Introduction to CSR

BUS560M
Opening
Prayer
Leader: Let us be aware that
we are in the Holy Presence
of God.
All: In the Name of the Father,
and of the Son, and of the
Holy Spirit.
Amen.
 Lord Jesus grant us the
FAITH to trust in Your
loving presence and
providence,
The ZEAL to give ourselves
fully to Your Mission
And the COMMUNION to
pursue Your holy will as
one.
That we may show Your
great LOVE for Your
people.
Amen.
 All:
I will
continue
O my God
To do all
my actions
for the
love of
You
Leader: St. John Baptist de La Salle
All: Pray for us!
Leader:
Live
Jesus in
our
hearts

All:
Forever!
 Session 9
Carroll, The Pyramid of Corporate Social
Responsibility: Toward the Moral
Management of Organizational
Stakeholders
Teehankee, Why should corporations be
socially responsible?
The Competitive Advantage of Corporate
Philanthropy
ISO26000
 The Lasallian Business Leadership Framework

HIGHER PURPOSE
The Life of St. La Salle and the
Lasallian Core Values of Faith, Zeal, &
Communion in Mission
Catholic Social Teachings
Vocation of the Business Leader
MANAGEMENT
DECIONS & ACTION
Outputs
Integration project: service
DEMANDS OF NATIONAL learning report, leadership mission,
AND GLOBAL IMPERATIVES self-assessment and leadership
Global Business Oath development plan
Philippine Constitution Ethics and CSR Project :
Dialogic Leadership and Organizational assessment
Crucial Conversations and change leadership plan
Family Plan: Income and Expense
Budget & Work-Family Schedule
Analysis and Group Discussion
of Ethics Cases
Family Code
Work and Life Harmony
Personal Finance
FAMILY AND RESOURCE
FOUNDATION
 What is CSR?

http://www.youtube.com/watch
?v=E0NkGtNU_9w&list=PLbuayHr
Xca4IswkVusLanUS1Hk-OQio37
Corporate Social Responsibility
Preliminary definitions of CSR
The impact of a companys actions on
society
Requires a manager to consider his acts
in terms of a whole social system, and
holds him responsible for the effects of his
acts anywhere in that system
A Companys Ripple Effect
Corporate Social Responsibility
Business Criticism/ Social Response
CycleFactors in the Societal Environment

Criticism of
Business
Increased concern A Changed
for the Social Social Contract
Environment
Business Assumption of Corporate Social
Responsibility
Social Responsiveness, Social Performance,
Corporate Citizenship
A More Satisfied
Society
Fewer Factors Increased Expectations Leading
Leading to More Criticism
to Business
2-
Criticism 7
Corporate Social Responsibility
Historical Perspective
Economic model the invisible hand of
the marketplace protected societal interest
Legal model laws protected societal
interests
 Friedmans Definition of SR
social responsibility of business is to increase its
profits . . . the corporation is an instrument of the
stockholders who own it. If the corporation
makes a contribution, it prevents the individual
stockholder himself deciding how he should
dispose of his funds.

Milton Friedman 1970

Corporate Social Responsibility
Historical Perspective
Modified the economic model
Philanthropy
Search the Web
Community obligations
Milton Hershey was a leading example
Paternalism of an individual who employed
philanthropy, community obligation and
paternalism To learn more about
Milton Hershey and the company,
school and town he built, log on to:
http://www.miltonhershey.com/
 Corporate Social Responsibility
Historical Perspective
What was the main motivation?
To keep government at arms length

Search the Web

Businesses are interested in CSR and one
leading business organization that companies
can join is Business for Social Responsibility.
To learn more about BSR, visit their web site
at:: http://www.bsr.org/
Corporate Social Responsibility
Historical Perspective
From the 1950s to the present the
concept of CSR has gained considerable
acceptance and the meaning has been
broadened to include additional
components
Corporate Social Responsibility
Evolving Viewpoints
CSR considers the impact of the
companys actions on society (Bauer)
CSR requires decision makers to take
actions that protect and improve the
welfare of society as a whole along with
their own interests (Davis and Blomstrom)
Corporate Social Responsibility

