Since the beginning of the 1990s, the debate on the social responsibilities of companies has extended far beyond environmental matters. It has focused on the integrity of practice conduct and the involvement of firms to the development of local communities. This essay is aiming to discuss the notions of Corporate Social Responsibility (CSR) in terms of interpretations varying in different organisations, the distinctiveness of social responsibilities when a case occurs between individual's decision and the companies as a whole. This essay further examines a business case of ExxonMobil Corporation and its practices on CSR in terms of the rational reason behind its CSR activities, the controversies, time frame and how the firm gains values from its CSR strategies.
CSR definitions may vary in principles of different organisations yet they agree on the part that it is not legal obligation yet they voluntarily actively implement CSR strategies in order to gain positive reputations and other fringe benefits. Additionally, when a case concerning social responsiveness occurs it is hard to distinguish the case was caused by individual's decision or the company practices, thereby; firms often put themselves on guard in order to avoid such negative image.
As the largest private oil company in the world, ExxonMobil is involved in numerous CSR activities, gaining itself both good corporate citizen image and criticisms. It is perceived that Exxon implements a illusion of CSR strategies in attempt to delete the environmental crime image caused by ExxonMobil Valdez case. However, criticisms still arose from its negligence in fighting against global warming leading to resentment in its home country. On the contrary, its CSR strategies in other countries especially in Africa pay off- gaining the company significant tax reductions from host governments. Despite all the disgraces, ExxonMobil remains lead the energy industry.
Corporate Social Responsibility (CSR) has emerged in recent years as both an important academic construct and a pressing corporate agenda item. Firms have been found to engage in socially responsible behaviors not only to fulfill external obligations such as regulatory compliance and stakeholder demands, but also due to enlightened self interest considerations such as increased competitiveness and improved stock market performance. CSR concepts and theories are continuously in debate while firms may interpret it differently, but common understanding according to Bloom and Gundlach is the obligation of firm to its stakeholders, people and groups who can affect or are affected by corporate policies and practices. These obligations go beyond legal requirement and the companies duties to its shareholders. (cited in Kakabadse & Kakabadse 2007, pp.15)
This essay will analyse the definitions of CSR in practice of proclaimed good corporate citizens and the social responsibilities of companies when a case occurs, the notion of distinctiveness between individual's decision and the company as a whole. It will further examine a business case of ExxonMobil Corporations and its CSR activities, the down sides of CSR plans, time frame as well as how CSR values organizations.
This paragraph will discuss about the definitions of CSR. Corporate social responsibility (CSR) occupies a prominent place on the global corporate agenda in today's socially conscious market environment.
More than ever, companies are devoting substantial resources to various social initiatives, ranging from community outreach and environmental protection, to socially responsible business practices (Du et al. 2010). Inarguably, society's expectation of business responsiveness to societal concern has increased more or less in parallel with the power that corporations have gained, but in some cases, the plans of actions are remain doubtful to the public.
Similar to other terms in business context, there are many theorists and scholars attempting to define CSR. It depends on how companies or individuals interpret it as each firm has their own definition of CSR; Unilever (2003) for instance, defined social responsibility as the impact or interaction with society in three distinct areas: (1) voluntary contributions; (2) impact of operations; and (3) impact through the value chain. Whereas, European Union, EU (2003) views CSR as a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis. Despite the distinctiveness between two examples of CSR definitions, both organisations seem to agree on the similar basis in which is voluntary aspect emphasizing the notion of CSR is beyond that prescribed by law or union contract. This means companies implement social responsiveness due to either genuine concern of local communities or expectation to augment reputation or ideally from both reasons.
Having discussed about the definitions of CSR, this paragraph will discuss about the social responsibilities of companies when a case occurs, the notion of distinctiveness between individual's decision and the company as a whole.
Social responsibility takes many different forms and is expressed in numerous ways varying from firm to firm. CSR can be determined by looking at two distinct ways; the company as a whole or the individuals who make decisions. When the auditing firm, Arthur Andersen, was convicted of forgiving illegal behavior by its officials, federal court action put the whole company out of business. In such cases, a firm's CSR status is an outcome of organizational actionstaken by the company as a distinct, identifiable legal entity. On the other hand, individual top executives of Enron, Tyco, and WorldCom, not the companies themselves, were jailed and fined for criminal acts these executives committed in the company's name (Federick n.d.). The majority of research conducted about who drives decisions about an organization's CSR efforts has focused on CEOs (Sheth & Babiak 2010). In most cases, when the lawsuit occurs, society often views and judges a company's reputation as a whole organization's mistake rather than looking deeply into who made such decision resulting in incidents. This is why every multinational enterprise has decided to invest in CSR activities in many local communities in order to lay a secure foundation of good corporate citizen in the perception of local stakeholders and the public. They are unable to afford a single mistake of an individual that would ruin the entire company's image.
The previous paragraph has discussed about the social responsibilities of companies when a case occurs, the notion of distinctiveness between individual's decision and the company as a whole, this paragraph will further examine a business case of ExxonMobil Corporations and its CSR activities.
One of the most prominent actors in CSR activities worldwide is ExxonMobil. Due to the fact that the company is the biggest company in energy industry where it involves transforming natural resources into products, the company inevitably is required to deal with a number of activities as well as incidents related to environmental issues and communities in host countries.
