Corporate Social Responsibility (CSR), Sustainability and Environmental Social Governance (ESG): Approaches to Ethical Management

213 Pages·2022·8.266 MB·English

by  Tracy Dathe, René Dathe, Isabel Dathe, Marc Helmold

Management for Professionals
Tracy Dathe
René Dathe
Isabel Dathe
Marc Helmold
Corporate Social
Responsibility
(CSR), Sustainability
and Environmental
Social Governance
(ESG)
Approaches to Ethical Management
Management for Professionals
More information about this series at https://link.springer.com/bookseries/10101
Tracy Dathe • René Dathe • Isabel Dathe
Marc Helmold
Corporate Social
Responsibility (CSR),
Sustainability and
Environmental Social
Governance (ESG)
Approaches to Ethical Management
Tracy Dathe René Dathe
Macromedia University Berlin, Berlin, Germany
Berlin, Berlin, Germany
Marc Helmold
Isabel Dathe iubh University
Technical University of Berlin Berlin, Berlin, Germany
Berlin, Berlin, Germany
ISSN 2192-8096 ISSN 2192-810X (electronic)
Management for Professionals
ISBN 978-3-030-92356-3 ISBN 978-3-030-92357-0 (eBook)
https://doi.org/10.1007/978-3-030-92357-0
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Preface
The book “Corporate Social Responsibility (CSR), Sustainability and Environmental
Social Governance (ESG)” combines the theoretical research and the real-world
business practice for ethical management. The symbiosis of theory and practice
makes this book a worthwhile reading experience both to the teaching professionals
and students of higher educational institutions and the business practitioners.
The presentation of theories provides an extensive overview of the fundamental
understanding of business ethics, in particular the concepts of Corporate Social
Responsibility (CSR), Sustainability and the operationalisation of sustainability
management by means of the process of Environmental Social Governance (ESG).
The integration of ethical management in the overall business strategy is depicted
both in context of the individual business processes and of interactions with the
stakeholder groups. The relationship of value creation and the ethical management
is discussed in both short-term and long-term perspectives. A plethora of examples
facilitate the comprehension of the theories and inspires the application in the busi-
ness practice.
The book authors are a combined team of experienced academics, business exec-
utives and young activist. The endeavour with this book is intended to help the read-
ers to effectively expand the knowledge of ethical management and to provide a
guideline to business executives to enhance long-term, sustainable value chains
with national or international business partners.
Finally, the authors would like to thank Ms. Jones-Sepulveda and the Springer
team for the friendly and competent assistance for the publication of this book.
Berlin, Germany Tracy Dathe
Summer, 2022 Marc Helmold
René Dathe
Isabel Dathe
v
Contents
1 CSR as Part of the Corporate Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Levels of Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1.1 Corporate Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1.2 Business Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1.3 Functional Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.1.4 Alignment and Communication of Strategies . . . . . . . . . . . . 3
1.2 Strategic Triangle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.3 Strategic Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.3.1 Analysing Important Factors . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.3.2 Analysing the Environment . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.3.3 Analysing the Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.3.4 Analysing the Strengths and Weaknesses of the Own
Enterprise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.3.5 Analysing the Core Competencies . . . . . . . . . . . . . . . . . . . . . 8
1.4 Strategic Choice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.4.1 Generic Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.4.2 Boston Consulting Matrix (BCG-Matrix) . . . . . . . . . . . . . . . 10
1.4.3 Ansoff-Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.4.4 Blue and Red Ocean Strategies . . . . . . . . . . . . . . . . . . . . . . . 13
1.5 Strategic Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.5.1 Assessment of Suitability, Acceptability and Feasibility . . . . 14
1.5.2 Suitability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.5.3 Acceptability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.5.4 Feasibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.6 Strategic Pyramid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.6.1 Mission and Vision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.6.2 Goals and Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.6.3 Core Competencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.6.4 Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.6.5 Strategic Architecture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
1.6.6 Control and Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
1.7 Core Ethical Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
1.8 Strategies Must Focus on Value-Creation . . . . . . . . . . . . . . . . . . . . . 20
vii
viii Contents
1.9 Case Study: Siemens CSR Mission, Vision and Strategy . . . . . . . . . 20
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2 Sustainability Management and Social Responsibility in the Value
Chain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.1 CSR as Integral Part in the Value Chain . . . . . . . . . . . . . . . . . . . . . . 23
2.2 CSR Maturity Levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.3 Global Compact Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.4 Case Study: Volkswagen’s CSR and Green Award . . . . . . . . . . . . . . 26
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3 CSR in Procurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.1 Procurement and Supply Side . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.2 History of Procurement and Procurement 4.0 (Fig. 3.4) . . . . . . . . . . 32
3.3 Procurement Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.4 Procurement Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.4.1 Six Phases in Procurement . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.4.2 Supplier Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.4.3 Supplier Selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
3.4.4 Supplier Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
3.4.5 Supplier Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
3.4.6 Supplier Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
3.4.7 Supplier Controlling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
3.5 Control Via Digital Supplier Dashboards and Cockpits . . . . . . . . . . 57
3.6 Case Study: Apple’s Outsourcing Strategy . . . . . . . . . . . . . . . . . . . . 58
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
4 CSR in Operations Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
4.1 Introduction to Operations Management . . . . . . . . . . . . . . . . . . . . . . 61
4.2 History of Operations Management . . . . . . . . . . . . . . . . . . . . . . . . . . 62
