Corporate Social Responsibilities (CSR) deals with the concept of corporate behavior as a good responsible corporate citizen in the sense by not just following the law but also executing the activities of production, marketing in such a way that avoids causes for environmental pollution or exhausting scarce natural resources and contributing to the sustainable development of economy while enhancing the standard of living of work force i.e. employees, their families as well as the local community and society at larger extent. Few corporate sectors have already begun to act in a more socially responsible manner which is partly due to their managers’ decision to do so and partly due to the pressure exercised by the environmentalists, media and the consumer pressure groups and the concern of corporates to maintain their public image or reputation. It has been a hot topic for quite a while that people argue socially responsible behavior of organizations can pay off in the long run, even though it incurs relative amount of sacrifice of profit in short term.
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Awareness about socially responsible behavior among government, public including stakeholders, managers, employees, suppliers, producers, consumers and others will help to regulate the activities of corporates i.e. balancing economic, environmental and social objectives of the organization and society by meeting out the investors’ expectations and increasing stakeholders’ value.
Raising awareness about CSR
Companies are violating the minimum standards of CSR due to their lack of knowledge in the domain of CSR. The CSR performance of an individual firm largely depends on the perceptions of the stakeholders (investors, consumers, etc.,) about economic, social and environmental related CSR issues. Because of this reason, Government should take necessary initiatives for raising awareness for CSR among businesses and their stakeholders.
More than half of the population in our country doesn’t have the knowledge or idea about socially responsible behavior of corporates. Even in the mass of people who already heard about this, a part of them really have no idea what it is. Initiation of commissions by public sectors, private sectors and non-governmental organizations with the objective of disseminating information regarding corporate social responsibilities. Members of this commission may include employers, employees, representatives of advisory committees, people from non-governmental organizations, financial sectors, various consumer groups, social firms, academic institutions. This commission will be discussing existing CSR policies, analyzing the pros and cons, providing suggestions for improvement and proposing public sector policies to encourage CSR.
Transparency in Reporting
Transparency and accountability in reporting CSR activities is an essential component for impactful corporate growth and development programs where companies are working hard to achieve Sustainable Development Goals. There are three types of motivation behind CSR: 1) Intrinsic motivation: To contribute to the societal development, 2) Extrinsic motivation: To expect financial and other social benefits out of socially responsible behavior, 3) To meet out the expectations of shareholders and society. Corporates must have clarity of thought about motivation and should disclose related information (both progress and setbacks) which are necessary to harness the benefits of CSR. In this way, sharing of knowledge allows development programs to generate better practices, enables new programs to incorporate learnings from real time course-corrections and improves future development programs. Transparent reporting helps the corporates to focus more on economic, environmental and social factors and motivates companies to augment their efforts to become more socially responsible.
Reporting of socially responsible activities by the corporate should be transparent enough that each and every people in the organization and society having an overview about on-going CSR project and its progress. Transparency in reports can be ensured by providing standard framework. For example, every company has to publish an annual report exclusively for CSR activities of the firm containing their financial status, profit or loss, previous CSR projects in details, Forthcoming Short-term and Long-term CSR projects, provisions or allocated funds for CSR projects which should also cover to what extent the firm has considered ethical, social and environmental criteria while the formation of investment policies.
Business incentives to the firms which are adhering to CSR policies like subsidy for procurement of raw materials and manufacturing cost of goods by the government motivates the companies to follow CSR practices. Recognition from the public and government for good CSR activities can also motivates the firms to perform better. Hence, the companies must know about the long run and short run benefits of CSR which enables them to participate in CSR activities more actively.
Small Medium Enterprises
CSR is an another way for Small and Medium Enterprises to explain something they already do. As most of the SMEs are family-run, the relationships and bonding they maintain with their consumers, business partners, employees & their families and the local community have been built on the basis of trust and a responsible approach towards business. CSR in SMEs is about improving on good practices which are already existing, maximizing their impact and making a strong connection between CSR and the company’s core business activities.
Business challenges faced by SMEs at present are labor scarcity and shortage of talents. In most of the cases, SMEs are focused to complete responsible workplace practices. Some of the CSR practices is already being part of the SMEs’ culture. For example, certain sector SMEs are more likely to have family-friendly workplace practices in a less organized or controlled settings which may be more suitable for employees who would really like to work in a more flexible environment due to personal choice or family commitments. SMEs are often having longstanding network in serving a local community and are well located to understand the benefits that can be derived from the community relationships. Being more flexible in terms of rules and regulations and less formal than large corporates, SMEs can channel resources more effectively to CSR efforts. The main idea is the identification of the CSR trends relevant to the business and the planning of activities that aligns with the business objectives.
Responsible social behavior and business practices has long helped corporate businesses to maintain their reputation and stability within the society or community in which they operate in. The advantages of such engagement in CSR include increase in bottom line, good publicity and dedicated employees. Incorporation of CSR activities into the core business lines helps companies in dealing with an increasingly complex business environment by being a risk management strategy which also adds value for the companies in the long run. Some reasons for corporates to follow CSR are as follows:
Multi-national companies are operating in different locations under different legal jurisdictions with varying regulatory standards. An increasing trend is being observed at present towards tightening of regulatory and legislative frameworks, especially in the domain of environment protection and anti-corruption. Every firm under the framework has to be closely monitored. Committees and regulatory authorities should be set up by the government to supervise the CSR activities planning and execution. Collaborative development of standards for CSR is needed for effective execution of CSR concept. CSR is also a business strategy for companies which are using the CSR framework are better equipped to look beyond merely following existing regulations & obligations, integrating environmental and societal considerations of the stakeholders in the business functions.
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