final paper corporate social responsibility

-1- AlexopoulouDR. E. ChristodoulakisSenior I3 February 2006

Today’s companies are called upon to function within an environment that is defined by

national and across boarder competition, with products and services differentiation becoming

one of the most powerful competitive strategies. Corporate Social Responsibility (CSR) is

fast becoming a key feature of such differentiation strategy and thus becoming the main

discussion on boardroom agendas. This is not only because it can optimize a company’s

competitive field but also their brand recognition and placement in the market place. 1

About 30 years ago, Corporate Social Responsibility was a term not many companies or

different publics had heard of, but today CSR has become an everyday concern and priority. 2

In today’s society CSR is one of the most vital components which has become essential to

incorporate into ones business, this is not only for the business to thrive economically but

also for future prosperity. 3 Organizations around the world are embracing new and

innovative way of getting their work done and increasing profit but with that said companies

have to consider the environment and the impact of their services and or products have in the

community. 4 The purpose of this essay is explaining the definition of Corporate Social

Responsibility (CSR) and the conflict that surrounds the definition of the terms’

understanding. In following an exploration of the symbiotic relationship, will be reveled one,

which exists and connects a business to the community and the three levels of CSR.

Illustrated will be the reasons why CSR should be practiced and the importance of CSR, as

well as, how it affects key players, the businessmen and consumers. In the midst of all this

shown will be the conflicting arguments that arise when discussing CSR. Finally, an

exploration in the methods used when it comes to measuring CSR and in conclusion future

projections on CSR.

1 “The Importance and the Role that CSR plays.” Agenda Setting topics. 12/4/02. 3/01/05. <www.agendasetting.com>

2 Quinn. J. Francis. “Why Social Responsibility Matters.” Supply Chain. Keep Media. Sep 1, 2004. 1/15/06 www.keepsmedia.com.

3 “What is CSR?” Canadian Business for Social Responsibility. 17 /1/06. www.cbrs.bc.ca.

4 “Management Essay.” Social Responsibility and the Firm. 23/1/06. www.users.bigpond.com.

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http://www.keepsmedia.com/

http://www.users.bigpond.com/

http://www.cbrs.bc.ca/

-2- Alexopoulou

For decades now many companies and other organizations have turned to their cheque

books to offer over donations or other forms of financial contributions to less privileged

institutions. But many companies have seen that just donating resources and money is not

enough. “Most of the times the money gets used up in an inefficient way and at the end of the

day the cause and the effort goes to waist…” says, CEO of Coco-Cola. “We believe that a

good business is a good citizen."5 There is a new attitude which is being described, by many

as a fresh wave of voluntary action or a new form of “good works charity”- in other words:

CSR. While donations and contributions to disadvantaged people in a society and to the

larger society are still very important, businessmen are taking on a bigger and better

responsibility: “… a role that supports development and involves communities in decision

making.” Husky Injection Molding believes that it is important to: “…supporting local

environmental and social community initiatives…” each year they contribute 5% of their pre-

taxes to the Schad Foundation.6 BP’s Chief Executive, Lord Browne has put “…corporate

responsibility and mutuality of benefit at the heart if his business.” CSR has become an

integral part in the community and a key to prospect success. 7

But to truly understand and fully appreciate the potential good that CSR can bring to a

company and most importantly to a society we first have to understand and grasp the true

meaning of CSR. When speaking about the basic responsibility of a business, it entails that a

business obeys the law and follows the basic ethical standards of behavior, above and beyond

that “…pretty much anything would go.”8 When actually reading the word Corporate Social

Responsibility (CSR), it is self evident what the word actually means. The term, itself,

carries an underlying suggestion that it has to do with the welfare and accountability for the

corporation and the social fundamental elements. 9

5 The Importance of Social Responsibility. The Times Newspaper 100. Ed 7. 2001. 7/01/06 www.cocacola.com

6 “Corporate Social Responsibility: Lessons Learned” Sustainable Development. Canada. 2001/03/31. 1/15/2006. www.nrcan.gc.ca/sd-dd/pubd/crs-rse/toc _e.html

7 Lewis, Steward. “Reputation and corporate responsibility” Journal of Communication Management. 7.4 (2003): 356 – 364 ProQuest Company. Amer. Coll. of Gr. Libraries, Athens, Gr. 2 Feb. 2006

<www.proquest.umi.com>

8 Baker, Mallen. “Do we expect business to save the world? ”. Business Respect. No.40. 4/10/02. <www.mallenbaker.net>

9 Leiberwitz. L. Risa. What Social Responsibility for the Corporation? A report on the United States. Cornell University. School of industrial & Labour. Vol.47 No. 5. 2005.

