Introduction
In today's business environment, one of the most important issues is corporate social responsibility or CSR. According to Bueble (2009), CSR can be defined by looking at what the organization is responsible for and what are the things that motivate them to do it. For Vogel (as qtd in Bueble, 2009) defined CSR as the "policies and programs of private firms that go beyond legal requirements as a response to public pressures and social expectations (4)." This definition illustrates CSR as the commitment of the organization to do what is not required of them, but what they are expected of them. The government sets forth the guideline and regulation for the basic concerns that should be done by the organization, but CSR is more than the guideline of the government, it is all about the expectation of the society.
While on the other hand, Cramer & Bergmans (2003) define CSR as "the conscious focusing of the company's activities on long-term value creation in three dimensions: profit, people, and planet (114)." Instead of devaluing CSR as a separate division of the company or organization, CSR is attached and embedded to the operations of the business for the achievement of goals and objectives affecting the three dimensions. Of course, the primary concern of the organization is to generate profit or economic return. But along with this goal, it is necessary to ensure that activities or operations of the business provide safety to the people inside and outside the organization. And of course, the environment is another area of concern. Business operations must comply with the basic requirement for environmental sustainability – and organizations should take more than just what are expected of them for environmental protection.
Simply, CSR in today's context is more than just corporate philanthropy, but it is the coordination of ethical values and respect for people, and the high regard to the environment and society. This broader definition of CSR sets forth the scope of CSR for organizations to look for and ensure that their responsibility is equated with their power.
Case Profile
Last thirty years ago, water privatization was pushed by the World Bank and the international governing bodies to ensure that water is accessible and available to all people across the planet. By allowing private companies to manage water resources, World Bank sees a better water system that will increase the level of water availability to all homes. However, after three decades, water privatization raises questions in corporate social responsibility. Mainly, this questions the commitment of the government to promote the common good of the populace by keeping water available to all. Second, water privatization raises the alarm on how committed and true organizations, especially those within the water industry, are in keeping up with the demands of global water shortage.
One of the classic example of water privatization problems is the Bolivian situation. The government of Bolivia implemented water privatization as a way to obtain loan from the World Bank. However, in 2000, there had been several protests that even escalated to violence due to the hefty water rates. The scenario forced the government to reverse their decision and terminate the water privatization policy. The problem of water privatization is not just affecting Bolivia and other developing countries, but it also keeps developed nations in lookout on the urgency of keeping the universal availability of water.
With the 18% of the world's population not having access to clean water and another 40% who don't have enough basic sanitation, multinational private water companies such as Suez and Vivendi, Coca-Cola and Nestle, are enjoying large profits from the water industry. This is a deep contrast to the millions of people who are forced to drink water in lakes and rivers due to the difficulty of obtaining clean water. Nonetheless, this also poses a question on the gap of the poor and the rich. While millions in Africa are suffering for access to clean water, an average Canadian uses or waste 300 liters of water per day.
Over the years, the goal of the World Bank and the United Nations is to ensure that water is sustainable and remains so in the next decades to come. However, with the privatization of water, water becomes scarce to millions and water supply has been exhausted and explored to ensure that multinational companies get their expected revenue. In this regard, the question is how well water privatization is and how well are the CSR policies of water companies with regards to sustainability and welfare of the entire humanity.
Critical Assessment of the Various Theories Governing Corporate Social Responsibility and Its Application
To describe how organizations apply CSR into their operations, I will be reviewing the stakeholder theory, the social capital theory, and the institutional theory. These theories govern CSR policies and they shape the way businesses or organizations apply CSR. This means that these theories are basically the rationale and foundation for the actions and implementation of CSR.
Stakeholder theory refers to the "organizational management and business ethics and addresses the morals and values involved in the management of an organization (Sen, 2011)." In the stakeholder theory, the organization's CSR should take responsibility of the interest and demands of the business stakeholders. Stakeholders are those who are dependent, influenced, or affected by the actions of the organization. This means that the organization is not just answerable or responsible to the shareholders as owners of the business.
Stakeholder theory is in direct contrast the idea of instrumental theory of CSR. For the instrumental theory, the primary goal of the organization to maximize profits for the shareholders or owners benefit. But this is not the case with the stakeholder theory. Stakeholder theory provides a level of responsibility and burden to the organization in considering the interests and demands of other groups or members of its stakeholders, other than the shareholders, in the decision-making.
