BUSINESS REPORTING: CSR - Essay Example

?BUSINESS REPORTING: CSR Introduction Definition and Potential benefits of CSR: This report will be all about the bane and boon of CSR within corporate business structure. The concept will be discussed with reference to British Petroleum plc and Mark and Spencer plc. Corporate Social Responsibility (CSR) refers to those obligations which make a business responsible for safeguarding the public interests and also promote them. CSR is the duty that a business performs towards the society. Nature of CSR differs across industries and organizational policies. Selection of companies and Difference in CSR Approach: This paper deals with two organizations. Among them, one is BP plc. It is a leading Public limited British multinational company dealing with oil and gas. It ranks third in production of energy and also it is the fourth largest organization. Its business ranges from exploration, export, production, distribution, marketing and trading, refining, petrochemical products and generation of power. It is headquartered in London, UK. The other company is Marks & Spencer plc (M&S), which is also a Public limited company headquartered in London, UK. It is a retail chain which operates in more than 40 countries across the globe. In UK it is the largest retail organization, and specializes in selling on luxury clothing and food items. Potential Benefits of CSR Benefits of CSR: Firstly, CSR helps in building positive public image of an organization’s activities. An organization which actively participates in social welfare activities always finds itself better connected to masses. Secondly, it shields an organization from government regulations. Thirdly, CSR helps in optimizing organizational productivity as the investors, creditors, suppliers, employees are satisfied. Apart from them government, community, trade unions too, get their respective share of privileges. In general sense, they are the stakeholders in any business and are directly benefitted as because stakeholders are those who will be affected by any endeavor taken by an organization. This contributes to a company’s survival and growth. Lastly, it improves competitive atmosphere and also increases consumer awareness (Social Responsibilities of Business, n.d., pp. 39-41). Balancing business and stakeholders with examples: In 2012, BP’s expenditure for CSR was near about a billion. In Egypt it has invested in numerous education- related activities. Different scholarship programs are given, so that students can study at University of Cairo or Cambridge. By collaborating with Fulbright Commission, Future Generation Foundation and Technical Skill Employment Program, it also contributes in generating skilled workforce. Its social activities include programs for water- quality improvement and health. M&S, as CSR measure has taken care of public heath by launching products which provide balanced nutritious diets. They also provide for animal welfare in Oakham. For ‘Cafe Revive’ retail chain, they ensured that the farmers get fair price for their coffee. They have also taken initiatives to reduce use of those chemicals which are dangerous for our environment and nature. As it benefits both the businesses and their stakeholders, social reporting must be practiced (Your M&S, 2010). Importance of CSR: Relative to other Corporate Objectives Definition of corporate objectives: CSR is carried out with several corporate objectives first of all it promotes growth and profit. By practicing CSR they would remain loyal to their investors, suppliers and employees, which in turn will serve their financial objectives and HR objectives. Thus, when certain facilities like, keeping to commitments, better working conditions, educational facilities are given, it indirectly contributes to company’s production, thereby serving any organization’s operating objectives. Moreover, when organizations sustain natural resources and also maintain rights of customers, it creates both awareness and demand in the market. Thus, CSR also contributes in marketing objectives. Tallying CSR with corporate objectives: Both these companies maintain high ethical standards, which give them an edge over their competitors. Society, as a stakeholder is benefitted. Getting refined water for people, educating some students, welfare for animals, limited use of harmful chemicals, ensuring fair price, etc definitely contributes in building up a positive and ‘valued’ image in the market. This saves the effort of marketing the products and services. Due to their goodwill, BP and M&S are able to take credits from market which can meet their financial needs. Good relations with their stakeholders have not only helped them manage their HR procedures but on the whole has also smoothened their operational objectives, thereby increasing their efficiency and productivity. Their approach to CSR is different from others that they formulate their plans of CSR by eyeing corporate profits only. It is their way of getting a step ahead in the market (Social Responsibilities of Business, n.d., pp. 39-43). Influence determining which Responsibilities are Accepted by a Business Main influences on adoption of CSR: CSR has a wide range of influences over the business as well as its stakeholders. Firstly, it helps the business to run efficiently and efficiently manage the resources and capital, thus ensuring regular and fair returns. Secondly, stakeholders like investors, creditors and suppliers would get regular and timely payments for their investments and will also get timely supply and best quality of goods and services. Moreover CSR also influences workforce mobilization by providing them job securities, better work- place atmosphere, facilities, regular payment of wages, training and other developmental facilities. Thus, by CSR, not only the business gets prosperous, but the stakeholders’ interests are protected too (Social Responsibilities of Business, n.d., pp. 39-43). Influences important for business of BP and M&S and differences: As a CSR measure, BP has taken initiatives towards sustainability. As its deals with mineral resources, therefore, its most important concern ought to be nature and environment. Society, as one of the stakeholder cannot be damaged by emission of poisonous gases or compromising the securities regarding oil and gas reserves. It launched CO2 “capture and storage project” in Algeria and totally replaced their production plants on the basis of UK GAAP/ SORP. Thus, in case of BP, CSR mostly influences its resource management (Making the Right Choices, 2004) M&S is the first organization to achieve a status of ‘carbon neutral’. As CSR measure, it has developed projects to recycle its wastes and is successful. Around 31% of M&S products in 2012 were manufactured at factories which are eco- friendly and do not