Corporate Social Responsibility

1. Corporate Social Responsibility LECTURE 14: Corporate Social Responsibility MGT 610

2. Corporate Social Responsibility Chapter 4Roles of Various Institutions in CSR

3. Corporate Social Responsibility LEARNING OBJECTIVES • Understand that CSR is integral to the development process • Understand and the role of the major institutions of the civil society in CSR • Create and awareness of certain institutional initiatives in progress and the need for further contribution in the field

4. Corporate Social Responsibility • Government has to ensure distributive justice • It has to be based on the absence of specific information • Advantage or disadvantaged based on social class and fortune • Government should ensure • Markets remain competitive • Equal opportunity • Resources are utilized efficiently • Outcome of business is distributed • Social capital has to be enhanced by developing human capital • Corruption has to be rooted out to ensure true competitiveness • The role of the government is to provide guidance to business about CSR • Unethical activities thrives best in Chaos • Expectations regarding welfare have to be clear with a proper chain of accountability laid out for monitoring

5. Corporate Social Responsibility • The role of the government is to provide clear guidance to companies regarding CSR • Government can insist on internalizing the social and environment cost • Business can pressurize the government for better mechanism of distribution of wealth (result in more purchasing power) • In a globalized world • The business represents the nation and the governance structure • In the interest of the government that domestic firm adhere to the norms of responsible social behavior • A company misadventure can compromise a country reputation

6. Corporate Social Responsibility • A two pronged approach has to be adopted by the government • Mandatory disclosure of the activities impacting society • Educate people to understand such information • Result an environment of informed choices i.e. just and fair decisions • Government should enforce legislation that should internalize their externalities • This demands that companies engage in socially relevant activities that are not profitable, thus do not meet the market test, monitoring may become a big challenge • Companies can falsify information if monitoring is not strict or or the government officials join hands with companies • While monitoring government should ensure that involvement does not become interference and legal coercion

7. Corporate Social Responsibility • Conclusion • Broad based social and moral consensus in the global arena is the need for effective CSR • Sullivan principle • Given by Reverend Leon Sullivan, member board of General Motors in 1977 • Persuade US companies with investment in South Africa not to participate in the negative practices • Gained popularity and was relaunched in 1999 as a Global Sullivan principle to foster human dignity • This refers to support for universal human rights, equal opportunity, respect for freedom of association, levels of employee compensation, training, health, safety, sustainable development, working in partnership to improve quality of life • This and other UN institutions principles can become yard sticks for the local governments to measure and evaluate their CSR activities