Corporate Social Responsibility
Economic
Profits
Environment
Social
Planet
People
Nathalie CRUTZEN
HEC-Management School of the University of Liege (Belgium)
ncrutzen@ulg.ac.be
1
"Sustainability has been our
salvation"
Ray Anderson, CEO of Interface flooring
2
"Sustainability represents the
greatest opportunity for the next
generation"
Lee Scott, Former President and CEO of Walmart
3
Today's agenda
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Student introductions
Online assignment
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Symbols of CSR / sustainability
Readings: The Economist, Matten and Crane
Context
The case for and against CSR
Fundamental theories and concepts
Company examples
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KLM
Starbucks
Wal-Mart
…
4
You!
Your name,
Where you're from
and
Something which characterizes you…
which makes you distinctive
5
Pre-module assignment
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Symbols of CSR / sustainability (Session 1)
Video / Film Clip on CSR / Sustainability
(Session 4)
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CSR heroes (Session 9)
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NGO and NPO heroes (Session 3)
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Sustainability report presentations
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Begin on Friday 15 June. All presentations take place in the second half of class ,
after the break (10:45)
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Friday 15 June – Siemens advocates and critics
Monday 18 June – Danone advocates and critics
Tuesday 19 June – GSK advocates and critics
Wednesday 20 June - Toyota advocates and critics
Format
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Powerpoint, in English
Length of presentation: 20 mn. followed by 10 mn. Q/A session
In general, 20-25 slides
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Each person in group should have a role in preparing and presenting.
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Resources on Wiki
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Links to sustainability report
Points for advocates to cover
Grading criteria / evaluation sheet
Good student examples from spring CSR module taught at ESC Rennes
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Make it interesting - feel free to be creative!
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Break up into groups for 15 mn. to introduce yourselves and schedule your
preparation time.
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Introductory video
http://www.youtube.com/watch?v=GggyVO21hw8&feature=watch_response
8
Context
Worldwide scandals and disasters
(Ex. EnRON, B. Madoff; Exxon Valdez, BP oil spills; Nike, Gap)
http://www.youtube.com/watch?v=MbjC9SMKClE
http://www.youtube.com/watch?v=pkEYtsUkFRY
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Increasing transparency (Internet, NGOs)  “Firms are being
WATCHED”
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The Financial Crisis (September 2008) and the related worldwide
economic crisis
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!! Increasing awareness for global environmental and social
challenges
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Pollution, water withdrawal, biodiversity, climate change,
Poverty, health, fight for talents, etc.
http://www.youtube.com/watch?v=a9I3Q6-ZSTI&feature=related
http://www.youtube.com/watch?v=YsMw4TQ6DY4
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Major Environmental Issues
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Climate change
Energy
Water
Biodiversity and land use
Chemicals, toxics, heavy metals, nuclear waste
Air pollution
Waste management
Ozone depletion
Oceans and fisheries
Deforestation
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Climate change
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A primer by National Geographic
http://www.youtube.com/watch?v=-MY-i_kdwe0
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Consequences
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Hotter temperatures – 2003 Europe (what about 2011/2012?) –
26,000 deaths
Rising sea levels
Disrupted eco systems
Increased ocean temperatures and intensity of windstorms
Environmental refugees
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Biodiversity
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Biodiversity is the degree of variation of life forms
within a given ecosystem, biome or an entire planet
Biodiversity is a measure of the health of ecosystems.
Greater biodiversity implies greater health
http://www.youtube.com/watch?v=V1VYmpTikgw
European Network for Biodiversity
http://www.enbi.info/forums/enbi/index.php
 Global Issues
http://www.globalissues.org/issue/169/biodiversity
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Social Issues
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Aging of the population
Health
Poverty
Racism
Well-being
Stress
Local development
Etc.
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Sustainable Development
http://www.youtube.com/wat
http://www.youtube.com/watch?v=FS7o4g5kzMM&feature=related
ch?v=B5NiTN0chj0&feature=related
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Context
Sustainable Development
•
If one wants to favour a sustainable development of
the Society/World, need to consider three
complementary and interdependent pillars :
–
–
–
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Economic dimension - creation of wealth for all thanks to
a sustainable production and consumption
Environmental dimension – preservation and adequate
management of natural resources
Social dimension – equity and involvement of all social
groups
Separately, each dimension does not contribute to
an optimal development of the World.
