UNIT 24.

CORPORATE SOCIAL RESPONSIBILITY

LEARNING OBJECTIVES
After you have read and studied this unit, you should be able to

 Understand the responsibilities of business.

 Discuss the ethics of various business practices.
KEY TERMS

 ethical standard: a rule for moral behaviour in a particular area/ˈeθ.ɪk/

 Ethical behaviour: doing things that are morally right
 Ethical lapse: temporary failure to act in the correct way
 Ethical dilemma: /daɪˈlem.ə/ /dɪˈlem.ə/ a choice between two actions that might
both be morally wrong
 Ethical stance: a stated opinion about the right thing to do in a particular situation
 Ethical issue: an area where moral behaviour is important
 Business Ethics: Standards of business behaviour that promote human welfare and
“the good.”
 Corporate Social Responsibility (CSR): A company’s commitment to improving
or enhancing community well-being through discretionary( tự nguyện) /dɪ
ˈskreʃ.ən.ər.i/contributions of corporate resources. There are five dimensions of
CSR: Environment, Social, Economic, Stakeholder, and Volunteerism.

LEAD- IN

 What words do you associate with 'corporation'? Write down five words.
 What companies/brands do you like? Why?
 Do you know companies that have bad reputations? What for?
 Are there products you won't buy for ethical reasons? If so, what are they?
 Do you think that a company must have responsibilities to its suppliers, its customers, its
employees, the local community and society in general as well as its holders?

READING 1: Four of the views expressed in the illustration on the previous page are
referred to in the following text. Which are they?
PROFITS AND SOCIAL RESPONSIBILITY
Pure free market theorists argue that the function of a business is to make profits. Milton
Friedman, for example, argued that any corporate action inspired by “social responsibility”,
rather than the attempt to maximize profits, is “unbusinesslike”. In an article called “The social
responsibility of business is to increase its profits”, he argued that people who say that business
has “responsibilities for providing employment, eliminating discrimination, avoiding pollution”,
and so on, are “undermining the basis of a free society”. For Friedman, “only people can have
responsibilities”, and not corporations:
In a free enterprise, private-property system, a corporate executive is an employee of the
owners of the business. He has direct responsibility to his employers. That responsibility
is to conduct the business in accordance with their desires, which generally will be to
make as much money as possible, while of course conforming to the basic rules of the
society, both those embodied in law and those embodied in ethical custom.
Therefore, “to say that the corporate executive has a "social responsibility" in his capacity as a
businessman” is to say that “he is to act in some way that is not in the interest of his employers”.
Because if an executive makes 'social' expenditures he is:
spending someone else's money ... Insofar as his actions in accord with his “social
responsibility” reduce returns to stockholders, he is spending their money. Insofar as his
actions raise the price to customers, he is spending the customers’ money. Insofar as his
actions lower the wages of some employees, he is spending their money.
Furthermore, such actions are “undemocratic” as they involve corporations taking on
responsibilities that should be the government's: taxation and expenditure, and solving social
problems. If the elected government is not taking certain actions, it is because the voters did not
want it to do so. Any such action “harms the foundations of a free society” and reveals an
unfortunate “suicidal impulse” in businessmen.
Friedman does not seem to consider the possibility that stockholders might prefer to receive
lower dividends but live in a society with less pollution or less unemployment and fewer social
problems.
An alternative view to the “stockholder model” exemplified by Friedman's article is the
stakeholder model. According to this approach, business managers have responsibilities to all the
groups of people with a stake in or an interest in or a claim on the firm. These will include
employees, suppliers, customers and the local community, as well as the stockholders.
Proponents of the stakeholder approach argue that all these groups should be represented on a
company's board of directors.
Comprehension questions
1. According to Friedman, why should business executives only seek to maximize profits?
2. Who are the employers of corporate executives?
3. In what negative way do 'socially responsible' actions affect stockholders, customers, and
employees?
4. According to Friedman, in what way are “socially responsible” actions by businesses
“undemocratic”?
5. According to the text, what other desires might stockholders have, apart from making as much
money as possible?
6. What is a “stakeholder”?
Vocabulary: Find words in the text that mean the following:
1. treating some people in a worse way than you treat other people
2. making something weaker
3. an economic system in which anyone can raise capital, form a business, and offer goods or
services
4. complying with or following (rules, etc.)
5. expressed, given a material form /ɪmˈbɒd.i/
6 according to generally accepted beliefs based on morals
7. a usual way of behaving
8. to the degree or extent that
9. causes damage to
10. supporters, people who argue in favour of something
Vocabulary
1. discrimination enterprise
2. undermining
3. free
4. conforming to
5. embodied /ɪmˈbɒd.i/
6. ethical
7. custom
8. insofar as
9. harms
10. proponents

