The Meaning of Corporate Social Responsibility and Environmental Science - Essay Example

Corporate Social Responsibility (Environmental Science) Introduction It is now well settled that stakeholders in a corporate entity are not only itsshareholders but also its employees, suppliers, customers and the public. Hence a corporate entity is responsible to all these stakeholders. Depending on the business activity of the corporate entity, its responsibility will vary in respect of environment though predominantly it is the public, which have environmental stake in a given corporate entity. Keeping in view of the environmental issues that the public is concerned with, the corporate entities must behave in an environmentally responsible manner. As employees, suppliers, customers, shareholders and the public form a society , the corporate entities as corporate citizens are expected to conduct themselves in a socially responsible manner also with all their financial mite. It has been reported that in the last 30 years, nearly 1/3 of world's natural resources have been lost because of corporations' industrial activities. (Friends of earth) Meaning of Corporate Social responsibility The aim of the social responsibility is to effect a higher and higher standard of living while at the same maintaining the profitability of the corporation (Hopkins) Therefore corporate social responsibility involves community, environment, ethics, human rights, responsibility in the market, vision and values, and workforce. We are immediately concerned with the environment. This involves management decision making in respect of production processes that minimise negative impacts on the environment and the costs. Meaning of Environmental Science Environmental problems have been with us for quite a long time as a result of interaction between man and nature. In modern times, scale of the problems is unique arising from two aspects. One, rapid expansion of the world population and second ever-increasing consumption of energy and material per person in addition to the past-accumulated damage. Environment encompasses all components of our surroundings i.e. the air we breathe, the habitat we dwell in and the food and drinks we take. The energy of milk we drink originates from grass and crops driving force behind which is the solar energy, converted to chemical energy by photosynthesis. In effect the ecology around us has to be preserved. In ecologic point of view, all are interconnected i.e. the waste produced by man pollutes meadows and returned to the mankind by food chain. Different organisms i.e. man and cow compete for the same resources (crops) and one organism (man) acts as predator for another (cow). Environmental care does not stop at the national boundaries. Air circulation and river flows having no boundaries and migration of people and animals and large scale import and export of food, impact the environment. Pollution is the direct cause of environmental damage. The pollution may be defined as "addition by man of any substance (solid, gas or liquid) or energy to parts of the ecosystem that ultimately harm or damage man" (Boeker, Grondelle) Global warming and Ozone layer Depletion Global warming is the most dangerous threat to our environment. It occurs due to heat-trapping gases that are sent to atmosphere from our industries (factories), cars and homes. The gases sent up form a blanket forcing more heat to stay trapped near the earth's surface. More heat produces more energy in the atmosphere resulting in extreme weather conditions like droughts, storms and floods. Elsner James, Professor Florida State University on researching the past 135 years of records of Atlantic Sea surface and air temperatures, found a direct link to the intensities of hurricanes and many hurricane researchers affirm that the intensity increased 10 years ago could last for the next 25 to 40 years. (Loney Jim) Another phenomenon now coming under control after two decades of remedial measures is Ozone layer depletion, though it will be by 2049 when the 1980 levels will be restored. (Reuters) Ozone layer being part of the atmosphere protects the earth from the sun's damaging rays. Some of the chemicals used by the industries reach the atmosphere in the form of gas and react with the ozone and destroy it. This causes hole in the layer enabling sun's harmful rays directly into the earth and become responsible for skin cancers and crop damage. (Dr Suzuki David) The above major concerns of environment are not alone. We have water pollution, soil erosion, and migration of fisheries due to change in water levels caused by different industries in different forms in spite of compliance with various mandatory pollution control measures. Unless the magnitude of the environmental pollution is understood, the importance of Corporate Social Responsibility (CSR) towards environment cannot be appreciated especially because CSR is an ethical issue coming after the exhausting all possible control measures by the regulations. Today corporations are expected of Social Responsibility Reporting in their annual reports more so when they are directly responsible for environmental pollution. Even those who are not concerned directly also champion the cause of preserving the environment as part their social responsibility to the stakeholders i.e. the public. Social Responsibility reporting of the corporates are even considered a tool for the corporate image building with ultimate eye on the share price appreciation in the market. CSR has therefore become an indispensable and inseparable part of the corporate life today. Underwood states corporates look at the CSR as tool for return on investment. CSR is now assumed by top B-schools, high-octane boardrooms as an important variable in profit and loss calculation. (fastcompany.com) Of late businesses have started looking at a dual bottom line in not only financial return but also