Development in Cyprus - Essay Example

1 Definitions of Corporate Social Responsibility The concept of corporate social responsibility (CSR) has come to stay as one of the major operational areas of several corporate entities world over. It is true that most of the corporate giants have recognized their responsibility towards the society and are involving themselves to certain extent for its betterment. But CSR is a vast area and naturally demands a huge effort on the part of the corporate sector. The term 'CSR' first originated in the US in the 1950s though its concepts are very old. The Co-operative Bank, Ben & Jerry's and Body Shop have made their name on CSR-style ethical principles before the term was coined (Internet, The story so far). Because of its importance, many organizations have provided different meanings for the concept of CSR. The World Business Council for Sustainable Development has defined CSR in its publication 'Making Good Business Sense' as "the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large"(Internet, Other definitions). Hopkinssays that "CSR is concerned with treating the stakeholders of the firm ethically or in a responsible manner, and that stakeholders exist both within a firm and outside" (Hopkins, 2003, P 16). Davis and Blomstrom's classic definition describes CSR: "social responsibility is the managerial obligation to take action to protect and improve both the welfare of society as a whole and the 2 interest of organizations" (Andriof and Waddock, 2002, P 21). But it must be noted that the terms used in this definition such as obligation and welfare of society are very broad in meanings and invite a variety of interpretations. Carroll defines it in a much broader sense. He says: "The total corporate social responsibility of business entails simultaneous fulfillment of firm's economic, legal, ethical and philanthropic responsibilities" (Nieuwenhuis et al, 2003, P 58). Carroll's Pyramid of CSR identifies the different levels at which a company can engage with society. They are economic (indicating profitability), legal (obeying the law), ethical (doing what is right) and philanthropic ( being a good corporate citizen). The Institute of Business Ethics describes CSR as "the voluntary actions taken by a company to address ethical, social and environmental impacts of its business operations and the concerns of its principle stakeholders" (Internet, what is IBE's definition of CSR). However, a survey of CEOs around the world has revealed that they have yet to reach a consensus on the definition of CSR though they have formulated their own definitions and recognized the importance of the concept in general (Internet, Baue, and February 1, 2002). 1200 CEOs from 33 countries have participated in this survey and most of them agreed unanimously on its relevance. When viewed overall, the meaning of CSR is very wide and interpreted in different angles. Most of the corporate companies feel that the concept of corporate social responsibility has gained 3 prominence in the last decade or so (Internet, Overall conceptual understanding), though some of them have nurtured these social responsibility ideas since the 1970s. For a few companies, the CSR has been the part of the very history of the company. The origin of CSR Europe The concept of corporate social responsibility has become an organized one for the first time in the world in 1995 with the launching of the CSR Europe by the then president of the European Commission Jacques Delors in association with several leading multinational companies (Internet, CSR Europe). Established with a motto of achieving profitability, sustainable growth and human progress through implementation of corporate social responsibility practices, CSR Europe has been seeking the active participation of corporate companies for achieving healthy and harmonious societies in all European countries. It has been functioning as an effective tool to achieve this goal by involving more and more companies and NGOs in the concept implementation. Now, with over 60 leading corporate companies as its members, CSR Europe has become a brand name for CSR in Europe officiating as a multifaceted business network for the implementation of the CSR activities and programs in an effective manner. It has been relentlessly working for helping the companies integrate CRS with their businesses. As an effective network of firms operating in Europe, CSR Europe has also been conducting training courses for sharing knowledge. The 60-member organization includes some top-notch companies like BP, Shell, ENI, Nestle, 4 Unilever, Danone, BT, ABB, Citigroup, Nike, Levi and Suez. It is true that the CSR Europe is the best forum for implementing the concept of corporate social responsibility but unfortunately there are some murmurings about its functioning. According to the Corporate Euro Observer, "the group's activities are far from limited to the noble aim of encouraging and assisting companies to behave more socially and environmentally responsible. It is also a lobby group working full-steam to influence EU policies, for instance the decision-making on an EU framework