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http://www.nrcan.gc.ca/sd-dd/pubd/crs-rse/toc

http://www.cocacola.com/

-3- AlexopoulouNo one can pin point a definite and precise definition of CSR, but it generally refers to

the idea that: “… businesses are accountable for the effects of their actions on the community

and should seek socially and economically beneficial results. It involves operating a business

in a way that meets ethical and legal standards as well as meeting public expectation.” If you

ask any executive they will tell you that when making a decision, they need to take into

consideration both the needs of the community and the business. 10 The bottom line is that

when one is being socially responsible we have to see the business and the community as one

entity and not as two separate ones. This premise is based on the idea that: “… the

corporation is not a secluded section of society, but both general public and organization are

integrated parts in the whole spectrum and have dramatic impact on the community, its

problems, structure and its future." 11

Defining the concepts of CSR ranges from company to company and business to

business; but finding a clear, concise and universal definition is difficult.12It is said that the

name CSR is: “…a vague and intangible term which can mean anything to anybody, and

therefore is effectively without meaning.13 Coca Cola Company states that being CSR

means… “CSR is behaving in a way that actively supports all members of the community.”

Here we understand that Coca-Cola is more interested in the community and the symbiotic

relationship which they form with their different publics. 14 On the other hand we see that

Bayer's Corporate believes: “…our goal is to grow the value of our company over the long

term and generate a high value added in the interests of our stockholders, employees … in all

the countries in which we operate.” 15 Here the definition takes another side, one which

focuses on the profits and only concerns itself with the benefits of the internal publics.

The lack of a clear definition for CSR makes it difficult to decide which companies are

being socially responsible and what degree of Social Responsibility is being practiced. Ethics

in Action Awards- a co-operation which honors companies annually with awards every year

says that: “CSR is a term describing a company’s obligation to be accountable to all of its

stakeholders in all its operations and activities. Socially responsible companies consider the

10 Baker, Mallen. “Do you know the meaning of the word?”. Business Respect. 4/10/02. <www.mallenbaker.net>


12 Debashis, Aikat. Corporate Communication in the 21st Century about Corporate Social Responsibility. University of North Carolina, Chapel Hill, USA. 5/12/03.

13 Jones, P and Comfort, D. “Corporate social responsibility and the UK’s top ten retailers.” International Journal of Retailing & distribution Management.. 33.12 (2005) 882 – 892. Emerald Research. Amer. Coll. of

Gr. Libraries, Athens, Gr. 2 Feb. 2006 <ww.emeraldinsight.com/0959 – 0552.htm>

14 The Importance of Social Responsibility. The Times Newspaper 100. Ed 7. 2001. 7/01/06 www.cocacola.com

15 “Objectives of Bayer's Corporate Social Responsibility Commitment” Bayers . February 27, 2004 6/01.06www.bayer.com

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-4- Alexopouloufull scope of their impact on communities and the environment when making decisions,

balancing the needs of stakeholders with the need to make a profit.” 16

Source “Corporate Social Responsibility” DVN Dec. 2005 . 31/1/06 <www.dnv.com/certification/corporatesocialresponsibility/>

The diagram above depicts exactly that, we can understand that Ethics in Action is

speaking about a sort of symbiotic relationship which takes place between the business and

the community, were by this affiliation brings out benefits for all three side, allowing

collaboration and common gain between each segment.

It is true, different organizations have different definitions but to understand this

symbiotic correlation between society and business more evidently observe the following

diagram:

Source: Baker, Mallen. “Corporate Social Responsibility – what does it mean?” Business Respect. 4/01/06. <www.mallenbaker.net>

16 “What is CSR? Q&A” Ethics in Action Awards. 12/08/05. 3/01/06 < www.ethicsinaction.com>

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http://www.ethicsinaction.com/

-5- Alexopoulou

Here we see that companies have to see to two parts of the community, the internal,

which is the quality of their management – dealing with both the people and the practice

(Inner circle) and secondly the external, where the personality and the extent of a companies

impact is on society in all areas of involvement.

On the outside the stakeholders and the larger community are constantly taking an ever

growing interest to the company and its dealings. (Outer circle) On the outer ring you can see

what the company has actually achieved and done, whether it is good or bad, in terms of their

services or products which they produce. In following we can see the whole picture and

stakeholders will judge for themselves if what the company’s impact has been on the

environment and the local communities. 17 The symbiotic relationship works both ways one

were stakeholders see what positive effects you have made to the environment and

community and then inter the stakeholders investing in your company.

Three Levels of Corporate Social Responsibility (CSR)

Source: © Novartis Foundation for Sustainable Development, 2004 <www.novartisfoundation.com/en/articles/csr/main_features.html>

When one looks at the basic features of CSR we can see that there are three levels which a

company goes though. As Mentioned above it can be clearly seen that the basic responsibility

17 Baker, Mallen. “Corporate Social Responsibility – What does it mean?”. Business Respect. 4/01/06. <www.mallenbaker.net>

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-6- Alexopoulouof a business on the lower most basic level – Required of business by society, which entails

that a business obeys the laws. Here a company obeys the laws and regulations and does not

act illegally, neither effecting or being affected by society.

The second level entails the part where the society expects the business to have. Here a

business would practice correct labour laws and fare treatment to the companies’ assets and

other intangible ethical elements which help the company work together. 18 “Weyerhaeuser’s

Code of Ethics and Business Conduct clarifies the expected behavior of employees and is an

important building block of the company’s corporate culture.”19

The third and most desired level is the level where the public would like a company to be at.

