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The Responsibility of Business

Class presentation to postgraduate students at Griffith University

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The Responsibility of Business

  1. 1. Managing Sustainable Enterprise GCSE 7508 Griffith Business School Asia Pacific Centre for Sustainable Enterprise January 2013 Jeremy Williams jeremy.williams@griffith.edu.au @jeremybwilliams @TheGreenMBA facebook.com/profjeremybwilliams jeremybwilliams.net
  2. 2. Session 2:The Responsibility of Business
  3. 3. A word or two from the forefather of modern capitalism• ‘It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.’ Adam Smith Wealth of Nations, 1776 3
  4. 4. The social responsibility of business …• … is to increase its profits Milton Friedman 9
  5. 5. ‘CSR is the voluntaryassumption by companies ofresponsibilities beyond purelyeconomic and legalresponsibilities’. (Piacentini et al, 2000)
  6. 6. • ‘Corporate social responsibility can be defined as a principle stating that corporations should be accountable for the effects of any of their actions on their community and environment’. (Frederick et al, 1992)
  7. 7. • ‘Corporate social responsibility is achieving commercial success in ways that honour ethical values and respect people, communities and the natural environment’. (Business for Social Responsibility, 2003)
  8. 8. Sustainable Enterprise Economy ‘An economy where any enterprise – corporate, social or individual – aims to have as little impact on the environment as possible and is mindful of its social impact. In an enterprise economy the spirit of the community is geared to innovation, creativity, problem solving, entrepreneurialism and enthusiasm for life. A sustainable enterprise economy produces wealth, preserves the natural environment and nurtures social capital.’Malcolm McIntoshSustainable Enterprise and Sustainable Futuresin Suder, G.G.S. (ed) International Business Under Adversity:A Role in Corporate Responsibility, Conflict Prevention and Peace (2008) Asia Pacific Centre for Sustainable Enterprise, Griffith Business School
  9. 9. The social responsibility of business …http://www.youtube.com/watch?v=k44WifxDSX4 17
  10. 10. The sceptics • CSR is a mistake because it distorts market forces and increase firms‘costs • They also challenge the view that the world isProfessor David Henderson Professor Steve H. HankeVisiting Professor, facing worsening social Senior Fellow at the CatoWestminster Business and environmental Institute and Professor ofSchool, UK; former Head of problems. Applied Economics at theEconomics & Statistics Johns Hopkins UniversityDepartment, OECDView Prof Henderson’s paper at:http://research.dnv.com/csr/PW_Tools/PWD/1/00/L/1-00-L-2001-01-0/lib2001/CSR_ 18
  11. 11. The triple bottom line • “Is it progress if a cannibal uses a fork?” – Stanislaw Lec Elkington (1997) asks this question in the context of 21st century capitalism as he ponders whether holding corporations accountable to a ‘triple bottom-line’ of economic prosperity, environmental quality, and social justice constitutes progress.John Elkington 20
  12. 12. Transparency, accountability, reporting• In practical terms, corporate accountability now amounts to more than maximising shareholder profit• For proactive and successful companies, it is about maximising stakeholder value – a different goal with a broader set of beneficiaries• Inevitably, this involves the recognition of a triple bottom line that focuses on people and the planet as well as profit. 21
  13. 13. The transition from the industrialeconomy to the sustainable economy 22
  14. 14. ‘Responsible’ business?• BP and Shell issue CSR reports, but oil is to remain dominant source of energy through to 2050• BAE has announced it has a new range of environment- friendly weapons, including ‘lead free’ bullets, rockets with reduced toxins and grenades that produce less smoke• BAT issues a Sustainability Report, but still contributes to the premature death of millions of people 25
  15. 15. The Four Basic Principles of Corporate CitizenshipOrganisations should be able to:1. Articulate their role, scope and purpose;2. Understand their social and environmental impactas well as their financial performance;3. Be transparent and accountable;4. Be in compliance.Corporate Citizenship (1998 & 2003) McIntosh et al.
