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CHAPTER I

1. Introduction

Corporate social responsibility (CSR) is a concept that has acquired a new character in the global economy. “With the advent of globalization, managers in different contexts have been exposed to the notion of CSR and are being pressured to adopt CSR initiatives” (Jamali and Sidani, 2008; 330).

Therefore, even more corporations are increasing conscience about the importance of matching their own interests and the interests of society by taking responsibility for the impact of their activities on employees, suppliers, customers, communities and other stakeholders as well as the environment.

Although, this is an obligation that goes beyond economics or law, and in which companies have to act ahead in pursuing long term goals that can also be good for the society and the environment as a whole.

Intrinsically related to the topic of CSR is the protection of the environment for future generations through Sustainable actions. Not only because there has been an enormous technological progress that means we are not as much dependent as decades ago of a wide range of natural resources such as air, energy, land, and minerals.

On the contrary, driven by the growth of the population and the hectic globalization, competition for those natural resources has been intense. As a result, this competition also brought a powerful driver for both environmental conflicts and damage to our fragile, life-supporting environment.

A range of environmental disasters, such as climate change, ozone layer depletion, and soil contamination, have been occurring along the past decades and which turned organizations and society more aware of practice such as recycling, energy consumption, preservation, among others.

“Evolving from an attitude of simply reacting to such disasters and their effects on the physical environment, corporate concerns now include strategic planning and looking at the environment in its multiple social, cultural, political, and institutional dimensions” (Enriquez and Drummond, 2007; 75).

Therefore, the instruments of corporative citizenship turned also to the preservation of the environment as a strategic element for enterprises in the whole world. Along with the development for part of the organizations of clean technologies, there is also the concern in getting a green image, which put organizations’ sustainable activities into practice calling for an Ecobusiness.

Especially in the past two years, 2008 and 2009, the world was marked by a financial crisis that had an impact in economies of organizations in general. Nevertheless, the financial crisis is not causing firms or governments to abandon sustainable development. In fact, many business and government suggest that a ‘green solution’ can be found to both economic and ecological challenges, creating new jobs and markets by investing in new forms of energy, redesigning or retrofitting buildings and equipment, and managing forests and other ecosystems sustainably.

Mineral industries, for example, are using the actual crisis on their own benefit, attempting to identify domains where actions are required and trying to shape a different future to this industry, taking advantage of the actual scenario. To achieve that they make use of available data and information to appreciate the mining sector’s impact, giving support to decision makers in their strategic choices.

The actions of Alcoa Inc., for example, are impressive and unique, the company interplays among intangibles as leadership and innovation as well as a strong CSR strategy, wisingly aligning society, workplace and environment, productivity, and financial performance in the context of a traditional manufacturing company.

This project research examines the existing literature in an attempt to create a more comprehensive perspective of what has been written about the topic of Corporate Social Responsibility and Sustainable Development. The project’s approach was qualitative in nature and focused on discovering what researchers and authors have explored and understand about this complex subject.

Besides, it looks at some of the principal favourable and unfavourable arguments to the social responsibility of enterprises, especially when they are being considered by multinational enterprises interested in initiating activities into developing countries, with focus into Brazil. We also propose some alternatives of acting in the area of Social Responsibility made by Alcoa Inc., considering the current Brazilian reality, with the aim of achieving Sustainable Development.

This dissertation is divided in two parts. Part one will be based in secondary data and involves: Chapter II, which comprises the literature review that examines existent work in current trends involving the subject of CSR as well as paradigms as SD in order to help establish what values associated indicators could contain.

Chapter III, the explanation of the methodology used along the development of the project.

Part two, comprises Chapter IV, which examines factors involving Alcoa Inc., taking into account its current CSR and SD actions and strategies, making use of a questionnaire, answered by some of the organization’s managers, in relation to the issues encountered in the literature.

Chapter V, will draw conclusions, make future recommendations and points out gaps for future research.

1.2 Research Title

The Effectiveness of Corporate Social Responsibility as a means of achieving Sustainable Development: a case study of Alcoa Incorporation.

