A SKILL DEVELOPMENT (394) PROJECT REPORT

ON
IMPACT OF CSR INITIATIVES ON A COMPANY'S BOTTOM LINE

SUBMITTED BY
SHAH NEELAM VINAY
THITE SUDIKSHA SUNIL
THEVAR CHITRA DURAISWAMY
NIKITA DINKAR GAVLI
PAWAR CHAKRADHAR VITHAL
PAWAR SOM KHASHABA
PHAD SAPNA SANJAY
ROKADE CHETAN MAHENDRA
ROSHAN K VARGHESE
SAINI MAMTA GANESH
SAWANT BHAVESH RANJAY
SHAIKH ADIL HAMID
SINGH SHIVANI ANIL
THOMAS KATHRYN NIXON
THOMBARE SHUBHAM KIRAN
THORAVE PRIYANKA VIVEK
REBELLO MONICA JUJEPAUL

UNDER THE GUIDANCE OF

Prof. Avinash Darbare

KES’s
PRATIBHA INSTITUTE OF BUSINESS MANAGEMENT
CHINCHWAD – 411019.

1
 ACKNOWLEDGEMENT

I am extremely grateful to Pratibha Institute of Business Management for having prescribed

this project work as a part of academic requirement in the Masters of Business Administration

(MBA) course. I wish to express a special thanks to my project guide “Prof. Avinash Darbare”.

Without whose guidance the project may not have taken shape.

I would like to thank all those who have directly or indirectly helped me towards the execution

of this project with full sincerity. Sincere thanks to all.

2
 EXECUTIVE SUMMERY

Corporate social responsibility is one of the needful and prominent business practices of today’s
scenario. Companies Practising CSR has an enhanced overall reputation and their corporate
identity promotes positive culture among society. The execution of a CSR process is an important
component of a company’s assets and its strategy is a competitive component in market itself
which is led by company itself. This means integrating 3P’s which acts a tool of society like
people, planet and profit which collaborates with (Internal and External Public) stakeholders.
Overall aim is to make a positive and strong impact on society as a whole. The company’s bottom
line refers to a company’s net earnings, net profit or net income. The term “bottom” explains the
net income figure on a company’s income statement. Bottom line also refers to any activity that
may increase/decrease net earnings. A company that has more net earnings or reducing costs
cutting is said have “improving its bottom line”. Most companies aim to improve their bottom
lines through two simultaneous methods: growing profits through revenues and increasing
efficiency through cutting costs. This paper focuses on how CSR initiative has affected the
company bottom line or overall growth. It will throw light on the scenario and impact of CSR
strategies followed by companies. The purpose is well defined to know the 5w’s and 1H of CSR
initiatives. With various case studies we will try to answer who does CSR and how. What is the
company all about, where is it located, whom it is run by, Since when it is running and how the
company has implemented CSR strategy and what was the result.
The bottom line of a company is defined as a company's net earnings, or net income which is
calculated at the end. The reference to "bottom" describes the relative location of the net income
figure on a company's income statement.

3
 INDEX

SR.NO CONTENTS PAGE

NO.
1. INTRODUCTION 5

2. OBJECTIVE OF 9
STUDY
3. LITERATURE 10
REVIEW
4. RESEARCH METHODOLOGY 11

5. SOCIAL RESPONSIBILITY 12

6 ROLE AND RESPONSIBILITY OF 14

CSR

7. THE CSR COMMITTEE AND POLICIES 15

8. THEORY OF CSR BOTTOM LINE 17

9. 3WAYS CSR CAN INCREASE BOTTOM LINE 20

10. IMPACT OF CSR INITIATIVES ON A COMPANY'S BOTTOM 21

LINE

11. 22
14 SOCIALLY RESPONSIBLE COMPANIES THAT ARE WELL-
KNOWN FOR CSR IN BOTTOM-LINE
12. KEY AREAS TO IMPLEMENT CSR INITIALIVES 25

13. RISK IN CORPORATE CITIZENSHIP 26

14. RISK IDENTIFICATION AND ASSESSMENT 28

15. LIMITTIONS 36

16. CONCLUSION 39

17. BIBLIOGRAPHY 40

4
 INTRODUCTION

In 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 stakeholders and also openhandedly support societal initiatives. In India companies
like TATA and Birla are practicing the Corporate Social Responsibility (CSR) for decades, long
before CSR become a popular basis. There are many instances where corporate have played a
dominant role in addressing issues of education, health, environment and livelihoods through
their corporate social responsibility interventions across the country.

As per United Nations and the European Commission, Corporate Social Responsibility (CSR)
leads to bottom-line: profits, protection of environment and fight for social justice. It is expected
that Civil society, activist groups, Government and corporate sectors should work together to
create appropriate means and avenues for the marginalized and bring them to the mainstream. The
success of CSR lies in practicing it as a core part of a company’s development strategy. It is
important for the corporate sector to identify, promote and implement successful policies and
practices that achieve bottom-line results.

