Corporate responsibility: balancing economic, environmental, and social issues in the forest products industry.
The role of business in society and the way it is perceived by society have undergone many distinct changes throughout history. Eberstadt (1977) has studied these changes ranging from ancient Greece The term ancient Greece refers to the periods of Greek history in Classical Antiquity, lasting ca. 750 BC (the archaic period) to 146 BC (the Roman conquest). It is generally considered to be the seminal culture which provided the foundation of Western Civilization. to modern times and he argues that today's corporate responsibility movement is an attempt to restore a 2,000-year-old tradition of businesses being connected to the community. Things changed in the medieval period when itinerant ITINERANT. Travelling or taking a journey. In England there were formerly judges called Justices itinerant, who were sent with commissions into certain counties to try causes. traders replaced local craftsmen in filling the needs for merchandise. Society often had a negative attitude toward these early traders, viewing them as exploitative. The industrial revolution exacerbated this situation with an increased focus on wealth creation or profit making, largely separated from social concerns.
Over time, awareness of the impact of business and its interplay with societal and environmental concerns has emerged, along with parallel growth of socio-regulatory pressures. This evolution of business and societal concern has led business to gradually re-embrace its formerly displaced displaced
see displacement. social orientation and assume increased responsibility and consideration for both social and environmental well-being. The corporate response to environmental and social issues, commonly known as corporate responsibility (CR) or corporate social responsibility (CSR (1) (Customer Service Representative) A person who handles a customer's request regarding a bill, account changes or service or merchandise ordered. Agents in call centers are known as CSRs. See call center. ), has been studied by many pioneering authors and is viewed as progressing through the following three stages: profit maximization In economics, profit maximization is the process by which a firm determines the price and output level that returns the greatest profit. There are several approaches to this problem. management, trusteeship management, and "quality of life" management (Hay and Gray 1977).
Stage one reflected the belief that the individual's drive for maximum profits and the regulation of the competitive marketplace would interact to create the greatest aggregate wealth for a nation and therefore the maximum public good.
Stage two, which began during the 1920s and 1930s, reflected a shift from a mere profit motive, incorporating the maintenance of an equitable balance among the competing claims of customers, employees, suppliers, creditors, and the community, including shareholders. An important reason for the shift is said to be the emergence of a pluralistic plu·ral·is·tic
1. Of or relating to social or philosophical pluralism.
2. Having multiple aspects or parts: "the idea that intelligence is a pluralistic quality that ... society such as in America and Europe that suggests no group in society should have unbalanced power over all others and that each has direct or indirect impact on all others. The major groups exerting pressure on business during this period were labor unions and national governments, but today such influencing factors have grown to include minority, environmental, and consumer groups.
Stage three, referred to as "quality of life" management, rests on the premise that societies became saturated with goods and services In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility (unless the "good" is a "bad"). It is often used when referring to a Goods and Services Tax. . Because of this economic success, other societal concerns surfaced, such as inequitable distribution of wealth, air and water pollution, degraded landscapes, and a general disregard for consumer concerns, interests, or safety. Stage three was furthered by changing sentiments in society regarding the inherent trade-offs between economic gains and declining social and physical environments. A new societal consensus emerged. Business was now expected to assume responsibilities beyond the realm of economic considerations.
Most recently, globalization globalization
Process by which the experience of everyday life, marked by the diffusion of commodities and ideas, is becoming standardized around the world. Factors that have contributed to globalization include increasingly sophisticated communications and transportation , advances in communication technologies, and the emergence of ethical investment opportunities have resulted in an increased focus on CR. Globalization refers to the cross-border flow of people, products, information, and money. To varying degrees, globalization is resisted by societies concerned with the social and environmental implications of large companies operating throughout the world. Therefore, it becomes increasingly important for organizations to attempt to be proactively responsive to social and environmental issues in order to ameliorate a·mel·io·rate
tr. & intr.v. a·me·lio·rat·ed, a·me·lio·rat·ing, a·me·lio·rates
To make or become better; improve. See Synonyms at improve.
[Alteration of meliorate. social concerns.
