1 The Profit Motive and Environmental issues Geoff Leese October 2006 revised July 2007, August 2008, August 2009

2 Introduction n Profit maximisation n Corporate Social Responsibility definition n Ethical management n Benefits of CSR n CSR and stakeholders n The SVN and it’s standards n The arguments against

3 The profit motive n Profit means growth n Growth means survival n But at what cost? n Short term profit vs. long-term survival

4 Corporate Social Responsibility The commitment of business to contribute to sustainable economic development, working with employees, their families, the local community and society at large to improve their quality of life.” The World Business Council on Sustainable Development.

5 Ethical management n Is it legal? n Is it balanced? ä That is, fair to all stakeholders n Is it “right”? ä Are you proud of it? ä Would you want others to know what you decided?

6 Ethical policy n Purpose ä Don’t lose sight of it n Pride ä Don’t be ashamed of what you’ve done n Patience ä Long term survival rather than short term profit n Persistence ä Commitment to principles is important n Perspective ä Stay focused!

7 Benefits of CSR n Satisfied customers n Loyal employees n Enhanced reputation Taken From SERCO annual CSR report, Socially responsible and environmentally sustainable

8 CSR and customers n Product safety n Cost-based pricing n High quality n Focus on customer needs n Value for money n Honest advertising

9 CSR and shareholders n Maximum information n Honest accounting practices n Resisting hostile takeovers n Creating a sound capital base

10 CSR and employees n Health and Safety n Fair wages n Continuous employment n Job design n Training and personal development n Promotion opportunities n Equality of treatment n Respect privacy n Respect family life ä Home/work balance

11 CSR and society n Environmental sustainability n “Clean” operations n Contribution to local communities n No restrictive practices n Obeying spirit as well as letter of the law n Conserve natural resources

12 CSR and suppliers n Prompt payment ä Enforced by law in some societies n Confidentiality n Long notice of termination of contracts n Don’t exploit position of dependence power n Help them to help you

13 The SVN standards n Three general topics ä Ethics –Values ä Accountability –Disclosure ä Governance –Stakeholder representation

14 The SVN standards n Six stakeholder topics ä Employees ä Investors ä Customers ä Suppliers ä The community ä The environment

15 The SVN standards n Each standard consists of ä Principle ä Practices ä Measures ä Resources Visit for more information

16 The arguments against CSR n Overdependence n Disproportionate influence n Undermines democratic process n Not our problem n Can’t afford it n Leads to higher prices n Puts us at a competitive disadvantage

17 The arguments against CSR n How do we measure it? n Diversity of viewpoints

18 Summary n Profit maximisation n Corporate Social Responsibility definition n Ethical management n Benefits of CSR n CSR and stakeholders n The SVN and it’s standards n The arguments against

19 Further reading n Bennett chapter 8 n Johnson and Scholes section 5.4 n Social venture network - follow the link! Social venture network - follow the link! n Corporate Social Responsibilty - follow the link! Corporate Social Responsibilty - follow the link!