The CSR conundrum

Should companies invest in CSR? Of course, they should. Corporates have all the money. If they don’t, who will? I mean, the world has problems, right? Problems have solutions. But these solutions come at a price. Adopting and implementing these solutions require money which only the corporates – and wealthy philanthropists – can afford to provide. So, they should.

But ask whether it makes business sense for companies to invest in CSR, and you might get another answer. Or two. Or, perhaps, none at all. Go on, ask a corporate bigwig if he or she can demonstrate concrete financial benefits of CSR for his company, and see what happens. In spite of what you may read in the media about Indian corporates benefiting from investing in CSR by initiating programmes for children, adopting villages, saving forests, etc., the figurework for investing in CSR is inconclusive.

The fact is, there is very little evidence to demonstrate that CSR actually benefits a company financially or strategically. And, this is not just in India; it’s a global phenomenon. Of course, there is a view that suggests that investing in CSR has positive impact in public relations and the image of the company, but there is nothing that can be measured in money value to substantiate benefits that add to the company’s bottom line. Not yet, anyway.

So, is there a way out of this conundrum?

I feel there are bigger questions to be asked: For instance, do companies have a social responsibility at all? And, does this responsibility serve the interests of the shareholders? If the answers to both questions is a resounding ‘yes’, then companies could think of sacrificing business profits for doing good in this world. Because, in this case, it may not matter if the figurework for the investments is conclusive or not.