Sustainability Provides Benefits For Corporations
In recent years, people worldwide have been increasingly concerned about saving our earth’s natural resources to make them last as long as possible. Businesses are significant users of natural resources, so it makes sense that they’d also be interested in operating as ‘green’ as possible without compromising the vitality of their operations. Many businesses are finding that a good way to do this is by incorporating conservation principles into their mission, culture and strategic planning. Companies are trying to develop a culture that encourages all employees and other stakeholders to reserve energy, cut costs, reduce waste and enhance other environmental factors.
The benefits of this are manifold: the collective impact of corporates and individuals that work toward preserving energy and resources benefits the public. It positively impacts businesses that contribute materially to conservation efforts.
Stakeholders appreciate the effort that businesses take to place recycling bins throughout corporate facilities. They enjoy reading about how businesses have lowered their emissions, gone paperless and engaged in other conservation efforts. Consumers increasingly prioritize provenance and sustainable supply chains, putting pressure on corporates to adopt socially responsible attitudes to sourcing.
The Dimensions Of Csr Strategies
CSR considers that company responsibility should be shared beyond the owners alone, instead extending to the various stakeholders. Responsiveness to pressures from stakeholders depends on the environmental and social risks companies take. The power, legitimacy and urgency of stakeholder demands shape managerial decisions with regards environmental and social concerns .
The most studied CSR dimension is by far governance, which creates consensus among studies . The second most studied dimension is the environment. However, social factors are much less studied. Horváthovás meta-analysis of ecological studies warns that simple correlation coefficients generate more negative results when linking performance to ecological factors. Therefore, it seems appropriate to rely more on advanced econometric methods instead. She also highlights that a positive link is found more frequently in common law countries than in civil law countries, which brings us to our next topic.
Concerning the country of observation, there seems to be a difference in empirical results obtained in the U.S. compared to other countries. Studies on the U.S. context more often find positive results, while studies on non-U.S. companies tend to lead to more neutral results. An attempt to justify these discrepancies can be found in the activism of U.S. pension funds toward sustainability.
Environmental Social And Governance Overview
Most of the analyses of CSR appear in corporate sustainability reports. However, relying on the individual corporate CSR report has intrinsic shortcomings, such as a biased disclosure problem due to the deficiency of the firms revelation mechanism, viz. revealing only the firms favorite interpretation of its CSR and its operationalization . Thus, to investigate the relationship between CSR and FP unbiasedly, several studies examined the relationship based on third party ratings of environmental, social and corporate governance.
Meanwhile, because ESG issues are extra-financial attributes, ESG scores could lack the consistency and standardized definitions necessary for their comparison. Even with quantified data, it is difficult to compare them with the information delivered by peers and across periods. The ESG disclosure scores used in other studies faced the problem, particularly in terms of their objectivity. As a matter of fact, there are companies which are uncooperative in providing the information necessary to assess the impact of their ESG factors on FP or cases where the ESG score provided by the company lacks consistency. In order to resolve these problems or minimize the ESG measurement bias, this study use the ESG scores provided by Bloomberg, which is a third-party data collecting institution that cares very much about its own reputation for accumulating accurate data.
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What Is Corporate Governance
Corporate governance is the framework that stakeholders use to manage the business at a high level. In a business environment, for the company to succeed all its stakeholders must have a satisfactory working relationship. To make that happen theres corporate governance, a set of processes for overseeing how decisions are settled, executed and communicated between key shareholders, including investors, and management, and sometimes also staff, and clients.
Without corporate governance, rogue decisions and activities can go unnoticed and also illegal action like fraud, and embezzlement. Good corporate governance can also be the leading force to settling investor and management disagreements, plus scandals, liabilities, and what to do when a companys performance is dire.
What Is Corporate Social Responsibility
If you mention any major headline, you’re bound to find a host of opinions on both sides of the issue. Major headlines often have an impact on employees in one or more ways. To mention a few, sexual harassment in the workplace, diversity, global and political issues, environmental issues, natural disasters, human rights, and data privacy and protection are big societal issues.
Several incidents have brought workplace harassment and inequality onto the agenda items in boardrooms across the nation. Susan Fowler, a software engineer for Uber, blew the whistle on sexual harassment at the company with an essay that ousted the CEO. The Me Too movement started in 2006 and went viral after allegations of sexual harassment against film producer Harvey Weinstein surfaced in 2017. Supreme Court candidate Brett Kavanaugh is under fire, as several victims have alleged that he committed sexual assault against them when he was young. The Pew Research Center did a survey this year that showed that employees feel that 50% of men get away with sexual harassment in the workplace. About 46% of employees feel that society has a tendency not to believe female accusers.
These incidents have prompted corporations to have zero tolerance policies for sexual harassment and enhance their internal reporting policies. The issue is also motivating corporations to review whether they afford women equal opportunities for employment.
