Corporate Social Responsibility in the Global Logistics Industry - Term Paper Example

Running head: CORPORATE SOCIAL RESPONSIBILITY Corporate Social Responsibility s Corporate Social Responsibility Introduction Corporate Social Responsibility (CSR) is a management model that promotes ethical conduct and values for businesses by creating public relations policies to promote these practices to publics and stakeholders. After the major milestone "World Summit" in Rio in 1992, the sustainability agenda and its derivative concepts became more popular and visible. As in many new developments, major concepts of sustainability have no single definition. Neither the exact meaning of the term corporate social responsibility (CSR) nor the related terms e.g. corporate responsibility (CR) or corporate sustainability (CS) has still been agreed upon. (Marrewijk 2003 p 95). The European Commission (2001) defines CSR so that it incorporates social, environmental and economical aspects: CSR is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis." (European Commission 2001) Companies like UPS, FedEx, DHL and a large number of other multinational and smaller organisations are beginning to, or indeed already have taken the concept of Corporate Social Responsibility (CSR) very seriously. Corporate Social Responsibility and Logistics Sector The logistics and transportation sector plays a positive role in the economic development of societies, spreading opportunity and acting as a backbone for global development and communication, as well as contributing to communities. However, this sector also faces some strong emerging challenges to its perceived social responsibilities. The core business of this industry's direct relation with major sustainability issues such as environmental impact, traffic congestion, energy waste, safety and security, and sustainable infrastructure, puts logistics firms under the careful inspection of various stakeholders. There is a group of consumers who consider CSR in their purchasing decisions (Mohr Webb Harris 2001 p 45). 0ver the past few years, socially responsible consumers have been studied in relation to boycott behaviour (e.g. Klein 2003 p10 ) and cause related marketing (e.g. Polonsky 2001 p8) and it has been found that "negative CSR associations can have a detrimental effect on overall product evaluations, whereas positive CSR associations can enhance product evaluations" (Brown and Dacin 1997, p. 80). Recent surveys in Europe, the U.S. and Australia also suggest consumers do consider CSR policies in their purchasing decisions. The majority of surveyed consumers say they would pay more for goods and services marketed by socially responsible companies. (MORI 2001; Lloyd 2003 p58). Furthermore, as Kotler (1972) predicted, socially responsible consumer behaviour is growing . UPS UPS is one of the most active corporations in logistics sector on CSR issues. They are the biggest of 8 logistic companies in the world with a full triple bottom line report which is aligned with GRI; both sustainability and CSR are mentioned in their annual report for the last 3 years. The UPS website states that sustainability is in the heart of their business strategy. All CSR programs and initiatives are seen as business-as-usual in a well-managed company. Both the Chairman's statement and company mission statement explicitly states the importance of being a good corporate citizen. The Annual report includes a section called "Our Sustainability Statement". UPS has consistently ranked among the most admired companies in the country. They have reinforced the reputation of dependability and reliability by being conservative financially, being good corporate citizens and emphasizing social responsibility in the community. UPS is a tough competitive company but they understand the responsibility of a market leader. UPS policy promotes initiatives with the United Way, developing sustainability, increasing diversity, and limiting environmental impacts. United Parcel Service has released its annual corporate sustainability report (key performance indicators) tracking progress on the company's economic, social and environmental objectives. According to the report, in 2006: UPS's CO2 efficiency decreased .5 percent. The company produced .01 metric tons (60 kilograms) more CO2 emissions per 1,000 packages delivered than it did in 2005. Total energy consumption increased by four percent. Energy consumption per package increased by .07 percent. UPS recycled 36,800 tons of solid waste materials including metals, plastics, paper, corrugated materials, pallets and wood waste. It purchased 36,300 tons of materials with recycled content. The company maintains the largest alternative-fuel fleet in the industry and shaved more than 28.5 million miles by using technology to streamline delivery routes. UPS recycled more than 2.7 million pounds of electronic equipment from its operations. (www.environmentalleader.com/category/csr-report/page) DHL DHL has press releases on Corporate Citizenship. They cover the topic with some basic information on their web page. Although currently they have no triple bottom line report, during January 2004, they led a number of leading corporations from the logistics sector to agree on sector principles on Sustainable Development. This was called The Logistics & Transportations Corporate Citizenship Initiative (L&TCCI), and reported back to the World Economic Forum Annual Meeting in Davos, Switzerland. DHL