Discuss about the Socioemotional Wealth and Social Responsibility.
The CSR is a management concept, which can take various forms on the basis of company and the industry. It is a broad concept through which corporations handle the business procedures to produce positive effects on society. The executives are required to fulfil the duties and obligations in order to frame plans, strategies, and taking decisions to fulfil the purposes and objects. The corporate social responsibility is an organisation policy. It is categorised as international private business self-regulation. CSR is agenda of procedures, rules, and regulations that allows management to be clear, reasonable, and answerable. There are several aspects of governance structure such as individuals, roles, procedures, and arrangements.
The theory of CSR is not only limited to good environmental approach, but it covers the values of a company with the goals of the stakeholders such as customers, workers, depositors, dealers, supervisors and society. The worldwide importance of CSR can be merely drawn by the various companies of foreign, which are shaped for the same. The international companies are regularly describing the subject matters in respect of CSR and moral duties of companies.
In this essay, the theory of corporate social responsibility, corporate governance structure, and morally feasible efforts of Rio Tinto is discussed and examined.
Rio Tinto Limited is major mineral and metal mining corporations. The main offices of Rio Tinto Limited are situated in United Kingdom and Australia. Rio Tinto Limited fulfils corporate social responsibilities by sustainability committee. The sustainability committee is regulated by the Chairman, Ms Megan Clark (Rio Tinto, 2018).
To analyse the corporate social responsibility policy of the Rio Tinto limited, some actions were undertaken (Rio Tinto, 2018). They are following-
There are many models to evaluate corporate social responsibility structure of companies. There are two significant techniques that have been used to analyse the corporate social responsibility activities and governance structure. These significant techniques are Carroll’s pyramid and Wartick model and Cochrane’s Typology (Schwartz, 2011). Archie B. Carroll had established pyramid of corporate social responsibility. This pyramid of corporate social responsibility helps to analyse corporate social responsibilities and common public matters in the administration. The system is made on the basis of corporate social responsibility definition given by the Archie B. Carroll. As per the definition given by Carroll, the CSR activities of a corporation are limited in four kinds of expectations of society. This four types are fiscal, legal, Philanthropy and legal (Tricker, 2015).
It is required by the organisation to be efficiently accountable by giving goods of better quality at less and reasonable cost to the people and by making profits. It is a liability of an organization to increase the long-term financial proceeds to stakeholders of the organisation. The monetary profits may analyse by regularity of the market share value and the allocation of benefits as a cash dividend (Katamba, et. al, 2012).
Further, Legal liability of organisation includes the observance of various valid laws and rules (Rio Tinto, 2018). The organisation Rio Tinto Limited specifies CSR activity against United Kingdom’s corporate governance code, the principles related to corporate governance of Australian Exchange Corporate Governance Council and ASX Principles, and Corporate Governance principles of New York Stock Exchange. The organisation also follows the Global Reporting Initiative (GRI) Sustainability Reporting Principles and the ten philosophies of significant growth. The International Council of Mining and Metals has established these ten theories of significant growth.
The ethical liability refers to acceptance of ethical values and commitment in actions, which are morally feasible. The administration of organisation Rio Tinto Limited has formulated a business affairs code “The method we work,” for its universal procedures that simply establishes the values and principles of cooperation, security, admiration, honesty and the skills. Rio Tinto Limited’s annual report of year 2017 states that Sustainability Committee operates in direction of the BOD (Rio Tinto, 2018). The Sustainability Committee is accountable for analysing and monitoring the procedures of an organization, principles, and approaches created to ease issues and problems regarding strength, security of worker, security of asset, matters related to environment and issues of society. The Ethical committee is also accountable of making sure that the corporation operates in a manner that is in line with purposes of company, towards all the stakeholders and that the actions give contribution for the growth of country (Zientara, 2017).
The philanthropic liabilities deal with contribution for common issues and development of the environment of company in which organisation functions (Carroll and Buchholtz, 2014).
