Application of the CSR Measuring Model in Commercial Bank in Relation to their Financial Performance

Abstract

IntroductionIn the last decade the concept of corporate social responsibility (CSR) became a global phenomenon across all sectors of business. In general we could state that the social responsibility is based on the behavior of each individual. While enterprises and organizations are playing the major role in influencing of their surroundings in general, the influence of transnational corporations and large companies has the greatest impact.The reason for the creation of the very concept of corporate social responsibility was the importance of organizations in economic and social issues. To understand the phenomenon of CSR, it is necessary to accept the statement that the business as a creator of economic wellbeing does not have only economic effects (Dahlsrud, 2008). Barth and Wolff(2009) emphasize that businesses are the part of the world that faces tremendous challenges associated with sustainable development. The CSR concept recommends to change the current approach to business, which is frequently labeled by term profit only (based only on profits), and to replace it with a modern conception of the broader people-planet-profit (also known as the triple bottom line framework) with regard to social and environmental aspects of the business.The authors engaged in CSR generally refer to multiple definitions that are associated with this concept. Kotler and Lee (2005) give an acceptable definition of the international organization of Business for Social Responsibility, which defines CSR as a business management in such a way that surpasses the ethical, legal, commercial and societal expectations of the business.CSR concept takes into account three main pillars - Economic, Social and Environmental. The Economic pillar relates in particular to the financial side and is made up by the aspects that have a direct or indirect impact on the economic performance of the organization. This pillar may also include financial participation of the company in socially beneficial projects or educational activities, for example support for sporting events or support for training courses and education. Indisputable part of the Economic pillar is the relationships with key stakeholders - investors, suppliers, customers and community. Such aspects as the ethics code and its observance, rejection of corruption or transparency make a vital contribution to the Social pillar of CSR, which is also focused on philanthropic activities and employee relations. Human rights, labor rights and equal opportunities for men and women, younger and older workers and stakeholders are the important aspects of the typical socio-economic problem of global economic growth and overall demographic development. Environmental pillar is by definition already associated with the environment and its influence, the pollution for example. This pillar is focused on organic production, products and services, and environmental corporate culture.Implementation of the CSR concept has recently demanded attention not only because of its systematic view of the business in relation to social and environmental issues as a framework for triple bottom line, but also in terms of economic benefit. While the basic principle that CRS is long-term in implementation remains, so there shouldn't be expected immediate results from the implementation of CSR activities and principles.The most famous critique addressed to the CSR concept belongs to the significant representative of neoclassical economics Milton Friedman and his article from 1970 with the self-explaining headline (The Social Responsibility of Business is to Increase Its Profits). According to Friedman (1970), the company by investing (increasing costs) to socially responsible behavior turns away from its primary objective of increasing the profit. Also as per Friedman, the satisfaction of the interested parties should not be in a higher position that the basic economic objectives of the company. …