Corporate Social Responsibility and

Business Ethics

Carmina Nunes | FEUC

|carmina.nunes@uc.pt

Course Content
• Introduction - Our changing world and the evolution of CSR
• From CSR pyramids to shared value and beyond: CSR models and
frameworks
• Moving beyond shareholders: Internal and external stakeholders
• The S in CSR: Social and global issues
• Environmental sustainability: The role of business in sustainable
development
• Responsible leadership: Inspiring CSR
• CSR reporting
• Benchmarking CSR: Frameworks, standards, certifications and indices
• Business ethics: How philosophy can help us make ethical decisions in
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today’s business
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 Moving beyond shareholders:
Internal and external
stakeholders

• What are stakeholders? R. Edward Freeman.

• https://www.youtube.com/watch?v=17hnaKFjDU8

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 Strategic CSR

• Strategic CSR is a holistic and long-term approach to the

broad responsibilities of business, based on stakeholder
integration. Therefore, responsible companies must be
managed in the interest of a broad set of stakeholders.

• Not every business has shareholders, however, they all have

stakeholders.

• The idea resonates with people because it made sense and

touched on our basic notion of a family, tribe and community.
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How much do stakeholders pay for

their stake?

“The most ridiculous word you hear in boardrooms these days

is ‘stakeholders’. A stakeholder is anyone with a stake in a
company’s well-being. That includes its employees,
suppliers, the communities in which it operates, and so on.
The current theory is that a CEO has to take all these
people into account when making decisions. Stakeholders!
Whenever I hear that word, I ask ‘How much did they pay
for their stake?’ Stakeholders don’t pay a penny for their
stake. Shareholders do” (Dunlap, 1996).
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 Stakeholders defined

• A stakeholder is any individual, group or institution who is

affected, positively or negatively, by the achievement of
an organisation’s purpose (Freeman, 1984).

• The stakeholders in a firm are individuals and groups that

contribute, either voluntarily or involuntarily, to its
wealth-creating capacity and activities, and who are
therefore its potential beneficiaries and/or risk bearers (Post
et al., 2002).

Three circles of stakeholders

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 Internal and external stakeholders
(de Chernatony and Harris, 2000)
• Internal stakeholders include individuals and groups within the
organisation that affect or are being affected by the organisation’s
actions and goals.
• External stakeholders include individuals and groups that have no
direct affiliation to the organisation.
• Internal CSR is a company’s ethical behaviour towards its internal
stakeholders, mainly employees.
• External CSR encompasses ethical behaviour towards external
stakeholders and includes philanthropy and community
contributions.
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Primary and secondary stakeholders

(Mackay and Sisodia, 2014)

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 Stakeholder prioritisation

 The ability to prioritise among stakeholders is particularly

important when there is conflict in the interest of these
stakeholders.

 Businesses are most likely to succeed in the global

environment if they learn how to balance conflicting
interests of multiple stakeholders.

 Companies need to decide what to do when stakeholders

demand non-socially responsible behaviour.
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Stakeholders’ prioritisation

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 Stakeholders’ prioritisation table

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Stakeholder management capacity

(Freeman, 1994)
• The three levels must be consistent. A philosophical view
can act as the “glue”, such as voluntarism, (an organisation
must undertake on its own to satisfy its key stakeholders)

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 Organisations with high stakeholders’
management capability

• Design and implement communication processes with multiple

stakeholders

• Negotiate with stakeholders on critical issues and seek a voluntary

agreement

• Integrate boundary spanners into the strategy formulation processes

in the organisations

• Are proactive: they anticipate stakeholder concerns and try to

influence the stakeholder environment

• Allocate resources in a manner consistent with stakeholder concerns

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Stakeholder integration is one of the three

tenets of conscious capitalism (based on
Mackey and Sisodia, 2014)
• Stakeholder integration is quite different
from stakeholder prioritisation.
• Based on the assumption that business
does not have to be a zero-sum game
with winners and losers, but rather an
opportunity for everyone to thrive and
win.
• If a business is managed effectively, there
are opportunities to create value for every
stakeholder and the result is greater than
the sum of individual value.

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 Stakeholder integration and Win
(based on Mackey and Sisodia, 2014)

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Multi-stakeholder initiatives (MSI)

• Multi-stakeholder initiatives (MSIs) have recently become a popular
concept and CSR tool in helping businesses and governments address
complex societal and environmental challenges.
• MSIs were devised to address the governance gap that exists due to the
failure of existing systems and structures to solve global business and
social issues.
• They bring together various stakeholder groups (governments,
businesses, civil society organisations, local communities and
individuals) to promote responsible, inclusive and sustainable
governance as well as business operations.
• Examples: The Forest Stewardship Council, The Marine Stewardship
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Council, and the Ethical Trading Initiative.
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 Stakeholder-related CSR issues
• Employees
– Fair employment
• Suppliers
– Fair trade
• Consumers
– Ethical trade
– Ethical marketing
• Governments
– Partnership beyond taxes

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Case study: Johnson & Johnson

• Johnson & Johnson’s Credo, written in 1943, is still an
outstanding example today of corporate responsibility
towards all stakeholders.

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 Conclusion
• Every business in the world has stakeholders, which are
individuals, groups and organisations that affect the company or are
being affected by the company achieving its goals. This can be
positively or negatively, voluntarily or involuntarily.
• Stakeholder management is a key component of strategic CSR. It is
part of the shift towards a broad view of business responsibility and a
more holistic approach to business management.
• There are various corporate stakeholder responsibility levels in
different companies: the rational level, the process level and the
transaction level. We can also see a shift from stakeholder
prioritisation to stakeholder engagement and Win6 21

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 Reference:

 Haski-Leventhal(2022). Strategic Corporate Social

Responsibility: A holistic Approach to Responsible &
Sustainable Business

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