Ultimate Foundation of CSR: Where Do We Base Our Ethico-Logical Arguments?

Ethics

=A specialized study of what is right or wrong =It concerns itself with the correct application of some fundamental moral principles, such as business decisions Therefore, to be ethical is to determine and policies. whether a particular behavior, decision,
or action of an individual is morally right or wrong. Then act accordingly.

Business Ethics and CSR

Business ethics first, then CSR.

A Philosophy of management that can

be both personal and corporate Goes beyond public relations and profitability The big challenge is to actually implement and sustain it. Requires the involvement of everyone Aspiration for excellence

Business ethics first, then CSR.

Individual conscience before one makes decision

Moral accountability of a group of individuals

A Philosophy of management that can be both personal and corporate

The Ethical behavior of a corporation depends to a large extent on the moral conviction of its CEO and managers

Goes beyond public relations and profitability

CSR
Sales go up

Good image

CS You practice ethics because its R

Do not practice business ethics & Corporations do not benchmark CSR to do public relations and increase sales

your philosophy of management; You benchmark CSR because it is the right thing to do.

The big challenge is to actually implement and sustain it. Host community Profit motive and Customers corporate gain serve Employees the Competitors Interests of the Government various Environment stakeholders: Profi The big challenge is to actually share t resources with all,

Requires the involvement of everyone

CSR includes:
Code of conduct Corporate citizenship Employee volunteerism Resource sharing and management Social investment and social development

It believes that the more people are engaged the better

Aspiration for excellence

Excellence is an open-ended goal, which means a personal and corporate decision to enter the room for improvement and become better.

When business does not attempt to see a rigorous respect for the moral, cultural and spiritual requirements, based on the dignity of the person and on the proper identity of each community... Then all the rest (availability of goods, abundance of technical resources applied to daily life, a certain level of material well-being) will prove unsatisfactory and in the end contemptible -Pope John Paul II, 1987

papal

Mutual Attributes of business ethics and CSR

Both business ethics and

CSR are born with universal values. Both business ethics and CSR are practical Business ethics and CSR are all about firm conviction

Both business ethics and CSR are born with universal values. Honesty truth Telling the
Indonesia n

SWI SS

Italia n

Italian

Providing assistance to a needy person Patience Protecting the environment Business integrity, etc. False advertising Bribery & extortion Technology piracy Misrepresentation Collusion or cartel Tax evasion Unfair competition Rights & duties truthfulness

Saudian

Filipin o

There is only one universal language for all business practitioners and professionals everywhere- TRUTH,

Both business ethics and CSR are practical

We dont simply plan our corporate involvement We apply it to day-to-day operations as part of our core business It is not enough to recall principles, state intentions, point to crying injustice and utter prophetic denunciations declare Pope Paul VI Words will lack real weight unless they are accompanied

for each individual by a livelier awareness of personal responsibility and by effective action - Octogesima adveniens, 48

CSR

Busine ss Ethics

Both are not concerned only with orthodoxy (correct policy) but also with orthopraxis (best practice)

Business ethics and CSR are all about firm conviction Ethics is a fixed standard, objective, permanent, and grounded on the strongest convictions about what is right and wrong.
It necessarily refers to the myriad extraordinary and ordinary decisions and practices, which men and women of goodwill make, and the lasting values for

Union Carbide pesticide plant in India

On the night of December 2, 1984, the deadly

methyliscynate gas, a highly toxic chemical (500 times more poisonous than cyanide) exploded Towns of Jaipraksh and Cola, where hundreds were killed instantly in their bed, choking helplessly in violent spasms. The eyes of thousands were burned and blinded, and still many thousands more suffered lesions in their throats, nasal and bronchial passages. Atleast 2,000 people lay dead and 200,000

From the Perspective of both ethics and law

Ethic It is ethical because someone or some group s leaders were socially responsible for what of
occurred.

