Corporate Responsibility: Tradition of Commitment - Essay Example

Below are the tables comparing the possibilities of the effects of Corporate Social Responsibility on the Corporate Financial Performance of UK companies. Fifteen (15) companies from each of two sectors, namely the pharmaceuticals and telecommunications are analysed to detect: (i) the positive link between CSR and CFP; (ii) the possibility of no apparent link between CSR and CFP; (iii) the negative link between CSR and CFP. UK Pharmaceutical Companies The Positive Link between CSR and CFP The Absence of Link between CSR and CFP The Negative Link between CSR and CFP GlaxoSmithKline According to the 2010 Corporate Responsibility Report, Glaxo engages in series of activities that likely boost its reputation among other pharmaceutical companies by respecting people’s Human Rights, working towards environmental sustainability and investing hugely in the communities. These activities are likely to encourage more patronage of Glaxo’s products; hence, leading to a better financial performance (GlaxoSmithKline, 2011) There are no direct statistical representations of how GlaxoSmithKline’s great Corporate Social Responsibility has actually affected its Corporate Financial Performance. However, the inference is that sticking to ethical conduct may have helped GlaxoSmithKline to gain positively from their CSR policies (GlaxoSmithKline, 2011) Apparently, there are no negative links between GlaxoSmithKline’s CSR policies and the company’s overall Corporate Financial Performance Merck & Co It is believed that highly organized and effective CSR will definitely produce a positive link with a company’s CFP (Carroll & Buchholtz, 2011). Merck operates transparently, monitors its corporate activities against the environment and involves in community building (Merck & Co, 2011) There are no statistical or documented evidence that there is no direct link with Merck & Co’s CSR and CFP There is no possibility of negative link between CSR and CFP for Merck & Co. because the company engages in CSR activities that are likely going to increase the popularity of the company within its communities (Merck & Co, 2011) Novartis AG With interesting policies on CSR, Novartis AG has endeared itself to people in the communities it operates worldwide (Novartis AG, 2011). As a result of this, the company is one of the best loved pharmaceutical companies in the world. Hence, this has improved the patronage of the company’s products. There is every possibility that Novartis AG’s CSR truly contributed to the company’s advancement in the world There are no apparent negative link with Novartis AG’s CSR activities Gilead Sciences Gilead Sciences ‘ elaborate response to AIDS in the emerging market and its transparent method of operations have made the company to earn a lot of respect as a frontline social ly responsible companies that invest in their communities (Social Funds, 2011). And this is reflected in the demand for Gilead Sciences’ products. There is no evidence that the CSR attempts by Gilead Sciences do not impart the Financial Performance of the company No negative link between CSR and CFP as far as Gilead Sciences are concerned Sanofi-Aventis Sanofi-Aventis concentrates on acting responsibly for their patients through strict adherence to ethics, best practices and investment in the communities and people in them (Sanofi-Aventis, 2011). This attitude will only bring positive growth and better financial performance to the company (Carroll & Buchholtz, 2011) There are no statistical or documented evidence that there is no direct link with Sanofi-Aventis’s CSR and CFP Apparently no negative link between Sanofi-Aventis’ CSR and CFP. AstraZeneca AstraZeneca’s CSR programs include but are not restricted to maintaining operational transparency, human rights, standardized code of conducts, environmental sustainability and patient safety (AstraZeneca, 2011). All these qualities contribute to better financial performance for the company. No observable neutral effects of CSR on AstraZeneca’s CFP There are no practical negative implications of CSR on the company’s CFP. Novo Nordisk Through philanthropic gestures and strong involvement of the stakeholders, Novo Nordisk undertakes pragmatic CSR that have brought many awards and higher patronage to the Company (Novo Nordisk, 2011) It is quite certain that Novo Nordisk’s CSR truly contributed to the company’s advancement in the world There are no practical negative implications of CSR on the company’s CFP. Johnson & Johnson It is believed that highly organized and effective CSR will definitely produce a positive link with a company’s CFP (Carroll & Buchholtz, 2011). Johnson & Johnson operates transparently, monitors its corporate activities against the environment and involves in community development (Johnson & Johnson, 2011) There are no direct statistical representations of how Johnson & Johnson’s great Corporate Social Responsibility has actually affected its Corporate Financial