Part 1 introduction to csr
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This document provides an overview of a course on corporate social responsibility from an international perspective. The course objectives are outlined, including defining CSR, its link to competitive advantage, implementation, and social entrepreneurship. The course is divided into four parts that cover an introduction to CSR including its origins and links to sustainable development, corporate governance, and business ethics. It also discusses stakeholders, CSR implementation, and social entrepreneurship. Key concepts like hard and soft law in the EU and France are examined.
![Origin of CSR
• Howard Bowen :American economist and president
of the University of Iowa. He coined the concept of
Corporate Social Responsibility.
• He defined Corporate social responsibilities as "the
obligations of businessmen to pursue those policies,
to make those decisions, or to follow those lines of
action which are desirable in terms of the objectives
and values of our society.“
[Social Responsibilities of the Businessman, 1953]](https://image.slidesharecdn.com/part1introductiontocsr-141122073021-conversion-gate02/85/Part-1-introduction-to-csr-6-320.jpg)
![Can a corporation have social responsibility ?
Milton Friedman [1970] : “the social responsibility of
business is to increase its profits”
Corporate executives have responsibilities to their
employees, stockholders, and principals to maintain
the highest financial intake possible while acting
within the bounds of the law of social mores, but
these executives should not perpetuate their own
social agendas (or the popular social agenda of the
day) with the corporations’ finances.](https://image.slidesharecdn.com/part1introductiontocsr-141122073021-conversion-gate02/85/Part-1-introduction-to-csr-7-320.jpg)
![What does CSR involve in E.U. ?
• To maximize the creation of shared value, enterprises are
encouraged to adopt a long-term,strategic approach to CSR, and
to explore the opportunities for developing innovative products,
services and business models that contribute to societal wellbeing
and lead to higher quality and more productive jobs.
• To identify, prevent and mitigate their possible adverse impacts,
large enterprises, and enterprises at particular risk of having such
impacts, are encouraged to carry out risk-based due diligence,
including through their supply chains.
• Certain types of enterprise, such as cooperatives, mutuals, and
family-owned businesses, have ownership and governance
structures that can be especially conducive to responsible business
conduct.
• For most small and medium-sized enterprises, especially
microenterprises,the CSR process is likely to remain informal and
intuitive.
[COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN
ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS]
July 2012 ESDES Université Catholique de Lyon 50](https://image.slidesharecdn.com/part1introductiontocsr-141122073021-conversion-gate02/85/Part-1-introduction-to-csr-50-320.jpg)
Part 1 introduction to csr
- 1. CSR- INTERNATIONAL PERSPECTIVES Patrick GILORMINI
- 2. Course objectives • What is corporate social responsibility ? • How corporate social strategy leads to competitive advantage? • How corporate social responsibility is implemented and managed ? • What is corporate social entrepreneurship?
- 3. Course overview • Part 1: Introduction to CSR 1. Corporate social responsibility linked to sustainable development, corporate governance and ethics 2. Stakeholders approach to business and society relationship 3. Hard law and soft law in E.U. and France • Part 2 : The business case for CSR • Part 3 : CSR Implementation • Part 4: Social Entrepreneurship
- 4. INTRODUCTION TO CSR Part 1.1
- 5. What defines a corporation ? • Corporations regarded as ‘moral persons’ in the eyes of the law : rights and responsibilities in society • Corporations regarded as notionally ‘owned’ by shareholders , but exist independently of them : limited liability • Managers and directors have a ‘fiduciary’ responsibility to protect the investment of shareholders.
- 6. Origin of CSR • Howard Bowen :American economist and president of the University of Iowa. He coined the concept of Corporate Social Responsibility. • He defined Corporate social responsibilities as "the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society.“ [Social Responsibilities of the Businessman, 1953]
- 7. Can a corporation have social responsibility ? Milton Friedman [1970] : “the social responsibility of business is to increase its profits” Corporate executives have responsibilities to their employees, stockholders, and principals to maintain the highest financial intake possible while acting within the bounds of the law of social mores, but these executives should not perpetuate their own social agendas (or the popular social agenda of the day) with the corporations’ finances.
- 8. Can a corporation have social responsibility ? Milton Friedman premises : • Only human beings have a moral responsibility for their actions • Its managers' responsibility to act solely in the interests of shareholders • Social issues and problems are the proper province of the state rather than corporate managers If corporate executives start pandering to the desires and whims of society then they will be elevating socialist doctrines and corrupting the free market economy.
