1. Introduction
The growing quest for sustainable business practices in recent times has made the need to become a responsible corporate citizen one of management’s important business strategies. Businesses do not exist in isolation of their immediate community and beyond; they create products and services to serve their needs for the purpose of profit making. However, as they carry out their industrial and commercial activities for profit making, the need to inculcate a sound Corporate Social Responsibility (CSR) in their core business strategy has become critical to their long-term sustainability and commercial success. This has become even more imperative with the growing sophistication and demands of consumers in Western countries like the United Kingdom (UK) for brands that are socially and environmentally responsible, without which their continued patronage may be stalled.
2. CSR and Environmental Concerns
The COP21 Global Environmental summit held in Paris in November 2015, which brought together politicians, scientists, investors, numerous non-governmental organizations, and many others, clearly indicates the urgency in reversing the long years of environmental despoliation that the global environment has been subjected to, with much of it caused by industrial pollutions of business entities. This has further amplified the value of incorporating CSR into the activities of business entities as governments, non-governmental organizations, and consumers’ demands for socially and environmentally responsible business and industrial activities continue to gain pace in the 21st century. This growing awareness has made companies increasingly value the need for an effective CSR strategy, which would have long-term effects on their corporate performances (Baron, 2001; Gill, 2008).
3. CSR and Corporate Performance
Understanding the connection between CSR and a firm’s performance and sustainability has in recent times gotten lots of interest among researchers (Bevan, 2005), although many argue that their findings are inconclusive and rather misleading (Jones, et al 2010; Vogel, 2005). Some studies suggest there is a positive correlation between a firm’s CSR and its corporate performance (Kotler & Lee, 2005) while some other studies suggested that there can also be a negative correlation (Luo and Bhattacharya, 2006).
4. Definition and Scope of CSR
CSR can be seen as those actions that appear to further some social good, beyond the profit-seeking interest of a firm and that which may be required by law, to affect society with a positive impact on the community, consumers, environment, and workers (Baron, 2001). CSR programmes would include those actions that improve the environment, community, and lives of all the stakeholders of a business entity (Moon and Vogel, 2009).
5. Debates and Inconsistencies in CSR
Discussions have suggested that there are several issues that relate to the concept of CSR. Early scholars have had inconsistencies in the debate regarding CSR (Dahlruds, 2006). Orlitzky, et al (2003), inferred that the inconsistency in the debate over CSR involves fundamental conceptual issues. Friedman (1970) is one of such notable scholars who considered shareholder wealth maximization as the single social responsibility of firms and goes ahead to caution against any broader conceptualization of CSR. While others can see a significant or tremendous economic value in balancing a large number of stakeholders’ interests and demands (Carroll, 2001; DEFRA, 2006), or considered corporate social responsibility as a four-pronged typology of corporate existence which includes: economic, legal, ethical, discretional/philanthropic responsibilities (Carroll, 2001).
6. Growing Importance of CSR
In recent times, there is a growing saliency of CSR in the strategic objectives of businesses desiring to expand their provision of socially and environmentally responsible products, whose demand is quickly gaining momentum (Orlitzky, et al, 2003; Matten and Moon 2008). Meeting the needs of present generations without compromising the needs of future generations has further raised the value of CSR not just as a mere gesture but as a necessity. Organizations are increasingly being confronted with stakeholders’ demands to take responsibility for their actions as they impact society and the natural environment (Mullerat, & Brennan, 2010). Business entities are increasingly applying sustainable practices in their operational activities. Sustainability refers to the activities, which the organizations perform, which is voluntarily or mandated by law that shows the inclusion of social and environmental concerns in their business operations.
7. CSR and Consumer Satisfaction
Implementing a strategic CSR has shown to be successful for some firms and some studies have also shown that the effects of corporate social responsibility have been reached on customer satisfaction and that these strategies can either have a positive or negative impact. An increase or decrease in customer satisfaction can have a great effect on the market value of a company, and as such, increasing consumer patronage through the instrumentality of CSR cannot be taken for granted. To this end, the thrust of this study is on CSR in the UK’s supermarket industry as it regards consumer patronage with specific emphasis on Sainsbury.
