Corporate Responsibility and Sustainability Discussion
Description
SCENARIO
You have been hired as VP of Operations and part of the executive team of a U.S. based company. Due to conventional thinking, the shareholders of the organization feel the focus on promoting environmental efforts and increasing employee benefits may have a negative impact on profitability. Given that you have successfully implemented a corporate social responsibility plan for a global organization in your previous role, you are asked by the Board of Directors to create an executive summary that outlines and analyzes how additional investment in the workforce and the environment can increase the organization’s profits.
CONVENTIONAL THINKING WOULD BELIEVE ORGANIZATIONS THAT PROVIDE ADDITIONAL BENEFITS TO THEIR EMPLOYEES AND PAY HIGHER WAGES THAN THE INDUSTRY STANDARD IS FOCUSED ON EMPLOYEES TO THE DETRIMENT OF THEIR SHAREHOLDERS. FOR LEADERS OF ORGANIZATIONS PRIMARILY FOCUSED ON PROFITS AND THE BOTTOM LINE, CORPORATE SOCIAL RESPONSIBILITY (CSR) IS NOT A PRIORITY. ORGANIZATIONS THAT PRACTICE CORPORATE SOCIAL RESPONSIBILITY, INTEGRATE THE SOCIAL, ENVIRONMENTAL, AND FINANCIAL ASPECTS OF THE BUSINESS, MORE COMMONLY REFERRED TO AS THE TRIPLE BOTTOM LINE. IF LEADERS CONTINUE TO FOCUS MAINLY ON THE FINANCIAL HEALTH ASPECT OF THE TRIPLE BOTTOM LINE, THEY WILL CONTINUE TO STEAL FROM OUR FUTURE – OUR CHILDREN AND GRANDCHILDREN – FOR MONETARY PROFITS (HAWKEN, 2007). THE IMPACT OF CORPORATIONS NOT COMMITTED TO CSR IS SUBSTANTIAL. THEY DO NOT CONTRIBUTE TO ECONOMIC GROWTH, QUALITY OF LIFE FOR ITS WORKFORCE AND FAMILIES, OR IMPROVE THE QUALITY OF THE LOCAL COMMUNITIES. LEADERS OF THESE ORGANIZATIONS MUST UNDERSTAND THAT CORPORATE SOCIAL RESPONSIBILITY HAS A SIGNIFICANT IMPACT ON CORPORATE REPUTATION AND MUST BALANCE PROFIT-MAKING WITH SOCIALLY RESPONSIBLE DECISIONS.THE PEOPLE COMPONENT OF THE TBL CONSIDERS EMPLOYEES, THE LABOR INVOLVED IN THE ORGANIZATION’S WORK, AND THE COMMUNITY WHERE A CORPORATION DOES BUSINESS. ORGANIZATIONS THAT ARE CONCERNED WITH THE TBL PAY FAIR WAGES AND TAKE STEPS TO ENSURE GOOD WORKING CONDITIONS, FOR EXAMPLE. THESE COMPANIES ALSO MAKE AN EFFORT TO GIVE BACK TO THE COMMUNITY.THE PLANET PART OF THE TBL MEANS THAT THE ORGANIZATION TRIES TO REDUCE ITS ECOLOGICAL FOOTPRINT AS MUCH AS POSSIBLE. THESE EFFORTS MIGHT INCLUDE REDUCING WASTE, INVESTING IN RENEWABLE ENERGY, MANAGING NATURAL RESOURCES MORE EFFICIENTLY, AND IMPROVING LOGISTICS.\
Every business pursues financial profitability, however, the TBL business sees this as just one part of the business plan. Sustainable organizations recognize that profit doesn’t have to be separate or conflicting with people or planet.To enhance their reputation and public perception, corporate social responsibility has transformed how organizations report on ethical and responsible behavior. Leaders now realize that corporate social responsibility must be a core part of their organization to remain sustainable (Edmans, 2012). Socially responsible leaders need to be instrumental in assisting businesses in appreciating how the triple bottom line can be an indicator of long-term sustainability. Additionally, socially conscious leaders have a moral responsibility to recognize and adhere to the expectations of societal ethics by going beyond established regulations (Carroll, 1991). With corporate social responsibility, organizations have discovered when companies treat their employees better they perform better, resulting in increased profits.Measuring operational success using the triple bottom line is a key indicator of an organization’s sustainability. This model takes into consideration that organizations using fewer natural resources will ultimately become more successful. Lovins, Lovins, and Hawken (2007) offered a new approach for environmental sustainability that can also contribute to improving profits. Using advanced techniques to maximize resources, both shareholders and future generations can receive benefits from an approach identified as natural capitalism. Transitioning to natural capitalism requires four key modifications in business practices:Maximize the output of natural resources: Changes in technology and manufacturing processes can reduce energy, water, and other natural resource waste.Shifting to sustainable operational models: Closed-loop supply chain systems allow for raw materials to be returned to the ecosystem or reused for other products.Convert to a solutions-based business model: A shift to providing services to repair or replace worn parts versus replacing an entire finished good can reduce overall product and process costs.Reinvest in natural capital: Replenish natural resources by participating in activities, such as planting trees, to counterbalance carbon emissions to protect the earth’s biosphere.As business partners of global firms continue to question whether their supply chains and production facilities are sustainable and safe, these companies have vowed to become environmentally sustainable (De Soete, 2016). By integrating sustainable operations, processes, and information through knowledge-sharing within an organization, leaders could have a positive effect on social change by fostering employee collaboration, innovation, and empowerment (De Soete, 2016). To document their efforts, these companies are working with Enterprise Resource Planning (ERP) providers to modify their current applications to create modules to track their information. To develop a tool to track sustainable processes, researchers have begun to call these new applications Sustainable Enterprise Resource Planning (S-ERP) applications (Goldston, 2019). While decision-makers within firms can utilize existing technology using the tools and information they currently have at their disposal, the following elements could be identified regarding the implementation of S-ERP applications:Data management in organizationsData penetrations through ERP systems consistency in data loggingSupply chain transparencySupply chain reliabilityThe language (and education) issueWhile leaders of organizations speak to operational, environmental, and financial concepts from a theoretical perspective, these leaders could move toward advanced sustainable technology to put these theories into practice.
