Corporate Social Responsibility
Corporate Social Responsibility (CSR) is a companies attitude toward respecting the effects that the company may have on things like, the environment, their workers, and the political landscape. Companies may opt to be socially responsible in order to remain positive in the eyes of their customers, this can be difficult for businesses that are fundamentally bad for aspects of society, such as oil or paper companies for the environment.
Some companies may take some strategic steps to ensure that they are to some effect, marketable or otherwise… socially responsible.
- Some companies may simply take the philanthropic approach, and sponsor a charity or fundraise a cause. According to the Directory of Social Change‘s ‘The Guide to UK Company Giving’, in 2013, £658 million was given to charity and £369 million was given in 2014. However, the top 25 charitable companies donated 68% of this figure, companies such as Lloyd’s Banking Group, Tesco, and Shell.
- Some companies use more sustainable resources, such as changing packaging, Switching their resource procurement to more sustainable or conflict free markets.
- Some companies have co-operatives with their suppliers to ensure that their products’ profits are spread evenly among each chain of the products manufacture, distribution, and retail. Or may simply distribute shares of its company to its employees.
Advantages of Corporate Social Responsibility
- Having a socially responsible company is marketable and attractive to consumers and buyers.
- Positive Publicity for positive behavior.
- Companies are less likely to be singled out or face action from pressure groups or disgruntled consumers.
- Products are seen as high quality from consumers, even if the product may be inferior from other means.
- Retention of current employees is more likely if the company treats them well.
- The brand of the company appears stronger and more attractive to consumers.
- Regulation and Authoritative Bodies are less likely to take interest in controversial practices.
Disadvantages of Corporate Social Responsibility
- There is a greater expense in the manufacture of products if they need to be replaced.
- There is, therefore, an increase in cost and a decrease in contribution from products.
- If there is a mistake or products are made without renewable sources, for example, they may need to recall some of their products to ensure consistent quality and credibility in their own CSR program.
Companies that are more socially responsible are most likely going to benefit from it, however, if the cost of doing so takes a big hit on productivity, then it may be difficult to convince shareholders.