Effectiveness of CSR in Achieving Sustainable Development

Effectiveness of CSR in Achieving Sustainable increaseCHAPTER I1. IntroductionCorporate loving righteousness (CSR) is a concept that has acquired a new character in the spheric economy. With the advent of globalization, managers in opposite considerations ready been exposed to the notion of CSR and argon being pressured to sweep up CSR initiatives (Jamali and Sidani, 2008 330).Therefore, purge to a greater extent corporations ar increasing conscience about the enormousness of matching their own interests and the interests of order by pickings responsibility for the shock of their activities on employees, suppliers, customers, communities and another(prenominal) stakeh old(a)ers as whole roughly as the environment.Although, this is an obligation that goes beyond economics or law, and in which companies have to act ahead in engage extensive margin goals that passel alike be good for the high society and the environment as a whole.Intrinsically associate to the dra wic of CSR is the protection of the environment for in store(predicate) generations by dint of Sustainable actions. Not scarce because there has been an enormous technological progress that means we are not as much dependent as decades ago of a wide range of ind headspringing resources such as air, energy, land, and minerals.On the contrary, crowdn by the growth of the population and the hectic globalization, competition for those natural resources has been intense. As a result, this competition also brought a powerful driver for both environmental conflicts and damage to our fragile, life-supporting environment.A range of environmental disasters, such as climate change, oz wizard layer depletion, and soil contamination, have been occurring along the ult decades and which turned organizations and society more than aware of practice such as recycling, energy consumption, preservation, among others.Evolving from an spatial relation of simply reacting to such disasters and thei r effects on the physical environment, collective concerns now include strategic planning and looking at the environment in its five-fold complaisant, cultural, political, and institutional dimensions (Enriquez and Drummond, 2007 75).Therefore, the instruments of corporative citizenship turned also to the preservation of the environment as a strategic element for enterprises in the whole world. Along with the development for part of the organizations of ransack technologies, there is also the concern in getting a green image, which put organizations sustainable activities into practice calling for an Eco business sector.Especially in the past deuce years, 2008 and 2009, the world was marked by a financial crisis that had an jounce in economies of organizations in general. Nevertheless, the financial crisis is not causing firms or governments to abandon sustainable development. In fact, mevery business and government suggest that a green solution can be found to both economic an d ecological challenges, creating new jobs and markets by investing in new forms of energy, redesigning or retrofitting buildings and equipment, and managing forests and other eco system of ruless sustainably.Mineral industries, for example, are using the actual crisis on their own benefit, attempting to identify domains where actions are required and act to shape a polar future to this industry, taking advantage of the actual scenario. To achieve that they make use of available data and information to appreciate the digging sectors impact, giving support to decision makers in their strategic choices.The actions of Alcoa Inc., for example, are impressive and unique, the phoner interplays among intangibles as leadership and innovation as well as a satisfying CSR strategy, wisingly aligning society, workplace and environment, productivity, and financial performance in the context of a traditional manufacturing party.This get wind research examines the existing literary works in an attempt to create a more comprehensive perspective of what has been written about the topic of Corporate a isinglassble function and Sustainable Development. The projects approach was qualitative in nature and focused on discovering what researchers and actors have explored and understand about this complex instance.Besides, it looks at some of the principal lucky and unfavourable arguments to the social responsibility of enterprises, especially when they are being considered by multinational enterprises interested in initiating activities into developing countries, with focus into Brazil. We also propose some alternatives of acting in the area of Social Responsibility made by Alcoa Inc., considering the up-to-date Brazilian reality, with the aim of achieving Sustainable Development.This dissertation is divided in ii parts. quality one will be based in secondary data and involves Chapter II, which comprises the literature review that examines existent work in current tre nds involving the subject of CSR as well as paradigms as SD in order to help establish what values associated indicators could contain.Chapter III, the explanation of the methodology used along the development of the project.Part two, comprises