Evolving Viewpoints
CSR mandates that the corporation has
not only economic and legal obligations,
but also certain responsibilities to
society that extend beyond these
obligations (McGuire)
Corporate Social Responsibility
Evolving Viewpoints
CSR relates primarily to achieving outcomes
from organizational decisions concerning
specific issues or problems, which by some
normative standard have beneficial rather than
adverse effects upon pertinent corporate
stakeholders. The normative correctness of the
products of corporate action have been the main
focus of CSR (Epstein)
 Social Responsibility
responsibility of an organization for the impacts
of its decisions and activities on society and the
environment, through transparent and ethical
behavior that
contributes to sustainable development, including
health and the welfare of society;
takes into account the expectations of stakeholders;
is in compliance with applicable law and consistent
with international norms of behaviour; and
is integrated throughout the organization and
practised in its relationships
CSR Carrolls Pyramid
 Responsibilities of Business
1- Economic 2- Legal
Responsibilities: Responsibilities:
The only Social Social Responsibility =
Responsibility = Obeying the Law (as
Profit-Maximizing. well as making a
profit)
 3- Ethical Responsibilities
To be ethical, an organization should seek a
higher standard than merely obeying the
law:
e.g., Act with equity, fairness, and impartiality
e.g., Respect the rights of individuals
e.g., Act for the common good
 4 - Discretionary
Responsibilities
Purely voluntary, not mandated by
economics, law, or ethics
Goes beyond what society expects
This is true Social Responsibility
 Social Responsibility Levels

Level of Concern---Likely Behavior

Discretionary------------------- Proaction
Ethical-------------------Accommodation
Legal------------------Defensive Behavior
Economic-------------Anything for profit
 Corporate Social Responsibility
(CSR)

CSR in Equation Form Is the Sum of:

Economic Responsibilities (Make a profit)
Legal Responsibilities (Obey the law)
Ethical Responsibilities (Be ethical)
Philanthropic Responsibilities (Good corporate
citizen)
CSR
 CSR 2.0
Strategic Philanthropy
CSR Fundamental Strategic
Innovation as
Sustainable Value and Operational Impact
Creation
Business Models
CSR
Compliance as
Medium to High
Risk Management Strategic and
Operational Impact

Provide CSR Little Strategic

funding as or Operational
Corporate Philanthropy Impact
and skills
 Why Social Responsibility?
Self-defense - If business is not proactive,
the public or government will press for
more regulation
Obligation - Business exists due to being
sanctioned by society - owes debt to
society
Self-interest - S.R. good for business in long
run
Risk Management and Value
Drivers
Exposure to CSR Transmission Financial
ESG Issues Engagement Factors Value Drivers
Litigation and

Strategy, Policy, Management Systems

Human Rights regulatory risk Risk
premiums
Operational risks

Workplace Reputation
and brands

Operational
efficiency
Costs
Environment
Innovation

Access to new/
existing markets
Corruption
Access to knowledge
and skills
Revenues
Access to
Community Issues key resources

Source: Conference Board/GC Working Group, 2005

 Arguments Against Social
Responsibility
Social expenditures amount to theft of
business owners equity.
Business lacks the ability to pursue social
goals.
Business would gain too much power if
involved in the social domain. (Social
issues should be left to those accountable
to the voters.)
 Reasons for CSR Activities
CSR activities are important to and even
expected by the public
And they are easily monitored worldwide
CSR activities help organizations hire and
retain the people they want
CSR activities contribute to business
performance
 Corporate Social Responsibility Continuum
Do more than
required; e.g. Integrate social
engage in objectives and
philanthropic business goals
Fight social giving
responsibility
initiatives
Maximize firms Balance profits
profits to the and social
exclusion of all objectives
else

