Corporate Social Responsibility Presentation

Corporate Social Responsibility
Josh Brunsdon
Will Case
Matt Cassettari

‘BECAUSE BUSINESS IS NOT JUST ABOUT CREATING
ECONOMIC VALUE, BUT ALSO SOCIAL VALUE’
(Argandona 2011)

DEFINING CSR
 European Commission (2003) ‘inherent voluntary
nature of CSR’ regarding commercial success the
immediate priority’.
 ‘A concept whereby companies integrate social
and environmental concerns in their business
operations and their interaction with their
stakeholders on a voluntary basis’
 Ethics In Action – ‘Obligation of all stakeholders
and activities’ (2003)
 One recent study identified 37 definitions of CSR
(Dahlsrud 2006).
 Concluded the term as one with no guidance
which can be easily altered to suit an
individuals objectives.

Economic Legal
Ethical Philanthropic
CARROLL’S FOUR PART MODEL OF CSR

ORIGIN OF CSR
 The foundations of CSR can be related to initial
working and social welfare acts of the industrial
revolution.
 Development of philanthropy, Cadbury and Lever
were some of the first to actively invest in the local
community in the early 1900s.
 In 1916 John Mason Clarke wrote in the Journal of
Political Economy:
“if men are responsible for the known results of their
actions, business responsibilities must include the
known results of business dealings, whether these
have been recognised by law or not”.

Sustainability Accountability Transparency
Implies that society
and business must
use no more of a
resource than can
be regenerated in
order to secure
future use.
Implies recognition
that an organisation
is part of a wider
societal network
and has
responsibilities to all
of that network.
External impacts of
actions can be
ascertained from
business reports and
that pertinent facts
are not disguised
within that reporting.
MODERN CSR: THE PRINCIPLES

MODERN CSR: WHY DO IT?
 The millennial demographic and the age of
information has created transparency and
potential for further scrutiny of corporate
operations.
 Corporations are continually seeing the
advantages associated with CSR initiatives.
Staff are more loyal, productive,
motivated and recruitment
standard higher
Makes corporations more
competitive by building
relationships between authorities
and consumers

CUSTOMER ENGAGEMENT
Engagement into
value creation
Trust Satisfaction
Strength of
relationship
Loyalty
(Banyte and Dovaline 2014)

‘There is one and only one social
responsibility of business – to use its
resources and engage in activities
designed to increase profit so long as its
stays within the rules of the game, which
is to say, engages in open and free
competition without deception or
fraud’ (Friedman 1970)
‘Business turns a social problem into
economic opportunity, and economic
benefit into productive capacity, into
productive capacity, into human
competence, into well paid jobs and
into wealth’ (Drucker 1984)
A TRADITIONAL VIEWPOINT?
‘Profit is all that matters’

 Social issues are not of concern for business
people (Friedman 1962).
 Management has one responsibility, solely to
maximise profits for owners & shareholders.
 Business managers lack expertise to make
socially orientated decisions (Davis 1973).
 CSR dilutes a businesses primary purpose of
making profits (Hayek 1969).
‘PROFIT IS ALL THAT MATTERS’

‘Businesses are owned by
their shareholders - money
spent on CSR by managers is
theft of the rightful property
of the owners’
 Human rights case
against CSR
 CSR deprives
shareholders of property
rights
 Conventional views of
social responsibility
absurd (Sternberg 2009)
 Decency, honesty,
fairness expected of any
corporation
THE CASE AGAINST CSR

THE CASE AGAINST CSR
‘Its Not CSR, its Just Good Business’
 One popular argument suggests that ‘socially
responsible’ companies do better by their
consumers and investors.
 Dow Chemical for example, reduces its Co²
emissions to lower energy costs.
 McDonalds employ more humane slaughtering
techniques to increase meat yields (Warrick 2001).
 Wal-Mart have adopted ‘Green’ packaging to
replace expensive petroleum based packaging
(Brubaker 2005).
 Starbucks gives part-time staff health insurance in
the US to reduce employee turnover (Schmeiser 2005).
‘It’s Just
Good
Business’

