Huy Nguyen - CSR Assgn 1 - Yr2010

8/8/2019 Huy Nguyen - CSR Assgn 1 - Yr2010

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1 –Student ID:

103BF0709

[ ] research project

The Role of International Multi-lateral organization & Media in

the changing attitudes of stakeholders towards corporate social

responsibility.

November 11, 2010

Presented to: Raffles International College – HCMC Campus

Department of Commerce & Finance

Corporate Social Responsibility Course – RUBU 3041

Prof. Corazon

Prepared by: Nguyen Xuan Huy (Huey)

Student ID - 103BF0709

http://www.raffles.edu.au/index.php

http://www.raffles.edu.au/index.php



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[1.0] Executive Summary

Increasing shareholder value for a firm is central to being competitive in specific field.

The Core of CSR is how a firm would maintain intrinsic interest to uphold its mission objectivewhile tendering to the creation of value for other stakeholders, and the communities at large

where the firm operates. Corporate Social Responsibility is more relevant for successful, field-

leading firm not only because they employ large number of workers, and the power they can

wield in economics, politics, government-legislation shaping endeavor, but more so because

CSR can leave lasting impact on society, generating shared values and prestige for future

generations to admire, thus proving attractive to quality workforce joining for a cause, or at

least for a company’s whose cause is humanely ethical. The CSR efforts exercised by the firmsextending beyond the reach and scope required by government and industry standard, so they

must be commendable. Firms that practice avoidance of CSR in seeking of maximum profit to

be derived from society via abusing environment, workers, and neglecting stakeholders’

perceived value are to face maximum penalty from government and media backlash, possible

cases of consumers’ boycotting the brand and the products are factual, so the firms’ bottom

line is weakened by laggard sales and contract. International multi-lateral organizations are

founded by members of members of society and corporate whose work will be monumental inshaping the firms of the future. This paper is a study of the cases and recognition of profound

impact CSR has on society.



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Table of Contents

[1.0] Executive Summary ................................................................................................................ 2

[1.1] Introduction ............................................................................................................................ 4

[2.1] Scope of CSR: .......................................................................................................................... 5 i. Working beyond the requirement of normal business requirement

ii. Sustainable Corporate Social Innovation Plan

[2.2] Positive CSR practices: .......................................................................................................... 12

i. Decrease cost of doing business long-term - avoidance of legal fines & charge

ii. Increase stakeholder value - Increase firms' prestige

iii. Basis for attracting quality workforce

[2.3] CSR as investment criteria .................................................................................................... 18[2.4] Depth of CSR ......................................................................................................................... 20

[3.1] Conclusion ............................................................................................................................ 23

[4.1] References ............................................................................................................................ 24



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[1.1] Introduction

With the advent of the TV media as a revolution and later the Internet evolution with

proliferation of individual-blogging, video-sharing capability, it comes effective that the mass’ attention is turned toward human propagation in face of enduring worsening quality of life

across the globe beyond what is justifiably acceptable and connection of shared values and

ethics toward the abolishment of human suffering in workplace situation and society at large.

The more connected human beings are internationally irrelevant of language barriers and social

classes, the users of the content are fast becoming the content creator as well, and much focus

is shifted from government and corporate sanctioned content to people ’s accepted-and-often-

demanded content. Corporate Social Responsibility is much requested in the time of change,especially when unionization has reached saturation point across the globe, and still more work

is required to demand the ethical treatment of human beings as employees, colleagues,

customers, shareholders, stakeholders where the firms’ operation taking place. Corporate

Social Responsibility is the latest to come off of Academia Research on Corporate Social Doing

or Undoing that may leave lasting impact on its existence formed by stakeholders. There are

mystiques as to what CSR are and the scope and timeline that a company may take in its

proactive approach. This paper will demystify the aura, giving real life examples of how CSRaffecting the corporate’s bottom line positively and the sustainability of CSR as a key factor for

investments criteria made apparent by the shift in shareholders’ value coming the year 2000’s

and onward. The paper will also illustrate the consequences and blames as companies may

make for forgoing CSR practices due to the high potential cost undercutting the company’s

profit centric existence.



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[2.1] Scope of CSR:

Corporate Social Responsibility (CSR) is the ethical doing of corporate entities to

preserve and foster stakeholders’ value in the trust of society. Firms take the proactiveapproach to CSR are more than adequate to meet the need of customers, taken they have

carved a niche in the market for themselves already. For no customers would have detested the

good deeds and undertaking an entity will perform. In fact, green marketing is coping to be the

foundation for which firms may differentiate from one another, and earn consumers dollars1.

As pronounced attention is given to CSR, firms may make it mandatory to have Compliance and

Risk Management policy in place to counter the risk of not performing CSR and the negative

public backlash that may escalate when business environment turn sour. All parties are bestillustrated in the featured chart below from the Hyakugo Bank of Japan. Stakeholders comprise

of – in no order of importance – customers, employees, society, shareholders, and

environments.