The other model of CSR operation of a company is Wartick model and Cochrane typology. The Wartick and Cochrane typology established 3 dimensional models such as corporate social performance Model, covering three aspects. These three aspects are social issue, kinds of social liability, and the scope of corporate reactions (Morrison, 2015). This model is encouraged by the Carroll’s pyramid. It is established on the basis of principle to know social issues, different matter analysis, and organisational actions. It helps in decreasing negative influences on the company’s environment during the life cycle of functions (Pascoe, 2016).
As per the data stated in Rio Tinto Limited’s annual report for year2017, the organisation had used a whopping 176 million US $ in year 2017, as a contribution for public (Rio Tinto, 2018). This amount was used to run 1336 common public events including health, environmental security, training and the agricultural growth and business advancement (Moon, 2014).
The Annual Report, 2017 states the governance structure of company (Rio Tinto, 2018). It contains various parties. Each party of governance is defined as follows-
Chairman: With effect from 5th March, 2018, Mr Simon Thompson has appointed for the position of the Chairman of Rio Tinto Limited. Mr Simon Thompson is accountable for the management, for give directions to the employees, outlining agendas of board and complete efficiency of performance of board of company.
Chief Executive Officer (CEO): Mr Jean Sebastian Jacques has appointed chief executive officer of Rio Tinto Limited. Mr Jean Sebastian Jacques is accountable for daily supervision of the business affairs by allocation of actions and maintains the different groups. These committees are administrative Committee, Investment Committee, Closure Committee, Risk Management Committee, and the Ore Reserves Steering Committee. These committees are together recognized as organizational committees of Rio Tinto Limited.
Chief Financial Officer (CFO): Mr Christopher Lynch has been appointed as chief executive officer of Rio Tinto Limited. Mr Christopher Lynch has different obligations to perform. Chief financial officer is entrusted with the liability of monetary arrangements, recording and examination, administration of shareholder’s connections and reviewing whole capital structure creation and the application.
Board of Directors: Board of directors (BOD) contain 6 non-executive directors. The board of directors give complete management and direction to the business affairs of the organisation either in the direct way or in the indirect way. In this way, they provide long-term assessment and importance to shareholders and other stakeholders of the company (Burton and Edwards, 2018). The board of directors are accountable for developing corporate procedures and strategies. They are also responsible to give surety that there is an efficient internal control environment for day-to-day management to have place powerfully. The board of directors identifies and allocates its functions and powers the different committees such as an administrative Committee, Investment Committee, Closure Committee, Risk Management Committee.
Five Board Committees: The organisation Rio Tinto Limited contains five committees. These committees are following by which different operations are conducted in the company (Rio Tinto, 2018).
Group Company Secretary: Mr Steve Allen and Mr Tim Paine are appointed for post of the company secretary of the Rio Tinto Limited. They are accountable for giving advice the board of directors on the different governance in respect of related subjects (Rio Tinto, 2018)
The Rio Tinto Limited is committed to securing the environment of the society. It is also committed to protecting the resources for significant use. The organisation has knowledge that the functions are making direct effects or indirect effects on environment of company. It allows the organisation to pursue environment policies in which they can handle direct influences and indirect effects of company’s environment. The company is presently contributing in the global transition. The company has knowledge that there are different functions that influence the environment by which management of company keeps watching and reporting the development of proposals and plans, and actions taken by them for securing company’s environment. The organisation has started sovereign audit of the non-monetary aspects that include atmosphere, consumer, public, and governance system (PWC, 2018).
