Corporate Social Responsibility CSR: It’s meaning Corporate Social Responsibility (CSR) • Is a self-regulating business model that helps a company be socially accountable—to itself, its stakeholders, and the public. By practicing corporate social responsibility, also called corporate citizenship, companies can be conscious of the kind of impact they are having on all aspects of society, including economic, social, and environmental. (Investopedia) • Is the obligation to take action that protects and improves the welfare of society as a whole, as well as supports organizational interests. The Law of Organizational Activity/ Social Responsibility • Social Responsibility means that individuals and companies have a duty to act in the best interests of their environment and society as a whole. Social Responsibility, as it applies to business, is known as corporate social responsibility (CSR), and is becoming a more prominent area of focus within businesses due to shifting social norms. • The policy-making role of government is crucial for promoting CSR between different industries at the national level, encouraging a tightening of standards across the board. • The government implemented a ‘Corporate Governance Reform,’ the aim of which is to respond to recognized problems inherent in some businesses and provide a set of legislative and business-led measures to improve standards of corporate governance. • A key goal of this Reform was to “drive change in how large companies engage at board level with employees, suppliers and wider stakeholders to improve boardroom decision-making and deliver more sustainable business performance.” • Why Collaboration Can Be Positive • A collaboration between government and the private sector is arguably one of the most effective ways to improve national CSR standards within businesses. By laying down the groundwork for minimum CSR standards and encouraging companies to reach above and beyond this threshold, government involvement can ensure that social objectives are followed through and that voluntary CSR initiatives are carried out to an appropriate standard. Hierarchy of Values Total Responsibility: 1. Discretionary/ Philanthropic Responsibility 2. Ethical Responsibility 3. Legal Responsibility 4. Economic Responsibility Hierarchy of Values - Economic Responsibility • The basic foundation and discretionary or volitional is the apex. • Represents a business’s first responsibility – to be profitable. • It is a company’s duty to produce goods and services that are needed/wanted by the customers, at a reasonable price. Hierarchy of Values - Legal Responsibility • The second level of the pyramid is the business’s legal obligation to obey the law. • It is the most important responsibility out of the four levels as this will show how companies conduct their business in the marketplace. • Examples of the legal responsibilities a company should adhere to: Employment Law Tax Regulations Employee’s Health & Safety Competition with other companies Hierarchy of Values - Ethical Responsibility • Doing the right thing, being fair in all situations and also avoiding harm. • Unlike the first two levels, this is something that a company is not obligated to do. However, it is best for a company to be ethical as this not only shows their stakeholders that they are moral and just, but people will feel more comfortable purchasing goods/services from the company as well. Hierarchy of Values - Philanthropic / Discretionary Responsibility • At the top of the pyramid, occupying the smallest space is philanthropy. • Philanthropic Responsibility is more than just doing what is right, but it is something that holds true to the company’s values, to give back to society. • “Discretionary responsibility is voluntary and guided by a company's desire to make social contributions not mandated by economics, law, or ethics. Discretionary activities include philanthropic contributions that offer no direct financial payback to the company and are not expected.” The Principles of Corporate Social Responsibility: There are three (3) basic principles which together comprise all CSR activity. These are: 1. Sustainability 2. Accountability 3. Transparency The Principles of CSR - SUSTAINABILITY • Concerned with the effect which action taken in the present has upon the options available in the future • Implies that society must use no more of a resource than can be regenerated The Principles of CSR - SUSTAINABILITY Sustainability can also be defined in terms of the carrying capacity of the ecosystem (Hawken 1993) and described with input – output models of resource consumption. Example: Paper industry has a policy of replanting trees to replace those harvested and this has the effect of retaining costs in the present rather than temporally externalizing them. The Principles of CSR - ACCOUNTABILITY • Concerned with an organization recognizing that its actions affect the external environment, and therefore assuming responsibility for the effects of its actions • Implies a quantification of the effects of actions taken, both internal to the organization and externally The Principles of CSR - ACCOUNTABILITY Example: To address the waste issue, UNILEVER launched the local program “Surf Misis Walastik” last 2012, a community-based waste collection program for flexible plastics, such as sachets, plastic bags, and other single-use packaging, with an incentive to encourage proper waste management. The Principles of CSR - TRANSPARENCY • It means that the external impact of the actions of the organization can be ascertained from that organization’s reporting and pertinent facts are not disguised within that reporting The Principles of CSR - TRANSPARENCY Example: SAN MIGUEL CORPORATION The company’s Annual Report (latest 2020) was posted on their official website. • https://www.sanmiguel.com.ph/ • https://www.sanmiguel.com.ph/storage/images/article/file/SMC%20AR%202020_0601Aforweb.pdf References: • J. Fernando (2021) Corporate Social Responsibility (CSR). Investopedia, https://www.investopedia.com/terms/c/corp-social-responsibility.asp • A.Ganti (2021) Social Responsibility. Investopedia https://www.investopedia.com/terms/s/socialresponsibility.asp • BDC,Corporate Social Responsibility, https://www.bdc.ca/en/articles-tools/entrepreneur-toolkit/templates-business- guides/glossary/corporate-social-responsibility • Encyclopedia https://www.encyclopedia.com/finance/finance-and-accounting-magazines/social-responsibility-and- organizational-ethics • D. Jamali (2007) Corporate Social Responsibility (CSR): Theory and Practice in a Developing Country Context, file:///C:/Users/Acer/Downloads/Corporate_Social_Responsibility_CSR_Theory_and_Pra.pdf • GivingForce Team (May, 2018) Does Government Have a Role to Play in Corporate Social Responsibility?, https://www.givingforce.com/does-government-have-a-role-to-play-in-corporate-social-responsibility/ • https://www.toppr.com/guides/business-studies/social-responsibilities-of-business/kinds-of-social-responsibility/ References: • David Crowther, Guler Aras, and Venus Publishing ApS (2008) Corporate Social Responsibility https://www.mdos.si/wp-content/uploads/2018/04/defining-corporate-social-responsibility.pdf
