Understanding the internal and external pressures that drive businesses to adopt socially responsible behaviours is crucial for analysing how companies shape long-term strategies and operational decisions.

External Pressures Driving CSR

External pressures originate outside the business and are often beyond direct control. However, businesses must respond to these to maintain competitiveness, legal compliance, and positive stakeholder relations.

Media and Public Opinion

The media plays a critical role in shaping the image of businesses, often acting as a watchdog for unethical practices. The influence of media has grown significantly with the rise of the internet and social media platforms, enabling public opinion to be formed and spread quickly.

• Media scrutiny can expose unethical behaviours, such as poor working conditions, environmental pollution, or tax avoidance. Once reported, these issues can spark widespread backlash.

• Social media intensifies this effect by enabling users to share opinions and experiences in real time, sometimes leading to viral campaigns or boycotts.

• Public awareness of global issues such as climate change, inequality, and exploitation has increased. As a result, consumers expect companies to demonstrate accountability and transparency.

• Media campaigns can also highlight positive CSR practices, such as supporting local communities, reducing emissions, or engaging in charitable activities, which help to enhance a company’s brand reputation.

• Failure to respond to public sentiment can damage a firm’s image and lead to loss of customers, falling sales, and lower staff morale.

Businesses must therefore monitor media coverage and adapt their behaviour in line with public expectations, even if there is no direct legal obligation to do so.

Government and Regulation

Governments influence business behaviour through legislation, regulation, and economic incentives. Regulatory bodies and policymakers aim to ensure that businesses act in ways that align with broader societal and environmental goals.

• Environmental laws impose obligations to reduce emissions, manage waste, and prevent pollution. Examples include limits on carbon dioxide output or requirements for sustainable packaging.

• Labour laws require businesses to uphold workers’ rights, including fair pay, safe working environments, and anti-discrimination policies.

• Consumer protection regulations ensure that products and services are safe, clearly labelled, and fairly priced.

• Governments may also incentivise CSR initiatives through tax credits or grants for businesses that invest in renewable energy, green transport, or community engagement programmes.

• Non-compliance with regulation can result in fines, sanctions, litigation, and even loss of operating licences, forcing firms to factor legal compliance into strategic decisions.

Many multinational firms must comply with multiple jurisdictions, leading to greater complexity and increased incentive to adopt universal CSR standards.

Customer Demand

Customers are a vital stakeholder group whose changing preferences have driven a shift towards more ethical business practices. Ethical consumption has become a powerful force in the marketplace.

• Increasing numbers of consumers now evaluate products not just on price or quality, but also on social and environmental impact.

• Trends influencing purchasing behaviour include:

  • Demand for fair trade goods (e.g. ethically sourced coffee or chocolate)

  • Interest in sustainable packaging, such as recyclable or compostable materials

  • Support for brands that show transparency in supply chains (e.g. tracing cotton back to farms)

  • Avoidance of companies associated with animal cruelty, poor labour practices, or environmental harm

• Businesses that fail to align with these values may experience falling sales, loss of market share, or negative publicity.

• In contrast, businesses that champion ethical standards can develop brand loyalty, increase market penetration, and justify premium pricing.

Firms often respond by adjusting product designs, sourcing policies, and marketing campaigns to appeal to conscious consumers.

Investor Expectations

Investor attitudes have evolved significantly in the 21st century. There is now increasing emphasis on non-financial indicators of company performance, especially those related to Environmental, Social, and Governance (ESG) factors.

• Investors increasingly believe that socially responsible companies are less risky, more sustainable, and better managed in the long term.

• Major asset managers and pension funds may use ethical screening to exclude firms involved in controversial industries or poor CSR records.

• Shareholder activism is rising, with investors using their voting rights to demand improved CSR performance, disclosure of climate risks, or adoption of ethical policies.

• Businesses with strong CSR records may be more attractive to investors, gaining access to capital at favourable rates or being included in ethical investment indices.

For example, a company listed on a green investment index may benefit from increased exposure and credibility, which supports share price growth and business expansion.

Internal Pressures Driving CSR

Internal pressures come from within the organisation. These often reflect the values, culture, and strategic priorities of the business and its stakeholders.

Company Culture

Corporate culture refers to the shared values, beliefs, and behaviours that shape how a business operates. A company with a strong ethical culture is more likely to implement CSR policies consistently and effectively.

• A business that embeds integrity, transparency, and social awareness into its culture is more likely to promote responsible decision making.

• Leadership plays a vital role in shaping this culture:

  • Ethical leadership sets expectations and leads by example.

  • Senior managers can create accountability structures and reward socially responsible behaviour.

