February 19, 2016

Is CSR an Expense?

From my past accounting academic background, we were taught how to control the cost and keep an eye on increasing cost. Most importantly find the reason for increasing cost and try to relate its impact on the revenue generated. Increasing cost were termed as "Adverse impact". It was very important to relate every cost, that if it is contributing to increasing revenue or not. Like if training expence, marketing, raw material costs were increasing they use to have an poitive impact on reveneus as well. But it was very difficult to make direct link between CSR and revenue in short run, as accounting records are updated on very short term basis. So CSR expence use to be our first target to cut down, when we wished to control or reduce costs. I think its just difference of perception for the treatment of CSR in accounting terms as expence where as it is an investment in future, if CSR activity is in line with your vision and helping to promote the brand. Because at sometimes alot of successfull products are launched under the umbrella of brand with positive image.

There is difference in accounting investment and investment in customer brains for soft image of brand. Accounting investment normally consists of capital(long term but in something tangible or non tangible) or revenue(short term used in a year). CSR is normally treated as revenue expenditure which i realize is quite different despite which it should have been. CSR is sort of capital investment which you are doing in future to strengthen your brand. It is very important to note that CSR doesn't and shouln't mean throwing away money without adding value to business. CSR should be some positve socially respoinsbile acitivity which helps to generate value and recognition for business in long run as well.

As organizations are an important player in socities, so are socities an important stakeholder to businesses. In many cases, socities provide important input to businesses interms of employees motivation, their skills and engagement to make business more successfull, suppliers and customers. CSR is investment in the future inputs to increase the quality of inputs. If operations of some business is making the lives of socities around misereable, someday in future that misery will enter the organization as input and ruin all its performance. Because we have one plannet for all living beings, its very important to take care of it. It's more like "GIVE AND TAKE". Think about them, they'll think about you. It might take some time, but they will. Becaue humans are attached to emotions, which sometimes connects them to some organization or products.


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