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1 CORPORATE SOCIAL RESPONSIBILITY Corporate Social Responsibility (CSR) is becoming an increasingly important acti vity to businesses nationally and

internationally. As globalisation accelerates and larg e corporations serve as global providers, these corporations have progressively re cognised the benefits of providing CSR programs in their various locations. CSR activities ar e now being undertaken throughout the globe. 1.1 What is corporate social responsibility? The term is often used interchangeably for other terms such as Corporate Citizen ship and is also linked to the concept of Triple Bottom Line Reporting (TBL), which is used as a framework for measuring an organisations performance against economic, social and environmental parameters. The rationale for CSR has been articulated in a number of ways. In essence it is about building sustainable businesses, which need healthy economies, markets and commu nities. The key drivers for CSR are1: Enlightened self-interest - creating a synergy of ethics, a cohesive society and a sustainable global economy where markets, labour and communities are able to function well together. Social investment - contributing to physical infrastructure and social capital i s increasingly seen as a necessary part of doing business. Transparency and trust - business has low ratings of trust in public perception. There is increasing expectation that companies will be more open, more accountab le and be prepared to report publicly on their performance in social and environmen tal arenas Increased public expectations of business - globally companies are expected to do more than merely provide jobs and contribute to the economy through taxes and employment. is CSR the same as business ethics? There is clearly an overlap between CSR and business ethics Both concepts concern values, objectives and decision based on something than th e pursuit of profits And socially responsible firms must act ethically The difference is that ethics concern individual actions which can be assessed a s right or wrong by reference to moral principles. CSR is about the organisations obligations to all stakeholders and not just share holders. There are four dimensions of corporate responsibility Economic - responsibility to earn profit for owners Legal - responsibility to comply with the law (societys codification of right and wrong) Ethical - not acting just for profit but doing what is right, just and fair Voluntary and philanthropic - promoting human welfare and goodwill Being a good corporate citizen contributing to the community and the quality of life 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 s takeholders. Wallace and Pekel explain that attention to business ethics is crit

ical during times of fundamental change -- times much like those faced now by bu sinesses, both nonprofit or for-profit. In times of fundamental change, values t hat 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 nu merous 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," et c.), and so these people don t take business ethics seriously. For many of us, t hese principles of the obvious can go right out the door during times of stress. Consequently, business ethics can be strong preventative medicine. Anyway, ther e are many other benefits of managing ethics in the workplace. These benefits ar e explained later in this document. (Extracted from Complete (Practical) Guide t o Managing Ethics in the Workplace.) Corporate Governance Corporate governance refers to the broad range of policies and practices that st ockholders, executive managers, and boards of directors use to (1) manage themse lves and (2) fulfill their responsibilities to investors and other stakeholders. Over the past decade, corporate governance has been the subject of increasing s takeholder attention and scrutiny. These concerns have given rise to a powerful shareholder movement. Shareholder activists, composed primarily of large multi-b illion-dollar pension funds, religious and socially responsible investment group s, and other institutional investors, are now using a variety of vehicles to inf luence board behavior, including creating corporate governance standards of exce llence and filing shareholder resolutions. These investors are concerned with su ch topics as board diversity, independence, compensation, and accountability, as well as a broad range of social issues, e.g. employment ethics practices, envir onmental policies, and community involvement. Corporate Responsibility Corporate responsibility refers to fulfilling the responsibilities or obligation s that a company has toward its stakeholders. When examining a particular corpor ate practice, like profit versus environmental protection, corporate responsibil ity can help distinguish between a stakeholder expectation and a corporate oblig ation, i.e., is the company obligated to provide absolute environmental protecti on at all costs or is it obligated to maximize profits for its investors at the cost of damaging the environment? Corporate Social Responsibility (CSR) CSR can be understood in terms of corporate responsibility, but with greater str ess upon the obligations a company has to the community, particularly with respe ct to charitable activities and environmental stewardship. Corporate and social responsibility is sometimes described as being a tacit contract between business and a community, whereby the community permits the business to operate within i ts jurisdiction to obtain jobs for residents and revenue through taxation. Addit ionally, the community expects the business to preserve the environment and to m ake the community a better place to live and to work through charitable activiti es. Business for Social Responsibility (2001) speaks of CSR in the following terms: S ocially responsible business practices strengthen corporate accountability, resp ecting ethical values in the interests of all stakeholders. Responsible business practices respect and preserve the natural environment. Helping to improve the quality and opportunities of life, they empower people and invest in communities where a business operates. Currently, European companies seem to be adopting offices of corporate environme

ntal and social responsibility more often than U.S. companies. It should be note d that some business ethics organizations believe that corporate responsibility encompasses all responsibilities that a company has to all of its stakeholders, which includes ethical, social and environmental responsibilities (J. Noterdaeme , personal communication, 2004). Corporate Sustainability PricewaterhouseCoopers defines corporate sustainability as aligning an organizat ions products and services with stakeholder expectations, thereby adding economic , environmental and social value. The Global Reporting Initiative (GRI), that gr ew out of environmental work by the Coalition for Environmentally Responsible Ec onomies (CERES) and the United Nations Environment Programme (UNEP), produced, i n June 2000, the GRI Sustainability Reporting Guidelines that cover economic and social performance as well as the more traditional environmental ones (Centre for Social Markets, 2004).1 Methodology The research was undertaken to test the proposition that the ethics, governance and CSR practices of corporations based in the United States differ dramatically from corporations 1 The Global Reporting Initiative (GRI) is a multi-stakeholder process and indep endent institution whose mission is to develop and disseminate globally sapplica ble Sustainability Reporting Guidelines. These Guidelines are for voluntary use by organizations for reporting on the economic, environmental, and social dimens ions of their activities, products, and services. The GRI incorporates the activ e participation of representatives from business, accountancy, investment, envir onmental, human rights, research and labor organizations from around the world. 8

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