Corporate Social Responsibility - Essay Example

EXECUTIVE SUMMARY Corporate Social Responsibility or CSR has become the buzzword among corporates wishing to project their socially responsible face towards the world. in recent years, as the model of profit driven enterprises has come under attack for the way in which the corporates have engaged in business practices that can be deemed as damaging to the environment. (Martin, 2007) In this context, it became imperative for the corporates to follow socially responsible practices both as a means to promote themselves as responsible stakeholders of society and as a conscientious gesture towards sustainability. This paper examines the question “The issue of Corporate Social Responsibility has moved up the agenda in recent years, but is challenged by competing demands for investment during a serious global recession. Should sustainable development should now be seen as a business opportunity and funded accordingly.” The emphasis is on evaluating the options available before the companies and hence focuses on the priorities accordingly. The paper deconstructs the question by breaking them down into headings that appear throughout the paper. These headings focus on the different aspects of CSR and the practice of the same during times of recession. The question as to whether CSR is worth the cost in tough times is examined in the context of the paradigm shifting times that we live in. I conclude the paper with the assertion that CSR must be continued as a practice for the companies to move beyond the current paradigm and into a people before profit business practices. WHY CSR CSR as a practice has attracted its share of critics and supporters alike. There were many who called the practice of CSR an “eye wash” and others who saw the practice of CSR as an evolution of the corporate from a “me only” paradigm to an inclusive “we”. (Baken, 2000) However, with the onset of the global economic crisis and the prospect of a serious global recession, companies all over the world are reevaluating their commitment to CSR. The current obsession with cutting costs and slashing unnecessary expenses may well lead to the budgets for the CSR initiatives being pruned. However, the fact remains that whether the times are good or bad, CSR should continue as it benefits the company and the society at large. THE PRACTICE OF CSR Companies contribute to CSR in many ways. For instance, “CSR, essentially, comes in three different forms. Companies can contribute to society with cash or products, giving away grants, goods, or their services to schools, homeless shelters, hospitals, and the like. Second, companies can focus their CSR on community involvement, by supporting employees who mentor students or volunteer for a myriad of causes. And third, companies can put CSR into their product and service strategies, focusing on green initiatives, for instance, or factoring environmental concerns into their manufacturing processes.” (Business Week, 2009) CSR IN RECESSIONARY TIMES When times are good, the companies contribute to CSR in all three ways. When the going gets tough the emphasis is on the bottom line rather than anything else. This view is articulated by the following quote from the Business Week article about CSR, “In this enlightened day and age, whether times are good or bad, companies must be socially responsible. Thats a given. But tough economic conditions underscore a blunt reality. A companys foremost responsibility is to do well. That may sound politically incorrect, but the reason is inexorable. Winning companies create jobs, pay taxes, and strengthen the economy. Winning companies, in other words, enable social responsibility, not the other way around. And so, right now—as always—companies should be putting profitability first. Its the necessity that makes every other necessity possible.” (Business Week, 2009). The point here that is being made is that companies can contribute to the society by investing in products and services that create more jobs and create more opportunities for society as a whole to profit from the company’s activities. Hence, this view holds that it is better for the companies to focus on making profits and contributing to the economy in this fashion. However, the fact that in a recession, companies need to focus more on the communities and society with a view to supports them through tough times. This view is captured in the following quote, “Indeed, one could argue the CSR is now more important than ever. I recently chatted about this with Princeton University ethicist Peter Singer who said to me: In the long term, you could suggest in a downturn its more important than ever for corporations to be responsible citizens and to help and support communities. And it would be crazy to think we dont need to deal with carbon emissions because of the economy." (SOX First, 2009). NEED FOR CSR The proponents of this view hold that more than ever, it becomes important during recessionary times to invest in CSR and strengthen the community based efforts and behave responsibly towards society at large. (Friedman, 2008) The supporters for this view are many who argue that it is imperative that companies stick to their CSR programs in times of recession as a means of supporting the initiatives to weather the coming crises as a result of climate change and the move away from fossil fuels. The evidence from the corporate world seems to support the view that companies are indeed spending on their CSR programs. The following quote from the CNN website makes this clear, “As recession-battered companies struggle to cut costs, money spent on microfinance projects in India or using more expensive environmentally-correct packaging might seem like obvious ways to save. But a surprising number of companies see corporate responsibility as all the more important given the financial crunch, even as they reduce spending elsewhere in their businesses. Indeed, proponents of CSR like General Electric, Intel, PricewaterhouseCoopers and Wal-Mart are sustaining or expanding their commitments, at least for now.” (CNN, 2009). ADVICE TO PINAULT My advice to Pinault would be to go ahead with his plans of going to India and promoting green business. This is the way forward and hence, he should everything possible to participate in the evolving paradigm that is unfolding before our eyes. It would be a good business strategy as well considering the fact that more and more consumers are green conscious and are comparing the ecological cost of what they buy and consume. CONCLUSION It is my personal opinion that companies scale up on their efforts at building support for community based programs. After reviewing the articles quoted above, it is clear that to survive the present crisis and participate in an evolving paradigm shift, it is imperative that companies do their bit to navigate the structural shift that is currently underway. CSR should be used as a tool to aid the companies in anticipating the large scale changes that are bound to happen sooner than later. In conclusion, CSR as a practice must evolve with the times and like all business models must be refined and adapted to the prevailing business climate. Hence, CSR is here to stay no matter what the business climate. Of course, some amount of prioritization in terms of the scale and size of the CSR initiatives is certainly called for and this may be a prudent move rather than scrapping the entire program altogether. Sources Baken, Joel 2000, The Corporation: the pathological pursuit of profit. New York: Allen Lane Delevingne, L 2009, ‘Surprising survivors: Corporate do-gooders’, CNN.com. Available From http://money.cnn.com/2009/01/19/magazines/fortune/do_gooder.fortune/index.htm [Accessed 06 December 2009] Friedman, Thomas 2008, Hot, Flat and Crowded: Why we need a green revolution- And how it can renew America. New York: Farrar, Strauss and Giroux. Leon 2009, ‘Corporate Social responsibility and recession’, SOX First. Available from: http://www.soxfirst.com/50226711/corporate_social_responsibility_and_recession.php [Accessed 06 December 2009] Martin, James 2007, The Meaning of the 21st century. New York: Penguin Welch, J 2009, ‘Corporate Social Responsibility in a recession’, Business Week. Available from http://www.businessweek.com/magazine/content/09_22/b4133000801325.htm [Accessed 06 December 2009] Read More