Print7.1 Corporate Social Responsibility
Corporate Social Awareness
Corporations are inherently socially aware entities by the very fact that they have to be known to be able to do business. Corporations operate within wider market systems, competing with many other corporations in the same or similar specifics as to what the markets are about (e.g., the corporation is typically a computer company, or a clothing company, or an energy company). In these markets, the performance of a Corporation can depend as much on societal perceptions of brand identity as it does on rational monetary relationships to the Market. Marketing (departments or firms) can control the corporate public image only so far, because, regardless of whether the corporation is operating in a standards or status market, reputation matters. What a corporation has a reputation for extends from its actions, both intentional and unintentional, over the duration of a product or service. While sudden events, such as a tragic structural failure, can suddenly change the reputation of a corporation overnight, it is the "slow and steady" events and steps taken to build their reputations that establish the long-term social identity of corporations.
The social imperative of corporations, according to Milton Friedman (1970), is to maximize shareholder profits. It was, however, only a few years after Friedman said this, when the beginnings of social responsibility were being promoted in the business community and that the idea of putting stakeholders in the forefront was taking root. From nuclear proliferation to burning rivers, the environmental and social justice actions of companies were coming to a head in the late 1970s and early 1980s. At the time, however, no issue was more pressing than focusing on divestment in companies making money from supporting the apartheid government in South Africa.
Perceptions began to change and one firm, Calvert Investments, established in 1976, decided that their only focus was going to be on verifiably socially and environmentally responsible investments. As an intermediary between investors and companies, Calvert Investments pioneered and developed investment portfolios that were based on performance in three significant categories: environmental, social, and corporate governance (ESG). Since the late 1970s, the varied approaches to socially responsible investing developed by firms like Calvert Investments have definitively reshaped the goals, actions, and corporate structures of most of the biggest companies in the world.
The conceptualization and foundations for nonmarket strategies emerged from this movement towards socially and environmentally responsible businesses. Sustainability and the development of sustainability management planning is now at the core of most corporate Corporate Social Responsibilities (CSR) agendas
Corporate Social Responsibilities
There are a wide variety of models and approaches that companies apply to reshape their business practices around social and environmental responsibilities. The main goal is the generally the same, though, which is to increase value for society as well as for the company. The clothing manufacturer, Patagonia, whose motto is "Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis,"has been a leader in the area of social and environmental responsibility for decades. Some companies are deeply and structurally committed to corporate giving, such as Newman's Own, started by Paul Newman and his wife, which gives away 100% of the profits to charity.
| Usage | Purpose | Impact | Benefits |
|---|---|---|---|
| CSR as value creation | Innovative and promotes sustainable business model | Fundamental strategic and operational impact |
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| CSR as risk management | compliance | medium to high strategic and operational impact |
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| CSR as corporate philanthropy | providing funding and skills | little strategic and operational impact |
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This diagram, summarizes the various ways in which big companies may think about pursuing and increasing value through their CSR resources, moving up the value chain from giving resources away (philanthropy); to reduction and management of internal and external risks; to the creation of new values and social structures, with a focus on comprehensive and integrated sustainability for the company and for society.