Importance of Corporate Social Responsibility

Question :

Define corporate social responsibility and sustainability.What is the triple bottom line and The three reasons that define CSR for an organization in terms of pragmatic reasoning, ethical reasoning and strategic reasoning Multiple types of CSR in terms of economic, legal, ethical and discretionary which encompasses philanthropic/environmental responsibilities Iron Law of Responsibility Using CSR to gain competitive advantage Benefits of being socially responsible in terms of an organisation’s reputation.

Corporate social responsibility is not an option anymore as the company will have to fulfill the corporate responsibilities so that they can survive in the competitive market. If corporate social responsibility has to be described in layman’s term then it can be stated as business practices that can be beneficial for the society as a whole. One of the biggest problems, today globally, is sustainability. Every company will have to look for ways by which sustainability can be achieved through business practices so that the society can be happy with the business operations. Sustainability is not just important for people in the society; it is very important for the success of the business as well. There are plenty of risks involved in the business operations and hence, those problems like poverty, global warming and climate change needs to be addressed by the business so that the impact of these problems don’t increase further.

Today consumers are completely aware of what the impacts of various actions on planet earth and it is also seen that the consumers are taking their decisions based on the corporate social responsibilities that the organizations are fulfilling. Different organizations may have different priorities but it is the major responsibility of every organization to achieve the social responsibilities.

When starting with the implementation of CSR, it is responsibility of the management to address the problems to the internal stakeholders so that the solution for the problem can be implemented from within the organization. Few of the internal stakeholders who need to be addressed by the management are discussed below.

The legal department of the organization should be made aware of the corporate social responsibility that will be implemented in the organization. It is very important for the organization to take approval from the legal advisor so that the management can be rest assured that they won’t get into any legal complications in the near future. Once approval from the legal department is clear, the management should communicate their corporate social responsibility plan to the communication’s department. The communication’s department will keep the concerned team informed that they can communicate the same to the external stakeholders. This will help the external stakeholders to build the trust with the organization.

The HR department of the organization should be made aware of the new policy that will be in place so that they can educate the employees to act accordingly. If the employees aren’t made aware of the new corporate social responsibility then they will stick to the old policies which may be against the new policies which are in place. The production department should be informed so that the production can be in line with that of the new policy. The research and development department should be informed so that they can work on the corporate social responsibility policies further and this will help the new innovations in place to be in sync with the new policies that are defined by the organization.

Implementation Process

The implementation of corporate social responsibility will also create an impact on the external stakeholders of the organization. Few of the parties that will be affected by the implementation of new corporate social responsibilities are described below.

The suppliers will be affected the most by the implementation of corporate social responsibility policies. The organization may have decided to stop the usage of certain products so in such a situation, the suppliers will have to check if their supply is in line with the new policy of the organization. The shareholders of the organization should be informed about the responsibilities that will be undertaken by the organization. This will make the shareholders feel that the organization is concerned about the environment in which they operate. Apart from that, this can be beneficial to the organization as the shareholders may be willing to make further investments in the company.

The political parties in the country will also be affected by the implementation of corporate social responsibility of the organization. There are possibilities that the organization will require the support from the political parties so that the implementation can be done successfully. The government should also be informed about the new policy that will be implemented in the organization. The new policy will have to be approved by the government authorities. The media should be informed as this will keep the target audience informed regarding the initiatives that the organization will be taking. This will help the employees to be informed and hence, they can take buying decisions accordingly (Porter n.d.).

The decisions taken by the organization will create an impact on the primary as well as the secondary stakeholders. Primary stakeholders are those who are directly affected by the decisions that are taken by the organization and secondary stakeholders are those who are indirectly affected by the decisions that are taken by the company. The primary stakeholders of the company would be customers, employees, suppliers and also investors. The secondary stakeholders of the organization would be media, social activist group, foreign government and other such parties.

It is the responsibility of the organization to look for ways by which the three areas of business need to be taken care of. The financial, social and the environment aspect of any decision need to be considered. If any one aspect is absent in the decision that is taken then troubles will come in the organization for sure while implementing the decision. The implementation of all the aspects in corporate social responsibility is static in nature rather than that of being dynamic. It is the responsibility of the management to continuously monitor the new initiative so that they can be rest assured that the new plan is in place. The complexity and the variability of the decision should be considered and an appropriate way to balance everything will have to be considered. With the implementation of Triple bottom line, the concentration of the business is shifted from business oriented view to society or planet oriented view (Fauzi 2010).

Internal Stakeholders

An organization will have to take care of plenty of corporate social responsibility for the betterment of the organization and also the people who are directly and indirectly associated with business. Few of the responsibility that needs to be considered by the management while they are planning to implement corporate social responsibility are discussed below.

The economic responsibility of the company needs to be considered. The CSR activity should be profitable for the organization. If the company is planning to produce an eco-friendly soap then the cost of materials used in the soap will be expensive than that of the regular products. If the cost of the soap is more than what the customers are willing to pay then the product may not be considered to be useful by the company. The company should look for ways by which the profit maximizing objective of the company is not affected.

The legal responsibilities of business should not be ignored at any cost. The organization should check if the new policies of the company are in line with that of legal policies. The management should check with the legal bodies and government agencies if they new policy is in line with the legal terms. The ethical responsibility of the organization should also be considered. If the corporate social responsibility of the organization is beneficial to one sector of the society and if its causing problem to the other sector then that should be avoided. Discretionary responsibility of the organization is done by the organization and it is not mandatory (Total Quality Management 2009).

There are various advantages of implementation of CSR in the organization and hence, it is highly recommended for the organizations to opt for policies that promote CSR. Few of the benefits of implementation of corporate social responsibility are discussed below.

Implementation of corporate social responsibility will be beneficial to the organization in the long run. The government is very much concerned about the environment and hence, there are possibilities that in the near future, the CSR activities will be made compulsory. If the organization starts implementation today itself then they can be rest assured that everything will be in place.

The organization can build a good public image with the help of appropriate CSR policies. The society will believe that the organization is concerned about the society and hence, the customer’s loyalty towards the company will increase automatically. With a strong customer base, the organization can get an idea about the long-term of the business. If the organization is not sure about the trustworthiness that the customers have on them then the organization will not be able to plan their long-term.

The government can be rest assured that the organization is taking care of all the responsibilities and hence, the government intervention in the function of the business will be very less. The shareholders of the organization will be happy to be a part of the business as they know that the share price of the organization will continue to increase (Davis 1973).

References

Davis, K, 1973, The Case for and against Business Assumption of Social Responsibilities, The academy of management journal, vol. 16, no. 2, pp. 312-322

Porter, M, Strategy & Society, Harvard Business Review, pp. 78-91

Fauzi, H, 2010, “Triple Bottom Line” as “Sustainable Corporate Performance”: A Proposition for the Future, Sustainability, pp. 1345-1355

Total Quality Management, 2009, Stakeholders and Corporate Social Responsibility, Viewed on January 17, 2015, https://totalqualitymanagement.wordpress.com/2009/03/12/stakeholders-and-corporate-social-responsibility/