The Impact of Corporate Social Responsibility (Cambridge International A-Level Business)

The impact of corporate social responsibility on business

• Corporate social responsibility (CSR) refers to the concept that businesses have a responsibility to consider and positively impact society
• Companies voluntarily integrate social and environmental concerns into their business operations and interactions with stakeholders

Social responsibility goals

Corporate social responsibility goals can be focused on a range of different stakeholders

• CSR involves taking into account the impact of business activities on various stakeholders, including employees, customers, communities, the environment and society as a whole

Examples of socially responsible activities

Ethics and CSR

• Ethics relates to the rights or wrongs of making a strategic decision that are beyond legal requirements

• Some businesses adopt an ethical code of practice which informs decision-making and may set out how they

  • Behave responsibly with regards to the environment and avoid negative impacts on animals
  • Adopt fair working practices
  • Implement **equitable supply chains *
  • Takes steps to** eliminate corruption
  • Adopt ethical accounting practices
  • Avoid controversial products or take steps to minimise their impact or access to them

• Many large companies carry out and publish annual social audits which provide an review of the steps being taken to meet their commitments

The impact of implementing CSR

• Businesses experience a range of benefits as a result of implementing CSR

  • They attract long-term loyalty from employees and customers
  • Their approach provides a useful competitive advantage
  • They receive the support of the local community and local government, especially if they share their aims
  • Employees are likely to be motivated, loyal and productive, as they are proud of working for a responsible firm

• However, suppliers and competitors often change their approach to ensure that they do not lose sales to more ethical rivals

• In addition, taking an ethical approach costs more and may reduce the overall level of profits if prices cannot be raised to compensate

Case Study Fashion retailer Uniqlo has adopted an eco-friendly strategy in recent years

• It focuses on technologies that make the production of new clothing from recycled materials possible
• It has invested significant sums in energy-efficient production facilities
• It supports the campaign to safeguard the islands and coastal regions of Japan’s threatened Seto Inland Sea

Community and pressure group needs

• A business's community is everyone touched by a its activities, including

  • Local residents
  • Employees and their families
  • Customers
  • Suppliers
  • Schools
  • Charities
  • Local government

• Winning community support gives a business a social licence to operate; without it, business projects can be delayed, boycotted or shut down

Why businesses should listen to their communities

Pressure groups

• A pressure group is an organisation that tries to influence the decisions of businesses or governments in favour of a particular cause, such as animal welfare, climate action, or workers' rights

• Common tactics used by pressure groups include

  • Public petitions and letter-writing campaigns
  • Social-media 'naming and shaming' or viral videos
  • Peaceful protests, strikes, or sit-ins
  • Lobbying politicians for new laws
  • Buying shares to speak at a company’s AGM
  • Legal action (e.g. climate lawsuits against oil firms)

• Consumers can act as a particularly powerful pressure group

  • Buying behavior, e.g., choosing Fairtrade coffee or USDA-organic fruit, rewards ethical producers
  • Social media, e.g., praising green firms and exposing polluters at low cost
  • Direct feedback, e.g., e-mails, online reviews, polls and focus groups, tells firms which practices are unacceptable
  • Boycotts, e.g., refusing to purchase from a harmful brand or deliberately supporting a responsible rival

Examples of pressure group influence