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Definition[edit]
The term "corporate social responsibility" became popular in the 1960s and has remained a term used
indiscriminately by many to cover legal and moral responsibility more narrowly construed. [9]
Business Dictionary defines CSR as "A companys sense of responsibility towards the community and
environment (both ecological and social) in which it operates. Companies express this citizenship (1)
through their waste and pollution reduction processes, (2) by contributing educational and social
programs and (3) by earning adequate returns on the employed resources." [10]
A broader definition expands from a focus on stakeholders to include philanthropy and volunteering.[11]
onsumer perspectives[edit]
Most consumers agree that while achieving business targets, companies should do CSR at the same
time.[12] Most consumers believe companies doing charity will receive a positive response. [13] Somerville
also found that consumers are loyal and willing to spend more on retailers that support charity.
Consumers also believe that retailers selling local products will gain loyalty.[14] Smith (2013)[15] shares the
belief that marketing local products will gain consumer trust. However, environmental efforts are
receiving negative views given the belief that this would affect customer service. [14] Oppewal et al.
(2006) found that not all CSR activities are attractive to consumers. [16] They recommended that retailers
focus on one activity.[17] Becker-Olsen (2006)[18] found that if the social initiative done by the company is
not aligned with other company goals it will have a negative impact. Mohr et al.(2001) [19] and Groza et
al. (2011)[20] also emphasise the importance of reaching the consumer.
Approaches[edit]
CSR Approaches
Some commentators have identified a difference between the Canadian (Montreal school of CSR),
theContinental European and the Anglo-Saxon approaches to CSR.[21] It is said that for Chinese
consumers,[22] a socially responsible company makes safe, high-quality products; for Germans it
provides secure employment; in South Africa it makes a positive contribution to social needs such as
health care and education.[23] And even within Europe the discussion about CSR is very heterogeneous.
[24]
A more common approach to CSR is corporate philanthropy. This includes monetary donations and aid
given to nonprofit organizations and communities. Donations are made in areas such as the arts,
education, housing, health, social welfare and the environment, among others, but excluding political
contributions and commercial event sponsorship.[25]
Another approach to CSR is to incorporate the CSR strategy directly into operations. For instance,
procurement of Fair Trade tea and coffee.
Creating Shared Value, or CSV is based on the idea that corporate success and social welfare are
interdependent. A business needs a healthy, educated workforce, sustainable resources and adept
government to compete effectively. For society to thrive, profitable and competitive businesses must be
developed and supported to create income, wealth, tax revenues and philanthropy. The Harvard
Business Review article Strategy & Society: The Link between Competitive Advantage and Corporate
Social Responsibility provided examples of companies that have developed deep linkages between
their business strategies and CSR.[26] CSV acknowledges trade-offs between short-term profitability and
social or environmental goals, but emphasizes the opportunities for competitive advantage from
building a social value proposition into corporate strategy. CSV gives the impression that only two
stakeholders are important - shareholders and consumers.
Many companies employ benchmarking to assess their CSR policy, implementation and effectiveness.
Benchmarking involves reviewing competitor initiatives, as well as measuring and evaluating the impact
that those policies have on society and the environment, and how others perceive competitor CSR
strategy.[27]
Cost-benefit analysis[edit]
In competitive markets cost-benefit analysis of CSR initiatives, can be examined using a resourcebased view (RBV). According to Barney (1990) "formulation of the RBV, sustainable competitive
advantage requires that resources be valuable (V), rare (R), inimitable (I) and non-substitutable (S)." [28]
[29]
A firm introducing a CSR-based strategy might only sustain high returns on their investment if their
CSR-based strategy could not be copied (I). However, should competitors imitate such a strategy, that
might increase overall social benefits. Firms that choose CSR for strategic financial gain are also acting
responsibly.
RBV presumes that firms are bundles of heterogeneous resources and capabilities that are imperfectly
mobile across firms. This imperfect mobility can produce competitive advantages for firms that acquire
immobile resources. McWilliams and Siegel (2001) examined CSR activities and attributes as a
differentiation strategy. They concluded that managers can determine the appropriate level of
investment in CSR by conducting cost benefit analysis in the same way that they analyze other
investments.
Reinhardt (1998) found that a firm engaging in a CSR-based strategy could only sustain an abnormal
return if it could prevent competitors from imitating its strategy.[30]
Scope[edit]
Initially, CSR emphasized the official behavior of individual firms. Later, it expanded to include supplier
behavior and the uses to which products were put and how they were disposed of after they lost value.
