Introduction to Social concerns about the environmental impact of
pesticides and other chemicals. Carson's book
Responsibility Good Governance
and Social Responsibility
Introduction to Social Responsibility
Social responsibility in business, also known
as corporate social responsibility (CSR),
pertains to people and organizations behaving
and conducting business ethically and with
sensitivity towards social, cultural, economic,
and environmental issues. Striving for social
responsibility helps individuals, organizations,
and governments have a positive impact on
development, business, and society.
BACKGROUND &HISTORY OF SOCIAL
RESPONSIBILITY
Social Responsibility Emerges In the 1950s and
1960s, the concept of social responsibility
began to emerge as a result of the rise of
social and environmental movements. This
period saw the emergence of several
influential authors and activists who called for
greater corporate responsibility, including
Ralph Nader and Rachel Carson.
Ralph Nader
Ralph Nader, an American consumer advocate
and," which criticized the automotive industry
for failing to prioritize consumer safety.
Nader's book sparked a public outcry and led
to the establishment of the National Traffic
and Motor Vehicle Safety Act in 1966, which
set safety standards for vehicles and
established a regulatory agency to oversee the
industry. Nader's work helped to raise public
awareness of the need for businesses to be
held accountable for their actions, and played
a key role in shaping the idea of corporate
responsibility. activist, published a book in
1965 called "Unsafe at Any Speed
Rachel Carson
Rachel Carson, an American marine biologist
and environmental activist, published a book
in 1962 called "Silent Spring," which raised
helped to inspire the modern environmental
movement and led to increased public
awareness of the need for businesses to take
responsibility for their impact on the
environment.
SOCIAL RESPONSIBILITY
Social responsibility is an ethical framework in
which individuals or corporations are
accountable for fulfilling their civic duty and
taking actions that benefit society. If a
company or person considers taking actions
that could harm the environment or society,
those actions are considered socially
irresponsible. According to this concept,
managers must make decisions that maximize
profits and protect the interests of the
community and society as a whole.
Examples of Social Responsibility
Social responsibility includes companies
engaging in environmental preservation
efforts, ethical labor practices, philanthropy,
and promoting volunteering. For example, a
company may change its manufacturing
process to reduce carbon emissions.
7 Principles of Corporate Social
Responsibility
1. Accountability- An organization is
accountable for the effects of its actions on
society and the environment.
2. Transparency- A transparent company
offers information so that the engaged
stakeholders can comprehend the problems
that are important to them.
3. Ethical behavior- Fair treatment of all
stakeholders, including the leadership team,
investors, employees, suppliers, and
customers, is how organizations demonstrate
ethical behavior.
4. Respect for stakeholder interests- Owners,
members, consumers, and constituents, are a
few examples of the stakeholders whose rights MANAGEMENT OF STAKEHOLDER
and interests need to be considered.
RELATIONSHIPS
5. Respect for the rule of law- An organization
DEFINITION AND IDENTIFYING
must abide by all applicable laws and
STAKEHOLDER
regulations.
A stakeholder is a person, group or
6. Respect for the international norms of
organization with a vested interest, or stake,
behavior-It is unacceptable for a company to
in the decision-making and activities of a
ignore or profit from wrongdoing.
business, organization or project.
7. Respect for Human Rights-An organization Stakeholders can be members of the
should address the negative effects they cause organization they have a stake in, or they can
and ensure they do not violate the rights of have no official affiliation.
others (as described in the International Bill of
TYPES OF STAKEHOLDER
Human Rights).
Customers
Corporate social responsibility (CSR)
Stake: Product/service quality and value Many
Corporate social responsibility (CSR) means a
would argue that businesses exist to serve
company is aware of its impact on the
their customers. Customers are actually
environment, culture, and society. If these
stakeholders of a business, in that they are
things are important to you, look into the CSR
impacted by the quality of service/products
initiatives of your favorite corporations.
and their value.
Benefits of Social Responsibility
Employees
Social responsibility benefits society and the
Stake: Employment income and safety
environment while lessening negative impacts
Employees have a direct stake in the company
on them. Companies engaging in social
in that they earn an income to support
responsibility can do so in a number of ways,
themselves, along with other benefits (both
including making changes that benefit the
monetary and non-monetary). Depending on
environment, engaging in ethical labor
the nature of the business, employees may
practices, and promoting volunteering, and
also have a health and safety interest
philanthropy. Consumers are more actively
looking to do business with socially Investors
responsible companies, which can also benefit
bottom lines. Benefits of Companies in Social Stake: Financial returns Investors include both
Responsibility In addition to potentially shareholders and debtholders. Shareholders
increasing the bottom line, companies that invest capital in the business and expect to
implement social responsibility programs can earn a certain rate of return on that invested
also boost their brand image. Social capital. Investors are commonly concerned
responsibility programs can also have a with the concept of shareholder value
positive impact on morale among employees.
Suppliers and Vendors

Stake: Revenues and safety Suppliers and

vendors sell goods and/or services to a
business and rely on it for revenue generation
and on-going income.
Communities
Stake: Health, safety, economic development
Communities are major stakeholders in large
businesses located in them. They are impacted
by a wide range of things, including job
creation, economic development, health, and
safety
Governments
Stake: Taxes and GDP Governments can also
be considered a major stakeholder in a
business, as they collect taxes from the
company (corporate income taxes), as well as
from all the people it employs (payroll taxes)
and from other spending the company incurs
(sales taxes
STAKEHOLDERS TWO (2) MAIN GROUPS
Internal stakeholders - are those within a
company whose interest stems from direct
employment, ownership or investment.
