Module Chapter 5 CSR 2021

Republic of the Philippines
NUEVA VIZCAYA STATE UNIVERSITY

Bayombong, Nueva Vizcaya
INSTRUCTIONAL MODULE
IM No.: MGT 2ND SEM 2020-2021
College: BUSINESS EDUCATION

Campus: BAYOMBONG
DEGREE PROGRAM BSBA COURSE NO. MGT 4

SPECIALIZATION Finance, COURS TITLE Good Governance & Social
Marketing Responsibility
YEAR LEVEL 1&2 TIME FRAME 9 hrs. WK NO. IM NO. 05
I. UNIT TITLE/CHAPTER TITLE: CORPORATE SOCIAL RESPONSIBILITY
II. LESSON TITLE
Lesson 1: Concept of Corporate Social Responsibility

Lesson 2: Ethical Leadership
Lesson 3: Ethical Decision-Making Process in Organizations
Lesson 4: Corporate Citizenship
Lesson 5: Philanthropy and Social Initiatives
Lesson 6: Social Screening of Investments
Lesson 7: Corporate Greenwashing
III. LESSON OVERVIEW
Corporate social responsibility (CSR) has attained a high profile in the academic domain. As well, many
consider it an absolute necessity that organizations define their roles in society and apply social,
ethical, legal and responsible standards to their businesses. CSR has achieved business prominence
due to the activities of pressure groups and also the emergence of the “market for virtues” such as
socially responsible investments that create further pressures to adopt CSR initiatives. From a CSR
perspective, organizations are seen as key drivers in the process of constructing a better world and are
therefore under increasing pressure to demonstrate good and accountable corporate responsibility.
IV. DESIRED LEARNING OUTCOMES
1. Explain the concept of corporate social responsibility

2. Elucidate the basic premises, arguments for and against CSR
3. Reason out on the need of a CSR initiative
4. Enumerate and discuss the ethical decision-making process
5. Describe the issues considered in social screening of investments
6. Exhibit understanding of corporate greenwashing
V. LESSON CONTENT
Topic 1 CONCEPT OF CORPORATE SOCIAL RESPONSIBILITY
CSR HISTORY
The nature and scope of corporate social responsibility has changed over time. The concept of
CSR is a relatively new one. The phrase has only been in wide use since the 1960s. While the
economic, legal, ethical and discretionary expectations placed on organizations may differ, it is
probably accurate to say that all societies at all points in time have some degree of expectation that
organizations should act responsibly.
In the eighteenth century, the great economist and philosopher Adam Smith articulated the
traditional or classical economic model of business. In essence, this model suggested that the needs
and desires of society could best be met by the free-for-all interaction of individuals and organizations
in the marketplace. By acting in a self-centered conduct, individuals would produce and deliver the
goods and services that would earn them a profit, but also meet the needs of others. The viewpoint
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expressed by Adam Smith over 200 years ago still forms the basis for free-market economies in the
twenty-first century. However, even Smith recognized that the free market did not always perform
perfectly and he stated that marketplace participants must act honestly and fairly toward each other if
the ideals of the free market are to be achieved.
In the century after Adam Smith, the Industrial Revolution contributed to fundamental change,
especially in Europe and the United States. Many of the principles advocated by Smith were borne out
as the introduction of new technologies allowed for more efficient production of goods and services.
Millions of people obtained jobs that paid more than they had ever made before and the standard of
living greatly improved. Large organizations developed and acquired great power, and their founders
and owners became some of the richest and most powerful men in the world. In the late nineteenth
century, many of these individuals believed in and practiced a philosophy that came to be called “Social
Darwinism”, which in simple form, is the idea that the principles of natural selection and survival of the
fittest are applicable to business and social policy. This type of philosophy justified cut-throat, even
brutal, competitive strategies and did not allow cut-throat, even brutal, competitive strategies and did
not allow for much concern about the impact of the successful corporation on employees, the
community, or the larger society. Thus, although many of the great tycoons of the late nineteenth
century were among the greatest philanthropists of all time, their giving was done in their individual
capacities, not as representatives of their companies. Indeed, at the same time that many of them were
giving away millions of dollars of their own money, the companies that made them rich were practicing
business methods that by today’s standards at least were exploitative of workers.
Around the beginning of the twentieth century a backlash against the large corporations began
to gain momentum. Big business was criticized as being too powerful and for practicing anti-social and
anti-competitive practices. Laws and regulations, such as the Sherman Anti-trust Act, were enacted to
reign in the large corporations and to protect employees, consumers and society at large. An
associated movement, sometimes called the “social gospel”, advocated greater attention to the working
