What is corporate social responsibility (CSR)?

Discuss the limits and potential of CSR for promoting

sustainable development. Illustrate with examples.

By Matilda Engqvist
1627 words

Introduction
The definition Corporate Social Responsibility (CSR) has been reformulated and
refined throughout several decades, although as an academic area it dates back to the
21th century. However, I consider the best explanation of CSR to be the corporation
has not only economic and legal obligations, but also certain responsibilities to society
which extend beyond these obligations (W. McGuire, 1963, p. 144). A corporation
cannot only see to their obligation to obey by the stated laws or their responsibility to
provide for their countrys economic growth. They also need to see to the environment
and the society in order to reach sustainability.
However, how does this apply in practice? Is CSR promoting sustainable development?
What are the limits of CSR?
These questions will be brought forward and discussed based on examples found in the
readings provided. These will be refered to throughout the discussion.
Formal guidelines
In the rising and development of our capitalistic society corporations and business has
taken a more substantial place in our society. Some countries have faced weakened
impact of state institutions as a consequence of globalization and neo-liberalreform.
This shows that the link between the corporations and the society has become
inevitable. Big business has historically resulted in huge amounts of waste, degradation
of natural resources, pollution and exploitation of workers with market share and
profitability as their narrow point of focus (Utting, 2000, p. 1). However, the idea of
CSR is to trace back to at least the 1930s, and has been uneven yet continually growing
ever since. It did not succeed to attract interest in a bigger scale until the latest two
decade, when associations and academics rapidly increased their attention to the subject
(de Bakker, Groenewegen, & den Hond, 2005). During the last two decades, the number
of sustainable initiatives has grown rapidly. For example:
-

IKEA prohibits their rug suppliers to employ children. IKEA also provides

financial aid to families in order to avoid child labour (Vogel, 2005, p.1).
McDonalds is now regulating their beef- and chicken suppliers use of growthpromoting medication based on the restrictions made by the European Union
(Vogel, p. 2).

Since the interest in CSR management is increasing, ways of controlling and justify the
behavior of corporates are required. This has nurtured the use of codes of conduct,
cleaner technology, life-cycle analysis, environmental reporting and certification
(Utting, 2000, p.6.). A code of conduct is a set of principles and standards that should be
used as guidelines when acting environmentally or socially responsibly. Although, these
codes are critcized for being set to action (Utting, 2000, p.4). This is what calls for
certification. Certification is the way of proving that the codes of conduct is kept in
mind and followed by the company throughout their performances. Much alike the
codes of conduct, the certification is criticized. The independence of the verifier, as well
as the indicators used to prove the responsible performance is questioned (Utting 2000,
p. 4). Several organisations and associations have risen to engage and encourage CSR in
practice. However, I can see the problem with trusting the verifier, since the
organisations seem to be rather irrespective of each other.
To Action
Now, that the formal ways of being a socially responsible corporate are unraveled, we
shall look in to how it applies in business. Firstly, a corporate has to be interested in
integrating sustainable codes of conduct and accepting their resposibilities to the
society. There are several reasons to why a corporate is willing to do this; increased
profitability by innovative products and services, increased profitability by avoiding
scandals, or added pressure from the society (Zorn & Collins, p. 407). The profitability
by innovation may be services and products that are environment friendly. The
profitability by avoiding scandals means that when a corporate starts acting socially and
environmentally responsibly they will reduce the possibility that the society finds facts
that is provocating, through naming and shaming by activists or consumers, that can
harm the companies market share and reputation. The added pressure from the society
means that the society is getting more aware of the environmental and social issues and
is now expecting the corporates also to become so.
When a corporate has their reasons and will to adapt CSR to their business, they have to
make up a strategy in order to be successful. They have to choose which issues to

