Manufacturing & Society: Defining Social Responsibility

Feb. 17, 2005
It's much more than good works and charities.

Philanthropy is not enough.

However well-intentioned or whatever the amount of the contribution, support of local good works and charities is not all there is to manufacturing's responsibility to society, to the people who are its employees and customers and the communities in which it does business.

"In the U.S., there's a tendency to think of corporate social responsibility as philanthropy and not thinking of it in terms of what it is fundamentally about, which are the obligations a firm has to society," observes N. Craig Smith, associate dean of the London Business School.

"Making money is certainly one of our obligations, but it needs to be done in a moral and ethical way," emphasizes Robert Spekman, a professor at the University of Virginia's Darden School in Charlottesville. Business has "obligations to ensure that people under its employ, either directly or indirectly, are able to earn a wage and that it be done not under threat of abuse, not using children [and] not using extended working hours," he states.

As both Smith's and Spekman's comments indicate, corporate social responsibility is being defined differently and more broadly than it used to be. By academics like Smith and Spekman. And, more important, by companies themselves.

For example, Eaton Corp.'s Code of Ethics, in addition to proscribing unethical or illegal trade practices, affirms the company's commitment to respecting human rights, something it requires of suppliers as well, and affirms the company's commitment to a culturally diverse workforce through fair employment practices.

Another example: "Businesses now operate in an environment in which long-standing societal concerns -- in areas from diversity to equal opportunity, the environment and workforce policies -- have been raised to the same level of public expectation as accounting practices and financial performance," stated Samuel J. Palmisano, IBM Corp.'s chairman, president and CEO, a couple of years ago in his introduction to the company's first consolidated corporate social responsibility report.

Another example: Energy company BP PLC states, "As a corporate citizen and a business that aims to deliver sustainable success, we believe BP must play a positive role in society: creating mutual benefit for others and ourselves." For BP, that includes human rights, arts and culture, and education.

But one of the best benchmarks for defining social responsibility in manufacturing is a remarkable one-page set of operating principles crafted 60 years ago by Robert Wood Johnson, then Johnson & Johnson's chairman of the board. Known as The Credo and still very much in use today, the document does speak of supporting good works and charities. But it speaks first of a responsibility to customers, including the necessity to "strive to reduce our costs in order to maintain reasonable prices." It speaks of a responsibility to employees, to respecting their dignity, recognizing their merit, assuring equal opportunity, compensating them fairly, providing them with a safe working environment and competent management whose actions are just and ethical, and helping them fulfill their family responsibilities. The Credo speaks of a responsibility to communities, to encouraging better health and education and to maintaining "in good order the property we are privileged to use, protecting the environment and natural resources."

The company's final responsibility is to its shareholders, who, The Credo states, "should realize a fair return."

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