1 the profit motive and environmental issues geoff leese october 2006 revised july 2007, august...

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The Profit Motive and Environmental issues

Geoff Leese October 2006 revised July 2007, August

2008, August 2009

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Introduction

Profit maximisation Corporate Social Responsibility

definition Ethical management Benefits of CSR CSR and stakeholders The SVN and it’s standards The arguments against

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The profit motive

Profit means growth Growth means survival But at what cost? Short term profit vs. long-term

survival

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Corporate Social Responsibility

The commitment of business to contribute to sustainable economic development, working with employees, their families, the local community and society at large to improve their quality of life.”

The World Business Council on Sustainable Development.

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Ethical management

Is it legal? Is it balanced?

That is, fair to all stakeholders Is it “right”?

Are you proud of it? Would you want others to know

what you decided?

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Ethical policy

Purpose Don’t lose sight of it

Pride Don’t be ashamed of what you’ve done

Patience Long term survival rather than short term

profit Persistence

Commitment to principles is important Perspective

Stay focused!

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Benefits of CSR

Satisfied customers Loyal employees Enhanced reputation

Taken From SERCO annual CSR report, 2003

http://www.investis.com/reports/srp_crr_2003_en/report.php?type=1

Socially responsible and environmentally sustainable

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CSR and customers

Product safety Cost-based pricing High quality Focus on customer needs Value for money Honest advertising

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CSR and shareholders

Maximum information Honest accounting practices Resisting hostile takeovers Creating a sound capital base

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CSR and employees Health and Safety Fair wages Continuous employment Job design Training and personal development Promotion opportunities Equality of treatment Respect privacy Respect family life

Home/work balance

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CSR and society

Environmental sustainability “Clean” operations Contribution to local

communities No restrictive practices Obeying spirit as well as letter of

the law Conserve natural resources

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CSR and suppliers

Prompt payment Enforced by law in some societies

Confidentiality Long notice of termination of

contracts Don’t exploit position of

dependence power Help them to help you

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The SVN standards

Three general topics Ethics

– Values Accountability

– Disclosure Governance

– Stakeholder representation

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The SVN standards

Six stakeholder topics Employees Investors Customers Suppliers The community The environment

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The SVN standards

Each standard consists of Principle Practices Measures Resources

Visit http://www.svn.org/initiatives/PDF_standards.pdf for more information

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The arguments against CSR

Overdependence Disproportionate influence Undermines democratic process Not our problem Can’t afford it Leads to higher prices Puts us at a competitive

disadvantage

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The arguments against CSR

How do we measure it? Diversity of viewpoints

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Summary

Profit maximisation Corporate Social Responsibility

definition Ethical management Benefits of CSR CSR and stakeholders The SVN and it’s standards The arguments against

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Further reading

Bennett chapter 8 Johnson and Scholes section

5.4 Social venture network - follow

the link! Corporate Social Responsibilty

- follow the link!