Unit L/617/1248 Corporate Social Responsibility
Level 4
Scenario
You are working for a well-known sports clothing manufacturer. Your company has recently received a lot of bad publicity because of investigations and reports in the press about human rights and conditions for workers in factories used by the company. Workers have reported abuse, low wages and poor physical working environments. There is a code of conduct for suppliers but no means of ensuring it is adhered to. This issue has caused the company to consider other corporate social responsibility (CSR) issues such as carbon neutrality and recycling. It has become apparent to senior managers that a CSR policy is needed but the Board must be convinced of this. You have been asked to write a report on current corporate social responsibility issues facing the business, which the senior management team will consider at their next meeting before discussing with the Board.
Task 1
Produce an explanatory report for the senior management team which covers the following:
an analysis of the regulatory framework for CSR (AC1.1)
an analysis of environmental issues in CSR (AC1.2)
an analysis of social and community issues in CSR (AC1.3).
Merit task
To achieve Merit, you must add a section to your report where you assess changing attitudes to CSR (AC1M1).
Distinction task
To achieve a Distinction, you must add a section to your report where you evaluate the success of a chosen organisation in managing CSR issues. This may be an organisation which you have worked for, or one that you can research. (AC1D1).
Task 2
Following the submission of your report, the senior management team wish to understand the impact of corporate social responsibility policy on different stakeholders. They invite you to a meeting to discuss aspects of the impact. Prepare discussion notes in the form of detailed information on the following aspects so that you are prepared to present any or all of your responses verbally or in writing at the meeting:
Assess the benefits of CSR to our employees (AC2.1)
Analyse the impact of CSR on our supply chain (AC2.2)
Explain how a CSR policy will impact the Senior Management Team and business performance (AC2.3)
Merit task
To achieve a Merit, you must add a section to your discussion notes where you assess the potential conflicts which may arise when we try to satisfy the needs and expectations of different stakeholders through our CSR policy. (AC2M1).
Task 3
At the meeting with senior managers, the Board of Directors agreed that a CSR policy will be developed. The senior managers want you to draft a brief for them to make recommendations to the Board for responsible business practice. They want you to do this by initially reviewing the CSR policy of a similar company.
You must choose a sports clothing manufacturer or another organisation that manufactures clothing and review its CSR policy. Produce a brief for the SMT to finalise and take to the Board. In the brief, you must include
A review of the CSR policy of your chosen clothing manufacturer (AC3.1)
Your recommended changes to the CSR policy to benefit the following groups of stakeholders
suppliers
customers
employees
environment
community (AC3.2)
An assessment of the potential impact of changes in CSR on business performance (AC3.3).
Distinction task
To achieve a Distinction, you must add a section to your brief where you assess the extent of voluntarism in CSR policies (AC3D1).
Answer
Introduction
Corporate social responsibility or CSR corresponds to an entity's commitment to properly managing the social, ecological, and economical effects of its activities in conformity with community expectations. This is a critical component of a corporation's strategy to organizational governance as well as frequently affects many aspects of the organization, including operations, human capital, production, distribution network, workplace safety, and many others. Companies have built excellent reputations, attracted favourable attention, saved cash via business effectiveness, reduced impacts on the environment, attracted top talent, and encouraged innovation. With their financial statements, public corporations report frequently on CSR performance (Advantage, 2020). CSR act as an important tool to businesses since they may lose consumers or even see their image diminish if the public does not agree as to how company function. The news press and protest organizations frequently closely monitor corporations and report irresponsible incidents rapidly. The study comprises an analysis of multiple aspects related to CSR including regulatory framework, environmental issues, and social issues, etc. Further, the study evaluates the CSR performance of Nike company which is a leading Sports Clothing Manufacturer. At last, study recommends different CSR initiatives for benefit of different stakeholders along with possible implications for these recommendations.
Main Body
Task 1
AC1.1 An analysis of the regulatory framework for CSR:
Social responsibility practices have been a prominent issue in contemporary times since societal pressures on corporations to become increasingly socially responsible entity as well as comply to social moral codes has risen considerably. Organizations especially sport clothing manufacturers all around the countries must undertake the required steps to strengthen social performance as well as make the planet an improved place. ISO:26000 is a major worldwide norm that was created to give instructions regarding how to conduct business in a structured socially responsible approach. This criterion applies to all companies, irrespective of a particular place or business sector, whose goal is to contribute to society's welfare and safety. ISO 26000 acts as a guiding regulatory framework that assists companies in strengthening operating practices and supporting a sustainable environment (Crane, Matten, and Spence, 2019).
