Corporate Social Responsibility as an Inevitable Part of Business.English Composition ΙΙ Colin S Clark MAElizaveta Guzhavina

ABSTRACT“Reinserting ethics into business is no mere luxury” – the words of R. M. Kidder , the author of the book “Must Capitalism be Moral?” perfectly reflect the need for corporate responsibility in contemporary business environment, since recently, society has witnessed manynotorious cases of unethical corporate scandals: Enron audit failure, resulting into the bankruptcy, or BP oilspill in the Gulf of Mexico, leading to devastating consequences for environment and people. More often corporations start to admit the importance of behaving ethically and responsibly towards stakeholders, going beyond legal obligations. It is a common delusion that businesses must aim only at profit maximization. On the

contrary, businesses should implement various social responsibility strategies to protect and improve society’s welfare, to build trust of consumers, and finally maintain their reputation. In the research, there is an attempt to describe and analyze miscellaneous CSR strategies that allow corporations tobe a responsible moral agent, meeting society’s expectations, and make long-run profits at the same time.

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Contents

Outline. 2

Introduction. 3

CSR: Arguments For and Against. 4

Responsibility towards the Environment. 5

Responsibility towards Employees. 7

Responsibility towards the Society. 9

Conclusion. 11

Appendix. 13

Works cited. 14

Outline.

Introduction.

Thesis: The contemporary business environment has undergone a

number of changes due to a series of damaging challenges:

sustained recession, scandals, environmental damage and the

perception of corporate “sleaze”. In order to regain consumer’s

confidence, businesses must consider issues of CSR and seek to

employ ethical codes, which are transparent.

The Main Body.

1. Arguments for and against CSR.

Good arguments can be made for and against behaving ethically

and responsibly. Managers face difficulties while making

decisions in the framework of CSR.

2. Responsibility towards the Environment (Green Management).

Green management is a very popular area of CSR, where managers

recognize the high importance of the environment. They make

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decisions in accordance with principles of an environmentally-

friendly behavior, using renewable sources of energy, lessening

the usage of water and electricity, etc.

3. Responsibility towards Workplace (Equity, Empowerment).

Codes of ethics are indispensable for an efficient and effective

management of a company, since they set company’s primary

values, principles and rules, which have to be met by the staff.

Moreover, they help to eliminate ambiguity over decision-making

process, that once again accounts for a better management.

4. Responsibility towards the Community (Charity,

Philanthropy, Education, Entertainment).

Being open towards the stakeholders has a prominent value in the

contemporary business environment. Involvement into various

community activities makes a company “closer” and more

transparent to a potential customer. Being a proactive moral

agent helps to win over the trust of customers.

Conclusion.

In today’s world it is very important for businesses to

maintain a good reputation, so the majority of corporations

pursue the path of responsibility and ethics to be seen

trustworthy and professional. Thus, companies try to show

commitment not only to its shareholders, but also stakeholders,

by implementing CSR strategies.

Introduction.“Reinserting ethics into business is no mere luxury” – the words

of R. M. Kidder1, the author of the book “Must Capitalism be

Moral?” perfectly reflect the need for corporate social

responsibility (CSR) in contemporary business environment, since

1 R.M. Kidder, “Must Capitalism Be Moral?” Ethics Newsline, 2009.

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recently, society has witnessed many notorious cases of

unethical corporate scandals: Enron audit failure, resulting

into the bankruptcy, or BP oil spill in the Gulf of Mexico,

leading to devastating consequences for environment and people.

What is CSR? According to UNIDO (United Nations Industrial

Development Organization), “Corporate Social Responsibility is a

management concept whereby companies integrate social and

environmental concerns in their business operations and

interactions with their stakeholders”2. More often corporations

start to admit the importance of behaving ethically and

responsibly towards stakeholders, going beyond legal

obligations. Nowadays not only company’s success, but also its

existence turns out to be immensely dependent on the well being

of its stakeholders.

Indeed, the nexus between corporations and their stakeholders is

indestructible, since these two entities are inseparable.

Consumers and producers – both exist inside one economic circle,

and thus have a profound impact on each other.

It is a common delusion that businesses must aim only at profit

maximization. On the contrary, forward-thinking businesses

should implement various social responsibility strategies to

protect and improve society’s welfare, to build trust of

consumers, and finally maintain their reputation. Apart from the

economics, profits and loss, companies should take into account

the complexity of contemporary markets and the high demands of

consumers. Moreover corporations should not forget about the

2 "What is CSR?” Unido.org.

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significance of environmental and social impacts they have on

the world as a whole.

