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In contemporary organisations Corporate Social Responsibility is an aspect which needs to be taken into consideration in order to survive, however Vogel (2006) argues it is something which is 'often troubled by ambiguity' where there is a 'misunderstanding and cynicism' (Hopkins, 2007) of the definition to what CSR actually means to organisations. Corporate Social Responsibility means 'different things to different people' (Hopkins, 2007) therefore it becomes an uncertain image to what organisations must do in order to achieve Corporate Social Responsibility. Michael Hopkins (2003) defines Corporate Social Responsibility
'â€¦concerned with treating the stakeholders of the firm ethically or in a responsible manner. 'Ethically or responsible' means treating stakeholders in a manner deemed acceptable in civilised societies. Social includes economic and environmental responsibility. Stakeholders exist both within a firm and outside. 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'
Therefore CSR demonstrates how organisations align their actions and values with the expectations of the direct and indirect stakeholders to the organisation. For that reason an organisation or 'society' should define the number of stakeholders to which an organisation has the responsibility of. It may be extensive or focused depending on the type of industry they operate in. Within in Hopkins definition of CSR he takes into consideration ecological, social and financial aspects, this paper will begin to identify whether organisations are successfully addressing this as what Elkington (1994) referred to as the triple bottom line.
Challenges within the 21st century are requiring organisations to essentially change the way they operate in order to gain societal approval. With an increase in natural resource reduction, climate changes and societal expectations are hitting organisations, as a society we are demanding attention is paid to aspects beyond profit and mere legal obligations. Thompson et al. (1991), Warhurst (1998), Schwartz and Gibb, (1999). However Milton Friedman (1962) argues 'Few trends could so thoroughly undermine the very foundations of our free societyâ€¦other than to make as much money for their shareholders as possible.' However in reality organisations are expected to act with a number of approaches by being able to adopt concerns from stakeholders and the environment they operate in.
Corporate Social Responsibility plays a substantial role within organisations where they can conduct their performance so that it ensures "minimizing harm, maximizing benefit, and being accountable and responsive to stakeholders' ("Defining corporate citizenship and social responsibility", Boston College Centre for Corporate Citizenship, p4 accessed from http://www.bcccc.net). This view is also shared by Chris Marsden, Chair of Amnesty International Business Group who stated an organisation is one that 'runs a profitable business, that takes all of the positive and negative environmental, social and economic effects it has on society'. (The Current Landscape of Corporate Social Responsibility, Newsletter, Accessed: http://www.wingsweb.org/documents). Friedman (1998), Carr (1968) also believed organisations should not engage in activities which result in deception, even though Fraud believed much of the same he pointed out, organisations exist to purely make 'profit for their shareholders so long as it stays in the rules of the game' (Freidman, 1998 cited in Branco Castelo, M., 2007. Positioning Stakeholder Theory within the Debate on Corporate Social Responsibility).
In spite of this, many of today's Fortune 250 'organizations are willingly pursuing Corporate Social Responsibility initiatives' (KPMG 2005) therefore these organisations today now have the aim to balance between social responsibility and financial performance, so organisations main objective is to be able to produce sustainable services and profit to gain a competitive advantage. However for many organisations this has been a challenge, with the effect of the economic crisis on organisations, they need to rebuild trust to improve the health of the global economy. In effect CSR is now instead of being seen as detrimental, 'to being considered as somehow benefiting the company as a whole, at least in the long run' (Hess et al., 2002; Porter and Kramer, 2002; Smith, 2003). For example leading sports retailer Nike, have seen the benefits first hand, how successful implementation of CSR has had on their organisation. In the beginning Nike had made some regrettable decisions by ignoring vital CSR regulations, however now they have made it an integral part of their business strategy. In 1996, they created a department solely to manage its supply chain in compliance with working labour standards. Finally in 1998, Nike launched a Corporate Social Responsibility department. Nonetheless can it be said CSR contributes to greenwashing an organisations image to cover up negative impacts surrounding CSR issues. Doane (2005) explains implementing CSR is a form of 'red tape' where it can be seen organisations such as Nike have put in place a set of 'pointless protocols and convoluted procedures' in order to cover up a negative brand image.
