Sustainability Corner with Ebenezer ASUMANG& Romein VAN STADEN
“Our biggest challenge in this new century is to take an idea that seems abstract – sustainable development – and turn it into a reality for all the world`s people.”
——–Kofi Annan, former UN Secretary-General
Corporate Social Responsibility (CSR)
The concept of Corporate Social Responsibility (CSR) has a fluid definition and can vary across different corporate programmes that benefit the community (Chandler, 2015). Simply put, CSR is all the work a company does to improve the relationship between the company and the community and produce positive changes in society with employee engagement, financial support, and volunteerism. Corporate Social Responsibility can be a powerful tool for businesses to maximize their prospects with customers and increase their bottom line. “This is in compliance with applicable law and consistent with international norms of behaviour; and is integrated throughout the organization.” (ISO 26000 Working Group, 2007).
Understanding CSR is vital because it represents nothing less than an attempt to define the future of our society. The meaning of Corporate Social Responsibility (CSR), throughout its history, has been in constant flux (Carrol, 1979;1999). The practice of CSR is set against the backdrop of the corporate economic system that functions as an excessive expression of unbridled capitalism (Fleming and Jones, 2013). Moreover, Corporate Social Responsibility creates more satisfied and loyal employees. In fact, according to one study, 69 percent of employees consider Corporate Social Responsibility to be an essential factor in choosing their employer. Any business needs to partake in what’s known as Corporate Social Responsibility (Kotler et al.,2012). Corporate Social Responsibility in business practice has today elevated well surpassed just philanthropy (Fleming and Jones, 2013).
The World Business Council for Sustainable Development has described CSR as the business involvement in sustainable economic development. Building on a base of compliance with legislation and regulations, CSR typically includes “beyond law” commitments and activities relating to:
- corporate governance and ethics;
- health and safety;
- environmental stewardship;
- human rights (including core labour rights);
- sustainable development;
- conditions of work (including safety and health, hours of work, wages);
- industrial relations;
- community involvement, development, and investment;
- respect for diverse cultures and disadvantaged peoples;
- corporate philanthropy and employee volunteering;
- customer satisfaction and adherence to principles of fair competition;
- anti-bribery and anti-corruption measures;
- accountability, transparency, and performance reporting; and
- supplier relations for both domestic and international supply chains.
Carroll (1991) suggests four social responsibilities that represent comprehensive CSR: economic, legal, ethical, and philanthropic. These four classifications of CSR are depicted as a pyramid, as shown in Figure 1 below.
Figure 1: The Pyramid of Corporate Social Responsibility
Source: Carrol (1991)
CSR vs. Sustainability
While environmental sustainability is often part of corporate social responsibility, CSR focuses not only on environmental sustainability. Sound environmental management is vital to many companies, and they reflect this value in their CSR programmes. For example, The Body Shop, whose good image can be traced to their promise to sell only fair trade products and not animal tested. This commitment generated great publicity, thus saved them millions on PR campaigns. In another example, the clothing brand Patagonia has a corporate model centered on reducing and recycling. Their efforts to reduce their carbon footprint are evident in their environmentally friendly practices.
CSR as the new bottom line
It is in this context that the question arises: Are profits more important than people? CSR provides a framework for corporations to be involved in economic development in ways that can be much more powerful than what has been hitherto thought (Fleming, 2007). The current corporate social responsibility movement is mainly trying to make it regular practices for most companies to create the kind of impact that can make a difference to the sustainability of our world and the quality of life of the present and future generations (Kaushal, 2017).
Research shows that companies can be very profitable while changing the world for the better. It’s possible to make money while working on social causes, and many investors and business owners are already making a difference while enjoying impressive profits. According to the research findings (Amyx, S. Apr. 14, 2020) CSR performance is statistically significant in:
- economic value and quantity of innovation;
- lowering of financing costs;
- competitive differentiation;
- higher productivity and higher innovation efficiency.
Increasingly, consumers and employees expect companies to work in a socially responsible way. For example, studies show that 69 percent of employees consider it important that their company lives up to its social responsibility. In contrast, a mere 6 percent of consumers agreed that a company should only be interested in improving its profits (Kotler et al.,2012).
The adoption of United Nations Sustainable Development Goals (SDGs) has led to increased corporate social responsibility (CSR). But, sadly, corporate social responsibility is still not fully part of the vision, mission, values, and organizational culture of businesses. It is still a “nice-to-do” rather than a paradigm shift that involves their management, product development, manufacturing, supply chain, services, and budgeting for many companies.
CSR in a capitalism 2.0 world is here to stay, and we as a global society will all benefit. Companies have a great opportunity in charitable and socially minded works: they amass publicity for the company, increase employee happiness, and produce more loyal customers. Not only does the power of doing good unlock potential profits for companies, climate change and other disasters may also make this kind of corporate innovation a necessity (Kotler et al.,2012).
Here is the new bottom line, businesses can no longer last in competitive markets if they think only about profit maximization. However, companies can have the best of both worlds – to make money and be a force for good through CSR.
Dunbar, E. (2020), Corporate Social Responsibility and Sustainability, https://www.learningtogive.org/resources/corporate-social-responsibility-and-sustainability accessed May 13, 2021
Amyx, S. (Apr. 14, 2020) How Commitment to CSR Improves the Bottom Line, https://www.forbes.com/sites/forbesbusinesscouncil/2020/04/14/how-commitment-to-csr-improves-the-bottom-line/?sh=3cbe428b2944 accessed May 14, 2021
Carroll, B.A (1999, vol.38; issue 3), Corporate Social Responsibility: Evolution of a Definitional Construct, Business and Society Journal
Carroll, Archie B (1979), A Three-Dimensional Conceptual Model of Corporate Social Performance. Academy of Management Review, 4(4), p.497-505.
Carroll, Archie B (1991), The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders. Business Horizons, July-August 1991, p.39-48.
Chandler, D. (2015), Corporate Social Responsibility: A Strategic Perspective, Business Expert Press, New York
Oonk, G and Slob, B (2007), The ISO Working Group on Social Responsibility Developing the future ISO SR 26000 Standard
Kotler, et al. (2012), Marketing Management. 14th Edition, Pearson Education, Open Journal of Social Sciences
Kotler, Philip; Hessekiel, David; and Lee, Nancy (2012), Good Works!: Marketing and Corporate Initiatives that Build a Better World… and the Bottom Line. John Wiley & Sons Inc.
Kaushal, Virender (2017), Corporate Social Responsibility: A Survey of Cement Corporation of India, Rajban, Sirmaur; International Journal of Science Technology and Management; Vol.No.06; Issue No. 07, July 2017. Available from: www.ijstm.com [Accessed 10 May 2021].
Fleming and Jones (2013), The end of corporate social responsibility: Crisis & critique
Fleming, Peter; and Jones, Marc T (2013), The End of Corporate Social Responsibility: Crisis & Critique. SAGE Publications, Inc. California.
About the Writers:
Romein is a (self-confessed) Pan-Africanist by heart. His diversified professional career spans many different sectors, i.e., local government, mining, consultancy, construction, advertising, and development corporations.. Romein is the Head: Business for Development at PIRON Global Development, Germany (www.piron.global). Contact him via ([email protected])
Ebenezer ASUMANG, CGIA.MBA.MA(c) is a Development Communication Specialist, an SDG Market Building, SME & Finance Researcher; serving as Senior Project Manager with PIRON Global Development, Ghana (www.piron.global). Contact him via ([email protected])