Corporate Social Responsibility (CSR)

Introduction

Corporate social responsibility(CSR) can be defined as a management model that concerns itself with the operations of global cooperation and its association within the society in which it operates (Crowther and Alas, 2008). CSR exists to promote sustainable development in the region where an organization operates, which supports the organization by attracting more investors and more customers. Rim and Song (2021) conducted a social experiment and concluded that when a company’s promotional message and its actions are aligned, this results in a positive impact and vice versa. The formulation of corporate social responsibility indicates a need to restrict and control gross misconduct by the cooperations. The existence of multinationals (MNCs) is sustained by society. Therefore it is delinquent for them to maximize their profits with little regard to the harm they cause to the environment and their employees.

World-renowned economist Milton Friedman said that MNCs should not work towards social responsibility but rather satisfy shareholders (Brock 2021). More often than not, organizations succumb to the greed to generate profits instead of legitimately connecting to their customers by focusing on sustainable issues. Nonfinancial reporting refers to reporting where organizations reveal their nonfinancial information, such as knowledge of human rights. Milne and Gray (2013) argue that the Triple Bottom Line does not provide sustainable conditions for preserving the earth’s ecology. Organizations often mistake marketing campaigns as a way to connect with the public while they inevitably fail to invent strategies that will help them to promote labor standards and ecological boundaries. Legitimately connecting with the society involves issues that affect the community who are their consumers, which will show that an organization is embedded. Environmental, human, social, and economic sustainability can achieve corporate social responsibility.

Environmental Sustainability

Environmental sustainability involves the promotion of the preservation of the environment in order to maintain the quality of human life. This can be done by conserving natural resources such as air, water, and mineral resources to ensure that the needs of the people are met without necessarily endangering the environment. Climate change is attributed mainly to pollution by industries. Climate change has facilitated a rise in the sea level through the melting of icebergs. This has given way to the loss and displacement of human and animal life. Changing weather patterns have contributed mainly to starvation due to unpredictable weather patterns. Climate change has also contributed to flooding, which increases poverty and homelessness. This has resulted in biodiversity loss, which negatively impacts the environment. The loss of some organisms brings about an imbalance in the ecosystems and food chains. All companies directly or indirectly source their raw materials from the environment, and therefore destroying them is not sustainable for them.

Ethical responsibility

Ethical responsibility demands that companies have measures and policies that ensure that human rights are executed and respected. Moral responsibility demands that workers, customers, and the administration are treated equally regardless of the positions that they hold (GlobalNaps, 2021). The main cause of the lack of ethical sustainability is globalization. When companies expand, they tend to neglect the working conditions of their workers since their main aim is profits. Expanding into new regions requires them to maximize their profits, often achieved by tactics such as poor pay. This means that there will be a big salary difference between members who are skilled and those who are semi-skilled. Companies tend to underpay employees in developing countries compared to those in developed countries. This is an illustration of bias that is based on origin instead of being ethically responsible.

In 2018, a study revealed that about 600 hundred workers working for Fairtrade experienced various abuses, including inhumane treatment, sexual violence, salary withholding, and physical abuse (Reinecke et al., 2019, p 7). Another incident occurred in Karachi at Ali Enterprises, where a fire broke out and killed 300 workers (Reinecke et al., 2019, p8). Ironically, three weeks earlier, the enterprise had been certified after a fire inspection. This is an illustration of corporate negligence and total disregard for the well-being of the workers. These two instances provide an illustration of gross violation of human rights, including the right to life.

Globalization has largely resulted in the development of culturally insensitive campaigns and ads. Most corporations expand into new areas after doing little or no research. This offends potential customers and employees because the company has created an image of being insensitive. This might lead to a loss of culture since globalization tends to enforce foreign culture on the people.

Customer segregation is one of the ways in which MNCs can achieve embeddedness. Segregation means that the organizations treat the needs of each consumer as uniquely as possible rather than assuming that a general approach will cater to every consumer’s needs. This can be achieved through collecting data about their preferences, needs, age, size, and race, among other things.

