About Ethics, Principles and Moral Values

Simply put, ethics involves learning what is right or wrong, and then doing the right thing -but "the right thing" is not nearly as straightforward as conveyed in a great deal of business
ethics literature. Most ethical dilemmas in the workplace are not simply a matter of "Should
Bob steal from Jack?" or "Should Jack lie to his boss?"
(Many ethicists assert there's always a right thing to do based on moral principle, and
others believe the right thing to do depends on the situation -- ultimately it's up to the
individual.) Many philosophers consider ethics to be the "science of conduct." Twin Cities
consultants Doug Wallace and John Pekel (of the Twin Cities-based Fulcrum Group; 651714-9033; e-mail at jonpekel@atti.com) explain that ethics includes the fundamental
ground rules by which we live our lives. Philosophers have been discussing ethics for at
least 2500 years, since the time of Socrates and Plato. Many ethicists consider emerging
ethical beliefs to be "state of the art" legal matters, i.e., what becomes an ethical guideline
today is often translated to a law, regulation or rule tomorrow. Values which guide how we
ought to behave are considered moral values, e.g., values such as respect, honesty,
fairness, responsibility, etc. Statements around how these values are applied are sometimes
called moral or ethical principles. (Extracted from Complete (Practical) Guide to Managing
Ethics in the Workplace.)
What is Ethics?
Ethics
Ethics
12 Ethical Principles for Business Executives
The Ground Rules of Ethics
Fairness
Value at Work ... and at Play
Trustworthiness and Integrity -- What It Takes and Why It's So Hard
Avoiding Unfair Conduct
Honesty in Communications
Honesty in Conduct
Ought Versus Ethics
Why Integrity Is Never Easy
Duty to Others and the Golden Rule
What are Values, Morals, and Ethics?

What is Business Ethics?

The concept has come to mean various things to various people, but generally it's coming to
know what it right or wrong in the workplace and doing what's right -- this is in regard to
effects of products/services and in relationships with stakeholders. Wallace and Pekel
explain that attention to business ethics is critical during times of fundamental change -times much like those faced now by businesses, both nonprofit or for-profit. In times of
fundamental change, values that were previously taken for granted are now strongly
questioned. Many of these values are no longer followed. Consequently, there is no clear

moral compass to guide leaders through complex dilemmas about what is right or wrong.
Attention to ethics in the workplace sensitizes leaders and staff to how they should act.
Perhaps most important, attention to ethics in the workplaces helps ensure that when
leaders and managers are struggling in times of crises and confusion, they retain a strong
moral compass. However, attention to business ethics provides numerous other benefits, as
well (these benefits are listed later in this document).
Note that many people react that business ethics, with its continuing attention to "doing the
right thing," only asserts the obvious ("be good," "don't lie," etc.), and so these people don't
take business ethics seriously. For many of us, these principles of the obvious can go right
out the door during times of stress. Consequently, business ethics can be strong
preventative medicine. Anyway, there are many other benefits of managing ethics in the
workplace. These benefits are explained later in this document. (Extracted from Complete
(Practical) Guide to Managing Ethics in the Workplace.)
Business Ethics (Wikipedia)
What is Business Ethics?
Values and Morals, Guidelines for Living
Ethics at a Cross Roads
Retaliation Soars When Managers Don't Do the Right Thing
Ethics is More Than Compliance
Taking the Ethical High Road Is Good for Business
Ethics and Intentions
3 Sources of Moral Obligation
The Best Ways to Discuss Ethics
Students Teach Business Ethics
Its Profitable to be Ethical
Transparency is a key to performance
Choices Make all the Difference
Ethical Decision Making and the Entrepreneur

Managing Ethics in the Workplace

Managing Ethics Programs in the Workplace
Organizations can manage ethics in their workplaces by establishing an ethics management
program. Brian Schrag, Executive Secretary of the Association for Practical and Professional
Ethics, clarifies. "Typically, ethics programs convey corporate values, often using codes and
policies to guide decisions and behavior, and can include extensive training and evaluating,
depending on the organization. They provide guidance in ethical dilemmas." Rarely are two
programs alike.
"All organizations have ethics programs, but most do not know that they do," wrote
business ethics professor Stephen Brenner in the Journal of Business Ethics (1992, V11, pp.
391-399). "A corporate ethics program is made up of values, policies and activities which
impact the propriety of organization behaviors."

