Corporate Social Responsibility Codes’ Importance

Introduction

Social responsibility and ethical appropriateness are frequently discussed themes in organizations worldwide. It is not enough for companies to be profitable tools that make money and follow laws, but it is required to stay responsible for citizenships who respect each other (Tai & Chuang 2014). All company’s actions and decisions should have a positive effect on the environment, employees, customers, and different communities. Organizations find it necessary to develop codes with the help of which the recognition of mutual standards turns out to be a significant step for stakeholders.

Still, not all companies follow such norms questioning the importance of corporate social responsibility. Companies can introduce their own goals, rules, and duties without thinking of the consequences of globalization and the development of international relationships. The technological progress and the possibility to use the Internet from different parts of the world have already changed the way of how business can be developed. Therefore, a burning question appears. Should companies subscribe to codes of corporate social responsibility? This paper aims at evaluating the importance of the codes of corporate social responsibility through the analysis of such environmental concerns as carbon footprint, logistics of plastics, and glass recycling and such social issues as corporate brands, labor conditions, consumer learning, and organizational content of Facebook, YouTube, Apple, and other companies through the prism of the existing ethical theories based on rights, utilitarianism, relativism/objectivism, development, and deontology.

Corporate Social Responsibility and Its Importance

Modern companies can improve their services in a variety of ways. However, despite the existing options, it is important for companies not to lose their moral character and understand how to protect and foster the benefits of society. Therefore, the competitive business environment has been improved by such a concept as corporate social responsibility. Carroll (2015) identifies this type of responsibility as “a product of the post-World War II period” caused by “the changes in social consciousness that came to a crescendo in the 1960s” (p. 87). Moon (2014) explains corporate social responsibility as an oxymoron or a subversive doctrine that helps to understand the essence of business-society relationships. Corporate social responsibility is a complex term with some compounds. However, it is wrong to believe that it is some one-sided kind of responsibility. Corporate social responsibility identifies the duties of both parties in these relationships considering legal, ethical, financial, and economic factors (Chandler & Werther 2014; Takkar 2015). As soon as corporate social responsibilities are identified within a company, it is easy to understand what steps are appropriate and what decisions should be better avoided to support social and organizational well-being.

Social responsibility is a demonstration of respect for consumers. Great profits may be achieved in case a company follows the codes of corporate social responsibility. Still, even though many people understand their responsibilities, they cannot apply similar attitudes and methods of cooperation in business. Regarding such debates and the absence of one common attitude to corporate social responsibility, the identification of codes becomes a solid competitive aspect of companies worldwide (Financier Worldwide 2015). Responsibility policies help to identify what components can make a better offer for different customers.

Ethical Theories

Some business leaders continue questioning the necessity to be engaged in corporate social responsibility focusing on such aspects as business success, appropriateness, and co-existence of financial and moral benefits. Frederiksen and Nielsen (2013) offer to combine instrumental and ethical approaches to comprehend the essence of corporate social responsibility in terms of the theory of rights and the utilitarian principle. Utilitarianism can be a helpful moral approach in the application of normative stakeholder theory that describes the relationships between company suppliers, customers, leaders, and employees (Nikolova & Arsic 2017). The investigations of Chakrabarty and Bass (2015) and McCleskey (2014) show that corporate social responsibility may also be properly integrated through the deontological class of theories. However, research introduced by Crowther (2017) proves that it is possible to unite all ethical philosophies like deontology, utilitarianism, relativism, and objectivism to develop a strong understanding of ethics in business relations and the promotion of corporate social responsibility codes. All these theories are characterized by different principles to pursue one goal – to avoid negative outcomes on society.

Theory of Rights

Human rights play an important role in the development of business relationships and an understanding of corporate social responsibility, labor rights, and the possible impact on the environment. The Universal Declaration of Human Rights was introduced in 1948 to determine the connection between companies and the rights people have to take into consideration when they use or offer services (Giuliani 2016). The peculiar feature of this theory is that human rights are usually introduced as fundamental issues despite people’s gender, age, sex, nationality, or geographical location. Companies develop global business relationships and cannot ignore social concerns about human rights.