Where Corporate Social responsibility is really about organisations going beyond the minimum requirements and obligations held by government officials. Through the use of CSR organisations can help to sustain ecological, social and financial ambitions. This is what Elkington (1994) described as the triple bottom line- three dimensions of accounting - financial, environmental, and social.
The triple bottom line was established as a means towards an end, persisting organisations should be held responsible for their actions and the achievement of long term sustainability. As multinational organisations have given themselves the 'privileged status' (Brown, D et. al., (2006) Triple bottom line: 'A business Metaphor for a social construct', p4) in society they are then responsible for societal, ecological and financial activities their organisation carries out. The triple bottom line is a way for organisations to report their CSR activities which can convey an 'image of concern' (Brown, 2006) towards societal responsibilities; on the other hand Schilizzi (2002) argues it is just a key function for enhancing the organisation's public image. Emerson (2003), Lingane and Olsen (2004), argue by capturing an organisations values and good CSR practices of the triple bottom line, can allow stakeholders to 'understand the full, blended value' (Brown, D et. al., (2006)) of how organisations are contributing to society.
Elkington (1994) reported many organisations were already 'responding to these fundamental' (Dunne, S., 2007) accounts of the triple bottom line. Where also Andriof, J. and McIntosh, M. (2001) stated Corporate Social Responsibility proves many organisations across the world are beginning to realise the true benefits of adapting a socially responsible approach in terms of organisational image and status. Elkington believed only as time passes on, the trend for the triple bottom line will pave away to a more sustainable global business environment. Boots is an example of how CSR was used right from the get go. Boots opened in 1849 (www.boots.co.uk) with a strong culture for corporate social responsibility, now in 2010, Boots is one of the UK's top health and beauty retailers they take part in many CSR activities, which included them teaming up with a local Hospital in Nottingham for the 'Look goodâ€¦Feel better' charity (2002) in an aim to makeover women with cancer to restore their wellbeing and confidence. Many programmes at Boots have been set up over the years which support the 'wider issue of health promotion and social inclusion' (Article 13 and CBI - CSR Case Study Series, January 2004) which can be seen as key components to Corporate social responsibility.
Also since emerging in the 1950's CSR has evolved considerably (Carroll 1999; Freeman 1984:38; Carroll and Beiler 1977; Sturdivant 1977). Where corporate social responsibility established it self within major organisations such as KMPG and PricewaterhouseCoopers, in order to survive major market changes and the economic downturn. PWC developed a strategy which communicates their sustainable values in four basic 'quadrants' (http://www.pwc.com/gx/en/corporate-responsibility/our-approach) which include community, environment, people and the marketplace. By taking into consideration the wider impacts on society, they have developed a strategy that implements CSR into all their organisational decisions.
It can be seen, CSR is no longer about how much money is given away but about making products and services in way that can be sustained socially and environmentally which is supported by the wider community. Therefore within contemporary organisations, Peter Drucker argued the more economy, money, and information becomes globalised, the more community will matter' (Leader to Leader website, June, 2003, accessed: http://www.pfdf.org/about/index.html). Where the basic idea is that those who have great power also have great responsibility, therefore Andriof and McIntosh (2001) suggest that corporate social responsibility requires corporate leaders to understand every action taken has a knock on effect externally. As a result, it can be argued multinational organisations have the responsibility to stop causing social problems but to also take a part in solving them. However, the business world has been burdened with numerous legal obligations in terms of Health and Safety, employment rights and environmental issues. Society has started to expect organisations to voluntarily take part in solving social problems. Corporate citizenship or corporate social and environmental responsibility - it is no longer enough for businesses to simply employ people, make a profit and pay taxes; they must act responsibly, be accountable and benefit society as a whole.
