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Corporate Social Responsibility

and Business Ethics


Pr. Manal EL ABBOUBI, PhD

Who I am?
Manal EL ABBOUBI, Associate Professor
PhD, HEC Belgium
Expertise area: diversity management, CSR,
stakeholder management, leadership, Team
management
Previous experiences: Louvain School of
Management, HEC Management school of
management, UQAM, ESC La Rochelle.
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Course objectives
1. Understand issues related to Business ethics
and corporate social responsibility
2. Understand the basic features of stakeholder
management
3. Be able to build and use KPI related to CSR

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Course Agenda
8 sessions of 3h
CM

TD

- Corporate Social
Responsibility
- Stakeholder Management
- Diversity Management
- Ethical leadership
- Ethical issues in
management

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- Harvard Business review


reading
- Group presentations
- Case study analysis

Manal EL ABBOUBI

www.easyclass.com
Subscribe using the following code

N32B-P9H3 for Marketing


748U-7L2J for Finance
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Corporate Social
Responsibility

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CSR

Session 1: CSR introduction


Questions to answer
What is the role of the firm?
Corporate Social Responsibility: what
does it mean?
Reasons why development of the CSR
field?
What are CSR success factors?

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What is the role


of the firm?

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What are the criteria of a


responsible organization?

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Responsibility types
Source: Carroll, A. B. (1991), The pyramid of corporate social responsibility: toward the
moral management of organizational stakeholders, Business Horizons (Jul-Aug), 39-48.

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Corporate Social Responsibility:


what does it mean?
The term [CSR] is a brilliant one; it means
something, but not always the same thing, to
everybody (Votaw, 1973)
The corporate social responsibility field is not only
a landscape of theories but also a proliferation of
approaches, which are controversial, complex and
unclear (Garriga and Mel, 2005)

CSP, together with CSR, carry no clear meaning


and remain elusive constructs. They have defied
definition [] Clarkson (1995: 92)

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Numerous
meanings of
CSR

Numerous
theoretical
approaches

Lack of
theoretical
foundations
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Business
Ethics

Corporate
Social
Performance

Corporate
citizenship

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Corporate
Social
Responsiveness

CSR

Sustainable
Development

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Business
and
Society

Social issues
management

Stakeholder
theory

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Type of approach

Authors

Act beyond economic,


contractual and legal
responsibilities

Jones
(1980)

Corporate social responsibility is the notion that corporations have an


obligation to constitute groups in society other than stockholders and
beyond that prescribed by law or union contract

Volontarily answer to
societys expectations

Carroll
(1979)

The social responsibility of business encompasses the economic, legal,


ethical and discretionary expectations that society has of organisations
at a given point in time

Respect principles at
the institutional,
organizational and
managerial level

Wood
(1991)

The meaning of CSR must be considered through the interaction of


three principles: legitimity (institutional level), public responsibility
(organizational level), managerial discretion (individual level)

Corporate social
performance as an
integration of CSR
approaches

Wartick &
Cochran
(1985)

Corporate social performance is a business organizations


configuration of principles of social responsibility, processes of social
responsiveness, and policies, programs and observanle outcomes as
they relate to the firms societal relationships

Social performance as
a way to satisfy
stakeholders

Clarkson
(1995)

CSR is related to the companys ability to manage and to satisfy the


concerns of its different stakeholders

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Definition

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Reasons why?

Financial, social and environmental scandals largely covered by the media

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Reasons why?

Financial, social and environmental scandals largely covered by the


media
Increasing pressures from different stakeholders

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Pressures from NGOs

Greenpeace participates to the complaint against X in


the case of the pollution due to the Erika shipwreck, by
addressing especially the oil company TotalFina

Environmental Defense Ecology Center published a report accusing


General Motors, Ford, and Chrysler of not respecting their commitment to
remove mercury from electric system in vehicles (2001)

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Pressures from citizens

2/3 of citizens ask for companies that go beyond their historical role of
making profit, paying taxes and obeying the law: they want companies
that contribute to broader social goals, that realize charities investment,
and investment projects in community
(results of a survey on 25000 citizens from 23 countries on the 5
continents, Nelson, 2000)

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Pressures from consumers

Increasing desire to buy on other criteria than price, quality and availability

Frequent boycott of irresponsible companies (effects?)

