Question

Explain how creating shared value (CSV) differs from corporate social responsibility (CSR), and discuss whether you believe a CSV approach to business can help solve major socio-economic and environmental challenges such as climate change, obesity and gender inequality.

Your essay plan should be divided into sections and provide a brief outline of what will be included in each section using dot points or normal prose. Your essay must include the following:

• Definition/explanation of CSV.
• Definition/explanation of CSR.
• Discussion of different approaches to business:
  • Rise of large MNCs (power/influence).
  • Recent socio-economic and environmental disasters, such as the BP oil spill and Samarco/BHP Billiton dam collapse.
  • History of CSR and context for development of CSV.
• Impact on, and role of, various stakeholders (e.g. social enterprises, government, NGOs, consumers, employees and community groups).
• Appropriate examples/case studies.
• Inclusion of relevant management theory and references.

Answer 1

CSR is fundamentally about taking resources from the business, and investing those resources in being a good corporate citizen. The CSR approach is holistic and integrated with the core business strategy for addressing social and environmental impacts of businesses. The term generally applies to companies efforts that go beyond what may be required by regulators or environmental protection groups. Philanthropic activities are considered to be only a part of CSR, which otherwise constitutes a much larger set of activities entailing strategic business benefits. Many large companies now issue a corporate social responsibility report along with their annual report. The CSR report concentrates on their non-financial societal activities.

On the other hand, Creating Shared Value CSV aims at changing and modifying the core business operates in related to the strategy, structure, people, processes and rewardsetc, in order to deliver triple bottom line returns. Multinational corporations in Europe and the U.S. are slowly but steadily ramping up their CSR and CSV efforts on complex global problems, but companies in frontier markets are rapidly taking the lead on national and regional issues of hunger, poverty, inequality, unemployment and climate change. These emerging market businesses are embracing Shared Value as a smart, sustainable and profitable business model.

Although responsible companies had already existed for more than a century before, the term Corporate Social Responsibility was officially coined in 1953 by American economist Howard Bowen in his publication Social Responsibilities of the Businessman. Howard Bowen is often cited as the father of CSR. The term CSR itself came into common use in the early 1970s. The evolution of CSR is as old as trade and business for any of corporation. Industrialization and impact of businesses on the society led to a complete new vision. By 80’s and 90’s CSR was taken into discussion, the first company to implement CSR was Shell in 1998. An ideal CSR practice has both ethical and philosophical dimensions, particularly in India where there is a wide gap between sections of people in terms of income and standards as well as socio-economic status.

The social contract outlined three responsibilities, and they’re still applicable today:

1. Provide jobs and economic growth through well run businesses.
2. Run the business fairly and honestly regarding employees and customers.
3. Become more broadly involved in improving the conditions of the community and environment in which it operates.

By the 1980s, early CSR continued to evolve as more organizations began incorporating social interests in their business practices while becoming more responsive to stakeholders. The very early adopters of CSR were companies such as Johnson & Johnson, whose founder, Robert Wood Johnson, established their credo in 1943, which requires that the needs of those they serve are put first. CSR recognises the fact that social and environmental stability and sustainability are two major prerequisites for sustainability of the market in the long run. CSR is both a value and a strategy for ensuring sustainability of a business

Corporate Social Responsibility is an evolving business practice that incorporates sustainable development into a company's business model. It has a positive impact on social, economic and environmental factors. As the use of corporate responsibility expands, it is becoming extremely important to have a socially conscious image. In any country, the business sector plays an important role. The economic growth of a country can be sustained by the expansion of manufacturing sector. Consumers, employees and stakeholders are beginning to prioritize CSR when choosing a brand or company. They are holding corporations accountable for effecting social change with their business beliefs, practices and profits. CSR is considered to be a thoughtful and practical way to give back to society. When businesses are conscious of their social and environmental impact on the world, they can benefit society by giving back and helping to find solutions to everyday issues. Many companies use CSR tactics as a strategy to gain public support for the presence in the global market.

In being economically responsible, companies “pay their dues” to society, such as by:

1. Keeping up with their taxes
2. Investing back into their communities
3. Paying their employees competitive wages

In 1990, CSR was considered to be a standard in the industry with companies like Price Waterhouse Copper and KPMG. CSR evolved beyond code of conduct and reporting, eventually it started taking initiative in NGO’s, multi stake holder, ethical trading.

