Corporate Social Responsibility – Series 1
By Ng Kean Kok, Dr Falahat Nejadmahani,
Tuam Kwok Choon, Farah Waheeda
Introduction
The following write-up represents the first of a series of articles that
hopes to provide readers with facts and information regarding Corporate
Social Responsibility (CSR).
The items to be covered in this article and future articles are aplenty. As a
preliminary, this article shall attempt to explain the following:
•
•
•
Definitions of CSR
Importance of CSR
Potential business benefits for firms that practice CSR
Definitions
The definitions of CSR are aplenty, ranging from simplistic to the more
complex. At its simplest, it has been defined as ‘… about how companies
manage the business processes to produce an overall positive impact on
society’ (Mallen Barker, 2004).
It is about treating all stakeholders responsibly or ethically. Michael
Hopkins (2011) explained:
‘Corporate Social Responsibility is concerned with treating the
stakeholders of a company or institution ethically or in a responsibly
manner. ‘Ethically or responsibly’ means treating key stakeholders in a
manner deemed acceptable according to international norms.
Social includes economic and environmental responsibility. Stakeholders
exist both within a firm and outside. The wider aim of social responsibility
is to create higher and higher standards of living, while preserving the
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profitability of the corporation or the integrity of the institution, for peoples
both within and outside these entities.
CSR is [thus] a process to achieve sustainable development in societies.
The United Nations Industrial Development Organizations defines CSR
as follows:
Corporate Social Responsibility is a management concept whereby
companies integrate social and environmental concerns in their business
operations and interactions with their stakeholders. CSR is generally
understood as being the way through which a company achieves a
balance of economic, environmental and social imperatives (“TripleBottom-Line- Approach”), while at the same time addressing the
expectations of shareholders and stakeholders. In this sense it is
important to draw a distinction between CSR, which can be a strategic
business management concept, and charity, sponsorships or
philanthropy. Even though the latter can also make a valuable
contribution to poverty reduction, will directly enhance the reputation of a
company and strengthen its brand, the concept of CSR clearly goes
beyond that.
However the definitions are framed, readers will note a somewhat
common theme that permeates all the definitions. Firms are expected to
do more than merely make profits for the owners or shareholders of the
firms. There is the increasing expectation that firms undertake additional
initiatives to assess and take responsibility for the firms’ effects on the
environment and the consequent impact on social welfare and well-being.
Firms would therefore be judged as to whether the firms do and also the
extent to which the firms indeed go beyond what is required by the
regulators and environmentalists.
This is why many now see CSR as being a process that aims to embrace
(and put as its core activity and concern) responsibility for the firm’s
actions and yield positive impact through its activities on the customers /
consumers, suppliers, employees, communities (far and near),
government, environment and many other stakeholders.
Marlen Barker (2004) illustrates the influence and effects on the many
stakeholders through a diagram, as shown in Illustration 1.
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Illustration 1
Definition and effects of CSR
Source: http://www.mallenbaker.net/csr/definition.php
Importance of CSR
Key CSR issues that firms are expected to consider and tackle nowadays
are: environmental management, eco-efficiency, responsible sourcing,
stakeholder engagement, labour standards and working conditions,
employee and community relations, social equity, gender balance, human
rights, good governance, and anti-corruption measures.
Given the key CSR issues as noted above, when firms are seen to
operate in an economically, socially and environmentally responsible
manner (and especially when they do so transparently), it helps such
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firms to succeed. This becomes more so through the encouragement of
shared values within and outside the firm, and from the society’s point of
view, the firm provides itself with an increasing social license to continue
to operate.
For instance, proper management and mitigation of social and
environmental risk factors by businesses are increasingly important for
firms’ successes, as the costs to firms of losing that social license, both in
terms of share price and the bottom line may be significant.
Given the earlier described definitions, readers would note that CSR
requires firms to engage with its internal and external stakeholders so
that the firms are able to anticipate better and take advantage of fastchanging expectations in society as well as the constantly changing and
evolving operating conditions.
CSR can therefore also act as a driver for the development of new
markets and create real opportunities for business growth.
By addressing their social responsibility, firms can build long-term
employee, consumer and citizen trust as a basis for sustainable
business models. This in turn helps to create a conducive environment in
which firms can innovate and grow.
Business benefits
Carefully crafted and implemented CSR policies by firms can result
in significant benefits accruing to the firms concerned. The
following lists some of the benefits:
1. Attract, retain and maintain a happy and motivated workforce, and
become an Employer of Choice
2. Be able to differentiate a business from its competitors
3. Develop and enhance relationships with customers, suppliers and
networks
4. Generate innovation and learning within a business, and consequently
enhance the influence of the business
5. Generate positive publicity and media opportunities due to media
interest in ethical business activities
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6.
7.
8.
9.
Increase customer retention
Improve the reputation and standing of a business
Provide access to investment and funding opportunities
Save money and resources on energy and operating costs, whilst
concurrently manage risk
10. Win new business
The next article shall discuss this area in greater detail.
About CSDCSR
The Centre for Sustainable Development and Corporate Social
Responsibility in Business (CSDCSR) is based in the Faculty of
Accountancy and Management, Universiti Tunku Abdul Rahman.
For businesses seeking to excel in CSR, UTAR’s CSDCSR is able to
provide your business and / or your firm with consultancies in the
following areas:
a)
b)
c)
d)
e)
Sustainable Business
Developing CSR policies
CSR implementation
CSR training
CSR workshops / seminars
Do visit our website: http://www.utar-csdcsr.info/ for more information
References:
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Mallen Baker (2004), Corporate social responsibility – what does it
mean?
http://www.mallenbaker.net/csr/definition.php
Michael Hopkins (2011), Definition of Corporate Social Responsibility
http://mhcinternational.com/articles/definition-of-csr
United Nations Industrial Development Organizations, What is CSR?
http://www.unido.org/en/what-we-do/trade/csr/what-is-csr.html
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