1. Describe briefly what is meant by Corporate Sustainability.

 
CORPORATE SUSTAINABILITY:
Corporate sustainability can be viewed as a new and evolving corporate management
paradigm. The term ‘paradigm’ is used deliberately, in that corporate sustainability is an
alternative to the traditional growth and profit-maximization model. While corporate
sustainability recognizes that corporate growth and profitability are important, it also
requires the corporation to pursue societal goals, specifically those relating to
sustainable development — environmental protection, social justice and equity, and
economic development.
A review of the literature suggests that the concept of corporate sustainability borrows
elements from four more established concepts: 1) sustainable development, 2)
corporate social responsibility, 3) stakeholder theory, and 4) corporate accountability
theory. The contributions of these four concepts are illustrated in Figure 1. Each
concept, and its relationship to corporate sustainability, is discussed below.

1) Sustainable Development

Sustainable development is a broad, dialectical concept that balances the need for economic
growth with environmental protection and social equity. The term was first popularized in
1987, in Our Common Future, a book published by the World Commission for Environment and
Development (WCED). The WCED described sustainable development as development that met
the needs of present generations without compromising the ability of future generations to
meet their needs. Or, as described in the book, it is “a process of change in which the
exploitation of resources, the direction of investments, the orientation of technological
development, and institutional change are all in harmony and enhance both current and future
potential to meet human needs and aspirations.” Sustainable development is a broad concept
in that it combines economics, social justice, environmental science and management, business
management, politics and law. It is a dialectical concept in that, like justice, democracy,
fairness, and other important societal concepts, it defies a concise analytical definition,
although one can often point to examples that illustrate its principles.

2) Corporate social responsibility

Like sustainable development, corporate social responsibility (CSR) is also a broad, dialectical
concept. In the most general terms, CSR deals with the role of business in society. Its basic
premise is that corporate managers have an ethical obligation to consider and address the
needs of society, not just to act solely in the interests of the shareholders or their own self-
interest. In many ways CSR can be considered a debate, and what is usually in question is not
whether corporate managers have an obligation to consider the needs of society, but the
extent to which they should consider these needs.

3) Stakeholder theory
Stakeholder theory, which is short for stakeholder theory of the firm, is a relatively modern
concept. It was first popularized by R. Edward Freeman in his 1984 book Strategic
Management: A Stakeholder Approach (Pitman Books, Boston, Mass, 1984). Freeman defined a
stakeholder as “any group or individual who can affect or is affected by the achievement of the
organization’s objectives.” The basic premise of stakeholder theory is that the stronger your
relationships are with other external parties, the easier it will be to meet your corporate
business objectives; the worse your relationships, the harder it will be. Strong relationships with
stakeholders are those based on trust, respect, and cooperation. Unlike CSR, which is largely a
philosophical concept, stakeholder theory was originally, and is still primarily, a strategic
management concept. The goal of stakeholder theory is to help corporations strengthen
relationships with external groups in order to develop a competitive advantage.

4) Corporate Accountability

The fourth and final concept underlying corporate sustainability is corporate accountability.
Accountability is the legal or ethical responsibility to provide an account or reckoning of the
actions for which one is held responsible. Accountability differs from responsibility in that the
latter refers to one’s duty to act in a certain way, whereas accountability refers to one’s duty to
explain, justify, or report on his or her actions.

In the corporate world, there are many different accountability relationships, but the relevant
one is the relationship between corporate management and shareholders.

The contribution of corporate accountability theory to corporate sustainability is that it helps

define the nature of the relationship between corporate managers and the rest of society. It
also sets out the arguments as to why companies should report on their environmental, social,
and economic performance, not just financial performance. In 1997

2. Differentiate between shareholder and stakeholder capitalism?

SHAREHOLDER:

The term shareholder theory or also shareholder value approach can refer to different ideas. The term
shareholder value approach is a term out of the field of business economics and refers to a particular
way of dynamic investment calculation.1 It was invented by Rappaport who searched for a new as
precise as possible method of measuring the value created by corporations.2 Shareholder value is
oriented towards an average diversified shareholder who wants maximum profit from his investment in
shares.3 Still in other fields than business economics the term shareholder theory usually means
something different, namely a guiding principle for operating a business, which gives the interests of
shareholders the highest priority.4 Therefore the objective is to maximize the value of the corporation’s
shares because that is obviously the main interest of shareholders.
A shareholder is a person or an institution that owns shares or stock in a public or private
operation. They are often referred to as members of a corporation, and they have a financial
interest in the profitability of the organization or project.
Depending on the applicable laws and rules of the corporation or shareholders’ agreement,
shareholders have the right to do the following (and more):

 Sell their shares

 Vote on those nominated for the board
 Nominate directors
 Vote on mergers and changes to the corporate charter
 Receive dividends
 Gain information on publicly traded companies
 Sue for a violation of fiduciary duty
 Buy new shares

Shareholders have a vested interest in the company or project. That interest is reflected in their
desire to see an increase in share price and dividends, if the company is public. If they’re
shareholders in a project, then their interests are tied to the project’s success.

