Social Entrepreneurship & Corporate Social Responsibility

Social Entrepreneurship & Corporate Social Responsibility

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  • Sigmund Echtler
    Sigmund Echtler    Premium Member   Group moderator
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    Corporate social responsibility (CSR) is an expression used to describe what some see as a company’s obligation to be sensitive to the needs of all of the stakeholders in its business operations.

    A company’s stakeholders are all those who are influenced by, or can influence, a company’s decisions and actions. These can include (but are not limited to): employees, customers, suppliers, community organizations, subsidiaries and affiliates, joint venture partners, local neighborhoods, investors, and shareholders (or a sole owner).

    CSR is closely linked with the principles of "Sustainable Development" in proposing that enterprises should be obliged to make decisions based not only on the financial/economic factors but also on the social and environmental consequences of their activities.

    * 1 Development and analysis
    * 2 Auditing and reporting
    * 3 The business case for CSR
    * 4 Criticism
    * 5 Other perspectives
    * 6 See also
    * 7 External links
    * 8 References

    [edit] Development and analysis

    Today’s heightened interest in the proper role of businesses in society has been promoted by increased sensitivity to, and awareness of environmental and ethical issues. Issues like environmental damage, improper treatment of workers, and faulty production leading to customers inconvenience or danger, are highlighted in the media. In some countries government regulation regarding environmental and social issues has increased, and standards and laws are also often set at a supranational level (e.g., by the European Union). Some investors and investment fund managers have begun to take account of a corporation’s CSR policy in making investment decisions (so called "ethical investing"). Some consumers have become increasingly sensitive to the CSR performance of the companies from which they buy their goods and services. These trends have contributed to the pressure on companies to operate in an economically, socially and environmentally sustainable way.

    It is important to distinguish CSR from charitable donations and "good works" (i.e., philanthropy, e.g., Habitat for Humanity or Ronald McDonald House). Corporations have often, in the past, spent money on community projects, the endowment of scholarships, and the establishment of foundations. They have also often encouraged their employees to volunteer to take part in community work and thereby create goodwill in the community which will directly enhance the reputation of the company and strengthen its brand. CSR goes beyond charity and requires that a responsible company take into full account their impact on all stakeholders and on the environment when making decisions. This requires them to balance the needs of all stakeholders with their need to make a profit and reward their shareholders adequately.

    A widely quoted definition by the World Business Council for Sustainable Development states that "Corporate social responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large." (CSR: Meeting Changing Expectations, 1999). This holistic approach to business regards organizations as (for example) being full partners in their communities, rather than seeing them more narrowly as being primarily in business to make profits and serve the needs of their shareholders.

    [edit] Auditing and reporting

    To demonstrate good business citizenship, firms can report compliance with a number of CSR standards, including:

    * AccountAbility's AA1000 standard, based on John Elkington's triple bottom line (3BL) reporting
    * Global Reporting Initiative's Sustainability Reporting Guidelines
    * Social Accountability International's SA8000 standard
    * The ISO 14000 environmental management standard

    Some nations require CSR reporting, though agreement on meaningful measurements of social and environmental performance is difficult. Many companies now produce externally audited annual reports that cover Sustainable Development and CSR issues, but the reports vary widely in format, style, and evaluation methodology (even within the same industry). Critics dismiss these reports as lip service, a charge that carries some weight given notable examples: Enron's yearly "Corporate Responsibility Annual Report" and tobacco corporations' social reports.

    CSR reporting draws much inspiration from its much older cousin, environmental and sustainability reporting (e.g., in Germany).

    [edit] The business case for CSR

    The benefits of CSR to businesses vary depending on the nature of the enterprise, and are difficult to quantify, though there is a large body of literature exhorting business to adopt measures beyond financial ones (e.g., Deming's Fourteen Points, balanced scorecards). Orlizty, Schmidt, and Rynes found a correlation between social/environmental performance and financial performance. However, businesses may not be looking at short-run financial returns when developing their CSR strategy.

    The definition of CSR used within business can vary from the strict "stakeholder impacts" definition used in this article and will often include charitable efforts and volunteering. CSR may be based within the human resources, business development or PR departments of a company, or may be given a separate unit reporting to the CEO or in some cases directly to the board. Progressive companies do not have a CSR department or function at all -- the concept is so ingrained in the company itself that employees implement the company's values directly.[citation needed]

    The business case for CSR within a company will likely rest on one or more of these arguments:

    Human Resources

    Corporate Social Responsibility can be an important aid to recruitment and retention, particularly within the competitive graduate market. Potential recruits are increasingly likely to ask about a firm's CSR policy during an interview and having a comprehensive policy can give an advantage. CSR can also help to build a "feel good" atmosphere among existing staff, particularly when they can become involved through payroll giving, fundraising activities or community volunteering.

