Corporate Responsibility - Essay Example

Corporate Responsibility Introduction Nexen (2009) has defined Corporate Social responsibility (CSR) as the “commitment to behave ethically and contribute to economic development while improving the quality of life of our workforce and their families as well as the local community at large” (Nexen, 2009). Kotler and Lee (2004) defined CSR as the “commitment to improve community well-being through discretionary business practices and contributions of the corporate resources” (Kotler &Lee, 2004, p.3). Crane et al (2009) has mentioned that CSR has appeared in the history along with the evolution of business activities itself (Crane et al 2009). In any case, CSR is a new term which was established in the corporate world only at the beginning of the twenty first century. Apart from making products useful to the society and keeping good relationships with the employees and the community, it is the responsibility of the big companies to give something in return to the community since they are exploiting the community resources very much. CSR has gained prominence in the current business circle since big companies realized that they cannot survive in a community for a longer period if they fail to do something for the community. This paper briefly explains the importance of CSR in the current market environment with the help of examples of companies which show excellent CSR and companies which show poor CSR. Importance of CSR in the current market environment Generally speaking, all the companies should focus on the quality of their management and the quantity of their impact on society in various areas (Baker, n.d). Numerous parameters can affect a company while it is operating in a community (See the figure given below). All the parameters mentioned in the figure are influencing company operations in one way or other. Since the company is operating in a community environment, it cannot stay away from the community issues (Baker, n. d) Hawkins (2006) has mentioned that the companies cannot stay away from their CSR since the society provides both customers and resources to fulfill the business objectives of them (Hawkins, 2006, p.2). Anything happening in the society can affect the organization positively or negatively and hence they cannot neglect the needs of the community. For example, the recent recession has destroyed the financial backbone of many people. It is the duty of the corporate world to come out for the rescue of the people since a financially poor community may not be good for the future growth prospects of the companies. Baker (n. d) has mentioned that different countries have different models of CSR. In his opinion, United States’ companies follows CSR in terms of a “philanphropic model in which the companies make profits, unhindered except by fulfilling their duty to pay taxes and donate a certain share of the profits to charitable causes’ whereas in Europe, CSR focused on “operating the core business in a socially responsible way, complemented by investment in communities for solid business case reasons” (Baker, n. d) Hopkins, (2008) has argued that “irrespective of private or public, all the organizations have an important role to play in achieving social justice. CSR provides a platform for corporations to be involved in economic development and wellbeing of disadvantaged people” (Hopkins, 2008, p.2). Private companies are more prominent in many countries compared to public companies. It is impossible for the government organizations alone to raise the living standards of the poor. Since both public and the private companies are operating on the resources of the general public, both of them have a responsibility to keep an eye on the living standards of the poor as well. “Even though, companies publish huge volumes of literatures with respect to their works for the wellbeing of the society, in practice many companies define their obligations in a much more limited” (Geoffrey, 2008, p.2). Normally, the published claims or expenditure and the actual money spent may not balance each other. Moreover, lots of declarations on CSR may lie on paper alone. In many cases, big companies spend something for the community and celebrate it with immense publicity. Such companies are trying to boost their brand value or image in the name of CSR. In other words, they are trying to reap profit even out of the money they spent for the community or charitable purposes. Demonstration of CSR of that kind is not acceptable to the public. Companies which show excellent CSR Vogel, (2006) has mentioned that Citibank and some other financial institutions, have formulated certain norms for evaluating the negative impacts of its lending decisions developing countries whereas PepsiCo and so many other companies including oil companies and consumer goods manufacturers have expressed their concern about the human right issues by withdrawing their investments from Burma, a country infamous for human right violation. Moreover, Chiquita has implemented stringent environmental practices for its suppliers of banana in Central America (Vogel, 2006, p.2). PepsiCo is helping the Indian farmers with modern agricultural equipments and high quality seeds for farming. In fact they are doing everything possible to make sure that neither of their activities causing any damages to the environment. They have sophisticated recycling plants wherever they operate in order to recycle the waste materials produced in their operations. Acer is another socially committed organization which has engaged in a conscious effort to make environment friendly products. “Acer focuses on developing an effective corporate governance mechanism of CSR and sustainability issues, improving efficiency among working groups, initiating stakeholder engagement, and building for better internal and external communications”(CSR within Acer, n. d). Apart from giving guidelines to the employees for preserving the environment, the company has given similar instructions to all their associates, franchisees and suppliers. Moreover, CFC cleaners have been completely eliminated from the Acer circuit board production. Companies which show poor CSR Coke has faced severe criticism from Indian market because