86% claimed to be more likely to buy products from a company which


engages in social actions (4000 respondents from Italy, Germany, France and
UK, Ipsos, 1999)

From 1998 to 1999, increase from 28% to 41% of English consumers who say
that social activities are very important to take into account in their buying
decisions (1000 respondents, MORI)

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Pressures from investors

BEFORE investing, they try to find out information about company activities on
different aspects
They want to invest according to their moral, philosophical or religious
convictions
They want to invest money where latent risks are clearly identified and
taken into account in company management
88% of financial analysts think that companies that are involved in CSR activities
manage better their environmental and social risks than others
(302 financial analysts from 9 European countries, SOFRES, 2001)

AFTER investing, they can give their opinion about the management of the
company

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Pressures from other companies

Pressure of a company on its suppliers, partners


Nike: application of American standards in its suppliers
companies abroad
French retailers: pressures on producers to incite them to
respect the rules of the International Labor Organization and to
help them understand the commercial interests to become
socially responsible

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Probably one of the strongest pressures

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Reasons why?

Financial, social and environmental scandals largely covered by the media


Increasing pressures from different stakeholders

Evolution of the institutional framework:

Laws that force companies to include social and


environmental information in annual reports
The European commission published in 2002 a
communication entitled CSR of companies:
companies contribution to sustainable
development

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Reasons why?

Financial, social and environmental scandals largely covered by the media

Increasing pressures from different stakeholders (NGOs, consumer


associations, environmentalist groups, consumers)

Evolution of the institutional framework:

Laws that force companies to include social and


environmental information in annual reports
The European commission published in 2002 a
communication entitled CSR of companies:
companies contribution to sustainable
development
Development of an enlarged conception of corporate responsibilities

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Best Corporate Citizens


1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Green Mountain Coffee


Hewlett-Packard
Advanced Micro Devices
Motorola
Agilent Technologies
Timberland
Salesforce.com
Cisco Systems
Dell
Texas Instruments

11.
12.
13.
14.
15.
16.
17.
18.
19.
20.

Intel
Johnson and Johnson
NIKE
General Mills
Pitney Bowes
Wells Fargo
Starbucks
Wainright Bank & Trust
St. Paul Travelers
Ecolab

Source: Philip Johansson, The Best 100 Corporate Citizens, Business Ethics, March/April 2006, p. 22.
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Arguments for Social


Responsibility
1. Business helped to create many of the social
problems that exist today, so it should play a
significant role in solving them
2. Businesses should be more responsible because
they have the financial and technical resources to
help solve social problems
3. As members of society, businesses should do their
fair share to help others

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Arguments for Social


Responsibility
4. Socially responsible decision making by businesses
can prevent increased government regulation
5. Social responsibility is necessary to ensure
economic survival

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Businesses must take steps to help solve the social and


environmental problems that exist today

Arguments Against Social


Responsibility
1. Managers are sidetracked from the primary goal of
business
Earning profits

2. Participation in social programs gives businesses


greater power, perhaps at the expense of particular
segments of society

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Arguments Against Social


Responsibility
3. Some people question whether business has the
expertise needed to assess and make decisions
about social problems
4. Many people believe that social problems are the
responsibility of government agencies and officials

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Social Responsibility Issues


Organizational relationships with owners and
stockholders:
Profit and ROI

Employee relations:
Providing a safe workplace, adequate pay, information
about the company, listening to grievances, and treating
employees fairly

Consumer relations:
Respecting the rights of customers and providing them
with safe and satisfying products
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Social Responsibility Issues


Environmental issues:
Animal rights
Pollution
Global warming

Community relations:
Responsibility to the general welfare of the
community
Did You Know?
In one year, Americans generated 230 million tons of
trash and recycled 23.5 percent of it.
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Responsibility of the Ethics


Officer
Provide advice about ethics to employees and
management
Distribute the companys code of ethics
Create and maintain an anonymous, confidential
service to answer questions about ethical issues
Take action on ethics violations
Review and modify the code of ethics as needed

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CSR implementation

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CSR- Key Sucess Factors

The management involvement


(charter, code of conduct, clear
directions,
allocation
of
resources, integration into the
strategy).
Vision / Mission
Vision: where to go?
Mission: what do we have to do?

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CSR - Key Sucess Factors -

Involvement and conviction of


employees for a day to day
application
Integration into the strategy:
finance, marketing, supply chaine,
RH, techniquesetc.)

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CSR
- Key Sucess Factors -

To be affiliated to networks (work


as an opened system, learn from
other experiences
Benchmark

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Example of a benchmark framework

Term used
Type

Signed/Foreword
by
Values
Stakeholders
Scope
Lenght
Style used
Outline of content

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CSR - Tools
Networks: tools, good practices, practices to avoid, funding research

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CSR Europe Tool box

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CSR Tools

Labels and standards: a global approach, with or without certification,


imply planning, implementation, follow up and sustainability

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Example of a certification
SA8000

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Child Labour
Forced Labour
Health and Safety
Freedom of Association & Right to Collective Bargaining
Discrimination
Disciplinary practices
Working Hours
Remuneration
Management Systems

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CSR - Tools

Code of conduct
Ethical charter
Social Audit

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CSR Tools

Code of conduct
Voluntary approach / involvement / behavior /
values
4 types

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Organizational
Professional
Industrial
Program

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CSR Implementation

Board Management

Where to place CSR?

