I. Before you read, answer the questions:

• What do you understand by the term ‘corporate social responsibility’?

• Is CSR an important issue for companies in your sector or country?

II. Reading

Read this article and fulfill the tasks below.

BUSINESS BOWS TO GROWING PRESSURES

1 The language of responsibility has spread so rapidly in business that it is now turning up in some surprising places. Messages such the small print in drinks advertisements that urge customers to enjoy alcohol ‘responsibly’ are not directed at the public so much as governments, regulators, investors and employees. A decade ago, few companies with social and environmental programmes were willing to speak out about them for fear of attracting closer scrutiny, and possibly shouts of ‘hypocrisy’, from campaign groups. Today, many companies feel they cannot afford not to talk about what they are doing, even if this does make them more vulnerable to attack.

2 Rising expectations of business are being given extra impetus by continuing revelations of corporate malpractice, particularly in the US. Companies that find themselves subject to greatest scrutiny include those with dominant market positions, such as former state-owned utilities; those dealing directly with, consumers, such as banks and retailers; those producing essentials such as food or drugs; and those exploiting natural resources or depending on supply chains in low-income countries, such as oil producers and clothing manufacturers.

3 Trust and responsibility have become valued additions to the CEO lexicon. Some talk of responsibility as a moral obligation. Mervyn Davies, chief executive of Standard Chartered Bank, which does business in more than 50 developing economies, says that the pursuit of profits is not enough; companies need principles, and employees want to see those principles in action. ‘I don’t think companies can just go about doing their business and ignore, what’s happening around them and not make a contribution,’ he says.

4. Others justify it on business grounds. ‘We know very clearly that companies which adopt and embrace corporate responsibility are more likely to create wealth and shareholder value than those that do not,’ says .Michael Fairey, deputy chief executive of Lloyds TSB. ‘The business case revolves around the creation of employee motivation, customer satisfaction and brand loyalty.’ Is there clear evidence that responsible business boosts financial returns? Many studies have examined whether there is a link. Those that have established a connection easily outnumber those that have found no link or a negative correlation, according to Risk, Returns and Responsibility, a report by the Association of British Insurers that reviews the evidence.

5. The biggest incentive for companies to behave- properly in the damage caused when they do not. Take Citigroup, the world’s largest, financial services company, which saw its share price dragged down by a series of legal and regulatory problems that have cost it billions of dollars. The image of Chuck Prince, Citigroup chief executive, apologizing for banking-law violations in Japan is a powerful one. Mr. Prince has been trying to instil ethical behaviour in the group since his appointment.

6 The damage caused by corporate malpractice can be both immediate and enduring. ‘CEOs are talking more about corporate responsibility. Are they taking responsibility? Some are. Some are not,’ says Robert Davies, chief executive of the International Business Leaders Forum (IBLF), which has been promoting responsible business practices for 14 years, ‘The tragedy is that, so often, they have to be hit by a crisis.’

7 Institutional investors are increasingly concerned about this type of crisis and the ethical, social and environmental risks that companies run. Big investors sec the way that companies handle issues such as obesity or human rights as a measure of the overall quality of their management, says Mr. Davies. For growing numbers of companies in the supply chain, responsible practices are no longer a matter of choice. Vodafone, for example, requires its suppliers to comply with its new code of ethical purchasing, designed to provide safe and fair working conditions. Vodafone says terminating a contract with a supplier would be an act of last resort, but the threat is there.

8 Greater government regulation to enforce corporate responsibility is one of the demands of non -governmental organisations. They can be expected to continue to lobby for it as long as they perceive a mismatch between the rhetoric and the way some companies behave. For multinationals in particular, it requires unrelenting effort to ensure high standards by every employee at every site in every country in which they operate. But unless they do, their credentials will be jeopardised. Witness the way that the reserves scandal at Royal Dutch/Shell has undermined its pretensions to leadership as a ‘sustainable’ oil company. Companies that fail to make all the connections on corporate responsibility increase the risk of damage to shareholder value and fuel cynicism among the public and campaigners.