Corporate Social Responsibility

Definition
Corporate Social Responsibility
The duty of a corporation to create wealth in ways that avoid harm to, protect, or enhance societal assets.
1960
Appeared in academic literature. It has no precise, operational meaning. It is primarily a political theory, not a management or economic theory, because its central purposes are to control and legitimize the exercise of corporate power. 2

Corporate Social Responsibility

Different definitions
Is the extension of the corporate role beyond economic pursuits. Corporation has responsibility that extend beyond the production of goods and services at a profit. As members of society, organizations should actively and responsibly participate in the community and in the larger environment.

Fundamental Idea
Corporations have duties that go beyond carrying out their basic economic function in a lawful manner.
But a zone of discretion inevitably remains and the firm must therefore, voluntarily take additional actions to meet its full obligations to society.

Thus: CSR Evolved into!

To require more expansive action by companies largely because stakeholder groups have gained more power to impose their agendas, but also because the ethical and legal philosophies underlying it have matured to support broader action by managers.

Basic Elements of Social Responsibility 3 Principle elements:

Market Actions Externally mandated actions Voluntary actions

Market Actions
Are competitive responses to forces in markets.
When a corporation responds to markets, it fulfills its first and most important social responsibility. Critics believe that certain businesses, for instance, gambling, defense, tabacco, animal agriculture, and alcohol, are irresponsible no matter how profitable you are.
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Market Actions
Thus:
Such judgment do not invalidate the general rule that the overriding impact of a corporation on society originates in normal operations.

Mandated Actions
Are programs required either by government regulation or by agreements negotiated with stakeholders, such as union contracts or codes of conduct.

Voluntary Actions
This actions go beyond legal, regulatory, or negotiated mandates.
They sometimes call it legal plus because they exceed required mandates.
Ex. Charitable giving

Actions are unrelated to mandates but respond to public consensus.

Ex. Benetton Group (anti-death penalty ad campaign) later it was boycotted by consumers or those relatives of murdered children.
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General Principles of Corporate Social Responsibility

1. No universal rules but below are some guidelines

Corporations are economic institutions run for profit.
This is the greatest responsibility which provide economic benefits.

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General Principles of Corporate Social Responsibility

2. All firms must follow multiple bodies of law.

These Laws are:
Corporation Law and chartering provisions The civil and criminal laws of nations Bodies of regulation that protect stakeholders International Law

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International Law
The purposes of International Law:
Resolution of problems of a regional or global scope (such as environmental pollution or global warming), Regulation of areas outside the control of any one nation (such as outer space or the high seas), and Adoption of common rules for multinational activities (such as air transport or postal service).

International law also aims to maintain peaceful international relations when possible and resolve international tensions peacefully when they develop, to prevent needless suffering during wars, and to improve the human condition during peacetime.
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United Nations Security Council

The most powerful body in the United Nations. It has 15 members determine how the UN should resolve world conflicts. Britain, China, France, Russia, and the U.S. have the most power among other 15 nations. 14

International Law
International law began as a system governing the relations among sovereign states, and states have always been the primary legal entities affected by international law. As the global system has become more complex, however, international law has come to recognize and regulate international organizations, businesses, nonprofit entities, and individuals.
The emergence of international human rights law and, more recently, international criminal law reflects the fact that individuals today are direct subjects of international law in certain respects.

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General Principles of Corporate Social Responsibility

3. Corporations have a duty to correct the adverse social impacts they cause.
They should try to internalize external costs.
External costs is a cost not paid by a firm or its customers, but by members of society.
Ex. A factory dumping toxic effluent into a stream creates costs such as human and animal disease imposed on innocents, not on the company or its customers.

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General Principles of Corporate Social Responsibility

4. Social responsibility varies with company characteristics.

Such as:
Size Industry Strategies Marketing techniques Locations Internal culture Stakeholder demands Managers values
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General Principles of Corporate Social Responsibility

5. Managers should try to meet legitimate needs of stakeholders.

Primary responsibility are:
Customers Stockholders Employees

Secondary responsibility are:

Government Communities
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General Principles of Corporate Social Responsibility

6. Corporate behavior must comply with norms in an underlying social contract.

To understand this contract managers can study the direction of national policies and global norms as evidenced in legislation, regulations, treaties, trade agreements, declarations, and public opinion.

