CSR Initiative Analysis: HANDAL's Ethical Business Practices

This report examines HANDAL, a clothing manufacturing company, and its Corporate Social Responsibility (CSR) initiative focused on replacing harmful sulphur colorants with natural alternatives to address environmental concerns. The report details the CSR strategy, management system, reporting mechanisms, and stakeholder engagement processes implemented by HANDAL. It explores the rationale behind selecting these CSR elements, emphasizing the use of the PPP (People, Planet, Profit) strategy. The report evaluates the strengths of the initiative, such as improved operational aspects and employee retention, while acknowledging weaknesses like increased operational costs and employee resistance to change. The analysis highlights how HANDAL aims to enhance its brand equity, achieve sustainability, and gain a competitive edge through ethical practices and effective communication with stakeholders.

Developing Skills for
Business Leadership
Assessment
(Winning hearts and minds)

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
a) Elements of the Corporate Social Responsibility (CSR) initiative..........................................1
b) Rationale behind selecting the CSR elements.........................................................................4
c) Evaluating the strengths and weaknesses of the initiative.......................................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Corporate social responsibility is a concept in which business organisations contribute
towards the society and fulfils their responsibility by sustaining their operations and functions
(Cheng, Ioannou and Serafeim, 2014). This concept is based on the ethical principles by which
all the activities conducted by organisation must not harm society and environment. The main
aim of this report is to develop an understanding about how CSR is implemented in organisations
and what are the issues which can be faced while implementing CSR activities. In this report, an
organisation is considered which is analysed to represent the various elements of CSR activities
Further, this report will show strengths and weaknesses of the CSR initiatives.
MAIN BODY
a) Elements of the Corporate Social Responsibility (CSR) initiative
A business organisation which is selected for the purpose of understanding the business case
is HANDAL. This company is a growing organisation which operates in two nations which are
United Kingdom and France. Both of these countries are the part of Europe and has trading
relationships. HANDAL company is a clothing manufacturing company which produces and
markets their clothes to earn profit and survival in dynamic environment. This company is facing
the ethical issue of harmful dyes which they use for colouring their clothes which impacts the
environment. The usage of such type of dye is not illegal but its harmful effects on environment
makes it unethical. The dye which is currently used by this company is Sulphur colorants. This
type of chemical is inexpensive and insoluble due to which it is perfect for clothes but it has
various environmental issues. Such dye has harmful effects on environment as this chemical
increases water pollution. In order to gain competitive edge, the company has decided to take an
ethical initiative in which they will replace the use of sulphur colorants with natural colorants.
There are various corporate social responsibility elements which are planned to be implemented
by this company. All these elements are discussed below:
CSR strategy
This element is the plan of action which company will conduct to resolve their ethical issue.
CSR strategy is the main goal of an organisation which they intend to achieve by their functions
(Crane, Matten and Spence, 2019). HANDAL is a clothing manufacturing company which is
currently using the sulphur colorants in their operations of dyeing the clothing materials. This
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operation of the organisation is levying a social responsibility upon this organisation. For this an
ethical initiative will be implemented by this company in usage of sulphur dye will be replaced
with natural colorants. For this initiative, CSR strategy of HANDAL states that research and
development team of this company will research which natural colorants are appropriate for the
operations of this company and then those natural resources will be used. In this the principle
strategy of PPP (people, planet and profit) will be used. By using this CSR strategy, this
company will not only focus upon the profits but provide equal contribution towards people and
planet.
Using the CSR strategy of PPP, HANDAL will be able to train their employees regarding
the use of natural dyes so that employees can be satisfied. Another aspect of this element is
planet which will be satisfied by reducing the use of pollutants and using raw materials which do
not cause water pollution (Grayson and Hodges, 2017). Lastly, using sustainable operations, the
brand equity of the company will be enhanced which will result in enhancing profitability of the
company.
CSR management system
This element of corporate social responsibility initiative states the system which all the
activities relating to CSR are managed so that they can be effectively implemented (Marquis and
Qian, 2014). For this purpose, HANDAL company will recruit a team of specialists which will
overview the ethical issues of the company. This team will be responsible to check whether all
the operations conducted by organisation are fulfilling ethical responsibilities or not. This team
will ensure that the CSR initiative of using natural colorants over sulphur colorants are effective
implemented.
CSR reporting
This element of CSR initiative states that all the practices which are conducted by the
company must be reported to all the stakeholders so that initiative awareness can be spread
(Albuquerque, Koskinen and Zhang, 2019). For this HANDAL company will report their
changes in operations in annual report and will also make a press release to convey CSR
initiatives to wider audience so that along with sustainability, profitability can also be enhanced.
Stakeholder engagement and communication
This is the last element of corporate social responsibility in which all the external and
internal stakeholders of the company will be communicated about the CSR initiative according
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to their interest and power in the company (Hong, and et.al., 2019) (Schäfer, 2016) (Demirag,
2018). In order to effective communicate CSR initiatives, the below stakeholder matrix will be
used by the company.
By considering the above stakeholder matrix, HANDAL company will first communicate
their CSR initiatives to shareholders as they given the top proprity because of the fact that they
are real owners of the company and they have high interest and power of the company. All the
shareholders will be communicated about CSR initiatives in annual general meeting or interim
general meeting so that all the stakeholders can be make aware about sustianiabity practices.
After shareholder, next priority will be given to government as they have high power in the
functioning of the company. HANDAL company will update their annual report in which they
will attach their sustainnability report so that government can be make aware about CSR
initaives. Another set of stakeholders are employees and investors which will be given training
about the new CSR initiaves as they have high interests in the functioning of the company.
