Understanding Carroll’s CSR Pyramid and Other CSR Frameworks

Corporate Social Responsibility (CSR) has become a core element in the way businesses operate today, and it’s only getting more important for businesses to attract talent, investment, and consumer trust.

Today, there are lots of CSR models, but Carroll’s CSR Pyramid  forms the basis of our modern understanding of CSR. So, we think it’s essential for everyone who cares about CSR to get a solid understanding of the theory that kicked it off.  In this article, we’re diving into Carroll’s Pyramid of CSR – and other relevant CSR frameworks  – to explain the key components you need to know, including their practical applications in business.

Introduction: What is Carroll’s Pyramid of CSR?

First, we’ll break down the essentials.

Carroll’s Pyramid of CSR is a model developed by Archie B. Carroll in 1991, which outlines 4 levels of responsibility that businesses should fulfil to contribute positively to society. These levels are organised in a pyramid shape, representing a hierarchy of obligations that companies need to balance.

The CSR pyramid consists of:

• Economic responsibilities: Profitability and revenue generation
• Legal responsibilities: Compliance with laws and regulations
• Ethical responsibilities: Doing what is right and fair, even beyond legal requirements
• Philanthropic responsibilities: Giving back to society through charitable donations and community involvement

Carroll’s Corporate Social Responsibility Pyramid is valuable because it emphasises that a company’s social responsibilities are not limited to charity. The pyramid recognises the need for businesses to stay profitable while ensuring they meet legal, ethical, and philanthropic standards.

While CSR has evolved over the years, Carroll’s Pyramid of Corporate Social Responsibility provides the central principles that remain relevant today. Businesses that embrace Carroll’s CSR are better positioned to meet the growing demand from consumers and stakeholders for ethical and socially responsible practices, even as the conversation around CSR becomes more complicated.

Exploring Carroll’s CSR Model

Although the CSR Pyramid Carroll presents all 4 layers as important facets of a healthy business, it also clearly indicates that the layers have different levels of importance – the system is, fundamentally, a hierarchy. Let’s take a deeper dive into each layer:

• Economic Responsibility: At the base of the pyramid, the primary responsibility of a business is to be economically sustainable. This involves generating profits, maintaining jobs, and contributing to the economy. Without profitability, none of the other levels of the pyramid can be fulfilled.
• Legal Responsibility: After achieving economic sustainability, a business must comply with all applicable laws and regulations. This is the second priority, as adhering to legal frameworks ensures fair competition, protects consumer rights, and maintains ethical business practices.
• Ethical Responsibility: Moving up the pyramid, ethical responsibilities are second from the top, and they’re all about moral conduct. This means that businesses shouldn’t just be legally right, but also ethically sound, promoting fairness, justice, and respect for human rights.
• Philanthropic Responsibility: At the top of the pyramid, philanthropic responsibilities encompass voluntary actions that a business takes to improve society. These are not mandatory but are hugely important for winning consumer trust, attracting top talent, and impressing investors.

This Carroll Model of CSR is flexible enough to be adapted by different businesses, and understanding how it works can help companies balance profitability with social good. Carroll’s Model of CSR serves as a practical tool for shaping strategies that consider multiple stakeholder needs.

Practical Applications of Carroll’s Pyramid in Business

Incorporating CSR into business strategy is essential for long-term success, in terms of investment, talent attraction, and consumer trust.

Aflac’s CSR Survey Report analysed how CSR efforts  impact brand reputation, looking at how social responsibility impacts the perception of consumers, potential employees, and investors.

The study found:

• Nearly 70% of employees say they wouldn’t work for a company without a strong purpose.
• 77% of consumers are motivated to purchase from companies committed to making the world a better place
• 41% of millennial investors put a significant amount of effort into understanding a company’s CSR practices, compared to just 27% of Gen X and 16% of Baby Boomers

And that’s what strategic CSR is all about: aligning CSR efforts with business goals.

Companies can apply Carroll’s CSR Pyramid in several ways:

• Economic Layer: By focusing on innovation and sustainable profit generation, companies can ensure they have the resources to engage in responsible behaviour. This might include investing in green technologies or developing products that serve a social purpose.
• Legal Layer: Adhering to regulatory requirements is a basic expectation, but businesses that exceed these legal standards demonstrate leadership in corporate governance.
• Ethical Layer: Ethical businesses gain the trust of consumers and stakeholders. For example, companies that adopt fair labour practices or reduce their environmental impact will often experience a boost in brand loyalty.
• Philanthropic Layer: CSR initiatives like donating to local charities or supporting educational programs can help businesses connect with communities and strengthen their brand image.

Other CSR Models and Frameworks

While Carroll’s CSR Pyramid is a  vital and foundational model for CSR, businesses today can benefit from a range of CSR frameworks that reflect modern challenges, particularly around sustainability and ethical governance. These frameworks provide strategic tools that align CSR with broader societal goals.

Let’s break down some other key frameworks that you’ve probably heard about in a CSR context.

1. Corporate Sustainability Reporting Directive (CSRD)

    

   The CSRD is an EU regulation that mandates large companies to disclose information on how they operate and manage social and environmental risks. This framework goes beyond Carroll’s CSR pyramid, incorporating sustainability into core business reporting. Companies must demonstrate their commitment to ethical practices and sustainable development, aligning their CSR strategies with transparent, measurable outcomes.

2. The United Nations Sustainable Development Goals (SDGs)

    

   The SDGs, established in 2015, provide a global blueprint for achieving a better and more sustainable future by 2030. For businesses, aligning CSR activities with specific SDGs offers a clear direction for making a positive impact on society. For instance, companies can tailor their efforts to support corporate social responsibility and sustainability, focusing on areas like environmental responsibility or equitable labour practices.

3. ISO 26000: Guidance on Social Responsibility

    

   While not a certifiable standard, ISO 26000 offers guidance for businesses on how to operate in a socially responsible way. This framework covers seven core subjects: organisational governance, human rights, labour practices, the environment, fair operating practices, consumer issues, and community involvement and development.

4. Global Reporting Initiative (GRI)

    

   The GRI Standards are another essential tool for CSR reporting, offering a robust framework for companies to disclose their economic, environmental, and social impacts. The GRI framework emphasises transparency and helps organisations communicate their CSR initiatives in a structured and consistent way, making it easier for stakeholders to assess performance.

The Sum-Up on Carroll’s CSR Pyramid

Carroll’s CSR Pyramid has shaped how businesses think about their responsibilities to society, emphasising a balance between profitability, legal compliance, ethical behaviour, and philanthropic efforts. As businesses increasingly embrace social responsibility, this model remains crucial in understanding how companies can align their operations with societal expectations.

While Carroll’s framework provides a foundational understanding of CSR, modern businesses have expanded their efforts by integrating other models and frameworks like the Corporate Sustainability Reporting Directive (CSRD), the United Nations Sustainable Development Goals (SDGs), and ISO 26000. These frameworks allow businesses to approach CSR strategically, ensuring both social impact and business success.

If you’re ready to take your CSR initiatives to the next level, talk to an expert at OnHand and see how we can help you drive revenue and growth through meaningful social responsibility.