Tag Archives: strategic corporate responsibility

Promoting strategic corporate social responsibility among practitioners

What is Strategic Corporate Social Responsibility?

Organisations engage in Strategic Corporate Social Responsibility (Strategic CSR) when they integrate responsible behaviours in their corporate practices (Camilleri, 2018; Porter & Kramer, 2011). Therefore, Strategic CSR is often evidenced by the businesses’ engagement with key stakeholders, including customers, employees, shareholders, regulatory authorities and communities as their non-financial activities can have an effect on society and the natural environment (Camilleri, 2017a). The ultimate goal of strategic CSR is to create both economic and social value (Carroll & Shabana, 2010; Falck & Heblich, 2007).


Introduction

The businesses’ CSR practices may result in a sustained competitive advantage if they are willing to forge strong relationships with their stakeholders (Camilleri, 2015a; Freeman,  & McVea, 2001). Therefore, businesses ought to communicate with employees, customers, suppliers, regulatory stakeholders as well as with their surrounding community (EU, 2016; Bhattacharya, Korschun & Sen, 2009). Positive stakeholder relationships can lead to an improved organizational performance, in the long run (Camilleri, 2015a).

The most successful businesses are increasingly promoting the right conditions of employment for their employees, within their supply chains (Camilleri, 2017b). They are also instrumental in improving the lives of their suppliers (Camilleri, 2017c; Porter & Kramer, 2011). They do so as they would like to enhance the quality and attributes of their products or services; which are ultimately delivered to customers and consumers. Hence, their long-term investments on strategic CSR activities are likely to yield financial returns for them. At the same time they will add value to society (McWilliams et al., 2006; Falck & Heblich, 2007). Therefore, the strategic CSR involves the promotion of socially and environmentally responsible practices they are re-aligned with the businesses’ profit motives (Camilleri, 2017b,c).


Key Theoretical Underpinnings

The Strategic CSR perspective resonates well with the agency theory. In the past, scholars argued that the companies’ only responsibility was to maximise their owners’ and shareholders’ wealth (Levitt, 1958; Friedman, 1970). Hence, companies were often encouraged to undertake CSR strategies which can bring value to their businesses and to disregard those activities which are fruitless. However, at times, the fulfilment of philanthropic responsibilities can also  benefit the bottom line (Lantos, 2001).

Although, it could be difficult to quantify the returns of responsible behaviours, relevant research has shown that those companies that practiced social and environmental responsibility did well by doing good (Falck & Heblich, 2007, Porter & Kramer, 2011).Some of the contributions on this topic suggest that corporate philanthropy should be deeply rooted in the firms’ competences and linked to their business environment (Camilleri, 2015; Porter & Kramer, 2002; Godfrey, 2005). Many authors often referred to the CSR’s core domains (economic, legal and ethical responsibilities) that were compatible and consistent with the relentless call for the business case of CSR (Camilleri, 2015b; Carroll & Shabana, 2010, Vogel, 2005).

Many commentators argued that the strategic CSR practices may result in a new wave of social benefits as well as gains for the businesses themselves (Fombrun et al., 2000; Porter & Kramer, 2011) rather than merely acting on well-intentioned impulses or by reacting to outside pressures (Van Marrewijk, 2003). Lozano (2015) indicated that the business case is the most important driver for CSR engagement. Thus, proper incentives may encourage managers ‘to do well by doing good’ (Falck & Heblich, 2007). If it is a company’s goal to survive and prosper, it can do nothing better than to take a long-term view and understand that if it treats society well, society will return the favour. Companies could direct their discretionary investments to areas (and cost centres) that are relevant to them (Gupta & Sharma, 2009). The reconciliation of shareholder and other stakeholders addresses the perpetual relationship between business and society, as companies are expected to balance the conflicting stakeholder interests for long term sustainability (Orlitzky et al., 2011; Camilleri, 2017c; Camilleri 2019).

 

Conclusion
Many companies are increasingly recognising the business case for CSR as they allocate adequate and sufficient resources to financial and non-financial activities that will ultimately benefit their stakeholders. Their motivation behind their engagement in strategic CSR practices is to increase their profits and to create shareholder value. At the same time, they strengthen their competitive advantage through stakeholder management.

References

Bhattacharya CB, Korschun D, Sen S (2009). Strengthening stakeholder–company relationships through mutually beneficial corporate social responsibility initiatives. J Bus Ethics 85(2):257–272.

Camilleri, M.A. (2015a). Valuing Stakeholder Engagement and Sustainability Reporting. Corporate Reputation Review, 18 (3), 210-222.

Camilleri, M.A. (2015b) The Business Case for Corporate Social Responsibility. In Menzel Baker, S. & Mason, M.(Eds.) Marketing & Public Policy as a Force for Social Change Conference. (Washington D.C., 4th June). Proceedings, pp. 8-14, American Marketing Association.

