Corporate Social Responsibility

Introduction

In an increasingly globalized society, consumers have become more and more knowledgeable about the business practices of various organizations. As a result, the consumer remains equipped with the ability to use their parameters and ethical compass in determining which businesses they seek to patronize. The phenomenon of the empowered consumer is affecting organizational procedures and business practices from the top down. One significant demand for a more globalized economy comes in the form of corporate social responsibility (CSR). CSR refers to the activity of companies addressing social and environmental issues in the vicinity despite their profit-making motive (Archie, B., 2015). Businesses can achieve this by putting in place ethical labor practices, donating to local and national charity events, implementing efforts to reduce the environmental impacts of industry the environment such as reducing the carbon footprint in manufacturing firms and volunteering in social activities for the well-being of the society. CSR helps to develop a healthy relationship between the company and the consumers, thus, helps to improve sales and the market share in a competitive market. Although some companies may not realize the benefits of taking part in CSR, development of a healthy relationship with the consumers may help in improving their performance in the long term.

History of Corporate Social Responsibility

Most companies began feeling the essence of environmental conservation right after the Second World War. The aftermath of the war resulted in the establishment of people’s perception towards social and ecological consciousness. The postwar period had remarkable serious events that created awareness among the global population. It is after the war that people began advocating for civil rights to quell their animosity. Similarly, different global agencies started ongoing operations (Archie, 2015). The most significant one was the establishment of the United Nations Organization. The creations of these institutions played substantial roles in environmental campaigns since it was a central belief that the war must have originated from ecological conflicts. Moreover, there was also an urgent need to solve challenges arising from inequality; either through equitable resource allocation or empowerment of the marginalized groups. It is due to this attempt that the rights of women became a priority both at private and at corporate levels. Thus, most companies had to embrace nearly all these changes within their plan to facilitate unitary service delivery.

According to Archie 2015, corporate social responsibility has evolved from little environmental consciousness to a perception that controls all the company’s stakeholders. The environment has also changed from mere surrounding to entail both the local, human resource and reward to the community under which the enterprise operates. Any business, therefore, must be ready to change its tact from pursuing profit-generating activities to obeying the law of nature. Thus, it must be well prepared to address the concerns of other stakeholders within its environment. In fact, studies have indicated that in the modern society, consumers and employees can only be loyal to companies that show interest in their welfare. Therefore, it has drifted from simple practice by different institutions to a competing factor in the industry. Over the recent years, most enterprises have derailed the integrity of the environment and consumers are losing interest in manufactured products. As a result, all companies must work together to mitigate pollution of the situation but maintain their social responsibilities.

Influence of Globalization on Implementing CSR

Globalization has put more pressure increasingly on companies to adopt corporate social responsibilities. For instance, consumers are becoming more aware of their rights. They no longer buy goods for the mere fun of it; instead, they focus on their health status, safety, and environmentally friendly products. Similarly, employees have also been advocating for the institutionalization of their general welfare through proper payments, training, and motivation. Finally, different agencies have even laid down legislation to enforce compliance by various companies. Therefore, for a company to operate well, it needs to consider the possible aspects to promote its performance in the competitive world. Some of the challenges include:

Increasing Consumers’ Demand from Business and Its Leaders

Consumers are the most important assets that every company treasures. They determine the level of success within business entities because, without them, the rate of purchase for the company’s products would drop. According to (Benabou & Tirole, 2010), two main pillars exist in every commercial environment. Benabou and Tirole describe that the first pillar is that of “an invisible hand” that addresses the consumers’ attitude and how the organization is prepared to respond to their objectives. Their argument places these buyers as the central players in the success of the business. In some areas, experts regard corporate social responsibility as a public relation tool. For instance, (Byline, Selvakumar & Arumugam, 2013) argue that companies should not consider their corporate social responsibilities as a mechanism that enhances their realization of success based on their contribution to social and environmental alone. Instead, they need to focus on the three fundamental principles centered on economic, social as well as environmental issues. In particular, the organization needs to evaluate and respond to the trends portrayed by the consumers. Understanding consumers and the society is particularly important for the companies that operate on an international scale.

Consumers are cautious about the existing ethical relationship between them and the company leadership. In their article, (Du, Swaen & Lindgreen, 2013) contend that corporate social responsibility entails a broad spectrum of tactics designed by any organization to ensure that its operations are aligned with the protection of the environment and that it addresses the needs of its stakeholders. It is a modest way through which businesses can respond to their socio-cultural norms, but in the broader scope, enhances their social legitimacy. Thus, it requires the intervention of responsible leadership that can build and cultivate a mutual relationship with their consumers. Moreover, the establishment of technology has raised the level of awareness among the consumers about the value of their environment. As a result, most of them have changed their attitudes to organizations that operate alongside environmentally-friendly interventions. However, some studies indicate significant variation in what constitutes to consumer loyalty. Johnstone and Tan (2015) claim that some consumers may stick to the organizations that produce environmentally hazardous products. Although it may seem peculiar, it is a typical scenario especially when such companies focus on trust, pricing of their products, performance and how they are ready to take risks into the affairs of the society.

