Often social contributions are met by philanthropic actions. While charity has a place in CSR, in a broader understanding, corporate social responsibility suggests that companies have a duty towards their stakeholders in all aspects of business operations. They need to take into account economic, social and environmental impacts of the way they in which they operate while maximizing the benefits and minimizing the downsides. This duty can be seen as a voluntary action taken by a company over and above the legal requirements, to address both its own competitive interests and the interests of wider society. A key feature of the concept is how businesses are able to involve and engage shareholders, employees, customers, suppliers, governments, non-governmental organizations, international organizations, and other stakeholders in setting objectives as private commitments.
A very precise definition of CSR was written in the Green Paper in 2001 published by the European Commission, which was the first definition of CSR in a document of such high importance. It states that ‘CSR is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with stakeholders from an internal and from an external company point of view’. Internal CSR practice mostly takes employees into consideration and revolves around matters such as: investing in human capital, health, security, and turnover. The external aspect takes into consideration other stakeholders: business partners and suppliers, customers, governments, nongovernmental organizations.
In some way society makes an agreement with businesses that allows them to operate in society, and from that angle companies must deliver something back to society if they want to carry on in the long run. This return is voluntary, and exceeds regulatory obligations; this keeps Government interference in business affairs to an absolute minimum and allows companies to focus on maximizing commercial return for shareholders and investors. At the same time, Michael Porter states that doing something more for society has also been linked with delivering more for shareholders. He advises that the adoption of CSR can deliver a competitive advantage to businesses, as consumers more inclined to purchase a product or service because of its CSR attributes.