Corporate Citizenship

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Corporate Citizenship
Chapter
4

• The Dynamic Social Climate
• Implementing Corporate Citizenship Activities
• Corporate Citizenship in Practice
• Corporate Social Performance Audits

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Corporate citizenship

• Refers to businesses acting responsibly toward
  their stakeholders.
• Involves
• proactively addressing business and society
  issues,
• building stakeholder partnerships,
• discovering business opportunities through social
  strategic goals, and
• transforming a concern for financial performance
  into a vision of corporate financial and social
  performance.

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Contrast between corporate social responsibility
and corporate citizenship
Figure 4.1
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Principles of corporate citizenship

Good corporate citizens strive to conduct all
business dealings in an ethical manner, make a
concerned effort to balance the needs of all
stakeholders, while working to protect the
environment.
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Exhibit 4.Aa
Principles of corporate citizenship
Ethical Business Behavior
1) Engages in fair and honest business practices
in its relationship with stakeholders. 2) Sets
high standards of behavior for all employees. 3)
Exercises ethical oversight of the executive and
board levels.
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Principles of corporate citizenship
Exhibit 4.Ab

• Stakeholder Commitment
• 4) Strives to manage the company for the benefit
  of all stakeholders.
• 5) Initiates and engages in genuine dialogue with
  stakeholders.
• 6) Values and implements dialogue.

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Principles of corporate citizenship
Exhibit 4.Ac

• Community
• 7. Fosters a reciprocal relationship between the
  corporation and community.
• 8. Invests in the communities in which
  corporation operates.
• Consumers
• 9. Respects the rights of consumers.
• 10. Offers quality products and services.
• 11. Provides information that is truthful and
  useful.

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Principles of corporate citizenship
Exhibit 4.Ad

• Employees
• 12. Provides a family-friendly work environment.
• 13. Engages in responsible human-resource
  management.
• 14. Provides an equitable reward and wage system
  for employees.
• 15. Engages in open and flexible communication
  with employees.
• 16. Invests in employee development.

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Principles of corporate citizenship
Exhibit 4.Ae

• Investors
• 17. Strives for a competitive return on
  investment.
• Suppliers
• 18. Engages in fair trading practices with
  suppliers.
• Environmental Commitment
• 19. Demonstrates a commitment to the environment.
• 20. Demonstrates a commitment to sustainable
  development.

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Global corporate citizenship

• The process of identifying, analyzing, and
  responding to the companys social, political,
  and economic responsibilities as defined through
  law and public policy, stakeholder expectations,
  and voluntary acts flowing from corporate values
  and business strategies.

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The Clarkson principles
Exhibit 4.Ba

• Principle 1
• Managers should acknowledge and actively monitor
  the concerns of all legitimate stakeholders and
  should take their interests appropriately into
  account in decision making and operations.
• Principle 2
• Managers should listen to and openly communicate
  with stakeholders about their respective concerns
  and contributions and about the risks that they
  assume because of their involvement with the
  corporation.

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Exhibit 4.Bb
The Clarkson principles
Principle 3 Managers should adopt processes and
modes of behavior that are sensitive to the
concerns and capabilities of each stakeholder
constituency. Principle 4 Managers should
recognize the interdependence of efforts and
rewards among stakeholders and should attempt to
achieve a fair distribution of the benefits and
burdens of corporate activity among them, taking
into account their respective risks and
vulnerabilities.
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Exhibit 4.Bc
The Clarkson principles
Principle 5 Managers should work cooperatively
with other entities, both public and private, to
insure that risks and harms arising from
corporate activities are minimized and, where
they cannot be avoided, appropriately
compensated. Principle 6 Managers should avoid
altogether activities that might jeopardize
inalienable human rights or give rise to risks
that, if clearly understood, would be patently
unacceptable to relevant stakeholders.
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Exhibit 4.Bd
The Clarkson principles
Principle 7 Managers should acknowledge the
potential conflicts between their own role as
corporate stakeholders, and their legal and moral
responsibilities for the interests of
stakeholders and should address such conflicts
through open communication, appropriate reporting
and inventive systems, and where necessary,
third-party review.
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Figure 4.2
A three-stage model of corporate social
responsiveness
STAGE
Organizational Policy Learning
Commitment
High

• Organizational
• changes

• Administrative learning

• Specialized
• learning

Degree of responsiveness to a specific issue

• Formulate policy

• Identity problem

Low
Time (years)
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A model for implementing corporate citizenship
strategies

• The Policy Stage
• The company becomes aware of those parts of the
  surrounding environment, to which it needs to
  respond and act on.
• A companys management may think, based on
  sensitivity to the corporate social environment
  that it should respond to emerging issues,
  concerns, or social trends.

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A model for implementing corporate citizenship
strategies

• The Learning Stage
• Once it has identified a social problem and
  adopted a general policy, the company must learn
  how to tackle the problem and make the new policy
  work.
• Specialized learning
• Occurs when a sociotechnical expert is employed
  to advise the company officers and managers.
• Administrative learning
• Occurs when a companys supervisors and mangers
  become familiar with new routines that are
  necessary to cope with a social problem.

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A model for implementing corporate citizenship
strategies

• The Organizational Commitment Stage
• When the organization institutionalizes its new
  social policy.
• When corporate citizenship becomes part of the
  company and its standard operating procedures.

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Framework for corporate citizenship

• Concentrate action programs on limited
  objectives.
• Concentrate action programs related to the firms
  products or services.
• Begin action programs close to home.
• Facilitate employee action.

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Significant philanthropic contributions
Exhibit 4.C
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American corporate conscience awards, 2003
Exhibit 4.D

• Delta Café
• Positive impactCommunity
• Southwest Airlines
• Positive impactCommunity
• Carrefour
• Innovative partnership
• Chiquita Brands International
• Innovative partnership
• Westpac Banking
• Innovative partnership
• Maina Panettoni
• SA8000 Responsible Workplace

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Corporate social performance audits

• Social performance audit
• A systematic evaluation of an organizations
  social and ethical performance, examining the
  social and ethical impact of a business against
  two benchmarks a companys own mission statement
  and the behavior of other organizations and
  social norms.
• Triple bottom line
• When companies report to stakeholders not just
  their financial results but also their
  environmental and social impacts. Financial,
  social and environmental results, taken together
  as an integrated whole, constitute a companys
  triple bottom line.

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Figure 4.3a
Summary of audit standard characteristics
Global Reporting Initiative
Origin 1997 Focus Link economic,
environmental, and social sustainability Self-rep
orted benefits 1) Internal vehicle for
evaluating policy versus performance 2) Structure
for effective dialogue with stakeholders 3)
Framework for sharing and promoting dialogue with
stakeholders
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Figure 4.3b
Summary of audit standard characteristics
ISO 14001
Origin 1996 Focus Support environmental
protection in balance with
socioeconomic needs Self-reported benefits 1)
Identify areas for energy reduction 2) Reduce
environmental risk 3) Maintain compliance with
legislation and regulation 4) Receive
environmental leadership rewards 5) Prevent
pollution and reduce waste 6) Improve
stakeholder relations 7) Receive more favorable
insurance rates 8) Gain a competitive advantage
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Figure 4.3c
Summary of audit standard characteristics
ISEA AA 1000
Origin 1999 Focus Quality social and ethical
accounting, auditing, and reporting Self-reported
benefits 1) Support effective stakeholder
relations 2) Effective in diverse global
operations 3) Build synergy with emerging
businesses 4) Link planning tools to quality
models 5) Build accountability in public
sector 6) Enhance overall performance