Corporate Social Responsibility and Social Innovation - Example

Corporate Social Responsibility and Social Innovation: Discussion with reference to a Media Article Introduction Increasingly, governments are becoming aware of their responsibility in solving environmental problems. In the recent years, both the governments of China and Australia have come up with measures that have helped to achieve significant reduction in environmental pollution, amidst increasing concerns over changes in climate. The government of Australia has implemented measures that discourage the use of non-renewable resources and encourage the use of renewable resources (Prideaux & Cooper 2009, p. 200). The government of China has also laid plans to minimize the use of inputs that produce harmful wastes such as coal and replace them with inputs that produce less harmful wastes such as wind and solar energy (Prideaux & Cooper 2009, p. 201). An article that was written by Chris McGrath (2013) in The Conversation on 20 August 2013 explains that China has laid major plans to enhance environmental sustainability in future. As well, it states that the Chinese government has taken environmental sustainability as an innovative way of responding to the social problem of unemployment. In contrast, the Coalition party which is expected to form the next Australian government has no solid policies to respond to environmental challenges. This paper uses corporate social responsibility (CSR) and social innovation theories in understanding the environmental sustainability issues presented in the newspaper article. Discussion The theory of CSR might provide a deep understanding of the issues presented in the newspaper. CSR in this context can be described as away of integrating social, economic, and environmental concerns into the culture, values, decision making, strategies and operations in an accountable manner and hence establish better practices, create wealth and improve the society as a whole (Carroll & Shabana 2010, p. 87). The principles embedded in the CSR theory require individuals, organisations and governments to engage in activities that do not harm or that are beneficial to the natural environment. The theory implies that individuals, organisations and governments should perform their activities in a way that strikes a balance between the natural environment and economic benefits (Todd 2009, p. 20). The theory contends that there exists a trade-off between the welfare of the society and the environment and economic development. It therefore suggests that for a society to achieve economic development in the long-term, equilibrium between the two should be sustained. Social responsibility in any society can be achieved through adopting activities that enhance economic sustainability, social sustainability and environmental sustainability. Economic sustainability refers to the use of available strategies or innovation of new strategies that will enhance effective utilisation of existing resources in order to achieve economic benefits in future (Montiel 2008, p. 246). As indicated in the newspaper article, China plans to foster greater protection to the natural environment from pollution by providing tax reliefs and subsidies to the industry involved. The government of China has already set plans to inject funds into the environmental sustainability initiative. The move by the Chinese government will not only enhance environmental sustainability, but it will enhance the economic productivity of the environmental protection industry. The government of China expects that the output of environmental protection industry will rise by a rate of 15% to US$730 billion by 2015. Importantly, the private investor will have greater confidence to invest in the industry and thereby make it more stable (Salehi & Azary 2009, p. 13). Improved economic performance of the industry will be beneficial to the Chinese society as a whole. It is likely that increased investment in the environmental protection industry will lead to creation of new jobs. In Australia, the Coalition party is expected to lead in the coming elections, as noted by McGrath (2013). However, McGrath (2013) also explains that the coalition does not have clear policies on how to tackle environmental sustainability issues. McGrath explains that the Coalition’s manifesto does not have specific polices focusing on the environmental protection industry. If the party wins the election, it is expected that private investors are going to withdraw their support to the renewable power project that is currently underway (McGrath 2013). If the investors withdraw their support, it is likely that the industry will be drained of capital and will become less productive (Montiel 2008, p. 246). This implies that Australian society will be deprived of the benefits it has been enjoying in form of returns from investment in the environmental protection industry. In an extreme case, some firms involved in environmental protection will close down, leading to a loss of jobs (Montiel 2008, p. 246). Environmental sustainability, on the other hand, refers to engagement in activities or practices which prevent harm or which are beneficial to the natural environment. The use of renewable resources in place of non-renewable resources is one of the common ways of achieving the goals of environmental sustainability. Environmental sustainability can also be achieved through reduction or elimination of pollutants or hazardous wastes. As Montiel (2008, p. 247) explains, this may be achieved through the use of inputs that produce less harmful wastes in place of inputs that