8. CSR in the UK Supermarket Industry
The UK supermarket industry is one of the world’s biggest and one of the major contributors of greenhouse gases causing global warming. Equally so, the UK has one of the world’s fastest-growing numbers of sophisticated consumers whose demand for socially and environmentally sustainable products and services has led to a multibillion-pound ‘green market’.
9. CSR as a Critical Feature in Global Marketplace
CSR has become one of the very important features of businesses in a rapidly changing global marketplace where consumers’ growing awareness and sophistication have increased the demands for socially and environmentally responsible products and services. The despoliation of the global environment due to the continued application of unsustainable business practices has seen the promotion of CSR to be increasingly projected in recent times by governments, consumers, non-governmental organizations, and other stakeholders.
10. Challenges in Corporate Governance and CSR
One of the many issues confronting corporate governance is the slow pace of appreciating the positive impact of CSR on organizational competitiveness. This may not be farfetched, as some organizations still value the age-old thinking that the only responsibility of businesses is to make a profit. This age-old thinking is fast becoming obsolete especially with increasing stakeholders’ demand for sustainable business activities (McKinsey, 2008).
11. Financial Considerations of CSR
The cost of implementing CSR in business practices is also a major issue confronting business entities. While it may require considerable financial commitments to implement business activities that are socially and environmentally responsible in the short term, the long-term benefits in brand loyalty, increased consumer patronage, improved financial performances, and the sustainability of supply chains remain essentially strong. Reducing costs is another key consideration. This is because CSR adds value to a company’s image and reputation, which in turn may attract more consumers or customers to increasingly patronize the company’s products and services. It is no longer fashionable, especially for big companies with international subsidiaries, to be found wanting. According to the Grant Thornton International Business 2014 report, 67% of businesses cite cost management as one of their most important internal key drivers of CSR.
12. Cost-Cutting Potentials of CSR
This is because the business reinvention that comes with the pursuit of sustainability has cost-cutting potentials. This may be in the form of reducing energy wastage, conserving water, recycling, reviewing the integrity of the supply chain, amongst others. Going green or having environmental and socially responsible credentials can indeed have a positive knock-on effect on a company’s consumer base while the lack of it can actually rub off negatively. This has seen companies motivated to develop products and services (eco-marking campaigns) with high certification standards such as: Global Reporting Initiative (GRI) and the International Standards Organization (ISO).
13. Staff Recruitment and Retention
Companies with good CSR credentials are becoming attractive and retaining high-valued employees especially in Western countries. According to PriceWaterHouseCoopers (PWC) Managing Tomorrow’s People report, 88% of ‘millennials’ will choose to work in companies with CSR than those who do not, while 86% will choose to leave their employers if their CSR activities no longer meet their expectations. This has seen businesses allocating resources to building their CSR profile; since attracting and retaining quality hires remains one of the critical thrusts of effective management.
14. Theoretical Underpinnings
CSR has become an essential feature of businesses in the 21st century, especially now that NGOs’ activism and the growing sophistication of consumers now demand environmentally and socially responsible behavior in the activities of businesses. This segment intends to examine the two broad spectrums of theoretical expressions regarding CSR. These are the monetarist and the ethicist theories.
15. Monetarist Theory
The monetarist theory of CSR owes its origin to Milton Friedman’s argument that the sole responsibilities of commercial entities in society are to make and maximize profit for its stakeholders. Thus, the responsibilities an organization owes its stakeholders should begin and end with profit-making. According to Friedman’s (1970) argument, “there is one and only one social responsibility of business—to use its resources to engage in activities designed to increase its profits so long as it stays within the rules of the game” (p. 6). This profit-oriented theory suggests that the more a company engages in CSR (whose cost must be lower than the profit derived from it), the better it will be for its overall economic benefit since it will affect the patronage of its product and more so, its social development efforts will equally develop infrastructure that further aid the business wealth creation efforts. According to (2008), there is a correlation between a company’s more vigorous CSR activities and higher financial performance. The implication of this is that CSR has an extensive economic context that businesses have come to leverage on to develop a business-to-CSR approach. This may not be farfetched as businesses are increasingly engaging in eco-marketing and labeling to enhance their images, boost their customer base, and ultimately increase their bottom line.