2

Disclosure of information on the reach and scope of business is strictly private, sensitive

business data. Beyond the requirement for fulfilling tax reports on revenue earning and cost of

1Website: Sustainable Marketing, What is Green marketing? http://www.sustainablemarketing.com/ Accessed

November 11, 20102

Website: Hyakugo Bank of Japan, Frontier of Banking on CSR policies

http://www.hyakugo.co.jp/english/2005_response.html Accessed November 11, 2010

http://www.sustainablemarketing.com/



http://www.hyakugo.co.jp/english/2005_response.html






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doing business with the government’s IRS or taxing arm; inclusion of further obligation to

disclose accounting information to the Securities Exchange Commission (SEC) or respective

countries’ bodies for overseeing publicly traded companies’ performance and restriction on

business practices placed by government sanctioned bodies; anything else the firms can wield

its doing as may be allowed by budgetary and human resources’ constraint. Going beyond the

scope of satisfying regulation requirements and tax deduction for charitable giving is where the

real fruit of CSR may lie.

For instance, Athena Partners - a Seattle-based NGO that sells bottled water and

forwards its proceeds to breast cancer research and education- was acquired by Atlanta-based

DS Waters of America, Inc. The NGO Athena has reported $347,025 in total income in 2009,

about 13 percent of which was donated3. The acquirer will continue Athena philanthropic cause

in its quest to fund breast cancer research and increase public awareness over the next three

years. Another company based in Britain now branching out to put its bottled water on the

shelves of Australian grocery stores, with the mission of providing clean drinking water and play

equipment to children in disadvantaged society with funding procured from said operation at

hundreds percent conversion rate.4

The business model with the noble objective has been

successful in Britain, US, South Africa, and Malaysia and able to supply 219 communities with

sanitized drinking water. The above businesses are NGO, but the lucrative benefit to caring andgiving is clear, as the brand tend to stand out from the mass of profit centric competitor

products in consumers’ eyesight.

The increased needs of CSR is propelled by media attention toward employee abusive

practices and inadequate measure to protect the rights of human being employed or affected

by the doing of the company, or harmed by the company’s products and/or by products in the

manufacturing process. For instance, the Vedan Company –maker of food flavoring

monosodium glutamate ingredient – was charged with expelling untreated waste water into

3Website: Clay Holtzman, BizJournals , http://www.bizjournals.com/seattle/stories/2010/07/19/daily37.html

Accessed November 11, 20104

Website: Josephine Asher, 'Ethical' bottled water takes a playful turn , ninemsn,

http://news.ninemsn.com.au/national/719186/ethical-bottled-water-brand-takes-playful-turn Accessed

November 11, 2010

http://www.bizjournals.com/seattle/stories/2010/07/19/daily37.html



http://news.ninemsn.com.au/national/719186/ethical-bottled-water-brand-takes-playful-turn






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the Thi Vai River in the Mekong Delta Area in Vietnam5. The company was later fined a pittance

fee compared to the ongoing damages to human life suffering in the area, who are mostly poor

rural folks, and the irony is they would have to pay for clean water shipped in from other towns

by the bottles at higher cost per litter than city residents. The increase in government funding

in such catastrophe for cleanup operations did manage some rise in employment in the area,

but since most people being residents to the area were mostly fisherman and farmers, they

don’t report their employment with the government to begin with. So the factual damage

rendered to the habitat and distress brought on the residents cannot be compensated in full by

Vedan. CSR in severely compromised in this case not because of what the firm didn’t care for

core customers, but more on the line of environmental regulation neglection in the pursuit of

optimum profit. A more devastating impact to the environment severely damage the eco-

environment and putting fisherman out of jobs on a much larger scale later occurred in the Gulf

of Mexico in April 2010 when an BP’s oil rig exploded leading to vast deposits of petroleum

gushing to the sea bed and seeping into sea water and sand.

6

The damage was untold off, leading to massive lawsuit and fine by US government in a

last resort relief effort to stop the spill and help out the fisherman family in a dying

environment. After internal investigation, BP admitted it was management turning-a-blind-eye

on workplace safety despite a minority report came up weeks before stating concern from

5Website: Vinh Minh, Lookatvietnam.com It’s Official: Vedan killed the Thi Vai River

http://www.lookatvietnam.com/2009/12/its-official-vedan-killed-the-thi-vai-river.html Accessed November 11,

20106

Website: Images archived from http://starkravingviking.blogspot.com/2010/07/illegal-bp-oil-spill-photos.html


http://www.lookatvietnam.com/2009/12/its-official-vedan-killed-the-thi-vai-river.html


http://starkravingviking.blogspot.com/2010/07/illegal-bp-oil-spill-photos.html



http://imgur.com/UxN1X.jpg





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workers about the safety practices but were fearing reprisals if they reported mistakes or other

problems. The death toll was 79 of the 126 workers on the rig7, forever tainting the reputation

of British Petroleum Company. As stock prices plummeted, and short term loan dries up, BP

managed to sell $7bn of assets in the US, western Canada and Egypt in order to part-fund the

clean-up cost of the incidents8. In conclusion to the cases, CSR is not a quick fix to help

leveraging the prestige and brand loyalty of corporations, and it surely cannot save an already

damaged ones. Without long term horizon planning, short term CSR would not be viable or

even worthwhile. In closing this argument of what CSR comprises of, one can define it as the

long-term corporate’s responsibility to its mission objective coupled with short term risk

management.

