Corporate Citizenship


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Corporate Citizenship

  1. 1. Corporate Citizenship Corporate Citizenship Professor Hector R Rodriguez School of Business Mount Ida College Business, Society & Environment
  2. 2. <ul><li>Society </li></ul><ul><ul><li>The Corporation and Its Stakeholders </li></ul></ul><ul><ul><li>People for the Ethical Treatment of Animals </li></ul></ul><ul><ul><li>Corporate Citizenship </li></ul></ul><ul><ul><li>The Social Responsibility of Business </li></ul></ul><ul><ul><li>The Shareholder Primacy Norm </li></ul></ul><ul><ul><li>CSR, Citizenship and Sustainability Reporting </li></ul></ul><ul><ul><li>Responsible Investing </li></ul></ul><ul><ul><li>The Community and the Corporation </li></ul></ul><ul><ul><li>Taxation and Corporate Citizenship </li></ul></ul><ul><ul><li>Corporate Philanthropy Programs </li></ul></ul><ul><ul><li>Employees and the Corporation </li></ul></ul><ul><ul><li>Managing a Diverse Workforce </li></ul></ul><ul><li>Environment </li></ul><ul><ul><li>A Balanced Look at Climate Change </li></ul></ul><ul><ul><li>Non-anthropogenic Causes of Climate Change </li></ul></ul><ul><ul><li>Sulfates, Urban Warming and Permafrost </li></ul></ul><ul><ul><li>Conventional Energy </li></ul></ul><ul><ul><li>The Kyoto Protocol </li></ul></ul><ul><ul><li>Green Building </li></ul></ul><ul><ul><li>Green Information Technology </li></ul></ul><ul><ul><li>Transportation, Electric Vehicles and the Environment </li></ul></ul><ul><ul><li>Geo-Engineering </li></ul></ul><ul><ul><li>Carbon Capture and Storage </li></ul></ul><ul><ul><li>Renewable Energy </li></ul></ul><ul><ul><li>Solid, Toxic and Hazardous Waste </li></ul></ul><ul><ul><li>Forests, Paper and Carbon Sinks </li></ul></ul><ul><ul><li>Life Cycle Analysis </li></ul></ul><ul><ul><li>Water Use and Management </li></ul></ul><ul><ul><li>Water Pollution </li></ul></ul>Course Map – Topics Covered in Course
  3. 3. <ul><li>Understand the basic meaning of Corporate Citizenship (CC) </li></ul><ul><li>Knowing when and where the idea of CC originated </li></ul><ul><li>Examining the critical arguments for and against CC </li></ul><ul><li>Investigating how business balances its responsibilities to multiple stakeholders, including its stockholders </li></ul>Key Learning Objectives For the purpose of this discussion, CC should be considered analogous to CSR
  4. 4. <ul><li>Current corporate design stems from the 19 th century, where natural resources and labor seemed to be unlimited. </li></ul><ul><li>CC aims to work through that perception to improve corporate performance on social and environmental concerns. </li></ul><ul><ul><li>It requires the corporation to assess the impact of its actions on people, their communities, and their environment </li></ul></ul><ul><ul><li>It requires companies to balance the benefits to be gained against the costs of achieving those benefits </li></ul></ul>Corporate Citizenship
  5. 5. <ul><li>These expectations are the result of: </li></ul><ul><ul><li>Essential function it performs for a variety of stakeholders </li></ul></ul><ul><ul><li>Immense influence it has over the lives of many of its stakeholders </li></ul></ul><ul><li>The world’s largest 200 companies account for more than 25% of the world’s economic activity </li></ul><ul><li>With power comes responsibility, concept for this coined the “Iron Law of Responsibility” </li></ul><ul><ul><li>In the long run, those who do not use power in ways society considers responsible will lose it. </li></ul></ul>CC and Power
  6. 6. <ul><li>Turn of the 20 th century corporations came under attack for being too big and powerful </li></ul><ul><li>Curbs on their power began with antitrust and consumer protection laws </li></ul><ul><li>Farsighted industrialists (e.g. Andrew Carnegie) started philanthropic efforts aimed at educational and cultural institutions </li></ul><ul><li>Bill and Melinda Gates and Warren Buffet are recent examples </li></ul>History of the CC Concept Carnegie Mellon University Pension Funds (TIAA-CREF) Carnegie Hall in NYC Carnegie Libraries Carnegie Institution in DC
  7. 7. <ul><li>Around the 1920’s, the charitable needs of communities began to shift from just being a purview of a small group of wealthy philanthropists to business firms themselves </li></ul><ul><li>Became more common for businesses to programs / charitable support for the needy </li></ul><ul><li>Broader concept of business as “trustees” who work in the public interest came to be known as “The Stewardship Principle” </li></ul>History of the CC Concept
  8. 8. Foundation Principles of CC
  9. 9. <ul><li>Economic and social goals come together in companies that practice enlightened self-interest </li></ul><ul><ul><li>Means firm leadership can see it is in the company’s self-interest in the long-term to provide true value to its customers, to help its employees grow and behave responsibly </li></ul></ul><ul><li>Scholars have debated the related question: Do socially responsible companies sacrifice profits by promoting the social good? </li></ul>Enlightened Self-Interest
  10. 10. <ul><li>Corporate executives and board members are constantly under pressure to produce value for owners / investors </li></ul><ul><li>Management’s central goal is to promote the interests of the entire company, not any single stakeholder group </li></ul><ul><li>Challenge is to put emphasis on long-term profits rather than focus on immediate returns </li></ul><ul><ul><li>An enlightened self-interest approach helps reconcile these challenges </li></ul></ul><ul><ul><li>It’s acceptable to incur short-term costs for socially responsible activities that benefit both the company and the public in the long-term </li></ul></ul>Stockholder Interests v. Other Stakeholder Interests
  11. 11. <ul><li>Despite strong support in the business community for CC, it is not universally accepted </li></ul><ul><li>2005 global study of corporate executives found 84% thought large corporations should “generate high returns to investors but balance this with contributions to the broader public good” </li></ul><ul><li>Common arguments, both for and against CC, on the next slide. </li></ul>The CC Debate
  12. 12. <ul><li>Pros </li></ul><ul><ul><li>Balances corporate power with responsibility </li></ul></ul><ul><ul><li>Discourages government regulation </li></ul></ul><ul><ul><li>Promotes long-term profits for business </li></ul></ul><ul><ul><li>Improves business value and reputation </li></ul></ul><ul><ul><li>Corrects social problems caused by business </li></ul></ul><ul><li>Cons </li></ul><ul><ul><li>Lowers economic efficiency and profits </li></ul></ul><ul><ul><li>Imposes unequal costs amongst competitors </li></ul></ul><ul><ul><li>Imposes hidden costs passed on to stakeholders </li></ul></ul><ul><ul><li>Requires skills business may lack </li></ul></ul><ul><ul><li>Places responsibility on business rather than individuals </li></ul></ul>The Pros and Cons of CC* *Continued on “The Social Responsibility of Business is to Increase Profits