Chapter IV, which examines factors involving Alcoa Inc., taking into account its current CSR and SD actions and strategies, making use of a questionnaire, answered by some of the organizations managers, in relation to the issues encountered in the literature.Chapter V, will get off conclusions, make future recommendations and points out gaps for future research.1.2 Research TitleThe Effectiveness of Corporate Social Responsibility as a means of achieving Sustainable Development a case study of Alcoa Incorporation.1.3 Research BackgroundIn the modern complex and dynamic business environment, around organizations are adopting a global positioning making sure that they are geared for being global. Furthermore, it is common knowledge that the world is constantly developing and changing and no change is permanent because any change is about to be further adjusted in the short or long run to suit the environment and the challenges they face.Organizations are now more powerful and have more influence in the society. Therefore, The notion of corporate social responsibility straight off functions as an emblem, that the lodge themselves rise towards a accordant social revolution that will eventually benefit all the stakeholders of our society (Habish et al, 2005 271).Corporate social responsibility intrinsically relates to environmental issues faced globally, especially in the early stages of the twenty-first century and sustaining in a particular industry has become very difficult task for many businesses.Employees, investors and consumers are becoming progressively more aware of the social and environmental impact to people and planet that a company produces, which are both incontrovertible and negative. As consumers become even more aware of sustainable practices, there will be even greater demands for business communities to do the right thing, requiring enhanced ethical leadership and CSR to drive profits, and brand loyalty (Mamic, 2004 Leffel, Sweeney, 2007 cited by Maass, 2007 36)Alcoa is the worlds leading producer and manager of primary aluminium, fabricated aluminium, and alumina facilities.In the framework of sustainability, Alcoa is considered one of the top three companies in the world in terms of commitment to sustainable development and has made use of an environmental strategy associated with a truthful social responsibility in order to gain war-ridden advantage and success in the marketplace. For example, for three years the Company has been sponsoring the Internethos program, directed at the development of Corporate Social Responsibility for Sustainability (www.alcoa.com).Moreover, Recognition from the Covalence Ethical Ranking drives the company to intensify actions of engageme nt of strategic publics. In 2006, the company was indicated as world leader in ethics, in the mining and metallurgical Industry, according to Covalence Ethical Ranking (Alcoa annual report, 2006/2007 41)1.4 Research Aims Analyse how corporate social responsibility can ensure competitive advantage and success in achieving sustainable development. To explore, analyze and identify the use of environmental strategy as a tool of achieving global success. Analyse the importance of achieving sustainable development in todays global environment.1.5 Research Objectives To evaluate, in an environmental perspective, the effectiveness of corporate social responsibility in todays global business. To evaluate, in an environmental perspective, the effectiveness of corporate social responsibility on achieving sustainability. To establish the feasibility of using corporate social responsibility within the industry to align strategic planning with sustainable development. To analyse and find out the implications of corporate social responsibility in Alcoas Inc. environmental management. To identify the extent to which the environmental management is involved in strategic planning at Alcoa Inc. To identify how important is environmental sensitivity to a company that extracts natural resources. To analyse in depth the integration of sustainability to Alcoas overall business giving emphasis to Brazil. To investigate practices used by Alcoa Inc. in its murder of corporate social responsibility as a means of achieving sustainable development.1.6 Rationale of the projectThe objective of this project was to gather information that could be utile and benefit antithetic organizations in engaging in environmental strategies by the concept of corporate social responsibility. Moreover, data collected can also hightail it corporations by providing them with an understanding of sustainable development and the resources they can make use of to establish a sustainable future for society an d the environment. The information gathered for this usher in work was collected through an extensive literature review as well as the use of different sources of information, such as videos. In addition, a questionnaire was used in order to collect insight information on the organizations management perspectives and its corporate social responsibility strategies for a sustainable development and prosperous business.CHAPTER IILITERATURE REVIEW2.1 IntroductionSocial Responsibility actions are examples