Traditionally, corporations were responsible only to their owners; and their primary and only objective was profit maximization. Corporations’ responsibility towards the community and the environment in which they operate was overlooked. Hence, responsibility towards the community and the environment which is commonly known as corporate social responsibility (CSR) is a recent development in the area of corporate governance.
CSR stands for a corporation’s initiatives to assess and take responsibility for the company’s effects on environmental and social well-being. The term generally applies to efforts that go beyond what may be required by their memoranda of association (MoA), regulators or environmental protection groups. CSR can involve incurring short-term costs that do not provide an immediate financial benefit to the company, but instead promote positive social and environmental change.
The same money and influence that enable large companies to inflict damage on people and the environment allows them to effect positive change. At its simplest, a corporation can give money to charity. Companies can also use their influence to pressure governments and other companies to treat people and resources more ethically.
Companies can invest in local communities in order to offset the negative impact their operations might have. A natural resources firm that begins to operate in a poor community might build a school, offer medical services or improve irrigation and sanitation equipment. Similarly, a company might invest in research and development (R&D) in sustainable technologies, even though the project might not immediately lead to increased profitability.
Today, a shift has occurred in the way people conceptualise corporate social responsibility. For decades, corporate business models have been assumed to be necessarily harmful to certain communities and resources. The intention was, therefore, to mitigate or reverse the damage inherent in doing business. Now many entrepreneurs consider profit and social-environmental benefit to be inextricable.
Some think CSR is an oxymoron. Others see it as a distraction of a different sort, that is, from the lawful pursuit of profits. To them, a corporation’s sole responsibility is to generate returns for its shareholders, not to try to save the world or to fret over its own impact.
Laws and regulations must be followed in all jurisdictions in which the company operates, but management should not go beyond that, as that could hurt its bottom line and violate its duties to the owners. Others counter that this concern is misplaced, since responsible initiatives can increase brand loyalty and therefore profits. This may become increasingly true as ethical consumer culture gains wider acceptance. In 2010, the International Organization for Standardization released ISO 26000, a set of voluntary standards meant to help companies implement CSR.
When we see the measures being taken and the advertisements broadcast on different mass media by different business entities in our country, we can observe the tendency that these business entities are using CSR as one tool of advertisement. To expound the claim at hand let me specifically analyze the floriculture and brewery sectors.
The floriculture sector is one of the sectors that invariably perceived as a sector which uses polluting substances. To gain acceptance and win the hearts of the society where it operates, apart from limiting the use of polluting substances and employing best available technologies, business entities engaged in floriculture business build schools and hospitals to the local community. However cynical this might seem, the act of building schools and hospitals and being eco-friendly is their obligation towards the community and the environment. Yet, these acts are considered by these enterprises as an act of benevolence; and they use these acts as tools in promoting what they do.
Similarly, when we look at the brewery sector, they contribute to the local community and the environment by using the best available technologies, creating employment opportunities, reducing polluting substances, building schools and hospitals, funding football clubs, and supplying useful production by-products to the community and others.
And when you see and hear the advertisements like those of Saint George, Walia and Dashen beers, and other related advertisements, one can understand that the things that are part of their CSR are being used as tools of promoting their businesses and ultimately maximizing their ultimate purpose – profit.
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