Archive for the ‘ethics and CSR’ Tag

CSR – a fad or philanthropy?

     

    Corporate social responsibility or sustainable responsible business or corporate citizenship: 

    Virtue is its own reward and for business enterprises, it can profitable too. Many companies incline towards a social cause in order to win public trust and portray a favourable image in the media. There has been an increasing demand for CSR and are being increasingly held responsible for their actions which have a direct bearing on the public, stakeholders and the environment. Therefore, it has become important for companies to win long-term public trust through ethical business practices. Also, with the coming of social media, it has empowered the customer as an equal participant and given more ground for media scrutiny.  

     But there are many factors that question the legitimacy of companies who take up social issues. Is it because they feel its their moral and social duty or does it all boil down to profits? Does CSR really takes the genuine concerns of the society/customers into consideration or is it all strategic philanthropy?

    Paul Davis Jones and Cary Raymond describe CSR  as a “strategic philanthropy” where contributions of dollars,  volunteers, products and expertise are invested to a cause aligned with the strategic goals of a business .

    On the other hand, William J. McEwen in the article”Does Corporate Social Responsibility Matter?” highlights the importance of CSR and how it can help in being emotionally bonded with the customers. “Today’s financial markets bears compelling testimony to the fact that emotions truly do matter. Companies don’t need to be better at everything. They need to be better at the things customers feel are important. Research shows that the companies that generate “fully engaged,” emotionally connected customers sell more, make more money, and are better able to withstand the stress of economic downturns.” (source: Gallup Management Journal Online; 1/28/2010, p1-1, 1p;)

    Benefits of doing CSR:

  1. Changes the perception of audience (media, stakeholders, market and customers) about the company as being socially, morally and ethically upright!
  2. Gives the company a benefit of doubt in times of crisis.
  3. Being socially engaged rubs well on the brand image and customer loyalty
  4. CSR can mobilise various the business strategies and increase profits. 
  5. CSR represents a tie-breaker, a “sweetener” that can help enhance a customer’s feelings of connectedness with a company.
  6. Retains employees and attracts best talent.

The other side: 

Various arguments have tried to define the true purpose behind the practice of CSR

1. Some critics argue that CSR distracts from the fundamental economic role of businesses.

2. Others believe that is nothing more than superficial window-dressing

3. It is an attempt to avoid scrutiny of government and community watchdogs over powerful multinational corporations.

4. Corporates shorten the most needy causes and choose the one’s which suit their strategic interests and business policies. 

5. The practice of CSR has always been debated and kept under a critical lens because it emerges out of a crisis, accident or an emergency.

6. The consumers are skeptical today because their faith has been shattered by tall promises and hidden motives behind CSR. Therefore, winning its credibility is a big question.

7. The company cannot expect to provide cheap services or substandard products and get away with it just because the company is affiliated to social causes.  

8. CSR has often been considered as a tool to beat the competition and attract more media attention. The underlined motive of CSR is profit and that is what defeats the entire purpose of being socially inclined. 

Following are some major examples of CSR. Read on and decide which is ethical and which is not?

Recently, many companies have taken a proactive approach to the environment, transforming the nature of their organization and products to reflect this. They are discovering that well-formulated environmental strategies can lead to a number of business advantages, such as better quality, reduced costs, improved environmental image, and the opening of new markets. Also, relations with stakeholders (such as regulators, local communities, and environmental groups) improve along with business profits. 

The drug giant Pfizer decided to do a good deed for its customers who had lost their jobs due to recession and thus, lacked prescription coverage, Pfizer would supply 70 of its name-brand drugs, from Lipitor to Viagra, free of charge for up to a year. For a company whose reputation has suffered some blemishes, including $2.3 billion in fines last year for improperly marketing drugs to doctors, the free-prescription program was well worth the cost. “We did it because we thought it was the right thing to do,” says Pfizer CEO Jeffrey Kindler. “But it was motivational for our employees and got a great response from customers. In the long run it will help our business.(Source: Richard McGill Murphy; “Why doing good is good for business?” Fortune; 2/8/2010, Vol. 161 Issue 2, p90-95, 6p, 7 Color Photographs.)

Philip Morris, the tobacco giant donated more than $17 million in a year to schools, hospitals, cultural organizations and charity groups. Critics believe that many of these funds were targeted to minority organizations which would help beat tax and anti-smoking bills. The CSR was well strategized in order to gain some political benefit. (Source: Ralph Tench, Liz Yeomans; ” Public Relations Strategies and tactics; 7th edition)

McDonald’s has a blog entirely dedicated to its CSR policy (http://csr.blogs.mcdonalds.com). Although not extremely well established in the blogosphere, the blog is growing in popularity. The blog itself is written by Bob Langert, McDonald’s Vice President of CSR, and is dedicated to informing the public about the five key issues relevant for McDonald’s: balanced active lifestyles, responsible purchasing, people, the environment, and the community. Would you call this genuine or a mere distraction from the real health issue?(source: Fieseler, Christian1 christian.fieseler@unisg.ch Fleck, Matthes, Meckel Miriam; “Corporate social responsibility in blogosphere”; Journal of Business Ethics; Feb2010, Vol. 91 Issue 4, p599-614, 16p)

The corporates owe a lot to the public who buys their products and services. As long as they don’t comply with the ethics conforming to their professional standards and social behaviour, CSR will only perceived as a mere hypocrisy, astroturing or spin.  If CSR is being done to aid the stakeholders, organisation and society and not camouflage some malicious activities, it will  help gain long term mutual benefits for the parties involved.

Diksha

Advertisements