There are many different definitions and interpretations for corporate social responsibility, but all with considerable common ground. Different societies have different perceptions of what corporate social responsibility is but all definitions refer to the way in which the core business is managed. (Weber, 2008, pp. 247–261)
The World Business Council for Sustainable Development in its publication Making Good Business Sense by Lord Holme and Richard Watts, used the following definition: (Mallenbaker.net, 2014) ‘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.’ (Mallenbaker.net, 2014).
It can therefore be said that social responsibility actions are those that go beyond a company’s obligations according to social or environmental regulations, in order to be perceived by the public as supporting their interests (Mallenbaker.net, 2014).
‘Social responsibility is a form of self-regulation that businesses adopt as a part of their corporate conscience and citizenship. Often referred to as corporate social responsibility or CSR, this policy spurs businesses to develop means to monitor the public’s social perception of them as a responsible business. The business goal of social responsibility is to encourage the company’s actions toward the positive impact of consumer, community and employee responsibility.’ (Davis, 2014).
This not only has an impact on economic growth, but also affects the social and ecological environment. Companies are becoming more and more aware of the impact that their business activities have, especially due to the fact that the media and society hold companies accountable, which attracts a considerable amount of publicity. Business leaders now have to consider incorporating corporate social responsibility into their business strategies a priority (Weber, 2008, pp. 247–261).
Diagram : The Business in Society (Mallenbaker.net, 2014)
Heightened attention to corporate social responsibility of companies is not completely voluntary. Many companies only become aware when they are surprised by public responses with regard to issues that they did not think was part of the scope of their responsibilities. (Porter and Kramer, 2006, pp. 2-13). ‘An example of this is Shell Oil’s decision to sink the Brent Spar, an obsolete oil rig, which lead to Greenpeace protests in 1995 and made international headlines’ (Porter and Kramer, 2006, pp. 2-13).
Benefits
There are 5 main areas which businesses can benefit from CSR:
- The positive effect on companies reputation and performance ‘ Gray & Balmer defined image as ‘the mental picture of the company held by its audiences’, which is influenced by the messages that are communicated. The way in which a company is perceived influences the company’s competitiveness. CSR influences a company’s reputation (Weber, 2008, pp. 247–261).
- ‘Positive effects on employee motivation, retention, and recruitment’ – Companies can directly influence employees by having them be more motivated as a result of working in a better environment. Potential employees may find volunteering and CSR program attractive and current employees may be more motivated by doing good work or ‘having a sense of purpose’ (Weber, 2008, pp. 247–261).
- Cost savings ‘ As a result of substituting materials for more sustainable ones, efficiency gains could be a result. Capital could be easier to gain as a result of investors being sensitive to sustainability issues (Weber, 2008, pp. 247–261).
Wal-mart reduces the number of store reports that are printed automatically. They expect that this will lessen printing of 350 pages, saving them $20M. (Walmartstores.com, 2014) - Revenue increases from higher sales and market share – An increase in revenue could be achieved indirectly as a result of an improved brand image or directly by a CSR driven product or market development (Weber, 2008, pp. 247–261).
- Risk reduction or management ‘Risk related risks can be avoided or managed by incorporating CSR such as negative media or NO boycotts. (Weber, 2008, pp. 247–261)
How CSR can be incorporated
Some of the ways companies incorporate CSR to be more sustainable include:
Voluntary Hazard Elimination
Companies that are socially responsible often act to remove production practices that could cause harm to the public, even if the law does not require them to do so. This is a voluntary action that companies take upon themselves in an effort to be more socially responsible. (Weber, 2008, pp. 247–261) A company, for example could educate the public on how to stay protected from harmful substances as part of a hazard control program. A chemical plant could implement a checklist for a safety inspection to help staff to handle substances that could be potentially dangerous to them. A company could gather information on local residents to determine the way the noise pollution that the business creates that affects them and adjust their activities or takes steps to soundproof or lessen the noise accordingly. (Davis, 2014) Wal-Mart is working to lessen the amount of waste generated by their facilities. They are looking for new solutions for excess materials and food. They are also working with suppliers to improve the packaging of their products. ‘The majority of their excess food is donated to ‘the Feeding America program’ which delivers the food to food banks in all states. In 2009, more than 127M pounds were donated, which then got distributed to people across the nation. Wal-Mart has also improved their recycling and waste redirection efforts. In 2009 they redirected more than 64% of waste generated’ (Walmartstores.com, 2014).
Community Development
Companies, businesses and corporations concerned with social responsibility align with appropriate institutions to create a better environment to live and work. For example, a corporation or business may set up a foundation to assist in learning or education for the public. This action will be viewed as an asset to all of the communities that it serves, while developing a positive public profile (Davis, 2014). ‘In 2003, Philips and Caritas Austria (a Catholic relief, development and social service organization) founded the Philips Pupils Fund of Caritas. The fund, which is managed by Caritas, provides financial support to socially disadvantaged school children in Austria. Each year, Philips Austria donates 70,000 EUR to the fund. Additional donations come from Philips employees and business partners. Philips also offers ‘future vouchers’ to the children supported by the fund offering to help them in the future e.g., by finding an apprenticeship position upon graduation.’ (Weber, 2008, pp. 247–261) This is a prime example of community development.
Philanthropy
Philanthropy is when a company makes a monetary contribution that will provide aid to local charities, organizations that are health or education related to help less fortunate, impoverished communities. This can help in many ways, such as providing people with the skills necessary to be marketable and therefore aiding in reducing poverty and help the environment. E.g. the Bill and Melinda Gates Foundation donates computers to various schools as well as funds work on vaccines preventing HIV (Davis, 2014). Another example is Goldman Sachs, which ‘committed $100 million over five years to one such initiative, ‘10,000 Women,’ which provides a mix of practical business education, support services and access to capital for under served women business owners in more than 20 countries’ (Eckhart-Queenan, 2010)
Creating Shared Value
Often corporate responsibility is referred to as CSV or creating shared value, which refers to the way in which social well-being and corporate success are related/connected. A business needs a healthy, educated workforce to strive. Businesses must thrive so that they may help develop society and help them to survive. By doing so, they created shared value. (Davis, 2014)
Social Education and Awareness
Companies that engage in socially responsible investing use positioning to exert pressure on businesses to adopt socially responsible behavior themselves. To do this, they use media and Internet distribution to expose the potentially harmful activities of organizations. This creates an educational dialogue in the public by developing social community awareness. This kind of collective activism can be effective in reaching social education and awareness goals. Integrating a social awareness strategy into the business model can also aid companies in monitoring active compliance with ethical business standards and applicable laws. (Davis, 2014) e.g. Walmart has displayed in its stores, which stresses the importance and global need for safe drinking water. (Walmartstores.com, 2014).