Organizations may be forced to consider the main possibilities as well as the limits of corporate social responsibilities to transform the consumers’ behavior. A business entity hardly operates in monopoly within the setting of a society where it serves. In every stage of decision-making, the community, more so the consumers must be considered (Nica, 2013). It also takes a significant amount of capital to study their behavior and expectation before the establishment of such organizations. Importantly, the business has to consider the current values, religious ethics and the stakeholders in general. Hence, to be practical and relevant within its operational environment, such an organization must be sensitive to the impacts it posses to the community around.

Legislative Requirements for Environmentally Cautious Behavior

Most companies operate across the borders of their parent countries. However, each nation or region has specific regulatory standards aimed at protecting the integrity of the environment. In the recent times, most states have witnessed increasing emission of greenhouse gases into their surrounding by different industries. In effect, global warming has caused severe challenges in nearly all the economic sectors. In fact, the change of climate has the impact on agriculture, rainfall distribution, and vegetation cover. It also affects other areas including the tourism sectors and much more. Therefore, the countries can hold it no more. The fight has been directed to the actual source of this menace – companies.

The first legislative responsibility is to enforce business ethics by empowering corporate governance. Different countries have laid forth several assumptions that they have classified under business ethics. Furthermore, they have as well designed theories as well concepts that can help define the ethical operations within its borders (Nicolaescu, 2013). Thus, through legislation, the corporate governance as constituted under each country’s Business Act will help enforce compliance by the companies to the regulatory requirements. It will help companies to solve critical issues including corruption that may further affect their relationship with the local society. In particular, it will keep check of the industrial operations to ensure they do not violate the existing ethical obligations.

As part of corporate responsibilities, companies should strive to maintain legitimacy within their operations. It is an excellent challenge for a firm to understand what is legitimate in the context of a country’s perspective. However, it is needful for such corporations to examine the social norms of the society it seeks to serve. One significant aspect under consideration is the moral degradation that most companies have assumed in the past. According to (Zheng, Luo &Wang, 2014), moral degradation is a very significant tool in implementing both ethical practices as well as the corporate social responsibilities. In most cases, most countries amend their constitutions in response to the widespread social outcry. As such, business success is not dependent on its willingness to adjust its operations to suit the society needs; instead, it depends on how well it is ready to adapt to dynamism within the same society (Wu et al., 2015). Well, it may be hard for nearly all the companies to meet the standard ethical requirements set by the host country. However, it is imperative that they retain their legitimacy and compliance with the law outlines. For instance, it is straightforward for any government to declare a company’s venture as illegal, notably if it fails to adhere to some of the guidelines set forth.

Ensuring environmental sustainability is a primary concern for every government. It sets its policies with the focus on how to foster the integrity of its surrounding. Nevertheless, it has become a challenge for most companies to adapt to these systems efficiently. Globally, nearly every country understands the dangers of global warming to its entire population and as well as on its climate. It is becoming a collective concern to address these challenges in the time since their impacts are extensive. In particular, most various agencies are in the spotlight advocating for organic production as opposed to chemically-flushed products that have dominated our markets (Ruff, 2017). Human beings are also becoming more enlightened about their health and safety as a whole. For instance, in a country like the United Kingdom, it is now mandatory for companies to manufacture organic materials. To them, the integrity of the environment matters. Therefore, it becomes disconcerting for most businesses that have not embraced the modern technologies in their production process. Such changes might only favor companies that have gone green in totality.

Benefits to Companies with Specific CSR-Related Strategies and Processes

Consumer/Stakeholder Loyalty/Employee Buy-In

Most companies have failed dramatically in their operations as a result of being insensitive to the regular corporate social responsibilities. A successful business is one that considers and appreciates its stakeholders such as consumers, employees, and executives. Corporate social responsibility and environmental leadership are the most probable pillars to ensure success in organizations (DiSegni et al., 2015). For instance, for a business entity to obtain proper services from their workers, the leadership must support them through motivation and appraisals. Therefore, ensuring ethical behaviors rein throughout the institution will most likely promote good working relationship (Stryker, S. & Stryker, J., 2017). Experts believe that if an organization remains in possession of high levels of corporate social responsibilities, then it stands a better chance to benefit even more (Sarkis, 1998). It will become competitive in the market, realize customer loyalty to its products and it will equally increase its employees’ performance.

