CSR more strategic than tactical tool for firms

Corporate Social Responsibility (CSR) is now playing a strategic role than a tactical role that it used to earlier.

While, some 15 years ago, firms could take up CSR works as a means to save taxes, firms today have to take up CSR work as an integral part of the firm's operations if they need to succeed in the global market. This often gives firms an edge in the market and help them find business partners from many parts of the world to work with.

The Corporate Responsibility Index, the product of a business-led initiative, and developed by the British charity, Business in the Community, is operational in the UK and in Australia.

It has become a business tool, ensuring a systematic approach to managing, measuring and reporting upon the various impacts that companies have upon society and their environment. Many firms today mull over how socially responsible a firm is before doing business with it.

According to Vasanthi Srinivasan, associate professor, IIM-B, "Firms today can end up losing a lot if they do not have credible CSR programmes. Also, the kind of CSR work a firm takes up matters and can dictate how easy it will be for them to do business or find business partners."

Environment today is among the subjects on top of the mind of many a firm. How local firms take on sustainable stakeholder engagement is important to a firm's success, she added. Policy, processes and people, or the Triple P, could stand between the success and failure.

Financial analysts, rating agencies and insurance firms who rely on the corporate data to establish their credit ratings and evaluate the more qualitative aspects of company performances often find it difficult to separate "feel-good" reporting from reliable data.

India, too, like in the developed countries may soon have a social responsibility index which would influence investment decisions of the investors. Rating agencies are today working on including CSR as one of the variables while rating firms.