Corporate social responsibility and sustainability exert positive influence on business environment by lowering cost, developing stakeholder relationship and managing risks.
Sustainability skillfully positions the business organization and handles economic and social challenges. In this assignment the chosen organization is Exxon Mobil that is formed by merger: Exxon and Mobil. It is one of the global companies in oil industry that produces 3% oil and gas.
The company shows high level of CSPR and sustainability through they have two biggest scandals in human history for environmental pollution. The first incident was Oil split in Alaska and it adversely affected sea population. The second incident was the company continued to avoid the fossil fuel emission that heated up the atmosphere and spread campaign about climate misinformation. After that they admit the fact and capture the opportunities so that they can create awareness among stakeholders, manage the risk and support development. The company has transformed and developed CSR activities to ensure sustainability, value based innovation and infrastructure development in long term. The managers of Exxon Mobil form a team that consists of experts that specialized in transformation project in sustainability that supports the areas: social and economic impact management, social engagement, stakeholder engagement and environmental management. Exxon Mobil provides solution on implementation of sustainability strategies, energy efficiency strategies, ethics management, diversity management and environmental settings. 2.
SUSTAINABILITY, CORPORATE SOCIAL RESPONSIBILITY AND TRIPLE BOTTOM LINE At this point I will analyze the terms of Sustainability and Corporate Social Responsibility. There is no globally agreed definition on what sustainability is. There are many views which can describe it and describe how it can be achieved. The term Sustainability comes from the concept of sustainable development which became popular after the World’s first Earth Summit in 1992 in Rio de Janeiro, Brazil (Blair and Hitchcock, 2001). The original definition, which I personally prefer, is that sustainability is the development that meets the needs of the present without compromising the ability of the future generations to meet their own needs (B Rutland Report for the World Commission on Environment and Development, 1992. Some others definitions can describe it as “A sustainable future is one in which a healthy environment. Economic prosperity and social justice are pursued simultaneously to ensure the wellbeing and quality of life of present and future generations. Education is crucial for attaining learning and achievement (Cherunilam, 2010).
As for the Corporate Social Responsibility, the European Commission’s definition that Corporate Social Responsibility is the responsibility of enterprises for their impact on society , which can be achieved by following the law and integrating social , environmental , ethical , consumer and human rights concerns into their business strategy and operations is a very simple and complete definition (Dew, 2008). During the time that I spent writing this assignment, I have realized the importance of both Sustainability and Corporate Social Responsibility into the company’s general performance. If a company achieves to combine corporate profits along with a great social and environmental responsibility then it has achieved a great “Triple Bottom Line”. Companies, by increasing their Corporate Social Responsibility can bring to the society the awareness that their role is not to create problems but to solve them (East Midlands regional plan, 2009). It is a real magic when companies start to have big concerns about their role in the ecology and the society. In fact, it turns out that these companies become tremendously productive financially in ways that had never imagined before (William McDonough, cradle to cradle: remaking the way we make things (Jolly and Henson, 2008). To demonstrate high level of Triple Bottom Line is not only an ethical issue.
It is a source of competitive advantage against existing competitors. Senior managers should have these type of concerns when it comes to create the strategy and set the objective goals. The Human Resources department can be benefited from this because companies that focus on Sustainability and Corporate Social Responsibility are always in a better position than those which do not (Palmer, Hartley and Palmer, 2002). Their employees will be more efficient at work and their customers will feel better to be related with this type of company, both will feel more important to the society.
In this way, promoting the company will be easier for the Marketing department and also the Finance department maybe will have better options when it comes to get access to funding, especially for activities related to “Green Investments” (McCrum and Anwar, 2008). In the Exxon’s Mobil case, we clearly see their approach on Triple Bottom Line. They have achieved great financial performance over the years and have invested millions of dollars in environmental projects especially in renewable energy. They have also invested in projects related to renewable energy and in academic support and scholarship programs and contributed to the fight against Malaria and other diseases (Schaefer and Bolton, 2009).
There are many factors that determine a company’s level of engagement in demonstrating Sustainability and Corporate Social Responsibility such as the nature of the industry in which a company operates. For companies related to energy and primary sector it usual that big amounts of money are being invested in order to promote Sustainability and Corporate Social Responsibility (Terterov, Henson and Ivkovic, 2008). Sometimes, it is not impossible to say that many firms care only about their financial performance and promoting Sustainability and Corporate Social Responsibility just for marketing purposes in order to become more competitive is usual.
They might feel like their responsibility is to make as much money for the stockholders as possible (Wan, 1998). Even previous incidents related to environmental damage which were occurred years ago can a big impact on the strategy that a company follows at the present. For example, Exxon’s Mobil responsibility for the oil spill had a huge impact on how it defines its strategy and how it approaches Sustainability and Corporate Social Responsibility now. The “Climate Change Controversy” scandal damaged the company’s social profile and eventually it was obliged to change the way that it interacts with the society (Worthington and Britton, 2013). Finally, as I mentioned above that the financial performance of a company can be affected positively both by Sustainability and Corporate Social Responsibility although it is difficult to measure the effectiveness and specify it. 3. FINANCIAL, SOCIAL AND ENVIRONMENTAL PERFORMANCE Exxon Mobil Corporation is a multinational corporation that operates business in oil and gas industry. It was formed by merger of Exxon and Mobil.
It is the 10th largest company by profit and 7th largest by publicly traded company. According to Fortune 500 in 2014 Exxon Mobil is the second largest profitable company in the world (Jacobson, 2017). Financial performance: Exxon Mobil Company’s performance is based on traditional financial ratio. These are categorized in liquidity, profitability, debt, operating cost, cash flow and investment valuation. But Exxon Mobil has been facing problems for the last four years to pay their short term liabilities in current ratio. From 2013 to 2015 the managers had bad record of liquidity management but in 2016 there is significant increase in liquidity (Jacobson, 2017).
Exxon Mobil operates efficiently with gross and net profit margin without any past decline record. Considering the debt ration 0.5 the company is in good position but investors and creditors have similar stake in case of debt equity ratio (Dave, 2014). The managers use assets to ensure efficient sales by predicting that investors will invest soon considering the P/S and EPS ratio. Social and environmental performance: It is very disappointing that Exxon Mobil invested only 0.5% in social development and environmental protection in last few years. Even in corporate and technical training they have not increased the amount.
But the managers have been investing and increasing the amount of money since 2012 in different environmental projects and infrastructure development (Worthington and Britton, 2013). Air emission: The managers try to reduce air emission and ensure that the products they deliver will increase shareholder value and meet regulatory requirements. They install SCAN-fining technology in Texas so that the catalyst system will remove sulfur and minimize octane to generate ultra-low sulfur fuels.
It is predicted that ultra-low sulfur will increase 40000 barrels per day. It is integrated with Down Stream portfolio by meeting US Environmental Protection Agency (Wan, 1998). Ecosystem service: Exxon Mobil Papua New Guinea functions a natural gas plant on the coastal area that protects biodiversity and the upper land is integrated with Up Stream production and processing activities. It is related to National Biodiversity Strategy and Action Plan (Terterov, Henson and Ivkovic, 2008).
Economic development: In Exxon Mobil company, there are more than 75000 employees are working and they are committed to enrich personal and professional development. The managers arrange local training and industrial vocational training so that they can hone the skills of both men and women (Schaefer and Bolton, 2009). The managers are committed for more than 15 years with Bioko Island Biodiversity Protection Program to ensure strategic community investment. The management body is also helping local and international suppliers by open and transparent process and fair opportunity (Palmer, Hartley and Palmer, 2002