Organizations Should Be Compelled to Act in a Socially Responsible Fashion

Defining and Prioritizing Stakeholders

Corporate Social Responsibility (CSR)

Learning Objectives

By the stop of this section, yous volition be able to:

• Define corporate social responsibility and the triple lesser line approach
• Compare the sincere awarding of CSR and its apply as only a public relations tool
• Explicate why CSR ultimately benefits both companies and their stakeholders

Thus far, we have discussed stakeholders mostly as individuals and groups exterior the organization. This section focuses on the concern firm every bit a stakeholder in its environment and examines the concept of a corporation as a socially responsible entity witting of the influences information technology has on club. That is, we look at the role companies, and big corporations in particular, play as active stakeholders in communities. Corporations, by their sheer size, affect their local, regional, national, and global communities. Creating a positive touch on in these communities may hateful providing jobs, strengthening economies, or driving innovation. Negative impacts may include doing damage to the surround, forcing the go out of smaller competitors, and offering poor client service, to name a few. This section examines the concept of a corporation equally a socially responsible entity conscious of the influences it has on club.

Corporate Social Responsibleness Defined

In recent years, many organizations have embraced corporate social responsibility (CSR), a philosophy (introduced in Why Ethics Thing,) in which the visitor'south expected actions include not but producing a reliable product, charging a fair toll with off-white turn a profit margins, and paying a fair wage to employees, but also caring for the surround and acting on other social concerns. Many corporations work on prosocial endeavors and share that information with their customers and the communities where they practice business. CSR, when conducted in good faith, is beneficial to corporations and their stakeholders. This is peculiarly truthful for stakeholders that have typically been given depression priority and trivial voice, such equally the natural environment and community members who live near corporate sites and manufacturing facilities.

CSR in its ideal form focuses managers on demonstrating the social good of their new products and endeavors. Information technology can be framed as a response to the backfire corporations face for a long rail tape of harming environments and communities in their efforts to exist more efficient and profitable. Pushback is not new. Charles Dickens wrote about the effects of the coal economic system on nineteenth-century England and shaped the way we remember about the early industrial revolution. The twentieth-century author Chinua Achebe, among many others, wrote about colonization and its transformative and often painful effect on African cultures. Rachel Carson first brought public attending to corporation's chemical poisoning of U.S. waterways in her 1962 book Silent Spring.

Betty Friedan'due south The Feminine Mystique (1963) critiqued the way twentieth-century industrialization boxed women into traditional roles and limited their agency. Kate Chopin's novel The Awakening (1899) and the nineteenth-century novels of Jane Austen had already outlined how limited options were for women despite massive social and economical shifts in the industrializing W. Stakeholder communities left out of or straight harmed by the economical revolution have demanded that they exist able to influence corporate and governmental economic practices to benefit more directly from corporate growth every bit well as entrepreneurship opportunities. The trend to adopt CSR may represent an opportunity for greater appointment and involvement past groups mostly ignored until now past the wave of corporate economical growth reshaping the industrialized world.

CSR and the Environment

Corporations have responded to stakeholder concerns well-nigh the environment and sustainability. In 1999, Dow Jones began publishing an annual list of companies for which sustainability was of import. Sustainability is the exercise of preserving resources and operating in a style that is ecologically responsible in the long term.

The Dow Jones Sustainability Indices "serve equally benchmarks for investors who integrate sustainability considerations into their portfolios."

There is a growing sensation that human deportment can, and do, harm the environment. Devastation of the environs can ultimately lead to reduction of resources, declining business organization opportunities, and lowered quality of life. Enlightened business organization stakeholders realize that profit is only 1 positive effect of business organisation operations. In improver to safeguarding the surround, other ethical contributions that stakeholders could lobby corporate management to make include establishing schools and health clinics in impoverished neighborhoods and endowing worthwhile philanthropies in the communities where companies have a presence.

Other stakeholders, such as country governments, NGOs, citizen groups, and political activeness committees in the United states use social and legal pressure on businesses to meliorate their environmental practices. For example, the land of California in 2015 enacted a set of laws, referred to as the California Transparency in Supply Chains Human action, which requires firms to written report on the working conditions of the employees of their suppliers. The law requires only disclosures, but the added transparency is a pace toward property U.S. and other multinational corporations responsible for what goes on before their products appear in shiny packages in stores. The legislators who wrote California's Supply Chains Human action recognize that consumer stakeholders are likely to bring pressure level to behave on companies found to use slave labor in their supply chains, so forcing disclosure can bring about change because corporations would rather adjust their relationships with supply-concatenation stakeholders than risk alienating massive numbers of customers.