Bob Dunn, President and CEO of San Francisco-based Business for Social Responsibility,
adds: "Balancing competing values and reconciling them is a basic purpose of an ethics
management program. Business people need more practical tools and information to
understand their values and how to manage them." (Extracted from Complete (Practical)
Guide to Managing Ethics in the Workplace.)
Ethics Management Programs: An Overview
Is It Time for a Unified Approach to Business Ethics?
10 Benefits of Managing Ethics in the Workplace
8 Guidelines for Managing Ethics in the Workplace
6 Key Roles and Responsibilities in Ethics Management
12 Ethical Principles for Business Executives
Responsibilities in the Employer-Employee Relationship
Why Should Business Executives Be Concerned With Ethics?
Organizational Character and Leadership Development
Ten Steps to Designing a Comprehensive Ethics Program

Developing Codes of Ethics

According to Wallace, "A credo generally describes the highest values to which the company
aspires to operate. It contains the `thou shalts.' A code of ethics specifies the ethical rules
of operation. It's the `thou shalt nots." In the latter 1980s, The Conference Board, a leading
business membership organization, found that 76% of corporations surveyed had codes of
ethics.
Some business ethicists disagree that codes have any value. Usually they explain that too
much focus is put on the codes themselves, and that codes themselves are not influential in
managing ethics in the workplace. Many ethicists note that it's the developing and
continuing dialogue around the code's values that is most important. (Extracted
from Complete (Practical) Guide to Managing Ethics in the Workplace.)
Creating a Code of Ethics for Your Organization
Can You Improve Your Code of Ethics?

Developing Codes of Conduct

If your organization is quite large, e.g., includes several large programs or departments,
you may want to develop an overall corporate code of ethics and then a separate code to
guide each of your programs or departments. Codes should not be developed out of the
Human Resource or Legal departments alone, as is too often done. Codes are insufficient if
intended only to ensure that policies are legal. All staff must see the ethics program being
driven by top management.
Note that codes of ethics and codes of conduct may be the same in some organizations,
depending on the organization's culture and operations and on the ultimate level of
specificity in the code(s). (Extracted from Complete (Practical) Guide to Managing Ethics in
the Workplace.)

Effective Methods of Employee Code of Conduct Training

Rethinking Codes of Conduct
Establishing a Code of Business Ethics
Codes of Conduct in Light of Sarbanes-Oxley
7 Rules for Avoiding Conflicts of Interest in a Family Business

Resolving Ethical Dilemmas and Making Ethical Decisions

Perhaps too often, business ethics is portrayed as a matter of resolving conflicts in which
one option appears to be the clear choice. For example, case studies are often presented in
which an employee is faced with whether or not to lie, steal, cheat, abuse another, break
terms of a contract, etc. However, ethical dilemmas faced by managers are often more realto-life and highly complex with no clear guidelines, whether in law or often in religion.
As noted earlier in this document, Doug Wallace, Twin Cities-based consultant, explains that
one knows when they have a significant ethical conflict when there is presence of a)
significant value conflicts among differing interests, b) real alternatives that are equality
justifiable, and c) significant consequences on "stakeholders" in the situation. An ethical
dilemma exists when one is faced with having to make a choice among these alternatives.
What's an Ethical Dilemma?
Some Contemporary (Arguably) Ethical Issues
General Resources Regarding Managing Ethics in the Workplace
Social Responsibility (social responsibility is but one aspect of overall business ethics)
General Resources Regarding Social Responsibility
Making Ethical Decisions: Conscience Prodders
Lessons in Ethics from Richard Branson
Components of an Ethical Decision: Commitment, Consciousness, and Competency
The Dirty Dozen: Twelve Common Rationalizations and Excuses to Avoid
12 Questions for Examining the Ethics of a Business Decision

Assessing and Cultivating Ethical Culture

Culture is comprised of the values, norms, folkways and behaviors of an organization. Ethics
is about moral values, or values regarding right and wrong. Therefore, cultural assessments
can be extremely valuable when assessing the moral values in an organization.
Assessing Corporate Culture - Part 1
Assessing Corporate Culture - Part 2
Guest Post: En Route to an Ethical Corporate Culture
En Route to an Ethical Corporate Culture
Establishing an Ethical Environment: Inspiration
Creating an Ethical Workplace Culture
Creating a Sustainable Ethical Culture
The Board's Role in Ensuring an Ethical Corporate Culture

Culture Saves Lives

Combating the Hero Worship Culture at Penn State: the NCAA Got It Exactly Right
Also see
Organizational Culture
Organizational Assessments

