Corporate Social Responsibility

Corporate Social Responsibility has a great impact on society

Corporate Social Responsibility

Jorge Yeshayahu Gonzales-Lara,

Sociology, MA Marketing

Corporate social responsibility has a great impact on society in the process of globalization of the market. Corporate social responsibility is a self-regulated business model that helps a company to be socially responsible, before itself, its stakeholders, the public and society. When practicing a corporate social responsibility company, companies can be aware of the type of impact they are having on all aspects of society, including economic, social, and environmental.

The practice of CSR means that, in the normal course of business, a company operates in a way that improves society and the environment, instead of contributing negatively to it.

Since the 1960s, Corporate Social Responsibility has attracted the attention of a variety of companies and stakeholders. A wide variety of definitions have been developed but with little consensus. Part of the problem with definitions has arisen because of the different interests represented. A businessperson can define CSR as a business strategy, an activist from an NGO can see it as "greenwashing," while a government official may see it as a voluntary regulation. "

Corporate social responsibility has been defined by Sheehy as "international self-regulation of private companies". Sheehy examined a series of different disciplinary approaches to define CSR. The revised definitions included the economic definition of "sacrificing profits", a definition of the administration of "beyond compliance", the institutionalist views of CSR as a "sociopolitical movement" and the focus of the law on the duties of directors.  In addition, Sheehy considered the description of Carroll's CSR as a pyramid of responsibilities, namely, economic, legal, ethical, and philanthropic responsibilities.

This view is reflected in the Business Dictionary that defines CSR as "the sense of responsibility of the company towards the community and the environment (both ecological and social) in which it operates." Companies express this citizenship

(1) through of its processes of waste reduction and contamination,

(2) contributing with educational and social programs, and

(3) obtaining adequate yields of the resources employed. "

Consumer Perspectives

Most consumers agree that, while achieving business objectives, companies must participate in CSR efforts at the same time. Most consumers believe that companies doing charity work will receive a positive response.

 What is corporate social responsibility?

·       Corporate social responsibility (CSR) is a broad term used to describe a company's efforts to improve society in some way. These efforts can range from donating money to non-profit organizations to implementing environmentally friendly policies in the workplace.

·       CSR is important for companies, non-profit organizations, and employees alike.

·       Corporate social responsibility is not a mandatory practice in the United States; instead, it is something extra that companies do to improve their local and global communities.

 How corporations’ benefit from corporate social responsibility

·       Improve the public image.

·       Increase media coverage

·       Employee engagement boots

·       Attracts and holds investors

 How employees benefit from corporate social responsibility

·       Positive work environment

·       Increase creativity

·       Encourages professional and personal growth

·       Promote individual philanthropy

In general, businesses have a hierarchy of responsibilities to meet, ranging from the basic (making a profit) to the benevolent (benefiting society). Here are some examples:

• Economic Responsibilities – A business exists to make a profit for shareholders. If it fails to do so, it likely will not be able to pay its employees, taxes, and other obligations. A corporate social responsibility program (CSR program) cannot be implemented until a business is profitable.

• Legal Responsibilities – Following the law is the foundation of corporate responsibility. A company cannot benefit society if it does not adhere to labor and tax laws or applicable industry regulations.

• Ethical Responsibilities – Once a company is profitable and meets its legal responsibilities, it can move up the ladder to ethical responsibilities, which might include paying higher wages, offering employees better benefits, avoiding trade with unscrupulous companies or providing jobs to those who would otherwise have difficulty finding work.

• Philanthropic Responsibilities – As a company meets its economic, legal, and ethical responsibilities, it can consider taking on philanthropic responsibilities. Corporate philanthropy ranges in size and scope and can include everything from donating time to a local charity to building a children’s hospital.

Today, more companies see corporate social responsibility as going beyond giving money to organizations in need.

Corporate Social Responsibility

Corporate social responsibility is nothing, but the step taken by the organization which is beneficial for the society. Organizations is an instrument of domination and act as a single dominant system for the society whose presence or absence affects the society.

·       Keeping the business green and environment friendly will benefits the business. It is particularly important for a company to be more into corporate social responsibility activities because:

·       Lots of saving and cost-cutting can be done in energy cost

·       This type of change does not require lots of investment. In turn, it helps in saving money.

·       Staff productivity can be improved by getting them involved in making the business and workplace greener. Green workplace will be healthier and safer for the employees’ health.

Green firm attracts best employees.

·       It gives legal and tax advantage by incorporating green technology to reduce emissions and wastes and complying with the state laws and regulations.

·       It helps in improving the overall efficiency of the business by reducing waste production.

·       It focusses on improving sustainability by maintaining the health of the environment

Ethic is important in business environment. Ethical culture influences the attitude and behavior of individual. It is nothing but the values and belief that contribute towards the good conduct of human being. It helps people to make right decisions and lead their life accordingly. It makes the business sustainable and more environment friendly by making safe products and minimizing social and economic impact. Thus, safety is important for the organization to be successful in the global market.

