1. CORPORATE SOCIAL RESPONSIBILITY

2. CORPORATE SOCIAL RESPONSIBILITY (CSR) CSR is concerned with treating the stakeholders of the firm ethically or in a responsible manner. CSR is about how companies manage the business processes to produce an overall positive impact on society.

3. Group work Discuss how a company of your choice undertakes CSR to: a)Customers b)Employees c)Stockholders d)Creditors e)Environment f)Community

4. CSR Cont’d Most definitions emphasize the interrelationship between economic, environmental and social aspects and impacts of an organization’s activities, and that SR “is taken to mean a balanced approach for organizations to address economic, social and environmental issues in a way that aims to benefit people, communities and society.”

5. FORMS OF CSR I)Responsibility to Customers Goes beyond merely providing goods and services. It includes areas like: a)Responsible production practices Products should be produced in a way that ensures customer safety Products should carry proper warning labels to prevent misuse, and warn of side effects. b)Responsible Sales Practices Avoiding overly aggressive sales practices Avoiding deceptive advertising Avoiding false promises to customers regarding product performance.

6. Implementing Responsibility Toward Customers i)Code of responsibilities Sets guidelines for product quality and how customers should be treated. Ensures products are tested to ensure safety before use. ii)Monitoring of complaints Giving customers the means to use for complaints. iii)Utilizing customer feedback Even when no complaints, feedback should be collected and utilized.

7. FORMS OF CSR Responsibility to Employees Firms have responsibility to their employees in the following ways: i)Employee Safety Checking machinery and equipment for proper working conditions Safety gadgets that prevent injury Emphasis on safety precautions e.g. through seminars. ii)Proper treatment by other employees Prevention of sexual harassment Offering equal opportunities e.g. through affirmative action, in promotions etc Diversity – e.g. through mergers

8. Implementing Responsibility Toward Employees Code of responsibility Procedures should be established in going with these codes, e.g. recruitment procedure. Grievance policy Assigning a specific department the duty of resolving conflicts and complaints. Providing seminars on areas like diversity and safety precautions Supporting these procedures and policies from the top, and with appropriate funding.

9. FORMS OF CSR Responsibility to Stockholders Firms are responsible for satisfying their owners by giving them a fair return on their investments. Managers implement this by monitoring the employee decisions to ensure that they are in the best interest of the owners. Sometimes employees are provided with some of the firm’s stock to ensure that they work to increase the value of the firm. Some managers manipulate the financial reporting to exaggerate the firm’s performance, allowing them to sell

10. FORMS OF CSR Responsibility to Creditors Firms are responsible for meeting their financial obligations to their creditors. Some violate their responsibility by providing misleading financial information that exaggerates their financial condition, hence getting credit they would not otherwise have got. Such creditors could lose their money when the firm goes bankrupt.

11. Responsibility to the Environment The production processes that firms use and the products they produce can be harmful to the environment, e.g. air pollution by automobiles, land pollution through toxic waste. Firms have revised their production and packaging processes to reduce the amount of waste

12. Responsibility to the Community When firms establish a base in a community, they become part of that community and rely on it for customers and employees. Firms may demonstrate their concern for the community by sponsoring local events or donating to local charities.

13. Arguments for CSR Since the society gives the business the charter to exist, then the firm must live up to the society's expectations. The creation of a better social environment benefits both society and business. Social involvement discourages additional government regulation and intervention, creating greater freedom and flexibility for businesses.

14. Arguments for CSR Cont’d Modern society is an interdependent system and the internal activities of the firm have an impact on the external environment. Business can therefore not ignore their impact on the environment around them. Social involvement may improve the value of the company's stock in the market through the goodwill created. Social involvement creates a favorable public image thus a firm may attract customers, employees and investors. Business has vast resources, which it should use to solve some of the society's problems. It is better to prevent social problems than to cure them. E.g. social unrest from street children.

15. Arguments against CSR The primary task of many businesses is to maximize profits by focusing strictly on economic activities, i.e. the business of business is business. In the final analysis society must pay for the social involvement of business through higher prices. Business people lack the social skills to deal with the problems of society. Their training and experience is with economic matters and their skill may not be pertinent to social problems.

16. Arguments against CSR Business executives are not elected and as such they are not accountable to the society. There are no established ways of taking stock and measuring the impact of social responsibility. May be costly for the business

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