Module 5 Corporate Governance

lBUMA 20033 (Good Governance and CSR): Module 5
Topic: Corporate Social Responsibility

References: Investopedia, Google, Scribd Files, Personal notes of the instructor from his
Bachelor and MBA degree
I. Contents
1. The Concept of Corporate Social Responsibility

2. The Four Categories of Corporate Social Responsibility
3. The 6 Benefits of CSR
4. The Integrative Models of CSR
5. Social Responsibility Towards Consumers, Workers, and Government
6. Social Responsibility Towards the Community and the Environment
II. What is Corporate Social Responsibility
 Corporate social responsibility (CSR) is a self-regulating business model that

helps a company be socially accountable to itself, its stakeholders, and the
public.
By practicing corporate social responsibility, also called corporate citizenship,

companies can be conscious of the kind of impact they are having on all
aspects of society, including economic, social, and environmental.
 Corporate social responsibility (CSR) refers to strategies that companies put

into action as part of corporate governance that are designed to ensure the
company’s operations are ethical and beneficial for society.
 Corporate Social Responsibility is a management concept whereby

companies integrate social and environmental concerns in their business
operations and interactions with their stakeholders.
CSR is generally understood as being the way through which a company

achieves a balance of economic, environmental and social imperatives
(“Triple-Bottom-Line- Approach”), while at the same time addressing the
expectations of shareholders and stakeholders.
III. The Four Corporate Social Responsibilities (According to Tim Stobierski,

Written Journal in Harvard School Online)
1. Environmental Responsibility
Environmental responsibility refers to the belief that organizations should

behave in as environmentally friendly a way as possible. It’s one of the most
common forms of corporate social responsibility. Some companies use the
term “environmental stewardship” to refer to such initiatives.
Companies that seek to embrace environmental responsibility can do so in

several ways:
Reducing pollution, greenhouse gas emissions, the use of single-use plastics,
water consumption, and general waste
Increasing reliance on renewable energy, sustainable resources, and recycled
or partially recycled materials
Offsetting negative environmental impact; for example, by planting trees,
funding research, and donating to related causes
2. Ethical Responsibility
Ethical responsibility is concerned with ensuring an organization is

operating in a fair and ethical manner. Organizations that embrace ethical
responsibility aim to achieve fair treatment of all stakeholders, including
leadership, investors, employees, suppliers, and customers.
Firms can embrace ethical responsibility in different ways. For example, a

business might set its own, higher minimum wage if the one mandated by the
state or federal government doesn’t constitute a “livable wage.” Likewise, a
business might require that products, ingredients, materials, or components be
sourced according to free trade standards. In this regard, many firms have
processes to ensure they’re not purchasing products resulting from slavery or
child labor.
3. Philanthropic Responsibility
Philanthropic responsibility refers to a business’s aim to actively make the

world and society a better place.
In addition to acting as ethically and environmentally friendly as possible,

organizations driven by philanthropic responsibility often dedicate a portion of
their earnings. While many firms donate to charities and nonprofits that align
with their guiding missions, others donate to worthy causes that don’t directly
relate to their business. Others go so far as to create their own charitable trust
or organization to give back.
4. Economic Responsibility
Economic responsibility is the practice of a firm backing all of its financial

decisions in its commitment to do good in the areas listed above. The end
goal is not to simply maximize profits, but positively impact the environment,
people, and society.
IV. BUSINESS BENEFITS OF CSR (According to

https://corporatefinanceinstitute.com/resources/knowledge/other/corporate-social-
responsibility-csr/)
1. Stronger brand image, recognition, and reputation
 CSR adds value to firms by establishing and maintaining a good

corporate reputation and/or brand equity.
2. Increased customer loyalty and sales
 Customers of a firm that practices CSR feel that they are helping
the firm support good causes.
3. Operational cost savings
 Investing in operational efficiencies results in operational cost

