Corporate Social Responsibility and Mass Media - Essay Example

?Corporate Social Responsibility and Mass Media I. Introduction The projection of adoption if not the actual practice of corporate social responsibility is an irreversible trend in many corporations today. The majority of Fortune’s top 250 corporations “are actively pursuing Corporate Social Responsibility initiatives” or CSR (Dunne 2007, p. 372). The European Commission in 2001 suggested that “concept of CSR requires an enterprise to be accountable for its impact on all the relevant stakeholder” (The Law Society 2002, p. 3). Dunne (2007, p. 373) pointed out however that the meaning of corporate social responsibility varies from corporations to corporations and it does not reflect a weakness but rather reflects corporate social responsibility’s “single greatest strength: without any formal determination or widely accepted definition, CSR has come to mean so much.” Implying to have adopted the viewpoint of William Frederick, the author of the book, Corporation be good! The Story of Corporate Social Responsibility (2006), Dunne said that corporate social responsibility has eventually come to mean “responsiveness”. “Responsiveness” does not imply any particular action but a range of actions or range of possible responses based on a company’s perception of social or consumer needs and the company’s role in responding either to society’s or the consumers’ needs. Carroll (1999, p. 268) explained that meaning of corporate social responsibility has undergone an evolution from its “beginning in the 1950s, which marks the modern era of CSR.” Carroll (1999, p. 268) pointed out that the “alternative themes” in corporate social responsibility “included corporate social performance (CSP), stakeholder theory, and business ethics theory.” Against the Dunne (2007) viewpoint, the Carroll (1999, p. 268) viewpoint is that corporate social responsibility is “a core construct that yields to or is transformed into alternative thematic frameworks.” On investigating whether corporate social responsibility adds to financial return, Cardebat & Sirven (2010) concluded that the results of their study do not provide evidence that the adoption of corporate social responsibility improves corporate financial performance. Cardebat & Sirven (2010) used statistical and econometric methods in testing hypotheses on the role of corporate social responsibility on company financial performance. On the other hand, the work of Ali et al. (2010) indicated that the practice of social responsibility may or may not promote the retention of consumer. Based on the study, it can nevertheless be argued however that the practice of corporate social responsibility can promote the retention of the customer base. In my study, I have chosen two cases: the case of the Aviva plc and the case of Thames Water Company. For reasons that will be explained later, Aviva appears to be a leading example of a company based in the United Kingdom that espouse corporate social responsibility consistently and diligently for the last several years and has gained additional prominence for the espousal as well as practice of that responsibility. Aviva claims to have “300 years of insights” which can be interpreted as having 300 years of engagement in the same or similar business (2011). Alternatively, the company “300 years of insights” is also described as “300 years of heritage” (2011). In contrast, Thames Water, a water company appears to have experienced a period in which its public image was at its worst. Lately, however, data are suggesting that Thames Water has invested in corporate social responsibility and may be profiting today in the said investment. Nevertheless, it appears that there are still avenues through which Thames Water’s practice of corporate social responsibility can be improved and which the company can exploit for greater profitability. II. Case 1: Aviva plc Aviva claims to the “world’s sixth largest insurance group and the biggest in the UK, with 36,100 serving around 44.5 million customers worldwide” (2012a). The company also claims that she is operating in 28 countries (2012a.). Aviva has a capitalization of ?10.73 billion (2011). In 2011, Aviva gave 6.5% dividends for 2010 and 12.8% return on equity (2011). The company’s corporate profile claims that the 2011 interim report showed that the company realized a profit of around ? 709 million in 2010 to the “exclusion of 2010’s special benefit of ? 84 million” (2011). In 2010, the company also claimed that she acquired 670,000 new customers (2011). All data are significant because all these have been happening given news of corporate failures in many parts of the globe. Perhaps, this is one of the returns from investing in corporate social responsibility. Aviva’s corporate social responsibility appears to be genuine. It has several years of performance reports on how she has implemented her corporate social responsibility. Aviva does not appear to be a major target of critics and she does not seem to be involved on controversies in which she is the subject of controversy. As for her corporate social responsibility, Aviva (2012b) expressed that her focus is on global issues. In particular, Aviva (2012b) articulated that she is focusing on trust and integrity, climate change and the environment, financial capability, attracting and retaining talent, and developing communities. Note that trust and integrity is very important because without them the nicest corporate social responsibility statements that can be articulated by Aviva would be meaningless. Climate change and the environment appears to be concern