COBCSRG: CSR AND GOVERNANCE

NOTES
JANUARY 8, 2024 JANUARY 18, 2024
What is Corporate Social Responsibility (CSR)?
ORIENTATION
➔​ RESPONSIBILITIES that a business has to the society in which it
DATES operates.
JAN 11 - CSR team activity: CSR word cloud activity and presentation; ➔​ Economic perspective:
CSR curses (for small teams) A.​ An institution that exists to produce goods and services
JAN 22 - CSR group activity: Creation of SL demanded by society.
proposal (to be posted on Canvas B.​ It creates jobs and wealth that benefit society further.
discussion board) C.​ Corporations, which limits the liability of individuals for
JAN 29 - Submission of approved proposal the risks involved in the business activities.
*drag your name in respective teams (canvas)
ALL SUBMISSIONS SHOULD BE SUBMITTED ON OR BEFORE APRIL 4.
What Exactly is CSR?
SL PROJECT
-​ A project that aims to address the problems of the given ●​ A long-term strategy.
organization through a program. ●​ Aligns business strategy and operations with universal values.
●​ Leads to a fundamental transformation of strategies,
FOR GROUPINGS
operations, relationships, corporate culture, and identity.
3 subgroups ●​ A proactive strategic planning, not defensive communication.
1.​ Documentation ●​ Includes philanthropy – but it is much more.
2.​ Finance
3.​ Logistics
*SL Outputs - pass it in both Canvas and Google drive with their Different Meanings of the Word RESPONSIBLE
respective name formats.
*SL Outputs - you don’t have to input everything in docs, you can use 1.​ Reliable or trustworthy.
powerpoint or canva. 2.​ Attributing something as a cause for an event or action.
3.​ Attributing liability or accountability for some event or action,
*SL Reflection - always include pictures.
creating an obligation to make things right again.
JANUARY 11, 2024
Types of Responsibilities
CORPORATION SOCIAL RESPONSIBILITY
1.​ Duty or ➢​ In order to indicate that they oblige us
●​ Introduction to Corporate Social Responsibility
Obligation in the strictest sense, is the
What is the purpose of a Business? responsibility not to cause harm to
➔​ We are not in the business to make maximum profit for our others.
shareholders. We are in business … to serve society. Profit is our
reward for doing it well. If business does not serve society, 2.​ To prevent ➢​ Even in those cases where one is not
society will not long tolerate our profits or even our existence. - harm the cause.
Kenneth Dayton, former Chairman of the Dayton-Hudson
3.​ To do good ➢​ (Volunteer and charitable work)
Corporation
➔​ You never expect justice from a company, do you? They neither
have a soul to lose nor a body to kick. - Sydney Smith, Social Responsibility
1771-1845, English writer, clergyman ➔​ Responsibility as accountability: Heart of CSR
➔​ Business has to take account of its responsibilities to society in ◆​ Actions for which a business can be held accountable.
coming to its decisions, but society has to accept its ◆​ To be concerned with society’s interests that should
responsibilities for setting the standards against which those restrict or bind business’s behavior.
decisions are made. - Sir Adrian Cadbury ◆​ What a business should or ought to do for the sake of
➔​ By ‘social responsibility,’ we mean the intelligent and objective society, even if this comes with an economic cost.
concern for the welfare of society that restrains individual and
corporate behavior from ultimately destructive activities, no CSR IS NOT PHILANTROPHY
matter how immediately profitable, and leads in the direction of ➔​ Because Philantrophy doesnt last long, it doesnt improve
positive contributions to human betterment, variously as the the people’s well-being long-term (it’s not sustainable)
latter may be defined. - Kenneth R. Andrews

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Corporate Social Responsibility Models 3.​ Model of CSR Hartman, Desjardin
1.​ Carroll’s Pyramid of CSR ➔​ This figure is not different from the pyramidic model.
➔​ One of the earliest models of CSR. ➔​ When you draw the pyramid, it is inverted.
➔​ Carroll (1991) proposed the CSR pyramid which posits four basic ➔​ Topmost is economic which is the bottom of the pyramid.
components of CSR: ➔​ Integrative is the tip of the pyramid = value creation.
◆​ Economic - producing goods and services for profit.
◆​ Legal - obeying the law while attempting to make profit.
◆​ Ethical - behaving in accordance with societal norms
embodies in the law.
◆​ Philanthropic - going beyond the profit motives to act as a
good corporate citizen and living up to the societal
expectations.