Internal stakeholders of a company or project
can include employees, project managers,
boards of directors, donors and investors.
External stakeholders - are those outside of a
company who are indirectly affected by its
decisions and outcomes. External stakeholders
include customers, suppliers, government
agencies, creditors, labor unions and
community groups.
STAKEHOLDER ORIENTATION AND
STAKEHOLDER ANALYSIS
Stakeholder Orientation
•It involves activities and processes within a
system of social institutions that facilitate and
maintain value through exchange relationship
with multiple stakeholder. The degree to
which a firm understands and addresses
stakeholder demands
Three Activities:
1.Generation of data about stakeholder group
2.Distribution of the information throughout
the firm
3.Organization's responsiveness to the
intelligence
Stakeholder analysis - is the process of
collecting Information about any person that
will be impacted by (or can Impact) your
project.Conducting a stakeholder analysis will
enable you to identify all your stakeholders as
well as their needs and expectations.
Step in conducting a stakeholder Analysis
matrixs
Step 1: Identify your stakeholders. -The first
step in conducting your analysis is to identify
all potential stakeholders
Step 2: Categorise your stakeholders in the
Stakeholder Analysis Matrix. -Once all
potential stakeholders have been identified,
the next step is to categorise them. Step in
conducting a stakeholder Analysis matrixs
Step 3: Understand stakeholder needs,
concerns and expectations -Once stakeholders
have been identified and categorised, the next
step is to understand their needs, concerns
and expectations.
Step 4: Develop, apply and monitor a
stakeholder engagement plan -Based on your
analysis, the fourth s is to develop a
stakeholder engagement plan.
KEEP SATISFIED
ENGAGE CLOSELY AND INFLUENCE
ACTIVELY MONITOR
(MINIMUM EFFORT) KEEP INFORMED
Stakeholder Analysis Matrix
• MANAGE CLOSELY: Fully engage with the
most interested, most influential stakeholders,
making the greatest efforts to keep them
sweet.
• KEEP SATISFIED : You should put the work
in with these stakeholders so they're kept
satisfied. However, as they're less interested,
it's best not to bombard them with regular
updates .
• KEEP INFORMED : You should keep these
stakeholders informed, talking to them
regularly. This group may be able to help with
the project detail, and can give early warnings
of issues arising.
• MONITOR:it's always best to know where
you stand with any stakeholders, but there's
no need to involve the least interested, least
influential group with regular updates.
SALIENCE MODEL AND STAKEHOLDERS
SALIENCE
• The Salience Model is a framework that
helps managers identify and prioritize the
stakeholders that are most relevant to their
organization
• Stakeholders Salience is decided by
assessment of their power, legitimacy and
urgency in the organization
• The stakeholder saliency model was
proposed by Mitchell, Agle and Wood (1997).
They define salience as: ―the degree to which
managers give priority to competing
stakeholder claims.‖
• POWER + LEGITIMACY = AUTHORITY
The Stakeholder Salience Model
• Power - Authority and influence in the
organization and on the project outcomes
Legitimacy - Their involvement is appropriate
(morally, legally, etc,) Legitimate stakeholders
are the ones who really count.
Urgency - Calls for immediate attention, or
pressing need. Urgency is based on 2
attributes. ⚫ time-sensitivity ⚫ Critically
3 ELEMENTS
• Latent Stakeholders: Low on power,
legitimacy, and urgency. They are not
currently engaged but could become more
salient in the future.
• Expectant Stakeholders: High on one
dimension (power, legitimacy, or urgency) but
low on the others. Their salience is dependent
on the specific context or issue at hand.
• Definitive Stakeholders: High on power,
legitimacy, and urgency. They are considered
most salient and are the primary focus of
organizational attention.
3 MAIN POSITIONS LATENT STAKEHOLDER
• Dormant Stakeholder - Do not require active
engagement.
• Discretionary Stakeholder - The Stakeholders
who are legitimate but have no power, and
their interest are not urgent.
• Demanding Stakeholders- Who have urgent
demands, but no power or legitimacy.
EXPECTANT STAKEHOLDER
• Dominant Stakeholder -These stakeholders
have legitimate stakes in the project and also
possess the power to act on those stakes.
• Dependent Stakeholder - Lack of power but
have urgent and legitimate stakes in the
project
• Dangerous Stakeholders - stakeholder who
possess power and urgency but do not possess
legitimacy to their claims.
DEFINITIVE STAKEHOLDER
• Stake holders who possess power and
legitimacy, and have an urgent need
NON-STAKEHOLDER OR POTENTIAL
STAKEHOLDERS
• No power, legitimacy or urgency
 THE ROLE AND FUNCTION OF
BUSINESS IN SOCIETY
INTRODUCTION
In any market economy, business plays a huge
role. Business is the engine of an economy.
Business provides jobs that allow people to
make money and goods and services that
people can buy with the money they make.
Without business, the economy would be very
inefficient and/or very primitive. Economies
can exist without businesses, but they are not
nearly as strong. Business, then, plays a
central role in any market economy. It is the
engine that allows an economy to run because
it provides jobs as well as goods and services.