for today’s leaders looking to transition to an environment focused on the triple bottom line, it is an unfortunate reality that they can spend much of their time managing resistance from internal and external stakeholders. Because leaders do not identify the rewards that will be attained when outlining the goals and objectives of the corporate social responsibility initiative, the presumed risks overshadow the rewards. Industry analysts and researchers define resistance to change as an insistence that the status quo remains and that there is no need to change it (Murrar & Brauer, 2019). Some stakeholders resist change because they associate any change to risk. In conducting change management initiatives for small, medium, and large enterprises around the globe, Goldston (2019) identified risk management strategies when implementing enterprise-wide corporate social responsibility initiatives:Treat ongoing project iterations as an opportunity for learning and foster an organizational culture that supports it.Be open to discussion and reflection and don’t be afraid to alter the strategic direction during the initiative.Repurpose technological and organizational-based learning from past experiences.Treat sub-projects as part of an on-going program that promotes continuous improvement.Allocate at least 50 percent of the budget of the project to organizational aspects of the change, such as developing new processes, roles, routines, communication, education, and training.Put change management on top of the executive agenda and develop tools, roles, methods, and skills for its execution.Make sure that the leaders that act as change agents and transformation managers excel at listening and communication.Researching the risks of not implementing a corporate social responsibility program, a study by Cone Communications and Echo Research of 10,000 global consumers found that 91 percent of shoppers worldwide will likely switch to brands that support a social or environmental cause (Turney, 2016). Additionally, another study found that 90 percent of shoppers would boycott a company based on moral or irresponsible business practices (Jaibur, 2016). In identifying the rewards to implementing a CSR program, Karla Jo Helms, CEO of JoTo Public Relations discussed the rewards of implementing CSR company-wide by stating “positive publicity and will increase the overall success of any CSR being performed simply by creating better word of mouth and getting the news out to the media and ultimately to the public. By leveraging your CSR efforts with a proactive public relations strategy, the public eye will take notice of the work your company is doing, which studies show heavily influences buying decisions” (Jaibur, 2016).Although it is important to identify the risks and mitigation strategies for a project, it is more imperative to communicate and demonstrate the rewards that internal and external stakeholders will receive with this project. To validate this initiative, during the interactions with organizations and consultants that have successfully implemented corporate social responsibility programs, leaders should inquire about how long it took to achieve strategic, operational, and tactical goals, as well as any additional rewards attained. With this information, organizations embarking on a CSR project can create an infographic to provide a quick visual as to the benefits of implementing a corporate social responsibility strategy. Additionally, published interviews and white papers created by these business partners and consultants are valuable to add to an organization’s communication plan to demonstrate the value of a CSR adoption from a third-party source. Once the future-state visioning has been established, leaders should work with their project team to develop mini or sub-projects that can be implemented as inputs into the full-scale CSR roll-out. In adopting this agile-style approach, organizations will experience small wins that not only empower internal and external stakeholders to continue with this initiative, but these stakeholders will also experience the positive impacts these small changes have on individuals of the organization, the community, and around the world.Organizations that make sustainability part of the mission are making a commitment that sustainability be an integral part of their everyday operations. Their decisions, partnerships and supply chains are all strategically created to improve and increase sustainability.Reduce wasteOrganizations can find ways to reduce waste by automating processes or by using technology. They can also create programs that encourages reusing items or increasing recycling efforts.One big way to improve sustainability is to look for ways to improve supply chains and reduce the ecological footprint in that supply chain.Sustainability doesn’t stop at the door. Organizations can engage employees to look for ways to increase sustainability in the organization but can also create programs that encourage employees to be more “green” outside of the office. For example, bank of America will pay $500 towards an employee’s solar panel installation.Set specific and transparent goals for your sustainability efforts and track and measure to those goals. You can’t improve what you don’t measure. In addition, organizations can seek out certifications for their sustainability efforts and make that a big goal and vision for the organization.
