CSR stands for Corporate Social Responsibility which is a discretionary process of a well-established organisation. It further carries out its duty for the well-being of the environment, society, and employees. To have the profits and revenues generated from the usage of the community's resources is returned to it through different means.
Corporate Social Responsibility:
With the help of CSR, the organisations build a positive and supportive image in the surrounding society. There is much confusion regarding the features of CSR within the organisation, which helps it to keep associated with the organisation.
Emergence of CSR
In the year 1930, CSR came into existence for the first time. The importance of responsibility in an organisation was realised and understood firstly by two of the professors such as Prof C.G and Professor A. A Berle from Harvard University during the time of the Great Depression of 1929. They believe that, if the corporations would have acted their responsibilities well, then such kind of condition would not have taken place.
1960s & 70s
It was difficult to change society’s perspective regarding the civil rights movement, environmentalism, and consumerism in the field of business. The guidelines that were formed in 1960 was Economic Co-Operation and Development (ECOD). The economy flourishes by advocating the policies. It also provides better employment options with an improved standard of living to the members with a balance finance condition.
In the year 1980, the World Conversation Strategy was published by the International Union for Conversation of Nature (IUCN). Their aim of the strategy was to increase the world's growth percentage by making the world economy more consistent. It also aimed to provide world equalities and remove poverty and its adverse effect in the world. The UN Earth Summit that was organised in the year 1992 at Rio De Janeiro formulated the business model of 'triple bottom line' which provides a simple idea of sustainable development with the organisation's profits and benefits.
Thus, several important and useful incidents happened after all those who have an important role in the establishment of the proposed concept in the organisation. It has become more difficult to convince or rather enforce the organisation to have these concepts in them.
Types of CSR
CSR is based on its four kinds of beneficiaries:
1. Ecological-Based CSR or Corporate Social Responsibility
The ecology-based CSR deals with the harmful effects of the environment that can be reduced by a company's attention to the operations. The organisation tries to decrease the harmful effects of the environment by minimising its by-product production that causes major damage to the environment. This also includes the encouragement to use the non-renewable resources for the environment. The increasing use of fossil fuels and the damage it causes to the environment is measured through this.
In this, a company holds its hand with the Non-profit organisations to conduct different programs to safeguard the society's well-being. To proceed with the programs, the companies arrange the fund to enhance the standards of the livings of people in society.
In a proper and smooth functioning of an organisation, human resource plays a major role in it. So, generally, the organisations focus on the requirement of the workforce to conduct their work and their living easier and better. This is executed in several methods such as the male figured employees get leave from the company to look after the newborn child. The organisation also offers medical insurance to the employee. This helps the employees to get treated in the best possible manner of medicine.
Generally, some of the companies are linked with several organisations for charity. The charities are contributed to the organisations and individuals to expect financial help from them. This is one of the most preferred CSR types that is utilised by several enterprises.
Advantages of CSR or Corporate Social Responsibility:
The significance of various Corporate Social Responsibility may be discussed above with their understandings. Now, the major merits of CSR are listed below:
One of the advantages of Corporate Social Responsibility refers to the increments of the value of terms and philanthropic activity of the company. Through this, the company gets a huge advantage in the market where the customers always aim to purchase goods that have a good image in the outside market. It includes another advantage where the company associated with the other companies to go with their business. CSR helps to influence the company's name in society as trustful and consistent in their work. The company enjoys having a good name and status in the society that helps the company to be superior in the business.
Promotion in attracting towards the enterprise by retaining the Employees
The strict rules and policies of a company help to attract more candidates towards it. And, this helps the company to get some best candidates with high potential where the candidate turnover becomes low. The new and existing employees of a company aim to an effective company which should always focus on the betterment of the working conditions of the company's employees. They wish that the company should have a genuine and empathetic approach towards their employees.
A company for people is always included in their wishlist where they wish the company to have regular assistance with fair treatment to the employees. The company should give special recognition to its employees at achievements. Some special days like anniversaries and birthdays should be given attention to become a dream company of the employees and to be counted in the list of the company for people in the market. This kind of small differences between the companies enhances the company’s performance in the market as compared with the other companies.
