What is corporate social responsibility?
Corporate social responsibility refers to the obligation that the business owes members of the community within which it operates. A business is expected to influence the locality where it operates with some of its policies. A business organisation should look beyond profitability because it has a duty of care to the people in the society. Therefore, it is required to contribute to the welfare of society by achieving social objectives along with the management’s long-term economic objective. A socially responsible business reduces the environment impact of its activities, imbibes fair practices and engages in philanthropy for the benefit of the society.
Business organisations are becoming more socially responsible owing to many problems confronting societies such as pollution, environmental damage, unemployment, poverty and high population growth.
Arguments for social responsibility
Business is better operated in a friendly environment
A socially responsible firm would always enjoy the community’s support. There would be minimal disruptions to its activities because of the friendly relationship it has with the society. For example, the community would not oppose it if it wants to embark on expansion..
Organisations should pursue social and economic objectives
The environmental damage caused by business activities necessitates the pursuit of social objectives in addition to profit maximisation. Therefore, the business organisation should reduce its activities’ impact by using recyclable materials and investing in clean technology to reduce its carbon footprint.
Organisations have the resources
Businesses make profits and can contribute in a little way to the progress of the society. Being socially responsible does not always involve a lot of money. For example, monitoring to ensure fair treatment of workers or ensuring a certain percentage of the managerial positions are given to women for social inclusion.
Businesses are an integral part of the society
An organisation should see itself as an integral part of the society. It should continuously strive to make an impact since it can affect and is affected by the environment in which it operates.
Arguments against social responsibility
It increases the costs of the business
Embarking on social responsibility involves some costs. Whether it is ensuring the organisation embraces environmentally friendly production techniques or philanthropy through donations, money is involved. Consequently, costs rise.
It reduces profitability
Whether philanthropic, environmental, or ethical, social responsibility involves costs. A rise in costs leads to a reduction in profitability; the distribution of dividends to shareholders would also decline.
Business organisations are not accountable to the society
The business organisation is principally accountable to providers of capital, namely shareholders or investors. Therefore, managers should run the business in the shareholders’ favour; the managers are just agents of the owners or shareholders. The managers are not employed or accountable to the society and should not always try to please them through corporate social responsibility.
It may be perpetual
Corporate social responsibility has been designed as a policy by many companies. This means that they guide behaviour in the organisation. As a result, they become endless transactions that the employees have to abide by.