Introduction
Corporate social responsibility (CSR) is a concept that has become part of the busines culture and reporting. Almost all established corporation maintains a CSR policy as part being socially responsible. According to Crowther & Aras (2008), CSR is defined, in broad terms, as the "relationship between global corporations, governments of countries and individual citizens." Narrowly, it is the relationship and interaction between the business and the local society or environment wherein the business resides or operations. In another broader definition, CSR is the relationship of the business and its stakeholders, including internal and external members. This definition stretches the CSR not just to the society, but to all components that are affected or can be affected by the operations and day-to-day activities of the business.
On the other hand, the World Business Council for Sustainable Development defines CSR as the "continuing commitment by business to contribute to economic development while improving quality of life of the workforce and their families as well as of the community and society at large." This sums up the goal of the business which is to generate wealth, create profit, and ensure growth. But the goal of the business must not be singled on that alone, it is necessary for the business to include the welfare of the people within the organization, and the community or society. It must be noted that the definition uses the word “continuing” because CSR does not stop on a single program alone, but this is an on-going process to improve life and ensure sustainability.
Looking closely, CSR must be deeply anchored and rooted on three pillars or dimensions, according to the World Business Council for Sustainable Development, which are: economic growth, ecological balance, and social progress. These three must come together to achieve the goals of the business and its stakeholders. By working together side by side, it would be easier for the business to reach its potential of growth without damaging the environment and while ensuring that society benefits from the growth of the business.
Profile of the Case
One of the global woes that haunts not just the underdeveloped and developing countries, but also the developed countries, is the lack of water supply. According to reports of the United Nations, 18% of the total world's population still don't have available safe drinking water. And this is just part of the problem to the 40% who don't have available basic sanitation. This means that there are millions are out there who don't have clean water to drink, but they only have the unclean and infected water from lakes and rivers or canals.
The problem of lack of available water can be traced to water privatization. The past thirty years have seen how governments are privatizing water to create a new industry that can help economies to grow. But the same privatization raises issues on how ethical governments are and how socially involve are businesses within the privatization of water. Privatization of water disables the traditional access to water wells and such forms of water systems used almost a century ago. The aim of privatization is to ensure that water is available to all and this water is clean and safe for drinking or such other purposes. However, the goal of water privatization seems to falter out with the report of millions who don't have enough water supply.
The world's top global water companies are French MNCs, Suez and Vivendi. These companies supply communities and societies with safe drinking water; they also control the water systems of most countries. The good thing about these companies is turning the water system into an advanced network to ensure that all sections of the society are given necessary water, either for commercial or personal use. Water privatization ensures that individuals don't have to pitch water from the well, but they just open their faucet and they get water they need.
The World Bank and other international supervening and governing organizations are the promoter of water privatization. In an article published by The Nation, Shultz (2005) noted that water privatization in Bolivia was not a choice, but a forced one to ensure that the country can get loan from World Bank. There is a big question on the goals of the World Bank and international organizations on how water privatization is pushed as a bargain of loan.
In the controversy of water privatization, ethics and social corporate responsibility are central. If businesses really have or follow CSR policies, why is it that water access is defined to millions of people who are thirsty but don't have access to water? This strings from the question that if water privatization is really targeted on promoting water availability to all, why there are those who drink water from canals just to survive?
Critical Assessment of the Various Theories Governing Corporate Social Responsibility and Its Application
The theory of social contract was of ancient history. This theory is defined by the conceptualized relationship between the individual and the society as a symbiotic one (Mullerat, 2010). This means that the coexistence of the two provides a mutually advantageous or beneficial relationship to ensure cohabitation between two components of the society. Due to the fact that individual and society mutually engaged in a relationship and connection, it is necessary to keep this connection intact and positive. In context of the corporate social responsibility, the value of the business can be found on the way it reacts and responds to its society. If businesses want to enjoy the mutual benefit of the society, businesses should ensure that society is properly supported and guarded.
