Corporate Social Responsibility

Introduction to CSR
Corporate social responsibility has become a hot business topic in recent years and many
well-known business people have expressed their support for it:
Niall
Fitzgerald
Former CEO,
Unilever

"Corporate social responsibility is a hard-edged business

decision. Not because it is a nice thing to do or because
people are forcing us to do it... because it is good for
our business"

Dame Anita
Roddick
Body Shop

The business of business should not be about money,

it should be about responsibility. It should be about
public good, not private greed

Warren
Buffett
Berkshire
Hathaway

It takes 20 years to build a reputation and five minutes

to ruin it.

There are many alternative definitions of CSR. Here are two:

An obligation, beyond that required by the law, for a business to pursue long term
goals that are good for society
About how a company manages its business to produce an overall positive impact
on society

So CSR involves:

Conducting business in an ethical way and in the interests of the wider community
Responding positively to emerging societal priorities and expectations
A willingness to act ahead of regulatory confrontation
Balancing shareholder interests against the interests of the wider community
Being a good citizen in the community

Is CSR the same as acting ethically? The answer is yes and no! There is clearly an overlap
between CSR and business ethics:

Both are concerned with values, objectives and decisions based on something other
than the pursuit of profit
Socially responsible firms must act ethically

The difference is that:

Ethics concern actions which can be assessed as right or wrong by reference to

moral principles
CSR is about the organisations obligations to all stakeholders and not just
shareholders

There are four main parts to CSR:

Economic

Responsibility to earn profit for owners

Legal

Responsibility to comply with the law

Ethical

Not acting just for profit, but doing what is right, just and fair

Voluntary and
philanthropic

Promoting human welfare and goodwill

Being a good corporate citizen contributing to the community and
quality of life

Does CSR really matter for a business?

You should appreciate that there is a debate about the role and importance of CSR. Not all
business organisations behave in a deliberately socially responsible manner, and some
argue that it is not the job of businesses to be concerned about social issues and problems.
There are two main schools of thought:

Free market view: the job of business is to create wealth for shareholders
Corporate social responsibility view: business should be concerned with social
issues as much as their commercial aims

Those who take the free market view and argue against over-reliance on CSR would make
points such as:

The only social responsibility of business is to create shareholder wealth

The efficient use of resources will be reduced if businesses are restricted in how they
behave
Businesses cannot decide what is in societys interest- that is the role of government
Extra costs are incurred which must be passed on to consumers
CSR is an unwelcome extra responsibility for businesses; another example of
bureaucratic red-tape

The counter-arguments of the CSR lobby would be that:

Businesses do not have an unquestioned right to operate in society

Those managing business should recognise that they depend on society
Business relies on inputs from society and on socially created institutions
There is a social contract between business and society involving mutual obligations
that society and business recognise that they have to each other

If you were asked to build the case for a business investing in CSR, you might include one
or more of the following advantages of CSR:

It is the ethical thing to do

It improves a business image and reputation
It is necessary in order to avoid excessive regulation
Socially responsible actions can be profitable
An improved social environment will be beneficial to a business
It will be attractive to some investors
It can increase employee motivation
It helps to corrects the social problems caused by business

Where does CSR apply in business?

You can find examples of CSR applying in nearly all of the functional activities of a business.
The table below illustrates some of them:
Dealing with customers
Value for money
Fair and honest advertising
Country/place or origin
Sustainable products
Responsible selling and promotion
Labour rights in the supply chain

Product quality and safety

After sales service
Local sourcing
Product testing
Fair handling of complaints
Availability of information to make informed
decisions

Dealing with employees

Fair treatment at work
Right to be kept informed
Work life balance / flexible working
Training in new skills
Job design and satisfaction
Attitude to disadvantaged groups
Dealing with the community

Workforce diversity and equal opportunities

Health and safety
Opportunities for participation in decisionmaking
Provision of social facilities
Working conditions

Minimising noise and other pollution

Sourcing from local suppliers
Labour rights in the supply chain
Diversity in the workplace

Consultation about major change

Protecting local employment
Product health and safety

Dealing with the Environment

Effects of pollution, noise, waste disposal,
congestion
Chemical use
Use of energy
Biodiversity

Waste management
Avoiding excessive packaging
Water consumption
Carbon emissions

Further study links on CSR

Two great resources to browse on CSR are:
Business in the Community
A membership organisation that encourages and promotes
active engagement by businesses in the community

CBI / Article 13 Case Studies in CSR

Regularly updated articles and case studies on businesses
getting involved in CSR activities