Andrews (1971) defines social responsibility as the 'intelligent and objective concern for the welfare of society that restrains individual to corporate behaviourâ€¦' (Andrews, Kenneth R., The Concept of Corporate Strategy, Homewood, IL: Dow Jones-Irwin, 1971.) Social sustainability includes all aspects of the public interest, if recognised at all, it is the organisations 'ability to reach good relations with supply-chains partners, employees, and unions' (Darren et al. (2006) 'TBL: A Business Metaphor for Social Construct' page 8). From looking at Carrols (1991) social responsibility model (p6) it shows even though the concept of CSR is always changing, the pyramid can give organisations a framework to enable an understanding of the changing 'nature of the firm's economic, legal, ethical and philanthropic performance' (Carroll, 1991 'The pyramid of corporate social responsibility', Business Horizons, pp 39-48)
The pyramid shows four levels which an organisation should maybe go through in order to achieve social responsibility. He explained the four areas are 'simply to remind us that motives or actions can be categorised as primarily one or another of these four kinds' Carroll (1979)
Where like Milton Friedman agrees, at level one of Carroll's model all organisations should be profitable. The second should be the importance of 'Legal responsibilities' where successful businesses can be defined as one that fulfils its legal obligations, thirdly 'ethical responsibilities' for organisation to do what is right and avoid harm at all costs and finally 'philanthropic responsibilities' to improving the quality of life. The body shop, found in the early 1970's, is known for their ethical values and has now become one of the most successful organisations as they began to 'tell the truth' about their products, which at that time was unheard of (Hartman, 2002). From working closely with organisations such as Friends of the Earth and Greenpeace enabled consumers to perceive them as caring and empathetic. This can be seen as successful application of the Carroll's pyramid, however many managers fail to realise by acting unethically has a knock on effect to all areas of their business.
As a result, this is where leading retailer Primark showed their true colours regarding social responsibility efforts. Where during the high street slump, Primark built up the reputation as one the cheapest selling retailers; however this was accomplished through unethical activities. To reduce costs and offer consumers the cheapest garments, they started using sweatshops in Bangladesh where workers were paid 5p an hour (www.independent.co.uk/news). However on their website they state; 'Primark is committed to providing the best possible value for our customers, but not at the expense of the people who make our products.' After being investigated by Panorama, Primark reacted immediately by carrying out their own line of enquiry and defensively terminated the suppliers. Primark believed it was those suppliers who had broken the code of conduct and took no responsibility. However by working with these suppliers they could have taught CSR practices, which would have seen as step towards achieving CSR procedures.
The fact that these global organisations operate in more than one country produces a number of ecological and social dilemmas for organisations, for example as Primark are still able to shift their operations out of one country and into another it presents more favourable conditions, i.e. cheaper labour and fewer laws, therefore managers, need to take into account how they would sustain the triple bottom line and not just in terms of their own moral conscience and PR stunts but where stakeholders will be taken into consideration.
Stakeholders are an essential aspect to organisations; managers should take into consideration the affects of triple bottom line on those stakeholders when making corporate decisions. MacGillivray (2004:121) theorises social investment as creative trust and represents the "stock of networks, stakeholder relationships and shared rules that help organizations and their surrounding communities work more effectively." There has been an on going debate on the shareholder vs stakeholder issue, where the shareholder perspective is that organisations interests solely rely on serving shareholder interests using corporate resources (Friedman, 1998; Jensen, 2001). On the contrary stakeholder perspective proposes besides direct shareholders, other parties (indirect) are also affected by organisational activity (Freeman, 1998; Werhane and Freeman, 1999). The theory argues organisations have the responsibility to consider all perspectives to the decisions made. Without a doubt for all organisations, how they are viewed by stakeholders is bound to have a major impact on the interactions with suppliers, direct and indirect stakeholders, this presents many challenges for organisations as it involves identifying to who and from whom they are responsible to. By using Carrolls reproduced model again (1991) organisations should "do what is required by global stakeholders" legally, "do what is expected by global stakeholders" ethically, and philanthropic responsibility means to "do what is desired by global stakeholders." (Carroll, 1991 'The pyramid of corporate social responsibility', Business Horizons) Swedbank is a key example of how use of CSR has had taken stakeholders into consideration and the impact of engaging these stakeholders to their organisation. Indirect stakeholders has largely been ignored by many banking organisations in the Swedish society due to much of the population being unemployed, living on different kinds of welfare because of their poor language skills and difficulties in communication, however Swedbank saw this as an opportunity to gain a larger percentage of the industry by finding the needs to win nearly 80,000 (Enquist, B, Johnson, M & Skalen, P, 2006) customers within this market segment.