In the social contract theory, there is a strong connection between the business and its society. For instance, if the market scope of the business is affected by flood due to the failure of the business to provide water walls, the businesses lose a large part of its market. The market becomes unable to purchase goods and services from the business. In a chain of reaction, the business suffers from the low sales and revenue results. This is the reason why it is important for the business to look after the welfare of the community to ensure that the people within the community can purchase and keep finances flowing to benefit the business.
Second, corporate social responsibility is also defined by the legitimate theory. This theory is anchored on the demand that "organizations continually seek to ensure that they operate within the bounds and norms of their respective societies, that is, they attempt to ensure that their activities are perceived by outside parties as being legitimate (Mullerat, 2010, p. 110)." There are standards that the society follows, but when businesses go against these standards, they suffer the negative perception of the public. In fact, this is the main reason why it is necessary for corporations to have clear-cut corporate social responsibility to foster a good public image to boost their appeal to households. When the public image of the corporation is tainted due to actions that do not align with the standards and norms of the society, the people within the society start to stay away from the products and services of the business.
In the legitimate theory, the lifeblood of the business is on how the public sees their operation. In today's world, the market behavior is to look for products and services that are “green”. Green products appeal to the public because of the strong promotion of ecological balance, which is part of the goal of CSR. As such, if the business goes against the standard of ecological balance, products may not be received by the public. This is the same with the Muslim community. In the definition of CSR, it is a relationship between the corporation and the stakeholders. This means that stakeholders of the corporation should be given attention in the day-to-day operations of the business. For businesses whose stakeholders include the Muslim community, the day-to-day operations and products of the corporation should be in accordance with the Islamic norms and standards. Otherwise, Muslim stakeholders or members of the society may perceive the operations of the corporation or business as against bounds and norms of their society.
Another important part of the theories on CSR include the instrumental theory, the political theory, the integrative theory, and the ethical theory (Garriga & Mele, 2004). Instrumental theory provides that the goal of the business is only to maximize profits for its stakeholders. This will ensure that the nation's economy is well supported so that people within the community are well provided. On the other hand, political theory promotes that the power of the business should be used to meet its responsibility. Moreover, integrative theory ensures that businesses do their responsibilities for the continuity of the society's benefits. And lastly, ethical theory ensures that the business looks after its community, the people within the community, and the environment to keep the society sustainable and growing for the business's benefit.
If we look closely at these theories, we will find that the ethical theory is the most active and most appropriate to be adopted by the organization. It is necessary for organizations to look after the welfare of the society and the people within the society to develop a strong awareness among them and to keep the growth of the society in direct proportion to the growth of the business. In fact, this is what Henry Ford uses in the automobile industry. When the people are well provided, the business can expect that they will contribute to the growth of the business, but the decline of the people and the environment means the decline of the business.
Critical Evaluation of the Impact of Corporate Social Responsibility and Supply of Water
CSR initiatives have been implemented by various corporations to bridge the gap between the private sector and the public, or to clean up and patch up a bad corporate image due to some public relations failure (Tapia, 2012). One of the CSR policies that translates the intent of keeping a good corporate image is of the Northumbrian Water Limited (NWL). The company's CSR says "NWL recognizes that conducting its business in a way that minimizes environmental impact, promotes positive interaction with the community and is conducted with sound ethical standards brings benefits to all concerned (www.nwl.co.uk)." Yet, this CSR is not limited to single period of the organization's or the society's life, but it is an on-going commitment of going beyond what is expected of the business.
In today's society, the CSR of businesses within the water industry are placed in the hotspot due to the growing demand and debates on water privatization, water shortage, and the large millions of disenfranchised individuals who don't have access to clean water or to basic sanitation. NWL's corporate social responsibility policy speaks of the intent of the organization to ensure that the environment is protected from immediate destruction and decline, as well as the need to ensure that the community is well provided. As a commentary, most of CSR policies sound like the NWL's statement, but only a few apply it because the problem of water shortage and the disenfranchisement of many is still growing at alarming trend.
