Corporate Social Responsibility

Introduction

• Everyone is expected to act in manners which benefit society, fulfilling social responsibility
• Social responsibility can be expressed in different ways; some follow the law, others are economically productive, and others help those in need
• Businesses also have varying views of social responsibility, but there is a consensus that they must perform certain obligations to society beyond simply conducting business
• Corporate Social Responsibility (CSR) practices have different frameworks
• Social responsibility is a highly debatable topic among consumers and businesses

Caroll’s Pyramid Model

• Archie Carroll graphically presented society’s expectations of businesses using a pyramid with four levels
• This model shows the different responsibilities arranged hierarchically; the arrangement from bottom to top indicates the base and apex of a business’s total responsibility
• The base of the pyramid is "economic responsibility", indicating that a business's performance and profit are the foundation of its social responsibility
  • Without profit, the company would not exist
  • Economic responsibility is required in every business
  • It affects the production of goods and services, dividend policies, and the capacity to pay employees' salaries and wages
• The second level is "legal responsibility", where the company obeys the law and adheres to regulations
  • Similar to economic responsibility, legal responsibility is required of every business
  • These responsibilities include employment laws, tax regulations, quality assurance guidelines, worker rights and safety, and other government regulations
  • Performing economic and legal responsibilities are society’s minimum expectations
• The third level is "ethical responsibility," representing the expectations that businesses will do what is right, just, and fair
  • Companies should avoid questionable practices
  • Ethical business practice goes beyond the bare minimum
  • Examples include appropriately treating customers, suppliers, and employees, being environmentally friendly, and practicing fair business
• At the top of the pyramid is "philanthropic responsibility", which is discretionary and voluntary
  • After fulfilling the fundamental and expected responsibilities, the company can maximize its profit by giving back to society
  • Philanthropy is not required by nature and law, representing the company's goodwill to society
  • Considers the business's impact on the environment and people
  • Philanthropy actively helps those in need through feeding programs, housing projects, scholarship programs, and other humanitarian activities

The Intersecting Circles Model

• The Intersecting Circles Model of CSR by Schwartz and Caroll presents the interconnection among the four domains of social responsibility
• This model rejects the hierarchical level of the components, illustrated in a Venn diagram showing the domains' connections
• A social responsibility program can fall under two or more domains
• The main goal is to cater to multiple domains simultaneously
• It is difficult and almost impossible to develop a specific CSR program that satisfies all four domains, stating that having multiple objectives is having no objective
• Some domains have competing aspects that can not be equally catered to

The Concentric Circles Model

• This model shares similarities with the pyramid and intersecting circles model
• This model views economic responsibility as the core social responsibility
• Various components of CSR are interconnected
• Concentric circles represent the system of inclusion rather than mutually exclusive domains
• This model focuses on the core responsibility: economic responsibility
• The efficient execution of social responsibility starts by focusing on economic functions: production, distribution, and consumption
• Profit allows the company to gain a stable economic status and perform its social responsibilities
• Corporate social responsibility is not a system of mutually exclusive elements, but rather one where non economic responsibilities such as legal, ethical, and philanthropic responsibilities, embrace the importance of economic responsibility

Framework for Assessing CSR

• The Social Benefit-Cost Framework weighs the benefits and costs of a CSR program to the business owner and to society to assess program effectiveness
• A company’s market value can increase through a CSR program, and society will support companies that have corporate social responsibility
• There are no concrete risks that CSR brings to a company apart from expenses of implementing the program
• Society will also benefit from implementing CSR; the people in the community maximize the use of CSR
• There are environmental and social costs to society, such as congestion, air and water pollution, and other environmental crises
• In May of 2020, a national agency responsible for Covid-19 aids received a bio-molecular laboratory and PPEs to be used for Covid-19 efforts donated by tobacco companies
• This CSR can be assessed using the Social Benefit-Cost Framework
• This increased tobacco companies' market value, as they helped the Philippines fight Covid-19
• While tobacco companies help the Philippines alleviate the effects of Covid-19, they continue producing toxic products which contribute to severe Covid-19 outcomes and death; this concerns the health risk of the community