Implementing Corporate Social Responsibility - Punishment or Compliance - Essay Example

Corporate Social Responsibility Name: Date: Affiliation: Corporate Social Responsibility Introduction Corporate social responsibility (CSR) is the practice of operating a business enterprise in a way that it is affecting the social and environmental factors created by the business. CSR is usually a commitment to develop the policies that will integrate the possible practices into the daily operations of the business and the progresses made towards developing the practices. Initially, CSR focused on philanthropy as the main driver, but it has been changing over time to include environment and the society (Bui 2010, p.78). The desire to improve and protect the lives of the people in the communities where the company does business has been the most important factor. Over time, CSR addresses issues that affect virtually on the lives of people such as ethics and governance, hiring workers, training and opportunity, purchase and supplies and finally environmental impact. Hewlett Packard vice president Debra Dunn asserts that some of this act as charity and philanthropists taking the responsibility of the shareowners. However, to the company, it is a vital investment in the future of the business because it facilitates top line and bottom line success of the business. Therefore, to the Hewlett Packard, corporate social responsibility acts as a factor that promotes and secures the future of the business (Crowther 2008, p.76). CSR has turned out to be promoting sustainability in the social environmental and economic arena in many companies today. Initially, sustainability meant an action that maintains the resources of the earth but it has changed with time. In 1987, the world managed to publish landmark action plan to facilitate environmental sustainability and named “our common future”. The commission went ahead and defined sustainability as the ability to meet the needs of the current without altering the needs of the generations to come. Therefore, today companies get challenges from the main stakeholders: customers, investors and employees to develop an ultimate blue print that will guide the sustenance of economic prosperity and taking care of the environment and the employees (Ducassy 2007, p.15). The shareholders of companies must be socially responsible through ensuring that companies have employed appropriate actions related to CRS. United Nations Environment Program financial initiative arm asked some of the best law firms to carry out a research whether institutional investors such as insurance companies and pension funds have legal permission to integrate environmental and social government(ESG) issues into their investment decision making and practices of ownership(Hunnicutt, 2009,p.90). The consequential report released in 2005 affirmed that investors required to the factors into account despite having an allowance to do that. The report concluded that including environment, governance and social considerations into an investment plan increases financial performance and at times, it is clearly permissible and required in all the jurisdictions (Jones et al 2005, 22). The investors who have social responsibility have been on the forefront to ask companies to develop CSR plans over the past decade. This indicates that CSR is vital for the prosperity of business to an extent that even financial institutions take into account the programs. Research carried in January 2005 indicates that socially responsible indicators of investment will be a common place in investing within ten years. Moreover, in 2013, spectrum group survey indicated that 49% of the millennial investors who had more than $1 million said that they used the social responsible criteria to fill the portfolios. However, one of the limitations of CSR and sustainability is lack of a common measure of performance (Kolk & Pinkse, 2009.p79). Corporate social responsibility is a situation, whereby companies decide to support the local communities voluntarily hence contributing to a cleaner and better environment. It’s an expression used in describing what the scholars view as the company’s obligation to be sensitive to all the stakeholders needs in the business.iis not possible to discuss corporate social responsibility without taking into account the community relations an important area of public relations(Lindgreen & Swaen,2010 p.5). Despite the fact that oil companies claim that they have done enough, in terms of bringing development to the people, through the corporate social responsibility, most communities remain hostile and constantly at variance with the multinational companies. The claims of the oil multinational and hostile communities, it is necessary to examine the claims forwarded by the oil companies and ascertain the legibility. Under normal circumstances, the communities must get utmost satisfaction from the corporate social responsibility. Failure to get appropriate satisfaction prompts crisis between communities and companies that wrong from ethical point of view (Litic 2009,p.45). In the recent time, there has been expanding concerns by specialists and scholars on the field of corporate social responsibility and the marketing ethics realizing the essence of conducting a business that takes care of the interests of the society while maximizing profit for the companies. Corporate social responsibility involves companies deciding to voluntarily contributing to better and cleaner environment (Mujih 2010,p.80). The companies achieve this through integrating social and environmental concerns in their business operations and in their interaction with their stakeholders on voluntary program. Labbai (2007) defines corporate social responsibility as continuing commitment by the business to behave in ethical manner and contribute to the economic development and at the same time improving quality of life of the laborers and their families and the community at large. This is an expression used in describing what some people see the obligation of the company to be sensitive to the needs of all people that influence or influenced by the decisions of the company. Company stakeholders are all those people influenced by or can influence the actions that company seeks to carry out. Therefore, it is noteworthy to explore the synergy between firms and the society (May 2007, p.67). It is noteworthy noting that corporate social responsibility seeks to promote a vision of business accountability in wide range of stakeholders, besides the common shareholders and the investors. The main areas of concern involve environmental protection and the well-being of the employees working in the company (Peters & Bradbard 2007,p.67). Moreover, the considerations of the civil society both currently and in the future serve as a good illustration of corporate social responsibility. The CSR concept affirms that corporation cannot act as isolated economic entities that operate in detachment from the broader societies. The traditional view about competitiveness, profitability and