Corporate Social Responsibility and Labor issues

1. Corporate Social Responsibility and Labor issues ACE 387: Spring 2006 ACE 387

2. Topics for today’s class • Corporate Social Responsibility • Labor issues • Women workers • Child Labor • Sweatshops • Efforts to Monitor and Correct Labor Abuses • Part 3 Assignment ACE 387

3. Corporate Social Responsibility • Explore the notion of corporate social responsibility • What is this? • Is it a legitimate concern of business? ACE 387

4. What is Business Social Responsibility? • Should business be involved in solving all of society’s problems • Should it specialize in only some problems? If so which problems? • Is the primary responsibility of business to stockholders ? • Should most profits be diverted to socially responsible activities? ACE 387

5. Corporate Social Responsibility (CSR) and Ethics • Corporate social responsibility (CSR) is the process by which businesses negotiate their role in society. • In the business world, ethics is the study of morally appropriate behaviors and decisions, examining what "should be done.“ • Although the two are linked in most firms, CSR activities are no guarantee of ethical behavior ACE 387

6. Do more than required; e.g. engage in philanthropic giving Integrate social objectives and business goals Fight social responsibility initiatives Maximize firm’s profits to the exclusion of all else Balance profits and social objectives Do what it takes to make a profit; skirt the law; fly below social radar Lead the industry and other businesses with best practices Comply; do what is legally required Articulate social value objectives ACE 387

7. Principle of Public Responsibility • Use Public Policy as a guide • What do you think of this? ACE 387

8. Should Business Act in A Socially Responsible Manner? • Milton Freidman - Its the social responsibility of business to increase its profits • What do you think? ACE 387

9. The Pyramid of Corporate Social Responsibility Source: Archie B. Carroll, “The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders,” adaptation of Figure 3, p. 42. Reprinted from Business Horizons, July/Aug. 1991. Copyright © 1991 by the Foundation for the School of Business at Indiana University. Used with permission. ACE 387

10. Determinants of the Level of Social Responsibility • Multiple Organizational Goals • Stakeholder Interests • Management Philosophy Organizational Culture • Corporate Governance ACE 387

11. Levels of Social Responsibility 1. Social Obligation • Meet minimum regulations, do what is required by law, no more 2. Social Responsibility • Go beyond what is required by law, mitigate negative effects 3. Social Responsiveness • Proactive approach, promote positive change ACE 387

12. Social Responsibility Issues • Green Marketing • The specific development, pricing, promotion, and distribution of products that do not harm the natural environment • Green Marketing Goals • Eliminate the concept of waste • Reinvent the concept of a product • Make prices reflect actual and environmental costs • Make environmentalism profitable ACE 387

13. Will Consumers Pay an Extra 25¢/Gallon to Reduce Pollution and Global Warming? Source: “Americans Split on Paying Higher Prices to Reduce Pollution,” USA Today, September 4, 2001, p. A1. Used with permission ACE 387

14. Importance of Company Reputation to Consumers Today Versus Five Years Ago Source: “Watch What You Say,” American Demographics, July 2000, p. 24. ACE 387

15. Reasons for Businesses to engage in development of a Global Code of Business Ethics and Social Responsibility • Create the same opportunity for all businesses if there are common rules • Level the playing field • They are needed in an interconnected world • They reduce operating uncertainties • If businesses don’t collaborate, they may not like what others develop ACE 387

16. Labor Issues(Dickerson Chapter 5) • Women workers • Child Labor • Sweatshops • Efforts to Monitor and Correct Labor Abuses • Labor Standards and Trade ACE 387

17. Labor Issues • Why are there labor issues? • Competition to keep costs down so abuses possible • Differing cultural factors that in combination can create abuse • Could the industry have developed without the abuses? - Remember that in the US and England, when the industry began there were also similar abuses - sweatshops, child labor ACE 387

18. Women Workers • T&A employ largely women in both developed and developing world. • 80-90% of global apparel workforce is female. • 50% of textile workforce is female. • Global industry change affects women. • Developed nations: become unemployed • Developing nation: young women get jobs in export processing zone with low wages, long hours, severe working conditions or make their own operation through sub-contracting. ACE 387

19. Child Labors • Child labor were common practice during industrialization age. • Cheapest source of available labor is “children”. • In developing world, child labor is pretty common. The countries do not have enough schools to accommodate children. • Lack of alternative for child workers in poor countries. • Sweatshops ACE 387

20. Sweatshops • Defined by the U.S. General Accounting office as a business that regularly violates both wages or child labor and safety or health laws. • Corporate greed and global competition to produce goods at the lowest possible price are the main reasons for the existence of sweatshops. • It's much more cost-effective for corporations to subcontract to suppliers who produce goods cheaply by minimizing worker salaries and benefits, skimping on factory and dormitory upkeep and standards, and demanding high levels of productivity (long hours and big quotas) from their workers. ACE 387

21. Question: Sweatshops Q: Isn't the low-wage employment offered by sweatshops better than not being employed at all? Don't sweatshops help poor people climb out of poverty? A: No. Sweatshop workers and child laborers are trapped in a cycle of exploitation that rarely improves their economic situation. ACE 387

22. Question: Sweatshops Q: Should I boycott manufacturers that use sweatshop labor, or should I pressure companies to change? A: You can do both. In general, boycotts are most effective when organized by the workers themselves. ACE 387