Several decades ago, Nike survived a wave of serious debates and misunderstandings when the company, as one of the most successful international business examples, was accused of supporting sweatshops and child labor (Bain 2017). As soon as such conditions were discovered, Nike had to take certain steps to improve its reputation and demonstrate another approach. The company started publishing their CSR reports annually to enumerate all its factories and describe working conditions there (Newell 2015). Within a short period, many companies followed the same example and developed their reports to clarify the conditions under which people could work. ABInBev (2016) pays much attention to human rights policies and the company’s attitudes to child labor or illegal workers. However, Frederiksen and Nielsen (2013) admit that all companies usually do not lie or steal officially, and it is hard to clarify what real practices are chosen in the workplace, if human rights are considered, and if employees are satisfied with the conditions offered.

Such companies as ABInBev or SABMiller promote activities to support eco-friendly recycling and renewable production to support the safe logistics of plastics and glass (that is a part of sustainable development theory). Still, real conditions under which people have to recycle products remain unknown for millions of people. Therefore, from the human rights perspective, the development of codes of corporate social responsibility has to be supported by all companies with the possibility to consider the opinions and attitudes of all stakeholders.

Utilitarianism and Normative Stakeholder Theory

The success of the business is predetermined by the possibility to manage social and workplace demands. Many leaders choose utilitarianism. Fryer (2014) defines utilitarianism as a process when ethically charged situations have to be solved through the analysis of the consequences of different actions and the identification of a direction where maximum good can be achieved. The choice of a utilitarian theory should be approved even if a small number of benefits can be observed (Carroll, Brown & Buchholtz 2017; Crowther 2017). Utilitarianism is a significant part of the normative stakeholder theory that identifies the duties of a company and the obligations of society. Freeman was a developer of stakeholder theory. In the middle of the 1980s, he defined stakeholders as the main actors of bilateral relationships that can be established between a company and its relevant group (a stakeholder) the representatives of which may affect or be affected by the company’s decisions and achievements (Martinez, Fernandez & Fernandez 2016).

A company has to pay attention to the interests of all potential stakeholders and keep a balance between what can be allowed and what has to be avoided. For example, stakeholder theory can be used to explain the promotion of smartphones between people, including the kids between 4 and 8 years. Some parents want to distract their children and use the easiest way that is to turn on their smartphones and get a child involved in watching a video or playing a game. Some customers want to promote regular contact with their children by buying smartphones. Still, some parents want to avoid the use of technology in their children’s lives but cannot achieve this goal because of fashion, modern habits, and constant contact with other children. The balance between these stakeholders is hard to find out, and stakeholder theory has to be discussed along with some other theories like sustainable development or human rights.

Facebook is one of the companies that use its CSR policies to support social media business and address stakeholders’ interests. Due to the global nature of the company, Facebook has to deal with millions of stakeholders like advertisers, users, or employees who develop billions of interests and improve its interactivity through consumer learning (Cortado & Chalmeta 2016). This company does not break the rules but establishes its measurements to give clear explanations of what can be expected from the company and its content. YouTube is another popular social media platform that pays attention to stakeholder theory to predict desirable CSR information (Bonson & Bednarova 2015). If different groups of stakeholders are identified, it is possible to reach more people and promote trustful and dynamic relationships between the company and its stakeholders. This theory is closely connected to the theory of human rights because the neglect of stakeholders’ interests is a kind of right deprivation.

Deontology

The deontological perspective is used to prove the importance of absolute ethical standards because of the presence of right and wrong decisions (Crowther 2017). However, compared to other theories of corporate social responsibility, this theory remains unstable because it does not give the definitions of what is wrong and what is good. For example, upholding duties is an ethically correct step. It is an ethical responsibility of a company to keep its promises and promote brand loyalty by being truthful to its customers (He & Lai 2014). Still, what duties to uphold or what promises cannot be kept – such questions cannot be answered in terms of this theory. Also, the use of deontological theory can influence the implication of other theories like human rights or normative stakeholders. An example can be observed in the work of Nestle Company. Nestle (2016) does not stop keeping its promises and promoting its corporate brands and shared values to support a healthy lifestyle, an eco-friendly environment, and customer loyalty. Simultaneously, Nestle has to keep its promises and support an abuse-free supply chain with neither child labor nor violations of employment conditions (Smallwood 2015). Therefore, a deontological approach can be used to support the idea of corporate social responsibilities. Still, it cannot be used alone and has to be improved with the help of other theories.