At one end of the spectrum, CSR can be viewed simply as a collection of good citizenship
activities being engaged by various organizations. At the other end, it can be a way of doing
business that has significant impact on society. For this latter vision to be enacted in India, it will
be necessary to build CSR into a movement. That is 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 of interested stakeholders will be able to take collective
action to establish CSR as an integral part of doing business – this is not a passing fad. There are
more than 1,000,000 registered companies in India out of which less than 1percent companies are
traded on the Indian Stock Exchange. A new Trend has started in Corporate is the establishment
of special committees within the board of directors to oversee CSR activities. Groups of corporate
are being encouraged to come together to promote CSR. In 2006, Europe created the European
Alliance for CSR. It currently consists of 70 multinational corporate houses and 25 national
partner organizations and has become a unique resource for building capability in CSR.

5
Definition of CSR

The well accepted definition of CSR is not a common term; MNC’s prefers sustainable

development or sustainable business while several Indian companies talk about responsible

business or P (People, Planet, and Profit). It is important to note that Indian companies and

stakeholders give a broader definition of CSR then MNC and stakeholders. According to the

Indian Corporate: “Sustainable development implies optimizing financial position while not

depleting social and environmental aspects and CSR implies supporting issues related to

children, women and environment”.

These corporate refer in its definition of CSR to community development. In the context of

Western community, development is often seen as charity. In the Indian context it is seen as a

large responsibility of a corporate, not only by stakeholders but also by the local Indian

management. The background of this is that stakeholders see the large western companies as

capitalist islands in a developing country. This position gives them a certain responsibility

towards the community. Most of the MNC’s leave room to their Indian daughter company to

develop initiatives in this field; sometimes they have a special fund. All kinds of initiatives

are developed by the interviewed Indian companies, many times bottom up initiated by the

employees.

Nearly all leading corporate in India are involved in corporate social responsibility (CSR)

programs in areas like education, health, livelihood creation, skill development, and

empowerment of weaker sections of the International Conference on Technology and

Business Management March 28-30, 2011 102 society. Notable efforts have come from the

Tata Group, Infosys, Bharti Enterprises, ITC Welcome group, Indian Oil Corporation among

others. The 2010 list of Forbes Asia’s ‘48 Heroes of Philanthropy’ contains four Indians. The

2009 list also featured four Indians. India has been named among the top ten Asian countries

paying increasing importance towards corporate social responsibility (CSR) disclosure

6
 norms. India was ranked fourth in the list, according to social enterprise CSR Asia's Asian

Sustainability Ranking (ASR), released in October 2009. Although corporate India is

involved in CSR activities, the central government is working on a framework for quantifying

the CSR initiatives of companies to promote them.

Corporate Social Responsibility is not a new area of the study; but recently is gaining

attention and interest among leading world companies, universities, researchers, media, the

governments and NGOs. While some companies are totally sold out on CSR by incorporating

CSR as part of their business strategies, others are less enthusiastic, wondering if such efforts

are just public relations stunts or corporate image-building activities. If companies see CSR as

mere philanthropy or charity and nothing more, then they do not yet clearly understand what

CSR is. CSR, when properly understood, is not what you do with your money once you have

made it but how you make your money.

Being a socially responsible company is much more important than ever before. Ever since

society’s expectations have changed, the expectations of customers, partners and employees

have altered as well. Still, the issues now are far more various, complex, global, and fast-

changing than ever before. In the era of globalization, businesses are no longer able to conduct

destructive and unethical business practices such us unfair labour practices, childhood obesity,

environmental pollution, without receiving negative response from the public. In order to retain

in the market, the importance of conducting sustainable business practice has become

inevitable demand from civil society, consumers, other corporations and governments in

general.

Defining CSR is not an easy task, since there is no single absolute definition to use and one

size does not fit all. According to Lord Holme and Richard Watts in the article “Making Good

Human Sense” published by World Business Council for Sustainable Development define

Corporate Social Responsibility (CSR) as, “the continuing commitment by business to behave
7
ethically and contribute to economic development while improving the quality of life of the

workforce and their families as well as of the local community and society at large.”

According to the authors there are effects on society that can be divided into three broad

overlapping areas, such as :

1) Social: involvement in external social issues such as education, social inclusion, generation

and employee volunteering.

2) Economic: addressing issues relating to jobs, ethical training standards and product value.

3) Environment: consideration of emissions and waste control, energy use, product life cycle

and sustainable development.

8
 OBJECTIVE OF STUDY

✓ To know in detail what is CSR

✓ To study the Impact of CSR initiatives on a company's bottom line.

✓ To study the importance of CSR

✓ To get Information from Company’s CSR.

9
 LITERATURE REVIEW
Spend time at any industry meeting, or browse the industry headlines and you’ll quickly realize
there is a theme of how to boost retention, decrease the increasing costs per call, and increase low
employee morale. Call centers have always been challenging to manage regarding the costs of
training and employee turnover. Additional stresses facing call centers pivot around the
generational shift taking place and the changing values of a younger workforce. While there is no
silver-bullet to address the many challenges of the workplace to increase profitability, there are
definitely steps that companies can take to limit turnover, boost morale, appeal to customers and
do good in the world. Most companies have recognized the value of investing in effective training
and certification programs, but there is more to be done. Beyond solid training for employees,
customers expect more from the companies they do business with. They want to know that the
dollars they spend with a brand or product are helping make a difference. This is where being a
corporate social steward can be a net positive to your organization. It’s an investment valued by
employees and customers.

How does being socially responsible help the bottom line?

