There is growing awareness that protecting the environment and the well-being of communities is the responsibility of everyone. As such, it has led to the redistribution of social initiatives from the government towards the private sector. Aligned to this, the private sector hastaken on a higher level of participation in CSR practices.This is apparent especially during economic recessions and environmental upheavals when there is a greater need for such social programmes.CSR Malaysia looks at the potential of CSR programmes towards providing solutions that not only alleviate social and economic stress but also contribute towards long term sustainability.
The traditional Asian corporate scene with its family-based outlook practised CSR within closed knit communities. As a result, employees and communities were well taken care of, in terms of social and economic needs. However, the growth of corporations has led to a focus on financial growth at the expense of social concerns.
A recurring issue that has encountereda mixed response from the corporate sector and policy makers is the role of businesses in assisting with the social needs of stakeholder communities. There is a distinctive range of CSR involvement amongst corporations. There are the corporations that embrace CSR as a corporate culture and there are those that take it as a charitable tax write-off.
Studies indicate that during economic distress, companies that continued CSR commitments are able to withstand the financial crises and come out a stronger competitor. Corporations are able to implement activities put on hold during business expansion. The reprioritisation of initiatives such as social assistance and building of partnerships with NGOs can lead to an increase in CSR activities.
The International Monetary Fund (IMF) and World Bank have forecasted a slow growth period, the slowest since the financial crises of 2008-2009. Economic stagnation resulting from lethargic growth rates along with the impending risk of a financial crisis is foreboding information for the corporate world. The consequences of financial crises can result in an economic malaise implicating the possible collapse of financial institutions, banking systems, production and finally the utilisation of primary resources. During such economic recessionary periods, there is the constant urge to regain the trust lost due to poor business and financial performances.
The question that undoubtedly comes to mind is “What is the role of CSR during economic downturns and expansion. Is it to stagnate and reappear at certain times in the economic landscape?”Conversely, its rightful position is an all-rounded framework that can shape business models regardless of economic situations, a solution for the bad and good times.
CSR is an accepted practice in Malaysia, one that has been recognised and actively supported by the Government as a contributor towards economic growth. The 11th Malaysian Plan actively encourages the undertaking of CSR programmes by the private sector notably within the health sector. The development of CSR programmes undoubtedly builds a sense of trust between the corporate world and society at large.
The rewards from such spending transforms into customers’ trust andloyalty.Trust built through strong CSR programmes leads to loyalty, a sought-after commodity during business downturns. The increasing norm of social conscious consumerism within the developed markets has become a major force in determining market share. The perception remains of a highly responsible corporation producing goods that takes into account consumer safety and environmental considerations, oblivious of economic and social dynamics.
Within Malaysia, the corporate sector, especially large companies, continue to invest in CSR programmes that involve social changes benefitting local communities. These activities carry the message of caring for society, which also builds trust and loyalty amongst customers. The downturn in the Malaysian economy due to falling commodity prices and the exchange rate has impacted the quality of living of the middle-class and below. Corporations’ greater involvement in CSR activities will have a lasting impression on customers, ultimately creating greater value for the overall community. This fluid atmosphere is the result when companies opt for continual CSR projects.
The core values of corporate social responsibilities lies within the domain of providing for social needs, catalysing change and balancing social values which may lead to financial rewards. The realising of social changes are long term goals as opposed to short term financial paybacks. The consistent challenge in balancing economic and social responsibilities ismost critical during financial crises. However, the rising momentum of social consumerism and environmentalism compels corporations to incorporateCSR values while calling for a consistent, resilient platform for the realization of long term corporate social success stories.
By Dato R. Rajendran