social return. (Engel Jerry) The statement of CSR is the must-have-accessory for corporate like Tesco, Shell and Barclays Bank in U.K. (Guardian Unlimted). Corporate Social Responsibility also lies in producing goods conducive to environment, which is called ethical business behaviour. For example even SME companies like Green People started in 1997 by Vehtz, a nurse is producing organically-based beauty products after she found even products claiming to be natural, contained chemicals causing skin allergy to her own daughter Sandra and another company Eco Tree Care and Conservation started by Hugi, a pharmaceutical chemist by which he takes care to protect trees and reduce environmental damage by recycling waste and using biodegradable chain oil. In what is known as 'Landcare' a scheme of partnership between corporates, community and Government in Australia, more than 4000 volunteer community groups are engaged in protecting and repairing environment in Australia by the care groups known as bushcare, urbanlandcare, rivercare, coastcare and sustainable agricultural groups. (landcare Australia) What a company can do A company should address itself certain questions to assess environmental markets and workout a strategy as part of its social responsibility action in the environment context. (BSR.org July 2006) 1) Which are the environmental services the company depends up on and to what extent 2) Which are the ecosystems that provide the above services and where are they located, whether in ecological hotspots of high degree of biodiversity 3) What are the environmental services relied upon by the company's suppliers and business partners 4) Whether the company's operations affect the environmental services and how and when 5) Has the company assessed considered-alternatives having lesser impact 6) What are the future prospects of theses environmental services being available to the company 7) In case of sudden changes in availability of these services, what is plan of the company to adapt to it or to prevent such a change 8) What is the company's strategy to minimise further degradation of environment services 9) What are the regulatory measures expected for these services 10) What is the benchmarking the company can do for its competitors 11) How the company shall communicate with the stakeholders its experiences The four major industries that are largely dependent on environment are agriculture, energy and extractives, utilities and pharmaceuticals. The agriculture industry has to compete with nature for water. Any change in rainfall, river or groundwater resulting in water scarcity will lead to higher inputs and capital costs. Due to urbanisation there is increasing pressure on land availability resulting higher cost of land and transport. Health is affected due to crop contamination because of pollution of surface water and land. The energy and extractive industries have the challenges of availability of fresh water in thousands of tonnes per day. This leads to depletion of local water supply and their rights over water are challenged by other users pushing up costs. The utilities industry generating electricity also requires fresh water for cooling and driving turbines in large quantities as above. This further results in wastewater disposal against pressure by growing populations and sprawl rendering lands unavailable for the sludge. This leads to extra energy costs for transportation and desalination. Pharmaceuticals: traces of pharmaceuticals found in the surface, ground and drinking waters impact on the people, animals and environment. Antibiotic resistance, feminisation by estrogens, highly potent drugs having effects on environmental organisms, presence of anti-depressants in drinking water, and veterinary drugs such as pain killers having effects on wild life are the few instances of environmental impacts of pharmaceutical industry as conceded by Glaxo SmithKline, a pharmaceutical industry. (Hagan James) In the process of CSR promotion in environmental impacts, some practices among the corporates have emerged. They are (a) Cap-end-trades: This is a programme by which a ceiling is given for total amount of a given pollutant such as sulphur dioxide or greenhouse gases. These emission allowances also called permits allotted to different industries add up to total emission cap for a region. These permits are then exchanged between countries or companies to give way to unavoidable excess by a region or company having unutilised or unsurpassed limits of allowances. This makes it cost-effective for the company having surplus allowance by selling it to the needy region or unit. (b) Conservation banking: This practice is in vogue in the U.S. for compliance with U.S.Endangered Species Act. "This act allows an "incidental take" of listed species as long as "a landowner provides long-term commitment to species conservation through development of a Habitat Conservation Plan." (BSR.org July 2006) ( c ) Tradable biodiversity credits, or biodiversity "offsets" are credits offered for "for conservation actions designed to compensate for the unavoidable residual impact on biodiversity caused by development projects, in order to comply with regulatory or corporate policies of "no net loss" of biodiversity."