- 9. SD gaining momentum 1972 United Nation conference on environment, Stockholm Kyoto Protocol 2002, Johannesburg World Summit on SD 1970 1980 1990 2000 Stop growth and protect environment Changing ecodevelopment concepts Scientifics et NGO Changing actors Grenelle de l’envir. 2007 Horizon Grenelle Corporate social responsibility Triple Bottom Line Corporations 1992, Rio Earth Summit Sustainable development Governments, Nations 1987 Brundtland Commission Consumers 1999 ONU Global compact 2012 Momentum gained in 20 ans July 2012 ESDES Université Catholique de Lyon 9
- 10. Part 1.1 CSR LINKED TO SUSTAINABLE DEVELOMENT, CORPORATE GOVERNANCE AND BUSINESS ETHICS ESDES Université July 2012 Catholique de Lyon 10
- 11. Ethics , governance, CSR and SD linked in a continuum Sustainable development Corporate social responsibility Corporate Governance Business ethics Macro-économic and world wide social issues Micro-economic et regional issues Corporate management and control issues Corporate strategy Corporate structures Decision making and processes Moral issues and Personal dilemnas pgilormini@univ-catholyon.fr 11 septembre 2009
- 12. Sustainable development The Declaration of Rio on Environment and Development , 1992, recognized that sustainable development was a balance of three interconnected dimensions: Territorial and global framework pgilormini@univ-catholyon.fr 12 septembre 2009
- 13. Corporate social responsibility What are the responsibilities of business in the context of a wider society ? • How they are defined and negotiated ? • How they are managed and organized ?
- 14. Corporate social responsibility Archie B. Carroll (1983:608), “corporate social responsibility involves the conduct of a business so that it is economically profitable, law abiding, ethical and socially supportive. To be socially responsible then means that profitability and obedience to the law are foremost conditions when discussing the firm’s ethics and the extent to which it supports the society in which it exists with contributions of money, time and talent”
- 16. What does CSR involve ? • Business has social obligation above and beyond making a profit • Corporations have an obligation to constituent groups in society other than stockholders and beyond that prescribed by law or union contract • CSR requires voluntary action pgilormini@univ-catholyon.fr 16 septembre 2009
- 17. Six characterizations of CSR Characterization Description License to operate CSR is a condition for doing business. Find the most effective way to meet stakeholders’ requirements Long-term business investment Like RD , CSR improve the business environment for future progress Vehicle for achieving goals and reputation Stronger customer loyalty, more committed employees,… Activity to avoid exposure to risk Avoid being singles out or exposed to unnecessary outsider intrusion Economic and constructive Companies reinforce the economic foundation and viability of the communities in which it operates Oxymoron ! Companies are designed to increase shareholder wealth !
- 18. Corporate governance • The formal system of oversight, accountability, and control for organizational decisions and resources • Governance issues: – Board of directors independance, quality, and performance – Shareholders activism and investors confidence – Internal control and risk management – Executive compensation July 2012 ESDES Université Catholique de Lyon 18
- 19. Views of Corporate Governance • Shareholder model (stock companies) : – Grounded on classic economic precepts – Goal of maximizing wealth for investors and owners – Managers act as agents of investors whose primary goal is increasing the value of the stock they own • Democratic model ( cooperative companies ): – One person , one vote right – Elective process for nomination July 2012 ESDES Université Catholique de Lyon 19
- 20. Views of Corporate Governance • Stakeholder model of corporate governance : – Company has also a responsibility to answer to other stakeholders including employees, suppliers, government regulators, communities and special interest groups with which it interacts – Due to limited resources companies must determine which of their stakeholders are primary – Once primary groups have been identified managers must implement appropriate governance mechanisms to promote development of long term relationships July 2012 ESDES Université Catholique de Lyon 20
- 21. Business Ethics • Moral obligations involving the distinction between what is good and what is bad • Ethical issues :Honesty , Fairness, Integrity – Abusive or intimidating behavior – Conflicts of interests – Bribery – Lying… July 2012 ESDES Université Catholique de Lyon 21
- 22. Paul Ricoeur (1913-2005) • Aristotelian view that action always aims at some good. • Its ultimate aim is to be a constituent in a “‘good life’ with and for others in just institutions” (Oneself as Another, 262). – For a good life, one must have associates with and for whom one acts. – Furthermore, societal institutions, particularly political institutions, set the context for action and significantly affect its efficacy. – For a good life, we aim to have institutions that meet our sense of justice in the obligations they impose and the privileges and opportunities they grant (Oneself as Another, 180).
