Corporate Social Responsibility (CSR) is neither synonymous with Corporate Philanthropy nor an alternative. In Corporate Philanthropy, corporates donate a certain portion of their profits to charitable causes. In this context, it is perceived as “improper” for corporates to consider receiving any benefit from it.
According to the World Business Council for Sustainable Development, CSR could be defined as, “the continuing commitment by business to behave 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”.
Another definition says CSR is, “operating a business in a manner that meets or exceeds the ethical, legal, commercial and public expectations that society has of business”.
In both definitions we can see the element of “sustainability”, explicit (continuing commitment) in the first and implicit (operating: continuous tense) in the second. This is another difference between CSR and Corporate Philanthropy.
Corporate donations may go to specific charities or non-profit organisations. The general public, and even the corporate’s own customers, both internal and external, may not be directly affected and, consequently, may not become aware of these huge and generous efforts. Usually top management decides when and how to donate and to whom to award grants. Corporate Philanthropy has a narrower and more limited scope than CSR.
CSR, on the other hand, has a much broader scope as it addresses the overall attitude of an organisation toward its employees, customers, the environment, local community, and the society at large.
CSR is an organisation’s frequent and wide effort. Every department and every employee needs to understand the organisation’s CSR strategy, what their role is and how they should contribute to the CSR success. The CSR target audience is much wider than that of Corporate Philanthropy.
Although CSR may not be on every organisation’s agenda, growing numbers of local communities, as well as stakeholders of modern organisations, demonstrate demands for greater “non-financial” performance indicators and, indeed, they are expecting them. For instance, it is expected that all corporate employees enjoy safe and healthy working environment. CSR can meet this demand efficiently.
Integrating community needs with CSR programmes will boost corporates’ bottom line. As an example of how CSR can benefit the community and the corporate is the common youth “training practice” of some of the oil and gas companies in our area as well as in other countries.
The youth will acquire technical skills and earn good income while oil and gas companies are provided with capable local workforce. Both the corporate and society will deal with CSR as an integral part of the wealth creation process. It is a win-win situation.
Integral part of business
It is well known that programmes that are peripheral to the main business, such as philanthropic programmes, are the first candidates to budget cuts at difficult times. On the contrary, when it gets harder, there will be a strong drive to enhance the CSR practice more and better as it is an integral part of the business.
Socially responsible corporations can enhance their profits and enhance their image as well through CSR programmes such as using recyclable paper and plastic and upgrading equipment that emits pollution.
Apparently, investing in CSR initiatives for concrete business case objectives is more sustainable. CSR is not only the right thing to do but rather a smart business move. In other words, success in business and commitment to CSR can go hand in hand.