Lec.

6 – Corporate Citizenship & Accountability

Ethics & Corporate Governance
PGDM WeSchool – Trim2
Pratibha Pai
Objectives Of This Module
• To understand what is Corporate Citizenship
• To see why power must always go hand in hand with responsibility
• To be able to connect with the ripple effects of c.citizenship
• To understand how corporate citizenship can provide a framework for
accountability
• How to build organizations that last
• How to be ‘good at the very core’
• To see the value in ‘being good’
What is Corporate Citizenship

• “The social role of business”

• “At a minimum, corporate citizenship means adherence to laws,
regulations, and accepted business practices in the places where a
company operates. A more expansive interpretation is the conduct of
business in ways that reflect proactive, responsible behaviour in
business and in dealings with all constituents and with respect to
communities, society, and natural environment more generally”
Corporate Citizenship
Refers to businesses acting responsibly toward their stakeholders
Involves :
• Proactively addressing business & society issues
• Building stakeholder partnerships
• Discovering business opportunities through social strategic goals
• Transforming a concern for financial performance into a vision of
corporate financial & social performance
Why is Corporate Citizenship important
U.N. & Corporate Citizenship

•The United Nations in its initiative under the leadership of Kofi

Annan sees the world business sector as a citizen of the world and
indeed a veritable tool/solution to the world problems rather than a
cause

•Global Compact published in 2000 provides the requisite

information on the principle, code, and practice of good corporate
citizenship
Power & CC

• The World’s largest 200 companies account for more than 25 percent
of the world’s economic activity
• With power comes responsibility, concept for this coined “ Iron Law of
Responsibility”
• In the long run, those who do not use power in ways society
considers responsible, will lose it
• Requires companies to balance the benefits to be gained against the
costs of achieving those benefits
Ripple Effects of Corporate Citizenship
Interpretation of CC in Practice
• Ford: “Corporate citizenship has become an integral part of every
decision and action we take. We believe corporate citizenship is
demonstrated in who we are as a company, how we conduct our
business and how we take care of our employees, as well as in how we
interact with the world at large.”
• Nike: “Our vision is to be an innovative and inspirational global citizen
in a world where our company participates. Every day we drive
responsible business practices that contribute to profitable and
sustainable growth.”
• Nokia: “Our goal is to be a good corporate citizen wherever we
operate, as a responsible and contributing member of society.”
Siemens & CC
• “We are at home in 190 countries, and in all of them we form part of
the social fabric – as an employer and client, as an investor, and as a
supplier of products, solutions and services. As a good corporate
citizen, we play an active role in sustaining society’s development
while safeguarding our future as a company. We take our
responsibilities toward society seriously, engaging in extensive
international education, community aid, as well as arts and culture.
These are implemented on a continuous basis in many different ways
through donations, partnerships, projects in cooperation with other
organizations and company foundations.”
Challenges of Globalization
Examples of activities in which Multinational Corporations are involved
because of globalization :
• Public wealth
• Education
• Social security
• Protection of human rights
• Define ethics codes
• Protect the natural environment
• Engage in self-regulation to fill global gaps in legal regulation and moral
orientation
Scherer & Palazzo, 2011
Firm as a Political Actor
• Some business firms have begun to assume a state-like role
• Companies fulfil the functions of protecting, enabling and
implementing citizenship rights
• Often occurs in cases where the state system fails (e.g. when the
state has not yet implemented basic citizenship rights)
• Business firms have become important political actors in the global
society
From National to Global Governance
• Process of Globalization is changing the context in which CC/CSR
research should take place: domestic to global
• Regulatory gap: Governance initiatives launched on the global,
national and local level by private and public actors
• Decentralized deliberation: NGOs/Companies/Workers
CC/CSR as Self Regulation

• From hard law to soft law

• Business firms engage in processes of self-regulation
through soft law where the state is unable or
unwilling to regulate
From Liability to Connectedness
• Legal liability: responsibility just for the immediate acts

• Social Connectedness model: actors bear responsibility for problems

of structural injustice from which they themselves benefit
Principles of Corporate Citizenship
ETHICAL BUSINESS BEHAVIOR
• Engage in fair & honest business practices in its relationships with stake
holders
• Set high standards of behavior for all employees
• Exercise ethical oversight of the executives & board

