Today1. Presentation

2. Break 3. Discussion of Readings

4. Assignment 1 CSR Symbols

Session I

CSR Concepts &

Frameworks

Cyrlene Claasen

cyrlene.claasen@esc-rennes.fr

Content1. CSR Definitions

2. Related Concepts

3. Drivers of CSR

4. Carroll’s Theoretical Framework

5.General Framework

Academic (1)

Friedman (1962)

There is one and only one social responsibility for 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

Only individuals can have social responsibilities

Social progress (e.g. health, longevity, etc.) is a consequence of free enterprise and free trade

1 – CSR Definitions

Academic (2)

Carroll (1979) The social responsibility of business encompasses the

1) economic, 2) legal, 3) ethical and 4) discretionary

expectations that society has of organizations at a given point in time

1 – CSR Definitions

Academic (3)

Porter & Kramer (2006) Strategy & Society: The Link Between Competitive Advantage and Corporate Social Responsibility, Harvard Business Review

The shared value model: idea that corporate success and social welfare are interdependent

– Businesses needs an educated workforce, sustainable resources and a robust government to compete effectively, whereas

– Society needs profitable and competitive businesses to create jobs, income, tax revenues, and wealth for all

The “Creating Shared Value” approach (CSV) focuses on building a social value proposition into corporate strategy

Examples of companies linking strategy and CSR in the article

1 – CSR Definitions

Academic (4)

Epstein (2008)

CSR relates primarily to achieving outcomes from organizational decisions concerning specific issues or problems, which by some normative standard have beneficial rather than adverse effects upon pertinent corporate stakeholders

The normative correctness of the products of corporate action have been the main focus of CSR …

1 – CSR Definitions

International Institutions (1) European Commission (MEMO/09/109 issued on 16/03/2009) CSR is “a concept whereby companies integrate social and environmental concerns in their business operations and in their

interaction with their stakeholders on a voluntary basis” This approach is consistent with the EU's so-called Lisbon Strategy

“CSR is always about going beyond the law”

“Ideally, CSR is a win-win scenario, whereby companies increase their profitability and society benefits at the same time”

1 – CSR Definitions

International Institutions (2)

World Bank (WB)

[CSR is] the commitment of business to contribute to sustainable economic development, working with

– employees, – their families, – the local community and – society at large

to improve quality of life in ways that are both good for business and good for development

1 – CSR Definitions

Networks (1)

International Institute for Sustainable Development (IISD)

CSR should be seen as the way that firms – working with those most affected by their decisions (often called “stakeholders”) – can develop innovative and economically viable products, processes and services within core business processes, resulting in improved environmental protection and social conditions ...

1 – CSR Definitions

Networks (2) ASEAN’s CSR Network

(Association of South-East Asian Nations)

CSR requires a legal framework that promotes openness, partnerships and democratization

Aim: to help bring about shared prosperity and a sustainable future to the ASEAN region (Brunei, Burma / Myanmar, Cambodia, Laos and Vietnam); to promote community building by promoting close collaboration among the business sector, civil society, academia and other stakeholders in the region

1 – CSR Definitions

Networks (3)

UNIDO’s Regional CSR Network (United Nations Industrial Development Organization)

Ensures that CSR supports, and does not undermine, the development of small and medium sized enterprises (SMEs) in developing countries as it is crucial for meeting the goal of improving the impact of business on society

1 – CSR Definitions

Example of a Company Website

Bloomberg Businessweek:

Corporate social responsibility is a way of managing a business by considering the impact of activities on – customers, – suppliers, – employees, – shareholders, – communities and other stakeholders, and – the environment

1 – CSR Definitions

Questions

Can you identify some major differences between all these definitions?

Are there common points shared by all of them?

What are the possible problems related to having such a vast array of CSR definitions?

Taking into consideration the geographic region where you come from, which would be the most relevant one?

