Contemporary industrial and economic processes have been observed to promote the acquisition of raw materials without thinking about the integrity of the natural environments. Within the past three centuries, forces of industrialization and capitalism have triggered various economic models that focus on consumption without protecting the integrity of the natural environment. These developments have catalyzed various concepts aimed at promoting the level of sustainability, such a corporate social responsibility (CSR) and circular economy.
These initiatives have the potential to support the goals of many companies, attract additional customers and eventually deliver positive results. This paper uses the case of Du to understand the nature of CSR engagements and their implications on corporate financial performance. A detailed literature analysis will also be presented in this document to support the intended arguments and observations.
Sustainability Initiatives and Financial Performance: Summary of Academic Papers
The issue of CSR has remained critical within the past two decades due to the problems of climate change and global warming. The first research paper for this discussion is “The Effects of Environmental Disclosure on Financial Performance in Malaysia”. Nor, Bahari, Adnan, Kamal, and Ali (2016) begin by indicating that many companies in Malaysia have been on the frontline to pursue the concept of sustainability.
This tactic has become common in different regions across the globe in an attempt to conserve existing ecological systems. Many leaders and policymakers in such organizations have identified environmental accounting as a powerful strategy for improving governance and delivering sustainable development. However, the study revealed that different stakeholders and agencies presented mixed reactions regarding the role of CSR and organizational financial performance (Nor et al., 2016).
However, this academic paper goes further to indicate clearly that Malaysian corporations that embrace the idea of environmental reporting tend to record positive financial performance. The authors conclude by encouraging business managers to appreciate the concept of disclosing their sustainability efforts in order to attract more clients and eventually emerge successful (Nor et al., 2016). Such a practice will make it easier for them to continue pursuing their goals diligently. The end result is that they will operate smoothly and achieve their objectives.
Some researchers have argued that firms that engage in CSR will have increased chances of emerging profitable and successful in their respective business sectors. This is the message presented in the article “The Relationship between Environmental Information Disclosure and Profitability: A Comparison between Different Disclosure Styles”. Yin, Li, Ma, and Zhang (2019) reveal that is a positive relationship between sustainability initiative and organizational profitability.
This means that organizations that want to emerge successful should consider these practices and improve them continuously. Yin et al. (2019) go further to argue that corporations that develop substantive information disclosure models will achieve their financial objectives and emerge successful. When clients acknowledge that a given corporation promotes evidence-based practices that resonate with the attributes of the circular economy model, chances will be high that they will be willing to support its business model. The paper concludes by encouraging every organization to pursue such a model in an attempt to record a positive financial performance.
The third paper for this discussion is “The Impact of Sustainability Reporting on Firm Profitability”. Since the concept of green accounting has become common in many firms and institutions, Whetman (2017) believes that firms that engage in CSR reporting will find it easier to achieve their goals. This is possible since they rarely get into trouble with investors and monitoring agencies. Such an initiative is worthwhile since it will improve the level of resources management and make it possible for any company to increases its profits. Whetman (2017) goes further to argue that evidence-based financial practices that have the potential to improve performance will eventually become common in companies that promote sustainability practices. This is a clear indication that corporations that engage in CSR efforts will record increased profits.
The next article for this discussion is “The Impact of Sustainability Practices on Corporate Financial Performance: Literature Trends and Future Research Potential”. In this paper, Alshehhi, Nobanee, and Khare (2018) identify sustainability as a powerful process for meeting human beings’ needs without affecting the success and lives of future generations. A proper organizational program should be able to balance environmental, human, and financial development.
The theory of value-creation indicates that “firm risk is reduced with the adoption of environmental and social responsibility” (Alshehhi et al., 2018, p. 495). The outstanding message from this article is that sustainability practices create a new change whereby clients and stakeholders will always be willing to support the business and eventually realize its financial objectives. The authors go further to promote evidence-based sustainability strategies that have the potential to improve the level of organizational performance.
The last article for this discussion is “The Impact of Corporate Social Responsibility on Financial Performance”. In the United States, the idea of sustainability has remained a critical determinant of the profitability of different companies. In the selected study by Giannarakis, Konteos, Zafeiriou, and Partalidou (2016), it is evident that corporations that engaged in CSR initiatives had increased chances of recording positive financial performance. Such organizations usually compensate their workers and managers effectively. The companies are always in a position to attract more customers and fulfill their demands while at the same time protecting the surrounding environment (Giannarakis et al., 2016).
Many stakeholders and business partners will be willing to support every established practice and eventually deliver positive results. From these summaries and arguments, it is agreeable that corporations that pursue the CSR concept will be closer to their aims than those who ignore it completely (Giannarakis et al., 2016). This is true since the initiative becomes a new opportunity for identifying the major issues affecting different stakeholders. These groups or individuals play a significant role towards improving performance and improving future practices. The paper concludes by explaining why policymakers and researchers should undertake numerous studies in order to get a clear understanding of CSR and other sustainability initiatives that can make a difference for companies operating in various sectors.
