Does Corporate Social Responsibility Promote Good Practices - Literature review Example

3.0 Does it Promote Good Practices 3.1 Introduction One of the principal aspiration for engaging in corporate social responsibility (CSR) activities is rooted on the deontological aspirations of doing good as informed by non-consequentialism principles such as Kantian ethics that calls up on organisations to engage in what is morally upright (Farrell, Fraedrich & Farrell, 2011, p.162). The whole essence of such paradigm is framed with the belief that commercial organisations being one of the moral agents within the society, they have the obligation of adhering to expectations of a society as a whole since they are a creation of the society (Donaldson & Dunfee, 1994, p.254). This section outlines how legal responsibility as an example within the domain of corporate social responsibility promotes good practice in relation to issues of sustainability. Foremost, the report conceptualises key terms that are significant for the discourse. In this regard, the report examines what is meant by ‘good practice’ and then it discusses the same within the context of sustainability as is this is the overriding theme within the whole discourse. Additionally, the report assesses what ‘legal responsibility’ entails and its connection with corporate social responsibility. Finally, in relation to Australian context, the report conceptualises what responsibility entails in relation to sustainability. In this regard, principles, policies, legislations & regulations relating to environmental management in various spheres such as industrial operations & built environment are tackled as anchored on the tortuous duty; law of contract and criminal justice system. Finally, in an argumentative discussion, the report establishes if legal responsibility contributes to promotion of best practices. Anchored on deontological aspirations, societal pressure as informed by tortuous duty & criminal justice system, the report argues that legal responsibility contribute to best sustainable practices such as preservation; conservation; re-use, recycle & reduce (RRR) concept; leadership in energy & environmental design (LEED); social/ sustainability reporting and polluter pay principle(PPP) as informed by environmental audits (EU), environmental impact assessments (EIA) and environmental management plans (EMP) that advocates for issues such as increasing of the natural resource productivity; shift to biologically inspired production approaches and reinvestment in natural capital. This leads to addressing of environmental issues such as pollution, degradation, threat to biodiversity, energy use & waste management, life cycle assessments and over exploitation of natural resources. On the other hand, the report fronts argument that legal responsibility does not contribute to best practices that are anchored on deontological aspirations, but as means of avoiding societal pressure that leads to economic consequences such as boycotts, reduced brand awareness & equity, legal fines which are hefty and lost business opportunities. This implies that the later is anchored on teleology principles such utilitarianism and not for the sake of doing well. Premised on the above observations, the discussion takes a stand point that irrespective of the motive behind the legal responsibility (teleology/ consequentialism or deontological/ non-consequeantialism), they all contribute to good practice as they limit organisations/ corporate to be responsible of their impact on the community/ environment by taking various precautionary/ proactive steps and reactive steps. In a nutshell, the report establishes that legal responsibility as an example of corporate social responsibility contributes to god practices in regard to sustainability issues such as such as reinvestment in natural capital, shift to biologically inspired production approaches and increasing of the natural resource productivity. 3.2 Role of Legal Responsibility in Promoting Good Practice 3.2.1 Good Practice The term good practice and best practice can be used interchangeably and there it will be a common occurrence in this report to use the two terms interchangeable. According to Codrington (2004, p.174), there is universal definition for the term good practice. However, he adopts the definition fronted by Javelin Technologies (2004) that conceptualises best practice “a process, technique, or innovative use of technology, equipment or resources that has a proven record of success in providing significant improvement in cost, schedule, quality, performance, safety, environment, or other measurable factors which impact an organization”. Therefore, good practices can be seen as adoption of strategies, methodologies, structures, systems and so on so as to offer significant improvement in various aspects such as environmental quality, cost and quality of lifestyle. 