CSR - Exploring Enlightened Self-Interest

2.​ CSR Pyramid 2.0 (Carsten Ingerserv, 2010) ➔​ Improve profitability by enhancing a company’s standing among
➔​ The development of this model, from Carroll to Carsten, is that its stakeholders, including consumers and employees.
he added another set of layers to the pyramid. ➔​ Positive impact stemming from customer preference and
➔​ When Carroll’s tip is Philanthropy, the tip is value creation, which employee preference.
many business students use. ➔​ Reputation management: The practice of attending to the
“image” of a firm through CSR activities
◆​ Good image for itself, it builds a type of trust bank
◆​ Negative image, may stick, regardless of what good the
corporation may do.

The Construction of Corporate Reputation

➔​ Reputation (also known as corporate reputation) can be defined
as the product of collective judgments in relation to a company’s
past actions and future prospects and its ability to create value in
relation to competitors
➔​ Six reputation dimensions are evaluated by the RQ: emotional
appeal; vision and leadership; financial performance; workplace
environment; social responsibility; and products and services.

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Curses of Modern CSR or CSR 1.0

Web 1.0 and CSR 1.0

Is CSR Good for Business?

➔​ From David Vogel, a political science professor at Berkeley:
◆​ There is a market for firms with strong CSR missions.
◆​ It is a niche market: Caters to only a small group of
consumers or investors.
◆​ CSR business strategy may or may not be appropriate for Transformative CSR - Web 2.0 and CSR 2.0
certain types of firms under certain conditions.
◆​ Exposure of a firm might suffer if it then does not live up to
its CSR promises.
◆​ Becoming cautious when investing in CSR when consumers
are not willing to pay higher prices to support that
investment.

CSR Stages (Wayne Visser)

Transformative CSR - Principles

Principles - Creativity
1.​ Defensive CSR - The Age of Greed
2.​ Charitable CSR - The Age of Philanthropy
1.​ Creativity ➢​ Directed to solving the world’s social
3.​ Promotional CSR - The Age of Marketing and environmental problems.
4.​ Strategic CSR - The Age of Management
5.​ Transformative CSR - The Age of Responsibility 2.​ Scalability ➢​ Increase in application.
Ages and Stages of CSR (Wayne Visser) ➢​ Not limited to a few case studies and
PRs.

3.​ Responsiveness ➢​ Is the business model part of the

solution or part of the problem?
➢​ Require transparency.

4.​ Glocality ➢​ Global localization, “Think Global, Act

Local.”
➢​ Understand local context and find local

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◆​ Helps us decide how we ought to act in a range of
solutions aligned with universal
principles. situations.

5.​ Circularity ➢​ Design economy where everything is

Making Decisions
engineered to constantly recycle.
➢​ “Crade to Crade” aspirations.
1.​ Consequentialist ➢​ Focusing on the results of an action.
➢​ Utilitarian Approach
○​ Most common/Concerns large
Ontological Shift
group of people.
●​ CSR as affordable solutions for those who most need quality ○​ Weigh the different amounts of
of life improvements. good vs bad.
●​ Investment in self-sustaining social enterprises will be favored
over cheque-book charity. 2.​ Duty-based ➢​ Non-consequentialist
➢​ Deontological ethics
➢​ Duties and obligations we have in a
situation.
➢​ Doing one’s duties and doing the
right thing.
➢​ Moral duties regardless of outcomes.
➢​ Can be rigid in applying the notion of
duty to everyone regardless of
personal situation.

3.​ Virtue ethics ➢​ Agent-centered

➢​ Character traits (either + or - ) that
motivate in certain situations.
➢​ Ask what sort of persons one should
be.
➢​ Emphasizes role models and
education to behavior.
DNA Model of CSR 2.0 ➢​ Sometimes reinforce cultural norms
as standard of ethical behavior.

