CSR (+ Stakeholder engagement) Flashcards
How does the World Business Council for Sustainable Development define CSR?
= the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large
The term corporate citizenship has a wider definition than CSR:
What does the term ‘corporate citizenship’ describe?
What does it require companies to do?
= how companies should act in the same way as the citizens of the countries in which they operate to meet the countries’ legal, social, ethical and economic responsibilities expected of its citizens
- Requires companies to balance the financial needs of its shareholders with the societal need of the countries within which it operates
What is the difference between business ethics, corporate responsibility, and sustainability?
What are the 3 challenges with determining a company’s sustainability?
· Business ethics = application of ethical values into business behaviours. Essentially, the organisation doing ‘the right thing’.
CR is about doing good deeds, having a positive effect on communities and environment and lessening negative impacts;
· Sustainability is about the long term = requires organisations to balance their current needs for operating their businesses, without compromising the needs of future generations
- The current and future needs.
- The time period to be considered when looking at future generations.
- Who the sustainability should be for (e.g. the company, the country or the world).
The Business Case for CSR:
What are the 4 sources on why many CSR activities are being carried out by organisations?
- organisations themselves
- governments = due to the pressure from their citizens to protect the environment and improve the quality of life for those citizens
- investors = recognise the impact of CSR issues on success = Some investors won’t invest in products they consider harmful to society = tobacco = type of investment referred to as (SRI)
- customer demand = Millennials constantly share views and opinions on social media = has led to an overwhelming demand for CSR as the potential workforce and consumer base look to do business only with those whom they feel are making a positive impact on society
Organisations are voluntarily carrying out CSR activities as they have realised they can use them for what 5 things?
- To obtain competitive advantage =Cadbury announced that its products would be certified by Fairtrade
- To reduce risk (especially reputation risk)
- To attract human capital = employees want to work for organisations pursuing CSR
- For innovation
- For sustainability = to be sustainable organisation must focus on CSR activities e.g. sourcing the different resources they need = develop strategies for utilising their resources more effectively and efficiently
What is Greenwashing?
What will stakeholders be looking out for?
= practice of making an unsubstantiated or misleading claim about the environmental benefits of a produce, service, technology, or company practice
* e.g. an organisation committing to reduce the environmental impact of its product line before the products are even ready
- looking out for organisations that are not delivering on the promises they make
- If found out = risk a drop in brand value and trust, loss of sales and drop in share price E.g. VW ‘Diselgate’
What are the 4 categories of CSR activities?
- Pet projects = reflect the personal interests of board members
* Activities get a lot of press coverage but offer minimal benefits to society or the organisation
* E.g. sponsoring an art exhibition - Philanthropy = large form of charitable donations
* e.g. large donations of money to charitable organisations
* Often little attention with these donations = questionable benefits to the organisation - Propaganda = primarily focus on building the organisation’s reputation and have little benefit to society
* E.g. sponsoring large sporting events
* If perceived there is a gap between the organisation’s words and actions, this may be dangerous to the reputation of the organisation - Partnerships = CSR activities that create shared value for the organisation and society
* 2004 Unilever created the Dove Self-Esteem Project = aimed at helping girls and young women to develop a positive relationship with the way they looked = have reached over 20 million young people
What are the 7 essential principles to create win-win CSR partnerships as stated by Albani and Henderson?
- Identify clear reasons to collaborate
- Find a fairy godmother = important for both organisations to identify a core group of people totally committed to the partnership
- Set simple, credible goals
- Get professional help
- Dedicate good people to the cause
- Be flexible in defining success
- Prepare to let go = organisations should plan an exit strategy for the partnership
Name the 5 CSR initiatives / frameworks.
- UN Guiding Principles on Business and Human Rights = countries are required to put in place effective remedies for those who suffer from business-related human rights abuses
- UN Global Compact = encourage companies to align their strategies and operations with the 10 principles covering human rights, labour, the environment and anti-corruption
- The SIGMA Project = guidelines ‘to provide clear, practical advice to organisations to enable them to make a meaningful contribution to sustainable development’
- The Equator Principles = a risk management framework adopted by financial institutions for determining assessing and managing environmental and social risk in projects
- OCED Guidelines for Multinational Enterprises = encourage the positive contributions that multinational enterprises can make to economic, environmental and social progress
When deciding what targets and measurements to use in CSR, what should an organisation consider? (5)
- Focus on outcomes and measure them using quantitative and qualitative measurements
- Listen to stakeholders
- Don’t undervalue stories = e.g. how an individual’s life has been changed by the organisation’s initiative
- Learn from others = improve their impact measurement by reviewing the sustainability reports of other companies
- Identify and measure risk
Boards should consider whether it is appropriate for their company to set CSR targets for their senior executives as part of their remuneration:
When should targets be set?
Why is it important to set CSR targets and link them to executive pay?
What should boards do in the absence of CSR metrics?
= only where organisations have developed clearly articulated business cases for CSR initiatives, which contribute to organisation’s sustainability
= ensures that CSR needs within companies are taken seriously and that targets are actively worked towards.
= retain the right to reduce incentive awards in cases of substantial damage to the company’s business or reputation resulting from an event that has had a negative effect on the environment, society or the organisation’s long-term sustainability.
What are the Sustainable Development Goals?
Who has accepted them and when do they hope to be achieved by?
Name 5 of them.
= 17 global goals set by the United Nations General Assembly 2015
- All 193 countries of the UN have accepted them and aim to achieve them by 2030
5.Gender equality
11.Sustainable cities and communities
12.Responsible consumption and production
13.Climate action
17.Partnerships for the goals
What are the 3 CSR Benchmarks?
- Dow Jones Sustainability Indexes = provide the investment community with information on global sustainable companies
- FTSE4GOOD Indexes = for investors interested in social responsible investment
- Business in the Community (BITC) Responsible Business Tracker = offers benchmarking against sector peers and the overall cohort on being a responsible business
What is integrated thinking in relation to CSR?
What are the 6 capital resources?
What should the cosec watch out for and how can this issue be countered?
= a process that takes into consideration in a balanced way the effective and efficient utilisation of each of the 6 capital resources available to an organisation when developing strategy or decision-making
- Financial capital - money
- Human capital - skills and experience of people
- Manufactured capital - fixed assets = infrastructure needed to provide products / services
- Intellectual capital - intangible assets = patents, copyrights, goodwill, brand value
- Natural capital - natural resources organisation depends on to provide product / service
- Social capital - value added of the of the social relationships with individuals and institutions developed through stakeholder engagement
- watch out for the ‘silo effect’ = when each of these capitals is managed separately (CEO should meet regularly with SM prior to BM to ensure a holistic view is being taken)
What are the 3 ways an organisation can engage with stakeholders?
What should the cosec advice the board and management to do regarding the 2nd way? (2)
Where issues and concerns raised through a stakeholder engagement cannot be addressed, what should an organisation do?
- Reactively = organisation engages defensively, when forced to in response to a crisis and usually in an attempt to rebuild its reputation
- Proactively = organisation tries to understand its stakeholders’ concerns and issues
- Interactively = organisation has ongoing relationships of mutual respect, openness, and trust with stakeholders
- For proactive: Cosec could advise the board and management to:
a. Carry out customer surveys, focus groups, shareholder surveys, competitor research for decision making
b. Engage directly with stakeholders to get their input before making decisions
should be honest and transparent about why this is the case = Novo Nordisk required to test on animals under law but understand it’s not desirable so publicly report on no. of animal used in testing
