Why your strength as a corporate lies in CSR initiatives

BY BENARD AYIEKO Corporate Social Responsibility (CSR) is an age-old corporate-custom. Since 1960s, CSR has attracted the attention of businesses and stakeholders with regard to its meaning and benefits. It has partly blossomed in the recent decades because of the lessons learnt from the devastating effects of corporate social irresponsibility. You will recall that the global discussions on transition to the low-carbon economy spurred by the 2015 Paris Agreement and the adoption of the Sustainable Development Goals lays emphasis on the need for corporate responsibility in the fight against global warming. Innovative initiatives from businesses are part of the global shift that has opened floodgates to large-scale opportunities that can combat climate change and change the lives of millions around the world. This culture of corporate conscience has taken root in the current management and cuts across sectors, from private to public entities to profit and non-profit making organizations. The United Nations Industrial Development Organization (UNIDO) – a specialized agency of the United Nations that promotes industrial development for poverty reduction, inclusive globalization and environmental sustainability defines Corporate Social Responsibility as a management concept. It considers CSR as part and parcel of successful management practice. Through CSR, companies are able to integrate social and environmental concerns in their business operations and interactions with their stakeholders. Corporate Social Responsibility is a sense of conscientiousness towards the community and the environment in which a corporate operates. Corporate Social Responsibility has evolved over the years, and today, it is referred to as the corporate citizenship –which basically refers to a company’s responsibilities towards the society. Companies express this citizenship through various ways. This may be through their waste and pollution reduction processes, by contributing educational and social programs and by earning adequate returns on the employed resources. In the modern corporate world, many corporate entities have come to terms with the vital role that CSR plays in augmenting the realization of their core mandate. They now appreciate the need for a strategic approach to corporate conscience or responsible business as a form of self-regulation integrated into their business models. According to 2016 statistics from the Double Donation Research based in the United States, corporations donated $17.8 billion to charities as a way of appreciating their role of corporate citizenship. It also reported that 55% of consumers were willing to pay more for products and services from socially responsible companies and that 93% of the world’s largest 250 companies have changed their reporting from the primary focus on financials to include annual CSR reports to their shareholders and stakeholders. This is a clear evidence of the measurable payoff of corporate social responsibility initiatives to companies as well as their stakeholders. So what justifies the allocation of resources by an organization to advance a certain socially responsible cause? Researchers too have been on the front line in quest to understand the empirical relationship between company’s social initiatives and its financial performance in what is now called the Corporate Social Performance (CSP) and Corporate Financial Performance (CFP) nexus. In fact, a publication by the Harvard Business Review on exploring the CSP-CFP relationship found that there is a positive relationship between CSP and CFP. So it does not matter how big your entity, clientele or profits are for you be attentive to CSR initiatives. It is an area that calls for greater attention. For the profit making corporations, CSR helps in publicizing their efforts and letting the public to be aware of their philanthropy by increasing their visibility in the eyes of the consumers – who are likely to purchase products associated with those companies thereby driving up their sales. It also boosts employee engagement by helping to attract and retain committed and productive employees. Additionally, investors tend to be attracted to invest in companies that demonstrate strong commitment not only to employees and customers but also to causes and organizations that impact positively on the lives of other people. Through CSR initiatives, corporations are able to increase their visibility in the media. Human-interest stories that touch on the people, planet and profits (3Ps) receive favourable media coverage. For the non-profit making organizations, key benefits of engaging in CSR activities is that it helps them to get more funding for their core work, attract volunteers to participate in their activities and finally, assists in forging strategic partnerships that bring additional awareness to their causes. Whether a Small and Medium Enterprise or a Multinational Corporation, there is need to mainstream CSR activities in the strategic plan of an organization. This will help corporations in the reduction of costs and lowering risks, gain competitive advantage, develop and maintain legitimacy and reputational capital and achieve win-win outcomes through synergistic value creation. This could be the main source of your hidden potential in the contemporary and dynamic corporate world. It is where your strength as a corporate lies.

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