Supply chain[edit]
Incidents like the 2013 Savar building collapse pushed companies to consider how the behavior of their
suppliers impacted their overall impact on society. Irresponsible behavior reflected on both the
misbehaving firm, but also on its corporate customers. Supply chain management expanded to
consider the CSR context. Wieland and Handfield (2013) suggested that companies need to include
social responsibility in their reviews of component quality. They highlighted the use of technology in
improving visibility across thesupply chain.[31]
Implementation[edit]
CSR may be based within the human resources, business development or public relations departments
of an organisation,[11] or may be a separate unit reporting to the CEO or the board of directors.
Engagement plan[edit]
An engagement plan can assist in reaching a desired audience. A corporate social responsibility
individual or team plans the goals and objectives of the organization. As with any corporate activity, a
defined budget demonstrates commitment and scales the program's relative importance.
AccountAbility's AA1000 standard, based on John Elkington's triple bottom line (3BL) reporting
The Prince's Accounting for Sustainability Project's Connected Reporting Framework [34]
The Fair Labor Association conducts audits based on its Workplace Code of Conduct and posts
audit results on the FLA website.
The Fair Wear Foundation verifies labour conditions in companies' supply chains, using
interdisciplinary auditing teams.
The FTSE Group publishes the FTSE4Good Index, an evaluation of CSR performance of
companies.
The Islamic Reporting Initiative (IRI) is a not-for-profit organization which leads the creation of
the IRI framework; the guiding integrated CSR reporting framework based onIslamic principles and
values.[43]
In nations such as France, legal requirements for social accounting, auditing and reporting exist,
though international or national agreement on meaningful measurements of social and environmental
performance has not been achieved. Many companies produce externally audited annual reports that
cover Sustainable Development and CSR issues ("Triple Bottom Line Reports"), but the reports vary
widely in format, style, and evaluation methodology (even within the same industry). Critics dismiss
these reports as lip service, citing examples such as Enron's yearly "Corporate Responsibility Annual
Report" and tobacco companies' social reports.
In South Africa, as of June 2010, all companies listed on the Johannesburg Stock Exchange (JSE)
were required to produce an integrated report in place of an annual financial report and sustainability
report.[44] An integrated report reviews environmental, social and economic performance alongside
financial performance. This requirement was implemented in the absence of formal or legal standards.
An Integrated Reporting Committee (IRC) was established to issue guidelines for good practice.
Verification[edit]
Corporate social responsibility and its resulting reports and efforts should be verified by the consumer
of the goods and services. The accounting, auditing and reporting resources provide a foundation for
consumers to verify that their products are socially sustainable. Due to an increased awareness of the
need for CSR, many industries have their own verification resources. [45] The include organizations like
the Forest Stewardship Council (paper and forest products), International Cocoa Initiative,
and Kimberly Process (diamonds). The United Nations also provides frameworks not only for
verification, but for reporting of human rights violations in corporate supply chains.
Ethics training[edit]
The rise of ethics training inside corporations, some of it required by government regulation, has helped
CSR to spread. The aim of such training is to help employees make ethical decisions when the
answers are unclear.[46] The most direct benefit is reducing the likelihood of "dirty hands", [47] fines and
damaged reputations for breaching laws or moral norms. Organizations see increased employee
loyalty and pride in the organization.[48]
Common actions[edit]
Common CSR actions include:[49]
Community involvement: This can include raising money for local charities, providing
volunteers, sponsoring local events, employing local workers, supporting local economic growth,
engaging in fair trade practices, etc.[53][54]
Ethical marketing: Companies that ethically market to consumers are placing a higher value on
their customers and respecting them as people who are ends in themselves. They do not try to
manipulate or falsely advertise to potential consumers. This is important for companies that want to
be viewed as ethical.
Social license[edit]
Social license refers to a local communitys acceptance or approval of a company. Social license
exists outside formal regulatory processes. Social license can nevertheless be acquired through timely
and effective communication, meaningful dialogue and ethical and responsible behavior.