In 2008, Chinese courts sentenced executives from diary company and one firm being

supplier of melamime – for use in infant formula instead of organic protein powder – to the

death sentence. There were 300,000 victims and six infants dying from kidney stones and

kidney failure. As much as 860 babies was hospitalized. Malnutrition rate was high as baby was

fed with nutrition-less, watered down milk9. The World Health Organization referred to the

incident as one of the largest food safety events it had had to deal with in recent years, and

that the crisis of confidence among Chinese consumers would be hard to overcome. Public trust

with regard to Chinese diary producer was forever tainted. Parents of victims solidified in theirconsensus that government should be responsible, like the quality supervision bureau and the

Health Ministry for failing to supervise the standard of the diary goods. The worst form of

neglect of CSR is the total disrespect for consumers’ well-being, selling and servicing them with

substandard and harmful goods in the most basic sense of the word. . There needs not be cases

of inferring that auto manufacturers make products that speed, and leading to a number of

auto accidents, thus inferring that the companies have neglected their CSR practices. What is

harmful is meant by Christianity virtue: “Do to no one what you yourself dislike” —Tobit 4:15.

7Website: Wikipedia, DeepWater Horizon Oil Spill http://en.wikipedia.org/wiki/Deepwater_Horizon_oil_spill


Website: BBC UK, BP agrees $7bn (£4.6bn) asset sale to fund oil clean-up http://www.bbc.co.uk/news/business-

10703955 Accessed November 11, 20109

Website: David Barboza, Death sentences given in Chinese milk scandal, New York Times,

http://www.nytimes.com/2009/01/22/world/asia/22iht-milk.3.19601372.html Accessed November 11, 2010

http://en.wikipedia.org/wiki/Deepwater_Horizon_oil_spill



http://www.bbc.co.uk/news/business-10703955




http://www.nytimes.com/2009/01/22/world/asia/22iht-milk.3.19601372.html








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Thus, it is no coincidence that the most virtuous corporate environment harbors the employees

that believe in the company’s products the most, in short, they do what they preach. For

instance, a Ford Motor’s executive would prefer not to be seen driving in a Lexus. A Toyota

executive should drive a Toyota, as situation permits, unless he believes a manufacturing defect

severely undercut the safety of driving a Toyota on the highway, and yet making no effort for a

Toyota recall, thus leading to the deaths of several Toyota owners on the highway. The cost of

the total recall was estimated to be massive compared to the payout on several lawsuits and

settlement, before the fact that a US government investigation into the issue demanding total

resolution by the Toyota Corporation, thereby damaging the consumer trustworthiness toward

the brand, and resulting in stagnant Toyota car sales. This disregard for consumer safety,

coupled with attempt to keep the situation under wrap - away from the media have severe

impact to Toyota sales in 2009-201010

. What took Toyota decades to build in brand prestige,

take only months for the brand to falter. The champion needs to protect his hindsight, but

Toyota failure to protect its hindsight in Risk management compliance and CSR practices,

further leverage the power of other firms to take away Toyota’s core customers. The story of

sticky pedal pads or manufacturing defect in programmable is nothing new in the auto-tech

industry (i.e. The case of Audio 5000 unintended acceleration in mid 1980s11

), as serving vital

components in an auto and expecting with zero defect in the absolute magnificent art of mastering the Six Sigma program is not quite feasible. At the time of the incident in 2009, the

US government has just bailed out GM and Chrysler Corporation from bankruptcy, thus the

nationalization of said corporations with government owning stocks in the firm place them in

the illiquid position to exploit the flaw of Toyota cars and magnify it by ten times or hundred

folds. Consumers will never know, yet it was the frequent TV and newspaper media that scale

back consumer trust in Toyota brand the most and put GM and Chrysler on healthy path to

10Website: Ed Wallace, The Real Scandal Behind the Toyota Recall Business Week Online,

http://www.businessweek.com/lifestyle/content/feb2010/bw20100211_986136.htm Accessed November 11,

201011

Website: Wikipedia, Sudden unintended acceleration,

http://en.wikipedia.org/wiki/Sudden_unintended_acceleration, Accessed November 11, 2010

http://www.businessweek.com/lifestyle/content/feb2010/bw20100211_986136.htm


http://en.wikipedia.org/wiki/Sudden_unintended_acceleration






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solid revenue regeneration with sales programs the like of:” May the Best Car Win12

” and

enhanced quality assurance program with $1000 USD incentive bonus for Toyota owners to

terminate their lease.

13

The aforementioned case brought us to another point as to the effect of media

manipulation to influence consumer and public sentiments. A better theoretical example may

be illustrated below

14

As often said, a picture is worth a thousand words. One the left, one can say it’s a

depiction of soldiers have no mercy when it comes to war. On the far right, one can say soldiers

are compassionate as human being. More so when international multi-lateral organizations and

government can influence the scope and breadth of media intake by people, figment of stories

must be carefully analyzed by the readers to determine what is factual. CSR can be manipulated

in the name of green marketing, which will be further examined in the Starbucks case in later

section.