Advances in the area of information technology have facilitated the focus on CR. These advances have allowed instantaneous global information flow at an extremely low cost. Easy access to detailed information on corporate activities has increased transparency and heightened public awareness regarding the impacts of corporations worldwide. This awareness has aided citizens and activists seeking corporate change, and boosted global discussion about CR and its adoption by companies. Advanced information technologies also provide a means by which companies can communicate their social and environmental orientation to a global audience. In particular, electronic media has fostered web-based exchange through which companies make available information to the public. For example, more than 80 percent of Fortune 500 companies address CR issues and actions on their corporate websites (Smith 2003).
When pursuing ethical investments, individuals and organizations seek out companies with a positive reputation while avoiding companies linked to environmentally damaging practices, poor employment practices, oppressive regimes, etc. The increase in ethical investment has encouraged companies to give attention to CR. Ethical investment is a growing niche among institutional and individual investors and public concerns regarding a lack of CR have fueled this growth to the point that some estimates suggest total ethical investment to be approximately $2.0 trillion (Schepers and Sethi 2003).
In this article, we explore the general concept of CR and its development and implementation, and then outline CR practices in the forest products sector.
Drivers of CR
Companies have diverse motivations to adopt CR. These motivations can range from meeting basic mandatory legal requirements aimed at controlling destructive business practices to consideration of CR as a tool for increased productivity and improved financial performance. Further, functional areas such as risk management and market positioning are also expected to improve with increased attention to CR. Table 1 outlines a number of potential instrumental benefits from CR. However, companies at the leading edge of responsibility issues are often not motivated by instrumental use but rather act out of internally motivated, ethical considerations.
Research has shown that companies that care for the environment and exhibit good CR practices experience increased consumer purchase preference in addition to increased investment appeal (Gildea 1994, Zaman et al. 1996). It has been further suggested that by adapting business practices and philosophies to socio-cultural norms and societal values, companies can improve the likelihood of securing their legitimacy or license to operate. This legitimacy contributes to company survival and prosperity by reducing stakeholder stakeholder n. a person having in his/her possession (holding) money or property in which he/she has no interest, right or title, awaiting the outcome of a dispute between two or more claimants to the money or property. conflict and associated costs while improving long-term sustainability and employee satisfaction (Bansal and Roth 2000).
Legislative entities have also provided encouragement for the adoption and practice of CR through establishment of both incentive and prescriptive pre·scrip·tive
1. Sanctioned or authorized by long-standing custom or usage.
2. Making or giving injunctions, directions, laws, or rules.
3. Law Acquired by or based on uninterrupted possession. policy. An increasing array of domestic and international regulations aimed at improving environmental protection, pollution control, gender and social equity, minimum wages, and safety and health benefits have been adopted and enforced.
Many authors also feel that CR is a philosophical shift inside the corporate culture driven by ethical considerations. However, the extent to which ethical or instrumental (economic and legal) considerations influence the adoption of CR is difficult to ascertain. Further, ethics and instrumental aspects are not necessarily in conflict. CR can emerge from either or both. The shift in corporate focus towards environmental and social responsibility has been especially prevalent during the last two decades, reflecting a change in societal values. In addition to instrumental and ethical drivers, it is reasonable to believe that this phenomenon is advanced through a collective change in society and business toward post-modern values that span from social to environmental concerns with an increasing consideration of present and future generations.
Concept and Definitions
Academically, CR can be traced to Bowen (1953) and his book Social Responsibilities of the Businessman. In this work, CSR is defined as "an obligation to pursue those policies, to make those decisions, or to follow those lines of action that are desirable in terms of the objectives and values of our society" (Bowen 1953, p. 6). However, CR has seen continuous debate about its meaning, approaches, and even the terminologies used to explain the "beyond mere profit" orientation of businesses. Following are terms that are sometimes used interchangeably to explain the socio-environmental orientation of companies:
* Corporate citizenship Corporate Citizenship
The extent to which businesses are socially responsible in meeting legal, ethical and economic responsibilities placed on them by shareholders. The aim it to create higher standards of living and quality of life in the community in which it operates, while
* Sustainable entrepreneurship
* Triple bottom line
* Business ethics business ethics, the study and evaluation of decision making by businesses according to moral concepts and judgments. Ethical questions range from practical, narrowly defined issues, such as a company's obligation to be honest with its customers, to broader social
* Corporate social responsibility
Individual researcher conceptualizations and interest areas within CR have led to a number of definitions to illustrate the concept. The sidebar outlines various definitions that have been proposed to capture the meaning of CR.
