CORPORATE SOCIAL RESPONSIBILITY

Competencies:

 analytical and critical abilities

 IT research skills
 business writing skills
 awareness of the social responsibility of
business in today’s global economy
 sensitization to the pressing issues where business can contribute
 understanding the political implications of doing business

READING AND SPEAKING (1)

PRE-READING

1. Comment on the quotes. What pressing problems do they address?

“ …the expanding economy is a part of the earth's ecosystem. The challenge is to redesign the
materials economy so that it is compatible with nature. The throwaway economy that has been
evolving over the last half-century is an aberration, now itself headed for the junk heap of
history.”
(Lester R. Brown, Earth Policy Institute)
“Corporations are not responsible for the entire world’s problem, nor do they have the
resources to solve them all. As businesses strive to build their brands and differentiate
themselves from the competition, practicing good corporate citizenship is one healthy and wise
strategy that businesses differentiate from the pack. From a marketing and communication
perspective, corporate citizenship is not just good but it is good for business.”
(from “Strategy & society” by Porter and Kramer)

2. Study the chart in class and say how you understand CSR.
 The quality of management as an
indicator of likely future performance -
both in terms of people and processes
(the inner circle). The nature of, and
quantity of impact on society in the
various areas (the outer circle)

Outside stakeholders are taking an

increasing interest in the activity of the
company. Most look to the outer circle -
what the company has actually done,
good or bad, in terms of its products and
services, in terms of its impact on the
environment and on local
communities, or in how it treats and
develops its workforce.

mallen@mallenbaker.net

WHILE-READING

1. Read the text. Be ready to explain the highlighted words.

Corporate1 Social Responsibility: HR's Leadership Role

In a global economy, increasingly organizations have a responsibility to facilitate,
demonstrate and promote corporate social responsibility (CSR). Long-term sustainability
demands that organizations change their mindset and rethink their business goals and objectives
from solely focusing on making a profit to going an extra mile to corporate citizenship. Today,
the impact of CSR is beginning to be seen in communities throughout the world--from human
rights and labor practices to health care and the environment. At home and abroad, HR plays a
critical role--that of leading and educating their firms regarding the importance of CSR while at
the same time strategically implementing sound HR management practices that support the
company's business and CSR goals. "More and more companies are accepting corporate
citizenship as a new strategic and managerial purpose requiring their attention. Once seen as a
purely philanthropic activity--a source of general goodwill, with no bottom-line consequence –
citizenship is moving from the margins of concern to the center at leading companies."
Today, there are many references to corporate social responsibility (CSR), sometimes
referred to as corporate citizenship, in our workplaces, in the media, in the government, in our
communities. While there is no agreed-upon definition, the World Business Council for
1
A corporation is a legal entity (distinct from a natural person) that often has similar rights in law to those of a
natural person. Civil law systems may refer to corporations as "moral persons." In colloquial usage, "corporation"
usually refers to a commercial entity set up in accordance with a governmental framework. The word "corporation"
derives from the Latin corpus (body), representing a "body of people"; that is, a group of people authorized to act as
an individual (Oxford English Dictionary).
Sustainable Development defines CSR as the business commitment and contribution to the
quality of life of employees, their families and the local community and society overall to support
sustainable economic development. Simply put, the business case for CSR -- establishing a
positive company reputation and brand in the public eye through good work that yields a
competitive edge while at the same time contributing to others--demands that organizations shift
from solely focusing on making a profit to including financial, environmental and social
responsibility in their core business strategies. Despite what the phrase corporate social
responsibility suggests, the concept is not restricted to corporations but rather is intended for
most types of organizations, such as associations, labor unions, organizations that serve the
community for scientific, educational, artistic, public health or charitable purposes, and
governmental agencies.
In the late 1990s, CSR began to gain momentum as pressure from consumers, the
media, activists and various public organizations demanded that companies contribute to society.
In large part, the increasing focus on CSR has been fueled by a number of events in recent years,
such as the highly publicized financial scandals of Enron and WorldCom, alleged sweatshop
labor by retail clothing and sports shoe manufacturers and the alleged "under-the-table" deals
that companies such as Halliburton2 have received.
Now, reputation, brand, integrity and trust are increasingly considered important
measures of corporate social responsibility, operating the core business in a socially responsible
way and business giving back to society. CSR becomes an integral part of the wealth creation
process - which if managed properly should enhance the competitiveness of business and
maximise the value of wealth creation to society.
As the concept of CSR becomes more widely accepted and integrated in business there
are basically three big "generations" of CSR in varying stages of sophistication. The first
generation has demonstrated that companies can contribute to society without risking
commercial success. Today, the second generation is developing more fully as CSR gradually
becomes an integral part of companies' long-term business strategies. Finally, the third
generation addresses significant societal issues, such as poverty and cleanup of the environment.
HR professionals can take on leadership roles that can contribute to CSR initiatives in their
organizations.

