Q.3 Why should public limited companies engage themselves in corporate social responsibility (CSR)? Give reasons.
1. Meaning of Corporate Social Responsibility
Corporate Social Responsibility (CSR) means the responsibility of a company towards the society in which it operates.
It implies that a company should not work only for profit but should also protect the environment, take care of employees, deal honestly with consumers and contribute to social welfare (education, health, poverty-relief, etc.). Why Public Limited Companies Should Engage in CSR
Public limited companies are large organisations using huge resources of society. Therefore, they have greater social responsibility.
2. Reasons Why Public Limited Companies Should Engage in CSR
(i) Social Obligation and Moral Duty
- Public companies use natural resources, public money and infrastructure created by society.
- It is their moral duty to give something back to society in the form of employment, fair wages, safe products, protection of the environment, support to education, health and community development. Why Public Limited Companies Should Engage in CSR
- Thus, CSR is a way to discharge ethical responsibilities.
(ii) Legal Requirements
- In many countries, including India, companies above a certain size are legally required to spend a part of their profits on CSR activities (for example, specified in the Companies Act, 2013).
- Therefore, engaging in CSR ensures compliance with law, avoids penalties and builds image as a law-abiding company.
(iii) Improvement of Corporate Image and Goodwill
- CSR activities such as running schools, hospitals, environment-protection drives, scholarships, etc. create a positive image of the company in the minds of the public. Why Public Limited Companies Should Engage in CSR
- A good reputation or goodwill helps the firm in gaining public support, easy acceptance of its products and favourable treatment from government and financial institutions.
(iv) Better Relations with Stakeholders
- By taking care of workers (safety, fair wages, welfare schemes), consumers (quality products, fair prices) and the local community, the company builds harmonious relations with all stakeholders. Why Public Limited Companies Should Engage in CSR
- This reduces conflicts, strikes, consumer complaints and legal disputes and ensures smooth functioning of business.
(v) Attraction and Retention of Employees
- Talented employees nowadays prefer to work in organisations that are socially responsible and ethical.
- CSR programmes (employee welfare schemes, training, participation in social projects) improve employee morale, motivation and loyalty, reducing labour turnover and increasing productivity.
(vi) Customer Loyalty and Market Advantage
- Consumers increasingly prefer products of companies that care for society and the environment (eco-friendly products, truthful advertising, no exploitation). Why Public Limited Companies Should Engage in CSR
- A strong CSR record differentiates the company from competitors and helps in building long-term customer loyalty and higher sales.
(vii) Long-Term Profitability and Sustainability
- CSR should not be seen as charity only; it is an investment for long-term success.
- By protecting the environment, maintaining good relations with government and society, and developing local communities, the company creates a stable business environment which is necessary for its long-term survival and profitability.
(viii) Risk Management
- Ignoring social and environmental responsibilities can lead to protests, legal actions, bans, boycotts and damage to reputation.
- Proactive CSR helps in identifying and reducing social, environmental and political risks and thus protects the company from future problems. Why Public Limited Companies Should Engage in CSR
(ix) Contribution to National Development
- Public companies are powerful economic institutions. Through CSR they can support education, health care, skill development, rural development, women empowerment, environmental conservation, etc.
- This contributes to overall economic and social development of the country, which in turn expands markets and opportunities for the company. Why Public Limited Companies Should Engage in CSR
3. Conclusion
Public limited companies should engage in CSR not only because it is legally expected but because it is economically beneficial and morally right.
CSR helps them to build goodwill, win public confidence, strengthen stakeholder relations, manage risks and ensure long-term growth and sustainability, while at the same time contributing to the welfare of society and the nation. Why Public Limited Companies Should Engage in CSR
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