10. Corporate Social Responsibility, Sustainability and Business Ethics Flashcards
How has the European Union defined CSR?
‘a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis’.
King IV uses the term ‘corporate citizenship’ - what does this mean?
How companies should act in the same way as the citizens of the countries in which they operate i.e. companies should meet the legal, social, ethical and economic responsibilities expected of its citizens – apply spirit of the Code
Sustainability can be defined in two ways - define both.
- refers to an organisation focusing on its long-term survival i.e. balancing current requirements without compromising the needs of future generations
- sustainability of the planet – how a company carries out its operations, develops its strategy and manages risk to have a positive impact or lessen a negative impact on the environment
ESG is defined as what?
Identify ways of integrating environmental, social and governance concerns into capital markets
How do CSR activities benefit organisations?
- Competitive advantage
- Reduce risk (especially reputational)
- Attract and retain employees
- Innovation
- Sustainability
Why do the government involve themselves in CSR?
Pressure from citizens for the protection of the environment and society at large - Examples include, MSA Act, Payment Practices Reporting and Health and Safety
What is ‘Greenwashing’?
Unsubstantiated claim to deceive customers into believing that a company is environmentally friendly – criticism of CSR
The Millenial CSR Study showed how millennials are more likely to take appropriate action due to a company’s CSR practices. Give some examples
Examples, switch brands, use social media to engage around CSR, take a pay cut and work for a responsible company, tell friends and family about CSR efforts, pay more for a product, etc
There are four categories of CSR activities - PPPP - name and explain what they are
Pet projects – frequently reflect the personal interests of board members within an organisation. These activities often get a lot of press coverage, but usually offer minimal benefits to society or the organisation. Examples include: sponsoring an art exhibition or a local sports club event.
Propaganda – focused primarily on building the organisation’s reputation – little benefit to society – sponsoring large sporting events or an international event.
Philanthropy – large charitable donations to groups of people, institutions or individuals – benefit to society – little noise and fanfare with these donations
Partnerships – CSR activities that create significant value creation for both the organisation and society – create value by addressing major strategic issues of challenges faced by the organisation – long-term sustainable benefit for society
What are the 7 essential principles into what make partnerships work in the long-term?
- Identify clear reasons to collaborate
- Find a ‘fairy godmother’ – core group of people totally committed to the partnership
- Set simple, credible goals
- Get professional help – get a facilitator
- Dedicate good people to the cause
- Be flexible in defining success
- Prepare to let go
How would you measure CSR?
- Focus on outcomes – i.e. how the initiative changed the lives of the beneficiaries and/or helped create a better planet
- Listen to stakeholders – engagement can be through one on one meetings, small focus groups or even social media polling
- Do not undervalue stories – CSR activities cannot be quantified so stories and qualitative observations are just as important
- Learn from others – review impact against other companies
- Measure, refine, modify, measure again – organisations who appear to have the most impact do not look at a one-time endeavour
Integrated thinking is a process that takes into consideration in a balanced way the effective and efficient utilization of the six capital resources available to an organisation when developing strategy or decision making.
What are the 6 capital resources?
- Financial capital
- Human capital
- Manufactured capital – fixed assets
- Intellectual capital – intangibles
- Natural capital
- Social capital – value added
The co-sec should ensure that CSR is on the board’s agenda. What matters should be brought to the board’s attention?
- Highlighting risk of non-compliance
- Commercial benefits
- S.172 requirements relating to stakeholder engagement
- Developing policies to govern CSR activities
- Appointing a board champion
- Communicating with key stakeholders about CSR initiatives
- Linking management rewards to CSR targets
- Reports on CSR on board agenda
What methods are there to engage with stakeholders?
- Reactively – when forced in response to a crisis to rebuild reputation
- Proactively – to understand its stakeholders concerns and issues e.g. surveys, focus groups, etc
- Interactively
