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Importance of CSRWhy Corporate Social Responsibility is Important in 2015We recently posted a blog ondefining corporate social responsibility, but we want to take this time to elaborate on its importance in strategic plans for both corporations and nonprofit organizations, especially with the new year rapidly approaching.Before we delve in, if youre part of a corporation, take a minute to think about some of the programs you offer that can be considered socially responsible (in short, they should be positively impacting the community). Are there any programs that you know of? If they exist, what kind and how much of an impact are they having on the local community? How engaged are employees in these programs?If youre part of a nonprofit organization, what kind of programs do you participate in with corporations to help solidify relationships in the community? Are you actively seeking these kinds of connections? Are you helping to educate corporate officials why the relationship is mutually beneficial?So, final question. Did you have a good answer to any of the above questions? If so, this is key information you need to work toward a larger, overall success in the realm of social responsibility (from both the corporate and nonprofit side). If you werent 100% sure about your answers, dont worry quite yet. Obtaining this information can be tough, but its important for the future. Below, we discuss more concrete examples on how your organization can either continue to or even start to benefit from programs like these, depending on your strategy for social responsibility in 2015.Corporate Social Responsibility How Corporations BenefitAs mentioned in our earlier blog about corporate social responsibility, current times dont allow for companies to simply be in business for the sake of making a profit anymore. While consumers may rely on corporations for goods and services, the level of competition allows customers to make decisions based on several factors, including (maybe surprisingly) how much good a corporation is also doing outside of the workplace. Many individuals today are basing their corporate loyalties on how companies are positively impacting their community.A Better Public ImageA corporations public image is at the mercy of its social responsibility programs and how aware consumers are of them (remember, this is the biggest obstacle education and awareness)! According to a study by Cone Communications, 9 out of 10 consumers would refrain from doing business with a corporation if there existed no corporate social responsibility plan.For example, if a company is heavily involved in the practice of donating funds or goods to local nonprofit organizations and schools, this increases the likelihood that a consumer will use their product. Additionally, if a corporation takes great care to ensure the materials used in its products are environmentally safe and the process is sustainable, this goes a long way in the eye of the public.If you havent seen the Scarecrow video from Chipotle, you should take a few minutes to watch it.Remember, consumers feel good shopping at institutions that help the community. Clean up your public image (and broadcast it to the world!)Better and More Media CoverageGoing along with how the public sees your corporation, the amount of positive media coverage a corporation receives is extremely important for business. It doesnt matter how much your company is doing to save the environment if nobody knows about it. As they say, its okay to toot your own horn every once in a while. Make sure youre forming relationships with local media outlets so theyll be more likely to cover the stories you offer them.How much good a company can do in the local communities, or even beyond that, is corporate social responsibility. And the better the benefits, the better the media coverage.On the other hand, however, if a corporation participates in production or activities that bring upon negative community impacts, the media will also pick this up (and unfortunately, bad news spreads quicker than good news). Media visibility is only so useful in that it sheds a positive light to your organization.Fosters a Positive Workplace EnvironmentThis section is short and simple because its just common sense employees like working for a company that has a good public image and is constantly in the media for positive reasons.Happy employees almost always equals positive output.Corporate Social Responsibility How Nonprofits BenefitHow corporations embrace corporate social responsibility in 2015 is also going to be of great importance to the nonprofit world.Corporate giving programs, which can include everything frommatching giftstovolunteer grants; from team building volunteer efforts to fundraising events.These types of programs, which vastly increase the public good that corporations are doing, are vital to nonprofit organizations because of the great monetary and volunteer implications.Greater Funding through Employee Matching Gift ProgramsCorporations that offer matching gift programs are essentiallydoublingdonations that its employees are giving to eligible nonprofits. For example, if an employee provides a $100 donation to a nonprofit of their choice, his or her employer (if the company offers a matching gift program) will write an additional $100 check, thereby increasing total funds brought in. Its really that simple!A recurring theme here seems to be the education factor of it. These are phenomenal socially responsible programs that benefit both corporations and nonprofits, but if they are underutilized because of a lack of awareness, then these programs do little good. As a nonprofit, encourage corporations to promote these programs to employees in fact, offer to help them! Use social media outlets as a way to spread the word. Sometimes a simple Facebook post can make all the difference.It should also come as no surprise thatmatching gift programs increase employee engagementfor companies that offer these kinds of socially responsible programs, but they also help foster deeper nonprofit-donor relationships. If youre looking to increase fundraising from existing donors, matching gift programs are a great place to start.Greater Time Commitments through Employee Volunteer Grant