What is Corporate Social Responsibility?
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Corporate Social Responsibility (CSR) is now a key feature of the business world and companies routinely publicise their commitments to human rights, social wellbeing, sustainability, environmental protection and a variety of programmes of ‘good deeds’ for communities both locally and globally. There are also a growing number of organisations dedicated to supporting companies in the CSR arena.
There is no universal agreement on how CSR is defined, but broadly speaking they tend to fit into models ranging from acts of philanthropy (where a company donates part of its profits to charities), to models where companies claim to incorporate responsible practices into their core business operations[1]. In Britain the latter tends to dominate, in the words of Gordon Brown, CSR is described as ‘an all year round responsibility that companies accept for the environment around them, for the best working practices, for their engagement in their local communities and for their recognition that brand names depend not only on quality, price and uniqueness but on how, cumulatively, they interact with companies’ workforce, community and environment’[2]
The commonality within varying definitions of CSR is that it concerns the relationship companies have with society and the environment, and that CSR commitments are undertaken on a voluntary basis.
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What are the issues?
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- Contradictions and Conflicting Interests
- From the outset, companies have played a major role in formulating and driving the CSR agenda. CSR initiatives such as the UN Global Compact, International Business Leaders Forum, World Business Council for Sustainable Development and the Ethical Trading Initiative are just a few of the organisations proclaiming to lead the way in promoting CSR. Even a cursory glance at these organisations highlights how such initiatives are awash with contradictions and issues of conflicting interests. They work primarily in the interests of their members which includes some of the world’s most controversial and criticised companies such as Shell and Coca Cola. Senior officials from controversial companies are also at the head of CSR initiatives: such as with the Ethical Trading Initiative which is headed by the Director for Littlewoods Retail Limited [3] which is owned by Associated British Foods which also owns Primark [4], the company deemed to be the number 1 most unethical place to buy clothes in Britain by Ethical Consumer magazine in 2005[5]
- One of the key players instrumental in setting up the UN Global Compact was the International Chamber of Commerce (ICC), which describes itself as 'the voice of world business’ [6] and which has been involved in blocking the agreement of several international environmental standards, including the Kyoto protocol on climate change, the Basel convention on toxic waste and the convention on biological diversity [7].
- Such conflicts of interests and contradictions within CSR initiatives are by no means uncommon. Indeed they are a recurring feature throughout this area.
- Avoiding Binding Regulation
- Involvement with CSR initiatives and declarations of corporate responsibility enables companies to present themselves as responsible entities who are already acting in the best interests of our planet and its inhabitants. A common feature of the benefits described by CSR initiatives for their members is direct access to government and decision makers in shaping policy. Initiatives can also act as advocates for their members, providing indirect access to decision makers and the formation of policy.
- One of the defining features in the modern CSR context is that initiatives are voluntary affairs. Involvement with CSR initiatives enables companies to ensure that the emphasis remains on self-assessment and voluntary codes where possible, and if regulation does come into force, they receive a decisive input into how it is formulated and what measures it contains.
- Voluntary Codes are Unenforceable
- Voluntary codes leave companies unaccountable for the negative effects of their actions and give those who suffer from such impacts little or no recourse. It is the norm for voluntary CSR Initiatives to rely on companies to self regulate themselves and to monitor and report on how they are meeting their commitments with little or no external examination or inspection. Membership with CSR initiatives is no indication that companies are acting in ethical ways. They simply have to voice a commitment to a set of ethical principles, they don’t have to meet them. In this sense CSR can be deemed as all words and no action.
- Hypocritical Window Dressing Statements of CSR provide an effective PR tool. It enhances the corporate image/reputation, builds brands and in turn generates sales and profit margins. Increasingly companies have faced scrutiny and criticism from the populace in relation to the unethical practices of business, this has necessitated that companies react to repair or avoid damage to their reputations [8]. CSR is strongly linked with challenges to corporate power and involvement with CSR initiatives on a voluntary basis with little or no monitoring allows companies to polish their image whilst carrying on behind the scenes with business as usual.
- Companies Are Profit Not Welfare Driven
- Companies are commercial entities which act in the pursuit of profit. Their primary interests are increasing shareholder value and profit margins. This is enshrined in law, which has been described as the ‘best interests of the corporation’ principle [9]. A company’s bottom line is the priority, no matter what the values of a CEO, they must act in the pursuit of profit as they are employed to further the ends of the company and ultimately its shareholders [10]. Cost/benefit analysis is at the heart of how business operates which makes them morally ambivalent entities. Decisions on what actions to take must have a positive impact on its bottom line, otherwise it may be deemed as stealing from the shareholders. Any good deeds a company undertakes, or even its involvement with ethical initiatives must be from the basis of increasing sales/profits. This is how business works.
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Categories
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There are a list of pages/articles associated with CSR:
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Recent changes to CSR on Powerbase
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References and Resources
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Articles
Videos
Resources
References
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