Corporate Respo

8/8/2019 Corporate Respo

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Corporate Responsibility

Dr Lance Moir

June 2006


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Structure

What is Corporate Responsibility?

Current Pressures

Value and Corporate Responsibility

The approach at Leading Companies


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What is corporate responsibility?

The triple bottom line

Economic

Social

Environment


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What is Corporate Responsibility?

Behaviour & conduct/good governance

Responsible impact on society

Accountability & transparency

Stakeholder engagement

Reputation & risk management

Socially responsible investment


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The issues being addressed by CR

Supply chain

Human rights

Plant closures

Charitable giving

Work life balance

Cause related marketing

Environmental pollution

Sustainability

These mean different things to different firms


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World-wide critical events and issues

1970s Apartheid era South Africa - racial discrimination

1970s Nestle - marketing of breast milk substitute

1984 Union Carbide in Bhopal, India - environment

1995 Shell in North Sea (Brent Spar) - environment

1995 Shell in Nigeria (Ogoni) - distribution of resources

1996 BP in Colombia - security forces & complicity

2000 Mars, Cadbury, Hershey, Ivory Coast - child labour

2000 Chiquita, Del Monte etc., C. America - association

2000 Adidas in Pakistan - child labour

2002 Talisman in Sudan - complicity in repression

2000s Nokia, Motorola, Congolese Coltan - forced labour


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Reasons for the focus on Business &Society

Globalisation - increasing trade Markets growing faster than social and political

structures

Sheer scale of business (51 of the top largest

economic entities are corporations)

Technology

Growth of the internet and available data

Increase of NGOs (non-governmental organisations)

Increase in democracy

Growth ofSRI (socially responsible investing)


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CR-related standards, guidelines and codes ofconduct

Now over 300 external CR tools, guidelines and codes of practice

Global Sullivan

Principles


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The Global Compact

Human Rights

Human Rights within sphere of influence Complicity with rights violations - repression & conflict

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

Environment

To support a precautionary approach to the environment

Promote greater environmental responsibility Encourage the diffusion of environmentally friendly technology

Anti- Corruption

Work against all forms of corruption, including extortion andbribery


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What is corporate social responsibility?

The traditional model

Socialresponsibility

Business

Philanthropy in response to appealsfor help from society and socialinvestment in projects of long-termimportance to the company

This is the core activity of thecompany providing the goodsand services society wants

The benefits of business

Investment

Jobs created

Taxes paid

Goods &Services

Technology transfer

Import substitution

Export earnings

Development of suppliers

Human Resources Development


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Four-Part model of Corporate Social Responsibility

Type of Responsibility Societal

Expectation Examples

Philanthropic

Ethical

Legal

Economic

DESIRED of

business by

society

EXPECTED of

business by society

REQUIRED of

business by society

REQUIRED of

business by society

Corporate contributions.

Programs supporting community/education.

Community involvement/improvement; volunteerism

Avoid questionable practices.

Respond to spirit of laws.

Assume law is a floor behavior; operate above minimum requiredby law.

Assert ethical leadership.

Obey all laws; adhere to regulations.

Environmental laws.

Consumer laws.

Laws affecting all employees.

Obey Foreign Corrupt Practices Act.Fulfil all contractual obligations.

Be profitable.

Maximise sales revenue.

Minimize costs (administrative, production, marketing, distribution).

Make wise strategic decisions.

Be attentive to dividend policySource: Carroll (1979))


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Carrolls Corporate Social Performance Model

Proaction

Accommodation

Defense

Reaction

Philosophy of Social Responsiveness

Consumerism

Environment

Discrimination

Product Safety

Occupational Safety

Shareholders

Social Issues Involved

Social ResponsibilityCategories

DiscretionaryResponsibilities

EthicalResponsibilities

LegalResponsibilities

EconomicResponsibilities


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The Three-Domain Model of Corporate Social Responsibility

(vii) Economic /Legal / Ethical

(vi) Legal

/ Ethical(iv) Economic /

Ethical

(iii) Purely Ethical

(v) Economic/ Legal (ii) Purely Legal(i) Purely Economic

Source: Schwartz & Carroll, Business Ethics Quarterly, 2003


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Categories in the Three Domain Approach

Purely economic Lockheed bribes / Andersen

shredding

Purely legal tobacco health warnings

Purely ethical Merck donation of drugs

Economic/ethical sponsorship of arts

Economic/legal Chapter 11 of Dow Corning?

