CSR Beyond the Mainstream Lecture PDF

CSR Beyond the Mainstream Session 1 Managing responsibly: The basics Dr Ivonne Chirino- Klevans © 2015 Cengage Learning © 2015 Cengage Learning Family Athlete Faculty  Leadership skills...

CSR Beyond the Mainstream Session 1 Managing responsibly: The basics Dr Ivonne Chirino- Klevans © 2015 Cengage Learning © 2015 Cengage Learning Family Athlete Faculty  Leadership skills using VR Executive coach PhD Psychology Assistant Dean Duke UNC- 12 Years Latest book Structure of the course: Learning pathways Know, think, act, interact Know: expand your knowledge bank Think: put what you’ve learned into context Act: engage with what you know with purpose Interact: connect, collaborate, co-design with others Structure of the Icon What this icon means on a lexture slide course: Visual cues You will find this unit and relevant information in the textbook. These are concepts covered only in lectures. The lecture slides, and bonus resources (linked in the slides) are your best source for exam preparation. U.N. Sustainable Development goals. These icons are placed to help you connect course content with SDGs. These indicate learning pathways to enhance the mastery of competencies. Note: “Know” will not be indicated to avoid confusion (e.g. a lack of KNOW label might be incorrectly understood as that slide is not important to know). Session 1: Outline Managing responsibly: the basics PART I. Defining managerial success & competencies in a systemic context ACTIVITY Activity: World Café PART II. CSR management in practice: introduction Key Terms: managerial competencies, responsible leadership, social- ecological systems, sphere of influence, stakeholders, planetary Boundaries, corporate sustainability  PART I. Defining managerial success & competencies in a systemic context Do you think that businesses have power over us? Examples of power over us 10 Do you think that businesses depend on you for their existence? Examples of how you have influence over businesses 11 © 2015 Cengage Learning 12 © 2015 Cengage Learning 13  Martha Stewart Enron What do all these have in common? WorldCom Tyco 14 Scandals Johnson and Johnson sued for baby power damages © 2015 Cengage Learning 15  Business and Society Business - the collection of private, commercially oriented organizations ranging in size from one-person proprietorships to corporate giants. Society - a community, a nation, or a broad group of people with common traditions, values, institutions, and collective activities and interests. Macroenvironment - the total environment outside the firm, the comprehensive societal context in which the organization resides. Society is the macroenvironment in which businesses operate. 16  Some business issues under scrutiny Corporate governance, executive compensation, backdated stock options, the use of undocumented immigrants as employees, high fuel prices, minimum wage, the safety of SUVs, the distraction of cell phones, the healthiness of fast food What issues are under scrutiny in your country? 17  Most of these events are situations in which the public or some segment of the public believes that a firm has done something wrong or treated some individual or group unfairly ©Learning 18 The question is… Whether they have been socially responsible or ethical. 19 How many of you smoke? Smoking in your country? Differences with NC Complaints people around you? Groups impacted by your smoking? 20 What is management? For example: This diagram shows the types of resources that operations managers must collect and use efficiently and effectively. How would you describe an efficient manager? How about (Walley 2017) an effective one? What is management? Take a close look again at the 3 lists: What are the main inputs? How can we categorize these? Where in the 3 stages do you think efficiency and effectiveness are most important? What criterion is important for (Walley 2017) evaluating the output? Think What is responsible management? Where does responsibility come into the picture? Goals Effiiciency Performance People Effectiveness Resources What does it mean to YOU to manage with responsibility- focused practices? (Walley 2017)  Ethics and efficiency definitions as responsible Think management Efficiency and effectiveness as responsibility includes asking: How much value is created—or harm avoided— in the achievement of goals? Focusing on all stakeholders is key. To understand and to take purposeful action requires responsible management competencies. Act What competencies do I need? This course is designed to nurture the 4 competencies using the learning pathways: know, think, act, interact.  Competency 1: social-ecological thinking See society and nature as deeply connected systems, each shaping and sustaining the other. Why did you choose Raleigh?  INPUT What is a system? SYSTEM Element 1 A system is a perceived whole, whose elements are “interconnected”. Element 3 Element 2 Systems are constantly subject to various forces and feedback mechanisms, some of which are stabilising and some of which are reinforcing or destabilising. BOUNDARY Understanding how a system works is done through Systems Element 4 Analysis. SURROUNDINGS OUTPUT http://arts.brighton.ac.uk/__data/assets/pdf_file/0004/5926/Systems-Thinking.pdf http://article.sapub.org/10.5923.j.ajss.20150401.02.html#Sec3 Snapshot view... Choosing a place to live is one of the most important decisions one has to take in a lifetime. When evaluating options, we take many variables into PASTE account. One of the key factors might be the location. YOUR If we prefer to live in a flat in the city, yet not too close to major IMAGE streets, we may be interested in the location from the picture