According to Jones and Wicks (as qtd in Sen, 2011), stakeholder theory holds four basic principles: (1) the corporation has a relations with several stakeholders, (2) processes and outcomes of the firm affect stakeholders, (3) stakeholders' interest has intrinsic value and is important to the company's growth, and (4) managerial decision-making stands supreme to the achievement of the stakeholders interest. It should be clearly noted that stakeholder theory does not undermine the necessity of profit maximization, but stakeholder theory promotes the social, moral and environmental obligation of the organization.
On the other hand, social capital theory refers to the civic engagement of the organization (Mungal, 2004). This theory speaks of the reciprocity of the impact and value of social networks. This means that whatever the action of a network affects the other, and in vice versa. It is important to note that for CSR policies that follow this idea of social network, CSR must be in parallel to the goal of other networks to achieve the best impact. This is in direct agreement with the value of political theory, wherein people must maintain mutual benefits for their survival of both. When a single network fails, others are expected to follow suit.
This theory is the rationale why organizations should look after the society because when the society fails the business fails as well. For instance, when the people are crushed by a dreaded epidemic due to the pollution of factories within the region, the business also feels the impact. Mainly, the business loses the workforce that enables it to produce goods. Second, it loses the immediate members of its market, thereby the organization succumbs to financial loses. To this regard, social capital theory believes that if the organization looks after the welfare of the society, the society can help the business to achieve its financial goals.
Lastly, institutional theory provides an explanation on how organizations behave within the bounds and limits of business with regards to their society's expectations (Brammer, et.al., 2012). It should be noted that the society as an institution has its own set of rules, either formal or informal, and other regulations that are followed in the conduct and behavior of people. This is same with the business sector. They have rules that should be followed which will place the business in the idea of ethical principles. These rules and regulations govern these institutions on the way they should behave and interact with each other.
As much as organizations have rules and conducts to be followed, CSR is going beyond what is expected of them out of the limits of the rules and regulations. By going more than what is expected of them, CSR works on the value of voluntary engagement. In essence, institutional theory is the new perspective to explain CSR in today's context. Instead of being guided and limited by the institutional conduct, organizations are doing their best for the achievement of the goals of the institutions, in whatsoever form they can be of great necessity.
However, the reality of CSR is not always on the value of voluntary engagement. It is just a theory, but far from being practiced. This is in fact the reason why the political institution has to create rules that should be followed and programs that would motivate organizations to improve their CSR, either social, political, moral, or environmental.
Critical Evaluation of the Impact of Corporate Social Responsibility and Supply of Water
According to Dianne Farsetta (2009), for every bottle of Ethos, a water brand of Starbucks and Pepsi which was launched in 2008, five cents go to the Ethos Water Fund for the H20 Africa. The organization aims to provide water for the millions in Africa who don't have water. This is part of the social responsibility of Starbucks and Pepsi of giving back to the world a part of their profit. However, these actions of organizations within the water industry come into scrutiny and deeper review. First, the five cents return for the welfare of mankind may not be enough to provide for the millions who don't have water supply or access to clean water in Africa. Second, the true value of corporate social responsibility is giving back to mankind, but the program of Starbucks and Pepsi may not even take a single cent from the companies. Starbucks and Pepsi can always pass the burden of their CSR to the consumers by adding price tag to Ethos bottled water. In essence, the CSR of organizations may not really be what is expected of them or the truth of what they are doing.
Of course, water privatization is not just the single reason for water shortage and the unavailability of water to millions of people, but water privatization is one of the culprits why millions cannot buy water or get access to fresh water across the planet. At the top of the water privatization is the World Bank. It had been the policy of the World Bank to encourage privatization of water as a way to keep water supply clean and to safeguard freshwater reserves to be safeguarded from the inherent destruction (Banerjee, 2009). However, from this perspective, the corporate body becomes the forerunner with the approval of the government to the loss of access or denial of water to the millions in Africa.
