Posted: May 25th, 2022
Managing People and Organizations
Business is about profitability through the exploitation of natural resources and people around the world.u Can organizations adopt a more socially responsible behavior then towards people and the environment? Discuss.
Every business needs people and the environmental resource of the region in which it operates to be successful. The business has two kinds of relationship with the environment. In the first kind, it is the receiver while the environment is the provider. The business needs raw materials to manufacture the products that it sells and these raw materials come from nature. In the second kind of relationship, the business is the destroyer and the environment is the victim. The manufacturing process of the business harms the environment and causes large scale disruptions in the activities of the flora and fauna of the region. These two kinds of relationships are opposed to each other in every way and still it goes on.
The third element in the equation is the people. No business can thrive without people and they are the building blocks of the company. but, when a company is reeling under financial loss, the first step that is taken is to send a few people home. Sadly, these decisions are made by the people in the company’s management who feel they are above the problems of other employees and this is a classic example of irresponsible social behavior. These executives who form the management of the company show little empathy towards the environment and its people.
Effects on the environment
In order for a company to be successful in the long run, it requires the hard work of its employees as well as the natural materials from the environment. The costs of neglecting these two important aspects are quite high.
The environment is the foundation for the livelihood of mankind. The air, water and natural resources belong to the people and the business happens to be one of the beneficiaries of this abundance. Improper use of resources that do not belong to the organization is a gross violation of all fundamental rules of the society. Such unchecked exploitation can have a profound impact on the very survival of human beings in the future.
The primary source for water pollution is industrial waste that is discharged to the water body from industries. Chemicals and other toxic products are released to a water body and this has a ripple effect on the eco-system of the region. Numerous aquatic animals and fishes that thrive in the water body is affected by these toxic materials. Also, it makes it unsafe for people to drink this water, thereby adding to the existing problem of clean drinking water scarcity. These problems are mainly found in developing and underdeveloped countries that have little laws governing these environmental problems.
The second aspect that is affected by irresponsible exploitation is air pollution. The quality of air decreases and the primary causes are industrial pollution and emission of greenhouse gases from vehicles. This increases the chances of respiratory diseases and decreases the overall quality of life.
Deforestation is another impact of environmental exploitation. It increases soil erosion and affects the ecological balance of nature. It also has an impact on the climatic condition of a region and large scale industrialization is turning forests into plains to make way for more companies and industries.
Effects on people
The effect of a company’s actions on the people can be broadly divided into two categories. The first category of people are those who depend on the environment for their livelihood and when a company exploits, destroys or disrupts an environment, it affects their livelihood. One such example is the BP oil spill. Many fishermen lost business and money because they were dependent on the fishes in the Gulf of Mexico which died due to the oil spill. Though they had nothing to do with BP, they were affected because the company disrupted their environment.
Another category of people who can get affected are its direct employees who can be fired due to economic problems of the company. Sometimes, even a so-called executive decision to stop a particular line of products can result in lay-offs. Though it represents the business interests of the company, it is nevertheless important that its employees are given more security for their jobs.
Why Corporate Social Responsibility?
It is important that every business understands the problems that come with irresponsible social behavior towards the environment and the people. However, this is easier said than done because of the complex inter-dependencies involved. “Environmental sustainability is distinctive in scope, complexity, and urgency. First, the sustainability context extends the social, organizational, and individual domains to include the natural environment: air, land, water, etc. This broadened scope has several implications, such as incorporation of environmental performance and the need for new research methodologies and metrics. Second, sustainability phenomena are complex and multilayered, often characterized by uncertain interdependencies and nonlinearities. One implication is the existence of alternative frames for the problem, including the rational (economic considerations such as productivity and profitability), natural (environmental sustainability, including preservation of natural resources and mitigation of climate change), and humanist (personal satisfaction and social needs such as fair trade practices and human rights)” (Elkington 1994 as cited in Melville, 2010, p.4). Nevertheless, the company should take more initiatives to protect the environment and the people.
There is a growing trend among companies to make social responsibility towards the environment and people a priority. According to Bansal (2009, p.183), “First, there have been some recent challenges to the legal precedence that organizations must operate in the best interests of shareholders, at the cost of stakeholders. Second, there is the development of new organizational forms, such as Google.org, which is a for-profit foundation. Third, there is the growth of the sustainability social movement, which is gaining considerable traction and more carefully scrutinizing corporate actions and shifting what is considered to be “normal” or acceptable.” These trends are a clear indication that external factors force the companies to act more responsibly and so they are forced to take action, irrespective of their thoughts and ideas. The social movement and hundreds of non-profit organizations act as watchdog and they do as much as they can to prevent companies from acting irresponsibly. They are empowered to file lawsuits and tarnish the image of companies in the eyes of its consumers and the world at large.
