Corporate Social Responsibility (CSR) is a business management tool for organizations, especially in times where the importance of branding and reputation play an important role in their operation, such as during periods of economic recession. In recent years, the economic crisis has created a volatile business environment, where the business risk is great and the image of every company is influenced by the perception of its stakeholders. Organizations while aiming to increase their profitability are expected to reduce or even eliminate their CSR activities; however many of them try to use these effects to their advantage and to reduce their business risks.
An important factor in the decision making of companies is their customers, the consumers as members of society. Companies which have used CSR merely as a promotional “trick” have lost their consumer’s trust, and have furthermore created a stream of frustrated and suspicious consumers, unable to trust companies and their offered products. The only reliable tool that has the potential to enhance or recover the lost consumer confidence is the effort of the company towards society through CSR activities and initiatives. The question rising is whether CSR should be treated as an additional cost for companies or as an investment with measurable results, an antidote to the economic downturn.
Why should businesses then invest on CSR activities? In a few words, through CSR businesses are given the opportunity to:
- Reduce cost and risk
- Gain competitive advantage
- Creation of corporate reputation and legitimacy
- Find profitable partnerships through value creating relationships
- Promote innovation outside and inside the company
- Increase accountability and transparency for stakeholder engagement
Moreover the economic crisis revealed the importance of effective long term decision making to manage risk. Therefore CSR as a long term strategy can play significant role in managing risk in this recession period. Also CSR actions can be delivered even with reduced budgets as their application can create opportunities in reduction for example energy and stationery costs rather than cost creation.
There are numerous examples of companies which have enhanced their environmental and economic performance though implementing CSR. From Nike to Boots and big retails such as Tesco and Sainsbury’s to small companies are investing in numerous CSR actions from merely environmental (renewable energy, carbon footprint) to societal (fundraising, employee volunteering) actions with positive effects in their economic performance.
A significant example of seeing CSR as investment is Sainsbury’s which has installed 69,500 new photovoltaic solar panels, or 16 MW of power, across 169 stores in the UK. The solar power will reduce Sainsbury’s total CO2 emissions by an estimated 6,800 tonnes per year, and each store’s energy consumption as well as delivering energy cost savings.
Finally CSR seems to be a powerful tool in enhancing business strategy and create innovation in this period of economic crisis. For these reasons it can be seen as an opportunity for long term economic and business development.