Ethics Before Midterm

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active shareholders

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those who participate in the governance to the full extent allowed by the law

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audit comittee

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members of the BoD, oversee the internal and external accounting and auditing function. ensures accurate financial statements and

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board of directors

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group elected by shareholders to govern or oversee the corporatation's affairs

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business citizenship

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includes the responsibilities of corporate citizenship on a local and national basis and extends it to a global or universal scope

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business ethics

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rules, standards, codes, or principles that provide guides for morally right behavior and trustfulness in specific situations

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business sustanable development

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according to the IISD, adopting business strats and activities that meet the needs of the enterprise and its stakeholders today while protecting, sustaining and enhancing the human and natural resources that will be need in the future

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capitalism

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private ownership of the means of production, economic decisions in the hands of individuals/enterprises looking for a profit

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cause-related marketing

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purchase of product results in donations by the corp to a non-profit organizations program

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chosen instrument

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a corp within a particular industry that receives some form of special attention from gov't through grants, loans, purchasing policy, or tax incentives

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civil society

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voluntary, community, and social orgs that contribute to the functioning of society but are not related to or supported by gov't

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code of conduct

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explicitly states what appropriate behaviour is by identifying what is acceptable and not

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code of ethics

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a statement of priciples or values that guide behaviour by describing the general value system within which a corp attempts to operate in a given env

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conflict of interst

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situation in which a indiv has a private or personal interst that is sufficient to appear to influence the objective exercise of that individuals duties

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conflicted consumer

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one who has moral concerns about some aspect of how a corp conducts business and will critisize it, but will continue to patronize it

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community investment

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efforts of a corp to help develop a community an create economic opportunities - through dontaion or commercial undertakings

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consumer sovereighnty

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assumption existing in an economy that consumers have and exercise power over producers through the decisions they make in purchasing the good and services provided by corps

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consumerism

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social movement seeking to protect and augment the rights and powers of buyers in relation to sellers

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corporate agenda

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the real or imagined alleged domination of public policy or gov't program by corps in their own best interest

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corp citizenship

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a corp demonstarting that it takes into account its role in and complete impact on society and the env as well as its economic influence

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corporate culture

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the complex set of vlaues, beliefs, assumption, and symbols, that define the way in which an org conducts its business

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corporate ethics program

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some combination of a statement of values, codes of conduct and/or ethics, ethics training, ethics audits, and consulting srvcs, ethics officers and committees, and ethics reporting systems

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corporate governance

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the processes, structs, and relationships through which the shareholders, as represented by a BoD, oversee the activities of the corp

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corp philatrophy

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effort of business to contribute to sicety socially; dontation of money or goods and services, voluntarism, and sponsorships

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corporate public affairs

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mngmnt function responsible for monitoring and interpreting the gov't env of the corp or industry and for managing the response necessary to protect the interest of the corp or industry

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corporate reputation

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preceptual representation of a corp's past action and future prospects, describes overall appeal of stakeholders when compared to rivals

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corp social resp (CSR)

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the way a corp achieves a balance among its economic, social and env, responsibilities in its operations so as to address shareholder and other stakeholder expectations

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corp social resp (CSR) reporting

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a management function that documents the corps econ, ethics, and env responsibilities and responsibilities and initiatives a and communicates this info to relevant stakeholders

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Corp social responsibilities (CSR) strat

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the portion of a corp's comprehensive corp strat addressing major socia/ethical, env, governance issues

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corp sustainability (CS)

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corp activities demonstrating the inclusion of social, env, and econ responsibilities in business as they impact all stakeholders to ensure the long-term survival of the corp

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corp voluntarism

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time and talent employees commit to community orgs with support and/or consent from employers

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ethics of business

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The rules, standards, codes, or principles that provide guidance for morally appropriate behaviour in managerial decision making relating to the operation of the corporation and business’s relationship with society. It is broadly defined to include corporate social responsibility, sustainability, corporate citizenship, corporate governance, triple bottom line, accountability, and environmental stewardship

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Stakeholder

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An individual, or group who can influence and/ or is influenced by the achievement of an organization’s purpose

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Triple bottom line

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The Triple-E bottom line (3E) is the evaluation of a corporation’s performance according to a summary of the economic, social, or ethical, and environmental value the corporation adds or destroys. A variation of the Triple-P bottom line (3P) which is an evaluation of the corporations performance according to profits, people, and planet.

