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SEU_MGT630_Module02_PPT_Ch021.pptx

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Business & Society Ethics, Sustainability & Stakeholder Management 10th Edition

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Chapter 2 Corporate Social Responsibility, Citizenship, and Sustainability

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Learning Outcomes (1 of 3)

Describe some early views of corporate social responsibility (CSR). Explain how CSR evolved and encompass economic, legal, ethical, and philanthropic components. Explain the Pyramid of CSR.

Articulate the traditional arguments both against and for CSR. Explain how the business case for CSR has strengthened the concept’s acceptance.

Describe how the concept of corporate social responsiveness differs from CSR.

Explain how corporate social performance (CSP) became more popular. Describe how it is different than CSR. Elaborate on how it differs from corporate social responsiveness.

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Learning Outcomes (2 of 3)

Describe how corporate citizenship is a valuable way of thinking about CSR. Explain its broad and narrow views. Explain how corporate citizenship develops and proceeds in stages.

Summarize the three perspectives on the relationship between corporate social performance (CSP) and corporate financial performance (CFP).

Explain how sustainability is a broad concept that embraces profits, people, and the planet. Describe how the triple bottom line is a vehicle for implementing sustainability.

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Learning Outcomes (3 of 3)

Elaborate on the ages and stages of CSR. Define CSR Greenwashing and how it may lead to misleading reputational profiles of companies.

Describe and characterize the socially responsible investing movement. Differentiate between negative and positive screens that are used in investments decisions.

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Chapter Outline

The Corporate Social Responsibility (CSR) as a Concept

Traditional Arguments against and for CSR

Ages and Stages of CSR

CSR Greenwashing

Political CSR

Corporate Social Responsiveness

Corporate Social Performance

Corporate Citizenship

The Social Performance and Financial Performance Relationship

Sustainability—Profits, People, Planet

Socially Responsible, Sustainable, Ethical Investing

Summary

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Allegations Against Business -

Business -

Has little concern for the consumer

Exploits employees

Cares nothing about the deteriorating social order

Has no concept of ethical behavior

Is indifferent to the problems of minorities and the environment

These claims have generated an unprecedented number of pleas for companies to be more socially responsible.

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Corporate Social Responsibility As a Concept

Early Definitions -

CSR means seriously considering the impact of a company’s actions on society.

CSR requires the individual to consider his or her acts in terms of a whole social system, and holds him or her responsible for the effects of his or her acts anywhere in that system.

These definitions provide useful insights into the concept of Corporate Social Responsibility.

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Business Criticism- Social Response Cycle

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Corporate Social Responsibility Related Concepts

Traditional CSR Patterns Emphasize:	Newer Terms with Similar Meanings
Corporate Social Responsibility Emphasizes Obligation, Accountability	Corporate Citizenship (CC) - Views companies as citizens and all this implies
Corporate Social Responsiveness Emphasizes Action, Activity	Corporate Responsibility (CR) – Broadly Focuses on all categories of corporate Responsibility
Corporate Social Performance (CSP) Emphasizes Outcomes, Results	Sustainability (SUS) – Emphasizes longer-term concern for people, planet and profits

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Historical Perspective on CSR

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Adaptations of the Economic Model

Philanthropy

Community obligations

Paternalism

Motivation: Keep government at arm’s length

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Evolving Meanings of CSR

CSR:

…is seriously considering the impact of the company’s actions on society.

… is the obligation of decision makers to take actions which protect and improve the welfare of society as a whole, along with their own interests.

…supposes that the corporation has economic and legal obligations as well as responsibilities to society that extend beyond these obligations.

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A Four-Part Definition of CSR

While each definition is valuable, we will focus on the types of social responsibilities business has. Corporate social responsibility encompasses the:

Economic

Legal

Ethical, and

Philanthropic

expectations that society has of organizations at a given point in time.