Here the company works together with the public and the company helps the society and the

community to work together. This level introduces the full potential of CSR. It talks about the

intangible elements of the business and focuses on how the business is managed rather than

with what. 20 Home Depot, Canada’s CSR plan is a prime example of desired social

responsibility. Home Depot Canada wanted to achieve two main goals: to give back to the

community and to decrease environmental impact resulting from its business output. The

company encouraged volunteerism amongst its employees. At the end of the year 2001 more

than 6 million hours were donated by the employees who had volunteered, to the

community.21

The Importance of CSR

Why should we practice CSR?It is very important to understand the true significance and the benefits that CSR can

offer to a business. The diagram below shows how each segments of society are affected if

strategic CSR plans are incorporated into a business. Enact, a London Public Relations

Consulting group has constructed a table showing concrete business reasons in each CSR

impacts different area in addition they says that CSR is not just: “…‘soft’ additions to the

business; it is rapidly becoming an indispensable ‘hard’ components of the business world.”22

18 Novartis Foundation for Sustainable Development, 2004 <www.novartisfoundation.com/en/articles/csr/main_features.html>


20 Novartis Foundation for Sustainable Development, 2004 <www.novartisfoundation.com/en/articles/csr/main_features.html>


22 “Why do CSR?” Enact Consulting. 31/01/06. < www.enactconsulting.com >

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-7- Alexopoulou

Source: “Why do CSR?” Enact Consulting. 31/01/06. < www.enactconsulting.com >

The graph shows the advantage that each sector will benefits from if they practice CSR. Its

shows the importance of how CSR must be an integrated part of the core elements of a

business.

As will be mentioned there are many reasons why CSR is important to the company

itself but let us take a deeper look into all the benefits that CSR can aspect including how

value creation and CSR go hand in hand. Lastly, most importantly the two most significant

elements that CSR affects; the, company and the consumers.

Value creation and responsibility go hand in hand.

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-8- Alexopoulou

Source: Stora Enso - global, local, responsible www.search.storaenso.com/2001/group/corporate_social.asp

According to Stora Enso an integrated forest Products Company producing magazine papers,

newsprint, fine papers, and other natural resources, believe that there is a strong correlation

which exists between social responsible operations and business gains. 23 There is a fine line

between long-term profitability and value creation through business excellence. In Stora

Enso's case business excellence incorporates three pillars of sustainability - financial,

environmental and social.

The Group's mission, vision and values formed the starting point for the Principles for

Corporate Social Responsibility. The Principles translate the social aspects of the

Environmental and Social Responsibility Policy into more concrete form and are consistent

with other Group policies and guidelines. The Principles are based on internationally

accepted statements, such as the United Nations Universal Declaration on Human Rights and

International Labour Organization (ILO) conventions. 24

To the Company:

23 “Value creation and responsibility go hand in hand” Stora Enso 31/01/06 <www.search.storaenso.com/2001/group/corporate_social.asp. >

24 “Value creation and responsibility go hand in hand “ Stora Enso - global, local, responsible www.search.storaenso.com/2001/group/corporate_social.asp

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-9- AlexopoulouOver the last decade the field of CSR has developed significantly and more and more

studies and preliminary research is constantly being done.25 More than ever companies are

pre-occupying themselves and are trying to incorporate CSR into all areas of business. By

doing so, many businesses have realized that this in paying off in the long run.26 Mc Donald’s

published their first CSR report in 2005 and it revealed that Mc Donald’s UK, had spent more

than £7m to promote ‘choice and balanced lifestyles’27

Indeed, between 1972 and 2000 more than 100 studies show that the relationship

between CSR and financial performance matters. 68% of the results show that there is a

positive relationship between the two variables. In addition theses findings were confirmed by

London Business School where out of 80 studies more than half were found to have a

positive coloration. 28

In today’s society CSR is gaining importance and companies all around the world are

devoting more time and effort in finding the correct combination of ethics and SR in their

businesses.29 In the Graph below we can see the how the opinion of CEOs has changed in

just one year.

Figure 1: graph from “CSR Facts and Figures.” CSR Europe. Pg 397. 21/1/06. www.csreurope.org

25 “CSR Facts and Figures.” CSR Europe. Pg396. 21/1/06. www.csreurope.org

26 “Consumers Education.” Department of Financial Institutions. 5/01/06 www.in.gov/dfi/about/

27 “McDonald’s sets out CSR promise.” Marketing(UK) 00253650 (12/7/2005). Business Source Elite. EBSCO. Amer. Coll. of Gr. Libraries, Athens, Gr. 2 Feb. 2006 <www.web9.epnet.com/citation.asp...>



