CorporaLe soclal responslblllLy

CorporaLe soclal responslblllLy (CS8 also called corporaLe consclence corporaLe clLlzenshlp soclal
performance or susLalnable responslble buslness) ls a form of corporaLe selfregulaLlon lnLegraLed lnLo
a buslness model CS8 pollcy funcLlons as a bullLln selfregulaLlng mechanlsm whereby buslness
monlLors and ensures lLs acLlve compllance wlLh Lhe splrlL of Lhe law eLhlcal sLandards and
lnLernaLlonal norms 1he goal of CS8 ls Lo embrace responslblllLy for Lhe companys acLlons and
encourage a poslLlve lmpacL Lhrough lLs acLlvlLles on Lhe envlronmenL consumers employees
communlLles sLakeholders and all oLher members of Lhe publlc sphere lurLhermore CS8focused
buslnesses would proacLlvely promoLe Lhe publlc lnLeresL (l) by encouraglng communlLy growLh and
developmenL and volunLarlly ellmlnaLlng pracLlces LhaL harm Lhe publlc sphere regardless of legallLy
CS8 ls Lhe dellberaLe lncluslon of l lnLo corporaLe declslonmaklng LhaL ls Lhe core buslness of Lhe
company or flrm and Lhe honorlng of a Lrlple boLLom llne people planeL proflL

1he Lerm corporaLe soclal responslblllLy came lnLo common use ln Lhe laLe 1960s and early 1970s afLer
many mulLlnaLlonal corporaLlons formed Lhe Lerm sLakeholder meanlng Lhose on whom an
organlzaLlons acLlvlLles have an lmpacL lL was used Lo descrlbe corporaLe owners beyond shareholders
as a resulL of an lnfluenLlal book by 8 Ldward lreeman SLraLeglc managemenL a sLakeholder approach
ln 19842 roponenLs argue LhaL corporaLlons make more long Lerm proflLs by operaLlng wlLh a
perspecLlve whlle crlLlcs argue LhaL CS8 dlsLracLs from Lhe economlc role of buslnesses CLhers argue
CS8 ls merely wlndowdresslng or an aLLempL Lo preempL Lhe role of governmenLs as a waLchdog over
powerful mulLlnaLlonal corporaLlons

CS8 ls LlLled Lo ald an organlzaLlons mlsslon as well as a gulde Lo whaL Lhe company sLands for and wlll
uphold Lo lLs consumers uevelopmenL buslness eLhlcs ls one of Lhe forms of applled eLhlcs LhaL
examlnes eLhlcal prlnclples and moral or eLhlcal problems LhaL can arlse ln a buslness envlronmenL lSC
26000 ls Lhe recognlzed lnLernaLlonal sLandard for CS8 ubllc secLor organlzaLlons (Lhe unlLed naLlons
for example) adhere Lo Lhe Lrlple boLLom llne (18L) lL ls wldely accepLed LhaL CS8 adheres Lo slmllar
prlnclples buL wlLh no formal acL of leglslaLlon 1he un has developed Lhe rlnclples for 8esponslble
lnvesLmenL as guldellnes for lnvesLlng enLlLles
ConLenLs
1 Approaches
2 Soclal accounLlng audlLlng and reporLlng
3 oLenLlal buslness beneflLs
31 Puman resources
32 8lsk managemenL
33 8rand dlfferenLlaLlon
34 Llcense Lo operaLe
4 CrlLlclsms and concerns
41 naLure of buslness
42 MoLlves
43 LLhlcal consumerlsm
44 CloballzaLlon and markeL forces
43 Soclal awareness and educaLlon
46 LLhlcs Lralnlng
47 Laws and regulaLlon
48 Crlses and Lhelr consequences
49 SLakeholder prlorlLles
3 ArgumenLs for lncludlng ulsablllLy ln CS8
6 See also
7 noLes
8 8eferences
9 LxLernal llnks
10 lurLher readlng


Approaches

Some commenLaLors have ldenLlfled a dlfference beLween Lhe Canadlan (MonLreal school of CS8) Lhe
ConLlnenLal Luropean and Lhe AngloSaxon approaches Lo CS83 And even wlLhln Lurope Lhe
dlscusslon abouL CS8 ls very heLerogeneous4

An approach for CS8 LhaL ls becomlng more wldely accepLed ls a communlLybased developmenL
approach ln Lhls approach corporaLlons work wlLh local communlLles Lo beLLer Lhemselves lor
example Lhe Shell loundaLlons lnvolvemenL ln Lhe llower valley SouLh Afrlca ln llower valley Lhey seL
up an Larly Learnlng CenLre Lo help educaLe Lhe communlLys chlldren as well as develop new skllls for
Lhe adulLs Marks and Spencer ls also acLlve ln Lhls communlLy Lhrough Lhe bulldlng of a Lrade neLwork
wlLh Lhe communlLy guaranLeelng regular falr Lrade purchases CfLen acLlvlLles companles parLlclpaLe
ln are esLabllshlng educaLlon faclllLles for adulLs and Plv/AluS educaLlon programmes 1he ma[orlLy of
Lhese CS8 pro[ecLs are esLabllshed ln Afrlca !lul lor ?ou ls an aLLempL Lo promoLe Lhese acLlvlLles ln
lndla

