Corporate Social Responsibility (CSR): Types and Importance

4 min read2 days ago

Businesses Adopting Corporate Social Responsibility

Corporate Social Responsibility, or CSR, is a key component of most business priorities today. In India, total CSR spending ranged around ₹29,986.92 crore in FY23, across 51,966 projects. This shows how businesses today are investing heavily in CSR, and rightly so.

Investing in CSR not only helps society but also benefits organizations as it allows them to retain more customers and employees. This is due to the fact that today’s generation expects businesses to invest in CSR and be socially conscious. Customers are more likely to support and advocate for brands that are responsible for environmental and social issues.

Read ahead on what is CSR, its history in India, its different types, and the important part it plays in society for people who rely on the kindness of people to brighten their lives.

What is CSR?

Corporate Social Responsibility is an important pillar of our society that ensures organizations make giving a part of their culture. In 2014, India became the first nation to legally mandate that companies allocate a certain section of their profits to social causes under Section 135 of the Companies Act 2013. Under this Act, profitable organizations exceeding a certain threshold of profitability, turnover or revenue are legally obliged to allocate 2% of their net profits to CSR initiatives.

Now, over a decade later, the importance of CSR has become a staple in every organization’s strategies to cultivate the image of a socially responsible brand and contribute to the nation’s progress.

Exploring Different Types of Corporate Social Responsibility

Here are a few different types of CSR areas that organizations today are focusing on to make a difference in the world:

1. Environmental Responsibility:

Environment protection has become an important part of the CSR strategies of organizations around the world. Corporations today understand the role they play in protecting the environment and how their efforts could lead to making a difference for generations to come. More organizations today are setting carbon reduction targets and cutting down on their impact on environmental damage.

2. Economic Responsibility:

Businesses today have a responsibility to economically support charities and make a difference in someone’s lives. This could include donating directly to an NGO like Bal Raksha Bharat (also known as Save the Children) that is working for children’s well-being and development. They also create a culture of giving back in their workplace where employees are encouraged to donate to NGOs or volunteer with them.

3. Philanthropic Responsibility:

The philanthropic responsibility of an organization includes making sure a part of its profits is going towards contributing to societal change. This could include setting up a trust fund that supports children’s well-being, and environmental cleanliness, or even sponsoring the education of children who need it.

4. Ethical Responsibility:

The ethical responsibility of an organization focuses on making an inclusive and safe working environment for its employees. It extends to the responsibility that a business organization has towards ensuring they are conducting their business operations in an ethical manner.

Importance of CSR

The importance of CSR cannot be emphasized enough in today’s world. When an organization extends a hand of support, its effect reaches the people who need it most. For instance, the donations a company makes to an NGO like Save the Children India help fund their daily operations, which impacts the lives of countless children. It helps the NGO contribute to areas such as children’s education, healthcare, nutrition, protection, resilience, emergency relief, and more.

The Way Forward

The Corporate Social Responsibility is an integral part of modern organizations. Leading organizations around the globe have seen how their CSR activities can impact people’s lives and make society a better place for everyone to live. You can also become a part of this change by actively participating in your company’s CSR initiatives, and if you are not a part of any organization, you can still do your part by directly reaching out to NGOs like Bal Raksha Bharat and donating to their cause.

Frequently Asked Questions (FAQs)

Q. 1. What is CSR and its importance?

Ans. Corporate Social Responsibility ( CSR) is an integral part of corporate commitments to society and other stakeholders. These efforts ensure the world is a better place for everyone and help organizations be socially responsible.

Q. 2. What are the four types of CSR?

Ans. The four most common types of CSR include:

● Environmental Responsibility

● Economic Responsibility

● Philanthropic Responsibility

● Ethical Responsibility

Q.3. What is CSR with an example?

Ans. CSR is the responsibility of an organization to contribute actively to the welfare of society. An organization donating to an NGO or inviting people from an organization to sell their products during festivals like Diwali or Holi is one of the most common examples of CSR in India.