Corporate Value

Corporate Value: Stakeholder engagement includes the formal and informal ways a company stays connected to its stakeholders (the individuals or parties that have an actual or potential interest in or impact on the company, its operations, and financial results). Stakeholders often could influence the success (or failure) of a company at various levels. A primary objective of corporate stakeholder engagement is to build relationships with stakeholders to better understand their perspectives and concerns on key issues (including CSR issues) and to integrate those perspectives and concerns (when and where feasible and prudent) into the company’s corporate strategy. Companies tend to recognize certain value associated with stakeholder engagement, including:

·       enabling informed board and management decision making (as effective stakeholder engagement will likely enhance business intelligence thereby assisting boards and management in their decision-making processes).

·       avoiding or reducing business risks due to better business intelligence.

·       developing and expanding business opportunities, brand value and reputation; and

·       bringing diverse perspectives together to facilitate innovation; all of which help drive long-term sustainability and shareholder value.

Corporate CSR reports vary greatly in format, length, and detail. There are, however, certain elements and disclosures that consistently appear in such reports. Those elements and disclosures include (1) an opening letter from the company’s chief executive officer and/or chief CSR executive (noting the company’s commitment to CSR issues and its willingness to discuss challenges and promote successes relating thereto), (2) the company’s CSR policy or mission statement, (3) a “forward-looking statements” disclaimer and (4) most significant, disclosures addressing issues most important to each of the company’s key stakeholders, for example:

• Shareholders—addressing the company’s business model and corporate governance, including disclosing the role of the board in risk management, in sustainability reporting and in evaluating CSR performance.
• Employees—addressing diversity, health and safety, training and mentoring, employee relations, and wages and benefits.
• Customers—addressing customer service and privacy.
• Suppliers—addressing labor standards and whether suppliers are required to implement their own CSR programs.
• Communities—addressing corporate philanthropy and charitable contributions, community investment and partnerships, volunteerism, and the environmental impact of operations.
• Governments and Regulators—addressing lobbying, public policy, and the effects of and compliance with environmental regulations.

Environmental Sustainability Initiatives

Environmental sustainability initiatives enacted by businesses generally focus on two main areas: limiting pollution and reducing greenhouse gases. As the awareness of environmental issues grows, businesses that take steps to reduce air, land and water pollution can increase their standing as good corporate citizens while also benefiting society. For example, Cisco Systems, a multinational technology company, has taken a variety of steps to reduce its carbon footprint, including the installation of photovoltaic systems at production facilities and developing platforms that allow employees to work from remote locations rather than commuting to the office.

Direct Philanthropic Giving

Philanthropic initiatives include the donation of time, money or resources to charities and organizations at local, national, or international levels. These donations can be directed to a variety of worthy causes including human rights, national disaster relief, clean water, and education programs in underdeveloped countries. For example, Microsoft co-founder Bill Gates has donated billions of dollars to the Bill and Melinda Gates Foundation, which supports numerous causes including education, the eradication of malaria and agricultural development. In 2014, Bill Gates was the single largest giver in the world, donating $1.5 billion in Microsoft stock to the Bill and Melinda Gates Foundation.

Ethical Business Practices

The primary focus on ethics is to provide fair labor practices for businesses’ employees as well as the employees of their suppliers. Fair business practices for employees include equal pay for equal work and living wage compensation initiatives. Ethical labor practices for suppliers include the use of products that have been certified as meeting fair trade standards. For example, Ben and Jerry’s Ice Cream uses fair trade-certified ingredients like sugar, cocoa, vanilla, coffee, and bananas.

Focus on Economic Responsibility

Economic responsibility focuses on practices that facilitate the long-term growth of the business, while also meeting the standards set for ethical, environmental, and philanthropic practices. By balancing economic decisions with their overall effects on society, businesses can improve their operations while also engaging in sustainable practices. An example of economic responsibility is when a company modifies its manufacturing processes to include recycled products, which could benefit the company by potentially lowering the cost of materials and benefit society by consuming fewer resources.

Sustainability and corporate social responsibility initiatives will continue to be prevalent in years to come.

Pyramid of Corporate Social Responsibility

While Corporate Social Responsibility (CSR) has been around since the 1950s, its importance and practice took hold much later. The basis of what we consider to be the modern definition of CSR is rooted in Archie Carroll’s “Pyramid of Corporate Social Responsibility.” In this Pyramid a corporation has four types of responsibilities. The first and most obvious is the economic responsibility to be profitable. The second is the legal responsibility to obey the laws set forth by society. The third, which is intricately linked to the second, is the ethical responsibility. That is to do what is right even when business is not compelled to do so by law. The fourth is the philanthropic responsibility. Also called the discretionary responsibility, it is best described by the resources contributed by corporations toward social, educational, recreational, and/or cultural purposes.

