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Businesses are designed to exist in society, and as such, they bear responsibilities to the society in which they operate. As a result, companies plan their activities in such a way that programs targeted at promoting social and environmental well-being are included. As a result, the term is used internally to refer to the sum of the company expressing commitment for the world and community in which they conduct their enterprise in order to be different (Balan 73). The term is often used interchangeably with corporate citizenship or corporate news. When perceived from the perspective of corporate citizenship, the individual or the business incurs short-term costs which might not provide the business with immediate benefits. However, the minor costs that the business incur at such a stage are later reflected in the promotion of the image of the business socially and environmentally (Križanová and Ľubica 28).

To examine how corporate social responsibility, it is important to consider the role the businesses play in the society and how the society, in turn, influence the success of the business. According to numerous studies, it has been established that businesses have a detrimental impact on the environment (Moser and Patrick 801). These impacts can be perceived from two perspectives: positive and negative impacts. The negative impacts imply that the ability of the business to lower the value of the environment in which it operates. Such means can be through pollution and damage to the ecosystem as a whole. The positive perspective looks at how the business enhances the development and preservation of the environment in which the business is located. The positive impacts include encouraging conservation procedures like organic farming and usage of clean energy to preserve the scarce resources available besides creating a balance in the oxygen levels to regulate global warming.

Drivers of CSR in the UK

In the United Kingdom, it has been observed that the stakeholders are demanding for increased scrutiny into the transparency of how business operate under social environment. The transparency expectations have led to the companies and businesses to become more responsible regarding environmental and social responsiveness (Moser and Patrick 800). Furthermore, the interest of the businesses to have a better financial sense has boosted the interest of the businesses to develop better CSR. According to the surveys conducted in the UK, five drivers of the rapid increase in the CSR development in the UK were established:

The demand between the client and the customer in a manner that the customers need the company to get involved in developing social amenities around the region like health facilities and also start the environmental conservation initiatives like recycling. I turn, the companies need the public to purchase the products and services offered for the success of the business. Since the demand is always increasing, therefore, the CSR will be in demand within the UK.

The recruitment and retention of the staff that serves to boost the image and reputation of the company or business. When the business or the company is reported to have the highest human resource retention, it is perceived to be responsible concerning the reliability of the products and services it provides to the customers.

The businesses targeted to manage the costs they incur in operating business. For example, a socially and environmentally conscious business will attract and retain more customers without incurring extra costs regarding advertisements.

Developing reliable CSR helps build the brand name that influences the public attitudes. The consumers will perceive such businesses as responsible and hence transfer the trust to their products and services which will enhance the loyalty of the consumers.

The companies in the UK consider CSR as ‘the best and right thing to be done’ under the circumstances to ensure that they are not just focused on gaining profits but are also aware of the society and the environments in which they operate (Fatma 393).

CSR Reporting

As a result of the interest of the stakeholders, there is a significant focus in the businesses reporting their social, corporate and environmental responsibility. The disclosure is essential for the positioning of the business within the locale of their operations making it crucial to appeal to the stakeholders that the business does not only care for their success but also for the best interest of the society and the environment (Noronha et al. 22). As a result, there are two dimensions to approaching the disclosure of the CSR: mandatory and voluntary.

Voluntary reporting

Globally, businesses opt for voluntary reporting of their corporate responsibility so as to retain the reputation of their business within the public. The essence of the business getting involved in voluntary reporting is to safeguard the organizational value which is fundamental for the core success of the organization (Perrault and Cynthia 517). As a matter of fact, developing a culture within the business that demonstrates and appreciates the value of being conscious towards the environment as well as the matters relating to the society as a whole provides the business with an ample time to focus on other key issues like profitability and competition. Furthermore, due to the competitive nature in the business sphere, it is important to create a lasting impression on the consumer so as to retain their trust in the business. The loyalty from consumers stems from altering the perception of the customers towards appreciating the idea that they are valued by the business. Also, voluntary reporting allows the business to be flexible in the manner in which they make their decisions without being influenced by other parties (Noronha et al. 19). Besides, the compliance with the ideals of the market allows the various stakeholders to perceive the business as a responsible dimension in the delivery of services. As a result, the collective industry interest is maintained rather than being forced into submitting to the interest of the few stakeholder.

The voluntary reporting, however, has its demerits that are likely to impact the business negatively. For example, the frequency with which the voluntary reporting takes place leaves the business with insufficient resources to run other programs. As a result, various stakeholders come into play who demonstrate their interest in sponsoring such activities in the company. In the long run, the CSR reported will suffer from the conflict of interest in which several stakeholders have vested interests. When the reporting is in this dimension, it can thus be established that there is a high probability for the reporting to have a negative impact on the business (Fatma 395).

Mandatory Reporting

Mandatory reporting has recently been put into action due to the businesses failing to observe voluntary reporting. As a result, there has been the inception of various regulation that is currently put in place demanding the businesses to comply and report on their CSR. The advantages for the mandatory reporting have come to surpass those enjoyed by businesses on voluntary reporting (Perrault and Cynthia 515). For instance, due to the incompetence associated with voluntary reporting in such dimensions as conflicts of interest, mandatory reporting offers an objective form of reporting that has no influence from certain groups of people. Championed trade unions and non-governmental organizations, the mandatory reporting observes the required regulations in which the necessary data is reported without alteration so that the company or the business can be compared with others at the same level. Therefore, the comparability observed allows the companies and businesses to make the necessary adjustments to their way of doing things. Significantly, the ability of this reporting to push for corporate culture change brings about innovation in the companies. The leaders at such businesses can, therefore, be considered as champions of change in the way things are done by avoiding disclosure of the performance that is negative. For example, Singapore Exchange utilizes mandatory reporting which has improved on the legal certainty of the business. Thus, the corporate leaders at the firm have an ample time to develop innovative methods of exchange systems that will be valuable to the organization (Noronha et al. 25).

