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Corporate Social Responsibility: A Comparative Analysis of Microsoft and Patagonia

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Added on 2024/06/28

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This study examines the role and importance of Corporate Social Responsibility (CSR) in modern business organizations, using Microsoft and Patagonia as case studies. It critically evaluates the impact of CSR policies on corporate tax and investment decisions, analyzes Patagonia's initiatives towards carbon neutrality, and explores the challenges faced in meeting environmental and sustainability ambitions. The study also delves into Patagonia's human rights policies and philanthropic activities, highlighting the effectiveness of direct-action through community-based groups.

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Corporate Social Responsibility
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Table of Contents
Introduction................................................................................................................................ 3
Assignment 1 (Essay).................................................................................................................4
Assignment 2 (Case Study)........................................................................................................ 9
Conclusion................................................................................................................................13
Reference List.......................................................................................................................... 14
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Introduction
Corporate social responsibility is the accountability that an organisation takes through which
businesses are able to give back to the community from which it has risen. It is important for
an organisation to perform corporate social responsibility as it helps in enhancing the brand
value of the company and improving the society as well at the same time. In the first part of
this study, the case of Microsoft has been considered and in the second part of this study, the
case of Patagonia has been taken. Microsoft is one of the top technological organisations
around the world and it helps all forms of consumers to have access to their software. The
revenue of the company is over a hundred billion dollars as per 2018 and there are over
13000 employees as per the same year. Patagonia is a clothing company that is active within
America and has been providing low cost environmental friendly innovation retail goods to
consumers. Patagonia has revenue of over 200 million dollars and the employee base in the
organization is around 1000 subordinates.
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Assignment 1 (Essay)
Critically evaluate the role and importance of CSR in present day business
organisations. As part of your evaluation, analyse how an organisation’s CSR policy
may directly influence its corporate tax and investment decisions.
Corporate social responsibility (CSR) is the method through which a company is able to self
regulates the organisation within the market (Blowfield, 2014). Through the performance of
Corporate Social Responsibility activities a company is able to increase the goodwill. It has
in the market and becomes accountable to not only its board of directors but to its consumers
and shareholders as well. On the global level, the ISO 26000 Is identified as the international
rate or standard to which CSR activities are measured. Government bodies around the world
use this standard in order to know how well the company is providing help to the community
from which it has risen.
In order for a company such as Microsoft to elevate its brand value in the market the
organisation must perform work towards its citizens. CSR activities are a crucial aspect that
will help not only length in the philanthropic aspect of the company but will help increase
ethical practices within the company as well. There are various controversies that surround
CSR activities that an organisation performs. Several theorists around the world suggest that
corporate social responsibility is only a veil that companies use in order to mask the illegal or
unethical practices that they perform within an organisation. In order for an organisation to
move further in the market and put an end to opinion such as this. An organisation can
perform CSR activities beyond the suggested route that the state government and
international bodies have suggested.
Activities such as this would help organisation to show its stakeholders that they have an
interest beyond just making a profit and helping the society at large. Within the context of
Microsoft, the organisation believes in being a corporate citizen in the framework of the
technological industry. The current CEO Microsoft (Satya Nandlala) informs consumers that
the organisation puts a high level of value on technology. However, he believes that the
organisation have several responsibilities when it comes to performing in the market and
meeting the Expectations of the stakeholders.
The company has initiated CSR programs such as Microsoft YouthSpark Through which
organisation provides free software to all types of students as well as teachers. These are
steps taken by Microsoft in order to help facilitate education within the market. It also creates
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a means through which new students can learn about computers and how to use it so that they
have higher capabilities (Dolan and Rajak, 2016).
Another CSR activity that Microsoft has initiated is called Microsoft Imagine. Through the
CSR activity, the company tries to focus on unleashing and improving the talent pool that is
present within the youth so that new innovators are born. In order to implement Microsoft
imagine in a well fashion banner into the market the company has taken two types of
organisational initiative. One is called Bizsparks and another is Microsoft innovation Centre
or MIC.
Similarly, Microsoft funds another initiative called smile India through which the company
provides support to millions of underprivileged children so that their education capability
increases. In addition to that Healthcare facilities and livelihood help is provided to the
children as well. It is estimated that this initiative has helped over 50,000 children as of 2019.
This not only describes the scale that Microsoft has in the market it also illustrates how a
technology company can go beyond the sphere of just machines and perform activities that
are outside of its domain (Crane et al., 2014).
There are two types of laws that companies must comply with in order to perform corporate
social responsibility activities. These regulations include soft laws and hard laws. Laws such
as these are implemented by international bodies on to every large organisation so that they
perform CSR activities. Soft regulations include guidelines that an organisation might follow
voluntary, these laws are informal in nature and help the organisation to indirectly know what
to do in the market. These laws suggest activities such as environmental campaigns, NGO
funding, medical campaigns, and others. Hard regulations encompass rules that are formal in
nature and must be adhered by the organisation on which they apply. When an organisation
performs CSR activities in accordance with the laws then they get a certification of
performing the activity which acts as an award for their endeavour. When an organisation
fails to follow hard CSR activities then penalties are imposed on to the business.
Microsoft currently falls under the company that must follow hard laws in order to progress
further into the market. The organisation has multiple subsidiary companies such as
Consumer Software, Forethought, software image with NextBase, and others. The
subsidiaries of the organisation are small scale in nature and the fall under the bracket of soft
laws which are optional in nature. Owing to this, the subsidiaries are not obligated to follow
the rules that have been put forward by the policies of the holding organisation (Bhattacharya
et al., 2011).
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One of the biggest private philanthropic foundations that Microsoft has set up is the Bill and
Melinda Gates Foundation. This foundation focuses on helping people who suffer from
extreme poverty and do not have an opportunity for any information through which the lives
of people can be made easier. This organisation focuses on two aspects one is global
development and another is global health. Global development includes tackling aspects such
as water scarcity, vaccination delivery, agriculture, and nutrition empowerment. Within
global context, the business fights dangerous diseases such as HIV, malaria, tuberculosis and
others. In addition to this organisation provides various seeds, agricultural tools, and others
through which Local farmers and citizens are able to grow higher vegetation. This will not
only help these people to have higher degrees of income it will also help in the creation of
more plant life and help carbon dioxide to decrease.
An initiative like this has helped the company to provide services to multiple and developing
countries such as India, Africa, Angola, and others. The company has received praise from
not only big news outlets but also the common audience members in the industry. The recent
corporate social responsibility activities of Microsoft include entering into two more areas
such as empowering human rights, carbon neutrality, helping non-profit organisations and
others. Since the organisation is in the technological industry, it is obvious that the business
has a huge carbon footprint because of the numerous machines it utilizes. These machines
directly affect how the atmosphere performs and negatively promotes phenomenal such as
greenhouse effect, global warming, ozone depletion and others (Dillard et al., 2013).
In order to combat this situation, Microsoft has than trying to investigate and research into
different forms of materials and resources that can be used. These resources might be
recyclable items, use of items that are non-plastic and others. All of these endeavours have
helped the company to rank as one of the best companies that perform corporate social
responsibilities in the year 2014 and 15. In the early stage of the organisation, Microsoft was
not as philanthropic as it is today. Within the early days Microsoft received much criticism
that Bill Gates was not giving back much to the community when he was receiving so much
revenue and profit. It is only on the realisation that the company should take some action in
this area that the tactics of the organisation altered and they started considering more about
giving back to the world (Goel and Ramanathan, 2014).
Microsoft organisational policy in regards to corporate social responsibility has been
explored here. The policy includes giving 2% of their annual revenue towards the betterment
of the society so that the world becomes a better place. In order for the company to
implement in an effective manner, The Company has laid out of a few areas where it has
6

