Corporate Social Responsibility
As authorities express concern over global warming and all its associated implications, consumers are encouraged to do whatever they can to reduce their impact on the environment. While there have always been groups of pro-environmentalists, increased awareness of the consequences of poor environmental management has resulted in a marked increase in ethical consumerism and green branding. It has also put a whole new perspective on how both consumers and management teams view corporate social responsibility (CSR).
CSR is a multi-faceted concept, but in general it means businesses taking responsibility for the impact of their product or activities on the environment, consumers, communities, employees and stakeholders. CSR is not just about avoiding damaging practices and keeping on the right side of the law, but actively promotes good practices such as community projects and taking into account matters of public interest when making corporate decisions. So, instead of just focusing on the bottom line, CSR encourages focusing on the ‘triple bottom line‘, being people, planet, and profit.
While it is difficult to quantify the impact of CSR on a business, studies by reputable analysts reveal that there is a definite correlation between social and/or environmental responsibility and financial performance. Some of the potential business benefits of sound CSR practices include: attracting investors who focus on socially responsible investing; appealing to proponents of ethical consumerism; aiding recruitment, especially in competitive skilled markets; retaining key staff through a sense of pride and identity with a socially active company; minimizing corporate image risk associated with corrupt business practices or environmental damage; earning customer loyalty and building brand consciousness; building good relations with authorities with regard to issues such as employee diversity, health and safety, and the environment.
Unfortunately, some companies have used their CSR projects as a smokescreen for questionable practices, or simply to cash in on the benefits. This has been somewhat detrimental to the concept, casting a shadow of doubt over other companies genuinely making the effort. This hypocritical approach to CSR has resulted in a call for better governmental regulation, and enforcement of corporate social responsibility, rather than promoting it as a voluntary option with varying degrees of effectiveness.
Ethical consumers and socially responsible investors would be wise to thoroughly investigate any company claiming to promote corporate social responsibility, before making any decisions regarding purchases or investing. Companies genuinely embracing the concept would likely be transparent about this and welcome such scrutiny.