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Corporate Social Responsibility

Corporate Social Responsibility (CSR)

The primary goal of any business is to make money and in today’s world, it is not just about making money and profits. More and more large organisations are beginning to understand that there needs to be a good balance of both evil and good. Evil in the sense of making money and good where the organisation consider the interests of both environment and humanity.

Why CSR? Here are some benefits of CSR:

1. Enhanced reputation and brand image:

Reputation is an important sustainable competitive advantage, because it is very hard to build and cannot be easily mimicked by competitors. A organisation’s reputation results from trust by its stakeholders. A strong reputation in ethical environmental and social responsibility can help a organisation build this trust. Several major brands, such as The Body Shop & the Co-operative Group are built on ethical values

2. Increased profit and customer loyalty:

Several academic studies have shown a direct correlation between socially responsible business practices and positive financial performance:

    • A 1997 DePaul University study found that organisations with a defined corporate commitment to ethical principles do better financially (based on annual sales/revenues) than organisations that don’t.


    • An 11-year Harvard University study found that “stakeholder-balanced” organisations showed four times the growth rate and eight times the employment growth when compared to organisations that are shareholder-only focused.


    • According to the Millennium Poll on CSR, the majority of 25,000 people interviewed in 23 countries want organisations to contribute to society beyond making a profit.


  • Research has shown that there is a growing desire by consumers not only to buy good and safe products, but they also want to know that what they buy was produced in a socially and environmentally responsible way such as “sweatshop-free” and child-labor-free clothing, smaller environmental impact.

3. Creating new business opportunities:

Experience gained through addressing CSR challenges also provides opportunities for organisations to create new business opportunities.

4. Increased ability to attract and retain employees:

A organisation’s dedication to CSR can be an important aid to recruitment and retention compared with competitors. People want to work for a organisation that is in accordance with their own values and beliefs.

    • 78% of employees would rather work for an ethical and reputable organisation than receive a higher salary. (The Cherenson Group, www.csreurope.org)


    • In interviewing 150 top employees in 24 organizations, the UK consulting firm, Stanton Marris, learned that employer reputation was a key factor in accepting a job offer.


  • 76% of those polled by the Cone/Roper Corporate Citizenship Study said a organisation’s “commitment to causes” was an important consideration in deciding where to work.

5. Increased productivity and morale:

Committing CSR internally to improve working conditions, lessen environmental impacts can lead to increased productivity and staff morale where the workforce are more reliable, enthusiastic and efficient.

6. Attracting investors and business partners:

Organisations addressing ethical, social, and environmental responsibilities have easier access to capital through investors and better conditions for loans on international money markets. It is also easier to do merger/acquisition negotiations, finding business partners and suppliers as well as smoother workforce integration.

A 2001 study showed that 12% of total investment in the USA was of a socially responsible nature. Likewise, there are were 313 green, social and ethical funds operating in Europe in June 2003, showing a 12% increase in the last eighteen months.

6. Managing risk:

The more an organisation is committed to CSR, the better it is able to manage risk. Large corporations and well-known brands are the first target of litigation for CSR misconduct such as the highly publicised “Nike sweatshops”. The consequences could be huge in terms of market share or capital loss. A tarnished reputation might require years to rebuild and cost a large sum of money.

7. Preferential government and regulatory treatment:

Governments and regulators are more lenient with organisations that are more committed to CSR. Preferential treatment may be given when applying for permits or permission to do something and less intervention in their business through taxation and regulations.

Some believe that CSR programmes are often undertaken in an effort to distract the public from the ethical questions posed by their core operations. Some that have been accused include British Petroleum (BP) and British American Tobacco (BAT).

8. Increased operational efficiency and reduced operating costs:

Operational efficiency can be increased by reducing waste production and operating costs can be reduced by less water usage, increasing energy efficiency and selling recycled materials. At a broader scale, such CSR actions can result in environmental, social and economic benefits.

9. Innovation in market through cooperation with local communities:

CSR requires cooperation with the local communities and relationships can be improved. This can help organisations in tailoring products and services as well as more rapid acceptance to local markets.

Now, how do you implement a CSR plan/model?

There a few things to think about before you begin a CSR plan. Begin with a big picture, can you do a better job in making our planet, its environment and its inhabitants a better world to live in? If yes, think about how your organisation can impact our world; its people and how you as an organisation can create a better, fair, just and compassionate world.

To achieve success, such ethical social and environmental values need to be embedded in your business culture: business practices, vision and plan which begin at the highest level.

To begin, you need to do a self assessment of what priority areas you need to implement based on your unique business strengths. Key stakeholders should be involved in the process where discussions can happen so that everybody can buy into the concept. First, identify any risk that may cause reputation and/or financial risk to your organisation. Second, identify those socially responsible initiatives that are the most cost effective to implement. Once you have developed your CSR priorities, you need to establish a code of principles conduct, clear value statement where the whole organisation needs to commit. You then need to develop policy to formalise and articulate this commitment, and create programs to implement this policy. To make the programs meaningful, organisations need to provide training and education, and plan visible, memorable activities. The CSR plan should be implemented across the organisation. It should be localised for different markets and it should have measurement techniques. Open communication with stakeholders (community, employees, customers, shareholders, suppliers and the environment) is also vital as they need to feel that they can respect and trust a company’s values. Finally, report the success of the programs and measure the progress as your CSR investment needs to be justified to shareholders.

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