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What are the key pillars of CSR for the automotive industry?

24 September 2021

When discussing topics related to the industry, the issue of corporate social responsibility (CSR) comes up more and more often. What exactly is CSR and how does it affect the automotive market? There are four main areas of corporate social responsibility – it is worth exploring them all and drawing the right conclusions about how CSR is beginning to change the world.

What is corporate social responsibility? Definition.

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Corporate social responsibility is a relatively new concept – at its core it refers to the notion that every industry and company has some impact on the world around it. This applies not only to the mere supply of products and execution of production processes, but also to the effects on the environment and society. Although for a long time market paradigms focused primarily on profit, currently every enterprise must also take CSR issues into account. Corporate responsibility is based on several basic pillars, which may slightly vary in importance depending on the industry, but each of them is a vital topic for modern companies.

What does it exactly translate into in practice?

It is primarily the consideration of factors related to the welfare of the planet and society when planning and implementing production processes. A socially responsible company is a company which manages its activities appropriately, limiting the negative effects on the environment and the community. The definition of Corporate Social Responsibility (CSR) is therefore primarily associated with the creation of new solutions and abandonment of those that are connected with harmful issues affecting society as a whole.

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Why are more and more companies paying attention to CSR? What is driving the movement towards increased corporate social responsibility?

Socially responsible business is becoming an increasingly popular idea, especially in Western European and North American countries, although the philosophy of CSR is gaining popularity in more and more places around the world. This has to do with the fact that society is increasingly paying attention to the way businesses operate. Social pressures, as well as cultural and climate change make CSR an increasingly important aspect of many companies' operations.

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Corporate social responsibility is also directly related to potential profit. Although adjusting processes to reduce negative effects often means additional expenses or reduced revenues, in the long run, customers should be more willing to choose companies that care about CSR.

What is the purpose of corporate social responsibility?

Corporate social responsibility revolves around several assumptions. Companies acting responsibly naturally have the ability to continuously generate increasing profits over time. At the same time, corporate social responsibility models assume that the negative impact of industry on the surrounding environment will be considerably reduced as a result. Therefore, economically and socially responsible business is often guided by the so-called triple bottom line (TBL). It is the basis of sustainable development. This concept assumes an equally significant importance of economics, society and the environment. It is primarily concerned with "accounting" for impacts on people and nature in a manner analogous to reporting financial results. This is the most commonly used way to determine a company's compliance with CSR.

What are the four levels of corporate social responsibility?

The concept of CSR mainly refers to four specific areas – environmental, philanthropic, ethical and economic responsibility. Becoming familiar with the types of corporate social responsibility makes it possible to define more precisely what the objectives of CSR are, and thus to adapt the company's activities to the philosophy of sustainable development.

Environmental responsibility

Environmental social responsibility has become increasingly important in recent years due to ongoing climate change and weather anomalies. CSR initiatives aim to reduce the negative impact of business on the environment. In the case of the automotive industry, CSR in this field can be implemented by reducing pollution and raw material consumption, as well as through environmental compensation.

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Philanthropic responsibility

Another type of corporate social responsibility is supporting non-profit organizsations, as well as creating your own charities. Corporate social responsibility carried out in this way consists primarily of supporting charitable causes with a portion of the company's profits.

Ethical responsibility

The definition of CSR is also largely driven by ethics. The conduct of a socially responsible enterprise should be in accordance with the principles of fair treatment of business partners, customers and employees. This is a rather broad concept that also includes, among other things, working on materials originating from ethical sources.

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Economic responsibility

Corporate social responsibility also manifests itself in issues directly related to economics. This area combines four levels of social responsibility. It assumes that corporate social responsibility activities are intended not only to maximizse profits, but also to have a positive impact on the environment and society. The term specifically refers to the generation of revenue in accordance with applicable legal regulations.

Key pillars of CSR for the automotive industry

For the automotive industry, the most important pillar of CSR is certainly environmental and economic social responsibility. Although many companies still focus primarily on economics, all four aspects of CSR are very important. It is worth noting that, in addition to the aforementioned increase in customer demand by adhering to social responsibility principles, the introduction of CSR measures – especially those concerning ethics – may significantly improve employee satisfaction. This, in turn, translates into higher productivity, which directly affects profits.

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Arguments in favour of corporate social responsibility in the automotive industry

Corporate social responsibility is mainly about a company's impact on the world. Year by year the society is becoming more and more aware of threats connected, among others, to environmental pollution or unethical practices of enterprises. By applying CSR assumptions, companies become more credible. Corporate responsibility proves to be particularly important in the automotive industry, which in the past caused considerable pollution. Ultimately, CSR should benefit everyone – both the companies and the society.

See also: How to reduce carbon footprint in automotive sector?

CSR in practice using the example of Knauf Industries

A real application of the principles of corporate social responsibility can be seen in the example of Knauf Industries. The company's CSR activities include reducing emissions and consumption of natural goods in the production of automotive components, as well as activities to improve the working conditions of its employees. Knauf Industries implements numerous solutions to make CSR a reality. An in-depth look at CSR processes can be found in the comprehensive report "Mission CSR. More than just words: actions. Our social responsibility report 2021" available upon subscribing to the Knauf newsletter.

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