The UK Corporate Social Responsibility - Case Study Example

CORPORATE SOCIAL RESPONSIBILITY IN THE UK Student’s name Code & Course Professor’s name University City Date Contents 2.0Study objectives 5 3.0 Theoretical perspective; a neoliberal viewpoint 5 4.0 The EU standpoint on CSR 7 5.0 UK government policy on CSR 8 6.0 Corporations acting inappropriately in the UK 10 6.1MacDonald’s 10 6.2 Nestle 11 7.0 Are governments failing in the fight against unethical business practices? 12 8.0 theoretical Findings 13 9.0Policy Limitations 14 10.0 Study implications 14 11.0 Conclusion 15 12.0 Reference List 16 Real-World Examples of Bad Business Ethics., 2014. Retrieved from 19 http://www.brighthub.com/office/entrepreneurs/articles/115557.aspx 19 The Observer view on unethical corporate behavior., 2015. Retrieved from 19 http://www.theguardian.com/commentisfree/2015/dec/20/observer-views-banks-corporations-ethics 19 Executive summary The global society has been focusing and gradually conforming to corporate social responsibility (CSR) during the 21st century. From this perspective, countries; and more specifically, companies, have registered varying levels of success with respect to the implementation of CSR (Hack et.al, 2014). This is especially in the face of increasing globalization alongside other significant international initiatives. While many governments around the world are in the introductory face of CSR, there are others that have seen the concept thrive in the domestic industries hence a long-standing history in CSR. The UK, according to global statistics, is regarded as the leading territory as far as CSR is concerned. This is especially with a review of the corporate law to include corporate social responsibility in 2006. This study sets out to highlight CSR in the UK from a neoliberal perspective, to review the current CSR policies as well as identifying unethical companies and government aggressiveness in curtailing such practices. 1.0 Introduction Traditionally; and for a long time, companies, even at a global perspective operated on the basis that they had no obligations beyond making profits. According to the work of Milton Friedman (2002), the only obligation of a business as far as social responsibility is concerned was to keep increasing profits. This argument was based on the perspective that by making profits, a company contributes to societal wellbeing such as creation of employment and boosting the economy of the respective country. However, with globalization and human rights as contemporary issues, CSR has become a crucial agenda (Maas & Reniers, 2014). As such, the global society is converging to an agreement that businesses are obliged to have well-managed relationships with other components of the society, not only shareholders. More interestingly, even with such convergence towards CSR, there is not a universal definition. The meaning and definition of CSR is therefore variant from country to country as well as from one company to another, even within the same country (Oberseder et.al, 2014). This raises the question as to whether such an ambiguous concept especially with regard to definition can ever achieve global harmony. In addition to this paradox, there is another question as to the extent of the responsibility expected from a given company. Some twenty years ago, the term corporate social responsibility sufficiently revolved around adhering to environmental legislations as well as corporate philanthropy (Lin-Hi, 2010; Crane et.al, 2013). In this age of time, CSR covers a very broad perspective. Many governments are either actively promoting CSR or actively participating in efforts to shape and develop CSR within their boundaries (Beare et.al, 2014). The UK government in particular, via the department of trade and industry, has set out to satisfy this endeavor. The Labor Government claims that it aims to transform CSR from a mere supplement to a central component of business practice. The government uses fiscal incentives, intelligent regulation and best practice guidance. The UK government has done the following in relation to adopting CSR; Naming and shaming the companies that reject the voluntary compliance with CSR. Reinforcing awards for companies with excellent reports Publishing the guidelines relevant to environmental reporting Amendment of the corporate law to accommodate corporate social responsibility 2.0Study objectives This retrospect paper seeks to bring out the extent to which CSR is applied in the UK, government involvement more in-depth, how companies are acting in response to such applications. To do so; given that the development and implementation of CSR is largely dependent on existing public policies, the paper will review such documents respective to the EU and the UK as from the year 2000. By so doing, the paper will reach a conclusion as to whether such policies are significant; and if so, the extent of such significance. The conclusions drawn will revolve around a neoliberal perspective to adoption of corporate social responsibility. 