produce harmful wastes through disposing harmful wastes in a state that is not harmful to the environment. As mentioned, China has come up with effective policies to support environmental sustainability in various ways (McGrath 2013). For instance, the Chinese government plans to spend US$275 billion in the next five years on improving air quality, alongside other initiatives. Thus, the Chinese government will enhance its public image as an active promoter of environmental sustainability and public health. In contrast, the Australian government led by the Coalition party will have a negative public image if it does not formulate and implement effective environmental sustainability policies. Lastly, social sustainability is a concept that asserts that healthy social relationships within organisations or societies can only be achieved if ethical standards that guide social interactions are respected. Social sustainability requires individuals, organisations and government to embrace practices and activities that are not socially harmful or that provide social benefits to all people (Nijhof & Jeurissen 2010, p. 620). The theory of CSR also contends that the kind of policies that are adopted by the leadership of different organisations influence the drive towards embracing ethical behaviour. In other words, the policies influence how leadership organises decisions and actions to ensure compliance with moral principles of conduct and established international norms (Muñoz & Encinar 2012, p. 355). Beltratti (2005, p. 374) argues that values are vital in determining and in defining the way a government conducts activities and thus, they are of utmost importance. The core values upheld by a government influence the way the government treats the overall society. Working towards achieving environmental and economic sustainability is one way through which the Chinese government has attained social sustainability. As McGrath (2013) indicates, China has well laid policies to enhance environmental protection that are informed by environmental sustainability values. It is very likely that the Chinese government will work towards achieving the set objectives for the good of the Chinese community. In contrast, the Australian Coalition party lacks solid policies to deal with the issue environmental sustainability. Lack of solid policies and values to refer to implies that the Coalition may not be effective in enhancing environmental sustainability. The associated loss of environmental and economic benefits is likely to be detrimental to the Australian community as noted by Wise and Ali (2008, p. 136). Adherence to corporate sustainability principles also ensures adherence to international norms as well as principles established by international organisations such as the United Nations. The UN is an international organisation whose objectives include promoting better living standards, social progress and human rights. It was established in 1945 and currently has 193 member states. The UN empowers organizations and governments to embrace initiatives and strategies that are in line with corporate citizenship and sustainability principles. The organisation has therefore established three main principles that empower organisations in member states to embrace environmental sustainability standards. The principles require organisations and governments to embrace practices and to come up with strategies that enhance greater environmental responsibility, to support initiatives that prevent harm on the environment and to promote innovation and use of environmentally-friendly technologies. Each member of the UN is required to formulate and implement policies, to come up with laws and regulations and to establish effective initiatives that will support environmental sustainability. Both China and Australia are members of the UN and are expected to comply with the principles of environmental sustainability established by the organisation. The move by China to formulate clear and solid environmental policies is in line with the requirements of the UN. Adhering to the principles laid down by the UN has various advantages to Chinese organisations involved in environmental protection, including enhanced reputation internationally, enhanced ability to attract foreign investors, increased opportunities to collaborate and dialogue with other local and foreign organisations, and enhanced capacity, increased transparency and accountability through public communication on performance progress (Ginette 2007). On the other hand, Australian firms involved in environmental protection may not access those benefits if the Coalition party wins elections and fails to establish effective policies. The issue presented in the newspaper can also be explained using the theory of social innovation. Social innovation refers to development and implementation of new ideas in solving social problems (Mulgan et al. 2007, p. 28). It refers to the use of new and creative ways to respond to emerging social demands. The term ‘social innovation’ may refer to innovations which are beneficial to the society or processes of innovation (such as techniques and methods). The above definitions of social innovation are broad and can incorporate other sub-fields, such as eco-innovation and sustainable innovation which focus on solving problems related to the natural environment. Therefore, social innovation through establishment of new economic strategies to solve environmental problems can be regarded as part of sustainable development (Brown 2002, p. 24). As Hall and Vredenburg (2003) explain, social innovation can take place