READING 2: Read the text below about the future of corporate philanthropy. Choose the best
sentence from the list to fill each of the gaps and mark a letter a) – h). Do not use any letter more
than once. There is an example at the beginning, (0).
The future of corporate philanthropy
Some of the biggest and most powerful companies in the world today are becoming almost as
well known for their high-profile corporate social responsibility initiatives as for their products
and services. Some are cynical about the motivations for this. (0)_____E_____. He maintains
that corporate social philanthropic activities have become “heavily promoted story tools that
present a deliberately over-inflated image of corporate citizenship”. What is more worrying still
is that all this activity has effectively served as a smokescreen to hide a significant fall off in
corporate charitable contributions worldwide. (1) ______________ Business charitable
deductions now only average about 0.7% of pre-tax earnings.
As ‘real’ contributions to charitable causes diminish, Hindery laments the fact that so many
CEOs have failed to understand the fact that an effectively managed contribution program can
deliver strong returns to a corporation. He maintains that if company donations are directed to
nonprofit groups closely aligned with the interests of the corporation's business objectives and
the community context in which it operates, they can become a powerful business tool. (2)
______________ Examples of this kind of ‘strategic’ corporate philanthropy would include, for
example, financial literacy programs supported by financial institutions, or health and wellness
programs funded by pharmaceutical companies (3) ______________ Moreover, the kind of
multiple-stakeholder participation in such initiatives require and generate can become a powerful
social force and an agent for positive change.
(4) ______________ Contributions that are purely selfish in their intent, for example, that are
designed only to bolster the bottom line, or to support pet projects of senior managers or board
members, do not, again according to Hindery, “satisfy the requirements of good corporate
citizenship.” (5) ______________ In other words, when a business gets too ‘strategic’; in its
giving, this will often result in it cutting its overall contribution rather than, for example,
deciding to focus on one or two strategic causes.
Then there are those who would advocate the abolition of corporate philanthropy altogether. (6)
______________ They would argue that because corporations are constantly pushing against the
limits imposed by society in pursuit of profits they will never make good citizens and should not
be treated as citizens. (7) ______________ Given the bottom-line-driven world we live in, it
seems unlikely that the current state of corporate giving is unlikely to change any time soon.
A. Without any additional promotional effort by the company concerned, such programs often
end up elevating awareness of the brand to the same degree as for the cause.
B. There is also the danger that strategic philanthropy is actually at the root of the downward
trend in contributions to charity.
C. Of course, for acts of corporate philanthropy to become solely about advancing the interests
of the company, would be a contradiction in terms
D. They should not be regulated or boycotted into doing the right thing.
E. Leo Hindery Jr, Chairman of the Smart Globalization Initiative at the New America
Foundation believes that, increasingly, companies exploit their corporate social responsibility
initiatives for promotional purposes.
F. Whereas 25 years ago, businesses allocated on average 2% of their pre-tax profits in gifts and
grants, today companies are only one-third as generous.
G. In such cases a donation, of, for example, 1% of pretax earnings, begins, as Hindery says to
“take on the look and feel of an investment, not a handout.”
H. They include, for example, the acolytes of Friedman who continue to believe that a company
should only be responsible to its shareholders.
CASE STUDY 1
Businesses must ensure that any environmental claims they make are genuine. Making
misleading or untrue claims is called greenwashing, which often results in bad publicity. Some
critics suggest that CSR (Corporate Social Responsibility) environmental activities are just
