ETHICS AND CORPORATE SOCIAL RESPONSIBILITY - WEEK 3
Corporate social responsibility
Corporate social responsibility (CSR) is a company’s commitment to manage the social,
environmental and economic effects of its operations responsibly and in line with public
expectations.
It is part of a company’s approach to corporate governance and often touches every part
of the business—operations, human resources, manufacturing, supply chain, health and
safety, and more.
CSR activities may include:
• Company policies that insist on working with partners who follow ethical business practices
• Reinvesting profits in health and safety or environmental programs
• Supporting charitable organizations in the communities where a company operates
• Promoting equal opportunities for men and women at the executive level
• Some aspects of CSR may be required by law. For example, banks and hospitals are legally
required to protect people’s private information. Others are voluntary.
Benefits of Corporate social Responsibility
• Companies establish good reputations.
• attract positive attention
• save money through operational efficiency.
• minimize environmental impacts.
• attract top talent and inspire innovation.
• Public companies often report on their CSR performance in their annual reports.
Corporate social responsibility from a historical perspective.
• During the ancient times, people believe that businessmen and wealthy people l services
should do business to the community as part of public or social service.
• The Greeks and Romans treated businessmen next to slaves. Businessmen were pressured
by society. The elite of the society condemned businessmen, criticizing them for utilizing their
money for profit and not for service to the community. In the absence of a standard of
morality to follow, they were denounced by the upper classes of the society.
• Criticism against the evil of business came far during the medieval period when the Catholic
Church became the most powerful institution in Europe. The Catholic Church does not trust
the business System deemed profit- motive as anti- Christian believing that the merchant
never or seldom pleases God.
• It was St. Thomas who justified that business could exist as long as it was used for good of
the Community.
• During this period, the practice of social responsibility in business produced good results.
St. Thomas Aquinas was responsible for introducing the concept of 'compensatory justice'
which maintains that prices and wages should be fair. Because of this and despite the poverty
experiences, people in 1500s enjoyed a standard of living in Europe, which never happened
in the next 300 years that followed.
Historical phases of corporate social responsibility
PHASE 1: Profit Maximizing Management (1800's to early 1900's)
• Profit Maximization (Traditional Philosophy)
• Historically, business enterprise was mainly looked for the interest of the owners.
• Social responsibility of the organization was to maximize the profit within the legal
framework of the country.
PHASE 2: Trusteeship Management (Stakeholder Philosophy) (Early1900's).
• During later years, the concept of social responsibility widened from mere satisfaction of
owners' interests to interest of other stakeholders like employees, consumers, creditors etc.
• Providing good working conditions, better quality goods, and timely repayment of loans to
creditors etc.
Perspective on corporate social responsibility
The Four-Step Pyramid of Corporate Social Responsibility
Social Responsibilities of a Business Organization towards Customers
A business cannot work without consumer. The survival and growth of business depends
on consumer satisfaction, service and support. The commercial organization should win the
confidence of the customers. This is possible by following a positive attitude towards customers
and fulfilling following social responsibilities towards them:-
(1) Quality: The Company should produce quality goods. The company should try to improve
its quality because at no time quality can be 100%. There is always room for improvement
of quality.
(2) Fair Prices: The customers should not be cheated by charging high prices. It is not possible
to fool the customer at all the time. Thus, fair price convert a customer into permanent
customer.
(3) Honest Advertising: The customers want to know the facts, features, advantages, side-
effects, etc., of the product. The advertisement conveys this information. Thus, the company
must see that the advertisement is not being misleading and it must be done by providing
the true and actual information.
(4) After Sales Service: The Company is expected to provide after sale service for
maintenance of goods during the period of warranty. Efficient and effective after sale service
helps to establish good relation between the customers and the company.
(5) Research and Development: The consumers require that the business organization must
conduct research and development for the purpose of improving the quality and reducing
the cost of production. That is, it must provide ISI or AGMARK products to the customers.
(6) Consumer's Safety: The business must ensure that the product supplied will not
adversely affect the life and health of the customers. Unsafe product must not be marketed
by the company.
(7) Regular Supply: Consumer should be supplied with the goods regularly as and when
required by them. The commercial organization should not create artificial shortage of
goods.
(8) Attend Complaints: The consumer complaints must be attended immediately.
(9) Avoid Monopolistic Competition: The commercial organization should avoid
monopolistic competition in the interest of consumers.
(10) Training: The commercial organization should arrange to train the customers either free
or for a fee. It must be in case of computers, etc.
Current activities related to corporate social responsibility
Examples of Corporate Social Responsibility in Action
Corporate social responsibility comes in many forms. Even the smallest company can impact
social change by making a simple donation to a local food bank. Some of the most common
examples of CSR include:
• Reducing carbon footprints
• Improving labor policies
• Participating in fair-trade
• Diversity, equity and inclusion
• Charitable global giving
• Community and virtual volunteering
• Corporate policies that benefit the environment
• Socially and environmentally conscious investments
Brands Doing it Right
1. Renewable Innovation: Johnson & Johnson
Map of Johnson & Johnson renewables footprint
An excellent example of CSR on the frontline is big pharma pioneer Johnson & Johnson.
