CATHERINE MAE J. SADIAN-BUMANGLAG
Abstract
In
this article, " Integrating CSR," we
explore the growing trend of companies integrating Corporate Social Responsibility
(CSR) into their business models. Companies are realizing the need to not only
make profits but also have a beneficial influence on society and the
environment. Nowadays, consumers are becoming to be more socially and
ecologically aware. This article will tackle into the reasons why companies are
choosing to integrate CSR and the benefits that it might bring.
The
main purpose of doing business is to generate profit. But a lot of companies
have considered CSR as another reason for them to continue business. Because of
CSR, businesses became more socially and environmentally aware. Businesses have
claimed that CSR benefitted their companies in a lot of ways.
However,
others claim that there are also challenges that companies face when
implementing CSR initiatives. This article will tackle both the benefits and
challenges of implementing CSR. By providing a comprehensive overview of the
topic, this article aims to serve as a valuable resource for companies looking
to take their first steps towards integrating CSR into their business models.
Ultimately, this article argues that CSR is no longer a choice but rather a
requirement in doing business. Companies that don't embrace CSR risk falling
behind in today's rapidly changing market.
Key
Words: CSR, purpose of doing business, CSR importance, challenges of CSR
Introduction
In
today's fast-paced and competitive business environment, it is easy to get
caught up in the pursuit of profits and short-term gains. Some companies become
so blinded in generating large profits that they turn to unethical and illegal
ways of doing business. They fail to realize that this will stain the company’s
name and might risk its’ existence.
However,
an increasing number of companies are beginning to realize that there is more
to business than just making money. They dig deeper to their purpose. These
companies are turning to corporate social responsibility (CSR) to meet the
needs of their stakeholders and differentiate themselves in the market. They
realized that CSR can also build brand loyalty, and long-term value. But what
exactly is CSR, and why is it important for businesses to integrate it into
their operations? In this article, we will explore the concept of CSR and the
many reasons why it is crucial for businesses to embrace it.
Brief
History of CSR
During
around mid-1800’s, issues on employment have risen. Growing criticisms of the
emerging factory system, working conditions, and the employment of women and
children were being brought to light, especially in the United States. Worker wellbeing and productivity became
a growing concern among industrialists.
Corporate
Social Responsibility started as a mere act of giving something to other people
for a certain purpose. During the late 1800’s, an industrialist from the steel
industry business named Andrew Carnegie donated large portions of his wealth to
help in the education and scientific research sector. Later, John D.
Rockefeller of the oil industry business donated more than half billion dollars
to religious, educational, and scientific causes.
In
1953, Howard R. Bowen coined the term “Corporate Social Responsibility in his
publication “Social Responsibilities of the Businessman”. Bowen is referred to
as the “Father of CSR”. He defined CSR as the obligations of businessmen to
pursue those policies, to make those decisions, or to follow those lines of
action which are desirable in terms of the objectives and values of our
society."
The
1990’s marked the beginning widespread approval of CSR. In the 1991, Donna J.
Wood published Corporate Social Performance Revisited, which expanded and
improved early CSR models by providing a framework for assessing the impacts
and outcomes of CSR programs. In that same year, Georgia Archie B. Carroll
published his article “The Pyramid of Corporate Social Responsibility” and
expanded on areas he believed were crucial when implementing CSR in an
organization.
By
the early 2000s, CSR had become an essential strategy for many organizations,
with multi-million-dollar companies, such as Wells Fargo, Coca-Cola, Walt
Disney, and Pfizer incorporating this concept into their businesses
processes.
Other
Definitions of CSR
Aside
from the earliest and most prominent definitions of CSR by Howard Bowen and
Caroll, Frederick (2006) summarizes what CSR stands for in the 50’s under three
basic issues: corporate managers are appointed as public trustees, the need to
balance competing stakeholders claims with corporate resources; and the
acceptance of philanthropy as a humane philosophy and discretionary principle
of the organization.
Moving
onwards from then CSR has transformed from philanthropy to regulated practices
and instrumentality or strategic CSR. Corporations are increasingly receiving
more pressures on compliance with regulations on environmental protection,
transparency, and the market is saturated with competitors thereby
necessitating the introduction of CSR as a strategy to survive and be more efficient
(Glan, 2006).
Researchers
in this period are focusing on the impact of CSR on financial performance
(Brammer & Millington, 2008; Ruf et al, 2001; Surroca et al, 2009). The
focus of CSR conceptual review and empirical studies has shifted from an ethics
orientation to a performance orientation. The essence of engaging in CSR in the
new millennium is tagged as “doing good to do well” (Rosamaria & Robert,
2011). Institutional pressure for CSR improvement has increased necessitating
introduction of CSR initiatives that focus beyond shareholders wealth maximization
(Waddock, 2008).
Definitions
of CSR shows that corporations are expected to contribute towards the welfare
of the whole society.
Lei
(2011) in his analysis on evolution of CSR definitions maintained that the area
of focus to all analyzed definitions are; sustainability and social obligations
like economic, legal, ethical and discretionary responsibilities.