Strategy

finance

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marketing

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CRM

HR

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Managing CSR
or
Managing by CSR?

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Le niveau de responsabilit
Contexte
international
Contexte
national

Contexte
local
FournisseursSous Traitants

Entreprise
D de
Matrise

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DRH
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Cadre
lgal

Les enjeux sociaux selon ISO


26000

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Formation des Business Partners


http://www.atlascopco.com/corporateresponsib
ility/videos/elearning/

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Stakeholder
Management

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Stakeholder
Management

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Introduction to
the Stakeholder Theory

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The stakeholder approach


One way to understand the
expectations and often conflicting
interests and competition from
several stakeholders. Interests may be
economic, social, legal or political

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The stakeholder approach


To be responsible towards whom?
One major challenge for an organization is to define
towards whom it is responsible.

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Responsibility types
Source: Carroll, A. B. (1991), The pyramid of corporate social responsibility: toward the
moral management of organizational stakeholders, Business Horizons (Jul-Aug), 39-48.

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Stakeholder Theory
A traditional model
Shareholders

Customers

Firm

Suppliers

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Employees

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Stakeholder Theory
Competitors

Governmen
t

Customers

Shareholders

Firm

Suppliers

Employees
Civil
society

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Stakeholder Theory
A Network Model
Customer
stakeholder
1
Competitors

Government

Customers

Shareholders

Customer
stakeholder
3

Firm

Suppliers

Employees

Employee
stakeholder
1

Civil society
Supplier
stakeholder
1

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stakeholder
2

Civil society
stakeholder
1

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Employee
stakeholder
2

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The stakeholder approcah

1. Identification
2. Classification
3. Management
What is a
stakeholder ?

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A stakeholder?
-characteristics?
-Links with the organization?
-Type of request?

-Type of management?

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What is a stakeholder?

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What is a stakeholder?

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What is a stakeholder?

Freeman (1984, p25)


A stakeholder in an organization is (by its definition) any
group or individual who can affect or is affected by the
achievement of the organization's objective.

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What is a stakeholder?

Post, Preston et Sachs (2002)


all individuals and constituent
elements which contribute deliberately
or otherwise to the firms capacity to
create value, who are its main
beneficiaries and/or bear its risks.

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The company? A Stakeholder or


not?
Regulators
Suppliers

Employees

Investors

COMPANY

Pressure groups
Customers

Local community
Competitors

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You are a student in the


Master level. How do
you
define
your
stakeholders? Who are
they?

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Brainstorming

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The stakeholder approach

1. Identification
2. Classification
3. Management

What are stakeholder


types? What about
their salience?

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Stakeholder typologies

Stakeholders present / past / potential


macro / micro perspective

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Stakeholder salience ?

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Existing typologies

Henriques and Sadorsky (1999)

Organizational stakeholders (e.g., employees, customers, shareholders, suppliers)


Community stakeholders (e.g., local residents, special interest groups)
Regulatory stakeholders (e.g., municipalities, regulatory systems)
Media stakeholders

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Existing typologies
Primary stakeholders : a direct link with the organisation survival

(Clarkson 1988)
Secondary stakeholders = social and political actors

Essential role for the organization in gaining


approval of its activities and business credibility
Communities, governments and NGOs

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Existing typologies
Author

Categories

Criteria

Freeman (1984)

Important / Non important

Strategic issue

Clarkson (1995)

Primary / secondary

Firms survival

Clarkson (1995)

Voluntary / non voluntary

Investment risk

Mitchell et al. (1997)

discretionary, dependant, dominant,


dormant, urgent, definitive and
dangerous

Power, legitimacy, urgency

Carroll et Nasi (1997)

Internal / External

relationship

Phillips (2003)

Normative / derivative

Moral obligations

Sobczak et Girard
(2006)

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Allied, committed, passive and militant.

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Organizational
commitment, social
commitment

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Existing typologies
Author

Categories

Criteria

Freeman (1984)

Important / Non important

Strategic issue

Clarkson (1995)

Primary / secondary

Firms survival

Clarkson (1995)

Voluntary / non voluntary

Investment risk

Mitchell et al. (1997)

discretionary, dependant, dominant,


dormant, urgent, definitive and
dangerous

Power, legitimacy, urgency

Carroll et Nasi (1997)

Internal / External

relationship

Phillips (2003)

Normative / derivative

Moral obligations

Sobczak et Girard
(2006)

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Allied, committed, passive and militant.

