Discuss about the Economic of Corporate Social Responsibility.
Corporate Social Responsibility (CSR) is defined as one of the most important strategies that business organisations need to undertake in order to perform successfully in the market. The contributions made towards the society are indicative of the business strategies that are maintained by organisations. The assignment highlights the manner in which CSR can be implemented in an organisation. The concept is discussed in details and the theoretical practices involved with the concepts are analysed. The interests of the stakeholders are discussed that provides a valuable understanding of the concept and the contributions made by the stakeholders. For the purpose of the assignment, Westpac has been considered (Westpac.com.au., 2018). Westpac is a banking organisation situated in Australia. The assignment analyses its implication of CSR policies.
About the organisation
Westpac is a famous Australian bank and financial service provider situated in New South Wales. The company was established in 1817 and since then it has contributed significantly to the growth of the banking sectors in Australia. Currently, Westpac is considered as one of the top four banks in Australia that provide safe and secure advice for the storage of money. It has 1429 branches spread across the Australian market with over 1000 ATM counters. It also has branches in New Zealand and operates successfully in both the countries. It is the second largest bank in New Zealand and the second largest bank in terms of assets in Australia. Westpac boasts about having 13.1 million customers and about 32,000 employees working in the bank (Westpac.com.au., 2018).
About Corporate Social Responsibility
Corporate Social Responsibility can be considered as a self-regulatory mechanism that is used by organisations to maintain active participation in the activities of a society (Bank, 2014). The ethical considerations related to governing a corporate body is undertaken so that an organisation can remain successful in the business market. However, it is seen that most of the times the regulatory and statutory requirements of a company go beyond the compliance initially set by the managers. It has been argued that with the application of CSR activities, organisations tend to make long-term profits for its improvement (McWilliams, 2014). Consequently, a counter-argument has been made that highlights the important role that is played by an organisation in the improving a society. Despite the CSR has been criticised as being unrealistic in its approach. This is mainly because of the fact that changing every member of a society cannot be done with the help of a few activities in the organisation. Thus, it can be said that CSR serves as a mission of an organisation as well as a guide that defines the duties of an organisation towards its customers. In this regard, theories involved to attain sustainability can be discussed.
Theoretical practices in incorporating sustainability
It has been analysed that in order to maintain sustainability in the market, every business organisation needs to ensure that proper management of sustainability is conducted (Samuelson & Anderson, 2014). Research has shown that four different types of capital exist in the market. These include the human capital, financial capital, environmental capital and manufacturing capital. The Four Capital Model helps in identifying the areas in which sustainability is required in an organisation. Each of the capitals needs to be made sustainable in order to ensure that a business thrives (Clapp & Rowlands, 2014). The statement clearly defines the purpose of CSR activities and the reasons behind the adoption of CSR activities by organisations. In this regard, it can be said that the analysis of each of this capitals can be related by applying it to the CSR activities undertaken by Westpac.
Human capital: The human capital consists of labour, skills, talents, political system. All these factors are important for an organisation to attain success, as organisations tend to rely on the HR factors that are necessary for its success. The trust and reputation between the employees and the employers are important in order to understand the manner in which every human resource managers can implement strategies (Tai & Chuang, 2014). Based on the human capital that an organisation possesses, sustainable strategies can be formed. It needs to be kept in mind that being involved in a banking sector, Westpac needs to ensure that the human resource management of the company is developed properly. This can help in maintaining sustainability by providing ideas about the ways to work properly.
Financial capital: The financial capital includes the cash borrowed and owned by a company along with the debt that needs to be paid. In most of the occasions, it is seen that organisations spend much cash on things that are not useful for the growth of the sector. The sustainable manner in which the cash needs to be spent depends on the financial capability of an organisation (Suliman, Al-Khatib, & Thomas, 2016). In the case of banks, this sustainable spending of cash is must as banks are the establishments that preserve the cash of the people. Hence, the investment needs to be made in the development of a society.
Environmental capital: The environmental capital is the most important source as it involves analysing the natural resources. The preservation of natural resources and the reduction of pollution is one of the most important factors that every business need to concern. Organisations that indulge in heavy emitting heavy pollutants need to maintain the sustainability of the environment (Carroll, 2014). The environmental factors need to be a huge concern for the managers as, without a proper natural environment, the working environment may also suffer. In the case of Westpac, the banking sector needs to make provisions about maintaining a sustainable environment by promoting the harmful effects of pollutants (Muller, 2014). This can be done by conducting campaigns and educating the people about it.
Manufacturing capital: The manufacturing capital mainly concerns the organisations involved in manufacturing products that may cause harm to the environment. This involves the manufacturing of shoes as the leather burnt for manufacturing shoes may cause harmful particle emissions (Salib, Sun, Wu, Wen, & Huang, 2015). In the case of Westpac, this provides a small threat to the banking sector is not responsible for manufacturing any harmful products. However, it can be said that the sustainability of an environment is not possible without the co-existence of all four capitals. The manner in which each of these capitals is dependent upon one another proves that every application is necessary for the proper growth of an organisation (Grinstein & Blekher, 2014).
Figure: Four Capital model
(Source: (Grinstein & Blekher, 2014)
Interests of the stakeholders
After analysing the CSR activities and the model used for describing the effectiveness of CSR, it can be said that the interests of the stakeholders are also important for the growth and development of an organisation. The interests of the stakeholders are important, as without the contribution of the stakeholders it may be difficult for an organisation to continue its business in the market (Carroll, 2014). In this regard, it can be said that the stakeholders of Westpac can be the society in which it is based. This is because CSR activities take into account the interests of the society and the people involved in it. The growth and development of the society are one of the biggest CSR activities that every organisation need to undertake (Suliman, Al-Khatib, & Thomas, 2016). Thus, it can be said that the society in which Westpac is situated can take a keen interest in its development. Hence, setting up a campaign for the eradication of pollution or education in the society can be successful for Westpac.
However, the shareholders of the company may have different interests (Tai & Chuang, 2014). The shareholders of Westpac would want the development of the organisation. Thus, it can be said that the campaign that is to be launched in the society can easily benefit the bank. Campaigns such as more investment or more loans can be launched in the society so that the people residing in it can invest for the betterment of the company. Thus, the conflicting interests between the two main stakeholders may prove to be a negative factor for Westpac. In order to mitigate this, Westpac needs to make certain that a stakeholders meeting is held so that the common interest of the stakeholders can be taken into considerations (Grinstein & Blekher, 2014). This can benefit the organisation, as priorities can be considered and accordingly adjustments can be made. In this regard, a conclusion can be drawn that highlights the important aspect of CSR in Westpac.
Thus, it can be concluded that CSR is important in order to ensure that a business can be conducted in a successful manner. Without the proper implementation of the CSR activities, an organisation cannot maintain its longevity in the business. The manner in which the CSR activities are conducted highlights the strategic implementation of the business minds. In the case of Westpac, the sustainability of the environment needs to be enforced by the spreading awareness. The company does not indulge in manufacturing products but can help in creating awareness among the people about the negative and harmful effects of pollution. Moreover, the interest of the stakeholders is also important as the company remains in conflict with improving the society and the organisations.
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