Corporate Social Responsibility

Name: Sim Yi Qi

UID: 3035143825

Assessment 1 Academic Paper Question

The sustainable growth is extremely important for all corporates in the fierce competition today while the economics world turns rapidly. The stable and sustainable growth can ensure the long-term benefits of the business. Thus, people especially experts from business field often argue that a corporate can achieve its goal of sustainable growth through Corporate Social Responsibility (CSR). However, there are still some limitations that caused many airline companies in the market not yet fully embraced the policy of CSR. Before investigating deeper, CSR should be clearly defined. CSR is generally defined as the responsibility of a corporate to the community and environment welfare on the business decisions. The business decisions made by the executives varies affect the stakeholders, employees, community, and the environment.

According to Airports Council International (ACI), the global passenger traffic in 2014 had increased by 5%. Airline industry is important in the transport system as it shortens the travel time and make the journey between two places more convenient. Thus, the airline industry is a large, fast-growing and competitive market especially when the low-cost airlines are growing rapidly. And the airline industry will sustainably grow with the effect of globalization and the growth of tourism industry. However, there were only 14 out of 41 airline companies that had officially launched their CSR policy in January 2009. CSR policy should be embraced in the airline companies as it improves the performance of the companies from different aspects.

From the aspect of human resources, CSR is beneficial to a company’s performance because CSR can improve the welfare of the employees in the company. As the employees are important assets of a company, the policy of CSR can motivate the employees and thus benefit the performance of the company. Motivated employees have better productivity and positive attitude towards the company, therefore, the relationship between the company and employees are maintained in a good condition. Companies with good working environment attract talented potential employees and create a greater company culture. With great company culture, the employees perform better and thus boost the business of the company. Companies can provide training programs in order to improve the skills of the employees. 269 employees from Air France-KLM successfully completed their vocational education program through Validation of Prior Learning (VPL) in 2013. Employees with better abilities can help the company to perform better in the market. Furthermore, the airline companies can improve the wellbeing of the employees by taking initiatives to reduce the occurrence of accidents among the employees. For example, American Airlines provide safety training to the employees in order to ensure that their employees are working in a safe environment. In the long term, the company can achieve its goal of sustainable growth with the support from its team of well-skilled employees. Loyal and experienced employees improve the performance of the company by reducing the cost in recruiting new employees. The company can save cost in hiring and training new employees when the company has an army of experienced employees. Hence, it is reasonable to argue that the CSR can improve the company’s performance by creating a positive working environment and reduce the cost in recruiting new employees.

The positive image of a company can be built by embracing the policy of CSR in the company. Brand image is the customers’ perceptions of the company. Companies spend the budget on advertising and marketing in order to deliver a positive brand image to customers’ mind. CSR can help the companies to achieve the same goal with less spending on traditional advertisement. Airline companies can involve actively in community projects in order to build a good image in the society. For example, Singapore Airlines embraces CSR by supporting different community projects in the countries that they operate. Singapore Airlines provides financial supports such as scholarships, clothing and transportation allowances for the families with the heavy financial burden. The community programs place the company as a corporate that contributes actively to the society. With the positive reputation, the customer loyalty of the company increases and thus boost the business of the company. Moreover, the airline companies can corporate with non-profit organisations in raising awareness of the public on certain issues. Cathay Pacific and the United Nations Children’s Fund (UNICEF) have been working together on improving the living and growing conditions of the children across the world, especially the less-privileged children. The passengers of Cathay Pacific are welcomed to donate any spare change they may have to UNICEF in order to fund the UNICEF project in over 150 developing countries. By drawing public’s attention to this issue, Cathay Pacific has successfully built a positive image on the customers’ perception. Therefore, one of the advantages of CSR is to build a positive brand image of the company and thus benefit the company’s performance.

A company that embraced the policy of CSR also focuses on the environmental issues such as greenhouse effect, carbon footprint, and energy use. The main goal of environmental CSR is to allocate the resources effectively while considering the environmental wellbeing. US airline burned about 16.2 billion gallons of fuel in 2014. Thus, the airline companies should adopt the green flight program in order to minimize the carbon footprint of each flight between cities worldwide. Virgin Atlantic Airways was the pioneer that offer an onboard carbon offset option to its passengers. Nowadays, more and more airline companies are offering their passengers the carbon offset in order to reduce the carbon dioxide emissions of the flights. Moreover, the airline companies can save cost through these energy saving program. China Airlines has been using the fuel efficient aircraft, A350 with the innovative wing tip design as to increase fuel efficiency and decrease greenhouse gasses emission. According to Airbus, the fuel consumption per seat for A350 is 7% lesser than the normal aircraft. While concentrating on the environmental welfare, the environmental CSR not only increases the energy efficiency but also reduce the cost of fuel for the airline companies.