Corporate Social Responsibility in Water Supplies - Case Study Example

CORPORATE SOCIAL RESPONSIBILITY IN WATER SUPPLIES Introduction Corporate social responsibility (CSR) is increasingly elevating interests and imaginations of individuals in the business world. The European Commission (the EU) defines CSR as the enterprises’ responsibility for their societal impacts. Carroll presented multi-layered CSR concept in 1991; it consisted of four interrelated factors or aspects: legal, ethical, economic, and philanthropic responsibilities. He presented a pyramid that is utilized in the analysis of the CSR dimensions. Carroll’s pyramid begins with the economic responsibilities; organizations or companies are created for the provision of goods and services to customers or the public and to generate profit. This forms the foundation or pillar upon which the rest, that is the other three responsibilities are based on. The second layer is made of the company’s legal responsibilities (Sloan, Legrand and Chen, 2013). The company’s ethical responsibilities are usually practices that are not codified in the national law and regulations. The members of the public anticipate a company to carry out what is fair and right. Finally, at the pyramid’s top there is the companies’ philanthropic responsibilities; organizations or business are expected to be the best corporate citizens in order to make improvement in terms of the quality of life. CSR has transformed into a complex strategy or concept that is utilized as the key component in the each corporate decision-making, a number of companies supplying water in developing are integrating the CSR concept. Due to the improper public regulations in relation to corporate’s best practices in developing countries, reporting of sustainability is relevant; there is no particular regulation of on the CSR (Visser, 2010). Privatized Water Supplies Companies (PWSC) will be analyzed on implementation of specific CSR policies with the measurable targets (Kotler and Lee, 2011). Literature Review CSR is viewed as inclusive set of practices, policies, programs, or initiatives that are incorporated into business or organization operations or supply chains, and in the decision-making processes throughout an organization or company and incorporates responsibilities that influence both the past and current actions as well as the required attention into future impacts (Griffin, 2008). The CSR initiative’s concept integrates the companies’ environmental and social concerns in their daily business operations or in their routine interactions with stakeholders on a voluntary basis. Various scholars in the early 1960s have defined the concept of CSR in their own perspectives. The term "corporate social responsibility" is sometimes utilized used interchangeably with the term corporate responsibility, social enterprise, corporate citizenship, sustainability, triple bottom line, corporate ethics, sustainable development, and in other cases with the term corporate governance. CSR as from Bowen’s (1953) definition is the obligation of company or businesspersons in pursuing those policies, in making those decisions, or in following those lines of actions that are desirable in direction values and objectives of the society. Davis Keith (1973) tried to expand the idea by defining CSR beyond the narrow technical, economic, and legal necessities of the firms that imply that responsibilities starts when law ends (Idowu and Louche, 2011). The CSR was also defined in terms of the obligation that the firm faces when using its resources in manner that benefits the society, via committed participation as one of the member in a society or community, considering the society or community at large and the improvement of the welfare a society or community at large independent of direct the gains of the business or company; this was put by Weile et al. (2001). World Business Council for Sustainable Development defines corporate social responsibility as the commitment of a company or business in contributing to sustainable economic development by working with their families, employees, and the surrounding local communities. Carroll proposed better version of the definition in 1979 in four-part illustration embedded in the pyramid or conceptual model, Carroll differentiated between the types of CSRs: legal, economic, discretionary, and ethical. He further availed the argument that firms or organizations wishing to effectively or be well engage in CSR programs needed to consider or have the basic or contemporary definition of CSR; familiar with issues that led to the existence of the social responsibility; and finally a specified philosophy of the responsiveness towards the issues. Carroll further revisited the four-part definition, in 1991, of the CSR and made the arrangement of the notion or idea of the multiple CSR in conceptual model or the pyramid construct as seen in Figure 1. below. Initially, Carroll referred to the term discretionary interchangeably with the term philanthropic. Carroll’s pyramid indicates that the economic responsibility is the main course or foundation, while philanthropic as the apex. The conceptual pyramid of the CSR illustrates the economic category as the main idea or the base or the foundation upon which others initiatives are built on, and consequently built upward via legal, then ethical, and finally the philanthropic categories or sections (Carroll, 1991). Figure 1. The Pyramid of CSR (Scherr and McNeely, 2007) Carroll’s model incorporates all business’ responsibilities that rely upon an economic responsibility, thus includes maintaining the strong competitive position and maximizing profitability. The legal responsibilities obligate the firm or organization to comply with the regulations and laws while performing or carrying out its business (Murray and Dainty, 2009). The ethical responsibilities are repetitions of the societal required standards, norms or expectations that have are not legislated. Eventually, philanthropic responsibilities incorporate actions that are usually in the response to communities’ or societys expectation that a company or businesses be good or better corporate citizens; these are differentiated from