In this module, we are going to tackle the basic
functions and roles of business in the society,
as well as the sustainable roles businesses
play due to societal needs and expectations.
SOCIETAL FUNCTIONS
THE ECONOMIC AND PRODUCTION TASK
• These include land maintenance and food
production, manufacturer and distribution of
goods and services and all tasks associated
with the creation and maintenance of wealth.
Farms, mines, manufacturers, distributors,
retailers and the myriad of enterprise which
make up the business and commercial world
perform these and the related economic roles.
THE MAINTAINANCE TASK
These exist to hold the society together,
maintain its stability and ensure its
continuation. Most activities which are
involves with transmitting and shaping
knowledge and culture fall into this category.
Education, religion, health and welfare service
and some aspect of the media provide the
clearest examples of the institutions which
undertake this roles.
THE ADOPTIVE PRODUCTIONS
These provide the means by which the society
responds to change. Research, the creative
activities, even the means of shaping and
managing debate or conflict undertake this.
Universities (their research activities), research
organizations and the arts are the clearest
examples of this form of ventures.
THE MANAGERIAL AND POLITICAL TASK
Any society or community requires
institutions and systems to identify and
implement policy for the group and related
agencies to arbitrate systems and assess
conflicting demands or expectations. The
society is likely to interact with other
communities; institutions are required to
manage these relationships. Government,
political parties, the law and the military
perform these tasks.
ROLE OF BUSINESS IN THE SOCIETY
The basic role of business is to produce and
distribute goods and services to satisfy a
public need or demand. However, business
leaders are pressured more and more to
redefine the role of business in society's by an
increasingly skeptical public. To make sure
that businesses are performing its role to the
society, the United Nations have developed the
―Sustainable Development Goals‖ which serve
as a blueprint to achieve a better and more
sustainable future for all
Goal 1: No poverty - Donate what you don't
use
Goal 2: Zero hunger -Waste less food and
support local farmers
Goal 3: Good Health and Well-Being- Vaccinate
your family
Goal 4: Quality Education - Help educate the
children in your community
Goal 5: Gender Equality - Empower women and
girls and ensure their equal rights
Goal 6: Clean water and sanitation- Avoid
wasting water
Goal 7: Affordable and clean energy- Use only
energy-efficient appliances and light bulbs
Goal 8: Decent Work and Economic Growth -
Create job opportunities for the youth
Goal 9: Industry, Innovation, and
Infrastructure - Fund projects that provide
basic infrastructure
Goal 10: Reduced inequalities- Support the
marginalized and disadvantaged
Goal 11: Sustainable cities and communities-
Bike, walk, or use public transportation
Goal 12: Responsible consumption and
production- Recycle paper, plastic, glass and
aluminum
Goal 13: Climate Action -Act now to stop
global warming
Goal 14: Life Below Water- Avoid plastic bags
to keep the oceans clean
Goal 15: Life on Land- Plant a tree and help
protect the environment
Goal 16: Peace, Injustice and Strong
Institutions- Stand up for human rights
Goal 17: Partnerships- Lobby your government
to boost development financing
BUSINESS FUNCTIONS
Aside the basic and sustainable function that
it plays in the society, businesses also have
other several functions. These major functions
are discussed in the succeeding section.
 PURCHASING FUNCTIONS
Materials required for production of
commodities should be procured on economic
terms and should other businesses, thereby
improving economic activity in general.
 PRODUCTION FUNCTION
occupies the dominant position in business
activities and it is a continuous process.
Generally, production is the transformation of
raw material into the finished goods. These
raw materials are classified as land, labor,
capital or natural resources.
 DISTRIBUTION FUNCTION
As goods produced are meant for sale,
distribution function is an important business
activity. Distribution is the process of making
a product or service available for the
consumer or business user who needs it. This
can be done directly by the producer or service
provider, or using indirect channels with
distributors or intermediaries.
 ACCOUNTING FUNTION
The purpose of the accounting function is to
provide financial information to the
stakeholders of the business: management,
investors, creditors and/or the general public.
Accounting measures and summarizes the
activities of the company and communicates
the results to management and other
interested parties. By providing transparency
through the accounting function, entities can
demonstrate their commitment to social
responsivity.
THE PERSONNEL FUNCTION
This refers to the planning, coordinating, and
controlling of a network of organization and
facilitating work pertaining to recruitment,
selection, utilization, development of human
resources. This is the business function that
provides job opportunities to the community.
In many ways people are the most important
factor in production, business is all about
people, it uses human skills and talents to
produce an increasing number of goods and
services.
THE RESEARCH AND DEVELOPMENT
FUNCTIONS
Research and development (R&D) includes
activities that companies undertake to
innovate and introduce new products and
services. It is often the first stage in the
development process. The goal is typically to
take new products and services that will
improve the company’s performance as well as
satisfy the demands of consumers.
THE ECONOMIC FUNCTIONS
Small and large businesses drive economic
stability and growth by providing valuable
services, products and tax money that directly
contribute to the health of the community.
Taxes are used, among other things, to
maintain the infrastructure of a city, state or
country –roads, bridges, tunnels, public
transportation, libraries and other public
buildings and services, including police
officers and firefighters, all benefit from tax
money collected from individuals and
businesses. These services are essential to the
good health and positive qualities of local and
national citizens.
