The Importance of Corporate Social Responsibility on Global Business Essay
The Importance of Corporate Social Responsibility on Global Business
The World Business Council for Sustainable Development (WBCSD): “Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large”.
EU Definition of CSR: “A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.”
CSR it is a form of corporate self-regulation integrated into a business model to ensure its active compliance with the law, ethical standards, and international customs. CSR aims to create a process within the organizations to embrace the responsibility for their actions and boost a positive impact with their consumers, employees, communities, stakeholders, and with anyone who comes in contact with their Organization.
Why is CSR important? Businesses are based on trust and precautions. Starting and keeping trust with communities, customers, and regulators isn’t simple and can be very easy to damage or lost if it is not embraced. For companies to be successful in the long-term, they need to think beyond what will affect them today they need to think in the future, how their decision will affect them down the road. This isn’t just about talking about changes to technology or the needs of customers, but also taking into account adjustments in social, environmental and governance matters. Most of these are always changing some progressing and some regressing but companies need to be aware of all.
It really depends on how you define CSR. If you believe that just by meeting the laws and regulations as one of your practices, your organization and many others reflects you are practicing CSR, you might be somewhat correct. However, if you look at CSR as going above and beyond minimal requirements by law, then only a few companies are achieving CSR. Most people in today’s society look for Organizations to go above and beyond of their social responsibilities.
Society, the government and your clients expect you and your organization to have social accountability of the economic, legal, ethical and discretionary expectations. But an even more surprising thing is that many companies are asking more from their suppliers too, as they’re nervous about the backlash of purchasing products and services from organizations believed to be irresponsible.
For example, McDonald’s requires its bidding and current suppliers to report many of their CSR activities. They also will perform audits to your establishment to ensure that your business is run as they expect it to be. How this will continue long term is still an open question but I am sure with the media continuing to be a huge factor and the going “green” initiatives, Corporate Citizenship will continue to grow and be a bigger factor. But it does give an indication of how companies can drive positive CSR change themselves.
Michael Porter of Harvard, one of the most prominent strategy gurus, says “that you can’t just look at your competitors. It is absolutely essential to look beyond your competitors and your competitive environment, and look deeply at their social, political and environmental context to fully understand the degree of CSR required”.
“CSR is an old-fashioned idea that needs to be upgraded,” says Eric Orts, professor of legal studies and business ethics at Wharton and director of the school’s Initiative for Global Environmental Leadership. “For companies to take CSR seriously, it has to be integrated into the DNA of the enterprise. Companies need to say: ‘We want to make money, sure, but we also care about our effect on society and the environment. And that comes through in the kinds of jobs we provide, the kinds of products we make and the ways in which we use resources.’”
A majority of consumers 77% of consumers think that Organizations should be socially responsible, according to a survey by branding company Landor Associates cited by the University of Pennsylvania’s Wharton School. Consumers are drawn to those companies that have a reputation of being a good corporate citizen. Research at Tilburg University in the Netherlands showed that consumers are prepared to pay a 10% higher price for products they deem to be socially responsible. The main disadvantage of CSR is that its costs on small businesses it’s too high. Major corporations can afford to distribute a small part of their budget to CSR, but this is not always open to smaller businesses with between less than 200 employees. A small business can use social media to communicate and increase the awareness of its CSR policy to customers and the local community. But it takes time to assess is this works and could involve hiring extra personnel that the business may not be able to afford.
At the end of the day big companies and small companies have a duty and a social responsibility to act and “do the right thing” even if this will cost them more money. We as consumers drive companies to take shortcuts so they can try to compete with the competitor’s price, which is why we see so many companies going abroad. It is not a secret that companies shipping jobs aver seas get their cost lower and they are able to have higher profits, the main reason is because the other countries do not have as many regulations and they are able to get away with more things. Corporate Social Responsibility it’s more of a romance idea that we all have but as we know money talks and the more money companies have in their pocket the better they do which is a direct reflection how much they care about Social Responsibilities.
Subject: Social responsibility,
University/College: University of California
Type of paper: Thesis/Dissertation Chapter
Date: 21 October 2016
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