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THE DEGREE TO WHICH CSR IS AN ATTAINABLE FORM OF ETHICS IN BUSINESS

AN OPINION

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The Degree to Which CSR is an Attainable Form of Ethics in Business

Introduction

Corporate Social Responsibility is the function of corporations that is concerned with adherence to the law, fulfilment of ethical norms, giving back to the society and conserving the environment rather than polluting it. The law tends to be more reactive rather than proactive (Simpson and Taylor, 2013). This makes the laws that corporations have to adhere to inadequate in ensuring that what they do is environmentally safe and for the good of its customers and workers. This gap is filled by CSR initiatives that corporations voluntarily take part in so as to positively impact the community whether global or local that has enriched them financially. Many companies publish reports on their CSR activities and sustainability so as to let their customers, investors and other stakeholders know what it is they are doing so as to forge ahead as responsible corporations (Kassel, 2012). This indicates that the CSR activities are part of their ethics as a company. However, it is questionable how attainable CSR is as a form of ethics for an organization. For this reason, this paper explores the degree to which CSR is an attainable form of ethics for organizations in the sports shoes and apparel industry represented by Nike Inc. and Adidas Group.

Overview of the Sports Shoes and Apparel Industry

The sports shoes and apparel industry is of interest because it involves a large number of employees. Also its factories that have implications for the environment are of concern. When the big names in this industry chose to segment their supply chains to third world countries, it meant reduced responsibility for factories and workers (Roscoe and Baker, 2013). This means that they were not liable for what was happening in their outsourced factories and plants. Issues such as child labour, excessive overtime, low pay and workplace mistreatment were not their concern. However, this changed when laws and consumers were outraged by this. Labour laws now require them to be responsible for their factories’ conditions and all aspects of their employees from their training to how they are treated at work (Roscoe and Baker, 2013). This requires supervision and a lot of money in training them. However, the law’s reach was not enough. Therefore, the corporations had to take it upon themselves to do more than just what is required by law and entrench it into their systems. This is because of further consumer outrage at how workers were being treated and the factories’ waste disposal methods (Bevan et al., 2004). Also, for some this had to be done as they felt that it was only fair for them to give back to the environment that gave them raw materials such as water (Adidas Group, 2014). These different perspectives on CSR will aid in the understanding of whether or not it is an attainable form of ethics in the mentioned corporations as discussed in the following paragraphs;

Reasons for implementing CSR in corporations

Bevan et al., (2004) explain that some corporations only pay lip service to CSR; others introduce it due to peer pressure while others are inherently committed to it as they believe it’s the right thing to do or because of its financial benefits. This is evident in the sportswear industry as it is concerned with people in the form of workers and the environment due to its factories especially in third world countries. For Nike Inc., CSR seems to be a damage control strategy. This is so as to quell the many complaints brought forward against it for the mistreatment of employees, child labour and pollution of the environment (Nike Inc., 2015).

With the imminent threat of their sales dropping, Nike Inc. was put in a position where it had to make significant changes in its supply chain. For some companies such as Adidas, the manager pushed for CSR initiatives and sustainability (Adidas Group, 2014). This means that the manager was the one who had a passion for this and thus moved ahead to implement the changes. This corporation was ranked 8th in Global 100 Most Sustainable Corporations in the World (Adidas Group, 2015). This ranking is by Corporate Knights Magazine, which is the world’s largest magazine that focuses on corporate responsibility among corporations (Adidas Group, 2015). Nike, Reebok and Puma are not even on this list. This indicates that CSR is attainable when pursued willingly and for the good of the environment and people. Otherwise it cannot be fully attained by corporations that do it unwillingly.

Transparency of Corporations

Transparency in a corporation’s operations is important in the attainability of CSR because it allows their efforts to be seen and verified by their customers and other stakeholders.  Kassel, (2012) posits that companies in the sportswear industry rarely reveal the location of all their outsourced factories to the public. This means that efforts made by the company in their CSR programmes are not known or identified. However, Kassel, (2012) reveals that this may be because they are hiding the locations of the factories in which they have done nothing towards CSR. This makes it hard to attain CSR as transparency is an essential part of it (Kassel, 2012).  Godelnik, (2012) points out that Adidas is the only corporation in the sportswear industry that has revealed the locations of all its outsourced suppliers so as to make their efforts evident. This means that its efforts in CSR are accessible for all to see and question on-site and in their yearly reports. This makes it easy to understand why Adidas is doing so well in attaining CSR as part of the company’s ethics. Transparency is ethical therefore to show it in the CSR sector shows its attainability

