Summary lectures Toolbox 2: CS implementation: theory and practice (GEO4-2603)
Lecture 1: Understanding the SDGs
Reasons why an company cares about sustainability:
Reputation
Competitive advantage
Become future proof
Stakeholder pressure
Profit
Sales, new customer segment
Two concepts for sustainability in corporations:
Corporate (social) responsibility: Started with a focus on social issues
Corporate sustainability: Started with a focus on environmental issues
Two concepts have blurred and are used interchangeably, both tackle the relationship
between business and society
Evolution of the conceptualization of business-society relations:
1944 – Karl Polanyi (political economist) called attention to the negative effects of markets
on society. No longer were markets serving society; society was serving markets
1950s - Economics, law, & business school professors started framing this conversation as
corporate responsibility. Managers’ moral responsibilities to society and legal frameworks
should guide managers’ decisions related to labour, local communities, and product safety
1980s - Another group of civil society actors and governments sounded the alarm that
economic development was breaching natural resource limits. These groups advocated for
sustainable development.
1990s/2000s - Convergence in the concepts around the business case for socially responsible
or sustainable business practices.
Corporate responsibility: Concept which is focused on the moral responsibility of managers and firms
toward society.
Based on ethical principles
Insight from the social sciences
Oriented towards the harms of markets on society (social issues)
Corporate sustainability: Individual companies implementing strategies to achieve sustainable
development
Based on systems science
Insights from the natural sciences
Oriented towards the harms of economic development on natural systems (environmental
issues)
Convergence of the two concepts corporate responsibility and corporate sustainability
(1990s/2000s):
Mix between profit, environment and society
Around the business case for socially responsible and environmentally sustainable business
practices
Strategic orientation: responsibility and sustainability as a long-term strategy
Discussing society and the natural environment
Role of CEOs and top management team in shaping responsible and sustainable practices
Shareholder Primacy Norm: States that a business corporation is organized and carried on
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,primarily for the profit of the stockholders
What happened between the late 1970s and the late 1990s?
Rationalization of CSR: This rationalization entails different changes:
1950s and 1960s 1990s
Level of Analysis Macro-social Organizational
Theoretical Orientation Ethical/obligation Managerial
Ethical Orientation Explicit Implicit
Relationship between CSR Exclusive/No discussion Tight coupling
and CFP
Evolution of the concept of CSR (Lee, 2008):
1950s - Emergence of the first CSR definitions. CSR as a complementary and corrective
measure for some social failures inherent in laissez-faire economy
1960s - Social Responsibilities of Businessmen CSR viewed as any action that goes
beyond company’s direct economic or technical interests
1970s - Enlightened Self-Interest CSR is seen as a competitive advantage. CSR is
consistent with stockholders’ long-term interests
1980s-1990s - Strategic Management, stakeholder approach Survival of a corporation is
affected not only by shareholders, but also various other stakeholders
21st century – Business case driven CSR Business case for CSR. Link between CSR and a
firm’s (financial) performance
Strategic management approach to CSR:
Strongly influenced by the notion of stakeholders
Central issue is the survival of the corporation, which is affected not only by shareholders
but also other stakeholders like employees, governments and customers
Changes in CSR policy are a clear response to issues and concerns voiced by relevant
stakeholders
CSR policy will foster good relationships with stakeholders and maintain the companies’
reputation
Limitations of business case driven CSR:
Inconclusive empirical findings: There hasn’t been many empirical studies that confirm the
relation between CSR and financial performance
The marginal value of social responsibility will decrease as more corporations become
socially responsible: The adoption of CSR will provide the company a competitive advantage,
but if all companies become social responsible, you will not have a competitive advantage
over other companies. There is only a competitive advantage for first movers
Little explanatory power to account for the recent organizational changes: Changes are
explained by institutional factors (e.g. pressures from social movements) and personal
factors (e.g. personal ethics of managers)
Business case driven CSR assumes that what is good for society should also be good for
corporations: That may not be the case. A lot of environmental actions are seen as costs for
companies. E.g. environmental laws obligates companies to move to sustainability which is
not always in their (financial) advantage
Business case driven CSR will bias how corporations select their CSR strategy: Not all social
and environmental issues have the same potential. Companies who are motivated by
financial objectives, will ignore things which are from an environmentally view more urgent
Problems with implementing CSSR/CSR:
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, No consistent understanding of corporate sustainability and social responsibility (CSSR)
Many companies lack a strategic approach to CSSR and follow unsystematic procedures
Formal strategic planning could improve operational efficiency
A strategic management process can be used to incorporate CSSR (by Hahn):
Framework guides companies by strategic steps to implement CSSR
Four main steps:
o Environmental scanning: Performing external and internal audits What does the
company good/bad for sustainability
o Strategy formulation: Creating vision and mission to incorporate it into the
company, long-term objectives, generate strategies
o Strategy implementation: Implement strategies
o Evaluation: Communication, reporting, measure and evaluate
There exist different guidelines to go through this management process:
ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy
UN Global Compact Principles
UN Guiding Principles on Business and Human Rights
ISO 26000 Guidance on Social Responsibility
OECD Guidelines for Multinational Enterprises
SA 8000 certification
And more!