(BSR.ORG July 2006) (d) Offset vs mitigation: In the U.S. Mitigation is for compensating inevitable damage to environment. In Europe mitigate is to minimize harm. and (e) Wetlands banking: It is prevalent in the U.S.as a sequel to the Federal Clean Water Act since 1980s. In this scheme, the developers who have to destroy wetland in the process should offset by acquiring wetland banks conserved at another place. Discussion Corporate Social Responsibility in order to be successful should not be considered as an act of philanthropy but as a mainstream to the business. "Justified not just by altruism but on sound business grounds. Otherwise it will not survive. And in Government we want it to survive and flourish, because it can have such an immensely positive impact in addressing big challenges which are among the toughest we face." (Tims Stephen M.P.) The M.P. Stephen Tims has three examples of compliance of social responsibility by the corporates namely TESCO, Lattice Group, and Co-op Bank, which he revealed in a conference in October 2002. In the case of Co-op bank, which declared some time in 1992 to be an ethical company and promised to pursue socially and environmentally accountable practices did fulfill them. Now 98% of the bank's energy comes from renewable sources, which are environment friendly. The Bank has been given many awards. It was named Company of the year in 2001 and in April 2002 won the award for Best Sustainability Report in the U.K. In the same year later in October the Bank was to get International Corporate Conscience Award (first U.K.Company to receive in 16 years) at a glittering ceremony in Newyork. "And the bank can point to substantial gains in terms of customer satisfaction, with customers recommending the bank to their family and friends, and to very high level of staff satisfaction too. On the toughest measure of all, the Co-op Bank has increased its profits to a new record in every one of the last eight years." (Tims Stephen 2002). Further in north east of England at Teesside, one of the UK's backward areas, Wilton Chemical complex is sending out about 700 tonnes of cancer causing chemicals every year. Due to the initiatives of the Friends of Earth a community center has been set up to make available to local people training, access to resources and research so as to make their presence and concerns felt by the said industry. Here are some of the prestigious awards for being Socially Responsible by the corporates. Champions of the Earth s UNEP Sasakawa Prize The Seed Awards Volvo Environment Prize Focus On Your World - UNEP International Photographic Competition International Hotel and Restaurant Association (IH&RA) Environmental Award Zayed International Prize for the Environment Global 500 Roll of Honour for Environmental Achievement The LivCom Awards: International Awards for Liveable Communities Ozone Awards The Green Awards On the other hand, Public interest organisation like Friend s of Earth in the U.K. are lobbying for legislation to make U.K. companies more accountable for their impact on communities and environment through out the world. It is the need of the hour because there are now about 61000 multinational companies as against 7000 of them in 1970 some of whom are more powerful than National Governments and two third of the world trade is in the hands of the multinationals and therefore they can exert a major influence over the protection natural environment and millions of people all over the world. A large number of companies indulge in damaging the environment irresponsibly and prowling natural resources mainly with profit motive without realising the trail of destructions left behind by them. It is for these reasons the environmental activists press for Mandatory Social and Environmental Reporting, A duty of care to communities to and the environment by the Company Directors who are now expected by law to put shareholders' interests first and Rights of Redress for Affected Communities which now only entitle shareholders to take legal action against the directors. Citizen and communities should have rights to proceed in U.K. courts for environmental abuses by U.K. companies and their foreign subsidiaries. Conclusion Although we have limited our discussion to environmental science, literally speaking a corporate's environment is not restricted to ecology aspects alone. It does cover the surrounding shareholders, employees, suppliers, customers, Government, local community as they have in one way or other stakes in the corporate concerned. Corporate's Social Responsibility Reporting should not end up as mere declarations on glossy papers. . They should rather be the evidences of Corporate's practical measures from time to time in the service of community. REFERENCES Boeker Egbert, Grondelle Van Rienk, Environmental Science:physical principles and Applications. BSR.org: Business for Social Responsibility: Environmental Markets: Opportunities and Risks July 2006 retrieved from http://www.bsr.org/meta/BSR-Trends-Report_Enviro-Markets.pdf on Aug 25, 2006 Dr Suzuki David, David Suzuki Foundation ' public doesn't understand Global warming" August 16,2006 Environmental New Net work Engel Jerry, Professor Hass School of Business at UC Berkely retrieved from http://www.fastcompany.com/articles/2002/05/haas.html on Aug 25 , 2006. Fast company on" Radicals for Responsibility" by Underwood Ryan retrieved from http://www.fastcompany.com/articles/2002/05/haas.html on Aug 25. 2006 Friends of Earth Jan 2004 big_business_environment, retrieved from www.foe.co.uk on Aug 25, 2006 Guardian Unlimited April 28, 2005 on 'why it pays to be socially responsible' retrieved from http://technology.guardian.co.uk/online/businesssolutions/story/0,,1471344,00.html on Aug 25, 2006 Hagan James, Vice President, Glaxo SmithKline, Business for Social Responsibility | Environmental Markets: Opportunities and Risks for Business retrieved from http://www.bsr.org/meta/BSR-Trends-Report_Enviro-Markets.pdf on Aug 26, 2006 Hopkins Michael A Planetary Bargain: Corporate Social Responsibility Comes of Age (Macmillan, UK, 1998) Revised August 2005 Landcare Australia retrieved from http://www.landcareonline.com/ on Aug 25, 2006 Loney Jim, Reuters August 16,2006 " Global Warming Affects Hurricane Intensity " Environmental Network. Reuters August 24, 2006 Ozone Layer on the Mend but Recovery Delayed, Environmental Net work Tims Stephen M.P. on Construction Industry Environmental Forum CSR conference October 9, 2002 retrieved from http://www.dti.gov.uk/ministers/speeches/timms091002a.html on August 25, 2006 Read More