GGSR Module 5

Pamantasan ng Lungsod ng Maynila
College of Business Administration

Good Governance and Social Responsibility
Module 5 (Part 2):

Corporate Social
Responsibility
 Drivers of Corporate Social Responsibility
1. Stakeholder Expectations:
• Pressure from stakeholders such as customers, employees,

investors, communities, and regulators pushes companies to adopt
CSR initiatives.
• Meeting these expectations helps in maintaining trust and credibility.
2. Legal and Regulatory Compliance:
• Compliance with laws and regulations related to environmental

protection, labor standards, consumer rights, and ethical business
practices compels companies to engage in CSR activities.
3. Ethical Considerations
• Many companies recognize the moral imperative to contribute positively to

society and mitigate negative impacts on the environment.
• Ethical principles and values guide CSR efforts, aligning business actions
with societal expectations.
4. Reputation and Brand Image
• CSR initiatives can enhance a company's reputation and brand image,

leading to increased customer loyalty, positive word-of-mouth, and
competitive advantage.
• Conversely, failure to address social and environmental concerns can
damage reputation and brand value.
5. Risk Management
• Proactive CSR strategies help mitigate risks associated with environmental,

social, and governance (ESG) factors.
• Addressing these risks reduces potential liabilities, operational disruptions,
and regulatory penalties, safeguarding long-term business sustainability.
6. Employee Engagement and Retention
• CSR programs contribute to employee satisfaction, engagement, and

retention by fostering a sense of purpose and pride in the organization.
• Companies that prioritize CSR often attract and retain top talent more
effectively.
7. Financial Performance:
• Studies suggest that responsible business practices can

positively impact financial results over the long term. This
includes factors such as cost savings through resource
efficiency, access to capital, and market differentiation.
8. Innovation and Competitive Advantage:
• Companies that integrate sustainability into their business

models can identify new market opportunities and stay ahead
of evolving consumer preferences.
9. Supply Chain Management
• Demand from customers and pressure from stakeholders push

companies to ensure ethical sourcing, fair labor practices, and
environmental stewardship across their supply networks.
10. Globalization and Social Trends
• In an interconnected world, companies face scrutiny from diverse

stakeholders across borders.
• Globalization has amplified awareness of social and environmental
issues, prompting companies to adopt CSR as a means of
addressing these concerns and maintaining relevance in
international markets.
 Historical phases of Corporate Social
Responsibility
1. Philanthropic Era (Pre-20th Century):
• Early philanthropy: Corporations engaged in charitable activities, mainly

through donations to community projects, schools, and hospitals.
• Motivation: Philanthropy was often driven by the personal values of
company owners rather than institutionalized corporate strategy.
2. Era of Corporate Social Awareness (Mid-20th Century):
• Emergence of social consciousness: Growing awareness of social issues

such as labor rights, civil rights, and environmental pollution.
• Legal and regulatory pressures: Legislation like the Occupational Safety
and Health Act (OSHA) in 1970 and the Clean Air Act in 1970 pushed
companies to address social and environmental concerns.
Responsibility
3. Responsive Era (Late 20th Century):
• Reactive responses to crises: Companies responded to

societal pressure and crises, such as environmental disasters
or labor strikes, often with short-term fixes.
• Stakeholder engagement: Greater emphasis on engaging
with stakeholders, including employees, communities, and
NGOs, to address concerns.
Responsibility
4. Strategic CSR Era (Late 20th Century to Present):
• Integration into business strategy: CSR became more strategic,

with companies aligning social and environmental initiatives
with core business objectives.
• Sustainability focus: Emphasis on long-term sustainability,
including environmental conservation, responsible sourcing,
and ethical supply chains.
• Triple bottom line: Adoption of the "triple bottom line" approach,
considering social, environmental, and financial performance.
Responsibility
5. Shared Value Era (21st Century):
• Creating shared value: Companies focus on creating social and

economic value simultaneously, aligning business success with
societal progress.
• Collaborative approaches: Partnerships with governments, NGOs,
and other stakeholders to address complex societal challenges.
• Emphasis on innovation: Integration of CSR into innovation
processes, leading to the development of products and services
that benefit society.
Responsibility
6. Global CSR Era (21st Century - Present):
• Globalization of CSR: Companies expand their CSR initiatives

globally, addressing social and environmental issues across
supply chains and in diverse geographic regions.
• International standards: Adoption of international CSR standards
such as ISO 26000 and the UN Global Compact to guide CSR
practices on a global scale.
• Emphasis on transparency and reporting: Greater focus on
transparency in CSR reporting, including disclosure of
environmental, social, and governance (ESG) metrics.
 Two Different Views of Corporate Social
Responsibility
1. Classical View/Economic Model (Milton Friedman)
• Management’s only responsibility is to maximize profits
• Primary goal of business is to maximize the economic efficiency

while continually acting within the boundaries of the law. This
neglects the idea of ethical behavior and chooses to only use the law
as the minimum form of ethical boundary.
• Holds that society will benefit more when business is left alone to
produce and market profitable products that society needs.
• Social responsibility is someone else's job.
 Two Different Views of Corporate Social
Responsibility
2. Socio-economic View
• It places emphasis not only on profits but also on the impact of

business decisions on society.
• Management must be concerned with the broader social welfare and
not just with corporate profits.
• Refers to the idea that business is a matter of respecting
stakeholder’s rights rather the viewing stakeholder’s constraints.
• Managers believe they have the responsibility not only to
stockholders, but also to customers, employees, suppliers, and the
general public.

Pyramid of Corporate Social Responsibility

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Pamantasan ng Lungsod ng Maynila

College of Business Administration

Module 5 (Part 2):

• Pressure from stakeholders such as customers, employees,

2. Legal and Regulatory Compliance:

• Compliance with laws and regulations related to environmental

• Many companies recognize the moral imperative to contribute positively to

4. Reputation and Brand Image

• CSR initiatives can enhance a company's reputation and brand image,

• Proactive CSR strategies help mitigate risks associated with environmental,

6. Employee Engagement and Retention

• CSR programs contribute to employee satisfaction, engagement, and

• Studies suggest that responsible business practices can

8. Innovation and Competitive Advantage:

• Companies that integrate sustainability into their business

• Demand from customers and pressure from stakeholders push

10. Globalization and Social Trends

• In an interconnected world, companies face scrutiny from diverse

• Early philanthropy: Corporations engaged in charitable activities, mainly

2. Era of Corporate Social Awareness (Mid-20th Century):

• Emergence of social consciousness: Growing awareness of social issues

3. Responsive Era (Late 20th Century):

• Reactive responses to crises: Companies responded to

• Integration into business strategy: CSR became more strategic,

• Creating shared value: Companies focus on creating social and

• Globalization of CSR: Companies expand their CSR initiatives

• Management’s only responsibility is to maximize profits

• Primary goal of business is to maximize the economic efficiency

• It places emphasis not only on profits but also on the impact of

Pyramid of Corporate Social Responsibility

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