When corporations visibly invest in their communities, those companies become a place where
people want to work. When agents are engaged with an employer that gives back, they feel that
they are part of contributing to a better community. Companies that value their employees as
individuals and community members are more likely to enjoy less attrition, loyalty, and
enthusiasm from its employees which ultimately yields higher customer satisfaction. Beyond
creating a more productive work environment, being socially responsible is also what customers
expect. There are many companies that have taken the lead in CSR practices, including Telus
International, Home Depot, Nike and FedEx Kinkos, and in today’s highly competitive
environment, being known as a company that works to improve its communities will help set you
apart from your competitors. In a study released by MIT a few years back, the authors found that
when companies take social responsibility seriously, they enjoy competitive advantages, higher
brand recognition and reputation, lower employee attrition and better employee engagement.

10
 RESEARCH METHODOLOGY
Looking into requirements of the objectives of the study the research design employed for the

study is of descriptive type. Keeping in view of the set objectives, this research design was

adopted to have greater accuracy and indepth analysis of the research study. Available

secondary data was extensively used for the study. The investigator procures the required data

through secondary survey method. Different news articles, Books and Web were used which

were enumerated and recorded

11
 SOCIAL RESPONSIBILITY

Social responsibility is a moral obligation on a company or an individual to take

decisions or actions that is in favour and useful to society. Social responsibility in
business is commonly known as Corporate Social Responsibility or CSR. For any
company, this responsibility indicates that they acknowledge and appreciate the
goals of the society, and therefore, would support them to achieve these goals.

CORPORATE SOCIAL RESPONSIBILITY

Corporate social responsibility (CSR) is a self-regulating business model that helps a company
be socially accountable to itself, its stakeholders, and the public. By practicing corporate social
responsibility, also called corporate citizenship, companies can be conscious of the kind of
impact they are having on all aspects of society, including economic, social, and environmental.

To engage in CSR means that, in the ordinary course of business, a company is operating in
ways that enhance society and the environment instead of contributing negatively to them.

IMPORTANCE OF CSR

1. Social Responsibility and Customer Relationships:-

One of the foundational elements of CSR is that it causes companies to
reason beyond basic ethics to consider the benefits of active involvement in
communities. In his article "The 7 Principles of Business Integrity,"
business strategist Robert Moment argues that 21st-century companies must
prove themselves to customers to build long-term, trusting relationships.
They must also get involved in the community to give back. This
community connection endears your company to the local markets in which
you operate.

2. Motivated Employees: -
Employees are a company's most valued asset. This is the premise of a
company's obligation to this key stakeholder group with regard to CSR

12
 compliance. This means treating employees with respect and offering fair
working conditions. It also means establishing fair hiring practices and
promoting a non-discriminatory workplace. This improves morale within
the workplace and encourages teamwork.

3. Profitability and Value: -

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.

4. Showing a True Commitment: -

The most successful corporate social responsibility programs integrate these
two types of CSR together to show a true commitment to a cause. For
example, a company that uses sustainable materials in their products,
donates financial resources to environmental causes, and allows employees
to take paid time off for volunteering at environmental charities would be
showing a true commitment to the environment that goes beyond any single
CSR initiative.

5. Public Relations Benefits: -

Public relations are a potent tool for shaping consumer perception and
building a company’s image. Corporations that actively promote their social
responsibility activities often take steps to publicize these efforts through
the media. Getting the word out about corporate donations, employee
volunteer programs, or other CSR initiatives is a powerful branding tool that
can build publicity for you in both online and print media.

13
ROLE AND RESPONSIBILITY OF CSR

14
 The CSR Committee and Policies

The qualifying companies are required to form a CSR committee. They are needed to spend at
least 2% of its average net profit for the 3 previous consecutive financial years on CSR initiatives.
Mandatorily, a CSR committee has to be formed by the qualifying company. It also has to appoint
at least 3 Board of Directors (Board). This Committee is responsible for preparing and
recommend to the Board, a policy and a plan that will specify the CSR activities to be undertaken
(CSR Policy). They would also suggest (and protect) the amount of expenditure to be incurred on
the activities referred. Monitor the implementation of CSR Policy and activity is also their job.
The Board will analyse the recommendations and suggestions made by the CSR Committee and
support the CSR Policy and activities of the company.

TYPES OF CSR ACTIVITES: -

1. Eradicating hunger, poverty and malnutrition: -

This can be done by promoting health care and sanitation in rural areas. This can also
be a contribution to the Swach Bharat Kosh which has been set-up by the Central Government.
Blood donation camps can also be done as a part of a company’s CSR initiative.

2. Promoting education: -
This can be inclusive of providing education to children and essential vocational skill
training that enhance employment or special education among women, elderly and the differently-
abled.

3. Promoting gender equality: -

Women empowerment programmes can be launched by setting up affordable hostels for
women. Establishing old age homes, daycare centers and other facilities for senior citizens is
another option. Orphanages can also be set up and managed by the CSR committee.

15
 4. CSR initiatives related to the environment: -
Contributions can be made towards environmental sustainability. Activities that help in
maintaining the ecological balance, protection of flora and fauna, promote animal welfare,
conservation of natural resources and maintaining quality of soil, air and water including
contribution to the Clean Ganga Fund set-up by the Central Government.

5. Protection of national heritage, art and culture: -

This can include the restoration of heritage sites, buildings of historical importance and works of
art. public libraries can be set up as well.