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http://www.csreurope.org/


http://www.in.gov/dfi/about/


-10- AlexopoulouThere are three main reasons why there has been such a great change of view with

respect to CSR. For starters; in a world where reputation and brand value are increasingly

seen as the company’s most valuable assets, CSR can build that bridge which is so crucially

needed, between its loyal consumers and the company’s future prosperity. Over the last 5

years, 94% of business executives have realized that the correct execution of SR can attract

investors and save the business money. McKinsey & Company recently had a survey which

showed that, “…institutional investors are prepared to pay, a premium of more than 20% for

shares, of companies that demonstrate good corporate governance.” 30

Secondly, Social Responsibility becomes a fundamental element of the wealth creation

process, in a business and if managed correctly should improve the efficiency and the

effectiveness of a business and at the same time maximizes the wealth creation to a society.31

Shell Petroleum realized that after bad publicity and increasing negative “salience” of issues,

surrounding the case with Nigeria and Brent Spar, Shell seemed certain for a drastic decline

in stakeholders sympathetic reaction; they had to “make- up” and regain the same status that

they had previously. Shell quickly started to work on sustainable development and CSR and

not only did they stop the decline but turned opinions to a positive movement. 32

In addition; 1 out of 3 executives believe that SR has become an important part if not

substituted risk management strategy in a company, as well as ‘saving’ companies and

businesses worldwide paper work when it comes to inspectors and regulators.33 DuPont

Canada believes that collaborating with external resources (NGOs, community groups,

government, etc.) will help the company better understand sustainability issues and

stakeholder expectations of their company.34 So far we have seen that CEO and other

synonymous members in a company seem to think that CSR is an important element to allow

their businesses to thrive in the future, but what about the consumers?


31 , Mallen. “Do you know the meaning of the word?”. Business Respect. 4/10/02. <www.mallenbaker.net>

32 Lewis, Steward. “Reputation and corporate responsibility” Journal of Communication Management. 7.4 (2003): 356 – 364 ProQUest Company. Amer. Coll. of Gr. Libraries, Athens, Gr. 2 Feb. 2006


33 “CSR Facts and Figures.” CSR Europe. Pg397. 21/1/06. www.csreurope.org 34 “Corporate Social Responsibility: Lessons Learned” Sustainable Development. Canada. 2001/03/31. 1/15/2006. www.nrcan.gc.ca/sd-dd/pubd/crs-rse/toc _e.html

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-11- AlexopoulouTo the Consumers.

People are now-a-days are questioning the behaviour of businesses. In the past few years

the public has come to realize the impact which a company or business has on a community.

They have seen that a company can have both positive and negative results on their

community and for this reason the publics are have higher expectations of a business’ role in

their community.35

Studies all around the world show that the public wants businesses to be social

responsible. Fleishman-Hillard; one of the world's leading public relations firms, serving

clients from 83 offices around the globe conducted a study showing that eight out of ten

consumers would be: “…more likely to buy a product from a company ‘engaged in activities

to help improve society.” It doesn’t go without saying that: “… one third of consumers would

boycott companies for social or environmental ‘misbehavior’.” 36 The public has become

more socially aware and proactive when in comes to CSR. “…in the wake of corporate

scandals such as Qwest, WorldCom and Enron.” CSR in general, has effectively been

boosted by these “corruption scandals.”37 (See figure 2: below)

Figure 2: “CSR Facts and Figures.” CSR Europe. Pg 397. 21/1/06. < www.csreurope.org

In addition a recent study done by Environics International, who observes the US

Corporate Social Responsibility sector, conducted a study which showed the public opinion


36 “CSR Facts and Figures.” CSR Europe. Pg397. 21/1/06. < www.csreurope.org >


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-12- Alexopoulouof consumers’ changing expectations of companies. In the latest results 53% of the public

would reward companies which they viewed socially responsible.38

(See below for further results.)

Source: Public Wants Business to Be Socially Responsible.The voice, Boston College. Nov – Dec 2002. www.imakenews.com

The graph above shows that 48% of the public, strongly agree and 39% somewhat agree,

which in essence makes that an 87% of the consumer public overall, who “respect” a

company when its CEOs speak about CSR. Now in marketing that would be a very good

percentage of the public, and anyone who did not take advantage of this result would down

right be ignorant. Today customers, with buying power want to know how the company is

acquiring their natural resources and how the staff is being treated, and if correct procedures

and customer care is being practiced. 39 The public is getting involved and companies should

take advantage of this. These opinions are also verified by a recent study done by CSR

38 Public Wants Business to Be Socially Responsible. The voice, Boston College. Nov – Dec 2002. www.imakenews.com

39 “What is CSR? Q&A” Ethics in Action Awards. 12/08/05. 3/01/06 < www.ethicsinaction.com>

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-13- AlexopoulouEurope stating that; “70 % of European consumers {said} that a company’s commitment to

{Social responsibility} is important when buying a product or service.” 40

For the year 1998 to the 2002, MORI Corporate a communications research company,

conducted studies in Great Britain asking consumers: “When forming a decision about buying

a product or using a service from a particular company, how important is it that it shows a

high degree of social responsibility?” Results are as follows:

Source: Lewis, Steward. “Reputation and corporate responsibility” Journal of Communication Management. 7.4 (2003): 356 – 364 ProQuest Company. Amer. Coll. of Gr Libraries, Athens, Gr. 2 Feb. 2006

www.proquest.umi.com (redesigned my Irene Alexopoulos)

By the graph it is observed, to what extent the opinion of the purchasing public has

changed. MORI states that: “…the evidence of its impact on sales is mixed, but this shift in

consumer mindset and self – image is drastic.” 41

The why CSR should be Implementation.

