Corporate Social Responsibility. We all have come across this word a number of times but haven’t really gone far to think about it.
In simple words, CSR (also called corporate conscience, corporate citizenship or responsible business) is a form of corporate self-regulation integrated into a business model.
Corporate social responsibility (CSR) promotes a vision of business accountability to a wide range of stakeholders, besides shareholders and investors. Key areas of concern are environmental protection and the wellbeing of employees, the community and civil society in general, both now and in the future.
But the question arises whether the companies are doing enough.
There are many big entities who have been actively engaged in the CSR activities, but unfortunately the number is relatively less. In order to encourage more entities to participate in the process of development of the society via- CSR, the Government of India has actually implemented the concept of CSR in the new Companies Act 2013.
What was supposed to be a “corporate self regulation” , a voluntary action has now become a mandated responsibility.
When we look closely at the real picture , we notice that a company which is fair in its dealings with all it’s stakeholders need not extenuate about CSR. But if a company engages in questionable practices , this can’t be remedied by paying lip-service to CSR.
Annual reports of listed companies have revealed that the companies with a questionable core business have devoted the most space to praising their CSR efforts. It is out of question, though , that companies which have taken such initiatives are better than the ones which have not.
But is it an apt remedy ? Wouldn’t it be far better to discourage such businesses with a high social cost at the first place? For a company which exploits the society, will it be justified to later on provide sanitary facilities, build schools and parks ?
Another aspect is that though large companies across the globe spend about a total of $20 billion dollars on CSR annually, the money, energy, and influence used to push popular CSR programs would be better spent either radically altering the way companies operate, or allowing better regulation—which would theoretically prevent companies from becoming being bad actors in the first place.
Ideally, the government rules and regulations are enough to curb the malpractices of the corporations- be it in terms of environmental damage or labour abuses. But , the presence of such practices is evidence enough that such regulations are too weak.
Corporates use the veil of CSR to their benefit. The research of relationship between CSR and consumer behaviour is relatively young, but it suggests that companies have already realised that their socially responsible behaviour has a direct impact on the consumer buying behaviour. It is used as a marketing tool to gain competitive advantage. This is because consumers are becoming increasingly aware of the companie’s practices due to the influence of media and better education. Infact, Fifty-five percent of global online consumers across 60 countries say they are willing to pay more for products and services provided by companies that are committed to positive social and environmental impact, according to a new study by Nielsen.
Clearly, CSR has become an important criterion not only for corporate houses but also for the consumers and the society. Therefore, it becomes all the more important to understand the impact of CSR and also prompt the leading lights of corporate to take their social responsibility more seriously and do away with elevated social costs.