Transcript CSR – a corporate tool or a moral obligation

Corporate Social Responsibility –
meaning, implications and
potential
Aidan McQuade
Director
Anti-Slavery International
Overview of presentation
• What is CSR?
• Socially responsibility business policies
and practices
• CSR outcomes
• Lessons for business and civil society
Corporate Social Responsibilty
• “the economic, legal, ethical and
philanthropic expectations placed on
organisations by society at a given point in
time” - Carroll and Bucholtz (2000)
Corporate Social Responsibilty
• “the economic, legal, ethical and
philanthropic expectations placed on
organisations by society at a given point in
time” - Carroll and Bucholtz (2000)
From classical economics
• The primary social obligation of business
is production of profit for shareholders,
and that there is an ethical compulsion for
managers to take any project so long as it
complies to law and will turn a profit
– The Friedmanite view
Freidmanite ethics
• Doesn’t distinguish between long term and
short term profitability
• Arise from classical view of economics
that asserts that the duty of the state is to
regulate business
Freidmanite ethics
• Doesn’t distinguish between long term and
short term profitability
• Arise from classical view of economics
that asserts that the duty of the state is to
regulate business
• Its over simplistic in a modern globalising
political economy
Limitation of classical economic
theory?
• 51 of the world’s top 100 economic entities
are now corporations
• Only 49 are countries
• Begs the question how can trans-national
corporations be regulated in the manner
envisaged by classical economics
Not a new question
• Eells and Walton (1961) worried about
“the problems that arise when corporate
enterprise casts its shadow on the social
scene, and the ethical principles that ought
to govern the relationship between
corporation and society”
What is CSR?
• CSR – an approach to business ethics
based on the stakeholder view of the firm
What is the stakeholder view of the
firm?
• A political-economic view of the firm, not sole
economic
• Narrow: asserts the importance of managing the
reciprocal relations of all those on whom the firm
depends in order to carry out its core economic
function (or social function in the case of not-forprofit enterprises).
• Broad: asserts the responsibility of the business
to any group who are affected by the company.
Stakeholder view of the firm
• Ethically neutral – managers who adhere to a
Freidmanite ethical position can comfortably use
stakeholder management techniques
• Some aspects of stakeholder and classical
economic view of the firm enshrined in law,
but…
• …no agreed moral core to stakeholder
management, and hence to CSR
• …no agreement on “lexical priorities” of rights
and responsibilities
Two aspects of CSR
• Expected outcomes
• Internal policies and practices necessary
to achieve the outcomes
Considering the internal aspects
first…
Internal policies and practices
1. Hierarchy of guiding moral principles of
corporate social responsibility
2. Culture of stakeholder dialogue
3. Moral leadership by individual managers
in accordance with principles
1. Hierarchy of CSR guiding
principles
• Ensure Universal Declaration of Human
Rights applied across all operations and
supply chain
• Uphold the rule of law itself
• Basic principle: Sustainably maximising
profits for shareholders within the law
1. Hierarchy of CSR guiding
principles
• Ensure Universal Declaration of Human
Rights applied across all operations and
supply chain
• Intermediate principle: Uphold the rule of
law itself
• Basic Principle: Sustainably maximising
profits for shareholders within the law
1. Hierarchy of CSR guiding
principles
• Overarching principle: Ensure Universal
Declaration of Human Rights applied
across all operations and supply chain
• Intermediate principle: Uphold the rule of
law itself
• Basic principle: Sustainably maximising
profits for shareholders within the law
Customising principles for business
• Hierarchy of guiding principles provide the
framework within which CSR policies should be
developed
• The challenges of upholding rule of law may be
slight for many businesses, but dramatic if
working in countries such as Kenya
• Which aspects of the UDHR should be most
concern will vary according nature of business
operation and supply chain
• “Decent work” agenda, which emerges from
aspects of UDHR is likely to be relevant to all
international businesses
2. Culture of stakeholder dialogue
• Argument is that ethical choice making
should be guided by principles customised
to business circumstances
• Changing circumstances may mean
changes in guidances are required
• Key way to stay attuned to necessary
adjustments is through systematic
stakeholder engagement
• Identify consequences of actions early
Scale of the problem
• At least 12.3 million people in slavery
today (ILO) – some reckon figure closer to
27 million
• ILO Global Report on Forced Labour
(2005) estimates that 40 – 50% of forced
labourers are children
Slavery is also a significant issue in
the international supply chain
• Pressure for reduced costs in business
• Increasingly complex supply chains
• Forced labour identified in African
– Mines
– Agriculture – including cocoa
• Bonded labour identified in South Asian
– Agriculture
– Silk
– Cotton production
– Cigarettes
– Brick kilns
– Quarries and mines
• NB these lists are not exhaustive
3. Moral leadership
• A business’s CSR policy and practice
succeeds or fails based on the leadership
from the business executives
• Business executives must be prepared to
take personal responsibility for all the
consequences of their business decisions
• It is from this that authority derives
Constraints on moral leadership
•
•
•
•
Peer pressure
Distance
Embarrassment
Pleasure in the exercise of power over
others
• Desires of superiors
This implies a requirement for selfreflexive learning for business
leaders on the implications and
challenges of implementing a CSR
policy
This implies a requirement for selfreflexive learning for business
leaders on the implications and
challenges of implementing a CSR
policy
- something helped by systematic
stakeholder dialogue
Internal policies and practices
1. Hierarchy of guiding moral principles of
corporate social responsibility
2. Culture of stakeholder dialogue
3. Moral leadership by individual managers
in accordance with principles
External outcomes
• Relating to accountability of economic
entities
• Relating to how to ensure economic
entities maximise their potential for social
good
Business potential
• Promote more sustainable economic
development
• Reduce poverty through decent work
• Reduce social exclusion through decent work
• Capacity to develop analysis of supply chains to
identify social development priorities for
government and civil society
• Use economic weight to initiate political dialogue
– What are the external constraints on implementing
CSR principles
Constraints on CSR – civil society
• Default confrontational position by NGOs
and other actors with business
• Insufficient dialogue with business
– Belief in business omnipotence
• Insufficient collaboration with business
Conclusions
• Many of the fundamental questions (e.g. tension
between regulation and growth) regarding
business in society are unanswered, and
perhaps unanswerable
• Establishing key ethical principles and reflexive
leadership practices is fundamental to framing a
dialogue on the subject
• Involvement of civil society, business and
government in the dialogue is central in
maximising their potential
• Fundamentally dialogue must be based on the
openness to collaboration
Thank you
• Any questions?