12Website: Rupal Parekh and Michael Bush, GM Takes Advantage of Toyota Recall With Incentive Program,

Advertising Age, http://adage.com/article?article_id=141782 Accessed November 11, 201013

Photo. GM Motors Corp. Archive

http://www.examiner.com/images/blog/EXID23764/images/may_the_best_car_win.jpg Accessed November 11,

201014

Website: Cool Optical illusions, Media Manipulation, http://www.moillusions.com/2010/01/media-

manipulation-illusion-example.html Accessed November 11, 2010

http://adage.com/article?article_id=141782



http://www.examiner.com/images/blog/EXID23764/images/may_the_best_car_win.jpg


http://www.moillusions.com/2010/01/media-manipulation-illusion-example.html









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In some cases that may be termed “reverse-CSR”, when the corporation demand consumer

product purchase via the protection of trade barrier and tariff on import. Consumers would be

coerced to buy deficient products or similar commodities at higher price, and or worse, their

tax dollars go toward subsidizing these businesses that have grown on complacency and

political connection15

. These companies preach that their CSR program be: buy our product,

love your country – but in effect it’s more like paying more getting less whether the consumers

may want it or not. The toolset may be effective to elicit strong emotional response on part of

consumer to drive out competition. Department of Commerce of importing nations will force

increased tax rate and reduce quota on import of specific products, as such to maintain

protection of industry. Vietnamese fishery products were subject to such tax hike of 64% by US

Department of Commerce and the International Trade Commission claiming the industry was

subsidized by Vietnamese government on ground of antidumping law16

. While the hike was in

effect, US consumers were forced to pay higher for fresh aquaculture products. Anticompetitive

practices driven by the need for industry protection are in conflict with CSR practices, because

stakeholders being the consumers are forced to pay higher prices, notwithstanding the

exchange rate parity between countries. Consumers’ benefits were minimized. Working people

are forced to pay higher tax rates, so it is only natural that heirs and large shareholders of

partially or fully protected industry by trade barrier would benefit the most, being the dividendspayout on their stock ownership were subjected to lower tax rates and can be deferred if

reinvested. The mechanism is in place to maintain the wealth concentrated in the one percent

of population. Case in point relates to the Fanjuls sugar empire in the Everglades, US. Between

1990 and 1998, American cane farmers poured some $13 million into presidential and

congressional campaigns and tens of millions more into local races, especially in Florida. The

Fanjuls benefited the most from a federal "guest" worker program for a steady supply of cheap,

docile Caribbean cane cutters, and government subsidy that keeps the domestic price of sugar

15Website: Paul Roberts, Fanjul Sugar Empire in the Everglades, http://www.wesjones.com/sugar1.htm Accessed

November 11, 201016

Website: Ranja Sengupta, US - Vietnam Trade War over Seafood: Free-Trade not so Free after all, International

Development Economics Associates http://www.networkideas.org/news/sep2003/news04_Catfish.htm Accessed

November 11, 2010

http://www.wesjones.com/sugar1.htm



http://www.networkideas.org/news/sep2003/news04_Catfish.htm






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some 50 percent above the world market price17

. In short, lobbying is a powerful tool and

media manipulation can work against CSR practices and diminish the benefit firms can bring to

stakeholders as whole.

Another case of skewed journalism is of the suicide incidents rate at the Foxconn’s

Shenzhen-China-factory, main contractor for Apple’s iPhone assembly. Stories first heard in

early 2010 of employee abuse and confinement at camp-like facility leading to suicide attempt,

but then it was revealed that worker’s family was compensated sumptuously (in comparison to

worker’s wage) due to insurance policies rendered against employee’s death. So, many

employees jump off of windows to commit suicide, to have their family given guaranteed

payout that they would have taken forever to save up. Foxconn then installed safety net to

discourage suicide attempt at its facility and raise worker compensation by 30%18

. One a

worker’s family was compensated by insurance company, it triggered a chain of attempted

suicides, or succinctly it may be stated that workplace condition was not the main factor

contributing to death as reported initially.

In light of media manipulation and corporate CSR scandals, there is a need for independent CSR

compliance audit panels be formed.

[2.2] Positive CSR practices:

There are many International multilateral organizations that have impacted CSR practices

around the world via their policies and grant, and technology transfer. Some examples are:

* United Nations (UN)

17Video: Jamieson Johnson, The One Percent of People with Large Wealth Video Documentary 2009

18Website: Jonathan Robins, Sky News Online, Apple Chief Defends China Suicide Factory

http://news.sky.com/skynews/Home/Business/Apple-CEO-Steve-Jobs-Defends-The-Chinese-IPhone-Factory-

Where-10-Worker-Committed-Suicide/Article/201006115642178?f=rss Accessed November 11, 2010

http://news.sky.com/skynews/Home/Business/Apple-CEO-Steve-Jobs-Defends-The-Chinese-IPhone-Factory-Where-10-Worker-Committed-Suicide/Article/201006115642178?f=rss







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* International Labour Organization (ILO)

* Food and Agriculture Organization of the United Nations (FAO)

* United Nations Educational, Scientific and Cultural Organization (UNESCO)

* World Health Organization (WHO)

* International Bank for Reconstruction and Development (IBRD)

* International Monetary Fund (IMF)

* International Civil Aviation Organization (ICAO)

* Universal Postal Union (UPU)

* International Telecommunication Union (ITU)

* World Meteorological Organization (WMO)

* International Maritime Organization (IMO)

* International Fund for Agricultural Development (IFAD)

* United Nations Industrial Development Organization (UNIDO)

* International Atomic Energy Agency (IAEA)

* World Trade Organization (WTO)