of a phenomenon of great proportions, which have been taken into more retainer in the business world, and reflect a new world-wide configuration. Historical recent events, in special environmental catastrophes around the globe, developed the academic discussion on the social paper of organizations, public and private, in the construction of the called sustainable development.Investors originated from richest countries have been realizing that economical survival and social balance is a long-term phenomenon more and more dependent of a constant preoccupation with levels of development of the least favoured areas of the globe (Parker, 1998).In the context of globalization, Social Responsibility has started to be understood as an essential instrument to be considered by organizations strategists in the sense of paying attention to the social demands of several economical agents involved. Apart from the internationalization strategy adopted, multinational enterprises installed in developing countries are under pressure in adopting an ethical and responsible posture. Mean condemnation, many actions carried out by multinational enterprises, through their own foundations or partnerships with local agencies, have been questioned for disregarding the participation of local actors in the decision processes, in the resource allocation and in the evaluation of results.2.2 Business Ethics and Corporate Social ResponsibilitySome vigorous critics and Marxists tend to dismiss the link between business and ethics (Shaw, 2009 2). For example, It was widely assumed that business and ethics were radically different and that ethical behaviour had little or no return on investment (Brenkert, 2004 188).However, on current days, ethical issues are being one of the approximately important subjects concerning organizations across the world, which now view business ethics not only in terms of administrative compliance with legal standards, rules or regulations as they used to do in the past. Some corporations are even creating their own written and formal ethical codes in addition with the use of different systems, uniform corporate social responsibility, to help them to create and maintain an ethical organization culture.Accordingly, Shaw affirms, Business ethics thus involves studying the fashions to refine and reinforce the underlying norms of the business system (Shaw, 2009 3).Nevertheless, Corporate Social Responsibility is topic of great value in business ethics, as reinforced by Ghauri and Cateora (2006 468) Ethics and social responsibility go hand in hand.Organizations are increasing conscience about the importance of matching their own interests and the interests of society by taking responsibility for the impact of their activities on employees, suppliers, customers, communities and other stakeholders as well as the environment.Kotler and Lee (2005 161) argue, The first ethical duty of business is to do not harm. Companies are responsible for minimizing stakeholders risks. This is the heart of business ethics.In fact, when ethical issues come to the organization field, a question is raised Of all these stakeholders, which should or will have the most or least influence over the ethical rules that will be applied by the organization? (Buhalis and Laws, 2001 88)Despite of all the suggestions given in relation to CSR and business ethics, Jones et al (2005 19) points out the fact whether business ethics will actually make business more ethical.In a current globalized environment, companies play an important division in the social structure and more than ever before, are being encouraged to improve their business practices by accentuate ethical behaviour, not only through the development of new technologies but also through social and environmental initiatives.Companies are increasingly being held accountable for their actions, especially with the growth in demand for high standards of corporate social responsibility.Sims (2003 8) links the concept of ethics and social responsibility saying that Being socially responsible, ethical, and a good corporate citizen is important to meeting and exceeding the expectations for any organizations stakeholders. And affirms Organizational management that truly cares about business and corporate social responsibility is proactive rather than reactive in linking strategic action and ethics.The structure of society has changed due to globalization changes, and the importan ce of businesses impact in society forced organizations to rethink their actions towards profitability, also promoting the development of concepts like sustainability.Nisberg (1988 43 cited by Kilcullen and Kooistra, 1999 158) gives an important definition of business ethics, which according to the author can be defined as a set of principles that guides business practices to reflect a concern for society as a whole while pursuing profits. However, with the relentless pursuit of profit in this actual globalized situation, how to maximise profit and act as an ethical company at the aforementioned(prenominal) time?A good understanding of what exactly is the term Corporate Social Responsibility is essential in order to answer and explain this question through