A Need to Extend the Social Responsibility to Modern Business - Report Example

TABLE OF CONTENTS 2 0 Introduction 3 1.1 What is Corporate Social Responsibility 4 1.2 The Need for Understanding the Implications of Corporate Social Responsibility 5 1.3 Issues Connected with Corporate Social Responsibility 6 1.4 Can We Define Corporate Social Responsibility 6 1.5 Limitations of Corporate Social Responsibility 7 1.6 Significance of Corporate Social Responsibility 7 2.0 Literature Review 8 2.1 Theories Outlining Corporate Social Responsibility 8 2.2 Standards of Corporate Social Responsibility 9 2.3 Literary Sources 10 3.0 Methodology Perspectives 12 4.0 Conclusion 17 Reference List 19 Appendix I 22 Appendix II 26 Appendix III 29 Appendix IV 34 IS THERE A NEED TO FURTHER EXTEND THE CORPORATE SOCIAL RESPONSIBILITY TO MODERN BUSINESS AND SOCIETY? ABSTRACT Corporate Social Responsibility has continued to assume the role of a topical and much debated subject in the modern day governments, in the corporate world and in the society in general. The increased focus for the exploration of the roles and responsibilities of the companies towards their relationship with the governments vis-à-vis the stakeholders, has resulted in the governments providing for suitable regulations governing such responsibilities. However, the extent to which the social responsibilities should be thrust on the companies remains unanswered. Whether adequate knowledge has already been acquired by the companies in this direction which will enable them to have a self motivation for implementing the measures of achieving the social responsibilities is also to be seen. With this background this study paper attempts to take a stand on the adequacy or otherwise of the governmental measures on Corporate Social Responsibility. 1. INTRODUCTION: The basic theme of the research proposal is outlined below: The Researcher has been assigned to study and make a report on the compliance of the Social and Environmental obligations of the Company, Royal Dutch Shell Plc (Shell), as there are vehement criticisms from all the quarters that the Company has miserably failed in meeting the Social and Environmental objectives not only in UK but in all the countries wherever the refineries of the Company are situated. The criticism is that the people living near the refineries of this Company have been put to lot of health hazards in that the multinational corporation is jeopardizing their families’ health, destroying their quality of life and threatening their lives. (The Other Shell Report 2003) For the information of the readers: Royal Dutch Shell plc (shell) is Royal Dutch Shell plc (Shell) is engaged in all principal aspects of the oil and natural gas industry, and also has interests in chemicals and additional interests in power generation and renewable energy. The Company operates in five segments: Exploration & Production, which searches for and recovers oil and natural gas around the world; Gas & Power, which liquefies and transports natural gas, and develops natural gas markets and related infrastructure; Oil Products, which include all of the activities necessary to transform crude oil into petroleum products; Chemicals, which produces and sells petrochemicals to industrial customers globally, and Other Industry Segments and Corporate, which include Renewables and Hydrogen.- (Google Finance) Shell is a global group of energy and petrochemical companies, operating in more than 140 countries and territories, employing more than 109,000 people. (www.Shell.com) In order to alleviate the fears and doubts from the minds of the people of various strata, the Researcher has undertaken the assignment on behalf of the Company to make a comprehensive report on the compliance or otherwise by the Company, of its Social and Environmental Commitments globally by adopting a suitable research method and analysis. Before commencing the research analysis into the concept of Corporate Social Responsibility we need to have a basic understanding of the concept, the purpose of our study of this concept, the hypothesis which this paper aims to analyse, the very definition of the term Corporate Social Responsibility and the limitations and significance thereof followed by a literary review of various works on the topic and a detailed research methodology. A detailed write up on the above aspects is attempted to in the following paragraphs: 1.1 WHAT IS CORPORATE SOCIAL RESPONSIBILITY: It is quite difficult to offer a straight forward definition of Corporate Social Responsibility (CSR). However in today’s globalised market place, there is growing acceptance that the corporate sector has a role to play in securing a sustainable future. “The Scope of this is variously defined as: Business for Social Responsibility – who you are, what you do and what you say about it. Business in the community – CSR is about how companies manage their business to produce an overall positive impact on society. CSR network – CSR demands that businesses manage the economic social and environmental impacts to maximize the benefits and minimize the downsides” - (Rebecca Collings 2006) 1.2 THE NEED FOR UNDERSTANDING THE IMPLICATIONS OF CORPORATE SOCIAL RESPONSIBILITY “It would be proper to painstakingly analyse this not always very precise concept from the perspective of its advocates and users, to measure its effects on the national or international (sectorial and multi-sectorial) instruments, on the standard-setting instruments (social and labour rights), on the future of these legislative and contractual rights, and on the content of the social policies.” (Gérard Fonteneau 2003) The following factors among other things have led to the situation that the extent of CSR is to be well defined so that all concerned have a similar view on the subject. Well informed stakeholders want to know the true performance of the companies concerned on their social and environmental responsibilities. The phenomenal growth in consumerism has given way to increased regulatory requirements which affect the working of the private enterprises to achieve their goal of profit maximisation. There is a growing need that the companies must empower stakeholders with adequate and valid information on the social and environmental norms. The constant increase in the number of stakeholders groups with varied expectations have made the companies position critical in the area of meeting their Corporate Social Responsibility In the above context this paper aims to bring about a fair view of the extent of pressure exerted by Corporate Social Responsibility measures on the modern day business and society and also a discussion on the adequacy of these measures in getting the desired objectives achieved. 