Mallen Baker (2003) describes CSR as the way in which companies manage the business processes to produce an overall positive impact on society. Further, this is extended with the addition that companies need to address two aspects of their operations: first: the quality of their management both in terms of people and processes and second: the nature of, and quantity of their impact on society in the various areas. This is indeed true as the public become more environmentally aware the latter becomes very critical in determining a corporations' success, although the first aspect still counts almost as equally as the latter. The World Business Council for Sustainable Development has described CSR as: ' …the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large.'
This concept speaks to a new responsibility in which corporations get involved alongside government e.g helping government to provide essential services and infrastructure to 'replacing' or even improving government response where government is failing (or has failed). CSR has caused corporations to become more public oriented instead of being conventionally focused on profits in a self serving manner.
CSR activities are being carried out in various ways including, but not limited to, community HIV/AIDS programmes, sponsorships, educational support, the provision of sporting facilities in disadvantaged areas, etc. Mercedes Benz in South Africa, has for example, recently announced the upgrading of their sponsorship of the South African Golf Development Board (SAGDB) from a regional sponsor to a national sponsor. This programme aims to ensure the participation of underpriviledged children in the sport. Mercedes Benz have pledged R1 million for national development initiatives and have provided buses for transportation. Other examples of CSR include programmes such as the introduction of computers to under-developed schools and communities.
Essentially, CSR compels corporations to ensure that the three tiers of sustainability, i.e social, economic and environment are in equilibrium. In the social sphere, corporations need to address the needs firstly of their employees. Corporations also need to address the needs of the families of their employees and the communities that surround them, providing services that sometimes, government has not been successful in providing, or augmenting such services where they are provided, albeit inadequately. In South Africa for example, the scourge of HIV/AIDS and its far-reaching impacts on society at large, cannot solely be left to government to address. The pooling of resources to fight HIV/AIDS / implement is becoming increasingly important as more and more HIV/AIDS related deaths occur. This is when the relevance of CSR becomes pronounced. The adoption of CSR will ultimately make corporations that are not seen to be fulfilling this role not successful as public opinion has become accentuated.
In the economic arena, although CSR still demands that corporations continue to satisfy the expectations of their shareholders in generating adequate profits, CSR requires more transparency in reporting functions, a more inclusive approach (or that public participation is ensured) in the decisions affecting the future of the corporations. CSR also requires that organizations are open in reporting on their activities in a balanced manner reflecting all three pillars of sustainable development. It no longer suffices to draw up balance sheets that only reflect profits and losses as the public now requires more information. This is endorsed in advancement in legislation in many countries calling for more public disclosure on the affairs of corporations. The proliferation of civic organizations and the power they are wielding in influencing outcomes to the extent of those outcomes with international repercussions has elevated the status of these organizations even further and these new demands cannot be ignored by corporations wanting to sustain themselves / wanting longevity, amidst tough competition from rivals who may be more perceptive and receptive to these new challenges. This is becoming increasingly imperative in the light of recent scandals such as Enron, and with globalization having made its impact felt worldwide.
In the environmental arena, corporations are expected to act responsibly as they engage in their various profit generating activities, whether it be services or products, ensuring least damage to the environment. CSR also requires that a new mindset from the 'business as usual' approach to a more environmental stewardship approach ensuring that the environment is left in a state very close to how it was found when 'production' or whatever activity interacting with the environment began. Under CSR corporations are required to have implement-able mitigation measures in place where environmental damage is inevitable. They are required to be proactive in dealing with environmental problems and to do everything within their power to avoid polluting the environment. Corporations are expected to play a significant role in engaging in innovative solutions for managing environmental impacts, engaging in instruments such as 'carbon trading' which are intended to mitigate some of the problems leading to climate change and problems associated with it. Corporations are being compelled to take 'a cradle to grave approach' to environmental problems. There are also relatively new requirements from the public for eco-labelled products, some clients are becoming very selective about which products they spend their money on, preferring the eco-labelled products.
The challenge rests with corporations to ensure their longevity and relevance to our ever-changing times by responding to the needs of CSR! How far is your organization from achieving CSR?