Corporate social responsibility, also referred to as CSR, can be described as a process with the aim of embracing responsibility for the company's actions and encouraging a positive impact through its activities on the environment, consumers, employees, communities, and other stakeholders. That said, there are a variety of definitions for CSR, as well as critics and proponents of the concept (Figure 1).
Proponents of CSR argue that socially responsible practices can have a positive impact on the bottom line, in ways including human resources recruitment and retention, risk management via reduced corruption scandals or environmental accidents, and brand differentiation with greater consumer loyalty. Proponents argue that corporations make more long term profits by operating with this perspective. CSR proponents may also argue for the recognition of a ‘triple bottom line’ that rewards social, environmental, and financial returns.
Critics argue that it competes with shareholder value maximization and may be prone to greenwashing. Many see CSR as unrelated to the primary aim of the business, to make a profit for its shareholders. Shareholder value is a business term that implies that the ultimate measure of a company's success is the extent to which it enriches shareholders. Milton Friedman and others have argued against CSR, stating that a corporation's purpose is to maximize returns to its shareholders and do not have responsibilities to society as a whole. The term greenwashing is generally used when significantly more money or time has been spent advertising being green (that is, operating with consideration for the environment), rather than spending resources on environmentally sound practices. Critics see this as wasteful and misleading.