A more common approach of CS8 ls phllanLhropy 1hls lncludes moneLary donaLlons and ald glven Lo
local organlzaLlons and lmpoverlshed communlLles ln developlng counLrles Some organlzaLlonswho?
do noL llke Lhls approach as lL does noL help bulld on Lhe skllls of Lhe local people whereas communlLy
based developmenL generally leads Lo more susLalnable developmenLclarlflcaLlon needed ulfference
beLween local org communlLydev? ClLe

AnoLher approach Lo CS8 ls Lo lncorporaLe Lhe CS8 sLraLegy dlrecLly lnLo Lhe buslness sLraLegy of an
organlzaLlon lor lnsLance procuremenL of lalr 1rade Lea and coffee has been adopLed by varlous
buslnesses lncludlng kMC lLs CS8 manager commenLed lalrLrade flLs very sLrongly lnLo our
commlLmenL Lo our communlLles3

AnoLher approach ls garnerlng lncreaslng corporaLe responslblllLy lnLeresL 1hls ls called CreaLlng Shared
value or CSv 1he shared value model ls based on Lhe ldea LhaL corporaLe success and soclal welfare are
lnLerdependenL A buslness needs a healLhy educaLed workforce susLalnable resources and adepL
governmenL Lo compeLe effecLlvely lor socleLy Lo Lhrlve proflLable and compeLlLlve buslnesses musL be
developed and supporLed Lo creaLe lncome wealLh Lax revenues and opporLunlLles for phllanLhropy
CSv recelved global aLLenLlon ln Lhe Parvard 8uslness 8evlew arLlcle SLraLegy SocleLy 1he Llnk
beLween CompeLlLlve AdvanLage and CorporaLe Soclal 8esponslblllLy 1 by Mlchael L orLer a leadlng
auLhorlLy on compeLlLlve sLraLegy and head of Lhe lnsLlLuLe for SLraLegy and CompeLlLlveness aL Parvard
8uslness School and Mark 8 kramer Senlor lellow aL Lhe kennedy School aL Parvard unlverslLy and co
founder of lSC Soclal lmpacL Advlsors 1he arLlcle provldes lnslghLs and relevanL examples of companles
LhaL have developed deep llnkages beLween Lhelr buslness sLraLegles and corporaLe soclal responslblllLy
Many approaches Lo CS8 plL buslnesses agalnsL socleLy emphaslzlng Lhe cosLs and llmlLaLlons of
compllance wlLh exLernally lmposed soclal and envlronmenLal sLandards CSv acknowledges Lradeoffs
beLween shorLLerm proflLablllLy and soclal or envlronmenLal goals buL focuses more on Lhe
opporLunlLles for compeLlLlve advanLage from bulldlng a soclal value proposlLlon lnLo corporaLe
sLraLegy

Many companles use Lhe sLraLegy of benchmarklng Lo compeLe wlLhln Lhelr respecLlve lndusLrles ln CS8
pollcy lmplemenLaLlon and effecLlveness 8enchmarklng lnvolves revlewlng compeLlLor CS8 lnlLlaLlves
as well as measurlng and evaluaLlng Lhe lmpacL LhaL Lhose pollcles have on socleLy and Lhe envlronmenL
and how cusLomers percelve compeLlLor CS8 sLraLegy AfLer a comprehenslve sLudy of compeLlLor
sLraLegy and an lnLernal pollcy revlew performed a comparlson can be drawn and a sLraLegy developed
for compeLlLlon wlLh CS8 lnlLlaLlves


edlL
Soclal accounLlng audlLlng and reporLlng
Maln arLlcle Soclal accounLlng

lor a buslness Lo Lake responslblllLy for lLs acLlons LhaL buslness musL be fully accounLable Soclal
accounLlng a concepL descrlblng Lhe communlcaLlon of soclal and envlronmenLal effecLs of a companys
economlc acLlons Lo parLlcular lnLeresL groups wlLhln socleLy and Lo socleLy aL large ls Lhus an lmporLanL
elemenL of CS86

Soclal accounLlng emphaslzes Lhe noLlon of corporaLe accounLablllLy u CrowLher deflnes soclal
accounLlng ln Lhls sense as an approach Lo reporLlng a flrm's acLlvlLles whlch sLresses Lhe need for Lhe
ldenLlflcaLlon of soclally relevanL behavlor Lhe deLermlnaLlon of Lhose Lo whom Lhe company ls
accounLable for lLs soclal performance and Lhe developmenL of approprlaLe measures and reporLlng
Lechnlques7 An example of soclal accounLlng Lo a llmlLed exLenL ls found ln an annual ulrecLors
8eporL under Lhe requlremenLs of uk company law8

