Lets embrace corporate social responsibility

By Dr. James Madzimure

The European Commission’s defined corporate social responsibility (CSR), as: “A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.”

Corporate social responsibility is part of the Europe 2020 strategy for smart, sustainable and inclusive growth.

It is also called corporate conscience, citizenship, social performance, or sustainable responsible business) is a form of corporate self-regulation integrated into a business model (Wikimedia Foundation, 2011).

We believe it is high time companies in developing countries like Africa and Asia grasp the practice and give it priority. Corporate Social Responsibility policy is closely related to ethics and corporate integrity.

It should be every organization aim to monitor and ensure its active compliance with the spirit of the law, ethical standards, and international norms.

Many authors agree that CSR embraces responsibility for the company’s actions and encourages a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere (Kasambira and Nyamuda, 2001; Wikimedia Foundation, 2011).

Proactive organizations encourage community growth and development, and voluntarily eliminating practices that harm the public sphere, regardless of legality.

If your organization is CSR conscious, you deliberately include the public interest into corporate decision-making, and ensure focus on people, planet and profit. Wisdom tells us that it pays better if you plough back some profits to those who give you business.

Some organizations are involved in CSR as a long term investment whereby the customers find it easier to identify with and prefer them over other organizations. Some investors are now engaged in socially responsible investing forcing organizations to behave well.

The world is becoming a global village and there is need to develop survival skills to ensure continued organizational growth.

CSR is more relevant than ever in the context economic crisis such as the global recession. It can help to build (and rebuild) trust in business, which is vital for the health of Africa’s social market economy.

It can also point the way to new forms of value of creation based on addressing societal challenges, which may represent a way out of the crisis. This has the potential to strategically position the organization for growth.

In this article I try to look at the approaches to CSR, advantages of engaging in it and criticisms of this concept.

Corporate social responsibility may be based within the human resources, business development or public relations departments of an organization or may be given a separate unit reporting to the CEO or in some cases directly to the board (Wikimedia Foundation, 2011).

CSR but be enforced so that it becomes part of organizational culture. CSR gives us the idea about the vision of the organization and its values. Once the CSR department is established, it should reach out to the communities using various approaches as discussed below.

These days, good leaders are involved in what is called development business ethics. As a leader of any organization, you must be actively involved in community-based development. In this approach, corporations work with local communities to better themselves.

The Shell Foundation, for instance, was involved in the Flower Valley, South Africa by setting up an Early Learning Centre to help educate the community’s children as well as develop new skills for the adults (Wikimedia Foundation, 2011).

Econet Wireless, a Zimbabwean multi-national company offers education scholarships for students up to university level, supports football in many African countries and participates in HIV/AIDS education programmes.

Even churches are actively involved in charity activities as a way of winning over souls and boost their numerical numbers. Preachers have come to realize the importance of fulfilling Maslow’s low needs before you can be able to minister to a person’s soul about Jesus Christ.

People like Benny Hinn have a very strong charity arm in their ministry and many churches need to follow this example. The Lord Jesus Christ gave us an example by feeding the five thousand men before ministering effectively to them.

A more common approach of CSR is whereby organizations are involved in monetary donations and aid given to local organizations and impoverished communities in developing countries. Community-based development generally leads to more sustainable development.

While the approach is good, there is also need to help build on the skills of the local people.

Another approach to CSR is to incorporate the CSR strategy directly into the business strategy of an organization. For example, procurement of Fair Trade tea and coffee has been adopted by various businesses including KPMG (Wikimedia Foundation, 2011).

Some organizations prefer garnering increasing corporate responsibility interest. This is also referred to as creating shared value. The shared value model is based on the idea that corporate success and social welfare are interdependent.

An organization needs a healthy, educated workforce, sustainable resources and adept government to compete effectively.

For society to thrive, profitable and competitive businesses must be developed and supported to create income, wealth, tax revenues, and opportunities for philanthropy (Wikimedia Foundation, 2011).

Many organizations use the strategy of benchmarking to compete within their respective industries in CSR policy, implementation, and effectiveness.

This approach involves reviewing competitor CSR initiatives, as well as measuring and evaluating the impact that those policies have on society and the environment, and how customers perceive competitor CSR strategy.

An organization will then develop a strategy for competition with CSR initiatives. The practice of CSR is associated with many benefits as follows:

• There are many benefits to CSR and organizations should always adopt measures that go beyond financial returns. Orlitzky et al. (2003) found a correlation between social/environmental performance and financial performance.

• Corporate social responsibility can be instrumental in human resources management, risk management, brand differentiation and obtaining an operation license. A CSR programme can assist in recruitment and retention in a competitive labour market (Bhattacharya et al., 2008). CSR can also help improve the perception of a company among its staff, by involving them in payroll giving, fundraising activities or community volunteering (Wikimedia Foundation, 2011).

• CSR can be used as a way of risk management as it is a central part of many corporate strategies. Building a genuine culture of ‘doing the right thing’ within a corporation can offset these risks (Kytle and Singh, 2005) associated with corruption scandals and major environmental accidents. Unethical behaviour in organizations draws unwanted attention from regulators, courts, governments and media.

• Wikimedia Foundation (2011) reported that organizations can use CSR as a form of brand differentiation especially in a very competitive market. Corporate social responsibility can work as a unique selling proposition that can separate an organization from the competition in the minds of consumers. According to Paluszek (2005), CSR can play a role in building customer loyalty based on distinctive ethical values. Business service organizations can benefit too from building a reputation for integrity and best practice.

• Organizations can be involved in CSR to avoid government interference in their business through taxation or regulations. This practice is common with multi-national companies when they are doing business in developing countries. By being proactive in community projects, organizations can persuade governments and the wider public that they are taking issues such as health and safety, diversity, or the environment seriously as good corporate citizens with respect to labour standards and impacts on the environment.

Despite all the above benefits of CSR, it has come under heavy criticism for various reasons.

• Critics of CSR argue that it distracts from economic role of business and reduces shareholders’ value since business is all about profit maximization. Milton Friedman and others have argued that only people can have social responsibilities, corporations are only responsible to their shareholders and not to society as a whole. These authors however, agree that corporations should adhere to the regulatory framework in the country they operate.

• Some people perceive CSR as incongruent with the very nature and purpose of business, and indeed a hindrance to free trade.

• Radicals view CSR as a form of blind folding the public for labour exploitation it is subdued to.

• Some argue that some organizations use CSR to distract the public from ethical questions posed by their core operations such as pollution and selling of harmful products like tobacco and food that contribute to heart diseases.

In conclusion, many religious and cultural traditions hold that the economy exists to serve human beings, so all economic entities have an obligation to society. Corporate social responsibility promotes ethical practice in an organization and creates a suitable public perception which can promote the growth.

I believe in creating responsible leaders who care for the needs of their society.

For more information, read the two books co-authored by Dr Madzimure namely: “Destined for greatness-Raising leaders to transform the corporate world” and “Unlocking the entrepreneurial Spirit-God’s secret to financial prosperity”