Module-5: The Significance of CSR

 Is n't it mean the same thing? Need and Significance?? No. Not at all. Need refers to absolute requirement like food, clothing and shelter to man. But significance is about importance. With these view in mind let us try to understand the Need for CSR and Significance of CSR 


Significance of CSR

Corporate Social Responsibility is a management conceptwhereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders. CSR is generally understood as being the way through which a company achieves a balance of economic, environmental and social imperatives (“Triple-Bottom-Line- Approach”), while at the same time addressing the expectations of shareholders and stakeholders. In this sense it is important to draw a distinction between CSR, which can be a strategic business management concept, and charity, sponsorships or philanthropy. Even though the latter can also make a valuable contribution to poverty reduction, will directly enhance the reputation of a company and strengthen its brand, the concept of CSR clearly goes beyond that.

UNIDO based its CSR programme on the Triple Bottom Line (TBL) Approach, which has proven to be a successful tool for SMEs in the developing countries to assist them in meeting social and environmental standards without compromising their competitiveness. The TBL approach is used as a framework for measuring and reporting corporate performance against economic, social and environmental performance. It is an attempt to align private enterprises to the goal of sustainable global development by providing them with a more comprehensive set of working objectives than just profit alone. The perspective taken is that for an organization to be sustainable, it must be financially secure, minimize (or ideally eliminate) its negative environmental impacts and act in conformity with societal expectations.


1. Brand Value

A quick look at the top 10 brands in the world would suggest that responsibility is at the core of their operations. A well-managed CSR program can help increase brand equity, awareness and resonate with strong values.
Tata Group is India’s most valuablebrand at $20 billion dollars(2021). People appreciate the company not only for its high-quality products but also for the activities that they do for the greater good of the people. The company has exceptional goodwill and the name exudes trust.

 

2. Increased Sales – Customer Matters

Companies that lead with a purpose are perceived positively by the customers. According to a study, 88% of the people surveyed would buy products from a responsible company. 85% of the people said that they would support the company in their community. 
Millennials and Generation Z connect with companies having a positive impact on the communities. This engagement translates into greater sales in today’s highly connected world. This further highlights the importance of Corporate Social Responsibility projects.

3. Employee Retention and Engagement 

There was a time when people looked at their jobs from the bread and butter perspective alone. Today, employees look for a higher purpose other than their monthly salary.
Employees enjoy working for companies that have a positive public image. CSR initiatives incorporate volunteering programs which foster values such as empathy and loyalty. This leads to better team-work and camaraderie among employees. It is a well-known fact that happy employees lead to low attrition.
Godrej Group CSR projects include a volunteering program that helps NGO’s to create sustainable models. They are also known to run several programs that help protect the environment. This has led to higher employee satisfaction and a positive image for the company. No wonder it is one of the most sought after companies to work for in India.

4. Cost Savings

In the past, operating sustainably came at a huge cost to the company. Cost savings as one of the factors in the importance of CSR would be surprising a few years ago. Responsible companies have found new technologies that have reduced the operating costs. 
Cochin Airport in India is a very good example of sustainable operations leading to cost savings. It is the first Airport in the world to operate completely on solar power. It has become a pioneer and is inspiring other airports to go solar and make this world a better place to live in.

5. Poverty Alleviation 

India is home to almost 1.4 billion people and the top 1% of its population owns 73% of the wealth. In spite of the plethora of welfare programs, the gap between the haves and have-nots is one of the steepest in the world. 
The corporate sector’s core competency is the execution of projects. They have the talent and know-how to ensure maximum impact at minimum cost. CSR programs bring out change at the grassroots level by harnessing this operational efficiency. 
Mahindra and Mahindra’s Nanhi Kali is one of the pioneers when it comes to CSR projects in India. The World Bank’s 2018 report states that limited educational opportunities for girls and barriers to complete 12 years of education, cost countries between $15 trillion and $30 trillion in lost lifetime productivity and earnings. Project Nanhi Kali educates girls which not only empowers them but also helps their families come out of poverty. 

6. Risk Management

It is no longer a debate that social and environmental risk affect businesses in a big way. In the long term, these factors affect the growth strategies and are completely out of its control.

Mumbai incurred a loss of Rs 14,000 crore due to floods from 2005 to 2015 according to a study conducted by the United States Trade and Development Agency (USTDA) and leading accounting company KPMG. Environmental and Social factors damage the infrastructure or lead to the loss of business hours due to absenteeism.
Depleting mangrove cover is one of the biggest reasons for flooding in Mumbai. Bajaj Electricals’ CSR arm planted 10,000 mangroves by partnering with NGO, United Way Mumbai (UWM) to create awareness on the importance of mangroves among the youth.


 

7. Corporate responsibility opens up new opportunities/markets


 

There are a lot of markets that haven’t been tapped into because traditional business thinking doesn’t see them as “profitable.” With social activism on the brain, corporations can open new doors into neglected areas and causes. In considering social impact as well as profit, corporations can find a balance and set themselves apart from the crowd. Consumers will appreciate that a corporation is thinking about where it can help and not only about profits.

8. Corporate responsibility makes the world a better place

 

Businesses, especially big corporations, can change society in significant ways. They have a lot of influence, so they can not only raise awareness of issues, they can play an essential role in progress. Addressing climate change is a prime example of where corporations can take charge. By taking responsibility for their impact, corporations can help the world become a healthier, happier place.




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