SCM4305 Managing ESG for Supply Chain Sustainability (Chapter 4)

SCM4305 Managing ESG for Supply Chain Sustainability Chapter 4: Corporate Stakeholder Responsibility  Introduction (1 of 4) Corporate social responsibility (CSR). Questions to consider regarding CSR. Assumptions of economic argument for CSR. Impact of...

SCM4305 Managing ESG for Supply Chain Sustainability Chapter 4: Corporate Stakeholder Responsibility  Introduction (1 of 4) Corporate social responsibility (CSR). Questions to consider regarding CSR. Assumptions of economic argument for CSR. Impact of unprincipled behavior. 2  Introduction (2 of 4) The focus of CSR debate: to urge to act out of moral duty. Responsibilities of stakeholders ignored. Absence of stakeholder engagement. 3  Introduction (3 of 4) No statute of limitations on stakeholder reactions. Building the foundation for strategic CSR. 4  Introduction (4 of 4) Social responsibility: defined by society. Challenges for the managers. Importance of forming trust-based relationships with stakeholders. 5 CSR: A Corporate Responsibility? (1 of 10) CSR community expects too much of firms. Stakeholders must demonstrate their support. 6  CSR: A Corporate Responsibility? (2 of 10) Milton Friedman, one of the greatest economists, introduced “A Friedman Doctrine”: The Social Responsibility of Business is to Increase Its Profits. 7  CSR: A Corporate Responsibility? (3 of 10) Charles Handy : In a knowledge economy, a good business is a community with a purpose, not a piece of property. 8  CSR: A Corporate Responsibility? (4 of 10) The business of business is business? Enlightened business? https://www.facebook.com/watc https://www.youtube.com/watc h/?v=3485711124887671 h?v=AbiCR3G2YPg https://www.youtube.com/watc h?v=0E-URmNAa5o 9 CSR: A Corporate Responsibility? (5 of 10) Milton Friedman vs. Charles Handy Articles on CSR framing the debate about firm’s responsibility: – By Friedman: profit is an end in itself. – By Handy: firm should meet needs of the society. 10  CSR: A Corporate Responsibility? (6 of 10) For Friedman: – Profit is an end in itself. – Value to society is maximized if individual actors pursue their self-interest above all else. For Handy: – Profit is only a means to a larger end. – A firm should not remain in existence just because it is profitable but because it is meeting a need that society as a whole values. 11  CSR: A Corporate Responsibility? (7 of 10) Image result for poll Link: https://forms.office.com/r/EeuC2EAsMw 12 CSR: A Corporate Responsibility? (8 of 10) Milton Friedman vs. Charles Handy Positions taken by Friedman and Handy appear irreconcilable. Insightful interpretation of both arguments. 13  CSR: A Corporate Responsibility? (9 of 10) Are the articles so different? An example: Does it make sense for a large financial firm to donate money to a group researching the effects of climate change because the CEO believes this is an important issue? vs. Does it make sense for an oil firm to donate money to the same group because it perceives climate change as a threat to its business model and wants to mitigate that threat by investigating possible alternatives? 14 CSR: A Corporate Responsibility? (10 of 10) The action – A large for-profit firm donating money to a nonprofit group – is the same. The difference is the relevance of the nonprofit’s activities to the firm’s core operations. Friedman’s argument – Free market system, efficient allocation of resources, business of business is business, within the rules of the game, create profit (values)…… Not take the positions of Friedman and Handy at face value Not far away from strategic CSR perspective 15 Milton Friedman Versus Charles Handy 16 Milton Friedman Versus Charles Handy 17 Milton Friedman Versus Charles Handy 18 Milton Friedman Versus Charles Handy 19 Milton Friedman Versus Charles Handy 20 Milton Friedman Versus Charles Handy 21 Milton Friedman Versus Charles Handy 22  CSR: A Stakeholder Responsibility? (1 of 6) Question that challenges stakeholders. Extent of sacrifice to achieve goals. Stakeholders need to act. 23  CSR: A Stakeholder Responsibility? (2 of 6) Firms reflect our societal values. Corporate stakeholder responsibility. A balance of responsibility. Shifting attention from firms to stakeholders. 