The company should obtain ISO 26000 certification, which enables the respective company not only to efficiently providing sports clothing products to customers and the general public but also to perform business operations considering the environment as well as its sustainability. Besides that, the company can improve the corporation's identity by covering more consumers groups and professionals that want to preserve the environment sustainable and healthy. ISO 26000 framework assists corporations in fulfilling their relevant social duties in terms of sociological, cultural, environmental, including economic progress circumstances. This framework offers a detailed guideline for the corporation on how to efficiently apply the theme of societal responsibilities. Such guidelines serve in identifying and involving stakeholders, as well as enhancing the credibility of reporting and assertions on corporate social responsibility. This enhances the customer's and shareholders' trust and satisfaction. This boosts the corporation's performance by contributing to sustainable growth in a fair and socially responsible way.
AC1.2 An analysis of environmental issues in CSR:
Environmental issues are key considerations for businesses operating in multiple countries. As the leading sports-clothing manufacturing organisation so it is essential for company to identify different environmental issues to frame CSR policies. In this regard, following are key environmental issues related to CSR in the context of respective organisation, as follows:
Recycling Policies: Organizational recycling policies usually encompass rules pertaining to the procedure of recovering raw materials from wastes and transforming them into fresh items. The initial product is eliminated in this procedure, which is generally performed by a dissolving phase, however, it is then applied to generate new items. In respective clothing organisation, it is managers’ responsibility to recycle and use waste materials, returned items and recalled products to manufacture fresh products as well as ensure adequate disposal policies for non-recyclable items (Liang and Renneboog, 2017).
Green packaging: Eco-friendly or green packaging may play a vital role in CSR. This is, also characterized as sustainability packaging, may contribute to minimizing carbon footprints while also creating substantially less wastage, therefore having a crucial part in protecting the welfare of the world. The respective business should adopt green packaging ideas to male contribution towards CSR practices.
Sustainability: The materials utilized in clothing affect not just the framework of value chain and distribution network, as well as the recycling opportunities. The more diverse the substances and chemicals utilized; the more complex recycling gets later on, consequently the greater the resource usage. Clothing as pollution filters, solar collectors, or insulating material has immense possibilities for achieving sustainability.
Pollution: The clothing industry's air pollution and emissions are significant issues. Pollutants are emitted into air by furnaces, thermopacks, and diesel engines. Suspension Particulate Matters, sulfur di-oxide gases, nitrogen oxide gases, and other contaminants are released. The discharge of poisonous gases into the atmosphere has a deleterious impact on the surrounding human-populated regions.
Bases on above analysis of different environmental issues concerned with CSR, this has been recommended to respective company to follow ISO 14000 standards. The ISO 14000 set of norms outlines and supports different environmental managing disciplines like environmental management framework, sustainability practices, environmental audits, environmental labeling, including product lifecycle analyses. As per this standard clothing manufacturers should minimise processes that impact environment adversely, adopt green packaging and follow all environmental regulations as specified in the said standard (Wang, Tong, Takeuchi, and George, 2016).
AC 1.3 An analysis of social and community issues in CSR
Social aspects and community groups are ley aspects in CSR as these are main beneficiaries and objects of a company’s CSR practices. Here are certain social and community-based issues which should be incorporated in CSR policies of respective companies, as follows:
Employment discrimination: When a staff member or job prospect is treated unfairly based on their age group, handicap, genetic characteristics, nationality, pregnancy, ethnicity or body color, religion, or gender, this is considered workplace discrimination. Furthermore, federal anti-discrimination rules shield employees from harassment for stating their entitlements to be protected from workplace discrimination. Thus, respective companies should consider these issues in CSR policies to mitigate such issues (Jankalova, 2016).
Sponsorship/donations: Companies should perform their studies and encourage personnel, communities, projects, and incidents that assist in society's progress. Companies should focus on providing money or in-kind contributions towards society's welfare, even though their products/services.
Volunteering: This refers to voluntary acts or steps performed by an entity in which it engages in non-profit charity initiatives without any fiscal advantage. The companies offer supplies and monetary assistance for the welfare of society, citizens, and enterprises. Corporations should assist personnel in developing new abilities, growing career opportunities, and strengthening their physiological and emotional wellbeing (Schäfer, 2016).
Employees workshops and training seminars: Corporations should encourage staff members to develop new skill sets and boost understanding and proficiency in support of educational training. Staff should be taught to enhance their total productivity and performance on healthcare and security concerns. That's not just employees' training and teaching, but also companies who must run sociocultural empowerment schemes, technical, skills-related coursework, as well as jobless young people.