ProgramsCorporations that offer volunteer grants, or even offer paid time off to volunteer at nonprofit organizations, are bringing in helping hands to eligible nonprofit organizations. A corporation with this kind of program might offer (for example) a $250 check to a nonprofit once an employee has volunteered at least 10 hours with the organization. There are also pay-per-hour grants that many corporations offer, paying a certain dollar amount per hour volunteered.This kind of socially responsible program is a win-win for both parties involved. Employees of corporations are seen volunteering and donating their time to important causes in the community, and nonprofits are receiving free time and volunteer work, which is essential the success of so many nonprofits.Volunteer grant programs are another huge reason why corporate social responsibility is important, especially for the upcoming year!Forging Corporate PartnershipsYet another positive impact corporate social responsibility has on nonprofit organizations is the possibility of corporate partnerships. These partnerships are vital to the work a corporation can do in the local community, and important to a nonprofit that may not have the resources for major marketing campaigns. Longterm corporate-nonprofit partnerships can benefit everyone.For a corporation, a partnership with a local or national nonprofit organization improves the companys image in the public eye, as consumers can clearly see the positive impact a corporation is having on their community. A key benefit is that it makes it easier for consumers to trust a company.For a nonprofit organization, a partnership with a local or national corporation puts its name on tons of marketing materials that otherwise could not have been afforded on tight budgets. A key benefit is the partnership brings additional awareness to the nonprofits cause.Corporate Social Responsibility Helps Everyone InvolvedAs you can see, socially responsible programs are mutually beneficial in the corporate-nonprofit world. When working on your strategic plans for 2015, make sure to take some time and look at the programs your company offers or benefits from and how they are working toward a better community and corporate environment for everyone involved. Work from there to expand your reach, and good luck!

PROS AND CONS OF CSRThe concept of "corporate social responsibility" has become pervasive enough that it has earned its own acronym in business circles: CSR. The term means that a corporation should be accountable to a community, as well as to shareholders, for its actions and operations. When a corporation adopts a CSR policy, it aims to demonstrate a goal of upholding ethical values, as well as respecting people, communities and the environment. The corporation undertakes to monitor its compliance with its stated CSR policy and report this with the same frequency that it reports its financial results.A CSR policy improves company profitability and value. The introduction of energy efficiencies and waste recycling cuts operational costs and benefits the environment. CSR also increases company accountability and its transparency with investment analysts and the media, shareholders and local communities. This in turn enhances its reputation among investors such as mutual funds that integrate CSR into their stock selection. The result is a virtuous circle where the company's stock value increases and its access to investment capital is eased.Customer RelationsA majority of consumers -- 77 percent -- of consumers think that companies should be socially responsible, according to a survey by branding company Landor Associates cited by the University of Pennsylvania's Wharton School. Consumers are drawn to those companies that have a reputation of being a good corporate citizen. Research at Tilburg University in the Netherlands showed that consumers are prepared to pay a 10 percent higher price for products they deem to be socially responsible.CostsThe main disadvantage of CSR is that its costs fall disproportionally on small businesses. Major corporations can afford to allocate a budget to CSR reporting, but this is not always open to smaller businesses with between 10 and 200 employees. A small business can use social media to communicate its CSR policy to customers and the local community. But it takes time to monitor exchanges and could involve hiring extra personnel that the business may not be able to afford.GreenwashingSome critics believe that corporate social responsibility can be an exercise in futility. A company's management has a fiduciary duty to its shareholders, and CSR directly opposes this, argues AneelKarnani, Professor at the University of Michigan in a Wall Street Journal article. The responsibility of executives to shareholders is to maximize profits. A manager who forsakes profits in favor of some benefits to society may expect to lose his job and be replaced by someone for whom profits are a priority. That is why some companies talk about CSR but do nothing about it. This is called greenwashing,

INTRODUCTIONIntroductionIn a societal structure, we have many stakeholders, one amongst them are companies or Corporate Houses.These Corporate houses are meaningfully contributing from their kitty which impact their internal stakeholdersand also openhandedly support societal initiatives. In India companies like TATA and Birla are practicing theCorporate Social Responsibility (CSR) for decades, long before CSR become a popular basis. There are manyinstances where corporate have played a dominant role in addressing issues of education, health, environmentand livelihoods through their corporate social responsibility interventions across the country.As per United Nations and the European Commission, Corporate Social Responsibility (CSR) leads to triplebottom-line:profits,protectionofenvironmentandfightforsocialjustice.ItisexpectedthatCivilsociety,activist groups, Government and corporate sectors should work together to create appropriate means andavenues for the marginalized and bring them to the mainstream. The success of CSR lies in practicing it as acore part of a companys development strategy. It is important for the corporate sector to identify, promote andimplement successful policies and practices that achieve triple bottom-line results.

