Pros & cons of corporate social responsibility

Written by neil kokemuller Google
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Pros & cons of corporate social responsibility
The expense of complying with CSR expecations is a con for businesses. (money image by cherie from

Corporate social responsibility is generally perceived as a positive business ideology in the 21st century, despite some challenges. A significant expansion of basic business ethics, CSR establishes guidelines for ethical and socially responsible behaviour. It addresses how companies that want to satisfy government and societal requirements should treat key stakeholder groups, including customers, suppliers, employees and the community.

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Pro 1: Social Responsibility and Customer Relationships

One of the foundational elements of CSR is that it causes companies to reason beyond basic ethics to consider the benefits of active involvement in communities. In his article "The 7 Principles of Business Integrity," business strategist Robert Moment argues that 21st-century companies must prove themselves to customers to build long-term, trusting relationships. They must also get involved in the community to give back. This community connection endears your company to the local markets in which you operate.

Pro 2: Motivated Employees

Employees are a company's most valued asset. This is the premise of a company's obligation to this key stakeholder group with regard to CSR compliance. This means treating employees with respect and offering fair working conditions. It also means establishing fair hiring practices and promoting a non-discriminatory workplace. This improves morale within the workplace and encourages teamwork. Additionally, a writer on the As You Sow website stresses the importance of managing a diverse workplace so that you can benefit from a variety of backgrounds and life experiences.

Con 1: Expenses

The main reason any company would object to participating in CSR is the associated costs. With CSR, you pay for environmental programs, more employee training and efficient waste management programs. Proponents of CSR agree that any expenses to businesses are ultimately covered by stronger relationships with key customers. However, David Vogel indicates in his Forbes article "CSR Doesn't Pay" that investment in CSR programs may not necessary result in measurable financial results.

Con 2: Shareholder Expectations

Another challenge for companies when considering CSR is the possible negative perception of shareholders. Historically, publicly-owned companies had a primary focus of maximising shareholder value. Now, they must balance the financial expectations of company owners with the social and environmental requirements of other stakeholder groups. Some shareholders are happy to invest in companies that operate with high integrity. Others may not approve of the aforementioned expenses of operating under CSR guidelines.

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