They have focused on reducing their impact on the planet for three decades. Their initiatives
range from leveraging the power of the wind to providing safe water to communities around
the world. Their purchase of a privately-owned energy supplier in the Texas Panhandle
allowed the company to reduce pollution while providing a renewable, economical alternative
to electricity. The company continues to seek out renewable energy options with the goal of
having 100% of its energy needs from renewable sources by 2025.
2. Social issues: Google
Google is trusted not only for its environmentally friendly initiatives but also due to its
outspoken CEO, Sundar Pichai. He stands up against social issues including President Donald
Trump’s anti-Muslim comments. Google also earned the Reputation Institute’s highest CSR
2018 score much in part due to their data centers using 50% less energy than others in the
world. They also have committed over $1 billion to renewable energy projects and enable
other businesses to reduce their environmental impact through services such as Gmail.
3. Sustainability: Coca-Cola
Coca-Cola plant based bottle
As a brand, Coca-Cola is putting a huge focus on sustainability. The key areas are climate,
packaging and agriculture along with water stewardship and product quality. Their message is
‘a world without waste’, with the aim of collecting and recycling every bottle, making their
packaging 100% recyclable and replacing all water used in creating their drinks back to the
environment to ensure water security. They aim that by 2030, they will have reduced their
carbon footprint by 25%.
In 2021, Coca-Cola unveiled its first-ever beverage bottle made from 100% plant-based
plastic. “Our goal is to develop sustainable solutions for the entire industry, We want other
companies to join us and move forward, collectively. We don’t see renewable or recycled
content as areas where we want competitive advantage,” said Dana Breed, Global R&D
Director, Packaging and Sustainability, The Coca-Cola Company.
4. Carbon neutral & pay equity: Ford Motor Company
Ford has huge plans in the area of CSR. Their mission is to ‘build a better world, where
everyone is free to move and pursue their dreams’. They have increased investment in
electrification to $22Bn (from an original $11Bn) and aim for their vehicles to be carbon
neutral by 2050.
“We’re committed to carbon neutrality”, stated Bob Holycross, Ford’s VP, Chief
Sustainability, Environment & Safety Officer. “It’s the right thing for our customers, the planet
and Ford. Ninety-five percent of our carbon emissions today come from our vehicles,
operations and suppliers, and we’re tackling all three areas with urgency and optimism,”
Interestingly, the company is also focusing on pay equity. They are conducting a diversity,
equity and inclusion audit while introducing a global salaried pay ratio (including gender) to
level the playing field for all employees.
5 & 6. Employee rights: Netflix & Spotify
From a social perspective, companies such as Netflix and Spotify offer benefits to support
their employees and families.
Netflix offers 52 weeks of paid parental leave to the birth parent and non-birth parent
(which includes adopted children). This can be taken at any time whether it is the first year
of the child's life or another time that suits their needs. This compares to a median of 18
weeks at other major tech companies.
Spotify offers a similar program, although for a shorter duration of 24 weeks of paid leave.
The company believes the launch of this initiative resulted in a spike in external job
applications which has never abated.
When it comes to social causes, Netflix and Spotify use their social media platforms to
show support for movements such as Pride month, environmental sustainability, and Black
Lives Matter. Netflix sets an example on how to target -and appeal to - niche and minority
audiences through clever social media.
7. Access to healthcare: Pfizer
When disaster strikes, emergency assistance in healthcare is crucial. To aid in these
circumstances, Pfizer has a three-pronged approach; product donations, grants and
solutions to access.
Grants have been provided to countries such as Haiti in the aftermath of Hurricane
Matthew and the global refugee crisis in Europe and the Middle East. This money is
provided in cooperation with NGOs to reach as many people as possible.
During the COVID-19 pandemic, through its Global Medical Grants program, Pfizer
provided $5 million to help improve the recognition, diagnosis, treatment and management
of patients. In addition, grants were made available to clinics, medical centers and hospitals
to improve the management and outcome of COVID-19 patients.
In 2022, Pfizer was named one of the most ethical companies in the world by Ethisphere.
8. Philanthropic Donations: Wells Fargo
Wells Fargo donates up to 1.5% of its revenue to charitable causes each year to more
than 14,500 nonprofits through philanthropy such as food banks and incubators (plant
science and renewable energy) to hasten the speed to market for start-ups.
In response to the COVID-19 pandemic, the company donated $6.25 million to support a
domestic and global response. This includes $1 million for the CDC Foundation, $250,000 to
the International Medical Corps across 30 countries, and $5 million for efforts at a local
level to address community needs.
9. Grassroots campaigns: TOMS
TOMS's mission is to donate a pair of shoes for every pair they sell and this has resulted
in the donation of over 100 million pairs of shoes to children in need. These profits have
been used to assist the visually impaired by providing prescription glasses and medical
treatments, providing 'safe' drinking water and building businesses in developing countries
to create jobs.
Since the company came under criticism from NGOs for creating a dependency on free
shoes and collapsing local shoe-making industries, TOMS has re-evaluated its strategy.