Ethics Training
The ethics program is essentially useless unless all staff members are trained about what it
is, how it works and their roles in it. The nature of the system may invite suspicion if not
handled openly and honestly. In addition, no matter how fair and up-to-date is a set of
policies, the legal system will often interpret employee behavior (rather than written
policies) as de facto policy. Therefore, all staff must be aware of and act in full accordance
with policies and procedures (this is true, whether policies and procedures are for ethics
programs or personnel management). This full accordance requires training about policies
and procedures.
Establishing an Ethical Environment: Education and Training
Do the Right Thing -- Ethics Training Programs Help Employees Deal With Ethical Dilemmas
Establishing an Ethical Environment -- Education and Training
Ethics Training and Development in the Military
Does Your Ethics and Compliance Training Meet the Standard?
Teaching Right and Wrong
Ethics Training: New Needs, New Times

Some Contemporary (Arguably) Ethical Issues

Banana Logic
Toyota Ethics: Questions to get to Answers
OK, Mr. Blankfein, How are you going to put ethics first?
Ethics Lessons in a New Era
The Fragility of Transparency
The Bloom is off the Tylenol Rose
Why Leaders have Trouble Restoring Trust
The Power of the Lowly Expense Report
Why it's so Hard to get Safety Right
Ethics Practices that Could Have Prevented the Shirley Sherrod Debacle
Insignificance of Ethics in Leadership
Ethics of Whistleblowing
J&J Accused of Ignoring Red Flags
Business Case #1 -- Employee Reference
J&J Dig Deeper!
How not to change a safety culture
Is Saying No to $12 million ethical, or unethical?
The Cost of Values
Employee References

Charlie Sheen's Business Ethics

Are companies responsible for how countries use their products?
Is Free Really Free?
Is News Corp Past the Tipping Point?
Cost of a Culture of Fear? $500 million for starters

General Resources Regarding Managing Ethics in the Workplace

Extensive list of lists of Websites
General business ethics resources at the Center for Applied Ethics
Ethical Leadership Group's articles
General site for ethics on the Web
List of listservers and groups
Ethics & Compliance Officer Association
Business Ethics
Business Ethics
Resource Renewal Institute
Business Ethics Center
Legal Ethics - Focusing on the ethical issues associated with the use of technology by legal
professionals
Business Ethics Information & Resources
Business Ethics References in 200 Years of Books
Ethics 2012 The Forecast is Cloudy
Get to the Start of the Slippery Slope

Social Responsibility
Social responsibility and business ethics are often regarding as the same concepts.
However, the social responsibility movement is but one aspect of the overall discipline of
business ethics. The social responsibility movement arose particularly during the 1960s with
increased public consciousness about the role of business in helping to cultivate and
maintain highly ethical practices in society and particularly in the natural environment.
Business for Social Responsibility (click on "Intro to Corporate Social Responsibility")
Business of Social Responsibility
Global Green Standards
"Winning with Integrity" - Business Impact Task Force Report Launched
Profit Versus Social Responsibility
Debate Social Responsibility -- a newsletter
Corporate Social Responsibility: An Insider's View
Responding to "The Case Against Social Responsibility"
Mother Theresa- An Inspiration For Social Responsibility

Corporate Social Responsibility: How Can Learning Contribute?

Four CSR Trends to Watch in 2011
Investing in Corporate Social Responsibility to Enhance Customer Value
Strategy and Society: The Link Between Competitive Advantage and Corporate Social
Responsibility

Boards and Corporate Social Responsibility

2012 Trends for Corporate Social Responsibility and Ethics and Compliance
The Business Case for Corporate Social Responsibility
The Corporate Responsibility to Respect Human Rights
Investing in Corporate Social Responsibility to Enhance Customer Value
Why CSR's Future Matters to Your Company
Organizing for Corporate Responsibility and Sustainability
The Responsible and Sustainable Board
Sustainability and climate change
Chief Sustainability Officer
Sustainability Matters: For Directors, its all in the Framework
Sustainability in the Boardroom
Corporate Social Responsibility What Is Wrong with This Picture?
Deconstructing Sustainability
Board Leadership and Corporate Social Responsibility
Nasdaq Hacking a Wake-Up Call for Boards
6 Criteria for Selecting a CSR Consultant

