Criticisms OfCorporate Social Responsibility

3M created an example of perfect socially responsible corporation by starting a program emphasizing on STEM i.e. science, technology, engineering, and mathematics in schools. The main aim of this program was to create sustainability among the students to join the field of technology and to maintain the numbers of students in the field of modern technology in the schools. It was a web based program so everyone had a complete access to learn about the importance of technology and how to keep sustainability in innovations and our environment. In the very start the program mainly focused upon the ways and means of making improvement in technology and taught the students how to make sustainable decisions. Afterwards the program covered the broader area including geography and mathematics.

With the upcoming modern technology, needs of scientists and engineers are increasing day by day, but to create a sustainable environment, students are required to be better known towards these fields in order to develop their interests in science and technology. 3M took a great step by initiating this 3 years program and created sense of awareness among schools to feel the importance of science and technology. This program was also available for giving training to STEM Ambassadors. In this way company gained not only the mean of training its employees and advertising its product but also the awareness of sustainability in decisions and getting new and fresh scientist and engineers from the schools and educational institutions.

As it was a web based program so it was not only available for the organizational members or selected people but for everyone. This program is further enhanced by 3M in order to provide better services to the teachers and to STEM Ambassadors, not only in the organization but also outside the organization. It will further enhance the sustainability in science and technology and will help in the advancement of technology and its users. It’s a good tool initiated by 3M by which technology shall be made available to every doorstep and up coming students shall be made aware of selecting their fields of qualification related to science, mathematics, and technology. It will create a relationship among the youth and their environmental sustainability as well. Fresh engineers and scientist shall emphasize on technological advancements along with sustainability in their environment.

New thoughts are easy to be brought forward in the field of technology with the help of this program. Its web based facility has made it easily accessible to the members of the organization as well as the members outside the organization hence creating a sense of awareness among the STEM Ambassadors as well as the among the teachers in the schools to coax the students in to the fields of technology and innovation.

Barclays is one of the leading financial service providers all around the world with 147000 employees in 50 countries and more than 42 million customers and clients worldwide. It provides the services of retail and commercial banking, investment banking and financial management services.

Most of the banks ignore the factors of social exclusion, hence overlooking the issues related to deprivation of its citizens from the banking services and other financial facilities. Social exclusion completely deprives most of the people of a region from participating in economic, social and political activities. But Barclays has given its main focus to provide the banking services to the unbanked and to facilitate them in using the banking products conveniently. Even in well developed countries not all the citizens enjoy the banking facilities and find no means of getting credit, as a result of which social exclusion is significant even in those developed areas and a great proportion of population is kept out of economic and social activities. Most of the banks design such policies under which only potential customers which are no doubt few in numbers enjoy the benefits of banking facilities while a large number of rural and urban populations are overlooked. Barclays bank with its credit policies and easy access to its product has made a social inclusion program which is working towards the betterment of social and economic activities performed by the participants, hence giving a good example of corporate social responsibility. It launched its basic banking account hence providing banking facilities to the people with low incomes or daily wages.

Most commonly it is seen that not all the members of society enjoy the credit facilities and only people with high income, good credit history and huge loan demand are provided with credit facilities resulting in ignoring those people who are not able to enjoy credit facilities due to low income or poor credit history. This results in increasing number of socially and economically excluded people. But Barclays has invested 2.3 million pounds to fulfill its financial inclusion objectives. This investment is aimed to benefit 100 credit unions and financial institutions providing short term loans and credit. This new thought of Barclays in UK has created a sense of service to the low income consumers and has broadened the banking sector approach towards its customers. Barclays new thought of inclusion has given a prestige to the low income consumers and has won the trust of government and other consumer groups who are ready to work with Barclays. Its new strategy has created a broader environment in UK and every month almost 11000 new cash accounts are opened with Barclays hence leaving no room for social exclusion issues in that region.

With an innovative thought Barclays is acting as a leader in UK in financial and social inclusion program and with the passage of time all the other financial institutions are directing their aims towards following the strategy of Barclays. It is improving the banking sector in UK, as well as building up the customers’ trust and will to use banking products more conveniently.

