Importance of CSR for companies in Mauritius

Importance of CSR for companies in MauritiusCSR has been subject to much analysis for different types of subscriber simple eyees who were controlled and managed by futurist and newfangled managers who were here to provide a new dimension in the bloodline era. It is a concept where managers or leaders of certain blottos decide to guide voluntarily for a dampen complaisant environs. Companies provide us with these because they brook they need to contribute back for the land that they use. The separate reason is that it is purely voluntary, and they provide us with such services without expecting anything in return.May re attendes retain come with various definitions of CSR, but however, they all posses the pursual characteristics in super acidBusiness commitment to try to add value and a conk out way of living for the whole baseball club.Making society benefit from itprotect nature and our surroundVyarkarnam as well found out during his view that CSR dealt with these following beasenvironmental problems,charities and donation,Investment in activities.embodied brotherly Responsibility is a process that companies apply to bring benefits to the society. The latter has legal, commercial, ethical and public expectations from line of origin activity. CSR is implemented in a way such that it meets the needs and in around instances, exceeds the expectations.The equivalent testimony gave some evidence of the diverse cultivate of thoughts which interpret CSR differently worldwide. Definition of CSR from Ghana is CSR is about capacity grammatical construction for sustainable livelihoods. It respects cultural differences and finds the furrow opportunities in building the skills of employees, the biotic community and the government,however Philippians CSR is about patronage giving back to society.Theoretical rationale behind Corporate Social Responsibility2.1 The Social Contract guessThe Social Contract supposition hypothesizes that the corner stone of morality argon resembling affectionate accords that best serve the interests of those who make the agreements. (A.K.H. Khor)This means that if the social twitch between the air and the community is breached, at that place impart be encroach leading to a revocation of the contract and the firm then risks sanctions oblige by the individuals of the society. For example demand may be reduced, legal restrictions may be imposed, and also denial of human and monetary resources.2.2 The Legitimacy TheoryIt is said that the Legitimacy Theory and the Social Contract Theory ar inter connected.To be viewed as being socially amenable, investors do not hesitate to pay a premium for collective behaviour (Pava and Krauze, 1996 Toms, 2000). This is so because it ensures the continual inflow of capital, labour and customers needed for viability. This proves the brilliance of CSRThe confidence of integrated stakeholders suffered a serious blow, undermining their faith in the a ccounting profession, following the divine revelation of the corporate scandals at WorldCom and Enron. Thus a call has been made for much transp arnt report and the Legitimacy guess arose and implied the above social contract.2.3 The political Economy TheoryThis theory is quite a recent one, and it gives us a good approach on how to explain CSR. That is, this theory states that political economy and politics cannot be separated. The mission and long term objective of the firm should coincide with that of the government. Hence, it is obvious that firms engage in CSR by taking into status its employees, the society and other stakeholders affected by its activities. Thus, this approach gives us a good idea as to why firms engage in these activities.2.4 The stakeholder theory tally to Milton Friedman, the main objective of an organisation in the past was gelt making and maximization. That is, firms were established only in the view of making profit, ignoring the denigrating effe ct that they might be doing to the society at large. At these times, there were no firms engaging in CSR activities.The stakeholder theory is a theory of organizational management that tries to address different topics in business enterprise, such as, morals and determine in management. This theory was originally put forward by Edward Freeman. harmonize to him, a business does not only involve the accepter, management and workers of the community. It involves the society at large, that is, the government, political groups, communities and even competitors. Freeman stated that when doing business, it was immoral estimable to reward the workers and owners of the business. Instead, it should be rewarding the whole society at large, and hence, glide path forward with CSR activities.The stakeholder Theory attempts to justify the provision of social information in an attempt to gain stakeholder support and so minimize the costs of dealing with complaints and actions that might ot herwise affect them. (Davis, 2003)We can categorize the stakeholders of the companysShareholdersEmployeesSuppliersCustomersGovernment contend unionsBusiness associates topical anesthetic community andEven competitors.Ullmann (1985) suggested a model ground on the stakeholder theory according to which, if stakeholders control the essential resources it is ultimate for business to responds positively to the demands of the former. As an empirical accountability, the organisations come upon its stakeholders. This is supported by by referring to the extent of which the organisation believes in the interplay with each group needs to be managed in order to further the interest of the organisation, the much important the stakeholder to the organisation, the to a greater extent effort ordain be extended in managing the traffichip.The impact of CSR on the decision making of stakeholders of a business.Shareholders.RARE