Corporate social responsibility

From Wikipedia, the free encyclopedia
Jump to: navigation, search
Corporate social responsibility (CSR, also called corporate conscience, corporate
citizenship or sustainable responsible business/ Responsible Business)[1] is a form
of corporate self-regulationintegrated into a business model. CSR policy functions as a
self-regulatory mechanism whereby a business monitors and ensures its active
compliance with the spirit of the law, ethical standards and international norms. In
some models, a firm's implementation of CSR goes beyond compliance and engages
in "actions that appear to further some social good, beyond the interests of the firm
and that which is required by law."[2][3] CSR aims to embrace responsibility for
corporate actions and to encourage a positive impact on the environment
and stakeholders including consumers, employees, investors, communities, and others.
The term "corporate social responsibility" became popular in the 1960s and has
remained a term used indiscriminately by many to cover legal and moral
responsibility more narrowly construed.[4]
Proponents argue that corporations increase long term profits by operating with a CSR
perspective, while critics argue that CSR distracts from business' economic role. A
2000 study compared existingeconometric studies of the relationship between social
and financial performance, concluding that the contradictory results of previous
studies reporting positive, negative, and neutral financial impact, were due to
flawed empirical analysis and claimed when the study is properly specified, CSR has a
neutral impact on financial outcomes.[5]
Critics[6][7] questioned the "lofty" and sometimes "unrealistic expectations" in
CSR.[8] or that CSR is merely window-dressing, or an attempt to pre-empt the role of
governments as a watchdog over powerfulmultinational corporations.
Political sociologists became interested in CSR in the context of theories
of globalization, neoliberalism and late capitalism. Some sociologists viewed CSR as a
form of capitalist legitimacy and in particular point out that what began as a social
movement against uninhibited corporate power was transformed by corporations into
a 'business model' and a 'risk management' device, often with questionable results [9]
CSR is titled to aid an organization's mission as well as a guide to what the company
stands for to its consumers. Business ethics is the part of applied ethics that examines
ethical principles and moral or ethical problems that can arise in a business

environment. ISO 26000 is the recognized international standard for CSR. Public sector
organizations (the United Nations for example) adhere to the triple bottom line (TBL). It
is widely accepted that CSR adheres to similar principles, but with no formal act of
legislation.
The notion is now extended beyond purely commercial corporations, e.g. to
universities.[10]

Contents

1 Definition
2 Consumer perspectives
3 Approaches
o 3.1 Cost-benefit analysis
4 Scope
o 4.1 Supply chain
5 Implementation
o 5.1 Engagement plan
o 5.2 Accounting, auditing and reporting
o 5.3 Ethics training
o 5.4 Common actions
o 5.5 Social license
6 Potential business benefits
o 6.1 Triple bottom line
o 6.2 Human resources
o 6.3 Risk management
o 6.4 Brand differentiation
o 6.5 Reduced scrutiny
o 6.6 Supplier relations
7 Criticisms and concerns
o 7.1 Nature of business
o 7.2 Motives
o 7.3 Misdirection
o 7.4 Controversial industries
8 Stakeholder influence
o 8.1 Ethical consumerism
o 8.2 Socially responsible investing
o 8.3 Creating shared value
o 8.4 Public policies

8.4.1 Regulation
8.4.2 Laws
o 8.5 Crises and their consequences
9 Geography
o 9.1 UK retail sector
10 See also
11 References
o 11.1 Notes
o 11.2 Sources
11.2.1 Books
11.2.2 Journals and magazines
11.2.3 Web
12 External links

Definition[edit]
Business dictionary defines CSR as "A companys sense of responsibility towards the
community and environment (both ecological and social) in which it operates.
Companies express this citizenship (1) through their waste and pollution reduction
processes, (2) by contributing educational and social programs and (3) by earning
adequate returns on the employed resources."[11]
A broader definition expands from a focus on stakeholders to
include philanthropy and volunteering.[12]

Consumer perspectives[edit]
Most consumers agree that while achieving business targets, companies should do
CSR at the same time.[13] However not all CSR activities are popular. Most consumers
believe companies doing charity will receive a positive response.[14] Somerville also
found that consumers are loyal and willing to spend more on retailers that support
charity. Consumers also believe that retailers selling local products will gain
loyalty.[15] Smith (2013)[16] shares the belief that marketing local products will gain
consumer trust. However, environmental efforts are receiving negative views given
the belief that this would affect customer service.[15] Oppewal et al. (2006) found that
not all CSR activities are attractive to consumers.[17] They recommended that retailers
focus on one activity.[18] Becker-Olsen (2006)[19] found that if the social initiative done
by the company is not aligned with other company goals it will have a negative
impact. Mohr et al.(2001)[20] and Groza et al. (2011) [21] also emphasise the importance
of reaching the consumer.

