GOOD GOVERNANCE AND SOCIAL whose interests must be

RESPONSIBILITY considered.

This course offers an overview of KEY COMPONENTS:

corporate governance and social
 Transparency: Clear decision-
responsibility, focusing on the
making processes.
Philippine context. It emphasizes the
 Accountability:
role of corporations in society, ethical
Responsibility for actions,
leadership, and legal frameworks that
ensured through audits and
shape corporate behavior. Students
compliance.
will explore how businesses can
create value while contributing to KEY CHARACTERISTICS OF A
sustainable development. CORPORATION:

1. Legal Personality: A
corporation is a separate
KEY CONCEPTS:
legal entity from its owners
1. CORPORATE GOVERNANCE (shareholders). It can own
property, enter into
- Corporate governance refers to the
contracts, sue, and be sued
systems and processes through which
under its own name.
corporations are directed and
2. Limited Liability:
controlled. It encompasses the
Shareholders are only liable
relationships between the board of
for the corporation's debts to
directors, management,
the extent of their
shareholders, and other
investment. They are not
stakeholders. Effective governance
personally responsible for
ensures transparency, accountability,
the corporation's obligations.
and alignment with stakeholders'
3. Perpetual Existence: A
interests.
corporation continues to
 Board of Directors (BOD): exist regardless of changes in
Responsible for overseeing ownership, such as the sale
corporate management and of shares or the death of a
making high-level strategic shareholder.
decisions. 4. Transferability of Shares:
 Management: Handles daily Ownership in a corporation is
operations and executes the represented by shares, which
board's strategies. can be bought and sold freely
 Shareholders: Own the without affecting the
corporation and vote on corporation's operations.
significant decisions. 5. Centralized Management:
 Stakeholders: Include Corporations typically have a
employees, customers, Board of Directors elected by
suppliers, and communities shareholders to oversee
management. Day-to-day
 operations are handled by resources and executing strategies.
corporate officers such as the 3. Evaluation: Assessing
CEO and CFO. performance, comparing results with
goals, and adjusting.

2. CORPORATE SOCIAL BOARD OF DIRECTORS (BOD) &

RESPONSIBILITY (CSR) SHAREHOLDERS' RIGHTS AND
PROTECTIONS
- CSR is the idea that corporations
have obligations beyond profit- 1. BOARD OF DIRECTORS
making. They must consider the
 Decision-Making Authority:
environmental, social, and economic
Handles key strategic
impacts of their operations.
decisions.
 Environmental  Fiduciary Duties: Must act in
Responsibility: Reducing the best interests of the
environmental footprints. company.
 Social Responsibility: Fair  Protection from Liability:
treatment of employees, Directors are protected if
product safety, and they act in good faith.
community contributions.  Access to Information: Can
 Ethical Responsibility: request necessary company
Avoiding corruption and information.
respecting human rights.  Right to Professional Advice:
 Economic Responsibility: Can seek expert advice at the
Contributing to local company’s expense.
economies through job
2. SHAREHOLDERS
creation and fair wages.
 Voting Rights: Shareholders
CSR enhances reputation and builds
vote on major company
customer loyalty.
decisions.
STRATEGIC MANAGEMENT OF  Right to Dividends: Entitled
STAKEHOLDER RELATIONSHIPS to a share of profits.
 Right to Information: Can
-Managing stakeholder relationships
access financial statements.
is essential for navigating social,
 Protection Against Dilution:
political, and economic
Can maintain ownership
environments. Strategies must align
percentages.
with stakeholder expectations for
 Right to Sue: Shareholders
long-term success.
can sue if their rights are
Three Stages of Business Strategy: violated.