on the right. HERE However, when looking at the full picture, shown on the next (IT HAS TO COVER THE ENTIRE GRAY AREA; slide, that initial and apparently correct decision, may BESIDES RESIZING USE “CROP IMAGE” IF NEEDED) suddenly appear to be not as attractive as we thought. ….versus full picture Would we still be interested in living there? This is an example of the importance of looking at -small- snapshots rather than at the full picture. When doing the first, instead of seeing the wider surroundings we focus solely on one aspect. This may seem completely wrong, and nevertheless sometimes it is indeed better to focus on just one part in order to take action. Otherwise we might get caught in endless evaluation processes instead of doing something. This is called analysis paralysis. However, coming back to our question and considering we did focus on the one aspect shown in the snapshot: We may have ended up living in that flat, which is very close to a pretty big street, and not be comfortable with the decision in the long run.  A system may, however, best be In other words... understood by this visual image: A system may be best understood by the following We could liken a decision maker in a visual image and explanation: complex situation of a chess player whose set has many more than the 1.Imagine yourself as a chess player. You are, normal number of pieces, several dozen, though, literally a chess figure. say. Furthermore, these chessmen are all linked to each other by rubber bands, so 2. All figures that play as your that the player cannot move just one counterparts (all other figures) are figure alone. Also, his men and his linked to each other by rubber bands. opponent’s men can move on their own and in accordance with the rules the 3. Any move of any player impacts player does not fully understand or all the players and all the figures. about which he has mistaken assumptions. And, to top things off, 4. Players can move independently from some of his own and his opponent’s men each other and, following the rules of chess, the are surrounded by a fog that obscures other players do not have information about the their identity. (Dorner, p. 42) purpose of those moves, which forces them to make -sometimes mistaken- assumptions. Based on Dorner D., p. 42 https://pl.scribd.com/document/385200229/dietrich-dorner-the-logic-of-failure-recognizing-and-avoiding-error-in-complex- situations-basic-books-1997# A system is formed by elements: Conceptualizing the Macroenvironment © 2015 Cengage Learning 33 Segments of the Macro environment. Example: Raleigh Multicultural, health oriented, individualism. Younger population. International. Growth. Capitalism. Low unemployment, globalization Democratic Automation. Apps. Biotechnology, © 2015 Cengage Learning 34 AI  Act Becoming a systems thinker: For example Instead of… Try to… Blaming someone... … ask “what influences that person?” Saying, “I know the answer”... … say “I have another perspective on the issue.” Thinking you know the answer... … never stop looking for evidence that confirms your theory, as well as evidence that challenges it. Focusing on one item...... look at all the variables that may affect that item. Focusing at the content of what … look for the process that lead them to say it - How are they saying it? people say... What are they not saying? What are the common themes in the content? Focusing on negative behaviours... … look at what is motivating these behaviours or if maybe they are hiding a deeper problem. Just looking at what individuals … look at the dynamics of the system - What forces are pushing individuals are doing... towards one thing or another? Source: https://thesystemsthinker.com/making-the-jump-to-systems-thinking/ Types of systems Social system A social system may be defined as a plurality of social actors PASTE YOUR IMAGE who are engaged in a more or less stable interaction, according to shared cultural norms and meanings (Parsons HERE (IT HAS TO COVER THE ENTIRE 1951). GRAY AREA; Individuals constitute the basic interaction units, but these BESIDES RESIZING USE “CROP interacting units may also be groups or organisations of IMAGE” IF NEEDED) individuals within the system. An individual may belong to multiple social systems at once. Examples of social systems include family units, communities, cities, nations, college campuses, corporations, or industries.. http://home.ku.edu.tr/~mbaker/CSHS503/TalcottParsonsSocialSyst em.pdf Types of systems Economic system An economic system is a set of institutions created for the PASTE YOUR IMAGE making and implementation of decisions in the spheres of HERE production, income, and consumption within a given (IT HAS TO COVER THE ENTIRE geographic area. GRAY AREA; BESIDES RESIZING USE “CROP It includes all institutions, organisations, laws and rules, IMAGE” IF NEEDED) traditions, beliefs, attitudes, values, taboos and the resulting behaviour patterns that directly or indirectly affect economic behaviour and outcomes (Gregory, Stuart 2014). https://www.amazon.com/Global-Economy-Economic-Systems- Economics/dp/1285055357 Types of systems Environmental / Ecological system An environmental or ecological system is a system where life PASTE YOUR IMAGE interacts with the various abiotic components found in the atmosphere, hydrosphere and lithosphere. HERE (IT HAS TO COVER THE ENTIRE GRAY AREA; Environmental / ecological systems also include the capture, BESIDES RESIZING USE “CROP movement, storage and use of energy. Thus, environmental IMAGE” IF NEEDED) systems are also energy systems (Pidwirny 2014-2018). http://www.physicalgeography.net/understanding/contents.htm l In sustainability discussions, the relationship between these