savings as well as reduced environmental impact.
4. Retaining key and talented employees
 Employees often stay longer and are more committed to their firm
knowing that they are working for a business that practices CSR.
5. Easier access to funding
 Many investors are more willing to support a business that

practices CSR.
6. Reduced regulatory burden
 Strong relationships with regulatory bodies can help to reduce a

firm’s regulatory burden.
V. INTEGRATIVE MODEL OF CORPORATE SOCIAL RESPONSIBILITY
 Common debate in Corporate Social Responsibility
Should business be expected to sacrifice profits for social ends?
 TWO TYPES OF BUSINESS IN TERMS OF PROFIT
1. NON-PROFITS BUSINESS – NGOs, foundations, etc.

2. PROFIT-CENTERED BUSINESS – focus in generating profit.
 TWO IMPORTANT CONSIDERATION IN CSR
1. SOCIAL ENTREPRENEURSHIP - the process of recognizing and

resourcefully pursuing opportunities to create social value.
2. SUSTAINABILITY - focuses on meeting the needs of the present without

compromising the ability of future generations to meet their needs.
 INTEGRATIVE MODEL OF CSR
Firms bring social goals into the core of their business model and fully
integrate economic and social goals.
3 INTEGRATIVE MODELS OF CSR
SUMMARY OF THE 3 INTEGRATIVE MODELS OF CSR

 THE PYRAMID OF CSR
o A leading model of CSR is Carroll's four-part pyramid.
o The CSR pyramid was framed to embrace the entire spectrum of society's
expectations of business responsibilities and define them in terms of
categories.
o According to the model four kinds of social responsibilities constitute total

CSR: economic (“make profit”), legal (“obey the law”), ethical (“be ethical”),
and philanthropic (“be a good corporate citizen”).
o According to Carroll, the use of a pyramid to depict the conceptual model of

CSR is intended “to portray that the total CSR of business comprises distinct
components that, taken together, constitute the whole.”
 THE INTERSECTING CIRCLES OF MODEL OF CSR

o The intersecting circles (IC) model of CSR contrasts with the pyramid model
in two main aspects:
(1) It recognizes the possibility of interrelationships among

CSR domains; and
(2) Rejects the hierarchical order of importance.
 THE CONCENTRIC-CIRCLE MODEL OF CSR
o The concentric-circle (CON) model is similar to the pyramid in that it views

the economic role of business as its core social responsibility and similar to
the IC model in that it emphasizes the interrelationships among the different
corporate social responsibilities.
 HOW TO JUDGE THE SUCCESS OF A BUSINESS?
o The success of the business must be judged not only against financial bottom
line of profitability, but also against the ecological and social bottom lines of
sustainability.
 SUSTAINABLE VS. UNSUSTAINABLE
o A business or industry that is financially profitable, but the uses of resources

(e.g. fossil fuels) at unsustainable rates and creates wastes (e.g. carbon
dioxide) at rates that exceed the Earth’s capacity to absorb them, is a business
industry that is failing its fundamental social responsibility.
VI. Social Responsibility Towards Consumers, Workers, Government, and

Environment
 The responsibility towards consumers that Corporate Social Responsibility includes

is as follows:
 To provide goods of standard quality

 To charge fair prices
 To provide prompt and courteous after sale services
 To handle consumer complaints and grievances quickly
 To avoid unfair trade practices like adulteration, black marketing
and hoarding.
 The responsibility towards workers that Corporate Social Responsibility includes is

as follows:
 To provide fair and regular wages

 To provide good working conditions
 To ensure welfare facilities like housing, medical, social security,
etc.
 To provide with opportunities for growth and development
 To adopt objective (fair) performance appraisal system.
 The responsibility towards the Government that Corporate Social Responsibility

includes is as follows:
 To abide by the laws of the land

 To pay fares and duties regularly
 To refrain from corrupting public servants.
 The responsibility towards the Environment that Corporate Social Responsibility

