Responsible management and CSR
Environmental sustainability refers to the “responsible interaction with the environment to avoid depletion of natural resources and allow for long-term environmental quality” (Severo et al. 2015). It is one of the most talked about issues in the global world and its significance has increased especially in the last few decades. In the arena of business in particular, environmental sustainability has become the most important part of the strategic decisions taken by managers.
The report aims to provide suggestions to Barratt Development Plc on the issue of environmental sustainability. The report is being written on behalf of Greenleaf Consultancy Firm to advise Barratt on taking up the Corporate Social Responsibility (CSR) approach to environmental sustainability issue. The consultancy is active in the UK providing consultancy services to clients on various issues including management, skills and CSR amongst others. At present, the consultancy is providing services to Barratt Development Plc, which specializes in residential property development and is based in the United Kingdom. Barratt Development Plc has been engaged in sustainability practices like reducing the use of harmful chemicals in the construction of buildings and so on. Founded in 1953 by Sir Lawrie Barratt, the company has John Allen as the Chairman and David Thomas as the CEO (Barattdevelopments.co.uk 2018). The company has an extensive policy on environment and sustainability that includes objectives like identifying and minimizing the risks caused due to its activities. A look at its socio-economic footprint reveals that the company has been active in meeting environmental sustainability needs. However, it is also important for the company to ensure increased benefits for the environment through its CSR policies.
The report will provide a systematic explanation of the need for CSR, its definition and importance. Further, the report will discuss the values supported by ethics and then explore the issue concerning the company. It will be followed by some advices suggested for the company and recommendations.
As mentioned in the previous section, environmental sustainability is a major part of any company’s strategic decision-making. Corporate Social Responsibility or CSR is one of the most crucial parts of this decision-making. Sheehy (2015) has defined CSR as the “international private business self-regulation” that recognizes the importance of indulging in activities that do well to the public. The transformation of CSR from being just a corporate philanthropy to a regulated practice has been rapid and in fact, it has become one of the major drivers of success in the competitive environment. As Kolk (2016) explains, the definitions of CSR has adopted various dimensions across decades. The author provides chronological definitions of CSR and the way its meaning and importance has changed over the years. During the 1950s and 60s, CSR was viewed mostly as a philanthropic activity with major focus on community development, poverty alleviation, humane and religious philosophies amongst others. The 1970s and 80s era witnessed a shift in the focus area of the CSR and it came to be viewed under the dimension of regulated CSR. The areas of focus were stakeholder relationship management, corporate reputation, extension of commitments, socio-economic priorities, bridging governance gap and many such. With the advent of the 21st century however, CSR entered the strategic arena and included competitive strategy, environmental protection, sustainability, accountability and responsibility as prime areas of focus. Increasing number of organizations began initiating the CSR policy into their organizational policies.
Benefits of CSR
Benefits of CSR
Several benefits of implementing the CSR surfaced and increased its popularity amongst companies. As Spence (2016) notes, CSR influences three major aspects of a business that include:
- Employee turnover
- Customer satisfaction and
- Reputation
According to the author, analyzing the relationship between CSR and employee turnover reveals that it helps diminish employee turnover. Companies that demonstrate good citizenship are more likely to see less employee turnover because the employees would evaluate it as a just and fair company. In terms of customer satisfaction, CSR exerts a positive influence on the customers regarding the company. When customers find that the company is not involved in any unethical conduct and is always in the news for good reasons, they tend to put their trust on that company and be loyal to it. Further, CSR positively influences the firm’s reputation as well because when employee turnover is less and customers are putting their trust and money on it, it is bound to raise its reputation.
Limitations of CSR
However, it must also be mentioned that not all experts consider CSR beneficial to the company. Although the disadvantages are marginal, these have some impact on the company mostly in terms of profit and revenue. Holmes, Banda and Chawansky (2015) have identified these major limitations associated with CSR:
- Costly – The most visible disadvantage of CSR is that it requires heavy costs to be implemented. Small and medium business in particular face great difficulties investing into it (Hbr.org 2018).