Real-Life Company: Sustainability Initiatives
Many companies in different parts of the world have been engaging in CSR initiatives in an attempt to achieve their goals and meet the demands of different stakeholders. The selected company for this discussion is that of Du in the United Arab Emirates (UAE). This organization has been on the frontline to promote social and economic transformation in this country (“Who we are,” n.d.). It achieves this objective by offering fixed and mobile telephony, IPTV services, and broadband connectivity to its increasing number of customers (“Who we are,” n.d.). It is also a leading provider of a data hub, carrier services, satellite services, and internet exchange facilities (“Who we are,” n.d.).
This organization currently has around 6.5 million customers in the UAE (“Who we are,” n.d.). This means that it has a market share of around 50 percent in the country (“Who we are,” n.d.). The leaders of Du have also been keen to implement evidence-based initiatives and practices that can add value to different stakeholders and eventually make it profitable.
The issue of CSR is taken seriously at this company to improve competitiveness and meet the changing demands of the targeted customers. The organization’s vision has been to add life to human life (“Corporate sustainability,” n.d.). This means that it creates the best value for different stakeholders, the surrounding communities, and the environment. A new idea of sustainable thinking has emerged whereby ethical values guide a wide range of practice.
The company treats colleagues effectively and serves customers in a professional manner. It has been engaging different community members and institutions in an attempt to make the world a better place for all human beings. The leaders of this company engage in volunteering, education, youth empowerment, and engagement in activities that add value to the client (“Corporate sustainability,” n.d.). This approach has made it possible for the organization to transform the wellbeing of the greatest number of people. Such initiatives are desirable since they resonate with the emerging or changing demands of every future population.
The company’s sustainability reports have identified various initiatives that are aimed at improving the quality of services available to the greatest number of citizens. These approaches have made it a leading corporate citizen that takes environmental responsibilities, social gains, and economic developments seriously (“Corporate sustainability,” n.d.). Du is presenting focusing on evidence-based practices that will continue to improve its CSR approaches in every aspect of its business operations. It goes further to report performance in a transparent and acceptable manner (“Corporate sustainability,” n.d.). These measures will, therefore, attract more clients in the future and make Du a competitive player in its industry.
The engagement in CSR and sustainably efforts is a strategy that has continued to make this organization successful and profitable. These measures meet the needs and many customers and community members, thereby encouraging them to continue supporting the established business model. This practice explains why the company managed to record increased revenues in 2015 (“Corporate sustainability,” n.d.).
The achievements and observations recorded in this corporation reveal that CSR practices are essential in any given organization. This is necessary since more people will be willing to do business with such a company and eventually increase the percentage of clients. The strategy also reduces the expenses incurred when trying to solve legal issues emerging from unsustainable business practices (Whetman et al., 2018). The summaries and inferences made from the summarized academic papers also support this kind of argument.
Conclusion
From the above discussion, it is agreeable that sustainability and CSR practices are essential in any given business organization. The identified resources have presented a positive relationship between such initiatives and financial performance. Companies that continue to focus on this kind of practice tend to become acceptable in their respective communities and attract the greatest number of customers. The end result is that such firms will record positive outcomes and eventually become competitive in their respective industries. Similarly, the initiatives Du undertakes to improve its sustainability index have been acceptable and appropriate for the UAE economy.
The company’s leaders have been keen to introduce superior procedures and practices that resonate with the demands of different clients. Business organizations should, therefore, consider the model of Du in an attempt to introduce superior CSR action plans and eventually increase their profits. Although these procedures might be expensive to implement, the outstanding fact is that firms that pursue them will remain sustainable and relevant in their respective sectors.
References
Alshehhi, A., Nobanee, H., & Khare, N. (2018). The impact of sustainability practices on corporate financial performance: Literature trends and future research potential. Sustainability, 10(2), 494-218. Web.
Corporate sustainability. (n.d.). Web.
Giannarakis, G., Konteos, G., Zafeiriou, E., & Partalidou, X. (2016). The impact of corporate social responsibility on financial performance. Investment Management and Financial Innovations, 13(3-1), 171-182. Web.
Nor, N. M., Bahari, N. A. S. Adnan, N. A., Kamal, S. M., & Ali, I. M. (2016). The effects of environmental disclosure on financial performance in Malaysia. Procedia Economics and Finance, 35, 117-126. Web.
Whetman, L. L. (2018). The impact of sustainability reporting on firm profitability. Undergraduate Economic Review, 14(1), 1-19.
Who we are. (n.d.). Web.
Yin, H., Li, M., Ma, Y., & Zhang, Q. (2019). The relationship between environmental information disclosure and profitability: A comparison between different disclosure styles. International Journal of Environmental Research and Public Health, 16(9), 1556-1569. Web.