Legal
It is Legal because it has something to do with the observance of the law.

CEO of Wall Street says:

Money never sleeps, and he tells a competitor to his face: Your interest is like mine... Its making a lot of money. The top executives down the rank-and-file employees are paid precisely because of that: To help the company make a lot of money for the shareholders. It will be a big contradiction to

Marlboro and Philip Morris in the Phil.

Smoking Factories and Silent-killing machin Smoking is dangerous, dodgy, and addictive (even more compulsive in effect than cocaine) Philip Morris cited an overwhelming medical and scientific consensus that cigarette smoking causes lung cancer, heart disease, emphysema and other serious diseases in

Among the actions and attitudes opposed to the will of God, the good of neighbor and the Structure created by them, two are very typical: on the one hand, the all-consuming desire for profit and, on the other , the thirst for power, with the intention of imposing ones will upon others. In order to characterize better each of these attitudes, one can add the expression: at any price
Pope John Paul II, Sollicitudo rei socialis, n. 37

CSR and the Law

Whatever is legal is not necessarily socially responsible and whatever is illegal is not necessarily unethical.

CSR is more than obeying the Law

The 2003 Asian Forum on CSR ensures that pro-profit organizations go: Beyond profit-that business learns to genuinely address the common public good beyond that of corporate interest; Beyond compliance-that business responds to higher standards and principles beyond mere obedience to the law; Beyond form that the company goes beyond

Point of Arguments
If the emphasis in CSR is the correct management of all corporate resources, goods, and services, it is because business is for the betterment of everyones wellbeing. But everyones well-being cannot be reduced to his/her physical or material welfare
Lest it be forgotten, business is for people, and all business activities (including CSR) are only a means for the total and wholesome development of the human person.

The total development of Human person embraces the:

Physical and the spiritual

The material and immaterial

Financial and Moral

The Human Person as the Central Issue Business

Corporate Interest

Total Human Advanceme Personal growth

Link 1. Anthropological s order Man by his very nature stands completely in need o

interpersonal cooperations, synergy and participation 2. Theologico-philosophical order The human person is a micro-cosmic species, a bu Or a consumer, but also a social being that has been the supernatural order, pronounced Pope John XXIII

Corporate citizenship advances its conviction that business should be at the service of the human person, and not human person at the service of business, that ethics is above technology, and spirit above matter

Theologico-philosophical basis of CSR

CSR is a collective human experience of reading the signs of the times. Wise men and women from all great spiritual traditions, such as Islam, Buddhism, and Christianity, have collectively proposed the basic underpinning of CSR

Pope John Paul II has stated in his encyclical Centesimus Annus, the conviction of the intellect must also be the conviction of the Faith

The reason why business should develop, practice, and institutionalize CSR is theological and philosophical, both of which do attempt to satisfy our human need , understand (intellectual) and our need to believe (matters of faith). Because theology will help facilitate the deduction from Faith of what is good for business, and philosophy the deduction from the norms of the natural law and history Faith Labor and Deduction from

Why theology and philosophy?

cap

Ultimate sources of business ethics and CSR

Sacred Scriptures
Which is matter of faith, beyond reason but not

unreasonable

Social Doctrine of the Church

Human Labor is dignified because the Gospel says so. That is

what we mean by saying the Bible and social doctrine of the Church are the ultimate sources of CSR

Natural Law
It is the moral norm knowable to human reason without

the aid of supernatural revelation. It is the only law that is immutable and universal

History
Scrutinize the signs of the times

Scrutinize the signs of the times War in The Philippine Business for Social Progress Mindanao
80 projects concentrated in the conflictridden South of Mindanao (ARMM, SZOPAD, and Caraga Areas

(PBSP) Catch up plan for uplifting human condition

EDSA TRES occurred in 2001

The Philippine Business for Social Progress (PBSP) Came up with a strategic partnership with the Asian Development Council (HUDCC) for urban poverty reduction known as STEP-UP, aimed at alleviating destitution among 25 communities in Metro Manila

