Corporate Social Responsibility is the ―Continuing commitment by

a company to behave ethically and contribute to economic developmentwhile

improving the quality of lifeof its workforce and family members, as well as the
local community and the society at large‖–World Business Council for
Sustainable Development, 1999.

In the modern industry, organizations such as businesses,

corporations, or even non-profit organizations play a key role towards
development. As organizational members tend to emulate their
corporate culture. Therefore, it is not only important to know that ethics
in an individual level (in knowing how to decide individually) but also to
invest in trying to understand the complexity of the
interaction within an organization.

In the past few decades, Corporate Social Responsibility (CSR)

has been one of the emerging topics in business research (Popa, 2015).
Entrepreneurs in the contemporary landscape not just establish a
company for the sake of fulfilling an economic contribution by its
profitability alone but also to uphold the wellbeing of its stakeholders
towards sustainability. For Becker (2019, pp. 102)

‗Corporate Social Responsibility‘ is a management concept whereby

companies integrate social and environmental concerns in their
business operations and interactions with their stakeholders‖. Once
a certain firm voluntarily give importance and adopt practices to uplift
social and environmental concerns, and plan a commitment of action to
continuously develop and harness its long-term relationship with their
stakeholders—their employees, shareholders, and the society as a
whole, it is considered Corporate Social Responsibility (CSR).
Why is there a need for a senior high school student like you to
understand Social Responsibility?

Remember, you are being trained today to become a competitive

business leader of tomorrow in your respective organizations. Some of
you will be working in the big hotel/resort chains, restaurant chains,
cruise line companies, international airlines, top accounting and
consultancy firms, reputable commercial banks and financial institutions,
and well-known manufacturing and retailing firms.

Before you achieve and land in your dreamed businesses, it is

important for you to understand business leaders in the contemporary
era must be concerned about the social responsibility of their
organizations because company‘s success will greatly rely in this as this
led customers to increase their interest and their consumption or in
other words, their purchase behavior were influenced in some way
(Yusof et. al, 2015).Have you thought of the increasing awareness
and sensitivity of the general public regarding acceptable business
practices?

Why is there a sudden rise of non-government organizations (NGO‘s)

like those pro-social and environmental advocates like anti-mining,
anti-illegal logging, getting aquatic resources? This certainly led
different organizations to educate and incorporate social
responsibility practices by imbibing it to their organizational culture that
could also help to keep and enhance the good image of the company.
The adoption of Corporate Social Responsibility (CSR) is believed
to start in the United States (Carroll, 2008 in Crane & Matten, 2016). It is
when the reasoning about different conceptual framework started to
be in detailed, thus, those concepts and principles focused on
two key-questions:
1. Why is it needed to have two responsibilities for a
corporation? (referring to financial and social responsibilities).
2. What is the nature of ―social responsibility?‖ To better understand,
first, let us recall the meaning of a ‗corporation‘. Corporations are
constitutionally deemed to be autonomous by those who work, run,
participate in, or purchase goods or services from them. In terms of
legal standing and the possession of properties, a company is
essentially established. Corporations, in their own right, are
independent bodies. With this, they are known to have perpetual
succession, i.e. they will survive even with the death of any
investors, workers, or clients as an institution, they only need to find
new ones.

This legal standing contributes to companies' second primary

distinguishing characteristic. The corporation maintains its
own assets instead of owners or management controlling
the assets associated with a company.

For example, all the assets of Jollibee Foods Corporation (JFC)

including their stores, buildings, machines, equipment,
computers, and offices are property of JFC and not its
shareholders. Shareholders basically hold a portion in the firm which
gives them "dividend" and often, holds certain decision making that
might affect the business.

For example, shareholders cannot just go and visit the

headquarters of Jollibee to attempt to remove a computer or a
desk and bring it at home, because it is Jollibee, the corporation
who controls the computer or desk, not the shareholder. Similarly,
their staff, clients, suppliers, etc., negotiate with the company to
 arrange agreements with. (addressing the corporation), not with
its shareholders.

For our interpretation of the roles of corporations, the

consequences of this situation are important: In the eyes of the
law, companies are usually known and identified as 'artificial
individuals.' which means they must abide certain rules and
regulations, and responsibilities to fulfill in a certain jurisdiction.
Second, Corporations are owned by shareholders conceptually,
but function separately from them which means there is a limited
liability in case the company or the corporation engaged in debts
and damages/bankruptcy (they are not responsible).