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Sustainable Development
Taxes paid
ROI, sales
Economic
Air & water quality
Energy usage
Waste treatment
Job creation
Profits
Environment
Social
Planet
People
Social: Diversity
Labor practices
Societal: Human rights, unemployment
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What is CSR?
Responsible management?
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Corporate Social Responsibility (CSR)
•
!! False friend !!
–
–
•
•
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Corporate?
Social?
Many definitions – not a generally-accepted one !
Contribution of (individual) firms to the Sustainable
Development of the Society
“(Voluntary) integration, by firms, of social and
environmental concerns in their business operations and
in their interaction with their stakeholders" (European
Commission, 2003)
 Sustainable and Responsible Businesses
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What is CSR?

Corporate social responsibility (CSR) is about how
businesses align their values and behavior with the
expectations and needs of stakeholders - customers
and investors, but also employees, suppliers, communities,
regulators, special interest groups and society as a whole
(the public sphere).
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CSR demands that businesses manage the economic, social
and environmental impacts of their operations to maximize
the benefits and minimize the downsides.
CSR  "ESR" Environmental and Social Responsibility"
Source: http://www.csrnetwork.com/csr.asp
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Corporate Sustainability is
a business approach
that creates
long-term shareholder value by
embracing opportunities
and managing risks deriving from
economic, environmental and social
developments.
Dow Jones Sustainability Index site
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Corporate sustainability leaders, [responsible managers]
achieve long-term shareholder value
by gearing their strategies and management
to harness the market's potential
for sustainability products and services
while at the same time
successfully reducing and avoiding
sustainability costs and risks.
Dow Jones Sustainability Index site
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What does CSR mean for these companies?
http://www.youtube.com/watch?v=P_zgtlW2TWY&lr=1
http://www.youtube.com/watch?v=Nly_OdvORQY
http://www.youtube.com/watch?v=Is_HRAttonE&feature=related
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Core/central characteristics of CSR
(Crane et al., 2008)
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Voluntary (beyond the law)
Managing “externalities” (side effects of economic
behavior that are borne by others but, traditionally, that are
not taken into account in a firm’s decision making process and
not included in the market price for goods and services)
Multiple stakeholder orientation
Alignment of social and economic responsibilities
Practices and values
Beyond philanthropy (beyond largesse towards the less
fortunate)
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Historical development of CSR
Early 20th century
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Europe
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Tendency to address social issues through governmental policies
and collective actions
Paternalism of big business: housing, education, healthcare
provided
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France: Michelin tires, Godin (ovens)
England: Cadbury’s – Germany: Krupp
USA
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“CSR is essentially a US idea” (“limited role” of the government)
Particularity of the US system (fairly unregulated markets for labor
and capital, low levels of welfare state provision, etc.)  many
social issues have traditionally been at the core of CSR.
Philanthropy (10X higher than in UK) (limited role of the government +
tax incentives): from Carnegie and Rockefeller to Warren Buffet and
Bill/Melinda Gates foundation
http://www.gatesfoundation.org/Pages/home.aspx
http://www.youtube.com/watch?v=7b51coOxZKo&list=PL7BD4E280453ECD7D&index=3&feature=plpp_video
http://www.youtube.com/watch?v=oyBVIcV6e5k
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Forces for change
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Civil Rights Movement (1950s and 60s, USA)
NGO activism (Greenpeace’s and Amnesty International’s
boycotting campaigns)
Regulations resulting from industrial catastrophes (Bhopal, Exxon
Valdez)
Growing awareness of ecological issues: global warming,
biodiversity. Rejection of materialism in late 1960s.
Historical divides enhanced by globalization and financial crises:
North/South, social, rural/urban  precariousness, social exclusion
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CSR boom starting in 1990s
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Sustainable Development (SD) and CSR are became integrated by a
growing number of companies of all sizes in different industries and in
different countries
Fashionable phenomenon  profound movement
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Paul Hawken's Wiser Earth movement
130,000 organizations working toward social and environmental justice.
The most advanced companies have put in place specific strategies,
structures, action plans, and reporting tools
These participate in specialized networks to exchange good practices
throughout their supply chains  ripple effect in the entire industry.
Ex. Cefic (European Chemical Industry Council)
http://www.cefic.org/sustainability/Cefic-Sustainability-Report-2011-2012/
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Why bother with CSR?
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To do what others do?
To save the planet?
To feel less guilty?
To do “something”?
To improve the company's reputation?
