Professional Documents
Culture Documents
Different perspectives on CSR The societal perspective The strategy-driven perspective The stakeholder perspective The ethical perspective The political perspective The philanthropic perspective
What responsibilities does a business have? A company has one and only one objective: to make long-term sustainable profits by satisfying customers for the benefit of its owners, whilst acting within the law. If society wishes to limit a company's singleminded pursuit of this goal, for example by constraining monopolies, regulating employment or preventing pollution, it must pass appropriate laws.
Milton Friedman
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What responsibilities does a business have? An alternative view Economic responsibility first and foremost the societal responsibility to be a profit orientated and market driven business Legal responsibility a licence to operate to adhere to society s laws and regulations as
Ethical responsibilities to honour society s wider social norms and expectations of behaviour over and above the law Discretionary (or philanthropic) responsibilities to undertake voluntary activities and expenditures which exceed society s minimum expectations
Carroll 1979 Academy of Management Review
King Report (King 1) on corporate governance in South Africa was first to recognize the interests of corporate stakeholders as well as shareholders. That report revolutionised approaches to corporate governance around the world because it said that in the decision-making process you should take account of the legitimate needs, interests and expectations of stakeholders linked to the company. That did not mean that directors should be accountable to stakeholders, but that they should take account of stakeholder needs and expectations in their decision-making. Mervyn King 2010
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Comment on CSR from the British Chancellor of the Exchequer The Rt. Hon Gordon Brown (2006) "Today, corporate social responsibility goes far beyond the old philanthropy of the past - donating money to good causes at the end of the year - and is instead an all year round responsibility that companies accept for the environment around them, to the best working practices, for their engagement in the local communities and for their recognition that brand names depend not only on quality, price and uniqueness, but on how, cumulatively, they interact with the companies workforce, community and environment.
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We have to choose between a global market driven only by calculation of short-term profit, and one which has a human face; between a world which condemns a quarter of the human race to starvation and squalor, and one which offers everyone at least a chance of prosperity, in a healthy environment; between a selfish free-for-all in which we ignore the fate of the losers, and a future in which the strong and successful accept their responsibilities, showing global vision and leadership Kofi Annan when Secretary-General of the UN
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Enlightened shareholder value (ESV The satisfaction of the needs of stakeholders is: crucial to corporate success essential to creating value for shareholders
For many companies, managing corporate social responsibility well is no longer seen as an extra cost or burden on hard-pressed management. Rather, CSR is increasingly viewed, not only as making good business sense but also contributing to the long-term prosperity of companies and ultimately its survival.
World Business Council for Sustainable Development
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In economically advanced world growing demands, encouraged by investigative media, for acceptable corporate behaviour on, for example: Employment of children in manufacturing in third world countries Ill treatment of animals in pharmaceutical product testing Pollution in manufacturing and transportation processes The risk to corporate reputation needs to be assessed along with other elements of risk.
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UK Companies Act (206) introduced CSR criteria for directors: "A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard to: the likely consequences of any decision in the long term the interests of the company's employees the need to foster the company's business relations with suppliers, customers and others the impact of the company's operations on the community and the environment the desirability of the company maintaining a reputation for high standards of business conduct the need to act fairly as between members of the company Tricker: Corporate Governance 2e
To encourage commitment to CSR practices the British Government created a CSR competency framework; a flexible tool, which is offered as a "way of thinking" for companies of all sizes The framework has six core characteristics with five levels of attainment for each
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The core characteristics are: Understanding society Building capacity Questioning 'business as usual' Stakeholder relations Strategic view Harnessing diversity
Understanding society: A knowledge of how the business operates in the broader societal context and a knowledge of the impact that the business has on society; plus a recognition that the business is an important player in society, seeking to make that impact as positive as possible.
Building capacity Working with others to build the capability to manage the business effectively, helping suppliers and employees to understand your environment, and apply social and environmental concerns
Questioning 'business as usual' Constantly questioning your business in relation to a more sustainable future and being open to improving people's quality of life and the environment, acting as an advocate engaging with bodies outside the business who share this concern for the future.
Stakeholder relations Recognising that stakeholders include all those who have an impact on, or are impacted by, your business Understanding the opportunities and risks they present and working with them through consultation, taking their views into account.
Strategic view Ensuring that social and environmental concerns are included in the overall business strategy so that CSR becomes 'business as usual', with leadership coming from the top and resulting in everyone in the business having an awareness of the social and environmental impacts
Harnessing diversity Recognising that people differ and harnessing this diversity, reflected in fair and transparent employment practices, promoting the health, wellbeing and views of staff with everyone in the business feeling valued.
The five levels of attainment are: Awareness Understanding Application Integration Leadership
(The ability to help managers across the organisation in a way that fully integrates CSR in the decision-making process)
CSR priorities today are human rights, employee rights, environmental protection, community involvement and supplier relations a coherent CSR strategy, based on integrity, sound values and a long-term approach, offers clear business benefits companies should articulate their own core values and codes of conduct, or failing that, to endorse and implement codes produced by others emphasise the importance of being responsive to local and cultural differences when implementing global policies
World Business Council for Sustainable Development (1999)
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Increasingly companies are reporting in their annual accounts and on their web pages their CSR policies and performance on the environment, employee welfare, ethics and sustainability
EXXON CSR Policy We take our responsibilities very seriously - for our employees, shareholders, customers, communities, the environment and society at large. We strongly believe that the way we achieve results is as important as the results themselves. Therefore, we are working hard to embed CSR into the way we do business We have integrated CSR policies and practices into our business, which help us ensure that we meet standards of integrity, safety, health, environment and social responsibility day in and day out and across our worldwide operations. We believe that this approach is essential to achieving superior business results.
Increasingly boards include a CSR policy within their corporate governance policies, for example: "In addition to the implications for continuing economic success, all company strategies, polices and management decisions should take account of the following long-term effects The firm's impact on all its stakeholders including: customers of the end product or service agents, distributors and others in the down-stream supply chain original suppliers and others in the up-stream supply chain other creditors bankers and non-equity sources of finance employees including managers self-employed contractors to the company The firm's impact on all the communities in which it operates (consider local, regional and national) The firm's impact on the environment (consider all the relevant communities, regions and countries)
An organisation's response to the social and environmental impacts recognised through CSR awareness can provide:
basic information for the company's CSR report cost-effective yet comprehensive ways to manage social and environmental risk across the organization.
US$ US$ US$/share numbers of vehicles miles per US gallon CO2 per mile by model year % initial quality problems
Mil. Metric tons Mil. Metric tons % mil. Cubic litres Donations, Employee diversity, discrimination,
Development that meets the needs of the present without compromising the ability of future generations to meet their own needs Brundtland Report UN 1987
Swire Pacific Ltd. publicly-quoted London and Hong Kong Diverse range of businesses - Cathay Pacific Airways, property, beverages and Coca-Cola bottling, retail, support services for the offshore oil and gas industry worldwide Group adopts decentralized approach
Recognising global warming problem would impact the development of their businesses, Board endorsed Sustainable Development programme throughout group. (http://www.swirepacific. com/eng/global/home.htm) Company appointed Director of Sustainable Development, Robert Gibson, 2007.
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We adopt this policy because: Long-term value creation for our shareholders depends on the sustainable development [1] of our businesses and the communities in which we operate. We wish to excel as corporate citizens
[1] Sustainable Development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. - Our Common Future", 1987 World Commission on Environment and Development. Sustainable development covers environment, health and safety, Tricker: Corporate Governance 2e employment, business partnerships and community matters.
Our business policy: Industry leadership: We will work with others to promote sustainable development in the industries in which we operate.