Lecture_Notes-Week Two Lecture Notes

8/13/2019 Lecture_Notes-Week Two Lecture Notes

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New Models of

Business in Society

Week 2:

Corporate Philanthropy and Corporate Social

Responsibility



Week 2 Syllabus

• 2.1 Corporate Philanthropy History

• 2.2 Corporate Philanthropy Current Issues

•

2.3 Corporate Social Responsibility• 2.4 Corporate Philanthropy and Corporate

Social Responsibility: Next Steps



2.2 Corporate Philanthropy

• That tradition is carried forward today as we’ll see in the next

video.

• It should cause us to question whether this idea about

business being only for shareholders has ever actually been

followed.



2.1 Engagement Question

• What do you think of Andrew Carnegie’s idea that those more

fortunate need to take care of those who are less fortunate?

• How does that work in your society?



2.2 Corporate Philanthropy:

Current Issues

According to Corporate Giving Standard (CGS) Survey for 2011:• The sum of all the contributions was more than $19.9 billion in cash

and product giving

According to Foundation Center, there are over 108,000 foundations,corporate donors and grantmaking public charities

•

Top 5 Foundations by Total Giving (as of 1/28/13):1. Bill & Melinda Gates Foundation – every person deserves thechance to live a healthy & productive life

2. AbbVie Patient Assistance Foundation – helping uninsured accessmedicines

3. Pfizer Patient Assistance Foundation, Inc. – prescription assistance

4. GlaxoSmithKline Patient Access Programs Foundation – prescriptionassistance

5. Genentech Access to Care Foundation – prescription assistance( http://foundationcenter.org/findfunders/fundingsources/fdo.html )

http://foundationcenter.org/findfunders/fundingsources/fdo.html

http://foundationcenter.org/findfunders/fundingsources/fdo.html




Current Issues

• Where companies gave their money in 2011: Health & Social Services 28%

Other 16%

Education: K-12 15%

Community & Economic Development 12%

Education: Higher 11%

Civic & Public Affairs 5%

Culture & Arts 5% Disaster Relief 4%

Environment 4%http://www.corporatephilanthropy.org/pdfs/giving_in_numbers/GIN2012_finalweb.pdf

http://www.corporatephilanthropy.org/pdfs/giving_in_numbers/GIN2012_finalweb.pdf

http://www.corporatephilanthropy.org/pdfs/giving_in_numbers/GIN2012_finalweb.pdf



2.2 Philanthropy

• The Bill & Melinda Gates Foundation, guided by the

belief that every life has equal value has helped many

people lead healthy productive lives.

•

Warren Buffett’s Promise, and The Giving Pledge forother wealthy people.

• The Carnegie Tradition is being carried on today.



2.2 Corporate Philanthropy Specifics

• According to the Committee Encouraging Corporate

Philanthropy (CECP) and The Conference Board’s Corporate

Giving Standard (CGS) survey, since 2001 corporate giving has

reached more than $100 billion.http://cecp.co/research/benchmarking-reports/giving-in-numbers.html

http://cecp.co/research/benchmarking-reports/giving-in-numbers.html











Current Issues

• ING with their “for something better” program donated 25M+

Euro (18M+$) for better education helping over 600,000

children in partnership with Unicef. Over 42,000 hours of

employee work was volunteered.

(http://www.ingforsomethingbetter.com/ )

• Amgen has contributed over $180 to non profit organizations.

In 2011 it contributed over $20M to complement Amgen’s

dedication to impacting lives in inspiring and innovative ways.(http://www.amgen.com/citizenship/foundation.html )

http://www.ingforsomethingbetter.com/

http://www.amgen.com/citizenship/foundation.html










Current Issues

• In 1970, Milton Friedman, a Nobel Economist, argued that the

only responsibility of a business is to earn profits. He argued

against the idea of corporate philanthropy, stating that this

was the role of government, and that private business should

not be involved.

• This led in part to the popular idea in the last part of the

Century that business was only about profits and the money.