16. Ethical Theory
The ethical theory of CSR contends that businesses have a moral responsibility towards their stakeholders rather than being excessively fixated on profit-making. These responsibilities should not be underpinned by the fact of profit-making but to create a better society and a more sustainable environment. Ethicists are not against businesses making a profit but it should not be at the detriment of future stakeholders, hence this submission of the World Business Council for Sustainable Development (WBCSD), which says—“Corporate social responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large”. The ethical theory has equally found salience with the United Nation’s Global Compact Initiative that emphasizes Principles for Responsible Investment (PRI) as against the overt preoccupation with profit-making by companies. PRI is anchored on the value of businesses taking up CSR in areas that uphold environmentally and socially responsible behaviors. To this end, ethicists advocate that businesses should accord CSR to the communities in which they operate not primarily for profit-making but as a moral obligation for their continued sustenance (De Schutter, 2008).
The implication of these two broad theoretical perspectives (Monetary and Ethical theories) is that CSR is either carried out by organizations for its underlying financial gains or as a moral obligation to society, and maybe even both at the same time.
17. Empirical Literature on CSR
Several studies have been carried out to ascertain the veracity of CSR on business consumer patronage, financial performance of a business, competitiveness of a business, public perception of a business amongst others. In a quantitative online survey on the retail sector conducted by Jones, et al (2007) to investigate consumers’ perception of a company’s CSR, listed amongst others areas of falling standards are: in the use of the natural environment, employee benefit, and sales practices to mention a few. In another study conducted by Jones, et al, (2010) on major global retailers, they discovered discrepancies in their business activities that undermine public confidence such as the use of their sustainability agenda to pursue underlying business objectives rather than the true essence of social and environmental responsibilities. In studies conducted by Moon and Vogel (2009) and McKinsey (2008) on the environmental sustainability of the retail industry, highlighted several challenges ranging from waste management to electricity consumption to mode of recycling to mention a few.
While efforts are being made, such as applying green technology to overcoming these challenges, more effort is still needed to really achieve success and such effort, besides spending so much money, requires a simple change in behavior that discourages unsustainable environmental practices. Frooman’s (1997) investigation of the linkage between corporate social responsibility (CSR) and corporate financial performance (CFP) using twenty-seven event studies of stock market reactions to companies falling short of social responsibility, found out that the market reacted negatively to such companies, thereby undermining shareholders’ wealth. In another event study conducted by Jones, et al. (2007) on the relationship between CFR and CFP found a strong relationship between the two.
Chains and consumer networks linked to growing debate on sustainable business practices (DEFRA, 2006). The process of getting that tea, coffee, chocolate, or beef from Sainsbury to the consumer and how the consumer trashes the leftovers all have certain effects on the environment that the implementation of effective CSR intends to address. Supermarkets like Sainsbury are major consumers of electricity, water, gasoline for delivery trucks to mention a few and as such their level of CSR commitment remains a key factor in building a brand that is competitive, sustainable, and attractive to consumers.
This study offers valuable academic literature which is important in understanding the underlying benefit to corporate performance in building and incorporating an effective CSR policy as one of the core strategies of a business in an increasingly sophisticated marketplace such as the UK. Without a doubt, the demand for socially and environmentally responsible products and services by consumers will increase in the UK and will be critical to sustaining continued consumer patronage. Marketers have not lost sight of this importance as many are increasingly developing products and services for clients and ethical consumers whose ranks keep growing in numbers (Kotler & Lee, 2005). This can only make a study such as this further gain traction in management and marketing cycles where the strategic component of CSR has given rise to a multi-billion pound industry requiring products and services with a positive impact on the social and environmental systems of the world. Equally so, a study like this can be very useful for members of the public desiring to know more about CSR and how important their demand and active participation in it can help create a sustainable world.