Third, to secure the investment of clients, administrators and

directors have a 'fiduciary' responsibility. This suggests that senior
management is obliged to keep the investment of shareholders in
trust and to perform in their best interests. This provides a legal basis
for businesses to be exposed to litigation concerns so that, in
the light of the law, a corporation is morally liable for its acts. This
is not exactly the same as allocating companies a moral obligation,
though.

Why Social Responsibility a MUST for Businesses?

To best explain why CSR is practical in businesses, Crane et. al (2016)

summarized the following reasons:

1. To develop profitability (long-term)- Corporations viewed as

being socially conscious may be compensated with more and/or
more loyal consumers, whereas boycotts or other unfavorable
consumer behavior may result from viewed irresponsibility.
2. To become cost-efficient- CSR can reduce expenses by helping
to conserve electricity, eliminate waste and minimizing inefficiencies.
For example, due to such CSR-related initiatives, a giant retail
company like Wal-Mart is estimated to have achieved savings of $1
billion by 2020, mostly about improving its environmental competence.
 3. It facilitates in handling of risks and uncertainties- Legislation
and broader business freedom from government will be
strengthened by mutual commitment to social actions and services.
4. Helps in the maintaining the social license to function/operate-
The need to secure and retain the approval of local communities,
workers, and governments is a tremendous force for CSR in resource-
based industries. More generally, having a meaningful
commitment to society may be perceived to be a long-term
investment in a world that is healthy, well-informed, and more
equal. Eventually, this helps the organization by providing an
increased and sustainable strategic framework for doing business.

Furthermore, Becker (2019) also emphasized the following reasons why

businesses must consider implementing Corporate Responsibilities (CR):

1. Enhanced Stakeholder Relations- By continuously identifying

different key-stakeholders, businesses can commit itself by creating
different social programs that would result to better engagement
and interaction.
2. Catch the best Human Resource to work in the team- By adopting
CR, it creates a distinct element to create and maintain the best
possible pool of manpower that would result to a more efficient,
effective, competitive, and sustainable business. For example, wouldn‘t
it be nice in your credentials if you had an experience working in a
company that supports massive social responsibilities and programs?
3. Helps to Create New Products and Services- Consumers are
constantly demanding for competitive products and services from
business. The need for efficiency and sustainability is the result of their
dynamic, changing, and growing demands.
The concepts Corporate Responsibility and Corporate Social
Responsibility (CSR) are well recognized, yet still confusing, since social
and environmental obligations are not only for corporations, but for all
businesses (Becker, 2019).

In this case, even the micro, small, and medium businesses/enterprises

have social and environmental responsibilities, too that is needed to be
fulfilled and not just by those big/large companies/corporations. In a wider
context, the Corporate Responsibility here defines the scope of a business
to have a community, financial, environmental, international, and long-term
obligations as a member of society.

Just like in our university, OLFU, we have aspecific office called, Social
Orientation and Community Involvement (SOCI) which aims to empower
our communities by the continuously organizing projects and programs
aimed to support the welfare of our adopted communities.

MODELS AND FRAMEWORKS OF ‘SOCIAL

RESPONSIBILITY’
One of the substantial modelsof corporate social responsibility wascoined,the
‗Pyramid of Corporate Social Responsibility‖ thatwas given by Archie
Carrollin 1991.

A multi-level concept of corporate social responsibility, in which four

interrelated dimensions may be distinguished: ―economic‖, ―legal‖, ―ethical‖,
and ―philanthropic‖obligations viewed as sequential layers inside a pyramid,
so that 'real' social obligation requires all four thresholds to be fulfilled
consecutively, based on the standards existing in society at the moment. As
soon as the company started its existence, this shall fulfill the following
obligations/responsibilities in the society:

1. Economic Responsibilities- Companies like restaurants for

example have shareholders who expect a fair return on their
investments and capital, they also have people/workers who want
 decent work, and they have clients who are patronizing their company
since they need to fulfill their needs with their goods.

Therefore, companies must secure to have a sustainable and

competitive business by means of profitability so that it can fulfill all its
economic function.
2. Legal responsibilities- Corporate legal responsibility requires
companies to submit and follow the regulations and laws. If you could
still recall the lesson in Week 3 in our third quarter, it is
important for any businesses to comply and abide the rules of the
jurisdiction to protect them from any legal controversy. Incorporation
of the moral views of society is thus a sufficient condition for
continued justification on societal obligations to adhere with these
norms.

