Corporate social responsibility is an effective way of building goodwill for a company. This was revealed by a study conducted by Nielsen spanning the whole of last year. Nielsen conducted the Nielsen India Corporate Image Monitor 2008, which brought out that corporate sensitivity towards social issues score better with stakeholders.
The study conducted by the research agency suggests that more than 50 per cent of its respondents feel that corporates are honest towards their CSR activities. Though the motive behind these activities are seen to be many, ranging from economic and tax benefits (47 per cent) to enhancing corporate reputation (45 per cent) and building a competitive advantage (30 per cent).
About 28 per cent of the total respondents thought that charity, either directly or through NGOs, is the best way to demonstrate social responsibility. Other ways of engaging in socially uplifting activities considered beneficial by stakeholders is a written CSR policy (24 per cent), actively involving employees in CSR activities (20 per cent) and community work and providing employment to needy groups (both 12 per cent).
However, a sceptical one-third of stakeholders believe that CSR is just a publicity stunt for most corporate houses.
According to the study, the top three social issues that stakeholders expect companies to tackle are better health infrastructure (50 per cent), fighting diseases such as HIV/AIDS, malaria, TB, cancer and immunisation programmes (38 per cent), and primary and higher education and adult literacy (30 per cent). The corporates are meeting the expectations of stakeholders for the top two social issues that are important to stakeholders, but give more priority to the promotion of healthcare education (72 per cent) than higher education and adult literacy.
Education, adult literacy, clean drinking water and sanitation are some of the areas where corporates need to step up activities to meet expectations.
"Any education or other initiative to build health infrastructure will impact the CSR reputation of an organisation significantly," says Vatsala Pant, associate director, Consumer Research, The Nielsen Company.
Environmental protection is now a hygiene expectation from organisations. It is deemed mandatory for any organisation that aims to gain the confidence of its stakeholders and be recognised as a socially responsible company to be sensitive to environmental issues and take steps not to endanger it through its activities.
Only 13 per cent of the respondents expect companies to undertake environmental protection as a CSR activity - it is a given that they will do so.
"It is interesting to note that seven out of ten members of the general public are willing to pay a premium for products and services to enable a company to fulfil its CSR commitments. Considering the impact of CSR activities on a company's reputation, organisations will have to plot a developmental path for CSR, integrating it with the rest of the business," continues Pant.
Some initiatives that are not spoken of openly but have a potential to yield big returns on reputation are rehabilitation (especially in times of natural disasters) and building of infrastructure (building roads/ maintaining properties).