Corporate social responsibility CSR

1

• Corporate social responsibility (CSR)
• and occupational pensions
• Paul Bridgen and Traute Meyer, Social Sciences,
  University of Southampton

2
Companies as social actors

• Question
• What do recent developments in Corporate Social
  Responsibility and occupational pensions reveal
  about companies as social actors?
• Argument
• Social role of companies shifted
• from substantial commitment to real social
  benefits to superficial image construction
  Social responsibility on the cheap.
• Rise of CSR obfuscates declining role of
  companies as social actors.

3
The rise of CSR

• Companies
• 1977 fewer than half of the Fortune 500 firms
  mentioned CSR in their annual reports.
• End of 1990s close to 90 embraced it as an
  essential element in their organizational goal
  (Lee 2008)
• UK Most companies now provide CSR reports
• Investors
• FTSE 4GOOD indices, ABI Socially Responsible
  Investment guidelines

4
The rise of CSR

• Governments
• UK - DTI (2001) Business and Society. Developing
  Corporate Social Responsibility in the UK
• EU EC (2001) Promoting A European Framework for
  Corporate Social Responsibility
• OECD (2000) - OECD Guidelines for Multi-National
  Enterprises
• NGOs
• AcccoutAbility, The Global Reporting Initiative
  etc.
• Academics
• 57 of the papers on CSR on the Web of Knowledge
  citation index for all years were published in
  the last five years

5
Why the rise of CSR

• Legitimising globalisation business reputation
  (eg Levy 1997)
• Developing market for Socially Responsible
  Investment (SRI) institutional investors
• Perceptions of positive association with company
  performance (Lee 2008)
• National and Supranational promotion and
  regulation

6
But, what is CSR?

• Corporate Social Responsibility (CSR) involves
  practices that improve the workplace and benefit
  society in ways that go beyond what companies are
  legally entitled to do (Vogel 2005 2)
• CSR as a response to the crisis of the welfare
  state producing a new model for social
  governance (Albareda et al 2007)

7
The content of CSR

• Within the listed company sector, management
  tends to view CSR as concerned with external
  issues, such as the organisation of supply chains
  and ethical trading concerns, and rules out its
  application to internal employment issues.
  (Deakin/Hobbs 2007).
• Many companies might want to get listed..., so
  they might take some small steps in that
  direction ... But they won't make changes that
  are seriously expensive (Vogel 2005)

8
Employee welfare as corporate social
responsibility

• Significance of occupational pensions for social
  provision
• 2005/06 66 of retired British couples, 56 of
  singles received occupational pension
• Mean level 192 pw for couples, 99 pw for
  singles
• Income from occupational pensions 26 of mean
  pensioner income (DWP 2007)

9
CSR and occupational welfareA link rarely made

• Academic literature
• Of 686 contributions on CSR quoted on the Web of
  Knowledge citation index since 2003 six referred
  in any major way to occupational pensions
• Of the 67 papers/reviews on occupational
  pensions, none referred in any major way to CSR

10
The decline of occupational pensions

• Coverage
• fall in the number of British schemes
• fall in the number of active members (ONS 2006)
• Generosity
• defined benefit to defined contribution shift,
  closure of schemes to new members, sharp drop in
  employer contribution rates
• Scope
• retrenchment in NL, CH
• slow development where state systems retrenched
  D, IT (Meyer/Bridgen/Riedmüller 2007)

11
The social impact of retrenchment

• Microsimulation of pension outcomes for
  identical worker on average wages with different
  pension entitlements
• DB Basic state pension (BSP), contracted-out
  final salary pension
• DB mobile BSP, contracted-out final salary,
  mobile worker
• DC in BSP, contracted-in defined contribution
  pension
• DC out BSP, contracted-out defined
  contribution pension
• State 2nd P BSP and State Second Pension

12
Pension levels, UK
13
Why a db/dc shift?

• Increasing longevity
• Increasing regulation
• Changes in company labour requirements (Sass
  1997 Clark 2006), increased labour mobility

14
Why a db/dc shift?

• Increased power of shareholders facilitated by
  regulatory change (FRS 17, IAS 19, fair value
  accounting)
• Declining power of unions
• Generalised perception within the pensions world
  (Bridgen/Meyer 2005)

15
Reconsidering companies as social actors

• Companies retain an interest in acting socially
  and many continue
• to do so voluntarily but their priorities have
  changed
• OUT - costly forms of social provision for
  company workers
• IN - less costly and more nebulous forms of
  social engagement focused mainly on external
  actors

16
New corporate priorities

• Interest in social activity is increasingly
  motivated more by a concern for
• external actors than internal actors
• the financial market than the labour market
• the ethical consumer than the unionised worker
• social image than social welfare

17
Shareholder capitalism

• The rise of shareholder capitalism forces
  companies to focus attention on short-term
  profitability and the core business
• Sustainable development agenda and the rise of
  post-materialist values has created a market for
  virtue (Vogel 2005)

18
Corporate norms and expectations

• CSR is a flourishing profession and nowadays an
  industry in its own right (Crook 2005)
• Good business for investment consultants/actuaries
  in the replacement of defined benefit pensions
  (Bridgen/Meyer 2005)

19
Responsibility on the cheap?

• The pressure on occupational pensions appears
  unrelenting
• Increased attention is being focused on the
  substance of CSR
• Pressure is growing for a tighter regulatory
  regime