A TRIPPLE BOTTOM LINE

By:
ALI AZFAR TIRMIZI

By the end of the 19th century the forces of limited liability, state and national deregulation, immense industrialization and vastly increasing capital markets had come together to give birth to the corporation in its modern-day form. The 20th century saw a proliferation of enabling law across the world, which stimulated to drive economic booms in many countries. The hike in economic activity gave birth to an treacherous competition among the business community. The boundless profit orientation of business organizations resulted in the cruel exploitation of working class. However, the Soviet Revolution of 1917 proved hurdalious to the extensive growth of capitalism. Many countaries being inspired by the soviet experience admitted, the popular demands of workers, reduced working hours and gave social liberties to the labour. It was the era of nationalization and state controled economy which encampassed almost the whole 20th century. The ray of nationalization came to an end in 1980s and many countries with large state-owned corporations moved toward privatization, the selling of publicly owned services and enterprises to corporations. Deregulation (reducing the regulation of corporate activity) often accompanied privatization as part of a laissez-faire policy. Free market economy, the absencence of governmental check and huge multi-national business structures are supposed to devour all the resources of the planet. So the demand for more ethical business processes and actions (known as ethicism) is increasing. Simultaneously, pressure is brought to bear on industry to doctor up business ethics through new public initiatives and laws (e.g. higher UK road tax for higher-emission vehicles). Business ethics can be both a normative and a descriptive discipline. As a corporate practice and a career specialization, the field is primarily normative. In academia, descriptive approaches are also taken. The range and quantity of business ethical issues reflects the degree to which business is perceived to be at odds with non-economic social values. Historically, interest in business ethics accelerated dramatically during the 1980s and 1990s, both within major corporations and within academia. For example, today most major corporate websites lay emphasis on commitment to promoting non-economic social values under a variety of headings (e.g. ethics codes, social responsibility charters). In some cases, corporations have re-branded their core values in the light of business ethical considerations (e.g. BP’s “beyond petroleum” environmental tilt). The term Corporate social responsibility (CSR), also known as corporate responsibility, corporate citizenship, responsible business, sustainable responsible business (SRB), or corporate social performance came into common use in the early 1970s, after many multinational corporations formed CSR departments, although it was seldom abbreviated. It is a form of corporate self-regulation integrated into a business model. Ideally, CSR policy would function as a built-in, self-regulating mechanism whereby business would monitor and ensure its adherence to law, ethical standards, and international norms. Business would embrace responsibility for the impact of their activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. Furthermore, business would proactively promote the public interest by encouraging community growth and development, and voluntarily eliminating practices that harm the public sphere, regardless of legality.

Essentially, CSR is the deliberate inclusion of public interest into corporate decision-making, and the honoring of a triple bottom line: People, Planet, Profit.

Some commentators have identified a difference between the Continental European and the Anglo-Saxon approaches to CSR. And even within Europe the discussion about CSR is very heterogeneous.

An approach for CSR that is becoming more widely accepted is community-based development projects, such as the Shell Foundation’s involvement in the Flower Valley, South Africa. Here they have set up an Early Learning Centre to help educate the community’s children, as well as develop new skills for the adults. Marks and Spencer is also active in this community through the building of a trade network with the community – guaranteeing regular fair trade purchases. Often alternative approaches to this is the establishment of education facilities for adults, as well as HIV/AIDS education programmes. The majority of these CSR projects are established in Africa. A more common approach of CSR is through the giving of aid to local organizations and impoverished communities in developing countries. Some organizations do not like this approach as it does not help build on the skills of the local people, whereas community-based development generally leads to more sustainable development. Procurement of Fair Trade tea and coffee has been adopted by various businesses: KPMG CSR manager commented, “Fairtrade fits very strongly into our commitment to our communities”.

The business case for CSR within a company will likely rest on one or more of these arguments: A CSR programme can be an aid to recruitment and retention, particularly within the competitive graduate student market. Potential recruits often ask about a firm’s CSR policy during an interview, and having a comprehensive policy can give an advantage. CSR can also help improve the perception of a company among its staff, particularly when staff can become involved through payroll giving, fundraising activities or community volunteering;

Managing risk is a central part of many corporate strategies. Reputations that take decades to build up can be ruined in hours through incidents such as corruption scandals or environmental accidents. These can also draw unwanted attention from regulators, Courts, governments and media. Building a genuine culture of ‘doing the right thing’ within a corporation can offset these risks; In crowded marketplaces, companies strive for a unique selling proposition that can separate them from the competition in the minds of consumers. CSR can play a role in building customer loyalty based on distinctive ethical values; Corporations are keen to avoid interference in their business through taxation or regulations. By taking substantive voluntary steps, they can persuade governments and the wider public that they are taking issues such as health and safety, diversity, or the environment seriously as good corporate citizens with respect to labour standards and impacts on the environment.

The practice of CSR is subject to much debate and criticism. Proponents argue that there is a strong business case for CSR, in that corporations benefit is in multiple ways by operating with a perspective broader and lunger than their own immediate, short-term profits. Critics argue that CSR distracts from the fundamental economic role of businesses; others argue that it is nothing more than superficial window-dressing; others yet argue that it is an attempt to pre-empt the role of governments as a watchdog over powerful multinational corporations. Corporate Social Responsibility has been redefined throughout the years. However, it essentially is titled to aid to an organization’s mission as well as a guide to what the company stands for and will uphold to its consumers.