Why corporate social responsibility matters - Essay Example

? Corporate Social Responsibility is emerging as a continuing discussion amongst the corporate and the civil society. From a where CSR used to be an extra part time activity by companies, it has become a mainstream activity for almost all leading companies. Corporate companies are setting up fully fledged CSR departments focusing on the social issues of contemporary relevance. A complex chain of various stakeholders of the company including the community; vendors, customers, investors and the concerned government will be involved in a CSR decision of the company. In other words, a CSR decision of particular company will affect its varied range of stakeholders. The stakeholders will have either comply with the CSR decision or in cases, they will benefit from the CSR initiative of the company. Johnson & Johnson is a multinational company with its presence over 60 countries. It has more than 250 subsidiary companies with human resource strength of 116,000 people. Being a large company and having been using the governmental and natural resources for long years, it becomes the responsibility of Johnson & Johnson to be responsible to issues of social relevance. The objective of this essay is to critically analyze the Corporate Social Responsibility initiatives of Johnson and Johnson. Managerial Structure of Corporate Social Responsibility Wing The company claims that CSR has been included in the mission statement of the company 60 years ago. Interestingly, in that period CSR was not a point of discussion as a responsibility to be fulfilled by Corporate Companies. The CSR initiatives of the company were started by General Robert Wood Johnson (CSR Globe, 2006) He was the Chairman of the Director Board of the company then. The first initiative taken up by the company in this regard has been claimed by the company to have taken up way back in 1906. The company supported the government to source medical supply for the victims of the earthquake that happened in San Francisco. The CSR representative for the company is the Executive Committee. This makes it clear that the CSR initiatives of Johnson & Johnson is planned and controlled by its top level management. The involvement of senior level management in thus ensured in the process of planning and implementation. The governance of Johnson & Johnson’s Corporate Social Responsibility initiatives is centrally based from its headquarters. This central approach in governance makes sure that the policy is oriented and focused on the central policies suggested by the Executive committee of the company. This further ensures the top management’s control over the CSR mechanism. The comprehensive Strategy Johnson and Johnson have developed a comprehensive strategy that clearly defines the limits of implementation of CSR. The CSR priorities of the company have been clearly defined to be limited to four sections. First of it is to cater to the company’s responsibility towards nurses, patients, doctors, mothers fathers and others who use the products of Johnson and Johnson. The second priority area is employees all across the world. The third is communities and the fourth one is stockholders. On careful analysis of these priority areas, it is clearly observable that the company has clearly defined the reach of its CSR initiatives. Interestingly, most of the beneficiaries from all the four priority areas belong to their customer base and direct dependents of the company. For instance when the patients who use their products refer to their customer base, the 116,000 people employees who are direct dependants of the company are included in within the limits of the activity. In conclusion, it can be observed that the CSR policy of Johnson and Johnson comprises of a comprehensive strategy clearly defining its limits to business development, human resource welfare, supply and sourcing chain wellbeing and community welfare. Specific CSR Programs The CSR programs of the company focus on three large areas including Environment, Social and Governance and Economic. The Corporate Social Responsibility aspect of Johnson & Johnson with reference to environment includes Environmental Management, Climate Change, Environmental Performance, Green Building and Product Stewardship. The Company makes sure that its products are processes comply with environmental standards and assessments and it makes sure to make these processes assessed and certified. The company follows a strict climate change policy involving use of alternative energy and effective utilization of energy. The policy also takes responsibility of greenhouse gas emissions. Waste Management, Green building, LEED certification, Biodiversity, Water Usage, paper recycling, and environmental literacy are some of the specific CSR programs of the company. Under the Social responsibilities, they cover Human Rights, Global Health, Employee support, Product Quality and Safety, Workplace Safety, Research and Development and Supply Chain. The company has taken up 650 programs spreading over to more than 50 countries. This covered a budget of 588 Million Dollars. The company has ensured to extend its CSR norms to its supply chain so that this value chain brings in a lot of ethics and social responsibility in a larger business arena. This becomes of increased relevance as the range of business that Johnson and Johnson involved in is large in its coverage and number of stakeholders. The Governance and Economic segment of the CSR strategy of Johnson & Johnson emphasizes on the transparent and ethical behavior of its governance system. The participation of stakeholders in decision making has been specially emphasized in the CSR policy of the company. The company makes political contributions so as to push governmental policies in areas as that of health and community welfare. CSR evaluation The CSR policy of Johnson & Johnson has been observed to cover wide range of issues. The policy statement encompasses a large vision. In the Corporate Social Responsibility Index of 2010 published by The Boston College Centre for Corporate Citizenship has ranked Johnson & Johnson as the topper with regard to their Social Responsibility (MNN 2010). They could score 82.67 pints in the indexing done by the Boston College Centre. A score of 75 is considered to be of good CSR repute (MNN 2010). The fact that Johnson & Johnson could maintain this position for three years and they increased 6 points to their account in comparison with the previous year suggests that the policies as envisaged by the company’s management are being implemented in its full spirit. However, the survey was limited to US customers. The company envisages its stakeholders to comply with the CSR policies of the company. Reading this together with the fact that the company’s consumer network is spread all across the world including third world countries, disparities in agreement to the CSR policies could be very well expected. It must be noted that the Corporate Social Responsibility Index created by Boston College Centre for Corporate Citizenship is valid only in the US context (MNN 2010). However, a major disparity in the CSR approach of Johnson & Johnson was revealed when the company admitted recently that the consumers and suppliers were persuaded and misled to buy defective Motrin painkiller products (Connor M 2010). For the company to comply with its CSR policy of ethical correctness and transparency, they should have admitted the mistake and recalled the product. There are no records suggesting that the entire programs under CSR policy of Johnson & Johnson to have voluntary compliance with SA8000, the global social accountability standard developed by Social Accountability International. The project Phoenix, an initiative of Johnson & Johnson, which supports Futura, a recycling cooperative in Sao Jose dos Campos, Brazil is designed to comply with SA8000 standards. The correlation between the company’s profit and CSR involvement has been globally noticed right from 1943. In the Credo statement that the company came up with explains the organization’s responsibility to run the business profitably along with being responsible to the community. The financial statement of the company for the year 2010 suggests that out of revenue of 61587 Million Dollars, the company made a direct community investment of 603 million dollars. The company claims that 53452 million dollars was distributed in different heads of which 603 million dollars was directly invested in community projects and the other section of it reached the community indirectly through wages, and taxes leaving aside an operational cost of 27586 million dollars and capital repayment of 6259 million dollars. Boston College Centre for Corporate Citizenship has opined that the Corporate Social Responsibility Index released by them directly depends on the people’s perception on the CSR involvement of different companies (MNN 2010). This directly depends on the advertisements issued by the companies in this connection. On analysis of the CSR policy of Johnson & Johnson, it is obvious that a majority of its programs are organization centered and only a small share of it is implemented directly amongst the community. For instance, the welfare of the staff and responsibility towards customers, which Johnson & Johnson highlight as their CSR policies, directly is paid back to the company in terms of organizational welfare and the resultant profits. Read More