BUSINESS ETHICS
OVERVIEW
Business ethics concerns the acceptance
of specific business practices by stakeholders.
Despite its controversial nature, most
businesses are developing ethics programs to
deter objectionable conduct. This module
explores business ethics as a social
responsibility dimension, defining its
importance, identifying ethical issues, and
discussing various ways to handle ethical
dilemmas. No universally accepted approach
exists for resolving these questions.
BUSINESS ETHICS OBJECTIVES
1. Understand the definition and
importance of Business Ethics.
2. Identify Ethical Issues common in most
organizations
3. Learn how to handle Ethical Dilemmas.
BUSINESS ETHICS
 Business ethics comprises the
principles and standards that guide the
behavior of individuals and groups in
the world of business.
 Most definitions of business ethics
relate to rules, standards, and moral
principles regarding what is right or
wrong in specific situations.
 Principles are specific and pervasive
boundaries for behavior that are
universal and absolute.
 Principles often become the basis for
rules. Values are used to develop norms
that are socially enforced. Integrity,
accountability, and trust are examples
of values.
 Ethical business decisions foster trust
in business relationships, and trust is a
key factor in improving productivity
and achieving success in most
organizations.
 New legislation and regulations
designed to encourage higher ethical
standards in business have been put in
place.
 As a result, businesspeople have been
codifying ethical standards into
meaningful policies that spell out what
is and is not acceptable, which allows
them to reduce the probability of
behavior that could create legal
problems.
ETHICAL ISSUES IN BUSINESS
A – ABUSIVE OR INTIMIDATING BEHAVIOR
B- BULLYING
L- LYING
C- CONFLICT OF INTEREST
F- FRAUD
D- DISCRIMINATION
S- SEXUAL HARASSMENT
Ethical issue is a problem, situation, or
opportunity requiring an individual, group, or
organization to choose among several actions
that must be evaluated as right or wrong,
ethical or unethical. An ethical issue is simply
a situation, a problem or even an opportunity
that requires thought, discussion, or
investigation to determine the moral impact of
the decision. The classification of ethical
issues relevant to most business organizations
are discussed in the next section.
ETHICAL ISSUES IN BUSINESS
 ABUSIVE OR INTIMIDATING
BEHAVIOR
Abusive or intimidating behavior is one of the
most common ethical problems for employees,
but what does it mean to be abusive or
intimidating? The concepts can mean anything
from physical threats, false accusations,
annoying a coworker, profanity, insults,
yelling, harshness, and ignoring someone to
being unreasonable; and the meaning of these
words can differ by person. With such, intent
should be a consideration. If the employee was
trying to convey a compliment when the
comment was considered abusive, then it was
probably a mistake. The way a word is said can
be important. In addition, the fact that we now
live in a multicultural environment, doing
business and working with many different
cultural groups, highlights the depth of the
ethical and legal issues that may arise.
Companies should have standards that draw
the line to determine which behavior are
considered abusive or intimidating in the
workplace.
 BULLYING
Bullying is associated with a hostile workplace
when someone (or a group) considered a
target is threatened, harassed, belittled,
verbally abused, or overly criticized. Bullying
can cause psychological damage that can
result in health-endangering consequences to
the target. Some suggest that employers
should take the following steps to minimize
workplace bullying:
A. They should have policies in place that
make it clear that bullying behaviors
will not be tolerated.
B. The employee handbook should
emphasize that workers must treat each
other with respect
 LYING
To be honest, is to tell the truth to the best
of your ability; lying relates to distorting
the truth. There are three major types of
lies. The first includes joking without
malice, and the socalled white lie that is
told to avoid hurting someone ' s feelings.
The second type of lie is lying by
commission, or creating a perception of
belief by words that intentionally deceive
the receiver of the message. The third type
of lie, lying by omission, involves
intentionally not informing the receiver of
material facts. You should be able to
understand when a lie becomes unethical
in business based on the context and intent
to distort the truth. A lie becomes illegal if
it is determined by the judgment of courts
to damage others. The question you need
to ask is whether lies are distorting
openness, transparency, and other values
that are associated with ethical behavior.
 CONFLICT OF INTEREST
A conflict of interest exists when an
individual must choose whether to advance
his or her interests, those of his or her
organization, or those of some other
group. To avoid conflicts of interest,
employees must be able to separate their
private interests from their business
dealings. In many developed countries, it is
generally recognized that employees
should not accept bribes, personal
payments, gifts, or special favors from
people who hope to influence the outcome
of a decision. Bribes also have been
associated with the downfall of many
managers, legislators, and government
officials. When a government official
accepts a bribe, it is usually from a
business that seeks some favor, perhaps a
chance to influence legislation that affects
it. Giving bribes to legislators or public
officials, then, is a business ethics issue.
When an individual engages in deceptive
practices to advance his or her interests
over those of the organization or some
other group, charges of illegal fraud may
result. In general, fraud is any false
communication that deceives, manipulates,
or conceals facts to create a false
impression to damage others. It is
considered a crime, and convictions may
result in fines, imprisonment, or both. The
following are the types of fraud that occur
in businesses:
A. ACCOUNTING FRAUD This is the
intentional manipulation of financial
statements to create a false
appearance of corporate financial
health. Accounting firms have the
responsibility to report true and
accurate picture of the financial
condition of the companies for
which they work. Failure to do so
may result in charges and fines for
both the accounting firm and the
employing company. Several laws
have been passed to prevent the
occurrence of accounting fraud.
