Over the last few years there has been increasing interest from the public and stakeholders about the effects business has on the environment and how businesses actually relate to society. This increased awareness is due to societies increased demand for information, which is made accessible by tools such as the Internet, and through campaigns by pioneering companies such The Body Shop. With the knowledge people glean from the internet, such as how other countries are dealing with the situation better, the publics expectation of British firms also grow.
This has lead to pressures from the public to be socially responsible, which can be expressed through consumer boycotts, ethical consumers and the costs of being irresponsible. (Boddy, 2002) Consumer boycotts reflect the active disapproval of society, as well as generating media interest that spreads the news of corporate misdemeanour. An example of this is the 1996 French boycott concerning nuclear testing issues. Ethical consumers tend to act on initiative. They alter their consumer decision making to take into account information regarding ethical issues. Therefore, if a company has been irresponsible and earned a bad reputation in this area, the business could suffer as a result.
Some consumers are also of the opinion that business has an ethical obligation. They should be socially responsible because it is the right thing to do. In addition they also have the power and resources to instigate change. This can be by doing things such as supporting public and charitable projects that need assistance or even simply trying to address social problems before they become too serious and costly to rectify.
Business perspective There are also benefits that businesses will actually gain from too. Businesses can create a favourable public image by pursuing social goals. This relates back to the fact that the public are more aware of the problems; therefore if a company is seen to be doing something to resolve these issues, they are smiled upon. A good example of a company that has a reputation for and good public image from chasing social goals is The Body Shop. The Body Shop’s mission is ‘To dedicate our business to the pursuit of social and environmental change’. (Boddy, 2002) Although the company did not set out to create a good public image, through its actions the business has benefited hugely, with no need for the usual advertising campaigns. BT also attributes a third of its image, reputation and trust to its CSR activities. (Simms, 2002)
Another benefit associated with advocating corporate social responsibility is that, according to Kobbins & Coulter (2002) socially responsible companies tend to have more secured long-run profits and in turn, business stock prices are improved in the long run. This could be a direct effect of a company being socially responsible or it could just be that the companies that do take on the added responsibility are already doing prosperous business, without further research it is not possible to say exactly. Although, if a CSR policy promotes a good image for a company, this will generally increase interest in the business through increased sale, in store and of shares, which in turn could be reflected by the company increasing its long-run profits.
From looking at these points, it is possible to say that corporate social responsibility is a form of enlightened self-interest, but only if putting these policies into action actually created a cost for the business. As Boddy (2002) says that “enlightened self interest is the practice of acting in a way that is costly or inconvenient at present, but which is believed to be in one’s best interest in the long term.”
In conclusion, it is possible to see how CSR has become integrated into the way businesses operate. It has come as a result of businesses responding to trends concerning changing consumer expectations, opinions and sometimes pressure. In most cases, the best solution to these changes has been to introduce a CSR policy into their way of working. This also reflects businesses awareness of their different stakeholder needs and their attempts to satisfy them.
As with many new business opportunities, surely the pros and cons of integrating such a system will have been measured. For example, they are not going to set out on a new project without looking at costs they will occur, and benefits they will gain, both in the short and long term situations. So if it does in fact cost them a small amount to initiate a CSR policy, but the long-term gains are substantial – as enlightened self-interest suggest – then the organisation would be fool not to take it on. But I do not believe that this is the only reason that companies are socially responsible. Generally one of the greatest sources of feedback on new systems such as CSR is the workforce.
In fact according to Cairncross (1995), in many companies the pressure to adopt sound environmental policies came initially from the workforce. Another factor is that managers often want to have an environmental record to be proud of, and one way to go about getting one is to instigate a good CSR policy with long-term benefits for consumers, public and the business. But more often than not, I believe that businesses instigate social policies like these because they realise that they have the power to make a difference and actually want to do something. When it is partially them that are responsible for the initial need for action, it is only right that they do at least try to compensate.
Adams, R, Carruthers, J & Hamil, S. (1991) Changing Corporate Values London: Kogan Page Ltd
Boddy, D. (2002) Management: An Introduction Europe: Prentice Hall
Cairncross, F. (1995) Green, Inc. London: Earthscan Publications Limited
Cochran, P, Trevino, L & Weaver, G. (1999) Integrated and Decoupled Corporate Social Performance: Management Commitments, External Pressures, and Corporate Ethics Practices. Academy of Management Journal; 42; p539
Davis, J. (1994) Greening Business Oxford: Blackwell Publishers