Corporate Social Responsibility in Mechanism

Question: Discuss ab out the Corporate Social Responsibility in Mechanism. Answer: Introduction Corporate social responsibility is a mechanism which helps the business in ensuring and monitoring the law and ethical requirements. Green washing is adopting practice of doing deceptive advertising. Green washing is one of the issues of corporate governance issues. There can be issues in corporate governance like: relationship between the board, agent and principle relationship where the relationship is defined between the manager and the employees is described, the rules and regulations compliances, the conflicts and cases filed against the company. The good governance is depicted by the company image in the minds of the consumer, its conflicts, strikes, the shareholders views about the company. The corporate governance responsibility is legal responsibility, ethical responsibility, economic responsibility and philanthropic responsibility. Green washing Greenwashing is a practice adopted by the companies who want to promote their brand by looking environment friendly comparing with what they are in real. It is usually done by investing more time, efforts and money or advertising their products as green or sustainable product (Aggarwal Kadyan, 2014). With the advancement in industrialization and globalization, it has created an adverse result on the environment by ozone layer depletion, environment pollution, global warming. This laid the concept of corporate social responsibility of the organization or company towards the society and environment. In case of green consumers, they usually prefer those companies goods and services who promote green marketing. Hence the companies who are want to capture more consumers and want to target niche market based on niche consumer, company sometimes adopt a practice of doing deceptive advertising. There are not any specific rules and regulations for green washing, because of this green washing practices are adopted universally. Hence there are some suggestions for the customer that they should conduct a proper research from the companys website if they see words like natural, pure, eco friendly etc., customer needs to look on documents and evidences that whether the company is adopting the practices it has mentioned or not. In case of company it is suggested that they should promote their brand in a righteous way rather than a deceptive way. All the instructions and ingredients should be clear and easy to understand so that the final user may not get confused with the perceived quality of the brand. Corporate social responsibility CSR is a practice adopted by the organization who wants to look responsive towards stakeholders that are society, government, employees, and environment. I agree to the point that CSR is beyond green washing. Apart from green washing a company must have commitment to the following: Legal responsibility: it is a duty which is to be complied before implementing actions. Following the rules and regulations is legal responsibility. Economic responsibility: the main objective of an organization is to make profit. But it is the duty of an organization to return the profit by whom it was able to earn it. And in case of public or nonprofit organization if they are earning profit, they must reinvest it into the company. Ethical responsibility: although the ultimate objective of an organization is to make profit, but that should be done by doing welfare of it stakeholders and environment keeping in mind. There should be everyones welfare. Philanthropic responsibility: it is the social responsibility of an organization towards the welfare of it employees, environment, doing charity to other organization. According to FTSE 100 Green winners Green washers survey, companies promote their product by green marketing but in reality they have no interest in going green. While the organizations in UK like HSBC, Marks Spencer were considered as green winners for their efforts. Whereas BP, Tesco, British Airways were considered as green washing their brand in the minds of the public. The concept of green washing if caught can sometimes destroy the image of the company as a whole (Aggarwal Kadyan, 2014). The CSR practice is usually adopted by the large MNCs, because they lay impact on the environment, society and economy. According to CSR practices companies should be committed towards the creation of shareholder value, human rights, and labor rights. Sometimes value addition in the shareholder value is misunderstood with CSR. But they mean differently, CSR is a broader concept whereas increasing in the shareholders value is a part of CSR. A good implementation of CSR results into lowering civil and criminal proceedings against the company ( Mares, 2008). The government and regulators addresses corporate governance by following things: Relationship between capital market and corporate governance: this presents the role of equity and debt structure, areas from where major funds are raised. Corporate governance and regulatory environment: here the elements of internal trading, laws that have been developed are evaluated. Corporate governance and stakeholder engagement: This aspect highlights the awareness of investors issues like social, environmental and ethical that may affect on long term sustainability of business (Tourani Ingly, 2011). There are various issues apart from green washing that are described as below: Duties of directors: the corporate governance aim is to make the duties as statutory and lawful, which are in the best interest of the company. Remuneration and reward of directors: sometimes directors are paid in extra and bonuses are given. This lays the emphasis of issue on corporate governance. Reliability of financial reporting and external auditors: this is a critical issue raised by the investors, because of the management accountability consideration. Shareholders rights and responsibilities: investors should be provided all the information that seems relevant to them. Composition and balance of the board: scandals usually place when there the board has one senior executive. Because it may happen that the single director get biased, or establishes his own interest. And if there are more than one director in the board there would be lack of formal relationships, and decision would be taken on the basis of personal recommendation. Hence there should be balance in the board having required talent, competency and skills. Boards responsibility for risk management and internal control: if there would not be regular meetings, the board would not be able to get the full information and therefore will not be able to oversee the business aspects. Corporate social responsibility and business ethics: there should be sense of responsibility and mutual decision between the shareholders and board (Hub pages,2014). Conclusion Some critics claim that corporate governance is more than green washing. And per the essay it is true that corporate governance issues are far away than green washing. Green washing is presenting the company product and services as they are eco friendly but in reality the company is not adopting such practices that mean the company is using deceptive advertising. That can lead to adverse situation if being caught. Hence as per discussion in essay it can be said that there are more issue apart from green washing. 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