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CORPORATE SOCIAL RESPONSIBILITY AND ETHICAL BUSINESS AUTHORE BY: PRATHIKSHA SADAGOPAN
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CORPORATE
SOCIAL RESPONSIBILITY AND ETHICAL BUSINESS
AUTHORED
BY: PRATHIKSHA SADAGOPAN
21BLB1058
ABSTRACT
The
corporate culture regarding economic, social, and environmental sustainability
practices must be carefully re-aligned with activities to support a sustainable
planet. It can be realized that there is an increase in unethical behavior in
business operations, driven by an insatiable desire for greater profits at any
cost, regardless of what is deemed morally appropriate in society and
regardless of the consequences of immoral behavior on stakeholders, including
the environment. Corporate social responsibility (CSR) is declining in some
businesses and increasing in others, as the latter aim to increase profits by
taking responsible activities in the communities in which they operate.
According to a thorough analysis of existing literature, there is a strong
association between ethical practice, CSR, and improved financial success. It
is stated that multinational firms and major corporations, in particular, must
urgently adopt an appropriate moral position and proactively drive sustainable
development by taking their stakeholders and the environment into account in a
triple-bottom-line strategy. This article, using a review of selected studies,
seeks to make a small contribution to the improvement of the likelihood of the
sustainability of corporations and CSR activities in their global operations,
leading to a more sustainable world by expounding on why and how incorporating
CSR initiatives and being ethical in business strategies bolsters
sustainability.
KEYWORDS
Corporate
Social Responsibility, Business Ethics, Ethical Standards, Organizational
policies and procedures, Sustainable Development Goals, Strategic Management,
Transformative process, Business Strategy.
1.
INTRODUCTION
Corporate
social responsibility (CSR) is a strategic management strategy that allows for
win-win scenarios for both the community and the organization. CSR is an
essential area of stakeholder inclusion, and it is described as activities
undertaken by firms that go beyond the ordinary legal obligations and
business-specific interests in order to adhere to social and environmental
reasons.
Ethical
behavior and corporate social responsibility can be extremely beneficial to a
company.
The
notion that businesses have responsibilities to society in addition to
producing profits for shareholders has been around for centuries. This explains
why the concept of Corporate Social Responsibility (CSR) has grown in
prominence and significance. One of the fundamental assumptions is that
business organizations have a social and ethical obligation in addition to the
economic objective of creating wealth for shareholders or business owners.
Whereas a business's economic responsibilities are to produce goods and
services that society needs and wants at a price that can sustain the
business's continued existence while also satisfying its obligations to
investors, a business's ethical responsibilities are those behaviors or
activities expected of businesses by society and other stakeholders such as
employees.[1]
It
has been proven time and again that a positive brand makes stakeholders feel
better about themselves as consumers. Implementing CSR rules also encourages
improved customer and employee involvement and creates a more favorable working
environment, which is beneficial for keeping qualified staff. CSR done
successfully exposes a business to new prospects and partnerships with other
community role-players, as well as long-term advantages and improves a
business's viability.
2.
CORPORATE SOCIAL RESPONSIBILITY AND ITS ORIGIN
The
increased public concern over topics like climate change, social inequity, and
ethical corporate practices has made CSR more significant in today's business
environment.
Businesses
first started participating in philanthropy and charitable giving in the early
20th century, which is when CSR began to develop historically. However, it
wasn't until the growth of social and environmental movements in the 1950s and
1960s that the idea of social responsibility started to take shape.
The
term "corporate citizenship" first gained popularity in the 1970s and
1980s, highlighting the moral and social obligations of corporations. In the
1990s and 2000s, this resulted in a move towards an emphasis on sustainability
and producing shared benefit for all stakeholders.
Today,
CSR is a critical factor for businesses in many industries, with firms aiming
to forge lasting bonds with clients, team members, and communities by resolving
their issues and making a difference in society and the environment.
Philanthropy and charitable giving were found to be the major forms and sources
of CSR. They established the groundwork for a more comprehensive approach to
corporate responsibility that emerged in the following decades. CSR now
encompasses a wide range of activities, from environmental sustainability to
ethical corporate practices, and is an important factor for firms of all sizes.
