The demands of consumers are growing, creating a dire need for companies to change the way they conduct their business. They want the companies to be more transparent and become more involved in addressing social, environmental and cultural issues. Corporate social responsibility has embedded itself in today’s corporate world. One of the most important factors in establishing a company’s public image and reputation is corporate social responsibility, commonly referred to as the CSR. Recently, CSR has become vital since the relationships of corporates with non-profit bearings have become more important in the eyes of the public.
So what is the importance of corporate social responsibility? In this article, you will know what the CSR entails, what it means for a business, and why it is necessary.
What is corporate social responsibility?
Before we go further, we need to know what CSR is. CSR is a never-ending commitment by a business to give back to the society through contribution to the quality of life of their employees, their families, and the whole community. Corporate social responsibility goes beyond profits and concentrates on how a business can be beneficial to the community.
The creation of a CSR strategy or sustainability strategy is an important constituent of the competitiveness of a company and something that the firm itself should be at the forefront. This means having policies and procedures in place which incorporate social, environmental, human rights or ethical, consumer concerns into business operations and core strategy in close relationship with stakeholders.
Some people may not be aware of the corporate social responsibility importance. However, for companies, the main aim is to have a positive effect on society and at the same time, optimizing the creation of shared value for entrepreneurs, employees, and stakeholders. Recently, the European commission explained CSR as “the responsibility of enterprises for their impacts on society”. This is a succinct and distinctive definition of the strategy.
Types of corporate social responsibility
The CSR is further subdivided into categories so as to cover each of the aspects of stakeholders. Here are the types of the CSR.
- Environmental responsibility
- Philanthropic initiatives
- Ethical business practices
- Economic responsibility
The above can be broken down into legal compliance, worker relations, transparency, environmental performance, ethics, human rights, product responsibility, ethics, stakeholder communication, strategy integration, profitability, and philanthropy. Corporate social responsibility is not just about giving back to the community. It involves all of these elements and each of the aspects has its own standards.
Why should a business engage in CSR?
Is social responsibility good for business? Corporate social responsibility allows organizations to do their bit for the society, environment, their employees and customers. The benefits of CSR indicate how vital it is and why every corporate head should try to incorporate it in their business. Here are some of the benefits of social responsibility.
1. Promoting the business
Giving back to the society and appreciating stakeholders, takes your business a notch higher and ensures long-term growth and accomplishment. Corporate social responsibility is important in making your brand popular among competitors, media, other corporations, and your direct clients.
Corporate social responsibility does not require much investment, it could as simple as cleaning the area around your business, donating to the needy or even buying food for the less needy. Do not engage in CSR activities if you want to gain popularity or use it as a publicity stunt. Do it because you believe in the cause and giving back.
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2. Positivity in the business environment
Social responsibility allows all the staff of an organization to contribute to the environment, community and the country as a whole. Putting a smile on the face of others because your firm has guaranteed to assist the less fortunate gives one an inner sense of satisfaction, happiness, and pride. Various organizations get to work towards the betterment of the society and make it a better place to live through corporate social responsibility. This makes the environment in the workplace more positive hence increasing productivity. Through the promotion of volunteering activities, personal and professional development are encouraged.
3. Attract and retain investors
Investors always want to know how their money is being utilized. Corporate social responsibility is a sign that the organization has sound business plans and a conducive budget. Most corporations encourage their employees to volunteer their time to show that they are not all about making money only. It shows that they have the welfare of the local and global community at heart. When this happens entrepreneurs are more likely to be interested and will continue supporting firms that show a commitment to their employees, clients and causes that affect the livelihood of others. Most companies that engage in CSR stand a better chance of gaining popularity among current and prospective clients. People often appreciate and prefer those who donate and contribute to the betterment of their lives. This, in turn, will increase the company's profit margins and popularity.
4. Increases investor and employee engagement
When answering why CSR is important, you cannot forget to mention that it increases client engagement. You can use your social media platforms to inform your customers and others about your CSR activities. Clients often follow this and interact with your operations and brand. Reach out to local media stations hoping they’ll give your event coverage.
Another importance of CSR is that the employees get to engage more. Just as customer engagement, the employer needs to make sure that the employees are aware of the company's CSR strategies. Showing that you are committed to CSR strategies may attract top candidates to your firm.
The concept of corporate social responsibility in the world plays an important role in the business sector that is spread across the globe. There are several multinational companies that have implemented the social responsibility in their business structure and striving hard for the success. Corporate social responsibility also plays an important in the development of the society.
Some companies don’t see the importance of CSR, and usually ignore to manage their CSR strategies which result in meager press coverage, anger among human rights activists and tainted public outlook. The reasons as to why CSR is important are very evident. From the article highlighting the importance of corporate social responsibility, one can conclude that CSR as a business imperative must be accepted wholeheartedly. It must be undertaken with vigor and passion for it is a great way to create a bond between the community and the organization.