Corporate Social Responsibility is an initiative and voluntary act of a company to ensure that it protects the interests of its stakeholders as it conducts its business. These stakeholders include the company’s shareholders, employees, customers, the community, and society in general. The very essence of corporate responsibility is giving back to people a share of what the company earns in terms of business profits, patronage, and good will. A corporation is defined and governed by its mission statement and the vision that it seeks to attain as it conducts its day-to-day business operations. It is by this yardstick that the shareholders measure the accountabilities of the corporate officers as they manage and conduct its business. The primary responsibility of any corporation is the return of investments which the shareholders entrusted to the organization.
Officers of the corporation have the fiduciary obligation to ensure that business transactions and business decisions do not run contrary to the mandate vested upon them by the shareholders. This is corporate governance; corporate officers are obligated by law, moral, ethics, and culture to uphold the trust reposed upon them by the shareholders and to ensure that profits are raised from the operations of the business.
Corporate Social Responsibility: Through the Years
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The concept of corporate social responsibility stemmed from the environmental protection laws which mandate corporations to care for the environment where they operate. Corporations have the obligation to warrant that its operation does not affect and degrade the environment – water, land, and air. Corporations guarantee that they support the continuity of life and promote people’s health and welfare at all times. It is towards this end that corporations incorporate corporate social responsibility (CSR) programs and initiatives in their business strategies. Corporate officers exercise corporate governance by complying with environmental laws; thus insulating the company and its shareholders from liabilities.
Through the years, the concept of corporate social responsibility has awakened various business organizations from the mere sharing and indulgence with the underprivileged in society to a system of accountability of business organizations as they impact on the environment and society where they operate. Corporate social responsibility has become a learning experience and a forum of benchmarking among business organizations setting a standard framework of conduct and corporate behavior towards society.
Corporate social responsibility is perceived by critics as a two-edged program of companies. The good side of any corporate social responsibility program is the benefit that it can provide and share with the identified beneficiaries. There are several programs and initiatives that a company may adopt to show its care and concern for society in general. The cue is that of responsiveness to the immediate needs of the people in the community where company operates. In effect, corporate social responsibility is a factor of social justice, a moral system which binds each one to a personal obligation to do something for the common good. A company, which by law is recognized as a juridical person, has the moral obligation to look beyond is processes and operations and contribute to the common good.
The other edge of which critics of the awareness and bandwagon of corporate social responsibility programs of companies is based on the hidden agenda that a company may really have as it incorporates these programs in the corporate strategies. Critics perceive the company’s eagerness to initiate corporate social responsibility programs as a mask and strategy to hide the ill-effects that it may cause or it is already causing the environment. Oils leak to the seas, air is polluted, waters are contaminated, trees are cut, soil is eroded, and the earth’s resources are mined and quarried.
Ned Sullivan, the President of Scenic Hudson, an environmental group, and land trust, says, “Only after G.E. uses its ecomagination to rid the nation's waterways of its contamination will these words ring true. Until then, its green campaign is nothing more than an eco smoke screen.” . This was Ned Sullivan’s reaction to the announcement by General Electric of its new program on ecomagination, a business strategy which is environmentally friendly. What really defines corporate social responsibility is the honest intention of a company, with all integrity, to truly care for all its stakeholders by not only focusing on the returns of investment, the insulation from liability and suit, provision of handsome pay and fat bonuses to management and the board of directors, competitive compensation package for its employees, or packaging and promoting products to present them as environmentally-friendly. Rather, what is more important is the company’s truthful intention to conduct its business operations without leaving a bad imprint on people and the environment without compromising its obligation to the shareholders who place their full trust in the company to returns of their investments. Corporate social responsibility should not kill capitalism or free trade.
Corporate Social Responsibilty: Merck ; Co. INC.
In the case of Merck ; Co. Inc., its mission states, “Merck ; Co., Inc.is a global research-driven pharmaceutical company dedicated to putting patients first. Established in 1891, Merck discovers, develops, manufactures, and markets vaccines and medicines to address unmet medical needs. The company also devotes extensive efforts to increase access to medicines through far-reaching programs that not only donate Merck medicines but help deliver them to the people who need them. Merck also publishes unbiased health information as a not-for-profit service.”
By its mission statement, Merck ; Co, Inc. has already categorically expressed its intention to donate medicines and ensure that these medicines reach the people who need them. Legally, shareholders have already bound themselves to acts of donations which the company’s officers and management may strategically decide on as they conduct the company’s business. The fiduciary duty to the shareholders include not only acts which ensure profits and return of investments but also on its humanitarian direction as embodied in its mission statement. Ethically, the direction of the officers and management of Merck ; Co., Inc. is well within the metes and bounds of their powers and duties.
The Merck Mectizan Donation Program is one of the company’s well structured and efficiently managed program of corporate social responsibility. Mectizan is donated and delivered to people in beneficiary countries who cannot afford the medicine yet are identified as the potential victims of river blindness. The program has been started in 1987. By the length of time at which Mectizan has been donated to various countries, shareholders have ratified the donation and have acquiesced to the decision of donation.
