Corporate Social Responsibility And Governance Essay Drives Value Creation.

Part A: MEMO

Describe about the Corporate Social Reasonability for Governance value Creation.

In this assignment, issues related with Corporate Social Reasonability and corporate governance has been discussed.  At first, the comparison between the 2014 and 2015 reports for the company Wesfamers has been provided in relation to GRI G4 standard. Then the same has been done for Fuji Xerox Company. Some recommendations have provided for these companies in order to improve their CSR.   

MEMO

TO: GENERAL MANAGER

FROM: ASSISTANT MANAGER

Date: 18^th October 2016

Subject: Corporate governance and social responsibility issues affecting business decision making of Wesfamers  

Aebi, Sabato and Schmid (2012) stated that, Corporate Social Reasonability (CSR) can help to promote a revelation of business responsibility to a large range of investors, shareholders as well as stakeholders. The major areas that the company needs to be concern are such as environmental protection, wellbeing of workers and local community. It has been found that there are six major issues related corporate governance and social responsibility that can affect business decision of a company. They are such as:

1. Role of government

Chen et al (2012) stated that, in previous time, the government mainly relies on regulation and legislation to deal with environmental as well as social issues in the sector of business. However due to shrinkage of resources and due to distrust of regulations that leads companies to voluntary and non-regulatory initiatives instead.  

2. Demand of better disclosure

Due to the growing demand for corporate disclosure from suppliers, stakeholders, communities and employees and activist organization, companies have to take initiatives to improve CSR and sustainable development (Bushee, Carter & Gerakos 2013).   

3. Increasing interest of customers

Liu and McConnell (2013) mentioned that, companies’ ethical conduct is now having significant impact on the customers’ purchasing decision. From a survey analysis, it has been found that 20% of the customers reward or punish companies depending on the perceived social performance (Hermalin & Weisbach, 2012).  

4. Deal with investor’s pressure

Nini, Smith and Sufi (2012) mentioned that presently investors are changing their methods to assess the performance of companies. They take decisions depending on various criteria that include ethical concerns. From a survey analysis it has been found that 25% of the investors all over the world take care of the ethical considerations while buying and selling stocks of a company (Claessens & Yurtoglu 2013). For this reason, a company needs to invest more on corporate social responsibility. 

5. Competitive labor market

Westphal and Zajac (2013) opined that, at present days employees are increasing looking beyond benefits and paychecks. They also look forward to have employee friendly working environment. Hence, all companies have to make sure that they are able to provide employee friendly working environment, so as to recruit and retain talented and skilled employees.  

6. Relationship with suppliers

Improved sustainability performance

It has been found that stakeholders are becoming more interested towards corporate affairs. Erkens et al (2012) stated that stakeholders always try to ensure that their partners work in environmentally responsible manner.     

This comparison of the report has been developed depending on the core data provided for the Wesfarmers Limited Sustainability Report. It has been fund that Wesfarmers is the company that strongly believes to deliver satisfactory return for its shareholders. The company does not only focus on improving financial performance. It also focuses on five key sustainability aspects. They are such as people, energy consumption, carbon emission, economic contribution, governance, community support and economic contribution (Acharya et al 2013).  It has been found that this approach is consistently related with the Government Reporting Initiative (GRI). As McCahery (2016) stated that GRI encourages companies to focus on matters, which are critical to both business and stakeholders. In accordance to the GRI G4 standard, the company is trying to focus material issues as well. After analyzing the report, it has been found that the major target of this report is the different stakeholders. With the help of this report, the company wants to show all the shareholders how it is trying to improve sustainability.

Fuji Xerox Comparison

Different guidelines

Guide lines used in 2014 report (UN Global Compact guidelines)

Guide lines used in 2015 report (UN Global Compact guidelines)

2014 report (Australia)

The company always tries to develop an open, respectful and safe working environment that both diverse and flexible (Fujixerox 2016). It also provides the opportunity for both personal and professional growth. There are various Australian associations that have influenced this report. They are such as Global Reporting Initiative (GRI) organizational stakeholder, “Australian and New Zealand Recycling Platform signatory with board”, “United Way Australia (UW) partnership” and “Australia-Israel Chamber of Commerce” (Fujixerox 2016). For this reason, the company has developed four major values. They are such as:

Customer first: The company Fuji Xerox wants to be successful through satisfied customers

Continuous improvement: The Company Fuji Xerox always wants to make continuous improvement in all business operations. 