A number of reporLlng guldellnes or sLandards have been developed Lo serve as frameworks for soclal
accounLlng audlLlng and reporLlng lncludlng
AccounLAblllLys AA1000 sLandard based on !ohn LlklngLons Lrlple boLLom llne (38L) reporLlng
1he rlnces AccounLlng for SusLalnablllLy ro[ecLs ConnecLed 8eporLlng lramework
1he lalr Labor AssoclaLlon conducLs audlLs based on lLs Workplace Code of ConducL and posLs audlL
resulLs on Lhe lLA webslLe
1he lalr Wear loundaLlon Lakes a unlque approach Lo verlfylng labour condlLlons ln companles supply
chalns uslng lnLerdlsclpllnary audlLlng Leams
Clobal 8eporLlng lnlLlaLlves SusLalnablllLy 8eporLlng Culdellnes
CoodCorporaLlons SLandard developed ln assoclaLlon wlLh Lhe lnsLlLuLe of 8uslness LLhlcs
LarLhcheck wwwearLhcheckorg CerLlflcaLlon / SLandard
Soclal AccounLablllLy lnLernaLlonals SA8000 sLandard
SLandard LLhlcs Ael guldellnes
1he lSC 14000 envlronmenLal managemenL sLandard
1he unlLed naLlons Clobal CompacL promoLes companles submlLLlng a CS8/ susLalnablllLy reporL a
CommunlcaLlon on rogress (CC) A CC reporL descrlbes Lhe companys lmplemenLaLlon of Lhe
CompacLs Len unlversal prlnclples
1he unlLed naLlons lnLergovernmenLal Worklng Croup of LxperLs on lnLernaLlonal SLandards of
AccounLlng and 8eporLlng (lSA8) provldes volunLary Lechnlcal guldance on ecoefflclency lndlcaLors
corporaLe responslblllLy reporLlng and corporaLe governance dlsclosure
verlLes MonlLorlng Culdellnes

1he l1SL Croup publlshes Lhe l1SL4Cood lndex an evaluaLlon of CS8 performance of companles

ln some naLlons legal requlremenLs for soclal accounLlng audlLlng and reporLlng exlsL (eg ln Lhe lrench
bllan soclal) Lhough lnLernaLlonal or naLlonal agreemenL on meanlngful measuremenLs of soclal and
envlronmenLal performance ls dlfflculL Many companles now produce exLernally audlLed annual reporLs
LhaL cover SusLalnable uevelopmenL and CS8 lssues (1rlple 8oLLom Llne 8eporLs) buL Lhe reporLs vary
wldely ln formaL sLyle and evaluaLlon meLhodology (even wlLhln Lhe same lndusLry) CrlLlcs dlsmlss
Lhese reporLs as llp servlce clLlng examples such as Lnrons yearly CorporaLe 8esponslblllLy Annual
8eporL and Lobacco corporaLlons soclal reporLs

ln SouLh Afrlca as of !une 2010 all companles llsLed on Lhe !ohannesburg SLock Lxchange (!SL) were
requlred Lo produce an lnLegraLed reporL ln place of an annual flnanclal reporL and susLalnablllLy
reporL9 An lnLegraLed reporL lncludes envlronmenLal soclal and economlc performance alongslde
flnanclal performance lnformaLlon and ls expecLed Lo provlde users wlLh a more hollsLlc overvlew of a
company Powever Lhls requlremenL was lmplemenLed ln Lhe absence of any formal or legal sLandards
for an lnLegraLed reporL An lnLegraLed 8eporLlng CommlLLee (l8C) was esLabllshed Lo lssue guldellnes
for good pracLlce ln Lhls fleld
edlL
oLenLlal buslness beneflLs

1he scale and naLure of Lhe beneflLs of CS8 for an organlzaLlon can vary dependlng on Lhe naLure of Lhe
enLerprlse and are dlfflculL Lo quanLlfy Lhough Lhere ls a large body of llLeraLure exhorLlng buslness Lo
adopL measures beyond flnanclal ones (eg uemlngs lourLeen olnLs balanced scorecards) CrllLzky
SchmldL and 8ynes10 found a correlaLlon beLween soclal/envlronmenLal performance and flnanclal
performance Powever buslnesses may noL be looklng aL shorLrun flnanclal reLurns when developlng
Lhelr CS8 sLraLegy

1he deflnlLlon of CS8 used wlLhln an organlzaLlon can vary from Lhe sLrlcL sLakeholder lmpacLs
deflnlLlon used by many CS8 advocaLes and wlll ofLen lnclude charlLable efforLs and volunLeerlng CS8
may be based wlLhln Lhe human resources buslness developmenL or publlc relaLlons deparLmenLs of an
organlsaLlon11 or may be glven a separaLe unlL reporLlng Lo Lhe CLC or ln some cases dlrecLly Lo Lhe
board Some companles may lmplemenL CS8Lype values wlLhouL a clearly deflned Leam or programme

1he buslness case for CS8 wlLhln a company wlll llkely resL on one or more of Lhese argumenLs
edlL
Puman resources