- 23. Ethics , governance, CSR and SD linked in a continuum Sustainable development Corporate social responsibility Corporate Governance Business ethics Macro-économic and world wide social issues Micro-economic et regional issues Corporate management and control issues Corporate strategy Corporate structures Decision making and processes Moral issues and Personal dilemnas pgilormini@univ-catholyon.fr 23 septembre 2009
- 24. Sustainable development World Commission on Environment and Development ( Brundtland), 1987 : ”Sustainable Development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. septembre 2009 pgilormini@univ-catholyon.fr 24
- 25. Sustainable development Agenda 21 : a blueprint for sustainability in the 21st century. • Provides options for combating the deterioration of land, air and water, whilst conserving habitats and their diversity. • Deals with poverty, over consumption, health and education. • Promotes roles for all. Everyone – governments, business, trade unions, scientists, teachers, indigenous people and youth – have roles to play in achieving sustainable development and should be involved in the decision making processes. • Encourages the reduction of environmentally and socially detrimental processes, but within a framework which allows economic success
- 26. Sustainable development France move towards a green and equitable economy: • Sustainable consumption and production, • The knowledge society • Governance • Climate change and energy • Sustainable transport and mobility • Conservation and sustainable management of biodiversity and natural resources • Public health, risk prevention and management • Demography, immigration and social inclusion • International challenges of sustainable development and the fight against global poverty http://www.developpement-durable.gouv.fr/IMG/pdf/NSDSp60.pdf
- 27. Sustainable development • Sustainable development calls for improving the quality of life for all of the world’s people without increasing the use of our natural resources beyond the earth’s carrying capacity. • The long-term success of sustainable development will depend on new approaches to transform business-as-usual at every level of society, both public and private. • In addition to the important role played by governments, the active leadership of NGOs, businesses and other Major Groups is key to transforming sustainable development from vision to reality.
- 28. Sustainable development • Major Groups identified in Agenda 21: – Business and industry – Children and youth – Farmers – Indigenous people – Local authorities – Non-governmental organizations – Scientific and technological communities – Women – Workers and trade unions
- 29. Sustainable development U.N. Open Working Group proposal for Sustainable Development Goals
- 30. Sustainable development U.N. Knowledge platform : http://sustainabledevelopment.un.org/index.html
- 31. Ethics , governance, CSR and SD linked in a continuum Sustainable development Corporate social responsibility Corporate Governance Business ethics Macro-économic and world wide social issues Micro-economic et regional issues Corporate management and control issues Corporate strategy Corporate structures Decision making and processes Moral issues and Personal dilemnas pgilormini@univ-catholyon.fr 31 septembre 2009
- 32. A semiotic square analysis of the concept of « good » Good Bad Benignness Indifference Contrariety or opposition Complementarity or implication 22/11/2014 Patrick Gilormini 32
- 33. Legal, illegal and just • Four categories of actions based on rightness – Those that are legal to do but which the law does not require to be done – Those that must be done or not done according to law – Those that are illegal but may well be justified (i.e. a requirement of justice ) – Those that are just but illegal
- 34. Major issues in business ethics ETHICS Prescribing the good life MORALITY Proscribing bad actions GOOD Positive action for good or to prevent harm being done BENIGN Avoiding doing harm, supports the doing of good but takes no positive action to do good INDIFFERENT Ignoring harm done by or to others and disregarding the rights of others BAD Taking action to do harm Taking no action to prevent harm being done Social developme nt and caring Social responsibilit y and supporting Reciprocity Fairness Lying and dishonesty Cheating and selfishness Bullying and social irresponsi-bility Harming and social environ-ment disengage-ment
- 35. Part 1.2 STAKEHOLDERS APPROACH TO BUSINESS AND SOCIETY RELATIONSHIPS ESDES Université July 2012 Catholique de Lyon 35
- 36. Who is a stakeholder ? • « Any group or individual who can affect or is affected by the achievement of the organization’s objectives » Freeman , 1984 • « Bear some form of risk as a result of having invested some form of capital , human or financial , something of value, in a firm » or « is placed at risk as a result of a firm’s activity » Clarkson 1994 July 2012 ESDES Université Catholique de Lyon 36
- 37. A firm’s stakeholders • Constituents that have a stake in , or claim on , some aspects of a company’s products , operations , markets, industry and outcomes • Individuals or groups who depend on the organisation to fulfill their own goals and on whom, in turn, the organisation depends July 2012 ESDES Université Catholique de Lyon 37
- 38. A firm’s stakeholders Globalization Economic Stakeholders Customers, creditors, distributors, suppliers Organizational Stakeholders Employees, Managers, Shareholders, Unions Societal Stakeholders Communities Government and regulators, Nonprofits and NGO’s , Natural Environment Technologies July 2012 ESDES Université Catholique de Lyon 38
