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Corporate Social Responsibility: during the financial crisis and economic recession.

1. INTRODUCTION

Treating people and the environment in a responsible manner plays a fundamental role in the success as a global corporation. As partner to a large number of social groups, they support projects and campaigns beyond the actual activities.

Corporate Social Responsibility is an important and discussed issue right now during the financial crisis and economic recession. The financial crisis and the subsequent economic downturn represent a significant upheaval in the evaluation of markets and the private sectors.

2. GLOBAL TRENDS

It is often said that successful companies need an intact society, just as an intact society needs successful companies, and this recognition forms the basis for responsible corporate action. The societal role of a company or of business in general, is dynamic and changes along with social, technological and ecological developments. As the current economic crisis has shown, society's expectations of companies change as well, along with major political and economic events.

The most important social changes that are taking place today can be divided into four closely related trends that have a direct or indirect effect on corporate actions:

* The globalization of value chains (driven by the liberalization of markets and efficient logistics systems).

* An increase in transparency as a result of new communications technologies and global media.

* Increasingly scarce natural resources, resulting in environmental damage (climate change, pollution, the loss of natural species).

* Growing social inequality, at both the national and the global level, as a result of disparities in access to the opportunities offered by globalization.

From the perspective of private industry, these trends bring with them both economic opportunities and risks. Some of the most important are listed below (Peters, 2010).

Weathering a crisis requires strategic management of opportunities and risks. Companies need to recognize relevant trends at an early stage and find ways to respond to them. Ignoring risks in a company's value chain, or engaging only in passive risk avoidance or risk minimization, is irresponsible as well as bad for business.

3. NEW PRESSURES ON CSR

There went on to describe new pressures imposed by the crisis on corporate responsibility commitments, including the reduced time available for CSR. There are also observed short-term decisions, a new emphasis on 'cash-thinking', and demands for returns within months.

The leaders were seeing much more necessary focus on the short term, with committees on cost reduction. However the leadership challenge is to focus on the short term while developing long term strategies. The current crisis is in this sense also an opportunity.

The companies have to decide to work on the long-term vision now and make resources available for long-term growth. If all is in shape now, and the economy picks up, they will emerge well and will grow.

However, some are demanding a slowing down of environmental and social efforts, the independent think tank specialized in corporate responsibility and sustainable development.

Another pressure on CSR activities was seen to be a more cautious approach to CSR in companies. With major job cuts hitting junior through to senior staff, heightening the emotions of the company, and having a significant impact on senior (CSR) decisions. We should observed risk-aversion among senior staff, and a determination to look after their own parts of the business. Such narrow thinking could complicate CSR decisions, which require a company-wide perspective.

4. IMPORTANT ROLES

State authorities, employers, and trade unions and NGOs represent the important roles. In these three groups are discussed the issues surrounding CSR and to outline their positions and actions in time of crisis.

The state should play an active role in the development of CSR by adopting the following measures:

* Encouraging entrepreneurs to develop their own CSR strategies by introducing a system of economic incentives for companies implementing CSR principles.

* Providing information on good CSR practices and creating greater awareness in this regard among the general public.

* Offering support for the development of a professional framework and certification in the sphere of CSR, as well as supporting the development of educational programmes in this field.

* Facilitating efforts for the establishment and operation of a unified network for coordinating and providing expertise on CSR activities.

The business representatives identified particular types of initiatives to generate the benefits of CSR, such as:

* Intensifying communication and social dialogue between employers and workers.

* Training employers on their responsibilities regarding customers, the environment and all other elements of CSR.

* Disseminating information on what companies do to apply CSR principles.

Civil society, including worker representatives and trade unions, should undertake the following actions:

* Engage in stakeholder dialogue.

* Devise media training on CSR.

* Find champions of CSR and draft stronger international treaties to call for proper CSR activities.

* Support business efforts to implement the principles of CSR.

5. NEW BUSINESS OPPORTUNITIES

Further, CSR leaders could enjoy new business Opportunities--especially if they are prepared to adapt and innovate. In this crisis, there are very substantial opportunities for businesses which take CRS seriously to find new business opportunities.

First, leadership companies should focus hard on costs like the cost of energy, which has a tangible bottom line. They're seeing similar new thinking in others: how to use the crisis as an opportunity and to look for new revenue streams for instance to replace energy and travel costs with innovative IT solutions.