on CSR. Rather than breaking with the reactionary line of lobby groups like UNICE, CSR Europe consistently fails to take a progressive position. In its response to the European Commission's first proposal for an EU CSR framework (the 2001 Green Paper), CSR Europe warned against 'force-fitting a prescriptive or mandatory framework,' and called on the EU to adopt a flexible approach in promoting CSR, based on proactive voluntary contributions"( Internet, CSR: Has the big business seen the light) Development of CSR in Europe Among the world continents, Europe has emerged as the first to recognize the importance of CSR. A commendable effort has been taking place in the European countries in this field for a long time and the momentum has picked up after 2000. The most relieving aspect of CSR in Europe is that the World Bank has also become a major partner in this field along with the European Commission. As per the British Retail Consortium Yearbook 2004 (BRC, 2004, p 5 121), the European Commission published a Green Paper in 2001 on CSR generating world wide debate on the topic. The Green Paper was responded with nearly 300 supporting proposals from several corporate companies. As a follow-up measure, the Commission invited the corporate companies in July 2002 for joining hands with it on partnership basis for developing a European strategy in this much needed field. Not surprisingly, the European Commission describes the CSR "as a business contribution to sustainable development, i.e. a management approach enhancing competitiveness, social cohesion and environmental protection." It clearly underlines that corporate giants must also work in contributing their part towards harmony and development in the society while pursuing a business policy of healthy competitiveness for self growth. Besides, they must work towards protecting the environment in the country where they are operating. It is very much heartening to note that a multilevel activity on CSR has been going on in Europe and several countries have been taking the lead in this connection. Finland's contribution towards the growth of CSR concept is worth considering and must be appreciated in several ways. The activity began in Finland with the launching of Finnish Ethical Forum in June 2001.Government officials, labor organizations, Church and corporate companies joined hands together to launch this forum to discuss the questions of business ethics and corporate social responsibility. Aiming to promote interaction among corporate companies, NGOs, public representatives and Government to formulate CSR policies, the forum acted as a catalyst in the promotion of CSR (Internet, Promoting CSR).The concept of CSR advanced further with Finnish 6 Business and Society, launched in spring 2000 on the initiative of 7 companies and the National Research and Development Centre for Welfare and Health, transforming itself into an association in November 2002 with the participation of 42 companies. It became a launch pad for several corporate companies of different businesses to operate as a network for promoting CSR The association released a CSR toolkit in Finland and gradually became a national partner organization of CSR Europe, the European Business Network for corporate social responsibility. These steps were followed up by the Finnish National Contact Point (NCP) which conducted a special seminar in April 2003 on formulating an EU wide strategy with the cooperation of corporate companies and NGOs for promoting corporate social responsibility in all European countries. Representatives of European Commission, UK and Finnish Governments, NGOs, business and labor organizations presented papers at the seminar and expressed their commitment for fast and smooth promotion of CSR in Europe (Internet, promoting transparency). Strategies were also worked out at this seminar for formulating a special governmental CSR program. The contribution of World Bank The contribution of World Bank in creating awareness about CSR is truly amazing. The Development Communication Division for Sustainable Development in Operations of World Bank (DevComm -SDO) is actively involved in helping promote a dialogue on CSR among Governments, corporate companies, NGOs and civil societies in member countries. This unit of World Bank has also been providing advice on setting up and implementing CSR programs 7 (Internet, DevComm CSR Program). This wing of World Bank has taken up an opinion survey in 2003 in European countries such as Bulgaria, Croatia, Poland and Romania on implementing CSR programs. Evolution of CSR in Cyprus Certainly, Cyprus has also been witnessing CSR activity on its soil but one has to agree that the momentum is very low and slow and a lot is yet to be done. A considerable beginning has been made by some Cyprus companies including banks and Bank of Cyprus is prominent among them. As one of the first members of the 'Greek Network for the Corporate Social Responsibility', a non profit organization attached to the CSR Europe, the Cyprus Bank Group has been consistently engaging itself in several CSR initiatives for many years. As part of its first major CSR programs, the