The historical development of the CSR movement in the UK - Essay Example

CSR History Introduction Corporate Social Responsibility is growing quickly in the world. It is termed as a business issue. It has attracted worldwide attention due to demands for enhanced transparency and corporate citizenship. It started to embrace ethical, social, and environmental challenges. Most companies know the social and environmental impacts associated with the production. Companies are not only expected to make profits but also be good corporate citizens. CSR has a close relationship with international development, and it is seen as a vehicle where large corporations can contribute to the well-being of most developing countries through responsible operations especially by social and environmental issues. Little is known about companies CSR policies and practices using an international context where large corporations abuse the CSR and act ethically towards the society and the environment. Such unethical issues are unsafe working conditions, gender discrimination, and pollution of water and sexual harassment issues raised by consumers and non-government organizing in the society. CSR in developing countries represents the formal and informal ways where multinational business companies contribute to improving the social and environmental conditions of such countries. In this essay, the history of CSR will be discussed to understand how it started and how it operates. It tries to look at the available literature in the relevant fields relevant to CSR. It will define the term corporate social responsibility and issues related to it. The essay is about the evolution of corporate social responsibility and its movement in UK. Definition Corporate Social Responsibility is a management concept where firms cooperate social and environmental issues in business operations and integrates with their shareholders. A company creates a balance of economic, social, and environmental imperative while addressing expectations of shareholders and stakeholders through CSR. It is clear that CSR is a continuing commitment by cooperates to behave ethically and ensure economic development that improves the quality of the workforce and their friends, families and the local community within the society. History Development concept of CSR is mainly carried out in western countries especially US from 1950s where attention to businesspersons was been devoted to responsibility to the society and 1980s where the stakeholders theory took place (LEE, 2002, p. 11). In the 1980s, there were studies carried out to analyze the relationship between corporate financial performance and CSR. Howard Bowen in the 1950s tried to give a rational and systematic analysis that favored CSR with its connections with corporations and its influence on social consequences and its societal responsibility. He argued that social responsibility is not a place for all businesses social problems but it has rules that might guide business in all its dealings even in the future. In the 1960s, it was characterized as a growing interest in its formalization and definition of CSR. Keith Davis was a writer who wrote about CSR in his business where he stated that social responsibility should be seen in a managerial context. By the year, 1970 there was a demonstration of the link between CSR and shareholders’ interests (Carroll, 1991). The aim of the corporation interest must be linked with environmental concerns. History of CSR therefore dates back many years ago and can date back to 5000 years ago in Ancient Mesopotamia that was around 1700 BC where builders, innkeepers, and farmers could be put to death for negligence that contributed to others or other major inconveniences. Rome senators complained about the failure of businesses to contribute to sufficient taxes to fund military campaigns (Davis & Blomstrom, 1966). In 1962 shareholders that were disgruntled in Dutch India, issued pamphlets that complained about the management secrecy combined with self-enrichment. By the year, 2006 European countries had argued that they were involved in promoting CSR in their countries where business incentives were established in their area. National pension’s funds have been regulated in UK to include ethical, social, and environmental concerns. CSR is an area that does not have a long history, but it has developed rapidly in recent times especially in UK. It has developed in large corporations and, therefore, various experts and organizations have had the idea of defining it. In 2002, the Construction Industry Environment Forum stated that five years ago the CSR became a strong agenda for businesses (Lee, 2002, p. 22) CSR is therefore considered as an umbrella that incorporates concepts of environmental sustainability, corporate ethics, ethical governance, and analysis of shareholders and their relationship to marketing. This concept developed in UK especially during the industrial revolution in the 19th century where philanthropic activities were carried out by eminent businesspersons and politicians. These efforts were directed to people who had not benefited from the industrial revolution (Farrar, 2008). This marked the beginning of CSR in UK that benefited the general people and improved the image of those who facilitated the increased influence of religious groups like the Quakers and Methodists that also increased philanthropic activities in UK. Rapid growth of Methodism in the 18th century created a platform for self-introspection that necessitated inequality among men and therefore they had to ensure eradication of such bias (Freeman, 1984, p. 13). The Quakers had an influence on the UK society because they were predecessors of CSR since most UK corporations at those times were created and founded by the Quakers businesspersons like George and Richard Cadbury. Such trends have continued in this field over the years and have improved the scope of corporate social responsibility in companies and business (Lee, 2002). Modern business have large ranging ethical and economic obligations to the society and therefore they define CSR as a continual commitment by firms to carry out their business ethically and also be able to contribute economically to the people's development by ensuring quality of life for the workers and their families and also to the local people in the society. The Business for Social Responsibility CSR is tasked with achieving commercial success and environment success. This places a huge responsibility on the corporation to be socially responsible practice in their practices and principles that address concerns of the shareholders in their daily operations and meet legal and commercial regulations. Businesses in this modern time are required to take CSR seriously as opposed to recent times. This corporate responsibility is a feel good venture but is also strategic financially for businesses. Rapidly expanding multinationals seek global trading