CSR Final

Corporate governance

The system of rules, processes, and principles by which a company is directed and controlled.

Corporate governance defines relationships among

Management, the board of directors, shareholders, and other stakeholders.

Good corporate governance ensures

Accountability, fairness, transparency, and responsibility.

Accountability

Management's duty to answer to shareholders and broader stakeholders.

Transparency

Open and accurate disclosure of company information.

Fairness

Equitable treatment of shareholders and stakeholders.

Responsibility

Ethical and lawful behavior that protects long-term interests.

CSR

Corporate Social Responsibility; the idea that businesses have responsibilities beyond profit.

Governance and CSR relationship

Governance provides structure, while CSR adds ethical and social responsibility to business decisions.

Governance as the skeleton, CSR as the soul

Governance creates the framework, while CSR provides the values.

Internal governance mechanisms

Board structure, internal controls, and audit committees.

External governance mechanisms

Laws, regulations, market discipline, and shareholder activism.

Board of directors role

Provides strategic guidance, oversees management, and aligns corporate actions with stakeholder interests.

Independent directors

Board members who help reduce conflicts of interest and improve oversight.

Board diversity

Variety in board backgrounds and perspectives that improves decision-making.

Governance failures

Breakdowns in oversight, accountability, or ethical leadership.

Examples of governance failures

Enron, WorldCom, Parmalat, and Lehman Brothers.

Why scandals matter

They showed the need for stronger accountability, independent oversight, and governance reform.

CSR as a governance tool

CSR expands accountability beyond shareholders to stakeholders and society.

Stakeholder-oriented governance

A governance model that includes employees, customers, suppliers, communities, and the environment.

Shareholder model

A model where the company's primary duty is to owners and investors.

Stakeholder model

A model where the company considers all groups affected by its actions.

Corporate citizenship

The idea that companies act as responsible members of society beyond legal compliance.

Ethical leadership

Leadership based on integrity, fairness, transparency, and accountability.

Tone at the top

The ethical example and expectations set by senior leaders.

CSR in practice

Turning ethical and social responsibility principles into real business actions.

Implementing CSR

Requires organizational commitment, clear objectives, and integration into everyday decisions.

Strategic CSR

CSR aligned with the company's core business strategy.

Strategic CSR treats CSR as

An investment, not just a cost or charity.

Traditional CSR

CSR that is separate from core strategy, often one-time donations or charity.

Strategic CSR benefits

Innovation, competitiveness, reputation, and long-term stakeholder value.

Leadership and CSR

Leaders promote ethical values and encourage employees to adopt responsible practices.

Organizational culture

The shared values, behaviors, and expectations inside a company.

CSR and organizational culture

CSR must be embedded through training, communication, and reward systems.

Stakeholder engagement

Ongoing dialogue with customers, employees, suppliers, communities, investors, and other affected groups.

Purpose of stakeholder engagement

To ensure CSR policies reflect diverse needs and build trust.

CSR in the supply chain

Extending responsibility to suppliers and third parties.

Supplier code of conduct

Rules requiring suppliers to meet ethical, labor, human rights, and environmental standards.

Ethical sourcing

Obtaining materials or products in ways that respect labor, human rights, and environmental standards.

Environmental CSR

Business practices that reduce environmental harm.

Examples of environmental CSR

Reducing emissions, saving energy, recycling, cutting waste, and using renewable resources.

Community involvement

CSR actions that support education, healthcare, infrastructure, social welfare, and local development.

Corporate philanthropy

Donations, sponsorships, matching gifts, in-kind donations, and employee volunteering.

Modern philanthropy

Philanthropy aligned with long-term sustainability strategy.

CSR and reputation

Strong CSR can attract loyal customers, talented employees, and responsible investors.

Poor CSR practices

Can damage credibility, reputation, and brand value.

Benefits of practical CSR

Improved risk management, lower costs, employee motivation, customer loyalty, and competitive advantage.

CSR challenges

Balancing profit with ethics, staying authentic, and managing conflicting stakeholder interests.