2
Halliburton Energy Services (NYSE: HAL) is a United States-based multinational corporation with operations in
more than 120 countries. It has been at the forefront of several media and political controversies in relation to its
work for the U.S. Government, its political ties, and its corporate ethics. Halliburton has been the “fastest growing
contractor.” Under the Bush administration, federal spending to Halliburton “increased over 600% between 2000
and 2005.” The Government Accountability Office has recently found out that the government wasted at least $2.7
billion to Halliburton on “over priced contracts or undocumented costs” (lucrative oil contracts in Iraq ).

(For more information, visit RobertBryce.com)

 (by Nancy R. Lockwood. HR Magazine, December 2006 )

2. Paraphrase or explain the following

 “from solely focusing on making a profit to going an extra mile to corporate citizenship”;

 sound HR management practices;

 “Once seen as a purely philanthropic activity--a source of general goodwill, with no

bottom-line consequence – citizenship is moving from the margins of concern to the center
at leading companies";

 “CSR began to gain momentum”;

 "under-the-table" deals;

 “good work yields a competitive edge”;

 “three big "generations" of CSR in varying stages of sophistication”.

3. Read the text again and find English synonyms for the following.

1. сделать все возможное; 2. предел погрешности, 3. решающий фактор,

4. оптимальный метод, передовая практика; 5. умонастроение, мировоззрение;
6. набирать силу; 7. давать конкурентное преимущество; 8. незаконные сделки.

4. Discuss the questions below.

 What range of problems does CSR address?

 How has the notion of CSR evolved lately?
 What are the three generations and benchmarks of CSR initiatives?
 How can HR specialists be instrumental in promoting CSR in their companies?
 Illustrate your viewpoint by providing some examples.

READING AND SPEAKING (2)

PRE-READING

1. Discuss the questions below.

 How does the tough competition on the global market affect business today?
 What is the impact of business on shareholders, employees, customers, suppliers and
communities at large?
 What do you know about the companies involved in high profile cases over the following
issues:

 financial fraud  workplace practices

 environmental concerns  health and safety

WHILE -READING

1. Read the text and find the words and expressions which have a similar meaning to the
following:
 yielded to proper enlightened behavior
 (of ideas) to become very similar or the same
 criticize sth/sb very strongly
 giving help; showing kindness
 to gain an advantage over other people, especially by saying or doing sth that makes a
particular person or group of people like you
 to force sb to pay an unfairly high price for sth, to raise prices unfairly
 authority to make decisions, or the power to influence events

2. Paraphrase or explain the following:

 “diversity of workforces”
 “Mr. Reich trashes the supposed triumphs of CSR”.
 “business leaders have capitulated to political correctness”
 “… preached that social responsibility and profits converge over the long term”
 “it was in their enlightened self-interest to rebuild the global economy and reinvent
the social contract “
 “… is neither zero-sum nor short- terminist”
 “The ‘whether in principle' conversation about CSR is over. What remains is ‘What,
specifically, and how?'”
 2. Scan the text for references to the controversial aspects of corporate social
responsibility agenda.

In Search of the Good Company

The debate about the social responsibilities of companies is heating up again
If you believe what they say about themselves, big companies have never been better
citizens. In the past decade, “corporate social responsibility” has become the norm in the
boardrooms of companies in rich countries, and increasingly in developing economies too. Most
big firms now pledge to follow policies that define best practice in everything from the diversity
of their workforces to human rights and the environment. Criticism of CSR has come mostly
from those on the free-market right, who intone Milton Friedman's argument that the only “social
responsibility of business is to increase its profits” and fret that business leaders have capitulated
to political correctness. But in a new twist to the debate, a powerful critique of CSR has just
been published by a leading left-wing thinker.
In his new book, “Super capitalism”, Robert Reich denounces CSR as a dangerous
diversion that is undermining democracy, not least in his native America. Mr Reich, an
economist who served as labour secretary under Bill Clinton and now teaches at the University
of California, Berkeley, admits to a Damascene3 conversion, having for many years “preached
that social responsibility and profits converge over the long term”. Socially responsible firms are
more profitable? Nonsense”. He now believes that companies “cannot be socially responsible, at
least not to any significant extent”, and that CSR activists are being diverted from the more
realistic and important task of getting governments to solve social problems.
Debating whether Wal-Mart or Google is good or evil misses the point, he says, which
is that governments are responsible for setting rules that ensure that competing, profit-
maximising firms do not act against the interests of society. One after another, Mr. Reich trashes
the supposed triumphs of CSR. Socially responsible firms are more profitable? Nonsense.
Certainly, companies sometimes find ways to cut costs that coincide with what CSR activists
want: Wal-Mart adopts cheaper “green” packaging, say, or Starbucks gives part-time employees
health insurance, which reduces staff turnover. But “to credit these corporations with being
‘socially responsible' is to stretch the term to mean anything a company might do to increase
profits if, in doing so, it also happens to have some beneficent impact on the rest of society,”
writes Mr. Reich. Worse, firms are using CSR to fool the public into believing that problems are
being addressed, he argues, thereby preventing more meaningful political reform. As for
politicians, they enjoy scoring points by publicly shaming companies that misbehave—price-
A sudden and complete change in one's beliefs. From the conversion of St. Paul to Christianity on the road to
3

