CSR advisories can help corporates to formulate better business plans that have the potential to incrementally increase the premium that consumers would be willing to pay on their brands and enhance the efficiency of the entire value chain
- Organisations have embraced CSR for fulfilling their obligations towards the society
- Labour welfare, environmental management, gender rights, human rights, social balance and tackling corruption are some of the important issues that can be addressed through CSR
- CSR can increase the market value of the business from 4 to 6 percent and reduce systematic risks by 4 percent
By Team ContentCraft
orporate Social Responsibility (CSR), as described by the United Nations Industrial Development Organization, (UNIDO), are initiatives undertaken by businesses for integrating their entrepreneurial goals with ethical values towards the fulfilment of social and environmental objectives. Generally, these objectives are achieved through social engagements and volunteering activities.
Discussions around CSR initiatives started in the 1950s. Initially, these discussions remained in the realm of academic references. But towards the end of the 20th century, these discussions moved into mainstream discourse and by the beginning of the 21st, organisations embraced the need for fulfilling their social obligations for creating a more equitable society.
The cornerstone of the concept is to make corporate functioning more responsible and inclusive. One of the key features of CSR is an amalgamation of sustainability with future goals of organisations towards the betterment of society as part of their social outreach programmes.
CSR initiatives, as opposed to charity and donations, can be considered as an economically viable strategy for businesses catering to international markets, which are increasingly becoming sensitive to important issues such as labour welfare, environmental management, gender rights, human rights, social balance and tackling corruption.
THE NEED FOR CSR ADVISORY
iven the fact that CSR strategies are comprehensive and not unidimensional as simple charitable programs, advisories can help businesses realise the best strategies to align their corporate ethos and workings with CSR goals and objectives. Advisories can help organisational structures of companies by suggesting solutions that can be incorporated in their policy plans and help them customise their efforts in the desired direction.
Social spending can thus be channelised and utilised in an increasingly conscientious and efficient manner. It adds fundamental value to the working mechanisms of a company. The various steps for devising and implementing a procedure for CSR schemes can be handled through a CSR advisory.
A detailed study published by MDPI studied the significant topic correlation between CSR and company strategy, supply chains, corporate governance, social business, ethics and entrepreneurship clearly indicated the exponential rise in CSR and related data discussions across the community via Twitter.
With exponential improvements in the quantity and quality of data availability, the need for an active group of CSR researchers and practitioners will be immensely valuable. CSR advisors are can endeavour to understand and derive valuable results for business models.
A CSR advisory can also incentivise the value of this expected responsibility for corporate structures by making the business more trustworthy and avoid neglecting it as compulsive decisions taken by firms to forcibly comply with some government regulations or rules. It can help mitigate the risks that are associated with unaccounted ventures and commercial stakes within a business model. CSR consultants can offer wide-ranging experience, with a diverse vision and provide much inspiration to develop better business models.
THE BENEFITS OF CSR ADVISORY
SR initiatives are successful drivers of business growth. A project report launched by Verizon and Campbell Soup Company along with Forbes points to the numerical values about the various benefits of CSR inclusion in business strategies. It highlights how CSR can increase the market value of the business from 4 to 6 percent and reduce systematic risks by 4 percent among many other positive effects on shareholder value, revenue, brand reputation, retention statistics and increase overall productivity by an approximate 13 percent while cutting down the cost of debts and equities.
This study titled, Project ROI: Defining the Competitive and Financial Advantages of Corporate Responsibility and Sustainability, provides a detailed evaluation of the value created and benefits of CSR in entrepreneurial decisions.
Similarly, reports published by the GlobalWebIndex suggest that people willing to pay for eco-friendly products have risen from 49 percent in 2011 to 57 percent in 2019, indicating that conscientious consumers don’t mind paying an extra premium above the brand value. Newsweek and Statista honoured America’s Most Responsible Companies 2020 based on performance indicators available to the public through CSR and sustainability reports complemented with an independent survey, which served as a measuring tool for a company’s adherence and responsiveness to CSR objectives.
A report published by BSR, a global non-profit organisation highlighted how business values can drive towards more socially responsible and sustainable contract partnerships in the post-pandemic world. Around 68 percent of companies showed leadership commitment towards gender equality and women’s empowerment, while 41 percent advocated for gender equality. Climate Change relevance for businesses jumped from 14 to 52 percentage points from 2018 to 2019, under the heading titled, The State of Sustainable Business in 2019.
SCOPE OF CSR ADVISORY
SR has become increasingly relevant in scope and coverage as society tends to place more value on socially responsible mechanisms. The GlobalWebIndex highlights that nearly 60 percent of people would be willing to pay a premium for brands that advocate CSR-based strategies by propagating products and services which have a positive impact on the environment like personal accessories, electronics and healthcare products like TOMS COVID-19 Global Giving Fund, a relief support mechanism started by TOMS for global relief contribution.
Some objectives of CSR advisory
- Provide help and strategize the vision of companies by helping them move on a responsible path of humanitarian, societal and environmental concerns.
- Help a business understand its values and then align them with some major objectives in the areas of concern.
- Evaluate business development and management and boost investment.
- Analyse from the grassroots levels and evaluate most adequately the planning and impact of CSR tasks and activities.
- Monitor tax submissions of businesses by assessing their impact on the immediate environment. It can help companies stand truthfully and responsibly in different types of interactions.
- Setting up policy, implementation, and execution of CSR objectives
- Dedicate its full time towards the outcomes and impact of the policy along with proper documentation and reporting.
CSR ADVISORY SCENARIO
nternationally, the world is becoming increasingly considerate of CSR policies and the idea of corporations getting more responsible and compliant with various international standards is gaining traction. Multinational companies like Starbucks set major examples of this conscious effort. BSR, FSG, and Mission Measurement: Jason Saul are effective organisations based in the US working in this field. The International Organization for Standardization (ISO) has also shared a set of standards, providing direction for incorporating CSR in business strategies.
These sets of standards are voluntary and guide companies instead of setting hard and fast rules and regulations. However, the increasing attractiveness and viability of this program are making more companies aware of the benefits of its inclusion. It was launched in 2010 with various meetings and discussions between various stakeholders and governments. The variety and expanse of benefactors involved in this process make it more important in today’s context.
CSR in India has seen an upgrade in the form of a regulatory mechanism. The Ministry of Corporate Affairs, India launched The National Corporate Social Responsibility Portal in wake of the need for releasing data related to the same. In India, CSR is regulated under Section 135 of the Companies Act, 2013.
Since 2014, CSR comes as a mandatory provision under the Act. India has thus become the only country to place registered businesses under the umbrella of CSR regulations and mandates them to involve themselves in social welfare activities. It serves as a basic setup for inducing companies to become more responsible and fulfil future public-private partnerships.
Reliance, ONGC, Wipro and TCS are among some of the top companies spending on CSR in India. Companies have to make public disclosure regarding their CSR activities to the concerned Ministry.