Corporate Social Responsibility
Every action has an equal reaction. This phrase cannot be applied anywhere more aptly than in the case of a company's social responsibility. The resources that a company uses have a cost far greater than the financial cost to it. The scarce resources that are fast depleting in the world are largely impacted by the great consumption by the corporates for their profit ventures. Further, numerous damages are being done to the environment in the form of disposal of wastes from the manufacturing process or pollutants in the air because of the various operations taken forward by the corporation. All these factors add up to the cost borne by society in general for the venture undertaken by the company. Corporate social responsibility is the way of paying back to society in return for the various resources used or the waste produced which further pollutes the environment wherein the organization operates. In other words, it is the initiative a corporation takes to do good and the impact of the organization’s activity on environmental and social well-being. It is a set-up through which the company can channel its production and distribution function for the greater well-being of its stakeholders through the employment and amalgamation of “ethical and sustainable management practices.” (Smith, 2011)
There are a variety of ways that a company can fulfill its CSR. However, there are two parts to it. One and the foremost way a company can comply with its corporate social responsibility is by undertaking a sustainable approach to its workings (Crowther and Aras, 2008). The resources used by the organization have a limited presence in nature. The sustainability practices of the company ensure that these are employed for optimized use, and are not used more than they can be regenerated. Further, steps should be taken to replenish those resources that are possible, such as planting more trees if a company consumes paper. The wastes generated should be made an effort to reuse, reduce, or recycle as much as possible. Further, waste management methods should be employed by the company to ensure the ultimate waste is being managed in the most environmentally compatible way. This would ensure that there is the least damage done to nature because of the hazardous waste coming out of the manufacturing units of the company. Employing the local people where the organization or its factory is set up will help enrich the lives of the local community there.
The main motive for a business is to earn profit. It is the main purpose of its existence. The company has to justify the investments made by its shareholders by creating profit for them. It is crucial for its survival and continuity, as the various resources used by the company such as raw materials, labor, capital, and technology come at a cost and to acquire the same has to be paid for. However, it should not be the sole objective of a company as it leads to the exploitation of the customers as well as the environment in which the company operates. These aspects often bring the downfall of a company. One such example is Volkswagen which got embroiled in a scandal after it got caught for rigging diesel emissions tests in America and Europe. With the motive of pushing the sale of diesel cars in the US, and having the sight upon the huge marketing campaign Volkswagen did exaggerate its car’s low emissions, Volkswagen had fitted "defeat device" software in its diesel vehicles. (Winton, 2016) the software could make out when the vehicle was being tested for emissions on rolling roads and ensured that the vehicle’s pollution control mechanism showed lower emissions levels then. This was a huge blow to the corporate social responsibility of the company and showed its selfish and profit-minded motive.
The profit-making objective of a company and its CSR are interconnected. A company can increase its profitability by indulging in good CSR practices. By creating goodwill for itself and indulging in ethical and environmentally conscious activities, the company can garner more brand value and a positive image in the eyes of the government. This leads to rebates and subsidies, thereby reducing losses. The benefits of having a proper CSR activity in place are galore. It will help in increasing the confidence of the company’s stakeholders, especially the customers and employees in the management. The investors will be happy as the brand image of the company increases and in return, the share prices will also, bring in more money. The company will have a favorable image in the government's eyes and will be subjected to increased tax rebates and subsidies. The internal environment of the company will also improve. A prime cost of CSR activities is the cash flowing out minus the reductions in taxes. The numerous projects and initiatives taken by the company will drain a considerable amount from the revenue or capital of the company. Apart from this, there is not much of a loss or disadvantage to the company as the benefit from CSR always outweighs the cost.
On the other hand, having a profit-maximizing motive for the company will lead to expansion for the organization. The organization will be able to employ more money in the business and grow it further. The shareholders will be happy, and the company will be able to attract more investors. The disadvantage of having only a profit motive is that the employees harbor negative feelings toward the management. They start viewing the management as a tyrant and are only concerned about short-term goals. The employees of such perform less heartily for such an organization and are less likely to go out of their way for the company's sake (Washburn, 2009). Further, the performance of the company takes a toll and it gives poorer results.
Merck is known for the corporate social responsibility it carries out, both internally as well externally. It is one of the company’s core goals to find, grow, and offer innovative products and services that improve people’s lives. It emphasizes developing and rewarding its employees for their contribution, protecting the environment, and operating with the greatest degree of ethics and transparency. Merck is an environmentally conscious company and has set environmental footprint methods and created a set of goals to develop the sustainability of their workings. At Merck, they believe in operating to counter the health issues plaguing the world, mitigate the impacts of climate change, lend a supporting hand to our communities, and enhance the skills of the workers.
To conclude, corporate social responsibility is the host of activities a company undertakes to compensate for the resources of society and the damages done to the environment. These activities act as goodwill for the company and come in the good books of the government. In my opinion, CSR constitutes one of the most crucial activities of the company and helps in alleviating the company’s reputation. Companies that have only profit maximization as their goal tend to have low morale among their employees, and perceive the company with negative feelings. They have the least loyalty towards their organization. CSR benefits the organization by increasing profit because the tax rebates and suicides reduce the losses.
References
Corporate Responsibility. (2017). merck.com.
Crowther, D. and Aras, G. (2008). Corporate Social Responsibility. 1st ed. Venture Publishing Aps.
Smith, R. (2011). Defining Corporate Social Responsibility: A Systems Approach For Socially Responsible Capitalism. Master of Philosophy Theses, 9.
Washburn, N. (2009). Why Profit Shouldn’t Be Your Top Goal. Harvard Business Review.
Winton, N. (2017). .
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