Blowfield book - Part 1 PDF

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Corporate Responsibility HT20

Part 1 - The meaning and origins of corporate social responsibility Chapter 1 - Introducing corporate social responsibility Key words: - Business and society - Business ethics and values - Corporate philanthropy ●

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Sustainability Legal responsibility Economic responsibility

Prosperity (välstånd) is measured in the terms of economic growth, that is made possible due to greater productivity and cost reduction. The drive for growth increases the demand for natural resources, cheap labour and new markets → Growth creates new jobs, stimulates local economies and can raise living standards BUT growth can also be criticized for being linked to human rights abuse, environmental disasters and poverty. CSR has many terms, such as Corporate sustainability, social entrepreneurship, green enterprise and benefit corporation. Look at Snapshot 1.1. - Types of CSR, page. 10 in the book.

Corporate Social Responsibility is an umbrella term that captures the variety of ways in which a business's relationship with society is being defined, managed and acted upon. - the responsibilities of business in the context of wider society - how those responsibilities are defined and negotiated, and - how they are managed and organized. Values motivation: conscious desire to achieve and be accountable for societally beneficial outcomes by means of operating a profitable business Materiality (väsentlighet) motivation: recognition that a successful business can seek out and address societal challenges with resultant material benefits → Outcome: Profitable enterprises helping address and redress societal challenges Key concept; Business ethics → crucial analytic tool for understanding, conceptualizing and legitimizing whether the actions and behaviour of companies are morally right or wrong. Economic responsibility: It refers to the responsibility to produce goods/services that society wants, and which it sells at a profit. The idea that companies have a purpose other than simply to make money is central to understanding CSR in terms of business relationship to society. Legal responsibility: It refers to the obligation of business to fulfil its economic mission within the confines of the laws. Ethical responsibility: It refers to the responsibilities of companies that goes beyond legal compliance and which are not determined by economic calculations. This might be the most interesting part of

Corporate Responsibility HT20

CSR because it is asking what companies can do beyond what is demanded by regulation and economic rationality. Discretionary responsibility: One example of this is philanthropy - which a company can assume even if there are no clear-cut societal expectations. An important area of CR has been the idea of giving back to society through philanthropic donations. Prominent areas of CSR activity: Human rights, legal compliance, workers rights, market relations, environmental management, corruption, sustainability, corporate governance, animal rights. Snapshots: ●

Snapshot 1.1: Types of CSR – How many kinds of CSR are there? Highlights seven main areas of CSR activity.

Community activities - IKEA ●

Snapshot 1.2: What responsibilities do companies have?

Published standards of CSR: ➔ GRI, global reporting initiative. A framework for reporting on CSR performance. ➔ Principles for responsible investments. ➔ OECD guidelines for multinational enterprises. Government recommendations on responsible business conduct. ➔ Beijing Declaration. An international declaration on the rights of women. ➔ Social Accountability 8000. Workplace standard against which to assure worker rights and welfare. TBL (Triple bottom line) or sustainability reporting: The focus is widened to embrace the economic, environmental and social performance of entities. Otherwise known as “the three Ps”: people, profit, planet. Economic (people) bottom line refers to the traditional bottom line as well as to issues relating to the long-term sustainability of an entity’s costs, of the demand for its product, profit margins and so on Environmental (planet) bottom line encompasses the sustainability of the entity’s use of natural, renewable or substitutable resources and its restoration performance Social (people) bottom line is concerned broadly with social capital with a focus on human capital, such as in the form of public health, skills and education, and more generally with society’s health and wealth creation capabilities

Corporate Responsibility HT20

Companies example: Harvard University´s Kennedy School and the environmental non-government organization (NGO) CERES have, in different ways, put governance to the fore of their work on CSR. Companies such as Walt Disney, IBM and Intel include corporate governance as part of their CSR reports, while pressure groups such as the Interfaith Center on CSR see aspects of governance, such as executive compensation, transparency and accountability to shareholders, etc as important parts of the agenda. The Body Shop - wanted testing of cosmetics on animals outlawed McDondald’s - improve animal welfare IKEA - committed to 100% renewable energy by 2020 Boeing - was accused of using corrupt practices to win a rocket project

Chapter 2 - The origins of corporate social responsibility Key words: - Capitalism - Corporate philanthropy - Industrial revolution - Welfare state - Globalization

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Licence to operate Limited liability New deal Social contract

CSR refers to actions for which the company is under no legal compulsion (tvång). So CSR often has no legal liability but is expected to uphold certain human rights. There are three eras that each have raised new issues about what business should be responsible for, but many of the issues have remained relevant from one era to another. 1. The Industrial Revolution 2. The mid-twentieth-century welfare state. 3. The Globalization era, 1980s → t he on Limited liability encourages entrepreneurship, but is also the root cause of problems in the business-society relationship. Because who is to blame when something “bad” happens? Key concept: Licence to operate → refers to the public’s acceptance of a company’s impact on wider society by its employees, stakeholders and the general public. It is an idea rooted in theories of the social contract that exists between a government and the people/companies. The concept of social licence to operate is closely related to the concept of sustainability and the triple bottom line. A company must be seen operating responsibly, taking care of its employees and the environment, and being a good corporate citizen, and when problems occur the company must act quickly to resolve the issues or the social licence to operate is put in danger. Difficult to define, and impossible to measure.

