CORPORATE SOCIAL

RESPONSIBILITY (CSR)

CSR OVERVIEW
By Dr. Ariadne Cordero
“When I do good, I feel good; when I do bad, I feel
bad. That’s my religion”
– Abraham
Lincoln

“Always do right—this will gratify some and

astonish the rest”
- Mark
Twain
 A fundamental ingredient of any successful
market economy is respect for basic human
values: honesty, trust, and fairness. These
values must become an integral part of business
culture and practice for markets to remain free
and to work effectively. Private business is at the
strategic center of any civil society. It’s where
people go for a job or to invest savings to realize
their aspirations for their families.

Donald L. Evans
U.S. Secretary of Commerce
 Starting point

1. Why do businesses exist?

2. What is the purpose of a business,
or, in the bigger picture of any
economic system?
• The derivation of the word company? Two
Latin words, cum and panis,
which mean: breaking bread together.
• How does this origin translate in today’s
business environment?
• What are or should be the goals of the
modern corporation?
 CSR is:
• An obligation, beyond that required by the law and
economics, for a firm to pursue long term goals that
are good for society

• 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 that of the local
community and society at large

• About how a company manages its business process

to produce an overall positive impact on society
Corporate social responsibility means:
• Conducting business in an ethical way and in
the interests of the wider community
• Responding positively to emerging societal
priorities and expectations
• A willingness to act ahead of regulatory
confrontation
• Balancing shareholder interests against the
interests of the wider community
• Being a good citizen in the community
Is CSR the same as business ethics?

• There is clearly an overlap between CSR

and business ethics
• Both concepts concern values, objectives
and decision based on something than
the pursuit of profits
• And socially responsible firms must act
ethically
• The difference is that ethics concern
individual actions which can be assessed as
right or wrong by reference to moral
principles.

• CSR is about the organization’s obligations to

all stakeholders – and not just shareholders.
 Major Stakeholders

Employees Investors

CORPORATION

Customers Suppliers

Local
Communities

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Most companies strive to be responsible to five main groups:

• Customers. Critical factors include charging fair prices, honoring

warranties, and standing behind product quality.

• Employees. Treating workers fairly, making them a part of the team, and
respecting their dignity promotes a company’s reputation.

• Investors. Managers must follow proper accounting procedures, provide

appropriate information to shareholders, and manage the organization to
protect shareholder investments.

• Suppliers. Partnership arrangements with suppliers can enhance market

image and firm reputation.

• Local Communities. Contributing to local programs has a positive impact

on the community.
Four dimensions of corporate responsibility

• Economic - responsibility to earn profit

for owners
• Legal - responsibility to comply with the
law
• Ethical - not acting just for profit but
doing what is right, just and fair
• Voluntary and philanthropic - promoting
human welfare and goodwill
 CSR is also referred to as:

• corporate’ or ‘business
responsibility’
• corporate’ or ‘business citizenship’
• community relations’
• social responsibility.
 Benefits of CSR
• .Greater trust with stakeholders
• Greater Customer satisfaction
• Stronger employee commitment
• Stronger investor loyalty
• Greater profitability
• Countries with greater trust-based
institutions foster productivity-enhancing
environment.
 Why is CSR relevant today?
CSR as a strategy is becoming increasingly important for
businesses today because of three identifiable trends:

1. Changing social expectations

Consumers and society in general expect
more from the companies whose
products they buy. This sense has
increased in the light of recent corporate
scandals, which reduced public trust of
corporations, and reduced public
confidence in the ability of regulatory
bodies and organizations to control
corporate excess.
2. Increasing affluence
This is true within developed nations, but also in
comparison to developing nations. Affluent
consumers can afford to pick and choose the
products they buy. A society in need of work and
inward investment is less likely to enforce strict
regulations and penalize organizations that might
take their business and money elsewhere.
3. Globalization
The growing influence of the media sees
any ‘mistakes’ by companies brought
immediately to the attention of the
public. In addition, the Internet fuels
communication among like-minded
groups and consumers—empowering
them to spread their message, while
giving them the means to co-ordinate
collective action (i.e. a product boycott).
 Spectrum of Approaches to
Corporate Social Responsibility

Obstructionist Defensive Accommodative Proactive

Stance Stance Stance Stance

LOWEST LEVEL OF HIGHEST LEVEL OF

SOCIAL SOCIAL
RESPONSIBILITY RESPONSIBILITY

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 APPROACHES TO SOCIAL RESPONSIBILITY
Obstructionist Stance
• Approach to social responsibility that involves doing as
little as possible and may involve attempts to deny or
cover up violations
(Nestle and Danone have been accused of violating
international agreements signed in 1981 to control
the marketing of infant formulas that serve as
substitutes for breast milk. Nestle and Danone,
however, allegedly provided mothers in West Africa
with free samples of milk power and violated
labeling standards on infant formula in the
countries of Togo and Burkina Faso. The firms,
however, deny any such violations and argue that
their actions were all technically within the
parameters of the agreements.)
Defensive Stance
Approach to social responsibility by which a company meets
only minimum legal requirements in its commitments to
groups and individuals in its social environment

Tobacco companies such as Philip Morris take this position

in their marketing efforts. In the United States, they are
legally required to include warnings to smokers on their
products and to limit their advertising to prescribed
media. Domestically they follow these rules to the letter
of the law but use stronger marketing methods in
countries that have no such rules. In many African
countries, for example, cigarettes are heavily promoted,
contain higher levels of tar and nicotine than those sold
in the United States, and carry few or no health warning
labels.
Accommodative Stance
Approach to social responsibility by which a company, if
specifically asked to do so, exceeds legal minimums in
its commitments to groups and individuals in its social
environment
(Some firms will match contributions made by their
employees to selected charitable causes.)