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Why You Need Corporate Social Responsibility And Corporate Governance
No one could have known 2020 was going to be a year of global uncertainty and upheaval. Theres a lot more at stake than just the survival of a business. Whole communities are wondering how they can recover post-pandemic.
Enterprises are rightfully reviewing their corporate governance structure, including their rights and responsibilities to stakeholders as well as the rules and regulations for making decisions at an organizational level.
When there is a lot at stake, particularly with larger organizations, due process is followed to the letter for significant decisions and actions. However, corporate governance is not the only mechanism required in times of need and this is why large enterprises will also have a corporate social responsibility mandate.
Corporate social responsibility ties businesses to communities and helps them stay relevant to their customers and society. While larger businesses will have CSR and CG covered startups and smaller players may not, therefore, in this article, we look at how SME owners and managers can capitalize on good corporate social responsibility.
Lets start off with a summary of the role of corporate governance.
Social Responsibility : Kroger Company
Social responsibility is an ethical framework which suggests that an organization or individual has an obligation to act for the benefit of society at large. Social responsibility is a duty every organization has to perform so as to maintain a balance between the economy and the environmentKroger CompanyJust in this year alone Kroger has made a substantial impact in society. When it comes to the social aspect the company went above and beyond the norm. Since 2010, Kroger has been contributing $1
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Corporate Social Responsibility Explained
Corporate social responsibility is a self-regulating business system that makes a business accountable to society. A company should work well with its stakeholders and the community around it. CSR is a conscious decision from the store to have a positive impact on its environs. This applies both economically and socially. Depending on the industry, CSR can take many forms. CSR can be acts of philanthropy, environment-saving, and volunteer programs. Morale-boosting programs for employees and stakeholders also fall under CSR.
Corporate Governance Codes Regulatory Environment And Csr Practices
but also social issues, which have been threatening the environment as a result of their operational activities . Therefore, MNCs do transform into socially responsible enterprises or behave in an ethical manner as the term called Corporate Social Responsibility has appeared. The duties and responsibilities of Board of Directors (Stiglbauer & Velte,
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Relationship Based On Cg Views
One of the major problems in establishing a positive relationship between CG and CSR is the lack of a uniform definition for CG due to its dual views, the narrow and the broader view depending on who the boards are responsible to. The broader view is related to the stakeholders theory regards all stakeholders, while the narrow view related to the agency theory only gives regards to the shareholders. In the narrow view, Stenberg in 1998 described CG as ways of ensuring that corporate actions, assets, and agents are directed at achieving the corporate objectives established by the corporations shareholders. This view was also shared by Hess in 1996 when describing the state of CG in the US. This view establishes a negative correlation between CG and CSR.
The broader view relates the boards with every stakeholder, thus creating the overlap between CG and CSR since taking care of stakeholders and the environment is what CSR is about. Parliamentary Joint Committee on corporations and financial services in 2006 defined CG as the company considering, managing and balancing the economic, social and environmental impact of its activities. The Organization for Economic Cooperation and Development in 2004 defined CG as a set of relationships between a companys management, its board, its shareholders and other stakeholders, This was also implied in SEC 2003
Research Method Employed And Research Process
described the four types of research descriptive/analytical, applied/fundamental, quantitative/qualitative, and empirical/conceptual. Descriptive research entails the use of surveys and investigations, while analytical research, the researcher is only left with already-made information from various materials and resources. Applied research implies finding an immediate solution to a problem facing the society while fundamental research deals with theory formulations and generalizations to add to the existing body of knowledge. Quantitative research talks about measurement or quantity based research while qualitative research refers to research relating to quality like attitude, and opinion. Conceptual research is mostly used by philosophers as it involves abstract and development of ideas from scratch or formulation of a hypothesis, while empirical research is experience or observation based and doesnt follow theories or rules.
It took 3months to complete this project, with regular meetings with the supervisor on the progress of the work to make sure the objectives are being met and the milestones are achieved. The work started with general readings in the field of CG and CSR to gain adequate knowledge of the topic and to formulate the research problem and hypothesis.
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Differences Between Csr And Ethics
Business ethics and CSR are closely related. Two schools of thought argue that CSR policies are highly effective and that their objectives reach beyond the sole purpose of communication. The first of these proposes to limit the scope to the notion of business ethics, according to the Anglo-Saxon perspective, and contrast this with corporate responsibility approaches rooted in social objectives, a more European stance, rather than moral principles . The second model argues a mixture of ethics and CSR . From a practical point of view, these two schools of thought are closely related, because a socially-responsible company with a CSR policy should be an ethical company, and an ethical company should be socially responsible .
