The Role of Corporate Social Responsibility in Sustainability Development - Essay Example

? The Role of Corporate Social Responsibility (CSR) in Sustainability Development Table of Contents Table of Contents 2 Introduction 3 Discussion 4 Advantages of Sustainable Development for Organizations 4 Advantages of Sustainable Development for the Society and Environment 5 Corporate Social Responsibility 5 Role of Corporate Social responsibility in Sustainable Development 7 Conclusion 10 References 12 Introduction The concept of sustainable development came into light after the first ever environmental movement took place in the 1950s. This movement was successful in identifying the negative impacts of human development on the society and environment (Department for Environment, Food and Rural Affairs, 2011). The importance of sustainable development further amplified in the year 1969, when National Environmental Policy Act also known as NEPA was passed by the US government. This act was intended to endorse general welfare, and create circumstances where mankind and nature can both survive. In addition, it was also aimed to ensure that the current social and economic needs are fulfilled keeping in mind about the future generation. A number of scholars have defined sustainable development, but the most common and accepted definition is that, sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs (International Institute for Sustainable Development, 2013). With the increasing awareness of sustainability and optimistic outlook of human being towards the preservation of society and environment, organizations around the world were also forced to commence sustainable development programs (Sepulveda and Edwards, 1997). Most of the companies around the world, now considers sustainable activities as one of the essential functions. On the other hand several scholars believe that sustainable development has become an obligation for the companies in order to satisfy customers and gain stakeholders’ confidence. Similarly, some of the large organizations of the world such as IBM, Lenovo, Microsoft, P & G and Etihad Airways among other focuses highly on integrating sustainability with development (Cakir and De Pablos, 2011). This study will highlight how companies around the world achieve sustainable development. In addition the study will also shed light on the benefits of sustainable development to both societies as well as to the organizations. However, the study will mainly focus on the role played by corporate social responsibility (CSR) in fostering sustainable development of a company. Finally, on the basis of the findings the study will draw a conclusion. Discussion Since the late 1980s, nations from different parts of the world have been discussing about the need of sustainable development. The issue became more apparent when scientists identified the degradation of the ecosystem due to organizational activities. The subject of global warming was also becoming a cause of concern (Polese and Stren, 2000). In addition, to reduce the damages caused by the human and organizational activities, sustainable development become necessary. Nevertheless, after a certain point of time, sustainable development became an obligation for the organizations. Sustainable development is not only necessary for preserving the society and environment, but it is beneficial for both organizations as well as for the society. The study will now discuss about the advantages of sustainable development for both organizations and society. Advantages of Sustainable Development for Organizations In response to the increasing environmental challenge, high inequalities in the communal development, organizations around the world have adopted sustainable development, as their growth model (United Nations Industrial Development Organization, n.d). However, this approach has not only helped companies to continue their operation in an eco friendly way, but has also provided them with large numbers of benefits. Some of the most common ones are presented below: - Satisfaction of Employees and Consumers: - The biggest advantage of initiating sustainability development program is that the employees of the company and also the customers get highly satisfied. It also helps to gain customer confidence and build loyalty. Gain Confidence of the Stakeholders: - Another benefit of sustainable development is that companies are able to gain confidence of the investors, banks, government and also the local community of its area of operation. Increase Sales: - In some cases, sustainable development also acts as a sales driver. Sustainable development indirectly helps companies to increase the total sales, as there are many customers who prefer buying goods and service from a company which is environment friendly. Cost Effective: - Several studies reveal that using resources which are eco friendly allow companies to be cost competent in the long run. Good Public Relation (PR): - The biggest benefit to the company comes in the form of good public relation (PR). Thus it adds value to the products and services. Advantages of Sustainable Development for the Society and Environment The sustainable development policy of an organization is also beneficial for the society and environment. In simple words, sustainable developmental approach of a company is also helpful for the society and environment in which the firm operates. Some of the advantages of having sustainable development are mentioned below: - Employment Opportunities: - It involves local community and provides people with job opportunities, financial incentives as well as education. Diversity and Functionality: - Along with providing economic benefits, it also helps in preserving the diversity and functionality of the system. Protection of Natural Resources: - Sustainable development helps to preserve the natural resources thereby ensuring the capabilities of the future generation remains intact. Efficient Use of Resources: - Sustainable development also