Corporate Social Responsibility is defined as a method of running a business that not only tries to maximize profitability but also tries attempts to offer solutions to address the social and environmental consequences of the business.

More businesses are warming up to the value of corporate social responsibility these days. This not only gives them an opportunity to boost their visibility, strengthen relationships with partners and consumers, and create the kind of market personal they are looking to establish. CSR activities today also allow you to provide for a number of different development programs that aid in the welfare of our society and environment.

These programs are unique, are expanding in scope and scale, and provide businesses as well as local and global community members with a host of advantages. But it’s not always sunshine and roses either as there are downsides to be considered as well. Let’s ponder over these perks and downsides.

Merits of Corporate Social Responsibility

1. It helps maintain the company reputation

Combined with genuine action, a Corporate Social Responsibility policy can assist in improving your time management and business reputation. If your brand has had to endure a negative backlash that resulted in losses, particularly owing to environmental issues, this policy would be a great way to repair the damage to your reputation and eventually restore profitability.

In many cases, implementing CSR works as part of a modern business model, where consumers are often seen showing more loyalty to a brand that commits to various social or environmental issues.

2. It boosts value and profitability

A CSR policy adopts energy-efficient strategies, like waste recycling, which minimizes operational expenses, while helping the environment. With that said, it will accelerate an organization’s transparency accountability and with the media, investment analysts, shareholders, and local communities.

This leads to a stellar business reputation among investors, and the investors integrate the same policy into their stock selection strategies. This becomes a circle where the business’s stock value also receives a boost, with access to investment capital being eased.

3. It keeps the employees motivated

It’s rarely a secret that the employees are one of the most valued assets of an organization. Now, this acts as a premise of the organization’s commitment with regard to CSR compliance.

This indicates that treating your employees with respect, maintaining a good working environment, adopting fair hiring practices, and creating a workplace that’s non-discriminatory is a must. This improves teamwork and the morale of the employees within your office environment.

4. Draws in new financiers

A business’s online reputation in the marketplace often depends on whether it will get new investments or otherwise. With CSR programs, you can increase your company’s chances of attracting new investors. And when your organization starts to grab a few eyeballs, it brings in a number of financiers. This will allow you to receive investment proposals from venture capitalists, other firms, and even from the government.

5. Better customer relations

One of the parameters of corporate social responsibility is staying involved in the communities where the business functions. This community involvement goes a long way toward maintaining trust between consumers and the business. If a business builds trust with its consumers, they often give the business the benefit of the doubt if something goes wrong, instead of assuming malicious intent or negligence. Consumers also tend to stick with the business intelligence they trust, instead of actively seeking out new companies, which helps keep a business profitable over the long haul.

6. Helps draw in the prospective employees

Organizations that are actively involved in CSR activities are more distinguished for their efforts. This makes it more convenient for your company to bring in prospective employees that look for employment possibilities. Apart from that, when your business begins to earn goodwill through extensive CSR activities, the employees are more likely to associate with the company for a much longer period. Millennials generally prefer organizations where they have a flexible work environment and strong core values. The organization’s beliefs and values let the employees feel a sense of self-pride to be associated with it.

Demerits of Corporate Social Responsibility

1. It requires a higher expenditure

One fairly evident disadvantage of CSR policy is that its expenses are often disproportionate, particularly on smaller companies. While large corporations can afford to invest a budget in CSR reporting, small businesses that employ between 10 and 200 employees usually face difficulties with this investment.

It’s possible to utilize social media to inform about such a policy to the local community and the consumers. But it would take considerable time to monitor exchanges, which may require hiring an additional workforce and that will maximize the costs.

There’s even a common belief that the expenses of CSR would result in the failure of small businesses, as most of them don’t have the adequate budget needed to be socially responsible. Many critics opine that these companies can’t afford the social media solutions, equipment, and training needed to pull off being socially responsible.

2. It can result in investor’s resistance

Some investors do prefer acquiring stocks in organizations that are socially responsible. However, most of them would make such an investment with the expectation of witnessing profit. Also, while several organizations have generated substantial profit while investing in CSR activities, others that adopted these policies have often lost their monetary resources.

With the erratic track record of CSR in highlighting the increases in profit, investors often resist attempts by company leaders to take their organizations in that direction.

3. This leads to impatience among consumers

It’s true that adopting a CSR program helps increase the value for the business at the beginning. It actually helps a firm attain huge popularity on the market for being socially and environmentally conscious. However, if the program doesn’t offer instant outcomes, people might assume this is nothing but an elaborate PR stunt. That won’t benefit the business’s track record.

4. It results in greenwashing

As per the critics, CSR can lead to the ineffectiveness of operations, discussing that it can result in green-washing. It’s argued that an entity’s management labor force has a duty to its capitalists, which is in direct contradiction of CSR activities.

The critics add that the responsibility of executives to their shareholders is to accelerate the profit. So, managers who focus on benefitting society as opposed to generating revenues can lose their jobs and be replaced by other individuals who prioritize profit. This is the prime reason why some large businesses are hesitant to not do anything about it.

Endnote

For businesses inclined to integrate CSR policies into their regular operations, it’s important to weigh down on the pros and cons. Once you consider all the aspects, you’ll develop policies that help you contribute to social and environmental causes without compromising on the profit. Please leave your comment below if the blog is useful and follow up with Live Business Blog.