class and the poor. The labor movement also called for greater social responsiveness on the part of
business, between 1900 and 1960 the business world gradually began to accept additional
responsibilities other than making a profit and obeying the law.
In the 1960s and 1970s, the civil rights movement, consumerism, and environmentalism
affected society’s expectations of business. Based on the general idea that those with great power
have great responsibility, many called for the business world to be more proactive in (1) ceasing to
cause societal problems and (2) starting to participate in solving societal problems. Many legal
mandates were placed on business related to equal employment opportunity, product safety, worker
safety and the environment. Furthermore, society began to expect business to voluntarily participate in
solving societal problems whether they had caused the problems or not. This view of corporate social
responsibility is the prevailing view in much of the world today.
Corporate social responsibility is the long-term vow by business to perform within the bounds of
ethics and to contribute to economic advancement at the same time improving the quality of life of the
workforce and their families as well as of the local community and society at large. CSR is a company’s
positive involvement on society and the environment through its operations, products or services and
through its relations with key stakeholders such as employees, customers, investors, communities and
suppliers.
It 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 as they are
increasingly aware that responsible behavior leads to sustainable business success. It is about the
alignment of business values and behavior with the expectations and needs of stakeholders not only to
customers and investors, but also employees, suppliers, public, government, special interest groups
and society as a whole. CSR depicts a company’s commitment to be answerable to its stakeholders.
Descriptively, CSR refers to a company linking itself with ethical values, transparency, employee
relations, compliance with legal requirements and overall respect for the communities in which they
operate. Corporate social responsibility (CSR) upholds a vision of business accountability to a broad
range of stakeholders not just to shareholders huge investors of the enterprise. The areas of concern of
this practice are environmental protection, employees’ welfare, the community and civil society in
general not only for the present but more importantly the future. The idea of CSR is attached to the idea
that corporations can no longer act as an economic entity isolated and operating in complete detach
from society.
ARGUMENTS FOR AND AGAINST CORPORATE SOCIAL RESPONSIBILITY
The “economic” argument against CSR perhaps most closely associated with the American
economist Milton Friedman, who argued that the primary responsibility of business is to make a profit
for its owners, albeit while complying with the law. According to this view, the self-interested actions of
millions of participants in free markets will, from utilitarian perspective, lead to positive outcomes for
society. If the operation of the free market cannot solve a social problem, it becomes the responsibility
of government, not business, to address the issue.
The “competitive”, argument recognizes the fact that addressing social issues comes at a cost
to business. To the extent that business internalize the costs of socially responsible actions, they hurt
their competitive position relative to their businesses. This argument is particularly relevant in a globally
competitive environment if businesses in one country expend assets to address social issue, but those
in another country do not. According to Carroll and Buchholtz, since CSR is increasingly becoming a
global concern, the differences in societal expectations around the world can be expected to lessen in
the coming years.
Finally, some argue that those in business are ill-equipped to address social problems. This
“capability” argument suggests that business executives and managers are typically well trained in the
ways of finance, marketing and operations management, but not well versed in dealing with complex
societal problems. Thus, they do not have the knowledge or skills needed to deal with social issues.
This view suggests that corporate involvement in social issues may actually make the situation worse.
Part of the capability argument also suggests that corporations can best serve societal interests by
sticking to what they do best, which is providing quality goods and services and selling them at an
affordable price to people who desire them.
There are several arguments in favor of corporate social responsibility. One view, held by critics
of the corporate world, is that since large corporations create many social problems, they should
attempt to address and solve them. Those holding this view criticize the production, marketing,
accounting and environmental practices of corporations. They suggest that corporations can do a better
job of producing quality, safe products and in conducting their operations in an open and honest
manner.
A very different argument in favor of corporate social responsibility is the “self-interest