Displaying commitment to CSR is one way to achieve social license, by enhancing a companys
reputation.[55]
"Planet" refers to sustainable environmental practices. Profit is the economic value created by the
organization after deducting the cost of all inputs, including the cost of the capital (unlike accounting
definitions of profit).[58][59]
This measure was claimed to help some companies be more conscious of their social and moral
responsibilities.[60] However, critics claim that it is selective and substitutes a company's perspective for
that of the community. Another criticism is about the absence of a standard auditing procedure. [61]
The term was coined by John Elkington in 1994.[59]
Human resources[edit]
A CSR program can be an aid to recruitment and retention,[62][63] particularly within the
competitive graduate student market. Potential recruits often consider a firm's CSR policy. CSR can
also help improve the perception of a company among its staff, particularly when staff can become
involved through payroll giving, fundraising activities or community volunteering. CSR has been
credited with encouraging customer orientation among customer-facing employees. [64]
Risk management[edit]
Managing risk is an important executive responsibility. Reputations that take decades to build up can
be ruined in hours through corruption scandals or environmental accidents. [65] These draw unwanted
attention from regulators, courts, governments and media. CSR can limit these risks. [66]
Brand differentiation[edit]
CSR can help build customer loyalty based on distinctive ethical values. [67] Some companies use their
commitment to CSR as their primary positioning tool, e.g., The Co-operative Group, The Body
Shop and American Apparel[68]
Some companies use CSR methodologies as a strategic tactic to gain public support for their presence
in global markets, helping them sustain a competitive advantage by using their social contributions as
another form of advertising.[69]
Reduced scrutiny[edit]
Corporations are keen to avoid interference in their business through taxation and/or regulations. A
CSR program can persuade governments and the public that a company takes health and safety,
diversity and the environment seriously, reducing the likelihood that company practices will be closely
monitored.
Supplier relations[edit]
Appropriate CSR programs can increase the attractiveness of supplier firms to potential customer
corporations. E.g., a fashion merchandiser may find value in an overseas manufacturer that uses CSR
to establish a positive imageand to reduce the risks of bad publicity from uncovered misbehavior.
Nature of business[edit]
Milton Friedman and others argued that a corporation's purpose is to maximize returns to its
shareholders and that obeying the laws of the jurisdictions within which it operates constitutes socially
responsible behavior.[70]
While some CSR supporters claim that companies practicing CSR, especially in developing countries,
are less likely to exploit workers and communities, critics claim that CSR itself imposes outside values
on local communities with unpredictable outcomes.[71]
Better governmental regulation and enforcement, rather than voluntary measures, are an alternative to
CSR that moves decision-making and resource allocation from public to private bodies. [72] However,
critics claim that effective CSR must be voluntary as mandatory social responsibility programs
regulated by the government interferes with peoples own plans and preferences, distorts the allocation
of resources, and increases the likelihood of irresponsible decisions. [73]
Motives[edit]
Some critics believe that CSR programs are undertaken by companies to distract the public from
ethical questions posed by their core operations. They argue that the reputational benefits that CSR
companies receive (cited above as a benefit to the corporation) demonstrate the hypocrisy of the
approach.[75]
Misdirection[edit]
Another concern is that sometimes companies use CSR to direct public attention away from other,
harmful business practices. For example, McDonald's Corporation positioned its association
with Ronald McDonald House as CSR[76] while its meals have been accused of promoting poor eating
habits.[77]
Controversial industries[edit]
Industries such as tobacco, alcohol or munitions firms make products that damage their consumers
and/or the environment. Such firms may engage in the same philanthropic activities as those in other
industries. This duality complicates assessments of such firms with respect to CSR. [78]
Stakeholder influence[edit]
One motivation for corporations to adopt CSR is to satisfy stakeholders.
Branco and Rodrigues (2007) describe the stakeholder perspective of CSR as the set of views of
corporate responsibility held by all groups or constituents with a relationship to the firm. [81] In their
normative model the company accepts these views as long as they do not hinder the organization. The
stakeholder perspective fails to acknowledge the complexity of network interactions that can occur in
cross-sector partnerships. It relegates communication to a maintenance function, similar to the
exchange perspective.[82]
Ethical consumerism[edit]
The rise in popularity of ethical consumerism over the last two decades can be linked to the rise of
CSR.[83] Consumers are becoming more aware of the environmental and social implications of their dayto-day consumption decisions and in some cases make purchasing decisions related to their
environmental and ethical concerns.[84]
Creating Shared Value (CSV) claims to be more community aware than CSR. Several companies are
refining their collaboration with stakeholders accordingly.
Public policies[edit]
Some national governments promote socially and environmentally responsible corporate practices. The
heightened role of government in CSR has facilitated the development of numerous CSR programs
and policies.[87] Various European governments have pushed companies to develop sustainable
corporate practices.[88] CSR critics such as Robert Reich argued that governments should set the
agenda for social responsibility with laws and regulation that describe how to conduct business
responsibly.
Regulation[edit]
Fifteen European Union countries actively engaged in CSR regulation and public policy development.
