Corporate Social Responsibility in Canada: An Indepth Analysis - Iloka Benneth Chiemelie
https://ilokabenneth.blogspot.com/2013/11/corporate-social-responsibility-in.html
Author: iloka Benneth Chiemelie
Published: 28th of Nove,ber 2013
1.0 INTRODUCTION
Published: 28th of Nove,ber 2013
1.0 INTRODUCTION
For the past two decades, they have been an increasing focus on the social and environmental impacts of corporations. In response to these changes, many corporations have incorporated sustainable development programs designed to manage and account for these impacts (Adams and Frost, 2008). The results are constantly being published in both internal and external reports on environmental and social responsibility development. Practicably, the reports of these results have been represented in many terms (Stratos, 2008) such as, sustainability, responsibility, environmental, accountability and corporate social responsibility.
Corporate social responsibility refers to a company’s obligation to be accountable to all its stakeholders in all their activities and operations with the aim of attaining a sustainable development in both economic and environmental perspectives (Carroll, 1991; Kalisch, 2002; Miller, 2001). The World Business Council for Sustainable Development also defined CSR as “a organisational commitment to ensure sustainable economic development, and improving the quality of life of all stakeholders (Kotler and Lee, 2005, p.3). These definitions are similar in the sense that they acknowledge that the resources of a society should be expanded to develop the society.
This study will focus on the corporate social responsibilities implemented by SMEs in Canada to demonstrate some of the unique attitudes and approaches towards CSR. The question of how CSR is understood and implemented by small and medium enterprises (SMEs) has resulted in a number of recent researches within Europe and American with many of these researches focused on Canada (Tilley, 2002; Aragon-Correa et al., 2008; Perrini, 2006; Perrini et al., 2007; Jamali et al., 2009). In Canada, SME is defined as an enterprise with less than 500 employees and less than $50 million CAD in gross revenue. (Industry Canada, 2008).
This study begins with a conceptualization of CSR in Canada with special reference to SMEs in Western Canada, followed by an analysis of some of the CSR and sustainability programs implemented and adopted by SMEs in Western Canada. The final section provides a conclusion based on a detailed summary of the discussed topics and a recommendation on the way forward highlighting both the negative and positives of implementing CSR in Western Canada. They are many researchable areas which will be discussed later in the study.
2.0 CORPORATE SOCIAL RESPONSIBILITY IN CANADA
Canadian business for Social Responsibility (CBSR) is a popular non-for-profit organisation (NPO) developing CSR in Canada through networking and education among businesses interested in Social Responsibility. CBSR (2009, p. 1) gave their view of corporate social responsibility as a company’s commitment to operating in a socially, environmentally and economically sustainable manner, while focusing on the interests of its stakeholders, and the environment at large.
In Canada, CSR has been pointed out as a vital social and political issue in the federally sponsored national CSR projects (Conference Board of Canada, 2004), although the participation of businesses in CSR is based on choice. The federal government of Canada limits its role to promoted CSR principles and practices, mainly through information and toolkits (Industry Canada, 2008). Businesses that can afford philanthropy are persuaded to over charitable incentives for corporate charitable giving to help out the society. They are also few regulations for CSR practices targeted to mainly big industries.
The federal policy is limited to such things as minimum standards for safety and environmental protection, or auditing and reporting requirements for financial business exceeding $1 billion Canadian dollars in equity (Industry Canada, 2008). CSR has had a clear impact on the Canadian business environment by focusing public attention on socially responsible practices among businesses (Joyner and Payne, 2002; McWilliams et al., 2006) and producing SR-measurement instruments and alliance with international business for CSR (Kell, 2003). This has lead to the voluntary adoption of corporate social responsibility practices as a key business principle in over 100 “leading” Canadian corporations and financial institutions (CBSR, 2001).
Some of the practices associated with CSR in Canada include transparent accountability, respecting ethical values, improving human quality of life in activities affected by the business, preservation of natural environment, offering support to local communities (Crowther and Rayman-Bacchus, 2004), as well as addressing issues related to information privacy, freedom of speech, intellectual property right and information reliability (Dhillon, 2002). Some of these practices have challenged CSR to even beyond the national circus in other to foster global responsibility (Berthoin Antal and Sobczak, 2004) and social justice.
