Pros & Cons of Corporate Social Responsibility (CSR)

Surabhi C.
4 min readMay 14, 2021

Corporate social responsibility or CSR is a self-regulating business model which allows an organization to be responsible not just to itself but to its stakeholders and society. If that definition went over the mind, here is a much easier explanation for you. By practicing CSR, a business adds worth to the environment without compromising with the company procedure.

Here, I will go over the several pitfalls of embedding Corporate Social Responsibility from the operations of a business organization. While there are many benefits along with also valid reasons why corporations must contribute to society.

Cons of Corporate Social Responsibility

1 Needs Greater Prices and Expenses

The most important drawback of CSR is that its costs fall disproportionately on small companies. Big businesses can allocate a budget to CSR coverage, but this isn’t necessarily available to smaller companies with between 10 and 200 workers. A small company can use social networking to convey its own CSR policy to clients and the local community. However, it requires time to track trades and may involve hiring additional personnel as a CSR consultant that the company might be unable to manage.

2 Shift in the Profit-Making Aim

Financial specialist Milton Friedman generally criticized CSR by saying that it shifts the company’s emphasis on the profit-making aim. For any economic entity, profit-making is the highest preference. However, when you get involved with CSR consultant activities, you have to cut the gain margin, which may make your shareholders miserable.

3 Sudden Increase in the Cost of Manufacturing

Being involved in a CSR program can frequently boost the cost of your company. As you might realize, once you’re contributing back to society, it offers you a significant amount of capital. If you raise the purchase price of your products to compensate for the expenditures, the customers will have to endure the burn. Big businesses can absorb the blow, however, small businesses can not.

4 Customers can get Impatient

Everyone will value you for choosing a CSR program for the business at the beginning. It may gain your company a substantial amount of popularity in the market for being connected with a fantastic cause. But if the program doesn’t offer instant results, people may think this is only a Public Relations stunt.

5 Encourages Greenwashing

Greenwashing, the terminology used to define corporate practices that appear to be environmentally responsible for actually representing a change in how an organization manages its business. For example, some dry cleaning services label their surgeries as “Organic” which seems similar to”organic food” but carries no specific meaning.

Pros of Corporate Social Responsibility

1 Profitability and Cost

CSR also increases business accountability and its transparency with investment analysts and the press, investors, and nearby communities. This in turn enhances its standing among investors like mutual funds which incorporate Corporate social responsibility in their inventory selection. The result is a good in which the organization’s stock value rises and its access to investment funds are eased.

2 Enhances Organization’s Reputation

CSR actions reflect favorably on the picture of a provider. Consumers will probably be more prepared to avail of your products/services due to the image of your organization.

If a brand is undergoing a negative reputation that has caused losses, especially due to ecological issues, the CSR strategy would be thought to be an effective remedy to enhance the damaged picture and ultimately increase the profitability. In a variety of conditions, employing the CSR policy functions within the company version, in which buyers are generally seen showing more loyalty to a particular brand that can demonstrate a strong commitment to environmental issues.

3 Helps attract and keep Potential Employees

Businesses that are involved in acute CSR programs are more familiar. This makes it much easier for your business to attract prospective candidates that seek employment chances. Additionally, as soon as your company begins earning goodwill during significant CSR actions, the workers are more inclined to continue using the business for a longer-term.

4 Attracts new Investors

A business’s reputation in the marketplace decides whether it is going to get new investments or not. With a CSR program, you may surely boost your organization’s image. And if your company begins to catch enough eyeballs, in addition, it attracts several investors. Be ready to get investment suggestions from venture capitalists, other companies, and even the government.

5 Method to Promote your Brand Name

Whenever your organization begins a CSR program, it automatically provides your organization a particular degree of publicity. It will not be incorrect to call these advertisements as an advertisement. You simply have to be certain that your goods or services are satisfied with the CSR consultant activities you’re involved in.

Embedding CSR into an organization’s operations is a difficult and tricky job. But it is also an essential one. A business in today’s time cannot eliminate unethical practices.

CSR is necessary for an organization to maintain. Thus, the very best a business can do is understand the cons of CSR completely, strategy well, and tread carefully to minimize the harm and increase the benefits. For this, you can approach Wachs Strategies, a social impact consulting firm partnering with corporations, non-profits, and philanthropies to develop cohesive social impact strategies that increase both their business and social impact bottom lines.

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