But, as I think it should now be clear, there is a long history of

business seeing its role as contributing to making societybetter, through its philanthropy.




• What do you think of Milton Friedman’s argument? Can

philanthropy be consistent with the interests of

shareholders, or should shareholders themselves decide

if and where to donate money to charity?



2.3 Corporate Social Responsibility

• The Origins of CSR.

– You can go back further in time, but the modern idea ofCSR is usually taken to be a book by an economist, HowardBowen

– Howard Bowen in 1953 says that: –The business(person) produces two categories of products. The

first category consists of commercial goods and services…thesecond the conditions under which the production of thesegoods and services take place

–

Bowen saw these conditions and their effects as ‘social”products of a business to be distinguished from its materialproducts, hence giving rise to the origins of CSR.

(Good.et al 213)




• In the 1960s and 1970s in the US, people began to take thisidea very seriously. Large firms especially began to makewhat has become known as “the business case for socialresponsibility”.

• By being good citizens and paying attention to the socialeffects of their businesses, business leaders could gainimportant support from customers and communities, andavoid regulation which sought to constrain them. CSR was

just good business.

• By focusing on the business case, companies could counterFriedman’s argument that CSR was a waste of shareholder’sresources, and a usurping of their prerogative.




• Much of the CSR work was done by “issue”. A company would takeon “racial discrimination” or “pollution” or “consumerism”, and tryto do better with respect to its own products and services.

• Many companies fought these ideas all the way since they werecommitted to what we have called the dominant story, thinking thatthey were separate from, or knew best for, society.

• People naturally began to talk about corporate social performanceand its linkage (or not) to corporate financial performance.

• Was good social performance simply a matter of financially well offcompanies who could afford to be good, or did good socialperformance pay off on the bottom line?

• These questions have spawned a number of research projects eventoday they remain open questions.




•

Many have argued that CSR needs to be institutionalized through aset of principles agreed to by companies. This started in the 1960swith the Sullivan Principles articulated by Rev. Leon Sullivan toregulate whether or not a company should invest in South Africaunder Apartheid.

• For Example lets look at the UN Global Compact – Human Rights

• Businesses should make sure they are not complicit in human rightsabuses

– Labour

• The elimination of all forms of forced labour, child labour. Etc.

– Environment

• Promote greater enviroonmental responsibility

– Anti-Corruption

• Work against corruption, extortion and bribery( http://www.unglobalcompact.org/ )

http://www.unglobalcompact.org/






2.3 CSR Example: SAP

• In Latin America, the company helps girls gain the lifeskills to craft their own futures

• In Europe they focus on helping young entrepreneurs to

build social businesses

• In Asia it provides computer access to help people

compete for jobs.

• In Africa they focus on helping children attend school( http://www.sap.com/about-sap/sustainability-corp-social-responsibility.epx )

http://www.sap.com/about-sap/sustainability-corp-social-responsibility.epx














2.3 CSR Example: P&G

• Live, Learn and Thrive…improved life for more than 400

million children

• Pampers vaccinations program

•A partnership in China with P&G HOPE Schools in povertystricken areas.

• Support for Feeding America oriented to children’s basic

needs, contributing more than 3.2 million pounds of

products, etc.(http://www.pg.com/en_US/sustainability/social_responsibility/index.shtml )

http://www.pg.com/en_US/sustainability/social_responsibility/index.shtml






2.4 CP and CSR: Next Steps

• Many companies have great CP and CSR programs, andthey do a lot of good in the world. They make a mockery ofthe dominant model.

• Yes, some argue that they are doing this just because thereis a link to profits, but I’m not sure that matters so much inthe real world, as it might to economic theorists.

• Yet, there is something missing here. Often times theseprograms are done as “add-ons” to the business models,without having too much overlap.

•

Of course people’s hearts may be in the right place, butsometimes it’s as if business people think they need CSRand CP programs to make up for any bad things that theirbasic business model does.