- Shareholder resistance – some shareholders do not always look to collaborate with socially responsible companies, rather they opt for companies that could profit them. Therefore, CSR could become a matter of contention for the shareholders.
- Green-washing – It is a tool of marketing where a company sells its products, services and policies portraying those as environment friendly while those are not. CSR is blamed for encouraging greenwashing.
The above-mentioned downsides of CSR could be detrimental to the company and it would cancel out all the positives that are associated with it. It thus becomes very important for the Barratt Developments Plc Company to use the CSR approach cautiously keeping the stakeholders in mind.
It is important for the company to have good knowledge about the various ethical theories that could guide it to manage operations responsibly. Having an in-depth knowledge about these theories could help the company explain their values clearly (Bampton and Cowton 2013). This section focuses on two specific ethical theories that include Deontology and Ethical relativism. Prior to explaining these two ethical theories and highlighting their importance guiding the company’s ethical thinking, it is important to understand the meaning of ethics in business. Alasdair MacIntyre was one of the pioneers of modern day moral philosophy, which is applicable to different fields (Fernando and Moore 2015). The Scottish philosopher had focused on the significance of moral goods concerning the community. Fernando and Moore (2015) have provided a lucid definition of ethics in terms of business where it relates to the policies and practices of any business. When the business is involved in practices such as discrimination, bribery and neglect for the environment, it deviates from the ethics. Hicks and Stapleford (2016) on the other hand, state that the ethics and virtues proposed by Alasdair MacIntyre are applicable to business organizations as well as these are generalizable. Business ethics, as Chell et al. (2016) has noticed has been categorized into traditional ethics and contemporary ethics. While Deontology is a part of traditional ethics, Ethical relativism comes under contemporary ethics. It is now possible to define and explain the two chosen ethical theories and understand the way these could help the company manage responsibly.
Limitations of CSR
Deontology is an ethical theory in which the morality of an action is judged based on the rules outlined by the moral philosophers. Deontology chiefly involves the duty, rule and obligation of an individual and it gives most prominence to action rather than the consequences. Immanuel Kant and W.D. Russ were the pioneers of this theory. According to them, the ethical value of an action depends on the doer’s intention related to that action. In the business arena, deontological ethical theory holds much value because it guides the actions of the managers, leaders and the employees. In the context of business, Deontology fits in perfectly because its major premise is performing one’s duties. Orlitzky (2017) states that obligations, rules and duties that are the major aspects of Deontology are also the most important elements in business. Businesses have the obligation to their customers, shareholders and employees and they also have the duty to implement laws that promote equality, justice and fairness. Managers at Barratt therefore, could use this theory as a guide to manage their business operations smoothly. Ferrero and Sison (2014) however argue that Deontology has little significance in the modern business setting because in the contemporary world, actions might be unethical but consequences are that matter the most. To provide an instance, breaking any rule or neglecting any duty might be a wrong action but if it was done to save lives then it is ethical. Managers at Barratt thus might have to carefully revise the actions of their employees and find the true reason behind it and then apply measures.
Another theory chosen is the Ethical relativism theory, which comes under the contemporary ethical theories. Ethical relativism states that the right and wrong is determined by the rights and wrongs specified by the specific society (Demirtas and Akdogan 2015). Proponents of Ethical relativism argue that there is no absolute ethical rule that decides the right and wrong committed by an individual. As Pearson (2016) observe, Ethical relativism allows managers to understand and appreciate the cultural differences within the organization, as they are aware that every employee will have different ethical principles. Ethical relativism also states that moral conducts or notions are only applied to individuals and not to the entire corporation. An instance of this could be that if an individual employee commits some wrong, the corporation is not held accountable for it. However, critics argue that this notion is wrong since the corporations also have some moral responsibilities and duties. Fryer (2016) contrasts this view stating that Ethical relativism rejects the universal law of respect and humanity as ethical values by focusing on the individual culture. It is therefore important for the Barratt management that they tactfully use Ethical relativism as guide to incorporate responsible management principles.
