Before unveiling the crux of Corporate Social Responsibility (CSR), some of the legal as well as general definitions need to be explained.
General Overview of Word Corporate/Corporation
The definition of corporate refers to something related to a corporation, which has a legal identification under the laws of a state or country. It is authorized to act as a single entity like a person with wide powers for various purposes, including owning property, entering into contracts, and engaging in business activities.
According to the Companies Act 2017
The Companies Act 2017 defines the corporate body in Section 2 (9). The relevant provision of the Companies Act is reproduced below;
“Body Corporate” or “Corporation” includes—
- A company incorporated under this Act or company law; or
- A company incorporated outside Pakistan, or
- A statutory body declared as a body corporate in the relevant statute, but does not include–
- A cooperative society registered under any law relating to cooperative societies; or
- Any other entity, not being a company as defined in this Act or any law for the time being, which the concerned Minister-in-Charge of the Federal Government may, by notification, specify in this behalf.
What is Corporate Social Responsibility?
Have you ever discontinued using products or services from a company because they did not align with brand ethics or social fabric?
The social responsibility of a company is a huge umbrella that envelops a brand’s stance on politics, social equality, diversity, inclusion, and the environment, as well as its philanthropic efforts. It is a realization of how the companies impact aspects of society, including social and environmental but not limited to economic. It is a business model or way of operation that enhances society and the environment instead of contributing negatively to them. Corporations should not only be profitable tools but also be responsible citizens. According to a report, it has been confirmed that sixty-four percent of consumers are “extremely likely” to buy from a company that takes a stand on social issues. That’s the reason companies are developing CSR strategies.
Large-scale and small-scale industries do contribute negatively by debilitating the environment but their visible success lies in the responsibility it takes to uplift society through their policies and services towards it. Corporate Social Responsibility involves a company taking responsibility for its actions and considering the interests of stakeholders beyond just shareholders, such as employees, customers, suppliers, the environment, and the wider community.
Types of CSR
The types of Corporate Social Responsibility include;
- Environmental Responsibility.
CSR is rooted in preserving the environment. Every corporate body is equally responsible as a responsible citizen. It includes reduction of pollution while manufacturing, increase in recycling materials, and replenishment of consuming natural resources like trees.
- Ethical Responsibility
Ethical responsibility covers the fair treatment of customers regarding age, color, sexual orientation, race, culture, and favorable benefits for employees. To understand the ethical responsibility, Spotify is the best example. Spotify said that it will let employees choose wherever they want to work, whether that’s from home, in an office, or a mix of the two and even countries.
- Philanthropic Responsibility
It is a common conduct of people to choose a company that donates the profit to charities, as their favorite brand. Philanthropist activities of a company improve its public image since they will be seen as generous, resulting in increased sales. According to Microsoft’s corporate social responsibility report the company provided over $3.8 billion in donated and discounted technology to nearly 325,000 non-profits, public libraries, and museums.
- Financial Responsibility
It is a commitment of a company to manage its financial resources in a way that benefits business and society. Shareholders, consumers. A company might be a responsible company but it has to back these responsibilities through financial programs and donations to stand out in the eyes of its consumers, shareholders, and business community.
Conclusion
Companies aiming to measure success beyond mere financial performance may adopt CSR strategies that focus on environmental, ethical, philanthropic, and fiscal responsibilities, extending their commitment beyond the products they sell.