attempts to get governments to impose fewer legal controls and restrictions on powerful
multinational firms. A business might invest in CSR projects to distract attention away from
environmental damage caused by its other activities. However, if found out, this is likely to
backfire badly on the business.
Virgin’s environmental policies: genuinely green or just greenwash?
The Virgin Atlantic jumbo jet that flew between London and Amsterdam using a proportion of
biofuel was a world first. This fuel was derived from Brazilian babassu nuts and coconuts and
was less polluting than ordinary jet fuel. Airline boss Sir Richard Branson hailed this as a vital
breakthrough for the industry. Other well-publicized environmentally friendly measures used by
the airline have included towing aircraft to runways for take-off (not using aircraft engines) and
offering first-class passengers train tickets to the airport instead of chauffeur-driven cars. Very
few passengers have taken up this last offer and aircraft towing has been stopped as it causes
damage to the undercarriage.
Greenpeace has labelled these efforts to make air travel more environmentally friendly as ‘high
altitude greenwash’ and stated that less air travel is the only answer to the growing problem of
climate-changing pollution caused by air travel. A Friends of the Earth spokesman said that
biofuels do little to reduce emissions and large-scale production of them leads to higher food
prices.
1. Analyze why Virgin Atlantic is making efforts to be more environmentally friendly.
2. Evaluate the impact of groups such as Greenpeace and Friends of the Earth on business
decisions.
CASE STUDY 2: Imagine yourself in the following situations. In each case, you can either
agree to the suggested action or refuse. After you choose, compare your choice with the list
provided by the teacher.
1. Everybody expects the government to change at the next election. The Chairman suggests that
all the members of the board should start 'wining and dining' politicians expected to form the
next government - i.e. inviting them for expensive restaurant meals, in order to explain to them
the company's situation and problems.
Agree > k Refuse > f
2. Someone suggests that the easiest way to find out what competitors are doing is secretly to
pay one of their staff to take pictures of their production processes.
Agree > d Refuse > h
3. The manager of a foreign subsidiary explains that to get quick planning permission to build a
new factory it is necessary to give a few cash 'presents' to local officials. $10,000 will save a
year of bureaucratic difficulties.
Agree > g Refuse > r
4. Whenever there's a north wind, foul-smelling sulphur dioxide emissions from one of your
factories pollute a nearby town. The local authorities ask you to fit filters on your chimneys, but
this will cost at least $300,000, the equivalent of six months' profit.
Agree > c Refuse > n
5. You could save 15% of your production costs by closing a factory in a small town where you
are a major employer and relocating to a cheaper developing country. This would result in 1500
people losing their jobs in one town, and 1200 jobs being created in another.
Relocate > e Remain > p
6. You discover that one of your suppliers in a developing country employs children as young as
nine years old in its factory, in appalling working conditions. They say that if you cancel your
orders they will have to close the factory and the whole village will lose this major source of
income.
Cancel > m Continue > a
7. Your products are now of a such high quality that they last for at least ten years, and your
sales are consequently lower than they used to be when your products were less durable.
Someone suggests using cheaper components that won't last quite so long.
Agree > i Refuse > q
8. You have produced a huge quantity of toys under an exclusive contract to tie in with a major
new
Hollywood movie. But just before the film is released, you discover that pieces of the toy can be
broken off and that young children could swallow them and even choke to death.
Sell the toy > b Withdraw the toy > j
9. Your major competitor is about to manufacture a product using a revolutionary new
production process. Someone suggests advertising for a Production Manager, even though the
job is not available, hoping your competitor's staff might apply, and give you some useful
information in an interview.
Agree > o Refuse > l

