Chapter 5

Corporate
Social Responsibility

-Tom and Jerry-

 Chapter Objectives:
Corporate
1. Is there a Social Responsibility of
Social Business if so, what is its origin
Responsibility 2. Responsibility to whom?
3. Extent of responsibility
4. Ethics and social responsibility
5. Exploring”Enlightened self
interest” model work? Does
Good Ethics” means Good
Business?”
UNDERSTANDIN
CORPORATE
G
SOCIAL
RESPONSIBILIT
Y
 Comprehensive set ofCSR policies, practices, and programs
that are integrated intoDEFINED
business operations, supply chains
and decision making processes throughout the company
and usually includes issues related to business ethics,
community investment, environmental concerns,
governance, human rights, the marketplace as well as the
workplace.
is defined as the proposition that companies are responsible
not only for maximizing profits but also for recognizing the
needs of its stakeholders such as employees, customers,
suppliers and the regions that they serve.
“RESPONSIBILITY” involves balancing profit maximization
and stakeholders’ needs.
THE TRIPLE BOTTOM LINE
CSR COMPONENTS
 CORPORATE CITIZEN
PROFITABILITY
PRODUCTIVITY
SUSTAINABILITY
15

Corporate Social Responsibility (CSR).

▸ Social Responsibility ▸ Social Responsibility, as it applies

means that individuals and
companies have a duty to
act in the best interests
of their environment and
society as a whole. ▸ It pertains to people and organizations
to Business, is known as
Corporate Social
Responsibility (CSR).
behaving and
conducting business ethically and with
sensitivity towards social, cultural,
economic, and environmental issues.
16

AREAS OF RESPONSIBILITY

▸ General Public
▸ Environment
▸ Local Community
▸ Employees/workers
▸ Consumer/Customers
.
▸ Shareholders/Investors
▸ Government
17
Responsibilities :

Responsibilities to the General Public

▸ Public Health Issues

▸ Protecting the Environment
▸ Developing the Quality of the Workforce
▸ Corporate Philanthropy

Responsibilities to the Environment

▸ Respect the environment -making rational use of natural resources

and taking steps to prevent pollution from the different processes
involved in our industrial operations. Promote the sustainable use of
raw materials and natural resources.
18
Responsibilities :

Responsibilities to the Local Community

▸ Community involvement can take many forms. For example, some businesses
choose to: support a local charity with financial contributions.

Responsibilities to Customers/ Consumers

▸ The Right to Be Safe Safe operation of products, avoiding product liability.
▸ The Right to Be Informed Avoiding false or misleading advertising and providing effective
customer service.
▸ The Right to Choose Ability of consumers to choose the products and services they want.
▸ The Right to Be Heard Ability of consumers to express legitimate complaints to the
appropriate parties.
19

Responsibilities:

Responsibilities to employees
▸ Responsibilities Workplace Safety Monitored by Occupational Safety and Health Administration.
▸ Quality-of-Life Issues Balancing work and family through flexible work schedules, subsidized child
care, and regulation such as the Family and Medical Leave Act of 1993.
▸ Ensuring Equal Opportunity on the Job
Providing equal opportunities to all employees without discrimination; many aspects regulated by law.
▸ Age Discrimination Age Discrimination in Employment
Act of 1968 protects workers age 40 or older.
▸ Sexual Harassment and Sexism Avoiding unwelcome actions of a sexual nature; equal pay for equal
work without regard to gend
20

Responsibilities to Investors and the Financial Community

▸ Obligation to make profits for shareholders.

▸ • Expectation of ethical and moral behavior.
▸ • Investors protected by regulation by the
Securities and Exchange Commission
and state regulation
21
Responsibilities :

Corporate Governance
▸ Corporate governance pertains to a set of policies, processes,
laws, and customs that affect the administration and control of a
certain company. This concept embraces the interaction of
various stakeholders involved as well as the corporate objectives
of a firm.
▸ Governments and corporations increase collaboration to provide
assistance to communities and locales through global
partnerships
▸ Best “investments”
▹ Controlling and preventing AIDS
▹ Fighting malnutrition
▹ Reducing subsidies and trade restrictions
▹ Controlling malaria
22
23
24
25

Ethics and Social Responsibility

▸ Human Rights

▹ Currently no universally adopted standard

▹ A great deal of subjectivity and culturally biased viewpoints exist
▹ Some basic rights: life, freedom from slavery or torture, freedom of
opinion and expression, general ambiance of nondiscriminatory
practices
▹ Human rights violations still rampant globally

▸ Corruption
Government corruption
Pervasive element in international
Business environment
 Ethics and Social Responsibility
26

Around the World

▸ Ethics and Social Responsibility

Around the World: CHINA
▸ Workers not well paid
▸ Often forced to work 12 hours a day, 7 days a week
▸ Piracy, counterfeiting, industrial spying
▸ Human rights violations
▹ Use of prisoner and child labor

▸ Philippines
Philippine cabinet member have accepted
questionable payments and favors
27

▸ Ethics and Social Responsibility

Around the World: JAPAN
▸ Equal opportunity issues
▹ Refusal to hire women or promote them into management positions
▹ Hostile work environment
▹ Traditional role of females and female employees
▹ Sexual harassment may not be considered a moral issue

Political and business scandals:

Japanese banking system has failed to take corrective
actions when dispersing loans
Some Japanese firms systematically concealed customer
complaints
 Exploring Enlightened Self-Interest:

Does “Good Ethics” Means “Good Business”?

