C S R

" Profit and morality are a hard combination to beat ."

Hubert H . Humphrey U . S . Politician

CSR Timeline
Acting altruisticall y for the greater good

Pure Self Interest

Degree of Ethical Behaviour

CSR Timeline
17th & 18th Century Perspective
Adam Thomas Smith Jefferson 1723 1743 1826 The Hobbesian assumption of the State of Nature 1790 The free market assumption of human motivation American Declaration:
The pursuit of happiness .. or is that wealth?

Thomas Hobbes 1588 1679

20th Century Perspective

John Forbes Nash , Jr . 1928Milton Friedman 1912 2006

John Nash and game theory Milton Friedman and the role of government

CSR Timeline

Commercial logging operations together with laws to protect forests, can both be traced back almost 5,000 years 1622 Dutch East India Company - management secrecy & self enrichment. 1700 BC, King Hammurabis code Ancient Rome senators funding the military campaigns 19301940 First corporate responsibility texts appear, including the work of Berle and Means, 1932 19351950 New Deal and start of the welfare state 19451960 Continued nationalization (Europe), state enterprises (former colonies, Communist bloc) and postwar consensus (US) 19601970 Return of business and society debate 19701980 Shift from responsibility of leaders to responsibility of companies 19751985 Debate about the nature of responsibilities 19751990 Corporate responsibility as management practice (e.g. corporate social responsiveness) 19801990 Introduction of stakeholder theory, including the work of Edward Freeman 1984 19902000 Environmental management 19902000 Corporate social performance 1995now Stakeholder partnerships 2000now Business and poverty 2000now Sustainability
Source: Blowfied, M. and Murray, A. (2008) Corporate Responsibility: A Criticial Introduction. Oxford University Press.

Community in a and postmodern Or why we business and played

pre-modern, modern world expect more from how the game is

Pre-modern
Traditional Entrepreneurial
Power goes to those who succeed in the jungle Authority resides in those with legitimacy size; wealth; longevity confers authority Ethics based on individual responsibility and programs minimized

Modern
Community of Rational Rules
Bureaucratic Scientific management Reliance on "experts Comprehensive rules

Power goes to those who make the rules. Relies on expertise Authority goes to those who can enforce their rules Reach for the top Ethics are based on fairness and programs based on rules

Postmodern
Community of Fleeting Exchanges
Need to interpret Need to build consensus Loose connections Suspicion of authority

Power goes to those who can make the deal through networking and can handle uncertainty Authority goes to those who see and can sell coalitions and deals regardless of other levels of authority Ethics are situational; programs

CSR Models
Position
Minimalist

Responsible to
Stockholders/owners

therefore
Maximizing profit

Self interested Stockholders/ owners/ cost Do good when furthers quest controllers for growth and profit Social contract Those with social and legal Goes beyond law to spirit of contract commitment Stakeholder Management Stakeholder stewardship Those who influence direction and fortunes Society as whole / future Develop responsive strategies Solutions for social problems

Modeling the context

Premodern
Minimalist Self Interested

Modern
The social contract

Postmodern
Stakeholder (management and stewardship)

Level of Analysis

Corporate Social Identity

Corporate Responsibility

Benevolance

Instituti onal Organisati onal

As a member of the business institution An organisational entity with membership in social network As a collection of individual human beings

Economic Responsibility Social Responsibility

Individu al

Moral Responsibility

Source: Kang/Wood 1995

Social contribution Activities Social Activities

Select ive CSR contribution

Labour Labour Customer Customer

Environmental protection , Environmental protection , safety & hygiene , human resources , safety & hygiene , human resources , satisfaction , supply chain management satisfaction , supply chain management

Extended CSR

Product quality & Safety , Compliance , Product quality & Safety , Compliance , Information management , Information management , Risk management , Corporate governance , Group Risk management , Corporate governance , Group control control

Core CSR

Ethical Responsibilities

Social Responsibilitie s

Legal Responsibilit ies

Economic Responsibilitie s

Definition
CSR is the acknowledgement by companies that they should be accountable not only for their financial performance, but for the impact of their activities on society and/or the environment. Discussions surrounding the concept are still at an evolutionary stage, although the principles of CSR have long been part of business strategy.

al justice Environmental quality Economic prospe

The diverse strands that now come under the 'CSR' umbrella such as Human resources and environmental issues, Sustainable development, Waste management, Health and safety practices, through a wide range of existing guidelines at national, EU and global levels.

PEOPLE PLANET PROFITS

But it is important to distinguish between these base-line standards and CSR activity which is voluntary, business-driven

Organisation Type Definition of CSR Organisation

UK Government Governmental European Commission Governmental

The voluntaryaction that the business can take, over and above compliance with minimal legal requirements, to address both its own competitive interest and the interest of the wider society. www.csr.gov.uk A concept whereby companies integrate social and environmental concerns in their interactions with their stakeholders on a voluntary basis. EC Green Paper 2001 A concrete action taken by Chinese companies to implement the political aspiration of the new Communist Party collective leasership putting people first in a harmonoussociety Chinese definition of CSR, 15th Sept. 2005

Chinese Ministry of Commerce

Governmental

HSBC

Corporation

CSR Asia

Social Enterprise

Means managing our business responsibly and sensitively for long-term success. Our goal is not, and never has been , profit at any cost because we know that tomorrows success depends on the trust we build today A companys commitment to operating in an economically, socially and environmentally sustainable manner while www.hsbc.com balancing the interest of diverse stakeholders www.csr-asia.com

Authentic Dialogue Decentralised Decision Making

Communit y Sense

Opening & Sensitivene ss to Environment

Knowledge

Flexibili ty Shared Vision

Systematic Vision

Shared Values

5 Basis of CSR

Value Creati on

Combination

Diversi ty

Innovation

Complex Intangioble Assets

Confidenc e
Long - term Considerat ion

Creativi ty Collaborati

Win Win

Social Benefit / Internal Alignment

Competitive Advantage
Low High

Social Benefit

Internal Alignment

Stakeholder Involvement of CSR

Mission Values Code of Ethics

Involvement of Stakeholders

Strategic Plan , Budget , Sustainable report

Operational Projects

Balanced Scorecard

4 Basis of CSR
OU R

CO ND UC T

LE OP PE

C S R
EN VI RO NM EN T

SO C

IE

TY

Corporate Responsibility
s ns ee io y Un lo mp E
Quality of Management

l ca Lo

s ie it un mm Co

s nt e s nm r GO e N ov G

a Sh re ld ho er s n Co su rs me

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Benefits of CSR
Economic considerations Ethical considerations Innovation and learning Employee motivation Risk management or risk reduction Access to capital or increased shareholder value Reputation or brand Market position or share Strengthened supplier relationships Cost savings

Challenges
Lack of corporate strategic philosophy and vision Lack of understanding about Community Engagement Frameworks Not enough sharing of best practices Insufficient database of good NGO partners Branding issues

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Approa ch to CSR

Social

Bearable Sustaina ble Viable

Equitable

Environment

Economic