Corporate Social Responsibility is the buzzword for the companies that keep the business to be sustainable in achieving the competitive advantage in the marketplace. As Corporate Social Responsibility stands for CSR, could be defined in the perspective of World Bank as “the commitment of business to contribute to sustainable economic development, working with employees, their families and local communities”. Many of the authors and researchers agreed the definition and its consequences of CSR since it satisfies mutually the needs of communities as well as companies that want to be sustainable in the market. The top many companies inclusive of multinationals, large enterprises and even a few of the SMEs in Sri Lanka undertake CSR initiatives to show how well they are associated and concerned about the community of public and they bring them as a part of the organization. Unilever’s Saubhagya, Coca-Cola’s Cricket Pathway, for instance as CSR initiatives. At the same time, those companies are competing with rivalries to increase the brand value and the brand equity as well at the end of the financial year to position the company in the top ranking while giving more focus on CSR initiatives.
These two concepts such as CSR and Brand Equity generally have a negative correlation in the perspective of shareholders because in practice, many of the shareholders are more frustrated with the colossal amount of investments that are pumped on CSR Initiatives which would affect drastically to the Brand Equity of the organizations in Sri Lanka. Consequently, what the companies need to do is the heavily investment jeopardize their profitability, thereby failing their shareholders; likewise to the extend that such companies fail to engage in such social responsible activities at all, or only in superficial ways, may threaten their company’s survival by driving the customers and potential customers away. Therefore, a careful balance of the neoclassical and shareholder approach to doing business in the Sri Lanka market place is required today. Further, the shareholders are confused on CSR initiatives of companies what really they are doing for society. In practice a few of the companies in Sri Lanka take some awareness programs to shareholders and other key stakeholders to explain the impact of CSR initiatives that would bring in the long-term perspective to the companies. It is very essential for the companies to explain the importance of their current CSR activities and they have to be accountability and transparency in their CSR Initiatives particularly to shareholders. It is the fact that in Sri Lanka, many of the companies do not have a proper mechanism to implement and evaluate the social responsible programs.
Triple Bottom Line (TBL) is the latest concept that most of the organizations in international market, practice in the business process that takes their companies’ business into the sustainable marketing. TBL which consists of three dimensions such as Economic, Social and Environment creates a framework for the companies to become sustainable effectively and to implement and evaluate the CSR efforts. In the perspective of Economic, the factors such as future economic development of the company, creating sustainable financial bottom line in terms of increased earning per share (EPS), profits, Return on Capital Employed (ROCE), the reduction of operating costs through systematic management, labor productivity, expenditures on research and development and investments in training and other forms of human capital, and saving money by reducing energy use that the employees are engaged to practice it in the organizations, are taken in the measurement that provide a valuation for the companies. In the social perspective, the factors such as the CSR initiatives of the organization, fair trading practices through proven with excellent and quality of Standards and awards such ISO, SLS etc, supporting to local suppliers as Cargills Food City does to the local suppliers in Sri Lanka for instance, could be deemed. In the perspective of environmental dimension, the factors like lower pollutant and emission, reduce energy waste, use sustainable packaging, and recycling of the packages are considered.
It is the fact that many of the researchers accept that the TBL has a definite and solid impact on companies’ sustainability which is primarily achieved by CSR in Sri Lanka. Global warming could shrink the world economy by up to 20%. It is no longer acceptable for companies on ignoring their responsibilities for a sustainable future for everyone- businesses included. The business case in Sri Lanka for sustainability rests primarily on the consequences for corporate reputation of not being sustainable. By implementing Triple Bottom Line concepts, companies take steps to avoid the risk of boycotts and negative publicity that can be extremely damaging. The number of people who say they have boycotted a company because its products damage the environment now stands at 51%. Recent research commissioned by The Chartered Institute of Marketing (UK) indicates that more than 75% of marketers believe that a company’s sustainability practices will increasingly affect consumers’ buying decisions. Therefore, with integration of TBL, the companies need to think on which TBL’s measures would imply on their capabilities and they should be able to evaluate the achieved outcomes on their investment for CSR initiatives, but in Sri Lanka the implication of TBL in organizations is generally less. It is a good opportunity for well-established companies to practice Triple Bottom Line to become sustainable business in achieving competitive advantage.
