Functions of Corporate Social Responsibility (CSR)

Social responsibility or more familiarly called corporate social responsibility (CSR) is the concept that a company has a social responsibility towards the community and the environment in all aspects of the company’s operations such as problems that have an impact on the environment such as pollution, waste, product safety and labor. Basically, CSR is not only limited to providing funds to the community and social environment, but also includes maintaining good long-term relationships with parties related to the company.

In terms of the Company Law No. 40 of 2007 regarding Limited Liability Companies, in general the CSR function is a form of the responsibility of a company to the parties involved and affected either directly or indirectly on the company’s activities. Stakeholders, for example, such as consumers, employees, shareholders, communities and the environment in all operational aspects covering economic, social and environmental aspects.

The elements of CSR include:

  • CSR is a form of a company’s responsibility towards stakeholders, so that the elements are as follows:
  • Applied in social behavior; care for the environment around the company in accordance with applicable laws and regulations.
  • There is a commitment to conduct business ethically and legally and participate in improving the economic welfare of employees.
  • There is a commitment to realizing broad and sustainable economic development (Sustainable Development Goals).
  • Some of the things that are included in this CSR program include; corporate governance (corporate governance) , company awareness of the environment, standards for employees and workplace conditions, company relations with the community, and corporate social investment (corporate philanthropy).

Specific CSR functions:

  1. Social License To Operate (Social Operating Permit)
    For a company, society is the factor that makes the company move or even hinders it. With the implementation of CSR, the community will get many benefits from having a company in their environment. Therefore, they will also benefit. In the end, the company will be more flexible in carrying out its business activities in that environment.
  2. Reducing Company Business Risk
    CSR will improve the relationship between the company and the parties involved, so that business risks that may arise such as opposition to the establishment of a company in the community are reduced. If this is the case then risk transfer costs can be used something that is more beneficial to the company and society.
  3. Widened Access to Resources
    If CSR is implemented, it will create a competitive advantage for a company which can then help the company to get the resources it needs.
  4. Expanding Access to Market
    All investments and costs incurred for a CSR program actually create an opportunity for the company to gain a bigger market.
  5. Improve Relationship With Stakeholders
    The implementation of CSR programs can help strengthen community relations with stakeholders. This will certainly increase stakeholders’ trust in the company.
  6. Improving Relations With Regulators
    Companies that carry out CSR generally ease the burden on the government as a regulator. This is because the government is actually responsible for the welfare of the environment and society.
  7. Increase Employee Productivity
    A good company reputation and a large contribution made by the company to stakeholders, society and the environment, will add pride to employees who work in the company where this can have an impact on increasing employee motivation and work productivity.
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