‘Every large corporation should be thought as a
social enterprise; that is an entity whose existence
and decisions can be justified insofar as they
serve public or social purposes’ (Dahl 1972)
‘Business encompasses the economic, legal
ethical and discretionary expectations that
society has of organisation at a given time’
(Carroll 1979)
‘In the modern commercial era, companies and
their managers are subjected to well publicised
pressure to play an increasingly active role in the
welfare of society’ (Balabanis et al. 1998)
‘CORPORATIONS ARE PART OF SOCIETY’

TRIPLE BOTTOM LINE
 Works on the assumption that corporations are members
of the moral community.
 Responsibilities including economic, social and
environmental sustainability.
 Allows corporations to evaluate their performances on a
broader perspective in order to create great business
value (Slaper and Hall 2011)
(Csrambassadors 2014)

‘A certain amount of rhetoric may be
inevitable in the area of social
responsibility. Managers may even
believe that responsibility insulates the
firm from the necessity of taking
socially responsible action’
(Robertson and Nicholson 1996)
‘Whether or not business should
undertake CSR and the forms that
responsibility should take, depends
upon the economic perspective of
the firm that is adopted’ (Moir 2001)
‘CSR IS CONDITIONAL’
(Van der Lingen 2010)

THE IMPACT OF GLOBALISATION ON
CORPORATE SOCIAL RESPONSIBILITY
1995/96 – Described as
the ‘Year of the
Sweatshop’ activists
highlighted the bad
practices of market
leaders Gap, Nike and
Disney.
1960s & 70s – An
increased effort to
regulate the
activities of
foreign investors
(TNCS) from the
Global North.
A number of bribery cases
resulted in US Congress
passing the Foreign
Corrupt Practices Act in
1977 (Jenkins, 2005).
1980s – Significant
shift away from
TNC intervention in
developing
countries.
The
‘regulatory
arbitrage’
phenomenon.
In the Global South it
led to a dramatic
shift from regulation
of TNCs, to intense
competition to
attract Foreign
Direct Investment
(FDI).
1990s –
Increased
significance of
brands and
corporate
reputation made
leading
companies
vulnerable to
bad publicity.
Development of global
communications,
specifically the internet
contributed to increased
public awareness of poor
working conditions in the
Global South.
1992 – Levi
Strauss
adopted its
Business Partner
Terms of
Engagement.
increased global media
coverage of corporate
failures, highlighted the
need for business ethics,
especially since the turn
of the millennium.

GLOBALISATION, CORPORATE FAILURES
&CSR
 Increased global competition between business and
the market.
 Business leaders more ambitious in terms of their
behaviors and status in the globalized world.
 Others are destroying fair business and principles as a
result of increasing competition.
 Globalisation is creating a world where multi-national
corporations are willing to risk legality and ethical
beliefs in order to secure a financial advantage.
 The cost of getting caught however, is now more
significant than ever before (Harish and Santhosh
2013).

CSR & GLOBALISATION:
ROYAL DUTCH SHELL IN NIGERIA
 Shell claim to have invested in professional skill
development including project management,
welding and catering.
 To have invested in healthcare in the Niger
Delta.
 To have provided financial and technical
assistance through development NGOs.
 To have invested in schools, learning facilities
and university scholarships.

Thought we
covered this
up Peter?

ROYAL DUTCH SHELL IN NIGERIA:
THE REALITY
 Shell admitted to fueling corruption, poverty and conflict from oil
activities (BBC 2004)
 Found guilty of bribing the Nigeria military promising arms and
military contracts.
 Shell vastly underestimated the size of oil spills in 2008 by as much
as 2400%.
 Ignored staff warnings about poorly maintained pipelines.
 Court documents revealed Shell knew for years that corrosive
pipes and equipment failure were a significant risk factor.
 Water contaminated to this day, with tap water containing
cancer causes compounds such as benzene.
 75% of agricultural land in the Niger Delta still has no access to
clean drinking water.
 Shell only to begin Niger Delta clear up in April 2017.

