Corporate Social Responsibility 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 (Lord Holme and Richard Watts, 2004) Ethics It is the basic concepts and fundamental principles of right human conduct. It includes study of universal values such as the essential equality of all men and women, human or natural rights, obedience to the law of land, concern for health and safety and, increasingly, also for the natural environment. ETHICS AND CORPORATE SOCIAL RESPONSIBILITY The code of ethics supports the protection of human rights, labor rights, and the environment but wants such pursuits to occur within a free and stable market economy. Historical Phases of CSR Phase 1 (1800s to early 1900s) PROFIT MAXIMIZING MANAGEMENT 1. Management must maximize profit. 2. Individual drive for profit maximization would ultimately create wealth for the nation. 3. Business systems as a profit maximizer are used as a tool for the elimination of economic scarcity. 4. Business ignored unsafe working conditions, paid starvation wages and used child labor in order to maximize profit. 5. Problems of cultural minorities, unsafe products, unfair advertising and urban poor problems were given little if no attention at all. 6. Abuses of capitalism are extremely rampant and the government tolerates these deplorable business practices. Phase 2:(Early 1900s) TRUSTEESHIP MANAGEMENT 1. Management was considered both as an instrument of stockholders and as a trustee for all groups who contribute to the business enterprise. 2. Aside from the profit maximization, the management's concern is also to maintain a fair balance in the interests of employees, customers, creditors, stockholders and the community. Phase 3: (1930s) QUALITY OF LIFE MANAGEMENT 1. Security of basic goods and services was no longer a principal problem. 2. Social and economic problems brought about by economic growth expanded the concept of social responsibility of management. 3. Society demanded management's active participation in helping solve social and environmental problems in view of the vast resources (funds, manpower, materials, management, skills and technology) of businesses. 4. Business is expected to contribute to the improvement of the quality of life which involves cultural, social, educational, political factors and economic security. 5. Society is unstable if the quality of life of the people is poor. Businesses contribute to a good quality of life and society. 6. A prosperous society is the best environment for a business to thrive in. Businesses will benefit from its self-investment in society. Perspectives on CSR 1. Classical View The primary responsibility of business is profit maximization. Obligation of management is to satisfy stockholders for their investments. 1

 Supported by Milton Friedman, one of the most effective advocates of economic freedom and free enterprise 2. Managerial view Doers do not emphasize profit maximization and interests of stockholders. To balance the interests of employees, customers, suppliers, and the local plant community is the role of managers of big businesses. 3. Public View Includes the needs and interests of the whole society in contrast with the classical and managerial views Establishes harmony with both businesses operations and public interest 4. Christian View Excess wealth should be given to the less fortunate. Wealthy individuals have a responsibility to share their blessings with the poor. A successful corporation should perform its social responsibility more by returning a fair portion of its profits to the people in the form of social services. Based on the teachings of Jesus Christ as taught in the bible Assessment on the Practice of Corporate Social Responsibility Arguments In Support of Corporate Social Responsibility (Fajardo, 2000) 1. Long-run self-interest. In the long run, business enterprise will benefit form their own investment by using their resources, in reducing or eliminating social problems. A good social and economic condition will offer an encouraging environment for businesses. 2. Business Resources. Businesses could use their huge resources in the improvement of societal and environmental conditions. Some of these business resources are manpower, funds, materials, management skills, and technology. 3. Viability of Business. As embodied in the deed of a corporation, businesses are granted powers and privileges by the government due to their contributions to the economy and valuable services to society. The government can also revoke the charter of a business once it fails to meet social expectations. For this reason, businesses have to perform their social responsibilities. 4. Public Image. Charitable, civic, and socio-economic projects are some of the activities where businesses take part. As they become active with such projects, their public image is also enhanced. They leave to the society a very good impression of their corporate image that attracts more competent recruits and a greater number of customers. 5. Profit from Social Problems. Businesses can turn problems into profits by being creative and resourceful. An example is recycling of waste materials into other valuable goods. The Four Corporate Social Responsibilities:

Social Responsibility Towards Consumers Consumers as Drivers of Corporate Responsibility The business case is often grounded in three key drivers: consumers, employees and investors. They care in ways that create economic incentives for companies to give attention to corporate responsibility. Consumers are considered to be the most important stakeholders of business besides its own employees. Companies are duty-bound to fulfill and be conscientious of their business. As Starbucks explains in its 2001 Corporate Social Responsibility Annual Report: Consumers are demanding more than product from their favorite brands. Employees are choosing to work for companies with strong values. Shareholders are more inclined to invest in businesses with outstanding corporate reputations. Quite simply, being socially responsible is not only the right thing to do; it can distinguish a company from its industry peers. Furthermore, the company must be aware of the consumer rights (safety, information, decide or select, expression) that are contributory to the intelligent and smart consumers of our generation. Social Responsibility Towards the Community and the Environment One must not forget that a flow in one direction cannot last long until and unless backed by other reciprocating flows. This implies that the role played by society is not a passive one or a neutral one. The growing responsibility of the society and the community in general cannot be denied at all. The awareness level of the society, which in turn is correlated with the literacy level, the standard of living, the preference pattern is a major determinant in this area- which helps individuals to voice their demands and grievances in a systematic manner ensuring that organizations in that locality practice CSR in a way that truly benefits society. The aim of every organization is to produce and distribute goods and services in such a way that income exceeds cost. Society expects the organization to be socially responsible as the economic environment of the society is dependent on the business environment. Socially responsible business is a common term today as business and societies are unthinkable without each other. As a result the company will be able to establish good ties with the society such as building relationships with charitable organizations and local community sectors. All reasonable steps should be done to manage operations so as to minimize environmental impact and to promote good environmental practice. Business practices should be reviewed regularly and check its performance to identify on how to improve energy efficiency, reduce water usage and waste disposal. Companies should seek to understand and act on the direct and indirect environmental impacts of their business operations. Current Activities Related to CSR 1. Establishment of certifying bodies to develop standards, programs and to train and certify employees, managers and businesses with quality programs, certifications and accreditations. 2. Training of employees for customer care and people skills with the application of Customer Relationship Management Standards. 3. Improvement of compensation and benefit packages for employees to enjoy from hiring to retirement while a number of benefits are also rewarded to families of employees. 4. Establishment of programs for the protection and preservation of the environment. 5. Active participation in socio-civic and charitable activities. 6. Development of customer complaint desks or hotlines with the use of the state-of-the-art technologies. 3

7. Recruitment of competent and technical employees to ensure manufacturing will follow the standards. 8. Training quality people that will handle all aspects of business processes. 9. Application of good manufacturing practices and advance quality assurance standards for the production safe and quality goods and services. 10. Strengthening of ties with agencies and creating organizing bodies that aim at the promotion, monitoring and recognition of companies that adhere to their moral obligations. References: Roa, F. C. (2007). Business Ethics and Social Responsibility. Manila, Philippines. Rex Book Store. http://cosmic.rrz.uni-hamburg.de/webcat/hwwa/edok07/f10844g/CM07-103.pdf http://businessthatcares.blogspot.com/2010/08/corporate-social-responsibility-and.html