The environment has become complex and is rapidly changing, presenting all sorts of ethical challenges (Trevino and Brown, 2004), therefore organisations must consider their strategy towards achieving corporate social responsibility. In order for organisations to succeed they must ensure they are doing to what is seen as the 'right' thing. Friedman (1970) acknowledged it would be in the best interest of the organisation to act in an ethical manor therefore would pay off in the long run. For example a US organisation Timberland is known for their unusual open product label, which is based on a design just like a nutrition label. It illustrates the name and location of the factory, amount of energy used in production, and percentage of renewable energy used. (www.timberland.com). Operating as an international organisation Timberland partners with local NGOs and international agencies to change working conditions and where their goal is make sustainable improvements in working conditions and the quality of life. For example helped Verité (an independent NGO monitoring international labour rights) create Life skills training programme to address communication skills and basic education, wage calculations and health (including HIV/AIDS and SARS) and nutrition.
In terms of organisations using their international and national entities to help developing communities is something which should be taken into consideration. For example organisations in Thailand, Zimbabwe and India are taking part in policies that focus on the thematic issues of sustainable development in terms of HIV/AIDS, in the UK and US a 'welfare-to-work'; has been set up by the government to aid such projects as HIV and AIDS. However China has been depicted as representing 'all that is problematic about globalisation.' Its vast supply of cheap labour, negligent enforcement of regulations and restraint of labour and human rights make it attractive for socially irresponsible multinationals and a troubling model for developing countries seeking to attract foreign investors'â€¦ (Ibid, p. 100)
Meeting these CSR requirements are all addressed in different ways, financial and social issues can be implemented from within the organisation itself, however environmental issues can require closer attention and partnerships with NGO's or partner organisations. As a result, organisations who fail to see the impact of climate change put themselves at risk. 'Climate change is like the internet' (www.climatecrisis.net), it changes one day and grows bigger as the days go on. The Kyoto Protocol has played a vital role in changing corporate behaviour towards climate change. NGO's and organisations are now aware that there is a framework addressing climate change, which have a set of legally binding commitments where many countries have signed up for. The Kyoto Protocol is an international environmental treaty with the main objective of achieving the "stabilisation of greenhouse gas concentrations in the atmosphere' (The United Nations Framework Convention on Climate Change.) Many organisations were sceptical in how they would be able to help lower climate change; however with the formation of the Protocol many automobile organisations such as Shell, Texaco and BP have changed their view and joined the 'Pew Centre on Global Climate Change', which is a non-profit organization with the purpose to support efforts to address global climate change. Thus, the result of the Protocol has convinced organisations that change will be inevitable. It has made businesses believe their government and country are committed to help climate change.
In the recent times of environmental pressure organisations have been acting to improve their energy efficiency. The most popular in this case is Wal-Mart. The largest retailers in the US, had announced specific environmental goals in their business strategy to reduce energy usage in their outlets and to also pressure some of their 60,000 suppliers in their supply chain to follow their lead. This can be seen as offensive CSR, where Wal-Mart are taking responsibility for their actions and the teaching others in the process. Wal-Mart have produced a set of guidelines which summarises how they will go about tackling this task. In terms of the G3 guidelines it suggests organisations should present their ongoing efforts within an overall sustainability context, which involves looking back in the supply chain or forward to how their stakeholders are perceiving and using their products. Another example is by Unilever, in their sustainability report they have recognised the limited amount of clean water in many countries in which they operate in, therefore instead of just exposing their own consumptions of water, it also includes water consumption of those supplies . Their commitment towards corporate social responsibility means they are able to keep the combined levels of water consumption constant.