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Responsible Corporation

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A business commitment that responds to social, ethical, and environmental responsibilities in addition to its economic obligations

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Three dominant approaches to normative theories of ethics

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Deontological (rule-based)
Teleological (consequential)
Virtue ethics

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Deontological (rule-based)

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theories of ethics, actions are ethical if done for the sake of what is good without regard for the consequences of the act. Individuals have a duty to do the right thing even if the consequences of another action are preferable

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Teleological (consequential)

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): theories focus on the outcomes or result of actions. A well-known variation is utilitarianism which is based on utility or usefulness. The approach looks to the end results and individuals make decisions based on the consequences of the action. The decision is believed to be good if the end result is good. This approach is used every day and in business to view the relative outcomes; that is, the distribution of harms and benefits. Thus, moral character depends upon the practical matter relating to the extent to which actions benefit or harm those involved.

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Virtue ethics

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emphasizes the character or identity of the individual and focuses upon being rather than doing. Morality is based on the development of good character traits or virtues and assumes that a good person will perform ethically. Virtue ethics acknowledges that absolute rules are unlikely to apply in all situations. “What virtues make a good business person or leader?” Possible answers include foresight courage, commitment, compassion, respectfulness and honesty

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Economic System

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: An arrangement using land, labour, and capital to produce, distribute, and exchange good and services to meet the needs and wants of people in society. The objective of an economic system is to use society’s resources to meet the society’s needs

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Free enterprise system

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An economic system characterized by ownership of private property by individuals and enterprises; the profit motive; a competitive market system; and a limited involvement by government.

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Laissez-faire capitalism

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: An economic system operating with absolute minimum interference by the government in the affairs of business. Government involvement is strictly limited to providing essential services such as police and fire protection

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Responsible enterprise system

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An economic system operating as a free enterprise system but incorporating the element of accountability. This definition implies that business enterprises are responsible to society for their actions and are answerable or accountable for being the cause, agent, or source of something.

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Stakeholder capitalism

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An economic system in which corporations accept broader obligations beyond financials ones for shareholders. Corporations are expected to balance the interests of shareholders with those of other stakeholders in the business system, for example employees, suppliers, customers, and the community at large.

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Factors Influencing Attitude Toward Business

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Standard of living
Decentralized Decision Making
Allocation of resources
Self-Interest
Inequities in Society
Business Cycle
Unemployment
Innovations
The Media

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Standard of living

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: A prominent argument used in justifying or supporting the business enterprise system is the standard of living that it provides. As living standards increase, the more likely society will view business in a positive manner

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Decentralized Decision Making

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Another factor of the business system considered desirable is the decentralized decision making process involved. Millions of businesses make decisions independently of one another, ensuring that a wide variety of good and services are available

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Allocation of resources

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Some argue that the efficient allocation of resources is more likely to occur with a business system, as allocation is based on the price and availability of resources. However, critics of the business system challenge the efficiency claim. They argue enterprises control prices, for example in oligopolistic industries or that business enterprises control the availability of resource, creating artificial scarcities.

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Self-Interest

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In a business enterprise system, the individual can behave in his or her own self-interest. Self-interest acts as a motivator, and provides the drive for profit that encourages individuals to get things done.

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Inequities in Society

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– In a business enterprise system, the individual can behave in his or her own self-interest. Self-interest acts as a motivator, and provides the drive for profit that encourages individuals to get things done.

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Business Cycle

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- Business cycles are natural in a market system, and probably are more accentuated in a business enterprise system than in a centralized economy. With periods of prosperity followed by recessions, the business enterprise system is vulnerable to criticisms because of the hardships imposed upon particular individuals and types of businesses at various times.

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unemployment

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Employment is associated with the country’s economic performance, business cycles, and the productivity of business. How well the country’s major industries are performing and the levels of consumer spending determine employment levels.

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Innovations

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The business enterprise system is designed to constantly seek innovation. A large portion of technological development has been the result of the efforts of business enterprises. Some people criticize continuous and accelerating technology and social change, while conceding that technology has improved their material well being. A problem associated with rapid technological change is alienation, particularly alienation in the workplace.