3.0 IMPACT OF CORPORATE SOCIAL RESPONSIBILITY IMPLEMENTATION IN CANADA
Corporate governance in many western (Canadian) organisations is deeply rooted in agency theory (Jensen and Meckling, 1976) with the primary focus on maximizing shareholder values, and this leaves managers with the limited capabilities of serving other stakeholders (Freeman, 1984). On the other hand, there is a heap of pressure on business executives to behave more professional and adhere to even more strict codes of business conducts and ethics (Dolan et al., 2004a, b). This impact on business ethics and moral value, and environmental preservation will be analysed below.
3.1 WORK ETHICS AND MORAL VALUE
Work ethics can be considered in its most simplistic way as a built composure of two distinct parties: attitudes or values and behaviour that reflect the attitudes and values outwardly (McCortney and Engels, 2003, p. 134). This definition has also been employed by a long list of scholars such as Major et al. (1994) and Michael and College (1997) in their various studies. The word ethics is descriptive in natures, when applied to into work it can be seen to be a set of moral standards, rules and principles that determines wrong and right (Catalyst, 2004). Some author have recently suggested that ethical norms can serve as a corporate governance tool for solving responsibility problem because they give rise to moral sanctions and provide powerful incentives for self-restraint (Mackenzie, 2004).
McCortney and Engels’s (2003) made an extensive revision of the state of work ethics in America and Canada: the origin, evolution, practices and future implications. In a habitual sense, work ethics is seen as a social norm principally affected by formative socialization experience during childhood and adolescence which are internalized in each individual through experience and observation of the actions and attitudes of family and peer groups (Brown, 2000; Hill and Petty, 1995).
The message here is that there is no accepted standard of work ethics, because it varies among individuals, location and by cultural, social and historical development (Peterson and Gonzalez, 2000). The results on the main impact of corporate social responsibility and sustainability in Canada, which is meant to create an acceptable “modus operandi” within all business and create a possibility for culture convergence in the work places (Held, 2000). The homogenous nature of business will ensure that all business operations work according to strict rules that are meant to improve productivity and protect the environment. On the other hand, it could result in loose of socio-cultural practices and norms among the difference ethnic groups in Canada and the world at large (Elizur, 1991; Schwartz 1994; Schwartz et al., 2001).
3.2 ENVIRONMENTAL AND ECOLOGICAL PRESERVATION
This is a much contested area on the impact of corporate social responsibility in Canada. Over the years the government of Canada has developed new ways to regulate the activities of businesses to ensure that they abide by norms designed to protect the environment. Many companies now make annual CSR report of their environmental and social performances to company’s financial statements. It has also been encouraged by the United Nations Environment Programme’s Global Reporting Initiative (McIntosh et al., 2003) as a bottom line for any business that wishes to participate in environmental sustainability (Elkington, 1997).
Some researchers have questions the definition of CSR, and argue that it represents a shallow and insufficient preview on the actual reality of climate change and significant global poverty (Christian Aid, 2004; Kennedy, 2005). Species extinction has increased drastically, and an estimated 60 per cent of the “eco-system services” that humans depend on (e.g. fisheries, fresh water, air etc) are either being devalued or used beyond a sustainable limit (MA, 2005). The reversal of the Antarctic Peninsula glacier fronts, coupled with the accelerating melting of Arctic ice (With the possibility of an ice-free summer before 2010) indicates the speed of speed of climate change (World Watch Institute, 2006). Another case includes the high rise of global poverty and inequality. For instance, 10.7 million children under the age or 5 die annually; more than a billion people live on less than $1 CAD per day (UNDP, 2005).
Undoubtedly, strict implementation of corporate governance rules to monitor social responsibility and sustainability will ensure that the environment as well as the eco-system is preserved. For instances, industrial waste products should be corrected in a safe manner to protect damage to both individuals and the environment, aquatic life will be protected by regulation activities that happens across the ocean to ensure survival of all remaining sea creatures, and control of air pollution will ensure survival of the Arctic ice. Many researchers have also supported this argument (e.g. Brown, 2001; Hawken, 1993; Holiday et al., 2002; Korten, 1995).