Corporate Responsibility HT20

Ex. The tobacco industry is an example where companies have had their license to operate severely restricted, not least due to the hiding of the connection between smoking and cancer. Issues relevant to CSR today: - Should companies take action beyond what is legally required? - Should a company’s assets be used for purposes other than maximizing shareholder value? - etc. Three important question relating to CSR: 1. How can business be responsible? 2. For what is Business responsible? 3. To whom is Business responsible? Snapshots: ● ●

Snapshot 2.1: Is big business desirable, inevitable or irredeemable? Snapshot 2.2: Trafigura (Singapore commodity trading company) takes on global civil society

Chapter 3 - Sustainable development Key words: - Brundtland Commission - Climate change - Financing sustainability

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Global warming Sustainable development

WCED - World Commission on Economic Development aka Brundtland Commision deliberated on environmental strategies for achieving sustainable development by the year 2000 and beyond. ETS - EU Emissions Trading Scheme. The aim is to help EU Member States achieve their commitments to limit or reduce greenhouse gas emissions in a cost-effective way. Sustainable development m  eans “development that meets the needs of the current generation without compromising the ability for future generations to meet their needs”. However sustainability is not limited to environmental issues, it also includes social justice, worker’s rights, women’s rights and health for just naming a few. -

A debate of sustainable development is whether environmental issues can be tackled without jeopardizing economic growth or not.

Words: BAU - Business as usual, a n ongoing and unchanging state of affairs despite difficulties or disturbances Climate change and global warming is a very important and high-profile aspect of sustainable development, but it is not the only one.

Corporate Responsibility HT20

Snapshots: ● ●

Snapshot 3.1: Is there a green energy future? Snapshot 3.2: Aviation and climate change à aviation was included in the EU emission trading scheme (ETS)

Chapter 4 - CSR in developing economies Key words; - Business as a developing agent or developing tool? - Bottom of the pyramid (BOP) - Microfinance

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Fairtrade SROI - Social return on investment Poverty

When businesses act like an developing tool the outcomes can be positive like creating jobs, generating wealth, meeting people’s needs through the provision of goods and services. However business as a developing agent takes responsibility for the number of jobs its creating, their location and the quality. The development tool might make products available in poor countries, but the development agent makes products suited to the needs of and accessible to a poor segment of the population. Business as a development agent is motivated by stakeholders concerns, pressures and demands. International development → r efers to efforts to improve standards of living in the poorer countries of the world. Three conditions of business engagement in poverty (development agent) 1. Condition 1; business is more likely to act when poverty is associated with an identifiable risk to a company or industry, including risks to reputation or production. 2. Condition 2; businesses are more likely to act when poverty offers a favourable return of investment (ROI). Such as new market opportunities for the poor or underserved markets. 3. Condition 3; Business is more likely to act when poverty is associated with inefficiency. At Least one of these conditions need to be met for companies to act as a development agent. Figure 4.1 Business relationships to poverty - Business as a cause of poverty - labour exploitation, pollution and corruption - Business as a solution - microfinance, BOP (bottom of the pyramid), goods/services for unserved markets - Business as a victim - HIV/AIDS, Corruption, poor infrastructure, less education → harder to fill even the low-skilled positions.

Corporate Responsibility HT20

There is also a fourth dimension which is not explored here, but is worth noting, i.e. that business can be indifferent to poverty, seeing it as neither a threat nor an opportunity, but simply as something that is not factored into decisions. Microfinance: Microfinance provides poor people with financial capital without the need for collateral, helping them to avoid high usury charges and providing them with a safe place to keep their money. Initially promoted by NGOs and aid organizations but then major banks Citigroup and Deutsche Bank have started to offer microfinance services. BOP: P&G (Procter & Gamble) have invested lots of money testing the bottom of the pyramid markets and investing in purifying water packs to poor communities. But because this requires too much investment to be profitable the company closed it down, despite giving benefits to consumers, employees and society. S. 77 förklarar mer, men tänkte om det kommer något om BOP och företag så kan man kolla upp noggrannare. Poverty as a business opportunity: Vodafone (Safaricom) in Kenya launched 2007 M-PESA. The idea that one person to “sends money” to another, preferably a relative in a rural part of Kenya. It was successful due to the fact that bank accounts and plastic money was scarce and people liked the idea that you could send money that another person could collect “real money” through a shop nearby. Snapshots: ● Snapshot 4.1: Clean water for poor communities- P&G PuR ● Snapshot 4.2: Fairtrade: an approach to market redistribution

Chapter 5 - Globalization and corporate social responsibility Key words; - Globalization - Deterritorialization - Liberal economics - Global governance

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Civil society Employment Self-regulation Stakeholder partnerships

FDI = Foregin direct investments In a globalized economy business activities are directly (through FDI) or indirectly (through global production chains) connected with many regions of the world and often take place beyond the sphere of influence of a single nation state. Snapshots: ● Snapshot 5.1: Shows some of the ways in which globalization is interpreted as both beneficial and damaging. ● Snapshot 5.2: New jobs, new responsibilities - zero-hour contracts (require workers to be available without paying them) and the gig economy

Corporate Responsibility HT20

Two areas of globalization criticism: 1. wealth, poverty, and equity 2. universalization of norms, values, and culture Partnership: Partnership can be described as a voluntary and collaborative relationship between various parties in which all participants agree to work together to achieve a common purpose or undertake a specific task and to share risk, responsibilities, competencies and benefits. There are different kinds of partnership: - Rule-setting partnership (e.g FSC logo applied to certified products) - Service/ implementation partnership ( e.g Better Cotton Initiative, or RSPO since it is involved in creating a market for sustainable palm oil, and in improving cultivation standards) - Resourcing partnership ( e.g Accenture Development Partnership. Employee volunteering, company sponsorship) Table 5.2 Partnership outcomes for different stakeholder, ex. mining Partnerships have become one of the ways that companies manage sustainability issues, e.g. through certifications. Examples of benefits with partnerships on page 113. Case study 5 page 116 - The ten principles of the United Nations Global Compact Globalization affects social networks, generates new types of organization, and creates the need for new approaches to governance....