Nearly 20 years later the Pyramid remains highly relevant. It is regularly cited, debated, modified, and criticized by academia, corporate leaders, politicians, and social commentators. But to understand the Pyramid’s true relevance one must look beyond the debate and focus more on its practical application. The Pyramid’s importance persists given its simplistic yet fundamental framework by which any company can not only comprehend the necessary principles of social responsibility, but ultimately set forth the practices to achieve each step of the pyramid with the goal of reaching the top. 

The film which comes to my mind is “Fun with Dick and Jane”. Even though the movie is a comedy it shows how some corporations have un-ethical workers. The main character Dick is portrayed as a hard worker trying to make his way up the corporate ladder. He does everything right and has good ethics. His boss Jack is a shady CEO who has been embezzling money when he realized his business was starting to fail. Jack promotes Dick to a high position and allows him to take the wrap for the company.

Businesses today are always in the spotlight. Once companies make their stock public for trading, they are watched even more. Keeping their noses clean and avoiding any negative publicity will help companies succeed. For companies to stay out of the limelight they might be trying to hide something, but this may not always be the case. A company may just be too small, or they have never done anything wrong. Just because they are not as known does not mean they are bad.

Employees are more attracted and committed to socially responsible companies

I believed that employees are attracted to committed to socially responsibility in differences ways that CSR programs help employees’ relations:

1. Increased Organizational Citizenship Behaviors and Improved Employee Relationships

If employees think their employer is “doing the right thing,” it seems they are more likely to “do the right thing” themselves. When organizations implement best practices in CSR, employees are more likely to engage in corporate behaviors towards their coworkers and the organization, like going out of their way to help their teammate. Similarly, CSR promotes higher -quality and closer relationship between employees.

2. Enhanced Employee Identification with the Organization

When employees feel that their organization is socially responsible, they experience a greater sense of identity with the business they work for. In fact, social responsibility can be more important than financial success in determining how much employees identify with their workplace.

3. Improved Retention and Organizational Commitment

Feeling positively about their organization’s CSR initiative has been shown to increase employee’s intentions to stay with their current employer, and their overall commitment to the organizations. Commitment includes a huge range of positive attitudes, including how much employees like their organization, make personal sacrifices for the organization, and see their own future and success tied to the organization’s success.

4. More Attractive Company Culture to Prospective Employees

Along with increasing current employees’ commitment, CSR can also make organizations look more attractive to applicants and prospective employees. In the age when millennials look to work for “high impact” organizations, engaging in CSR may help companies to attract top talent over other organizations. For example, a survey by the non-profit Net Impact found that 72 percent of students about to enter the workforce stated that a job where they can “make an impact” was important for their happiness.

5. Better Employee Engagement and Performance

Employees have also been shown to be more engaged and to perform better when they feel good about their company’s CSR involvement. By making employees aware of the company’s efforts to give back and celebrating these efforts, you can help employees become more actively engaged with their work and do better work overall.

6. Increased Creativity

Finally, CSR can increase employees’ creative involvement, including generating new but practical ideas, originality, and creative problem-solving. When organizations express their values and passions through CSR, employees may be inspired to develop new and better ways to do their work.

Corporate Social Responsibility (CSR) is the responsibility of an organization towards the welfare and interests of the society in which it operates while maintaining a healthy bottom-line of profits. Responsible, sustainable, and transparent business models help build brand and reputation as well as help strengthen the community and therefore the marketplace. Business ethics examines ethical principles and moral or ethical problems that arise in a business environment. Business ethics reflects the philosophy of business, one of whose aims is to determine the fundamental purposes of a company. If a company's purpose is to maximize shareholder returns, then sacrificing profits to other concerns is a violation of its fiduciary responsibility.

The principles of right and wrong that guide an individual in making decisions are called ethics. As ethics are about moral values, cultural assessments can be extremely valuable when assessing the moral values in an organization. The message from businesses today is clear employees must be well trained and capable of making ethical decisions to protect the business from legal liability and to maximize long-term profits. There are three steps to analyze the ethics of common business situations:

·       Is the action illegal?

·       Does the action violate company or professional standards?

·       Who is affected, and how, by the action?

The social responsibility movement is just one aspect of the overall discipline of business ethics. Many companies believe they have a responsibility to "give back" to society. This focus includes contributions of time and money, a duty to provide environmentally friendly products and services, and a desire to improve the lives of individuals here and around the globe. A few companies stand out as prime examples of how social responsibility can be productively coupled with sound strategies to advance goodwill, while building sustainable and impressive businesses.

References

1.     Chen, James. Corporate Social Responsibility (CSR)

2.     Wood, Donna J. (1991). "Corporate Social Performance Revisited". The Academy of Management Review. 16 (4): 691–718. doi:10.2307/258977. JSTOR 258977

3.     Trevino, Linda. Managing Business Ethics. Wiley. Sixth Edition.