Introduction
The World Business Council for Sustainable Development (WBCSD) defines Corporate Social Responsibility (CSR) as “the continuing commitment by business to contribute to economic development while improving the quality of life of the workforce and their families as well as of the community and society at large”[1] Wilson of Rio Tinto adds that “debate about corporate social responsibility may be of recent origin but caring, responsible management is certainly not”[2] Wilson goes on to explain that, “in many companies there has long been recognition that there is more to business than simply short-term profit. Indeed, in complex and sensitive businesses, such as those in the extractive industries, the creation of long-term shareholder wealth is incompatible with a purely near-term profit focus.”[3]
CSR: Benefits and Opportunities
There can be many good benefits for companies looking to get into CSR work. Authors Charles Holliday, Stephen Schmidheiny, and Philip Watts in their book Walking the Talk: The Business Case for Sustainable Development, state that, companies find that “good community relations can help raise awareness of unforeseen issues or problems, avoid unnecessary conflicts and hostility, create a better working environment for employees from outside the area, recruit employees from within the area, and build business links with people and companies in the area.”[4]
According to SustainAbility, an independent think tank and strategic consultancy headquartered in London, some of the benefits of CSR are “brand value and reputation, improvements in human capital, and revenue generation, particularly in large and as yet undeveloped markets.”[5] When assessing shareholder value associated with a company's demonstrations of social responsibility, SustainAbility concluded that companies that ‘flaunt or ignore human rights run a real, demonstrable risk of seeing their share price drop as a direct result. Whereas community initiatives have a weak, yet positive, impact on shareholder financial performance’[6]
The British government writing through the www.businesslink.gov.uk - the official government website for businesses of all sizes in the UK – added these benefits for companies practicing CSR:
- “A good reputation makes it easier to recruit employees.
- Employees may stay longer, reducing the costs and disruption of recruitment and retraining.
- Employees are better motivated and more productive.
- CSR helps ensure you comply with regulatory requirements.
- Activities such as involvement with the local community are ideal opportunities to generate positive press coverage.
- Good relationships with local authorities make doing business easier.
- Understanding the wider impact of your business can help you develop new products and services.
- CSR can make you more competitive and reduces the risk of sudden damage to your reputation (and sales). Investors recognise this and are more willing to finance you.”[7]
Case Study: Seven Trent
As an environmental services company, Severn Trent is a “leading provider of water, waste management, and utility services. The Group, which includes Severn Trent Water, Biffa Waste Services, and Severn Trent Services, employs more than 14,000 people, of whom 9,000 are based in the UK.”[8] Severn Trent became “involved with the Cromford Venture Centre in Derbyshire, UK, following a visit in 1995…The Venture Centre was founded on the belief that young people respond positively to opportunities for self-development if those opportunities are offered in surroundings that provide stimulus and the challenge of new activities and experiences…Thus Severn Trent decided to build a strong relationship with the Center, making an effort to understand its objectives and needs and to involve Severn Trent employees as fully as possible at every opportunity.”[9]
Conclusion
It is clear that companies have a great deal to offer the communities and world that they live in. Corporations, like governments and individuals, can be a powerful example of positive and substantive change. As the WBCSD concludes, “The strong and committed relationship between the company and the Severn Trent/Cromford Venture Centre has been crucial to the project's effectiveness and the provision of residential places to thousands of young people, who have been given the opportunity to help themselves - a vital element of everyone's progress in life.”[10] Such partnerships among corporations and the community foster not only a positive business model as well as customer loyalty and reputation, but the application of CSR offers a positive change in the social and environmental fabric of the community which is ideal for all stakeholders.
[1] http://www.wbcsd.org/templates/TemplateWBCSD5/layout.asp?type=p&MenuId=MTE0OQ [2] Wilson, R. (2001) 'Corporate Social Responsibility: Putting the Words into Action', speech made at the Conference on Corporate Social Responsibility, Royal Institute of International Affairs, Chatham House, London, 16 October 2001. [3] Ibid. [4] Holliday, Charles O. Jr., Stephen Schmidheiny, Philip Watts. Walking the Talk: The Business Case for Sustainable Development. UK: Greenleaf Publishing Limited, 2002. Print. Page 112-113. [5] Ibid. Page 112-113. [6] SustainAbility/UNEP (United Nations Environmental Program) (2001) Buried Treasure: Uncovering the Business Case for Corporate Sustainability (London: SustainAbility). [7] http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1075408491&type=RESOURCES [8] http://www.wbcsd.org/plugins/DocSearch/details.asp?DocTypeId=-1&ObjectId=NTUw&URLBack=result.asp%3FDocTypeId%3D-1%26SortOrder%3Ddoctype+asc%26CurPage%3D9 [9] Holliday, Charles O. Jr., Stephen Schmidheiny, Philip Watts. Walking the Talk: The Business Case for Sustainable Development. UK: Greenleaf Publishing Limited, 2002. Print. Page 115-116. [10] http://www.wbcsd.org/plugins/DocSearch/details.asp?DocTypeId=-1&ObjectId=NTUw&URLBack=result.asp%3FDocTypeId%3D-1%26SortOrder%3Ddoctype+asc%26CurPage%3D9
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