At one point or another all of us have heard of the term CSR (Corporate Social Responsibility), but none of us really knew what it meant. Basically, CSR is an umbrella term that many companies use to describe a variety of activities. To some firms, CSR can refer to their sustainability efforts, therefore minimizing their environmental footprint while increasing their investment within the community and their respectful events, as well as having employees or the management volunteer to their corporate foundation. This will all simultaneously produce an overall positive impact on society.
For the above to be achieved, a lot of other aspects need to be taken into consideration. The company always needs to keep in mind that CSR is a way through which the company achieves a balance of economic, environmental and social imperatives, whilst at the same time addressing the expectations of its shareholders. There are generally two types of CSR. One of the types is when Corporations provide funding and resources for worthwhile social causes. Another type of CSR is creating a plan to produce products or to provide services that are in the best interest of society.
Many have asked the question, “Why the need for CSR?” The answer? Issues such as environmental damage, improper treatment of workers and faulty production. Investors and Investment Fund Managers have now began to take their respective firm’s CSR policy more seriously when it comes to investment decisions, and customers have become increasingly sensitive to CSR programs of firms from which they purchase their goods and services.
There are many potential benefits a company can get from CSR, and something like the “Triple Bottom line P: People, Planet & Profit” serves to highlight this. CSR benefits people in general because it relates to fair and beneficial business practices. On another note, it benefits the planet as it refers to Sustainable Environmental Practices whilst also benefitting a firm’s profits, through the economic value created by the organization. CSR also helps with Risk Management by building a genuine culture of ‘doing the right thing’. This type of reasoning within a business can help to offset risks.
CSR is also a means of brand differentiation. In dense market groups companies strive for a unique selling proposition that can separate them from their competitors in their consumer’s mind. Other benefits of CSR are attracting, retaining and maintaining a happy workforce, Media Interest, and also earning a good reputation with suppliers and customers. Firms that invest in CSR, also benefit from access to funding opportunities, whilst at the same time enhancing their influence within their respective industry.
Looking to the other side of the page, there are many myths that surround Corporate Social Responsibility, these being that CSR is not ideal for small businesses, that CSR should be a separate initiative within the firm, and that CSR is a marketing gimmick for the firm to get more exposure. Last but not least, some have said that CSR is complicated and technical. But the truth is that these are all fabrications. Any firm, whether large or small, can create their own CSR.
Corporate Social Responsibility is all about the ways and means of how companies manage their businesses in a way that helps them produce an overall positive impact on society.
“Social Responsibility investment combines investors’ financial goals with their obligation and dedication to factors that ensure the well being of society such as environmentally friendly practices, economic growth and justice in society” (Jerry Anderson, Corporate Social Responsibility: Guidelines for Top Management).
It is unethical for some individuals to own so much and earn so much, at the expense of other suffering members of society. It is also unethical for companies to engage in environmentally degrading practices that result in illness and loss of life. It can be concluded that Corporate Social Responsibility and the maintenance of high ethical standards is not an option, but an obligation for all businesses.