ACCOUNTANT IN BUSINESS ESSAY CORPORATE SOCIAL RESPONSIBILITY ETHICS, LAW, GOVERNANCE AND SOCIAL RESPONSIBILITY

FOREIGN TRADE UNIVERSITY FACULTY OF ACCOUNTING AND AUDITINGACCOUNTANT IN BUSINESS ESSAY CORPORATE SOCIAL RESPONSIBILITY ETHICS, LAW, GOVERNANCE AND SOCIAL RESPONSIBILITY Scientific instr

FOREIGN TRADE UNIVERSITY FACULTY OF ACCOUNTING AND AUDITING

ACCOUNTANT IN BUSINESS ESSAY CORPORATE SOCIAL RESPONSIBILITY ETHICS, LAW, GOVERNANCE AND SOCIAL RESPONSIBILITY

Scientific instructor : MSc Pham Thi Ngoc Thu

Ha Noi, 2021

TABLE OF CONTENTS

INTRODUCTION 2

CONTENT 4

1 Corporate social responsibility 4

1.1 Definition 4

1.2 Types of corporate social responsibility 4

1.3 Strategies for social responsibility 6

1.4 Impact of corporate social responsibility on business 8

1.5 Examples of corporate social responsibility companies 9

1.6 Against corporate social responsibility 10

1.7 The stakeholder view 13

1.7.1 Definition 13

1.7.2 Categorization of stakeholders 13

1.7.3 Management of stakeholders 14

1.7.4 The relation between CSR and stakeholders 15

2 Ethics, law, governance and social responsibility 16

2.1 Definition 16

2.1.1 Business ethics 16

2.1.2 Business law 18

2.1.3 Business governance 18

2.2 Interaction of ethics, law, governance and social responsibility 19

2.2.1 Levels of regulation 19

2.2.2 Relationship between corporate governance and corporate social responsibility 20

2.2.3 Relationship between business ethics and corporate social responsibility 21

2.2.4 Effect on corporate behaviours 22

CONCLUSION 23

REFERENCES 25

There have been a number of reports worldwide on corporate socialresponsibility, but understanding how much an organization contributes back tothe society and utilizes its available resources in a responsible manner,contributing to sustainable development through conveying benefits such associal, economic and environmental to stakeholders are more important thangetting to grips with the detailed provisions laid down in each report Therefore,the purpose of this study is to examine the impacts of CSR and interaction ofethics, law, governance and social responsibility The typical examples werechosen based on the fact that most of the larger companies are expected to alreadyhave had good CSR as well as a code of ethics The study contributes to CSRliterature by providing types of CSR and strategies socially responsible companiesare using in their CSR initiatives

The topic of corporate social responsibility has attracted multidisciplinaryresearchers from fields such as law, political sciences, accounting, finance,economics and even philosophy Corporate social responsibility is a broad conceptthat can take many forms depending on the company and industry Through CSRprograms, philanthropy, and volunteer efforts, businesses can benefit society whileboosting their brands As a result, the importance of CSR and the awareness about

it were rising in the last few decades with the aim to protect and secure thecompany's brand image and boost staff morale while ensuring the company’seconomic efficiency and leading to sustainabiland

Additionally, corporate governance requirements and social responsibilitymay be viewed as additional rules and guidance for companies and individuals.They bridge the gap between what the law requires and what society expects This

is because the law does not always encourage them to behave in an ethical

or socially responsible manner While the economic aspects of corporategovernance, such as shareholder value maximization, legal compliance, andinvestment risk management, are better handled by board processes, the ethicalaspects, such as social and environmental challenges, are best handled bycorporate social responsibility.

