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CS Professional · CSR and Social Governance · Impact of CSR

Kaveri Foods Pvt Ltd spends on a CSR water-conservation project near its plant. Its management says the project will be successful only if it improves long-term corporate performance. Which approach best links the CSR project to measuring corporate performance?

The best approach is to track both financial and non-financial indicators, such as reputation, employee retention and community relations. CSR affects performance in several ways beyond immediate profit, so measuring only spending or a one-day share price move would not capture the real impact on the business.

  1. ACount only the rupees spent on the project during the year
  2. BTrack both financial indicators and non-financial indicators such as brand reputation, employee retention and community relationsCorrect
  3. CMeasure only the increase in the share price on the day of announcement
  4. DIgnore performance measurement since CSR is purely philanthropic

Explanation

CSR impact on business is multi-dimensional, so a balanced view uses financial and non-financial indicators. Counting only spend measures input, not impact, and a one-day price reaction is too narrow.

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