How does being Socially Responsible benefit the Corporate Business?
Background to the modern CSR practised in India
India predominantly was an agro-based country after the independence, which followed a model where each village was self-sufficient. The different artisans, farmers, traders all ensured that they contributed to employment, food and shelter for all individuals in the village. This attribute was reflected as the business grew, and businessmen started investing in the community surrounding them. This allowed a business to contribute back to society and is profitable for the business as happy employees and customers equal to an increase in business productivity?[5] . Similarly, after the industrial revolution, business families such as the Tatas, Birlas, Godrej, Bajaj, Singhanias supported and spent huge amounts on public welfare under the CSR expenditure. The trusteeship provided by Mahatma Gandhi further imprinted CSR in the DNA of the business leaders at that time?[5] . Thus the evolution of CSR has been closely related to the development and evolution of Indian society.
Corporate Social Responsibility was introduced as a business concept to address social and environmental concerns in their operations and interactions. India is the first country in the world to make CSR compulsory for all companies registered through the company act 2013, under section 135?[5] .
The CSR projects cannot be claimed as successful or unsuccessful as long as there is a way to measure and monitor them. It has been observed that the amount spent on CSR activities are varied depending on each state and type of project?[5] . Additionally, the sector-wise spend on different investment areas is not linear, with some sectors taking a large portion of the fund. This has brought about large discrepancies in national development, along with the fact that sometimes government interference causes a slowdown in CSR projects. Thus the measurement and monitoring of the CSR activities are extremely important as it involves large amounts of funds, which can be opportunistically misused?[5] . There is no standard framework provided by the Indian regulations to measure the impact of CSR initiatives of a business. Each business has to set up a CSR committee and monitor its progress, which enables flexibility but can cause complications if not managed properly. The CSR initiatives by Indian businesses are recognized through the National CSR Awards. This is provided to recognize businesses that were able to achieve a positive impact on society and the environment.
According to the Companies Act 2013, there are certain CSR qualified activities that the companies will be able to conduct (Thacker, 2020). The different types of CSR investment areas are as follows:
Eradicating hunger, poverty and malnutrition
Promoting education
Promoting Gender equality
CSR initiatives related to the environment
Protection of national heritage, art and culture
Initiatives to support armed forces, veteran, widows and their families
Contribution to Prime Minister's National fund
Initiatives to develop technology projects within the central government approved academic institutions
Projects towards rural development projects and slum area development
Benefits of engaging in CSR initiatives
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Improved Brand image and recognition:
Pursuing a strategy for CSR will provide a positive image for the business. Businesses that are ethically committed to their CSR activities will have the opportunity to get increased media coverage. This is a great way to improve brand value and recognition and enables a free way of advertising as opposed to paying?[2] . With consumers becoming more conscious about their products and the ethics of the services of a business, it is even more important to create positive publicity. Engaging in CSR activities is one way to create positive public relations for the brand.
Improves sustainability:
Adopting CSR projects is one way to integrate sustainability operations into the business. Sustainable development and CSR have closely linked business concepts that when integrated together strategically can help improve the sustainability operations of a business. Companies are increasingly becoming aware of the role of CSR in sustainable development. CSR is a great business model which promotes business contribution towards sustainability. It allows businesses to create a balance between economic interest, environmental needs and social expectations. CSR activities can also be focused on the UN SDGs, which enables firms to be part of global movements to implement sustainability?[1] .
Increased employee satisfaction and retention:
Employees are more likely to be committed to businesses that are conducting CSR activities and produce a positive impact on society/environment. Engaged employees have a 17% increase in productivity and provide 21% more profitability for the companies they work in?[1] . This reduces the number of employees leaving the firm or becoming absent from work. It has shown that disengaged employees cost around $500 billion annually. Involvement in CSR activities is also a great way to attract new potential employees. A recent study stated that 72% of students who are entering the labour force would prefer to be associated with jobs that would make a positive impact on society and the environment?[2] .
Customer Satisfaction:
It has been stated that around 55% of the consumers would prefer to pay extra for a product/service for a company involved in sturdy CSR activities?[1] . It has also been said that millennials prefer to buy from brands with pro-social messaging, sustainable manufacturing methods and ethical business standards?[4] . Successful CSR activities can translate to more sales and improve public trust, which leads to satisfied customers who will be willing to recommend the brand to others.
New investment opportunities and revenue streams:
Proper alignment of CSR activities into the business strategy has the potential to make the business stand out and provide a gateway to enter new markets. In a survey by IBM of 250 business leaders, 68 % of them are focusing on CSR activities to generate new revenue streams (Monti, 2018). Investment into sustainability on a global scale is now at over $30 trillion. In addition to this, the CEO of BlackRock, one of the leading investment management firms, has pledged to invest $7 trillion towards sustainability?[1] . With a strong CSR strategy, a business market reputation will increase which will attract new investment opportunities.
Overall, CSR activities have the immense potential to encourage the informal sector as well as the people of the country to indulge in social and national development?[5] . This in turn can help the citizens of India to realize and act upon their fundamental duties in being a responsible citizens.
CSR activities/projects instil a sense of togetherness for employees, as they develop a habit of working together to help society and the environment. This also helps the employees to feel more committed and a sense of pride towards their organization involved in positive CSR projects. The customers also feel a sense of contribution while investing in products from organisations conducting CSR activities. Even Though, a CSR activity requires a bit of effort, time and strategizing, the long term benefits for the organization are of high value. Investing in CSR can help organizations become more sustainable and provide a positive impact on the surrounding community.
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