MICHELLE P. TONNESEN
of Corporate Social Responsibility The concept of the conscious consumer demanding that business is carried out in an ethical and socially responsible manner is so wellestablished today that we almost take it for granted. With globalisation, the internet and the ever-present social media, it is close to impossible for companies, governments or even NGOs to put a foot wrong without the whole world knowing. But this was not always the case.
Here is a bit of background to understand the evolution of the Corporate Social Responsibility (CSR) movement. The main principles of CSR involve economic, legal, ethical and discretionary aspects. A corporation needs to generate profits, while operating within the laws of the state. The corporation also needs to be ethical, but has the right to be discretional about the decisions it makes. CSR and corporate sustainability represent the way companies achieve enhanced ethical standards and a balance of economic, environmental and social imperatives, addressing the concerns and expectations of their stakeholders. The phrase Corporate Social Responsibility was coined in 1953 - with the publication of Howard Bowen’s “Social Responsibility of Businessmen”, which posed the question of “what responsibilities to society can business people be reasonably expected to assume?” Thus, in the 1950s, the primary focus was on businesses doing good deeds for society. During the 1960s, key events, people and ideas were instrumental in characterising the social changes ushered in during this decade. Examples of corporate social responsibility began to emerge, and the civil rights movement, consumerism, and environmentalism greatly changed the way society expected the business world to behave. Writing and budding research on the subject expanded the definition, suggesting that beyond legal obligations companies had certain responsibilities to society. The Organisation for Economic Cooperation and Development (OECD) – a group of 34 powerful industrialised countries – was also created during this decade to promote policies improving the economic and social well-being of people around the world. With the 70s, came the common use of
the term CSR, along with many attempts to officially define the phrase. For example, the UN conference of 1972 in Stockholm considered the ever-growing need to find a common ground between both communities and businesses across the globe to preserve the human environment. At that time, both the OECD and the United Nations Centre on Transnational Corporations (UNCTC) began developing codes of conduct in an attempt to control different aspects of corporate globalisation. In 1976, the OECD, recognising the complications associated with companies operating across borders, established a set of guidelines to ease the workings of globalisation; setting the “rules of the game” for foreign direct investment, and creating an atmosphere of confidence predictability in overseas corporations. The OECD’s “Guidelines for Multinational Enterprises” covered areas such as accounting, tax payments, and operating in accordance with local laws. The rise in anti-corporate activism over environmental and human rights issues made a shift in corporate attitudes towards social and environmental issues essential. The 70s and 80s saw major international boycotts of companies investing in South Africa. This period was characterised by confrontational campaigning that forced change from companies by attacking their brand. In the 1980s, business and social interest came closer and firms became more responsive to their stakeholders. In 1987, the concept of sustainable development was introduced and finally defined in the ground breaking report; “Our Common Future” was delivered by The World Commission on the Environment and Development, under Chair Gro Harlem
Brundtland to the United Nations. In the 1990s, corporate lobbying challenged attempts to regulate their activities at a global level. Instead it achieved an extension of corporate power both logistically, through improved transport and communications, and legally, through international agreements; such as the General Agreement on Trade in Services (GATS), and the Trade Related Intellectual Property Rights (TRIPS) - which extended rights for corporations. Nevertheless, the anti-corporate backlash reached a climax in 1995, as the spotlight turned on Royal Dutch Shell. That year, the company stood accused of complicity in the execution of nine activists in Nigeria, as well as being hounded by Greenpeace over the decision to sink the Brent Spar oil platform. Shell temporarily lost the confidence of investors and the public. Shell’s ‘annus horribilis’ was a sign of things to come and woke up many in the business world to the importance of their public reputations and the ability of campaigners to damage them. Capitalism had to be given a human face. Step forward CSR. Shell spent millions on its PR offensive to rebuild its reputation and published a statement of business principles outlining its core values of “‘honesty, integrity and respect for people”. The company’s strategy focussed on “openness and dialogue”, pioneering the practice of producing CSR reports and triple bottom-line reporting – that is, a business model centred on People, Planet and Profit - which was introduced at the UN Earth Summit in Rio De Janeiro in 1992. Indisputably, Shell’s strategy was successful in rebuilding the company’s reputation amongst key opinion formers and decision makers at the time.
Published on May 1, 2014
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