1. Formulation: Defining vision,

mission, and objectives by analyzing
CHAPTER 1: CORPORATE SOCIAL
internal and external environments.
RESPONSIBILITY
2. Implementation: Allocating
1. THE CORPORATION became more aware of their
social responsibilities.
 A corporation is a legal entity
 21st Century: CSR became
formed by shareholders to
integral to corporate strategy,
engage in business activities.
emphasizing that companies
According to the 2019
do not exist in a vacuum.
Revised Corporation Code,
there is no minimum number In the Philippines:
of incorporators, and
 1960s: CSR started as
corporations now have a
donations by businesses.
perpetual term. Corporations
 1990s onwards: CSR became
have significant influence,
a critical part of business,
including through political
integrating strategic
lobbying.
management practices.
2. THE PHILIPPINE CORPORATION
2. CSR FRAMEWORK (CARROLL,
 Corporations in the 1991)
Philippines majorly impact
 Economic Responsibilities:
individuals and societies
To be profitable.
through their operations.
 Legal Responsibilities: To
They also have the power to
obey laws.
influence government policy.
 Ethical Responsibilities: To
3. IMPORTANCE OF SOCIAL do what is right.
RESPONSIBILITY AND GOOD  Philanthropic
GOVERNANCE Responsibilities: To give back
to society.
 Corporations are expected to
act responsibly towards
society and operate with
THE BUSINESS CASE FOR CSR:
good governance. This
ensures accountability and  Economist Milton Friedman
fairness. believed that a company's
only responsibility is to
maximize profits for
CORPORATE SOCIAL RESPONSIBILITY shareholders. However,
(CSR): modern CSR research shows
that engaging in CSR can
1. HISTORY OF CSR
improve a company's
 1950s: CSR was formally financial performance.
introduced by Howard  CSR enhances brand image,
Bowen. builds customer loyalty, and
 1970s-1990s: CSR gained provides a competitive
prominence as companies advantage.
DRIVERS AND BARRIERS OF CSR:  Benchmarking: Compare
against industry standards.
DRIVERS:
Benefits of Measuring CSR:
1. Regulation: Legal
frameworks enforce CSR. 1. Better Decision-Making:
2. Market Behavior: Public and Helps allocate resources
stakeholder actions influence effectively.
CSR practices.
2. Process Improvement:
3. Social Activism: Stakeholders
Identifies areas where CSR
push for responsible
efforts can be enhanced.
behavior.
4. Culture: Shared norms and 3. Demonstrating Value: Shows
practices drive CSR. stakeholders the tangible
5. Strategy: CSR is now part of benefits of CSR.
business strategy, enhancing
profitability and reputation. 4. Accountability: Helps track
progress toward CSR goals.
BARRIERS:
5. Improved Corporate
1. Limited Financial Resources: Reputation: Shows
Companies with financial commitment to sustainability
constraints may struggle to and ethical practices.
implement CSR.
2. Profit Maximization: A focus Balanced Scorecard Model (Kaplan
solely on profits can hinder & Norton, 1992):
CSR efforts. The Balanced Scorecard is a
3. Availability of Human strategic management tool
Resources: CSR needs proper developed by Kaplan and Norton
mobilization and employee in 1992 to evaluate corporate
engagement. performance across four
MEASURING CSR: dimensions:

Why Measure CSR? 1. Financial: Measures how well

a company is performing
To understand the effectiveness financially (e.g., profitability,
and identify areas for improvement. return on investment).
How to Measure CSR? 2. Customer: Assesses
customer satisfaction and
 Specific Metrics: Use
retention.
indicators like pollution
reduction. 3. Internal Business Process:
 Indirect Methods: Surveys to Evaluates how effectively
gauge employee or internal processes are
community satisfaction. operating.
 4. Learning and Growth: balancing social and
Measures the company’s environmental concerns.
ability to innovate and
The TBL approach promotes
improve over time (e.g.,
sustainable business practices by
employee training and
encouraging companies to
development).
consider the full impact of their
The Balanced Scorecard allows operations.
organizations to align business
LEADERSHIP IN CSR:
activities with vision and strategy,
improve internal and external - Leadership plays a critical role in
communications, and monitor CSR by fostering an environment of
performance. service, integrity, and inspiration.
Leaders influence employee attitudes
Triple Bottom Line (TBL):
and engagement in CSR initiatives.
The Triple Bottom Line (TBL) is
FUTURE OF CSR IN THE PHILIPPINES:
an accounting framework that
evaluates a corporation's - CSR will continue to be vital for
performance across three companies, helping them engage
dimensions: People, Planet, and stakeholders, create shared value,
Profit. It emphasizes the idea and implement public-serving
that corporations should focus policies.
not just on financial outcomes
but also on social and
environmental impacts.

1. People (Social
Responsibility): Measures
how the company's
operations affect employees,
customers, and the broader
community.

2. Planet (Environmental
Responsibility): Evaluates the
company’s impact on the
environment, including
resource consumption and
waste management.

3. Profit (Economic
Responsibility): Focuses on
financial performance,
ensuring that the company
remains profitable while