For example, if a certain business providing food like restaurants, must

adhere that it is important to provide safe and clean prepared food to
free the customers from any harm. If a customer was rushed in a
hospital and complains that it was because of the food that he/she
consumes in your restaurant, then, it might be because of the poor
sanitation and hygiene in the preparation area thus, can lead your
restaurant to a big trouble.
3. Ethical Responsibilities- These duties require businesses to do what
is right, reasonable/just, and fair, although the regulatory system does
not require them to do so. It is basically doing what is right even no one
is looking/watching.

Therefore, ethical obligations comprise as to what society typically

expects above economic and legal requirements. Improper and unfair
reporting and disclosure of taxes due to the government can be an
example of this.

4. Philanthropic Responsibilities- CSR's fourth and final level looks at

corporate philanthropic commitments. Philanthropy simply means the
love of the human fellow. The model integrates practices within
the discretion of the company to enhance and further
 developworkers, communities,eventually the whole societyby using this
concept in a business sense. In other words, philanthropic
responsibilities encompass the idealism of being a good corporate
citizen by helpingthe community.

Much extended framework of Caroll (1991) wasfurther developed and

enhanced by Becker (2019). This is coined the ‗Pillar Model of
Corporate Responsibility‘. The author emphasized the importance of
avoiding a hierarchical structure in doing corporate responsibilities.
Instead, the author presents ‗business-specific‘ obligations by adding
‗sustainability dimensions‘ and clearly differentiates ‗philanthropy‘ from
‗core business responsibilities.‘

The interpretation of Corporate Social Responsibility varies from

company to company. There is no fixed or constant in the practice
of CSR by businesses regardless of the type of ownership it has.
Generally, there is compliance team which functions independently from
CSR office.

Today, majority of what we often see in organization‘s CSR initiatives

is that of the proposed definition by United Nations Industrial Development
Program (UNIDO, 2015) in Becker (2019):―Corporate Social
Responsibility is a management concept whereby companies integrate
social and environmental concerns in their business operations and
interactions with their stakeholders.

CSR is generally understood as being the way through which a

company achieves a balance of economic, environmental and social
imperatives (‗Triple-Bottom-Line-Approach‘), while at the same time
addressing the expectations of shareholders and stakeholders.‖
Meanwhile, John Elkington introduced the phrase, ‗Triple bottom line‘in
(1994)and was evident in a 1997‘sbook,"Cannibals with Forks: The Triple
Bottom Line Of 21st Century Business." This concept,―triple bottom line‖
has 3 main elements, (1) people, (2) profit, and (3) planet.
What is the 'Triple Bottom Line'

John Elkington introduced the phrase Triple bottom line in 1994 by John
and was later used in his 1997 book "Cannibals With Forks: The Triple
Bottom Line Of 21st Century Business." The ―triple bottom line‖ has 3
elements,

(1) people

(2) profits

(3) planet.

The objective of this phrase is for the business to continuously grow or

sustainability in the long run without concentrating only on the aspect of
profit. The concept of social responsibility has been broadened to give
special attention to the people of the company, from the lowest rank to
shareholders and the customers. The element of ―planet‖ means the
environment.

The care for the environment should never be neglected as a substitute for
people and profit, owing to the principle that the environment is what
nurtures the sustenance in the productions of material goods which the
society needs. The preservation of the environment is tantamount to the
preservation of life and the source of business.

The triple bottom line is the measure of social responsibility of a business

organization; although according to Elkington, it is difficult to measure the 2
bottoms, people and planet, this will always be on the subjective side, this
will keep changing and will need to adapt to the existing conditions of the
time.

1. People in the Bottom Line (People)- The element of ―people‖ in the

Triple-Bottom Line of CSR includes a variety of practices and
principles concerning people in business organizations. Companies
now value people not as mere producers of goods but as important
partnership making the company grow.
Human resource management practices do not revolve around the
issue of pay and benefits but has grown into fair and equitable
treatment; training and development and career planning; work-life
balance and removal of gender discrimination. Fair treatment of
employees is not just within the company premises but even on those
who work off-site.

To ensure fair treatment among off-site laborers and develop also the
communities where these laborers stay and where the company
conducts business. An example of this is Mars Chocolate, North
America‟s Sustainable Cocoa Initiative which requires its cocoa
farmers to be certified by fair trade organizations to ensure they
follow a code of conduct that includes fair treatment to those
providing labor.

