Importance of Corporate Social Responsibility

Profit and nonprofit corporations have an ethical obligation to implement corporate social responsibility programs that support the environment and communities in which they operate. CSR -- expressed through sustainability projects or corporate donations -- helps organizations build a positive public image, foster trust relationships in a community, enhance employee loyalty and satisfaction, and increase business performance.

Public Image

Corporations with effective CSR programs stand a greater chance of building and maintaining a better public image. As they launch various community projects, local and regional media outlets are likely to cover the events, thereby increasing awareness about the corporations’ initiatives. "Corporate Responsibility Magazine" notes that companies with a good reputation incur lower hiring costs as potential employees give them greater consideration. In a 2014 survey the magazine conducted, 76 percent of the 1,014 people surveyed said that if unemployed, they would reject a job offer from a company with a damaged reputation.

Employee Support

More statistics from CR Magazine’s report indicate that 72 percent of people prefer working for a company whose chief executive prioritizes corporate responsibility and environmental issues. An organization with a CSR-conscious leadership enjoys greater support from junior employees. In such a company, if the chief executive asks employees to do some volunteer work in the community, turnout rates will likely be high, and the company won't incur any costs in contracting out the work.

Corporate Community Relations

A community in which a business produces and sells its products or services can affect its operational efficiency and business performance. Concerned that a sugar manufacturer pollutes the environment and does little about it, for instance, community members may hold protests against the company, potentially disrupting operations. On the other hand, a socially responsible manufacturer with good community relations is unlikely to experience such business disruptions. Dissatisfied residents are more likely to file a complaint directly with the company rather than engage in protests or seek redress in a court of law.

Innovation and Costs

CSR breeds innovation. Take an example of a fertilizer manufacturing company that is actively involved in preventing water pollution in the community in which it operates. While building dams and conducting community awareness programs can help, engineering solutions into its own products -- such as developing pollution-free fertilizers -- offers a long-term remedy for controlling pollution in the immediate community and beyond. Without CSR, the company would have little incentive to innovate. In addition, superior products can give the company a competitive advantage and enable it to make more sales.

As a corporation pumps money into community projects, it can save costs, too, by embracing "green" business practices such as using less energy.