Social responsibility is a notion of concern to both the social and business world in the recent years. This fact has led to an increase in interaction between the business, government, and society as a whole. In the past years, the primary concern of most business was the economic results of their decisions. However, in today’s business world they must also take into consideration the moral, legal, ethical responsibility for any decision they make. This paper discusses the different aspect of corporate social responsibility in Saudi Aramco. It will define the concept of corporate social responsibility and a summary of all the finding of the policies used by Saudi Aramco it will discuss on ways to improve some of this policies and whether I agree with some of the concepts.
Definition of Corporate social responsibility (CSR)
Corporate social responsibility (CSR) is the duty a firm has toward the society in giving back in forms of charity work and giving out donations. It is an ethical responsibility in business enterprises for their local communities in ensuring they help reduce environmental pollution with their operations while also making sure that there is the growth of the society or community around them. Its definition varies across disciplines as to an economist it is a business strategy while to a person who practices law it is a company’s responsibility to be responsible for the community that surrounds it. Corporate social responsibility is significant for businesses today as it holds a wide range of benefits to the companies (Shea " Hawn 2014) and also for the community as well. First, the business gains by having a positive business reputation increased sales, increased customers, better customer loyalty, improved recognition of the company’s brand and also a chance to self-advertise to the community who are the company’s leading ambassadors. All these are benefits that ultimately lead to more profits for the company. With this being a duty for the enterprise, it is also an excellent opportunity for the company to maximize on its earnings while giving back to the society at the same time.
I believe that any smart manager would embrace this idea wholly because it is an excellent opportunity to bond with the community. It is also an opportunity to create teamwork among the company’s employees, which creates a better working environment for everyone. Adherence to CSR policies also ensures that the company stays alert on how their operations generally affect the people that say around them. Therefore it is a beautiful way to make sure that people can stay in accord while sharing the same natural and economic resources. Corporate social responsibility is also a requirement for all the companies. While some may be small enterprises, it is always an excellent opportunity for any enterprise to embrace regardless of their capacity in the economic status of a country (Bistrova " Lace 2016).
Saudi Aramco
Saudi Aramco is a state-owned company that focuses on the production and refining of petroleum and gas products. It also deals with exploration, distribution, chemicals, and marketing of its products. It is a company owned solely by the Saudi Arabian government under the mineral and petroleum resources ministry together with the supreme council. It is a state-owned company, it is one of the most profitable companies in the world, meaning it delivers its products worldwide. Therefore, for a company like Saudi Aramco, it has greater social responsibilities as its consumer base is massive. However, it has also made it to the list of companies that produce the most significant amount of carbon dioxide in the atmosphere. The usage of oil and gas are essential in for business and also everyday life, but that does not come at the cost of increasing the risks of global warming. Saudi Aramco has, however, been very involved with issues to do with CSR and also giving back to the community.
Due to the nature of its industry, this company has a burden if adhering to the CSR requirements. Thus, it put forward specific policies regarding the same so that they help with meeting ethical and societal responsibilities. One of the significant steps taken by the company in embracing corporate social responsibility is by hosting the 2nd CSR forum in Dhahran in 2014. The conference included CSR experts from big companies globally, universities and major organizations. One of the aims of the discussion was to create a conducive environment and to form a partnership between the government, companies, and organizations that dealt with maximizing community service. The company’s stand on CSR was well brought out during this forum. The CEO expressed the company's readiness in participating in meaningful community service programs as opposed to just running a charity. He also stated that it was a not a burden for the company to be given this kind of responsibility because it is an essential duty in ensuring the society also grows with the company. With most of the businesses in Saudi Arabia being small and privately owned, it is mostly the work and duty of Saudi Aramco to step up and help sensitize the importance of community service responsibility.
Saudi Aramco corporate social responsibility Policies
Some of the ethics and compliance policies (Ramady, 2017) put up by the company include the compliance program, which is responsible for checking in with the legal procedures and the policies necessary to make sure that new projects comply with the required program. This program is a vital part of the company’s operations because it deals with project loopholes that may be potentially harmful to the environment and the community. There is the business conduct employee handbook that summarizes the ethical code of conduct of the company. It also contains information on company policies regarding health, environment, financial integrity and conflict of interest. This employee handbook provides guidelines and steps on how to behave while a work, ethical standards upheld by the company and also the best way to handle a situation should there be a conflict. An employee handbook is an essential step because it shares the company's ethical reputation with its employees while at the same time teaching about the part it plays for the company. The handbook clearly outlines the conflict of interest and business ethics policies. This precise outline is vital in making sure that the employees are kept up to date on what is expected of them while at work.
Consequences for breaking any of these policies are also reinforced in regularly through the company's communication channels. There is the supplier code of conduct that gives essential and necessary outlines on environmental, safety, health and fair trade issues. This code of conduct encoded by the company helps them realize their values and also responsibilities to their customers and their community as well. The above company policies are guidelines that pave the way on what path to take and steps needed to achieve business ethics and corporate service responsibilities.
The IKTVA program in Saudi Aramco
The In-Kingdom Total Value Add program is one that the company came up with to help them create more value in their businesses while creating long-term growth economically. Through this program, the company initiates the domestic value creation, which means that they put more value on the value created by the locals. The value increase is achievable through the hiring of more suppliers from any part of the world, to bring in their businesses and ideas to the table to grow the business together. It is necessary for keeping up with the changing economies and also environment so that to ensure future success. The program includes working with the partners to bring out efforts that will produce long-term effects such as creating more job opportunities for the growing Saudi population. These are steps that give the company fresh ideas that will also elevate the company's status globally which improves their competitiveness. While carrying out this program on a domestic level, the company is keen on ensuring all its operations are transparent and consistent so that to practice fairness and give every other aspirant a fair chance.
