CSR

Corporate social responsibility, also known as corporate conscience, corporate citizenship, social performance, or sustainable responsible business or  Responsible Business. CSR is a type of corporate self-regulation that is integrated into a business model. The CSR policy acts as a built-in, self-regulating mechanism whereby a business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms. Under some models, the CSR implementation goes beyond compliance of law and thereby engages in actions that appear to further some social good, that might be beyond the interests of the firm. CSR can be defined as the process aimed to adopt responsibility for the company’s actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere considered as stakeholders.

Corporate Social Responsibility (CSR) are transparent business practices which are based on ethical values, and respect for people, communities, and the environment. UNIDO defines CSR as a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders.

CSR directs the ways in which companies can contribute towards a better society through good business practices. CSR is about how companies make profit in a sustainable environment rather than how they spend it. Since more companies are realizing the importance of moral practices in businesses function, CSR further adds new dimensions to its definition by adapting to different cultures, communities and countries.

It has become very hard to find more sustainable form of growth at the time when resources are scarce and increasing population leading to the major challenge being faced by people, governments and businesses. CSR acts as a catalyst for development of risk and compliance management. CSR aids to repair the system of corporate economy but also as a systematic change of market economy. In order to truly exhibit corporate social responsibilities one must have an appropriate organizational structures and employees with utmost integrity. It therefore becomes a matter of individual and institutional ethics.

If CSR is treated as an integral part of an organisations core objective it would not only helps enhance the competitiveness of business, but also increase efficiency of human resources, improve brand image and reputation, strengthen customer loyalty and maximise value of wealth creation to the society. Many people argue that CSR is only a window dressing, or an attempt to enact the role of governments as a watchdog over powerful multinational corporations.

CSR is aimed to aid an organization’s mission as well as a guide to what the company stands for and will uphold to its consumers. The development of business ethics is one of the forms of applied ethics that assesses the ethical principles and moral or ethical problems which can arise in a business environment. The recognized international standard for CSR is ISO 26000. Public sector organizations (the United Nations for example) adhere to the triple bottom line (TBL). It is widely accepted that CSR adheres to similar principles but with no formal act of legislation.

CSR Strategies and Approaches

Philanthropic Approach

Philanthropic approach is one of the more common approaches to CSR. It involves monetary donations and assistance given to local and non-local nonprofit organizations and communities, including donations in areas such as the arts, education, housing, health, social welfare, and the environment, etc. Many organizations do not prefer philanthropy-based approach as it might not assist in building the skills of local populations, as community-based development generally leads to more sustainable development.

Philanthropic approach is a practice of company’s contribution towards a cause which offers a direct benefit for the cause and also supports the company’s core business objectives. The well-designed strategic philanthropy approach creates a win-win situation for everyone as it integrates the needs of both the business as well as good cause. It is also considered as one of the fastest approaches to form an alliance and increase engagement among the stakeholders. Philanthropic approach remains the most preferred option worldwide irrespective of the introduction of new methods in CSR.

Community Approach

The community approach focuses to incorporate the CSR strategy directly into the business strategy of an organization. Example – The procurement of Fair Trade tea and coffee adopted by various businesses including KPMG.

The community approach in CSR includes supporting organizations, programs and events in local communities that may have long-term positive impacts. The classical view of CSR was earlier limited to philanthropy that is now shifting its emphasis on business-society relations, in particular pointing to the contribution of the firm solving the social and environmental issues. -This concept is adopted by organizations considering the interests of society by taking responsibility of the impact of their activities on communities including customers, suppliers, employees, shareholders and environment.

Creating Shared Value Approach

Creating Shared Value or CSV is a CSR approach based on the approach that corporate success and social welfare are interdependent. The approach is primarily used for developing the future market while strengthening economies, the marketplace and communities. It helps in creating an interdependence of long-term business success on balanced social systems thereby encouraging the organisations to strategically invest in environment conservation, social welfare, education and healthcare for creating opportunities for overall long-term growth.