Introduction
Corporate sustainability can be defined as current and evolving management for corporate paradigm which acts as an option for traditional goals of growth and profit. Corporate Sustainability emphasizes on societal goals, like social ethics and sustainable development. Sustainability being an option for traditional goals of the firms mixes four concepts of management in achieving organizational goals. By sustainable development, I mean environmental protection, economic development, equitable distribution of resources and social justice.
Business managers have adopted strategies that take care of organizational goals and objectives and their stakeholders, at the same time sustaining, protecting natural and human resources for the survival of a corporate in the short run and in the long run. To achieve this manager must blend the concepts of sustainable development, corporate social responsibility, Accountability and stakeholders’ theory. These concepts form corporate sustainability.
Sustainable development
Sustainable development covers a wide area ranging from protection of the environment, micro and macro economic growth and development, and social justice in terms of distribution of natural resources. Therefore sustainable development is where the use of natural resources, investments directing , new technology introduction and defining human needs direction and aspirations for long term gain of the societal growth. The concept of sustainable development covers area of politics, economics, law, environment science, business management, and management. Like democracy, justice, fairness, and other societal concepts it is difficult to find definition (Wilson, 2003).
From the literature available, research shows that the issues of sustainable cannot be left to the governments (Oxford university press, 1987). Sustainable development has contributed to corporate sustainability through helping companies identify areas to focus on, which include environment, economic performance and social. It also provides social goals for corporation, governments and other groupings.
Social responsibility
Social responsibility in relation the management of corporate is defined as duties and moral obligation of corporate to other stakeholders. Corporate social responsibility is moral rights, wrongs and obligation for business managers for any business transaction or decisions. The moral responsibility of corporate depends on the nature of business and the individuals involved. Business organizations have adopted various ethical policies because they believe in showing the neighborhood their moral responsibility and in the process they have increased their sales.
Corporate social responsibility like any other concept is to be discussed broad terms. The idea of corporate social responsibility was introduced in 1973 when it was introduced in American corporations. Its basic premises of ethical obligation have made managers and shareholders to own self interest in business transactions. Every business manager who incurs business transactions will put the society goals and aspiration in the front.
Corporate social responsibility revolves around four basic theories which will include social contract theory (contractual relation), social justice theory (equitable distribution of resources), rights theory rights of community where the company is operating) and deontological theory.
- Social contract theory: This theory assumes that there are a number of contracts both explicit and implicit between individuals, organizations, and institutions. Social contracts evolve around whims of trust and are made in harmony. Corporations are assumed to business world by entering into contracts with the society in exchange for resources and acceptance to operate without interruption.
- Social justice theory: This examines the fairness in distribution of societal goods and services. The theory puts forward arguments that societies are considered, by way of distributing of social goods. Corporate managers, have a responsibility in ensuring these goods have been appropriately being shared in the society.
- Rights theory: This theory deals concentrate in rights of various members of the society like human rights and other rights. Corporate managers should not interfere with property rights and human rights of members of the society. Corporation will have property rights should not be used to affect the rights of employees, and the local community.
- Deontological theory: This theory assumes that everybody is equal and should treated with respect and everybody has a moral duty to that effect. This belief is for everyone, including corporate managers, shareholders and other stakeholder. Corporate social responsibility gives reasons why managers.
Stakeholder’s theory
The brain behind the stakeholders’ theory of the firm is R. Edward Freeman, in his book, Strategic management: A stakeholder Approach, He defined stakeholders as “any group or individual who can affect or is affected by the achievement of the organization’s objectives (Freeman, 1984). The aim of this theory is to assist corporate identify stakeholders and strengthen relationship with them and other external groups this will make the remain competitive advantage and relevant. Stakeholders will include shareholders, employees, customers and suppliers. It is difficult identify others because there is no clear formulae for defining stakeholders (Wilson, 2003).
However, since advertisement is making the world a small village, everybody is becoming a stakeholder depending on a number of factors. The factors to be considered in defining qualifying one as a stakeholder may include global impacts of an industry a “such as climate change or cultural changes due to marketing and advertising.” Examples of social responsibility include:
Corporate Accountability
This is legal requirement and ethical obligation of corporate to give an account of the actions and being responsible for their action. Accountability is a duty for one to justify and explain or report on his or her actions. Responsibility is a duty for one to act in a responsible way. There is relationship between shareholder and management which is and agency law thus agency theory. Management acts as agents’ and the shareholders acts the principal’s (Wilson, 2003). Shareholders entrust their capital in management in return for accountability and return on capital.