1.3 ISSUES CONNECTED WITH CORPORATE SOCIAL RESPONSIBILITY This research paper aims to make an in depth study into the various social and environmental obligations thrust on the corporate citizens of the modern world to analyse and find a comprehensive review of; The way in which the Corporates have so far responded to this newly found obligations, The effect of these measures adopted by them as reflected on the society and Whether the existing regulatory and other measures are adequate or is there any need to increase further the extent of these obligations. “Among the findings, three themes emerged as important new information regarding consumers, U.S. companies, and media outlets: ♦ Corporate America receives low marks for its CSR performance. ♦ Consumers define CSR in ways most relevant to them, often without “experts.” ♦ Technology is changing the landscape in which consumers gather and communicate information about how well companies are being socially responsible.” – (Fleishman Hillard Report 2005) 1.4 CAN WE DEFINE CORPORATE SOCIAL RESPONSIBILITY In a layman’s understanding the Corporate Social Responsibility is assumed to mean that the companies should provide people with quality products as much as possible and they must make sure they do not pollute air and the environment as a result of their business activity. Although appears to be a crude definition of CSR, this exactly reflects what is intended to be achieved by the much talked about CSR. “Corporate social responsibility activities that integrate broader societal concerns into business strategy and performance is evidence of good management. In addition to building trust with the community and giving firms an edge in attracting good customers and employees, acting responsibly towards workers and others in society can be in the long-term interest of firms and their shareholders.” (Corporate Social Responsibility An Implementation Guide for Canadian Business) 1.5 LIMITATIONS OF CORPORATE SOCIAL RESPONSIBILITY The CSR is not left without limitations. It does carry the following limitations which prohibit the advocation of this concept very strongly. The limitations are: CSR has no incentives, either legal or financial for the corporate entities to spend time and money behind this concept and go more than marginally beyond their competitors. There is no system which strictly regulates the follow up of these principles and also the concept doesn’t address the penalties for those who breach the principles or repeat the offences. It doesn’t offer any specific redress for the stakeholders as there is no forum in which they can voice their concerns. The major limitation of the concept is that it takes into account the fundamental problems of unsustainable trading system and market economy and has based its premises on these ideologies which have always been criticized of being unstable. 1.6 SIGNIFICANCE OF CORPORATE SOCIAL RESPONSIBILITY In spite of the serious limitations listed, the CSR concept has a significant contribution to make for social and economic well being of the community as a whole. The following questions, when answered honestly will bring out the significance of the concept and its contribution to the world economy. “Is a business committed to sustainable development? Does it accept the idea of a stakeholder corporation? Is it managing its business to get win-win results for both itself and for society? Does it understand and measure the risk to its reputation and financial standing of these new management issues so that it is clear where good corporate responsibility practices add value?” (EPPA Response to the European Commission Green Paper on Corporate Social Responsibility) 2.0 LITERATURE REVIEW: Being a topic much talked about the world-over, quite a number of Study and Research papers, Journal Articles and Essays were available to the Researcher for conducting a wide research in this socially and economically significant issue. All these papers sought to bring out the environmental issues in a larger perspective than the sociological issues associated with the concept. 2.1 THEORIES OUTLINING CORPORATE SOCIAL RESPONSIBILITY: As applied to other popular business concepts CSR is backed by the globalization, especially through Transnational Corporations. An empirical review of this concept leads to the following two theories that have been developed in the recent past: 1. Agency Theory of Corporate Social Responsibility implies that the directors of an organization are agents of the owners and are duty bound to act so as to maximise the interests of these owners. 2. Stakeholder Theory of Corporate Social Responsibility involving a variety of interests representing employees, shareholders, consumers, government and other organizations or groups such as suppliers, trade unions, business associates and even competitors, emphsises a much broader set of social responsibilities for the business. “Although difficult to reconcile in practice, the two approaches (agency and stakeholder theories) are not completely incompatible: to a stakeholder theorist, shareholders count as one type of stakeholder, but not the only type to which duties are owed by the firm. Thus, corporate social responsibility (CSR) can be broadly defined as an organisation’s commitment to operate in an economically and environmentally sustainable manner while recognising the interests of its stakeholders.” (Kenneth Ameshi) 2.2 STANDARDS OF CORPORATE SOCIAL REPONSIBILITY: “Many corporate leaders see themselves as legally and morally obligated to strive for profits above all, with concern for employees and perhaps a bit of corporate philanthropy thrown in. Increasingly, however, civil society groups are holding corporations to new standards of social responsibility that go far beyond existing legal requirements. But what should those standards be? And who should decide?” (Ann Florini 2003) One of the very pertinent questions often being asked by those who are associated with the study of CRS is: “Consumers and corporate social responsibility. How does a business’ social philosophy affect its relationships with consumers? What are the main implications of these relationships?” – (Prof. Beatriz Junquera Cimadevilla, Prof. Jesús Ángel Del Brío González and Prof. Patricia Ordóñez De Pablos 2004) “Consistent with McWilliams and Siegel (2001), we define CSR as instances where the company goes beyond