CORPORATE SOCIAL RESPONSIBILITY

1
CORPORATE SOCIAL RESPONSIBILITY

• Business Environment
• Ch. 5, Steiner Steiner

2
Class Objectives

• Corporations will want to establish a Strategic
  CSR policy consistent with their view of their
  Social Contract
• CSR can be described for its sources (causes) and
  its principles, but its effectiveness is hard to
  evaluate
• Corporations have six responses to the multiple
  pressures they will receive from society
• There are skills sets that can be developed to
  improve CSR.

3
Corporate Social Responsibility (Steiner. P. 120)

• Corporate duty, to
• Create wealth, and
• Protect social assets
• Avoid harm
• Preserve
• Enhance

4
CSR Related to AIDS

• International Aids Vaccination Initiative
• Non-profit, well funded (Bill Melinda)
• Invest in small US Pharmaceuticals
• Broker US Pharm. Develop. Countries
• License to manufacture cheap alternative for
  Africa
• Could affect prices in the U.S.

5
History of Corporate Social Responsibility (CSR)

• Corporate lesson in the Rodney King Riots?
• McDonalds
• Shell Corporation

6
Resistance to CSR?

• Adam Smith invisible hand
• Social Darwinism
• Ultra Vires

7
Justification for CSR--Bowen

• Ethical duty to consider broad social impacts of
  decisions
• Reservoirs of skill and energy
• Power in keeping with a broad social contract
• Enligtened self-interest to improve society
• Voluntary action will head off negative reactions?

8
Case Against CSR--Friedman

• Use its resources for profit
• Engage in activities for profit
• Increase its profits
• Within rules of the game

9
Case Against CSR (cont.)

• CSR money reduces shareholder profit
• Is it what stockholders want?
• Consumers paying for it
• Separation
• church/state
• corporate/state

10
Supremacy of CSR in the US

• CED -- 1971
• Inner Circleproducts jobs
• Intermediate Circleenvironment, hiring, safety
• Outer Circleevolving
• Business Roundtable Statement on CSR 1981
• Economic/Social responsibilities are compatible
• ALL CORPORATE RESPONSIBILITIES ARE INTERWINED

11
Basic Elements (causes) of CSR

• Market forces
• Mandatory programs
• Voluntary Social Programs

12
General Principles for Strategic CSR

• Law corporate and stakeholder regulations
• Primarily by economic criteria ROE
  Shareholder value
• Address the adverse social impacts they cause
• Varies by corporate characteristics
• Meet legitimate shareholder needs
• Guided by winds of social direction

13
Criteria for Rating CSR

• Published Screens
• Domini Social Equity Fund
• Council on Economic Priorities p. 138
• Personal screens what is on your list?
• WSJ in 2000 for top 50 using

14
CSR and Profit Related?

• Investing on CSR is noble but less profitable p.
  139
• Scholars and profit no conclusions
• Local programs examples that work?

15
CSR Internationally

• European Nations
• Regulations and taxes
• Unraveling because of US/other competition
• Japan
• Confucianism direct relationship responibility
• Emperor Meijis Imperial Oath
• Weaker Stakeholders
• LDCs
• India is an exemplar
• Economic performance alleviates poverty

16
Levi Strauss

• Evaluate pros/cons of LS decision to stay/leave
  in 1993
• Evaluate pros/cons of LS decision to return in
  1998
• What is the responsibility of a company like LS
  in improving HR in China?

17
Review main points of CSR in Chapter 5

• Corporations will want to establish a Strategic
  CSR policy consistent with their view of their
  Social Contract
• CSR can be described for its
• Sources (causes)
• Principles, but
• Effectiveness is hard to evaluate

18
IMPLEMENTING CORPORATE SOCIAL PROGRAMS

• Steiner Steiner, Ch. 6
• Business Environment

19
Class Objectives

• Corporations will want to establish a Strategic
  CSR policy consistent with their view of their
  Social Contract
• CSR can be described for its sources (causes) and
  its principles, but its effectiveness is hard to
  evaluate
• Corporations have six responses to the multiple
  pressures they will receive from society
• There are skills sets that can be developed to
  improve CSR.

20
Royal Dutch Shell

• Responsible corporate member
• Observe county laws
• Support human rights
• Proper regard or health, safety, environment
• Sustainable development

21
Six Patterns of Social Response

• Rejection
• Adversary strategy
• Resistance strategy
• Compliance
• Accommodation
• Proactive strategy

22
Pressures for Undertaking Programs

• Government jaw boning
• Community interests demands
• Environmental concerns
• Competitive responses
• Stockholder/investor pressures
• Philanthropy
• Crises

23
Implementation Procedures (SKILL SETS)

• Issues Management
• Crisis management
• Corporate philanthropy
• Business in education

24
Issues management

• What is it?
• Identify important social issues
• Potential of concern to the company
• Develop responses

25
Issues management methodology

• Intuition
• Scenario planning
• Probability/Impact matrix
• Setting priorities
• Shaping public opinion
• Legislation
• Compliance

26
Crises management

• Examples
• Bhopal in India
• Exxon Valdez oil spill
• Steps
• Assess possibilities
• Prepare process
• Game it

27
Corporate philanthropic allocations

• Priorities education, health,
• 10 of pre-tax profits vs 1-2 actual
• Buffett Gates are significant contributors
• How will you give?

28
Philanthropic Programs

• Community Economic Development
• Target and Home Depot at Habitat
• Strategic philanthropic self-interest
• Cause related marketing
• Current web sites
• Business in Education
• How much is OK?

29
Social audits

• Measure program contributions
• Central East Rotary summarized giving 6 years
• Kellogg Foundation
• 80 of start-ups vanished w/i five years
• How would you respond if you were on the board?

30
Class Objectives

• Corporations will want to establish a Strategic
  CSR policy consistent with their view of their
  Social Contract
• CSR can be described for its sources (causes) and
  its principles, but its effectiveness is hard to
  evaluate
• Corporations have six responses to the multiple
  pressures they will receive from society
• There are skills sets that can be developed to
  improve CSR