21 Dec A perspective on corporate social responsibility
With this ongoing pandemic, responsibility is the theme in the news. This global issue underlines the rationalisation of our habits as well as our manner to consume and points out the effect of our economic activities on the planet as well on the social ecosystem.
Since more than ten years the idea of responsibility for corporations, well-known as corporate social responsibility (CSR), has become widespread in society. Thus, corporate social responsibility is a way to midrise and foster sustainability through environmental, social, and economic impacts into society. From this idea, appear other ones related to the same idea- which is considering the environmental and economic impact on societies-such as corporate citizenship, ethics, ESG (economic, social, governance) or GRI. When it comes to handle CSR, it incorporates many themes such as philosophy, economics, politic science, sociology- and so on-in addition to diverse tools for its promotion such as marketing, communications, financial analysis. But how to grasp CSR deeply and understand its elements?
For 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”. The voluntary basis is the same for the international framework, ISO 26000, regarding the areas in which a CSR strategy can be established.
At the beginning, corporate social responsibility was the responsibility of the entrepreneurs, regarding an ethical interaction into society. Indeed, Howard Bowen was the first theorist to speak about the concept and the idea in his book, Social Responsibilities of the Businessman (Bowen, 1953). In the 1970 ´s, the idea was spread in the institutions movement to fight against Capitalism and the way of consumerism. For years, many evolutions happen, and sustainable development ideas were incorporated such as the Brundtland definition of sustainability signed in 1987. Thus, the link with sustainable development is embed and well connected with the idea of sustainability into CSR goals. That is why, when it comes to speaking about CSR, we linked it with sustainable development. At the end, the role of CSR is sustainability. In our attempt to present the concept of corporate social responsibility (CSR) and its elements, we will present first these elements then showcase why it can be useful as a performance for companies and society. After that, we will discuss about CSR metrics.
I-Corporate social responsibility elements
Corporate social responsibility is a theme well discussing in the society. Ten years ago, the subject was not speaking that much. But more and more, stakeholders point out the need on corporate sociability as another way to produce and consume. 2010 was a focal point, the Iso 26000 was launched after five years of work with more than one hundred countries with a variety of organisations and people with different background. The group work gave birth to the CSR framework. In addition to this, each country can establish its own corporate social responsibility rules. Unlike the ISO 26000, they can be compulsory even if it remains-with other frameworks- the basis for any CSR strategy.
Thus, in the Iso 26000, the first pillar component is the organisational governance. It is about all the reglementation, processes and the strategy that are taking by the Board of Directors of an organisation that can be considered as the shareholders of the company or organisation. Their decisions have directly an impact on the stakeholders such as consumers, suppliers, and employees. Many actions can be sustainably deployed. The most elected is the gender equality on Boards because most of the time women are missing. The second pilar is human rights. The question conveys to the respect of basic human rights in the operating process as well in the production. For example, labour child for a company operating outside of Europe can be damageable for its reputation as well regarding to the international law or the country itself if labour child is forbidden. The third pillar is related to labour practices that is the relationship of the organisation with its internal stakeholders, the employees, regarding questions to health, maternity leave, training, or process of recruitment which can promote equal opportunities for disabled people or minorities. All in all, the human resources implement labour practices and policies. The fourth pilar is environment and referred to the way that organisation activities can badly operate in the environment. We think about the impact of many industries on biodiversity and how they can promote better actions to reduce the greenhouse gas for example. The fifth pillar is fair operating practices. Corruption and good operating practices is the key point in this section. Most of the time, countries put on the legislation about these topics to avoid any conflict-of-interest thanks to business ethics. The sixth one is consumer issues that is a significant part of the external stakeholders in CSR. And today the awareness is outstanding as consumers care much about the products of the brand they buy in regards of their social and environmental impact. A company should develop a CSR strategy regarding this awareness. The last pillar is the community involvement and development that stress a local implication of companies. In Mexico, they promote sometimes local populations such as the Mayas in some CSR strategies.