• Firms may create CSR committees, internal audits, and policies to ensure alignment with ethical goals.

• A company culture that values ethics and sustainability encourages departments to incorporate CSR into day-to-day decision making.

When CSR is seen as part of the company's identity rather than a compliance task, it becomes embedded in strategic planning.

Employee Values

Employees are increasingly aware of their employers’ CSR commitments and are more willing to challenge unethical practices or leave firms whose values don’t align with their own.

• Surveys show that younger employees (especially Millennials and Gen Z) prefer to work for businesses that prioritise social and environmental issues.

• Firms that offer ethical training programmes, promote diversity, or support community volunteering can boost employee satisfaction and engagement.

• CSR also plays a role in attracting and retaining talent. A good CSR record can be a competitive advantage in recruitment.

• Employees may become brand ambassadors, sharing their pride in the company’s ethical initiatives with others.

Internally driven CSR initiatives often arise from staff engagement surveys, employee networks, and HR policies designed to reflect shared values.

Long-Term Risk Management

Many businesses adopt CSR not only to reflect ethical values, but also to reduce exposure to long-term risks that could damage financial performance or threaten survival.

• Socially responsible behaviour helps manage risks in areas such as:

  • Legal and compliance risks (e.g. fines for environmental breaches)

  • Reputational risks (e.g. backlash from unethical sourcing)

  • Supply chain risks (e.g. disruption due to poor labour conditions in outsourced factories)

  • Investor relations risks (e.g. loss of funding due to ESG concerns)

• Businesses also use CSR to anticipate future developments, such as:

  • Stricter climate laws

  • Changing societal expectations

  • Technological shifts requiring responsible data use

• By identifying and addressing these risks early, businesses can maintain their licence to operate and reduce the likelihood of disruptive events.

CSR therefore becomes part of proactive risk management, essential for long-term sustainability.

Business Responses to CSR Pressures

How a business responds to CSR pressures depends on its resources, culture, leadership, and strategic objectives. Responses may be strategic (shaping long-term plans) or functional (affecting specific departments).

Strategic Responses

CSR as Core Strategy

• Businesses may make CSR part of their core purpose, such as being a net zero company or operating a social enterprise model.

• CSR goals are integrated into:

  • Mission statements

  • Strategic objectives

  • Key performance indicators (KPIs)

• For example, a company may set targets to reduce carbon emissions by 50% in five years or commit to sourcing all materials ethically.

Triple Bottom Line Approach

• Some firms adopt a "triple bottom line" framework that evaluates performance across three dimensions:

  • Profit (financial performance)

  • People (social impact)

  • Planet (environmental sustainability)

• This encourages balanced decision making and long-term planning rather than short-term profit maximisation.

Sustainability Reporting

• Companies may publish annual CSR reports, aligned with global standards like the Global Reporting Initiative (GRI).

• These reports enhance transparency and are used to communicate progress to stakeholders, including customers, employees, and investors.

Functional Responses

Marketing

• Marketing teams incorporate CSR into advertising and product positioning.

  • Highlighting environmentally friendly products

  • Promoting corporate donations to charities

  • Using eco-labelling to signal ethical practices

• Cause-related marketing links product sales to charitable donations (e.g. “£1 from every purchase goes to...”).

Human Resources

• HR functions develop ethical recruitment practices and inclusive workplace cultures.

  • Initiatives might include gender equality programmes, fair pay audits, and wellbeing schemes.

• CSR can also form part of performance reviews, appraisals, and incentives.

Operations

• Operations teams implement ethical and sustainable practices in production and logistics.

  • This may include switching to renewable energy, improving waste management, or choosing local suppliers to reduce carbon footprint.

• Businesses may adopt circular economy models that emphasise reuse and recycling.

Finance

• Financial departments assess the cost implications and benefits of CSR.

  • For example, calculating the ROI of solar panel installation or energy-efficient machinery.

• CSR activities may be factored into budgeting and forecasting, ensuring financial alignment with sustainability goals.

Evaluating Business Responses

Cost vs. Value

• Businesses must evaluate whether CSR initiatives provide a return on investment. Some costs may be significant upfront but yield savings or revenue gains over time.

Risk of Greenwashing

• Firms must avoid the perception of "greenwashing"—making false or exaggerated claims about CSR.

• Transparency, honesty, and third-party audits are essential to maintain credibility.

Continuous Adaptation

• CSR is not static. Businesses must regularly:

  • Review stakeholder expectations

  • Assess CSR performance

  • Update strategies to reflect new developments in law, technology, and public values

Effective CSR is responsive, integrated, and aligned with both internal and external pressures, ensuring sustainable success in an ever-evolving business environment.