Social accounting

Reporting organizational activities that affect society and the environment.

Social accounting goes beyond

Traditional financial accounting.

Social accounting includes

Sustainability, ethics, stakeholder well-being, social impact, and environmental impact.

Purpose of social accounting

To improve transparency, build trust, evaluate impacts, and show ethical compliance.

CSR reporting

Communication of a company's social, environmental, and governance performance.

Why CSR reporting has grown

Public expectations, regulatory pressure, and responsible investment demand.

Voluntary CSR reporting

Reporting driven by ethical commitment and stakeholder expectations.

Regulatory CSR reporting

Reporting required by laws or standards.

Goal of global reporting standards

To make sustainability reporting more consistent, credible, and comparable.

GRI (Global Reporting Initiative)

a widely used sustainability reporting framework.

UN Global Compact

A principles-based framework covering human rights, labor, environment, and anti-corruption.

Integrated Reporting

Reporting that combines financial, social, and environmental information.

ISO 26000

International guidance for social responsibility.

Social reporting

Reporting on labor practices, community impact, human rights, diversity, and employee well-being.

Environmental reporting

Reporting on emissions, waste, water use, energy use, biodiversity, and recycling.

Good CSR reporting should be

Understandable, relevant, reliable, accessible, and stakeholder-focused.

Greenwashing

Misleading or selective claims that make a company appear more responsible than it really is.

Selective disclosure

Only reporting positive information while hiding negative impacts.

Triple Bottom Line

People, Planet, Profit.

People in Triple Bottom Line

Social responsibility toward employees, communities, and stakeholders.

Planet in Triple Bottom Line

Environmental responsibility and sustainability.

Profit in Triple Bottom Line

Financial performance and long-term business success.

ESG

Environmental, Social, and Governance factors used to evaluate responsibility.

Environmental ESG factors

Emissions, energy use, waste, water, climate risk, and biodiversity.

Social ESG factors

Labor practices, diversity, human rights, community impact, and employee well-being.

Governance ESG factors

Board oversight, transparency, ethics, accountability, and shareholder rights.

USA CSR model

Voluntary, market-driven, shareholder-focused, and philanthropy-oriented.

Europe CSR model

Regulatory, systemic, stakeholder-focused, and legally embedded.

USA CSR philosophy

CSR is guided mainly by corporate culture, innovation, markets, and reputation.

Europe CSR philosophy

CSR is embedded in laws, regulations, and social policy.

USA CSR orientation

Shareholder-focused, prioritizing profitability and investor returns.

Europe CSR orientation

Stakeholder-focused, including employees, communities, and the environment.

USA CSR key drivers

Consumer activism, market reputation, investors, and brand competition.

Europe CSR key drivers

Government mandates, regulation, worker protections, and state involvement.

USA CSR reporting

Mostly voluntary, with evolving SEC rules.

Europe CSR reporting

More mandatory, especially under CSRD and related directives.

CSRD (Corporate Sustainability Reporting Directive)

EU rule requiring sustainability disclosures.

USA social policy

Weaker unions and more emphasis on corporate philanthropy and volunteering.

Europe social policy

Stronger worker rights, collective bargaining, and welfare systems.

USA environmental policy

Varies significantly by state.

Europe environmental policy

More unified and strongly influenced by EU climate leadership.

EU Green Deal

European policy framework focused on climate action and sustainability.

USA philanthropy focus

CSR often appears through donations, volunteering, and corporate giving.

Europe philanthropy focus

Less charity-based and more integrated into business models and regulation.

USA governance focus

Financial performance and shareholder value.

Europe governance focus

Sustainability, stakeholder risk management, and legal accountability.

USA consumer influence

Consumer activism pressures companies to adopt sustainability.

Europe consumer influence

Consumers expect regulation to enforce responsible business standards.

USA ESG investing

Growing but politically contested.

Europe ESG investing

More institutionalized and widely supported.

Main USA vs Europe difference

USA CSR is voluntary and market-driven; Europe CSR is regulatory and stakeholder-driven.

CSR in China

State-driven CSR aligned with national development goals.