CSR and Sustainability

From the Margins to the Mainstream: A Textbook

Michael Hopkins, Michael Hopkins

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351284622
• Edition: 1
• Topic: Business
• Subtopic: Business generale
• Index: Business

Corporate Social Responsibility (CSR) is steadily moving from the margins to the mainstream across the spectrum of private companies, NGOs and the public sector. It has grown from being a concept embraced by a small number of companies such as The Body Shop in the early 1990s to a widespread global movement. At its weakest level, it is represented by a few philanthropic gestures by organizations but, when applied in its most complete form, it can steer the organization or sector to deliver a fully fledged, system-wide, multi-stakeholder operation, accompanied by multiple types of certification.For the first time, a book brings together key issues relating to CSR as they apply to different aspects of business; it is not another generalist title about CSR. Michael Hopkins, a leading expert in the field, is joined by a number of outstanding contributors to the book, to explain how CSR has evolved since the 1990s and to offer ground-breaking insights and practical and specific applications of the concept. For example, Mervyn King explains Integrating Reporting, Deborah Leipziger looks at the laws and standards for CSR, Branding and the Supply Chain, George Starcher provides a framework for Socially Responsible Restructuring, and Adrian Henriques explores Social Accounting and Stakeholder Dialogue.

Part I
The theoretical dimensions of CSR

Concepts of CSR

CSR and sustainability

Global warming

CSR and international development

1
Introduction

Michael Hopkins

No major company strategy is complete these days without a statement on corporate social responsibility (CSR)… at a fundamental level, CSR involves going beyond looking solely at how to make the most money, to include a wider commitment to building a better society.¹

Responsibility is and will always be there, it will never be “dead”, so let’s stop that discussion. CSR is here to stay. And not CSR 2.0, 3.0 or 4.0. There is only one responsibility.²

This book aims to address the needs of professionals in private companies, nongovernmental organizations (NGOs), international organizations and governments who are currently involved in corporate social responsibility and sustainability (henceforth CSR to encompass both terms), or would like to be involved in CSR, and wish to make the concept of CSR applicable in their institution.³

The book also aims to present in one place a complete reference on the issues that professionals tackle on a daily basis and that new entrants in the field will wish to learn about. The book, founded in sound academic practice, translates these theories into practical tools for practitioners. Many of the authors have been leaders in the application of CSR in companies since 1995, and all of them continue to work in this fascinating area.

Throughout the book, I frequently addresses the question of how CSR is now viewed and whether or not there is a future for CSR as both a concept and an institutional strategy. As the title of the book suggests, and the content will show, CSR is steadily moving from the margins to the mainstream across the spectrum of private companies, NGOs and the public sector. So saying, there is not much doubt that the concept, even as carefully defined here, will change over time and even be called something different. Yet the heart of the concept at its simplest is “treating key stakeholders responsibly” and will undoubtedly stand the test of time.

You can check out the level of CSR in your own company or institutions using CRITICS, a quick 20-question multiple-choice instrument at the end of this chapter.⁴

I put the definition of CSR at the beginning of the Glossary since it is the basis of all the work in this book and around which the structure of the book and content is presented. I also discuss in Chapter 2 the link between CSR and sustainability. The definition of CSR I use is based on academic work, mainly in the USA, but it has been updated and improved through feedback from the hundreds of times the definition has been presented, dissected and discussed. You will see that many other definitions are similar and that those that are briefer are certainly encompassed by my definition.

CSR has been around for a long time

Without CSR there is no business. It is self-evident that a business that does not engage in CSR or at least some form of social awareness (and thus creates value) will not survive. From the individual farmer who sells eggs in the local market to the multinational corporation, it is the ability to provide an answer to social needs that allows any business enterprise to operate and survive. It is the social added value that creates financial gain for businesses. If there is no social need for the product or the service offered by a business then no business will survive, let alone make a profit. One does not require models of CSR, sustainability or socially responsible investment (SRI) to understand that very simple logic. What is needed, however, is to ensure responsible treatment of stakeholders (company boards, shareholders, employees, managers, customers, contractors, suppliers, government, local communities, environmental champions etc.). It is no use selling eggs to customers if they are past their sell-buy date and thereby lead to illness. Similarly, if a business breaks societal laws will it be able to hold onto its retained profits for long, as so many of our “trusted” banks have shown us.

This simple business logic was also obvious to those who created the first share-owned organizations. These joint share-owned businesses were created by social beings to create social value and thus economic profit. The Roman Republic government used private contractors, publicani, or societas publicanorum for its services.

The oldest company known was Kongo Gumi Co., Ltd, a Japanese construction company that operated for over 1,400 years until it was absorbed as a subsidiary of another larger construction company. Headquartered in Osaka, the once family-owned construction company traced its origins to the year 578 when one of the skilled immigrants brought from Baekje to Japan by Prince Shōtoku to build the Buddhist temple Shitennō-ji decided to start his own business. Over the centuries, Kongo Gumi participated in the construction of many famous buildings, including the 16th-century Osaka Castle.

