The Cost of Benefiting From Corporate Social Responsibility Essay

The Cost of Benefiting From Corporate Social Responsibility - Essay Example Because the field is a relatively new effort by business and the effects of their actions are so far reaching, it is necessary to quantify what benefits a company derives from CSR as well as demonstrate to the public the benefit that society gains from it. The cost of CSR, sometimes met with a negative response, needs to be examined with an understanding that the benefits in some cases may be mutual and what may be good for society may also be good for business. Measuring the benefit that CSR has to a company has been complicated by the reluctance of business to embrace the concept and provide reasonable reports and audits. A forthcoming report from St. Andrews University contends that less than 4% of the world's major corporations produce CSR reports, and the results have been characterised by Rob Gray, professor from St. Andrews, as, "at best useless and at worst highly misleading" (qtd. in Edwards, 2006). There are, however, some economic indicators that can be used when comparing companies that have a strong CSR reputation to those that do not. Profits, revenues, customer loyalty, market response, worker safety, and legal liabilities can be examined for the impact they have on a business. Societal benefits that arise from worker and product safety, a clean environment, and ethical practices are readily apparent. However, more intangible benefits may not be as readily quantified, but may be reflected in better company reputation, brand l oyalty, and public perception. When measuring CSR as an overall effect on a company, there is some correlation between good company citizenship and lower profitability. Indicators that can be measured indicate an overall negative effect on top CSR companies and their annual net income growth (Laffer, Coors, & Winegarden, 2004, pg. 5). It may be misleading to infer that market leaders also have the most ambitious CSR programs, for as Laffer, Coors, and Winegarden, 2004, conclude, "It is likely, therefore, that the businesses that are inclined to engage in CSR initiatives tend to be those that are already financially successful and that can afford the added CSR overhead" (pg. 6). Short-term benefits from CSR that are realised by society may take place at the expense of a company's core mission of generating profits. However, when CSR traits are examined on an individual basis, the results may reveal benefits for both the company and society. Worker safety is a paramount consideration for a company with strong CSR traits. The demand of a safe workplace is a mainstay of worker advocates and has, in many cases, been forced upon business through increased regulation. Workers have benefited greatly from these actions as the work environment continues to improve. But has business also reaped rewards from investments in safety Or has safety had a negative effect on profit Alcoa, the world's largest aluminium producer, made a strong commitment to safety in 1987. Since then its accident rate has fallen by 90% and is 10 times better than its industry peers (Jackson & Nelson, 2004). During this same period, Alcoa has been able to outpace the industry and its nearest competitor, Alcan, in both revenue and profitability. Safety contributes to profitability through a