cause pollutions and also make use of recycled products. The organization has also succeeded in generating wide-spread awareness among its customers regarding various environmental issues. Thus, CSR promotes M&S’s social objectives (Marks & Spencer (M&S) 2012 How We Do Business Report, 2012). The difference lies in the nature of things dealt with. While BP deals directly with extraction of mineral resources, M&S makes indirect use of agricultural harvest and animal products. Thus, CSR is essential for business organizations. Factors Determining the Extent to which a Business is Socially Responsible Definition of social reporting and importance: Factors that determine social responsibility of business are organizations’ commitment towards the society and the provisions they keep for supporting CSR. It also depends on how much the organization wishes to save society from the negative impacts of industrialization and generate profit from it. Social reporting for BP and M&S: In case of BP, the longer term of issues are considered. As it has to deal with natural resources like unconventional gases, deep water and giant fields, it feels responsible towards environment and society. In 2012 it has employed around 2300 people in Gulf of Mexico and also donated $20 billion as claims for damaging settlements and natural resources (Building a stronger BP 2012, p. 4). In M&S, 11 million garments were recycled in 2012. $17 million are raised as an aid for Breast Cancer. It is saving 28% of total energy consumption and is also one of the top brands which offer healthy food. These show that M&S feels their responsibility towards public health, social and environmental welfare. Therefore, through social reporting, organizations are able to redirect themselves towards CSR (Marks & Spencer (M&S) 2012 How We Do Business Report, 2012). Value and Limitations to Business and Stakeholders of Social Reporting Importance for social reporting for Business and Stakeholders: Social reporting refers to the system by which different organizations disclose their reports to general public. Publications are generally made on electronic mediums like web. The chief purpose behind disclosure is to acquire multiple stakeholders (Lungu, et. al. 2011, p.464). Social reporting is important since it is a recurring process which helps in describing overall performances of an organization and also measures it. Society is benefitted as it gains knowledge about the operations of any organization, and organizations too get benefitted as they can compare and contrast their present stands with their competitors or their own performances on a yearly basis (Richards and Wood, 2010, p 4). Limitations of social reporting for businesses and stakeholders: Often the data published lacks in accuracy and consistency. Also, as different CR managers are made to evaluate performance, judgments vary from region to region. Due to certain internal and external reasons, quality and quantity of data also varies. Thus, often organizations fail to represent their net worth in a market and stakeholders too, wrongly perceive them. These are the limitations of social reporting (Richards and Wood, 2010, p. 51). Social reporting for BP and M&S: BP’s Sustainability Review makes sure that BP is able to check the negative impact they have on environment, society and economy. The key performing indicators helps in strategic development and sustainability (Building a Stronger BP, 2012, pp. 3-5). M&S’s Business Report helps the organization to monitor its progress and also keep to the commitments that are undertaken as part of company’s policy. Social reporting helps M&S to reach to a wider customer base (Your M&S, 2012, pp. 3-10). Government Influence Governments influence CSR because it helps in meeting government’s policy objectives and are better options to make organizations follow the hard-core laws. Moreover, softer approach to social and environmental issues saves complication and also ensures positive sustainable development (Steurer, 2010). Governments should not influence CSR. It must be left to individual organizations, as they understand their responsibilities better. Though governments of respective countries have accused BP and M&S for not maintaining CSR, they have never interfered in company’s’ CSR policies. Conclusion Reference to title question, summery and opinion: Both these organizations have their own customized approach to CSR. Both these organizations have strategic plans for executing CSR duties, which are treated with equal importance and concern. BP is an active participant in imparting education, health and skill generation programs. M&S is more directed towards environmental and social issues. It aims at sustainable expansion and development. Social reporting has not only made these organizations more popular and socially acceptable but has also contributed to their profit margins. Thus, CSR and social are immensely beneficial and must be adopted by every organization. References 1. Building a stronger, safer BP (2012) Sustainability Review 2012, available at: http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/downloads/S/BP_Sustainability_Review_2012.pdf (accessed on April 27, 2013) 2. Lungu, C. I. et. al. (2011), Exploratory Study on Social and Environmental Reporting on European Companies in Crisis Period, Accounting and Management Information Systems, Vol. 10, No.4, pp.459–478. 3. Making the right choices (2004) Sustainability Report, available at: http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/downloads/S/Sustainability_Report_2004.pdf (accessed on April 27, 2013) 4. Press Release (2012) Marks & Spencer (M&S) 2012 How We Do Business Report, available at: http://www.ethicalcorp.com/csr-reports/marks-spencer-ms-2012-how-we-do-business-report (accessed on April 27, 2013) 5. Richards, B. and D. Wood (2010), The Value of Social Reporting Lessons learned from a series of case studies documenting the evolution of social reporting at seven companies, Institute for Responsible Investment, available at: http://hausercenter.org/iri/wp-content/uploads/2010/05/Value-of-Social-Reporting.pdf (accessed on April 27, 2013) 6. Steurer, R (2010) The Role of Governments in Corporate Social Responsibility: Characterizing Public Policies on CSR in Europe, available at http://www.wiso.boku.ac.at/fileadmin/_/H73/H732/_TEMP_/InFER_DP_10_2_The_Role_of_Governments_in_Coporate_Social_Responsibility_Characterising_Public_Policies_on_CSR_in__Europe.pdf (accessed on April 27, 2013) 7. Your M&S (2012) Corporate Social Responsibility Report, available at: http://corporate.marksandspencer.com/file.axd?pointerid=24f35ecfc08e4eb1992603107c4ec51a (accessed on April 27, 2013) 8. Social Responsibilities of Business, (n.d.) available at: http://old.nios.ac.in/Secbuscour/cc04.pdf (accessed on April 27, 2013) Read More