Corporate Social Responsibility CSR Dr Sergey Konstantinovich Vasilik

Corporate Social Responsibility (CSR) Dr Sergey Konstantinovich Vasilik E-mail: vingek@ukr. net Subject: CSR

1. Understanding CSR 1. Introducing CSR p 2. Key trends of CSR development p 3. Standards of CSR p

Corporate social responsibility is p p a commitment to improve community well-being through discretionary business practices and contributions of corporate resources. a concept whereby companies integrate social and environmental concerns in their business operations and in their interactions with their stakeholders on a voluntary basis a form of corporate self-regulation integrated into a business model also called corporate conscience, corporate citizenship, social performance, or sustainable responsible business

Main Concepts of CSR (Carrol, 1979) Firms have responsibilities to societies including economic, legal, ethical and discretionary (or philanthropic). - See also De. George (1999) on the “Myth of the Amoral Firm” Social Contract (Donaldson, 1982; Donaldson and Dunfee, 1999) – There is a tacit social contract between the firm and society; the contract bestows certain rights in exchange for certain responsibilities. Stakeholder Theory (Freeman, 1984) – A stakeholder is “any group or individual who can affect or is affected by the achievement of an organisation’s purpose. ” Argues that it is in the company’s strategic interest to respect the interests of all its stakeholders.

Sustainable development p Development that meets the needs of the present without compromising the ability of future generations to meet their own needs

Corporate social initiatives p are major activities undertaken by a corporation to support social causes and to fulfill commitments to corporate social responsibility

Causes p p p p community health (i. e. , AIDS prevention, timely immunizations), safety (designated driver programs), education (literacy, computers for schools, special needs education), and employment (job training, hiring practices); the environment (recycling, elimination of the use of harmful chemicals, reduced packaging); community and economic development (low-interest housing loans); and other basic human needs and desires (hunger, homelessness, animal rights, antidiscrimination efforts).

Stakeholders p Individuals, groups of persons or organizations which have significant influence on decisions adopted by the Company or are subject to such decisions (for example, employees, clients, partners, public organizations, state bodies, etc. )

Carroll's definition

Pyramid of CSR Philanthropic Responsibilities Be a good corporate citizen. Ethical Responsibilities Be ethical. Legal Responsibilities Obey the law. Economic Responsibilities Be profitable.

Economic Components Responsibilities) p p p 1. It is important to perform in a manner consistent with maximizing earnings per share 2. It is important to be committed to being as profitable as possible. 3. It is important to maintain a strong competitive position. 4. It is important to maintain a high level of operating efficiency. 5. It is important that a successful firm be defined as one that is consistently profitable.

Legal Components (Responsibilities) p p p 1. It is important to perform in a manner consistent with expectations of government and law. 2. It is important to comply with various federal, state, and local regulations. 3. It is important to be a law-abiding corporate citizen. 4. It is important that a successful firm be defined as one that fulfills its legal obligations. 5. It is important to provide goods and services that at least meet minimal legal requirements

Ethical Components (Responsibilities) p p p 1. It is important to perform in a manner consistent with expectations of societal mores and ethical norms. 2. It is important to recognize and respect new or evolving ethical moral norms adopted by society. 3. It is important to prevent ethical norms from being compromised in order to achieve corporate goals. 4. It is important that good corporate citizenship be defined as doing what is expected morally or ethically. 5. It is important to recognize that corporate integrity and ethical behavior go beyond mere compliance with laws and regulations.

Philanthropic Components (Responsibilities) p p p 1. It is important to perform in a manner consistent with the philanthropic and charitable expectations of society. 2. It is important to assist the fine and performing arts. 3. It is important that managers and employees participate in voluntary and charitable activities within their local communities. 4. It is important to provide assistance to private and public educational institutions. 5. It is important to assist voluntarily those projects that enhance a community’s "quality of life. "

Corporate Social Responsibility (CSR) Stakeholder View Stakeholder Group Addressed and Affected CSR Component Owner Cons sumer s Employees Community Others Economic 1 4 2 3 5 Legal 3 2 1 4 5 Ethical 4 1 2 3 5 Philanthropic 3 4 2 1 5

Trends Increased Giving p Increased Reporting p Establishment of a Corporate Social Norm to Do Good (Ford ++: ) p A Shift from Obligation to Strategy p The Traditional Approach: Fulfilling an Obligation p The New Approach: Supporting Corporate Objectives as Well p

Benefits Increased sales and market share >> p Strengthened brand positioning p Enhanced corporate image and clout p Increased Ability to Attract, Motivate, and Retain Employees p Decreased Operating Costs p Increased Appeal to Investors and Financial Analysts p

Increased sales and market share p p p 84% said that they have a more positive image of companies that do something to make the world better 78% of adults said that they would be more likely to buy a product associated with a cause they cared about 66% said they actually would switch brands to support such a cause, assuming an equal price and quality 62% said that they would switch retail stores to support a cause 64% believe that cause related marketing should be a standard part of a company’s activities