“argument. This is a long-term perspective that suggests corporations should conduct themselves in
such a way in the present as to assure themselves of a favorable operating environment in the future.
This view holds that companies must look beyond the short-term, bottom-line perspective and realize
that investments in society today will reap the benefits in the future. This view holds that companies
must look beyond the short-term, bottom-line perspective and realize that investments in society today
will interests to engage in socially responsive activities because, by doing so, the corporate world may
forestall governmental intervention in the form of new legislation and regulation, according to Carroll
and Buchholtz.
Finally, some suggest that businesses should assume Social Responsibilities because they are
among the few private entities that have the resources to do so. The corporate world has some of the
brightest minds in the world, and it possesses tremendous financial resources. Thus, businesses
should utilize some of their human and financial capital in order to “make the world a better place for all
the stakeholders.
BASIC PREMISES OF CSR
Business leaders understand that long-term company value is based on the capability of the
enterprise to respond to society’s changing needs.
Consumers search for products and services of companies of companies they believe are
doing the “right thing” in terms of consumer protection, human rights and the environment.

Employees have a preference to work for companies whom they share similar mission and
values, and where they can make a contribution to society.
Investors look for companies that recognize and manage their risks, and are entrepreneurial in
terms of attitude in identifying emerging and promising business opportunities.
Local communities want to know that businesses are being good citizens.
Media expose some examples of best or worst practices to spotlight, in this way companies with
good practices are given incentive in the form of free mileage, companies performing worst practices
are given disincentive through exposure.
NGOs expose these examples of irresponsible corporate conduct and campaign for greater
corporate accountability and transparency.
Regulators want to make certain that business activities not only generate business
opportunities, jobs and economic growth but also help solve serious problems such as climate change
and environment.
SPECIFIC RELEVANCE OF CSR
CSR as an approach is becoming progressively more relevant for businesses today because of
following identifiable trends:
Changing Social Expectations
Consumers and the public in general expect more from the companies who produce the
products and services they buy. These expectations resulted from the corporate scandals, which
partially eroded the public trust of corporations and reduced public confidence in the ability of regulatory
agencies and organizations to control the corporations’ unrestrained behavior.
Competitive Labor Markets
Employees nowadays are gradually more concern not only on other benefits and take-home
pays but also business philosophy that match their principles. For the company to hire and retain these
employees with promising potentials, company’s working environment must be competitive. Failure will
cause the company some concerns about its human capital.
Disclosure Demands by Stakeholders
Stakeholders now know their roles and right which includes the right to be informed on how the
corporation does its business. There is an increasing insistence for corporate disclosures now from
stakeholders in the past. The public, employees, customers, suppliers and activist organizations can
now demand information about corporate conduct with more pressure than before.
Dwindling Government Role
Governments in the past rely on strict legislations and regulations to deliver social and
environmental services and objectives in tandem with business sector, unfortunately this is not how
things are done at present, there is now what we can call as “the government disconnection” or failure
of regulation. Due to limited government resources, corporations though subjected with so many
regulatory filings still have the upper-hand when ranged against the regulators. We must understand, in
an ideal environment, the government can only do so much, how much less in a deteriorating corrupt
one.
Globalization
Border less transactions and the increasing influence of the media on a global perspective is a
serious thing to be considered. When informed consumers see wrongdoings by companies, they can
immediately bring this to the attention of the public by capitalizing on the use of technology. For
example, social media can fuel instant communications among compatible groups and consumers and
empower them to spread their concerns, there is power in number. A “concern” may spread like a
wildfire which may cause damage to the company. Consumers can easily initiate collective action like a
product boycott campaign via cyber space.
Pressure From Investors
Ethical conduct is part of the system in assessing company’s performance. Reports showed that
about $2 trillion worth of assets in 1999 were invested in companies that screens and has linked to
social responsibility and environment, and more than 25% of shareholding businessmen buy and sell
stocks by taking into account ethical aspects of companies whom they deal stocks with. To cite, Al
Gore’s millions are in stocks of companies that deal on “green technology”. The foregoing facts set new
directions for companies in the future.
Supplier Relations
As stakeholders are becoming more and more concerned in business dealings, many
companies are taking steps to make certain that their partners do things in a socially responsible
approach possible. Some customers, consumer groups, and treaties are even setting conducts and
standards that their supplier has to meet as requisites of business relations. An example to this not
buying products who used child labor, boycott campaign on products from manufacturers that did not
follow International Labor Organization (ILO) standards, and the growing patronage on products
produced from facilities that are certified by international standards setting body like the ISO.
Wealth and Vulnerabilities
In developing and developed countries, consumers can afford to be choosy and picky on the
products they buy, corporations therefore have to operationally align itself with this consumer
tendencies. On the other hand, we can expect less strict enforcement and regulation when a country or
a society is in need of jobs which can be answered by inward investments. These companies which
operate here are good for the people in terms of economy and employment but we have to understand
that they go home better with profit. This is the kind of phenomenon is the one that is propelling the
unity of stakeholder groups in crying on a more holistic and responsible corporate operation and
philosophies.
Topic 2 ETHICAL LEADERSHIP
Ethical leadership is a leadership hat is concerned in leading in a manner that respects the
rights, dignity and stake of others. In business and political context, ethical leadership focuses on how
leaders employ their business and political power in the decisions they make and actions they engage
into, leaders who are ethical demonstrate a level of integrity that is essential for stimulating a culture of
honesty and accountability. The character and integrity of the leader provide the basis for personal
characteristics that direct a leader’s ethical beliefs, values, and decisions. Individual values and beliefs
impact the ethical decisions of leaders.
Leaders who are ethical are stakeholder-oriented, and also conscious of how their decisions
affect others. They use their power to serve the greater good instead of self-serving interests. In ethical
leadership it is important for the leaders, more specifically for corporate leaders in business arena to
consider how their decisions impact the internal stakeholders, the industry, customer and ultimately to
the public.
Topic 3 ETHICAL DECISION-MAKING PROCESS IN ORGANIZATIONS
“Right now, we know there are misdeeds going on somewhere in our company. We just hope it
is small and we find it”
Warren Buffet, Chairman, Berkshire Hathaway