Sepp Blatter
Martin Winterkorn
Tony Hayward
Rupert Murdoch

“We stand for responsible, honest actions.”
“We make ecologically efficient advanced
technologies available throughout the world.”
“We are a partner to society and politics with respect
to ecologically sustainable development.”
“We are obligated to the truth with respect to
political institutions.”
THE VOLKSWAGON EMISSION SCANDAL
‘What they said’

This looks like a
good hiding
spot..

THE VOLKSWAGON EMISSION SCANDAL 2015
‘The diesel dupe’
 September 2015, Environmental Protection
Agency (EPA) discovers many VW cars being sold
in the USA being fitted with a defeat device in
diesel engines.
 Emissions devices were said to have been fitted
on roughly 10.5million vehicles worldwide.
 VW diesel cars were said to be emitting 40 times
more toxic fumes than permitted.
 VW forced to recall 482’000 diesel cars in the US
as well as halt sales of several other diesel
models.
 Company shares have since collapsed by a third
and VK faces billions of dollars in fines as well as
numerous lawsuits.

Sustainability
Accountability
Transparency
THE PRINCIPLES

MONSANTO
‘The most evil Corporate in the World’

1901 – First
product
developed
Saccharin, sold
to Coca Cola
as a sweetener,
later found to
be toxic.
1920s – Expansion
into industrial
chemicals and
drugs. Release of
PCBs into Illinois
state water
supply
1930s – Expansion
into cleaning
products, rubbers
and plastics, all
found to be toxic
1940s – Uranium
research contributed
to Manhattan
projects and
Hiroshima atomic
bomb.
1960s –
Productions of
Agent Orange for
Vietnam invasion.
1960s –
Aspartame toxin
forcibly
introduced into
food supply
1980s –FDA
drinks
corruption led
to Aspartame
being added
to soft drinks.
Profits soar due
to addictive
component.
1990s – Millions
spend on
defeating state
legislation against
dumping of illegal
substances. Sued
for cancer in
workers.
2000s – Found to
wrongly
intimidated
farmers and small
businesses for use
of GM seeds and
pesticides.
2010s –
Successfully
lobbied against
GMO labelled in
the USA.
MONSANTO
‘The most evil Corporate in the World’

CSR & GLOBALISATION:
COCA COLA IN INDIA
 2.7 litres of water required to make one litre of Coca
Cola.
 Coca Cola consumes over 290billion litres of water
annually.
 Tapping into underground aquifers has led to water
tables dropping as well as water shortages and the
inability to farm crops.
 Independent assessment in 2004 found Coca Cola
responsible for worsening water shortages in the Kala
Dera region.
 Large scale protests and Government pressure forced
factory closures.
 Described as Coca Cola’s wake up call by CEO
Muhtar Kent (2008)
 Coca Cola described as the ‘talking shop’ that
achieves little for sponsoring the World Water Forum in
2005.

HOWEVER..
 Since the 2004 India debacle, Coca Cola have
very much stepped up their game in terms of
CSR.
 In 2015, Coca Cola used 300billion litres of water
to produce 151billion litres of product, using 27%
less water used per litre than 2004.
 Coca Cola now conducts annual water footprint
studies which explore the utility and practical
application of water in a sustainable manner.
 Since 2013, Coca Cola has committed to
sustainably source its key ingredients and
simultaneously announced its own ‘Sustainable
Agriculture Guiding Principles’ SAGP.
 Have partnered with the Nature Conservancy
(TNC) to aid with water replenishment efforts.
“Coca-Cola’s commitment to
water underscores that investing
in nature can produce very
positive returns for businesses
and local communities. TNC is
proud of its collaboration with
Coca-Cola and congratulates
the company and its bottling
partners on a very significant
achievement.”
Mark Tercek
(CEO of TNC)

 Nike criticised for poor working conditions and
employing young children. Resulted in brand
boycotts in late 90s.
 Nestle criticised for labour practices, unethical
marketing and using child labour during the
1970s and 80s.
 James Hardie criticised for its failure to provide
adequate compensation for asbestos related
diseases resulting from products.
 The ‘horsemeat scandal’ in 2013 involving
major retailers including Tesco, Aldi, Ikea and
Lidl.
 In California, Enron manipulated electricity
prices to maximise profits in 2000/2001 (Kercher
2007).
CSR & THE LAW: OTHER EXAMPLES