1 Corporate social responsibility 1.1 Definition

Corporate social responsibility (CSR) is a self-regulating business model thathelps a company be socially accountable - to itself, its stakeholders, and thepublic By practicing corporate social responsibility, also called corporatecitizenship, companies can be conscious of the kind of impact they are having onall aspects of society, including economic, social, and environmental Corporatesocial responsibility is a broad concept that can take many forms depending on thecompany and industry Through CSR programs, philanthropy, and volunteerefforts, businesses can benefit society while boosting their brands

As important as CSR is for the community, it is equally valuable for acompany CSR activities can help forge a stronger bond between employees andcorporations, boost morale and help both employees and employers feel moreconnected with the world around them

1.2 Types of corporate social responsibility

The first type of corporate social responsibility is environmentalresponsibility The environment is a major emphasis of CSR Businesses of allsizes have significant carbon footprints Any actions that a corporation may take todecrease its environmental impact are beneficial to both the firm and society.Environmental responsibility initiatives aim at reducing pollution and greenhousegas emissions, and the sustainable use of natural resources Companies that want

to be more environmentally conscious might do it in a variety of ways First of all,pollution, greenhouse gas emissions, single-use plastics, water usage, and generalwaste are all being reduced Secondly, the use of renewable energy, sustainableresources, and recycled or partially recycled

materials is becoming more common Moreover, planting trees, sponsoringresearch, and contributing to relevant charities are examples of ways to mitigateharmful environmental effects.

The second type of CSR is human rights responsibility Human rightsresponsibility initiatives involve providing fair labor practices (e.g., equal pay forequal work) and fair trade practices, and disavowing child labor Companies mayshow CSR by treating employees fairly and ethically This is especially true forcompanies that operate in countries whose labor regulations differ from those inthe United States The goal of ethical responsibility is to ensure that anorganization operates in a fair and ethical manner All stakeholders, includingleadership, investors, workers, suppliers, and consumers, should be treated fairly

by organizations that embrace ethical responsibility Companies can take onethical responsibility in a variety of ways If the minimum wage set by the state orfederal government isn't a "livable wage," for example, a company may set itsown, higher rate Similarly, a company may demand that products, ingredients,materials, or components be obtained in accordance with free trade principles.Many businesses have procedures in place to guarantee that they are not acquiringitems made by slaves or children

The third type is philanthropic responsibility Philanthropic responsibilityrefers to a company's goal of actively improving the world and society Businessesmay demonstrate their social responsibility by contributing money, products, orservices to charitable organizations and causes Larger corporations often havemore resources to donate to charities and local community initiatives;nevertheless, your actions as a small business may make a huge difference If youhave a specific charity or program in mind, contact the group and inquire abouttheir specific requirements, as well as if a donation of money, time, or yourcompany's goods would be the most beneficial Philanthropic responsibility can

include things such as funding educational programs, supporting health initiatives,donating to causes, and supporting community beautification projects.Participating in local causes or giving your time (and that of your employees) atcommunity events demonstrates a company's commitment Companies candemonstrate their concern (and support) for certain concerns and social causes byconducting good actions without expecting anything in return Organizationsfrequently donate a percentage of their revenues in addition to operating asethically and ecologically friendly as feasible Many businesses give to charitiesand organizations that match with their guiding missions, while others donate toworthwhile causes that have nothing to do with their business Others go so far as

to establish their own charity trust or organization in order to help others

The fourth type of corporate social responsibility is economic responsibility.Economic responsibility refers to a company's practice of basing all of its financialdecisions on its commitment to do good in the areas mentioned above Theultimate objective is to have a beneficial influence on the environment, people,and society, not only maximize profits Economic responsibility initiatives involveimproving the firm’s business operation while participating in sustainablepractices – for example, using a new manufacturing process to minimize wastage

1.3 Strategies for social responsibility

Over the past few decades, consumers have increasingly chosen to purchaseproducts from companies that do good Inversely, the majority of consumers arealso willing to stop purchasing products from companies whose values don’t alignwith theirs; especially on polarizing issues such as education, racial equality, andwomen’s rights In a survey of adult consumers conducted by EVERFI, 58% saythe social impact of the company is important when deciding which product tobuy; 76% said they believe engagement in the broader

community is important to brand reputation; and nearly half felt that companieshave an obligation to take actions to improve societal problems, even if thoseproblems aren’t related to the company’s business operations The survey resultsmake it hard to deny the corporate social responsibility impact on business.

