Financial Market Reactions To Company Disasters – Corporate Social Responsibility (CSR)

Corporate Social Responsibility (CSR)

Discuss About The Financial Market Reactions Company Disaster?

With the increasing ramified economic growth and complex business structure, each and every business should indulged in discharging their corporate social responsibilities in determined approach. This is the act to deliver back to society what is taken by the organization from society at large. Social responsibility, in connection to individual persons shows the act of the individual person who work for the welfare of the society. It maintains the balance between environment protection and economic growth as well as society’s welfare. Similarly, CSR or Corporate Social Responsibility is the obligations for the companies to complete their social responsibility by doing acts for the welfare of the society. Some specified eligible companies are required to apply corporate social responsibility policies and activities for improvement of the society and the environment (Tran, 2018).However, with the change in environmental factors and CSR needs in society, international bodies have passed CSR rules and regulations which must be complied by the companies on domestic and internal level with a view to maintain sustainability of their business. It is the duty of the board of directors of the company to implement the policies of the CSR committees. All eligible companies who fall in the definition of the CSR policies require to constitute a committees who work on this behalf. It is the responsibility statement of the company to implement the policies of CSR committees. It makes them accounting for the work done and its impact on the environment. The gist of corporate social responsibility reckon in corporate, environmental, ethical, philanthropic as well as economic responsibilities (Poussenkova, et al. 2016).  The corporate social responsibility policies make the environment better and built up the living style of every person by spending in the welfare of the society. There are variety of possibility when a company take initiative to make better society and working for the society may grow easiest and fastest comparison to other companies (Schrempf-Stirling, Palazzo and Phillips, 2016).

The purport of corporate social responsibility is to aside the plummet of government on responsibility of social services. Sustainability concept is the wider concept it the relationship between society, economy and environment. Environment protection is the main and center motive of the CSR policy. It indicates that need of present generation from the environmental resource should be completed without compromising resource for future generation. The principle of CSR policy is that development of technologies and social techniques but at the same time natural resources for upcoming generation are not depraved. The organization must work for all like people, planet and profit. If an organization does all there act for those three then the no other binding is required by the government to the companies (Amao,  2008).

CSR Policies and the Environment

Sustainability makes and maintains the situation where existence of both humans and nature fulfill the social, economic and environmental requirements. A carbon footprint in a business is the requirement of carbon which fulfill the need to conduct such business. CSR policy is regulated to maintain such carbon footprint which are highly consume by most of the industries. It is an assessment of impact of a product during its life from raw material to final disposal of such product. However, there are several companies such as GE Capital, Woolworth, Wesfarmers and BP Billiton that have followed effective CSR policies and frameworks. These companies contribute at least 5 % of their net average five years earning in CSR activities with a view to provide benefits to society. BP Billiton installed greenhouse gas emission system with a view to reduce the impact of hazardous substance on society (Joutsenvirta and Vaara,  2015).

There are many CSR activities which may implement by the organization. Deracinate hunger and poverty, promoting good health, promoting education and gender equality, built up homes for old adults and orphans, ensure environmental sustainability and human welfare. Also it is the duty of the government to make amendments time to time whenever it feels required by the government. CSR policy is for social, economic and environmental by which all the sustainable advantage fulfills (Suliman, Al-Khatib and Thomas, 2016).

Few times before company’s only responsibility is to perform well and makes more and more profit for its stakeholders. That time many industries only work to make profits and by the environmental issues were neglected. In that time increasingly uses of carbon footprint become common to the industries. The day when CSR comes to implement most of the organization of that but now it is very much favorable to the market. It also improves the image of the organization. Corporate social responsibility is inclusion of social, economic and environmental consideration. The concept of CSR was first introduce in 1953 by Howard Bowen (Swaen, Demoulin and Pauwels-Delassus, 2017).

• Economic effects:

This shows the effects of the policies of the CSR on the Enterprises such as GE Capital, Woolworth, Wesfarmers and BP Billiton. Although there is no cost to occur for implement CSR policy but it becomes impossible for organizations to set aside the importance of this. It is balance of making profit as well as maintain the welfare of company at large (Cheng, Ioannou,  and Serafeim,  2014).

• Society Welfare:

CSR Policies and Social Welfare

            This involves the relationship between the society and business persons. It is the duty of the promoters of GE Capital, Woolworth, Wesfarmers and BP Billiton to do their work for the welfare of the society and give them profit of that. This may built the lifestyle of society and provide them fare advantage like paying inhabitable wages (van den Heuvel, Soeters,  and Gössling, 2014).