(Dahlsrud,
2008) concluded that doing CSR is based on five dimensions; environmental;
social, economic, stakeholder and charity dimension.
(Shafiq,
2011) gave a ten dimensional points on CSR definitions, which gives a full
summary of all issues mentioned in various definitions of CSR, they are: obligation
to the society, stakeholders involvement, improving the quality of life,
economic development, ethical business practice, law abiding, voluntariness,
human rights, environmental protection, transparency and accountability.
European
Union’s Official Definition Of CSR
The
European Union, in an attempt to offer a framework for companies wishing to
invest in sustainable development, published in 2001 a Green Paper on Corporate
Social Responsibility defining CSR as:
“The
voluntary integration of companies’ social and ecological concerns into their
business activities and their relationships with their stakeholders. Being
socially responsible means not only fully satisfying the applicable legal
obligations but also going beyond and investing ‘more’ in human capital, the
environment, and stakeholder relations.”
ISO
2600 Official Definition Of CSR
The
International Organization for Standardization (ISO) is an international
standard-setting body that also addressed the definition of CSR through its ISO
26000 standards on Corporate Social Responsibility. In these guidelines, ISO
defines CSR as:
“The
responsibility of an organization for the impacts of its decisions and
activities on society and the environment, resulting in ethical behavior and
transparency which contributes to sustainable development, including the health
and well-being of society; takes into account the expectations of stakeholders;
complies with current laws and is consistent with international standards of
behavior; and is integrated throughout
the organization and implemented in its relations.”
The
Growing Importance of Social Responsibility In Business
1. CSR can help you attract and retain employees.
One of the major reasons people apply to various companies is because of their CSR projects. CSR demonstrates that a business is caring and treats everyone fairly, including its employees. A company that is dedicated to making the world a better place is likely to draw in more talent. This demonstrates how seriously employees consider social responsibility. CSR initiatives also support the development of a more effective and enjoyable workplace for employees. It encourages workers to put out good work and volunteer.
2. CSR can save money.
Because of CSR, employees might stay longer in the company. They perceive that they are helping the community while doing their job because of the CSR initiatives of the company where they work. This helps cut money since employee turnover will be low and there would be lesser expenses for hiring new employees.
3. CSR can improve customers' perception of your brand.
The competition in the business world of today is stiff, and it can be quite challenging for a company to set itself apart in the eyes of customers. However, companies who take social responsibility seriously may attract customers and provide a platform for marketing and grabbing the interest of their target market. CSR may make a firm appear to be a force of good in the community advancing general welfare. The CSR projects can help raise awareness for important causes and keep the business on top of the minds of customers or potential customers. Consumer loyalty goes a long way in helping a business stay afloat.
4. CSR
shows a sign of accountability to investors.
Businesses
that are socially responsible can also appear more attractive to investors. A business
that is able to manage finances while still helping its’ community is perceived
as accountable and transparent. According to a 2016 report by Aflac,
investments in CSR are not typically viewed by investors as a waste of money,
but rather an "indicator of a corporate culture less likely to produce
expensive missteps like financial fraud." The study said 61% of investors
consider CSR a sign of "ethical corporate behavior, which reduces
investment risk."
5. CSR can enable you to better engage with customers.
CSR
can help your business have better connection with customers. Some CSR
activities requires businesses to interact directly with members of society,
who may also be customers or potential customers. With directly interacting
with customers, the business will have direct feedback on what the company is
doing right and what the company needs to improve on. Word-of-mouth is still an
effective form of advertising, and customers who have been part of the social
responsibility created by a company are able to tell other potential customers
about the business.
Famous
Companies with good CSR practices
Jollibee
Foods Corporation and Ayala Corporation are
two of the companies that have committed to using their business to make a
positive impact on society, in addition to generating profits.
Jollibee
Foods Corporation is a Filipino multinational
company that operates a chain of fast food restaurants. Jollibee is famous with
its “Busog, Lusog, Talino” program which aims to aid children who are
identified as undernourished.
The
company's corporate social responsibility (CSR) program known as "Busog,
Lusog, Talino" and focuses on three main areas: Busog (Nourishment), Lusog
(Well-being), Talino (Knowledge). Jollibee believes that if they help children
receive enough physical nutrients, it will contribute a lot to their overall
well-being, physically, emotionally, socially, and mentally. In turn it will be
more possible for them learn at school and accumulate more knowledge for them
to be successful in the future. Overall, Jollibee's CSR program is focused on
promoting nourishment, well-being, and knowledge in the communities in which it
operates.
Jollibee
Group Foundation (JGF) first became involved in school-based feeding in 2007, when
it launched its Busog, Lusog, Talino (BLT) School Feeding Program to address
shortterm hunger and malnutrition among public elementary pupils in different
parts of the country. By SY 2015-2016, BLT school feeding had reached 165,000
pupils in 1,567 public schools together with over 200 partners.