different perspectives and theories.2.3 History and Definitions of Corporate Social ResponsibilityThe history of Corporate Social Responsibility can be compared as being as old as the history of business however, its concept has not been fully formulated until now (Asongu, 2007 28 Crane et al, 2008).May et al (2007 4) also adds Questions regarding the nature, scope and impact of organizations have been present into various forms for centuries ranging across the classical, medieval, mercantile, industrial and corporate eras.Taking into consideration only the period after the industrial Revolution, or better saying the 20th century, the first author who in a flash contributed to the responsibility issue was Clark (1916 210 cited by Secchi, 2007 351) when he affirmed that The old idea of vindicate will is giving way to determinism, individualism to public control, personal responsibility to social responsibility.During the period of 1930s and 1940s, called as the corporate period references about social responsibility can be found, for example Chester Barnards, The functions of the Executive (1938) and Theodore Krepss Measurement of the social performance of business (1940). (Crane et al, 2008).Murphy (cited by Crane et al, 2008), on the other hand classified Corporate Social Responsibility in four eras as follows eleemosynary era (up to 1950s), sensation era (1953 to 1967), issue era (1968 to 1973) and awareness era (1974 until now).According to Secchi (2007 348), however, One of the first attempts at classifying theories on CSR (business and society issues) was made by Preston (1975).This shows that the concept of CSR has been discussed for long but in fact, has not to that degree been fully understood and placed among organizations.Recently, empirical research about Corporate Social Responsibility and its relation to Corporate Social Performance and Sustainability provokes many contradictions in the literature. Due especially to the occurrence of different scandals among enterprises as well as the movement towards an environmentalist society rather than materialist, competitive labour market and shrivel up role of government, there were a rise of interest in Corporate Social Res ponsibility in the past decades (Carrasco and Yakovleva, 2007 15-16).Many authors affirm that business and society are interrelated entities rather than being distinctively separated (Kotler, 2005 Wood, 1991 cited by Moir, 2001).According to Watts et al (1998 3 cited by Yakovleva, 2005 12) Corporate Social Responsibility is the keep commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well of the local community and society at large.Corporate Social Responsibility, thus, reflect the responsibility or accountability of organizations in pro not only of its stakeholders but also of its surrounding environment, taking into consideration the various practices that can affect those.Carroll (1979), on the other hand, proposed a four-layered concept, which was the most accepted model, suggesting four corporations responsibilities related to their economical, legal ethical and philanthrop ic aspects.All those four aspects are of great meaning to the CSR concept, however, our current work focuses more on the top of the pyramid, which encompasses the philanthropic responsibilities.Philanthropic responsibility Interest in doing good for society, regardless of its impact on the bottom line is what is called altruistic, humanitarian or philanthropic CSR. giving back time and money in the forms of voluntary service, voluntary association and voluntary giving is where most of the controversy over the legitimacy of CSR lies (Shahin and Zairi, 2007 755)According to Carroll, the philanthropic responsibilities are arbitrary being, therefore, less important than the other categories on the other hand, as said before, is the one that brings the most controversial issues.The definition proposed by Gauri and Cateora (2005) follows the same idea, where the role of a company in the society goes beyond its economic goals.As we can see, definitions relating CSR are various and contra dictory among the literature which makes its study more exciting.2.4 Corporate administration and Corporate Social ResponsibilityGovernance is defined by Dam et al (2007 1333) as the set of informal arrangements that are used in handling the consequences of these unforeseen states of the world.As a result of globalization, different global governance structures have emerged, transforming the CSR concept more difficult to be understood.This new global governance brought about the participation by firms in tasks that used to be the governments domain. (Cutler et al., 1999 Scholte, 2001 cited by Albareda, 2008). Corporate Social Responsibility, therefore, can be seen as a new governance arena (Haufler, 1999 Scholte, 2001 cited by Albareda, 2008 434).Castka et al (2004 cited by Shahin and Zairi, 2007 761) proposed a useful framework, based on three major assumptions(1) The CSR framework should be incorporated into business systems, objectives, targets, and performance measures.(2) The governance system, whose purpose is to control, provide resources, opportunities, strategic direction of the organisation and be held responsible for doing so, is an integral part of business thus CSR system.