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The Media

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The popular media influences society’s views of business. Book, magazines, newspapers, television, film documentaries, movies, and the Internet describe the activities of business and the implications for society. Some of the portrayals are positive, but many are negative and receive a lot of attention.

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Examples of Corporate Wrongdoing

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Misleading financial statements
Misuse of shareholders’ money
Kickbacks: Payments or gifts by a seller to executives who were instrumental in awarding a contract or buying a product. Stakeholder most affected: suppliers.
Insider trading
Stock manipulation
Bid rigging
Embezzlement
Taxation evasion
Bankruptcy fraud
Insurance fraud
Ponzi Schemes: Such schemes promise high returns to investors, which are paid initially from the contributions of other investors rather than the earnings of the investment.

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Eight fundamentals of a capitalistic business system

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Right to private property
Individualism
Economic Freedoms
Equality of Opportunity
Competition
Profits
Work Ethic
Consumer Sovereignty
Role of Government

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Consumer Sovereignty

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the assumption existing in an economy that consumers have and exercise power over producers through the decisions they make in purchasing the good and services provided by corporations.
?Ethical implications: -consumers not always aware of alternative products available
- consumers’ preferences are shaped by advertising
- producers have power to ignore consumer wishes

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What are the Fundamentals Canadian Capitalism

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An economic system that allows for private ownership of the means of production (land, labour, and capital) and assumes that economic decision making is in the hands of individuals or enterprises that make decision expecting to earn to profit.

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Various forms of Capitalism

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Consumer capitalism
Producer capitalism
Family capitalism
Frontier capitalism
Creative capitalism
State capitalism

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Family capitalism

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Taiwan, Malaysia, Thailand, Indonesia – Also referred to as crony and Confucian capitalism. In some economies extended clans dominate business activities and control capital flows. In many countries the clans or families created by Chinese descendants scattered throughout the region

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Producer capitalism

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France, Japan, Mexico – This form emphasizes production, employment, and statist policies, the concentration of economic controls and planning in the hands of a centralized government.

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Consumer capitalism

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U.S., Britain, Canada, Australia – Government involvement is limited, there are open borders and a profit mentality exists. Consumers have considerable influence over the market and producers respond to their wishes.

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Creative capitalism

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resolution of social needs the primary goal of economic activity

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Frontier capitalism

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Russia, China – suggests that capitalism is in its beginning stages

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The challenges and ethics capitalism

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Greed
Mistrust
Economic downturns
Business failures
Corporate crime and wrongdoing

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Arguments against the stakeholder concept

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-Problems of categorization (e.g., how to identify and prioritize stakeholders)
- Challenges in meeting expectations (e.g, tradeoffs among the stakeholders)
- Dilution of top management focus (e.g., away from financial performance)
- Impracticality of shared governance (e.g., focus still on shareholders)

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Arguments for the stakeholder concept

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- Simply good business
- Ignoring stakeholder interests can have substantial economic consequences (e.g., employees, customers, lenders, etc.)
- Provides more systematic approach to recognizing stakeholder expectations and deciding how to respond

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Issues Management

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is a systematic process by which the corporation can identify, evaluate, and respond to those economic, social, and environmental issues that may impact significantly upon it. The term refers to the process by which the corporation responds to economic, social, and environmental issues.

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purpose of issues management

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?Purpose: to minimize surprise relating to events or trends in society by serving as an early warning system.

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Issues Life cycle stages:

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: degree of awareness of issues over time (none or little, increasing, prominent, peak, declining, represented by T1,T2,T3,T4, and T5

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Issues Management Process:

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Identification of issues
. Analysis of issues
. Ranking or prioritizing of issues
. Formulating Issue Response
Implementing issue response
Monitoring and evaluating issue response

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Basic Stakeholder analysis

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All corporations should involve themselves in stakeholder management, even at preliminary level. If nothing else, corporations should identify and attempt to understand the stakeholders that influence and are influenced by the corporation. It is possible to increase the understanding of the stakeholder by answering the following questions, which will capture essential information needed for effective stakeholder management

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questions for basic stakeholder analysis

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1. Who are out stakeholders?
2. What are their stakes?
3. What opportunities and challenges are presented to our firm?
4. What responsibilities (economic, legal, ethical, and philanthropic) does our firm have all its stake holders?
5. What strategies or actions should our firm take to best deal with stakeholder challenges and opportunities?