These agencies work in multiple countries in concerted effort on a given issue. The rise of

economic powers such as China, India have led to challenge the true effort of certain

multilateralism, due to the fact US has been dominant in terms of military and political clout.Still, wonderful CSR efforts were propagated by actions of the organizations cannot be

dismissed in the healthcare and social condition improvement. In April 1997, the Apparel

Industry Partnership's Agreement was formed during Clinton’s administration promote ethical

CSR practices in light of sweatshop in the footwear and apparel industry. Reebok and about 170

university affiliates contribute to the mission of fair labor association19

. The NGO logo “FLA” can

be used to create the demand fostered by consumers willing to do some goods just by

purchasing. The premium that consumers pay is therefore justified. The free media attentiongiven to NGO and noble causes supported by corporates are often enough incentive for them to

join force. Transparency of corporate policy in selection of partners, suppliers, and

subcontractor was desired. Another International Multi-lateral organization of interest is the

19Website: US Department of Labour, Apparel Industry Partnership's Agreement http://actrav.itcilo.org/actrav-

english/telearn/global/ilo/guide/apparell.htm Accessed November 11, 2010

http://actrav.itcilo.org/actrav-english/telearn/global/ilo/guide/apparell.htm







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International council of toy industries, in 1997, it approved a code of business practice prohibit

underage, forced or prison labor, required compliance with government approved maximum

number of work week.20

Another multilateral organization of interest is Ethical Trading Initiative

(ETI) which seeks to identify and disseminate info about how to improve labor conditions

(safety, work hours) in factories and farms in developing countries throughout the supply chain.

Focus is placed on both on industries and agriculture with 35 corporate members based in

Britain, including marks & Spencer, Tesco, Body Shop International, WH Smith, etc. Body Shop,

for example, is true to its objective to use 100% organic agriculture products, and advise against

animal testing. ETI can advise supply chain from farmers, subcontractor, middle man, Body

Shop international before the actual product reach the hand of consumers. ETI’s pilot project in

China, wine in South Africa, horticulture in Zimbabwe, bananas in Costa Rica has been so far

successful to avoid child labor abuse21

.

Another example of positive, sustainable CSR practice is demonstrated by IKEA’s India carpet

project. This enabled Indian women to borrow at market rates, not as the norm usury, thus

they don’t have to give in their children labor as collateral to the money lender. The project has

reached 1.5 million people in 600 villages, and women were able to work for themselves,

tending carpet and homemade goods. The disadvantaged children are to attend school founded

and/or funded by IKEA22

. In addition, the founding of microfinance in India have curbed child

labor abuse and allowed poor people with no collateral to borrow as little as a few dollars to

20Website: International Council of Toy Industries, Toy Safety Standards Around the World http://www.toy-

icti.org/info/toysafetystandards.html Accessed November 11, 201021

Website: Wikipedia, Ethical Trading Initiative http://en.wikipedia.org/wiki/Ethical_Trading_Initiative Accessed

November 11, 201022

Website: IKEA, IKEA’s position on child labour,

http://www.ikea.com/ms/de_AT/about_ikea/pdf/ikea_position_child_labour.pdf Accessed November 11, 2010

http://www.toy-icti.org/info/toysafetystandards.html



http://en.wikipedia.org/wiki/Ethical_Trading_Initiative


http://www.ikea.com/ms/de_AT/about_ikea/pdf/ikea_position_child_labour.pdf








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startup their business in agriculture, farming and herding of livestock. One such initiative is

ACCESS Development Services23

.

Lustrous value of CSR and sustainable business practices go hand in hand. As all firms

make compliance with regulation and international multi-lateral organization upholding to the

benefit of mankind throughout the supply chain and logistics key point, so is the cost of

auditing and streamlining of the process get cheaper due to economy of scale and division of

functional party. Disney sources its products from more than 30,000 factories. Walmart

sourcing from 50,000 to 100,000 at any certain times. The cost of monitoring supply chain and

subcontractor placed real cost on firms that would demand price hike in retail value.

Monitoring system take as much as 4 years to form. Factory audit must take place at random

for the valuation to be fruitful, thus activist are pushing for international independent audits,

the role of which international multilateral organization may take place. Environmental impact

assessment must be taken by governmental agencies. Nike being an immensely successful shoe

and sport apparels manufacturers has leveraged it to become some of the largest outsourcer of

footwear worldwide. It has operation in Japan; Korea then shifted operations to Indonesia,

Philippines, China and now Vietnam. Its subcontractor and supplier win on key metrics being

quality of products, quantity supplied, and price of sourcing. To remain competitive, the

subcontractor compete on low product sourcing cost, and utilizing the abundant of cheap laborin Vietnam, has driven down the living quality of employees, paying very low and increasing

shifts, work hours. Media attention by CNBC has allowed the firm the chance to take corrective

action and now it monitor its contractor more closely. In Nike’s defense, the corporate CSR

manager stated:” Nike paid competitive wage”.24

23Website: ACCESS Development Services http://www.microfinanceindia.org/ Accessed November 11, 2010

24Video Documentary: CNBC, CNBC Originals-Swoosh-Inside Nike (2008)

http://www.microfinanceindia.org/





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Aside from the ethical and just treatment toward workers, firms must take great care of waste

disposal and energy usage plan, and be moderate in the procurement of non-renewable

resources. Rapid development, urbanization and deforestation can leave long lasting, if not

irreversible harms. For example, overfishing affect coral reefs, the so-called lungs of the oceans

and decrease fish stocks of many generations. The diversity of ocean depend on coral reed

health. “Siltation, pollution and the loss of mangroves are all serious risks but resorts like this

prove that respecting the environment is a good business because tourists avoid damaged

reefs”.25

Good business can be found in the industry without smoke, which is tourism. Pollution and

overfishing can drive up profit in the short term, but as the supply increase, the price of the

goods decrease if demand is saturated. Conservation of environment is the sustaining part of

CSR, the benefits will eventually come as firm will:

i. Reduce cost,

ii. Increase productivity, Increase revenue,

iii. Build up Brand value

iv. Attract talent

CSR also means education of the next generation to take great care of stakeholders and

environment.

