Introduction and Overview of Corporate Social Responsibility - Paper Example

Corporate social responsibility (CSR) refers to efforts an organization makes towards realizing the impact that its operations have on the environment and taking steps towards improving the wellbeing of society and its surroundings (Hamidu, Haron, and Amran, 2015)

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Edwards (2015) notes that it in the 1800s and early 1900s, companies were not expected to go beyond their original mandate which was to serve the interest of its shareholders. The author states that it was common to find companies losing court cases to their shareholders whenever they gave away money. As such, most philanthropic efforts were restricted to the acts of individuals using their money to help others in society. Further, Edwards (2015) states that charitable acts were often viewed with suspicion. For instance, some feared that organizations were giving money away to cover underhand dealings or as bribes.

Research by Madrakhimova (2013) shows that the perception of CSR has changed over time. The scholar states that in the fifties and sixties talk began in economic circles on what organizations can do for the world. In the seventies and eighties, people began to speak out against the various actions by corporations that negatively impacted their stakeholders (consumers and communities) and the environment. Later on in the nineties, globalization took off, and computers made information easily accessible. As such, companies had to be more transparent. At the turn of the twenty-first-century firms began to put more emphasis on the idea of sustainable development.

Diener (2013) developed a Charity Responsibility Model of Corporate Social Responsibility. This model describes philanthropy as being different from charity. According to Diener (2013), philanthropy is usually supported by economic incentives. On the other hand, charity is done with purely goodwill intentions. This shows just how much CSR activities have become interconnected with the core purposes of organizations.

Evolution and Importance of CSR

Charity to Strategy

As noted by Edwards (2015), acts of charity in the past were done because of altruistic intentions. People who donated to charity activities did so in their personal capacity, and companies rarely participated in the philanthropy due to legal and strategic barriers. However, as a result of the 1953 case of Smith v Barlow, corporations were allowed to make charitable contributions (A.P. Smith Mfg. Co. v. Barlow, 2017). Thus, companies began to make contributions to institutions such as hospitals and universities. Also, companies are no longer mandated to ignore social goals over shareholder goals (Stout, 2015).

Vertigans and Idowu (2017) highlight Cisco as an example of philanthropy as a strategy. Cisco started giving free computing facilities to schools within its locale. Later, Cisco noted that there was a high demand for networking teachers to teach the many students who had received equipment donations. As such, they began teaching more teachers about networking (Vertigans and Idowu, 2017). Their continued investment in philanthropy and increasing interest from other schools, governments, and agencies such as the UN for networking education programs, resulted in a new market niche and a highly skilled workforce proficient in using and maintaining Ciscos equipment. Thus, what began as a charitable activity created a large demand for Cisco systems. This is a tactic used by many other organizations in the world.

Charity to Responsible Investing

CSR used to be an act of donating money or equipment to poor segments of society. As seen in the investigation by Madrakhimova (2013), during the sixties and seventies, people began to speak out against activities undertaken by corporations which they felt were detrimental to society and the environmental. Some of the tactics that were employed include product boycotts. Such tactics compel companies to be more aware of their business environment. This awareness includes having an understanding of the socio-ecological impacts of sourcing activities. For example, companies are pressured to avoid sourcing from sites that are not sustainable or from suppliers who use child workers. Therefore, companies end up investing in sustainable supply chains, proper workplace conditions, and legitimate sources.

Charity to Social Entrepreneurship

Social entrepreneurship refers to the act of investing in a community to help its members to generate income. Firms are no longer focusing on sending money to disadvantaged communities. Instead, organizations seek ways of helping members of society to gain meaningful employment. For instance, Coca-Cola has its 5by20 program which aims to provide jobs to poor communities in developing and underdeveloped countries (Jenkins, Valikai, and Baptista, 2013). Further, the program aims at incorporating over 5 million women into the companys supply chain by the year 2020. Coca-Cola intends to use the program to improve the capacity of more than 170 small-scale distributors in Tanzania and to invest in equipping over 50,000 fruit farmers in Kenya. These are some of the many regions where the program will be implemented (Jenkins, Valikai, and Baptista, 2013).

Cost Implication to Profit Instrument

CSR was once a cost factor because it was an expense to firms. However, businesses have found a way of converting CSR into a profit generating tool which supports their bottom line. According to Rangan, Chase, and Karim (2012), companies can gain tangible and intangible results from their strategic philanthropy. Vertigans and Idowu (2017) showed just how Cisco converted their CSR activities into an income generating activity. However, for companies that cannot do the same, intangible benefits are gained when the public becomes increasingly aware of a businesss products (Rangan, Chase, and Karim, 2012).