Accountability is not limited to the agency law, nor only to the relationship between management and shareholders. (Oxford University press, 1987). Accountability does not only relate to the relation between managers and shareholders but also to other stake holder as identified by Freeman in his book. Proponents of stakeholders theory argued that businesses are authority to exist for good behaviors.
Major challenges and opportunities facing managers in adopting sustainable policies, processes and practices:
- Achieving corporate sustainability is a major challenge to the managements of corporations and poses new opportunities that the world has never experienced before. The journey to corporate sustainability is bumpy, rough, tough and noisy for any manager to proud himself for having reached the far end of the path must face the following challenges and take advantage of underlying opportunities.
- Identification of stakeholders: As discussed in the stakeholders’ theory it is difficult to identify stakeholders especially this era of global for most companies. To some companies it is easier to identify the stakeholders.
- Democracy and Governance: managers and decision makers face challenges of embracing democracy and corporate governance while trying to pursue sustainability initiatives. Benn and Dunphy have argued that policies impact on innovative sustainability initiatives while in other cases they become partners in the sustainability process. Such innovations can lead to the generation of knowledge based economics thus improving corporate sustainability. “It appears that different governances systems will influence investment in resources that enable organizations to move beyond non-responsiveness and compliance to a sustaining approach” (Griffiths, 2003).
- Financial constrains in implanting corporate sustainability manager face challenges of financial constrain.
- Technology strategy: Technology issues that organizations need to consider when innovating towards sustainability pose challenges to policy makers. The advent of digital technologies has impacted on sustainability outcomes. Sustainability issues should be incorporated into the organization through learning methods.
How Heineken Beer Company implements corporate sustainability
The brewing industry has an ancient history since the time of Noah. The industry has grown from manual to mechanical and of late to electronic. Currently, most companies are using electronic means in huge production. A company like Heineken Beer Company Limited is enjoying huge production because of the technological change and competitive advertising.
Heineken Beer Company is a World known company for its products. The company is founded in strong financial position and strong brand recognition in the world. It produces brands that are known since 18th century and being used in many countries. The company stands tall among beer producing companies in the world. Heineken Beer Company is the 5th largest brewing company in the world and the official sponsor of the European Champions League. The company with such reputation must have some opportunities that many companies do not have.
The involvement of the sponsorship of the European Champions League is a social responsibility issue that makes Heineken stand ahead of other breweries in a Europe and other parts of the world where European football is admired. It is open. The social responsibility of Heineken is shown when making their advertisement where they discourage young people under the age of 21 years from taking its products, meaning they are performing very well in social responsibility. The company considers integrity in its operations regarding social responsibility. They have come up with policies that help keeping their products in use by the right people and right quantity. The principles included in their policies are; advertising and marketing which focuses on people who are mature enough to take a drink, they are also involved in educating the public of the effects of beer; they are also involved in social activities in various parts of the world.
Heineken Company also maintains high standards in production of their brands through the use of newly innovations. It takes a short period to produce massive quantities of their products. Its product is distributed fresh and quality, giving the company high value.
In production, the company uses economies of scale to reduce the cost of production and make a saving. In the recent years, the brewing industry has marked a tremendous growth. This can also be seen reflected in the financial statement of Heineken Company.
Among the opportunities available for Heineken Company is the ability to acquire any company in craft beer through its financial resources. If you look at the financial statement of Heineken you could realize that the company has huge financial resources which can assist them to acquire any company without borrowing from banks. The company can acquire or merge with any craft beer company in the US or in Africa for strategic reasons.
Another opportunity is that Heineken Company obtains a great market segment through the supply of beer using integrated means. This means that the use of fridges, electrical rails, refrigerated ships, the product of Heineken can reach any part of the world including Asia, African, South America, Australia, North America and Europe.
The company can also diversify to other activities that are related to beer production because of unlimited financial positions they boast. The company can enter into advertisement, construction of stadiums like emirates and even the production of soft drinks which will give the Coca cola Company a run for their money. The company also can increase its market share through sponsoring HIV/AIDS advertisements and programs in various parts of the world where HIV/AIDS prevalence is high. The increase in the market will enable her acquire more resources as compared to other companies in the brewing industry.
Another opportunity available for the company is to start a fund that sponsors wildlife and needy children in various parts of the world. They should also be involved in funding conflict resolutions in various parts of the world using their huge financial resources which will assist them acquire a greater market share.
Conclusion
In a nutshell, corporate sustainability is made on the combination of human and environment factors. I have further shown a classical example of a company with international presence and its challenges and opportunities. Not all Companies Subscribe to the ideas and principles of corporate sustainability, however some are following these.
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