EVERFI’s research analyzed consumer responses based on their impactpriorities within the following six categories of CSR: Education, Environment,Poverty/Economic Equality, Social Justice/Human Rights, The Arts, andHealth/Sports Seventy-eight percent of respondents listed education as animportant area on which brands should spend their CSR budgets and 60% selectededucation as the most important

Further, individuals who endorsed education seemed to be the most ardentconsumers in terms of loyalty and engagement with a given business, as opposed

to proponents of the other five categories For instance, 76% of consumers whoselected education as an important part of a CSR model said they would spendmore money to patronize a business with good values versus 59% of therespondents who did not select education They are also about twice as likely toengage with that brand via social media and by downloading its mobile app

It is clear education-concerned consumers are high-value customers.Investing in attracting education-concerned consumers via education efforts canpay off for companies in the form of increased engagement and ongoing loyalty

By making a CSR impact through education, specifically, may resonate with aparticularly valuable population of consumers and could perhaps yield the best

corporate social responsibility impact on business Additionally, communicatingout the success of education-focused programs can lead to greater brand awarenessand business

However, in order for buyers to support the companies they perceive associally impactful and aligned with their values, they must be aware of a

company’s social impact and values Communicating and marketing the impactofcorporate social responsibility is crucial Consumers don’t want to hunt forinformation, they expect companies to report on their CSR efforts and results in away that is easily discoverable, transparent and simple to understand.

1.4 Impact of corporate social responsibility on business

CSR may be beneficial to a company in two ways The first method is toimprove the company's brand image When customers and clients see proof ofsocial responsibility, they are more likely to respond positively The secondbenefit is that it boosts staff morale Companies that invest substantial time andmoney in ethical and socially responsible activities are more likely to have higheremployee morale in the long run

According to today's contemporary customer, businesses must recognizetheir social obligations and think beyond profit Because of the growing attention

on corporate social responsibility (CSR) in the news and on social media,companies are under more scrutiny than ever before in order to impact change intheir communities While this is all well and well, a company's investment in CSRmight be difficult to explain if there is no apparent relationship between CSR andprofitability

In fact, corporate social responsibility has an impact on businessperformance First of all, CSR can strengthen brand image, recognition, andreputation CSR adds value to firms by establishing and maintaining a goodcorporate reputation and brand equity Secondly, CSR can also increase customerloyalty and sales as customers of a firm that practices CSR feel that they arehelping the business support good causes It is worth acknowledging that investing

in operational efficiencies results in operational cost savings as well as reducedenvironmental impact Therefore, investors are more willing to support thebusiness and the firm may have access to funding easier Moreover, CSR can

help reduce regulatory burden as strong relationships with regulatory bodies canhelp to reduce a firm’s regulatory burden For corporate culture, CSR is likely toretain key and talented employees because employees often stay longer and aremore committed to their firm knowing that they are working for a business thatpractices CSR.

1.5 Examples of corporate social responsibility companies

Starbucks has long been known for its keen sense of corporate socialresponsibility and commitment to sustainability and community welfare.According to the company, Starbucks has achieved many of its CSR milestonessince it opened its doors According to its 2019 Global Social Impact Report,these milestones include reaching 99% of ethically sourced coffee, creating aglobal network of farmers, pioneering green building throughout its stores,contributing millions of hours of community service, and creating agroundbreaking college program for its partner/employees

Starbucks' goals for 2020 and beyond include hiring 10,000 refugees,reducing the environmental impact of its cups, and engaging its employees inenvironmental leadership.1 Today there are many socially responsible companieswhose brands are known for their CSR programs, such as Ben & Jerry's ice creamand Everlane, a clothing retailer

Despite being one of the largest corporations in the world, Google is anexcellent example of a business that is constantly working for the betterment ofsociety In addition to various other CSR initiatives, the company hasimplemented a widely successful environmental policy called Google Green,which is a corporate effort to use resources more efficiently and supportrenewable energy sources It has led to an overall reduction in power requirementsfor their data centers by 50 percent

In Canada, mining companies often engage with Aboriginal communitiesand groups Converting land sites into mines can cause a significantenvironmental impact on the Aboriginal communities living near the sites SeveralCanadian mining companies engage in corporate social responsibility with localcommunities to ensure that the adverse effects are minimized.

