Corporate Social Responsibility Part II

Ethics comes from the Greek word ethos, which means custom or habit; as such it is based on the management of the environment. Over time values has become the practice and builds on the sustainable and equitable treatment of societies and may evolve. Professional accounting institutes, as well as other professional institutes, have codified codes of expected behaviour and conduct for their members. Organizations have a responsibility to act responsibly to society as a whole.
Self-regulation within industry builds upon a firm foundation of ethical analysis.

Corporate Social Responsibility (CSR) is an important strategic tool for an organisation that needs to operate within an ethical framework. The complexity of the ethical framework is that it does firmly dictate right or wrong courses of action. The reach of ethics extends beyond CSR, law, and governance. An ethical oversight can be a catalyst for control into grey areas that may not be covered by national legislation.

In considering CSR activities, the potential harm to the community and society as a whole. If CSR activities are funded by actions that are considered as unethical, the CSR undertaken should raise questions including if more harm is being generated. The underlying ethics should play a pivotal role in determining the course of action that is taken. Ethics superimposes upon governance, law, and CSR. If undertaken with due diligence CSR can strategically benefit an organisation. Ethics should not be reactive rather it should focus on promoting transparency and governance.


As part of the justification for CSR, proponents have noted an organisation's moral obligation to society. The moral dilemma in considering alternatives needs to balance social responsibility with the overall objective of an organisation. Such a balance will need to consider longer-term social and environmental consequences of their actions. While corporations are not responsible for many of societal problems, it can identify a set of issues that it can address based on the internal expertise that it has within the company. Organizations with well thought out CSR will be able to harness the knowledge that it and combine it with suppliers and vendors where applicable so that it can have the greatest impact on society. The base of CSR is not merely making a financial contribution to a social cause, but contributing knowledge and expertise.

In determining which causes to support an organisation can consider general social issues, causes that impact an organisation's course of business, and lines of a competitive nature. The social problems will fall into different categories based on the industry of the organisation and may involve collaboration with other organisations within the industry. Exercising good corporate citizenship can enhance its overall goodwill.

Consumers increasingly want assurance that products ethically soured including fair treatment of workers as well as respect for natural resources. In such cases, the term ‘responsible consumerism' may be more appropriate than the use of ‘ethical consumerism'. The use of time responsibility solidifies expectations of ethics in society not necessarily in statutory laws or community codes of conduct.

Ethical failures could be the result of lack of transparency. The Board of Directors is responsible for the moral actions of the organisation, and moral values may be beyond the codified law. Increasingly organisations will need to identify the challenges and obstacles that faced; as a result, organisations action might be due to the lack of clear and unambiguous information. As well an institution's strategic goal or vested interest may make analysing a situation without bias difficult.

Some organisations have taken to understand better outcomes of their activities including examining and learning from previous mistakes. Organizations may consider the use outside consultants to undertake an ethics assessment and determine vulnerabilities that may exist. The extension of social responsibility as part of the ethical framework but is not defined as it extends beyond codified laws and statutes.

Additional effort will be required to ensure that the moral dilemma an organisation faces can be managed as it builds upon the strategic value of long-term connections with customers, employees, vendors, and distributors. An organisation can build upon the strategic value of its corporate responsibility by building upon cooperation that may also extend to its competitors. A CSR that considers the ethical dilemma can strategically be beneficial to an organisation in the long term.
 
 




About the author:
Hanif Shamji, MBA, CPA, CGA is a Finance Business Partner / Sr. Financial Analyst with an information technology background, experienced in several industries.

Tags: Corporate Social Responsibility

blog comments powered by Disqus