Pyramid of Corporate Social Responsibility: Go Beyond Profit

As a leader at your company, you’ve likely heard about the widespread movement toward more socially responsible business practices. With 65% of Fortune 500 companies offering matching gift programs, corporate social responsibility (CSR) is becoming increasingly common. In fact, 93% of employees believe that companies should lead with purpose through these programs.

However, starting a CSR program at your business can be challenging. For example, how do you know how to balance priorities like your profits with social good initiatives like corporate volunteer programs? Frameworks like the pyramid of corporate social responsibility can help you navigate these decisions.

We’ll break down what the CSR pyramid is and explore the ways your business can use it in practice. Let’s get started!

What is the pyramid of corporate social responsibility?

Corporate social responsibility (CSR) is a company’s commitment to social good through philanthropy and employing sustainable and ethical business practices. Socially responsible businesses aim to have a net positive impact on the world.

CSR strategies like implementing workplace giving programs and building partnerships with nonprofit organizations can also benefit your business by enhancing your reputation, attracting top talent, and boosting customer and employee loyalty.

The pyramid of corporate social responsibility is a framework depicting the importance of four key CSR dimensions: economic, legal, ethical, and philanthropic. This model was created by Professor Archie Carroll in 1991 as a way to visualize his four-part definition of CSR. The pyramid reveals the building blocks that businesses can use to become responsible in all four areas, rather than prioritizing profits alone.

The 4 Levels of the CSR Pyramid

The CSR pyramid has four tiers of social responsibilities, including:

• Economic responsibilities: This is the lowest level of the pyramid. In order to achieve success in the other three areas, your business must be profitable and financially stable. However, profitability should not come at the expense of other responsibilities, such as ethics.
• Legal responsibilities: While economic responsibilities are key for providing a strong foundation for these other efforts, legal responsibilities could be considered the most important. This involved complying with all relevant laws and regulations to ensure the business is conducting its operations fairly.
• Ethical responsibilities: This refers to doing the right thing and following ethical norms to fill in any gaps or ambiguities in the law. Similar to the legal layer, the purpose of being an ethical business is to operate fairly and avoid causing harm.
• Philanthropic responsibilities: The final level of the pyramid includes the voluntary responsibilities that businesses take part in to go above and beyond, such as donating to a nonprofit. While businesses are not legally obligated to participate in these activities, employees are coming to expect it. For example, 60% of employees say that it’s imperative their employer offers matching gifts.

Carroll used a pyramid for this framework to highlight the importance of each facet of CSR and the order in which companies should implement changes. For example, because your business’s profitability is the foundation of the pyramid, you’ll need to make sure this area is sound before moving on to your legal responsibilities.

How can businesses use the pyramid of corporate social responsibility?

While the pyramid does a good job of transforming an abstract concept into a clear visual, it doesn’t provide instruction on the practical ways to implement these ideas at your business.

To fill in the gaps, we’ll break down  some of the ways you can use the pyramid to improve your operations and explore  examples from real companies:

Level 1: Economic Responsibilities

If your business cannot sustain a profit, then it will eventually have to shut down. Clearly, this would prevent you from taking part in philanthropic activities and being an ethical employer. Your company also wouldn’t be able to offer jobs to its community or provide valuable goods and services to customers.

However, it’s important to be ethical in your pursuit of profit. While working with the cheapest manufacturer to fabricate your product might increase your profits, for example, that manufacturer may be exploiting its workers in the process.

Ensure you’re meeting your economic responsibilities in ethical ways by:

• Providing a positive, safe, and engaging work environment for your employees.
• Offering fair, living wages and benefits to employees.
• Creating high-quality products and services.
• Prioritizing customers’ safety and satisfaction.
• Remaining transparent about your business practices, finances, and motives.

Economically Responsible Company: Patagonia

Patagonia is a California-based clothing retailer that specializes in outdoor recreation apparel. Patagonia aims to make changes by implementing environmental and animal welfare responsibility programs that guide how the brand produces its products. Additionally, the company maintains transparency about where its facilities are located and strives to produce products under safe and humane working conditions.

These measures help Patagonia make a profit and remain economically responsible. The company is valued at about $3 billion and brings in about $100 million in revenue each year. Sales have steadily increased over the last decade, proving that sustainable businesses can be successful.

Level 2: Legal Responsibilities

Following all of the laws and regulations that apply to your business helps ensure that your company is operating fairly and not causing any harm. This can protect your business from legal implications like fines, and it is an indicator to employees and customers that you are a trustworthy organization with integrity.

While it’s best to get lawyers, accountants, and other professionals involved when it comes to legal issues, a good starting point is to make sure your company is complying with:

• Employment laws
• Health and safety regulations (e.g., OSHA)
• Tax regulations
• Environmental laws

Legally Responsible Company: Moleskine

Moleskine is an Italian company that manufactures paper goods, such as planners, notebooks, writing tools, and bags. Because its products are made from trees, Moleskine is subject to additional environmental regulations.

Moleskine meets these regulations and goes above and beyond to protect the planet. Not only does the company donate and recycle unsellable products, but they have been Forest Stewardship Council (FSC) Certified since 2008. This indicates that the business follows relevant environmental regulations for forests and commits to nurturing, restoring, and protecting forests.  

Level 3: Ethical Responsibilities

Being ethically responsible means doing the right thing even if you aren’t legally obligated to. For example, your business might implement hybrid schedules that increase sustainability by limiting how often employees need to drive to the office. Plus, initiatives like this one can boost employee engagement and retention by enhancing work-life balance.

