Responsibility (csr) Diamond

Module 3: A Framework: Corporate Social

Responsibility (CSR) Diamond

"CSR is not a cosmetic; it must be rooted in our values. It must make a difference

to the way we do our business." Phil Watts, Group Managing Director Royal

Dutch/Shell Group

1.0 Introduction

1.1 This module provides a framework, the Corporate Social Responsibility (CSR)

diamond, to address the complex issues of CSR in a systematic way1. The framework

can assist policy, business, and civil society leaders and practitioners in addressing

corporate social responsibility issues at the country as well as the corporate level. For

the purpose of addressing the issue of CSR in a more systematic way, CSR diamond

framework has been developed; it unbundles the CSR system into four main elements:

I. External Environment

a Rule of Law

b Regulations, Competition, and Standards

c Complementary CSR Institutions

II. Internal Environment

Internal Corporate Structures and Policies

1 The concept of CSR has been developing since the early 1970s. CSR encompasses an array of meanings and

intended applications that have undergone substantial modifications over time. There has been no single,

commonly accepted definition of CSR. CSR generally refers to a collection of policies and practices linked to

relationship with key stakeholders, values, compliance with legal requirements, and respect for people,

communities and the environment. It is the commitment of business to contribute to sustainable development to

improve quality of life of stakeholders. "Corporate Citizenship " which is based on the concept of corporate as a

citizen, is also frequently used in referring to CSR and sometimes interchangeably used.

"Social responsibility is neither a fad nor an optional extra. The interest in it is reflective of a deeper change in the

relationship between companies and their stakeholders, including consumers. Faith in the benefits of profits to

consumers has halved since the Seventies, as a viable basics of a relationship, that faith has been replaced by a

desire to see companies acting as active and responsible citizens. Healthy business requires a healthy community,

and should be contributing to its creation and maintenance." Steward Lewis, Measuring Corporate Reputation,

1999

"I believe that it is part of building good sustainable business to help establish safe, secure, stable and peaceful

societies. Business thrives where society thrives" Peter Sutherland former Director-General of the WTO, Cochairman

of BP-Amoco, Chairman of Goldman Sachs International

Differences in definitions influence the dialogue between governments, private sector and civil society, and this may

carry different implications among various parties regarding the legitimacy, obligations and impact of corporate

social responsibility standards. For example, one has to be careful in understanding and defining the term "CSR"

because CSR is sometimes mistakenly equated with either corporate philanthropy or simple compliance with law.

http://www.worldbank.org/wbi/governance/corpethics.htm

Furthermore, the functioning of the overall CSR system is also considerably influenced

by III) globalization, IV) crises and changes in the political and macroeconomic

environment, and V) the government (See figure 1). The framework has been designed

as a Decision Making Tool.

The effectiveness of the CSR diamond comes from the way the elements of the system

function as a whole. What matters is the cumulative effect of all four elements taken

together. The main challenge is to provide for consistencies in the efforts/initiatives

taking place in individual elements so that positive impact on CSR is achieved in the

most effective way. As all the elements are interconnected making progress on one will

improve prospects of improving others. The following three examples illustrate some of

the interconnections:

1. Links between Rule of Law and Regulation, Competition, and Standards

2. Links between Rule of Law; Regulation, Competition, and Standard; and

Complementary CSR Institutions

3. Links between Rule of Law and Internal Corporate Structure and Policies

1.2 Audience: policy, business, and civil society leaders engaged in addressing

corporate social responsibility issues at the country as well as the corporate level.

1.3 Duration: two days to two weeks, depending on the on the needs of particular

country or regions and the mode of delivery

CSR Diamond

Globalization

Government

Crisis & Changes in the

Political & Macroeconomic

Environment

Rule of Law

Internal

Governance