Do what it
takes to Lead the
make a Comply;
industry
profit; skirt do what
Articulate and other
the law; fly is legally
social value businesses
below required
objectives with best
social radar practices
Why should corporations be
socially responsible?
 The Philippine Constitution on the
Social Purpose of Private Property
ARTICLE XII: NATIONAL ECONOMY AND
PATRIMONY
Section 6. The use of property bears a social
function, and all economic agents shall
contribute to the common good. Individuals and
private groups, including corporations,
cooperatives, and similar collective
organizations, shall have the right to own,
establish, and operate economic enterprises,
subject to the duty of the State to promote
distributive justice and to intervene when the
common good so demands. 36
 The Philippine Constitution on the
Social Purpose of Private Property
ARTICLE II: STATE POLICIES
Section 9. The State shall promote a just
and dynamic social order that will ensure
the prosperity and independence of the
nation and free the people from poverty
through policies that provide adequate
social services, promote full employment,
a rising standard of living, and an
improved quality of life for all.
37
 The Philippine Constitution on the
Social Purpose of Private Property
ARTICLE XIII, SOCIAL JUSTICE AND HUMAN
RIGHTS
Section 1. The Congress shall give highest
priority to the enactment of measures that protect
and enhance the right of all the people to human
dignity, reduce social, economic, and political
inequalities, and remove cultural inequities by
equitably diffusing wealth and political power for
the common good.
To this end, the State shall regulate the
acquisition, ownership, use, and disposition of
property and its increments. 38
 The Philippine Constitution on the
Social Purpose of Private Property
ARTICLE XIII SOCIAL JUSTICE AND HUMAN RIGHTS
Section 3. LABOR
The State shall afford full protection to labor, local and
overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization,
collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law.
They shall be entitled to security of tenure, humane conditions
of work, and a living wage. They shall also participate in policy
and decision-making processes affecting their rights and
benefits as may be provided by law.
39
 The Philippine Constitution on the
Social Purpose of Private Property
ARTICLE XIII SOCIAL JUSTICE AND HUMAN RIGHTS
Section 3. LABOR

The State shall promote the principle of shared

responsibility between workers and employers and the
preferential use of voluntary modes in settling disputes,
including conciliation, and shall enforce their mutual
compliance therewith to foster industrial peace.
The State shall regulate the relations between workers
and employers, recognizing the right of labor to its just
share in the fruits of production and the right of
enterprises to reasonable returns to investments, and to
expansion and growth. 40
The Purpose of the Corporation
The proposed Code seeks to establish a new
concept of business corporations so that they
are not merely entities established for private
gain but effective partners of the National
Government in spreading the benefits of
capitalism for the social and economic
development of the nation.
Explanatory Note to The Corporation Code of 1980

41
 The Boat of Life: Unequal Access
to Integral Human Development
Upliftment (Breathing)

The Threshold for

Integral Human
Development

Society and its members

= with opportunity for
integral human development Exploitation (Drowning)
= without opportunity for 42
Changing Shapes of the Boat:
Towards Greater Social Justice

43
 Corporate Boats: How Do Corporations
Distribute Access to Human Development?

v
CORP
CORP
A
M CORP

M=Maintaining Society and its members

X=eXploiting
44
A=Ameliorating
 The Corporate Spreading of Capitalisms
Benefits through Work

v v v
he Threshold for
ntegral Human
Development vv v v v v v v

45
Society and its members
 Factors Facilitating and Hindering Corporate Humanism
Exploitative
FACILITATING FACTORS
Individual Factors
Humanistic values and social vision
of managers, entrepreneurs, financiers
Ethical principles
Faith-based beliefs
Ethical reflection and reasoning
Group/Organizational Factors
Humanistic organizational cultures
based on founder beliefs
Evolving managerial innovations
based on education and benchmarking
Societal/ Legal/
Institutional/ Educational
Constitutional provisions on ABC Corporation
social justice and the role of private
property
Intent of the Corporate Code
Labor Code
ILO Decent Work* and other
International Covenants
Humanistic
HINDERING FACTORS
Individual Factors
Teleo-pathological managers with
excessive drive for power and
profit with inadequate reflection*
Management by numbers and the
short-term
Preoccupation with growth and size
Group/Organizational Factors
Dysfunctional psycho-social dynamics
such as
Group conformity, Obedience to authority,
Role pressure, Diffusion of responsibility
Instrumentalization of people
using contracts
Societal/ Legal/
Institutional/ Educational
Corporate Laws undemocratic
bias for shareholders
Weak social justice enforcement system
Mis-education of managers
46
Strategies End
Figure 1: Net Sales of Top 1000 Philippine Corporations
vs. Gross Domestic Product, 1988-1997
(Data from Saldaa, 2000)