opportunities in the 21st century (Fleming & Jones, 2012). These businesses are involved in new markets where they must establish credibility, unlike other traditional markets. CSR is the best method to earn such credibility in the society. There are changing events in terms of technology in modern times where people have the ease of transmitting information where anything negative about a firm can spread via the internet. Irresponsible behavior like causing damage to the environment can be crucial for such a corporation and therefore CSR is important in such situations (Idowu & Leal Filho, 2008, p. 4). Various governments notice CSR where in 2005 the UK government launched the International Strategy framework for corporate social responsibility (Farrar, 2008). It was intended to formalize overall objectives and prioritize the main ways of the state in dealing with CSR. It is intended to contribute positively to existing current policies and development of good action that can apply at an international level The Turnbull Report and later reviews affected the UK corporations regarding their approach to ethical, social, and environmental risks in modern business platforms. In the beginning of the 21st century, only the top listed companies in the Financial Times Stock Exchange were allowed to give information on various ethical issues like social impacts and environmental performances (Stepanenko, 2012). CSR activities don’t fall under important legislation by states but some aspects of CSR are compulsory for all 3200 FTSE listed firms in UK since 2005 allowing it to operate within the Operating and Financial Review (OFR). However, this was later changed where the business were expected to publish regular Business Review every year (Farrar, 2008). In the past annually companies were required to concentrate on profits, losses, financial aspects, and cash flows but the OFR companies are now required to meet certain .non- financial disclosures of non –financial nature. Non- financial information is a crucial factor in checking levels of risks that arise from company’s accounts that affects the stock market valuations. OFR includes details of environmental performance of listed companies, their relationship with shareholders like suppliers, consumers and the society including the local community. It also has details of market positioning, product development and consumer profiles (Farrar, 2008). CSR is not now bound by statutory requirements and is implemented by the corporations voluntarily without legal obligations. CSR is not compulsory, but there are other legislative compulsions that make it necessary like there are societies where rules of environmental pollution and racial discrimination or health of workers and safety of employees is guaranteed. When the process is bureaucratic, it brings unwanted results that suppress innovation and creativity in its implementation, therefore, to be on the safe side companies must implement CSR. Consultancies have been established in UK that exploits demands of CSR. This importance that its growing rapidly has necessitated CSR reporting mechanisms in various companies like the London Benchmarking Group, which was established in 1994 to promote its corporate community relationship. This company created a strong framework tasked with measuring records and managing its corporate community interactions for its members (Stepanenko, 2012). In 1998, the Business in the Community (BITC) created the Corporate Responsibility Index that regulates the organizations to manage and report responsible business policies and practices (Lea, 2002). In 2000, the Good Corporation was created to provide organization for creating new verification framework that allows the companies to measure their behavior in regards to social responsibility. In 2004, the CSR Academy was created to spread awareness of CSR in promoting learning and training through utilization of CSR Competency Framework in companies (Fleming & Jones, 2012). The UK industry is criticized for being inconsiderate to environmental issues and relevant issues in the society. From recent analysis, almost a third of UK companies do not carry out reviews of social performance, however, this trend has changed and improved from the past few years. CSR has been there for a long time, and most companies have their frameworks for CSR in their policies but lack the motivation to implement them. Such companies have policies for financial donations and sponsors training which people who had strong religious and spiritual duties showed. Conclusion It is clear that CSR is a tricky affair for most companies. In most cases, it does not attract companies to implement it; however, they cannot in turn ignore it. It is an important issue for stakeholders and to regulatory authorities especially governments like UK... Few business people are interested in the social welfare of the society and engage in such philanthropy. Such businesspersons who make CSR a success and their intentions bring about motivations in the process, and they end up succeeding. CSR is considered as a marketing tool in the hands of such people where cultural differences play a great role in the social and country culture, which should be carefully observed before creating CSR policies and implementing them. Consultancy organizations have made much effort in creating a platform for assistance and assessment of making reports in such cases. However, there is always a possibility for such corporations to have fraudulent information regarding CSR goals that must be avoided. CSR has historically developed from a very long time where it has continued to gain momentum even in modern times. References Top of Form Top of Form Top of Form Bottom of Form Bottom of Form Bottom of Form Carroll, A. 1991. The Pyramid of Corporate Social Responsibility: toward the Moral Management of Organisational Stakeholders, Business Horizons, July-August, p42. Davis, K. & Blomstrom, R. 1966. Business and Its Environment, McGraw-Hill. Farrar, J. 2008. Corporate Governance: Theories, Principles and Practice, 3rd ed, Melbourne: Oxford University Press. Fleming, P., & Jones, M. T. 2012. The end of corporate social responsibility. London, Sage. Freeman, R. E. (1984). Strategic Management: A Stakeholder Approach, Pitman, p. 46. Friedman, M. 1970. ‘The Social Responsibility of Business Is to Increase Its Profits’, New York Times Magazine, 13 September. Idowu, S. O., & Leal Filho, W. 2008. Global Practices of Corporate Social Responsibility. Berlin, Springer Berlin. Lea, R. 2002. Corporate Social Responsibility: IOD Member Opinion Survey, The Institute of Lee, N., & Kotler, P. 2013. Corporate social responsibility doing the most good for your company and your cause. Hoboken, N.J., Wiley. http://rbdigital.oneclickdigital.com. Stepanenko, Ievgeniia. 2012. "Corporate Social Responsibility in Ukraine." USUBC. http://www.usubc.org/site/corporate-social-responsibility-csr-2 Read More