Corporate Social Responsibility (CSR) is considered to be a very important and beneficial tool for companies. It works not only in favour of the society but also for businesses in the form of building goodwill, attracting talent and even build a loyal customer base. While the advantages of CSR are multifold and many, it is also important to look at another side and understand its disadvantages.
Subject to greater scrutiny
CSR if done quietly does not reap many benefits. But when a company conducts it in a public space, it subjects itself to greater scrutiny. Thus, a mistake or irresponsible behaviour on a company’s part will be criticized much more than the appreciation it will receive for its CSR activity. Thus all in all a company might receive more blows to its brand image because of CSR than claps.
Competitive Disadvantage
CSR, when integrated with a company’s operations, might increase the cost of production of the product or service a business offers. This, in turn, will increase the prices of the products. In recent times, with rising awareness, people are willing to spend a bit more, if they feel the company they are buying from is ethical and socially responsible. But broadly, people tend to purchase products that allow them to spend less. Thus, a company who practices CSR is at a disadvantaged position in comparison to companies who do not.
Risk to Reputation
When an organization’s operations are based around ethical and socially responsible activities, they are often compelled to express and share a number of shortcomings of their own products to the customers in the market. Because of such sharing of information and shortcomings of the products or processes of a corporation, the organisation becomes vulnerable to a number of negative impacts upon its own reputation in the market.
Contrasting Business Interests
Normally, the main aim of any business organization is to create profits. Corporate Social Responsibility requires the companies to keep the interests of the people into consideration. This can cause a conflict in the business objectives of the corporation while making important decisions. For example, whether or not to buy an asset or an equipment that is beneficial for the business needs, but such buying may cause harm to the community or environment.
Embedding CSR into a company’s operations is a difficult and tricky task. But it is also an important one. A company in today’s time cannot get away with unethical practices. CSR is imperative for an organisation to sustain. Thus, the best a business can do is understand the disadvantages of CSR thoroughly, plan well and tread carefully to minimise the damage and increase the benefits of it.
