Introduction
The European Commission (qtd in Grant & O'Connor, 2013) defines corporate social responsibility as "essentially a concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment." It must be understood that CSR is all about volunteerism of the business sector. It is going beyond what is expected of the organization and working on what makes the society and the environment better. Governments are working hard to create the legal framework that will guide the implementation of CSR. In this sense of commitment, it is necessary to be vigilant even in the middle of depression. Under the definition of the European Commission, CSR should be imposed regardless of the conditions of the business, either it is gaining or losing.
On the other hand, the United Nations Institute for Training and Research (2013) defines CSR as the "management of concept and a process that integrates social and environmental concerns in business operations and a company's interaction with full range of its stakeholders.” Based on the definition of the UNITAR, CSR is a concept of the organization's management that is implemented for the purpose of meeting demand of social and environmental concerns and objectives. Socially, CSR focuses on the welfare of the people within the community to meet the norms and standards; and environmentally, CSR is concerned on the establishment of proper definition on the organization can ensure sustainability of the environment to avoid depletion of resources and such other degeneration.
Nonetheless, UNITAR further defined CSR as the incorporation of social and environmental purposes and objectives into the day-to-day operations of the business. It is impossible to separate the business operation from the impact of CSR. By keeping the operations of the business in alignment with the CSR, it is easy for the organization to meet demands and purposes of stakeholders. In the end, CSR is rooted on how businesses conduct their operations to avoid damaging the environment or forfeiting fundamental rights of the people within the society where the business resides or operates.
Profile of the Case
One of the most controversial issues that is constantly debated and argued by proponents and opponents is water privatization. The last three decades have seen the direction taken by governments to privatize the water industry and system. Yet, water privatization raises questions on how well the government or the nation-state safeguards the welfare of the people. It is about the responsibility of the government to provide safe and clean drinking water to the population, and to ensure that all aspects of the nation's resources are used creatively and properly for sustainability development path. In the same manner, it is a question on the implementation of the corporate social responsibility of organizations for the furtherance of both social and environmental concerns.
Perhaps, one of the most important situations regarding water privatization and CSR is the protest of Bolivians against the water privatization policy of the government. Foremost, Bolivia's direction of water privatization was motivated by the guideline of the World Bank in granting loan. However, results of privatization led to chaos and disorder in the country, which prompted the government to reverse their decision and for the premature termination of water privatization.
The ultimate goal of water privatization to ensure that the 18% of the world's population that don't have access to safe drinking water and the 40% of the world's population who don't have access to basic sanitation can have access to an advanced water system. Yet, the results were different and opposite to the goals. Instead of providing water for the poor, millions who don't have the capacity to buy water are led to drink water from lakes, rivers, and other unsafe and unwarranted water sources.
Water privatization also presents a large question on the disparity or gap between the poor and the rich. In Canada, a person uses 300 liters of water everyday. While those who are living in the developed countries are enjoying much affluence and water supply, there are millions, especially in the drought-prone regions of Africa, that don't have access to water. While in people in the US drinks bottled water, people in Africa are fighting against animals to get access to unclean water.
With this reality, the question is what are multinational companies, like Coca-Cola, Suez, Vivendi, doing to provide to these millions. It is necessary to determine the impact of their CSR to really see if they are doing the policy they have written for public image.
Critical Assessment of the Various Theories Governing Corporate Social Responsibility and Its Application
There are several theories that govern the application of CSR in most organizations. There are various quadrants that should be considered to ensure the accomplishment of CSR. In this regard, I will be reviewing the different theories and views on CSR, to include: classical, socio-economic, modern, and philatrophic (Zu, 2009). Classical theory of CSR can be likened to the instrumental theory, which looks forward to profit maximization of the organization. In this theory, CSR application is dependent on the value of the company net growth and financial status, rather than on the commitment of the organization to implement or accomplish CSR, regardless of the financial status of the company, as an alignment to the water UNITAR defines CSR.
The problem with the classical theory of CSR is dependence on flow of cash of the company. If we look closely, this classical theory of CSR is not actually a CSR in action. Rather, it just defines CSR as a policy of the company that they can choose to implement or not. Instead of making CSR a policy that should be implemented throughout the cycle of the business as characterized by the incorporation of CSR into the business operations, classical theory of CSR places CSR in a state of temporal options, not a permanent resolve.
