Corporate Social Responsibility: Importance

Corporate Social Responsibility: Important?


Welcome to the 21st century where technological advancements have taken us far away but at the cost of environment. For betterment of oneself one has to pay a major price by risking the environment. Gone are the days when companies used to operate to earn only huge profits as now they are required to focus even on their social responsibilities towards the society and its people whether it affects directly or indirectly. It was rightly remarked by Ratan Tata that “businesses need to go beyond the interests of their companies to the communities they serve.”
Corporate social responsibility (CSR) refers to the company’s effort to ameliorate the position of society in some or the other way by keeping in mind the present conditions and concept of sustainable development. Such efforts vary in terms of donating money, non-profit to implementing environmentally friendly workplaces or eliminating poverty or empowering women. Such social issues may be local, global or national. CSR not only helps in increasing business and revenue but helps in promoting change and progress throughout the world, involving and helping people with few or no resources. It is also termed as “Triple- Bottom- Line- Approach” which indicates the idea of promotion of commercial activities of company along with fulfillment of its responsibilities towards people and society. But still it remains very difficult to actually define the term because of different opinions and beliefs. [1]
The concept of CSR is different from philanthropy. It should not just be planned but implemented properly so that it imbibes properly in the aura of company and affect in a positive manner the way company affects business. CSR should be inherent with a message to society with strong advertisement. There must be proper implementation otherwise fake representation might lead to false and bad publicity. Companies not fulfilling their CSR have bad reputation environmentally and socially giving rise to negative aspects and bottom lining the brand or product, since consumers nowadays like buying products from companies which are successfully fulfilling their ethical and moral duties. But there is an ongoing debate as to whether the companies actually work for welfare or its just striving to improve its bottom line.[2]
CSR in India is a consequence of Companies Act, 2013. India has the most dedicated provisions for CSR. Not only this, but India is the first one to have brought about a legislation for implementation followed by United Kingdom. Earlier there was no as such legal requirement about the same but Companies act, 2013 made CSR a compulsory act under section 135 of the said act. This responsibility is mandatory for every type of companies, be it governmental, private or otherwise, provided they meet any of the following criteria:

  • The net worth of the company to be Rs. 500 crore or more
  • The annual turnover of the company should be Rs. 1000 crore or more
  • Annual net profits of the company to be at least 5 crore rupees. [3]