(3) Central to the CSR framework is the transformation of stakeholders needs and expectation into business strategy, where the organisation has to balance the need for CSR from their key stakeholders with entrepreneurship.Corporate Social Responsibility is considered deliberate governance, however, influenced directly or indirectly by demands from global civil society, Non Government Organizations, or even the government itself. Thus, Corporate Social Responsibility plays a major role in the global economic and political activities of corporations.To exercise this political power in international society, companies as private authorities have adopted different mechanisms. The most important of these have been inter-firm cooperative instruments, fundamentally through the creati on of CSR business associations (Albareda, 2008 434).The implications of poor corporate governance for peoples lives are tremendous, every in a developed or in a developing country, like Brazil for instance.Most of the Brazilian corporations are still dominated by a family-owned management, who are therefore, the main, if not the only shareholders of the company. This fact can interfere severely in the potential of corporate governance. Brazil is a country with strong authoritarian traditions, and inadequate corporate governance laws make it possible to perpetuate authoritarian and concentrated influence over governance structures (Oman, 2003 35).Nevertheless, especially in the past decades, there has been intensification of businesses in relation to governance and sustainability in countries like Brazil.Paro and Boechat (2008 533-534) illustrate it One of the most significant Brazilian non-governmental organizations with the specific committal to mobilize companies around this iss ue the Ethos Institute of Business and Social Responsibility, founded in 1998 had 1,266 member companies in November 2007. Around 74 Brazilian companies have published reports based on the orbiculate Reporting Initiative guidelines (GRI, 2007), and the Sao Paulo Stock Exchange (Bovespa) launched in 2005 its own Corporate Sustainability Index (ISE), which now has 32 companies listed.Well-managed corporate governance can have positive effects on socio-economic development it also hence sustained productivity growth and reforms on regulatory practices, although its benefits cannot be taken into consideration without strengthening the psychometric test of business practices and the government environment as a whole.2.5 Building Corporate Social Responsibility into StrategyCorporate and business strategy according to Foss (1997) has different meanings in relation to the kind of decisions to be made. The first relates to decisions that determines the companys goals and objectives, the latter though, determines how the company will position itself in relation to its competitors, defining its business and resources.McManus (2008 1069) affirms The term strategy is derived from the Greek Strategia or generalship, sometimes translated as the art of war. The metaphor of business as war, a competition to be won, is pervasive.The first author who actually exposed the link between strategy and Corporate Social Responsibility was Michael Porter. He argues that corporate social responsibility can be a source of innovation and competitive advantage if incorporated into the framework of analysis that companies use to guide their business strategy (Porter and Kramer, 2006 cited by McManus, 2008 1077).Corporations have now added value-creation to their middle business everlastingly considering its stakeholders needs to develop a strategy that is going to keep the company in a competitive advantage position. This is what drives a company to strive in management initiatives, e specially if those initiatives are driven towards the achievement of sustainable development.Lee (2008, cited by McManus, 2008 1075) argues, There has been an evolution in CSR from the macro-societal level to the organisational level, with a greater emphasis on managerial, strategic, and ultimately financial issues to the point that the key issue in 2008 is how to integrate CSR into ones core business.Organizations integrated to societal aspects are trying to be aware of the implications of the environment they are in and building, therefore, its strategy based in a social/environmental mission and vision.On the other hand, recent reports reveal that almost six out of ten organizations have no strategy for CSR while many companies are unclear as to how to adequately anticipate which social issues will affect their overall strategy (The Work Foundation, 2002 McKinsey and Company, 2006 cited by Galbreath, 2009 109)The importance of keeping the integration of a companys core business and its strategy according to the societys (stakeholders) needs determine the effectiveness of a business and its position in the marketplace.Galbreath (2009 122) also draws a model of corporate strategy in relation to the society as followsimageFigure 2 Source Strategy in the context of society (Galbreath, 2009 122).Not only the strategy itself, but also a change on the decision-making