    Risk Management

    Managing risk is a central part of many corporate strategies. Reputations that take decades to build up can be ruined in hours through incidents such as corruption scandals or environmental accidents. These events can also draw unwanted attention from regulators, courts, governments and media. Building a genuine culture of 'doing the right thing' within a corporation can offset these risks.

    Brand Differentiation

    In crowded marketplaces companies strive for 'X Factors' which can separate them from the competition in the minds of consumers. Several major brands, such as The Co-operative Group and The Body Shop are built on ethical values. Business service organisations can benefit too from building a reputation for integrity and best practice.

    License to operate

    Corporations are keen to avoid interference in their business through taxation or regulations. By taking substantive voluntary steps they can persuade governments and the wider public that they are taking current issues like health and safety, diversity or the environment seriously and so avoid intervention. This also applies to firms seeking to justify eye-catching profits and high levels of boardroom pay. Those operating away from their home country can make sure they stay welcome by being good corporate citizens with respect to labour standards and impacts on the environment.

    Attention Diversion

    Corporations may undertake high-profile CSR programmes in an effort to distract the public from the ethical questions posed by their core operations. Thus British American Tobacco (BAT) will take part in health initiatives and the petroleum giant BP has installed very visible wind-turbines on the roofs of some petrol stations in the UK.

    [edit] Criticism

    Some critics of CSR, such as the economist Milton Friedman, argue that a corporation's principal purpose is to maximize returns to its shareholders, while obeying the laws of the countries within which it works. Others argue that the only reason corporations put in place social projects is utilitarian; that they see a commercial benefit in raising their reputation with the public or with government. Proponents of CSR, however, would suggest a number of reasons why self-interested corporations, solely seeking to maximise profits are unable to advance the interests of society as a whole.

    Key challenges to the idea of CSR include:

    * The rule of corporate law that a corporation's directors are prohibited from any activity that would reduce profits
    * Other mechanisms established to manage the principal-agent problem, such as accounting oversight, stock options, performance evaluations, deferred compensation and other mechanisms to increase accountability to shareholders.

    Because of this, it has become clear that a CSR activity generally can only be effective at achieving social or environmental outcomes to the extent that it maximizes profits: hence the CSR slogan "Doing Well by Doing Good". Note that this requires that the resources applied to CSR activities must have a higher return than those resources could obtain if applied anywhere else, e.g. capital or productivity investment, lobbying for tax relief, outsourcing, offshoring, fighting against unionization, taking regulatory risks, or taking market risks—all of which are frequently-pursued strategies. This means that the possible scope of CSR activities is drastically narrowed. And corporations, with their constant incentive to maximize profits, often have identified all areas where profits could be increased, including those that have positive external social and environmental outcomes. The scope for CSR is thus narrowed to situations in which:

    * Resources are available for investment
    * The CSR activity will yield higher profits than any other potential investment or activity
    * The corporation has been remiss in identifying this profit opportunity

    A conflict can arise when a corporation espouses CSR and its commitment to Sustainable Development on the one hand, whilst damaging revelations about its business practices emerge on the other. For example the McDonald's Corporation has been criticised by CSR campaigners for unethical business practices, and was the subject of a decision by Justice Roger Bell in the McLibel case (which upheld some of these claims, regarding mistreatment of workers, misleading advertising, and unnecessary cruelty to animals). Similarly Shell has a much publicised CSR policy and was a pioneer in triple bottom line reporting, but was involved in 2004 in a scandal over the misreporting of its oil reserves which seriously damaged its reputation and led to charges of hypocrisy.

    Universities and business schools, many of them with keen advocates of CSR amongst their teaching staffs, have themselves come in for criticism concerning their dealings with corporations (note the different stances taken by ESADE and Wheeling Jesuit University with regard to Aramark).

    Critics of the role of business in society argue that:

    * Corporations care little for the welfare of workers, and given the opportunity will move production to sweatshops in less well regulated countries.

    * Unchecked, companies will squander scarce resources.

    * Companies do not pay the full costs of their impact. For example the costs of cleaning pollution often fall on society in general. As a result profits of corporations are enhanced at the expense of social or ecological welfare.

    * Regulation is the best way to ensure that companies remain socially responsible.

    Supporters of a more market based approach argue that:

    * By and large, free markets and capitalism have been at the centre of economic and social development over the past two hundred years and that improvements in health, longevity or infant mortality (for example) have only been possible because economies - driven by free enterprise - have progressed.

    * In order to attract quality workers, it is necessary for companies to offer better pay and conditions which leads to an overall rise in standards and to wealth creation.

    * Investment in less developed countries contributes to the welfare of those societies, notwithstanding that these countries have fewer protections in place for workers. Failure to invest in these countries decreases the opportunity to increase social welfare.

