Corporate social responsibility is a form of corporate self-regulation integrated into a business model. CSR policy functions as a built-in, self-regulating mechanism whereby business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms. The goal of CSR is to embrace responsibility for the company's actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere.
Furthermore, CSR-focused businesses would proactively promote the public interest (PI) by encouraging community growth and development, and voluntarily eliminating practices that harm the public sphere, regardless of legality. CSR is the deliberate inclusion of PI into corporate decision-making, which is the core business of the company or firm, and the honoring of a triple bottom line: people, planet, profit.
The World Business Council for Sustainable Development in its publication Making Good Business Sense by Lord Holme and Richard Watts used the following definition:
Corporate Social Responsibility is 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.
What is Sustainable Development?
It is the environmental, economic and social well-being for today and tomorrow. Sustainable development has been defined in many ways, but the most frequently quoted definition is from Our Common Future, also known as the Brundtland Report:
"Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. It contains within it two key concepts: 1.The concept of needs, in particular the essential needs of the world's poor, to which overriding priority should be given. 2.The idea of limitations imposed by the state of technology and social organization on the environment's ability to meet present and future needs."
This study investigates corporate social responsibilities. We begin by introducing the concept of CSR and the concept of Sustainable Development, than we emphasize on the importance of the two concepts, we also show a case study of a company that didn’t take these values into consideration, the impact of the company’s behavior on the company itself and on the stakeholders as well, and finally we conclude the study by a critical opinion and some recommendations.
This study was based on a research from the internet. Many sites and articles were helpful as they gave us an excellent material about our topic. Following is a list of these references:
•Henderson, Hazel (2009) The Politics of Economics, Ethicalmarkets.com [Internet] April, 2009. Available at http://www.ethicalmarkets.com/2009/05/13/the-politics-of-economics/ •APUS, Green Building (2010) Corporate Social Responsibility and Stock Values, a lesson from BP’s Deep Horizon catastrophe, Apus-green-building.com [Internet] May 4th, 2010. Available at http://apus-green-building.com/2010/05/04/corporate-social-responsibility-and-stock-values-a-lesson-from-bps-deep-horizon-catastrophe/ •Solman, Gregory (2008) BP: Coloring Public Opinion?, Adweek.com [Internet] January 14th, 2008. Available at http://www.adweek.com/news/advertising/bp-coloring-public-opinion-91662 •http://www.iisd.org/sd/
Case Study: Corporate Social Responsibility and Stock Values, a lesson from-British Petroleum’s Deep Horizon catastrophe
The Golf of Mexico’s oil spill is a good example to have a look at the negative environmental impact on sustainable development and the bad corporate social responsibility. Around the world, corporations, particularly publicly traded corporations, are gradually beginning to realize that environmental accountability and social responsibility play as large a role in attracting investment as any other economic indicator.
-+The relationship between investor confidence and companies’ environmental impact was recently illustrated by the catastrophic failure of BP’s gulf coast oil rig, Deepwater Horizon. The disastrous failure of the rig’s safety features has already taken a devastating toll on the ecology of the Gulf Coast, and is likely to have harmful ramifications long into the future.
The magnitude of the Deepwater Horizon disaster and the immediate and long term costs it implies for BP seems to be sinking in with BP investors as well. According to the New York Times, BP’s stock has plunged more than 13% since the incident began on April 20th. The company which operated the rig, Transocean, has seen stock prices fall by more than 14%.
Top BP Plc executives faced U.S. lawmakers who grilled BP Plc on the drilling rig explosion and oil spill that threatens a socially irresponsible environmental catastrophe and a major corporal social responsibility setback for BP off the coast of Louisiana in the Gulf of Mexico. The colossal oil spill threatens numerous tourist beaches, wildlife sanctuaries and fishing grounds across four states in the United States.
“BP Plc has spent up to US$125 million annually on its corporate social responsibility CSR campaign to enhance its socially responsible image in its transition from British Petroleum to Beyond Petroleum since 2000.” BP Plc made monumental investments in solar energy and after a string of acquisitions BP Plc even became the largest maker of solar panels in the world.
BP Plc touted itself as a celebrator of alternative energy and downplayed its prowess and dominance in the world of big oil, in its quest to have a resounding success in its corporate social responsibility campaign. Whilst “Beyond Petroleum” CSR campaign was quite a successful campaign, BP Plc was still hit by several CSR setbacks in the intervening years. Nevertheless, the oil spill in the Gulf of Mexico Area looks to be the biggest CSR hit for BP Plc and appears to be the worst U.S. oil spill surpassing the 1989 Exxon Valdez disaster in Prince William Sound, Alaska caused by Exxon Mobil.
So, what makes the oil spill a matter of social responsibility? Precisely the fact that the risks (and eventual negative impacts) of BP’s deep-water drilling operations are borne by society at large. The spill has resulted in enormous negative externalities — negative effects on people who weren’t involved economically with BP, and who didn’t consent (at least not directly) to bear the risks of the company’s operations.
Now, all (yes all) production processes involve externalities. All businesses emit some pollution (directly or indirectly via the things they consume) and impose some risks on non-consenting third parties. So the question of CSR has to do with the extent to which a company is responsible for those effects, and (maybe) the extent to which companies have an obligation not just to avoid social harms (or risks) but to contribute socially (beyond making a product people value). From a CSR point of view, then, the question with regard to BP is whether the risks taken were reasonable. Most of the people would say “no.” But then most of them still want plentiful cheap gas.
While the BP oil spill and Exxon-Valdez incidents represent extreme examples of potential environmental costs on sustainable development, it is important for all companies to examine their impact on the environment and examine the potential costs of mitigation and cleanup. Such preparation is becoming increasingly important as promoting the transition toward a sustainable future; better living for all—sustainably. Human ingenuity can be applied to improve the well-being of the environment, economy and society.
First, when we talk about the corporate social responsibility or any other responsibility, we mainly target the company’s leader or top level managers. It is their responsibility because they are the decision makers. Now concerning BP’s case, this catastrophe could have been avoided if the company’s leaders paid more attention on CSR and less attention to greedy profit. Those leaders didn’t realize or ignored the fact that CSR and sustainable development will eventually benefit everyone, including the company, and hence profit would be better on the long term. Ethical issues should always be taken into consideration, even when the law doesn’t impose ethical behavior.
Conclusion and Recommendations
Society’s expectations of companies are growing significantly. Companies not fully committed to CSR face growing risks, whereas those with CSR at the core of their business model could gain ground. Companies that integrated CSR into their business model stood to gain competitive advantage.
Consumers are increasingly punishing irresponsible companies and rewarding responsible ones, most markedly in the USA and Canada, but also in large developing economies. Employees increasingly value CSR in their employers. Large and steadily growing majorities say “CSR increases my motivation and loyalty;” and investors also see value in CSR. Over half of respondents believe it is “less risky to invest in socially responsible companies than socially irresponsible companies.”
Business leaders are the most involved in the situation. They have the authority and the ability to implement the values of CSR and sustainable development. Any successful business seeking prosperity and long term profit should be more and more involved in those issues.