Business Ethics: Corporate Social Responsibility and the Essay

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Business Ethics: Corporate Social Responsibility and the Triple Bottom Line

Picture two companies, Company A and Company B. Company A manufactures chemical products and has been on the receiving end of criticism and public outcry for the air and water pollution caused by its chemical manufacturing plant. Due to increased pressure, Company A devises a strategy to start a project that will enable all farmers in the neighboring areas to get clean water in an effort to give back to the community and reduce bad publicity. Company B. is a nonprofit organization which employs visually impaired and handicapped individuals to conduct research on strategies that communities and corporations can apply to conserve the environment. This company uses Braille technology and has come up with a variety of green strategies for both companies and the government. The community benefits from both companies but Company A embraces corporate social responsibility by providing clean water to farmers while Company B. applies the triple bottom line approach by employing individuals that other companies may not consider engaging, and at the same time contributes to the conservation of the environment. So which is more important? Is it the public's social perception of a company as a responsible business or is it the integration of social, environmental, and economic sustainability in a company's mission and daily activities? This text demonstrates why companies should aim to be triple bottom line companies as opposed to applying the strategies that only target social responsibility.

Corporate social responsibility and the triple bottom line approach

Corporate social responsibility (CSR) is a form of self -regulation for companies. It requires entities to not only pursue profits, but also engage in actions that benefit the community, comply with laws and legal procedures, and adhere to ethical standards. On the other hand, the triple bottom line (TBL) approach requires that in addition to CSR, companies focus on sustainability in the long-term, which involves weighing actions according to economic, social, and environmental sustainability (Matteson and Metivier, 2015). First used by John Elkington in 1994, this approach adds two bottom lines: social and economic on top of the traditional economic approach in accounting. In other words, it measures the profits, the benefits to the people, and to the planet - the three 'Ps'.

There are some major differences between CSR and the TBL approach. For instance, while CSR mainly targets the connection between the community and the firm, the TBL approach clearly distinguishes the responsibilities of a company towards the people and towards the environment. The TBL approach is also better in terms of encouraging innovative ideas that are profitable, beneficial to the community, and those that target populations that otherwise would be ignored. Entities have to look beyond the common CSR measures that a majority of companies apply as the social and environmental dimensions have to be accounted for. In terms of measurement, it is easier to quantify the portion of finances that go towards a community project using CSR, since accounting and comparison of the planet and the people using the TBL approach proves difficult. However, the TBL approach should be viewed as an improvement to CSR as they both go hand in hand. Companies seeking to expand their outreach to the community and conservation of the environment should aim to be bottom line companies as it will benefit them more in the long-run.

Reasons why the TBL companies are better than socially responsible companies

There is often a misconception that companies that have acknowledged there is more to business than making profit automatically embrace the need for social responsibility. This is false. According to Scott (2012), in 2002, Dell took advantage of the fact that it was mandatory for companies to recycle computers in the European Union and started recycling them at a fee, but failed to recycle in the U.S., which did not have the relevant laws. During recycling, Dell was also accused of using conscripted prison labor. Eventually, the company was made to recycle all computers without bias, although its reputation had already been tainted. This proves that sometimes, companies misuse social responsibility for their own selfish gains.

Another reason TBL companies are better is because in the long-run, corporate sustainability is more profitable. Companies that indeed embrace CSR, but then go the extra mile to consider the economic, social, and environmental sustainability will have better competitive advantage (Scott, 2012). This is brought about by the increased brand reputation that arises once customers appreciate the company's efforts towards caring for their needs, alongside those of their environment.

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TBL companies are also good at identifying new markets and coming up with creative ways to expand those that exist. By taking a long-term view of profitability, these companies learn that any disadvantage to the people, profits, or the planet will no doubt end up affecting their operations substantially. Given the increasing rate of global warming and the dynamic changes in the business environment, social responsibility alone, therefore, will not be enough. The public may rate a company as the best in terms of CSR, but with time, it is the three Ps that will have greater impact.

By taking a holistic approach to CSR, the TBL involves all the stakeholders in its goal of sustainability as everyone benefits in the long run. Studies have proven that companies whose employees are more committed to good profits; social responsibility, and conservation of the environment are the best in implementing these required strategies. The TBL approach accounts for all the three bottom lines and hence all the stakeholders will be able to see the benefits of their efforts in the financial report, which is bound to improve their morale. Savitz (2006) also claims that the three P's are more likely to facilitate the creation of employment opportunities because TBL companies want the society to thrive.

The final and the most important reason TBL companies are better in meeting their ethical obligations is the current structure of wealth distribution. There are very large gaps between the rich and the poor in today's economy, which greatly affects social and natural capital (Henriques and Richardson, 2004). Since CSR often implies that a company is only entitled to give back to the community when it rakes in excessive profits, it does not really promote distributive justice. Distributive justice is only evident when resources in the society are distributed fairly. According to Henriques and Richardson (2004), the inequality in wealth distribution will lead to more environmental and social problems unless both corporations and governments embrace sustainable development. As it has been established, the main focus of the TBL approach is sustainability and TBL companies, therefore, are better off as they factor in the three Ps from the onset.

Further analysis of the effect TBL companies have on distributive justice and the distribution of wealth groups them into four categories: corporate locusts, corporate caterpillars, corporate butterflies, and corporate honeybees (Henriques and Richardson, 2004). Corporate locusts often destroy human, social, and natural capital and only use unsustainable models in their business operations. Corporate locusts, on the other hand, are only interested in creating wealth for their local environment, although they have a high potential for transformation. Corporate butterflies show a strong commitment to social responsibility and they employ sustainable business models, although they are not effective in implementation. The honey bees' intentions often match their hard work as they set clear goals, apply the appropriate business models, and their efforts towards economic, social and environmental sustainability are eventually successful. It is important to note that all the four categories acknowledge that sustainability is key to reducing the gap between the rich and the poor, only the capabilities and commitment defer. This agrees with another argument that CSR is becoming outdated and new long-term strategies, which the TBL approach avails, need to be applied.

Conclusion

The key to developing strategies that satisfy the needs of a company and those of all its stakeholders is to focus on the factors that will guarantee long-term sustainability. Economic sustainability meets the need of the business in terms of the profits it makes; social sustainability requires the company to consider its effect on labor, and the society as a whole; and environmental stability makes it consider the conservation and protection of the environment. All these make it easier for companies to meet their ethical obligations. Therefore, in the example of Companies A and B, Company B. is the best as it puts all the P's into consideration. The strategies of Company A may work for a while but they will not be beneficial in the long-term and eventually, the company will fail. All companies are encouraged to be honey bee corporations which make a commitment to sustainability and put in the effort and hard work in achieving all the three bottom lines. This proves that indeed, it is not enough for a multinational corporation to be socially responsible......

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