As instances of this type of pressure on corporations increase around the world, stakeholder groups go simultaneously less isolated and more powerful. Firms need customers. Customers demand employment, and the country needs taxes just as firms need resources. All stakeholders be in an interdependent network of relationships, and what is virtually needed is a sustainable system that enables all types of key stakeholders to institute and employ influence.

People, Planet, Profit: The Triple Bottom Line

How can corporations and their stakeholders measure some of the effects of CSR programs? The triple lesser line (TBL) offers a style. TBL is a measure described in 1994 by John Elkington, a British business consultant ((Figure)), and it forces us to reconsider the very concept of the "lesser line." Most businesses, and most consumers for that affair, recall of the lesser line every bit a shorthand expression of their financial well-being. Are they making a profit, staying solvent, or falling into debt? That is the customary lesser line, only Elkington suggests that businesses demand to consider not just one but rather three measures of their true lesser line: the economical and also the social and environmental results of their actions. The social and environmental impacts of doing concern, chosen people and planet in the TBL, are the externalities of their operations that companies must accept into account.

The three components of the triple bottom line are interrelated. (attribution: Copyright Rice Academy, OpenStax, under CC BY 4.0 license)

The TBL concept recognizes that external stakeholders consider it a corporation'due south responsibleness to go beyond making money. If increasing wealth damages the environment or makes people sick, society demands that the corporation revise its methods or go out the customs. Society, businesses, and governments have realized that all stakeholders have to piece of work for the common good. When they are successful at interim in a socially responsible way, corporations volition and should claim credit. In acting according to the TBL model and promoting such acts, many corporations have reinvested their efforts and their profits in ways that can ultimately lead to the development of a sustainable economic system.

CSR as Public Relations Tool

On the other hand, for some, CSR is naught more than an opportunity for publicity as a firm tries to look skilful through various environmentally or socially friendly initiatives without making systemic changes that will have long-term positive effects. Conveying out superficial CSR efforts that just cover upwards systemic ethics problems in this inauthentic mode (especially every bit information technology applies to the environment), and acting simply for the sake of public relations is chosen greenwashing. To truly understand a visitor's approach toward the environment, we need to do more than blindly accept the words on its website or its advertising.

When an Epitome of Social Responsibleness May Be Greenwashing

Ben and Jerry'southward Ice Cream started every bit a small-scale ice cream stand in Vermont and based its products on pure, locally supplied dairy and agricultural products. The company grew quickly and is now a global brand owned by Unilever, an international consumer goods visitor co-headquartered in Rotterdam, The Netherlands, and London, United Kingdom.

According to its statement of values, Ben and Jerry's mission is threefold: "Our Product Mission drives u.s.a. to make fantastic water ice cream—for its own sake. Our Economic Mission asks us to manage our Company for sustainable financial growth. Our Social Mission compels united states of america to use our Company in innovative ways to brand the globe a better identify."

With its expansion, nonetheless, Ben and Jerry's had to get its milk—the main raw ingredient of water ice foam—from larger suppliers, almost of which employ confined-animal feeding operations (CAFOs). CAFOs have been condemned by animal-rights activists as harmful to the well-being of the animals. Consumer activists also claim that CAFOs contribute significantly to pollution because they release heavy concentrations of animal waste into the ground, water sources, and air.

Disquisitional Thinking

• Does the use of CAFOs compromise Ben and Jerry's mission? Why or why non?
• Has the growth of Ben and Jerry's contributed to any form of greenwashing by the parent company, Unilever? If then, how?

Coca-Cola provides another example of practices some would identify equally greenwashing. The company states the following on its website:

"Engaging our various stakeholders in long-term dialogue provides of import input that informs our decision making, and helps usa continuously improve and make progress toward our 2020 sustainability goals . . . We are committed to ongoing stakeholder engagement as a core component of our business organization and sustainability strategies, our annual reporting process, and our activities around the world. As active members of the communities where we alive and work, we want to strengthen the cloth of our communities and then that we tin prosper together."

Let united states of america have a shut await at this statement. "Engaging stakeholders in long-term dialogue" appears to describe an ongoing and reciprocal human relationship that helps improvement exist continuous. Commitment to "stakeholder engagement every bit a cadre component of business and sustainability strategies" appears to focus the company on the requirement to conduct articulate, honest, transparent reporting.