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Stakeholder Management Capability

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The ability of managers to:
1. Identify stakeholders and their influence;
2. Develop the organizational practices to understand stakeholders; and
3. Undertake direct contact with stakeholders

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Stakeholder Matrix Mapping

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A technique of categorizing an organization’s stakeholders by their influence according to two variables; usually involves plotting them on a two-by-two matrix:
- Y Axis: Oppose or support corporation
- X Axis: Importance of stakeholders

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Problematic stakeholders

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Those who would oppose the organization’s course of action and relatively unimportant to the organization

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Antagonistic stakeholders

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Those who would oppose or be hostile to the organization’s course of action and are very important to the organization.

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Low priority stakeholders

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Those who support the organization’s course of action and are relatively unimportant to the organization

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Supporter stakeholders

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– Those who would support the organization’s course of action and are important to the organization

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Diagnostic Typology of Organizational Stakeholders
Type 1 supportive

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This is the ideal stakeholder, providing support by being a low threat and high on potential for cooperation. Examples are boards of directors, managers, employees, parent companies, and possibly suppliers and service providers. The strategy for managing this type of stakeholder is to encourage the cooperative potential and not ignore them or take them for granted

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Diagnostic Typology of Organizational Stakeholders
Type 2 (Marginal)

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These stakeholders are neither highly threatening nor especially cooperative. They potentially have a stake, but it varies by issue or is limited to particular issues. Examples are consumer groups, shareholders, and professional associations for employees. The strategy for managing stakeholders of this type is to monitor them closely while recognizing that their interests are narrow and issue-specific.

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Diagnostic Typology of Organizational Stakeholders
Type 3 (Non supportive

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These stakeholders have a high threat potential, but low cooperation potential. Because of this, they are the most challenging to manage. Examples for, say, a manufacturing firm are competing firms, employee unions , government, and perhaps the media. The strategy to follow with this type of stakeholder is defensive, attempting to reduce the organizations dependence on the stakeholder

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Diagnostic Typology of Organizational Stakeholders
Type 4 (Monitor)

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These stakeholders play a major role in the organization as their threat and cooperation potential are high. Examples are employees who are in short supply, important clients, and organization with complementary products or services. The strategy to deal with this type of stakeholder is collaboration of some sort for example joint ventures, alliances, or mergers.

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Stakeholder Identification and Salience
salience:

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degree to which priority is given to competing stakeholders.

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Stakeholder Identification and Salience
Three attribute a stakeholder may have:

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Power: ability to get firm to do something that it would not otherwise do based on force, threat, incentives, etc.
Legitimacy: perception or assumption that actions of firm are desirable, proper, or appropriate
Urgency: degree to which stakeholder’s claim or relationship calls for immediate attention

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Stakeholder Types

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Latent stakeholders

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Latent stakeholders

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: managers may not recognize the existence of these stakeholders or may not give them any attention. There are three types: dormant, discretionary, demanding.

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Expectant stakeholders

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expectant stakeholders possess two attributes, are more salient and require more attention from management. There are three types: dominant, dangerous, dependent

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Definitive stakeholders

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management must address the claims of stakeholders immediately and give priority as they possess all three attributes. An example is shareholders voting to replace management

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Stakeholder Influence Strategies

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Withholding strategies: stakeholder discontinues providing a resource
Usage strategies: stakeholder continues to supply resource but specifies how it is to be used
Influence pathway: when withholding and usage strategies are used by an ally of the stakeholder

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Stakeholder Collaboration

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Collaboration
Creating a foundation
Organizational alignment
Strategy development
trust building
Evaluation
Repeat the process

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Stakeholders and Social Capital

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Social Capital – Any aspect of a corporation’s organizational arrangement that creates value and facilitates the actions of stakeholders within and external to the corporation.

