Essay on Evolution of CSR and New Trends

Since Milton Friedman conceptualized corporations social responsibility as maximizing profits, the concept of corporate social responsibility (CSR) has evolved significantly. According to Friedman, profit maximization is the primary obligation of any business. This notion regarding CSR has witnessed a marked shift. Today, CSR is no longer in the companys core business. On the contrary, it has become one of the most vital pillars of any firms sustainable business strategy. As CSR continues to occupy a central position in determining the performance of enterprises, both now and in the future, new trends in its domains have emerged, drawing notable attention to how companies are achieving their social and economic objectives using the new paradigms.

Evolution of CSR

In the most part of the 20th century, there was a widespread perception that companies had only one social responsibility: make as much profit as possible. The provision of public services and community building activities were treated as the responsibility of the government. In corporate circles, paying taxes to the government was viewed as indirectly contributing to the ability of the government to spend on welfare, and improve the societys well-being. Hence, active participation in CSR activities was deemed as a double-burden and seen as detrimental to the well-being and the future of the firm. Funds spend on CSR initiatives were seen as direct cuts to company profits.

Today, CSR is no longer seen as a detriment to the well-being of a company, but as a source of competitive advantage. Businesses that allocate a significant size of their revenues to CSR activities are seen as better and responsible social citizens. Considering this view, CSR has been known to have positive effects on customer loyalty and employee loyalty. In the present day of fierce market competition, securing customers loyalty and maintaining top-notch employees top the list of companies goals. Perspectives on spending funds on CSR activities are now seen as a way of widening and safeguarding profit margins. Another notable way in which CSR has changed is shifting focus from the financial health of shareholders to the well-being of stakeholders.

New Trends in CSR

Creating shared value (CSV) is one of the most pronounced and the fastest spreading emergent trends in the CSR field. By definition, shared value refers to the combination of policies and practices that improve a companys competitiveness while at the same time bettering the social and economic conditions in the society it operates (Baumann-Pauly 2013). The idea of share value is based on the belief that the wellbeing a company is intrinsically linked to the well-being of the society it operates in. If a company achieves its set economic goals as the society becomes poorer, the company will not have a market to sell to in the future. In reaction to this perspective, firms are enhancing the quality of life of the society and the community to protect their financial health in the future. Nestle, the worlds leading nutrition, health, and wellness company, provides a classic example of how firms are implementing CSV.

Nestles CSV has three main ways of delivering long-term positive impact to shareholders and society. First, the corporation is committed to helping over 50 million children lead healthier lives. By 2016, Nestle had renovated 8856 products in response to nutrition and health considerations. This move aimed at reducing the prevalence of lifestyle diseases such as obesity, depression, and cardiovascular diseases among others. Secondly, the company aims at improving 30 million livelihoods through rural development programs. Thirdly, Nestle seeks to achieve the zero-environmental impact target in all its operations.

Conscious capitalism is the other fast-growing trend in the CSR literature. This philosophy contends that there is more to business that maximizing profits: purpose. According to this school of thought, making profits is not the primary objective of any business. Rather, profits enable a business to achieve its purpose for existence. Conscious capitalism is made up of four main pillars: (1) conscious leadership; (2) stakeholder orientation; (3) purpose; and (4) culture. In terms of shareholders orientation, conscious business is not only concerned with maximizing investment returns for their stakeholders, but are focused on the whole ecosystem, including customers, employees, suppliers, funders, and communities.

Whole Foods Market (WFM) is probably the largest company using the conscious capitalism ideology. Its CEO, John Mackey, once commented that: While making money is essential for the vitality and sustainability of business, it is not the only or even the most important reason, a business exists. Conscious businesses focus on their purpose beyond profit (Lewis 2014, n.p) WFM is known for offering very low prices in lower-income areas. Ideally, the companys focus is to help people, even those with low standards of living, enjoy better foods. While conscious capitalism is a good idea, caution must be applied rest companies practicing the principle lack funds to deal with economic meltdowns and market cannibalism.

Social business is still another pronounced trend in CSR. Ideally, social business refers to the ability of a company to use its communities to enhance its performance. For example, an organization identifies of tapping the most from employees without violating moral and ethical codes. As such, the company considers and meets the employees social needs as a strategy to motivate them to achieve the companys commercial needs. The London Early Years Foundation is an example of organizations practicing the social business principle. The organization functions as a business, but is main aim is to impact lives.

Each of the companies mentioned as using these trends meet their business and social objectives in almost the same way. Nestle, for instance, uses the CSV approach to establish and sustain a rapport with potential customers. By empowering communities, the company meets social needs while at the same time marketing itself to them. Whole Foods Market focuses on the needs of the community rather than on brand management. In so doing, it deals develops customer loyalty which then translates to an upward trajectory of sales. The London Early Years Foundation identifies the needy, seeks financial support, and then uses some of the acquired aid to invest.

Conclusion

The evolution of CSR is transforming the world into a place of equality where people are not divided into haves and have-nots. The new tenets of CSR are actively concerned with improving the lives of the communities they operate in. This approach benefits both the shareholders and the stakeholders. The emergent trends in CSR are effective as they are embedded on establishing future markets today. Hence, shareholders will always enjoy financial benefits.

References

Baumann-Pauly, D. (2013). Managing corporate legitimacy: A toolkit. Sheffield, UK: Greenleaf Publishing.

Lewis, R. (2014). Whole foods market; Conscious capitalism or unconscious greed? The Robin Report. Retrieved from http://www.therobinreport.com/whole-foods-market-conscious-capitalism-or-unconscious-greed/