Corporate Social Responsibility and Sustainable Business - Term Paper Example

?Ethical/Social Responsibility Introduction Companies across the globe are trying to meet the new requirements of business which involve the prerequisites of the present-day population, without forgoing the capacity of the next generations to fulfil their own requirements. Business firms are being called upon to take accountability for the manner of carrying out their business which can have effect on societies and the natural environment. According to D’Amato, Henderson and Florence (2009), companies are also being forced to enforce sustainability principles to their process of business operations, where sustainability stands for a firm’s activities, normally considered voluntary that explains the involvement of social and environmental concerns in business operations and in relations with stakeholders. What is meant by ethical responsibility? Carroll (2010) identifies that the ethical responsibilities are the expectations placed on the business firm by corporate stakeholders and society as a whole, the idea which supposes that the business organisation has not only economic and legal obligations but also certain responsibilities which extend beyond all other responsibilities. Business ethics are considered to be moral principles which guides the manner a business, where performing in an ethical way involves distinguishing between ‘right’ and ‘wrong’ and then taking the right path. For example with a perspective of ethical responsibility, it is desired that no company should use child labour. Moreover, the corporate social responsibility enforces the company with wider responsibilities regarding minimising the harm to the environment and causing no damage to the communities in which it operates. ‘Anglo American’ is a UK public limited company that operates on a global scale and is one of the world’s leading mining companies. Anglo American is a major employer in Europe and in Africa, where 76% of its employees and its construction products business employs around 7,000 people in the UK (The Times 100). Moreover, as a primary producer, Anglo American plays a major role in the world economy as mining operations have greater impacts on the environment and on the societies where they work calling for a higher social responsibility. Today a company needs to focus on both developing its bottom line as well as becoming a good business citizen. It is not an easy task for a business organisation to simultaneously remain committed to its financial obligations along with the global trends and to meet its social responsibilities. And this obligation to provide both private and public benefits has forced the organisations to restructure their functional frameworks, rule, and business representation. Also, to cope up with the rapidly increasing global challenges and to specifically understand and improve the current efforts, socially responsible firms must keep on changing their short-term and long-term policies in accordance with the societal requirements. All the leading business organisations have formulated their own code of business principles setting their core values and standard for their operation. In Anglo American’s case, this is called ‘Good Citizenship’. In the same way, companies should adopt and implement voluntary codes of practice that controls their industrial sector, like Anglo American playing an active part in the initiatives such as the Extractive Industries Transparency Initiative, the United Nations Global Compact, and the Global Reporting Initiatives (The Times 100). In recent years, there has been an extensive and compound shift in the way how organisations recognisa themselves with regard to the range of local and global stake holders. As their success, their capacity to react to competitive situations and their Corporate Social Responsibility (CSR) are highly influenced by the quality of relationship they maintain with their lower level management and other important stakeholders like, customers, shareholders, investors, and communities. Major changes in the global and local markets force the global companies to operate their business in terms of sustainable development. An effective management of the business is required to achieve this aim. A significant measure adopted by Anglo American is that of stakeholder engagement, which enables the company to clearly recognise the perspectives and priorities of various external groups that are impacted by its activities and to consider them into the process of decision making. Besides, Anglo American has adopted a Socio-Economic Assessment Toolbox or SEAT process, which supports the managers to analyse and predict the impact of activities on the company and communities (The Times 100). This toolbox is used to expand the mining contribution to overall social development through its supply chain by generating new business opportunists, or improving other resource infrastructures. Socio-economic influence on people Business has the power to change people’s lives and to alleviate poverty through formulating economic development, producing services and goods that the consumers need, and by creating job opportunities. However, a business organisation should be attuned with the considerations of the societies it serves and the avoidance of which would alienate its stakeholders and employees. Here, Anglo American has to consult with different levels of interest while implementing a new undertaking, just like including the people, land, and services of the area into the business. The current South African government has a policy of transferring a share of the ownership, management, and benefits of the country's mining industry to people who were not included in to the mining industry prior to the policy. Anglo American supports the South African government in the process of transferring the ownership and thus considers supporting black economic empowerment deals through which the company has already sold (usually at a small discount) 26% of its assets in South Africa to BEE groups (The Times 100). Governments in this globalised economy are struggling with many challenging socio-economic problems for which they need companies to find out solutions. Anglo American has the faith that it can support governments in reducing poverty and inequality of wealth. It also heeds its genuine attention to environmental considerations with intent to improve people’s health and welfare. All of the large scale business activities are faced with the financial costs of equipment, labour, and non-financial costs of environmental and social impacts. However, acting ethically creates a financial cost for the company as the company tries to reduce the environmental impacts. Considering Anglo American, it is much more costly for the company to reduce its environmental impacts than the process of extracting resources without considering its impacts. The ethical responsibility makes a firm to recognise the responsibility for controlling and reducing the non-financial costs too, just like the Pebble Project in Alaska, through which Anglo American administers the non-financial costs, supporting the Alaskan economy by providing new jobs and revenue at a time when the oil and gas revenues where drastically declining. Large business firms like Anglo American have formulated various policies to manage the suitable mix of natural environment, the societal needs and the corresponding business essentials. The primary concentration is given to the developmental scale related to how deeply and how efficiently the integration of social responsibility approaches is carried out with regard to policies and operations. Firms must realise that their operations have significant impacts, and at the same time considerable dependence on society at the various levels of economic, ecological and social aspects, creating a sense of responsibility together with the sustainable business and corporate social responsibility. A multinational organisation with a high profile in the primary extractive sector must recognise that it should be rigorous in observing local laws, even if they are not always enforced. A business organisation has a significant role in supporting good governance initiatives through its ethical responsibility and developing the opportunities available to the communities connected with the operations of the firm. Therefore, the ethical and moral codes of a business firm instil it to be involved in a range of initiatives to help the communities around the firm’s area of operation. Its socio-economic assessment toolbox such as one adopted by the Anglo American, supports the management to measure its impact and to engage with local communities to resolve issues, find solutions to the societal issues, and to underpin initiatives like small business development or partnerships with local farmers (The Times 100). The financial and non-financial benefits to a business organisation and to its stakeholders are depicted through its performance, and people consider it to be a trusted business partner who takes into account social and environmental issues. Evidently, this strategy would open up new windows for the firm to operate in many other countries across the globe. Conclusion Across the world, business firms are expected to develop their course of action to make profits and to contribute to the economic growth of their communities meeting the reasonable expectations of their stakeholders—their customers, employees, vendors, investors. A business firm does not become a member of its community just by commencing its business within the community. It remains accountable for meeting community values, customs, and standards. In an emerging market economy, just like Anglo American, all other business firms have many legacies of a command economy to overcome while the state develops legal frameworks and policies that are market-oriented, forcing all the business undertakings to participate in the evolution to an efficient market economy by civilising their business performance, by assisting to create social capital in its economy, and by closely functioning with leaders in business, government, and civil society to formulate and develop the essential market-oriented legal structure and reliable judicial policies. References D’Amato, A, Henderson, S & Florence, S 2009, ‘Corporate social responsibility and sustainable business: A guide to leadership tasks and functions’, Center for Creative Leadership, pp.1-94, Viewed 16 November 2011, The Times 100, n.d, ‘Anglo American: Business ethics and corporate social responsibility’, Viewed 16 November, 2011, Caroll, AB & Shabana, KM March 2010, ‘The business case for corporate social responsibility: A review of concepts, research and practice’, International Journal of Management Reviews, vol.12, no.1, pp. 85-110. Read More