CSR is about give and take

CSR1In 1963, Milton Friedman – an American Economist and Statistician also known as the free-market philosopher described corporate social responsibility as “fundamentally subversive”, writing that corporate responsibility is the pursuit of personage interest of an organization to survive in an uncontrolled market. He also said that firms do not exist in vacuum.

Organization will grow bigger and stronger in proportion with the rise of community standards.  Stakeholders are increasingly demanding information regarding an organization’s environmental, social and economic impact on society. Inclusive growth is a multidimensional concept that needs considerable commitment from business organizations. Theoretical and empirical analysis indicates that firms can strategically engage in socially responsible activities to increase private profits. While a firm gets noticed for its social efforts, the firm can obtain additional benefits such as enhancing the firm’s reputation and the ability to generate profits by differentiating its product, the ability to attract more highly qualified personnel or the ability to extract a premium for its products.

In India around Rs 22,000 crore is expected to be poured into the social sector from 2015 onwards as Indian business houses ramp up CSR funding. Under the Companies Act, 2013, which stipulates companies with a net worth of Rs 500 crore or a turnover of Rs 1,000 crore or a net profit of Rs 5 crore to spend at least 2% of their average net profits made over three preceding years on CSR programes.

Many organizations are staring at the inadequacy of the CSR initiatives they had been flaunting over the years. Till now, many companies kept postponing their CSR funding. After an initial phase of indifference and, later, even sly attempts by a few at gaming the rules  fitting in what they are doing currently as CSR or looking for loopholes to avoid doing what they ought to be doing, companies are now preparing for a new era or a new genre of CSR interventions. On the flipside, the mandatory interventions of government will spoil scene – companies which used to spend much more on CSR may now get away spending less; this is just a thought.

At the moment, CSR or corporate social responsibility is an ever hotter topic. The Economist Intelligence Unit finds CSR becoming rising corporate agenda not only in the US, UK and China but globally. Everyone has an opinion on it. It is a hot topic in Commerce and Management lectures.

CSR has a big role to play in enhancing corporate image. A research conducted by McKinsey found that 95 per cent of CEOs felt that society has elevated expectations from businesses in regards to social responsibilities today than five years back. Consumers prefer buying products and services from companies supporting worthy social cause. CSR has multidimensional effects on a firm’s existence in society.

CSR2Risk Management: Commitment in CSR activities help organizations to manage emerging social risks which at times emerge as an offshoot of their operational activities; when the weather is bad, and when things go wrong corporate can influence the perception of people at large in society. Corporate usually get clean chit from the consumers, community, regulators, employees and the suppliers.

Brand Positioning: Consumers usually like to get associated with a company, which is ethical and has a positive image; many companies are becoming innovative while contributing to social cause. P&G’s CSR program ‘Shiksha’ is an integral part of their global philanthropy program. It is based on of the theme ‘Live, Learn and Thrive’. Shiksha has helped 2,80,000 underprivileged children access education. The programe is built and supported over 140 schools across India in partnership with many NGOs. The advertisements of P&G state that when P&G products are bought, some portion of the price paid for it goes into their Shikha initiative.

CSR increases ability to attract, motivate and retain employees: CSR helps companies to attract good employees. With Gen Y (called also millennial) making up more of the modern workforce, it is becomes important to pay attention to what they think about an organization. Research has found that 88 per cent of Gen Y (children born between the years 1980 to 2000) chose employers based on strong CSR values; it also showed that 86 per cent would consider leaving if the company’s CSR values no longer met their expectations. Business schools, like New York University’s Stern Business School, added courses related to CSR to keep up with their students’ rising demand. The Gen Y is known as responsible corporate citizen with sensitivity towards social and environmental issues. Therefore, a good corporate image helps employees and communities assist the corporate in achieving its Vision and Mission, as they all feel alike and contribute towards a common goal. According to Forbes, the 10 companies that are best at CSR are Microsoft, Google, Walt Disney, BMW, Apple, Daimler (Mercedes-Benz), Volkswagen, Sony, Colagte Palmolive and Lego. All of these firms attract young and enthusiastic workforce.

Investors like investing in these firms: There are many financial institutions globally, which have made it part of their policy to study the CSR activities of the company before investing. M&A decisions are also taken after consideration of CSR and Sustainability activities, even if it makes perfect economic sense for the investors.