ethical responsibilities since they are charitable nature and, hence such, a company or organization is not considered or termed unethical if it does not give or provide the society or community (Moon, 2014). Carroll’s revisited conceptualization shows that the mentioned four responsibilities are aggregators in sense that organizations or corporations that need to be ethical, for instance, must be legally and economically responsible. Therefore, from this angle or perspective, legal and economic responsibilities are socially needed, ethical responsibility is socially anticipated, while philanthropy is a social desire and each of the mentioned responsibilities is made of the component of the aggregate social responsibility of an organization or a firm. Manilla Water Company, Philipines Manilla Water Company’s corporate governance is laid on: Accountability; the Company accountable to its shareholders and on guiding the Board of management in terms of monitoring and strategizing for the Company. Transparency; the company guarantees accurate and timely disclosures on material matters, inclusive of the financial situation, governance, ownership, and performance in a way that is readily accessible to the general public and the interested parties. Sustainability; Manila Water Company believes that its day-to-day business goals are integrated with well-being of the local communities that it renders services to, and the natural environment or diversity that supports its resources. The company acknowledges the importance of working with all its stakeholders in achieving its environmental, social, and business objectives. Water supplies in Philipines is regulated by the Metropolitan Waterworks and Sewerage System (the MWSS) under the Republic Act 6234; the regulator declares major policies that ensure proper operation or maintenance of water systems in the parts of Rizal, Cavite, and Metro Manila. Manilla Water Company has demonstrated an increased awareness of CSR via the guidance of non-governmental organizations (NGOs), for example, the Green Peace Association and Ayala Group; in working towards environmental and social awareness. These have happened since there is no statutory requirement from the water regulator about disclosure of information relation to CSR activities. Manila Water Company, in Philippines, works under or has a philosophy or a banner “We Care” that is a cornerstone of the company’s human resource programs, targeted, among other initiatives at developing an ultra-modern water supply system to their fullest potential. The companies target is majorly on giving back to the community that they serve, and sharing with the less fortunate or helping fellow countrymen.The Company’s CSR initiative is on philanthropic activities; and social responsibility. Legal Manila Water Company developed a policy that guarantees employment to people with disabilities, that is, People with Disorders, for example, the deaf workers. The Company carried out the necessary adjustments at the in workplace; this policy is being instituted by other stakeholders in the CSR activities. The Company has high technical standards requirements for the Suki contractors; type of vendors accredited on bidding major projects. This ensures quality services provision. Economic The Company came up with the “Tubig para sa Barangay, that is ‘Water for the Community’ development project that found the most cost effective ways of availing safe water to the ever-increasing population of poor residents within the Company’s concession zone while providing employment opportunities through cooperatives creations and water services; through creation of water kiosks. The Company’s ‘Kabuhayan Para sa Barangay’ (the KPSB), that is ‘Livelihood for the Community’ arranges jobs for the community cooperatives and utilize them as service providers or suppliers of some of the company’s duties. Philanthropic The Company carries out free water supply to toilets in the Eastern Supply Zone of the Metro Manila in the public service institutions, for example, hospitals, schools, city jails, markets, and orphanages. Ethical The Company via its KPSB program, it avails training and seed capital for backyard cooperatives towards the production of essential consumable, for example, pipe nipples and bollards that are utilized in civil works projects. The Company through its Vendor Program helps the contracted suppliers and enterprises by providing extension of financial assistance, business, technical, and managerial skills for their staff. Impacts of Manila Water Company CSR programs The Companys CSR programs work towards the fulfillment of Ayala Groups CSR development objectives; that is water, poverty alleviation, infrastructure, and environmental management and protection objectives. Through the Vendor CSR program, the company has achieved an improved performance, addressed the immediate requirements or obligations of the company, fast-tracked its project implementation, and supported the economic progress efficiently via the development of medium and small enterprises. There is improved quality and safety standards, especially by the Suki contractors, in the provision of services at all times. This is usually achieved via training programs and laid non-technical standards. The “Tubig Para sa Barangay” program has addressed the need for the regular or constant clean water supply among the low-income communities, and further reduced number of illegal water connections. The program has helped more than 1.6 million people since its inception in 1998, by encouraging savings for disadvantaged families, a great reduction in water-borne diseases, and the improvement of the community’s sanitary conditions. CSR Discussion and Recommendations PWSCs should launch sustainability framework, for example like the Coca Cola’s “Live Positively,Eastern Asia, attached to their entire system; at all organization’s levels, from water treatment and to the distribution. The companies’ CSR policies should establish several core areas that the companies set for themselves measurable goals that improve the organizations’ sustainability practices in general. The core areas might include the clean water benefits, the