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Corporate CitizenshipCorporate Citizenship

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

ChapterChapter

4

Corporate citizenshipCorporate 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.

Contrast between corporate social Contrast between corporate social responsibility and corporate citizenshipresponsibility and corporate citizenship

Origin

Basis

Focus

Action

Corporate Social

Responsibility

1920s

Principles of charity and stewardship

Moral obligations to society at large

Philanthropy, trustee of the public’s interests

Figure 4.1

Corporate

Citizenship1990s

Building collaborative partnerships with stakeholder groups

Discovering business opportunities through partnerships

Managing corporate social and financial performance

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.

Exhibit 4.Aa

Principles of corporate citizenship

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.

Ethical Business Behavior

Principles of corporate citizenshipPrinciples of corporate citizenship

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.

Exhibit 4.Ab

Principles of corporate citizenshipPrinciples of corporate citizenship

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.

Exhibit 4.Ac

Principles of corporate citizenshipPrinciples of corporate citizenship

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.

Exhibit 4.Ad

Principles of corporate citizenshipPrinciples of corporate citizenship

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.

Exhibit 4.Ae

Global corporate citizenshipGlobal corporate citizenship

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

The Clarkson principlesThe Clarkson principles

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.

Exhibit 4.Ba

The Clarkson principlesThe 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.

Exhibit 4.Bb

The Clarkson principlesThe 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.

Exhibit 4.Bc

The Clarkson principlesThe 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.

Exhibit 4.Bd

Figure 4.2

A three-stage model of corporatesocial responsiveness

STAGE Organizational

Policy Learning Commitment

Time (years)

Deg

ree

of r

espo

nsiv

enes

s to

a s

peci

fic

issu

e High

Low

• Identity problem

• Formulate policy

• Specialized learning

• Administrative learning

• Organizational changes

A model for implementing corporate A model for implementing corporate citizenship strategiescitizenship 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 company’s management may think, based on sensitivity to the corporate social environment that it should respond to emerging issues, concerns, or social trends.

A model for implementing corporate A model for implementing corporate citizenship strategiescitizenship 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 company’s supervisors and mangers become familiar with new routines that are necessary to cope with a social problem.

A model for implementing corporate A model for implementing corporate citizenship strategiescitizenship 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.

Framework for corporate citizenshipFramework for corporate citizenship

Concentrate action programs on limited objectives. Concentrate action programs related to the firm’s products or

services. Begin action programs close to home. Facilitate employee action.

Significant philanthropic contributionsSignificant philanthropic contributionsExhibit 4.C

Name Background 1999-2003 Given/ Pledged

(in Millions)

Bill and Melinda Gates Microsoft co-founder $22,906

Gordon and Betty Moore Intel co-founder 7,010

George Soros Investor 2,431

Eli and Edythe Broad SunAmerica founder 1,463

James and Virginia Stowers American Century founder 1,345

Michael and Susan Dell Dell Computer founder 1,215

The Walton Family Family of Wal-Mart founder 750

Ted Turner CNN founder 664

Ruth Lilly Eli Lilly heiress 560

Donald Bren Real estate 402

American corporate conscience awards, 2003American corporate conscience awards, 2003

Delta Café Positive impact—Community

Southwest Airlines Positive impact—Community

Carrefour Innovative partnership

Chiquita Brands International Innovative partnership

Westpac Banking Innovative partnership

Maina Panettoni SA8000 Responsible Workplace

Exhibit 4.D

Corporate social performance auditsCorporate social performance audits

Social performance audit

A systematic evaluation of an organization’s social and ethical performance, examining the social and ethical impact of a business against two benchmarks: a company’s 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 company’s triple bottom line.

Figure 4.3a

Summary of audit standard characteristics

Global Reporting Initiative

Origin: 1997

Focus: Link economic, environmental, and social sustainability

Self-reported benefits: 1) Internal vehicle for evaluating policy versus performance2) Structure for effective dialogue with stakeholders3) Framework for sharing and promoting dialogue with

stakeholders

Figure 4.3b

Summary of audit standard characteristics

ISO 14001Origin: 1996

Focus: Support environmental protection in balance with socioeconomic needs

Self-reported benefits: 1) Identify areas for energy reduction2) Reduce environmental risk3) Maintain compliance with legislation and regulation4) Receive environmental leadership rewards5) Prevent pollution and reduce waste6) Improve stakeholder relations7) Receive more favorable insurance rates8) Gain a competitive advantage

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 relations2) Effective in diverse global operations3) Build synergy with emerging businesses4) Link planning tools to quality models5) Build accountability in public sector6) Enhance overall performance


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