18. Organization of the Study
This study is divided into five major chapters including the following:
Chapter 1: Introduction
This chapter focused on the background of the study, statement of problems, its aims and objectives, and other relevant features.
Chapter 2: Literature Review
This chapter reviewed extant literature relevant to the study combined with a theoretical overview of the phenomenon of Corporate Social Responsibility (CSR).
Chapter 3: Methodology
This chapter discussed the systematic process adopted in carrying out the study and as such covers the research philosophy, design, data collection instruments, and other relevant appendages.
Chapter 4: Data Presentation and Analysis
This chapter covers the systematic process of sifting through the data generated in the study in order to answer the research question and test its hypotheses for the causal relationship of variables.
Chapter 5: Conclusion and Recommendation
This chapter expresses the overall outcome of the research investigation from the purview of its conclusion and recommendations offered. The study’s limitation and areas of further research are equally stated in this chapter.
Chapter Two – Literature Review
1. Introduction
As businesses continually strive to breakeven, giving back to the community in which they operate as corporate entities has become a hallmark of forward-looking organizations in a contemporary world where businesses are increasingly being viewed through the prism of social responsibility (Carroll and Shabana, 2010; Taneja et al, 2011). Businesses do not exist in isolation of their immediate communities and beyond; they exist to serve a population of people and as such beyond profit making, reaching out to their communities and even beyond with services aimed at environmental protection and the physical wellbeing of the people helps confer positive reviews on organizations or businesses that engage in such (Mullerat & Brennan, 2010).
It is no longer enough to be a successful company without being a successful corporate citizen whose actions straddle the economic, social, and ecological enclaves of society. Corporate Social Responsibility (CSR) is without doubt a key feature of national and global corporate citizenship in a much more competitive marketplace where the need to be responsive to the needs of society is even much more pronounced with the growing demand for environmental protection as a result of continued human despoliation of the environment.
The role of business entities in a society cannot be overemphasized because of the symbiotic relationship that exists between them and the environment in which they operate from and sell to. This symbiotic relationship is demonstrated by the fact that just like society relies on business entities to supply all those things that augment their daily existence like banks, eateries, grocery stores, and many others; the business entities equally owe their survival to the continued patronage they enjoy from society and as such maintaining such key relationships remains at the core of CSR.
However, even as CSR remains at the core of responsible corporate citizenship, its adoption by business entities continues to generate challenges in many corporate boardrooms on how best to render such valuable services that may well be the key to their eventual long-term sustainability (Kotler & Lee, 2005; Alafi and Hasoneh, 2012). CSR has evolved beyond mere corporate philanthropy; it has become a call for corporate accountability and responsibility often choked by the profit-seeking motives of commercial entities. The growing call for dedicated CSR will only be loudest as this century progresses especially with the growing vigor combined with political and social leverages of civil society activists and consumer sophistication that continues to spotlight the economic, social, and environmental context of corporate entities.
This chapter takes a systematic analysis of the subject matter of CSR through a review of relevant academic literature. As such, the concept of CSR will be defined, followed by the role of the concept in business, after which a particular focus on CSR in the UK will be made.
2. Corporate Social Responsibility (CSR)
CSR is one concept that suffers from definitional problems owing to different perspectives given to it. These different perspectives accorded to CSR cover broad perspectives such as: stakeholders, social, economic, voluntary, and environmental perspectives (Dahlsrud, 2006). Furthermore, other considerations that have greatly influenced the definition of the concept could be located in the conceptualization of CSR by Carroll (1991:283) which says—“The social responsibility of business encompasses the economic, legal, ethical and discretionary [later referred to as philanthropic] expectations that society has of organizations at a given point in time”.
