Canadian Business and Society

ETHICS, RESPONSIBILITIES, AND

Fifth
SUSTAINABILITYAND
Edition

CHAPTE
R8
Corporate
Social
Responsibility:
In Renée
Practice
Prepared By:
Majeau, NAIT

© 2020 McGraw-Hill Education Limited 8-1

 Learning Outcomes

1. Identify the different responses to corporate social responsibility.

2. Define corporate philanthropy and describe the forms it takes.
3. Define corporate voluntarism and describe the implications for
employees, employers, and the community.
4. Define corporate sponsorship and identify trends in this
approach to CSR.
5. Understand the community investment approach to CSR
including its use in Indigenous communities.
6. Appreciate the challenges confronting small businesses in
practising CSR.

© 2020 McGraw-Hill Education Limited 8-2

 Responses to CSR
Acceptance
Response Explanation
of CSR
Organizations that operate with a social mission without the intention of
Social
operating to make profits with all earnings committed to social causes or
enterprise— High
projects.
social return
Example: Habitat for Humanity, Goodwill
Organizations that operate with a social mission but with the intention of
Social making a profit. “Doing well by doing good” (social paradigm). A portion of
enterprise— profits are committed to social causes or projects with the remainder High
mixed return reinvested or returned to owners.
Examples: Whole Foods Market Inc. and Value Village
CSR and sustainability placed high on corporate agenda. Often are larger
CSR recognition corporations and traded on stock exchanges. Corporate giving and Above
or embracers citizenship are involved. Publish “social reports” of their initiatives. “Doing average
good by doing well” (economic paradigm).
Cautious CSR Recognize CSR and sustainability but focus on savings from environmental Some
adaptors projects, energy cost reductions, material efficiency, and risk reduction. recognition

TABLE 8.1
© 2020 McGraw-Hill Education Limited 8-3
 Responses to CSR Cont’d…
Acceptance of
Response Explanation
CSR
Corporations are not serious about CSR, but believe they should
Tokenism or respond. Might be forced into initiatives by non-governmental Low
greenwashing organizations (NGOs), the media, or competitors. NGOs allege many commitment
multinational corporations are responding this way.

Very little, by
Corporations, and their managers, simply ignore CSR, intentionally or
Amoral chance, or legal
unintentionally. Difficult to identify and measure numbers.
requirement

As CSR is widely accepted and practised, it is unlikely that these Very little,
Anti-CSR corporations will identify themselves as being anti-CSR. Difficult to most likely as
identify numbers. required by law
Businesses about which not much is known regarding CSR initiatives,
Low, but not
Unknown including small businesses and privately held corporations. There is a
documented
modest literature on CSR in these types of enterprises.
TABLE 8.1

© 2020 McGraw-Hill Education Limited 8-4

 Risks of Not Practicing CSR
The risks associated with not practicing CSR include:
Damaged reputation
• Negative media coverage
• Consumer boycotts
• Lost sales and revenues
• Labour disruptions
• Blockages, attacks against assets
• Decrease in share value
• More onerous financing or insurance terms
Increased spending to remedy past damage for core activities
• Increased shareholder activism
• Failure to attract and retain quality employees
• Civil lawsuits, including class-action initiatives
• Criminal and regulatory prosecution
Suspended operating permits
• Liability for the conduct of subsidiaries and arm’s-length affiliates, for example
suppliers
• Increased and onerous government regulation

© 2020 McGraw-Hill Education Limited TABLE 8.2

2-5
 Planning and Managing CSR
Programs
• Need to establish a planning process:
 Commitment from top management / board of directors
• Involves one or more of following activities:
 Philanthropy
 Corporate giving
 Voluntarism
 Sponsorship
 Community investment

© 2020 McGraw-Hill Education Limited. 8-6

 Corporate Philanthropy

• Corporate philanthropy  effort of business to contribute to

society socially and is manifested by donations of money or
goods and services in kind
• Donations:
 Canadian businesses donate to variety of causes and organizations
 Some corporations spread contributions across a variety of causes while
others are more focused

© 2020 McGraw-Hill Education Limited 8-7

 Arguments For
Corporate Giving

• Means to express CSR to community i.e. business not

just concerned with society as a market
• Promotes image of good citizenship and creates
goodwill
• Business benefits from volunteer sector
• Benefits from corporate community investment program
• Company’s success linked to community’s health

© 2020 McGraw-Hill Education Limited 8-8

 Arguments Against
Corporate Giving
• Funds given belong to shareholders; presumptuous of managers to
give funds and to choose recipients
• Social welfare is the job of government
• Gives business more power in society
• Corporation might become accountable for actions of charity;
adverse publicity could damage corporation’s image
• No guidelines or standards to measure, evaluate, or monitor
corporate giving

© 2020 McGraw-Hill Education Limited 8-9

 Making Corporate Giving
Decisions
• Historically, corporate giving decisions made by individual
executives (or wealthy individuals)
• Large corporations make donation decisions by committee
consensus
 Establish the objectives for giving (how much money is given and to whom)
 Decisions made to fund - or to reject – requests
• Reasons for rejection:
 Not enough funds, donation already made to similar organization, not within
community, inadequate financial statements, etc.