of a great percentage of the UK public and with concern, Aviva identifies herself better with the public mass. Financial capability, of course, is one principal concern that Aviva must devote herself into because without financial capability, Aviva would be disappointing the UK consumers who would be depending on Aviva (as pointed earlier, Aviva is in the insurance business). Without financial stability, Aviva would also be disappointing its workforce. Attracting and retaining talents is a social responsibility statement that favours Aviva’s employees because some of the more popular ways of attracting and retaining talents are through ways that increases their salaries. Finally, developing communities is a corporate social responsibility concerns that are not usually directly related with the consumer base. However, despite the study of Ali et al. (2010), adoption of the concern by corporations can probably enhance customer loyalty. It is worth noting that Aviva’s webpage on www.aviva.com/corporate-responsibility/ has buttons for several social media sites. This indicates a desire to interact with the public and to be more responsive to public sentiment. III. Case 2: Thames Water Thames Water claims that she is the United Kingdom’s largest water and sewerage company and serves around 14 million customers in London and Thames Valley (2012a). In particular, Thames Water said that the company provides 2,600 million litres of tap water to 8.8 million customers in London and in the Thames Valley (2012b). The company claims that the firm treats 4 billion sewage for 14 million customers but it is not clear the whether the treating period is one or one year although it is likely that it involves that latter (Thames Water 2012a). Several years ago, Thames Water was the subject of a UK-wide controversy. According to the Public Citizen or the Public Citizen’s Critical Mass Energy and Environment Program, Thames Water “topped the lists of the worst polluters in the United Kingdom in both 1999 and 2000” (2003, p.1). Further, Public Citizen also alleged that “the company’s dismal in 2002 may very well warrant a return to the top of the dubious list yet again when regulators release their annual pollution tables” in 2002 (2003, p. 1). The Public Citizens identifies Thames Water as a subsidiary of a German company known as RWE AG although Thames Water remains as a British company (2003, p. 1). In turn, the Public Citizen alleged that RWE is “one of the world’s largest energy giants with more than 640 subsidiaries worldwide and annual revenues of more than $50 billion” (2003, p. 1). The Public Citizen identified Thames Water as the “operational manager of RWE’s international water business, including the management of the U.S. properties owned by American Works” (2003, p.2). It appears that the large bulk of the Public Citizen’s criticisms against Thames Water is that the firm is basically non-British and an alien in British society. Further, the Public Citizens had harped on the theme that although Thames water “is telling its current customers that they won’t have to pay more,” future customers will (2003, p. 2). Another criticism popularized by the Public Citizens against Thames Water is that Thames Water is growing but it has spread itself thin. The Public Citizen also expressed reservation that Thames Water will not be able to pay off her debts (2003, p. 3). The Public Citizen (2003, p. 3) has exposed that since 1999, Thames Water “has been convicted of environmental and public health violations two dozen times and fined ? 450,000 (roughly $700,000).” According to Public Citizens (2003, p. 3), “the convictions are connected to Thames allowing raw sewage to flow into open waterways, over streets, onto people’s lawns and over children’s toys---even flooding homes, damaging houses to the point that families could no longer live in them.” Public Citizen (2003, p. 3) also exposed that “in 1999, Thames was successfully prosecuted for pollution eight times, more than any other company in England and Wales.” Further, the Public Citizen reported that “in 2000, the company paid ?288,000 in pollution-related fines, more than any other company that year” (2003, p. 3). The Public Citizen noted that “Barbara Young, chief executive of the Environmental Agency for England and Wales, complained that monetary punishment wasn’t large enough to act as a deterrent to the private water company.” In short what has been portrayed by the Public Citizen is that that the Thames Water company has been a seriously irresponsible water company, an incorrigible polluter, a firm that has no concern for the British public, a firm that would rather pay fines rather than address pollution concerns associated with its operation. In short, a firm bereft of any trace of corporate social responsibility, a firm that is the worst corporate polluter in the UK. The Public Citizen (2003, p. 3) reported that “regulators and magistrates found that Thames was aware of conditions that led to raw sewage discharges and could have easily prevented the pollution.” In the assessment of the Public Citizen (2003, p. 3), “putting public health and the environment at risk, and a willingness to plead guilty and pay the occasional fine, appears to be integrated into Thames’ corporate culture, and perhaps its business strategy.” For the Public Citizen (2003, p. 4), “Thames has a skewed set of priorities and a dysfunctional corporate culture that tolerates harming the environment and the public.” If there is corporate social responsibility, the account of the Public Citizen indicated that Thames Water is the best example of corporate