Ethical responsibility to shareholders

Organizations have an ethical responsibility to shareholders to rake in profits as much as it is possible (Hine and Preuss, 2008). This means that the stakeholders’ requirements are put first by the company’s management and workers. CSR therefore gets a backseat in their company’s day to day functioning. This has been given as a reason why corporations fail to spend more of their resources on CSR efforts. McWilliams, Siegel and Wright, (2006) argue that companies should give back to the community in one way or another, especially companies that excel at manufacturing and selling premium products. This is because the companies in question make a lot of profit; therefore, the community and even the whole world should be in a position to share in this since they benefit a lot.  Nike Inc. and Adidas both manufacture and sell premium quality sports shoes and apparel. The requisite finances to engage in CSR activities are therefore available to them. Nike Inc. has no excuse as to why it did not start these initiatives earlier on rather than using it as a damage control tool to please the global consumer groups (Nike Inc., 2015). On the other hand, Adidas is attaining CSR as a form of ethics by making it one of its top priorities. However, they are still doing well in the market and therefore fulfilling their ethical responsibility to its shareholders (Adidas Group, 2014).  This indicates that a company can attain CSR and still be able to fulfil its other obligations as far as the corporation is concerned.

Managerial attitudes

The attitude of the manager of a company towards CSR influences how the employees see it and work on it (Hine and Preuss, 2008).A study done by Hine and Preuss, (2008) on  managers indicates that the majority of the participants saw CSR as no different than the other actions they take to adapt to the changing economic environment. This means that the actions they take are for the company to be better than its peers in the eyes of the consumers. This gives the CSR efforts a manipulative twist that is designed to make consumers spend more on the product being sold because the corporation practises CSR or says it does.  The manager is the person who will be responsible for the outcome of the CSR initiative, just like in any other action that the business takes up under the manager’s instructions (Hine and Preuss, 2008). This indicates that the managers’ role is to ensure that CSR benefits the firm in order to ensure that it performs well. The failure or success of the CSR ethic would reflect on the thought processes and implementation abilities of the manager. The failure of the CSR ethic would then downplay the power of the manager in the company, thus making him/her a failure. Therefore, CSR attainability does depend on the outlook of the manager on the issue, and how it would impact his position as the leader in the company.

The group’s CEO was named environmental manager of the year by The World Wide Fund for Nature Germany (WWF) and German business magazine Capital (Adidas Group, 2015). This is because of the company’s efforts under his leadership in improving the ecological and social conditions of the factories that produce its products (Adidas Group, 2015). This indicates that he has a positive attitude towards CSR and values it. Due to the success that Adidas has had in its CSR initiatives, the CEO’s attitude in pursuing it relentlessly and innovatively is evident. Therefore, the manager’s attitude towards CSR determines its attainability and sustainability as a form of ethics for an organization.

Lack of internalization of CSR values

For CSR to apply as part of work ethic in business, the employees have to be aware of it. This is because they are the ones that have to live by the work ethic. When the company’s employees are unaware of the CSR efforts that the company is making, it fails to have an ethical impact on them (Simpson and Taylor, 2013).This renders the goal of attaining CSR as a form of ethics in business impossible to achieve. Even though the business would be making the initiative to give back to the society, this may not be the message communicated to the employees. Bevan et al., (2004)’s study indicates that communication of the purpose of the activities that workers take part in leads to greater group ethics. This implies that if the workers are well informed (and perhaps trained) on the CSR efforts of the company, then they would be able to accept the ethics and implement it fully as they work.

For instance, if the employees were aware of the CSR initiatives as a way of giving back to the community rather than just a way to increase sales, then they would feel good about these efforts. This would have an impact on their work ethic as they would know that they were also doing something good for the concerned community. In the case of Nike Inc., the large number of people under their employ is a way of giving back to the community (Nike Inc., 2013). This is by giving people a chance to improve their lives and earn a living. This may not be evident nor appealing to the workers as it would make them a charity case to their employer. This therefore acts as a hindrance to attaining CSR as a form of ethics in the business.

Inability to measure the benefits of CSR as a form of business ethics

The benefits of CSR as a form of business ethics to an organization include the feel-good factor among staff and management, attraction of talented and idealistic employees, and recognition as a CSR-conscious company which may cause an increase in sales. Kassel, (2012) posits that it is difficult to measure the effects of CSR as a form of ethics due to the intangible results that are cited above. For instance, if marketing strategies are in force, it makes it hard for the success factors at work to be identified. This problem is further aggravated by the use of CSR as a marketing strategy among other strategies. For instance, Bevan et al., (2004)’s research only accommodated the employee choice to continue working for a company due to its CSR actions. However, the benefit of attracting talented workers would be hard to account for as the talent of workers is only realized a considerable time after he/she has been hired. This also excludes the talented workers that were not hired by the company. Nike Inc. acknowledges their employment opportunities as their way of giving back to the communities around the world that they outsource from (Nike Inc., 2013). This is a CSR initiative whose success would be hard to quantify. This is because Nike Inc. was not involved in the hiring process of the employees. It would therefore be inaccurate to claim this as their initiative as they do not control the hiring process. The inability to measure its success makes it hard for its supporters to sell it to the sceptical stakeholders of the company such as management. This acts as hindrance to attaining CSR as a form of ethics in an organization.