Despite increased awareness of sustainability issues in recent years, many financial directors and managers still argue that it is not their place to consider sustainability issues, but they came to the concept that “the business of business is business”. But, as the customers play a pivotal role in the market oriented companies and they look the brands of which the companies’ social responsible approach is put on society. Then they purchase those brands. Subsequently, this behavior of customer perception on CSR initiatives impacts the brand equity of the companies. Thus, brand equity has been described as the added value endowed by the brand to the product that consists of brand loyalty, brand awareness, brand associations, and perceived quality. In the real practice of organizations, they take various efforts to increase the brand value throughout the business and marketing process. From innovative research of products to consumers decision making regard to the purchase of the brand, there are a lot assets and brand building thoughts included, such as advertising campaigns, promotional campaigns, PR campaigns, direct marketing, companies physical evidence, organizational culture, superior customer value through customer care program etc.
In Sri Lanka, the CSR is measured in a practical manner with the level of brand equity increased, the number of people who were benefitted from the initiatives, the amount of cost saving to the organization in the long-term perspective. At the same time, many of the companies in Sri Lanka measure the brand equity based on the factors such as increased brand image, increased sales, increased brand awareness level, and the level of the customers’ perception that become as an advocate for the brands.
Perhaps nobody will disagree to the statement that CSR enhances brand image, brand reputation, customer loyalty and sales. In an online poll conducted by The Economic Times on 5-6 January 2007, 75 percent of the respondents opined that CSR activities increase the brand equity of a company. Branding of products, more particularly of consumer products, gets an immense boost through social messages. With increasing competition and little differentiation in product features, creating and sustaining is a challenge. Spending on visible CSR activities is a cost effective means of achieving and sustaining a brand image. Good brand image leads to customer loyalty. We shall see that emotional binding is one of the factors contributing to brand image and customer loyalty, and CSR is tool for achieving that. Consumers not only want good and safe products but would also like to know that what they buy was produced in socially and environmentally friendly way, and are sometimes even willing to pay more for products that are produced in a socially and environmentally responsible manner. In the practice of companies in Sri Lanka, the CSR initiatives are understood in the upper market that was taken through with urban consumer behavior and customer life style. In the lower market, there is a gap in the involvement between companies and society which represent customers. The CSR is not understood properly by them.
It is recommended for the companies in Sri Lanka, the proper message from CSR initiatives should be communicated to the stakeholders such as shareholders, customers or beneficiaries and employees in order to have an effective results and outcomes from the efforts. Before implementing CSR, there should be a proper awareness programs, community link programs and word of mouth campaign by the companies that engage the CSR initiatives particularly in the rural market. Further, companies need to think of CSR initiatives that support to the majority of the society or customers, matching to their internal strengths, an excellent example is Unilever’s Suabhagya CSR initiative targeting the women in order to provide the supports and resources in enhancing their career, education and enterprise. But in this case, Unilever’s strategy was most appropriate because their primary target segment is women for their most of the brands and through the initiatives they were able to make women as advocates for the brands which would help increase the value and equity of the brand.
Therefore, it is on the strategy of the organizations on how they would induce the value corporate social responsibility to enhance the brand equity with the strategic integration of triple bottom line by doing various analyses. In Sri Lanka, there is a great potential to build their brands for companies throughout the CSR strategy.
About the Author
Muhammed Rizard Ismail is a final year student of Bachelor of Business Administration (specialization in marketing), Faculty of Management and Commerce, South Eastern University of Sri Lanka and a creative researcher in the area of consumer marketing, branding, personal selling and retail marketing with the three years experience in the marketing organization. He also is an Associate Member of The Chartered Institute of Marketing (UK).
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