Additionally, your business can pursue certifications to guide your decisions and signal that you are an ethical organization, including:

• B Corps Certification: This designation is extended to businesses that demonstrate high social and environmental performance, make a legal commitment to prioritize ethics (e.g., adjusting the corporate governance structure to be accountable to all stakeholders), and exhibit exceptional transparency. B Corps you may have heard of include Patagonia, Ben & Jerry’s, and TOMS.
• Fair trade certifications: These apply to items like food, drink, housewares, and apparel. Companies are held to fair labor standards such as providing a sustainable income and practicing environmental stewardship. Popular certifications include Fair Trade USA Certified and Fairtrade International.
• Animal welfare certifications: These certifications are concerned with the treatment of animals in the manufacturing process. Some certify that the products did not test on animals while others confirm that products are free of any animal products (e.g., vegan leather or almond milk). Widely used certifications include Leaping Bunny, PETA, and Vegan.org.

Ethically Responsible Company: Ben & Jerry’s

Ben & Jerry’s is a Vermont-based ice cream company. The business has been dedicated to supporting progressive causes and operating sustainably and fairly for decades, following core values such as human rights and dignity, social and economic justice, and environmental protection. In their own words, they strive to be “a social justice company that makes ice cream.”

In addition to being a Certified B Corporation, Ben & Jerry’s shows its commitment to ethics in almost every aspect of its operations. The company supports supplier diversity, helps farmers thrive through organizations like Fairtrade International, and believes in animal welfare. Ben & Jerry’s also works to protect the environment by reducing its carbon footprint, running energy-efficient freezers, and using FSC-certified paper packaging.

Level 4: Philanthropic Responsibilities

Finally, your business should focus on driving change through philanthropy. There are many ways to contribute to charitable causes and issues that your business and employees are passionate about. Choose initiatives based on the time and resources you have available along with your CSR goals. For instance, if you aim to increase employee engagement with your CSR programs, opt for philanthropy initiatives that put employees in the driver’s seat.

Some popular CSR programs include:

• Matching gifts: Through these programs, employers offer to match the donations their employees make to charitable organizations. For example, if one of your employees donates $100 to a local nonprofit, your company would match that donation with an additional $100. This way, employees can double their impact without needing to give more. Many of the most successful companies in the world have matching gift programs, including Microsoft, Coca-Cola, and Disney.
• Corporate volunteerism: With a corporate volunteer program, your company will coordinate with a nonprofit to have your employees volunteer with the organization. For example, you might have optional volunteer hours for employees over the weekends. Or, you can set up company-wide volunteer days where employees can choose to spend the whole day volunteering.
• Volunteer grants: Volunteer grants, sometimes called Dollars for Doers programs, allow employees to turn the time they spend volunteering into more money for the nonprofits they support. Some companies give donations based on an hourly rate (e.g., $20 per hour volunteered) while others give a flat amount once employees pass a certain hours threshold (e.g., $500 once the employee reaches 20 volunteer hours).
• Corporate grants and sponsorships: Corporate grants supply nonprofits with the funding they need for a specific project or initiative. When awarding grants, you have more control over what the funding will be used for. Additionally, you may offer corporate sponsorships. These tend to be more informal than a grant and might fund things like fundraising events.

Philanthropically Responsible Company: TOMS

TOMS is a California-based company that designs and manufactures shoes, eyewear, and other apparel. The company gained acclaim for its pledge to donate one pair of shoes to someone in need for every pair sold. While TOMS has since phased out this initiative, it continues to focus strongly on philanthropic activities.

Like Ben & Jerry’s, TOMS is a Certified B Corporation that meets high standards of social and environmental performance, transparency, and accountability. The business focuses its efforts on causes like mental health and increasing access to opportunity. Notably, TOMS invests one-third of its profits for grassroots good to drive sustainable change for community organizations. 

What are some challenges of implementing the CSR pyramid framework?

As with any academic theory, there are some criticisms of Carroll’s CSR pyramid. Some critics point out that the pyramid doesn’t show businesses how to approach conflicting obligations (e.g., choosing an unethical supplier for the sake of profits). Others argue that the pyramid should place more weight on ethics in general, particularly for global companies that employ workers across regions with varying levels of labor and environmental regulation.

However, it’s worth noting that many companies face negative backlash from neglecting ethics—this backlash ultimately impacts their bottom line. When Rhianna’s Savage x Fenty clothing brand received an abysmal ethics rating of 4 out of 125, fans of the star and her brands were shocked. The company’s reputation was harmed, and many loyal customers expressed hesitation over shopping from the business again.

Additionally, keep in mind that the CSR pyramid is just one framework that businesses can use to structure their CSR efforts. For example, some companies choose to follow the 3 Ps model instead. This idea falls under the Triple Bottom Line (TBL) theory and posits that companies should work on the following bottom lines simultaneously: profit, people, and planet. Ultimately, you’ll need to select a framework that aligns with your business’s current situation and resources.

Wrapping Up

The pyramid of corporate social responsibility reveals your organization’s core responsibilities to its community and how CSR fits into your operations. With this understanding, you can better allocate resources toward more sustainable, ethical practices. Additionally, you’ll make strides toward a more streamlined and effective CSR program, allowing you to make a bigger impact on your community.

To continue optimizing your CSR initiatives and getting employees involved, check out these additional resources:

• How to Implement Corporate Social Responsibility Software. Most modern CSR programs rely on software to stay organized. This buyer’s guide explains everything you need to know about choosing a tool.
• Get Your Team Motivated! Employee Engagement Strategies. Engaged employees are better for your business and its CSR program. Discover these strategies to take employees from uninterested to invested.
• Matching Gift Auto-Submission + CSR Platforms: What to Know. Looking for ways to streamline your matching gift process? See how auto-submission can help, and find out if your CSR vendor supports it.