Corporate Social Responsibility and Its Measures

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Corporate Social Responsibility and Its Measures

Sample Paper

Corporate Social Responsibility and Its Measures

Corporate Social Responsibility (CSR) is the degree to which businesses take responsibility for their actions and the resulting consequences. Specifically, it deals with measuring the impact that these actions and particularly their consequences have on society and the environment.

Although CSR is not a new concept, after the global financial crisis, many companies were forced to go back to the drawing board and re-evaluate their business practises. It was irresponsible and unethical business practises by corporate executives that led to the global financial crisis. Millions of families were faced with unemployment as well as less value for their earnings in terms of purchasing power. The elements under scrutiny were no longer about the profits, but were directly linked to internal business practices and external results that generated profitability for the companies in the first place. It is no longer acceptable for companies to conduct their business without taking responsibility for the consequences that emerge from their business activities.

More recently, as the global economy makes steps toward recovery, the market value of a company is no longer determined by balance sheets, net incomes and profit margins. Investors and stakeholders are looking into non-financial information that demonstrates that a company promotes good internal business practices, catering for the well-being of their employees, as well as supporting positive community development and a sustainable care for the environment, in its overall operations. This information is critical in determining the longevity and sustainability of their investments. The pressure is significantly higher now for a company to have a positive image socially, in its location(s) of operation, and CSR is now increasingly becoming a significant factor in determining a company’s overall growth in the long-term.

As companies grow, their long-term goals are often broken down into short-term milestones. Many companies then shift their focus on maximising on the short-term outputs without taking into account the long-term consequences, which historically have been dire. Consequently, a company with a good record of CSR, having addressed the issues of impact socially and environmentally, is now more likely to attract more long-term investors. This leads