Second, socio-economic theory or view of CSR is more focused on the adoption of some degree of social responsibility for the net benefit of the company. Simply, an organization that uses this theory in the implementation of CSR looks for possible ways they can serve the social demand while creating profit for the business. This is further expanded by the view of Political Economic Theory, which focuses on how the business can avoid regulations that damage its operations and revenue generation (Idowu & Filho, 2009). By choosing areas for CSR implementations, the organization will be able to maximize its profit responses and actions through the CSR.
Socio-economic theory of CSR is the most prevalent view being used by organizations for their CSR. For instance, for a mining company to continue its operations, it is necessary to include environmental protection into its CSR. As such, mining companies would rehabilitation areas they mined by reforestations. As a result, they can avoid further regulations and interventions of the government, which may cap their growth and revenue generation. In a sense, companies are looking for ways wherein they can combine social and environmental responsibilities into their operations for the aim of maximizing their profit capability.
Third, the modern view of CSR works is the stakeholder theory into action (Âkovleva, 2005). This furthers the idea that the organization has a responsibility to take among its stakeholders. In an organization, there are various stakeholders affected by its actions, which may include: consumers, communities, shareholders, suppliers, competitors, and governments. These stakeholders demand actions from the organization. Stakeholder theory focuses on meeting the "needs, interests and influence of those affected by their policies and operations (Âkovleva, 2005, p. 11)." In the decision-making of the organization, it is necessary to consider the demands of stakeholders for the accomplishment of the CSR of the company.
The good thing about CSR is the establishment of a good foundation that can flow net benefits in the long run. The organization pursues CSR not for the benefit of the moment, but to achieve benefits in the long run. For instance, a travel and tourism company can invest in various projects that involve improvement of the landscape of the region; this action ensures sustainability of the environment. In the long run, when the landscape of the region already flourishes and reaches its beauty, the tourism company can bank on it to attract people to travel to these regions.
Lastly, the philanthropic view of CSR is more of the ethics theory. It does not equate CSR with net benefits, rather it considers CSR as a net cost for the organization. In this sense, the CSR is purely philanthropic. An organization that creates scholarship programs and supports environmental protection even it works within the IT industry is doing CSR in a purely philanthropic sense. The organization will not receive net benefits in short term or long term. Rather, the organization engages in the CSR for the sake of helping the society and the sustainability of the environment. The philanthropic view of CSR is one of the best approaches of CSR, but it is also the most ignored and rejected view due to the net cost the organization incurs.
Critical Evaluation of the Impact of Corporate Social Responsibility and Supply of Water
According to Bakker (2013), water privatization, a trend that started in the 1990s, transcends the "political, economic, and environmental challenges that arise when governments attempt to deploy private companies to manage resources." Proponents of the idea of water privatization looks forward to the proper management of this last frontier resource. Without privatization, water will be damaged and destroyed, and this will lead to the destruction of mankind, as a whole. However, there are intriguing questions on the proper social and ecological balance of governance. Opponents of water privatization argue the reality of water deprivation to millions of people due to the increasing cost of private water systems and the difficulty to find access to free water that is not owned by private entities.
In the profile of the case section, I have presented the facts of 18% of the world's population who don't have access to clean drinking water and the example of Bolivia's fight to regain their water from the hands of private companies. This leads to the question on actions of the government to protect the populace and to ensure that they get access to clean. If water privatization goals are really achieved, why millions would resort to drinking water from canals and dirty rivers? In the same manner, this also questions the CSR of water companies. It raises doubts on how well they manage the last frontier resource of the world to ensure that stakeholders' interests and needs are well provided and met.
The problem of water privatization springs from the political ground of why it is allowed (Samson, 2013). Multinational companies like Nestle and Coca-Cola are allowed to manage water resources because they can create jobs, even at the expense of the people. The World's Bank looks forward to protect water and to ensure that the water industry becomes a big part for the economic advancement of the nation. However, for most of this companies, like Nestle, water is not a right, but a privilege of human beings, as noted by Samson (2013). And because water is not a public right, privatization looks forward to make it so private that people cannot have access to it without giving profit to MNCs, in this case, Nestle.
