Jamaica: Social Responsibility is Good Business

[Karl]

Jamaica Gleaner News – July 20, 2008

Corporate Social responsibility (CSR) challenges businesses to go beyond the usual practices of maximising profits for shareholders who have invested in firms. Striving for CSR entails considering the firm's stakeholders in its decision making and actions. It also means that firms, while seeking profits, need to balance the benefits to be gained against the costs of achieving the benefits. CSR is rooted in two main features of operating in modern societies: The essential function it performs for a variety of stakeholders, and the influence that companies have on the lives of its stakeholders. Firms are now increasingly involved in job creation, community well-being and contributing tax revenues to enable the State to perform its functions. Firms also are involved directly in meeting a variety of needs of citizens through the services and products that are provided.

However, the interpretation of what it means to act in socially responsible ways cannot always be prescribed, and there is much debate on what behaviour constitutes social responsibility, and how extensive it needs to be. The first step is to understand what is meant by CSR. Industry Canada, a social responsibility grouping, notes that CSR is an evolving concept that currently does not have a universally accepted definition. Generally, CSR is understood to be the ways firms integrate social, environmental and economic concerns into their values, culture, decision-making, strategy and operations in a transparent and accountable manner, thereby establishing better practices within the firm, creating wealth and improving society. The World Business Council for Sustainable Development (WBCSD) defines CSR as "the commitment of a business to contribute to sustainable economic development, working with families, local communities and the society at large".

From these, some common themes emerge:

• Preserving the environment for future generations through sound environmental policies and responsible environmental management.

• Cultural awareness, education, diversity awareness or advocacy.

• Community development, social consciousness.

• Managing a company ethically and well to maximise shareholder wealth and making decisions that maximise wealth for all society.

• Ensuring that marketing efforts are not discriminatory or biased and that they do not present ideas that are counter to the fulfilment of human rights.

• Making an effort to ensure that suppliers are also operating in a responsible manner.

• Considering current and future generations to ensure both social and business sustainability.

These themes present different areas that businesses can choose to focus on and opportunities for action if a company sees CSR as a beneficial practice.

CSR is considered to be beneficial for a number of reasons. First, CSR allows for a balance between corporate power and influence with responsibility. Companies committed to social responsibility believe that if they misuse the power they have, then they may lose it. Companies also feel that if they voluntarily support social causes and operate in responsible ways, then this may offset promulgation of government regulations that may reduce freedoms for both businesses and society. Often, the costs of complying with regulations are far greater than the investments in societal well-being. CSR at its best actually promotes long-term profit and viability for businesses by contributing social cohesion and development, and in so doing, influences citizens who may become future employees and customers. Long-term business interests are also enhanced as they build the social reputation of the firm, an important component of establishing trust between the firm and its stakeholders. Reputation, though an intangible asset, works in helping to attract and maintain good employees and loyal repeat customers as both customers and employees want to be associated with 'good' companies. Not everyone agrees that CSR is a good thing. A few companies and executives believe that businesses should stick to business and leave social matters to others. Those who argue against CSR say companies that use some of their resources for social purposes are lowering efficiency at their core business. Others argue that CSR imposes unfair costs on the more responsible companies and that some companies may pass the costs of CSR on to consumers. The last, and perhaps the most-often-cited argument against CSR is that business people are usually not trained to solve social problems, and so businesses shy away from getting involved in these issues.

Many Jamaican companies are already convinced of the benefits of CSR and have been undertaking noble and meaningful CSR activities. By putting CSR on the business agenda, enterprises have an opportunity to offer a perspective of management systems, efficiency, oversight and governance to identify, prioritise and resolve Jamaica's social and environmental challenges. The Private Sector Organisation of Jamaica (PSOJ) is highlighting to its members and the public, a number of projects and initiatives as opportunities for businesses to participate, and, in so doing, contribute to Jamaica's sustainable development and create an environment in which we can prosper, grow and do well for all our stakeholders.

Read Full Article: Jamaica Gleaner News - Social responsibility is good business - Sunday | July 20, 2008

[MartinSykes]

"to go beyond the usual practices of maximising profits for shareholders"

However, as market indices such as FTSE4Good show, there is a correlation between responsible and sustainable behaviour and financial performance. This suggests to me that such behaviour does improve profits for shareholders. The weakness at the moment is in understanding and quantifying why so that more businesses follow suit.