already land where it will deploy these profits. These areas include fields such as healthcare
education, providing food and others. In accordance with these policies the company has
donated 1.4 billion dollars into CSR activities and helped enrich the lives of children and
others. With the help of this amount, it has helped over 16000 students through the TEALS
program. Adding to which the company has provided 3 billion dollars to disabled, minority
groups, veterans and underprivileged women also.
The company is responsible for paying various types of taxes in order to be in compliance
with the state government that is present in the United States as well as the international laws
that prevailed. The company most strictly follows the CT 600 tax return policy through which
it gives back all most 20% of its gross income to the government. On timely payment of these
policies, the company gets tax exemptions as well through which it can retain a higher level
of its profit. In order for the company to properly move into the market and prevent it from
avoiding tax evasion, a tax professional must be hired within the organisation. There are two
types of tax techniques method that the business can implement. These techniques include
Aggressive Tax Planning strategy and Acceptable Tax Planning strategy (Jonker et al., 2006).
Normal Tax Planning encompasses the payment of tax over a large quantum of a period so
that within fixed time frames a payment of taxes can be made. On the other hand, aggressive
tax planning Involves stretching how much tax should be paid by the company in order to pay
less in the future. A question of moral responsibility and acceptability arises in this
framework. Tax changes from time to time as per the needs that arise in the society if a
company such as Microsoft performs aggressive tax planning. Then if they pay their taxes in
advance which is not in the best interest of the state government. This is because if the tax
rates reach a new height, then the government will face a deficiency. In order to remedy the
situation, it is expected of companies such as Microsoft to cooperate and pay taxes as and
when they arise.
There are several pathways that Microsoft can take when it comes to making investment
decisions. There are many financial instruments which are available in the market that in
includes items such as shares, debentures, bonds, and others. Investment for a company like
Microsoft is to get the highest amount of revenue from the market. In order to do this, it must
create an investment portfolio through which revenue can be put forth in many instruments.
In case an organisation performs an excessive amount of CSR activities and goes beyond the
regulated pathway of the state and International government. Then the revenue rate of the
company lowers down, this restricts the investment scope of the organisation and prevents it
from diversifying its investment mix (Dobers and Halme, 2009).
7