Getting everyone on board with CSR in your company

It’s important that employees are informed of the CSR strategy and able to clearly communicate
to the public what the company is committed to accomplish. Employees that feel pride in such
goals become your best ambassadors to the outside world. This in turn attracts loyal customers
who connect to this aspect of the brand’s story. There are different approaches to build this
employee commitment. While some companies create a plan for volunteering with specific events
in mind, others encourage employees to take ownership over their service to the community by
allowing 2 days paid for volunteering for employees to choose.
Public perception of a company is crucial to its success. Corporate social
responsibility is not the sole domain of large companies. Small business can also champion a
cause. As a startup, you might even be able to recruit better and more socially conscientious
employees by including information about your CSR in handouts distributed at recruiting fairs.

16
 Theory of CSR Bottom Line

Another theory of corporate social responsibility is the Bottom Line. Like the CSR theory we
just discussed, Bottom Line works on the assumption that the corporation is a member of the
moral community, and this gives it social responsibilities. This theory focuses on sustainability,
and requires that any company weigh its actions on three independent
scales: economic sustainability, social sustainability, and environmental sustainability.

These three tabulations are all aimed at long-term sustainability. Economic sustainability must
focus on the long term because this is the nature of a persistent company. A decision which
creates an economic boon in the short-term (like the Ford Pinto), but causes long-term harm,
would likely reduce this bottom line to such a degree that the action would be untenable.

Social sustainability gives precedence on the balance of economic power in the society.
Competition in the business arena is common, and encouraged, behavior, but maximizing the
bottom line in social terms requires that a business foster an environment in which all can
succeed. This might seem counterintuitive, but in the big-picture it is better for a whole society to
thrive than for one single corporation to thrive alone. This will allow the company to continue to
exist, and it will foster good-will between the company and the society that it exists in. The PCB
dumping alluded to in above created an environment in which that company could not exist, and
it is no longer present in NC.

The requirement of environmental sustainability stems from the recognition that resources are not
infinite, and leads to the reasoning that too much degradation will worsen the lives of ourselves,
our children and so on. Members of the moral community ought not cause undue harm to the
people around them and the people who will come later, and so this bottom line values some
protection of the environment. The word "some" in the previous statement introduces vagueness
in the calculation, but it might be necessary because there is some risk of environmental
degradation in many necessary business activities. The question of how much environmental
degradation is acceptable is one that must be answered, but it need not be answered in this
module. Suffice it to say that this calculation must be made even if it is a rough calculation.
Business cannot operate in a world which is poisoned or "used up." Efforts should be

17
made to renew some of the environments that have been harmed in the past, and these
environmental harms and gains belong on this bottom line.

The reasoning behind this tripartite theory is that if businesses calculate their gains and losses in
this way they will be more likely to take actions which are to the benefit of both the business and
the community. It is easy, when the numbers are large enough, to ignore the social and
environmental dimensions of a business decision. This is because the average business decision is
made by comparing the expected costs and benefits in terms of dollars and, only then, considering
the other dimensions of that decision. In order to combat this order of operations, the Bottom
Line requires that a business decision be composed of all of these elements from the beginning.
When the data shows each of these dimensions along the same line, and measured with the same
metric, it will be much easier to see the impact of a decision and to judge the fittingness of that
decision

18
 3Ways CSR can increase Bottom Line: -

It has become de rigueur for major companies to embraced corporate social responsibility as a
strategic imperative. CSR can create some social good and enhance brand reputations; but there
remains a question over whether including social and environmental aims in a company’s core
strategy actually improves corporate performance.

A recent study by Professor Kamel Mellahi and colleagues, asks: can organizations do well while
doing good? And identifies three common factors that ensure CSR initiatives can add to a
company’s bottom line.

Previous research studies have reached varied conclusions on the impact CSR has on
performance, with some finding CSR had a negative effect. So to clarify this, Kamel Mellahi,
of Warwick Business School, Jdrzej Frynas, of Middlesex University, Pei Sun, of Fudan
University, and Donald Siegel, of University at Albany SUNY, reviewed 163 research papers
from top-tier journals published from 2000 to 2014 on the link between CSR and company
performance. In A Review of the Nonmarket Strategy Literature: Toward a Multi-Theoretical
Integration published in the Journal of Management, they argue that the proper use of CSR can
improve a company’s performance and so add to the bottom line.

Professor Mellahi, who teaches Global Business Strategy on the MSc Marketing & Strategy, said:
“It is clear that the results are far from consistent. A lot of firms haven’t found the sweet spot of
doing well while doing good at the same time. More than one third of CSR studies did not find a
positive relationship between CSR and performance. Several studies found that CSR actually has
a negative impact on performance. But some interesting trends can be observed.”

The study identified three factors that moderate the impact of CSR on performance.

1) In order for CSR to pay-off, the organization must be able to adapt and align its CSR
activities with the concerns of key stakeholders. It must have the capacity to influence
stakeholders by having the ability to “to identify, act on, and profit from opportunities to
improve stakeholder relationships.”

2) Communicating a company’s CSR activity is another important factor. Professor Mellahi,

who also teaches International Business Strategy on the MSc International Business and

19
 the Undergraduate programme, added: “The visibility of CSR is very important. While
managers are right to worry about self-promoting and publicising their CSR activities as
they can be seen as ‘goodwashing’ or ‘greenwashing’, they need to be transparent about
what they are doing, where the investment is going and the impact it’s having.”