Exploring Enlightened Self-Interest:
Does “Good Ethics” Means “Good Business”?

According to the former chairman of the

Dayton-Hudson Corporation, Kenneth
Dayton, explained that :

“If business does not serve society,

society will no longer tolerate our profits
or even our existence”.
Exploring Enlightened Self-Interest:
Does “Good Ethics” Means “Good Business”?

Are there other reasons for a business to

engage in socially responsible activities?
Exploring Enlightened Self-Interest:
Does “Good Ethics” Means “Good Business”?

CSR-related activities can improve profitability by

enhancing a company’s standing among its
stakeholders, including consumers and employees.
Exploring Enlightened Self-Interest:
Does “Good Ethics” Means “Good Business”?

As a firm, would you rather be an unethical firm

with a good reputation or an ethical firm with a
reputation for injustice?
Exploring Enlightened Self-Interest:
Does “Good Ethics” Means “Good Business”?

As per context:
▸ Ethics refers to those values, norms, beliefs
and expectations that determine how people
within a culture live and act

▸ Reputation refers to the image of a firm that is

to be cared
Ethical firm with a reputation for injustice

▸ Procter & Gamble Co.

The company was harshly criticized by respondents to a survey

seeking to rank firms on the basis of their corporate philanthropy.
Respondents contented that P&G did “absolutely nothing to help”
after the September 11 tragedy in New York City. However, in truth,
P&G provide more than $2.5 million in cash and products, but they
simply did not publicize that contribution.
Ethical firm with a reputation for injustice

▸ Honda Motor Co.

The company donated cash, all-terrain vehicles, and

generators for use at the World Trade Center site
during the same time period. Perhaps unaware of
these efforts, respondents instead believed these
companies to lack compassion for their failure to
(publicly) support America.
 Unethical firm with a good reputation

Enron Corporation
▸ "America's Most Innovative Company" for six consecutive years
based on Fortune magazine
▸ 100 Best Companies to work for in America, ranked no.22 in 200
▸ All-Star List of Global Most Admired Companies, ranked no.25 in
2000
▸ 100 Fastest Growing Companies, ranked no.29 in 2000
Unethical firm with a good reputation

Enron Scandal
▸ At the end of 2001, it was revealed that Enron's reported
financial condition was sustained by institutionalized,
systematic, and creatively planned accounting fraud.
▸ A well-known example of willful corporate fraud and
corruption.
▸ The scandal also affected the greater business world by
causing the dissolution of the Arthur Andersen accounting
firm, which had been Enron's main auditor for years.
Unethical firm with a good reputation

BP plc (formerly The British Petroleum Company

plc and BP Amoco plc)
▸ One of the 100 Most Sustainable Companies
▸ Among the Top 10 companies listed on Fortune’s Accountability
Rating for 2006, 2007 and ranked as no.1 in 2008.
▸ The world's sixth-largest oil and gas company
▸ The sixth-largest energy company by market capitalization
▸ The company with the world’s 12th-largest revenue (turnover)
Unethical firm with a good reputation

2010 Deepwater Horizon Oil Spill

▸ The largest accidental release of oil into marine
waters in history resulted in severe
environmental, health and economic
consequences, and serious legal and public
relations repercussions for BP. 1.8 million US
gallons of Corexit oil dispersant were used in the
cleanup response, becoming the largest
application of such chemicals in US history.
Unethical firm with a good reputation

▸ 2010 Deepwater Horizon Oil Spill

REALITY CHECK: Will Sustainability Reports Replace the
Annual Financial Reports?

Various laws and regulations require corporations to file an annual report that
provides a comprehensive accounting of a business’ activities in the preceding
year. The report is intended to provide shareholders and the public with information
about the financial performance of the company in which they have invested. While
a variety of information is contained in an annual report, they are primarily financial
reports and they will include an auditor’s report and summary of revenues and
expenses.
Within the last decade, thousands of companies have supplemented this financial
annual report with a corporate sustainability report, which provides an overview of
the firm’s performance on environmental and social issues. In some cases,
sustainability reports are replacing financial reporting by integrating assessment of
financial, environmental, and social performance into one comprehensive report.
REALITY CHECK: Will Sustainability Reports Replace the
Annual Financial Reports?

According to the Global Reporting Initiative, a non-profit organization that was

instrumental in creating a widely accepted sustainability reporting framework,
Sustainability reporting is a process for publicly disclosing an organization’s
economic, environmental, and social performance. Many organizations find that
financial reporting alone no longer satisfies the needs of shareholders,
customers, communities, and other stakeholders for information about overall
organizational performance. The term ‘’sustainability reporting’’ is synonymous
with citizenship reporting and other terms that encompass the economic,
environmental, and social aspects of an organization’s performance.
43

Thank you...

-The End-