47
 Profits are Improving

48
BizNews Asia, January 31, 2007
 Returns in the Capital Market are
Improving

P S E i A n n u a liz e d C h a n g e

50%
40%
30%
20%
10%
0%
-1 0 %
-2 0 %
-3 0 %
-4 0 %
-5 0 %
1997

2000

2002

2004

2006
1994

1995

1996

1998

1999

2001

2003

2005
Year

49
Courtesy of Atty. Francis Lim of PSE
Media and Popular Culture
Romanticizes Corporate Wealth

50
 Worlds Richest - 2015

http://www.forbes.com/video/408
9156543001/

http://www.forbes.com/real-time-billionaires/
 10 Richest Filipinos - 2015
Origin of
Rank Name Net Worth Age
Wealth
#1 Henry Sy $14.4 B 90 diversified
John Gokongwei,
#2 $5.5 B 88 diversified
Jr.
#3 Andrew Tan $4.5 B 63 diversified
#4 Lucio Tan $4.3 B 81 diversified
#5 Enrique Razon, Jr. $4.1 B 55 ports
#6 George Ty $4 B 82 banking
#7 Aboitiz family $3.6 B - Diversified
Jaime Zobel de
#8 $3.5 B 81 Diversified
Ayala
#9 David Consunji $3.2 B 93 construction
#10 Tony Tan Caktiong $2.2 B 62 fast food
http://www.forbes.com/philippines-
billionaires/list/
Poverty amidst plenty
 Philippine Poverty
Poverty Incidence among Population:
First Semester 2013 and 2014

http://www.nscb.gov.ph/poverty/defaultnew.asp

54
 Above 30.4% Pover
Below 30.4% Povert

Philippine
Poverty
2003

om NEDA MDG Report citing 55

CB data Philippine Daily Inquire
 Philippine Hunger

56
NEDA MDG report citing NNS
 Philippine Corporate
Governance
Corporations are mainly family-controlled
Ownership is concentrated
Directors are business associates,
relatives or friends

57
Philippine Corporations are Run
for Controlling Families

58
 Corporate Governance and Stakeholders
Creditors
Investors Taxes & Govt
compliance
Fair &
Funds Repayment Legal license,
TE

Capital attractive return

ND

commitment & return support & enforcement

EN
YC
FO

Products & services

Board Customers
R

which support
BI

Oversight
AS

Performance TENDENCY
positiveFOR
humanBIAS
values
Mgt accountability
Price
Trustworthy Society
behavior

Members Trust
Just working conditions for
productivity
Company
 Based on Dumlao (2004)
FAMILY CORP
40% PUBLIC A
60% A
60% 24%
2.8X 100% 40% PUBLIC B
36%
B
60%
100% 40%
C PUBLIC C
22%
60%
100% 40%
D PUBLIC D
13% 60%
12.5X 40% PUBLIC E
100% E
8%
Legal cash flow 60
Effective control
Effective cash flow
& control; share-ownership
 The Lopez Group Control of
ased on Saldaa (2000) and Meralco
Claessens et al. (1999)
LOPEZ FAMILY Lopez, Inc.
100%
88.3%
PUBLIC
Benpres Holding
Corporation 11.7%
(majority control)
37.5%
6.3% 16.4% 1.64% 62.5%
2.58X Manila Electric14.76%
First Phil. Holdings
Company Corporation
(minority control) (minority control)

Sum of control rights via Benpres & First Holdings 1.64% + 14.76%

Sum of cash flow rights via Benpres & First Holdings

= (88.3%X1.64%) + (88.3%X37.5%X14.76%)

Legal cash flow 61

Effective control
Effective cash flow
& control; share-ownership
 Table 1: Ownership concentration of
Philippine Publicly Listed Companies by
Sector, 1997

