Corporate citizenship is another term for corporate social investment. This concept states how corporations take voluntary responsibility to give back resources, skills, time and money to the communities where they operate. Corporate citizenship programs have increased in communities throughout the world as companies come under scrutiny to adhere to higher standards of business and social ethics in their operations.
History
Corporate citizenship as corporate social investment came into public view with intensity in the 1980s. During this decade, several incidents occurred that caused the public to question the ethical standards and the potential long- and short-term negative affects of some corporate operations on communities. Examples include the environmental disasters of the Exxon Valdez oil spill off the coast of Alaska and the explosion at the Union Carbide Bhopal pesticide factory in India. As regulations tightened and communities became more skeptical of how corporations operated, corporations responded with corporate social investment programs that promoted their corporate citizenship.
Function
Whenever a business becomes a corporation, it becomes a new legal entity. As a result,it is supposed to operate as a good citizen of the community where it was established and has its operations. Corporate citizenship is a concept that indicates a corporation's voluntary willingness to consistently operate as a good citizen in all activities. Other terms include corporate social investment, corporate responsibility or corporate sustainability.
Identification
Activities reflective of corporate citizenship include programs and services that are outside of regular business functions conducted to make a profit. Some corporations may provide scholarships to students, help build community centers, support programs for the needy or maintain a ccorporate foundation. Some corporations encourage employees to volunteer their skills in the community. Many develop policies to help to reduce waste and protect the environment. Sometimes, corporate leaders serve on non-profit boards or donate money, products, services or time to particular causes.
Considerations
Good corporate citizenship considers how company operations affect the society, customers, suppliers, shareholders, communities and others. It considers the corporate impact on social and environmental situations and reflects this consideration in company policies and strategic plans. The personal and professional ethics of company leaders determine how corporate citizenship programs are designed and implemented.
Misconceptions
Corporations don't always embark on social programs on their own. Some corporations may be forced to take a position as a good corporate citizen before certain communities will let them establish operations in the area. This protects citizens and holds the corporation to higher standards of operation. Another misconception is that corporate social programs are always beneficial. There must be a balance between profit-building operations and social investment programs for the corporations to be successful. If not, this could result in a loss of jobs, tax revenues and other resources.
Benefits
Benefits of corporate citizenship have been found to outweigh the negatives. Some companies find their profits increase as they develop a positive reputation for caring for social and environmental issues. Employees take pride in working for and representing a company that is a good corporate citizen. Society finds improvements in social programs and an increase in resources.
