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HomeBusiness Products & ServicesWhat is Corporate Social Responsibility? – Pros And Cons

What is Corporate Social Responsibility? – Pros And Cons

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5 ways CSR is beneficial for the Corporates. (And 5 ways it isn’t)

“Businesses cannot be successful when the society around them fails.”

Corporate Social Responsibility is a kind of social duty performed by notable business houses. This activity enables them to be more socially responsible. As a result, the public and the stakeholders get benefited from CSR alike. With CSR, a company can instil its values into the environment without hampering its business operations.

The new managers can look into case studies or an essay to help them understand how to initiate a CSR activity. CSR can affect the organisation both positively and negatively. On that note, let us look at five advantages and disadvantages of CSR –

5 Advantages of a CSR Program

1. Business Image Improvement

CSR Tasks reflect positivity. It enhances the image of the organisation. When the company has CSR policies, goodwill automatically increases. Customers like to buy products or services from companies involved in corporate social activities and have clean images. The global leader in manufacturing digital products and services, Xerox has implemented a CSR program called Area Involvement Program. Xerox directly engages its workers in various area development programs through the Area Involvement Program. This program helps in creating a socially responsible impression in the minds of the customers and the stakeholders.

2. Helps in retention of workers

Companies make their names popular through various CSR activities. For example, Tata has become a household name through its numerous CSR activities only. A reputed firm name makes it easier to bring in more candidates for the job. Additionally, the firm’s goodwill ensures that the existing employees stay longer in the organisation. Employee retention is a prime cost factor for all companies. A company with good ethos, values, and beliefs connects well with the millennials. Thus, they feel proud to be a part of such an organisation.

3. Get in the good books of regulatory authorities

Regulatory authorities are responsible for scrutinising the company’s operations. The members of these regulatory boards do not show mercy to the big organisations. However, with a long history of CSR, the companies try to get in the good books of the scrutinisers. Also, a company that engages in CSR typically stays within the rules and regulations to avoid penalties.

Chipotle’s Inglorious Fruit and Vegetable project is a CSR case study you may have come across if you are an essay typer. This project focussed on food wastage minimisation. The American government made regulations about reducing waste load. Chipotle hence complied with those regulations through their CSR. When a company is assisting with government regulations, the regulatory authorities, by default, try to aid that organisation as well.

4. Attracts new investors

Cash influx is essential for every firm to bear with its operating costs. Whether a business will get new investors or not depends entirely on its market reputation. CSR programs help in doing precisely that. The firm name starts to grab eyeballs and ears once it is prominent in CSR activities, thus attracting a lot of new financers. Venture capitalists, even government, comes forth to be associated with such organisations for future projects.

5. Advertisement of Brand Name

This is a common proverb in the marketing industry that “Any promotion is good promotion”. A company can get a significant level of publicity with just one CSR activity. This kind of publicity is a form of advertisement for the firm. A smart manager or marketer will align their products and services with their CSR activities for maximum impact.

CSR is also an efficient tactic adapted by organisations to boost employee morale as well. However, CSR sometimes has negative impacts on the company as well. Let’s look at the ways it can be detrimental –

5 Disadvantages of CSR Programs

1. It Gets more costly for the firm

This is perhaps the biggest downside of having CSR policies. Implementing a CSR plan comes with huge costs. The companies need to decide on CSR strategies, install them and enforce them. This is a lengthy process, especially for small entities. Large organisations have the funds to bear such high expenses above their set budget for CSR activities. However, if it is a small entity with 200 odd employees, they are bound to face problems in accumulating those extra funds.

Small companies can consider media companies to help them communicate their plans in society, including their potential buyers. But on the flip side, this implies hiring an extra team to create and modify the contents for promotion.

A prevalent thought opposing CSR activities states that most companies don’t have training more than the budget for carrying out Social Responsibility Activities.

2. Investor’s resistance increases

The outlook of the investors is to grab the headlines by being a part of socially responsible companies. Thus, their activities revolve mostly around generating more profits. Also, many capitalists feel that the public may see their way of spending so much for society, their way of shedding their illegitimate sources of funds or evading taxes. So, these factors create a resistance among investors to put more funds in the companies.

3. Promotes Greenwashing

The non-believers of CSR express their concern about the ineffectiveness of the programs because they believe it promotes greenwashing. The urge to be involved in CSR activities creates peer pressure for many companies to flaunt their “Socially Kind” side.

We can cite the example of Coca-Cola when they resorted to Greenwashing. Coca-Cola preyed on their customers by giving them false impressions of climate change and sustainability without having any such features in their products or activities.

They also believe that ultimately these companies only care for their profits, and their attempts at such noble plans only highlight their intention of generating profits from such activities rather than thinking about society.

4. Clients get impatient

Everyone lauds the company’s attempts to implement CSR at the beginning. There is no doubt that CSR activities give significant popularity to the companies for being associated with such noble reasons. But the stakeholders believe in seeing results at the end of the day. Not to forget they are extremely impatient about getting profits from their investments. If the CSR activities do not show any signs of instant profit, the investors tout these as PR stunts. CSR makes the companies walk on thin wires where they can fall into the bad books of the financers in one day. But, of course, such a stunt is not beneficial for the business.

5. Shift in the Goals

Many market experts believe that CSR unintentionally changes the paradigm of the company’s goals. They no longer benefit society as they intend to do. Instead, their profit-making attitude takes over. Every business survives on profits. So, it is not strange for one to prioritise their survival. So, if they find CSR is endangering their existence, the shifts in the goals are normal.

Parting Thoughts

CSR is an elaborate program of notable organisations to show their way of giving back to society. They also show how they are eco-friendly through CSRs. Not to forget, this is a highly effective method of increasing your brand name and image. In addition, CSR activities strengthen the bonds between the organisation and its employees. CSR can have numerous long-term benefits for the company.

However, there are quite a few factors that can have a demeaning effect as well. As mentioned earlier, case studies or an essay can help a manager know how much CSR good CSR is. So, we must be cautious while implementing CSR policies for the company.

Author Bio:

Clara Smith has spent two decades as the senior manager for a multinational organisation. Her works on CSR in organisations are commendable. She is now working for Myessayhelp.co.uk as an assignment writer after her retirement. She is an avid reader and writes books in her spare time.

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