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Chapter 5: Corporate social responsibility

INTRO
° Development and implementation of CSR is ongoing process
° Calls for vision and commitment from leadership and management
° Most medium- to large-sized corporations implement CSR
° But few companies have actually institutionalised CSR

Introducing CSR
- Concept that recognizes following points:
° Companies have a responsibility for their impact on society and the natural environment
° Companies have a responsibility for the behaviour of those they conduct business with
° Businesses need to manage its relationship with wider society
- King lll Report definition:
CSR = the responsibility of a company for the impact of its decisions and activities on society
and the environment through transparent ethical behaviour that:
° contributes to sustainable, including health and welfare of society
° takes into account the legitimate interests and expectations of stakeholders
° is in compliance with applicable law and consistent with international norms of behaviour
° is integrated throughout the company and practiced in its relationships








Corporate citizenship and corporate social investment
° Corporate citizenship – recognizes corporations as legal persons with certain rights and
responsibilities:
- the right to govern internal affairs
- the right to enter into contracts
- the right to hold assets
- the right to hire
- the right to sue and be sued

° Corporate social investment – contribution made to society

Triple bottom line = aims to measure the financial, social and environmental performance
of corporation
° the 3 P’s:
- people = how socially responsible has the business been
- planet = how environmentally responsible has the business been
- profit = bottom line of profit and loss account

CSR in contemporary business management
° Social drivers
- No company wants to have a reputation of being socially irresponsible; employees
increasingly choosing to work for socially responsible companies
° Governmental drivers
- Many governments show lots interest in encouraging business involvement in social issues
ex: UK government has cabinet minister for CSR + policies/initiatives to be more responsible

° Market drivers - companies can reduce costs through CSR by:
- avoiding fines
- using resources efficiently
- using recycled materials
- Increase revenue
And can increase revenue by:
- developing new products/services
- growing markets for services through general programmes such as job creation/ social dvp

° Ethical drivers = deciding between right and wrong, orientated towards the common good
- Ethically responsible for damage to environment
- For some companies, CSR is the right thing to do

Corporate governance
° Refers to the way in which a business makes decisions about how to manage its affairs
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Fiduciary relationship to company
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Executive Director =
responsible of the running of the business

Primary principles of good governance
° Discipline
° Transparency = making info available about a company’s actions
° Independence = extent to which mechanisms have been implemented to avoid conflicts
° Accountability
° Responsibility
° Fairness
° Social Responsibility

Stakeholder engagement
° Reasons why companies engage with stakeholders:
- Responsible companies want to understand and respond to society’s expectations of a
responsible company
- Engagement is a means to help build a better relationship with all parties
- “ “ helps provide opportunities to align business practices with societal needs/expectations

Defining stakeholders
° Persons or groups that affect or are affected by the business activities of company
° Impose various responsibilities
° All stakeholders are important, but degree to which they are prioritised depends on the
issue and factors such as influence, knowledge and credibility
° Basic level of stakeholders:
- Primary stakeholders, include shareholders and employees: their ongoing support for the
company is vital for its survival – financial/contractual relationship with company
- Secondary stakeholders, less direct impact on the company, could include: environmental
NGO’s or the media
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The stakeholder-engagement process
° Prepare: identify and understand the territory to be explored and the most important
issues in which stakeholder engagement might be helpful
° Plan: set objectives for engagement process, identify and prioritise stakeholders
° Design: develop engagement plan to meet engagement objectives
° Engage: successfully meet objectives through execution of engagement plan
° Evaluate: assess outcomes of engagement
° Apply: share info and integrate the outcomes into business practicses


Sustainable development
° Development that meets the needs of the present without compromising the ability of
future generations to meet their own needs

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