CSR as Risk Management – A Model for Multinationals

The Kennedy School of Government’s CSR Initiative has defined CSR to “encompass not only what companies do with their profits, but also how they make them. It goes beyond philanthropy and compliance to address the manner in which companies manage their economic, social, and environmental impacts and their stakeholder relationships in all their key spheres of influence: the workplace, the marketplace, the supply chain, the community and the public policy realm.” Given the dynamic interactions of the global economy, adopting a CSR program is natural extension of going global analogous to other adjustments of “scaling up” (e.g., forming strategic alliances, finding skilled staff in foreign countries). CSR, particularly for a global company, is related to corporate risk management through two means: by providing intelligence about what those risks are, and by offering an effective means to respond to them. The key to both, as implied in the above definition, is more effectively “managing stakeholder relationships.”

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