Corporate Social

Responsibility
(CSR)
Chapter 1 - 1
Learning Objectives:
After studying this chapter, you should be able to:

1. Explain the concept of corporate social responsibility

2. Elucidate the basic premises, arguments for and
against CSR.
3. Reason out the need of a CSR initiative.
4. Enumerate and discuss the ethical decision making
process.
5. Describe the issues considered in social screening of
investments.
6. Exhibit understanding of corporate greenwashing.
Concept of corporate social responsibility
CRS, is the long term vow by business to perform
within the bounds of ethics and to contribute to
economic advancement at the same time improving
the quality of life of the workforce and their families
as well as of the local community and society at large.

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Arguments for and against CSR

Economic argument against csr

– most closely associated with the American economist
Milton Friedman, who argued that the primary
responsibility of business is to make a profit for its
owners.

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Arguments for and against CSR

Competitive argument
- Recognizes the fact that addressing social issues comes
at a cost to business. To the extent that businesses
internalize the costs of socially responsible actions, they
hurt their competitive position relative to other business.

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Arguments for and against CSR
Capability argument
- Suggest that business executives and managers are typically
well trained in the ways of finance, marketing and operations
management but not well versed in dealing with complex
societal problems.

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Arguments for and against CSR
Self interest argument
- Suggest that corporations should conduct themselves in
such a way in the present as to assure themselves of a
favourable operating environment in the future.

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Basic premises of CSR
• Business leaders
• Consumers
• Employees
• Investors
• Local communities
• Media
• NGOs
• Regulators

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Specific relevance of CSR
1. Changing Social Expectation
2. Competitive Labor Markets
3. Disclosure Demands
4. Dwindling Government Role
5. Globalization
6. Pressure from investors
7. Supplier Relations
8. Wealth and Vulnerabilities

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 Ethics
Ethics in an organization refers to system, values,
philosophies and principles that govern the behaviour of
organizational members which are the consequences of
organizational pronouncement.
Ethical Decision making is the process of trying to
established organizational values from which ethical
decisions will be based from.
Ethical decision making process in organizations
1. Withdraw
2. Be an archivist
3. The option of doing nothing
4. Be conscious of long term effects
5. Consider legalities and ethics
6. Ask around
7. Be comprehensively sensitive
8. Do not be a dangerous “alpha male”
9. Find a win-win solution

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 Social screening of investment

Scare off from strategy

- this is considered as the most rigid way of screening of
investments. It can be characterized by hard policies such as
no investments to those companies with questionable
environmental records, those engaged in child labor,
discrimination, those who use animals in product testing and
many other anti-earth or anti-green policies.

Business Communication
© Prentice Hall, 2004 Chapter 1 - 12
Essentials
Social screening of investment
Impact mitigation
Some socially concerned investors deal with the problems
inherent in absolute screening by using the strategy of
balance with benefit. This approach is founded upon the
idea that everything the company does is always an impact
to the stakeholders.

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 Social screening of investment

Whoever is the best

This strategy involves a kind of free market model where
companies within the same industries compete with one
another for the best records on a variety of social issues.

Business Communication
© Prentice Hall, 2004 Chapter 1 - 14
Essentials
 Corporate Greenwashing
Greenwashing refers to the practice of companies
characterized by deceptively making it appear that their
products, services, and policies are environmentally friendly
by projecting costs cuts as reduction in use of resources or
investments in “green concerns” like in areas of ecology and
environment

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 Greenwashing sins
1. Sin of the hidden trade off
2. Sin of no proof
3. Sin of vagueness
4. Sin of irrelevance
5. Sin of fibbing
6. Sin of lesser of two evils
7. Sin of worshiping false labels.

Business Communication
© Prentice Hall, 2004 Chapter 1 - 16
Essentials