Effective CSR is not just about philanthropy; it's about creating shared value that benefits both the company and the community.

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By Abhishek Ranjan

A lot of people see CSR – rightfully- as giving back. My own thoughts are not far from this tangent. Fruits of labor are all about reaping what you sow – and with CSR, the harvest is turning out to be plentiful. In this post, I explore the exciting potential that CSR has begun to demonstrate in terms of sound brand strategy.

Shared Value in CSR

CSR has become all about shared value. This mutually beneficial relationship between corporation and community is beginning to throw up promising outcomes that point to a sustainable and advantageous synergy. There is a now a triple bottom line that is more or less universally accepted – a combination of financial performance, social performance, and environmental performance that work together as a reputation driver for employees and customers.

CSR and Brand Loyalty

CSR is actively contributing to brand loyalty: never before has CSR played such a vital role in helping customers form brand perceptions. And that’s not all – the company’s public perception actively drives sales and improves employee morale. At a time when battered investors, customers and employees are wondering whom they can trust, the ability of a familiar brand to deliver proven value flows straight to the bottom line.

Mandated Reporting and Impact Measurement

There was a time when CSR activities were not given the reportage they deserved. Not anymore. The Indian CSR legislation mandates reporting, which – in turn – has generated a lot of buzz around impact measurement. Companies are now compelled to put CSR activities on their websites and provide a public face to their CSR activities. Significantly, many organizations are now housing CSR functions under their Corporate Communication or Marketing divisions. This is how important it has become to effectively communicate CSR.

Shifting Perception and Communication Strategies

Previously, it was believed that charity was best performed quietly. CSR, however, has outgrown its roots in charity. Once upon a time the saying went ‘Do good, and throw it into the sea.’ I suppose we could now say ‘Do good, and put it in the newspaper.’ For CSR to be truly sustainable, it has to also do good to the organization funding it. By communicating CSR effectively, Corporates can maximize the business benefits to consumers, employees, partners, investors and new markets.

CSR, PR, and Employee Engagement

CSR does good, and feels good. In fact, it feels a bit like PR – which brings us to a new range of associated challenges and benefits. CSR must be differentiated from mere promotional activities. While PR can help management listen to constituents, help create CSR awareness and build legitimacy for the initiative, it also has a downside. For instance, CSR can be tainted when linked to PR and reputation building – a cynical view of CSR is all too often strengthened by directly linking PR to CSR initiatives. PR can be helpful, but it may be argued that there is such a thing as too helpful!

The Role of Employees in CSR

The solution to the PR-CSR dilemma comes from a rather obvious source: employees. Employees are, in essence, CSR brand ambassadors. Consider this: CSR without the HR angle is simply PR. That is to say, if employees are not engaged, CSR becomes a PR exercise. Companies need to walk the talk – and they can do so by building CSR into internal company messaging.

Empowering Employees as Brand Champions

CSR must be communicated effectively to empower employees to become brand champions. The gains are manifold: increased credibility, enhanced reputation, and brand differentiation. The happiest result of them all: a measurable increase in employee pride and satisfaction.

Reputation Returns and Sustainable CSR

Sound CSR practices are also about making a sound, resonating, driving dialogue and conversations to deliver return –in terms of social progress, the bottom line (profit) and brand perception. That’s why I see ‘reputation returns’ as critical to sustainable, effective CSR. It’s so simple, and yet so profound: CSR contributes to a positive reputation, and that – in turn – attracts customers, investors and quality employees. It is also a powerful way to create identification with constituents. I explore this further in my next post, where I look at how social performance has been influencing financial performance. Something to think about, truly.