What is the Importance of corporate social responsibility?

Image building on part of the corporate.

Most corporates take it as a liability.

But now certain business refrms and other policies of the goernment make it mandatory on the companies who are earning a set limit of profits to practice CSR 

I personally feel in India except two of my favorite corporates are doing CSR as per the guidelines.Its sad they show something else and do much lesser than they are supposed to.

(Belated congrats on becoming a moderator, Mr. Zaheer!)

 

Corporate responsibility is very important nowadays, to the extent that it established itself as a main marketing tool for many multinationals & even smaller national companies, a company’s Philosophy, People or Positioning.  In fact, corporate responsibility may probably be the only feature that can be applied to other P’s as well!

Corporate responsibility is the number one tool in counter-arguing the long-standing perceptions of companies that they’re only vicious profit-makers who care for no other objective.

 

Examples

1. In Asia, Korea, the top management of the biggest automobile maker was involved in a scandalous embezzlement case a couple of years ago, which was answered by donating a big amount of money to social good. This was applauded by the majority of customers & stake-holders as a good compensation.
2. A major oil company gained bad reputation recently for a big oil spill in the ocean, for which they were made responsible due to laxity. It may take years for them to reverse this huge reputation damage as a result of damaging the environment.
3. In another country, a big telecom provider is the main sponsor/builder of small open-air & closed hall football fields al over the country, providing youth with excellent leisure time experience. It goes without saying that mainly the (talkative & social) youth became the main thankful customer-segment of that telecom.

 

 

CSR is holds importance in the current era due to the various implications of Consumerism (consumer rights), as well as, environmental implications, along with legal and most importantly economic implications. It is important for an organization to understand these important points in order to become a socially responsible organization and win the support of the consumers (knowing that media plays an important role in making the consumers aware of any mishaps). I just thought up another question from this question, thanks zaheer, and belated congrats on becoming a major contributor. Deserve it.

It is important for businesses not only to provide products and services to satisfy the customer, but also to ensure that the business is not harmful to the environment in which it operates. In order for an organisation to be successful, the business must be built on ethical practices. Companies are increasingly pressurised to behave ethically. This pressure comes from customers, consumers, governments, associations and the public at large.

 

There are four CSI strategies, organisations usually fit in one of the following. These include:

• Obstructive strategy – these are companies that meet economic demands;
• Defensive strategy – these are companies that meet economic and legal responsibilities;
• Accommodative strategy – these are companies that meet economic, legal and ethical responsibilities; and
• Proactive strategy – these are companies that meet economic, legal, ethical and discretionary responsibilities.

THE BIGGEST IMPORTANCE WHAT I THINK IS THAT IT CAN BE A BRIDGE TO MAINTIAN ABSOLUTE ELECTRIC ATMOSPHERE WITHIN THE ORGANIZATON. 

It spreads the co-opreative momentum and a talanted head of organization can turn this into a profit making tool with HUMANITY

Corporate should step up and take the social responsibility starting from the welfare of its own employees. Those who sacrifies for the benefit of the corporate deserve to expect in return care for its family : socially, economically and financially. Every corporate should pay in return to the society from where they earned name, fame and money. This will have positive impact on the society and will establish enduring relationship with the corporate world. 

I believe the company should keep an eye on there competitors, and launch better and effective products infrastructure to get crowned achievement for another more meaning full pursuit.

What is the Importance of corporate social responsibility?

Mr. Abdul Rehman Zaheer, here is my answer to this important question in the form of a compilation of relevant subject matter 

 

What exactly is CSR?

Corporate social responsibility is a business philosophy that stresses the importance of keeping the best interests of the wider society in mind. While recognizing that profits are necessary for any business entity to exist, all groups in society should strive to add value and make life better. Businesses rely on the society within which they operate and could not exist or prosper in isolation. They need the infrastructure that society provides, its source of employees, not to mention its consumer base. CSR is recognition of that inter-dependence and a means of delivering on that obligation, to the mutual benefit of businesses and the societies within which they are based:

Although turning a profit every year and taking your business to new heights is likely to be your main goal, it is important to consider the societal impact you are having as well.

It is important for businesses not only to provide products and services to satisfy the customer, but also to ensure that the business is not harmful to the environment in which it operates. In order for an organisation to be successful, the business must be built on ethical practices. Companies are increasingly pressurised to behave ethically. This pressure comes from customers, consumers, governments, associations and the public at large.