Based on above issues this has been advised to respective companies to follow OHSAS 18000 norms, these norms support companies in their health issues and security risks management and controlling. Further, respective company should also follow provisions of Health & Safety at Work Act, Discrimination & disability Act regulations, and Regulation on working hours to ensure company’s steps towards society and community.
AC1M1 changing attitudes to CSR:
Companies due to their global image and to change customer perspectives towards company, are changing their attitudes towards CSR. In the current setting, the objective of huge profits, huge revenues, and increased market dominance is not viable. They also take care of social elements and societal demands while developing a plan for the corporation. They seek to earn consumers' trust by implementing social responsibilities, as buyers are interested not just in the products/services but even in environmental and societal implications of enterprise. This indicates that CSR isn't just a voluntary obligation, but also becomes a day-to-day moral responsibility.
AC1D1 evaluate the efficacy of Nike in managing CSR issues
Nike is a leading sports clothing manufacture has taken steps to improve workers' working situation to handle the impacts of climate changes on the distribution chain as well as to decrease its ecological effect. In addition, Nike innovates its material creation and administration. Water preservation is one issue of emphasis for Nike. Nike makes effort in evaluating the total water footprint including comprehending it, which allows Nike to find conservation possibilities in its value chain. Whilst targeted advancements in water efficiency for production and processing of raw material, this is recognized that efficacy is not the just appropriate measure.
Task 2
AC2.1 Assess the benefits of CSR to our employees:
More attractive organisational culture for potential employees: CSR could render companies more appealing to potential personnel and potential employee personnel, in conjunction with improving employees' engagement at present. In the era where people in thousands of years are looking for businesses with a "great impact," participating in CSR can assist firms to recruit talented employees above others (Grayson and Hodges, 2017).
Reducing workplace discrimination: The use of fair possibilities helps to inspire workers because every individual has some potential for growth and progression. Gender inequality, citizenship, ethnicity, age, and disabilities discrimination are integrated as well as a workplace-friendly workplace is established.
Whistle-blower policy: CSR also covers whistle-blower policies that protect a company if the present or previous employee makes a fraudulent or deceptive accusation. The significance of their confidential duties towards their company and customers may also be reinforced by a whistle-blowers policy. It provides companies a chance to train employees and leadership and enhances their company's desired norms.
Improved workplace circumstances: When companies adhere to CSR policies, they care for their personnel and establish decent working arrangements and settings, such as maternity leave, job rotation, frequent breaks, and frequent training sessions, along with other aspects.
AC2.2 Analyse the impact of CSR on our supply chain:
Production Ethics: On a worldwide level, ethical production is focused on excellent health, security, and decent labour pay. These are also part of CSR practices which generally involve the desire to minimize waste, extensive screening of products, and appropriate labelling. These allow businesses to adopt eco-friendly techniques in production (Tilt, 2016).
Decrease in transportation cost: This critical issue not only affects a business’s overall costs but also the reason of CO2 emissions. CSR practices enable businesses to optimise and adapt environmental-friendly steps to optimise the value chain.
Carbon emission: CSR practices enable businesses to reduce carbon emissions and make contributions towards lowering carbon footprints. This also allows businesses to optimise resource usage and contribute towards reducing pollution.
Accountable sourcing: This entails going beyond price, reliability, and delivery timing. That those were the conventional components of the supplier network; while acquiring raw materials throughout backwards integrating and marketing products/services during forwarding integrating, strategical considerations for procurement should incorporate morality, sustainability issues, and civil rights.
AC2.3 how a CSR policy will impact the Senior Management Team and business performance:
The impact of CSR can be both positive and negative on top management as well as the company’s performance. CSR initiatives are used by top management as a strategy to increase sales by attracting new customers and increase profitability. In long run, CSR practices can enable respective companies to achieve competitive advantages and give tuff competition to other market players. CSR can assist management to save money by minimizing the consumption of resources, wastes, and pollution. Management may reduce their energy costs and make savings for company with few simple measures. This also enables businesses to form a plan showing the environmental impacts of the project. This plan clearly outlines the actions the firm will take to mitigate this effect, contrary to a declaration of environmental effects. Effective land administration and energy usage policies, wastage disposal processes, and water preservation strategies may be included in the environmental strategic plan (Portney, 2020).