Proactive Stance
Approach to social responsibility by which a company
actively seeks opportunities to contribute to the well-
being of groups and individuals in its social
environment
(the Ronald McDonald House program undertaken
by McDonald's Corp. These houses, located close to
major medical centers, can be used by families for
minimal cost while their sick children are receiving
medical treatment nearby.)
 Areas of Social Responsibility

• Environment
• Customers
• Employees
• Investors
Responsibility Toward the
Environment

It is our collective and individual

responsibility to preserve and tend
to the environment in which we all
live.

- Dalai Lama
Controlling Pollution

• Air Pollution
• Water Pollution
• Land Pollution
– Toxic Waste Disposal
– Recycling
• Air Pollution. Under new laws, many
companies must install special devices to
limit pollutants they expel into the air.
• Water Pollution. Increased awareness of
chemical and waste dumping, and the
resulting dangers, has led to improved
water quality in many areas of the country.
• Land Pollution. Proper toxic waste disposal
and recycling programs are allowing
companies to help restore land quality and
to prevent further contamination.
 Responsibility Toward
Customers
Consumer Rights
Consumerism
Form of social activism
dedicated to protecting the
rights of consumers in their
dealings with businesses
 Responsibility Toward Customers
Consumer Rights:
1. Consumers have a right to safe
products.
2. Consumers have a right to be
informed about all relevant aspects of
a product.
3. Consumers have a right to be heard.

4. Consumers have a right to choose

what they buy.
 Responsibility Toward
Customers
Unfair Pricing
Shortchanging
Collusion
Illegal agreement between
two or more companies to
commit a wrongful act
(i.e., price fixing)
 Responsibility Toward
Customers
Ethics in Advertising
 Truth in Food product labeling
 Morally objectionable advertisements

Consumers deserve to be given product

information that is truthful and can be
proven, as well as information that is not
morally objectionable.
 Responsibility Toward
Employees
Legal & Social Commitments
Recruiting, hiring, training, promoting, and
compensating are the bases for social
responsibility toward employees

Whistleblower
Employee who detects and tries to put an
end to a company’s unethical, illegal, or
socially irresponsible actions by publicizing
them
 Responsibility Toward Investors
Improper Financial Management
Unethical offenses — not necessarily illegal
Illegal Activities

Check Kiting
Illegal practice of writing checks against money that has
not yet been credited at the bank on which the checks
are drawn
Insider Trading
When someone uses confidential information to gain
from the purchase or sale of stocks
Managing Social Responsibility
Programs
• Social responsibility must start at the top.
• A committee of top managers must develop a plan
detailing the level of management support.
• One executive must be put in charge of the firm’s agenda.
• The organization must conduct occasional social audits

Social Audits
systematic analyses of its success in using funds
earmarked for its social responsibility goals
 Three Common Values for Global Business
• respect for human dignity
• respect for human rights
• good citizenship
ETHICAL VALUES FOR BUSINESS?

• TRUST
• HONESTY
• FAIRNESS
• DIGNITY AND RESPECT FOR HUMANITY
• RESPECT FOR LAW
• RESPECT FOR PROPERTY
• FREEDOM AND AUTONOMY
• OBJECTIVITY
• COMPASSION
 What is Business Ethics?
• Ethics- a specialized field of study by of what is right
or wrong
• Business ethics is a form of applied ethics examining
the following: ethical rules, theories and principles in
business context.
• Business ethics- it teaches what ought to be done,
and what ought Not to be done (De George, 1999)
• Also known as ethical management
 Role of Ethics in Business
• Ethical management in the workplace:
• It is the foundation of CSR in the workplace
• It covers the following issues in the workplace:
• Ethical issues arising from employer- employee
relationship.
• Rights and obligations justly owed to them
• Preventing discrimination issues in the workplace
 Role of Ethics in Business
• Ethical Management in intellectual property
rights:
• This is concerned about issues on:
• Copyright, patent and trademark infringement
• Business intelligence, industrial espionage
• Employee pirating
 Role of Ethics in Business

• Ethical Management in sales, advertising and

marketing
• Deals with issues and responsibilities on pricing and
price fixing
• Truth in advertising
• Viral marketing, pyramid scandal, sex in advertising
 Role of Ethics in Business
• Ethical management in production:
• This is the area of business ethics deals
with the duties of a company to ensure
that products and production processes do
not cause harm
 Role of Ethics in Business
• Ethical management in finance,
accounting and auditing
• Issues are: executive compensation,
manipulation of financial markets, bribery,
financial fraud and false reporting
 Ethical Management of Profit
• The pursuit of profit is a legitimate exercise-
there is nothing wrong or unethical about it.
• Provided that it is obtained in a fair and just
means
• Profit is good as long as it stays within the rules
of the game
• It must engage in open and free competition
without deception or fraud ( Friedman, 1970)
 How did business ethics evolve to CSR?
• First phase- company sees and wants only
profit
• Second phase- company complies with
laws and regulations
How did business ethics evolve to CSR?
• Third phase- company conforms to ethical
requirements to build its image
• Ultimate phase- company institutionalizes
CSR and ethical management because it
is the right thing to do.
 Business Ethics and CSR

• Practice business ethics first; and then

practice CSR
• Business ethics will make contentious
business decisions.
• CSR is all about moral accountability of a
group of individuals (Rothman and Scott,
2004)
• Before CSR is practiced correctly, its
practitioners are assumed to be ethical
 Practical CSR application
• Corporate governance
• Accountability
• Value based management