Companies that want to take on corporate social responsibility (CSR) voluntarily and as a result of philanthropic endeavours can do so with the help of various instruments such as ESG-ratings and corporate forms such as responsible ownership.
Those companies that successfully pursue charitable goals benefit from a number of business advantages, including the interaction between their activities and the prosperity of the location.
Corporate Social Responsibility
More and more companies are committing themselves to the concept of CSR and assuming social responsibility in the sense of social entrepreneurship. Pursuing charitable goals has become part of the self-image of many companies in recent years (As well Corporate Cultural Responsibility).
For example, Stefan Hartung, CEO of the leading international technology and services company Bosch, believes that „social responsibility is now firmly anchored in many companies.“
Assuming social responsibility means that companies not only pursue the goal of profit maximisation with their business activities. Instead, they also voluntarily commit themselves to social and ecological sustainability goals and want to contribute to the good of society in the sense of being a non-profit organisation.
In concrete terms, assuming social responsibility is about making specific philanthropic, but also economically meaningful contributions to ecologically or socially sustainable development within the company, the location and society. This can take place, for example, through social activities or projects that tackle social challenges with innovative solutions and thus pursue the purposes of public benefit.
No legal standardisation
There are no international legal standards for the assumption of social responsibility in the all-encompassing sense. However, there are constantly new laws and legislative proposals that make such purposes, to which companies voluntarily commit themselves, mandatory.
For example, the German Supply Chain Duty of Care Act stipulates which and to what extent companies must comply with human rights and environmental protection standards in the supply chain. Another example is the European Union's Corporate Sustainability Reporting Directive. This requires capital market-oriented companies to submit detailed sustainability reports by April 2025.
This development emphasises the increasing importance of corporate social responsibility within companies. This is because it is reflected in legal reporting. However, it is currently up to companies to implement standards on public benefit that go beyond the existing legal requirements.
What are steward-owned companies?
One important form of company that allows social enterprises to assume social responsibility is that of steward-ownership. Although this has not yet been legally formalised in Germany, there are already over 200 responsibly owned companies.
Steward-owned companies, which for example pursue charitable purposes, are characterised by the fact that control and decision-making power remain with the companies themselves and not with investors.
They usually have a corporate constitution that emphasises certain charitable purposes. Profits are also tied to this purpose and cannot be transferred to private assets. This means that sustainable management takes centre stage.
Well-known responsibly owned companies include the globally operating and sustainable outdoor company Patagonia and the leading international technology and services company Bosch, as well as the German search engine Ecosia, whose profits are used to pursue ecological goals.
Ecosia founder and CEO Christian Kroll has made a conscious decision in favour of steward-ownership. „Ecosia is on its way to becoming the largest environmental movement in the world. We believe that a movement should not be owned by a single person. That's why steward-ownership is the perfect solution for us. The ownership structure protects our mission and allows entrepreneurial freedom.“
Patagonia's economic success story in particular emphasises that assuming social responsibility and making sustainable investments can help to promote corporate growth.
Co-founder of the international Purpose network and board member of the German Responsible Ownership Foundation Armin Steuernagel comments on Patagonia founder Chouinard's decision to transfer his company to steward-ownership: „Chouinard explicitly said that he wanted a form of company that would ensure that the company could remain „on purpose”. It should serve an overriding purpose. To do this, it must invest in order to preserve the company's values.“
Legal forms of organisation
Companies under responsible ownership and those that also want to combine economic objectives with charitable objectives can use different legal forms of organisation.
In particular, foundation law offers various forms of organisation. Foundations can be set up to pursue a specific charitable purpose and thus in line with the philanthropic and business endeavours of companies or be converted into foundations (see §§80 et seq. of the German Civil Code, BGB).
The organisation, for example, as a family foundation or double foundation within the framework of foundation law is therefore particularly suitable if it is important to ensure the long-term continuation of the company with the purpose of charitable status.
In addition, companies that are committed to the purposes of non-profit status can also be organised in the sense of traditional company forms such as a non-profit limited liability company (see §§1 et seq. of the Limited Liability Companies Act; GmbHG).
