The discussion on the topic of corporate social responsibility (CSR), having arisen in developed countries in 1970, has nowadays spread throughout the world. Now, having stepped over the economic sphere, it enters the field of public policy not only in developed but also in developing countries. Furthermore, the role of business and entrepreneurship in the development of society has noticeably increased, and so did the requirements for openness in the business sector. Many companies have realized that it is impossible to conduct business operating in an isolated space successfully. Therefore, the integration of the principle of corporate social responsibility in the business development strategy is becoming a characteristic feature of leading domestic companies.
The modern world lives in the face of acute social problems, and in this regard, the social responsibility of business is especially significant – enterprises and organizations associated with the development, manufacture, and supply of products and services, trade, and finance. This is due to them having the necessary financial and material resources that allow these companies to work out solutions for social problems facing the world.
The Notion of Corporate Social Responsibility
Firstly, the significance and importance of corporate social responsibility is due to the outstanding economic development of the major countries of the world that are creating opportunities to maintain modern standards of living of the population. Secondly, the importance of CSR consists of strengthening the role of impalpable elements of economic growth that are linked to the requirement for investment in human capital as a critical provision for progressive economic growth. “CSR is a concept, whereby the organizations integrate social and environmental concerns in their business operations and their interaction with the stakeholders on a voluntary basis” (Kapur, 2020, p. 2).
The corporate social responsibility is interpreted in different ways: it can be comprehended as too specific, and sometimes too generic. In a narrow sense, corporate social responsibility establishes the responsibilities of a company to effectively execute operations to create added value, to fully comply with socio-environmental and economic demands set up by government laws, ethical standards, and morals accepted in society.
Therefore, CSR could be viewed as an achievement of commercial success in compliance with ethical values, authorities, local communities, and the environment. In its broad meaning, on the other hand, corporate social responsibility takes part in voluntary activities undertaken by the company itself to protect nature, create favorable working conditions, support the local community, charity, and good business practice. The CSR has been rendering a significant contribution in leading to well-being and progression, taking into account the above stated areas (Kapur, 2020, p.2). The company, in this case, goes beyond absolute legislative norms and socially accepted ethical models.
The Difference Between CSR and Charity
It is possible to distinguish CSR from a charity, as charity can be classified as only a tool for implementing social programs that can be organized by companies that have integrated CSR. For instance, a company can hold charitable donations and sponsorships, a form of targeted assistance allocated by the company for conducting social programs both in cash and other non-financial offerings.
The primary foundations of the activities of companies concerning corporate social responsibility are candidness, coherence, relevance, and the prevention of conflicts. However, businesses based on these foundations often experience substantial difficulties. “CSR encompasses multiple dimensions involving different stakeholder groups while companies are constrained with limited resources, especially in years of financial turbulence—thus, conflicts of interest among stakeholder groups competing for financial resources and managerial attention may arise” (Wang et al., 2016, p. 535).
Additionally, difficulties happen because the implementation of the policies of CSR requires a lot of time and effort from company management. As a result, they are forced to be distracted from solving current, urgent issues; secondly, the experience shows that there is no quick and visible result from the implementation of CSR, since, at least five years are required to achieve a high-quality result.
How CSR Affects Firm Performance
There are numerous advantages of CSR activity for business development and firm performance. Firstly, CSR implementation may allow companies to gain access to socially responsible investments, in the allocation of which investors take into account indicators characterizing the company’s activities in social and ethical spheres, in the field of environmental protection. Secondly, operating costs can be reduced, for example, by reducing production or processing waste, increasing energy efficiency, or selling recycled materials. Thirdly, companies, which have integrated CSR into their activities, can improve their brand and reputation, factors, which help to develop and open up new markets and lines of business. Thirdly, sales in the company may grow, and customer loyalty can increase.