Misuse of CSR:CSR practice coupled with eco-friendly, green marketing go so far, as to engender

another type of public mistrust, as when so-much is too-much. Firms should not see CSR as the

easy way out to earn consumers dollars, just by tagging their products labeling with just one

25Video: Imax- Coral Reef Adventure – MacGillivray Freeman Films Educational Foundation – www.coralfilm.com



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more label from the like of international multi-lateral organizations, they should not expect

consumers will be easily fooled. If firms don’t make factual of their cause seeking consumer

plight and trust, the public will fight back and outcry on the foul action will be heard wide and

far. For instance, accusation arise on Starbucks with its affiliation the Ethos Water Fund, which

published goal of $10 million USD for charity by year 2010, from which Starbucks would have

earned an estimated gross profit of $350 million USD because it only donate only five cents for

every bottle water sold at retail price of $1.80.26

Americans could assert this is nothing more

than a glorified case of shameful marketing. The petitioner to the letter made out to Starbuck

advise the company to improve its model for charity by revising the conversion percentage.

There is no place to earn consumer trust better than by giving something back. Giving

something back in the normal words of doing business meant taking care of your core

customers, both before – during – and after the sales has taken place. Adding new features is

goods, creating a sustaining foundation or an affiliation trust foundation with the aim to benefit

the community of presence is considered grandeur.

Cooperation thrives like a mutualistic relationship; shareholders have influence on the

board of management. Consumers and the public as ones have the option to boycott certain

products and hurt corporation where it may be hurt the most - the profit bottom line. The

apparent conflict between cost cutting – profit seeking incentives versus doing what is right forthe environment, the regulators and the stakeholders seems escalating. But now corporates

deem CSR as the cost of doing business, of giving back, as long term-sustainability planning.

Going above and beyond the measure of regulation requirement in waste disposal, chemical

and byproducts treatment, product renewal plan increase the cost of doing business. However,

going green need not be expensive. The Ferrari Plant in Italy is one of the most advanced

manufacturing and assembly plant in the industry, and it is the most sought after place to work

for mechanics, technicians due to the rich culture, and welcoming work environment. The plantis flushed with plantation in habitable location (with trees and gardens occupying as much as

165,000 square meters of the facility) to minimize greenhouse effect. It uses solar photovoltaic

26Website: The undersigned, A challenge for Starbucks to stop profiteering in the name of humanitarianism

through the sale of Ethos bottled water, http://www.petitiononline.com/ethos/petition.html Accessed November

11, 2010

http://www.petitiononline.com/ethos/petition.html





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panels that reduce the amount of power Ferrari takes from the national grid by over 210,000

kWh have been arranged on the top of the roof of Ferrari's Engine Mechanical Machining

facility, all in an effort to cut the plant’s CO2 emissions by 25 -40 percent in 2009. Eco-friendly

effort has been started at Ferrari as early as 2001 when it was awarded ISO 14001 certification

– the internationally accepted specification for the total management of environmental impact

and effect reduction.27

Photos. Ferrari plant with solar roof panels to cut energy waste by 70%

[2.3] CSR as investment criteria

There are “green” mutual funds that only invest in companies with track record and practices of

environmentally friendly and ethical treatment of human beings. The green industry is a new

frontier encompassing not only construction, conservation and energy, but nearly every human

endeavor and it could balloon into a $6 trillion market28

. Keeping tabs of who is green and who

is not is tedious work, especially when public policy is changing all the time, so it is more

feasible for most private investors at this early stage to invest in green companies through

mutual funds. Some top performing funds are: Acuity Clean Environment Equity, Appleseed

Fund (APPLX), Calvert Global Alternative Energy A, Claymore/MAC Global Solar Index (ETF:TAN),

First Trust Global Wind Energy (FAN), First Trust NASDAQ Clean Edge US (ETF: QCLN), Guinness

Atkinson Alternative Energy ( MUTF:GAAEX ). There is inherent risk for going green as well, as is

the inherent volatility of single sector funds, much like the industries they track. Investors must

27Website: Juliet Potter, MotherDriven - Ferrari Goes Green,

http://www.motherdriven.com.au/public_panel/environment.php?id_ART=36 Accessed November 11, 201028

Website: Barrons, Going Green with Mutual Funds, http://www.smartmoney.com/investing/mutual-

funds/going-green-with-mutual-funds/#ixzz153Pq0ygX Published March 2, 2010 - Accessed November 11, 2010

http://www.motherdriven.com.au/public_panel/environment.php?id_ART=36


http://www.smartmoney.com/investing/mutual-funds/going-green-with-mutual-funds/#ixzz153Pq0ygX








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be diligent in their homework, for going green does not mean failure proof. Individual action on

sentiment with market ups-and-downs may wipe out profit to be gained on the rebound as hot

sectors of renewable energy may be heading 2010 and onward.

