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Advantages and Disadvantages of Corporate Social Responsibilities (CSR)

Corporate Social Responsibility (CSR) is referred to as a technique of carrying on a corporation that not only focuses to increase the profitability, but also attempts to look for solutions to emphasise on social, culture, and environmental results of the corporation. Also, an entity should be responsible to a community or you can say in simple words, society as well as other stakeholders that are influenced by its actions and related functions. When such a plan or policy is applied by the senior management, it targets to create a goal to support ethical terms and the habit of valuing the societies, individuals living in the communities, and the overall culture where the company is needed to handle its compliance with the set standards in CSR and to report this with similar occurrence as to how frequently it accounts its annual reports.

ADVANTAGES:

  • It improves value and profitability

A CSR plan focuses on the energy-efficiency tactics, for instance waste recycling that can diminish the operational costs, while offering advantage to the environment. Continuing with that, it will enhance an entity’s transparency as well as responsibility with the media coverage, capital analysts, investors or owners of the company, and domestic societies. As an outcome, it improves the firm’s reputational image among the owners that they integrating the similar plan and strategies into their shares selection tactics. Hence, it would turn into a virtuous circle where the corporation’s shares’ value would improve, with accessibility to capital investment being relieved.

  • It enhances organisation’s reputation

Mixed with genuine action, a policy regarding CSR can serve to create or enhance the company’s reputational image. If it occurs that a brand is experiencing from adverse reputation that has resulted in losses, particularly because of environmental concerns, the CSR plan would be considered as effective solution to improve the damaged image and ultimately increase the profitability. In various situations, applying the CSR policy operates as part of the business model, where buyers are commonly seen showing more loyalty to a specific brand that has the ability to show strong commitment to environmental concerns.

  • It assist to bring motivation among the employees

Almost of the global corporations know that employees or the staff of a company are considered as the most esteemed resources, which can be regarded as a fundamental structure of a company in relation to the CSR compliance. In other words, it means that treating the workforce with utter dignity and respect, providing them desirable office infrastructure, friendly working culture, developing fair and unbiased hiring practices, as well as developing a workplace that does not promote work discrimination (regarding race or gender) is a must. Hence, focusing these points enhances the teamwork and confidence among the employees within a good office culture.

DISADVANTAGES:

  • It needs higher costs and expenses

One of the major drawbacks of implementing CSR plans and policy is to bear high costs in relation to install CSR strategies and implementing it, particularly for small entities. Whereas, large companies have the ability to bear such high cost regarding the allocation of a set budget to CSR reporting. Also, small entities that comprise of only 10 to 200 staff commonly experience issues with bringing capital investment. Although they can consider using media coverage to convey their policy to the domestic societies and their potential buyers, it would be time consuming to handle the alterations, which would involve hiring of additional staff, meaning further salaries expenses. Furthermore, there is a common thinking that the high costs of CSR would result in the downturn of small entities as majority of them cannot consider the required budget to be socially accountable. As per the critics, these entities does not have ability to bear the high costs of social media solutions, equipment, and training sessions required to fulfil the social responsibility.

  • It can increase investor’s resistance

While several investors are attracted to grab shares in entities that are publicly responsible, majority of them would consider for investment with the hope of generating high profits. Besides, while few organisations have created reasonable profitability from CSR, others that consider such a plan always prove as probable to lose cash resource. Considering the spotty path record of CSR in determining growth in earnings, shareholders focus to restrict attempts by entity managers to progress their companies in that path.

  • It promotes Greenwashing

As per the critics, CSR can be considered a practice that might result in ineffectiveness, debating that it can result to green-washing. They shows that an entity’s management workforce has inefficient responsibility to its investors, which is directly contradicting by CSR plans. They further focus that the accountability of senior management to their investors is to increase profitability, and executives who emphasise on creating huge revenue for the society and their employment. Hence, this is the main motive why some entities argue about such policy, but would do nothing or take action regarding it.

Author Bio:

Crystal Lombardo is a well-recognised supervisor and graduate tutor from London University who provides Assignment Writing Service at all academic levels and its related activities for a long-term. His main focus is to provide valuable and effective concepts to students about the pros and cons of CSR.

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