Corporate Social Responsibility: A Strategic Business Essay.

The Triple Bottom Line Theory

According to the United Nations Industrial Development Organization Corporate Social Responsibility is a concept of management where the businesses combine the social and environmental concerns in their operations and dealings with their stakeholders. A balance between the economic, environmental and social factors can be achieved by any business organization through the way. On the other hand it is also been suggested Corporate social responsibility is a corporate strategy of business organizations to create a good will in the society and amongst its customers. Though it is not directly aimed for profit making but it indirectly it benefits the company. It focuses on acknowledging the various expectations stakeholders have from the organization. Therefore, it really becomes important to distinguish between the Corporate Social Responsibility activities, which are a strategic business concept and the charity, sponsorships, and philanthropy activities. Philanthropy activities also contribute to the reduction of poverty, which also enhances the reputation of the company and makes the brand strong but the concept of CSR is beyond this (Jamali et al. 2017).  

It is a type of Corporate social responsibility that demands the corporate leaders to analyze and record the bottom line results not only in the economic terms but in terms of the company influence on the Society. This concept has three key ideas, first is that the three columns of responsibility must be separately kept with all the results reported separately for each of the areas. The second idea is that should have sustainable results. The idea of sustainability is very particular. Sustainability means that business process should not be done compromising the needs of the future generations. While some of the business men think that satisfying the needs of the customers is the most important criteria to sustain in the market and hence they ignore the sustainability concept. According to theorist, John Elkington the balance between the economic, environmental and social factors can be defined and gained (Lund-Thomsen, Lindgreen and Vanhamme 2016).

Many businessmen are motivated by short term benefits and hence take decisions that only benefit for few years and they make strategies to attain their objectives mostly financial (Deegan and Shelly 2014). The triple bottom line theory suggests a different idea businesses  the responsibility to make plans that have stability and that lasts for a longer time. Some of the businesses mainly focus on making decisions that only benefit for a shorter time.  Therefore, the aim of economic sustainability is not making swift profits but also to avoid the losses of both companies and the stakeholders (Rangan, Chase and Karim 2015).

Short-Term Benefits vs. Long-Term Sustainability

It is based on the life of people and their life style. The worlds have few businessmen that are making riches and are listed in the fortune 500 list and also there are millions in the same world that live on rags. The gap is continuously growing, the rich is getting richer and the poor is getting poorer. For any business to be stable it is very important that the wealth has to be equally and evenly distributed amongst all. Social responsibility is not limited to the wealth distribution it also relates to human respect and human rights. Social responsibility is the maintenance of healthy relationship with the communities and the people (Mezzadri 2014).

Environmental sustainability refers to the preservation and protection of the natural resources especially the non-renewable resources like oil fuels, clean air and water that is used for drinking is limited. If the non-renewable resources are lost then the coming generations might face problems because they will not be able to use the same quality of resources. This creates the need for conservation and protection of the resources that are available. Companies pouring harmful chemicals to the land and water resources are affecting the lives of people and the animals dependent on the resources. Increased carbon emission from industries resulting in global warming is raising serious environmental concerns. All this factors are to be considered by the business, this does not have any impact in the financial statement of the company but it is a very serious issue that is beyond all gains (Singh 2013).

In June 2011, following the UN human rights council’s endorsements of the Guiding principles on Business human rights.  International organization of employers (IOE) has launched a campaign named “Guidance Tools to how to do business with respect for the children’s rights to be free from child labor, to give guidelines on how the businesses can stop child labor and also provide solution to this problem”. They can see that there is no child labor in their operations or in the supply chain by applying appropriate policies (Jamali 2017).

As per the suggestion of UNICEF, businesses can look at the situation of any particular country where they are operating, and the working conditions be defined accordingly. The Internal business operations are needed to be analyzed so as to prevent the demand of suppliers and sub contractors that result in use of child labor. Initiatives are needed to be taken to stop child labor in various business operations. Companies can tell their employees not to hire children for domestic help who are below 14 years of age.  Another thing that can be done by the companies is to take initiatives in eliminating poverty so that child labor is discouraged (Goldstein 2015).

Social Responsibility and Wealth Distribution

Corporate social responsibilities are beneficial for both, the corporations and the society. The welfare of the local communities are taken care and hence the corporations also get an opportunity to promote their brand. Various corporations have noted many issues. Many social issues are being addressed, there are several diseases and medical conditions for which the treatment cause is very high. On the other hand many CSR according to its not always that all the social issues are addressed in CSR some of the issues are left out and not being addressed. Many corporations like the Tata group who works for helping the poor people get best treatment at a lower cost. Corporate social responsibility is a strategic move but the results in many cases are very positive, which makes the initiations very effective. The major advantages of CSR activities are, welfare of local communities, improvement of infrastructure, people get amenities like hospitals, parks, public toilets, roads and bridges are built. The present city Jamshedpur also known as Tata Nagar is a gift of CSR activities done by the Tata group of companies. The city is known for its good infrastructure, which was improved by the efforts of the company. There are similar efforts by the corporations that help in making the lives of people better and raising the standards of their lives (Jamali 2017).

