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Monday, December 9, 2013

The Genesis of Corporate Responsibility


We hear about corporate responsibility fairly frequently in our daily lives, but where did it begin? When did corporations start to feel the need to give back to society?

The term corporate responsibility, or more so social responsibility, was first coined by Howard R. Bowen, an American economist, who wrote “Social Responsibility of the Businessman.”  This book focuses on how companies should behave towards society in regards to morality and ethics. Some could also argue that it started even early than that in 1930s and 1940s, with Chester Barnard’s (1938) The Functions of the Executive, J. M. Clark’s (1939) Social Control of Business, and Theodore Kreps’(1940) Measurement of the Social Performance of Business. However, Bowen was the first to have a clear definition of social responsibility. Bowen definition was “It refers to the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society”.

Although, there was a variety of literature that was published on social responsibility after Bowen, the first company to actually publish a social report was Ben and Jerry’s in 1989 followed by Shell in 1998. Shell was forced to take social responsibility seriously as they were facing accusations of being compliant with the execution of Ken Saro Wiwa and eight other activists in Nigeria. Shell was also being attacked by Greenpeace for their decision to sink the Brent Spar oil platform. Because of all these issues that were arising against Shell, investors and the public lost confidence in Shell.

Shell spent over 20 million dollars on their publicity to rebrand and outline their values “Honesty, integrity and respect for people.” They also incorporated on their website “Tell Shell,” allowing individuals and shareholders to share their concerns with Shell. It gave them a sense of having a more active voice in Shell’s decision making. Tom Delfgaauw, former Vice President for Sustainable Development at Shell, said in regards to the issues the company faced in the mid-90s “The best thing that ever happened to us, first because we’ve come out of it much, much stronger as a company, and second, because it accelerated a great many needed corporate developments.” Because of the incident with Shell, it was an eye opener for other corporations to self-reflect and prepare themselves for any possible backlash they might receive on any of their decisions. They also needed to refocus on how their corporation was affecting the communities and lives of people around them.

This also began the rise of other organizations who wanted to help corporations instill corporate responsibility into their vision and mission. These companies include: PricewaterhouseCoopers, KPMG and Burson Marsteller. Other companies that would serve on a more consulting side of corporate responsibility are: SustainAbility, Business for Social Responsibility, and CSR Europe. Also, as business began to travel overseas and internationally, organizations such as Organization of Economic Cooperation and Development (OECD), and the United Nations Center of Transnational Corporations began to emerge around the 1970s.

How does your company fit in with social responsibility? Has the corporate and social responsibility actually begun at your workplace? Who is in charge of making sure that you are giving back to your community and making the right choices?

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