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General Principles of Corporate Social Responsibility

7. Corporations should accept a measure of accountability toward stakeholders and publicly report on their market, mandated, and voluntary actions.
This is to show transparency of the organization corporate activities to their stakeholders and other people who have interest to the said organization.

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Corporate Philanthropy
Philanthropy
Is concern for the welfare of society expressed by gifts of money or property to the needy or to institutions that advance social welfare.
Ex. Charity works

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Patterns and Magnitudes of Corporate Giving

Charitable giving is now a standard dimension of corporate social responsibility.

The basic motives for this are response to pressure, belief that it will monetary profit, desire for reputational gain, and altruism, or self-less concern for the welfare of others.

Altruism the desire to give to, help, or improve others and society with no expectation of self gain in return. 22

Strategic Philanthropy
The act of philanthropy presume a self-less motive of giving out moral duty to benefit the needy.
Companies gave to help the destitute and deserving while funding social goods such as education and the arts.
Thus it was recognize and helped corporate reputations, created goodwill, and improve the economy by strengthening society.

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Example of Strategic Philanthropy

Mattel donated $25 million to put its name on the childrens hospital at UCLA, now called Mattel Childrens Hospital. The company has no role in running the hospital, although it gives toys to patients. Its large gift contributes to a compassionate corporate image among toy buyers. Adding the company name to the hospital increases brand recognition. These benefits reinforce the commercial goals of a toy company while also helping sick children.

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Sources of Pressure for Social Responsibility

Communities Competitors Advocacy Groups Stockholders/Inves tors Customers Employees Events/Crises Governments Multilateral Organizations Philanthropic Requests

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Key Elements of Managing the Social Response

Leadership Mission Statements Managing Social Issues The Life Cycle of Issues Alignment of Structure, Culture, and Processes Corporate Social Reporting
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Constraints in Business Practices

Corporate cultures sustain values and beliefs that influence how people relate to one another.
3 Different types of Controls or constraints
Commitment of Top Management Codes of Ethics Compliance Programs

Commitment of Top Management

Leaders must show commitment because they act as a role models and they teach by example.
Ethical business must be carefully planned and continuously monitored by committed executives and managers with the expertise to instill in all members of the organization the importance of ethical behavior.

 3 steps that top managers can take to discourage unethical behavior.

Draw a clean line between the behavior youll tolerate and the behavior youll have to punish. Invest the time and money in making sure that those distinctions are understood and remembered Put the fear of God into would-be violators by conspicuously raising the risk of exposure.
Punishing wrongdoers fairly and swiftly.

Compliance Programs
This is enforcement of codes of ethics and conduct.
If no enforcement then the codes of ethics will just be words on paper.

Compliance training must be given that alerts people to policies, regulations, and laws that establish acceptable behavior within a company.

How Companies Contribute to their Communities

Donate their products Involve employees in the activity. Involve other companies. Leverage the companys expertise Enlist suppliers and customers

Approaches to Social Responsibility

1. The Resistance Approach
When they actively fight to eliminate, delay, or fend off the demands being made on them.
They wait for demands to be made and then responds to them by evaluating alternatives. Companies are continually look to the needs of constituents, constantly staying in touch, sensing their needs, and trying to find ways to assist them.

2. The Reactive Approach

3. The Proactive Approach

Responsibilities to Stakeholders
Stakeholders
Those who have an interest in or who are affected by how a business conducts its operations.
Owners and stockholders Employees Customers Suppliers Communities

 Owners
Assets must be conserved and used effectively and efficiently

Employees
Should enjoy equal access to the rights, responsibilities and privileges afforded by employers.

 Customers
Business and their employees owe fair and honest representation of their products and services to their customers.

Supplies
Suppliers and business should build relationship based on mutual trust.