Monetary Success

The objective for venturing into any business is to generate profit. However, the success of an organization does not rest on the benefit alone. Instead, it centers on the ability of such agencies to deal with people, planet and financial issues (Svensson & Wagner, 2015). In fact, most companies find it easier to control some of the loopholes to prevent economic wastage. Through corporate social responsibility, a company will develop a culture needed to address environmental challenges before they strike extreme levels. Such institutions also appreciate the contribution by their stakeholders towards their success (Tian, Liu, & Fan, 2015). As a result, they retain their workers, support the community through non-profit interventions, and keep their customers’ trust at par. The administration of these attributes has an automatic positive effect on the financial capabilities of the company. In essence, such organizations have striven to uphold their reputation with the existing customers while they focus on building stronger ground in the market (Stinnett & Gibson, 2016). Therefore, it becomes imperative for any company that hopes to succeed in the future, to begin by embracing corporate social responsibility.

Innovation/Creativity/Longevity

Businesses are like projects that can be classified as either short-term or long-term intervention. In either way, they have a mission and vision to address. During the development of the business idea, the entrepreneurs identify the available opportunities. In some cases, the options present are highly competitive, making their selection a bit tricky. Nevertheless, by measuring the choice of environmental sustainability, such organizations are likely to create a competitive advantage (Walsh & Dodds, 2017). In spite of the external forces, an organization can initiate a strategy known as differentiate approach in which it combines several considerations to gain a leeway in the competitive market. For instance, by choosing to go green, such an institution is not just becoming unique, it is embracing adaptability to suit and appeal more to its customers. Secondly, some other institutions have designed hybrid approach in which a collection of opinions and operations are synthesized into a single, more powerful outlook fit to warrant competition. Interestingly, a well-structured system always emphasizes the environmental conservation as well as protection.

Additionally, increasing environmental awareness through manufacturing process is another crucial step. It is an innovating approach that can assure the implementing company of a sustainable future in the same business. So far, there business drivers that have proven effective in creating environmental consciousness and awareness as dictated by five core drivers (Varinder & Kuldip, 2014). Examples include the government policies, organizational benefits, and desired corporate goals. In essence, incorporating these strategies into the functionality of any business will ensure leveraging of resources to achieve environmental conservation.

Challenges to Companies Attempting to Become more Environmentally Conscious

Start-Up Costs

The most prominent problem among companies is the financial burden they have to bear to implement environmental conservation strategies. Through waste management and safety of their products, such companies spend large sums of money (Romero & Lamadrid, 2014). Sometimes it becomes strenuous when the company has to bear it alone. Adopting environmental friendly strategies require sophisticated technology that will monitor the danger mitigation approaches. Such volatile equipment needs skilled workforce to run and maintain. They may also be very expensive to acquire from vendors or manufacturers.

Collaboration Difficulties

As previously described, the implementation of strategies to mitigate environmental pollution and damage are very costly. Therefore, there is the need for companies to come together to share the management process. For instance, some companies have developed a recycling cycle model in which end-products from one industry becomes the raw material for another. Well, it is a good strategy but hard to implement. There is the need for companies to work closely together for a cost-effective management of environmental threats (Bear, 2017). Since specific approaches may require intensive research, such costs should be distributed among industries that produce similar end-products (McEwen, 2013). However, there are several barriers to effective collaboration of companies. First, most of them are competitors hence they are determined to stay away from each other’s affairs. Secondly, most companies produce different commodities, therefore, have unique process systems. Thus, they can hardly get streamlined to work as a single entity (Crane & Glozer, 2016). Finally, nearly every organization functions under its terms and conditions. The variation in policies makes it practically trying to harmonize the entire process.

Conclusion

Despite a myriad of challenges companies encounter as a result of the demand for more socially responsible business practices, it seems that CSR is here to stay. With increased concerns about the impact of production and manufacturing, paper and ink waste, and worker conditions, organizations are now forced to realign their business strategies in congruence with a more environmentally-conscious marketplace. Although some benefits have emerged from the initial implementation of more “green” or environmentally-friendly practices, the long-term dividends are significant. Ultimately, companies that struggle to meet the growing demands of the global marketplace and are unable to establish themselves on a stable ground (Crane & Glozer, 2016). Businesses need to put into consideration the resources required to meet the laid down strategies for a stronger CSR thus help them cope with the stiff competition for the limited space in the market. A good name may be expensive for a company but helps to keep customers.

Also Study:

Unilever Corporate Social Responsibility Project Report

Corporate Social Responsibility and Financial Performance: A Study of ISO 26000 Implemented Companies

References;

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