CSR is also known as Sustainable Responsible Business (SRB), or Corporate Social Performance is a form of Corporate self regulation integrated into a business model
CSR is manner of operating a business that meets or exceeds the ethical, legal, commercial, and public expectations of customers, shareholders, employees, and communities
CSR includes: Take corrective action before it is required Work with affected constituents to Resolve Mutual Problem Publicly admit their Mistakes Get involved in Appropriate Social Programmes Help to correct Environment Problem Take needed public stands on Social issues A strong CSR can: Help recruit and retain good employees Help differentiate the firm and enhance its brands Help cut costs, such as minimizing packaging, recycling, economizing on energy usage, and reducing waste in operations Help the firm avoid increased taxation, regulation, or other legal actions by local government authorities Following charges that its foreign contract factories were run like sweatshops Nike took steps to improve working conditions. Now, Nike is the largest private employer in Vietnam.
Ethics are moral principles and values that govern the behavior of people, firms, and governments.
Corruption is the abuse of power to achieve illegitimate personal gain.
More than 30 percent of MNCs believe corruption is a major or severe concern in their global activities.
Bribery is common and can take the form of grease payments, small inducements intended to expedite decisions and transactions or gain favour.
Examples: Firms may-
Falsify or misrepresent contracts or official documents
Offer or accept bribes or inappropriate gifts
Tolerate sweatshop conditions or abuse employees
Use false advertising or other deceptive marketing
Engage in deceptive or discriminatory pricing
Deceive or abuse intermediaries in the channel
Undertake activities that harm the natural environment
Growing sense that responsibility for righting social wrongs belongs to all organizations Growing business need for integrative mechanisms such as ethics ethics reduce operating uncertainties Voluntary guidelines avoid government impositions
Ethical conduct is needed in an increasingly interdependent world Companies wish to avoid problems and/or be good public citizens CORPORATIONS HAVE TO COMPLY ECONOMIC RESPONSIBILITY (Be Profitable) ETHICAL RESPONSIBILITY (Do what is right)
DISCRIMINATORY RESPONSIBILITY (Contribute to the community)
LEGAL RESPONSIBILITY (Obey the law) Corporations are Primarily Economic Institutions. Must follow the law Managers must act ethically Duty to correct the adverse social impacts they cause Comply with the norms of the social contract. Managers should try to meet the legitimate needs of stakeholders Publicly report on market, mandated, and voluntary actions Effective abolition of Child Labour The UN Global Compact asks companies to embrace, support and enact, within their sphere of influence, a set of core values in the following Areas:
Human Rights: Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; and Principle 2: make sure that they are not complicit in human rights abuses.
Labour: Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; Principle 4: the elimination of all forms of forced and compulsory labour; Principle 5: the effective abolition of child labour; and Principle 6: the elimination of discrimination in respect of employment and occupation.
Environment: Principle 7: Businesses should support a precautionary approach to environmental challenges; Principle 8: undertake initiatives to promote greater environmental responsibility; and Principle 9: encourage the development and diffusion of environmentally friendly technologies. Anti-Corruption: Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.
1. Obstructionist Strategy: Meet Economic Responsibility 2. Defensive Strategy: Do minimum legally required meet eco, legal and ethical responsibility. 3. Accommodative Strategy: Do minimum ethically required meet eco, legal and ethical responsibility. 4. Proactive Strategy: take leadership in social initiatives, meet eco, legal, ethical and discretionary responsibility. UN code of Conduct for TNCs European Convention on Human rights International covenant on civil and political Rights UN universal declaration of Human rights International covenant on Economic Social and Political Rights
Ethical issues Workers not well paid (often work 12 hours a day, 7 days a week) Piracy of intellectual property, counterfeiting, and industrial spying Human rights violations Use of prisoner and child labor China- Political campaign contributions & lobbyists Fraud in mortgage sector Attitude of caveat emptor Rising wage inequality middle class wages stagnant for a decade Lack of health benefits for workers Loss of promised retirement benefits
United States- International agencies and national governments have also attempted to lay down business principles for guidance.
1. Rise of Civil Society Groups 2. Response of TNCs 3. Government Actions Emergence of organized civil society and NGOs altered Business environment globally Role of MNC within global business environment NGOs globally Save the Children Oxfam CARE World Wildlife Fund Conservation International TNCs generally show a cautious response to social responsibilities issues. Some TNCs adopt their own codes of conduct to address social responsibility Corporate codes of conduct help to boost corporate image. Some TNCs adopt a proactive approach to CSR on the belief that it is a good business practice.
Govt of various countries take actions on the basis of international standards or codes.
UN and OECD has laid down guidelines related to human rights, labor issues and environment.