How Organisations Can Benefit from Corporate Social Responsibility!

Published on: Wed Oct 25 2017 By: Sumanto Mukherjee
Corporate Social Responsibility CSR Branding
How Organisations Can Benefit from Corporate Social Responsibility!

India was the first country in the world to have corporate social responsibility (CSR) legislation. After the Companies Act, 2013 came into effect, certain requirements were put in place for companies having a net worth of Rs 500 crores, turnover of Rs 1000 crores, or net profit over Rs 5 crores. These included the setting up of a CSR board committee and allocation of 2% of net profits in the last three years to CSR. This had to be reviewed at the end of each financial year by the board to ensure compliance.

According to the Economic Times, about 8,000 Indian companies meet this criterion. As per data provided by the ministry, as many as 12,431 companies had spent Rs 18,625 crore towards CSR activities during 2014-15 and 2015-16. Out of the total, 7,334 firms had shelled out Rs 8,803 crore in 2014-15.

It is not surprising that some businesses have adopted ways of avoiding shelling out money or re-routing the monies by giving donations to charitable foundations that then return the monies, minus a commission.

According to the minister of state for corporate affairs P P Chaudhary, the corporate affairs ministry, had served show-cause notices to 1,018 defaulting entities. He also indicated that the ministry, which is keeping a close tab on companies' compliance with the CSR provisions, has accorded permission to initiate penal action against 160 firms for failing to comply with CSR norms.

However, CSR should not be viewed as a drain on resources and done grudgingly solely to fulfill the compliance requirements under law. This is because carefully implemented CSR policies can help an organisation in several ways which can be immensely good for business.

 

CSR improves a company’s public image and its relationship with consumers.

There is no doubt and there are many surveys to prove this, that companies that demonstrate a strong and consistent commitment to various social and charitable causes are perceived as more philanthropic when compared to companies whose corporate social responsibility endeavors are nonexistent.

In today’s social media age, where a company’s public image can significantly affect its share prices, corporate social responsibility programmes and more importantly how aware consumers are of these programmes can help improve a company’s image and its public perception on the good and evil scale.

Corporations can improve their public image by - engaging in CSR activities, supporting not for profit organisations through monetary donations or by establishing partnerships with them, engaging in volunteerism, giving in-kind donations of products and services. They also need to publicise their efforts and let the public know about their social welfare activities.

 

CSR programmes increase the chances of getting media coverage.

Advertising is expensive and the ROI is impossible to assess. CSR activities can help companies hit two birds with one stone. If a company has good relationships with media houses it is quite likely that they will give coverage to its CSR initiatives.

Most local media outlets are happy and willing to cover news that is relevant to local communities. This presents organisations with incredible opportunities to influence particular communities and markets. The more good a company can do in local communities the better the benefits and the media coverage.

 

Companies with good and virtuous image attract and retain productive employees.

Happy productive employees are key for any organisation and employees like working for a company that has a good public image and is constantly in the media for positive reasons.

Humans are social creatures and we subconsciously see ourselves as members of tribes. Employees see their organisation as a large tribe as well and feel positively about the organisation’s achievements and positive acknowledgements.

Employees aspire to work for and seek out companies that have a positive image and are known to be dedicated towards improving their communities. Such companies are more likely to attract and retain valuable, hardworking, and engaged employees. Job seekers are more likely to apply and once hired, employees will stay with a company longer, be more productive on a daily basis, and will be more creative.

 

Top executives also benefit from corporate social responsibility.

A company’s CSR activities are not done in isolation. There is always someone from the top management who hands out the cheque or launches an programme. This puts them in the public eye as well and helps improve their own personal image, reputation and affirm their commitment to social causes.

Of course, the takeaway should not be to view CSR as just another self-serving activity solely to draw benefits from. To be clear, these should not be the reasons for companies to engage in CSR rather it should be done honestly with the positive objective to actually do good for the underprivileged and the disadvantaged.


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