compliance and engages in actions that appear to advance a social cause. Such actions might include adding social features or characteristics to products or modifying production processes to signify that the firm is seeking to advance a social objective (e.g., selling cosmetics with ingredients that are not tested on animals or adopting environmentally-friendly technologies) or working closely with community organizations to ameliorate homelessness and indigence (e.g., the Society of St. Vincent De 11 Paul). In an international context, CSR may also involve avoiding operations in countries that commit human rights violations.” (Peter Rodriguez, Donald S.Siegal. Amy Hillman, Lorraine Eden 2006) The major social consideration the CRS should focus is the employee welfare represented by fair wages and better working conditions. The following is the essence of social obligations of the companies: “Manufacturing sectors tend not to be typical of other domestic and international economic modes of production. Often, the manufacturing sector covers only a minority of employees in most countries and its wages are often unrepresentative of the overall labour market”. (Jill Murray 2004) 2.3 LITERARY SOURCES: Having studied the varied opinions and ideas expressed on the concept of Corporate Social Responsibility we shall make a review of the following three literary articles on the subject. 1) Introduction to Corporate Social Responsibility Design Council Article by Rebecca Collings: The Author Rebecca Collings is a Business Journalist and Sustainability Advisor. In this article from Design Council, the author has commented on the evolution of the concept of Social Responsibility since working on the first environmental reports in the early 90’s. She concludes the article with the hope that “as CSR matures, more effort will be targeted at communicating with customers by integrating CSR issues in to a company’s brand and less on producing lengthy reports. This will drive product and service innovation, as well as brand communication.” 2) Article: Corporate Social Responsibility: The New Social Contract The Author Ann Florini is a Senior Fellow in Brooking Institution Washington D.C. This article is drawn from her new book ‘The Coming Democracy: New Rules for Running the New World’ (Island Press, 2003) The article speaks about setting human right standards as a measure of Corporate Social Responsibility and better socio-economic goals to be adopted by the Corporates. The article fixes the responsibility of fixing the social standards for compliance on the companies themselves. 3) EPPA Response to the European Commission Green Paper on Corporate Social Responsibility: EPPA is a specialised management consultancy assisting its clients with their management of the risks and opportunities resulting from the European political, regulatory and socio-economic landscape. The company was established in 1987 as one of the first consultancies active in this sphere. The Article attempts to bring out a clear understanding of the Corporate Social Responsibility by way of the Consultant firm’s response on the queries raised by the European Commission on the following key issues: Should the EU legislate to require major businesses to measure and report on CSR Is there any room for EU legislation How else can the EU encourage more CSR How can SMEs be more engaged in environment and social responsibility issues What are the best ways to build link between the social and environmental dimensions of CSR The article concludes with “what is most needed at this stage in the development of CSR is a pragmatic, supportive and results-focussed agenda which harnesses rather than by-passes the global market-place. This approach offers better opportunities to get sustainable and substantial improvements in the number and quality of businesses genuinely implementing CSR principles. Thus a review of these three literary articles provides a fair view of the Social Responsibilities of business including the standards to be set. The article from EPPA gives a comprehensive idea of how the Governments should react to the CSR issues and to what extent they can extend the norms to be adopted by various corporate entities. 3.0 METHODOLOGY PERSPECTIVES: The methodology perspectives of the research proposal are described below in detail: Outline of the Survey: Having studied the broad objective of the research as outlined in the beginning, this researcher proceeds to define the boundaries of his research field namely the Research approach, Research Strategies, Data Collection Methods and dissemination of the data and information to arrive at the conclusions of the research. Research Approach: Research is defined by Saunders as: ‘the systematic collection and interpretation of information with a clear purpose, to find things out.’ (Saunders et al., 2003) The first step in conducting a research survey is to think about and arrive at the data and information to be collected from the subjects of the survey on the basis of the objective of the research to be achieved. The quantum and nature of the date provides the alternative methods of collecting them. The Research may follow a ‘Deductive Approach’ by testing the theoretical propositions with the adoption of suitable testing methods or an ‘Inductive Approach’ by collecting relevant empirical data and evolving the necessary theories based on the data collected. For the present study on the CSR compliance of BP plc, the inductive approach will be followed as there is no previous theory or hypothesis which needs to be proved by testing. Research Strategy: Due to the nature of the report and the decision to use an inductive approach, it has been chosen: The Grounded theory where the procedure are designed to build and explanation or to ‘generate a theory’ around the central theme that emerges from research data. It also provides the structure often lacking in other qualitative approaches without sacrificing flexibility or rigor (Saunders et al., 2003) By Research Strategy we mean the dissemination of the data collected by whatever means, presenting them in a coherent and comprehensive manner which provides the necessary conclusive information on the research project and the issues connected therewith. Data Collection Methods: The general belief of business research is often thought of as collecting data, constructing questionnaires and analysing data. But it also includes identifying the problem and how to proceed solving it (Ghauri et al., 1995). Data sources can be described as the carriers of data (information). There are to types of data sources (Ghauri et al., 1995) 1. Primary data (field) is collected specifically for the research project. This will be in form observations and interviews. 