[2]
The
growth of social and environmental movements in the 1950s and 1960s helped
shape the concept of corporate responsibility. Influential authors such as
Ralph Nader and Rachel Carson aided in raising awareness about business's
impact on society and the environment. [3]
The
concept of "corporate citizenship" originated in the 1970s and 1980s,
stressing firms' social and ethical duties. Companies such as Ben & Jerry's
and The Body Shop contributed to the spread of this concept by supporting
principles such as social justice and environmental sustainability. [4]
The
emphasis moved in the 1990s and 2000s to sustainability and providing shared
value for all stakeholders. Companies such as Patagonia and Unilever have made
sustainability a central component of their business strategy, establishing
ambitious targets for decreasing their environmental effect and encouraging
social responsibility.
3.
SOCIAL RESPONSIBILITY AND ETHICS
A
responsible firm will strive to attain these universal aims while considering
their influence on society - in the case of positive consequences, to nurture
them, and in the event of negative implications, to avoid and counterbalance
them. Most definitions of SR mention "integrating social or ethical
dimensions in economic activities," "achieving economic goals while
also addressing society's expectations," "engaging in open,
transparent business practices that respect their employees, the community, and
the environment," "integrating the needs of people, planet, and
profit in their operations," and so on. [5]
A
socially responsible organization is one that prioritizes people - the
stakeholders - the organization must
consider the needs of all its stakeholders, both internal (owners, managers,
employees) and external (customers, suppliers, the community). ??The ability of
SR to reform enterprises from inside also faces challenges, but it serves as a
reminder that organizations have duties that can change management processes if
managers identify and accept these obligations. The virtuous or responsible
firm "will have a corporate character that recognizes that it 'houses' a
practice, that encourages the pursuit of excellence in that practice, aware
that this is an entirely moral pursuit, that pursues the external goods in so
far (and only in so far) as they are necessary to sustain and support the
development of excellence in the practice". An organization that is
socially responsible is one that is managed using excellent criteria. This
brings us to the ethical dimension of SR.
This
SR's ethical rationale is often consequentialist. What matters is that certain
results are obtained that are deemed socially desirable, without regard for the
means. These methods may be unjust because of what is being requested or
because of the strain placed on businesses. That burden is subsequently passed
on to the enterprises' consumers and employees, not only their owners, maybe
without regard for distributive justice standards, possibly because this mode
of operation furthers personal interests or, in some cases, the interests of
the rich and powerful, etc.
4.
LEVELS OF ETHICAL STANDARDS
Being
ethical in business is applying values of honesty and fairness to interactions
with coworkers and clients. Business or corporate ethics is a subset of applied
ethics or professional ethics that investigates ethical principles and moral or
ethical issues that emerge in the workplace. It is an umbrella phrase for any
ethical difficulties that arise in the course of doing business. Sexty defines business ethics as "the rules,
standards, codes, or principles that provide guidance for morally appropriate behavior
in managerial decisions relating to the operations of the corporation and
business relationships with society." It pertains to all areas of business
behavior and is relevant to both individual and organizational behavior. [6]
The
Law: A formal system of rules and regulations established by governing entities
within a certain territory is represented by the law. It establishes the
minimum acceptable norms of behavior in society and provides a framework for
sustaining order, justice, and the preservation of individual rights. Legal
ethical standards define which behaviors are forbidden, required, or permitted
in a certain environment. While following the law is required for ethical
activity, it should be highlighted that legal obligations may not always
contain the full scope of ethical issues.[7]
Organizational
Policies and Procedures: Policies and procedures are frequently used by
organizations to set their own ethical standards. These standards are intended
to guarantee that employees and stakeholders maintain ethical behavior within
the context of the organization. Organizational ethical standards may address
issues such as conflict of interest, confidentiality, workplace respect,
environmental responsibility, and treating employees and customers fairly.
These policies seek to align the organization's ideals and mission with its
members' conduct.
The
Moral Stance: A person's moral stance is their particular ethical framework
based on moral principles, values, and beliefs. It includes subjective moral
judgments and governs personal decision-making and conduct. Moral standards
differ from person to person and are impacted by cultural, religious,
philosophical, and personal experiences. Beyond legal requirements and
corporate standards, an individual's moral attitude may include ideals such as
compassion, honesty, empathy, and fairness.
It
is vital to recognize that these several levels of ethical standards can
interact and occasionally clash. For example, a legal activity may be morally
dubious, whereas an organizational policy may contradict with an individual's
personal moral viewpoint. To arrive at a morally defensible path of action,
resolving ethical quandaries frequently necessitates rigorous analysis and the
synthesis of multiple ethical perspectives.[8]
5.
ETHICAL TREATMENT OF EMPLOYEES
Employee
ethics is a crucial component of responsible and equitable business practices.