3) The CSR must be consistent with what the organization does, it needs to be committed to
CSR.

Mellahi said: “CSR may backfire if the firm is accused of hypocrisy, where it boasts about its
CSR achievements in one area while acting irresponsibly in another.”

(A prime example being Volkswagen’s professed intent -“Living up to our social responsibilities
is at the core of our corporate culture” – which came back to bite VW badly last year.)

The study also highlights the negative impact of CSR initiatives driven by the egos or personal
concerns of business leaders. “If an organization’s CSR is just an indulgence of the CEO then it
produces a negative effect on performance,” said Mellahi. “Managers are most likely to support
and be loyal to social or political stakeholders to which they are most closely tied and so devise
their CSR around them. This is not good for the organization’s performance though and can
alienate other stakeholders….. When managers are driven by self-serving motives they tend to
spend an exceedingly large amount of resources on initiatives without a clear strategy or visible
results.”

20
Impact of CSR initiatives on a company's bottom line

Today’s consumers vote with their wallets and buy from brands that stand for something that
aligns with their values.

In fact, 2 out of 3 consumers are willing to pay more for products made by socially responsible
companies and 67% of consumers would pay full price for a product that supports a cause rather
than buying one at a discounted price.

While there are many ways to communicate your brand’s purpose and values, corporate social
responsibility (CSR) programs offer a powerful platform to tap into consumer sentiments and
connect with your audience.

As millennials and Gen Z start dominating the marketplace, this means CSR and social media are
closely intertwined. Brands that properly leverage social media to communicate CSR
initiatives have the opportunity to communicate a broader message that will reinforce your brand
identity, going beyond products and services to foster customer loyalty, build trust, and generate
powerful word of mouth.

21
 14 Socially Responsible Companies That Are Well-Known For
CSR in bottom-line:-

Many well-known brands have embraced CSR and have partnered with various nonprofits
to drive change. Many socially responsible companies are making a direct impact on society
with their CSR programs.

Here is a list of socially responsible companies that are strongly committed to Corporate
Social Responsibility (CSR):

1. Adidas
2. Starbucks
3. Marc Jacobs
4. Indigo Reach
5. IKEA
6. Bosch
7. Ben and Jerry’s
8. Apple
9. Coca-Cola
10. Alaska Airlines
11. BMW
12. Dell
13. Walt Disney Company
14. Microsoft

Case Studies Let's have a look at some companies who have successfully implemented CSR
practices.

1. Coca-Cola: Coca-Cola continues to make strides toward aiding in the alleviation of

environmental issues. After realizing that its fleet of delivery trucks accounted for 3.7 million
metric tons of greenhouse gases (GHGs) in 2014, Coca-Cola made significant changes to its
supply chain like investing in trucks that are powered by alternative fuels. Those changes should
support the company's goal of reducing its carbon footprint by 25 percent by 2020.

2. Ford Motor: Company Ford is another corporation attempting to improve their environmental
performance. In an effort to reduce its GHG emissions, an EcoBoost engine was developed to
increase fuel efficiency and the company hopes to offer 13 new electric vehicle models by 2020.
In addition, American Ford dealerships now use wind sail and solar PV systems as their primary
power source.

3. Microsoft: Microsoft implements CSR through their work to gain customer trust, empower
people and use the planet responsibly. Their U.S employees have given over 2 million hours of
22
their time through volunteer efforts since Microsoft's volunteer match program began. This
program has opened opportunities for over 300 million youth to date, and Microsoft aims to
continue its growth by investing in today's youth.

3. Reynolds: Reynolds' corporate culture revolves around their Commitment to community and
Social responsibility. Since 1997, Reynolds' employees have strengthened through contributions
over $1 million. Amore recent community contribution, the Hummel Street Project, outlines a
project committed to building five new town homes to provide homes for homeless women and
children in the Harrisburg, PA community.

4. Google: With a high public perception of a great work atmosphere, Google gains recognition
for treating their employees above the standard norm. This alone ranks them as a top CSR
organization, but they've also implemented community practices through their Google green
program. Google Green is the company's commitment environmental resources responsibly. Their
efforts range from the fully-repurposed desks in their California office to remaining carbon
neutral for the past ten years.

23
 What’s Corporate Social Responsibility (CSR) and How Can It
Benefit Your Organization?
CSR describes a company’s efforts to improve society in some way, ranging from donating
money to charities to implementing sustainability initiatives in sourcing and procurement.

CSR is getting many organizations’ attention thanks to the rise of “CorpSumers” – a newly
minted consumer segment that’s highly loyal to brands that align with their values. They believe
that a brand’s mission and reputation is just as important, if not more so, than its products.

Source

CorpSumers make up a sizable portion of the population with high spending power and they’re
vocal about the brands that they support. For example, 76% of them have encouraged others to
buy from a brand because they want to support the company that makes the product.

