Unit 5: Fill in the Blank

Corporate Social Responsibility (CSR)

• Economic Responsibility: Compliance with capitalist principles.
• Legal Responsibility: Adhering to laws set by global stakeholders.
• Ethical Responsibility: Meeting the ethical expectations of stakeholders.
• Philanthropic Responsibility: Engaging in activities desired by stakeholders.

Importance of Going Beyond Obligations

• Reputation: A valuable asset impacting brand value.
• Legitimacy: Essential for operational success; lack of legitimacy discourages investments from shareholders and suppliers.

Pressures on Firms

• Increased social demand for accountability in supply chains.
• Activist and public mobilization are driving forces for sustainability.
• Investment funds are divesting from fossil fuels, influencing broader corporate behaviors.
• High demand for transparency and sustainability reporting, especially for companies closer to consumers.
• Companies showing commitment to sustainability face scrutiny and potential backlash on social media.
• Strategic withholding of sustainability certifications to prevent reputational harm.

Spillover Effects

• Case of BP: Reputation damaged after the Bluewater Horizon disaster, with long-term impacts on stock prices.
• Negative actions of one firm can affect peers, as seen with BP and Shell.

Self-Governance in Corporate Sustainability

• Social Movements: Initiatives like Fridays for Future influence corporate practices.
• Regulatory Frameworks: Banks established the bankers' oath and Equator Principles for greater accountability.
• Certification Standards: ISO standards (e.g., ISO 26000) promote trust but can also raise questions about potential greenwashing.

Institutional Examples for Sustainability

• Certifications: Establish standards that encourage sustainable practices.
• Resource Scarcity: Highlights necessity for innovation, such as BMW's battery refurbishment initiative.
• Government Regulations: Bans on fossil fuel vehicles push firms toward sustainable alternatives.
• Market Dynamics: Consumer preferences shifting towards car-sharing services impact automobile ownership models.

Case Analysis: WestLB

• WestLB faced systemic scrutiny and accountability for broader environmental impacts.
• Stakeholder reactions influenced the bank's response to sustainability issues.

Stakeholders' Perspectives

• Diverse Interests: Customers, NGOs, and shareholders hold varying expectations from firms.
• Political Dimensions: Stakeholders, including state entities, can shape corporate sustainability discussions.
• NGO influence grows when combined with public pressure, shifting corporate strategies from defensive to collaborative approaches.

Company Responses

• Nike's Transformation: Efforts to eliminate sweatshop practices demonstrate responsiveness to stakeholder concerns.

Key Takeaway

• Balancing stakeholder interests is crucial for maintaining reputation and driving business strategy in a sustainability-focused world.

Corporate Social Responsibility (CSR)

• Economic Responsibility: Compliance with capitalist principles.
• Legal Responsibility: Adhering to laws set by global stakeholders.
• Ethical Responsibility: Meeting the ethical expectations of stakeholders.
• Philanthropic Responsibility: Engaging in activities desired by stakeholders.

Importance of Going Beyond Obligations

• Reputation: A valuable asset impacting brand value.
• Legitimacy: Essential for operational success; lack of legitimacy discourages investments from shareholders and suppliers.

Pressures on Firms

• Increased social demand for accountability in supply chains.
• Activist and public mobilization are driving forces for sustainability.
• Investment funds are divesting from fossil fuels, influencing broader corporate behaviors.
• High demand for transparency and sustainability reporting, especially for companies closer to consumers.
• Companies showing commitment to sustainability face scrutiny and potential backlash on social media.
• Strategic withholding of sustainability certifications to prevent reputational harm.

Spillover Effects

• Case of BP: Reputation damaged after the Bluewater Horizon disaster, with long-term impacts on stock prices.
• Negative actions of one firm can affect peers, as seen with BP and Shell.

Self-Governance in Corporate Sustainability

• Social Movements: Initiatives like Fridays for Future influence corporate practices.
• Regulatory Frameworks: Banks established the bankers' oath and Equator Principles for greater accountability.
• Certification Standards: ISO standards (e.g., ISO 26000) promote trust but can also raise questions about potential greenwashing.

Institutional Examples for Sustainability

• Certifications: Establish standards that encourage sustainable practices.
• Resource Scarcity: Highlights necessity for innovation, such as BMW's battery refurbishment initiative.
• Government Regulations: Bans on fossil fuel vehicles push firms toward sustainable alternatives.
• Market Dynamics: Consumer preferences shifting towards car-sharing services impact automobile ownership models.

Case Analysis: WestLB

• WestLB faced systemic scrutiny and accountability for broader environmental impacts.
• Stakeholder reactions influenced the bank's response to sustainability issues.

Stakeholders' Perspectives

• Diverse Interests: Customers, NGOs, and shareholders hold varying expectations from firms.
• Political Dimensions: Stakeholders, including state entities, can shape corporate sustainability discussions.
• NGO influence grows when combined with public pressure, shifting corporate strategies from defensive to collaborative approaches.

Company Responses

• Nike's Transformation: Efforts to eliminate sweatshop practices demonstrate responsiveness to stakeholder concerns.

Key Takeaway

• Balancing stakeholder interests is crucial for maintaining reputation and driving business strategy in a sustainability-focused world.