Criticism against corporate social responsibility

Every good thought has certain critics along with it. Whether it is a concept, a theory or a behavior, without criticism one cannot have the positive aspects of it with clarity and authenticity. Similarly if the criticism on CSR would be accepted than no one would have preferred to follow such an activity. Everything has its pros and cons but if it’s still beneficial, one must go for it. Some of the critics raise certain points against corporate social responsibility and highlight its uselessness but adequate response is available for such critics that make CSR more important in corporate environment

Arguments

CSR activities are against shareholders’ interest

It is a fact that business is run by shareholders money and only shareholders own the business so spending money on CSR activities would be wastage of shareholders’ wealth hence will be against their interest.

Response

If shareholders own the enterprises than they fully know how to be responsible towards their stakeholders and environment but unfortunately most of the shareholders are ignorant of such responsibility. Finally the responsibility falls on the shoulders of the management. In this modern time of competitive environment business shares are less important than that of the companies’ reputation as it provides a passage way to the business to work smoothly. If stakeholders and social factors are ignored company will be at risk on the part of its goodwill and reputation. And this is the reason of some big companies’ success that they focus more on their long-term goodwill and social relations than that of its shareholders interest that ultimately provide company with huge profits and a good name among its customers.

CSR activities are merely the wastage of precious time

If we look at some of the renowned companies we will come to know that they have been completely uninterested in working on CSR. Even some famous companies owners like bill gates and jack Welch had been working against CSR and had been rigid throughout their business career without considering their social relations and environmental affects of their business work. But still they were among the most successful business people all around the world. Hence CSR is merely wastage of time which the company can use towards more productive directions.

Response

If the businesses run by jack Welch and Bill gates were successful without following the CSR activities than the businesses like coca cola, IBM, and Motorola are equally successful being the leaders of corporate social responsibility. If businesses can make their way to success without harming their social relationships and environmental conditions than the firms should go for this way as its useful both for the business and for their stakeholders rather than moving to the direction only profitable for the business and drastic for the stakeholders and environment.

CSR diverts attention from the core and major goals

Big companies have thousands of resources to manage and if the attention is given to the issues other than managing those resources, the company may face the risks that can be harmful for its smooth and profitable working.

Response

Every activity is done in business either in a good way or a bad way. CSR is also the part of the management and if CSR is diverting attention from the core issues of the business than it means that management lacks proficiency and it is unable to manage its task skillfully. Ignoring environmental and social factors shall ultimately result in the formation of hurdles in the way of company achieving its goals and objectives. It may result in fines and prosecutions against the business for polluting environment and showing irresponsibility towards environmental maintenance, it may result in lose of potential customers due to lack of good reputation and quality product, similarly it may cause our potential employees to switch from the job due to differences in race, color, age, gender and religion. While CSR teaches a business to look around all these things and to remove them once for all as they are flaws of corporate functionality.

Government is to decide for the social welfare and not the companies

It is the responsibility of the government to conduct such actions that are favorable for the society and environment. It is not the duty of businesses or companies to look after its society and environment. Businesses do what they think is good for their existence. For example tobacco companies will stop their production if government bans cigarettes but if government is receiving huge taxes from such companies than their social and environmental impacts are the responsibility of the government.

Response

As far as multinational companies are concerned no legal framework is provided by the government for their operations. It is the responsibility of these big firms to follow the CSR and to make policies and strategies in favor of social and environmental conditions. As CSR is not merely paying taxes and being loyal to the laws but it also involves the betterment of stakeholders including customers and other environmental and social factors regarding which government is not responsible for company’s act and a company needs to design nits own framework to materialize its work towards environment and society.

Profit is more important than CSR

Most of the managers run business in order to seek more and more profit. Their attention towards their impact on the environment is least and they bother not to get into the extra activities like waste reduction and anti-pollution policies. Rather they keep their focus on going out into the markets and making huge profits

Response

Once the waste minimization policy is attained it can further the profit of the business. And still managers can go out and enhance their profit. Profit can be enhanced with the help of waste minimization policies that can develop a trend of re-using the waste material for productive purpose. It can reduce the ultimate cost and can increase the profit margin.

Writing a Corporate Social Responsibility Policy:

Every business realizes the importance of Corporate Social Responsibility and in any way most of the businesses are already connected and concerned with CSR. This report tells us about the value of Corporate Social Responsibility policy and how to make it realistic in terms of practical implementation.

Why Business Should Have CSR Policy? :

By Adopting CSR, Businesses not only giving objectives to the community and filling out the legal requirements but also the major impact on social environment. Environment is affected by every business either by direct way or indirectly. So companies have to make it CSR policies due to lot of advantages getting after it.