- 39. A sorting rationale for stakeholder identification 1. Firm and stakeholder are in relationship 2. The firm is dependant on the stakeholder 3. The stakeholder has power on the firm 4. Firm and stakeholder are in contractual relationship 5. The stakeholder has a legitimate or moral claim on the firm 6. The stakeholder has something at risk July 2012 ESDES Université Catholique de Lyon 39
- 40. Stakeholder typology POWER URGENCY LEGITIMACY Dormant Dominant Discretionary Definitive Dependant Dangerous Demanding Non Stakeholder Mitchell, Agle, Wood, 1997 July 2012 ESDES Université Catholique de Lyon 40
- 41. What about a stakeholder theory? Donaldson and Preston, 1995
- 42. What about a stakeholder theory? • The stakeholder theory is descriptive : the corporation is a constellation of cooperative and competitive interest possessing intrinsic values. • The stake holder theory is also instrumental : a framework for examining the connections between management practice and achievement of performance goals • Its fundamental basis is normative: – Stakeholders are identified by their interests in the corporation, whether the corporation has any corresponding functional interest in them – Each group of stakeholders merits consideration for its own sake and not merely because of its ability to further the interests of some other groups , as the shareowners
- 43. What about a stakeholder theory? • The stakeholder theory is managerial: – it recommends attitudes, structures and practices – It requires simultaneous attention to the legitimate interest of all legitimate stakeholders • However : – simultaneous attention to stakeholders interests does not resolve the longstanding problem of identifying and evaluating their “legitimate” stakes in the corporation – Does not imply that all stakeholders should be equally involved in all processes or decisions Donaldson and Preston, 1995
- 44. Part 1,3 HARD LAW AND SOFT LAW IN FRANCE AND THE EUROPEAN UNION
- 45. CSR between Hard law and Soft law Hard law means binding laws. To constitute law, a rule, instrument or decision must be authoritative and prescriptive. In international law, hard law includes self-executing treaties or international agreements, as well as customary laws. These instruments result in legally enforceable commitments for countries (states) and other international subjects. Ex. conventions or international agreements Soft law means commitments made by negotiating parties that are not legally binding. Ex. E.U. codes of conduct, guidelines, communications
- 46. Legislative process in E.U.
- 47. What is CSR ? European Commission Green Paper “Promoting a European Framework for Corporate Social Responsibility” COM (2001) 366 • CSR as a concept whereby companies integrate social and environmental concerns in their business operations and in their interactions with their stakeholders on a voluntary basis as they are increasingly aware that responsible behaviour leads to sustainable business success. July 2012 ESDES Université Catholique de Lyon 47
- 48. What is CSR in E.U.? European Commission Green Paper “Promoting a European Framework for Corporate Social Responsibility” COM (2001) 366 : • CSR is also about managing change at company level in a socially responsible manner. This happens when a company seeks to set the trade-offs between the requirements and the needs of the various stakeholders into a balance, which is acceptable to all parties. If companies succeed in managing change in a socially responsible manner, this will have a positive impact at the macro-economic level. July 2012 ESDES Université Catholique de Lyon 48
- 49. What is CSR in E.U. ? A renewed EU strategy 2011-14 for Corporate Social Responsibility: The Commission puts forward a new definition of CSR as “the responsibility of enterprises for their impacts on society”. Respect for applicable legislation, and for collective agreements between social partners, is a prerequisite for meeting that responsibility. To fully meet their corporate social responsibility, enterprises should have in place a process to integrate social, environmental, ethical, human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders, with the aim of: – maximizing the creation of shared value for their owners/shareholders and for their other stakeholders and society at large; – identifying, preventing and mitigating their possible adverse impacts. July 2012 ESDES Université Catholique de Lyon 49
- 50. What does CSR involve in E.U. ? • To maximize the creation of shared value, enterprises are encouraged to adopt a long-term,strategic approach to CSR, and to explore the opportunities for developing innovative products, services and business models that contribute to societal wellbeing and lead to higher quality and more productive jobs. • To identify, prevent and mitigate their possible adverse impacts, large enterprises, and enterprises at particular risk of having such impacts, are encouraged to carry out risk-based due diligence, including through their supply chains. • Certain types of enterprise, such as cooperatives, mutuals, and family-owned businesses, have ownership and governance structures that can be especially conducive to responsible business conduct. • For most small and medium-sized enterprises, especially microenterprises,the CSR process is likely to remain informal and intuitive. [COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS] July 2012 ESDES Université Catholique de Lyon 50
- 51. Reporting Policies among the European Member States
- 52. Reporting Policies among the European Member States “comply or explain” approach: It requires companies to report how they comply with the “corporate governance code”, or to explain where and why not.