Communities
Concern on the quality of life in a community, its air, land, and water, its specific needs all come to play.

Forces Shaping Future Business

Better-quality management Better production Growing use of technology Use of computers Environmental protection Control of pollution Expansion beyond national boundaries.

 The relationship between the corporation and society is inseparable, in that society needs corporations for products and corporations needs society for profits.

THE LAW AND BUSINESS CODE

 Law
Described as a system of rules governing human conduct.
The object of law is to ensure that persons or groups deal with one another as fairly and justly as possible and to provide as a means of settling conflicts that may arise.

Private Law
It regulates relations between private individuals.
Each person has the right for
Protection (Human rights) Imposition of duties between citizens provide the content of the private law.

Two classification
Tort Law Property Law

Tort Law
Definition
Any private or civil wrong or injury involving a breach of contract. Common torts are:
Trespass Assault Battery Nuisance Slander and Libel Invasion of privacy - Automobile accidents - Burglary - Others

To Be Legally Held When:

The accused person must have acted with intent to harm or must behaved negligently and without the plaintiffs or complaints consent. If the plaintiff contributed to the harm or assumed the risk beforehand, the defendant is not liable for damages.

Private Property
Property
An exclusive right to control an economic good. Possession of a good and the owner has the opportunity to take advantage of its use in the further production of more goods and has a valid claim of ownership.

Business Law
All business transactions were conducted on a high ethical state.

Associations had adopted the Code of Ethics.

Code
An organized collection of laws or legal procedures on a particular subject. It is usually submitted or approved by the legislative body to clarify or revise laws already exist.

Historical Codes
Twelve Tablets
The first Roman Code Written about 415 B.C Emperor Justinian and his Corpus Juris Curies created this code. It was also the basis of The Code of Napoleon in 1804 (France) that use as a guide for European Development.

Cont
Code of Hammurabi
6th of 11 Kings who was King Hammurabi of Babylon Consist of:
Preamble Epilogue 282 sections

Cont
282 sections contains to the dealing of:
Personal property Real estate Trade Business Labor Family Personal Injuries

Cont
The code also protects:
Debtors Slaves Workers Women Use for appealing to courts whose judges are unjust.

Cont
Code of Kalantiao
Use by the native Filipinos before Magellan came. Contains:
Listing of crimes Stated punishment (dipped in boiling water)

Anti-Graft and Corruption Practices Act RA # 3019 effective August 17, 1960

 Business Codes
Principles or standards of fair and ethical practices observed or agreed upon by particular industries or business groups.
It became known as Business Ethics or Code of Ethics

Codes of Ethics
To be effective and influential in an organizations culture and command structure, codes of ethics must be specific enough to give concrete guidelines and must be re-enforced by the examples set by key corporate figures.

 Characteristics of Codes of Ethics

They are visible guidelines for behavior at all levels. They are an unchallengeable basis for firing an unethical employee, even when his or her action is not, strictly speaking, against either the law or the specific terms of the job. They protect all personnel from the pressures of the market, which tend to incite desperation and unethical behavior. They remind employees to look beyond the bottom line and they provide a touchstone for appeals through the hierarchy.

Guidelines for Acting Ethically

Consider other peoples well-being, including the well-being of nonparticipants. Think as a member of the business community and not as an isolated individual. Obey, but do not depend solely on, the law. Think of yourself, and your company, as part of society. Obey moral rules Think objectively Ask the question, What sort of person would do such a thing? Respect the customs of others, but not at the expense of your own ethics.

Human Rights
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Human Rights
Is also our liberty (freedom)
Right of individuals to act as they choose.