After analyzing the CSR and the two chosen ethical theories, this section focuses on the issue that concerns the company, which is environmental sustainability. Environmental sustainability especially for companies involved in property construction is important because this field involves extensive use of chemicals and other things that are detrimental to the environment. The importance of environmental sustainability could be assessed from the views of the modern business scholars. As Jamaludin, Mahayuddin and Hamid (2018) state, “poor environmental performance of small suppliers can affect badly the image of the buying company”. Further, the authors state that managing environmental sustainability is an important strategic issue that has the potential to exert an everlasting influence on the organization’s performance.
Values underpinned by Ethics
In an article published in the Fortune magazine, the importance of environmental sustainability in business particularly was clearly elaborated. The article provided certain examples of businesses that have benefitted from maintaining environmental sustainability (Fortune.com 2018). Unilever developed washing-up fluids that need less water and its sales started showing rapid rise. It also enlisted examples of companies that have come up with sustainability plans while at the same time maintaining the profits. Companies like Adobe (software), PG&E (utility), Xylem (water technology) and Proctor & Gamble (consumer goods), and so on are some companies that have excelled in the field of sustainability without facing any loss to business (Confino 2018). However, these companies had to face many challenges while initiating their plans. The first major challenge they had to face was the economic setback. Secondly, the companies had to invest much time and energy on creating materials and products that could exert less pressure on the environment. Sustainability becomes even more difficult to maintain and challenging when it comes to the house-building industry (Abidin and Iranmanesh 2016). As Nill, Laczniak and Thistle (2017) observe, the housing industry face the challenge of maintaining sustainability due to government’s “lack of incentive programs and slow progress in revising regulations”. These lacks and negligence result in unnecessarily high costs for environmental sustainability.
Similar is the situation in the UK where house-building companies have to expend huge sums of money to comply with environmental regulations. In a recent announcement, the UK government advisers had asked the house builders to continue building houses on flood plains despite flooding risks (Harvey 2018). The only condition was that the house builders must make the householders aware of the risks associated. The case provides an environmental sustainability issue in the sense that the decision was made to meet the targets of reducing greenhouse gas emissions. However, the change in climate has led to increased and unpredictable rainfall in the country causing more flooding.
House builders are aware of the environmental dangers that could be caused due to negligence and wrong policies. They demonstrated this awareness when they protested against the government’s decision to scrap ‘zero carbon homes plan’ (Oldfield 2018). The government had scrapped the zero carbon homes policy sighting the reason that it would lessen net regulations on house builders. However, many executives, house builders and environmentalists ridiculed this decision stating that the decision was “unnecessary, retrograde and damaging to the house building industry”. (Oldfield 2018). They further expressed their disappointment with the decision stating that it would hamper their plans to build homes that would comply with the Climate Change Act of being low emission reducing.
The above analysis has brought forward several ways by which Barratt Development Plc could adopt ethical and responsible measures. The issue that was outlined for the company was environmental sustainability. This section would provide detailed advice to the company on the ways to adopt measures that would ensure successful compliance to environmental sustainability.
As it has been discussed in the above sections, environmental sustainability has become the dominant issue in the world of business today and for the house building company to stay ahead in completion, must incorporate CSR policies that address this issue.
At first, the company should revise its CSR policies in order to match with the rapidly updating policies of the government. The policies implemented by the company until 2017 do not put much emphasis on the environmental sustainability issue. As has been mentioned in the previous sections, CSR helps elevate company reputation (Yin, Wang and Min 2017).
Secondly, the company must encourage the practice of keeping the environment protection policy at the top of its strategic decision-making. In this regard, the company must include in clear terms, the steps it has decided to take to protect the environment through sustainable practices.
Third, Barratt Development Plc although has an elaborated policy on environment sustainability including the objective and plans, it lacks core issues related to environment. The objectives are not discussed extensively and the policies lack conviction. The company should mention the plans by which they are going to implement these policies.
