Corporate Social Responsibility-The Responsible Thing to Do

Mercer Business, May 01, 2007 by Hill, Maggi S

To the most cynical among us, the term Corporate Social Responsibility, or CSR, is an oxymoron. For those, like myself, who receive dozens of press releases on a daily basis from both corporations and nonprofits alike, with executives holding one corner of a large check, and a happy recipient organization representative on the other end, we know better. The fact is, corporate social responsibility is a major part of a company's community relations program, and while in some industries it is mandated by law, for the most part it is indeed a measure of goodwill on the part of the giver.

Corporate social responsibility has many facets. According to Wikipedia, the online encyclopedia, "Corporate Social Responsibility (CSR) is a concept that organizations, especially (but not only) corporations, have an obligation to consider the interests of customers, employees, shareholders, communities, and ecological considerations in all aspects of their operations." The difference between general philanthropy and CSR is that CSR requires that a company take into full account its impact when making decisions. In other words, it's a balancing act in satisfying the company's stakeholders with the desire to act ethically and contribute to the economic development and quality of life of the workforce, environment, community, and society at large.

The well-disseminated corporate scandals of the 1980's and 1990's, such as Enron, WorldCom, Arthur Andersee and the rest gave rise to demand both from the public and shareholders alike for accountability at the highest levels of corporate America in the form of business ethics policies and programs.

CSR programs are often based in human resources or public relations departments, or may even be a separate department unto itself. More progressive companies don't have a specific arm for CSR, but instead it is a part of their overall management strategy and mission statement.

Stockholders and Public Policy

Merrill Lynch, for example, says on their website that "Public Policy at Merrill Lynch is grounded on the principles of corporate social responsibility. We strive to conduct ourselves with the high level of integrity and commitment to public citizenship that is our company's heritage. As part of this heritage, we consider the views of our clients, stockholders, employees and key external constituencies. We assess our policies and activities of the Corporation in light of the interests of our stockholders and the ethical principles expected of a socially responsible corporation."

In fact, Fortune Magazine recently ranked Merrill Lynch first in their industry for social responsibility. The company is at the forefront of a call to the U.S. Congress to enact tough federal legislation to curb carbon emissions and overhaul energy policies nationwide in an attempt to stem the growing threat of global warming with a proposal that lays out three specific policies: 1) a realignment of energy policies to spur the growth of clean technologies, 2) directions from the Securities and Exchange Commission (SEC) specifying what companies should disclose to investors on climate change in their financial reporting, and 3) a mandatory marketbased solution, such as what has come to be known as "cap and trade", a program that sets a ceiling on greenhouse emissions then sells or grants credits to businesses allowing them a certain level of pollution. Companies that reduce their emissions below their quota can sell credits to companies that exceed theirs.

"Merrill Lynch is convinced of the wisdom of exposing the public costs of carbon emissions to market discipline," says Mark Goldfus, senior vice-president at Merrill Lynch. To that end, the company tracks energy consumption and C02 emissions at their facilities, and has sought to reduce energy consumption by an average of 2% annually.

Locally, the company participates in several community and philanthropic programs, including one in which over 200 employees every other month assemble approximately 1500 lunch bags that are delivered to the Trenton Area Soup Kitchen (TASK). On alternate months employee volunteers serve at TASK. In addition, Merrill Lynch is involved with the Trenton/Ewing High School Career Academy, which provides 50 high school students (25 from each school) a chance to be onsite at Merrill Lynch once a month to develop skills needed for the workforce. Over 80 employee volunteers coordinate and support this program.

Helene Garcia, Director of Community and Strategic Initiatives says, "Merrill Lynch Bank does have CRA (Corporate Responsibility Act of 2002, for financial institutional standards) requirements, but for the most part the firm's philanthropy and volunteerism is done as a function of just wanting to be a good corporate citizen and to support the communities where our employees work and many times live. It is important for Merrill Lynch to give back by becoming part of the fabric of the community and making a contribution of our employees' time, talent, and resources.