As proven above we can see how much of an influence CSR can have on consumers and

because the trade and the success of a company play an integral part with each other it will

obviously affect the company’s future prosperity. For this reason, everyday, new and

improved CSR strategies continue to flourish in the corporate world and this is being done

amongst an on going debate about whether or not and how to formalize legal CSR for

businesses around the world.42 One very interesting observation came up whilst researching a

big problem with CSR is that companies are failing to publicize their SR efforts. While 77

percent of survey respondents in the United States said they want to hear from companies

about their social responsibility efforts, 38 percent of those polled were unable to name a

40 “Value creation and responsibility go hand in hand” Stora Enso 31/01/06 www.search.storaenso.com/2001/group/corporate_social.asp.

41 Lewis, Steward. “Reputation and corporate responsibility” Journal of Communication Management. 7.4 (2003): 356 – 364 ProQuest Company. Amer. Coll. of Gr. Libraries, Athens, Gr. 2 Feb. 2006


42 “Overview of Corporate Social Responsibility.” Business for Social Responsibility. BSR. Issue Briefs. 12/1/06. <www.bsr.com.>

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1998

2000

2002

Very Important

28%

41%

44%

http://www.bsr.com/

http://www.proquest.umi.com/

-14- Alexopoulousocially responsible company. 43 How can this be true, if it has been already mentioned that

87 % of consumers respect a company, when the CEO speaks out in favour of being more

responsible to the broader society? Companies now a days should be encouraged to show

their involvement in CSR and use CSR as a tool of public relations strategy. They should take

CSR more seriously and “…integrate it further into their business vision and brand

management.” 44

A Reason for companies not mentioning their involvement in CSR could be that

companies fear, that there might be a boomerang effect on them; just like Philip Morris

Company: “…which was heavily criticized for spending more on ads publicizing their social

responsibility programs than they did on the programs for themselves.” Companies have long

struggled with how to promote their CSR programs without appearing self-serving. 45 This

could be one of the many reasons why CSR has still not become top priority for most

businesses and companies all around the world. Companies need to be shown how to handle

and practice accurate CSR programmes so that they will see the advantages discussed and

gain from there outcomes.

Simon Loftus, now chairman of ‘Adnams of Southwold’, one of the fastest growing

brewers in the UK had first worked for Fosters Bakery in Barnsley, UK’s number one bread

distributor. Mr. Loftus, said that he had learned a great deal when about working together

with the environment, making a reputation for your company, helping the community and

then reaping the rewards. “I remember how Fosters Bakery was committed to environmental

sustainability. They decided to go: “… zero waste to land fills… It looked like a hopeless

optimistic target… last I heard they had reached 98 % waste free, while saving loads of cash

on expenses and sold more bread than ever.”46 The key to the problem is that companies

should find the right combination to balance the scale between their ethical responsibility to

society and between the businesses financial obligations to its shareholders. 47

MORI corporate says that incorporating CSR can bring about only a logical thought

process; they interviewed several main stakeholders in Britain about their opinion on brand

trust and using CSR as a device to manage consumer opinions and findings showed:


44 Lewis, Steward. “Reputation and corporate responsibility” Journal of Communication Management. 7.4 (2003): 356 – 364 ProQUest Company. Amer. Coll. of Gr. Libraries, Athens, Gr. 2

Feb. 2006 <www.proquest.umi.com>

45 “Value creation and responsibility go hand in hand” Stora Enso 31/01/06 www.search.storaenso.com/2001/group/corporate_social.asp.

46 Baker, Mallen. “Doing it small.” Ethical Corporation. 1/09/03. 17/1/06 www.mallenbaker.net.

47 Leiberwitz. L. Risa. “What Social Responsibility for the Corporation? A report on the United States.” Cornell University. School of industrial & Labour. Vol.47 No. 5. 2005.

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http://www.mallenbaker.net/

-15- Alexopoulou- Brands are about trust

- Trust is created – and destroyed - in a society that is constantly going though

changes.