bank had extended monetary help for establishing an Oncology centre at Nicosia in 1998. Besides granting scholarships to the needy students, the bank launched a unique educational scheme called 'Oikade' in 1999 to involve all Greek children around the world in education. To cap it all, it had also established Bank of Cyprus Cultural Foundation in 2000 to protect and preserve the Greek and Cypriot culture (Internet, Social contribution). Fortunately, Cyprus has also been attracting some multinational companies slowly to its soil for CRS implementation. Deloitte Touche Tohmatsu group firms observed community impact day in more than 20 countries including Cyprus in June 2005 and conducted a variety of activities like blood donation for the needy, cleaning up of surroundings, distribution of the books to the 8 needy students and other community programs. As part of this world wide CSR activity, Deloitte Cyprus conducted blood donation camps for the first time in Cyprus in the cities of Nicosia, Limassol, and Larnaca and donated 76 liters of blood to the needy. Deloitte executives described the experience as gratifying and fulfilling (Internet, Europe, the Middle East and Africa (EMEA). In spite of all these activities, a lot is yet to be done in countries like Cyprus on building up strong bases for the implementation of CSR activities. Arguing about corporate social responsibility, Daniel Vaughan-Whiteheadbuilds up a strong case on part of the European Commission to ensure proper information and consultation mechanism in countries like Cyprus, Malta and Turkey in this regard ( Vaughan, 2003, P 314). What do CEOs think of corporate social responsibility There are different perceptions of CSR among the CEOs of corporate companies. A debate on CSR, featured in the October 2005 issue of Reason magazine, has paved the way for a rethinking on the concept of CSR (Internet, Rethinking the social responsibility of business). Economist Milton Friedman of the University of the Chicago, John Mackey, the founder and CEO of Whole Foods and .J. Rodgers, the founder and CEO of Cypress Semiconductor expressed different views and explained the concept in their own meanings. Friedman's opinion that social responsibility of business is only to increase profits has been contested by Mackey who described the former's view as very narrow while Rodgers argued that corporations have been adding far more to society by maximizing long term shareholder value than they do by donating money and time for charity. 9 Can CSR improve a company's reputation and brand value A high profile debate has been going on for a long time on the importance of the CSR in improving the profitability of a company or its brand name and reputation. Doubts were also expressed about the caring of the employees for the CSR. But most of the corporate companies have been taking up CSR activities with the profound involvement of their employees with a view to developing their businesses and improving their brand names as they have come to know that a social responsibility guided business would fetch them more profits, besides enhancing their reputation. Frankly speaking, CSR has become part and parcel of the organization for most of the leading companies. That top corporate giants have been establishing special CSR divisions outlines the importance of the concept in their operations. Toshiba Company, Japan's electrical machinery giant has started its own CSR Management division in July 2003(Internet, Toshiba group's CSR management). As part of its CSR commitment, the company had announced that it was working on plans to reduce emissions by 25 % towards the end of 2010. It is a thing of pride for CSR campaigners that this company has been training its employees and other individuals to fully understand the environmental impact of products from the stage of purchasing materials to final stages of recycling them ( Internet, Reduction in carbon dioxide emissions). It is a welcome development that banking companies also have specially formed CSR Committees for the concept implementation. The multinational bank HSBC has become a trend 10 setter in this regard. It is perhaps the first international bank to form such a committee for overseeing its CSR implementation. Most fortunately, HSBC strongly believes in the theory 'good CSR is good business' (Internet, Business case for CSR). Its management boldly declares that there are strong business reasons to invest in CSR projects and that social investment is linked to profits. HSBC's idea of CSR is divided into two concepts: the social dimension and the environmental dimension. The social dimension consists of (1) caring of stakeholders that would help improve relations with customers and investors, (2) involving employees in community welfare programs that would help them mingle with public representatives and gain knowledge, understanding, confidence and self esteem and (3) investing in educational activities that would build up the confidence and abilities of young people of the nation, the future customers and employees of the bank. By giving a wider meaning to its concept of CSR and practically involving employees in its CSR activities, it has proved to the corporate world that the employees really care about the CSR activities. Most of the companies that talk about CSR should take lessons from the HSBC. The environmental dimension consists of (1) implementing programs along with Government and citizens for minimizing the pollution levels on land and water, (2) encouraging customers to seek loans for investing in eco friendly projects to avoid pollution and (3) helping preserve the natural resources of the planet to avoid possible human conflicts. 