RESPONSIBLE CAPITALISMS? EB434 ENTERPRISE + GOVERNANCE

Transcription

1 RESPONSIBLE CAPITALISMS? 23 EB434 ENTERPRISE + GOVERNANCE

2 some basic concepts Socially responsible investment looks from the broadest perspective of investment, including portfolio (passive) investments in various business activities Corporate social responsibility looks specifically at the decisions by managers and directors of firms (in relation to specific issues and the broader strategic directions set for the enterprise) and how they impact on those dealing with the firm and its host societies and environments Stakeholder theory includes some of the concerns of CRS but is NOT the same (eg. A firm may act in the interests of employees but not the environment or community)

3 business ethics Corporate social responsibility relates directly to the broader issue of business ethics Ethics to actions and decisions that might be, in a strict sense, legal, but which might not be socially acceptable Business ethics is becoming a common part of the curriculum of business and management programs in universities This is in response to social pressures on firms

4 good behaviour is good business? Many advocates of corporate social responsibility argue that good conduct is good business The evidence is mixed, and research is still at an early stage Intuitively, firms with a consistently poor reputation as employers, partners, customers etc will bear costs But some businesses are short-termist in nature and might be able to afford these risks (eg. certain extractive mining etc- and project industries)

5 motivations for ethics? Are individuals and firms ethical out of a genuine commitment to considering the interests of others (other-regarding) or out of self-interest? Self interest motivations arise, in part, from (interrelated): Fear of detection and punishment (through either legal provisions or.) Repeat games might deal with same parties again Reputational concerns Forestall greater restrictions

6 3 basic SRI strategies (socially responsible investment) Engagement active expression of voice by shareholders Preference favouring firms meeting certain indicators of social responsibility in the investment selection decision (amongst similarly performing firms on financial criteria) Screening investing only in firms screened (selected) for ethical behavior (typically with managed funds investment products offered to people on an SRI basis)

7 socially responsible investors Pension (superannuation) funds associated with highly unionized sectors of the workforce and often union-sponsored funds are more likely to have explicit an SRI orientation (ideological motivations etc) Public and education sector funds, for related reasons, often favor SRI - eg. the UK Teacher Insurance and Annuity Association, CalPERS (Californian public sector employees fund) Pension fund members are increasingly given the opportunity to choose to put all or part of their funds into such SRI-oriented schemes

8 a social compact? Cadbury has suggested that businesses are in a kind of compact with their host societies (accords with Roe s notion of peace as predicate for business) An implication of this is that, through either societal opposition and/or state authority, the interests of the firm can be seriously threatened if this compact is not respected. This might imply that firms with significant political authority have greater latitude then to be socially irresponsible