24  CSR: A Stakeholder Responsibility? (3 of 6) Difference between CSR and strategic CSR. Higher expectations and higher cost. Stakeholders define the value. Stakeholders have leverage over the firm. 25 CSR: A Stakeholder Responsibility? (4 of 6) 26 CSR: A Stakeholder Responsibility? (5 of 6) 27  CSR: A Stakeholder Responsibility? (6 of 6) The pursuit of profit. Managers need to understand conditions and rules. 28  Stakeholder Engagement (1 of 18) Firms are designed to make a profit. Stakeholders define parameters of actions. 29  Stakeholder Engagement (2 of 18) Caring Stakeholders Stakeholders need to care sufficiently. The potential for an economic/social deficit. The Strategic CSR Window of Opportunity. 30  Stakeholder Engagement (4 of 18) Caring Stakeholders 31  Stakeholder Engagement (3 of 18) Caring Stakeholders Emphasis on the need for balance. Implementation of strategic approach to CSR. 32  Stakeholder Engagement (5 of 18) Caring Stakeholders Firms should compete in terms price or quality. Need for more responsible stakeholders. 33  Stakeholder Engagement (6 of 18) Informed Stakeholders Encouraging socially responsible behavior. Opportunity to convey collective message. The power to shape the society. Values are subjective. 34  Stakeholder Engagement (7 of 18) Informed Stakeholders 35  Stakeholder Engagement (8 of 18) Informed Stakeholders Opportunity/risk tradeoff demonstrates the danger of procrastinating. Need for genuine action to punish firms. 36  Stakeholder Engagement (9 of 18) Transparent Stakeholders The need for open lines of communication. Building trust between firms and stakeholders is a challenge. 37 Stakeholder Engagement (10 of 18) Transparent Stakeholders 38  Stakeholder Engagement (11 of 18) Transparent Stakeholders Different polls of public’s confidence in American institutions. Opinion surveys may not always be clear. Similar trend in online protests. 39  Stakeholder Engagement (12 of 18) Transparent Stakeholders Need to convey the concerns clearly. Firms are value-neutral tools. 40  Stakeholder Engagement (13 of 18) Educated Stakeholders An indicator of CSR perspective becoming a part of business. Business schools beginning to take ethics and CSR seriously. – “Beyond Grey Pinstripes” biennial survey. – Net Impact. 41  Stakeholder Engagement (14 of 18) Educated Stakeholders The United Nations’ Principles of Responsible Management Education (PRME). Bringing business schools closer to their original mission. Awareness and acceptance of CSR perspective. 42  Principle 1: Purpose Principle 2: Values The United Principle 3: Method Nations PRME Principle 4: Research Principles Principle 5: Partnership Principle 6: Dialog 43  Stakeholder Engagement (15 of 18) Engaged Stakeholders A belief in something larger than the self. Factors that strongly connect with the sense of self-worth. 44 Stakeholder Engagement (16 of 18) Engaged Stakeholders 45  Stakeholder Engagement (17 of 18) Engaged Stakeholders A synergistic relationship between a firm and its stakeholders. Corporate stakeholder responsibility is a radical idea. 46  Stakeholder Engagement (18 of 18) Engaged Stakeholders Acknowledging our collective role in creating firms. CSR is both corporate and stakeholder responsibility. 47  Strategic CSR Debate Motion: A stakeholder’s responsibility to hold the firm to account is more important than the firm’s responsibility to meet the needs and concerns of that stakeholder. 48  Questions for Discussion and Review Who is responsible for CSR—firms or their stakeholders? Why? List three points in favor of both Friedman’s and Handy’s view of the firm and its responsibilities. Which position do you agree with? Why? Would you report a classmate you suspected of cheating at school? Why or why not? Think about a recent example of a firm that changed its behavior in response to the demands of a stakeholder. Was this an example of corporate stakeholder responsibility? If a firm’s stakeholders condone the irresponsible behavior of a firm, should the firm keep acting this way or should it change? Why? 49