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In the case of Microsoft when it comes to the company’s policies that have been set, one
direction the organisation can take is trying to integrate its investment directions with CSR
policies. The company's CSR policies are directly geared towards putting interest towards
Healthcare, NGOs, and similar industries. One strategic direction that can be taken by the
organisation is to make its financial investments in these companies in which it sees a
philanthropic and monetary gain. The impact of taking a step like this would be that there
would be higher brand value and the company can show how far it goes to help the
community and at the same time balance its financial endeavours as well (Knuutinen, 2014).
From the above discussion, it can be seen that CSR in the context of Microsoft has many
facets, because of this fact, the way the company must implement it must be in a methodical
manner. However, in the long run, CSR can act as a natural means of marketing through
which word of mouth goodwill is raised.
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Assignment 2 (Case Study)
1. Assess the impact of Patagonia’s CSR policy and evaluate its initiatives to achieve the
company’s goal of carbon neutrality by 2025.
Patagonia currently wants its carbon footprint in the market to reach zero levels. The
organisations' plan for the next five to six year is to implement a carbon neutrality movement
throughout its organisation (Lin et al., 2015). All the components that are used in producing
garments and accessories for the company have alternative sources that are less harmful to
society. The company has implemented orders to substitute petroleum-based material that is
used within the business to create clothes. This substitution has been initiated through the
implementation of Yulex. This is a new rubberized material which is neutral in nature and
helps in reducing GHG emissions in the environment. With the help of an alternative
resource such as this, the company has been able to lower its impact when it comes to carbon
in the society by almost 80% when compared to previous statistics. The impact of Patagonia
implementing these CSR moves would be several folds.
One of the biggest effects this CSR activity would have on the organisation is that it would
help in raising the brand value of the company. The more the goodwill of the company raises
the higher the chances there is that the company can implement premium charges so that
higher revenue comes in. The more the level of revenue there is within the organisation the
business can perform activities such as expansion, hiring diversify and employees within the
enterprise, and others. In addition to that, the company would have the chance to innovate
and create new products as well. Through which, the commodity line of the enterprise can
change and the organisation would have a higher scope of providing mode utility in the
market (Korschun et al., 2011).
Another impact that Patagonia’s CSR endeavours can have within the garment industry is
that other similar companies such as Zara, Armani, Lee Cooper, Burberry, Versace, Chanel
and others may wish to initiate similar activities. Activities like this would help there to lower
the amount of greenhouse effect and global warming within the industry. All of the above
aspects indicate the fact that if the organisation really tries to implement carbon neutrality
then with the help of other companies. The clothing industry would be able to single-
handedly decrease the effect of industrialization on to urban as well as rural areas when it
comes to the carbon impact.
2. Identify and examine the challenges faced by Patagonia in meeting its environmental
and sustainability ambitions.
9

