Obstacles Affecting the Implementation of CSR Policies in Companies - Coursework Example

Obstacles affecting the implementation of CSR policies in companies Question no: 2 Introduction Corporate Social Responsibility denotes a focus on the impact that a business creates both socially and environmentally. In this sense, companies engage in establishing policies that can promote responsible practices and accounting for the progress of such practices. Initially, CSR focused on philanthropy as a social responsibility practiced by the corporate world. However, the scope of CSR today is broad and also involves the responsibility of businesses in improving the lives of their employees, and in the communities they operate. In the corporate world today, CSR mainly focuses on various issues that include corporate governance, hiring employees, creating opportunities and providing other incentives to employees. In addition, emphasising environmental protection is a key issue when implementing CSR in the corporate world. In implementing CSR, businesses should go beyond what the existing regulations states to achieve both socially and environmentally (Vogel, 2005). Today, companies are not in the business precisely to make a profit, but also to appeal socially to the consumers. For instance, consumers are now interested in knowing the value that different businesses are adding to the community. As such, CSR in the modern day plays an important role in determining a company’s public image (Vogel, 2005). While CSR policies ensure that firms engage in responsible practices, its implementation still faces obstacles. Further, the obstacles evident in the implementation of CSR policies may include lack of commitment from the company, difficulties integrating CSR with the core values and practices of a company and inadequate financial resources. Additional obstacles include economic pressure, difference of opinion regarding the roles and responsibility of a company, conflict and stakeholder interest. The emergence of CSR in the corporate world Initially, the focus on CSR by companies was minimal, but as a result of public outcry for more responsible corporate world, it became an essential component of organisations. Because of numerous protests and boycotts by consumers regarding exploitative labour practices, multinational companies began to embrace responsible practices. CSR also became predominant in most business as a result of pressure from green movements across the world for the need to protect the environment (Glavas & Kelley, 2014). However, while CSR is now part of organisations business model, most initiatives taken by companies ignores the regulations required in implementing CSR policies. For example, Pharmaceuticals are under pressure to respond to the HIV/AIDS scourge in Sub-Saharan Africa despite such a responsibility not being part of their CSR objectives. In some instances, the pressure from various activists across the world has turned CSR to a good will act that does not require the implementation of CSR policies in organisations (Glavas & Kelley, 2014). The importance of integrating CRS in companies operations While the implementation of CSR policies in companies is facing a number of obstacles, there are still benefits that companies can derive by engaging in responsible practices both internally and externally. Among the benefits associated with responsible practices in a company include improved financial performance. This is because; a company embraces sound ethics in the management of its resources. In turn, the confidence of stakeholders is enhanced, and they invest more resources into the company. Similarly, CSR also improves brand image and the reputation of a company (Hack, Kenyon, & Wood 2014.). When a company becomes socially responsible, it attracts the attention of the public and, as a result, a firm is in a position to attract more investors or customers. Some of the social responsibility that a company can adopt includes good customer care and establishing a working relationship with the community (Hack, Kenyon, & Wood, 2014.). Further, CSR tends to improve a company’s sales and cements customer loyalty. For example, the companies whose products have the highest appeal in the market are perceived by customers as being socially responsible. While business is a profit-making venture, CSR ensures that businesses also satisfy customers’ needs. Across the world, incidents have been reported regarding multinationals using child as labourers or sweatshops in the Far East. As such, CSR enhances sound ethics on how businesses carry out their activities (Hack, Kenyon, & Wood, 2014.). In the western world, for example, customers are boycotting products coming from sweatshops. CSR also provides an avenue for reducing high employee turnover. Such companies are considered to engage in sound practices that mind the needs of the worker. Retaining employees because of sound practices also ensure that a company saves the cost incurred in hiring and training of new personnel. Where a company embraces responsible practices, there tends to be minimal regulatory oversight. Responsible practices in a company also increase the chance of accessing financial assistance from other institutions such as development banks (Hack, Kenyon, & Wood, 2014.). CSR policy CSR policy in an organisation is meant to improve the business performance both internal and external. Every business establishment has a philosophy that helps it to remain relevant in a competitive business world. As such, the implementation of CSR policy is important in terms of defining how a company can develop good practices that can improve performance (Moon, 2002). On the other hand, CSR policy also helps companies to brainstorm on how they can give back to the community. From a CSR point of view, businesses are not for profit making only, but a source to also improve the lives of other people. In a company, the existence of a CSR policy ensures that workers are treated fairly. This involves providing incentives and improving their working conditions. On the other hand, the communities around a business entity also need to benefit from the opportunities created by a responsible organisation. For instance, a responsible organisation can implement a CSR policy that ensures they employ a percentage of persons from the community (Moon, 2002). In addition, CSR policy implementation is about looking at how a company can embrace environmentally friendly operations. As such, the policy is needed to define how a company can engage in practices that, for instance, protect the environment. In essence, implementing a CSR policy in an organisation is a declaration of an intention by a company to be more accountable to its employees and the general public (Coglianese & Nash, 2001). In the corporate world, ISO 26000 is the legitimate standard body for CSR globally. The