3.0 Theoretical perspective; a neoliberal viewpoint The neoliberal school of thought has engaged in heated contentions concerning the level of legitimacy of CSR with respect to adoption by corporations. David Henderson (2001), in his contentious book, subjected the concept of CSR to neoliberal critiquing. He maintains that as much as CSR is harmless, it is a threat to economic development of both rich and poor economies. Adopting of CSR not only undermines the market economy, but also curtails economic freedom and competition. Henderson goes ahead and plainly advocates for profit-making within corporations in the place of corporate citizenship in form of economic, social and environmental goals. He further claims that CSR is not legitimate based on its origin from NGOs, multinational enterprises and academics as opposed to need. On the same note, Husted and Salazar (2008) confirm Henderson’s arguments in the claim that instead of being coerced to invest in CSR, firms should be allowed to act strategically. Even so, there are many neoliberalists who provide arguments as to why companies should consider the adoption of CSR. Lantos (2001) agrees with Milton Friedman in that businesses have no obligations beyond making profits, but notes that CSR is necessary for social sustainability as well as moral and ethical values. In a strategic perspective, many authors have found that even with proficient technological, political and economic risk management skills, companies still encounter environmental and social issues (Perez & Del Bosque, 2013). In this viewpoint, ignoring CSR in detrimental in that by the time the management respond to such environmental and social concerns, it may be too late. At such a point, a corporation may damage its reputation or be subjected to public, civil activists and government opinion. It is therefore, in this sense, meaningful to adopt CSR as a strategic tool. At a neoliberal standpoint, a CSR approach is only meaningful to a company in terms of strategic gains. Such strategic gains may be in the nature of risk management strategies which cover an organization from threats emanating from the government, consumers, civil activists or stakeholders attacks (Sodano & Hingley, 2013). Furthermore, there are arguments that adopting CSR can yield market benefits. Such benefits include; Brand differentiation X-factors existing within crowded market places can protect companies from the notions of competition thriving in the minds of consumers. In this sense, major brands are able to build themselves upon ethical values. Risk management Risk management is a fundamental strategy in the corporate arena. Incidents like environmental accidents or corruption scandals can ruin the reputation of an organization in a matter of hours regardless of the time taken to build such reputations. More so, such incidences can draw the attention of the media, government, courts and regulators. As such, a corporation benefits from ‘doing the right thing’, which can only be achieved through adoption of CSR. Human resources Any organization seeks to ensure that it recruits and retains its employees. Given that companies find themselves competing for graduate human resource, it is only meaningful to employ CSR such that employees feel good working in the given organization. 4.0 The EU standpoint on CSR Employment and social affairs Directorate-General, hand in hand with the enterprise and industry Directorate-General oversee CSR related Legislation in the EU region (CEC 2006b). According to the European Commission, CSR entails companies integrating environmental and social issues in their daily business activities alongside engaging shareholders in a voluntary interaction (CEC 2006b: 5). The member states of the EU are the main drivers of adopting CSR within their jurisdictions. In this sense, as mentioned herein, the precise nature and characteristics of CSR differs with varying cultural and national contexts in the EU. Even so, it is valid to conclude that there is an increasing agreement in the region as far as the definition of CSR is concerned; as contained in (CEC 2006b: 7). The consensus is deduced from a review conducted in the EU Member States. The review provided that all the Member States have the main objective of increasing public-private partnership as well as voluntary stakeholder dialogues. To do so, the States are engaged in creating consistent and solid links between public policies and sustainable development objectives, recognition and knowledge of best practices and increasing awareness(CEC 2007: 2). Corporate Social Responsibility is regarded as a basic building block of sustainable development in the EU. This regard is heavily concerned with creating more and satisfying jobs in the region as well as in sustainable economic growth. In fact this is viewed as a natural supplementary tool for the European Commission’s sustainability policies. Even so, there is a well brought out need for additional research with regard to the connections relative to sustainability, competitive advantages and CSR (CEC 2006b: 7). The European’s Commission corporate social responsibility differentiates businesses with size as opposed to type. The Green Paper, as contained in (CEC 2001a) provides several exceptions like shipbuilding, coal and steel case studies. Further, industry-specific schemes such as gas, oil and textile industries, financial corporations, chemical and petrochemical companies and office equipment manufacturers are highlighted. 