- 53. Legislative process in France
- 54. French CSR policy and legislation • Laws regulating non-financial data in private bodies in France as early as 1977 with the Social Assesment Law (Bilan Social), which required listed companies to report on asset of social data. • The Nouvelles Regulations Economiques (NRE) law passed in 2001, through article 116, makes reporting on social and environmental impacts mandatory for listed companies. the NRE law has acted as an impulse for non-financial reporting. • The combination of both volunteer and legal actions, and the necessity to give a global answer to all the stakeholders gave a great impetus these last five years to non-financial reporting and CSR policies.
- 55. National Sustainable Development Strategy • The first national sustainable development strategy was set in motion on 3 June 2003 by the Raffarin government, for a period of five years. • It was revised and renewed in 2008 for a further five years, building on the experience and outcomes of the first period of implementation. • The new national sustainable development strategy for the 2010-2013 period was adopted on 27 July 2010 by the Inter-Ministerial Committee for Sustainable Development. • This 2010-2013 national sustainable development strategy is centred on nine strategic issues: sustainable consumption and production - knowledge society - governance - climate change and energy - sustainable transport and mobility - conservation and sustainable management of biodiversity and natural resources - public health, risk management and prevention - demography, immigration and social inclusion - and international challenges relating to sustainable development and the fight against poverty in the world.
- 56. The Grenelle Environment Round Table • Launched in 2007, the Grenelle Environment Round Table comprises a series of meetings between the State and representatives of civil society (local authorities, NGOs, employers and workers) aiming to arrive at long term decisions regarding sustainable development. • A total of 268 commitments have arisen from the Grenelle Environment Round Table. • Between 2008 and 2010, the Parliament adopted the texts that were required to turn these commitments into effective legislation: the Grenelle I Act (promulgated 3 August 2009) and the Grenelle II Act (promulgated 12 July 2010). Article 53 of the Grenelle I Act and Articles 224-225 of the Grenelle II Act cover matters of governance, reporting and SRI.
- 57. New CSR reporting obligation with article 225 of 12 July 2010 The article 225 requires a CSR reporting obligation: - for listed companies - for others companies (number of employees and balance sheet total is defined by a decree of the State Council (Conseil d'Etat)) It also includes information on the way in which society takes account of the social and environmental consequences of its activity as well as its societal commitments for sustainable development. The staff representative institutions and stakeholders participating in dialogue with the companies can put forward their opinion on the approach of corporate social, environmental and societal responsibility as a supplement to the indicators presented. The social and environmental information with regard to legal and regulatory information is subject to verification by an independent third-party body, according to terms set by Conseil d'Etat decree. This verification gives rise to a recommendation which is sent to the shareholders' or members' meeting at the same time as the report of the board of directors or executive board. Several State Council (Conseil d'Etat) decrees enforce this article.
- 58. Other regulatory initiatives • Diversity is also the object of regulations as a series of law recommended companies to negotiate agreements with trade unions on gender equality. In March 2006, a law proposes to reduce the salary gap between men and women by 2010. In case of no respect of this engagement there should be some financial sanctions. • Equally, a quota of 6% of disabled people should be respected in the staff of companies with more than 20 employees.
- 59. Key drivers of CSR in France • The emergence of CSR in France is the result of the consequences of globalization and the influence of foreign corporations as well as the successful development of the French socially responsible investment (SRI) market. • The development of the SRI market is reflected in the strong growth in SRI assets under management (AuM) and mandates in France, increasing from €3.9 billion in 2003 to €169.7 billion in 2013.