Importance of Corporate Social Responsibility - Admission/Application Essay Example

Importance of Corporate Social Responsibility 1. Introduction The demands of the modern market and consumer do not allow companies to run their businesses in an irresponsible manner. It is a thing of the past when the consumer only wanted low priced items without caring about the way the thing had been produced or manufactured. Consumer of the modern world has become aware of the welfare of his environment and the value of running businesses in an ethical manner. It is due to this awareness that consumers demand social responsibility in the actions and processes of organizations. This is known as ‘Corporate Social Responsibility’. The European Commission defined corporate social responsibility (CSR) as the concept by which organizations incorporate social and ecological concerns in their processes and manufacturing activities (European Commission Enterprise and Industry 2010). Another definition of CSR that clearly defines its objective is “Business giving back to the society”; doing good things for the society and the people in it (Open Learn- Lab Space n.d.). The incorporation of corporate social responsibility in the strategy of an organization induces the spirit of the welfare of the society and they ensure that their processes and operations do not cause any harm to the environment. It promotes the notion of the welfare of the environment rather than the idea of generating profits at any cost. 2. Importance of CSR Companies can be considered as a group of individuals; consisting of different stakeholders like employees, top management, shareholders, consumers etc. CSR can serve to be the common set of interests between these different set of individuals (Estallo et al 2007). Corporate Social Responsibility should be viewed as a new tool for devising eco-friendly strategies rather than an innovational concept to gain customer’s attention. It is more important than ever for companies to understand the need of being socially responsible due to the alarming climatic changes on the planet, increasing rates of pollution etc. It is the need of the hour for companies to join hands in the movement of global warming to ensure a safer future for our generations ahead. CSR not only plays an important role in the safety of the environment but also the people in different societies. In the current times of revival from the global recession, companies need to promote ethical and humane policies for their employees. There are very different definitions of CSR and different ways in which companies incorporate them in their organizational strategies. Some researchers argue that the concept of CSR is merely used by some organizations to gain a name amongst their consumers rather than bringing any good to the society. Such companies focus on generating profits more than anything therefore their social responsibility campaigns are also aimed for that direction. For example; Mc Donald’s is one of the largest fast food chains in the world. The company claims to be socially responsible in the process of producing their own ingredients with the highest quality standards. However, there seems to be a contradiction in their CSR strategy when their employees are suspected to be underpaid (People’s Daily Online 2007). Therefore it is very important for companies to actually care about the environment rather than just use CSR as a fashionable concept to increase profits. Another aspect raised by entrepreneurs to degrade the importance of CSR is that companies are only accountable to provide the best quality products and services to their customers. They further say that companies should abide by all the laws but are not responsible for the welfare of the society. This argument does not stand valid since companies can be considered as a controlling part of the society and these controlling bodies can cause great harm to the environment if they are not socially responsible about their processes and modes of production. The top management executives of organization should understand that their business processes have a direct or an indirect effect on the society, customers and employees (Andriof & McIntosh 2001). They cannot claim to live in an isolated region where their strategies will not affect anything around them. The entrepreneurs who support CSR explain that it not only ensures the safety of the environment and society but can also cause increase in long-term benefits for the organization. 3. Chosen Organization: Marks & Spencer 3.1 Company Profile Marks & Spencer is one of the leading retailers in UK with approximately 15 million visitors weekly in their outlets. They offer a wide range of products to their customers ranging from clothes to home products. They also offer an extensive variety of high quality foods. They are a large multinational company with a major global existence with 198 branded franchise stores in 30 regions around the globe. Marks & Spencer is also known to be the founding member of the Businesses in the Community (Marks & Spencer 2006). 