Oct 14, 2017
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Corporate Social Responsibility (CSR)

Economic growth consumes available inputs of the environment and society.  The harnessing of these natural resources directly impact the environment and society at large. Therefore, there is a need to embark a sense of social responsibility on corporates known as Corporate Social Responsibility (CSR).

CSR, is a dynamic concept channeling companies to create a beneficial environment for all humans. CSR or corporate conscience, corporate citizenship invokes a sense of social conscious to uplift a deprived society.

Need for CSR

The significance of  Corporate Social Responsibility aims to secure a sustainable business that also cares for the environment and its people.

(i) Economical: the Corporate Social Responsibility initiative empowers companies to undertake recycling, reusing, water conservation and energy efficient steps, thus reducing operative costs.
(ii) Customer Loyalty and sales: The customers, indeed recognize the  efforts of those companies undertaking social responsibilities. Therefore, a customer is likely use the services of the business again. The return value of a customer, directly projects an increase in sales.

(iii)Reputation and Brand image: A company undertaking Corporate Social Responsibility , elevates its reputation among the public, thereby building a brand image and increasing chances of attracting perspective clients.
(iii) Higher productivity and Quality: CSR, also focuses on improving the working conditions of its employees, people involved in supply, distribution chain, thus achieving higher productivity and better quality of services.
helps in increased productivity with better quality
(iv) Access to Capital: Companies with strong  Corporate Social Responsibility backgrounds, have an increased chance to access capital, because, CSR is a prominent factor lending institutes take into consideration while approving a loan.

Study: An 11-year study of corporations by Harvard University on stakeholder management, found that socially responsible and sustainable corporations had sales growth 4 times and also an employment growth 8 times compared to “Shareholder first” companies. (KPMG, The Business Case for Sustainability 2001)

Amount spent on CSR:

The general query to simplify the amount spent on Corporate Social Responsibilty: 2% of Average net profits of last 3 year profits go towards CSR expenditure.  Also note that the net profit here does not include any dividend received/ gain on sale of assets/ loss on sale of assets as per Companies Act, 2013.

List of CSR Activities: 

Following are some of the areas of Corporate Social Responsibilities:

  • Ensure environment sustainability.
  • Eradicate hunger and poverty.
  •  Provide employment enhancing skills.
  • Additionally, promote training and education.
  • Promote gender equality; women empowerment.
  • Provide maternal benefits.
  •  Support the noble cause of reducing child mortality.
  • Moreover, contribute to the Prime Ministers National Relief fund to the Schedules castes, tribes and other backward classes.
  • Any other activity as prescribed from time to time.

The CSR, secures a responsible and humanitarian relationship between companies and people.

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