4.0 CANADIAN PAST AND RECENT CORPORATE SOCIAL RESPONSIBILITY CHANGES
In the past decade, the Canadian government has become more proactive in promoting corporate social responsibility through public polices measures mainly due to the global economic crisis and this trend is expected to continue into the future as government sees to establish a competitive advantage over other countries (Kimberly and Tamar, 2009). Kimberly and Tamar (2009) also went on to point out that with the implementation of these public policies, will see businesses focus on the government as their main stakeholder and this will make them to be more serious with the CSR measures implemented. The changes made by Canadian government includes but maybe not limited to those discussed below as of the time this research paper was conducted.
4.1 GOVERNMENT EFFORTS TO RAISE CSR AWARENESS: ECONOMIC CHANGE
The Canadian government has made creating awareness of CSR one of their focal point in national campaign (Kimberly and Tamara, 2009) as a means of increasing trade and competitiveness. The two federal agencies that oversees the promotion of CSR in Canada both domestically and internationally to increase trade and foreign investment in the country are the Industry Canada (IC) and Foreign Affairs and International Trade Canada (FAITC).
The benefits of these awareness efforts are evident in businesses across Canada. These benefits include the relatively inexpensive nature of the approach compared to other types of efforts, such as creation of binding standards. Government can make use of an existing infrastructure to communicate their messages and this reduces operation costs. Additionally, this campaign helps to encourage cross-sectional collaboration. For instance civil society organizations such as CSR often encourage and support government’s efforts because their message is consistent with their objectives.
4.2 DEVELOPMENT OF STRICT LAWS BY THE GOVERNMENT: POLITICAL CHANGES
In Canada, the government has implemented several federal, provincial and local laws that businesses must abide by in other to keep their business licence (Djordjija and Nigel, 2003). These laws are related to work safety, labor codes, human rights and environmental protection, and should any business abuse these laws, if reported and investigated the business could be dissolved. However even these changes have not had the best of effects because many abuses are not reported and even when reported the businesses get away due to improper investigations in to the abuse. (Djordjija and Nigel, 2003)
These businesses has gone free due to the complexity in dealing with federal, provincial and local laws, because some federal laws are not of provincial jurisdiction thus, fails to generalize if the organisation is being a corporate socially responsible citizen . (Djordjija and Nigel, 2003) This difference has been a critical point while investigating on abuses of these laws and will continues to pose a difficulty to the investigators if the government don’t look into in the near future.
4.3 CANADIAN COMPANIES ABROAD AND CSR: TECHNOLOGICAL CHANGE
Over a period of years, several reports were made to a subcommittee of the Standing Committee on Foreign Affairs and International Trade (SCFAIT) on the activities of Canadian mining and petroleum companies in countries such as Colombia, Sudan, the Democratic Republic of Congo and the Philippines (SCFAIT, 2007). The report as submitted by the Standing committee in 2005, Mining in Developing Countries and Corporate Social Responsibility, argued that more efforts should be put to ensure that Canadian mining companies operating overseas conduct their day to day activities in conformity with international human rights standards and in an environmentally responsible way.
This lead to the development and implementation of a CSR framework in 2007, by the Canadian government to establish standards and reporting obligations for Canadian companies and also create an ombudsman office to investigate, assess and evaluate complains related to violation of these set standards. To ensure that these set standards are meet, the federal government also sponsored the production of high-tech machineries Canadian petroleum and mining companies in developing country that will reduce the rate of environmental pollution and hazards on the host nations (SCFAIT, 2007).
5.0 CHALLENGES OF CORPORATE SOCIAL RESPONSIBILITY IN CANADA
One of the frequently noted challenges is the absence of a definition or absolute perception of corporate social responsibility. Various studies have portrayed a wide variety of meaning and norms all in the name of CSR (McWilliams et al., 2006; Whitehouse, 2006). This has lead to a varying form of CSR participation among organisations in different business sectors and regional contexts (Husted and de Jesus Salazar, 2006). Some firms understand CSR to be just a new way of calling a business responsible and philanthropic citizen Whitehouse, 2006).