1 – CSR Definitions

Responsibility / Responsiveness

Corporate social responsibility – emphasizes obligation and accountability to society

Corporate social responsiveness – emphasizes action, activity

Corporate social responsiveness is a business's capacity to respond to social pressures

This suggests the ability of a business organization to survive through adaptation to its business environment

The term is an inclusive and global concept which embraces the complete spectrum of socially beneficial activities of business

2 – Related Concepts

Corporate Social Performance: Principles, Processes and Outcomes

Wood, 1991: Corporate social performance is “a business organization’s configuration of principles of social responsibility, processes of social responsiveness, and policies, programs and other observable outcomes as they relate to the firm’s societal relationships”

This definition was further developed so that each of the three components – principles, processes and outcomes – are each composed of specific elements

2 – Related Concepts

The problem of the CSP – FP link (Corporate Social Performance – Financial Performance)

Does it pay to be ethical? We don’t know Whereas some studies report a positive relationship between ethics and profits, some find a negative relationship and some find the relationship either neutral or mixed

It is hard to draw broad conclusions about the relationship between CSR and profits because the studies often measure different things; Margolis and Walsh (2001) have shown in their summary of 95 studies that CSP is measured in many different ways

There might be a correlation between CSP and FP, but the existence of a causal link has not been proved

McWilliams & Siegel (2001) find that there is a neutral relationship between CSR and FP

2 – Related Concepts

Legitimacy (1) The legitimacy of business is linked to its obligations to

society and to the sanctions that society can apply to business when it fails to live up to these obligations

The most often cited definition is that of Suchman (1995):

“Legitimacy is a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions”

3 – Drivers of CSR

Legitimacy (2) According to the “Iron Law of Responsibility” (Davis):

Economic power entails social responsibility

Society grants legitimacy and power to business; in the long run, those who do not use power in a manner which society considers responsible will lose it

However, some challenge this view because defining the terms of legitimacy as a contested process and the norms of legitimacy are an outcome of power relations

3 – Drivers of CSR

License to Operate

It is usually seen as the approval that companies must obtain from local communities or other stakeholders in areas where they operate (as compared to the legal license they must obtain from governments)

CSR policies, projects or initiatives do help to obtain the social licence to operate

It is crucial notably for extractive industries, which often directly impact local communities by exploiting their land, subsoil, and other resources

A “social licence to operate” is earned by acquiring free, prior and informed consent from indigenous peoples and local

communities

3 – Drivers of CSR

Image / Reputation (1)

The implementation of a CSR approach usually enhances the brand image and reputation of a business

Consequently, over time, it leads to an improvement in sales and customer loyalty

And it also leads to an increased ability to attract and retain (the best) employees

By capitalizing on it, a company can improve its financial performance and attract more investments

3 – Drivers of CSR

Image / Reputation (2)

However, companies are often accused of instrumentalizing CSR to improve their image or reputation

There are serious dangers associated with paying lip service to stakeholders and considering CSR as a mere PR exercise (“greenwashing”, “window dressing”…)

This may cause a loss in credibility and destroy very quickly the company’s image

Whereas building a good reputation takes a long time, tarnishing it is a matter of days or hours…

3 – Drivers of CSR

Image / Reputation (3)

“Greenwashing” happens when disinformation is disseminated by an organization so as to present a (false) environmentally responsible image of itself

Making exaggerated environmental claims in order to obtain consumer favor is one of the worst things a company can do in the eyes of the sustainability community

When a company that has been lauded for its environmental performance is revealed to be engaging in environmentally dangerous practices, it provides skeptics with the fodder they need. Can you think of an example?

Even when the claims are found to be inflated (or impossible to substantiate), credibility is lost

3 – Drivers of CSR

Workplace Issues

Research demonstrates that CSR initiatives have a positive impact on employee morale, motivation, commitment, loyalty, training, recruitment and turnover

Benefits in these areas have been found to improve the bottom line of companies

Three surveys across Europe, the USA and a survey involving 25 countries found employees felt greater loyalty, satisfaction and motivation when their companies were socially responsible

3 – Drivers of CSR

Risk reduction

Companies with non-sustainable supply chains may experience financial, integrity and reputation issues

(e.g. Mattel in 2007 when a supplier used lead-contaminated paint on toys)

Green procurement strategiesPurchasing of green energy, raw materials with a higher recycled content, etc.

“Greening the supply chain” refers to buyer companies requiring a certain level of environmental responsibility in the core business practices of their suppliers and vendors

3 – Drivers of CSR

Reduced internal costs And revenue growth

Energy efficiency, green projects and other eco-friendly initiatives

Implementation of sustainable practices in design, production, distribution and end-of-life management

Enhanced brand reputation

Employee motivation

Customer satisfaction

All these policies, processes and outcomes guarantee savings and increase cost avoidance

3 – Drivers of CSR

4 – Carroll’s CSR Pyramid

5 – General Framework