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...engagement initiatives and the linkage between CSR and good corporate governance.
* Corporate social responsibility
* Corporate governance
* Stakeholder engagement
* Thailand
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THIS PAPER WILL EXPLORE CORPORATE SOCIAL RESPONSIBILITY (CSR) PRACTICES and their linkage to good governance in leading Thai public companies through the perception of executives directly in charge of CSR. Insights from in-depth interviews are presented from seven leading members of the Thailand Business Council for Sustainable Development. The findings reveal the emergence of CSR as a corporate focus, but show very different interpretations even among the most progressive companies in the country. These issues are similar for listed companies throughout the Asia-Pacific Region: for example, in Singapore, Hong Kong and Korea.
Background
Corporate social responsibility
The most cited definition of CSR is by the World Business Council for Sustainable Development (WBCSD 1999): '[CSR is] the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society'.
A more pragmatic aspect of CSR concentrates on activities rather than responsibility. In this perspective, tools and processes are the main concern. Swift and Zadek (2002) propose a classification of CSR into four stages of development (Kuhndt et al. 2004). Legal compliance is the first stage. This reflects the expectation that CSR is more than an obligation. Based on this voluntary orientation, the second stage is low-level business case, including publicly visible approaches such as philanthropy, risk management and industry standards. Strategic corporate responsibility is the third stage, emphasising the integration of corporate responsibility into key aspects of business practice. Examples include implementing product and process innovation, new business and corporate governance models, and long-term sustainability. The fourth stage considers corporate responsibility as a substantial resource base for strategies. This remoulding competitive advantage stage concentrates on multi-stakeholder partnerships, institution building, corporate responsibility-oriented advocacy and public policy.
Stakeholder
CSR puts the emphasis on stakeholders. Freeman (1984) defined the term 'stakeholder' as 'any group or individual who can affect or is affected by the achievement of organisational objectives'. Evan and Freeman (1993) further suggest that a corporation has a responsibility to all groups that it affects either positively or negatively. Mitchell et al. (1997) indicate that a firm assigns different concerns to different stakeholders based on their salience in terms of power, urgency and legitimacy.
Forrest and Mays (1997) present a spectrum of stakeholder engagement based on levels of interaction (Kuhndt et al. 2004). The first level is one-way communication, in which a company releases information to the public, such as reports. Next is the voluntary attempt to create occasional interactions with outside stakeholders, but in a limited way: for example, verification of sustainability reports. The third level is interaction conducted on an ongoing basis, with interactive dialogue to improve production or to develop stakeholder-oriented indicators. The highest level is collaboration by directly engaging stakeholders in decision-making, such as in governance, an independent advisory panel or a social responsibility committee at the board level.
Motivation
Maignan and Ralston (2002) categorise the motivations for CSR. A utilitarian view argues that CSR is employed by business to ultimately achieve economic performance. From a compliance perspective, business behaves appropriately to conform to stakeholder norms and expectations. CSR is used to build legitimacy. The commitment perspective suggests that business is self-motivated to adopt CSR to enhance corporate identity, values or strategy.
Corporate governance
Recent trends indicate a growing link between CSR and corporate governance. Based on the Turnbull Report (ICAEW 1999), there has been greater emphasis on the incorporation of the social, environmental and ethical aspects of company risks within the internal control system (ACCA 2001; Peattie 2002).
The role of the corporate board of directors is still central to the corporate governance concept. The involvement of the board has been increasingly necessary in monitoring the CSR performance of a company (World Economic Forum 2003). According to the WEF survey, the three broad types of governance related to CSR are a formal subcommittee at the board level as an integral function, an executive committee reporting to the board and an external advisory group.
Enhancing transparency is another key element of corporate governance. Armstrong and Sweeney (2002) argue that the influence of disclosure is increasingly recognised in good corporate governance.
Sampling
CSR practice in Thailand is at an early stage and is concentrated in a few concerned, large corporations. To identify the best practices of these leading companies, this study employs an in-depth interview to investigate the management perceptions of CSR, focusing on Thai public companies with environmental and social commitment.
Based on the size of the company and sector, only public companies from the 28 corporate members of the Thailand Business Council for Sustainable Development (TBCSD) (affiliated with the World Business Council for Sustainable Development) were identified. Fifteen public company members represented nine industrial sectors. The next criterion for selection was sufficient environmental and social information on the corporate website and, most crucially, permission for in-depth interviews with the key executives. Based on an assessment of the CSR practices publicised and industrial variety, seven companies in four industries were chosen as the most appropriate sample as presented in Table I. The majority of listed Thai companies indicate little CSR commitment or activities.
Of the seven companies studied, one company is in petrochemicals (T-Energy), two in energy and utilities (Performa,...
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