The recent trend towards regulation of business activities has highlighted the fact that if governments and policy makers identify failures in self-regulation, they are more than willing to step in and regulate business behaviour (Lynch-Wood et al, 2009). Legislation changes and compliance requirements are both restrictive and costly to organisations. If organisations fail to go above and beyond the current compliance requirements, they risk more being imposed on their activities (Bênabou and Tirole, 2010).
These risks all have the potential to significantly impact an organisations profitability and in extreme cases, long-term survival. These considerations also should be cause enough for businesses to reconsider their default position on CSR initiatives. Whatever the short-comings of the CSR movement, and the ideologically motivated debates about definition, society and the global economy are radically changed. Being socially responsible is now the only way to do business.
Corporate Social Responsibility is a sound business concept, but long fought debates around its definition have reduced the impact that it may have had on the business community. The fact remains that even if organisations conduct themselves in a socially responsible manner, there is some level of profit-motivated self-interest underpinning these decisions. The greatest headway in moving (forcing?) organisations to be more socially responsible has been societal and environmental changes external to the firm. Global industry and populations have led to the degradation of raw materials and fossil fuels which has made it necessary for many industries to reconsider how they do business. Sustainable development has become core to business operations in most sectors and is now more a case of good business practice than falling under the CSR banner. Society has also seen the impact that business has on their natural environment and communities in general, and is now willing and capable of calling organisations into account for irresponsible, unethical behaviour. In summary, forces external to the organisation have had a greater influence in moving organisations towards the CSR ideal than the CSR movement itself. Regardless of how more socially responsible business practices are achieved, the change is positive and widespread. Substantial risk still remains for those businesses who do not adopt CSR practices. The implications include reputational risk, the inability to attract and retain staff and the possibility of increased regulation. Failing to embrace CSR also has the potential to impact the long-term suitability of an organisation, reducing access to capital, missing opportunities for growth and the failure to differentiate your brand from the rest of the pack. The conclusion being that being socially responsible is no longer optional, it is simply the way good business is done.
References
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Bênabou, R. and Tirole, J. (2010), Individual and Corporate Social Responsibility. Economica, 77: 1–19.
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Blowfield, M. and Murray, A. (2008), Corporate Responsibility: a critical introduction, OUP.
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Fitzgerald, N. and Cormack, M. (2011), The Role of Business in Society. An Agenda for Action, Joint Initiative by the Conference Board, Harvard University CSR Initiative and the International Business Leaders Forum on behalf of the
