Table of contents
Historically, the ultimate goal of any corporation has been making money and increasing shareholder's value because they are the real owners of the company, and without them, the company won't exist. However, over the last decade, a concept known as Corporate Social Responsibility (CSR) has started to slowly spread. Today, CSR has become a necessity for a successful business as it recognizes numerous benefits for businesses, employees, communities, and the environment. Often referred to as the corporate Triple Bottom Line, CSR includes Environmental, Ethical, Legal, and Economic responsibilities.
In the realm of corporate practices, Corporate Social Responsibility (CSR) stands as a profound commitment of organizations towards considering the broader interests of society. This encompasses taking responsibility for the impact of their activities on various stakeholders, including customers, employees, shareholders, communities, and the environment. At the core of their operations, companies are now urged to look beyond mere profit-making and prioritize the well-being of the world around them. One of the early proponents of this concept is Howard Bowen, who is often hailed as the father of Corporate Social Responsibility. Bowen's definition of CSR is succinct yet comprehensive, as he describes it as "the obligation of businessmen to pursue those policies, to make those decisions, and to follow those lines of action which are desirable in terms of the objectives and values of our society" (Bowen, 1953).
The Evolution of Corporate Social Responsibility
The roots of Corporate Social Responsibility (CSR) extend deep into history, reaching back numerous years. However, it wasn't until the 1920s that discussions regarding the application of this concept in business truly matured, culminating in what we now recognize as the modern CSR movement. With the advent of industrialization and its profound impact on society, companies were compelled to embrace a new vision of their role. Fast forward to the 1980s and 1990s, CSR became a prominent topic, sparking fervent debates and motivating companies to integrate social interests into their business practices, thus transforming them into responsible stakeholders.
In the early 2000s, CSR emerged as an indispensable strategy for many successful enterprises, including industry giants like Coca-Cola and Walt Disney, both of whom wholeheartedly embraced it as an integral part of their business strategies. However, it is essential to note that CSR did not attain widespread significance until the tumultuous period of the Great Depression. Since the 1960s, this concept has gained importance not only within the business realm but also in the realms of law, politics, and economics, becoming a pivotal subject in theory and practice.
Undertaking CSR initiatives holds the power to make companies immensely appealing to consumers, thereby leading to augmented profitability. By adopting CSR practices, companies can fortify their brand names, stand out amidst fierce competition, differentiate themselves in the market, and enhance overall operational efficiency.
Corporate Social Responsibility has gained considerable interest among researchers and business organizations in the past decades. More companies are embracing CSR practices under different names, such as Corporate Sustainability, Social Responsibility, or Corporate Citizenship. These practices are well-reflected in corporate reports, published on their websites, and through surveys conducted by organizations to communicate their social responsibility actions and results.
An argument against CSR initiated by Friedman (1970) claimed that the only benefit of communicating CSR to the public is to increase the company's profit. However, recent research conducted by Doshi and other authors disagreed with Friedman's claims, stating that CSR reporting can be implemented with both for-profit and non-profit intentions.
While some organizations contribute to society without seeking publicity, others actively promote their CSR efforts to improve their brand image. Standards of CSR practices vary from one company to another and from one industry to another. Some companies engage in CSR to mitigate the harmful effects of their operations on the community and the environment, especially in industries like oil companies. CSR programs are not only aimed at the external community but also towards internal stakeholders, as companies increasingly focus on employee benefits to improve productivity and retention, which can also be considered part of CSR activities. There is also a recent trend of blending social activism with branding, making it difficult to discern whether it is a CSR activity or a branding initiative (Doshi et al., 2012).
In another study conducted by Garriga and Mele (2004) to clarify CSR theories, they categorized CSR into four groups based on aspects of social reality: instrumental theories, political theories, integrative theories, and ethical theories. Each of these theories has its limitations, and organizations need to develop new theories that overcome these limitations by accurately understanding reality and building on a sound ethical foundation (Garriga & Mele, 2004).
