Corporate Social Responsibility of the Dow Chemical Company - Essay Example

CORPORATE SOCIAL RESPONSIBILITY OF THE DOW CHEMICAL COMPANY Introduction This is a paper looking into the Corporate Social Responsibility of The Dow Chemical Company. To begin with, it will first of all highlight the importance of Corporate Social Responsibility for companies, in general. Consequently, it will then delve into how Corporate Social Responsibility is attained by the firm, using CSR analytical tools as a framework for the analysis. In addition, this paper will highlight the major drivers of the firm’s Corporate Social Responsibility strategies and initiatives. Growth of Importance of CSR for companies The current times do not allow for companies to be in business just for the sake of making profits anymore. Many consumers rely on companies and firms for goods and services, but the level of competition allows the consumers to make their purchasing decisions based on several factors. One of the most surprising factors is how much positive goods a company is doing outside of the workplace setting. Many consumers are basing their company and corporate loyalties on how much a firm is positively impacting on their community. Therefore, CSR has become a growing concern for most, if not all firms and corporations because it provides a competitive edge to a company (Sternberg 2009, p.10). Through CSR, companies are innovating new products and services to ensure sustainability. For instance, a firm might change the chemical composition of its products so as to make them safer for the end users. A firm can also devote their funds and much valued time to initiatives that are beneficial to the society, like clean ups (Weber 2008, p. 257). Definitions of Corporate Social Responsibility Corporate Social Responsibility entails the managing of the overall impacts of a company on a society. This consists of the direct impact of the operations and the wider impact of business all through the value chain from manufacturers to suppliers and finally to the consumers. Corporate Social Responsibility can also be defined as the ongoing commitment by a firm to contribute to economic development, at the same time improving the quality of life of its employees and their families as well as the society and community at large. CSR can also be referred to as “corporate citizenship”, involving the incurrence of costs that don’t provide a direct financial benefit to the company, but promotes positive environmental and social change. (Trong 2012, p. 555). Company description The Dow Chemical Company is a globally acknowledged manufacturer and supplier of products used as raw materials in the manufacture of a myriad of other consumer products and services. The Dow Chemical Company delivers its products to consumers in more than two hundred countries globally, providing a wide range of technology-centered products and services (Trong 2012, p. 548). Generally, the company ventures into six operational elements: Functional and Electronic materials, Infrastructure and coating solutions, Agricultural Sciences, Feedstock and Energy, Performance materials and Performance plastics. The Dow Chemical Company began its operations in 1897 but still has a substantial amount of the market share (Hunnicutt 2009, p. 90). Analytical tools Carroll’s Pyramid of CSR In 1991, Carroll organized the different corporate social responsibilities into a four layered pyramid model, which he called the pyramid of corporate responsibilities. The four responsibilities are; economical, legal, ethical and finally philanthropic (Weber 2008, p. 256). Historically, firms were created as economic entities designed to produce goods and services that consumers wanted and make reasonable profits in the process. The idea of profit as a motivator changed into an impression of maximizing profits. This has been the most enduring value ever since. All the other social responsibilities are centered on the economic responsibility of a firm, because they are moot considerations without this first elemental responsibility. In the second portion are legal responsibilities. Society not only sanctions firms to operate with regard to the profit motive alone; the company is also expected to comply with the laid down laws and business regulations put forth by the federal state. Firms are therefore expected to pursue their economic goals within acceptable limits of “codified ethics. The third segment houses the ethical responsibilities. This embodies the activities prohibited or expected by societal members even if they are not codified into stipulated laws. At the top of the Carroll’s pyramid are the philanthropic responsibilities. The aims of these responsibilities are to make the firm a good corporate citizen and promote human welfare or goodwill. Such initiatives include contributions through financial and executive time contributions to societal centered initiatives like education for instance (Hunnicutt 2009, p. 94). Triple Bottom Line The axiom “triple bottom line” was coined in 1994 by Elkington John, the founder of a British consultancy firm known as SustainAbility. John’s argument was that firms should be preparing three different and quite separate bottom lines as imperative constituents to positive corporate citizenship. This is a holistic approach to business that considers the people, the planet and profitability as three equivalent pillars in an organization’s mission. In conducting their businesses, companies not only use financial resources (revenues), but also social resources (employee’s talents, time and government infrastructure) and environmental resources (raw materials, energy, and water). John’s argument was that any sustainable firm should be able to document a positive return on investments transversely in all the three bottom lines, as well as show the benefits that a company’s stakeholders obtain across the same three dimensions. (Weber 2008, p. 255). The next section of this paper highlights how the Dow Chemical Company engages in CSR through the lens of these analytical tools of Corporate Social