For more than 30 years, ExxonMobil has promoted its Standards of Business Conduct which are embedded in the company's management strategy. Every business decision reflects the company's commitment to corporate citizenship. The company has committed itself to apply its expertise and resources to the daily challenge of providing energy to the world in an economically, environmentally, and socially responsible manner (Beauvais 1998). In 2004, ExxonMobil affiliated and ExxonMobil Foundation, the primary generous of the corporation in theUnited States, provided $106.5 million in donations of cash, goods and services worldwide.(Beauvais 1998). However, such large contribution budget was not approved by the board without any promising supported reason and that is the Exxon Valdez oil spill in Alaska in 1989 which is globally perceived as the spark for the corporate social responsibility movement. That incident would have nearly been a prosecution for Exxon as it cost the company 2.5 Billion dollars penalties and more severe damage is the reputation of the company. The incident is considered one of the most devastating human caused environmental disasters (Roner 2004).
Until now, the people of Alaska and the world are remaining to perceive ExxonMobil as having the world's most negative environmental reputation, largely due to its reputed indifference to the problem of global climate change and its continued focus on fossil fuels in spite of it is one of the world's most profitable corporations. For years, Exxon has attempted to rebuild its image by investing in a wide range of CSR activities. For instance, the initiative in Women's Economic Opportunity in which it has invested over $30 million dollars since 2005 launch aiming to promote technology's advancement for women for future benefits in the workforce (ExxonMobil 2009).
Upon mentioning examples of CSR activities of ExxonMobil and the prominent reason behind such commitments, this section will further analyze the downside of CSR plans, time frame and how CSR activities add value to the corporate.
Controversies arose when the CEO, Lee Raymond opposed the Kyoto agreement and any mandatory measures to restrict the use of fossil fuels. Arguably that Raymond has caused Exxon Mobil' reputation harm, particularly for his doubtful views about the science behind global warming (Smith 2002). This in turn caused an unusually broad coalition of 12 U.S. environmental and public interest groups to launch a national boycott of ExxonMobil in 2005 for undermining efforts to combat global warming and lobbying Congress to open the Arctic National Wildlife Refuge (ANWR) to drilling(Lobe 2005). The campaign called ExxposeExxon.com also wants to exert pressure on the company to pay full compensation to fishermen and others harmed by the 1989 Exxon Valdez oil spill. Even though Exxon donated 100million dollars for Stanford University's Global Climate and Energy Project according to Greenpeace this is the attempt to green wash their poor track records on global warming compared to those of Shell or BP (Greenpeace website 2002).
In contrast, as oppose to home country's disputes, ExxonMobil gained significant respects from local communities in other countries from their CSR activities. For example, in 2007, it provided $174 million to improve education and preventinfectious diseases working through the ExxonMobil Foundation's initiatives the Africa Health and Educating Women and Girls programs. Furthermore, ExxonMobil's Angola CSR operations partnering with 'Save the Children and African people'. They have built three community health posts that have been incorporated within the country's national health system. These posts provide vaccines, essential medicines and primary care services in their region benefiting around 6,500 people (The Free Library website 2008). Not ExxonMobil solely is actively working their CSR activities in Africa; other major oil companies are doing the similar works, for example Shell and its Niger-Delta program.
All the many CSR programs that the oil majors and other multinationals are undertaking in Africa are making a substantial contribution to the continent's development. However, business has the primary objective of returning a profit, so they have to justify their CSR expenditure to shareholders.The host government also offers substantial tax benefits to offset CSR expenditure, meaning they can be funded at little financial expense to a business while doing no harm to its public image. In short, these CSR activities in Africa are win-win scenarios (The Free Library website 2008).
As timeframe of CSR varies for different types of actions, some thought leaders see the future CSR that company is engaging its stakeholders in co-production, a process of developing product and service innovations through joint problem solving tables with stakeholders. Others believe that should these relationships develop, they will be limited in number in this 5 - 10 year timeframe for long term contribution. Even though the benefits generating from CSR activities is difficult to measure, it takes the case of Exxon's contribution to Africa's Health Programs for example, in return they receive tax and tariff deduction from local governments which in long term will pose much more financial benefits than the budget they initially invested. Thereby, it is inarguably that some contribution investing in CSR will generate advantages beyond expectation in terms of company's reputation, customer perception and awareness as well as deregulation received from governments emphasizing the belief that investing in giving back to the communities is one of the optimum choices in laying a foundation for firm's future.
Despite all the controversies over an extended period of time, ExxonMobil has performed far better financially thanBP which changed its brand to Beyond Petroleum to emphasize its responsibility to help reduce the world's dependence on fossils fuels. The contrast between ExxonMobil and BP reveals another limitation of the business case for corporate responsibility. It is often difficult to distinguish responsible and irresponsible firms (Vogel 2008). While BP may have a more responsible record than ExxonMobil when it comes to the issue of global climate change, ExxonMobil has recently been far more successful in preventing accidents and avoiding oil spills. It is thus not obvious which firm is more responsible.
In conclusion, CSR is anchored in corporate practice for MNEs and SMEs globally. It is increasingly acceptance as a legitimate business practice yielding by unprecedented global expansion of economic (Frederick n.d.). Despite various interpretations from scholars and firms, the common traits of CSR is it is on a voluntary basis because there is no legal implication governs, but is more likely to be seen as a moral obligation.
Upon evaluating the case of ExxonMobil and its CSR contributions, it can be assumed that firm heavily invested in CSR activities worldwide in attempt to recover its reputation after the incident of ExxonMobil Valdez. Even though the company has been strongly criticized and even boycotted by environmentalists for its negligence in anti global warming campaign and continuing to use fossil fuels as opposed to those of competitors, the company is still making tremendous profits. In contrast, its CSR programs in foreign countries are posing more positive effects. For instance the Health and Educating Women and Girls programs in Africa has assisted them not only to gain a good corporate citizen image from local people, it has gained them deregulations in tax/tariff from local governments in which benefits the firm far more than what they have invested. This emphasizes the fact that CSR is a good move for firms as the return on investment comes in various ways.
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