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Business Responsibility and Sustainability Essay

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Updated: Jul 15th, 2021

Overview

Corporate social responsibility (CSR) gradually becomes one of the major priorities for modern businesses. This paper will examine the positive and negative aspects of applying CSR standards. One should determine if this strategy is helpful in establishing an organization that acts in a socially responsible way. At first, it is necessary to describe the concept of a CSR standard and identify its types. Much attention has to be paid to the specific examples of these norms like the United Nations Global Compact (UNGC) and ISO 26000. This discussion will illustrate the strengths and weaknesses of relying on CSR standards.

Introduction

Before discussing the types of CSR standards, one should briefly define this concept. Overall, this term can be described as the level or extent to which the organisation adopts socially responsible and sustainable practices (Williams, 2014). Furthermore, this notion is used as a reference to the norms and rules that companies follow to maximise the welfare of the community. This paper will be focused on the second definition of this term. The concept applies to different areas of performance, including corporate philanthropy, labour relations, environmental protection and so forth. These norms can be divided into four groups depending on their functions (Williams, 2014).

At first, one should speak about principle-based standards; they are supposed to identify strategic objectives and ideals that an enterprise should attain (Williams, 2014). Process-based standards are aimed at outlining various activities that enable firms to become socially responsible (Williams, 2014). Certificate-based standards can be viewed as pre-determined criteria according to which the work of businesses is evaluated (Williams, 2014). Finally, it is possible to mention the reporting standards describing the requirements that managers should meet while presenting the information about the performance of their companies.

Review

Principle-based Standards

In some cases, policy-makers, researchers and businesses administrators do not try to define CSR standards in a specific and measurable way. Instead, they try to single out a set of broad principles and goals on which enterprise should focus (Rasche, Morsing, & Moon, 2017). As a rule, it is difficult to measure compliance with such standards or enforce them. This situation can be explained by the purpose of these CSR standards. Firstly, they are supposed to draw managers’ attention to the most pressing problems that should be recognised and addressed by companies (Diehl, Karmasin, Mueller, Terlutter, & Weder, 2017).

Additionally, by identifying such goals, policy-makers intend to set the stage for more specific initiatives and policies that will later be implemented by businesses (Diehl et al., 2017). Furthermore, the identification of these principles can facilitate the discussion of different aspects related to CSR. In most cases, these guidelines can be successfully applied only if there are specific process-based standards.

It is possible to offer several examples of principle-based CSR standards. Among them, one can first distinguish the UNGC since its importance is accepted by companies. The UNGC can be described as a non-binding agreement that is voluntarily accepted by enterprises from different countries (Voegtlin & Pless, 2014). This international agreement is based on ten principles that are supposed to direct the CSR initiatives of managers (Voegtlin & Pless, 2014).

These principles are related to such aspects as human rights, environmental protection, anti-corruption policies and labour relations. For instance, according to the UNGC, businesses should foster the development and use of technologies minimising the negative effects of industrial activities on the environment (Boubaker & Nguyen, 2014). Additionally, organisations are encouraged to take measures that can combat various forms of corruption (Boubaker & Nguyen, 2014).

At present, there are several national associations that help local companies improve their CSR performance. The management of an enterprise can express its acceptance of these guidelines by sending a letter of commitment to the UNGC principles. These principles can be regarded as the strategic objectives that a company has to attain.

There are other examples illustrating principle-based CSR standards; in particular, one can consider the OECD Guidelines for Multinational Enterprises. They can also be described as the broad guidelines that businesses choose to follow voluntarily. In most cases, they are aligned with the regulations and laws adopted in the OECD countries (Collins, 2017). Like the UNGC, the OECD guidelines can be viewed as the ideals to which companies should conform.

For instance, businesses are expected to achieve social, economic and environmental improvements in local communities (Collins, 2017). Moreover, enterprises are urged to introduce effective controls that can reduce the risk of unethical practices (Collins, 2017). The authors of the OECD guidelines attach much importance to local committees that are expected to raise the awareness of business administrators about CSR principles. On the whole, these guidelines are aiming at initiating more specific policies that can lead to the establishment of socially responsible organisations.