4.3 Elements of Modern Operations Management 4.0 . . . . . . . . . . . . . . 63
4.3.1 Virtual Factory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
4.3.2 Digital Value Chain Integration . . . . . . . . . . . . . . . . . . . . . . . 65
4.3.3 CSR Simulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
4.3.4 System Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
4.3.5 Internet of Things . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
4.3.6 Cybersecurity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
4.3.7 Cloud Computing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
4.3.8 Additive Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
4.3.9 Augmented Reality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
4.3.10 Big Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
4.4 Principles of Operations Management . . . . . . . . . . . . . . . . . . . . . . . . 66
4.4.1 Digital Synchronization of Networks . . . . . . . . . . . . . . . . . . 66
4.4.2 7R Principle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
4.4.3 Gemba, Gembutsu und Genchi: Right Place of Happening . 68
4.4.4 Muda, Muri, Mura . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Contents ix
4.4.5 Heijunka . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
4.4.6 Poka Yoke . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
4.4.7 Jidoka . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
4.4.8 Chaku Chaku Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
4.5 Case Study: Mazda Operations Management Strategy . . . . . . . . . 72
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
5 CSR in Marketing Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
5.1 Introduction to Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
5.2 Marketing-Mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
5.3 Marketing Function as Driver for Implementing
Triple Bottom Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
5.4 Transformational Marketing Concept Towards CSR . . . . . . . . . . . 80
5.5 Shared Value Marketing Concept Towards CSR . . . . . . . . . . . . . . 80
5.6 Cause-Related Marketing Concept Towards CSR . . . . . . . . . . . . . 81
5.7 Case Study: Apple’s Design Strategy . . . . . . . . . . . . . . . . . . . . . . 81
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
6 Innovation Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
6.1 Introduction to Innovation Management . . . . . . . . . . . . . . . . . . . . 87
6.2 Technical Relevance and Attractivity . . . . . . . . . . . . . . . . . . . . . . . 88
6.3 Strategic Relevance of Innovation Management . . . . . . . . . . . . . . 89
6.4 Resource Intensity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
6.5 Future Potential of Innovations . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
6.6 Fields and Tasks of Innovation Management . . . . . . . . . . . . . . . . . 91
6.7 Case Study: Digital Innovation in a Bakery in Tokyo . . . . . . . . . . 92
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
7 Ethical Theories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
7.1 Ethics and Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
7.2 Selected Approaches in Normative Ethics . . . . . . . . . . . . . . . . . . . 97
7.2.1 Consequentialist Versus Non-consequentialist Ethics . . . . 97
7.2.2 Egoism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
7.2.3 Utilitarianism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
7.2.4 Ethics of Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
7.2.5 Theories of Justice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
7.2.6 Pragmatic Application of Ethical Theories . . . . . . . . . . . . 102
7.3 Decision-Making Based on Ethical Theories. . . . . . . . . . . . . . . . . 102
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
8 Corporate Social Responsibility (CSR) and Ethical Management . . 107
8.1 CSR as Strategic Framework for Ethical Management . . . . . . . . . 107
8.2 Carroll’s CSR Pyramid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
8.3 Two-Dimensional Model of Quazi & O’Brien . . . . . . . . . . . . . . . 109
8.4 Three-Domain Model by Carroll & Schwartz . . . . . . . . . . . . . . . . 110
8.5 Sustainability and the Three-Pillar Model . . . . . . . . . . . . . . . . . . . 112
8.6 Corporate Citizenship (CC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
x Contents
8.7 ESG Rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
9 Corporate Social Responsibility (CSR) Versus Environmental Social
Governance (ESG) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
9.1 Definition of ESG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
9.2 UN Initiative: Who Cares Wins . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
9.3 UN Initiative: Freshfield Report . . . . . . . . . . . . . . . . . . . . . . . . . . 125
9.4 Creating of the Principles for Responsible Investment . . . . . . . . . 128
9.5 Launch of the Sustainable Stock Exchange Initiative . . . . . . . . . . 131
9.6 COP21 Paris UN Climate Conference 2015 . . . . . . . . . . . . . . . . . 134
9.7 ESG as a New Factor for Investments . . . . . . . . . . . . . . . . . . . . . . 134
9.8 CSR and ESG as Two Entrepreneurial Tool
Sets for Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
9.9 Regulations, ISO Standards and ISO Certification on ESG . . . . . 137
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
10 Stakeholder der CSR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
10.1 The Concept of Stakeholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
10.2 Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
10.3 Stakeholder Relationship Management and CSR Strategies . . . . 147
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
11 The State and Civil Society . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
11.1 The State and Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
11.2 The Role of Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
11.3 Political Power of Private Business . . . . . . . . . . . . . . . . . . . . . . . 152
11.4 NGO and Social Enterprise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
12 Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
12.1 Shareholders and Stakeholders in Corporate Governance . . . . . . 159
12.2 Shareholders and Stakeholders in the Financial Market . . . . . . . 162
12.3 Responsible Shareholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167
13 Consumers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169
13.1 Consumer Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169
13.2 Pricing Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172
13.3 Marketing Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
13.4 Sustainable Consumption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178
14 Suppliers and Competitors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181
14.1 B2B Relationships in the Supply Chain Network . . . . . . . . . . . . 181
14.2 Dealing with Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182
14.2.1 Fair Trade and Ethical Trade . . . . . . . . . . . . . . . . . . . . . . 183
14.2.2 Conflict of Interest & Integrity . . . . . . . . . . . . . . . . . . . . 184