Corporate Social Investment and Corporate Social Responsibility – Is there a difference?

Corporate Social Investment (CSI) and Corporate Social Responsibility (CSR) have a close association. Some articles that are about CSI even discuss only CSR. And vice versa. Is there a difference between the two? The answer is yes, there is an important distinction to be made.

Why we need CSI and CSR

Before we look at the difference between the two, let’s examine why both are important. The cost of doing business can be extremely high. While profitable for shareholders and directors, damage to the environment can be severe. Business ventures can also be area-specific and operate for a limited amount of time. This could mean that when the business cycle is up, there is no more work for vast numbers of employees. With the options to outsource many aspects of a company’s activities, job security is also not what it once was. In our globalised world, the entire production process can move to a foreign country.

The impact of such decisions can be devastating. The communities that are dependent on those businesses can suffer. Employees’ salaries are a direct example of this dependence. There are also indirect ways that such decisions can have a negative impact. Small businesses often grow under the shadow of bigger business activity. The big business might move away or otherwise stop. These small businesses will not be able to continue to operate. Many employees could lose their jobs at the large firms. They would have no money to make use of the small businesses they would usually support. 

The growing awareness within the global corporate community

These are the reasons that we need CSI and CSR. There has been a growing awareness that businesses are responsible to the communities in which they operate. This is both to the environment and the societies that such activities will affect. Companies see the need to take steps to avoid the negative impacts should they close down or move. Besides this, more and more businesses are seeing that they have an obligation. This obligation is to improve the towns, cities, and countries that they operate in.

Corporate Social Investment

CSI is the direct monetary investments that a company makes to improve the districts they operate in. This can be as straightforward as donating to a local charity. This would be the investment into building a school or hospital. There are many other examples: Investing in a reading program or adult literacy classes for the less fortunate, cleaning the local rivers or reforestation projects, or any concrete use of money which falls under the rubric of Corporate Social Investment.

Corporate Social Responsibility

CSR runs both broader and deeper. This gets beyond the corporation’s spend to the true spirit of the initiative. This is where a business refuses to use suppliers that take advantage of child labour. Or where a company gives excellent maternal benefits, encouraging family stability. It could mean the company obtains its raw materials from sustainable sources, and ensures that its sources are environmentally-friendly.

CSR includes the motivation to see that the communities are left better off for having had the business there, to begin with, even when they leave. CSR would be the motivation to leave the world a better place, not only enriching executives and shareholders.

Arguably CSI falls within CSR. Besides being a public relations exercise, or a way to become media friendly, CSI fulfils a company’s obligations to be compliant to legislature. But Corporate Social Responsibility is a display of a company’s values.

Criticism of Corporate Social Investment and Responsibility

There are those who argue that it is not a business’s function to care for the environment. Neither is it to uplift the needs of the unfortunate.  The priority of the corporation should be to maximize profits. This is a shortsighted point of view. It seems to assume that profits and CSI/CSR are mutually exclusive. There is a social concern that is prevalent among consumers today. CSI/CSR initiatives have a positive brand building effect. They also garner loyalty from existing and new customers. And without an environment and without a healthy consumer base there will be no profits.

Companies who invest thoughtfully and dutifully into Corporate Social Investment initiatives are going a long way to promoting an equitable and prosperous future in the nation.