1 Corporate Social Responsibility PRASETIYA MULYA BUSINESS SCHOOL 27 September 2010
2 AGENDA Corporate Responsibility Pyramid Arguments for and against Corporate Social ResponsibilityCSR implementation
3 CORPORATE RESPONSIBILITY PYRAMID PHILANTROPIC RESPONSIBILITIESThe corporation’s active involvement in activitiesthat promote human welfareETHICAL RESPONSIBILITIESFulfill legal and ethical obligationsLEGAL RESPONSIBILITIESCarry out its work in accordance with the law andgovernment regulationECONOMIC RESPONSIBILITIES(making acceptable profit)Trevino, p.29
4 EVOLUTION OF BUSINESS’S SOCIAL INVOLVEMENT Social Obligation - obligation to fulfil economic and legal lawAvoid do any harm to other peopleConform to the lawSocial Responsiveness:Capacity of an organization to respond to social issuesSocial Responsibility:It is beyond legal and economic standard, in order to attainlong term organization goalsTo cultivate the wisdom and ability to make the world better(Thomas Mulligan)
5 SOCIAL RESPONSIBILITY versus SOCIAL RESPONSIVENESS Major Consideration Ethical PragmaticFocus Ends MeansEmphasis Obligation ResponsesDecision Framework Long Term Medium-Short Term
6 Arguments For Social Responsibility Public ExpectationsLong run ProfitsEthical ObligationBetter EnvironmentDiscouragement of further government regulationBalance of responsibility and powerStockholder interestPossession of resourcesSuperiority of prevention over cures
7 Arguments against social responsibility Violation of profit maximizationDilution of purposeCostsToo much powerLack of skillLack of accountabilityLack of broad public support
9 CSR definition: Company Society Corporate social responsibility is the duty a corporation has to create wealth by using means that avoid harm to, protect or enhance societal assetsCompanySociety
10 CSR PHILOSOPHY Achieving Balance Social Expectation Business Expectation
11 CSR CONCEPT“Business commitment to contribute sustainable economic development, working with employees, their families, the local community, and society at large to improve their quality of life”CSR is a commitment to improve community well being through discretionary business practices and contributions of corporate resources
12 Benefit of CSR Implementation Better management of an ever expanding spectrum of riskImproved reputationImprove innovation, competitiveness and market positioningImproved quality of social relationship to stakeholders by giving added value
13 Generation of CSR Social responsibility as a philanthropy activities Social responsibility as a risk managementSocial responsibility as a mutual business developmentSocial responsibility as global ethics practices
14 Guidance on Social Responsibility ISO 26000 WD 4.2 The EnvironmentLabourPracticesFair OperatingPracticesConsumersissuesCommunity involvement& developmentSocialResponsibilityOrganizationalGovernanceHuman Rights
15 ACT NO. 40 OF 2007Article 7 4:Companies doing business in the field and/or in relation to natural resourcesmust put into practice Environmental and Social responsibility.The Environmental and Social Responsibility contemplated in paragraph (1) constitutesan obligation of the Company which shall be budgeted for and calculated as a cost ofthe company performance of which shall be due to attention to decency & fairnessCompanies which do not put their obligation into practice as contemplated in paragraphShall be liable to sanctions in accordance with the provisions of legislative regulations.Further provision regarding Environmental and Social Responsibilities shall be stipulatedby Government Regulation.
16 Social Issues Supplier: Social issues: Fair competition Good corporate GovernanceSupplier:Fair competitionBriberyCollusionEnvironmental:Global warmingPollutionLack of energyEnvironmental conservationHazardous wasteEcosystemSustainable resources useCustomer:Customer protectionProduct designCustomer complaint handlingMechanism for product recallEducation & AwarenessEmployees:Child laborDiscriminationPeople developmentSocial lifeHealth & safety at workDisable personLabor unionCommunity:UnemploymentPovertyContribution to economic empowermentCommunity involvement
17 Principles of CSR In the area of human rights: Support and respect the protection of internationally proclaimed human rightsMake sure they are not complicit in human rights abuses.
18 Principles of CSR In area of labor Uphold the freedom of association and the effective recognition of the right to collective bargaining.Eliminate all forms of forced and compulsory laborWork for the effective abolition of child labor.Eliminate discrimination in respect of employment and occupation.
19 Principles of CSR In the area of environment Support of precautionary approach to environmental challenges.Undertake initiatives to promote greater environmental responsibility.Encourage the development and diffusion of environmentally friendly technology.
20 Establishing mutually beneficial relations with our suppliers, Principles of CSRSupplier & DistributorEstablishing mutually beneficial relations with our suppliers,customers and business partners.
21 Corporate Social Responsibility MythTruthCSR Kepedulian sosialKedermawananEksternalKetergantungan pada perusahaan (manja)Dinilai dari UangApa mau perusahaanCSR Peningkatan kualitas hidup masyarakatKedermawanan bagian kecil dari CSRStakeholder (internal & eksternal)Memberdayakan masyarakat mandiriSejauh mana perusahaan aktif & proaktif terhadap lingkunganApa mau masyarakat
22 CSR Through Time 50’s – 60’s Howard R. Bowen, Bapak CSR Social Responsibility of The Businessman“Kewajiban Perusahaan menjalankan usahanya sejalan dengan nilai-nilai dan tujuan yang hendak dicapai masyarakat di tempat perusahaan tersebut beroperasi”Perlunya visi yang melampaui urusan kinerja finansial perusahaanSource : Majalah Investor no.166, 29 maret-11april 2007
23 Iron Law of Social Responsibility CSR Through Time60’sKeith DavisIron Law of Social Responsibility“Semakin besar perusahaan, maka semakin besar pula bobot tanggung jawab yang harus dipertahankan perusahaan itu kepada masyarakatnya.”80’sThomas Jones, Pakar ekonomi pembangunan Amerika“Ada korelasi positif antara peran perusahaan dalam merealisaikan tanggung jawab sosial dan peningkatan kinerja keuangan perusahaan tersebut.”Source : Majalah Investor no.166, 29 maret-11april 2007
24 CSR Through Time 90’s Muncul banyak model-model CSR : CSP ( Corporate Social Performance )BET ( Business Ethics Theories )Corporate CitizenshipCSR mulai menjadi tradisi baru dalam duniausaha di berbagai negara.Source : Majalah Investor no.166, 29 maret-11april 2007
25 CSR Method Cause Branding (Top-Down) Perusahaan menentukan masalah sosial dan lingkungan yang harus dibenahi.Biasanya perusahaan mendesain program sosial yang ada kaitannya dengan branding produk/layanannya sehingga masyarakat lebih akrab dengan merek perusahaan tersebut.Source : Majalah Investor no.166, 29 maret-11april 2007
26 Venture Philanthropy (Bottom-up) CSR MethodVenture Philanthropy (Bottom-up)Perusahaan membantu pihak non-profit dalam masyarakat sesuai apa yang dikehendaki masyarakat.Perusahaan membantu masyarakat untuk mandiri dan tidak sekedar manyalurkan bantuan sosial/finansial kepada masyarakat.Source : Majalah Investor no.166, 29 maret-11april 2007
27 Six Option Corporate Social Initiatives NoInitiativesDescription1Cause promotionSupporting social cause through promotional sponsorship.2Cause related marketingMaking a contribution or donating percentage of revenues to specific cause based on product sales3Corporate social marketingSupporting behavior change campaigns4Corporate philanthropyMaking direct contributions to charity or cause5Community VolunteeringProviding volunteer services in the community6Socially ResponsibleBusiness PracticesAdopting and conducting discretionary business practices and investment that support social causes.Kotler and Lee, 2005