How Corporate Social Responsibility Can Benefit Impoverished Communities

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SEATTLE — In between the factory and the consumer, the two polar ends of consumption, lies an enormous number of geographic gaps to be bridged, communities to be considered and, above all, human lives that should not be forgotten. Universally, the corporation, and the production facilities and transportation fleets that it fields, all carry a potential cost. This potential cost comes in a variety of forms, ranging from environmental to human impacts. In developing nations, the activities of corporations directly impact those living in severe poverty.

Corporate social responsibility is a term for the ethical implications of these colliding worlds. In developing nations, the ramifications of a socially irresponsible corporation are far more severe than in developed countries, as they are employing at-risk populations and operating in areas that are home to at-risk communities. Corporate social responsibility practices aim to ensure that corporations do not negatively impact their regions of operation, either socially or environmentally.

Various Laws Lead to Greater Corporate Social Responsibility

In 2013, India passed the Companies Act, which mandated that large companies must invest 2 percent of their gross profits back into the communities in which they operate. This act is an example of legislation that targets corporations and, through the force of law, ensures that their operations are mutually beneficial for the community.

A variety of other legislative measures exist that are leveled at corporations environmental and human impacts. From water usage restrictions to transparent governance measures, these laws, whether they are enforced or not, hope to prevent disastrous human impacts, such as polluted waterways, as a result of a corporation’s production process.

Companies Take the Initiative to Help Nearby Communities

Corporate social responsibility is not this simple though, as most corporations are not thoughtless entities seeking to take advantage of impoverished communities. Rather, many recognize the importance of operating in a socially responsible manner, as it confers the corporation itself a variety of benefits. In fact, these socially responsible activities do not just shield impoverished communities from harm; instead, they can often benefit these communities.

Levi’s, whose production activities in developing nations such as India and Bangladesh could potentially have negative impacts, actually exists as an example of a corporation with corporate social responsibility practices that benefit both the community and the business. Its Improving Worker Well-Being initiative aims to improve the livelihoods and rights of workers operating throughout its supply chain. This initiative has received $15 million in support from Levi’s over the past 15 years, and continues to push for improved working conditions in impoverished communities.

Among other initiatives, Levi’s is also dedicated to reducing its water usage during the production process. The benefits of conducting such initiatives are twofold. First, Levi’s experienced higher rates of worker retention, and secondly, Levi’s is now afforded the ability to tout its products as ethical to potential consumers.

While few other corporations share Levi’s aggressive approach to social responsibility, sometimes the simple act of providing clean bathroom facilities for their employees in low-income communities can be similarly beneficial. Offering access to clean water and sanitation is an effective way to improve employee retention, health and general well-being.

Charity Partnerships a Viable Method of Corporate Social Responsibility

These are not the only avenues of corporate social responsibility practice in developing nations. Jason Morrison, president of global water policy think-tank The Pacific Institute, told The Borgen Project that corporations can pivot outside of the supply chain and turn towards philanthropy as a means of giving back to impoverished communities. Philanthropy provides another avenue for corporate social responsibility by taking the pressure off corporations to install clean water facilities throughout their supply chains, and allowing them to shift their resources to foundations dedicated specifically to these efforts, like the Gates Foundation.

For example, HBSC, a banking group, donated $150 million to various charity groups in 2015. Many of these groups were dedicated to providing for those in need throughout the developing world.

These legislative acts and stories of corporate social responsibility practices aimed at impacting the developing world are exciting and promising. They instill hope that corporations, through legislation, by their own volition or perhaps by shifting societal norms, can champion philanthropic and community-based efforts to support the global poor.

– Ian Greenwood
Photo: Flickr

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