1.3 Research Background

In the modern complex and dynamic business environment, most organizations are adopting a global attitude making sure that they are geared for being global. Furthermore, it is common knowledge that the world is constantly developing and changing and no change is permanent because any change is about to be further adjusted in the short or long run to suit the environment and the challenges they face.

Organizations are now more powerful and have more influence in the society. Therefore, “The notion of corporate social responsibility today functions as an emblem, that the company themselves rise towards a consensual “social revolution” that will eventually benefit all the stakeholders of our society” (Habish et al, 2005; 271).

Corporate social responsibility intrinsically relates to environmental issues faced globally, especially in the early stages of the twenty-first century and sustaining in a particular industry has become very difficult task for many businesses.

“Employees, investors and consumers are becoming increasingly more aware of the social and environmental impact to people and planet that a company produces, which are both positive and negative. As consumers become even more aware of sustainable practices, there will be even greater demands for business communities to do the right thing, requiring enhanced ethical leadership and CSR to drive profits, and brand loyalty” (Mamic, 2004; Leffel, Sweeney, 2007 cited by Maass, 2007; 36)

Alcoa is “the world's leading producer and manager of primary aluminium, fabricated aluminium, and alumina facilities.

In the framework of sustainability, Alcoa is considered one of the top three companies in the world in terms of commitment to sustainable development and has made use of an environmental strategy associated with a truthful social responsibility in order to gain competitive advantage and success in the marketplace. For example, for three years the Company has been sponsoring the Internethos program, directed at the development of Corporate Social Responsibility for Sustainability (www.alcoa.com).

Moreover, “Recognition from the Covalence Ethical Ranking drives the company to intensify actions of engagement of strategic publics. In 2006, the company was indicated as world leader in ethics, in the mining and metallurgical Industry, according to Covalence Ethical Ranking” (Alcoa annual report, 2006/2007; 41)

1.4 Research Aims

- Analyse how corporate social responsibility can ensure competitive advantage and success in achieving sustainable development.

- To explore, analyze and identify the use of environmental strategy as a tool of achieving global success.

- Analyse the importance of achieving sustainable development in today’s global environment.

1.5 Research Objectives

- To evaluate, in an environmental perspective, the effectiveness of corporate social responsibility in today’s global business.

- To evaluate, in an environmental perspective, the effectiveness of corporate social responsibility on achieving sustainability.

- To establish the feasibility of using corporate social responsibility within the industry to align strategic planning with sustainable development.

- To analyse and find out the implications of corporate social responsibility in Alcoa’s Inc. environmental management.

- To identify the extent to which the environmental management is involved in strategic planning at Alcoa Inc.

- To identify how important is environmental sensitivity to a company that extracts natural resources.

- To analyse in depth the integration of sustainability to Alcoa’s overall business giving emphasis to Brazil.

- To investigate practices used by Alcoa Inc. in its implementation of corporate social responsibility as a means of achieving sustainable development.

1.6 Rationale of the project

The objective of this project was to gather information that could be useful and benefit different organizations in engaging in environmental strategies by the concept of corporate social responsibility. Moreover, data collected can also guide corporations by providing them with an understanding of sustainable development and the resources they can make use of to establish a sustainable future for society and the environment. The information gathered for this present work was collected through an extensive literature review as well as the use of different sources of information, such as videos. In addition, a questionnaire was used in order to collect insight information on the organization’s management perspectives and its corporate social responsibility strategies for a sustainable development and prosperous business.

CHAPTER II

LITERATURE REVIEW

2.1 Introduction

Social Responsibility actions are examples of a phenomenon of great proportions, which have been taken into more consideration in the business world, and reflect a new world-wide configuration. Historical recent events, in special environmental catastrophes around the globe, developed the academic discussion on the social paper of organizations, public and private, in the construction of the called sustainable development.

Investors originated from richest countries have been realizing that economical survival and social balance is a long-term phenomenon more and more dependent of a constant preoccupation with levels of development of the least favoured areas of the globe (Parker, 1998).

