Corporate social responsibility, sometime referred as corporate citizenship, is corporate initiatives, which company takes as a responsibility for its effect on the environment and social welfare. These initiatives go beyond the laws imposed by regulators and other environmental groups.
Hasan views CSR as a story of progressive business that goes beyond the bars set by regulatory bodies and its responsiveness goes beyond responsibility. Many of the gurus have a different view about the origin of corporate social responsibility, where Richard identifies its roots in 1920s, Ray view it to be 70 years old etc. One can say that it originated in 21st century and became an important aspect of business (Hasanov, 2011).
Generally as per the CSR, ISO 26000 figured out seven core objectives that are part of most of definitions of CSR. Objectives can further be added; however all can be divided into five different dimensions. These dimensions can be:
- The environmental dimension
- The social dimension
- The economic dimension
- The stakeholder dimension
- The Voluntariness dimension
Each of these dimensions represents an organizational responsibility to consider these dimensions before making a business decision. The business decision should not be affecting any of these dimensions to be called a social responsible organization. Addition to the business decision, the corporate strategies should also be in conformity to be responsible organization.
Malwarwick identifies three different paths for an organization to be socially responsible. If a Van diagram is drawn these are interlinked to each other. These include, the companies should provide the products and services that are intended to improve the quality of like and the communities.
Moreover, despite an organizational objective of earning profit, it should invest a portion of the Profits on the development of communities and social welfare. This is an important aspect of the organization to earn a good reputation amongst its competitors and it can also serve a marketing tool and part of PR campaign. The third step that Malwarwick adds on to the second step and marketing opportunities and argues that in today’s world companies are differentiated, by the way, the operate. If the company will be more social responsible, it has a good chance of winning over its competitors. Japanese firms are renowned for being social responsible and environmental friendly practices (Broomhill, 2007).
As per the Future of CSR, many gurus are very optimistic about the increasing role of CSR with time. Sebastian Barth argues that the CSR will be the next big thing within the business practices. He second Malwarwick’s opinion that there is a probability of imposing CSR on the organization through governmental laws and regulations. Moreover, Caro suggests that it will be long term aspect of organizational development because, with change of time, consumers are becoming aware and their attitudes are shifting from just advertisements. They will consider the organizational steps towards human betterment and welfare. The other optimists present view that the majority of companies will be slanted towards social welfare organizations and this attitude will highly affect their profitability and sustainability (Barth, 2003).
CSR in Financial Service and the effect of financial crisis on CSR:
Damon argues that the increase in cost due to global financial crisis, that include direct cost for supporting this system, increase in governmental debt and loss of output has put everyone’s attention and question on the merits of the financial sector and how it operates.
Many of the researchers like, Damon, Christian, and Kostyuk etc. commented upon the corporate social responsibility on the banking sector and presented a view that these sectors lack these practices. Kostyuk argues that banking and other financial sectors act as a backbone for a country’s economy. He says that Banks typically work with the money borrowed, and as a result, they are not self regulating organizations, so this sector needs to be subject to controlled by the regulatory authorities. This regulation will ensure more stability. Damon adds onto the thoughts of Kostyuk, and argues that the financial services are in more use than before. These are dealing with helping people getting houses, education, investments for retirements and debacle in this sector can greatly impact the community or even a country as a whole. The regulation of this industry has become an important and a greater concern.
The economist Pakistan has presented the same view about the industrial sector in Pakistan and said that it's being ruled by the greedy people. Moreover, it says that this institution is being hijacked by lesser vision-ists and very few selfish people. Senior Banker Muhammad Zubair, President Micro Finance Forum says that, as a part of corporate social responsibility, national priorities should be diverting funds towards development of the nation that includes environment, housing education, infrastructure etc (Economistpakistan, 2013).
Many times the financial structure of US is considered to be ideal and taken as a benchmark for many. If one analyzes their structure, a big part of their philanthropic investment is based on the development of community. The environment and the health investments are considered to be the second major investments. The educational development also receives a major part of the pie. On the other side of it, the development of culture and art is given less preference within these social or philanthropic investments (Herzig and Moon, 2011).
Figure: Philanthropic investments of banks in 2011 and their place in the whole CSR system of USA
Jeremy presents view that the banking sector was least responsive to change, a change from profit driven to socially responsible organization. Addition to that, this sector has many negative environmental impacts. This sector is generally considered being non pollutant; although, it turned into a giant and with that size and reach it can have a significant impact on the environment. Jeremy agreed with Demon and Christian and says that this sector has always been conspicuous with its sluggishness in adapting to CSR practices (Kostyuk, 2011).
Demon through his research point some of reason for the lack of adaptability of CSR practices by baking sector. He points out the lapses in CSR reporting framework. Addition to that he pin points lack of transparency and industry being governed by influential people (Gibbons, 2011). This sector has a long way to move ahead and make certain changes be socially responsible.
Barth, S. (2003) 'The Current and Future Trends of of Corporate Social Responsibility ', Cass Business School
, pp. 5-15.
Broomhill, R. (2007) 'Corporate Social Responsibility: Key Issues and Debates', Dunstan Paper
, pp. 6-14.
Economistpakistan (2013) Banking Sector Negleciting the Norms of Corporate Social Responsibility in Pkaistan
, [Online], Available: http://www.economistpakistan.com/Page-Detail.php?id=830
[18 February 2013].
Gibbons, D. (2011) 'Held to Account: A review of Corporate Social Responsibility in Retail Banking from the Consumer Perspective', CFRC
, February, pp. 10-25.
Hasanov, H. (2011) 'The Defination of CSR In 21st Century', Cass Business School
, August, pp. 1-20.
Herzig, C. and Moon, J. (2011) ' The Financial Sector and Corporate Social Resposibility', International Centre for Corporate Social Responsibility
, pp. 1-10.
Kostyuk, .A.N. (2011) 'Corporate Social Resposibility in Banks: An International Overview', Ukrainian Academy of Banking of the National Bank of Ukraine
, pp. 1-20.