Fourth, it is advised that the company should provide a systematic plan of the ways by which it aims to test, transport and disposes all the hazardous and contaminated wastes complying with environmental standards. These plans must be made accessible to the stakeholders as well.
Fifth, the company must clearly explain the risk management procedures as has been identified in its environmental policy statement. It is good that the company has implemented policies to address accidental pollution but a deeper understanding of accidental pollution has to be made clear to the stakeholders.
Sixth, engaging with the supply chain has to be transparent and the company must make sure that the suppliers are also in compliance with the environmental sustainability policies. It can be achieved if the company encourages its employees and other stakeholders to commit responsibly to their duties as prescribed in the Deontology ethical theory.
Recommendations
Greenleaf Consultancy knows the importance of environment sustainability for its client and hence it shall recommend the best possible ways for the company to ensure responsible ethical management. These recommendations are derived from the advice given to the company.
- It is recommended that the company must include an extensive list of environmental sustainability plans like building houses that are low on carbon emissions in its policy framework.
- It is also recommended that the company must hold shareholder and stakeholders meeting at frequent levels to aware them about the latest updates and changes in the government policies regarding environment.
- Further, it is recommended that Barratt Development Plc must introduce technological systems that could increase the rate of waste reduction.
- In addition, the company should apply the knowledge gained through the study of the two ethical theories namely Deontologyand Ethical relativism to make its employees aware about their individual responsibilities.
- It is also recommended that the company should strengthen its CSR policy by introducing efficient and effective mechanisms of CSR like behavior mechanisms that include social responsibility cognition, strategy, and the drivers of social responsibility, investment and performance.
- Lastly, it is recommended that the UK based company should increase its focus on research and development so that it could construct zero carbon homes without going against the government policies.
These advices and recommendations are best suited for the company because these have been prepared by combining the traditional contemporary ethical theories and practices. Further, these recommendations and advices have been presented keeping in mind the stakeholders and shareholders and the changing norms of the business and the industry.
Conclusion
In conclusion, it must be stated that the CSR definition, its explanation, the two theories of Deontology and ethical relativism has been instrumental in providing recommendations for the company. However, it is imperative to state that several other recommendations could have been provided with further research that was limited due to time constraints. The report has nonetheless presented a detailed analysis of the Corporate Social Responsibility and the two ethical theories. These recommendations have been prepared for the client, which is Barratt Development Plc, a house building company based in the United Kingdom. The report followed a systematic procedure to analyze the issue chosen – environmental sustainability. At first, the definition of CSR and its changing dimensions was discussed followed by the demerits of implementing it. These consisted of higher costs, greenwashing and resistance from shareholders. Then the report discussed the two ethical theories from the traditional and contemporary ethics, which were Deontology and ethical relativism. While Deontology stressed on the actions committed by individuals and neglected the consequences, ethical relativism emphasized that ethics are not absolute and change as per the socio-cultural norms of the particular society. The report then provided instances of companies that had initiated environmental sustainability plan and the challenges they had to face. This analysis led to the advices and recommendations provided to the company.
References:
Abidin, N.Z. and Iranmanesh, M., 2016. Environmental practices in construction firms. Procedia Engineering, 145, pp.242-249.
Bampton, R. and Cowton, C.J., 2013. Taking stock of accounting ethics scholarship: A review of the journal literature. Journal of business ethics, 114(3), pp.549-563.
Barattdevelopments.co.uk 2018. Our policies. [online] Barrattdevelopments.co.uk. Available at: https://www.barrattdevelopments.co.uk/sustainability/our-policies [Accessed 21 Aug. 2018].
Chell, E., Spence, L.J., Perrini, F. and Harris, J.D., 2016. Social entrepreneurship and business ethics: Does social equal ethical?. Journal of business ethics, 133(4), pp.619-625.
Confino, J. 2018. Best practices in sustainability: Ford, Starbucks and more. [online] the Guardian. Available at: https://www.theguardian.com/sustainable-business/blog/best-practices-sustainability-us-corporations-ceres [Accessed 21 Aug. 2018].
