UNIT – 2
CORPORATE SOCIAL RESPONSIBILITY
INTRODUCTION
Social responsibility refers to the obligations and duties of a business to the society. According to
KK Andrew, “Social responsibility may be taken to mean intelligent and social objective
concern for the welfare of the society”.
Corporate social responsibility (CSR) is a strategy undertaken by companies to not just grow
profits, but also to take an active and positive social role in the world around them.
Engaging in CSR means that, in the ordinary course of business, a company is operating in
ways that enhance society and the environment instead of contributing negatively to them.
For a company to be socially responsible, it first needs to be accountable to itself and its
shareholders. Companies that adopt CSR programs have often grown their business to the point
where they can give back to society. Thus, CSR is typically a strategy that's implemented by
large corporations. After all, the more visible and successful a corporation is, the more
responsibility it has to set standards of ethical behavior for its peers, competition, and industry.
“It refers to the obligations of businessmen to pursue those policies, to make those
decisions, or to follow those lines of action which are desirable in terms of the objectives
and values of our society.”
– H.R. Bowen
Why there is a need for CSR?
The relevance and importance of corporate social responsibility (CSR) is highly significant today
in this capitalist economy, to ensure the sustainability of life and business in the future. Mallen
Baker defines CSR as, “It is about how companies manage the business processes to produce an
overall positive impact on society.”
The benefits of CSR extend to both society and the company. Thus, it is necessary to carefully
weigh the impacts of CSR initiatives and design them to maximize the positive effects.
There are many reasons for a company to embrace CSR practices such as -
• Business survives using the resources of society, it, therefore owes a responsibility
towards it, in return
• Business is an integral part of the social eco-system, it should therefore be responsible
toward it
• Social responsibility improves the image of the organization
• Social involvement fosters a harmonious and healthy relationship between society and
business, for the mutual benefit of both
• Social responsibility also implies a reduction in unnecessary government regulation and
intervention
• It helps in spreading positive word of mouth
• It keeps the stakeholders happy and satisfied
• It improves the corporate reputation
• It helps an organization in gaining a competitive edge
NATURE AND SCOPE OF CORPORATE SOCIAL RESPONSIBILITY
The nature of corporate social responsibility can be understood as follows:
1. Focus on business firms – Though business and non-business organizations must be
equally involved in discharge of responsibilities towards society, the focus is more on
business firms to look after the social interest.
2. It deals with the moral issues – Companies have specified policies and programmes for
looking after the interests of their employees and non-employees. These programmes
emanate from the need to do what is right and just for society.
3. It is commensurate with the objective of profit maximization – Social goals are
fulfilled by the organizations when they are economically sound. A financially unviable
enterprise cannot look after the interests of society. The increased costs of social
responsibility are passed on to consumers in the form of increased prices of goods and
services.
4. It is a pervasive activity – Social responsibility is not only the obligation of top-level
managers but managers at all levels must involve themselves in the discharge of social
responsibility.
5. It is a continuing activity – Social responsibility is not catering to the interests of
society once or twice. It is important for organizations to continuously engage themselves in
social issues if they want to survive and grow in the long run. The economic and the social
issues go hand in hand.
IMPORTANCE OF CORPORATE SOCIAL RESPONSIBILITY
The benefits of CSR speak volumes about how important it is and why you should try to adopt it
in your business.
Some clear benefits of corporate social responsibility are:
• Improved public image. This is crucial, as consumers assess your public image when
deciding whether to buy from you. Something simple, like staff members volunteering an
hour a week at a charity, shows that you’re a brand committed to helping others. As a
result, you’ll appear much more favorable to consumers.
• Increased brand awareness and recognition. If you’re committed to ethical practices,
this news will spread. More people will therefore hear about your brand, which creates
increased brand awareness.
• Cost savings. Many simple changes in favor of sustainability, such as using less
packaging, will help to decrease your production costs.
• An advantage over competitors. By embracing CSR, you stand out from competitors in
your industry. You establish yourself as a company committed to going one step further
by considering social and environmental factors.
• Increased customer engagement. If you’re using sustainable systems, you should shout
it from the rooftops. Post it on your social media channels and create a story out of your
efforts. Furthermore, you should show your efforts to local media outlets in the hope
they’ll give it some coverage. Customers will follow this and engage with your brand and
operations.
• Greater employee engagement. Similar to customer engagement, you also need to
ensure that your employees know your CSR strategies. It’s proven that employees enjoy
working more for a company that has a good public image than one that doesn’t.
Furthermore, by showing that you’re committed to things like human rights, you’re much
more likely to attract and retain the top candidates.
• More benefits for employees. There are also a range of benefits for your employees
when you embrace CSR. Your workplace will be a more positive and productive place to
work, and by promoting things like volunteering, you encourage personal and
professional growth.
CONCLUSION
The social responsibility of a business is an ethical framework that suggests that an entity has a
responsibility to act for the benefit of society at large. Social responsibility is, therefore, a duty
that an organization should perform to maintain a balance between the economy and the
ecosystems. A trade-off may exist between the economic responsibilities of a concern and the
welfare of the society. Social responsibility means sustaining the equilibrium between the two.
This responsibility can be passive, by avoiding engaging in socially harmful acts, or active, by
performing activities that directly advance social goals. Thus, social responsibility is a voluntary
effort on the part of business to take various steps to satisfy the expectations of the different
interest groups, while achieving and fulfilling its economic and legal responsibilities.