According to Carroll and Shabana (2010), the four-part considerations of CSR highlighted above: economic, legal, ethical, and discretionary or philanthropic are essentially critical to the understanding of the concept. The four considerations for CSR highlighted in Carroll (1979; 1991) are clearly visible in the definition of CSR rendered by Hopkins (2004:1)—
“CSR is concerned with treating the stakeholders of the firm ethically or in a responsible manner. Ethically or responsibility means treating stakeholders in a manner deemed acceptable in civilized societies. Social includes economic responsibility. The wider aim of social responsibility is to create higher standards of living, while preserving the profitability of the corporation, for peoples both within and outside the corporation.”
According to the globally recognized not-for-profit organization—Business for Social Responsibility (BSR), CSR entails—“…operating a business in a manner that meets or exceeds the ethical, legal, commercial and public expectations that society has of business”. This definition is equally underpinned by that of World Business Council for Sustainable Development (WBCSD) which posits that—“CSR is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families, as well as of the local community and society at large…”
A thorough analysis of the definitions of CSR above would suffice to say it incorporates all the features pointed out in Dahlsrud (2006) five dimensions of CSR which are: stakeholders, social, economic, voluntary, and environmental dimensions coupled with Carroll (1991 and 1999) four categories of CSR which are: economic, legal, ethical, and discretionary/philanthropic categories of CSR responsibilities.
Pyramid of Social Responsibilities (Carroll, 1991:42)
The economic responsibility of CSR is expressed by businesses to their stakeholders in the form of dividend payments derived from profit making. Businesses are established by individuals to make a profit and such meeting the financial demands of stakeholders of a business without jeopardizing the society’s wellbeing through excessive pursuit of profit (Carroll & Shabana, 2010; Barnett, 2007).
The legal responsibilities of CSR refer to those obligations or as Carroll (1991:4) puts it—“codified ethics” businesses have to adhere to in the environment in which they operate. These legal responsibilities tend to generate controversies with some canvassing for more compelling legal obligations for businesses to engage in CSR (De Schutter, 2008) while others have argued against stricter legal imposition of CSR by businesses that it should instead be a voluntary obligation.
Ethical responsibilities of CSR on businesses consider the standards and expectations placed on them by stakeholders and society at large as respectable members of it. The violations or relegation of these expectations and standards would be considered unethical by society. Thus, ethical responsibilities of a business can be expressed as its “voluntary actions to promote and pursue social goals that extend beyond their legal responsibilities. These goals are of importance to society or to different stakeholders in the society, but their promotion is beyond the corporation’s immediate financial interest” (Carroll & Shabana, 2010: 95). Ethical responsibilities on business and commercial entities have continued to gain momentum especially with the rise of ‘rights groups’ focusing on various issues of corporate responsibilities such as climate change, fair trade, corporate governance, workplace diversity, decent work, and human rights to mention a few.
Discretionary or philanthropic responsibilities CSR of a business entity are demonstrated in the form of tangible gestures to promote the well-being of society. This may come in the form of donations to schools, fighting diseases, building infrastructure like roads and pipe-borne water, aiding disaster relief programmes, and other numerous good causes. The Committee Encouraging Corporate Philanthropy (CECP) is one very important platform used by a good number of Fortune 100 companies to engage in philanthropic donations to causes important to a society’s wellbeing.
3. Drivers of Corporate Social Responsibility (CSR)
CSR as a global phenomenon has seen its expansion in recent times grown in scope and resources with many global companies and high-net-worth founders of big businesses such as Bill Gates, Warren Buffet, Richard Branson to mention a few and most recently Mark Zuckerberg pledging billions of dollars to numerous causes aimed at improving the human and environmental conditions of the world. The primary aim of commercial entities is profit making, but even at that CSR is increasingly influencing the extent to which companies can be held accountable and responsible as they go about their profit-making activities. This then raises the idea of drivers or influencers of CSR. According to Van Marrewijk (2003: 99) there are three reasons while companies engage in CSR, these are “they either feel obliged to do it; are made to do it or they want to do it”. These reasons can be categorized into external and internal reasons; “because they feel obliged to do so and because they might be made to do so”—are clearly external factors while “because they want to”—represents an internal factor. This is in line with the assertion of the Interdepartmental Commission for Sustainable Development (ICSD, 2006), which categorized the motivating factors of CSR into internal and external. The internal factors are driven by shareholders, management, or employees who demand their companies embrace convictions that make them good corporate citizens while the external drivers are the consumers, government agencies, NGOs, and other pressures emanating from outside requesting the company adhere to socially and environmentally responsible behaviors.
