Essay On Corporate Social Responsibility
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Corporate Social Responsibility
The organization has different obligations to society. Corporate social responsibility is the interaction between business and the social environment in which it exists. Corporate social responsibility according to Sims (2003) is an organization’s obligation to engage in activities that protect and contribute to the welfare of society. CSR refers to an organization’s moral obligation toward others who are affected by the organization’s actions (p. 44). Corporate social responsiveness is the ability of an organization to respond to social demands. Corporate social responsiveness focuses on the individual and organizational processes for determining, implementing, and evaluating the firm’s capacity to anticipate, respond to, and manage the issues and problems arising from the diverse claims and expectations of internal and external stakeholders (Epstein 1987).
Proaction is considered as the highest level of responsiveness to social issues where companies actively seek to improve and contribute to society. Companies with proactive philosophy will try to carry out discretionary responsibilities (Deresky 2003 cited in Harila and Petrini 2003). Proaction is an approach to corporate social responsibility that includes behaviors that improve society. Organizations that assume a proaction strategy subscribe to the notion of social responsiveness. Proaction according to Carroll (1979); Joyner and Payne (2002) involves actively addressing specific concerns of stakeholders and anticipating social problems before they arise or are officially recognized, and developing strategies to deal with these issues.
Accommodation is an approach to corporate social responsibility that adapts to public policy in doing more than the minimum required. Accommodation according to Joyner and Payne (2002) is doing the right thing because it is the right thing to do.
A company with a defensive philosophy will only fulfill its legal responsibilities in relation to the social issues that it faces (Deresky 2003 cited in Harila and Petrini 2003). Organizations that pursue a defense strategy respond to social challenges only when it is necessary to defend their current position. Defense according to Carroll (1979); Joyner and Payne (2002) involves doing only the minimum legally required to address stakeholder issue in order to avoid being forced to do so.
Reaction is the philosophy with the lowest responsiveness, indicating that companies simply react to eventual crises that might occur (Deresky 2003 cited in Harila and Petrini 2003). Reaction according to Carroll (1979); Joyner and Payne (2002) involves either fighting against addressing stakeholder issues or completely withdrawing and ignoring the stakeholder.
There are firms that take an obstructionist approach to social responsibility. Obstructionist organizations choose to push socially responsible envelope as far as they can. They consciously engage in questionable and at times illegal acts, in the hope that they will not get caught, the fine imposed will be less than the benefits incurred. These firms often work to prevent knowledge of their behavior becoming visible (Sims 2003).
Corporate Social Responsibility according to Carroll (1979; 1991) encompasses the economic, legal, ethical and discretionary (philanthropic) expectations that society has of organizations at a given point in time. The figure below presents the types of social responsibility as defined by Carroll (1979; 1991):
An organization has to make a profit in order to survive. The organization is obliged to its shareholders to maximize earnings, and operate efficiently. This forms the foundation on which all else is built (Van Dongen 2006).
An organization is obliged to comply with the rules and regulations that the government imposes (Van Dongen 2006).
Ethical responsibilities are considered important. They consist of the expectations, demands, and needs stakeholders place on an organization. Ethical responsibility is often vague and under public debate regarding its legitimacy. In essence it is the obligation to do what is right, just and fair (Carroll 1991 cited in Van Dongen 2006).
Discretionary (Philanthropic) Responsibility
Philanthropic act is often labeled as being socially responsible, however, compared to ethical responsibility, it is not expected from the organization to commit to a philanthropic act, in the sense that they will be found unethical when they do not reach the desired level (Vamn Dongen 2006).
Corporate Social Responsibility: TESCO
When it comes to CSR approach, TESCO adapts, proaction. The company has taken a leadership role in dealing with different issues concerning the environment, community, suppliers and ethical trading, customers, and its people. By satisfactorily dealing with these issues the company is fulfilling its ethical responsibilities and as well as its discretionary responsibilities.
As a global business, the company realizes that it has an important role to play in helping to minimize climate change. The company takes a proactive approach in dealing with climate change by leading by example; working with supply chains and partners to reduce emissions more broadly; and leading a revolution in green consumption.
Leading by example – the company aims to set an example to customers and suppliers by tackling its own carbon footprint. In 2007, the company set ambitious targets to reduce emissions in its buildings and distribution networks. The company aims to:
· Halve emissions from existing buildings by 202, against a baseline of 2006
· Halve distribution emissions of each case of goods delivered by 2012, against a baseline of 2006; and
· Halve emissions from stores by 2020, compared with an equivalent store built in 2006.
In order to accomplish these goals, the company has invested financially in ensuring that there are available carbon-reduction technologies in its stores, distribution centers and supply chains worldwide. The company has also started building environmental stores in 2006. These stores test new technologies and designs to save energy and reduce carbon dioxide emission. Each store has achieved significantly lower environmental impacts than the previous one and many of their innovations are now incorporated in the company’s standard stores.
2. Working with suppliers and partners – the company’s ethical responsibilities are shared with its suppliers and partners. TESCO supports action on climate change beyond its direct business activities through its relationships with governments, businesses, academia, and other influential organizations.
