Current Development in Corporate Social Responsibility

Recent theories of CSR assert that firms engage in “profit-maximizing” CSR.[45] That is, companies are assumed to be socially responsible because they anticipate a benefit from these actions. Examples of such benefits might include reputation enhancement, the ability to charge a premium price for its output, or the use of CSR to recruit and retain high quality workers. These benefits are presumed to offset the higher costs associated with CSR, since resources must be allocated to allow the company to achieve adequate CSR status, i.e. adequate level of CSR.

Despite the lack of a commonly agreed definition of CSR, as has already been mentioned in the subchapter Definition of Corporate Social Responsibility, there can be identified a consensus among academics and business professionals about key trends in the CSR area. Three key trends are the following:

Ø Beyond philanthropy to more integrated approaches in the mainstream business. For a growing number of companies, the concept of CSR has moved beyond traditional philanthropy, although philanthropy remains important. Also philanthropy became more strategic, i.e. aligned with the company’s strategy and operation.

Ø Beyond public relations to a greater accountability and stakeholder engagement. For more than a decade there exists a growth in demands by stakeholders, including shareholders, for companies to demonstrate greater accountability, transparency and integrity and not only in terms of their financial accounts and statements, but also in terms of their wider social, economic and environmental impacts.

Ø Beyond legal compliance to a greater clarity of principles and values. There has been a growing recognition of the need to balance rules with values and for companies to have greater clarity, both internally and externally, in terms of their purpose, principles and values, backed up by penalties and remediation when these are not met. [46]

Effective CSR is more than a response to external stakeholder expectations, or an effort to manage social and environmental risks and harness new business opportunities. It is a statement about what a company stands for and would stand by, even if this sometimes incurs additional costs or results in a lost business opportunity. It requires that business owners, business managers, and employees not only comply with the law, or undertake actions that they can directly link to financial gain, but also aim to do the right thing.

Since the last decade of 20th century a great number of manufactures, retailers and service companies all around the World, but particularly in developed countries, has adopted voluntary standards for labor conditions, environmental practices and human rights. Often these new commitments have been incorporated into corporate and industry codes, multi-stakeholders initiatives and private standard setting bodies, frequently with reporting and monitoring requirements. This complex of soft laws has helped to create new social and environmental norms for several important dimensions of business conduct. Globally, civil regulation represented by CSR movement has produced important changes in business practices, including:

· Reduction in the employment of child labor and improvement in health and safety conditions in many companies; [47]

· An increase in the prices some agricultural producers in developing countries – notably coffee growers – received for their products; [48]

· A reduction in the quantity of wood products sold in the United States and Europe produced from tropical, old–growth, and endangered forests;

· A decrease in greenhouse gas emissions or in their rate of growth;

· The withdraw of many companies from countries, where exist strong violation of human rights, where local government are corrupt and impoverish its citizens; [49]

· An improvement of some of the negative environmental and social impacts of natural resource development in the developing countries.

Even though CSR movement has done a lot of good things and still is developing further, some academics predict its decline; and not because of the financial crisis or recession. Stefan Stern has claimed, “In the inevitable life cycle of management, CSR is now heading for the exit. Customers are generally unconvinced by the hype. And social responsibility was always too flimsy concept to gain serious traction with business leaders. That gives us a clue as to the identity of the next Big Thing in management: “sustainability”. Unlike CSR, this concept has some meat and commercial potential to it. Innovations that make money while helping to reduce carbon emissions are actually worth pursuing.” [50]

Personally, I disagree with Mr. Stern. Sustainability cannot replace CSR concept, as “sustainability” actually is part of CSR. Sustainability is only a small part in much bigger CSR mosaic. On my side is also the European Commission, which commends companies to go beyond minimum legal requirements to address societal needs. Also CSR concept has been strongly supported by Patrick Cescau, Unilever’s Chief Executive. He said, “Companies’ commitment should go further than philanthropy, although that still had its place.” He also said that companies and non-governmental organizations were no longer automatic adversaries. In many cases, they worked together. Most important, Mr. Cescau said, “CSR involved understanding that many of the big social and environmental challenges of our age, once seen as obstacles to progress, have become opportunities for innovation and business development.” [51]

These days CSR field is becoming more crowded. The early lead in CSR enjoyed by Europe based companies is now being challenged both by US businesses and by enterprises in China and India. Sustainable and ethical practices are fast becoming basic requirements for doing business, nationally and globally. This reality means the question is no longer about whether a business case can be made for CSR – it's about how to maximize the return on the investment. There are many ways to look at returns from CSR but the most significant result from the power of CSR is an improvement in company’s performance. Here is one example from real life by Tim Smart, President of BT Global Services UK: “Action to cut waste and consumption may reduce carbon emissions, but in the process can also deliver significant cost savings. These savings can be immediate – for instance, in the form of reduced energy costs – or they can result from subtler, longer-term improvements in human resource management.” [52]

Finally, eminent role in current development of CSR, similarly as in its history, plays profit. Profit, in good times and bad, is where any discussion of companies’ responsibilities should start. Without profit, there is no future for shareholders, employees, customers, business partners or in other words for stakeholders. Without profit, there is no future for CSR.