Damascus
gouging oil firms, say—while failing to make real changes to the regulations that make such
misbehaviour possible, something Mr. Reich blames on the growing clout of corporate lobbyists.
What will CSR advocates make of this? Few will dispute that government has a crucial
role to play in setting the rules of the game. Many will also share Mr. Reich's concern about the
corrosive political power of corporate money. But Mr. Reich has it “exactly backwards”, says
John Ruggie of Harvard University. If citizens and politicians were prepared to do the right
thing, he says, “there would be less need to rely on CSR in the first place”. Thoughtful advocates
of CSR also concede that companies are unlikely to do things that are against their self-interest.
The real task is to get them to act in their enlightened long-term self-interest, rather than
narrowly and in the short term.
Mr. Reich dismisses this as mere “smart management” rather than social
responsibility. But done well, CSR can motivate employees and strengthen brands, while also
providing benefits to society. Understanding and responding to the social context in which firms
operate is increasingly a source of new products and services. Telling firms they need not act
responsibly might cause them to under-invest in these opportunities, and to focus excessively on
short-term profits. Intriguingly, Mr. Reich looks back fondly to what he calls the “not quite
golden age” in America after the Second World War when firms really were socially responsible.
Business leaders believed they had a duty to ensure that the benefits of economic growth were
distributed equitably, in contrast to their modern counterparts, argues Mr. Reich. What changed?
Back then, big American firms enjoyed the luxury of oligopoly, he says, which gave them the
ability to be socially responsible. Today's “super capitalism” is based on fierce global
competition in which firms can no longer afford such largesse.”
Lenny Mendonca of McKinsey takes a different view of the post-war period. After the
war business leaders realized it was in their enlightened self-interest to rebuild the global
economy and reinvent the social contract4, he says, and there is a similar opportunity today,
given problems ranging from climate change to inadequate education, where firms' long-term
self-interest may mean that they have an even greater incentive to find solutions than
governments do. Certainly, in America, business leaders are advocating government action on
education, climate change and health-care reform that is neither zero-sum nor short-terminist,
and which, indeed, may not differ much from Mr. Reich's own preferences
Though his book hits many targets, both bosses and CSR activists are likely to dismiss
it as fundamentally unworldly and to agree with Simon Zadek, the boss of AccountAbility, a
CSR lobby group. “The ‘whether in principle' conversation about CSR is over,” he says. “What
remains is ‘What, specifically, and how?'”

4
the people give up some rights to a government in order to receive social order.
 (from The Economist print edition, September 6th 2007)

3. Say if these statements are true or false according to the text. Prove your point of view
by citing a phrase or a sentence from the text.
 CSR has only come in for criticism from those on the free-market right.
 Robert Reich has always been a vehement proponent of CSR.
 The attention of CSR lobbyists is being taken away from more important
problems the society is facing.
 Robert Reich believes that corporations pay lip service to CSR ideas.
 Mr. Reich’s opponents believe that being socially responsible is even more
beneficial for today’s business than for governments.

POST- READING

1. Sum up Mr. Reich’s present views on CSR issues.

2. Outline the current attitude to CSR in the USA and Russia.

READING AND SPEAKING (3)

Business and Corporate Responsibility in Russia

NOVEMBER 2014

Bill Bowring of Field Court Chambers and Professor of Law at Birkbeck College explores the
nature of corporate responsibility in Russia and the country's status in the global economic order.
"Despite privatisation policies and programmes since 1991, the Russian state still owns two-
thirds of the market capitalisation in the Russian stock market."

