Corporate Social Responsibility in Post Covid-19 Era

 Corporate Social Responsibility in Post Covid-19 Era

Corporate social responsibility (CSR) has become a much-needed topic in the era since the whole world is trying to combat against a Covid 19 virus which has changed usual lifestyles upside down. Most of the people in the world are in a state of searching for a helping hand. Under such situation it is worth to reconsider the importance of CSR in a post Covid era. In order to scrutinize the stated fact the content has been unfolded in areas such as what CSR is, why CSR is needed, how CSR can be misused, the impact of Covid-19 on CSR and the necessity of CSR in the post Covid era.

What is CSR? & Why CSR is needed?

Corporate social responsibility is currently a highly evolving area in the business world. Simply it is the legally unbound moral duty of and organization towards the improvement of society as a gratitude for what it has gained hitherto. Aggarwal, (2018) introduces CSR as a way of how businesses incorporate environmental and socio-economic concerns into their business operations in an explicit and definable manner in order to establish good governance within an organization resulting upswing in the society. Lindgreen and Swaen, (2010) has explained CSR is not only doing good but it also leads for doing better. However, it is important as well as interesting to reveal why CSR is required for an organization. As Lindgreen and Swaen, (2010) has explained that CSR is essential for an organization in terms of defining their roles in the society and incorporating social and ethical standards to the business governance. There are two main drivers for an organization to engage in CSR as philanthropic influence due to ethical and moral values in leadership and strategic influence due to the requirement in the current market system (Dhanesh, 2014). If the latter one further elaborated strategic influence means, there is always a pressure from other organizations as carrying out CSR increases the customer loyalty as well as employee commitment. In fact, current trend of CSR is in a state of transition from a philanthropic perspective to a strategic perspective.

Today most of the organizations are carrying out their CSR projects which are very common as in Cancer drugs development, arts, helping for poor, etc. Kaplan, (2020) has stated that in order to be more resilient, it is important for an organization to consider what type of CSR they should do instead of having attitude of just “doing good”. Furthermore, Kaplan, (2020) explains that it would be much effective if leaders of the organization can consider about the interests of their wide range stakeholders from whom the organization is surrounded by, when they are planning their CSR projects. Strebel, Khan and Cossin, (2020) also have stated that leaders of an organization should consider interests of not only shareholders who invested on the company but also all the stakeholders such as suppliers, customers, employees, partners and finally the society as they are equality or in some cases more important for the society in the sense of long – term growth of the organization. For an instance Hayelys Sri Lanka is an organization which involved in many industries including tea exports. They have launched a CSR project to ensure the that every plantation worker has a house fulfilled with necessities and it has named as “tea without tears” (Hayleys.com, 2020).

(Hayleys.com, 2020)

                    

How is CSR Misused?

Corporate Social responsibility is not only about donations, sponsorships or  just charity work but it should be understood by all the organizations that CSR is there genuine incorporation in the betterment of the society and the environment or in other words it is something about improving triple bottom line people, planet and profits. However, organizations misuse the CSR for their own profit benefits as they have understood that CSR is there for the profit maximization or brand development by business development. The reason is management and the top leaders think that organization should function to make the shareholders wealthy and do not take care about other stakeholders. For some organizations CSR is only in their attractive reports as when there are bigger numbers in the annual reports that can attract more customer attention towards their businesses though the actual commitment towards social responsibility remains questionable. Some organizations misuse these CSR funds in order to spend for becoming politically stronger. Furthermore, organization should not make use of CSR as a tool for hindering their unethical behaviours. (Debeljak, Krkač and Bušljeta Banks, 2011)

However, there are situations in which CSR had uplifted the company ethics and governance from an unsatisfactory level to an appreciable level. For an instance in mid-nineties consumers of Nike were protesting for sweatshop allegations and child labor and had to face boycotts as well. Twenty years later Nike became the first company in their industry to maintain transparency in salary scales and working conditions through their CSR report showing that how CSR activity on their own employees had paid them off. (Newell, 2020)

(Newell, 2020)

 How is CSR affected by Covid-19?

