Corporate Social Responsibility - ACCA P1- Revision Theory

Summary

Corporate social responsibility (CSR) is a form of corporate self-regulation, aligning a company's social duties with its core values to enhance reputation and long-term success. Carroll's four-part pyramid of CSR includes economic, legal, ethical, and philanthropic responsibilities, each vital for organizational success. Companies must balance profitability with law compliance, ethical behavior, and societal contributions. Strategies for addressing social pressure range from denial to proactive engagement. CSR and corporate governance also lead to various forms of social accounting, including ethical, environmental, and sustainability accounting, which assess the broader societal impact of business activities.

Takeaways

• 💼 Corporate social responsibility (CSR) refers to a business's sensitivity to all stakeholders and its alignment with core values to improve reputation and long-term success.
• 🎯 CSR offers several benefits including differentiation, attraction of top talent, brand strengthening, new market opportunities, and increased profitability.
• 📊 Carroll's four-part pyramid of CSR includes economic, legal, ethical, and philanthropic responsibilities, all of which need to be fulfilled for true CSR.
• 💰 Economic responsibility emphasizes the need for organizations to produce goods/services, make a profit, and meet shareholder, employee, and customer expectations.
• ⚖️ Legal responsibility requires organizations to abide by laws; violations can lead to heavy penalties or negative public opinion.
• 🛠️ Ethical responsibility goes beyond legal obligations, encouraging organizations to do what society perceives as right, like reducing carbon emissions or recycling.
• 🎁 Philanthropic responsibility involves discretionary activities like donations, sponsorships, and improving others' lives, showing an organization's social support.
• 🛡️ Carroll identifies four strategies for social responsiveness: reaction (deny responsibility), defense (admit but do the minimum), accommodation (accept responsibility), and proaction (exceed norms).
• 📑 Social accounting measures CSR performance and can include ethical, environmental, social, and sustainability accounting to provide non-financial reporting.
• 🌍 Sustainability accounting encompasses the broader impacts of an organization, incorporating ethical, environmental, and social aspects in its performance reports.

Q & A

What is corporate social responsibility (CSR)?

Corporate social responsibility (CSR) is a form of corporate self-regulation where businesses are sensitive to the needs of all stakeholders, aligning social responsibilities with core values to improve reputation and ensure long-term sustainability.

What are the benefits of corporate social responsibility for a business?

The benefits of CSR include differentiation, attraction of high-caliber staff, brand strengthening, new market opportunities, and an increase in profitability.

What is Carroll's four-part pyramid of corporate social responsibility?

Carroll's four-part pyramid of CSR includes four levels of responsibility: economic, legal, ethical, and philanthropic. All four parts must be satisfied for true corporate social responsibility.

What is economic responsibility in CSR, according to Carroll?

Economic responsibility is the organization's obligation to produce goods and services needed by society while being profitable. This includes providing a reasonable return to shareholders, fair wages for employees, and quality products for customers.

What are legal responsibilities in the context of CSR?

Legal responsibilities require organizations to comply with the laws of their jurisdiction. Failure to do so, such as through anti-competitive behavior or price fixing, can result in fines and damage to public opinion.

What is the ethical responsibility of a corporation under CSR?

Ethical responsibility involves meeting society's expectations beyond legal and economic requirements. It is about doing what is considered morally right, such as focusing on sustainability efforts like recycling or reducing carbon emissions.

What are philanthropic responsibilities in CSR?

Philanthropic responsibilities are discretionary actions by an organization to improve the lives of others, such as charitable donations or sponsoring the arts.

What are Carroll's four strategies for social responsiveness?

Carroll's four strategies for social responsiveness are: Reaction (denying responsibility), Defense (admitting responsibility but doing the minimum), Accommodation (accepting responsibility and meeting demands), and Proaction (actively going beyond industry norms).

What is the role of stakeholders in developing a corporate social responsibility strategy?

In developing a CSR strategy, organizations must identify their stakeholders, classify their claims, and assess their importance and motivation. This helps decide a suitable response to social pressures, using models like Carroll’s strategies for social responsiveness.

What is the difference between ethical, environmental, social, and sustainability accounting?

Ethical accounting focuses on internal management systems and codes of practice, environmental accounting addresses the organization’s impact on the natural environment, social accounting covers broader aspects like employee conditions and charity work, while sustainability accounting includes all three, focusing on non-financial performance.