From this international standardisation organisation, some like Stephanie Hiss proposes the integration of CSR in a corporate strategy in three dimensions. This is the responsibility model. She is a Professor of Sociology in Germany and her work is focused on different subjects such as markets, organizations, and governance at Friedrich Schiller University, in Jena. First, the internal area of responsibility means that the organisations strategy themselves participate in the responsibility in their decisions with partners and relationship to the market such as against a monopoly for example. Then, she defines the middle area of responsibility that is linked to all the environmentally and socially activities of the organisations which effects can be positive or negative. It involves all the stakeholders as well as employees and that can affect a company´s reputation. Stakeholders are all the institutions or people that interact with the organisation and that can increase or decrease its profitability and visibility.
The third one is the external area of responsibility that involves all the outside operations of the company. It is relevant in the corporate giving activities through charities, sponsoring a social event or a city project or social activities where participate the company or the employees. For example, in Accenture company, workers participate in the support of social activities through the patronage of competencies for non-profit-organizations on behalf of the company. This company, as many, has also a foundation. Besides, this external area is also known as the corporate citizenship behaviour of companies.
The Iso 26000 and the different dimensions in which we can implement it, points out the significance of developing a strategy to be efficient as a company. Furthermore, any organisation can establish a strategy based on CSR. We are going to see why CSR is efficient for an organisation and the whole society.
II-Why the integration of CSR can be profitable for a company and the society?
Corporate social responsibility is mostly based on a voluntary and compulsory basis that can be useful for companies. First, regarding the Triple Bottom Line (TBL) – that is an economic reason – without CSR, it appears you cannot have all the cost of a business. In 1994, John Elkington coined this concept. In regards of this concept, companies should not consider only profits in their objectives, but three elements should be added – people, planet, profit. From this perspective, the addition of planet and people are related to corporate social responsibility and therefore you cannot do business by ignoring the social and environmental issues related to the given society. He does not deny profits, but social and environmental concerns should be integrated in them. In other words, companies cannot hold on financial aspects only.
In an article written by Kramer and Porter (2006), they put the link between CSR and a double performance. Companies should not ignore the effective environment in their daily running business. Following this corporate social responsibility perspective, both companies and society can benefit from economic activities. Therefore, there is a win-win relationship between companies and the whole society. That is the “added value” permitted by CSR.There means all the valued chain is integrated as a ripple effect to form a part of a sustainable development by adopting corporate social responsibility strategy in it. So that, for example, as consumers and employees are satisfied, a company betters its reputation as well as its performance and so on.
From these economic reasons, CSR strategies are relevant and demonstrate the impact at different scales and can give to other frameworks more consistency. As a result, CSR policies can help to achieve sustainable goals.
As it was expressed in the Brundtland report in 1987 which defines the idea of sustainable development through ´´our common future´´ paradigm that we can reach by this perspective, it seems like ´´ development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”
First, the global compact is an UN agency which focuses on the dissemination and to influence organisations, companies, governments about topics such as the areas of human rights, labour, the environment, and anti-corruption. These topics can be integrated into a CSR strategy.
Then, the 17 sustainable development goals of the United Nations launched in 2015 by the United Nations Assembly to solve global issues related to people and the planet, so that 17 goals were proposed to tackle such issues. That means around 2030 some goals must be reached. They can be divided in three groups: people; planet and people; planet.
People: Poverty in the world at 0; hunger, by food needs of their vulnerable populations by promoting global supply chain and supporting small holders’ farmers and all king of ways to avoid food insecurity; good health and well-being; quality education in tackling poverty and enhancing social mobility; gender equality with a focus on domestic violence that women are victims and early marriage and poor access to school; reduce inequalities to achieve sustainable development goals; peace, Justice, and strong institutions to promote just, peaceful and inclusive societies , partnerships for the gaols with national, regional and local partners.
Planet and people: Ensure access to water and sanitation for all; affordable and clean energy to poor the difficult access to energy for poor people as well as the development of renewable energy in the electricity sector. Decent work and economic growth to improve living standards. Industries, innovation, and infrastructure to improve economic forces to enhance employment and income. Responsible consumption and production, to enhance the social and economic impact over production therefore consumption and production.