systems are depicted in different ways Let us discuss the relationships between the previously mentioned systems on the example of the “sustainable development” issue. Before we proceed, below is a quick reminder of what we mean by “sustainable development”: Sustainable development is defined as a “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (World Commission on Environment and Development, 1987). http://www.un.org/en/ga/president/65/issues/sustdev.shtml VERSION 1.0  SUSTAINABILITY ENVIRONMENTAL UNEP, ENGOs VERSION 2.0 UNESCO SOCIAL ECONOMIC WTO, OECD  Economies ENVIRONMENTAL Human Societies Earth’s life support system SOCIAL ECONOMIC Fischer et al. (2007) VERSION 3.0  Social-ecological systems Whaling captain Kunneak Nageak photographed outside his Eample: ice cellar (siġḷuat) dug family’s ice cellar on June 24, 2022. Nageak said he once needed to use a jackhammer to remove ice when rainwater into the frozen ground—to store damaged an ice cellar. traditional foods Both practical and cultural A collapsed and abandoned entry to an ice cellar in Utqiaġvik significance for Alaska Inupiaq on June 28, 2022. The Iñupiat Community of the Arctic Slope communities is working to install thermosyphon refrigeration technology to restore and protect some ice cellars in the region. Climate change (permafrost thaw) is threatening this local resource “You can put half a whale in them things. You can’t put half a whale in a little home freezer.” Marc Lester/Anchorage Daily News Social-ecological systems An “integrated complex system that includes social (human) and ecological (nature) subsystems in a two-way feedback relationship” (Berkes 2011) Ecological: Social all living beings and their Human dimension: the relationships: humans & human economic, political, actions, interplay with atmosphere, technological, and cultural water cycle, biogeochemical cycles, & the dynamics of the Earth system Image: Katie Orlinsky, National Geographic. “the delineation between social and ecological systems is artificial and arbitrary” (Folke et al. 2016).  Another example: Mangrove social-ecological system Can you think of ways you and your wellbeing are embedded in your environment? Social-Ecological Systems all humanly used resources are embedded in complex social-ecological systems coupled human–environment systems interacting and interdependent physical, biological and social components integrates a diversity of disciplines & knowledges (e.g. local & traditional ecological knowledge) A Pluralistic Society - Prevents power from being concentrated in the hands of a few. Maximizes freedom of expression and action, and strikes a balance between monism, on the one hand, and anarchy on the other. Creates a widely diversified set of loyalties to many organizations, and minimizes the danger that a leader of any one organization will be left uncontrolled. Provides a built-in set of checks and balances, in that groups can exert power over one another with no single organization (business or government) dominating and becoming overly influential. 47 © 2015 Cengage Learning Business and Stakeholder Relationships 48 Competency 2: Futures literacy Anticipate and envision future possibilities to inform today’s decisions.  50 Think In a future involving human-machine interaction, how will we... ….integrate robots safely in our everyday life?...support innovation? ….make robots more human-centred? ….assure control over our personal information?...enhance individual skills? ….bridge the generation gap? What fears do What benefits you think will come to your emerge in mind? society?  51 How can we assure Now, think about these control over personal information? How can we questions taking the integrate robots safely in our How can we enhance individual perspective of... How can we everyday life? skills through human-machine How can we bridge the support interaction? generation gap? - a policy maker. innovation? - a researcher. - an entrepreneur. What problems and opportunities do you see in each case? Are they different from each other? CITIZEN ENTREPRENEUR CITIZEN RESEARCHER POLICY-MAKER  52 Important How can we assure control over personal information? How can we integrate robots How can we safely in everyday enhance individual life? skills through How can we How can we human-machine bridge the support interaction? generation innovation? gap? Foresight(future vision) tries to answer such questions by fostering dialogue between citizens, scientists, business, policy-makers and, in general, stakeholders of any kind. This way they create shared visions, develop strategies and implement recommended actions based on the conviction that the future can be CITIZEN ENTREPRENEUR CITIZEN influenced strategically. RESEARCHER POLICY-MAKER  53 Where is foresight applied? 03 Foresight for business Foresight aims to provide the means to guide, develop and shape Foresight for policy-making research, technology and innovation policies and strategies. 01 02 Foresight for research Based on: Cuhls (2015, p. 4); Rohrbeck (2011, p. 11); Stoffaёs cited by Destatte (2010, p. 1575-1587)  54 Where is foresight applied? Foresight for business Foresight in business aims to enable companies to detect discontinuous change early, 03 interpret the consequences that has for them and formulate effective responses Foresight for policy Foresight to ensure long-term survival and success. Foresight helps prepare aims to provide the policies and policy means to guide, measures. It is used to develop and shape Foresight for research support priority-setting and research, technology The aim of Foresight for identify critical technologies and innovation policies science is to identify that guide governmental and strategies. investments. 