Business Leaders, through the CSR agenda, have learned to read the events and to hear the cries of in Vatican Council II the Church has In fact, the time considered her duty to Scrutinize

the signs of the times and to interpret them in the light of the Gospel
(Pastoral Constitution Gaudium et spes, 4) Armed with Faith and reason, with theology and philosophy, Pope John XXIII urged the contemporary manager to Resolve

the social questions in ways more in accord with the needs of the present time (Mater et

Quintessence of CSR: How Do We Know Were Doing It Right?

The desire of power in excess caused angels to fall; the desire of knowledge in excess caused men to fall. But in charity there is no excess neither can man nor angels come into danger by it

Drivers pushing business towards CSR

1. The shrinking role of government

2. Demands for greater disclosure

3. Increased customer interest

4. Growing investor pressure

5. Competitive labor markets 6. Supplier relations 7. Ecological concerns.

1. The shrinking role of government

Shrinking Govt Government resources Muddle bureaucracy Legislation and regulation&Red Tape Distrust of regulations Government can Social and environmental objectives

Past

Reasons:

Business Sectors
Government
Social development

only accomplish the mission impossible of serving all citizens in partnership with the business

2. Demands for greater disclosure

Growing demand for corporate disclosure from stakeholders, including customers, suppliers, employees, communities, investors, and activist organization.

The Principle of Transparency

Example: Petroleum Company, Shell is creating an anti-corruption culture, for instance, with its joint ventures partners, contractors, and suppliers.

3. Increased customer interest

Consumer rewarded or punished companies based on their perceived Social Performance REASONS: -Insist on reputable products and services. -Consumer Movement gives every indication of becoming a permanent influence on business

4. Growing investor pressure

Investors are changing the way they assess companies performance and are making decisions based on criteria that include ethical concerns and social involvement of business.
In US in 2000 more than $2 trillion worth of assets invested in portfolios that used screens linked to the environment, sustainable development and social responsibility. AMERICAN took into account ethical consideration when buying and selling stocks.

5. Competitive labor markets

Employees considered the following: 1. Seeking out employers whose philosophies and operating practices match their own social principles. 2. Workers are looking for jobs that can provide bread and butter, plus Chicken Soup for the Soul and formation for ones values. 3. In order to hire and retain skilled employees, companies are put to task to improve working conditions, eliminate the climate of sexual harassment and provide equal employment opportunities, in addition to benefits package.

6. Supplier relations
Companies are taking steps to ensure that their partners conduct themselves in a socially responsible manner. Code Supplie of Condu r to ct ensure that policies or practices of other companies do not tarnish their reputation Clothing Company C&A has developed a supplier code of conduct, which expressly states that exploitation of child labor is Absolutely Unacceptable Compani es

7. Ecological concerns
Include the use of recyclable materials for packaging and conservation programs by businesses like ILOG PASIG PROJECT It also affected product design, production, and marketing, especially as the expense of product modification has increased the retail cost.

CSR is beyond profit, beyond

It is Corporate
It is composed of human individuals Cooperating together, synergizing,who act as brainstorming and reflecting one Collective Effort

Corporate Act

It is Social
Because the corporate action is geared towards the society in general, a small community-at-risk, the internal customers or a part of the environment in particular.

It is a A corporation (a legal entity, a group of Responsibility

persons) can act as individual
develop its own strategy, performance indicators and objectives.

Corporation is morally responsible for its actions

The antonym of active responsibility is passive non-involvement: Active responsibility refers to doing something positive and being accountable for it. Passive non-involvement refers to plain observing from the bench

What CSR is not?

