Why Corporate Social Responsibilty is important

Corporate Social Responsibility demonstrates that a company is taking some action to safeguard that there are positive social and environmental effects related to how they operate. It is not philanthropy which implies a donation of  money to a good cause, but rather a desired modus operandi as companies are increasingly expected to show a strong genuine commitment to society that extends well beyond the bottom-line as they engage in activities that inter alia address environmental, social and cultural diversity issues plaguing our beleaguered and fragile planet. Interestingly, it has been found that CSR models operating in companies generally increase business growth and bolster revenue. CSR needs to become part of the DNA of all companies, irrespective of their size. It cannot be the case that some companies pillage and plunder the environment for their greedy shareholders at the expense of the majority of the stakeholders and the earth. It is now more critical than ever to promote operational changes, and these invariably need to involve helping stakeholders with scarce or no resources. CSR thus characterizes new requirements designed to safeguard the socio-economic prosperity while conserving the quality of the environment. CSR that is meaningful also increases the legitimacy and improves the reputation of a company. 

"It has been found that CSR models operating in companies generally increase business growth and bolster revenue," says Prof Angelo Nicolaides.

The increasing tendency towards CSR is driven by a few significant factors. It is clear from daily media reports that environmental, social and ethical issues are receiving increasing public attention. This means that there is increased market pressure from all stakeholders, and especially customers who are keen to show their market partialities towards CSR driven companies. There is thus increasing importance stressing that customers want to buy from CSR alert companies which demonstrate an ethical position in how the conduct business. 

There are four key dimensions relating to CSR, namely, the marketplace, the workplace, the over-extended natural environment and the community at large and their basic human rights. These serve as guides to empower companies to better appreciate the value of CSR and implement it. In addition, it has also been found that especially the millennial generation recognizes that they are drawn to seek employment in companies which are committed to CSR in a genuine manner, and do not merely offer lip-service as to its implementation. If a company wishes to employ and retain its workforce, it needs to show its genuine commitment to CSR. Staff attraction and retention is an expensive and time-consuming exercise, and it is thus better to engage in a win-win operational manner and do the right thing. When employees see that their employer is committed to preserving the planet and does not only seek profits, they are likely to have enhanced morale which tends to boost performance. Employees also feel more engaged as they consider that they are doing something for society as they leverage the resources at their disposal to be ethical and do the right things. There must be a range of positive social and environmental effects connected with the way a company operates. Corporate social responsibility is far more than just a passing business inclination or trend.  

It is of course not practical and some-what illogical for all companies to engage in the same kinds of CSR. This is because there are diverse factors to consider such as for example, the type of industry and the local environment in which the company operates and of course the level of commitment and enthusiasm of company leaders to do the right things. One thing is certain, companies that wish to remain relevant to upcoming generations need to embrace CSR and thereby also increase their profits and levels of efficiency. 

By Prof Angelo Nicolaides*

*Prof Angelo Nicolaides is a Professor of Marketing and Strategy at the Unisa Graduate School of Business Leadership. His areas of Specialisation include Business Ethics, Stakeholder Engagement, Management, Governance.