Corporate Social Responsibility

              Corporate Social Responsibility (CSR).

Corporate social responsibility simply put is a strategy for a successful business whereby an organization gives its best to the community in which it operates, and as well attains its objective of profit making. In other words, CSR explains the quality of management’s decision in an organization as well as the impact of the organization on the society. CSR is an ethical and responsible way of doing business.

The World Business Council for Sustainable Development in its publication "Making Good Business Sense" by Lord Holme and Richard Watts used the following definition.

 "Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large"

CSR finds capacity in building people for sustainable livelihood. CSR sees opportunities in different cultural environment and maximizes such opportunity by giving back to the society.

CSR brings about the company’s image to the public. It is a tool of marketing that brings acceptability to an organization. Definitely, a company gets its resources from the society, giving back to the society makes the society fulfilled. For example, a telecommunication service provider exists in a community where electric power supply is a nightmare; the company decides to install a transformer for power generation and as well fix its mast in the community for a better network.  Sure! The entire community consciously or unconsciously begins to see the telecom service provider as the best among its competitors. Reasons could be because the service provider has marketed its services by solving the community’s pressing need. Sending a message to the community that we care about you and in turn the society responds positively by subscribing to their network because good things in life are reciprocal.

CSR goes beyond the charity program, i.e sheer community development initiative. A good management of the organization, transparency in financial reporting, good and reliable products and services, quality customer care, environmental consciousness, employee welfare and so on is part of social responsibility.

“I've always said that the better off you are, the more responsibility you have for helping others. Just as I think it's important to run companies well, with a close eye to the bottom line, I think you have to use your entrepreneurial experience to make corporate philanthropy effective.”
Carlos Slim Helu

Most excellent organizations  are into social responsibility because in the in the first place their philanthropist attitude cleared the path to their success.

“Business social responsibility should not be coerced; it is a voluntary decision that the entrepreneurial leadership of every company must make on its own.”
John Mackey

The Importance of Corporate Social Responsibility

The importance of corporate social responsibility cannot be overemphasized. While some executives see CSR as an unnecessary intrusion into an organization’s business and a form of distraction, some see it as a necessity and also, a means to profit making. We can liken CSR to that proverbial elephant being felt by different blind men. It is interpreted in many ways but, nonetheless, is a large, single body, and one that is on the move.

“In October 2004, the Economist Intelligence Unit in Cooperation with Oracle Corporation conducted an online survey of corporate executives around the world and a separate online survey of institutional investors, asking them to assess the importance of corporate responsibility. In all, 136 executives and 65 investors responded. The main findings of the survey include:

·        Eighty-five percent of executives and investors surveyed said CSR was now a “central” or “important” consideration in investment decisions. This figure is almost double the 44% who said CSR was “central” or “important” five years ago, demonstrating the growth in CSR’s significance.

·        The three most important aspects of CSR for executives surveyed were: ethical behavior of staff (67%); good corporate governance (58%); and transparency of corporate dealings (51%).

·        For institutional investors, transparency of corporate dealings was even more important. Sixty-eight percent said it was one of the three most important aspects of CSR, followed by high standards of corporate governance (62%) and ethical behaviour of staff (46%).

·        Eighty-four percent of executives and investors surveyed felt CSR practices could help a company’s bottom line.

·        Brand enhancement (61%) and better staff morale (67%) were picked by both groups as the most important business benefits of CSR.

But both groups also cited cost implications (42%) and unproven benefits (40%) as the two biggest obstacles to implementing CSR programs…”

(Economic Intelligence Unit, by Oracle, 2004)

We can agree that CSR enhances employees morale and commitment; better relations with government and local communities; competitive advantage over rivals; and brand with the customers.

Companies achieve this by applying divers means which include: Ethical behavior on the part of employees; high standards of corporate governance; transparence in corporate dealings; labour practices and employee rights; philanthropic and charitable giving; and environmental practices.

CSR and the Millennium Development Goals.

At the end of the last millennium, the 189 that constitute the United Nations came up with the Millennium Development Goals (MDGs). There are eight goals in all and they are aimed at solving the world economic problems. This goals are : Eradication of extreme poverty and hunger; Universal basic education; Gender equality and the empowerment of women; Reduction of the child mortality rate; Improved maternity health; Combat HIV/AIDS, malaria and other diseases; Environmental sustainability; and Global partnership for development.

The United Nations saw CSR as a tool to achieve the MDGs. Not only is CSR a tool, it is a relationship of a mutual benefit. While an organization invests in an environment, there is a positive impact on its business. United Nations identified three ways an organization can benefit from CSR:

 Investing in a sound business environment: A sound environment is necessary for a business to thrive. Sound and capable workforce will aid business, and the essence of every business is the demand for its product and services. All these can only be achieved when the goals are achieved.

“…I believe that it is part of building good sustainable businesses to help establish safe, secure, stable and peaceful societies. Business thrives where society thrives.”

Peter Sutherland, Chairman BP and Goldman Sachs

around “The Business of  Peace”

(IBLF, With International Alert and CEP, 2000)

Also, attaining MDGs through CSR will aid managing direct cost and risks.  Sick leave will be reduced, operational cost, raw material cost, hiring, and training of personnel cost, security cost, and insurance cost will reduce thereby reducing the total cost of production.

More so, the MDGs and CSR relationship will expose organizations to new business opportunity. Different environments have its own demands. A company can tap into this and make their profits while satisfying social needs.

Not only can corporate and social needs be integrated, but the success of the developing world in improving prosperity is of fundamental strategic                                                          importance to almost every company.

Professor Michael Porter, Harvard Business School around “Tomorrow’s Markets”

(WRI, WBCSD AND UNEP, 2002)

In conclusion, Corporate Social Responsibility is a strategic aspect of business that aids the achievement of the objective of any business while positively impacting on the society.

References:

 Dave Precott and Jane Nelson, (2003) “Business and the MDGs: A Framework to Action.”

Oracle, (2004), “The Importance of Corporate Responsibility”, a White Paper from the Economist Intelligence Unit.

Lord Holmes and Richard Watts “Making Good Business Sense,” A publication of World Business Council for Sustainable Development.