The Future of CSR

There is no doubt that CSR has been adopted by a lot of businesses especially in the developed world. CSR tends to be seen as a mainstream activity among businesses today. The question is how genuine are these efforts? This brings us to the issue of ethical CSR. Following the debate most of us will say, most businesses are just practicing CSR as a technique to get more profits though a few, as Emily pointed out, do practise CSR genuinely. So what can be done to get these businesses to practice genuine or ethical CSR? Getting profits from CSR is not a bad idea but I think businesses should be encouraged to practice ethical CSR though one wonders how ethical profit making businesses can be. Making profits should not be the motive or the main drive behind businesses practice of CSR. CSR practised this way is used just as another business strategy. The main motive for practising CSR should be a genuine desire to help and improve the society and environment in which these businesses operate. If they get a good reputation and profits as a by-product of this good gesture, then that is fine. Another issue that comes up from this is how do we know the real motive behind these practices?

Should Companies who Make Products that Kill Practice CSR?

As the debate unfolds I just thought that it would be interesting to get peoples views on whether companies who make products that kill can practice corporate social responsibility. With an issue like this, one can't help but think about the cigarette, arms and alcohol producing companies. If they can practice CSR how can you reconcile their corporate social responsibility acts with their products? Baker (2005), says there is an uneasiness surrounding this issue. He adds that “some on the CSR movement have felt uncomfortable about their newly discovered allies, and would really wish they would go away and play their role of corporate villain with a little more conviction.” http://mallenbaker.net/csr/CSRfiles/page.php?Story_ID=1492 Can these companies justify their social responsibility? What do you think?

Should CSR be regulated?

Most of the comments I have received are of the opinion that most businesses practice CSR just as a means of improving their profit margin. Someone even suggested that it should be regulated which brought me to this particular point about regulating CSR.
Naturally anything that people do which is tagged voluntary should be left to their freewill and so should be the case of CSR because it is something which is done voluntarily by corporations. As defined by the European Commission, CSR is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.
There are a lot of arguments about whether CSR should be regulated or not. There is even a call for its regulation and one of the ways suggested for the regulation of CSR is by compulsory CSR reporting by corporations. Some people have argued that regulating CSR may push companies towards compliance and will risk making them passive about CSR because they will be doing it just to tick their names that they have done CSR. Some others have argued that compulsory reporting of CSR will just add another burden to the already heavy administrative burden corporations have to bear. Muller, cited in an article by EU business on CSR reporting, makes a strong case that CSR should not be regulated. He stresses that CSR must be seen in the light of its voluntary nature. He adds that "Imposing compulsory reporting clauses on a voluntary activity is tantamount to nonsense". http://www.eubusiness.com/SMEs/ueapme-csr.2007-03-06/ He goes on to argue that obligatory reports on CSR will not make enterprises more socially responsible on the contrary it will put them on the defensive and scare them away from CSR.
On the other hand, there are also arguments that CSR should be regulated. Rowe cited in Jennifer McNulty’s article on Corporate Regulation makes a case for the regulation of CSR. He argues that if corporations were serious about CSR they would not oppose its regulation. He says history has shown that “in the absence of strong government regulation, corporate responses to populist movements have minimal impact”. http://currents.ucsc.edu/05-06/11-07/rowe.asp . Cutlip et al (2006) seem to share a similar view to Rowe’s in their statement that corporations have always had obligations to the society but many companies had to be forced to meet these obligations. Rowe emphasizes that only strict environmental regulations by government can force corporations to bear the cost of corporate pollution which is passed on to tax payers when neglected by corporations.
In my opinion I believe CSR should be regulated especially in developing countries like Cameroon, Nigeria and others because so many corporations cause a lot of industrial and environmental pollution and do nothing about it because most of the governments do no force them to act responsibly. An example is the environmental pollution of the Niger Delta region in Nigeria by Shell. If these corporations are not forced by regulations and even laws they will continue polluting the environment and do nothing about it.

