Transcript Slide 1

Corporate Social Responsibility
Business Management for the 21st Century
Spring 2011
What We Will Discuss
• What is “ Corporate Social Responsibility”
• Models of Business and Role of CSR
• ISO 26000
• Business Benefits
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What is “ Corporate Social
Responsibility”
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What is Corporate Social
Responsibility -- CSR
• Corporate Social Responsibility is 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 of the local community
and society at large. It includes:
– an organization’s obligation to maximize its positive impact on
stakeholders and to minimize its negative impact
– legal, ethical, economic, and philanthropic (discretionary) dimensions
– business giving back to society
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The Traditional Business Model
Philanthropy in response to
appeals for help from
society and social
investment in projects of
long-term importance to the
company
Social
Responsibility
Business
•Jobs created
Core activity of the
company providing the
goods and services
society wants
•Taxes paid
•Goods & Services
•Investment
•Technology transfer
•Import substitution
•Export earnings
•Development of suppliers
•Human Resources Development
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Models of Business and CSR
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Basic Principles of CSR
Charity
Principle
Definition
Type of Activity
Examples
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•Business should give voluntary
aid to society’s needy persons
and groups.
Stewardship
Principle
•Business, acting as a public trustee,
should consider the interests of all
who are affected by business
decisions and policies.
•Corporate philanthropy
•Acknowledge business and society
•Voluntary actions to promote the interdependence.
social good.
•Balancing the interests and needs
of many diverse groups in society.
•Corporate philanthropic
foundations.
•Private initiatives to solve social
problems.
•Social partnerships with needy
groups.
•Enlightened self-interest
•Meeting legal requirements
•Stakeholder approach to corporate
strategic planning
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CSR Models
Position
Responsible to
therefore
Minimalist
Shareholders/owners
Maximizing profits
Self Interested
Shareholders/owners/”cost Do good when it furthers
controllers”
quest for growth and profit
Social Contract
Those with social and legal
contract
Goes beyond law to spirit
of commitment
Stakeholder
Management
Those who influence
direction and fortunes
Develop responsive
strategies
Stakeholder
Stewardship
Society as whole/future
Solutions for social
problems
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The CSR Pyramid
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The Economic Dimension
• Concerns how resources for the production of
goods and services are distributed within the
social system. Areas of interest;
– Wages paid employees
– Cost of goods and production
– Prices established for consumers
– Profit of Shareholders
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The Legal Dimension
• Obeying governmental laws and regulations:
– Civil law: rights & duties of individuals and
organizations
– Criminal law: prohibits specific actions and
imposes fines and/or imprisonment as
punishment for breaking the law
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The Ethical Dimension
• The ethical area includes;
– behaviors and activities that are expected or
prohibited by organizational members, the
community, and society (not codified into law)
– standards, norms, or expectations that reflect the
concern of major stakeholders
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The Discretionary Dimension
• Programs and activities which are not
mandatory;
– business’s contributions to society
– strategic “philanthropy”
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Toyota – “100 Toyotas for Good”
Microsoft – “Gates Foundation”
Nestle – “Poor Coffee Farmer Program”
Nike – “The Girl Effect”
Platinum Bank – “ Financial Literacy for Kids”
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Understanding the Four Components
Responsibility
Societal
Expectations
Examples
Economic
Required
Be profitable. Maximize
sales, minimize costs, etc.
Legal
Required
Obey laws and regulations.
Ethical
Expected
Do what is right, fair and
just.
Philanthropic/
Discretionary
Desired/
Expected
Be a good corporate citizen.
