Corporate Social

Responsibility

Dr Niklas Kreander
 Quotes
 “No organisation can be socially responsible
without being environmentally responsible – and
vice versa” John Pearce
 “There is little consensus regarding what
constitutes socially responsible business”
CFS Sustainability Report 2003
 “Consumers are more literate about corporate
social responsibility. They know they have to
look at a whole picture of the company’s
performance” Paul Pelizzari, EthicScan
 Quotes
 “Social responsibility –that most naïve of
concepts- represents our best hope for reversing
that trend” (towards utilitarianism and squeezing
out ideals, beliefs, feelings, ethics and a sense of
purpose) Minzberg (1983)

 “Without responsible and ethical people in

important places, the society we know and wish
to improve will never survive” Minzberg (1983)
 Background
 Corporate Scandals:
 Enron, MCI Worldcom, Parmalat…
 70% of UK respondents in 2003 Thought that
business does not pay enough attention to its
social responsibilities (Mori Survey)
 Specific ethical guidelines in Exodus and
Deuteronomy vs Friedman 1971 “corporate
responsibility is to obey the law and make
profits”
 Background
 UK Turnbull report added Reputation and other
non-financial risks for reporting to shareholders
 UK minister of CSR appointed in 2000 (first in
the world)
 UK Business in the Community: Corporate
Responsibility Index launched in 2002
 UK: Two all parliamentary groups on Corporate
Responsibility; One on CSR and one on SRI
 The EU has taken interest: CSR whitepaper and
organised CSR conferences in all EU countries
 Why get involved?
 Avoid costly litigation
 ChevronTexaco are sued for $6 billion about water
pollution in Equador (1)
 8 US states & NY City have sued 5 largest energy
companies about CO2 emissions (2)

 Avoid Consumer Boycotts

 Nike, Shell…

 Stay ahead of legislation

 Why get involved?
 Positive Benefits
 It is the right thing to do
– Stakeholder theory, Broader resp. Int. evidence

 Some claim economic benefits

– Buried treasure, ACCA CSR report…

 Reputation
– Staff morale
– Recruitment
– Inclusion in SRI funds & indices
 What is a responsible company
like?
 Depends on: Model Followed (GOA 56-62)
 Depends on firm objective(s)/priorities
Some suggestions (moral minimum)(*)
 (1) A firm which addresses impacts of its key
businesses and is willing to change
 (2) A firm which treats people & planet better
than law requires and its peers does
 (3) A firm willing to say NO to
customers/suppliers for env. & soc. reasons
(1) A firm which addresses the
impacts of its key businesses
Taking steps to mitigate harm
-> impacts on businesses & markets firm is in
 Restraint in use of resources (DesJardins, 98)
-> How can this be achieved? (conflict with growth)

Co-operative Insurance Services, Manchester

 CIS publishes voting record (Accountability)
 CIS Engagement approach for all assets
 CIS Environ ethical fund
 (2) A firm which treats people & planet
better than law requires and its peers

 Recognise problem(s) & legal compliance

 Example: Neste, double hull/bottom tankers

 Example: CFS recycling and reuse resulted in

financial gain of £260000 in 2003

 Open reporting (Accountability)

 Further points on business
environmental responsibility
 DesJardins (1998) principles (1)
• “renewable resources ought not to be used at rates that
exceeds the systems ability to replenish itself”
• “Non-renewable resources can be used only at rates at
which alternatives are developed”
• “Wastes and emissions should not be generated at rates
that exceed the capacity of the eco-system to assimilate
them”

 Environmentally Responsible businesses would be

those that perform best against principles above
 A firm willing to say NO to
customers/suppliers
for environmental & social reasons
 Co-operative bank turned down 11 companies
referring to human rights and a further 10 due to
animal welfare concerns in 2003 (total 45)

 SustainAbility turned down Monsanto

 Shell ended a joint venture and terminated 49
contracts due to conflicts with their business principles
 Different views of CSR
 BT considers CSR to be the voluntary actions a
company takes to contribute to sustainable
development
 SD is also about “doing the right thing” (change)
 We would need to add mandatory/involuntary
actions to BT’s view for it to be meaningful
 ACCA considers CSR to be more “best practice”
or “doing things right” within current context
(not much change)
 Risks with CSR
 “Papertiger” – window dressing - Spin
 -> little if any substance – Enron
 All voluntary -> ignored by majority
 Ignores the real issues (Monsanto) (1)
 Difficult to operationalize (a company may have
policies but if 40% of employees don’t know…)
 Boundaries caused by socio/economic system
(pays to be good but not too good…) (2)
 Problems with CSR
Different models (company objectives lecture) yield
different answers
 Responsible to whom?
 Responsible for what?
 How to deal with conflicts between:
Environmental/financial & social issues

 Can CSR be linked to Sust. Development?

 Difficulties for CSR
 Taxes (transfer pricing)
– What level of tax payment is responsible? (1)

 Political donations/lobbying (Kirman PhD)

– See Collison 2003 and Beder 1997

 Global standards (2)

– Example: Gap “Few factories if any are in compliance
all the time” (3)
 Corruption & Bribes
 Arguments Against CSR
 The Business of business is business!(1)
– Especially Milton Friedman

 Business executives not qualified to make

“social” decisions (2)
– Trained to focus on profit making (only)

(3) The structure of a corporation opposes CSR

See Minzberg 1983 for details

 Answering arguments
 If CSR is good for business then (1) is no
objection (a)
 If CSR is morally right then (1) loses some
force (b)
 (2) Some executives may be qualified to make
social decisions
 (2) We can all take advice (and we do)

 (3) Change compensation (&other) systems

 Conclusions
 CSR is a contested but important area
 It was argued that a responsible company
must 1) act responsibly in its core business
 2) Meet and exceed legal demands
 3) Be willing to say no to (some)customers
 There are serious risks/problems with CSR
 There are limits to what listed companies
can (and are willing) to do
 Question
 To what extent can companies be
socially responsible?

?
?