11 The bank management is of the view that businesses resulting in environmental damage and pollution will ultimately lose the support of stake holders and customers as well. At a stretch, the CSR philosophy of the bank proves and provides logic to believe that the CSR implementation results in more profits, more reputation and more harmonious relationship with customers. The HSBC has practically proved that CSR really helps in the improvement of its name and reputation, besides increasing the profits. HSBC Corporate Social Responsibility report 2004 stands a tall witness for this (Internet, download 2004 CSR Report). This report was the fifth consecutive separate annual report on CSR by the bank. The report boldly declares that the bank has immensely benefited from the advice of its company's CSR Committee which met 4 times in 2004. In fact, the results are amazing. Its profit before tax rose to US$ 19.4 billion towards the end of 2004 from the previous year's US$14.4 billion. As part of its CSR implementation, the bank also gave a commitment that it would become carbon neutral by 2006. Its number of employees rose to 253000 from 232000 while its charitable donations rose to US$ 69.2 million from US$ 47.4 million in the same period. Really, there is a need for others to emulate HSBC in CSR. Mitsubishi Corporation (MC) of Japan is another example that confirms the belief that participation in CSR will help gain more profits and that socially responsible investment is really profitable. As part of its global commitment to CSR, MC launched the Mitsubishi Corporation 12 Fund for Europe and Africa (MCFEA) as a UK registered charity organization as far back as 1992 ( Internet, Community investment). Since then it has been consistently supporting the Earth watch Institute in sending volunteers to assist scientists on environmental projects. This and some other companies have proved by their ever increasing involvement in CSR that the customers would generally choose to encourage companies caring for the society by buying more and more products of such companies. This is further confirmed by the increasing willingness of the companies to create separate segments in their management to handle CSR activities. This is not without a basis and there are several survey reports that confirm the link between CSR and financial performance of companies. According to the London Business School, out of 80 case studies on CSR, 42 companies confirmed the positive impact of CSR on financial performance (Internet, Is there really a link between CSR and a company's financial performance). Another survey points out that 70% of the European consumers go by the company's commitment to the social responsibility while buying its products or services (Internet, Will consumers really pay more for products produced by a socially responsible company). Learning about CSR: What the companies actually do in fulfilling CSR The fulfillment of CSR involves implementation of several projects for the welfare of the society as a whole. For most of the companies, environmental protection tops the list of CSR programs followed by educational services and community help. As part of its CSR activities, HSBC has 13 been equally concentrating on environmental protection, educational services and community services. In the environmental field, this bank has taken up the task of preserving the environmental treasure of Malaysia, the Tasek Bera wetlands (Internet, Environment). Vigorously supported by the HSBC in Malaysia for the last 5 years, the wetlands campaign has highlighted the importance of the large fresh water lake. Distribution of posters, bookmarks and postcards highlighting the importance of the lake throughout the nation has stirred up the students into action. Students have begun undertaking trips to the lake to study its environmental significance. It has created awareness among students about the imminent need to protect and preserve the country's environs. In the educational field, HSBC has been providing scholarships to the needy around world. In Australia, its HSBCKIDS program has joined hands with Children's Charity Barnardo's for arranging voluntary tutors and mentors to underprivileged students. It will help reduce the students' dropout rate from mainstream education (Internet, Education). In the community service, HSBC has joined hands with UK's major charity organization Water Aid which is involved in providing safe drinking water, sanitation and hygiene education to the poorest people in Africa and Asia. Not surprisingly, HSBC has involved its employees in community projects in Malawi, Ghana, and Mozambique to provide eco-sanitation units and safe drinking water to the most underprivileged in these countries. While the management of HSBC contributed 50,000, 30 staff members raised an impressive 50,000 making a total of 100.000 towards this project (Internet, Community). 