CORPORATE SOCIAL RESPONSIBILITY

OD (WKD)
March, 2023

By:
Tophil. O. Odoy
Consultant
UMI
0772591457
04/04/23 CSR 1
 Session objectives
 Explain corporate social responsibility (CSR)
 Provide business examples of CSR
 Differentiate social responsibility and
responsiveness
 Explain corporate social performance (CSP)
 Relate social performance to financial performance
 Describe the socially conscious investing movement

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 Session outline
 The CSR Concept
 Arguments For and Against Corporate
Social Responsibility
 Corporate Social Responsiveness
 Corporate Social Performance (CSP)

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 Session outline
 Nonacademic Research on CSP
 Social Performance and Financial
Performance
 Socially Conscious or Ethical Investing
 Summary

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 Introduction

 The focus in this session is on corporate social

responsibility, which involves responsibilities
outside of making a profit and the key questions
for corporations include:-
• Does business have a social responsibility?

• If so, what is the extent and type of the

responsibility?

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 Introduction
 What is a corporation?
 “An artificial being, invisible, intangible,

and existing only in contemplation of

law…”
Chief Justice Marshall,1819

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 Introduction
 The impact of a company’s actions on
society
 Requires a manager to consider his/her acts
in terms of a whole social system, and holds
him responsible for the effects of his/her acts
anywhere in that system
 Corporations must abide by the laws and
regulations governing society
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 Introduction
 Legal rules set the minimum
 Corporations can choose to go beyond the
standards

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 Introduction
 What is the logic of CSR?
 World’s 200 largest corporations account for

more than 25% of the world’s economic activity

 With power comes responsibility- “ Iron Law of

Responsibility.”
 In the long-run, those who do not use power

in ways society considers responsible will

lose it

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 Corporate citizenship concepts
 Corporate social responsibility –
emphasizes obligation and accountability to
society
 Corporate social responsiveness –
emphasizes action, activity
 Corporate social performance – emphasizes
outcomes, results

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 Historical perspective
 Economic model – the invisible hand of the
marketplace protected societal interest(,
Thomas Hobbes; Adam Smith)
 Legal model – laws protected societal
interests

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 Historical perspectives
Milton Hershey, Andrew Carnegie ,Henry
Ford
 Modified the economic model

 Philanthropy
 Community obligations
 Paternalism

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 Historical perspective
 What was the main motivation?
 To keep government at arms length

 Corporation under attack for being too big-

turn of the C20th

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 Historical perspective
 From the 1950’s to the present the concept
of CSR has gained considerable acceptance
and the meaning has been broadened to
include additional components
 But not universally accepted

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 Evolving views
 CSR considers the impact of the company’s
actions on society (Bauer)
 CSR requires decision makers to take
actions that protect and improve the welfare
of society as a whole along with their own
interests (Davis and Blomstrom)

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 Evolving views
 CSR mandates that the corporation has not
only economic and legal obligations, but
also certain responsibilities to society that
extend beyond these obligations (McGuire)

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 Definition
CSR: organizations consider the interests of
society by taking responsibility for the impact
of their activities on customers, suppliers,
employees, shareholders,, communities, and
other stakeholders, as well as the
environment. This obligation is seen to
extend beyond the statutory obligation to
comply with legislation- organisations to take
voluntary steps

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 Definitions
Carroll’s Four Part Definition
 CSR encompasses the economic, legal,

ethical and discretionary (philanthropic)

expectations that society has of
organizations at a given point in time
Carrol&Buchholtz(2003): Business and ethics
and stakeholder management.

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 Definitions
Understanding the four components
Responsibil Societal Examples
ity expectatio
ns
Economic Required Profit
maximization
Legal Required Obey laws
and
regulations
Ethical Expected Do what is
Wright, fair
and just
Discretionary Desired/ Be a good
expected corporate
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citizen
CSR in Equation Form is sum
of:
Economic Responsibilities (Make a profit)
Legal Responsibilities (Obey the law)
Ethical Responsibilities (Be ethical)
Philanthropic Responsibilities (Good
corporate citizen)

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 Arguments Against CSR
 Restricts the free market goal of profit
maximization
 Business is not equipped to handle social
activities
 Dilutes the primary aim of business
 Increase business power
 Limits the ability to compete in a global
marketplace
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 Arguments for CSR
 Balances corporate power with social
responsibility
 Addresses social issues business caused and
allows business to be part of the solution
 Protects business self-interest
 Limits future government intervention
 Corrects social problems caused by business

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 Business responsibilities in the
21st C
 Demonstrate a commitment to society’s values
and contribute to society’s social,
environmental, and economic goals through
action.
 Insulate society from the negative impacts of
company operations, products and services.
 Share benefits of company activities with key
stakeholders as well as with shareholders.
 Demonstrate that the company can make
more money by doing the right thing.
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 Non-academic research
 Fortune's ranking of most and least
admired corporations
 Council on Economic Priorities
Corporate Conscience Awards
 Business Ethics Magazine Awards
 WalkerInformation’s Research on the
impact of social responsibility

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 Corporate citizeship
 Corporate citizenship embraces all the
facets of corporate social responsibility,
responsiveness and performance

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 Two opposing views
1. Classical view – “the social responsibility of
business is to increase its profits ” Milton
Friedman (Stanford)
 Managers are employees of owners of the business
 management does not have the right to use
owner’s money for any purpose other than to
advance the interests of the business.

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 Opposing views
2.Social economic view
Kenneth Gilbraith, John Nash
Actions in support of society are also in the
interests of the individual-enlightened self
interest or why CSR works.
 A business goes well beyond making profit
to include protecting society’s welfare

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 Elements of CSR
CSR is related but not limited to:
Legal compliance

Corporate philanthropy

Corporate governance

Environmental protection

Labor security

Human rights

Community involvement

Business standards

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 Triple bottom line
CSR considers
1.Economic bottom line:
emphasis of a business is not just financial
performance. But also sustainability of a business
and return of human and social capital
2.Environmental bottom line:
Impact of products or operations on the
environment
3.Social bottom line:
Issues such as ethnic and gender diversity, working
hours and wages, staff security

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 Increased importance of CSR
 Growing role of business
 reduced role of govt due to privatization and
deregulation- KCCA and roads
 Globalization
 need to accommodate global values and local
cultures and histories- SHELL in Nigeria
 New technologies
 impact on the environment for better or worse
 Greater cost of misconduct
 less tolerance and high scrutiny in civil society-
UEDLC and employee deaths

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 Criticism of CSR in Uganda
 Public relations exercise- FM stations
 Pet projects of largely expatriate focus-
Kampala Kids League; motor car rallies
 Follow the leader strategy- MTNs
 Violation of profit maximization- dilution of
purpose and loss of focus
 Usurping political control- Madvhani and
control of schools, roads, hospitals

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 Social Responsible
Investment

 Considers Investment in social

responsibility issues
 In US now at $2.3 billions
 Is an expression of shareholder concern

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 SRI methodology

 Negative screening- excluding companies in

specific activities (e.g. tobacco or
armaments)
 Positive screening- focus on specific themes
 Rating- on a case by case base assessing
CSR policies and processes at the firm level
against a benchmark

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 Points of debate
1.What role should governments take
(the law) in forcing higher standards or
should free market forces be allowed to
show that ethical business behaviour is
also better business?

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 Points of dedbate
2.Is it true that ethical business is actually
likely to be more profitable than
unethical business?
3 Is ethical behahiour a luxury available
to the wealthy who may end up higher
in Maslow’s “hierarchy of needs”?

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END OF PRESENTATION

THANK YOU FOR YOUR ATTENTION

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