[88]
CSR efforts and policies are different among countries, responding to the complexity and diversity of
governmental, corporate and societal roles. Studies claimed that the role and effectiveness of these
actors were case-specific.[87]
The variety among companies complicates regulatory processes. [89] Self-regulation allows each
corporate actor to balance profits and social responsibility without cumbersome governmental
involvement. Studies suggest that mandated CSR distorts the allocation of resources and increases the
likelihood of irresponsible decisions.[90]
Bulkeley cited the Australian government's actions to avoid compliance with the Kyoto Protocol in 1997,
over concerns of economic loss and national interest. The Australian government claimed that the pact
would damage Australia more than any other OECD nation.[91] In November 2007, the new Prime
Minister Kevin Rudd ratified the protocol.
Canada adopted CSR in 2007. Prime Minister Harper encouraged Canadian mining companies to meet
Canadas newly developed CSR standards.[92]
The Heilbronn Declaration is a voluntary agreement of enterprises and institutions in Germany
especially of the Heilbronn-Franconia region signed the 15th of September 2012. The approach of the
Heilbronn Declaration targets the decisive factors of success or failure, the achievements of the
implementation and best practices regarding CSR. A form of responsible entrepreneurship shall be
initiated to meet the requirements of stakeholders trust in economy. It is an approach to make
voluntary commitments more binding.[93]
Laws[edit]
In the 1800s,the US government could take away a firm's license if it acted irresponsibly. Corporations
were viewed as "creatures of the state" under the law. In 1819, the United States Supreme
Court in Dartmouth College vs. Woodward established a corporation as a legal person in specific
contexts. This ruling allowed corporations to be protected under the Constitution and prevented states
from regulating firms.[94] Recently countries included CSR policies in government agendas.[88]
On 16 December 2008, the Danish parliament adopted a bill making it mandatory for the 1100 largest
Danish companies, investors and state-owned companies to include CSR information in their financial
reports. The reporting requirements became effective on 1 January 2009.[95] The required information
included:
CSR/SRI policies
CSR/SRI is voluntary in Denmark, but if a company has no policy on this it must state its positioning on
CSR in financial reports.[96]
In 1995, item S50K of the Income Tax Act of Mauritius mandated that companies registered in Mauritius
paid 2% of their annual book profit to contribute to the social and environmental development of the
country.[97] In 2014, India also enacted a mandatory minimum CSR spending law. Under Companies
Act, 2013, any company having a net worth of 500 crore or more or a turnover of 1,000 crore or a net
profit of 5 crore must spend 2% of their net profits on CSR activities.[98] The rules came into effect from
1 April 2014.[99]
Geography[edit]
Corporations that employ CSR behaviors do not always behave consistently in all parts of the world.
[100]
Conversely, a single behavior may not be considered ethical in all jurisdictions. E.g., some
jurisdictions forbid women from driving,[101] while others require women to be treated equally in
employment decisions.
UK retail sector[edit]
A 2006 study[102] found that the UK retail sector showed the greatest rate of CSR involvement. Many of
the big retail companies in the UK joined the Ethical Trading Initiative,[103]an association established to
improve working conditions and worker health.
Tesco (2013)[104] reported that their essentials are Trading responsibility, Reducing our Impact on the
Environment, Being a Great Employer and Supporting Local Communities. J Sainsbury[105] employs
the headings Best for food and health, Sourcing with integrity, Respect for our environment, Making
a difference to our community, and A great place to work, etc. The four main issues to which UK retail
these companies committed are environment, social welfare, ethical trading and becoming an attractive
workplace.[106][107]
Retailer
Annual Sales bn
Tesco
42.8
Sainsbury's
22.29
Asda
21.66
Morrisons
17.66
8.87
Co-operative Group
8.18
7.76
Boots
6.71
5.49
King Fisher
4.34
Anselmsson and Johansson (2007)[109] assessed three areas of CSR performance: human
responsibility, product responsibility and environmental responsibility. Martinuzzi et al. described the
terms, writing that human responsibility is the company deals with suppliers who adhere to principles
of natural and good breeding and farming of animals, and also maintains fair and positive working
conditions and work-place environments for their own employees. Product responsibility means that all
products come with a full and complete list of content, that country of origin is stated, that the company
will uphold its declarations of intent and assume liability for its products. Environmental responsibility
means that a company is perceived to produce environmental-friendly, ecological, and non-harmful
products.[110] Jones et al. (2005) found that environmental issues are the most commonly reported CSR
programs among top retailers.[111]
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Corporations can have enormously detrimental effects on the environment. Oil spills are some
of the most conspicuous examples, but industries as varied as chemical manufacturing,
mining, agriculture and fishing can do permanent damage to local ecosystems. Climate
change can also be attributed in large part to corporations. While their responsibility is hard to
untangle from that of the consumers who demand electricity and transportation, it is difficult to
deny that many corporations have profited from the deterioration of the global environment.
