Exploiting Environmental Concerns: Companies' Role in Contributing to Society

Paper Type:  Essay
Pages:  7
Wordcount:  1699 Words
Date:  2023-06-07

Profitability is the primary force behind the development strategies initiated by most companies. Besides, profitability has resulted in cut-throat competition among businesses. Consequently, businesses have begun exploiting environmental concerns that can give them particular advantages over others. Gradually, according to Alhouti, Johnson, & Holloway (2016), companies' executives have realized that they should give back to society because their survival is highly dependent on society; this realization gave birth to the concept of Corporate Social Responsibility (CSR). CSR is a commitment by business firms to maintain and improve community safety and wellbeing through discrete business contributions and practices (Alhouti, Johnson, & Holloway, 2016). CSR can involve several activities such as forming partnerships with local communities, creating rapport with customers, and participating in activities that promote environmental conservation and sustainability (Gao, & Zhang, 2015). However, most firms use the CSR strategy to have a competitive advantage over others and to enhance their profit. A properly executed CSR strategy can help companies to have better access to markets, boost their sales and profit, and improve the loyalty of their customers.

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Companies are using the CSR strategy for business sustainability, which involves actions that benefit both the companies and the surrounding communities (Alhouti, Johnson, & Holloway, 2016). Currently, sustainability in businesses is related to responsible investing where there is a balance between the profits earned and the social impact. Therefore, the sustainability of companies is associated with strategies that are framed as environmental, social, and governance or ESG (Gao, & Zhang, 2015). CSR helps companies to be socially responsible for themselves, their shareholders, consumers, and employees. Business firms also use CSR to address several issues such as human rights, health and safety of employees, and corporate governance (Alhouti, Johnson, & Holloway, 2016). Primarily, CSR is mainly a strategy used by large companies that have grown to the extent that they can give back to society. It is a reliable way of boosting a company's brand through CSR activities and volunteer efforts. CSR also strengthens the bond between the employees and the corporations, making them feel connected. Therefore, CSR has enormous impacts on a variety of issues, such as corporate events and event sponsorship.

Corporate events include any activities that are organized by a business entity for economic and social benefits. The events can be private, charity, and corporate. Most events influenced by CSR are a charity and corporate events. A company like Coca-cola is involved in many charitable activities whose aim is to achieve the CSR objectives. Coca-cola is a company that has a robust global presence, and it manufactures a variety of beverage products (Torkornoo & Dzigbede, 2017). The company is involved in several activities aimed at human development, as well as achieving protection of the community, and environmental especially in developing countries. However, Torkornoo, & Dzigbede (2017), notes that most CSR activities by Coca-cola mainly focus on human development than protection of the environmental. These activities aim to address emergent community needs.

One of the CSR strategies by Coca-cola is the Golden Triangle Initiative (GTI), which involves civil society, business firms, and the government (Torkornoo, & Dzigbede, 2017). It covers many projects across different communities in the world. The NetsforLife, whose central focus is malaria control in developing countries, is one project under GTI; the program was incepted in 2006, and it has facilitated the training of 74 000 agents to help in malaria control, besides distributing 8.5 million mosquito nets (Torkornoo, & Dzigbede, 2017). In Africa, the NetsforLife was instrumental in saving the lives of more than 100, 000 children (Torkornoo, & Dzigbede, 2017). Another CSR project under GTI is Project Last Mile, whose aim is to provide critical medication to the most remote communities in under-developed countries (Torkornoo, & Dzigbede, 2017). The project spent about $21million in the year 2014, and it extended its services to other countries like Ghana and Tanzania (Torkornoo, & Dzigbede, 2017).

The company is also involved in programs whose aim is to protect and conserve the environment and human empowerment. It has initiated projects that ensure people can access safe and adequate water. Coca-Cola is also involved in projects that advocate for the protection of wetlands in countries like Brazil, Colombia, and India (Torkornoo, & Dzigbede, 2017). The 5by20 initiative by Coca-cola has provided women in developing countries with grants that can help them to start small scale businesses (Torkornoo, & Dzigbede, 2017). The initiative gave loans to 1.2 million female entrepreneurs between 2010 and 2015; most of the women were from Pacific Asia and Africa (.Torkornoo, & Dzigbede, 2017). The initiative is currently active in 60 countries (Torkornoo & Dzigbede, 2017). The company executive also understands that involving employees with different abilities and outlooks can improve their ability to understand and connect with their customers and suppliers. Thus, they launched the 'helo' application in the year 2017 with the main objective being to bring employees together and train them to unleash their potential (Cesko, 2017). Furthermore, Coca-cola is reducing the calorie content in most of its beverages to help in the fight against lifestyle diseases like obesity; 13.3% of its carbonated drinks have no sugar (Cesko, 2017). This CSR strategy aims to maintain and improve the health of its customers and consumers.

