CSR Beyond the Mainstream - Session 2 PDF

CSR Beyond the Mainstream Dr. Ivonne Chirino Klevans Session 2  Seminar outline Lecture - part 1: Quiz based on readings from session 1 Corporate sustainability, Corporate Responsibility, Business Ethics definitions W...

CSR Beyond the Mainstream Dr. Ivonne Chirino Klevans Session 2  Seminar outline Lecture - part 1: Quiz based on readings from session 1 Corporate sustainability, Corporate Responsibility, Business Ethics definitions Who are CSR professionals? Integrating Responsibility, Ethics & Sustainability into management processes and corporate strategy Key concepts Corporate sustainability and strategy, Corporate Social Responsibility, Business Ethics, Tensions around corporate sustainability, Competencies of sustainability professionals, ethical decision making Activity - part 2: Ethics Fishbowl Book chapters: 3, 5 and 10 Competence developed in seminar Ethical and Responsible Leadership: Acting with integrity and accountability for societal impact. Is this a situation related to CSR? Why?  What’s at stake? A Changing Context for Business, Nature, and Society Increasing Rising Scale and Relevance of ESG Scope of Corporate Increasing Relevance of ESG Challenges: scientific evidence supporting view that environmental challenges (e.g., Challenges : Activities: planetary boundaries), social challenges (e.g., human rights IMMIGRATION AMAZON risks), and governance challenges (e.g., corruption risk) are rising globally 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 Digitalisation and Globalisation and have entered into domains formerly controlled by Datafication: DATA (the Lack of) Global governments (e.g., water, security) PRIVACY Governance: HIRIN Digitalisation and Datafication: increased public scrutiny has G PRACTICES made ir(reponsible) conduct more transparent; tech firms ACROSS also contribute to ESG problems (e.g., CO2 emissions) COUNTRIES Globalisation and (the Lack of Global Governance): firms often escape national regulation due to the international nature of value chains (causing a regulatory vacuum) The Pyramid of Corporate Social Responsibility Adapted and modified from Carroll (1991) Economic: recycled tires mulch © 2015 Cengage Learning 9 10 Ethical 11  Philanthropic https://youtu.be/8EaSlKqs6Fo © 2015 Cengage Learning 12 Renter’s rights https://www.wral.com/video/5onyourside/video/17783238/ Corporate Sustainability, Corporate (Social) Responsibility, and Business Ethics  Think 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 issues Corporate sustainability aims at balancing are part of larger systems, and these social, environmental and economic systems interact with each other. interests while doing business. It therefore Corporations, for instance, impact and are aims to avoid situations where taking impacted by various natural systems, like action in support of one sphere comes at the Earth’s climate system. the expense of another sphere Defining Strategy in relation to Corporate Sustainability “Strategy is the direction and scope of an organisation over the long term: which achieves advantage for the organisation through its configuration of resources within a changing environment, to meet the needs of markets and to fulfil stakeholder expectations.” Johnson and Scholes, 1999: 10 Strategic decisions are Strategic decisions deal Strategic decisions aim at usually concerned with with the future which achieving a competitive the entire firm (e.g., makes them anticipatory advantage for the entering a product reflections and hence corporation and aspire to market). risky. fulfil stakeholder expectations. Think Think Why Do Corporations Engage in Sustainability? - Instrumental motivation - Ethical motivation - Political motivation - Stakeholder motivation Corporate Sustainability, Corporate (Social) Responsibility, and Business Ethics Who Are Sustainability Professionals? Sustainability professionals are people tasked with advancing and implementing sustainability in organisations They tend to conduct similar activities, which typically include analysing, controlling and advancing sustainability in organisations In the early 2020s, most multinational companies and other large and small organisations have by now created the position of sustainability professional or manager Tasks of Sustainability Professionals Strategic Corporate Sustainability Future 1. Organisational Embeddedness: Strategic corporate sustainability Organisational should be embedded into organisational practices whenever and Orientation Embeddedness wherever relevant 2. Future Orientation: Corporate strategy deals with the long-term direction of a company. Strategic corporate sustainability therefore tries to identify those ESG issues that support the long-term goals of the corporation in its competitive environment Alignment with Consideration of 3. Alignment with Key Resources: The strategic plans that a company Stakeholder Key Resources Expectations makes need to be backed by the resources that the firm has or can develop 4. Consideration of Stakeholder Expectations: Strategic engagement with corporate sustainability implies to look for early warning signals by stakeholders that enable a proactive management of relevant expectations How many brands of yogurt can you find at the supermarket? Vegan Lactose free Fat free Skim Organic Low carb Low sugar A Pluralistic Society (e,g, fast food regulation) 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. 