CSR policy helps the businesses by recognize the importance that what they need in what conditions and tell them about the thinking of the people about the company. CSR policy can change the people’s thinking from negative to positive. CSR can enable you to recognize locally and internationally and can made you the market leaders. By developing a policy you came to know about what is the importance of CSR to your company.

Besides this, CSR policy also has business benefits to your business like it shows your commitment to CSR and how serious you are about social responsibility. It enhances the reputation and credibility of your business. A cleared CSR policy with set targets and milestones lead you to your objectives in respect of CSR.

Parties Involved in CSR:

CSR policy based on the values of the company and every person that is connected with the company must have a connection with the CSR policy. But for better results, CSR policy should be adopted from top to bottom management of the company.

In CSR policy, company should mention its employees, customers, suppliers and community and should also mention that how the company get work from them and make them useful for CSR policy. Company should listen to its stakeholders to add something new if necessary to improve the working and standard of the company. These are the parties directly involve in CSR policy:

Staff:

Staffs are the hands of the company by which company can perform their task; they enable the company to achieve its targets. Every staff member has its own views, thinking and beliefs but company can drive their staff on a track which is beneficial to company, community and for the Government. Company should regularly consult with their staff about the policies and system of the company. Company should make an environment where every staff member can participate for the betterment of the company.

Customers:

We can easily judge the running of any company by their behaviour with the customers, how they deal with the customers and what services they are giving to their customers. But if we talk about CSR in this prospect then it means what is best for customer and what is important to them. By taking feedback from your customers company can easily identify their errors and they can remove it easily.

Suppliers:

Identify the core values and policies of the supplier and discuss all the matters with him if any conflict arises in your policies. Check the supplier’s policies regarding environment, employment and quality and treat them as it is your own and give suggestion if necessary.

Community:

The CSR policy of the company is the main reflector of the social responsibility towards the community. Company should know about the thinking of the locality that what they are thinking about the company, if they have any problem and issue than this is the responsibility of the company that they should solve it as soon as possible.

What should be included in CSR Policy? :

CSR policy depends on the nature of every business. As the nature of every business is not same so it is the possibility that the CSR policy may be change. CSR policy should be specific, to the point, realistic and not be just focus to theoretical principles of it.

Aims and Objectives:

After full consultation, observation and analysis, the aims and objectives of the CSR policy should develop because it is the full infrastructure and route map of the business responsibility of the company. So it is very necessary to keep every single aspect under consideration while making the CSR policy of the company.

CSR policy should have following areas under consideration:

Environmental issues.

Social and community problems.

Companies ethical issues.

Development sustainability.

Company’s relationships with stakeholders.

Legal requirements.

Implementation of CSR Policy:

After mentioning and setting the Policies, company should specifically target the policies one by one. For example, in waste disposal programme company should dispose all of its waste time by time and don’t show any delay in it.

Company could easily find out the issues relevant to its business or industry and support those charity organisations and NGO’s which are doing well for removing that issue. Company can make its customers and employees the part of the programme by spreading awareness to them for the benefits of the society and ask them to participate in it. For long run implementation of the policy, company should come to any legal agreement with that charity to make it mutually agreed programme.

Company can choose those members from its staff that are more energetic and interested and ask them to give suggestions to how to make this programme successful and in running condition. Company can conduct different charity events like concerts, exhibitions and awarding programs and can raise money to for its charity.

Keep in touch with the society, customers and employees to find out more about their problems and issues if they have any by the company. Ask them that how we are doing and how we can help them. This type of things will raise the level of understanding with your customers, employees and community.

Risk Management:

CSR Policy is the reflection of company’s interests and concern with the community and its stake holders. Company can be accountable for its activities regarding social responsibility. So company should already identify the risks which may affect the society and manage it.

Company’s CSR policy should be like this that it gives advance warning of any upcoming risk so that it may be erased before coming. This step will increase the reputation of the company and reduce the impact on its business.

Roles and responsibilities:

In CSR policy, it should be included that what type of task will be done by whom and who will be responsible for any specific job. All the tasks should be allocated to the members and they must be responsible and accountable to the general public.

An Integrated report:

It might be possible that any company’s CSR policy will be similar to any other company. There may be some links which are similar like employee’s timings, health and safety policy and procurement and training policy. One company must be agreed to other company to minimise the conflict and they must be mutually agreed upon all the matters between them.

