The Growing Importance of CSR
Corporate social responsibility (CSR) is the responsibility recognized by the companies for acting in socially responsible manner. There is no single universally accepted definition of corporate social responsibility, it has generally come to mean business decision making linked to ethical values, legal compliance, and respect for people, community, and environment. CSR accepts a company to go further than required by law so as to:
– treat employees fairly and with respect
– operate with integrity and in an ethical manner in all its business dealings with customer, suppliers, lenders, and others
– respect human rights
– sustain the environment for future generations
– be a responsible neighbor in the community and a good ‘corporate citizen’.
Occupational welfare and corporate community welfare or corporate social responsibility (CSR) are of growing importance to governments and service providers as they promise to meet challenges of social problems within changing welfare environments. The modern governments have increasingly resorted to corporate involvement in local services and have also encouraged the expansion of occupational welfare. Despite its growing importance CSR remains an under researched area even as business organizations have faced new demands for increasing levels of occupational provision and involvement in local partnerships with public services.
Over the last twenty years an increasingly large number of business houses have responded positively to the banner of CSR. This has perhaps been partly due to their aspiration to make their operations more ethical. While for the government, the role the businesses can play in the development of society is quite crucial, the activist community might like to take credit for the growing importance of CSR as a clear victory for their efforts in pressurizing the activities of companies. To put the same in other words, companies introduced CSR reports and programs as a response against damage inflicted on their sale and reputation by attacks from activist groups who aided by 24 hour news media in which corporate wrongdoing has been especially highlighted. While on the one hand this makes compelling news, it puts an ethical pressure on the companies to give back at least a part to society in return what they have gained from it. It is therefore, no longer important for companies to just make profit, the way this profit is generated is deeply investigated by the activists. A company must not be seen violating ethics or law in any of the areas like market behavior, trade policies, employment relations, sourcing of raw materials, human rights, environmental laws or the activists would put pressure on them through media or the other channels. This analysis however fails to appreciate much of the social contributions businesses have been making since long back. We have the example of Joseph Rowntree and others and the way they developed their workforces. In 1980s, a network of companies came together to establish Business in the Community (BITC). Later, they launched Per Cent Club whose members donate 1 percent of pre-tax profits to the community. BITC is a very widely acknowledged and influential force within business and in CSR arena.
A set of indicators for the companies wanting to measure and report CSR has been developed by the BITC. The Indicators that Count addresses four impact areas: workplace, market place, environment and community. The indicators have been classed into two groups. The core indicators consist of 27 basic indicators on which all the companies are expected to report. The six advanced indicators are judged more difficult to measure. The other group, made up of 17 specific indicators, may not be relevant to all companies.
There are also specific projects for the measurement and reporting of particular aspects of responsible business, as for example, Human Capital and Disability. Human capital management and disability will have growing importance in CSR reporting. In the UK, Accounting For People Taskforce has proposed a reporting framework for human capital management (HCM). This taskforce, appointed by the UK government was represented by Denise Kingsmill as chairman, and a number of other business leaders. According to the Taskforce report, even as people typically account for up to 65 percent of a company’s costs, there has been, however, little reporting on how companies develop their people.
The companies may either include CSR report in their annual report and accounts or may publish their separate corporate responsibility report which may be called a ‘social and environmental report’ or a ‘sustainability report’. These reports indicate a company’s commitment toward ethical behaviour and highlight their progress towards achieving their strategic CSR objectives.
Increasingly more and more companies have begun to incorporate ethics and CSR in their strategic planning and objectives. Many large companies have adopted formal environmental policies with the objectives of creating a sustainable business and being environment friendly. For instance, a company that uses large quantities of timber as raw material might adopt a policy of re-forestation to replace the trees they have cut down.