As a result, companies start taking an active part in promoting

their CSR interests, creating a “warmer” and more “close” image

on the market. In turn, stakeholders are more eager to be

engaged with the corporate business, thus maintaining strong and

long relationships, endearing them to the markets in which they

operate.

For this reason, CSR is worth analyzing, taking into

consideration what it means for corporations, how they implement

CSR strategies and adapt them, and why it is necessary to behave

responsibly towards the other entities of the business

environment. Corporations are trying to find the key to the

marketing problem: how to do well and good at the same time.

That is why businesses should be able to understand and respond

to their stakeholders if they want to achieve their far-reaching

goals.

CSR: Arguments For and Against.Since the issue of CSR is highly disputable today, there are

different views on it. Some may say that CSR is a mere

entertainment for large corporations, aiming at the creation of

a misleadingly good image of the company. Others argue that CSR

significantly influences business success, since customers tend

to buy products from the companies with views similar to theirs.

Both views are worth examining.

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Speaking about the positive effects of CSR, it is necessary to

point out that today’s consumers are sophisticated, and demand

companies more and more to consider their impact on the

environment. That’s is why relevant CSR programs help to create

a favorable image of a business that cares not only about

revenue, but also about people and the planet. Nevertheless, not

all shareholders may perceive CSR as a good thing to do. Since

the publicly owned companies aim at the maximization of

shareholders’ value, indulging into social or environmental

projects contradicts with it, causing negative feedback.

More than that, socially responsible companies tend to have more

secured long-run profits, because of the well-maintained

relationships with the customers and suppliers. In this way,

businesses can more easily pursue their economic goals, such as

improving their stock price for instance. It also lessens the

governmental regulation and pressure. On the other hand, while

businesses pursue their social goals, such activity may end up

in diluting their economic productivity. Indeed, the associated

costs are high, since CSR programs imply more employee training

or efficient waste management usage. These costs cannot be fully

covered, and as a result, it leads to the loss of profits.

Finally, business involvement into social and environmental

problems via CSR programs can help solve burning issues of the

society. Investments to the common well -being bring positive

feedback. Besides, by doing this businesses maintain the perfect

balance of responsibility and power. However, it may occur that

business leaders lack the necessary skills to address social

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issues correctly, thus harming the whole system of the company.

It may also backfire into the lack of accountability, since

there are no direct lines for social actions.

Although the issue of CSR can be seen as a skeptical effort of

businesses, its advantages in the long-run far outweigh

drawbacks in the short-run. Through the creation of a reliable

public image, companies show commitment to being ethical and

responsible to people and the planet. In today’s world, it would

be unadvisedly for businesses to behave contrary to the

expectations and demands of their stakeholders.

Responsibility towards the Environment.For many serious corporations responsibility towards the

environment has become an issue of utmost importance. They

realized that in today’s business, one cannot simply leave apart

the issue of sustainability. In order to be successful, a

company has to understand the value of it, and try to coordinate

its corporate culture with the culture of responsibility. Moving

these two cultures hand-in-hand allows companies to stand out

and succeed. What should a company take into consideration in

order to be responsible towards the environment? There are

several ways of reducing the environmental footprint: the

conservation of resources, the improvement of efficiency and the

promotion of innovations.

The climate change and global warming as its consequence

represent a real threat to the planet and people, thus

highlighting the need to save the resources. Indeed global

businesses affect the environment on many levels: from the

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consumption of water, energy and paper in the offices, to the

direct production of the goods, which accounts for huge carbon

dioxide emissions. Many companies develop profound energy and

climate strategies to transform the conventional waste of

resources towards more responsible and sustainable use of them.

No doubt, it is not that easy, since being energy-efficient does

not mean only cutting off electricity bills. On the contrary, it

combines the implementation of hi-end innovations towards the

sustainability within and outside a company.

The first thing a company can do is to switch to renewable

energy and minimize the carbon impact on the environment,

through installing renewable generators on the estate such as

wind generators or solar panels. In such a way companies tend to

greatly diminish the carbon dioxide emissions from the estate,

at the same time saving energy. It also greatly contributes to

the decrease in use of the heating and cooling energy and

electrical power. It is not only saves a colossal amount of

money, but also shows a wise commitment to the problem of

resource scarcity. Thanks to green IT management companies can

significantly reduce the number of business trips and

conferences, by using the virtues of the Internet conferencing.

Besides, a company can emerge itself into various green

management projects and recycling initiatives, massively

promoting sustainability and eco-friendly activities among its

stake and shareholders. As a financial intermediary, a company

can invest money into eco-efficient innovative technologies,

supporting the environmental balance and continuous efficient

development.