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Organizational
commitment, social
commitment

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Group

Paper to present

Paper to challenge

Amine jazouli

Shared value

Stakeholder involvement

Taghy Yousra

What is the matter with


business ethics

Is the ethic of business


changing

Bader khaladi

Philantrophy agenda by
M.Porter

Michael porter

Fenjiro sarah

Michael porter

Philantrophy agenda by
M.Porter

Zahra jazouli

Is the ethic of business


changing

What is the matter with


business ethics

Samia erguig

Stakeholder involvement

Shared value

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Group

Paper to present

Paper to challenge

Bensaid sara /
narjiss/ wahiba
Anass / Nidal /
Taha

Shared value

Stakeholder involvement

What is the matter with


business ethics

Is the ethic of business


changing

Ibtissam :
Oumaima /
Sophia
Soukaina/ Afaf/
Saifeddine

Philantrophy agenda by
M.Porter

Michael porter

Michael porter

Philantrophy agenda by
M.Porter

Nabila/Soukaina
EL MARDI

Is the ethic of business


changing

What is the matter with


business ethics

Anass
/ Saad
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Stakeholder involvement
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Shared value

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Mitchell, Agle & Wood (1997)

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The model specificities


Dynamic model
Based on the managers perception

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The model application


Noms des parties
prenantes

Types

Pouvoir

Lgitimit

Urgence

Type de PP

Dfinitive

BD

Client

AA

Fournisseur

Dpendante

BB

Sous-traitant

Dpendante

CC

Fournisseur

DD

Fournisseur

EE

Fournisseur

FF

Fournisseur

GG

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Dominante
X

Dangereuse

Urgente

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Discrtionnaire
X

Dfinitive
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LEGITIMITY

POWER
PP discretionnary

SC

PP Dominant

V
P

PP Dfinitives
BD
ASS
LG

TT

PC

CP

Bq

AU

EM

IMP
NE

PP Dangerous

RR
Bq

PP

PP Dependant

TLL
PP urgent
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URGENCY

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Sobzack & Girard (2006)


Orgnizational
commitment

Allied

Passives

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Commited

Militants

Social
commitment

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Engagement
organisationnel

allied
EEMP

RR

commited

BD

ASS

TRD

OMP

UNI

Cg

RF

RGT

AA

TDRF
U intrim

UJ

passive

Militant

Tl
BQ1

Nt

BQ2

TE
PP

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IMP

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Engagement dans
le processus RSE
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The stakeholder approach

1. Identification
2. Classification
3. Management

How to manage
stakeholders?

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Double direction interaction

General case

Organisation

Organisation

Proactive approach

Reactive approach

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A stakeholder Management
Model

Power

Step 1 : Initial Event


Urgency

CONTEXTUALIZATION

Legitimacy

Step 2 : 1st actors positionning


Positioning model of Mitchell
& al (1997)
PROBLEMATISATION

Orga
nizat
ional
com
mitm
ent

+
Allied

Passives

Committed

Step 3 :

1st

organizational answer
OBLIGATORY PASSAGE
POINT

Step 4 : 2nd actors positionning

ENROLEMENT

Militants

Social commitment
Positioning model of Sobzack
and Girard (1997)

Step 5 : 2nd organizational answer

Modified from Preble (2005)

INVOLVMENT

Akrich, Callon and Latour,


(1988)

Source: EL ABBOUBI M, CORNET A, (2009), La mobilisation des parties prenantes dans les certifications lies
la Responsabilit sociale de lentreprise, Editions de lUniversit de Lige, Lige.

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Stakeholder dialogue

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With all of them


?

How to avoid
frustration?

What subject?

What are their


expectations?

Practically, who will


dialogue with what
stakeholder?

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Are we ready to
answer to all their
requirement ?