Approaches[edit]

CSR Approaches
Some commentators have identified a difference between the Canadian (Montreal
school of CSR), the Continental European and the Anglo-Saxon approaches to CSR.[22] It
is said that for Chinese consumers, a socially responsible company makes safe, highquality products; for Germans it provides secure employment; in South Africa it
makes a positive contribution to social needs such as health care and
education.[23] And even within Europe the discussion about CSR is very
heterogeneous.[24]
A more common approach to CSR is corporate philanthropy. This includes monetary
donations and aid given to nonprofit organizations and communities. Donations are
made in areas such as the arts, education, housing, health, social welfare and the
environment, among others, but excluding political contributions and commercial
event sponsorship.[25]
Another approach to CSR is to incorporate the CSR strategy directly into operations.
For instance, procurement of Fair Trade tea and coffee.
Creating Shared Value, or CSV is based on the idea that corporate success and social

welfare are interdependent. A business needs a healthy, educated workforce,

sustainable resources and adept government to compete effectively. For society to

thrive, profitable and competitive businesses must be developed and supported to

create income, wealth, tax revenues and philanthropy. The Harvard Business Review
article Strategy & Society: The Link between Competitive Advantage and Corporate
Social Responsibility provided examples of companies that have developed deep
linkages between their business strategies and CSR.[26] CSV acknowledges trade-offs
between short-term profitability and social or environmental goals, but emphasizes the
opportunities for competitive advantage from building a social value proposition into
corporate strategy. CSV gives the impression that only two stakeholders are important
- shareholders and consumers.
Many companies employ benchmarking to assess their CSR policy, implementation and
effectiveness. Benchmarking involves reviewing competitor initiatives, as well as
measuring and evaluating the impact that those policies have on society and the
environment, and how others perceive competitor CSR strategy.[27]
Cost-benefit analysis[edit]
In competitive markets a cost-benefit analysis of CSR initiatives, can be examined using
a resource-based view (RBV). According to Barney (1990) "formulation of the RBV,
sustainable competitive advantage requires that resources be valuable (V), rare (R),
inimitable (I) and non-substitutable (S)."[28][29] A firm introducing a CSR-based
strategy might only sustain high returns on their investment if their CSR-based
strategy could not be copied (I). However, should competitors imitate such a strategy,
that might increase overall social benefits. Firms that choose CSR for strategic
financial gain are also acting responsibly.[3]
RBV presumes that firms are bundles of heterogeneous resources and capabilities that
are imperfectly mobile across firms. This imperfect mobility can produce competitive
advantages for firms that acquire immobile resources. McWilliams and Siegel (2001)
examined CSR activities and attributes as a differentiation strategy. They concluded
that managers can determine the appropriate level of investment in CSR by
conducting cost benefit analysis in the same way that they analyze other investments.
Reinhardt (1998) found that a firm engaging in a CSR-based strategy could only
sustain an abnormal return if it could prevent competitors from imitating its
strategy.[30]

Scope[edit]
Initially, CSR emphasized the official behavior of individual firms. Later, it expanded
to include supplier behavior and the uses to which products were put and how they
were disposed of after they lost value.

Supply chain[edit]
Incidents like the 2013 Savar building collapse pushed companies to consider how the
behavior of their suppliers impacted their overall impact on society. Irresponsible
behavior reflected on both the misbehaving firm, but also on its corporate
customers. Supply chain management expanded to consider the CSR context. Wieland
and Handfield (2013) suggested that companies need to include social responsibility
in their reviews of component quality. They highlighted the use of technology in
improving visibility across the supply chain.[31]

Implementation[edit]
CSR may be based within the human resources, business development or public
relations departments of an organisation,[12] or may be a separate unit reporting to
the CEO or the board of directors. Some companies approach CSR without a clearly
defined team or programme.
Engagement plan[edit]
An engagement plan can assist in reaching a desired audience. A corporate social
responsibility individual or team plans the goals and objectives of the organization. As
with any corporate activity, a defined budget demonstrates commitment and scales the
program's relative importance.
Accounting, auditing and reporting[edit]
Main article: Social accounting
Social accounting is the communication of social and environmental effects of a

company's economic actions to particular interest groups within society and to society
at large.[32]
Social accounting emphasizes the notion of corporate accountability. Crowther defines
social accounting as "an approach to reporting a firms activities which stresses the
need for the identification of socially relevant behavior, the determination of those to
whom the company is accountable for its social performance and the development of
appropriate measures and reporting techniques."[33] Reporting guidelines and standards
serve as frameworks for social accounting, auditing and reporting:

