Corporate Social Responsibility
Lecture 1: Introduction to CSR
Management is not only about planning, organizing, controlling, ... but also why they
do it.
• Two Components:
o What managers do (functions)
o Why they do it (effectiveness) à this is where CSR comes in
Three approaches for CSR
1) Financial Bottom Line (FBL)
Focus on financial growth of the company
• Example: Jeff Bezos
• [+] wealth growth, innovation
• [-] ignores social/environment cost à negative externalities
• Utilitarianism: the end justifies the means (Note at top of next page: the end
does not justify all the means)
• Milton Friedman: the only responsibility of a company is to make money.
Investments that do not cause profits are theft.
• Pinto Case: Ford came with a competitive car to Japanese cars, they had to
act fast so didn't test the car so much and apparently it was discovered the
fuel tank was very dangerous. Solution was to take insurance because it was
cheaper than recalling all the cars.
o Not really a good solution in the end, because court ordered Ford to
pay a lot more.
2) Triple Bottom Line (TBL)
Focus on Financial + Social + Environmental
• Example: Tim Cook
• Solution for profit, people and planet (3P)
• Founder: John Elkington
• Creating Shared Value (CSV) by Michael Porter = not only creating value
for own company but also for others
1. In products/services
2. In supply chain
3. In own community
o CSR doesn't go far enough, CSV does
• Fortune at the Bottom of the Pyramid (BoP)
o The poor are with so many they can be seen as a business
• Enlightened utilitarianism
,3) Social and Environmental Thinking (SET)
• Example: Anita Roddick (stopped animal testing)
• Focus on society first
• Money is a means not a goal
• Nested 3P model: (Ecological + Social + Financial)
• Virtues Ethics: we have to be good before being "profitable" and
enough is enough.
CSR Core Concepts & Stakeholders
CSR = the responsibility of companies for the impact they have on society.
• Maximize positive impact
• Minimize negative impact
• Goes beyond law, otherwise it's just legal obligations
• It's a continuous improvement process, not something you have
• CSR is everywhere in the world, but the focus is different for different regions
in the world (see slides).
• Most companies today in FBL or TBL.
Materiality are the topics that are important for your business.
• You need Stakeholders to define the materiality of your company.
Stakeholder (External / Internal) = individual or group that influences or is influenced
by the objectives that an organization wants to achieve.
• e.g., shareholders, employees, customers, governments, ...
• Types of Stakeholders: market, activity, environment and workplace
• Collective vs individual interest
• Short vs long term visions
• Every stakeholder has its own interests and only look at a small part of the
company. Together these stakeholders can form a good overall picture for the
company to focus on.
• Importance of stakeholders:
1) External perspective and reality check
Companies can have blind spots: stakeholders offer different
viewpoints on social and environmental issues.
2) Local and social knowledge
NGOs, community groups, and local governments understand
the challenges and priorities at the grassroots level.
3) Industry and regulatory insights
Regulators and policymakers provide advice on upcoming laws
and compliance requirements.
Competitors and industry groups provide benchmarks and best
practices.
4) Legitimacy and credibility
Partnerships with trusted NGOs or academics increase the
authenticity of CSR efforts. Avoid accusations of greenwashing.
, 5) Risk identification and crisis prevention
Early warning from affected communities or experts helps
mitigate reputational and operational risks.
Investors and financial analysts point to long-term sustainability
risks.
• Criticism of stakeholders:
1) Lack of Clear Prioritization
- It is almost impossible to balance the competing interests of
stakeholders against each other
- Leaving the choice to management gives them considerable
power.
2) Dilution of Corporate Focus
- Trying to satisfy all stakeholders can lead to mission drift.
3) Greenwashing & Performative CSR
- The "illusion" of stakeholderism: working against
stakeholders by obstructing reforms (tax
reform, antitrust regulation, carbon taxes).
- Superficial engagement with NGOs, employees, without
substantive change.
4) Increased Bureaucracy & Complexity
- Extensive stakeholder consultations can slow decision-
making.
5) Potential for Investor Backlash
- Shareholders may resist stakeholder-driven strategies if they
perceive them as reducing profits- MYOPIC institutions
Steps in stakeholder management:
1. Stakeholder identification
2. Stakeholder mapping
3. Stakeholder engagement strategy development
Ex question on Stakeholders / apply Materiality on case:
• Exercise Slides: Stakeholders: employees, government, shareholders,
customers, "competitors", ...
• Stakeholder mapping: based on how important each stakeholder is for your
company (interest and influence) in matrix.
• Engagement by sending survey or scheduling meetings, …
• Materiality matrix:
o on one hand what is important for own
business
o on other hand what is important for
stakeholders
• Stakeholders help identify what topics are
important and should be the main focus of a
company. They also help with identifying the
strategy of a company.