24  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. 25  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 \ 26 Opening a new hospital in Raleigh 27 Awareness Access to internet Freedom of speech Awareness impacts social action 28 Is lobbying good or bad? Lobbying \ 29  Social Environment, Business Criticism and Corporate Response Access to internet Affluence Education Awareness The number of American adults Factors in the Social Environment who were high school Rising Expectations Rights Movement graduates grew from 55 percent to Entitlement Victimization 83 percent Mentality Philosophy Business Criticism MONSANTO Increased Concern for the A Changed Social Contract Societal Environment 30 Victimization philosophy what do you think? © 2015 Cengage Learning 31 Victimization philosophy 32  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 grew Rising 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 33 Commercials misleading the public 34 On top of the fine of $45 million, Dannon was ordered to remove "clinically" and "scientifically proven" from its labels, according to ABC. 35 36 37 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 38 Key Tensions Around Corporate Sustainability Shareholder Stakeholder Economic Social/Environmental Internalisation Externalities Mandatory Voluntary Global Local Characteristics of Sustainability Professionals The strain between commercial goals (i.e., profit maximisation and financial performance) and sustainability goals (i.e., conducting business in a responsible and sustainable way) is inherent in sustainability professionals’ everyday experiences The tensions faced by sustainability professionals are not easy to address due to the fact that these conflicting goals cannot be addressed separately, they need to be addressed simultaneously as the triple bottom line is what defines sustainability (people, planet, profit) Sustainability professionals often perceive their task as very difficult and in the context of limited resources and support within an organisation, they may even find these tasks impossible to achieve  Think Hard and Soft Skills of Sustainability Professionals Sustainability professionals are expected to have certain skills that enable them to address the complex job challenges. They also need their intrinsic motivation for coping with the high and diverse job demands. Based on Atwood et al. (2016)  Competencies of Sustainability Professionals A sustainability professional ‘has to be an ‘all-rounder’, covering a wide variety of requirements’ (Spraul et al., 2019, p. 19) They have to become experts on all of the following four competence domains: cognition-oriented; functional-oriented; social-oriented and meta-oriented This suggests that a successful professional is someone who is a social thinker and a practical executer  Necessity of Ethical Reflection for Corporate Sustainability Why do we need ethics when reflecting on corporate sustainability? The ‘Moral Case’ for Corporate Ethics as Complementing Regulation Sustainability Ethics is needed because no law can Think The moral case for corporate sustainability account for all possible courses of action. emphasises that we should not always The letter of the law is usually insufficient need to have a business case to do the to fully ensure sustainable and responsible right thing. business behaviour. Necessity of Ethical Reflection for Corporate Sustainability Ethical dilemma situations are deeply embedded into reflections on corporate sustainability. We 1 cannot avoid ethics when thinking about how firms should become more sustainable and responsible. Although strategic thinking and win-win scenarios are important when discussing corporate 2 sustainability, they are by themselves not a sufficient basis for thinking about how we want firms to behave in society. It is therefore important to understand normative and descriptive ethical theories. Given that ethical decision-making is impacted by multiple biases, which often push ‘good’ people 3 towards ‘bad’ decisions, ethics management with a compliance and integrity perspective in mind is an indispensable part of making corporate behaviour more sustainable. Descriptive Ethics – ‘How Are Ethical Decisions Made?’ Descriptive ethical theories What influences ethical decision-making? 