●​ Ethics of Care
➔​ Agent-centered
➔​ Feminist approach
◆​ Experiences of women and other marginalized groups.
➔​ Anti-consequentialist
➔​ Actions highlighting interpersonal relationships and care or
benevolence as virtue.

The Trolley Problem

➢​ How we deal with our dilemma through ethical frameworks.

JANUARY 22, 2024

ETHICAL FRAMEWORKS 1.​ Scenario 1 - ➢​ Duty-based approach (deontological

Saving a Life ethics)
●​ Making Decisions ○​ Non-consequentialist.
➔​ Right and wrong ○​ Ethical action based on one’s
➔​ Ethics duty.
◆​ Standards for behavior. ○​ Obligation to perform the
action.

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➔​ Overworking, underpayment.
2.​ Scenario 2 - ➢​ Utilitarian approach
Saving 1 vs 5 ◆​ Terms we often use to joke on these things: “OTY”, “Aliping
○​ Consequentialist
Lives/Saving saguiguilid”
○​ Action that will produce
many lives
greatest benefit, least harm.
➢​ Common good approach Employee at Will in the U.S. In the Philippines
➢​ Choose the lesser evil.
➔​ Employers are free to fire ➔​ Normally, given 30-days or so
3.​ Scenario 3 - ➢​ Ethics of Care an employee at any time before he or she leaves the
Saving Lives vs ○​ Focus our decision on those and for any reason. organization.
Loved ones important to us. ➔​ Employee may opt to ➔​ When an employee is
○​ Appeals to caring motivation leave a job at any time for retrenched, he or she is given
and emotion. any reason. an agreed. compensation
○​ Choose the one you love over ➔​ If not in mutual agreement,
the many. they go through litigation
mediated the Department of
Labor and Employment.
CORPORATE SOCIAL RESPONSIBILITY AND EMPLOYEES