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Stakeholder dialogue challenges

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Stakeholder dialogue
challenges

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Stakeholder dialogue
challenges

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Stakeholder dialogue
challenges

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Stakeholder dialogue
challenges

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Stakeholder dialogue
challenges

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Stakeholder dialogue

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Stakeholder dialogue

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Stakeholder dialogue

The different form of dialogue :


strategies and actions

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Stakeholder dialogue
The Pannel Approach

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Responsible Communication

CSR communication

1. CSR communication definition

2. The means of CSR communication


3. The reasons for CSR communication
4. The risks of CSR communication
5. Conclusion

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C.Janssen, UCL

CSR communication
Definition
Communication that is designed and distributed by the company itself about
its CSR efforts (Morsing, 2006, p.171)

Sustainable Marketing is The process of planning, implementing, and


controlling the development, pricing, promotion and distribution of products in
a manner that satisfies the following three criteria :
1) Customer needs are met;
2) Organizational goals are attained; and
3) The process is compatible with ecosystems. (Fuller, 1999)

Link the 4Ps of Marketing, including communication, to the 3Ps of


sustainable development (People, Planet, Profit)

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CSR communication
is not limited to:
Cause-related marketing

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CSR communication
is not limited to:
Social communication

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CSR communication means

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Means of CSR communication


Annual report

CSR report

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Means of CSR communication


Corporate website

New CSR page

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C.Janssen, UCL

Means of CSR communication


Advertising
Chiquita

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C.Janssen, UCL

Means of CSR communication


Advertising
Dove

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C.Janssen, UCL

Reasons for CSR communication

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Reasons for CSR communication


CSR communication debate

Should companies communicate about their CSR


initiatives (Tixier, 2004) and are the traditional marketing
tools appropriate to do so?(van de Ven, 2008)

Use of environmental arguments on the increase


Increased stakeholders expectations
Fear of criticism
Once communicated, even the best intentions will be called
into question (Tixier, 2004)
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C.Janssen, UCL

Reasons for CSR communication


CSR communication debate
Example :

Product development
Products that are good for your health and products that are good, period.

Social and environmental code of conduct


Employee awareness
Hybrid cars
Offices

No direct communication about its CSR efforts

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Reasons for CSR communication


Importance of CSR communication
Used wisely, communication has an extraordinary power : not
only to inform, but to challenge and to inspire (Futerra & UNEP, 2005)
Communication is the fourth pillar of sustainable development
(Libaert, 2004)

Avoiding the gap between stakeholders perceptions and reality


(van de Ven, 2008; Wicki & van der Kaaij, 2007)

Various research show that consumers hold more positive


attitudes towards companies that are positioning themselves as
socially responsible in their communications (e.g. Du, Bhattacharya, &
Sen, 2007)
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Reasons for CSR communication


According to the audience
2007 Ipsos survey, 1011 French respondents
62% think that it is legitimate for advertising to talk about
ecology
BUT only 9% are sure that the claims are accurate

2004 Cone Corporate Citizenship study,

1033 American

respondents

Want companies to communicate more about their CSR


initiatives
40% think that companies can do a better job to communicate
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their CSR objectives and achievements

Risks of CSR communication

It takes 20 years to build a reputation and 5 minutes


to ruin it (Warren Buffet)

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Risks of CSR communication


Stakeholders skepticism
Marketing perhaps more than other management disciplines is viewed with
a great deal of cynicism and suspicion when it attempts to convey a more
socially responsible message (Jahdi & Acikdalli, 2009, p.104)

Various studies show that CSR can, in some circumstances,


increase stakeholders skepticism and cynicism (Mohr, Webb, & Harris,
2001 ; Sen & Bhattacharya, 2001 ; Schlegelmilch & Pollach, 2005 ; Yoon, Guran-Canli,
& Schwarz, 2006)

Attribution of self-serving motives


Perceived credibility of the company

Industry in which the company operates


Etc.
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Risks of CSR communication


Attract criticism

Companies that set themselves up as models are more


likely to be attacked by the media or advocacy groups
(Schlegelmilch & Pollach, 2005)

The more transparent we are, the more we get criticized, and it is


quite surprising to see that companies that are not doing anything in
the field [CSR] are also the ones that are the least criticized (Tom
Delfgauw, former VP of Shell, SEE Newsletter, 2001)

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Risks of CSR communication


Attract criticism

Example: Dove Campaign for real beauty

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Risks of CSR communication


Attract criticism

Example: Dove Campaign criticism by Rye Clifton

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Risks of CSR communication


Attract criticism

Example: Dove Reaction of Greenpeace

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Risks of CSR communication


Greenwashing

What is it?

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Risks of CSR communication


Greenwashing

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Risks of CSR communication


Greenwashing

Nuances
Where do we draw the line?

Predictive power of communication (Libaert, 2006)


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Conclusion

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CSR communication
Conclusion

CSR communication debate

Many arguments in favor of CSR communication

However, there are risks associated to CSR


communication
Stakeholders skepticism

Criticism
Greenwashing
Lack of coherence

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CSR communication
Conclusion

Tips for CSR communication


Must be based on facts
Avoid being vague and misleading the viewer
Avoid displaying too much information
Take into account the stakeholders
Assess all of the potential effects

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