 Several motivations :
 Market reasons
 Competitive reasons
 Legal reasons
 Marketing reasons
 Real values
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Not everyone agrees…
"Business only social responsibility is to maximize
profits, within the limits of the law. A company ’s major
contribution to general welfare is the efficient
production of goods and services. Social action should
be left up to concerned individuals and government
agencies."
"CSR is a fundamentally subversive doctrine".
Milton Friedman,
American Nobel
Economist, 1973
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Friedman's arguments against CSR
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The purpose of a business: maximize profits within the
limits of the law
Only human beings – not corporations - have moral
responsibility for their actions.
The manager is an agent serving the interests of his
principal, those who own the corporation, and should
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Act solely in the interest of the shareholder
Not spend shareholders' money at her/his discretion
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Countering Friedman's arguments
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At the time Friedman voiced opposition to CSR, his arguments could
and did not take into account phenomena which occurred
after the 1970s:
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Globalization: the power and mobility of MNCs (+ scandals)
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Increasing transparency (Internet) – firms are being watched !
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Governmental failure in the west, the collapse of communist block.
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High unemployment
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Environmental risks which
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know no borders
have social, political and economic effects.
His arguments rest on assumptions about
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The nature of the modern corporation
The role and capacity of governments
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The case for CSR
Henry Mintzberg, professor
at McGill U., Montreal
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Moral imperative of social responsiveness – companies should
anticipate and prevent social problems
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Enlightened self-interest: "it pays to manage people right"
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Watson & Wyatt survey: link between HCI and share price
Examples: Whole Foods, Southwest Airlines
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Sound governance avoids government regulation.
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A firm's strategic decisions have economic, social, and political
consequences
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Renault's decision to outsource Clio production to Turkey
Dow's decision to sell napalm to the U.S. Army in Vietnam
Copper mining in Zambia
The Economist reading's case for CSR?
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The “business” case for CSR
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4 classifications of CSR theories
(Garriga and Melé in Crane et al., 2008)
Instrumental
theories
Political theories
Integrative
theories
Ethical theories
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1. Instrumental theories
Focus: Achievement of economic objectives through social
or environmental means / activities
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Sees CSR as a strategic tool to create wealth
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Assumes positive “CSR  financial performance”
correlation
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3 approaches:
A.
B.
C.
Maximize shareholder value
Strategies for achieving competitive advantage
Cause-related marketing
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Instrumental theories
B. Strategies for achieving competitive advantage
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Resources  long-term objectives  competitive advantage
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Example: Bottom of the (economic) pyramid or BOP strategy
Make profits by "serving" the poor class of 4 bn. consumers through
disruptive innovations - products / services produced at a lower cost,
with fewer capabilities, adapted to target
 These innovations can improve social and economic conditions
http://www.youtube.com/watch?v=79JOHMrs8m4
http://www.youtube.com/watch?v=CPnx6gLcfK4&feature=related
 Examples:
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Dacia Logan (Renault) in Romania, now in France
 Tata India automobiles
http://www.youtube.com/watch?v=3WB87eo_obU
 Solar energy panels in African villages
 Vodafone and Safaricom: M-Pesa – Mobile Phone Payment solution in Kenya
http://www.youtube.com/watch?v=B6m3xb6T5kk
 Grameen Bank : micro-credit and mobile phone service in remote areas
http://www.youtube.com/watch?v=TPk2gRuIdj0&feature=relmfu
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Instrumental theories
C. Cause-related marketing
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Altruistic activities used as a marketing instrument
Contribute to a designated cause in order to create a reputation for
a firm as "reliable and honest"  Increased customer loyalty and
revenues
"Enlightened self-interest" - linking the company to a charitable
cause  win-win situation
One example:
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Avon's breast cancer foundation
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2. Political theories
Focus: Responsible use of business power in the political arena
A. Corporate
constitutionalism
B. Corporate
citizenship
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2. Political theories
Corporate citizenship
http://www.youtube.com/watch?v=7bsMpShiOp0
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Definition: Companies acting responsibly (3 Ps), as citizens (ie. members
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Corporations enter the area of citizenship at the point of government failure
– "welfare state" crises and globalization

of a community), toward the global and local communities
Deregulation process, decreasing costs + technological improvements have
meant that some MNCs have more economic and social power than some
governments

They can act as citizens  what are their rights, their responsibilities and
the potential partnerships?