If the company fulfills any one of these fiscal conditions then it is supposed to set up a committee to enforce its CSR mandate with at least 3 directors, one of whom should be an independent director.
It is rightly said that CSR is not going to solve problems of world but with such initiatives, it is going to benefit both the company itself and the society.
Improving company’s brand
Nowadays consumers are more aware about the companies fulfilling their social responsibilities and prefer buying products from them. Fulfilling social responsibilities helps to attract consumers as the news spreads which in return increases sales. The public perception matters a lot and can help bolster the sales of the company. By representing the positive aspects, the company can make a good name and indirectly promotes its marketing strategies.
Engaging customers and enhancing public image
Before buying the product, the buyers assess the public reputation of the organization. Sometimes staffs simply working for barely 2-3 hours as charity workers may count in fulfilling social responsibility thereby ameliorating their public image. Sometimes, consumers are even willing to pay more if they get to know that a part of their money and company’s profit is being contributed to the worthy and greater cause. Hence, building reputation and relationship with the public is the cornerstone of a successful company successfully fulfilling social responsibilities.
ExxonMobil Corporation, largest oil company in the world focuses on human rights with the idea to improve the positions of the institutions of that countries which do not have developed legal and commercial system.[4]
Standing out of competitors
Embracing CSR can help one to stand out from others in the industry. One can establish itself as a company committed to move a step forward by examining the social and environmental factors. Companies engaging in large scale capacity building makes society prosperous and wealthy by creating a more balanced world. For instance, Elon Musk, CEO of Telsa Inc. was successful in bridging the gap between its corporate affairs and societal factors by making electric powered cars and environment friendly automotive products.
Benefit to employees
Employees like to work in environment friendly companies that has a good public image. Not only this but they are also proud of the fact that they are engaged in such companies. There are a wide variety of benefits when employees are aware of and embrace CSR. The work atmosphere will be a positive one promoting personal and professional growth. For example, coca cola in 2010 started ‘5by20 initiative’ to empower women across the globe as they aimed at empowering economically 5 million women entrepreneurs by 2020. [5]
Not only this but it equally gives a chance to employees to contribute in their ways towards society, country and environment. It gives an immense pride and satisfaction deep down to educate poor people just because the organization as pledged to do so. It gives an unparalleled happiness to individual performing such responsibilities. Moreover, the overall standard of living rises by introduction of various amenities.
Innovation and cost savings
Saving the limited resources of the world keeping in view the future generations, the concept of sustainable development has given rise to many innovations and advancements, for instance, production of hair conditioner which uses less water by Unilever. The company’s research and development has led to such a variation which in turns lead to advancement. Not only this but also innovations can be done in a way so as to reduce down the costs of production thereby producing and saving more. For example, packaging or less use of energy as committed by general mills to reduce its energy usage by 2015. [6]
Management of risk
Risk management is central strategy of any corporation. It is well said from time immemorial that it takes seconds to ruin or devastate the reputation and takes years to build. The reputation can be harmed by any environmental mishap or scandal which attracts the attention of government and media. Keeping such instances in mind can help the organization to foresee and avoid such risks.[7]
Paying for using resources
It is an established fact that companies in a lust to earn more and more have exploited the resources which are limited. Not only this but factories in return for usage of resources emit out its wastes in the water bodies, contributing highly in causing pollution in every possible way. Ecological system is disturbed, biodiversity decreased at a greater pace and climate change, global warming has affected not only humans but plants and animals too. It’s a high time for such businesses to reimburse for the loss caused by them and save the environment from further degradation. [8]
Not only this, when the company is ethically correct, it faces less legal hurdles and the legitimacy helps in accessing the greater market shares. CSR helps in bolstering the company’s goodwill and stabilizing stock market in short and long run.
“CSR occurs when business firms, through joint efforts and policies of executive leaders, acts to improve the position of all those who are directly or indirectly affected by firm’s economic operations.”[9]
Hence, it is well established that CSR initiative addresses the three wings of a company: society, employees and customers. CSR upholds and look after the needs of the society and the company itself. CSR attracts the customers, motivates the employees and retain them for achievement of long term goals. CSR is the spark of any business which revolutionizes the entire concepts of development and profits. It is rightly defined by UN that “CSR is a management concept whereby companies integrate social and environmental concerns in their business operation and interactions with their stakeholders”. Therefore, seeing instances from the article it can be concluded that CSR helps in development of social, cultural, educational, ecological and economic domains of the country.
[1] HÖLLERER, M. (2012). Corporate social responsibility (CSR). In Between Creed, Rhetoric Façade, and Disregard: Dissemination and Theorization of Corporate Social Responsibility in Austria (pp. 29-66). Frankfurt am Main: Peter Lang AG. Retrieved from .
[2] Falkenberg, J., & Brunsæl, P. (2011). Corporate Social Responsibility: A Strategic Advantage or a Strategic Necessity? Journal of Business Ethics, 99, 9-16. Retrieved from .
[3] The Companies Act, 2013, No. 18, Acts of Parliament, 2013 (India).
[4] Collingsworth, Terry. “‘Corporate Social Responsibility’ Unmasked.” Proceedings of the Annual Meeting (American Society of International Law), vol. 99, 2005, pp. 258–265. JSTOR,
[5] Why Corporate Social Responsibility Matters In Today’s Society, Last accessed: 7.08.2019.
[6] Six Reasons Companies Should Embrace CSR Last accessed: 7.08.2019.
[7] Why India Needs Aggressive CSR Implementation? Last accessed: 8.08.2019.
[8] Roos, Stefanie Ricarda. “Climate Change and Human Rights: What Follows for Corporate Human Rights Responsibility?” Climate Change: International Law and Global Governance: Volume I: Legal Responses and Global Responsibility, edited by Oliver C. Ruppel et al., 1st ed., Nomos Verlagsgesellschaft MbH, Baden-Baden, 2013, pp. 299–322. JSTOR,
[9] William C. Frederick, “Corporate Social Responsibility: Deep Roots, Flourishing Growth, Promising Future”.

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