Essay Example on Whether Good CSR improve financial Performance

Introduction This assignment will be looking at whether Good CSR improve financial performance Different theories will be used throughout the assignment to critically analyse the effect that CSR has on the performance of a company Research using the FT and Bloomberg will be used to determine and look at a companies financial activities CSR Corporate Social Responsibility began in the 18th and 19th Centuries when there was an industrial revolution and very poor living and working conditions CSR is defined as actions that appear to further some social good beyond the interest of the firm and that which is required by law McWilliams and Siegel 2001 p 117 Many Scholars share the assumption that companies only focus on profits Scherer and Palazzo 2011 this assignment will critically analyse and look whether this statement is correct In this assignment there will be companies with good CSR and companies with no or bad CSR and there will be a comparison between the company's financial reports This assignment will include a conclusion based on the findings from the research and the analysis 

What is Corporate Social responsibility CSR is when an organizations consider the interests of society by taking responsibility for the impact they have on their employees communities shareholder s customers and the environment in all aspects of their operations This means when an organization go above and beyond the statutory obligation to comply with legislation and sees organizations voluntarily taking further steps to improve the quality of life for employees and their families as well as for the local community and society at large Having good CSR means the organisation is going beyond compliance with legislation and leads the organisation to honour ethical values and respect people communities and the natural environment CSR will also have a positive impact on the sustainability of the business CSR can be achieved without affecting the business goals Some argue that the only responsibility to society is to maximize shareholder s wealth Friedman however Friedman also mention if CSR makes the organization more sustainable in the long run then this should maximize the shareholders return 

Advantages of Corporate Social Responsibility Customers are increasingly looking for ethical business practices or ethical organisations consumers tend to avoid dealing with unethical organisations who act irresponsibly The fast growing use of social media which is given everyone that has access to the internet a voice which mean that unethical or destructive practices can reach millions of people online all across the world and will quickly fuel conversations online which means companies are accountable for their actions like never before Having a good CSR will eliminate the chances of this occurring A recent example of a company that was not socially aware or socially irresponsible and was affected by the social media effect is H M they had a black child dressed in a hoodie which had a massage on it that reads coolest monkey in the jungle this is the effect it had on their share prices H M plunged in 2017 after sales growth weakened especially in the fourth quarter Some 51 percent of analysts advise clients to sell the shares the biggest proportion of negative ratings since at least early 2003 according to data compiled by Bloomberg The stock is down more than 55 percent since reaching a high in March 2015 Walsgard 2018 As well as other effects it had on people destroying stores in south Africa and big pop stars names such as The Weekend that had clothes collaboration with H M for the last two years said he will not be working with them anymore 

This issue would not spread to the extent it did maybe 10 years ago therefor companies need to be more careful than they have been previously Having good CSR will win the originations new business and retain their current business It will increase customer retention therefore customers will be going above and beyond to support ethical companies for example fair trade coffee might be more expensive than a non Fairtrade but customers know that the farmers are not being paid a fair wage therefore customers will be willing to pay maybe a higher price for a coffee if they know that farmers are being paid a good wage CSR will help develop and enhance relationships with suppliers customers and networks If the organization is paying their suppliers a good price for their products and not abusing their power suppliers will be willing to retain that business Good CSR will mean a happy workforce which will attract and retain employees as well as making the organization as an employer of choice CSR can save the company some money for example on energy and other operating cost Companies can also differentiate themselves from competitors by implementing good CSR practices and they can use that as a USP unique selling point for example the body shop their products might cost more than normal beauty products however they are not afraid to stand out from the crowd and stand up for what s right we search the world for the finest ethically sourced ingredients to create a range of naturally inspired beauty products Today our dedication to use business as a force for good is stronger than ever As part of our Enrich Not Exploit Commitment we ve made it our mission to enrich our products our people and our planet That means working fairly with our farmers and suppliers and helping communities thrive through our Community Trade programme being 100 vegetarian and always and forever being firmly against animal testing Thebodyshop com 2018 By doing that the body shop is generating innovation and enhancing their influence on the market CSR will also improve the business reputation which will lead to more investment and funding opportunities