Legally, if shareholders had any objection at all to this decision of donating Mectizan to the identified beneficiaries, they should have raised such objection on time. By their own acts laches has set in. Therefore, the fiduciary responsibility reposed upon the officers of the company has not been violated; rather, the decision has been impliedly approved by the shareholders who are now estopped from raising their objections after a lapse of ten years since the start of the donation program. In a free market society, corporations are free to produce and trade, operate and make profit through the operation of a market economy. A profit is a gain from any business transaction which is conducted for the benefit of the owners.
In the case of Merck ; Co., Inc., the decision to give by way of donation its effective and solely discovered Mectizan to the rest of the world in order to prevent river blindness from wiping out a large portion of society, was and is still the wisest decision to take. Morally, Merck ; Co., Inc. cannot be allowed by natural law to withhold the application of Mectizan’s efficacy and effectiveness from those who are susceptible to river blindness that leads to death. Merck ; Co, Inc has the moral obligation to produce Mectizan and make it available to the public and to society in general. However, upon Merck’s evaluation, it would be impossible to make Mectizan affordable to the poor people in the communities. Therefore, Merck ; Co. Inc. exercised its wise and sound business decision in donating Mectizan to the world. Management was right and profits, in terms of honor and good will, are continuously reaped and earned. The distinction of having a private-public partnership works well with Merck ; Co Inc over the last ten years.
This continued support from the government and non-government organization shows the value and the worth that this donation program has added to the organization as a whole. Merck ; Co Inc did not kill free enterprise or capitalism. In fact, it utilized its right under free enterprise when it decided to donate Mectizan to the whole world. It is their choice and their decision to maintain and sustain its control over Mectizan while they help the underprivileged in sustaining their lives.
The 1987 decision of the board of Merck ; Co., was a well-calculated decision to ensure that the company lives its mission while it builds its name and good will to people across the world. In this age of globalization and free markets, Merck ; Co is one of the market leaders in bringing its product to the rest of the world, thus establishing its name. A noble, well intentioned, and uncompromising act is always a welcomed precedence in society. Where the benefit is for the greater good, precedence, if indeed there is one, should be seen in the light of the help and support that the act is bestowing upon other people.
There were other options that Merck ; Co Inc may have considered but which would pale when put side by side and compared with the 1987 decision of donating Mectizan. One option would have been to sell the company’s right to manufacture and produce Mectizan to any party or corporation who would have been willing to accept such offer. But then, such an alternative would have robbed Merck ; Co Inc of the profit of gaining recognition and good will. There would not have been any noble act to speak of insofar as the company was concerned as the availability and delivery of Mectizan could have been through other modes of disposition such as sale. There is no guarantee also that Mectizan would really be made available to those in need had it been sold to another company by Merck ; Co Inc.
Another option which Merck ; Co Inc would have made was to wait for the shareholders to pour in additional investments or make tie-ups or mergers as there was really a potential market for Mectizan. However, time was of the essence and people were already dying of river blindness. Back then in 1987, the chance of getting the funding was nil and decision had to be made. Thus, in the best interest of society, Merck ; Co Inc exercised good and sound business judgment by producing the medicines and donating it to the whole world.
Another option which Merck ; Co Inc would have done was to put conditions to the donation by setting a period by which free goods would be available. However, where there was no definite time frame for the funding to pour in, the setting of a period would only be a futile exercise which would even be more costly if we consider the waiting time in production. Economies of scale would tell us that production in volume is less costly than production in smaller quantities. Hence, the 1987 decision was still the good and sound business decision.
Corporate social responsibility should not be looked at only in terms of obligation to society but also in terms of competitive advantage whereby a company gains the capability to sustain and improve its capital so that it can in turn improve on the brand.While this is realistic but this is not always true and correct. It depends on the circumstances and the benefits that the program generates for society. Mectizan is the breakthrough medicine for the treatment of river blindness, a disease caused by a worm that breeds in fast-flowing rivers. It is endemic in certain areas and these areas like West Africa, Central Africa, and Nigeria are places whose people do not have the means to procure a medicine such as Mectizan. Where Mectizan is not available, this river disease affected people’s lives and families.
Children stop going to school as they take care of their parents and adults. The circumstances river blindness wrought in these areas warrant the immediate need for cure for the 18 million people who are infected with river blindness. Out of this 18 million, 300,000 are irreversibly blind. The timeliness of the use of Mectizan dictates the degree of cure and the percentage of saving a person’s life.
The soundness of a decision is tested through the years. Where that decision continues to produce good results, then that decision must be the best and sound decision. The corporate social responsibility program of Merck ; Co Inc., specifically its Mectizan Donation Program has been an ongoing initiative for over ten years already. Its continued strength is measured through time and the impact that it has created to people in 30 countries proves that Merck ; Co Inc. made a good decision in providing Mectizan to the rest of the world.
The legality of a corporate decision is founded on its adherence to the corporate vision and mission statement. Merck ; Co Inc has this for their mission the “people first” policy. By their mission statement alone and by its people first policy, one can readily understand how the 1987 decision of Merck ; Co Inc was made and why its shareholders acquiesced to that decision. The world can only thank Merck ; Co Inc on its very noble and sincere corporate social responsibility program. Where others failed, Merck ; Co Inc succeeded, sustained, and prevailed.
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