Also, sometimes there may be conflicts between a company’s CSR practices and managerial policies which can affect a business’s overall performance. There may be some rigid CSR policies required to be followed by the company which can impact managerial plans and policies. Here, in this case, management should make changes in CSR policies or integrate them with managerial policies while ensuring that the company is adequately contributing towards CRS and aware of its social responsibilities.
AC2M1 Potential conflicts due to CSR with stakeholders
Different business stakeholders in CSR practices may have varying perspectives, as these practices are optional, not mandatory for all companies, which causes numerous complications. Shareholders desire substantial profits, they don't desire an environmentally accountable corporation because its income might be decreased by increased expenses towards CSR. CSR practices may be applied for longer-term sustainability through corporate governance. The stockholders' objective is making immediate profits, whereas management focuses on the company's longer-term objectives to create a unique identity of the company.
Task 3
AC3.1 A review of the CSR policy of your chosen clothing manufacturer:
Nike company is targeting corporate duty initiatives in key areas where they could make the highest effects and produce the maximum value: in their materials, they incorporate into their products, in the operation of manufacturing those raw materials and items, especially in the field of sports where its products are utilized. Nike recognized its most important impact sectors, comprising energy & weather, labour, chemicals, wastes, and the communities, using a number of protocols, comprising stakeholder engagement and lifecycle evaluation. When the Nike brand assesses and controls major effects, they learn how they interlink as well as how integrated strategy to product designing and processes innovations may gain from a number of impact zones. Athletes strive for ever-increasing standards of performance. Athletes aspire to reach that tipping point, to attain their maximum (Agudelo, Jóhannsdóttir and Davídsdóttir, 2019). That is how company Nike perceives corporate responsibilities. It is not just simply getting more at what they're doing - tackling effects across their supplies chain – but also about aiming for excellence, generating wealth for the company, and inventing for a healthier environment. As environmental, societal, and economical issues grow, they necessitate the highest level of performance. Company Nike is utilizing the strength of its brand, people’s choices, passion and excitement, and the size of enterprise to effect considerable transformation. The possibility for sustainability planning to promote corporate advancement, deepen customer and social relations, and produce nice social, as well as environmental impact, is bigger than before. Here are some key points analysed from Nike’s CSR priorities:
Nike CSR & Sustainability Highlights: –
A varied and inclusive work culture that serves as fuel for creativity.
Committed to lowering carbon footprints
Create a fresh palette of environmentally friendly materials.
Creating items with a closed-loop.
From production to advertising, it places the human experience at the centre of all it does.
Participating in, and inspiring workers to contribute to, the community and regions in which Nike works.
Transitioning to 100% renewable energies.
AC3.2 Recommended changes to the CSR policies to benefit the different groups of stakeholders
Here are certain recommendations for changes to CSR for the advantages of different stakeholders, as follows:
Customers: Customer satisfaction should be a top priority for Nike since most athletes are key customers of the company thus company majorly considering this customer segment. The company should also focus on unprivileged and financially weaker section of players and potential athletes who are interested in company’s products but unable to buy Nike products thus company should make a contribution in this area which will help the company to enhance their image among players and sports persons emotionally (Watson, 2015).
Employees: These are internal parties but the most significant asset for business. Company presently focusing on its education and training but here company should change its CSR plan. Now company should perform friendly games among different employees groups of its different business locations and give them Nike Products as well as promote games to advertise Nike products.
Environment: By Implementing CSR, the influence, negative effect on the ecosystem can be minimized, the business processes should be established in a way that the implications on the ecosystem can be decreased, such actions should strive to lower usage of scare resources like water, energies, improve wastes handling, input materials recovery as well as renewability, Decrease CO2 emissions, Natural, healthier, eco-friendly, solar-powered office building, Biodegradable packing, and Purchase more domestically. These all changes will result in cost reductions because energy-efficient organizations save more money upon water consumption, turning off lighting, and using less paperwork. These also strengthen brand identity since most people want to purchase from firms that are increasingly environmentally conscious (Lau, Lu, and Liang, 2016).
Community: Customers and communities are closely interconnected thus company should consider community and society while making CSR plans. Nike should now put emphasises developing nations like India and China as they have large populations as well as most athletes in world. Thus, company should contribute to local community of these markets to increase their customer base and enhance brand identity.
