The advantages and disadvantages of Business Social Responsibility

Wednesday, 10 August 2016  |  Admin

BUSINESS SOCIAL RESPONSIBILITY: CSR FOR SMEs / Sana KhanThe following are a number of reasons why businesses, regardless of their size, would be interested in implementing a BSR initiative into their daily practice:

  • Better recruitment: Your business may be able to attract a higher calibre of staff due to its BSR activities. Businesses such as Google, LinkedIn and Facebook are renowned for their CSR policies, which help them attract a higher calibre of staff;
  • Clarity in long-term strategy: BSR promotes a culture of risk management in business, as prior to implementing a BSR policy you should examine your organisation in detail, which helps you with long-term strategic planning;
  • Enhanced learning opportunities for staff: BSR initiatives often require staff to learn or develop new skills – for example, organising events, etc;
  • ‘Feel good’ factor: People who work in a business can get a good feeling about what they do if they feel that they are helping the community and the world at large, while customers also feel that purchasing from your organisation helps the community and the world at large.
  • Improved business culture: Staff are likely to be more motivated and have a stronger commitment to the organisation if good BSR initiatives are in place. Helping external stakeholders usually improves the internal work environment also;
  • Improved marketing and public relations: A BSR initiative highlights your business’s good side and the publicity gained from arranging events and providing assistance to charities through your BSR initiative is a effectively free marketing;
  • Increase in customers: Having an effective BSR initiative differentiates your organisation from your competitors and thus may attract more customers;
  • Increase in reputation: If your organisation can help local communities and / or the world at large, it creates an impression that it must be financially viable because otherwise it would not be in a position to give back;
  • Productivity: Giving back through working hours enables staff to feel better about their work environment and happier staff leads to increased productivity.

But before you think that BSR only brings positive changes for your organisation, you should also be aware of the difficulties that you may encounter. However, the disadvantages are not insurmountable and rarely outweigh the advantages:

  • Greenwashing: Some critics believe that CSR is simply a ploy to improve an organisation’s brand image. (Greenwashing is the practice of making an unsubstantiated or misleading claims about the environmental benefits of a product, service, technology or company practice.) Thus it is important to carefully consider the nature and impact of your BSR initiative to ensure its effectiveness;
  • Reduced profits: Critics argue that a company’s management has a fiduciary duty to its shareholders to obtain the maximum profits possible, which CSR initiatives directly reduce. But, often BSR leads to increased sales – and thus increased profits;
  • Resources must be used for non-commercial activities: This is particularly likely to affect SMEs, which do not have the same resources as larger organisations. However, with proper planning and implementation of a BSR initiative that fits your business model, this disadvantage can be overcome. For example, you don’t have to implement a BSR initiative rapidly – a slower approach may be more suited to your resources. Make sure to tell the story of how you determined and developed the BSR initiative for your organisation, as it will provide a personal touch to your initiative and a good background to your business model to external stakeholders as well’.

As you can see from the above list, the disadvantages in implementing a CSR policy are not nearly as extensive as the advantages!

Extracted from BUSINESS SOCIAL RESPONSIBILITY: CSR FOR SMEs by Sana Khan, #53 in the NuBooks series.