Business Nightly Interview, May, 2005

Ethics in an organization refers to system, values, philosophies and principles that govern the
behavior of organizational members which are the consequences of organizational pronouncement.
Ethical decision-making is the process of trying to established organizational values from which ethical
decisions will be based from. Part of the requisite of ethical decision-making process in organization is
answering the following questions whenever confronted with any instance that requires decision. On
the managerial side, did the leader provide leadership and oversight. On the human side, did the leader
nurture individuals by providing responsibility and accountability. In the operational corporate context,
will it facilitate improvements more especially on compliance requirement.
Decision-making is an essential process for organizational effectiveness. Decision-making is

nearly universally defined as choosing between choices. It is closely related to all the traditional
management function functions. In the context of ethical decision-making process, the following may
help decision-makers of organization lay down decisions aligned with their CSR principles:
1. Withdraw.
Before you look at it objectively, step back first. Have a calibrated response for thrilling,
rushed and demanding scenarios whether self-imposed or outside-source. It is not
popularity and power nor winning on high drama; its fairness. As much as possible it should
not be a “winner takes all” ending. Solutions should spring instead of imposing decisions
which might make some parties and stakeholders unhappy.
2. Be an Archivist
Organizational history may have much to learn from. Review how previous situations were
handled; this would reduce the risks of making horrendous mistakes. Some of the
fundamentals in this world are not really new despite how distinctive you believe your
situation to be. History is also a good warehouse of already invented wheels, which can
often save you the time and pain of trying to ineffectively invent a new one.
3. The Option of Doing Nothing.

Gather the facts from all available standpoints. More often a though issue offers three main
alternatives: first, personal view; second, the main alternative option; and the third, the
normally under-estimated, ever-available option of doing nothing. Doing nothing in terms of
real emergency can be catastrophic, but for an incredibly large number of circumstances
doing nothing is the only truly wise way.
4. Be Conscious of Long-term Effects.

Realize the long-term consequences. Do some base-case modelling and tweaking, think of
the “what-if scenarios”. History can again be a good source for models for any given
situations.
5. Consider Legalities and Ethics

There might be parties or stakeholders inside and outside of the firm that might be affected
by your decision, it is basic to check the law first. Once you are cleared on the legal bar,
check its ethical issue. In a sincere CSR practice, what is legal can just be the minimum and
not all legal are ethical.
6. Ask Around
Consult with people, more importantly to the ones you consider crucial. Get out from your
close circle; be conscious, you are not looking for a friendly advice that is most of the time
bias and comforting. Consult with people or party most affected by the situation, when you
do some examination and assessment analysis, make sure your instruments is balanced
and objective.
7. Be Comprehensively Sensitive
Be concern about the effect as deeply as possible. Any business decision big or small will
have an effect in one way or another directly or indirectly to stakeholders. Some may affect
a lot of people and on the environment now and far into the future.
8. Do Not Be a Dangerous “Alpha Male”.

Decision-makers should defy the illusion and arrogance that power and authority tend to be
associated with. This is particularly essential to safeguard against if you live and work in a
protected, insulated or isolated situation. Being a leader for a long time, or for any duration
in a culture of arrogance, comfort and privilege, nourishes personal delusion. A good
number unethical decisions are products of arrogance and delusion.
9. Find a Win-Win Solution

Decision-makers should detach himself from the different partialities of the issue for him to
arrive at an objective decision. Never be carried by the pressure of swelling expectation
from any group or party who believe they are at the finer end of the issue and thus, they
should be favored. Find a Solomonic decision, if possible.
MYTHS ABOUT ORGANIZATION ETHICS
Being Ethical Is Easy
From the business standpoint, being ethical is not easy considering that to be ethical means
that business conduct most of the time has to be beyond the minimum legal requirement. Second, there
is no such thing as cost-free compliance effort. Third, being ethical could mean being a bee flying
towards a huge web of unethical entities that can easily overwhelm the company.
It is hard to withstand the pressure when almost everybody deviates and their deviation is
already part of the system. The tendency of being carried into this bandwagon mentality may entice the
decision makers of corporations to cross the line and start to find justifications for some acts deemed
unethical; it is like a quicksand, the next thing you know, you cannot get off from it anymore. Just like in
politics, some of them are clean prior to getting involved then stories change when they are already part
of the system.
Being Ethical Is Not Part of Doing Business
It is not true that being ethical has no reward. Arguably, the inly investment without any loss is
being ethical. Ethical companies are standouts. They have the confidence of the investors, the support
of the community and other stakeholders, and most importantly, the trust of their members. These
along a great vision can definitely bring success and stability.
WHAT ETHICS IS NOT
Ethics Is Not the Same as Feelings
Feelings provide important information for our ethical choices. Some people have highly
developed habits that make them feel bad when they do something wrong. And, often our feelings will
tell us it is uncomfortable to do the right thing if it is hard.
Ethics Is Not Religion
Many people are not religious but ethics applies to everyone. Most religions do advocate high
ethical standards but sometimes do not address all the types of problems we face.
Ethics Is Not Just Following the Laws
A good system of laws does incorporate many ethical standards but law can deviate from what
is ethical. Law can become ethically corrupt, as some totalitarian regimes have made it. Law can be a
function of power alone and designed to serve the interests of narrow groups. Law may have a difficult
time designing or enforcing standards in some important areas and may be slow to address new
problems.
Ethics Is Not Following Culturally Accepted Norms