In every country which TESCO operates, it works with local communities to provide jobs and services and support local causes. TESCO stores are at the heart of thousands of communities around the world. The company always aims to make a positive contribution to these communities, both in the way it does business and by supporting local causes. The company responds to customers’ expectations by offering quality products at affordable prices. The company provides good jobs and careers for 470,000 people, growing the local economies where they live. TESCO invests in a many disadvantaged communities, opening stores which help to regenerate areas, and offering opportunities to the people who live there. The company also fund education programmes around the world, helping children learn about health and the environment, and donate equipment to schools. The company does not only fulfill its ethical responsibilities it also gives more by helping communities, providing jobs and supporting local community development programs.
Suppliers and Ethical Trading
When it comes to codes of practice, TESCO follows voluntary and statutory codes of practice including the UK Supplier Code of Practice introduced by the Office of Fair Trading in 2001. This code was introduced to regulate dealings between supermarkets and their grocery suppliers and currently applies to the largest four supermarkets in the UK. It covers issues such as dispute resolution, changes to agreed prices, and promotions and training. The company practices ethical trading. TESCO’s ethical trading policy and programme applies to every country from which it sources. TESCO’s approach to ethical trading has five stages: setting and communicating standards; monitoring supplier performance; addressing problems where they arise; building capacity to prevent problems; and working with others to tackle the more complex and systemic problems TESCO cannot address alone.
Customer Choice and Health
TESCO was the first retailer in UK to introduce a front-of-pack label showing guideline daily amounts (GDAs). GDA signposts cover calories, sugar, fat, saturates and salt. They tell customers how much they will eat in one serving of the product, shown as grams and the percentage of the guideline daily amount for a typical adult. The figures are based on work carried out by the IGD, the Institute of Grocery Distribution.
Corporate Social Responsibility: Co-Operative Group
The Co-operative group is popular for its commitment to its corporate social responsibility. The Group is a firm supporter of Fairtrade.
Given the failure of the international trading system to deliver decent livelihood to millions of producers in the developing world, the fair-trade movement believes that an alternative model that puts sustainable development and social justice at the heart of international trade is needed. The aim of fair trade is to address the underlying causes of poverty and marginalization in the developing countries where the products are being produced. The objective of fair trade is to improve lives and develop communities. Fair trade is geared towards the betterment of the producers who are marginalized by the conventional trading system by creating more mutually beneficial relationships between partners. Fair trade is a popular movement in the United Kingdom which is supported by a wide range of developing agencies, campaigning organizations, faith groups, social enterprises and consumer organizations through:
· Trading partnerships that offer direct benefits to producers and enable consumers to buy fairly traded products
· Capacity building of producer organizations to improve the impact of fair-trade among producers
· Advocacy and education work to increase awareness of fair trade among consumers, and to press for government action to reform international trade systems
Fairtrade labeling operates through a network of independent, no-profit national organizations in 20 countries around the world, who are all members of Fairtrade Labeling International (FLO). The Fairtrade Foundation is the member for Britain where the Fairtrade Label is known as the FAIRTRADE Mark.
Standards are crucial to the work of Fairtrade Labeling. They provide a set of specific criteria that can be independently audited to ensure compliance with minimum standards and to monitor improvements. They also enable the system to operate consistently in many different countries and markets and with different types of producer organizations. These processes differentiate Fairtrade from the Codes of Conduct that many companies now work to as part of their purchasing policies, but which are not subject to external certification. The Fairtrade system is also unique in not simply verifying compliance with minimum standards but in establishing a process of continual improvement, linked to the benefits that producers receive from Fairtrade market sales in higher prices and the Fairtrade investment premium. The audit and monitoring of Fairtrade standards aims to ensure that all the relevant ingredients of products carrying the FAIRTRADE Mark have been purchased from organizations that meet the producer standards, and that those ingredients have been traded in accordance with the trading standards. Thus, for example, a pack of Fairtrade coffee must contain 100% certified coffee beans that have been purchased from certified cooperatives for at least 1241 US cents per lb. Where a product is a mix of ingredients covered by Fairtrade standards and those outside the system (these are referred to as “composite” products) the standards ensure firstly that all ingredients covered by the standards are properly certified, and then that the Fairtrade content is at least 20% of the total ingredients by weight. Therefore a snack bar might qualify for the FAIRTRADE Mark on the basis of its honey and sugar content, even though it contains ingredients that are produced domestically. Producer standards cover developmental, employment and environmental factors; and for each of these there are minimum requirements that the producer organization must meet in order to be certified, and process requirements that establish a framework for continuous improvement as the organization starts to receive additional income from sales to the Fairtrade market. Trading standards define the minimum price that must be paid for products to qualify for Fairtrade certification, and also provide for transparent trading and payment terms that ensure the benefits to the producer are maximized. In order to achieve the developmental objectives of Fairtrade, the standards apply to producer organizations rather than to individual farms, and require that such organizations are:
· Democratically run and accountable to their members
· Capable of ensuring compliance with the minimum social and environmental criteria and to manage the process of ongoing improvement.
· Able to manage the Fairtrade Investment Premium for the benefit of their members.