within the private sector as well as within the government. Remarkably, the move by the Chinese government to invest in the environmental protection industry can be regarded as social innovation. It should be noted that there is an urgent need to reverse climate change around the globe and to create jobs and alleviate poverty especially in developing nations such as China. China is the most populous nation in the world and thus, there is need for creative ways in the country to foster job creation in order to meet the demands of the huge population. McGrath (2013) explains that China perceives investment in the environmental protection industry as a way of responding to environmental challenges such as increased rate of pollution and as a way of creating new jobs. Investment in environmental protection is thus perceived as an innovative way of responding to emerging social problems such as unemployment and poverty, alongside other benefits. On the contrary, Australian Coalition party does not seem to be innovative in responding to such social problems. Generally, it can be argued that the plans by the Chinese government will be quite beneficial to the country’s natural environment. On the other hand, the Australian Coalition party may not be active in enhancing environmental sustainability. However, as McGrath (2013) explains, environmental protection is beneficial to all sectors in an economy and not just to the natural environment. In fact, environmental protection should be viewed as a foundation for the success in other sectors. For instance, an organisation that does not embrace environmental sustainability may have a negative public image and may be unable to attract investors and customers. Such an organisation may not be able to achieve the set economic objectives (Witt 2004). Conclusion In conclusion, CSR and social innovation theories provide a basis for understanding the environmental sustainability issues presented in the newspaper article. As noted in the paper, social responsibility can be achieved through embracing principles of environmental sustainability, economic sustainability and social responsibility. The Chinese government has plans to comply with the principle through investment in the environmental protection industry. On the other hand, the Australian Coalition party has no clear and solid policies regarding environmental sustainability. Compliance with the principles of environmental sustainability ensures adherence to the expectations of the international community and provides opportunities for firms to enjoy the associated benefits. As demonstrated by China, establishment of effective environmental sustainability initiatives can also be used as an innovative way of solving social problems such as unemployment and poverty. Finally, the environmental protection industry should be viewed as a foundation for the success of other industries and not just an industry competing with others. References Beltratti A 2005, ‘The complementarily between corporate governance and corporate social responsibility’. The Geneva Papers on Risk and Insurance - Issues and Practice, Vol. 30, Iss. 3, pp. 373 – 386. Brown, L R 2002, ‘The eco-economic revolution: getting the market in sync with nature’, The Futurist, March–April, pp. 23–32. Carroll, A B & Shabana, K M 2010, ‘The business case for corporate social responsibility: A review of concepts, research and practice’, International Journal of Management Reviews, Vol. 12, Iss. 1, pp. 85 – 105. Ginette, D 2007, ‘Literacy research, ethics and social responsibility”, English Teaching: Practice and Critique, Vol. 6, No. 3, pp. 133 – 147. Hall, J & Vredenburg, H 2003, ‘The challenges of innovating for sustainable development’, MIT Sloan Management Review, Fall, pp. 61–68. McGrath, C 2013, ‘Environmental protection industry a job creator’, The Conversation, 20 August 2013, viewed 8 September 2013 Montiel, I 2008, ‘Corporate social responsibility and corporate sustainability: Separate pasts, common futures’, Organization & Environment, Vol. 21, No. 3, pp. 245 – 269. Mulgan, G, Tucker, S, Ali, R & Sanders, B 2007, Social innovation: What it is, why it matters, how it can be accelerated. The Young Foundation, London. Muñoz, F & Encinar M 2012, ‘On economics, ethics, and corporate social responsibility,’ Modern Economy, Vol. 3, Iss. 4, pp. 355 – 363. Nijhof, A H J & Jeurissen, R J M 2010, ‘The glass ceiling of corporate social responsibility,’ International Journal of Sociology and Social Policy, Vol. 30, Iss. 11/12, pp. 618 – 631. Prideaux, B & Cooper, M 2009, River tourism, CABI, Massachusetts. Salehi, M & Azary, Z 2009, ‘Stakeholders’ perceptions of corporate social responsibility: Empirical evidences from Iran,’ International Business Research, Vol. 2, Iss. 1, pp. 12-31. Todd, K 2009, ‘Corporate social responsibility,’ Baylor Business Review, Vol. 27, Iss. 2. Wise, V & Ali, M M 2008, ‘Case studies on corporate governance and corporate social responsibility,’ South Asian Journal of Management, Vol. 15, No. 3, pp. 136-149. Witt, P 2004, ‘Entrepreneurs’ networks and the success of start-ups’, Entrepreneurship and Regional Development, Vol. 16, pp. 391–412. Appendix 20 August 2013, 6.27am AEST Environmental protection industry a job creator AA very different approach is emerging between Australia and China’s treatment of jobs and industries providing goods and services for environmental protection. In Australia, major investors are reported to be planning for the impact if the Coalition wins power, axes the carbon price and dismantles the… Author Chris McGrath Senior Lecturer at University of Queensland Disclosure