Corporate Social Responsibility
American President Calvin Coolidge said in the 1920s that "the chief business of the American people is business.” It was a popular observation in a time of economic prosperity when issues such as energy security and climate change were practically nonexistent.
Almost a century later, things are very different. Now more than ever, private enterprise is being called upon to exercise social responsibility, especially when it comes to the environment. In March 2008, America.gov goes in depth to explore the greening of American business, and what that means for citizens, innovation, and profit margins. Today, we discuss corporate social responsibility.
President Coolidge, like many American presidents before and since, kept government out of the affairs of business as much as possible. But starting in the 1960s and 1970s, the environmental impact of an ever expanding economy was generating more and more protest from citizens. The result was a wave of legislation designed to reduce the pollution produced by business activity. Those laws had positive effects and are now vital parts of the American regulatory framework. But despite these regulations, controlling pollution continues to be a challenge. And now there are even larger problems on the horizon.
Even though businesses today are more efficient and use fewer resources to make goods thanks to technological advances, many ecosystems continue to suffer. This is because the scale of economic activity grows every year, despite environmental improvements by individual enterprises.
Starting a few years ago, many citizens in the U.S. and around the world began calls for more action from private enterprise on these social issues, beyond compliance with regulations and traditional charity-related work. The result was a new movement known as Corporate Social Responsibility, or CSR. Next, we look at the arguments behind this controversial concept.
From the beginning, CSR has been the subject of much debate. CSR’s critics argue that the main responsibility of businesses is to maximize return to their shareholders. They point to the corporate legal system as the proper place for regulating businesses’ conduct with society. And besides, businesses are already fulfilling a key public service by providing jobs and services that society needs.
Supporters of CSR contend that there are significant profit-related benefits in socially responsibile behavior. Companies are using their CSR activities to recruit and keep the best management talent and to establish partnerships with communities to increase company influence on legislation. And, companies that make social responsibility an integrated part of their business actually are managing risk, a key part of corporate development strategy.
Despite the ongoing debate, trends indicate that CSR is gathering force and is here to stay. More and more leading companies in America and worldwide are releasing sustainability reports. Plus, new industries, like clean energy, provide social and economic benefits while fighting environmental problems like climate change. The result of that combination has been called one of the greatest commercial opportunities in history. How CSR is defined and practiced differs for each enterprise. But for all those companies, the view seems to be that CSR programs are a good investment.
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