THE DISCONNECT BETWEEN BUSINESS AND SOCIETY
In recent years there have been efforts to try and connect society with businesses. Talks of the roles that corporate and businesses can play in trying to change society and environments are becoming more and more. Corporate social responsibility (CSR) is becoming a trend with corporate, big and small, incorporating this activity in society. CSR comes in where businesses take on the responsibility of taking care of problems that particular societies are facing. These actions go to show that businesses are concerned about societies and what goes on in these particular societies. However, the relatively new concept of CSR has not always been the case. In the past few decades there has been a noticeable disconnect between businesses and society. This disconnect has been able to negatively impact societies in which businesses operate. However, there are proponents that argue that a business is a business is a business. These people believe that the incorporation of society needs into any particular business is in essence a recipe for disaster. Such arguments have in essence implied that there exists a disconnect between society and business and that to some this disconnect is justified.
There are different reasons that have been given to justify the disconnect between society and business. One of the main influences of this disconnect has been attributed to capitalism. It has been argued that capitalism has and is still the biggest hindrance to the achievement of businesses full potential as far as their meeting of their respective societal needs is concerned. The pressures in the societies are such that the businesses are under the pressure to produce short term results rather than examine and consider the repercussions that society is likely to face because of these decisions. Therefore, beneficial decisions such as cost-cutting as well as relocation of the businesses to low income areas might be advantageous to the businesses but are a bad idea for the society.
Society on the other hand is not taking these decisions lying down. Society in general as well as governments and institutions are fighting businesses back by creating legislations as well as policies that limit the actions that businesses can take. This in a way goes to show that society is aware of the fact that businesses have put profit ahead of societies needs and therefore there was need to punish these actions.
Currently, it can be argued that both society through government and both so concerned about emphasizing who was right and who was the source of conflict as well as who would come out victorious in the end that little if no effort is placed on the shared interests between the two parties. This has resulted in huge loss of potential opportunities that may be presented between the two parties that would have ended up benefiting both parties and the community at large.
If businesses would step up and find a way that would incorporate society and its functions into how they carry out their profit making systems, then there would be less conflict between the two parties and more benefit instead. This involves the incorporation of social benefits that include looking at society not only as a means of making profit, but also as a place that needs to be included in the business strategy, after all, a happy society is likely to give back more profit to the business than that of a less happy society.
It can be concluded that while capitalism played and still plays a very important role in the creation of a drift between the businesses and society, it can also be used for the exact opposite reason. Thus, instead of using capitalism as a tool for benefiting the business and its shareholders, it should be used to benefit society as a shareholder.
Business and the role it plays in society
Prosperity in any given society can only be created by business. Therefore, a healthy community will in turn create healthy businesses. Over the years, societal problems keep on growing, so much so that that governments as well as non-governmental societies are finding it hard to solve all these problems. Companies are being seen as prospering at the expense of the general community. Furthermore, businesses are now viewed as the major contributors to environmental, social and economic problems that face the community.
It has been found that more often than not businesses that neglect social responsibilities are more often than not likely to be attacked by society. Therefore, it is important that businesses work hard not to ignore social problems that societies face.
Examples can be found everywhere of the long-term business impact of social issues. These are increasing at a fast rate more so in the current century. In the pharmaceuticals sector for example, a tempest of social pressures over the last decade, emerging from issues such as public perceptions of excessive prices charged for HIV drugs in developing countries, are now translating into a general, and sometimes seemingly unsystematic, toughening in the regulatory atmosphere. In the food and restaurant sector, on the other hand, the long escalating debate about obesity is now resulting in calls for further controls on the marketing of unhealthy foods. More so, in the case of big financial institutions, concerns over conflicts of interest and mis-selling of products have recently led to changes in core business practices and industry structure. On the other hand, for some big retailers, public and planning resistance to new stores is constraining growth opportunities. And all this is to say nothing of how social and political pressures have reshaped and redefined the tobacco industry or the oil and mining industries over the decades. This just goes to show the fact that business and society are intertwined and that actions taken by any particular business are reflected in society and that society will hit back if it feels unhappy.
It has become important for companies to be able to incorporate a concept known as share value. This involves creation of corporate values and practices that not only enhance the company’s competitiveness but also enhances social and economic conditions in the society in which that particular company operates.
Businesses need to understand that there is a social contract between them and the society in which they exist. The creation of a drift between the two would lead to conflict and therefore great loss. On the other hand, businesses have to realize that they can only thrive if society thrives, and vice versa is also true; therefore it is of key importance that businesses take societal problems into consideration instead of leaving it to government and NGO’s only.
THE LINK BETWEEN CSR AND SUSTAINABLE DEVELOPMENT
Corporate Social Responsibility (CSR) is a relatively new term that been in existence for less than a century. This term involves that involves companies managing their business processes in a way that produces an overall positive effects on society, is a trend that has caught on in the business community. Currently, businesses of all nature, all over the world, have subscribed to this ideology and are positively giving back to society in all manner of projects. Corporate Social Responsibility has taken firm root in the global community. Presently, one can go as far as argue the fact that there is a ‘social contract’ between most if not all corporations and the particular societies in which they operate[1].