ISO 26000 standards are important in terms of providing clarity regarding the concepts associated with social responsibility. Further ISO 2600 exists to help companies embrace sustainable development. On another note, businesses do not exist only to provide goods and services, but also to ensure the environment and customers are not harmed. The success of any business requires the adoption of sound ethics and as such, ISO 26000 was created to promote ethical practices in the business community. The ISO 26000 standards act as an encouragement for business entities to look at social responsibility as a fundamental duty (Moratis, 2014.). Obstacles to implementing CSR policies There are a number of barriers to implementation of CSR policies in an organisation. These include lack of commitment from the company, challenges in terms of integrating CSR with the core values and practices in an organisation and inadequate financial resources. Other obstacles include economic hardship, difference of opinion in terms of roles and responsibility, conflicts and stakeholder interest. The implementation of CSR policies can be derailed by lack of commitment from the board of directors or the top management of a company. The lack of commitment is evident in a company where an emphasis on profit maximisation prevails over other initiatives. The management may not see the need to engage in activities that are not part of the business operations. Further, the lack of commitment may arise as a result of the company’s reluctance to commit its resources to initiatives that are only geared at improving its social responsibility. The governments in the regions where companies establish their operations also play a role in determining the commitment of firms towards the implementation of CSR (Korschun, Bhattachary, & Swain, 2014). Where the government is ignorant of the welfare of workers in companies or the communities surrounding a company, such company may ignore the urgency of developing socially responsible initiatives. In addition, lack of proper regulations that scrutinises the operations of companies also contributes the reluctance of companies to adopt CSR policies. Where regulations lack, or there is complacency from the responsible authorities such labour unions that advocates for employee rights, employers continue to engage in abusive labour practices. For instance, in the third world, there is still lack of properly instituted labour standards. As such, multinationals operating in these countries continues to exploit workers in numerous ways and ignore the need to implement sound ethics in their business activities. Further, companies that operate in particular regions for a short period do not see the need for engaging in CSR activities. This is because; they perceive the CSR activities to be counterproductive to their business objectives when implemented on a short-term basis (Korschun, Bhattachary, & Swain, 2014). There are also companies that enjoy state support and may not see the need for engaging in socially responsible activities to improve their image to the public. For instance, the international oil corporations backed by the local governments, have failed from time to time to implement policies that reduce the environmental impact of oil mining to the surrounding. Corruption also increases the lack of commitment by companies to engage in socially responsible practices. In most countries that multinationals operate, the regulators in various industry sectors often obtain bribes for the international companies to ignore the malpractices taking place. This in turn, reduces the level of commitment by companies to implement CSR policies (Dandago & Arugu, 2014). Concerning integrating CSR policies with core values and practices in an organisation, obstacles may arise because of the conflict of interest. For instance, companies have different core values and practices that they use. However, introducing new practices may interfere with the existing tradition of a company in terms of how it conducts its business. For example, a company not focused on dealing with the public directly may find itself in trouble in terms of implementing policies that ensure they engage with the public. Most private companies operating in small scale are not often willing to participate in CSR initiatives outside the company. Conversely, others may not be willing to employ new workers from the community because, they may lack the needed skills, and this means, the company has to incur other costs in training the new employees (Korschun, Bhattachary, & Swain, 2014). Inadequate financial resources are another impediment to the implementation of CSR policies in companies. Without financial backup, the extra projects that companies implement are not possible. As a socially responsible company, finance is needed to support incentive programs for workers, and other community initiatives. Even though CSR plays a significant role in improving a company’s profits, priority is often given to the core operations of a company. This is because, financial resources determines the activities that an organisation can undertake other than its core business (Vogel, 2005). For instance, it is risky to start a project in the community that will end up stretching the company’s resources. In most CSR initiatives, funding is essential and as such, company’s ability to implement CSR policies depends on the support from the major stakeholders. On another note, where there are inadequate financial resources more time is wasted prior to implementation of a CSR policy. This is because; such a policy cannot achieve its objectives without financial backup. As such, time is needed to solicit for funds elsewhere needed to implement a CSR activity. Many CSR projects have stalled due to insufficient funding, and this tends to create a negative public image for corporations. As such, companies with inadequate funding are reluctant to implement CSR initiatives (Vogel, 2005). Economic pressure also forces companies to be reluctant in implementing the CSR policies. Implementing CSR policies depends on a number of factors that include the economic situation in the region that a company operates. The economic situation determines the CSR activities that a company can initiate. For example, when there is inflation, it is difficult for a company to carry out more projects in the community since it will stretch its resources where there is no assistance from other stakeholders (Vogel, 2005). On the other hand, economic hardship may force a company to cut down its expenditure which may mean shelving CSR activities. Internally, economic pressure may force a company to reduce incentive programs intended for employees. There could be problems also, in terms of a company winding up in a region affected by economic hardship. Consequently, it will not be possible to implement CSR policies