About CSR

The term corporate social responsibility is being thrown around more and more in Jordan although the concept itself is little practised.

It is also little known and often mistaken for charity or philanthropy, which is probably the main reason it is stifled in Jordan.

CSR, which became popular in the 1960s, is also known as corporate conscience, corporate citizenship and social performance, among other things.

It is defined as a form of self regulation for a corporation, whereby a business monitors and ensures its active compliance with the spirit of the law, ethical standards and international norms.

In some cases, corporate compliance goes beyond that, to do social good. In other words, CSR is a process that aims to accept responsibility for the firm’s actions and encourage a positive impact through the company’s activities on employees, consumers, the environment, communities and all stakeholders.

The firm is thus said to accept its social responsibility.

Adam Smith, the father of economics, once commented that it is better to have a wealthy neighbour than a poor one, except if in a state of war.

He meant that rich neighbours make rich customers who can buy more and demand more sophisticated products.

Indeed this applies even to neighbourhoods; few people would be pleased with building palaces next to shanty towns and homes and when such a poor neighbour moves in per chance, those living in the street or area may most likely complain and feel that such a development may undermine the value of their property.

The wisdom of Smith’s observation is plain wonderful.

If one is to apply this to business and the activities of a firm, one may even rename “corporate social responsibility” to become “corporate economic responsibility” (CER), because firms that do practise CSR are ones that focus on long-run competitiveness, not quick hit-and-run type of profits, which are usually short lived, could easily usher disasters, and hardly ever grow in healthy market systems.

A few examples on why CSR should be CER. Firms that contribute to the tuition of their employees’ children’s studies are investing in employee retention. 

Employees are less likely to leave until the child obtains the degree or diploma.

This makes good business sense, as no firm wants to suffer the cost of high employee turnover if it seeks long-term competitiveness.

A firm that opens a school in an area where it operates does not only garner goodwill from the community and workers whose children are being educated at the school, it also gains a better future for its products: better educated consumers will most likely have greater incomes and are more discriminating in terms of purchases and thus willing to pay higher prices.

Add to this the community loyalty and you have a profitable long-term investment.

Practising fair trade (paying better prices, offering decent working conditions, ensuring local sustainability, and fair terms of trade for farmers and workers in the developing world) is another example of CSR, and although firms pay more for their inputs, customers worldwide gain a certain moral satisfaction when purchasing their products and are consequently willing to pay more for cleaner, more humane products.

Clearly, customers of firms that practise CSR are more loyal and positive about such firms. They trust them and are willing to offer these firms their business opportunities or lend a helping hand should the need arise.

What CSR is not is philanthropy; it is not even charity or Islamic Waqf or Zakat.

CSR may include such acts, but it is not simply about that, for these actions should become systematised and within a multimodal framework to become part of a CSR strategy or action plan.

In fact, the confusion among people in Jordan regarding the true meaning of CSR (CER) has had an adverse impact on the practise of CSR.

A person who gives to the poor thinks that he is practising CSR and thus his business does not need to practise it, which is wrong in many respects.

Given that most businesses in Jordan are family businesses, people need to know what CSR is really about. 

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