These kinds of policies of a company help to get major market value in the industry even at some severe time of tight labour market. This helps the companies to get over the other companies in the market. Through this, the company is benefitted, and it helps to minimise the training costing of the employees at the time of induction. The incentives of the old employees can be minimised through this name in the market. The employees try to perform their best through the motivation of the company and achieve better incentives through their work. With the help of skilled and effective employees in the company, it helps the company to increase its productivity and profit in the market, which reduces the rework of the company and help to satisfy their clients.
The companies which do not perform CSR are focussed by the authorities in the market. They believe that CSR helps to enhance the well-being of the community and the ecology, which makes the goodwill or reputation of the company by helping in an easy flow of them in the market. To have most of the profits in favour of the company, the company needs to follow the CSR regulations and policies to get the most of it. These companies easily receive the scrutiny process from the authorities. Sometimes, As the management recognises that the specific business of the enterprise will benefit the society and environment, they ignore the requirement of paperwork into it. And proceed with the project as fast as possible through their end.
The sponsors or financiers would like to invest in the enterprises, which bears worthy image in a market and projects goodwill of the company. If a company operates well in Corporate Social Responsibility, the goodwill of the enterprise automatically gets enhanced. This process also attracts more people towards investment in the significant programs of the company. The investment will be projected in the form of Foreign Direct Investment in this type of companies. This is also the method of contribution to earning foreign exchange in a nation. This process gains trust and goodwill, which eventually helps in attracting investors from other enterprises and ultimately from the industry. Even sometimes, the governmental agency of the nation also invests in these projects and thus, the company enjoys minimal issues in the regulation process of the project.
The Clean and Renewable form of energy is generated through Ecological Corporate Social Responsibility Program
The enterprises, which, follow the Corporate Social Responsibility regulations and build the CSR programs always ensure that their programs do not harm or affect the environment. The companies always ensure to use environment-friendly machines and develop such techniques and methods to reduce the damage of the environment and helps to maintain the clean and healthy environment of the society. Through this process, the company aims to use the maximum of the renewable resources in its project to minimise the damage of the environment.
The company also reduces the cost in production if they choose the use of the renewable process in their production. It helps to minimise the use of fossil fuels in their production.
It is very important to understand the difference between positive publicity and publicity. As every publicity is not good publicity. To increase the selling proportion of the products, the company should maintain a good name in the market. To have a good brand image in society is essential as a bad name can decrease the sales of the products of the company. It is not correct to be remembered for the wrong reason as it will lay down the market value of the company. Through the CSR program, a company can earn good publicity for its products which can assist in having a good as well as positive promotion in the industrial sector... The CSR program can help out the companies without even investing in the advertising section of the products and will allow having a good promotion in the market.
This also works to differentiate from the other companies in the market. The companies that are concerned with the environment and community factors always win over the other companies that sell their products comparatively lower at the prices in the market. Even the buyers are ready to contribute a little more to the company if they get aware of the concern of environmental factors of the company.
Disadvantages of CSR or Corporate Social Responsibility
There are certain observations based on which the enterprises express their complete disapproval of Corporate Social responsibility that may be mentioned below-
A well-known criticiser of CSR, Milton Friedman, which is a popular economist, and he believes that CSR deviates the path of earning profits in the business. He believes that the aim of business must be to gain a lot of profit from it, but CSR reduces the capability of earning profit for the welfare in the business. The shareholders are also included in the business, which hopes for the profit and focuses on the different methods or process on earning more profits. Whereas, as compared to the other companies, they use programs which are based on Corporate Social Responsibility for the well-being of the community and environment.
Thus, this can be said as the company increases its expenditure and costing of the production and in return receives less profit from it.
While including the CSR programs in the company norms, the company has to inform the buyers about the limitations of the products which are associated with it. And the product is made public if any of the regulations of CSR are not followed. It reduces the market image of the product. An example can be taken, as a truck-manufacturing unit had to withdraw all the old trucks from the market because of some defective features found in every mode. This damages the market image of the company and the sale is decreased in the market.
This causes a loss of trust among the customers and causes an extreme inconvenience to them.