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benefits to the firm of creating social capital

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- Information allows employees to access new ideas from external networks
- Information and norm adherence enables employees to share information and work collaboratively
- Norm adherence establishes a strong emotional connection between the corporation and its customers
- Influence can be obtained by making a valuable contribution to the community
- Influence and norm adherence allows the corporation and union to have reciprocal debts to each other that merge their interests in each other’s success

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Value judgements

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- subjective evaluations of what is considered important

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Influences on Ethical Behaviour
Moral standard

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– the means by which individuals judge their actions and the action of others

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Influences on Ethical Behaviour
Individual morals

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managers often make ethical decisions based on the morals they acquire while growing up. The family or home environment is a major influence, making the personal convictions of individual managers a source of ethical standards

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Influences on Ethical Behaviour
National and Ethnic Cultures

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- The cultural traditions of a country or an ethnic group influence how managers view society and business practices

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Influences on Ethical Behaviour
Government legislation and regulation –

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Government legislation does not influence ethical decisions

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Influences on Ethical Behaviour

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National and Ethnic Cultures
Individual morals
The legal system
Religion
Colleagues or peers
Education
Media

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Other influences on ethical behaviour

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Corporate mission, vision, and values statements
Union contracts
Competitive behaviour
Activists or advocacy groups (NGOs)
Business or industry organizations
Professional associations

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Government Requirements Ethic

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the acceptance of a code of laws as the governing rules of society or as a contract with society that determines what is considered right or appropriate behaviour. The law represents the minimal moral standard.

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Utilitarian Ethic

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focuses on the distribution of benefits and harms to all stakeholders with the view to maximizing benefits. The greatest good for the greatest number.

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Universal Rules Ethic

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ensures that managers or corporations have the same moral obligations in morally similar situations. Treat people as means in themselves (i.e., with respect) and never as a means to one’s own ends.

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Individual Rights Ethic

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relies on a list of agreed upon rights for everyone that will be upheld by everyone and that becomes the basis for deciding what is right, just, or fair. Examples: rights to safety, information, privacy, property.

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Economic Efficiency Ethic

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judges the moral implications of a decision by its economic consequences and provides the moral justification for a market system. By focusing on efficient operations, profits are maximized, and society ultimately benefits

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Ethics of Justice

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considers that moral decisions are based on the primacy of a single value: justice.
Difference types of justice

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Difference types of justice

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1. Procedural
2. Corrective
3. Retributive
4. Distributive

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Moral Reasoning Process

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Define moral issue or decision
Gather all relevant information
Identify the stakeholders involved
Develop possible alternative solutions
Consider applicable value judgments, moral standards, ethical principles
Identify harms/benefits to stakeholders
Determine practical constraints
Decide on action

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Kohlberg’s Stages of Moral Development

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Pre-conventional level
Conventional level
Post-Conventional level

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Kohlberg’s Stages of Moral Development
Pre-conventional level

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at this level individuals are focused on themselves and awareness of others is virtually non-existent. What is right is determined by self-interest:
Stage 1 – Punishment and obedience orientation
Stage 2 - Individual instrumental purpose and exchange orientation

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Kohlberg’s Stages of Moral Development
Conventional level

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The individual is more aware of others at this level, and is group- or organization-focused. Individuals take into account the expectations and overall welfare of society and therefore are responding to notions of fairness and justice as outlined in laws, rules, and codes.
Stage 3- Mutual interpersonal expectations, relationships, and conformity orientation.
Stage 4- Law and order orientation.

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Kohlberg’s Stages of Moral Development
post-Conventional level

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– Involves universal and humankind orientation. Concepts of rights and justice are considered when determining what is right. There is an increased capacity to consciously use principled judgement; that is, ethical principles. Rules and laws are questioned as the only basis for making moral decisions.
Stage 5- Social contract orientation.
Stage 6- Universal ethical principle orientation

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Statement of Values

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contains a description of beliefs, principles, and basic assumptions about what is desirable or worth striving for in an organization. A statement of values also becomes the basis for a code of ethics.

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Codes

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Codes have been developed at different levels in the business system, and they all contribute to the managing of ethics:

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Criticisms of Codes

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- Unenforceable, if enforced the penalties would be insignificant.
- Unnecessary, as most corporations operate ethically
- Often idealistic
- Written in meaningless generalities
- Merely to prevent government legislation
- Mere response to public criticism

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Corporate or business enterprise codes

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Individual corporations prepare codes for their own use

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Pagano model

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1) Is it legal? – Core starting point
2) The benefit cost test – This test employs the Utilitarian perspective of the greatest good for greatest number
3) The categorical imperative – Do you want this action to be a universal standard?
4) The light of day test – what if your actions appear on TV? Would you be proud?
5) Do unto others – This test uses the Golden rule. Do you want the same to happen to you?
6) The ventilation test – Get a second opinion from a wise friend with no investment in the outcome

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Ethic programs: Approaches

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Formal Approach - based on org norms as in CoC
Monological approach - determined by employees themselves
Dialogical approach - communication before decison

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Professional organizations

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Professions such as lawyers, accountants, and architects have been early users of codes and are influenced by them when employed by business enterprises.

