Business and society are interdependent. The wellbeing of one depends on the wellbeing on the other. Companies engaged in CSR are reporting benefits to their reputation and their bottom line. We cannot build the case for CSR solely because of its economic benefits – an ethical case must be made for companies taking responsibility for the impact of their relations with society and the environment, otherwise the foundations of CSR will be far too narrow. However, Corporate Social Responsibility (CSR) is becoming an increasingly significant category by which a company’s reputation is evaluated.
A variety of social and environmental issues across a broad spectrum of industries have recently been covered in the media – all of which directly affect a company’s reputation and all of which can be considered part of the larger CSR equation. Whether CSR is considered merely the latest trend in business management or whether it is laying the foundation for a newly advanced way of doing business, a brief overview of recent business news and corporate communications shows that CSR is certainly a relevant factor for how a company positions itself in the marketplace.
There is no universally agreed statement of just what CSR means and implies, and ideas on the subject are still developing. All the same, a common body of policy has now taken shape and won general approval among those who favors the approach. According to this way of thinking, a combination of recent changes on the world scene and pressures from public opinion now requires businesses to take on a new role, a newly defined mission. They should play a leading part in achieving the shared objectives of public policy and making the world a better place. In doing so, they should embrace the notion of ‘corporate citizenship’.
They should run their affairs, in close conjunction with a group of different ‘stakeholders’, to pursue the common goal of ‘sustainable development’. Sustainable development is said to have three dimensions-‘economic’, ‘environmental’ and ‘social’. Hence, companies should set objectives, measure their performance, and have that performance independently audited, in relation to all three. They should aim to meet the ‘triple bottom line’, rather than focusing narrowly on profitability and shareholder value. All this applies to privately owned businesses in general and in particular to large multinational enterprises.
Only by acting in this way can companies respond to ‘society’s expectations’. Making such a positive response is presented as the key to long-run commercial success for individual corporations in today’s world. This is because profits depend on reputation, which in turn depends increasingly on being seen to act in a socially responsible way. Thus taking the path of CSR will in fact be good for enterprise profitability: it will bring and sustain support and custom from outside the firm, and make for greater loyalty and keenness from its employees.
To embrace corporate citizenship represents enlightened self-interest on the part of business. There is also a wider dimension, going beyond the individual corporation. The adoption of CSR by businesses generally is seen as necessary to ensure continuing public support for the private enterprise system as a whole. Corporate social responsibility Corporate social responsibility is necessarily an evolving term that does not have a standard definition or a fully recognized set of specific criteria.
With the understanding that businesses play a key role on job and wealth creation in society, CSR is generally understood to be the way a company achieves a balance or integration of economic, environmental and social imperatives while at the same time addressing shareholder and stakeholder expectations. CSR is generally accepted as applying to firms wherever they operate in the domestic and global economy. The way businesses engage/involve the shareholders, employees, customers, suppliers, governments, non-governmental organizations, international organizations, and other stakeholders is usually a key feature of the concept.
While business compliance with laws and regulations on social, environmental and economic objectives set the official level of CSR performance, CSR is often understood as involving the private sector commitments and activities that extend beyond this foundation of compliance with laws. From a progressive business perspective, CSR usually involves focusing on new opportunities as a way to respond to interrelated economic, societal and environmental demands in the marketplace.
Many firms believe that this focus provides a clear competitive advantage and stimulates corporate innovation. CSR is generally seen as the business contribution to sustainable development, which has been defined as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”, and is generally understood as focusing on how to achieve the integration of economic, environmental, and social imperatives.
CSR also overlaps and often is synonymous with many features of other related concepts such as corporate sustainability, corporate accountability, corporate responsibility, corporate citizenship, corporate stewardship, etc. CSR commitments and activities typically address aspects of a firm’s behavior (including its policies and practices) with respect to such key elements as; health and safety, environmental protection, human rights, human resource management practices, corporate governance, community development, and consumer protection, labor protection, supplier relations, business ethics, and stakeholder rights.
Corporations are motivated to involve stakeholders in their decision-making and to address societal challenges because today’s stakeholders are increasingly aware of the importance and impact of corporate decisions upon society and the environment. The stakeholders can reward or punish corporations. Corporations can be motivated to change their corporate behavior in response to the business case, which a CSR approach potentially promises.
This includes: 1)Stronger financial performance and profitability (e. g. hrough eco- efficiency), 2)Improved accountability to and assessments from the investment community, 3)Enhanced employee commitment, 4)Decreased vulnerability through stronger relationships with communities, 5)Improved reputation and branding. Historical context The view that a business can have obligations that extend beyond economic roles is not new in many respects. Throughout recorded history, the roles of organizations producing goods and services for the marketplace were frequently linked with and include political, social, and/or military roles.
For example, throughout the early evolutionary stages of company development in England (where organizations such as the Hudson Bay Company and the East India Company received broad mandates), there was a public policy understanding that corporations were to help achieve societal objectives such as the exploration of colonial territory, setting up settlements, providing transportation services, developing bank and financial services, etc.. During the nineteenth century, the corporation as a business form of organization evolved rapidly in the US.
It took on a commercial form that spelled out responsibilities of the board of directors and management to shareholders (i. e. fiduciary duty). In this later evolutionary form, public policy frequently addressed specific social domains such as health and safety for workers, consumer protection, labour practices, environmental protection, etc. Thus, corporations responded to social responsibilities because they were obligated to comply with the law and public policy. They also responded voluntarily to market demands that reflected consumer morals and social tastes.
By the mid-point of the twentieth century, business management experts such as Peter Drucker and being considered in business literature were discussing corporate social responsibility in the US. In 1970, economist Milton Friedmann outlined his view that the social responsibility of corporations is to make profits within the boundaries of societal morals and laws (but cautioned that socially responsible initiatives by corporations could lead to unfocused management directions, misallocations of resources, and reduced market competition, opportunity and choice).
CSR emerged and continues to be a key business management, marketing, and accounting concern in the US, Europe, Canada, and other nations. In the last decade, CSR and related concepts such as corporate citizenship and corporate sustainability have expanded. This has perhaps occurred in response to new challenges such as those emanating from increased globalization on the agenda of business managers as well as for related stakeholder communities.
It is now more a part of both the vocabulary and agenda of academics, professionals, non-governmental organizations, consumer groups, employees, suppliers, shareholders, and nvestors. Diversity of Perspectives The following summaries of perspectives of different organizations serve to indicate the diversity of views on CSR that exist in Canada and around the world. They reflect the challenges and opportunities for both the public and private sectors to effectively operationalize and align CSR between domestic, continental and international levels. They also indicate the challenges and opportunities to develop the most appropriate relationships between shareholders and other stakeholders as well as to use the optimal policy mix of legislative and voluntary instruments.
Cite this essay
Corporate Social Responsibility. (2018, Oct 03). Retrieved from https://studymoose.com/corporate-social-responsibility-18-2-essay