➔​ "We can invest all the money on Wall Street in new technologies, Letting go of employees
but we can't realize the benefits of improved productivity until ➔​ Challenges the employer in their ethical decision.
companies rediscover the value of human loyalty." - Frederick ◆​ UTILITARIAN APPROACH
Reichheld, Director, Bain & Co. ◆​ DEONTOLOGICAL APPROACH
➔​ “There are now more slaves on the planet than at any time in
human history. True abolition will elude us until we admit the Role of due process in performance appraisals
massive scope of the problem, attack it in all its forms, and ➔​ Constant supervision and evaluated.
empower slaves to help free themselves.” - E. Benjamin Skinner, ➔​ Benefits to motivate or sanction.
“A World Enslaved” ◆​ Salary, work conditions, promotions
➔​ Fair treatment in the workplace.
●​ Employee Security
➔​ Most significant aspect of work from the employee’s ethical Downsizing
perspective. ➔​ Most emotional part for employees and corporate
Fundamental questions of justice arising… decision-makers.
➔​ Are they subjected to harm from lack of security in their jobs? ➔​ Alternatives may pose a more effective option from the
➔​ Do not have much power to create security? perspective of all stakeholders involved.
➔​ Ethical downsizing
◆​ Should be represented.
Due Process
●​ Earn trust of employees
➢​ The right to be protected against the arbitrary use of authority. ●​ Visible leaders
◆​ Employees should be kept aware.
◆​ Intent to downsize should be made known as soon as it is
Due Process in the Workplace
determined.
➔​ Acknowledges an employer’s authority over employees.
◆​ Look at the legalities.
➔​ Employer’s exercising control to discipline or fire and employee.
➔​ Questions on ethical downsizing
➔​ Implementation of basic fairness.
◆​ Productivity and quality are likely to suffer
➔​ But not often exercised:
◆​ Uncertainty and rumors are sure to develop between the
◆​ Bullying
announcement of downsizing.
◆​ Mistreatment
◆​ Allowing a worker to remain in a position for a period of
time once she or he has been notified of impending
Employee Experiences in the Workplace
termination – is not the best option.
➔​ Emotional abuse, loss of personal dignity.
➔​ Intimidation, fear.
Employee health and safety
➔​ Forced to do unethical actions.
➔​ Health and safety are “goods” that are valued both as a means
➔​ Discrimination.
for attaining other valuable end as ends in themselves.
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➔​ Intrinsic value: death can be measured by part in lost wages
which can’t be replaced by financial compensation. JANUARY 25, 2024
➔​ Ethics of employee health and safety
CSR AND CUSTOMER SEGMENTS: CONSIDERING THE SUPPLY
◆​ Discussing risks
CHAIN
●​ “Risks” can be defined as the probability of harm.
●​ “Relative risks” is determined by comparing the ●​ What is a Supply Chain?
probabilities of harm involved in various activities. ➔​ Involves the transformation of natural resources, raw materials,
and components into a finished product that is delivered to the
end customer.
➔​ A network between a company and its suppliers.
➔​ Produce and distribute a specific product to the final buyer.
➔​ Network includes:
◆​ Different activities
◆​ People and entities
➔​ Occupational Safety and Health Standards ◆​ Information and resources
◆​ Department of Labor and Employment. ➔​ Climate change poses a new risk to supply chains and a need to
◆​ OSHSA - R.A. 11058 increase their resilience.
◆​ Inform employees on all types of hazards in the workplace
and having the right to refuse unsafe work, as well as ●​ What is a Sustainable Supply Chain?
providing facilities and personal protective. ➔​ Business issue affecting an organization’s supply chain or logistics
◆​ Help curb the increasing cases of diseases and injuries in network in terms of environmental, risk, and waste costs.
the work environment that confront the country (PSA, ➔​ Integrating the environmentally sound choices into supply- chain
2015) management.
●​ Back pain (32.8%) ➔​ A sustainable supply chain seizes value creation opportunities
●​ Hypertension (11.5%) and offers significant competitive advantages for early adopters
●​ Neck and shoulder pain (11.4%) and process innovators.

The Global Workforce Tiers of Sustainable Supply Chain

➔​ Challenges in the Global Workforce? 1.​ Getting the Basics Right
◆​ Child labor: forced, trafficked, sexually exploited. ➢​ This is the base level and is the stage in which the majority
◆​ Discrimination: Women, LGBTQ, stereotyping of organizations are at.
◆​ Modern day slavery ➢​ Employing measures such as switching lights and PCs off
➔​ What can we do? when left idle, recycling paper, and using greener forms of
◆​ Promote DIVERSITY and INCLUSION travel with.
●​ Acknowledge multiple cultures ➢​ Purpose of reducing the day-to-day carbon footprint.
◆​ Use AFFIRMATIVE ACTIONS ➢​ Employ self-service technologies such as centralized
●​ Respond to instances of past discrimination by procurement and teleconferencing.
implementing proactive measures to ensure equal
opportunity. 2.​ Learning to think sustainably
●​ Analyze the top of supply chain if it is truly the ➢​ Companies begin to realize the need to embed sustainability
purpose of the business. into supply chain operations.
➢​ Companies tend to achieve this level when they assess their
impact across a local range of operations.
➢​ In terms of the supply chain, this could involve supplier
management, product design, manufacturing
rationalization, and distribution optimization.
➢​ Shortening supply chains can be part of a sustainable supply
chain strategy.
➢​ Example: Single origin coffee beans are part of a niche
market that benefits producers who can earn a higher wage
for high quality products.

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3.​ The science of sustainability
goals.
➢​ Uses auditing and benchmarks to provide a framework for ➢​ Encourage first- and lower-tier
governing sustainable supply chain operations. suppliers to take advantage of
➢​ Clarity around the environmental impact of adjustments to sustainability training programs
supply chain agility, flexibility, and cost in the supply chain offered by industry organizations.
network.
➢​ Driven by the current climate (in which companies recognize 4.​ Global ➢​ Work closely with relevant NGOs and
Approach international institutions interested in
cost savings through green operations as being significant)
improving supply chain sustainability.
as well as pushing emerging regulations and standards at ➢​ Use tools and data that those
both an industry and governmental level. organizations provide for dealing with
suppliers (contracts and scorecards).
➢​ Recognize suppliers that excel in
Encouraging sustainable practices throughout the networks - programs sponsored by NGOs and
Approaches international institutions.