    * Free markets contribute to the effective management of scarce resources. The prices of many commodities have fallen in recent years. This contradicts the notion of scarcity, and may be attributed to improvements in technology leading to the more efficient use of resources.

    * There are indeed occasions when externalities, such as the costs of pollution are not built into normal market prices in a free market. In these circumstances, regulatory intervention is important to redress the balance, to ensure that costs and benefits are correctly aligned.

    * Whilst regulation is necessary in certain circumstances, over regulation creates barriers to entry into a market. These barriers increase the opportunities for excess profits, to the delight of the market participants, but do little to serve the interests of society as a whole.

    [edit] Other perspectives

    Some would argue that it is self-evidently “good” that businesses should seek to minimise any negative social and environmental impact resulting from their economic activity. It can also be beneficial for a company’s reputation to publicise (for example) any environmentally beneficial business activities. A company which develops new engine technology to reduce fuel consumption will be able (if it chooses) to promote its CSR credentials as well as increase profits.

    Some commentators are cynical about the true level of commitment of corporations to ideas like CSR and Sustainable Development, and their actual motivations for responsible behaviour. (Corporations that create the appearance of acting responsibly just for its public relations value are said to be "greenwashing.")

    Such commentators also say, citing Friedman's dictum, that the idea of an “ethical company” is an oxymoron, since the corporation is by its nature compelled to maximize its own interest, whatever the external price. Corporate executives and employees in turn have strong incentives to internalize the corporation's statutory obligations to maximize profits, sometimes to the extent that they abdicate their individual moral and ethical obligations as human beings. This tendency is, of course, encouraged by the desire to keep one's job, and by a system that judges and rewards performance strictly by bottom-line returns. The results of this tendency were clearly seen in the many corporate scandals of the late twentieth and early twenty-first centuries.

    So the CSR movement may perhaps be understood as an attempt not so much to regulate the activities of corporations per se, as to remind the people who constitute these corporations that they nonetheless have other responsibilities beyond the corporate ones.

    [edit] See also

    * Voluntary compliance

    * United Nations Global Compact

    * OECD Guidelines for Multinational Enterprises
    * Business ethics
    * Business philosophy
    * Civil society
    * Corporate behaviour
    * Corporate benefit
    * Corporate governance
    * Corporate personhood
    * Corporation
    * Ethicism

    [edit] External links

    * Canadian Critique of the Triple Bottom Line approach to measuring CSR
    * Reclaim Democracy. Essay on corporate responsibility
    * World Bank archived online discussion: "How Can Corporate Social Responsibility Initiatives Deliver Results?"
    * World Bank archived online discussion: "Will Responsible Business Increase the Competitiveness of Developing Countries?"
    * Milton Friedman on corporate responsibility
    * Useful summary of the main schools of thought on CSR
    * Center for Global, International, and Regional Studies History and Critique of Corporate Social Responsibility (PDF file)

    [edit] References

    Bhattacharya Jayanta (2006), Corporate Social Responsibility: Ethical and Strategic Choice. Asian Books(Pvt) Limited: New Delhi, India.
    This post was modified on 10 Mar 2007 at 10:30 pm.
  • Sigmund Echtler
    Sigmund Echtler    Premium Member   Group moderator
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    Corporate Social Responsibility (CSR) umschreibt verantwortungsvolles unternehmerisches Handeln, welches über die eigentliche Geschäftstätigkeit eines Unternehmens hinaus geht.

    Für Unternehmen besteht aufgrund veränderter Umweltbedingungen (insbesondere Globalisierung, verbesserte Informations- und Kommunikationstechnologie und sich verändernde mentale Modelle) der Druck, sich zunehmend mit dieser Thematik auseinander zu setzen, da sie anderenfalls Gefahr laufen, die von der Gesellschaft benötigte Licence to operate zu verlieren. Prominentes Beispiel für die Konsequenzen bei Verlust der Licence to operate stellt Shell (Brent Spar) dar. Die Gesellschaft fordert von Unternehmen die Übernahme von Verantwortung. Unternehmen haben dieser Forderung in ihrem Eigeninteresse nachzugehen. Sie stehen vor der Herausforderung, angemessene Konzepte zu entwickeln. Um eine gemeinsame Annäherung an das Thema CSR zu finden schließen sich Unternehmen zu Netzwerken zusammen (econsense, CSR Europe). Allerdings ist nach wie vor weitgehend unklar, was sich genau hinter dem Begriff CSR verbirgt; er wird sowohl als Überbegriff zu Corporate Citizenship (CC) verstanden, wie auch umgekehrt. Meist werden unter beiden Begriffen Instrumente wie Social-/Umweltsponsoring, Spendenwesen, Mäzenatentum oder Corporate Volunteering verstanden. Auch wird oftmals der Anspruch erhoben, CSR würde ein Bestandteil im Rahmen einer nachhaltigen Entwicklung sein. Während im angelsächsischen Sprachgebrauch das Konzept "CSR" zwar die ökologische und soziale Dimension stärker betont als die wirtschaftliche, wird im Deutschen "CSR" zunehmend mit dem Begriff der unternehmerischen Nachhaltigkeit (d.h. eine Unternehmensführung unter ausgewogener Berücksichtigung von ökonomischen, ökologischen und sozialen Faktoren) gleichgesetzt. Allerdings erscheint es fragwürdig, ob einzelne Instrumente hierzu einen Beitrag leisten können. Vielmehr wird das Ergebnis oftmals "nur" ein ad-hoc Projekt sein; es fehlt der professionelle Umgang mit der Thematik.


