Name: Loi Zhong Yu Student Number: 14784440 Student e-mail address: zhongyu13@hotmail.

com Tutor s name: Anne Marie Gutierrez Tutorial day & time: Wednesday, 2-4p.m. Semester & campus details: Semester 3, 2010 Singapore. Topic 1: GlaxoSmithKline

Corporate Social Responsibility (CSR) A mechanic who operates his own garage may pour the used motor oil into the drain after servicing a vehicle but a mechanic at the service centre of Toyota or Honda is not allowed to do that as the company has strict guidelines and policy on waste disposal. Large companies like Toyota and Honda just cannot afford the bad publicity for polluting the environment. Therefore, they have to incur extra cost to make sure that all waste products are properly disposed off in their day to day operation. In a recent article titled How To Become Sustainable Professor Wim A. Van Der Stede of London School of Economics pointed out the importance of CSR in business sustainability. He thinks that in order for the organizations to become sustainable, they should improve their business objectives by including environmental, social and societal initiatives rather than focus on narrow, conventional objectives of operational excellence and financial performance (Wim A. Van Der Stede 2010). However, there are arguments against the need for CSR. Milton Friedman and others have argued on the corporation s purpose. They think that the corporations have no social responsibilities; corporations are only responsible for their shareholders, which are maximizing returns to the shareholders (Corporate social responsibility 2010). For example, the amount the company allocated for CSR is restricted each year to a small percentage of the company s budget. Individual such as Bill Gates and Warren Buffett can donate almost 100% of their wealth for charities but it will be unthinkable if the management of a multinational company allocate 100% of a year s profit to charities. This is why some critics brought up the motives of CSR. They critic that some companies use CSR to draw away the public from ethical issues posed by their operations and sometimes companies claim that they do involve in CSR program, but they engage in harmful business practices at the same time (Corporate social responsibility 2010). On the other hand, as multinational corporations expand their businesses through globalizations, they face new challenges on different government regulations, tariffs, environmental and labour issues. As a result of these challenges, businesses cannot only focus on profit maximization, but they have to operate with a human face (Evelyn S Wong, 2009). Some companies therefore use CSR as a strategy to gain public and government support by involving and contributing to community programs, making monetary donations and giving aids to charitable bodies. Furthermore, there are potential benefits from CSR program such as brand differentiation, for example The Body Shop and so on. GSK is a pharmaceutical company headquartered in London, United Kingdom. It is formed in 2000. It has its own CSR program. GSK believe that having strong values in business is important in order for the business to be success (GlaxoSmithKline plc 2009). GSK do not only focus on what they achieve but also the way they achieve it. GSK is changing to fulfill the needs and expectations of society. They are progressing on many aspects such as

increasing the accessibility of their medicines, improving research opportunities for neglected tropical diseases, increase ethical standards when research and business activities are carried out, and be more open and transparent of how they run the business. GSK just like any other pharmaceutical companies use animal testing in research. This causes some concern by certain stakeholder such as People for the Ethical Treatment of Animals (PETA). Animal Research Animal research is an important part in GSK research. It is because research in animals enables scientists to detect whether or not the new medicines are safe enough to use on humans. Animal research has helped scientists to develop lifesaving treatments and vaccines for diseases that may harm or kill millions of people, for example, cancer, diabetes, rubella, polio and so on. Positive and Negative of GSK social performance GSK is concerned about the welfare of the animal by practicing the principles which was proposed by Russell and Burch in 1959, known as 3Rs in all animal studies (GlaxoSmithKline plc 2009). The principles for 3Rs are replacement, reduction and refinement. Replacement is meant by replacing animals with non-animal alternatives. Reduction is minimizing the use of animals per experiment while getting the same information. Lastly, refinement is to minimize the pain and suffering and improve the welfare of animals. In USA, the U.S. Food and Drug Administration (FDA), a government agency, requires all new medicines to be tested on animals before reaching the store shelves (Stephanie Watson, 2009). Furthermore, in the GSK s CSR annual report 2009, GSK said that they are committed to act ethically and practice good animal welfare. They carried out a review of their policy on the use of animals. Based on the review, they are making a few changes. Firstly, after 28th October 2008, GSK volunteered for not using great apes to carry out biomedical research anymore. They will not commence the studies using great apes (GlaxoSmithKline plc 2009). Besides, when GSK conduct the testing on non-human primates, the number of non-human primates used is kept at the lowest and less than 0.5% of non-human primates are used in animal research (GlaxoSmithKline plc 2009). However, GSK is one of the customers of Huntingdon Life Sciences (HLS), which is a controversial animal-testing company. Huntingdon Life Sciences (HLS) uses 75,000 animals each year in biomedical research (A controversial laboratory 2001). In 1997, in United Kingdom, People for the Ethical Treatment of Animals (PETA), an American animal rights organization, shot a film secretly in HLS (Huntingdon Life Sciences 2010). Later the film was broadcast on Channel 4 television showing a beagle was hitting and repeatedly punched by HLS s staff. HLS did not deny the incident, but said the staff involved had been dismissed and prosecuted (A controversial laboratory 2001). They should not be one of the customers of