Profit versus Responsibility

Another interesting angle of this debate is whether companies practice CSR because they truly want to be responsible towards the society or are just practicing it because it helps to increase their profit margin. As Little and Little, (2000) and Moore (2003) cited in Tench and Yeomans, (2006) say, “...arguments and evidence are emerging to support CSR’s contribution to the financial performance of organisations” (p.101). Personally, I would agree with Sola that most companies are now engaging in CSR because they have realised that CSR does contribute to bottom line profits and not because they feel deep down in them a moral duty to help the society or community. After all businesses want profits and will engage in whatever will bring them greater profits. The statement of Anna Diamantopoulou that “Many businesses have already recognized that CSR can be profitable and CSR schemes have mushroomed..." seems to support the fact that most businesses use CSR as a means to increase their profit margin. There are a number of international businesses who project a more socially responsible behaviour in Europe and other developed countries because the government, the general public, pressure groups and competition force them to and because the public tend to buy products from companies which are socially responsible meanwhile the same companies are not socially responsible or practice very limited CSR in developing countries because the population there do not buy products because a company is socially responsible or not and are also they are not well informed about CSR. They know if they do not practice CSR in a society where all businesses are doing it, they will be left out of the competition and profits. This goes to support Elisa Juholin’s statement that CSR is more a matter of business than ethics.

Can business balance profits and corporate social responsibility?

Until a few years back, the objective of business was essentially to make profits. According to David Hawkins, formally most businesses followed the capitalist economic model for doing business whose main objective was to make profit with little regard or concern for the society. But today, business has entered into a new domain called corporate social responsibility (CSR) or business ethics where businesses are required to be ethical and responsible towards the society and the environment in which they operate. CSR and ethics in business has become an increasingly important topic in our society today. Many companies now recognize the importance of corporate social responsibility, but are still concerned about how businesses can balance the objective of making profits with that of being socially responsible to society.

Economists argue that enterprises already contribute to society through taxes paid of profits made and through people supported by the wages they receive for work performed. The most popular argument against CSR is that of the economist Milton Friedman who insists that businesses have only one social responsibility which is to make profit for their shareholders. Supporters of Friedman argue that if private enterprises start pursuing objectives like, fighting poverty and prevention of disease and make this their primary objective; they are no longer operating under the logic that dictates private enterprise. They argue that such objectives should be pursued by non-profit organisations and governments.
On the other hand there are those who believe business is not just about making profits but also about being responsible to the society. Sommerville (2004) argues that “the task of a corporate manager is to balance the interest of all the different groups who have a ‘stake’ in the company” (p.138). Tench and Yeomans (2006) and Harrison (2000) state that though companies are not a state or country they are part of the society in which they operate and as such must consider their impact on it. Those who advocate that businesses be socially responsible believe that businesses can balance the objective of making profit and being socially responsible. Wilcox et al (2003), say corporate citizenship enhances a company’s reputation and its ability to market goods and services adding that surveys show that more people buy products according to a company’s reputation. Tench and Yeomans (2006) gave the example of John Burke, who demonstrated that companies with a reputation for ethics and social responsibility grew at a rate of 11.3% annually from 1959 to 1990 while the growth rates for similar companies without the same ethical approach was 6.2%, showing how companies can balance the CSR agenda with that of making profits. Bjohn adds that corporate ethics leads to a more stable organisation and will improve the bottom line and drive higher profits.
Many businesses now are being forced by pressure groups, government and legislation to adopt positive measures to ensure their activities are environmentally responsible. So considering all these, business today is not just about making profits anymore. In my view, the main objective of a business is to make money because that is the reason it was established in the first place but not at the expense of society and so they should be ethical and responsible in the way they carry out their activities. What do you think?

Is business just about making profits?

In this socially and environmentally aware age, it is hard to think businesses are out just to make profits with the amount of companies and organisations who talk about and practice corporate social responsibility (CSR) today. Yet there are still conflicting views about whether business is essentially about making profits and whether their profit motive does not clash with their corporate social responsibility agenda. What do you think? This is essentially what the debate on this blog is all about. please feel free to give your own opinion. comments and suggestions are most welcomed.