irresponsibility. Thames Water has a solid track record of being a seriously irresponsible corporate citizen that is indicated by its consistently irresponsible behaviour over a fairly long period of time. In 1999 alone, Thames Water “was prosecuted and convicted for environmental pollution eight times, the most of any company in England and Wales, and fined ?79,000” or the third highest pollution fine during that year (Public Citizen 2003, p. 4). One of the more well-known and repulsive offence committed by Thames Water against the public of the United Kingdom was her discharge into Cray River in Dartford (Public Citizen 2003). The discharge happened because “a sewage trunk line to a treatment facility was shut down, resulting in a sewage discharge to the river” (Public Citizen 2003). The UK government environment agency showed up but Thames Water failed to respond in a manner that projects a deep concern for the public at large (Public Citizen 2003). In the case, the Environment Agency reported that Thames Water pleaded guilty for “knowingly permitting” the discharge of sewage to the Cray River (2003, p. 4). Among others, this indicates that the pollution sins of Thames Water were committed not simply out of neglect by Thames Water but by its outright disregard and disrespect for public welfare and interest. It is difficult to trust one’s drinking water to someone who does have a concern at all for your welfare. In year 2000, Thames Water manifested notoriety once more when it was fined the highest by the Environment Agency (Public Citizen). According to the Public Citizen (2003, p. 4), “the vast majority of fines levied against Thames, ?250,000 stemmed form a single case---a case that so offensive, the first magistrates to hear Thames’ guilty plea felt the scope of their punitive authority was insufficient, and they kicked the case up to a higher court.” The damaged brought on the public by Thames’ lack of social responsibility, however, isn’t the big news but rather that high court’s criticism of Thames Water for “its complete disregard of human health and the environment” (Public Citizen 2003, p. 5). In 2001, the Public Citizen noticed that Thames Water was no longer the leading polluter in Britain but the company still managed to get a hefty ?57,600 fine (2003, p. 5). Worst, the Public Citizen noticed that “while the amount the company was fined was relatively lower in 2001, the corporation’s total number of significant pollution incidents climbed 20 percent from 2000 to 2001” (2003, p. 5). By 2002, however, Thames Water reclaimed its title as being the “worst of the worst” polluter of the United Kingdom (Public Citizen 2003, p. 6). Thames Water was prosecuted five times and fined a total of ?132,000 (Public Citizen 2003). Noting that a number of people were exposed to “sewer gushing from manholes every time it rained heavily”, residents were exposed to “sewage several inches deep washing over their gardens and yards, covering children’s toys and play equipment, and leaving a slimy smelly residue behind”, the Environment Agency fined Thames Water. Public Citizen (2003, p. 6) alleged that Thames Water “knowingly” allowed sewage to run into streets, streams and homes. Public Citizen (2003, pp. 7-8) alleged that Thames Water’s notoriety is not limited to the UK because Thames Water has been polluting Australia and Indonesia. Further, Thames Water has also been notorious for its exorbitant rates in the United States (Public Citizen 2003). According to the Public Citizen (2003, p. 8), Thames Waster has been refusing to invest in things that would benefit the public interest because it is more interested “to reward corporate executives with equally offensive pay raises” as the company tripled the annual compensation package of its chief executive. Today, however, in stark contrast with the image painted by the Public Citizen in 2003, Thames Water has solidly invested in a corporate social responsibility program. Thames Water advances the notion of corporate responsibility as proxy for corporate social responsibility and defines corporate responsibility as “taking account of social and environmental issues in the way we operate” (Thames 2012b). Thames Water does not appear to recognize that environmental problems cause havocs on people’s lives and degrades their quality of life, nevertheless the company declaration constitutes an advancement from the earlier posture of lack of concern if not a total absence of concern. As mentioned, the posture of Thames Water today is to take into account the social and environmental issues in the way that Thames Water operates. The way that Thames Water configured its corporate social responsibility is something that deserves a study by itself. Note how Thames Water phrased its “social responsibility” statements. According to Thames Water (2012b), “each day we take millions of litres of water from the environment to provide drinking water to our customers, and then return treated wastewater to rivers and streams.” There is no statement of remorse for several years that Thames Water caused the diversion of sewage water into the rivers. The corporate responsibility statement may not at all provide a guideline that would prevent Thames Water from dumping sewage water into rivers on the ground that they are treated wastewater anyway. There is a clear and present danger that notwithstanding Thames Water social responsibility statements, sewage water can still be dumped into the rivers by Thames Water. In any case, Thames Water’s social responsibility statement is a far cry from the situation wherein Thames Water has no corporate social