includes is as follows:
 Reduce waste
 Reduce, reuse
 Recycle
 Compost
 and be a responsible consumer.
 Conserve energy - Turn off lights and computers, install energy-
saving devices, or wash laundry in cold water.
Assessment:
Related to LAS #1, Question 1
1. As a future business professionals, think of any business that you would like to
venture in the future.
2. Provide the name of your business and the products or services of your business.
3. As a responsible business owner who values the concept of corporate social

responsibility, how are you going to fulfill your:
a. Environmental Responsibilities
b. Ethical Responsibilities
c. Philanthropic Responsibilities
d. Economic Responsibilities
in your business.

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lBUMA 20033 (Good Governance and CSR): Module 5

Topic: Corporate Social Responsibility

1. The Concept of Corporate Social Responsibility

II. What is Corporate Social Responsibility

 Corporate social responsibility (CSR) is a self-regulating business model that

By practicing corporate social responsibility, also called corporate citizenship,

 Corporate social responsibility (CSR) refers to strategies that companies put

 Corporate Social Responsibility is a management concept whereby

CSR is generally understood as being the way through which a company

III. The Four Corporate Social Responsibilities (According to Tim Stobierski,

Environmental responsibility refers to the belief that organizations should

Companies that seek to embrace environmental responsibility can do so in

Ethical responsibility is concerned with ensuring an organization is

Firms can embrace ethical responsibility in different ways. For example, a

Philanthropic responsibility refers to a business’s aim to actively make the

In addition to acting as ethically and environmentally friendly as possible,

Economic responsibility is the practice of a firm backing all of its financial

IV. BUSINESS BENEFITS OF CSR (According to

1. Stronger brand image, recognition, and reputation

 CSR adds value to firms by establishing and maintaining a good

3. Operational cost savings

 Investing in operational efficiencies results in operational cost

4. Retaining key and talented employees

5. Easier access to funding

 Many investors are more willing to support a business that

6. Reduced regulatory burden

 Strong relationships with regulatory bodies can help to reduce a

V. INTEGRATIVE MODEL OF CORPORATE SOCIAL RESPONSIBILITY

 Common debate in Corporate Social Responsibility

Should business be expected to sacrifice profits for social ends?

 TWO TYPES OF BUSINESS IN TERMS OF PROFIT

1. NON-PROFITS BUSINESS – NGOs, foundations, etc.

 TWO IMPORTANT CONSIDERATION IN CSR

1. SOCIAL ENTREPRENEURSHIP - the process of recognizing and

2. SUSTAINABILITY - focuses on meeting the needs of the present without

 INTEGRATIVE MODEL OF CSR

SUMMARY OF THE 3 INTEGRATIVE MODELS OF CSR

o A leading model of CSR is Carroll's four-part pyramid.

o According to the model four kinds of social responsibilities constitute total

o According to Carroll, the use of a pyramid to depict the conceptual model of

 THE INTERSECTING CIRCLES OF MODEL OF CSR

(1) It recognizes the possibility of interrelationships among

(2) Rejects the hierarchical order of importance.

 THE CONCENTRIC-CIRCLE MODEL OF CSR

o The concentric-circle (CON) model is similar to the pyramid in that it views

 HOW TO JUDGE THE SUCCESS OF A BUSINESS?

 SUSTAINABLE VS. UNSUSTAINABLE

o A business or industry that is financially profitable, but the uses of resources

VI. Social Responsibility Towards Consumers, Workers, Government, and

 The responsibility towards consumers that Corporate Social Responsibility includes

 To provide goods of standard quality

 The responsibility towards workers that Corporate Social Responsibility includes is

 To provide fair and regular wages

 The responsibility towards the Government that Corporate Social Responsibility

 To abide by the laws of the land

 The responsibility towards the Environment that Corporate Social Responsibility

3. As a responsible business owner who values the concept of corporate social

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