Corporate Social Responsibility: Perspectives and Practices

This assignment delves into the multifaceted concept of corporate social responsibility (CSR) through various scholarly perspectives. It covers definitions and visions of CSR from different nations (Freeman & Hasnaoui, 2011), experiential learning for leadership and sustainability in multinational corporations like IBM and HSBC (Gitsham, 2012), the role of leader ethical values in shaping follower attitudes towards CSR (Groves & LaRocca, 2011), and the relationship between corporate governance and CSR (Jo & Harjoto, 2012). Additionally, it explores the connection between CSR and international development (Hopkins, 2012) and examines a specific case study on HSBC's Anti-Money Laundering compliance struggles (Naheem, 2015). The assignment requires a comprehensive understanding of CSR theories, practices, and criticisms, culminating in an analysis of HSBC's corporate social responsibility policy.

Contemporary Developments
in Business and Management

INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Political factors:......................................................................................................................1
Economic factors:...................................................................................................................2
Social factors:.........................................................................................................................3
Technological:........................................................................................................................3
Legal factors:..........................................................................................................................4
TASK 2............................................................................................................................................5
i). Relevance of ethics and CSR to HSBC bank and their influence on policies and decision
making process.......................................................................................................................5
ii) Effectiveness of organisational response...........................................................................6
iii) Areas of improvement as a response................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business environment is dynamic as it changes rapidly and influence the functioning of business.
Organisations face various issues or problems in managing operations in proper way due to
constantly changing environment of business (Crane, Matten and Spence, 2013). There are
various opportunities that are existing in the market and firm can exploit them by emphasizing
on successful implementation of strategic plans and strategies. In the present assignment, chosen
company is HSBC Bank which deals in financial and banking services. The report covers various
forces of business environment which impacts on the working of organisation and its
significance. Corporate Social Responsibility and business ethics are the main part of this
assignment and it also defines its influence on decision making process of the firm. It also
includes the way in which organisation respond when it confronts issues regarding ethics. At last,
some key areas of improvements are defined in the report.
TASK 1
HSBC is one of the leading banks which deals in financial and banking sector. Before some time,
these firms have limited reach & their existence was not available at many places but when
developing and underdeveloped countries open up their economy for direct foreign
investment, many organisations got chance to gain higher profits and attain long term
objectives. Internal issues of the business can be resolve, but external factors are
uncontrollable and firms don’t have control over it. These factors may impact positively or
negatively on the performance of company. External forces and their significance are
defined below:
Political factors:
The bank is operated in many countries. It is necessary to ensure that money is invested in
those countries which is not confronting any issues related to political instability. In some
nations such as India, if government is change then, policies also change. They introduce
major variations in practices and policies related to insurance and banking sector like
changes in loan procedure, increase in interest rates or bank rates etc. HSBC has to make
required changes in their policies and strategies in order to cope up with that (Freeman and
Hasnaoui, 2011).
Example of political impact Influence on organisation
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War Destruction to property of concern
Stiff regulations against foreign concerns Decline in sales
Violence & riots in country Hurdle in administering effective services to
clients
Importance:
It is a crucial factor for HSBC as if they emphasize on business expansion in the country
which is politically stable then they don’t need to undertake major changes in functioning
and policies of business. But if they expand in those countries which are politically instable,
then it is difficult for the organisations to make appropriate strategies for the attainment of
long term objectives.
Economic factors:
For multinational organisations such as HSBC Bank, it is very easy to attain growth in the
growing countries like China and India. If collective demand in economy will increase, then
it will impact the business of firm in positive way. Some incidents such as economic crisis
influence banking industry in negative way (Gitsham, 2012).
Importance:
Operating business in the country with growing economy assists the firm in earning higher
profits. When HSBC Bank entered in India, they gain high revenues.But in 2009, when
countries face economic crisis, the growth of HSBC bank was decline. It is the major cause
behind decline in market share of the firm due to which they lose many customers. If
operations of business are expanding in developing countries, it will increase the chance of
earning high profits and attain goals. Variations in national income can influence the
profitability of organisation in both way, i.e., favourable as well as unfavourable. For getting
better services, customers are ready to pay more money. HSBC bank is known for
administering its best services to customers. Increase in national income is important for
company as it will increase purchasing power of buyers and they will prefer to get their
services more.
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Social factors:
Norms of the society should be necessarily followed by the company. The major social issue
that comes in banking sector is money laundering. HSBC effectively deal with these issues
and improve its performance as well as goodwill in the market. Culture of save money is
increasing day by day in developing and under developing countries. earlier, people save
money in houses but now with changing scenario, thinking of people is also change and they
prefer to save money in banks. This cultural shift influence HSBC as well as other banks of
this sector.