01 02 promising avenues of research and orientate the scientific community towards priorities, thus fostering sustainable development in the long term. Based on: Cuhls (2015, p. 4); Rohrbeck (2011, p. 11); Stoffaёs cited by Destatte (2010, p. 1575-1587)  55 Decision-making in policy, research and business If we assume that we exist within a closed system (elements of our system do not interact with other elements in their environment) PASTE YOUR we ignore critical factors influencing our decisions, missing to reflect on opportunities and threats that are outside our mental IMAGE HERE model of reality. This can happen in both our professional and (IT HAS TO COVER THE personal life. ENTIRE GRAY AREA; Visionary decisions, policies and strategies require a different BESIDES RESIZING USE approach. “CROP IMAGE” IF NEEDED) One that assumes reality is not a closed system, but an open and creative one! Source: Miller R., Recent Developments in Thinking about the Future: An Overview for Policymakers in W.W. Neng Adaptive Governance for a Changing World, 2016, p. 190, 192.  56 Decision-making in policy, research and business All over the world there are governments, research organisations and companies that have decided to improve decision-making using methodologies that embrace the idea of an ever more complex reality. innovation PASTEsociety Specifically: science & YOUR - They have started to experiment with strategic technology foresight processes that deliberately cut across traditional boundaries of thematic areas and IMAGE Decision-making departments. As a result: HEREeconomy environment - Decision-makers are beginning to take a cross - security (IT HAS TO COVER THE ENTIRE GRAY AREA; disciplinary look on issues when incorporate these BESIDES RESIZING USE “CROP IMAGE” IF NEEDED) processes into their research, business or policy agendas. This enhances their activity on the strategic level. Based on Kuosa T., Practising strategic foresight in government. The cases of Finland, Singapore and the European Union, 2011, p. 26.  57 Defining strategic foresight Strategic foresight is about providing foreknowledge to PASTE someone who wants to win a political, innovation or YOUR business battle. IMAGE HERE (IT HAS TO COVER THE ENTIRE GRAY AREA; BESIDES RESIZING USE “CROP IMAGE” IF NEEDED) Based on: Kuosa T., Practising strategic foresight in government. The cases of Finland, Singapore and the European Union, 2011, p.18.  58 How strategic foresight can contribute to decision-making (1) Strategic foresight can contribute to decision-making at three distinctive levels: Gathering Broadening Enhancing mindsets foreknowledge strategy focus of decision-makers Based on: Kuosa T., Practising strategic foresight in government. The cases of Finland, Singapore and the European Union, 2011, pp. 26-27  59 How strategic foresight can contribute to decision-making (2) Gathering Broadening Enhancing mindsets foreknowledge strategy focus of decision-makers AIM: To systematically gather AIM: To enhance reflexive mutual learning processes knowledge of changes in trends and among decision-makers and stakeholders, cutting AIM: To help decision-makers formulate potential new emerging issues and across traditional boundaries of thematic areas and better informed and better prepared future risks that should be addressed departments in order to obtain a holistic understanding visions and strategies. strategically. of the societal needs and impacts. Based on: Kuosa T., Practising strategic foresight in government. The cases of Finland, Singapore and the European Union, 2011, pp. 26-27  60 How can strategic foresight Think contribute to decision-making? The headlines are matched with the wrong descriptions. Which description correctly matches each headline? Gathering Broadening strategy Enhancing mindsets of foreknowledge focus decision-makers - Helping decision-makers grasp long- - Providing cutting edge knowledge on - Developing potential policy, research or term implications of current policy, top emerging issues. business options and their assessment. research or business choices - Detecting warning indicators. - Prioritising policy, research or business options - Supporting decision-makers - Detecting emerging (relevant) issues. according to their societal, environmental, understand the relation between to which decision-makers will have to economic and technological impacts. upcoming external changes and react. - Enhancing the integration of complexity and internal capabilities and drivers - Arising potential problems in (public) interdisciplinarity into decision- making - Providing decision makers with better discussions before they occur (i.e. - Analysing upcoming external changes in understanding of how to use the future financial crisis). relation to internal capabilities and drivers.  61 Think How can strategic foresight contribute to decision-making? Solution: Gathering Broadening Enhancing mindsets of foreknowledge strategy focus decision-makers - Providing cutting edge knowledge on - Developing potential policy, research or - Helping decision-makers grasp long- top emerging issues. business options and their assessment. term implications of current policy, - Detecting warning indicators. - Prioritising policy, research or business options research or business choices - Detecting emerging (relevant) issues. according to their societal, environmental, - Supporting decision-makers to which decision-makers will have to economic and technological impacts. understand the relation between react. - Enhancing the integration of complexity and upcoming external changes and - Arising potential problems in (public) interdisciplinarity into decision- making