CSR

"We know that the profitable growth of our company depends on the economic, environmental, and social sustainability of our communities across the world. And we know it is in our best interests to contribute to the sustainability of those communities" – Travis Engen, CEO, Alcan

Corporates as social responsibilists

CSR

Goodness is the only investment that never fails – Henry David Thoreau, American writer.

"The good we secure for ourselves is precarious and uncertain until it is secured for all of us and incorporated into our common life." ― Jane Addams

"Solitude is fine but you need someone to tell that solitude is fine." ― Honoré de Balzac

Companies are part of society and their business decisions have unavoidable social consequences.

What is CSR?

How far that little candle throws his beams! So shines a good deed in a weary world." ― William Shakespeare, The Merchant of Venice

Corporate Social Responsibility is a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders. CSR is generally understood as being the way through which a company achieves a balance of economic, environmental and social imperatives ("Triple-Bottom-Line- Approach"), while at the same time addressing the expectations of shareholders and stakeholders.

In this sense it is important to draw a distinction between CSR, which can be a strategic business management concept, and charity, sponsorships or philanthropy. Even though the latter can also make a valuable contribution to poverty reduction, will directly enhance the reputation of a company and strengthen its brand, the concept of CSR clearly goes beyond that.

"I have no faith in human perfectibility. I think that human exertion will have no appreciable effect upon humanity. Man is now only more active - not more happy - nor more wise, than he was 6000 years ago." ― Edgar Allan Poe

Promoting the uptake of CSR amongst SMEs requires approaches that fit the respective needs and capacities of these businesses, and do not adversely affect their economic viability. UNIDO based its CSR programme on the Triple Bottom Line (TBL) Approach, which has proven to be a successful tool for SMEs in the developing countries to assist them in meeting social and environmental standards without compromising their competitiveness.

The Triple Bottom Line (TBL) Approach, is used as a framework for measuring and reporting corporate performance against economic, social and environmental performance. It is an attempt to align private enterprises to the goal of sustainable global development by providing them with a more comprehensive set of working objectives than just profit alone. The perspective taken is that for an organization to be sustainable, it must be financially secure, minimize (or ideally eliminate) its negative environmental impacts and act in conformity with societal expectations.

Key CSR issues: environmental management, eco-efficiency, responsible sourcing, stakeholder engagement, labour standards and working conditions, employee and community relations, social equity, gender balance, human rights, good governance, and anti-corruption measures.

A properly implemented CSR concept can bring along a variety of competitive advantages, such as enhanced access to capital and markets, increased sales and profits, operational cost savings, improved productivity and quality, efficient human resource base, improved brand image and reputation, enhanced customer loyalty, better decision making and risk management processes.

Institutions by definition are the more enduring features of social life

Milton Friedman states that the social responsibility of companies is to make as much money for stockholders as possible. There are a number of problems with this deceptively simple definition.

Companies are part of society and their business decisions have unavoidable social consequences. The role of companies is to provide society with goods and services legally, efficiently and profitably. In fulfilling their primary purpose, they can choose to undertake such social activities as they believe are in their corporate interest and have the support, for publicly-quoted companies, of their shareholders.

Such activities are not necessarily at the expense of shareholders, for whom corporate reputation is an asset. The issue of corporate social responsibility has moved up the economic and political agenda internationally, through concern over corporate power linked to globalisation, examples of corporate malpractice and the impact of economic activity on the environment. In addition, UK pension funds have to disclose their social, ethical and environmental policies in relation to investment, which in turn requires quoted companies to report on their activities in the social, ethical and environmental fields. The paper outlines the nature of some of these activities. Outsourcing and its effects on employment are current issues for developed countries, leading on to a discussion of corporate responsibility in relation to employment.

Because the social and commercial consequences of business decisions are intertwined, companies need to clarify their policies on social responsibility and to manage them accordingly, taking account of external pressures to the degree to which they can be said to represent the interests of society as a whole. The manner in which companies discharge their responsibilities towards society affects their public reputation and their ability to recruit and retainable and committed employees.

Corporate social responsibility (CSR, also called corporate sustainability, sustainable business, corporate conscience, corporate citizenship or responsible business) is a type of international private business self-regulation. While once it was possible to describe CSR as an internal organisational policy or a corporate ethic strategy, that time has passed as various international laws have been developed and various organisations have used their authority to push it beyond individual or even industry-wide initiatives. While it has been considered a form of corporate self-regulation[4] for some time, over the last decade or so it has moved considerably from voluntary decisions at the level of individual organisations, to mandatory schemes at regional, national and even transnational levels.