B. MARKETING FRAUD This is the
intentional misrepresentation or
deceit during the process of
creating, distributing, promoting
and pricing products. False or
misleading marketing
communications can destroy
customers ’ trust in a company. One
set of laws that is common to many
countries are laws concerning
deceptive advertising−that is,
advertisements that are not clearly
labeled as advertisements. In the
Philippines, we have Republic Act
7394 (The Consumer Act of the
Philippines) to protect consumers
against false, deceptive and
misleading advertisements.
Misleading advertisements fall into
three categories:
1. Puffery This can be defined
as the exaggerated
advertising, blustering, and
boasting upon which no
reasonable buyer would rely.
When it’ s obvious that the
statement is meant to be not
taken seriously, that is
puffery. This isn ’t illegal.
2. Implied falsity This means
that the message of the
advertisement tends to
mislead, confuse, or deceive
the public. It doesn ’t
necessarily have to be false
but it’ s not completely true
either. This is illegal.
3. Literal falsity When the
advertisement is stating that
the product is something
that' s not, that is literal
falsity. A product may state
that’ s completely organic
when it has artificial
components or state that it
can do something that it can
’t. This is obviously illegal.
C. CONSUMER FRAUD This occurs
when consumers attempt to deceive
businesses for their own gain.
Consumer fraud involves intentional
 deception to derive an unfair
economic advantage by an
individual or group over an
organization. Examples of
fraudulent activities include
shoplifting, collusion or duplicity,
and guile.
1. Collusion typically involves an
employee who assists the
consumer in fraud.
2. Duplicity may involve a
consumer staging an accident
and then seeking damages
against the company for its lack
of attention to safety.
3. Guile is associated with a person
who is crafty or understands
right/wrong behavior but uses
tricks to obtain an unfair
advantage. The advantage is
unfair because the person has
the intent to go against the right
behavior or end
 DISCRIMINATION
Discrimination is the act of making
distinctions between human beings based
on the groups, classes, or other categories
to which they are perceived to belong.
While most organizations have made
strides to reduce instances of
discrimination, it remains an important
legal issue in the workplace. To help build
workforces that reflect their customer
base, many companies have initiated
affirmative action programs, which involve
efforts to recruit, hire, train, and promote
qualified individuals from groups that have
traditionally been discriminated against
based on race, age, gender, or other
characteristics.
 SEXUAL HARASSMENT
Sexual harassment is a form of discrimination
and is defined as any repeated, unwanted
behavior of a sexual nature perpetrated upon
one individual by another. It may be verbal,
visual, written, or physical and can occur
between people of different genders or those
of the same sex. To establish sexual
harassment, an employee must understand the
definition of a hostile work environment, for
which three criteria must be met: the conduct
was unwelcome; the conduct was severe,
pervasive, and regarded by the claimant as so
hostile or offensive as to alter his or her
conditions of employment; and the conduct
was such that a reasonable person would find
it hostile or offensive. A policy must be
enacted in the workplace to avoid sexual
misconduct.
DEALING WITH ETHICAL ISSUES
Individuals make ethical choices on the basis
of their own concepts of right or wrong, and
they act accordingly in their daily lives.
Understanding the individual factors will help
an organization determine how to deal with an
ethical issue.
HOW TO HANDLE ETHICAL ISSUES
1. Identify the ethical issues. Ethical issues
exist, in a broad sense, whenever one’s
actions affect others. In the workplace, a
manager’s decisions might affect
employees, customers, suppliers, creditors
and shareholders. These are the
stakeholders of an organization.
2. Identify alternative courses of action. Every
dilemma affords more than just one
opportunity. The cautious handling of
workplace ethics issues can resolve
personal and business dilemmas. By
identifying the alternatives, the next step
can take place.
3. Using ethical reasoning to decide on a
course of action. Ethical reasoning skills
are essential to making ethical decisions.
A variety of methods exist including:
A. Egoism looks at each decision by
considering the effects of a
decision only as it relates to the
individual decision-maker. It is a
philosophy that defines right or
acceptable conduct in terms of
consequences for an individual.
Most ethicists dismiss this method
 because it fails to consider the
consequences on the stakeholders.
B. UTILITARIANISM This is concerned
with seeking the greatest good for
the greatest number of people.
Using a cost benefit analysis, a
utilitarian decision maker
calculates the utility of the
consequences of all possible
alternatives and then chooses the
one that achieves the greatest
utility through a calculus/weighting
approach.
C. ETHICAL FORMALISM This is a
class of moral philosophy that
focuses on the rights of individuals
and on the intentions associated
with the particular behavior rather
than on its consequences. Ethical
formalists regards certain
behaviors as inherently right, and
their determination of rightness
focuses on the individual actor, not
on society.
CORPORATE GOVERNANCE
What is Corporate Structure?
Corporate structure refers to the organization
of different departments or business units
within a company. Depending on a company ’
s goals and the industry in which it operates,
corporate structure can differ significantly
between companies. Each of the departments
usually performs a specialized function while
constantly collaborating with each other to
achieve corporate goals and values.
CORPORATE GOVERNANCE DEFINED
The term corporate governance refers to how
companies are run and for what purpose.
Corporate governance also defines an
organisation ’ s power structure,
accountability structure, and decision-making
process. It is essentially a set of tools that
enables management and the board to run an
organisation more efficiently and effectively.