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Example: Carrefour Brazil in 2008 collected 319 tons of clothing, water an
food in response to torrential rains which left many people homeless
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Forbes' rating of 100 top corporate citizens
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Criteria: environmental impact, climate change, human rights, philanthropy,
employee relations, financial performance and governance
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Corporations & Countries
W al-Mart
Exxon
219.8
GM
191.6
BP
Ford
177.3
174.2
162.4
Daimler
Ch rysler
136.9
210.1
188.6
175.7
163.7
Austria
Poland
No rway
125.9
162.4
130.3
Swed en
GE
Den mark
In donesia
123.5
Venezu ela
Annual Sales (B$,2004)
GNP (B$)
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3. Integrative theories
Focus: How business integrates social demands, as it depends on
society for its existence, continuity and growth (legitimacy, prestige)
A.
B.
Stakeholder management: responding to and
balancing the interests of stakeholders – any person or
group which affects or is affected by the firm 
Tomorrow's topic (Session 2)!
Corporate social performance: Principles of CSR,
Processes (stakeholder management, assessment,
management) and Outcomes (social impacts)
Example: Caroll's pyramid of social responsibility
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4. Ethical theories /
approach to CSR
Based on principles that express the "right thing" to do
in order to achieve a "good society“
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Anchored in moral philosophy theories
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Normative – "what should be" – as opposed to
descriptive – "what is"
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Two approaches
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A.
B.
Universal rights
Common good approach
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4. Ethical theories
B. Common good approach
The common good is the supreme good of the society. A concept
traditionally confined to philosophy, theology, and economics, more than
management
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 Business has to contribute to the common good, because it is part of society.
 Business should neither be harmful to nor a parasite on society, but purely a
positive contributor to the well-being of the society
General categories of common goods:
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Means of existence
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Access to drinkable water
Basic alimentation
Energy
Habitat
Health
“Means” of co-existence between peoples
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Freedom of information
Cultural diversity
Civil and political rights
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Common good
Means of existence issues
Environmental
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Climate change, protecting the biosphere
Ozone layer depletion
Pollution: air, water, noise
Access to water
Land use and pollution (chemicals, toxics, heavy metals, nuclear wastes)
Resource depletion
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Oceans and fisheries  Biodiversity
Deforestation
Energy
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The end of oil
Renewable energies: wind, solar, water, biomass,…
Social issues
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Poverty: the north-south divide
Economic development in emerging countries
Overpopulation
Inequality – growing in western countries
"The Future We Want" - Improving the urban environment from "Force for Good"
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Summary
CSR is good business
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Improves reputation, brand image, and trust
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Higher customer loyalty
Attraction and retention of top talent and employees
Benefit of doubt in crisis
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Uncovers previously hidden commercial opportunities and potentially new
markets
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Reduces costs
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Reduces risks: decreases vulnerability to misconduct & fines
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Attracts investment capital
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References
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Crane, A. & Matten, D. (2008), Corporate Social Responsibility:
Readings and Cases in a Global Context. Routledge, 2008.
Esty, D. C. & Winston, A. S. (2009), Green to Gold: How Smart
Companies Use Environmental Strategy to Innovate, Create Value,
and Build Competitive Advantage, John Wylie & Sons
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Presentation of CSR Symbols
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Discussion – Articles
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“CSR is only relevant for large private sector companies” –
Critically discuss and provide other examples
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CSR in different organizational
contexts
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CSR and the private sector
Large corporations
 SME’s
“20% of SMEs reported on their CSR as opposed to 62% of large businesses” (2003)
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CSR and the public sector
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Government still supply a lot of goods and services – Public sector organizations
face similar claims, expectations – even more pronounced
 By definitions, “social aims” - run as “non-for-profit” organizations
 Particular impact on Society (eg. Quasi-monopolistic position)
Roles
 Incorporating CSR in their values, strategy and operations
 Promoting CSR within their sphere of influence
CSR and civil-society organizations
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CSR in different regions of the world
Is CSR similar in various parts of the world (developed,
developing or emerging countries)?
Could you give some insights about CSR
approaches/characteristics in your countries?
Context, evolution, examples
China, Colombia, Egypt, Finland, Germany, Greece,
Lithuania, India, UK, US
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CSR in a global context
One-size-fits-all approach cannot work: different contexts,
differents priorities
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Session 2: Stakeholder
Management
http://knowledge.wharton.upenn.edu/article.cfm?articleid=3009
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