Lecture 1: An Introduction To CSR
1. The Relevance and Concept of CSR in the Modern Business
World
1.1. The Relevance and Concept (2000-2020)
1.1.1. Background
Global Crossing: accounting fraud and financial mismanagement (2002).
Parmalat: Italian dairy and food corporation (2003) was involved in a
financial scandal involving falsification of accounts and debts hiding.
L&H: A speech recognition software company, went bankrupt (2001) due
to accounting fraud (inflating sales and revenue figures).
Consequences:
o Increased scrutiny on corporate financial practises.
o Higher financial integrity standards due to deceptive
accounting practices.
o Increased need for accurate financial reporting.
o Ethical business conduct requirements.
o Bigger role for auditing and regulatory oversight introduced.
Examples:
- Volkswagen Emission Scandal (2015)
- Wells Fargo Account Fraud Scandal (2016)
- Facebook-Cambridge Analytica Data Scandal (2018)
- Boing 737 MAX Safety Issues (2019)
- Ever Given Suez Canal Blockage (2021)
- Facebook Whistleblower and Misinformation (2021)
- …
1.1.2. Definition of CSR
,CSR = a business model that helps a company be socially
accountable; to itself, its stakeholders and the pulblic. The interaction
with stakeholders and the responsibility of companies are key.
By practicing CSR, companies can be conscious of the kind of
impact they are having on all aspects of society, including
economic, social and environmental.
Companies take into account the interests of stakeholders (=
parties who affect and are affected by the organization’s activities).
Integrate the voice of stakeholders in strategic decisions.
Companies are not only concerned with the firm’s interests and
legal requirements, but also with stakeholders expectations.
Overal, CSR can be interpreted as a corporate investment.
1.1.3. The Five Dimensions of CSR (Dahlrud)
1) Environmental dimension
2) Social dimension
3) Economic dimension
4) Stakeholder dimension
5) Voluntariness dimension
1.1.4. Reflecting on Dahlrud’s Aspects of CSR
,Context (which sector): CSR efforts must be tailored to the context of the
specific industry or sector in which a company operates. Different sectors
may have varying social and environmental impacts, stakeholder
expectations, and regulatory requirements.
Conflicts (stakeholders disagree): It is important to acknowledge and
navigating conflicts that may arise when stakeholders have differing or
opposing views and interests. Stakeholders may include employees,
customers, suppliers, community members, and shareholders.
Dynamics (responsibilities today): This aspect refers to the evolving
nature of what is considered responsible behaviour by corporations. What
is seen as above-and-beyond corporate behaviour today may be seen as
the minimum requirement tomorrow. CSR is dynamic and the
responsibilities of businesses can change rapidly due to new scientific
findings, regulatory changes, public opinion, or technological
advancements
System (stakeholder responsibilities): There is a systemic view of
stakeholder responsibilities, meaning that CSR should be integrated
throughout the entire system of the company, considering all the roles
and relationships of
different stakeholders. It implies a holistic approach where CSR is not just
a department or a set of activities but is embedded in the entire operation
and strategy of the company.
1.1.5. Key Components of CSR Definition
Economic responsibility: Companies must be profitable to fulfil their
role as providers of goods and services, employers, and investors.
Legal responsibility: Compliance with the law is the foundation upon
which all other CSR efforts are built. Companies must fulfil their legal
obligations as a minimum level of CSR.
Ethical responsibility: Beyond legal compliance, companies should
operate in a manner that is ethical and fair to all stakeholders, including
employees, customers, and the communities in which they operate.
Philanthropic responsibility: This involves actively contributing to the
community and society to improve quality of life. Philanthropy goes
beyond what is required by law or ethics and is about giving back.
, 1.1.6. Benefits of CSR
2. Historical Review of CSR and Its Evolution
2.1. President Wilson
“Since trade ignores national boundaries and the manufacturer insists
on having the world as a market, the flag of his nation must follow him,
and the doors of the nations which are closed against him must be
battered down. Concessions obtained by financiers must be
safeguarded by ministers of state, even if the sovereignty of unwilling
nations is outraged in the process. Colonies must be obtained or planted,
so no useful corner of the world may be overlooked or left unused. The
idea of a commonwealth of nations must be greatly widened to include
within its circumference all that portion of the world's surface which is
inhabited by intractable and unsocial human beings or by human beings
whose intractability and unsociability are not so great as to render it
impossible or inexpedient to bring them within the pale of law and
order. The seed of war in the modern world is industrial and
commercial rivalry.” (W. Wilson, 1907).
President Wilson reflects on:
the impact of industrial and commercial rivalry on global politics and
economics, highlighting the need for businesses to consider their
broader impact on society and the world.
He underscores the aggressive nature of industrial expansion and its
disregard for national boundaries or sovereignty in pursuit of
markets, which leads to conflict and exploitation.
Wilson's observation highlights the ethical implications of such
business practices, suggesting an early recognition of the need for
businesses to consider their social and political impact, a concept at
the heart of CSR.
Basically, he is setting the precursor to modern CSR discussions, about
115 years ago.