There are certain disadvantages of CSR as well, according to Ahuja, (2015).  CSR often create corruption issues many, NGOs many a times have been caught for doing some illegal business like child trafficking in the name of opening orphanages for poor and orphan children. He further says that there is also lot of duplicate activities is also being carried out in the name of corporate social responsibility. The same kind of issues is raised again and again by the corporations. He also says that the CSR activity sometimes becomes the reason for loss of the Corporation if there is no participation of the local community Ahuja (2015).

ITC follows the “No Child Labor and No Forced Labor policy”. According to their policy no child below the age of 18 be employed in the organization or get involved in the vendor and suppliers’ operations who use forced Child labor. The company has communicated their policies to all their employees in a very clear way. ITC have units that see that these policies are strictly followed and also there are grievances redressal forums. The policy is being regulated as well as monitored by the Sustainability Compliance Review Committee (Dhanesh 2015). ITC has taken other initiatives like it donates a part of its revenue in educating the less fortunate children. It encourages its customers to buy their products help the poor children by their products (Delaney 2016).

Environmental Sustainability

The main challenges that ITC faces while the carrying out its CSR activities is that, it  is very difficult for the people living in the remote areas are reluctant about the CSR activities, they do not have much idea about the CSR concepts so to convince them to participate and cooperate with the companies. The child labor issue is deep rooted in  India, to eradicate the issue from its supply chain ITC will have to implement more stringent laws. The educated portion of the society does not participate much in these kinds of activities. CSR activities also demands the involvement of volunteers, so lack of volunteer from the society often results failure of the campaigns. Corruption is another  major that affects the effective implementation and execution of the policies. Monitoring is often not done properly and hence it becomes difficult to eradicate child labor from the supply chain (Delaney 2016).

It was reported in an Australia newspaper that the problem of child labor in India is very serious in the mica mining sector of India. In the year 2010-2011 it was also reported that 86 percent of the total exports of mica were unregulated. The companies normally trust their distributors when they assure that the mica production is free from Child labors in any kind. In the recent times many companies started a social audit see that there is no child labor in Mica production. L’Oreal’s Mica supplier in India Merck also undertook a social audit to check the authencity of the report and to what extent the issue of Child labor is prevailing in the Production of Mica. Form the year 2007 Merck has appointed HR management consultants for the monthly assessments of the mining operations. Merck has also joined hands with the NGO, “Bachpan Bachao Andolan” ( Save the Childhood campaign) so that they can create child friendly villages were the mica resources are in abundant, so that child labor can be reduced in these areas. Companies like Estee Lauder have also engaged with the NGO and claims that it is working with the National Resources stewardship (Delaney 2016).

Children involved in the mica production often belong to poor families, they are forced to take p jobs at an early age. Child labor is not always forced, children after age of 15 yrs because of the financial problems in their families voluntarily take jobs in areas like mica production. Even if companies like L’Oreal take measures to stop the problem, there will always ne children from the age group of 15-18 who would manage to get themselves employed in the mica production, so it the poverty that is major challenge for L’Oreal. Another challenge is that, since it is a big and expanded industry, to monitor the child labor activities becomes very difficult (Cole 2017).

CSR Activities' Benefits, Advantages, and Disadvantages

One of the world’s largest fashion retailers with eight brands and 6,460 stores all around the world. The goal of the organization is to offer a standard quality of products to its customers and also establish a sustainable business. The textile company employs more than 35 million people and is known to be India’s second largest company in terms of employment generation. Most of the suppliers are from European companies and only 5 percent of manufacturing is done in India. Currently there are more than 100 non exclusive suppliers in India employing 65,000 people. The suppliers have worked along with the company to improve the working processes. Inditex takes initiatives in improving the work conditions of the factories as per the Global Corporate social Responsibility Policy. One such example of the Corporate Social Responsibility is the Vidya Project, the objective of this project is to correct the problem of labor outsourcing in Northern India. In the research and investigation done by the Inditex team they filmed, photographed and recorded the poor working conditions  at the workshop of some of the sub contractors and it was also found that some of the manufacturing was done in the workshops. Inditex did not wanted these subcontractors to become the part of the supply chain hence they launched the Vidya project so as to abolish the illegal outsourcing of the work force in the operations of the supply chain agents, and take measures to improve the working conditions of the work places of the suppliers and the sub contractors. The objectives of the Vidya project, stop persons working below the age of 18, improve the safety conditions at working place, provide clean drinking water, and guarantee minimum fair wages to the workers. In order to  make sure that there is no child labor is practiced Inditex introduced age verification measures. The Indian CSR team of Inditex visited 400 workshops of their suppliers to help them improve the working conditions (Deegan and Shelly 2014).