Besides appealing to this new consumer segment that considers companies to be positive change
agents in society, organizations can benefit from CSR initiatives in the following ways:

• Improve their public image: buying from a brand that has a positive impact on the
community makes consumers feel good. A favorable public image helps build
goodwill, broaden your reach, and cultivate customer loyalty.
• Gain media coverage: CSR initiatives provide opportunities to increase your brand’s
exposure, improve your organization’s reputation, increase brand awareness, and build
brand equity.
• Increase employee engagement: employees that are proud of their company’s social
responsibility involvement are more engaged in their jobs. Your CSR program can
help attract and retain talent that is likely to be more productive and creative while
lowering employee turnover.
• Attract investors: CSR is good for business and investors know that. They’re more
likely to be attracted to and keep supporting companies that are considered socially
responsible. Not to mention, being associated with a good cause is great for their
reputation.
• Stay compliant: many CSR initiatives can help guide your corporation to avoid
making ethically questionable decisions that will cause you to face public scrutiny or
even investigation from regulatory bodies.

24
 Key Areas To Implement Corporate Social Responsibility
Initiatives
Selecting the right areas to focus your CSR initiatives can help achieve the highest impact for
your organization’s reputation, attract talent that is a good fit for the internal culture, and align
your brand with the ideal customers and investors.

Diversity and Inclusion

While gender equality in the workplace has been an ongoing discussion, awareness about the
issues has been taken to new heights with recent news such as the #MeToo movement and Uber’s
sexism and harassment scandal.

Today, consumers and employees expect corporations to expand the conversation on diversity
and inclusion beyond gender. Organizations need to create a workforce that gives voice to various
cultures, languages, ages, sexual orientations, disabilities, backgrounds, and experiences.

Having an inclusion and diversity policy will help create a company culture that attracts and
retains talent from all walks of life, increase employee engagement, and augment your reputation.

A diverse workforce also contributes a wide range of perspectives that will help your company
develop products and services, as well as a brand message, that’ll appeal to a broader audience in
today’s diverse society.

Brand Activism

Consumers want to buy from brands that stand for a cause or represent values that they believe in.
In fact, 91% of millennials and 85% of the average U.S. public would switch to brands that are
associated with a cause.

25
 RISK IN CORPORATE CITIZENSHIP

Trying to find connections and dependences between CSR and risk management without

deeper analysis, it may seem that these concepts are remote and do not have much in common.

However, as it was presented earlier, one of CSR goals is to minimize negative influence, which

may be perceived in the light of risk, using means used in a process of risk management. Risk

management itself is not a unified process. Its construction largely depends on the risk it refers

to. Similarly, CSR risk must be managed using appropriate instruments. These are usually the

methods of operational risk management or more definite nonfinancial, reputational risk.

Reasons why companies decide to manage risk in the area of CSR are connected with wanting

to improve the image and maintain good reputation. On the basis of areas of social

responsibility identified in ISO 26000, we can show risks they refer to. These areas include

(PKN 2010): – organizational order, – human rights, – work relationships, – protection of

nature, – honest market practices, – relations with clients, – social commitment.

CSR risk is a consequence of many factors which influence business activity on following

basis: – economic – e.g. the way of managing the value of business, investment policy,

remuneration policy, managing relations with suppliers and clients, – environmental – e.g.

availability of resources, ecological catastrophes, changes in protection of nature legal

regulations, failures, production methods, length of supply chain, – legal – e.g. presence of

regulations and legal system tightness, – cultural – e.g. system of values and behaviour of

members of an organization, – personal – e.g. individual approach regarding organizational

matters. Analysing CSR risk we need to pay special attention to a dialogue with the most

important stakeholders, which makes this process different from processes of managing other

types of risks. Properly created strategy of dialogue, which includes areas of dialogue, its form

and appropriate assessment of expectations, makes it possible to support risk management

26
process and increase its efficiency. When it comes to CSR, stakeholders are “risk bearers” and

they can appear as voluntary stakeholders (e.g. investors) or forced stakeholders, who are in

relation with organization not necessarily by their own choice. Summing up connections and

dependences between CSR and risk management it is worth to try to define the role of risk

management within CSR. With reference to CSR, risk management needs to be understood as

strategy, policy and processes, whose goal is to address potential ethical, social and

environmental factors. These factors, by influencing stakeholders, are to organization’s

disadvantage (Wisser 2007: 15). In such context, CSR is one of the main means of managing

risk of social factors and their influence on financial aspect of an organization.

Each process of risk management is based on set framework, established methodology. CSR

risk management in a greater part can be efficiently implemented in already existing in a

company process of risk management. This will not only influence on minimizing likelihood

of risk but will also be a positive signal for all stakeholders. Creating a model of CSR risk

management, we can adopt two approaches: top-down and bottom-up. In top-down approach

international contracts (especially on the area of human rights and natural environment

protection), national law and other regulations which organization must comply with, are

factors which decide on paying attention to CSR in risk management. Such an approach is

particularly advisable for organizations whose activities are in close relations with these

factors. Bottom-up approach is more adequate for organizations, where the main factor is

commitment of stakeholders. In the further part of this paper, bottom-up approach is going to

be discussed, as it is most frequently used and adapted for business organizations and local

non-profit organizations. Thus, the process of CSR risk management will include conventional

elements: – risk identification, – evaluation (risk assessment), – description and application of

risk management methods, – risk evaluation and monitoring.

27
Risk identification

The first stage is risk identification. Information about potential risks can be found in risk

registers, annual reports and governance documents. Nonmaterial risks must be carefully

looked at. Prepared list of risks should be looked through regarding gaps and lacks and

completed with results of analysis, which will reduce the chance of overlooking significant

risk. The next step should be risk mapping, based on expert knowledge and external data, such

as benchmarks or available risk classifications. On this stage attention should be paid specially

to risks characteristic for areas where an organization operates and to influence of risks on

reputation capital. CSR risk identification should be made on the basis of efficient and complete

procedures, which must be documented and familiar to everybody involved in the process.

28
Risk assessment

Risk is a combination of likelihood and consequence of appearance, which is a threat for an

organization. Thus risk assessment is subjective and depends on its perception. Perception of

risk by stakeholders may significantly differ from organization one. It may be said that subject

matter of CSR is to take actions so that stakeholders perceive threats properly. CSR risk

evaluation, which is mostly composed of assessing likelihood of risk realization and its

influence on organization, should be taken regarding an event carrying risk and its influence

on stakeholders and their perception of this event. It may happen that risk manager’s evaluation

of likelihood of risk and its influence will be much lower than evaluation done by stakeholders.

It is also advisable to prepare a few evaluations of the same risk for each group of stakeholders,

pointing to the right level of their importance. To evaluate stakeholders we can use the scale of

stakeholders commitment (Figure 1)

CSR risk that refers to stakeholders whose scale of involvement is high should be a matter of

particular interest, because it may result in serious losses. Apart from losses we need to

remember about likelihood of its appearance and adequacy of control measures.

29
 key elements to Corporate Social Responsibility business strategy
success: -

1. Internal Assessment: -
Before designing a CSR strategy it is often helpful to assess your current CSR activities,
looking at the whole picture what CSR policies, programs, and structures are already in place
and where the “gaps” are.

2. Put it in writing: -
Ensure that your company creates a separate CSR statement or embeds its CSR
commitment within the company’s mission or values statement, code of conduct or other
appropriate company policy.

3. Embed CSR into the company planning and budget processes:-

The goal of a CSR management system is to ensure that CSR considerations are a part of all
business decisions.

4. Develop processes for employees to raise CSR issues and

concerns to appropriate decision-makers and advocates:-
An open environment is one of the easiest ways to solicit valuable feedback on CSR
issues and problems.

5. Formalize the board- and executive- level responsibility for

CSR issues:-
It is virtually impossible to successfully implement Corporate Social Responsibility in your

company without board, executive and senior management buy-in, support, and

accountability for CSR performance. Your ability to build senior-level vision and support will

have a direct impact on the depth, breadth, longevity and overall effectiveness of your CSR

work.

30
 6. Communicate CSR performance visibly and frequently to all
employees: -
Whether through newsletters, annual reports, intranet communication, meetings, training or other
informal mechanisms, make sure your employees know CSR is a company priority.

7. Put CSR on the agenda of meetings at all levels of the

company:-
This includes the board, executive and senior management, companywide meetings and
departmental communications.

8. Provide training for employees directly involved in CSR

activities:-
This is an ongoing commitment since training needs will change as the company’s CSR issues

change and evolve.

Below are examples of CSR activities:

– Buying items that are fair trade

– Carbon footprint reduction

– Getting involved in charitable activities

– Investing in firms that are environmentally aware

– Participating in volunteer work

9. Create CSR accountability at all employee levels:-

Build CSR responsibilities into the job descriptions and performance evaluations of

employees at all levels.

10. Measure and communicate your performance:-

Whether you choose to engage in an internally managed assessment of your CSR

31
 performance, or contract out a formal external assessment of your performance, find an

honest and appropriate way to share the results with internal and external stakeholders.

IMPORTANCE OF CSR

1. Improved public image: -

This is crucial, as consumers assess your public image when deciding whether to buy from

you. Something simple, like staff members volunteering an hour a week at a charity, shows

that you’re a brand committed to helping others. As a result, you’ll appear much more

favorable to consumers.

2. Increased brand awareness and recognition: -

If you’re committed to ethical practices, this news will spread. More people will therefore
hear about your brand, which creates an increased brand awareness.

3. Cost savings: -
Many simple changes in favour of sustainability, such as using less packaging, will help to
decrease your production costs.

4. An advantage over competitors:-

By embracing CSR, you stand out from competitors in your industry. You establish yourself
as a company committed to going one step further by considering social and environmental
factors.

32
5. Increased customer engagement: -
If you’re using sustainable systems, you should shout it from the rooftops. Post it on your
social media channels and create a story out of your efforts. Furthermore, you should show
your efforts to local media outlets in the hope they’ll give it some coverage. Customers will
follow this and engage with your brand and operations.

33
 ROLE OF CSR

• Responsible sourcing of materials and supplies

• Employee, vendor, customer and community engagement and relations

• Adherence to labour standards

• Environmental protection and management

• Anti-corruption measures

• Upholding social equity, gender equity and other human rights goals

• Conservation of resources, like water and energy, in production

34
 TANGIBLE & INTANGIBLE CSR

TANGIBLE CSR :

from the accountant’s point of view, an organization’s financial (tangible assets) have been

material things like factories, machinery, and physical human capital. In a somewhat more off

the beaten path approach, financial assets should also include intangible, non-physical

(invisible) elements that are rooted in human knowledge (know-how) and a business’

relationships and profile.