In many cases, harm to the environment and harm to vulnerable communities go hand-inhand: indigenous groups in the Amazon rainforest, for example, have been decimated and
even wiped out, both intentionally and unintentionally, in order to make room for logging, cattle
ranching, gold mining, oil and gas drilling and hydroelectric power generation.
In light of this often dark legacy, some areas of corporate culture have begun to embrace a
philosophy that balances the pursuit of profit with a commitment to ethical conduct. Google
Inc's (GOOG) slogan sums up the idea of corporate social responsibility nicely: "Don't be evil."
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. When Martin Luther King, Jr. won the
Nobel Peace Prize in 1964, Atlanta's business leaders initially refused to attend a dinner
celebrating the Atlanta native's achievement. Coca Cola Co.'s (KO) CEO, recognizing the
damage such a display of segregationist attitudes could do to the firm's international brand,
threatened to move Coke out of the city, causing an immediate change of heart in the local
business elite.
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 in sustainable technologies,
even though the project might not immediately lead to increased profitability.
In order to account for the importance of social and ecological considerations in doing
business, some organizations advocate the concept of the "triple bottom line": social,
environmental and economic or "people, planet, profit."
In recent years, supply chains have emerged as a central focus of corporate social
responsibility. Company X's management might make extraordinary efforts to hire, foster and
empower a diverse workforce. They might offer generous paid maternity and paternity leave.
They might sponsor after-school programs in crime-affected neighborhoods, fund the clean-up
of local river systems and put pressure on elected officials to consider the needs of all citizens
rather than simply seeking political expediency. None of that would change the fact that they
source their raw materials, albeit indirectly, from outfits that use slave labor.
The diamond industry, for example, has come under fire for benefiting from injustices along its
supply chain. "Blood diamonds" or "conflict diamonds" are diamonds which have been
sourced from war zones, where rebel groups will often fund their campaigns through mining,
frequently using forcedoften childlabor. Such situations have arisen in Angola, Liberia,
Ivory Coast, Mozambique, Zimbabwe, the Democratic Republic of the Congo and CongoBrazzaville. International consumer and NGO pressure has caused diamond companies to
scrutinize their supply chain, and has reduced the number of diamonds reaching the market
from conflict zones.
Today, a shift has occurred in the way people conceptualize 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. Few tech startups pitch their ideas without describing how they will
change the world for the better. Social media platforms believe they will facilitate democracy
and the free exchange of information; renewable energy companies believe they will make
money by selling sustainable solutions; sharing economy apps believe they will cut down on
the waste and inefficiency of a post-war economy myopically geared toward the individual
consumer.
To be sure, some companies may engage in greenwashing, or feigning interest in corporate
responsibility. Companies may tout window-dressing contributions to "the greater good" while
engaging in morally questionable or inherently unsustainable conduct in the background.
Google's "don't be evil" slogan can seem hypocritical when viewed in terms of the company's
collaboration with repressive regimes, not to mention the questionable practice of compiling
reams of personal data on every customer.
Some think corporate social responsibility is an oxymoron. Others see corporate social
responsibility 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. Some counter that this
concerned is misplaced, since responsible initiatives can increase brand loyalty and therefore
profits. This may become increasingly true as ethical consumer culture gains wider
acceptance.
A few cynical executives will inevitably try to portray themselves as responsible when they are
decidedly not. And for some critics, nothing short of a massive overhaul of the world system
will suffice. The truth is that many large corporations are devoting real time and money to
environmental sustainability programs and various social welfare initiatives. These activities
should be encouraged, but at the same time, continually questioned and reassessed.
In 2010, the International Organization for Standardization released ISO 26000, a set of
voluntary standards meant to help companies implement corporate social responsibility.
Corporate social responsibility (CSR) refers to business practices involving initiatives that
benefit society. A business's CSR can encompass a wide variety of tactics, from giving
away a portion of a company's proceeds to charity, to implementing "greener" business
operations.
There are a few broad categories of social responsibility that many of today's businesses
are practicing:
1.
2.
3.
4.
"Sustainability isn't just important for people and the planet, but also is vital for business
success," said Maw, whose company connects students and professionals who want to
use business skills to do social good. "Communities are grappling with problems that are
global in scope and structurally multifaceted Ebola, persistent poverty, climate change.
The business case for engaging in corporate social responsibility is clear and
unmistakable."
"More practically, [CSR] often represents the policies, practices and initiatives a company
commits to in order to govern themselves with honesty and transparency and have a
positive impact on social and environmental wellbeing," added Susan Hunt Stevens,
founder and CEO of employee engagement platform
WeSpire.