Importance:
Issues like money laundering are crucial for the company as it stained their goodwill in the
society. Building trust and getting loyalty of customers are important part of banking. In
developed nations, people understand the value of saving money in banks. They know that
their saved money provides benefits to society as this will flow in the economy and
facilitates in developing economic growth as well as welfare of society. The trends of
market in developing nations have changed in last few years and people started to save their
money in banks especially, in case of private organisations like HSBC Bankas these firms
offer better services (Lantolf, Thorn and Poehner, 2015). In Asia pacific reason, changing
trend is an essential factor in the growth and success of bank.
Technological:
Technology is the most important aspect that highly influence the business organisations.
New applications of mobile banking, software etc. brought drastic changes in financial and
banking industry. In HSBC Bank, activities related to hacking and new virus generation
creates a lot of tension. Due to continuous and rapid upgradation of technology, operations
of business are highly influence.
Importance:
It is necessary for the organisation to adopt new technology on continuous basis in order to
attain growth and sustainability in the market. If these technologies are not adopted, then, it
is difficult for the company to attain success in the market (Moura-Leite and Padgett, 2011).
Techniques like online money transfer, make easy payments by mobile phones etc. provides
benefits to HSBC. they understand the significance of adopting technological changes and
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upgrade their services according to that. This is a crucial factor as it highly contributes in
success of company.
Legal factors:
As the regulations of European union changing, they are getting stiff. Similar is happening in
money laundering rules. In most of the companies where bank is operated has strong norms
of customer protection made by government. So, it is necessary for HSBC Bank to follow all
the laws in order to get protection from legal troubles. Ongoing changes as well as existence
of laws impacts the strategy of business.
Importance:
It is important for HSBC Bank to follow all the laws and regulations. They compile with
regulations that assists them to run business in effectively and smoothly. It also helps them
in saving a lot of money. Opposition of illegal activities assists the firm in increasing
goodwill of the company. Legal compliance is time consuming as it takes a lot of time of
management as they are responsible for formulating and controlling of these policies.
Environmental factors:
Changing in climate, waste recycling and various other factors are the important issues of
environment which directly influence the operations of business. the bank is committed to
lower down carbon emission and work on saving energy. All these actions are taken by
HSBC Bank in order to reduce influence of changing environment on business (Naheem,
2015).
Importance:
It is important to take necessary actions in order to protect environment and make it clean by
keeping it free from pollution. Using less paper is an another action that is taken by the
organisation. HSBC Bank minimize use of paper and emphasize on recycling of waste
which assists them in completing regulations of government and improving goodwill of
organisation.
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TASK 2
i). Relevance of ethics and CSR to HSBC bank and their influence on policies and decision
making process
It is often seen that people are confused between two main elements if the organisation which are
named as Ethical and legal. Both these terms are very different from each other as legal is related
with law and regulations whereas Ethics are the moral standards that are present in every
company but it is different for all as it is made by the management of the company only
(Abuznaid, 2017). It tells the employees what needs to be done and what not to be done. There
are some areas that are present in companies where ethics play a major role and helps in decision
making. They are:
TRANSPERANCY: It is that quality that is completely related with the work ethics of th
company because if they will not have transparency then the customers have a doubt in them and
a trust factor will not be built. So, in HSBC bank also transparency is very important as then only
they will be able to make more customers who believe them as well as their promises.
PROMOTION OF FAIR TRADE PRACTICE: HSBC is having its offices in all the parts of
the world so they know that they will have to face various types of customers and their issues as
well. This organisation is known for its fair practices and thus whenever any customers comes
the so as to convert their black money into white but it does not deal with any such clients or do
any unethical work. They try their best to help each and every client but without divulging into
types of unethical practices. HSBC follow ethical code and it influences their policies regarding
facilities which they provide to clients.
DIVERSITY ISSUE: Since HSBC is operating in a global environment so the employees that
are working there also belongs to different cultures and communities. So, they have to take care
that all the employees are being treated in an equal manner (Banerjee, 2012). Also, they should
also try to make sure that all the employees are working with each other in an effective manner
an there are no issues between them because then only the work of organisations will be able to
be completed on time.
It is not that an organisation will only have a positive side, there are some negativity too.
Similarly, HSBC has also faced some of the negativity which can be depicted as :-
MONEY LAUNDERING: HSBC has also faced criticism related to money laundering. It was
known that they were involved in some unethical practices relating to money but were found
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guilty. They were also penalised with amount 1.92 billion dollars. This incident had a very
impact on their goodwill and it was seen declining in market (Barker and et. al., 2011).