Corporate Social Responsibility is about caring, after all, the firms are created to create

values, since they are not nationalized and merely an extension of shareholders value, the firms

should not be charged with the responsibility of caring for the public goods, performing

miracles and smooth the mechanism of social welfare transfer. The government with the ability

to control monetary and social policies is more than adequate to ensure social wellbeing. The

upholding of the law and legislation, and regulation are forms of control that government instill

to companies’ policy, making sure that firms would perform well within the defined parameter,

not outside of the parameter so as to have monopolistic control on goods and services and

extract maximum value from consumers. Antitrust law is a regiment for ensuring public benefits

and competition between firms is at optimal level. Firms on the other hand, should not and

would not devote their attention to philanthropic endeavors should their budget not allow (in

cases that the profit balance is in the red), but firms’ leaders, shareholders still have a choice as

to operate firms within legal and moral confinement, with profit centric motive and greed, but

that greed gradient should be spanned out over long term. As one Goldman Sach executives

have stated:Gus Levy saying, “We’re greedy, but long- term greedy, not short- term greedy.” “Gus,” he says,

“wanted to do what was right for Goldman Sachs in the long run and didn’t deny that he was

greedy for that, but he didn’t want to be greedy in the short run if it . . . well, you can see wh at

the phrase implied.”29

Firm’s culture with its objective is the determinant whether CSR’s persistence in the firm is

pertinent. Compared to its competitors, the top firm recruited more intriguing people who

cared more about their Firm and the culture. The commitments to the firms are more explicit,throughout as the leaders of the firm at every level were more rigorous, more thoughtful, and

far more determined to improve in performance of the firm in every aspect. way over the

longer term. They took a longer- horizon view and were more alert to details. They knew more

29Book: The partnership: the making of Goldman Sachs / Charles D. Ellis. page 89/375, First published in 2008 by

The Penguin Press.



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about and cared more about their people. They worked much harder and were more modest.

They knew more and were hungrier to learn. Their focus was always on finding ways to do

better and be better. Their aspirations were not on what they wanted to be, but on what they

wanted to do. The generosity of giving is more heart-warming the receiving.

[2.4] Depth of CSR

What are efficient CSR practices? Should a company devote such thousands to hundreds

of thousands of dollars to a philanthropic cause and says it is the leader in CSR in its industry

specialty? Surely it can, Government tax scheme has made it feasible for firms to take large

write off from contribution to noble causes. Startup firms help shaping economies and creating

jobs, so entrepreneurship is much applauded. People would like to donate money to start up

which they think are doing exciting work and research, making exciting products, but

unfortunately, such donation are not entitled to tax write off at the presence.

The scope of CSR practices should pertain to its supply chain management and sourcing,

as is the doing of something that is sustaining to the betterment of mankind in the society it

practices. The firms are not obligated to alleviate human suffering elsewhere beyond the scope

and reach of its partner form, country of headquartering, supplier companies, or countries for

the basis of customer base. Yet the firms and private entity is more than welcomed to

participate in philanthropic causes that are sustaining and thus giving rise to the advanced field

of Corporate Social Innovation (CSI) plan. Private, wealthy individual willing to participate in the

gift of giving have founded many wonderful foundations. Some foundation have severed their

ties with corporations from which the founders have benefited financially immensely, but the

organization of the foundation kept their corporate roots in managing projects and transferring

funds worldwide. It seems that the art of giving require tremendous patient and throughout

thought, for no one dollar in charity is the same. A dollar well-spent needs much careful

planning, and retired executives are reigning champion to take up for the cause. The aims of

different organizations are of subjects to critique and social ridicule at times. For example, the

One Laptop Per Child Association, Inc. is a U.S. non-profit organization with the mission to



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create educational opportunities for children in underprivileged communities by providing each

and every child with a low cost laptop30

, which is paid for in whole by the consumers in

developed countries looking to buy a durable, easy to use laptop for the child, and via the

process also pay for a laptop to be delivered to an unfortunate child in third world countries.

The premise is simple, buy one for the price of two and thus give the gift of laptop to child in an

undeveloped countries, who will grow up to be the future citizens of countries with the power

to shape the countries’ development, via knowledge of computers, of being-connected, of

understanding each other. The novel cause was subject to ridiculed because the children in

those countries do not have three meals a day, seven days a week. A laptop for a child may

seem excessive for a child who may starve; no matter how cheap is the laptop. The real long

term impact of the project must therefore not be judged from short term perspective, just as

an investment may take years to proliferate, so is human capital.

