What is CSR?

Corporate Social Responsibility (CSR) is a management concept which includes integration of social and environmental concerns into the regular business models of the companies. Though this concept is in existence since 1960s, the importance of CSR has been increased manifolds in the 21st century.

With Indian companies like Tata Group, Indian Oil Corporation and Aditya Birla Group integrating the CSR in their normal business model, this concept has become a very hot discussion topic between the young employees who are still trying to figure out what this concept actually is.

What is CSR?

CSR is a policy which facilitates a company/firm to achieve obeisance towards international norms and ethical standards.  CSR is what that ensures the companies’ commitment towards ethical business behavior. CSR is what that forces a company to overlook her profits and bank balances while providing services to the normal customers.

The policies of CSR might fetch fewer profits to the firm but they help the organization to leave a positive impact on the society. The positive impact might be any; environment, employees, consumers, stakeholders etc.

Why CSR?

There isn’t a single answer to this question. While there are many critics who still believe that CSR works in a negative way as far as the profits and revenue of the company is concerned, there are uncountable number of critics and organizations who have accepted the dire need of CSR in today’s business oriented world.

The proponents of this concept believe that CSR helps the company to achieve long term profits, while the opponents say that CSR might distract the company from the economic role (earning profits). There are many who say that the effect of CSR on financial side of company is neutral.

With these three-pronged views, one often fails to understand why CSR is such a necessary aspect of a successful business?

Let me explain this with an example. There are two companies – Company A and Company B selling a food product which is similar in all aspects – price, ingredients, manufacturing conditions etc.  Which one would you choose?  There isn’t a single distinguishing factor between these two companies. But now, say Company A has good social reputation in the society. You know that company really cares for your health and has done a lot for the same. Now, you would certainly be allured by the product of Company A for you know it’s ‘good’. Won’t you?

This is where CSR comes into the picture. The company A was actually maintaining its CSR and that’s why was able to build more trust amongst the common people.

CSR helps an organization, big or large scale, to build a good reputation in the society. This may or may not be related with financial goals. CSR aids the mission of the company and becomes a guiding factor to realize the vision of the organization.

Different Approaches to CSR

Incorporating CSR into the regular business model of an organization isn’t that simple for there are more than one approaches to achieve this objective and choosing the right approach is what causes trouble.

For example,  Chinese define CSR as being socially responsible towards the people while manufacturing and marketing products while German consider ensuring secure employment as their CSR. Likewise, every country and organization differs in its approach towards CSR.

However, the most common approach towards CSR is of course corporate philanthropy. This subsumes all the approaches of CSR – monetary help to local and non-local NGOs, donations in areas like education, health, social welfare and environment etc. However, corporate philanthropy doesn’t include commercial sponsorships of events and political contributions.

Other approaches like CSV (Creating Shared Value) and incorporating CSR directly into business strategy  are also practiced by many.

CSR is one concept in business world which is still struggling to get everyone’s vote of trust. Many people consider this to be a bad concept – bad to the economic growth of organization and also it may help the organizations to camouflage by harming the society in name of CSR.

Whatever it is, this is one concept whose knowledge is a must to a person who is set to enter the business world for one day or other, you would have to deal with CSR. Now, you know what it actually is. Don’t you?

Share your views with me about CSR. Is it a good concept or a bad one? Which side are you on? Proponent or opponent.

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2 COMMENTS

  1. Hello Manpreet,

    Was going through the recent posts, Well to be honest I wasn’t aware of CSR before it get into this post and I guess I’ve learned something new from this post.

    Thanks

    • Hello Samir,
      I am really glad that you learned something new from this post. This is what I work for – to provide the users with something new and something good.
      From the article, you would have guessed how important CSR is in today’s business world and it’s good that now you know what it means and why is it important.
      Keep visiting Finix Post 🙂

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