Performance. However, the inference is that sticking to ethical conduct may have helped Johnson & Johnson to gain positively from their CSR policies (Johnson & Johnson 2011) There are no apparent negative link with Johnson & Johnson’s CSR activities Bristol Meyers With interesting policies on CSR (pediatric AIDS, poverty reduction and patient safety), Bristol Meyers has endeared itself to people in the communities it operates in (Bristol Meyers, 2011). As a result of this, the company is one of the best loved pharmaceutical companies in the world. Hence, this has improved the patronage of the company’s products. There are no statistical or documented evidence that there is no direct link with Johnson & Johnson’s CSR and CFP No negative impacts on the Company’s CFP owing to its CSR activities Abbot Laboratories Abbot Laboratory’s CSR programs include but are not restricted to maintaining operational transparency, human rights, standardized code of conducts, environmental sustainability and patient safety (Abbot Laboratories, 2011). All these qualities contribute to better financial performance for the company. There is no evidence that the CSR attempts by Abbot Laboratories do not impart the Financial Performance of the company No detectable negative impacts of CSR programs on Abbot’s CFP. Eli Lilly & Company This Company has great CSR policies which embrace good or best governance, community development and environment preservation. These activities help Eli Lilly & Company to flourish economically (CSRHUB, 2011) There is no evidence that the CSR attempts by Eli Lilly & Company do not impart the Financial Performance of the company There are no practical negative implications of CSR on the company’s CFP. Pfizer Pfizer establishes policies that cater for the environment, community wellbeing, employee safety and patient survival. These qualities are helpful for economic advancement in the company (Pfizer, 2011). There is no neutral implication of CSR on Pfizer’s CFP. No negative influence of CSR on Pfizer’s CFP. Roche Roche strongly encourages access to healthcare, transparent governance and environmental protection—and these CSR ethics have produced constant and improved financial performance for the company (Roche, 2011) There is no neutral implication of CSR on Roche’s CFP. There are no practical negative implications of CSR on the company’s CFP. Boehringer-Ingelheim Huge involvement in charities and other community-development activities have made Boehringer-Ingelheim win the hearts of the customers in the communities it operates in (Boehringer-Ingelheim, 2011). There is no neutral implication of CSR on Boehringer-Ingelheim’s CFP. No negative influence of CSR on Boehringer-Ingelheim’s CFP. UCB Pharma With interesting policies on CSR, UCB Pharma has made serious impacts on people in the communities it operates in (UCB Pharma, 2011). As a result of this, the company is one of the best loved pharmaceutical companies in the world. Hence, this has improved the patronage of the company’s products. There is no neutral implication of CSR on UCB Pharma’s CFP. No negative influence of CSR on UCB Pharma’s CFP The CSR reports of the fifteen UK pharmaceutical companies discussed in the table above confirms that CSR policies adopted by these companies have largely contributed positively to their Corporate Financial Performance; hence, the CSR reports do not reveal any neutral or negative impacts of CSR activities on their CFP. Despite the fact that each company undertakes different or almost approaches to CSR, the outcome of their actions have remained predominantly in the support of the companies’ Corporate Financial Performance (Carroll & Buchholtz, 2011). UK Telecommunications Companies The Positive Link between CSR and CFP The Absence of Link between CSR and CFP The Negative Link between CSR and CFP Orange Orange has been able to win the favour of many customers because of its concerns for the environment, human development through sponsorship of community activities and transparent management style. This has helped the company to grow financially (Orange, 2011) Every fact indicates that CSR has helped Orange’s financial standing immeasurably. No negative implications of involvement in CSR activities for the company’s Corporate Financial Performance. BT Shop BT has adopted social and environmental policies as parts of its main business objectives; and this has endeared the company to several customers who use the company’s products (BT, 2011) No statistical evidence indicates that CSR has not been instrumental to BT’s financial progress in recent years. No observable negative effects of CSR on the company’s CFP. Virgin Media Virgin Media combines digital technology, environmental preservative procedures and human development to keep itself at the top of the market through CSR (Virgin Media, 2011) There is no neutral implication of CSR on Virgin Media’s CFP No detectable negative impacts of CSR on the Company’s CFP. Vodafone With interesting policies on CSR, Vodafone has