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“Corporate social responsibility or CSR in short is also referred to as sustainable business relationship and is an integral integration into a business model to function as a self-regulation mechanism where the business monitors and ensures that it complies with the laws, standards of ethics and norms – both national and international.” (D Wood, Younger).
For a multi-national corporation like Siemens, the approach of corporate social responsibility is a very important part of their business philosophy. Siemens always has an active participation approach to all their corporate social responsibility activities.
Their employees are always willing to give a helping and caring hand to those people who are in one way or another disadvantaged apart from the mere action of giving a fat cheque to cover expenses and serve as funding to the projects. Foote 1999 says “For Siemens, devoting their time and expertise to assist the needy – children, the youth and the elderly is a part of their identity.” It is what differentiates them from other corporate.
Ranging from giving hope to the challenged or caring for the environment, Siemens has always participated in initiatives that require responsibility to be served to the society. Siemens always makes sure to satisfy all their stakeholders. The following are termed as the stakeholders: employees, suppliers, customers, investors, policy makers and the society at large. Brown, Dillard and Russer, Marshall say that,
“To employees, the company “invests considerable resources in training them, upgrading their professional qualifications, safeguarding their health and assuring their welfare.” To supplier, the company aims to “promote sustainability by generating long-term value with the help of excellent and innovative suppliers – with a strong focus on economic, ecological and socially responsible operation.”
“To customers, Siemens aims at aligning their business strategies, goals and objectives with the demands of customers as well as with what the customers expect,”(Correst, Nathan Bedford). To investors, the company aims at giving the best return on investments that pleases the investors as well as to maintain a good corporate image.
To policy makers, Siemens makes their business decisions based on political decisions and public policy debates. “In addition to maintaining business relationships with government institutions and agencies which are customers for our products, solutions and services, we also openly contribute to the shaping of public opinion through various means in our capacity as a corporate citizen,” (Davis, Kirk Blomstrom and Dawart, Crowther).
The case against Siemens
Despite Siemens terming themselves as being a “global powerhouse in the electronics and electrical engineering”, Siemens AG has been curbed by some corruption cases. The company was fined 1.6 billion US dollars. This was the largest fine for corruption in the history of the Anti-corruption cases and also in the U.S. Securities and Exchange Commission (SEC) history.
Evidence was sought signifying that the company was involved in bribing all over the world in several different business sectors. “The company (Siemens AG) and its subsidiaries in Venezuela, Argentina and Bangladesh were fined $450 million for allegations concerning corruption as per the U.S. Foreign Corrupt Practices Act (FCPA).” Dawart (20).
Foote adds. Siemens which is listed in the New York Stock Exchange is regulated by the U.S. Justice Department and U.S. Securities and Exchange Commission (SEC) despite it being a German company. Siemens further agreed to top up with $350 million to cover charges incurred by SEC. Wills a renown researcher says that, “The company (Siemens AG) also paid $569 million to Munich Office of the Prosecutor General to whom the company had in October 2007 paid $285 in fines.”
The evidence against Siemens revealed that the company bribed public officials in many business sectors and in many countries in order to be awarded large public contracts. Corruption within the company was so rampant and despite the company’s senior officials having this knowledge, they turned blind eye to the corrupt deals and did not do anything to attempt to stop them.
Bribery almost became a part of the checklist in all of Siemens’ operations across the world. The agreement also made it that Siemens had to be checked for a period of four years by an independent compliance monitory and also agreed to co-operate with the Department of Justice in further investigations of corruption within the company by agent and employees.
If we examine Siemens’ corporate social responsibility in this case, the company did not stick to their own code of ethics and business conduct. The company also broke one of its core values which are to be responsible. Their value of responsibility states that “We are determined to meet – and wherever possible, exceed – all legal and ethical requirements.
