Chapter 11 - Corporate Social Responsibility And Sustainability

Question 1

Define CSR

Answer 1

“Business decision making linked to ethical values, compliance with legal requirements and respect for people, communities and the environment.”

(Business for Social Responsibility)

Question 2

Outline some example of how companies might act in accordance with an awareness of social responsibility

Answer 2

• treat employees with respect
• operate ethically
• respect human rights
• sustain the environment
• be responsible neighbours

Question 3

What is a corporate citizen?

Answer 3

A company that seeks to behave as a good citizen, by respecting its social responsibilities.

Question 4

Define sustainability.

Answer 4

“Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

(Brundtland Report 1987)

Question 5

What are the six capitals whose value companies should seek to maintain or enhance?

Answer 5

Financial
Manufactured
Human
Intellectual
Natural
Social

Question 6

What is another term for “CSR”?

Answer 6

Corporate citizenship.

Question 7

With which corporate governance approach is CSR in accordance?

Answer 7

The stakeholder approach.

Question 8

What is the six capitals model?

Answer 8

The concept that an organisation creates or destroys value over time using and affecting 6 types of capital.

Question 9

Who loves you?

Answer 9

Jade loves you xx

Question 10

What are the three pillars of CSR?

Answer 10

1 Economic objectives
2 Social objectives
3 Environmental objectives

Question 11

Which three bodies drive the concern for CSR?

Answer 11

1 Governments
2 Investors
3 Companies themselves

Question 12

What are the general OECD Guidelines for multinational companies?

Answer 12

• contribute to economic, social and environmental development
• respect human rights
• encourage the development of local business
• encourage the development of human capital
• refrain from seeking exemptions to local laws
• support good governance
• avoid improper involvement in local politics.

Question 13

How does UK law encourage CSR?

Answer 13

CA S172 requires directors to promote the success of the company while having regard to:

• the interests of the company’s employees
• the need to foster relationships with suppliers and customers
• the impact of company’s actions on the community and environment
• the desirability of maintaining a reputation for high standards of conduct

Question 14

Why were the OECD guidelines for multinational companies considered necessary?

Answer 14

To encourage the positive contributions that multinationals can make to economic, social and environmental progress.

Question 15

Define SRI.

Answer 15

Socially Responsible Investing

Question 16

Explain three approaches to implementing an SRI strategy.

Answer 16

• engagement (seeking to persuade a company toward CSR)
• investment preference (investing based on a balance between CSR requirements and financial opportunities)
• screening (only investing in companies that meet certain criteria).

Question 17

Name 2 CSR Indexes

Answer 17

1 Dow Jones Sustainability Indices

2 FTSE 4 Good

Question 18

How might companies be affected by a bad reputation for concerns about social and environmental issues?

Answer 18

They lose consumer and investor confidence and may be subject to government sanctions (e.g. BP)

Question 19

What are the potential benefits of CSR?

Answer 19

• reduced reputational risk
• reduced business probity risk
• PR and marketing benefits
• commercial and financial benefits

Question 20

How has AkzoNobel incentivised CSR?

Answer 20

By making 50% of director remuneration linked to CSR targets.