ensures that reduced impact of human activities on the environment. For example, it ascertains efficient use of energy, waste reduction, water conservation and use of raw materials which are environmentally friendly. Eco Friendly Products and Services: - One of the major benefits to the society is that, it ensures the products and services offered by the firm to the customers are eco friendly as well as are of high quality. Corporate Social Responsibility In order to ensure sustainable development takes place, organizations take several steps. Nonetheless, the most common and effective one is carrying out socially responsible works. The term used to describe this activity is corporate social responsibility. Corporate social responsibility (CSR) is defined as the responsiveness of the business to the stakeholders in terms of social, legal, ethical as well as environmental protection. According to Chen (2011), corporate social responsibility, should hold an important position in an organization’s list of operation. The author also highlighted that CSR can even be equated with the environmental, social and economic performance of an organization. It involves the application of sustainability to the corporate world. Several scholars have stated that then key drivers of corporate social responsibility are social investments, trust and transparency portrayed by the organization, lightened self service and growing public expectation from the business. Figure 1 – Drivers of CSR (Source: Jha and Chavan, 2012) The area of CSR has been gaining much attention over the last few years. According to several researchers, companies develop CSR strategies for the purpose of improving their reputation in the market, complying with government regulations, gaining competitive advantage and for protecting the environment and society. All the aforementioned factors help companies to embrace growth in a sustainable way (Hall and Vredenburg, 2004; Kassinis and Vafeas, 2006). Hence, from the above discussion it is obvious that corporate social responsibility is a major driver of sustainable development. The report will now carry out in-depth investigation of the role played by CSR activities in the sustainable development of a company. Role of Corporate Social responsibility in Sustainable Development CSR has always been a pragmatic approach of the companies towards the civil society and consumer pressures (Jaffe, Peterson, Portney and Stavins, 1995). However the initiation of CSR activities of the firms has not only acted as a response to customer pressures but it also acted as an important element towards sustainable development. Companies around the world are focusing more on investigating their socially responsible activities, in order to ensure they preserve the environment as well as the society in which they are operating. Moreover, the companies have identified the strategic value of becoming more responsible towards the environment and society. This is the reason why a number of firms are trying to align their products and services with the CSR activities. Green packaging or controlled use of non-renewable resources is some of the examples of aligning CSR activities with the products and services of the company. As the earth witnessed serious natural and economic disasters, due to unprincipled and immoral business practices, firms have started to showcase their ethical standings since the early 90s. The fall of Enron and the Union Carbide’s Gas tragedy of Bhopal are some of the examples of poor corporate ethics. In addition, the falling of Satyam and integrity questions over Walmart are also some of the examples of the negative approaches of the company towards sustainability. On the contrary companies such as Johnson & Johnson has always portrayed positive outlook towards the preservation of society. This approach has allowed them to embrace sustainable development. Therefore from the above examples it is evident that there is a strong correlation between corporate social responsibility and sustainable development. The assessment reveals that corporate social responsibility and sustainable development are the two sides of the same coin. According to several scholars, CSR remains highly focused with three areas namely planet, profit and people. Moreover, CSR activities also impacts positively on the several areas of business such as risk management, reputation of a firm, and increases the competitiveness. In the similar context, European Commission believes CSR as one of the key elements towards stimulating growth and development of both society and organizations. The establishment also went on to highlight that a company can only grow in a sustainable way if it ensures the society in which it operates grows in a sustainable way (Bull, 2012). Nowadays, business houses have to continue their operation in a turbulent environment and have to deal with cut throat competitions. In this context, the Brundtland Commission Report stated that there are strong correlations between environmental degradation, economic development and population pressure. Hence, the environment and the economy must be viewed as a single system and in order to ensure both the factors remains efficient sustainable development is necessary. A joint study carried out by Accenture and UN Global Compact regarding sustainability and corporate social responsibility emphasized that large MNCs such as Johnson and Johnson have been able grow sustainably due to its ethical approach towards then society. The management of the company is highly focused on maintaining values and ethical standards. Moreover, the company also remains highly focused with the controlled use of natural resources, product innovation, human resource management and business ethics. This approach of the management has helped the company to remain a position in “Top 100 Best Places to Work for Mothers” and “World’s Most Respected Companies” (Akerstrom, 2009). In the similar context, the ethical standpoint of Kellogg’s and their CSR