At one end of the spectrum, CSR can be viewed simply as a collection of good citizenship activities beingengaged by various organizations. At the other end, it can be a way of doing business that has significant impacton society. For this latter vision to be enacted in India, it will be necessary to build CSR into a movement. Thatis to say, public and private organizations will need to come together to set standards, share best practices,jointly promote CSR, and pool resources where useful. An alliance ofinterested stakeholders will be able to takecollective action to establish CSR as an integral part of doing business this is not a passing fad. There are morethan 1,000,000 registered companies in India out of which less than 1percent companies are traded on the IndianStock Exchange. A new Trend has started in Corporate is the establishment of special committees within theboardofdirectorstooverseeCSRactivities.Groupsofcorporatearebeingencouragedtocometogethertopromote CSR. In 2006, Europe created the European Alliance for CSR. It currently consists of 70 multinationalcorporate houses and 25 national partner organizations and has become a unique resource for building capabilityin CSR.Definition of CSRThe well accepted definition of CSR is not a common term; MNCs prefers sustainable development orsustainable business while several Indian companies talk about responsible business or Triple P (People, Planet,and Profit).It is important to note that Indian companies and stakeholders give a broader definition of CSR then MNC andstakeholders. According to the Indian Corporate: Sustainable development implies optimizing financialpositionwhilenotdepletingsocialandenvironmentalaspectsandCSRimpliessupportingissuesrelatedtochildren, women and environment.These corporate refer in its definition of CSR to community development. In the context of Westerncommunity, development is often seen as charity. In the Indian context it is seen as a large responsibility of acorporate, not only by stakeholders but also by the local Indian management. The background of this is thatstakeholders see the large western companies as capitalist islands in a developing country. This position givesthem a certain responsibility towards the community. Most of the MNCs leave room to their Indian daughtercompany to develop initiatives in this field; sometimes they have a special fund. All kinds of initiatives aredeveloped by the interviewed Indian companies, many times bottom up initiated by the employees.Literature ReviewCan shareholder money be used for a company's corporate social responsibility (CSR) practices? Shouldn'tshareholders have a say in the CSR activities of the company they are invested in?As per ACCSRs State of CSR in Australia Annual Review report Full understanding of CSR still emerging;There are many obstacles are emerging while adopting successful CSR strategies include the difficulty inmaking a business case for CSR, difficulty in integrating CSR with organizational values and practices, and thelack of organizational buy-in and commitment to CSR.Other obstacles reported is the lack of time and financial resources to pursue CSR practices are directly relatedto the above three. When an organization finds it hard to make a business case for CSR or link it to coreorganizational operations, it will be reluctant to commit and allocate resources or time to such practices.Moreover, these obstacles also point to another set of findings in the report: respondents view CSR more so asa means to manage regulatory impacts, reduce risk, and respond to stakeholders concerns, and to a lesser extentas a strategic source of competitive advantage.

CSR Strategies Focusing on Protectionrather than CompetitiveAdvantageA CSR strategy that is focused on avoiding regulatory liability and maintaining a license to operate in thecurrent business will neither lead to current competitive advantage nor an imagination of future businessmodels.Managing regulations, risk and legitimacy (license to operate) is also reflected in the main capabilitiesemphasized by the respondents: ethical behavior, social accountability and stakeholder engagement.In order to leverage its CSR/sustainability strategy for competitive advantage, an organization needs theadvanced capabilities of organizational learning and sustainable innovation. These two capabilities are criticalfor building sustainable business models that will lead to future sustained competitive advantage.

