Flashcards in CSR Deck (41):
the actions and policies introduced by companies to ensure that society and stakeholders beyond the business owner are positively, or at least not negatively, impacted from the company’s operations. In other words, for a company to be socially responsible, it must protect the needs of further society alongside its own (Carroll, 2016
What are the twin hemispheres of capitalism?
- The idea of capitalist growth as a solution and as destruction
(Blowfield and Murray, 2011)
What are the four theories of CSR?
- Shareholder Value Theory/ Fiduciary capitalism
- Stakeholder Theory
- Corporate Citizenship
- Corporate Social Performance
What is Shareholder Value Theory?
- Business doesn't have a social responsibility beyond its stakeholders
- It's only responsibility is to maximise profits
What is Stakeholder Theory?
- Firms will will gain competitive advantage if it is able to develop relationships with its stakeholders based on mutual trust and cooperation
- Brand building through CSR- i.e. Iceland's not using Palm Oil
What is corporate citizenship?
- corporate citizenship focuses more on internal organizational values, corporate social responsibility focuses on the externalities associated with corporate behavior (Birch, 2001)
What is Corporate social performance?
- ensure the private sector has a positive impact on communities, employees and consumers. This is especially so in geographies where basic governance, the rule of law and accountability mechanisms are lacking or limited. (Wood, 1991)
What is the trade off for CSR brand building?
- Ethical action costs money
- But they might build a stronger brand and are doing something ethical
What is Carrolls CSR pyramid?
4 Responsibilities build full CSR- (most to least important)
- Economic Responsibilities
- Legal responsibilities
- Ethical Responsibilities
- Philanthropic responsibilities
Why is economic responsibilities most important for Carroll?
without economic success, businesses will be forced to close and their other responsibilities become irrelevant
What are three ways to manage corporate responsibilities?
- Environmental Management Systems (EMS)
- Social Accounting and reporting
- Codes of Conduct, Standards, Labels etc.
What are environmental management systems?
- Introduced in order to improve environmental performance
- Provides support in improving environmental performance
- certification from external board - credible
- High profile examples include EMAS and ISO14001
What are issues with environmental management systems?
- Not very rigorous- even mining companies get these certifications
What is social accounting and reporting?
- Companies writing report about their socially relevant behaviour
- how companies report to outside audiences
- Opens up the debate on a company;s performance
- Encourages companies to at least think about ethics
What are the issues with social accounting and reporting?
- CSR becomes just a PR exercise
- Bias if written by the company- needs to write about successes as well as failures
- Quality of reporting is usually weak
- If a company thinks they can get away without reporting something they wont
What should CSR reports be like?
- frank and honest
- showing sums spent
- actions undertaken
- not glossy headline studies
- also failures
Who are the drivers of CSR?
- Government/State pressures
- Civil Society
- Industry and Ethical Investment
How does government regulation encourage CSR?
- Arguably most important- constant and can't avoid it unless you move abroad
- 3 types- directive, enabling and steering
How do consumer pressures encourage CSR?
- Negative- force to do better through boycotts
- Or buy more from good companies- i.e. fairtrade products, dolphin friendly tuna
What are the issues with internal CSR codes of conduct?
- Factory inspections are announced in advance- time to hide certain practices and coach workers on the correct answers
- Pressure on suppliers to lower costs more important than coc
- Lots of effort goes into paper work- less efficient
- inspections last, at most, 1 week
- Rarefaction (Foucault) - thinking major elements to thicken others- e.g. Thin actual CSR- thicken coaching and paperwork
Example of successes of boycotts
- Seaworld- no longer having Orcas
Limits of consumer boycotts?
- Does it make a difference?
- Imperfect knowledge - Only have power at certain parts of the supply chain
How does civil society encourage CSR?
- Shareholder activism, (negative) publicity, ethiscores etc
- Globalisation has led to greater connectedness of communities, NGOs, medias etc
- gives a social license to operate
What is a social license to operate?
ongoing acceptance of a company or industry's standard business practices and operating procedures by its employees, stakeholders and the general public.
How do investors/ industry encourage CSR?
- Peer pressure- (norms of appropriateness)
- Emulative dynamics- (copying more successful firms)
- Coercive pressures and social/environmental requirements from insurers, banks and ethical investors
What's the advantages of compliance only approach to CSR?
-Doing the bare minimum
- Avoid (potentially) costly technological and organisational investments = cost advantage
- Learn from frontrunners (c.f. latecomer advantage)
- Market access (corrupt regimes, etc.)
- Avoid attracting attention, investigation and damaging accusations of hypocrisy
What's the advantages of beyond compliance approach to CSR?
- Avoidance of (government) legal action and penalties
- Better relationship with regulators (regulatory ‘relief’)
- Efficiency gains and productivity advantage
- Maintain and/or enhance brand integrity
What is greenwashing?
refers to the occasions where a company’s claims about their socially and environmentally responsible actions are intentionally misleading.
- a gap between the claims companies make about their actions within CSR and the reality of their actions.
- trying to distract from less ethical actions by selective disclosure of information
- Impression management- altering what people think of a company
- I.e. BP- try to show that they're invested "beyond petroleum" while at the same time being responsible for the US Gulf oil spill
What are the 4 myths of CSR?
- Voluntary reporting will increase performance
- Voluntary Codes of conduct will change management behaviour
- Consumers will drive change
- Investment industry can provide the strongest incentives
What are the 5 natural vices of corporations?
1. Firms exist to generate economic returns and not solve societal problems
2. Firms skew societal standards to their own needs
3. Firms are not representative of society at large
4. Most corporations are socially conservative
5. CSR allows govts. to abdicate some of their social responsibilities
How is information about a company's CSR spread?
- Media (press releases, marketing and advertisements)
- Sponsorship of sustainability initiatives (e.g., community, universities, etc.)
- Dialogue and ‘partnership’ with civil society
- Corporate environmental reports (RioTinto example)
Where are most CSR reports from?
- Europe- the demand for CSR is higher
- Becoming more common in Asia
What company is seen as the premier global sustainability leader?
- Every year between 2010 and 2017
- GlobeScan- SustainAbiity Survey
- Gap between leaders and the rest is widening
Which type of organisation is most and least trusted by experts?
- Most- NGOs and social entrepreneurs
- Least- governments and private sector
What is SDG12?
Ensure sustainable consumption and production patterns
What are the 4 key drivers of CSR?
1. Manage risk and reputation
2. Protecting human capital assets
3. Responding to consumer demands
4. Avoid regulation
Describe how CSR has benefited Patagonia?
- Advert saying "don't buy this jacket"
- Achieved ad of the day by Ad Week
- Sales saw a 30% increase 9 months after the advert
- Patagonia experienced growth in excess of 10% per year each year between 2010 and 2015
What was Patagonia's aims with their adverts?
- Encourage thoughtful consumption (Gellert, European General Manager)
- encourage consumers to think about the consequences for the environment of careless overconsumption
How do Patagonia show their environmental ideology in their supply chain?
- One percent of Patagonia sales are put towards environmental projects,
- Patagonia’s employees are allowed up to two months of paid time away from the company to take part in environmental internships
- the company uses only organic cotton
Why is greenwashing a problem?
- Allows companies to avoid their environmental and social responsibilities
- Encourages cynicism among consumers thus making CSR less beneficial for firms