For most companies, the scope of accountability and ethics are limited to legal obligations and sometimes to codes of best practices, while profitability remains the only criterion that affects company decisions. However, ethical codes are becoming increasingly popular, especially in large companies, and cover areas such as CSR, quality of customer relationships and supply chains, respect for the environment, and personal and corporate integrity charters. In this approach, assessing the ethical performance of a company includes CSR as a dimension of ethics.
Transparency Is Key Aspect Of Corporate Governance
The boards of directors are responsible for the governance of their companies so there has to be transparency in company reporting. Transparency is key aspect of corporate governance because of implementing corporate governance this will allow stakeholders and shareholders to review and evaluate performance of management and the company this ensures that the board of directors and the executive directors of corporations act in the best interest of shareholders and the corporations. It is implemented
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How Do Csr And Cg Work Together
Corporate governance and corporate social responsibility are two sides of the same coin. Businesses with weak internal systems are unlikely to have an excellent external conscience. For a company to become an outstanding corporate citizen, it has to have stable corporate governance.
The role of corporate governance in business is to lay down the proper channels for the industry to run smoothly. Companies who are under fire for environmental pollution or employee abuse have poor corporate governance. It results in poor corporate social responsibility.
A business must have the proper integration of the two, so it can have a lead role in solving wider issues in the community and further afieldfor example, solutions for generating economic stimulus which can save and create jobs. During the pandemic corporates with good governance and CSR could quickly switch their offering to meet the needs of the community. General Motors switched from vehicles to ventilators and other corporates also stepped up with relevant products to address realtime community needs.
What Is The Relationship Between Corporate Governance And Sustainability
Good governance is not only crucial for corporations, it’s important for society there’s a growing recognition that there is a close relationship between corporate governance and social responsibility.
Here we explore why this is: why are the two so closely interlinked? What is the relationship between corporate governance and social responsibility? And what role does sustainability play how does that fit into the mix?
To begin with, good corporate governance improves the public’s faith and confidence in its corporate leaders. Legislative processes were designed to protect societies from known threats and to keep problems from occurring or reoccurring. Recent corporate scandals shed light on the connection between corporations and social responsibility.
A growing focus on environmental, social and governance issues and corporate social responsibility increases corporations’ responsibility and accountability to their stakeholders. As a result, we’re seeing corporations place increasing pressure on themselves to improve best practices for corporate governance with the goal of enhancing their relationships with stakeholders. The largest motivation for corporations to direct increasing attention to sustainability is that it ultimately improves corporations’ ability to thrive and prosper.
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The Importance Of A Good Corporate Governance Framework
why a good corporate governance framework must incorporate stakeholder accountability. For the purpose of this paper, the term stakeholder governance will be used to incorporate all aspects of stakeholder accountability and engagement, that is dialogue, decision making, transparent operations and implementation of solutions to common problems or goals. The first part of this paper will describe how the landscape has changed for business operations due to environmental, economic and social reasons
Corporate Social Responsibility Literature Review
2.2.1 Corporate Social Responsibility and its Importance
Every organization depends on its stakeholders to develop a good image and goodwill for long-term sustainability. Corporate sustainability is defined as:
a business approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments
Which means every stakeholder must be well-accounted for this is where CSR comes into play.
Bowen defined CSR as
the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society.
The Parliamentary Joint Committee on corporations and financial services defined CSR as striking a balance and controlling the triple bottom lines of economic, social and environmental impact of the corporation. Sir Adrian Cadbury, the founder of Cadbury Plc in 2002 encapsulated the whole idea of CSR saying
the broadest way of defining social responsibility is to say that the continued existence of companies is based on an implied agreement between business and society and that the essence of the contract between society and business is that companies shall not pursue their immediate profit objectives at the expense of the longer-term interests of the community.
Friedman in 1970 stated that:
In general, CSR can be summarized in terms of the expectation of every stakeholder as
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How Different Are Corporate Social Responsibility And Corporate Governance In Todays Business Environment
By Yuan Li, Assistant Professor, James Madison University
The topic of corporate social responsibility has attracted wide attention from scholars, the public, and industry professionals alike. In the hospitality literature alone, numerous studies have examined its antecedents and outcomes, as evidenced by a large number of review papers on CSR published in major hospitality and tourism journals as compared with other topics such as finance and accounting, of which review papers are rare. Despite the prolific research, there is a lack of a universally agreed upon definition of CSR such that CSR means something, but not always the same thing to everybody . Nevertheless, there is some consensus that CSR describes actions taken by the firm that are voluntary and that have ethical, social, and environmental implications . Indeed, the vast majority of the various definitions employed by existing studies share at least three of the five dimensions identified by Dahlsrud : environmental, social, economic, stakeholder, and voluntariness dimensions, leading to the conclusion that how CSR is defined is less an issue than how it is socially built in a specific context.