It finally succumbed to excess debt and an unfavourable business climate in 2006. But how does one make a family business last for 14 centuries? According to Bloomberg, Kongo Gumi’s case suggests that it is a good idea to operate in a stable industry.⁵ Few industries could be less flighty than Buddhist temple construction. The belief system has survived for thousands of years and has many millions of adherents. Kong Gumi also boasted some internal positives that enabled it to survive for centuries. Its last president, Masakazu Kongo, was the 40th member of the family to lead the company. He has cited the company’s flexibility in selecting leaders as a key factor in its longevity. Specifically, rather than always handing reins to the oldest son, Kongo Gumi chose the son who best exhibited the health, responsibility and talent for the job. Thus there have been signs of social responsibility from the earliest of days.

Other examples around Europe can be observed in the mid-1200s in France at Toulouse, with the milling company, Société des Moulins du Bazacle. In the late-1200, there was Stora, the Swedish mining and forestry product’s company. But perhaps the earliest acknowledged share-owned company in modern times was the English East India Company which was granted an English Royal Charter by Queen Elizabeth I at the end of 1600, with the intention of furthering trade privileges in India and providing the company with a monopoly on all trade in the East Indies.⁶ It is therefore almost offensive that as it acquired more auxiliary governmental and military functions, the company then transmuted from a commercial trading venture to one that virtually controlled India.

Like CSR, globalization is a not a new phenonenon. In the early 1600s, the Dutch East India Company was innovative in issuing the first tradeable shares on the Amsterdam Stock Exchange, allowing the attraction of more capital as well as creating an ease of share disposition for existing shareholders. This company, the first multinational megacorporation, which traded 2.5 million tons of cargo with Asia on 4,785 ships and had sent a million Europeans to work in Asia over two centuries, provides the very example of responding to the social needs of society and thus creating economic growth for both society and the company itself.

It is apparent that the innovation of joint share ownership contributed a great deal to Europe’s economic growth, which also illustrates quite clearly that without social concern there is no business enterprise and hence no economic profitability. Of course more recent changes such as environmental concerns (of little interest before the Second World War), care for communities (the need to avoid Bhopal-type contamination), compliance (laws abound), social licence to operate (a growing literature on this concept), employee motivation (volunteering), and reputation (globalization and the internet are still relatively recent phenomena).

Today, CSR has grown from a few users such as The Body Shop under its founder the late Anita Roddick in the early 1990s to a widespread global concept. The notion of CSR comes under many guises, such as sustainability, shared value, environmental, social and corporate governance (ESG), corporate citizenship, the ethical corporation and so on. CSR goes from conducting a few philanthropic projects at its weakest level to full-fledged system-wide, multi-stakeholder operations accompanied by multiple types of certification.

Corporate social responsibility is a term that became “fashionable” towards the end of the 20th century thanks to work by Archie Carroll, Donna Wood and Anita Roddick coupled with an increased need for social responsibility following not only the fall of communism but also accelerated by Shell’s assumed disregard for human rights in the execution of Ken Saro Wiwa in Nigeria and the Brent Spar incident in which Shell were blamed by Greenpeace for poor disposal of an oil rig.⁷

Arguably, theimpetus given to CSR in the past two decades came after the fall of the Berlin Wall, which signified the collapse of communism, and the rise of the private sector embedded in the rise, strength and power of corporations. Today, just about every corporation in the so-called developed world has adopted some notion of CSR together with certification through the implementation of major standards such as the Global Reporting Initiative’s G4. In the so-called emerging markets or developing nations, CSR is also taking root as companies realize that consumers in the developed markets will no longer accept goods produced in a socially irresponsible way. Little by little that notion has also passed into the larger emerging economies of India and China. India now has a CSR law on its statute books. CSR has entered not only the private sector across the world but also non-private institutions such as NGOs, governments, foundations and associations.

I decided to put as much of the contemporary material that is available into one volume. This material has been tried and tested both in business and in the academic world where I have been teaching CSR for over a decade. I developed the material, together with many of the other authors included in this book, over the past seven years in a graduate course at the University of Geneva. This material is now presented here in what I call a textbook on CSR.

The structure of the book

This book includes contributions from a star-studded array of practitioners and academics in the field of CSR and sustainability. The contributors, who are professionals from different fields around the world, have each provided their ideas on CSR from both an academic and research-based perspective and a practical one that is anchored in the real world, that of business and institutional practice. Each chapter ends with an exercise that covers a few questions that readers may like to try their hand at answering or that can be used as the basis for in-depth classroom discussion at undergraduate or postgraduate levels.

The book is composed of four parts, with each part focusing on different dimensions of CSR. Part I: Theoretical dimensions of CSR looks, over three chapters, at the link between CSR and sustainability and the wider use of CSR in international development. The six chapters of Part II: CSR in practice look at how CSR has been applied in practical situations. Part III: Business and CSR in society is made up of six chapters that explore how CSR has extended acros...