VOCABULARY
EXERCISE 1. Match the two parts of these sentences;
1. We are committed to the highest ethical a. stance, we are always looking to reduce the
amount of paper we use”.
2. Is ethical
b. lapses came to light, including city managers
3. There were questionable ethical
hiring their relatives.
4. They tightened the city's ethics policy
c. behaviour in business affairs different from
after a string of ethical
everyday behaviour in the family or community?
5. “As a bank with a strong ethical
d. dilemma of whether to disclose to a buyer that
6. He's dealing with the ethical the house might soon be demolished to make
way for a new road.
e. standards and to promoting our medications
only for approved uses”, the company
spokesperson said.
 f. issues, including whether he helped a
company that hired his brother as a lobbyist.

EXERCISE 2. Complete the sentences with expressions in bold from the following text.
Accountability and transparency
Individuals and organizations should be accountable – completely open about what they do and
able to explain their actions. Dealings – business transactions – should be transparent – not
hidden or secret – and explainable in a way that can be understood by outsiders. Companies may
say that their managers and employees should act with integrity and, more formally, probity –
complete honesty – and that they do not tolerate any form of professional misconduct. People
expect the behaviour of organizations to be above board – completely open and honest.
1. His lawyers have argued that the transactions were completely above _____________ and
approved by the other directors.
2. The code of professional conduct requires directors to act with _____________ and
_____________, and to accept that failure to comply carries the threat of fines.
3 It faces the most serious charges of _____________ yet brought against a big accountancy
firm, with claims that it deliberately concealed evidence of fraud.
4 We are totally _____________ about the methods that we use, so it would be hard for - and us
to hide the fact if we were not giving the correct numbers in our findings.
5 The city's officials ought to be held far more _____________ than they are today for what they
spend and how.

EXERCISE 3. Match the ideas (1–5) in the article with the points (a–c) in the table below.
Corporate social responsibility
Companies have long had codes of ethics and codes of conduct saying how their managers
and employees should behave. Now they are looking at these issues in more systematic ways.
They are designating executives to oversee the whole area of corporate social responsibility
(CSR), which relates to the following areas, among others:
a. employment and community: they want to pay attention to things that affect the well-
being of everyone, not just their employees, in the areas where the company has its
plants, offices and other activities.
b. environmental protection: they want to conduct business in ways that protect the
environment, for example, to ensure that the company does not cause pollution of the
air, rivers, etc. and does not endanger plant and animal life or contribute to climate
change.
c. winning new business: they want, for example, to get business without engaging in
corruption, for example, offering bribes – money given to someone so that they
behave unethically.
Companies want to be seen as good corporate citizens, with activities that are beneficial
 not only for their stakeholders but for the community and society as a whole.

C S R: MORE THAN PUBLIC RELATIONS

(1) Global greenhouse gas emissions continue to rise. (2) Disease wreaks havoc across
entire
continents. A host of seemingly intractable issues confront governments around the world, who
are sometimes unable to effect positive changes. With the emergence of companies as some of
the most powerful institutions for innovation and social change, more (3) shareholders,
regulators, customers and corporate partners are increasingly interested in understanding the
impact of these organizations’ regular activities upon the community and its natural resources.
With the world’s largest 800 non-financial companies accounting for as much economic output
as the world’s poorest 144 countries, the importance of these organizations in addressing (4)
trade imbalances and income inequality is key. In public opinion surveys, consumers admit
they prefer to buy products and services from companies they feel are socially responsible (72
per cent) and that they sell the shares of companies that are not (27 per cent). Challenging the
notion that companies’ only responsibility is to make a profit, executives are increasingly
seeking ways to combine (5) economic gain with social well-being in ways that will produce
more customer loyalty, better relationships with regulators, and many other advantages. CSR
practices may, in fact, prove pivotal to the success of a company.
UNIT REVIEW
1. What is corporate responsibility?
2. What do companies need to do to show they exercise good corporate responsibility?
3. Do you think making huge profits means companies can never be responsible?
4. Can a company survive if it shows no corporate responsibility?
5. Which of the following do you think are especially interesting for a company to highlight as
part of its CSR:
 Good working environment for employees
 A good environmental policy
 Policy of not using child labour, products tested on animals, etc.
 Donating a percentage of profits to good causes
 Employing people at risk of exclusion (for instance, people with disabilities, single
mothers, and unemployed people over the age of 45)

REFERENCES

1. Mackenzie, I, 2010, English for Business Studies, Cambridge University Press.

2. Mascull, B, 2017, Business Vocabulary in Use Advanced, Cambridge University Press.
3. Stimpson, P, & Farquharson, A, 2021, Business for Cambridge International AS&A level,
Cambridge University Press.
4. Nickles, W.G, McHugh, J.M, McHugh, S.M, 2019, Understanding Business, Mc Graw Hill
Education.
5. Mackenzie, I., 1997. Management and Marketing, Thomson.