14 In case of Toshiba too, environmental aspects have been receiving top attention in its CSR programs. Prominently adopting the slogan 'committed to people, committed to the future', Toshiba has been promoting environmental management covering all products and all business processes in every phase from manufacturing and usage through to end of life projects. Its environmental management consists of four pillars: 1) improvement of the environmental management system, 2) creation of environmentally conscious products, 3) business activities designed to reduce environmental impacts and risks, and 4) vigorous environmental communication (Internet, Environmental management). Companies that are yet to make a beginning in the CSR implementation can find a lot to learn from the CSR activities of Toshiba and HSBC. CSR education and training The concept of CSR is bound to become more popular around the world, sooner than later. Going by the present activity undertaken by several companies, CSR is likely to become a managerial part of the organizational structure of several companies on par with other departments such as finance, purchases, accounts and sales. Already, companies like HSBC and Toshiba have shown the way in this regard for several companies. Now, some corporate companies have gone to the extent of conducting training classes in the implementation of CSR. Mitsubishi Corporation (MC) of Japan, which is actively undertaking CSR initiatives such as protecting biodiversity and environmental protection world wide, has been conducting training classes in CSR education for its employees (Internet, CSR Education). In January 2005, the management of MC has revised its CSR guidelines and corporate standards of conduct for 15 increasing the levels of CSR awareness among employees. Now, MC has begun conducting lectures on CSR initiatives to old and new employees as well. In these lectures, specific examples of CSR activities, case studies of situations encountered overseas and the utilities of CSR implementation are taught. Most important part of these training classes is that the MC made it a must for employees of all sections to participate without exemptions. Discussions and meetings CSR was the main topic in one of the programs of CNBC Europe in which the discussion was focused on three main issues relating to CSR: responsibility to the environment, responsibility to employees and responsibility to investors. Article 13 was also involved in this discussion in which Anthony Burgmans (Chairman Unilever), Peter Bakker (CEO TNT), Barbara Kux (Group Management Committee, Philips), Nick Robins (Head of SRI Funds, Henderson) and Dr Adrian Payne (Head of CSR, BAT) participated as the panel members. The panelists also discussed issues of CSR practice within their own businesses (Internet, Questions for the future series- CSR). Article 13, along with CBI, continues to profile companies involved in CSR. Forthcoming events on CSR A 2-day conference on 'how to manage corporate responsibility in Asia' will be held from February 22, 2006 at Hong Kong to discuss implementation of CSR activities in the Asian countries. A number of issues such as NGO/ Governments partnerships, protecting labor values and improving businesses will be discussed at this meeting. This will be followed by a 2-day conference on business and NGO partnerships at London from March 28, 2006 and another such 2-day conference at New York city from May 9 , 2006 ( Internet, Conferences) 16 Bibliography: The story so far, "Ten minute tutorial - corporate social responsibility", http://www.article13.com/A13_OurPress.aspstrAction=GetPublication&PNID=397, html (accessed 13/12/2005). Other definitions, "Corporate Social Responsibility- what does it mean", http://www.mallenbaker.net/csr/CSRfiles/definition.html (accessed 13/12/2005). Hopkins, Michael (2003). The Planetary Bargain: Corporate Social Responsibility Matters, James & James/ Earthscan, UK and USA. Andriof, Jorg and Waddock, Sandra (2002) "Unfolding Stakeholder Engagement" in Husted, Brian (ed) Unfolding Stakeholder Thinking No.1 Theory, Responsibility and Engagement, Greenfield Publishing, UK,PP 19-42 Nieuwenhuis, Paul, P. Wells and P. Niewenhuis (2003) The Automotive Industry and the Environment, woodhouse publishing, Cambridge, UK. What is IBE's definition of CSR, "Frequently asked questions", http://www.ibe.org.uk/faq.htm(accessed 13/12/2005). Baue, William (2002) "CEOs Worldwide Prioritize Corporate Social Responsibility", http://www.socialfunds.com/news/article.cgi/article769.html (accessed 13/12/2005). Overall conceptual understanding, "How do companies define CSR for themselves, both conceptually and operationally", http://www.csreurope.org/whatwedo/EuropeanAcademy/Asurveyoncompanies/HowdocompaniesdefineCSR/ (accessed 13/12/2005). 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