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As an example, a Deutsche Bank success story can be taken. As a

globally leading and active banking corporation, they were eager

to support and develop sustainable growth in all their business

divisions. As a result, the Environmental Steering Committee was

launched in order to create, implement and control the CSR

strategies in the framework of the environment. They are engaged

into renewable and efficient energy strategies, concerning the

carbon neutrality, by reducing the consumption of energy with

the help of the renewable sources. They not only follow these

measures themselves, but also support sustainability among their

clients, by consulting and promoting private investments into

clean energy and eco-efficient technologies.3 As a result,

Deutsche Bank achieved unprecedented success in becoming a role

model for behaving immensely responsible towards the

environment4.

Another company that introduced eco-efficient technologies is

Kyocera Document Solutions. The company introduced the first of

its kind “biomass color toner that is made from biomass plastic,

derived from non-grain materials”5. By doing this, they managed

to diminish carbon dioxide emissions up to 30 %, proving that

engineering innovations do not simply bring profits, but equally

serve as an environment-friendly tool. SEIKO NPC CORPORATION

organizes various initiatives such as cleaning the adjacent

areas of the plant and planting trees on the premises, in order

to take care of the environment.3 Deutsche Bank “Our Energy and Climate Strategy”, 2012.4 See picture 1 in Appendix. 5 Kyocera Solutions “CSR Report 2012”

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Such eco-efficient measures have a great impact on the corporate

image of the company. By minimizing the detrimental influence on

the environment through these eco-friendly steps, companies

manage not only to build up a trustworthy reputation, but also

to draw people’s attention to the problems of the environment.

Through numerous environmental projects companies tend to make

more solid and close connections between them and stakeholders.

Moreover, the implementation of eco-efficient strategies helps

to reduce the costs of wasted water, electricity and paper.

Also, being responsible diminishes the risk of the environmental

pollution, and in turn huge fines

Responsibility towards Employees.According to Bhattacharya, who is a prominent market researcher

in Germany, “CSR actions can give a company an inimitable upper

hand in the war for talent”6. There are no doubts that employees

are the cores of any company, and creating comfortable workplace

for them is of the utmost importance. The management of

corporations should make sure that the working environment is

aspiring, motivating and encouraging enough to align employee’s

attitudes with the expectations of clients. Employees of global

companies represent the widest variety of nations, languages,

cultures and talents, where everybody is a unique and valuable

part of the team. That is why in the modern business environment

workforce diversity is fostered, appreciated and considered to

be beneficial for the success of a company, since the staff of a

company is one of the most important assets that define the 6 Bhattacharya, C. “Strengthening stakeholder-company relationships through mutually beneficial corporate social responsibility initiatives”, Journal of Business Ethics, 2009.

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prosperity of it. It is undeniable that a professional motivated

team is pivotal to a company, thus the management should provide

the staff with all the range of training and development

activities, recreation and wellbeing facilities, which in turn

will increase their commitment and motivation in work.

Seeing this, companies organize various seminars and training

programs to ensure that their employees are qualified and

skilled to meet the high demands of the customers. Special

seminars for newly hired employees will help to accommodate to a

new work place without stress, while promoting team-building

spirit and develop their abilities. For instance, SEIKO HOLDINGS

Group organizes such seminars for newly appointed managers of

different levels throughout the whole year7, to make sure that

each employee is treated individually and does not feel left out

of the team.

Also, SEIKO HOLDINGS Group follows a very significant management

rule of equity, which says that all employees are to be treated

equally, no matter how old they are, or what disabilities they

may have. According to its CSR Report for 2012, “The Group

continues to promote various measures for people with

disabilities and elderly people, enabling them to continue

working after their retirement at the age of 60 up until the age

of 65 under new employment terms (one-year contract renewal

employees). More than that, “special subsidiaries” are

established to provide employment opportunities for persons with

disabilities and workplaces in which they can function with

7 Seiko International, “CSR Report 2012”

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independence.”8 Such measure creates the atmosphere of trust and

reliability within the company, showing how responsible and

caring the holding is towards its staff. Moreover this above and

beyond commitment is vital for a company’s reputation and image

in today’s world, where all people should have equal

opportunities when seeking for a job.

Speaking about diversity at workplace, Deutsche Bank points out

that “the smartest teams are the most diverse”9. Not only the

corporation welcomes people from various cultural and language

backgrounds, but also tries to give more power to women, by

pursuing its goal to promote more women to senior positions by

2018 through special ATLAS program10. Such approach also accounts

for the significant principle of equity, so that every single

employee can develop his or her own potential at work through

the unique perspective. Indeed, there is no doubt that

generational and cultural differences account for more efficient

and effective management of a company.

