What is Corporate Responsibility ?
Corporate Social Responsibility (CSR) is a concept which encourages organizations to consider the interests of society by taking responsibility for the impact of the organization's activities on customers, employees, shareholders, communities and the environment in all aspects of its operations. This obligation is seen to extend beyond the statutory obligation to comply with legislation and sees organizations voluntarily taking further steps to improve the quality of life for employees and their families as well as for the local community and society at large.
Development and analysis
While many businesses have always behaved in a responsible manner, the debate about CSR has been said to have began in the early 20th century, amid growing concerns about large corporations and their power[1]. The ideas of charity and stewardship helped to shape the early thinking about CSR in the US.
Ida Tarbell’s 1904 work, The History of the Standard Oil Company helped lead to the US Supreme Court’s decision to break up the company on antitrust grounds. Similarly, Upton Sinclair’s 1906 book, The Jungle led to the passage of the Pure Food and Drugs Act and the Meat Inspection Act by the US Congress.
The term CSR itself came in to common use in the early 1970s, although it was seldom abbreviated. The term stakeholder, meaning those impacted by an organization's activities, was used to describe corporate owners beyond shareholders from around 1989.[2]
A widely quoted current definition by the World Business Council for Sustainable Development states that "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."[3].
Approaches to CSR
Some commentators have identified a difference between the Continental European and the Anglo-Saxon approaches to CSR.[4]
Auditing and reporting
To demonstrate good business citizenship, firms can report compliance with a number of CSR standards, including:
* AccountAbility's AA1000 standard, based on John Elkington's triple bottom line (3BL) reporting
* Global Reporting Initiative's Sustainability Reporting Guidelines
* Verite's Monitoring Guidelines
* Social Accountability International's SA8000 standard
* The ISO 14000 environmental management standard
UN Global Compact's Communication on Progress (COP) is a company’s report to demonstrate the continual improvement of the implementation of the ten Compact's universal ten principles.[1]
FTSE Group's FTSE4 Good index is an evaluation of CSR performance by assessing companies according to various criteria. [2]
Some nations require CSR reporting, though agreement on meaningful measurements of social and environmental performance is difficult. Many companies now produce externally audited annual reports that cover Sustainable Development and CSR issues, but the reports vary widely in format, style, and evaluation methodology (even within the same industry).
The business case for CSR
The scale and nature of the benefits of CSR for an organization can vary depending on the nature of the enterprise, and are difficult to quantify, though there is a large body of literature exhorting business to adopt measures beyond financial ones (e.g., Deming's Fourteen Points, balanced scorecards). Orlizty, Schmidt, and Rynes[5] found a correlation between social/environmental performance and financial performance. However, businesses may not be looking at short-run financial returns when developing their CSR strategy.
The definition of CSR used within an organisation can vary from the strict "stakeholder impacts" definition used by many CSR advocates and will often include charitable efforts and volunteering. CSR may be based within the human resources, business development or PR departments of an organisation[6], or may be given a separate unit reporting to the CEO or in some cases directly to the board. Some companies may implement CSR-type values without a clearly defined team or programme.
The business case for CSR within a company will likely rest on one or more of these arguments:
Human resources
A CSR programme can be seen as an aid to recruitment and retention[7], particularly within the competitive graduate student market. Potential recruits often ask about a firm's CSR policy during an interview and having a comprehensive policy can give an advantage. CSR can also help to improve the perception of a company among its staff, particularly when staff can become involved through payroll giving, fundraising activities or community volunteering.
Risk management
Managing risk is a central part of many corporate strategies. Reputations that take decades to build up can be ruined in hours through incidents such as corruption scandals or environmental accidents. These events can also draw unwanted attention from regulators, courts, governments and media. Building a genuine culture of 'doing the right thing' within a corporation can offset these risks[8].
Brand differentiation
In crowded marketplaces companies strive for a unique selling proposition which can separate them from the competition in the minds of consumers. CSR can play a role in building customer loyalty based on distinctive ethical values[9]. Several major brands, such as The Co-operative Group and The Body Shop are built on ethical values. Business service organisations can benefit too from building a reputation for integrity and best practice.