in a situation where a company is under receivership or to wind up its operations (Hoejmose, Brammer, & Millingtone, 2013). Difference of opinion in terms of roles and responsibilities also impact negatively in the implementation of CSR policies. For example, a company may perceive the role of supporting community project as a government initiative. As a result, a company may ignore involving itself from CSR activities that are external. Similarly, international corporations operate in different countries under the invite of the local government. Consequently, they might not see the need to implement CSR policies while operating in the host country. Conversely, the community can also make it hard for a company to implement CSR policies. Difference of opinion may arise where; the community feels they deserve the right to decide on projects to be implemented. On the contrary, the management of a company may have a different opinion particularly if they are the ones funding a community project. At workplace, employees may also derail the implementation of CSR policies where roles and responsibilities are not defined clearly (Dandago & Arugu, 2014). Conflicts also impede on the implementation of CSR policies due to lack of understanding between the parties involved. Conflict may emerge between the top managers, directors or employees. As such, where there is a conflict, it is difficult to reach a consensus or agreement regarding a particular issue. Where there are disagreements, for instance, because of personal issues, more time is wasted in the boardroom debating how to implement CSR policies. Employees, on the other hand, may also disagree with the management regarding programs introduced in the company to improve their welfare (Moon, 2002). As such, more time is needed for consultation to ensure that the policies implemented are acceptable to everyone in an organisation. Other than conflicts within an organisation, external conflicts can also affect the implementation of CSR policies. For instance, where the community is not pleased with the operations of a given company, it may be difficult to implement CSR programs. Instability also affects the implementation of CSR policies. For instance, political instability tends to affect the operations of multinational companies globally (Florida, Atlas & Cline, 2001). In this sense, it is difficult for companies to implement CSR programs that involve the community. Further, a company may end up winding its operations in a region where conflicts persist. On another note, stakeholders’ interest also affects the implementation of CSR policies in an organisation. A major impediment in this sense is the government that sometimes, tries to influence the implementation of CSR policies in organisations. The financiers of CSR projects can also influence the implementation of CSR policies in an organisation. This leads to a situation where various policies cannot be implemented without the approval of stakeholders outside the company (Rao & Holt, 2005). From the shareholders perspective, the implementation of CSR policies may affect their interests in an organisation. The shareholders are often worried about the prospect of their company investing in projects with no any financial gain (Preuss, 2001). In essence, CSR poses a challenge to shareholders because the returns from environment and social programs are difficult to measure. As such, shareholders are likely to oppose most of the CSR policies implemented by the board members and the management. The implementation of CSR policies is also seen to impact negatively on a company’s competitiveness in the market. On the same note, there is a belief in the business circles that a company that implements CSR policies commits its resource to projects that are unprofitable. On the other hand, a company that does not implement CSR policies has its resources intact and can use those resources to pursue other business ventures. Because it is not mandatory to integrate CSR policies into a company’s operations, most firms are reluctant to implement CSR policies (Preuss, 2001). There is also a concern in the business circles that guidelines associated with CSR are broader than initially anticipated. Accordingly, the companies that implement CSR policies only do it because they fear a public backlash. In this sense, it means that some companies do not view CSR as their fundamental duty. In addition, some companies may find it too expensive to embrace all the requirements related to CSR. Other companies also believe that CSR cannot last because its prominence at the moment is related to the increase of scandals reported in the media. As such, they do not view CSR as being important to the success of their business on a long term basis. In addition, some companies believe there is a lot of advocacy going on for companies to embrace environmentally friendly operations (Rao & Holt, 2005). The claims by some green movements across the world are not substantive and, as a result, some organisations are becoming reluctant in implementing CSR policies. The beneficiaries of programs associated with CSR policies may begin to view CSR as mandatory obligation of companies. However, such a view is likely to dissuade companies from engaging in more programs geared at promoting CSR in the community (Rao & Holt, 2005). Conclusion CSR is critical in enhancing responsible practices in an organisation. As a result of CSR, employees are no longer working in deplorable conditions and companies beginning to embrace sustainable development. This involves being environmentally conscious and supporting communities to improve their living standards. In essence, where companies become socially responsible, there is accountability, transparency and reliability. In addition, CSR also promotes the trust and working alliance between companies and the community. However, while CSR plays a role in enhancing sound ethics, there are also obstacles that impede the implementation of its policies. Such obstacles include lack of commitment, financial resources and conflict of interest among other issues. While these obstacles persist, consensus in the CSR literature indicates that CSR has an important role in promoting good practices in an organisation. The emergence of CSR globally has ensured that the multinational corporations are no longer exploiting their workers and incidents of child labour in the third world countries have reduced. References Coglianese, C. & Nash, J eds. 2001, Regulating from the Inside: Can Environmental Management Systems Achieve Policy Goals? RFF Press, Washington, D.C. Dandago, K.I. & Arugu, L.O., 2014. ‘Corporate Social Responsibility and Environmental Concerns in Nigeria: A Critical Focus on Oil Producing Communities’, Issues in Social & Environmental Accounting, Vol. 8, no. 2, pp. 104-115. 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