1.CSR is neither sharing company donations nor a pure act of philanthropy 2.CSR is not a doleout 3.CSR is not just public

1. CSR is neither sharing company donations nor a pure act of philanthropy Corporate giving is a social investment in developmental activities and not a kind of welfare program (www.asianforumcsr.com)

Donations and philanthropy connote welfare activities, not developmental activities. can say they are socially Companies
responsible and has opted for the poor is through corporate giving (the transfer of resources, usually financial) in the form of tax deductible donations for a wide range of projects and

2. CSR is not a doleout

Its not a matter of giving fish but a matter of patiently teaching them how to fish.

3. CSR is not just a Public Relation Calvert Group, a mutual fund American Example: The
company based in Maryland, Baltimore, demonstrated social zeal in prohibiting investments in companies that produce guns, cigarettes, and vodka.

What CSR actually is a social 1. CSR is

In CSR, resources are invested responsibly in investment projects, which allow the company to discharge its obligations to the various publics it is related with, while at the same time gaining higher returns from resource investments. Financial contributions are used not only to remedy a particular deficiency or situation but can also become a Social investment funds in the form of revolving capital. CSR can indeed become a wise investment because it opt for the poor and the less privileged a preferential option that pays in the long run.

Exampl e IN_HAND Phils. (an organization that opted for

the poor) Produced thousands of Christmas lanterns and other occasional products. It expanded into making stuffed toys and other sewing products.

2. CSR is resource sharing

A company might have relatively easy access to resources and may even be a better utilizer of certain resources than other organizations.

However, a company may allow others fair access to the same resources and, at the same time, criticize unfair allocation of resources including credit, land and technology.
A monopoly of access is a form of inequity, corporate social responsibility is sharing resources with the less endowed.

An Important dimension of CSR

Resource sharing is a give-and-take procedure Businessmans give-with-one hand-and-takewith-two policy The concept of business partnership is extended to those who have nothing but little brain and brawn.

In this sense, the less privileged can become partners of business, particularly of the manufacturing sector.
There are other companies, opting to enter into such partnership, that have eventually allowed communities to take over specific limited functions or enter into subcontracting arrangements.

What Filipino CEOs are saying

According to Andres Soriano III

Public welfare, unemployment, education, and economic opportunities should also be deep, concrete concerns of private business. Pooling together the resources of the business sector to meet these challenges...is a landmark strategy in corporate business

It has been long accepted that the Philippine government alone can neither solve the problem of poverty nor provide the necessary basic services to all, for the demand for benefits is just beyond what the government can supply.

What is urgent is to bring together different groups under one umbrella organization so that fund and resources management can have a deeper impact on the most needy in our society.

Catherine Weir, Citibank country chair, says:

This is the beauty of collective response. With resources put together, more can be accomplished and the impact becomes

Cesar A. Buenaventura
Overall, we feel that all the development work we are doing is still small compared to the needs of the country. But if other companies with resources would do the same, the multiplier effect in terms of assistance extended to families and communities nationwide would have a

3. CSR is part of the work ethic of a corporation

CSR is business ethics concretized and reflected in corporate values.

Ricardo S. Pascua, former President and CEO, Fort Bonifacio Development Corp. Explained CSR as part of work ethic in the concrete: seldom do something with a single You very motivation; things that you do very often have multiple objectives that may be synergistically supportive of each other. When I do good as a corporation, it assuages my Christian conscience; it is also good business. If I contribute to the development of my immediate nieghborhood , criminality goes down. My employees can come to work with peace of mind and I have access to a better

4. CSR is partnership

Private enterprise is beginning to reach out to other constituents of civil society such as nongovernmental organizations, academe, women, employer and labor sectors, the United Nations, and national and local government

League of Corporate Foundations -a working partnership of different companies across different industries in an umbrella organization .
Examples Rival companies like Shell and Petron of the oil industry Pfizer and Zuellig of the drug industry BPI and Metrobank of the banking industry

They forget their differences to work with the government and NGOs for the betterment of the

Stakeholders of CSR
THE SOCIETY AT LARGE THE EMPLOYEES THE CONSUMERS THE COMPETITORS THE GOVERNMENT, SUPPLIERS, AND CORTRACTORS THE ENVIRONMENT

Its also advantageous for business(businesses adopt a policy of social responsibility such as: 1. Company benefits
improved financial performance Lower operating costs Enhanced brand image and reputation Increased sales and customer loyalty Greater productivity and quality More ability to attract and retain good employees Reduced regulatory oversight Access to capital Workforce diversity Product safety and decreased liability.