On top of that, companies may implement the award presentation

system to make sure that each employee’s contribution counts and

is praised by money bonuses or other awards. Also, companies

should see to employee’s health, by organizing usual health

checks and what is more important nowadays-stress check tests,

making sure that all employees are satisfied, motivated and

aspired to work above and beyond the usual work expectations. It

8 Seiko International, “CSR Report 2012”9 Deutsche Bank, “Corporate Social Responsibility Report”, 2012.10 Deutsche Bank, “Corporate Social Responsibility Report”, 2012.

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also results into high employee commitment rate, which means

that companies retain skillful and talented employees within.

In addition to the health care system, responsible employers

should take into account not only employees, but also their

families. It means that working mothers and fathers should have

an opportunity to take a parental leave, mobile workspace or

shortened working-hour program, thus maintaining a balance

between job and family, without detrimental sacrifices to both.

Speaking about children, some companies target them as potential

future employees, and because of that, provide the children of

the staff with various supporting scholarships. As an example,

Global Group Enterprise launched a scholarship program “Gyan

Jyot”, inspiring young people to succeed. The program provides

them with “financial assistance and support towards the

education”11, giving them a significant incentive to study

better. Additionally, Global Group Enterprise set up the

“Samrakshan” project to provide financial assistance to the

dependent families of the deceased or totally disabled employees

of GTL Limited”12. This project brilliantly represents the idea

of behaving responsibly towards employees, taking care of their

families even in such hard situations.

On the whole, responsibility to employees is crucial for any

enterprise, since through it, the staff becomes the unique

entity, tightly bonded together. Companies should maintain

pleasant working environment, fostering diversity and equity at

11 GTL Limited “Projects Undertaken for the Employees”, 2012.12 GTL Limited “Projects Undertaken for the Employees”, 2012.

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workplace, and giving every employee ample opportunity to show

his or her talent and abilities. The stronger the corporate

culture within a company, the more successful company turns out

to be. Moreover, employees should have opportunities for

professional advancement, motivating them to work harder. Let

alone the preservation of essential labor rights, which are

highly important for a good working environment.

Responsibility towards the Society.Being responsible and ethical towards the stakeholders is

crucial, if a company wants to co-exist and co-prosper with the

society successfully. Trudel and Cotte in their article “Does It

Pay to be Good?” point out that “consumers are likely to buy

more or pay a higher price for products from a socially

responsible company”13. Seeing that global corporations operate

around the whole world, they inevitably face cultural and

language differences. To overcome them, corporations should seek

ways to invest into the common good in a sustainable and ethical

way, taking into account the needs of people around them. But

why corporations should even think about other people? The

answer is social capital, which is highly important for a

successful operation of a company.14 Indeed, social capital is an

indispensable integral part of a business success nowadays,

because it encourages, engages and advances people outside a

company. “Company’s character as revealed by its CSR actions is

the most fundamental, relatively enduring and also often more

13 Trudel, R. and Cotte, J. “Does it pay to be good?”, 2009.14 Tsai, S. “Corporate marketing management and corporate-identity building”, Marketing Intelligence & Planning, 2009.

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distinctive aspect.”15

As a part of relations with the society, global companies may be

engaged into various health supporting projects. For example,

breast cancer campaign. No doubts that this type of cancer has

become a burning issue for millions of women, thus providing

companies with ample opportunity to show their commitment to

people, by investing money into research projects, organizing

events and medical checks for women around the globe. Probably,

the most popular breast cancer campaign was launched by

cosmetics giant Avon, attracting many A-level celebrities and

powerful people to help, support and make a change in the fight

against cancer, by raising millions of dollars during auctions

and other events.

Education is also a way in which worldwide corporations can

behave responsibly towards the society. It is a well-known fact

that educational opportunities are not accessible for everybody,

thus depriving people of their natural civil rights. It is a

pity when talented and motivated children cannot get education

to pursue their career development. Deutsche Bank, for instance,

invests a lot of money to support the young and talented in

their desire to study and work, by organizing different

scholarship programs to support children from disadvantaged

backgrounds.

15 Powell, Shaun M. "The Nexus between Ethical Corporate Marketing, Ethical Corporate Identity and Corporate Social Responsibility: An Internal Organisational Perspective." European Journal of Marketing. 2011.

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Their COMPASS OF STUDIES program launched in 201216 helps to

improve the chances of disadvantaged children to get higher

education. Moreover, employees are encouraged to be mentors at

schools and educational centers to support children and to pass

on their knowledge and experience in life. On a par with DB,

SEIKO INSTRUMENTS INC. engages young people into its production,

by continuously organizing plant watching tours and work

internships for the locals.

