Draw out a clear distinction between shareholder centric CSR and stakeholder centric CSR

Shareholder-centric Corporate Social Responsibility (CSR) and Stakeholder-centric CSR are two contrasting approaches to how a company defines and prioritizes its social and ethical responsibilities.

Get the full solved assignment PDF of MCO-24 of 2023-24 session now.

Here’s a clear distinction between the two:

1. Shareholder-Centric CSR:

  • Primary Focus: Shareholder-centric CSR primarily prioritizes the interests and returns for the company’s shareholders (i.e., its owners or investors).
  • Profit Maximization: The primary goal is to maximize financial returns for shareholders, even if it means making decisions that may have negative social or environmental consequences.
  • Limited Scope: The scope of CSR activities is often limited to actions that directly benefit shareholders, such as increasing profits, dividends, or share prices.
  • Ethical Consideration: While ethical considerations are not disregarded, they are often secondary to financial objectives. Shareholder-centric CSR may engage in ethical practices as long as they align with profitability.
  • Examples: Shareholder-centric CSR might involve cost-cutting measures that result in layoffs or environmental practices that prioritize cost savings over ecological impact.

2. Stakeholder-Centric CSR:

  • Primary Focus: Stakeholder-centric CSR prioritizes the interests and well-being of all stakeholders involved with or affected by the company, which includes shareholders but extends to employees, customers, suppliers, local communities, and the environment.
  • Balancing Act: The goal is to strike a balance between profit-making and addressing the broader social and environmental impacts of the company’s activities.
  • Broad Scope: Stakeholder-centric CSR has a broader scope, encompassing actions aimed at benefiting all stakeholders, not just shareholders. This may include fair treatment of employees, sustainable sourcing, community engagement, and environmental sustainability.
  • Ethical Consideration: Ethical considerations are fundamental and central to decision-making. The ethical impact of actions is weighed alongside financial considerations.
  • Examples: Stakeholder-centric CSR might involve fair wages and labor practices for employees, responsible sourcing of materials, community development initiatives, and sustainability efforts to reduce environmental harm.

In summary, the key distinction lies in the primary focus and scope of CSR efforts. Shareholder-centric CSR centers on maximizing returns for shareholders with a narrower scope, whereas stakeholder-centric CSR embraces a broader perspective that takes into account the interests and well-being of all stakeholders while balancing profit-making with ethical and social considerations. The choice between these approaches often reflects a company’s values, culture, and its commitment to broader societal and environmental goals.

Scroll to Top