In the article on Corporate Social Responsibility in India Putting Social-Economic Development on a Fast Track by RamyaSathish mentioned that many CSR initiatives are executed by corporate in partnership withNon-governmental organizations (NGOs) who arewellversed inworkingwiththe local communities andareexperts in tackling specific social problems. For example, SAP India in partnership with Hope Foundation, an NGO that works for the betterment of thepoorandtheneedy throughoutIndia, hasbeenworkingonshortandlong-termrebuilding initiativesforthetsunami victims. Together, they also startedThe SAP Labs Center of HOPEin Bangalore, a home for street children, where they provide food, clothing, shelter, medical care and education. CSR has come a long way in India. From responsive activities to sustainable initiatives, corporate have clearly exhibited their ability to make a significant difference in the society and improve the overall quality of life. Inthe current social situation in India, it is difficult for one single entity to bring about change, as the scale isenormous. Corporate have the expertise, strategic thinking, manpower and money to facilitate extensive socialchange. Effective partnerships between corporate, NGOs and the government will place Indias socialdevelopment on a faster track.6In an article on Trust and Corporate Social responsibility: Lessons from India, authors mentioned Spiritualityand Corporate Social Responsibility have had a deep-rooted connection in India.A phenomenon that has preceded the coining of the term CSR, the link between the karma as espoused bysacred Indian texts and initiatives anchoring corporate as responsible citizens has been amply evident in Indiasince the early days.This is widely divergent from the perspective of corporate social responsibility in Western economies asreflected in the observation by Arthur Page, vice president of public relations at AT&T for around 20 years andformer advisor to the US President: all business in a democratic country begins with public permission andexists by public approval .Viewed from this perspective, public relations professionals are the custodians of trust for the corporate world.While the global spotlight today focuses on debates on corporate trust, India can proudly flaunt a head start inthisarena.Yet, before we present Indias case, lets briefly scan some recent happenings, particularly in the US, that ledto an erosion of trust in Corporate Inc. worldwide.7Education is the most preferred area of CSR for Indian companies, with 85% of the companiessurveyedengaged in it, followed by health (67.5 per cent) and rural development and livelihoods (57.5 %).

Issues & ChallengesMany companies think thatcorporate social responsibility is a peripheral issue for their business and customersatisfaction more important for them. They imagine that customer satisfaction is now only about price andservice, but they fail to point out on important changes that are taking place worldwide that could blow thebusiness out of the water. The changeis named associal responsibility which is an opportunity for the business.Some of the drivers pushing business towards CSR include:The Shrinking Role of GovernmentIn thepast, governments have relied on legislation andregulation to deliver socialand environmentalobjectivesin the business sector. Shrinking government resources, coupled with a distrust of regulations, has led to theexploration of voluntary and non-regulatory initiatives instead.Demands for Greater DisclosureThere is a growing demand for corporate disclosure from stakeholders, including customers, suppliers,employees, communities, investors, and activist organizations.Increased Customer InterestThere is evidence that the ethical conduct of companies exerts a growing influence on the purchasing decisionsof customers. In a recent survey by Environics International, more than one in five consumers reported havingeither rewarded or punished companies based on their perceived social performance.Growing Investor PressureInvestors are changing the way they assess companies' performance, and are making decisions based on criteriathat include ethical concerns. The Social Investment Forum reports that in the US in 1999, there was more than$2 trillion worth of assets invested in portfolios that used screens linked to the environment and socialresponsibility. A separate survey by Environics International revealed that more than a quarter of share-owningAmericans took into account ethical considerations when buying and selling stocks. (More on sociallyresponsible investment can be found in the 'Banking and investment' section of the site.)Competitive Labour MarketsEmployees are increasingly looking beyond paychecks and benefits, and seeking out employers whosephilosophies andoperating practices match theirown principles. Inorder to hireand retainskilled employees,companies are being forced to improve working conditions.Supplier RelationsAs stakeholders are becoming increasingly interested in business affairs, many companies are taking steps toensure that their partners conduct themselves in a socially responsible manner. Some are introducing codes ofconduct for their suppliers, to ensure that other companies' policies or practices do not tarnish their reputation.DrRatnamsaid the concept of CSR haddifferentmeanings depending on thestakeholder andthat dependingon the specific situation of the enterprises expectations can also vary. A CSR project can begin in response to acrisis or adverse publicity that a company may suffer. The motive for launching CSR can vary betweenphilanthropy ornotions ofcorporate citizenship. InIndia, over time,the expectations ofthepublic hasgrownenormously with demands focusing on poverty alleviation, tackling unemployment, fighting inequality orforcing companies to take affirmative action.The historical driver of CSR has been philanthropy or a sense of ethics. After the Second World War, a varietyof national and international regulations arose through bodies such as the International Labor Organization(ILO) emphasizing the need for an active social policy for transnational companies (TNCs). This additionaldriver, international institutions, has relevance for India through the work of the ILO, the OECD, SociallyResponsible Investment (SRI), the SA8000 Social Accountability scheme and through the work of the UNCommission on Human Rights which tackled the human rights responsibilities of TNCs.In India, some public sector companies can spend up to 5% of their profits on CSR activities. Pressure groupshave been quite successful in inducing companies to fund CSR schemes, even to the point of using kidnappingas a tactic! Forms of CSR differ according to the country or region. In Europe, for example, notions of CSRprobably developed out ofthe Church and a sense of ethics. In India, CSR has evolved to encompass employees,customers, stakeholders and notions of sustainable development or corporate citizenship. In transnationalcompanies, the approach to CSR typically emerges from one of three elements including a decentralizedstrategy (which might examine human rights), a centralized strategy (which would be company-wide) or aglobally integrated strategy (which would include Coca Cola or oil companies - where local actions can impingeglobally).