3.2.2 Good practice in Context of Sustainability Before examining good practice within the context of sustainability, it is prudent to establish what sustainability is all about. Mitchell (2009, p.25) observes that as result of various activities of human being in various sector of the economy since man started living sedentary live up to the modern century of industrial development, human being are able to modify their environment giving rise to various environmental issues. For instance, in pursuit of economic development so to cater for the population, human beings have continually engaged in exploitation of natural resources with some being non-renewable, engaged in industrial production leading to pollution, ozone layer depletion and global warming that is causing climate change and thawing of glaciers. Secondly, in pursuit of comfortable life human beings have modified natural ecology to create built environment which has lead to clearance of forest, emission of carbon and pollution of rivers. This above realisation has therefore raised issues of sustainability especially in relation to corporate who are the major beneficiaries of natural resource which is key to production or is a victim as result of the waste they emit under the theme of natural capitalism as the well being of individuals, society and associated developments such as economic development and industrialisation is tied to it (O'Connor, 2000, p.4-5; Lovins, Lovins & Hawken, 1999, p.146). Bartlett (2012) observes that sustainability refers to a development that does not comprise on the future generations ability to meet their own need (p.2 & 3). Therefore, the nexus between best practices and sustainability is anchored on having various procedure, strategies and models for limiting human impact on environment so as to meet the present needs without compromising on the needs of future generations. Heinberg (2010, p.12-15) notes that best practices can aid in attaining sustainability through five axioms which include finding that unsustainable society will eventually collapse; that the growth of population vis-à-vis resources cannot be sustained at present levels; the use of renewable resources must trail the rate at which they are replenished; use of non-renewable resource must be continued on a declining trajectory and lastly, waste injected should be minimised and rendered harmless to the ecosystem. This is well embraced by business organisation, they will ensure that they reinvest in natural capital so as to replenish it, enhance natural capital productivity and adoption of biologically driven approaches (Lovins, Lovins & Hawken, 1999, p.146). There are various good or best practices in sustainability/ sustainable development environmental management/ green development. However, these are more pronounced in a localised approach depending on the sector a corporate operates in. These include reduce, re-use & recycle strategy (RRR); conservation; preservation; polluter pay strategy (PPP) and Leadership in Energy and Environmental Design (LEED). These are informed by environmental management action plans that are anchored on policies, legislations & regulations and can include various approaches that address economic, political and social factors that contribute to environmental issues (Fiksel, McDaniel & Mendenhall, 1999). 3.2.3 Legal Responsibility and its Nexus with CSR Farrell, Fraedrich & Farrell (2011, p.162) posits that justice system can be distributive, procedural and interactional or combine all these attributes at one. he notes that legal responsibility stem from view that justice system should not only be procedural and interactive, but also it should also be distributive where it addresses wrong directed towards individuals or group of people by another party such as business organisations. Legal responsibility is rooted on the rule of law where individuals and all entities are required to adhere to legal stipulations and collateral requirements of a country (Manuel, 2011). Therefore, businesses in pursuit of profit have to conform to the rule of the land by not contravening ethical and legal values (Bowie, 2012, p.6). Further, Bowie (2012) observes that legal responsibility is one of the domains in corporate social. Others include philanthropy and ethical behaviour (p.6). There are two levels on how legal responsibility arises. The first is within the framework of criminal justice system where government through police, court & rehabilitation institutions as the custodian of rights and arbiter on justice issues has the role to pursue criminal cases against any individual or entity if they are deemed not to conform to legal expectations (Harr et al., 2014). The other paradigm relates to the law of tort where in any relationship including commercial and social relationship whether written, unwritten, spoken or unspoken such as business organisations and the public, involved parties have a tortuous duty of care so as to avoid any damage to the other party or third parties by acting responsibly and through good faith which is a critical ingredient in corporate social responsibility (Witt, 2007, p.5). 3.2.4 Legal Responsibility in Context of Sustainability Environment is a vast topic that covers various aspects such water, atmosphere, land, energy utilisation and emission of toxic substance. However, all these boils down to extraction from natural environment for value addition processes and discharge in terms of waste. In Australia, there are various legislations bestowing legal responsibility to businesses in relation to sustainability. These include Environment Protection and Biodiversity Conservation Act 1999; Carbon Credits (Carbon Farming Initiative) Act 2011; Clean Energy Act 2011; Harzadous Waste (Regulation of Exports and Imports) Act 1989; Ozone protection and synthetic greenhouse gas acts among many others. All these legislations aim at delivering clean, healthy and sustainable environment. Therefore, any entity including business organisations have the obligations to adhere to these stipulations unless they are ready to be subjected to fines, bans and even criminal prosecution. 