Responsibility analysis. The Dow Chemical Company Corporate Social Responsibility Strategies Product Safety Dow Chemical Company applies the Chemical Risk Policy in all its operations. The company applies this policy to identify and manage chemical risks to ensure that their products are safe. Consequently, Dow employees work hard to make sure that the company’s products are manufactured, stored, ferried, utilized, disposed and recycled in a way that highly regards human health, safety and environmental curatorship (Hunnicutt 2009, p. 67). Dow Chemical Company has a well-documented process for characterizing and managing any perils that may arise as a result of using their products. This measure is designed to demonstrate the company’s commitments in making their products safe, well beyond the government’s requirements. This is in close relation to the triple bottom line’s segment of people where the end users plights are addressed. The firm strictly observes the Global Chemicals Management Policy and the American Chemistry Council’s Responsibility Care (Sternberg 2009, p. 6). Climate Change The Dow Chemical Company is exclusively positioned to continue providing creative innovations that advocate the utilization of alternative energy sources. Dow Chemical Company invests unprecedented amounts in financial grants to coin solutions that will stop, slow or reverse global warming. The firm also advocates a framework that establishes the clear paths to stop, slowing down or reversing carbon dioxide emissions in all countries (Weber 2008, p. 252). Dow Chemical Company has prevented well over 500 million tons of GHC emissions from getting into the atmosphere since the early 90’s (Weber 2008, p. 254). This is in relation to the three bottom line’s subdivision of the planet as one of the three crucial pillars of corporate social responsibilities. Energy Efficiency and Conservation Many do not recognize that energy efficiency is the only sure way to reduce carbon emissions and improve the energy situations globally. Since 1990, the firm has reduced the intensity of its energy by almost 50%, saving well more than 6 trillion Btu (Sternberg 2009, p. 7). Dow calls for incentives for power generators and distributors to partake innovative energy efficiency and cost effective measures. Through the effective use of generators, dependency of national grids for power is greatly reduced, increasing energy efficiency. These actions are related to the economic segment of Carroll’s pyramid of CSR. Community Outreach The relationship between the firm and the community can be reflected in many ways. First off, the firm communicates with the community’s panel of advisors to clearly identify the “acceptable communal” boundaries along which the company will operate (Sternberg 2009, p. 8). In addition to this, Dow Chemical Company partners with other local organizations in the instigations of processes that will benefit the community and the whole society are well. This is related to Carroll’s segment of philanthropy. The firm also sponsors many community events, where it strategically invests monetary resources in the creation of utilities like schools, public halls, colleges and many more other projects. To add to this, Dow Chemical Company also invests in community groups that serve to improve the lives of the people around the immediate environment in which every branch of the firm operates (Weber 2008, p. 262). Sustainable Chemistry The firm lays focus on articulating business strategies that have the most significant sustainability impact of their products. The Dows Sustainable Chemistry Index provides the company with a clear profile of their products as well as identifies the probable areas that need improvement (Weber 2008, p. 267). The Index helps the stakeholders to track the progress of the firm in ensuring that their products are chemically “sound and safe” for their consumers. This is in close relation to the three bottom line’s segments of people and the environment. Environmental Health and Safety (EH&S) Every Dow business line has a worldwide EH&S Product leader who works closely with experts to identify environmental and health data necessary to assess the environmental impacts of the products of the company. After this, the product leader works with experts to review and interpret the relevant health and safety data so as to develop and implement plans that will protect human health and the sanctity of the environment. Dow Chemical Company works with regulatory experts to monitor relevant regulatory requirements to ensure that all their products are in compliance with the current government requirements (Trong 2012, p. 558). This is closely linked to Carroll’s legal segment of CSR. The firm employs over a hundred scientists with doctorate degrees. This massive group of scientists advises The Dow Chemical Company on the relevant human and environmental safety aspects with regard to the company’s products. To augment, the company has over fifty regulatory experts who interpret and put to use applicable regulatory requirements to the products of the company (Sternberg 2009, p. 7). This is related to the three bottom line’s portion of the environment. Major Drivers of the Dow Chemical Company CSR Initiatives The major drivers of The Dow Chemical Company can be classified as internal or external. As the names plainly suggest, internal drivers are the forces within the boundaries of Dow Company whereas the external drivers are the foreign but relevant forces that affect the business operations of the firm. External drivers Legislation These are the rules and regulations stipulated by the government. The government sets the standards for the products to be produced, the chemical composition, manufacturing practices, and processes and eventually how the products are availed to the final consumers (Sternberg 2009, p. 10). Therefore, Dow has to conform to the legislative requirements, affecting its Corporate Social Responsibility initiatives from time to time. It is for this reason that Dow Chemical Company has a team of more than fifty