Covid-19 the global pandemic has changed the world to a great extent during last eleven months. People’s lives, living styles as well as business world also got affected by this crisis. Many strategic alterations have been introduced within the organizations as actions required to implement in order to be align with the healthcare guidelines and regulations imposed by the governments of particular countries as well as actions essential for the survival of the organizations. As this is a critical period for most of the organizations in the world there can be a considerable drop in the number of CSR projects conducted in the post Covid-19 era. It is mainly because pandemic has created another financial crisis and due to the economic downturn created by the financial crisis negatively impact on the funding for CSR projects (Fraser, 2020), (Charitoudi, Giannarakis and Lazarides, 2011).  Karaibrahimoglu, (2010) has explained that during a financial crisis, organizations tend to be more defensive and conservative, hence unable to balance expectations of all stakeholders or in other words during a crisis organization are more likely to avoid engage in CSR projects or may have led to a dormant phase in the sense of CSR till the situation becomes better again .

Instead organizations might have to make some measures for the betterment of their own employees first as it also become a major CSR of its own (Kramer, 2020).  Kramer, (2020) has further explained some of those measures such as avoidance of employee layoffs, avoidance of salary cuts and continuing paying wages up to an extent which organization is capable of as these will be paid off in the form of reduction in the costs of rehiring and training employees when crisis come back to normal. Furthermore, lending money for the employees for low interest rates and covering their health expenses also will be a great relief for them during this difficult period and it will in turn enhance their loyalty towards the organization. For an instance companies as Apple, Microsoft, Walmart had continued payments for the hourly workers during the first two weeks in the lockdown (Kramer, 2020). Contrastingly, some of the some of the CSR projects have been mothballed due to the problems such as reduction in the teams or construction terminations. 

However, some of the companies still engage in CSR while their focus has changed as doing good for the society in terms of Covid-19. Managing the continuation of CSR during a crisis or under uncertainty reflects a strong senior leadership quality as well. Charitoudi, Giannarakis and Lazarides, (2011) has explained that CSR projects conducted during crisis periods allow organizations to become differentiated among others and there by turn the threat to an opportunity. There are many examples for such CSR projects and one such is donation of new Corona virus test kits  and other medical equipment for other countries by Alibaba foundation and founder of Twitter has donated 1bn US dollars for the efforts on Covid-19 pandemic (He and Harris, 2020). Furthermore, Microsoft has initiated a program involved in granting global digital skills require in a Covid-19 economy for 25 million people worldwide (Smith, 2020). Some of the giant companies such as McDonalds, Audi, Volkswagen and Nike had changed their logos in order to promote social distancing during the pandemic.

(Valinsky, 2020)

Should organizations be involved in CSR in the Post Covid-19 era?

The crisis that was generated by the Covid-19 pandemic is giving a second chance for all the organization to reestablish the relationship between the society and the organization. A genuine and authentic efforts towards the pandemic will allow organizations to build a strong rapport with their stakeholders and general public. For an instance when considering about consumers, by seeing their favorite brand is taking real effort to help them during a crisis would naturally increase the loyalty towards the organization as well as will establish a more meaningful bond in between brand and the consumer with regards to the before crisis situation. As most of the governments in countries have loosen their economic policies in order to strengthen and encourage the businesses in the country that opportunity can be utilize by the organizations to reconstruct their governance including more CSR into it. It is because as an organization profit maximization should not be the sole objective if its aspiration is long-term sustainability. Since, without having strong bonds with stakeholders, environment and the general public it is very difficult for an organization to have a long-term sustainability. (He and Harris, 2020)

In concluding, as an organization who is looking for the long-term sustainability engaging in CSR in the post Covid-19 era would be a great advantage as it will enhance the image of the organization in the society and customer loyalty. Over and above, in order ensure the long-lasting success of an organization, the well-being of their stakeholders is vastly important. Hence Carrying out CSR activities during the past Covid era though it is a difficult period for organizations as well would be vastly paid off in the dawning of the good time.