Embracing Corporate Social Responsibility: Best Practices
Worldwide, companies are increasingly trying to improve their image by being socially responsible. Today, businesses cannot solely focus on making profits without considering their impact on society. The Committee of Economic Development has identified three principles of social responsibility for businesses:
- Creating Products, Jobs, and Contributing to Economic Growth: Companies need to create products and services that benefit society, generate jobs, and contribute to economic growth.
- Sensitivity to Dynamic Social Values: Businesses should be aware of and responsive to the evolving social values of the communities they serve.
- Dealing with Emerging Responsibilities: Companies should be proactive in addressing emerging social responsibilities that arise due to changing societal needs and demands.
Corporate Social Responsibility in International Companies
According to Reputation Institute's 2018 Global Social Responsibility RepTrak 100 Rankings, Google holds the best reputation for Corporate Social Responsibility in the world. Google is known for its philanthropic activities and substantial investments in projects aimed at improving lives worldwide. Their CSR strategy focuses on providing education and learning opportunities for the underprivileged and underrepresented, along with investing in projects that support employment and racial justice.
Walt Disney is another international company with a successful CSR implementation. Their CSR strategy revolves around environmental stewardship, conservation funds, charitable giving, and volunteering. Disney's efforts are directed at enhancing sustainability, protecting wildlife, and engaging with communities to improve social and environmental conditions.
Corporate Social Responsibility in Local Companies: The Case of Saudi Arabia
In Saudi Arabia, many companies are promoting good Corporate Social Responsibility practices. Saudi Aramco, SABIC, Abdul Lateef Jameel (ALJ) Group, National Commercial Bank (NCB), and Savola Group are among the leaders in this regard.
Saudi Aramco has been a pioneer in creating sustainable social and economic opportunities in the country. Their CSR operations focus on the economy, community, knowledge, and the environment. The company has invested billions in ventures to create jobs and stimulate economic growth, while also supporting over 150 charities to serve various causes.
Savola Group, a Saudi public listed company, is another successful example of CSR in the country. It has been successful in various initiatives, including Saudization of its workforce, and has established a separate CSR department with a well-defined strategy focused on openness, transparency, and accountability toward all stakeholders.
Discussion: Balancing Profit and Social Responsibility
The concept of CSR has been subject to extensive debate over the years. Some argue that businesses should only focus on activities directly related to profitability, while others believe that companies have a responsibility to consider the impact of their operations on society and the environment. Balancing profit with social responsibility is a complex challenge that companies face, and it requires adhering to three fundamental principles of CSR: sustainability, accountability, and transparency.
Ethics play a crucial role in CSR, defining the values, norms, beliefs, attitudes, and behaviors that guide a company's conduct. Ethical behavior encompasses respecting the rights of shareholders and all stakeholders, including the environment. Companies should adopt ethical codes that promote fundamental human rights, environmental protection, and anti-corruption measures. Ethical behavior not only fosters a positive corporate culture but also shapes the character traits and engagement of employees within the organization.
Corporate Social Responsibility has become an essential strategy for businesses aiming to achieve long-term success. It involves considering the interests of all stakeholders and the impact of business activities on society and the environment. Companies need to strike a balance between profitability and social responsibility by embracing sustainability, accountability, and transparency. Emphasizing ethical behavior further strengthens CSR efforts and contributes to building a positive reputation in the global business landscape. As more companies recognize the importance of CSR, the positive impact on communities, employees, and the environment will continue to grow, creating a more sustainable and responsible business world.
- Bowen, H. R. (1953). Social Responsibilities of the Businessman. Harper & Brothers.
- Doshi, R., Gunny, N. M., & Mello, A. S. (2012). CSR Reporting: The Battle for the Narrative. Harvard Business School Accounting & Management Unit Working Paper, (12-009).
- Friedman, M. (1970). The Social Responsibility of Business is to Increase its Profits. The New York Times Magazine.
- Garriga, E., & Mele, D. (2004). Corporate Social Responsibility Theories: Mapping the Territory. Journal of Business Ethics, 53(1-2), 51-71.
Cite this Essay
To export a reference to this article please select a referencing style below