Increased Ability to Attract, Motivate, and Retain Employees p p p a company's participation in social initiatives can have a positive impact on prospective and current employees, as well as citizens and executives Employees working in companies reported to have causerelated programs were 38% more likely to say they are proud of their company's values than were employees in companies not reported to have these programs Even before 9/11, 48 percent of respondents indicated that a company's commitment to causes is important when deciding where to work. After 9/11, that percentage rose to 76 … more than half of the 2, 100 MBA students surveyed indicated they would accept a lower salary in order to work for a socially responsible company … graduates look for the right corporate culture, as well as the right salary, job description, and opportunities for promotion

Corporate social responsibility (CSR) is: p p p An obligation, beyond that required by the law and economics, for a firm to pursue long term goals that are good for society The continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as that of the local community and society at large About how a company manages its business process to produce an overall positive impact on society

Corporate social responsibility means: Conducting business in an ethical way and in the interests of the wider community p Responding positively to emerging societal priorities and expectations p A willingness to act ahead of regulatory confrontation p Balancing shareholder interests against the interests of the wider community p Being a good citizen in the community p

OSR Issues include (not exhaustive and not in any particular order) p p p p p Human rights (Universal Declaration of Human Rights, ILO Core Conventions) Workplace and employee Issues (incl. Occupational Health & Safety) Unfair business practices including bribery, corruption and anti-competitive practices (all organizations) Organizational governance Environmental aspects Marketplace and consumer Issues Community involvement Social development

WHAT ARE THE MAJOR CURRENT CHALLENGES TO DOING GOOD? Choosing a Social Issue p Selecting an Initiative to Address the Issue p Developing and Implementing Program Plans p Evaluation p

Six Social Initiatives 1. p 2. p 3. p 4. p 5. p 6. p Cause Promotions Cause-Related Marketing Corporate Social Marketing Corporate Philanthropy Community Volunteering Socially Responsible Business Practices

1. Cause Promotions p p A corporation provides funds, in-kind contributions, or other corporate resources to increase awareness and concern about a social cause or to support fundraising, participation, or volunteer recruitment for a cause. The corporation may initiate and manage the promotion on its own (i. e. , The Body Shop promoting a ban on the use of animals to test cosmetics); it may be a major partner in an effort (Aleve sponsoring the Arthritis Foundation's fundraising walk); or it may be one of several sponsors (Keep America Beautiful 2003 sponsors for the "Great American Cleanup" included Lysol, Pepsi. Co, and Firestone Tire & Service Centers, among others).

2. Cause-Related Marketing p p p A corporation commits to making a contribution or donating a percentage of revenues to a specific cause based on product sales. Most commonly this offer is for an announced period of time, for a specific product, and for a specified charity. In this scenario, a corporation is most often partnered with a nonprofit organization, creating a mutually beneficial relationship designed to increase sales of a particular product and to generate financial support for the charity (for example, Comcast donates $4. 95 of installation fees for its high-speed Internet service to Ronald Mc. Donald House Charities through the end of a given month). Many think of this as a win-win, as it provides consumers an opportunity to contribute for free to their favorite charities as well.

3. Corporate Social Marketing p p A corporation supports the development and/or implementation of a behavior change campaign intended to improve public health, safety, the environment, or community well-being. The distinguishing feature is the behavior change focus, which differentiates it from cause promotions that focus on supporting awareness, fundraising, and volunteer recruitment for a cause. A corporation may develop and implement a behavior change campaign on its own (i. e. , Philip Morris encouraging parents to talk with their kids about tobacco use), but more often it involves partners in public sector agencies (Home Depot and a utility promoting water conservation tips) and/or nonprofit organizations (Pampers and the SIDS Foundation encouraging caretakers to put infants on their backs to sleep).

4. Corporate Philanthropy p p p A corporation makes a direct contribution to a charity or cause, most often in the form of cash grants, donations, and/or inkind services. This initiative is perhaps the most traditional of all corporate social initiatives and for many decades was approached in a responsive, even ad hoc manner. More corporations are now experiencing pressures, both internally and externally, to move to a more strategic approach, choosing a focus and tying philanthropic activities to the company's business goals and objective

5. Community Volunteering p p p A corporation supports and encourages employees, retail partners, and/or franchise members to volunteer their time to support local community organizations and causes. This activity may be a stand-alone effort (i. e. , employees of a high tech company tutoring youth in middle schools on computer skills) or it may be done in partnership with a nonprofit organization (Shell employees working with The Ocean Conservancy on a beach cleanup). Volunteer activities may be organized by the corporation, or employees may choose their own activities and receive support from the company through such means as paid time off and volunteer database matching programs.

6. Socially Responsible Business Practices p p p A corporation adopts and conducts discretionary business practices and investments that support social causes to improve community well-being and protect the environment. Initiatives may be conceived of and implemented by the organization or they may be in partnership with others. In each case, background information on the corporation's focus for social initiatives is briefly described, followed by an example of a social initiative in each of the six areas.

Principles of CSR Sustainability p Accountability p Trasparency p

Standards for CSR SA 8000 p AA 1000 p GRI p ISO 9000 p ISO 26000 p Sarbanes-Oxley p UN Global Compact p