•

Should they get a pass on any ill effects of their businesspractices because they have a terrific CP/CSR program? By

the way Lehman Brothers (now bankrupt, with its bankruptcy

being one of the causal factors in the GFC) had a CSR program

as well, and these programs do a lot of good.

• Goldman Sachs has been one of the most vilified banks in the

GFC, yet you might be surprised to know that GS has had a

CP/CSR program for some time.

2 4 CP d CSR



2.4 CP and CSR:

Next Steps: Goldman Sachs• The Office of Corporate Engagement Programs:

- 10,000 Women is a five-year, $100 million global initiative to help growlocal economies and bring about greater shared prosperity by providing10,000 underserved women entrepreneurs with a business andmanagement education, access to mentors and networks and links tocapital.

- 10,000 Small Businesses is an investment to help entrepreneurs create jobsand economic opportunity by providing greater access to education,capital and business support services. 10,000 Small Businesses is fundedby Goldman Sachs and the Goldman Sachs Foundation.

- Goldman Sachs Gives is a donor-advised fund, from which current andformer Goldman Sachs partners can recommend grants to qualified

nonprofit organizations.- Community TeamWorks is the global volunteer initiative that allows GS

employees to take a day out of the office and spend it volunteering withlocal nonprofit organizations.

http://www.goldmansachs.com/citizenship/corporate-engagement/










• Problem is that CP and CSR really don’t stray very far from thedominant story. It is still pretty much only shareholders or“owners” that really count.

• And, these models of business in society, say that business

can discharge its obligations to society by working on “social”issues.

• They assume that we can clearly distinguish the “economic” aspects of business from the “social” aspects of business.Economics creates value, while “social” creates costs.

• The Separation Fallacy




• What are some companies that you consider “socially

responsible”? Why? What is their underlying business

model, and is it connected to their “social

responsibility”?

F th R di d R



Further Reading and Resources

for Week 2• “Misery Loves Companies: Rethinking Social Initiatives by Business,” Joshua D.

Margolis and James P. Walsh

• “The Gospel of Wealth,” Andrew Carnegie

• “Conscience and Corporate Culture,” Kenneth E. Goodpaster

• “Social Responsibilities of the Businessman,” Howard R. Bowen

• “Strategy and Society: The Link Between Competitive Advantage and

Corporate Social Responsibility,” Michael Porter and Mark Kramer

• View Jeremy Moon, Professor of Corporate Social Responsibility at

Nottingham University Business School speak about CSR:

• http://www.youtube.com/watch?v=GodTH4CAGdc&feature=share&list=PLAA660438D94DDF53

• http://www.youtube.com/watch?v=mJoIczZtXkA&feature=share&list=PLAA660438D94DDF53

• http://www.youtube.com/watch?v=4nyjF0sRnyU&feature=share&list=PLAA660438D94DDF53• http://www.youtube.com/watch?v=z63pJl4tOt0&feature=share&list=PLAA660438D94DDF53

• http://www.youtube.com/watch?v=p2TrS3vQUI8&feature=share&list=PLAA660438D94DDF53

http://www.jstor.org/stable/3556659

http://carnegie.org/publications/search-publications/pub/272/

http://www.amazon.com/Conscience-Corporate-Culture-Kenneth-Goodpaster/dp/1405130407

http://www.amazon.com/Social-Responsibilities-Businessman-Howard-Bowen/dp/1609381963

http://hbr.org/2006/12/strategy-and-society-the-link-between-competitive-advantage-and-corporate-social-responsibility/ar/1


http://www.youtube.com/watch?v=z63pJl4tOt0&feature=share&list=PLAA660438D94DDF53




http://www.youtube.com/watch?v=p2TrS3vQUI8&feature=share&list=PLAA660438D94DDF53


















http://www.amazon.com/Social-Responsibilities-Businessman-Howard-Bowen/dp/1609381963

http://www.amazon.com/Conscience-Corporate-Culture-Kenneth-Goodpaster/dp/1405130407

http://carnegie.org/publications/search-publications/pub/272/

http://www.jstor.org/stable/3556659

Lecture_Notes-Week Two Lecture Notes

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