The money that is invested in a company by shareholders can be withdrawn for a profit. It can
even be invested in other organizations, some of which could be in competition with the other.
Therefore, the shareholder is an owner of the company, but not necessarily with the company’s
interests first.

STAKEHOLDER:

Even more than the term shareholder approach the term of stakeholder approach is highly ambiguous,
if not controversial.8 There are multiple „theories” and concepts involving the term stakeholder, which
come to different conclusions and have accentuations.9 The term surely is multi-dimensional and can be
described as having descriptive, instrumental and at core normative levels10 . The fundamental idea of
the stakeholder approach is to consider interests of corporate groups other than just those of
shareholders.11 these interests do not need to be considered for the sake of the shareholders but for
their own sake. They have an own intrinsic value.12 For that reason stakeholder capitalism judges the
performance of a corporation by a broad spectrum of parameters, 13 and not only by the performance
of the shares. The subsequent question which interests need to be considered, ergo who the
stakeholders are is answered inconsistently. Freeman defined stakeholders very broadly as “any group
or individual who can affect or is affected by the achievements of the firm’s objectives”.14 It is with no
doubt still necessary to further differentiate between different stakeholders since their interests and
influence can vary heavily.

We’ve written about what a stakeholder is before, and the definition still stands. A stakeholder
can be an individual, a group or an organization impacted by the outcome of a project.
Therefore, they have an interest in the success of a project. They are either from the project
group or an outside sponsor.

There are many people who can qualify as a stakeholder, such as:

 Senior management
 Project leaders
 Team members on the project
 Customers of the project
 Resource managers
 Line managers
 User group for the project
 Subcontractors on the project
 Consultant for the project

Therefore, stakeholders can be internal, such as employees, shareholders and managers—but

stakeholders can also be external. They are parties that are not directly in a relationship with
the organization itself, but still the organization’s actions affect it, such as suppliers, vendors,
creditors, the community and public groups. Basically, stakeholders are those who will be
impacted by the project when in progress and those who will be impacted by the project when
completed.

3. What is Corporate Social Responsibility (CSR) and why is it important?

CORPORATE SOCIAL RESPONSIBILITY:

(CSR) is when a company operates in an ethical and sustainable way and deals with its
environmental and social impacts. This means a careful consideration of human rights, the
community, environment, and society in which it operates.

IMPORTANCE OF CORPORATE SOCIAL RESPONSIBILITY:

It’s incredibly important that your company operates in a way that demonstrates social
responsibility. Although it’s not a legal requirement, it’s seen as good practice for you to take
into account social and environmental issues.

Social responsibility and ethical practices are vital to your success. The 2015 Cone
Communications/Ebiquity Global CSR study found that a staggering 91% of global consumers
expect businesses to operate responsibly to address social and environmental issues.
Furthermore, 84% say they seek out responsible products wherever possible.

As the above statistics show, consumers are increasingly aware of the importance of social
responsibility, and actively seek products from businesses that operate ethically. CSR
demonstrates that you’re a business that takes an interest in wider social issues, rather than
just those that impact your profit margins, which will attract customers who share the same
values. Therefore, it makes good business sense to operate sustainably.

4. Describe a typical corporate structure in terms of shareholders, managers and

stakeholders.

CORPORATE STRUCTURE:
Refers to how a business is organized to accomplish its objectives. The corporate structure of a
business is important because it determines the ownership, control, and authority of the
organization. In a corporation, these characteristics are represented by three groups:
shareholders, directors, and officers. Ownership belongs to the shareholders. Control is
exercised by the board of directors on behalf of the shareholders, while authority over the day-
to-day operations is vested in the officers.

SHAREHOLDERS:
A shareholder can be a person, company, or organization that holds stock(s) in a given
company. A shareholder must own a minimum of one share in a company’s stock or mutual
fund to make them a partial owner. Shareholders typically receive declared dividends if the
company does well and succeeds.
Also called a stockholder, they have the right to vote on certain matters with regard to the
company and to be elected to a seat on the board of directors.

