1. Business Responsibility and Sustainability BHS0032 Dr Eshani Beddewela Week 03

2. Session Outline Applying CSR from a stakeholder perspective –CSR in the workplace –CSR in the market place –CSR in the community

3. CSR in the workplace

4. Employees Employees are at the centre of CSR: A firm’s reputation rests on its treatment of employees CSR can attract talent and boost performance Companies need employees to buy into CSR activities Provision of Employment is the fundamental social & economic role of business

5. CSR in the workplace Workplace issuesWorkplace issues are central to CSR: –occupational health and safety (physical and psychological), –fair pay and conditions, –equal opportunities, –fair process –free association.

6. CSR in the workplace in different settings Developed CountriesDeveloping CountriesOutsourced Workplaces Regulated The law takes care of employee protection Less Regulated / Unregulated Poorly enforced laws for employee protection or no laws Could be in both developed and developing countries CSR -By upholding legal requirements -By focussing on diversity, work-life balance and other issues CSR Working conditions, pay, unionisation, health and safety, equal opportunity Extended Responsibility CSR through supply chains

7. Outsourced Workplace ‘Race to the bottom’ –Developing countries compete to attract foreign investments –For Multinational Enterprises there is a “choice” of going to countries which offers the ‘most preferable’ conditions – lowest level of regulation –This competition for foreign investments lead to a “downward spiral” of protection called – The Race to the Bottom

8. Outsourced Workplace ‘Human Rights’ –Global companies responsibilities towards protection of human rights globally SHOULD focus on three principles:- 1.PROTECT – The company is liable to PROTECT the human rights of their workers even if that worker is in another country 2.RESPECT – Firms are required to undertake due diligence in relation to Human Rights (i.e. Awareness and Acknowledgement) 3.REMEDY – Firms need to put in place formal procedures and systems to punish abuses of human rights

9. CSR in the market place

10. CSR in the Market Place CSR is commercially viable: attracts consumers, builds brands that consumers evaluate more favourably, earns business a premium. Marketplace may expose corporate irresponsibility: the impact of products and marketing on consumers. CSR is a market-preference expressed by consumers: A basis for differentiation. Market can act as a social control of business: Consumers can reward or punish corporations.

11. The Bottom of the Pyramid (BOP) “Improving the lives of the billions of people at the bottom of the economic pyramid is a noble endeavor. It can also be a lucrative one,” (Prahalad and Hammond, 2002) The bottom of the pyramid (BOP) concept refers to those at the very bottom of the world’s earnings league; the poorest of the poor. Prahalad and Hammond’s contention is that the world’s poor have been neglected by business. By stimulating commerce and development at the bottom of the economic pyramid, MNCs could radically improve the lives of billions of people and help bring into being a more stable, less dangerous world.

12. < $1,5000 Pyramid of Consumer Groups $1,500—$20,000 Annual Purchasing Power Parity (PPP) in US $ > $20,000 Middle class Tiers 2 & 3 (1.5 billion people) Tier 1 Upper class (85% of wealth) Tier 4 (4 billion people in developing countries Population in millions BoP Base of pyramid Luxury market 12

13. Untapped Potential –Positive trends in developing countries (e.g. political reform, development of low-cost wireless networks) are reducing barriers and creating better access, even in rural areas –The aggregate buying power of poor communities is large –The poor do buy ‘luxury items’ –Opportunity for companies with economies of scale to offer higher quality goods at lower prices –Business activity is thriving in the slums

14. The Business Case for BoP Three advantages for serving the BOP: 1.Revenue growth: BOP markets represent new sources of growth due to being in early stages of economic development 2.Greater efficiency: Cost saving opportunities and reconfiguration of supply chain e.g. outsourcing 3.Access to innovation: BOP markets are hotbeds of commercial and technological experimentation

15. CSR in the community

16. CSR in the Community CSR has traditionally been equated with communities: –Philanthropic community donations were amongst the first forms of CSR and are usually the first manifestations of a firm’s CSR agenda. –Reflect the voluntary and discretionary elements that are central to CSR. –Communities have high legitimacy as corporate neighbours. Types of community responsibility: –Philanthropic donations from the firm to deserving causes (time / money) e.g. Toyota. –Corporate giving through dedicated Foundations e.g. Anglo American’s corporate donations in South Africa.

17. Should Corporations Engage in Philanthropy? Criticisms raised against corporate giving: –Too paternalistic. –An instrumental attempt to buy local compliance to corporate plans. –A public relations device that adds little value to the cause / firm. –Lack of ‘fit’ between company and cause. –Focus on publicity (goodwill) rather than social impact. –Most initiatives are unfocused and piecemeal. –Breeds public cynicism of corporate motives. –Fail to be tied to business / social objectives

18. Can Firms ‘Do Well by Doing Good?’ Philanthropic donations  Strategic philanthropy (add value to cause and company) Innovations in strategic philanthropy: –Linking of employee volunteering to human resource development strategies. –Linking charitable giving to marketing strategies through cause- related marketing and sponsorship. –Establishing cross sector partnerships with community groups.

19. References Crane, A., Matten, D., & Spencer, L. (Eds.). (2014). Corporate Social Responsibility: Readings and cases in a global context (2nd ed.). London: Routledge. Chapter 5, 6 and 7 (pages as indicated in the Reading List)