Theme 1: Perspectives: introduction to corporate social responsibility and sustainability
1.1. Course introduction: contemporary developments and challenges
Developments (since 1900s) Challenges
• World population more than quadrupled; • In 2019, humanity’s ecological footprint equals 1.75
• World economy increased by a factor of planet equivalents;
80; • Every year we extract 100 billion tons of raw materials
• Average life expectancy more than of the earth;
doubled; • 785 million people do not have access to clean water;
• The share of people living in extreme • 26 richest people in the world have as much wealth as
poverty dropped by a factor of 8; 3.8 billion poorest (half of the population);
• Literacy rates more than quadrupled; • In Europe, air pollution causes 790,000 premature
• Astonishing developments in science and deaths yearly;
technology; • 19 of the 20 warmest years on record occurred during
• So overall, the last 100 years we this century;
experienced unprecedented economic • So question for this course: What is the role of
growth and human prosperity. business? (The progress that we made or the
challenges?)
What is the role of business?
• 100 corporations are responsible for 71% of all carbon dioxide emissions;
• 93% of the world’s largest 250 companies produce sustainability reports, which shows the relevance of the
topic. However, the reason to produce such reports differ: e.g. greenwashing, social pressure;
• 157 of top 200 economic entities are corporation. So there are fewer countries than corporations in the top 200.
Hence, businesses have a lot of power.
1.2. Introduction to CSR and business sustainability
Multiple definitions for corporate social responsibility exist:
• = “Actions that appear to further some social good, beyond the interest of the firm and that which is required
by law”
• = “A concept whereby companies integrate social and environmental concerns in their business operations and
in their interaction with their stakeholders on a voluntary basis and in a context specific way”
• = “The responsibility of enterprises for their impacts on society”
Corporate sustainability definition:
• = “CS means managing a firm in such a way that its activities meet the needs of the present, without
compromising the ability of future generations to meet their needs”
1
, • = “CSR and CS refer to company activities – voluntary by definition – demonstrating the inclusion of social
and environmental concerns in business operations and in interactions with stakeholders”
Main elements of CSR and CS (more important to know than the definitions):
• Triple Bottom Line: economic, social & environmental dimensions;
• Taking into account stakeholders;
• Voluntary;
• Context-specificity;
• Managing externalities/impacts;
• Rooted in values and ethics.
1.3. Dealing with ethical decisions in business
Business ethics is concerned with “business situations, activities and decisions where issues of right and wrong are
addressed.”
The study of business ethics is not really about having one answer, but rather:
• Gathering relevant evidence;
• Systematically analyse the evidence through relevant lenses/theories;
• Making better (not ‘objectively right’) answers.
There are multiple theories, stakeholders and points of view:
• Consequential principles (if an act is right or wrong depend on the consequent/outcome):
o Egoism: maximize our utility
▪ → Pursuing our own interest
o Utilitarianism: maximize collective utility
▪ → Pursuing the interests of the community
▪ In class example: saving five injured people is better than just one
• Non-consequential principles (there are some things that are just right or wrong, you just can’t do it, regardless
of the consequences):
o Duty/Kantian ethics: categorical imperatives
▪ → “Act only according to that maxim by which can at the same time will that it should become
an universal law”
▪ I.e. think about whether you would allow that act by everyone, in all kinds of situations. E.g.
you don’t allow murder or breaking promises: some things are just wrong
o Ethics of rights & justice: respect basic rights
▪ → Choosing under the “veil of ignorance”
▪ I.e. imagine that you are in a veil of ignorance: so you ignore who you are in society. First you
could have argued “It is ok if 10% of our population are slaves, I will never be a slave because
of my status”. However, after applying this veil of ignorance you would say “Slavery is NOT
2
, ok, and I don’t want to be part of the 10%”. Similarly you can apply this on business decisions:
think of the weakest stakeholder and imagine whether they would perceive the decision as fair.
Crane & Matten (2006). Business ethics: managing corporate citizenship and sustainability in the age of globalization
[Often the arguments in favour of CSR and sustainability revolve around ethics or morality. This book chapter
summarizes some of the most influential ethical theories. Try to understand the main principle behind each of these
theories.]
In our everyday lives, we constantly come up against situations where values are in conflict and where we have to make
a choice about what is right or wrong. In a business context situations might become considerably more complex, namely
a MNC has to cope with multiple ethical problems at the same time that involve a variety of people with different views
and attitudes. More importantly, the decisions made in a business context need to be based on a systematic, rational and
widely understandable argument → normative ethical theories. Ethical theories are the rules and principles that
determine rights and wrong for any given situation.
The role of ethical theories:
• Two extreme positions: ethical absolutism vs. ethical relativism;
o Ethical absolutism (more traditional): there are external, universally applicable moral principles. Right
and wrong are objective qualities that can be rationally determined.
o Ethical relativism (more contemporary): morality is context dependent and subjective.
▪ Occurs in international business, namely morality is culturally determined and a moral
judgement about behaviour in another culture cannot be made from outside.
▪ Different from descriptive relativism, which suggests that different cultures have different
ethics. Ethical relativism differs because it proposes that both sets of beliefs can be equally
right.
o Pluralism: in the middle of the above, and accepts different moral convictions and backgrounds, while
at the same time suggesting that a consensus on basic principles and rules in a certain social context
can, and should be reached.
• Two basic assumptions of morality: 1) morality is a social phenomenon; 2) morality is about harm and benefit.
Normative ethical theories: a European perspective:
• Literature is dominated by an Anglo-American perspective, but European business ethics differs:
o Individual (US) vs. institutional morality (EU)
o Consequences (US) vs. duties (EU)
o Questioning (EU) vs. accepting capitalism (US)
o Justifying and ethical legitimization of norms (EU) vs. applying moral norms (US)
Traditional ethical theories:
• Traditional ethical theories generally offer a certain rule of principle which one can apply to any given situation
– hence they are absolutist in intentions. Can be differentiated in two groups:
3
, • Consequentialist theories are based on the intended outcomes, the aims or the goals of a certain action.
• Non-consequentialist theories look at the desirability of principles, and, based on these principles deduce a
‘duty’ to act accordingly in a given situation, regardless of the desirability of the consequences.
• Following the theory of egoism an action is morally right if the decision-maker freely decides in order to pursue
either their (short-term) desires or their (long-term) interests.
• According to utilitarianism (aka ‘greatest happiness principle’), an action is morally right if it results in the greatest
amount of good for the greatest amount of people affected by the action.
o Cost-benefit analysis:
4