HLS. Thus, GSK should consider use some other companies instead of HLS so that they do not associate themselves with treating animals cruelly. Moreover, GSK claimed that they know that the research and development, sale of medicines and vaccines and manufacture raise ethical issues (GlaxoSmithKline plc 2009). Therefore, they aimed to be more open and transparent in the way they tackle them (GlaxoSmithKline plc 2009). Thus, in order to be open and transparent, GSK should give further disclose on the actual number of animals they used in their laboratories but not disclose the number in percentage. It is probably because the actual number of animals used is huge. They only reported to the public that the number of animals used in 2009 was around 20 per cent lower than in 1994; research and development activity has increase in the same period. Stakeholders Company does CSR also aimed to enhance the value of stakeholders and gain acceptance from the stakeholders. A stakeholder is any group or individual who can affect, or is affected by, the achievement of a corporation s purpose (Andrew Crane, Dirk Matten and Laura J. Spence, 2008). Stakeholders are divided into two categories: internal and external stakeholders. In March 2009, GSK selected an independent external adviser, Ms Sophia Tickell to the company s corporate responsibility committee in order to improve the GSK s engagement with the stakeholders. Ms Sophia Tickell attended the meetings of the committee and gave advises to the company. Five Principles: access to medicines; standards of ethical conduct; research and innovation; employment practices; and global community partnerships are reviewed annually (GlaxoSmithKline plc 2009). In 2009, the committee also reviews the use of animals in research as disclosed in the CSR annual report 2009 of GSK. GSK involvement in animal research has different impact on its stakeholders. From the point of view of the investors, what they want is just high turnover and profit from the company. They will have no objection to GSK doing animal research as long as the company adheres to the rules and regulations and Animal Welfare Act. Stakeholder like employees also have similar stand as the investors, as if the company make a lot of profit, they will get more bonuses and incentives. Besides, government is not concerned whether GSK is very keen on CSR or the amount they donated to charity as long as GSK follow the rules and regulations when carried out animal testing. However, special interest groups like People for the Ethical Treatment of Animals (PETA) and Stop Huntingdon Animal Cruelty (SHAC) would go against GSK as they use animal testing in biomedical research.

Recommendations It is recommended that GSK should disclose the actual number of animals used in research each year as the company aimed to be more open and transparent as stated in the GSK s CSR annual report 2009. The figures will show GSK effort in reducing the number of animals used over the years. Moreover, they can set target for the percentage reduction of number of animals used for each year. Furthermore, GSK should consider alternative methods when conducting research. For example, the use of modern technology such as computer modeling (Stephanie Watson, 2009). Researchers set up the information about human cells and the drug being tested into a computer. Then, the computer can predict the effects of the drug on cells, organs and other tissues by using a mathematical formula (Stephanie Watson, 2009). Besides, GSK can also improve the welfare of the animals by keeping them in large cages, social groups and provide toys for them to play with (Patience Coster, 2009).

Conclusion It is necessary for GSK to conduct animal research in biomedical research before the medicines or vaccines are used by humans until the company has found an alternative method to replace the use of animals. However, GSK should show they actually practice the 3Rs concept by disclosing the actual figure of animals used in research to the public in each year. Furthermore, GSK should reduce the number of animals used; minimize the pain and distress of animals during animal testing.

References 1. Andrew Crane, Dirk Matten and Laura J. Spence. 2008. Corporate Social Responsibility: Readings and cases in a global context. USA and Canada: Routledge. 2. Chris Hayhurst. 2000. Animal testing: the animal rights debate. New York: The Rosen Publishing Group, Inc. 3. Christine A. Mallin. 2009. Corporate Social Responsibility: A Case Study Approach. UK: Edward Elgar Publishing Limited. 4. Evelyn S. Wong. 2009. CSR for sustainability and success. Singapore: Marshall Cavendish Editions. 5. Patience Coster. 2009. Animal Research and Testing. London: Wayland. 6. Stephanie Watson. 2009. Animal testing: issues and ethics. New York: The Rosen Publishing Group, Inc. 7. Terry O Neill. 2006. Animal rights. United States of America: Thomson Gale. 8. Wayne Visser, Dirk Matten, Manfred Pohl and Nick Tolhurst. 2007. The A to Z of Corporate Social Responsibility: a complete reference guide to concepts, codes and organizations. England: John Wiley & Sons, Ltd. 9. Wim A. Van Der Stede. 2010. How To Become Sustainable. Accountants Today: The Malaysian Institute of Accountants, October. 10. GlaxoSmithKline plc. 2009. Our responsibility 2009 Report. http://www.gsk.com/responsibility/downloads/GSK-CR-2009-full.pdf (accessed December 8, 2010). 11. A controversial laboratory. 2001. http://news.bbc.co.uk/2/hi/uk_news/1123837.stm (accessed December 22, 2010) 12. Corporate social responsibility. 2010. http://en.wikipedia.org/wiki/Corporate_social_responsibility (accessed December 16, 2010) 13. Huntingdon Life Sciences. 2010. http://en.wikipedia.org/wiki/Huntingdon_Life_Sciences (accessed December 23, 2010)