The single most critical challenge faced by Inditex is that, it is very difficult to create awareness amongst the poor people about the Vidya Project, it is challenge to generate interest amongst the children and their families to participate in the initiatives taken by the company. There is lack of consistency in involvement and participation of local communities in this kind of projects (Deegan and Shelly 2014).

The case of SGFI is related to the child labor issue in the ball manufacturer and exporters in Jalandhar. In the year 1998 the issue of Child labors working in the inflatable ball manufacturing was reported. The issue got so much media coverage and the inflatable balls from India and Pakistan were boycotted. Pakistan signed an agreement with Atlanta, under this different stakeholders joined hands to introduce a monitoring mechanism. The manufacturers of the Jalandhar established Sports Good Foundation of India in response to this, in order to help monitor the issue of Child labor among the SGFI members. FIFA financed the SGFI from 1999 to 2003 on condition that international bodies like SGS will do the external monitoring. SGS was hired by SGFI to monitor inflatable balls to be exported in Jalandhar. UNIDO interfered and launched its cluster development program. Through this program SFGI entered different areas of Corporate Social Responsibility. SFGI monitors the production process and also investigates about Child labors (Cole 2017).

ITC's No Child Labor and No Forced Labor Policy

The shortage of the Government resources and the distrust in the regulations has created a need for looking for voluntary and non-regulatory measures. The local communities are very much hesitant to the CSR projects because of the lack of awareness and interest about the CSR concepts, this makes it very difficult to implement any measures. Lack of proper implementation of the regulations by SGFI creates loopholes in the system and hence it was very difficult to handle the issue (Ahuja 2015).

Conclusion

It can be concluded that Corporate Social responsibility is very important for any business, it helps the businesses to contribute to the welfare of the society and make their stakeholders happy.  Businesses do a lot of activities as CSR, many companies work for serious social issues, one such issue is Child Labor. Child Labor in India is one of the serious issues and many companies have been working for the social cause, like ITC, L’Oreal and Inditex. Though, there are lot of challenges that the corporations have to face while carrying out the various social activities especially in remote and rural areas of the country. The concept of CSR is not known to the local communities and hence they are often hesitant and do not show any interest. They do not participate in the initiatives of the companies. Therefore, there is a need for creating awareness about Corporate Social Responsibility and the objective behind it. It will let them participate in the initiatives and hence will make the purpose of CSR successful.

References

Ahuja, R., 2015. The Study of Corporate Social Responsibilty in Indian Context. The International Journal of Business & Management, 3(1), p.135.

Cole, G., 2017. The Intersection of Corporate Social Responsibility and the Non-Profit Industrial Complex Exploitative Child Labor in Côte d’Ivoire’s Chocolate Industry. Columbia Social Work Review, (2014).

Deegan, C. and Shelly, M., 2014. Corporate social responsibilities: Alternative perspectives about the need to legislate. Journal of Business Ethics, 121(4), pp.499-526.

Delaney, A., Burchielli, R., Tate, J. and Worldwide, H., 2016. Corporate CSR responses to homework and child labour in the Indian and Pakistan leather sector. Gender Equality and Responsible Business: Expanding CSR Horizons, p.170.

Dhanesh, G.S., 2015. Why corporate social responsibility? An analysis of drivers of CSR in India. Management Communication Quarterly, 29(1), pp.114-129.

Goldstein, J.S., 2015. CSR Best Practice for Asbolishing Child Labor in the Travel and Tourism Industry. Denv. J. Int'l L. & Pol'y, 44, p.475.

Jamali, D., Lund-Thomsen, P. and Jeppesen, S., 2017. SMEs and CSR in developing countries. Business & Society, 56(1), pp.11-22.

Lund-Thomsen, P., Lindgreen, A. and Vanhamme, J., 2016. Industrial clusters and corporate social responsibility in developing countries: what we know, what we do not know, and what we need to know. Journal of Business Ethics, 133(1), pp.9-24.

Mezzadri, A., 2014. Backshoring, local sweatshop regimes and CSR in India. Competition & Change, 18(4), pp.327-344.

Rangan, K., Chase, L. and Karim, S., 2015. The truth about CSR. Harvard Business Review, 93(1/2), pp.40-49.

Singh, R., 2013. Child labour in India. Anusandhanika, 5(1/2), p.44.