Why Corporate Social Response Matters - Essay Example

?Why Corporate Social Response Matters? Table of Contents 0United Nations Global Impact (UNGC) 3 1 Brief Background 3 2 Roles in Promoting CSR 3 1.3 Impact on Private Sector CSR 4 1.4 Cases of Successful Intervention in Private Sector CSR 5 2.0 Global Reporting Initiative (GRI) 5 2.1 Brief Background 5 2.2 Roles in Promoting CSR 6 2.3 Impact on Private Sector CSR 6 2.4 Cases of Successful Intervention in Private Sector CSR 7 3.0Markets and Media Perceptions of UNGC and GRI 7 4.0 UNGC and GRI Views on CSR Audits 8 4.1 Recommendation for Effective CSR Audits 8 4.2 How a CSR Audit Should be Carried Out 9 References 11 1.0 United Nations Global Impact (UNGC) 1.1 Brief Background One of the planned policy projects for the businesses that are interested in arranging their business processes as well as strategies in the context of commonly accepted ten basic principles in context of human rights, anti-corruption, environment and labor is generally referred to as United Nations Global Compact (UNGC) (United Nation Global Impact, 2011). When the businesses do align their strategies according to the principles, then they can ensure that technology, market and finance develop in such a manner that can be beneficial to the economies as well as societies all over the world (United Nation Global Impact, 2011). 1.2 Roles in Promoting CSR In the current times, there have been changes in the corporate world with the evolution of time. After the financial crisis that took place in the year 2008, the companies have started focusing upon the Corporate Social Responsibility (CSR) initiatives by means of promotions of transparency as well as responsibility. United Nations (UN) has instigated the UN Global Compact whose main objective is to promote CSR thereby directing upon human rights, anti-corruption, environmental causes as well as labor rights. The main function of UN Global Compact in the field of the CSR is to encourage the companies to apply the 10 principles which cover apprehensions over labor rights, human rights, environment as well as anti-corruption as part of their corporate management strategies. They are further endorsed to submit sustainability reports on a yearly basis on the base of what they achieve in their business operations. It has been observed that UN has made planning to involve 20,000 companies by the year 2020 so that the values of the Compact can be turned into universal values endorsed by the business world (Chul-Ki, 2011). 1.3 Impact on Private Sector CSR The private sector plays a major role in the progress of most of the countries by generation of the employment opportunities, generation of new technologies and thereby enabling equitable economic growth. The function of the private sector is not just obliging of its economic activities but also it has a significant role to play in context of social responsibilities towards its stakeholders, environment as well as communities in which the business tends to operate. There are many reasons behind the incorporation of UN Global Compact in private sector for participation in the voluntary corporate governance within a non-regulatory model. The three main reasons are the financial crisis within the United Nations, the alteration in the leadership and the ideological shifts. Structural alterations within the organizations are also defined as one of the significant reasons behind the invitation of Global Compact in the organisation (Arevalo & Fallon, 2008). UN Global Compact tends to encourage the private sector to embrace, endorse and take into account numerous core values in the context of human rights, labor standards as well as environmental practices (United Nations. Economic and Social Commission for Asia and the Pacific, United Nations. Economic and Social Commission for Asia and the Pacific. Development Research and Policy Analysis Division, 2004). 1.4 Cases of Successful Intervention in Private Sector CSR The United Nations Global Compact has successfully intervened in the private sector as has been observed in case of Ford Motors. It has been found that Ford Motors instigated formal acceptance of the human rights as one of the main components of its sustainability strategy in the year 2000. It was in the year 2008, when United Nations Global Compact and Ford Motors made collaboration together (Dold, n.d.). Reed Elsevier is the other private sector enterprise that endorses United Nations Global Compact. The ten principles of the UNGC which comprise human rights, labor as well as environment help the company to be positive and ethical in their actions and towards their stakeholders. From the time Reed Elsevier became a participant, it has found different ways to advance the numerous principles of the UN Global Compact in the company as well as beyond (Reed Elsevier, 2006). 2.0 Global Reporting Initiative (GRI) 2.1 Brief Background Global Reporting Initiative (GRI) is one of the non-profit organisations that generate the world’s most significant standards for the purpose of sustainability reporting. There are more than 3000 organization that make use of the GRI guidelines in order to produce sustainability reports. It has been identified that the company was established in the year 1997 in Boston, US (Global Reporting Initiative, n.d.). 