And the problem is not just about political and economical, but rather on discrimination of race and disparity between the rich and poor. In Africa, race and wealth become the primary factors for the access to clean and safe water. If the person don't have the capacity to buy bottled water or pay cost of the water system, he or she succumbs to lakes and rivers. This is a picture of contrast to the goal of the World Bank and other international associations under the United Nations. The opposite is happening across Africa and underdeveloped or developing countries. And developed nations are not also immune to the problem of water cost.
This is what happened to Bolivia. In the highly contested water industry, several players are willing to pay much to get what they wanted. In Cochabamba, Bolivia, water privatization was a disaster (Beishem, et.al., 2012). After the water system was established by a private company, water rates went up high that the people were alarmed. This scenario led to violent protest of the population against the repressive nature of water privatization – and they won. Cochabamba is just a prototype of what's happening across the planet. Years back, people can have access to fresh water, they can dig the ground for water wells, but with the water privatization they are forced to pay high bills just to get clean and safe water.
Yet, the people cannot fight back because water now becomes a commodity, rather than a public right (Marshall, 2013). Private companies are trading water instead of making it available to the populace. They are elevating profit maximization over their social responsibility. As a result, thousands have died or may die due to hunger, lack of food due to water supply shortage for their agricultural irrigation, and other problems. It must be noted that water is considered a universal last frontier for everything and everyone depends on it, that if water is denied, death is inevitable to many.
Walters (2013) argued that water privatization is going against water democracy and public right of access to water. By deepening water democracy, the populace can better work with the government for the protection and management of water. Nonetheless, water democracy is still an important issue in the CSR. If organizations would include water democracy into their CSR, it could have saved millions who don't have access to clean and safe water.
Conclusion
The goal of most CSR policies is not actually to promote the common good of mankind or the society. Rather, the main purpose of CSR is to project a strong corporate image of good behavior and character. This is the common scenario and this is the culprit why there are millions who don't have access to water supply. Instead of providing for the needs of the millions, organizations are looking for ways on how to come up with a good image that increase their value in the market.
In reality, CSR is only but a theory and policy. Perhaps, instrumental theory and social capital theory are more proper to be used to explain CSR. CSR policies are focused on the maximization of profits and on how organizations can benefit from their CSR. Even if how hard institutional and ethical theories project the value of CSR, we are still confronted of the reality of the inadequacy in the network.
In the implementation and application of real CSR commitment, the government should be the first motivator and mover. In fact, in water democracy, the government is expected to act for the welfare of the people. Rather than wait for private organizations to adopt a CSR policy that really translates the welfare of the people, it is time for the government to do its part by imposing the rules on how CSR should be implemented, especially with regards to water.
References:
Banerjee, S. (2009). Corporate Social Responsibility: The Good, the Bad and the Ugly. Edward Elgar Publishing.
Beishem, M., et.al. (2012). Limits to Privatization: How to Avoid Too Much of a Good Thing - A Report to the Club of Rome. CRC Press.
Brammer, S., et.al. (2010). "Corporate Social Responsibility and Institutinal Theory: New Perspectives on Private Governance." Socio-Economic Review. Oxford University Press.
Bueble, E. (2009). Corporate Social Responsibility: CSR Communication as an Instrument to Consumer-Relationship Marketing. GRIN Verlag.
Cramer, J. & Bergmans, F. (2003).Learning about Corporate Social Responsibility: The Dutch Experience. IOS Press.
Farsetta, D. (2009). Water: The Newest Wave of Corporate Social Responsibility. Retrieved from http://www.prwatch.org/node/8526
Marshall, A. (2013). Human Beings Have No Rights to Water and Others words of Wisdom from Your Friendly Neighborhood Global Oligarch.Retrieved from http://truth- out.org/opinion/item/16015-human-beings-have-no-right-to-water-and-other-words-of- wisdom-from-your-friendly-neighborhood-global-oligarch
Mungal, S. (2004). When Social Capital Doesn't Impact Political Participation: A Case Study in Social Capital Theory in El Salvador. Retrieved from http://www.scu.edu/ethics/publications/submitted/mungal/social-capital-theory.html
Sen, S. (2011). "Corporate Social Responsibility in Small and Medium Enterprises: Application of Stakeholder Theory and Social Capital Theory." Southern Cross University Library.
Walters, V. (2013). Water, Democracy and Neoliberalism in India: The Power to Reform. Taylor & Francis.