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The Four Components of CSR

Responsibility	Societal Expectation	Examples
Economic	Required	Be profitable. Maximize sales, minimize costs.
Legal	Required	Obey laws, adhere to regulations.
Ethical	Expected	Avoid questionable practices. Do what is right, fair, and just.
Philanthropic	Desired/ Expected	Be a good corporate citizen. Give back.

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The Pyramid of CSR

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The CSR Equation

A stakeholder perspective focuses on the CSR

pyramid as a unified whole.

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Top 20 Activities or Characteristics of a Socially Responsible Company

Makes products that are safe.

Does not pollute air or water.

Obeys the law in all aspects of business.

Promotes honest or ethical employee behavior.

Commits to safe workplace ethics.

Does not use misleading or deceptive advertising.

Upholds stated policy banning discrimination.

Utilizes “environmentally friendly” packaging.

Protects employees against sexual harassment.

Recycles within company.

Shows no past record of questionable activity.

Responds quickly to customer problems.

Maintains waste reduction program.

Provides or pays portion of medical costs.

Promotes energy conservation program.

Helps displaced workers with placement.

Gives money toward charitable or educational causes.

Utilizes only biodegradable or recyclable materials.

Employs friendly or courteous or responsive personnel

Tries continually to improve quality.

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Arguments against CSR -

Classical Economics: The classical economic view is that business’s only goal is the maximizing of profits for owners.

Business Not Equipped: Business is not equipped to handle social activities.

Dilutes Business Purpose: It dilutes the primary purpose of business.

Too Much Power Already: Businesses have too much power already.

Global Competitiveness: It limits the ability to compete in a global marketplace.

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Arguments in Support of CSR -

Enlightened self-interest: Businesses must take actions to ensure long-term viability.

Warding off government regulations. This is one of the most practical reasons.

Resources Available: Business has the resources and expertise. Let it try.

Pro-action is better than Reaction. Pro-action is also less costly.

Public supports: the public strongly supports CSR.

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Business Responses to calls for CSR Make the Business Case for CSR

Defensive approach

Cost-benefit approach

Strategic approach

Innovation and learning approach

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The Business Case for CSR

6 Reasons for Embracing CSR

Innovation

Cost savings

Brand differentiation

Long-term thinking

Customer engagement

Employee engagement

Business Benefits of CSR

Win new business

Increase customer retention

Develop and enhance relationships with customers, suppliers, and networks

Attract, retain, and maintain a happy workforce and be an Employer of Choice

Save money on energy and operating costs and manage risk

Differentiate oneself from competitors

Improve business reputation and standing

Provide access to investment and funding opportunities

Generate positive publicity and media opportunities due to media interest in ethical business activities.

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Ages and Stages of CSR

Visser’s Five Stages of CSR

Age Of Greed – CSR practices are undertaken when companies’ shareholder value needs to be protected.

Age of Philanthropy – Emphasizes charitable CSR when companies support social causes through donations and sponsorship.

Age of Marketing – CSR is used as a public relations approach to enhance the company’s brand, image, or reputation.

Age of Management – CSR activities are linked to the company’s core business (e.g., Coca-Cola and water quality/management).

Age of Responsibility – Identifying and remedying the root causes of irresponsibility and unsustainability.

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CSR Greenwashing

Some companies convey an image of responsibility when in fact they are conducting business as usual.

Companies attempt to make the public believe they are “green”—environmentally friendly—when they are not.

CSR Greenwashing is intentionally seeking to convey the image of a socially responsible firm when the evidence of their practices does not support this conclusion.

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Political CSR

Gaining attention and application especially in European or similar contexts where the government historically has assumed a larger role in providing societal benefits.

“PCSR entails those responsible business activities that turn corporations into political

actors, by engaging in public deliberations, collective decisions, and the provision of

public goods or the restriction of public bads in cases where public authorities are

unable or unwilling to fulfil this role.”

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Matthew Somoroff (MS) - "ills" would be more grammatical than "bads" but if this is actually quoting something, I guess leave as is.

Corporate Social Responsiveness

Corporate Social Responsiveness -

An action-oriented variant of CSR.