In the beginning, the people and the customer have a very good impression on the enterprises, which include CSR programs in it. Gradually, the public became intolerant with the programs and started expecting immediate results from it. If the instant results are not noticed by the customers, then they start believing that CSR is just public stunts. For some companies, it is tough to make the customers understand the program and convince them to have the patience to get results. For this, the company must have the trust and patience of the customers to continue their programs for them. A constant level of effort is required to convince the customers about the product which is counted in the additional effort as well as unfruitful, ineffective tasks for a working company or enterprise.
To continue the events based on Corporate Social Responsibility, the company has to bear some additional costing than the actual cost of the item. It is completely payable by the consumers to the company. It becomes an extra burden for the company to get imposed on their customers every time.
Some of the big companies that can afford the cost of the products never raise the price of the items. Thus, small enterprises are manipulated to raise their product prices because they are not able to afford the raised costing of the product. They have to struggle in the market for the increasing prices of the product, which becomes very complicated for the companies.
The Provisions and the Legislations which are related to CSR
The legislation and the provisions are different for CSR at a different place. The imposed legislation varies with every company from various perspectives. Some can be based on the geographical location or the environment, culture or sometimes in different countries. The major countries that get affected by the legal contexts are Australia the United States of America and the United Kingdom are mentioned a follows:
The guidelines of the Organisation of Economic Cooperation and Development (OECD) for Corporate Social Responsibility
There is a global level platform where all the thirty nations being democratic can solve the matters in respect of ecological issues, economic issues, and social issues. The name of the global platform is the Organization for Economic Cooperation and Development (OECD). It follows all the defined guidelines that are based on the ethics of business operations and functions for the different companies to operate well with the market. The guidelines include the issues that are directly related to CSR programs and norms. Australia, UK, and the USA are the part of OECD where the different companies follow the OECD guidelines to operate well in the country with their company.
Only Following the OECD guidelines will not be sufficient as the companies are required to take all the general policies into considerations while operating in a country. It is mandatory to take proper care of the stakeholder’s interests in the country. Some essentials are listed below that are required to be followed by the company:
The enterprises are always inspired to:
The detailed guidelines of the information of the website, which refers to the OECD that is accessed through online services for the guidelines, included in the format of PDF.
Corporate Social Responsibility: Australia
The enterprises must contact the OECD groups operating in the country of Australia to get the knowledge of the guidelines formed by OECD so that they can act as members of the group. The company needs to be well aware of the CSR laws of Australia finalised by the court system of Australian local and centralised parts. In every case of Australia, the final and supreme jurisdiction is with the High Court, which influences the people with its decision. Some of the essential sections that influence the CSR factors at the Global process level listed below:
The Australian companies are legally bounded by the Australian laws that serve the basic human rights standard to well-being. An example can be taken as many strict laws have been developed to stop the harassment and discrimination at the workplace and employees must be given equal opportunities. There are many aspects of the law that controls the environment to have a greater impact on the CSR implementation in the country. The CSR implementation includes the safety, proper payment method, terms and conditions, occupational health of the employee and his bargaining capacity. The corporations that have a bad consequence on human rights are imposed as absolute liable by the law. It includes the bribe offered to the international officials, including the misconduct against the humanity of the country.
The directors are enforced with powerful duties for the stakeholder’s financial interest through the Corporation Act and Common Law. Under the Corporations Act, Section 181(1) the directors are under the pressure of ensuring the best interest of the corporation in the country.
The key conventions that are included in the UN regarding human actions are supported by the Australian government. The human rights in Australia are protected and promoted by the autonomous body named ‘Australian Human Rights Commission’ which is created by the Australian authorities. There are many responsibilities involved in it in which the most important is looking after the human and ethical rights of the employees of the nation as well as concentrate on the CSR.
Companies that aim to start their business in Australia follow the strict rules and regulations of the country. It includes the employees working hours and the breaks between the work. The Australian employment policy is well-regulated by the central and local legislation systems which apply their collaborative contracts with categories like the total working hours, salaries, overtime, remuneration, etc. 8 main conventions are promoted in Australia, and it is identified by The International Labor Organization (ILO).
