Introduction to Corporate Social Responsibility
Customers hold businesses to high standards and have high expectations of them in the modern business environment. Most customers don't just consider the price or quality of the items and services the company offers when deciding which one to work with or purchase goods from. Along with generating revenue, consumers also want businesses from a range of industries to act responsibly and contribute to solving some of society's pressing social and environmental issues. In one of the surveys done by Cone Communications, it was estimated that more than 80% of consumers worldwide look for ethical goods and services in whatever manner they can. Thus, the paper is a critical analysis of the Corporate Social Responsibility, the companies involved, advantages and disadvantages.
Definition and Importance of Corporate Social Responsibility
Corporate Social Responsibility (CSR) can be defined as the integration of business activities and policies where all the stakeholders in the company like investors, managers, employees, and customers work together with the members of the community in the interest of the environment and social well-being of the society. In Corporate Social Responsibility, companies voluntarily work and contribute resources that are aimed at making the community clean and safe for the people around. The company contributions may be through social investments or business activities. In most cases, the contributions are not profit motivated and are self-driven by respective companies involved. (Clapp et al., 42).
How Corporate Social Responsibility has Evolved
For the last ten years, many companies have joined the Corporate Social Responsibility initiative. This is due to that fact the many customers and the general public including potential investors rank companies according to what they are giving back to the society. Also, companies are expected to help in the sustenance of the world. Thus, Corporate Social Responsibility has resulted in a lot of economic, social and environmental progress in the world.
Interpretations of Corporate Social Responsibility
However, based on its applications, Corporate Social Responsibility may be used to mean a lot of things. For instance, while to some organizations Corporate Social Responsibility may mean compliance with the standards of human rights and help in the development of a free and equitable society, other firms view Corporate Social Responsibility as the provision of social security services to the people. (Clapp et al., 43). To others, however, Corporate Social Responsibility is the fight against environmental degradation and ensuring a sustainable control of the all the natural resources and protecting the consumers' interests. Companies achieve this through voluntary work or being engaged in philanthropy.
History of Corporate Social Responsibility
The concept and application of Corporate Social Responsibility were first used in 1953 in a publication made William Bowen titled 'Social Responsibilities of the Businessman.' It did not however become popular until the late 1990s when Betapharm, a German company involved with pharmaceutical production decided to give it a shot by giving free medication to the people. The company also started a school-based program where children were educated on health tips and useful ways to express their feelings. Also in 1977, there was an influx of medicines in the market, and most customers could not thus choose products based on quality but went on price. As a result, many people lost their lives to curable diseases. The company then again came into play and educated the people on the importance of considering quality when buying drugs. By the end of these programs, the company recorded a fifteen percent increase in the sales and customer attitude towards their activities and products. This gave them a competitive advantage over similar firms in the market, and it thus increased the total income generated per annum within the same level of production costs. (Clapp et al., 44).Later in 2001, the European Commission then decided to start a consultative paper based on Corporate Social Responsibility. The article was titled "Promoting a European Framework for Corporate Social Responsibility." Its aim was to create a debate that would determine how the European Union could work together and promote Corporate Social Responsibility both at the internal and international levels.
The 'Real Responsibility' of Companies in Corporate Social Responsibility
As at the moment, there is no single documented process or methods involved in the Corporate Social Responsibility both at the local and international levels. Thus, the Corporate Social Responsibility strategies and its practical applications differ from one company to the other. As a result, there are still a lot of deficiencies when it comes to the output of Corporate Social Responsibility. For instance, there are still a lot of complaints to the multinational firms on environmental pollution. The non-governmental sector has also complained a lot of companies promoting abuse to the human rights. (Tai et al.,117).To some people, especially those in human rights organizations, many companies engage in Corporate Social Responsibility to drive attention away from their primary agenda. For example, some firms have been known to engage in the production of illegal drugs for consumption by people. They, however, found a lot of developmental projects and assist people in their financial needs that the community tends to forget their primary source of revenue. Thus, though many companies have increasingly realized that benefits of Corporate Social Responsibility, a number of them are yet to implement sound management policies that show their concern to the people or the society in general.Thus, according to It has become the initiative of the pioneering companies to help others in adopting and implementing socially accepted practices by having a universal guide to the whole process. (Tai et al., 117). For example, the Corporate Social Responsibility Europe and Copenhagen Centre recently came together and started a program that is aimed at bringing academic communities and concerned businesses together to identify and address some of the training needs that the corporate sector experiences in Corporate Social Responsibility.This was as a result of the realization that through Corporate Social Responsibility may be an initiative of the firm, all employees, investors, managers, and consumers must also take part in the important decision-making process of the social responsibilities that company is involved. The investors may provide the capital and other resources for the program, but the employees and the consumers are also directly involved since the program is likely to affect them directly.Thus, according to critics, Corporate Social Responsibility can be promoted through international regulation, open and better governmental policies and enforcement of the law by all participants involved. Rather than being a voluntary initiative, companies should have guidelines that make them socially responsible to the customers and to the community they operate within. It should not thus be viewed a substitute of environmental standards and the protection of human rights, but as an effort made by all companies as they try to focus on adopting a good framework that benefits the computer and helps people in the social developments. (Tai, Fang-Mei, and Shu-Hao Chuang, 117)
Companies Involved in Corporate Social Responsibility
A lot of companies have developed the initiative to give back to the society. Some give back through a financial contribution; others make it a duty to produce environmentally friendly goods and services and some developed programs whose aim is to improve the living standards of people around the globe. The number of companies engaged in Corporate Social Responsibility is counter less. The paper only considers five leading countries that have impacted a lot in the world through Corporate Social Responsibility.