A CS8 programme can be an ald Lo recrulLmenL and reLenLlon12 parLlcularly wlLhln Lhe compeLlLlve
graduaLe sLudenL markeL oLenLlal recrulLs ofLen ask abouL a flrms CS8 pollcy durlng an lnLervlew and
havlng a comprehenslve pollcy can glve an advanLage CS8 can also help lmprove Lhe percepLlon of a
company among lLs sLaff parLlcularly when sLaff can become lnvolved Lhrough payroll glvlng fundralslng
acLlvlLles or communlLy volunLeerlng CS8 has been found Lo encourage cusLomer orlenLaLlon among
fronLllne employees13
edlL
8lsk managemenL

Managlng rlsk ls a cenLral parL of many corporaLe sLraLegles 8epuLaLlons LhaL Lake decades Lo bulld up
can be rulned ln hours Lhrough lncldenLs such as corrupLlon scandals or envlronmenLal accldenLs14
1hese can also draw unwanLed aLLenLlon from regulaLors courLs governmenLs and medla 8ulldlng a
genulne culLure of dolng Lhe rlghL Lhlng wlLhln a corporaLlon can offseL Lhese rlsks13
edlL
8rand dlfferenLlaLlon

ln crowded markeLplaces companles sLrlve for a unlque selllng proposlLlon LhaL can separaLe Lhem from
Lhe compeLlLlon ln Lhe mlnds of consumers CS8 can play a role ln bulldlng cusLomer loyalLy based on
dlsLlncLlve eLhlcal values16 Several ma[or brands such as 1he CooperaLlve Croup 1he 8ody Shop and
Amerlcan Apparel17 are bullL on eLhlcal values 8uslness servlce organlzaLlons can beneflL Loo from
bulldlng a repuLaLlon for lnLegrlLy and besL pracLlce
edlL
Llcense Lo operaLe

CorporaLlons are keen Lo avold lnLerference ln Lhelr buslness Lhrough LaxaLlon or regulaLlons 8y Laklng
subsLanLlve volunLary sLeps Lhey can persuade governmenLs and Lhe wlder publlc LhaL Lhey are Laklng
lssues such as healLh and safeLy dlverslLy or Lhe envlronmenL serlously as good corporaLe clLlzens wlLh
respecL Lo labour sLandards and lmpacLs on Lhe envlronmenL
edlL
CrlLlclsms and concerns

CrlLlcs of CS8 as well as proponenLs debaLe a number of concerns relaLed Lo lL 1hese lnclude CS8s
relaLlonshlp Lo Lhe fundamenLal purpose and naLure of buslness and quesLlonable moLlves for engaglng
ln CS8 lncludlng concerns abouL lnslncerlLy and hypocrlsy
edlL
naLure of buslness

MllLon lrledman and oLhers have argued LhaL a corporaLlons purpose ls Lo maxlmlze reLurns Lo lLs
shareholders and LhaL slnce only people can have soclal responslblllLles corporaLlons are only
responslble Lo Lhelr shareholders and noL Lo socleLy as a whole AlLhough Lhey accepL LhaL corporaLlons
should obey Lhe laws of Lhe counLrles wlLhln whlch Lhey work Lhey asserL LhaL corporaLlons have no
oLher obllgaLlon Lo socleLy Some people percelve CS8 as lncongruenL wlLh Lhe very naLure and purpose
of buslness and lndeed a hlndrance Lo free Lrade 1hose who asserL LhaL CS8 ls conLrasLlng wlLh
caplLallsm and are ln favor of neollberallsm argue LhaL lmprovemenLs ln healLh longevlLy and/or lnfanL
morLallLy have been creaLed by economlc growLh aLLrlbuLed Lo free enLerprlse18

CrlLlcs of Lhls argumenL percelve neollberallsm as opposed Lo Lhe wellbelng of socleLy and a hlndrance
Lo human freedom 1hey clalm LhaL Lhe Lype of caplLallsm pracLlced ln many developlng counLrles ls a
form of economlc and culLural lmperlallsm noLlng LhaL Lhese counLrles usually have fewer labour
proLecLlons and Lhus Lhelr clLlzens are aL a hlgher rlsk of explolLaLlon by mulLlnaLlonal corporaLlons19

A wlde varleLy of lndlvlduals and organlzaLlons operaLe ln beLween Lhese poles lor example Lhe
8LALeadershlp Alllance asserLs LhaL Lhe buslness of leadershlp (be lL corporaLe or oLherwlse) ls Lo
change Lhe world for Lhe beLLer20 Many rellglous and culLural LradlLlons hold LhaL Lhe economy exlsLs
Lo serve human belngs so all economlc enLlLles have an obllgaLlon Lo socleLy (see for example Lconomlc
!usLlce for All) Moreover as dlscussed above many CS8 proponenLs polnL ouL LhaL CS8 can slgnlflcanLly
lmprove longLerm corporaLe proflLablllLy because lL reduces rlsks and lnefflclencles whlle offerlng a
hosL of poLenLlal beneflLs such as enhanced brand repuLaLlon and employee engagemenL
edlL
MoLlves

