Csr presentation edit 2
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Transcript of Csr presentation edit 2
Does it pay to be environmentally/socially responsible? If so, under what conditions does it
pay?Clara Melot
Jennifer Steeves
Outline Definition of CSR
The case against CSR
The case for CSR Tangible vs intangible benefits
Short term vs long term
When does CSR pay? Opportunities for raising revenues
Opportunities for decreasing costs
Conclusion
Definition of CSR CSR = Corporate Social Responsibility
Activities that “represent firms’ efforts to do more to address a wide variety of social problems than they would have done in the course of their normal pursuit of profits” (Vogel, 2005:4)
Beyond the law
Accountability to stakeholders
Old vs. New CSR Doing good to do good vs. doing good to do
well (Vogel)
Zero-sum to win-win (Fiorino)
CSR sells, but does it pay?
The case against CSR Greenwash
Costly
Customers don’t really care
Socially responsible funds don’t outperform other funds
Bottom line?
Company’s main responsibility is to maximize profit for shareholders
CSR doesn’t guarantee payoff
The case for CSR Intuitively, CSR should not pay
Porter Hypothesis (applied to VEPs) allows us to draw a different conclusion.
Business as usual Good business relies on good practices
because trade is based on trust.
Part of CSR is achieved through efficient business
Tangible and intangible short term benefits
CSR activities and outcomes can pay
Why separate activities and outcomes?
tangible= accountancy view
intangible = economic benefits which can be tricky to value.
Tangible and intangible long term benefits
CSR activities can pay economically speaking. Through tangible and intangible benefits
(marketing assets)
…under certain conditions
Relationship between environmental and economic
performance
Lankoski, 2008
When does CSR pay?
Opportunities for raising revenues
Better access to certain markets
IF said firm sells to the public sector or is in a BtoB model.
United Kingdom:
Public procurement policy
Differentiating products IF there is :
- credible information about the product’s added value- Consumer Willingness To Pay- Barrier to imitation
Toyota was the first company to develop an accessible series model for hybrid technology
Selling pollution control technologies
More likely if the company already has R&D facilities.
Ciba Specialty Chemicals Co. And the Cibacron Ls Pattern
When does CSR Pay?
Opportunities for reducing costs
Risk management & stakeholder relations
IF firms are in highly regulated and publicly scrutinized industries
APP
Cost of materials, energy and services
IF firms: Have flexible production process Are in highly competitive industries Are in industries where MBIs were
implemented Already have R&D facilities
Dow Chemicals’Waste Reduction Always Pays (WRAP)
Cost of capital IF firms have shares exchanged on stock markets
Exxon Mobil’s share price drop after Exxon Valdez oil spill
Cost of labour IF:
Firm’s emissions affect workers’ health Firms seek to attract young, well-educated
employees Firms are located in areas with strong
environmental values
97% of MBAs willing to forgo average of 14% expected income to work for firm with better CSR reputation
Conclusion
CSR is not a panacea but a tool which is efficient under certain
conditions
Strategic implication What contextual elements should
business policy makers consider before implementing CSR strategies?
References Ambec, S. & Lanoie, P. (2008). Does it pay to be
green? A systematic overview. The Academy of Management Perspectives 22 (4), pp.45-62
Fiorino, D. J. (2006). The new environmental regulation. London: MIT Press.
Lankoski, L. (2007). Corporate responsibility activities and economic performance: A theory of why and how they are connected. Business Strategy and the Environment 17 (8), pp.536-547
Vogel, D. (2005). The market for virtue the potential and limits of corporate social responsibility. Brookings Institution, Washington, D.C.