The concept of Social Responsibility (SR) can be traced all the way back to the 1800s in the form of philanthropy. It was not until the 1950s when we first saw the start of the modern era of Corporate Social Responsibility (CSR). The rise of CSR can be largely credited to Howard Bowen and his book “Social Responsibilities of the Businessman” where he defines CSR as the obligations of businessman to pursue those policies, to make those decisions, or to follow those lines of actions which are desirable in terms of the objectives and values of our society. Today, companies all over the world align their CSR report in accordance to the standards pioneered by Global Reporting Initiative (GRI). This essay will cover the adoption of CSR in Asia, US, and whether CSR is as common in Asia as it is in the US.
The adoption of CSR in the USA can be largely credited to the Committee for Economic Development (CED) for publishing a three-tiered model of CSR as a code of conduct. The model identifies the inner, intermediate and outer circles, where organizations need to actively pursue towards improving the social environment issues. In addition, Keith Davis also established the “Iron Law of Responsibility” which held that the social responsibilities of businesses are to be commensurate with their social power. The citizens in the US quickly caught onto the idea of the Iron Law of Responsibility and carried out protest during the 1960s on corporations who were only concerned about their profits and not the environment. Despite influences from societal change, many organizations still do not buy the idea of CSR. However, in the 1980s, Peter Drucker, a top management consultant wrote in the California Management Review where he mentioned that it was paramount to turn social problems into economic opportunities, leading to the first publication of CSR in the annual report in 1989 by Ben & Jerry’s. Giant companies such as Nike and Shell faced the wrath of its stakeholder in the 1990s for not playing their part in social responsibility. Shell was accused of complicity in the execution of Ken Saro Wiwa and eight other activists in Nigeria which sparked an outrage among individuals all over the world. In addition, the oil spills in the coast of Nigeria delta also caused the reputation of Shell to spiral down south. On the other hand, Nike was accused for labor abuse where labor conditions in some factories were questionable with approximately 80% of the workers were female and were paid very little despite working overtime several times in a week. Stakeholders view such cases as socially irresponsible and would not hesitate to eradicate such companies off the market. Therefore, when the incident came into the light of the media, many consumers boycotted Nike resulting in a huge dip in revenue. That is when corporations in the US realized that they needed a strategy to convince the mass public and stakeholders that they could also play a valuable role in improving the society and environment.
Over the past decade, the number of listed companies reporting CSR have sky rocketed from 20% in 2011 to 82% by the end of 2017.
It is often debated that when it comes to CSR, Asia lags behind their western counterparts. But in fact, Asia companies have always been practicing CSR, although they may have never used this term. Businesses in Asia tend to focus more on community development and philanthropic activities such as large donations to local communities and taking care of their employees’ welfare. The adoption of modern CSR in Asia can be seen in recent years and is heavily attributed to globalization. In addition, the increased activity between US and Asia and increasing pressure from stakeholders have made Asian companies more explicit about CSR practices. In 2016, 10 Asia firms made it into the “Global 100 Most Sustainable Corporations Index”. Starhub, a telecommunication firm in Singapore, ranked 8th on the index. The company contributed $200,000 to CDC to support learning for disadvantaged individuals and also raised over $120,000 for the Children’s Cancer Foundation through its annual “Hair for Hope” fundraiser. All the reports made by Starhub were in accordance with the GRI standards. A report by KPMG in 2016 shows that CSR reporting in Asia have risen from 49% to 79% in a short span of four years. An example of modern CSR in Asia is Bangchak Corporation. The company aims to tackle climate change by using clean-energy to replace their entire fuel oil usage for production process by 2020. Moreover, GRI have also reported that there is an explosion in reporting rates in Asia and they are the fastest growing region in terms of sustainability reporting.
Globalization have caused both Asia and Western corporations to be accountable and transparent to its stakeholders and society. In addition, government in the US and Asia are actively creating an environment that promotes corporations to tackle environmental and social interests as part of their business operations. For instance, listed firms in Singapore, Hong Kong and Japan are required to report the impact they have on the environment and society and how the firms aim to improve as they grow. In the recent years, both Asia and US corporations view CSR as Corporate Sustainability Responsibility where its core characteristic is about how to make money in a sustainable and responsible manner as well as staying competitive in the market.
However, the different models of CSR set the regions apart. In the US, firms differentiate CSR from philanthropy as they focus on how to integrate CSR into business objectives and goals as well as redefining the firm’s role in its society and environment. On the other hand, Asia firms quantify CSR as acts of philanthropy instead of defining their role within their environment and society.
To quote founder of Centre for Ethical Orientation, John Dalla Costa, “Not long ago the concerns of ecologists were as irrelevant to business planners as those of ethicists are today. “Green” has gone from being a disparagement to becoming a badge that no smart company would risk being without. Ethics are similarly en route to becoming a strategic imperative.”
Indeed, ten years ago, many would argue that CSR in Asia is non-existent. However, with globalization and the increase growth in sophisticated and outspoken stakeholders, companies in Asia have been quick in integrating philanthropy with modern CSR standards.
The number of sustainability reports subjected to GRI standards in Asia only exploded in recent years. Even though CSR is perceived by many to be the most prominent in the US, Asia is definitely a dark horse when it comes to modern CSR. With statistics provided by GRI and CSR RepTrak®, CSR is definitely as common in Asia as in the US and they are speculated to overtake the US and lead the world in CSR in the near future.