Corporate Social Responsibility
Name
Institution
Introduction
The Corporate Social Responsibility (CSR) concept was coined by Howard Bowen in 1953 to explain why organizations should be environmentally and socially accountable. Since then, it has evolved to become one of the most influential concepts in organizations today. Pressure has been increasing on organizations to adhere to the CSR principles as the concept continues evolving. The CSR concept describes the social, economic, legal and environmental responsibilities of organizations, and has numerous benefits to for-profit firms. As such, this paper contains a definition of CSR, its ethical and legal dimensions, exploration in a business context and a discussion of five of its benefits, with illustrations using the case of Procter and Gamble (P&G).
Discussion
Defining CSR
The definition of CSR has been revised over time in response to the evolution of the concept. As noted in the initial definition of the concept by Bowen it was used to refer to the social and environmental responsibilities of organizations. The initial definition was influenced by social concerns such as the fight for human rights and the need for increased environmental protection (Silberhorn & Warren, 2007). However, broader and varying emerged from the 1990s, when a connection between CSR and sustainability was established. The definition instance was revised to include the responsibilities of organizations to meet the expectations and needs of the stakeholders, including the shareholders, and to adhere to the established laws and regulations (Fordham & Robinson, 2018). In this regard, the CSR can be defined as the firm’s commitment to environmental, economic, ethical and legal responsibilities (Fordham & Robinson, 2018). As such, CSR touches on all activities of organizations.
Roles of Business Ethics and Laws in Organizations
In recent years, organizations are increasingly expected to establish and maintain effective ethical standards and regulations that guide the behaviours and actions of the internal stakeholders. The organizations are also expected to express their commitment to professional standards that guide behaviours in their industries and the laws and regulations established by government authorities (Wang et al., 2016). Expressing commitment to laws, regulations and professional and ethical standards are increasingly used as an indicator of a firm’s commitment to CSR, in addition to other benefits (Wang et al., 2016). Adherence to ethical standards indicates that a firm is socially responsible.
In its efforts to become socially responsible, for instance, P&G has established a code of ethics that is meant to guide the behaviours of its internal stakeholders. The company’s code of ethics, for instance, requires the internal stakeholders to uphold respect, integrity and trust in all activities and interactions within the organization (Procter & Gamble, 2020). An organization’s adherence to social responsibilities is evaluated beyond the interactions among the stakeholders. During the recent protests by the Black Lives Matter Movement in the US, for instance, organizations were required to express their stances or views toward the issues that were involved. By adhering to its ethical principles, P&G’s stance would be against the killing of blacks and racism. At the same time, the organization would be against the destruction and stealing of properties of innocent people. P&G would also strive to adhere to the established laws and regulations by government authorities to rank high in adherence to CSR.
However, several cases have emerged in which P&G has been accused of violating ethical standards and the established laws. In 2018, for instance, the company was sued for violating laws against discriminating against people based on factors such as age, ethnicity, race, religion and gender. The company was accused of refusing to consider qualified immigrants for paid internships (Maldef, 2020). The case is at the trial stage in court. Recently, the company has been changed for misleading the consumers regarding the “flushability” of Freshmates Flushable Wipes, one of its products. In doing so, the organization violated its ethical standards such as integrity and trust, professional standards and the established laws (Caldwell, 2020). Such cases lower the ranking of P&G in its adherence to CSR principles. Thus, ethical standards and laws are used as a parameter that determines a firm’s adherence to CSR principles.
CSR from Business Perspective
From a business perspective, CSR has positive impacts on organizational performance. Based on the economic dimension of CSR, organizations have the responsibility to engage in practices and activities that would lead to optimal performances (Fordham & Robinson, 2018). In the adherence to the CSR principles, for instance, the managers and the board members are expected to make decisions that would lead their firms to be most profitable. When making the interests, personal interest should not supersede the interests of shareholders, employees, consumers and other stakeholders (Fordham & Robinson, 2018). As such, Adherence to CSR increases the probability of organizational success in bottom-line performances. In the case of P&G, the company has been striving to adhere to the economic dimension of CSR. Through the efforts of all the internal stakeholders, the company has been performing well, leading to a remarkable income that is distributed among the shareholders. During the financial year that ended in June 2020, for instance, the company had a net income of $12.764B (Macrotrends, 2020). The case of P&G’s illustrates that adherence to the economic dimension principles of CSR increases the probability of positive performance in organizations.
Benefits of CSR
CSR has numerous benefits to organizations. As explained earlier, adherence to CSR influences a firm’s overall reputation. While P&G has had a good reputation, it has been tainted by the cases in which it has been accused of violating ethical standards and laws. A good reputation is important since it enhances the ability of a firm to attract consumers and to avoid losses caused by issues such as fines and penalties in court cases (Fordham & Robinson, 2018). Second, adherence to CSR increases efficiency in economic operations and activities (Fordham & Robinson, 2018). Improved efficiency increases the probability of success, as expressed in the case of P&G. The third benefit is that adherence to CSR increases the ability of a firm to attract talented and experienced workers and leaders (Fordham & Robinson, 2018). Most talented, skilled and experienced people are increasingly preferring working for socially responsible organizations. For instance, such people are likely to avoid firms with a history of employment discrimination and choose others that do not have such negative practices (Fordham & Robinson, 2018). Thus, the discriminative practices of P&G limit its ability to attract talented workers. The fourth benefit is that adherence to CSR enhances a firm’s ability to become innovative to the enhanced ability to attract talented workers. Improved innovativeness leads to higher bottom-line performance (Fordham & Robinson, 2018). Last, adherence to CSR principles enhances the satisfaction and commitment among the employees and other stakeholders of a firm. Improved satisfaction and commitment among the employees lead to higher loyalty and efforts in their work (Fordham & Robinson, 2018). Eventually, they increase the ability of a firm to meet its objectives and goals.
Conclusion
Overall, CSR encompasses the responsibilities of firms to adhere to economic, social and environmental sustainability principles and the established regulations and laws. Laws and ethical standards are thus among the parameters that determine the ranking of a firm in the adherence to CSR. Adherence to CSR has positive impacts on business organizations since it enhances their bottom-line performances, as illustrated by the case of P&G. The benefits of CSR include enhanced reputation, efficiency and ability to attract suitable and talented workers and improved innovativeness and satisfaction and commitment among the employees and other stakeholders.
References
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