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The principal of this paper is to communicate what Corporate Social Responsibility (CSR) is, the benefits and issues it faces, how it is reported, and any related assurance issues a company faces when implementing this practice.
As business and technology merge and progress in value, corporations are choosing to become transparent not only in an operational and financial aspect, but also in what it does for the greater good of their community and how it carries those values out.
Ethical and corporate social responsibility hasn’t always been at the top of a company’s protocol or values. As time progresses, we see the downfall of many multi-million-dollar companies and as a result society has become more inclined to ask more questions, request more documents and demand transparency in their overall operational aspect and their social responsibilities of corporations. While profits are still at the forefront of any business, how it gets there has slowly shifted to incorporate CSR.
Corporate Social Responsibility (CSR) is a fundamental platform (model) per say that allows a company to operate in a profitable and ethical manner. It integrates values such as economics, social, environmental, corporate governance and human rights (ethics) with their standard operational plan. The focus is ensuring prosperity in all facets becomes a discipline (Karim). If done correctly CSR can positively impact a business’s company image, brand and motivates the owner(s) (Schooley, 2019). While there are many different schools of thoughts on what exactly can be considered a fundamental application of CSR, the below list some of the most commonly seen arenas highlighted in CSR reporting:
- Environmental – Businesses can leave an everlasting impact on the environment not only by what it produces – but how it handles itself when their actions directly impact the environment. A company that ensures their total behavior is beneficial to this cause will be favorably looked upon by stakeholders, employees and the general public.
- Philanthropy – This is a practice that has been seen in both small and larger companies. As a company donates into their local community and to worldwide effective issues, their money, products and services are directly improving not only their own social gain but the result of the issue at hand.
- Ethical labor practices – This has seen a major increase in recent years – due to the many issues giant companies have faced with their employees and the labor laws in place to protect them. CSR is a protocol to ensure that companies are treating employees fairly and most of all ethically. International corporations are one of the businesses that can tend to benefit from this arena – as their dealings internationally can often lead to issues as all countries have different labor laws.
- Volunteering – can be merged with philanthropy, as both lead to helping the community.
- Organisational governance – gives guidance on the processes of how the corporation functions and how these practices and procedures are managed and maintained.
- Consumer Issues – guidance on the overall expectations towards consumers and their importance to the corporation which includes but is not limited to items such as data protection and privacy, education/awareness consumption, and health & safety to name a few.
For a clearer visual, University of Washington shared a chart which shows all the different areas that inadvertently effect a business which are and can be captured their CSR reporting (“Chart of CSR”, 2018). Essentially these platforms allow businesses to create a transparent way of operating, which shows their faithfulness not only via profits but also in their values of bettering civilization.
However, while all these items sound perfect – companies are facing a few hurdles while implementing the change. Some of the issues at hand are finding the coordination between their vision and the appropriate personnel to carry them out. This issue stems from internal management implementing such responsibilities without true direction from their c-suites. Many times, companies must weigh the outcome of CSR and ensuring that they comply to the responsibilities of the shareholders (Button, 2019). Another issue CSR and CSR reporting face are the lack of enforcement of their policy on when and how to report CSR. Some question the validity and the true motivation of what’s included in the CSR report (Drum & Ashton, 2019).
While understanding some of the distinctions of what CSR is – reporting it from a company’s point of view can be difficult as there is no executive standard for it. Reporting of CSR is an important factor of a business due to the direct clearness of its past accomplishment and continuous commitments. Other important factors that corporations should include in their CSR reports are items such as specific measures of their performance of the above-mentioned responsibilities – such items measured against their goals can help a CSR report stand out and help their stakeholders, customers and employees.
Even though there is no legal requirement for CSR reporting assurance nor is there a universal standard for the reporting as mentioned above – stakeholders still expect some type of verifiable information. Assurance can provide creditability and transparency, become a mechanism for increasing the trust of stakeholders not only in the information quality but also in the corporate sustainability commitment, act as a monitoring tool of managers and can decrease information asymmetry and uncertainty (Adams and Evans, 2004). Essentially the company can provide a type of verification for the information they have provided, this in turn will provide the investors and stakeholders a better understanding of the companies’ commitment towards the initiatives found in their CSR report. In a perfect world – these assurances can give creditability and confidence about the companies’ future growth. This creditability is not only usable for future endeavors, but it also gives a look into the current manager commitment to the company. The issues for CSR reporting and assurance is very simple – there is no governing body, there is no standardized way to test what a company reports aside of their self-verification. It is important to note that every CSR report varies in lay-out, information and quality.
CSR by face seems like a simple and effective way for companies and the outsiders to be in a win-win situation, however due to the newness and lack of protocol it is sometimes difficult to obtain, while ensuring the company continues to be profitable and keeping the shareholders best interest at heart.
- Adams, Carol A., and Richard Evans. (2004) Accountability, Completeness, Creditability and the Audit Expectations Gap. Journal of Corporate Citizenship, 14, 97-115. Retrieved July 22, 2019.
- Anderson, R. (2019). Chart of CSR [Chart]. In Social Responsibility & Business Ethics: What is CSR? Tacoma, WA: University of Washington.
- Button, A. (2019, February 11). What Are the Issues of Social Responsibility & Ethical Behavior? Retrieved June 18, 2019, from https://bizfluent.com/info-8135193-issues-social-responsibillity-ethical-behavior.html
- Drum, P., & Ashton, S. (2019, March 26). Is Corporate Social Responsibility Reporting Just a Potemkin Village? Retrieved June 18, 2019, from https://www.thinkadvisor.com/2019/03/26is-corporate-social-responsibiliy-reporting-just-a-potemkin-village/?slreturn=20190518205804
- Schooley, S. (2019, April 22). What Is Corporate Social Responsibility? Retrieved June 18, 2019 from https://businessnewsdaily.com/4679-corporate-social-responsibility.html
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