community, active healthy living, sustainable distribution, water stewardship, energy and climate (Mullerat and Brennan, 2011). Nowadays CSR has a big strategic importance to water companies. However, in developing countries, for example, Philipines, CSR still appears as the way of conducting business. Most of the private water companies in developing countries view CSR as only philanthropic activities. Table 1 below demonstrates some of the CSR activities that are implemented by the water supply companies in the developing countries; the tables CSR activities of water supply companies are categorized according to the Carrolls four-part model. Legal Most of the Water Supply companies pay the minimum for the newly recruited workers and increases with ranks and education. The water companies pay either bonus or overtime for additional work or exemplary work. The avail clean working environment, hygienic toilets, ventilation and drinking water. Economic The water supply companies pay taxes, pay salaries through employment. Philanthropic Some the Water companies donate toward orphanages and people with HIV/AIDS Ethical Most of the water companies train their staff prior to execution of technical services. They also avail insurance cover to their employees. Table 1. Summary of CRS Activities by Water Supply Companies Most of the PWSCs have been in conflicts the Central Government and Non-Governmental Organization on evidences of presences of pesticides contamination in water, and microorganism contaminated water; hence, governments have implemented and enforced legal water standards. The third world governments should undertake investigations on each water contamination cases and should ensure they meet the European standards; they ensure they do not violate any national laws. CSR Policies The PWSCs should handle the environment and water resources well, the PWSCs should have a goodwill to the local communities; they should work with the NGOs and local communities in addressing local water problems. The most outstanding initiative will be launching of various community water projects, especially in developing countries. For example in countries that face constants droughts, they should start the rainwater harvesting projects, working the national water boards (Neef, 2004). Rain harvesting will address depletion of groundwater levels and water scarcity mainly through collection and storage of rainwater; this will further prevent its runoff and evaporation for efficient conservation and utilization. The strategy is aimed at capturing large quantities of high-quality water that would otherwise go to waste. Water harvesting ensures that that there is ‘net zero’ usage of groundwater; this tries to accomplish full balance in between groundwater distributed and that replenished communities and to nature, hence the CSR policy on water management. The PWSCs should implement water stewardship programmes and commit themselves to reducing distribution water footprint and offsetting the water supply in the Companies’ business operations via local relevant projects. In order to achieve these commitments, the following measurable objectives should be established: Reducing water usage and supply by increasing water efficiency levels Recycling of water via wastewater treatment and then returning the recycled water utilized in manufacturing or industrial processes to the environment; to level that supports agriculture and aquatic life. Replenishing of water used via offsetting several litres of water supplied through local projects and initiatives that support nature and communities (i.e. rainwater harvesting and watershed protection). It is noteworthy for the PWSCs to publish, in addition or separate the sustainability reports on annual water reports. The PWSCs should publish in these reports their assessments on and their progress in their water initiatives. PWSCs’ core objectives should be increasing the knowledge and understanding of watersheds and water cycles in improving their water supply, and working with the local communities in developing common frameworks of preserving water sources. The PWSCs should embrace the public-private initiative in assisting other companies in the development or implementation or disclosing water sustainability practices and policies (Thauer, 2014). The PWSCs should commit their selves to series of policies that quantifiable targets that give reports on a yearly basis; the report should also be verified by any interested third party (Shah and Ramamoorthy, 2014). The PWSCs should change CSR policies in case of conflicts immediately. PWSCs implement various CSR initiatives tailored towards addressing the water problems surrounding the communities, incorporating partnerships or research with the local governments or international organizations and the local community projects (Sun, Stewart and Pollard, 2010). Conclusions and Recommendations The top management is responsible for the strengthening of the CSR programs with its endorsement and support. The supervisory function guarantees that CSR programs are “institutionalized via the persistent and consistent implementation of the initiatives that later translates into a regular habit. PWSCs’ conflicts in developing nations involve over-extraction and supply of groundwater and supplying water that has high levels of agricultural pesticide residues or harmful microorganism. References Griffin, A. (2008). New strategies for reputation management. London: Kogan Page. Idowu, S. and Louche, C. (2011). Theory and practice of corporate social responsibility. Heidelberg: Springer. Kotler, P. and Lee, N. (2011). Corporate Social Responsibility. New York, NY: John Wiley & Sons. Moon, J. (2014). Corporate social responsibility. Oxford: Oxford University Press. Mullerat, R. (2010). International corporate social responsibility. Austin: Wolters Kluwer Law & Business. Mullerat, R. and Brennan, D. (2011). Corporate social responsibility. Alphen aan den Rijn: Kluwer Law International. Murray, M. and Dainty, A. (2009). Corporate social responsibility in the construction industry. London: Taylor & Francis. Neef, D. (2004). The supply chain imperative. 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