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Corporate Social Responsibility

(CSR), also known as corporate responsibility,corporate citizenship, responsible business, sustainable responsible business (SRB) andcorporate social performance'

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is a form of corporate self-regulationintegrated into a business model.Ideally, CSR policy would function as a built-in, self-regulatingmechanism whereby business would monitor and ensure their adherence to law, ethicalstandards, and internationalnorms.Business would embrace responsibility for the impactof their activities on the environment, consumers, employees, communities, stakeholdersand all other members of the public sphere. Furthermore, business would proactively promote the public interestby encouraging community growth and development, andvoluntarily eliminating practices that harm the public sphere, regardless of legality.Essentially, CSR is the deliberate inclusion of public interestinto corporatedecision- making, and the honoring of atriple bottom line: People, Planet, Profit. The practice of CSR is subject to much debate and criticism. Proponents argue that thereis a strong business case for CSR, in that corporations benefit in multiple ways byoperating with a perspective broader and longer than their own immediate, short-term profits. Critics argue that CSR distracts from the fundamental economic role of businesses; others argue that it is nothing more than superficialwindow-dressing; othersargue that it is an attempt to pre-empt the role of governments as a watchdog over powerfulmultinational corporations.

Development

Business ethicsis one of the forms of applied ethicsthat examines ethical principles and moral or ethical problems that can arise in a business environment.In the increasingly conscience-focused marketplaces of the 21st century, the demand for moreethical business processes and actions (known as ethicism) is increasing.Simultaneously, pressure is applied on industry to improve business ethicsthrough new public initiatives and laws (e.g. higher UK road tax for higher-emission vehicles).Business ethics can be both a normative and a descriptive discipline. As a corporate practice and a career specialization, the field is primarily normative. In academia,descriptive approaches are also taken. The range and quantity of business ethical issuesreflects the degree to which business is perceived to be at odds with non-economic socialvalues. Historically, interest in business ethics accelerated dramatically during the 1980sand 1990s, both within major corporations and within academia. For example, today mostmajor corporate websites lay emphasis on commitment to promoting non-economicsocial values under a variety of headings (e.g. ethics codes,social responsibilitycharters).In some cases, corporations have re-branded their core values in the light of businessethical considerations (e.g.BP's "beyond petroleum" environmental tilt).The term CSR came in to common use in the early 1970s although it was seldomabbreviated. The termstakeholder , meaning those impacted by an organization's

activities, was used to describe corporate owners beyondshareholdersas a result of aninfluential book by R Freeman in 1984.

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Whilst there is no recognized standard for CSR, public sector organizations (the United Nations for example) adhere to theTriple Bottom Line(TBL). It is widely accepted thatCSR adheres to similar principles but with no formal act of legislation.

Approaches

Some commentators have identified a difference between theContinental EuropeanandtheAnglo-Saxonapproaches to CSR.

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And even within Europe the discussion aboutCSR is very heterogeneous.

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An approach for CSR that is becoming more widely accepted is community-baseddevelopment projects, such as theShell Foundation's involvement in theFlower Valley, South Africa. Here they have set up an Early Learning Centre to help educate thecommunity's children, as well as develop new skills for the adults.Marks and Spencer isalso active in this community through the building of a trade network with thecommunity - guaranteeing regular fair trade purchases. Often alternative approaches tothis is the establishment of education facilities for adults, as well as HIV/AIDS education programmes. The majority of these CSR projects are established in Africa. A morecommon approach of CSR is through the giving of aid to local organizations andimpoverished communities in developing countries. Some organizations

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do not likethis approach as it does not help build on the skills of the local people, whereascommunity-based development generally leads to more sustainable development

Social accounting, auditing and reporting

Main article:Social accountingTaking responsibility for its impact on society means in the first instance that a companyaccounts for its actions.Social accounting, a concept describing the communication of social and environmental effects of a company's economic actions to particular interestgroups within society and to society at large, is thus an important element of CSR.

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A number of reporting guidelines or standards have been developed to serve asframeworks for social accounting, auditing and reporting:

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AccountAbility'sAA1000standard, based onJohn Elkington'striple bottom line (3BL) reporting

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Accounting for Sustainability'sConnected Reporting Framework .

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Global Reporting Initiative's Sustainability Reporting Guidelines

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GoodCorporation'sStandarddeveloped in association with the Institute of Business Ethics

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Green GlobeCertification / Standard

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Social Accountability International'sSA8000standard

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TheISO 14000environmental management standard

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TheUnited Nations Global Compactpromotes companies reporting in the formatof aCommunication on Progress (COP). A COP report describes the company'simplementation of the Compact's ten universal principles.

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TheUnited Nations Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR)provides voluntarytechnical guidance oneco-efficiency indicators,corporate responsibility reporting andcorporate governance disclosure.

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Verite's Monitoring GuidelinesTheFTSE Group publishes theFTSE4Good Index,an evaluation of CSR performance of companies.In some nations legal requirements for social accounting, auditing and reporting exist(e.g. in the Frenchbilan social), though agreement on meaningful measurements of socialand environmental performance is difficult. Many companies now produce externallyaudited annual reports that cover Sustainable Developmentand CSR issues ("TripleBottom Line Reports"), but the reports vary widely in format, style, andevaluation methodology(even within the same industry). Critics dismiss these reports aslip service, citing examples such asEnron's yearly "Corporate Responsibility Annual Report" andtobacco corporations' social reports.

Potential business benefits

The scale and nature of the benefits of CSR for an organization can vary depending onthe nature of the enterprise, and are difficult to quantify, though there is a large body of literature exhorting business to adopt measures beyond financial ones (e.g.,Deming'sFourteen Points, balanced scorecards). Orlitzky, Schmidt, and Rynes

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found a correlation between social/environmental performance and financial performance. However, businesses may not be looking at short-run financial returns when developing their CSR strategy.The definition of CSR used within an organization can vary from the strict "stakeholder impacts" definition used by many CSR advocates and will often includecharitable efforts andvolunteering. CSR may be based within thehuman resources, business development or public relationsdepartments of an organisation,

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or may be given a separate unitreporting to theCEOor in some cases directly to theboard. Some companies may implement CSR-type values without a clearly defined team or programme.The business casefor CSR within a company will likely rest on one or more of thesearguments: