Top 7: Discuss why senior managers leading large public limited companies might decide not to have CSR Objective [12]

[Sir Afzal Shad]

Topical Q7: Discuss why senior managers leading large public limited companies might decide not to have corporate social responsibility (CSR) as business objectives. [12]
Topical Past Papers: 9609/13/ON 2016/ Q5

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Solution:
Point 1:
[KN] Senior managers leading large public limited companies may decide not to have corporate social responsibility (CSR) as business objectives due to various reasons, including shareholder interests, short-term financial pressures, and perceived trade-offs between profitability and social responsibility.
[AN+APP] For example, in a highly competitive market environment where shareholders prioritize financial returns and short-term profitability, senior managers may prioritize profit maximization over CSR initiatives to meet investor expectations and maintain shareholder confidence.
[AN+] Moreover, senior managers may perceive CSR initiatives as detracting from the company's core business activities or diverting resources away from strategic priorities such as innovation, growth, or cost reduction.
[AN+] Additionally, senior managers may believe that focusing solely on financial performance is the most effective way to create value for shareholders and stakeholders, dismissing CSR as a secondary concern or optional activity that does not directly contribute to shareholder wealth.

Point 2:
[KN] Furthermore, senior managers leading large public limited companies may be concerned about the potential risks and uncertainties associated with CSR initiatives, including regulatory compliance, reputational damage, and stakeholder expectations.
[AN+APP] For instance, senior managers may fear that engaging in CSR activities could expose the company to legal liabilities, lawsuits, or regulatory scrutiny if they fail to meet legal requirements or industry standards.
[AN+] Moreover, senior managers may worry about the potential backlash from shareholders, customers, or other stakeholders if CSR initiatives are perceived as insufficient, insincere, or inconsistent with the company's values and actions.
[AN+] Additionally, senior managers may lack confidence in the effectiveness of CSR initiatives to generate tangible business benefits or competitive advantages, viewing them as discretionary expenses rather than strategic investments with measurable returns.

Point 3:
[However] Not prioritizing CSR as business objectives does not necessarily mean neglecting social responsibility or ethical considerations altogether. Instead, senior managers may choose to integrate CSR principles into the company's operations, strategies, and decision-making processes in more implicit or indirect ways.
[AN+] For example, senior managers may embed CSR considerations into corporate governance practices, risk management frameworks, and business ethics codes to ensure compliance with legal and ethical standards while aligning with shareholder interests and business objectives.
[AN+] Moreover, senior managers may recognize the importance of addressing environmental, social, and governance (ESG) issues as part of long-term business sustainability, risk mitigation, and reputation management efforts, even if they are not explicitly labeled as CSR objectives.
[AN+] Additionally, senior managers may engage in philanthropic activities, community outreach programs, or employee volunteerism initiatives as part of their broader corporate citizenship and stakeholder engagement strategies, demonstrating a commitment to social responsibility without formalizing CSR as business objectives.

[EVAL]
[SOL] One solution to address concerns about not having CSR as business objectives could be to educate senior managers and shareholders about the potential benefits of CSR for long-term business sustainability, reputation enhancement, and stakeholder engagement, emphasizing the importance of balancing financial performance with social and environmental considerations.
Another solution could involve incorporating ESG criteria into investment decisions, executive compensation structures, and performance metrics to incentivize senior managers to integrate CSR principles into business strategies and operations in ways that create shared value for shareholders and society.

[External Factors] Factors to consider before making a final decision include:
1. Stakeholder expectations: Understanding the expectations and preferences of shareholders, customers, employees, regulators, and other stakeholders regarding CSR can help senior managers assess the potential risks and opportunities associated with incorporating CSR into business objectives and strategies.
2. Industry dynamics: Assessing industry norms, benchmarks, and best practices related to CSR can provide insights into the competitive landscape, regulatory requirements, and stakeholder engagement strategies adopted by peer companies, influencing senior managers' decisions about prioritizing CSR as business objectives.
3. Legal and regulatory environment: Compliance with laws, regulations, and industry standards related to CSR, corporate governance, and sustainability reporting is essential for large public limited companies to mitigate legal risks, maintain public trust and confidence, and avoid reputational damage associated with non-compliance or unethical conduct.

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Disclaimer: This is the possible answer with some extra information to make you understand better, the wordings must be managed according to the time allocated for each 12 marker.
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