Second, leading companies will have to deliver functional and inspirational goods and services, as too many had failed to hit the sweets pot. Products like the first mass-produced hybrid electric car, had missed out on advertising budgets, and they not attractively priced.

Third, leadership opportunities also include developing new collaborative models. Leadership will be demonstrated, by those who try to remake the system in disarray. Everything is to play for now that the system is upside down. The crisis helps us to ask big questions.

Previously, the economic expansion offered little opportunity or incentive for change, given the benefits it offered to the main actors. The new system will be defined, by whether we apply our efforts to rebuilding the system we've been living in last years, or rebuild something else. That's the part to play for.

A critical factor in defining a new system, however, will be how far investors change their perceptions of corporate responsibility. Will they recognize the failures of irresponsible companies? Will they value externalities, the actual social and environmental costs not included in the market prices of goods and services?

6. CONCLUSION

"What is the relationship between the financial crisis and CSR?" The answer to the question is that it depends. It depends on your beliefs about how deep the irresponsibility behind the economic meltdown runs--is it banks simply overextending themselves, or a far more systemic failure in the corporate, financial and capitalist models? Similarly, the answer to "How will CSR be affected by the financial crisis?" It depends on how deep CSR runs within the organization--is it superficial philanthropic CSR, something more strategic or embedded, or even the more revolutionary CSR 2.0 version? Either way, the recession ahead will not only be an acid test for companies CSR commitment, but for CSR itself. It may very well be that the time has come for CSR to adapt or die.

7. REFERENCES

Benn, S.; Dunphy, D.; Griffiths, A. (2008). Organizational Change for Corporate Sustainability: A Guide for Leaders and Change Agents of the Future (Understanding Organizational Change), Routledge, ISBN 0-415-28740-5, London

Carroll, A. B. (1981). Business and Society--managing corporate social performace, Little, Brown and Company, ISBN 0-316-130109, Boston

Pavlik, M.; Belcik M. (2010). Spolecenskd odpovednost organizace (CSR v praxi a jak s nlm ddl), Grada Publishing, ISBN 978-80-247-3157-5, Praha

Peters, A.; Roess, D. (2010). The role of government in promoting Corporate Responsibility and private sector engagement in development, Available from: http://www.unglobalcompact.org/docs/news_events/8.1/UNGC_Bertelsmannn.pdf Accessed: 2010-08-20

Peters, A. (2010). Pathways out of the crisis: CSR as a strategic tool for the future, Available from: http://www.bertelsmann-stiftung.de/cps/rde/xbcr/SID-40BBE5BE- 11A0895D/bst_engl/xcms_bst_dms_30240_30241_2.pdf Accessed: 2010-04-20

Werther, W. B.; Chandler D. B. (2006). Strategic Corporate Social Responsibility, Sage Publication, ISBN 1-4129-1373-X, Thousand Oaks
Tab. 1. Global trends and their opportunities and risks

Global trends

Opportunities Risks

Globalization of value chains

Cost advantages through Dependence on foreign

Global trends

Opportunities Risks

global purchasing and suppliers
production

Access to new raw materials Greater difficulty in
that can lead to product monitoring standards
innovations

Development of new Difficulty in recognizing
markets risks and negative effects
 of transaction chains
Increasing transparency

Efficient internal and Better monitoring by
external communication interest groups and greater
 potential for pressure
 from the media

The ability to monitor Competitors can copy
suppliers and other business products and services
partners more quickly

Increasingly scarce natural resources and climate change

Increasing appeal of More expensive raw
resource-saving products and materials
services

Additional sources of Greater expense owing to
income through markets set higher fees and
up to conserve resources, investments to prevent
particularly emissions environmental damage, so
trading called "green taxes"

Driver for innovations Greater scrutiny by
involving sustainable interest groups of
products corporate behaviour that
 may affect the
 environment

Growing social inequality

Market opportunities among Shortage of well-trained
lowincome groups employees

Employees/Trade unios are Increased pressure from
more willing to cooperate poor population groups on
 companies

Greater recognition of good Threat to political/social
human resources stability
management
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Author:Srchova, Marcela; Dvorakova, Lilia
Publication:Annals of DAAAM & Proceedings
Article Type:Report
Geographic Code:4EXRO
Date:Jan 1, 2010
Words:1555
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