Taking corporate social responsibility to the next level

Taking corporate social responsibility to the next level. FILE PHOTO | NMG 

By EDWARD MUNGAI

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Summary

• Occasionally, a business, in very isolated cases would involve itself in some sort of philanthropy trying to solve some of these problems.
• The concern with the philanthropy perspective is that it was considered after the bottom line of the company and was also seen as an extra cost to the business at the expense of the shareholders.
• The solving of social problems by business was seen to have direct implications to their economic results.

Businesses have traditionally not involved themselves in tackling the social challenges that countries face and for a long period, this was seen as a role of government.

Occasionally, a business, in very isolated cases would involve itself in some sort of philanthropy trying to solve some of these problems. The concern with the philanthropy perspective is that it was considered after the bottom line of the company and was also seen as an extra cost to the business at the expense of the shareholders.

The solving of social problems by business was seen to have direct implications to their economic results. The reason for this is that, traditionally the role for business has been to maximize profits. For example, under the neoclassical economics and several management theories, it has been assumed that the role of a business is to maximize economic gains for its shareholders.

In the recent past the shareholder’s theory is being replaced by the stakeholder’s theory. Stakeholder’s theory advocates that there are other parties involved in the business ecosystem which includes the likes of government, civil society and NGOs, trade unions, communities, financiers, general public, suppliers, employees and customers.

During the last two decades, more companies have voluntarily integrated social and environmental issues in their business strategies as part of the stakeholder’s theory integration through corporate sustainability activities.

Corporate sustainability (CS) is a way of doing business that embraces opportunities and manage risks from three dimensions; economic, environmental and social.

This is CSR in a broader sense than the case of the philanthropy. It implies management is concerned on the activities of the business and how that affects the stakeholders and this not only for the purposes of feeling good but also for making money.

CSR is sustainability that is embedded in the business strategies of the business. The movement towards more than the philanthropy CSR has made the role of business in sustainable development more relevant.

The introduction of the SDGs in September 2015 created a platform that will help companies to move towards more coordinated CSR which is more relevant, and which is a win- win for all the parties involved. Business will have no choice other than to move towards more sustainable CSR. This is not only the right thing to do but it is also the right thing to do due to the push by the various interested parties in a business.

As an example, customers and employees are putting immense pressure demanding integration of the both the special and environmental issues in the business operations.

Regulators are also pushing companies to be more ethical from different perspectives. This approach has now been proved to pay for the shareholders as there is a correlation between economic performance and corporate social performance and hence shareholders pushing for more social and environmental issues in business operations.