Planet: Sustainable cities and communities, to face the challenges of urbanisation; climate action and the limitation of human activities in terms of greenhouse gases; life below water to conserve and sustainably use the oceans, seas, and marine resources; life on land to sustainably manage forests, combat desertification, halt and reverse land degradation, halt biodiversity loss.
Finally, these three groups that we have subjectively created are related to people and the planet in their research for prosperity and peace through partnership. And CSR can be a tool to companies to be internationally involved in these economic, social, and environmental issues.
III – How to evaluate CSR?
When it comes to evaluate CSR policies, there are a range of tools that permit to assess CSR strategies efficiency. They can be international as well as national. As such, there are many ways to assess CSR in the company.
First, we have the governmental agencies, and the stakeholder’s organisations. For example, stakeholders from academia, government, NGOs, and industry have established a criterion from the GSI (Global Sustainability Index). All the CSR criteria are presented, and metrics and scientific elements come along to assess the better CSR practices between companies to establish the most competitive advantage in terms of CSR as well as their performance. Then, there is the GRI (Global Reporting Initiative) which is an international reporting about companies best CSR practices that establishes framework for sustainability reporting and help companies to implement their CSR approach. And the Dow Jones Sustainability Index (DJSI) evaluates economic, environmental, and social performance assessment of companies was launched in 1999.
These metrics rank mostly enterprises, but another one such as RobecoSAM and Robeco, which is specialised in sustainable investment rank countries as well. They use the ESG metrics trough environmental, economic and governance factors to evaluate the extra financial analysis to enhance a sustainable investment (IS). And following this metrics, investors chose to invest in a company regarding the better results. In the scale of a country ESG metrics can shape investors decisions. For example, Sweden was ranked at the first place in the RobecoSAM and Robeco Country Sustainability Ranking (2019).
In addition to these international indexes, you have the national agencies, which can be different from a country to another, who evaluate the results of companies through their extra financial report. It can be required in some countries for several enterprises. For example, in France, many companies cited in the CAC 40, that means the forty bigger companies must do an annually CSR report about their involvement.
Then, labels are also a good way to assess CSR practices. Labels integrate in their criteria the ISO 26000 and other elements to assess organisations. They give to the rewarded organisations huge visibility and institutionalised them de facto as CSR ambassadors. We can cite an international CSR label that is Be responsible. Let us also take the European CSR label, the CEEP-CSR Label created in 2006.It showcases companies in their achievements and their commitment to hight values.
In general, a label concerns a range of product and it is seen as a quality seal. Besides, national labels are diverse and implement CRS perspectives but at the same time all the labels have not the same quality of assessment. In France, we can refer to the AFNOR Certification that is the CSR Commitment Label.
We cannot forget some management tools that can be an alternative to evaluate CSR practises. For example, the PDCA Cycle (Plan-Do-Check-Act) is a mixed with the Smart goals tool and it can be useful for a CSR project at different perspectives and levels and as a strategic tool as an assessment one.
CSR is quite a great tool for business sustainability, and it can be diverse depending on the industry and the company and the goals with the idea that it can enhance companies’ reputation as well as their visibility therefore their performance. Shareholders and stakeholders have both the possibility to influence the kind of strategy and to induce CSR into the running business. And most of the time stakeholders require more business ethics.
Thanks to the legislation and the standardisation on the topic, organisations become more and more socially responsible. Thus, CSR is a diverse tool from which companies can make a difference. This fact is truly relevant in the attempt of dissemination on the whole economic activities, as it is encouraging by the global compact and the United Nations Assembly through the 17 sustainability goals that should be achieved by 2030. Companies and organisations are encouraged to adopt these objectives in their strategies. Furthermore, we assist to the first declination of the ISO 26000. France has started with partners to develop the ISO 26030 as a tool for cooperation. The idea is to create an international framework for the agricultural sector based on the ISO 26000. There is also the idea to be in correlation with the 17 united nations goals.
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