Corporate Social Responsibility

Executive summary

The purpose of this report is checking the understanding of financial institutions and corporation social responsibility concepts from the textbook. Additionally, this report analyses roles that financial institutions play in the corporation social responsibility promotion. Several optional roles have been generated in order to work out the real relationship between financial institutions and corporation social responsibility. Meanwhile, there are some analyses for roles in each part as well.

1. Introduction

Corporate social responsibility has played an increasingly important role in today’s organizations’ management. Generally, this term has been defined as a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis (Hunnicutt, 2009). It has been served not only as a value reflective of organizational role in contributing to societal goals, but also as a strategy for improving the bottom line (OECD, 2001).  Over the past few years, there was a kind of opinion that the main social responsibility is to maximize profits. Dr. Friedman (1970) argued that managers’ main task is to satisfy shareholders’ needs and operate the organization under shareholders’ concerns, which are generally served as the financial return to shareholders. However, this kind of view has been changed recently. The new opinion is based on the belief that corporations are responsible for not only the shareholders but also the whole society. In 2008, the global financial crisis reminded us that society is one of the most significant factors for managers to concern. An increasing number of corporations around the world begin to accept the view that corporate social responsibility should include protecting and improving society’s welfare currently (Robbins, et al., 2015).

Among the promotion of corporate social responsibility, financial institutions such as banks play an essential role in this process. The purpose of this report is to analyze the relationship between corporate social responsibility and financial institutions and the real role that financial institutions play in the promotion of CSR.

1. Driver

Financial institutions, in particular banks, play the important role in the communities, not only as a source between companies and consumers but also as catalysts of corporation social responsibility promotion (OECD, 2001). As mentioned above, an increasing number of corporations all over the world begin to realize the importance of environment and society, and financial institutions make great contributions to its development. As the main source that links corporations and consumers, financial institutions could be served as the bridge between companies and the whole society. Therefore, because of the connection provided by banks, the CSR view of protecting and improving society’s welfare becomes possible for corporations. In addition, financial institutions make corporations and society become an indivisible whole, increasing the importance of environmental factor to corporations’ development.

Meanwhile, banks are one of important intermediaries that could help corporations arrange their corporate social investments, which could effectively increase the CSR level and make great contributions to sustainable development. For example, in order to increase the education condition, corporation could set a student funding in the bank. Therefore, financial institutions make great efforts in CSR promotion.

1. Data and information provider

In the past, the profit had been regarded as the main point for corporations. However, after a series of financial crisis, managers began to realize the importance of social stability. In order to understand social situation, financial institutions are the primary choice for them to gather information and data. Banks are the center in the economic environment. Different kinds of information gathered together in the bank. Analysts will arrange them and write reports showing the financial situation. Corporations will usually set their detailed goals about social responsibility according to these reports. For example, the World Bank will provide relative data such as people’s living condition and education condition. This information helps corporations set their social projects more feasible and increase their social responsibility level remarkably.