4. External Drivers of CSR
The role of external forces in driving or influencing businesses to embrace CSR is huge in all ramifications. Businesses operate to serve their external environment and as such the external environment plays a prominent role in shaping some of their activities. The external factors represent the social, economic, legal, and political factors that have a great influence over the activities of businesses.
4.1 Non-Governmental Organizations (NGOs)
Non-Governmental Organizations (NGOs) are a key socio-political actor in the external environment of a business that influences its adoption of CSR. NGOs continue to be one of the major external drivers of CSR through the pressures they put on governments and businesses to act in a manner that demonstrates accountability and responsibility. The likes of Greenpeace, World Wildlife Fund (WWF), Oxfam, Rainforest Alliance, and Amnesty International to mention a few, have pressured the corporate world to embrace measures that protect the environment, fight against child labour and the use of sweatshops, uphold rights of indigenous communities where extractive business activities take place, feed the hungry, and many other good causes. NGOs enjoy a good measure of trust from members of the public, while some NGOs are engagers by trying to convince businesses to subscribe to codes of conduct while others tend to be confrontational bringing into light the shortcomings of businesses such as harmful environmental or labour practices. NGOs tend to enjoy an appreciable trust premium that gives them the leverage to influence the CSR initiatives of commercial entities. According to Edelman Trust Barometer of 2015, NGOs continue to be the most trusted institution in the world although it saw a slight decline from 66% in 2013 to 63% in 2014.
According to the 2015 C&E Corporate-NGO Partnership Barometer—
“An overwhelming majority (92%) of corporate respondents state that corporate-NGO partnerships have improved business understanding of social and environmental issues…Most respondents from the corporate sector (65%) state that their key NGO partnerships have helped their companies to change their practices for the better (a 6% increase on the prior year—and 21% uplift on 2013). Cross sector partnering clearly matters to business” (C&E, 2015:3).
Corporate-NGOs partnerships have gained momentum in recent times and as such have greatly and continue to influence CSR of businesses in various areas such as sustainable agriculture, forest preservation, renewable energy, labor issues, consumer protection, and human rights to mention a few. NGOs as drivers of CSR, have seen businesses committing more resources to social and environmental causes. As standard setters, NGOs labeling and certification have become highly sought after by businesses in order to boost their image as responsible corporate citizens and this in turn has seen businesses committing resources to environmental protection and social development (Poret, 2014; Baron, 2001). NGOs continue to play an important role in influencing investors, businesses, consumers, and the general public especially now that global internet penetration remains steadfast and as such has given NGOs a powerful status as drivers of CSR globally.
4.2 Consumers
Consumers are essentially the most important segment of the society business entities are much more eager to woo for their repeat patronage of products and services on offer. This in turn has made consumers one of the most important motivators or drivers of CSR locally and globally. Consumers are the main reason commercial entities exist and as such consumers’ apathy towards a business entity can ultimately lead to its downfall.
This submission of Starbucks, the global coffee chain, captures the essence of consumers as one of the major drivers of CSR thus:
“Consumers are demanding more than product from their favourite brands. Employees are choosing to work for companies with strong values. Shareholders are more inclined to invest in businesses with outstanding corporate reputation. Quite simply, being socially responsible is not only the right thing to do; it can distinguish a company from its peers” (Starbucks, 2001:3).
