Corporate Social Responsibility: A Comprehensive Guide
1. What is Corporate Social Responsibility (CSR)?
Corporate Social Responsibility is an organization’s commitment to operate ethically and contribute positively to society. It encompasses various approaches:
The Social Responsibility as Legal Compliance:
Organizations adhere to legal and regulatory requirements imposed by society. For businesses, this means pursuing profits within the framework of the law and ethical standards.
The Social Responsibility as Social Reaction:
Organizations go beyond legal obligations by responding to the demands of various social groups, such as unions or consumers. They act responsibly by addressing these requirements, not just legal ones.
The Social Responsibility as Social Sensitivity:
Organizations anticipate social needs and proactively address them, exceeding legal duties and responding to societal problems. This approach emphasizes social balance, measuring the positive and negative impacts of the organization’s actions.
The Social Responsibility as Social Action:
Organizations integrate social responsibility into all their actions, guided by ethical principles, implementation processes, and assessment tools. This approach emphasizes a holistic commitment to ethical behavior.
2. Social Responsibility and the Common Good
The ethics of any legitimate organization, including businesses, should align with the principles governing social order and the common good. The common good encompasses anything that contributes to overall human development.
3. Ethical Principles of Social Responsibility
Several ethical principles underpin social responsibility and provide legitimacy to organizations:
The Principle of Respect for Human Rights:
Organizations have a duty to respect fundamental human rights, including the right to life, liberty, education, bodily integrity, equality, honor, association, and private property.
The Principle of Solidarity:
Individuals and social groups should contribute to the well-being of society according to their abilities and resources.
The Principle of Subsidiarity:
Higher-order social structures should respect and promote the initiative and activity of organizations working for the common good, and these organizations should do the same for individuals.
4. Social Responsibility and Ethical Standards of Personal Performance
Ethical principles guide responsible personal actions, especially when representing an organization. Individuals are ethically responsible for their actions, which can impact the organization’s reputation.
The Principle of Justice:
Acting in accordance with the law and fairness, objectively, impartially, and diligently.
The Principle of Professionalism:
Acting with integrity, truthfulness, and prudence. Being consistent with ethical conscience, calling things by their proper names, and exercising practical wisdom to make sound judgments.
The Principle of Excellence:
Acting with an attitude of excellence, service, and cooperation. This requires reciprocity from all members of the organization and a commitment to continuous improvement.
5. Stakeholders and Corporate Social Responsibility
Organizations are responsible to their stakeholders, defined by Freeman as any group or individual who can affect or be affected by the achievement of the organization’s objectives. This includes owners, consumers, workers, suppliers, government, competitors, and more. Stakeholders can be direct or indirect:
Directly Involved Stakeholders:
Those who shape the organization and implement its mission, including owners, managers, and employees.
Indirectly Involved Stakeholders:
Those who provide resources or are affected by the organization’s activities, such as suppliers, customers, and the community.
6. Degrees of Social Responsibility: The Concentric Circles
Social responsibility can be visualized as concentric circles, representing different levels of responsibility:
First Circle: Basic Responsibilities
Focuses on the core business activities, such as producing goods and services, creating jobs, and contributing to economic growth. This primarily involves directly involved stakeholders.
Second Circle: Social Priority Responsibilities
Addresses social issues related to industrial relations, safety, consumer information, and environmental protection. This involves indirectly involved stakeholders.
Third Circle: Social Change Responsibilities
Encompasses broader societal issues like urban planning, economic development, and cultural initiatives. This involves individuals and agents not directly involved in the organization’s mission but part of the larger society.
7. Types of Responsibilities
Organizations have different types of responsibilities based on their relationship with stakeholders:
Primary Responsibilities:
Obligations to those directly involved in the organization’s existence and mission.
Secondary Responsibilities:
Obligations to those indirectly involved in the organization’s mission.
Tertiary Responsibilities:
Obligations to individuals and social agents not directly involved in the organization’s mission but part of the broader society.
The criterion for distinguishing these responsibilities is proximity. The closer the stakeholder’s involvement or contribution to the organization’s mission, the higher the responsibility.
8. Social Responsibility Towards the Environment: Ecology
Organizations have a duty to respect the environment as a human good, essential for human development and well-being. This responsibility requires individuals and organizations to assess the environmental impact of their actions and act sustainably, ensuring future generations can meet their needs. A prominent example of this commitment is the United Nations Global Compact, an initiative promoting ten principles of conduct related to human rights, labor, environment, and anti-corruption.
9. The 10 Principles of the United Nations Global Compact
- Businesses should support and respect the protection of internationally proclaimed human rights.
- Make sure that they are not complicit in human rights abuses.
- Uphold the freedom of association and the effective recognition of the right to collective bargaining.
- The elimination of all forms of forced and compulsory labor.
- The effective abolition of child labor.
- The elimination of discrimination in respect of employment and occupation.
- Support a precautionary approach to environmental challenges.
- Undertake initiatives to promote greater environmental responsibility.
- Encourage the development and diffusion of environmentally friendly technologies.