In order to make sure that customers are satisfied with the products or services, it is imperative that a company establishes a customer care docket that will provide quick responses and assistance to the customers. The provision of such an will help the company know how to make their products and services better. Quick responses will also ensure that the customers will always come back. An organization should be able to anticipate the needs of their customers before they even mention them. Analysis of patterns of sales and preferences can be done through machine learning and AI in order to predict the future needs of buyers. Organizations can formulate methods such as promotions to reward their loyal customers. This can serve as a way of giving back to them and showing appreciation. This presents a positive image of the organization by showing society that they genuinely care about them.

The TBL theory insists that organizations should put equal effort into environmental sustainability, social responsibility, and profits. This approach has proved ineffective in achieving sustainable development goals since most companies do not adhere to it. The leading cause of this is that there are no measures to deal with the violation of CSR. Hefty fines hardly have any kind of effect on multinational corporations. The MNCs are not properly monitored, and workers in developing countries are often neglected.

Conclusion

A critical analysis showed that corporations have failed to adhere to CSR, and this has caused drastic effects on the environment and caused a gross violation of human rights. Companies largely contribute to all forms of pollution, elimination of natural resources, and emission of greenhouse gases. The failure to be environmentally responsible gives the companies big profits but has adverse long-term effects. Organizations are continually trying to impress their shareholders with massive profits and are ignorant of the effects they have caused. There exists documental of nonfinancial reporting, but it is not implemented. Despite the existence of CSR, companies still selfishly exploit their workers and destroy the environment. Corporate social responsibility is one of the ways to achieve sustainable development goals. Therefore, this means that the organizations are not concerned with reaching SDGs, but they are just after monetary gain.

References

Brock, T., 2021. [online] Mdos.si. Available at: <https://www.mdos.si/wp-content/uploads/2018/04/defining-corporate-social-responsibility.pdf> [Accessed 30 April 2022].

Browne, J. and Nuttall, R. (2013), Beyond corporate social responsibility: Integrated external engagement. http://www.dse.univr.it/documenti/OccorrenzaIns/matdid/matdid320082.pdf, [Accessed 1 November 2019].

Browne, J., Nuttall, R. and Stadlen, T. (2015), Connect: How companies succeed by engaging radically with society, WH Allen.

Crowther, D. and Alas, G., 2008. [online] Mods.si. Available at: <https://www.mdos.si/wp-content/uploads/2018/04/defining-corporate-social-responsibility.pdf> [Accessed 30 April 2022]. Scherer, A. G. and Palazzo, G. (2010), The New Political Role of Business in a Globalised World: a review of a new perspective on CSR and its implications for the firm, governance and democracy, Journal of Management Studies.

Grayson, D., Coulter, C., & Lee, M. (2018). All In: The Future of Business Leadership (1st ed.). Routledge. https://doi-org.libproxy.york.ac.uk/10.4324/9781351001205

Hahn, R. (2013), ISO 26000 and the Standardisation of Strategic Management Processes for Sustainability and Corporate Social Responsibility, Journal of Business Strategy and the Environment 22,442-455.Williams, A., Kennedy, S., Philipp, F., Whiteman, G., 2017. Systems thinking: A review of sustainability management research. Journal of Cleaner Production.

Milne, M.J. and Gray, R., 2013. W (h) ither ecology? The triple bottom line, the global reporting initiative, and corporate sustainability reporting. Journal of business ethics, 118(1), pp.13-29.

Naps, G., 2022. Nonfinancial reporting | National Action Plans on Business and Human Rights. [online] National Action Plans on Business and Human Rights. Available at: <https://globalnaps.org/issue/non-financial-reporting/> [Accessed 30 April 2022].

Reinecke, J., Donaghey, J., Bocken, N. and Lauriano, L. (2019), “Business Model and Labour Standards: Making the Connection” Ethical Trading Initiative, London.

Rim, H., Park, Y.E. and Song, D., 2020. Watch out when expectancy is violated: An experiment of inconsistent CSR message cueing. Journal of Marketing Communications, 26(4), pp.343-361.

Searcy, C. Defining True Sustainability. MIT Sloan Management Review. [Online]. Available at:https://sloanreview-mit-edu.libproxy.york.ac.uk/article/defining-true-sustainability/ [Accessed 17 March 2021].

Whiteman, G. Walker, B. and Perego, P. (2013), Planetary Boundaries: Ecological Foundations for Corporate Sustainability, Journal of Management Studies, 50:2.