3.2 Marks & Spencer’s Commitment to CSR Marks & Spencer is one of those market leaders that took the first significant steps towards the integration of corporate social responsibility in their strategies. They have launched several campaigns over the past years that reflect its commitment towards the cause. They are fully aware about the expectations and demands of their customers regarding CSR. Surveys are conducted in this regard so they can formulate their strategies according to the expectations of the stakeholders. Results of the surveys showed that the customer’s demand for CSR from Marks & Spencer was 75% in 2005 and it grew by 3% in the year 2006 (Marks & Spencer 2006). M&S treasure the concern of their customers and therefore issue annual reports about their CSR policies and steps taken towards the welfare of the environment. 3.3 Strategy for the Implementation of CSR Each business entity is expected to devise its own CSR strategy that would cater the unique threats and opportunities of the respective product. These threats might include factors like market share, competitive pricing etc. All the CSR strategies are then presented to the CSR committee annually so that they can be evaluated and judged if the strategies are in accordance with the overall corporate social responsibility vision of the organization. These CSR committees meet with the company’s chairman three times a year to brief them about the direction of CSR in the company (Marks & Spencer 2006). 3.4 Marks & Spencer CSR Policy Their approach to CSR is to maintain good relations with their employees, stakeholders, suppliers (Business in the Community 2007). The CSR Policy of Marks & Spencer is that at least 1% of their pre-tax profits are used for the welfare of the local communities in accordance with the ‘Per Cent Standard”. In 2006, they utilized around £9.3 million for this purpose which amounted to around 1.5% of their pre-tax profits (Marks & Spencer 2006). They work closely with their suppliers so that they can be assured of the standards they are maintaining and if they are socially responsible themselves. M&S assesses their suppliers on the basis of their strategies towards the consumption of energy resources, animal welfare, recycling etc. Feedback from customers is considered important therefore their CSR policies are also directed towards the social and environmental issues of the societies that are of concern to the customers. The development of strategies to address the respective issues of the societies makes them better places to work and live in. Social and environmental concerns are always changing therefore CSR policies are also required to be changed after certain intervals. CSR committee performs this responsibility of making changes in the policy with respect to the demands of the times. CSR committee ensures that policies and strategies are in accordance with the commitment of the company and the vision of the top management executives. 3.5 Significant Steps towards CSR As stated earlier, Marks & Spencer have altered their processes in number of ways and initiated new ventures to safeguard the environment and the rights of the people. Following are some of the examples of their endeavors and they are categorized by People, Product, Places; 3.5.1 Product Marks & Spencer realized the need for reduction in the usage of plastic bags as it has hazardous effects on the environment. After years of research, they replaced their plastic sandwich bags with another form of packaging that would cause much lesser impact on the environment. The sandwiches started being packaged in cardboard packs made from well-managed forests (Marks & Spencer 2006). Marks & Spencer utilized recycled plastic to make their drinks bottles and salad packs. This recycled plastic consisted of around 1,500 tonnes. Such a great initiative was even awarded in the 2005 National Recycling Awards as the ‘Best Retail Recycling Initiative’ (Marks & Spencer 2006). The concept of Fair trade products has gained attention of people in many parts of the world. Fair trade can be defined as an endeavour that has the objective of assisting producers in developing and under-developed countries get improved trading conditions to make their lives better. The consumers of Marks & Spencer also asked them to sell more Fair trade products to support the movement. As a result, Marks & Spencer removed all the roast, ground and instant coffee from their outlets and introduced Fair trade products. 3.5.2 People CSR has another important aspect which is the welfare of the people. Marks & Spencer shows its commitment to this aspect as well and introduces new incentives for its employees at different periods of time. Effective from the year 2006, they increased the employees benefits and gave 20% unlimited discount on all their outlets. They also gave their employees access to a service that provided them with free advice on the telephone regarding their mental or physical health problems. M&S realizes the fact that even second hand smoke can be injurious to health; therefore they have prohibited smoking in their workplaces in Scotland, England, Wales and Northern Ireland (Marks & Spencer 2006). 