Sustainable Development

In their intentions to prove the importance of corporate social responsibility, many researchers and companies use a sustainable development concept to meet their current organizational demands with future or past opportunities. As a rule, many environmental factors are used to prove the importance of sustainable development. For example, SABMiller develops its activities regarding their sustainable future where the use of land for the corps is discussed, recycling waste and carbon footprint are determined, and social development is supported (Ellen Macarthur Foundation n.d.). Promotion of sustainability is also the goal of many other companies like ABInBev and Apple the leaders of which are ready to ask more of themselves to keep a safe environment and support people in their intentions to develop and use the best services (ABInBev n.d.; Apple 2017).

Sustainable development is the purpose of many worldwide organizations, and the G20 can be a good example of how to deal with economic instability and support growth. The G20 is an international organization that was created at the end of the 1990s to unite different economies and stabilize global relationships (Mustafa 2017). TESCO (2018) follows similar goals and helps to address different social issues and supply chains to empower workers and drive improvements. However, when companies choose this theory to promote its corporate social responsibility codes, they have to remember that development in one field may cause negative outcomes in another field, and it is necessary to consider human rights and utilitarianism to make the right decision. Similar to deontology, this theory can partially support the decision to subscribe to codes.

Relativism and Objectivism

In comparison to the above-mentioned theories and values, relativism and objectivism are the theories that deal with universal truths and the identification of moral principles. These theories are the oppositions to each other. Relativists deny the existence of certain universal truths, and objectivists believe that despite the existing variety of moral principles, it is necessary to identify a group of common universal principles and follow them (Crowther 2017). Relativism is similar to a deontological perspective where things can be divided into right and wrong. The only difference is that relativists can support both parties with their wrong and right approaches and state that all of them are right in their ways because there are no certain global standards. People are free to decide what is wrong and right for themselves decreasing the number of ethical debates and the necessity to search for a reason. Cultural context is the only source of true information (Mele & Sanchez-Runde 2013). The benefit of this theory for corporate social responsibility is a chance to develop multiple models of corporate governance and rely on various judgments with no prejudice and distinctions (West 2016). Therefore, from the humanistic point of view and the necessity to respect each other’s rights, relativist theory can be used in the development of corporate social responsibility ethics. However, compared to other theories, it contributes to several misunderstandings introduced by a community or an international partner.

Objectivism is a good approach to address the economic and ethical discrepancy in a company (Dent & Parnell 2015). It creates the standards according to which different cultures may be compared, and a single rule or value is offered to the company and its stakeholders. Globalization is a chance to develop business relationships worldwide, and if every company starts supporting its interests and promote its benefits only believing that their position is correct, there is a small chance to achieve positive results in cooperation. Objectivism is a solution for international partners. Still, much time and certain efforts have to be spent to come to one conclusion that is appropriate for all parties.

Conclusion

In general, the evaluation of different ethical theories proves that the relationships between companies and society may be developed in different ways. It is a hard task to draw a line that may distinguish the responsibilities of a company and society. Therefore, it is understandable why so many companies are still challenged by the necessity to make their final decisions about corporate social responsibility codes. On the one hand, these codes can help to establish common rules and values according to which companies can work and cooperate with different stakeholders relying on such theories as deontology or objectivism. On the other hand, such theories as universal rights, sustainable development, and normative stakeholders may contradict each other creating new questions and concerns in business relationships. To understand if it is necessary to subscribe to codes of corporate social responsibility, a company has to forget about “black-and-white” decisions and outcomes and realize that the corporate environment and business relationships may have different colors, and these codes help to improve the workplace through the consideration of the environmental, personal, social, and cultures issues. In such a case, the answer to the main research question of this paper will be “Yes”, subscription to CSR codes is an essential step to business success.

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