Corporate Social Responsibility, also known as CSR, pertains to the responsibilities of companies towards society with which they function and operate. Corporate Social Responsibility ensures that the business organizations align its corporate values and behaviors with that of stakeholders’ needs and expectations.
Corporate Social Responsibility approach incorporates social, economic, and environmental aspects of the business as part of increasing profit or revenues and minimizing the problems or shortcomings. It is not only geared towards the customers and investors, but also towards its employees, suppliers, and the society as a whole.
As part of business ethics, organizations go beyond seeking profits and increasing revenue. A company embeds corporate values, employee relations, and a general respect for socially acceptable standards.
Corporate social responsibility also entails legal requirements. So the obligations that working individuals and the company face everyday are grounded on rules and regulations. Upon breaking these set rules, corresponding sanctions are to be implemented. However, this is not a major concern of Corporate Social Responsibility. Although it is related to cause-related marketing and strategic philosophy, the rules-regulations and sanctions concepts are not its social responsibility.
Issues Governing CSR
There are issues that are involved in corporate social responsibility. All of these issues have something to do with the perception of an organization. Some of these issues are corporate governance, increased customer interest, fair trade, competitive labor markets, diversity, and supplier relations.
Managers have to display transparency in managing a company for the shareholders. The management must also show confidence in its relation with other stakeholders and the society. Possible issues that may be related to corporate governance are accuracy in making financial statements, management compensation, and lapses in management. These are specifically sensitive so it is important that companies must iron these issues out.
Another issue could be the increased customer interest where ethical practices of companies greatly influence the buying decisions of the consumers. These consumers are the ones to give the companies either customer satisfaction or dissatisfaction based on how it performs.
Fair trade as a CSR issue exists because companies have felt that market prices have barely increased over time but production costs have been soaring high.
Companies must have a competitive advantage not just on its products and marketing aspects but also in the working conditions of employees since many workers seek for companies with good ethical practices.
With the diversity of personalities in a workplace, a company must keep an equal and fair treatment between men and women, and people of various cultures. This also applies to the diversity within the society.
One more example of issues governing CSR is the relations with suppliers. Companies make it a point that their suppliers conduct business transactions in a socially responsible manner.
Arguments behind CSR
The concept of corporate social responsibility is not generally accepted by some companies and is subject to criticism and debate. So, there are two major arguments that will be discussed in this article: a moral argument and an economic argument for CSR.
Some critics dispute that CSR distracts the principal role of businesses in the economic aspect. On other points, practicing CSR in the business can offer economic benefits. The basis of economic argument is more on the economic self-interest of businesses. CSR helps a company in matching its operations with the values and demands of the stakeholders. It positively affects the business operations in its goal of maximizing profits and strengthening its brand.
The moral argument that supports CSR practice states that companies are interdependent with the societies with which they operate and cannot exist in isolation. The society in general is where the company depends on when hiring skilled employees, infrastructure needs, and most importantly, the business consumers.