AccountAbility's AA1000 standard, based on John Elkington's triple bottom line (3BL)

reporting

The Prince's Accounting for Sustainability Project's Connected Reporting

Framework[34]
The Fair Labor Association conducts audits based on its Workplace Code of
Conduct and posts audit results on the FLA website.
The Fair Wear Foundation verifies labour conditions in companies' supply chains,
using interdisciplinary auditing teams.
Global Reporting Initiative's Sustainability Reporting Guidelines
Economy for the Common Good's Common Good Balance Sheet[35]
GoodCorporation's standard[36] developed in association with the Institute of
Business Ethics
Synergy Codethic 26000[37] Social Responsibility and Sustainability
Commitment Management System (SRSCMS) Requirements Ethical
Business Best Practices of Organizations - the necessary management system
elements to obtain a certifiable ethical commitment management system. The
standard scheme has been build around ISO 26000 and UNCTAD Guidance on
Good Practices in Corporate Governance.The standard is applicable by any
type of organization.;
Earthcheck Certification / Standard
Social Accountability International's SA8000 standard
Standard Ethics Aei guidelines
The ISO 14000 environmental management standard
The United Nations Global Compact requires companies to communicate on their
progress[38] (or to produce a Communication on Progress, COP), and to
describe the company's implementation of the Compact's ten universal
principles.[39]
The United Nations Intergovernmental Working Group of Experts on
International Standards of Accounting and Reporting (ISAR) provides voluntary
technical guidance on eco-efficiency indicators,[40] corporate responsibility
reporting,[41] and corporate governance disclosure.[42]
The FTSE Group publishes the FTSE4Good Index, an evaluation of CSR performance
of companies.

In nations such as France, legal requirements for social accounting, auditing and
reporting exist, though international or national agreement on meaningful
measurements of social and environmental performance has not been achieved. Many
companies produce externally audited annual reports that cover Sustainable
Development and CSR issues ("Triple Bottom Line Reports"), but the reports vary
widely in format, style, and evaluation methodology (even within the same industry).

Critics dismiss these reports as lip service, citing examples such as Enron's yearly
"Corporate Responsibility Annual Report" and tobacco companies' social reports.
In South Africa, as of June 2010, all companies listed on the Johannesburg Stock
Exchange (JSE) were required to produce an integrated report in place of an annual
financial report and sustainability report.[43] An integrated report reviews
environmental, social and economic performance alongside financial performance.
This requirement was implemented in the absence of formal or legal standards. An
Integrated Reporting Committee (IRC) was established to issue guidelines for good
practice.
Ethics training[edit]
The rise of ethics training inside corporations, some of it required by government
regulation, has helped CSR to spread. The aim of such training is to help employees
make ethical decisions when the answers are unclear.[44] The most direct benefit is
reducing the likelihood of "dirty hands",[45] fines and damaged reputations for
breaching laws or moral norms. Organizations see increased employee loyalty and
pride in the organization.[46]
Common actions[edit]
Common CSR actions include:[47]

Environmental sustainability: recycling, waste management, water

management, renewable energy, reusable materials, 'greener' supply chains,
reducing paper use and adopting Leadership in Energy and Environmental
Design (LEED) buildind standards.[48][49][50]

Community involvement: This can include raising money for local charities,
providing volunteers, sponsoring local events, employing local workers,
supporting local economic growth, engaging in fair trade practices, etc.[51][52]

Ethical marketing: Companies that ethically market to consumers are placing a

higher value on their customers and respecting them as people who are ends
in themselves. They do not try to manipulate or falsely advertise to potential
consumers. This is important for companies that want to be viewed as ethical.
Social license[edit]
Social license refers to a local communitys acceptance or approval of a company.
Social license exists outside formal regulatory processes. Social license can

nevertheless be acquired through timely and effective communication, meaningful

dialogue and ethical and responsible behavior.
Displaying commitment to CSR is one way to achieve social license, by enhancing a
companys reputation.[53]

Potential business benefits[edit]