Brands today are one of the key focal points of corporate success. Companies try to establish popular brands in consumer minds because it increases leverage, which is directly reflected in sales and revenue. All aspects of a company’s operations today feed into helping build the corporate brand. Crucial is how a brand is perceived by all stakeholders.

Three benefits in particular indicate the positive value for a company in striving to remain in tune with the community within which it is based by implementing a strong CSR policy:

• Positive marketing/brand-building – BP

BP, with a $200 million re-branding exercise, has effectively re-positioned itself as the

most environmentally sound and socially responsible of the extraction companies. The

company stands in stark contrast today with Exxon Mobil that faces on-going NGO

(Non-Governmental Organization) attacks, consumer boycotts, and activist-led litigation

because of its decision to fight the environmental movement, and its failure to recognize

the wider importance of CSR as a corporate strategy.

• Brand insurance – NIKE

NIKE has emerged as one of the most progressive global corporations in terms of CSR

because it has learned from its past mistakes and attacks by NGOs. As one of the first

corporations to have a Vice-President for Corporate Responsibility and to publish an

annual CSR Report, the company has done a lot to mitigate public opinion, establish its

brand as representative of a much more committed corporate citizen, and ‘insure’ itself

against any repeat of the consumer boycotts it faced in the mid-1990s.

• Crisis management – Johnson & Johnson

Johnson & Johnson’s transparent handling of the crisis facing its Tylenol brand in1982 is widely heralded as the model case in the area of crisis management. J&J went far and above what had previously been expected of corporations in such situations, instigating a $100 million re-call of31 million bottles of the drug following a suspected poisoning/product tampering incident. In acting in the way it did , J&J saved the Tylenol brand, enabling it to remain a strong revenue earner for the company to this day.

Given the large amount of time, money and effort companies invest in their brands, a good CSR policy is an effective means of protecting that investment and maximizing its impact.

Why is CSR important?

CSR is an important business strategy because, wherever possible, consumers want to buy products from companies they trust; suppliers want to form business partnerships with companies they can rely on; employees want to work for companies they respect; and NGOs, increasingly, want to work together with companies seeking feasible solutions and innovations in areas of common concern. Satisfying each of these stakeholder groups allows companies to maximize their commitment to another important stakeholder group—their investors, who benefit most when the needs of these other stakeholder groups are being met:

The21st century will be the century of the social sector organization. The more economy, money, and information become global, the more community will matter.- Peter F. Drucker

Why is CSR relevant today?

CSR as a strategy is becoming increasingly important for businesses today because of three identifiable trends:

• Changing social expectations

Consumers and society in general expect more from the companies whose products they buy. This sense has increased in the light of recent corporate scandals, which reduced public trust of corporations, and reduced public confidence in the ability of regulatory bodies and organizations to control corporate excess.

• Increasing affluence

This is true within developed nations, but also in comparison to developing nations. Affluent consumers can afford to pick and choose the products they buy. A society in need of work and inward investment is less likely to enforce strict regulations and penalize organizations that might take their business and money elsewhere.

• Globalization

The growing influence of the media sees any ‘mistakes’ by companies brought immediately to the attention of the public. In addition, the Internet fuels communication among like-minded groups and consumers—empowering them to spread their message, while giving them the means to co-ordinate collective action (i.e. a product boycott). These three trends combine with the growing importance of brands and brand value to corporate success (particularly lifestyle brands) to produce a shift in the relationship between corporation and consumer, in particular, and between corporation and all stakeholder groups, in general.

The result of this mix is that consumers today are better informed and feel more empowered to put their beliefs into action. From the corporate point of view, the market parameters within which companies must operate are increasingly being shaped by bottom-up, grassroots campaigns. NGOs and consumer activists are feeding, and often driving, this changing relationship between consumer and company.

CSR is particularly important within a globalizing world because of the way brands are built—on perceptions, ideals and concepts that usually appeal to higher values. CSR is a means of matching corporate operations with stakeholder values and demands, at a time when these values and demands are constantly evolving.

 

CSR can therefore best be described as a total approach to business. CSR creeps into all aspects of operations. Like quality, it is something that you know when you see it. It is something that businesses today should be genuinely and wholeheartedly committed to. The dangers of ignoring CSR are too dangerous when it is remembered how important brands are to overall company value; how difficult it is to build brand strength; yet how easy it can be to lose brand dominance. CSR is, therefore, also something that a company should try and get right in implementation.

CSR helps business come across as human and helps build greater emotional connect with consumers driving brand sustainability in the long run.