Easy to study summary of all the main topics / course concepts of the course Corporate Sustainability (323102-M-6), in the Master Accountancy at Tilburg University.
Anti Profit Beliefs (APB) The perception that profit-seeking conflicts with beneficial
outcomes for consumers and society.
(Bhattacharjee et al., ● APB can arise because the zero-sum game is easily
2017) accessible
Zero-sum The more the firm profits from an exchange, the less value for
the consumer (more profit, less value for society)
Corporate purpose and ● High purpose camaraderie (team feeling) → Flat,
financial performance slowly decreasing return on assets
(Gartenberg, Prat, ● High purpose clarity (clear management view and
Serafeim, 2019) expectations) → increasing return on assets
Lecture 2 Concepts of CSR & Corporate Purpose
Corporate Citizenship Companies should be good “citizens” of the world
Companies are responsible for contributing to the communities
in which they operate, including environmental stewardship
and social responsibility. Companies must comply with laws
and regulations and pay taxes. Governments provide the legal
foundations.
Corporate Social A concept whereby companies integrate social and
Responsibility (CSR) environmental concerns in their business operations and
in their interaction with their stakeholders on a voluntary basis
A business model (strategy) that affects organizational
processes and company culture
● Broad societal and environmental focus
● Value creation
● Stakeholder-centric
Environmental, Social, A model used by investors to examine the sustainability of a
Governance (ESG) company including a set of (quantifiable) criteria
The Pyramid of CSR The social responsibility of business encompasses the
economic, legal, ethical, and discretionary [later referred to
(by Carrol) as philanthropic] expectations that society has of
organizations at a given point in time.” Carroll 1979, 1991)
● Philanthropic responsibilities (desidered by society)
● Ethical responsibilities (expected by society)
● Legal responsibilities (required by society)
● Economic responsibilities (required by society)
,Triple Bottom Line (TBL) Management concept that aims to measure the financial, social
and environmental performance of the corporation. Only a
(by John Elkington) company that produces a TBL is taking account of the full cost
involved in doing business
● Planet: Environmental performance
● People: Social performance
● Profit: Economic performance
Sustainability Meeting the needs of the present without compromising the
ability of future generations to meet their own needs
Who should provide ● Conflicts regarding “business purpose”
activities for sustainable ● Intrinsic motivation
development? ● Competence / Knowledge
● Potential impact
● Prevention or fixing of problematic outcomes
● Crowding out
Shareholder Primacy Berle’s shareholder primacy emphasizes managers (legal)
fiduciary duty towards shareholders
(profit maximization) ● Investors invest their own funds into a firm.
● Investors should get the returns that this money
(Principal-agent view) generates.
Milton Friedman: the only social responsibility of the business
(governments are is to increase its profits (within the rules of the game)
responsible for social
welfare) Assumptions:
1. No competitive advantage in socially responsible
actions
2. Governments are well-functioning
3. Calculable impact of socially responsible investments of
profit
Stakeholders Interests Dodd views corporation as economic institution with a social
service as well as a profit-making function. Corporations….
(Create value for all ● embedded in society (stakeholder theory)
stakeholders) ● profit from society
● receive a license to operate (legitimacy theory)
● impact society (externalities)
Edward Freeman
Stakeholder Theory is a view of capitalism that stresses the
interconnected relationships between a business and its
customers, suppliers, employees, investors, communities and
others who have a stake in the organization. The theory argues
that a firm should create value for all stakeholders, not just
shareholders.
, CSR can generate ● saving on resources and streamlining processes
financial benefits (and ● attracting / binding customers / avoiding being punished
reduce costs by: by “critical consumers”
● motivating and attracting certain employees
CSR → CFP
● preventing stricter governmental intervention
● decreasing risks of catastrophic events
● having lower costs of equity and debt
Corporate Social Empirical evidence: CSP (to the extent chosen by firms) seems
Performance (CSP) to be positively associated with CFP. Investing in firms with
relatively high sustainability engagement paid off.
and
Corporate Financial Link between CSP and CFP
Performance (CFP) (1) Cost and risk reduction
(2) Gaining competitive advantage: justify benefits over
costs
(3) Developing reputation and legitimacy
(4) Seeking win-win outcomes: strategy integration,
learning and innovation
Creating Shared Value Creating Shared Value involves creating economic value in a
(CSV) way that also creates value for society by addressing its needs
and challenges. Can be done by:
(Porter & Kramer, 2011) ● Reconceiving products and markets
● Redefining productivity
● Enabling local cluster development
Growing the Pie Company purpose and profit need not be in conflict if we ‘grow
Mentality the pie’
Lecture 3 Sustainability Accounting
Externality A cost or benefit caused by an economic actor that is not
suffered or enjoyed by that same actor. Externalities refer to
the indirect effects of a company's activities that are not
reflected in its financial statements but have broader
impacts on society and the environment
Stakeholder Value Market Capitalization - Value of Externalities (net)
Impact-Weighted Impact-Weighted Accounts (IWAs) are a way for organizations
Accounts (IWA) to quantitatively assess their impact: how they create value for
all stakeholders.--> measuring value beyond profit
IWAs consist of two building blocks:
Integrated Profit & Loss
expands a traditional profit & loss by taking into account value
created for all stakeholders in the form of the six capitals
(financial, manufactured, intellectual, social, human, natural)
Integrated Balance Sheet
expands a traditional financial balance to include stakeholder
value created over a longer term
→ Line items in the statements are impacts
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