2. Secondary data (desk) is collected by others. These include academic and non-academic sources. Since the Researcher is under an obligation to the Company to present a Report which suitably disorients the criticism against the Company, collection of Primary Data from the field is very much essential to provide the basis for the presentation of a true and fair report. Therefore the research survey will be using the following two ways of collecting the basic data necessary. Preparation and distribution of questionnaires to the subjects of the survey. Telephonic Interviews with the subjects on the relevant issues. The subjects of the survey shall be UK adult citizens of more than 18 years age. Survey Methods: The survey may be conducted by distributing questionnaires in the various retail outlets of the Shell plc. The questionnaires containing simple objective type of questions with optional answers numbered are to be distributed to those visiting the retail outlets to fill up fuel for their vehicles. General questions like gender, age, profession and income group detailing the background of the subjects are to be included to finally group and tabulate the data collected. A brief indication of the line of questions that may be framed is given as Appendix IV. Similarly the telephonic interviews are to be conducted on subjects selected by random picking of the telephone numbers. While contemplating to conduct interviews, the different methods of conducting the interviews should be kept in mind. Interviews may be: Structured – where there is a necessity to gather data out of a survey which need to be subjected to quantitative analysis, mainly used as a means of identifying set patterns if any, in a descriptive and explanatory study. Semi-structured – involving varying questions form interview to interview, but essentially covering the themes and topics to be covered. The questions may be added or omitted according to the context. It may be possible also to include new questions on a planned or ad-hoc basis. Unstructured – having no predetermined list of questions and allowing the respondent to speak freely in relation to the topic. Such questions explore the general area of interest in depth and may involve any number of questions as the interview will be informal. For the present study semi-structured interview method will be used, framing the topical questions which may be suitably modified according to the context and the subject of interview. Also the ‘Primary Method of Observation’ will be undertaken to collect the relevant information from the field directly so that the report will be coherent and concise. Profile of Survey Participants: The weighted demographic profile of survey respondents should reflect the adult population in the United Kingdom, according to the U.K. Census Bureau’s Population Data Base. Survey Objectives: The objectives of the survey are: To find out the consumers’ perceptions regarding the impact of specific and controversial CSR issues like the health hazards of living near refineries To explore the reactions of consumers to the various sources of CSR information that the Company use to communicate with the consumers. To assess the level of involvement with and understanding of CSR generally. More specifically the survey should gain insights into: How consumers define and understand “corporate social responsibility.” The impact of the company’s CSR activities on the environmental protection issues and social issues and overall opinion about the CSR compliance of the company. The credibility and use of various CSR information sources, including Executives, annual reports, traditional news media, and more recent online efforts. Subjects’ level of active involvement with and interest in CSR-related issues. On collection of data this report should reflect on the following key findings and represent: How Subjects define and interpret the meaning of CSR. Public opinion regarding Company’s performance in the environmental protection all through the world... Subjects’ interactions and attitudes toward an international social responsibility standard. Subjects’ personal values and belief behaviors. Factors influencing living standards of the general public. Opinions of and interactions with CSR sources. Subjects’ level of involvement with CSR. 4.0 CONCLUSION: Based on the various discussions and findings from the survey there emerges the following scenario: Most of the consumers still do not have a full and clear understanding of the CSR values. Even though legislative and other measures are being adopted the companies do not attach much importance to the CSR values. Because of the absence of penal measures the CSR, seriousness is not built into the CSR measures to be undertaken by the companies. Companies due to the cost and other factors do not attach the required standards of importance to the CSR aspects. Due to lack of proper reporting (reporting on CSR presently is just for the sake of making a report by many companies) the companies themselves are not aware of the direction in which they are proceeding in respect of compliance of CSR. Thus it may be concluded that the Corporate Social Responsibility Concept, although being widely talked about, the awareness there of has not reached the grass roots of the beneficiaries, being the ultimate consumers. Hence, there is every need that the CSR concepts should further be extended to the Corporate World, by making them understand the significance of the various social and environmental obligations thrust on them. With the advent of globalization the corporations do have their manufacturing facilities and offices in several countries. Hence in order to bring about more meaningful application of CSR measures, in respect of those Transnational Corporations, action needs to be taken both at the global level and at national levels. Global action may take the form of developing international treaty or convention that covers corporate accountability. By making sure that treaty can be enforced by extending role of international criminal court National level action may be taken by reforming the Company Laws so that the companies are made more responsible for social and environmental objectives Reference List: 1. Rebecca Collings 2006 Introduction to Corporate Social Responsibility, Design Council [online] Available from: http://www.designcouncil.org.uk/en/About-Design/Business-Essentials/Corporate-Social-Responsibility-by-Rebecca-Collings/ Accessed on 19th January 2007 2. Gérard Fonteneau 2003 Corporate Social Responsibility: Envisioning its Social Implications The Jus Semper Global Alliance [online] Available from: http://users.skynet.be/gresea/csr_gf_nov03.pdf Accessed on 19th January 2007 3. Fleishman Hillard Report Rethinking Corporate Social Responsibility A Fleishman-Hillard/National Consumers League Study [online] Available from: http://www.csrresults.com/FINAL_Full_Report.pdf Accessed on 19th January 2007 4. Corporate Social Responsibility An Implementation Guide for Canadian Business [online] Available from: http://strategis.ic.gc.ca/epic/internet/incsr-rse.nsf/vwapj/CSR_mar2006.pdf/$FILE/CSR_mar2006.pdf Accessed on 19th January 2007 5. EPPA Response to the European Commission Green Paper on Corporate Social Responsibility [online] Available from: http://ec.europa.eu/employment_social/soc-dial/csr/pdf/047-COMPCONS_EPPA_EU_011220_en.pdf Accessed on 19th January 2007 6. Kenneth Ameshi Stakeholder Framework Analysis of the Meaning and Perception of Corporate Social Responsibility: A North -South Comparison [online] Available from: http://info.worldbank.org/etools/docs/library/57481/northsouth_finalist.pdf Accessed on 19th January 2007 7. (Ann Florini 2003) Corporate Social Responsibility: the new Social Contract What’s Next? Global Politics, The Brookings Institution [online] Available from: http://www.brookings.edu/views/articles/florini200309.pdf Accessed on 19th January 2007 8. Prof. Beatriz Junquera Cimadevilla, Prof. Jesús Ángel Del Brío González and Prof. Patricia Ordóñez De Pablos (2004) Corporate Social Responsibility, Environmental Management and Business Competitiveness World Review of Entrepreneurship, Management and Sustainable Development [online] Available from: http://www.inderscience.com/browse/callpaper.php?callID=460 Accessed on 19th January 2007 9. Peter Rodriguez, Donald S.Siegal. Amy Hillman, Lorraine Eden 2006 Three Lenses on the Multinational Enterprise: Politics, Corruption, and Corporate Social Responsibility Rensselaer Working Papers in Economics No 0608 [online] Available from: http://www.economics.rpi.edu/workingpapers/rpi0608.pdf Accessed on 19th January 2007 10. Jill Murray (2004) Corporate social responsibility:an overview of principles and practices Working Paper No 34 World commission of the Social Dimension of globalization, International Labour Office [online] Available from: http://www.ilo.org/public/english/bureau/integration/download/publicat/4_3_219_wcsdg-wp-34.pdf Accessed on 19th January 2007 11. Saunders, M., Lewis, P. and Thornhill, A. (2003) “Research Methods for business students” 3rd ed., Harlow, Essex, FT Prentice Hall 12. Ghauri, P., Gronhaug K and Kristianslund I., (1995) “Research methods in business studies – a practical guide” Hempstead, Prentice Hall 13. Google Finance Royal Dutch Shell plc [online] Available from: http://finance.google.com/finance?q=RDS.A Accessed on 19th January 2007 14. Shell Worldwide (2005) [online] Available from http://www.shell.com/home/Framework?siteId=aboutshell-en&FC2=/aboutshell-en/html/iwgen/leftnavs/zzz_lhn3_3_0.html&FC3=/aboutshell-en/html/iwgen/who_we_are/shell_worldwide/shell_worldwide_15112006.html Accessed on 19th January 2007 15. Behind the Shine The Other Shell Report 2003 [online] Available from http://www.foe.co.uk/resource/reports/behind_shine.pdf Accessed on 19th January 2007 Appendix I Introduction to corporate social responsibility Author: Rebecca Collings Rebecca Collings is a Business Journalist and Sustainability Advisor. This article is derived from the archives of ‘Design Council’ Its difficult to offer a straightforward definition of Corporate Social Responsibility (CSR), when not even the experts agree. However, in todays globalised marketplace, there is growing acceptance that the corporate sector has a role to play in securing a sustainable future. The scope of this is variously defined as: Business for Social Responsibility - who you are, what you do and what you say about it. Business in the Community - CSR is about how companies manage their business processes to produce an overall positive impact on society. CSR network - CSR demands that businesses manage the economic, social and environmental impacts of their operations to maximise the benefits and minimise the downsides. UK government (www.csr.gov.uk ) - CSR is essentially about companies moving beyond a base of legal compliance to integrating socially responsible behaviour into their core values. The notion, if not the jargon, of CSR has been around since the 50s, when academics and business leaders first began to identify and articulate the impact of global businesses on society. Now more and more companies are getting involved in areas such as human rights, fair trade, local economic development, non-discriminatory employment practices and reducing waste and emissions. This was originally driven by regulation of the utilities in the 80s and early 90s, which spawned the first-generation environmental reports. The social dimension emerged as the business communitys response to complaints that it had failed to create trusting relationships with its stakeholders. Notably, numerous food scandals in recent years have in marketing terms turned consumers into choosers - indicating that the balance of push and pull between providers of products and services and customers who may or may not choose them has changed. So how does a company convince a chooser to choose its products and services over those of its competitors? As Wally Olins said in The Economist in September 2001: The next big thing in brands is CSR...it will be clever to say there is nothing different about our product or service, but we do behave well. Unfortunately, the marketeers saw this as an opportunity to deliver brand promise and many offers turned out not to be what it said on the tin. Its no wonder that consumers are increasingly cynical when healthy option ready meals turn out to have more than the Recommended Daily Allowance of salt in one serving. This has hampered the development of CSR in that more and more companies have allowed the marketeers to hijack the agenda, causing CSR to become confused with greenwash, cause-related marketing and chequebook charity. So how can business overcome growing consumer cynicism? Business for Social Responsibilitys definition (above) is an admirably succinct way to say that organisations have to walk the talk. In marketing terms, brand promise needs to be replaced by brand