License to operate
Corporations are keen to avoid interference in their businesses through taxation or regulations. By taking substantive voluntary steps they can persuade governments and the wider public that they are taking current issues like health and safety, diversity, or the environment seriously and so avoid intervention. This also applies to firms seeking to justify eye-catching profits and high levels of boardroom pay. Those operating away from their home country can make sure they stay welcome by being good corporate citizens with respect to labor standards and impacts on the environment.
Disputed business motives
Critics of CSR will attribute other business motives, which the companies would dispute. For example, some believe that CSR programmes are often undertaken in an effort to distract the public from the ethical questions posed by their core operations. Some that have been accused of this motivation include British American Tobacco (BAT) [10] which produces major CSR reports and the petroleum giant BP which is well known for its high profile advertising campaigns on environmental aspects of their operations.
source wikipedia.
1. ^ University of New Mexico Management Presentation, Van Buren 2006
2. ^ A brief history of social reporting, Business Respect 2003
3. ^ CSR: Meeting Changing Expectations, 1999
4. ^ CSR in a Comparative Perspective, Williams and Aguilera, 2006
5. ^ Orlizty, Schmidt and Rynes
6. ^ Edinburgh University Careers Service
7. ^ The Economist's CSR Survey
8. ^ Risk: A model for multinationals
9. ^ Ethics and Brand Value: Strategic Differentiation
10. ^ Friends of the Earth Press Release April 2005
11. ^ The New York Times Magazine, September 13, 1970
12. ^ Hope vs Hype Article, Mother Jones magazine, 2003
Further reading
* Carroll, A. and Buchholtz, A. (2003) Business and Society: Ethics and Stakeholder Management. Thomson. Ohio
* Carroll, A. (1998) The Four Faces of Corporate Citizenship. Business and Society Review, September, vol. 100, no. 1, pp. 1-7
* Clarkson, M. (1995) A stakeholder framework for analyzing and evaluating corporate social performance. Academy of Management Review. Vol.20, pp.92 -117.
* Davis, K. and Blomstrom, R. (1975) Business and Society: Environment and Responsibility, McGraw - Hill, New York.
* Fombrun, C. (2000) The value to be found in corporate reputation The public's view of a company not only acts as a reservoir of goodwill, but also boosts the bottom line. Financial Times December 4 2000
* Griffin, J. and Mahon, J. (1997) The Corporate Social Performance and Corporate Financial Performance Debate: Twenty five years of incompatible research. Business and Society. Vol. 36. pp.5 -31
* Maignan, I., Ferrell, O. and Tomas, G.(1999) Corporate Citizenship: Cultural Antecedents and Business Benefits. Journal of the Academy of Marketing Science. Volume 27, No. 4, pages 455-469.
* Maignan, I., and Ferrell, O. (2001) Corporate citizenship as a marketing instrument - Concepts, evidence and research directions. European Journal of Marketing. Vol.35 No. 3/4 pp.457-484
* Matten, D, Crane, A. and Chapple, W. (2003) Behind the mask: Revealing the true face of corporate citizenship. Journal Business Ethics Vol. 45, Issue1 pp109
* Menon, A. and Menon, A. (1997) Enviropreneurial marketing strategy: the emergence of corporate environmentalism as marketing strategy. Journal of Marketing. Vol. 61, pp.51 - 67
* Millennium Poll on Corporate Responsibility ‘Environics International Ltd’ in cooperation with The Prince of Wales Trust September 1999.
* Waddell, S. (2000) New institutions for the practice of corporate citizenship; Historical Intersectoral, and Developmental Perspectives'. Business and Society Review, Vol. 105, pp.323 - 345.
* Wartick, S. and Cochran, P. (1985) The Evolution of the Corporate Social Performance Model. Academy of Management Review, Vol.10, pp.767.
* WBCSD (2001). The Business Case for Sustainable Development. World Business Council for Sustainable Development. ISBN 2-94-024019-1.
* WBCSD (2000). Corporate Social Responsibility: Making good business sense. World Business Council for Sustainable Development. ISBN 2-94-024007-8.
* WBCSD (1999). Corporate Social Responsibility: Meeting changing expectation. World Business Council for Sustainable Development. ISBN 2-94-024007-8.
* Wood, D. (1991) Corporate Social Performance Revisited. Academy of Management Review, Vol.4, pp.691 - 718.