3.2.5 Supporting One of the principal legislation in relation to sustainability which is one of the aspects in corporate social responsibility is the Environment Protection and Biodiversity Conservation (EPBC) Act 1999 (Commonwealth consolidated acts 1999). The legal responsibility of individuals or business organisation is anchored on section 7 that states that chapter two of the criminal code with the exception of 2.5 is applicable to anyone who contravenes the Act (Commonwealth consolidated acts 1999). On the other hand, section 493-496 of the same Act stipulates the liability of Chief Officers of any Corporation in event of breach of conditions stated in the Act. In relying on the EPBC Act, let examine how it contributes to/ promote good practice. The best or good practice that EPBC Act promotes as result of the liability it places on chief executives as defined in section 493-496 and criminality aspect of it that is defined in section 7, the Act has given birth to two interlinked concepts that include Sustainability reporting/ audits and environmental management plans as defined in section 101-105 and 458-462. Environmental management plans are an offshoot of environmental impact assessment. Makarenko (2012) defines EIA as “the process of identifying, predicting, evaluating and mitigating the biophysical, social, and other relevant effects of development proposals prior to major decisions being taken and commitments made” (p.445). On the other hand sustainability reports or audits indicates how firms are managing their impact on environment through measures such as adoption of appropriate technologies in energy utilisation, building materials, industrial processes and the products they churn out (Hubbard, 2011, p.826). According to Ching, Gerab & Toste (2013, p.62) sustainability reporting has turned out especially for - large corporations - as a requisite part of business strategy. Such legal requirements have given birth to ground breaking process and innovations. For instance, McDonald’s Australia in their bid to manage waste and energy consumption, the firm has invested heavily utilising the Reduce, Re-use and Recycle concept (RRR) where most of their packaging are recycled materials. Moreover, they aim at reducing wastes that is associated with their business and carbon emission. In a bid to manage waste that has negative impact on the environment, the company was the first quick service restaurant to ratify Green House Challenge Cooperative Agreement. Moreover, they participate in Energy Efficiency Opportunities Program that obliges them to initiate energy efficiency measures. At the same time they adhere to Greenhouse Gas Emission Reporting Act (McDonald Australia, 2010, p.20-21). Moreover, such trends are equally exhibited by a company such as Toyota Australia through the concept known as green processes & green products. In this regard, they aim at churning out product/ automobiles which are environmentally friendly in terms of fuel consumption or energy being utilised and the process of manufacturing these vehicles. A unique approach of Toyota Australia is adoption of “Toyota’s Way” concept such as Kaizen and reduction of emission of carbon in the vehicle’s whole life span into environmental management (Toyota Australia, 2011b, p.6). This has seen them reduce their total emission annually from 197, 099 tonnes of carbon dioxide in 2007 to 145, 469 (Toyota Australia, 2011b, p.11). The last within this domain especially for industries within the built environment is the integration of the concept of leadership in environmental and energy design. According to Council (2007, p.2), the aim of LEED “is to produce buildings that are environmentally responsible, profitable and healthy places to live and work”. Such trend has seen growth of over 7.2 million square metres of Green Star-certified space around Australia (Green Building Council Australia, 2014). The emerging observation is what these good practices contribute to within the context of sustainability discourse and the practical aspect of it. The ultimate contribution is premised on the valuation of ecosystem services. Such valuations are anchored on the concept of natural capitalism. Lovins, Lovins & Hawken, (1999) notes that investment in sustainability practices, methodologies, models and solutions have greatly enhanced how corporations addresses the issues of wastefulness, destruction of nature, pollution and depletion of resources. These is an area where engineering profession is live as it can aid in implementation of whole-system design that aims at curtailing wastage, impact of wastes emitted on to the environment and energy consumption (p.148-151). Lovins, Lovins & Hawken, (1999) observes that adoption of the good practices is critical in informing on how to redesign production according to biological models therefore giving birth to green products. This is critical in reducing material requirement and wastage which is more common with closed loop manufacturing. It has been proven that these biological productions are critical in addressing occupation, safety & standards (OSHA) and environmental management