The survey conducted by Times of India group on CSR used a sample size of 250 companies involved in CSRactivities through a method of online administration of questionnaire. The questionnaire was evolved after duediligence including focus group meetings, consultations with key stakeholders and a pilot in four metros. Finally82 organizations responded to the questionnaire. These comprised 11 public sector undertakings (PSUs), 39privatenationalagenciesand32privatemultinationalorganizations.Therespondentorganizationsformasatisfactory percentage of 33 per cent of the sample size, given the fact that only those companies that had director indirect involvement in CSR activities were chosen to be approached for the survey.The survey elicited responses from participating organizations about various challenges facing CSR initiativesin different parts of the country. Responses obtained from the participating organizations have been collated andbroadlycategorized bythe research team. These challenges are listed below:Lack of Community Participation in CSR Activities:There is a lack of interest of the localcommunity in participating and contributing to CSR activities of companies. This islargely attributableto the fact that there exists little or no knowledge about CSR within the local communities as no seriousefforts have been made to spread awareness about CSR and instil confidence in the local communitiesabout such initiatives. The situation is further aggravated by a lack of communication between thecompany and the community at the grassroots.Need to Build Local Capacities:There is a need for capacity building of the local non-governmentalorganizations as there is serious dearth of trained and efficient organizations that can effectivelycontribute to the ongoing CSR activities initiated by companies. This seriously compromises scaling upof CSR initiatives and subsequently limits the scope of such activities.Issues of Transparency:Lack of transparency is one of the key issues brought forth by the survey.There is an expression by the companies that there exists lack of transparency on the part of the localimplementing agencies asthey do notmake adequate efforts to disclose informationon their programs,audit issues, impactassessment and utilization of funds.This reported lack of transparency negativelyimpacts the process of trust building between companies and local communities, which is a key to thesuccess of any CSR initiative at the local level.Non-availability of WellOrganized Non-governmental Organizations:It is also reported that thereis non-availability of well organized nongovernmental organizations in remote and rural areas that canassess and identify real needs of the community and work along with companies to ensure successfulimplementation of CSR activities. This also builds the case for investing in local communities by wayof building their capacities to undertake development projects at local levels.Visibility Factor:The role of media in highlighting good cases of successful CSR initiatives iswelcomed as it spreads good stories and sensitizes the local population about various ongoing CSRinitiatives of companies. This apparent influence of gainingvisibility and branding exercise often leadsmany nongovernmental organizations to involve themselves in event-based programs; in the process,they often miss out on meaningful grassroots interventions.Narrow Perception towards CSR Initiatives:Non-governmental organizations and Governmentagencies usually possess a narrow outlook towards the CSR initiatives of companies, often definingCSR initiatives more donor-driven than local in approach. As a result, they find it hard to decidewhether they should participate in such activities at all in medium and long run.Non-availability of Clear CSR Guidelines:There are no clear cut statutory guidelines or policydirectives to give a definitive direction to CSR initiatives of companies. It is found that the scale ofCSR initiatives of companies should depend upon their business size and profile. In other words, thebigger the company, the bigger is its CSR program.Lack of Consensus on Implementing CSR Issues:There is a lack of consensus amongst localagencies regarding CSR projects. This lack of consensus often results in duplication of activities bycorporate houses in areas of their intervention. This results in a competitive spirit between localimplementing agencies rather than building collaborative approaches on issues. This factor limitscompanys abilities to undertake impact assessment of their initiatives from time to time.

