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The history of social and environmental concern about business is as old as trade and business itself. " CSR as an issue has been around since the commerce began", ( A guide to corporate social responsibility, p4).
With industrialisation, the impacts of business on society and the environment assumed an entirely new dimension. The "corporate paternalists" of the late nineteenth and early twentieth centuries used some of their wealth to support philanthropic ventures. By the 1920s discussions about the social responsibilities of business had evolved into what we can recognise as the beginnings of the "modern" CSR movement. In 1929, the Dean of Harvard Business School, Wallace B. Donham, commented within an address delivered at NorthWestern University: 'Business started long centuries before the dawn of history, but business as we now know it is new - new in its broadening scope, new in its social significance. Business has not learned how to handle these changes, nor does
it recognise the magnitude of its responsibilities for the future of civilisation.
Almost seventy five years later, these words ring just as true. Although today we face
some novel concerns about the role of business in society, from internet "spam" to
genetically modified foods, many of the issues under discussion are not very different
to those being raised in the 1920s. There is a danger that social and environmental
concern about business is an issue which, like sex, every new generation thinks that it
has discovered. The interactive timelines below provide details of the evolution of the
history of our environment, the history of business corporations, the evolution of the
concept of sustainable development and the history of business law and socially
responsible investment as forces seeking to shape the social and environmental
impacts of business.
In broad terms, CSR covers the responsibilities corporations (or other for-profit organizations) have to the societies within which they are based and operate. " It is an evaluation or assessment of the policies and practices of an organisation to establish how and to whatextend it is behaving in a socially responsible manner, e.g. in terms of employment practices, relationships with its local community, environmental protection, etc" (Marketing: principles and practice, p399, 1998).
More specifically, CSR involves a business identifying its stakeholder groups and incorporating their needs and values within the strategic and day-to-day decision-making process.
While recognizing that profits are necessary for any business entity to exist, all groups in society should strive to add value and make life better. Businesses rely on the society within which they operate and could not exist or prosper in isolation. They need the infrastructure that society provides, its source of employees, not to mention its consumer base. CSR is recognition of that inter-dependence and a means of delivering on that obligation, to the mutual benefit of businesses and the societies within which they are based. Charles Handy makes a convincing and logical argument for the purpose of a business laying beyond the goals of maximizing profit and satisfying shareholders above all other stakeholders in an organization: " The purpose of a businessâ€¦.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 businessâ€¦.It is a moral issue. To mistake the means for the end is to
be turned in on oneself, which Saint Augustine called one of the greatest sinsâ€¦.It is salutary to ask about any organization, "If it did not exist, would we invent it?" "Only if it could do something better or more useful than anyone else" would have to be the answer, and profit would be the means to that larger end."
WHY SHOULD BUSINESS COMPANIES ENGAGE IN CSR?
CSR as image building exercise and a source of competitive advantage.
Basically, CSR is an important business strategy because, wherever possible, consumers want to buy products from companies they trust; suppliers want to form business partnerships with
Companies they can rely on; employees want to work for companies they respect; and NGOs, increasingly, want to work together with companies seeking feasible solutions and innovations in areas of common concern. The businesses most likely to succeed in the globalizing world will be those best able to combine the often conflicting interests of its multiple stakeholders, and incorporate a wider spectrum of opinions and values within the decision-making process and objectives of the organization. Lifestyle brand firms, in particular, need to live the ideals they convey to their consumers: "The 21st century will be the century of the social sector organization. The more economy, money, and information become global, the more community will matter." (Peter F. Drucker, 2003)
In recent decade, the concept of CSR turned out to be a vital strategy for companies to survive in a ruthless market environment. In a condition where market's shift and customers' preferences becomes more unpredictable and complex, adopting CSR strategy could be a powerful tool for survival. Today's world has become smaller, and markets have become ever more accessible,
thanks to globalization. Globalization however, would force many companies including small and the medium enterprises to adopt CSR in order to remain competitive locally and in the international market. In some countries government regulations such as environmental and social issues have increased, and standard and laws are also often set at a supranational level. An example of this is the European Union, where regulations and standards are applied to all member countries. Moreover, buyers in these countries would want to know that the product they buy did not come from companies and manufacturing processes that caused or even poses threat to the environment. They are also concerned with the company's records - giving fair wages, good working conditions, and the like. These are highlighted in the media, which becomes a clear advantage to businesses with
good CSR programs. During the past decade, consumers and communities have become sensitive to business practices of companies existing in their areas or from which they buy their goods and
services. It has been observed that communities would prefer and are supportive of
companies they see as concerned with the general welfare of the people in their business
operation than the employment opportunities it generates. Achieving and maintaining
industrial peace is also a direct consequence of a good CSR strategy.
Another emerging concern nowadays that could easily be responded through good CSR,
is the difficulty of companies in retaining highly skilled and competent personnel or
luring them to work in your company. In recent years many human resource analysts
noticed that the most competent and skilled workers would want to be associated with
companies that have good business practices and reputation. This is the possible
explanation why even large corporations whose reputation of being tax cheaters, involved
in corruption, products and practices that are harmful to the environment, non-
involvement in responding to social issues and concerns, have hard time getting good-
quality, or highly skilled employees. "Companies with good business practices have clear advantages in convincing investors. Recent studies have shown that a growing number of investors would prefer companies with strong CSR programs. They see CSR involvement as an indication of the company's long-term potentials." Grant Thornton, 2008.