integrity. Effective stakeholder communication has therefore become a key issue for companies that want to respond effectively to consumers who dont want to leave their values at home every time they go shopping. Increasingly well-informed stakeholders now demand clear, hard facts about a companys social and environmental performance. People want to know, for example, that children did not make their trainers, that the manufacturing process does not pollute the environment excessively and that their food is safe to eat. Such growth in consumer pressure has been matched by increased regulatory requirement to report on what is material to a company’s historic and future performance, including its impact on the environment and the wider community. This information needs to be presented in a way that is accessible, honest and engaging. More than that, companies are now expected to form partnerships with their stakeholders. Rather than just talking to them about their performance, they must find ways to empower stakeholders with information, listen to their opinions and involve them in key business decisions. The communication challenge for responsible companies is compounded by the fact that most businesses have numerous stakeholder groups, each with very different demands, expectations and communication needs. The right medium and message for employees may not be right for consumers, and entirely inappropriate for the Non Governmental Organisations (NGOs) and the regulatory bodies that monitor business performance. Instead of simply promoting a brand or even helping businesses talk to their audiences, design and communication consultancies must now create channels of dialogue between stakeholder and corporation, tailored to the communication needs of different audiences. Most FTSE top 100 companies now produce CSR reports alongside their annual reports. Published either in print or as part of a company website, these reports usually follow a standard format. They outline the companys social and environmental performance, show performance against targets set the previous year and set out targets for the year ahead. CSR reports often try to encourage feedback through posted or online feedback forms. There is a move to more web-based reporting because companies can publish more information, tailored to different audiences, and users can choose what they read. But there are disadvantages too, because the web is still accessible to only half the UK population and, even if they have access, users can get lost in poorly structured information. Companies that aim to innovate in CSR practice are increasingly integrating CSR issues into the way that they do business, and aligning their company vision and value statements with the CSR agenda. This moves them towards so-called triple bottom line, or sustainability, reporting, which combines their financial, social and environmental performance in a single report. Although CSR reports are essential to give a picture of a companys social and environmental performance, it is clear they have limitations as tools for inclusive dialogue. The amount of complex information demanded by reporting best practice means that reports can make dull reading for non-expert audiences. For this reason, companies are beginning to look beyond the CSR report and find new avenues to reach non-specialist audiences, such as consumer groups and employees, to invite their feedback and opinions. As CSR matures, more effort will be targeted at communicating with customers by integrating CSR issues into a company’s brand, and less on producing lengthy reports. This will drive product and service innovation, as well as brand communication. Appendix II Article: Corporate Social Responsibility: The New Social Contract By: Ann Florini Ann Florini is a Senior Fellow in Brookings Institution in Washington D.C. USA This Article is drawn from her new book ‘The Coming Democracy: New Rules for Running the New World’ (Island Press, 2003) The companies were attempting to protect their patent rights, and they argued that patent protection was necessary to provide the incentive to develop better drugs. They may have had a case under the terms of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS); an agreement the industry had helped design. But such arguments proved no protection in the court of public opinion. An international “drop the case” campaign organised by human rights and advocacy organisations worldwide accused the firms of participating in a “new global apartheid,” as hundreds of thousands of South Africans died of untreated AIDS and the disease became the country’s leading cause of death. By the time the companies dropped the suit, they had found themselves globally vilified as callous profiteers willing to condemn millions to a miserable death. A matter of standards This case is only one of many dramatic conflicts in which quite different conceptions of corporate rights and responsibilities are competing for public favour. Many corporate leaders see themselves as legally and morally obligated to strive for profits above all, with concern for employees and perhaps a bit of corporate philanthropy thrown in. Increasingly, however, civil society groups are holding corporations to new standards of social responsibility that go far beyond existing legal requirements. But what should those standards be? And who should decide? Since the rise of modern-style large corporations over a century ago, such questions have been answered by the traditional counterpart to big business: big government. But at the global level, no such unified government exists, nor, fortunately, is one likely to emerge in the foreseeable future. And thanks to the vast ideological shift of the late 20th century in which markets, not governments, came to be seen as the road to prosperity, the halls of the United Nations no longer ring with calls for international regulation of multinational corporations. But as the South African case indicates, even if governments are not trying to negotiate rules governing corporate behavior, others are. The lack of effective international (and often national) regulation to protect workers, communities, investors, and the environment has spurred the development of a powerful movement aimed at promoting corporate social responsibility. That movement’s partisans have on occasion forced significant changes in business practices through campaigns aimed at consumers and investors. And businesses are finding themselves under intense pressures to adopt corporate codes of conduct specifying what standards of