Self – reporting

The reports that companies compile on their CSR activities make it difficult to ascertain the accuracy of what is being reported. Kassel, (2012) posits that the reports that companies present are usually accurate in outlining their CSR activities and projects. However, Kassel, (2012) continues to explain that what is omitted from the report makes up what the companies failed to achieve in their CSR projects. This is usually the areas that the company had pledged to have resolved in previous reports. Godelnik, (2012), points out that Adidas Group’s CSR report for the year 2014 dedicated a small portion of it to carbon (IV) oxide emissions. According to Godelnik, (2012), this was a CSR issue that the corporation should have spent more time on, seeing that it had made pledges to do so in the previous report. This shows that the Adidas Group was mentioning this in passing as it knew that they had not done what was required of them. This makes CSR unattainable as a form of ethics since the companies are given an opportunity to hide the failures in their CSR initiatives.

Conclusion

CSR is an emerging trend that is widely gaining importance the world over. This is especially because consumers have been enlightened about these issues and they have therefore become important to them. The motive behind a company taking up CSR initiatives is not important. What matters is that they are doing it right and that they are sustaining it. Because it is a voluntary initiative, all is expected of the companies that take up CSR is to fulfil their promises and adapt transparency when it comes to reporting on what they have achieved or not. From the foregoing, I conclude that CSR is an attainable form of ethics in business, given that the companies that take it up are willing to do it openly and diligently. With Adidas Group leading the way to sustainable CSR, the sportswear industry is no exception to this.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

Adidas Group, (2014). Sustainability Progress Report, 2013. 1st ed. [ebook] Adidas Group. Available at: [Accessed 16 Mar. 2015].

Adidas Group, (2015). Awards and Recognition. [online] Adidas-group.com. Available at: [Accessed 16 Mar. 2015].

Bevan, S., Isles, N., Emery, P. and Hoskin, T. (2004). CSR at the heart of business. 1st ed. [ebook] London: The Work Foundation, pp.7-23. Available at: [Accessed 16 Mar. 2015].

Godelnik, R. (2012). Adidas Progress Report – Great Pass but No Slam Dunk. [online] Triple Pundit: People, Planet, Profit. Available at: http://www.triplepundit.com/2012/05/adidas-2011-progress-report-shows-achievements-along-problems/ [Accessed 16 Mar. 2015].

Hine, J. and Preuss, L. (2008). “Society is Out There, Organisation is in Here”: On the Perceptions of Corporate Social Responsibility Held by Different Managerial Groups. Journal of Business Ethics, [online] 88(2), pp.381-393. Available at: http://abufara.com/abufara.net/images/abook_file/Society%20is%20Out%20There,%20Organisation%20is%20in%20Here-%20%20On%20the%20Perceptions%20of%20Corporate%20Social%20Responsibility%20Held%20by%20Different%20Managerial%20Groups.pdf [Accessed 16 Mar. 2015].

Kassel, K. (2012). The Circle of Inclusion: Sustainability, CSR and the Values that Drive Them. Journal of Human Values, 18(2), pp.133-146.

McWilliams, A., Siegel, D. and Wright, P. (2006). Corporate Social Responsibility: Strategic Implications. Journal of Management Studies, [online] 43(1), pp.1-18. Available at: http://www.economics.rpi.edu/workingpapers/rpi0506.pdf.

Nike Inc., (2013). NIKE, INC. FY12/13 SUSTAINABLE BUSINESS PERFORMANCE SUMMARY. 1st ed. [ebook] Nike Inc. Available at: http://Nikeresponsibility.com [Accessed 12 Mar. 2015].

Nike Inc., (2015). Nike CSR Report, 2014. 1st ed. [ebook] Nike Inc. Available at: http://www.nikeresponsibility.com/report/uploads/files/FY12-13_NIKE_Inc_CR_Report.pdf [Accessed 12 Mar. 2015].

Roscoe, S. and Baker, P. (2013). Supply chain segmentation in the sporting goods industry. International Journal of Logistics Research and Applications, 17(2), pp.136-155.

Simpson, J. and Taylor, J. (2013). Corporate governance, ethics, and CSR. London: Kogan Page.

 

 

 

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