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DefinitionsLeading business companies engaged into serious

malpractice during the 1980s-90s as well as late 2000s

After the 1970s the notion ‘corporate social responsibility’ gained serious momentum, as governments, international organizations and societies raised their voices against corporate greed

CSR involves the adoption of best business practices that respect human rights, the environment, labor and product standards and anti-corruption

Can the business be ethical ?http://www.youtube.com/watch?v=GggyVO21hw8

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Top business malpractice: environmental disasters and human rights violation (1980-90s)Exxon Mobile – oil spills in the Niger DeltaUnion Carbide – factory explosion in BhopalBP – oil spills in Mexico GulfTexaco – Ecuadorian ChernobylCaterpillar – selling bulldozers to the Israeli army

for Palestinian home demolitionCoca-Cola – world’s most abusive and

discriminatory companyChevron – owner of Texaco, devastating human

rights violation in BurmaDow Chemicals – outrageous environment

pollutionFord Motors – 10th largest world polluter 3(Source: http://www.globalexchange.org/corporateHRviolators)

Top business malpractice: Financial fraud (2000s)Enron – America’s ‘most innovative company’

over reported revenues to $ 100 billion. The company went bankrupt in 2001, which led to net loss for its shareholders amounting to $ 60 billion

Bernie Madoff – sentenced to 150 years in jail for financial frauds amounting to $ 17 billion

Bank bail-out by governments – UK’s Northern Rock

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The emergence of CRFactors shaping the social role of business:Increasing need to regulate the performance

of MNCsIT used to control business more effectively

(stringent rules on financial reporting and monitoring of activities in the 3rd world)

Legal standards on environment and human rights protection, health and safety at work

Awareness of society (increasing need to build good company image)

Growth of third sector (NGOs)5

Aspects of CRCorporate Responsibility is “a concept whereby

companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis” (EU Commission, 2011)

It is the “commitment of business to contribute to sustainable economic development by working with employees, their families, the local community and society at large to improve their lives in ways that are good for business and for development” (WB, 2011)

The business is increasingly being expected to engage in activities that preserve the environment and human rights and to promote adequate corporate governance

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(2) Aspects of CRCorporate citizenship refers to “managing

the company’s wider influence on society and the benefit of company and society” (Wetherly&Otter, 2011)

Perceiving the business as a citizen, implies that it has moral obligations and civic responsibility to the other members of society

http://www.corporate-citizenship.com/what-we-do

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(3) Aspects of CRBusiness ethics is based upon the following

principles: Ethical values of business Application of values to business (codes of ethics) Ethical policies (corporate governance) Ethical theories: deontological and utilitarianThe application of ethical norms to business behavior

leads to socially acceptable practicesAdam Smith: “People of the same trade seldom meet together

[…] the conversation ends in a conspiracy against the public, or in some contrivance to raise prices” (The Wealth of Nations, 1776)

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Perspectives on CRFriedman and the ‘free-market’ view:“What does it mean to say that ‘business’ has

responsibilities? Only people have responsibilities” (“The Social Responsibility of Business is to Increase Its Profits” The New York Times Magazine, September 13, 1970)

The primary goal of business is profit (no moral obligation)

Social goals are governments’ obligationSocial / community projects entails economic costs for

the business: Lower dividends and wages Outside the scope of manager’s duties

9(*to the article: http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html)

(2) Perspectives on CRStakeholder theory

about CRStakeholder is “any individual

who affects or is affected by the business actions, decisions, policies and practices”

Taking into account the complex interests of main stakeholder groups leads to effective CR

The four main areas: Pyramid of CR by Archie Carroll

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The nature of CRTypes of responsibility:Agency – business values and their effect on the

environmentAccountability – to particular groups of stakeholders

Liability – moral responsibility to the wider community

Motives for CRSelf-interest – bad image might lead to loss of clients Mutual interest – business has both power and

obligation solve problems it has/will createShared responsibility – sense for the ‘common’ good,

based on dialogue

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Steps to successful CRCR should be applied to practical situations and

problems. The comprehensive process includes several steps:

1.Data gathering – being informed about shareholders

2.Value clarification and management – identifying and defending company values

3.Responsibility negotiating – when the major stakeholder groups are indentified, responsibility should be negotiated and shared

4.Audit – publishing social and environmental reports (in addition to financial ones)

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UN Global Compact: 10 Principles Human rightsPrincipal 1: Businesses should support and respect the protection of internationally

proclaimed human rights; andPrincipal 2: make sure that they are not complicit in human rights abuses.   LaborPrinciple 3: Businesses should uphold the freedom of association and the effective

recognition of the right to collective bargaining;Principle 4: the elimination of all forms of forced and compulsory labor;Principle 5: the effective abolition of child labor; andPrinciple 6: the elimination of discrimination in respect of employment and occupation.    EnvironmentPrinciple 7: Businesses should support a precautionary approach to environmental

challenges;Principle 8: undertake initiatives to promote greater environmental responsibility; andPrinciple 9: encourage the development and diffusion of environmentally friendly

technologies.    Anti-corruptionPrinciple 10: Businesses should work against corruption in all its forms, including

extortion and bribery. 13

(Source: http://www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/index.html)

OECD guidelines to MNCsRecommendations (to the 42 member governments of

OECD) for ‘responsible business conduct’:General policies (major ‘should do’)Extensive recommendations on: Disclosure Human rights Employment and industrial relations Environment Combating bribery, bribe solicitation and extortion  Consumer interests Science and technology  Competition  Taxation  

14(Source: http://www.oecd.org/dataoecd/43/29/48004323.pdf)

EU CommissionThe EU Commission has history of extensive CSR

development and strong encouragement for MS to adopt relevant national policies

EU strategy 2011-14 for CSR:Enhancing the visibility of CSR and disseminating good practices Improving and tracking levels of trust in business Improving self- and co-regulation processesEnhancing market reward for CSR Improving company disclosure of social and environmental

informationFurther integrating CSR into education, training and researchEmphasizing the importance of national and sub-national CSR

policiesBetter aligning European and global approaches to CSR

15(Source: EU Commission - A renewed EU strategy 2011-14 for CSR, 2011)

ExamplesIn 2007, 78 US top companies donated $

3.8 billion in cash to social initiatives:1.Wal-Mart Stores - $ 301 m2.Bank of America - $ 211 m3.Exxon Mobil - $ 173 m4.Citigroup - $ 146 m5.Johnson & Johnson - $ 127 m

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The BG contextIn 2006, the UNGC and Bulgarian Charities

Aid Foundation ran a survey on CSR in BG:121 medium sized and big companies (100

employees or more) took partonly 7% had a separate department for

community work (the foreign ones follow practices from Western headquarters)

overall CSR was not part of the long-tern company agenda (sporadic donations prevail)

Cooperation with NGOs is very low

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The empirics

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(2) The empirics

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Consolidated democracyLarry Diamond’s

explanation on developed democracy entails three developed and reinforcing arenas

If one of them fails to function properly, obstacles to democracy are conveyed

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BG context explained2 out of 10 people were voluntary members in any

kind of NGOs (2008)9% of the NGOs in BG are actually functioning

(2008)75% of the state ministers and 90% of the mayors

owned an NGO (2000-2007)The legal framework does little to incorporate

NGOs in national legislation Since 2007 the EU has poured $ 24 million as aid to

Bulgarian NGOsBulgarians usually perceive NGOs as business

organizations, ‘cleaning’ corrupt activities, or quasi-state structures, which have pointless existence

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The EU impactIn 2003, President Parvanov officially

launched the UN Global Compact in BGIt links together 120 companies that

voluntarily apply the 10 principlesIn 2010, the Association Global Compact

Network Bulgaria was established by 20 leading companies

www.unglobalcompact.bg

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