Consumers want to know that products are manufactured with an understanding of environmental responsibility as well as other social aspects. Some consumers are even willing to pay more for “socially responsible” products (Alvarado-Herrera et al., 2015, p. 245). Additionally, there are more opportunities to attract and retain employees, as people prefer to work in companies whose values coincide with their own (Jamali & Karam, 2016, p. 10). Furthermore, it is essential to mention that regulatory authorities tend to reduce their claims regarding “socially responsible” companies.
Thus, corporate social responsibility is not just a tribute to fashion but a vital necessity. Social innovations introduced within the framework of CSR strategies not only allow companies to demonstrate their civic position but also become an important marketing tool that makes it possible to stand out, develop new products and directions, create an emotional connection between a brand and a consumer, thereby contributing to the growth of loyalty.
Private companies in the UAE were supposed to necessarily allocate funds for social initiatives and participate in them by the end of 2017, a senior official said on the occasion of the launch of 11 programs by the Ministry of Economy, dedicated to the Year of Charity (Zakaria, 2017). The Ministry, which implemented these initiatives starting in 2018, was at that time working with various economic departments and the Chamber of Commerce and Industry to make the necessary changes to current laws.
Upon its completion, corporate social responsibility became mandatory for UAE companies. Thus, by the end of the year, through the initiative, approximately 500 million dirhams ($ 136.1 million) were planned to be collected in cash or the form of work with charitable organizations. These kinds of programs by the UAE government were aimed at raising awareness and supporting the interaction of the private sector with economic, social, and environmental issues.
Corporate Social Responsibility Company in UAE
There is an example of a real-life company operating in UAE that discloses its CSR activities, and that is Emirates NBD. This is a large banking group in the MENAT region, some of its shares being listed on the Dubai Financial Market. The company offers corporate, retail, Islamic, investment, and private banking, global markets & treasury, asset management, and brokerage operations throughout the region. Emirates NBD is currently a functioning member and supporter of the UAE’s fundamental improvement and network activities, in close arrangement with the UAE government’s methodologies, including money related education and promotion for consideration of People with Disabilities under its #TogetherLimitless platform.
The company is perceived for the corporate social responsibility by IMPACT2030, the corporate volunteering arm of the United Nations. They have dedicated a separate page on their website and claimed that they “recognize that we have responsibilities not only towards our customers, employees, and shareholders but also to the communities in which we serve” (Emirates NBD). They sometimes invest in funds and social programs directly, but, usually, they work through their partners, like community institutions and social organizations.
Furthermore, they have an online donation channel, where anyone can contribute to a charitable cause and offer help. Emirates NBD proposes to have a look at their efforts that they have made since 2015, reaching 2 million people that have received their help and support. The Sustainability Report for 2015-2016 is available on their website. It outlines their dedication to their partners and features their performance across social, economic, financial, environmental, and administration practices.
In conclusion, CSR is the obligation of business to society: the state, society, individuals, and the population as a whole. In other words, this is the ethical attitude of business to the entire human community, which not only helps maintain the image and reputation of the company but also brings significant economic benefits. Nowadays, large multinational corporations are focused on international principles of CSR, while small and medium-sized businesses are focused on local understanding and criteria for assessing CSR.
Alvarado-Herrera, A., Bigne, E., Aldas-Manzano, J., & Curras-Perez, R. (2015). A scale for measuring consumer perceptions of corporate social responsibility following the sustainable development paradigm. Journal of Business Ethics, 140(2), 243–262. Web.
Emirates NBD. Corporate Social Responsibility. Web.
Jamali, D., & Karam, C. (2016). Corporate social responsibility in developing countries as an emerging field of study. International Journal of Management Reviews, 20(1), 32–61. Web.
Kapur R. (2020). Corporate Social Responsibility. Web.
Wang, H., Tong, L., Takeuchi, R., & George, G. (2016). Corporate social responsibility: An overview and new research directions. Academy of Management Journal, 59(2), 534–544. Web.
Zakaria, S. (2017). CSR to be compulsory for UAE companies. Khaleej Times. Web.