Chapter 4

Corporate Social
Responsibility

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 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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 Defining CSR
• Corporate Social Responsibility is the actions
of an organization targeted towards the
achievement of a social benefit over and
above maximizing profits for its shareholders
and meeting all its legal obligations.
• The definition assumes the organization
operates in a competitive environment and
that it is not a “not-for-profit”.
• Also called corporate conscience or corporate
citizenship
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 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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 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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 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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 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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 The Driving Forces Behind CSR
1. Transparency – business actions will be known
around the world
2. Knowledge – customers have access to more
information and ability to act on that info
3. Focus on sustainability of earth’s natural
systems
4. Globalization – many different governments
involved with our global business actions
5. The Failure of the Public Sector to address
social problems

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 The Triple Bottom Line
Many companies are now
considering a triple bottom line
which includes performance in
three areas:
FINANCIAL
SOCIAL
ENVIRONMENTAL
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 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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 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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 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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 Carbon Footprint

• New and questionable practice: Making your

operation carbon neutral
• Kyoto Protocol Ratification was an agreement
by 160 countries requiring developed nations
to reduce their greenhouse emissions and fund
projects in developing nations in order to
receive carbon offset credits.
• http://youtu.be/RHKlo5j9TSs

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