made serious impacts on people in the communities it operates in (Vodafone, 2011). As a result of this, the company is one of the best loved telecommunications companies in the world. Hence, this has improved the patronage of the company’s products/services. No statistical evidence indicates that CSR has not been instrumental to Vodafone’s financial progress in recent years. No detectable negative impacts of CSR on the Company’s CFP. Cable & Wireless Cable & Wireless has adopted social and environmental policies as parts of its main business objectives; and this has endeared the company to several customers who use the company’s products (Cable & Wireless, 2011) There is no neutral implication of CSR on Cable & Wireless’ CFP No observable negative effects of CSR on the company’s CFP. Alpha Telecoms Standardized mode of operations, preservation of the environment and great customer relationship are the three ingredients of CSR that has helped Alpha Technology to become a household name in the UK (Alpha Telecoms, 2011). No statistical evidence indicates that CSR has not been instrumental to Alpha Telecoms’ financial progress in recent years No detectable negative impacts of CSR on the Company’s CFP. Siemens Communications Siemens Communications combines digital technology, environmental preservative procedures and human development to keep itself at the top of the market through CSR (Siemens Communications, 2011) No statistical evidence indicates that CSR has not been instrumental to Siemens’s financial progress in recent years No observable negative effects of CSR on the company’s CFP. Nokia Nokia remains a viable telecommunications company in the world because of its CSR , which include but not limited to sustainability governance, best code of conduct, and involvement of the stakeholders in the CSR processes (Nokia, 2011) There is no neutral implication of CSR on Nokia’s CFP No observable negative effects of CSR on the company’s CFP. Fujitsu Fujitsu combines digital technology, environmental preservative procedures and human development to keep itself at the top of the market through CSR (Fujitsu, 2011) No statistical evidence indicates that CSR has not been instrumental to Fujitsu’s financial progress in recent years No detectable negative impacts of CSR on the Company’s CFP. Alcatel Alcatel remains a viable telecommunications company in the world because of its CSR , which include but not limited to sustainability governance, best code of conduct, and involvement of the stakeholders in the CSR processes (Alcatel, 2011) No statistical evidence indicates that CSR has not been instrumental to Alcatel’s financial progress in recent years No detectable negative impacts of CSR on the Company’s CFP. Sony Ericsson Sony Ericsson has adopted social and environmental policies as parts of its main business objectives; and this has endeared the company to several customers who use the company’s products (Sony Ericsson, 2011) There is no neutral implication of CSR on Sony Ericsson’s CFP. No negative implications of involvement in CSR activities for the company’s Corporate Financial Performance. Samsung Samsung combines digital technology, environmental preservative procedures and human development to keep itself at the top of the market through CSR (Samsung 2011) No statistical evidence indicates that CSR has not been instrumental to Samsung’s financial progress in recent years No detectable negative impacts of CSR on the Company’s CFP. Appletree Communications Appletree Communications combines great customer supports with great business solutions to stay on top of the market—this is a positive impact of CSR (Appletree Communications, 2011) There is no neutral implication of CSR on Appletree Communication’s CFP. No negative implications of involvement in CSR activities for the company’s Corporate Financial Performance. Icom Ltd Icom Ltd remains a viable telecommunications company in the UK because of its CSR , which include but not limited to sustainability governance, best code of conduct, and involvement of the stakeholders in the CSR processes (Icom Ltd, 2011) No statistical evidence indicates that CSR has not been instrumental to Icom Ltd’s financial progress in recent years No detectable negative impacts of CSR on the Company’s CFP. Philips Telecom Philips Telecom has adopted social and environmental policies as parts of its main business objectives; and this has endeared the company to several customers who use the company’s products (Philips, 2011) There is no neutral implication of CSR on Philips Telecom’s CFP. No detectable negative impacts of CSR on the Company’s CFP. The table above indicates the CSR programs or policies undertaken by the fifteen UK telecommunications companies. Their approaches to CSR appear to be similar and produce positive impacts on their Corporate Financial Performances (CFPs). As a matter of fact, their CSR reports do not indicate that they have been negatively affected by the expenses on achieving CSR policies/programs (Carroll & Buchholtz, 2011). Part of the Literature Review For the fact that all the 30 companies used in this paper implement one form of corporate social responsibility in their policies, it is possible to assume that these activities have been quite instrumental to the corporate financial performances of these companies (Carroll and Buchholtz, 2011). Two important observations stand out in this study: (i) That well-intentioned Corporate Social Responsibility can enhance better customer patronage, which invariably will lead to more economic activity for the company. In other words, companies can improve on their financial performance based on the increased in the demand of goods or services produced by these companies. Hence, it is safe to assume that CSR is a driving force for better Corporate Financial Performance (Carroll and Buchholtz, 2011). However, it has been difficult for past researchers on the same subject-matter to discover the magnitude of CFP that are enhanced by the efficient CSR. (ii) On the other hands, it is almost impossible to discover, if any, the negative or neural effects of CSR on any company’s CFP. The reason for this is that most CSR reports are not statistically quantifiable: they are merely expression of optimism and managed policies. Take for instance: do companies estimate, in monetary values, how much it is going to cost them by volunteering for community activities? Do companies feel drained by investing in the communities when in actual fact they are carrying out their statutory functions as a viable part of the community? But this does not indicate that CSR has a neutral or negative impact on the corporate financial performance of companies. As a result of the two reasons stated above, companies without a definable CSR policy may find themselves hooked by the problem of low patronage which could have been caused by their bad judgment of not contributing to the communities in which they operate. Corporate social responsibility has become a famous procedure for acquiring better reputation for companies that understand that they need to operate in good manner towards people, who happen to be their customers. Technically, a well-executed CSR will always bring positive impacts to the financial development of the companies that implement them. Invariably, if a company fails to brighten its image through CSR, it may be difficult for it to win people’s trust and enjoy increased patronage like the one that considers CSR as a part of its business strategy (Carroll and Buchholtz, 2011). Assessing the Differences between Firms in Different Sectors in CSR Spending in the UK during the Past Three Years The two sectors investigated in this paper are pharmaceuticals and telecommunications. The annual reports of five companies from each sector are used to acquire their CSR spending during the past three years. Using SPSS, their means are determined. Since most companies do not normally indicate their overhead CSR spending in their annual reports; therefore, the standard procedure in the business world is that companies should set aside a minimal 2% of their annual income as their CSR spending. This does not include the profit made within the fiscal year so as to guarantee consistency (Corporate Social Responsibility Outsourcing, 2011). So, the estimated CSR spending in this paper is based on the minimum 2% of the annual income (Net Earnings or Turnover) of each company using the Consolidated Financial Statements. Pharmaceutical Company CSR Spending (2008) CSR Spending (2009) CSR Spending (2010) Mean Abbott Laboratories $97,614,380 $114,916,000 $97,614,000 $103,381,330 GlaxoSmithKline $974,080,000 $1,134,720,000 $1,135,000,000 $1,081,266,700 UCB Pharma $100,000,000 $87,248,000 $90,104,000 $392,450,670 Johnson & Johnson $258,980,000 $245,320,000 $266,680,00 $256,993,330 Pfizer $965,920,000 $1,000,180,000 $1,356,180,000 $1,107,426,700 Total Mean $588,303,200 The estimated mean value above shows a representative amount of CRS spending engaged by five big Pharmaceutical companies in the UK, which is approximately worth $588,303,200 USD within the last three years. Telecommunications Company CSR Spending (2008) CSR Spending (2009) CSR Spending (2010) Mean Orange $1,307,938,000 $1,255,660,000 $1,274,140,000 $1,279,246,000 Vodafone $1,419,120,000 $1,640,680,000 $1,778,880,000 $1,612,893,300 Sony Ericsson $35,100,000 $12,300,000 $33,600,000 $81,000,000 Samsung $230,564,100 $239,395,320 $271,549,280 $247,169,570 Alcatel $440,000,000 $405,988,000 $424,500,000 $423,496,000 Total Mean $728,960,800 The estimated mean value above shows a representative amount of CRS spending engaged by five big Telecommunications companies in the UK, which is approximately worth $728,960,800 USD within the last three years. However, comparing the extent of CSR spending between the two sectors of pharmaceutics and telecommunications in the UK, one could infer that the telecommunications sector spends more on CSR policies/programs. 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