Corporate social responsibility and sustainable development
| Author | Ec. drd. Oana Ghiga - HVB Bank Romania |
| Position | Prof. univ. dr. Constantin Ghiga, Academy of Economic Studies, Department of Administration and Public Management |
| Pages | 1-8 |
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The history of social and environmental concern about business is traced by some economists 'as old as trade and business itself"1. However, the impacts of business on society and the environment assumed a new dimension once the economy entered the industrialisation period. In time, as concerns about large corporations and their power grew in importance, Corporate Social Responsibility (CSR) became a debate-generating principle.
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 recognize the magnitude of its responsibilities for the future of civilization. 2
Corporate social responsibility is a principle that depends on a complex of economic, cultural and political factors, therefore companies do not apply it to the same extent. However, recent reports and analysis of the market show that companies make efforts to include CSR either as strategy or adopt it as corporate value, indifferent of the economic sector they perform in. In numerous cases, companies apply CSR rather to align to market tendencies than to express a true interest towards society. Even so, the growing interest for CSR is evident and its influence on the international business environment and society as a
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whole is more powerful than before.
Corporate social responsibility is a commitment to improve community well-being through discretionary business practices and contributions of corporate resources. 3
Philip Kotler, Nancy Lee - Corporate Social Responsibility (2005)
In recent years, the support granted to social causes has become a constant action in the corporate environment. Without being associated to a specific economic sector, CSR activities are promoted through various communication channels. Companies make use of their official websites, annual reports or other promotional materials in order to publicly show that the implication in the community's life and sustaining social causes are among the most significant activities that they perform.
This is partly due to the multiple requests for supporting social causes received from non-profit organisations, government agencies, interest groups, potential investors, politicians etc. Matters for which support is required varies from issues such as health, education and public safety to community development, animal rights protection or the environment. Companies respond to these "pressures" strategically by choosing to support both economical and social causes, to take actions that are beneficial to both the company and the cause itself.
The multitude of cases supported through CSR programmes determined a constant development of the concept, reaching a stage where it can now be associated to a great number of matters. Starting with ethics and human rights to corporate governance and the environment, the causes promoted by CSR programmes have been the origin of specific company policies or have been inserted in corporate values.
With regard to company policies, a report released in 2004 by the Centre of Urban Planning and Environmental Development (University of Hong Kong) analysed the incidence of CSR policies at a global level. The paper is based on a survey that asks 450 companies whether they had written policies on each of 20 aspects of CSR policies. From the 49% of companies that responded, 47.7% North American companies reported to have policies on CSR/sustainability compared with 60.4% in Europe and 33.3% in Asia4. Richard Welford, the deputy director of the Corporate Environmental Governance Programme (CEGP - University of Hong Kong) stressed that fact that the existence of a policy does not guarantee that it is implemented, and conversely, the absence of a policy does not mean that a certain CSR aspect is not practiced.
A study performed by Business for Social Responsibility (a non-profit organisation that offers information, instruments, training and consultancy services related to integrating corporate social responsibility in a corporate operations and strategy) mentions the benefits that companies experience from having clearly articulated business principles5:
- Organizational Touchstone - Companies are now increasingly attempting to establish a set of holistic statements that reflect an interlinked set of values and commitments. This shift towards a world-view that recognizes the interrelated nature of stakeholder issues can provide a broader acknowledgement and consideration of stakeholder expectations.
- Values-based Decision-Making - Companies that institutionalise a values-based decision-making process can proactively address a broad range of legal and ethical dilemmas. Clearly defined values, when integrated into a company's organizational
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infrastructure, provide employees with the necessary tools and conceptual framework to make independent decisions in their daily operations that are consistent with the company's underlying values. As a result, these companies reduce their vulnerability to misconduct and the damage this can do to management focus, profitability, brand image, and overall reputation
- Greater Employee Commitment and Motivation - Research conducted by BSR revealed that employees have more positive feelings about their work and themselves - and as such demonstrate a stronger commitment to their workplace - when they believe that the company they work for demonstrates good values and ethical practices.
- Point of Reference for External Stakeholders - When a company articulates its business principles, it enables stakeholders to know exactly where it stands on relevant issues, thereby taking the first crucial step in aligning internal operations and external expectations.
- Enhanced Customer Loyalty - Increasingly, customers are taking into...
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