Researchers identify several positive impacts of principle-based CSR standards like the UNGC or the OECD guidelines. Firstly, these guidelines impel executives to recognize the most important goals that businesses should achieve to reconcile their interests with the needs of society (De Colle, 2014). To a great extent, such CSR standards encourage companies to take various measures critical for meeting the expectations of different stakeholders such as employees, clients, and communities. On the whole, the acceptance of these norms can be a starting point for significant changes within the organisation. Without such guidelines, it will be rather difficult for companies to design effective CSR strategies.

Additionally, companies that express their commitment to principle-based standards can gain deeper insights into various aspects of CSR. These businesses often establish partnerships with other enterprises and not-for-profit organisations (Svenson, 2016; Idowu & Schmidpeter, 2017). By communicating with other professionals, managers can better understand what kind of policies and initiatives are more effective in promoting CSR (Svenson, 2016). Furthermore, they can avoid the problems that their colleagues encountered. As a rule, the policies introduced by these firms are more likely to succeed.

One has to acknowledge that the principles of CSR identified in the UNGC or the OECD Guidelines are not comprehensive. It is quite possible to compile a list that will include many other CSR principles. Moreover, these ethical norms can be formulated in a more detailed manner. Thus, managers should not assume that these guidelines are sufficient for developing appropriate policies. Nevertheless, by acknowledging and embracing the goals included in these documents, businesses can make various improvements in their operations. In particular, they become more attentive to the expectations set by their workers, clients, suppliers and the community in general.

Nevertheless, managers should also recognise some limitations of the UNGC or other principle-based CSR standards. Firstly, it is possible to mention that these standards are too general; moreover, their scope is not properly defined. Therefore, business administrators may find it difficult to implement them. For instance, according to the UNGC, companies are encouraged to take initiatives promoting increased environmental responsibility (Boubaker & Nguyen, 2014).

Different managers may not agree on the specific requirements that this principle includes (De Colle, 2014). These difficulties may arise when managers have to estimate the expenses that organisations should incur to improve their environmental performance. Additionally, such notions as the protection of human rights or diversity cannot easily be expressed in a quantitative manner; therefore, it is difficult to measure them (De Colle, 2014). Thus, it will be difficult for businesses to evaluate their progress. Thus, if the managers of a firm focus only on principle-based CSR standard, they can come to the wrong conclusions about their progress. It is one of the major pitfalls that businesses should avoid.

One should also take into account that some enterprises want to express their support for the UNGC or the OECD guidelines only to gain greater prestige. In this case, managers focus mostly on the public image of their companies rather than the needs of different stakeholders like worker or clients (Sethi & Schepers, 2014). The problem is that such a strategy gives only an illusion of promoting CSR (Sethi & Schepers, 2014).

However, it does not ensure that enterprises act in a socially responsible way. This argument is often expressed by the critics of the principle-based standards (Brown, Clark, & Buono, 2018). This problem can be mostly attributed to the moral failures of companies rather than some inherent flaws of principle-based CSR standards. Nevertheless, the risks caused by this issue have to be recognised by managers. On the whole, business administrators should remember that these CSR norms are only the first step that companies should take in order to become socially responsible. They do not ensure that businesses can quickly become effective in CSR.

Process-based Standards

There is a different approach to the development of CSR standards; in particular, researchers and managers can lay stress on the actions and activities that are necessary for creating socially responsible businesses. In this case, one should speak about the process-based CSR standards (Moon, 2014). If this approach is adopted, practitioners focus on the ways in which the principles of CSR can be put into practice (Moon, 2014). Much attention is usually paid to the procedures required for making an organisation more oriented to CSR. To a great extent, process-based CSR standards can be regarded as the instructions that should be followed by managers. On the whole, these instructions are much more specific than principle-based CSR standards like the UNCD.

Process-based CSR standards can be best exemplified by referring to ISO 26000. This document is focused on such areas of CSR as transparency, labour practices, environmental protection, consumer interests, accountability, and so forth (Funk, Niemeyer, & Gomez, 2014). It also contains the definitions of various terms related to socially responsible behaviour (Funk et al., 2014). Furthermore, ISO 26000 explains the main practices required for ensuring the ethical conduct of enterprises (Ma’ayan & Carmeli, 2015). These guidelines are not imposed on any enterprise; they can only be voluntarily accepted by owners and corporate executives.