CSR contribution to corporate strategy.
Reputation and Brand Enhancement
We have seen that Company reputation and brand are greatly influenced by public perception. For example, in the largest global survey of the public's expectations, the Millennium Poll on Corporate Social Responsibility documented that over 25,000 individuals across 23 countries on six continents revealed they form their impressions of companies by focusing on corporate citizenship and two out of three people want companies to go beyond making money and contribute to broader society goals.
Accountability and Transparency
Open, reliable and regular reporting of a company's performance--known as accountability and transparency in CSR terminology--is quickly becoming a public issue and one that HR leaders will need to keep in the forefront. Lockhood published in the HRMagasine (2004), that, "As a sign of the times, large companies are beginning to publish company information, once deemed as too sensitive to release, with expectations for their suppliers and their internal human resources practices."
Managing investor confidence is another factor supporting the business case for CSR. Today, the financial community is examining organizations' CSR report cards and their risk profile.
THE LIMITS OF CSR
What is wrong with CSR?
CSR may appear to be an uncontroversial extension of the company's role in the society; however, few businesses really care about getting the statute of "socially" responsible. Many critics have risen against the concept of CSR. Arguments against CSR are amongst others that, Corporate Social Responsibility is not relevant for businesses since whether practiced or not, businesses are inherently "socially responsible"; CSR undermines good company governance, and CSR diminishes the crucial focus on good public governance. Let's look at it point by point.
Businesses are inherently "socially responsible"
The statement means that discussions regarding CSR almost always fail to recognize the many inherently "socially responsible" aspects of business and the markets in which they operate. Many CSR proponents start from the premise that there is nothing socially responsible about business itself. It is only with CSR that businesses become socially responsible. Dr. Andrew W. Markley in his article "The limits of Corporate Social Responsibility"(2008), talks about that aspect of CSR and says: "Discussions of CSR ought to begin with the recognition that companies play a very important social role."
Without any doubt, businesses, in supplying products and services to society and providing employment, also play an important role in society.
CSR undermines good company governance
According to CSR antagonist, the concept create a problem because it undermines the responsibility of company managers to company owners. CSR brings a new role to business so that in addition to the known business purpose of maximising long term interest of the shareholders, business also have an obligation to stakeholders interests and to the environment. So the traditional problem of making sure that managers are serving the interests of the company and of its owner is made worse. Jonathan Charkham (2008) explain that: "there is a real danger with CSR of competing contradictory and compatible objectives."
Furthermore, Dr Andrew W. Markley in " The limits of Corporate Social Responsibility" (2008), advance another argument in this case, so according to him CSR does not show how fair allocation of resources can be achieved among the shareholders, the employees and the community. "Employees typically would be very happy if the company increased the wages paid to employees. But shareholders would like more consistent dividend payments, and perhaps the community would like more money spent on pollution control equipment whereas suppliers want faster payment for goods sold to the corporation. Which group is to get priority if each group has an equal claim to be served by the company?"
CSR diminishes the crucial focus on good public governance
Another argument against CSR is that it diminishes the crucial focus on good public governance. It means that CSR make people to forget that the real issues of the society should be addressed to local's governments. So, people should rather make sure that governments themselves are acting effectively on those issues important to the society.
CSR APPLIED TO A COMPANY: CASE OF HONDA
In these paragraphs we are going to demonstrate how a company like Honda define and manage its CSR.
HONDA MOTOR LTD is a Japanese multinational corporation primarily known as manufacturer of motorcycles and automobile. It has an UK based branch. In 2008, Ken Keir, the managing director of HONDA UK were proud to publish the first HONDA CSR report.
HONDA CSR POLITIC.
HONDA, engages in several domain useful for the society:
HONDA'S advanced Environmental Technology.
Honda as an automobile manufacturer fights against pollution, engaging itself in environmental management programme, creating hybrid cars less pollutant, Honda bio fuel releasing a cleaner co2 when it is burned. Honda created home energy station facility technology and according to the company, "Compared tothe average US home with grid-supplied electricity and a petrol-powered car, a house using HES can reduce CO2 emissions and energy costs by an estimated 30% and 50% respectively." Honda CSR report (2008)
HONDA'S Advanced Safety Technology
Honda is concerned about the safety of its products users. It has created new safeties technologies such as Honda Advanced Driver Assist System (ADAS), Vehicle Stability Assist (VSA), and Collision Mitigation Braking System (CMBS). The report says that, "Honda's CMBS system has won the praise for in dependent motoring safety organisation (...) Tatcham the UK insurance Industry believes that if manufacturers embrace new systems such as CMBS and fit them as standard, more than 125000 injuries will be prevented each year in Britain alone."
HONDA Charitable work
Honda work with charities that fit under our 4 key cornerstones of Racing, Education, Environment and Local Community.
Honda supports many charities such as NSPCC, the Britain's leading children charity; Thames Hospice care an hospice care provider in UK; Slough Mencap, a charity providing Educational and working opportunities for people with learning disabilities;...and many others charities.
Honda defines its basics principles of philanthropic approach as:
As a global company they're dedicated to contributing to society around the world with our products.
They will always try to deepen our commitment to the local communities in which we operate.
They support the nurturing of a society where individuals care for the world around them, and actively participate in socially responsible activities.
These are the keys of Honda's Corporate Social Responsibility, a desire to be a company that makes contribution, in short 'a company that society wants to exist'. As their motto says, 'Together for Tomorrow'.