Some crlLlcs belleve LhaL CS8 programs are underLaken by companles such as 8rlLlsh Amerlcan 1obacco
(8A1)21 Lhe peLroleum glanL 8 (well known for lLs hlghproflle adverLlslng campalgns on
envlronmenLal aspecLs of lLs operaLlons) and Mcuonalds (see below) Lo dlsLracL Lhe publlc from eLhlcal
quesLlons posed by Lhelr core operaLlons 1hey argue LhaL some corporaLlons sLarL CS8 programs for Lhe
commerclal beneflL Lhey en[oy Lhrough ralslng Lhelr repuLaLlon wlLh Lhe publlc or wlLh governmenL
1hey suggesL LhaL corporaLlons whlch exlsL solely Lo maxlmlze proflLs are unable Lo advance Lhe
lnLeresLs of socleLy as a whole22

AnoLher concern ls LhaL someLlmes companles clalm Lo promoLe CS8 and be commlLLed Lo susLalnable
developmenL buL slmulLaneously engage ln harmful buslness pracLlces lor example slnce Lhe 1970s
Lhe Mcuonalds CorporaLlons assoclaLlon wlLh 8onald Mcuonald Pouse has been vlewed as CS8 and
relaLlonshlp markeLlng More recenLly as CS8 has become malnsLream Lhe company has beefed up lLs
CS8 programs relaLed Lo lLs labor envlronmenLal and oLher pracLlces23 All Lhe same ln Mcuonalds
8esLauranLs v Morrls SLeel Lord !usLlces lll May and keane ruled LhaL lL was falr commenL Lo say
LhaL Mcuonalds employees worldwlde do badly ln Lerms of pay and condlLlons24 and Lrue LhaL lf
one eaLs enough Mcuonalds food ones dleL may well become hlgh ln faL eLc wlLh Lhe very real rlsk of
hearL dlsease23

8oyal uuLch Shell has a muchpubllclzed CS8 pollcy and was a ploneer ln Lrlple boLLom llne reporLlng
buL Lhls dld noL prevenL Lhe 2004 scandal concernlng lLs mlsreporLlng of oll reserves whlch serlously
damaged lLs repuLaLlon and led Lo charges of hypocrlsy Slnce Lhen Lhe Shell loundaLlon has become
lnvolved ln many pro[ecLs across Lhe world lncludlng a parLnershlp wlLh Marks and Spencer (uk) ln
Lhree flower and frulL growlng communlLles across Afrlca

CrlLlcs concerned wlLh corporaLe hypocrlsy and lnslncerlLy generally suggesL LhaL beLLer governmenLal
and lnLernaLlonal regulaLlon and enforcemenL raLher Lhan volunLary measures are necessary Lo ensure
LhaL companles behave ln a soclally responslble manner A ma[or area of necessary lnLernaLlonal
regulaLlon ls Lhe reducLlon of Lhe capaclLy of corporaLlons Lo sue sLaLes under lnvesLor sLaLe dlspuLe
seLLlemenL provlslons ln Lrade or lnvesLmenL LreaLles lf oLherwlse necessary publlc healLh or
envlronmenL proLecLlon leglslaLlon has lmpeded corporaLe lnvesLmenLs26 CLhers such as aLrlcla
Werhane argue LhaL CS8 should be consldered more as a corporaLe moral responslblllLy and llmlL Lhe
reach of CS8 by focuslng more on dlrecL lmpacLs of Lhe organlzaLlon as vlewed Lhrough a sysLems
perspecLlve Lo ldenLlfy sLakeholders lor a commonly overlooked moLlve for CS8 see also CorporaLe
Soclal LnLrepreneurshlp whereby CS8 can also be drlven by employees personal values ln addlLlon Lo
Lhe more obvlous economlc and governmenLal drlvers
edlL
LLhlcal consumerlsm

1he rlse ln popularlLy of eLhlcal consumerlsm over Lhe lasL Lwo decades can be llnked Lo Lhe rlse of CS8
As global populaLlon lncreases so does Lhe pressure on llmlLed naLural resources requlred Lo meeL rlslng
consumer demand (Crace and Cohen 2003 147) lndusLrlallzaLlon ln many developlng counLrles ls
boomlng as a resulL of boLh Lechnology and globallzaLlon Consumers are becomlng more aware of Lhe
envlronmenLal and soclal lmpllcaLlons of Lhelr dayLoday consumer declslons and are Lherefore
beglnnlng Lo make purchaslng declslons relaLed Lo Lhelr envlronmenLal and eLhlcal concerns27
Powever Lhls pracLlce ls far from conslsLenL or unlversal
edlL
CloballzaLlon and markeL forces

