A new week and another new topic, this time it’s Corporate Social Responsibility. This weeks topic seems broader and more complex than anything we have touched on up to this. Corporate Social Responsibility sounds like such a good thing but how would it work in reality or could it ever work in reality? Corporations would not appear to me to be very interested in social responsibility except when it would bring some financial reward. Of course there are those corporate bodies that wish to ‘appear’ socially responsible in order to enhance their image and improve their selling power but are not in fact interested in social responsibility in any real sense. Are there really corporate bodies that take social responsibility seriously and act for the right reasons?
What is Corporate Social Responsibility and who would it benefit? More importantly how would those people who are the leaders and managers in business ever be convinced that there is some benefit to be had for the business… “Corporate social responsibility (CSR) is a commitment to behave ethically and contribute to economic development while improving the quality of life of our workforce and their families as well as the local community at large” http://www.nexeninc.com/Sustainability/glossary.asp (25-3-11). There are many definitions but this one best conveys what I think Corporate Social Responsibility should be about it must also be of benefit to the business otherwise it will not work. This definition is almost equivalent to Triple Bottom Line’: people, planet, profit. While the ideas are abstract and very hard to grasp, it is something I think we need to consider. Even the wording ‘the local community at large’ is hard to define, how local and how large? It’s hard to define and comprehend, in a concrete way, where ‘Corporate Social Responsibility’ begins and ends it is therefore difficult to have a workable policy or regulations that work. It is good that businesses would have a social responsibility and even better if this were set out in law but laws alone are not enough to ensure social responsibility, it seems to be concerned with something much deeper and more complex and must also be of benefit to the corporations, they must believe that “.. it is profitable to behave well”. http://ulsd.files.wordpress.com/2011/03/roleofcommunitysouthafrica.pdf (25-3-11).
“The goal of CSR is to embrace responsibility for the company’s actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere.” http://en.wikipedia.org/wiki/Corporate_social_responsibility (24-3-11).
“Today, Corporate Social Responsibility (CSR) is widely accepted as an essential component of business ethics – and a key management strategy in most big companies. CSR has become linked with the pressing need to conserve the planet’s diminishing resources “because the future of mankind everywhere is threatened by the degradation of the environment in which we all live and work”, as one commentator put it.” http://www.rasgas.com/files/articles/RG23_28_29%20CSR%20vF3.pdf (25-3-11).
In the developed world most people agree that the corporate leaders have obligations to society that reach wider than optimizing shareholder values but a lot of corporate leaders, who actually make the decisions, tend to disagree. One reason for this disagreement is that the businesses are generally owned by shareholders so any money spent on these wider responsibilities will be taken away from shareholders income. Personally I believe as these shareholders had the financial capability to buy into these businesses they wouldn’t mind the business doing something for its workers or the community that it’s part of. This would involve changing the way investors think and providing education around the positive advantages to be gained from moving towards becoming more socially responsible. This is happening as businesses are becoming more concerned with their reputations and Corporate Social Responsibility is seen more and more as taking positive action. Some companies adopt the Corporate Social Responsibility image because of the gains to be had from appearing to be green or ‘green washing’ as it has become known. “Green-wash– verb: the act of misleading consumers regarding the environmental practices of a company or the environmental benefits of a product or service.” http://sinsofgreenwashing.org/ (25-3-11). This green washing is for economic gain and as we know only too well in Ireland in the world of business money is power and money rules. The situation has and is improving as can be seen from the graph:
The impact of Corporate Social Responsibility has been very much embraced by Mc Donald’s and shows in a concrete way the impact of such responsibility. McDonald’s is the world’s largest chain of hamburger fast food restaurants.
According to the McDonaldâ€™s Corporate Social Responsibility website, McDonalds is all about taking action in order to achieve results. They believe that it is vital to always keep open lines of communication with customers and other key stakeholders. In 2007 McDonald’s began a sustainability project with the aim of improving conditions for farm workers in the Florida tomato industry, they realized that these workers and the land they till were all a vital part of the Mc Donald’s industry, even though they were far removed from the actual burger outlets. This in turn promotes good environmental practices in the land-based agricultural supply chain and makes the farm a sustainable business, which in the long term is of benefit to Mc Donald’s. McDonald’s purchase only 1.5% of Florida’s tomatoes annually, but their actions spread out like the ripples from the stone thrown into a pond and have lead to industry-leading grower standards that improved working conditions in other farms in Florida and have made the farms a sustainable business. There are other corporate bodies who were not involved in social responsibility and are now becoming involved perhaps because of “corporate accountability strategies by civil society groupings…can play a role in altering the context, facilitating improvements in the way corporate activities affect local workers/communities.” http://ulsd.files.wordpress.com/2011/03/roleofcommunitysouthafrica.pdf (25-3-11)
One such example is to be found in Durban, South Africa where there is a long history of poor relations between locals and oil refiners involving health and environmental issues. In 1998 a five-year environmental improvement plan for the refinery was put in place and is known as a good neighbourhood agreement (GNA). “The GNA had a number of significant outcomes in reductions in SO2 emissions, internal technology changes and improvements in management systems at the company. Whereas stakeholder perceptions of the effectiveness of the agreement varied, it was generally seen as ‘a step in the right direction’” http://ulsd.files.wordpress.com/2011/03/roleofcommunitysouthafrica.pdf (25-3-11) and shows some of the benefits of CSR initiatives.
