Corporate social responsibility makes companies more profitable and sustainable. Analyse.

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Ghissu Editorial · Accepted Answer

CSR makes companies more profitable and sustainable when it is embedded in core strategy, building trust, resilient supply chains, a social licence and access to ESG capital, but not when it is a compliance cheque or greenwashing. ITC's e-Choupal empowered farmers while securing ITC a reliable supply of produce.

**Introduction**

India made CSR spending mandatory under Section 135 of the Companies Act, 2013. The claim that CSR also raises profits rests on Porter and Kramer's idea of **Shared Value** (2011): business and society prosper together when social good is built into strategy.

**How CSR Raises Profitability and Sustainability**

SKETCH: flow-cycle | CSR Value Loop
- CSR in core business
- Trust and reputation
- Loyalty and talent
- Lower risk, cheaper capital
- Durable profits

1. **Trust and reputation**: The Tata group's community work in Jamshedpur built a brand that consumers and governments trust, which lowers the cost of doing business.
2. **Resilient supply chains**: ITC's e-Choupal (2000) gave farmers price information and fair procurement while securing ITC a reliable supply of produce.
3. **Social licence**: Vedanta lost its Niyamgiri bauxite project after gram sabhas, empowered by the Supreme Court in 2013, rejected it, showing that neglecting communities destroys value.
4. **Access to capital**: SEBI's mandatory Business Responsibility and Sustainability Report for the top 1,000 listed firms lets investors reward credible ESG records.

**Where the CSR-Profit Link Weakens**

1. **Short-term cost**: For thin margins the 2% outlay is a real cost, and Milton Friedman (1970) held that the business of business is profit.
2. **Greenwashing**: Volkswagen's 2015 emissions-cheating scandal, despite glossy sustainability reports, shows that a false green image destroys value.
3. **Cheque-book CSR**: One-off donations detached from the core business earn little lasting reputation or sustainability.

**Conclusion**

CSR makes companies profitable and sustainable only when it is strategic and embedded, not a compliance cheque. Gandhi's trusteeship, wealth held in trust for society, is the basis of long-term business success.

Corporate social responsibility makes companies more profitable and sustainable. Analyse.

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