framework plays an important role. The use of the classical American pragmatic decision-making is one example. The use of pragmatic decision making would inherently lead to the consideration of ecological issues within the decision-making process while fostering competitive advantage (York, 2009 102)In conclusion, as McManus (2008 1068) says, Perhaps, the greatest contribution of the mash-up CSR and business strategy will be, not in the details of particular approaches to its realization, but rather the change in disposition of individual business people its emergence may signal.2.6 Leadership and Corporate Social ResponsibilityThe first important point in the leadership context is to understand that ethics is not something we born with. Many authors say that along the years we are taught by the community conventions, norms, and regulations that guide our ethical behaviours (Trevino and Nelson, 2004). The same occurs with an organization, where norms, regulations, and values are drawn along the years, guiding their employees and creating its culture, but in this case, the founder has a crucial position, being the one who first underlie most of the organizations ethics code.Another important issue consists in how hierarchy of power is distributed in the organization this is explained because the flow of integrity and moral actions always comes from the top to the bottom of the organization hierarchy and this explains why the founder plays a key role in creating the culture and guiding decisions. This relates to the called learning theory, where leaders are perceived as role mo dels. (Hind et al, 2009)Daboub et al (1995 cited by Hind et al, 2009 8) developed a model which suggested a relationship between the characteristics of an organizations top management team and corporate irresponsibility, even criminality. The model holds that, other variables being equal, the greater the proliferation of formal management qualifications (e.g. MBAs) in a top management team, the higher the chances of corporate criminality. The implication of this is that management educators do not seem to be addressing the current and future developmental needs of managers who are required to respond to changing social norms for higher ethical, accountable, and sustainable standards in business.2.7 Voluntarism and Accountability of CompaniesThere are two contradicting views in the role of voluntarism in CSR The first view is supported by Carrol and Buchholtz, (1999 cited by Yakovleva, 2005 14) and suggests that CSR refers to both types of corporate operations operations towards comp liance with legislation requirements and voluntary operations towards social benefit not stipulated by law or economic requirements. The second view, however, suggests that the firm itself should call for the stakeholders interest voluntarily and considers that CSR starts when law ends (Yakovleva, 2005 14).All those contradictions are part of the inconsistency in defining the term CSR. Corporate Social Responsibility according to Keinert (2008) is concerned to how corporations tackle external pressures responding to them accordingly. Moreover, she adds It does not question the rightness of social expectations from an ethical, theoretical point of view, but seeks way of implementing them (Keinert 2008 45)Apart from this point of view, corporations are responsible, nowadays, alongside the government, to the interests of its employees and society as a whole being also accountable for its actions. Thus, accountability is another important disport of Corporate Social Responsibility.Zade k (2007 10) argues embracing accountability for their actions, corporations contribute to addressing societal needs and challenges in ways that could also deliver economic value and success.According to the IPEA (Instituto de Pesquisa Econmica Aplicada), Social Accountability 8000 is the first norm turned to the improvement of the conditions of work, including the principal labour rights and certifying the fulfilment through independent auditors. The Social Accountability International LEAVES-, a non-government organization created in 1997 in USA, developed it and which has its action turned to the preoccupation of the consumers for the conditions of work in the world. The norm follows the standard of the ISO 9000 and of the ISO 14000, which makes its introduction easier for enterprises that already know this system (www.ipea.gov.br).One of the basic propositions from social accountability favourable to the contemporary point of view is based on Keith Davis ideas (apud Certo Peter, 1993 281 cited by Souza, 2004 31). According to them, enterprises must operate as an opened system with two hands, with information reception from society and opened advertisement about their operations with the public. (Souza, 2004 31) In agreement with this proposition, the enterprise must be disposed to hearing the society and working in the construction of its well-being.2.8 Corporate Social Responsibility and ProfitabilityWhilst some authors defend Social Responsibility as a solution for organizations and societys sustainability issues in the long-term, others are emphatic, affirming that it is not reasonable to imagine that the