Currently 20 percent of the people on Earth consume a Coca-Cola product each day, meaning a very large portion of the global population belongs to the company's consumer stakeholder group. Depending on the procedure and location, it is estimated that information technology takes more than three liters of water to produce a liter of Coke. Each mean solar day, therefore, millions of liters of h2o are removed from the Earth to make Coke products, so the visitor's water footprint tin endanger the water supplies of both employee and neighbor stakeholders. For instance, in Chiapas, Mexico, the Coca-Cola bottling plant consumes more than ane billion liters of water daily, but only about half the population has running water.

Mexico leads the world in per capita consumption of Coke products.

If consumers are aware only of Coca-Cola's advertizing campaigns and corporate public relations writings online, they will miss the very existent concerns most water security associated with it and other corporations producing beverages in similar fashion. Thus it requires interest on the part of stakeholders to go on to drive existent CSR practices and to differentiate truthful CSR efforts from greenwashing.

The Ultimate Stakeholder Benefit

CSR used in adept faith has the potential to reshape the orientation of multinational corporations to their stakeholders. By positioning themselves as stakeholders in a broader global community, careful corporations can be exemplary organizations. They tin demonstrate interest and influence on a global calibration and ameliorate the manner the manufacture of goods and delivery of services serve the local and global environment. They can return to communities as much every bit they extract and foster automated financial reinvestment then that people willing and able to piece of work for them can afford non only the necessities simply a run a risk to pursue happiness.

In return, global corporations will take sustainable business organisation models that expect beyond short-term growth forecasts. They will have a method of operating and a framework for thinking almost sustained growth with stakeholders and as stakeholders. Ethical stakeholder relationships systematically grow wealth and opportunity in dynamic way. Without them, the global consumer economy may fail. On an alternate and ethical path of prosperity, today'due south supplier is a consumer in the next generation and Earth is nonetheless inhabitable afterward many generations of dynamic alter and connected global growth.

Summary

Nearly organizations must practice genuine corporate social responsibility to be successful in the modern marketplace. The triple bottom line places people and the planet on equal standing with profit in the mission of an organization. The 18-carat practice of CSR, different greenwashing, requires a commitment to an additional stakeholder, the planet, whose continued healthy existence is essential for whatever arrangement to operate.

Assessment Questions

Name the three components of the triple bottom line.

The three components are people, profit, and planet.

What does the California Transparency in Supply Chains Human action require of businesses that operate in California?

The California Act requires businesses that operate in California to depict for consumers all components and activities of their supply chains.

Truthful or false? Corporate social responsibility is a voluntary action for companies.

True

The Dow Jones Sustainability Indices provides information for ________.

1. investors who seek quick profit
2. investors who seek long-term returns
3. investors who value CSR in companies
4. marketing promotions of each of its members

C

Endnotes

1Victoria Knowles, "What's the Difference Between CSR and Sustainability?" 2degrees, March 25, 2014. https://world wide web.2degreesnetwork.com/groups/2degrees-customs/resources/whats-divergence-between-csr-and-sustainability/.

2"Dow Jones Sustainability Indices," RobecoSAM. http://world wide web.sustainability-indices.com/index-family-overview/djsi-family unit-overview/#tab-1 (accessed Baronial 5, 2018); "Results Announced for 2017 Dow Jones Sustainability Indices Review," RobecoSAM, September 7, 2017. http://www.sustainability-indices.com/images/170907-djsi-review-2017-en-vdef.pdf.

3Kamala Harris, "The California Transparency in Supply Chains Deed. A Resource Guide," California Department of Justice, 2015. https://oag.ca.gov/sites/all/files/agweb/pdfs/sb657/resources-guide.pdf.

4Coca-Cola Visitor, "2016 Sustainability Study: Stakeholder Date," Baronial eighteen, 2017. http://www.coca-colacompany.com/stories/stakeholder-date#ii.

5Martha Pskowski, "Coca-Cola Sucks Wells Dry in Chiapas, Forcing Residents to Buy Water," Salon, September 16, 2017. https://www.salon.com/2017/09/16/coca-cola-sucks-wells-dry-in-chiapas-forcing-residents-to-buy-water_partner/.

Glossary

greenwashing

carrying out superficial CSR efforts that merely comprehend up systemic ethics bug for the sake of public relations

triple bottom line (TBL)

a mensurate that accounts for an organization's results in terms of its effects on people, planet, and profits

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