FOUL MORTGAGE PRACTICES: HSBC was also guilty for taking homes of various people
and thus making them homeless. They had made different kinds of policies for rich people and
poosr people thus were found guilty for using unethical practices.
Relevance of CSR to HSBC and its influence on organisation
PROMOTING EDUCATION: Since HSBC is such a big organisation and earning in lacks so
they are investing their money in providing education to those people who cannot afford it
socially at primary and secondary level. They are also providing vocational training so that
people can get employment and along with this they are also engaged in empowering women of
the country so that they can live with dignity in the country.
FRESHWATER SUSTAINABILITY: Through this activity HSBC is working for the society
and trying to save the environment as well. They are doing freshwater sustainability because they
believe that the country is not enough fresh water as lots of it is getting depleted in one manner
or another so taking this initiative is very much required and people need fresh water to drink.
COMMUNITY INVESTMENT: It is the responsibility of all the banking companies to invest in
one or the other projects that are related to the society so that they can provide their support to
the society from where they are operating as well as taking resources also (Bean, 2012). This can
also come under their CSR activity.
ii) Effectiveness of organisational response
HSBC bank has faced many problems and issues related to implementing unethical
practices inside their organisation and it has also been known that it was not in just one country
but in whichever country they are working they are doing these kinds of practices (Groves and
LaRocca, 2011). In some countries they were able to handle the situation but somewhere things
were not in their control. So, the issues that were not resolved by them were:
Connection with Drug kingpin: In this case, the bank did not accept theor fault and were
constantly denying it. But since they were charged for it so they had to pay around $2 billion as a
fine for the same. The problem was that they could not gather enough proof to prove themselves
correct and this was not the first time also that they were charged for these unethical things so
they had to pay the fine (Hopkins, 2012).
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Poor Performance: It was seen that in 2011-12, HSBC bank has incurred losses more
than profits and thus instead of designing new strategies they preferred to fire 25000 employees.
This was a highly unethical step taken by company as they might have thought of some other
way for coming out of such situation.
Following are ethical issues which HSBC corporation handled in impressive way:
Money laundering: This issue was faced by company many times and thus they had
understood how to deal with such types of situation. As in 2005 they have designed their own
Anti money Laundering team which was held responsible for taking care of all such matters in an
impressive manner so that it does not reduce the goodwill of the company.
Fair treatment: There were also allegations that they are only giving good treatment to
their premium clients and not all. So, the management accepted their mistakes and promised that
they will try to listen to issues of each of their customers and try to make all of them satisfied.
CSR activities
Since HSBC is doing its operations all around the world so it is their basic responsibility
to take care of the area in which they are working. But all these activities require huge amount of
money and for this company has to be ready to invest in this. So, they can look for the areas
where they can provide their help like education sector etc. They can make schools for those
children who are not having enough money to pay their fees (Huimin and Ryan, 2011). So they
organisation took accountability of providing vocational training to the people who do not have
higher education. They are working in increasing their employability skills so they can earn
decent amount of money by becoming employable
SWOT analyses can assist in analysing their effective response in a better way along with the
benefits which they have attained in past:
STRENGTHS WEAKNESSES
 Around 275000 individuals are doing
their job in HSBC and the good part is
that they all are from different
background and culture. It brings unity
in diversity in the company.
 They are giving various types of
services to the customers in the market
 They are getting their main income
from their USA offices but due to their
involvement in some unethical
practices, there that market is also
coming down.
 They are having their retail business in
a weaker part because it is believed that
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like investment banking, mortgage,
financial services etc. This helps them
in making more no. of customers which
will help them in gaining competitive
advantage as well.
they are not focussing on their
customers as much as they should.
OPPORTUNITIES THREATS
 Since they have made themselves
involve more in the CSR activities so it
will provide them benefit as their
Goodwill will be good and they will be
able to grow their business in
whichever area they like.
 They can improve their relationship
with consumers and thus try to rebuild
their retail business as well.
 Rules and regulations that are made by
government can change anytime and
thus it can create problems as the
company is making their strategies for
long term purpose.
 When they were facing allegations at
that time their competitors were making
their place in the market thus it is big
threat for the bank.
iii) Areas of improvement as a response
Everybody makes mistakes but the main point is to learn from such mistakes. So in case of
HSBC also they were also charged with so many allegations but they learnt from all of them so
as to deliver better services to their customers in the future. They also made various strategies
and the important thing that they promised to do was to focus on one thing at one time so that
they could do it in a better manner (Ihlen, Bartlett and May, 2011). Still there are some areas
where HSBC can brings improvements and they are:-
ETHICS CLASS- HSBC should try to design new ethical standards for the company and also try
to implement it in whole organization. The management should make sure that senior level
managers are also following these ethics so that employees should learn from them. They should
also create more Anti money laundering teams so that they can make their organization more
secure.
