Chapter 4

Corporate Social
Responsibility

Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.

 Years ago William Jennings Bryan once
described big business as “nothing
but a collection of organized
appetites.”
Daniel Patrick Moynihan, 1986

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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
 Defining CSR
“The New Lemonade Stand…
Consider that age-old icon of childhood endeavors: THE LEMONADE
STAND. Within a CSR context, it’s as if today’s thirsty public wants
much more than a cool, refreshing drink for a quarter. They’re
demanding said beverage be made of juice squeezed from lemons
not sprayed with insecticides toxic to the environment, prepared by
persons of appropriate age in kitchen conditions which pose no
hazard to those workers. It must be offered in biodegradable paper
cups and sold at a price which generates a fair, livable wage to the
workers – who, some might argue, are far too young to be toiling
away making lemonade for profit anyway. It’s enough to drive
young entrepreneurs…. straight back to the sandbox.”

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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
 Defining CSR
• Corporate Social Responsibility (CSR)

– The actions of an organization that are

targeted towards the achievement of a
social benefit over and above maximizing
profits for its shareholders and meeting all
its legal obligations.

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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
 Defining CSR
• The Instrumental Approach

– The perspective that the only obligation of

a corporation is to maximize profits for its
shareholders in the provision of goods and
services that meet the needs of their
customers.

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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
 Management Without Conscience
The Social Contract Approach

– The perspective that a corporation has an

obligation to society over and above the
expectation of its shareholders.
• Modern social contract approach argues there is an
obligation for corporations to meet the demands of
the society rather than just the demands of a
targeted group of customers
• Recognize all stakeholders

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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
 Management by Inclusion

• Actions of corporations impact

customers, employees, suppliers, and
communities
• Some groups will be positively impacted,
others will be negatively impacted

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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
 Management by Inclusion

• Recognizing the interrelationship of

these groups leads beyond the bottom
line
• Going beyond generating profit
inevitably attracts a lot of attention

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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
 The Driving Forces Behind CSR

1. Transparency
2. Knowledge
3. Sustainability
4. Globalization
5. The Failure of the Public Sector

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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
 The Triple Bottom Line

FINANCIAL
SOCIAL
ENVIRONMENTAL

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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
 The Triple Bottom Line
Coca-Cola’s 2004 Citizenship Report:
“Our Company has always endeavored to
conduct business responsibly and ethically. We
have long been committed to enriching the
workplace, preserving and protecting the
environment, and strengthening the
communities where we operate. These
objectives are all consistent with—indeed
essential to—our principal goal of refreshing
the marketplace with high-quality beverages.”
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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
 The CSR Bandwagon
Ethical CSR

– Organizations pursue a clearly defined sense of

social conscience in managing their financial
responsibilities to shareholders, their legal
responsibilities to their local community and
society as a whole, and their ethical
responsibilities to ‘do the right thing’ for all their
stakeholders.

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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
 The CSR Bandwagon
Altruistic CSR
– Organizations take a philanthropic approach by
underwriting specific initiatives to “give back’ to
the company’s local community or to designated
national or international programs.

Strategic CSR
– Philanthropic activities are targeted towards
programs that will generate the most positive
publicity or goodwill for the organization.

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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
 Carbon Footprint

• New and questionable practice: Making

your operation carbon neutral
• Carbon offset credits
• Kyoto Protocol Ratification
• European Carbon Investors and Services
Association (ECIS)

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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
 In-Class Assignment

• Will be added later

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Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.