Researching into the topic of Corporate Social Responsibility has shown many organisations are trying to address the triple bottom line. For example organisations such as Lush were created in the mind frame of Corporate Social Responsibility and have continually grown as a corporate social organisation. However while organisations regard CSR as top priority many have only now created an allowance for it to be included into their business strategy, but this does not mean that CSR cannot be achieved by organisations, or 'that a more culturally integrated form of organisational CSR may not evolve in the future' (Weaver et al., 1999).
According to Vogel (2006) there a concern of ambiguity about CSR that contains a tainted image, where organisations are seen to be 'doing good', but are they actually being good? It can be said Corporate Social Responsibility distracts organisations from the fundamental role of business which is no more than superficial window dressing, as an example of corporate philanthropy, is where an organisation makes donations to a number of charities is seen to be giving away shareholder's money. Therefore, are organisations only giving away money to generate good public relations in order to gain societal approval? Nickel (1985) argues there is a growing number of organisations teaming up with NGO's where cause related marketing involves profit-motivated giving and enables organisations to contribute to 'non-profit organizations while also increasing their bottom line by tying those contributions to sales' an example of profit driven organisations partnering with non-profit and charitable organizations are Gap Clothing. According to their (RED) website, "(RED) is a simple idea that transforms our incredible collective power as consumers into a financial force to help others in need'. By consumers buying into this campaign, makes it a fashion statement, stakeholders will, instead buy the products and feel proud that they are doing something to help the world, however this can just be seen as a cheap way to advertise, but there is always a basic financial motive, so the organisation benefits more than anyone else.
Thus, Friedman argues organisations should not distract themselves with the well being of society but instead should focus on its core responsibility - to maximize its profits. Where many people are pessimistic towards the efforts of CSR as many organisations are prone to be labelled as window dressing', a 'greenwash,' or 'a PR exercise' (Frankental, 2001) by reporting their CSR issues.
The power of CSR urges organisation to contribute to the triple bottom line, however contemporary organisations are only picking up the concept now, in order to keep up with the competition. Therefore what about new and existing companies? Are they able to achieve the potential of the sustainability concept? Companies, in turn will need '21st Century leadership, 21st Century technology, 21st Century governmental institutions' (Triple Bottom Line: Pathway to a 21st Century Business Paradigm, Accessed: http://www.snyderleadership.com) and the understanding and discipline of what the Triple Bottom Line means to them.
Handy (2007) points out many relevant assumptions regarding Corporate Social Responsibility, as in our daily lives we need certain possessions to keep living, therefore, for organisations just to rely on purely on profit as a way forward will actually be their downfall, with societies changing attitudes towards ecological, social and finiancial aspects, CSR should always be an aspect which is taken into consideration.
'We need to eat to live; food is a necessary condition of life. But if we lived mainly to eat, making food a sufficient or sole purpose of life, we would become gross. The purpose of a business, in other words, is not to make a profit, full stop. It is to make a profit so that the business can do something more or better. That "something" becomes the real justification for the business.' (Handy et al. cited in Dunne. S., 2007. 'What Corporate Social Responsibly now? p376)
People such as Anita Roddick have established their business from an ethical stance, from the start she states "I don't think Corporate Social Responsibility is working. I think it's been taken over by the big management houses, marketing houses, been taken over by the big groups. It's a huge money building operation now' many stakeholders are cynical towards
"Beyond monitoring", Business for Social Responsibility (BSR) and its member companies have developed a project to "create systemic change in supply chains and materially improve the well-being of workers and communities globallyâ€¦.Its goal is to collaborate on multi-stakeholder initiatives that tackle the root causes of non-compliance with company codes of conduct and regulations at supplier facilities.
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