internal capabilities and drivers discussions before they occur (i.e. - Analysing upcoming external changes in - Providing decision makers with better financial crisis). relation to internal capabilities and drivers. understanding of how to use the future 5 minutes of foresight 2 minutes: It’s 2100. Think about your home town and imagine utopia: a healthy, robust, Image: Steven P. Hughes, sustainable community Politico Prepare: A sentence to describe it 2-3 things that are most important, essential key ingredients to achieving that future 3 minutes: Brief group reflection Image: museumforthefuture.nl/ Why foresight is important for responsible management Sustainability is at the heart of responsible management Sustainability is inherently future-oriented, but the actions and policies must be determined and implemented in the present https://www.youtube.com/watch?v=ej80SmMMhz0 Competency 3: Stakeholder innovation Collaborate with stakeholders to experiment, to innovate shared solutions. The Shift Towards Collaborative, Inclusive Models There is a growing movement from traditional, top-down approaches to decentralized, collaborative models in supply chain management, making stakeholder engagement a core leadership skill.  Stakeholder Theory The theory was developed to solve three Stakeholder theory argues that all main problems… organisations exist within a set of relationships, interactions and How is value creation and trade interdependencies involving a 1 possible in fast-changing environments variety of different groups and that have little stability? individuals. How do we understand the ethics of These “stakeholders” both affect, 2 capitalism, and how can we put and are affected by, an organisation capitalism on firmer ethical ground? and the achievement of its objectives. What should we teach in business 3 schools? Who are stakeholders? Stakeholders are people or parties that are important to you. They are people who can exert influence or power on the success of your project / organization in a certain way, or whom your project / organization may influence. What is stakeholder management? Ensuring that everyone is satisfied, well informed and heard. THE IMPORTANCE OF UNDERSTANDING INTEREST GROUPS AS STAKEHOLDERS © 2015 Cengage Learning 69 Special interest groups. Why do they matter? © 2015 Cengage Learning 70  Special Interest Groups - Make life more complex for business and government. Can number in the tens of thousands in some societies. Pursue their own focused agendas. Are active, intense, diverse and focused. Can attract a significant following. Often work at cross purposes, with no unified goals. A special-interest society is pluralism taken to the extreme. © 2015 Cengage Learning 71  Social Environment, Business Criticism and Corporate Response Access to internet The number of Affluence Education Awareness American adults who Factors in the Social Environment were high school graduates grewRising Expectations Rights Movement from 55 percent to 83 percent Entitlement Victimization Mentality Philosophy Business Criticism MONSANTO Increased Concern for the A Changed Social Contract Societal Environment © 2015 Cengage Learning 72 Opening a new hospital in Raleigh © 2015 Cengage Learning 73 Awareness Access to internet Freedom of speech Awareness impacts social action © 2015 Cengage Learning 74 Is lobbying good or bad? Lobbying © 2015 Cengage Learning 75 © 2015 Cengage Learning 76  Social Environment, Business Criticism and Corporate Response Access to internet The number of Affluence Education Awareness American adults who Factors in the Social Environment were high school graduates grewRising Expectations Rights Movement from 55 percent to 83 percent Entitlement Victimization Mentality Philosophy Business Criticism MONSANTO Increased Concern for the A Changed Social Contract Societal Environment © 2015 Cengage Learning 77 Factors in the Social Environment Affluence and Education - Create higher expectations of major institutions. Growing public awareness through television, movies, and the Internet. The Revolution of rising expectations - creates a social problem, a gap between societal expectations for social conditions and social realities. This can lead to: Entitlement mentality Rights movement Victimization philosophy © 2015 Cengage Learning 78 Victimization philosophy what do you think? © 2015 Cengage Learning 79 Victimization philosophy © 2015 Cengage Learning 80 Social Environment, Business Criticism and Corporate Response Access to internet The number of Affluence Education Awareness American adults who Factors in the Social Environment were high school graduates grewRising Expectations Rights Movement from 55 percent to 83 percent Entitlement Victimization Mentality Philosophy Business Criticism MONSANTO Increased Concern for the A Changed Social Contract Societal Environment © 2015 Cengage Learning 81 Commercials misleading the public Uber misled drivers about how much they could make and was forced to pay $20 million to settle claims © 2015 Cengage Learning 82 On top of the fine of $45 million, Dannon was ordered to remove "clinically" and "scientifically proven" from its labels, according to ABC. © 2015 Cengage Learning 83 VolksWagen falsely advertised envorinmentally friendly diesel cars and the Federal Trade Commission filed a lawsuit against them © 2015 Cengage Learning 84 Red Bull was sued in 2014 for its slogan “Red Bull gives you wings” and agreed to pay out $13 million © 2015 Cengage Learning 85 Levels and Spheres of Corporate Power: Apple Levels Macro Intermediate Micro Individual Spheres Level Level Level Level The business Several firms A single firm A Single Executive system Economic Social/Cultural