of their alleged exploitation of ground water resources. Coke forced to close down their plant in Kerala located at Plachimada because of the people agitation against over-exploitation of water resources on their land (EMJ, 2010). Apple is another company which is infamous for poor CSR history. Coke should stay away from injudicious ground water exploitation. Many of the countries are facing severe drinking water shortage at present and hence Coke’s over exploitation of ground water may create drought and drinking water shortage. “Apple is an innovative brand with a cult following. Its edgy and sleek; its got buzz all the time; its expensive; it defines modern design; it has cool advertising. And yet, Apple is rotten when it comes to sustainability reporting” (Why is Apple Dodging CSR Reporting?, 2010). Apple has surpassed even Microsoft recently as far as the market capitalization is concerned. Moreover, it is believed to be one of the topmost reputable companies as far as the product quality and reliability are concerned. Yet, Apple is reluctant in publishing their meaningful data about their activities for the public evaluations. In fact it hides its secret activities even from its employees. Only the top executives have the information about the business strategies and the new products they are going to develop. In other words, the functioning of Apple Company is very much opaque not only to the public, but even to the employees as well. Apple should improve their credibility by giving more information about their activities to the employees and the public. The American company Union Carbide is another example for companies with poor CSR. The Bhopal gas tragedy, which accounted for the lives thousands of innocent people in 1984, was happened because of careless handling of toxic chemicals by the Union Carbide company. They have given no respect to the life of the villagers staying near the plant. Union Carbide Pesticide plant from where the gas leaked belonged to Union Carbide India, a subsidiary of the US-based Union Carbide Company. The US-based Union Carbide Company was asked by the Indian government to pay compensation and make arrange for medical treatment for the affected people in India. But the US Company and its CEO refused to take any responsibility for this accident. Moreover, the CEO of Union Carbide at that time, Warren Anderson escaped from India and argued that it is impossible for the Indian courts to take a case against him. The American Company refused to take responsibility of this tragedy and the American CEO escaped from any punishment which clearly indicate poor CSR from Union Carbide (Bhopal gas tragedy: Accused awarded only 2 yrs in jail, get bail, 2010). Conclusions Corporate Social responsibility should not be considered as a moral act; it should be declared as a legal requirement for the operation of organizations in a community. All the commercial business units or companies work for making profits. They are exploiting the community resources one way or other and hence it is their legal responsibility to help the community from where they are exploiting the resources. Organizations should realize that, it is impossible for them to stay in the market with the help of the customers alone; they need the support of the community in which it operates for sustaining their business. Financial abilities and smart governance will help the companies to achieve their short term goals whereas community support is necessary for the organizations to achieve their long term goals. Corporate social responsibility is not at all about helping the poor and needy people alone; a committed company may exhibit ethical business practices in all their operations. Such companies will never do anything harmful even to the environment. References 1. Baker, M. (n.d). Corporate Social Responsibility - What does it mean?, [Online], Available at: http://www.mallenbaker.net/csr/definition.php, [Accessed on 25 October 2010] 2. Bhopal gas tragedy: Accused awarded only 2 yrs in jail, get bail, (2010), [Online], Available at: http://news.rediff.com/slide-show/2010/jun/07/slide-show-1-bhopal-gas-tragedy-verdict.htm [Accessed on 25 October 2010] 3. CSR within Acer, (n. d). [Online], Available at: http://www.acer-group.com/public/Sustainability/sustainability_main02-1.htm [Accessed on 25 October 2010] 4. Crane A.Andrew Crane (Editor) 5. › Visit Amazons Andrew Crane Page 6. Find all the books, read about the author, and more. 7. See search results for this author 8. Are you an author? Learn about Author Central 8. , McWilliams A., Matten D., Moon J & Siegel D.S. (2008) The OxfordHandbook of Corporate Social Responsibility Publisher: Oxford University Press, USA (October 18, 2009) 9. EMJ,(2010). Coca-Cola and Water Use in India: "Good Till the Last Drop" [Online], Available at: http://scienceblogs.com/primatediaries/2010/03/coca-cola_in_india_good_till_t.php [Accessed on 25 October 2010] 10. Geoffrey H. (2008). When Principles Pay: Corporate Social Responsibility and the Bottom Line Publisher: Columbia University Press (May 1, 2008) 11. Hawkins D. E.(2006), Corporate Social Responsibility: Balancing Tomorrows Sustainability and Todays Profitability Publisher: Palgrave Macmillan (September 4, 2006) 12. Hopkins M. (2008). Corporate Social Responsibility and International Development: Is Business the Solution? Publisher: Earthscan Publications Ltd. (November 2008) 13. Kotler P Philip Kotler (Author) › Visit Amazons Philip Kotler Page 4. Find all the books, read about the author, and more. 5. See search results for this author 6. Are you an author? Learn about Author Central 7. & Lee N. (2004), Corporate Social Responsibility: Doing the Most Good for Your Company and Your Cause, Publisher: Wiley; 1 edition (December 13, 2004) 14. Nexen (2009). Glossary, [Online], Available at: http://www.nexeninc.com/Sustainability/glossary.asp [Accessed on 25 October 2010] 15. Vogel D. (2006). The Market for Virtue: The Potential And Limits of Corporate Social Responsibility Publisher: Brookings Institution Press (August 1, 2006) 16. Why is Apple Dodging CSR Reporting? (2010). [Online], Available at: http://www.justmeans.com/Why-is-Apple-Dodging-CSR-Reporting/9843.html [Accessed on 25 October 2010] Read More