In the past when considering corporate philanthropy (charitable giving by companies), opinion tended to divide into those who considered is appropriate that companies (as the creators of economic wealth) should reasonably direct some resources towards good causes of their choosing; and those who vehemently oppose such practices on the grounds that company managers are not elected to address societal problems, are not mandated to make choices between social priorities, and are not empowered to give away other peoples’ money (i. . , that belonging to their shareholders). This debate is still relevant, though usually resolved by the value-judgments of the debaters – there are no absolute rights and wrongs. However, what makes the issue particularly topical is the growing number of pressures on companies to manage and protect corporate reputation as a resource, partly by investing in social initiatives. These pressure points include: customers, suppliers, employees, managers themselves, shareholders, media, and external lobby groups.
Importantly, the debate has moved beyond pressures to make charitable donations into the challenge to companies to (a) make good damage they have done at various points in the value chain, without waiting for legal coercion to be applied; and, (b) incorporate social initiatives and goals within the core value proposition. Currently, attention is focused on environmental issues and the employment conditions of those who work in manufacturing and distributive organizations in the value chain.
In the first instance, companies may be pressed to examine the value chain for human and environmental consequences of business operations, and to take steps to make good damage that has been unavoidable. However, the really interesting challenge is to make social responsibility a central part of business strategy. Initiatives like those at Dell, Microsoft and GE illustrate this challenge. In these strategies, CSR is not a peripheral question, but an important part of how a company does business.
Recycling and reconditioning initiatives are also illustrative. While philanthropy or charitable donation remains susceptible to the argument that management may not have the moral right to make such choices for the use of shareholders’ money, CSR as an initiative in value chain management and business strategy takes the argument into a different domain, when business and social objectives are more clearly aligned.