CONCLUSIONConclusionThe concept of corporate social responsibility is now firmly rooted on the global business agenda. But in orderto move from theory to concrete action, many obstacles need to be overcome. A key challenge facing business isthe need for more reliable indicators of progress in the field of CSR, along with the dissemination of CSRstrategies. Transparency and dialogue can help to make a business appear more trustworthy, and push up thestandards of other organizations at the same time. Some of the positive outcomes that can arise when businessesadopt a policy of social responsibility include:Company BenefitsImproved financial performance;Lower operating costs;Enhanced brand image and reputation;Increased sales and customer loyalty;Greater productivity and quality;More ability to attract and retain employees;Reduced regulatory oversight;Access to capital;Workforce diversity;Product safety and decreased liability.Benefits to the Community and the General Public

Charitablecontributions;Employee volunteer programs;

Corporate involvement in community education, employment and homelessness programs;Product safety and quality.EnvironmentalBenefitsGreater materialrecyclability;Better product durability and functionality;Greater use of renewable resources;Integration of environmental management tools into business plans, including life-cycleassessment and costing, environmental management standards, and eco-labeling.

Approaches[edit]

CSR ApproachesSome commentators have identified a difference between the Canadian (Montreal school of CSR), theContinental Europeanand theAnglo-Saxonapproaches to CSR.[22]It is said that for Chinese consumers, a socially responsible company makes safe, high-quality products; for Germans it provides secure employment; in South Africa it makes a positive contribution to social needs such as health care and education.[23]And even within Europe the discussion about CSR is very heterogeneous.[24]A more common approach to CSR is corporatephilanthropy. This includes monetary donations and aid given to nonprofit organizations and communities. Donations are made in areas such as the arts, education, housing, health, social welfare and the environment, among others, but excluding political contributions and commercial event sponsorship.[25]Another approach to CSR is to incorporate the CSR strategy directly into operations. For instance, procurement ofFair Tradetea and coffee.Creating Shared Value, or CSV is based on the idea that corporate success and social welfare are interdependent. A business needs a healthy, educated workforce, sustainable resources and adept government to compete effectively. For society to thrive, profitable and competitive businesses must be developed and supported to create income, wealth, tax revenues and philanthropy. The Harvard Business Review articleStrategy & Society: The Link between Competitive Advantage and Corporate Social Responsibilityprovided examples of companies that have developed deep linkages between their business strategies and CSR.[26]CSV acknowledges trade-offs between short-term profitability and social or environmental goals, but emphasizes the opportunities for competitive advantage from building a social value proposition into corporate strategy. CSV gives the impression that only two stakeholders are important - shareholders and consumers.Many companies employbenchmarkingto assess their CSR policy, implementation and effectiveness. Benchmarking involves reviewing competitor initiatives, as well as measuring and evaluating the impact that those policies have on society and the environment, and how others perceive competitor CSR strategy.[27]Cost-benefit analysis[edit]In competitive marketscost-benefit analysisof CSR initiatives, can be examined using aresource-based view(RBV). According to Barney (1990) "formulation of the RBV, sustainable competitive advantage requires that resources be valuable (V), rare (R), inimitable (I) and non-substitutable (S)."[28][29]A firm introducing a CSR-based strategy might only sustain high returns on their investment if their CSR-based strategy could not be copied (I). However, should competitors imitate such a strategy, that might increase overall social benefits. Firms that choose CSR for strategic financial gain are also acting responsibly.[3]RBV presumes that firms are bundles of heterogeneous resources and capabilities that are imperfectly mobile across firms. This imperfect mobility can produce competitive advantages for firms that acquire immobile resources. McWilliams and Siegel (2001) examined CSR activities and attributes as a differentiation strategy. They concluded that managers can determine the appropriate level of investment in CSR by conducting cost benefit analysis in the same way that they analyze other investments.Reinhardt (1998) found that a firm engaging in a CSR-based strategy could only sustain an abnormal return if it could prevent competitors from imitating its strategy.

