Question Tag: Long-Term Benefits

Contribution of CSR Initiatives to Long-Term Benefits:

1. Enhanced Reputation:
   • There is almost certainly some element of “public relations exercise” in the CSR pronouncements of companies. Given sufficient publicity, CSR can enhance the reputation of a company with its potential customers and its employees. In the long run, this can have a beneficial effect on sales, which can, in turn, lead to competitive advantage.
2. Talent Attraction and Retention:
   • Being a responsible, sustainable business may make it easier to recruit new employees or retain existing ones. Employees may be motivated to stay longer, thus reducing the costs and disruption of recruitment and retraining.
3. Ethical Investment:
   • Concerns for matters such as suppliers, communities, and employees may help to attract investments from “ethical investors” – investment institutions that specialize in making investments in companies they regard as ethical in their behavior and business activity. If so, this may have some effect in maintaining the share price.
4. Corporate Governance and Stakeholder Engagement:
   • It may also be argued more generally that the CEO appears to hold the “shareholder view” of corporate governance – where the primary purpose of a company should be to maximize the profits of shareholders. This view may be challenged with the “enlightened stakeholder view” – that even if the main purpose of a company should be to increase the wealth of shareholders, concern should be shown for other stakeholder groups such as employees, customers, suppliers, and society.
5. Competitive Advantage:
   • It keeps your company competitive. When you choose a unique position as a company and do things differently from competitors, it helps your business stand out. This applies to all facets of business, including social responsibility. Your relationship with society is as important as your relationship with customers. Having a strong vision and connection to a cause that makes a positive impact gives you a competitive advantage.
6. Regulatory Benefits:
   • Reduce regulatory burden – good relationships with local authorities can often make doing business easier.