Lesson 7

• Corporate social responsibility (CSR)

  -is defined as a concerted initiative to contribute to sustainable development through efforts that are economically, socially, and environmentally beneficial to stakeholders.
• Corporate social responsibility is also related to sustainable development.

  -It is defined as an effort to strike a balance between maintaining the needs of the present and the ability of future generations to meet their needs through the preservation of the environment.
• Corporate social responsibility is embodied in four aspects or obligations.

  -economic

  -legal

  -ethical

  -philanthropic.
• Economic Obligations.

  -It is the primary responsibility of a company to help develop the economy and achieve a status of development on par with other countries;

  -generate employment;

  -and distribute goods and services for public use and consumption.

  -a company should earn a profit. Otherwise, it will close down.

  -Nonprofit organizations, however, like the Philippine Red Cross, are established not for profit but for some specific purpose. As such, nonprofit organizations rely heavily on donations and grants.
• Legal Obligations

  -Company operations should be within the bounds of law.

  -The company should follow rules and restrictions dictated by law and comply with legal requirements.

  -It also has the obligation to pay taxes and get the necessary permits in the operation of the business.

  -It has the duty to pay its employees promptly, in accordance with the law.
• Ethical Obligations

  -Companies are expected to be ethical in their dealings with stakeholders, especially the public.

  -They should avoid emitting toxic wastes or causing pollution in the course of their operations.

  -They also have an ethical responsibility to their employees.

  -Protective gears should be used when workers are handling harmful chemicals.

  -A company operates ethically when it does not cause harm or threaten the life of anyone in the course of its operations.
• Philanthropic Obligations

  -It is an obligation of a company to help the community in worthwhile projects which are beneficial to the people in the community.

  -This is a way of giving back to the community where the company operates.

  -Philanthropy is voluntary in nature.
• There are three models of CSR which depict the different aspects of CSR and their relationships. These are the:

  (1) pyramid model

  (2) intersecting circles model

  (3) concentric circles model.
• The Pyramid Model

  -This model emphasizes the levels of expectations of the people comprising the four social responsibilities starting from the economic to the philanthropic.

  -The hierarchy of social responsibility shows the order of decreasing importance starting from the baseline which is economic responsibility. -The next layer is legal responsibility while the third is ethical responsibility.

  -The last is philanthropic responsibility.
• Pyramid Model

  
• The Intersecting Circles Model.

  -In this model, the four aspects of social responsibility overlap with each other, showing their interrelationships.

  -The interrelationships allow for flexibility because managers are free to use the company's resources not solely on one aspect but undertake endeavors that address several aspects.
• The Intersecting Circles Model

  
• The Concentric Circles Model

  -This model is similar to the Pyramid model where the economic social responsibility is the core aspect.

  -It is also similar to the Intersecting Circles model in terms of the interrelationships of the four aspects.

  -However, economic social responsibility is more pronounced and emphasized.

  -This means that the company should be profitable for the good of the general public.
• The Concentrix Circles Model

  -The concentric circles of legal, ethical, and philanthropic social responsibilities embrace economic social responsibility.

  -all economic responsibilities should have legal, ethical, and philanthropic aspects.
• The Concentrix Circles Model

  -For example, in achieving profitability,

  =the company should act morally in all its dealings (ethical).

  =While complying with legal requirements, it should cooperate with the government in fighting inflation and adopting measures to prevent pollution (legal).

  =Lastly, in reaping profits, the company should have programs that will improve the social environment (philanthropic).
• The Concentrix Circles Model

  
• Many companies today advocate concern for the environment, incorporating ethical principles that are environment-related. These environmental principles are classified according to development phases such as

  -light green,

  -market green,

  -stakeholder green, and

  -dark green principles.
• Light Green

  -This environmental principle states that a company becomes successful if it sustains competitive advantage but at the same time complies with the law.

  -Some companies have strict environmental standards to complement their strategies, expertise, and technology. Thus, they issue environmental policies which fit their competitive advantage.

  -Those who advocate light green principles prioritize the protection of the environment as a personal choice.

  -For these individuals, they believe it is a responsibility and a part of their lifestyle.
• Market Green

  -This principle promotes the creation of products and services that cater to the environmental preferences of consumers. Many consumers now prefer to buy environment-friendly goods and services.

  -Refrigerators and airconditioners with environment-friendly features have been very saleable.

  -The Internet has been an effective channel for consumers to detect any irregularity or if an aspect of a product poses potential harm to the environment. Customers then decide if they will make a purchase.
• Stakeholder Green

  -This principle focuses on the preferences of stakeholders.

  -Stakeholder green has a darker shade than market green because it focuses on a bigger group-the stakeholders.

  -The wide range of people covering stakeholder green include the customers, suppliers, community, employees, shareholders, and others.
• (Stakeholder Green)

  There are many environmental activities that support stakeholders:

  -requiring suppliers to meet environmental standards in their processes or orienting employees on environmental issues. The community benefits from policies on the proper disposal of wastes and eco-friendly packaging.
• Dark Green

  -Not many companies adopt the dark green principle.

  -This propagates leadership in the industry through a high level of commitment to preserve the environment.

  -For many, this is very idealistic because it is difficult to lead in a very competitive world by fully prioritizing the environment.
• -Others may just attempt to adopt dark green principles but these are mostly superficial means of creating value for all species in the environment.

  -Nevertheless, companies which used the dark green principle have been successful in reconciling their strategies with the preservation of the environment.
• Shades of Green

  -Companies can develop and create their own shades of green depending on how they interpret the shades to suit their commitment and aspiration to take care of the environment.

  -They can define each shade in their own ways depending on how they interpret the corresponding environmental values for each shade.