behavior they will apply. Those codes are controversial. Proponents argue that codes can lead corporations to buy into new norms of behavior without the need for government intervention, making them attractive to corporate leaders who want to fend off government regulation. More ambitious proponents see them as a means of achieving consensus around standards of behavior that can be tried out voluntarily, then eventually adopted and enforced by governments. Detractors portray them as mere fig leaves. Some codes, such as the Caux Principles, are just aspirational statements. Others, such as the Social Accountability 8000 standards, are more demanding, requiring that corporations permit outside auditors to inspect their facilities to assess compliance with the code’s standards on labour practices. The United Nations’ Global Compact relies on corporate self-reporting, asking signatories to report annually on progress in implementing human rights, labour, and environmental standards. Compliance: cost and benefit How should corporations respond to these growing pressures? Corporations that tries to conduct business as usual, lobbying governments to set up global rules that benefit business interests and ignore any negative social consequences, may find themselves the targets of campaigns conducted by the growing number of transnational activist networks - as the pharmaceutical industry found. Those that adopt codes of conduct and strive to be good global citizens, however, may find that the more they promise the higher the standard against which they are judged. Corporations have no choice. If they want to prevent a massive public backlash, their economic activities must be embedded in a social contract that takes into account wider societal interests. Given the lack of a world government and the ineffectiveness of many national governments, corporations must play a key role in negotiating the terms of that global social contract. Appendix III EPPA RESPONSE TO THE EUROPEAN COMMISSION GREEN PAPER ON CORPORATE SOCIAL RESPONSIBILITY INTRODUCTION EPPA (www.eppa.com) is a long-established pan-European public affairs consultancy with offices, staff and clients throughout the member states and beyond. We work with a wide variety of corporate and NGO clients. We are increasingly helping clients determine what Corporate Social Responsibility (CSR) means for them and in facilitating the design and implementation of tailor-made solutions. We are, therefore, very conscious of the growing importance of the good management of the cluster of issues labelled as CSR - but also of the differences in the way the issues are understood and applied in different countries - as well as in different business markets. Further, successful promotion of CSR needs to reflect different cultural realities - both social and corporate. UNDERSTANDING CORPORATE SOCIAL RESPONSBILITY The EU Presidency Conference in Brussels (November 27-28 2001) showed that there is still great misunderstanding both of the term CSR and its significance. It is not about having a Company Foundation (however good that is) and being good at corporate community involvement which is a relatively small part. Nor is it enough to have Good programmes and policies in just one particular area such as environmental issues or the diversity of the workforce. To be a responsible business today involves: engaging: internal and external stakeholders measuring the positive and negative impacts that a companys actions have on business and society minimising the negative impacts / maximising the positive impacts There is not yet a settled consensus on the issues covered by CSR. We consider that it includes: Ecology and environment Health and well-being Human rights and diversity Communities. We recognise that it is less the specific topics and much more the corporate culture – the attitude of collective corporate "mind" - that matters in determining sound strategies and polices: - Is a business committed to sustainable development? - Does it accept the idea of a stakeholder corporation? - Is it managing its business to get win-win results for both itself and for society? - Does it understand and measure the risk to its reputation and financial standing of these new management issues so that it is clear where good corporate responsibility practices add value? There are heightened expectations of business behaviour: both how business runs its own core activities - and for how business contributes to tackling wider societal problems. These expectations extend through the life-cycle of a product or service: from initial sourcing, through manufacturing, marketing, and distribution to final disposal; and concerning the sale and purchase of businesses themselves. The reality is that issues that were once regarded as soft by investors and managers - community, environment, human rights, diversity, work-life balance - are now hard. Hard to manage, hard to ignore - and very hard if you get them wrong. And potentially very costly. Yet conversely, if managed effectively, these same issues can be a source of competitive advantage. CSR is not, therefore, some optional "bolt-on" to mainstream business activity - but about the way that businesses are run. Insofar as CSR is about achieving sustainably profitable and competitive businesses it cannot, by definition, be legislated for - any more than the EU can "legislate" that businesses must be "world-class" competitive. Equally, it does not mean that those issues which are already covered by legislation such as aspects of worker rights, social dialogue, and environmental legislation; should be in future the subject of "voluntary" behavior by employers. Such legal requirements are, and will continue to be, developed through democratic institutions at national and European level. Business as well as civil society groups actively participate in this process. CSR is behaviour by companies over and above legal requirements, freely entered in to because they deem it to be in the long-term interests of both business and society. RESPONDING TO THE KEY ISSUES IN THE GREEN PAPER It appears that the debate around the Green Paper has focussed on a few key issues. (A) Should the EU legislate to require (major) businesses to measure and report on CSR? We believe that measurement and reporting for large companies is a tool that businesses and stakeholders can use to address the trust issues that exist between businesses and society. We suggest that it would be counter-productive to legislate at this stage since measurement and reporting of social and environmental