approach. Porter & Kramer (2006) defined three categories of causes and issues that are
important and strategic for the business.
Generic social issues are important to the society but are not affected by the company
nor will it help the company to win market share (Porter & Kramer, 2006, p.89). An
example can be that a company producing clothes would engage in issues affected by
farming.
Value chain social impacts are the issues that are affected by the performances of the
company (Porter & Kramer, p.89). An example can be that a
Social dimensions of competitive context are the social issues that significantly affect a
companys market share and competitiveness in the operating area (Porter & Kramer,
p.89). Toyota is a clear example of a company that succeeded to do this as they
produced the first hybrid electro/gasoline car, which gave them multiple advances in
their operating area (Porter & Kramer, p.88).
To be successful in the integration of CSR in the company, it is preferable to choose one
of the two latter alternatives. The most strategic thing to do is to add a social dimension
to the companys value chain for it to have an impact on the whole of the strategy of the
business (Porter & Kramer, 2006, p.90).
Responsibility revenue or risk?
This may seem as a big step to take in order to be successful. Still, the question of
profitability remains unanswered. Is it worth going through a lot of work to integrate
social responsibility in business? Many studies have found a positive relationship
between social responsible performance and profits, although some have found it to be
negative (Vogel, 2005, p.29). In some cases, a profitable company could be even more
so if they were not striving for sustainability and responsiveness (Vogel, p.33). It is also
hard to determine if the profits really are a cause of the integration of CSR or if it is an
effect of any other performance made by the company (Vogel, p.30). Studies show that
even the companies that are reputedly committing to social responsibility have no
bigger market share, nor do they attract a bigger scale of consumers (Porter & Kramer,
2006, p.83).

However, as mentioned before, a business can avoid damage such as scandals that could
cost them their profit if they integrate CSR in their agenda.
Another risk may be the fact that CSR shows signs of a management fashion. All of the
five criteria, identified by Jackson and Rigby (2000) are more or less clearly applicable.
CSR has a management technique, practice or concept at its heart, a collective belief
that it is at the forefront of management progress, its own distinctive lexicon and
signifiers, and a bell-shaped adoption or popularity life cycle over time (Jackson &
Rigby, 2000, p. 4). The latest critera, the bell-shaped curv in popularity, is still unclear.
A rise in popularity has been seen, although the eventual drop is yet to be seen (Zorn &
Collins, p. 412). If CSR is a management fashion, it means that some corporates merely
use it because it is right in time and not because they strive towards sustainability.
However, this does not have to be bad. Seeing to the needs of the stakeholders will not
make the situation worse even if it is just a question of increasing profits.
Corporates who see CSR as a constraint will probably not succeed, as stakeholder
governance models overlooks practices that can be unethical or unsustainable to benefit
the corporates that are genuinely motivated to integrate CSR in their business.
CSR as a sustainable method
As stated before, the rise of CSR has encouraged corporates to make up for their impact
on society and the environment. Since sustainability is the progress that meets the
needs of the present without compromising the ability of future generations to do so
(Brundtland, 1987, p. 43), these kinds of actions are one step in the right direction. At
least if we see to the past, and what is still somewhat the present, where corporates
degrade natural rescourses, pollute, exploite their workers etc (Utting, 2000, p. 1).
However, a method that is questioned for its management fashion tendencies can also be
questioned in terms of promoting sustainability. Sustainability is a process, and if CSR
shows to be a management fashion, the responsible performance may cease. Though,
not to forget, CSR provides a more sustainable business climat compared to the former.

Conclusion
Whether CSR is sustainable is yet to see. The sustainability of the method is
questionable if CSR proves to be merely a management fashion. However, it has sown
the seeds of sustainability in the private sector, and has influenced a lot of voluntary
initiatives: commitments that are difficult to forsake. In that meaning, I see potential in
CSR as a method contributing to sustainable development.
The limits of CSR are the fact that social responsible performance does not secure an
increase in profits, and that it on the contrary can be more costly than irresponsible
performance. This can discourage companies to engage. However, the potential of CSR
is the gain in reputation, and the evasion of scandals. Summed up, CSR might not
increase the profits, and will not give a company any big advantages, although it will
not do any harm either. Moreover, to disregard the societys social expectations can be
unfavorable as the company risk naming and shaming and lost market share.

References
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30 years of research and theory on corporate social responsibility and corporate social
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McGuire J.W. (1963). Business and Society. New York, Harper & Row.
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