As corporaLlons pursue growLh Lhrough globallzaLlon Lhey have encounLered new challenges LhaL
lmpose llmlLs Lo Lhelr growLh and poLenLlal proflLs CovernmenL regulaLlons Larlffs envlronmenLal
resLrlcLlons and varylng sLandards of whaL consLlLuLes labor explolLaLlon are problems LhaL can cosL
organlzaLlons mllllons of dollars Some vlew eLhlcal lssues as slmply a cosLly hlndrance whlle some
companles use CS8 meLhodologles as a sLraLeglc LacLlc Lo galn publlc supporL for Lhelr presence ln global
markeLs helplng Lhem susLaln a compeLlLlve advanLage by uslng Lhelr soclal conLrlbuLlons Lo provlde a
subconsclous level of adverLlslng (lry kelm Melners 1986 103) Clobal compeLlLlon places a parLlcular
pressure on mulLlnaLlonal corporaLlons Lo examlne noL only Lhelr own labor pracLlces buL Lhose of Lhelr
enLlre supply chaln from a CS8 perspecLlve
edlL
Soclal awareness and educaLlon

1he role among corporaLe sLakeholders ls Lo work collecLlvely Lo pressure corporaLlons LhaL are
changlng Shareholders and lnvesLors Lhemselves Lhrough soclally responslble lnvesLlng are exerLlng
pressure on corporaLlons Lo behave responslbly nongovernmenLal organlzaLlons are also Laklng an
lncreaslng role leveraglng Lhe power of Lhe medla and Lhe lnLerneL Lo lncrease Lhelr scruLlny and
collecLlve acLlvlsm around corporaLe behavlor 1hrough educaLlon and dlalogue Lhe developmenL of
communlLy awareness ln holdlng buslnesses responslble for Lhelr acLlons ls growlng28 ln recenL years
Lhe LradlLlonal concepLlon of CS8 ls belng challenged by Lhe more communlLyconsclous CreaLlng Shared
value concepL (CSv) and several companles are reflnlng Lhelr collaboraLlon wlLh sLakeholders
accordlngly
edlL
LLhlcs Lralnlng

1he rlse of eLhlcs Lralnlng lnslde corporaLlons some of lL requlred by governmenL regulaLlon ls anoLher
drlver credlLed wlLh changlng Lhe behavlor and culLure of corporaLlons 1he alm of such Lralnlng ls Lo
help employees make eLhlcal declslons when Lhe answers are unclear 1ullberg belleves LhaL humans are
bullL wlLh Lhe capaclLy Lo cheaL and manlpulaLe a vlew Laken from (1rlvers 1971 1983) hence Lhe need
for learnlng normaLlve values and rules ln human behavlor29 1he mosL dlrecL beneflL ls reduclng Lhe
llkellhood of dlrLy hands (Crace and Cohen 2003) flnes and damaged repuLaLlons for breachlng laws
or moral norms CrganlzaLlons also see secondary beneflL ln lncreaslng employee loyalLy and prlde ln
Lhe organlzaLlon CaLerplllar and 8esL 8uy are examples of organlzaLlons LhaL have Laken such sLeps30

lncreaslngly companles are becomlng lnLeresLed ln processes LhaL can add vlslblllLy Lo Lhelr CS8 pollcles
and acLlvlLles Cne meLhod LhaL ls galnlng lncreaslng popularlLy ls Lhe use of wellgrounded Lralnlng
programs where CS8 ls a ma[or lssue and buslness slmulaLlons can play a parL ln LhlsclLaLlon needed

Cne relevanL documenLary ls 1he CorporaLlon Lhe hlsLory of organlzaLlons and Lhelr growLh ln power ls
dlscussed CorporaLe soclal responslblllLy whaL a company does ln Lrylng Lo beneflL socleLy versus
corporaLe moral responslblllLy (CM8) whaL a company should morally do are boLh lmporLanL Loplcs Lo
conslder when looklng aL eLhlcs ln CS8 lor example 8ay Anderson ln 1he CorporaLlon Lakes a CM8
perspecLlve ln order Lo do whaL ls moral and he beglns Lo shlfL hls companys focus Lowards Lhe
blosphere by uLlllzlng carpeLs ln secLlons so LhaL Lhey wlll susLaln for longer perlods 1hls ls Anderson
Lhlnklng ln Lerms of CarreL Pardlns 1he 1ragedy of Lhe Commons where lf people do noL pay
aLLenLlon Lo Lhe prlvaLe ways ln whlch we use publlc resources people wlll evenLually lose Lhose publlc
resources
edlL
Laws and regulaLlon

AnoLher drlver of CS8 ls Lhe role of lndependenL medlaLors parLlcularly Lhe governmenL ln ensurlng
LhaL corporaLlons are prevenLed from harmlng Lhe broader soclal good lncludlng people and Lhe
envlronmenL CS8 crlLlcs such as 8oberL 8elch argue LhaL governmenLs should seL Lhe agenda for soclal
responslblllLy by Lhe way of laws and regulaLlon LhaL wlll allow a buslness Lo conducL Lhemselves
responslbly

1he lssues surroundlng governmenL regulaLlon pose several problems 8egulaLlon ln lLself ls unable Lo
cover every aspecL ln deLall of a corporaLlons operaLlons 1hls leads Lo burdensome legal processes
bogged down ln lnLerpreLaLlons of Lhe law and debaLable grey areas (Sacconl 2004) lor example
Ceneral LlecLrlc falled Lo clean up Lhe Pudson 8lver afLer conLamlnaLlng lL wlLh organlc polluLanLs 1he
company conLlnues Lo argue vla Lhe legal process on asslgnmenL of llablllLy whlle Lhe cleanup remalns
sLagnanL (Sulllvan Schlafo 2003)

