CORPORATE SOCIAL RESPONSIBILITY

CORPORATE SOCIAL RESPONSIBILITY

INTRODUCTION

Corporate Social Responsibility (CSR) is simply a way for companies to take responsibility for the social and environmental impacts of their business operations. “A robust CSR program is an opportunity for companies to demonstrate their good corporate citizenship … and protect the company from outsized risk by looking at the whole social and environmental sphere that surrounds the company.

Corporate social responsibility initiatives are standards and measures that businesses put in place to benefit society. Generally speaking, these initiatives are based on sustainability in four different categories.

TYPES OF CORPORATE SOCIAL RESPONSIBILITY

Corporate social responsibility comes in many different shapes and sizes, but can usually be categorised into four different areas which are as follows:

1. Environmental Responsibility
2. Philanthropic Responsibility
3. Ethical Business Practices
4. Economic Responsibility

Understanding these different types of corporate social responsibility and what other businesses do in these areas helps organisations to be able to set their own corporate social responsibility programmes up. Some organisations work on all three of these areas while others just focus on one or maybe two of them.

1. ENVIRONMENTAL RESPONSIBILITY

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 as a whole. 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.

It is more and more common that organisations are starting to focus on their carbon footprint and look for ways in which this can be reduced. Additionally, companies are looking at ways that their operations can be more sustainable overall for the environment, by having a minimal impact. Some companies are now required by law in the UK to report on their emissions of greenhouse gases. This makes it more likely than in the past that a company would focus on environmental areas of corporate social responsibility.

Another example of a company that is focusing on environmental forms of corporate social responsibility is Toyota. This company has a range of different initiatives running, all of which it claims seek to work towards a “low carbon society”. In addition to this it also has an emphasis on working towards a “recycling based society” and a society “in harmony with nature”. To achieve this it looks at the ways in which its business has an environmental impact during the process of building and selling cars. This looks at everything from the design phase through to sales and recycling of cars when they are no longer useful. It has an environmental plan that it works towards and specific goals and targets. One is a focus on developing vehicles that use electricity rather than petrol, for example.

2. PHILANTHROPIC RESPONSIBILITY

This type of corporate social responsibility is most commonly associated with giving money to charities. Often, organisations will have specific charities that they support, and these may be linked to their line of business. This is not always linked to charity work however.

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.

 For example, Google carries out several initiatives in China that help to improve the prospects of people. One such example is the Google China Social Innovation Cup for College Students which seeks ideas from college students in China to drive social change. The best proposals get funded and the social projects run. Google also gives money to support earthquake relief efforts.

3. ETHICAL RESPONSIBILITY OR BUSINESS PRACTICE

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.

Most of the ethical corporate social responsibility programmes out there focus on fair treatment of employees, which includes employees that may not be directly working for the organisation. What this means is that ethical corporate social responsibility usually considers the entire supply chain. That means that some companies that source clothes from Asia have corporate social responsibility programmes to make sure that the people that work to produce the clothes that they buy are treated fairly. This may include a minimum wage or certain standards to be met in the factories. Some of this can be quite difficult to enforce in the supply chain. Another example is that small farmers in developing countries that supply produce such as coffee, bananas or other crops are paid a fair price for their goods.

Ethical corporate social responsibility is not just limited to making sure that people in less developed countries are treated fairly. It is also focused on making sure that all stakeholders receive fair treatment. This includes employees, but also customers, shareholders and other stakeholders that the company may impact through its activities.

One company that has made impressive strides with ethical corporate social responsibility is Nestle. Nestle was ranked highly by KPMG in a study to see which companies were the most sustainable. This is a big turn around for the organisation that was once criticised for the fact that its powdered milk products were leading to malnutrition in children in developing countries. Nestle was the only food and drink company in the top 10 rated companies for excellence in corporate social responsibility. Other organisations in the top 10 included BMW, Cisco Systems, Repsol, Siemens and Total.

4. 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 also benefit society by consuming fewer resources. Sustainability and corporate social responsibility initiatives will continue to be prevalent in years to come.

 REFERENCES

Wood, Donna J. (1991). “Corporate Social Performance Revisited”. The Academy of Management Review. 16 (4): 691–718.

Sheehy, Benedict (2012). “Understanding CSR: An Empirical Study of Private Regulation”. Monash University Law Review. 38: 103–127

McWilliams, Abagail; Siegel, Donald; Wright, Patrick M. (March 2006). “Corporate Social Responsibility: International Perspectives”. Working Papers (0604). Troy, New York: Department of Economics, Rensselaer Polytechnic Institute.

Kytle, Beth; Singh, Paramveer (2005). “Corporate Social Responsibility as Risk Management: A Model for Multinationals” (PDF). Social Responsibility Initiative Working Paper No. 10. Cambridge, MA: John F. Kennedy School of Government, Harvard University. Retrieved 2008-03-07.