It entails recognizing and respecting individuals' rights, dignity, and
well-being in the workplace. [9]
Here are some essential elements that contribute to ethical employee treatment:
1)
Employees should be compensated fairly
and justly, with pay and benefits that are commensurate with industry standards
and that reflect their contributions and skills. Compensation should be
established in a transparent and equal manner, ensuring that employees are
fairly compensated for their efforts.
2)
Employees should be treated equally and
without discrimination based on factors such as color, gender, ethnicity,
religion, age, disability, or sexual orientation. On the basis of merit and
qualifications, equal opportunities for employment, advancement, and career
growth should be granted.
3)
Employers have the responsibility to
provide a safe and healthy work environment that protects employees from bodily
and psychological harm. To prevent accidents, improve well-being, and address
occupational health concerns, adequate safety measures, training, and policies
should be in place.
4)
Respect for Human Rights: Employers must
uphold and respect employees' essential human rights, such as their freedom of
association, freedom of expression, and right to privacy. Employees should be
free to express their concerns, file grievances, and participate in collective
bargaining without fear of retaliation.
5)
Work-Life Balance and Well-Being:
Employers should promote work-life balance by instituting policies that enable
employees to properly manage their personal and professional duties.
Encouraging employee well-being through efforts such as flexible working hours,
leave policies, and wellness programs helps to ensure that employees are
treated ethically. [10]
6)
Employers should invest in their
employees' professional development and training, giving possibilities for
growth, skill upgrading, and career promotion. Supporting employees' learning
and development increases organizational value and pleasure.
7)
Ethical Leadership and Communication:
Ethical employee treatment begins at the top, with leaders who demonstrate
honesty, fairness, and transparency. To promote open discourse, employee
engagement, and the chance for feedback and suggestions, effective communication
channels should be established.[11]
6. ASSESSMENT OF CORPORATE
SOCIAL RESPONSIBILITY BY ADDRESSING SUSTAINABLE DEVELOPMENT GOALS
Prior
to the formation of the SDGs in 2015, governments and international
organizations bore the primary responsibility for advancing international
development and taking action to address global concerns. However, it is now
commonly acknowledged that in order to accomplish long-term success, all
parties, including the business sector, must work together. Businesses can help
close the financial gap and achieve the SDGs by contributing through their
products and services, providing new economic possibilities, boosting access to
employment markets, and through innovation. [12]
Assessing
corporate social responsibility (CSR) through the lens of meeting the
Sustainable Development Goals (SDGs) might assist firms in determining their
impact on long-term development. The Sustainable Development Goals (SDGs) are a
collection of 17 interrelated goals established by the United Nations to solve
global concerns and promote sustainable development by 2030. [13]
Here's a method for evaluating CSR in relation to the SDGs:
?
CSR Efforts to SDGs: Determine how the
organization's CSR actions relate to the SDGs. Examine each SDG and decide
which goals are directly or indirectly related to the operations, products, or
services of the organization. This mapping exercise assists in identifying
specific areas where the organization may make a significant contribution.
?
Prioritize the SDGs according to their
relevance, urgency, and compatibility with the organization's mission, values,
and core capabilities. Concentrate on the goals where the organization can have
the most influence and where there is a strong link between its operations and
the SDGs.
?
Establishing precise Goals and
Indicators: Establish precise goals and indicators to track the organization's
progress toward the targeted SDGs. These objectives should be SMART (specific,
measurable, achievable, relevant, and time-bound). The organization can track
its performance and determine the success of its CSR initiatives in
contributing to sustainable development by setting targets and indicators.
?
Integration into Business Strategy:
Incorporate the selected SDGs and their associated targets into the overall
business strategy of the enterprise. Incorporating sustainability and the SDGs
into core business operations ensures that CSR initiatives are consistent with
the organization's long-term goals and decision-making processes.
?
Collaboration and Partnerships: Work with
stakeholders such as governments, non-profit organizations, local communities,
and other enterprises to collaboratively address the SDGs. Partnerships enable
the sharing of experience, resources, and collective action, which increases
the effect of CSR projects. [14]
7. BUSINESS
ETHICS AND STRATEGIC MANAGEMENT
Social
value is a phenomenon that is being studied in both Corporate Social
Responsibility and Entrepreneurship studies, and each of these social and
ethical outcomes is being evaluated within the context of the company's
strategy. Strategic basis of social value and ethical behavior is currently a
part of corresponding study, implying the necessity to examine what has been
researched in the subject to date.