Models Depicting CR
There is no universally accepted definition of CR; however, several models have been developed that effectively capture elements of CR and make it a workable proposition for practitioners and researchers. Figure 1 shows a continuum model that conveys a "proportional" set of responsibilities of the firm such that larger elements represent greater responsibility. According to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. the model, the primary firm responsibility is economic success.
The continuum further reflects the importance of legal responsibilities, followed by ethical and discretionary responsibilities. While the model emphasizes a financial consideration, the inherent makeup suggests the basic premise that companies must also look to issues beyond financial interests. Ethical and discretionary responsibilities espoused by Carroll (1979) have been further developed by others to consist of social and environmental elements, which ultimately make CR a multidimensional construct.
[FIGURE 1 OMITTED]
[FIGURE 2 OMITTED]
The multi-dimensional construct of CR is introduced by emphasizing the interdependence among economic, environmental, and social dimensions in responsible business behavior (Fig. 2). These elements of CR are generally referred to as the "triple bottom line." CR in this sense can be understood as the balancing of economic, social, and environmental roles that companies play when conducting business.
Stakeholder Approach to CR
Obligations to society, managerial processes, and social contracts are a few of the approaches that have been used to discuss CR. The mainstream approach advocates that companies have obligations to stakeholders Stakeholders
All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government. . According to the World Business Council for Sustainable Development The World Business Council for Sustainable Development (WBCSD) is a CEO-led, global association of some 200 companies dealing exclusively with business and sustainable development. (WBCSD WBCSD World Business Council for Sustainable Development 2000), companies have a responsibility to the following stakeholders:
* Owners and investors -- high profits
* Employees -- consistent, fairly compensated employment
* Customers -- high quality products and service
* Business partners -- fair, ethical treatment as partners
* Suppliers -- consistent customer upon which to base the supplier's business
* Competitors -- maintain industry image
* Government regulators -- meeting or exceeding regulations
* Non-governmental organizations -- meeting or exceeding their expectations
* Communities -- stable employment for community members
Different stakeholder groups often have varying and sometimes conflicting interests, thus requiring companies to balance these varying demands. Companies need to successfully predict and credibly respond to changing and sometimes volatile stakeholder views and expectations of CR.
Issues and Challenges to Implementation of CR
Despite the increase in attention given to CR, choosing the right form of CR and successfully implementing it is no trivial task. It has been pointed out that favorable consumer reaction to CR is not as clear as some marketplace polls suggest and that there are a number of factors that interplay in affecting whether CR initiatives by a company will be rewarded via consumer purchases. A company anticipating a favorable consumer response to CR efforts must understand consumer awareness and attitudes about firm motivations to engage in CR. CR initiatives must be communicated clearly so that consumers can distinguish between marketing/promotion and true CR initiatives.
In a study of 18 Dutch companies This is a list of companies from the Netherlands. See for lists of companies from other countries. Independent companies
Cost is an important issue when considering adoption of CR practices. This is particularly relevant for firms that have special concerns over short-term costs. However, there is considerable evidence to suggest that inaction in·ac·tion
Lack or absence of action.
lack of action; inertia
Noun 1. towards societal issues ultimately leads to higher costs. Azapagic (2003) suggests that the financial benefits resulting from CR business practices may in fact be realized after a lengthy gestation period Gestation period
In mammals, the interval between fertilization and birth. It covers the total period of development of the offspring, which consists of a preimplantation phase (from fertilization to implantation in the mother's womb), an embryonic phase . In the absence of clear, industry-specific research, a full cost-benefit analysis cannot be done; however, as the adage suggests "an ounce of prevention is worth a pound of cure," and adoption of CR may indeed be valuable prevention.
Effective communication is very important and therefore companies must focus on making consumers more aware of their CR initiatives. However, using CR exclusively as a promotional tool can do more harm than good to the companies. For example, many companies have been accused of "greenwashing" when conducting environmentally oriented advertising.