Consumers wield enormous influence over business entities and continue to have an extensive impact on their CSR activities. It is even gaining momentum with increasing sophistication of consumers who are now demanding businesses embrace sound ethics, good labour practices, and sustainable practices. This growing sophistication of consumers has seen the growing influence over CSR by ‘ethical purchasers’ who “have political, religious, spiritual, environmental, social or other motives for choosing one product over another…The one thing they have in common is that they are concerned with the effects that a purchasing choice has not only on themselves but also on the external world around them” (Harrison, Newholm and Shaw, 2005:2).
Sen and Bhattacharya (2004) study revealed that CSR in the corporate world is greatly influenced by the consumer-business congruence with consumers acting as a major instigator. This has seen consumers boycott products or services of a business entity deemed to engage in practices at variance with values and principles detrimental to human rights, social justice, animal welfare, or environmental sustainability (Grande, 2007). In the findings of another study conducted by d’Astous and Legendre (2009) on the influence of consumers over CSR, concludes that “consumers have developed favorable attitudes towards ethical products and companies with socially responsible practices” (p. 255).
Consumers are a great segment of the stakeholder population of businesses and as such they have become greatly influential to the extent that their dissatisfaction with the ethical behavior of a company may well spell doom for the profit or image of such company. Consumer boycotts of South African products during apartheid, Danish products in the Middle East following the caricature of Prophet Muhammed by a Danish newspaper, or the consumer backlash Shell received for drilling in the Arctic or for polluting the environment in Nigeria, Nike’s use of sweatshops in India, and many other consumer activism clearly suggest the influence of consumers as one of the key drivers of CSR.
4.3 Government
Government is a powerful driver of CSR in most countries of the world through the mechanism of regulatory frameworks that businesses have to adhere to in order to operate without hindrance. Without government intervention, most external pressures on businesses to embrace CSR may not have the full backing of legal machinery whose violations by businesses would elicit sanctions. This has been clearly demonstrated in the recently concluded COP21 Paris Conference on Climate Change where countries and their governments have to play an important role of setting limits of carbon emissions of publicly owned and privately owned businesses in their domains.
Government carries out the all-important task of a mediator, facilitator, and partner in CSR development in businesses. These activities or roles are not to upset business activities but to act as a motivator of a company’s voluntary engagement in CSR. According to Bevan (2005), government’s role in motivating CSR in the corporate world involves the enactment of legislation mandating certain behavior, setting guidelines on content, engaging with stakeholders, and endorsing CSR activities of businesses. The increasing trans-nationalization of businesses flowing from the overarching influence of globalization coupled with the growing challenges of sustainable development meant government cannot stand aloof while businesses generate profits without giving back to the communities in which they operate. This in turn has made governments engage in a synergistic partnership with the private sector to boost CSR to solve societal and environmental challenges confronting their communities and the world at large. In the submission of Moon and Vogel (2008), CSR cannot exist in isolation of government since the national content of CSR is a reflection of the modern state. In recent times, many Western governments with liberal market economies have assumed a much more active role in promoting CSR in the form of a cross-sectoral synergy with the private sector (Matten and Moon, 2008).
To this end, government through its soft approach has increasingly become a facilitator of the voluntary participation of businesses which in turn according to Moon (2007) has made CSR not “simply a feature of the new global corporation but it is also increasingly a feature of new societal governance” (p. 302). De Schutter (2008) differs a bit on the soft approach based on his study of three Scandinavian countries: Finland, Sweden, and Denmark known for the high ethical standards of their corporations coupled with their strong CSR, contends that: a strong governmental regulation as against soft regulation, a much more active civil society movement, and a collective industrial self-regulation have indeed been the underlying factors driving CSR. This assertion is equally reflected in the statement of Carroll (2008) which says in the respect of CSR “some initiatives are more voluntary than others as companies have been under legal and regulatory pressures to adopt” (p. 41).