© 2020 McGraw-Hill Education Limited 8 - 10

 Trends and Concerns
in Corporate Giving
• Charitable foundation  corporation or trust that is constituted and
operated exclusively for charitable purposes
• Cause-related marketing  purchase of particular product results in a
donation being made to a non-profit organization’s program
• Strategic giving  attempt to rationalize the shareholder interest with
corporate philanthropy where the corporation benefits directly from the
funds given

© 2020 McGraw-Hill Education Limited 8 - 11

 Social Venture
Philanthropy
• Social venture philanthropy  investment of human and
financial resources in non-profit community development
agencies to generate a social return vs. only a financial one
 Also known as social venturing, the new philanthropy and high-
engagement philanthropy
 Applies venture capital management practices to social responsibility

© 2020 McGraw-Hill Education Limited 8 - 12

 Corporate Voluntarism

• Corporate voluntarism  time and talent employees

commit to community organizations with support
and/or consent from employers who recognize the
value of such efforts to society
 Employee voluntarism has become more important for two
reasons:
1. Decline of the professional volunteer of the past, the
homemaker who did not work outside the home
2. Increasing need for volunteers to serve

© 2020 McGraw-Hill Education Limited 8 - 13

 Employee Voluntarism:
Advantages and
ADVANTAGES Disadvantages
• Benefits employee morale by enhancing professional skill development, providing a learning experience,
and providing a personal experience
• Good for the community
• Good for the organizations supported
• Improves the corporation’s local and national image or profile
• Good for the overall environment in which employees, customers, and the corporation must operate
• Can contribute to corporate team building, employee involvement initiatives, and employee retention
• Sets a good example
• Helps employees integrate with the community, provides a source of contacts or a network, and encourages
a sense of community commitment
DISADVANTAGES
• Possible employee resentment at perceived coercion to participate
• Possible distractions from the job, corporate objectives
• Cost in dollars and time
• Implication of picking “winners” or “losers” from among community organizations; that is, deciding which to
support
• Possibility of controversy over objectives of some voluntary organization reflecting adversely on corporation
• Some employees may overcommit themselves, impacting upon job performance
• A controversy involving the efforts of an employee volunteer may reflect unfavourably on the corporation
TABLE 8.3
© 2020 McGraw-Hill Education Limited 2 - 14
 Corporate Support and
Policies
• Majority of corporations support voluntary activities by:
 Providing facilities, allowing time off, assisting with personal
expenses incurred while undertaking voluntary activities, special
recognition to employees, letters of thanks, etc.
• Policies on voluntarism are of three types:
 Encouraging
 Enabling
 Promoting
• Voluntarism most successful where top management /
CEO indicates it is worthy and commendable

© 2020 McGraw-Hill Education Limited 8 - 15

 Corporate Sponsorship

• A partnership, which has been established for mutual

benefit between a business sponsor and an event or a
non-profit
 Distinction between corporate donations and sponsorship 
donation is a gift that goes one way, while a sponsorship
benefits both parties
 Examples: sports, cultural, and educational events, literacy, race
relations, drug abuse, environmental issues, etc.

© 2020 McGraw-Hill Education Limited 8 - 16

 Charity or Marketing?

• Trend toward sponsorships is attractive for a variety of

reasons:
 Favourable media exposure or publicity
 Opportunity to entertain clients
 Building a company/product presence
 Reaching select market segments
 Business-to-business networking
• Positive and low-cost image-building approach  must
be some common ground so both parties benefit

© 2020 McGraw-Hill Education Limited 8 - 17

 Community Investment
Approach

• Community investment (CI)  efforts of corporation

to help develop a community and create economic
opportunities through variety of means
 From donations to direct involvement in commercial
undertakings
 Bridges traditional areas of philanthropy and volunteerism with
commercial-community relationships
• Social enterprise  model business operation where
some or all profits are deliberately used to further social
aims