This leads to the question of a global policy on CSR- should we aim for a global policy for the global village the world has become or should we leave it up to each country to regulate its own policy on CSR?
This is, again, a very complex question to answer. Initially when I heard the question I believed it should be a global policy but as we discussed the idea in class I came to agree with the person who suggested that it should be a national policy. The global policy seemed like the way to go as I believe, like many others, that everyone deserves to be treated equally regardless of their circumstances. When we discussed having a National Policy, however, I began to realize that every country is different, and one size would not fit all. Would people be able to work ten hour shifts in the blazing heat of 42 degrees as effectively as people working in conditions of 15 degrees, for example, not to mention nutrition and living conditions in different parts of the world? I am unable therefore to answer the question of who should regulate a policy on CSR, it is not as simple as it appeared at first, like a lot of the questions around sustainable development.
International companies, I believe, should have a policy that is common to all the countries that the company has operations in and it must be a very difficult job to develop a CSR policy that can accommodate and balance all the different needs and wants. “Consumers expect goods and services to reflect socially and environmentally responsible business behaviour at competitive prices. Shareholders also search for enhanced financial performance that integrates social and environmental considerations.” http://www.ic.gc.ca/eic/site/csr-rse.nsf/eng/rs00128.html (25-3-11).
The Main issue with Corporate Social responsibility:
The biggest problem and question in the CSR debate is the same today as it was during the Industrial Revolution- does the firm exist solely to maximise the profits it returns to its owners or do firms and managers have a broader responsibility to society at large? Large and small businesses are faced with this same complex dilemma. It appears that smaller businesses are better at implementing socially responsible policies, even in some cases without any awareness of the official terminology. This may seem like a contradiction as many large corporate bodies have designated personnel whose sole responsibility is to develop CSR policies. On reflection it is not a contradiction as smaller businesses are in many cases part of their community with a natural sense of Social Responsibility, which a lot of the time needs no policy, the business is just a part of the community and have an inbuilt sense of interdependence. This whole idea of CSR was less complex when put into context in Shelia Killian’s lecture. W e heard about the shop on Achill Island which is a working example of Corporate Social Responsibility and made me think of other such businesses, which I would not have associated with CSR. This shop, on Achill Island, is owned by the Sweeney family who may not have a CSR policy or may not even be aware of CSR terminology but their business is a good example of CSR in action. This business provides almost everything the community wants. They will provide any goods or services that the people on Achill Island want. Sweeney’s Business is, it could be said, is the heart of the community as they bring the whole community together and provide the goods and services needed by the community. They also have a long term connection with this community, are part of the community, provide employment in the community and give back to the community in many ways in return the community supports the business. This is sustainable development and CSR at its best. Big International Companies can learn from smaller companies who have this sense of social responsibility and provide working models for them. Unfortunately we lost a lot of these smaller corporate bodies during the boom years in Ireland and are now reeling from the effects. It is harder, I think, to develop a real social responsibility policy in big business, as there is the feeling of being a community within a community instead of the reality of being part of a wider community with all the responsibility that entails. When businesses get very big they sometimes loose the sense of connectedness and interdependence.
Corporations are made up of people and communities and have a responsibility to the people and the environment that are connected to them. In the long term, the more socially responsible the business is the happier the people connected to it. The happier people are the more they are willing to contribute and the better for us all and for our environment. As Michael Sabia, President and Chief Executive Officer of BCE Inc., has said, “Corporations are also social institutions. What they do and how they act and the role they play in the community they operate in is important. … We can build better communities, stronger communities and, frankly, better places to operate business. The opportunity we have is compelling.” http://www.ic.gc.ca/eic/site/csr-rse.nsf/eng/rs00128.html (25-3-11).
“Corporate social responsibility activities that integrate broader societal concerns into business strategy and performance are evidence of good management. In addition to building trust with the community and giving firms an edge in attracting good customers and employees, acting responsibly towards workers and others in society can be in the long-term interest of firms and their shareholders.” http://www.ic.gc.ca/eic/site/csr-rse.nsf/eng/rs00128.html (25-3-11).