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eastchance.com essay feature
Author: Carstea Irina
CSR between Utopia and Fact
Over the years, there have been many discussions regarding whether the social matters, like providing jobs and income, needed to build a more equitable and prosperous society, concern only governments or even the private sector.
In the light of these preoccupations, the Corporate Social Responsibility has become “the new flavor of the day”.
Although the concept of Corporate Social Responsibility has been developing since the early 1970s, there is no single, commonly accepted definition of Corporate Social Responsibility.
The definition that I considered to be the most appropriate is: “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis”.
It is believed that the growing international and domestic interest in Corporate Social Responsibility stems largely from the concerns about the real and perceived effects of rapid globalization.
The interest has been reflected in the expectation that globalization must proceed in a manner that supports sustainable development in all regions of the world.
In recent years, Corporate Social Responsibility has gained growing recognition as a new and emerging form of governance in business.
It is already established in a global context, with international reference standards set by the United Nations, Organization for Economic Cooperation and Development (OECD) guidelines and International Labor Organization (ILO) conventions.
Although, at first sight CSR seems to be a solved issue, the subject is still a matter of dispute and controversy.
The matters that made Corporate Social Responsibility so controversial are:
Does Corporate Social Responsibility strategies improve profits of the company? What are the company’s advantages?
Should the companies be responsible for the negative impacts that they have on the society? And if so, will the companies admit their faults and take action to improve them?
What’s in it for the companies?
Firstly, when wanting to state why a company should use Corporate Social Responsibility programs, the ones that are in favor of it present us three types of arguments: the emotional one, the moral (ethic) one and the logic one.
According to the emotional aspect, companies are considered to be sensible to the needs of the society. If referring to the moral/ethic argument, companies consider that their core values should be compatible with the actions they take.
As for the logic aspect, it is said that being socially responsible improve profits, because the costumers and even potential employees are likely to react to these kinds of strategies.
Moreover, in order to achieve a sustainable development a company should let herself guided according to the triple bottom line, which focuses on three dimensions of sustainability: economic, environmental, and social. This means that if the company would like to achieve a sustainable growth, then it should not only develop economically, but also to take into consideration the other two dimensions of sustainability, the environmental and social one, to integrate these into their business.
It is believed that people are the ones who insist that the activities of corporations should make a positive contribution not only to the economic development and stability of the countries in which they operate, but also to their social and environmental development. Failure to respond to such an agenda satisfactorily will contribute to increased social tensions, environmental degradation and political upheavals. Good corporate conduct makes an important contribution to sustainable development in any community and so goes a long way toward responding to the concerns that globalization raises.
Already an increasing number of companies are recognizing that globalization is transforming corporate responsibility from a choice into an imperative.
A recent international inquiry into consumer expectations concluded, for example, that 20 percent of consumers surveyed had avoided products and services of particular companies because of their negative ethical profile, and a further 20 percent were considering doing so.
Adopting Corporate Social Responsibility is in the long-term interests of companies since - in an age of increasing, worldwide consumer awareness - it improves their public image and wins over new customers.
Corporate Social Responsibility applies to a wide variety of company activities, especially in enterprises that operate at a multinational level in very different social and environmental settings.
But it is a voluntary system, and as such, lacks objective, consistent and transparent criteria for workers, consumers and other stakeholders to measure company performance.
There are several examples, which demonstrate that corporations indeed, react to the problems of our society.
Many companies like Avon, Body Shop or Procter & Gamble contributed to the social good through a various of ways like sponsoring a major social cause, do volunteer work in the community, give philanthropic gifts, or establish highly ethical business practices.
Their profits increase because of the impact these corporate social responsibility programs have upon people.
We live in a world where the information flow is really high and people are aware of what happens in the business world, they are informed about the actions that companies take, and so they are influenced by the company’s external behavior.
There are opinions which say that Corporate Social Responsibility must not be merely a public relations exercise, but a sustained and challenging effort.
Corporate Social Responsibility must not be a way to avoid dialogue with workers organized in trade unions, or an alternative to labor legislation and collective bargaining.
There are people that affirm that the prime concern of Corporate Social Responsibility must be the quality of industrial relations within a company. It would, indeed, be a contradiction in terms for a firm that fails to apply a collective agreement or respect an employment contract to be regarded as ‘socially responsible’.
A business can only claim publicly to be responsible if it first applies the highest standards internally.
However, referring to the neo-liberal position, the question that comes in mind is: How right is Milton Friedman, when stating that: “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits.”
And is the business of business business?
Shouldn’t companies focus on making profits while government should regulate companies to be responsive to social and environmental responsibility?
All these matters are entitled to be taken into consideration.
Indeed, you can’t say that "business" has responsibilities because only people can have responsibilities. A corporation is an artificial person and in this sense may have artificial responsibilities, but "business" as a whole cannot have responsibilities.
If you say that the corpo¬rate executive has a "social responsibility" in his capacity as businessman than this statement might be “pure rhetoric” as Milton Friedman said.
Regarding the employees of a company, in order to say that they really believe in the core values of a company, is nothing else than hypocrisy. The actual reason for which they do this is because they are obliged by the company’s politics, not because they truly believe in those core values.
Also corporations add far more to society by maximizing “long-term shareholder value” than they do by donating time and money to charity.
If one looks at the lists of the most "socially responsible" companies, according to the criteria of the radical environmentalists and labor unions, you find on average many more poor stock market performers than among businesses that focus on business.
In brief, although, businesses must obey the law and operate responsibly and ethically they do not have the responsibility to function as a social welfare organization.
The society creates different institutions for different functions. The Government, the churches and other institutions have different roles than business has.
Businesses while making profit, create real jobs, advance technology, and in the end make the world better for everyone.
Another aspect is that there are NGOs, according to a Washington Post article, which together with the media, create destroying media campaign, which in the end weaken the companies.
The purpose of these measures is to oblige companies to start taking all kinds Corporate Social Responsibility actions.
Moreover, because of the blackmail and unfair and abusive media treatment, companies often spend their resources in protecting themselves from these kinds of assaults, ending up neglecting the thing that should matter the most for them: their products.
As you can see, the matter of Corporate Social Responsibility is indeed very controversial.
It is true, we all have to be responsible for our actions, but we should refer to us as individuals, not businesses, because I believe it is not so much the responsibility of the private sector to contribute directly to the welfare of the society, but the responsibility of governments or welfare organizations.
Businesses’ responsibility, their only final objective is to make profit and that is what they will do in the end. Actions like volunteer work in the community, philanthropic gifts or establishing highly ethical business practices, are only ways to sell your image to the consumers and to attract suppliers and employees.
So, by adopting Corporate Social Responsibility programs a company is not doing anything else but trying to use these programs as tools in delivering her image, it is creating or improving its image as a company for its stakeholders.
Nowadays, the consumers are more and more sensible to the actions of a company they have strong ethical and moral beliefs and they will react to anything that doesn’t meet their standards.
As a conclusion, I consider that the development in all parts of the world must happen in a sustainable way. In order to do this we must, above all, let businesses do their job properly. A sustainable developed company would for sure have a social positive impact because it will provide jobs and income.
For the moment, Corporate Social Responsibility might seem to be an incentive to hypocrisy for some of us, as for others a sustained and challenging effort.
But, what today it is considered to be a utopia probably tomorrow will be a fact.
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