Camilleri M.A. (2017a) Corporate sustainability, social responsibility and environmental management: an introduction to theory and practice with case studies. Springer, Cham, Switzerland.

Camilleri, M.A. (2017b). Corporate Citizenship and Social Responsibility Policies in the United States of America. Sustainability Accounting, Management and Policy Journal. 8 (1), 77-93.

Camilleri, M.A. (2017c). The Rationale for Responsible Supply Chain Management and Stakeholder Engagement. Journal of Global Responsibility. 8 (1), 111-126.

Camilleri, M.A. (2018). The SMEs’ Technology Acceptance of Digital Media for Stakeholder Engagement. Journal of Small Business and Enterprise Development.  26(4), 504-521.

Camilleri, M.A. (2019). Measuring the corporate managers’ attitudes toward ISO’s social responsibility standard. Total Quality Management & Business Excellence. 30(14), 1549-1561.

Carroll AB, Shabana KM (2010). The business case for corporate social responsibility: a review of concepts, research and practice. Int J Manag Rev 12(1):85–105.

European Union (2016). Corporate social responsibility (CSR) in the EU. European Commission Publications, Brussels, Belgium http://ec.europa.eu/social/main.jsp?catId=331.

Falck O, Heblich S (2007). Corporate social responsibility: doing well by doing good. Business Horizons 50(3):247–254.

Freeman, R. E., & McVea, J. (2001). A stakeholder approach to strategic management. The Blackwell handbook of strategic management, 189-207.

Friedman M (1970). The social responsibility of business is to increase its profits. New York Times Magazine 13:32–33.

Godfrey PC (2005). The relationship between corporate philanthropy and shareholder wealth: a risk management perspective. Acad Manag Rev 30(4):777–798.

Gupta S, Sharma N (2009). CSR-A business opportunity. Indian Journal of Industrial Relations:396–401.

Lantos GP (2001). The boundaries of strategic corporate social responsibility. J Consum Mark 18(7):595–632.

Levitt T (1958). The dangers of social-responsibility. Harv Bus Rev 36(5):41–50.

Lozano R (2015). A holistic perspective on corporate sustainability drivers. Corp Soc Responsib Environ Manag 22(1): 32–44.

Orlitzky M, Siegel DS, Waldman DA (2011). Strategic corporate social responsibility and environmental sustainability. Business & society 50(1):6–27.

Porter ME, Kramer MR (2011). Creating shared value. Harv Bus Rev 89(1/2):62–77.

Van Marrewijk M (2003). Concepts and definitions of CSR and corporate sustainability: between agency and communion. J Bus Ethics 44(2):95–105.

Vogel DJ (2005). Is there a market for virtue? The business case for corporate social responsibility. Calif Manag Rev 47(4):19–45.

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Filed under Business, Corporate Social Responsibility, Corporate Sustainability and Responsibility, CSR, Shared Value, Small Business, SMEs, Stakeholder Engagement, Sustainability, sustainable development

Environmental Responsibility in the Hospitality Sector

In a recent media release Hyatt has reiterated its commitment to environmental stewardship with a focus on energy, waste and water reduction, sustainable building, supply chain management as well as stakeholder engagement. In Hyatt’s Corporate Responsibility Report, the listed hotel corporation has unveiled an aggressive set of environmental goals for the year 2020, all designed to strengthen Hyatt’s collective ability to collaborate, inspire and further its commitment to environmental stewardship. Hyatt has also defined a suite of measurable and actionable targets. Hyatt hotels aim to create a more sustainable future for themselves and for their neighbours. The hotel group posits that the conservation efforts have reaped fruit, resulting in major reductions in greenhouse gas emissions and water and energy usage by property across their portfolio. Hyatt maintains that its commitment to environmental stewardship touches every aspect of its business, from the way how the hotels are built and operated, to the way they collaborate with their global supply chain, to the way the hotel chain influences change through the passion and commitment of its employees around the world.
Setting Focus Areas
Hyatt 2020 Vision focuses on significantly expanding the global chain’s strategic scope, especially in areas where past efforts have not had as much of an impact due to occupancy fluctuations and rapid business growth in developing markets. With this in mind, the hotel chain’s three strategic priorities include the following;
• “Use Resources Thoughtfully: Hyatt is committed to examining how its hotels source, consume and manage natural resources to serve their guests. Hyatt will identify ways for Hyatt hotels to reduce energy consumption and greenhouse gas emissions, use less water, produce less waste and make more environmentally responsible purchasing decisions. As a highlight, Hyatt has set the goal to reduce water use per guest night by 25 percent, and within water-stressed areas, Hyatt has set a 30 percent reduction goal. Additionally, Hyatt is elevating its recycling efforts by challenging every hotel to reach a 40 percent diversion rate, as well as by setting a recycling goal for renovation waste.
Build Smart: Hyatt will work closely with stakeholders to increase the focus on building more efficient, environmentally conscious hotels across the enterprise. Beginning in 2015, all new construction and major renovation projects contracted for Hyatt managed hotels will be expected to follow enhanced sustainable design guidelines. Hyatt will lead this initiative by mandating that all new construction and major renovation projects for wholly owned full service hotels and resorts achieve LEED certification, or an equivalent certification.
Innovate and Inspire: This goal reflects Hyatt’s commitment to be a catalyst for bringing more hearts, hands and minds to the table to help advance environmental sustainability around the world. This includes Hyatt’s commitment to create a funding mechanism to support the innovation, ideation and acceleration of sustainable solutions within its hotels that can be replicated across the Hyatt portfolio, as well as the broader hospitality industry” (Hyatt Corporate Responsibility Report, 2013/2014).

