Corporate Social Responsibility

Corporate Social Responsibility

1. Definition

   • CSR is a commitment to improve community well-being through discretionary business practices and contributions of resources (Kotler + Lee 2006)
   • "There is a difference between a good company and a great company. A good company offers excellent products and services. A great company also offers excellent products and services but also strives to make the world a better place" (Ford Jr)
   • CSR is an entirely voluntary, corporate-led initiative to promote self-regulation as a substitute for regulation at either a national or international level (Christian Aid 2000)

2. Modern Day Slavery Act 2015

   • Companies must publish statement on their website dealing with steps to ensure no slavery or trafficking in own organisations or supply chains
   • Has increased training and awareness
   • 50% of companies are collaborating more with peers, NGOs and multi-stakeholder initiatives since the act was passed
   • Barriers to companies addressing modern slavery
     • Supply chain complexity, resources to support supplier improvements and due diligence, commercial priorities, cost and pricing pressures, transparency dilemmas

3. Reasons for CSR

   • Defending public image, attracting investors, consumer pressure, making good PR, engaging with campaigners, lobbying against regulation
     • Moral reasons
       • Corporations should use their power responsibly
     • Business reasons ('enlightened self-interest)
       • Extra or more satisfied customers, employees may be more attracted / committed, forestall legislation, long-term investment which benefits corporation

4. CSR Theories (Garriga + Mele 2004)

   • Instrumental
     • Achieving economic objectives through social activities
     • Maximization of shareholder value
     • Strategies for competitive advantage
     • Cause-related marketing
   • Political
     • Responsible use of business power in political arena
     • Corporate constitutionalism - social responsibilities arise from power
     • Corporate citizenship
   • Integrative
     • Integration of social demands
     • Issues management - which political/ social issues may affect company
     • Public responsibility (law and public policy)
     • Stakeholder management and social legitimacy
   • Ethical
     • Stakeholder narrative theory - fiduciary duties towards stakeholders
     • Sustainable development - considering present + future generations
     • Universal rights - human rights, labor rights + environment
     • The common good

5. Carroll (1991)

   • Pyramid of responsibilities (top to bottom)
     • Philanthropic (desired by soc)
       • Ethical (expected by soc)
         • Legal (required by soc)
           • Economic (required by soc)

6. Triple Bottom Line (Elkington)

   • Bottom line thinking suggests sustainability as a goal
   • 3 Dimensions
     • Environmental
     • Social
     • Economic

7. Cause-related Marketing

   • Definition
     • Is the co-alignment of marketing goals with corporate philanthropy
       • Attempts to create win-win-win
   • e.g. RED brand (Bono) - ethical merchandise as alternative to regular merchandise (doing good through consumption)
     • Criticism; shopping is no solution, just buy less, do good without consuming
   • Price and quality being equal, consumers are generally more likly to switch brands on the basis of CRM
     • Most consumers link CSR positively with product + brand evaluation = postitive company benefit
   • Criticisms
     • Selection of causes based on brand value
     • Corporations depicted as 'saviors' without questioning their contribution to problem
     • % of donation actually going to cause
     • Profit benefit + consumer cynacism

8. Perspectives on CSR

   • Anti CSR, Pro Corporate (Friedman)
     • Single social responsibility- to shareholders
     • "Of course, in practice the doctrine of social responsibility is frequently a cloak for actions that are justified on other grounds rather than a reason for those actions...whether blameworthy or not, the use of the cloak of social responsibility, and the nonsense spoken in its name by inflential and prestigious businessmen does clearly harm the foundations of a free society" (Friedman 1970)
   • Pro CSR, Pro Corporate (Kotler + Lee 2006)
     • Doing the most good for your company and your cause
     • 'giving something back'
   • Anti Corporation, Pro CSR (NGOs)
     • Business should not be in charge of the global commons as the social responsibility agenda intends to do - instead role of governments (Doane, 2003)
   • Anti CSR, Anti Corporate (Corporate)
     • Whitewash, Greenwash

9. Criticisms of CSR

   • CSR is a flawed concept. The idea that companies have a duty to social ills is flawed.
     • CSR is irrelevant when private / public interests are aligned e.g. healthy food is profitable
     • CSR is ineffective when profits and social welfare are in opposition e.g. poverty, pollution
     • CSR may delay/discourage more effective measures
   • CSR in opposition to good corporate governance
     • Executives are hired to maximise profits while doing what is best for society may mean sacrificing profits
     • CSR encourages 'Greenwashing'
     • Philanthropic endeavors should not be pursued with shareholder money

10. Strategies in the Ethical Market

    • Ethical Niche
      • Customers have strong ethical preferences (Ben + Jerry's, Green & Black's organic chocolate, Body Shop)
    • Mainstream
      • Variety of firms with variety of values. Ethical credentials not fundamental, high competition (CafeDirect)
    • Low Cost
      • Certify + communicate ethics costly - environmental focus; opportunity to reduce resource inputs etc
    • Green Bandwagon
      • Becoming more ethical or Greenwashing

11. Whose responsibility?

    • 60% consumers say retailer's sustainable credentials are important

12. B Corporations

    • B-Corps are for-profit busineses that have social +/ envirnomental outcomes as part of their mission and meet the highest of environmental and social standards, have high accountability and transparency
      • Reasons to become a B-Corp
        • Attract investors, attract talent, build trust, appeal to ethical consumers, build collective voice, lead a global movement

13. Examples

    • Nestle
    • Shell in Nigeria (Christian Aid 2000)
    • British American Tobacco in Kenya (Christian Aid 2000)
    • Coca Cola in Kerala, India (Christian Aid 2000)
    • Bottled Water Ethics (Wilk 2006)