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Corporate Social Responsibility (CSR)
Arguments For
• Addresses social issues that businesses caused and
allows business to be part of the solution
• Protects business self-interest
• Promotes long-term profits
• Responds to changing stakeholder demands
• Limits future government intervention
• Addresses issues by using business resources and
expertise
• Addresses issues by being proactive
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Corporate Social Responsibility (CSR)
Arguments Against
• Restricts the free market goal of profit
maximization
• Business is not equipped to handle social
activities
• Dilutes the primary aim of the business
• Increases businesses power
• Limits the ability to compete in a global
marketplace
• Imposes “hidden costs” passed on to
stakeholders
• Imposes unequal costs among competitors
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ISO - A Global Issue
• CSR has become prominent in the language and
strategy of business and by the growth of dedicated
CSR and SR organizations globally. Governments and
international governmental organizations are
increasingly encouraging CSR and forming CSR
partnerships.
• CSR and SR are rapidly becoming a major part of all
business management courses and a key global issue.
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About the ISO
• ISO (International Organization for Standardization) is the world's largest
developer and publisher of International Standards.
• ISO is a network of the national standards institutes of 160 countries, one
member per country, with a Central Secretariat in Geneva, Switzerland,
that coordinates the system.
• ISO is a non-governmental organization that forms a bridge between the
public and private sectors. On the one hand, many of its member
institutes are part of the governmental structure of their countries, or are
mandated by their government. On the other hand, other members have
their roots uniquely in the private sector, having been set up by national
partnerships of industry associations.
• Therefore, ISO enables a consensus to be reached on solutions that meet
both the requirements of business and the broader needs of society.
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The ISO Global Compact
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Human Rights
– Human Rights within sphere of influence
– Complicity with rights violations - repression & conflict
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Labour
– The right to collective bargaining & freedom of association
– Eliminate forced and compulsory labour
– To effectively abolish child labour
– To end discrimination in the workplace
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Environment
– To support a precautionary approach to the environment
– Promote greater environmental responsibility
– Encourage the diffusion of environmentally friendly technology
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Anti- Corruption
– Work against all forms of corruption, including extortion and bribery
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What is ISO 26000
• ISO 26000 is an ISO International Standard giving
guidance on Social Responsibility (SR). It is intended for
use by organizations of all types, in both public and
private sectors, in developed and developing countries,
as well as in economies in transition. It will assist them
to operate in the socially responsible manner that
society increasingly demands.
• ISO 26000 contains voluntary guidance, not
requirements, and therefore is not for use as a
certification standard like ISO 9001:2008 and ISO
14001:2004.
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Why is ISO 26000 Important
• Sustainable business for organizations means not only
providing products and services that satisfy the customer,
and doing so without jeopardizing the environment, but
also operating in a socially responsible manner.
• ISO’s expertise is in developing harmonized international
agreements based on double levels of consensus – among
the principal categories of stakeholder and among
countries
• ISO 26000 will distill a globally relevant understanding of
what social responsibility is and what organizations need to
do to operate in a socially responsible way.
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What will ISO 26000 Achieve
ISO 26000 will integrate international
expertise on social responsibility – what it
means, what issues an organization needs to
address in order to operate in a socially
responsible manner, and what is best practice
in implementing SR. ISO 26000 will be a
powerful SR tool to assist organizations to
move from good intentions to good actions.
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Principles of Social Responsibility
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Ethical behavior.
Respect for rule of law
Respect for international norms of behavior
Respect for and considering stakeholder interest
Accountability
Transparency
Precautionary approach
Respect for human rights
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Business Responsibilities
in the 21st Century
• Demonstrate a commitment to society’s values
and contribute to society’s social, environmental,
and economic goals through action.
• Insulate society from the negative impacts of
company operations, products and services.
• Share benefits of company activities with key
stakeholders as well as with shareholders.
• Demonstrate that the company can make more
money by doing the right thing.
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To Summarize --
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How Firms Benefit
No matter the size of an organization or the level of its involvement
with CSR, every contribution is important and provides a number of
benefits to both the community and business. Contributing to and
supporting CSR does not have to be costly or time consuming.
Many businesses active in their local communities are seeing
significant benefits from their involvement:
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Reduced costs
Increased business leads
Improved reputation
Increased staff morale and skills development
Improved relationships with the local community, partners and clients
Innovation in processes, products and services
Mitigating the risks a company faces
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Thank You!!
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