• Environmental issues:

The environmental issues which most of the time comes to the way of the business. The protection of the environment as well as economical use of environment benefits. The main motive of implementing CSR activities by GE Capital, Woolworth, Wesfarmers and BP Billiton is to follow practices that could benefits and other advantages while using produce and use recycled products (Mayo, et al.2016).

• Stakeholders Benefit:

Stakeholders are the people who directly connected with the company which includes suppliers, employees and members of the company. Therefore, it is considered that GE Capital, Woolworth, Wesfarmers and BP Billiton needs to provide best level of benefits to their stakeholders for the betterment of society.  The company should also take proper steps for the benefit of the stakeholders. There is included following stakeholders like customers, suppliers, employees, investors and government (Fodor and Stowe, 2015).

The real life example could be taken from the BP responses on its deep water horizon oil spill. After following CSR practice, BP installed various eco system and other greenhouse gas emission program to reduce the negative impacts of the hazardous products and substance in market. After evaluating the annual report of company, it is observed that BP has invested more than AUD $ 50 million while installing eco system and other greenhouse gas emission program. It is also observed that if BP had installed this eco system and other greenhouse gas emission program then it could have stopped the negative impact of the deep water horizon oil spill incident at large. This deep water horizon oil spill had great impact on the people who were living around the spill. Furthermore, many employees and workers had to die because of this spill. Therefore, it could be inferred that if companies follow proper level of CSR practices in their value chain activities then it would not only reduce the sustainability of business but also increase the overall brand image in the market.

After evaluating all the details and imperative study on the CSR it can be concluded as  business strategy which helps to grow the business and make good image of the company in domestic and international market. CSR provisions are unique to corporate level and its uniqueness develop the society. It is like government invasion to corporate companies to oblige them to perform the social duties. The doubts are clear about the corporate social responsibility policies that it is just not the responsibilities of the companies to do kind work but also obligation that rectify its act by which environment has been harmed. The concept of CSR is as simple is that if any business instead of only making profits works for the benefit of the society also then such business loan last survive otherwise it fails to outlast. Some of the time there may some negative effects of CSR policy that if it is binding on newly incorporated company then it may make some loss to implement CSR policy. The synopsis of corporate social responsibility cannot be aside that it involves many advantages with growing economy. This may take few steps or time to properly implement this policy.

References

Amao, O.O., 2008. Corporate social responsibility, multinational corporations and the law in Nigeria: controlling multinationals in host states. Journal of African Law, 52(1), pp.89-113.

Cheng, B., Ioannou, I. and Serafeim, G., 2014. Corporate social responsibility and access to finance. Strategic Management Journal, 35(1), pp.1-23.

Fodor, A. and Stowe, J.D., 2015. Financial market reactions to a company disaster: the BP case.

Joutsenvirta, M. and Vaara, E., 2015. Legitimacy struggles and political corporate social responsibility in international settings: A comparative discursive analysis of a contested investment in Latin America. Organization Studies, 36(6), pp.741-777.

Mayo, M., Gomez-Mejia, L., Firfiray, S., Berrone, P. and Villena, V.H., 2016. Leader beliefs and CSR for employees: the case of telework provision. Leadership & Organization Development Journal, 37(5), pp.609-634.

Poussenkova, N., Nikitina, E., Loe, J.S., Rowe, E.W., Wilson, E. and Fjaertoft, D., 2016. Corporate social responsibility.

Schrempf-Stirling, J., Palazzo, G. and Phillips, R.A., 2016. Historic corporate social responsibility. Academy of Management Review, 41(4), pp.700-719.

Suliman, A.M., Al-Khatib, H.T. and Thomas, S.E., 2016. Corporate Social Responsibility. Corporate Social Performance: Reflecting on the Past and Investing in the Future, p.15.

Swaen, V., Demoulin, N. and Pauwels-Delassus, V., 2017. Corporate Social Responsibility and Irresponsibility: How Do Consumers React to Ambivalent CSR Information? Application in the Retailing Sector—An Abstract. In Marketing at the Confluence between Entertainment and Analytics (pp. 1285-1286). Springer, Cham.

Tran, B., 2018. Corporate Social Responsibility. In Encyclopedia of Information Science and Technology, Fourth Edition (pp. 671-681). IGI Global.

van den Heuvel, G., Soeters, J. and Gössling, T., 2014. Global business, global responsibilities: Corporate social responsibility orientations within a multinational bank. Business & Society, 53(3), pp.378-413.