Individual Technological Environmental Political © 2015 Cengage Learning 86 86 Society’s Expectations Versus Business’ Actual Social Performance Society’s Expectations of Business Performance Expected and Actual Social Performance: Social Problem Smoking and health impact Social Business’s Actual Problem Social Performance 1960s 2010s Time © 2015 Cengage Learning 87 Elements in the Social Contract Laws or Regulations: “Rules of the Game” Business Society or Societal Stakeholder Groups Two-Way Shared Understandings of Each Other © 2015 Cengage Learning 88  Origins of the Stakeholder Concept Stake - An interest or a share in an undertaking. Can be categorized as: An Interest A Right Ownership Legal Right Moral Right 89 89  An Interest PERSON OR GROUP AFFECTED BY A DECISION You have a GM car 90 Information on a Google account: right to privacy  A Right (legal or moral): fairness, justice or equity https://ny.curbed.com/2019/1/17/18186114/womens-march-2019-nyc-route-street-closures https://www.youtube.com/watch?v=gpU0c1 5coBU © 2015 Cengage Learning 92  Moral Right A person or groups thinks they have a moral right to be treated in certain way. https://marchforlife.org/mfl-2019/rally- march-info/ © 2015 Cengage Learning 93 Stakeholders Any individual or group Stakeholder is a variant of who can affect or is the concept of affected by the actions, Stakeholder - stockholder– an decisions, policies, investor/owner of practices, or goals of the businesses. organization. 94 Who are Business’s Stakeholders? Stockholders Employees Customers Community Competitors Business Stakeholder Groups Special-Interest Suppliers Media Groups General Society Public 95 95 Three Views of the Firm Production and Managerial Views of the Firm © 2015 Cengage Learning 97 Stakeholder View of the Firm 98  Primary & Secondary Stakeholders Primary stakeholders - Have a direct stake in the organization and its success. Secondary stakeholders - Have a public or special interest stake in the organization that is more indirect. 99  Social Stakeholders Primary social Secondary social stakeholders stakeholders Shareholders and investors Government regulators Employees and managers Civic institutions Customers Social pressure groups Local communities Media and academic commentators Suppliers and other Trade bodies business partners Competitors 100  Nonsocial Stakeholders Primary nonsocial stakeholders Secondary nonsocial stakeholders Natural environment Environmental interest groups Future generations Animal welfare organizations Nonhuman species 101 © 2015 Cengage Learning A Typology of Stakeholder Attributes. Example: COVID VACCINE R & D company. Legitimacy - Refers to the perceived validity or appropriateness of the stakeholder’s claim to a stake. For example shareholders who invest in drug manufacturing company. Power - Refers to the ability or capacity of a stakeholder to produce an effect. E.G. Investors can withdraw funding if a new drug is not approved and sold (no revenues). Urgency - Refers to the degree to which the stakeholder’s claim demands immediate attention or response. E.G. Government who has provided financing for the development of the vaccine and implemented deadlines. Proximity - The spatial distance between the organization and its stakeholders. Local investors vs. global. 102 Superbowl Half time show Maroon 5 Petition to drop out https://www.change.org/p/maroon-5-drop-out-of- the-super-bowl-halftime-show Petition to take a knee https://www.billboard.com/articles/news/8493599/p etition-maroon-5-travis-scott-big-boi-take-a-knee- super-bowl 103 Taking a knee https://www.youtube.com/watch?v=bBdoDOXMWkg 104 Stakeholder Typology: 105  Business as Relationships Among Stakeholders Stakeholder theory provides a novel, useful and impactful lens through which to view organisations, and opens up many exciting possibilities in terms of reorienting the relationship between business, society and nature. Business can be understood as a set of relationships among groups that have a stake in the activities that make up the business. Stakeholder theory considers the dynamic relationships between groups and individuals who affect and are affected by an organisation and its decision-making process. It also considers the question of what characteristics a group/individual must have to be considered to hold a stake in the actions and outcomes of an organisation.  Stakeholder management steps Who are your stakeholders? What do your stakeholders want? Why do they want this? How can they influence your trajectory? How can you best manage your stakeholders?  Identifying Stakeholders WHO DESERVES or REQUIRES your attention: ⎯ To whom does the organization have legal obligations? ⎯ Who might be positively or negatively affected by the organization's decisions or activities? ⎯ Who is likely to express concerns about the decisions and activities of the organization? ⎯ Who has been involved in the past when similar concerns needed to be addressed? ⎯ Who can help the organization address specific impacts? ⎯ Who can affect the organization's ability to meet its responsibilities? ⎯ Who would be disadvantaged if excluded from the engagement? ⎯ Who in the value chain is affected? Your organization’s ‘sphere of influence” An organization derives influence from sources such as: ⎯ ownership and governance ⎯ economic relationship ⎯ legal/political authority ⎯ public opinion Categorizing Stakeholders ‘Primary’ stakeholders: There is interdependence between these stakeholders and the firm: both affect, and are affected by one another, just as the survival of each to some extent depends on the other ‘Secondary’ stakeholders. These individuals, groups, entities and species both affect and are