Socially Responsible Business Practices
Costco
Pay
employees
double the
national
average
90% of
employees
receive
healthcare
benefits
Support
local
products,
businesses
and
suppliers
Provide
internal
leadership
development
policies
Disability
Insurance
401(k)
stock
purchase
plans for
employees
Craig Jelinek
CEO of Costco

Expensive!
• ‘Costco’s management is focused on its
employees to the detriment of its
shareholders’ (Business Week 2012)
• The conventional view states that dollar
paid to your employees is a dollar taken
away from your shareholders.
• Therefore, theoretically you should pay
your workers as little as possible and work
them as hard as possible.
• Just like a great football manager can
squeeze that little bit extra out of his
players.
Employees
Shareholders
Employees
Shareholders
Costco

However,
Treating your employees well, actually
pays off in terms of firm value.
Costco’s former CEO Richard Galanti
previously stated:
‘From day one we’ve run the business
philosophy that if we pay better than
average, if we provide a salary that
people can live on, have a positive
environment and good benefits, we’ll
be able to hire better people, they’ll
stay longer and be more efficient.’
Costco

Concern for workers however, is not at
the expense of profit, indeed, Costco’s
profits have exceeded $2billion in each
of the last 5 years.
‘Caring about society does not come
at the expense of profit, it supports
profit’
Costco

WHOLE FOODS MARKET
 Supports sustainable agriculture through increased
production of organically and bio-dynamically
grown foods and the reduction of pesticide use.
 Actively encourages waste production and use of
renewable energy resources
 Participate in community recycling programmes.
 Created the Local Producer Loan programme,
provides up to $10 million in low interest loans.
 Whole Planet Foundation has raised $1.5 million,
lifting 40,000 women from poverty.
 1998 – First “Green Building” award for HQ in Austin,
Texas.

Whole Foods Market Controversies
June 2015 – Overcharging customers across California
and New York City.
• Failed to deduct weight of fresh food containers.
• Placing smaller amounts into packages than the
stated weight.
• Selling items by the piece instead of the weight.
June 2016 – People for the Ethical Treatment of
Animals (PETA) filed a false marketing complaint
• All WFM meat is rated via the Global Animal
Partnership (GAP), a WFM founded organisation.
• The reality in terms of animal welfare was that WFM
were no better than KFC or McDonalds.

 Philanthropic goal at the heart of the
company.
 Founder Blake Mycoskie started TOMS on
the principle of giving to those in poverty.
 One for One Campaign – for every pair
sold, a pair is donated to a child a less
developed country.
 Therefore, directly ties consumer purchase
with donation.
 Since inception in 2006, over 70 million
shoes have been donated in countries
such as Haiti, Ethiopia, Kenya, India and
Argentina.
TOMS‘What if I start a shoe
company and every time I
sold a pair of shoes, I gave
away a pair to a child in
need’

TOMS CRITICISM
However, the One for One scheme
has received criticism from the
International Development
community.
“TOMS, model is designed to make
consumers feel good rather than
addressing the underlying causes of
poverty.”
TOMS committed to manufacturing
and producing one third of Giving
Shoes in countries where they are
given.
Children shoes given by TOMS are
among the cheapest to manufacture
($3.50 - $5). Which isn’t apparent to
purchasing customers.

