Corporate Social Responsibility

Broadly speaking, proponents of CSR have used four arguments to make their case:
moral obligation, sustainability, license to operate, and reputation. The moral appeal –
arguing that companies have a duty to be good citizens and to “do the right thing” – is
prominent in the goal of Business for Social Responsibility, the leading nonprofit CSR
business association in the United States. It asks that its members “achieve commercial
success in ways that honour ethical values and respect people, communities, and the
natural environment. “Sustainability emphasises environmental and community
stewardship.

A.
An excellent definition was developed in the 1980s by Norwegian Prime Minister Gro
Harlen Brundtland and used by the World Business Council for Sustainable
Development: “Meeting the needs of the present without compromising the ability of
future generations to meet their own needs.” Nowadays, governments and companies
need to account for the social consequences of their actions. As a result, corporate social
responsibility (CSR) has become a priority for business leaders around the world. When
a well-run business applies its vast resources and expertise to social problems that it
understands and in which it has a stake, it can have a greater impact than any other
organization. The notion of license to operate derives from the fact that every company
needs tacit or explicit permission from governments, communities, and numerous other
stakeholders to justify CSR initiatives to improve a company’s image, strengthen its
brand, enliven morale and even raise the value of its stock.

B.
To advance CSR. we must root it in a broad understanding of the interrelationship
between a corporation and society. Successful corporations need a healthy society.
Education, health care, and equal opportunity are essential lo a productive workforce.
Safe products and working conditions not only attract customers but lower the internal
costs of accidents. Efficient utilization of land, water, energy, and other natural
resources makes business more productive. Good government, the rule of law, and
property rights are essential for efficiency and innovation. Strong regulatory standards
protect both consumers and competitive companies from exploitation. Ultimately, a
healthy society creates expanding demand for business, as more human needs are met
and aspirations grow. Any business that pursues its ends at the expense of the society
in which it operates will find its success to be illusory and ultimately temporary. At the
same time, a healthy society needs successful companies. No social program can rival
the business sector when it comes lo creating the jobs, wealth, and innovation that
improve standards of living and social conditions over time.

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C.
A company’s impact on society also changes over time, as social standards evolve and
science progresses. Asbestos, now understood as a serious health risk was thought to be
safe in the early 1900s, given the scientific knowledge then available. Evidence of its
risks gradually mounted for more than 50 years before any company was held liable for
the harms it can cause. Many firms that failed to anticipated the consequences of this
evolving body of research have been bankrupted by the results. No longer can
companies be content to monitor only the obvious social impacts of today. Without a
careful process for identifying evolving social effects of tomorrow, firms may risk their
very survival.

D.
No business can solve all of society’s problems or bear the cost of doing so. Instead,
each company must select issues that intersect with its particular business. Other social
agendas are best left to those companies in other industries, NGOs, or government
institutions that are better positioned to address them. The essential test that should
guide CSR is not whether a cause is worthy but whether it presents an opportunity to
create shared value – that is, a meaningful benefit for society that is also valuable to the
business. Each company can identify the particular set of societal problems that it is
best equipped to help resolve and from which it can gain the greatest competitive
benefit.

E.
The best corporate citizenship initiatives involve far more than writing a check: They
specify clear, measurable goals and track results over time. A good example is General
Electronics’s program to adopt under-performing public high schools near several of its
major U.S. facilities. The company contributes between $250,000 and $1 million over
a five-year period to each school and makes in-kind donations as well. GE managers
and employees take an active role by working with school administrators to assess needs
and mentor or tutor students. In an independent study of Ion schools in the program
between 1989 and 1999, nearly all showed significant improvement, while the
graduation rate in four of the five worst performing schools doubled from an average of
30% to 60%. Effective corporate citizenship initiatives such as this one create goodwill
and improve relations with local governments and other important constituencies.
What’s more, GE’s employees feel great pride in their participation. Their effect is
inherently limited, however. No matter how beneficial (he program is, it remains
incidental to the company’s business, and the direct effect on GE’s recruiting and
retention is modest.

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F.
Microsoft's Working Connections partnership with the American Association of
Community Colleges (AACC) is a good example of a shared-value opportunity arising
from investments in context. The shortage of information technology workers is a
significant constraint on Microsoft’s growth; currently, there are more than 450,000
unfilled IT positions in the United States alone. Community colleges, with an
enrollment of 11.6 million students, representing 45% of all U.S. undergraduates, could
be a major solution. Microsoft recognizes, however, that community colleges face
special challenges: IT curricula are not standardized, technology used in classrooms is
often outdated, and there are no systematic professional development programs to keep
faculty up to date. Microsoft’s $50 million five-year initiative was aimed at all three
problems. In addition to contributing money and products, Microsoft sent employee
volunteers to colleges to assess needs, contribute to curriculum development, and create
faculty development institutes. Microsoft has achieved results that have benefited many
communities while having a direct-and potentially significant-impact on the company.

G.
At the heart of any strategy is a unique value proposition: a set of needs a company can
meet for its chosen customers that others cannot. The most strategic CSR occurs when
a company adds a social dimension to its value proposition, making social impact
integral to the overall strategy. Consider Whole Foods Market, whose value proposition
is to sell organic, natural, and healthy food products to customers who are passionate
about food and the environment. The company’s sourcing emphasises purchases from
local farmers through each store’s procurement process. Buyers screen out foods
containing any of nearly 100 common ingredients that the company considers unhealthy
or environmentally damaging. The same standards apply to products made internally.
Whole Foods’ commitment to natural and environmentally friendly operating practices
extends well beyond sourcing. Stores are constructed using a minimum of virgin raw
materials. Recently, the company purchased renewable wind energy credits equal to
100% of its electricity use in all of its stores and facilities, the only Fortune 500
company to offset its electricity consumption entirely. Spoiled produce and
biodegradable waste are trucked to regional centers for composting. Whole Foods’
vehicles are being converted to run on biofuels. Even the cleaning products used in its
stores are environmentally friendly. And through its philanthropy, the company has
created the Animal Compassion Foundation to develop more natural and humane ways
of raising farm animals. In short, nearly every aspect of the company’s value chain
reinforces the social dimensions of its value proposition, distinguishing Whole Foods
from its competitors.

Questions 14-20

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Reading passage has seven paragraphs, A–G
Choose the correct heading for each paragraph from the list of heading below.
Write the correct number, i-viii, in boxes 14-20 on your answer sheet.

List of Headings
i How CSR may help one business to expand
ii CSR in many aspects of a company’s business
iii A CSR initiative without a financial gain
iv Lack of action by the state of social issues
v Drives or pressures motivate companies to address CSR
vi The past illustrates business are responsible for future outcomes
vii Companies applying CSR should be selective
viii Reasons that business and society benefit each other

Questions 21-22
Complete the following summary of the paragraphs of Reading Passage, using NO
MORE THAN TWO WORDS from the passage for each answer. Write your answers
in boxes 21-22 on your answer sheet

The implement of CSR, HOW?

Questions 23-26
Use the information in the passage to match the companies (listed A-C) with opinions
or deeds below. Write the appropriate letters A,B or C in boxes 23-26 on your answer
sheet

List of companies
A General Electronics
B Microsoft
C Whole Foods Market

NB you may use any letter more than once

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25. Helping the undeveloped
26. Ensuring the people have the latest information

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