Besides, many global corporations tend to support and sponsor

various sport competitions, events, or simply sports teams and

athletes. For example, since 2001, Deutsche Bank has been

supporting the German Sports Aid Foundation. “As a national

sponsor, the bank helps talented athletes combine athletic

achievement with successful careers – we help them equip

themselves for the period after their active athletic careers”17.

By providing sportsmen with higher scholarships18 while they are

studying, DB maintains a crucial balance between sports

achievements and academic success. More than that, DB encourages

their clients to behave responsibly and support sportsmen, by

donating only 3 euro per month19.

Let alone numerous fund raising campaigns, aimed at helping

people to recover after such natural disasters as floods,

earthquakes, tsunamis, tornados and many others. Volunteered

employees donate money, food, clothing and simply help to

16 Deutsche Bank, “Corporate Social Responsibility Report”, 2012.17 Deutsche Bank, “Corporate Social Responsibility Report”, 2012.18 See picture 2 in Appendix.19 Deutsche Bank, “Corporate Social Responsibility Report”, 2012.

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reconstruct damaged infrastructure. Making employees responsible

towards other people and promoting such behavior allows

companies to greatly contribute to the common welfare. In such a

way they not only advertise its good public image and

reputation, but also help to make the world a better place for

stakeholders and society as a whole. The above-mentioned CSR

associations “provide consumers with insight into corporations’

“value system”, “soul”, or “character”20.

Conclusion.We live in a time of unprecedented change. Businesses encounter

economic, social and environmental challenges, making them think

in a new, sustainable way. Scarcity of resources, crisis and

poverty – all these dilemmas are standing in the way of a

successful enterprise. Every decision of a business has a huge

impact on people, planet, and, of course, profits. In order to

balance economic priorities and goals, managers should think

strategically, taking all the challenges as ample opportunities

to succeed and bring both: economic and social benefits. CSR can

be seen as a powerful marketing tool, opening new profitable

markets, at the same time making the planet a better place to

live. Besides, CSR allows businesses to reduce potential costs

and risks through behaving ethically.

Seeing that, it is high time for businesses to start taking CSR

seriously as an integral part, not a non-obligatory add-on. CSR

20 Balmer, J.M.T. and Greyser, S.A. “Integrating corporate identity, corporate branding,corporate communications, corporate image and corporate reputation”, European Journalof Marketing, 2006.

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policy is crucial for both entities of the business environment,

since both benefits more from such collaboration. “What the

company is, what its internal stakeholders believe it is and

what they want it to be all inform the specific CSR actions the

company engages in.”21 Indeed, through the implementation of

appropriate CSR programs, businesses are able to build an

attractive reputation, and promote the corporate identity to

inner and outer stakeholders, since CSR is strategically pivotal

inside and outside of a corporation. The actions a company is

engaged in have direct impact on external stakeholders, by

modeling what they think about a company, and what sort of the

image they draw in their minds. Moreover,

On top of that, CSR helps to build sound and long-lasting

relationships between stakeholders and companies through the co-

creation, implementation and assessment of CSR strategies. Thus,

empowerment and development of employees account for better

communication and negotiation – the skills that are very

important for any business. Further, various charity and

education projects show business commitment to the social

problems outside of a corporation, making business closer to the

customers. As well as Green Management brings positive effects

on the environment, contributing to the common well-being.

Ethical behavior facilitates companies into becoming role models

for the competitors. That is why CSR should be integrated to the

entire structure of a company, improving it as a whole. It

proves that it is possible to maintain a fragile balance between21 Morsing, M. and Schultz, M. “Corporate social responsibility communication: stakeholder information, response and involvementstrategies”, Business Ethics: A European Review, 2006.

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profits and responsibility, and shows how to grow economically

without damaging environment and lives of stakeholders.

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Appendix.DB Achievements in Saving Energy

1

DB Sportsmen Support 2

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Mutually Beneficial Corporate Social Responsibility

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<http://www.kyoceradocumentsolutions.com/company/csr/index.

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7. "Our Understanding of Responsibility." Deutsche Bank Corporate

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Social Responsibility Report 2012. Web. 27 May 2013.

<https://www.db.com/cr/index_en.htm>.

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Responsibility: An Internal Organisational Perspective."

European Journal of Marketing 45.9/10 (2011): 1365+. Print.

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2009), Web

<http://www.globalethics.org/newsline>

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May 2013.

<http://www.seiko.co.jp/en/csr/report/society/03.php>.

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<http://www.unido.org/index.php>.

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