A large body of literature exhorts business to adopt measures non-financial measures
of success (e.g., Deming's Fourteen Points, balanced scorecards). While CSR benefits are
hard to quantify, Orlitzky, Schmidt and Rynes[54] found a correlation between
social/environmental performance and financial performance.
The business case for CSR[55] within a company employs one or more of these
arguments:
Triple bottom line[edit]
"People, planet and profit", also known as the triple bottom line form one way to
evaluate CSR. "People" refers to fair labour practices, the community and region
where the business operates. "Planet" refers to sustainable environmental
practices. Profit is the economic value created by the organization after deducting the
cost of all inputs, including the cost of the capital (unlike accounting definitions of
profit).[56][57]
This measure was claimed to help some companies be more conscious of their social
and moral responsibilities.[58] However, critics claim that it is selective and substitutes
a company's perspective for that of the community. Another criticism is about the
absence of a standard auditing procedure.[59]
Human resources[edit]
A CSR program can be an aid to recruitment and retention,[60][61] particularly within the
competitive graduate student market. Potential recruits often consider a firm's CSR
policy. CSR can also help improve the perception of a company among its staff,
particularly when staff can become involved through payroll
giving, fundraising activities or community volunteering. CSR has been credited with
encouraging customer orientation among customer-facing employees.[62]
Risk management[edit]

Managing risk is an important executive responsibility. Reputations that take decades

to build up can be ruined in hours through corruption scandals or environmental
accidents.[63] These draw unwanted attention from regulators, courts, governments and
media. CSR can limit these risks.[64]
Brand differentiation[edit]
CSR can help build customer loyalty based on distinctive ethical values.[65] Some
companies use their commitment to CSR as their primary positioning tool, e.g., The
Co-operative Group, The Body Shopand American Apparel[66]
Some companies use CSR methodologies as a strategic tactic to gain public support
for their presence in global markets, helping them sustain a competitive advantage by
using their social contributions as another form of advertising.[67]
Reduced scrutiny[edit]
Corporations are keen to avoid interference in their business
through taxation and/or regulations. A CSR program can persuade governments and the
public that a company takes health and safety, diversity and the environment seriously,
reducing the likelihood that company practices will be closely monitored.
Supplier relations[edit]
Appropriate CSR programs can increase the attractiveness of supplier firms to
potential customer corporations. E.g., a fashion merchandiser may find value in an
overseas manufacturer that uses CSR to establish a positive imageand to reduce the
risks of bad publicity from uncovered misbehavior.

Criticisms and concerns[edit]

CSR concerns include its relationship to the purpose of business and the motives for
engaging in it.
Nature of business[edit]
Milton Friedman and others argued that a corporation's purpose is to maximize returns

to its shareholders and that obeying the laws of the jurisdictions within which it
operates constitutes socially responsible behavior.[68]
While some CSR supporters claim that companies practicing CSR, especially in
developing countries, are less likely to exploit workers and communities, critics claim

that CSR itself imposes outside values on local communities with unpredictable
outcomes.[69]
Better governmental regulation and enforcement, rather than voluntary measures, are
an alternative to CSR that moves decision-making and resource allocation from public
to private bodies.[70] However, critics claim that effective CSR must be voluntary as
mandatory social responsibility programs regulated by the government interferes with
peoples own plans and preferences, distorts the allocation of resources, and increases
the likelihood of irresponsible decisions.[71]
Motives[edit]

Play media
A story of CSR promoted byAzim Premji Foundation in India[72]
Some critics believe that CSR programs are undertaken by companies to distract the
public from ethical questions posed by their core operations. They argue that the
reputational benefits that CSR companies receive (cited above as a benefit to the
corporation) demonstrate the hypocrisy of the approach.[73]
Misdirection[edit]
Another concern is that sometimes companies use CSR to direct public attention away
from other, harmful business practices. For example, McDonald's Corporation positioned
its association with Ronald McDonald House as CSR[74] while its meals have been
accused of promoting poor eating habits.[75]
Controversial industries[edit]
Industries such as tobacco, alcohol or munitions firms make products that damage
their consumers and/or the environment. Such firms may engage in the same
philanthropic activities as those in other industries. This duality complicates
assessments of such firms with respect to CSR.[76]

Stakeholder influence[edit]

One motivation for corporations to adopt CSR is to satisfy stakeholders.

