"CORPORATE HIPOCRISY"

 

Lets face it. CSR is doing all good, good things. Of course, there's nothing wrong doing good but complications arise but thers no connection with what firms carry out in their business and CSR. Edward Freeman in his book "Stakeholder Theory: The State of the Art"says there will be serious implications as there is no connection between business functions and CSR, as the underlying structure of companies is  not to do good or remain morally neutral.  

While checking out blog of Xieli Lee(refer:http://203.117.89.231/news/15544), he refers about Olam International's CEO Sunny Verghese speech in Singapore Human Capital Summit ,2009. He says " companies would set aside a certain percentage of the profits to give away to charitable causes but with another reason in mind. The real motivation was at the end of the year, we could inventorise all the good deeds we have done, score public relations brownie points and present that to the board or including it in the annual report."

Look at Bill Gates , George Soros to name few...Billionaires who worry about global problems, and use the riches gained by capitalist exploitation for the greater good. Is that double standard living??? Mr.Soros says " charity is part of the game, a humanitarian mask hiding the underlying economic exploitation". Bill Gates...A cruel businessman, destroying or buying out competitors, aiming at a virtual monopoly; on the other, the great philanthropist who makes a point of saying: 'What does it serve to have computers if people do not have enough to eat?"

Supporting Sceptic David Henderson , CSR is not meant to improve profitability but companies are using CSR to market themselves and build it as competitive advantage without implementating in their core business structure  and the results are whooping disasterous. Look at the recent financial debacle. It showed the results of separating Ethics and Capitalism. Large banks and financial institutions ...Goldman Sachs, Lehmann, Morgan Stanley to name a few ...were doing their part of CSR but they brought own the entire global economy because they couldn't connect ethics with what they do, to creat value or to fulfil their basic responsibilties  to stakeholders. A perfect example of what I say "CORPORATE HIPOCRISY!!!".

Well the point I am trying to make is that firms have got confused between doing good for society with their cunning business pratices. It's not aligned as firms taking CSR as different from business practices .

 current CSR model followed by companies

Companies’ failure to integrate their brand and CSR strategies is often the reason why thier  initiatives are not as well received or are as effective as intended. Stakeholders have become smart enough to understand that the firms are using the CSR activities as gimmick thanks to internet , websites and CSR reports.

Tying CSR in with business activities is the first step to successfully integrate CSR into business strategy.By analyzing how these competencies impact a business' stakeholders,
organizational boardrooms identify if stakeholders are negatively affected by their company's actions and also how they use their organization's core competencies in innovative ways that benefit stakeholders, society and business. When this is done CSR becomes sustainable development. CSR is a part of sustainable development or may I take liberty to say CSR evolved to SD in present times.

This diagram pictorially shows that SD is larger circle that emcompasses CSR. SD is shaping all the business practices to integrate CSR in social ,legal, technical and other aspects of the firm. Sustainability is the result of having such sustainable policies and processes, and aligning them so that goals in one area are not compromised in favour of those in another. Its a long term aproach unlike CSR which gives a benefits only for short time. It takes  a stakeholder aproach. Its considers both inside out as well as outside in aspect of the business.

Companies have slowly realised the difference between SD & CSR. Maybe its stakeholder pressure or its on internal realization( am I sounding pessimistic?), SD is catching up. While 53% of firms worldwide surveyed by the Economist Intelligence Unit claim to have a coherent sustainability policy, only half of these extend this beyond internal operations to encompass their supply chains. In all, less than one in three executives (29%) say their company has a coherent strategy that covers the whole business and its supply chain.

         Source: Economist Intelligence Unit survey, October 2007.

On careful look on the responses given by 1200 executives worldwide when asked the reasons for opting for SD in their firms we see, retaining customers, profitability and building image are of high priority. None of them are bother to improve society or envirnoment . SD for Ecological economic efficiency is only in theories that we learn.

 

SO is SD again a corporate gimmick??? After failure of CSR  high voltage drama show off by firms and increase pressure from stakeholder, firms have no option but to succumb to follow ethical practices or atleast pretend to do good. Common!!! As Mr. Soros says..."If there is a conflict between making money and doing good, making money will win out every time." Straight from horse's mouth. That's true. Firms are there to mint money and they go to any extent to put show their poker face in order to retain their profitability.

To concluded CSR and SD is not at fault but the intentions with what companies are practising it or pretending to practise is questionable. Its all in the ethics and morals after all ,which is again a huge topic of dicussion all together.

References:

A. T. Kearney, Bank of America,  2008," Doing Good-Business and sustainability challenge",The Economist.

Bazin, D. and Ballet, J. (2004). Corporate social responsibility: the natural environment as a
stakeholder? In: International Journal of Sustainable Development, Vol. 7, 1, pp. 59-75.

Daniela Ebner, 2006, "The relationship between Sustainable Development and Corporate
Social Responsibility", Corporate Responsibility Research Conference 2006, 4th-5th September, Dublin.

DesJardins, J. (1998). Corporate Environmental Responsibility. In: Journal of Business Ethics,
Vol. 17, 8, pp. 825-838.


Cheers
RMN
Remin 

US SINO MONEY WAR

We are very well aware that US is the Major importer of Chinese goods.

Now the US is suffering from high level of unemployment rate i.e. stuck near 10% with the U.S. economy having shed 8.4 million jobs since December 2007 due to double digit recession (source :www.reuters.com). It wants to minimize it by providing the employment. For that it wants to give jobs to people. This can be done if it improves manufacturing sectors. There has to be demand for their goods in the country too. For that it has to reduce its import from China. US is asking China to revalue Yuan so as to it increases its price of their goods. As the prices increase, the demand for their goods in US and other countries will decrease and hence US can increase its manufacturing sector to provide employment and also to increase exports in order to improve their of Balance of payments (right it is expected that US deficit is 140% of its GDP).

China has always been blamed by the economist (including IMF on March 1 ,2010) for keeping their Yuan undervalued intentionally by to 40 percent because of this  China gives an unfair price advantage in international trade, takes jobs away from other countries and adds to global financial distortions.

Definitely China being notorious for Protectionist nation won’t let this happen. What will happen if China appreciates it Yuan? The demand for Chinese products will reduce as the price of the goods increases. Thus this will impact its exports, reducing the demand and increasing their unemployment rate. Will China do that? Never!!! But Chinese Vice Commerce Minister Zhong Shan bluntly said that it’s nobody interest to revalue Yuan anyways.

Moreover there is another school of thoughts by some economist that evaluation of the Yuan would not bring back U.S. jobs because many of the labor-intensive products Americans buy from China have not been made in the United States for decades(source: Reuters).

Some are weary that this could also be spark for US Sino Trade War affecting the International Trade on whole. China which holds $889 billion of U.S. government bonds and whose help is needed to tame the nuclear ambitions of Iran so US has can’t do much than requesting. But US is making policies such as anti dumping policy , strict tariff plans etc to indirectly curb China’s exports.

China on other side is asking to devalue US dollars for which US says that this will affect the entire Global Financial systems. China also says that US can increase it exports to China which has been stagnating for a long time. 

Also China is under stress mainly because China is thinking this can lead to isolation in G20 meetings and moreover domestic factors and actors convinced China's leadership that diminishing marginal returns for keeping the Yuan fixed and massively undervalued had kicked in.

In the end what I think is right now the Ball is China’s court.

 

Cheers

RMN

Remin