Chapter 5

Corporate Social Responsibility

Meaning of CSR
It is a form of corporate self regulation integrated into a business model. CSR policy functions is a built-in function ,whereby, a business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms. In some models, a firm's implementation of CSR engages in "actions that appear to further some social good, beyond the interests of the firm.

Consumer Rights
The right to safety The right to be informed The right to choose The right to be heard The right to satisfaction of basic needs The right to redress The right to consumer education The right to a healthy environment

Responsibility toward Consumers

Duty to inform fully Duty to not misrepresent or withhold information Duty to not force or take undue advantage Duty to take due care to prevent foreseeable injuries

Buyer beware vs. Seller take care

Five Goals of Government Policy Makers toward Consumers

1. Providing consumers with reliable information about purchases 2. Providing legislation to protect consumers against hazardous products 3. Providing laws to encourage competitive pricing 4. Providing laws to promote consumer choice 5. Protecting consumers privacy

External Corporate Responsibility Areas

Advertising Product Safety and Liability Environmental concerns

Ethics and Advertising

Whose rights are being protected or violated intentionally and inadvertently? At what and whose cost? Are consumers being justly and fairly treated? Are the public welfare and good taken into consideration for the effects as well as the intention of advertisements? Has anyone been harmed, and can this harm be proven?

Advertising

Inform vs. persuade (two purposes

Deception:
Mislead customers Affect consumers behavior or decisions

Unfair:
Substantial injury Injury not outweighed by other benefits Injury is reasonably avoidable

Conditions for Clear and Conspicuous Disclosures

The placement of the disclosure in an advertisement Whether items in other parts of the advertisement distract attention from the disclosure Whether the advertisement is so lengthy that the disclosure needs to be repeated Whether disclosures in audio messages are presented in an adequate volume and visual disclosures appear for a sufficient duration Whether the language of the disclosure is understandable to the intended audience

Pros and Cons of Advertising

Pros

Cons

Fine line between fairness Informs consumers about products and deception Enables companies to be Targeting unsophisticated competitive buyers (children and Increases consumption and youth) spending, which in turn Intentional deception and creates economic growth half-truths Helps a nations balance of trade and debt payments Customers pay for the images as well as the products Consumers are not ignorant; they have freedom of choice

Product Safety and Liability National Commission on Product Safetys steps to assess product safety: How much safety is technically attainable, and how can it be specifically obtained for this product/service? What is the acceptable risk level for society, the consumer, and the government regarding this product? Does the product meet societal and consumer standards?

Environmental Issues
Toxic air pollution Water pollution and scarcity Hazardous waste and land pollution Laws: 1. Air (Prevention and Control of Pollution) Act, 1981 2. Environment (Protection) Act, 1986 3. Forest Conservation Act, 1980 4. Water (Prevention and Control of Pollution), 1974

Causes of Environmental Pollution

1. 2. 3. 4. 5.

Materialistic cultural values. Urbanization. Population explosion. New and uncontrolled technologies. Industrial activities.

Ethics of Ecology: Assumptions

1. Responsibilities go beyond production of goods and services at a profit 2. Include helping to solve important social problems 3. Broader constituency or population than stockholders 4. Impact more than just marketplace 5. Serve a wider range of human values than just economic value

Environmental Ethical Issues

Green Marketing Environmental Justice Industrial Ecology Rights of future generations Right to a livable environment

Questions for Managers Regarding Environmental Policy

1. How much is your company really worth? 2. Have you made environmental risk analysis an integral part of your strategic planning process? 3. Does your information system look out for environmental problems? 4. Have you made it clear to your officers and employees that strict adherence to environmental safeguarding and sustainability requirements are a fundamental tenet of company policy?

Five Stages of Environmental Corporate Commitment