Corporate Social Responsibility’ and Shareholder’ Issues

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What aspect(s) of corporate social responsibilities are demonstrated in the article?

The article entitled “Replacing the ‘dumbest idea in the word’ by Skapinker “ (2010) is about the oft-repeated issue of corporate social responsibility (CSR). The article seems to seek the meaning of CSR which issue has been settled before long. It records the divergent perceptions by the CEOs of some of the world’s leading corporates such as Citigroup, Uniliver, etc. The article highlights the never-ending conflict between shareholder interests and CSR interests, the CEOs are often faced with. Citigroup’s CEO has no words to express except sorry.

Does he mean to convey that his company failed to protect shareholders’ interests by serving the customer’s/consumer’s interests? Lambert of British Employers’ group has said that shareholder value which General Electric’s former CEO had held on to has at last been given up by him as evidenced by his recent observation that shareholder value is the “dumbest idea” in the world conceding that shareholder value is a result and not a strategy.

Paul Polman of Uniliver is of the same view in that it is the customer or consumer that his company should serve which alone would ensure positive business results. It may be the tendency of shareholders to maximize their profits in the short term and to keep shedding their shares. But managers cannot afford to serve the shareholders’ self-serving interests as they are driven by CSR tenets which are what Chapter 5 is all about. The central theme of the chapter is that CSR aims to serve the interests of the stakeholders in a corporate set up such as shareholders, suppliers, employees, consumers, customers, environment, financiers, government agencies, etc.

The managers need not feel guilty if shareholders’ selfish interests of maximizing profits at the cost of the other stakeholders are not served, for two reasons. First, it will be suicidal for the shareholders since their company will not survive in the long run if all the stakeholders’ interests are not taken care of. Second, after all, the shareholders’ liability is limited and they are not assuming the entire risks of the business as in the event of loss, the stakeholders will suffer more than the shareholders do.

What is the ethical consequence(s) of what is reported in the article?

Stefan (2010) in his farewell article “Before the curtain falls, three final words” stresses the importance of the human side of management. The final three words are “see it human”, writing on the wall for the managers to be aware of their ethical responsibility to consider the human aspect behind their every action/decision. As an ethical consequence, the author recalls the British businessman’s selling of engine parts to the U.S. Air force by seeing the business opportunity in a War.

Be it the sweat labor in China’s factory which assembles beautiful parts of Apple’s iPad, the global warming consequences the World is facing or managing people, today’s managers have the enormous responsibility to see the human suffering behind every one of them. These are all fraught with ethical consequences which chapter 3 tries to impress upon. The situations explained in the article involve decision making without due regard to ethical consequences.

Seizing a wartime business opportunity, engaging sweat labor for profit maximization and indiscriminate exploitation of natural resources and spoiling the environment leading to global warming detrimental to mankind’s future survival, call attention to the ethical responsibilities of today’s managers. Chapter 3 lays down the ethical principles to be observed in business conduct. The utilitarian principle of the eighteenth century is relevant even in the present 21^st century. The principle enjoins that man should consider the consequences of his actions. Hence a consequentialist approach is necessary behind managerial decisions.

The consequences of the above-cited examples in the article stare at the faces of managers who in their greed to maximize profits and their executive remuneration failed to realize human suffering. Wartime opportunities may have been instrumental in killing the British citizens themselves. Not that the citizens of other countries killed were not humans. Similarly, young people who committed suicide at the Chinese plant where Apple’s iPad were assembled due to appalling work conditions or whatever is another example (consequence) of unethical decision making without the least regard to the utilitarianism principle.

References

Skapinker, M. (2010). Replacing the ‘dumbest idea in the world’. Financial Times.

Stefan, S. (2010). Before the curtain falls, three final words. Financial Times.

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