3.5.3 Places Marks & Spencer initiated a venture with the name “Marks & Start” in 2004. The purpose behind this programme was to give employment to the individuals who face certain employment challenges like disabled and homeless people. The success rate of this programme has been very commendable as 6000 people benefitted in the first year of the launch of this programme and nearly 40% of their participants were able to find jobs. Marks & Spencer is very generous in giving donations; a good example of such an act was witnessed at the time of Tsunami in 2004 in Indonesia and the region near it. The company donated around £250,000 and appointed a manager in their Sri Lankan office to monitor the correct usage of the money to build houses for the people who lost their houses. M&S conducted a survey in August 2005 and became aware about their customer’s increasing interest in the climatic changes on the planet. The company devised a plan to contribute their share in the reduction of the consumption of energy resources to benefit the environment. As a result of this strategy, they are able to consume 5% less energy in their workplaces and outlets resulting in 9% lesser emission of carbon-dioxide (Marks & Spencer 2006). They continue to devise strategies to help save the environment and avoid any harm to the society. 3.6 Role and Benefits of CSR Corporate social responsibility not only promotes the concept of safeguarding the interests of the people and the environment, it also benefits businesses to progress and increase their revenues. This notion can be proved by the results of the Marks & Spencer campaign “Marks & Start”. As stated earlier in the report, this programme helped disabled and homeless people to get jobs. The inclusion of such individuals created a certain degree of diversity in the workforce and created a very healthy, supportive environment (Article 13 and CBI 2005). These individuals gave valuable suggestions about how the customer service can be improved for disabled people. The disabled customers felt very comfortable in dealing with these individuals in their workforce and became loyal customers. These type of steps enhance the trust of people on the company and improves their reputation. Marks & Spencer’s commitment to CSR helped reduce the fat contents in their foods to cater to the needs of the customers. Consumer is now more health conscious than ever before therefore such socially responsible actions make the consumers prefer their products over any company that does not care about the health of the people or does not cater to their needs. These steps towards the making of a healthy society also tend to increase sales and gain the trust of the consumers (Article 13 and CBI 2005). The act of listening to the needs of the customers and delivering them with socially responsible attitude sets the company apart from its competitors. The loyalty of the customer never goes unnoticed by the external forces for example; investors feel confident of companies that have a strong clientele. Investors might feel safer to invest in a company that has strong CSR policies and has a good reputation for implementing them well. Competitors tend to face a difficult time in surpassing companies that have a strong name among the consumers. Another important benefit of the CSR policies is that employees feel satisfied in the respectful working environment where their needs and social issues are addressed. The companies tend to sustain more employees which saves the recruitment and thus training costs. These loyal employees work more productively with the assurance that their employers care about them and their work is valued by the company. 4. Conclusion Socially responsible companies do not only look into generation of greater profits but stay concerned with the processes that are being adapted to achieve those profits. Consumers have become very aware about their social issues, environment, health issues and therefore expect the companies to provide services and products that cater to all these things. Companies should realize the importance of incorporation of corporate social responsibility in their infrastructure to safeguard the environment and the rights of the people around them. Companies need to understand the level of impact that they can cause on their societies and play their role in the steps towards a greener and healthier future. References Article 13 and CBI 2005, ‘Marks & Spencer – CSR, social inclusion and work experience’, CSR Case Study Series, September 2005, viewed 19th June 2010, Andriof, J., McIntosh, M 2001, Perspectives on corporate citizenship, Greenleaf Publishing, Sheffield Business in the Community 2007, Marks & Spencer - look behind the label, viewed 19th June 2010, European Commission Enterprise and Industry 2010, Corporate Social Responsibility (CSR), viewed 17th June 2010, Estallo, MG, Fuente, FG, Miquela, CG 2007, ‘The importance of corporate social responsibility and its limits’, International Advances in Economic Research 2007, viewed 17th June 2010, Marks & Spencer 2006, Corporate Social Responsibility Report 2006, viewed 17th June 2010, People’s Daily Online 2007, McDonalds and KFC suspected of labor rights violations, 30th March 2007, viewed 18th June 2010, < http://english.people.com.cn/200703/30/eng20070330_362521.html> Open Learn- Lab Space n.d., Definition of Corporate Social Responsibility, viewed 19th June 2010, Read More