INTRODUCTION
According to concept of Social Responsibility of business the objective of managers for taking decision related to business is not only to maximize profit or shareholder value but also to serve and protect the interest of other members of its society like consumer, worker and community as a whole. CORPORATE SOCIAL RESPONSIBILITY (CSR) is a self-regulating business model that helps a company be socially accountable—to itself, its stakeholders, and the public. By practicing corporate social responsibility, also called corporate citizenship, companies can be conscious of the kind of impact they are having on all aspects of society, including economic, social, and environmental. Corporate social responsibility is a gesture of showing the company’s concern & commitment towards society’s sustainability & development. CSR is the ethical behaviour of a company towards society.
NATURE OF SOCIAL RESPONSIBILITY
- CSR is normative in nature.
- CSR is a relative concept.
- CSR may be started as a proactive or reactive.
- All firms do not follow the same patterns of CSR.
NEED FOR CSR
- Issues such as environmental damage, improper treatment of workers, and faulty production leading to customer inconvenience or danger are being highlighted.
- Investors and investment fund managers have began to take account of a firm’s CSR policy in making investment decisions.
- Some consumers have become increasingly sensitive to the CSR program of the firms from which they buy their goods and services.
NEED FOR CSR FOR CONSUMERS AND SOCIETY
It is required to encourage businesses Consumer preference Consumer opinions Issues mainly emphasized on by consumers:
- Product quality
- Money value
Technological advancements Leads to increase in the awareness of the society Helps in dealing with societal matters such as:
- Nutrition & health issues
- Human rights & gender
- Labour practices
- Involvement in community issues
BENEFITS OF CSR
- IMPROVED PUBLIC IMAGE:
This is crucial, as consumers assess your public image when deciding whether to buy from you. Something simple, like staff members volunteering an hour a week at a charity, shows that you’re a brand committed to helping others. As a result, you’ll appear much more favorable to consumers.
- INCREASED BRAND AWARENESS AND RECOGNITION:
If you’re committed to ethical practices, this news will spread. More people will therefore hear about your brand, which creates an increased brand awareness.
- COST SAVINGS:
Many simple changes in favour of sustainability, such as using less packaging, will help to decrease your production costs.
- AN ADVANTAGE OVER COMPETITORS:
By embracing CSR, you stand out from competitors in your industry. You establish yourself as a company committed to going one step further by considering social and environmental factors.
- INCREASED CUSTOMER ENGAGEMENT :
If you’re using sustainable systems, you should shout it from the rooftops. Post it on your social media channels and create a story out of your efforts. Furthermore, you should show your efforts to local media outlets in the hope they’ll give it some coverage. Customers will follow this and engage with your brand and operations.
- GREATER EMPLOYEE ENGAGEMENT:
Similar to customer engagement, you also need to ensure that your employees know your CSR strategies. It’s proven that employees enjoy working more for a company that has a good public image than one that doesn’t. Furthermore, by showing that you’re committed to things like human rights, you’re much more likely to attract and retain the top candidates.
- MORE BENEFITS FOR EMPLOYEES :
There are also a range of benefits for your employees when you embrace CSR. Your workplace will be a more positive and productive place to work, and by promoting things like volunteering, you encourage personal and professional growth.
IMPORTANCE OF CSR
- CSR helps in strengthening the relationship between companies and stakeholders.
- It enables continuous improvement and encourages innovations.
- Attracts the best industry talent as a socially responsible company. Provides additional motivation to employees.
- Mitigates risk as a result of its effective corporate governance framework.
- Enhances ability to manage stakeholder expectations.
ADVANTAGES OF CSR
- IT IMPROVES VALUE AND PROFITABILITY
A CSR plan focuses on the energy-efficiency tactics, for instance waste recycling that can diminish the operational costs, while offering advantage to the environment. Continuing with that, it will enhance an entity’s transparency as well as responsibility with the media coverage, capital analysts, investors or owners of the company, and domestic societies. As an outcome, it improves the firm’s reputational image among the owners that they integrating the similar plan and strategies into their shares selection tactics. Hence, it would turn into a virtuous circle where the corporation’s shares’ value would improve, with accessibility to capital investment being relieved.
- IT ENHANCES ORGANISATION’S REPUTATION MIXED WITH GENUINE ACTION
a policy regarding CSR can serve to create or enhance the company’s reputational image. If it occurs that a brand is experiencing from adverse reputation that has resulted in losses, particularly because of environmental concerns, the CSR plan would be considered as effective solution to improve the damaged image and ultimately increase the profitability. In various situations, applying the CSR policy operates as part of the business model, where buyers are commonly seen showing more loyalty to a specific brand that has the ability to show strong commitment to environmental concerns.
- IT ASSIST TO BRING MOTIVATION AMONG THE EMPLOYEES
Almost of the global corporations know that employees or the staff of a company are considered as the most esteemed resources, which can be regarded as a fundamental structure of a company in relation to the CSR compliance. In other words, it means that treating the workforce with utter 9 dignity and respect, providing them desirable office infrastructure, friendly working culture, developing fair and unbiased hiring practices, as well as developing a workplace that does not promote work discrimination (regarding race or gender) is a must. Hence, focusing these points enhances the teamwork and confidence among the employees within a good office culture.
DISADVANTAGES OF CSR
- IT NEEDS HIGHER COSTS AND EXPENSES
One of the major drawbacks of implementing CSR plans and policy is to bear high costs in relation to install CSR strategies and implementing it, particularly for small entities. Whereas, large companies have the ability to bear such high cost regarding the allocation of a set budget to CSR reporting. Also, small
entities that comprise of only 10 to 200 staff commonly experience issues with bringing capital investment. Although they can consider using media coverage to convey their policy to the domestic societies and their potential buyers, it would be time consuming to handle the alterations, which would involve hiring of additional staff, meaning further salaries expenses. Furthermore, there is a common thinking that the high costs of CSR would result in the downturn of small entities as majority of them cannot consider the required budget to be socially accountable. As per the critics, these entities does not have ability to bear the high costs of social media solutions, equipment, and training sessions required to fulfil the social responsibility.
- IT CAN INCREASE INVESTOR’S RESISTANCE
While several investors are attracted to grab shares in entities that are publicly responsible, majority of them would consider for investment with the hope of generating high profits. Besides, while few organizations have created reasonable profitability from CSR, others that consider such a plan always prove as probable to lose cash resource. Considering the spotty path record of CSR in determining growth in earnings, shareholders focus to restrict attempts by entity managers to progress their companies in that path.
- IT PROMOTES GREENWASHING
As per the critics, CSR can be considered a practice that might result in ineffectiveness, debating that it can result to green-washing. They shows that an entity’s management workforce has inefficient responsibility to its investors, which is directly contradicting by CSR plans. They further focus that the accountability of senior management to their investors is to increase profitability, and executives who emphasize on creating huge revenue for the society and their 10 employment. Hence, this is the main motive why some entities argue about such policy, but would do nothing or take action regarding it.
FEATURES OF CSR LAWS
The broad and important features of the CSR laws are as follows:
- Quantum of money utilized for CSR purposes are to be compulsorily included in the annual profit-loss report released by the company.
- The CSR rules came into force on 1st April 2014 and will include subsidiary companies, holdings and other foreign corporate organizations which are involved in business activities in India.
- CSR has been defined in a rather broad manner in Schedule VII of Companies Act, 2013. The definition is exhaustive as it includes those specific CSR activities listed in Schedule VII and other social programmes not listed in schedule VII, whose inclusion as a CSR activity is left to the company’s discretion.
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