affected by the firm’s pursuit of its objectives Some academics and practitioners believe that nature is in fact a primary stakeholder due to the fact that the firm by definition could not exist without it Act Various sources to locate stakeholders:  Project charter  Procurement documents and contracts  Enterprise environmental factors: o Organization culture and structure o government regulations and o industry standards  Organizational process assets: o stakeholder register templates o lesson learned from previous projects o stakeholder registers from previous projects ✓ Expert advice  Act HIGH keep satisfied engage closely How to engage? How to communicate? INFLUENCE POWER / Power-Interest Matrix monitor keep informed or, empower and This space may require special management LOW be empowered by (e.g. Indigenous groups) LOW HIGH INTEREST Competency 4: Ethical and responsible leadership Lead with integrity and accountability, considering the broader impacts of decisions.  We look at social, ecological RESPONSIBILITY: Responsible Management Setting and pursuing ethical goals, influencing activities toward ecologically, socially responsible ways ACTIVITY World Café  World café Managing responsibly Purpose of the café Explore what it means to manage responsibly, applying the principles of ethical decision-making, stakeholder engagement, and leadership in a challenging situation. Rasche et al., Corporate Sustainability © Andreas Rasche, Mette Morsing, Jeremy Moon and Arno Kourula 2023 116 The dilemma A key supplier in your production chain is not paying workers the legal minimum wage and is requiring excessive overtime. While this violates your company’s stated ethical values, cutting ties immediately will delay production for a major product launch, leading to significant financial losses and potential layoffs both at home and within the supply chain. You are tasked with recommending a course of action to your senior leadership. Do you: 1.Enforce immediate compliance with ethical standards, despite the short-term costs? 2.Develop a longer-term strategy to address these issues while maintaining the supplier relationship for now, considering your company’s own role in enabling these practices? Activity Flow Group Formation: Form groups of 4-5 people, ensuring a mix of peers you haven’t worked with before. Role of the Host and Note Taker: Nominate a host and a note taker for the first round of conversation. The host guides the discussion, note takers record key points made. 10-minute discussion rounds After each round, the host moves to a new table and briefly summarizes the previous discussion to the new group. A new host will be nominated for each round. Final round and final groups: After the fourth round, the group at your table will be your project group for the course. Submit your group’s names to the professor.  Café Discussion Topics What does it mean to you, to act responsibly in a management role? Reflect on how responsibility is defined and practised in challenging situations like this one. How do managers influence the well-being of employees, communities, or ecosystems? Consider the ripple effects of decisions, both immediate and long-term, on various stakeholders using this example. What kinds of challenges might managers face when trying to balance the different responsibilities? Explore the complexities of navigating competing priorities such as ethical standards, financial performance, and stakeholder expectations. How do you approach balancing your responsibilities? What is your strategy to resolve conflicting priorities? Share personal or observed strategies for navigating conflicting demands and responsibilities. What would you do in this situation?  PART II. Responsible management in practice: What is CSR?  Textbook Chapters 1-2 Key Take-Aways Corporate sustainability rests on a changing nature of the relationship between business, 1 nature, and society – firms are interested in this debate for various reasons (e.g., economic rationale, stakeholder pressure, and ethical considerations). Different society – business – government – environment relationships have underpinned the 2 dynamics of corporate sustainability, illustrated in three key historical stages: industrialisation, the modern corporation and internationalisation. Various issues fall under the corporate sustainability umbrella, but it helps to view and 3 categorise issues according to the ESG and also SDG frameworks Rasche et al., Corporate Sustainability © Andreas Rasche, Mette Morsing, Jeremy Moon and Arno Kourula 2023 121  A Changing Context for Business, Nature and Society 1. Increasing Relevance of ESG Challanges: scientific Increasing Rising Scale evidence supporting view that environmental challenges (e.g., Relevance of and Scope of planetary boundaries), social challenges (e.g., human rights ESG Corporate risk), and governance challenges (e.g., corruption risk) are Challenges Activities rising globally 2. Rising Scope and Scale of Corporate Activities: firms have grown in size (and power) significantly; in some industries a few firms cover a high volume of production/service; firms have entered into domains formerly controlled by governments (e.g., water, security) Digitalisation Globalisation and and (the Lack 3. Digitalisation and Datafication: increased public scrutiny Datafication of) Global has made ir(reponsible) conduct more transparent; tech firms Governance also contribute to ESG problems (e.g., CO2 emissions) 4. Globalisation and (the Lack of Global Governance): firms often escape national regulation due to the international nature of value chains (causing a regulatory vacuum) Rasche et al., Corporate Sustainability © Andreas Rasche, Mette