survival are moving away and some of the contributing factors fall below in the description (Portney 2005, p.78). The role of government has been shrinking on daily basis because they initially relied on legislation and regulation to deliver environmental and social objectives in the sector of business. The reducing and shrinking government resources coupled with distrust f of regulations has contributed to the exploration of the voluntary and non-voluntary initiatives. There is growing greater disclosure from the stakeholders including the customers, suppliers, employees, investors, communities and activist organizations (Vasal 2009, p.90). Moreover, the increased customer interest shows that there is evidence that ethical conduct of the companies exerts considerable growing influence on the purchasing decisions of the customers. The recent survey by the Environics international indicates that more than one out of five consumers that reported having either rewarded or punished companies based on the social performance. Day in day out, the investors are changing the way to assess company performance and making decisions based on the criteria that involve the ethical concerns. Social investment forum report that in 1999, the US had more than $2 trillion worth of assets invested in the portfolios that use screens linked to the environment and social responsibility (Waddock 2009, p.56). A distinct research carried out by the Environics international indicates that more than a quarter of the share-owning America considered account when buying and selling shares in the stock market. Moreover, more socially responsible investment is in the investment companies and the banking industry (Welford 2008, p.67). Recommendations The labor markets are increasingly competitive, the employees have significant interest in the business affairs, and many companies take steps to ensure that partners conduct themselves in socially responsible manner. Some introduce the code of conduct for the suppliers to ensure that other practices and policies of the company do not tarnish good reputation. There are benefits that come along with adopting a policy for social responsibility. For instance, the company realizes improved financial performance because it makes sustainable investments and people accept the company in the market. Research indicates that companies that have articulate corporate social responsibility tend to make more profits because they end up having good reputation (Yoon & Lam 2007, p.56). A good reputation earns company better returns because many people like buying products and services from those companies. Lower operating cost is an advantage of companies that have articulate corporate social responsibility because they do not have to do many promotions to market the company. Public projects market the company hence making it known to the public. Moreover, when a company a company observes the environmental sustainability, it will escape hefty fines that emanate from failure to conform to environment rules and regulations (Zu 2009, p.56). Companies that comply with corporate social responsibility usually develop good names and reputation and this promotes the company. For instance, Microsoft has gained good reputation because of the philanthropic activities that has embarked in the African continent and the world at large. Sponsorships and food aids are some the programs that the company provides to the society hence building a good name to the company. This in turn increases productivity of the company because more products start getting identification in the market. A good reputation enables the company to continue producing quality products to ensure that sustains the high number of customers. In the same breath, a company that has implicit social corporate responsibility is likely to retain quality employees because of treating them well. Moreover, employees love working in companies that show responsibility in the society because such companies must look into the needs of employees effectively (Peters & Bradbard 2007, p.37). The government normally plays the role of oversight in major companies operating in a given country. The arms of government such as environment ministry must check whether these companies comply with the environment and sustainability rules. At times, the rules are considerably strict and only few companies manage to comply (Kolk & Pinkse 2009, p.67). However, companies that have exquisite compilation with the Social corporate responsibility will be at an upper hand for government will tend to overlook some loopholes due the merit on the other side. Therefore, compliance with CRS creates a favorable working condition in such a way that the government will not be keen concerning the company. Compliance to corporate social responsibility creates a good name for the company even to the financial institutions. Banks and other financial institutions prefer people and companies that have discipline. An act of complying with CRS is a form of discipline that helps such corporate bodies to access financial aid from banks. For instance, if the company happens to require money, the banks or other financial bodies will evaluate how effective the company has adhered to the regulation. Effective compliance translates to financial aid hence the need to comply with CRS (Lindgreen & Swaen 2010, p.56). CRS compliance guarantees product safety and liability reduces by great extent. First, the immediate society will not riot against the company and this will hold the reputation of the company together (Mujih 2010, p.67). Reputation always counts to the productivity of a company and therefore complying will favor the company on that basis. Moreover, liabilities will decrease because the company will be in favor with all the concerned parties. Conclusion In summation, it is evident that CRS compliance is paramount to the establishment of good corporate. Compliance creates a good image for the company in the eyes of authorities hence reducing cross-examination that resulted to liabilities. Moreover, compliance creates a good reputation and through that increasing the sales of the company. A good name increases productivity of a company because more people feel obliged to buy from it. Moreover, the product of a company that has good reputation assumes automatic quality. References Bui, T. (2010, March 1). The Vietnamese Consumer Perception on Corporate Social Responsibility. Journal of International Business Research Crane, A. (2008). The Oxford handbook of corporate social responsibility. Oxford: Oxford University Press. Crowther, D. (2008). The Ashgate research companion to corporate social responsibility. Aldershot, England: Ashgate. Crowther, D., & Aras, G. (2008). Corporate social responsibility. Bookboon. Ducassy, I. (2007). Does Corporate Social Responsibility Pay Off in Times of Crisis? An Alternate Perspective on the Relationship between Financial and Corporate Social Performance. Corporate Social Responsibility and Environmental Management, N/a-N/a. 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