1. The Relevance and Concept of CSR in the Modern Business
World
1.1. The Relevance and Concept (2000-2020)
1.1.1. Background
Global Crossing: accounting fraud and financial mismanagement (2002).
Parmalat: Italian dairy and food corporation (2003) was involved in a
financial scandal involving falsification of accounts and debts hiding.
L&H: A speech recognition software company, went bankrupt (2001) due
to accounting fraud (inflating sales and revenue figures).
Consequences:
o Increased scrutiny on corporate financial practises.
o Higher financial integrity standards due to deceptive
accounting practices.
o Increased need for accurate financial reporting.
o Ethical business conduct requirements.
o Bigger role for auditing and regulatory oversight introduced.
Examples:
- Volkswagen Emission Scandal (2015)
- Wells Fargo Account Fraud Scandal (2016)
- Facebook-Cambridge Analytica Data Scandal (2018)
- Boing 737 MAX Safety Issues (2019)
- Ever Given Suez Canal Blockage (2021)
- Facebook Whistleblower and Misinformation (2021)
- …
1.1.2. Definition of CSR
,CSR = a business model that helps a company be socially
accountable; to itself, its stakeholders and the pulblic. The interaction
with stakeholders and the responsibility of companies are key.
By practicing CSR, companies can be conscious of the kind of
impact they are having on all aspects of society, including
economic, social and environmental.
Companies take into account the interests of stakeholders (=
parties who affect and are affected by the organization’s activities).
Integrate the voice of stakeholders in strategic decisions.
Companies are not only concerned with the firm’s interests and
legal requirements, but also with stakeholders expectations.
Overal, CSR can be interpreted as a corporate investment.
1.1.3. The Five Dimensions of CSR (Dahlrud)
1) Environmental dimension
2) Social dimension
3) Economic dimension
4) Stakeholder dimension
5) Voluntariness dimension
1.1.4. Reflecting on Dahlrud’s Aspects of CSR
,Context (which sector): CSR efforts must be tailored to the context of the
specific industry or sector in which a company operates. Different sectors
may have varying social and environmental impacts, stakeholder
expectations, and regulatory requirements.
Conflicts (stakeholders disagree): It is important to acknowledge and
navigating conflicts that may arise when stakeholders have differing or
opposing views and interests. Stakeholders may include employees,
customers, suppliers, community members, and shareholders.
Dynamics (responsibilities today): This aspect refers to the evolving
nature of what is considered responsible behaviour by corporations. What
is seen as above-and-beyond corporate behaviour today may be seen as
the minimum requirement tomorrow. CSR is dynamic and the
responsibilities of businesses can change rapidly due to new scientific
findings, regulatory changes, public opinion, or technological
advancements
System (stakeholder responsibilities): There is a systemic view of
stakeholder responsibilities, meaning that CSR should be integrated
throughout the entire system of the company, considering all the roles
and relationships of
different stakeholders. It implies a holistic approach where CSR is not just
a department or a set of activities but is embedded in the entire operation
and strategy of the company.
1.1.5. Key Components of CSR Definition
Economic responsibility: Companies must be profitable to fulfil their
role as providers of goods and services, employers, and investors.
Legal responsibility: Compliance with the law is the foundation upon
which all other CSR efforts are built. Companies must fulfil their legal
obligations as a minimum level of CSR.
Ethical responsibility: Beyond legal compliance, companies should
operate in a manner that is ethical and fair to all stakeholders, including
employees, customers, and the communities in which they operate.
Philanthropic responsibility: This involves actively contributing to the
community and society to improve quality of life. Philanthropy goes
beyond what is required by law or ethics and is about giving back.
, 1.1.6. Benefits of CSR
2. Historical Review of CSR and Its Evolution
2.1. President Wilson
“Since trade ignores national boundaries and the manufacturer insists
on having the world as a market, the flag of his nation must follow him,
and the doors of the nations which are closed against him must be
battered down. Concessions obtained by financiers must be
safeguarded by ministers of state, even if the sovereignty of unwilling
nations is outraged in the process. Colonies must be obtained or planted,
so no useful corner of the world may be overlooked or left unused. The
idea of a commonwealth of nations must be greatly widened to include
within its circumference all that portion of the world's surface which is
inhabited by intractable and unsocial human beings or by human beings
whose intractability and unsociability are not so great as to render it
impossible or inexpedient to bring them within the pale of law and
order. The seed of war in the modern world is industrial and
commercial rivalry.” (W. Wilson, 1907).
President Wilson reflects on:
the impact of industrial and commercial rivalry on global politics and
economics, highlighting the need for businesses to consider their
broader impact on society and the world.
He underscores the aggressive nature of industrial expansion and its
disregard for national boundaries or sovereignty in pursuit of
markets, which leads to conflict and exploitation.
Wilson's observation highlights the ethical implications of such
business practices, suggesting an early recognition of the need for
businesses to consider their social and political impact, a concept at
the heart of CSR.
Basically, he is setting the precursor to modern CSR discussions, about
115 years ago.