Integrity and ethics: The Company Fuji Xerox operates at the high level of business ethics.

Teamwork:  Fuji Xerox always promotes team work and tries to improve team spirit.

The major interests for Fuji Xerox Australia are:

To share the voices of the stakeholders

To identify issues and gaps within the organization

Social

To map the boundaries for the material matters

2015 report (Japan)

There are 10 major values that have influenced the sustainability report of Fuji Xerox company report in 2015 (Fujixerox 2016). These values emphasize how the company needs to consider the business approach as the society members. It is also sets value for fundamental respect for humanity.  These 10 values are such as team spirit, professionalism, scientific thinking, high ethical standards, environmental consciousness as well as customer satisfaction. Other 5 shared values are such as pioneering spirit, joy and fulfillment, trust and consideration, as well as cultural diversity. From this report, it has been found that business goal of the company is to develop mutual trust and develop diverse cultures. The company tries to develop an environment where customers can develop and efficiently utilize knowledge. The major aim of the company is to enable every employee to achieve personal and professional goals (Tricker 2015). It has been found that economic globalization continues to advance with the growth of information technology. Harford, Mansi and Maxwell (2012) stated that, the society is facing challenges recently, which are more complex in nature. There are many social issues that require immediate actions. For this reason, the company has developed missions in order to solve management problems for each customer by “building an environment for the creation and effective utilization of knowledge.”

2014-15 comparison (in relation to the G4 GRI Guidelines)

Stakeholder engagement mechanism (2014) 

Stakeholder engagement mechanism (2015)  

Conclusion and recommendations

Wesfarmers

Wesfarmers is the company that strongly believes to deliver satisfactory return for its shareholders. The company does not only focus on improving financial performance. It also focuses on five key sustainability aspects. They are like people, energy consumption, carbon emission, economic contribution, governance, community support and economic contribution.  It has been found that this approach is consistently related with the Government Reporting Initiative (GRI). It has been found that the company is has taken various initiatives to improve corporate and social responsibilities of the company. For example, the company has decreased the usage of water and reduces the emission of CO2. In addition, the company has decreased waste generation and increased waste disposal. However, the company has issues related with community investment and dust management.

Recommendations

The company has to increase direct and indirect investment for the community in order to improve CSR activity.

The company needs to implement new technologies in order manage dust form the mines in appropriate manner and reduce making nuisance for the neighbors.

Fuji Xerox  

The company always tries to develop an open, respectful and safe working environment that both diverse and flexible (Fujixerox 2016). It also provides the opportunity for both personal and professional growth. There are 10 major values that have affected the corporate governance and CSR of the company Fuji Xerox. These 10 values are such as scientific thinking, professionalism, team spirit, high ethical standards, environmental consciousness as well as customer satisfaction. It has been found that the company has taken various initiatives to reduce forced labor and child labor.

Recommendations 

The company has to take initiatives to take care of the environmental issues:

The company has to implement enhanced technologies in order to reduce CO2 emission

The company has to develop policies to reduce waste emission.

Reflective journal of personal development

This assignment helps me to develop my personal knowledge related CSR and corporate governance. There are some major reasons for which a company needs to increase investment on corporate governance. They are such as role of government, demand of better disclosure, increasing interest of customers; deal with investor’s pressure, competitive labor market and relationship with suppliers. I come to know that the Australian government mainly relies on regulation and legislation to deal with environmental and social issues in business sector. However due to shrinkage of resources and due to distrust of regulations that leads companies to voluntary and non-regulatory initiatives instead. I also come know that due to the growing demand for corporate disclosure from suppliers, stakeholders, communities and employees and activist organization, companies have to take initiatives to improve CSR and sustainable development.   

I have come to understand that there are three theoretical approaches related with CSR. They are such as theory of CSR, Triple bottom line approach and stakeholder theory. I come to understand that CSR is combined with four obligations. They are philanthropic responsibility, ethical responsibility, legal responsibility as well as economic responsibility. I come to understand that presently investors are changing their methods to assess the performance of companies. They take decisions depending on various criteria that include ethical concerns. From a survey analysis it has been found that 25% of the investors all over the world take care of the ethical considerations while buying and selling stocks of a company. For this reason, a company needs to invest more on corporate social responsibility.  

Currently I am situating in the managerial position of a multinational company. I have come to understand that environmental, social and governance issues related with CSR have been increasing in recent years. As a manager, I have to take care of these issues and I have to develop friendly environment within the company so that we can attract talented and skilled employees.

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