Legal/ethical Giving drugs at below cost to Africa?

Economic/legal/ethical WalMart stops selling

cigarettes in Canada


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Corporate Social Responsibility Portraits

Economic Orientation (e.g., CEO of Acme of Co.)

Ethical

Legal

Economic

Source: Schwartz & Carroll, Business Ethics Quarterly, 2003

Legal Orientation (e.g, Legal Dept)

Econ

Ethical

Legal

Ethical Orientation (e.g., Consumers Desired Toy Co.) Balanced Orientation (e.g., Toy Industry)

Econ Legal

Ethical Ethical

Econ Legal


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How do firms look at CSR?

The World Business Council for Sustainable Developmentproposes a definition for CSR as:

the ethical behavior of a company towards society. .management

acting responsibly in its relationships with other stakeholders who

have a legitimate interest in the business.

and

CSR is the continuing commitment by business to behave ethically

and contribute to economic development while improving thequality of life of the workforce and their families as well as of the

local community and society at large.


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The Management of Corporate Responsibility

Defensive (pain alleviation)

Traditional (cost-benefit)

Strategic - shifts business into a new direction. Thuspart of corporate strategic intent

Learning, innovation and risk management

Zadek (2001)


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Stakeholders

Anyone who affects or is affected by an organisationFreeman

Primary stakeholders - those without whom orgcannot survive

shareholders, customers, employees

Secondary community, environment, opinion formers

Clarkson


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Page 19

Issues with stakeholders

Stakeholder scanning and identification

Stakeholder consultation

Stakeholder engagement

Approach depends on view of the organisation andthe need for a relationship with stakeholders


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Stakeholder Typology: One, Two, or ThreeAttributes Present (Mitchell, Agle & Wood)

POWER

LEGITIMACY

URGENCY

7

DefinitiveStakeholder

5

DangerousStakeholder

3

DemandingStakeholder

6

Dependent

Stakeholder

4

DominantStakeholder

1

DormantStakeholder

2

DiscretionaryStakeholder

8

Nonstakeholder


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The Management ofStakeholders

Four strategies

Reactive

Defensive

Accommodative Proactive

Wartick and Cochran (1985)

Depends on stage in life cycle

Fits idea of resource dependency

Jawahar and McLaughlin (2001)


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The Management of CSR

Medium term cost/ benefit

incremental social policies

operational issues

Recent substantial change

reactive

ethical/ environmental issues

protective - risk and reputation key

Strategic - long term viability and competitive advantage -two

forms

scenario mapping and strategic planning (top-down)

learning and innovation (bottom-up )

Lenssen 2001


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4%

4%

5%

7%

11%

17%

20%

Customers

Q Could you tell me, in your own words, what you think is

meant by the term corporate social responsibility?

Base: 2,099 GB adults, October 2000

Responsibility towards customers

Responsibility towards local

community

Responsibility towards theenvironment

Acting responsibility/ethically

Responsibility towards employees

Being profitable/successful

Responsibility towards theirshareholders

Source: MORI


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33%

49%

16%

2%

Q When forming an opinion about a particular company or

organisation, how important is it to you to know about theiractivities in society and the community?

Most say it is important to reputation

Base: 1,044 GB adults 16+ July - August 2003

Not very

important

Fairly important

Very important

Not at allimportant

No opinion 1%

2003

%

Important 82

Not important 18

Net +64

Source: MORI


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64%

60%

60%

58%

56%

51%

50%

Protecting the environment

Education

Recycling

Unemployment/re-trainingschemes

Help for people with disabilities

Job creation

Top mentions

-2

-5

+4

-1

-1

-2

0

Priority Activities

Base: 2,026 GB adults 16+ (350 customers)

Protection of the countryside

Q Which areas do you feel it is extremely or very important thatlarge companies contribute to or support?

Change02-03

+

Source: MORI


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Employees

Q Thinking now about the organisation that you work for, howimportant is it to you that your own employer is responsibleto society and the environment?

Base: 890 working GB adults 16+.

6%

33%

59%

VeryimportantFairly

important

No opinion 1%Not veryimportant

Not allimportant 1%

Source: MORI

Documents

Corporate Respo