On 22 August 2012, after 18 years of negotiations, Russia became the 156 th member of the
World Trade Organization. As a BBC report pointed out, Russia is the EU's third biggest trading
partner, with member countries exporting €108 billion euros of goods to Russia, including €7
billion worth of cars and €6 billion of medicines. Russia also exports enormous quantities of oil
and gas around the world. Despite complications arising from Russia’s actions in Ukraine –
including EU and US sanctions on Russian financial and other interests, and Russian sanctions
on imports from the EU – the Russian economy and its governance are of great importance to the
rest of the world.
Does this important step mean that the Russian economy can be compared with those of Western
Europe or North America?
There is one particularly striking difference. Despite privatisation policies and programmes since
1991, the Russian state still owns two-thirds of the market capitalisation in the Russian stock
market. The state’s ownership is concentrated in four strategic sectors: energy (oil, gas and
electricity), banks, defence industries and transport. There is little state ownership in most other
sectors in the Russian economy, including consumer goods, non-defence manufacturing,
agriculture, insurance and services. But it is precisely in the two-thirds of the economy which has
remained in state hands, or been seized by the state (as in the expropriation of Yukos, according
to the Hague Court of International Arbitration, and the arrest and imprisonment from 2003 to
2013 of its owner Mikhail Khodorkovsky) that the most senior government officials are in
control. This includes Igor Sechin, head of the state oil company, Rosneft, which took over the
former assets of Yukos. Many of these officials have become incredibly rich.

Accession to the WTO was not the first marker of Russia’s participation in the global economic
order, especially where corporate social responsibility was concerned. On 10 April 2008 the UN
Secretary General Ban Ki-moon spoke at a Moscow meeting of more than 30 Russian business
leaders, preparing to establish the Russian network of the UN’s Global Compact. Kofi Annan
launched the Compact, which carries ten principles, on 26 July 2000. With over 12,000 corporate
participants and other stakeholders from over 145 countries, it is the largest voluntary corporate
responsibility initiative in the world. On 17 December 2008 the Russian network adopted its
statutes.

In 2009 a Report on Corporate Social Responsibility Practices in Russia was published by, the
United Nations Development Programme (UNDP), together with the Russian Union of
Industrialists and Entrepreneurs (RSPP) and the UN Global Compact Network in Russia. It
highlighted the corporate social responsibility commitments of some of the largest Russian
enterprises: Viktor Vekselberg’s Renova Group of Companies, employing more than 100,000
people in Russia; Oleg Deripaska’s UC Rusal, the world’s largest aluminium manufacturer; and
Vladimir Yevtushenkov’s Sistema investment group. Ironically, Sistema has recently lost its
investment in the oil producer Bashneft through court proceedings that have been seen by many
as part of the Russian state’s strategy to consolidate its dominance of oil production. Mr
Yevtushenkov himself was arrested.

The RSPP is headed by Vladimir Shokhin, formerly Russia’s deputy prime minister and minister
of economics. It was founded in 1991 following the collapse of the former USSR, and is based
on the foundations of the Scientific and Industrial Union (which launched in 1990). It has a
membership base of over 120 regional alliances and industry associations representing key
industries, including the fuel and energy, machine-building, investment banking, military
industrial, construction, chemical and food industries. It has more than 328,000 members
representing industrial, scientific, financial and commercial organisations and individual
members in all Russian regions.

The RSPP is itself responsible for a series of initiatives in the field of social responsibility,
including the Global Compact. It has its own Charter of Corporate and Business Ethics,
established in 2002, and a Social Charter of Russian Business, adopted at its Congress in 2004
and amended in 2008. It covers 254 businesses and NGOs, and more than 6 million workers. On
20 September 2012, in Sochi, the RSPP promulgated its Anti-Corruption Charter of Russian
Business in the presence of the current prime minister Dmitry Medvedev.

Some highly influential Western companies promote corporate responsibility in Russia. For
example, the Russian website of PricewaterhouseCoopers (PwC) includes glossy report on the
firm’s corporate responsibility programme. It is the market leader in professional services in
Russia, with eight offices and over 2,000 staff. Its client base of 2,000 companies includes: every
single on of the 10 largest financial services companies and banks; nine of the 10 largest oil and
gas companies; seven of the 10 largest power industry companies; six of the 10 largest retail
companies; five of the six largest telecommunications companies; four of the 10 largest mining
companies; and five of the 10 largest ferrous metallurgy companies. The report states that PwC
is a signatory to the UN Global Compact, and in 2009 signed the RSPP’s Social Charter of
Russian Business: “a set of principles for businesses to follow that are the foundations of
responsible business practices”.