Potential business benefits[edit]A large body of literature exhorts business to adopt measures non-financial measures of success (e.g.,Deming's Fourteen Points,balanced scorecards). While CSR benefits are hard to quantify, Orlitzky, Schmidt and Rynes[54]found a correlation between social/environmental performance and financial performance.Thebusiness casefor CSR[55]within a company employs one or more of these arguments:Triple bottom line[edit]"People, planet and profit", also known as the triple bottom line form one way to evaluate CSR. "People" refers to fair labour practices, the community and region where the business operates. "Planet" refers to sustainable environmental practices.Profitis the economic value created by the organization after deducting the cost of all inputs, including the cost of the capital (unlike accounting definitions of profit).[56][57]This measure was claimed to help some companies be more conscious of their social and moral responsibilities.[58]However, critics claim that it is selective and substitutes a company's perspective for that of the community. Another criticism is about the absence of a standard auditing procedure.[59]Human resources[edit]A CSR program can be an aid torecruitmentandretention,[60][61]particularly within the competitivegraduatestudent market. Potential recruits often consider a firm's CSR policy. CSR can also help improve the perception of a company among its staff, particularly when staff can become involved throughpayroll giving,fundraisingactivities or community volunteering. CSR has been credited with encouraging customer orientation among customer-facing employees.[62]Risk management[edit]Managingriskis an important executive responsibility. Reputations that take decades to build up can be ruined in hours through corruption scandals or environmental accidents.[63]These draw unwanted attention from regulators, courts, governments and media. CSR can limit these risks.[64]Brand differentiation[edit]CSR can help build customer loyalty based on distinctive ethical values.[65]Some companies use their commitment to CSR as their primary positioning tool, e.g.,The Co-operative Group,The Body ShopandAmerican Apparel[66]Some companies use CSR methodologies as a strategic tactic to gain public support for their presence in global markets, helping them sustain a competitive advantage by using their social contributions as another form of advertising.[67]Reduced scrutiny[edit]Corporations are keen to avoid interference in their business throughtaxationand/orregulations. A CSR program can persuade governments and the public that a company takeshealth and safety, diversity and the environment seriously, reducing the likelihood that company practices will be closely monitored.Supplier relations[edit]Appropriate CSR programs can increase the attractiveness of supplier firms to potential customer corporations. E.g., a fashion merchandiser may find value in an overseas manufacturer that uses CSR to establish a positive imageand to reduce the risks of bad publicity from uncovered misbehavior.Criticisms and concerns[edit]CSR concerns include its relationship to the purpose of business and the motives for engaging in it.Nature of business[edit]Milton Friedmanand others argued that a corporation's purpose is to maximize returns to its shareholders and that obeying the laws of the jurisdictions within which it operates constitutes socially responsible behavior.[68]While some CSR supporters claim that companies practicing CSR, especially in developing countries, are less likely to exploit workers and communities, critics claim that CSR itself imposes outside values on local communities with unpredictable outcomes.[69]Better governmental regulation and enforcement, rather than voluntary measures, are an alternative to CSR that moves decision-making and resource allocation from public to private bodies.[70]However, critics claim that effective CSR must be voluntary as mandatory social responsibility programs regulated by the government interferes with peoples own plans and preferences, distorts the allocation of resources, and increases the likelihood of irresponsible decisions.Motives[edit]Some critics believe that CSR programs are undertaken by companies to distract the public from ethical questions posed by their core operations. They argue that the reputational benefits that CSR companies receive (cited above as a benefit to the corporation) demonstrate the hypocrisy of the approach.[73]Misdirection[edit]Another concern is that sometimes companies use CSR to direct public attention away from other, harmful business practices. For example,McDonald's Corporationpositioned its association withRonald McDonald Houseas CSR[74]while its meals have been accused of promoting poor eating habits.[75]Controversial industries[edit]Industries such as tobacco, alcohol or munitions firms make products that damage their consumers and/or the environment. Such firms may engage in the same philanthropic activities as those in other industries. This duality complicates assessments of such firms with respect to CSR.

