Posted in Business/ Economy

CSR: Good For Everyone?

Corporate Social Responsibility (CSR) is a social concern which a company undertakes. Through the years society has benefited greatly from different companies’ CSR initiative. Different companies are working in different sectors like education, healthcare, increase in employment, reduction of poverty, the environment (sustainability) and better working conditions among others. Some CSR initiatives have also helped companies along with the society. For example: Since 1990, Sony Pictures Entertainment has been recycling TV and film sets by renting them out to other TV and feature productions. This has helped save resources, which is a boon for society and which would have otherwise gone in waste in used to make new sets. It also makes it cheaper to production companies to rent out the stuff instead of manufacturing it, enabling them to earn more profits. So is CSR really good for everyone? Well, there are two sides to this argument.

Let’s begin with the good points. Firstly, a company’s CSR initiative can engage consumers by creating a brand awareness among them. It is useful in increasing a company’s reputation through the publicity it creates ideas which are not only different from other competitors but also which tend to be effective. For example, along with World Vision (an NGO), Eureka Forbes, a water purifier company established ‘community water plants’ i.e. A place where water is purified through reverse osmosis, to solve the problem of fluorosis among people of Andhra Pradesh. Secondary, it also helps companies save money and resources which can ensure more and cheaper products. For example, Now many companies are practising ‘by product synergy’ i.e. the process of turning one company’s waste into another’s raw material. Companies have also started improving the working conditions of labourers. This helps retain skilled workers. For example, in the 1990’s there were severe opposition to Nike products due to the accusations of people being made to work in poor conditions and with a salary less than the minimum wage limit. Now, Nike is working to, ‘Transform our working relationship with contract factories to incentivize changes that benefit their workers. Instill changes in our code, instigate innovation, educate to build management capabilities, address root causes in our own processes, work with the industry, and reward factories’ progressive achievement.’ (as quoted from Nike’s CSR report). Finally, last but not the least, the new CSR initiatives of companies also give rise to more innovation. AOL, an American media company has managed to reduce 30 tons of its CO2 emissions annually and in turn save almost $1 million through Cloud Computing.

On the other hand, CSR also has its disadvantages: In the event of trying to increase the use of sustainable methods of production, many companies face a reduction in output. This can result in reducing the company’s profit. Also many companies (big or small) have started using the method of ‘green washing’ i.e. a method of publicizing a company’s CSR initiative, but in reality not doing what they tend to show they are doing. This on the contrary, can work the opposite of building up a company’s reputation. It can reduce people’s faith on corporates. One more factor which causes a problem for companies is that people tend to have too many expectations related to their social initiatives, often forgetting that a company’s main goal is profit- making and not always giving back to society. While some companies are able to do both, other are not. For example, Coca Cola was accused of extracting a lot of ground water for its bottling plants. Thus as their CSR initiative they started using methods of replenishing the water they used as well as started preserving local water bodies. On the other hand, in 2006 Pepsi Co. decided to market healthier food as part of their Corporate Social Responsibility ‘Good for You’ campaign, focusing on healthy foods such as Quaker oats and Tropicana. A lot of resources were put into these products instead of being used to popularise Pepsi’s standard product i.e. Cola. This resulted in Pepsi losing its number 2 position to diet coke in the cola market (in 2010).

CSR is working towards building a much better life for people. While it is instrumental in causing a big impact in different sectors, it can also cause some difficulties to companies. Thus, inspite of problems like extra costs and green washing, it can be said that Corporate Social Responsibility is good for everyone through its examples of creating innovation, more jobs, better working conditions, profits and a happier society.

 

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