Corporate social responsibility [CSR] refers to initiatives taken up by companies to give back to society. The Financial Times defines it as a business approach that contributes to sustainable development by delivering economic, social, and environmental benefits for all stakeholders.
It is the company’s “sense of responsibility” towards the community and surrounding in which it operates. Also called corporate citizenship, it is a self-regulating business model developed by companies to create a positive impact on society.
CSR addresses various issues like human rights, education, health, and safety. It also covers corporate governance, working conditions, environmental sustainability, and more. Along with economic development, CSR also focuses on social and environmental development [the triple bottom line].
India, too, is actively involved in practicing corporate social responsibility. Section 135 of the Indian Companies Act mandates companies to “CSR spend of 2 percent of average net profits during the three immediately preceding financial years.” Effective from 2013, this rule is applicable for all companies “having a net worth of rupees five billion or more, or turnover of rupees ten billion or more or a net profit of rupees fifty million or more during any financial year.”
Deloitte says, “organizations
are no longer assessed based only on traditional metrics such as financial performance, or even the quality of their products or services. They are increasingly judged their impact on society at large—transforming them from business enterprises into social enterprises.”
Moreover, a study shows that only 18 percent of organizations put social responsibility as a top priority, yet 77 percent say it’s “important.”
Corporate Social Responsibility initiatives benefit both the company as well as the environment [ecological and social] in which they live in.
Improves Brand Value
Being socially responsible brings recognition to the company. It shows that your company is more than just profits. More people start knowing about your company and the good work that it is doing. Customers start trusting your business, and it builds an overall positive image of the brand.
Builds Customer Loyalty
Research shows that 55 percent of consumers are willing to pay more for products from socially responsible companies. Your customers want to feel that they are a part of something. Even if not directly, they feel good to be part of a company with a vision and the willingness to do good.
Engages Millennials
“7 in 10 young adults consider themselves social activists.” Everyone wants to feel they are part of a bigger cause that helps shape lives. They want employers who match their ideals and are doing something to help those in need. A survey found that 78 percent of millennials said that CSR directly influences their decision to join an organization.
Helps Attract and Retain Talent
When employees feel they are part of an organization that is more than just about profits, they’ll want to stick around. To help them achieve this, a lot of companies are now providing their employees with the benefit of taking time off to volunteer in their organizations of choice.
Increases Employee Engagement
CSR requires employee assistance. Right from designing and developing the CSR program to volunteering for a cause. So, when you include your employees in such important events, they feel valued and appreciated. It helps improve your relationship with them, helps build the team’s dynamics, and increases the overall employee engagement level of the workforce.
Companies With the Best CSR Reputation
These multinational corporations have changed the way how a business operates. Their CSR strategies have helped them build a name for themselves and contribute hugely to society.
IKEA
The Swedish-house multinational group that designs furniture has been actively involved in creating safe places for children in conflict zones. Their initiatives include–
Let's Play for Change enables children to "play and develop, even in the most difficult circumstances."
Brighter Lives for Refugees, for which they have donated “€30.8 million to help the UNHCR bring light and renewable energy to refugee camps across Asia, Africa, and the Middle East.”
COCA-COLA
Coca-Cola focuses on empowering young women entrepreneurs. Their #5by20 program aims to bring 5 million women into the company as bottlers or distributors by 2020. Their other programs are centered around providing clean drinking water and for the development of disadvantaged youth.
LEVI’S
For Levi’s, just one thing matters- Is the jeans contributing to water scarcity? Since the inception of their Water