UNIT 24_ CORPORATE SOCIAL RESPONSIBILITY

Key Takeaways
Corporate Social Responsibility

The idea that a company should play a positive role in the community and consider the
environmental and social impact of business decisions.

Types of Corporate Social Responsibility

In 1991, researcher Archie B. Carroll, came up with a 'pyramid of corporate social

responsibility’ including the 4 components of CSR: economic responsibility (make profits), legal
responsibility (follow laws), ethical responsibility (be fair) and philanthropic responsibility (be
charitable).

● Economic responsibility: maximizing profits consistently was the firm's responsibility.

Business practices that not only help maximize profits but help make an impact.
● Environmental responsibility: Efforts made by companies to adopt business practices
keeping in mind their environmental impact. This could include companies committed
to shirking their carbon footprint or working in other ways to mitigate adverse impacts
of global warming and climate change.
● Ethical responsibility: Efforts made by companies to adopt fair and ethical business
practices. That could mean anything from offering equal to or better than minimum
wages to employees, to using ethically sourced raw material.
● Philanthropic responsibility: Some companies may opt to give away a portion of their
earnings or executive time to charities or towards charitable causes.
Examples of CSR companies

LEGO: The toy company has invested millions of dollars into addressing climate change and
reducing waste. LEGO’s environmentally conscious efforts include reduced packaging,
sustainable materials, and investments in alternative energy.

TOMS: TOMS donates one-third of its net profits to charities that support physical and mental
health as well as educational opportunities. During the pandemic, the brand directed all
charitable donations to the TOMS COVID-19 Global Giving Fund.
Johnson & Johnson: The brand Johnson & Johnson focuses on reducing its environmental
impact by investing in alternative energy sources. Globally, Johnson & Johnson also works to
provide clean, safe water to communities.

Starbucks: The global coffee chain has implemented a socially responsible hiring process to
diversify its workforce. Its efforts are focused on hiring more veterans, young people looking to
start their careers, and refugees.

Google: Google has demonstrated its commitment to the environment by investing in

renewable energy sources and sustainable offices. CEO Sundar Pichai is also known to take
stands on certain social issues.

Pfizer: The pharmaceutical company’s focus on corporate citizenship is reflected in its

healthcare initiatives, which include spreading awareness about non-infectious diseases and
providing accessible health services to women and children in need.

Challenges:

CSR Costs Money to Implement

The main disadvantage of CSR is that its costs fall disproportionately on small businesses.
Major corporations can afford to allocate a budget to CSR reporting, but this is not always
open to smaller businesses with between 10 and 200 employees. A small business can use
social media to communicate its CSR policy to customers and the local community. But it takes
time to monitor exchanges and could involve hiring extra personnel that the business may not
be able to afford.

Conflicts with the Profit Motive

A company's management has a fiduciary duty to its shareholders, and CSR directly opposes
this, since the responsibility of executives to shareholders is to maximize profits. A manager
who forsakes profits in favor of some benefits to society may expect to lose his job and be
replaced by someone for whom profits are a priority. This view led Nobel-Prize winning
economist Milton Friedman to write a classic article with the title: "The Social Responsibility Of
Business Is to Increase Its Profits."

Consumers are Wise to Greenwashing

Greenwashing is a term used to describe corporate practices that appear to be

environmentally responsible without actually representing a change in how a company
conducts its business. For example, a product may be labelled as "All Natural", even though it
is being manufactured just as it always has. Some dry cleaning services label their operations
as "Organic" which sounds similar to "organic food" but really carries no specific meaning.
Some customers may react positively to these types of claims, but others are wary of
corporate greenwashing.

CSR vs Business Ethics

Corporate social responsibility (CSR) applies to businesses that put policies and practices in
place that will have a positive impact on the environment and community.

Business ethics deals with moral principles and is based on the premise of good and bad
behaviour – right
Gián điệp versus wrong. When you incorporate ethics into business, you’re working to
công nghiệp
apply good ethical decision-making practices in the workplace (doing what is best for the
employees, stakeholders and the consumers alike – not just the shareholders.)

Illegal acts (non-ethics business practice)

Hối lộ tham nhũng

Bribery – brib corrupt foreign officials

Industrial espionage : gián điệp công nghiệp

Lobbying (v): thông qua/ bác bỏ luật

References

https://www.investopedia.com/terms/c/corp-social-responsibility.asp

https://online.hbs.edu/blog/post/types-of-corporate-social-responsibility

https://smallbusiness.chron.com/advantages-disadvantages-business-ethics-10414.html