programs such as “K Values”, has allowed them to grow in a sustainable way (Porter and Norton, 2009). The study therefore clearly revealed that companies which remained socially responsible and maintained the ethical standards were able to embrace development in a sustainable way. Thus, it can be concluded that the correlation between an organization’s value system & sustainability and the CSR activities is positive (Jha and Chavan, 2012). According to a study carried out by Kumari (2011) on the role of corporate social responsibility in sustainable development, the role of corporate sector does not remain constrained with only providing employment opportunities and contributing towards the economic growth, but also responsible for providing benefits to the society without impairing the natural resources. This is the reason why corporate social responsibility has become one of the vital components of sustainable development. Some of the eminent scholars have suggested that companies should deign and implement their CSR strategies in a manner that ensures development of both society and organization (Scheneiderman, 2011; Bhatia, 2008). The human need has always been dynamic in nature and keeps on changing with time. In order to satisfy these needs organizations, sometimes carry out activities which degrade the environment and negatively impacts future generation capabilities. However, the author does not believes it as the right approach, rather she emphasizes that organizations should ensure their activities do not affects the survival of the successors. Nowadays, most of the companies around the world have adopted different CSR mechanisms. Moreover, the mission and vision statement of some companies are formulated in such a way that it reflects the company’s viewpoint towards the society and environment. At the same time, these companies have also implemented innovative technologies by which they can reduce the consumption of energy and resources. Rapid population growth, globalization, urbanization and increasing middle class are the driving factors towards lessening down of scarce resources such as water, energy and raw materials. Moreover with irreconcilable requirement of ecological stewardship have raised the question, whether is it possible to live today without borrowing from tomorrow. On the contrary, to embrace sustainable development, a company needs to ensure that it does not destroy future generation capabilities in order to meet the current demands. Scholars highlighted, this combination is only possible with various CSR approaches. The sustainability on a smarter planet approach of IBM is an example of how companies can embrace sustainable development with the help of CSR activities. The company has been working hard towards the preservation of society and carry out smarter development. In this context, IBM’s sustainability approach is related to waste collection with the help of analytics strategies. The primary intention of the company is to save energy, landfill space, oil as well as trees (IBM, 2010; Hutt and Speh, 2012; Hoskins, 2010). The smarter computing approach of the company has helped several companies of the world to remain sustainable. Figure 2 – Benefits of Smarter Planet Approach according to the Respondents (Source: For example, IBM has helped COSCO, a Chinese shipping company to reduce its number of distribution centres from 100 to 40. The outcome was COSCO succeeded to reduce logistics cost by 23% and CO2 emission by 15 %. In the similar manner, the Department for Environment, Food and Rural Affairs of UK was successful in reducing CO2 emission with the help of this approach. In addition, there are several example such as using recycling paper, waste disposable etc. are some of the examples which portray how a company can embrace sustainability with the help of CSR activities. Therefore, this can be regarded as a sustainable development approach with the help of CSR activities. Conclusion The study was about identifying the role played by corporate social responsibility in the sustainable development process of an organization. In order to satisfy the objective, the study has comprehensively researched the theories proposed by the scholars previously. In addition, real life examples regarding the area of concern were also considered. The study revealed that most of the firms around the world have adopted CSR activities in order to ensure both company as well as society gets benefitted by it. In addition, from the study it has been also identified that several CSR activities such as the smarter planet of IBM, Kellogg’s ‘k-value’ are playing a crucial role in the sustainable development process of the organizations. Therefore it can be concluded that corporate social responsibility is playing a major role in fostering sustainable development. References Akerstrom, A., 2009. Corporate Governance and Social Responsibility. Berlin: GRIN Verlag. Bhatia, S. C., 2008. Retail Management. New Delhi: Atlantic Publishers & Dist. Bull, 2012. Corporate Social Responsibility and Sustainable Development. 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Polese, M., and Stren, R. E., 2000. The Social Sustainability of Cities: Diversity and the Management of Change. Toranto: University of Toronto Press. Porter, G. A., and Norton, C. L., 2009. Financial Accounting: The Impact on Decision Makers. 6th ed. Connecticut: Cengage Learning. Scheneiderman, J. S., 2011. International Journal of Social Policy Research and Development. Munich: GRIN Verlag. Sepulveda, S. G., and Edwards, R., 1997. Sustainable Development: Social Organization, Institutional Arrangements and Rural Development: Selected Readings. Costa Rica: IICA Biblioteca Venezuela. United Nations Industrial Development Organization, No Date. Corporate social responsibility for market integration. [online] Available at: < http://www.unido.org/what-we-do/trade-capacity-building/corporate-social-responsibility-for-market-integration.html> [Accessed 06 March 2013]. Read More