One of CSRs pioneers practitioners A.B. Carroll defines it as ‘The total corporate social responsibility of business entails the simultaneous fulfilment of the firm’s economic, legal, ethical and philanthropic responsibilities. Stated in more pragmatic and managerial terms, the CSR firm should strive to make a profit, obey the law, be ethical, and be a good corporate citizen’ (Carroll, 1991, p. 43). What is becoming more and more evident as days go by is the fact that the private sectors, i.e. the businesses are becoming a major contributor towards sustainable development in society. In fact, “implied in the debate is the idea that the private sector is the dominant engine of growth – the principle creator of value and managerial resources – and that it has an obligation to contribute to economic growth and opportunity – equitable and sustainable.” (Jamali & Mishak, 2007, p. 362)
Since the early 1990’s, corporate responsibility issues including the social obligations of corporations have attained prominence in political as well as business debates. This has been mainly in response to not only corporate scandals but also because of the realisation that development centred only on economic growth paradigms is unsustainable thus there is a need for a more pro-active role by companies, states, and communities in a development process aimed at balancing economic growth with environmental sustainability and social consistency.
Can it therefore be argued that there is a link between CSR and sustainable development?
For a better understanding of the concept, it would have to be broken down into two parts. The first involves CSR and how businesses adopt it. The second part would be sustainable development. More often than not, sustainability in a business context is used to define organizations activities, which are usually voluntary in nature, which usually demonstrate that organizations concern for both social as well as environmental concerns. On the other hand, CSR involves the incorporation or responsible practises in the day to day business operations[2].
In recent years there have been numerous efforts to focus CSR on social environment as well as sustainable growth. This has all been in an effort to conserve the earth’s resources[3]. It is now becoming a norm for companies to be asked to showcase their plans on how they aim to conduct their businesses in a manner that will ensure its prosperity on one hand while taking care of the environment and society in general. Currently, there is no limitation as to who can incorporate CSR for the purpose of sustainable development and who cannot[4].
Relationship between sustainable development and CSR
The duty and functioning of any good company or enterprise is divided into four major functions. These include corporate competitiveness, governance, sustainability and CSR.
The proper functioning of that particular organization will depend on how they are able to juggle any of the two if not all factors. What is however clear is the fact that a link has been established between these factors due to the duties they play in any given business[5].
There has been no clear definition as to the link between sustainable development SD and CSR. However, a rough sketch of this inter-relation would be as follows in this diagram below.
The incorporation of sustainability aspects into general functioning of the business management is what plays the contributory role in this scheme. The general idea is that it would help the business fulfil its duty to society while on the other hand maintaining the shareholder demands creating a win-win situation.
Therefore, whether businesses like it or not, there is a distinct interrelation between CSR and sustainable development not only of the business but also of the society in which the business operates such that they co-exist.
[1] An article titled ‘Social Responsibility Builds Long-Term Success: Opinion’ written by Michael Crooke, quoted “Until now, legal requirements for corporations focused on one goal: profits. Today, benefit corporations add the legal duty of companies to achieve profits while also focusing on socially responsible activities — also known as Corporate Social Responsibility (CSR). Start-up businesses and existing small businesses would be well-served to adopt a benefit corporation structure. Companies that seek to establish sustainable principles as part of their business and marketing strategy and, more importantly, their corporate DNA, are positioned for long-term success.” Accessed at http://www.cnbc.com/id/47599530 on August 30, 2013
[2] As an engine for social progress, CSR helps companies live up to their responsibilities as global citizens and local neighbours in a fast-changing world. And acting in a socially responsible manner is more than just an ethical duty for a company, but is something that actually has a bottom line pay-off.
[3] In 1987, the World Commission on Environment and Development published a landmark action plan for environmental sustainability. The commission, named after former Norwegian Prime Minister Gro Harlen Brundlandt, defined sustainability as "meeting the needs of the present without compromising the ability of future generations to meet their needs."
[4] A report carried out by one of the world’s largest law firms on request from The United Nations Environment Program Financial Initiative in 2005 concluded that "Integrating environment, social and governance considerations into an investment analysis so as to more reliably predict financial performance is clearly permissible and is arguably required in all jurisdictions,"
- Corporate Competitiveness addressed by strategic management is a subject rarely discussed in the context of corporate responsibility. However, unless all strands of corporate responsibility are brought together under a common management framework, CSR and sustainability will remain peripheral activities and their impact is likely to remain well below required levels to achieve the Millennium and related goals.
- Corporate Governance sets the legal framework to protect a company’s shareholders and stakeholders; the relative emphasis being dependent on national approaches.
- CSR is aimed at extending the legal requirements promoting ethics, philanthropy and social reporting to satisfy stakeholder concerns.
- Corporate sustainability focuses on long term economic and social stakeholder expectations both by optimising their sustainability performance and by participating in networks with governments, NGOs and other stakeholders that can provide the capacity for the world’s sustainable development.