- Corporate responsibility lies at the heart of that change

- This has an important implication for communications strategy, and for the brand

management. 48

Conflicting arguments

An argument against CSR which has appeared over and over again is when companies

complain and say that the money that is made by a company belongs to the shareholder and

so, if it is then spent on CSR that would mean that you would be ‘stealing’ from the

shareholders percentage of the money. And, in retrospect shareholders, should in essence

decided for themselves if they would want to spend it on ‘charity’ or not.49

Mallen Baker, a Sociology professor says that you have to take into consideration what

kind of CSR program, the company is practicing and that the money that the company is

‘giving away’ should actually be benefiting both the company and the welfare that they are

helping. In addition CSR doesn’t mean that you are ‘giving away’ money, but should be seen

as a relationship formed. We should also mention that a business is not only made up of

exclusively capital. 50 This is true, if we take for example Coca Cola Company, 96% of it

made up of “intangibles” – there is a great deal of reputation that Coca Cola holds and this is

the key working element that had made the company to prosper over the years. 51 For years

now Coca Cola, in Britain has been a member of the Business in the Community, which

works closely with the “Prince’s Trust” to engage big or small corporations, in their local

communities. This is just one of many relationships which Coca Cola has formed over these

years. 52

Another strong argument is one which involves where company’s say that they don’t

have time to fret over insignificant issues; they need to concentrate on what the goals and

targets are for the company. 53 This might be true in most cases and most companies till today

preoccupy themselves with what is important to them and how they will benefit and

48 Lewis, Steward. “Reputation and corporate responsibility” Journal of Communication Management. 7.4 (2003): 356 – 364 ProQUest Company. Amer. Coll. of Gr. Libraries, Athens, Gr. 2 Feb. 2006


49Baker, Mallen. “Corporate Social Responsibility – What does it mean?”. Business Respect. 4/01/06. <www.mallenbaker.net>

50 “The Importance and the Role that CSR plays.” Agenda Setting topics. 12/4/02. 3/01/05. www.agendasetting.com

51 Baker, Mallen. “Arguments against Corporate Social Responsibility.” Business Respect Issues. 4/1/06. 17/1/06 www.mallenbaker.net. 52 The Importance of Social Responsibility. The Times Newspaper 100. Ed 7. 2001. 7/01/06 www.cocacola.com


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-16- Alexopoulousucceeded. To show you how irresponsible this is we have only to look at General Electrics

employment rights issues they had not so long ago. Jack Welsh reconstructed General

Electric so that it would have the correct structure so that it would take CSR into

consideration- especially that of “employment empowerment”. He himself went on record

saying that: ‘…the time has passed when making a profit and paying taxes was all that a

company had to worry about.” 54

Most of the arguments are of this nature, - “... it’s not our job to care about SR, but it’s

the politicians...” “...I don’t have time or money to spend on insignificant issues, when it

comes to charity, when I'm trying to make a profit ...” 55 People have still not understood the

true meaning of CSR, they think that CSR is a rule that they have to follow, something that

they have to do. 56 People need to realize that this is not what you have to do about CSR; but

what CSR can do for you so that it can help your business prosper. 57 People and businesses

need to understood the importance and know the benefits of a properly run CSR campaign.

Therefore, we have to eliminate difficult procedures and strategies and find easy and user

friendly techniques to incorporate CSR into a business.

When speaking about a particular CSR program, there is nothing wrong, when a

company chooses in which way, by what means or how to spend the funds they “donating”,

to help its community. The most important part of CSR is the symbiotic relationship which is

formed between the business and the community, and the result which comes forth from this

poised partnership, bringing both (the business and the community) parties involved

benefits.58 Home Depot was one of the very first traders to supply wood products that came

from SR managed forests and because of this, today Home Depot is one of the largest retailer

of wood products that have been certified by the Forest Stewardship Council (FSC).59 Once

this symbiotic relationship has been found, only then can CSR be effectively and efficiently,

implemented into a company’s framework. But once that is completed, one question still

remains; how do you measure CSR?

54 Baker, Mallen. “Arguments against Corporate Social Responsibility.” Business Respect Issues. 4/1/06. 17/1/06 www.mallenbaker.net.

55 Baker, Mallen. “Arguments against Corporate Social Responsibility.” Business Respect. 4/1/06. 17/1/06 <www.mallenbaker.net. >

56 “What is CSR?” Canadian Business for Social Responsibility. 17 /1/06. www.cbrs.bc.ca.

57 “Corporate Social Responsibility” Lise Weblog 09/12/03. 8/01/06 <www.csrjomc223.blogspot.com >

58 Leiberwitz. L. Risa. What Social Responsibility for the Corporation? A report on the United States. Cornell University. School of industrial & Labour. Vol.47 No. 5. 2005


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http://www.cbrs.bc.ca/



-17- AlexopoulouThe Measurement of Corporate Social Responsibility.

There is much interest and a growing literature on the measurement of what is meant by

corporate social responsibility. MHCInternational an international consulting company

focuses upon the measurement of CSR in its research and consulting business. It takes social

development very seriously and encompasses social development, as well as corporate social

responsibility, corporate citizenship, business ethics, social audits, social reports and

reputation management. 60

The type of measurement used by MHCInternational was first developed by Prof. Donna

Wood. This framework of measurement has been used all over the world and applied to many

companies. 61

In short CSR is measured by dividing the organization into three distinctive parts:

· Principles of social responsibility

· Processes of social responsiveness

· Outcomes as they relate to the firm's societal relationships

Section I: Principles of Social Responsibility

This level entails the company’s basic obligations as a business in a society. The CSR model

measures that: “…relationship between business and society, and specifies what is expected

of {the} business.” Just as mentioned in the three levels of CSR.