Develop the ability to value our human rights. Understand, respect, and protect those values that are related to human rights. Teach, learn, and maintain the values that preserve our life and dignity. Evaluate and react to any violations of human rights. 56

Human Rights Value

Franklin D. Roosevelt Jan. 6, 1941 Envisioned a postwar world in which four freedoms would be guaranteed: Freedom of speech and expression Freedom of worship Freedom from want Freedom from fear
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Core Values of Human Rights

1. Learning about human rights
United Nations Declaration of Human Rights Equality Justice Love

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Universal Declaration of Human Rights

Prepared by the Commission on Human Rights of the Economic and Social Council of the United Nations. It described the 30 articles of human rights among these are:
Right to life, liberty and security of person Freedom of conscience, religion, opinion, expression, association, and assembly. Freedom from arbitrary arrest Fair and impartial trial
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Universal Declaration of Human Rights

Freedom from interference in privacy, home, or correspondence. To a nationality To a secure society and an adequate standard of living To education To rest and leisure

Declaration also affirms the:

Rights of every person to own property To be presumed innocent until proven guilty To travel from a home country at will and return at will
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Universal Declaration of Human Rights

To work under favorable conditions, receive equal pay for equal work, and join labor unions at will. To marry and raise a family To participate in government and in the social life of the community

Overall it involves all civil and political rights, economic, social and cultural rights
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Core Values of Human Rights

2. Learning How to Uphold Human Rights
Acquisition of relevant knowledge is not enough but it must be develop and practice in order to defend and promote those values of human rights. Skills that are:
Effective communication Co-operation Negotiation Decision Making Non-violent action and campaign
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Core Values of Human Rights

3. Learning through Practicing Human Rights
Uphold and reinforced the learned skills and values. It must be encourage to do it by:
Interpersonal relationships Decrease level of anxiety Promote divergent and constructive thinking Encourage peer learning Encourage open, effective, creative and accurate communication
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Violation of Human Rights

1. Too much emphasis on economic consideration at the cost of equality and justice for common people. 2. Ignorance of law and customs 3. Lack of education 4. Vested interested of a rich and powerful minority 5. Poverty 6. Inequitable distribution of wealth 7. Certain traditional norms with respect to the status of women in society. 8. Families becoming more nuclear in nature, so that the aged are becoming neglected. 64

Bill of Rights
is the declaration and enumeration of the individual rights and privileges which the Constitution is designed to protect against encroachments by the government, or by individuals or groups of individuals. It is a charter of liberties for the individual and a limitation upon the power of the State.
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Bill of Rights
Its basis is the social importance accorded to the individual in a democratic or republican state, the belief that every human being has intrinsic dignity and worth which must be respected and safeguarded. Classes of rights
Natural rights (right to life and right to love) Constitutional rights Statutory rights (right to receive minimum wage)
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Bill of Rights
Sec. 1
No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws

Sec. 2
Private property shall not be taken for public use without just compensation. State power (eminent domain, police power, taxation
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Bill of Rights
Sec. 3
The right of the people to be secure in their persons, houses, papers, and effects against unreasonable searches and seizures of whatever nature and for any purpose shall not be violated, and no search warrant or warrant of arrest shall issue except upon probable cause to be determined by the judge, or such other responsible officer as may be authorized by law, after examination under oath or affirmation of the complaint and the witness he may produce, and particularly describing the place to be searched, and the persons or things to be seized.
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Bill of Rights
Sec. 4
The privacy of communication and correspondence shall be inviolable except upon lawful order of the court, or when public safety and order require otherwise.

Sec. 5
The liberty of abode and of travel shall not be impaired except upon lawful order of the court, or when necessary in the interest of national security, public safety, or public health.

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Bill of Rights
Sec. 6
The right of the people to information on matters of public concern shall be recognized.

Sec. 7
The right to form associations or societies for purposes not contrary to law shall not be abridged.

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Bill of Rights
Sec. 8
No law shall be made respecting an establishment or religion, or prohibiting the free exercise thereof. The free exercise and enjoyment of religious profession and worship, without discrimination or preference, shall forever be allowed. No religious test shall be required for the exercise of civil or political rights.
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Bill of Rights
Sec. 9
No law shall be passed abridging the freedom of speech, or of the press, or the right of the people peaceably to assemble and petition the Government for redress of grievances.

Sec. 10
No law granting a title of royalty or nobility shall be enacted

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