    * 1 EU und Verbände zu CSR
    * 2 Siehe auch
    * 3 Literatur
    * 4 Weblinks


    EU und Verbände zu CSR

    Die Europäische Kommission sieht in der Förderung von CSR einen Ansatz um ergänzend zu gesetzlicher Regulierung die freiwilligen Beiträge von Unternehmen zu sozialer und ökologischer Nachhaltigkeit zu fördern.

    Die wesentlichen Meilensteine der europäischen CSR-Politik sind:

    * Das Davoser Manifest (1973)
    * das EU-Grünbuch zu CSR (2001)
    * das Europäische Multistakeholder Forum zu CSR (2002-2004)
    * die für 2005 geplante neue Mitteilung zu CSR

    Der europäische Prozess hat wesentlich zur Verbreitung von CSR in Deutschland beigetragen.

    Immer wieder wird kontrovers diskutiert, inwiefern Vereinheitlichung, Standards oder gesetzliche Rahmenbedingungen (z.B. zu mehr Transparenz) zur Förderung von CSR eingeführt werden sollen. Unternehmensverbände, wie z.B. der BDI, sprechen sich strikt dagegen aus und berufen sich auf den Freiwilligkeitscharakter von CSR. Umwelt- und soziale NGO halten gewisse Standards und gesetzliche Verpflichtungen zu Transparenz für notwendig damit fortschrittliche Unternehmen auch als solche von den Konsumenten erkannt werden können und vom Markt belohnt werden. Vgl. Loew 2005 The Results of the European Multistakeholder Forum on CSR in the View of Business, NGO and Science, Berlin.

    Siehe auch

    * Corporate Responsibility
    * Corporate Citizenship
    * Corporate Volunteering
    * Sozialsponsoring



    * Bassen, Alexander/ Jastram, Sarah/ Meyer, Katrin (2005): Corporate Social Responsibility. Eine Begriffserläuterung, in: Zeitschrift für Wirtschafts- und Unternehmensethik, Jhrg. 6, Heft 2 (2005), S. 231-236
    * Beschorner, Thomas (2005): "Corporate Social Responsibility, Corporate Citizenship, Corporate Governance. Schillernde Begriffe und ihre Deutung." Ökologisches Wirtschaften 2005(3), S. 40-42.
    * Daub, Claus-Heinrich (2005): Globale Wirtschaft - globale Verantwortung: Die Integration multinationaler Unternehmen in den Prozess der nachhaltigen Entwicklung. Basel 2005



    * - Neuigkeiten, Informationen und Best-Pracice Beispiele zu Corporate Social Responsibility (CSR) von der Bundesvereinigung der Deutschen Arbeitgeberverbände
    * - Umfangreiche Informationen zu Corporate Social Responsibility (CSR) und Corporate Citizenship (CC) in Deutschland und Europa
    * - Virtuelles Kompetenzzentrum des Projektes "Verantwortliche Unternehmensführung im Deutschen Mittelstand", gefördert von der Europäischen Kommission
    * - Definitionen, Instrumente, Initiativen im Bereich Corporate Social Responsibility (CSR) und Corporate Citizenship (CC).
    * Projekt "COSORE" (Corporate Social Responsibility)
    * - Forum Nachhaltige Entwicklung der Deutschen Wirtschaft
    * respACT austria - Die österreichische Plattform für Unternehmen mit Verantwortung
    * Portal für Nachhaltigkeitsberichterstattung mit der Möglichkeit kostenlos Umwelt-, Sozial-, CSR- und Nachhaltigkeitsberichte herunterzuladen oder als Printversionen zu bestellen.
    * CorA - Corporate Accountability - Netzwerk für Unternehmensverantwortung
    * European Commission, Publikationen zu CSR
    This post was modified on 03 Nov 2006 at 11:11 pm.
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