2. Benefits to the community and the general public: Charitable contributions and social development Employee volunteer programs Corporate involvement in community education, employment and housing programs Consumer protection Product safety and quality 3.Environmental benefits: Greater material recyclability Better product durability and functionality Greater use of renewable resources Conservation and protection of species Integration of environmental management tools into business plans, including life-cycle assessment and costing, environmental management standards, and

Link between CSR and market performance

The Price Waterhouse Coopers CEO Survey launched at the 2002s World Economic Forum annual meeting found 70% of CEOs considered CSR vital to profitability. The top business practitioners have spoken: Its good business when business is socially responsible.

Framework of strategic CSR: a proposal Strong Leadership Policy setting Program Development Systems and resources Measurement and standard index Reporting and feedback mechanism

1. Strong Leadership Leadership can be a potent force in setting a CSR agenda and in actively promoting CSR practice in the company
The company needs a leadership that would lead in defining CSR performance indicators and assume full accountability of the CSRs impact on the companys economic, social, and environmental bottomlines

2. Policy setting - Is to provide the mandate and define the

direction of the companys CSR agenda.

An Excellent CSR policy must have the following features: 1.Written, clear and crisp, easily understandable an 2. Communicated to and shared with all internal and external publics 3. Perfectly aligned with companys business goals promotes the welfare of all 4. To stakeholders.

Mc Donalds CSR Policy

3. Program Development
Praiseworthy Commitment 1. An excellent CSR program must be in line with the CSR mandate and related to the main lineprograms should be identified 2. CSR of business.

through consultation with intended beneficiaries, hence they are market-driven or need-based in order to address the specific needs of the company and 3. CSR programs are designed to have community. clear and workable target objectives, implementation strategies and evaluation

4. Systems management

-A CSR program cannot be effective without well-defined organizational, functional, financial, monitoring, and evaluation systems management. -The tools, systems, and frameworks are developed by taking into consideration the local context and corporate culture. System management leads to the continuing development and installation of sustainability strategies such as partnership building, corporate volunteerism, and phase-out

An outstanding CSR program would be based on the following:

1. ORGANIZATIONAL SYSTEM 2. MANAGEMENT SYSTEM 3. KNOWLEDGE MANAGEMENT AND COMMUNICATION SYSTEM 4. FINANCIAL SYSTEM

1. ORGANIZATIONAL SYSTEM

Which may be created through a manual, guide, or roadmap, tools, and technology development and information baselines; supervised by a unit of highly competent staff and support system;

2. MANAGEMENT SYSTEM
Which means a top-to-bottom involvement in program planning, controlling and decision making processes; and provides for a specific audit of operations

3. KNOWLEDGE MANAGEMENT AND COMMUNICATION SYSTEM

Which is none other than a fast and efficient flow of communication to and from stakeholders and created venues for information exchange.

4. FINANCIAL SYSTEM
Which is a provision for bookkeeping of finance records, maintenance of audit and internal control.

In 1999- DOW JONES SUSTAINABILITY GROUP INDEX -It is the first global index to track the performance of companies which are leaders in sustainable development issues. In 2003- BUSINESS IN THE COMMUNITY in England published the CORPORATE RESPONSIBILITY INDEX- which is the first business-led, voluntary, standard index, publicly benchmarking the CSR agenda and practice among companies.