The approach to human rights is necessarily developed by Rio Tinto Limited Company. This approach of human rights protects and advances health of persons, business, and groups. The statement of human rights states the responsibility and obligations to admire the human rights. The many steps have been taken for the protection of human rights such as ESG risk assessment process. It highlights the some major issues such as health, security, power, effluence, struggle, human rights, corruption, governance, and irrigation. This is the right and effective step to finish the corruption. Rio Tinto Limited is associated with various international organisations. It states the progress on the business principles such as rights of individual, employment, industry, corruption issues and other environmental issues. In this way, organisation is keeping good record on the observance of human rights. The corporation has established policies related to the corporate responsibilities to finish the corruption, disparity, and scarcity. These policies are depended upon the understanding of consumer and economic accountability. The organisation maintains the proper documentation of moral management of individuals by giving educations, guidance and doing experiments. There is no survival of immoral marketing approach due of better and healthy corporate structure of the company (Jamnik, 2017)
Conclusion
As per the above analysis, it can be analysed that CSR is a strategy adopted by an organisation to manage the business affairs of company. CSR not only forms a large honest client base in the organisation, but also important for making basic development, goodwill and creating the success. Furthermore, these actions support the healthy and positive relationships between company and the workers. The corporate social responsibility, morals, and governance structure have a great role in the business affairs of corporation. The idea in respect of systems and procedures has made a key significance. The companies like Rio Tinto Limited deliberately reveal corporate social responsibility activities and governance structure because of the two main reasons. First of all it develops their status among the stakeholders of company leading to consumer’s integrity and fairness. Further, it establishes status for reporting clear and fair procedures. As per the CSR policy of the organisation Rio Tinto Limited, it is concluded that the corporate social responsibility activity established by the organisation has helped the business of company in making wealth and goodwill in the particular industry and at the international level. Consumers consider more than features ad value of products at the time of selecting brand.
References
Burton, M., and Edwards, T. (2018) Rio Tinto digs deeper into Mongolia. [online] Available from:https://www.reuters.com/article/us-rio-tinto-mongolia/rio-tinto-digs-deeper-into-mongolia-idUSKBN1FA17R [Accessed 07/06/2018].
Carroll, A. B., and Buccholtz, A. K. (2014) Business and Society: Ethics, Sustainability, and Stakeholder Management. 9th ed. Boston, MA: Cengage Learning.
Jamnik, A. (2017) The Challenges Of Business Ethics: The Basic Principles Of Business Ethics – Ethical Codex In Business. [online] Available from: file:///C:/Users/System04100/Downloads/RIC_volume_3_issue_3_Anton_Jamnik%20(1).pdf [Accessed 05/06/2018].
Katamba, D., Zipfel, C., Haag, D., and Kazooba, C. T. (2012) Principles of Corporate Social Responsibility (CSR): A Guide for students and practicing managers in developing and emerging countries.Houston: Strategic Book Publishing and Rights Co.
Market Index (2018) Rio Tinto Limited. [online] Available from: https://www.marketindex.com.au/asx/rio [Accessed 07/06/2018].
Moon, J. (2014) Corporate Social Responsibility: A Very Short Introduction. New York: Oxford University Press, p. 3.
Morrison, J. (2015) Business Ethics: New Challenges in a Globalised World. London: Palgrave Macmillan, p. 226
Pascoe, M. (2016) Unethical Rio Tinto seeing shares surge up. [online] Available from:https://au.finance.yahoo.com/news/unethical-rio-tinto-seeing-shares-surge-up-034629798.html[Accessed 07/06/18].
Reuters (2018) Rio Tinto, Mongolia end stand-off to build huge copper mine. [online] Available from:https://www.reuters.com/article/rio-tinto-plc-oyu-tolgoi-idUSL3N0Y95MT20150519[Accessed 07/06/18].
Rio Tinto. (2018) Annual Report 2017. [online] Available from: https://www.riotinto.com/documents/RT_2017_Annual_Report.pdf [Accessed 07/06/18].
Rio Tinto. (2018) Sustainable Development Report 2017. [online] Available from: https://www.riotinto.com/documents/RT_SD2017.pdf [Accessed 07/06/18].
Schwartz, M. S. (2011) Corporate Social Responsibility: An Ethical Approach. New York: Broadview Press.
Tricker, B. (2015) Corporate Governance: Principle, Policies and Practices. 3rd ed. Oxford: Oxford University Press.
Zientara, P. (2017) Socioemotional Wealth and Corporate Social Responsibility: A Critical Analysis. Journal of Business Ethics, 144(1), pp.185–186.
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