If the company is getting liquidated and its assets are sold, the shareholder may receive a
portion of that money, provided that the creditors have already been paid. When such a
situation arises, the advantage of being a stockholder lies in the fact that they are not obliged
to shoulder the debts and financial obligations incurred by the company, which means creditors
cannot compel stockholders to pay them.

The shareholder, as already mentioned, is a part-owner of the company and is entitled to

privileges such as receiving profits and exercising control over the management of the
company. A director, on the other hand, is the person hired by the shareholders to perform
responsibilities that are related to the company’s daily operations with the intent of improving
its status.

In a corporation, a group of shareholders have shared ownership, represented by holding

shares of common stock. Most business corporations are established with the goal of providing
a return for its shareholders in the form of profits. Shareholders have the right to share in the
profits of the business but are not personally liable for the company's debts.
STAKEHOLDERS:
In corporate governance, stakeholders are often classified into primary or secondary groups.
Primary stakeholders are fundamental for the firm’s operation and survival. Such stakeholders
include owners, investors, employees, suppliers, customers, and competitors, as well as nature
(physical resources and carrying capacity).

5. What is the main difference between Stakeholder theory and Agency theory on the role of
managers?

 The stakeholder theory suggests there are differences between individual groups within
an organization, such as the employees, investors, and suppliers.
 Agency theory primarily focuses on the interest of the shareholder(s), while principal
theory includes the entire range of stakeholders.
AGENCY THEORY:
Agency theory describes the problems that occur when one party represents another in
business but holds different views on key business issues or different interests from the
principal. The agent, acting on behalf of another party, may disagree about the best course of
action and allow personal beliefs to influence the outcome of a transaction.

The agent may also choose to act in self-interest instead of the principal's interests. This may
result in conflict between the two parties and might be an agency problem. Agency theory
tends to focus mainly on the interest of shareholders.
STAKEHOLDER THEORY:
Stakeholder theory describes the composition of organizations as a collection of various
individual groups with different interests. These interests, taken together, represent the will of
the organization. As much as possible, business decisions should consider the interests of this
collective group and advance overall cooperation.

Conflict represents an erosion of these interests. Bringing these distinct groups together to
reach an agreement may not always be possible, so business decisions must consider each
point of view and optimize the decision-making to include all voices.

6. A corporate body is made up of varying categories of personnel, operating at various levels

with different responsibilities and rights. Describe six (6) points you will take into
consideration while drafting the code of ethics to be implemented in your organization.

Code of Ethics and Professional Conduct:

1. Be inclusive.

We welcome and support people of all backgrounds and identities. This includes, but is not
limited to members of any sexual orientation, gender identity and expression, race, ethnicity,
culture, national origin, social and economic class, educational level, color, immigration status,
sex, age, size, family status, political belief, religion, and mental and physical ability.

2. Be considerate.

We all depend on each other to produce the best work we can as a company. Your decisions
will affect clients and colleagues, and you should take those consequences into account when
making decisions.
3. Be respectful.

We won't all agree all the time, but disagreement is no excuse for disrespectful behavior. We
will all experience frustration from time to time, but we cannot allow that frustration become
personal attacks. An environment where people feel uncomfortable or threatened is not a
productive or creative one.

4. Choose your words carefully.

Always conduct yourself professionally. Be kind to others. Do not insult or put down others.
Harassment and exclusionary behavior aren't acceptable. This includes, but is not limited to:

 Threats of violence.
 Insubordination.
 Discriminatory jokes and language.
 Sharing sexually explicit or violent material via electronic devices or other means.
 Personal insults, especially those using racist or sexist terms.
 Unwelcome sexual attention.
 Advocating for, or encouraging, any of the above behavior.

5. Don't harass.

In general, if someone asks you to stop something, then stop. When we disagree, try to
understand why. Differences of opinion and disagreements are mostly unavoidable. What is
important is that we resolve disagreements and differing views constructively.

6. Make differences into strengths.

We can find strength in diversity. Different people have different perspectives on issues, and
that can be valuable for solving problems or generating new ideas. Being unable to understand
why someone holds a viewpoint doesn’t mean that they’re wrong. Don’t forget that we all
make mistakes and blaming each other doesn’t get us anywhere.

Instead, focus on resolving issues and learning from mistakes.