Some cultures are quite ethical but others become corrupt or blind to certain ethical concerns
(as the US was to slavery before the Civil War). “When in Rome. Do as the Romans do” is not a
satisfactory ethical standard
Ethics Is Not Science
Social and natural science can provide important data to help us make better ethical choices.
But science alone does not tell us what we ought to do. Science may provide an explanation for what
human are like. But ethics provides reasons for how humans ought to act. And just because something
is scientifically or technologically possible, it may not be ethical to do it.
Lesson 4 CORPORATE CITIZENSHIP
Corporate citizenship refers to the acceptance by business of a conscious effort in focusing and
in satisfying the economic, legal, ethical, philanthropic and social responsibilities and other acts
expected from the corporation to do its stakeholders. This focus covers the areas of business ethics,
social responsibility, corporate volunteerism, religious compliance and reputation management.
Corporate citizenship recognizes that a company or organization is not and should not act in
separation of the community or communities within which it operates. Companies and organizations
worldwide are recognizing the extensive benefits of a more determined move of attaining balance
between their organizational goals and important social, cultural and environmental responsibilities.
This explains why some model organizations are trying to win multiple stakeholders to make
certain that their corporate success goes side by side with improving broader stakeholders, which in
turn become an undeniable factor for their long-term success and stability. Striving to become a good
corporate citizen is now considered a responsible and legitimate business objective, a trend most now
considered and proudly declaring as one of their best practices. Corporate citizenship has the following
key elements:
 Commitment to Quality
 Ethical Legal Compliance
 Stewardship and Governance
 Superior Employee Relation
 Social Advocacy
 Environmental Advocacy
 Community Involvement
Lesson 5 PHILANTHROPY AND SOCIAL INITIATIVES
Philanthropy is the practice of giving money and time to help make life better for other people. It
is a manifestation of love for mankind. Corporate philanthropy refers to the giving of the company’s
profit directly to charitable organizations or to individual in need with the intention of helping and
improving the quality of life of the different corporate stakeholders. Corporate philanthropy is a key
component of a corporation’s broader social responsibilities. It can be in the form of cash, product
donations or employee
Volunteerism. Corporate philanthropy serves as a major link between the corporation and the
communities it serves.
BENEFITS OF CORPORATE PHILANTROPY
Corporate philanthropy can benefit the companies in a number of ways:
Benefits to Business
 Enhances corporate reputation
 Improves relations with the government, the community and the key stakeholders
 Supports a company’s strategic business goals
Benefits to Stakeholders

 Build employee morale and engagements

 Enlarges sense of community and social obligations
 Develops future workforce contributing to a sustainable company
Benefits to the Community

 Improves quality of life of the community members
 Provides human and capital resources to non-profit organizations
Lesson 6 SOCIAL SCREENING OF INVESTMENTS
While we cannot define or describe ethical business in an absolute sense and terms, it is
possible to give some modern examples in order for us to outline ethical considerations based on
scenarios that are generally acceptable as reference in trying to screen investments. For social
screening of investments, the following strategies that might be used by corporate decision makers.
They differ in the extent of their intricacies and thus vary also as far as to the degree of difficulty of
implementation. It is not necessary that they individually are exclusive because some can be combined
in various ways.
“SCARE-OFF FROM STRATEGY”
This is considered as the most rigid way of screening of investments. It can be characterized by
hard policies such as no investments to those companies with: questionable environmental records,
those engaged in child labor, discrimination (sex, racial, religious, cultural, etc.) those who use animals
in product testing, and many other ant-earth or anti-green policies.
It is worthy to note that while the above strategy is hard to implement from the investor’s point of
view, some companies (investees) do find some ways to appear as appealing to the investor’s by
employing some mitigating features on the way they do business. For example, some industries such
as pharmaceuticals are inherently environmentally polluting, and an absolute screen would bar some
investment opportunities into these companies. Some drug companies, for example, have made a
serious effort to drastically reduce the number of animals used in the testing of products but they are
still using animals for drug testing purposes. Some companies are even willing to share the
technological advances that could have been to their favor in exchange for good image to the eyes of
the investors.
IMPACT MITIGATION
Some socially concerned investors deal with the problems inherent in absolute screening by
using the strategy of balance with benefit. This approach is founded upon the idea that for everything
the company does there is always an impact to the stakeholders. For example, fisher folks are given
alternative livelihood by companies doing some seismic testing and eventually drilling for oil exploration
in their fishing area. Other companies give priority in terms of employment to those who are
immediately affected by the company’s operation.
WHOEVER IS THE BEST
This strategy involves a kind of free market model where companies within the same industries
compete with one another for the best records on a variety of social issues. For example,
environmental awareness and best social practices like best record for the recruitment, training and
promotion of women and family-friendly practices. Awards such as employer of the year, best in
community extension program, most disable-friendly company. In the last several years, books have
been published that describe the most family-friendly companies and the best companies for women,
the best companies to work for, the best companies for African Americans and other minorities.
Business magazines frequently carry features on such companies as well.
In the Philippines, for example, Lamoiyan Corporation (manufacturer of Hapee toothpaste) has
garnered the following awards:

 Most Outstanding Toothpaste Manufacturer of the Year (1990, 1993,1995,1996,1997,

2001 & 2002) given by the Consumer’s Union of the Philippines
 Agora Award’s Marketing Company of the Year (1992) given by the Philippine
Marketing Association
 Apolinario Mabini Rehabilitation Award for the Employer of the Year (1993)
 A special citation for the Best Outdoor Advertising for Hapee Singing Christmas Tree
given by the Catholic Mass Media Council (1993)
 Outstanding Program for Equal Employment opportunities for the Disabled (1993) given
by the Personnel Management Association of the Philippines
 Big Bird Award, Asian Licensee of the Year Award
Another example is Human Nature, the first Filipino company to receive prestigious cruelty-free
recognition from PETA (People for the Ethical Treatment of Animals).
MAIN OR DERIVATIVE CONNECTIONS
This strategy requires investors to decide whether or not they are concerned if an
investment has a secondary involvement with a social problem. It involves asking how far back
in the industrial process one wants a particular social screen to go. For example, is it acceptable
if a coal utility purchases coal from mining company with a bad environmental record? The
hamburger connection is an example of this strategy. Fast-food companies such as Burger King
have been criticized for purchasing beef from around the world. The problem is that vast
amounts of rainforests land are being cleared to provide range land for cattle. The clearing not
only destroys thousands of potentially valuable plants and animals but it also contributes to the
greenhouse effect. In addition, slash-and-burn clearing adds pollutants to the air. In contrast to
the usual pattern, McDonald’s outlets in the US use only beef purchased from the American
Southwest ranches.
Another is the sweatshop issue of Nike; will it be just alright to purchase a pair of shoes
that is allegedly made out of child labor. Are you going to eat in a restaurant with the best beef
in town as their signature dish, even if it means clearing forest to give way to soya plantations
for cattle feeds?
Lesson 7 CORPORATE GREENWASHING
Greenwashing refers to the practice of companies characterized by deceptively making it

appear that their products, services and policies are environmentally friendly by projecting cost
cuts as reduction in use of resources or investments in “green concerns” like in areas of ecology
and environment. It is the business of telling the whole world that they are for “mother earth”.
Descriptively, it is “green marketing tactics”, which refer to the deceiving use of green PR to win
the hearts of consumer for purposes of improving image, building up goodwill and eventually
drawing more revenues. These are companies who are trying to have a commercial love affair
with the environmentally concerned consumers. Consider the following facts:
1970 – Due to public interest in the environment, the first Earth Day was held on April
22, 1970. This caused the industry in general to use more environmental advertising to improve
their image. Public utilities spent $300 million in advertising to promote that they were a clean
green company while they only spent $ 37.5 million on pollution reduction research.
1990 – A study published in the journal of Public Policy and Marketing found that 58% of
environmental ads had at least one deceptive claim. Another study found that 77% of people
said the environmental reputation of company affected whether they would buy their products.
One fourth of all household products marketed around Earth Day advertised themselves as
being green and environmentally friendly. In 1998, the Federal Trade Commission created the
“Green Guidelines”, which defined terms used in environmental marketing. The following year
the FTC found the Nuclear Energy Institute claims of being environmentally clean were not true.
The FTC did nothing about the ads because they were out of their jurisdiction. This caused the
FTC to realize they needed new clear enforceable standards. In 1999, Greenwashing officially
became part of the English language. Term like green sheen is also used similarly to describe
organizations that endeavor just to let the public see that they are espousing practices
advantageous to the environment.
GREENWASHING SINS
An environmental marketing firm TerraChoice released the following in December 2007;
 99% of 1,018 common consumer products surveyed were guilty of greenwashing

 1,753 products with at least one environmental claim; some have more than one claims
 Out of 1,018 products, only one product was found not guilty of false or misleading
“green marketing claim”
The following are the green washing sins;
1. Sin of the Hidden Trade-Off

 “Energy-efficient” electronics that contain hazardous materials; 998 products and
57% of all environmental claims committed this sin
 Candies, drinks, beverages, and other sweets with “no sugar” label”
 Electric cars are appreciated for zero emission but forget that these need
recharging
2. Sin of No Proof
 Shampoos claiming to be “certified organic” but with no verifiable certification;
454 products and 26% of environmental claims committed this sin
 Shampoos with aloe vera extract added claim coupled with huge aloe vera
picture on its label with little or no actual extracts added
 Paints, spays and aerosols claiming to be fresheners or sanitizers
3. Sin of Vagueness
 Products claiming to be 100% natural when many naturally-occurring substances
are hazardous like arsenic and formaldehyde; seen in 196 products or 11% of
environmental claims
 The use of paper bags, cups and other packaging and capitalized the term
“biodegradable” to improve company image; indeed it is biodegradable but it may
mean clearing more trees.
4. Sin of Irrelevance
 Products claiming to be CFC-free even though CFCs were banned 20 years ago.
This sin was seen in 78 products and 4% of environmental claims.
5. Sin of fibbing
 Products falsely claiming to be certified by an internationally recognized
environmental standard like EcoLogo, Energy Star or Green seal. Found in 10
products or less than 1% of environmental claims.
6. Sin of Lesser of two Evils