AC3.3 An assessment of the potential impact of changes in CSR on business performance
Businesses engage in communities proactively in order to enhance their image and reputation. They participate in relationship-building initiatives in order to satisfy their societal duties in respect of economical, ecological, and societal commitments. They strive to maximize the value to community; it is one form of payback to society where it operates business. Nike by Social activities become engaged in the regional community as moral motivations, i.e. donations, sponsorships and work for local young people. The company is aiming to create positive reputation for additional value in community. Company is working via community participation to establish fresh marketplaces, products/services. Therefore, companies need to be engaged in community for environmental sustainability (Scherer and et.al., 2016).
These all changes as discussed above will help company to increase their overall sales and increase brand goodwill. These all changes will help company to enhance its overall profitability and develop a base for more skilled employees in company. By focusing on all these improvements in CSR policies, Nike can increase their brand popularity in developing nations. Further, suggestions related to employees will help company to enhance their overall customer base and enhance their reach to large customers. However, there will be an increase in CSR expenses due to adoption of such suggestions but this will be worthy for company as this will enhance company’s marketing strategies effectiveness. Suggestion related to customers will help company to gain competitive advantages in longer run and create unique identity in sports clothing industry.
AC3D1: Extent of voluntarism in CSR policies:
Voluntarism concept refers to the role of corporations in situations when CSR contribution and activities are not compulsory, but organizations need to choose to at their judgment and then go above and below current moral codes and laws. Companies believe that they can provide service to the community on their initiative, instead of relying on the authorities to use it. Many nations considered CSR an obligatory responsibility, whereas others maintained CSR at the option of organizations. As in India it there is threshold income above which such companies are required to make CSR contribution of at least 2 percent of net profits. There are no compulsory CSR standards in the USA, Japan, United Kingdom. This is a subject that is quite disputed and which requires CSR regulations for firms to engage under their initiative in ethical, environmental, and economic actions to the same degree as it goes beyond legal requirements, with no regulatory supervision (Tran, 2019).
Conclusion
From the above study, this has been ascertained that Companies should develop a CSR governance framework by developing the appropriate policies, practical action programs, and reporting structures for CSR activities, which should include all CSR issues. Ensuring that CSR policies are created, that relevant resources are assigned to design and undertake action plans to follow such policies, and also that Metrics and outcomes are tracked and reported on. Companies with a CSR culture may easily push volunteerism to personnel and urge them to give to NGOs. Employee personnel is more inclined to become independently charitable if their business promotes it. Likewise, employees are aware that their company is dedicated to improving their regional and worldwide communities. They are more likely to be active and innovative after that. As a consequence of CSR, personnel can grow technically and morally.
References
Books and Journals:
Advantage, C., 2020. Corporate Social Responsibility. CSR and Socially Responsible Investing Strategies in Transitioning and Emerging Economies, 65.
Agudelo, M.A.L., Jóhannsdóttir, L. and Davídsdóttir, B., 2019. A literature review of the history and evolution of corporate social responsibility. International Journal of Corporate Social Responsibility, 4(1), pp.1-23.
Crane, A., Matten, D. and Spence, L. eds., 2019. Corporate social responsibility: Readings and cases in a global context. Routledge.
Grayson, D. and Hodges, A., 2017. Corporate social opportunity!: Seven steps to make corporate social responsibility work for your business. Routledge.
Jankalova, M., 2016. Approaches to the evaluation of Corporate Social Responsibility. Procedia Economics and Finance, 39, pp.580-587.
Lau, C., Lu, Y. and Liang, Q., 2016. Corporate social responsibility in China: A corporate governance approach. Journal of Business Ethics, 136(1), pp.73-87.
Liang, H. and Renneboog, L., 2017. On the foundations of corporate social responsibility. The Journal of Finance, 72(2), pp.853-910.
Portney, P.R., 2020. The (not so) new corporate social responsibility: An empirical perspective.
Schäfer, H., 2016. 26 Corporate Social Responsibility Rating. A Handbook of Corporate Governance and Social Responsibility, p.449.
Scherer, A.G., and et.al., 2016. Managing for political corporate social responsibility: New challenges and directions for PCSR 2.0. Journal of Management Studies, 53(3), pp.273-298.
Tilt, C.A., 2016. Corporate social responsibility research: the importance of context. International journal of corporate social responsibility, 1(1), pp.1-9.
Tran, B., 2019. Corporate social responsibility. In Advanced Methodologies and Technologies in Business Operations and Management (pp. 270-281). IGI Global.
Wang, H., Tong, L., Takeuchi, R. and George, G., 2016. Corporate social responsibility: An overview and new research directions: Thematic issue on corporate social responsibility.
Watson, L., 2015. Corporate social responsibility research in accounting. Journal of Accounting Literature, 34, pp.1-16.
