A1 CSR issues and the impact on stakeholders
Corporate Social Responsibility refers to the aims of an organisation that aim to incorporate ethical, environmental and human concerns in their business activity.
Stakeholders are all of the individuals and groups that have a vested interest in the activities of a business. All stakeholders have objectives of what they want from a business and business practices may either support those objectives or have a negative impact.
Customers’ objectives include high quality products at reasonable prices. Increasingly, consumer expectations on quality are including CSR policies. Consumers are becoming more aware of activities of businesses and the impact on society and the environment of unethical practices. When armed with all of the information, consumers may decide which business to purchase products from based on factors such as environmentally friendly packaging, sustainable production methods and a fair supply chain.
Suppliers want regular orders and on time payments from their business customers. Some large businesses can exert power over their smaller suppliers to reduce their prices or wait for very long periods for payment. Smaller supplier can have cash flow issues as a result but cannot afford to lose a large customer. When using suppliers, a business may also be unaware of unethical practices in the supply chain if they do not complete a thorough audit. Organisations such as Fair Trade can give information on products that come from ethical, fair and sustainable supply chains.
Local communities’ objectives include businesses reducing their negative impact on the environment and offering jobs to local people. Businesses that operate in a community that cause damage may face objection from members of that community. Examples of practices that local communities may object to are water pollution, traffic congestion, air pollution and eye sores. If the trade off between these negative externalities is not off set with improvements such as jobs, local people may protest, petition, gain publicity through media and arrange boycotts of products.
Owners’ objectives are to receive high dividend payments and for the business to increase in value. They may have different perspectives on CSR practices. On the one hand, as it is often more expensive to be more ethical, some owners may see these practices as a negative impact on their profits. However, due to the damage that unethical practices can have on a brand, some owners may value CSR activities due to the contribution to brand image and brand loyalty which can impact future sales and market share.
Governments want businesses to help reduce unemployment and pay taxes. Firms that offer good training programmes and employ domestic staff will help the government meet their objectives. Many multinational companies are able to avoid paying tax in countries they operate in due to loopholes in the laws. This is an issue for many governments that would benefit from that tax revenue. In June 2021, governments from G7 nations agreed a strategy to prevent this. https://news.sky.com/story/g7-reaches-deal-on-tackling-corporate-tax-avoidance-in-proud-moment-12325400
Employees’ objectives include fair pay and good working conditions. CSR practices that relate to employees may include ethical practices in the recruitment process, treatment of staff including discrimination and bullying policies and the creation of a safe working environment. Employees may also find it more motivating to work for companies that have a positive impact on society. Companies with good CSR practices may therefore attract more staff.
