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Summary Varsity College BCOM Year 1 Business Management 1A LU 5
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BMNG – Business LU 5LU 5 – Corporate Social
Responsibility
5.1 Introduction
Development and implementation of CSR frameworks, policies and practices in
companies is an ongoing process. It calls for vision and commitment from the leadership
and management of the company.
5.2 Introducing Corporate Social Responsibility
5.2.1 What is corporate social responsibility
There is an increased pressure on business leaders to take a stand on social and
environmental issues.
Corporations exert a lot of power on the world, they can use their power and influence to
contribute to the common good and markets. Through partnerships w gov, business,
communities or by themselves – providing job opportunities, investing in SMMEs and
building infrastructure.
CSR deal w how business organisations can meet essential needs without dishonouring
community values. CSR is an umbrella concept that recognises the following points:
- Companies have responsibility for their impact on society and the natural
environment
- Responsibility for the behaviour of others with whom they do business
- Manage their relationship with wider society
The king ||| report says that “CSR is the responsibility of the company for the impacts of
its decisions and activities on society and ethical behaviour that:
- Contributes to sustainable development
- Takes into account of legitimate interests and expectations of stakeholders
- Is in compliance w applicable law
- Is integrated throughout the company and practised in its relationships”
5.2.1.1 Corporate citizenship and corporate social investment
People use “corporate citizenship”, “corporate social investment” and “corporate social
responsibility” interchangeably.
Difference between CSR and corporate citizenship
- CSR focuses on the responsibility aspect of the business
- Corporate citizenship focuses on business being a social player by virtue of both
its rights and its responsibilities as a citizen.
- Corporate Citizenship is the recognition that the business is part of society and
has rights and responsibilities like any other member
1
, BMNG – Business LU 5
CSR is the preferred term to corporate citizenship.
5.2.2 Cannibals with forks: The triple bottom line
Triple bottom line – term coined by Elkington
Important concept as businesses operate in an environment in which the planet, people
and profit and intertwined.
The idea behind the triple bottom line is that a company’s ultimate success should be
measured against its financial bottom line as well as its social / ethical and
environmental performance. It is therefore expected that companies honour their
obligations to stakeholders and behave responsibly.
The triple bottom line metaphor has been incorporated globally to guide corporate
reporting. It is also known as the 3 P’s – people, planet and profit.
5.2.3 CSR in contemporary business management
The focus of CSR should also be aligned to current discourse to address issues that
matter.
The business rational for CSR varies, however, most CSR programmes are driven by a
combination of drivers.
5.2.3.1 Social Drivers
Businesses should be thought as socially responsible. Society expects it of a business.
Companies therefore want to protect their reputations by meeting these societal
expectations.
5.2.3.2 Governmental Drivers
Most govs enforce local and national legal systems that companies must comply with to
operate in the country. Many govs also show interest in encouraging business
involvement in social issues through CSR. Governments can also facilitate CSR through
the provision of organisational support. If a company complies only with the letter of the
law, they would be doing the bare minimum to avoid sanction.
5.2.3.3 Market Drivers
Companies can reduce costs through CSR by:
- avoiding fines
- avoiding legal costs;‚
- using resources efficiently
- using alternative raw material sources, such as recycled materials;
- reducing recruiting costs increasing staff retention;
- reducing the cost of capital.
Companies can also increase revenue through CSR by:
- developing new products or services - carbon credit trading.
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