Reporting Progress
Hyatt’s reported some of its major milestones, including:

• “The launch of Ready to Thrive, Hyatt’s global corporate philanthropy program focused on literacy and career readiness, which included a $750,000 investment in career readiness programs in Brazil.
• Building 11 libraries and supporting reading and writing programs in 30 schools through a new partnership with Room to Read, impacting 30,000 students in India.
• Donating 35,000 books to kids in need across the globe through We Give Books and Room to Read.
• Donating more than 100,000 volunteer hours in 2013 – a 69 percent increase from 2012.
• More than 80 percent of Hyatt hotels recycling at least one or more waste streams.
• A reduction in resource use intensity in each of Hyatt’s three regions compared to 2006 – up to a 20 percent reduction in greenhouse gas emissions, up to a 13 percent reduction in energy and up to a 15 percent reduction in water.
• Development of responsible seafood sourcing goals based on a global purchasing audit in partnership with World Wildlife Fund.
• Required more than 40,000 of its global associates — including housekeepers, front office, concierge, guest services, key service and security personnel, and all management-level colleagues — to complete Human Trafficking Prevention Training. Hyatt also implemented a standard for all of its hotels to have training measures in place” (Hyatt Corporate Responsibility Report, 2013/2014).

Sources:
Hyatt Thrive: http://thrive.hyatt.com/en/thrive.html
Hyatt Corporate Responsibility Report (2013-2014): http://thrive.hyatt.com/content/dam/Minisites/hyattthrive/Hyatt%20Corporate%20Responsibility%20Report-2013-2014.pdf

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Creating Shared Value Leverages the Value Chain

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Socio-economic actions and environmental changes play a vital role in determining the prices of core commodities. Undoubtedly, the availability of commodities can change the dynamics in supply chain relationships. It is in the interest of suppliers to forge fruitful and collaborative working relationships with their customers. For instance, farm workers are demanding bigger shares from the profits of wine producers, coffee makers and the like. In this day and age, businesses will have to look at new ‘shared value’ models as customers are often expecting greater reliability, higher quality, reduced lead times and frequent deliveries from their suppliers.

‘Creating shared value’ needs to address not only value chain requirements but to ensure that programmes are built on joint principles. Of course, many businesses may be genuinely interested in investing in philanthropic initiatives. However, this particular proposition suggests that businesses can leverage themselves as they gain a competitive advantage.  Inevitably, this notion suggests  that there is a need for co-creative and innovative approaches rather than blueprints.

CASE STUDIES

“Take Novartis as an example. They saw a shared value opportunity in selling their pharmaceuticals in rural India, where 70% of the population lives. The obstacle was not the prices they charged but the social conditions in the region: a chronic lack of health-seeking behaviour in the community, healthcare providers with virtually no healthcare training, and tens of thousands of local clinics without a reliable supply chain. Looking through a shared value lens, Novartis saw these social problems as business opportunities: they hired hundreds of community health educators, held training camps for providers, and built up a distribution system to 50,000 rural clinics.

For Novartis, the result was an entirely new business model that is essential to their future. In the coming decade, emerging markets with similar challenges are predicted to account for 75% of the growth in global pharmaceutical sales. For 42 million people in India, the results are access to a vastly improved level of healthcare that neither government nor NGOs were providing.

Or consider Southwire, a US company that manufactures wire and cable in a small town in Georgia. Their machinists were retiring and the local high school, burdened by a 40% dropout rate, wasn’t producing the workforce they needed. So Southwire partnered with the school, opened a factory nearby to employ the most at-risk students, part-time, using attractive wages as an incentive, and mentored their academic performance. Nearly 100% of the students in the Southwire program completed high school, and 1/3 went on to become Southwire employees. And, by the way, that factory near the school generates a million dollar annual profit.

These examples are not examples of corporate social responsibility or sustainability. They are examples of businesses grabbing hold of a social issue that is at the core of their business, and figuring out how to wrap that into their strategy and operations. These companies are using the resources and capabilities of business to solve very specific social problems in ways that are aligned with the company’s strategy, that strengthen its competitive positioning, and that enable it to make more money” (More details are available in the Guardian – Better ways of doing business: Creating Shared Value).

More blogs about “Shared Value” approaches!

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February 5, 2013 · 4:36 pm