Responsibility -

Implies a state or condition of having assumed an obligation.

Responsiveness -

Connotes a dynamic, action-oriented condition.

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Corporate Social Performance: Carroll’s Model

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Corporate Social Performance: Wartick & Cochran’s Model Extensions

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Corporate Citizenship (1 of 2)

Corporate citizenship -

Embraces all the facets of corporate social responsibility, responsiveness, and sustainability.

Corporate citizenship is not a new concept, but one whose time has come.

Corporate citizenship serves a variety of stakeholders.

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Corporate Citizenship (2 of 2)

Broad View

A reflection of shared moral and ethical principles.

A vehicle for integrating individuals into the communities in which they work.

A form of enlightened self-interest that balances stakeholders’ claims and enhances a company’s long-term value.

Narrow View

Corporate community relations

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Stages of Corporate Citizenship

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Global Corporate Citizenship -

…and Global CSR are topics in which there has been an explosion of interest.

Multinational enterprises are expected to:

be good corporate citizens in the countries in which they do business.

tailor their initiatives to conform to the cultural environment.

International academics and business people around the world are now researching and advocating CSR and corporate citizenship concepts.

Convergence in global CSR approaches will continue as the world economic stage becomes the common environment within which businesses function.

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Corporate Citizenship Awards by Business Press

Fortune's ranking of “Most Admired” and “Least Admired” corporations

Conference Board’s Ron Brown Award for Corporate Leadership

CRO Magazine Awards

Chamber of Commerce of the U.S. Corporate Citizenship Awards

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The Social and Financial Performance Relationship

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One Bottom Line, or Many?

The stakeholder-bottom line perspective -

Impacts or benefits of social performance cannot be fully measured or appreciated by considering only the impact on the firm’s bottom line.

CSP cannot be fully comprehended unless it includes impacts and measures on consumers, employees, the community and other stakeholder groups.

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Sustainability—Profits, People, Planet

Sustainability derived from sustainable development—a pattern of resource use that aims to meet human needs while preserving environment so that these needs can be met not only in the present but also for future generations.

Earlier versions of sustainability focused only on the environment. Recently it has become clear that it pertains to the natural environment, and other business environments as well.

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The Triple Bottom Line Perspective

Business Must Attend to Three Key Spheres of Sustainability –

Economic

Social

Environmental

The goal is corporate sustainability.

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Creating Shared Value and Conscious Capitalism

CSV (Creating Shared Value)

Business and society could be brought back together if business redefined the basic purpose as creating shared value—generating economic value in a way that also produces value for society.

Conscious Capitalism

A more complex form of capitalism that reflect and leverages the interdependent nature of life and all of the stakeholders in business.

Higher purpose, Stakeholder orientation, conscious leadership, conscious culture.

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Socially Responsible, Sustainable, Ethical Investing (1 of 2)

Socially Responsible Investing -

Emerged in the 1970s

Nearly $7 trillion in socially responsible investments in the U.S.

Social Screening -

A technique used to screen firms for socially-responsible investment purposes.

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Socially Responsible, Sustainable, Ethical Investing (2 of 2)

Total dollars invested in SRI has grown exponentially over past twenty years.

Council on Economic Priorities suggests 3 reasons:

More reliable research on CSP

Investment firms using social criteria have solid track record

The socially conscious 1960s generation is making investment decisions

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Key Terms

business for social responsibility

conscious capitalism

community obligations

corporate citizenship

corporate social performance model

corporate social responsibility

corporate social responsiveness

corporate sustainability

CSR exemplar firms

CSR Greenwashing

created shared value

economic responsibilities

environmental, social, and governance investing

ethical responsibilities

global corporate citizenship

impact investing

legal responsibilities

mainstream adopters

paternalism

philanthropic responsibilities

philanthropy

pyramid of CSR

social entrepreneurship

social intrapreneurship

socially responsible, sustainable or ethical investing

stages of corporate citizenship

stockholder-bottom line

sustainability

sustainable development

triple bottom Line

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