There are many other names for Corporate Social Responsibility such as sustainable responsible business, social performance, corporate citizenship, corporate conscience and simply CSR. By definition, Corporate Social Responsibility means an obligation and compulsion for a company to set and run based on long term objectives which will benefit the society. Companies should be committed towards improving the lives of their workforce, as well as communities while contributing towards the development of the economy. Overall, a company needs to run a business which gives a positive impact to society.
Today, many companies have adopted Corporate Social Responsibility in their long term goals. Many have incorporated the program into the company’s code of ethics and mission statements which makes the program known to investors, stock holders as well as other interested parties. Most companies today have their very own Corporate Social Responsibility department, which is in charge of managing social programs, as well as ensuring that the company’s efforts in Corporate Social Responsibility remains relevant to the public.
The scope of a Corporate Social Responsibility program is actually quite wide, which covers from the slightest of change in the company’s operations, to more bigger and public social events. Some even begin in the office itself by offering higher wages and providing good work conditions for their workforce. Corporate Social Responsibility programs are designed to enhance the lives of others as well as be impactful positively to society.
Besides welfare issues, some Corporate Social Responsibility programs target charitable aspects in a community. For example, a company might sell products, in which some of the profits go to charity. While this is an effort to both profit and be charitable as well, it definitely plays a part in giving back to the community. Some bigger corporations usually support charitable bodies and causes as well as directly donate money to the charity organizations that they support.
Supporters of Corporate Social Responsibility programs feel that it is a great way for companies to give back to the community, as well as work in a responsible and ethical way while pursuing economical goals. It is also a great way to retain customers and workforce in the long run, especially when the company is on a track with positive long term goals. Companies with a solid Corporate Social Responsibility department are often well respected and loved in the eyes of the company, which also helps with the revenue generating efforts of the company.
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That’s an interesting idea in these times of high crticism of capitalism.
I’m one of those critics, and I’d like to point out a few problems with CSR.
To begin with, including CSR in a mission statement does not have the legal force that embedding it in the Memorandum and Articles of Association would. This means that in hard times, as now, companies look at how they can cut costs. CSR may be a great PR tool in good times, but doesn’t cut the mustard when the economy is failing, and will therefore be in line to be cut. I haven’t seen any evidence for how much corporate donations to charity have dropped, but I’d be willing to hazard a guess that it is fairly significant; and there is no doubt wages are under enormous downward pressure.
But that’s a very minor part of my critical analysis. The whole idea that giving money to charity represents social responsibility is laughable. It ought to be obvious that social responsibility extends well beyond that, to caring about the environment, in terms of the immediate working conditions the company provides, the impact of its operations on the community in which it sits, and the wider, global impacts (ethical sourcing, ethical selling, climate change, etc) of those operations. Given that, if any one company adopted policies that respected all these elements, that company would, because of the extra costs they impose, be likely to fail when competing with other companies which didn’t adopt them.
Therefore, because the whole idea of capitalism is that competition is the driving force that throws up winners, and because investors invest in order to grow their money, few if any companies are going to go down that road voluntarily.
The alternative to voluntarism is legislation; but there are similar constraints on countries as exist on companies. Any one country that imposed these obligations on its companies would be likely to lose those companies, the inward investment, the jobs, the tax revenues….Countries CAN survive without these, can build alternative routes to prosperity, alternative views of what we mean by the word prosperity. But it needs people who share a strong and coherent vision at the top; and our political systems don’t give us those.
So to really make the idea of CSR work, every country would have to impose the same regulatory legislation at the same time. Such agreement is unprecedented, but even if it were forthcoming, my guess is that, because capitalism, however constrained, always seeks to maximise profit, there would inevitably be pressure from business for relaxation of the rules, and politicians would inevitably eventually bend to that pressure.
So, from this point of view, you can perhaps understand why I think this form of CSR is so much froth.
Welcome to my blog Peter and thank you very much for your comments.
I would not be so pessimistic about future of voluntary CSR. Many companies already are looking how to be more socially responsible and new businesses arises to help them on this. For some this is of course just marketing mimic that they hope to use to keep competitive when customers become more socially conscious in their shopping.
I do not believe in legislation. It would just lead companies to try to evade and avoid it. When decision is voluntary, caused by awaking of own social responsibility or in response to demands of the market, it is much more effective.
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