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Corporate Social Responsibility
Corporate social responsibility means "businesses and organisations working responsibly and contributing positively to the communities they operate in" (Times 100 Amway case study).This is an area that firms are keen to emphasise as they try to present a positive image of the organisation to the world.So how are firms showing their corporate social responsibility?
Marks and Spencer recently announced plans to create eco-factories that make use of renewable energy sources and implement the latest recycling technology.This is part of their commitment to spend £200 million to become more environmentally friendly (The Times, May 22nd 2007).
Nike has been trying to improve its social responsibility.It has pledged to cut back on the level of overtime undertaken by workers at its factories, in an attempt to improve working conditions of up to 880,000 workers. This is a serious area of concern for Nike, which operates 130 factories in China, where many workers have been expected to work unpaid overtime.They have also pledged new targets for reducing waste and carbon emissions (BBC, 31st May 2007).
The Times 100 also provides a good example of a company with a clearly defined corporate social responsibility agenda.It describes how the direct sales organisation Amway works with UNICEF, the United Nations Children's Fund.This includes providing substantial financial support for UNICEF's global immunisation programme.Whilst the benefits to society are clear, Amway also benefits from an enhanced reputation.
Potential Study Questions:
A firm with a clear corporate social responsibility will consider how their business impacts on all stakeholders.Who are the stakeholders of the businesses identified in the news above?
For economists:By creating a corporate social responsibility strategy, firms can attempt to internalise some of the negative externalities associated with their operation.Explain what is meant by this statement.