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Corporate Social Responsibility (CSR) by Anita Cava, JD Overview Setting the Stage: Questions to Think About.... Should a local business or corporation pay more than the legal minimum wage to employees, especially when they all live and work in a county where the cost of living is very high? That is to say, what factors should be considered by a corporation when it determines wage rates and how should those factors be weighed? Should a multinational company such as Gap, Inc. take advantage of the conditions common in certain foreign factories - extremely low wages and minimal requirements for worker safety -- to manufacture its clothing very cheaply and pass those savings on either to shareholders (in the form of higher profits) to the consumer (in the form of lower prices)? Do corporations have a responsibility to use their economic power to improve the quality of life of foreign workers, paying them reasonable wages, ensuring safe working conditions and preventing child labor? Finally, is it possible that some of these decisions to "do good deeds" are not genuinely motivated by a sense of responsibility, but rather are "window dressing" or "greenwashing" motivated by a desire for publicity? If so, is there anything wrong with that motivation? These are important questions for students in the 21st century to consider and they provide the framework for this module on Corporate Social Responsibility (CSR). Introduction Public corporations are businesses that are organized for the purpose of making money for their owners, members of the public who have invested in the company and are known as "shareholders," or stock holders. When one buys stock on the stock market, one is buying a small portion of the company in which one invests in the hope that the corporation (and, therefore, its stock) will rise in value; some corporations pay dividends on their stock, direct payments from the profits made by the corporation to the stockholders. The emerging concept of Corporate Social Responsibility (CSR) suggests that businesses also have obligations and responsibilities to the many other entities affected by their decisions, not just their shareholders. These are called "stakeholders" and include employees, suppliers, customers, communities, and even the environment. CSR often refers to business decisions and strategies that go beyond what the law requires. These might include, for example, decisions to adopt a voluntary code of conduct; report on worker conditions at home and abroad; disclose environmental impact information; improve health, safety and environmental management systems; and contribute to community well-being through, for example, strategic investments and philanthropic donations. This module will provide students with an understanding of CSR in the real world through various case studies, activities, and corporate websites. They will be more able to evaluate whether CSR efforts are authentic and appropriate or are mere window-dressing. Some argue that many CSR strategies are in the company's interest because they protect corporate reputation and brand status and also manage risk to some degree. This argument is based in the belief that CSR is "good for business" as it improves a firm's ability to attract investors, decreases costs of litigation arising from poor environmental and social decisions, and enhances corporate reputation (Hopkins, 2003). Some point out that because business today is subject to increasing public inspection (Zadek, 2001), the private sector can be an important engine of economic development, particularly in developing countries (Clay, 2005). Businesses can no longer afford to ignore issues associated with CSR, especially as allegations of corporate wrongdoing can be spread easily by the media (Klein, 2000). Further, companies must now recognize the importance of visibly enhancing their non-financial performance to build on stakeholder trust, avoid public accusations, and better align themselves with consumer concerns. While various CSR efforts seem to create a positive effect on society and the natural environment, certain questions must be considered. One that comes to mind is whether the rightful investor/owners of the business, the shareholders, can object to "their" money being spent protecting the environment or workers when the law does not require it. Some argue that instead, it should be returned to the shareholders, who can then contribute to their favorite activist group (e.g. Save the Whales or Worker Justice) or charity (e.g. cancer research, Habitat for Humanity). Another question, posed above, is whether CSR efforts are genuine or just "window-dressing" for pubic-relations purposes. This module explores these and other ethical arguments surrounding CSR in the 21st century and offers strategies for an interested student/consumer to learn more about a particular business.

Corporate Social Responsibility (CSR)

by Anita Cava, JD

Overview

Setting the Stage: Questions to Think About....

Should a local business or corporation pay more than the legal minimum wage to employees, especially when they all live and work in a county where the cost of living is very high? That is to say, what factors should be considered by a corporation when it determines wage rates and how should those factors be weighed?

Should a multinational company such as Gap, Inc. take advantage of the conditions common in certain foreign factories - extremely low wages and minimal requirements for worker safety -- to manufacture its clothing very cheaply and pass those savings on either to shareholders (in the form of higher profits) to the consumer (in the form of lower prices)?

Do corporations have a responsibility to use their economic power to improve the quality of life of foreign workers, paying them reasonable wages, ensuring safe working conditions and preventing child labor?

Finally, is it possible that some of these decisions to "do good deeds" are not genuinely motivated by a sense of responsibility, but rather are "window dressing" or "greenwashing" motivated by a desire for publicity? If so, is there anything wrong with that motivation?

These are important questions for students in the 21st century to consider and they provide the framework for this module on Corporate Social Responsibility (CSR).

Introduction

Public corporations are businesses that are organized for the purpose of making money for their owners, members of the public who have invested in the company and are known as "shareholders," or stock holders. When one buys stock on the stock market, one is buying a small portion of the company in which one invests in the hope that the corporation (and, therefore, its stock) will rise in value; some corporations pay dividends on their stock, direct payments from the profits made by the corporation to the stockholders.

The emerging concept of Corporate Social Responsibility (CSR) suggests that businesses also have obligations and responsibilities to the many other entities affected by their decisions, not just their shareholders. These are called "stakeholders" and include employees, suppliers, customers, communities, and even the environment.

CSR often refers to business decisions and strategies that go beyond what the law requires. These might include, for example, decisions to adopt a voluntary code of conduct; report on worker conditions at home and abroad; disclose environmental impact information; improve health, safety and environmental management systems; and contribute to community well-being through, for example, strategic investments and philanthropic donations.

This module will provide students with an understanding of CSR in the real world through various case studies, activities, and corporate websites. They will be more able to evaluate whether CSR efforts are authentic and appropriate or are mere window-dressing.

Some argue that many CSR strategies are in the company's interest because they protect corporate reputation and brand status and also manage risk to some degree. This argument is based in the belief that CSR is "good for business" as it improves a firm's ability to attract investors, decreases costs of litigation arising from poor environmental and social decisions, and enhances corporate reputation (Hopkins, 2003). Some point out that because business today is subject to increasing public inspection (Zadek, 2001), the private sector can be an important engine of economic development, particularly in developing countries (Clay, 2005). Businesses can no longer afford to ignore issues associated with CSR, especially as allegations of corporate wrongdoing can be spread easily by the media (Klein, 2000). Further, companies must now recognize the importance of visibly enhancing their non-financial performance to build on stakeholder trust, avoid public accusations, and better align themselves with consumer concerns.

While various CSR efforts seem to create a positive effect on society and the natural environment, certain questions must be considered. One that comes to mind is whether the rightful investor/owners of the business, the shareholders, can object to "their" money being spent protecting the environment or workers when the law does not require it. Some argue that instead, it should be returned to the shareholders, who can then contribute to their favorite activist group (e.g. Save the Whales or Worker Justice) or charity (e.g. cancer research, Habitat for Humanity). Another question, posed above, is whether CSR efforts are genuine or just "window-dressing" for pubic-relations purposes. This module explores these and other ethical arguments surrounding CSR in the 21st century and offers strategies for an interested student/consumer to learn more about a particular business.