Voluntary, beyond the law, and layered
◈ 7 cardsDefine sustainability and corporate social responsibility; place a corporate action on the CSR pyramid and the legal/responsible matrix.
Two definitions
Sustainability is meeting the needs of the present without compromising the ability of future generations to meet theirs — the 1987 Brundtland Commission’s wording, and the one the midterm expects. Applied to a company it means running the business so that it can keep running: not exhausting the resources, the workforce or the community it depends on.
Corporate social responsibility (CSR) is a company’s voluntary concern for the welfare of society, going beyond what the law requires, toward a broad set of stakeholders. Two words in that definition do the work. Voluntary: an action the law compels is compliance, not CSR. Broad: CSR looks past shareholders to employees, customers, suppliers, the community and the environment.
The CSR pyramid
A company’s responsibilities stack in four layers. From the base up:
- Economic — be profitable. This is the foundation, not the summit: a company that cannot pay its staff and suppliers cannot do anything else on the pyramid.
- Legal — obey the law. Required.
- Ethical — do what is right, fair and just even where the law does not require it. Expected.
- Philanthropic — be a good corporate citizen; contribute resources to the community. Desired.
The lower two layers are required; the upper two are where CSR proper begins.
Worked example — four Tamarack actions
Tamarack Outfitters, the outdoor-equipment retailer from the statement pack, did four things this year:
- Earned a profit of $480,000. Economic layer. Students want to put profit at the top of the pyramid as the company’s ultimate goal; the pyramid puts it at the bottom as the precondition.
- Remitted HST on time. Legal layer. Not CSR — a company that boasts about paying its taxes is describing compliance.
- Dropped a low-cost supplier after learning it uses forced labour, though no Canadian law prohibited the purchases. Ethical layer. Legal to continue, wrong to continue; the company chose the ethical action at a cost. This is CSR.
- Funded a community hiking trail near its Sudbury store. Philanthropic layer.
The legal / responsible matrix
A second lens crosses legal? with responsible?:
| Responsible | Irresponsible | |
|---|---|---|
| Legal | the trail; dropping the supplier | selling a legal product with a known hazard and saying nothing |
| Illegal | (a protest that breaks a law on principle — rare for a company) | dumping waste into a creek |
The top-left cell is where CSR lives. The top-right cell — legal but irresponsible — is the one the exam uses as a distractor, because students equate legal with ethical. They are different layers of the pyramid.