As consumers' awareness about global social issues continues to grow, so does the
importance these customers place on CSR when choosing where to shop. But consumers
aren't the only ones who are drawn to businesses that give back. Susan Cooney, founder
of crowdfunding philanthropy platform
Related
Story: Social Responsibility Tips for Your Business]
interviews.
Eighty one of the country's largest companies companies participated. Almost
three-fourths generate more than P60 million revenues every year. They engage in
varied business activities, including manufacturing to outsourcing, financial
services, extractive industries, non-profit, retail, and real estate. Businesses that
operate in Mindanao, Visayas and Luzon are represented.
1. Favorable enabling environment for CSR to thrive in Philippine companies remains because
people at the top support and push it within the organization
2. Most of the CSR activities are still mainly philanthropy and event-driven, but
employee volunteerism has become more prominent in the CSR designs
3. Results assessment, which is basis for further improvement, is generally weak
while communication means still traditional
4. "Goodwill" is a main motivation for companies to engage in, report, and
communicate about their CSR, but business economics motivate financial support
Push from the top
Pushing the CSR agenda within the organization has largely been attributed to the
chief executive officer, according to the 2007 survey. At the time, the CEO initiated
CSR 77% of the time. To augment funding of these activities, he or she shared
discretionary funds, including his or her budget for dining out with clients and
suppliers, golf tournaments and other perks, so the company could, for example,
donate books or support the arts.
This year's survey captured how the CSR push has not been coming only from the
top management executive but from way up. Family owners, sometimes the entire
board of directors, directed the entire organization to engage in CSR. Collectively,
the board directors and management executives initiated or introduced CSR to the
entire organization 83% of the time.
"Our CSR is rooted in Filipino values, heightened by our religiosity [and the culture
of] taking care of our family, including our employees," explained Lydia Sarmiento,
former human resource head of integrated poultry producer Vitarich Corp and
current president of the family foundation. "The CSR of our company emanated
from the vision of the founders, particularly from my father's old paternalistic style of
corporate leadership."
For the multinational companies, the main trigger came from their head office
abroad. Local counterparts were required to engage in CSR 13% of the time.
Global companies like Microsoft, IBM, McDonalds, Wyeth, Walmart, and L'Oreal
comply with their main office's program directives, but consider local realities when
they designed their activities here.
These high-level individuals or groups set the companies CSR policy 69% of the
time, with some of them involved all the way to the preparation, development and
implementation of the CSR plan.
Eighty-two percent (82%) said CSR is part of their corporate vision and mission.
While the board and the top management officials planted the CSR seed when they initiated it in
the organization, it is usually the foundation that brings the companies CSR activities into fruition.
After all, the community where the business operates, and usually the target of foundation work,
was cited as the main beneficiary of the companies CSR by a whopping 95% of the respondents.
Mutually beneficial relationship with the host community is a major measurement of CSR success.
A hefty 70% of the respondents said community acceptance is their main goal. Another 22%
considered unhampered operations important. These usually refer to companies that have
operations in poor communities, most of them in far-flung areas. They aim to keep their equipment
free from bomb blasts, their executives safe, among others,
"The community is our best security," explained Senen Bacani, president of La Frutera, which has a
vast banana plantation in a Maguindanao, a region in the south where rebels operate nearby. "Not
only is there no disruption in our business operations, but in a way our good name is very important
in the business community because it really adds more to the credibility of what the company is
doing."
However, since most respondents have a foundation whose activities are devolved from the main
business units, funding for CSR activities is dependent on business economics and realities.
Practical issues influence the decision on whether these CSR activities will continue to receive
financial support.
Profits from last year was rated as the top motivation for receiving budget allocation by 27% of
the respondents. In the 2007 survey, financial performance was only rated the third top reason.
Thus, aside from donations, foundations also leverage themselves by forging partnerships with
external groups, including non-governmental organizations and multilateral financing institutions.
Rafael Lopa, executive director of the corporate-led social development foundation Philippine
Business for Social Progress, calls these partnerships "collective philanthropy."
"A lot of companies outsource the implementation of their CSR projects. For instance, "SMART
Schools" (education program of a mobile phone giant) and Coca-Cola "Red Schools" (support for
schools) are outsourced to PBSP. It emphasizes on collective philanthropy," Lopa explains.
PBSP bridges the gap between the corporate members and the consortium's network of nongovernmental organizations, as well as funders, including other governments and philanthropists
like the Bill Gates.
Aside from funding, access to expertise that corporations do not possess motivates these
partnerships. For example, real estate companies Ayala Land and SM Development Corp. partnered
with World Wildlife Fund, an environmental and sustainability group, to design luxury projects in
remote areas.
