“Responsibility's like a string we can only see the middle of. Both ends are out of sight.”
With increasing globalization and companies going multinational, there is an increasing demand for disclosure of their stand towards the corporate world’s recent buzzword Corporate Social Responsibility or social, environmental and economic performance from the various stakeholders of these companies. The result is implicit – more and more companies have come forward to share information about the economic, environmental and social impacts of their processes and have published reports describing the same. But mere reporting is not what follows. These companies also face the challenge of improving the content of these reports, i.e., the quality and acceptability of these reports.
Corporate Social Responsibility is regarded as a prerequisite to sustainable development by some analysts. Sensitivity and awareness towards environment and ethical issues as a whole has increased and laws are framed to target any deviation from maintaining a balance of these. In fact, according to the World Business Council for Sustainable Development,
“Corporate social responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large.”
The adoption of Corporate Social Responsibility would provide a competitive edge to the companies in all their endeavors. It has numerous advantages and can reshape the whole functioning of an organization. There is a need to realize the importance of Corporate Social Responsibility both towards other companies and towards the external environment and society. For example, recent years have witnessed a numbers of mergers and acquisitions but very few have been successful enough because of the adverse effects they have on the productivity, behavior and creativity of the employees. Safeguarding employee rights must be an integral part of any such activity but seldom do things happen the way they should.
Another angle from which one can view Corporate Social Responsibility is how companies respond and behave outside their boundaries at the local, national or international levels. Local markets provide companies with labor and also a market for their goods or services, thus make it all the more important to maintain good relations with the local settings. Companies develop networks of distribution and sales all round the country and thus need to concentrate on their responsibility towards the nation’s environment, legal framework and society. Moreover, companies have been able to increase their supply chains by transcending the national frontiers and moving to international arena. This automatically incurs the need to follow a minimum code of conduct at the global level for all the companies going global at a rapid pace.
The question that now comes forward is that how to install the component of Corporate Social Responsibility in the business process of the company. For this to be done the company needs to instill it completely in its culture and structure, at virtually all the stages and in all the processes, be it decision making at managerial level or manufacturing goods at the assembly line level. This would have a favorable impact on the shareholders of the company in the long run because of the role of ethics coming forward compared to the monetary profits which have been understood to be the only goal of the shareholders. Thus, the company would be projected in good light and lead to a glorified brand image of the company apart from the company fulfilling its duties towards the environment and society. A very good example is the way ITC has implemented Corporate Social Responsibility in its processes by empowering farmers and by restoring the balance of nature by planting more trees than uprooted by the company for its activities.
In view of the growing public awareness, it becomes extremely necessary for organizations to appear altruistic. But appearances would not work for longer periods and hence only those companies which implement practices to restore citizen control and environmental balance will succeed in getting the trust of the consumers.
It is a fact that organizations are formed and then they grow fueled by the drive to continually pursue newer and broader goals in markets around the world. But this lookout for more and more resources has led to depleting levels of natural resources and hence the only way out is that the companies themselves recognize the situation at hand and follows the framework of Corporate Social Responsibility.
Ultimately, it all boils down to the people who are living in this society and breathing in this environment to understand the current scenario by analyzing the effects if such a phenomenon is allowed to grow. It is “We the people” who have to realize, who must take the responsibility on their shoulders and urge organizations to move towards the real goal – the goal of serving more and more people, and thus, to preserve public interest in light of the responsibility towards the society, the environment, and the mankind as a whole.
With increasing globalization and companies going multinational, there is an increasing demand for disclosure of their stand towards the corporate world’s recent buzzword Corporate Social Responsibility or social, environmental and economic performance from the various stakeholders of these companies. The result is implicit – more and more companies have come forward to share information about the economic, environmental and social impacts of their processes and have published reports describing the same. But mere reporting is not what follows. These companies also face the challenge of improving the content of these reports, i.e., the quality and acceptability of these reports.
Corporate Social Responsibility is regarded as a prerequisite to sustainable development by some analysts. Sensitivity and awareness towards environment and ethical issues as a whole has increased and laws are framed to target any deviation from maintaining a balance of these. In fact, according to the World Business Council for Sustainable Development,
“Corporate social responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large.”
The adoption of Corporate Social Responsibility would provide a competitive edge to the companies in all their endeavors. It has numerous advantages and can reshape the whole functioning of an organization. There is a need to realize the importance of Corporate Social Responsibility both towards other companies and towards the external environment and society. For example, recent years have witnessed a numbers of mergers and acquisitions but very few have been successful enough because of the adverse effects they have on the productivity, behavior and creativity of the employees. Safeguarding employee rights must be an integral part of any such activity but seldom do things happen the way they should.
Another angle from which one can view Corporate Social Responsibility is how companies respond and behave outside their boundaries at the local, national or international levels. Local markets provide companies with labor and also a market for their goods or services, thus make it all the more important to maintain good relations with the local settings. Companies develop networks of distribution and sales all round the country and thus need to concentrate on their responsibility towards the nation’s environment, legal framework and society. Moreover, companies have been able to increase their supply chains by transcending the national frontiers and moving to international arena. This automatically incurs the need to follow a minimum code of conduct at the global level for all the companies going global at a rapid pace.
The question that now comes forward is that how to install the component of Corporate Social Responsibility in the business process of the company. For this to be done the company needs to instill it completely in its culture and structure, at virtually all the stages and in all the processes, be it decision making at managerial level or manufacturing goods at the assembly line level. This would have a favorable impact on the shareholders of the company in the long run because of the role of ethics coming forward compared to the monetary profits which have been understood to be the only goal of the shareholders. Thus, the company would be projected in good light and lead to a glorified brand image of the company apart from the company fulfilling its duties towards the environment and society. A very good example is the way ITC has implemented Corporate Social Responsibility in its processes by empowering farmers and by restoring the balance of nature by planting more trees than uprooted by the company for its activities.
In view of the growing public awareness, it becomes extremely necessary for organizations to appear altruistic. But appearances would not work for longer periods and hence only those companies which implement practices to restore citizen control and environmental balance will succeed in getting the trust of the consumers.
It is a fact that organizations are formed and then they grow fueled by the drive to continually pursue newer and broader goals in markets around the world. But this lookout for more and more resources has led to depleting levels of natural resources and hence the only way out is that the companies themselves recognize the situation at hand and follows the framework of Corporate Social Responsibility.
Ultimately, it all boils down to the people who are living in this society and breathing in this environment to understand the current scenario by analyzing the effects if such a phenomenon is allowed to grow. It is “We the people” who have to realize, who must take the responsibility on their shoulders and urge organizations to move towards the real goal – the goal of serving more and more people, and thus, to preserve public interest in light of the responsibility towards the society, the environment, and the mankind as a whole.
Written By: Anubhav Jain, IIM Indore
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