This section of the report analyses the reputation of Ryanair as regards corporate social responsibility (CSR) issues in the environment in which the airline operates and also the role of the operation function of Ryanair in addressing CSR issues.
Corporate social responsibility (CSR)
CSR is the serious consideration of a company’s impact over the company’s environment. (CSR) refers to the responsibility that business organizations have and which is creating a healthy and prosperous society. Business organizations cannot work alone in an environment because their activities have impact on consumers and in return these consumers constitute the environment in which the business organization exists.
Business activity impacts on the lives of people in many ways, ranging from the creation of a safe and clean environment, through clean and careful production, to the creation of jobs, and opportunities for all members of the community. The term CSR can be traced to back to Bowen (1953) cited in Panwar et al (2006) as “an obligation to pursue those policies, to make those decisions, or to follow those desirable lines of actions in terms of the objectives and value of our society”. According to European commission, CSR is the act of companies acting voluntarily and also achieving social and environmental objectives during the course of their daily business operations i.e. production of goods and services (European Commission, 2009). Corporate Social Responsibility is of increasing importance in the corporate world ranging from voluntary contributions and good employer practices to ethical investments and internal management objectives (Frame, 2005). Cramer (2006) has identified seven CSR policies which include– Employees, Environment, Human Rights, Governance, Chain Responsibility, Transparency and Responsibility and Product Responsibility which Business organizations should apply in their business activities or operations.
Ryanair and CSR issues:
CSR benefits companies in terms of their profitability by increasing it and also deriving maximum benefit to the society in which such companies exist. Business organizations that plans to establish itself in terms of having competitive advantage amongst its competitors should have a good CSR to the society or community in which its exist(European Commission, 2009).
Ryanair airline has a bad reputation when it comes to CSR issues. Ryanair is at the bottom 10 of an “ethical ranking” of 581 companies and the rating is based on conditions such as environmental performance of the airline, corporate social responsibility of the company and information provided to consumers. The ranking of the airline was compiled by Geneva-based Covalence, and it measures qualitative data on 45 criteria and they include labor standards of the company, waste management policy of Ryan air, social utility and human rights policy (McDonald, 2010). Ryanair airline was ranked 575, and the airline claims its “reputation index”, was distributed by Thomson Reuters, Bloomberg and Capital IQ and that it simply shows “a barometer of how multinationals are perceived in the ethical field” (McDonald, 2010).
The airline has series of issues involving posting misleading information on its website such as the Ryan air misleading green claim by saying the airline industry contributes just 2 percent of carbon dioxide emissions and according to ASA the claim breached rules on truthfulness because it didn't explain that it was based on global rather than UK emissions. Airlines are calculated to contribute 5.5 percent to the emissions of the UK. (Ryan air criticized for misleading green claims, 2007) and also sometimes in 2008 the airline had to take off its website due to the fact that there were misleading price list in the website although the airline claimed the website was taken off because of the airline’s increasing the site's capacity (Businessrespect,…