Corporate Social Responsibility, often referred as CSR, is an evolving business practice that encourages a company to be socially accountable towards its stakeholders and the public. Within a CSR strategy, a company integrates environmental, social, economic and human rights concerns into its long term business strategy as well as its day-to-day operations.
Why is CSR important?
For the Society
The primary purpose of CSR is to deliver tangible and intangible benefits to the society as a whole. This includes social and environmental aspects that are ethical, transparent and lawful. Some of the benefits that CSR business policies can provide to the society are:
- Economic Development
- New technologies, innovation and infrastructure
- Environment protection and sustainability
- Improved quality of life and higher standard of living
- Increased employment opportunities
- Higher quality products and increased customer satisfaction
- Increased trust and security
- Decreased corruption in the society
- Increased awareness and knowledge about environmental-friendly solutions
For the Companies
Being socially responsible is not only beneficial for the society as whole. It can also provide a lot of benefits to the firms including:
- Improved public image and customer relationships
- Enhanced employee morale and HR management
- Increased exposure to media
- Risk management
- Attraction of new investors
- Gained advantage over competitors
- Cost savings through minimization of waste
Types of CSR
- Environmental: One of the primary areas that CSR focuses on is the environment. Here, the company aims to minimize its carbon footprint and at the same time take steps to foster environmentally friendly policies and procedures such as recycling, tree planting, waste reduction and so on.
- Volunteering, Sponsorships and Donations: Another form of CSR is volunteering in events at which the company performs acts of kindness for those in need. Companies can instead donate money to a good cause or sponsor a philanthropic event.
- Ethical practices: Probably the most important but yet often overlooked factor are the ethical, fair and transparent policies and procedures within a company. The business must treat its employees and customers fairly and should always provide equal opportunities to all genders, ethnicities and races regardless of religion, political views and appearance.
What if a company does not have a CSR strategy?
Businesses that ignore the role of CSR in the current business landscape run a high risk of bringing down their public brand image and reputation. This can in turn significantly affect the company’s performance and profits. Hence, CSR and business performance are two concepts that are nowadays interconnected. It is important to understand that CSR is not philanthropy. It’s all about companies understanding their impact on the social and environmental landscape and proactively making efforts to minimize their negative burden and maximize their positive impact on the society and end consumers. Being ethical and transparent is nowadays demanded by consumers and is no more an option for the business solely for the firms that want to do something extra.