Green Corporate Social Responsibility is a new concept that deals with environmental actions that is not required by law. Earlier, the focus of Corporate Social Responsibility (CSR) was on local philanthropy and labour issues. However, in the 1970s, Milton Friedman discussed an article related to CSR in the New York Times Magazine.

The focus of the article was on the social onus of business. From this point of view, the social actions that are beneficial, and increases profits are the strategic CSR. Friedman referred to this as “hypocritical window-dressing.” In recent times, companies are associating themselves with LEED (Leadership in Energy and Environmental Design). They are also joining the Climate Exchange of Chicago and producing social reports on the corporate world.

Here are the factors behind the trend of Green Corporate Social Responsibility

1. The consumers of this new generation are expecting to go green.
2. The business personas, who indulge in proactive steps to avoid political differences rather than show their reactions to peer pressure, are instrumental.
3. The selflessness of the managers plays a vital role in the development of this trend.

Is CSR beneficial for the society?

1. The manager has a preference on the group of share holders, as the shareholders may have a different choice of beneficiaries to the charitable donations. They might prefer to allocate the charitable contributions in different ways, as the market for donations is perfectly competitive.  The sole aim of the shareholders is to maximize their profit from the investments that they have made. This is one of the powerful arguments can be held against CSR. However, if the above-mentioned assumption is not in practice, the difference between “strategic” and “altruistic” CSR is blurred.
2. Socially responsible firms can combine a charitable donation with an investment.  This can attract the investors, as it averts the personal transaction costs and the taxation involved in corporate profits. These firms can supervise even if certain investors desire to make charitable contributions directly.  The investors are free from bearing the cost of CSR activities, if information about the unit’s CSR activities is given during the time of their investment in which case, the entrepreneurs will bear the cost. The entrepreneurs benefit by starting the firm while the investors have a wide range of investment opportunities. People who receive CSR directly benefit.
3. If the regulators and legislators pursue the interest of the public, there is less opportunity for CSR to improve on enlightened government rule. However, the companies that the regulatory agencies control often capture them.  This implies that the political market is inefficient.  If this is the case, the welfare results of strategic CSR are dependent on the political circumstances in which it has occurred.
4. Government regulation can be a costly and cumbersome enterprise. CSR is less costly and can be a substitute for government mandates. This way, it will increase welfare.
5. CSR activities can determine the regulatory decisions in many ways. It can make the regulators aware of such pollution abatement techniques that it is not too costly. This way, it will encourage new regulations that can produce a competitive reward for the signaler.