SDG Compass: Tool launched by the UN Global Compact and WBSCD. Shows companies how they
can align their strategies, measure and manage their contribution to reaching the SDG, and put
sustainability at the heart of their business strategy
The SDG Compass consists of five steps:
Step 1: Understanding SDGs - Helping companies to become familiar by SDGs
o What are SDGs
o How can companies use SDGs
Step 2: Defining priorities Assessing positive and negative current and potential impact of
companies on SDGs for the entire supply chain
Step 3: Setting goals Establish goals and strategies to address these priorities
Step 4: Integrating Integrating these strategies and operationalizing these strategies into
the supply chain
Step 5: Reporting and communicating Report and communicate about the strategies
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, The five steps of the SDG Compass are pretty similar with the different steps of the management
process developed by Hahn Strong alignment between the SDGs steps and steps proposed by
Hahn:
Step 1 and 2: Internal and external audit What is wrong, what is right in the company
Step 3: Generate vision and mission, establishing objectives, generate strategies
Step 4: Implementing the strategy
Step 5: Evaluating, reporting, communicating strategy
Focus of the SDG Compass:
Focus on large multinational enterprises
Small and medium enterprises and other organizations are encouraged to use it as a source
of inspiration and adapt as necessary
ISO 26000: An international voluntary standard that provides guidance on how businesses and
organizations can operate in a socially responsible way. Acting in an ethical and transparent way
that contributes to the health and welfare of society.
Contributes to sustainable development
Guidance for all types of organization (regardless of their size, location, experience)
Flexible, the user decides how to use it
Builds on international norms and agreements related to social responsibility
Social responsibility: Responsibility of an organization for the impacts of its decisions and activities
on society and the environment, through transparent and ethical behaviour that contributes to
sustainable development
Three key elements of ISO 26000:
7 principles of social responsibility: Establish the underlying framework for socially
responsible decision making
Stakeholder engagement: Activity undertaken to create opportunities for dialogue between
an organization and one or more of its stakeholders, with the aim of providing an informed
basis for the organization’s decisions
7 core subjects and their related issues: Cover most of the topics of social responsibility
7 principles of social responsibility in ISO 26000:
Accountability: State of being answerable for decisions and activities to the organization’s
governing bodies, legal authorities and, more broadly, its stakeholders
Transparency: Openness about decisions and activities that affect society, the economy and
the environment, and willingness to communicate these in a clear, accurate, timely, honest
and complete manner
Ethical behaviour: Behaviour that is in accordance with accepted principles of right or good
conduct in the context of a particular situation
Respect for stakeholder interests: Identifying groups and responding to their concerns
Respect for the rule of law: An organization complies with all applicable laws and
regulations, even if they are not adequately enforced
Respect for international norms of behaviour: In situations where the law or its
implementation does not provide for adequate environmental or social safeguards, an
organization should strive to respect, as a minimum, international norms of behaviour
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