Today, large corporations generally provide annual reports of their responsibility efforts. This trend arose from environmental reporting and has grown to include other aspects of responsibility. These reports are an essential element of corporate communication. Dawkins (2004) asserts that alignment of CR communications with stakeholder concerns is essential to fully capture the reputation benefits of CR. He further suggests that the biggest challenge in this endeavor is that stakeholders have diverse expectations and satisfying these divergent expectations in one report can be challenging. He also emphasizes the importance of internal communication, as employees can be important messengers of initiatives to a broader audience. Companies should develop a clear communication strategy and carefully tailor the content and style of communication in order to enhance their corporate reputation. For example, responsibility reports could be divided into different sections that would provide an explanation of company actions designed to meet each stakeholder group's expectations.
[FIGURE 3 OMITTED]
CR strategies should be specific to the company and chosen with consideration given to organizational resources, needs, and position in the marketplace. Each organizations must develop its own CR portfolio and design the implementation. Figure 3 illustrates the typical stages involved in organizational response to societal issues. This model can serve as a guiding matrix for companies striving to initiate their own unique approach to CR.
Most organizations pass through five stages in their handling of corporate responsibility. In addition, societal views of issues mature over time, so organizations must stay aware of public opinion. Table 2 outlines five organizational learning stages, what organizations do at each stage, and why they act the way they do.
The second dimension of the matrix shown in Figure 3 relates to the four stages of issue maturity. Table 3 illustrates the issue maturity stages and their respective characteristics. The matrix shows that promoting broad industry participation in CR regarding latent issues provides the highest opportunity for reaping benefits. An industry-wide effort can best achieve the instrumental benefits that CR provides and also strengthen the industry business environment. However, few industries have reached the Civil stage of organizational learning (Table 2); therefore, the matrix can be used by individual companies to help recognize new issues they will face and to monitor how competitors choose to deal with those issues. Through better assessment of issues and self assessment of their ability to meet them, companies can position themselves for successful navigation of challenging social and environmental issues.
CR and the Forest Products Industry
Throughout history, forests have fulfilled a myriad of needs ranging from the experiential ex·pe·ri·en·tial
Relating to or derived from experience.
ex·peri·en and aesthetic to the most basic needs of warmth and shelter. Forests are often held in special reverence by society, resulting in high attention regarding their use and treatment. The forest products industry is very familiar with the increasing societal expectations regarding its use of forests throughout the world. In light of these societal views, and also a business climate that is experiencing increasing consolidation and globalization, it is not surprising that CR has become an increasingly relevant issue within the industry.
Another trend that can promote an interest in CR is increased outsourcing in search of low labor and raw material costs, which extends forest products industry activities to new geographical areas. Outsourcing has long-debated socio-economic implications for both exporting and importing countries. The shift from traditional production regions to new ones has aroused public debate because in many cases the establishment of new units overseas has forced companies to rationalize ra·tion·al·ize
1. To make rational.
2. To devise self-satisfying but false or inconsistent reasons for one's behavior, especially as an unconscious defense mechanism through which irrational acts or feelings are made to appear existing operations.
Forest products industry operations have endured extensive criticism since the 1970s, as real and perceived environmental impacts began to attract public interest. More recently, public debate has broadened to increasingly cover social aspects such as employee welfare and interaction with local communities. Increasing societal awareness and expectations for responsible business behavior and transparency of operations have established new responsibility standards for the forest product industry. The industry has responded by implementing new environmental and social policies aimed at addressing public concerns.
Sustainable practice reports are an example of the industry's response to public concerns. Sharma and Henriques (2005) researched stakeholder issues in sustainability practices of the Canadian forest industry and contend that the industry has gone beyond mere pollution control and eco-efficiency and reached the phase of adopting sustainable practices. They further note that stakeholders are likely to negatively impact the reputation of companies that do not adopt the holistic practices of CR.
As previously mentioned, economic performance is a fundamental organizational responsibility. The forest products industry is no different in this regard and the call for steady and sustainable increases in company value and profitability to provide for shareholder economic interests is imperative. Beyond individual investors and owners, the industry provides significant economic benefit by producing taxable income and providing employment. In recent years, the forest products industry has not adequately met investor expectations of financial returns. The industry suffered from poor profitability in the 1990s and the same trend has continued in this decade. According to PriceWaterhouseCoopers, the return on capital employed Return on capital employed (ROCE)
Indicator of profitability of the firm's capital investments. Determined by dividing Earnings Before Interest and Taxes by (capital employed plus short-term loans minus intangible assets). in the forest products industry reached only 5.4 percent in 2004, whereas investors expect 10 to 12 percent (PWC 2005). The forest products industry must focus on economic profitability of operations to ensure expected returns.
