Corporate Social Responsibility for Organizations - Essay Example

? CSR Table of Contents Introduction 3 Discussion 3 Conclusion 8 References 9 Introduction Corporate social responsibility can be defined as the consideration of and response to several issues and aspects beyond the narrow technical, legal, economic and social requirements of the firm. Organizations generally focus on the several CSR activities in order to give back something against the social, environmental or natural resources are used in the business processes. Effective CSR activities can help an organization to maintain its strong reputation and brand image within the competitive industry (Moir, 2001, pp. 16-22). It is highly important for an organization maintain strong relationship with, customers, business clients, employees and several external stakeholders. Effective business operation sustainability and CSR activities can help an organization to maintain strong relationship with the stakeholders and several shareholders. The essay will support that the CSR reports of the organizations generally provide useful information on the environmental performance and corporate social performance by considering the example of Tesco Plc and several other firms by considering several accounting theories. Discussion Instrumental theories In this theory CSR is seen as a strategic tool so that it can achieve the economic activities of a company and can ultimately lead to wealth creation. According to the Friedman view, it is seen that the only responsibility of the business it has towards the society is maximisation of the profits of the shareholders while working within the legal and ethical framework of the company. This theory has long enjoyed the acceptance of the business across the world. Such concern for profits include taking into consideration the interest of all the stakeholders of an organisation. It is argued that in some conditions such satisfaction can increase the overall profit and hence result in maximising the shareholder value. It has been seen that there is a positive correlation between the social responsibility and the financial performance of the companies (Brennan and Merkl-Davies, 2013, pp. 109-132). Here there are three main groups of instrumental theories on the basis of the economic objective of the company. The first is the maximization of the shareholder value. The second is focusing on the strategic goal of achieving the competitive advantage. The third is the related to the cause-related marketing efforts of the company. British Petroleum understands this aspect much better. The policy statement of BP commits the company to its wide ranging business policies. The CSR report of the company illustrates way the company is meeting those commitments in a way which supports the profitability of the company. Hence by focussing on the Strong financial performance the company can invest the profits into their CSR activities (Deegan and Rankin, 1996, pp. 50-69). Political theories Political theory is an effective CSR accounting theory that used to focus on the interaction between the society and companies and their responsibilities towards the society. There are three divisions of this theory that are discussed below. Corporate Constitutionalism According to this concept the social responsibility of an organization generally arises depending upon the available social power of Organization. Coca Cola Company is one of the leading organizations. The organization implements several green strategies depending upon its social power. Effective water recycling strategy helps the organization to maintain is leading organization within global soft drink industry. Social Contract Theory Jean- Jacques Rousseau was the political economist who posited the social contract theory. According to him the individuals form a social contract with the state so that responsibility of citizens of the state is entrusted with the government. Thus the people are the source of the collective political sovereignty of the state. Thus the government was performing the functions of the common people after undergoing a contract of political and societal responsibility (Riley, 2006, pp. 147–175). This theory proposed by Rousseau almost three hundred years ago can be applied to the companies like PepsiCo of the present day. The investors or the shareholders of PepsiCo entrust their responsibilities of maintaining the company goals and the relationships on the employees and the executives. The shareholder’s are in a contract with the board of PepsiCo in a way that they would perform what they have promised (Merkl-Davies and Brennan, 2011, pp. 415-437). Thus CSR should also be considered as a goal of PepsiCo which the executives should deliver in the right sense of the term. Corporate Citizenship The ability of Yusen Logistics Company to upgrade the working condition and maintaining environmental sustainability in the logistics and supply chain management processes. This sustainability helped the organization to maintain its valuable corporate citizenship. Integrative theories This theory looks at how the business considers the social demands. It argues how the business depends on the society so that it can exist and continue its operation and grow. Generally there are social demands which the company has to meet through the ways it interacts with the society and thus provide legitimacy to its existence (Hooghiemstra, 2000, pp. 55-68). Hence the management of the company must take into consideration factors like social demands and look for ways to integrate it in their business model. For example Stormberg uses 5% from their annual profits for charities like SOS Children’s Villages in countries like