Tuesday, 29 March 2011

The extent which the government should influence Corporate Social Responsibility

Governments can influence CSR in private sector businesses by imposing different techniques to force firms to adopt CSR and not become large profit businesses with no boundaries while governments must not jeopardise the future for the sake of current generations. The government can influence CSR by doing many techniques. These include creating legislation in relation to health and safety, employment tights and pollution, Grants for Research and Development into renewable energy for example, BP to use more environmentally friendly oils such as bio fuel in power stations in order for BP to create a better branding image and provide a lower carbon footprint. They can also impose contracts which require firms to accept CSR and discriminate against irresponsible firms so they can be dealt with by the government.
Businesses often are not socially responsible because of having a profit motive. If governments did not influence CSR, then the companies would be likely to provide ruthless profits to detriment of the rest of the community although businesses are willing to accept CSR with incentives from the government. Governments use some techniques in order for firms to not do this and force them or encourage them to accept CSR. For example, BP had a massive negative impact on the environment when they had an oil spill in the Gulf of Mexico; this means that this has had many impacts on industries such as fishing and tourism. The government has then had to step in and give BP the oil fines for cleaning up and damage to other industries. This fine came to $34 Billion and a full report by the US government into steps to prevent this happening again. This will depend on the tests done and how accurate the data they have collected. Because BP have had a massive negative effect on the environment, this means they have made less of a profit margin, meaning that people are selling their shares and withdrawing their investments, which can be seen today as the price per share drops when a disaster like this happens which in turn finds it harder to raise finance and gives them a negative reputation. Also influences that the government have to give consideration for is the companies such as large supermarkets which exploit smaller firms such as suppliers which they give harsh terms to as the large supermarkets will have orders which compensates from most of their revenue, but this depends on how large the firm is as to the action taken.
Another reason in which that the government has to influence CSR is the dangers of the pollution and the growing pressures from scientists for the government to do more on Global warming- Businesses being one main contribution to the countries carbon footprint and has been seen as one of the most challenging targets for mankind. The government can offer incentives such as receiving grants and rewards to be socially responsible. For example, if an irresponsible firm can have a grant into research and development into renewable energy, then this will impact the businesses environmental image and impact which will in turn, lower costs for the business and offer an incentives for shareholders to buy into renewable energy for the business as this doesn’t impact on costs and profit margins. The government have to influence businesses when it comes to pollution because it is invisible and it creates problems for future generations environmentally. As the carbon emissions go into the atmosphere, the future generations face greater natural disasters as global warming temperatures increase therefore the government has to try to reduce this in order reduce carbon emissions. This will depend on the political party in government and their attitude to CSR and environmental, and also the economic state of the country. The government also has to comply with EU laws so, therefore the national government has to enforce laws in compliance with EU pollution laws.

Some say, the government is damaging the “Free market” of business and enterprise if they have too much impact on the techniques used by the government as the ability of a business to be successful by having profit coming in rather than being socially responsible. A free market economy has little restrictions or minimum requirements and are said to benefit the community socially for a number of reasons. For example, a free market ensures that businesses supply the goods which people need, For example, BP selling oil to people with cars and have different types of oil which cater for everyone. They also have competition to keep the costs low and offer goods to the consumer at a fair price. This can be shown because BP have to be in line with Shell and other competitors, but as the resource of oil is running out, it can be argued these will have to change business products as the price of oil will be more expensive then Researching and developing products to spur on environmentally friendly cars which run off biodiesel or electric cars. This can also be done by reducing the amount of fuel used in cars and making them more efficient as in regards to MPG. The growth of businesses and the free market also provides high levels of economic growth and raises living standards. For example, because everyone needs oil and it’s bad for the environment, the government can only impose tax which limits the profit which they can have. Because the tax is so high, with $200m of taxes each year from big oil companies, it funds most social programmes and public resources. This limits the economic growth and has to balance the impact on the environment and businesses being socially responsible and the concept of a free market and free enterprise.
In conclusion, the government can influence a business’s attitude to CSR with different techniques mentioned above. This can be done by offering grants to become environmentally friendly to providing CSR with protection in order to force the large companies to become socially responsible without damaging free enterprise and the free market. This is because private sector businesses provides jobs to the nations, and provide economic growth. This is said to dramatically limit the amount of regulations and legislation they can enforce without damaging the economy, although the government has to look after the environment. This shows the government can enforce different techniques to help businesses to reach the minimum requirement of being socially responsible but enough penalties for them to abide by the rules while still allowing free enterprise to grow and let other entrepreneurs to be able to innovate and have the opportunity to provide economic growth. This can depend on the political party in power and their approach to businesses and the environmental policies they have as some government political parties such as green peace will have more environmental laws then someone from the conservative who believes in free enterprise and the concept of the private sector can look after itself type of attitude.


No comments:

Post a Comment