This section in the level of the CSR model itself is all about the relationship between business

and society at large and it has three major elements:

Legitimacy of the nature of the business and its relationship with the public.

Public Responsibility, which has to deal with the companies doings and outcomes “…

within the framework of its own principles in terms of what it actually does." Waste

disposal etc.

Managerial Discretion – where every person within the company has to have a moral

conduct, within and outside of the company.

Level II: Processes of Social Responsibility

Corporate social responsiveness is a reaction used by companies to react to social pressure.

This means that a business will be able to react and to adapt to its ever changing business

environment. For this to happen, the company itself has to know a lot about the business and

60 Who we are? Corporate Social Responsibility. MHCInternational. 2/01/2006. http://www.mhcinternational.com/

61 Monthly news item. The measurement of Corporate Social Responsibility CSR. Nov 2000. 31/01/06. <http://www.mhcinternational.com/measurement.htm>

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-18- Alexopoulouthe social environment that they are operating in and they have to be able to process

information which will help the to analysis and expect changes in their socio-economical

sphere, which they in turn would have to adapt to. “Act globally, think locally.”

Business Environment Scanning

Stakeholder Management by defining the relationship amongst the key players in the

company and how each of them is affected.

Issues Management. (Risk Management)

Level III: Outcomes

The main focus of measurement is the third level of the CSR model.

To determine if "CSR makes a difference”.

Internal Stakeholder Effects (key people within the company)

External Stakeholder Effects ( key Members outside the company)

External Institutional Effects (The society at large)62

Having given a brief yet thorough outline of the most important elements which should

be taken into consideration when trying to measure CSR; take a look at the diagram below.

NRcan Canada, a website for sustainable development used this table of criteria to perform

case studies with various multinational companies in Canada: explain each area of CSR and

the potential elements which each of those areas entail. 63

Elements Included in Key CSR Program Areas

CSR Program

Area

Potential Elements Included

Community and

Broader Society

Local hires

Local purchasing

Support for employee volunteerism

Work schedules tailored to local needs

Philanthropy

Social impact assessment

Community consultation

Community

development programs

Human rights

monitoring

Supplier diversity

programs

Indigenous

peoples programs

Emergency

response programs

62 Monthly news item. The measurement of Corporate Social Responsibility CSR. Nov 2000. 31/01/06. <http://www.mhcinternational.com/measurement.htm>

63 Source: “Corporate Social Responsibility: Lessons Learned” Sustainable Development. Canada. 2001/03/31. 1/15/2006. www.nrcan.gc.ca/sd-dd/pubd/crs-rse/toc _e.html

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-19- Alexopoulou Cultural

sensitivity training for staff

Employee

Programs

Workplace diversity (especially in management)

Work-life balance (flex time, etc)

Profit-sharing / share options

Full benefits for part-time employees

Training / career advancement

Incentive programs

Employee assistance programs

Employee

participation in decision-

making

Child labour /

human rights

Occupational

health & safety

Open

communication channels

between employees and

managers

Employee

satisfaction surveys

Collective

bargaining

Customer/Product

Stewardship Programs

Product stewardship programs

Labelling programs

Health and environmental Information on products &

services

Involvement of customers in product development

Customer

screening

Communication

with customers on

company’s standards

Environment

Programs

Design for environment (development of eco-efficient

products)

End-of-life management (product take-back, recycling,)

Green procurement program

Internal recycling programs

Toxics/hazardous waste management

Environmental evaluation of capital investments/projects

Greenhouse gas programs (measurement, reporting, trades,

off-set projects)

Alternative

energy programs

(purchasing, R&D)

Resource

efficiency programs

(water, materials, energy)

Emissions

management (air, land,

water)

Transportation &

distribution (logistics,

employee transportation,

information technologies)

Industrial

ecology/by-product

synergy programs

Stakeholder Surveys Web-based

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-20- AlexopoulouEngagement Programs Joint management committees

Advisory boards

communications

Town hall or

community meetings

Reporting and

Communications

Programs

SD data integrated into annual Reports

Separate environment reports

Separate SD / CSR reports

Any combination of social, economic, environment

Web-Site

Reports tailored

to local facility

VCR, TRI, NPRI,

etc

Various reports

to government

Shareholders Any information on activities or programs that the company implements to involve

shareholders in non-financial matters.

Any information on how the company makes information available to minority

shareholders (those not holding majority of voting shares or having significant influence over

board decisions) that allows them to effectively participate in company decisions.

Supplier

Programs

Supplier screening (environment, working conditions, child

labour)

Supplier communications

Supplier audits—

Internal or third party

Supplier training/

working with suppliers to

improve performance

Governance/

Code of Conduct

Programs

Code of ethics

Accountability systems

Support systems

for code of ethics

Investment

screening (Human Rights,

Environment, etc)

Source: “Corporate Social Responsibility: Lessons Learned” Sustainable Development. Canada. 2001/03/31. 1/15/2006. www.nrcan.gc.ca/sd-dd/pubd/crs-rse/toc _e.html

The table above takes a look at all the areas and the intricate details that are incorporated

into CSR. Take a look at some of the most imperative key elements when discussing and

trying to integrate CSR in commerce.