STAKEHOLDER COMMITMENT
• Strives to manage the company for benefit of all stakeholders
• Initiates & engages in genuine dialogue with stakeholders
• Values & implements dialogues
Principles of Corporate Citizenship
COMMUNITY
• Fosters a reciprocal relationship between the company & community
• Invests in the community in which it operates

CONSUMERS
• Respects rights of consumers
• Offers quality products & services
• Provides information that is truthful & useful
Principles of Corporate Citizenship
EMPLOYEES
• Provides a family-friendly work environment
• Engages in responsible Human Resource Management
• Provides an equitable reward & wage system
• Engages in open & flexible communication with
employees
• Invests in employee development
INVESTORS
• Strives for a competitive Return on Investment
Principles of Corporate Citizenship
SUPPLIERS
• Engages in fair trading practices with suppliers

ENVIRONMENTAL COMMITMENT
• Demonstrates a commitment to environment
• Demonstrates a commitment to sustainable development
GLOBAL CORPORATE CITIZENSHIP
“ The process of identifying, analyzing, and
responding to the company’s social, political &
economic responsibility as defined through law and
public policy, shareholder expectations, and
voluntary acts flowing from corporate values &
business strategies”
Framework for Corporate Citizenship

• Concentrate action programs on limited objectives

• Concentrate action programs related to the firms products / services
• Begin action programs close to home
• Facilitate employee action

CORPORATE CITIZENSHIP MUST BECOME A PART OF THE COMPANY &

ITS STANDARD OPERATING PROCEDURES
Corporate Accountability
• Corporate accountability is the performance of a publicly traded
company in non-financial areas such as social responsibility,
sustainability and environmental performance.
Corporate accountability espouses that financial performance should
not be a company's only important goal and that shareholders are not
the only people a company must be responsible to; stakeholders such
as employees and community members also require accountability.
Corporate Social Performance Audits
SOCIAL PERFORMANCE AUDIT : A systematic evaluation of an
organizations social & ethical performance, examining the social &
ethical impact of a business against 2 benchmarks – i) Company’s own
mission statement ii) behavior of other organizations and social
norms.
TBL : When companies report to shareholders not just financial results
but also their environmental & social impacts.
Built To Last
Discover Value

“Let us perfect the means, the end will

take care of itself”

… Swami Vivekananda
Discover The Value Of Your Work

Your own Your company’s

contribution to contribution to
the organization economy / society
Discover your purpose
The Formula of Why

Why
How
What

Simon Sinek:The Golden Circle

Value Creation

Money is a function of value creation.

The more value you create for other people,
the higher the sales of your organization.

…Robin Sharma
There is a battle of two wolves inside
us…

The wolf that wins is the one you feed.

Aligned Values…a video
When personal values & organizational
values align…

Exponential value is realized

 Core Challenge : 1
Open the door to your core…

1 2
Would it be What do you
dusty & look think you would
forgotten, immediately
or would it be see inside?
clean, fresh &
relevant?
There is something of a miracle that
unfolds …

When we reconnect to the goodness

of our core
Paid With Gratitude… a video
 Core Challenge : 2
1 2
What Values Where are you
do you stand currently
for? vulnerable to
falling?
We don’t run away from our values
we drift away, and one day…

we wake up in a place
we would never have chosen!
 Core Challenge : 3

1 2
What red balls Who are the
are you ‘lifeguards’ who
missing or can help you
ignoring? ‘catch your drift’?
 Values drive behavior.
Values are about who you are. They are
brought to life by what you do.
Core values create boundaries

Boundaries create focus

Focus minimizes drift

 Core Challenge : 4

1
What behaviors are currently driving
definition of your values rather than
vice versa?
 The value of values begins to
exponentially increase …

when we are living them consciously,

intentionally, concretely
What lies at your Core
Center Yourself [ Seeds at your core – Honesty,
Humility…]
Own Your Work [Commitment, Responsibility…]
Renew Your Spirit [Optimism, Humor…]
Engage Your Potential [Service, Forgiveness…]
 Core Challenge : 5
1 2
How How consciously,
consciously, intentionally
Intentionally & & concretely are
concretely are you connected to
you connected the values of your
to your values? organization?
 As you slowly, but surely,
commit to living your values,
it will preserve the
goodness of your core
Power Of Positive Doing…a video
Value Quotient

Be Positive. Be Inspired. Serve Others.