Corporate Citizenship

2. Chapter 4 Corporate Citizenship The Dynamic Social Climate Implementing Corporate Citizenship Activities Corporate Citizenship in Practice Corporate Social Performance Audits

3. Corporate citizenship • Refers to businesses acting responsibly toward their stakeholders. • Involves: • proactively addressing business and society issues, • building stakeholder partnerships, • discovering business opportunities through social strategic goals, and • transforming a concern for financial performance into a vision of corporate financial and social performance.

4. Figure 4.1 Contrast between corporate social responsibility and corporate citizenship

5. Principles of corporate citizenship Good corporate citizens strive to conduct all business dealings in an ethical manner, make a concerned effort to balance the needs of all stakeholders, while working to protect the environment.

6. Exhibit 4.Aa Principles of corporate citizenship Ethical Business Behavior 1) Engages in fair and honest business practices in its relationship with stakeholders. 2) Sets high standards of behavior for all employees. 3) Exercises ethical oversight of the executive and board levels.

7. Exhibit 4.Ab Principles of corporate citizenship Stakeholder Commitment 4) Strives to manage the company for the benefit of all stakeholders. 5) Initiates and engages in genuine dialogue with stakeholders. 6) Values and implements dialogue.

8. Exhibit 4.Ac Principles of corporate citizenship Community 7. Fosters a reciprocal relationship between the corporation and community. 8. Invests in the communities in which corporation operates. Consumers 9. Respects the rights of consumers. 10. Offers quality products and services. 11. Provides information that is truthful and useful.

9. Principles of corporate citizenship Exhibit 4.Ad Employees 12. Provides a family-friendly work environment. 13. Engages in responsible human-resource management. 14. Provides an equitable reward and wage system for employees. 15. Engages in open and flexible communication with employees. 16. Invests in employee development.

10. Exhibit 4.Ae Principles of corporate citizenship Investors 17. Strives for a competitive return on investment. Suppliers 18. Engages in fair trading practices with suppliers. Environmental Commitment 19. Demonstrates a commitment to the environment. 20. Demonstrates a commitment to sustainable development.

11. Global corporate citizenship The process of identifying, analyzing, and responding to the company’s social, political, and economic responsibilities as defined through law and public policy, stakeholder expectations, and voluntary acts flowing from corporate values and business strategies.

12. Exhibit 4.Ba The Clarkson principles Principle 1 Managers should acknowledge and actively monitor the concerns of all legitimate stakeholders and should take their interests appropriately into account in decision making and operations. Principle 2 Managers should listen to and openly communicate with stakeholders about their respective concerns and contributions and about the risks that they assume because of their involvement with the corporation.

13. Exhibit 4.Bb The Clarkson principles Principle 3 Managers should adopt processes and modes of behavior that are sensitive to the concerns and capabilities of each stakeholder constituency. Principle 4 Managers should recognize the interdependence of efforts and rewards among stakeholders and should attempt to achieve a fair distribution of the benefits and burdens of corporate activity among them, taking into account their respective risks and vulnerabilities.

14. Exhibit 4.Bc The Clarkson principles Principle 5 Managers should work cooperatively with other entities, both public and private, to insure that risks and harms arising from corporate activities are minimized and, where they cannot be avoided, appropriately compensated. Principle 6 Managers should avoid altogether activities that might jeopardize inalienable human rights or give rise to risks that, if clearly understood, would be patently unacceptable to relevant stakeholders.

15. Exhibit 4.Bd The Clarkson principles Principle 7 Managers should acknowledge the potential conflicts between their own role as corporate stakeholders, and their legal and moral responsibilities for the interests of stakeholders and should address such conflicts through open communication, appropriate reporting and inventive systems, and where necessary, third-party review.

16. Figure 4.2 A three-stage model of corporate social responsiveness STAGE Organizational Policy Learning Commitment High • Organizational • changes • Administrative learning • Specialized • learning Degree of responsiveness to a specific issue • Formulate policy • Identity problem Low Time (years)

17. A model for implementing corporate citizenship strategies The Policy Stage • The company becomes aware of those parts of the surrounding environment, to which it needs to respond and act on. • A company’s management may think, based on sensitivity to the corporate social environment that it should respond to emerging issues, concerns, or social trends.

18. A model for implementing corporate citizenship strategies The Learning Stage • Once it has identified a social problem and adopted a general policy, the company must learn how to tackle the problem and make the new policy work. • Specialized learning Occurs when a sociotechnical expert is employed to advise the company officers and managers. • Administrative learning Occurs when a company’s supervisors and mangers become familiar with new routines that are necessary to cope with a social problem.

19. A model for implementing corporate citizenship strategies The Organizational Commitment Stage • When the organization institutionalizes its new social policy. • When corporate citizenship becomes part of the company and its standard operating procedures.

20. Framework for corporate citizenship • Concentrate action programs on limited objectives. • Concentrate action programs related to the firm’s products or services. • Begin action programs close to home. • Facilitate employee action.

21. Significant philanthropic contributions Exhibit 4.C

22. Exhibit 4.D American corporate conscience awards, 2003 Delta Café • Positive impact—Community Southwest Airlines • Positive impact—Community Carrefour • Innovative partnership Chiquita Brands International • Innovative partnership Westpac Banking • Innovative partnership Maina Panettoni • SA8000 Responsible Workplace

23. Corporate social performance audits Social performance audit A systematic evaluation of an organization’s social and ethical performance, examining the social and ethical impact of a business against two benchmarks: a company’s own mission statement and the behavior of other organizations and social norms. Triple bottom line When companies report to stakeholders not just their financial results but also their environmental and social impacts. Financial, social and environmental results, taken together as an integrated whole, constitute a company’s triple bottom line.

24. Figure 4.3a Summary of audit standard characteristics Global Reporting Initiative • Origin: 1997 • Focus: Link economic, environmental, and social sustainability • Self-reported benefits: • 1) Internal vehicle for evaluating policy versus performance • 2) Structure for effective dialogue with stakeholders • 3) Framework for sharing and promoting dialogue with stakeholders

25. Figure 4.3b Summary of audit standard characteristics ISO 14001 Origin: 1996 Focus: Support environmental protection in balance with socioeconomic needs Self-reported benefits: 1) Identify areas for energy reduction 2) Reduce environmental risk 3) Maintain compliance with legislation and regulation 4) Receive environmental leadership rewards 5) Prevent pollution and reduce waste 6) Improve stakeholder relations 7) Receive more favorable insurance rates 8) Gain a competitive advantage

26. Figure 4.3c Summary of audit standard characteristics ISEA AA 1000 Origin: 1999 Focus: Quality social and ethical accounting, auditing, and reporting Self-reported benefits: 1) Support effective stakeholder relations 2) Effective in diverse global operations 3) Build synergy with emerging businesses 4) Link planning tools to quality models 5) Build accountability in public sector 6) Enhance overall performance