Environmental awareness, ethical behaviour,
corporate strategy, compensation, and risk
management are all aspects of corporate
governance.
CORPORATE GOVERNANCE DEFINED
Corporate Governance is the foundation of an
organization ’ s functioning and business
conduct. Effective Governance includes the
following elements:
 A seamless corporate structure— clear
roles, responsibilities, policies,
practices, procedures, and code of
conduct;
 The diversity of the board;
 Strategically designed risk management
mechanisms;
 Complete disclosure of corporate
information, including the sustainability
report on the ESG practices
(Environmental, Social and Governance);
 Safeguarding and centralizing
shareholders ’ rights— right to dividend
and right to vote;
HOW CORPORATE GOVERNANCE WORKS?
The purpose of good governance is to ensure
that businesses have the appropriate decision-
making processes and controls to ensure that
all stakeholders ’ interests (shareholders,
employees, suppliers, customers and the
community) are balanced. At the corporate
level, governance involves setting and
achieving the company ’ s goals while
considering the social, regulatory, and market
contexts. In other words, this concept refers to
practices and procedures for ensuring that a
company runs in a manner to meet its
objectives while ensuring that its stakeholders
can have confidence that they can trust the
company.
WHY IS CORPORATE GOVERNANCE
IMPORTANT?
Corporate governance is important for several
reasons:
1. Protection of shareholder interests: Good
corporate governance ensures that the
interests of shareholders, who are the
owners of the company, are protected.
2. Risk management: Strong corporate
governance helps identify and manage
risks, including financial, operational,
legal, and reputational risks.
3. Enhanced business performance: Good
governance practices contribute to
improved company performance and long-
term sustainable growth.
4. Access to capital: Investors, especially
institutional investors, are more likely to
invest in companies with strong corporate
governance practices
5. Stakeholder confidence: Transparent and
ethical governance practices build trust
and confidence among stakeholders,
including employees, customers,
suppliers, and the public.
6. Conflict resolution: Clear governance
structures and mechanisms can help in
resolving conflicts of interest among
different stakeholders.
7. Innovation and adaptability: Good
governance practices encourage a culture
of innovation and adaptability.
8. Long-term perspective: Corporate
governance encourages a focus on
longterm goals rather than short-term
gains.
CORPORATE GOVERNANCE AND SOCIAL
RESPONSIBILITY
Corporate governance (CG) and corporate
social responsibility (CSR) have been
important research issues for decades. The
relationship between CG and CSR has been
studied in financial literature in conjunction
with the relationship between CSR, risk and
corporate financial performance (CFP).
The critical importance of the relationship
between corporate governance and
sustainability has been long acknowledged in
the literature. Corporate social responsibility
(CSR) has been noted as a development of
good governance, where companies with better
governance are often found to be more
socially responsible. While corporate
governance is the force behind CSR aims and
objectives in organisations , the board of
directors as a core element of corporate
governance are responsible for achieving and
monitoring the set aims and objectives.
Companies may engage in two types of CSR
strategies .
One strategy is to take serious and rigorous
action to implement CSR governance.
Organizations may consume significant
resources to implement CSR governance with a
greater propensity to ― walk the talk‖ and
generate significant CSR outcomes.
The other CSR strategy involves engagement in
symbolic and opportunistic CSR governance to
improve corporate image or address emergent
issues but does not include allocation of the
resources needed to implement CSR activities
deeply or strategically.
ISSUES IN CORPORATE GOVERNANCE
SYSTEM
Major corporate governance issues include:
Leadership – Corporate governance oversees
key strategies and leads a culture to help the
business perform at its best.
Stakeholder engagement – ensuring that
significant stakeholders are engaging with the
business to position the business for the best
possible outcome.
Accountability – owning and embracing
strategies, as well as the tasks needed to
achieve the organisation ’ s long-term goals.
Fairness – Stakeholders at all levels should be
treated equitably and reasonably. Violations
should be redressed effectively.
Transparency – the organisation should not
need to keep secrets. Outsiders should be able
to observe the organisation ’ s transactions
and processes.
Many associate the idea of corporate
governance with publicly traded companies,
but many small and medium businesses can
also benefit from having a strong corporate
governance structure. Corporate governance
sets rules – instead of processes – that
determine your key personnel’ s actions and
roles. They typically seek to improve
management and reduce legal or ethical
issues. Some examples of this are rules
regarding personal use of business funds,
what it means to serve on a Board of Directors,
conflicts of interest, disbursement of profit,
hiring of family members, and information
partners, investors, and business owners of
key decisions and meetings.
Corporate governance can improve your
reputation
By publicising your corporate governance and
detailing how your business works, you will
likely attract additional stakeholders.
Minimise conflict and fraud
Corporate governance can help to reduce
major conflicts of interest, as well as potential
issues with fraud. For example, by conducting
external audits, or requiring multiple
approvals when transferring large sums of
money, or by forbidding the hiring of family
members for significant positions, you can
stop potential issues with bad employee
behaviour before they arise.
Other strategic challenges you may be
facing:
❖ Internal Systems – ensure that your
business can run efficiently and effectively
with clear systems. Taking control of your
internal processes ensures that company
culture is maintained and employees are never
left uncertain how to proceed without you.