Measurability of social responsibility through ESG-rating
In order to ensure that a company assumes social responsibility, it should not only be organised in a legally sensible manner. It should also be possible to measure, visualise and prove the concrete implementation of the objectives of public benefit. One instrument for this is the Environment Social Government Rating (ESG).
This instrument is based on a specific regulatory system that is applied by specialised rating agencies. Based on this regulatory system, it is possible to measure and show whether and how successful a company is in implementing measures such as projects and inventions that promote sustainability and the common good with regard to the three criteria of environment, social affairs and corporate governance.
For example, it is shown whether companies invest in renewable energies, reduce emissions, create fair working conditions and remuneration for employees or how they are committed to assuming social responsibility and charity at all levels.
The ESG-rating tool can help companies to assume social responsibility and act sustainably in the long term in the interests of the common good. At the same time, it can ensure economic success and boost corporate growth.
This is because the results of the ESG-rating are informative for companies internally. They can review investments in terms of their impact on social prosperity or their sustainability. And companies can compare themselves with each other.
On the other hand, it has been shown at an economic level that companies with investments or portfolios with a higher ESG-rating achieve better long-term financial success than those with a lower rating.
Economic benefits of taking social responsibility
The assumption of social responsibility due to philanthropic endeavours and non-profit status not only has a positive impact on society. Companies can also benefit economically from this and, as a result of economic growth, invest in the non-profit organisation.
What are the competitive advantages?
Companies that assume social responsibility and pursue charitable causes stand out from competitors in the market that do not have similar endeavours or projects. As described above, this can be achieved through an excellent ESG -rating, for example, which strengthens trust in the brand.
The assumption of social responsibility is also becoming increasingly important for public tenders and the granting of financial resources or in investment evaluations for potential investors. In this context, companies that pursue non-profit objectives are favored.
With regard to new legislation and regulations, companies can avoid legal risks and compliance problems by proactively implementing social responsibility projects and thus gain an advantage over competitors in the market.
A company that is permanently committed to social and ecological goals and promotes these with projects and strategies also has a market advantage over its competitors when it comes to customers. This is because the trust of the target group is strengthened if a company also pursues clearly defined social and philanthropic goals with its economic activities. This has been particularly evident in responsibly owned companies such as Patagonia, which have a loyal and growing customer base.
What are the internal company advantages?
Indirectly, assuming social responsibility and pursuing charitable causes has a positive impact on recruitment, identification with the company and, last but not least, financial aspects.
When recruiting staff, companies that pursue charitable causes and promote sustainable projects, for example, are more attractive to potential employees. This is because employees can identify with something and work for a company that shares their values (employer branding).
It can also promote corporate culture and cohesion between employees within a company if a company is committed to social causes.
And by assuming social responsibility at the company's location through recycling and waste reduction, companies that pursue charitable purposes can save costs. For example, the efficient use of resources and energy savings can also reduce operating costs, which in turn can be invested in social good.
In this way, indirect savings can in turn be used for sustainable purposes and for the benefit of the community for long-term projects or investments, thus generating direct social benefits.
„Win-win" for companies and their environment
Companies that are committed to the common good can create a „win-win situation“ with their environment and society, with which they interact.
This is because assuming social responsibility and pursuing a charitable purpose leads to locational advantages for companies that grow sustainably at a location and thus create prosperity in their neighbourhood.
These locational advantages result, for example, from the fact that by assuming social responsibility they create jobs, serve an economic niche or launch environmental projects, thereby embedding the company in its environment.
This creates a reciprocal effect, as this embedding increases purchasing power. They are dependent on this in order to develop sustainably and continuously. As soon as this interaction is established in terms of public benefit, companies are more resilient in their environment and economically more robust.
Resumé
In order to take social responsibility, companies can support society or their environment with sustainable and social projects in the sense of a „win-win situation“. In doing so, they can benefit from economic advantages that drive sustainable corporate growth. Legal forms of organisation such as steward-ownership or instruments such as ESG-ratings are available to them.
dtb-lawyer and non-profit expert Maximilian Brazel comments: „Socially responsible companies have proven to be more resilient and economically robust.“
Status 07.05.2025