Sustainability considered as one of the most common concept in the globe
Sustainability considered as one of the most common concept in the globe. Where the beginning of this concept came after publishing report entitled “Our common future” by the World Commission on Environment and Development in 1987. Based on this report, the definition of the sustainability is ‘development that meets the needs of the present without compromising the ability of future generations to meet their own needs’ (Brundtland, 1987). Sustainability has three main dimensions which are economic, environmental, and social. Informally, the three pillars referred as profits, planet, and people (Beattie, 2017). The CSR (Corporate Social Responsibility) came as a subset of the sustainability concept, where CSR focuses on the social dimension of the sustainability. (Bhagwat, 2011) has defined CSR in broadly (i.e., the ethical behavior of a company towards community) and particularly (i.e., the management dealing responsibly in its relationships with other stakeholders who have a legitimate interest in the business such as the customers, investors, employees – not just the shareholders) manner. (PJC, 2006) defined CSR as when the firms apply their business operation, it takes in their account the impact of these operations on society, economy and atmosphere. The implementation of the sustainability will not happen without engage this concept in the business world. There are two main arguments regarding implementing sustainability practices in the corporates, one of them are supportive and the second team is against. The rejection from the second team is coming because the main purpose of any business is gaining high profits by less cost. But in my opinion, I think there is a positive relationship between the sustainability efforts and the financial performance of any firm. Basically the financial performance is a tool to measures the results of company’s policies and operations in monetary terms, where these results are reflected in the company’s return on investment, return on assets and value added( Farlex, 2012).The CSR activities boosts the social value and profitability of the firms. I will prove my point of view through mention some reasons and examples accordingly.
Positive Correlation between CSR & Financial Performance:
Corporate financial performance has driven by the main factor which is profitability (‘what are the Profit Drivers to your Business’, (n.d.). For that reason, some corporates minimize the number of CSR initiatives in their business or avoid implementing it at all. (Aupperle, Carroll, & Hatfield, 1985) had supposed that firms would have overload costs from CSR actions which put them in bad economic situation comparing to competitive firms that has less responsible. But, the correlation between CSR and financial performance has significant importance within the business and management scope, plus in the interest of investors (Weber, 2008). Despite no guarantee that CSR activities would lead to an increase value for the shareholders; however, evidence seems that it could be a kind of insurance protection and therefore, keeps the value for them. Corporates can add CSR as a strategic investment in the central corporate strategy, management instrument and the core business (Bråtenius, & Melin, n.d.). Reputation of the corporate is one of the most important results of implementing CSR activities, whereas it is a valuable intangible asset that companies should carefully manage. In these days, the competition is highly increased among all types of business, therefore, companies have to meet the predictions of multiple stakeholders such as employees (i.e. choice of firm to work for), investors (i.e. choice of firm to invest in) and customers (i.e. choice of firm to buy products and/or services) to compete for reputational status. Corporate reputation plays significant role where the stakeholders depends on the reputational status of the firm to make their decisions (Maden, Ar?kan, Telci & Kantur, 2012).
In addition to bright reputation, implementing CSR initiatives could save the costs. With a few simple sustainable steps, firms can reduce their utility bills and accomplish saving for the business. Reducing resource use, waste and emissions are examples of costs saving through the CSR initiatives (“Business benefits of corporate,” 2018). Dow Company is ideal firm in saving cost by implement CSR practice. They have invested $1 billion over 10 years in order to reduce its energy consumption and improve its efficiency, and as a result of their initiative, until now they has savings $7 billion from improved energy and reduction in waste water produced in its manufacturing processes (“The Business Case for being a Responsible Business”, 2011).
The beneficial way to motivate the employees in any organization is to comfort their employees. As I mentioned earlier, the employees are considered as stakeholder for the organization, and they are the most important group. The CSR initiatives in regards of employees could highly motivate workforce to engage and stay with the organization. For instance, the total reward package on offer, the unique opportunities that come from being a member of that organization, a level of synergy between individual and organization in values; being a member of a respected and reputable team and the effect this has on self-identity, the existence of fairness and trust in the organization and its leaders and opportunities for employees to enact their jobs in a way that is consistent with their personal values and ethics, all of these are example of CSR initiatives can motivates the employees. According to CSR initiatives related to employees, Marks & Spencer has very efficient practice in this. Where, they are worked in partnership with factories to accomplish efficient process which lead to increase wages, reduce working hours and protect the quality of products. By this initiative, the productivity in Bangladeshi factories related to Marks & Spencer Company increased by 42%, the staff turnover reduced from 10% to 2.5% and absenteeism reduced from 10% to 1.5(“The Business Case for being a Responsible Business”, 2011).
Examples of CSR:
Many forms of CSR activities have been implemented in the firms across the world. There are many leading global companies have successful implementations in this regards which emphasizes the positive relationship between CSR and financial performance, where the main target of all commercial firms is to gain high profits by less cost. Below are some bright practices of CSR:
• Walt Disney Company: is the leading company in entertainment across the world. The social mission of the company is to strengthen societies by providing hope, happiness and comfort to children and families who are poor. Disney gave more than $400 million to nonprofit organizations in 2016. In addition, it has program that encourages employees to donate time, and since 2012, they reached to 2.9 million hours of services. their goal is to reach to five million hours of employee community service by 2020 (Vilas, 2017)
• IKEA: it is foundation concentrates on funding home, health, education and sustainable income for societies in need. In 2017, the campaign of Brighter Lives for Refugees which launched by IKEA has funded a solar farm to provide renewable power to Jordan’s Azraq refugee camp. It is a unique initiative, which it will save $1.5 million and reduce CO2 emissions by 2370 tons annually (Vilas, 2017).
• Starbucks: it is one of the leading coffee providers across the world has always committed to sustain and strengthen communities. Many initiatives has implemented by Starbucks such as planning to hire 10,000 refugees across 75 countries during the next five years and hire 25,000 veterans by 2025. In addition, the company committed to provide one million coffee trees to farmers (Vilas, 2017).
• Apple: The “greenest tech company in the world” for three consecutive years, is Apple which has this title by Greenpeace. 99 % recycled paper products using for manufacturing packaging in Apple. Also Apple encourages its IT partners to use the renewable energy (Vilas, 2017).
In conclusion, businesses that have social responsibility realize the positive correlation between CSR and financial performance. The bright reputation, is one of the most important intangible assets corporate obtained through implementing CSR practices, plus to other many benefits. The sustainable business will gain profit, reduce the costs and maintain the planet.