The various operation of business activity should consider the environmental aspect of the country of Australia. In the implementation of CSR, Australia's environmental factors act as the major crucial ones in the list. There are several laws found that ensure the safety of the environment in the local area, state and central authorities in Australia. The law is imposed by the country because many other companies harm the environment of Australia. For this, the company or the enterprise requires a license, so that is it capable of reporting to the authorities about the issues. The companies are liable to provide a report on the total generation and the consuming of energy with the greenhouse gas emission in the production site.
The fight against corruption is carried out by the UN convention with Australia to become the least corrupted country worldwide.
The companies that use the natural resources of the environment should take care of the local residents living in the area. The laws are imposed even in consultation. The companies, which are functioning in Australia, need to monitor their functions with the local companies and the management of the business.
The implications and punishment for violating the norms of CSR in Australia
There is a rapid emergence of CSR norms in the country in which the enterpriser's expectation increases day by day. Thus, at the time of violating the CSR regulations, the companies face several implications as well as they lose their brand image in the share of the market and name.
The Australian Securities and Investments Commission (ASIC) is an autonomous body in Australia that executes the regulations on the corporate of Australia. It also manages the market and financial services of Australia. The status of the economy and the welfare of Australia should be in secured hands. This is generally determined by the ASIC as it is the duty to assure the nation. ASIC also maintains the market control and keep track of transparency of the markets. ASIC also looks into the matter of law violation. If any of the enterprise or company violate s the mentioned corporate law, then the company faces strict actions which are carried out by ASIC.
Type of Action
Description of Punishment
ASIC can approach the courts to take the required action for the organisation which violates the rule and cause misconduct in the process. The actions can accelerate to two kinds:
1. Penalties for crime, which can amount to detention by law
2 The penalties that incur money is to be paid to the city agency of the Commonwealth of the country.
To secure the interests of investors and customers, ASIC maintains the actions related to administrative, which includes:
1. Disqualification to manage any of the institutions
2. Ban from giving any credit of monetary service.
3. Termination, rectification, and retracting the terms of the license.
4. Public warnings announcements
ASIC takes valid judicial actions and enforces the others to follow it just to protect the assets.
After the court order, the corrective conclusion should be made.
ASIC can request the judiciary court to take action for the assurance of the ones who have suffered damage and recovered the loss.
Negotiated and Agreed Outcome
ASIC can negotiate the alternatives that result in an effective law which includes: 1. The cautionary notes which are officially enforced.
2. The compensation for breaching any announcements.
Corporate Social Responsibility: UK
As Australia is a part of OECD, similarly the UK is also a member of OECD. UK follows the OECD general policies related to CSR. There exist some policies that create an impact on the functioning of an enterprise in the United Kingdom
A New Enacted Law:
As per the UK Modern Slavery Act, the first organisation that creates their statements are those whose financial year ends on 31-03-2016. It is because of the reason that the Human Resource and Business centre had attained the registry which was required to be retained by the statement of the organisation as per the act
The implications and punishment for violating the norms of CSR in United Kingdom
It is very important for organisations that are functioned and operated in the United Kingdom to follow the regulations that respect human rights in the country. It must be noticed that every corporate law associated with the organisation that provides human rights and impact the address of human rights in the process.
1. Monetary penalty of £528 up to £26410.
2. Each officer or employee of the organisation would be punished with imprisonment of up to 3 years or above.
a. The court can charge a penalty on the organisation's employees to pay an amount that can be £528 to £5282.
3. Under the Section of 450 and 451, the organisations of the United Kingdoms will be facing some other casual punishments related to the organisation. Below are some enlisted points that are encountered in the operating function if an institution tries to violate any of the listed laws.
a. It can cause a monetary penalty of £4 up to £105. If the institution continuously violates the rules and guidelines, then the penalty of £10 per day will be associated until the violation continued and will be enforced on the organisation or the employee of the organisation.
b. Under Section 451, the offender will be heavily penalised either charging monetary charges or facing imprisonment. If the offender repeats the same crime, then the organisation will be charged the double amount if the crime is committed within a period of three years from the first one. The offender may face imprisonment that will be decided by the judiciary.