A good example is the recent BP oil spill in the Gulf of Mexico. The company behaved irresponsibly by spilling oil during its exploration process and this had a profound negative effect on the fisheries, birds and other aquatic organisms in this region. It also affected the livelihood of people who were dependent on fishing in this part of the country. In turn, this impacted the Gulf’s tourism industry and the revenues started diminishing. All these problems occurred because the company did not have sufficient safety measures and a back-up plan. The environment and the people were taken for granted and BP thought it could get away with it.
The aftermath was a corporate disaster for BP. The lawsuits from different environmental organizations and the lawyers representing the local people increased. The U.S. Government also took notice of this problem and fined BP heavily for its actions. It was also forced to clean-up the oil mess. This case shows the heightened levels of public awareness to such issues and the active role played by the different NGOs in bringing to light such problems and ensuring that the company never repeats this mistake again. This is a heart-warming trend in many ways and it is hoped that this incident will be an eye-opener to many other companies to protect and safeguard their environment besides their business interests.
Philanthropic organizations and public interest groups are also actively involved in encouraging companies to act more responsibly. “Major charitable foundations and public interest groups — the Ford Foundation, the Sloan Foundation, and the Aspen Institute, to name three of the most prominent — have launched major initiatives to investigate and even encourage business investment in redressing societal ills. Public intellectuals, including leading business school academics whose prior contributions shaped the fields of corporate strategy and organizational behavior, have joined the call to encourage and guide firms in taking on a larger role in society.” (Margolis and Walsh, 2003, p.2).
Technology — internet, blog and social networking
Another reason for companies to take initiative and action is to protect their brand name and company image. Technology has revolutionized the way people communicate and share information. Blogs and social networking have become an integral part of life today. So, any misstep by any company will be published online and this will even be discussed by millions of people. This, in turn, will result in negative publicity for the company and customers will steer away from its products. The company’s growth and performance will be affected and indirectly, the company will be forced to take steps to correct the environmental disaster that it caused.
To avoid all these hassles, corporates should take the lead. They should ensure that the environment is not harmed in any way and people are treated with respect and dignity without exploiting the people or the environment in any unfair way. Such initiatives get publicity too and this has a positive impact on the company’s business interests. Therefore, technology has been another driving factor that induces companies to take the right steps to preserve and protect the environment and the people who depend on it.
Steps that should be taken by the company
Companies should have a clear strategy of how they are going to address their issues and this should be decided after taking into account its impact on the environment as well as its business interests. Recent years has seen more importance being given to shareholders and so company executives do everything possible to increase the returns for the shareholders. However, this can impact the environment and the people to a significant extent.
Conflict of Interest
This is a conflicting issue for companies because there is a direct clash between its business interests and corporate social responsibility. Emergencies and problems increase opportunities for a company. For example, when HIV cases increase, the company manufacturing the cure for it will benefit. If the society insists that the company should take all possible steps to fight against HIV, then it conflicts with their business interests. This is the reason why many companies try to keep away from such issues. They make contributions towards areas that do not affect their business in any way. “Calls for broader corporate responsibility, therefore, constitute an effort to surmount the presupposition that such corporate action is illicit. With social misery and the imperative of corporate involvement, on the one hand, and the skeptical economic rationale, on the other, attempts to mobilize corporate social initiatives reach an intense pitch” ( Margolis and Walsh, 2003).
The management of the company has a difficult task at hand because it has to strike a balance between its business interests and its corporate social initiatives and ensure that they do not clash. Though some executives argue that it is the responsibility of the Government to end problems like poverty, they are nevertheless forced to take actions due to the constant monitoring of their activities by social activist groups and the technology and media that propagate information to the world.
Some of the major factors that have a bearing on the company’s social initiatives are the nature of the firm, the industry in which it operates and its direct impact on the environment and its people. If the company has created a problem, then it has an obligation to clear it up effectively and as quickly as possible. In such a case, it will have a larger role to play. Such a company should also have the right amount of resources to perform the clean-up. In the case of a small company that has limited resources, it will not be able to do a good job. Such a situation becomes more complex. The company has done what best it can, but unfortunately, its best is not enough. The company can be absolved to a certain extent because it has put forth its best efforts, but the issue on hand still remains. “Chevron Texaco may have limited firm-specific capability to provide what Nigerian communities demand of it, but the integral presence of the company in Escravos, Nigeria and the benefits the company derives from its oil extraction facilities, even if those benefits are the result of explicit legal contracts, may obligate or at least license the firm to do more to redress societal problems there.” (Moore 2002 as cited in Margolis and Walsh, 2003). This is a dicey issue and one possible solution is the intervention of the Government. The company can provide all resources that it possibly can to help the problem and the Government should also come up with some of its own resources to make up for the remaining. Such a collaboration can help to eradicate the problem to a large extent.