Photos. Archive from OLPC projectA very notable case of CSR and philanthropy is well illustrated in the book The Billionaire

Who Wasn't by author Conor O'Clery31

. The story give plight to tycoon Chuck Feeney, his

stories of being an eccentric billionaire living on frugality, while donating generously to

philanthropy his riches, which he has procured earlier being the co-founder of Duty Free

Shoppers (DFS). Since World War II, the retail chain has exploded with presence at airports

around the world, for selling cigarettes, alcohol, perfumes and other luxury items. Boom in

tourism and escalating profit earn him the titles of twenty-third richest American alive byForbes Magazine in 1988. Feeney enjoyed the prosperity more in the act of giving and donation

30Website: One Laptop Per Child Association, Inc., Mission Statement http://laptop.org/en/children/index.shtml


Book: Conor O'Clery, The Billionaire Who Wasn't: How Chuck Feeney Made and Gave Away a Fortune Without

Anyone Knowing, PublicAffairs; 1 edition (September 25, 2007)

http://laptop.org/en/children/index.shtml


http://en.wikipedia.org/wiki/File:XO-Beta1-mikemcgregor-2.jpg




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than keeping it all for himself, all the while retaining his very anonymity in the cause. His

foundation Atlantic Philanthropies is on track to spend the remaining $4 billion in his lifetime32

,

now Feeney being a man in his mid-seventies. The Billionaire Who Wasn't is a tale of one of the

greatest untold retail triumphs of the twentieth century. The ties that connect DFS to Atlantic

Philanthropies is the man that founded them both, but it cannot be said that AP is DFS’ social

corporate giving. The objective of one organization is of procuring profit, while the other is

aimed at philanthropy, it cannot be satisfied that two organization be formed as one, for

conflicting purpose is no way to do business, but it remains they are extension of the founders’

will. Still, it can be cemented that CSR culture is richest at the company where the founder and

executive are more generous with giving for a cause. The Bill and Melinda Gates foundation

were aimed at reflecting the core belief “every life has equal value33

” guided by fifteen

principles. Given a passage from the principles:

“We demand ethical behavior of ourselves. We treat each other as valued colleagues.

Meeting our mission—to increase opportunity and equity for those most in need—requires

great stewardship of the money we have available. We leave room for growth and change.”

One can begin to see the tremendous change that is going on in our world, for the

betterment of mankind, not as an act of IMF or WHO, but rather by foundations, with

individuals at the helms, who have amassed vast fortunes in their business life and now canmake a different in other lives, not because they need to, but because they want to, not for

themselves partially. Of course, great satisfaction can derived from seeing dreams being

realized and detrimental social ideal being challenged, but it only occurs as an afterthought to

the givers. Perhaps they have seen light at the end – where the corporate rat race end, comes a

new beginning to shift focus on making changes to entities, encompassing all spectrums of lives

and livelihood, on the principle that is: mankind are dependent on one another, and with

nature as whole, and to help those around us, we help ourselves.

32Website: Wikipedia, Atlantic Philanthropies, http://en.wikipedia.org/wiki/Atlantic_Philanthropies Accessed

November 11, 201033

Website: Bill & Melinda Gates Foundation, About the Foundation

http://www.gatesfoundation.org/about/Pages/overview.aspx Accessed November 11, 2010

http://en.wikipedia.org/wiki/Atlantic_Philanthropies



http://www.gatesfoundation.org/about/Pages/overview.aspx






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[3.1] Conclusion

In conclusion of this paper, the intricacies of Corporate Social Responsibility is explored

in terms of pros and cons. Firms are coherent group of business centric group with clearlydefined profit motives, they are not NGOs. There is conflict of interest between government in

civilized, developed economies to serve the public goods and firms seeking to earn profit at all

cost. Government instilled policies, media glorification of ethical business practices, and the

proliferation of consumers group forming to ensure media attention focusing on unethical

business practices, and thereby can instill restriction onto the firm’s doing or undoing. Firms

that operate within confinement of legality can face objection and consumer backlash, so it is

factual to say going the extra miles beyond legal obligation of business practices to serve publicand consumer goods would be determined as CSR practices. The firms can advocate their CSI

plans, and contribution and make good names of themselves, is well recommended since it will

further the competition and advancement of firms contribution and philanthropic works. The

pertinent asset of firms will be its sustaining goodwill, and that takes long time to build but can

be destroyed over matter of days. CSR should be given much thought and care, and

incorporated into the Firms Compliance and Risk Procedure. It can be an exhaustive study by

the lawyers and the PR - CSR specialist, or simply at times, doing just what is right and givingeducation for those involved, or affected.



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13. Photo. GM Motors Corp. Archive



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26. Website: The undersigned, A challenge for Starbucks to stop profiteering in the name of

humanitarianism through the sale of Ethos bottled water,

http://www.petitiononline.com/ethos/petition.html Accessed November 11, 2010

27. Website: Juliet Potter, MotherDriven - Ferrari Goes Green,

http://www.motherdriven.com.au/public_panel/environment.php?id_ART=36 Accessed

November 11, 2010

28. Website: Barrons, Going Green with Mutual Funds,

http://www.smartmoney.com/investing/mutual-funds/going-green-with-mutual-

funds/#ixzz153Pq0ygX Published March 2, 2010 - Accessed November 11, 2010

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http://laptop.org/en/children/index.shtml Accessed November 11, 2010

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Fortune Without Anyone Knowing, PublicAffairs; 1 edition (September 25, 2007)

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http://en.wikipedia.org/wiki/Atlantic_Philanthropies Accessed November 11, 2010

33. Website: Bill & Melinda Gates Foundation, About the Foundation

http://www.gatesfoundation.org/about/Pages/overview.aspx Accessed November 11, 2010

Huy Nguyen - CSR Assgn 1 - Yr2010

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