C4: CSR

Question 1

Corporate Social Responsibility (CSR)

Answer 1

The actions of an organization that are targeted toward achieving a social benefit over and above maximizing profits for its shareholders & meeting all its legal obligations

Question 2

CSR is also known as

Answer 2

• Corporate Citizenship

- Corporate Conscience

Question 3

The definition assumes:

Answer 3

the corporation is operating in a competitive environment and that the managers of the corporations are committed to an aggressive growth strategy while complying with all federal, state and local legal obligations

Question 4

Corporate’s legal obligations

Answer 4

1. Payment of all taxes related to the profitable operation of the business
2. Payment of all employer contributions for its workforce
3. Compliance with all legal industry standards in operating in a safe working environment for its employees
4. Delivering safe products for its customers

Question 5

Instrumental Approach

Answer 5

The perspective that the only obligation of a corporation is to maximize profits for its shareholders in providing goods and services that meet the needs of its customers

Question 6

Social Contract Approach

Answer 6

The perspective that the a corporation has an obligation to society over and above the expectations of its shareholders

Question 7

Assumptions of Milton Friedman

Answer 7

1. Unethical for corporation to do anything other than deliver the profits for which investors have entrusted
2. Those profits should be earned without “deception or fraud”
3. As an employee or the corporation, manager has an ethical obligation to fulfill his roles in delivering the expectations of his employers.

Question 8

What’s the difference between Instrumental Approach and Social Contract Approach? (1)

Answer 8

Instrumental approach - corporation argues that they meet social obligations through the federal and state taxes, and therefore they should not be expected to contribute beyond that.

Question 9

What’s the difference between Instrumental Approach and Social Contract Approach? (2)

Answer 9

Critiques of IA argue that it takes a simplistic view of the internal processes of a corporation in isolation, with no reference to the external consequences of the actions of corporations and its managers

• SCA acknowledge that there is a world outside that is impacted by the actions or corporation and since corporation depends on society for its existence & continued growth, there is an obligation for the corporation to met the demands of that society rather than just the demands of a targeted group of customers.

Question 10

business argument “doing well by doing good”

Answer 10

Rather than waiting for the media or their customers to force them into better csr practices, many organizations are realizing that incorporating the interests of all their stakeholders instead of just their shareholders can generate positive media coverage, improved revenues and higher profit margins.

Question 11

“doing well by doing good” - 2

Answer 11

easy policy to adopt and many organizations have started down that road by making charitable donations, underwriting projects in their local communities, sponsoring local events, and engaging in conversations with special interest groups about earth-friendly packaging materials and the use of more recyclable materials

Question 12

Who asserts Five Driving Forces behind CSR?

Answer 12

Joseph F. Keefe

Question 13

What are the Driving Forces behind CSR?

TKSGF

Answer 13

1. Transparency
2. Knowledge
3. Sustainability
4. Globalization
5. The failure of public sector

Question 14

Transparency:

Answer 14

Information-driven economy where business practices have become increasingly transparent

Companies can no longer sweep things under the rug - whatever they do will be known almost immediately

Question 15

Knowledge

Answer 15

Information-based economy also means that consumers and investors have more information at their disposal than at any time in history

They can be more discerning and wield more influence

Consumers can choose between one companies over another based upon the companies’s environmental records

Question 16

Sustainability

Answer 16

We are fast approaching or have already crossed the sustainable yield thresholds of many natural systems (freshwater, oceanic fisheries, forests) which cannot keep pace with projected population growth.

corporations are under increasing pressure from diverse stakeholder to demonstrate that business plans and strategies are environmentally sound and contribute to sustainable development

Question 17

Globalization

Answer 17

represents a new stage of capitalist development, this time w/o public institutions (in place) to protect society by balancing private corporate interests against broader public interest

Environmental Protection Agency, Clean Air & Water Act are governmental efforts to intervene in the economy to improve the worst excesses of market capitalism

Question 18

The failure of public sector

Answer 18

In the US and other developed nations, citizens arguably expect less of government than they used to, having lost confidence in the public sector as the best or most appropriate venue for addressing a growing list of social problems.

This has increased pressure on corporations to take responsibility for the social impact of their actions rather than expecting the public sector to do so.

Question 19

Ethical CSR

Answer 19

Purest/most legitimate type of csr in which organizations pursues a clearly defined sense of social conscience in managing their financial responsibilities to shareholders, their legal responsibilities to their local community and society as a whole, and their ethical responsibilities to do the right thing for all their stakeholders.

Question 20

Altruistic CSR

Answer 20

which organizations underwrite specific initiatives to give back to the company’s local community or to designated national/international program

Question 21

Strategic CSR

Answer 21

which organizations target programs that will generate the most positive publicity or goodwill for the organization but that run the greatest risk of being perceived as self-serving behaviour on the part of the organization

Question 22

Triple Bottom-line Approach

Answer 22

involves recording social & environmental performance in addition to he traditional financial bottom line performance

Corporations understand the value of promoting their csr activities, annual reports start to feature community investment projects.

Social and financial reports do not offer the same standardized approach as the financial reports which follow GAAP

Question 23

The Kyoto Protocol

Answer 23

an agreement between 160 countries that become effective in 2005 required developed nations to reduce greenhouse gas emissions either by modifying their own domestic industries or funding projects in developing nations in return for “carbon credits”

Question 24

Relative merits of carbon off-set trading

Answer 24

This has spawned a thriving business in trading credits for cold hard cash.

those funds can be used to develop infrastructures in poorer communities but critics argue that the offset credit option allows corporations to buy their way into compliance rather than being forced to change their operational practices.