2.2 Roles in Promoting CSR The sustainability reporting rules of the GRI suggest particular information which is related to the environment, the economy and the social acts. The course of actions is generally prearranged around Chief Executive Officer’s (CEO’s) statement, explanation of pertinent policies as well as management systems, stakeholders associations, product performance along with sustainability overview. It has been since the year 2002 that GRI has become one of the pioneers among the voluntary global performance reporting programs on account of CSR (Brown & et. al. 2007). 2.3 Impact on Private Sector CSR Private sector has emerged as one of the powerful economic forces in the modern times. It is often observed that these forces provide immense opportunities for market expansion, job opportunities, enhanced wealth and profitable investment to the people all around the globe. However, it is often criticized that these trends are eliminating the capability of the civil societies as well as the governments for ensuring the fact that the activities of the private sector serve the interests of the public during the process of wealth creation. In such circumstances, the current governance structures fail to keep in track of the changes in the global economy. This might cause several problems for humankind as well as for the biosphere. The business, government along with civil society and individual citizens are responsible for administering the impacts on humanity as well as biosphere. GRI has a role to play in such circumstances. It tends to offer a framework for reporting that stimulates comparison among the reporting organizations. It further tends to realize the need to collect and to present information across numerous reporting in the private sector (Adams, 2001). 2.4 Cases of Successful Intervention in Private Sector CSR It has been observed that McDonald’s has been making use of the Global Reporting Initiative framework in order to demonstrate its corporate social responsibility efforts (McDonald’s, 2012). The other UK giant namely Lloyds Banking Group, which is a financial institution providing the customers with financial services was found to publish its first corporate social responsibility report according to GRI Framework. The report tries to demonstrate how the bank responds to the material problems as well as the challenges that the business faces (Center for Sustainability and Excellence, 2011). 3.0 Markets and Media Perceptions of UNGC and GRI The local network has a significant role to play in the context of UNGC. It is the local networks that are easing the way for exchanges, sending encouragements, rewards as well as recognitions to the appropriate locales at the right moments and involving a wide variety of stakeholders in collective actions. The Global Compact Network Namibia assisted to map out the corporate social responsibility by keeping a three-series workshop in order to identify how the CSR strategies are being executed at the national, the company as well as at the project levels (United Nations Global Compact, 2011). UNGC views that while taking into account the stakeholders’ approach, it is quite significant to maintain good communication with the media (UNGC, 2011). The stakeholders of the GRI have a significant role to play in the organisation. They tend to be the supporters of the organisation. The markets and media get an opportunity to make use of the organizational stakeholder logo for use on their websites. They also get the opportunity to promote their events in GRI’s calendar. There are other related benefits that the markets as well as the media obtain in being collaborated with the GRI (Global Reporting Initiative, 2011). CSR activities are considered as one of the most crucial aspects for all the organizations in the modern times. Therefore, marketers and media conceive the principles and the guidelines of the UNGC and GRI to be quite significant in their day-to-day operations. 4.0 UNGC and GRI Views on CSR Audits 4.1 Recommendation for Effective CSR Audits According to the GRI and the UNGC, for an effective CSR the auditors need to check conformity by ensuring that the companies’ activities are undertaken according to defined business needs and also to ensure that the companies undertake the standards. The auditors also need to ensure that the companies employ the best practices. The auditors also need to comprehend and to evaluate the impact of process ‘enablers’ such as use of assets, people competence along with management of risk on process implications. Furthermore, the auditors must comprehend how these enablers tend to work in collaboration for the purpose of impacting the results and to evaluate how well this is happening. It is also significant for the auditor of the CSR to keep a close record of the processes across the locations, the sites, the departments as well as the sections in order to identify how the process actually works. A successful auditor is one who would stay objective and would not be impacted by politics of the organisation. CSR auditing programme is considered as effective if the auditor is capable of gathering sufficient proof in order to convince the management that there are few things that can be improved. This will assist the management of an organization to make their commitments towards the CSR activities stronger. The auditors need to present all the collected matters in a way so that the management is capable of acting upon it in a meaningful approach (Rosam & Peddle, 2004). 