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Corporate Social
Responsibility




Corporate Social
Responsibility initially came
to light in the 1960s with
social activists advocating the
notion of corporate
responsibility, against
practices carried out by
organizations in the pursuit of
financial gain. However it was
in the 1970s that the idea
became indelibly clear with
the incorporation of the
Environmental Protection
Agency (EPA), the Equal
Employment Opportunity
Commission (EEOC),
Occupational Safety and
Health Administration (OSHA)
and the Consumer Product
Safety Commission (CPSC)1.
The establishment of these
government bodies made
apparent the significance of
corporations obligations to an
ever-broadening group of
stakeholders social.

1
Andy Crane, Dirk Matten (2007)
Corporate Social Responsibility -, SAGE
Publications.
Over the last two decades
with the global population
increase and the pressure on
limited natural resources
consumers have become
more and more aware of
environmental and social
implications of their decisions.
Today, an increasing number
of companies are realizing
that in order to stay
productive, competitive, and
relevant in a rapidly changing
business world, they have to
become socially responsible.

Definition
Corporate Social
Responsibility is defined by
the World Business Council
for Sustainable Development
as the continuing
commitment to business to
behave ethically and
contribute to economic
development while improving
the quality of life of the
workforce and their families as
well as the local community
and society at large
(WBCSD, 1999).
However different societies
and cultures have different
interpretations of CSR. In
America and Canada CSR is
more about the philanthropy,
where companies make
charitable donations to society
or its representatives. These
include making donations in
areas such as the arts,
education, housing, health,
social welfare, and the
environment. Whereas in
Ghana it is about respecting
cultural differences and
finding business opportunities
which contribute building skills
of employees, the community
and the government.
Europeans on the other hand
focus on incorporating
business processes which are
more socially responsible so
that CSR is part of the
business strategy of the
organisation while investing in
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communities for selected
good business cases.
It is argued that this approach
is more sustainable as social
responsibility becomes an
integral part of the business
and contributes to wealth
creation whereas with, the
philanthropy approach when
times are hard companies can
simply cut the size of the
donation.

Responsibilities
Corporate Social
Responsibility has economic,
legal, ethical, and
philanthropic dimensions.
The economic responsibility
refers to the principle
responsibility an organisation
has towards its shareholders
which is to be profitable. All
other business responsibilities
depend upon the economic
responsibility of the firm for
the simple fact that survival of
a company depends on its
ability to be profitable.
Legal responsibilities are the
laws and regulations an
organisation has to comply in
carrying out day to day
business activities. Legal
responsibilities can range
from securities regulations to
labour law, environmental law
and even criminal law.
Ethical responsibilities of an
organisation are following
practices that are morally
right, fair and just. However
organisations do not have an
obligation to follow such
practices. Ethical
responsibilities could include
being environmentally friendly,
paying fair wages, refusing to
do business with oppressive
countries, supporting a
community's economic
growth, and engaging in fair
trade practices.
Philanthropic responsibilities
encompass corporate actions
towards society that promote
human welfare and goodwill.
Philanthropy goes beyond
what is simply required and
involve making an effort to
benefit society.

Importance of CSR
The level and nature of the
CSR strategy adopted by an
organisation depend on the
nature of the business and
cultural aspects. However
CSR refers to a firms
obligation to maximise
positive impact upon
stakeholders while minimising
negative effects. Therefore it
is expected that companies
not only focus on increasing
shareholders wealth, but that
companies will also focus on
adding value to the primary
stakeholders such as
shareholders, customers and
suppliers, employees,
creditors and public
stakeholder groups such as
residents of the community,
government and the natural
environment.
It is believed that building
better relationships with
stakeholder groups will help
improve the credibility,
reliability, transparency, and
trust and thereby the
reputation and overall public
perception of the organisation.
Investing in stakeholders can
lead to loyalty from
customers, suppliers and
employees. Creating a culture
that follows distinctive ethical
practice can lead to building
customer loyalty and creating
a distinctive competitive
advantage. Major brands such
as The Body Shop UK enjoy
unique a competitive
advantage due to its ethical
practices. Organisations can
benefit from building a
reputation for integrity and
best practice as it will
differentiate the business from
its competition.
CSR can improve the
perception of the company
among its employees. This
will help attract new
employees, retain them and
build loyalty. Improved
employee loyalty would lead
to lower staff turnover,
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motivation and improved
performance.
CSR policies will help improve
credibility, trust and
consistency of the
organization in relation to
suppliers. Corporations
excelling in supply relations
can benefit from lower cost,
better quality supplies and
lasing mutually beneficial
partnerships.
Creating a culture of following
ethical practices and doing the
right thing can help avoid
risks. By carrying out in depth
analysis on company
stakeholders the company is
more likely to become aware
of changes in technology,
society, regulations and
market expectation and avoid
risks.
All these aspects will
contribute to the overall
performance of the
organisation and wealth
creation.

Criticisms of CSR
One of the main criticisms of
CSR is that the main purpose
of an organization is to
maximize its returns to
shareholders and not to
society as a whole and that
such practices is against the
purpose of creating a
business.
It is also argued that some
corporations such as British
American Tobacco, and British
Petroleum undertake CSR
programs for commercial
benefit (by highly publishing
their initiatives) and to
overcome harm caused by
negative aspects of their
business.
Some detractors believe that
the guidelines of the CSR
have expanded beyond the
initial scope and have lead to
corporations losing focus on
core activities.

Social Accounting and CSR
Social accounting is a more
recent development relating to
CSR. The concept was
developed to communicate
the social and environmental
effects of organizations'
activities. Social accounting is
defined by D. Crowther as "an
approach to reporting a firms
activities which stresses the
need for the identification of
socially relevant behaviour,
the determination of those to
whom the company is
accountable for its social
performance and the
development of appropriate
measures and reporting
techniques
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.


2
Shamir, Ronen (2011) Socially
Responsible Private Regulation:
World Culture or World- Capitalism
Despite the criticism many
leading companies now
undertake CSR due to the
strategic value it creates and
to stay competitive in the
market.