Any policy that is outlined by the board should take into account all these complex factors. Firstly, the dependence of the organization on the environment should be ascertained. Based on this information, the company should come with an action plan that will have little to no impact on the environment. The action plan should focus more towards eco-efficiency and should cover various aspects such as increasing the output of the business with lesser resources from the environment, eliminating water and air pollution, finding safer ways to dispose waste and exploring ways and means to boost the sustainability of the environment.
For example, if a patch of forest has to be cleared to make way for an organization to establish its office, then it should consider choosing a different part of the city or even better consider the option of allowing a good part of its employees to work from home. By doing so, the carbon footprint of the company on the environment is reduced because people have to travel less and this means fewer gas emissions. Also, the forest can continue to make its contribution to the climate and ecology of the region while the company has its operations in a different part of the city or country. Such alternate options that can reduce environmental degradation should be explored and included in the action plan.
Use of Information Systems
The second step is to implement the policies undertaken by the company with regard to environmental preservation. The company should consider using many different kinds of systems that can help to reduce its impact on the environment. One such system is called the Environment Management System (EMS). (Melville, 2010). This system can start with changing the beliefs and mindset of the employees and management of the organization to turn their focus and attention on how the environment is affected by the actions of the company and its employees and in turn, how this can affect everyone in the region or country. So, through this system the company should bring about an organizational change that will work unitedly towards a common objective — environmental sustainability.
This system can be an important action that a company can take to preserve the environment. By doing so, every employee is conscious of not only what the company does to the environment, but also their role in environmental degradation. This will help to reduce the carbon footprint of every individual and it can be expected that they will adopt greener and more environment-friendly actions.
Co-evolution and co-existence
A company should try to explore the possibilities of peaceful co-evolution and co-existence with its natural environment. A good example of such co-existence is the Ricelands Habitat Partnership between the rice industry and the environmental advocates of Northern California. It proved to be a win-win situation for the rice industry as well as those who felt that the industry was damaging the fragile ecosystem of the region. “Flooding rice fields in winter provided farmers with an environmentally friendly alternative for getting rid of post-harvest stubble. It also made the fields attractive to migrating waterfowl. This proved that rice production could serve both human and wildlife needs, making the RHP a good example of “natural capitalism” (Hawken, 1999 as cited in Livesey, Hartman, Stafford and Shearer, 2009, p.424). This collaboration led to sustainable farming in the region where winter waterfowl habitat and the fisheries were preserved for posterity. At the same time, the production of rice went up with the support of the local people and everyone benefited from this venture, including the environment of North California.
Besides these collaborative efforts, some companies have taken steps on their own to improve the health of the environment because they were able to realize how it can affect them in the future. “Deterioration of the natural environment poses risks and opportunities for business organizations. Some firms respond by adopting environmental management strategies. For example, Marks & Spencer committed to a five-year plan to reduce its greenhouse gas (GHG) emissions (Rose 2008), and Google installed a solar power facility at its U.S. Headquarters.” (Melville, 2010, p.3)
These steps have to be taken quickly because there is little time left. Exploding population and rapid deterioration of the environment have started alarm bells and so companies should act quickly to preserve whatever little is left for posterity.
In short, companies have a moral and social responsibility towards the environment and its people. So, the management should devise a strategy to act more responsibly and ensure that it shows more concern for the environment and people.
Melville, Nigel. (March 2010). Information Systems Innovation for Environmental Sustainability. MIS Quarterly. Vol 34(1). p1-21.
Livesey, Sharon; Hartman, Cathy; Stafford, Edwin; Shearer, Molly. (October 2009). Performing Sustainable Development through Eco-Collaboration. Journal of Business Communication. Vol 46(4). p423-454.
Bansal, Pratima. (March 2009). Corporate Social Responsibility: The Good, the Bad and the Ugly. Administrative Science Quarterly. Vol 54(1). p182-184
Margolis, Joshua. Walsh, James. (June 2003). Misery Loves Companies: Rethinking Social Initiatives by Business. Administrative Science Quarterly. Vol 48(2). p268-305.
Social Education. (March 2009). Do Companies Have a Social responsibility? Social Education. Vol 73(2). p 84-91.
Zandvoort. H. (May 2008). Preparing Engineers for Social Responsibility. European Journal of Engineering Education. Vol 33(2). p133-140
Friedman, Milton. (2007). The Social responsibility of business is to increase its profits. Publisher: Springer Berlin Heidelberg.
Lo, Shih-Fang. (November 2010). Performance Evaluation for Sustainable Business. Corporate Social Responsibility and Environmental Management. Vol 17(6). p311-319.
Keith, Davis. (June 1973). The Case for and Against Business Assumption of Social Responsibilities. Academy of Management. Vol 16(2). p312-322
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