MBA 570 Summer 2011

At the end of this session, you should be able to identify and describe:  A definition for CSR  Reasons for having a CSR program  Objections to CSR  What makes a CSR program  How a CSR program is communicated  Principles of reporting for CSR  Some alternative viewpoints on CSR

Corporate Social Responsibility? What is :

I think many people assume, wrongly that a company exists simply to make money. While this is an important result of a company’s existence, we have to go deeper and find the real reasons for our being. As we investigate this, we inevitably come to the conclusion that a group of people get together and exist as an institution that we call a company so that they are able to accomplish something collectively that they could not accomplish separately – they make a contribution to society, a phrase which sounds trite but is fundamental. Dave Packard Co-founder of Hewlett Packard Company in 1939

Scrooge said to the ghost of his partner Marley – But you were always a good man of business, Jacob – to which the ghost replied – Business! Mankind was my business. The common welfare was my business; charity, mercy, forbearance, and benevolence were all my business. The dealings of my trade were but a drop of water in the comprehensive ocean of my business! A Christmas Carol, Charles Dickens (1843)

Also known as: Corporate Citizenship Corporate Responsibility Responsible Business Sustainable Responsible Business (SRB)

Definition : “Specifically, we see CSR as the voluntary actions that business can take, over and above compliance with minimum legal requirements, to address both its own competitive interests and the interests of wider society.” Source:

The notion of companies looking beyond profits to their role in society is generally termed corporate social responsibility (CSR)….It refers to a company linking itself with ethical values, transparency, employee relations, compliance with legal requirements and overall respect for the communities in which they operate. It goes beyond the occasional community service action, however, as CSR is a corporate philosophy that drives strategic decision- making, partner selection, hiring practices and, ultimately, brand development. South China Morning Post, 2002

 Consumers & investors: growing expectation for organizations to behave responsibly  Consumer awareness: ‘Green’ and ‘Ethical’ consumerism  Legislation: H&S, EPA, Sustainability, Codes of Practice  Globalisation: Adoption of ‘Best Practice’, Consumer & Legal Acceptance.  Result = empowered stakeholders

Human Resources  Recruitment, retention and morale of Staff  Risk Management  Investment in ‘ethical brand equity’  ‘Greenwash’ effect? Brand Differentiation  As USP  Build brand loyalty  Reputation and brand attractiveness

Business Development  New markets, products and services Resources Management  Better management and conservation of strategic assets Stakeholder Management  Better internal and external relationships  Freedom of operation: reduce government, public, NGO intervention in organization

adds value Corporate Social Responsibility:

 May take management focus away from core business activity  Restricts the free market goal of profit maximization  Business is not equipped to handle social activities  May appear cosmetic – without genuine social benefit  May make organization more vulnerable to revelation of bad / unethical business practice  A restriction to free trade? (does it limit the ability to compete in a global marketplace?)

Economist, Milton Friedman says: “The social responsibility of business is to increase its profits.” “What does it mean to say that "business" has responsibilities? Only people can have responsibilities.” “…in a free society there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud."

 Specialist ‘adopted’ projects  Corporate charitable donations  Voluntary schemes for staff  Staff fundraising activities  Changes to organizational operations

ResponsibilitySocietal Expectation Examples EconomicRequiredBe profitable. Maximize sales, minimize costs, etc. LegalRequiredObey laws and regulations. EthicalExpectedDo what is right, fair and just. Discretionary (Philanthropic) Desired/ Expected Be a good corporate citizen.

Communicating Corporate Social Responsibility

 organizations should develop a general values statement which reflects their stance towards CSR  This may form part of a more comprehensive Mission Statement  Should define ethical framework that guides the accomplishment of the overall mission of an organization within a society

Example: organizational Focus JP Morgan Chase

Example: Environmental Focus Coca Cola

Example: Customer Focus Home Depot

Example: Employee Focus Johnson and Johnson

Example: Stakeholder Focus Credit Suisse United Technologies

Example: Social Focus Bristol-Myers Squibb

CSR projects may be administered and communicate achievements via:  A dedicated CSR section or department  The HR department  Business development section  Public Relations department  Directly via CEO and / or Board of Directors

 Concept developed by John Elkington in 1994  Expects organizations to be responsible to ‘stakeholders’ interests rather than ‘shareholders’ profit  Related concepts: ◦ Full-cost accounting ◦ Social entrepreneurialism ◦ Social and natural capital

This means expanding the traditional reporting framework to take into account performance in terms of:  Social (People)  Environmental (Planet), as well as  Financial (Profit)

◦ CSR can really be discussed as separate areas for a business… Corporate governance and access to capital Human capital management: Getting better people and keeping them Doing business honestly – effective measures against corruption Improving community relationships and building a bank account of trust Communicating well with consumers, and treating them right Better environmental and social risk management Cost savings via environmental efficiencies Better relations with governments, at home and abroad A great way to find new opportunities for products and services VIDEO Stakeholder theory: capitalism/index.cfm (19-24mins) capitalism/index.cfm ◦ “Opportunity” Examples include: BP, Unilever, Marks and Spencer, Nike, Waitrose, Timberland, Cadbury, Sky, and many others

In India, it often means working with NGOs, taking a philanthropic approach In Colombia, it can mean helping with post conflict reconstruction and societal rebuilding In South Africa, it can mean building up a supply base, that is both economically sustainable and worker-friendly – and helping tackle HIV / Aids. In France, it can mean picking up where the government has failed on some social issues, negotiated agreements on working hours and conditions, and environmental issues In Ukraine, it can mean sponsoring church rebuilding, book publishing and encouraging basic skills improvements in the workforce, alongside health and safety Finally, in Cambodia, it can mean a partnership with the ILO, NGOs and IGOs to create a ‘cluster’ of factories where labour standards and union rights are respected.

CSR can only be resilient if it is part of the DNA of an organization, i.e. CSR will only survive the vagaries of fickle markets, fluctuating profits, financial crises and leadership whims if it is totally embedded in the corporate culture, strategy and governance systems” – Wayne Visser, 2008 Copyright CSR International / Wayne Visser 2010 Environmental Integrity Societal Contribution Good Governance Value Creation CSR 2.0

‘Sustainability Guidelines’ developed by the Global Reporting Initiative ( SA800 certification developed by the international human rights organization Social Accountability International. (

The Green Globe program for ‘benchmarking, certification and performance improvement’, based on Agenda 21 proposals from the 1992 Rio Earth Summit ( ISO international environmental management standards (

The United Nations Global Compact (UNGC) framework and mechanism designed to encourage businesses to adopt CSR policies ( The FTSE 4 Good Index – measures the performance of companies who meet globally recognised CSR standards. ( 4Good_Index_Series)

In this session we have looked at:  What is CSR  Why CSR is likely to be come more widely adopted  The business case for CSR  The Value Statement (Customer, Employee, Stakeholder and Social focus)  Reporting and Accountability options for CSR including the ‘Triple Bottom Line’ concept  CSR and social criticism of international organizations