Although social issues have been debated for centuries, corporations have only recently accepted them as a legitimate topic of concern for their own operations. It is only now being realized of the possible impacts that a company can have on impacting the community and possibly the globe. As quoted by Universiti Tunku Abdul Rahman’s Razihah, “Corporations, in turn, could benefit from the consumer support, which has the reciprocal effect of an increase in reputation and brand image and an increase in the ability to attract institutional investors. All of these effects will definitely produce short-term and long-term corporate performance, as desired by all corporations”. This emphasizes the importance of social endeavours being consistent with profit-oriented business objectives and expressing the values of service to society.
Corporate social responsibility (CSR) has evolved from an abstract concept to a critical business function. In reality, business leaders have now made social responsibility an “unavoidable priority.” CSR’s emergence as a legitimate, if not necessary, endeavour for any business concerned with brand image development.
As corporate responsibility becomes more prevalent, maintaining a socially conscious image becomes increasingly important. Consumers, employees, and stakeholders value corporate social responsibility when evaluating brands and companies, and they hold corporations accountable for affecting change (be it social or environmental) through their business beliefs, practices, and profits.
When a corporation voluntarily accepts additional moral/ethical responsibilities beyond those required by law, it acknowledges its social nature as well as its capacity to impact change. Alternatively, one could argue that the corporation recognises the validity of the social contract.
The social contract is the bedrock of stakeholder theory. Once the necessity of business and society is recognised, managing the business side of the relationship becomes a critical component of corporate performance. Business and society, as equal partners, share certain rights and responsibilities. Alternatively, this relationship is implicit as well as vague making it incapable to being judged by rules or laws. Although there is no official grading scale that companies have to achieve when it comes to servicing the (local or global) community, social media and sales have become a great indicator of corporate social responsibility’s impact on customer behaviour.
Consumers are not the only ones attracted to charitable organisations. Numerous top companies stated that their sustainability strategies are critical in determining where today’s top talent chooses to work. The next generation of employees is seeking employers who care about the triple bottom line of people, planet, and revenue. Corporate revenue will always fluctuate, and when it does, society expects and encourages corporations to reinvest a portion of their increased profit in the community.
Recognizing the value of socially responsible efforts to their customers, employees, and stakeholders, many businesses focus on a few broad CSR categories, which include but are not limited to the following:
1. Environmental initiatives: These initiatives seek to reduce pollution and greenhouse gas emissions while also promoting sustainable resource use.
2. Philanthropy: these initiatives include the funding of educational programmes, the support of health initiatives, the donation of funds to worthy causes, and the assistance of community beautification projects.
3. Ethical labour practises: These initiatives promote fair labour practises (such as equal pay for equal work) and fair trade practises, as well as the opposition to child labour.
Corporate social responsibility can be viewed as a type of public relations in some ways. It goes beyond that, as corporate social responsibility can help a business improve its competitiveness. Several of the business benefits of corporate social responsibility include the following:
1. Increased brand recognition, awareness, and reputation: By establishing and maintaining a positive corporate reputation and/or brand equity, CSR adds value to businesses.
2. Increased customer retention and revenue: Customers of a company that practises CSR believe they are contributing to the company’s charitable efforts.
3. Workplace cost-cutting measures: Investing in operational efficiencies results in reduced operating costs and a smaller environmental footprint.
4. Retaining key and talented employees: Employees frequently stay longer and are more committed to their company when they are aware that they work for a CSR-conscious organisation.
5. Easier access to funding: Many investors are more receptive to investing in a company that demonstrates a commitment to CSR.
6. Decreased regulatory burden: Strong relationships with regulatory agencies can help companies reduce their regulatory burden.
With the new generation’s population and purchasing power increasing year after year, it is critical for a company’s image to appeal to this new generation as potential clients or employees. Millennials and Gen-Z make up more than 60% of the global population, and they believe that businesses should invest in society’s improvement and seek solutions to assist in that improvement. Businesses should communicate how they are attempting to make a positive difference in the world so that the general public can learn about their pro-social initiatives. It is critical to highlight efforts to reach millennials because these efforts will have an impact on the consumer choices made by younger generations.
Millennials and Generation Z, having grown up in an era of inclusion, would also like to participate in initiatives such as volunteering or contributing to a company’s charitable efforts. As more businesses become aware of the impact their social and environmental efforts have on consumer perception, they are more likely to initiate their own initiatives.
CSR initiatives are frequently visible during times of local or global stress. Let us look at International companies that have implemented SCR on a large scale
- Top Glove committed RM5 million to COVID-19-related initiatives during the peak of the pandemic in 2020.
- Jordan Brand pledged $100 million to the Black Lives Matter movement in the aftermath of George Floyd’s murder.
- Lego has committed USD150 million to a green initiative aimed at reducing waste and combating climate change.
- Starbucks has implemented a socially responsible hiring process to diversify their workforce and ensure that all employees have an equal opportunity.
It is critical for brands of all sizes to consider the issues that matter to their customers and implementing socially responsible practises can benefit your business while also having a positive impact on the world.