❖ Outsourcing and Supplier Management – it
often makes sense not to do everything in
house. Your business can ’t always cover every
possible area of its operations, so making use
of outsourcing and external suppliers can
help. Strategising your outsourcing will make
sure you maximise value and efficiency.
❖ Legal and Risk – every business faces risks
and threats to its operations. It’ s important to
know how to handle these risks so that you
can fall back on your plans if something
happens, without having to figure it out on the
fly
DEVELOPMENT OF CSR STRATEGY
OVERVIEW
 Developing and implementing a
Corporate Social Responsibility (CSR)
strategy is crucial for effectively
integrating CSR into your business
operations

 A Corporate Social Responsibility (CSR)
strategy is a comprehensive plan that
outlines how a company intends to
integrate social and environmental
responsibility into its business
operations and interactions with
stakeholders. It is a framework that
guides the company's efforts to make a
positive impact on society while
aligning with its mission, values, and
long-term goals.
 In this module, we are going to discuss
the components and factors that must
be considered in the development of a
CSR strategy as well as rules to consider
when developing an effective CSR
strategy.
THE UN GLOBAL COMPACT
 FOUNDED ON July 26, 2000
 SANDA OJIAMBO CEO & Executive
Director
The UN Global Compact is a leadership
platform for the development,
implementation and disclosure of
responsible and sustainable corporate
policies and practices. Endorsed by chief
executives, it seeks to align business
operations and strategies everywhere with
ten universally accepted principles in the
areas of human rights, labor, environment
and anticorruption.
With nearly 8,000 corporate participants in
over 140 countries, the UN Global Compact
is the world’s largest voluntary corporate
sustainability initiative. The UN Global
Compact asks companies to embrace,
support and enact, within their sphere of
influence, a set of core values in the areas
of human rights, labor standards, the
environment, and anti-corruption.
THE TEN PRINCIPLES OF THE UN GLOBAL
COMPACT
These principles might serve as a
foundation to which social responsibility
strategies are formulated or developed.
 ADDITIONAL INFORMATION:
The Ten Principles of the United Nations
Global Compact are derived from:
 Universal Declaration of Human
Rights
 International Labour Organization’s
Declaration on Fundamental
Principles and Rights at Work
 Rio Declaration on Environment and
Development
 United Nations Convention Against
Corruption.
HUMAN RIGHTS
Principle 1 Businesses should support and
respect the protection of internationally
proclaimed human rights; and
Principle 2 Make sure that they are not
complicit in human rights abuses
LABOR STANDARDS
Principle 3 Businesses should uphold the
freedom of association and the effective
recognition of the right to collective
bargaining;
Principle 4 The elimination of all forms of
forced and compulsory labor
Principle 5 The effective abolition of child
labor; and
Principle 6 The elimination of discrimination
in respect of employment and occupation.
ENVIRONMENT
Principle 7 Businesses should support a
precautionary approach to environmental
challenges;
Principle 8 Undertake initiatives to promote
greater environmental responsibility; and
Principle 9 Encourage the development and
diffusion of environmentally friendly
technologies.
ANTI-CORRUPTION
Principle 10 Businesses should work against
corruption in all its forms, including extortion
and bribery
THE OBJECTIVE OF A BUSINESS
The following are the possible objectives of an
organization:
PROFIT MAXIMIZATION For organizations
which exist to make a profit it seems
reasonable that they should seek to make as
large a profit as possible. It is not however
always clear what course of action will lead to
the greatest profit, and it is by no means clear
whether profit maximization in the short term
will be in the best interests of the business
and will lead to the greatest profit in the
longer term. Thus profit maximization may
not be in the best interests of a business and it
certainly may conflict with other objectives
which a business may have.
MAXIMIZING CASH FLOWS Cash flow is not
the same as profit and an organization needs
cash to survive. In some circumstances this
cash flow may be more important than profit
because the lack of cash can threaten the
survival of the organization.
MAXIMIZING RETURN ON CAPITAL
EMPLOYED
This is a measure of performance of a
business in terms of its operating efficiency
and therefore provides a measure of how a
business is performing over time. Comparative
measures are useful in helping the owners and
managers of a business to decide what course
of action may be beneficial to the business.
MAXIMIZING SERVICE PROVISION This is a
measure of performance of a business in
terms of its operating efficiency and therefore
provides a measure of how a business is
performing over time. Comparative measures
are useful in helping the owners and managers
of a business to decide what course of action
may be beneficial to the business.
MAXIMIZING SHAREHOLDER VALUE The
value of a business depends partly upon the
profits it generates and partly upon the value
of the assets it possesses. These assets can
comprise partly of tangible assets such as
plant and machinery or land and buildings and
partly of intangible assets such as brand
names.
GROWTH
Growth through expansion of the business, in
terms of both assets and earnings, and the
increase in market share which the business
holds is one objective which appeals to both
owners and managers. If this is an objective of
the business then it will lead to different
decisions to those of profit maximization.
LONG TERM STABILITY
The survival of a business is of great concern
to both owners and managers and this can
lead to different behavior and a reluctance to
accept risk. All decisions involve an element of
risk and seeking to reduce risk for the purpose
of long term stability can lead to performance
which is less than desirable.
