SHEE «Vadym
Hetman Kyiv National Economic University», UKRAINE
CORPORATE
SOCIAL RESPONSIBILITY’S EXTERNAL AND INTERNAL DIMENSION
Nowadays there are increasing social concerns about
the corporate behavior regarding human rights, working
conditions, social welfare and the environment security
in the context of sustainable growth concept domination. In consequence
of that companies have to meet such request and thus stick
to at least minimum standards of socially acceptable
behavior within a corporate social
responsibility (CSR) concept considering its external and internal essence.
The key point in CSR concept for last 40 years was the
“responsibility” and SCR practices examination allows to identify five core types of business responsibility:
1) responsibility towards society – carry on business
in correlation with moral and ethical standards, preventing environmental
pollution, to minimize ecological imbalance, to use appropriate (sustainable)
technology, to develop social health and education, moreover to insure locality
development;
2) responsibility towards government – obey
regulation, to pay tax accurately, to cooperate with government in order to
promote social value, economic growth and development;
3) responsibility towards shareholders – ensure a
reasonable rate of return, to ensure the survival and growth of the company, to
build the company’s reputation and develop its goodwill, to provide
transparency and remain accountable;
4) responsibility towards employees – provide healthy
working environment, to grant fair wages on regular basement, to provide
welfare services, to provide training and promotion options, to provide good
working standards and norms, to recognize and grant efficiency and hard work;
5) responsibility towards consumers – supply socially
harmless products, to supply quality product which responds to standards and is
as was promised, to conduct fair pricing, to provide after sale service, to
resist black-marketing and profiteering, to adhere to fair competition.
Such one-way and limited approach has brought to life formal CSR companies’
activities. That is way in order to benefit from such situation international
organizations (for companies looking for a formal approach to CSR, especially
large companies) provide solid guidance
by means of global framework for CSR which consists at least of: Updated OECD
Guidelines for Multinational Enterprises (OECD, 2011); Ten principles of the United Nations Global Compact (United Nations Global Compact, 2013); ISO 26000 Guidance Standard
on Social Responsibility (ECOLOGIA, 2011); ILO Tri-partite Declaration of Principles Concerning Multinational
Enterprises and Social Policy
(ILO, 2006); United Nations Guiding Principles on Business and Human Rights
(European Commission, 2011).
However, the European CSR
implementation experience demonstrates that companies refuse to use
formal CSR approach but implement essential dimensions which can be described
through external and internal extend
and lead to shared value creation.
Internal extend is about company itself: 1) socially responsible practice is about human capital,
health and safety investment that is employees related; 2) environmentally
responsible practices regards mostly to the management of natural resources
involved in the production process. Both of these areas are zones where company’s competitiveness can
be increased.
CSR extends far beyond the internal companies
processes and has strong influence on and is influenced by a wide range of external interested parties, such as:
company's business partners, suppliers, customers, public authorities and NGOs
which are representing local communities act. In a world of transnational
capital and global supply chains, CSR inevitable extends beyond the borders one
company and one country thus generating the
CSR external dimension.
Companies contribute to local communities both
positively (by providing jobs, wages, benefits, and tax revenues) and
negatively (business can also be responsible for polluting activities: noise,
light, water pollution, air emissions, contamination of soil, and the
environmental problems associated with transport and waste disposal). On the
other hand companies depend on the health, stability, and prosperity of the
communities in which they operate. Thus such interdependence make companies
work for their image and build good relationships with local communities. Many
foreign companies decide to interact with local community by means of CSR
policy through providing extra training for local workforce, hiring socially
excluded people, providing child-care programs for their employees, sponsoring
local sports and cultural events, active environmental charity and
donations.
Large companies are at the same time business partners of the smaller
ones: they are their customers, suppliers, subcontractors or competitors.
Companies should be aware that their social performance can be affected by the
practices of their partners and suppliers throughout the whole supply chain.
The effect of CSR activities will not remain limited to the company itself, but
will also touch upon their economic partners. Some large companies demonstrate
CSR by promoting entrepreneurial initiatives in the region of their location
(mentoring schemes, development of new innovative enterprises, ect.)
Thus such multilateral
cooperation which is based on the win-win principle is much more profitable
both for business and society.
References:
1. A 10-year framework of
programmes on sustainable consumption and production patterns. Outcome of the United Nations
Conference on Sustainable Development [Electronic resource] / United Nations. – Rio de Janeiro. – 2012. –
Mode of access: http://www.unep.org/rio20/portals/24180/Docs/a-conf.216-5_english.pdf
4. Guidelines for
Multinational Enterprises [Electronic resource] / OECD Publishing. –
Paris. – 2011. – 95 p. – Mode of access:
http://www.oecd.org/daf/inv/mne/48004323.pdf
5. Handbook for Implementers of ISO 26000. Global
Guidance Standard on Social Responsibility [Electronic resource] / ECOLOGIA.
– 2011. – 35 p. – Mode of
access: http://www.ecologia.org/isosr/ISO26000Handbook.pdf