In
2016, the Department of Education’s (DepEd) budget for its School-Based Feeding
Program (SBFP) was increased to cover all undernourished pupils in public
elementary schools in the country. With this development, JGF shifted its
approach from direct school feeding to building BLT School Feeding Kitchens.
Each BLT Kitchen serves as a commissary or a central site for food preparation
and distribution to surrounding schools, feeding hundreds of children daily
with less time and effort. The model was piloted in Tarlac in 2015 where the
first kitchen served 5,000 pupils. With the proof of concept established, DepEd
adopted the BLT Kitchen as a modality for SBFP implementation starting SY
2016-2017. Ten (10) more BLT Kitchens were constructed, reaching 7,700
undernourished pupils in 60 public schools in various municipalities and
cities. As of SY 2018-2019, there are 33 BLT Kitchens across the country
catering to more than 25,000 severely wasted and wasted pupils in 235 public
schools.
Beyond
school feeding, BLT Kitchens are platforms for various members of the community
to work together. DepEd facilitates school selection and provides funds for
feeding. The principals and feeding coordinators oversee kitchen operations
while parent volunteers prepare, cook, and serve the food. Local Government
Units (LGUs) provide allowances for parent volunteers, facilitate their medical
screening, and coordinate the pick-up and delivery of food. For its part, JGF
leverages the strengths of Jollibee Foods Corporation (JFC) as a food company
and provides kitchen equipment, facilitates food preparation and distribution
system, as well as volunteer training. JGF’s publication of this recipe book forms
part of its technical assistance and continuing support to the BLT Kitchens and
DepEd’s SBFP.
Ayala
Corporation is a Philippine conglomerate with a
number of subsidiaries and businesses in various sectors, including real
estate, banking, telecommunications, and water. The company's corporate social
responsibility (CSR) programs are focused on three main areas namely:
Environment, Education and Community.
Ayala
Corporation is committed to supporting the communities in which it operates and
has several initiatives in place to address social issues and improve the
quality of life for people in these communities.
Ayala
Corporation have seen the need for a drug rehabilitation center in Marawi. Along
with its’ continued commitment to its community and as part of their CSR, they
built “Siyapen”, the first community-based drug rehabilitation center. Siyapen
is named after the Maranao word for “care”. Siyapen was built in partnership
with the City Government of Marawi
and the Autonomous Region of Muslim Mindanao (ARMM). The facility has a 60-bed
capacity and amounts to around PHP30-million over to the local government unit
in January 2018.
The facility seeks to provide a space that
encourages physical wellness and social integration. Located within the
community, the center allows drug dependents to have better access to family
and other forms of social support, which are crucial to their recovery. In
addition, its proximity to a mosque opens opportunities for spiritual
counseling. The facility also allows for other therapeutic activities such as
exercise and group sessions.
“The Siyapen Drug Rehabilitation Center is our
way of addressing another challenge Mindanao faces, and of responding to the
national government’s call for private sector support in addressing the drug
problem,” said Jaime Augusto Zobel de Ayala, chair and chief executive officer
of Ayala Corp. and co-chair of Ayala Foundation.
During the pandemic, Siyapen was converted as a
quarantine facility housed locally stranded individuals (LSIs) who are tested
positive for Covid-19 but asymptomatic. But only Marawi residents were allowed
to be housed at Siyapen.
Challenges of Implementing CSR
1. Responsibility towards Shareholders only
Some argue that a business is accountable only to
its shareholders and not in the whole society. Some entrepreneurs claim that
the sole aim of the business should be to gain profit for its stakeholders.
Doing CSR violates this objective and does violates the basic rule of serving its
stakeholders.
2. Failure of the public to recognize
organizations through CSR
Some
communities sometimes neglect or put little attention to organizations that do
CSR. While other communities are warm and are very conscious of companies that
do CSR. Organizations that do CSR are not sometimes recognized eben though it
benefits both the company and the society.
3. Input not equal to the output
Doing
CSR entails a lot of effort for a company. It uses its financial resources and
allots time for it to successfully implement CSR for the betterment of the
society. But sometimes the public fails to recognize this effort and denies the
appropriate appreciation and acknowledgment that a company deserves.
4. Mentality of consumers
Some consumers always think that every move of a
company is done solely for its own benefit. Because of this, the efforts of
doing CSR by some companies become neglected. This upsets some organizations to
do CSR as they see that there is no need to do CSR initiatives.
Conclusion
Over the years, CSR has grown to be of a more serious topic. Businesses have viewed it as a way that they could give back to the community where they operate. Businesses can no longer operate with the sole aim of making profits at the expense of the environment, society, economy, consumers, and employees. It led to a growing concern to take good care of their employees, the environment, comply with legal requirements set forth by the government and give back to the society. CSR became the balance between just merely gaining profit. CSR became a purpose to some businesses. That to give back to society, act ethically and be responsible in their business pursuits is a must. CSR lets business owners to rethink their purpose and realign their actions to what is right and ethical.
References:
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