2Corporate Citizenship Chapter4Corporate CitizenshipThe Dynamic Social ClimateImplementing Corporate Citizenship ActivitiesCorporate Citizenship in PracticeCorporate Social Performance Audits
3Corporate citizenship Refers to businesses acting responsibly toward their stakeholders.Involves:proactively addressing business and society issues,building stakeholder partnerships,discovering business opportunities through social strategic goals, andtransforming a concern for financial performance into a vision of corporate financial and social performance.
4Figure 4.1Contrast between corporate social responsibility and corporate citizenshipOriginBasisFocusActionCorporate SocialResponsibility1920sPrinciples of charity and stewardshipMoral obligations to society at largePhilanthropy, trustee of the public’s interestsCorporateCitizenship1990sBuilding collaborative partnerships with stakeholder groupsDiscovering business opportunities through partnershipsManaging corporate social and financial performance
5Principles of corporate citizenship Good corporate citizens strive to conduct all business dealings in an ethical manner, make a concerned effort to balance the needs of all stakeholders, while working to protect the environment.
6Principles of corporate citizenship Exhibit 4.AaPrinciples of corporate citizenshipEthical Business Behavior1) Engages in fair and honest business practices in its relationship with stakeholders.2) Sets high standards of behavior for all employees.3) Exercises ethical oversight of the executive and board levels.
7Principles of corporate citizenship Exhibit 4.AbPrinciples of corporate citizenshipStakeholder Commitment4) Strives to manage the company for the benefit of all stakeholders.5) Initiates and engages in genuine dialogue with stakeholders.6) Values and implements dialogue.
8Principles of corporate citizenship Exhibit 4.AcPrinciples of corporate citizenshipCommunity7. Fosters a reciprocal relationship between the corporation and community.8. Invests in the communities in which corporation operates.Consumers9. Respects the rights of consumers.10. Offers quality products and services.11. Provides information that is truthful and useful.
9Principles of corporate citizenship Exhibit 4.AdPrinciples of corporate citizenshipEmployees12. Provides a family-friendly work environment.13. Engages in responsible human-resource management.14. Provides an equitable reward and wage system for employees.15. Engages in open and flexible communication with employees.16. Invests in employee development.
10Principles of corporate citizenship Exhibit 4.AePrinciples of corporate citizenshipInvestors17. Strives for a competitive return on investment.Suppliers18. Engages in fair trading practices with suppliers.Environmental Commitment19. Demonstrates a commitment to the environment.20. Demonstrates a commitment to sustainable development.
11Global corporate citizenship The process of identifying, analyzing, and responding to the company’s social, political, and economic responsibilities as defined through law and public policy, stakeholder expectations, and voluntary acts flowing from corporate values and business strategies.
12The Clarkson principles Exhibit 4.BaThe Clarkson principlesPrinciple 1Managers should acknowledge and actively monitor the concerns of all legitimate stakeholders and should take their interests appropriately into account in decision making and operations.Principle 2Managers should listen to and openly communicate with stakeholders about their respective concerns and contributions and about the risks that they assume because of their involvement with the corporation.
13The Clarkson principles Exhibit 4.BbThe Clarkson principlesPrinciple 3Managers should adopt processes and modes of behavior that are sensitive to the concerns and capabilities of each stakeholder constituency.Principle 4Managers should recognize the interdependence of efforts and rewards among stakeholders and should attempt to achieve a fair distribution of the benefits and burdens of corporate activity among them, taking into account their respective risks and vulnerabilities.
14The Clarkson principles Exhibit 4.BcThe Clarkson principlesPrinciple 5Managers should work cooperatively with other entities, both public and private, to insure that risks and harms arising from corporate activities are minimized and, where they cannot be avoided, appropriately compensated.Principle 6Managers should avoid altogether activities that might jeopardize inalienable human rights or give rise to risks that, if clearly understood, would be patently unacceptable to relevant stakeholders.
15The Clarkson principles Exhibit 4.BdThe Clarkson principlesPrinciple 7Managers should acknowledge the potential conflicts between their own role as corporate stakeholders, and their legal and moral responsibilities for the interests of stakeholders and should address such conflicts through open communication, appropriate reporting and inventive systems, and where necessary, third-party review.
16A three-stage model of corporate social responsiveness Figure 4.2A three-stage model of corporatesocial responsivenessSTAGEOrganizationalPolicy Learning CommitmentHighOrganizationalchangesAdministrative learningSpecializedlearningDegree of responsiveness to a specific issueFormulate policyIdentity problemLowTime (years)
17A model for implementing corporate citizenship strategies The Policy StageThe company becomes aware of those parts of the surrounding environment, to which it needs to respond and act on.A company’s management may think, based on sensitivity to the corporate social environment that it should respond to emerging issues, concerns, or social trends.
18A model for implementing corporate citizenship strategies The Learning StageOnce it has identified a social problem and adopted a general policy, the company must learn how to tackle the problem and make the new policy work.Specialized learningOccurs when a sociotechnical expert is employed to advise the company officers and managers.Administrative learningOccurs when a company’s supervisors and mangers become familiar with new routines that are necessary to cope with a social problem.
19A model for implementing corporate citizenship strategies The Organizational Commitment StageWhen the organization institutionalizes its new social policy.When corporate citizenship becomes part of the company and its standard operating procedures.
20Framework for corporate citizenship Concentrate action programs on limited objectives.Concentrate action programs related to the firm’s products or services.Begin action programs close to home.Facilitate employee action.
21Significant philanthropic contributions Exhibit 4.CNameBackgroundGiven/ Pledged (in Millions)Bill and Melinda GatesMicrosoft co-founder$22,906Gordon and Betty MooreIntel co-founder7,010George SorosInvestor2,431Eli and Edythe BroadSunAmerica founder1,463James and Virginia StowersAmerican Century founder1,345Michael and Susan DellDell Computer founder1,215The Walton FamilyFamily of Wal-Mart founder750Ted TurnerCNN founder664Ruth LillyEli Lilly heiress560Donald BrenReal estate402
23Corporate social performance audits A systematic evaluation of an organization’s social and ethical performance, examining the social and ethical impact of a business against two benchmarks: a company’s own mission statement and the behavior of other organizations and social norms.Triple bottom lineWhen companies report to stakeholders not just their financial results but also their environmental and social impacts. Financial, social and environmental results, taken together as an integrated whole, constitute a company’s triple bottom line.
24Summary of audit standard characteristics Figure 4.3aSummary of audit standard characteristicsGlobal Reporting InitiativeOrigin: 1997Focus: Link economic, environmental, and social sustainabilitySelf-reported benefits:1) Internal vehicle for evaluating policy versus performance2) Structure for effective dialogue with stakeholders3) Framework for sharing and promoting dialogue with stakeholders
25Summary of audit standard characteristics Figure 4.3bSummary of audit standard characteristicsISO 14001Origin: 1996Focus: Support environmental protection in balance withsocioeconomic needsSelf-reported benefits:1) Identify areas for energy reduction2) Reduce environmental risk3) Maintain compliance with legislation and regulation4) Receive environmental leadership rewards5) Prevent pollution and reduce waste6) Improve stakeholder relations7) Receive more favorable insurance rates8) Gain a competitive advantage
26Summary of audit standard characteristics Figure 4.3cSummary of audit standard characteristicsISEA AA 1000Origin: 1999Focus: Quality social and ethical accounting, auditing, and reportingSelf-reported benefits:1) Support effective stakeholder relations2) Effective in diverse global operations3) Build synergy with emerging businesses4) Link planning tools to quality models5) Build accountability in public sector6) Enhance overall performance