1he second lssue ls Lhe flnanclal burden LhaL regulaLlon can place on a naLlons economy 1hls vlew
shared by 8ulkeley who clLes Lhe AusLrallan federal governmenLs acLlons Lo avold compllance wlLh Lhe
kyoLo roLocol ln 1997 on Lhe concerns of economlc loss and naLlonal lnLeresL 1he AusLrallan
governmenL Look Lhe poslLlon LhaL slgnlng Lhe kyoLo acL would have caused more slgnlflcanL economlc
losses for AusLralla Lhan for any oLher CLCu naLlon (8ulkeley 2001 pg 436) Cn Lhe change of
governmenL followlng Lhe elecLlon ln november 2007 rlme MlnlsLer kevln 8udd slgned Lhe raLlflcaLlon
lmmedlaLely afLer assumlng offlce on 3 uecember 2007 [usL before Lhe meeLlng of Lhe un lramework
ConvenLlon on CllmaLe Change CrlLlcs of CS8 also polnL ouL LhaL organlsaLlons pay Laxes Lo governmenL
Lo ensure LhaL socleLy and Lhe envlronmenL are noL adversely affecLed by buslness acLlvlLles

uenmark has a law on CS8 Cn 16 uecember 2008 Lhe uanlsh parllamenL adopLed a blll maklng lL
mandaLory for Lhe 1100 largesL uanlsh companles lnvesLors and sLaLeowned companles Lo lnclude
lnformaLlon on corporaLe soclal responslblllLy (CS8) ln Lhelr annual flnanclal reporLs 1he reporLlng
requlremenLs became effecLlve on 1 !anuary 200931 1he requlred lnformaLlon lncludes
lnformaLlon on Lhe companles' pollcles for CS8 or soclally responslble lnvesLmenLs (S8l)
lnformaLlon on how such pollcles are lmplemenLed ln pracLlce and
lnformaLlon on whaL resulLs have been obLalned so far and managemenLs expecLaLlons for Lhe fuLure
wlLh regard Lo CS8/S8l

CS8/S8l ls sLlll volunLary ln uenmark buL lf a company has no pollcy on Lhls lL musL sLaLe lLs poslLlonlng
on CS8 ln Lhelr annual flnanclal reporL More on Lhe uanlsh law can be found aL CS8govdk
edlL
Crlses and Lhelr consequences

CfLen lL Lakes a crlsls Lo preclplLaLe aLLenLlon Lo CS8 Cne of Lhe mosL acLlve sLands agalnsL
envlronmenLal managemenL ls Lhe CL8LS rlnclples LhaL resulLed afLer Lhe Lxxon valdez lncldenL ln
Alaska ln 1989 (Crace and Cohen 2006) CLher examples lnclude Lhe lead polsonlng palnL used by Loy
glanL MaLLel whlch requlred a recall of mllllons of Loys globally and caused Lhe company Lo lnlLlaLe new
rlsk managemenL and quallLy conLrol processes ln anoLher example Magellan MeLals ln Lhe WesL
AusLrallan Lown of Lsperance was responslble for lead conLamlnaLlon kllllng Lhousands of blrds ln Lhe
area 1he company had Lo cease buslness lmmedlaLely and work wlLh lndependenL regulaLory bodles Lo
execuLe a cleanup Cdwalla also experlenced a crlsls wlLh sales dropplng 90 and Lhe companys sLock
prlce dropplng 34 due Lo several cases of L coll spread Lhrough Cdwalla apple [ulce 1he company
ordered a recall of all apple or carroL [ulce producLs and lnLroduced a new process called flash
pasLeurlzaLlon as well as malnLalnlng llnes of communlcaLlon consLanLly open wlLh cusLomers
edlL
SLakeholder prlorlLles

lncreaslngly corporaLlons are moLlvaLed Lo become more soclally responslble because Lhelr mosL
lmporLanL sLakeholders expecL Lhem Lo undersLand and address Lhe soclal and communlLy lssues LhaL
are relevanL Lo Lhem undersLandlng whaL causes are lmporLanL Lo employees ls usually Lhe flrsL prlorlLy
because of Lhe many lnLerrelaLed buslness beneflLs LhaL can be derlved from lncreased employee
engagemenL (le more loyalLy lmproved recrulLmenL lncreased reLenLlon hlgher producLlvlLy and so
on) key exLernal sLakeholders lnclude cusLomers consumers lnvesLors (parLlcularly lnsLlLuLlonal
lnvesLors) communlLles ln Lhe areas where Lhe corporaLlon operaLes lLs faclllLles regulaLors academlcs
and Lhe medla

