1. Canadian Business and Society: Ethics & Responsibilities
Chapter
Seven

2. Chapter Outline Corporate Social Responsibility
Debate: The role of business is to make money vs. It’s more than that
Social Responsibility Theories
Pyramid of Corporate Social Responsibility
Corporate Sustainability (CS)
Reputation Management
Social Impact Management
Triple-E Bottom Line (TBL)
Good Corporate Citizenship
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3. Corporate Social Responsibility: Definition
The way a corporation achieves a balance among it economic, social, and environmental responsibilities in its operations so as to address shareholder and other stakeholder expectations.
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4. Key Elements of CSR
Corporations have responsibilities beyond the production of goods and services.
These responsibilities involve helping to solve social problems.
Corporations have a broader constituency than just stockholders.
Corporations have impacts beyond simple marketplace transactions.
Corporations serve a wider range of human values than just economic values.
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5. Debate: Case for Involvement
Business must satisfy society’s needs and expectations.
CSR prevents public criticism and government regulation.
McDonald’s Clam Shells
Business and society are interdependent.
Boom towns
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6. Case for Involvement CSR is good for the bottom line.
Insurance companies
Investors and consumers support CSR.
Green mutual funds
Addressing social problems can become financial opportunities (e.g., pollution abatement).
Playgrounds surfaces made from recycled tires
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7. Case for Involvement Business should take long-term CSR approach.
MEC
Social actions improve public image and goodwill.
Business can solve problems as well as government.
African countries
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8. Case for Involvement Proactive approach is better than reactive.
Home Depot
Businesspeople are also concerned citizens.
Apotex Inc. (Bernard and Honey Sherman)
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9. Debate: Counterarguments
Profit maximization is the primary purpose of business.
Milton Friedman, Nobel Prize winner in Economics
Business is responsible to shareholders.
It should be their decision
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10. Counterarguments Social policy is role of government.
Business lacks training in social issues.
It is not competent
CSR would give too much power to business.
Take over a community
Impose business values
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11. Counterarguments
Business involvement in social matters increases costs.
Someone is paying for it
Mistakes can be made
No reliable guidance for business in CSR matters.
PR vs. real action
Needed vs. waste of time
Charity accountability
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12. Counterarguments
Business cannot be held accountable unlike social institutions.
To what standard?
Whose responsible to hold them accountable?
There is divided support in business community for social involvement.
No competition to get involved
The concept is unclear, so business action is uncertain.
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13. Social Responsibility Theories
Amoral view
“Amoral” (not immoral) – an activity without moral quality
Traditional view of business
profit-making entity
Laws governing incorporated businesses make them legitimate
Milton Friedman
Source: Klonoski, 1991
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14. Social Responsibility Theories
Personal view
Corporations are like people and can therefore be held accountable for their actions.
There is a ‘right thing to do’ and corporations can be punished for acting immorally.
Counterarguments: Corporations are legal entities not persons and can not be held accountable.
Only the people running the organization can be held accountable for the actions of the corporation.
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15. Social Responsibility Theories
Social view
Corporations exist within a social context
Corporations are social institutions with social responsibilities
The Amoral view is incomplete
There are many examples of the social view
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16. Examples of the Social View
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17. Pyramid of Corporate Social Responsibility
“Be a good
corporate citizen”
Desired
Philan-
thropic
“Be ethical”
Expected
Ethical
“Obey the law”
Required
Legal
“Be profitable”
Economic
Required
Source: Archie Carroll, 1991
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18. Corporate Sustainability (CS)
Most prominent term after CSR
Definition: Corporate Sustainability refers to corporate activities demonstrating the inclusion of social and environmental as well as economic responsibilities in business operations as they impact all stakeholders.
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19. Corporate Sustainability (CS)
Marrewijk ‘s five levels of CS
Compliance-driven CS: follow regulations
Profit-driven CS: focus on bottom line
Caring CS: go beyond legal compliance
Synergistic CS: well balanced solutions
Holistic CS: fully integrated CS
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20. Reputation Management
Definition: Reputation management is an effort to enhance a corporation’s image
Previous focus on media and public relations as well as crisis management
Today, focus is on relationships with all stakeholders
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21. Reputation Management
Reputation Management can:
Enhance financial performance
Improve competitive positions
Increase public approval
Reputations take a long time to be established, but can be destroyed quickly
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22. Social Impact Management
Field of inquiry at the intersection of business needs and wider societal concerns that reflects and respects the complex interdependency between the two.
Interdependency of business and society
Two directional:
Society’s influence on corporations
Corporation's influence on society
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23. Social Impact Management
Evaluates 3 aspects of business:
Purpose of business
Social context of business
Metrics: how performance is measured
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24. Triple-E Bottom Line (TBL)
Evaluates a corporation’s performance according to a summary of the economic, social, and environmental value the corporation adds or destroys.
Now forms the basis for corporate reporting of economic, ethical, and environmental responsibilities.
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25. Corporate Citizenship
Definition: The demonstration by a corporation that it takes into account its complete impact on society and the environment as well as its economic influence.
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26. Good Corporate Citizenship: Benefits
Reputation management
Risk profile and risk management
Employee recruitment, motivation, and retention
Investor relations and access to capital
Learning and innovation
Competitiveness and market positioning
Operational efficiency
Licence to operate
Greater leeway
Source: World Economic Forum
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27. New Approach to Corporate Citizenship
Limited
Focus on corporate giving
Equivalent
Emphasis on sustainability
Extended
Defined as a set of individual, social, civil, and political rights
Source: Matten and Crane, 2005
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