Application of the mandatory reporting within the mining sector and other businesses like banking contributes to saving on costs of operation for the business as they try to beat the competitive rivals. For example, Rio Blanco mine enjoys equal treatment as other mining sectors within Peru and those in other parts of the world. The standardization that is associated with the equal treatment of the entities allows both large and new corporations in the business to compete favorably. For instance, companies are subjected to the same regulations regarding responsibility to the environment. Taking, for example, the mining companies, it would be difficult for them to remain competitive against other types of businesses like flour companies in case the regulations were made stricter about mining than other businesses. Therefore, the equal treatment under mandatory reporting serves as a driving force to creating fair competition for all business and companies.

Furthermore, the mandatory reporting influences positively on the performance of the business since the regulations reduce the non-diversifiable market risks (Moravcikova et al. 333). Through standardization and regulation, businesses are provided with an environment in which the risks of making loses as a result of liabilities associated with a certain line of operation is eliminated. Besides, the sustainability ensures that the business remains relevant within the market by limiting the potential threats to the success of the business.

On the other hand, mandatory reporting has been reported to have a negative impact on the performance of businesses and companies globally. For instance, the regulations have been made rigid, and therefore there is no flexibility in the operations of the businesses. The complex process of altering the set regulations reduces the possibility of the business streamlining their lines of operation (Fatma 397). As a matter of fact, the application of uniform regulations in the mandatory reporting has potential negative impact on certain businesses compared to the other. The one-size-fits-all policy limits the ability of newly established companies to excel globally by imposing restrictive regulations that generate a gap between the industry and the regulators. For instance, the knowledge within a certain industry is not evaluated by the regulators since the regulations are stiff and do not allow the regulator to investigate into other aspects like the profitability of the programs (Moravcikova et al. 332).

On examination of both voluntary and mandatory reporting, it can be noted that the advantages the businesses stand to gain under mandatory reporting are more in comparison to the demerits that are associated with it. The chance provided to business under mandatory reporting in a manner that the business chooses not to report on the negative performances allows the business to create a positive image within the public and therefore ensuring that the chances of success of the business in cases of competition are safeguarded (Perrault and Cynthia 513). On the contrary, the conflicts of interest associated with voluntary reporting invalidate the transparence and compliance of the reports under this domain and therefore may fail to appeal to the consumers as a reliable business in the long run.

Guidelines for CSR Reporting

The reporting of CSR in companies and businesses take up varied forms depending on the line of production or operation besides such considerations as to whether the business is focused on the local or international market. The closer the company is concerning the environmental issues and influence on the society, the stricter the regulations on reporting.

Some companies provide their reports as summaries in the form of annual reports. The annual reports discuss the various elements that the company has included in the operations like human resource, programs, and projects funded by the company, environmental initiatives put in place to safeguard the environment in which they operate in. Besides, the reports cover such sections as to how the information is disseminated to the relevant stakeholders besides the relevant and interested parties.

Considering the various annual reports by businesses, it can be seen that they observe certain guidelines in the way they disclose the information to the public. The guideline observed by these reports is as follows:

The kind of information that the company has to pass across- the information can be a sustainability report, policy on environment awareness, or commitments to uphold the global regulations on social responsibility.

How the information will be made available and accessible to the key stakeholders- the section informs on the various improvements to be made and documented by the business.

Why the business has established CSR practices.

Importance of CSR to Companies

Businesses demonstrate their responsibility to the society and the environment in many ways. The company can invest in such initiatives as donating money to charities and community projects which serve to improve the lives of those living in such communities. Other businesses are reported to engage in such community activities like community cleaning, efficiency energy utilization among other waste management activities. These initiatives impact the image of the companies in some ways as discussed (Križanová and Ľubica 34).

The public usually develops trust in the companies that show responsibility and tend to associate the trust with loyalty to the products from such businesses. As a result, the companies grow economically due to the reputation associated with the trust. Moreover, the aim of the companies to be conscious of their impact on the environment and the society portrays the company as transparent and therefore appealing to the public besides being in a better position to address the opportunities and risks within the location of operation. Furthermore, the stakeholders like the consumers have a vital role in ensuring that the decisions made by the company are based on facts (Ioannou and George 7). Thus, maintaining CSR in a company improves the company’s integration with the government and the stakeholders that influence the reception of their products and services in the market.

Conclusion

Corporate Social Responsibility entails the organization’s participation in the society and demonstration of environmental responsiveness. The ability of a business to succeed in a given location depends on the strategies put in place to ensure the reception of their products and services is seamless (Moser and Patrick 798). As a result, such businesses target building a brand that is trustworthy and inspires trust among the consumers. Through participation in community activities like waste management and charity services, companies improve their image and inspire customer loyalty.

Reporting of CSR has been narrowed down to either voluntary or mandatory with many companies pushing for voluntary reporting as the system is flexible and complies with the expectations of the companies (Moravcikova et al. 335). On the other hand, the public including non-governmental organizations encourages mandatory reporting in which the companies are subjected to regulations. It can thus be established that mandatory reporting proves important to the improvement on the performance and the image of a brand in a manner that the negative performance is not reported in the process (Ioannou and George 3).



Works Cited

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Ioannou, Ioannis, and George Serafeim. "The consequences of mandatory corporate sustainability reporting: evidence from four countries." (2016).

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