Embedding CSR
To determine how the mandate from the owners, board members, head office abroad, and the CEO
trickles down into the organizational structure, we looked at how the different functional groups or
business units participate in the CSR process.
First, the public affairs group. In 2007, this group was one of the main actors in how CSR is played
out in the company. About 43% of the respondents then said the public relations group brought this
up to the CEO, who in turn gave his or her blessing. It was deeply involved in the whole cycle,
from planning to implementation to assessment.
In 2011, the public affairs continues its key role in how the company sets its CSR policy and
executes the CSR plan. After all, reputation and social investment was rated by the respondents
as the top motivation for the company to fund CSR.
Twenty-seven (27%) of the respondents gave reputation and social investment the highest rating
when they were asked what determines the decision on how much funding to set aside or allocate
for CSR. A good image benefits the company in myriad of ways, including the crucial ability to
attract the best talent and enjoy premium pricing, among others.
Not surprisingly, 30% of the respondents said publicity is a measurement of success for their CSR.
Another top measure for success is CSR activities' contribution to "brand equity," according to
more than a fourth of the respondents. CSR activities are usually a way for companies to associate
positive emotions to the company or its products. To some, it is a strategy to project away from the
usual attributes of corporations as just cold-blooded profit machines.
Fourteen percent (14%) of the respondents said their sales and marketing group, which is mainly
in-charge of managing "brand equity," receives annual budget allocation to support CSR activities.
Achieving the companies revenue goals is one of the key motivation why the company funds
CSR. Twenty-eight percent (28%) of the respondents gave it a rating of 2 in a scale of 1 to 4,
with 4 as the highest.
The operations group, which manages the companies main product or service, is also involved.
Almost one-fifths of the respondents said their operations group is given an annual budget
allocation to include CSR. However, the respondents rated support for operational targets low
when asked if it is a key reason for funding CSR.
This could be attributed to the companies' tendency to separate environmental initiatives within
their business operations as separate from their CSR projects. John Victor Tence, vice president at
Jollibee, showe how their new heat recovery water system in 402 stores bring annual energy
savings equivalent to the yearly power consumption of 4,953 households. "This shows being 'green'
but we see it as being frugal," he told an audience at the LCF-led CSR Expo in July.
Environment-friendly practices in business operations have gained more following in the
Philippines than consumer or shareholder activism, which are the main push factors in the West.
The Finance group is mainly in-charge of investors and stockholders who reward and punish
companies who behave or misbehave not only in their host communities but in the way the entire
business operates.
However, the survey respondents said stockholders and investors are key players in CSR only 14%
and 17% of the time.
Jesse Ang, the president of the International Finance Corp, the private sector financing arm of the
World Bank, said these results reflected how generally weak the advocacy for the rights of minority
shareholders is here in the Philippines.
"Investors or stockholders have to watch their own back," he told Newsbreak in an interview in
July.
Employee volunteers
While some large companies have made CSR one of the cornerstones of their business strategy,
these leaders have few followers.
"Philanthropy is still the dominant practice," Lopa admitted. Most corporate efforts remain focused
on beneficiaries that have little to do with or are peripheral to how the companies create products or
provide services.
Most also seem to be event-driven. For example, a local financial services firm that does not have
any policy, program or product that has the environment as theme regularly conducts tree-planting.
A multinational consumer company conducts dengue-free activities to promote its anti-mosquito
lotion.
These one-time, one-shot activities, as well as the usual check-giving ceremonies are rarely
followed up on after the days picture has been published in a Sunday paper or reported in the
company newsletter. These activities are not likely to be sustainable.
"With philanthropy, you never really lift them up from poverty," Sarmiento noted. "But CSR in the
country is evolving from philanthropy to 'integrated' CSR."
One significant finding of the 2011 study was how the growing participation of employees in CSR
activities has become a way to ease CSR into how the companies make profits. In the 2007 survey,
employee volunteerism was less prominent when companies designed their philanthropy, event, or
other CSR activities.
The 2011 study showed that 62% of the respondents have CSR activities that are opportunities for
their workers to do volunteer work. In the 2007, it was only 52%.
The increasing involvement of employees is considered significant in the way CSR is transitioning
from being an activity outside the main business functions into one that engages the people that
makes the business run. Sixty percent (60%) of the respondents said their employees are a top
reason why the companies have engaged in CSR.
This findings support various studies on how companies provide work-life balance to their
employees by exposing them in feel good activities. Studies have shown that happy and
motivated employees are more productive at work. Fifty-two percent (52%) of the respondents in
this 2011 survey said employee satisfaction is a measure of their CSRs success.
