Corporate citizenship encompasses the social responsibility of corporations and the degree to which, as determined by shareholders, they uphold legal, ethical, and economic obligations. As individual and institutional investors continue to search for companies that have socially responsible orientations, such as their environmental, social, and governance (ESG) practices, corporate citizenship is becoming increasingly relevant. Corporate citizenship refers to the duties of a corporation to society. The aim is to build higher living standards and quality of life for the communities around them and yet preserve stakeholder profitability. Demand for socially responsible companies continues to develop, enabling consumers, customers, and workers to use their individual power to have a negative effect on businesses that do not share their values. All corporations have fundamental ethical and legal responsibilities; nevertheless, a clear basis of corporate citizenship is built by the most effective companies, demonstrating a dedication to ethical conduct by maintaining a balance between the interests of shareholders and the needs of the local community and environment. Such strategies help bring in customers and create brand and business loyalty.
During the process of establishing corporate citizenship, businesses go through various phases. Based on their skill and integrity while promoting community activities, a good awareness of community needs, and a commitment to integrating citizenship into their company's culture and structure, businesses ascend to the higher stages of corporate citizenship.
The five corporate citizenship phases are described as:
l Elementary Services
l Innovative Creature
l To convert
In the basic process, the citizenship practices of an organization are fundamental and unclear because there are little organizational knowledge and little to no participation from senior management. In particular, small businesses seem to remain in this process. They are capable of compliance with the standard laws on health, safety, and the environment, but they do not have the time or money to fully cultivate greater engagement in society. Companies will also create strategies in the engagement process that facilitate the participation of personnel and managers in activities that transcend rudimentary compliance with basic laws.
In the creative process, with increased meetings and consultations with shareholders and through involvement in forums and other channels that promote innovative corporate citizenship policies, citizenship policies are becoming more detailed. Citizenship practices are formalized in the integrated process and fit in fluidly with the daily operations of the organization. Performance is tracked in community operations, and these operations are pushed into the lines of business. They recognize that corporate citizenship plays a strategic role in fueling revenue growth and penetration into new markets once businesses hit the transition stage. In this process, economic and social activity is a routine part of the daily operations of a business.
Corporate social responsibility (CSR) is a broad definition of corporate citizenship that, depending on the business and sector, may take different forms. Businesses can support society through CSR initiatives, philanthropy, and volunteer activities while boosting their own brands. It is equally valuable for a company, as critical as CSR is for society. CSR events can help to forge a stronger connection between workers and corporations; they can raise productivity and help employees and employers to feel more connected to the world around them. It first needs to be responsible for itself and its shareholders in order for a corporation to be socially responsible. Businesses that support CSR programs have also built their business to the point where they can give back to society. Therefore, CSR is essentially a policy of big companies. Often, the more recognizable and profitable an organization is the more transparency it has to set ethical conduct guidelines for its peers, competition, and industry.
Starbucks as an example: Starbucks was known for its keen sense of corporate social responsibility, and dedication to sustainability and community welfare well before its initial public offering (IPO) in 1992. Starbucks has reached benchmarks in corporate citizenship, including:
l Achieving 99% of ethically sourced coffee
l Creating a global farmers' network
l Pioneering green development in its shops
l Contributing millions of community service hours
l Establishing for its partner/employees a pioneering college program
The priorities of Starbucks include recruiting 10,000 refugees in 75 countries, reducing the effect of its cups on the environment, and involving its workers in environmental leadership.