Unilevers CSR

Unilevers CSR activities are significantly enshrined in its history and business culture. The companys founder William Lever believed a lot in using the companys capacity to promote societal well-being. For instance, he came up with Lifebuoy to counter the spread of diseases in Britain (In search of the good business, 2014). Currently, Lifebuoys hygiene efforts are spread across the globe. For its current CEO, Paul Polman, investing in CSR activities is a long-term strategy to ensure societal equity and corporate sustainability. Such a model is designed to ensure the long-term survival of the company (Confino, 2012). Werther and Chandler (2014) note that when the Financial Times reported that Unilever was not performing as well as its competitors, the companys CEO stated that an investor has to believe in the companys sustainable model before investing. This goes to show just how much value the company places. The existence of a dedicated corporate team has made it easy for Unilever to implement its CSR practices (In search of the good business, 2014).

Unilever is one of the leading brands when it comes to the development and enactment of corporate social responsibility plans. A 2016 report by GlobeScan shows that regarding CSR, Unilever outpaces all of its competitors by a significant margin. Unilever has held the position for over six consecutive years. The companys CSR starts from its workers and customers to those in its supply chain system. For instance, when Unilever performed a pollution analysis it found out that most of the greenhouse gas emissions came from its supply chain, the company embarked on a process to clean up its supply chain through partnership programs with its suppliers (In search of the good business, 2014).

Unilevers CSR places emphasis on four main circles. They include consumers, employees, investors, suppliers, and communities.

With regards to CSR, Unilever considers the environmental footprint of all goods they sell to their customers. As such, Unilever attempts to reduce adverse impacts of its products on the surroundings since consumer perception is critical (Thompson, 2016). Additionally, Unilever ensures that it provides its workers with an ideal workplace with reasonable remuneration as well as career advancement. Such programs extend to their entire supply chain (Thompson, 2016). Also, Unilever tries to ensure that it incorporates its obligations to shareholders with its CSR mandate. The company has maintained dominance through innovation, acquisitions and expansionary strategies (Thompson, 2016). Supplies are key stakeholders in Unilevers CSR program since they form a critical component of its product supply chain. Unilever adopts a partnership model with its suppliers to ensure that materials are sourced in a sustainable manner, employees are well remunerated, and emissions from logistics are reduced (Thompson, 2016). Lastly, Communities are viewed as important participants in Unilevers CSR since the company invests significant sums from its operational expenditure in community-oriented initiatives such as those dealing with nutrition, sanitation, and entrepreneurship (Thompson, 2016).

Unilevers CSR plans fall under their Sustainable Living Plan which has provisions for improving the health of the communities which the company interacts with, reducing the firms environmental footprint and enhancing the livelihoods of persons (Case Studies in CSR: Unilever, 2016).

Improving Health and Well-being

Unilever hopes to improve the health status of more than one billion people by the year 2020. Their health and well-being program hopes to reduce ailments such as diarrhea by encouraging a handwashing culture in the targeted communities. Other aims of the program include the provision of safe water for drinking as well as improving sanitation and oral health of societies ("Sustainable Living," 2017). According to a PWC audit on Unilever, the CSR program had reached over 483 million persons by the year 2015 ("Sustainable Living," 2017). Unilever uses its various products to achieve its CSR goals. For instance, Unilevers hand washing program is aided by the reach of the companys Lifebuoy soap. Lifebuoy programs across the world have reached up to 337 million people. Further, Unilever had supplied over 78 billion liters of clean water to needy communities by the end of 2015 ("Sustainable Living," 2017). Lastly, Unilever develops products that have health and nutritional benefits. These include products with low fat and sugar content (Confino, 2012).

Reducing Environmental Impact

Unilever aims at having sustainable sourcing programs, reducing its waste, water usage, and greenhouse gas emissions. The company notes that currently, its supply chain emits 39 percent less carbon dioxide and it produces 97 percent less waste that it did in 2008 ("Sustainable Living," 2017). Moreover, by February 2016 all of Unilevers facilities across the globe produced zero toxic wastes. Furthermore, the firm managed to reduce its greenhouse gas emissions by 6 percent between 2010 and 2015. On top of that, Unilever engages in programs to ensure that it participates in sustainable sourcing ("Sustainable Living," 2017). The sustainable sourcing program has seen the company buy 98 percent of all its packaging materials from sustainable sources.

Enhancing Livelihoods

Unilever strives to improve livelihoods by promoting workplace fairness, gender equality in employment, and ensuring an inclusive business environment. Women form 45 percent of Unilevers management. Also, the company has invested in empowering close to one million women via entrepreneurial projects in India and Kenya ("Sustainable Living," 2017). Additionally, Unilever spends over 54 percent of its purchasing investment to ensure its suppliers meet the organizations fair compensation guidelines. These guidelines are guided by the UNs principles...