Management responsibility and corporate functionality

The modern times where every corporation is strengthening its view in the eyes of public and stakeholders by designing strategies in favor of corporate responsibility. But still there are certain executives who are irresponsible towards these policies and some of the big results of these irresponsibility’s are dissolution of ENRON ad WorldCom. CSR teaches to behave in an honest and transparent manner no matter how harmful it is for the financial activities of the company.

Recent interest factors in csr activities

Studies have shown that CSR has been an important part of corporate sector with increase in stakeholder’s interest, massive working of NGOs and strict regulatory authorities and their rigid rules. Most of the stock exchanges demand their listed company to file their financial positions transparently and to provide information on their CSR activities. Similarly stakeholders are more educated and are conscious about their company’s social behavior hence demands for their company to be socially responsible. NGOs are also working for environmental and social benefits hence possess a keen interest in the corporate social responsibilities.

CSR practice and action plans

Corporate sector is considered a part of a society and it must be responsible towards it. Social-ills should be removed by the companies and self interest should be abandoned for the sake of society’s interest. It should pay its taxes, follow the rules and regulations and should minimize its negative effects on society.

In this modern era, companies now understand their responsibility towards society and many corporate firms now issue their annual CSR reports which provide information on the company’s performance on CSR activities throughout the year.

Research study

Research on the study that why companies issue CSR reports have shown that there are many reasons for this. Some of the companies now have their own CSR manager and they provide CSR guidance to the company. Many companies demonstrated different factors for issuing CSR reports which may include, to satisfy the stakeholders and to provide them information about the company’s performance, to build a good relationship between the company and the members of society, to provide a more transparent picture of a company and to highlight the importance of CSR issues.

One of the largest American automobile manufacturer and distributor FORD has shown a brilliant performance by changing its ethical code of conduct, environmental control and its working pattern throwing a positive impact on its stakeholders.

As a global player, FORD had to deal with extreme pressure to avoid corruption and bribery and to maintain a perfect example of good governance. Increasing market contribution and world becoming a global village had placed FORD against the new challenges to gain a good environmental control and stakeholders trust. But with the increasing challenges FORD changed its policies and strategies in direction to the societal and business benefits that were best suited to its customers, employees, suppliers and other stakeholders. Setting one of the best examples of corporate administration, it developed a code of conduct for better governance avoiding unethical practices and improving the quality of work helpful in gaining the stakeholders’ trust. Globalization posed a main threat to the transparent and trustworthy working pattern of FORD hence coaxed it in to opening new ways of setting policies and working methods that has now placed the FORD administration among one of the best corporate management teams. Due to its wide organizational network throughout the globe, FORD was expected to be more vulnerable to the unethical practices and poor environmental control neglecting its social responsibility. But with increasing cultural diversity and changing business laws in every region of the world, FORD mended its code of conduct and employees behavior according to the needs and requirements of that particular region. Employees training programs and online anti corruption courses has positively influenced FORD’s administrative control and management impact on its stakeholders and social relationships. As a global competitor, FORD faced transparency challenges and cultural diversity hence exposed to an open threat from the ever hanging social and stakeholder dagger. Since 2007 it started taking initiatives to improve its ethical practices and with its good governance it showed highly positive results reflecting its consistent policies and brilliant strategies that gave bolster to its social, economic and environmental performance.

FORD dealing throughout the six continents set a best example of corporate responsibility by considering its stakeholders’ interests and dealing with diverse culture and corporate environment in a tactful manner. Its advanced directives and policies including internal awareness of mal practices and removing them once for all has made this organization widely known for its magnificent managerial skills and corporate administration. The flexibility in its policies and code of conduct has made it possible for FORD to conduct its business efficiently in different geographical locations and diverse economies. Keeping in view the social values in different regions of the world, FORD management has deeply analyzed its policies and working structures, and has formed a well designed business model leaving no room for misconduct and chances of ill-impact on its stakeholders.

Despite of some prodigious challenges, FORD has proved it’s best corporate management ability and perfect governance by its unbeatable strategic planning and well designed business model throughout the wide range of global market. And even in new emerging markets FORD is maintaining a proven track record of high social, economical and environmental performance.