There are several challenges that Patagonia is facing in the market when trying to promote
the idea of carbon neutrality. One of the biggest hindrances that the company is currently
facing is that it cannot find a replacement for durable water repellent material. Through a
material like this, the company will be able to make garments more water resistant. The
reason for putting emphasis on water resistance is so that the company can focus on lowering
the amount of harm that carbon does its consumers. Through natural phenomenon such as
rainfall, air pollution, others, the customers are exposed to constant external harm (Orlitzky et
al., 2011).
One of the key steps the organisation can take is to implement CSR medical camps through
the help of qualified and experienced doctors. This would help the organisation to assess how
many of their target consumers are being affected by the harmful elements which are present
within the environment. Some of the top Healthcare non-profit organisations in the market
include companies such as Care International, Oxfam, Smile International, and others. With
the assistance and collaborative work of these organisations, Patagonia could not only
increase its investment pool. The organisation would also have a chance to diversify its
subordinate base through which more diverse employees can be brought within the
organisation so that the skill set of the business can be increased.
As the company wants to move towards carbon neutrality the organisation should aim
towards altering the way it uses machines within the organisation. The usage of operational
automation devices helps in introducing products in a quick manner. However, the downside
to this is that a large amount of electricity is utilised and the resources required fuelling these
machines that increase the carbon impact on the environment. In order to eliminate this
challenge within the organisation can take one simple step is that Patagonia can take is to
rehire the subordinates that it has laid off. With more manpower with working within the
organisation, there would be higher chances of there being less carbon consumption by
machines. This would also enable there to be a higher level of a chance given to employees as
well to have better scope in the market and gain incentives. The company can increase its
sustainability in the market by complying with the rules and regulations that have been stated
by the government on both the national and International level (Dobers and Halme, 2009).
This was that a company can comply with should mainly focus on the CSR outlines that have
been provided by the state government. The highest level of compliance is present the more
the company has sustainability chances within the clothing industry as the support of the
company would help the organisation to find ways through which legal complications can be
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lowered. The support of the government would also help Patagonia to observe various
environmental pitfalls that are present within the organisation.
3. Evaluate Patagonia’s policy to identify and prevent potential impacts on human
rights. Comment on the processes to enable the remediation of any adverse human
rights impacts.
Patagonia has several policies when it comes to human rights. In order for the organisation to
get cheap and labourers at a reasonable rate, the organisation utilizes subordinates from other
countries. In order to lower cost Patagonia basically outsourcers all its core operational
functions to under developed countries China, India, and others. When bringing in materials
within the organisation, Patagonia follows and adheres to a four-fold approach through which
it evaluates if the components that the organisation is getting are worth it from the supplier.
Within this four-fold approach in compresses of aspects such as social responsibility, product
quality, ethical sourcing, and environmental compliance (Tilt, 2016).
In order for the company to have the highest quality of materials within the business, an
organisation has a strict commitment and policy towards bringing in various types of
components. These components include 100% organic cotton, 100% traceable down, grazed
world and others. All these components help the consumer to know that the organisation is
constantly consciously trying to put forth products that are environmental friendly as well as
customer friendly too. There are multiple types of policies that are active within the United
Kingdom all of which have been illustrated ahead and below:
Promoting fair labour practices
In order to elevate the performance of the organisation the high due diligence and legal
compliance within the organisation must be performed so that a safe and healthy the
workspace is maintained within the organisation. In order to do this quality supervisor and
health inspectors are appointed so that the company e operates at an optimal level and there
are not any faults present. In addition to that modern and optimised tools must be provided to
employees so that they do not feel like they are being treated below the standard way that
other organisations perform. In addition to that, the company follows the employment and
equality act within the organisation so that there is no form of gender or racial bias which is
being promoted within the organisation. In addition to that fair trade practices for labourers
also means that equal compensation and bonus must be paid to employees for that they feel
motivated towards their work and stay within the organisation for the period (Pohl and
Tolhurst, 2010).
11

Supplier workplace code of conduct
In order to conduct business with the suppliers, Patagonia Follows the standards and codes
that has been provided by the International Labour Organisation. The organisation makes
sure that the material which is being provided by the supplier does not fall under several
categories. These categories include forced labour, harassment, child labour, abuse practices,
discrimination, underpaid work, ignoring health and safety shoes, subcontracting, animal
abuse, and others Patagonia Is one of the members of the fair labour Association which
implies that it is a must that the organisation performs in an unethical manner (Orlitzky et al.,
2011).
This would help the organisation to improve upon its objectives and improve the creating
position of the business in the market. The organisation is also taking part in the social and
environmental responsibility program that is active within the market. Owing to this program,
the business is currently in a position where Please make sure that order of the finished goods
that come within the organisation are by people who get proper security, food, personal tools
and other factors.
4. Evaluate Patagonia’s Philanthropic activities and justify the effectiveness of
philanthropy of direct-action through community-based groups at the grassroots level.
Patagonia’s philanthropic activities include the Welfare action that the company performs
towards the community and its people. Earlier in around the 1980s is the company used to
donate around 10% of the profit the company earned in order to support the degrading
environment at an international level. As time as went on the company has made itself a
further vital part of the society and now donates around 1% of the sales it makes in order to
help the planet. As of current statistics that have been found by researchers data shows that
over and above 80 million dollars in cash has been donated by the organisation towards
community-based activities (Ross, 2017).
This money has been used towards various CSR activities such as protecting in endangered
plants and animals, helping they bring change in climate conditions, and others. Furthermore,
the organisation does not consider what it does as something extra. Patagonia firmly believes
that the cost which the business puts towards the development of the community is a part of
the business. The traditional philanthropic work that the organisation does it addresses it as
Earth Tax (Pohl and Tolhurst, 2010).
From all the above activities it can be seen that the organisation is taking direct action in
order to how things work when it comes which philanthropic work. Patagonia does not
12

