Company Law for Business - Essay Example

? Company Law for Business Table of Contents Introduction 3 Evolution of CSR 3 History of CSR 5 Role of CSR in Financial Crisis 5 Prospects of CSR infuture 8 Conclusion 9 References 10 Introduction Corporate social responsibility is a form of corporate regulation that is integrated into the business model of an organization. Leading organizations around the globe are trying to implement unique strategies in business processes in order to maintain their competitive position in global market place. Competition in global business environment gradually increased right after the Second World War due to globalization. Several organizations implemented business expansion strategy in order to increase their market share and develop potential client base around the globe. This global expansion strategy forced these organizations to adopt and implement aggressive business strategies to maintain its competitive position. Several social, environmental, political, legal and environmental issues, such as labour issues and high carbon emission issues had developed for these organizations due to these aggressive business strategies. These challenges were affecting the image and reputation of the organization among the customers and other stakeholders. Therefore, the organizations decided to adopt strategies that will bring sustainability in business performances as well as societies (Bourne, 2013, p.32). The essay will discuss the evaluation, history and future prospective of CSR. In addition to this, it will discuss about the role of CSR in financial crisis. Evolution of CSR Organizations generally try to initiate corporate social responsibility activities and program in order to bring overall positive impact on community and society. In addition to this, socially responsible corporations find it easy to maximize business profits due to several valuable green and sustainable business activities. Earlier, several organizations adopted unethical and illegal business policies to maximize business profit without contributing for the community or society. It affected the social, communal and environmental balance. Aggressive global expansion strategy forced manufacturing and distributing firms to increase their consumption level of fossil fuel as major energy sources. It is known to all the consumption and burning of fossil fuel lead to environmental pollution as these activities increases the carbon emission level. High carbon emission level is one of the major reasons behind these growing effects of global warming. The temperature of earth surface is increasing day by day due to massive fossil fuel burning. Looking into these aspects, governments of several countries developed several environmental policies for business organization to limit the consumption percentage of fossil fuel. However, these policies and legal barriers forced the organizations to focus on sustainable business practices. In addition to this, market and customer’s demand for green and environment friendly products. Slowly and gradually, the organizations tried to search for substitute energy sources that can harm less to environment. In addition to this, emergence of advanced technology helped organizations to consider the aspect of green business operation strategy. On the other hand, sustainable business practices helped organizations to avoid legal and political threats. However, corporate social activities are considered as the part of sustainable business strategies. Water recycling, maintaining zero solid waste, reduction of carbon emission, charitable functions for the development of communities and other sustainable business activities are adopted by several organizations to maintain high brand vale and meet current market demand (Hannigan,. 2009, p.71). History of CSR In the year 1990, the leading organizations started to understand the significance of several types of CSR programmes and activities. It was important for the organization to undertake different business strategies to sustain in the competitive business environment. In addition to this, the stakeholders of several organizations are also started to take interest in green business strategies and CSR initiatives. Governments of several developed and developing countries started to develop environment and legal policies for the business organizations to maintain social and environmental sustainability. On the other hand, leading organizations started to organize several corporate social responsibility programmes to benefit the community and society. Effective NGO and stakeholder engagement helped these organizations to make plan for several kinds of CSR activities (Hudson, 2012, p.106). For example, PepsiCo initiated child education program. This initiative was to arrange educational facilities for poor children. Several leading NGOs and public organization helped to develop this strategy. In addition to this, the organization started to focus on water recycling and low carbon footprint aspects in order to reduce the consumption level of natural resources. These strategies increased the acceptability of the brand among the government, shareholders and all the stakeholders. Role of CSR in Financial Crisis The financial crisis that took place due to the bursting of the Unites States Mortgage bubble and the collapse of the Lehman Brothers had an adverse effect on the entire world. The government of the United States along with the apex regulatory and supervisory body had not been able to estimate the true extent of the risk that the country was exposed to. The rising prices of crude oil and the absence of liquidity in the markets resulted in a trouncing of the sentiments of the individual consumers. Thus the business activities across the globe experienced a major slowdown due to this incident. As it has been perceived that the reason for this financial crisis was the lack of a sustainable approach towards the business activities. There was a deficiency of ethics among the people who were engaged in the activities related to the financial markets. Therefore in the post financial crisis period all the businesses felt the need for a change in the prevalent processes of the businesses (Giannarakis and Theotokas, 2011, p. 3). The financial crisis had made the companies aware of the fact that there is a need for a change in the Socio-economic and environmental perspectives of the company and that the goals need to be reset. The models in which the businesses worked needed a restructuring and the new models based on ethics, values and principles were necessary to be constructed. Any kind of economic recession is bound to affect the shareholders of the company as well as the management. Some researchers are of the opinion that corporate social responsibility acts as a burden on the companies as they have to incur extra costs to carry on with their CSR activities. There are several issues relating to corporate social responsibility that crop up while discussing about the global financial crisis. Most of the Fortune 500 companies consider the society as a major stakeholder of their businesses. The adverse effect of the financial markets has resulted in the holding back of the investments of the projects that are made with a social motive. However