INCREASE FEMALE STAFF- HSBC should try to hire more female employees in theur
organization and does not do any kind if discrimination with them. They should also provide
them best training facilities so that they can show their talent as well skills in an appropriate
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manner. Also female employees are considered as more sorted and efficient so it will be
beneficial for company only (Jo and Harjoto, 2012).
REWARDS AND RECOGNITIONS- Employees who have have done extra ordinary ethical
work and motivated other to follow moral standards can be rewarded by this organisation so
more workers get motivation for promoting a health and positive culture develop trust among
each other.
COMMUNITY WORK: In this, the organisation should try to do something for the society by
giving those good vocational training so that they can develop their skills and perform in a better
manner. They should also have a regular check on the activities in which they have invested so
that they can know about it.
SUSTAINABLE ENVIRONMENT- HSBC should also think of making their environment
greener and also try to use some healthy practices inside the work environment like less usage of
paper etc. Through this they can take care of resources that belong to society as well.
CONCLUSION
From the above mentioned report, it can be concluded that the external factors that are
present have the power to influence the strategies and working of the company. All these factors
are considered as very important because they are having a very strong impact on the goodwill of
the company and its profits as well. The ethical standards decided by the company helps in
deciding that whether it is a trustable company or not. Also, the importance of CSR activities
have also been developed in the current situation because government wants that companies are
taking resources from the environment and earning millions so it is their responsibility to give it
back to the society by way of these CSR activities. These activities are also used by companies
as a means of promotion so as to impress the public and make them their customers as well.
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REFERENCES
Books and journals
Abuznaid, S.A., 2017. Ethics and Corporate Social Responsibility. Social Issues in the
Workplace: Breakthroughs in Research and Practice: Breakthroughs in Research and
Practice, p.49.
Banerjee, S.B., 2012. The ethics of corporate social responsibility (pp. 55-76). Taylor and
Francis.
Barker, E. and et. al., 2011. Earthwatch and HSBC: embedding sustainability into the DNA of
HSBC's business. People and Strategy. 34(1). p.24.
Bean, E., 2012. US vulnerabilities to money laundering, drugs, and terrorist financing: HSBC
case history.
Crane, A., Matten, D. and Spence, L.J., 2013. Corporate social responsibility in a global context.
Freeman, I. and Hasnaoui, A., 2011. The meaning of corporate social responsibility: The vision
of four nations. Journal of Business Ethics. 100(3). pp.419-443.
Gitsham, M., 2012. Experiential learning for leadership and sustainability at IBM and
HSBC. Journal of Management Development. 31(3). pp.298-307.
Groves, K.S. and LaRocca, M.A., 2011. An empirical study of leader ethical values,
transformational and transactional leadership, and follower attitudes toward corporate
social responsibility. Journal of Business Ethics. 103(4). pp.511-528.
Hopkins, M., 2012. Corporate social responsibility and international development: is business
the solution?. Earthscan.
Hopkins, M., 2012. The planetary bargain: Corporate social responsibility matters. Routledge.
Huimin, G. and Ryan, C., 2011. Ethics and corporate social responsibility–An analysis of the
views of Chinese hotel managers. International Journal of Hospitality
Management. 30(4). pp.875-885.
Ihlen, Ø., Bartlett, J. and May, S. eds., 2011. The handbook of communication and corporate
social responsibility. John Wiley & Sons.
Jo, H. and Harjoto, M.A., 2012. The causal effect of corporate governance on corporate social
responsibility. Journal of business ethics. 106(1). pp.53-72.
Kim, S.Y. and Park, H., 2011. Corporate social responsibility as an organizational attractiveness
for prospective public relations practitioners. Journal of business ethics. 103(4). pp.639-
653.
Lantolf, J.P., Thorne, S.L and Poehner, M.E., 2015. Sociocultural theory and second language
development. Theories in second language acquisition: An introduction. pp.207-226.
Moura-Leite, R.C. and Padgett, R.C., 2011. Historical background of corporate social
responsibility. Social Responsibility Journal. 7(4). pp.528-539.
Naheem, M.A., 2015. AML compliance–A banking nightmare? The HSBC case
study. International Journal of Disclosure and Governance. 12(4). pp.300-310.
Online
Corporate Social Responsibility Policy. 2017. [Online]. Available through:
<http://www.about.hsbc.co.in/hsbc-in-india/community/corporate-social-responsibility-
policy>.
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