To some degree, ISO 26000 is supposed to supplement principle-based CSR standard such as the UNGC. For example, according to one of the principles outlined in the UNGC, businesses should take measures aimed at protecting human rights (Idowu, Sitnikov, & Moratis, 2018). In its turn, ISO 26000 lays stress on the specific policies that can be useful in achieving this goal (Lundan, 2015). In this case, policy-makers attach much importance to the due diligence process, which is critical for eliminating the practices resulting in the violations of human rights (Idowu et al., 2018).

For instance, business administrators are asked to adopt the procedures needed for documenting, reporting, and eliminating activities involving human rights violations. Additionally, companies are expected to pay much attention to the practices adopted by the suppliers. This requirement is particularly vital in those cases when there are reasons to believe that the suppliers of the company use forced labour. Thus, it is possible to argue that ISO 26000 shows how broad strategic plans can be transformed into specific steps.

While discussing process-based CSR standards, researchers also mention the guidelines related to a particular aspect of responsible corporate behaviour. For instance, one can consider ISO 14000 that provides instructions for developing better environmental policies (Heras, 2018). This document describes safeguards and procedures that can minimize the negative effects of the company’s activities on the environment (Heras, 2018).

Among the practices included in ISO 14000, one can distinguish various risk management procedures, the assessment of product life-cycles and methods of evaluating the current policies of the enterprise (Heras, 2018). On the whole, the main goal of ISO 14000 is to help companies reduce the negative effects of their activities on nature.

Scholars distinguish the positive effects of using process-based CSR standards such as ISO 26000 and ISO 14000. Firstly, they note that these guidelines are useful in institutionalizing CSR practices (Spoufe, 2018). In other words, they help managers translate various broad principles of CSR into everyday procedures and activities (Zinenko & Rovira, 2015). By meeting these standards, businesses demonstrate that they are genuinely committed to CSR (De Colle, 2014).

Clients will see that the executives of the organisation are concerned about CSR. Additionally, such process-based guidelines assist managers in assessing their current CSR policies. For instance, these professionals can determine whether their current strategies incorporate the processes that can prevent unethical or unsustainable behaviours in the workplace. Thus, they will be able to take the precautions required for eliminating potential malpractices.

Finally, such guidelines can facilitate continuous improvement in the CSR performance of the organisation. They describe various procedures required for identifying potential deficiencies in the policies of the company. Additionally, process-based CSR standards like ISO 26000 are often used by NGOs to establish criteria for assessing the work of different companies (Leipziger, 2017). To some degree, they are critical for anticipating and overcoming potential difficulties that may arise when companies attempt to include some elements of CSR. Thus, one can say that researchers recognise some beneficial aspects of using such CSR standards.

Nevertheless, this approach also has some disadvantages that should not be overlooked by practitioners. Firstly, business administrators should take into account that these guidelines do not usually reflect the context in which a particular company operates. Businesses may differ considerably in terms of their size, organisational culture, industry and so forth (Idowu, Frederiksen, Mermod, & Nielsen, 2015). While developing CSR standards, one should take these variables into consideration (Idowu et al., 2015). Providing that these details are overlooked, companies may not benefit from using such guidelines.

It is also important to remember that the growing emphasis on rules and procedures can sometimes stifle independent initiatives of employees. These people may be primarily concerned about procedures rather than the decisions that can bring significant improvements (De Colle, 2014). This phenomenon can be called the erosion of responsibility; this term is used to describe the situations when people think primarily about the established rules rather than their ethical responsibilities (De Colle, 2014).

This is one of the reasons why the use of CSR standards does not always produce satisfactory outcomes. Some problems are peculiar to both principle-based and process-based standards of CSR. In particular, the executives of some companies may claim that they adhere to CSR standards; however, their major concern is the reputation of their firms rather than the welfare of the community (De Colle, 2014). Practitioners should be able to anticipate these pitfalls; otherwise, their companies will never embrace CSR. More importantly, employees will never perceive CSR initiatives as something valuable.

Critical Analysis of the Topic

This discussion indicates that adherence to CSR standards has several distinct advantages and disadvantages. While speaking about the strengths of this approach, one should first mention that it helps businesses start the development of more effective CSR policies. For instance, they can assist business administrators in setting the strategic CSR goals that a company should achieve.

Additionally, the use of standards allows the management to identify the processes that are necessary for the inclusion of CSR in various business process and operations such as recruitment, supply chain management, production and so forth. Furthermore, these guidelines can be useful in evaluating the current practices of the organization. To a large degree, CSR standards enable managers to make more informed decisions that are essential for creating a socially responsible organisation. They are also indispensable for anticipating and avoiding potential mistakes.