  16. 16. ‘Corporate citizenship, like individual citizenship, isan idea which has both practical and ethicaldimensions. A key feature of citizenship is that itinvolves a mutually reinforcing relationship betweenindividuals and communities’.Corporate CitizenshipMcIntosh, Leipziger, Jones and Coleman (1998)
  17. 17. ‘Citizenship is defined as the rights and duties of amember of a country. Companies, as independentlegal entities, are members of countries and can bethought of corporate citizens with legal rights andduties. All companies, therefore, are corporatecitizens, but their citizenship performance varies justas it does for an individual citizen. But citizenship ismore than a legal term, it is a political term – ‘activecommitment, responsibility, making a difference’(Drucker 1993).Perspectives on Corporate CitizenshipAndriof and McIntosh (2001)
  18. 18. http://www.flickr.com/photos/wolframburner
  19. 19. http://www.flickr.com/photos/wolframburner
  20. 20. Examples of CSR initiatives over last ten yearsEthical workplace management systems certification (SA8000)Sustainability management systems assurance (AA1000S)Learning platforms based on international conventions onhuman rights, labour standards, environmental protection andcorruption (UN Global Compact)Standardisation of reporting on corporate financial, social andenvironmental reporting (Global Reporting Initiative)
  21. 21. The UN Global Compact www.unglobalcompact.org.au The Global Compact asks companies to embrace,support and enact, within their sphere of influence, a set of core values in the areas of human rights, labour standards, the environment, and anti-corruption
  22. 22. Human RightsCompanies are asked to:1. Support and respect the protection of internationally proclaimed human rights; and2. Make sure they are not complicit in human rights abuses
  23. 23. LabourCompanies are urged to:3. Uphold freedom of association and recognise the right to collective bargaining.4. Make sure they are not employing forced or compulsory labour.5. Refrain from employing child labour.6. Eliminate discrimination in their hiring and firing policies.
  24. 24. EnvironmentCompanies are asked to:7. Support a precautionary approach to environmental challenges.8. Undertake initiatives to promote greater environmental responsibility.9. Encourage the development and diffusion of environmentally friendly technologies.
  25. 25. Anti-Corruption10. Businesses should work against all forms of corruption, including extortion and bribery.
  26. 26. The Global Compact’s ten principles in the areas ofhuman rights, labour, the environment and anti-corruption enjoy universal consensus and are derivedfrom:The Universal Declaration of Human RightsThe International Labour Organizations Declaration on FundamThe Rio Declaration on Environment and DevelopmentThe United Nations Convention Against Corruption
  27. 27. ‘The Global Compact has explicitly adopted a learning approach to inducing corporate change, as opposed to a regulatory approach; and it comprises a network form of organization, as opposed to the traditional hierarchic/ bureaucratic form’. John Ruggie - UN & Harvard (2000)
  28. 28. • The leader in the quest to develop internationally accepted standards for triple bottom line reporting is the Global Reporting Initiative (GRI) http://www.globalreporting.org/• 1st draft of reporting guidelines (G1) was piloted by 21 companies during 1999-2000; 2nd version of the guidelines (G2) was released in 2002; Version 3 (G3) came out in 2006• Since this time, more than 1500 companies worldwide have used the guidelines, making it the de facto global standard for reporting 41
  29. 29. Example: CasioJoined Global Compact in 2010
  30. 30. Case Study:“The good, the bad, and the ugly” 43
  31. 31. • Which companies have a bad record? • Which are• Which companies plain have a good record? ugly? 44
  32. 32. Consider, the evolution of CSR• A company that views CSR to be of key strategic importance• A company that had reputational problems is trying to rehabilitate itself• A company that has little or no interest in CSR 45
  33. 33. Some discussion points …• The affordability of CSR in a highly competitive environment• Can companies afford not to commit to CSR?• Is there ‘good CSR’ and ‘bad CSR’?• Is the sustainable enterprise a special case? 46
  34. 34. Prepare a 10 minute presentationproviding an example (and critique) of each Go ahead… make my day! 47