it had little effect on the labour standards of the country (Karaibrahimoglu, 2010, p. 382). Thus the most prudent question in this context is by how much the company would curtail its CSR expenditures to combat the extra burden of expenditure. The policy formulation of the companies has a greater effect on the CSR activities and the companies that had been following the stringent norms had been affected by the crisis to a lesser extent. This is because they have followed the ethical standards which enabled them to continue their business in a more sustainable manner and attain long term stability. Following the financial crisis period, a number of important areas of importance have been identified where the companies are working on to continue with their spirit of the indulgence of social welfare. Most of the companies have aimed at building leadership teams that have put forward their helping hand in different issues relating to the environmental and social commitments of the organisations. Each of the organisations have developed Research and development teams that have continuously contributed to the innovation of new systems and processes which would aim at making the businesses more sustainable and environment friendly. Along with this another strategy that most of the organisations have taken is to partner with different nongovernmental organisations that are working on specific issues of social relevance (Sirgy, 2002, p. 152). The main motive behind all this is the commitment to the people of the world by extending support in protecting the human rights of the individuals. Clubbed with this the companies also intend to address the problems relating to environmental and climatic imbalance and the issues of global warming. The last few decades have witnessed a lot of increase in this kind of activities, especially in the countries that have achieved the status of developed nations. The financial crisis had led to a setback for the practice of this CSR because of the rising costs. In some cases it had acted as a threat for the survival of any company. Therefore the crisis has forced the companies to change the perspective of CSR from the point of view of investment in social needs to the refinement of the ethical and environmental standards of the companies (Ingram and Frazier, 1983, p. 614). Therefore it is based more on the development of the social relationships. The limited resources that are present in the world need to be utilised in an optimal way so that the future generation is left behind with sufficient bequest. Hence the regulations and the compliance norms are given more importance in the present ay across countries. Prospects of CSR in future Global business environment is becoming highly competitive as several leading organizations are operating their business practices in similar industry. The organizations that aspire to be leaders in CSR are significantly challenged by the rising expectations of public. It is important to implement innovation and creativity to foster CSR activities. Integration of CSR activities in business strategies is becoming profitable for the organizations. Day by day, the demand for green products and services are increasing among the global consumers. For example, global automobile manufacturing organizations are trying to introduce vehicles that are run by substitute energy resources rather than fossil fuel or petroleum (Dignam and Lowry, 2009, p.98). Leading car manufacturing organizations like Toyota and Ford already have introduced electronic cars. People around the globe know the significant of substitute energy resources. In addition to this, price of fossil fuel is rising at a rapid pace. Therefore, the demand for these green vehicles is increasing among people. Another example can be considered to determine the future prospects of CSR. Implementation of strategies according to the cultural background of employees in different countries is also considered as the corporate social responsibility activities. Large organizations as well as the SMEs around the globe implementing corporate social respo0nsibility activities in order to maintain conflict free business operation. Each and every organization is trying to contribute to the development of societies and communities from its business profit to mitigate ethical concerns. As a whole it is important for the organizations to find new sustainable strategies and CSR initiatives to continue with their sustainable business performance in near future as demand for these aspects will grow at a rapid pace. Governments of different countries are monitoring the business performance of the organizations along with its corporate and business culture (Kershaw, 2011, p.44). A profitable organization can face several legal and political challenges if the organization does not follow any kind of ethical code, labour standard or environment policy. It is clear from several survey reports that stakeholders are attracting more to those organizations who maintain all the corporate social responsibilities (Griffiths, 2013, p.17). CSR is not only about maximizing profit and revenue, but also taking care of social and communal aspect through these business outcomes. Effective CSR activities will help the organizations to make better decision that will help to achieve business objective without an external environmental challenges. Governments are developing strict rules to maintain sustainability and CSR. Maintain these policies will help to attain effective brand recognition. Conclusion Leading global firms are focusing on corporate social responsibility activities to maintain sustainable business practices. Recently, the demand of stakeholders and customers are shifting to green business strategies and effective environment friendly business outcome. Earlier the business organizations tried to fulfil social needs by investing in the community and society from the business profit. It created setbacks for several organizations as it increased operational cost. Recently, the organizations are focusing on environmental sustainability in order to maintain their CSR. It is important for the organizations to fulfil all the social and environmental needs through sustainable business strategies in order to attain high brand image. References Bourne, N., 2013. Bourne on Company Law. 6th ed. London: Routledge. Dignam, A., and Lowry, U., 2009. Company Law. London: Oxford University Press. Giannarakis, G. and Theotokas, I., 2011.The Effect of Financial Crisis in Corporate Social Responsibility Performance. International Journal of Marketing Studies. Vol 3(1). Griffiths, A., 2013. Company Law. New Jersey: Pearson. Hannigan, B., 2009. Company Law. London: Oxford University Press. Hudson, A., 2012. Understanding Company Law. London: Routledge. Ingram R. and Frazier, K., 1983. Environmental Performance and Corporate Disclosure. Journal of Accounting Research. Vol.18. Karaibrahimoglu, Y.Z., 2010. Corporate social responsibility in times of financial Crisis. African Journal of Business Management. Vol 4(4). Kershaw, D., 2011. Company Law in Context. London: Oxford University Press. Sirgy, M.J., 2002. Measuring Corporate Performance by Building on the Stakeholders Model of Business Ethics. Journal of Business Ethics. Vol. 35. Read More