Demirtas, O. and Akdogan, A.A., 2015. The effect of ethical leadership behavior on ethical climate, turnover intention, and affective commitment. Journal of Business Ethics, 130(1), pp.59-67.
Fernando, M. and Moore, G., 2015. MacIntyrean virtue ethics in business: A cross-cultural comparison. Journal of business ethics, 132(1), pp.185-202.
Ferrero, I. and Sison, A.J.G., 2014. A quantitative analysis of authors, schools and themes in virtue ethics articles in business ethics and management journals (1980–2011). Business Ethics: A European Review, 23(4), pp.375-400.
Fortune.com 2018. https://fortune.com. [online] Fortune. Available at: https://fortune.com/2015/09/24/sustainability-practices-in-business-intel-unilever-wal-mart-dupont/ [Accessed 21 Aug. 2018].
Fryer, M., 2016. A role for ethics theory in speculative business ethics teaching. Journal of business ethics, 138(1), pp.79-90.
Harvey, F. 2018. Build on flood plains despite the risks, say UK government advisers. [online] the Guardian. Available at: https://www.theguardian.com/environment/2016/jan/27/homes-and-companies-should-be-built-on-flood-plains-despite-risks-says-panel [Accessed 21 Aug. 2018].
Hbr.org 2018. The Challenge of Going Green. [online] Harvard Business Review. Available at: https://hbr.org/1994/07/the-challenge-of-going-green [Accessed 21 Aug. 2018].
Hicks, D.J. and Stapleford, T.A., 2016. The virtues of scientific practice: MacIntyre, virtue ethics, and the historiography of science. Isis, 107(3), pp.449-472.
Holmes, M., Banda, D. and Chawansky, M., 2015. Towards sustainable programme design? An examination of CSR initiatives within a Zambian SfD NGO. International journal of sport management and marketing, 16(1-2), pp.36-51.
Jamaludin, S.S., Mahayuddin, S.A. and Hamid, S.H.A., 2018, April. Challenges of Integrating Affordable and Sustainable Housing in Malaysia. In IOP Conference Series: Earth and Environmental Science (Vol. 140, No. 1, p. 012001). IOP Publishing.
Kolk, A., 2016. The social responsibility of international business: From ethics and the environment to CSR and sustainable development. Journal of World Business, 51(1), pp.23-34.
Nill, A., Laczniak, G. and Thistle, P., 2017. The Use of Genetic Testing Information in the Insurance Industry: An Ethical and Societal Analysis of Public Policy Options. Journal of Business Ethics, pp.1-17.
Oldfield, P. 2018. UK scraps zero carbon homes plan. [online] the Guardian. Available at: https://www.theguardian.com/environment/2015/jul/10/uk-scraps-zero-carbon-home-target [Accessed 21 Aug. 2018].
Orlitzky, M., 2017. How cognitive neuroscience informs a subjectivist-evolutionary explanation of business ethics. Journal of Business Ethics, 144(4), pp.717-732.
Pearson, R., 2016. Beyond ethical relativism in public relations: Coorientation, rules, and the idea of communication symmetry. In Public relations research annual (pp. 77-96). Routledge.
Severo, E.A., de Guimarães, J.C.F., Dorion, E.C.H. and Nodari, C.H., 2015. Cleaner production, environmental sustainability and organizational performance: an empirical study in the Brazilian Metal-Mechanic industry. Journal of Cleaner Production, 96, pp.118-125.
Sheehy, B., 2015. Defining CSR: Problems and solutions. Journal of Business Ethics, 131(3), pp.625-648.
Spence, L.J., 2016. Small business social responsibility: Expanding core CSR theory. Business & Society, 55(1), pp.23-55.
Yin, J., Wang, J. and Min, L., 2017. The Mechanism of Corporate Social Responsibility Fulfillment to Promote Forest Investment. American Journal of Industrial and Business Management, 7(03), p.270.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