China, where they have the majority of their local crisis centres in Kristiansand. Ethical theories Implementation of ethical theories will help to evaluate and analyze the ethical consideration that has been taken in the business processes. There are two ethical theories that are discussed below with respect to the CSR activities of IKEA. Ethical Branch of Stakeholder Theory IKEA is considered as one of the most ethical organizations among the stakeholders. The organization always tries to provide all the information regarding its corporate governance, CSR activities and sustainable practices to the stakeholders through its published CSR reports. Moreover, the issues of the stakeholder power usually are not directly relevant. Sustainable Development Being one of the leading retail chains, Walmart always maintains high sustainability in workplaces and several business operation practices. Moreover, the organization provides the value of corporate relationship and business ethics in published CSR reports in order to influence all the stakeholders to take interest in the business strategies of Walmart. Environmental Reporting One of the main components of the corporate responsibility report is the environmental reporting. This report describes the systematic and complete disclosure of the company’s environmental performance to the general public. It includes the impact of the organisation on the environment, and its actions which reduces the adverse effects on the environment and thus restores the environmental conditions. TESCO has used this Environmental reporting of CSR to its fullest. According to its CSR report 2013, they have reduced their carbon footprint so that they don’t emit much CO2 in the atmosphere. Reducing emission is the right way for a company to seek sustainable profits. It helps conserves energy, save money and also helps deliver energy security (Urip, 2010, p.17). Like this they are able to manage their resource efficiently. In 2012-13, TESCO emitted 5.75 million tonnes of gross greenhouse gas (GHG). They have decoupled the growth in the business from the growth in the carbon emission. When their area of distribution centres and stores have increased by 9%, their carbon footprint has increased by only 3%. In countries like Ireland, Hungary, Poland they have achieved an impressive reduction of the emission as compared to last year. They have also decreased emissions from the refrigerant gas leakage which is now 16% much lower than the figures in 2006 (Mahoney, Thorne, Cecil and LaGore, 2013, pp. 350-359). Agency Theory The agency theory of business considers that there is a principal agent relationship existing where the shareholders act as the principals and the managers and other executives of the company act as agents. Since the managers are merely agents they are completely accountable to the shareholders (Eisenhardt, 1989, pp. 57–74). In the context of CSR, it is natural for the shareholders of a company like Vodafone to expect that the CSR would be conducted in a fair manner and each of the activities would be informed in detail in the annual disclosure documents. Thus Tesco plc should thus be transparent in the way the accounting for the CSR is conducted. Conclusion In the examples provided above the companies have published their activities in the CSR report which helps them to sustain in the society and adjust their business model in line with the societal demands. Many of those strategies are newly integrated strategies, which can help achieve a sustainable working environment for the company. This shows that the company effectively showed all the major information which are needed for the shareholders to see and decide on the social responsibility of the company. Through this report we see that majority of the companies across the world is trying to make the society and their business model co-exist at the same time. Hence it emerges as a company which looks after the welfare of all its stakeholders though there are a few grey areas for it to still work upon. Companies must be driven by values to reinforce their CSR strategy and implement the same so that such a strategy can add value to organisation and increase their reputation across the world. References Brennan, N. M. and Merkl-Davies, D. M. 2013. “Accounting Narratives and Impression management”, In: Jackson, L., Davison, J., and Craig, R. (eds.), Routledge Companion to Communication in Accounting. Routledge. Deegan, C. and Rankin, M. 1996. “An analysis of environmental disclosures by firms prosecuted successfully by the Environmental Protection Authority”, Accounting, Auditing, and Accountability Journal, Vol. 9(2), pp. 50-67. Eisenhardt, K., 1989. "Agency theory: An assessment and review". Academy of Management Review, Vol. 14 (1), pp. 57–74. Hooghiemstra, R. 2000. “Corporate communication and impression management – New perspectives why companies engage in corporate social reporting”, Journal of Business Ethics, Vol. 27(1), pp. 55-68. Mahoney, L.S., Thorne, L., Cecil, L. and LaGore, W. 2013. “A research note on standalone corporate social responsibility reports: Signalling or green washing?” Critical Perspectives on Accounting, Vol. 24(4-5), pp. 350-359. Merkl-Davies, D. M., and Brennan, N. M., 2011. “A Conceptual Framework of Impression Management: New insights from psychology, sociology, and critical perspectives”, Accounting and Business Research, 41(5), pp. 415-437. Moir, L., 2001. “What do we mean by corporate social responsibility?”, Corporate Governance, 1(2), pp. 16-22. Riley, P., 2006. The Cambridge History of Eighteenth-Century Political Thought: Vol 4. Cambridge: Cambridge University Press. 2006. Urip, S., 2010. CSR Strategies. London: Routledge. Read More