However, this approach also has weaknesses that cannot be disregarded. Firstly, one should mention that CSR standards do not usually take into account the specific context in which the enterprise operates. Therefore, one should not suppose that these guidelines are easily applicable to different types of businesses. Furthermore, the guidelines incorporated in CSR standards can be too general, and it may be too difficult to implement them.

More importantly, practitioners have to remember that the focus on standards and rules can sometimes discourage creativity and independent initiatives of workers. Business administrators should be able to recognise these risks and reduce their impact on the performance of the organisation.

Additionally, it is vital to mention that sometimes, the use of standards does not make a company more attentive to the needs of its stakeholders. In particular, the executives of some enterprises can express their commitment to CSR standards; however, these people may only care about the public image and reputations of their firms. In this case, the emphasis on CSR standards will lead only to superficial changes in the work of businesses. For instance, these businesses may implement some policies aimed at promoting diversity; however, they may continue paying low wages to workers. The adoption of this approach demonstrates that the company does not really attach much importance to CSR. Under the circumstances, the use of CSR standards is just a method of enhancing the reputation of the firm.

The problems that have been identified do not completely undermine the usefulness of CSR standards. In most cases, they can be explained by the mistakes made by managers and employees. In particular, they fail to look at these guidelines in a critical way. Moreover, they may forget about the changes in the behaviour of workers at the time when they have to follow new rules and procedures. Therefore, business administrators should be keenly aware of these peculiarities; otherwise, the adoption of CSR standards will not benefit their companies.

Summary

The use of CSR standards is often essential for the successful performance of enterprises and their sustainable development. These guidelines are required for developing effective policies of businesses and ensuring their compliance with various ethical norms. There are several types of CSR standards, among which one consider principle-based and process-based guidelines. Principle-based standards highlight the strategic objectives that companies should attain. They help senior executives identify the most important tasks that should be performed by the organization.

Additionally, they are helpful in increasing workers’ awareness about the most acute problems affecting the stakeholders of the company. Process-based CSR standards are aimed at describing the policies and activities that are needed for acting in a socially responsible way manner. They can make various activities of companies more effective. Nevertheless, the reliance on these norms can produce some adverse effects. In particular, workers can focus only on the need to follow certain rules or procedures. However, they may be unable to take independent decisions.

References

Boubaker, S., & Nguyen, D. (Eds.). (2014). Corporate governance in emerging markets: Theories, practices and cases. New York, NY: Springer Science & Business Media.

Brown, J., Clark, S., & Buono, A. (2018). The United Nations Global Compact: Engaging implicit and explicit CSR for global governance. Journal of Business Ethics, 147(4), 721-734.

Collins, D. (2017). An introduction to international investment law. Cambridge, UK: Cambridge University Press.

De Colle, S. (2014). The paradox of corporate social responsibility standards. Journal of Business Ethics, 125(2), 177-191.

Diehl, S., Karmasin, M., Mueller, B., Terlutter, R., & Weder, F. (2017). Handbook of integrated CSR communication. New York, NY: Springer.

Funk, B., Niemeyer, P. & Gomez, J. (Eds.). (2014). Information technology in environmental engineering: Selected contributions to the sixth international conference on information technologies in environmental engineering. New York, NY: Springer Science & Business Media.

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Moon, J. (2014). Corporate social responsibility: A very short introduction. Oxford, UK: Oxford University Press.

Rasche, A., Morsing, M., & Moon, J. (Eds). (2017). Corporate social responsibility: Strategy, communication, governance. Cambridge, UK: Cambridge University Press.

Sethi, S., & Schepers, D. (2014). United Nations Global Compact: The promise–performance gap. Journal of Business Ethics, 122, 193-208.

Spoufe, R. (2018). Integrated management: How sustainability creates value for any business. London, UK: Emerald Group Publishing.

Svenson, N. (2016). The United Nations as a knowledge system. New York, NY: Routledge.

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Williams, O. (2014). Corporate social responsibility: The role of business in sustainable development. New York, NY: Routledge.

Zinenko, A., & Rovira, M. (2015). The fit of the social responsibility standard ISO 26000 within other CSR instruments. Sustainability Accounting, Management and Policy Journal, 6(4), 498-526.

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