CORPORATE GOVERNANCE

●​ What is Corporate Governance?

➔​ Broadly speaking, Corporate Governance refers to the processes
which enable the top management of a corporation –
particularly the board of directors, most commonly elected by
the stockholders – to direct, monitor, and control the activities of
operating management in order to achieve the strategic vision of
a corporation.
➔​ Corporate Governance means slightly different things to
different entities:
◆​ In the US, directors are more likely to define their role as
1.​ Direct Approach ➢​ Evaluate first-tier suppliers by using running the company for the benefit of the shareholders.
sustainability performance indicators
◆​ In Germany, directors are more likely to frame their duty in
that capture their requirements for
lower-tier suppliers. terms of their allegiance to the company.
➢​ Survey suppliers on their ◆​ In Japan, directors may give precedence to stakeholders’
environmental, health, safety, and interests representing employees, customers, suppliers,
labor practices and on their and the communities.
procurement practices.
➢​ Work with major first-tier suppliers to Theoretical Perspectives on Corporate Governance
map the firm’s supply network.
➔​ Agency Theory:
2.​ Indirect ➢​ Provide training and foster peer ◆​ Emphasizes the need for boards to control management
Approach learning among first-tier suppliers to against the latter’s potential for excessive self-interest to
help them improve their procurement the detriment of the stockholders.
practices with lower-tier suppliers.
➢​ Select high-performing suppliers to
pilot new sustainability initiatives.
➢​ Reward suppliers for cascading
sustainability requirements to
lower-tier suppliers.

3.​ Collective ➢​ Commit to developing and complying

Approach with industrywide sustainability
standards, and help suppliers become
full members of industry
organizations.
➢​ Via industry organizations, share
resources with competitors and major
suppliers to achieve sustainability

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➔​ Structure of a Corporation. Scandals and Collapses: The Growing Concern for Corporate
Governance
Shareholders ➢​ Invest in the company.
➔​ Enron Scandal: The Fall of Wall Street Darling:
Board of Directors ➢​ Oversees management. ◆​ At Enron’s peak, its shares were worth $90.75; when the
➢​ Makes decisions in the interests of the firm declared bankruptcy in December 2001, they were
shareholders. trading at $0.26.
◆​ Arthur Andersen, one of the 5 largest and reputable
Management ➢​ Day to day operations. accounting firms in the US, offered its stamp of approval
➢​ Identifies and manages corporate
for years despite Enron’s poor accounting practices.
risks.
◆​ US $74 billion The amount that shareholders lost in the
four years leading up the Enron’s bankruptcy.
➔​ Stewardship Theory: ◆​ Management imposed aggressive sales quotas.
◆​ Recognizes that individuals who are motivated by intrinsic ◆​ Employees cheated on customers to meet their targets,
and intangible rewards such as affiliation, achievement, keep their jobs, and earn incentives.
and personal growth tend to align themselves as stewards ◆​ $ 3.5 million in fraudulent accounts opened without
with goals for an involvement- and trust-oriented customer approval.
organization. ◆​ 800,000 instances of unwanted auto insurance forced on
customers.
➔​ Stakeholder Theory: ◆​ Bank fired more than 5,000 employees in relation to
◆​ Portrays the company’s duty to earn the trust of various fraudulent accounts.
stakeholders by behaving in a trustworthy manner towards
its stakeholders. Government Role in Corporate Governance
➔​ Securities and Exchange Commission (SEC):
◆​ Code of Corporate Governance
●​ Require corporations to submit a Manual on
Corporate Governance
●​ Require full disclosure on any aspects of company
activities which could affect share price
●​ Require the appointment of at least 2 independent
directors or 20% of Board membership (the lesser)
●​ Recommend the separation of the role of the
Chairman of the Board and Chief Executive Officer
(CEO)
◆​ Respecting stakeholder rights is good in itself separate ◆​ SEC Revisions on the Code of Corporate Governance:
from its potential for producing corporate profits. ●​ Require appointment of compliance officers.
●​ Shift to “comply-or-explain” approach to compliance
Corporate Scandals with corporate code.
1.​ Money Laundering ●​ Increase in stakeholder-oriented and social
➢​ Handling drug cartel’s money responsibility provisions.
➢​ Ponzi schemers ●​ Code principles on sustainability and social
➢​ Shell companies responsibility merges.
2.​ Drug Prices and Stocks ●​ Corporate Governance and Corporate Social
➢​ Acquisition of Pharma companies Responsibility.
➢​ Increasing revenue by increasing drug prices
➢​ Cut costs through significant reduction in R&D
➢​ Out of this 6 brands, 5 are from Valeant FEBRUARY 5, 2024
➢​ Left sick Americans with high drug prices
CSR AND ENVIRONMENT
3.​ Diesel Emission Test Scandal
➢​ Turbocharged direct injection diesel engines to activate only ●​ Common Beliefs
during laboratory emissions testing ➔​ Environmental and business interests are always in conflict.
➢​ $2.8B criminal fine for rigging government tests ➔​ Environmental regulations add costs.
➔​ Sustainability revolution – creating opportunities.