Lecture 1: Introduction to CSR
Management is not only about planning, organizing, controlling, ... but also why they
do it.
• Two Components:
o What managers do (functions)
o Why they do it (effectiveness) à this is where CSR comes in
Three approaches for CSR
1) Financial Bottom Line (FBL)
Focus on financial growth of the company
• Example: Jeff Bezos
• [+] wealth growth, innovation
• [-] ignores social/environment cost à negative externalities
• Utilitarianism: the end justifies the means (Note at top of next page: the end
does not justify all the means)
• Milton Friedman: the only responsibility of a company is to make money.
Investments that do not cause profits are theft.
• Pinto Case: Ford came with a competitive car to Japanese cars, they had to
act fast so didn't test the car so much and apparently it was discovered the
fuel tank was very dangerous. Solution was to take insurance because it was
cheaper than recalling all the cars.
o Not really a good solution in the end, because court ordered Ford to
pay a lot more.
2) Triple Bottom Line (TBL)
Focus on Financial + Social + Environmental
• Example: Tim Cook
• Solution for profit, people and planet (3P)
• Founder: John Elkington
• Creating Shared Value (CSV) by Michael Porter = not only creating value
for own company but also for others
1. In products/services
2. In supply chain
3. In own community
o CSR doesn't go far enough, CSV does
• Fortune at the Bottom of the Pyramid (BoP)
o The poor are with so many they can be seen as a business
• Enlightened utilitarianism
,3) Social and Environmental Thinking (SET)
• Example: Anita Roddick (stopped animal testing)
• Focus on society first
• Money is a means not a goal
• Nested 3P model: (Ecological + Social + Financial)
• Virtues Ethics: we have to be good before being "profitable" and
enough is enough.
CSR Core Concepts & Stakeholders
CSR = the responsibility of companies for the impact they have on society.
• Maximize positive impact
• Minimize negative impact
• Goes beyond law, otherwise it's just legal obligations
• It's a continuous improvement process, not something you have
• CSR is everywhere in the world, but the focus is different for different regions
in the world (see slides).
• Most companies today in FBL or TBL.
Materiality are the topics that are important for your business.
• You need Stakeholders to define the materiality of your company.
Stakeholder (External / Internal) = individual or group that influences or is influenced
by the objectives that an organization wants to achieve.
• e.g., shareholders, employees, customers, governments, ...
• Types of Stakeholders: market, activity, environment and workplace
• Collective vs individual interest
• Short vs long term visions
• Every stakeholder has its own interests and only look at a small part of the
company. Together these stakeholders can form a good overall picture for the
company to focus on.
• Importance of stakeholders:
1) External perspective and reality check
Companies can have blind spots: stakeholders offer different
viewpoints on social and environmental issues.
2) Local and social knowledge
NGOs, community groups, and local governments understand
the challenges and priorities at the grassroots level.
3) Industry and regulatory insights
Regulators and policymakers provide advice on upcoming laws
and compliance requirements.
Competitors and industry groups provide benchmarks and best
practices.
4) Legitimacy and credibility
Partnerships with trusted NGOs or academics increase the
authenticity of CSR efforts. Avoid accusations of greenwashing.
, 5) Risk identification and crisis prevention
Early warning from affected communities or experts helps
mitigate reputational and operational risks.
Investors and financial analysts point to long-term sustainability
risks.
• Criticism of stakeholders:
1) Lack of Clear Prioritization
- It is almost impossible to balance the competing interests of
stakeholders against each other
- Leaving the choice to management gives them considerable
power.
2) Dilution of Corporate Focus
- Trying to satisfy all stakeholders can lead to mission drift.
3) Greenwashing & Performative CSR
- The "illusion" of stakeholderism: working against
stakeholders by obstructing reforms (tax
reform, antitrust regulation, carbon taxes).
- Superficial engagement with NGOs, employees, without
substantive change.
4) Increased Bureaucracy & Complexity
- Extensive stakeholder consultations can slow decision-
making.
5) Potential for Investor Backlash
- Shareholders may resist stakeholder-driven strategies if they
perceive them as reducing profits- MYOPIC institutions
Steps in stakeholder management:
1. Stakeholder identification
2. Stakeholder mapping
3. Stakeholder engagement strategy development
Ex question on Stakeholders / apply Materiality on case:
• Exercise Slides: Stakeholders: employees, government, shareholders,
customers, "competitors", ...
• Stakeholder mapping: based on how important each stakeholder is for your
company (interest and influence) in matrix.
• Engagement by sending survey or scheduling meetings, …
• Materiality matrix:
o on one hand what is important for own
business
o on other hand what is important for
stakeholders
• Stakeholders help identify what topics are
important and should be the main focus of a
company. They also help with identifying the
strategy of a company.