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Ethics programs
compliance based

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Rules, laws, polices
Prevent criminal conduct
Lawyer-driven
Employee discretion limited
Code of conduct

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Industry and sector

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Industry associations formulate codes that enterprises in the industry or sector may voluntarily follow.

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Ethics programs
Values-Based

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Values/ethics/principles
Enable responsible conduct
Management-driven
Employee discretion increased
Code of ethics

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Single issue

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non-governmental organization (NGOs) or business associations develop codes applicable to a particular issue, for example sweatshop labour in developing countries.

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An ethics program criteria

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- visibility
- ownership
-fit
-balance

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Benefits of Ethic Programs:

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- business practices more beneficial to society
- alignment of corporate behaviour with values
- heightened ethical sensitivity of employees and managers
- avoidance of criminal acts
- integration of values with quality and strategic management
- recognition of stakeholder impacts
- more favourable public image

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Guideline for effective ethics management:

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1. Understand the existing ethical culture
2. Communicate the importance of ethical standards
3. Focus on reward system
4. Promote ethical leadership throughout the firm

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Key elements of CSR:

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1. Corporations have responsibilities that go beyond the production of goods and services at a profit.
2. These responsibilities involve helping to solve important social problems, especially those they have helped create.
3. Corporations have a broader constituency than stockholders alone.
4. Corporations have impacts that go beyond simple marketplace transactions
5. Corporations serve a wider range of human values than can be captured by a sole focus on economic values

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Arguments for business involvement in society:

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1. Business must satisfy society’s needs.
2. Social responsibility prevents public criticism and discourages government involvement and regulation.
3. Society is a system of corporations, and the system is co-dependent.
4. Social responsibility is in the shareholder’s interest, and will be profitable in the long term.
5. Investors and consumers support social responsibility.
6. Businesses must realize that social problems can become opportunities, and can lead to profits.
7. Businesses should take a long term approach to social responsibility, instead of a short term view.
8. Corporations must be concerned with public image and goodwill.
9. Businesses should be given more opportunity to address social problems, instead of just the government.
10. Preventing is better than curing. A proactive stance is better than a reactive stance.
11. Business people are also concerned citizens and humans who are interested in social matters.

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Counterarguments for business involvement in society:

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1. Maximizing profits is the main purpose of businesses, and to have any other purpose is not socially responsible.
2. Businesses should only be responsible to shareholders, and have no authority to operate in the social area.
3. Social policy is the jurisdiction of governments, not businesses.
4. Business lacks training in social issues, and lacks social skills.
5. Social responsibility is viewed by some as another excuse to let big businesses increase their power.
6. Business involvement in social matters increases costs. Costs of the business and possible even social costs.
7. There is no reliable guidance or policy for business in social matters.
8. Business corporations cannot be held accountable for their social involvement. Social institutions can.
9. There is divided support in the business community for social involvement, and as a result there is unlikely to be a treatment for social issues by business.

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Social Responsibility Theories

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• Amoral View: Traditional view of business – A profit-making entity
• Personal View: Corporations are like people, and can therefore be held accountable for their actions
• Social View: Corporations are social institutions with social responsibilities

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Pyramid of Corporate Social Responsibility

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• Economic responsibilities: Be profitable. The foundation upon which all others rest.
• Legal responsibilities: Obey the law. Law is society’s codification of right and wrong. Play by the rules of the game.
• Ethical responsibilities: Be ethical. Obligation to do what is right, just, and fair. Avoid harm
• Philanthropic responsibilities: be a good corporate citizen. Contribute resources to the community. Improve quality of life.

