BUSINESS ETHICS & SOCIAL RESPONSIBILITY

HAND OUT #7

CORPORATE SOCIAL RESPONSIBILITY (CSR) - is defined as a concerted initiative to contribute to sustainable

development through efforts that are economically, socially, and environmentally beneficial to stakeholders.
- The actions of an organization that are targeted toward achieving a social benefit over and above maximizing profits
for its shareholders and meeting all its obligations.
- It is a shared pattern of beliefs, expectations and meanings that influence and guide the thinking & behaviors of the
members of that organization.

SUSTAINABLE DEVELOPMENT – defined as an effort to strike a balance between maintaining the needs of the present
and the ability of future generations to meet their needs through the preservation of the environment

ASPECTS OF CORPORATE SOCIAL RESPONSIBILITY

1. ECONOMIC RESPONSIBILITY – it is the primary responsibility of a company to help develop the economy and
achieve a status of development on a par (same level or balance) with other countries; generate employment; and
distribute goods and services for public use and consumption.
2. LEGAL RESPONSIBILITY – company operations should be within the bounds of law. The company should follow
rules and restrictions dictated by law and comply with legal requirements.
3. ETHICAL RESPONSIBILITY – companies are expected to be ethical in their dealings with stakeholders, especially the
general public. A company operates ethically when it does not cause harm or threaten the life of anyone in the course
of operations.
4. PHILANTHROPIC RESPONSIBILITY – it is an obligation of a company to help the community in worthwhile projects
which are beneficial to the people in the community. This is a way of giving back to the community where the
company operates. Philanthropy is voluntary in nature.

MODELS OF CORPORATE SOCIAL RESPONSIBILITY

Three models of CSR which depict the different aspects of CSR and their relationship

1. THE PYRAMID MODEL – this model emphasizes the levels of expectations of the people comprising the four social
responsibilities starting from the economic to the philanthropic. The hierarchy of social responsibility shows the
order of decreasing importance starting from the baseline which is economic responsibility. The next layer us
legal responsibility while the third is ethical responsibility and the last is philanthropic responsibility.
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LEGAL
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ECONOMIC
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2. THE INTERSECTING CIRCLES MODEL – in this model, the four aspects of social responsibility overlap each other,
showing their interrelationships. The interrelationships allow for flexibility because managers are free to use the
company’s resources not solely on one aspect but undertake endeavors that address several aspects.
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LEGAL ETHICAL

ECONOMIC

3. THE CONCENTRIC CIRCLES MODEL – this model is similar to the Pyramid model where the economic social
responsibility is the core aspects. It is also similar to the Intersecting Circles model in terms of the interrelationships
of the four aspects.
- Although, the economic social responsibility is more pronounced and emphasized (this means that the
company should be profitable for the good of the general public).
- The concentric circles of legal, ethical, and philanthropic social responsibilities embrace economic social
responsibility (this means that all economic responsibilities should have legal, ethical, and philanthropic
aspects).
Example:
- In achieving profitability, the company should act morally in all its dealings (ethical)
- While complying with legal requirements, it should cooperate with the government in fighting inflation and
adopting measure to prevent pollution (legal)
- In reaping profits the company should have programs that will improve the social environment (philanthropic)

ECONOMIC
ETHICAL
PHILANTHROPIC
ECONOMIC
ETHICAL
PHILANTHROPIC

PRINCIPLES OF ENVIRONMENTAL MANAGEMENT

Environmental principles are classified according to development phases such as:

LIGHT GREEN
- This environmental principle states that a company becomes successful if it sustains competitive advantage but at
the same time complies with the law. Some companies have strict environmental standards to complement their
strategies, expertise, and technology. Thus, they issue environmental policies which fit their competitive advantage.
- Those who advocate light green principles prioritize the protection of the environment as a personal choice. For
these individuals, they believe it is a responsibility and a part of their lifestyle.

MARKET GREEN
- This principle promotes the creation of products and services that cater to the environmental preferences of
consumers. Many consumers now prefer to buy environment-friendly goods and services.
- Refrigerators and airconditioners with environment-friendly features have been very saleable.
 - The internet has been an effective channel for consumers to detect any irregularity or if an aspect of a product
poses potential harm to the environment. Customers then decide of they will make a purchase.

STAKEHOLDER GREEN
- This principle focuses on the preference of stakeholders. Stakeholder green has a darker shade that market green
because it focuses on a bigger group – the stakeholders. The wide range of people covering stakeholder green are
the customers, suppliers, community, employees, shareholders, and others.
- There are many environmental activities that support stakeholders such as requiring suppliers to meet
environmental standards in their processes or orienting employees on environmental issues. The community
benefits from policies on the proper disposal of wastes and eco-friendly packaging.

DARK GREEN
- Not many companies adopt the dark green principle. This propagates leadership in the industry through a high
level of commitment to preserve the environment. For many, this is very idealistic because it is difficult to lead
in a very competitive world by fully prioritizing the environment.
- Others may just attempt to adopt dark green principles but these are mostly superficial means of creating value for
all species in the environment. Nevertheless, companies which used the dark green principle have been successful
in reconciling their strategies with the preservation of the environment.