The economic responsibilities of the forest products industry also include their macro economic impact. For example, in Scandinavia, the industry has a considerable impact on the regional economy. Similarly, in the U.S. Pacific Northwest, the forest sector has a significant role in employment and the regional economy. In this context, the development and impact of outsourcing trends is a substantial concern and industry needs to find an amicable am·i·ca·ble
Characterized by or exhibiting friendliness or goodwill; friendly.
[Middle English, from Late Latin am balance between outsourcing benefits and regional economic considerations.
The debate around environmental responsibility of the industry began in the 1970s, as governments increasingly focused on environmental issues related to industrial operations. Industry topics of social concern that have evolved over time are:
* 1970s -- emissions to water and air
* Mid 1980s -- recycling
* Late 1980s -- chlorine bleaching
* Early 1990s -- forestry and forest management
* Mid 1990s -- forest certification
* 21st century -- global climate change and the role of forests
In response to these environmental issues of public concern, the forest products industry has developed a renewed focus on sustainable use Sustainable use is the use of resources at a rate which will meet the needs of the present without impairing the ability of future generations to meet their needs. The concept was notably put forth by the Brundtland Commission in 1987. See also
Something that pollutes, especially a waste material that contaminates air, soil, or water. emissions by adopting, for example, ISO (1) See ISO speed.
(2) (International Organization for Standardization, Geneva, Switzerland, www.iso.ch) An organization that sets international standards, founded in 1946. The U.S. member body is ANSI. 14001 standards.
Globalization trends in the industry have served to raise public concern over issues of raw material sourcing and tracking through the supply chain. To ensure a responsible supply chain, some forest products companies have established comprehensive tracking systems where materials can be followed from harvest to the customer. For example, SCA (Single Connector Attachment) An 80-pin plug and socket used to connect peripherals. With a SCSI drive, it rolls three cables (power, data channel and ID configuration) into one connector for fast installation and removal. , a large Swedish company, states the following: "SCA will assess its suppliers and require them to provide verification; so that customers may be assured that their expectations regarding the environmental qualities of SCA's products are fulfilled." (SCA 2005, p. 22). Corporate purchasing policies are becoming commonplace with many specifically stating preferences for certified wood products or taking specific steps to eliminate the purchase of wood resulting from illegal logging Illegal logging is the harvest, transportation, purchase or sale of timber in violation of national laws. The harvesting procedure itself may be illegal, including using corrupt means to gain access to forests; extraction without permission or from a protected area; the cutting of .
The environmental responsibilities of forest products industry companies extend to how forests are used beyond harvesting interests. Specifically, multiple-uses of forests have become a standard in many countries. Multiple-use implies that many different entities and interests can benefit from forests. Additionally, there has been public debate on the industry's responsibility to protect forests. An example of how UPM-Kymmene responded to this issue is demonstrated in Case 1 in the sidebar on the next page.
In addition to a growing environmental consciousness, the social aspect of CR has become an increasingly important concern for forest products companies. With the advent of these interests, it is becoming critical that forest products companies effectively balance potentially conflicting stakeholder interests with social and economic responsibilities. Cultural traditions and rights of indigenous people are examples of these kinds of conflicts.
Despite the apparent need to balance these interests, the realities of modern business frustrate this goal. For example, consolidation and globalization of operations is an increasingly common means of growing market share and enhancing profitability. However, these decisions are often accompanied by disruption within the communities that are left behind as production centers shift to new locations. Similarly, investments in other countries have been criticized because of potential negative impacts in the local regions, as shown in Case 2 in the sidebar.
In support of responsiveness to social and environmental actions as a means of positively impacting public opinion, Hill et al. (2002) documented the efforts and results of International Paper (IP) in interfacing with community leaders, employees, and government institutions (Case 3 in the sidebar).
