The Corporate Social Responsibility

Society’s vision of a company with respect to its philosophy, goals and politics has been changing in the last decade. The main factor behind this change is related to the greater role consumers themselves now play, and the transcendental force which this exerts from the market. Nowadays both product and producer are subject to continuous and exhaustive controls in relation to values that stretch beyond quality and efficiency.

In this criterion, a new concept makes a marked entrance, one which foresees and attends to not only the needs of the product itself but more ethical service. The level of compromise of the company with society is fundamental, something which is taken more and more into consideration by consumers and reflected in their expectations.

The new concept, according to the degree of social involvement or commitment, represents the link between a business’s success and customer perception of them.

Commitment to the Community

Commitment to the community refers to the different actions taken by a company in order to maximise the effect of its contributions in terms of money, time, products, services, influences, administration and other resources, which it directs towards the communities in which it operates.

When these initiatives are designed and are carried out in a programmed and strategic fashion, they not only bring an added value to those on the receiving end, but these initiatives strengthen a company’s reputation, its brands and its products in the local communities where they have commercial interests, as well as in the rest of the world, the company’s efforts being motivated by the financial benefits that come with an increased involvement with society. This increases sales, raises staff moral, and strengthens the ability to compete in regional markets, as a result of qualified staff, and of being a “favourite neighbour” in the community. Many companies also recognise the opportunity and the necessity to assign private resources to certain social problems, taking over the role of the state in different areas.

• Funds for projects or non-governmental organisations that are already defined.
• The selection and treatment of a social themeto consider with which the company can identify.
• Back-to-work schemes. Systematic support in the area of   RRHH, focussing on work capacity.
• Donation of secondhand computer equipment or furniture.
  
  

Social action programmes in collaboration with the company’s human resources.

• Joint participation of human resources in the undertaking of projects.
• The role of systematic support to the volunteer of the company body
• Low-cost and easily produced social initiatives

Social action programmes through the company’s proudcts and services.

• Marketing programmes with a cause.
• The donation of company products (new, used or surplus goods).
• Courtesy concessions on services and products (with no charge)
  
  Companies who make a pledge to society experience as many quantitative as well as qualitative benefits.

• Financial Performance  
• Reduction in Operating Costs
• Brand and corporate Image.
• Access to Capital.

Financial Performance

Business and investment groups have for a long time debated whether there exists a real correlation between the practices of business with a social commitment and positive financial performance.

Many academics have demonstrated the relationship. In one study, quoted in the 1999 Business and Society Review, it showed that 300 businesses who respected an ethical code, which was known to the community, enjoyed a performance 2 or 3 times greater than those with no consideration to social commitment, which clearly indicates a differential added value. A recent study, carried out at the University of Harvard, also showed that these companies with action schemes shared with their employees, showed a growth rate four times greater, and eight times greater the rate of job creation in relation to the scheme just for shareholders. David Lewin, Professor of the UCLA, on behalf of IBM, has studied the link between corporate donations and a company’s business performance. Through this relationship, companies with charity-based social practices, were able to receive much higher than expected return rates on their investments

Reducing Operating Costs

Various initiatives of the CSR, particularly in the environmental field, achieve a significant reduction in costs, reducing spending and improductivity. For example, those who pledged to reduce emissions of gases, contributed towards optimising energy potential, thus reducing costs as a result. Furthermore recycling alternatives generate extra incomes. There exist various practical example of significant environmental savings. For example, the Dow Chemical Company and the National Resource Defense Council established an alliance with the aim of reducing the production of 26 toxic chemicals to just one. This is why they have saved 5.4 million a year, and as an added bonus, the quality of their products too.

In 1997, a survey carried out among 150 executives, by the Whirlpool Foundation, Working Mother Magazine and Family Newsbrief, found a direct link between the programmes and different initiatives of the working environment, such as health, well-being, child care, the elderly, with the result of obtaining important benefits such as a reduction in worker absenteeism and rotation, better employee and consumer satisfaction, and reduction in health costs etc.

Improving Brand Image and Reputation

Often consumers are led towards brand names and companies which are considered to have a good reputation in areas related to RSE (Company Social Responsibility). A company which is considered socially sensitive, can reap benefits from its public reputation, same as with its reputation in the business community, thus increasing the ability of the company

Active participation in community activities generates a positive reputation for the employees within the company. According to a study carried out byt "Hill and Knowlton" and "Yankelovich Partners", in the U.S people think more favourably of those companies which focus their charity efforts into the donation of products, and the promotion of their employees working as volunteers in the community. Only a small percentage consider that "giving a large sum of money" is the most impressive act a company can perform. Leading businesses are often quoted in the media and recommended to investors who are looking for companies with a social commitment. Many of the annual lists of companies include active participation in the community as one of the measuring parameters. For example, the magazine "Fortune" places "social responsibility" within the 8 criteria used in its yearly survey of the most admired companies along with financial stability and quality within administration.
Companies have used environmental responsibility as a way of reinforcing their reputation, or the brand's image, which in return has served to increase sales and atract investment. In the Netherlands the value in the market of ITT Nokia for the 24inch television increased by 57% and its crude income by 73% a month after a consumer magazine classed them as the best products, basing this decision in part, in the which identify themselves as soc ially or environmentally progressive. In this way, companies which have incorporated environmental issues into their business decisions are starting to profit from financial institutions and insurance companies, according to a 1999 report by the Aspen Institute.

In the global economy, brand, image and reputation are amongst the most valued "strengths" of a company. Responsible marketing practices are naturally easily visible to consumers and possess the potential to strengthen or weaken public opinion with respect to a company or its brand name. A good reputation through integrity, and a strong commitment to the consumer can generate loyalty and trust, and provide room for confidence in times of crisis, having a public which is more tolerant and one whose confidence is much more easily regained when the crisis subsides. In the same way, responsible marketing practices which are negatively viewed can attack the brand's image and a company's reputation even if this company has very high quality products and services.

Accessing Capital

The reports by the Forum of Social Investment reveal that there were more than two billion pesos in resources directed towards ethical causes, the environment and company social projects in the U.S in 1999. In 1995 that figure rose 639 thousand million dollars to 1.185 billion dollars in 1997, then to 2.16 billion in 1999. It's easy to see that companies who show ethical, social and environmental sensitivity, have easier access to capital, which would otherwise have been more difficult to come by.