The
majority of relevant research examines the relationship between social
responsibility and its impact on company performance, and the findings are
contentious. Some research suggests that socially responsible behavior has a
favorable impact on firm success. Others have discovered that the outcomes are
fixed, i.e., in some circumstances, socially responsible behavior leads to
negative economic outcomes. Some study goes even farther, stating that socially
responsible behavior is bound to result in bad effects because the corporation
spends money on something that has nothing to do with its original purpose.
From this vantage point, it appears worthwhile to investigate the origins of
such contradictions, which necessitate the development of an approach that
evaluates simple social outcomes without interfering with economic ones. [15]
This
area of study is social entrepreneurship, which is considered a subset of
entrepreneurial activities (with a primary focus on social benefit). This 100
types of business is bound to be economically efficient, but it is unclear why
social value focused entrepreneurs succeed (despite the fact that they spend a
lot of money on social issues). Within this field of study, it is difficult to
define social entrepreneurship because all entrepreneurial activities are
social in some way. From this perspective, every entrepreneurship is social,
creating an incentive to develop the method to measure social outcomes for all
sorts of firms. [16]
8. CORPORATE
SOCIAL RESPONSIBILITY
VERSUS ETHICS
Over
the past decades, existing managerial research has explored Corporate Social
Responsibility approaches, policies, and activities using data from firms,
governments, and non-governmental organizations.
Researchers
currently designate four clear levels of Corporate Social Responsibility maturity
level. The first type is distinguished by the prevalence of single socially
driven measures carried out by companies that promote corporate citizenship but
cannot be considered a strong and holistic strategy. [17]
The
second type is an organized and holistic approach to the final implementation
of CSR practices (a firm could establish a strategy based on ISO 26000 or the
OECD Guidelines principles) and becomes a part of corporate regular management.
At this juncture, a firm blends its economically effective plan with its CSR
strategy and examines the necessity of continuing these practices at every
decision-making step.
The
third type is defined by the interdependence of each stage of managerial
decision-making, including its application to sub-strategies such as innovation
management or human resource management. At this time, Corporate Social
Responsibility is integrated into the primary business of the organization.
This method is referred to as a transformative process in current literature
when the firm wants to solve both traditional and societal concerns.
While
CSR is an expression of ethical considerations, they are not the same thing.
CSR is concerned with a company's broader societal effect and voluntary
activities to address social and environmental issues. It entails going above
and beyond legal requirements to constructively contribute to society. In
contrast, ethics refers to the principles and ideals that guide individual and
organizational behavior. Ethical concerns serve as the foundation for CSR
policies, ensuring that organizations' actions and efforts are consistent with
moral ideas and values.
9. SUGGESTION
CSR's
value today cannot be said. Businesses are expected to take the lead in
tackling social and environmental concerns, and those who do not may face
reputational and financial consequences. The continual necessity for
corporations to take responsibility for their social and environmental effect
is evident, and the evolution of CSR over time underlines the issue's
continuing importance. Encouraging innovation and R&D initiatives will
contribute to long-term solutions and solve societal and environmental
concerns. And creating an innovative culture will encourage the creation of
long-lasting goods, services, and business models.
10. CONCLUSION
Finally,
corporate social responsibility (CSR) and ethical business practices are
critical in the development of responsible and sustainable firms. Businesses
that embrace CSR acknowledge their greater responsibilities beyond profit
generating and try to make beneficial contributions to society and the
environment. Ethical business practices, based on principles of honesty,
fairness, transparency, and respect, influence organizational decision-making
and behavior.
Implementing
CSR activities and ethical business practices can result in a variety of
advantages. They improve an organization's reputation, stimulate innovation,
and manage risks related to environmental, social, and governance aspects.
Furthermore, they contribute to sustainable development by addressing societal
concerns and encouraging community and global well-being.
Organizations
can produce value for their stakeholders while also contributing to a more
inclusive, equitable, and sustainable society by implementing CSR and ethical
business practices. Businesses may help design a future in which economic
prosperity coexists with social well-being and environmental stewardship by
taking into account the interests of many stakeholders and actively working
toward beneficial social and environmental results.
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Article Information
CORPORATE SOCIAL RESPONSIBILITY AND ETHICAL BUSINESS AUTHORE BY: PRATHIKSHA SADAGOPAN
Authors: PRATHIKSHA SADAGOPAN
- Journal IJLRA
- ISSN 2582-6433
- Published 2023/09/27
- Issue 7
About Journal
International Journal for Legal Research and Analysis
- Abbreviation IJLRA
- ISSN 2582-6433
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