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➔​ Businesses have brought us against the biophysical limits of the Circular Flow Model
earth’s capacity.
➔​ Natural Step Funnel: Backcasting, examining the future as we
emerge in the funnel.

Business Environmental Responsibility: The Market Approach

A Model of the Economy (Or Economic System) As A Subset of the
➔​ Society is willing to pay for pollution reduction as the perceived
Biosphere (Or Ecosystem)
benefits outweigh the costs.
➔​ Alternative policies that could address pollution and
pollution-related diseases would never be considered through
market solutions.
➔​ Markets are incomplete (at best) in their approach to the overall
social good.
➔​ What is good and rational for a collection of individuals is not
necessarily what is good and rational for a society.

Business Environmental Responsibility: The Regulatory Approach

➔​ A broad consensus emerged in the Philippines in the late 1990’s
and early 2000’s that unregulated markets are an inadequate
approach to environmental challenges. Principles for a sustainable business
➔​ Before this legislation was enacted, the primary legal avenue ➔​ Eco-efficiency
open for addressing environmental concerns was tort law (civil ◆​ Efficient use of natural resources
lawsuits). ◆​ Doing more with less
➔​ Much of the most significant environmental legislation in the ➔​ Model entire production in the biological process
Philippines. ◆​ Closed-loop – waste put back to the process
◆​ The Clean Air Act of 1999 (RA 8749) ◆​ Biomimicry – waste of one activity, is resource of another
◆​ The Clean Water Act of (RA 9275)
◆​ The Solid Waste Management Act of 2000 (RA 2000) Continuum of Biomimicry
◆​ The Toxic Substances and Hazardous and Nuclear Wastes
Control Act of 1990 (RA 6969)

Business Environmental Responsibility: The Sustainable Approach

➔​ “Circular flow model” explains the nature of economic
transactions in terms of a flow of resources from businesses to
households and back again
➔​ Two aspects of the circular flow model are worth noting.
◆​ It does not differentiate natural resources from the other
1.​ Take-make-waste
factors of production.
➔​ Business takes resources, makes products out of them, and
◆​ The model treats economic growth as both the solution to
discards whatever is left over.
all social ills and also as boundles.

2.​ Cradle to Grave

➔​ Business taking responsibility for its products.
➔​ “Life-cycle” responsibility.
➔​ Business should be responsible for incorporating the end results
of its products back into the productive cycle.

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➔​ Create incentives to redesign products so that they could be
recycled efficiently and easily.

3.​ Shift from products to service

➔​ Traditional economic and managerial models - consumer
demand as the demand for products.
➔​ A service-based economy interprets consumer demand as a
demand for services.

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