Proper communication is one of the central issues of all CR programs. In order to build and manage the company's reputation and enlist en·list
v. en·list·ed, en·list·ing, en·lists
1. To engage (persons or a person) for service in the armed forces.
2. To engage the support or cooperation of.
v. stakeholder support, forest products firms have widely embraced CR reporting. The current multi-dimensional CR reporting by forest products industry companies was preceded by a focus on environmental reporting. Increased environmental consciousness in the late 1980s translated into increased pressure on companies to disseminate dis·sem·i·nate
v. dis·sem·i·nat·ed, dis·sem·i·nat·ing, dis·sem·i·nates
1. To scatter widely, as in sowing seed.
2. information about their environmental actions and impacts. Consequently, companies began to publish separate annual environmental reports in the early 1990s.
By the mid 1990s, most European forest products industries published environmental reports on a regular basis. The European industries have a longer history of reporting CR initiatives when compared to the North American North American
named after North America.
North American blastomycosis
see North American blastomycosis.
North American cattle tick
see boophilusannulatus. and Asian industries, particularly reporting with an environmental focus. European forest products companies reporting activities have primarily been driven by ethical factors, whereas the North American industries North American Industries is a private company that has been building overhead cranes since 1969. It is a member of the Crane Manufacturers Association of America (CMAA) and has sold cranes throughout the world. have been driven by legal considerations. A further difference is that European companies focused largely on past performance and actions taken whereas North American companies focused on responsibility policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental that will influence future actions.
In the current decade, forest industry companies have begun to publish more comprehensive responsibility reports, with a focus on economic, environmental, and social dimensions. However, it has been noted that these reports primarily emphasize economic and environmental dimensions of CR, whereas the social dimension receives relatively less attention. Given that the social impact component is gaining more attention in the media and with the public, it is likely that future industry reporting will include an increased emphasis on social issues.
The basic concept of CR is clear, regardless of loose boundaries or varying definitions. It is a context-specific, strategic, proactive, and synergistic synergistic /syn·er·gis·tic/ (sin?er-jis´tik)
1. acting together.
2. enhancing the effect of another force or agent.
1. philosophy of doing business. It means that when defining strategies, corporations need to pay attention to economic, environmental and social issues in a balanced way. The whole CR landscape, though populated pop·u·late
tr.v. pop·u·lat·ed, pop·u·lat·ing, pop·u·lates
1. To supply with inhabitants, as by colonization; people.
2. by many theories, approaches, and models, calls for each individual company to respond by developing its CR portfolio. In the forest products sector, the scope and relevance of CR is broad as is the implementation, and it deserves further investigation and consideration. Each year new research findings surface that add to our understanding of the concept and the issues involved. Issues like unsustainable use of natural resources, inequitable distribution of wealth, rising corporate crime, the upsurge of anti-corporate campaigns, and increasing intra-industry competition and inter-industry threats are on the rise. This creates an audible knock on Noun 1. knock on - (rugby) knocking the ball forward while trying to catch it (a foul)
rugby, rugby football, rugger - a form of football played with an oval ball
rugby, rugby football, rugger - a form of football played with an oval ball corporate boardroom doors that it is time to rethink how we sustain our economy, ecology, and society. CR can be an answer.
The authors are, PhD Student, Forest Business Solutions Team, Dept. of Wood Science and Engineering, Oregon State Univ. (OSU (Open Source UNIX) Refers to the Unix variants that are maintained as open source, which were primarily BSD Unix and Linux until Sun made its Solaris operating system open source in 2005. ), Corvallis, OR (email@example.com); PhD Student, Dept. of Forest Economics, Univ. of Helsinki, Helsinki, Finland (Tomi.Rinne@helsinki.fi); Professor, Forest Products Marketing, Forest Business Solutions Team, Dept. of Wood Science and Engineering, OSU (firstname.lastname@example.org); and Professor, Forest Products Marketing, Dept. of Forest Economics, Univ. of Helsinki, Helsinki, Finland (Heikki.Juslin@helsinki.fi). A fully cited version of this article is available from the authors. This article was peer reviewed.
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Movement or policies aimed at regulating the products, services, methods, and standards of manufacturers, sellers, and advertisers in the interests of the buyer. and buying preference for green products. In: Proc. of the Australian Marketing Educators' Conference. Theory and Application. Volume II. C. Riquier and B. Sharp, eds. Marketing Science Centre, Univ. of South Australia South Australia, state (1991 pop. 1,236,623), 380,070 sq mi (984,381 sq km), S central Australia. It is bounded on the S by the Indian Ocean. Kangaroo Island and many smaller islands off the south coast are included in the state. , Adelaide, Australia. pp. 613-626.