PwC’s competitor Ernst & Young also publishes a report on corporate responsibility. It began
work in Russia in 1989 and employs 3,000 staff in eight offices. Since 2012 it has had a
corporate responsibility expert panel, which brings clients together with representatives of the
educational and ecological sectors.

Baker & McKenzie was the first international law firm to open an office in Moscow in 1989, and
employs more than 120 qualified lawyers in Moscow and St Petersburg combined, including 27
partners. This year it was voted Law Firm of the Year in Russia. Its report, “Doing Business in
Russia (2014)”, describes the country’s legal and judicial systems in detail and presents a picture
of a properly and normally functioning rule of law.

Yet a different perspective comes from Medvedev’s initiative, announced on 27 April 2012: the
creation of a new business ombudsman. Mr Medvedev’s last day in office as Russia’s president
was 7 May 2012 (he was sworn in as prime minister the following day). 7 May also marked the
introduction by Vladimir Putin (who had just been elected president, after serving as prime
minister for four years) of a national business ombudsman’s office by December 2012. 

On 21 June 2012, in advance of the law, Putin appointed business lobby leader Boris Titov as the
Ombudsman for Entrepreneurs’ Rights. According to a BBC report published in July 2012, Mr
Titov claimed that in the last 10 years Russia has imprisoned nearly 3 million entrepreneurs,
many unjustly. He added, “It is hard to find another social group persecuted on such a large
scale.” How has this come about?

The answer is to be found in two of the most insidious problems of doing business in Russia.
These are “criminal prosecutions to order” and “criminal corporate raiding”. In short, there have
been complaints for many years that private and state businesses, and powerful individuals, have
been able to frame commercial rivals by paying corrupt police officers and prosecutors to plant
evidence and make arrests to order. The judicial system itself has been a willing participant in
such activities.

Another reason for creation of the Ombudsman was the $84 billion in capital that left Russia in
2011: a record amount. Russians were investing overseas because they feared for the safety of
their businesses at home. Indeed, many Russian entrepreneurs have fled the country for their
own safety. London has even been dubbed “Londongrad” because of the many Russians who
have taken up residence and carried out business in the city.

The author of this article, who first travelled to Russia in 1983 in the days of the USSR, has since
2003 been employed as an expert witness on Russian law and politics in several cases in the
London and Cyprus courts. The cases fall into three categories.

First, there have been requests by the Russian Federation for the extradition of Russian citizens
resident in the UK, on the basis of criminal charges. Many of these were activities connected
with Yukos and Mr Khodorkovsky. In almost all of these cases the English judge found that the
requests were politically motivated. In none of these cases has Russia been successful. Second,
expert evidence has been given in appeals against refusal of refuge status. Third, there have been
commercial disputes in which an important preliminary issue has been the potential for a fair
trial in Russian courts, given the continued prevalence of “telephone justice” and the possibility
of political interference or pressure from highly placed and wealthy individuals and interests.

In fact, prior to his arrest in late 2003 and the destruction of Yukos, Mr Khodorkovsky was the
leading Russian exponent of good corporate governance and corporate social responsibility.
After two trials and 10 years in prison (he was released in December 2013), he now leads a
global campaign to transform Russia into a democracy with an independent judiciary, a viable
opposition and free and fair elections.

H.A. STUDENTS ARE TO MAKE PRESENTATIONS ABOUT 5 COMPANIES PROVIDING CSR IN

RUSSIA

Summing up:

 What is CSR? (Create a definition of corporate social responsibility)

 What are the benefits of corporate social responsibility? (summarize the benefits of CSR
and evidence to support each benefit)
 What are concerns about corporate social responsibility?
 Is social responsibility in the best interest of society?

what is triple bottom line?

Triple bottom line ("People, planet and profit“)  - People" refers to fair labour practices, the
community and region where the business operates. "Planet" refers to sustainable
environmental practices. Profit is the economic value created by the organization after
deducting the cost of all inputs, including the cost of the capital (by John Elkington1994).
Brand differentiation builds customer loyalty based on distinctive ethical values. Reduced
scrutiny and/or risk management. Corporations are keen to avoid interference in their
business through taxation and/or regulations and risks.

Benefits of CSR
The ability to have positive impact in the community hence support public value outcomes
Keeping social responsibility front of mind encourages businesses to act ethically and to consider
the social and environmental impacts of their business. In doing so, organizations can avoid or
mitigate detrimental impacts of their business on the community. 
Access to funding opportunities
Enhancing your influence in the industry
Enhanced relationship with stakeholders