For example, Cameco Corporation oversees education programs directedtoward northern and Aboriginal peoples through their northern Saskatchewanfive-pillar strategy Goldcorp Inc strives to make a positive impact on theircommunities by supporting education and health initiatives and sponsorship ofspecial events Softrock Minerals Ltd contributes money for festivals, schools,and projects

1.6 Against corporate social responsibility

The critique of CSR can be grouped into three main arguments To beginwith, it is violating the obligation to shareholders It is Friedman’s argumentdescribed above that presupposes that business works based on the principlespromoted by traditional economics theory

Fifty years ago, Milton Friedman's landmark article “The Social Responsibility of Business Is To Increase Its Profits," was published in the New

York Times magazine This work remains as polarized as it was five years ago.For some, Friedman's provocative theory heralded a new stage in Americaneconomic life, in which "greed is good'' and profit is the only real goal of business.However, many others saw it in a timely capitalist manifesto that clearlydelineated the proper role that executives should play in our free market system.Friedman commentators often have a polarization between those who believe thatcompanies have greater "social responsibility" and those who believe that thesocial mission of the company is profitable, and that it is better to leave othersocial objectives to politics

But both parties can agree that in the last 50 years, the world has becomemore complex and businesses have become increasingly complex, and businessesmust balance many different priorities In addition, the emergence of sociallyresponsible investment and corporate methods has realigned the priorities ofcorporate leadership and many investors, regardless of whether they truly believe

in the broader corporate social goals

His signature achievement is the almost universal acceptance (in thebusiness world) that listed companies should maximize profits and shareholder

value above all other goals According to this theory, he stated that:

Firstly, businesses do not have responsibilities; only people have

responsibilities Managers in charge of corporations are responsible to the owners

of the business, by whom they are employed In this case, corporate executives areemployees and company shareholders are bosses

Secondly, Friedman said that shareholders want to "make as much money

as possible while complying with the basic rules of society." These so-called

‘employers’ may have charity as their aim, but generally their aim will be to make

as much money as possible while conforming to the basic rules of the society,both those embodied in law and those embodied in ethical custom

Thirdly, for Friedman, in addition to making profits, executives who

respond to social issues are not doing employee work Instead, they are spendingthe owners' money for purposes other than those they have authorised

Although individuals can do whatever they want with their own money,employees must always obey the wishes of their superiors If the statement that amanager has social responsibilities is to have any meaning, 'it must mean that he is

to act in some way that is not in the interest of his employers

In Friedman's analysis, the greatest benefit is to allow the executive toreturn as much money as possible to shareholders Anyone who wants to pursue

the greater good can do so with their own money in their own time For Friedman,executives who make profits and use them for social goals have becomelegislators "This is the basic reason why the doctrine of 'social responsibility'implies acceptance of the socialist vision, that is, political mechanisms rather thanmarket mechanisms are the appropriate way to determine the allocation of scarceresources in order to use alternatives," Friedman wrote In addition to Friedman’sopinion, there are two other arguments surrounding the topic whether CSR exertspositive impact:

CSR is a method of corporations’ covering wrongdoing CSR is criticizedfor creating a distorted view of business It became commonplace to considerbusiness as a necessary evil for society and to perceive executives as short termeconomic maximizers of their own self interest To recover their reputation,business executives need to do something good – namely, CSR According to thisview of business, managers are akin to gangsters going to church on Sundays.Another type of covering wrongdoing, but in a different sequence, refers to CSR’smoral licensing, when doing good things for communities can create a misleadingfeeling of being excused for mistreating some other stakeholders (Ormiston &Wong, 2013) One more type of covering wrongdoing could be found in “window-dressing” used to pre-empt government from enforcing stricter regulations oncertain products, business activities, or industries All these perceptions of CSR as

a tool for covering wrongdoing can to a certain extent be considered a result offalse dichotomies discussed in the next argument

Having CSR means creating false dichotomies CSR could be criticized for

furthering a set of questionable distinctions such as Economic vs Social, Business

vs Ethics, Profits vs Society These unnecessary distinctions became adopted associal science orientation of business schools finding their way into

the curriculum taught in MBA classrooms as well as in academic research Thefirst criticism of CSR, violating obligation to shareholders, has been disproved byboth scholars and lawyers alike (Stout, 2012; Freeman, Harrison, Wicks, Parmar,