BURT'S BEES
BURT'S BEES, the company, is a member of the Natural Product Association. It has helped in the development of natural standards that may be used for personal care products. The company has established a guideline that guides consumers in identifying the natural products. Its primary goal is to enhance the production of natural products that are environmentally friendly and hence help in the reduction of pollution. For instance, in its production of candles and lip balm, the company has since begun to use honey as its raw materials since it is readily available and also natural from the source. By 2009, it had raised its revenue by $250 million (Salib, et al., 24).
TOMS SHOES
TOMS SHOES, when Blake Mycoskie started the company, his main aim was to donate a pair of shoe to every ten pairs of shoes sold. He came up with the idea when he visited Argentina where he saw a large number of children walking without shoes. Tom, therefore, realized that to make his customers feel good, he needed to donate shoes to the people who cannot afford to buy. He has over the years donated over 400,000 shoes to many children around the world, an impression that has made his customers appreciate his business by increasing their purchase (Salib, et al., 26).
STARBUCKS COFFEE
STARBUCKS COFFEE, ever since the company was started in 1971, the owners have always made sure that all the production methods are conducted ethically and responsibly. One of its primary goals is to focus on what the company terms as "sustainable production of green coffee." Using this guideline in mind, the company has come up with environmental leadership, economic accountability, product quality and social responsibility strategies that it uses to keep the society and the environment safe and protected and at the same time ensuring that meets all the customer demands. It calls this guideline the C.A.F. E practices. As its main project, the company gives financial support to Ethos which is an initiative that gives people access to clean water and sanitation. Currently, Ethos is estimated to have given grants to people that total to more $6.2 million.
METHOD
METHOD, the company is involved in the production of cleaning products. However, the company ensures that most of its raw materials are from natural sources. This was after the realization that most of the cleaning products were previously made from chemicals that are hazardous to the environment. The company then decided to use natural products to make safe personal and home cleaning products that have no negative impacts on the environment. Some of its natural sources include soy, palm oil, and coconut. The company also ensures that its packages are biodegradable to avoid destruction of the soil texture and air circulation. Thus, being ranked among the fastest growing firms in the world, Methods as proved to be socially responsible and takes into consideration the after effects of its products to the people and the environment in general. Currently, its income generation is over $100 million per year, which is attributed to the good social responsibility to the people.
Advantages and Disadvantages of Corporate Social Responsibility
Though the original intention of Corporate Social Responsibility was to enhance the company regarding its accountability to its customers, it has nevertheless changed to be a business strategy for many firms. There are different advantages to a business that engages in Corporate Social Responsibility.
Increased Profitability and Value
The first benefit is increased profitability and value to the firm. For example, the introduction of waste recycling and energy efficiencies has cut the operational costs for various businesses. Due to this, they have been able to increase the level of production and consequently the total income generated at relatively lower costs. Also, Corporate Social Responsibility makes companies attractive and accepted by different people in the market which increase their value and performance (Cheng et al., 2).
Improved Customer Relations
Secondly, Corporate Social Responsibility improves customer relations. Some activities in Corporate Social Responsibility involve having direct contact with the customers. (Cheng, et al., 10). Examples of such activities include technical and vocational training to the customers. While in contact with people, the company can use such opportunities to marketize and build a strong customer relationship with them.
Benefits to Employees and Managers
Also, Corporate Social Responsibility benefits the employees and the managers of the firm. Individual Corporate Social Responsibility programs focus on building teamwork, insurance policies and better welfare to the stakeholders of the enterprise. When the employees are satisfied and are adequately trained for the duties, their productivity to the company also improves (Cheng et al., 14).
Building Long-term Goals with the Community
Finally, Corporate Social Responsibility also helps the company build long term goals with the community. Building projects are some of the initiatives that can create a long-term relationship between a community and a company. With such a relationship exists, the company can then engage in additional investments in the society that are likely to generate extra income. The firm can as well get free labor and cheap raw materials from the community and hence cutting on their production costs. (Cheng et al., 22).However, there is one significant disadvantage the firms have when they engage in Corporate Social Responsibility. That is, Corporate Social Responsibility exposes the business to the outside world. It drives attention of the media and other investors. This means therefore that in the case of any crises like financial crises, the company will be quickly exposed and this can negatively affect its operations. Additionally, most of the times, Corporate Social Responsibility are non-profit and very costly. Thus, the company can easily run through heavy losses if it does not have a sound financial planning (Poussenkova, et al., 12).In conclusion, Corporate Social Responsibility has both negative and positive sides. However, as seen from the discussion above, the company is likely to increase its sales, expand its operations and increase its market coverage by engaging in ethical Corporate Social Responsibility programs. Companies like method and Toms Shoes have used this program to develop and become one of the largest firms in the world. It is thus a good initiative that every company in the world should be encouraged to participate in.
Work Cited
Cheng, Beiting, Ioannis Ioannou, and George Serafeim. “Corporate social responsibility and access to finance.” Strategic Management Journal 35.1 (2014): 1-23.
Clapp, Jennifer, and Ian H. Rowlands. “Corporate social responsibility.” The Essential Guide to Global Environmental Governance. Routledge: London (2014): 42-44.
Poussenkova, Nina, et al. “Corporate social responsibility.” (2016).
Salib, Jacquelin, et al. “Corporate Social Responsibility.” (2015).
Tai, Fang-Mei, and Shu-Hao Chuang. “Corporate social responsibility.” I business 6.03 (2014): 117.