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CS methods

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• Compliance-driven CS: Following government regulations.
• Profit-driven CS: Consider social, ethical, and environmental aspects of business operations if they contribute to the financial bottom line
• Caring CS: Go beyond legal compliance and profit considerations. Doing the “right” thing
• Synergistic CS: Well balanced and functional solutions for all stakeholders
• Holistic CS: Corporate sustainability is fully integrated and embedded in every aspect of the corporation’s activities.

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Social impact management

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The field of inquiry at the intersection of business needs and wider societal concerns that reflects and respects the complex interdependency between the two. Evaluates 3 aspects of business:
• Purpose of business
• Social context of business:
• Metrics

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Benefits of corp citizenship
benefits

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• Reputation management:
• Risk profile and risk management:
• Employee recruitment, motivation, and retention: Obtaining and keeping employees is made easier
• Investor relations and access to capital:
• Learning and innovation:
• Competitiveness and market positioning:
• Operational efficiency:
• License to operate:

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new aproach to corp citizenship

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• Limited : Focus on Corporate giving
• Equivalent : sustainability
• Extended : rights

Front 135

Approaches to Corporate Social Responsibility

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• Social enterprise- Non-profit
• Social enterprise- For-profit
• CSR Recognition
• Tokenism or greenwash
• Amoral
• Anti-CSR
• Unknown

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Risks of not practicing CSR

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• Negative media coverage
• Consumer boycotts
• Lost sales and revenues
• Labour disruptions
• Blockages, attacks against assets
• Decrease in share value

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Strategic giving

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An attempt to rationalize the shareholder interest with corporate philanthropy where the corporation benefits directly from the funds given

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Social Venture Philanthropy

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The investment of human and financial resources by corporations in non-profit community development agencies to generate a social return instead of only a financial one. Also known as social venturing, the new philanthropy, and high-engagement philanthropy

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Social Enterprise

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• Non-profit enterprises that contribute all profits to social initiatives (like Value Village)
• For-profit enterprises that divide profits between social initiatives and shareholders (like The Body Shop)

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differences in CSR for large and small corps
large

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• Accountable to a large number of stakeholders
• Responsible to society at large
• Concerned with brand image and reputation
• Shareholder pressure; ethical investing
• Based on corporate values
• Formal planning for CSR
• Emphasis on standards and indices
• Involvement of CSR professionals
• Prominent campaign
• Awareness through CSR reporting, publicity

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differences in CSR for large and small corps
small

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• Few stakeholders
• Responsible to local communities
• Concerned about retaining business
• Pressure from lenders
• Based on owner values
• Unlikely to be formal planning
• Emphasis on intuition
• No dedicated personnel
• Small scale activities
• Often unrecognized as CSR activities

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Approaches to Social Auditing

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• Inventory
• Program management:
• Process:
• Cost or outlay:
• Social responsibility accounting:
• Social indicators:
• Social objective setting:
• Triple bottom line reporting:
• Sustainable guidelines:
• Externally verified social reports:

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Approaches to Social Auditing
• Social objective setting

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: in addition to economic objectives, corporations are establishing social and environmental objectives and reporting on their accomplishments in annual reports

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Global reporting initiative (GRI)

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A long term, multi-stakeholder, international process whose mission is to develop and disseminate globally applicable Sustainability Reporting Guidelines. The principles are grouped into four clusters:

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4 clusters of Global reporting initiative

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• Framework for the report (transparency, inclusiveness, auditability)
• Inform decisions about what to report (completeness, relevance, sustainability context)
• Relate to ensuring quality and reliability (accuracy, neutrality, comparability)
• Inform decisions about access to the report (clarity, timeliness)

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Global Corporate Reporting Guidelines

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• OECD Guidelines for Multinational Enterprises
• UN Global Compact
• Caux Round Table Principals for Business
• International Code of Ethics for Canadian Business:
• ISO CSR Reporting Standards:

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The Future of CSR and Social Reporting

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• CSR Lite: Superficial and marginal
• CSR Compliant: take on obligations to maintain licence to operate
• CSR Strategic: Create strategic niches
• CSR Integrated: comprehensive policies
• Deep CSR: mission is to improve social or environmental conditions

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CSR Fad-and-fade scenario

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Awareness and practice of CSR will decline significantly

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CSR Embedded-and-integrate scenario

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CSR is accepted, continuous enhancement continues

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CSR Transition-and-transform scenario

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incremental changes to CSR are insufficient, redesign of corporation necessary