A fundamental question in Corporate Social Responsibility (CSR) is whether it is financially viable or rewarding. After years of implementation, the top management still debates whether CSR is a cost that gives an image-building opportunity that companies must pursue or an investment to drive the an organisation toward sustainability.
People, especially organisation leaders, often describe CSR as giving back (a portion of profits) to society - an unfair depiction of the whole concept. CSR is a business-driven approach in which companies concentrate on enriching rather than harming society and the environment.
CSR is selfish; the core aim is to benefit the business. And I believe it is all about "Being Good (by) Doing Good (to) Getting Good."
Being good does not refer to portraying the image of a good corporation by donating money (to give back to society). In today's world, being good goes far beyond the traditional belief of returning impressive profits regularly for the shareholders. It is not limited to a shareholder's financial returns solely. It considers the breadth of a positive impact the company creates through its business for more prominent stakeholders.
'Being Good' is about being responsible, sincere in what you offer your customers, providing quality products (beneficial, convenient, affordable, worthwhile, and innocuous) and services and producing products with a minimum environmental impact. It is about being compliant, accountable, and transparent - being self-driven to follow the law of the land and ensuring governance to run the business and gain shareholders' confidence. It is about supporting the community's growth and not polluting the environment around your business units. It is about letting your co-workers thrive and be proud of working in the organisation. It is about enlightening society about positive things the business can do collaboratively with the community and local authorities. It is about being efficient, empathic, and sensible. It is about demonstrating that you are genuinely good, not just dissembling to be one.
'Doing Good' is simple. Be proactive in helping society advance and help people prosper. Give preference to the local community while generating employment opportunities, safeguard the environment, and involve your stakeholders (co-workers, customers, and suppliers) in your stewardship efforts. If you are service-oriented, make sure the service helps people with more efficiency and less hassle.
By 'Being Good' and 'Doing Good', you can be sure of 'Getting Good' from your customers, government, shareholders, co-workers, and the community. It completes the circle of your CSR endeavours.
We must remember that 'Being Good' and 'Doing Good' will always need extra business efforts, which may incur additional costs.
Being compliant incurs a cost unless you want to sidestep the policies, accept shortcuts, and give bribes (speed money) to get the paperwork done. Procuring quality raw materials and checking for relevant health hazards have a cost. Ensuring the safety of co-workers and a conducive workplace has a cost too. Being convenient to customers means transforming into digital and adopting modern technology - it will also cost you. Hence, being responsible and ethical (part of 'Being Good') has a price.
Your CSR initiatives (part of 'Doing Good') can also involve financial expenses. These costs include sustainability measures (e.g., measuring your emission of GHG or green house gas, national contributions, ESG or environmental, social and governance dimensions, aiming to be a net-zero or carbon-neutral organisation), employee volunteer programmes, and targeted CSR initiatives (e.g., water recycling, providing healthcare support to co-workers, customers, community people, working toward disability inclusion, providing scholarships to financially challenged students, supporting in national disasters).
We must keep two things in mind before embarking on CSR initiatives.
First, we can collaborate with organisations, preferably NGOs, for CSR efforts. However, it is essential to understand that doing CSR through a foundation differs from doing CSR through a corporation. A foundation is an entirely separate entity from the firm that may use the company's funds but is not liable for the company's equity. Your company's foundation will only be an implementing agency like any other NGO.
Second, an organisation must link its CSR initiatives with its business objectives to benefit from them. The company's CSR strategy should be employed and integrated with the overall business strategy stakeholders. At the same time, they must avoid using donations as a kind of CSR. Giving money to an organisation once a year and putting a photo in the newspaper add no long-term benefit to the corporation. You may keep doing responsible business for a long time, but you can't keep donating for the rest of your life.
While any CSR initiative looks like a form of expenditure, it is often considered essential for a company's reputation and long-term sustainability, if aligned with business objectives. Though a little more expensive, doing responsible business is safer than doing business with risky propositions. Responsible business practices can mitigate reputational risks and regulatory penalties and help gain customer trust. That is why CSR is increasingly considered an investment rather than a cost.
Investing in CSR can result in long-term benefits, such as improved financial performance, governance indicators, and recognition. It can enhance a company's stakeholder connections, encourage innovation, and attract and retain talent. Although CSR should be voluntary, regulatory obligations in some regions oblige corporations to engage in CSR as part of their corporate responsibility.
CSR also gives opportunities for businesses. Engaging in business-focused CSR initiatives helps companies improve their brand image, increasing customer loyalty, attracting socially conscious consumers and investors, and opening up new markets. By capitalising on growing responsible business practices and environmental trends, CSR may provide a competitive edge.
Ultimately, a company's distinct approach and goals determine whether CSR is a cost, an opportunity, or an investment. Over the last few years, CSR has increasingly been recognised as a strategic investment in long-term sustainability and success.
Shafiq R. Bhuiyan is Senior Manager, Communication and CSR, BRAC Bank PLC.
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