Corporate Social Responsibility and its Impact on Business

Corporate Social Responsibility

DEFINITION OF CSR Corporate continuing behave ethically and contribute to economic development while improving the quality of life of the workplace and their families as well as of the local community and society at large . Social commitment Responsibility by is the to business

WHY SOCIAL RESPONSIBILITY OF BUSINESS? The Business of business is Business was the motto of businesspersons in early times. To economists like Adam Smith and Milton Friedman, in a capitalist society profit maximization by the continued increase of efficiency is the most socially responsible way of conducting business. This implies making quick money, with utter disregard for the responsibility of business towards society. The ethical and social behavior of corporations is essential for the generation of profit, owing its source to the reputation the corporation would acquire in view of its social behavior.

ACCOUNTABILITY TO SOCIETY In a democratic society, any kind of enterprise exists for the sake of society. Industries are allowed to exist because they are perceived by the public to be useful in the attainment of the personal, social, and material goals of the people. So, corporations exist for the sake the public, they are accountable to the public and have a social responsibility.

CORPORATIONS DEBT TO SOCIETY Corporations, whether public or private, draw much from society. It depends on society for a developed infrastructure such as roads, water supply, electricity and an educated workforce. It also depends on society for the maintenance of law and order, public health, transport facilities and for reaching out to its customers through the mass media. Finally, all consumers of its finished products are drawn from society. If a corporation draws so much from society it has to make its own contribution to society.

CSR as a business strategy for sustainable development CSR is about capacity building for sustainable livelihoods Manifold benefits to corporations both internally and externally. Socially Responsible Investing is gaining importance because :- Socially responsible companies offer long term value Evaluating a company s social impact on top of its financial performance provides an additional hedge against the risk SRI blunts adverse sentiments against the company CSR is an outcome for business models, which goes just beyond financial viability.

Evaluation of CSR activity 3 basic principles: - Sustainability Accountability Transparency

Advantages of CSR Improved financial performance Enhanced brand image and reputation Increased sales and customer loyalty Increased ability to attract and retain employees Reduced regulatory oversight Innovation and learning Risk management Easier access to capital Reduced operating costs

Scope of CSR Three levels of social responsibility can be identified: - Market forces Mandated actions Voluntary actions CSR addresses the following issues: Community, assistance in solving community problems Health and welfare Education Human rights Natural environment Culture

Corporate social responsibilities to different group of stakeholders 1. To consumers and community Quality Reasonable prices After-sales services Free competition Ethical advertising policy Support for educational, charitable and other programs Honest trade policies Impartiality towards political affairs Social accountability Progressive outlook

2. To employees Promote espirit de corps Pay fair wages Provide reasonable work conditions Help development of proper leadership Guarantee religious, social and political freedom to workers to take part in civic activities

3. To owners and inter-business establishments Provide fair return Develop healthy cooperative business relationship Check the advance of unfair practices Help in control of monopoly and promotion of healthy competition.

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