RELATED ARTICLE: Various Definitions of Corporate Responsibility
"CR is concerned with treating the stakeholders of the firm ethically or in a responsible manner ... The wider aim of social responsibility is to create higher and higher standards of living, while preserving the profitability of the corporation, for people both within and outside the corporation (Hopkins 2004)."
"The social responsibility of business encompasses the economic, legal, ethical and discretionary expectations that society has of organizations at a given point of time (Carroll 1979)."
"CR refers to a company's status and activities with respect to its perceived societal or, at least, stakeholder obligation (Brown and Dacin 1997)."
Case 1 -- UPM-Kymmene and the establishment of Repovesi National Park Repovesi National Park (Repoveden kansallispuisto) is situated in the municipalities of Valkeala and Mäntyharju, only a few hours north-east of the more populous Helsinki area of Southern Finland.
UPM-Kymmene has long traditions in the Finnish forest products industry. The firm's first mechanical pulp mill A pulp mill is a manufacturing facility that converts wood chips or other plant fiber source into a thick fiber board which can be shipped to a paper mill for further processing. , paper mills, and sawmills started operations in the early 1870s. Today, UPM-Kymmene is a leading global forest products corporation, focusing on magazine papers, newsprint newsprint
low grade paper used for newspapers. Old newspapers are fed to cattle as an alternative roughage and may occasionally be ingested by dogs. Significant amounts of lead are accumulated in tissues; no cases of poisoning have been recorded in cattle, though it has been , and fine papers, as well as on converting materials and wood products.
In 2002, UPM-Kymmene donated more than 500 hectares of forest land in Repovesi wilderness area Broadly, a wilderness area is a region where the land is left in a state where human modifications are minimal; that is, as a wilderness. It might also be called a wild or natural area. (Very low or immaterial human impact or "footprint. in southern Finland to the state, enabling the establishment of a new National Park. In addition, the company volunteered to preserve 1200 hectares of its own forests around the national park for recreational and conservation purposes.
According to company management statements, UPM-Kymmene wanted to complete the long-lasting protection process in the area and to show that the sustainable use of forest resources is important to the company. As a result of the land donation, the WWF See Windows Workflow Foundation. Finland granted UPM-Kymmene an award in recognition of the company's resolution to protect the area.
Sources: UPM-Kymmene (2003), UPM-Kymmene (2001 and 2002), Rohweder (2004).
Case 2 -- The establishment of Veracel--A joint venture between Stora Enso and Aracruz
Veracel Celulose, a joint venture between Aracruz Celulose Aracruz Celulose S.A. is a major Brazilian manufacturer of pulp. It is headquartered in São Paulo.
The company is the world's leading supplier of bleached eucalyptus pulp. of Brazil and Scandanavian-based Stora Enso, began operating a new pulp mill in May 2005 in South Bahia, Brazil.
When the decision to build the Veracel Pulp Mill was announced in 2003, some non-governmental organizations (NGOs) raised concerns related to possible socioeconomic impacts of the production unit. The views of Veracel and its owners differed somewhat from the stances of the NGOs, and there was little progress in resolving the debate. Thus, Veracel and its owners looked for a credible, independent third party who could conduct a study examining the critical issues, and produce reliable and balanced information on the impacts of the pulp mill.
The agreement on cooperation with the independent third party The United Nations Development Program (UNDP UNDP United Nations Development Programme
UNDP Unión Nacional para la Democracia y el Progreso (National Union for Democracy and Progress) ) was signed in July 2004. The basis of the work conducted by UNDP is a demographic and socio-economic data survey in the communities surrounding the business, taking into account the Human Development Index (HDI HDI Human Development Index (UNDP yardstick of human welfare)
HDI Help Desk Institute
HDI Humpty Dumpty Institute (New York, New York)
HDI High Density Interconnect ), the tax revenue receipts, and the presence of Veracel in the region. According to the statements of Stora Enso and Veracel management, the objectives of this project are to identify and analyze the effects of Veracel on the well-being of the local population and communities, and to recommend future actions. Veracel owners have committed to fund the $5 million development plan for the local community suggested by UNDP.