In the context of globalization, Social Responsibility has started to be understood as an essential instrument to be considered by organizations’ strategists in the sense of paying attention to the social demands of several economical agents involved. Apart from the internationalization strategy adopted, multinational enterprises installed in developing countries are under pressure in adopting an ethical and responsible posture. Meantime, many actions carried out by multinational enterprises, through their own foundations or partnerships with local agencies, have been questioned for disregarding the participation of local actors in the decision processes, in the resource allocation and in the evaluation of results.

2.2 Business Ethics and Corporate Social Responsibility

“Some vigorous critics and Marxists tend to dismiss the link between business and ethics” (Shaw, 2009; 2). For example, “It was widely assumed that business and ethics were radically different and that ethical behaviour had little or no return on investment” (Brenkert, 2004; 188).

However, on current days, ethical issues are being one of the most important subjects concerning organizations across the world, which now view business ethics not only in terms of administrative compliance with legal standards, rules or regulations as they used to do in the past. Some corporations are even creating their own written and formal ethical codes in addition with the use of different systems, like corporate social responsibility, to help them to create and maintain an ethical organization culture.

Accordingly, Shaw affirms, “Business ethics thus involves studying the ways to refine and reinforce the implicit norms of the business system” (Shaw, 2009; 3).

Nevertheless, Corporate Social Responsibility is topic of great value in business ethics, as reinforced by Ghauri and Cateora (2006; 468): “Ethics and social responsibility go hand in hand”.

Organizations are increasing conscience about the importance of matching their own interests and the interests of society by taking responsibility for the impact of their activities on employees, suppliers, customers, communities and other stakeholders as well as the environment.

Kotler and Lee (2005; 161) argue, “The first ethical duty of business is to do not harm. Companies are responsible for minimizing stakeholder’s risks. This is the heart of business ethics.”

In fact, when ethical issues come to the organization field, a question is raised: “Of all these stakeholders, which should or will have the most or least influence over the ‘ethical’ rules that will be applied by the organization?” (Buhalis and Laws, 2001; 88)

Despite of all the suggestions given in relation to CSR and business ethics, Jones et al (2005; 19) points out the fact “… whether business ethics will actually make business more ethical.”

In a current globalized environment, companies play an important role in the social structure and more than ever before, are being encouraged to improve their business practices by emphasizing ethical behaviour, not only through the development of new technologies but also through social and environmental initiatives.

Companies are increasingly being held accountable for their actions, especially with the growth in demand for higher standards of corporate social responsibility.

Sims (2003; 8) links the concept of ethics and social responsibility saying that: “Being socially responsible, ethical, and a good corporate citizen is important to meeting and exceeding the expectations for any organization’s stakeholders”. And affirms: “Organizational management that truly cares about business and corporate social responsibility is proactive rather than reactive in linking strategic action and ethics”.

The structure of society has changed due to globalization changes, and the importance of businesses impact in society forced organizations to rethink their actions towards profitability, also promoting the development of concepts like sustainability.

Nisberg (1988; 43 cited by Kilcullen and Kooistra, 1999; 158) gives an important definition of business ethics, which according to the author “can be defined as a set of principles that guides business practices to reflect a concern for society as a whole while pursuing profits”. However, with the relentless pursuit of profit in this actual globalized situation, how to maximise profit and act as an ethical company at the same time?

A good understanding of what exactly is the term Corporate Social Responsibility is essential in order to answer and explain this question through different perspectives and theories.

2.3 History and Definitions of Corporate Social Responsibility

The history of Corporate Social Responsibility can be compared as being as old as the history of business; however, its concept has not been fully formulated until now (Asongu, 2007; 28; Crane et al, 2008).

May et al (2007; 4) also adds “Questions regarding the nature, scope and impact of organizations have been present into various forms for centuries ranging across the ‘classical’, ‘medieval’, ‘mercantile’, ‘industrial’ and ‘corporate eras’”.

Taking into consideration only the period after the Industrial Revolution, or better saying the 20th century, the first author who directly contributed to the responsibility issue was Clark (1916; 210 cited by Secchi, 2007; 351) when he affirmed that “The old idea of free will is giving way to determinism, individualism to public control, personal responsibility to social responsibility.”

