MGMT30004 · Managing Globally
Sustainability and CSR
This chapter asks one big question — responsible to whom, and how far? The spine is the contrast between Friedman's shareholder view (the firm's one social responsibility is to maximise lawful shareholder returns) and Freeman's stakeholder theory (1984) — that a firm should weigh the interests of everyone it affects, mapped at home-country, host-country and global levels. Everything else operationalises a stakeholder mindset: Carroll's CSR pyramid (economic, legal, ethical, philanthropic), the upgrade from CSR to Creating Shared Value (Porter & Kramer, 2011) — making profit by doing good, not alongside it — dynamic capabilities (Teece: sense → seize → transform), the UN SDGs, and the ESG reporting scorecard. It closes on the dark side: greenwashing, B Corp certification's limits, and the 2020s anti-ESG backlash in which firms quietly scale back pledges. In the exam you frame a firm under pressure through stakeholder theory, distinguish CSR from CSV, and use ESG / the SDGs as the assessment lens.
What this chapter covers
- 01Friedman's shareholder view vs Freeman's stakeholder theory (1984); the three-level stakeholder map
- 02Carroll's CSR pyramid: economic, legal, ethical, philanthropic
- 03CSR vs Creating Shared Value (Porter & Kramer, 2011): separate-from vs integral-to profit
- 04Dynamic capabilities (Teece): sense → seize → transform
- 05The UN Sustainable Development Goals and the ESG reporting frame
- 06Greenwashing, B Corp certification, and the anti-ESG 'scaling-back' backlash (Pucker, 2024)
Worked example: diagnosing a sustainability move
- +2Frame it through stakeholder theory (Freeman). Ask which stakeholders — host communities, employees, investors, the global environment — lose out, rather than only asking what shareholders gain.
- +2Is it CSR or CSV? A discretionary, philanthropic pledge (CSR) is the first thing cut under pressure; a Creating-Shared-Value commitment that also secures supply or brand trust (CSV) is harder to drop. Name which one was paused.
- +2Assess with SDGs / ESG and prescribe. Name the SDGs at risk (e.g. Climate Action) and the governance fix that would make the pledge stick — Pucker's line that responsibility must be structural, not a marketing claim.
Key terms
- Stakeholder theory
- Freeman's (1984) view that a firm should weigh the interests of everyone affected by its activity — not just owners — mapped at home-country, host-country and global levels. It contrasts with Friedman's shareholder-primacy view and is the subject's most-reused idea.
- Carroll's CSR pyramid
- A stack of four corporate responsibilities — economic (be profitable, the base), legal (obey the law), ethical (do what is right beyond the law), and philanthropic (be a good corporate citizen, the top).
- Creating Shared Value (CSV)
- Porter & Kramer's (2011) reframing of responsibility: instead of treating social goals as a cost bolted onto profit, find where solving a social problem is itself the strategy — via reconceiving products and markets, redefining value-chain productivity, and building supportive clusters.
- Dynamic capabilities
- Teece's capability to adapt, innovate and transform when the environment shifts — sense the change, seize it by committing resources, then transform the organisation so the change sticks. The subject frames it as what CSV requires.
- ESG
- The Environmental, Social and Governance scorecard investors and regulators use to assess a firm — carbon and resource use (E), employees, communities and human rights (S), and board ethics, transparency and accountability (G).
Sustainability and CSR FAQ
What's the core debate in this topic — Friedman vs Freeman?
Milton Friedman argues a firm's one social responsibility is to lawfully maximise shareholder returns; spending profit on social causes is spending other people's money. R. Edward Freeman's stakeholder theory (1984) argues the firm should weigh the interests of everyone it affects. For a multinational the shareholder view is hard to defend — actions in one country ripple across employees, host communities, governments and the shared environment — so stakeholder theory tends to win the framing.
What is the difference between CSR and CSV?
CSR (corporate social responsibility) does good with profit — actions beyond the firm's own interests and beyond the law, often a discretionary programme at the edge of the business. Creating Shared Value (Porter & Kramer, 2011) makes profit by doing good — social value re-engineered into core strategy and the value chain, where solving a social problem also strengthens competitive position. The CSV test is whether the social action also strengthens long-term profit; a pure donation with no strategic link is CSR.
Is a B Corp badge a guarantee of responsibility?
No. B Corporation certification (B Lab) requires passing a B Impact Assessment (score 80+) and a legal commitment to all stakeholders, but the score is largely self-reported and the stakeholder commitment is not always legally enforceable. A B Corp badge reduces, but does not eliminate, greenwashing risk — say so if a scenario leans on it.
What is the anti-ESG backlash about?
Pucker's (2024) reading documents firms quietly walking back net-zero and ESG commitments under cost pressure, 'anti-ESG' political sentiment and reporting fatigue — putting goals like Decent Work, Reduced Inequalities and Climate Action at risk. The suggested fixes are structural: governance for accountability, consolidating fragmented supply-chain effort, and truer carbon pricing — making responsibility structural rather than a marketing line.
Exam move
Treat stakeholder theory (Freeman) as the default frame for any sustainability scenario — it recurs in organising, negotiation and IHRM, so it is the highest-leverage idea in the chapter. Drill the CSR-versus-CSV distinction until it is automatic: separate-from versus integral-to profit, with the test 'does the social action also strengthen long-term profit?'. Keep the McDonald's Impact Report and A2 Milk as worked anchors for reading a firm through CSV and ESG. For any 'a firm did X' prompt, diagnose rather than judge — name the stakeholders, classify CSR vs CSV, name the SDGs at risk, and prescribe the governance fix.
