With CSR programmes, organisations benefit from better corporate reputation, brand equity, and increased customer engagement.
By Urvi Chhaya
India’s Corporate Social Responsibility (CSR) landscape has evolved over the last decade. It has moved beyond simply philanthropic efforts to a more impactful approach to addressing stakeholder needs. CSR today is now also the right thing to do. Corporates are now increasingly structuring their CSR efforts in a manner that enables a larger section of the population to participate in and benefit from India’s economic progress. Through CSR, corporates are playing an active role in the socio-economic development of the nation, effectively bridging the gap between the haves and the have nots.
According to a study, CSR spending in India has been steadily rising over the years and touched Rs. 24,688.66 crore in FY2020. Considering the importance CSR has gained over the last decade and the quantum of resources being dedicated, the next frontier for CSR will be about creating visible and measurable social impact at scale.
CSR now is a CXO priority and is part of board room discussions as it aids in enhancing corporate reputation, trust and customer pull. Besides corporate reputation plays an important role in attracting and retaining top talent.
Let’s deep dive to understand the aspects which are positively impacted by CSR.
Enhanced corporate reputation
A company’s reputation is one of its most valuable assets. According to a 2013 study conducted by Reputation Institute, a global consulting firm, CSR activities contribute approximately 42% towards a company’s reputation. Interestingly, the same study shows that a customer’s willingness to buy, recommend, work for, and invest in a company is driven 60% by the company’s perceived reputation, and 40% by their perception of the products or services.
Therefore, while intangible assets such as brand equity and goodwill make up a large proportion of a company’s market value, CSR is emerging as a strategic tool to build good reputation. Besides, disclosures on annual CSR reporting, Companies are increasingly releasing annual Environmental, Social and Governance or ESG reports, which detail their efforts in areas such as environmental protection, social responsibility, and good governance standards. It also showcases the company’s commitment to being a responsible corporate citizen.
Creating consumer pull
Consumer behaviour too has evolved in recent years, and consumers are now increasingly aware of the social and environmental impact of products and services they consume. This preference is so strong that more often than not, they are willing to pay a premium for products and services offered by socially and environmentally responsible companies.
Companies too are increasingly recognising this shift in consumer preference and have implemented CSR initiatives as a way to differentiate their products and services. Consumers today seek out products that are innovative and show evidence of responsibility, and also value products that are created using responsible or sustainable processes. CSR initiatives are a great way to give back to the community, both from a social and environmental perspective.
Building trust
A research article titled “Competing for government procurement contracts: The role of corporate social responsibility”, published by the School of Business, Boston University, 2018, highlighted the emphasis governments place on the role of ‘trust’, when it comes to supplier relationships. The same study found that CSR, over the last couple of decades has emerged to reflect the company’s commitment to creating long-term sustainable value and is an excellent tool to build relationships with key stakeholders, including employees, suppliers, customers, governments and local communities. These relationships can provide valuable insights to build mutual trust and understanding.
Companies are ambitiously looking beyond just profits and genuinely looking to bring appreciable social benefits to communities where they operate in. With CSR, organisations benefit from better corporate reputation, brand equity, and increased customer engagement.
(Urvi Chhaya, Senior Vice President, Human Resources, ICICI Prudential Life Insurance Limited.)