Statement Chris McGrath is employed in the environmental protection industry discussed in this article as a lawyer and university lecturer teaching environmental law to town planning, environmental management and engineering students. University of Queensland does not contribute to the cost of running The Conversation. Find out more. The Conversation is funded by CSIRO, Melbourne, Monash, RMIT, UTS, UWA, Canberra, CDU, Curtin, Deakin, Flinders, Griffith, JCU, La Trobe, Massey, Murdoch, Newcastle, QUT, Swinburne, UniSA, USC, USQ, UTAS, UWS and VU. China recognises environmental protection is good for the economy, and has gone all out to fund it. Dainis Matisons A very different approach is emerging between Australia and China’s treatment of jobs and industries providing goods and services for environmental protection. In Australia, major investors are reported to be planning for the impact if the Coalition wins power, axes the carbon price and dismantles the clean energy finance system. They expect private funding would be directed away from large-scale renewable power – starving the sector of capital – due to regulatory uncertainty and a lack of solid returns. In stark contrast, China recently announced it will elevate environmental protection to a “pillar industry” that would receive government support in the form of tax breaks and subsidies to tackle dire pollution. There are staggering amounts of money involved. China has vowed to raise the total output of environmental protection industries to 4.5 trillion yuan (US$730 billion) by 2015, an average annual increase of 15%. To put that in some sort of perspective, that is equivalent to nearly 9% of China’s GDP in 2012. It is equivalent to nearly 50% of Australia’s GDP in 2012. On improving air quality alone, China says it will spend US$275 billion over the next five years. That’s roughly twice the size of its annual defence budget. The Economist points out that even by Chinese standards this is an enormous sum. A missing pillar in election policies Coincidentally, economic pillars are the “it” metaphor in Australian politics. In this election both the Coalition and Labor have built their economic policies around pillars. The Coalition has five and the Labor Party has seven. As the Coalition looks likely to form the next government, let’s concentrate on the five economic pillars in its policy platform. They are: manufacturing, advanced services, agriculture exports, education and research, and mining. You won’t find any direct reference to the environmental protection industry in the economic pillars of the Coalition policy. It might be hiding in “advanced services” but the Coalition’s policy does not mention it. Advanced services is referred to as a “highly diversified sector” and particular mention is made of financial services, health services, engineering and architectural services. The 19th of 21 policy themes in the Coalition’s policies is “delivering a cleaner and more sustainable environment”. This emphasises the benefits of direct action on climate change rather than the carbon tax, a Green Army, and creating a one-stop-shop for environmental approvals. Strewn throughout the Coalition’s policies are calls to reduce regulation and constraints on business, particularly the carbon tax and the mining tax. Overall, the clear impression is that the Coalition views environmental protection as a constraint on industry that should be minimised – like trips to the dentist – rather than a business opportunity in its own right. A pillar or the whole foundation? Thinking of environmental protection as an industry in its own right is innovative but perhaps it misses the bigger point that the whole economy depends upon it. As the late US senator Gaylord Nelson famously said, “The economy is a wholly owned subsidiary of the environment, not the other way around.” Adapted from Daly (1996) Beyond Growth: The Economics of Sustainable Development Rather than think of environmental protection as an industry competing with other industry sectors and other social goals, we should think of it as the foundation of all of our economic and social goals. When speaking as a teacher to classes on environmental law, a metaphor that I like to use is of a tree where social and economic goals like jobs and housing are the fruit we aim for and education, good governance and justice, and a healthy environment are the roots that sustain the tree. Maintaining a healthy environment is the foundation of all of our goals as a society. Text added to graphic design by OCAL on clicker.com When we think of environmental protection as the foundation or root sustaining social and economic goals such as jobs, housing, peace and security, and public health, we avoid the common and arid dichotomy of jobs versus the environment. Still, the Chinese approach of recognising environmental protection as an industry has the benefit of saying clearly that there are jobs in it. Can we learn from that? Can we make the environmental protection industry a major job creator and export earner? The easiest way for the Coalition to incorporate this approach within its existing policy framework would be for it to expressly recognise Australia’s environmental protection industry within its economic pillar of “advanced services”. An incoming Coalition government could promote trade with China in the environmental protection industry to build Australia’s exports into the massive business opportunity that China’s new policy represents. Linking “environmental protection” and “industry” is an idea that is likely to win support across the political spectrum. Read More