responsibility statement. Based on Thames Water (2012b), the notion of corporate social responsibility appears to have emerged in Thames Water in 2005 or around 2 years after the scathing criticisms of Public Citizen (2003). In the social responsibility statement of Thames Water, there is no statement prohibiting Thames Water from permitting the flow of sewage water into the rivers but nevertheless there is a recognition that “customers and communities are impacted” by the work of Thames Water. It is clear that Thames Water has crafted a carefully-prepared declaration of social responsibility but apart from “taking account of social and environmental issues”, Thames Water’s notion of corporate responsibility is basically circumscribed in the notion that corporate responsibility remains limited to or revolves around providing the “essential service for customers” and this is the key parameter through which Thames Water measures its performance. This is dangerous because Thames Water can argue that sewage water has to flow into rivers for sometime so the more essential service of the delivery of tap water can be ensured. Yet, at the same time, it is encouraging to know that Thames Water has adopted in its social responsibility program a system of public consultations. This can be a potential mechanism through which public interests can moderate the actions of Thames Water even if full success is not yet achieved in making or forcing Thames Water to have a more proactive or more responsible corporate social responsibility statements that would explicitly prohibit herself from dumping sewage water into the rivers, the environmental sins for which Thames Water has been notorious for a long number of years. At the same time, the corporate responsibility policy statement that is embodied in the Thames Water (2011, p. 2) clearly says that Thames Water must be “responsive to the expectations of others.” In addition, the third policy statement of the document (the first policy statement of the document is that Thames Water must live its company core values which are not really defined while the second policy statement is in sentence prior to this sentence), stresses that Thames Water must respect the world in which we live in. These policy statements pertaining to Thames Water’s articulation of its corporate responsibilities offer a set of principles that can be invoked to prevent Thames Water from repeating its corporate social responsibility fiascos from 1999 to 2003. It is also encouraging to know that in the social responsibility policy statement produced in 2011, Thames Water has adopted the principle that the company will “identify, measure and manage the impact” of its operation in a systematic way (Thames Water 2011, p. 4). This policy statement has the potential of finally leading Thames Water to adopt measures that would finally force herself to measure her impact to the environment. However, the policy statement could have been more meaningful if Thames Water would acknowledge her excesses in the past and express her remorse for her past sins and offences on UK’s environment. Finally, it should be noted that Thames Water appears to have the intent to fully project its social responsibility statements into the social media. The webpage http://www.thameswater.co.uk/cps/rde/xchg/corp/hs.xsl/1767.htm offers buttons for sharing Thames Water’s corporate social responsibility policy with the users of Facebook, Twitter, NetShout, Tag, 7Live, Amazon, AOL Mail, Arto, Baang, Bebo, BitzSugar, Blip, 2linkme, Armenix, Aviary, Bit.ly, Blinklist, Blogger, and other social media. Of course, by putting herself on the offensive, Thames Water is putting herself also on the defensive or vulnerability to public opinion. By using the social media, Thames Water would make herself become more available for public scrutiny and, hopefully, ultimately lead her to adopt more environment-friendly policies. References Ali, I., Rehman, K., Yilmaz, A., Nazir, S., & Ali, J.F. (2010). ‘Effects of corporate social responsibility on consumer retention in cellular industry of Pakistan’. African Journal of Business Management. 4 (4) pp. 475-485. Aviva (2012a) About us [Online]. Available at: http://www.aviva.com/about-us/ [Accessed: 9 January 2012]. Aviva (2012b) Our focus on global issues [Online]. Available at: http://www.aviva.com/reports/cr10/ [Accessed: 9 January 2012]. Aviva (2011) Corporate profile [Online]. Available at: http://www.aviva.com/library/pdfs/corporate_profile_oct_2011.pdf [Accessed: 9 January 2012]. Cardebat, J.M. & Sirven, N. (2010) ‘What corporate social responsibility reporting add to financial return’. Journal of Economics and International Finance. 2 (2) pp. 20-27. Carroll, A. (1999) ‘Corporate social responsibility: Evolution of a definitional construct’. Business & Society. 38 (3) pp. 268-295. Dunne, S. (2007) ‘What is corporate social responsibility?’ Theory & Politics in Organisation. 7 (2) pp. 372-380. Public Citizen (2003) Corporate profile: RWE/Thames Water [Online]. Available at: http://www.citizen.org/documents/RWEProfile2003.pdf [Accessed: 9 January 2012]. Thames Water (2011) Corporate responsibility and sustainability. London: Thames Water. Thames Water (2012a) Our business [Online]. Available at: http://www.thameswater.co.uk/cps/rde/xchg/corp/hs.xsl/825.htm [Accessed: 9 January 2012]. Thames Water (2012b) Corporate responsibility [Online]. Available at: http://www.thameswater.co.uk/cps/rde/xchg/corp/hs.xsl/827.htm [Accessed: 9 January 2012]. The Law Society (2002) Corporate social responsibility: A view from the Law Society. The Law Society: International Unit. Read More