Introduction to a Literature Review on CSR and Sustainable Development

CHAPTER I

1. Introduction

Corporate social responsibility (CSR) is a concept that has acquired a new character in the global economy. “With the advent of globalization, managers in different contexts have been exposed to the notion of CSR and are being pressured to adopt CSR initiatives” (Jamali and Sidani, 2008; 330).

Therefore, even more corporations are increasing conscience about the importance of matching their own interests and the interests of society by taking responsibility for the impact of their activities on employees, suppliers, customers, communities and other stakeholders as well as the environment.

Although, this is an obligation that goes beyond economics or law, and in which companies have to act ahead in pursuing long term goals that can also be good for the society and the environment as a whole.

Intrinsically related to the topic of CSR is the protection of the environment for future generations through Sustainable actions. Not only because there has been an enormous technological progress that means we are not as much dependent as decades ago of a wide range of natural resources such as air, energy, land, and minerals.

On the contrary, driven by the growth of the population and the hectic globalization, competition for those natural resources has been intense. As a result, this competition also brought a powerful driver for both environmental conflicts and damage to our fragile, life-supporting environment.

A range of environmental disasters, such as climate change, ozone layer depletion, and soil contamination, have been occurring along the past decades and which turned organizations and society more aware of practice such as recycling, energy consumption, preservation, among others.

“Evolving from an attitude of simply reacting to such disasters and their effects on the physical environment, corporate concerns now include strategic planning and looking at the environment in its multiple social, cultural, political, and institutional dimensions” (Enriquez and Drummond, 2007; 75).

Therefore, the instruments of corporative citizenship turned also to the preservation of the environment as a strategic element for enterprises in the whole world. Along with the development for part of the organizations of clean technologies, there is also the concern in getting a green image, which put organizations’ sustainable activities into practice calling for an Ecobusiness.

Especially in the past two years, 2008 and 2009, the world was marked by a financial crisis that had an impact in economies of organizations in general. Nevertheless, the financial crisis is not causing firms or governments to abandon sustainable development. In fact, many business and government suggest that a ‘green solution’ can be found to both economic and ecological challenges, creating new jobs and markets by investing in new forms of energy, redesigning or retrofitting buildings and equipment, and managing forests and other ecosystems sustainably.

Mineral industries, for example, are using the actual crisis on their own benefit, attempting to identify domains where actions are required and trying to shape a different future to this industry, taking advantage of the actual scenario. To achieve that they make use of available data and information to appreciate the mining sector’s impact, giving support to decision makers in their strategic choices.

The actions of Alcoa Inc., for example, are impressive and unique, the company interplays among intangibles as leadership and innovation as well as a strong CSR strategy, wisingly aligning society, workplace and environment, productivity, and financial performance in the context of a traditional manufacturing company.

This project research examines the existing literature in an attempt to create a more comprehensive perspective of what has been written about the topic of Corporate Social Responsibility and Sustainable Development. The project’s approach was qualitative in nature and focused on discovering what researchers and authors have explored and understand about this complex subject.

Besides, it looks at some of the principal favourable and unfavourable arguments to the social responsibility of enterprises, especially when they are being considered by multinational enterprises interested in initiating activities into developing countries, with focus into Brazil. We also propose some alternatives of acting in the area of Social Responsibility made by Alcoa Inc., considering the current Brazilian reality, with the aim of achieving Sustainable Development.

This dissertation is divided in two parts. Part one will be based in secondary data and involves: Chapter II, which comprises the literature review that examines existent work in current trends involving the subject of CSR as well as paradigms as SD in order to help establish what values associated indicators could contain.

Chapter III, the explanation of the methodology used along the development of the project.

Part two, comprises Chapter IV, which examines factors involving Alcoa Inc., taking into account its current CSR and SD actions and strategies, making use of a questionnaire, answered by some of the organization’s managers, in relation to the issues encountered in the literature.

Chapter V, will draw conclusions, make future recommendations and points out gaps for future research.

1.2 Research Title

The Effectiveness of Corporate Social Responsibility as a means of achieving Sustainable Development: a case study of Alcoa Incorporation.

1.3 Research Background

In the modern complex and dynamic business environment, most organizations are adopting a global attitude making sure that they are geared for being global. Furthermore, it is common knowledge that the world is constantly developing and changing and no change is permanent because any change is about to be further adjusted in the short or long run to suit the environment and the challenges they face.

Organizations are now more powerful and have more influence in the society. Therefore, “The notion of corporate social responsibility today functions as an emblem, that the company themselves rise towards a consensual “social revolution” that will eventually benefit all the stakeholders of our society” (Habish et al, 2005; 271).

Corporate social responsibility intrinsically relates to environmental issues faced globally, especially in the early stages of the twenty-first century and sustaining in a particular industry has become very difficult task for many businesses.

“Employees, investors and consumers are becoming increasingly more aware of the social and environmental impact to people and planet that a company produces, which are both positive and negative. As consumers become even more aware of sustainable practices, there will be even greater demands for business communities to do the right thing, requiring enhanced ethical leadership and CSR to drive profits, and brand loyalty” (Mamic, 2004; Leffel, Sweeney, 2007 cited by Maass, 2007; 36)

Alcoa is “the world’s leading producer and manager of primary aluminium, fabricated aluminium, and alumina facilities.

In the framework of sustainability, Alcoa is considered one of the top three companies in the world in terms of commitment to sustainable development and has made use of an environmental strategy associated with a truthful social responsibility in order to gain competitive advantage and success in the marketplace. For example, for three years the Company has been sponsoring the Internethos program, directed at the development of Corporate Social Responsibility for Sustainability (www.alcoa.com).

Moreover, “Recognition from the Covalence Ethical Ranking drives the company to intensify actions of engagement of strategic publics. In 2006, the company was indicated as world leader in ethics, in the mining and metallurgical Industry, according to Covalence Ethical Ranking” (Alcoa annual report, 2006/2007; 41)

1.4 Research Aims

– Analyse how corporate social responsibility can ensure competitive advantage and success in achieving sustainable development.

– To explore, analyze and identify the use of environmental strategy as a tool of achieving global success.

– Analyse the importance of achieving sustainable development in today’s global environment.

1.5 Research Objectives

– To evaluate, in an environmental perspective, the effectiveness of corporate social responsibility in today’s global business.

– To evaluate, in an environmental perspective, the effectiveness of corporate social responsibility on achieving sustainability.

– To establish the feasibility of using corporate social responsibility within the industry to align strategic planning with sustainable development.

– To analyse and find out the implications of corporate social responsibility in Alcoa’s Inc. environmental management.

– To identify the extent to which the environmental management is involved in strategic planning at Alcoa Inc.

– To identify how important is environmental sensitivity to a company that extracts natural resources.

– To analyse in depth the integration of sustainability to Alcoa’s overall business giving emphasis to Brazil.

– To investigate practices used by Alcoa Inc. in its implementation of corporate social responsibility as a means of achieving sustainable development.

1.6 Rationale of the project

The objective of this project was to gather information that could be useful and benefit different organizations in engaging in environmental strategies by the concept of corporate social responsibility. Moreover, data collected can also guide corporations by providing them with an understanding of sustainable development and the resources they can make use of to establish a sustainable future for society and the environment. The information gathered for this present work was collected through an extensive literature review as well as the use of different sources of information, such as videos. In addition, a questionnaire was used in order to collect insight information on the organization’s management perspectives and its corporate social responsibility strategies for a sustainable development and prosperous business.