8ranco and 8odrlgues (2007) descrlbe Lhe sLakeholder perspecLlve of CS8 as Lhe lncluslon of all groups
or consLlLuenLs (raLher Lhan [usL shareholders) ln managerlal declslon maklng relaLed Lo Lhe
organlzaLlon's porLfollo of soclally responslble acLlvlLles32 1hls normaLlve model lmplles LhaL Lhe CS8
collaboraLlons are poslLlvely accepLed when Lhey are ln Lhe lnLeresLs of sLakeholders and may have no
effecL or be deLrlmenLal Lo Lhe organlzaLlon lf Lhey are noL dlrecLly relaLed Lo sLakeholder lnLeresLs 1he
sLakeholder perspecLlve suffers from a wheel and spoke neLwork meLaphor LhaL does noL acknowledge
Lhe complexlLy of neLwork lnLeracLlons LhaL can occur ln cross secLor parLnershlps lL also relegaLes
communlcaLlon Lo a malnLenance funcLlon slmllar Lo Lhe exchange perspecLlve33
edlL
ArgumenLs for lncludlng ulsablllLy ln CS8

ln recenL years CS8 ls lncreaslngly becomlng a parL of a large number of companles lL ls becomlng an
lmporLanL acLlvlLy for buslnesses LhroughouL Lhe globe

8aslcally CS8 means LhaL a companys buslness model should be soclally responslble and
envlronmenLally susLalnable 8y soclally responslble lL means LhaL Lhe companys acLlvlLles should
beneflL Lhe socleLy and by envlronmenLally susLalnable lL means LhaL Lhe acLlvlLles of Lhe company
should noL harm Lhe envlronmenL

8uL nowadays whaL we can see ls LhaL Lhere ls an ouLbursL of enLhuslasm for envlronmenLal causes only
lor eg conLrolllng polluLlonglobal warmlng deforesLaLlon mlLlgaLe carbon emlsslons eLc Whereas lL
can be sald LhaL Lhe same enLhuslasm ls noL seen for soclal welfare 1hls ls because mosL of Lhe soclal
welfare acLlvlLles of Lhe companles conLrlbuLe Lo Lhe welfare of us able bodled people buL do noL Lake
lnLo accounL Lhe dlsabled people who are also a parL of Lhe socleLy ln whlch Lhe company exlsLs and who
amounL Lo aL leasL 10 of Lhe populaLlon 1herefore dlsablllLy musL be made a parL of CS8 pollcles of
Lhe companles and people wlLh dlsablllLles musL be allowed Lo become sLakeholders

1here should be nondlscrlmlnaLlon or dlverslLy managemenL awarenessralslng and Lralnlng for
employees ln Lhe companles LhaL lnclude dlsablllLy LreaLmenL 1hey should lnclude Lhe dlsablllLy facLor
ln employmenL/P8 lndlcaLors (age dlsLrlbuLlon gender conLracL Lype professlonal caLegorles and/or
acLlvlLy areas roLaLlon) so LhaL Lhe slLuaLlon of people wlLh dlsablllLles can be compared wlLh LhaL of
oLher employees 1he companles should Lake lnLo accounL Lhe characLerlsLlcs of people wlLh dlsablllLles
when managlng human resources (recrulLmenL selecLlon conLracLlng and lnducLlon promoLlon
Lralnlng prevenLlon of rlsks aL work) CusLomer care sLaff Lralnlng should be carrled ouL by Lhe
companles almed aL guaranLeelng approprlaLe LreaLmenL of people wlLh dlsablllLles 1hey should have a
pollcy or dlrecLlve almed aL conslderlng or favourlng suppllers and subconLracLors LhaL employ people
wlLh dlsablllLles lncludlng ShelLered Workshops

1hus carrylng ouL buslness pracLlce whlch lncludes dlsabled people wlll help lmprove Lhe companys
repuLaLlon and lmage ln an lncreaslngly compeLlLlve envlronmenL

llnally dlsablllLy ls one of Lhe facLors LhaL can conLrlbuLe Lo ulverslLy and ulverslLy ls a rlslng value
wlLhln companles' managemenL Powever dlsablllLy ls ofLen pushed behlnd ln favour of oLher dlverslLy
crlLerla Lhus dlsablllLy needs Lo be speclflcally lncluded wlLhln Lhe CS8 34
























1.1 What is corporate sociaI responsibiIity?
The term is often used interchangeably for other terms such as Corporate Citizenship and is
also linked to the concept of Triple Bottom Line Reporting (TBL), which is used as a
framework for measuring an organisation's performance against economic, social and
environmental parameters.
The rationale for CSR has been articulated in a number of ways. n essence it is about
building sustainable businesses, which need healthy economies, markets and communities.
The key drivers for CSR are1:
nIightened seIf-interest - creating a synergy of ethics, a cohesive society and a
sustainable global economy where markets, labour and communities are able to
function well together.
SociaI investment - contributing to physical infrastructure and social capital is
increasingly seen as a necessary part of doing business.
Transparency and trust - business has low ratings of trust in public perception.
There is increasing expectation that companies will be more open, more accountable
and be prepared to report publicly on their performance in social and environmental
arenas
Increased pubIic expectations of business - globally companies are expected to
do more than merely provide jobs and contribute to the economy through taxes and
employment.