CORPORATE SOCIAL

RESPONSIBILITY

Corporate Social Responsibility

refers to a corporation’s responsibilities or obligations toward society.

Whose interests should a company be responsible for?

Views on CSR

Shareholder

Stakeholder

Shareholder View

a company’s only responsibility/obligation is to (legally and ethically) “make as much money as possible” for its owners

The Purpose of Business is to make money for the owners or stockholders.

Assumptions of the Shareholder View compliance with regulations natural constraints of the market will

help keep companies in check. (i.e. if a company is known to be dishonest or terrible to their employees, then consumers will not buy from that company.)

Shareholder View Companies ultimately provide great benefits for

society. When a company tries to maximize stockholders’

profits in a “free-enterprise” economy, competition will force it to use resources more efficiently than competitors, to pay employees a competitive wage, and to provide customers with products that are better, cheaper, and safer than those of competitors.

So when managers aim at maximizing profits for stockholders in competitive markets, the companies they run will end up benefiting society.

Arguments for Shareholder View

1. Executives/Managers have a fiduciary Responsibility to its stockholders

2. Selfish Businesses Actually Promote Overall Well-Being

3. Actions that benefit society is the government’s responsibility

4. Businesses people are not moral authorities

Views on CSR

Shareholder

Stakeholder

Stakeholder View

Companies should give all its stakeholders a fair share of the benefits that they produce

Stakeholder View

A stakeholder is any identifiable group or individual who can affect the achievement of an

organization’s objectives or; is affected by the achievement of an

organization’s objectives.

Arguments for Stakeholder View

1. People who own stock in a business are not the only people who stand to gain or lose something when businesses make decisions

2. Utilitarianism (non-egoism)

3. Not all which are legally allowed are morally permissible

CSR a concept whereby organizations

consider the needs of all stakeholders when making decisions.

CSR extends beyond legal compliance to include voluntary actions that satisfy stakeholder expectations.

Example of a Corporate Mission Statement

“We are a leading, dynamic Filipino financial services group with a global presence committed to delivering a whole range of quality products and services that will create value and enrich the lives of our customers, employees, shareholders and the communities we serve.”

STAKEHOLDERS

Stakeholders Customers Suppliers Stockholders Employees Communities

Customers Safe, high-quality products that are fairly

priced. Competent, courteous, and rapid

delivery of products and services. Full disclosure of product-related risks. Easy-to-use information systems for

shopping and tracking orders

Suppliers Fair contract terms and prompt

payments. Reasonable time to prepare orders. Hassle-free acceptance of timely and

complete deliveries. Cooperative rather than unilateral

actions.

Stockholders Competent management Easy access to complete and accurate

financial information. Full disclosure of enterprise risks. Honest answers to knowledgeable

questions.

Employees Safe and humane working conditions. Nondiscriminatory treatment and the

right to organize and file grievances. Fair compensation. Opportunities for training, promotion,

and personal development.

Communities Payment of fair taxes. Honest information about plans such as

plant closings. Resources that support charities,

schools, and civic activities. Reasonable access to media sources.

What is CSR?

CSR is a concept whereby companies integrate social and environmental concerns in their business operations and in their interactions with their stakeholders on a voluntary basis.

~European Commission

What is CSR?

CSR is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large.

~World Business Council for Sustainable Development

Dimensions of CSRINTERNAL DIMENSION Focuses on organizational practices

with respect to internal stakeholders that should be aligned to CSR standards

Human Resource

Management

Adaptability to Change

Health and Safety

Impact on the Environment

Dimensions of CSREXTERNAL DIMENSION Focuses on organizational practices

with respect to external stakeholders that should be aligned to CSR standards

Human Rights

CommunityBusiness Partners

Domains of CSR

Concentric Circle Model by the Committee on Economic Development (1971) summarized by Archie B. Carroll.

INNER CIRCLE:

Focus: Production, jobs and economic growth

INTERMEDIATE CIRCLE:

Examples - Environmental conservation, hiring and relations with employees; and more rigorous expectations of customers for information, fair treatment, and protection from injury

OUTER CIRCLE:

Examples – Fight against poverty, environmental advocacy and philanthropy.

Carroll’s CSR Pyramid

Economic Responsibility

Economic Responsibility

It is important to perform in a manner consistent with

maximizing earnings per share

It is important to be committed to being as profitable as

possible

It is important to maintain a strong competitive position

It is important to maintain a high level of operating efficiency

It is important that a successful firm be defined as one that is

consistently profitable

Legal Responsibility

Legal Responsibility

It is important to perform in a manner consistent with expectations of

government and law

It is important to comply with various federal, state, and local

regulations

It is important to be a law-abiding corporate citizen

It is important that a success firm be defined as one that fulfills its legal

obligation

It is important to provide goods and services that at least meet minimal

legal requirements

Ethical Responsibility

Ethical Responsibility

It is important to perform in a manner consistent with expectations of societal

mores and ethical norms

It is important to recognize and respect new or evolving ethical moral norms

adopted by society

It is important to prevent ethical norms from being compromised in order

achieve corporate goals

It is important that good corporate citizenship be defined as doing what is

expected morally or ethically

It is important to recognize that corporate integrity and ethical behaviour go

beyond mere compliance with laws and regulations

Philanthropic Responsibility

Philanthropic Responsibility

It is important to perform in a manner consistent with the philanthropic and

charitable expectations of society

It is important to assist the fine and performing arts

It is important that managers and employees participate in voluntary and

charitable activities within their local communities

It is important to provide assistance to private and public educational institutions

It is important to assist voluntarily those projects that enhance a community’s

quality of life.

CSR ISSUES

CSR Issues

Sample CSR Issues for XYZ Company Corporate Accountability & Transparency Socially responsible Investing Community Development Work Life Balance Job Security Environment

Criteria to Evaluate CSR Issues

Internal SignificanceHow important the issue is to your

company? External Significance

What is important to Stakeholders?

Materiality Matrix for XYZ Company

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Importance to Business

Importance to Stakeholders

END

CSR In the Philippines

Approaches to CSR

Philanthropy

Integration of CSR into Business Strategy

Creating Shared Value

Integration of CSR into Business Strategy i.e.

Fair TradeTatak Pinoy SealRisk ManagementOccupational Safety and HazzardEnvironmental StandardsFair labor practices

Creating Shared Values

The central premise behind creating shared value is that the competitiveness of a company and the health of the communities around it are mutually dependent.

Mechanism:Reconceiving products and markets Redefining productivity in the value chainEnabling local cluster developmen

Creating Shared Values The central premise behind creating shared value

is that the competitiveness of a company and the health of the communities around it are mutually dependent.

Mechanism: Reconceiving products and markets 

○ Providing what society needs efficiently Redefining productivity in the value chain

○ Act as a steward for essential natural resources and drive economic and social development

Enabling local cluster development○ Companies do not operate in isolation from their surroundings