regulatory experts to interpret and apply the regulatory requirements for the products of the company, significantly driving the company’s CSR initiatives and strategies (Trong 2012, p. 552). Investor Pressure Investors are the backbone of any company. The investors inject their resources into a company or firm, and, therefore, have a major role to play in the way things are run by the firm. This includes making decisions, which might interrupt the optimal operations in an organization. Dow Chemical Company is not an exception. Just like other companies, Dow Chemical Company has strings of investors behind the scenes that manipulate each operation the company undertakes. They are the ones that make major decisions as to how the products should be manufactured, their contents, distribution and many more other vital decisions. Consequently, Dow Chemical Company has to yield to the forces of investors in the production of their products. Therefore, it is clear that investors are a vital “external driver” to the CSR initiatives and strategies employed by The Dow Chemical Company. NGO/Societal pressures Non-Governmental Organizations are normally instituted to protect the interests and well-being of humankind. Therefore, they are concerned with how human beings relate to themselves and the environment at large. These bodies often postulate what is morally and ethically pleasant or unpleasant. Working closely with the society, the NGO’s stipulate what products and services are beneficial to mankind. Therefore, because of this pressure, Dow Chemical Company has to conform to the pressures exerted by the society through the NGO’s. This affects the CSR initiatives and strategies the firm employs, making the NGO’s and the society an external driver on the way the Dow Chemical company approaches issues related to Corporate Social Responsibilities (Sternberg 2009, p. 9). Internal Drivers Reputation enhancement It is an elementary goal of any firm or company to have a good reputation. A good reputation paints a positive picture of the company. At the Dow Chemical Company, the processes and procedures undertaken are all aimed at customer and consumer satisfaction. Their products are designed to make the customer satisfied and content with whatever company product they purchase from their stores by increasing utility. Customer satisfaction with the company’s products is what gives the company a good reputation (Trong 2012, p. 555). Therefore, this directly affects the CSR initiatives the firm has in place, in pursuance of the attainment of a good reputation in the industry in which it exists. Moral Conviction The Dow Chemical Company exists in more than two hundred countries globally. They are geographically separated but have a converging goal of giving back to the society. Since the firm exists in different communities and societies, it is its moral conviction to give back to the community for the space, resources and ample working environment provided for them by the immediate community (Hunnicutt 2009, p. 78). Therefore, the Dow Chemical Company is obliged to give back to the society by means of the channels earlier discussed in this paper. As a result of “moral obligation”, Dow Chemical Company gives back to the community. This directly affects the CSR initiatives and strategies employed by the firm. Strategic Alignment The Dow Chemical Company has strategic plans that serve as template, indicating how the firm should run to achieve its present targets. To attain these targets, much has to be done, including instigating changes to conform to the strategies (Sternberg 2009, p. 8). Therefore, the Dow Chemical Company produces products specifically to solve a problem related to a specific market niche. Consequently, the processes used to attain the goal of “strategic alignment” to suit a certain market directly affect the CSR strategies and initiatives employed by the firm. It is thus very clear that strategic alignment does affect the CSR strategies and initiatives of The Dow Chemical Company. Opportunity An opportunity to firm translates to its monetary equivalent; profits. Therefore, Dow Chemical Company has potential opportunities in which they can improve or expand their product basis to serve a “neglected” market niche (Hunnicutt 2009, p. 65). To serve the needs of a newly discovered market, Dow Chemical Company alters its processed to meet the goals of the opportunity discovered. Therefore, this serves as a major driver for the firm’s CSR approaches and strategies in production. All these drivers are of great importance to The Dow Chemical Company. This is because these drivers that accurately pinpoint what needs to be done to make sure that the company is acting responsibly. These drivers dictate what products to manufacture, what chemicals to incorporate and what processes need to be adhered to. Without these drivers, it would be impossible to innovate and advance products manufactured by the company. Recommendations The Dow Chemical Company can embrace a CSR rewarding system in which all the branches of the company compete for the top most position. By adopting this strategy, the result will be that all the sister companies of The Dow Chemical Company will act pro-actively to get the reward of being named the best Dow Chemical Company branch. This can be rewarded with maybe monetary gifts to the whole staff of the sister company awarded the best in Corporate Social Responsibility. As a result, the levels of CSR initiatives will perk up in the firm as a whole, making The Dow Chemical Company advance both economically and socially. Bibliography Hunnicutt, S 2009, Corporate social responsibility, Detroit, MI: Greenhaven Press. Sternberg, E 2009, Corporate social responsibility and corporate governance, Economic Affairs, 29(4), pp.5-10. Trong, L 2012, Corporate social responsibility, ethics, and corporate governance, Social Responsibility Journal, 8(4), pp.547-560. Weber, M 2008, The business case for corporate social responsibility: A company-level measurement approach for CSR, European Management Journal, 26(4), pp.247-261. Read More