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  • AmbiguousAddressing social problems – Challenges Milton Friedman’s notion that the responsibility of business is to maximize profit for shareholders.Acknowledge that there are some activities that a firm would undertake in business as usual ie. reducing waste production, updating old technologyBeyond compliance, beyond regulationWhat companies do to make a positive contribution to society above and beyond that which constitutes their legal obligations (Blowfield & Murray, 2011)CSR has become necessary, main argument is that it lends competitive advantage to a firm by appealing to the growing number of environmentally and socially conscious consumers and investors
  • in the 1970s when CSR emerged, it was a form of corporate philanthropy not linked to core business practicesNow it is internalizing externalities that arise from core business practicesNow the focus is on profitability, idea that being socially responsible leads to competitive advantage
  • Doesn’t pay if it’s perceived as greenwash by publicCompanies can still be profitable without being ethicalAssumption that CSR is about profitCustomers wont’ pay more for eco-friendly products: http://www.bizreport.com/2011/09/nielsen-20-of-consumers-will-pay-more-for-eco-friendly-produ.html
  • UK government – public purchasing policyToyota – PriusCiba Geigy dye – reduced firms’ wastewater treatment costs
  • Anythird party shouldremainaware of the limits of such a tool.

Csr presentation edit 2 Csr presentation edit 2 Presentation Transcript

  • Does it pay to be environmentally/socially responsible? If so, underwhat conditions does it pay? Clara Melot Jennifer Steeves
  • Outline Definition of CSR The case against CSR The case for CSR  Tangible vs intangible benefits  Short term vs long term When does CSR pay?  Opportunities for raising revenues  Opportunities for decreasing costs Conclusion
  • Definition of CSR CSR = Corporate Social Responsibility Activities that “represent firms’ efforts to do more to address a wide variety of social problems than they would have done in the course of their normal pursuit of profits” (Vogel, 2005:4) Beyond the law Accountability to stakeholders
  • Old vs. New CSR Doing good to do good vs. doing good to do well (Vogel) Zero-sum to win-win (Fiorino) CSR sells, but does it pay?
  • The case against CSR Greenwash Costly Customers don’t really care Socially responsible funds don’t outperform other funds
  • Bottom line? Company’s main responsibility is to maximize profit for shareholders CSR doesn’t guarantee payoff
  • The case for CSR Intuitively, CSR should not pay Porter Hypothesis (applied to VEPs) allows us to draw a different conclusion.
  • Business as usual Good business relies on good practices because trade is based on trust. Part of CSR is achieved through efficient business
  • Tangible and intangible short term benefits CSR activities and outcomes can pay Why separate activities and outcomes? tangible= accountancy view intangible = economic benefits which can betricky to value.
  • Tangible and intangible long term benefits CSR activities can pay economically speaking.  Through tangible and intangible benefits (marketing assets) …under certain conditions
  • Relationship betweenenvironmental and economic performance Lankoski, 2008
  • When does CSR pay?Opportunities for raising revenues
  • Better access to certain markets IF said firm sells to the public sector or is in a BtoB model. United Kingdom:Public procurement policy
  • Differentiating products IF there is : - credible information about the product’s added value - Consumer Willingness To Pay - Barrier to imitation Toyota was the first company to develop an accessible series model forhybrid technology
  • Selling pollution control technologies More likely if the company already has R&D facilities. Ciba Specialty Chemicals Co. And the Cibacron Ls Pattern
  • When does CSR Pay? Opportunities for reducing costs
  • Risk management & stakeholder relations IF firms are in highly regulated and publicly scrutinized industries APP
  • Cost of materials, energy and services IF firms:  Have flexible production process  Are in highly competitive industries  Are in industries where MBIs were implemented  Already have R&D facilitiesDow Chemicals’Waste ReductionAlways Pays (WRAP)
  • Cost of capital IF firms have shares exchanged on stock marketsExxon Mobil’s share price drop after Exxon Valdez oil spill
  • Cost of labour IF:  Firm’s emissions affect workers’ health  Firms seek to attract young, well-educated employees  Firms are located in areas with strong environmental values97% of MBAs willing to forgo average of 14% expectedincome to work for firm with better CSR reputation
  • ConclusionCSR is not a panacea but a tool which is efficient under certain conditions
  • Strategic implication What contextual elements should business policy makers consider before implementing CSR strategies?
  • References Ambec, S. & Lanoie, P. (2008). Does it pay to be green? A systematic overview. The Academy of Management Perspectives 22 (4), pp.45-62 Fiorino, D. J. (2006). The new environmental regulation. London: MIT Press. Lankoski, L. (2007). Corporate responsibility activities and economic performance: A theory of why and how they are connected. Business Strategy and the Environment 17 (8), pp.536-547 Vogel, D. (2005). The market for virtue the potential and limits of corporate social responsibility. Brookings Institution, Washington, D.C.