Corporate Social Responsibility

Corporate social responsibility (CSR) refers to open and accountable business actions based on respect for people, community/society and the broader environment. It involves businesses doing more than just complying with the laws and regulations.

Triple bottom line - refers to the financial profitability, social impact and the environmental impact of a business.

Corporate social responsibility and operations management

Corporate social responsibility (CSR) is a key concern in operations management for contemporary businesses. Operations management involves processes of transformation that draw from a range of inputs to make financial products. 

The principles of CSR require a business to manage the effects of its activities on society/community and the environment, such that negative impacts are minimised. This requires that a business understand where and how its inputs are sourced so that it only draws from suppliers that adhere to appropriate standards. 

It also requires that a business shapes its processes in such a way as to minimise environmental damage and waste. The operations process can further integrate principles of CSR through managers ensuring recruitment practices draw from a diverse range of employees and are inclusive of people from all backgrounds.

The difference between legal compliance and ethical responsibility

Complying with legislation costs a business money, which, as was previously explained, is referred to as compliance costs. To go further than the requirements of legislation is even more expensive for businesses. In demonstrating ethical responsibility, a business is demonstrating that it values something more than just earning maximum profits because it is allocating money over and above what it costs to comply with the law.

Legal compliance and business operations

•  Labour law compliance, such as minimum wages, award wages, working hours, breaks, pay for various forms of leave, other on-costs associated with labour, workers compensation and WHS laws

•  Environmental and public health compliance, such as regulations stopping dumping, pollution (air, land and water), requiring certain standards of operating and of waste disposal

•  Business licensing rules, such as those requiring particular levels of training or certification and those placing conditions on operations (such as restricted working hours, zoning restrictions, and content and disclosure restrictions)

•  Taxation, such as levies and duties as well as taxes imposed on profits. Superannuation can be considered a form of taxation that is invested for retirement purposes. Taxation can be applied in such a way as to encourage particular practices or penalise particular activities

•  Trade practices and fair market dealings, which address issues of market power, misleading and unfair conduct, price collusion, monopoly behaviour, market concentration (competition) and product safety

•  Migration and rules around the use of offshore skilled labour, which aim to ensure minimum standards are applied to labour brought in from other nations.

•  Intellectual property, which addresses issues related to moral rights such as copyright, patents, trademarks, designs and other original ideas and artistic works

• • Outsourcing, compliance and business behaviour - Lower taxation rates, lower standards of labour, weaker environmental and intellectual property regulations all enable businesses to reduce their compliance costs.

    • Onshore outsourcing involves the use of domestic businesses as the outsourcing provider.

    • Offshore outsourcing involves taking the activities to a provider in another country.

  • Ethical responsibility  involves businesses going beyond the law and taking into account broader social, community and environmental concerns.

The main international body that discusses the workplace and sets guidelines and rules for work is the International Labour Organization (ILO). 

The International Labour Organization (ILO) is devoted to promoting social justice and internationally recognised human and labour rights, pursuing its founding mission that social justice is essential to universal and lasting peace. 

The ILO brings together governments, employers and workers representatives of 187 member states to set labour standards, develop policies and devise programmes promoting decent work for all women and men. Today, the ILO’s Decent Work Agenda helps advance the economic and working conditions that give all workers, employers and governments a stake in lasting peace, prosperity and progress.

Environmental sustainability and social responsibility

Responsible business owners (and, increasingly, government  legislation) has led them to adopt policies of conservation, recycling and restoration. 

The principle of ecological sustainability requires businesses to evaluate the full environmental effects of their operations. Additionally, the growing consumer expectation that products should be ‘clean, green and safe’ is changing management practices in a number of Australian businesses. By producing new and better products in an ecologically sustainable manner, the business focus coincides with stakeholder expectations.In response to concerns about climate change, the community increasingly expects businesses to:

•  adopt greenhouse abatement (reduction) measures

•  encourage the development of long-term sustainable strategies.

Examples 

https://www.blackmores.com.au/about-us/company-information/corporate-social-responsibility

https://corporate.aldi.com.au/en/corporate-responsibility/ 

https://www.tiffany.com.au/sustainability

https://www.lego.com/en-sg/aboutus/news-room/2017/september/lego-group-csr-reptrak100 

https://investor.apple.com/esg/default.aspx 

https://www.patagonia.com.au/pages/activism 

2012

21 (a) How might a business benefit when an operations manager acts in an ethically and socially responsible manner? Support your answer with relevant examples 4 marks

(b) Why might a business be resistant to meeting its corporate social responsibilities? 4 marks