Analysing Corporate Social Responsibility

Corporate Social Responsibility (CSR) --> could be argued on a 'normative' vs 'business' case:

Normative --> stems from a desire to do good.
Business --> 'enlightened' self-interest.

Why are community relationships important?

• There is a growing recognition within the business community of the importance of building relationship with the community.
• Corporations today face profound pressure to manage responsibility, as well as profitability.
• Pressure for this emphasis on socially responsibly behaviour derive from three broad sources.
• Primary stakeholders
• Secondary stakeholders
• Societal Pressures

Westpac Community Involvement 2007 report -- "... banks can, and should, lead beyond their corporate walls when it comes to doing the right thing for communities and the environment... However, we are not driven simply by benevolence but by enlightened self-interest. After all, successful and prosperous businesses cannot sustain if the communities in which they operate are not successful and prosperous. There is a mutual flow of benefits. "

Pressure from Primary Stakeholders:

• Shareholders/Investors:
• Ultimately own the organisation, so demand strong corporate financial performance and growth.
• Corporate financial performance is strongly linked with responsible corporate practices.
• Have a growing interest in investing in socially screened equities.
• Employees:
• Perceptions about responsibility management are often a key decision criteria when assessing a potential employer.
• Employee considerations include: salary and benefits; health and safety; and fair and ethical treatment (incl. labour standards)
• Customers:
• May base their purchasing decisions on perceived level of corporate responsibility.
• Example some of considerations: quality standards, ethical treatment of animal, "green"friendliness.
• Suppliers:
• With increasing supply alliances, companies are now judged on supplier behaviours.
• Some industries, particularly consumer products, have been seriously affected by negative publicity surrounding labour practices in supplier facilities (e.g. protests against Apple).

Pressure from secondary stakeholders:

• Government: 
• Regulatory obligations including compliance, transparency and anti-corruption.
• Also asking for a social contribution.
• Community:
• Expectations of corporate involvement in the community are significant.
• Activists and NGOs
• Demand for improvement human rights, labour rights and environmental performance.

Societal pressures:

• Institutional pressures have led to pressures for responsibility management and have created a need for greater transparency of an accountability for corporate impacts.
• Evidence by: best of rankings, global principles and standards, triple bottom line reporting.

Question Mark:

• Q: Whether business has a “responsibility” to help solve the planet's problems? Some argumentation stated that: business of business is making a profit to reward shareholders, just simply by jobs being created, taxes being paid and investments being made, it's enough. On the other hand, some concept like "Corporate Social Responsibility" are solely based on moral imperative or obligation for business to do the right thing. 
• Is the "business of business" simply to maximise shareholder value? Explain your position about this statement and clearly support your point.
• Possible Answer:
• Basically, I could say that CSR is not ultimately going to solve the planet's problems, but CSR is a way the company could benefits themselves (normative), while also benefits society/stakeholders (business) by enlightened self-interest.
• Yes, I could say that company should embrace CSR in their business process and contribute more effort than just simply maximise shareholder value, because of:
• By implementing CSR, the company could get a step ahead of your competitor by providing not only strong financial performance and revenue growth, but also wider range of benefits by building strong relationship with the community and responsible practices. 
• Bad or ugly information about environmental, social or governance practices can spread simultaneously and dissolve years of goodwill and corporate brand recognition on spot.
• CSR will influence the perception of employee regarding the company's brand recognition, since how company responsibly threat the community, will also reflect a responsible management fairness and ethical practices in labour standard.   
• CSR will influence customer's purchasing decision and considerations, because the product reflect an additional value such as: quality standard, ethical treatment of animal and "green" friendliness.
• Q: Identify two (2) ways in which companies benefit from being proactive in managing and reporting on corporate social responsibility (CSR) issues?
• Possible Answer: 
• Participating and encouraging employees involvement in charitable, community volunteering, payroll giving and fund raising --> could initiate employee to promote pride and increase self-belonging to the company. These activities transform into loyalty, commitment and productivity.
• Customer nowadays will choose to purchase product from a company that develop reputation on being social responsible. Thus, the company makes a great deal by positioning themselves attracted by investors and also customers compare to competitors.
• Complying with regulatory requirements and involvement in local community will be an ideal opportunity to generate positive press coverage, make doing business easier and reduces sudden damage to corporate reputation.
• Q: Provide two (2) pieces of guidance that may help David Jones develop an effective CSR strategy.
• Possible Answer:
• Should reflect organisation's mission and values
• "David Jones is committed to investing in its people and providing a work environment where all employees are supported, recognised and rewarded."
• David Jones's vision of being the "best place of our people to work" by investing in its people and providing an environment that ensures every employee is valued, recognition and reward for contribution, commitment to safety and commitment to environmental responsibilities.
• Thus, CSR strategy should covered employees engagement and retention, communication, training, development, recognition and reward.
• "David Jones continues to support the community at large through contributions to its philanthropic partners, with particularly focus on women and children's health."
• Thus, CSR strategy should build strong partnership with not-for-profit organisations that benefits the Australian community and meet social needs, in particular those focused on cancer-related issues for women and children.
• Should identify obligations to customers, employees, suppliers and community.
• David Jones is committed to responsible management of environmental and social impacts along its supply chain.
• David Jones has imposed obligations to its supplier that merchandise supplied to David Jones is under considerations that meet Australian labour standard in relation to anti-discrimination, equal opportunity, safe working conditions.
• Improve environmental outcome by reducing greenhouse gas emissions, protecting and conserving natural resources, optimising water use.
• Motivate cultural change, by encouraging behavioural change and integrating sustainability into decision making.
• Stakeholder engagement should be at the core.
• David Jones will continue to strive forward an integrated approach to corporate social responsibility and aims to ensure that its community programs remains relevant with its key stakeholders.
• Requires developing appropriate metrics for measuring social performance.
• Q: Identify the three (3) bottom lines that comprise ‘triple bottom line’ reporting and for each bottom line, suggest one (1) measure that the Commonwealth Bank may use to assess its performance in demonstrating CSR.
• Possible Answer:
• Economic performance: total economic impact of the company on the community. Example measures: Economic Value Added (EVA), Value of Donations ($), value of donations as percentage of EBIT (%).
• Social performance: impact of the company on people in the communities in which they operate. Example measures: number of women completing free breast screening services, number of employees joining fund raising and community volunteering activities, number of children participating in children cancer screening services.
• Environmental performance : impact of the company on the natural environment sustainability. Example measures: Greenhouse gas emissions from David Jones buildings (tonnes CO2 emitted), electricity consumption (MWh emitted), energy efficiency based on trading hours (watts emitted), waste and water usage. Sustainable packaging design, carry bags and paper based process and materials.