INTANGIBLE CSR :

Corporate social responsibility (CSR), community relations, accountability, corporate

citizenship, transparency, stakeholder engagement, (I could go on for a while here) are too

often seen as nice-to-haves or nice-to-pursue by executives. Bottom line is, all of these are

directly affecting your organization’s finances.

How so? They’re all closely linked to your intangible assets. And even if they’re still not quite

obvious to everyone yet, intangible assets are as impactful as tangible assets (sometimes even

more) to business continuity. That being said, I’m sure that whether you’re the owner, top

executive, Community Relations or Public Relations professional in your organization, your

brand’s reputation, its place in the market and its perception by communities where you operate

are fairly high on the agenda. Especially if recently your name has been all over the news.

35
 IMPACT
LIMITATIONS

Costs:

The factor of costs impacts an organization in two ways when it embeds the system of CSR

into its operations. The first was in which costs is a factor is that when an organization looks

for and establishes methods that are different from their usual mode of practice, in order to

meet the requirements of CSR, they need to incur special costs for implementing such differed

mode of operation which becomes burdensome for the organization. The second way in which

costs are a disadvantageous factor is because it brings along with itself a number of expenses

that a corporation is required to fulfil such as training the employees, investing in dedicated

programs for the upliftment of the society as well as the safety of the environment, etc. which

increases the overall costs and expenditures for the organization.

Clashing of business objectives

It is a well-established fact that the main aim of a business organization is to create profits,

which is why it produces various products and services to the customers, in order to be able to

gain profits. Corporate Social Responsibility requires the corporations to keep the interests of

the people into consideration which can cause a conflict in the business objectives of the

corporation while making important decisions. For example, whether or not to buy a land that

is beneficial for the business needs, but such buying will not be beneficial for the people living

around that land.

36
Interests of the shareholders

When a corporation has to embed CSR in their operations, the costs of operations tend to

increase and such costs are obviously paid by the funds of the shareholders which is why this

point is often raised that the interests of the shareholders of an establishment face disadvantage

when the practices of Corporate Social Responsibility are embedded in the system of the

organization.

Competitive Disadvantage

The establishment of CSR in a corporation can also be disadvantageous for an organization

because an organization that has established CSR would incur more costs to finish and

complete their tasks and operations while those who do not embed the concept of CSR into

their operations will be able to provide their products at lower costs to their customers in the

market which would imply that a corporation ensuring the fulfilment of CSR would be at a

disadvantageous position in the market as compared to its various competitors in the markets.

Such a situation can also cause a company to face a number of losses in the market in both

short and long run.

Impact upon the reputation of the Corporation

When an organization established the concept of CSR as a part of its operations in the

organization, they become bound to express and share a number of shortcomings of their own

products to the customers in the market. Because of such sharing of information and

shortcomings of the products or processes of a corporation, the corporation becomes vulnerable

to a number of negative impacts upon its own reputation in the market and hence, CSR can

lead to a drop in the established reputation of a corporation in the market.

37
Corporate Social Responsibility is one of the most widely discussed issues in respect to

business organizations and corporations in the global markets and has both benefits and

disadvantages for its establishment and amalgamation within the organizational and

operational setup of an organization. Hence, embedding CSR in the organization becomes a

difficult choice for many companies.

38
 CONCLUSION

Corporate social responsibility has a substantial impact on an organization’s brand image,

business model, marketing strategy, ability to attract and retain talent, investor relationships, and

procurement process.

In short, with consumers’ increasing awareness of businesses’ involvement in social and

environmental initiatives, your ability to implement an effective CSR policy will directly affect

your company’s brand equity, operating cost, and bottom line.

If a company understands the need of doing right things environmentally and socially, consumers

feel they can trust them to do the right thing in all situations. Consumers feel motivated and have

a pride to be associated with the brand. Reputation Institute has found that a higher corporate

responsibility ranking leads to more supportive consumer behaviors

CSR activities aren’t simply cosmetic. They have the potential to increase long-term company
valuation and shareholder value. Based on empirical evidence, high CSR performance increases
customer loyalty, boosts employee productivity and lowers financing costs, all of which
contribute to the economic value of innovation and shareholder wealth. High CSR performance
has a positive statistical effect on innovation and shows a positive correlation between CSR and
company value. Caring for the interests of customers, employees and partners encourages their
willingness to support a company.

Now that you are armed with empirical data, help strengthen your organization’s commitment to
CSR activities

39
 BIBLIOGRAPHY

1) Corporate social responsibility (CSR): Wikipedia

2) Baseline Study on CSR in Macedonia. UNDP. (2007).

3) thecsrjournal.in/what-is-the-importance-of-csr/

4) https://www.researchgate.net/

5) www.legalserviceindia.com

6) www.sciencedirect.com

7) www.makemyassignments.com/blog/disadvantages-of-csr/

8) https://www.incentive-il.com/single-post/2019/12/29/can-corporate-social-responsibility-
help-your-bottom-line

9) https://acspublisher.com/journals/tjmitm/archive-issues/2018-toc/effect-of-csr-initiatives-
on-a-companys-bottom-line/

10) https://www.forbes.com/sites/forbesbusinesscouncil/2020/04/14/how-commitment-to-csr-
improves-the-bottom-line/?sh=34298e062944

40