Kaptein and Wempe (2001) identified ethics as the foundation for sustainability and creates the vision in incorporating the three pillars of the triple bottom line – people, planet, and profit. The shift in stakeholder focus on the triple bottom line has transformed how organizations report on ethical and responsible behavior. Due to this requirement, leaders have increased their financial and nonfinancial commitments to their corporate social responsibility initiatives to meet stakeholder expectations, which also enhances the organization’s reputation and public perception. Carroll (1991) stated the triple bottom line recognizes three concepts, including economic and legal obligations, along with ethical and discretionary responsibilities. Carroll also offered three ethical leadership approaches – immoral, amoral, and moral. While immoral leaders demonstrate actions that oppose correct and appropriate behavior, the amoral leadership approach reflects a neutral style that may not realize the unintended consequences of business decisions. Moral leaders employ a high model of professional behavior and balance profits with legal and ethical approaches.Beyond regulatory requirements, environmental initiatives must make business sense in addition to environmental sense. While the environmental aspect is certainly one facet of the triple bottom line, the concept of sustainability has grown since the 1990s when many researchers recognized that businesses needed to find ways to act as responsible environmental stewards, while also maintaining a path to economic growth (Vadlamannati, 2015). Given the sharp rise in energy and commodity prices, environmental initiatives to reduce energy, water, and waste have made business sense. In one example, Coca Cola has committed to key areas of ethical sustainability, including reducing emissions, water use and stewardship, ingredient sourcing, and empowering their people and communities. On the organization’s website, Coca Cola (2018) specifically identified the following sustainable initiatives:Increasing energy-efficient refrigerators to 50% of its coolers in the marketSourcing 100% of the total electricity used in European Union countries & Switzerland from renewable and clean energyHelping secure water availability for all its communities in water risk areasHelping collect the equivalent of 75% of primary packagingEnsuring 50% of manager positions are held by womenTraining 1 million young people through the #YouthEmpowered programWhen evaluating Coca Cola’s social, environmental, and economic sustainability processes, the organization validates its ethical practices through an annual Business and Sustainability Report. Within the organization’s most recent report, Coca Cola plans to use 25% less packaging per liter of beverage produced, a 30% reduction in water across all operations, and a 10% reduction in added sugar per 100ml of sparkling beverages by the end of 2020.Any company that is not trying to minimize or eliminate a waste stream in its operations through investment in advanced technologies or recycling is missing a significant opportunity to save costs as well as reducing impacts to the environment. Increased consumer scrutiny on environmental stewardship issues has led many companies to use their green initiatives as selling points, which can increase revenues (Hassini, Surti, & Searcy, 2012). Given the power of social media, negative repercussions from neglecting the environment or human health and safety matters can affect the company’s reputation overnight, if not faster. This visibility extends to the external supply chain as well, given buyers and suppliers are uniquely connected. Rammohan (2009) explained that damage to the corporate image from environmental and human health and safety incidents could quickly cause damage to the corporate bottom line.While some leaders continue to believe that their organization cannot maintain a profit while participating in sustainable practices, other organizations have implemented environmentally friendly processes, creating a competitive advantage (Lovins, Lovins, & Hawken, 2007). With studies uncovering the benefits of sustainable practices, major concerns have been raised by environmentalists centered around the topic of greenwashing. Identified as a practice where organizations provide a false impression regarding how the company’s products and processes are environmentally sustainable, consumers have requested a certification program to mitigate the risk of organizations participating in unethical practices. Although countries have mandated environmental regulations, until governmental leaders around the world develop a global alliance to standardize and mandate sustainable practices, some organizations around the world will continue to create a negative impact on the environment through air emissions, wastewater, and land pollution.
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