Corporate social responsibility - It's not all about the money? Right?

Corporate social responsibility is becoming an increasingly important objective for businesses. It refers to the efforts made by a company to behave ethically and contribute to the welfare of society.

In addition to contributing to the welfare of the state, acts of corporate social responsibility can grant companies with lots of positive publicity, however, alternatively acts of unethical business practice can have adverse effects on a company’s public persona.

A company that has recently suffered lots of negative press as a result of its unethical practice is Primark. The clothing retail giant has been reported throughout the media regarding the poor working conditions in some of its manufacturing facilities overseas.

‘Primark tops list of unethical clothes shops in poll that shames high-street brands’ – (Brand Republic.com, 2005).

An article on the CSR European website suggests that corporate social responsibility is becoming increasingly more important in the eyes of the investors, apparently CSR is significantly effecting many people’s investment decisions. Corporate social responsibility is therefore an element of business that must be considered to those wishing to maintain a positive image in the public eye, although, as stated in the Primark example, a firm’s CSR may not have as significant effects on a company’s financials as previously thought...

In 2008, the firm was targeted by BBC Panorama who produced a documentary on the company’s use of sweatshops abroad. The documentary sparked lots of negative media attention to be focused on the company and yet, despite this, the unwanted publicity doesn't seem to be enough to deter people from shopping there..

‘Primark profits soar 35%’ – (The Guardian, 2010).

In a seminar I attended recently, hosted by Niamh Brennan regarding her new paper; ‘the dirty laundry case’ she explained the efforts made by Greenpeace to stop the use of toxic chemicals in the production of sporting attire by some of the major sporting brands. Public displays and press releases carried out by Greenpeace to create awareness of the issue obviously had the desired effects as all of the manufacturers targeted withdrew the use of such chemicals within weeks of the campaign.

However, had the companies failed to comply would the company have suffered financially?

Everyone can show disgust and pass judgement on such poor manufacturing standards but if it keeps the cost a new outfit to below £10, do people really care?

‘Primark sales rise despite cost pressures’ – (BBC News, 2011)

Apparently not.

In 1994 John Elkington designed a system that could be used to provide full measure of the ‘financial, social and environmental performance of the corporation over a period of time’ (The Economist, 2009). He called the model the triple bottom line. The model focuses on the three ps:

- Profit
- People

- Planet

 

The models aims to evaluate the ‘people’ and ‘planet’ factors using measures such as: the excessive use of hydrocarbons and the exploitation of cheap labour.  Although these factors can prove difficult to measure, an increasing awareness of the social and environmental impact of business practice has led to many companies improving their ethical and environmental standards.

Nike and Tesco have been amongst some of the bigger firms that have been made to improve their ethical standards, particularly in countries like Bangladesh and Mexico where labour conditions are largely unregulated often leading to exploitation of workers.

I agree that such practices are very difficult to measure, for example; BP has recently had huge issues measuring the extent of the spill in the Gulf of Mexico. Obviously, there’s the cost of oil that was wasted but then also environmental damage, damage to wildlife, to the welfare of the fishermen and other people that make their living from working in the Gulf, the cost of the 11 men that lost their lives, the list goes on…

Although you cannot really put an accurate calculation to such factors, the increasing transparency and responsibility firms are taking regarding the ethical implications of their operations is leading to a fairer and more environmentally friendly world.

Hopefully this increasing awareness will lead to the growth of more organisations such as: The Fairtrade movement that focuses on giving farmers and suppliers from around the world a fairer wage. The group was started in 2006 and has shown promising growth ever since. I understand there’s a long way to go to significantly reduce the amount of exploitation and corruption of workers and environmental standards in the world, but at least the examples shown here indicate quite a promising start.

Sources used:


Whitehead, J. (2005) 'Primark tops list of unethical clothes shops in poll that shames high street brands', The Republic.com Website, [Online]. Available at: http://www.brandrepublic.com/news/532319/ (Accessed: 24/03/11).

The Guardian. (2010) 'Primark profits soar 35%', The Guardian Website, [Online]. Available at: http://www.guardian.co.uk/business/2010/nov/09/primark-profits-up (Accessed: 25/03/12).


BBC News. (2011) 'Primark sales rise despite cost pressures', The BBC News website, [Online]. Available at: http://www.bbc.co.uk/news/business-12237010 (Accessed: 24/03/12).


The Economist. (2009) 'Triple Bottom Line', The Economist Website, [Online]. Available at: http://www.economist.com/node/14301663 (Accessed: 24/03/12).