These orientations of ethical or economic CSR maybe viewed as mutually exclusive or as a varied representation passing through other dimensions such as locus of responsibility. Lange and Fredrick (2008) grouped Canadian businesses to be either strong CSR implanters – related to an integral vision for a broader structural social change and linkage with other agencies and CSR actors, or weak CSR implementers – more focused on individual business actions and community relationships. From the above explanation it can be seen that some organisations tend to reject CSR frameworks and distance it with their own concern and business operations.
Secondly, the argued ethical responsibility between businesses understating CSR: as to who is responsible, to whom, and precisely for what? Still pose a great challenge on the implementation of CSR activities (Davidson and Hatt, 2005). Many researchers have argued that the defining and sole ethical responsibility of a corporate is to generate profit for shareholders, and that CSR activities are vague altruistic programs that serves neither shareholder’s benefit no public good (Husted and de Jesus Salazar, 2006; Dobbin, 1998).
Thirdly, it has been argued that CSR are very expensive, difficult, and time-consuming or does not represent a worthwhile business goal (CBSR, 2001). The level of genuine commitment to CSR ranges within organisations, and employees resistance in areas related to CSR activities (L’Etang, 1995). There is also a conflicting interests from stakeholders which the business are responsible for (Coelho et al., 2003), and Henderson (2002) argues that the lack of a distinctive criteria for corporate social responsibility and sustainability opens business decision making to special interest group while erasing the focal point.
6.0 HAVE CANADA IMPLEMENTED ENOUGH CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES FOR SUSTAINABLE DEVELOPMENT?
Although different organisations have different boundaries and conceived mode of adoption (Hill et al., 2003; Snider et al., 2003; Wilson, 2000), they are however some realistic characteristics associated with CSR adoption. The first concept is an idealistic moral dimension: the decision to adopt is made on valued concept (conscience) as to whether it is right or wrong, on the economic worth (cost) of adoption and on normative philosophy as to whether the organisation is obliged to the society as a means of showing their appreciation (Stoney and Winstanley, 2001).
The second characteristics are that economic profit is proportional to the proclaimed purpose of the practices, which is reversely powered by societal values. Proposed to overview public goods, interests in this form of adoption are likely to be high and there is a potential for primary notoriety, driven by attention from a knowledgeable and experiencedmedia (Bansal, 2005). The final characteristic is the durability of CSR practicing organisation in the face of conflicting environmental benefits (idiosyncrasy). Though the Canadian government and business in general have implemented various measures of CSR practices, this research paper goes on the notion that more is still lacking based on the practice adoption and institutionalization of CSR practices in Canada.
6.1 PRACTICE ADOPTION AND INSTITUTIONALIZATION IDEALISM OF CORPORATE SOCIAL RESPONSIBILITY IN CANADA
Institutionalization is the process by which a given practice becomes adopted by majority of organisations in a field, thus becomes reified as a common and acceptable social norm that guides behaviour. The extent to which a phenomenon is institutionalized within a field is observable by comparing an organisation with other organisations that adopt the same practices. This process of institutionalizations has been reviewed by many theorists (Dacin et al., 2002; Zucker, 1987), who have stressed on the economic and social factors that determine whether a practice becomes embedded within an organisation. Tolbert and Zucker (1996) revealed three stages of institutionalization: habituation, objectification and sedimentation.
Habituation is the process of generating certain practices within the individual level to deal with specific problem or opportunity. The second stage often referred to as the semi-institutional stage of objectification is the stage where a practice acquires certain symbolic or economic value to spread around the organisation through imitation. The final stage of sedimentation is the stage where these practices has spread within different organisations and theorised as a potential adopter (Tolbert and Zucker, 1996, p. 184). A number of theorist has considered the institutionalization of CSR practices vital is any society is to be called a major player on CSR implementation (Clemens and Douglas, 2005; Gendron et al., 2009; Jennings and Zandbergen, 1995; Lindgreen et al., 2009).