Instead of focusing on free shoes, the company now donates one-third of its profits to
grassroots campaigns. This includes the COVID-19 Giving Fund and racial justice campaigns
such as Black Lives Matter.
“We learned that giving shoes, sight, and safe water for over a decade was an amazing
start— the right start — to creating meaningful change. But, the decision to give impact
grants instead will enable our community to do even more. Rather than giving shoes, we’re
giving 1⁄3 of our profits. In other words, $1 for every $3 we make, which is about as much
as a company can give while still keeping the lights on.” - TOMS Impact Report 2019-2020.
10. Climate neutral: Bosch
Bosch set itself ambitious goals for protecting the environment, with an aim to reduce
their ecological footprint through climate action, water usage, and a circular economy.
It seems this ambition has paid off and paved the way for other global companies, as
400 of its locations are now climate neutral. The company now wants to reduce upstream
(purchased goods and services) and downstream (product use) emissions by 15% in 2030.
“Having achieved our initial targets for scopes 1 and 2, we are now tackling scope 3
emissions with the same degree of rigor – setting specific targets and milestones for the
coming years.” - Torsten Kallweit, Head of EHS AND Sustainability
11. Clean technology: GE
It's been over a decade since General Electric launched Ecomagination, its renewable
business strategy with a mission to double down on clean technology and generate $20
billion in revenue from green products.
As part of its ‘Ecomagination Challenge’ launched last year, GE awarded five people
$100,000 each to develop their innovations such as an inflatable wind turbine, an intelligent
water meter, a cyber-secure network infrastructure, and short-circuiting and outage
technology.
12. Workplace diversity & inclusion: Starbucks
Starbucks diversity hires
With an eye to hiring, Starbucks wanted to diversify its workforce and provide
opportunities for specific cohorts. It has pledged to hire 25,000 US military veterans and
spouses by 2025 as part of its socially responsible efforts. Ahead of schedule, the company
reached this milestone six years early and now hires 5,000 veterans and military spouses
every year.
To tackle racial and social equity, Starbucks announced a mentorship program to connect
black, indigenous, and people of color (BIPOC) to senior leaders and invest in partnerships.
The chain also aims to have BIPOC represented at 30% in corporate roles and 40% in retail
and manufacturing by 2025.
13. Sustainability: New Belgium Brewing Company
This brewing company owned entirely by its employees through a stock ownership plan
is focused on sustainability. Its Fort Collins, Colorado brewery produces its electricity
through solar panels and wastewater and aims to have all its beer carbon neutral by 2030.
It also gives away $1 of every barrel sold to support their philanthropic initiatives, values and
goals. According to the Director of CSR, Katie Wallace: “We consider social and
environmental well-being to be intricately intertwined.”
14. Local communities: The Walt Disney Company
Disney committed to reducing its carbon footprint in its 2020 CSR report with goals for
zero net greenhouse gas emissions, zero waste, and a commitment to conserve water. They
are actively ensuring strict international labor policies to protect the safety and rights of their
employees.
They are also active in the community and encourage employees to do the same. When
their parks closed due to the COVID-19 pandemic, Disney focused their CSR efforts on local
communities. They provided $27 million towards food donations and PPE from closed parks
and production sets and encouraged employees to participate in virtual volunteering.
15. Packaging: LEGO
LEGO sustainability commitments
Lego will invest $400 million over the next three years with a focus on accelerating its
efforts in the area of sustainability. Their primary focus as a modern-day superbrand is to
phase out single-use plastic packaging for its bricks with all packaging to be sustainable by
2025. From 2021 on they will trial paper bags in boxes in partnership with the Forest
Stewardship Council. They are also investing in more sustainable products that create zero
waste and are carbon neutral.
LEGO Group CEO, Niels B Christiansen said: “We cannot lose sight of the fundamental
challenges facing future generations. It’s critical we take urgent action now to care for the
planet and future generations. As a company that looks to children as our role models, we
are inspired by the millions of kids who have called for more urgent action on climate
change.”
16. Social media & journalism: The Washington Post
In the wake of fake news, news outlets are taking to social media networks like TikTok
to address a new audience and tackle false information around issues such as the U.S
election and coronavirus.
The Washington Post is one example of a news brand using TikTok successfully. Their
tagline is ‘We are a Newspaper’ and their TikTok profile already has 1 million followers (and
growing). Their goal? To draw in new readers and build trust using short-form videos and
viral content.
According to Dave Jorgensen, the Post’s social media guru, the rapid rise of TikTok is
down to the fact that the platform has increased the trust between the paper and its
followers. He believes that TikTok is journalism in every sense. “Pretty much every other
TikTok has something news related in it and with that we are delivering news to the users.
That’s what journalism is – delivering news however you are able to in a responsible way.”
References:
https://www.indiastudychannel.com/resources/127789-Social-Responsibilities-of-a-Business-
Organization-towards-Customers.aspx
https://insightssuccess.com/social-responsibility-to-the-community-and-the-environment/
https://digitalmarketinginstitute.com/blog/corporate-16-brands-doing-corporate-social-
responsibility-successfully