This program is the company's way of implementing projects for the realization of vision 2030. It involves working with the Saudi Arabian government, potential investors and the domestic created value. It is a grand vision that will be beneficial for the government, investors involved and also the lives of the people given a chance to be a part of this company. The project is a fusion of corporate social responsibility while also putting the company out here to the world, which will reflect on its sales. IKTVA will also play the role of a mother program that will inevitably lead to many more such programs created and implemented in the future.
Corporate social responsibility theories
Corporate social responsibility practice as had various theories (VILLAGRA, 2016) that try to bring a deeper understanding of the topic. One of the theories is the stakeholder theory that states that the CSR responsibility is the stakeholders. It is because the stakeholder's number has gone up since the 1960s and thus their impact on the business has also grown over the years. This theory argues that stakeholders prefer unique social to other socials that are not directly related to the company. The second theory is the business ethics theory that has its basis in the social and moral obligation of business toward its society. In this theory, CSR is more of moral responsibility for the company and not an economic and legal liability. The third theory is the shareholder value theory that argues that a company’s social responsibility is creating profits for itself while following the necessary legal procedures. The function of a business to society is providing economic growth opportunities which is also not under the same category as nonprofit organizations. Despite involving shareholders in the CSR as the best approach in a successful CSR, the company has its obligation to use this to its gain to have more profits.
I think the shareholder's theory is the most effective and influential because it provides a win-win situation for both the community and also the company. Its legal obligation to give back to the society can be used as a way of self-advertising, creating a good name for the company and ultimately creating more profits for the company. The stakeholder's theory is limiting for the company and even to the community as well. It demands social activities that are only related to the company. This notion is defining as these ideas may become monotonous after a series of these CSR activities, which will make the company lose its taste to the community around. This theory does not help grow the business as the decisions made are pressured by the shareholders demands and preferences. The business ethics theory defines corporate service responsibilities well, only that it mainly focuses on the moral obligation of a company to the society. It is true that a company has this responsibility, but it leaves out the part of where the business itself gains from it. Apart from corporate service responsibility being a legal and moral requirement, it should also be beneficial to the firm as it uses its resources, time and workforce to carry these activities. As a motivation for more businesses to be involved in CSR, the companies need assurance that this is going to be a beneficial exercise to them as well.
I agree with the company’s steps in its policies to achieve CSR. The company has gone to great lengths to ensure that they comply with their duty to the environment and also the community they are in. With its global presence, Saudi Aramco is presented with the responsibility of varied communities and even the environment around the neighborhood. Their nature of the industry is also a risky one as it is straightforward to have health and environmental hazards should there be any carelessness during operations. Thus, its corporation since its conception over the years shows that the company respects is a community and also the environment. It was a massive step for the company when it hosted the CSR forum in 2014, providing a conducive environment for talks on the importance of CSR to other global companies as well. The company's steps in making sure its policies on CSR are me are also adequate as the idea of community service responsibility is spread across the company from its administration to the employees. The use of employee handbooks is one great strategy to help sensitize the importance of the issue to the employees. It is from within that the company can make any significant changes to its operations in relations o their effects on the environment. He compliance program make sure that all the projects are run effectively while following the right legal and environmental requirements.
Therefore, for my company, I would embrace the shareholder's theory as it gives me the opportunity to exercise my duty to my community economically and also environmentally while keeping my brand name popular. I would take this as a marketing chance for my company while creating a strong client bond that increases their loyalty to my company. Having this kind of relationship also gives one insight into what the community needs, and that's where the company comes in with the corporate social responsibility of solving that need. It may be a health care issue that the company could partner with the government to provide better services.
Conclusion
Saudi Aramco is a global company that has prospered over the years despite the many challenges that face it. However, I believe that this company is the best example that can apply when researching on what corporate social responsibility is and its importance to the company and the community that lives around the company. As a company that has been listed to produce harmful waste into the atmosphere, it has taken great strides in curbing this issue by reducing the emission of carbon dioxide to the atmosphere and working with the local community to help with disaster response. Its efforts are not in vain because we can see the company grow over the years. Saudi Aramco can be used as a role model to other international and big companies to follow in steps to help solve some societal issues while it is beneficial to the companies. Therefore, corporate service responsibility is legal as it is also an ethical responsibility (Kang " Yoon 2018) for enterprises whether big or small from all over the world. It is expected of them to take care of the community that surrounds them and help it grow socially and economically, through infrastructure or even awareness programs that directly affect the people living around the place.
References
Bistrova, J., " Lace, N. (2016). CSR Initiatives Introduction Status in Central and Eastern Europe and Their Importance for the Equity Investor. Key Initiatives in Corporate Social Responsibility, 43-69. doi:10.1007/978-3-319-21641-6_3
Kang, K., " Yoon, Y. (2018). The Effects of Corporate Ethicality, CSR Consistency, and CSR Fit on the Perception of CSR Authenticity : Focusing on the Moderating Effects of Anti-Corporate Sentiment. The Korean Journal of Advertising and Public Relations, 20(3), 5-34. doi:10.16914/kjapr.2018.20.3.5
Ramady, M. A. (2017). The Aramco IPO: Governance, Listing, Options, and Policy Implications. Saudi Aramco 2030, 167-248. doi:10.1007/978-3-319-67750-7_5
Shea, C. T., " Hawn, O. (2014). Social Perception of Corporate Social Responsibility and Irresponsibility: Asymmetric Benefits and Penalties of CSR Strategy. SSRN Electronic Journal. doi:10.2139/ssrn.2380864
VILLAGRA, N. (2016). Communicating Corporate Social Responsibility: re-assessment of classical theories about fit between CSR actions and corporate activities. Communication " Society, 29(2), 133-146. doi:10.15581/003.29.2.133-146