is clearly presence in Corporate Citizenship discussions; however the lack of a published triple bottom line report or clearly set and communicated targets prevent them from being classified as a pro-active firm in the area. DHL takes its definition of Corporate Citizenship from the World Economic Forum: Corporate citizenship is about the contribution a company makes to society through its core business activities, its social investment and philanthropy programs, and its engagement in public policy (http://www.bcccc.net/index.cfm) DHL's rapid growth was achieved by encouraging local decision-making, bringing with it benefits in corporate citizenship terms -- for example, the local sourcing of services and the employment and training of local managers. However, local decision-making leads to local solutions, and this in turn can lead to duplication and inconsistency in some areas. As a result, we have a challenge to maintain local flexibility while introducing efficiency measures such as centralized procurement and standardized, global IT services. DHL's policy of corporate citizenship is consequently a reflection of its close relationship with the local communities in which it operates. This policy works to help areas which are affected by natural disasters or war they do this by supporting humanitarian agencies. In order to comply by their policy they improve their transportation as well as logistics activities that are foundation to DHL's business. In their point of view, what they are doing is not charity; this is what the corporate citizenship policy of DHL is all about. FedEx FedEx does not mention any issues related to stake holders other than share holders in their initial homepage. There are some pages devoted to sustainability issues but CSR is mainly taken as Corporate Governance which is considered as risk management. Major CSR activity is "community involvement" which focuses on giving a part of the profit back to the society rather than actively changing the business model and effect profitability. In its Forest-based Products Procurement Policy FedEx kinko setup the long-term goal a couple of years back FedEx Kinko's strategy to work side by side with organizations which are non-profit in nature and other external stakeholders concerning practices of sustainable forest management. FedEx Kinko's progress to better and advanced post-consumer recycled content, in the above mentioned policy , will reduce the use of wood; lessen the quantity of total energy, chemicals and water which is used when paper is manufactured ; and lessen solid waste as well as greenhouse gas emissions. By their policy they promote FedEx Kinko's as well as other industry to carry on assertively going after prospects in order to enhance recycled content usage and develop forest product procurement. Conclusion Major players in the global logistics industry align their CSR initiatives to their corporate strategy. UPS, FedEx and DHL all have different levels of activity on these issues. In a capitalist economy, investment decisions are taken to increase the company value. Trying to understand the reasons between these different approaches, this paper concludes that all sought different benefits from the path that they have taken. UPS saw a value in the new trends of responsible consumption; DHL is slow and approaching the subject from a standard setting perspective rather than an action taking approach; FedEx's involvement is quite minimal, value driver being the profit margin they take actions only where it has a quick return to financial bottom line. As in many other business initiative, in sustainable business models there are some companies who are driving the change and some other ones following the lead. Success and the value of these initiatives for this sector and for these companies will be more clear overtime. References Brown, T., P. Dacin (1997), 'the Company and the Product: Corporate Associations and Consumer Product Responses', Journal of Marketing, Vol.61, 68-84. European Commission (2001) Green Paper. Promoting a European framework for Corporate Social Responsibility. European Commission. Directorate-General for Employment and Social Affairs Unit (Accessed: http://europa.eu.int/comm/employment_social/soc-dial/csr/greenpaper_en.pdf.) 03.4.2004. http://www.bcccc.net/index.cfm retrieved on 4th April 2008 Klein, J., C. Smith, A. John (2003) 'Why We Boycott: Consumer Motivation for Boycott Participation and Marketer Responses', Centre for Marketing Working Paper No. 03-702, June, London Business School. p10 Kotler, P. (1972), 'What Consumerism Means for Marketers', Harvard Business Review, Vol. 50, 48-57. Lloyd, S. (2003), 'Speak to the Hand', Business Review Weekly, May 29, p58. Marrewijk, Marcel van (2003) Concepts and Definitions of CSR and Corporate Sustainability: Between Agency and Communion. Journal of Business Ethics. No: 44, p. 95-105. Mohr, L., D. Webb, K. Harris (2001), 'Do Consumers Expect Companies to be Socially Responsible The Impact of Corporate Social Responsibility on Buying Behaviour', The Journal of Consumer Affairs, Vol. 35, No. 1, 45-72. MORI (2000), 'The first ever European survey of consumers attitudes towards corporate social responsibility', CSR Europe Polonsky, M.J., G. Wood (2001), 'Can the Over-Commercialisation of Cause-Related Marketing Harm Society', Journal of Macromarketing, Vol. 21, No.1, 8-22. www.environmentalleader.com/category/csr-report/page retrieved on 4th April 2008 Read More