 Organic cigarettes or “environmentally friendly” pesticides, this occurred 1n 17
products or 1% of environmental claims
in April 2009, TerraChoice published a second report in April of 2009 and the
seventh sin surfaced termed as the Sin of Worshipping False Labels.
7. The Sin of Worshipping False Labels

 This is perpetrated by a product wherein by either words or images, gives the
impression of third-party endorsement while in fact and in reality, no such
endorsement actually happened.
WAYS ON HOW TO SPOT GREENWASHING

There are a good number of ways to spot a company that may be greenwashing.
The following are the things one should consider when buying a product to determine
whether it is just advertisement of or really a green:
 Poor use of scientific facts or the lack of any common scientific knowledge and
facts
 The use of buzz words like “carbon intensity”,” sustainable development”,
“carbon offsets” and clean technology. These terms may be used to distract
consumers from researching further into the product. Sounding too technical
makes the consumers depart from probing.
 Look at the environmental label on the product. Save those that are backed by a
strict independent certification. Some of the eco-labels of the product are not
regulated and are just marketing cosmetics and can be used even if the products
are not green
 Never abandon common sense
 Look out for negligible green claims, mainly when a company focuses on one
small green attribute when the rest of the company or product is not green.
VI. LEARNING ACTIVITIES
Internet Exercise
1. Locate the website for Business for Social Responsibility. What is the stated mission of the BSR?
What does the BSR do? List four benefits of what BSR claims corporations can achieve through
CSR programs. List four well-known companies that are members of the BSR.
2. Locate the website for Ideals Work. What is the goal of the Ideas Work organization? What services
does the organization offer? How does the mission of the BSR differ from that of Ideals Work?
3. Locate the website for the corporate social responsibility newswire CSRWire. What does CSRWire
do? List four CSRWire members and explain the services that receive from CSRWire. Find the CSR
Events page and identify the next scheduled event. Briefly summarize the location and planned
agenda for the event. If the event has a website. Visit the site and record the name of the keynote
speakers.
VII. ASSIGNMENT
Mini-Case
Banning the Real Thing
In 1999, following a campaign by a student group known as Students Organizing for Labor and
Economic Equality (SOLE), the University of Michigan instituted a Vendor Code of Conduct that
specified key performance criteria from all university vendors. The code included the following:
General Principles
The University of Michigan has long withstanding commitment to sound, ethical, and socially
responsible practices, the University seeks to recognize and promote basic human rights, appropriate
labor standards for employees and a safe, healthful and sustainable environment for workers and the
general public. In addition, the University shall make every reasonable effort to contract only with
vendors meeting the primary standards prescribed by this Code of Conduct.
Primary Standards
 Non-discrimination
 Affirmative Action
 Freedom of Association and Collective Bargaining
 Labor Standards: Wages, Hours, Leaves, and Child Labor

 Health and Safety
 Forced Labor
 Harassment or Abuse
Preferential Standards
 Living wage
 International Human Rights
 Environmental Protection
 Foreign Law
University-Vendor Partnership. The ideal University-vendor relationships is in the nature of a

partnership, seeking mutually agreeable and important goals. Recognizing our mutual
interdependence, it is in the best interest of the University to find a resolution when responding to
charges or questions a about a vendor’s compliance with the provisions of the Code.
On Nov. 30, 2004, SOLE submitted formal complaint against one specific university vendor the Coca
Cola Company-with whom the university held 12 direct and indirect contracts totaling just under $1.3
million in FY 2004. The complaints against Coke were as follows:
 Bio-solid waste disposal in India. The complaint alleged that bottling plant sludge containing
cadmium and other contaminants has been distributed to local farmers as fertilizers
 Use of groundwater in India. The complaint alleged that Coca-Cola is drawing down the water
table/aquifer by using deep bore wells; water quality has declined; shallow wells used by local
farmers have gone dry; and poor crop harvests near bottling plants have resulted from lack of
sufficient irrigation water.
 Pesticides in the product in India. Studies have found that pesticides have been detected in
Coca-Cola products in India that are in excess of local and international standards
 Labor practices in Columbia. Data showing a steep decline in SIALTRAINAL, a Columbian
bottler’s union (from approximately 2,300 to 650 in the past decade); SOLE claims repeated
incidents with paramilitary groups threatening and harming union leaders and potential
members, including allegations of kidnapping and murder, SOLE is also concerned about
working conditions within the bottling plants.
The Vendor Code of Conduct Dispute Review Board met in June 2005 to review the complaints and
recommended that Coca-Cola agree in writing no later than Sept. 30, 2005 to a third-party independent
audit to review the complaints. An independent auditor satisfactory to both parties had to be selected by
Dec. 31, 2005. The audit had to be completed by March 2006, with the findings to be received by the
University no later than Apr. 30, 2006. Coca-Cola would then be expected to put a corrective action
plan in place by May 31, 2006. Since one of the 12 contracts was scheduled to expire on June 30, 2005
with another 7 expiring between July and November 2005, Coca-Cola was formally placed on probation
until August 2006 pending further investigation of the SOLE complaints. The board also recommended
that the University not enter into new contracts or renew any expiring contracts during this period, and
that it agrees only to short-term conditional extensions with reassessment at each of the established
deadlines to determine if Coca-Cola has made satisfactory progress toward demonstrating its
compliance with the Vendor Code of Conduct.
The situation got progressively worse for Coca-Cola. By December 2005, at least a dozen institutions
worldwide had divested from the Coca-Cola Company on the grounds of alleged human rights
violations in Asia and South America. On December 8th , New York University began pulling all Coke
products from its campus after Coke refused to submit to an independent investigation by that day’s
deadline.
On Dec. 30, 2005, the University of Michigan suspended sales of Coke products on its three campuses
beginning Jan. 1, 2006, affecting vending machines, residence halls, cafeterias, and campus
restaurants. Kari Bjorhus, a spokesperson for the Coca-Cola Company, told the Detroit News, “The
University of Michigan is an important school, and I respect the way they worked with us on this issue.

