Corporate Social Responsibility - Essay Example

Personal position on “corporate social responsibility” Ideally, corporate social responsibility (CSR) is when corporations take responsibility at large through their actions and attempt to make the world a better place. This is based on the so-called business ethics, which outlines what is right and wrong behavior in the business world. (Chapter 4 reference, p. 84) In the past, this concept has been considered to be in opposition with economic responsibility. But a widely accepted CSR model is now widely used – one that combines economic and social responsibility together. Here, business does not carry on its affairs in a compartment labeled “economic,” separate from the society it operates. The accepted norm today is to be socially responsible is to be ethically responsible and profitable. For example, Alan Knight, head of social responsibility for a British home-product retailer argued that identifying potentially hot-button social and environmental issues now rather than when they become big problems is a pragmatic business practice. (White B10) It is from this parameter wherein I would discuss my position on corporate social responsibility. Let me start with the shareholders. The traditional conception about shareholders is that they are the prime responsibility of companies. This is the reason why the management of a business organization would focus on profit maximization and short-term gains over long-term growth because their shareholders are preoccupied with rising share prices and good dividend. (Chapter 4 p. 85) This underscore the power investors have in directing the behavior of companies. So, should shareholders encourage responsibility or is it better to make judgment in investing? My position is that both are effective. On the one hand, investors could persuade the top management to undertake and implement CSR and this has been empirically proven to be effective. A case in point was the Christian Brothers Investment – an investment advisory firm for Catholic dioceses, hospitals and other organizations. In 2008, they put forth a shareholder resolution seeking an independent examination of the environmental and social impact of Newmont Mining Co.’s operations around the globe. The Denver-based gold-mining company did not fight the resolution and that, in fact, it endorsed it before the shareholder vote was taken. (CQ Researcher 100) On the other hand, an investor could encourage CSR by choosing companies who meet certain ethical requirements. Today there is the so-called socially responsible investment, which pertains to the kind based on negative selection wherein no investment is made on sectors and enterprises that develop activities which investors view as undesirable from the ethical perspective. In the United States, around 12 percent of all investments are now assessed against ethical criteria. A concrete example of positive impact of socially responsible investment is the Domini 400 Social Index – a list of 400 companies selected on grounds of social and environmental criteria. This index has risen faster than the Standard & Poor’s 500 Index in recent years. (Social-Economische Raad 38) However, the efficacies of the two previous approaches available to ethically-inclined investors are different. If one is a shareholder in a company without any sizable shares, then the first approach would be futile. The management would only be swayed when a number of investors come together or an investor who owns a significant percentage of the stocks demand a CSR policy. In this perspective, it appears that investing in companies with sound CSR policy and business ethics is the more effective approach for individual investors. An underlying issue in regard to corporate social responsibility is whether this policy immediately translates into business ethics. There are those who argue that it does not - if the motive is still to profit more than the satisfaction of an obligation to do good. This argument found an illustration in the Starbucks drive to encourage volunteerism in its employees. The objective is that this CSR policy would strengthen employee morale and ultimately Starbucks customer service. (Hymowitz B1) There is also the British Kingfisher’s initiative to save the declining forests. They are spending money to help in addressing this problem because in the long-run, it will affect the wood-supply, which they need to import for their furniture production. (White B10) Because of the ulterior motive variable, corporate social policies might not pass the ethical requirement for business. I do not think, however, that motive should become a fundamental argument against CSR. One must remember that business organizations must make a profit in order to survive, progress and afford a policy of corporate social responsibility. Otherwise, we are advocating some form of socialism. It made sense when George Stalk (2005), writing for the Wall Street Journal, said that this is not about ruthlessness first and philanthropy second. The fact is that “business leaders today face the kind of intensely competitive environment unknown to past generations. Globalization, technological change, fragmenting consumers and consumer interests and increased complexity all along the production and supply chain have made the business of doing business more difficult than ever.” (B2) In regard to safeguards against greed and the unscrupulous desire of companies for profit, it is important to point out that customers have consciences and that those business organizations that cut ethical corners such as exploiting natural resources or cheap labor overseas or cheat in their business operations will eventually pay the price. And so, with all these considered, I would like to use the utilitarian model of ethics in evaluating the soundness of corporate social responsibility theory. Here, an action is morally correct or right when among the people it affects, it produces the greatest amount of good for the greatest number. (Chapter 4, 89) Along this line, Stark reminded us that success in business generates the profits and growth that enable companies and economies to do good things and not good intentions and warm-and-fuzzy management. (B2) This model for me, outweighs those theories of corporate social responsibility such as the stakeholder approach or the corporate citizenship theory especially when we talk about motives. Only the biggest companies could afford policies of social responsibility that have purely altruistic reasons. And it will not be surprising to find that these companies corporate history are marred by strategies of profit, intense drive for competitive advantage and corporate ruthlessness that gave it the success that allow for philanthropic activities. Works Cited Pleas add the book reference here: Cq Researcher. Issues for Debate in Corporate Social Responsibility: Selections From CQ Researcher. SAGE, 2009. Hymowitz, Carol. “Asked to be Charitable, More CEOs Seek to Aid Business as well.” Wall Street Journal. [New York] 22 Feb. 2005: B1. Social-Economische Raad. Corporate social responsibility: a Dutch approach. Uitgeverij Van Gorcum, 2001. Stalk, George. “Warm and Fuzzy Doesn’t Cut It.” Wall Street Journal. [New York] 15 Feb. 2005: B2. White, Erin. PR Firms Advise Corporations On Social-Responsibility Issues. New York: Wall Street Journal. Nov. 13, 2002. B10 Read More