The issues of corporate social responsibility are having an increasing effect on sales, popularity, brand power, and reputation, with the ISO introducing its CSR certification in 2009. Companies that meet the new standards for CSR, including the ISO 26000 may reap substantial dividends in relations with their customers, communities, and other stakeholders.
Corporate CSR obligations fall under three categories: "environmental management," "ethical management" and "social contributions."
"Environmental management," of course, involves protection of the environment, with concepts of environmental management moving beyond pollution control to encompass ideas like sustainable development.
"Ethical management" involves shareholder rights, labor issues, legal compliance, ordinary management activities and the ethics of executives and employees.
"Social contributions" include things like charity work, corporate volunteer activities and donations. They also include social contributions made as a managerial strategy that can create positive effects for businesses.
Ever since the 1960s, with the rising social and political agenda focusing on liberal propriety and correctness, CSR has been adopted by many companies as a means to instill business ethics based on key principles around integrity, fairness, and internal stakeholder expectations, and local community/environmental responsibilities.
However, many companies have struggled with this balance where the overall socially responsible business movement is often superficial and results in neither progressive nor particularly ethical results.
|Before we proceed further about the CSR activities of Korean companies, it would be good to first take a look at the worldwide definitions of CSR.
Basically, it has been agreed that there are four characteristics of CSR: (1) Economic responsibility explains that a corporation has a responsibility to maximize profit. (2) Legal responsibility is about adhering to law. (3) Ethical responsibility is about behaving in an ethical way, even though it is not required by law. Implementing an environmentally friendly business operation can be an example of the category of ethical responsibility. (4) Discretionary responsibility explains corporations' activities of donations to community .
Through CSR, enterprises of all sizes, in cooperation with their stakeholders, can help to reconcile economic, social and environmental ambitions. As it is a concept with a growing currency within Korea and around the globe. CSR is a concept that frequently overlaps with similar approaches such as corporate sustainability, corporate sustainable development, corporate responsibility, and corporate citizenship. While CSR does not have a universal definition, many see it as the private sector's way of integrating the economic, social, and environmental imperatives of their activities.
As such, CSR closely resembles the business pursuit of sustainable development and the triple bottom line. In addition to integration into corporate structures and processes, CSR also frequently involves creating innovative and proactive solutions to societal and environmental challenges, as well as collaborating with both internal and external stakeholders to improve CSR performance.
It is a concept that organizations, especially (but not only) corporations, have an obligation to consider the interests of customers, employees, shareholders, communities, and ecological considerations in all aspects of their operations. This obligation is seen to extend beyond their statutory obligation to comply with legislation.
It is also closely linked with the principles of Sustainable Development, which argues that enterprises should make decisions based not only on financial factors such as profits or dividends, but also based on the immediate and long-term social and environmental consequences of their activities.
Today's heightened interest in the role of businesses in society has been promoted by increased sensitivity to and awareness of environmental and ethical issues. Issues like environmental damage, improper treatment of workers, and faulty production that inconveniences or endangers customers are highlighted in the media. In some countries government regulation regarding environmental and social issues has increased. Also, standards and laws are often set at a supranational level (e.g., by the European Union).
Some investors and investment fund managers have begun to take account of a corporation's CSR policy in making investment decisions (so-called ethical investing).
It is important to distinguish CSR from charitable donations and "good works" .
Corporations have often, in the past, spent money on community projects, the endowment of scholarships, and the establishment of foundations. They have also often encouraged their employees to volunteer to take part in community work and thereby create goodwill in the community, which will directly enhance the reputation of the company and strengthen its brand. CSR goes beyond charity and requires that a responsible company take into full account its impact on all stakeholders and on the environment when making decisions. This requires the company to balance the needs of all stakeholders with its need to make a profit and reward shareholders adequately.
The definition of CSR used within an organization can vary from the strict "stakeholder impacts" definition used by many CSR advocates and will often include charitable efforts and volunteering. CSR may be based within the human resources, business development or PR departments of an organization, or may be given a separate unit reporting to the CEO or in some cases directly to the board. Some companies may implement CSR-type values without a clearly defined team or program. The business case for CSR within a company will likely rest on one or more of these arguments:
A CSR program can be seen as an aid to recruitment and retention, particularly within the competitive graduate student market. Potential recruits are increasingly likely to ask about a firm's CSR policy during an interview and having a comprehensive policy can give an advantage. CSR can also help to build a "feel good" atmosphere among existing staff, particularly when they can become involved through payroll giving, fund raising activities or community volunteering.
Managing risk is a central part of many corporate strategies. Reputations that take decades to build up can be ruined in hours through incidents such as corruption scandals or environmental accidents. These events can also draw unwanted attention from regulators, courts, governments and media. Building a genuine culture of 'doing the right thing' within a corporation can offset these risks.
Corporations are keen to avoid interference in their business through taxation or regulations. By taking substantive voluntary steps they can persuade governments and the wider public that they are taking current issues like health and safety, diversity or the environment seriously and so avoid intervention. This also applies to firms seeking to justify eye-catching profits and high levels of boardroom pay. Those operating away from their home country can make sure they stay welcome by being good corporate citizens with respect to labor standards and impacts on the environment.
Critics of CSR will attribute other business motives, which the companies would dispute. For example, some believe that CSR programs are often undertaken in an effort to distract the public from the ethical questions posed by their core operations. Some critics of CSR, such as the economist Milton Friedman, argue that a corporation's principal purpose is to maximize returns to its shareholders, while obeying the laws of the countries within which it works. Others argue that the only reason corporations put in place social projects is utilitarian; that they see a commercial benefit in raising their reputation with the public or with government.
Proponents of CSR, however, would suggest a number of reasons why self-interested corporations, solely seeking to maximize profits are unable to advance the interests of society as a whole.
A conflict can arise when a corporation espouses CSR and its commitment to Sustainable Development on the one hand, whilst damaging revelations about its business practices emerge on the other.
|According to a report by Samsung Economic Research Institute (SERI), CSR can have a positive effect on a company's tangible and intangible performance. CSR is important to many consumers and communities, and companies that leverage CSR for business reasons will be increasingly successful.
One notable case of business results from CSR is the new phenomenon of "socially responsible investing," or SRI funds. These funds invest in companies that practice good CSR.
The report notes that first, when it comes to CSR, companies should remember that environmental management, ethical management and social contributions play a role in corporate performance that is as significant as the balance sheet.
CSR is not unlimited responsibility for companies, but a harmony of corporate performance and social contribution. Therefore, companies need to build their CSR activities in tune with the circumstances and communities where they live and operate.
Secondly, companies will need input from a variety of stakeholders in their CSR plans. They can start on this by communicating the value of CSR to shareholders, employees, consumers, and the surrounding community.
Third, companies should associate management strategy with CSR to maximize positive effects. Fourth, companies have to establish systems that can manage and supervise CSR enterprise-wide and prepare for the arrival of CSR related certifications.
Unfortunately, CSR remains an unfamiliar concept in Korea, with most firms dismissing it as charity rather than business. Now is the time for Korean firms to change their mentality and make serious consideration of issues of social responsibility in the way they do business.