Corporate Social Responsibility: USA
The corporations that are being operated in the United States have to follow a wide external variety of the legislative obligations that define the responsibilities of the shareholders and stakeholders of the organisation. An example can be taken off: the US has developed a rule where the interest is guaranteed by the corporation to the shareholders and the stakeholders. The outline of the duties listed make the directors act and use the organisation resources responsibly. It ensures the requirements of the director to perform the activities according to the corporate interests where the organisation holds back all the ill intentions and the motives with all its objectives to manipulate the director's behaviour negatively. These duties are meant for the enhanced initiation of the corporation, which the also comprises of the shareholders and stockholders interests into it.
Every enterprise that is intended to be operated in the US should follow the rule of the contribution that is acknowledged in the US. The donations are carried forward by seven states of the US that donate in the charity regardless of the corporate profit gained in the market. Nineteen states in the US get benefited from the charity which is provided by the company and society. And thus the rest of 24 states are not clear about the charity that can provide in the interest of the organisation in the nation.
The Corporate laws that are formed by the state generally enforce the legal duties on the organisation and provide permission to the organisation to practice the lawful activities. Organisations can take part in CSR activities by forming their charters. Even the New York Times is working to fulfil the purpose of social well-being rather than incurring any earning in the market.
The rule of the business draws a strong assumption on the manager's activity of the organisation. The decision of a manager may be contested by the judiciary court, and until any verdict draws out, the organisation is required to meet all the clashed needs and interests of the customers.
The implications and punishment for violating the CSR norms in the United States Of America
The organisations that do not follow corporate laws are required to understand the bad consequence of their actions that can affect the company’s image in the market.
The instances of activities involving CSR
The leaders of the market perform activities that reflect the flow of the system involving CSR. They are the merits of an organisation which is better than having the demerits which are enlisted below:
Google’s CSR activities
Various attempts are initiated by Google for improvisation. Forbes has reported that Google has the best CSR activities in its function.
Google's CSR based on community
Google's CSR based on the ecology:
Google’s CSR based on Charity:
Effects: Google's green initiatives have drawn a great impact on the power consumption of some big enterprises. It has become almost the footprint of every organisation to follow the ideas of less power consumption in the organisation. It also involves charitable activities in it, including the advertisement without any amount charged.
Microsoft’s Corporate Social Responsibility Activities
Microsoft Company is very known for its contribution to social development. The owner of Microsoft, Bill Gates, offers a humanitarian approach to charities by donating billions of dollars to them. "The Bill and Melinda Gates Foundation" is non-governmental found by Bill Gates and Melinda Gates which supports millions of people with funding and medical services. They offer financial support in the research purpose related to medical.
Microsoft's CSR activities based on the community:
Microsoft offered the “Office 365” software to the NGOs free of cost. This software was in distribution over 92 nations by charging a nominal amount.
o Effects: Microsoft's CSR activities have highly influenced the development of society. This also led to the satisfaction of the employees. A study reveals that 86% of the employees of Microsoft have recommended this software to other branches of Microsoft. The other employees who were 94 in per cent revealed that the seniors treated them justifiably, and they were satisfied with their job. Therefore, it is also called as “good corporate “citizens.
Bosch’s Corporate Social Responsibility Activities
In the field of automation and industry, Bosch has reached a well-known position in the market. It is based on Germany that focuses all the operations that are carried out by the environmental norms and rules-
CSR of Bosch – based on HR
Bosch's CSR Activities based on the environment
Effects: By the invention of this technology, Bosch also helped the other public to know more about the term of saving energy that can ensure a clean and better environment around us in future.
Hewlett-Packard Germany Corporate Social Responsibility Activities
In the IT industry, one of the popular names is Hewlett-Packard. It is very well-known for the technologies that are brought up by Hewlett-Packard. The technology aims to use very less amount of energy and works in an efficient way.
HP's CSR Activities based on the environment
Effects: There are many creative and innovative programs developed by HP that helps in the awareness and increases the concern of the production of clean energy in nature. It helps to keep the environment more cleanly as compared with the earlier situation.