1 2 Individual Factors Situational Factors The characteristics of the decision- The context in which we make ethical maker (e.g., shaped by socialisation decisions (e.g., in terms of location and processes): time) Cognitive moral development Moral awareness  1 2 3 Corporate Culture Reward and Incentive National Culture Schemes Corporation’s culture is ‘a set of Right and wrong depends on the norms and values that are widely societal context in which a person shared and strongly held throughout Rewards are an important change agent that managers can use to operates the organization’ (O’Reilly and Chatman, 1996: 166) incentivise ethical behaviour (e.g., Countries differ with regard to the stock options) norms and values they consider to Values (Which things matter to the reflect legitimised behaviour organisation?) and norms (What Poorly designed reward systems can kind of behaviour is consistent with also invite and enable unethical Differences in attitudes are these values?) influence how we employee behaviour (e.g., influenced by societal norms and make ethical decisions employees recording more ‘billable broader national institutions (e.g., hours’) the role of politics) Managing for Ethical Reflection in Corporations Adapted and modified from Paine (1994: 113) Possibility of Ethical Reflection in the Context of Corporate Sustainability Firms’ norms and values reach beyond individual members and define what is considered right and wrong Corporations as Corporations possess agency beyond the Collective Actors accumulation of individual members’ agency (e.g., codes of conduct) Firms’ norms and values set the normative context in which individuals make decisions Corporations as Firms have rules that fix authority relationships. These rules specify when and an Individual Actor under which conditions an individual action becomes ‘official’ and should be seen as an action of the organisation Bringing About Sustainable Change in Organisations There are different ways in which sustainability professionals can pitch their projects. This is often referred to as issue-selling. A root cause of sustainability professionals’ difficulties with implementing their projects is the decoupling of mainstream and sustainability strategies. Issue-Selling Decoupling Sustainability professionals seek to Sustainability goals of the organisation are strengthen their internal influence by often at odds with the business creating a network of internal allies mainstream strategy They seek to make sustainability issues While the mainstream strategy is widely emotionally appealing for people in accepted as the legitimate strategy, the – different functions mostly new – sustainability strategy can face severe challenges in terms of Sustainability professionals try to adapt acceptance and legitimisation their language  Difficulties in Implementing Sustainability Strategies 1 2 3 Difficult to Measure Resistance to Change Complexity Sustainability can be very hard to Changing the internal organisation Sustainability is a complex implement as it is something that or creating new sustainable phenomenon that requires cannot be easily measured practices before they can be organisations to address at the same Although the past decades have measured, can be difficult time ethical, social and seen a rise in standards, tools, codes Organisational change typically environmental concerns of conducts, policies, key meets resistance throughout the Businesses are usually embedded in performance indicators, and organisation; changes that may large networks of stakeholders – reporting schemes it can still be threaten their tried-and-trusted such as other businesses, difficult to measure and put into business practices governments and NGOs – all of words just what it means to be whom might have their own take on ‘sustainable’ these concerns  Corporate Sustainability: Balancing economic, social, and environmental goals is essential but complex due to systemic interactions and inherent tensions. Role of Ethics: Ethical reflection complements regulation and underpins sustainable and responsible decision-making in business. Sustainability Professionals: Must navigate organizational challenges, balance stakeholder expectations, and act as In summary change agents. Practical Tools: Techniques like issue-selling and managing decoupling help embed sustainability into corporate strategies. Ethical Dilemmas: Responsible management requires reconciling short-term pressures with long-term sustainability goals. Interact Ethics Fishbowl Session 2 Background for instructors Fishbowl is an established, well-documented small group activity with many resources available online 1. The class is broken up, so that two groups work together (project groups that work together during the semester for example can be paired up with another group) 2. Two rounds are played, with one group in the middle having a discussion, the other silently observing and taking notes on the outside. Discussion is about 10-15 minutes, then the groups switch. 