SATISFICING
Satisficing is a decision-making strategy that
aims for a satisfactory or adequate result,
rather than the optimal solution. This is
because aiming for the optimal solution may
necessitate a needless expenditure of time,
energy, and resources. Satisficing is a way of
reducing risk and taking multiple objectives
into account by making decisions which are
acceptable from several viewpoints without
necessarily being the best to meet any
particular objective
DEVELOPMENT OF AN EFFECTIVE
STRATEGY
Kellie McElhaney is the faculty director of the
Center for Responsible Business at the Haas
School of Business, University of California,
Berkeley. In her book Just Good Business: The
Strategic Guide to Aligning Corporate Social
Responsibility and Brand, Kellie describes
seven rules to consider when developing an
effective CSR strategy.
7 RULES IN DEVELOPING AN EFFECTIVE CSR
STRATEGY
1. KNOW THYSELF
Your CSR strategy must be authentic
and must ring true for your
organization, vision, and values. .
The Vision Statement
The vision statement should answer the basic
question, ―What do we want to become?‖ It
provides the foundation for developing a
comprehensive mission statement.
The following are examples of vision
statements from several socially responsible
brands that continues to spark inspiration in
the business world:
TESLA: ―To accelerate the world’s transition to
sustainable energy.‖
NIKE: ―Bring inspiration and innovation to
every athlete* in the world.‖ *If you have a
body, you are an athlete.
IKEA: ―To create a better everyday life for the
many people.‖
AMAZON: ―To be Earth’s most customer
centric company, where customers can find
and discover anything they might want to buy
online.‖
The Mission Statement
It is based largely on guidelines set forth in
the mid-1970s by Peter Drucker. Drucker says
that asking the question ―What is our
business?‖ is synonymous with asking the
question ―What is our mission?‖
It is statement of purpose that distinguishes
one organization from other similar
enterprises, the mission statement is a
declaration of an organization’s ―reason for
being. ‖
The following are examples of mission
statements that inspire sustainability:
CHEVRON: ―Our company’s foundation is built
on our values, which distinguish us and guide
our actions. We conduct our business in a
socially responsible and ethical manner. We
respect the law, support universal human
rights, protect the environment and benefit
the communities where we work.‖
ADIDAS: ―We are a global organisation that is
socially and environmentally responsible, that
embraces creativity and diversity and is
financially rewarding for our employees and
shareholders."
2. GET A GOOD GIFT
The goals you select for your CSR
strategy must fit your company and its
products and services. For example, if
your business is a boutique selling
women’s clothing, then actively
supporting breast cancer research is a
good fit.
3. BE CONSISTENT
Be sure that everyone in your
organization knows what your CSR
strategy and goals are and that
everyone can express them consistently
to one another — and to the general
public. Your CSR efforts are multiplied
when everyone in your company has a
clear understanding of his or her role
and is completely aligned with the
program.
4. SIMPLIFY
In developing and implementing a CSR
strategy, simpler is usually better.
Organic yogurt maker Stonyfield Farm’s
mantra is simple: ―Healthy food, healthy
people, healthy planet.‖ Anyone can
understand what the company is
committed to accomplishing, and
customers feel tremendous brand
loyalty because they want to be a part
of what Stonyfield is doing
5. WORK FROM THE INSIDE OUT
Your CSR strategy isn’t worth the paper
it’s written on if you haven’t engaged
your employees in the process of
developing and implementing it. Instead
of forcing a CSR strategy on your
employees, invite their active
participation in creating it and then
rolling it out. You’ll get better results
and your employees will be pleased that
you thought highly enough about them
to involve them in the process.
6. KNOW YOUR CUSTOMER
When developing a CSR strategy, it’s
better to address the immediate needs
of your customers before you try to
solve all the problems of the world.
These customer needs often boil down
to the most basic of human needs:
safety, love and belonging, self‐ esteem,
and self‐actualization. If you can
address these customer needs, you’ll
have a customer for life
7. TELL YOUR STORY
When you have your CSR strategy in
place, don’t be afraid to publicize your
efforts to be socially responsible along
with your successes. Again, many
people are attracted to companies that
operate in a socially responsible way. If
you don’t get out the word about your
programs, you’ll lose this powerful
advantage. So tell your story — as often
as you can — to your employees and to
the general public. Use company
newsletters and brochures, your
website, and online social media such
as Twitter, Facebook, LinkedIn, and
YouTube
EXAMPLE OF AN EFFECTIVE CSR STRATEGY
Ben & Jerry's commitment to social justice is
just about as sweet as a pint of Half Baked®.
As a B Corp, it's committed to using its ice
cream to change the world for the better. For
example, it invests heavily in building
relationships with Black-owned and refugee-
hiring suppliers. But the brand didn't jump
right into the deep end from its inception.
From its humble beginnings in the late 1970s
until today, the company has gradually
advocated for more causes, now including
voter rights, climate justice, LGBTQ+ rights,
and many more—all while maintaining its
brand presence.
In 2016, the company released a campaign
noting the social and environmental impact
that a temperature increase of two degrees has
on ice cream - and the Earth. The ad increased
awareness on the topic and urged
policymakers to be more proactive in fighting
climate change.

THE IMPORTANCE OF DEVELOPING AN

EFFECTIVE CSR STRATEGY

In the business world, implementing a CSR

strategy can help a company gain a
competitive edge and build relationships with
its stakeholders that benefit all parties
involved, while also saving money, reducing
risk, and enhancing a company's legitimacy
and reputation at the same time