5.0 UK government policy on CSR Initially, the responsibility to oversee Corporate Social Responsibility was left to the Trade and Industry Department. However, most of such responsibilities in the former department were handed over to the Business, Enterprise and Regulatory Reform Department (Durie, 1996). The Department was then integrated into the Business, Innovation and Skills Department. The department, as at the writing period, had minimal information regarding the standpoint of the government with respect to Corporate Social Responsibility. The responsibilities previously implemented by DTI have since been assigned to a not-for-profit organization known as Business in the Community (BitC). CSR: A Government Update; is the most Updated document concerning CSR policy in the UK. Section 417 as contained in (HMG 2006b) requires all listed corporations have reports on community and social issues, employees and environmental matters. However, there are no specific indicators and measurements in such reporting (DTI 2004). According to CSR (DTI 2004: 2, Durie, 1996), Corporate Social Responsibility requires firms to consider their environmental, social and economic implications. Moreover, businesses are obliged to take account of key sustainable development hurdles with respect to fundamental competences at international, regional or local levels. The UK government (DTI 2004: 4) takes CSR to be an integrated business driver that should be continuously compliant with legal requirements. Further, Corporate Social Responsibility (DTI 2004: 2, Durie, 1996) provides six major objectives in support of the government’s endeavor towards sustainable development. These are; Creating a policy framework that enables and encourages ethical and responsible business behavior Encouraging increased trust, open constructive dialogue and awareness Ensuring decent minimum performance levels in fields like equal opportunities, the environment, health and safety Encouraging application of best practice, continuing development and innovative approaches Working in partnership with consumers, unions, community bodies, private sector and other significant stakeholders Promotion of business activities which foster simultaneous environmental, social and economic benefits 6.0 Corporations acting inappropriately in the UK 6.1MacDonald’s The way a company relates with its stakeholders could have major impacts on its ethical values. MacDonald’s, amidst huge global success, has suffered a damaged reputation and increasing criticism due to unethical relationship with its employees and other significant stakeholders. This misconduct is popularly known as the MacDonald’s Legislation, where the company’s founder donated $25000 for Nixon’s campaign to be reelected (Brighthub, 2014). The donation was later to be paid back as a favor allowing such companies as MacDonald’s to pay a 20% less wage for teenage employees as opposed to federal minimum wages. This is a form of exploitation by big companies and politicians, leading to societal harms driven by selfish interests from corporate influence. Moreover, the company does not allow its employees to associate. In fact, at one instance in St. Hubert Quebec where its workers attempted to form a union, the company intervened and shut down the unit. The Company also suffered damaged reputation from the McLibel case. This happened between 1986 and 19990 where activists in London Greenpeace published flyers written “What's Wrong with McDonald's? Everything They Don't Want You to Know” (Brighthub, 2014). Other words such as McGarbage, McProfits, McMurder, McCancer, McGreedy and McDollars were used by the activists to criticize the company which they claimed was promoting third-world poverty, destroyed the Amazon Forest, tortured animals, exploited employees and children and sold unhealthy food. McDonald’s sued the group but lost the case on allegations of animal cruelty, busting unions, paying low wages to employees, serving dangerous and unhealthy food and using adverts to exploit children. 6.2 Nestle According to the findings of the World Health Organization, there was a five to ten times higher mortality rate of children who were fed with Nestle infant-formula compared to those who were breastfed in developing countries. The company employed ununiformed nurses in distributing the infant formula among the poor mothers. The formula was deemed to last until the baby stopped breastfeeding (The Guardian, 2015). The main problem was that most mothers fed their babies with insufficient amounts of the formula to save it while there was lack of clean water as per the requirements of the formula. Nestle also once sued the Ethiopian government claiming a stake of six million dollars. This was to be payment as compensation for its share in the Ethiopian Livestock Development Company (Eldico). During this time, Ethiopia was facing the worst drought in a period of twenty years. Ethiopia nationalized the investment acquired through German Company and then sold it at a profit. Ethiopia was forced to pay $1.5 million since it could not afford any other higher amount (ZmeScience, 2015). More recently, Nestle has been accused of spying on a non-governmental organization known as Attac. The company is therefore well known, even at a global arena for unethical business practices. 7.0 Are governments failing in the fight against unethical business practices? It is rather disturbing that at the face of increasing globalization, there is a simultaneous increase in ethical cases in the business world. This is amidst the call for CSR and sustainable development. The problem does not only exist in the UK, but also in other parts of the world. Since the establishment of the Cambridge ethics Centre in 1988, the corporate landscape has been subjected to multiple scandals. In 2001, the US witnessed the tragic collapse of Enron while Bernie Madoff Ponzi Scheme was exposed as fraudulent. Olympus, a Japanese Camera giant is being sued by six banks over allegedly disclosing false financial statements in 2011(The Guardian, 2015). In the UK, GlaxoSmithKline was also rendered unethical for allegedly getting caught up in a bribery scandal in Japan. It is evident that it is not always easy to tell from right and wrong in the business world. It is therefore valid to question the extent to which unethical behavior can be regulated (Weiss, 2014). For instance, it is well known that tax evasion is illegal; on the other hand, avoiding tax, although considered unethical, is legal. Similarly, while lying in court is incriminating, when a businessman lies, though immoral, he is not necessarily held accountable for such lies by the law. Governments, and notably UK, need to integrate soft law and hard legal requirements as frameworks for ethical conduct. This is inclusive of conventions like the UN Global Compact, codes of ethics and codes of practice. In essence, neither soft law nor hard law can be effective on its own (The Guardian, 2015). Hard law is a function of regulatory framework as well as requires time for enactment and amendment. Also, hard law includes high compliance costs as the case of Sarbanes-Oxley. Governments are failing to see that these issues, if not handled now, will be problematic in the future. 