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The importance of CSR in meeting economic, social and sustainability needs Essay Example

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The importance of CSR in meeting economic, social and sustainability needs


Corporate organizations do not exist in a vacuum but they carry out their various activities in the society. In other words, it is the society that gives them space to exist while providing them with labour, resources, capital and markets for their products and services. Though they may exist for profit purposes, some of their activities may be detrimental to the society through such issues as pollution, resource exploitation and pollution. It is thus felt that corporate activities should not only benefit its internal stakeholders but also the society and the environment within which they exist. This is corporate social responsibility. A lot of corporates have embraced CSR as they have discovered that it enhances their economic/ financial performance as well as sustained pressure from various groups on the need for corporates to engage in CSR. CSR can be defined as the continuing commitment by business to contribute to economic development while improving the quality of the workforce and their families’ life as well as those of the local community and society at large. This paper looks at the importance of CSR while elaborating on its advantages and disadvantages for corporations. The paper starts by discussing the economic, social and environmental importance of CSR before discussing the advantages that corporations stand to draw from practicing CSR. The paper then discusses some of the disadvantages that might accrue from corporate CSR before concluding on why corporates actually ought to embrace CSR.

There are three main reasons why CSR is deemed important and hence rapidly gaining importance nowadays. They include the fact that it helps in enhancement of societal and communal welfare while reducing undesirable environmental effects that arise from corporate activities. In addition, it leads to enhancement of corporate’s financial performance through increased acceptance of corporate activities by the society and community at large. CSR would mean that corporates engage in fair labour practices while giving back to the community and region where they operate. This will in turn have the effect of ensuring that the employees are motivated and that their welfare and that of their families is well taken care of and hence improved. More motivated employees would mean that high quality goods and services are offered. On the other hand, giving back to society through charitable activities on the other hand helps boost the company’s image (David, 2013). It is also worth noting that some corporate activities could have detrimental to the environment within which they operate including resources depletion and pollution. As such, engaging in environmental conservation activities such as planting trees serves to reduce such undesirable effects that corporate activities may have on the environment. It is worth noting that the social and environmental CSR activities described above have economic implications for the company. Corporate use finances in carrying them out and hence they may be forced to charge higher prices in recovering the cost. However, it is to be noted that they lead to improved corporate image which would have customers willing to pay higher prices for the company’s goods and services (William, 2010). More and more customers adopt the company’s goods and services owing to the improved reputation and image which would lead to improved economic performance for the corporate in the long run.

As stated above, CSR leads to improved economic performance for the business in the long run. It is to be noted that CSR leads to satisfied employees with positive attitude towards the company and thus they can be retained. The company also can access better workforce owing to the large number of people that want to work in a company concerned of their wellbeing and motivation. These employees will deliver quality goods and customers thus increasing their satisfaction and numbers and hence revenues and profits. The customers on the other hand will be satisfied and hence have an improved attitude towards the company (IHK-Company Barometer, 2012). Thus, they will buy more of the company’s goods and services and will be less willing to change to other brands. Furthermore, they will even refer more customers to the company. CSR leads to positive PR as people share positive stories about the company through various media. This would lead to low advertising and marketing budget as the company will have generated free publicity through CSR. CSR also leads to cost reductions by various means including more efficient staff hire and retention, implementation of environmental friendly energy saving programs while managing risks and liabilities more effectively. In addition, the long-term future of the business is secured through CSR.

Critics of CSR have associated it with a number of disadvantages including increased costs that fall disproportionally especially on small businesses. This may hinder their growth through eating into their profitability. Furthermore, CSR could be an exercise in futility. Though the management has a fiducially duty to the shareholders to maximize profits, this is opposed by CSR (Samuel, 2011). This is because it compels the management to forsake profits in favor of conferring some benefits to the society. Though CSR may be undertaken with an intention of bolstering corporate public image, the initiatives may at times call for them to release information to their detriment. For instance, Coca-Cola released a damaging report in 2013 regarding the chemicals it uses in its products as part of its CSR initiative.


As discussed above, CSR has been credited with the improvement of societal and communal welfare. This is in addition to encouraging environmental conservation and hence leading to improved business economic performance in the long run. However, it has been blamed for increased business costs among other disadvantages (Thorpe, 2015). It should however be noted that the benefits greatly outweigh the disadvantages. Furthermore, it is only right that corporates adequately compensate the society for giving them space to exist. They should also do their best in mitigating some of the undesirable effects that accrue to the environment as a result of their actions. Finally, it has been proved that CSR will lead to improved financial performance for the business in the long run.


David, C2013, Corporate social responsibility, London, Rutledge.

IHK-Company Barometer, 2012, Society benefits from corporate social responsibility, Retrieved on 11th November 2013, from;

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=7&ved=0CEwQ FjAGahU KEwjs0fO9vojJAhVMaRQKHXZiBYM&url=http%3A%2F%2Fwww.dihk.de%2Fresso urcen%2Fdownloads%2Fcsr-barometer englisch&usg=AFQjCNEJa6kMHo8uIJWbojOw8lrBb4dmxA&sig2=ALaNRu8lBDLhyj XkLJoFLA

Samuel, I2011, Theory and practice of corporate social responsibility, Springer-verlag, Berlin- Heidelberg.

Thorpe, D2015, Why CSR? The benefits of corporate social responsibility will move you to act, Retrieved on 11th November 2013, from;

http://www.forbes.com/sites/devinthorpe/2013/05/18/why-csr-the-benefits-of-corporate- social-responsibility-will-move-you-to-act/

William, B2010, Strategic corporate social responsibility: Stakeholders in a global environment, New York, Sage Publications.