Corporate Citizenship: Social Responsibility, Responsiveness, and Performance

1. 0 Corporate Citizenship: Social Responsibility, Responsiveness, and Performance Chapter2

2. The Corporate Social Responsibility Concept Arguments Against and For Corporate Social Responsibility Corporate Social Responsiveness Corporate Social Performance Corporate Citizenship Business’s Interest in Corporate Citizenship Social Performance and Financial Performance Relationship Socially Responsible or Ethical Investing 0 Outline of Topics

3. Business allegations… • Little concern for the consumer • Cares nothing about social problems • Has no concept of acceptable ethical behavior • Indifferent to the problems of minorities and the environment What responsibility does business have to society? 0 What are Business’s Responsibilities?

4. CSR is a key concept Seriously considering the impact of a company’s actions on society. CorporateSocial Responsibility 0 Corporate Social Responsibility (CSR)

5. Corporate Social… Emphasizes… Responsibility Obligation, accountability Responsiveness action, activity Performance outcomes, results 0 Corporate Citizenship Concepts

6. Economic Model Legal Model Social Model 0 Historical Perspective on CSR Responsible for meeting only economic obligations Responsible for meeting only economic and legal obligations Responsibility goes beyond economic and legal

7. Philanthropy Community obligations Paternalism Motivation: Keep government at arm’s length 0 Modification of the Economic Model

8. 0 Acceptance and Broadening of Meaning From the 1950’s to the present, the concept of CSR has gained considerable acceptance and the meaning has been broadened to include specific issues, such as: • corporate governance • product safety • honesty in advertising • employee rights • affirmative action • environmental sustainability • ethical behavior • global CSR

9. 0 Carroll’s Four-Part Definition of CSR The social responsibility of business encompasses the economic, legal, ethical and discretionaryexpectations that society has of organizations at a given point in time.

10. Responsibility Societal Expectation Examples Economic Legal Ethical Philanthropic Desired/Expected Expected Required Required Be profitable. Maximize sales, minimize costs. Be a good corporate citizen. Give back. Obey laws, adhere toregulations Avoid questionable practices.Do what is right, fair, and just 0 Carroll’s Four-Part Definition of CSR

11. 0 Legal Responsibilities • Why laws are not sufficient: • Law cannot address all the topics or issues that business may face • Law often lags behind more recent concepts of what is considered appropriate behavior • Laws are made by lawmakers and may reflect the personal interests/motivation of legislators rather than appropriate ethical justifications

12. Philanthropic ResponsibilitiesGive back to society. Ethical ResponsibilitiesBe ethical. Legal ResponsibilitiesObey the law. Economic ResponsibilitiesBe profitable. 0 The Pyramid of CSR

13. + TotalCorporate CSR = + + 0 The CSR Equation Economic Responsibilities Legal Responsibilities Ethical Responsibilities Philanthropic Responsibilities

14. 0 Arguments For CSR • Enlightened self-interest • Wards off future government intervention • Proactive better than reactive • The public supports CSR

15. Restricts the classic economic goal of profit maximization Business is not equipped to handle social activities Limits the ability to compete in a global marketplace Dilutes the primary purpose of business 0 Arguments Against CSR These arguments do not hold favor any longer

16. 0 Corporate Responsibility in the 21st Century • Millenium Poll on CSR (1999). Conclusion is that society expects businesses to: • Demonstrate a commitment to society’s values and contribute to society’s social, environmental, and economic goals through action. • Insulate society from the negative impacts of company operations and its products and services. • Share benefits of company activities with key stakeholders as well as with shareholders. • Demonstrate that the company can make more money by doing the right thing.

17. Implies more of a state or condition of having assumed an obligation Connotes a dynamic, action-oriented condition Responsibility Responsiveness 0 Corporate Social Responsiveness

18. 0 Corporate Social Performance Areas of Performance

19. Corporate Social Performance: What Gets Measured Gets Managed • Measuring and reporting key to communicating with stakeholders • Measurement (goals and measures) • Reporting: Global Reporting Initiative (GRI) • Example: Intel

20. Corporate Citizenship… Embraces all the facets of corporate social responsibility, responsiveness, and performance. Widely accepted concept 0 Corporate Citizenship

21. Improved employee relations Improved customer relationships Improved business performance Enhanced marketing 0 Benefits of Corporate Citizenship

22. 0 Stages of Corporate Citizenship

23. Business Recognition • Fortune's ranking of “Most Admired” and “Least Admired” corporations • Conference Board’s Ron Brown Award for Corporate Leadership • Corporate Responsibility Officer Magazine Awards 0 Business’s Interest in Corporate Citizenship

24. Perspective 1: CSP Drives the Relationship Good CorporateSocial Performance Good CorporateFinancialPerformance Good CorporateReputation Perspective 2: CFP Drives the Relationship Good CorporateFinancialPerformance Good CorporateSocial Performance Good CorporateReputation Perspective 3: Interactive Relationship Among CSP, CFP, and CR Good CorporateSocial Performance Good CorporateFinancialPerformance Good CorporateReputation 0 Social and Financial Performance Relationship

25. Owner Stakeholders’ “Bottom Line” Consumer Stakeholders’ “Bottom Line” Corporate Social Performance Employee Stakeholders’“Bottom Line” Community Stakeholders’“Bottom Line” Other Stakeholders’ “Bottom Line” 0 “Multiple Bottom Line” Perspective

26. Key Spheres of Sustainability • Economic (easy to measure) • Environmental (harder to measure) • Social (hardest to measure) 0 “Triple Bottom Line” Perspective

27. A technique used to screen firms for socially-responsible investment purposes 0 Socially Responsible or Ethical Investing Social Screening Shareholder resolutions force companies to take action Example: CERES Shareholder Advocacy Investments made in a community with the purpose of enhancing its social/environmental condition Community Investing