Besides benefiting the community members, the CSR strategy has yielded several benefits for Coca-cola. They have improved the reputation of the company as well as giving them a competitive advantage. The strategy has helped the company to enhance the loyalty of its customers. Consequently, this has resulted in increased sales and profit. As of 2015, their gross profit margin was at 60.5%, where they made a profit of $26, 812 million (Torkornoo & Dzigbede, 2017). Their profit margin was higher than that of its main competitor PepsiCo whose gross profit was at 54.9% ((Torkornoo & Dzigbede, 2017).

The CSR activities have also improved the Coca-Cola Company's reputation; it has been ranked among the most reliable companies in the world (Cesko, 2017). Coca-Cola was also awarded the Gold Class award as the best company in the beverage industry in the yearly evaluation of the sustainable and ecological behavior of companies (Cesko, 2017). Globally, Coca-Cola has been number one in the sustainability of drinks for the past four years prior to the year 2017 (Cesko, 2017). The awards have resulted in a positive public image making the demand for its products to increase.

Furthermore, CSR initiatives in developing countries have increased customer and employee loyalty. The 'helo' application boosted the growth of employees by 3.8% in 2017 compared to 2016 (Cesko, 2017). Coca-Cola's CSR strategy for employees focuses on providing fair workplaces, health, and safety measures as well as the intellectual development of employees (Cesko, 2017). Its CSR activities in developing countries have increased the customer base in those countries. Subsequently, it generates most of its revenue and operating profit from brands that are outside the United States (Cesko, 2014). These initiatives have given Coca-Cola a competitive advantage over other beverage manufacturing companies in the world. Coca-Cola has a better position in the beverage industry, with over 300 brands and its operations based in approximately 200 countries around the globe (Cesko, 2017). Therefore, CSR activities benefit both business firms and society. However, the critics of CSR argue that it is more focused on profit maximization than helping the communities.

The main disadvantage of CSR that Coca-Cola experienced is that it causes conflicts among companies with the profit motive. The central conflict occurred in 2003 in India when the Centre for Science and Environment (CSE) reported that water from Coca-Cola had pesticides that were beyond the European Standards (David, 2014). They even reported that farmers were using their drinks as pesticides in their farms. The CSE requested the government of India to put into effect legally the enforceable water standards (David, 2014). This accusation attracted ample media attention; it resulted in immediate effects on the revenue generated by Coca-Cola. Furthermore, the company has been experiencing several conflicts that are related to environmental degradation. It was once accused of causing water shortages in some parts of Southern India (David, 2014). Another disadvantage of CSR is that it can disrupt a company's events when there are economic crises. It may be challenging and costly for companies to retain their support when the economy is shaky.

Event sponsorship is another form of CSR strategy used by companies. According to Batty, Cuskelly & Toohey (2016), it involves corporations providing financial support for particular events in exchange for both brand awareness and visibility at the event. Thus, event sponsorship increases the sales margin for the services or products of the sponsoring corporation. However, the authors note that critics view event sponsorship as a strategy used mainly by food industries to counter any negative impacts related to their operations. CSR sponsorship is mainly observed in community sports events (CSE), which can take different forms like the team or venue sponsorship (Batty, Cuskelly & Toohey, 2016). CSEs are reliable strategies for CSR sponsorship, as they highly benefit community members. However, tobacco and alcohol manufacturing companies have experienced a lot of criticism in CSR sponsorship due to the harmful nature of their products (Batty, Cuskelly & Toohey, 2016). The participation of these companies in CSR sponsorship increases public health concerns. Many people are also against the use of food and beverage companies for CSEs due to increases in obesity prevalence, poor nutrition, alcoholism, and smoking.

CSEs are beneficial to both the companies and the community members involved. The benefits of event sponsorship have been experienced by The Toyota Company, which was the main sponsor of the Toyota Mekong Club Championship, and the V. League to help in the development of Vietnam's football (Khuong & Chau, 2017). Toyota increased its investment in sports sponsorship from 30 million VND in 2015 to 40 million VND in 2016 (Khuong & Chau, 2017). The company spent huge amounts of capital to sponsor sports events to raise public awareness for its products and give back to society. It is gaining a lot of benefits from sponsoring sports events; hence, their expenditure in this area keeps on increasing. Toyota is among the top event sponsors in the world. The company is managing competitive and popular sports clubs in Japan ((Khuong & Chau, 2017). Moreover, the Toyota Company has been showing continued support in global or international sports events.

CSE sponsorship has been beneficial to the Toyota Company, which is enjoying increased brand awareness and secure positioning in different global markets. In 2012, Toyota had a market share of 4.3 percent in Europe, 12.2 percent in North America, and 45.5% percent in Japan, (Thembani...

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Exploiting Environmental Concerns: Companies' Role in Contributing to Society. (2023, Jun 07). Retrieved from https://proessays.net/essays/exploiting-environmental-concerns-companies-role-in-contributing-to-society

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