Morsing, Jeremy Moon and Arno Kourula 2023 122  Environmental Challenges Explained Through the Planetary Boundaries Framework Basic question: What environmental processes regulate the stability of the Earth system in a Holocene-like state? Planetary Boundaries = safe operating space for humanity with respect to different Earth systems 2022: 5 out of 9 boundaries are transgressed: deforestation (land-use), climate, biodiversity, biogeochemical flows (e.g., human use of nitrogen in fertilisers), and novel entities (e.g., plastic pollution) Designed by Azote for Stockholm Resilience Centre 2022, based on analysis in Persson et al., 2022 and Steffen et al., 2015 (E/MSY: extinctions per million species-years, BII: Biodiversity Intactness Index, N: Nitrogen, P: Phosphorus) Rasche et al., Corporate Sustainability © Andreas Rasche, Mette Morsing, Jeremy Moon and Arno Kourula 2023 123  Which Sustainability Issues to Address? – The Sustainable Development Goals (SDGs) Rasche et al., Corporate Sustainability © Andreas Rasche, Mette Morsing, Jeremy Moon and Arno Kourula 2023 124  Defining Corporate Sustainability Corporate sustainability focuses on managing and balancing an enterprise’s embeddedness in interrelated ecological, social and economic systems so that positive impact is created in the form of long- term ecological balance, societal welfare and stakeholder value. Economic, social and environmental Corporate sustainability aims at issues are part of larger systems, and balancing social, environmental and these systems interact with each other. economic interests while doing Corporations, for instance, impact and business. It therefore aims to avoid are impacted by various natural situations where taking action in systems, like the Earth’s climate support of one sphere comes at the system. expense of another sphere Rasche et al., Corporate Sustainability © Andreas Rasche, Mette Morsing, Jeremy Moon and Arno Kourula 2023 125  How Has Corporate Sustainability Changed? What issues are addressed by corporate sustainability (e.g., Issues community development, ecological diversity, social inequality, planetary limits)? How are modes used to address the issues (e.g., foundations, Modes corporate codes, cause-related marketing, partnerships, regulation)? Why, or what rationales are offered for addressing these issues and adopting these modes, whether based on principles (e.g., customary Rationales ethics), strategies (e.g., the business case), or business dependencies (e.g., environmental conditions), for example? Rasche et al., Corporate Sustainability © Andreas Rasche, Mette Morsing, Jeremy Moon and Arno Kourula 2023 126  Corporate Sustainability Issues Corporate sustainability issues have shifted in several main ways… Corporate sustainability issues are 1. Changes from corporate welfare policies the problems or opportunities to which corporate sustainability is 2. Greater concern for the social, economic and invoked or addressed, usually environmental impacts of production and commercial reflecting societal and processes governmental agendas. 3. Changes in environmental policies 4. Corporate sustainability issues reflect specific They include underlying trends consumer or investor preferences which are beyond single issues or events which trigger new 5. Corporations are expected to engage their corporate sustainability agendas that sustainability in relation to core governmental issues companies face. 6. Corporate sustainability has recently attached itself to wider societal agendas Rasche et al., Corporate Sustainability © Andreas Rasche, Mette Morsing, Jeremy Moon and Arno Kourula 2023 127  Corporate Sustainability Modes There has been a general historical development of corporate sustainability modes, specifically with the shift from corporate sustainability being organised entirely in and by the corporations themselves to being organised with other actors. Corporate sustainability reflects ‘partial’ organisation by the corporation in conjunction with other actors whether in business associations, cross- sector partnerships or multi-stakeholder initiatives. Whilst corporations open their sustainability policies to outside influences, they also learn to deal with complexity as a result of the confluence of expertise, interest and value that these new organisational approaches bring, and gain legitimacy thereby. Rasche et al., Corporate Sustainability © Andreas Rasche, Mette Morsing, Jeremy Moon and Arno Kourula 2023 128 Six Rationales for Corporate Sustainability Rasche et al., Corporate Sustainability © Andreas Rasche, Mette Morsing, Jeremy Moon and Arno Kourula 2023 129  Corporate Sustainability Actors: Society, Business, Government and the Natural Environment 1. Society: The core context of corporate sustainability. Society Business Societies have expectations of business and certain powers over business, particularly concerning legitimacy. 2. Business: Gives corporate sustainability substance and shapes corporate sustainability agendas in order to win legitimacy, innovate, attract new customers, motivate employees and make efficiency savings. Government Natural 3. Government: The key institutional shaper on behalf of Environment society given their unique authority. Business also looks to governments to ensure functioning markets (e.g., by making and applying rules of competition). 4. Natural Environment: The imperative to include the environment in corporate sustainability analysis became more central in the light of alarming ecological trends (e.g., water scarcity, loss of biodiversity and climate change). See Table 2.2 in the book Rasche et al., Corporate Sustainability © Andreas Rasche, Mette Morsing, Jeremy Moon and Arno Kourula 2023 130