5. Measurement and standard index

What did it accomplish

The new index is a business tool for companies to evaluate their own performance and to compare it with their peers. It enables them to assess the extent to which strategy and values are translated into responsible practice throughout their organization, in four key areas (community, environment, marketplace, and workplace. To identify gaps in performance and make

David Varney, Chairman of Business in the Community conclues:

This is not a just a tick-box exercise... The first Corporate Responsibility Index demonstrates to stakeholders that companies are taking the lead in promoting awareness and public reporting. It will help increase trust in business and transparency in business performance.

Benchmarking Ford CSR

PBSP in partnership with LCF-League of corporate foundation
Came up with a measurement mechanism or tool called THE CORPORATE CITIZENSHIP BENCHMARK RATING CHART --to compare how a companys internal systems and processes fared with its primary competitor

Foundation

Another tool INDIVIDUAL COMPANY BENCHMARK REPORTwhich you or any CEO may freely use to see how your company manage in relation to the overall benchmark

Individual Company Benchmark Report

This tool, a technology created by PBSP-Center for Corporate Citizenship, assesses the company based on the five key elements (measurement and reporting together constituting the fifth element).

Standard Index
-to measure CSR impact vis-avis companys triple bottomlines (Financial, Social, Environmental) and identify possible areas for improvements

In other words, the index can determine whether or not a CSR program is costefficient and effective.

Example
Its handy tool for managers who want to know the actual returns of their CSR investments. Not only that. A standard index is also an excellent yard which can ensure that the CSR initiatives are adequate and sustained, It is a kind of set of guide questions, roadmapscomprising good business sense.
transparent, systematic and well-defined-that helps identify key results areas by doing a cost and benefit analysis of the CSR impact on business. It also includes a monitoring evaluation system that helps in establishing baseline information through surveys, reviews, and consultation.

6. Reporting and Feedback Global Corporations is usually communicated through Mechanism compliance with standards such as the
Global Reporting (GRI) and ISO 1400 Is an international, multi-stakeholder effort to create
a common framework for voluntary reporting of the economic environmental, and social impact of organization level activity.

Mission: To Improve the comparability and credibility of sustainability reporting worldwide: Let the best practices in CSR be revealed; let the good news be announced .

Reporting and the feedback mechanism results would give credibility to the CSR program and build peoples trust and confidence in the company.
Compan y
Improves its reputation with the general public

by generating valuable feedback from various stakeholders

An excellent reporting helps to review on a regular basis based on feedback whether your CSR programs is perfectly aligned with your financial

Interactivity among the 6 key (Impressive) Corporate elements:

Citizenship Strong business leadership
-that practically influences the other elements, can effect the creation of a clear and definite

CSR policy

Implement doable program Install interfunctional working

Measurement and reporting mechanism

San Miguel Corporation: Profit with Honor Policy:

Strong Leadership and pro-environment Top Management made it a point that the policy program
of profit with honor and a social work ethic should pervade the entire corporation To maintain its image as a premier company that produces high quality products. Profit with Honor

Systems in Management sees to it that the green office concept place

is replicated in the companys production facilities throughout the country. Each plant has an environmental management officer who takes charge

(SMC)Standard Index and TQM

Most of the companys facilities already have ISO 9000 certification, which facilitates certification to ISO 14000. SMC has adopted the internationally recognized Malcolm Baldridge quality management. Burt Hammer, an environmental consultant based at the Asian Institute of Management. Now works with SMC to develop another management framework that integrates the Baldridge criteria, ISO 14000 Environmental Management System standard elements, and principles of Total Quality Environmental Management (TQEM)

SMC Reporting Mechanism

SMC publishes information booklets on social development, best practices in sustainable development and environment protection every 2 years to inform its stockholders and other interested stakeholders of the companys work in these area.

Activities
Highlighted activities include a clean air program that prohibits smoke-belching vehicles from entering SMC compounds, reforesting watersheds that supply water to SMC facilities, and livelihood projects that involve local farmers in making