Drivers of CSR
Corporate Social Responsibility (CSR) refers to a company’s voluntary commitment to operating responsibly in terms of economy, society, and the environment. CSR goes beyond mere profit-making and is intended to positively impact both society and the environment.
As societal expectations and global challenges change, there are a number of drivers that motivate companies to participate in CSR activities. We discuss these drivers in detail below:
1. Stakeholder Expectations:
The evolution of stakeholder expectations is a major driver of corporate social responsibility. A company’s stakeholders include its customers, employees, investors, suppliers, communities, and non-governmental organizations (NGOs) who have an interest in its operations.
In today’s society, companies are expected to go beyond traditional profit-making to embrace ethical practices, transparency, and social and environmental responsibility in addition to traditional profits.
Customers, in particular, are becoming more discerning in their choices, favoring products and services from companies with responsible business practices.
In addition to increasing customer loyalty and improving competitiveness in the market, a positive brand image can also result in increased market share.
It is crucial that employers consider CSR when recruiting and retaining top talent, boosting employee morale and nurturing a positive work environment.
Employees, especially those of the younger generations, strive for purposeful work and want to work for a company that shares their values.
CSR is also becoming increasingly important to investors and shareholders when making investment decisions.
Socially responsible investing (SRI) and environmental, social, and governance (ESG) investing indicate a growing preference for companies with strong corporate social responsibility practices.
Investors are more inclined to invest in companies that prioritize CSR, as they are perceived as being less risky and more sustainable.