Introduction to Business

Management
11th edition
Ancillary material
ISBN 978 019 07 4576 9
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 Chapter 5
Corporate Social Responsibility
Learning Outcomes

• Explain and define what corporate social responsibility (CSR) is

• Explain why a company would consider implementing CSR programmes
• Define corporate governance
• Explain corporate governance compliance requirements
• Define the concept sustainable development
• Explain who the stakeholders of a company are
• Give reasons why a company should engage with its stakeholders
• Describe how a company would go about engaging with its
stakeholders
• Describe the contribution of CSR to sustainable development.
Chapter outline

• Introduction
• Introducing corporate social responsibility (CSR)
• Corporate governance
• Sustainable development
• Stakeholder engagement
• Summary
Introducing CSR

• Companies have a responsibility for their impact on society and the

natural environment
• Companies have a responsibility for the behaviour of others with
whom they do business
• Companies need to manage its relationship with wider society

Corporate citizenship Corporate social investment

Recognises corporations as legal persons with certain rights Contribution made to society (excluding contributions made
and responsibilities. through core business activities)
Introducing CSR (continued)

• CSR in contemporary business management

• Social drivers
• Governmental drivers
• Market drivers
• Ethical drivers
Corporate governance

• Governance refers to the way in which a business makes decisions

about how to manage its affairs.
• Corporate governance is the system by which companies are
managed and controlled.
Corporate governance (continued)

Roles and responsibilities of boards within a company in terms of

good governance.
• Executive director/s: Full time employees
• Non-executive director/s: Not involved in the day-to-day operations
of the business.
Corporate governance (continued)
Corporate governance (continued)

• Primary principles of good governance:

Discipline
Social
Independence
Accountability
Responsibility
Transparency
Fairness
responsibility
Corporate governance (continued)

Corporate governance compliance:

• A link always exists between good governance and compliance with
the law.
• “Comply or Else”
• “Comply or Explain”
• Criteria of good governance codes and guidelines are used to
determine appropriate standard of conduct.
Corporate governance (continued)

Three ways in which a CSR committee can determine corporate

policy:
• Values-based system
• Stakeholder-engagement process
• A combination of value-based and stakeholder engagement
processes
Sustainable development

Defining sustainable development

• ‘Development that meets the needs of the present without
compromising the ability of future generations to meet their own
needs.’
• Sustainable development encompasses a number of areas and
highlights sustainability as the idea of environmental, economic
and social progress and equity – within limits of the world’s natural
resources
Stakeholder engagement

Reasons why companies engage with stakeholders:

• Responsible companies want to understand and respond to
society’s expectations of a responsible company
• Engagement is a means to help build a better relationship with all
parties
• Engagement helps provide opportunities to align business practices
with societal needs and expectations, helping drive long-term
sustainability and shareholder value
Stakeholder engagement (continued)

Defining ‘stakeholders’
• Persons or groups that affect or are affected by the business
activities of a company

Primary stakeholders Secondary stakeholders

• Some contractual or financial relationship • Have a less direct impact on the company.
with the company. • For example Environmental NGO’s and the
• For example shareholders and employees media
Stakeholder engagement (continued)

Defining ‘engagement’
• An ongoing and multi-faceted process between the corporation
and stakeholders:
• Providing information
• Capacity building to equip communities and stakeholders to effectively
engage
• Listening/responding to community and stakeholder concerns
• Including communities and stakeholders in decision-making processes
• Developing goodwill and better understanding of objectives and priorities
• Establishing realistic understanding of potential outcomes
Stakeholder engagement (continued)

Defining ‘engagement’ (continued)

• Level of engagement is determined by:
• Goals established through interaction with stakeholders
• Mode of communication with stakeholders
• Nature of the relationship between the company and its stakeholders
• Engagement approach used with stakeholders
Stakeholder engagement
(continued)
Principles for stakeholder engagement
• Key approaches of stakeholder engagement process:
oInvolvement
oCandour
oRelevance
oLearning
oAction
Stakeholder engagement(continued)

Steps in the stakeholder-engagement process

• Prepare – identify and understand
• Plan – set objectives
• Design – develop the engagement plan
• Engage – meet objectives
• Evaluate – assess the outcomes
• Apply – share information
Summary

• Corporate social responsibility and related concepts of corporate

social investment and corporate citizenship
• Historic overview and discussion on social, governmental, market
and ethical drivers
• Importance of CSR policies and frameworks
• Principles and processes of stakeholder engagement
• Sustainable development