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Corporate Social Responsibility (CSR) (Stages of Corporate Citizenship…
Corporate Social Responsibility (CSR)
Corporate Power & Responsibility
Corporate Power
Capability to influence government,
economy and society based on organisation's resources
E.g. Walmart, ExxonMobil
Iron Law of Responsibility
In the long run, those who do not use power in ways that society considers responsible will tend to lose it
Meaning of CSR
Act in a way that enhances society
Be held accountable for its action that affect people, their communities and environment
Forgo some profits if its social impact hurt its stakeholders/funds used to create positive social impact
Creating commitment to give back to society & stakeholders
Acknowledge any harm, correct it if possible
Corporate Citizenship
Actions companies take to put their
commitments to CSR into practice:
Behaviour
Global Corporate Citizenship
Actions companies take to put their commitments to CSR into practice
worldwide
Demonstrate By:
Discover business opportunities in serving society
Transform concern for financial performance into vision that integrates financial and social performance
Proactively build stakeholder partnerships
Origins
Corporations under fire for being too big/powerful, yet guilty of anti-social and anti-competitive practices
Critics tried to curb power through anti-trust laws, banking regulations and consumer protection laws
Idea of CSR appeared at the start of 20th century (in US)
Faced with social protest, corporations are advised to use their power and influence for social purposes rather than for profit alone
Phrases
Corporate Social Responsiveness
[1960s - 1970s]
CSR Drivers:
: Social unrest/protest
Policy Instruments:
Stakeholder strategy; political lobbying
Social Impact Analysis
Corporate/Business Ethics
[1980s - 1990s]
CSR Drivers:
Code of ethics, human rights pressure
Foster ethical corporate culture
Policy Instruments
: Mission/Vision Statements, CEO leadership ethics
Corporate Social Stewardship
[1950s - 1960s]
CSR Drivers:
Company image/reputation
Policy Instruments:
Public Relations
Acts of Charity
Corporate/Global Citizenship
[1990s - Present]
Identify globalisation impacts; Sustainability
CSR Drivers:
Global trade/investment; NGO pressures
Policy Instruments:
Global audit standards; Sustainability audits/reports
Multiple Responsibilities
Social
Meeting public's changing expectations
Legal
Get along better with government regulators;
cooperate with legislators as new laws are
being passed down to cope with social problems
Economic
Financial well-being
Enlightened Self-Interest
E.g. Nestle
In the long run, provides
True value to customers
Help employees grow and behave responsibly.
Combine economic & social goals
Debate
For
Promotes long-term profits
Improves stakeholder relationship
Improve quality/quantity of stakeholders;
attract more employees etc
Discourage government regulations
Freedom in decision-making
Enhance business reputation
Encourages brand loyalty
Reputation Index: measures a company's social reputation
Balance corporate power with responsibility
Links to
iron law of responsibility
Against
Lowers economic efficiency & profit
Resources would be used for CSR,
hence not efficient
Imposes unequal cost among competitors
Greater cost for those companies who are more competitive;
putting them at
competitive disadvantage
Imposes hidden cost on stakeholders
Cost of CSR may be passed on to stakeholders;
e.g. Lower dividend, lower pay, higher price
Requires skills Business may lack
Business people solve social problems;
may be ineffective and efficient
Places responsibility on business
rather than on individuals
Idea of CSR is misguided;
only individual person can be responsible for their own actions
Entire company cannot be held liable for its action
Individuals should contribute back to society using own money:
instead of using company's funds in the name of CSR
Stages of Corporate Citizenship
Stage 3
Innovative
Stage 2
: Engaged
Stage 4
: Integrated
Stage 1
: Elementary
Stage 5
: Transforming
Assess & Report Social Performance
Social Reporting
Transparency
Integrate social and environmental info into financial (annual) reports
Publicize info. from social audit
Increasing trend of companies that doing social reporting
Social Audit
Standards
:3 Ways
Agree on a common industry-wide standard;
e.g. EICC
Develop by global NGOs or standard-setting organisation,
e.g. AccountAbility (AA), United Nations Global Compact
Design standard; set expectations;
e.g. Apple
6 Benefits
Understand what stakeholders think about and want from business
Inform stakeholders what was achieved
Strengthen loyalty & commitment of stakeholders
Enhance decision making
Improve overall performance
Help business understand what is happening within their firm
Systematic evaluation of company's social, ethical & environmental performance