We are continuing to try hard to work with the University to address concerns and assure them about
our business practices.
Questions:
1. Which ethical standards are being violated here?

2. Is the University being unreasonable in the high standards demanded in its Vendor Code of
Conduct?
3. Do you think the university would have developed the Vendor Code of Conduct without the
aggressive campaign put forward by SOLE?
4. How should Coca-Cola respond in order to keep the University of Michigan contracts?
5. How would you relate the situation in the local environment?
VIII. EVALUATION (Quiz/Exam via MS Teams)
IX. REFERENCES
Numbering the IM No.: IM-CCCCCC-SSSSSS-NNNN-NNNN
School Year
Semester
Course Number
e.g.:
IM-COURSE NO-SEMESTER-SCHOOL YEAR
IM-MCB180-1STSEM-2020-2021

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Republic of the Philippines

NUEVA VIZCAYA STATE UNIVERSITY

College: BUSINESS EDUCATION

DEGREE PROGRAM BSBA COURSE NO. MGT 4

I. UNIT TITLE/CHAPTER TITLE: CORPORATE SOCIAL RESPONSIBILITY

II. LESSON TITLE

Lesson 1: Concept of Corporate Social Responsibility

III. LESSON OVERVIEW

IV. DESIRED LEARNING OUTCOMES

1. Explain the concept of corporate social responsibility

Topic 1 CONCEPT OF CORPORATE SOCIAL RESPONSIBILITY

It is a concept whereby companies integrate social and environmental concerns in their

ARGUMENTS FOR AND AGAINST CORPORATE SOCIAL RESPONSIBILITY

A very different argument in favor of corporate social responsibility is the “self-interest

BASIC PREMISES OF CSR

NVSU-FR-ICD-05-00 (081220) Page 3 of __

SPECIFIC RELEVANCE OF CSR

Changing Social Expectations

Competitive Labor Markets

Disclosure Demands by Stakeholders

Dwindling Government Role

Pressure From Investors

Wealth and Vulnerabilities

Topic 2 ETHICAL LEADERSHIP

Topic 3 ETHICAL DECISION-MAKING PROCESS IN ORGANIZATIONS

Warren Buffet, Chairman, Berkshire Hathaway

NVSU-FR-ICD-05-00 (081220) Page 5 of __

Decision-making is an essential process for organizational effectiveness. Decision-making is

3. The Option of Doing Nothing.

4. Be Conscious of Long-term Effects.

5. Consider Legalities and Ethics

8. Do Not Be a Dangerous “Alpha Male”.

NVSU-FR-ICD-05-00 (081220) Page 6 of __

9. Find a Win-Win Solution

MYTHS ABOUT ORGANIZATION ETHICS

Being Ethical Is Easy

Being Ethical Is Not Part of Doing Business

WHAT ETHICS IS NOT

Ethics Is Not the Same as Feelings

Ethics Is Not Religion

Ethics Is Not Just Following the Laws

Ethics Is Not Following Culturally Accepted Norms

NVSU-FR-ICD-05-00 (081220) Page 7 of __

Ethics Is Not Science

Lesson 4 CORPORATE CITIZENSHIP

Lesson 5 PHILANTHROPY AND SOCIAL INITIATIVES

BENEFITS OF CORPORATE PHILANTROPY

Corporate philanthropy can benefit the companies in a number of ways:

NVSU-FR-ICD-05-00 (081220) Page 8 of __

 Build employee morale and engagements

Benefits to the Community

Lesson 6 SOCIAL SCREENING OF INVESTMENTS

“SCARE-OFF FROM STRATEGY”

WHOEVER IS THE BEST

NVSU-FR-ICD-05-00 (081220) Page 9 of __

 Most Outstanding Toothpaste Manufacturer of the Year (1990, 1993,1995,1996,1997,

MAIN OR DERIVATIVE CONNECTIONS

Lesson 7 CORPORATE GREENWASHING

Greenwashing refers to the practice of companies characterized by deceptively making it

An environmental marketing firm TerraChoice released the following in December 2007;

 99% of 1,018 common consumer products surveyed were guilty of greenwashing

The following are the green washing sins;

1. Sin of the Hidden Trade-Off