CISCO ‘CONNECTING PEOPLE IN CRISIS’
 Cisco call CSR their corporate social
responsibility mission.
 Cisco provide emergency
communications and connectively
solutions in disaster events.
 Networks implemented help with relief
agencies and government organisations
to organise and deploy services on the
ground.
 Since 2005 Cisco have deployed
communications systems to 28 different
disaster zones throughout the world.
 Examples include: The Sichuan
Earthquake 2008, Hurricane Sandy in
2012 and Typhoon Haian in 2013.
 Have developed their own unique CSR
business process.
‘Philosophically both as a
company and as an
individual, those that are
the most successful, owe
and obligation to others to
give back’
John Chambers current Executive
Chairman and former CEO of CISCO

TESLA ‘Taking CSR to a New Level’
“Tesla will not
initiate patent
lawsuits in good
faith for anyone
who wishes to use
our technology.”
 Tesla’s mission has been to
“accelerate the advent of sustainable
transport by bringing compelling mass
market electric cars to the market as
soon as possible.”
 The release of their patents shows the
company’s devotion to CSR and their
willingness to make sacrifices for the
improvement of the wider community.

Elon Musk ‘I’ll fix South Australia’s Energy
Woes in 100 days or it’s for free’
(Twitter 2017)
 Tesla Inc CEO Elon Musk promised Atlassian
Corporation founder Mike Cannon-Brookes
that he could install a 100-megawatt-hour
energy storage plant within 100 days.
 The promise would help balance out the
unstable local grid throughout the South
Australia state where electricity prices has
risen exponentially.
 Musk promised that if it could not be
completed within 100 days, he would finish
the task but at no cost.

Difference Between Sustainability & Corporate
Social Responsibility
Dyllick & Kai (2002) define sustainability as
‘meeting the needs of a firm’s direct and
indirect stakeholders without comprising its
ability to meet needs of future stakeholders’.
‘The continuing commitment by business to
behave ethically and contribute to economic
development while improving the quality of life
of the work force and their families as well as the
local community and society at large’ (WBC
2010).

These two terms can seem interchangeable, but there are some
subtle, and not so subtle, differences between them.
1. Vision
CSR looks backwards, reporting on what a business
has done, typically over the last year to make a
contribution to society.
Sustainability looks forward, planning the changes a
business might make to secure its future.

2. Targets
CSR tends to target opinion formers such as
politicians, NGOs and the media.
Sustainability targets the whole value chain from
suppliers to operations to partners to consumers

3. Business
CSR is about becoming compliant
Sustainability is about business

4. Management
CSR gets managed by communication teams.
Sustainability by operations and marketing.

5. Reward
CSR investment is rewarded by politicians.
Sustainability investment is rewarded by the city.

6. Drive
CSR is driven by the need to protect reputations in
developed markets.
Sustainability is driven by the need to create
opportunities in emerging markets.

 Charitable donations that relieve social
problems are socially responsible, but they are
not sustainable if they do not resolve the
underlying issue.
 Securing short-term success should never risk
long-term survival. Business sustainability is the
ability of firms to respond to their short-term
needs without compromising the ability to
meet future needs.
WHY DOES KNOWING THE DIFFERENCE
MATTER?

CONCLUSIONS
 Corporate actions are still very much underpinned by
board pressure and the requirement of business to
produce profits.
 The nature of CSR is conditional, dependant on a
companies overall ethics and belief structure.
 Being socially responsible does not necessarily equate to
being socially sustainable.
 Gaps are emerging between the legal accountability that
relate to CSR initiatives.
 CSR is Top-Down meaning it is up to the leader of a
company to make CSR a core component of every layer
of a businesses operations.
 CSR will only be effective when the term is no longer used.
 Instead true CSR will only exist when individuals throughout
the corporate ladder have one clear ideology on
prioritising sustainable development and socially
responsible behaviour.
 True CSR only possible when all of Carroll’s four part model
is engaged.

ACTIONS
 Engage in open discussion over the reality of how a business
doing business naturally provides massive advantages to society
and that doing good does not come at the expense of profit, it
supports it.
 The realisation that businesses in themselves add value by
creating jobs and providing quality products and services to
clients.
 Corporations need to take more sustainable (long term) views on
the CSR side to their businesses.
 Corporate social responsibility must become closer in twinned
with corporate sustainability and the gap between the two
needs to be narrowed.
 Corporates and business leaders need to become more
emotionally intelligent. This helps individuals develop skills such as:
Self-awareness, Self-regulation, motivation and empathy for
others.
 Develop problem solving skills in order to change underlying
values and assumptions (double-loop learning).

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