Employees of this company will be trained about new techniues through which natural
colourants will replace sulphur colourants.
The lats set of stakeholders are suppliers or wider audience which has low power and low
interest in the operations of the organisation. To make these stakeholders aware, HANDAL
company will issue a press release in which they will provide information about CSE initaitives.
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b) Rationale behind selecting the CSR elements
There are various reasons due to which the above mentioned CSR elements are selected for
CSR initiative. The first element which is selected is CSR strategy. In this element, the decision
of using the strategy of PPP was taken to implement the CSR initiative of using natural colorants
over sulphur colorants. This decision was influenced by the familiarity of PPP strategy. I agree
with the findings of my group members as we all agreed on the decision of using PPP as the CSR
strategy. This strategy allows us to not only focus upon resolving the ethical issue of the
company but to also focus upon the primary aims of the company which are to enhance the profit
making ability and satisfaction of employees. Our approach to maintain the change management
campaign of HANDAL company is appropriate as this will allow in providing benefit to the
company’s profitability and will also the sustain the operations by using natural raw materials
while operating.
Another element which was selected was CSR management system. The rationale behind
selecting this element was to assist ourselves in orienting the subject matter with our master’s
subject of management. These CSR elements which are selected helps in showing our relevant
orientation with the master’s subjects as the CSR initiative which is selected is related with
operations. The PPP strategy is related with human resource and the CSR element of reporting is
related with marketing.
It is important to relate the CSR initiative with our new strategy. The decision behind the
rationale of selecting the CSR initiative of replacing the use of sulphur dye with natural dye is
that it can help in resolve the ethical issue of environment harm.
CSR strategy is the plan which an organisation implement in their operations to make their
operations sustainable so that no brand equity can be maintained and competitive edge can be
gained. Both of these aims can be achieved at once by the use of CSR elements which are
selected. The rationale behind selecting the CSR element of stakeholder engagement and
communication was the decision making of the group members. As it was important to initiate
marketing campaign due to which press release strategy is used in their element by which
marketing campaign aim will be achieved.
c) Evaluating the strengths and weaknesses of the initiative
The CSR initiative that is being brought by HANDAL is “Being Ethical”. The company
being an apparel manufacturer over the course of time has been making using of a dye which has
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harmful effects for the environment. One of the most adverse effects of this dye is that it results
in polluting the environment. The polluted air cause harm to human lives as well as livestock.
Looking upon this, the management of the respective company realised the significance of
undertaking effective and strong measures through which such harm can be reduced or
controlled. Through this, the entity would be able to operate in an environment friendly as well
as ethical manner. To ensure alignment with and implementation of its CSR initiative, the
organisation has now proposed to make use of a dye which would not have any harmful effects
for the environment. Now, in relation to this new initiative being brought by HANDAL, I have
analysed that there are several strengths as well as weaknesses linked to it.
In this regard, it can be largely seen that the operational aspects of the new practice or
initiative are acting as the strength while the behavioural aspects can be viewed as the
weaknesses. I have analysed this owing to a number of reasons. The change in dye would imply
a major transformation in operational and behavioural elements of the corporation. In this regard,
the operational working would benefit from the proposed CSR initiative. This is because the new
dye would not be holding any negative effects for the nature, owing to which the firm would be
able to gain support on the part of customers, local community and government. This implies a
significant increment in the revenues as well as profits of the corporation post the execution and
implementation of CSR initiative in operations. Thus, the operational aspect of the CSR initiative
of being ethical is acting as strength for HANDAL. Yet another strength is that the initiative
would provide assistance to the respective apparel manufacturing company to retain workforce
for a long period of time. This happens as the employees recognise the efforts taken on the part
of the corporation to act in the best interest of environment. Thus, they start considering
themselves to be an important part of the change that the entity seeks to bring with the alterations
done in the dye used by it. With its experienced employees and excellent CSR initiative,
HANDAL will be able to build extensive goodwill in market.
On the other hand, in relation to the behavioural aspects, I have evaluated that the change
in dye has created dire need for the company to provide training to the employees as the
personnel were only used to working with the old dye. Thus, one of the weaknesses of the CSR
initiative has been acknowledged to be the increment in overall cost of operations as a result of
conducting training sessions for employees. Further, another behavioural aspect which I can see
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as the weakness of the CSR initiative is the resistance faced by HANDAL from the employees as
they were comfortable with the old working pattern and equipment.
CONCLUSION
From the above report, it has been concluded that corporate social responsibility is a wide
concept which is important to be considered by an organisation to acquire sustainability in
operations and enhance the brand image in current business environment. It has been also found
from above report that CSR elements can help an organisation in the aim of implying the
management to change campaign.
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REFERENCES
Books and Journals
Albuquerque, R., Koskinen, Y. and Zhang, C., 2019. Corporate social responsibility and firm
risk: Theory and empirical evidence. Management Science. 65(10). pp.4451-4469.
Cheng, B., Ioannou, I. and Serafeim, G., 2014. Corporate social responsibility and access to
finance. Strategic management journal. 35(1). pp.1-23.
Crane, A., Matten, D. and Spence, L. eds., 2019. Corporate social responsibility: Readings and
cases in a global context. Routledge.
Demirag, I. ed., 2018. Corporate social responsibility, accountability and governance: Global
perspectives. Routledge.
Grayson, D. and Hodges, A., 2017. Corporate social opportunity!: Seven steps to make corporate
social responsibility work for your business. Routledge.
Hong, H.G. and et.al., 2019. Crime, punishment and the value of corporate social responsibility.
Available at SSRN 2492202.
Marquis, C. and Qian, C., 2014. Corporate social responsibility reporting in China: Symbol or
substance?. Organization science. 25(1). pp.127-148.
Schäfer, H., 2016. 26 Corporate Social Responsibility Rating. A Handbook of Corporate
Governance and Social Responsibility, p.449.
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