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Why do companies use CSR ? - Coggle Diagram
Why do companies use CSR ?
Key Points of CSR
EU
Definition
“The voluntary integration of social and ecological concerns of companies in their business activities and their relations with their stakeholders. Being socially responsible means not only meeting applicable legal obligations but also going beyond and investing "more" in the capital, the environment and stakeholder relations.”
Direct Observations
Legal and Ethic
Corporations will ensure their resources by respecting citizens and the environment
Philanthropic
Being Generous pays off by taking care of their images and retain their customers
Economic responsibility
If the employee is well paid, he will buy more and work better
Ikea
2020, FSC suppliers
This standard includes that a cut tree must be replanted and tropical forests are spared
Many producers are then hurrying to comply with this sustainable management system.
Ikea wins on 3 levels: Reputation, continuous production and identical wood in all its points of sale.
ISO 26000
2010, 99 countries adopted this standart
7 main principles with corporate governance at the center, which must be transparent and independent.
The idea is to respect the basic principles of People, Planet, Profit.
Importance of Legal Regime
Difference between countries
why firms in some countries engage in CSR to a greater extent than firms in other countries?
Main Theories
The common explanation for why companies invest in CSR is that doing so enhances profitability and firm value, a relationship often referred to as “doing well by doing good”
it is only well-performing firms that can afford to invest in CSR, that is “doing good by doing well”.
Multidimensionnal impact
This multidimensional and externality-driven nature of CSR suggests that it should be fundamentally related to not only a firm’s own choice but also regulations, institutional arrangements, and societal preferences.
Classical view of corporations
Maximizing profits, in order to pay more dividends to shareholders.
Surprisingly, they give employee benefits, take care of the production process by investing in a friendly-environment, or even avoid their suppliers who uses child labour.
Impact of Legal regime
A common law origin is a more discretion-oriented system that supports private market outcomes, places fewer ex-ante restrictions on managerial behaviour (but discourages inappropriate or unacceptable behaviour by relying on ex-post sanctions such as litigation or other judicial mechanisms), and favours shareholder protection.
A civil law origin, in contrast, is associated with state intervention in economic life through rules and regulations.
The level of CSR in a country is, therefore, a result of both a governance tradeoff concerning the rights and preferences of shareholders and other stakeholders and the form in which this tradeoff is made.
Overall, firms in civil law countries face less shareholder litigation risk but more regulations concerning stakeholder welfare, rely more on supermajority rules among shareholders and have stronger state involvement in their businesses, all of which are strongly related to higher CSR scores.