Sources: Stora Enso (2004), Veracel (2004), Global Finland (2004), Stora Enso (2005).
Case 3 -- Social and environmental responsiveness of International Paper
Beginning in 1987, Androscoggin pulp and paper mill in Jay, Maine, faced a strike that lasted 1-1/2 years. The strike effectively severed sev·er
v. sev·ered, sev·er·ing, sev·ers
1. To set or keep apart; divide or separate.
2. To cut off (a part) from a whole.
3. relations with workers and the Jay community. Environmental violations by the mill were perceived as crimes and the town enacted ordinances to check emissions. Several years later, IP responded by resolving to change its business approach and chose to develop Androscoggin mill as a model of environmentally oriented business.
The strategy that the mill followed started with bringing in a new management team and entrusting them to bring about change. The mill began by complying with environmental regulations but soon pursued a proactive policy of collaboration with local and federal agencies as well as partnering with stakeholder groups. The new approach went beyond mere compliance to embrace broader sustainability issues. Further steps taken were finding beneficial uses of landfill wastes, replacing hazardous chemicals, reduction in waste, developing an on-site natural gas power generation facility, tying up with another neighboring neigh·bor
1. One who lives near or next to another.
2. A person, place, or thing adjacent to or located near another.
3. A fellow human.
4. Used as a form of familiar address.
v. facility to offer its by-products and, very importantly, forming a Public Advisory Committee (PAC) that included environmentalists, forestry and business experts, mill customers, employees, and an independent forester. Tracing the supply chain in pursuit of sustainability was embraced. The PAC also developed report cards to record effluent effluent
waste from an abattoir carried away in liquid form. Disposal is a major problem because of the need to avoid pollution of waterways. See aerobic effluent treatment, anaerobic effluent treatment. quality, waste generation, energy and water use, and emissions. The mill also collaborated on a broader scale, for example, cooperative projects with the Environmental Protection Agency targeting pollution prevention
Within a few years, the mill turned around its relationship with the community and regulatory agencies, as well as with other stakeholders. Enthused with the Androscoggin success story, IP has formed community advisory committees at each of its pulp and paper mills.
Source: Hill et al. 2002.
Table 1 -- Business benefits of CR practices as depicted by Kotler and Lee (2005) and Azapagic (2003). Kotler and Lee (2005) Azapagic (2003) * Enhanced corporate image * Cost savings and benefits and clout of innovation * Increased sales and * Lower health and safety market share costs * Strengthened brand * Lower labor costs positioning * Easy access to lenders * Increased ability to attract, and insurers motivate, and retain * Best practice influence on employees legislation * Decreased operating costs * Company reputation * Increased appeal to * Market advantage investors and financial * Opportunity to attract analysts ethical investors Table 2 -- Five stages of organization learning (Zadek 2004). Stage What Organizations Do Why They Do It Defensive Deny practices, outcomes, or To defend against attacks to responsibilities their reputation that in the short term could affect sales, recruitment, productivity, and the brand Compliance Adopt a policy-based To mitigate the erosion of compliance approach economic value in the medium as a cost of doing business term because of ongoing reputation and litigation risk Managerial Embed the societal issue in To mitigate the erosion of their core management economic value in the medium processes term and to achieve longer term gains by integrating responsible business practices into their daily operations Strategic Integrate the societal issue To enhance economic value in into their core business the long term and to gain strategies first-mover advantage by aligning strategy and process innovations with the societal issues Civil Promote broad industry To enhance long-term economic participation in corporate value by overcoming any first- responsibility mover disadvantages and to realize gains through collective action Table 3 -- The four stages of issue maturity (Zadek 2004). Stage Characteristics Latent Active communities and NGOs are aware of the societal issue The issue is largely ignored or dismissed by the business community Emerging Political and media awareness of the issue Leading businesses experiment with approaches dealing with the issue Consolidating Emerging body of business practices around the societal issue Sector-wide and issue-based voluntary initiatives are established There is litigation and an increasing view of the need for litigation Voluntary standards are developed and collective action occurs. Institutionalized Legislation or business norms are established Embedded practices are normal parts of a business excellence model