While it is often used in campaigns to trigger conversations for brands, corporate social responsibility, or CSR, it is more than just a buzzword. In simple terms, CSR is about the organization’s conscious efforts to create a positive impact on the environment and society.
There are no fixed standards when it comes to the implementation of socially responsible initiatives in each organization. Depending on the company’s objectives as well as its core values, the CSR activities can just be project-based or more permanent and long-term.
The organization may also choose to focus on just one area of social responsibility, which can either be environmental, philanthropic, ethical, or economic. Alternatively, and if the company operations are flexible enough to adapt to multiple changes, it is possible to tap into all four areas for their CSR program.
For example, a company that wants to focus on the environment would execute operational changes that would reduce its carbon footprint. Meanwhile, an enterprise that plans to concentrate on ethical responsibility would pivot its core business towards union made products.
Of course, these changes are not simple, nor are they easy to implement. For many enterprises, it is not easy to shift their operations in order to be more socially responsible. Aside from the impact on their profit, there are other factors that need to be taken into consideration, such as their recruitment and employee management, supply chain, manufacturing processes, and others.
But on the upside, the organization also stands to gain by being socially responsible. Here is a list of possible benefits that a company can gain from CSR programs:
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It Builds A Positive Reputation For The Company
Thanks to the widespread use of the internet, consumers have become more aware of the issues that are happening around them. Along with this awareness, they have also formed opinions on who should be held responsible as well as the steps that must be taken to improve the situation for future generations.
Thus, today’s consumers are more involved when it comes to brands that they support. They are now demanding accountability from businesses not only on the quality products or services that are being sold on the market but also in terms of the organization’s impact on the community.
With this heightened social consciousness comes a greater appreciation towards the companies that do exert effort to be more responsible in their business choices. This is why a successfully implemented CSR policy can be used as a powerful Marketing and Public Relations tool for brands.
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It Can Help Reduce Expenses
A common misconception about CSR is that it is costly to execute and that the company has to sacrifice profits in order to make it work. While this is true in some aspects, there are some CSR initiatives that can actually help reduce the company’s expenditures.
Energy efficiency is one of the areas where the company can save up on expenses while also being socially responsible. Switching to green energy alternatives and energy-efficient equipment will lower overhead costs while converting consumer packaged goods into sustainable alternatives can reduce production expenses.
Aside from this, the company can also cut back on costs of hiring and retaining talents because CSR programs help keep employees engaged and committed. This means that there will be a lower attrition rate which leads to lesser expenses related to employee turnovers, such as training and onboarding of new staff, as well as errors and downtime during the transition of new workers.
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It Increases The Company’s Market Value
CSR initiatives allow the company to give back to society and actively contribute solutions to problems that plague the community. In return, it can open up opportunities that create more value for the organization.
In a report shared by Babson College, it was revealed that a properly executed CSR program has the potential to increase the company’s market value by as much as 6%. It can also help to reduce the employee attrition rate by almost 50% and lower the company’s systemic risk by up to 4%.
This is because CSR programs can create a favorable image in the eyes of consumers, investors, and regulators, who all have critical roles to play in the company’s growth. A growing segment of consumers is even choosing to only buy from businesses that are actively practicing CSR.
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It Drives Innovation Within The Organization
Another positive effect of corporate social responsibility within the organization is that it gives key business leaders a reason to change the way they operate. Rather than staying with their tried and tested formula, companies now have an incentive to actively look for new, sustainable alternatives for their business.
Sustainability can give the business a competitive edge in the industry, which makes it a worthwhile investment. Firstly, it gives consumers more reasons to choose them over competitors since sustainability has become a priority in the minds of socially conscious shoppers.
Secondly, sustainability can help the company keep up with regulatory requirements. With more regulations being created to minimize damage to the environment, converting the company’s operations into more sustainable processes will prevent future issues that could affect the supply chain.
Interesting Related Article: “Corporate social responsibility improves customer service“
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