Volunteering is innate among Filipinos. According to Martin Castaneda, the corporate
communications head of L'Oreal Philippines, employees in the local unit of the France-based
cosmetics and beauty firm prefer to include outreach programs as part of their company anniversary
celebrations or other special company events. This is almost unheard of among their Western
counterparts who thrive largely on bonuses and other monetary rewards.
The local unit of technology giant IBM takes volunteerism one step forward: the hours spent by
employees doing volunteer work are included when each individual is assessed at the end of the
year. "Each IBM-er is asked to at least commit to eight hours of service work. A number of us
actually will go beyond eight hours. I've probably done 60 hours," shared country general manager
James Velasquez. He stressed that "personal fulfillment" of each employee is the main incentive.
Aside from psychic rewards, employee volunteerism also provides labor free of cost. "There is the
non-monetary contribution from employees," Bernardo Abis of Webcast Technologies Inc., a local
technology firm offering location-based applications, said of their CSR activities that tap
employees' support.
and the other success indicators are measured, however, is another story.
The survey noted that, while CSR has the support of and push from the top, and its functional
business groups engaged in policy making, planning and implementation, the mechanism and
process for gathering stakeholders feedback is weak.
Felino Palafox Jr, an architect and current president of the Management Association of the
Philippines realized this when he answered the Newsbreak survey. "I know we have a lot of worthy
CSR projects, but I now I wonder how we [in Palafox Associates] are measuring our impact or
what we gain, or understanding how we can improve," he shared.
Companies regularly assess performance as part of their business cycle to check if the entire
company and the individual functional groups are far or near their business goals. It also gives an
idea of how the company can further improve itself and move ahead.
However, only 6% of the respondents conduct focus group discussions and 10% carry out formal
assessments to determine if their CSR process or impact has been effective. Almost half claim they
conduct either formal or informal surveys. Forty-six percent (46%) rely on anecdotes.
The general tendency not to complete the feedback and improvement loop that includes a bottomup process could be attributed to the lingering focus on philanthropy, events, and other one-shot
efforts.
This dominant top-down approach is reflected in another key CSR process: how the companies
report, communicate and encourage engagement. Tools used to announce, publicize, pass on or
impart the companies CSR activities are still the traditional one-way styles.
Company newsletter is used by 74% of the respondents and media coverage, 58%.
Over half depend on word of mouth to get their activities known by others.
Forty-two percent (42%) said they report about their CSR activities in their annual
reports, usually as an additional information to their financial report to stockholders.
Only a handful prepare a separate report that abide by the international guidelines
for reporting and assessing business factors, including labor conditions, social and
environmental impact of their operations, among others.
The 2011 survey added social media in the choices of communication strategies of
the respondents. This choice was absent in the 2007 survey when this new online
trend has not yet been introduced.
This years survey showed that only 27% of the companies in the survey are
tapping Facebook, Twitter, including video sharing platform YouTube, as part of
their communication strategy for their CSR activities.
Employees who participate in volunteer programs have already embraced it. With
their digital cameras and smartphones, they take pictures or videos of themselves
teaching kids, planting trees, or doing community work. Then they post these on
their Facebook walls or Tweet to their online friends, generating worthy praises or
otherwise.
Social media, a phenomenon only in the recent past, has been showing rosy
prospects in the Philippines as a communication, feedback, and engagement tool.
CSR practitioners ought to take heed.
For San Miguel Corporation, integrity, teamwork, respect for others and social responsibility are just a few
of its corporate values that guide them everyday. Through its corporate social responsibility arm, San
Miguel Foundation Incorporated, San Miguel Corporation proactively reaches out to others to bring forth
change that will enable communities to live better lives.
Throughout our transformation these past couple of years, we have never wavered in our resolve to play
a major role in the development of our country. We have come to understand that investing in our
country is the best way to jumpstart growth as well as push forward our social development agenda. Its
in this spirit that we have taken on more meaningful social investments that have tangible, long-term
benefits
to
our
countrymen.
We are proud to report that for 2012, our spending for social development breached the P1-billion mark,
the biggest by far, by any company in Philippine history. Of this, P550 million went towards constructing
5,000 new homes in Cagayan de Oro, Iligan, and Negros Oriental for the victims of typhoon Sendong, the
single-largest corporate social responsibility initiative in the country.
We also continued to invest on important social causes that are closely tied to our country's
development: education, health and nutrition, environmental preservation, community-building, and
disaster management.
For updates on our projects, like us on Facebook: www.facebook.com/sanmiguelfoundation