Corporate social responsibility

Corporate social responsibility: is the idea that a business has responsibility towards the community and environment.

Corporations may choose to show CSR by reducing their carbon footprint, improving the working conditions of employees & community, and/or being philanthropic e.g. supporting local charities.

Why would a business take on corporate social responsibilities?

• Some might see CSR as a moral responsibility or duty (to be a good 'corporate citizen' of society).
• Improve their public image – So they can appear on the FTSE4Good Index, this may in turn attract ethically-minded investors and customers.
• Ensure good press, which in turn would give good publicity for the company so they may self-regulate
• Avoid reputational damage (which might hurt profits).

How can they do this?

• They can be responsible to shareholders – ensuring their investment is used wisely and they reap healthy rewards
• Employees – ensuring that working conditions, pay, and recruitment policy are fair and balanced between making money and treating humans correctly.
• Engage with their wider Community by sustaining a green policy, reducing litter, recycling, no pollution or renewable energy usage.
• Stay in line with government especially when it comes to green policy or spending.

How can they do this?

• They can be responsible to shareholders – ensuring their investment is used wisely and they reap healthy rewards
• Employees – ensuring that working conditions, pay, and recruitment policy are fair and balanced between making money and treating humans correctly.
• Engage with their wider Community by sustaining a green policy, reducing litter, recycling, no pollution or renewable energy usage.
• Stay in line with the government especially when it comes to green policy or spending.

Why should business not show CSR?

Milton Friedman disagrees that companies should even think about corporate responsibility. He argued that they should think only about their shareholders.

"There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud." (Friedman)

Friedman argues: -

• The only 'social responsibility' of a business is to make a profit.
• CSR is nothing more than propaganda for socialism.
• Individuals in the corporation can have responsibilities towards others e.g. to give privately to charity, but the business itself has no such responsibility.
• Businesses have no responsibility to keep the environment clean, or provide jobs and a living wage because:
  1. A manager who pursues a CSR is overstepping the responsibility given to them by the shareholders. (The shareholders have hired a manager to do a specific job - increase profits).
  2. Pursuing CSR violates the relationship between shareholders and the company. (If a manager of a company focuses' on CSR they are not focused on making as much profit as possible, so are violating the agreement between the company and the shareholders, essentially stealing from shareholders). A manager who chooses money for things they think is better (e.g. helping the community) is taking control of shareholders' money, and they have no right to do so.

A natural reaction to being 'set free' saw businesses naturally take on CSR taking on responsibility for their stakeholders beyond legal responsibility, known as the trickle-down effect.

Case studies:

Pret Foundation (https://www.pret.co.uk/en-GB/the-pret-foundation)

Has its very own fleet of vans, every night, as its shops close, volunteers arrive to collect the day's unsold food. Delivers take it to hostels and charities supporting the homeless. (use for arguments about CSR and the community)

Pret uses its foundation as a means of advertising the company, as such it can be argued that CSR is not really philanthropic, but a means to make a profit.

Kenco (http://coffeevsgangs.telegraph.co.uk/)

Coffee Vs Gangs project aims to provide social mobility for those living in favelas esp. in Honduras to be able to move from their neighbourhoods and earn a living. (use for arguments about CSR and the community)

Kenco has invested heavily in sustainability, all its products meet the Rainforest Alliance standard, and its coffee range is entirely sourced from Rainforest

Alliance-certified farms. (use for arguments about CSR and the environment)

Kenco uses Coffee V Gangs and the Rainforest Alliance standard as a means of advertising the company, as such it can be argued that CSR is not philanthropic, but a means to make a profit.

Google

Runs a free bus service for employees to HQs, they encourage employees to drive electric cars, with hundreds of chargers on-site.

Google also invests heavily in solar and wind power, with the ambition of becoming the world's first carbon-neutral company in the foreseeable future. It has made a green pledge: - it will work to run its operations purely on carbon-free energy by 2030 (used for arguments about CSR and the environment)

Being green comes as a great benefit to Google, recycling and turning off the lights lowers costs and has seen an overall drop in power requirements by an average of 50 percent.

80-20 project means workers are allowed to work 1 day per week on personal interest projects.

The personal interest projects mean that not only do they employ the best-qualified staff (as this is an attractive perk), but they are at the forefront of innovation, as they will often sponsor projects that will be successful.

Case study – A company that explicitly misuses CSR as a means to gain profit: (can be used within a weakness)

Starbucks

The company claims to be a 'green company' that cares for the environment through sustainable coffee and encourages recycling through reusable cups. But, not all of the coffee Starbucks uses is from sustainable means so, is not certified by organisations like the Rainforest Alliance. Starbucks cups are not recyclable so 4 billion go to landfills each year.

Utilitarianism on Corporate Social Responsibility (CSR)

Free market capitalism posits that a business's sole responsibility is to maximize profit for its shareholders.

Philosophers like Bentham and Mill argue that free markets generally promote the greatest happiness. They would likely endorse environmental CSR initiatives, acknowledging the severe impact of climate change on overall well-being.

However, they might oppose community CSR, such as corporate philanthropy, seeing it as beyond a business's primary responsibility. Bentham did support some employee regulations, like a minimum wage.

Kantian Ethics on Corporate Social Responsibility (CSR)

• Avoiding Exploitation (Community CSR): Ensuring fair wages, potentially advocating for a minimum or living wage.
• Providing a Safe Work Environment (Community CSR): Guaranteeing a safe and healthy workplace for employees.
• Avoiding Fraud or Deceptive Advertising (Community CSR): Maintaining honesty and transparency in business practices.
• Environmental Responsibility (Environmental CSR): Preventing pollution and ensuring that business activities do not harm the environment.