Conceptual Clarity of

CSR/Sustainability Related Terms

Corporate Social Responsibility (CSR)
Historical Perspective
From the 1950’s to the present the concept of CSR has
gained considerable acceptance and the meaning has been
broadened to include additional components
Corporate Social Responsibility (CSR)
Evolving Viewpoints
 CSR considers the impact of the company’s actions on society (Bauer)

 CSR requires decision makers to take actions that protect and improve the
welfare of society as a whole along with their own interests (Davis and
Blomstrom)
Corporate Social Responsibility (CSR)

Evolving Viewpoints
 CSR mandates that the corporation has not only economic and legal
obligations, but also certain responsibilities to society that extend
beyond these obligations (McGuire)
Corporate Social Responsibility (CSR)
Evolving Viewpoints
 CSR relates primarily to achieving outcomes from organizational decisions
concerning specific issues or problems, which by some normative standard
have beneficial rather than adverse effects upon pertinent corporate
stakeholders. The normative correctness of the products of corporate
action have been the main focus of CSR (Epstein)
‘Fundamentals of Corporate Social Responsibility’

 CSR is now a mainstream approach to business:

“The movement for CSR has won the battle of ideas
…CSR commands the attention of Executives Everywhere.”
(Economist 2005)

 In 2006, as this movement gains momentum and

mainstream acceptance, it is time for people that work
or have an interest in this area to take stock and take
a closer at the fundamentals of CSR.
What is CSR?

Canadian Government:

“CSR is generally understood to be the way a company

achieves a balance or integration of economic,
environmental and social imperatives while at the same
time addressing shareholder and stakeholder expectations.”
What is CSR?

UK Government:

“The Government sees CSR as the business contribution to

our sustainable development goals. Essentially it is about
how business takes account of its economic, social and
environmental impacts in the way it operates –
maximising the benefits and minimising the downsides.”
What is CSR?

European Union:

“[CSR is] a concept whereby companies integrate

social and environmental concerns in their business
operations and in their interaction with their
stakeholders on a voluntary basis.”
What is CSR?

World Business Council for Sustainable

Development:

“We define CSR as business' commitment to

contribute to sustainable economic development,
working with employees, their families, the local
community, and society at large to improve their
quality of life.”
What is CSR?

The Kennedy School of Government (Harvard University),

CSR Initiative:

“The term [CSR] is often used interchangeably with others,

including corporate responsibility, corporate citizenship, social
enterprise, sustainability, sustainable development, triple-
bottom line, corporate ethics, and in some cases corporate
governance.Though these terms are different, they all point in
the same direction: throughout the industrialized world and in
many developing countries there has been a sharp escalation
in the social roles corporations are expected to play.”
What is CSR?

Common Understanding One:

CSR is an idea whereby companies integrate economic,

social and environmental concerns in their business
operations
Corporate Social Responsibility and
Sustainability
CORPORATE SOCIAL RESPONSBILITY
 Not only deals with Corporate Philanthropy but also other issues that affect the
environment, consumers, human rights, supply-chain sustainability etc
 CSR mainly deals with current responsibilities of a company towards different
stakeholders undertaken by the company

SUSTAINABILITY
 Brundtland Report – “Our Common Future” defined Sustainable Development as
development that “meets the needs of the present without compromising the ability
of the future generations to meet their own needs”
 Business Sustainability is the ability of the firms to respond to their short-term
needs without compromising the ability to meet their future needs
 Firms can build long term relationships, building long-term infrastructure, long term
strategies
Triple bottom line and Quadruple Bottom Line

TRIPLE BOTTOM LINE

 PEOPLE, PROFIT and PLANET

QUADRUPLE BOTTOM LINE

 PEOPLE, PROFIT, PLANET and PURPOSE
Common Understanding One: Integration
Corporate Social Responsibility: The Integrated
Approach to Business in the 21st Century

Consumer
Exchange Confidence Interest
Rates Rates

Governance Regulation/Policy

Economic

Climate Corruption
Change

Environment Social Communities

Waste

Biodiversity Labour/
Workplac
Human e
Resource
Use Rights
Common Understanding Two: Stakeholders

 Common Understanding Two: CSR relates to the idea whereby a business

addresses and balances the needs of stakeholders.

 Who/what are stakeholders? “Individuals and groups who may affect or be

affected by the actions, decisions, policies, practices or goals of an enterprise.”

Examples:
• Shareholders and other investors
• Employees
• Customers
• Governments
• Local communities
• NGOs
• Environment
Is CSR a Voluntary Concept?
 Some definitions (e.g. European Union) describe CSR as a voluntary
concept.

 Given the multitude of initiatives that promote CSR (e.g. Global

Compact, Global Reporting Initiative, OECD Guidelines) in a voluntary
fashion- not surprising CSR is perceived in this way

 However, recent legal developments suggest CSR is no longer a

voluntary concept.

 Two major areas of development: Reporting and Directors’ Duties

Mandatory CSR Reporting

 Backed by increasing calls from investors and the community for more
disclosure and reporting on CSR issues, many jurisdictions have now
introduced mandatory corporate reporting requirements on environmental
and social matters:
• Australia
• France
• South Africa
• Sweden
• Canada
• Denmark
• Netherlands
• Norway
• India
• And very soon the UK.
Key Issues in CSR

 Labour rights:
 child labour
 forced labour
 right to organise
 safety and health

 Environmental conditions
 water & air emissions
 climate change

 Human rights
 cooperation with paramilitary forces
 complicity in extra-judicial killings

 Poverty Alleviation
 job creation
 public revenues
 skills and technology
Context Globally

 Liberalisation of markets – reduction of the

regulatory approach

 Emergence of global giants, consolidation of market

share

 Development of the ‘embedded firm’ and the global

value chain

 Development of supplier networks in developing countries

Key drivers of CSR

Around the world Developing Countries

• NGO Activism • Foreign customers
• Responsible investment • Domestic consumers
• Litigation • FDI
• Gov & IGO initiatives • Government & IGO
Key Drivers: NGO Activism

 Facilitators: Internet,
media, low cost travel

 Boycotts, brand damage,

influence legislation,
domino effect

 e.g. Shell in Nigeria, Exxon

in Cameroon, Sinopec in
Sudan, Apparel Industry
(Nike, Gap), GMO, Wood
Products, etc.
Key Drivers: Litigation

 Foreign Direct Liability

 Alien Tort Claims Act (ATCA): human
rights, environmental rights
o Unocal Burma $30,000,000 settlement

o Coca-Cola Columbia
o Rio Tinto Papau New Guinea
o Del Monte Guatemala
o The Gap Saipan
o Shell Nigeria Other tools: RICO, False
Advertising
 E.g. Saipan ‘sweatshop’ cases; Katsky v. Nike
Key Drivers: Govt and Multilateral agencies
 UN Global Compact
 UN Principles for Responsible Investment
 UNEP Equator Principles
 ILO Tripartite Declaration of Principles
concerning Multinational Enterprises and
Social Policy (MNE Declaration)
 UNHCHR Business and Human Rights
 UNODC Anti-corruption
 UNCTAD Corporate Responsibility
Reporting, World Investment Report
Sphere of Influence
Sphere of Influence

Who – is to be influenced?
Sphere of Influence

What – issues are to be influenced?

Sphere of Influence

How – are those issues to be influenced?

Sphere of Influence
Example: Mattel
Who: suppliers, JVs and branch plants
What: OSH
How: focus on manufacturing processes, HR, factory design
Thank You