4.2 How a CSR Audit Should be Carried Out According to two organizations i.e. UNGC and GRI, an effective CSR activity is one where the internal audit has a significant role to play. It can be stated that in effective CSR activities the internal audit is capable of attaining the objectives in a responsible way. The adverse impacts of the activities of the organizations can be minimized to a greater extent and the positive influences can be maximized. It is vital for the auditors to comply with the rules, the regulation as well as the legislations along with values that are reliable with responsible practices. The audit should look to evaluate how well the companies have involved the stakeholders in the process of formulating the plans of the organisation. The auditors also need to assess how well the stakes of each of the stakeholder’s in the organization has been determined. An effective CSR audit is one that begins from the notion that all the internal audits have been done following proven and structured process. It is also significant to ensure that specialists have a significant role to play in the reassurance of CSR. The companies may also consider the help of specialist agencies as one of the significant parts of the audit planning. An effective audit must evaluate the contribution of the objectives of the business. It needs to check how well the objectives align with the company’s mission and values. It also needs to assess consistency with the accepted codes of conduct as well as policies. CSR audit can be termed as effective if it is capable of identifying the effects of the CSR programme on the stakeholders. The auditors need to assess the costs as well as the benefits of the CSR activities and also need to evaluate if the management has taken steps to manage the CSR risks (Hollands, n.d.). References Arevalo, J. A. & Fallon, F. T., 2008. “Assessing Corporate Responsibility As A Contribution To Global Governance: The Case Of The United Global Compact”, Emerald Group Publishing. Vol: 8, Iss: 4, pp: 456-470. Adams, R., 2001. Sustainability Reporting and the Global Reporting Initiative. Acca Homepage. [Online] Available at: http://www.acca.co.uk/students/student_accountant/archive/2001/18/57324 [Accessed January 05, 2012]. Brown, H. S. & et. al., 2007. The Rise Of The Global Reporting Initiative As A Case Of Institutional Entrepreneurship. Harvard University. [Online] Available at: http://www.hks.harvard.edu/m-rcbg/CSRI/publications/workingpaper_36_brown.pdf [Accessed January 05, 2012]. Chul-Ki, J., 2011. Promoting Corporate Social Responsibility. The Korea Times. [Online] Available at: http://www.unglobalcompact.org/docs/news_events/in_the_media/Korea_Times_13.4.11.pdf [Accessed January 05, 2011]. Center for Sustainability and Excellence, 2011. Lloyds Banking Group Publishes Its 1st GRI Sustainability Report. About Us. [Online] Available at: http://www.cse-net.org/Contents.aspx?CatId=564 [Accessed January 05, 2012]. Dold, M., No Date. The Ford Approach Towards Human Rights and Business Integration. Issues Doc. [Online] Available at: http://www.unglobalcompact.org/docs/issues_doc/human_rights/Business_Practices/Ford_011209.pdf [Accessed January 05, 2012]. Global Reporting Initiative, No Date. What is GRI? An Overview of GRI. [Online] Available at: https://www.globalreporting.org/information/about-gri/what-is-GRI/Pages/default.aspx [Accessed January 05, 2012]. Global Reporting Initiative, 2011. Organisational Stakeholder Program. Network. [Online] Available at: https://www.globalreporting.org/network/organizational-stakeholders/Pages/default.aspx [Accessed January 05, 2012]. Hollands, R., No Date. An audit framework for Corporate Social Responsibility. Head of Audit and Risk Review Nacro. [Online] Available at: http://www.google.co.in/url?sa=t&rct=j&q=an%20effective%20csr%20audit%20&source=web&cd=1&ved=0CDEQFjAA&url=http%3A%2F%2Fwww.cipfa.org.uk%2Fregions%2Fmid%2Fdownload%2FAn%2520audit%2520framework%2520for%2520CSR%2520(CATS).ppt&ei=6XIGT7bdOIfzrQfD3u3fDw&usg=AFQjCNHuZEvjTizJ0NxhcM384SfCUU4feA [Accessed January 05, 2012]. McDonald’s, 2012. Global Reporting Initiative. Our Company. [Online] Available at: http://www.aboutmcdonalds.com/mcd/sustainability/2011_sustainability_scorecard/gri_index.html [Accessed January 05, 2012]. Reed Elsevier, 2006. United Nations Global Compact Communication on Progress 2006. System. [Online] Available at: http://www.unglobalcompact.org/system/attachments/2512/original/COP.pdf?1262614336 [Accessed January 05, 2012]. Rosam, I. & Peddle, R., 2004. Implementing Effective Corporate Social Responsibility And Corporate Governance: A Guide. BSI British Standards Institution. United Nations. Economic and Social Commission for Asia and the Pacific, United Nations. Economic and Social Commission for Asia and the Pacific. Development Research and Policy Analysis Division, 2004. Asia-Pacific development journal. United Nation Publications. United Nations Global Impact, 2011. Overview. About Us. [Online] Available at: http://www.unglobalcompact.org/AboutTheGC/index.html [Accessed January 05, 2011]. United Nations Global Compact, 2011. Local Network Report 2011. Annual Report 2011. [Online] Available at: http://www.unglobalcompact.org/docs/networks_around_world_doc/Annual_Report_2011/Annual_Local_Network_Report_2011.pdf [Accessed January 05, 2012]. UNGC, 2011. 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