7.6b The Social Environment and CSR Flashcards
What are negative externalities also known as?
External costs
Negative externalities definition
The costs on society of a business’ actions
Do businesses pay for negative externalities?
No, they are covered by the public, the government or other organisations
Examples of negative externalities
- Pollution
- Acid rain
What can government intervention for negative externalities include?
- Legislation
- Making sure a license is needed to take part in an activity
- Taxation
- Fines
Pressure group definition
An organisation formed by a group of like minded people who wish to exert their feelings
Aim of pressure groups
To either raise awareness of, disrupt, or end activities they think are inappropriate
Possible responses to pressure groups:
- Company agrees to change
- Resist pressure
- Government steps in and intervenes
- The public supports the pressure group and turns their back on the business
What do businesses do when making a decision about a project to prevent government or pressure group intervention?
Conduct a cost-benefit analysis
What do cost-benefit analysis’ do?
Work out both the financial and external costs and benefits of a project
Two ways in which a business can take responsibility for its actions
- Conduct contingency planning for any environmental problems they cause
- Conduct an environmental audit
What happens in an environmental audit?
- The business checks on the negative externalities that it causes to the environment
- The business can then identify what it is doing wrong, take responsibility for it, and find a way or correcting the problem and repairing the damage caused
Opportunities of environmental responsibility:
- Marketing opportunities - green image e.g. The Body Shop
- Financial opportunities - may be easier to raise finance if it has strong environmental reputation e.g. the Co-Op Bank will not invest in firms that damage the environment
- HRM opportunities - a business may attract and keep better workers if they feel what they are doing is not damaging the environment
What does CSR do?
Describes a company’s non-financial responsibilities to its stakeholders
Key CSR issues include:
- Labour standards
- Environmental management
- Responsible sourcing
CSR reporting definition
A process where a business assesses the impact its activities have on stakeholders and society
The results of CSR reporting are divided into what four sections?
- The workplace - how a business performs for its workers
- The marketplace - is it dealing ethically?
- The environment
- The community - are they talking with the community and giving something back?
Opportunities of CSR to a business:
- Improved customer loyalty
- Removal of negative externalities
- Decisions are made on what is best for society in the long run
Threats of CSR to a business:
- Less efficient use of resources leads to increased costs
- A business may turn away from CSR when it is not generating lots of profit
- May just be a way of marketing their products
Mendelow power-interest matrix definition
A tool used to judge which stakeholders a business should listen to
What is the use of Mendelow’s power-interest matrix called?
Stakeholder mapping
What are the axes on the Mendelow matrix?
Power and interest
What does Carroll’s CSR pyramid identify?
Four areas of CSR that are all obligations and responsibilities a business should strive to meet.
What are the four areas in Carroll’s CSR pyramid?
- Philanthropic responsibility - do what is desired by stakeholders
- Ethical responsibility - do what is expected by stakeholders
- Legal responsibility
- Economic responsibility