Branco and Rodrigues (2007) describe the stakeholder perspective of CSR as the set
of views of corporate responsibility held by all groups or constituents with a
relationship to the firm.[77] In their normative model the company accepts these views
as long as they do not hinder the organization. The stakeholder perspective fails to
acknowledge the complexity of network interactions that can occur in cross-sector
partnerships. It relegates communication to a maintenance function, similar to the
exchange perspective.[78]
Ethical consumerism[edit]
The rise in popularity of ethical consumerism over the last two decades can be linked to
the rise of CSR.[79] Consumers are becoming more aware of the environmental and
social implications of their day-to-day consumption decisions and in some cases make
purchasing decisions related to their environmental and ethical concerns.[80]
Socially responsible investing[edit]
Main article: Socially responsible investing
Shareholders and investors, through socially responsible investing are using their capital
to encourage behavior they consider responsible. However, definitions of what
constitutes ethical behavior vary. For example, some religious investors in the US
have withdrawn investment from companies that violate their religious views, while
secular investors divest from companies that they see as imposing religious views on
workers or customers.[81]
Creating shared value[edit]
Non-governmental organizations are also taking an increasing role, leveraging the media

and the Internet to increase the visibility of corporate behavior. Through education
and dialogue, the development of community awareness in pushing businesses to
change their behavior is growing.[82]
Creating Shared Value (CSV) claims to be more community aware than CSR. Several

companies are refining their collaboration with stakeholders accordingly.

Public policies[edit]
Some national governments promote socially and environmentally responsible
corporate practices. The heightened role of government in CSR has facilitated the

development of numerous CSR programs and policies.[83] Various European

governments have pushed companies to develop sustainable corporate
practices.[84] CSR critics such as Robert Reich argued that governments should set the
agenda for social responsibility with laws and regulation that describe how to conduct
business responsibly.
Regulation[edit]

Fifteen European Union countries actively engaged in CSR regulation and public policy
development.[84] CSR efforts and policies are different among countries, responding to
the complexity and diversity of governmental, corporate and societal roles. Studies
claimed that the role and effectiveness of these actors were case-specific.[83]
The variety among companies complicates regulatory processes.[85] Self-regulation
allows each corporate actor to balance profits and social responsibility without
cumbersome governmental involvement. Studies suggest that mandated CSR distorts
the allocation of resources and increases the likelihood of irresponsible decisions.[86]
Bulkeley cited the Australian government's actions to avoid compliance with
the Kyoto Protocol in 1997, over concerns of economic loss and national interest. The
Australian government claimed that the pact would damage Australia more than any
other OECD nation.[87] In November 2007, the new Prime Minister Kevin Rudd ratified
the protocol.
Canada adopted CSR in 2007. Prime Minister Harper encouraged Canadian mining
companies to meet Canadas newly developed CSR standards.[88]
Laws[edit]

In the 1800s,the US government could take away a firm's license if it acted

irresponsibly. Corporations were viewed as "creatures of the state" under the law. In
1819, the United States Supreme Court inDartmouth College vs. Woodward established a
corporation as a legal person in specific contexts. This ruling allowed corporations to
be protected under the Constitution and prevented states from regulating
firms.[89] Recently countries included CSR policies in governtment agendas.[84]
On 16 December 2008, the Danish parliament adopted a bill making it mandatory for
the 1100 largest Danish companies, investors and state-owned companies to include
CSR information in their financial reports. The reporting requirements became
effective on 1 January 2009.[90] The required information included:

CSR/SRI policies

How such policies are implemented in practice

Results and management expectations

CSR/SRI is voluntary in Denmark, but if a company has no policy on this it must state
its positioning on CSR in financial reports.[91]
In 2014, India became the world's first country to enact a mandatory minimum CSR
spending law. Under Companies Act, 2013, any company having a net worth of
500 crore or more or a turnover of 1,000 crore or a net profit of 5 crore must spend 2%
of their net profits on CSR activities.[92] The rules came into effect from 1 April
2014.[93]
Crises and their consequences[edit]
Crises have encouraged the adoption of CSR. The CERES principles were adopted
following the 1989 Exxon Valdez incident.[45] Other examples include the lead paint used
by toy maker Mattel, which required the recall of millions of toys and caused the
company to initiate new risk management and quality control processes. Magellan
Metals was found responsible for lead contamination killing thousands of birds in
Australia. The company ceased business immediately and had to work with
independent regulatory bodies to execute a cleanup. Odwalla experienced a crisis with
sales dropping 90% and its stock price dropping 34% due to cases of E. coli. The
company recalled all apple or carrot juice products and introduced a new process
called "flash pasteurization" as well as maintaining lines of communication constantly
open with customers.