“Our responsibility is to conduct all business according to the highest professional and ethical standards and practices: There must be no tolerance for non-compliant behavior” (Habisch, Andre and Jan, Jonker. Schmidpeter), ”This principle of responsibility is meant to act as a crucial guideline to the making of business decisions so by breaking this value and encouraging corruption by not stopping it despite being aware of it, Siemens did not meet its ethical obligations here.
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There is no doubt on this. By breaking this principle, the stakeholders were negatively impacted.”
The case for Siemens
Despite the court cases and fines concerning Siemens and alleging corruption, the company has however learnt its lesson and there have not been any reports of corruption in its operations. At least by correcting where they had gone wrong, the company still showed that they were willing to be responsible by both handling the situation to curb corruption and agreeing to be accountable and responsible and paying fines.
Siemens AG also launched a $100 million Integrity Initiative. This initiative has been argued by many to be as a result of the court cases concerning corruption since the initiative was started in 2009 after the huge fines that the company had to pay for corrupt deals. According to Wills, “The Siemens Integrity Initiative aims to fight corruption and fraud through activities such as education and training.”
The company also has a large corporate social responsibility portfolio from all over the globe. They have some corporate citizenship programs in several countries. In South Africa, the company is well known for its AIDS program known as REACH. Siemens collaborates with several partners to support HIV victims by providing cheap health care and providing support to HIV positive employees. The patients receive their medications and/or vaccines and are given counseling and ongoing personal and group support.
Grace, Darmoth and Habisch, Andre says that in Egypt, as part of the Siemens Generation 21 education program, the company supports university education with several projects. Some of the projects include contest to design energy saving systems and idea workshops on energy conservation and reducing carbon footprints.
In Brazil, the company built a high-voltage line round the Brazilian rainforest. The line is 14km long with the aim of keeping to a minimum the project’s footprint and to reduce to the most possible minimum, the impact that the project would have on one of the world’s richest fauna and flora habitats.
The project did not involve any heavy machine work. “Rather, they used laborers to excavate, pneumatic jack hammers and installed cables by hand or if needed, by helicopter.” Wills says. All waste was cleverly handled and no waste was left unprocessed or unmoved.
According to Donations, employee volunteer work and partnerships 2008, “Siemens is an equal opportunity employer for the ‘different label’, when it comes to employment. Siemens has always given the challenged people a level playing ground in conjunction with the Ability Foundation, the physically challenged or those with other disabilities to interviews” (Jastram, Sarah and Paluszek, John). These interviewees are given aptitude tests like the others and are not given any special attention or consideration.
The development of corporate social responsibility programs demonstrates that Siemens is fulfilling their obligation to the society and to the environment by developing sustainable development.
Siemens as a company has been involved in both the positive and negative influences in relation to their stakeholders that is the employees, society, suppliers, customers, investors, policy makers and the society at large. On the positive side, Siemens had engaged in positive environmental impacts and corporate citizenship roles that have empowered the stakeholders and made Siemens a company that all are ready and willing to be associated with.
On the negative side, Siemens showed a lack of care for their core values and their delayed response in finding and handling the situation had a great negative impact to the stakeholders and in the way our society is wired, despite how much the company attempts to make up for the wrongs, it will be the most difficult thing that the company has done since people will always focus on the negatives more than the positives.
In terms of its core business, through the rampant corruption within the organization, Siemens demonstrated that in order to please their stakeholders, they were willing to do this by any means be they clean or dirty. This is not a good business approach since it usually destroys businesses especially as seen in the huge fines paid to the courts.
I would recommend that Siemens AG stick to its core value of “exceeding all legal and ethical requirements and conducting business in the highest professional and ethical standards and having no tolerance for non-compliant behavior” (Habisch, Andre and Jan, Jonker Schmidpeter). In this way, Siemens will be able to give full value to all stakeholders in an honest way without jeopardizing anything.
I would also recommend that Siemens AG should continue in its corporate citizenship and in the other good corporate social responsibility initiatives that it has in the past been involved with.
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