plans. For instance, with banning of chlorofluorocarbons owing to its role in ozone layer depletion, Motorola invested a new process for cleaning printed circuit board anchored on orange-peel terpenes (p.152-153). Other advantage of such good practices is the ability to re-invest in the natural capital. Initially, manufacturing firms did not believe that impact on environment did not have impact of their productivity since the whole process was anchored on closed loop system. However, with growth of solution based system, firms are proactive in investing in natural capital through conservation, preservation and sustainable exploitation (Lovins, Lovins & Hawken, 1999, p.155). EPBC Act section 9 stresses the need for individuals & corporations to re-invest in natural capital as it allows concerned minister to formulate regulations and enforce these standards. Such realisations have given birth to appreciation of principles of sustainability such as intergenerational equity as outlined. 3.2.6 Disputing The discontenting observation in relation to the fact that legal responsibilities does not contribute to good practices is anchored on teleological approach where the firms obligation in meeting legal requirements is not anchored on the need to adopt best practices, but on a need to overcome any possible negative outcomes that might be associated with not meeting the legal requirements (ASX Corporate Governance Council, 2007, p.21). As such, the firms only adhere to legal regulations so as to avoid legal fines which at a time are hefty; reduce possibility of lost business opportunities; curtail negative impact on their brand name that is likely to impact on brand equity & brand awareness and lastly, to curtail any possibility of product boycotts (Williams and Adams, 2013, p.456). In this regard, environmental focus is not the prime focus, but a possible outcome as result business organisations needing to address the customer supremacy that squarely falls within the domain of profit oriented business model where addressing the goals of shareholders through creation of value to customers irrespective on the negative impact on environment is the order of the day (Yoo, Donthu, & Lee 2000, p.195). In a nutshell, the whole processes and outcomes are not implemented as result of being in need to adopt precautionary and preventive strategies, but just as measures to avoid criminal aspect of environmental legislation. 3.2.6 Discussion In regard to the supporting arguments, the report established that legal responsibility as enshrined under tortuous duty & criminal justice system obliges corporate/ business organisation to adhere to the law of land. The same said benefit extends to sustainability issues which is mainly addressed by firm having legal responsibility towards adhering to legislations touching on environmental management in various sectors of the economy such as built environment, transport, industrial operations and tourism among others to addresses environmental issues such as environmental degradation, climate change/ global warming, ozone layer depletion, energy use and biodiversity occasioned by pollution, green house gases and over exploitation of natural resources through application of principles and programs such as leadership in energy and environmental design; polluter pay principle; reduce, re-use & recycle principle; environmental management plans, sustainability reporting and lifecycle assessment procedures. all these are critical in conserving natural capital by directing firms to reinvest in it, enhance its productivity and initiate biologically inspired production models. On the counter argument, the report established that the rationale behind legal responsibilities is not to attain good practices, but to avoid economic and legal consequences of fines, boycotts, reduced brand equity & awareness and loss of business opportunities. This implies that good practices emanating of legal responsibility is a by product that is not initially intended for. Therefore, adherence to legal responsibility is not the direct causative process in ensuring good practices as most firms are informed by consequantialism aspirations as opposed to deontological where the order of the day is self interest and to avoid negative impacts of justice perspectives that are either distributive, procedural or interactional. However, the reports stand point is that legal responsibility as a form of corporate social responsibility contributes towards good practices in sustainability management. The rationale for such argument is anchored on the fact that whether business organisations/ corporate adhere to legal responsibility for deontological teleological reasons the outcome is the same. In this regard the attainment is good practices. Therefore the focus should not be on the process/ means or driving ethical principles used to attain good practices, but on the end result. In a nutshell, legal responsibility promotes good practices. 3.3 Conclusion The aim of this section of the report was to establish is legal responsibility which is one of the domains within corporate social responsibility was to establish if the said term contributes to good practices. To ascertain this statement, the report assessed the various supporting and disputing counter arguments so as to draw a vivid picture about the same. 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