Links Between Corporate Social Performance And Financial Performance

Table of Contents Introduction............................................................................................................................ 2 I. The development of global, European and national policies relating to sustainability. 2 1. Changing attitudes of public, politicians and businesses to the environment since 1945 .................................................................................................................................... 2 2. Brundtland definition of ‘sustainable development’ .................................................. 4 3. The international and UK policies to sustainable development since Earth Summit of 1992

Corporate social responsibility incorporates environmental, social, and economic dimensions that provide leadership and differentiation opportunities for perceptive organizations. However,

This definition is almost identical to that of the Brundtland Report’s view on global sustainability. Many organizations and corporations have since then embedded the Brundtland Report’s concepts of sustainability and sustainable development, whether it’s for genuine care for the world or the desire to increase positive publicity to consumers. But the process of determining and implementing the definition can be tricky as many struggle with twisting around the term with its broad and interpretable definition. Many arguments have surrounded the issue of when a company releases its sustainable development progress to the stakeholders, they will reap many advantages that are not usually associated with releasing this soft of data in an annual financial

Sustainable Capitalism in short is a method in order to maximize long-term growth and protect the stakeholder’s needs, all while considering all costs associated (Huffington Business, 2013). Taking into consideration the environmental factors associated with doing business along with the economic, social and governance criteria is believed to be a driving force to long-term sustainability (Bethel University, 2015). Within the environmental category, the manifesto released by GenerationIM proposes that companies identify the risks of their business and record the footprint being generated by their processes.

Sustainability and corporate social responsibility indicate the desire of an organization as a responsible citizen to give back to the society through initiatives that seek to better the lives of the people and generally, leaving the world a better place to live. As a global leader in the coffee restaurant business, the size of Starbucks and its activities mean that it wields a lot of power in its areas of operation and its activities can affect societies directly and indirectly. The company’s mission, vision, and objectives guides the company’s quest for sustainability and supports the corporate social responsibility activities and programs that Starbucks undertakes.

Another abstract contributes to the research of the 100 companies to work for is Ahmed, Nanda, & Schnusenberg (2010). This research aim to identify “Can Firms Do Well While Doing Good?” in term of applying to financial economic. They are looking at the relationship between a firm’s social responsibility and its performance. They argue that Fortune’s approach to identify the Best Companies to Work For is mainly based on employee (not shareholder) surveys, which may provide a more direct measure of the relationship between a firm’s degree of social responsibility and its financial performance.

This research proposal will contain details on how environmental corporate social responsibility affects a firm's profitability. The central question is how does environmental awareness affect a firm's financial gains? This is a worthwhile question to pursue due to the emerging trend in positive consumerism (Harrison, 2005) as well as the perceived business benefits of CSR.

The corporates were suggested by Hogner (1982) to legitimize their corporate social decisions and activities. In 1983, Lindblom stated a framework about legitimacy theory to explain why companies should disclosure the social information and environment information. Many social studies relied on this framework to claim the theoretical structure. The legitimacy theory was born to strengthen objective of the corporate management to react to the expectations of the community members (Tilt,1994). In 1995, Suchman combine the framework stated by Lindblom and the literatures resources, and issued a framework about legitimacy theory to provide the roles about the mandatory companies should disclosure the environment

Social responsibility should be important to businesses because it shows consumers and the media that the company takes a serious interest in doing what is right. These issues may be spread locally, nationally, or globally and could impact the health and wellness of customers and employees. Implementing a good social responsibility policy can impact buying decisions for consumers wanting to make purchases from an ethical company. Building a trustworthy reputation takes time, and effort, and is a valuable attribute for a business to have.

It not only requires investments in green product and manufacturing technologies, employee skills, organizational competencies, formal management systems and procedures, but also in the reconfiguration of the strategic planning process. To date, existing approaches are still so fragmented and disconnected from business strategy in such a way as to obscure many of the greatest opportunities for companies to benefit society via such an approach (Porter and Kramer, 2006). Yet, it has been suggested that if corporations would analyze their prospects for environmental responsibility using the same frameworks that guide their core business choices, they would discover that environmental management can be much more than a cost or a constraint; it could, in essence, be a source of opportunity, innovation, and competitive advantage (Porter and Kramer, 2006).

Jackson et al. (2011) and John (1994) established the term “Triple Bottom Line” as an approach for measuring sustainability performance. Govindan et al. (2013) explains that TBL consists of three words ‘Profit, Planet and People’ which implies measuring the company’s performance on three parameters ‘Economic, Environmental and Social’. It is an approach for evaluating management performance. In addition, the concept of TBL proposes that economic performance cannot be achieved alone at the expense of the environment and society (Goel 2010), companies must carry out its operations to positively protect the environment and the people within the community (Govindan et al. 2013). Implementing these sustainability initiatives, they also gain business continuity, long-term economic success and competitive advantage (Carter and Rogers 2008). Therefore, adopting the triple bottom line approach, the company gains economic prosperity, environmental quality, and social fairness.

The last two decades has seen a significant increase in firm’s investment on corporate social responsibilities (CSR). Jo and Harjoto (2011) propose that a social responsible firm cares about how its operating affects stakeholders, community and environment in the ways that is beyond the legal requirement. The increasing importance of CSR has raised many debates on its influence on firm’s performance, shareholder value, and whether it increase the agency costs of management and shareholders. Executive compensation serves as an important tool in corporate governance. As CSR is a long-term investment with immediate cost showed in financial report in current period and uncertain payoff in the future, the managers may be unwilling to invest in CSR, even though it benefits the shareholders and increases firm value in the long term. While executive compensation is critical in aligning the interests of shareholders and managers, the decision of CSR commitment can be influenced by the management compensation.

Apple Inc. is regarded and recognized as a leader in technology. The international corporation is identified for its modernization in technology and its admired products for instance the iPod, iPad, iPhone, Mac computers and software of computer. Apple in short time, has turn out to be the second-largest world 's information technology company by income subsequent to Samsung Electronics, and the third-largest world 's mobile phone maker subsequent to Samsung and Nokia. Fortune magazine forenamed Apple the majority admired corporation in the USA in 2008, and in the world from 2008 to 2012.

Traditionally, financial reporting discloses only financial information to determine its financial performance. However, nowadays, success of one business is no longer solely depending on monetary gain, instead the impacts of companies’ activities have on society and environment as a whole is highly important. This trend has come across to increase the public expectation for organization to take responsibility for their non-financial impacts for example the impacts on the environment and community. Hence, Triple Bottom Line (TBL) which was first described in 1994 by John Elkington can be an ideal integrated approach that fit in to this approach in order to support the sustainability growth of the companies. Triple Bottom Line

During a lecture in International Sustainable Tourism, we discussed the Triple Bottom Line or Triple Bottom Line Reporting, which means expanding the traditional reporting framework to take into account environmental and social performance in addition to financial performance. This framework is becoming an accepted approach for organizations to demonstrate they have strategies for Sustainable Growth. It focuses on decision-making and reporting, which explicitly considers an organization’s economic, environmental and social performance. Triple Bottom Line focuses on Stakeholders instead of Shareholders. A Stakeholder is a person, group, or organization who has an interest or concern in an organization. In this essay, I