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 Leading business companies engaged into serious malpractice during the 1980s-90s as well as late 2000s
 After the 1970s the notion ‘corporate social responsibility’ gained serious momentum, as governments, international organizations and societies raised their voices against corporate greed
 CSR involves the adoption of best business practices that respect human rights, the environment, labor and product standards and anti-corruption
 Can the business be ethical ?
 http://www.youtube.com/watch?v=GggyVO21hw8
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Exxon Mobile – oil spills in the Niger Delta
Union Carbide – factory explosion in Bhopal
BP – oil spills in Mexico Gulf
Texaco – Ecuadorian Chernobyl
Caterpillar – selling bulldozers to the Israeli army for
Palestinian home demolition
Coca-Cola – world’s most abusive and discriminatory company
Chevron – owner of Texaco, devastating human rights violation in Burma
Dow Chemicals – outrageous environment pollution
Ford Motors – 10 th largest world polluter
(Source: http://www.globalexchange.org/corporateHRviolators )
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 Enron – America’s ‘most innovative company’ over reported revenues to $ 100 billion. The company went bankrupt in 2001, which led to net loss for its shareholders amounting to $ 60 billion
 Bernie Madoff – sentenced to 150 years in jail for financial frauds amounting to $ 17 billion
 Bank bail-out by governments – UK’s Northern Rock
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Factors shaping the social role of business:
 Increasing need to regulate the performance of MNCs
 IT used to control business more effectively (stringent rules on financial reporting and monitoring of activities in the 3 rd world)
 Legal standards on environment and human rights protection, health and safety at work
 Awareness of society
(increasing need to build good company image)
 Growth of third sector (NGOs)
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Corporate Responsibility is “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis” (EU Commission, 2011)
It is the “commitment of business to contribute to sustainable economic development by working with employees, their families, the local community and society at large to improve their lives in ways that are good for business and for development” (WB, 2011)
The business is increasingly being expected to engage in activities that preserve the environment and human rights and to promote adequate corporate governance
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 Corporate citizenship refers to “managing the company’s wider influence on society and the benefit of company and society” (Wetherly&Otter, 2011)
 Perceiving the business as a citizen, implies that it has moral obligations and civic responsibility to the other members of society
 http://www.corporate-citizenship.com/what-we-do
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Business ethics is based upon the following principles:
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Ethical values of business
Application of values to business (codes of ethics)
Ethical policies (corporate governance)
Ethical theories: deontological and utilitarian
The application of ethical norms to business behavior leads to socially acceptable practices
Adam Smith: “People of the same trade seldom meet together […] the conversation ends in a conspiracy against the public, or in some contrivance
to raise prices” (The Wealth of Nations, 1776)
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Friedman and the ‘free-market’ view:
“What does it mean to say that ‘business’ has responsibilities?
Only people have responsibilities”
(“The Social Responsibility of Business is to Increase Its Profits”
The New York Times Magazine, September 13, 1970)
 The primary goal of business is profit (no moral obligation)
 Social goals are governments’ obligation
 Social / community projects entails economic costs for the business:
 Lower dividends and wages
 Outside the scope of manager’s duties
(*to the article: http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html) 9

Stakeholder theory about CR
 Stakeholder is “any individual who affects or is affected by the business actions, decisions, policies and practices”
 Taking into account the complex interests of main stakeholder groups leads to effective CR
 The four main areas: Pyramid of CR by Archie Carroll
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 Types of responsibility:
 Agency – business values and their effect on the environment
 Accountability – to particular groups of stakeholders
 Liability – moral responsibility to the wider community
 Motives for CR
 Self-interest – bad image might lead to loss of clients
 Mutual interest – business has both power and obligation solve problems it has/will create
 Shared responsibility – sense for the ‘common’ good, based on dialogue
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CR should be applied to practical situations and problems.
The comprehensive process includes several steps:
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Data gathering – being informed about shareholders
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Value clarification and management – identifying and defending company values
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Responsibility negotiating – when the major stakeholder groups are indentified, responsibility should be negotiated and shared
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Audit – publishing social and environmental reports (in addition to financial ones)
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 Human rights
Principal 1: Businesses should support and respect the protection of internationally proclaimed human rights; and
Principal 2: make sure that they are not complicit in human rights abuses.
 Labor
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.
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(Source: http://www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/index.html)

Recommendations (to the 42 member governments of OECD) for
‘responsible business conduct’:
 General policies (major ‘should do’)
 Extensive recommendations on:
 Disclosure
 Human rights
 Employment and industrial relations
 Environment
 Combating bribery, bribe solicitation and extortion
 Consumer interests
 Science and technology
 Competition
 Taxation
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(Source: http://www.oecd.org/dataoecd/43/29/48004323.pdf)

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 The EU Commission has history of extensive CSR development and strong encouragement for MS to adopt relevant national policies
EU strategy 2011-14 for CSR:
Enhancing the visibility of CSR and disseminating good practices
Improving and tracking levels of trust in business
Improving self- and co-regulation processes
Enhancing market reward for CSR
Improving company disclosure of social and environmental information
Further integrating CSR into education, training and research
Emphasizing the importance of national and sub-national CSR policies
Better aligning European and global approaches to CSR
(Source: EU Commission - A renewed EU strategy 2011-14 for CSR, 2011)
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In 2007, 78 US top companies donated $ 3.8 billion in cash to social initiatives:
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Wal-Mart Stores - $ 301 m
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Bank of America - $ 211 m
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Exxon Mobil - $ 173 m
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Citigroup - $ 146 m
5.
Johnson & Johnson - $ 127 m
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In 2006, the UNGC and Bulgarian Charities Aid
Foundation ran a survey on CSR in BG:
 121 medium sized and big companies (100 employees or more) took part
 only 7% had a separate department for community work (the foreign ones follow practices from Western headquarters)
 overall CSR was not part of the long-tern company agenda (sporadic donations prevail)
 Cooperation with NGOs is very low
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 Larry Diamond’s explanation on developed democracy entails three developed and reinforcing arenas
 If one of them fails to function properly, obstacles to democracy are conveyed
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2 out of 10 people were voluntary members in any kind of
NGOs (2008)
9% of the NGOs in BG are actually functioning (2008)
75% of the state ministers and 90% of the mayors owned an
NGO (2000-2007)
The legal framework does little to incorporate NGOs in national legislation
Since 2007 the EU has poured $ 24 million as aid to
Bulgarian NGOs
Bulgarians usually perceive NGOs as business organizations, ‘cleaning’ corrupt activities, or quasi-state structures, which have pointless existence
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 In 2003, President Parvanov officially launched the UN
Global Compact in BG
 It links together 120 companies that voluntarily apply the 10 principles
 In 2010, the Association Global Compact Network
Bulgaria was established by 20 leading companies
 www.unglobalcompact.bg
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