- Work against corruption in all its forms, including extortion and bribery.
10. Implementing Social Responsibility
Ethical social action requires a clear mission, a vision that guides actions, and a strategy for implementation. Social responsibility should be integrated into all organizational actions, supported by ethical principles, implementation processes, and evaluation tools.
11. Ethical Social Policy Strategies
Organizations can adopt different approaches to social responsibility:
Passive Approach:
Responds only to legal sanctions or incentives, with no proactive ethical considerations.
Reactive Approach:
Responds to social demands after initial resistance, eventually implementing changes.
Interactive Approach:
Considers social demands as legitimate claims, evaluating their alignment with the organization’s mission.
Proactive Approach:
Actively seeks to understand and address social needs, incorporating them into the organization’s mission.
12. Management Tools for Social Action Ethics
These tools help manage and evaluate social responsibility policies, both internally and externally, often focusing on obtaining ethical certifications through compliance with established standards:
ISO 14000 Standard:
A documented environmental management system that addresses all aspects of an organization’s environmental responsibilities, promoting systematic management of environmental issues.
SA 8000 Certification:
Ensures quality standards in social and labor aspects, using tools like social audits and stakeholder interviews.
AA 1000 Standard:
Improves accountability and performance through social reporting and stakeholder dialogue.
GRI (Global Reporting Initiative):
A framework for sustainability reporting, promoting transparency and comparability in reporting organizational impacts.
IES.100 Standard:
A proposed system for social performance management, focusing on employment, wages, and industrial relations.
SGE 21 Standard:
A certification for business ethics, covering eight management areas related to stakeholders.
EFQM Excellence Model:
A comprehensive management model that incorporates social responsibility as one of its eight principles, promoting a holistic approach to organizational excellence.
13. Social Action Ethics and Reputation
Ethical behavior builds trust and enhances reputation. When individuals act ethically, they develop positive qualities that foster trust within the organization and its environment. Reputation is the recognition of an organization’s behavior, while image is a more temporary and subjective perception. A good corporate reputation is based on the perception of ethical behavior and trustworthiness.
14. Key Findings on Ethical Responsibility
- Ethical responsibility is always personal, non-transferable, and irrevocable.
- Ethics requires the involvement of everyone.
- Individuals must first strengthen their own ethical character to contribute ethically.
- Ethics is not an artificial add-on but an integral part of human behavior in organizations.
- Freedom is a prerequisite for ethical responsibility.
- Ethics requires continuous reflection and adaptation to changing circumstances.
- Personal and professional ethics are inseparable.
- Ethics is connected to human fulfillment and happiness.
- Organizations should ensure that ethical principles are known and implemented by all members.
15. Statements about Social Responsibility and Stakeholders
Correct statements:
- The stakeholder concept emerged as a critique of Milton Friedman’s view that organizations are solely responsible to their shareholders.
- Edward Freeman advocated for responsible behavior towards all stakeholders.
- Freeman defined stakeholders as any group or individual who can affect or be affected by the organization’s objectives.
- Stakeholders can be categorized based on their relationship with the organization’s mission and their type of relationship (providing or receiving).
- Direct stakeholders include those involved in implementing the mission, developers, and owners, while indirect stakeholders include resource providers, recipients of the mission, and the affected community.
16. Lack of Respect for the Environment
Disrespecting the environment is a destructive behavior that harms both current and future generations, depriving them of their right to a healthy environment.
17. Ethics and the Environment
Historically, ethics did not focus on the environment because there was no awareness that humans could significantly disrupt the balance of nature.
18. Environmental Social Responsibility
Environmental social responsibility requires individuals and organizations to assess the environmental impact of their actions and act responsibly, respecting the environment as a common good for present and future generations. This responsibility is an ethical standard because the environment is a fundamental human good. Personal virtues related to environmental respect can be developed and practiced within organizations.
19. UN Global Compact Principles
The UN Global Compact is an initiative encouraging organizations to adopt ten principles related to human rights, labor, environment, and anti-corruption as part of their strategies and operations.
20. The 10 Principles of the UN Global Compact (Detailed)
(See the list of principles in section 9.)
21. Defining Social Ethics Performance
Social ethics performance is an approach that advocates for integrating social responsibility into all organizational actions, guided by ethical principles, implementation processes, and evaluation tools.
22. Approaches to Social Ethics Performance
This approach requires a clear definition of social responsibility, identification of specific issues for accountability, and a philosophy for addressing social issues. It involves principles (describing responsibility), processes (modes of response), and social policies (concrete, reviewable actions).
23. Management Tools for Social Ethics Performance
These tools are practical mechanisms for managing and evaluating social responsibility strategies within organizations, both internally and externally.
24. SA 8000 and EFQM
SA 8000: Ensures quality standards in social and labor aspects, using tools like social audits and stakeholder interviews. It addresses areas such as child labor, forced labor, health and safety, freedom of association, discrimination, disciplinary practices, working hours, compensation, and management systems.
EFQM Excellence Model: A comprehensive management model that incorporates social responsibility as one of its eight principles, promoting a holistic approach to organizational excellence.