& de Colle, 2010) However, the other two arguments impose a substantialchallenge to CSR Helping communities should not be treated as a redemptiontool for excessive greediness in business, and CSR should not be used to coverwrongdoing toward other company stakeholders When it comes to creating falsedichotomies, we believe that economics cannot be separated from social, businessand ethics cannot be isolated one from the other (Freeman, 1994; Harris &Freeman, 2008), and making profits and serving society are not moving inopposite directions

1.7 The stakeholder view

1.7.1 Definition

Stakeholders are individuals or groups which were either harmed by orbenefited from the corporation; or whose rights have been violated or have to berespected by the corporation Firms have several stakeholders which compete fororganizational resources; hence, the need for firms to identify strategies formanaging stakeholders

Stakeholders are the key factors for the success of the practice of corporatesocial responsibility Without their participation, knowledge, skills, talents, andloyalty, organizations can not achieve their goals A characteristic of corporatesocial responsibility is that companies are accountable to various stakeholders,who can be identified and propose legal or ethical requirements for the businessactivities that affect them In this day and age, more and more authors put thestakeholder approach in the core of the CSR theories Homes and Watts (2000) seethe engagement of the stakeholders as “the essence of CSR”

Recently, corporate social responsibility has been recognized as a developing field

of corporate strategic value creation However, stakeholder engagement is oftenseen as secondary or even irrelevant to the corporate social responsibility agenda

1.7.2 Categorization of stakeholders

Commonly identified stakeholder groups include shareholders (or owners),employees, customers, suppliers, local community, competitors, interest groups(or sometimes civil society representatives, though slightly more inclusive indefinition), government, the media, and society at large Some of these terms bythemselves raise important questions related to the value of an organization'sresponsibility to stakeholders, especially the concept of "society as a whole" andcommunity The stakeholder theory emphasizes that in addition to shareholders,there are various agents who are interested in corporate behavior and decision-making.The theory emphasizes the need for administrators to be accountable tostakeholders The theory highlights the need for managers to be accountable tostakeholders The type of stakeholders proactively engaged and resources controlstrategy adopted impact firm’s corporate strategy From a business-drivenviewpoint, stakeholder theory interest covers three premises: that organizationshave stakeholders which impact their activities; these interactions impact specificstakeholders and the organization; and perceptions of major stakeholders impactthe viability of organizational strategic options Firms, therefore, need to adoptsuitable approaches to deal with primary stakeholders accordingly Firms areunlikely to fulfil responsibilities (economic and non-economic) of some primarystakeholders; hence, the need for stakeholders management

1.7.3 Management of stakeholders

The obligation to serve the interests of all stakeholders is often referred to

as stakeholder management Since corporations deal with several stakeholdersover time and simultaneously; it is unlikely that organizations would fulfil all theirresponsibilities towards each primary stakeholder or group Hence, firms’ shouldidentify strategies for managing stakeholders as there are several stakeholderscompeting for organizational resources Furthermore, the type of stakeholdersengaged, and resources control strategy adopted impact organization’s corporatestrategy Stakeholder management facilitates consideration of individuals orgroups within and outside the firm when allocating organizational resources.Stakeholder management promotes an effective allocation of resources amongstakeholders to achieve a “win-win” outcome Although the practice ofstakeholder management is long-established, its academic review started only atthe end of the 70s In a seminal paper, Freeman (1978) presented two basicconcepts, which underpin stakeholder management The first is that the centralobjective of stakeholder management is to achieve the highest degree of overallcooperation between all stakeholder groups and company goals The second saysthat the most effective stakeholder management policy involves efforts to addressissues that affect multiple stakeholders at the same time Stakeholder managementattempts to include groups that own company shares in management decisions

1.7.4 The relation between CSR and stakeholders

The relationship between corporate social responsibility and enterprises hastraditionally been investigated through the concept of corporate socialperformance The generally accepted definition of CSP shows that seniormanagers, those who make strategic decisions and choices for the development