look intoes brought, a company mar in Corporate social Responsibilit y efforts can strengthen the articulatio of shareholders in sustainability matters. On a better information basis, they can quantify their companys sustainability performance and assert their rights to promote more corporate right (Shareholder activisms). Shareholders carriage for confidence and hope in a company. Therefore guided by their ethical principles, many investors choose firms taking into consideration the social and environment issues. In the study of Epstein and freedman, investors reduce the uncertainty about the value of their investiture through reducing their environmental risks and the firms product safety and quality among others.EmployeesThe literature of management science regard the relationship of management-employee as an essential one, employees are one of the key stakeholders for any business and evidence is growing of the importance of employees attached to the companies demonstrating their CSR records through progressive employment practice as puff up as through their behavior as good corporate citizens to jazz about the working conditions and sustainability job hunters make use of the annual report. Companies promoting the social responsibility provide such information through CSR divine revelation. Crowther says that employees are search to work for companies that reflect and embody their values and who are as pertain about principles as they are with profits. In search of job security, CSR disclosure is serve upful to employees.suppliers For suppliers, CSR such as fair trade practices hold the potence that the buying company grants preferential purchasing conditions, frequently to stabilize the turn relation and gain legitimacy as well as customers (RARE research project). Thus it can be deduce that suppliers also use CSR to some extent to establish good commercial relationship.CustomersThrough CSR activities like reporting companies provide more (non-financial) information to customers who can then take better informed decisions on purchasing or rejecting the companys product (voice cf. Rrubik et al. 2000) A fresh event marked by The oil spill in the gulf provoked a total chaos leading to BP customers rejecting bps products worldwide.Local CommunityAccording to Glautier and Underdown (1994), local communities are very underage on local industries, not only because they provide employment, but also because they directly affect the entire socio-economic structure of the environment. Industrial activities have forever both positive and negative impact on the community at large. CSR disclosure is useful to the community in the sense that they may identify the companies with the good companies-public relationship. As such, the local community has an interest in the activities of the local industries, and requires much more information on social benefits and cost than the public relations-type information.governmentThe government use CSR disclosure as a shot to set norms and assess a companys envir onmental concern. CSR may constitute a framework for cooperative governance where the traditional means of the state return out public private (or trilateral) cooperations might make accessible information, innovation, and legitimacy potentials that award the tackling of sustainability problems more effectively. Wolff (2004).4.0 Why do companies indulge in CSR activities?It can be seen, especially after big international crisis, which businesses need to reflect on how to meliorate the image of their company.Milton Friedman argued it is the head of firms, that is, executives that have the responsibility towards society and other stakeholders.Friedman says that if actions that have been done result in a decrease in the return of shareholders, an increase in the price for consumers or result in a decrease in the wages of employees, customers and shareholders are spending gold for the corporate social responsibility issues.Like said by smith in The Wealth of the nations (1776), I t is not from the benevolence of the baker, the brewer and the butcher , that we get our meal, but from their regard to their own best interest is in line with what Friedman says in his book , Capitalism and Freedom where he refer to social responsibility in firms as a fundamentally subversive school of thought in society nowadays where businesses main aim is to make upper limit profits by using recourses effectively. Therefore as said by Friedman, a businesss duty is to make as much profits as it is legally possible.In his paper, the author titled Morality in the Marketplace, Robert Almeder questions whether corporate behavior should be restricted by moral or prohibited considerations.In the paper, the author takes the example of general motors and firestone that knowingly made the forward motion of a defective product even though they knew that it would reduce their food market share. He also talk about the lack of morality of advertize companies that promote the consumption of cigarettes knowing that this is prone to pull more smokers and thusly will increase the number of population who might get lung crab louse and many other disease.According to him, to make businesses act more responsibly , authorities should come up with a laws such that corporate managers should effectively put CSR in practice , at their own expense rather than censured and fines a sum from corporate profits.