The failure of businesses to promote and practice their CSR policy is the main motivation for consumers and activist groups to raise their voices to put the public spotlight on social and ecological issues. The growing demand from the public or the society has been placed on hold by the government and most businesses, which caused the clamor of the public for real CSR. This is the case with Nestle. Nestle produces the largest volume of bottled water, but they don't have concrete discussion with stakeholders on how they are addressing the problem. Of course, it must be noted that Nestle just consume 0.0008% of the world's fresh water supply, but when the public's mind is focused on the millions of people who don't have access to water, the question is how did Nestle react to these millions who are thirsty for water, but they are profiting much from water, which should have been free to all (Binder, 2010)?
CSR is more stained with water privatization. The rationale behind the promotion of World Bank to privatize water is to ensure that all people around the world get equal access to clean and safe water. But the results were different from the objectives and goals of World Bank. Instead in Bolivia, people were stopped from access to water due to the high cost of water (May, et.al., 2007). Instead of making water available and accessible to the people, the universality of water was being trampled down to ensure that the private company controlling Bolivia's water system got the biggest profit. In the end, protests were made by the thirsty populace and the government was forced to overturn the water privatization policy.
Raising the argument of CSR is the rationale of water privatization itself. According to Mulreany, et.al. (2006), "access to clean, safe water is a cornerstone of public health." However, the problem with the application of CSR is the failure to focus on clean and safe water accessibility and availability. Corporations are more focused on how they can use water to gain much from the advantage of water's universality and free course, and yet they remain to be adamant in sharing the same advantage to those who don't have capacity to have safe and clean water.
Conclusion
Mainly, it must be noted the water is free, and access to it should remain free. However, due to the intent of creating convenience so that people don't have to pitch water from well, water privatization becomes a practice. Water privatization provides a way for the water system to reach houses and commercial establishments. It is fitting for the companies behind these investments to gain from their capital. However, it is not fitting for companies to focus on their ROI and ignore the reality of the need to meet the social needs of the people within the community. When this happens, the CSR of companies becomes statements only, rather than practices. Or if practices are made, these do not meet the demand of real CSR policy.
Second, it must be clear that the goal of business which is to make money should not come in priority against the need of promoting the common good of the people. Rather, it is necessary for organizations to create CSR that would empower the society's populace so that they can become members of the market. It is a realistic, honest, and proper corporate social responsibility, rather than the promotion of greed, which will eventually lead to the decline of the market, the environment, and the business itself.
Lastly, CSR should not be about how the business can get something in the future, but how they can improve society itself. When CSR becomes more focused on the people, the society receives the best reward and results, and this generates a ripple on other components of the society to benefit all.
References:
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Crowther, D. & Aras, G. (2008). Corporate Social Responsibility. Bookboon.
Garriga, E. & Mele, D. "Corporate Social Responsibility Theories: Mapping the Territory." Journal of Business Ethics 53-71. Kluwer Academic Publishers. Netherlands.
Horrigan, B. (2010). Corporate Social Responsibility in the 21st Century: Debates, Models and Practices Across Government, Law and Business. Edward Elgar Publishing.
May, S., et.al. (2007). The Debate over Corporate Social Responsibility. Oxford University Press.
Mullerat, R. (2010). International Corporate Social Responsibility in Practice: The Role of Corporations in the Economic Order of the 21st Century. Kluwer Law International
Mulreany, J., et.al. (2006). "Water Privatization and Public health in Latin America." Rev Panam Salud Publica Vol. 10 N. 1.
Northumbrian Water Limited. (2013). Corporate Social Responsibility. Retrieved from http://www.nwl.co.uk/business/corporatesocialresponsibility.aspx
Shultz, J. (2005). The Politics of Water in Bolivia. Retrieved from http://www.thenation.com/article/politics-water-bolivia
Tapia, E. (2012). Corporate Social Responsibility and Its Implications. Retrieved from http://www.dagliano.unimi.it/20120809/csr/
World Business Council for Sustainable Development. (2013). Corporate Social Responsibility.Retrieved from http://www.wbcsd.org/work-program/business- role/previous-work/corporate- social-responsibility.aspx