CSR3CSR Boosts Corporate Image: It allows the company to have certain respect in the society among its stakeholders. Companies that implement CSR, like Unilever with its sustainable living plan, have enjoyed increased growth and profits. I would love to quote here how TNT has used its core business to help people in disasters. Through its CSR programe which is established at its Amsterdam headquarters, 50 designated employees are always on call to intervene anywhere in the world at 48 hours’ notice. The programme was established based on the company’s strong internal culture that places an emphasis on giving back to society. Due to their access to transportation and logistics, the cause became an easy fit. Employees have responded to over two dozen emergencies, including the Asian tsunami in 2004, since its inception.

A survey was recently conducted by Reputation Institute which is a global research institute for carrying surveys and research. Their surveys enable business leaders to take more confident business decisions that build and protect the business image globally. Reputation Institute recently conducted a CSR pulse survey globally, which found that CSR was responsible for more than 40 per cent of a company’s reputation and 42 per cent of people based their feelings about a company on the firm’s CSR. About 31 per cent of global consumers believe businesses should change the way they operate to align with social and environmental needs.

Another study shows that nine out of 10 consumers want companies to go beyond the minimum standards required by law to operate responsibly and address issues. 53 per cent of workers think that they like to contribute to a job which can make an impact on social wellbeing. And, such a job makes them happier. About 35 per cent would even take a pay cut to work for a company committed to CSR. Another study found that the more actively a company pursues worthy environmental and social efforts, the more engaged its employees are.

So that is a strong indication that CSR is not simply a superficial matter, but has a solid impact on consumers, employees and communities. There is a concrete rise in awareness of CSR and real demand for it. Greater than any strategy, CSR can give business a competitive advantage while also making positive changes to the community and the environment.

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A Professor with 15 years of teaching and 20 years industry experience. My core teaching areas are Marketing Strategy and General Management. While I am a Professor of Marketing and General Management, I have also worked as Director of few Management Institutes in Mumbai. I am a research guide in Mumbai University, SNDT University and YCMOU (Yashwantrao Chawan Maharashtra Open University, Nasik) 6 students have got their PhD degree under my guidance so far, and 11 students are registered for their PhD with me. Research is my passion, and I work on live projects from the industry. I strongly believe that the principal goal of research is to discover new knowledge, while that of teaching is to impart well-established knowledge and provide training in problem-solving. At present I am working as a Director for a Center of Excellence with an 80 years old Educational institution in Mumbai. I am a results-driven researcher, qualified with a PhD in Marketing Management from Pune University, a Post Doctoral Degree D.Litt from Mumbai University. I have authored above 100 articles and research which are published in news papers, business magazines and research journals. I have also authored two books. I am appointed as a Senate Member in Swami Ramanand Teertha Marathwada University, Nanded as the Maharashtra Governor’s nominee. Today we need greater industry-academia collaboration in research in institutes of higher education. I am confident that I will be able to facilitate the organizations with my research skills to create, integrate, and apply advancements in tricky areas. Thus, in my own way I could collaborate between industry and academia. I am curious, responsible, knowledgeable person with a scholarly approach.

3 COMMENTS

  1. CSR —is all about give and take it gives tonnes of money to poor and needy for hospitalisation , providing basic needs etc , extend support to social cause like education, women empowerment, etc.. thus building a good reputation and takes the trust of the people ultimately loyalty to the people.In India we have lots of CSR activities happening with top notch industrialist either associating the cause or funding the cause.For e.g. Kotak’s Teach India—wherein they provide teaching to children of slum areas. Its high time the members of India Inc join hands and support social cause together thus working towards a progressive India. Thank you

  2. CSR also being wisely used by corporate to enhance their brand image…..increase sales with marketing gimmick of such projects etc….would be interested to know and understand whether their is any nodal body which checks genuineness of such initiatives and money/funds used for purpose ?

  3. Need of the hour article madam ” CSR ( Corporate Social responsibility ) is about give and take. truly agree what you get from the society it is an responsibility not only for an individual but specially for the big giants companies whose turnover above millions or billions crore so they need to come forward and stand for the social cause of the state and nation , I really apprecialte our current Prime minister view and urging the Indian citizens specially NRI and for all the big giants business organisation , celeberatiy some of the political parties member and even sport star to adopt the village and develp the rural areas this is also one way where development and progress of rural in to urban areas, really when we talk about CSR among Tatas , P&G, Mahindra, etc are some of the top multinational companies who are really doing for the betterment of the nation beside earninng profits in business. Thank you madam for writing such an enlighten article. I liked it .

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