3. The exact prompts for discussion are different, so that the activity is not repetitive, new statements are discussed in the second round. But the overarching theme is the same. 4. After the two rounds, groups share out their main reflections on inner-circle discussions, then any observer-role reflections 5. Instructor finishes with overarching questions for plenary reflection to connect activity with theme of the session (sample questions on following slides) Ethics Fishbowl: Objective This activity has 2 purposes: To use the activity to discuss practical ways to integrate ethics, responsibility, and sustainability into management processes. To observe and analyze how ethical dilemmas and responsibilities are debated  Fishbowl: Steps 1. Group A will be the first inner- circle, while group B is the outer circle (observers taking notes) 2. Switch: Group B inner-circle Group A observes  What you will do: 1. As inner circle you read 2 statements & discuss as a group: 1. First, each person decides which one they agree with more 2. As you debate, each person argues from that perspective as if it were their own statement 3. It is a bit like role playing 2. As outer circle, you work individually with the form provided to: Observe silently the behaviors Note discussion points, attitudes  GROUP A: The Role of Sustainability in Management ASSIGN A DISCUSSION LEAD. DISCUSS BOTH STATEMENTS. Statement 1: "Sustainability is a buzz-word, a distraction. As a manager, my responsibility is to focus on maximizing efficiency and profitability. Trying to incorporate sustainability into daily WHICH DO YOU AGREE WITH? operations only adds unnecessary complexity." WHAT ARE THE STRENGTHS / Statement 2: WEAKNESSES OF EACH? "Sustainability is non-negotiable. As a manager, it’s my duty to integrate environmental and social considerations into every decision. This isn’t just ethical—it’s essential for long-term success." 10-15 minutes  GROUP B: ASSIGN A DISCUSSION LEAD. Balancing Ethical Standards and Business Goals DISCUSS BOTH STATEMENTS. Statement 1: "In the real world, tough choices are inevitable. As a manager, I have to prioritize business goals over strict WHICH DO YOU AGREE WITH? ethical standards to remain competitive. It’s just the WHAT ARE THE STRENGTHS / nature of the job." WEAKNESSES OF EACH? Statement 2: "Ethics should guide every decision I make as a manager. Compromising on ethical standards for short-term gains undermines trust and damages long-term success." 10-15 minutes Practical tips for instructors As observers students work individually. This is frequently a point of confusion: they tend to believe they act as an observing group, and they have to be reminded to take notes, expecting someone else in the group will. Students will need to see the prompts during the discussion for reference. The prompts can be projected on the screen during each round, and students sitting far away may take pictures on their phones Similarly, observers need the guiding questions (see following slides), the form should be disseminated e.g. digitally It helps to provide the discussion leads with discussion points they can use to advance the exchange. If the prompt statements are projected on the screen, these discussion points should be printed handouts (1 per group is enough). Sample prompts are on next slide. Group A discussion prompts: On its surface, which statement draws you, which resonates with you? Why? What are some small, practical ways that managers can incorporate sustainability into day-to-day business operations? If you were managing a team, how would you address resistance to sustainability initiatives from employees or leadership? Think of a situation where pursuing sustainability might create a challenge. How would you balance this with your other priorities? Group B discussion prompts: On its surface, which statement draws you, which resonates with you? Why? How would you respond to a colleague or supervisor pressuring you to compromise on ethical standards for short-term gains? What tools or strategies can help managers communicate ethical priorities effectively to their teams? What are the risks of compromising on ethics for business goals? Observer guide: individually, take notes on the following when you are in the outer circle Group Dynamics Was the discussion balanced, or did one perspective dominate? Did participants listen actively and engage respectfully with opposing views? Viewpoints on Managerial Responsibility Did the group express optimism about integrating ethics and sustainability into management, or skepticism about its practicality? Were participants more focused on short-term business realities or long-term societal impacts? PLENARY DEBRIEF As fishbowl participant: 1. How did it feel to take a stand, knowing that you were watched? How is it similar to being in the role of a responsible manager? 2. How did it feel to argue for or against a position on managerial ethics and responsibility? Were there moments when you felt conflicted or struggled to support your view? As an observer: 1. Did you hear anything from the fishbowl that surprised you? 2. Was it difficult to not interrupt? Why is it important for responsible managers to balance sharing one’s opinion, with restraint as to what, how, when and with whom is shared? Everyone: What is one thing you learned from this exercise? Based on the discussions, how do you now define responsible and ethical management in practical terms? How might the ideas debated in the fishbowl be integrated into actual management processes or corporate strategies? What challenges did the activity highlight about balancing ethical responsibilities with business realities?