8.0 theoretical Findings Public policy, even in the EU and UK has largely been neoliberalized. Such neoliberalization not only affects education, health and welfare but also extends to government perspectives to corporate social responsibility. In the EU, governments are providing templates for promoting CSR development alongside applauding the voluntary nature of the concept. This perspective is based on the recent decoration and praising of CSR as good for the economy and business. As mentioned herein earlier, CSR is a significant strategic advantage for companies due to reasons such as shielding from government, activists and consumer negative attention (Knusden et.al, 2015). Further, as opposed to being a regulatory enforcer, the government is taking up the task of being an empowering and enabling facilitator hence levering growth and competitiveness. Integrating the government and strategic CSR ensures that the needs and wants of businesses, value creation and performance are more prominent in comparison to civil society and democratic deliberation. This way, CSR gains a definition with respect to value surplus and business opportunities as opposed to the previous dwelling on government gaps, government deficits and social problems. This means that possible antagonisms and tensions between the society and business will be obscured by neoliberal marketization logics. 9.0Policy Limitations This study finds the following to be the current policy limitations in the United Kingdom; The current policies emphasize mostly on environmental and employee factors Although there is an evident effort to implement CSR, the policy level is still underdeveloped both I the EU and UK. As a policy consideration, CSR is therefore largely absent due to lack of substantial objectives towards implementation; which would serve as catalysts for adoption, implementation and development The current policy statements and strategies only refer to CSR on a superficial basis. More importantly, businesses have not been invited to participate in sustainability nor in CSR by the existing policies. 10.0 Study implications For the future of CSR, this study finds four main implications relevant to implementation and development. 1. There are numerous opportunities for trade associations and businesses to encourage and seize the initiative towards corporate social responsibility hence business ethics. More so, there is an increasing need for leadership towards the same. 2. CSR presents the platform for alternative facilitation of sustainable futures especially with ethical businesses in mind. To enable this, the EU and UK policies must be complementary to each other. 3. Future policy towards sustainable businesses must be streamlined with CSR policy and strategy 4. CSR strategies in all sectors of the UK economy need to have a knowledge base pertaining the complex CSR statement and strategy. 11.0 Conclusion As much as corporate social responsibility seems to be the ultimate instrument for curtailing unethical business practices, the way in which the UK government is approaching the concept may not be effective enough. Companies are still oriented to profit making while foregoing the needs of the society, wellbeing of employees, economic implications as well as environmental concerns. There are still major gaps in the implementation of CSR and linking it other significant concepts like sustainability and ethical conduct (Taticchi et.al, 2013). This paper does not disregard the fact that the EU and more specifically, the UK is considered the global leader in CSR. This paper argues that the companies that have adopted CSR are least likely to be involved in any ethics-related scandals. This paper has found that neoliberalism only accepts CSR on the basis of strategy as opposed other benefits like environmental and societal welfare. A conclusion is therefore drawn that as much as neoliberalism is a crucial and meaningful force in the current debate concerning the position of businesses in the society. However, instead of dwelling on the neoliberal perspective as the CSR approach, it is more rational to create an awareness of the various liberalisms working in the field. To do so, the government has to consider the limitations of the current policy described herein. 12.0 Reference List Beare, D., Buslovich, R. and Searcy, C., 2014. Linkages between corporate sustainability reporting and public policy. Corporate Social Responsibility and Environmental Management, 21(6), pp.336-350. Commission of the European Communities., 2001a. 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Retrieved from http://www.theguardian.com/commentisfree/2015/dec/20/observer-views-banks-corporations-ethics Weiss, J.W., 2014. Business ethics: A stakeholder and issues management approach. Berrett- Koehler Publishers. Why Nestle Is One of the Most Hated Companies in the World., 2015. Retrieved from http://www.zmescience.com/science/nestle-company-pollution-children/ Read More