Stakeholder influence[edit]One motivation for corporations to adopt CSR is to satisfy stakeholders.Branco and Rodrigues (2007) describe the stakeholder perspective of CSR as the set of views of corporate responsibility held by all groups or constituents with a relationship to the firm.[78]In their normative model the company accepts these views as long as they do not hinder the organization. The stakeholder perspective fails to acknowledge the complexity of network interactions that can occur in cross-sector partnerships. It relegates communication to a maintenance function, similar to the exchange perspective.[79]Ethical consumerism[edit]The rise in popularity ofethical consumerismover the last two decades can be linked to the rise of CSR.[80]Consumers are becoming more aware of the environmental and social implications of their day-to-day consumption decisions and in some cases make purchasing decisions related to their environmental and ethical concerns.[81]Socially responsible investing[edit]Main article:Socially responsible investingShareholders and investors, throughsocially responsible investingare using their capital to encourage behavior they consider responsible. However, definitions of what constitutes ethical behavior vary. For example, some religious investors in the US have withdrawn investment from companies that violate their religious views, while secular investors divest from companies that they see as imposing religious views on workers or customers.[82]Creating shared value[edit]Non-governmental organizationsare also taking an increasing role, leveraging the media and the Internet to increase the visibility of corporate behavior. Through education and dialogue, the development of community awareness in pushing businesses to change their behavior is growing.[83]Creating Shared Value(CSV) claims to be more community aware than CSR. Several companies are refining their collaboration with stakeholders accordingly.Public policies[edit]Some national governments promote socially and environmentally responsible corporate practices. The heightened role of government in CSR has facilitated the development of numerous CSR programs and policies.[84]Various European governments have pushed companies to develop sustainable corporate practices.[85]CSR critics such asRobert Reichargued that governments should set the agenda for social responsibility with laws and regulation that describe how to conduct business responsibly.Regulation[edit]FifteenEuropean Unioncountries actively engaged in CSR regulation and public policy development.[85]CSR efforts and policies are different among countries, responding to the complexity and diversity of governmental, corporate and societal roles. Studies claimed that the role and effectiveness of these actors were case-specific.[84]The variety among companies complicates regulatory processes.[86]Self-regulation allows each corporate actor to balance profits and social responsibility without cumbersome governmental involvement. Studies suggest that mandated CSR distorts the allocation of resources and increases the likelihood of irresponsible decisions.[87]Bulkeley cited the Australian government's actions to avoid compliance with theKyoto Protocolin 1997, over concerns of economic loss and national interest. The Australian government claimed that the pact would damage Australia more than any otherOECDnation.[88]In November 2007, the new Prime MinisterKevin Ruddratified the protocol.Canada adopted CSR in 2007.Prime Minister Harperencouraged Canadian mining companies to meet Canadas newly developed CSR standards.[89]The Heilbronn Declaration is a voluntary agreement of enterprises and institutions in Germany especially of the Heilbronn-Franconia region signed the 15th of September 2012. The approach of the Heilbronn Declaration targets the decisive factors of success or failure, the achievements of the implementation and best practices regarding CSR. A form of responsible entrepreneurship shall be initiated to meet the requirements of stakeholders trust in economy. It is an approach to make voluntary commitments more binding.[90]Laws[edit]In the 1800s,the US government could take away a firm's license if it acted irresponsibly. Corporations were viewed as "creatures of the state" under the law. In 1819, theUnited States Supreme CourtinDartmouth College vs. Woodwardestablished a corporation as a legal person in specific contexts. This ruling allowed corporations to be protected under the Constitution and prevented states from regulating firms.[91]Recently countries included CSR policies in government agendas.[85]On 16 December 2008, the Danish parliament adopted a bill making it mandatory for the 1100 largest Danish companies, investors and state-owned companies to include CSR information in their financial reports. The reporting requirements became effective on 1 January 2009.[92]The required information included: CSR/SRI policies How such policies are implemented in practice Results and management expectationsCSR/SRI is voluntary in Denmark, but if a company has no policy on this it must state its positioning on CSR in financial reports.[93]In 2014,Indiabecame the world's first country to enact a mandatory minimum CSR spending law. UnderCompanies Act, 2013, any company having a net worth of 500croreor more or a turnover of 1,000 crore or a net profit of 5 crore must spend 2% of their net profits on CSR activities.[94]The rules came into effect from 1 April 2014.[95]Crises and their consequences[edit]Crises have encouraged the adoption of CSR. TheCERESprinciples were adopted following the 1989Exxon Valdezincident.[45]Other examples include thelead paintused by toy makerMattel, which required the recall of millions of toys and caused the company to initiate new risk management and quality control processes.Magellan Metalswas found responsible for lead contamination killing thousands of birds in Australia. The company ceased business immediately and had to work with independent regulatory bodies to execute a cleanup.Odwallaexperienced a crisis with sales dropping 90% and its stock price dropping 34% due to cases ofE. coli. The company recalled all apple orcarrotjuice products and introduced a new process called "flash pasteurization" as well as maintaining lines of communication constantly open with customers.