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Chapter 4

Corporate
Social
Responsibility

McGraw-Hill

Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.

Years ago William Jennings
Bryan once described big
business as “nothing but a
collection of organized
appetites.”
Daniel Patrick Moynihan, 1986

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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.

Defining CSR
“The New Lemonade Stand…
Consider that age-old icon of childhood endeavors:
THE LEMONADE STAND. Within a CSR context, it’s as if
today’s thirsty public wants much more than a cool,
refreshing drink for a quarter. They’re demanding said
beverage be made of juice squeezed from lemons not
sprayed with insecticides toxic to the environment,
prepared by persons of appropriate age in kitchen
conditions which pose no hazard to those workers. It
must be offered in biodegradable paper cups and sold
at a price which generates a fair, livable wage to the
workers – who, some might argue, are far too young to
be toiling away making lemonade for profit anyway.
It’s enough to drive young entrepreneurs…. straight
back to the sandbox.”
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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.

Overview CH 4
• Defining CSR
• Approaches to CSR (instrumental & social
contract)
• 5 Driving forces behind CSR
• 3 types of CSR
• Challenges of CSR
• Key Successful of CSR

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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.

Defining CSR
• Corporate Social Responsibility (CSR)
– Organization actions targeted towards the
achievement of a social benefit over and above
maximizing profits for its shareholders and
meeting all its legal obligations.

• Corporate Citizenship (other term)
– Organization is a responsible citizen in meeting
all its obligation

• Corporate Conscience (other term)
– Organization is run with an awareness of its
obligations to society.
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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.

• Organization faced consumer boycotts and
unexpected media attention
– Consumer boycott – Nike –media reported
abusive labor practices of its suppliers
– Greenpeace protest- Shell – to sink oil rig in the
north sea

• Organization discovered CSR
– intentionally or
– Result of the unexpected media attention

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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.

Approaches to CSR
• The Instrumental Approach
 The only obligation of a corporation is to
maximize profits for its shareholders in the
provision of goods and services that meet the
needs of their customers.
 Unethical - profit should be earned “without
deception or fraud”

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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.

Approaches to CSR
The Social Contract Approach
• A corporation has an obligation to society
over and above the expectation of its
shareholders.
• Modern social contract approach argues there is
an obligation for corporations to meet the
demands of the society rather than just the
demands of a targeted group of customers
• Recognize all stakeholders (customers,
employees, shareholders, vendor partners,
community partners)
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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.

Management by Inclusion
• Actions of corporations impact customers,
employees, suppliers, and communities
– Positively impacted
– Negatively impacted
Competitive environment -> lower the cost
lay off employee -> impact customer spending
Shut the factory -> no income for worker ->
not tax paid by people -> negative impact to
the public service (infrastructure, public school,
public transportation)
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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.

Management by Inclusion
• Recognizing the interrelationship
of these groups leads beyond the
bottom line
• Going beyond generating profit
inevitably attracts a lot of
attention

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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.

The Driving Forces Behind CSR
1. Transparency
o Business practice is transparent. The
company that does good or not good will be
known immediately.

2. Knowledge
o Consumers and investors have more
information anytime

3. Sustainability
o Demonstrate business to sustain the natural
resources (forest, fisheries, water)

4. Globalization
5. The Failure of the Public Sector
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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.

The Triple Bottom Line

Organization focus to achieve 3BL ( triple bottom lin
FINANCIAL performance
SOCIAL performance
ENVIRONMENTAL performance
The challenge is how to measure

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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.

Example of 3BL
The Triple Bottom Line: Financial, Social,
Environmental
Coca-Cola’s 2004 Citizenship Report:
“Our Company has always endeavored to conduct
business responsibly and ethically. We have long
been committed to enriching the workplace,
preserving and protecting the environment, and
strengthening the communities where we operate.
These objectives are all consistent with—indeed
essential to—our principal goal of refreshing the
marketplace with high-quality beverages.”

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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.

3 Types of CSR
1. Ethical CSR
– Organizations pursue a clearly defined sense
of social conscience in managing:
o their financial responsibilities to shareholders,
o their legal responsibilities to their local
community and society as a whole,
o their ethical responsibilities to ‘do the right
thing’ for all their stakeholders.
 Examples is company operating with social
contract (has an obligation to society). E.g
Body Shop
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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.

Body Shop – Ethical CSR

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• 1986 - The Body Shop sponsor "Save the Whale" for
Greenpeace.
• 1990 - The Body Shop Foundation is established, a charity
which funds human rights and environmental
protection groups.
• The Body Shop Foundation part-funding the launch of The
Big Issue stateside for homeless people, in Los Angeles.
• 1998 - The Against Animal Testing campaign. The
campaign leads to a UK-wide ban on animal testing of
cosmetic products and ingredients in November 1998.
• During 2002, The Body Shop runs a global campaign with
Greenpeace International on promoting renewable
energy, funding of energy efficiency projects in the
developing world, and incorporating post-consumer
recyclate into our packaging.
• 2004 - The Body Shop is the first global retailer to join the
Board of the Roundtable for Copyright
Sustainable
Palm Oil, to
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.

Body Shop – Ethical CSR
• 2005- The Body Shop joins The Campaign for Safe
Cosmetics and is commended by Greenpeace and the
Breastcancer Fund for our responsible chemicals policy.
• 2006 - The Body Shop creates a partnership with UNICEF
and the United Nations Secretary-General’s Study on
Violence Against Children, to conduct a study into the
effects of domestic violence on children.
• 2007 - The Body Shop join forces with MTV in a new brand
partnership to raise funds and awareness about HIV
and AIDS amongst young people, through the Spray to
Change campaign.

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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.

3 Types of CSR
2. Altruistic CSR
– Organizations take a philanthropic approach by
underwriting specific initiatives to “give back’
to the company’s local community or to
designated national or international
programs.
– Uses funds (of shareholder)
– Example:
• Southwest airlines (Ron McD house) – donated $$ &
volunteer work
• Shell Oil (Tsunami disaster)– donated $$$ & donated
fuel for transportation rescue &water for relief aid

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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.

3 Types of CSR
3. Strategic CSR
– Philanthropic activities are targeted towards
programs that will generate the most
positive publicity or goodwill for the
organization.
– Ex Ford Motor – ad campaign to raise
awareness importance of baby seat in a car.
Ford donated millions of baby car seats
– Interpretation Ford motor care about the
safety of its passengers

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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.

Carbon Footprint
• New and questionable practice:
Making your operation carbon
neutral
• Carbon offset credits
• Kyoto Protocol Ratification
• European Carbon Investors and
Services Association (ECIS)
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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.

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