In exchange for certification, Mars provides productivity technology

and buys cocoa at premium prices. In the Philippines, County Agro
Venture, Inc. have contract growers who are strictly supervised and
taken cared of by the company to ensure the best production of
chicken which are safe and healthy; and, at the same time provide
the company provides business, income and ensure a safe
environment.

Examples of Philippine companies that excel in taking care of their

peoples are the following: Nestle Philippines offers exceptional health
benefits that extend to employees‘ family members, along with
competitive pay and a desirable work environment. The study also
revealed that Nestle provides employees with opportunities for career
advancement, which is another huge motivational factor for many
Filipino workers.

According to the company website, Accenture offers employees what

it referred to as a ―Total Rewards‖ package. This package includes
competitive compensation, a comprehensive benefits package,
professional growth opportunities, and programs to help employees
 balance work with a healthy family-oriented lifestyle. Accenture also
places a huge emphasis on recognizing individual contributions and
performance. Banco de Oro (BDO) Unibank believes that its people
are the company‘s most important assets, and the company
recognizes that the strength of their business relies on healthy and
happy employees. BDO provides its employees with a
comprehensive benefits plan including group life insurance, medical
insurance, as well as accident insurance.

Given BDO‘s dedication to its employees, it‘s not hard to see why
many Filipinos from all career levels aspire to work there.

2. Environmental Bottom Line (Planet)- The third ―P‖ in the Triple-

Bottom Line is ―planet‖ as the representation of the different practices
geared toward the care, preservation and sustenance of the
environment. The practices include the 3 Rs (reduce, re-use and
recycle) covering the wide range of programs from pollution
reduction, wise energy consumption, greening program and
sustainability of the environment through the use of renewable energy
like sun and wind.

Companies do the environmental bottom line through different

practices such as changing the filament bulbs and fluorescent
lightings to LED lights, the use of solar panel roofs to reduce
electricity consumption and in some rural areas, the solar energy is
not just for lighting but also to power some generators for water
pumps.

A lot of companies now do waste segregation not just for the purpose
of proper waste disposal but at the same time to instill to the
employees the dictum, ―may pera sa basura‖. Reinheart Marketing
was founded by Mr. Efren T. Go, as the sole owner of the company.
The main plant is located at #58 M. Antonio St., Maysan, Valenzuela
City, Metro Manila, Philippines 1440 where all the gathered plastic
scraps are preprocessed: segregation and classification according to
types of plastic material; cleaning; washing; and crushing. After
which, the crushed materials are brought to its branch located at #5
Jupiter St. Barrio Parada, Malinta, Valenzuela City, under the name
of God‘s Gift Pelletizing Services, where these are converted into
pellet form, packed and delivered to customers. Mr. Efren T. Go, has
a vast experience in the plastic recycling industry and is considered
as the pioneer successful recycler in the Philippines.

He has developed a reputation of always succeeding in every

company he has started. He started when he was only 16 years of
age, and manages his parent recycling plant under the name of
Plasticycle Manufacturing in Caloocan. He has served as president
and general manager of the following companies which have all
became top players in the plastic recycling industry:
1. EY Enterprises
2. Hopewell Poly Industries Inc.
3. Richwell Industries Inc.
4. Ecoplast Industries Inc.
5. New Foundland Plastic Mfg Corporation Efren was the moving
spirit of all these companies and he was always given the free hand
by the owners to manage the business. He managed to successfully
attain the top position in the industry for these companies. He is
considered honest in all his dealings with his business partners and
suppliers. Seeking further advancement,

Efren felt it was time to be on his own and decided to set up his own
company, parting amicably with his business partners. He then
started out with his Reinheart Junk Shop. This company is into buying
all kinds of plastic scrap and selling it to its sister company
Newfoundland Plastic Mfg. Recognizing a brighter field in his
business of marketing, Efren changed the name to Reinheart
Marketing.

He combined three kinds of plastic businesses into one. First, the

company is into recycling of plastic scrap material. Second, the
 company is into buying and selling of plastic virgin and pellets
materials and sold these to his various clients. And lastly, the
company is into plastic servicing job orders from his valued
customers. Mr. Efren T. Go has been the recipient of the National
Product Quality Excellence Award:'Best Plastic Recycling Company
2005' He is presently a member of the following Associations: ∙
Philippine Plastics Industry Association, Inc. ∙ Metro Plastic Recycling
Association ∙ Valenzuela Business Club

3. The Financial Bottom Line (Profit)- Financial responsibility is the

process of managing money and other similar assets in a productive
and the best interest of the individual, or the family, or the business
company. Sound financial tasks and money management needs a
businessman‟s mindset to look beyond the present and be ready for
the future.