The socio-political saliency of public policy in CSR has seen its strong manifestation in a series of frameworks such as: The Restriction of Hazardous Substance (ROHS) in the European Union (EU), The Waste Electrical and Electronic Equipment Act also in the EU, the United States Toxic Release Inventory and other environmental protection regulations set by the country’s Environmental Protection Agency, Dow Jones Sustainability Index (DJSI) and the United Nations’ Global Compact to mention a few. These regulatory frameworks have global ramifications that businesses engaging in international trade cannot take for granted (Hopkins, 2004). Other policies of government towards promoting CSR in businesses include funding of research, voluntary product labeling schemes, and the setting up of guidelines for financial reporting especially for publicly quoted companies. Governments indeed value the promotion of CSR in the business environment so as to complement its efforts especially now that the quest for environmental and social developments have become greatly aligned to national interest.
5. Internal Drivers of CSR
Businesses have internal elements that motivate their CSR activities. These internal elements have great influence on the direction and vigor of a company’s CSR activities. Some of these internal drivers are: reputation and image of the company, strategy for competitiveness, and staff recruitment and retention.
5.1 Reputation and Image
In an increasingly globalized economy with the spotlight on business activities expanding in scope owing to the growing ubiquity of the internet; building a brand reputation that is socially and environmentally responsible has become a very important business strategy. According to the Reputation Institute, a global consulting firm—“people’s willingness to buy, recommend, work for, and invest in a company is driven by 60% by their perceptions of the company, and only 40% by their perceptions of the product”. Furthermore, Reputation Institute listed seven factors at the core of a company’s image and reputation, these are: workplace, governance, citizenship, financial performance, leadership, product and services, and innovation. Out of these seven, three (citizenship, governance, and workplace) are essentially linked to CSR which according to Kasper Ulf Nielsen, executive partner at Reputation Institute “…people’s willingness to trust, admire, and feel good about a company is based on their perception of the corporate social responsibility of the company, so this is a key tool for companies to use to improve support from stakeholders like consumers, regulators, financial community and employees”. This in turn has seen companies try to create distinct identity for themselves by giving publicity to their low carbon footprint, support for human rights, animal welfare, decent labour practices, funding for girl child education to mention a few.
5.2 Strategy for Competitiveness
CSR is no longer a mere gesture by companies, it has become a vital tool for boosting competitiveness. These major retailers consider themselves actively pursuing CSR using key performance indexes (KPI) (such as DEFRA KPI) and other independent verification. These mechanisms are to ensure these supermarket chains reduce their carbon footprint, conserve water, adhere to good waste management, minimize and even eradicate food wastages, maintain decent work and adhere to industry codes and standards amongst others. The business side of CSR has further been explored in the UK supermarket industry as the green economy has become a multibillion dollar industry. This has seen the major supermarket chains in the UK try to outdo each other as socially and environmentally responsible. Sainsbury for instance has as a rider five core values—“The best for food and health, sourcing with integrity, respect for our environment, making a positive difference to our community and a great place to work”. Tesco pride itself as working towards the reduction of CO2 emission and that carbon footprint can become an important business driver while Marks and Spencer emphasizes the sourcing of its raw materials in a sustainable manner. Virtually all the major supermarket chains in the UK have a commitment to CSR clearly stated on their official website. While the saliency of CSR has continued to grow in the industry especially with increasing sophistication of consumers, the sincerity of the supermarket industry at committing to a much more effective CSR engagement remains under increased public scrutiny (PWC, 2015).
6. Conclusion
This chapter reviewed relevant academic literature on the issue of corporate social responsibility (CSR) focusing on various perspectives such as: economic, philanthropic, ethical, and legal perspectives of CSR. Various drivers of CSR in the forms of internal and external drivers were equally dealt with in this review. Issues emanating from CSR covering broad areas such as: its impact on staff retention to consumer loyalty and to financial performances of businesses were equally reviewed. The theoretical perspectives of CSR had expression in the review as well. Equally so, the review looked at the retail industry, specifically the UK’s supermarket industry which is the focus of this study.
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