References

1)    Aggarwal, A., 2018. CSR: The Total Social Responsibility of Business Organizations. SSRN Electronic Journal, [online] Available at: <Aggarwal, A. K., CSR: The Total Social Responsibility of Business Organizations (May 23, 2018). Available at SSRN: https://ssrn.com/abstract=3183654 or http://dx.doi.org/10.2139/ssrn.3183654>.

2)    Charitoudi, G., Giannarakis, G. and Lazarides, T., 2011. Corporate Social Responsibility Performance in Periods of Financial Crisis. European Journal of Scientific Research, 63(3), pp.447-455.

3)    Debeljak, J., Krkač, K. and Bušljeta Banks, I., 2011. Acquiring CSR practices: from deception to authenticity. Social Responsibility Journal, 7(1), pp.5-22.

4)    Dhanesh, G., 2014. Why Corporate Social Responsibility? An Analysis of Drivers of CSR in India. Management Communication Quarterly, 29(1), pp.114-129.

5)    Fraser, D., 2020. Covid-19 Has Become An 'Economic Crisis' Says Chief Economist. [online] BBC News. Available at: <https://www.bbc.com/news/uk-scotland-52367295> [Accessed 11 October 2020].

6)    Hayleys.com, 2020. Community Impact | Conglomerates In Sri Lanka | The World Of Hayleys. [online] Hayleys.com. Available at: <https://www.hayleys.com/sustainability/community-impact/> [Accessed 15 October 2020].

7)    He, H. and Harris, L., 2020. The impact of Covid-19 pandemic on corporate social responsibility and marketing philosophy. Journal of Business Research, 116, pp.176-182.

8)    Kaplan, S., 2020. Why Social Responsibility Produces More Resilient Organizations. MIT Sloan Management Review, 61(1), pp.85-90.

9)    Karaibrahimoglu, Y., 2010. Corporate social responsibility in times of financial crisis. African Journal of Business Management, 4(4), pp.382-389.

10) Kramer, M., 2020. Coronavirus Is Putting Corporate Social Responsibility To The Test. [online] Harvard Business Review. Available at: <https://hbr.org/2020/04/coronavirus-is-putting-corporate-social-responsibility-to-the-test> [Accessed 11 October 2020].

11) Lindgreen, A. and Swaen, V., 2010. Corporate Social Responsibility. International Journal of Management Reviews, 12(1), pp.1-7.

12) Newell, A., 2020. How Nike Embraced CSR And Went From Villain To Hero. [online] Triplepundit.com. Available at: <https://www.triplepundit.com/story/2015/how-nike-embraced-csr-and-went-villain-hero/57726> [Accessed 13 October 2020].

13) Smith, B., 2020. Microsoft Launches Initiative To Help 25 Million People Worldwide Acquire The Digital Skills Needed In A COVID-19 Economy - The Official Microsoft Blog. [online] The Official Microsoft Blog. Available at: <https://blogs.microsoft.com/blog/2020/06/30/microsoft-launches-initiative-to-help-25-million-people-worldwide-acquire-the-digital-skills-needed-in-a-covid-19-economy/> [Accessed 12 October 2020].

14) Strebel, P., Khan, M. and Cossin, D., 2020. How to Reconcile Your Shareholders With Other Stakeholders. MIT Sloan Management Review, 61(4), pp.1-8.

15) Valinsky, J., 2020. Mcdonald's And Other Brands Are Making 'Social Distancing' Logos. [online] CNN. Available at: <https://edition.cnn.com/2020/03/26/business/social-distancing-brand-logos-coronavirus/index.html> [Accessed 13 October 2020].