In the battle between CSR and profit, the question is what form of CSR theory is used. We can look forward for the classical view or the instrumental theory. Companies invest in the protection of freshwater sections to ensure that they can have access to water in the future, which they can sell to the public. In fact, we don't see any social contract in this CSR perspective.
And still the question goes on much larger problem on what is the priority of the government, being the creator of legal framework for the accomplishment and implementation of CSR. This is the case with Cochabamba in Bolivia. According to Shultz (2000), after the privatization of Cochabamba with the direct pressure of the World Bank, water rates goes as high as $20 for a family that earns only $100. The water bill of the people is just enough to suck up the earnings of the people, that they cannot anymore provide for their daily needs. [And of course, the water privatization was reversed and terminated.] This shows that the World Bank or the government is not after the welfare of the people, but on the protection of large corporations for them to earn more and more at the expense and hurt of the population.
As noted, CSR is going beyond what the government expects from them. This means that CSR's foundation starts with the government legal framework. It is necessary for the government to formulate regulations for the CSR in terms of water protection. But as seen, most governments where water problem is rampant, the idea of CSR is not a big one. This is the reason why companies would not regard CSR as a big thing.
Yet, and still, for governments that have clear cut CSR legal framework, the problem goes to the principle of the organization. Water is of common ownership and should be sold as a commodity (Dilsworth, 2006). What is being allowed for water companies to do is to profit from their investments in making water consumption easier and better. However, organizations do not see it this way. Instead they look forward to using of water as a means of revenue. This notion undermines the social contract, the responsibility of the corporate to provide for the people. According to Robbins (2003), management is an important part to ensure that CSR will not be undermined and ignored by organizations, and it is the task of the government.
Conclusion
If water is denied to a person, this is a denial of life because water is life. With millions of people not having access to water supply, life is being denied. The fundamental of CSR ensures that the welfare of stakeholders are protected and met. But in water privatization, the welfare of stakeholders is just second to profit generation. Organizations are more concerned on how they can push for an on-going profit, rather than on ensuring the people can survive. This is the problem of the CSR definition of today's society. CSR is more a policy than a resolve or commitment to take on.
Water privatization becomes a hot issue because organizations don't want to implement their CSR. It is easy to silence the problem: by providing the needs of the people. However, the collective association of water companies are not on their feet for the needs of the people. This is the reason why water is traded as a commodity, as a commodity duly affected by several factors, when in fact, it not directly affected. In essence, the problem is on the mindset and perspective of people with regards to water. Instead of making it a right, it becomes a privilege to those who can buy.
References:
Âkovleva,N. (2005). Corporate Social Responsibility in the Mining Industries.Ashgate Publishing, Ltd.
Bakker, K. (2013). Privatizing Water: Governance Failure and the World's Urban Water Crisis. Cornell University Press.
Dilworth, R. (2006). "Privatization, the World Water Crisis, and the Social Contract." Apsanet.
Grant, M. & O'Connor, J. Corporate Social Responsibility and Alcohol: The Need and Potential for Partnership. Routledge.
Idowu, S. & Filho, W. (2009).Global Practices of Corporate Social Responsibility. Springer.
Robbins, P. (2003). "Transnational Corporations and the Discourse of Water Privatization." Journal of International Development. Wiley Interscience.
Samson, K. (2013). The Privatization of Water: Nestle Denies that Water is a Fundamental Human Right. Retrieved from http://www.globalresearch.ca/the-privatisation-of-water- nestle-denie that-water-is-a-fundamental-human-right/5332238
Shultz, J. (2000). World bank Forced Water Privatization on Cochabamba. Retrieved from http://www.commondreams.org/views/071500-101.htm
UNITAR. (2013). Introduction to corporate Social Responsibility. Retrieved from http://www.unitar.org/event/introduction-corporate-social-responsibility
Zu, L. (2009). Corporate social responsibility, corporate restructuring and firm's performance: empirical evidence from Chinese enterprises.Springer.
