CSR
As intresting yet tough question came up this week, corporate social responsibility, should corporate bodies be responsible for social and enviromental issues associated with it and if so to what degree of responsibility. The definition of CSR according to the European Commission is “A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.’ Companies that appear to be socially responsible by promulgating environment saving or environmental sustainability and, at the same time, being allegedly tangled in an illegal socially irresponsible activity is a tremendous message to send out to the stakeholders including consumers and investors. The effect of such CSR scandals is that credibility and the reputation of the company are undoubtedly badly damaged. There is an old saying that any publicity is good publicity. However, in the world of business, bad publicity is bad publicity, and can cost a company up to millions of dollars, with nothing to speak for goodwill. Corporate social responsibility articles in the news are often quick to fault wrong-doers.
An obvious example of bad publicity from bad corporate social responsibility at play and the effect that bad social responsibility has on a company, is Enron, the Texan energy that not only brought itself down but also one of the largest accounting firms at that time, Arthur Andersen. Enron was a darling of corporate philanthropy and gave millions in charity donations to charity organizations and won several awards for its corporate social responsibility work, including a climate protection award from the EPA and a corporate conscience award from the Council on Economic Priorities. In 2001, Enron collapsed under massive debts after it was revealed that Jeffrey Skilling, who was jailed for 24 years, had orchestrated a giant fraud and a massive corporate ethics scandal.
Naturally, companies are on the wrong side of the law when they engage in socially irresponsible activities. They can pay heavily, literally, as an effect of engaging in such crimes. The Exxon Valdez tanker incident in Prince William Sound, off the coast of Alaska is one of the most memorable events in corporate social responsibility history. ExxonMobil paid dearly for the Valdez scandal – nearly $4.84 billion in cleanup costs, fines, punitive damages and interest for the flagrant bad CSR act in the Exxon Valdez ethics scandal that dumped 11 million gallons of crude oil into Prince William Sound, damaging wildlife and the fishing industry.
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