impacts is still in its infancy. There are a range of Codes and Initiatives to develop this field - such as the Global Reporting Initiative; and, in the UK, the Business Impact Reporting Portal on the Internet led by 20 major UK businesses. These should be encouraged. Inevitably - just as financial reporting quickly evolved – these will lead to a rapid evolution in how businesses measure and report their social and environmental impacts. To attempt to legislate with a particular model at this stage would limit this evolution at a very primitive level, distract attention, and risk losing the excitement and entrepreneurial creativity of CSR in a bureaucratic maze. (B) Is there any room for EU legislation? Rather than "broad-brush" approaches, it would be far more effective to identify simple, targeted initiatives that would have a significant positive impact and harness market-place pressures to encourage more CSR. For example, the requirement in UK Pension law that Pension Fund trustees specify their policy on social and environmental issues is proving a slow-burning fuse to encourage institutional investor interest in CSR. It is very important to recognise that CSR is a global issue and not just a regional or national one. (C) How else can the EU encourage more CSR? The Commissions capacity to encourage more CSR will be enhanced by a frank recognition that its credibility for understanding business - especially amongst SMEs - is limited. It is far better if genuinely business-led organisations promote a business case for CSR. The most effective contribution, therefore, will be to support the development of genuinely businessled intermediary organisations, which can inspire business to pursue CSR. Such organisations nominally exist in most Member States but several are still fragile and need resources if they are successfully to engage a critical mass of businesses. This will also be important for the applicant states. Additionally, there is considerable potential to develop the understanding and work of major sectoral associations on a pan-European basis to incorporate CSR into their core work programmes. The Commission can reinforce this work by publicising good practice that is identified through the work of these CSR intermediary organisations. The Commission can also contribute to greater understanding of CSR by ensuring that its own policies are "joined-up" - for example, its policy making around sustainable development as well as social policy should be linked firmly into the Competitiveness Agenda. It is also likely to inspire more confidence in business, if the lead responsibility is held by the Enterprise Directorate-General, working with an Inter-Service Team drawn from all the Directorates-General with an interest in the core CSR issue. This will emphasise that this is seen by the Commission as an integral part of a more competitive business agenda. (D)How can SMEs be more engaged in environmental and social responsibility issues? The arguments, the examples and the language to encourage SMEs have to be specific to them. For instance, to talk of "corporate social responsibility" immediately makes the issue appear irrelevant to most SMEs. The most significant pressures on SMEs will come in the market-place - notably from their large business customers. Any EU initiative to encourage responsible business practice amongst SMEs would be best focussed on equipping the CSR intermediary organisations with resources to work with organisations advising and representing SMEs. In this way, these more front-line organisations can be convinced and enabled to incorporate these issues into their mainstream operations. (E) What are the best ways to build links between the social and environmental dimensions of CSR?: The environmental dimension of CSR is not immediately clear in the title CSR. This is unfortunate as the environmental dimension of corporate responsibility is a crucial component of achieving sustainable development quickly. It is also important to recognise that there can be tensions in the social and environmental aspects of corporate responsibility. For example, the switch to clean technologies or alternative energy sources can even have detrimental social impacts on those communities who currently depend economically on the older technologies or fossil fuel production. Similarly, decisions about relocating production because of human rights issues, for example, can have negative economic and hence social impacts on the affected communities. The relationship between social and environmental responsibility is not necessarily linear - and, on occasion, may even be in conflict. Further thought and discussion and exchange of emerging of best practice is needed here. This difficulty is evident in the Green Paper, which gives insufficient consideration to the environmental dimension. Building links between these dimensions is a process which will require time and the Commissions best option for building links could be to encourage stakeholders within intermediary organisations to address the question. CONCLUSION We believe that what is most needed at this stage in the development of CSR is a pragmatic, supportive and results-focussed agenda which harnesses rather than by-passes the global market-place. This approach offers better opportunities to get sustainable and substantial improvements in the number and quality of businesses genuinely implementing CSR principles. Appendix IV Broad Outline of the Proposed Questionnaire Forming Part of the Research Study into the Discharge of the Corporate Social Responsibility by Royal Dutch Shell plc.: 1. Brief Outline of the Subject: Gender, Age Group, Profession, Income Group, Nationality/Residential Status 2. Knowledge about Shell plc: Constitution, Size, Operations, Multi Locational Presence 3. Knowledge about CSR: Meaning, overview, Issues involved, Applicability to Corporate entities, Legislative Measures 4. In Depth Knowledge about Social Issues: Issues involved, Standard of Awareness, Inferences and suggestions 5. In Depth Knowledge about Environmental Issues: Issues involved, Standard of Awareness, Inferences and suggestions 6. Knowledge on Economic Implications of CSR: Standard of Awareness, Affecting Factors, General opinion 7. Knowledge on the Research Study: Reasons, Objective and Scope A detailed questionnaire encompassing all the above topics of the research study will be prepared for presentation to the survey subjects. The questions will be of objective type involving multi option answers and graded according to the issues. Read More