Corporate Social Responsibility – Should it be made mandatory?
CSR is about how a business takes account of its economic, social and environmental impacts in the way it operates – maximizing the benefits and minimizing the downsides. Corporate social responsibility (CSR) is the buzz phrase these days. Where previously formal CSR policies have been the domain of governments and multinationals, business people at all levels are becoming aware that they ignore their CSR responsibilities at their peril.
CSR manifests itself in many different ways. Businesses need to be aware of their commitments to all their stakeholders – customers, their community, suppliers, employees and, more grandly, the environment in which they operate.
The originally defined concept of CSR needs to be interpreted in a broader conceptual framework of how companies embed their corporate values as a new strategic asset, to build a basis for trust and cooperation within a wider stakeholder community.
Though there has been evidence of a paradigm shift from charity to a long-term strategy, the concept is still believed to be strongly linked to philanthropy. There is a need to bring about an attitudinal change in people about the concept by having more coherent and ethnically driven discourses on CSR. It has to be understood that CSR is about how companies balance their business ethics and behaviours with business growth and commercial success along with a positive change in the stakeholder community.
Several companies today have specific departments to operationalize CSR. There are foundations or trusts or a separate department within an organisation that looks into the implementation process.
Since these departments are treated as separate entities, they have a flexibility and independence to carry out tasks. But these entities often work in isolation without creating a synergy with the other departments of the company. There is a need to understand that CSR is not only a pure management directive but it is also central to the company and has to be embedded in its core values and principles.
Whatever companies do within the purview of CSR has to be related to its core business. CSR has to utilise things that companies are good at. It has to take advantage of core skills and competencies of companies. It should be a mandate of the entire organisation and its scope does not simply begin and end with one department alone.
There is a need to incorporate an evaluation plan that measures the short- and long-term impact of the CSR practice — apart from providing suggestions on improving fund utilisation and the methodology for executing projects.
Though there have been success stories of short-term interventions, their impact has been limited and has faded over a period of time. It is essential for companies to adopt a long-term approach rather than sticking to short-term interventions, involving the employees in the long-term process of positive social transition.
A clearly defined mission and a vision statement combined with a sound implementation strategy and a plan of action firmly rooted in the ground realities, and developed in close collaboration with implementation partners are needed for the successful execution of CSR. One area that can be considered for companies is to share best practices. A plausible framework for this could be benchmarking.
Therefore, the challenge is to apply fundamental business principles to make CSR sharper, smarter and focused on what really matters. This can be done by focusing on priorities, allocating 2 per cent of the book profit earned by companies on a voluntary basis from which returns that are expected are either tangible or intangible. There is a need to optimise available resources by ensuring that efforts are not duplicated and existing services are strengthened and supplemented. It’s important to monitor activities and work in close liaison with implementation partners such as...
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