What is CSR and its purpose?
Traditionally, Corporate Social Responsibility (CSR) was seen as a segment of an organization’s strategy to give back to society, more so with a sense of charity. Gradually, the definition of CSR initiatives changed to activities that would also deliver business results. A way of creating and achieving shared value for the business as well as society.
This blog is dedicated to a deeper understanding of CSR as a concept, its purposes, and its myriad benefits.
The United Nations Industrial Development Organisation describes CSR as “the way through which a company achieves a balance of economic, environmental and social imperatives, while at the same time addressing the expectations of shareholders and stakeholders.”
Today, CSR practices are focused on finding sustainable solutions rather than the traditional approach of ironing out or filling up crevices. They are aimed at identifying the potential risks and working toward avoiding or mitigating the same for a sustainable tomorrow—for society, the planet and the business itself.
Purpose of CSR
The primary goal of a CSR campaign is to align a company’s social and environmental initiatives with its business purpose and values and at the same time contribute to the well-being of the communities and society on which the business depends.
Never before was there such an impetus for developing coherent CSR practices. A rock-solid CSR strategy becomes necessary for building a strong brand image, boosting sales, gaining more employees, customer loyalty and much more.
Today, nobody wants to invest in a business that doesn’t have a ‘sustainable’ vision. Therefore, a robust yet holistic CSR strategy figures at the heart of any corporate entity and also assumes the role of an indispensable tool for companies to reap profits and gain stakeholders’ support.
Benefits of CSR
As per a report by Babson College, United States, CSR programs can also lead to an increased market value and reduction in systemic risk, cost of debt, and staff turnover rate.
This leads us to quickly sum up how organizations can benefit through CSR initiatives while also creating a positive socio-economic, environmental impact:
- Positive impact on the community
- Bolstered brand image
- Increased sales and revenue
- Attracting new talent
- Increased customer loyalty
- Employee retention, better productivity
- Enhanced access to capital and markets
- Operational cost savings
- Better risk management/reduced systemic risk
- Minimized environmental impacts
It must be noted that the benefits of CSR may also be among the goals and purposes of an enterprise’s CSR activity. More and more organizations are now addressing socio-economic issues that are directly linked or relevant to their business.
A firm may originally want to set out with the purpose of reducing its operational cost, thereby making a positive impact in the community.
Consider this example, a company may want to cut its operational cost by switching to locally produced resources. In the process, it ends up creating employment opportunities for the local community while also promoting indigenous culture and its produce.
As per a 2017 Cone Communications CSR Study, 87% of the Americans surveyed said they will purchase a product based on a company’s advocacy for an issue they cared about while 76% said they might say no to a brand if it supports an issue contrary to their beliefs.
Simply put, if the community on which a company depends does not approve of its business, rather brands it unsustainable, it may translate into severe losses for the organization. This is where CSR comes into play and makes it a win-win, virtuous cycle for both businesses as well as society.
A company may choose to run coordinated activities or set up a dedicated, interdependent program for its CSR initiative. Organizations may want to create more value for society than for the firm, achieve common value/s, or create value primarily for the indigenous community. CSR initiatives of a given firm may tend to have fluid, porous boundaries; a crossover with different purposes but with one end goal for sure, if not the only goal, that is generating socio-environmental results.