Employees

Employees have long been considered a key stakeholder for companies. The employees are

the make or break of CSR, this is because is the internal part of a company works in harmony

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-21- Alexopoulouthen this is portrayed to the outer areas – community and society. 64 One of the most powerful

driving influences is when an employee speaks highly of the company they work for. 65

Communities & Broader Society

The core element which is a great part of CSR is the community and the society which is

affected by the Business.

Environment

In the late 80’s and early 90’s, many multinational companies, were asked to “…reduce their

impacts on the environment (e.g., emissions reductions, hazardous waste management, life

cycle assessment of products etc)…”

Reporting

talking about a companies CSR programs and initiatives is very important to the brand

recognition and acceptance. Though only “nine of ten companies… {publish}… some type of

annual sustainability or CSR reports. This does not go with out mentioning that even though

“…environmental reports have been produced since the 1980s, when companies such as

Norsk Hydro pioneered the practice, it was not until the 1992 UN Conference on

Environment Development that corporate public reporting on environmental performance

began to enter mainstream business practice

Governance and Conduct

Correct governance is the epicenter of CSR. Some stakeholders consider CSR to be part of

the ethical aspect in a company, but business men and women are realizing that CSR is

something much more that just practicing accurate ethical conduct, CSR should be part of

their values, philosophy and objectives.

Stakeholder Engagement

Effective engagement of stakeholders makes up one of the main components of a company’s

overall CSR strategy.

Suppliers

Environmental issues in the supply chain have become a big issue for European legislation

Customers

CSR mean that most companies should look for the new consumer trend and beyond the

“traditional customer”. Numerous corporations are working in collaboration with the public


65 Lewis, Steward. “Reputation and corporate responsibility” Journal of Communication Management. 7.4 (2003): 356 – 364 ProQUest Company. Amer. Coll. of Gr. Libraries, Athens,

Gr. 2 Feb. 2006 <www.proquest.umi.com>

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-22- Alexopoulouso as to improve their: “… environmental and social performance of their services and

product.”

Shareholders

one of the main priorities of the stakeholders have been the shareholders for a company and

this is because there is a constant expectation from the stakeholders to show a rise in share

value. 66

Even though schemas and many other theories have been proposed for the measurement

of CSR, it should not be forgotten that because the term has still not been academically and

business wise been defined; that it is difficult to measure the true CSR of every company. So

when saying that every company has its own definition of CSR, the same should be said

when trying to measure the outcomes of CSR for each company.

In conclusion,

there have been many organizations and institutions such as the International Standards

Organization, which are gradually moving closer in their plight in finding an ISO standard for

CSR. For some businessmen this will mean the new coming of age. For other: “…it will be

the kiss of death.”67 The last few years has seen a proliferation of initiatives to develop a

common framework for reporting on economic, environmental, and social performance. The

Global Reporting Initiative’s Sustainability Reporting Guidelines, one of these reporting

initiatives, is gaining momentum with companies. More and more companies (e.g., Shell, HP,

ABB, BP) are using the GRI guidelines to promote their companies. 68

Even thought the definition of CSR is still at a debate and at the early stages, it is said

that within the next five years CSR will become as common as the word, “Coca Cola”. But

for now, it is still difficult to decide whether a company is being socially responsible or not.

Yet the fact still remains that more and more companies are realizing the importance and the


67 Baker, Mallen. “A standard for Goodness.” Business Respect. Issue. 42. 3 Nov 2002. 4/01/06. <www.mallenbaker.net>


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-23- Alexopoulousignificance that CSR can have on a business and the consumers. BP has renewed its policy

statement and is committed the company to ambitious and a wide range of business

principles. 69

We have seen that there is a great correlation between CSR and business performance,

something that every business strives for, not only in the economic performance but also in

all the other aspects surrounding a business. Many companies are looking towards CSR to

pull them out of sticky situations and awkward dilemmas when dealing with the law and

NGOs. Many segments in the market including the tobacco producers, the pharmaceutical

industry, the alcohol and gambling commerce, and have all started to integrate and

amalgamate CSR into their business strategy. Companies are understanding the true worth

and value that the opportunity of CSR is offering them. Within the next five years companies

and organizations all around the world will not be using advertisements and or publicity, to

promote their product or services, but will be using CSR as a tool to create brand value and

recognition.

Every year more and more companies are producing social and environmental reports

which reflect on their CSR initiatives. In the future, Corporate Social Responsibility will

define the core business issues, values philosophy and objectives in a business and will

become the new 21st Century utensil, public relations technique, across local and national

boarders.

69 Baker, Mallen. “A standard for Goodness.” Business Respect. Issue. 42. 3 Nov 2002. 4/01/06. <www.mallenbaker.net>

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final paper corporate social responsibility

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