Lecture 1 - Stakeholder approaches to Corporate sustainability

Question 1

How does Milton Friedman define the responsibilities of a business?

Answer 1

“there is one and only one social responsibility of business—to use its resources
and engage in activities designed to increase its profits so long as it stays within
the rules of the game, which is to say, engages in open and free competition
without deception or fraud.”

Question 2

Name 4 problems with Shareholder Capitalism

Answer 2

1) Managing change (only occurs to please shareholders)

2) Short term vs long term perspectives

3) Inconsistency with ethics: separating ethics and business

4) Narrow vs. wider value creation

Question 3

Define a Stakeholder

Answer 3

A stakeholder in an organization is […]
any group or individual who can affect, or
is affected by, the achievement of the
organization’s objectives

Question 4

Define Principle of Corporate Rights

Answer 4

The corporation has the obligation not to
violate the rights of others.

Question 5

Define Principle of Corporate Effects

Answer 5

The corporation is responsible for the effects
of their actions on others

Question 6

What does ‘Shaking stakeholders’ entail?

Answer 6

To proactively initiate cooperation with stakeholders to catalyze change in the society and market place.

Motivation: To ultimately change behavior and market place norms to reward firms that commit to sustainability related changes

Question 7

Mention and explain the 4 arguments to why stakeholders matter

Answer 7

1) Legal
2) Economic
3) Moral
4) Managerial

Question 8

Explain the 3 factors of The Interplay of Power, Legitimacy and Urgency

Answer 8

1) Power:
- How powerful is the organization or individual?
- Sources of power: Coercive, utilitarian, normative
- How easily can a stakeholder access their power base?

2) Urgency
- Do claims call for attention now?
- Types of urgency
1)Time sensitivity (delay not acceptable)
2) Criticality (importance of claim to party)
- Stakeholders’ expectations can influence urgency
- Today urgency can go from 0-100 overnight due to social media - it doesn’t have to be proportionate or rational, it just have to be the right people and the right pressure.

3) Legitimacy:
- How legitimate is the claim of the stakeholder?
- Legitimacy = appropriateness in a given social context
- Note: Legitimacy is a social construct and therefore depends on who perceives it.

Question 9

Mention and define the 3 types of stakeholders

Answer 9

1) Key stakeholder
-Can significantly influence achievements of firm’s objectives

2) Primary stakeholders
-Can be affected positively or negatively by achievement of a firm’s objective

3) Secondary stakeholders
-Only have marginal effects on achievement of firm’s objectives

Question 10

Mention the 5 types of stakeholder engagement

Answer 10

1) Collaboration
2) Dialogue
3) Consult
4) Advocate
5) Monitor

Question 11

Mention 3 reasons to why purpose matters

Answer 11

1) Firms more likely to drive transformative innovations needed to tackle climate change

2) Can often afford to make costly commitments if there is a shared understanding of what the firm stands for (with investors)

3) Commitment to a renewed purpose increases employee effort and internal strategic alignment on climate goals

Question 12

Mention the aspects of building a purpose SCORE

Answer 12

1) Simplify
2) Connect
3) Own
4) Reward
5) Exemplify

Question 13

What does Paul Polman’s Net positive principle entail?

Answer 13

• Hand-print vs. footprint
• Is the world better off because you are in it?
• Baseline = do no harm -> you should go beyond this
  -You are responsible for all current and future direct and indirect consequences that you create