In April 2013, the world witnessed the devastations of garment factory workers and their families in Bangladesh as the buildings where these garment factories were located collapsed. The death toll reached more than 1000 people and many more suffered in this preventable tragedy. The buildings that collapsed were constructed using substandard materials and did not comply with the building codes and safety requirements. These factories were contracted by several well-known multinational companies to produce clothing that was to be sold in North America and European countries.
As soon as the news broke, the world started pointing fingers at those presumably responsible for this tragedy – from the owner of the buildings, garment factory owners, local government and politicians, clients of these garment factories (i.e. multinational companies with recognizable brands) to the customers who demanded the products. Clothing labels such as Loblaw’s Joe Fresh, Primark (UK) and the Benetton Group (Italy) etc. were found in the rubble of these manufacturing complexes. The world condemned these companies for their lack of action even though the garment factory workers were the employees of their suppliers. Many people felt that these companies were still expected to know the conditions under which their products were manufactured and should have insisted on contracting out jobs only to suppliers who uphold the safety standards.
Cases like the one above show that we have been missing a critical part of doing business. We have lost touch with the idea of duty of care even though the concept of having a business manager originated out of a desire for stewardship. The importance of caring for people and surroundings diminished over the years as emphasis was placed on efficiency, quality and competitiveness. Milton Friedman, the Nobel laureate in economics, famously proposed in the early 1970’s that the only and sole responsibility of business was to be accountable to the shareholders who provided the funds for the existence and operation of the business. This was the mindset of most capitalists, where the argument was that doing business responsibly would cost businesses more and lower the profits for shareholders. In the quest to maximize profits, businesses often overlooked the impact that they were having on society and the environment.
As disasters and tragedies involving businesses continued to unfold, such as Bhopal’s gas tragedy that killed thousands in India in the mid 1980’s, major sporting apparel companies’ use of child labourers and sweatshops in developing countries in the early 1990’s, and the Gulf of Mexico oil spill in 2010, more emphasis was placed on how businesses should conduct themselves. Edward Freeman in 1984 identified stakeholders as groups or individuals that are affected by or can affect an organization’s pursuit of its goals. Businesses are expected to include wider stakeholders’ interests, not just shareholders’, in designing their operations so that they cause no harm or minimum harm to people and surroundings.
A global shift in society’s values is now underway, where businesses are expected to look further than just their shareholders’ interests and operate in ways that sustain people and the planet – otherwise known as the triple bottom line (profit, people, planet). Corporate social responsibility is a commitment to doing business in a way that integrates economic, social and environmental considerations while creating value for the company, its customers and the local community. Businesses are held accountable for their operations, starting from how they obtain the inputs, process them, distribute, and sell their products. In today’s globalized business environment, accountability can take place in all continents and involve several countries. The boundaries of responsibility are not limited to certain geographical locations but are dependent on the location of operations of the particular company.
Today’s youth are the future leaders in business and they expect businesses to be part of the solution to social problems rather than just a means of wealth creation. In the 2013 Deloitte global survey of millennial generations in 16 countries, only 35 % consider profits as the main purpose of business and 52% believe that businesses have the greatest impact in solving social problems. Corporations understand the need to respond to the changes in societal values and to the call to be more responsible in business operations. Today’s company must move from a simple philanthropic approach to a more holistic approach of being socially responsible. Business is not only about getting a licence to operate but about truly being a good corporate citizen that cares for society, the local community and environment.
The global cultural shift toward corporate social responsibility is an opportunity for us as believers to live out a biblical understanding of stewardship – in other words, sustainability. We are called to be the light wherever we go and this includes in the marketplace. Believers have the opportunity to act as agents of change by leading the way in conducting business responsibly while creating economic and social value. This includes caring for employees, the local community and environment, and upholding ethical standards in our business dealings.
Ambrose is developing the next generation of leaders by equipping them with the relevant skills and knowledge needed to thrive in the age of corporate social responsibility (CSR). For example, a new course on CSR next year will help students learn to identify the tensions between business and societal goals, and will address the major social responsibilities of profit-seeking businesses operating in a global context. In pursuing CSR and other faith-inspired learning experiences that reflect current business realities, Ambrose graduates are well positioned to add value wherever their career takes them.
Aries Sutantoputra is a professor in the Ambrose Business Administration program. His research interests include sustainability reporting and corporate social responsibility.