One primary focus of corporate social responsibility is the environment. Businesses, regardless of size, have large carbon footprints. Any steps they can take to reduce those footprints are considered good for both the company and society. Businesses can practice social responsibility by donating money, products or services to social causes and nonprofits. Larger companies tend to have a lot of resources that can benefit charities and local community programs. It is best to consult with these organizations about their specific needs before donating.

BHP Billiton operates a mining company in the region of Bento Rodrigues in Brazil. The mine has a dam that holds waste products from the mining activity. The dam collapsed in November 2015, causing massive environmental destruction of human lives, property and livelihoods. This case describes the consequences of the disaster, considered to be the worst ever environmental catastrophe in Brazilian history. Through the company mining activities and its failure to adequately maintain the dam, the company led to the voilation of health and safety regulations. Also, the mining company endangered the lives of the community with an unethical and negligent mining activities.On 2 March 2016, Samarco reached a heavily criticized $6 billion settlement to restore the severely damaged environment and indemnify the affected communities. The collapse of the mining dam was undoubtedly one of the biggest environmental disasters in Brazil’s history.

The implementation of CSR practices can help the companies to achieve their organizational goals. The strong commitment of the company to CSR raises the public’s perception of CSR activities. Also, the companies should strictly comply with environmental laws, rules and regulations in order to minimize environmental disturbances.

Corporate social responsibility has evolved as a global phenomenon that encompasses businesses, stakeholders, consumers, governments, and civil society, and many organizations. Stakeholders are responsible for reviewing deliverable project items. They are individuals or companies with a vested interest in the outcome of their specific projects. The stakeholder perspective claims for a corporate responsibility that takes into account stakeholders’ contributions to the corporate wealth creation process. Therefore, the firm is responsible to reduce risk and increase benefits for stakeholders at one side but also for a fair distribution of benefits at the other side.

Governments usually adopt a two-pronged approach in terms of Cororate Social Responsibility. Governments provide the parameters for everyday behavior for citizens, protect them from outside interference, and often provide for their well-being and happiness. Firstly, they commit to respecting the triple bottom line throughout their operations and secondly, as a corollary to cross-sector CSR implementation, they request their suppliers and partners to commit to ethical principles and to report regularly to as to how they are meeting CSR-related targets.

An example of a company with CSR activities and intention is the Coca Cola Company. Coca-Cola India being one of the largest beverage companies in India, realized that CSR had to be an integral part of its corporate agenda. According to the company, it was aware of the environmental, social, and economic impact caused by a business of its scale and therefore it had decided to implement a wide range of initiatives to improve the quality of life of its customers, the workforce, and society at large. The company continued to champion various initiatives such as rainwater harvesting, restoring groundwater resources, going in for sustainable packaging and recycling, and serving the communities where it operated. Coca-Cola planned to become water neutral in India by 2009 as part of its global strategy of achieving water neutrality.

Juntos’ initiative is based on a similar principle as TOMS - for every pair of shoes sold, the company donates a backpack filled with school supplies to a child in Ecuador. Dell now contributes to environmental management by shipping their laptops in less wasteful containers using more eco-friendly materials.

In 2010, Twitter launched The Fledgling Initiative campaign to support Room to Read, a non-profit organization promoting literacy among children. Starbucks promises to be a socially responsible company by hiring 25,000 veterans before 2025. Also, the acronym for Starbuck’s CSR initiative stands for Coffee and Farmer Equity (C.A.F.E.) which focuses on safe, fair and humane working conditions for workers and providing adequate living conditions.

Companies need to take action to improve the economy, society as a whole, and the environment. The way to do so is to innovate. Innovation can uncover new ways to foster societal progress and when it comes to innovation, the private sector has a crucial role by engaging in CSR. Any company has ethical responsibility to contribute the sustainable environment development by maintaining the ecological balanceIt is important for these activities to be addressed as socio-economic issues and distributed the benefits equally to the community.

Additionally, multiple studies have unequivocally demonstrated that companies with a more gender-equal workforce, and women in more leadership positions, are more profitable on average. In their CSR efforts, companies should not only promote gender equality, but consider the role they can play in promoting the Sustainable Development Goals.

Today, CSR is essential to the bottom line, and corporate citizenship professionals are empowered to align their work with the business to maximize impact.