Corporate Social Responsibility LECTURE 27: Corporate Social Responsibility MGT 610 1

Corporate Social Responsibility 2 Chapter 7 SUSTAINABILITY AND ITS CHALLENGES

Corporate Social Responsibility 3 LEARNING OBJECTIVES Understand capitalism and the relationship between capitalism and sustainability Understand the efforts to measure sustainability Know the difficulties faced in the implementation of measurement frameworks

Corporate Social Responsibility 4 Globalization is not a passing trend Impacting and shaping all aspects Understanding of globalization should guide every activity that deals with socio economic factors Globalization is based on the concept of capitalism Capitalism needs responsible business as an ally Lack of regulations resulted in capitalism becoming exploitative as greed for more increased Socialism Vs Capitalism It is apparent that a middle path is needed for sustainable development Conspicuous consumption Vs annihilation of human freedom Selfish exploitation of resources would result in lopsided growth in the society Promoting restriction cannot be justified Equality of poverty should not be the objective but a culture of hand holding should be encouraged

Corporate Social Responsibility 5 Capitalism Business has to realize that they owe a social obligation If the social system is destroyed in the rush for economic growth? Capitalism promised freedom and a life that would be comfortable and self fulfilling It answered the mans aspirations to move beyond the basic needs To achieve this objective rationalism explained as self interest not selfishness soon replaced emotions and values To judge a activity, ask a a question what would I gain? Capitalism is based on the forces of supply and demand Utilitarianism ethics is achieved when individuals are allowed self interest Duty based morality is ignored and authority and persuasion is accepted Example: tragedy of the commons Capitalism and socialism failed to delivered the goods that they promised

Corporate Social Responsibility 6 Capitalism In socialism freedom of spirit is more important than control, hence socialism failed and lost its enchantment Capitalism has t reinvent – every one should enjoy their life as long as they take care that others enjoy the same freedom Capitalism cannot depend on charity but it has to make ethical behavior mandatory for corporations Build symbiotic relationship Humanizing capital Capitalism forgot interdependencies Contrary to the belief of competition i.e. can never result in a win win situation To make competition more endearing, level playing fields are created The prerequisite of this field is collaboration that requires development of spirit of sharing Business needs to have a human face Based on trust Freedom has to be used responsibly

Corporate Social Responsibility 7 Humanizing capital This should be the driving force behind globalization Improving the quality of life Reality – globalization has resulted in disparity between the rich and the poor CSR demands that the business embrace globalization to create a perfect world Equal distribution Transparent flow of information and products and human beings between the geographical borders Capitalism and globalization cannot lead to economic and ethical imperialism Lack of host countries stringent rules resulting from lack of resources Guiding factor for business is the value foundation List of moral rights that organization must practice as moral minimum Rational empathy test

Corporate Social Responsibility 8 Corporations must realize that CSR is not charity and cannot work on Robin Hood principle Pseudo NGOs Don’t make profits the mantra Sustainability will become an issue if that is the case Human subdued to business rather than the other way Danger of profits becoming the only driving force as long as business remains within rules Who makes the rules and who monitors? CSR cannot remain philanthropy but has to be woven Capitalism has to look beyond materialistic world towards the human aspect