62
From Saldaa, 2000
The Competitive Advantage of
Corporate Philanthropy
Porter and Kramer (2002)

Adapted from Porter and Kramer 2002, pg 7

Aligned philanthropys virtuous cycle
Adapted from The Competitive Advantage of Corporate Philanthropy
By Michael Porter and Mark Kramer
Harvard Business Review December 2002
Selecting projects with
social and environmental
returns and business
alignment

Increasing social, Projects demonstrate

environmental and social, environmental,
business returns and business returns

Expanded giving
for aligned
investments in
next investment
cycle

Aligning philanthropy and business interests can

lead to greatest social and environmental returns
 ISO 26000

http://www.iso.org/iso/home/stand
ards/iso26000.htm
 ISO 26000

ISO 26000 provides guidance to all

types of organizations, regardless
of their size or location, on:
concepts, terms and definitions relating to
social responsibility;
the background, trends and characteristics of
social responsibility;
principles and practices relating to social
responsibility;
 ISO 26000

ISO 26000 provides guidance to all

types of organizations, regardless
of their size or location, on:
core subjects and issues relating to social
responsibility;
integrating, implementing and promoting
socially responsible behavior throughout the
organization and its sphere of influence;
identifying and engaging with stakeholders; and
communicating commitments and performance
related to social responsibility.
 Definition of Social
Responsibility
Responsibility of an organization for the impacts
of its decisions and activities on society and the
environment, through transparent and ethical
behavior that
contributes to sustainable development, including health
and the welfare of society;
takes into account the expectations of stakeholders;
is in compliance with applicable law and consistent with
international norms of behavior; and
is integrated throughout the organization and practiced in
its relationships
 Characteristics of social
responsibility
The essential characteristic of social
responsibility is the willingness of an
organization to take responsibility and
be accountable for the impacts of its
activities and decisions on society and
the environment.
Implies transparent and ethical behavior
 Integrating social responsibility
throughout the organization
The ongoing, regular daily activities of the
organization constitute the most important
behavior to be addressed.
Philanthropy (in this context understood as
giving to charitable causes) can have a
positive impact on society. However, it should
not be used by an organization as a substitute
for addressing the adverse impacts of its
activities.
Core Subjects of CSR
Sphere of Influence
Integrating SR in the Organization
(ISO26000)
Relationship of organizations characteristics to SR
1. Location of operation
2. Type, purpose, nature of operations, size
3. Workforce/employee chracteristics
4. Sector where it belongs
5. Internal/external stakeholders concerns
relevant to SR
6. Supply chain and sphere of influence
Integrating SR in the Organization
(ISO26000)
Understanding SR of the organization
1. Relevance/significance of core subjects
(human rights, labor practices, environment,
fair operating practices, consumer issues,
community)
2. Spheres of influence: ownership and
governance, economic relationship, legal/
political authority, public opinion
3. Priorities to address core subjects
Integrating SR in the Organization
(ISO26000)
Practices for integrating SR

1. Setting the direction

2. Organizations systems and procedures

3. Raising awareness, building competency

Integrating SR in the Organization
(ISO26000)
Communication on social responsibility
1. Role of communication
a. Accountability & transparency
b. Legal requirements for disclosure
c. Show how commitments are met
d. Raise awareness within, outside
e. Engage/motivate employees
f. Facilitate benchmarking
g. Enhance reputation, integrity
Integrating SR in the Organization
(ISO26000)
Communication on social responsibility
2. Characteristics of information
a. Understandable
b. Responsive
c. Accurate
d. Balanced
e. Timely
f. Available
3. Planning communication, stakeholder dialogue
Integrating SR in the Organization
(ISO26000)
Enhancing credibility regarding SR
1. Direct discussions with affected stakeholders
2. Written information to address
misunderstanding
3. Forums where stakeholders and organizations
can present viewpoints
4. Formal complaints handling procedures
5. Mediation/arbitration procedures
6. Other forms for handling grievance like ADR
Integrating SR in the Organization
(ISO26000)
Reviewing/improving SR practices

1. Monitor activities on SR

2. Review progress, performance, milestones

3. Enhance reliability of data/information

collection/management