Social

Corporate Social Responsibility (CSR)

Corporate Social Responsibility (CSR) Reporting is a paradigm shift from a corporation being responsible just to the shareholders to a corporation being responsible to all of its stakeholders – anyone (or group_ which has a vested interest in the sustainability of the corporation. This includes the shareholders, but it also includes the workers, the community that depends on that company, the managers, and the suppliers upstream and the customers downstream. J

Transparency

Transparency is a very important topic with Social Reporting. Because the company has a responsibility to each of its stakeholders, and has a responsibility to assure all of its stakeholders that it will remain viable not only for the short term but also for the long term, transparency is required.

Taken from Wikipedia

Stakeholder

A corporate stakeholder is that which can affect or be affected by the actions of the business as a whole. The stakeholder concept was first used in a 1963 internal memorandum at the Stanford Research Institute. It defined stakeholders as "those groups without whose support the organization would cease to exist." The theory was later developed and championed by R. Edward Freeman in the 1980s. Since then it has gained wide acceptance in business practice and in theorizing relating to management, corporate, business purpose and corporate social responsibility (CSR).

The term has been broadened to include anyone who has an interest in a matter.

Types of stakeholders

Any action taken by any organization or any group might affect those people who are linked with them in the private sector. For examples these are parents, children, customers, owners, employees, associates, partners, contractors, and suppliers, people that are related or located nearby.

Primary Stakeholders - usually internal stakeholders are those that engage in economic transactions with the business. (For example stockholders, customers, suppliers, creditors, and employees)

Secondary Stakeholders - usually external stakeholders are those who - although they do not engage in direct economic exchange with the business - are affected by or can affect its actions. (For example the general public, communities, activist groups, business support groups and the media)

Company stakeholder mapping

A narrow mapping of a company's stakeholders might identify the following stakeholders:

A broader mapping of a company's stakeholders may also include:

Stakeholders In management

In the last decades of the 20th century, the word "stakeholder" has become more commonly used to mean a person or organization that has a legitimate interest in a project or entity. In discussing the decision-making process for institutions—including large business corporations, government agencies, and non-profit organizations—the concept has been broadened to include everyone with an interest (or "stake") in what the entity does. This includes not only its vendors, employees, and customers, but even members of a community where its offices or factory may affect the local economy or environment. In this context, "stakeholder" includes not only the directors or trustees on its governing board (who are stakeholders in the traditional sense of the word) but also all persons who "paid in" the figurative stake and the persons to whom it may be "paid out" (in the sense of a "payoff" in game theory, meaning the outcome of the transaction). Therefore to effectively engage with a community of stakeholders, the organization’s management needs to be aware of the stakeholders, understand their wants and expectations, understand their attitude (supportive, neutral or opposed) be able to prioritize the members of the overall community to focus the organization’s scarce resources on the most significant stakeholders.

Example

  • For example, in the case of a professional landlord undertaking the refurbishment of some rented housing that is occupied while the work is being carried out, key stakeholders would be the residents, neighbors (for whom the work is a nuisance), and the tenancy management team and housing maintenance team employed by the landlord. Other stakeholders would be funders and the design and construction team.

The holders of each separate kind of interest in the entity's affairs are called a constituency, so there may be a constituency of stockholders, a constituency of adjoining property owners, a constituency of banks the entity owes money to, and so on. In that usage, "constituent" is a synonym for "stakeholder."

Stakeholders as a corporate responsibility

In the field of corporate governance and corporate responsibility, a major debate is ongoing about whether the firm or company should be managed for stakeholders, stockholders (shareholders), or customers. Proponents in favor of stakeholders may base their arguments on the following four key assertions:

1) Value can best be created by trying to maximize joint outcomes. For example, according to this thinking, programs that satisfy both employees' needs and stockholders' wants are doubly valuable because they address two legitimate sets of stakeholders at the same time. There is even evidence that the combined effects of such a policy are not only additive but even multiplicative. For instance, by simultaneously addressing customer wishes in addition to employee and stockholder interests, both of the latter two groups also benefit from increased sales.

2) Supporters also take issue with the preeminent role given to stockholders by many business thinkers, especially in the past. The argument is that debt holders, employees, and suppliers also make contributions and take risks in creating a successful firm.

3) These normative arguments would matter little if stockholders (shareholders) had complete control in guiding the firm. However, many believe that due to certain kinds of board of directors’ structures, top managers like CEOs are mostly in control of the firm.

4) The greatest value of a company is its image and brand. By attempting to fulfill the needs and wants of many different people ranging from the local population and customers to their own employees and owners, companies can prevent damage to their image and brand, prevent losing large amounts of sales and disgruntled customers, and prevent costly legal expenses. While the stakeholder view has an increased cost, many firms have decided that the concept improves their image, increases sales, reduces the risks of liability for corporate negligence, and makes them less likely to be targeted by pressure groups, campaigning groups and NGOs.

Corporate Transparency

Corporate transparency describes the extent to which a corporation's actions are observable by outsiders. This is a consequence of regulation, local norms, and the set of information, privacy, and business policies concerning corporate decision making and operations openness to employees, stakeholders, shareholders and the general public.

Standard & Poor's has included a definition of corporate transparency in its GAMMA Methodology aimed at analysis and assessment of corporate governance. As a part of this work, Standard & Poor's Governance Services publishes the Transparency Index which calculates the average score for the largest public companies in various countries.

Corporate transparency describes the extent to which a corporation's actions are observable by outsiders. This is a consequence of regulation, local norms, and the set of information, privacy, and business policies concerning corporate decision making and operations openness to employees, stakeholders, shareholders and the general public. Standard & Poor's has included a definition of corporate transparency in its GAMMA Methodology aimed at analysis and assessment of corporate governance. As a part of this work, Standard & Poor's Governance Services publishes the Transparency Index calculated as the average score for the largest public companies in various countries. Transparency International publishes an index of corporate transparency based on public disclosure of anti-corruption programs and country-by-country reporting. Corporate transparency is also used to refer to radical transparency in corporate governance. Transparency Index calculated as the average score for the largest public companies in various countries. Transparency International publishes an index of corporate transparency based on public disclosure of anti-corruption programs and country-by-country reporting.

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