Corporate Social Responsibility in Banks Essay Example | Topics and Well Written Essays - 4750 words

Corporate Social Responsibility in Banks - Essay Example Corporate Social Responsibility in Banks Therefore, when a corporation engages in corporate social responsibility, it is acting in the best interest of forces which are not in a close relationship with the corporation, to the detriment of forces which are (Lantos, 2001, p. 1). This theory is based upon classical economic theory which is underscored by Milton Friedman’s analysis (Bronn&Vrioni, 2001, p 208), and this theory does not leave room for behaving ethically or responsibly (Paine, 2003, p. 1) However, in today’s socially conscious world, the traditional view is short-sighted. In this world of Occupy protests, where corporations are portrayed as soulless entities, and the extreme profit motive is seen as inherently evil, corporations now will benefit tremendously from being more socially responsible. Therefore, if corporations can show society that they are not just interested in profits, but are also interested in better the world and the environment, they will be once again more attractive to consumers. Therefore, corporate social responsibility in this environment would be advantageous to the bottom line (Innes, 2006, p. 355). This is particularly true regarding the banking industry, which is widely perceived, not inaccurately, as being the catalyst to the worldwide recession that has occurred, as their shoddy practices effectively brought down economies worldwide. Corporate responsibility may be ethical, legal, economic or philanthropic. (Mohr, 2001, p. 47). There are many reasons why corporations are compelled to act responsibly. One of the reasons why a corporation might act responsibly is its image, and, as stated above, corporate responsibility helps a corporation’s image, which, in turn, helps the corporation’s bottom line – people are more likely to patronize a corporation who is seen as being concerned about the environment and other social causes that the public holds dear (Paine, 2003, p. 110). A corporation who has socially friendly practices may b e the target of a â€Å"buycott.† Friedman (1996) advocates â€Å"buycotts,† which is the flip side of a boycott. In a boycott, companies are punished for misdeeds. On the other hand, a boycott rewards the corporation for its policies when their policies are in line with activists of a certain cause. These activists are organized and induce other shoppers to patronize the store who shares their beliefs (Friedman, 1996, p. 440). A good example of this are â€Å"Green† purchasers, who look at the ethics of a certain purchase, look at whether the purchase enhances sustainability, and decides to make the purchase based upon these factors (Young, et al., 2010, p. 20). Social investing is another way that a corporation may benefit. Social investing is where people invest their money in corporations which are in line with their personal beliefs or forward causes that the individual believes in (Entine, 2003, p. 1). Alternatively, corporations who do not act socially re sponsibility may be punished for indiscretions. For instance, a corporation who is targeted for socially unfriendly policies may find themselves the target of a boycott and other problems. When corporations do not do the right thing, then they may face boycotts, PR nightmares and fewer customers buying their products (Sassatelli, 2006, p. 218). An example of this is Bank of America. When it announced plans to charge its customers a $5 monthly debit card fee, the backlash was immediate and intense. Customers were outraged at this