Comparing the argument above and our earlier discussion on the CSR practices implemented in Canada either voluntarily or by law, it is clear to see why this research proposes that Canada has not done enough. Our earlier discussion stresses on the fact that the contradicting nature of the local and federal law in Canada make abusers of the set rules undetectable and even when dictated they go free dues to lack of proper investigation. On the other hands, Canada as a country lack various policies needed to implement CSR activities in the country and this makes organisations more focused on their shareholders instead of the stakeholders. Thus, this argument can be concluded by stating that for Canada to become one of the major players on social responsibility for environmental sustainability, they will need to go beyond complexity in their regulation and encourage institutionalization of CSR within businesses.
7.0 RECOMMENDATION
The truth is that companies are what they do (Post et al., 2002), but it is also true that they decided what they want to do based on their set objectives (what they want to be) and standards (how they should be). That is why analysing the implementation of CSR in Canada is important because it show how businesses are committed towards environmental sustainability (Handy, 2002). Although sustainability is being frequently used and accepted, it must not be narrowed down to just environmental concept. European Commission (2001) proposed sustainable development to be a development which meets present generation’s needs without denying future generation the ability to meet their needs.
From the discussions above, this paper have revealed some wonderful efforts of both the Canadian businesses and government to ensure a sustainable future through corporate governance and social responsibility, but nevertheless this study also noted some underlying limitations on their effort and some recommendations will be offered below on steps of correct these limitations and build a better corporate governance both in the governmental and business context to ensure a sustainable business environments.
Evaluation and control of responsible corporate performance is the best way to ensure that Canada keeps moving in the right direction. Development of an auditing model for CSR among organisation has raised many debates among NGOs and association to the extent that the society now considers CSR to be legitimating activity for corporation (Deegan, 2002; Holmstrom, 2003). Because avowed CSR and sustainability programs can be profitable to firms, thus this raises eyeballs on their motivation and makes genuine social responsibility programs conflicting (Hamann and Acutt, 2003).
Even if the above recommendation is implemented, it still lacks true feasibility and this leads to the second recommendation of imposing an involuntary CSR measures on all organisations. The government of Canada should enact strict laws to ensure that all companies perform CSR activities to a certain standard and these laws and policies must be feasible within federal, provincial and local region to avoid complexity during investigation. This will ensure that organisations don’t use CSR and SD merely as a tool to influence stakeholder’s perceptions on their business operations (Hamann and Accut, 2003; p. 258).
8.0 CONCLUSION, LIMITATIONS AND IMPLICATIONS
This research paper was developed to analyse corporate social responsible and sustainable development with a both eyes pointed on Canada. Based on the analysis above, the efforts of Canada both in national and international level to promote CSR and SD are undoubtedly viable. Canada has promoted CSR national and about 100 of Canadian leading organisations has joined the campaign for a sustainable development in the society. Some of the activities implemented by these organisations include: work safety, sponsorship for societal organisations, education and seminars, reduced pollution and waste control. The government has also implemented certain policies and regulations that businesses must follow if they are to retain their license. They have been some identifiable flaws on the way these policies are regulated because of the complexity between federal, provincial and local laws. Some recommendations has been suggested on how to tackle these issues and ensure a much better CSR and SD activities in Canada.
Since this is a secondary research, it poses few limitations. Lack of first hand analysis is one of the limitations as all contents in the research are a product of a previously conducted research. A first hand analysis would have presented a much clear distinction as compared to a combination of interlocking researches from different researches. This problem was narrowed through a careful selection of contents that are directly related to the main topic and conducted by well known researchers. Contents with few viability where all omitted to avoid much complexity on the quality of this research paper. Other limitation includes lack of clear topic definition. The topic is too broad and makes the research more complex because it does not present or represent any specified unit or division for better understanding of the contextual elements discussed. For instances a topic that investigate CSR based on either governmental or non-governmental approach would have presented a better picture of the situation in hand compared to a combination of the two.
The implication of these limitation does not in any form make this research voidable because over 70 per cent of the contents presented were adapted from trusted sources such as Industry Canada, Trade Union, United Nations, European Union and the Canadian committee on foreign trade and environmental sustainability. Nevertheless, it presents a researchable areas in the context of analysing how the Canadian government will resolve the issues of complexity between regional laws to ensure a better investigation on abuse of CSR and SD policies in Canada.
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