© 2020 McGraw-Hill Education Limited 8 - 18

 CSR and Indigenous Peoples

• Community investment illustrated by corporations in

resource industries operating on or near Indigenous
communities
• Corporations must avoid redwashing  term to describe
the deception of general public by government and
industry in trying to cover up theft of indigenous peoples
lands, natural resources and cultural riches
 Pretending they are acting in best interests of the native peoples
 Occurs when time and money spent on public relations that make
a pretence of acting ethically towards indigenous nations

© 2020 McGraw-Hill Education Limited 8 - 19

 Small Business and CSR

• Challenges to implementing CSR in small businesses:

 Entrepreneurs do not have time to devote to CSR
 Expenses associated may be too high
 Lack of knowledge of CSR planning and monitoring
 Resources relevant to small businesses not readily available
• Strongly influenced by personal values of entrepreneur
• Small businesses must confront social and ethical issues
experienced by large business

© 2020 McGraw-Hill Education Limited 8 - 20

 Small Business and CSR
Cont’d…
• Some issues are associated more with small business:
 Entrepreneurs more likely to participate in underground
economy
 Misleading advertising and financial reporting
 Improper gift giving and receiving
 Tax evasion
 Ignore or are unaware of workplace regulations
 Nepotism in hiring and promotion of family members

© 2020 McGraw-Hill Education Limited 8 - 21

 Differences in CSR in Large
Corporations vs. Small
Business
Large Corporations
• Accountable to a large number of
stakeholders
• Responsible to society at large
• Concerned with brand image and reputation
• Shareholder pressure; ethical investing
• Based on corporate values
• Formal planning for CSR
• Emphasis on standards and indices
• Involvement of CSR professionals
• Prominent campaign; for example, cause-
related marketing
• Awareness through CSR reporting, publicity
© 2020 McGraw-Hill Education Limited
Small Businesses
• Accountable to fewer stakeholders
• Responsible to local communities
• Concerned about retaining business
• Pressure from lenders
• Based on owner values
• Unlikely to be formal planning
• Emphasis on intuition and ad hoc processes
• No dedicated personnel
• Small scale activities; for example,
sponsoring local sports teams
• Often unrecognized as CSR activities
TABLE 8.4
8 - 22
 Three Strategies for Working
with Communities
Investment Involvement Integration
Company
“Giving Back” “Building Bridges” “Changing Society”
perspective
Company provides information Company uses community Company and the community
Description
or resources to the community input to shape its actions jointly manage projects
Communication One-way Two-way Two-way
Number of
Many Many Few
partners
Interaction Occasional Repeated Frequent
Information/ Goes from company to Goes from community to
Is jointly generated
knowledge community company
Control over
Company Company Company and community
process
Advertisements; information Strategic local or regional
Surveys; studies; interviews;
kiosks; press releases; partnerships; sector discussion
Tools and consultative committees;
newsletters; door-to-door visits; groups; joint brainstorming;
techniques interactive websites; public
information sessions; charitable conflict resolution; work
hearings; neutral forums
donations; voluntarism groups

© 2020 McGraw-Hill Education Limited TABLE

2 - 238.5
 Summary
• A spectrum of CSR and CS approaches are described: corporate giving
or donations, voluntarism, sponsorship, and community investment.
Most corporations practice one or more of these approaches as they
seek the most effective way to practice CSR. It is important for
corporations to manage and plan their CSR efforts. (LO 8.1)
• There are arguments for an against corporate donations; in particular,
the issue of whether such activity is in the best interests of the
corporation and its shareholders has bnot been resolved. Philanthropic
decision making is challenging given the increasing demands for
corporate support and the limited amount of funds available. (LO 8.2)

© 2020 McGraw-Hill Education Limited 8 - 24

 Summary

• Voluntarism is receiving more attention as an approach

to corporate philanthropy. Employees and retirees make
contributions to charitable organizations, often with the
encouragement of managers. (LO 8.3)

• Sponsorship has grown as a form of philanthropy.

Discussion continues as to whether such an activity is in
support of a charity or an aspect of marketing. (LO 8.4)

© 2020 McGraw-Hill Education Limited. 8 - 25

 Summary

• Some corporations prefer to implement CSR using the community

investment concepts. This concept is a comprehensive approach to
CSR in the corporation’s local, national, or international areas of
operation. (LO 8.5)

• Small businesses are involved in CSR but receive less recognition

than large corporations. CSR decisions are driven by the entrepreneur
and focus on local community and social issues. (LO 8.6)

© 2020 McGraw-Hill Education Limited 8 - 26