Corporate social responsibility is a form of corporate self regulation integrated into a business model whereby organizations consider the interests of society by taking responsibility for the impact of their activities on customers, employees, shareholders, communities and the environment in all aspects of their operations. CSR, also known as corporate citizenship, sustainable business (SRB), or corporate social performance is not a very recent concept. However, due to industrialization, the impact of various businesses on society, and the growing number of well informed and educated general people, companies have now shifted focus to meeting various societal challenges while still making large profits.
In 1995, Shell, one of the world's major energy companies was boycotted for the way it dealt with the disposal of the Brent Spar, its oil storage facility. Shell faced a lot of criticism from groups like Green Peace and this incident nearly brought the company bankrupt. It was after this episode that CSR really jumped on top of the global agenda for most organizations. Since then, CSR has continuously developed into a must have policy or a complete business framework for organizations around the globe. Companies started developing plans to manage the expectations of their stakeholders, manage the way they do their business more responsibly, and also take care of the environmental impacts of their business.
During the AIDS catastrophe in Africa in 2000, the pharmaceutical industry was accused of making money out of the drugs which provided some relief to AIDS patients and not accepting their responsibility towards society. Since then, major pharmaceutical companies like Merck, Pfizer, Eli Lily, Johnson&Johnson etc. have adopted corporate social responsibility as a business strategy in an effort to communicate and demonstrate their commitment to their employees and targeted consumers in a manner that insures product safety. Product liability is a key factor in determining a company’s success in the global market. Hence, pharma companies are now voluntarily developing 'responsible business standards' with individual regulations and standards more stringent than the international standards in order to establish confidence among the firm's core constituency. This helps to generate goodwill among the stakeholders and in turn increases profits for these companies. CSR reports or sustainability reports of some top pharma companies such as Pfizer, GlaxoSmithKline, Eli Lily, Merck, Johnson&Johnson address issues such as child labor, workplace conditions, employee relations, community involvement, customer information, environmental performance and its progress against last years commitments and more.
Writing CSR reports is an art, which many top companies have not mastered yet. It can be quite tricky to represent the information in a sustainability report appropriately. According to the report ‘Branding and cure: a consumer perspective on corporate social responsibility, Drug Promotion and the Pharmaceutical Industry’, Eli Lily provided better public information about its marketing code of conduct compared to Pfizer, the world’s biggest pharmaceutical company. Does this mean that Eli Lily is a better corporate citizen than Pfizer? or has it just cracked the code for writing a good sustainability report faster? As a stake holder, would looking at a company’s CSR report be enough to judge appropriately whether it is a socially responsible company or not? Are shareholders ready to invest in businesses that focus on CSR which might give a high ROI only after long period of time rather than a short horizon?
Below are the links to the CSR reports of some of the top pharmaceutical companies:
PFIZER: http://www.pfizer.com/responsibility/cr_report/goals.jsp
ELI LILLY: http://www.socialfunds.com/csr/reports/Lilly_2005-2006_Corporate_Citizenship_Report.pdf
NOVO NORDISK: http://www.novonordisk.com/sustainability/reports/reports.asp
You imply the CSR is more marketing than true philanthropy -- and I agree. Corporations generally operate to maximize profits for its shareholders; thus, there is an inherent conflict between true CSR (true CSR being foregoing potential profits to abide by a higher moral standard) and corporate responsibility to shareholders. In my opinion, CSR is an investment that corporations will make only if it is demanded by consumers. Maybe instead of Corporate Social Responsibility, CSR should stand for Consumer Social Responsibility.
ReplyDeleteEli Lily might look better than Pfizer on the CSR issue, since at least they made the effort to write a report. Also, given the fact that Eli Lily is a European entity, Europe has stricter laws about corporate social responsibility than the US. I think corporations should not be accused for not practicing CSR rules, instead the governments should become aware of the sustainability issues and enforce laws and regulations for foreign investors to follow them. Such as creating local EPAs to watch over foreign corporations to see how well they fulfill the requirements for the environment while simultaneously promoting their products.
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