Jan DvořáčekTechnical University in Zvolen

Corporate Social Responsibility

Company – this fundamental business term is derived from two Latin words, “cum” and “panis”, which mean breaking bread together.

What is the purpose of a business?

„Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible.“

Milton Friedman (Nobel prize recipient for economy)

What is the purpose of a business?

„I think many people assume, wrongly, that a company exists simply to make money. While this is an important result of a company’s existence, we have to go deeper and find the real reasons for our being. As we investigate this, we inevitably come to the conclusion that a group of people get together and exist as an institution that we call a company so that they are able to accomplish something collectively that they could not accomplish separately – they make a contribution to society, a phrase which sounds trite but is fundamental.“

Dave Packard (Co-founder of Hewlett Packard Company)

What is the purpose of a business?

C – CorporateS – SocialR – Responsibility

....a duty or obligation to satisfactorily perform or complete a task (assigned by someone, or created by one's own promise or circumstances) that one must fulfill, and which has a consequent penalty for failure.

CSR – what does it mean?

"Egoism is a life principle when human’s activities following only their own interests, ignoring the interests of other people. Egoism, as a moral quality, was in the history of moral consciousness generally evaluated negatively“

"Altruism is such a moral principle, that is based on the suppression of their own egoism (selfishness), in selfless sacrifice for the benefit of others, in the willingness to sacrifice their own interests for the interests of others“

CSR – egoism vs. altruism

altruism (fully divided company’s profit for society)

egoism (companies‘ profit only)

CSR – egoism vs. altruism

A concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment. A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with stakeholders on a voluntary basis. (European Commission)

Operating a business in a manner that meets or exceeds the ethical, legal and public expectations that society has of business. (Business for Social Responsibility)

CSR definition

Environmental dimension

Social dimension

Economic dimension

Stakeholders dimension

Dimension of voluntariness

CSR – intersection of definitions

CSR hierarchy

„A stakeholder in an organization is any group or individual who can affect or is affected by the achievement of the organizations objective“

(Freeman, 1984)

Primary stakeholders - owners, stockholders, investors, customers, suppliers, creditors, and employees

Secondary stakeholders - the general public, government, competitors, communities, activist groups, lobbyists, business support groups, and the media

Stakeholders

Stakeholders – internal and external

Stakeholders Stakeholder's concerns

Government taxation, VAT, legislation, employment, truthful reporting, diversity, legalities, externalities.

Employees rates of pay, job security, compensation, respect, truthful communication.

Customers value, quality, customer care, ethical products.

Suppliers be paid on time, equitable business opportunities, long term supplies

Creditors credit score, new contracts, liquidity.

Community jobs, involvement, environmental protection, shares, truthful communication.

Trade Unions quality, worker protection, jobs.

Owner(s) profitability, market share, market standing, succession planning, raising capital, growth, social goals.

Investors return on investment, income.

Stakeholder’s concerns

Economic: transparency, corporate governance, code of ethics,

ethical marketing and advertising, a non-corrupt framework, ...

Social: philanthropy, supporting local community,

volunteerism, supporting of education, workforce diversity, engaging in fair trade practices, outplacement, ...

Environmental: recycling, waste management, water management,

using renewable energy sources, utilizing reusable resources, creating 'greener' supply chains, packaging and transportation, using digital technology instead of hard copies, ...

CSR activities

Sustainable DevelopmentCorporate PhilanthropyCorporate CitizenshipCause Related MarketingCorporate VolunteeringSocial Responsible InvestmentTax assignation

CSR – related terms

Enhanced brand image and reputationDifferentiation from competitorsIncreased ability to attract, motivate and

retain employeesCosts reductionsIncreased sales and customer loyaltyPositive PRMore business opportunitiesEasier access to capital

Benefits of CSR

Consumer attitudes to CSR

Critique of CSR

Milton Friedman

...“there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition deception or fraud.“

Consumers’ skepticism

sociocultural and economic environments are so heterogeneous

countries with more developed economies have higher social expectations

Maslow's hierarchy of needsexample of an air pollution problem (Chile vs.

U.S.A.)

Sociocultural and economic context of CSR

CSR controversy

CSR leadership

R2 Jacket environmental cost:60 % of recycled polyester135 liters of water20 pounds of carbon dioxide

“I know it sounds crazy, but every time I have made a decision that is best for the planet, I have made money. Our customers know that—and they want to be part of that environmental commitment.”

Yvon Chouinard (Patagonia founder)

CSR leadership

Thank you for your attention!