The economic recession has hit many companies badly and the ones that have survived are focusing their efforts on re-branding in order to attract more consumers. One of the key re-branding efforts revolve around corporate social responsibility. CSR is a form of corporate self-regulation integrated into the business model. A CSR policy would function as a built-in, self-regulating mechanism whereby businesses would monitor and ensure its adherence to law, ethical standards and international norms.
It is also a model whereby businesses would proactively promote public interest by encouraging community growth and development. CSR essentially is the deliberate inclusion of public interest into corporate decision-making regardless of legality and the honoring of the triple bottom line: people, planet and profit. Why is this important?
The private sector holds immense potential in alleviating some of the world's most dire problems simply because of the enormous funds available to their disposal. The impact of business decisions of MNCs have far reaching social, economic and environmental consequences not restricted to the countries of their operation. This is something that companies can use to their advantage and it is a powerful brand-building tool.
Recession automatically means that most companies will cut back on 'superfluous' operation costs and CSR is one of them. However, this might prove to be catastrophic to company image once economies recover. 67% of business in a recent survey believed that being trusted to deliver social and environmental policies is critical to business success. A report by OgilvyEarth, showed that the recession has done little to curb consumer demand for products with social and environmental credentials.
The recession therefore provides a unique opportunity for branding - although philanthropy and charity-based CSR activities are likely to take a hit, the ones that are sustainability-driven will make more headway and emerge. The financial crunch also means that companies will want to get the maximum branding potential, that offers them the best competitive advantage with low inputs.
CSR is also business model that brings together the civil sector and NGOs together into main-stream business encouraging greater divergence of ideas and solutions. Many companies now tie up with prominent NGOs in order to build their CSR profile. With 'green' being a key word with even customers these days, it is essential for companies to have a strong profile in this area both for brand-building and for economic sense.
CSR and sustainable development does indeed provide avenues for brand building. But it is a process that requires huge amounts of transparency on the company's part in order for it to be believable. It is possible to participate in sustainable business and include that aspect of CSR into annual reports and still be involved in the not-so-savory aspects of business. This has led critics to believe that it is essential that the process of CSR should also be regulated in a manner such that all aspects of business is taken into account.
CSR is in a nascent and largely unregulated stage. If it becomes main-stream and regulated, the heights to which the green business model can reach are immense. CSR could be the key that will change business as usual.