Intentions for CSR Reporting:

Many authors argued that there are a lot of benefits when any company accepted its social responsibility in respect of its stake holders e.g. Crowther (2003), Idowu and Towler (2004) and Jackson (2003). The CSR reporting got familiarity due to recent incidents around the world like Enron’s collapse, WorldCom and Parmalat issue. These incidents changed the views of others to see and think about CSR.

Many Corporations started the phenomenon of voluntary disclose the annual CSR report and other documents relating the issues with environment and stakeholders. Campbell (2004) noted that around 10 UK companies voluntary disclose its environment related issues in its annual report. Patten (1992) and Deegan et al. (2000) also noted that after heavy criticism of people, many companies voluntary disclose the information related to the environment.

Due to pressure groups or accountable to stakeholders, corporations are now taking actions in respect of its social responsibility like installing environment friendly machines, properly dispose of the wastages, recruiting of employees without any distinction , favouring human rights, restricts child labour and giving donations to charities working on these issues.

Explaining the Corporate Social Responsibility:

Frederick’s CSR Series:

The understanding of the people with regard to CSR has been developed time by time in respect of its nature, ideology and practices in businesses. Frederick (1986, 1994) described the CSR as the practice of the company for the betterment of the society and he described it as “the capacity of a corporation to respond to social pressure”. This Philosophical approach to CSR is called (CSR1). If the Corporations respond to the pressure from society with more managed way and handle the pressure carefully then it is called (CSR2). Frederick proposed in 1986 that if we add ethical anchor in business studies and “society to permit a systematic critique of business’s impact upon human consciousness, human community and human continuity” this new term is called (CSR3).

Respondent Company’s key driving motivations:

The main factor for any company to come in CSR is the culture of the industry in which that company operates. The pressure groups in that industry force to apply CSR in that company and they are operating the tradition which is coming from the past. If that company don’t reveal its CSR report then that company has to face the harsh criticism which can affect the reputation of the company. Following are the reasons by which any company is bound to issue CSR report:

To report stakeholders:

Most of the Respondent companies noted that the main reason behind issuing CSR reports is just because of interest of the stakeholders. Stakeholders demand a report to ensure that whether company is doing something good for the betterment of the society or not. So for this company has to make a formal and managed report to show to stakeholders about the social activities of the company. All the stakeholders like Government, customers, employees, community, media, shareholders and general public believes this method as a reasonable and non-conflicted method to aware the stakeholders.

To show the precise picture of the company:

Some Companies around 10 % decided to issue CSR report just because of the threat that Some NGO’s argue that these companies are not fulfilling their duties regarding environmental issues and not giving the rights to their employees so they have to issue the precise picture of the company about its activities towards them.

To meet the requirement of the industry:

About 55 % of the companies noted that the main reason to issue CSR report is to meet the requirement of the industry or to live in the industry because every company in that industry is already practicing this and they have no option rather than this. If they don’t respond to this practice then they would be out of that industry.

To get positive Public response:

The motivation to issue CSR Report for around 2 % of the companies is to get positive public feedback. These companies want to hear “you are doing well” from the public and have concern about their reputation in the market. And one of the companies stated that as “it is good for business”. Department of Trade and Industry (DTI) UK also encourage those companies which are practicing CSR in their business.

To satisfy the Investors:

Two of the companies stated that to get investment and to attract investors, they have to publish CSR report. They also stated that in case of failure to issue the report they could miss the investment and flow of equity.

To keep the employees on track:

CSR can also be used to keep the employees on track that what is the target for CSR and what policies and rules have been made to follow for the betterment of the society and for their welfare as well.

To Show the commitment of the company:

Many companies also stated that the motivation for them to issue CSR report is to assure the public about the commitment and seriousness they have for the business. These companies also think that besides generating profit, the core reason of the business should be betterment of the community.

In response to UK Government regulation:

One of the company noted that FTSE 250 companies were asked for the report on their activities related society and environment from UK Government and they started issuing CSR report in response of this. The pressure from other sources also forced them to take this step and they had not any other option to do.

To give importance to non-financial issues:

Stakeholders have many concerns other than financial from the companies so four companies started issuing CSR report to tell to their Stakeholders that they are taking many actions for the social and environmental betterment. Stake holders are also interesting in what company is doing for society, what policies they have adopted and what are their future plans to spread it.

For tender purposes and Government requirements:

There is a increase in the requirements of the Government and other organisations tender and many companies stated that they publicis