An endless debate on the importance of CSR - a concept a few years ago raised only skeptic eyebrows now even has the most conservative corporations embracing it with open arms – spotlights corporate behavior in respect to communities, citizens and the environment. There are 4 compelling reasons to view CSR as more than a marketing or public image tool but as a strategic move to enhance companies’ influence in society.

Moral obligation

Moral obligation speaks to the ethical values the company honors in efforts to have a profound and positive effect on society. Many Western companies have come to recognize the value of doing good, but prompting the right actions continue to be a massive challenge.


More abstract than the three reasons below, companies that don’t necessarily subscribe to the moral aspect still find CSR invaluable in long-term.

Business motive

The business motive stems from the company being responsive and responsible to consumers. With the internet now forcing greater transparency, heightened awareness on corporate activity means companies increasingly are accountable for the cause and effect of their operations and products. More and more, companies are ranked on their CSR performance by a host of organizations, and despite questionable methodologies, the substantial publicity these rankings attract do motivate companies to do more good.


Although current studies show little effect on the influence of responsible corporate behavior on actual consumer purchasing preferences, the public backlash from bad publicity however can be damaging and costly. As Nike learned the hard way in the 1990’s, it pays big to manage such risks by carefully supervising the manufacturing and selling conditions. The approach can be dynamic through external dialogue with communities, or protective to best avoid compromising the company’s public image.


Corporations further along in integrating CSR embarked on strategic tactics to do things differently from competitors in a way that lowers costs or better serves a particular set of customer needs, all the while checking off the CSR boxes.
Termed by CSR consultants Michael E. Porter and Mark R. Kramer in their Harvard Business Review article, “strategic CSR moves beyond good corporate citizenship and mitigating harmful value chain impacts to mount a small number of initiatives whose social and business benefits are large and distinctive.” Auto companies like Toyota pour large sums into R&D for better fuel-efficient cars that save on costs and address environmental concerns are prime examples.

Employee engagement and company performance

CSR is a crucial factor for employee engagement and long-term staff retention. Efficient and motivated staff is one of the main assets of a company and can’t afford to be overlooked. Employees derive pride from their company’s positive involvement in the community and environment, which in effect acts to increase own company image amongst staff.


Mentioned in the Financial Times in March 2008 and in the June 2008 La Tribune, is importance AXA WF Human Capital fund compare with the market of over employee performance. The convergence of companies to agree on starting a fund based on a strong human resources policy. Engaging staff as one cruical part of the company’s CSR strategy factors into the company’s retention and productivity rates.

Sustainability

Long-term survival of the company requires thinking and acting sustainably in achieving the triple bottom line of economic, social, and environmental performance. Most companies are not established to be highly profitable one day to only disappear the next, and should operate in ways to secure long-term social stabilitity and high productivity in the supply chain, as well as economic performance in the consumer market.

While persuading companies on the merits of CSR is the easy part, getting companies properly engaged in CSR is where the true challenge lies. As Kramer and Porter so aptly put it “the focus must move away from an emphasis on image to an emphasis on substance.” Without a universal standard or a governing body to dictate guidelines or regulations needed to abide by, companies’ current CSR actions are only prevalent in areas that match their own justified motivations. The best CSR initiatives involve far more than writing a check, where clear, measurable goals are specified and results are tracked consistently. Companies need to assess their impact on society and the environment, and at the same time, identify strategies to reduce or resolve such problems where it can gain the greatest competitive benefit. Integrated properly this is when CSR truly pays off.

References

1.Michael E. Porter and Mark R. Kramer, Strategy and Society: The Link between Corporate Social Responsibility and Competitive Advantage, Harvard Business Review, 2006
2.Simon Zadek, The Path of Corporate Responsibility, Harvard Business Review, 2004
3.Roger L. Martin, The Virtue Matrix: Calculating the Return on Corporate Responsibility, Harvard Business Review, 2002

Lei Chen Wong contributed to this article.