depend on other NGOs or similar businesses to undertake its intentions. Performing actions
like this is effective as it helps an organisation to lower the amount of costs that
intermediaries take. In addition to that organisations can evaluate items that have low prices
and prevent them from being any rise in rates through bulk buying.
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Conclusion
The above-conducted study can be divided into two parts. In the first part of this study,
Microsoft has been selected in the second part of this study Patagonia has been considered. In
the initial part of this study, the important that corporate social responsibility has in the
corporate lives of organisations has been illustrated. In the initial part of this study, several
examples have been provided as to how Microsoft implements CSR activities in the market.
It has been elaborated that the company takes the help of several NGOs and other platforms
through which it can be the market easily. In the second part of this study, for Patagonia Four
areas have been illustrated which includes the impact of carbon neutrality, the challenges that
the organisation will face in regards to sustainability and environmental aspects. In addition
to that, the implications of Human Rights along with the effectiveness of philanthropic
activities on the community have been elaborated as well.
14

Reference List
Bhattacharya, CB; Sen, Sankar; Korschun, Daniel 2011. Leveraging Corporate Social
Responsibility: The Stakeholder Route to Business and Social Value
Blowfield, M., Murray, A. 2014, Corporate Responsibility. Oxford, OUP Additional Texts
Crane (ed), A., Matten (ed), D., Spence (ed), L. 2014, Corporate Social Responsibility.
Abingdon, Routledge
Dillard (ed), J., Haynes (ed), k., Murray (ed), A. 2013, Corporate Social Responsibility.
Abingdon, Routledge
Dobers, P. and Halme, M. 2009. Corporate social responsibility and developing countries.
Corporate Social Responsibility and Environmental Management, 16(5), pp.237-249.
Dolan, C. and Rajak, D. 2016. The anthropology of corporate social responsibility. Oxford:
Berghahn Books Ltd.
Goel, M. and Ramanathan, M. 2014. Business Ethics and Corporate Social Responsibility –
Is there a Dividing Line? Procedia Economics and Finance, 11, pp.49-59.
Jonker, Jan, Witte, Marco De 2006. Management Models of Corporate Social Responsibility.
Berlin Heidelberg.
Knuutinen, R. 2014. Corporate Social Responsibility, Taxation and Aggressive Tax Planning.
Nordic Tax Journal, 1(1), pp.36-75.
Korschun, D., Bhattacharya, C. and Swain, S. 2011. When and How Does Corporate Social
Responsibility Encourage Customer Orientation? SSRN Electronic Journal.
Lin, C., Chang, R. and Dang, V. 2015. An Integrated Model to Explain How Corporate
Social Responsibility Affects Corporate Financial Performance. Sustainability, 7(7), pp.8292-
8311.
Orlitzky, M., Siegel, D. and Waldman, D. 2011. Strategic Corporate Social Responsibility
and Environmental Sustainability. Business & Society, 50(1), pp.6-27.
Pohl, M. and Tolhurst, N. 2010. Responsible Business. Chichester, U.K.: John Wiley &
Sons.
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Ross, D. 2017. A research-informed model for corporate social responsibility: towards
accountability to impacted stakeholders. International Journal of Corporate Social
Responsibility, 2(1).
Sims, R. 2003. Ethics and corporate social responsibility. Westport, Conn.: Praeger.
Stohl, M. and Stohl, C. 2010. Human rights and corporate social responsibility. Sustainability
Accounting, Management and Policy Journal, 1(1), pp.51-65.
Tilt, C. 2016. Corporate social responsibility research: the importance of context.
International Journal of Corporate Social Responsibility, 1(1).
Visser, Wayne. 2008. Corporate Social Responsibility in Developing Countries. The Oxford
handbook of corporate social responsibility.
Wayne Visser, 2012. Corporate Sustainability & Responsibility: An Introductory Text on
CSR Theory & Practice – Past, Present & Future, Bookbaby Uk.
Wood, D. 1991. Corporate Social Performance Revisited. The Academy of Management
Review.
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