Considered at the organisational level, CSR is an organisational policy. As such, it must align with and be integrated into a business model to be successful. With some models, a firm's implementation of CSR goes beyond compliance with regulatory requirements, and engages in "actions that appear to further some social good, beyond the interests of the firm and that which is required by law".. The choices of 'complying' with the law, failing to comply, and 'going beyond' are three distinct strategic organisational choices.

While in many areas such as environmental or labor regulations, employers may choose to comply with the law, or go beyond the law, other organisations may choose to flout the law. These organisations are taking on clear legal risks.

The nature of the legal risk, however, changes when attention is paid to soft law. Soft law may incur legal liability particularly when businesses make misleading claims about their sustainability or other ethical credentials and practices.

Overall, businesses may engage in CSR for strategic or ethical purposes. From a strategic perspective, the aim is to increase long-term profits and shareholder trust through positive public relations and high ethical standards to reduce business and legal risk by taking responsibility for corporate actions. CSR strategies encourage the company to make a positive impact on the environment and stakeholders including consumers, employees, investors, communities, and others.

From an ethical perspective, some businesses will adopt CSR policies and practices because of ethical beliefs of senior management. For example, a CEO may believe that harming the environment is ethically objectionable.

Proponents argue that corporations increase long-term profits by operating with a CSR perspective, while critics argue that CSR distracts from businesses' economic role. A 2000 study compared existing econometric studies of the relationship between social and financial performance, concluding that the contradictory results of previous studies reporting positive, negative, and neutral financial impact, were due to flawed empirical analysis and claimed when the study is properly specified, CSR has a neutral impact on financial outcomes.

Critics questioned the "lofty" and sometimes "unrealistic expectations" in CSR. or that CSR is merely window-dressing, or an attempt to pre-empt the role of governments as a watchdog over powerful multinational corporations. In line with this critical perspective, political and sociological institutionalists became interested in CSR in the context of theories of globalization, neoliberalism and late capitalism.

Some institutionalists viewed CSR as a form of capitalist legitimacy and in particular point out that what began as a social movement against uninhibited corporate power was transformed by corporations into a 'business model' and a 'risk management' device, often with questionable results.

CSR is titled to aid an organization's mission as well as serve as a guide to what the company represents for its consumers. Business ethics is the part of applied ethics that examines ethical principles and moral or ethical problems that can arise in a business environment. ISO 26000 is the recognized international standard for CSR. Public sector organizations (the United Nations for example) adhere to the triple bottom line (TBL). It is widely accepted that CSR adheres to similar principles, but with no formal act of legislation.

Social contract

"No one cares how much you know, until they know how much you care" ― Theodore Roosevelt

"There is nobody in this country who got rich on their own. Nobody. You built a factory out there - good for you. But I want to be clear. You moved your goods to market on roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything at your factory... Now look. You built a factory and it turned into something terrific or a great idea - God bless! Keep a hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along." ― Elizabeth Warren

Definition

Since the 1960s, corporate social responsibility has attracted attention from a range of businesses and stakeholders. A wide variety of definitions have been developed but with little consensus. Part of the problem with definitions has arisen because of the different interests represented. A business person may define CSR as a business strategy, an NGO activist may see it as 'greenwash' while a government official may see it as voluntary regulation. In addition, disagreement about the definition will arise from the disciplinary approach. For example, while an economist might consider the director's discretion necessary for CSR to be implemented a risk of agency costs, a law academic may consider that discretion to be an appropriate expression of what the law demands from directors.

Corporate social responsibility has recently been defined by Sheehy as "international private business self-regulation. Sheehy examined a range of different disciplinary approaches to defining CSR.

The definitions reviewed included the economic definition of "sacrificing profits," a management definition of "beyond compliance", institutionalist views of CSR as a "socio-political movement" and law's own focus on directors' duties.

Further, Sheehy considered Carroll's widely used description of CSR as a pyramid of responsibilities, namely, economic, legal, ethical and philanthropic responsibilities.[18] Importantly, while Carroll was not defining CSR but simply arguing for classification of activities, Sheehy developed a definition differently following the philosophy of science—the branch of philosophy used for defining phenomena.

Carroll 1991 extended corporate social responsibility from the traditional economic and legal responsibility to ethical and philanthropic responsibility in response to the rising concerns on ethical issues in businesses, .

The essence of being human