This aspect of financial responsibility means securing that individuals,

family and business can continuously have the ready finances and
financial capabilities even during the adversities of the future.
Philippine National Bank‟s (PNB) CSR goals and programs include
empowering the youth and other identified sectors of Philippine
society through education and other relevant development programs
such as financial literacy.

The Bank strongly believes in investing in the future through the

provision of educational opportunities to deserving youth as well as
propagating thrift, selfsufficiency and economic empowerment
through financial literacy program. The type and degree of financial
responsibility depends upon the type and size of the business.
However, owners and operators of a business can demonstrate their
financial responsibility in different ways like: ∙ Obtaining commercial
environmental impairment liability insurance; ∙ Demonstrating self
insurance; ∙ Obtaining surety bonds, guarantees, or letters of credit; ∙
Placing the requisite amount into a trust fund run by a third party;
and, ∙ Relying on coverage proffered by a state financial assurance
 fund. The most common mechanisms used to conform to the
requirements of financial responsibility include state funds and
insurance.

STAKEHOLDER THEORY OF A FIRM

Stakeholdermeans ―an individual or a group that, in the context of a

specific situation, is either harmed by, or benefits from, the corporation,
or whose rights the corporation should respect‖ (Crane et. al, 2016)

Stark (1994) argued that the most prominent and one of the most popular
theoriesinbusiness ethics is the stakeholder
theorythough‗stakeholder‘term was thenrecognized as early as the 1960‘s.
This theoretical approach became popular because of Edward Freeman
(1984).

This theory is far different from CSR approach model by Carrol (1991)
since CSR revolves solely around the responsibilities of the corporation
while stakeholder approach begins with the identification of several groups
in which the corporation needed to respond. Here, the company gives
importance not just to the shareholders (or the owners) of the firm, but also
to those groups of people who have interest as well.

For example, Jollibee Foods Corporation (JFC) has established Jollibee

Group Foundation (JGF) as their ‗social responsibility arm‘ which aims to
create and implement programs focusing on agriculture specifically getting
in touch the local farmers, education wherein their foundation sends
thousands of scholars to school, and disaster response in times when a
calamity or disaster strikes, all for the benefit of their adopted
communities nationwide (Please seeillustrative example:case ofJollibee
Foundation below).
Definition of Stakeholders. Adopted from Crane et. al, 2016. Business
ethics. Managing Corporate Citizenship and Sustainability in the age of
Globalization. Fourth Edition. Oxford University Press 6).The above
variety of meanings makes it hard for a company to have a basic
idea regarding stakeholders. It is Freeman (1993) who then
recommends the two underlying principles: corporate rights and corporate
effect.

Thus, this shall mean the businesses should not violate the rights of
others and are held accountable for whatever the result of their activities
concerning others, respectively.

The said explanation makes it obvious that within various situations, tasks,
or projects, the range of stakeholders differs from company to company,
and even for the same company. With this, it is not practical in any given
scenario to determine a concrete category of people involved for any given
company.

We can also characterize stakeholders whether Primary or Secondary.

Primary stakeholders are those owners, shareholders, company
manpower/employees, customers/clients, business partners (the
retailers/distributors), suppliers, the host/local communities, the
environmental non-profit organizations, etc.

Meanwhile, those secondary stakeholders include the

government/public institutions/agencies, lobbyists and several pressure
groups, competitors, media, civic, and business associations and
organizations (Business Leaders Forum, 2020).
DONALDSON AND PRESTON (1995) IN CRANE ET. AL, (2016)
ARGUED THAT STAKEHOLDER THEORY ARE CATEGORIZED
INTO THREE: NORMATIVE; DESCRIPTIVE; AND INSTRUMENTAL.

1. For Normative, it provides a reasoning as to why firms

should/must be liable/responsible for their stakeholder‘s interests.
2. For Descriptive, it questions the company‘s actual
activities/steps that benefits their stakeholders.
3. For Instrumental, stakeholder theory tries to present an evidence
whether there is a necessity for the firm to conduct such CSR
practices in relation to their stakeholders.