(Almeder, R et al (1983) (eds) Business moral philosophy Corporate values and society)The form of corporate social responsibility most commonly found in businesses are them taking care of the environment around them.Environmental issues are an inescapable part of planning business strategies for the foreseeable future and boards of directors who ignore this, do so at their own peril.5.0 Is it relevant and worthwhile for companies to report on CSR issues?It is important for a business to communicate properly its financial position and equally its plans and actions concer ning the social responsibility so as to maintain the good relationship of existing stakeholders and attract potential investors. According to Roger Adams, ACCAs executive director, it is becoming more and more touch and urgent for companies to indulge in CSR if they want to enhance their corporate reputation, thus supporting the above statement. He also said that global investors progressively regard good environmental management as an integral part of overall governance and accountability. notwithstanding in an analysis on Post-Eron Post-Andersen, Roger Adams increase to say that Pressure is mounting foe companies to widen the scope of corporate public accountability and many are responding by including social info in their reports, preferably through a well managed process of stakeholder dialogue. (Accounting Business, July/ fantastic 2002)Based on Roger Adams statements, it is clear that globally CSR has rooted its importance in the world of business and helps in corporate sustainability and success showing its relevance and worthiness.Lack of ethical standards and social responsibility has lead to corporate wrinkle in various parts of the world recently leaving cross on the global economy. Howard Davies put forward that event in the US for the past years demonstrate that a breakdown in of ethical standards within a firm can carry high reputational and financial penalties. (Accounting Business, February 2003)Stakeholders are required to portray a good governance of an organisation, its hydrofoil and proper accountability to access organizations worthiness.In Rachel Jacksons (ACCAs head of social and environmental issues) words the increased influence of non governmental organisations NGOs) and the demand by the stakeholders for great foil, organizational accountability and good governance were key drivers for CSR. Accounting Business, June 2004). Moreover she adds that some potential advantages that can be derived by business practicing trans parency and accountability can be enhancement of business reputation, improvement of investor relations and access to capital, increase in competitiveness and market positioning. Other factors that force back companies to be socially responsible areEconomic rationality considerations,To keep abreast with borrowing requirements,To benefit from lower resource use and operation cost,And to improve competitive advantage and global exposure.6.0 Empirical evidence of CSR.6.1 The usefulness and relevance of CSR disclosure.Empirical studies effected by Belkaoui (1980) and Milne (1999), and Hendricks (1976) proved that CSR disclosure is useful and relevant. nevertheless results obtained were in favor of both positive and negative impact on investment decision.Hai Yap Teah and Godwin Y Shiu also carried out an empirical study which revealed that social responsibility disclosure in company annual reports may be more helpful in decision making if the entropy is presented numerically that fo cus on product improvement and fair business practices. Hence, we can deduce that for CSR disclosure to be deemed relevant and useful, it should speak the run-in of figures.Formbrun and Shanky put forward some empirical evidence which suggest that the great a companys contribution to social welfare is the better the goodwill becomes. hereby they may benefit from premium prices, enhance their access to capital market and attract investors. Hence it supports the school of thought advanced earlier by other research work extending the impact of CSR on investment decision.According to Mc Gaire et al (1988) a firm that is perceived to be acting responsibly will face less labor unrest and will gain kudos in the eyes if its potential customers, increasing its gross revenue base. Nevertheless, the other side of the coin refers to the fact that it s not necessary that CSR disclosure directly improves the profitability for mixed results obtained.6.2 CSR Framework as substantial by ERNSTE RNST (1978)Six areas have been found by Ernst and Ernst (1978), in which corporate social objectives may be set. They areEnvironmentFair business practicesHuman recoursesCommunity involvementEnergyProducts6.3 Code of Corporate ecesisHowever in section 7 of The Code of Corporate organisation for Mauritius , that is , the Integrated Sustainability Reporting identifies four areas which should be subject to disclosure . They areEthicsEnvironmentHealth and SafetySocial issuesThese information are considered important by The Code as it is considered as informative and will help stakeholders build a culture of social and environmental responsibility.(Code of Corporate Governance section 7)6.3.1 EthicsEthics means being responsible , diligent and integer. A business disclosing ethical principles will make people trust in it as they will know that the company has a good code of conduct. It will be assumed that this company is certain and concerned about its duties towards society and sta keholders.6.3.2 EnvironmentFirms should do their utmost best to reduce the negative effects of industrial production and adopt more effective and efficient methods to make least use of exhaustive recourses. The company should disclose any project that they do which have for effect to help in preserving the environment.6.3.3 Health and SafetyHealth and Safety practices and policies should be developed and implemented in the business. Also, safety and health risk identification has to be undertaken. This will lead to betterment in risk management strategies.6.3.4 Social issuesSocial issues include community involvement, human recourse and fair business practices. The Code requires that businesses adopt fair policies in promotion and recruitment of employees.