During the period of 1930s and 1940s, called as the ‘corporate period’ references about social responsibility can be found, for example: Chester Barnard’s, ‘The functions of the Executive’ (1938) and Theodore Kreps’s ‘Measurement of the social performance of business’ (1940). (Crane et al, 2008).

Murphy (cited by Crane et al, 2008), on the other hand classified Corporate Social Responsibility in four eras as follows: Philanthropic era (up to 1950s), awareness era (1953 to 1967), issue era (1968 to 1973) and awareness era (1974 until now).

According to Secchi (2007; 348), however, “One of the first attempts at classifying theories on CSR (business and society issues) was made by Preston (1975).”

This shows that the concept of CSR has been discussed for long but in fact, has not yet been fully understood and placed among organizations.

Recently, empirical research about Corporate Social Responsibility and its relation to Corporate Social Performance and Sustainability provokes many contradictions in the literature. Due especially to the occurrence of different scandals among enterprises as well as the movement towards an environmentalist society rather than materialist, competitive labour market and shrinking role of government, there were a rise of interest in Corporate Social Responsibility in the past decades (Carrasco and Yakovleva, 2007; 15-16).

Many authors affirm that business and society are interrelated entities rather than being distinctively separated (Kotler, 2005; Wood, 1991 cited by Moir, 2001).

According to Watts et al (1998; 3 cited by Yakovleva, 2005; 12) “Corporate Social Responsibility 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 of the local community and society at large”.

Corporate Social Responsibility, thus, reflect the responsibility or accountability of organizations in pro not only of its stakeholders but also of its surrounding environment, taking into consideration the various practices that can affect those.

Carroll (1979), on the other hand, proposed a four-layered concept, which was the most accepted model, suggesting four corporations’ responsibilities related to their economical, legal ethical and philanthropic aspects.

All those four aspects are of great meaning to the CSR concept, however, our current work focuses more on the top of the pyramid, which encompasses the philanthropic responsibilities.

“Philanthropic responsibility: Interest in doing good for society, regardless of its impact on the bottom line is what is called altruistic, humanitarian or philanthropic CSR. “giving back” time and money in the forms of voluntary service, voluntary association and voluntary giving – is where most of the controversy over the legitimacy of CSR lies” (Shahin and Zairi, 2007; 755)

According to Carroll, the philanthropic responsibilities are discretionary being, therefore, less important than the other categories; on the other hand, as said before, is the one that brings the most controversial issues.

The definition proposed by Gauri and Cateora (2005) follows the same idea, where the role of a company in the society goes beyond its economic goals.

As we can see, definitions relating CSR are various and contradictory among the literature which makes its study more exciting.

2.4 Corporate Governance and Corporate Social Responsibility

Governance is defined by Dam et al (2007; 1333) as “the set of informal arrangements that are used in handling the consequences of these unforeseen states of the world”.

As a result of globalization, different global governance structures have emerged, transforming the CSR concept more difficult to be understood.

This new global governance brought about the participation by firms in tasks that used to be the government’s domain. (Cutler et al., 1999; Scholte, 2001 cited by Albareda, 2008). Corporate Social Responsibility, therefore, “can be seen as a new governance arena” (Haufler, 1999; Scholte, 2001 cited by Albareda, 2008; 434).

Castka et al (2004 cited by Shahin and Zairi, 2007; 761) proposed a useful framework, based on three major assumptions:

“(1) The CSR framework should be integrated into business systems, objectives, targets, and performance measures.

(2) The governance system, whose purpose is to control, provide resources, opportunities, strategic direction of the organisation and be held responsible for doing so, is an integral part of business hence CSR system.

(3) Central to the CSR framework is the transformation of stakeholders’ needs and expectation into business strategy, where the organisation has to balance the need for CSR from their key stakeholders with entrepreneurship.”

Corporate Social Responsibility is considered deliberate governance, however, influenced directly or indirectly by demands from global civil society, Non Government Organizations, or even the government itself. Thus, Corporate Social Responsibility plays a major role in the global economic and political activities of corporations.

“To exercise this political power in international society, companies as private authorities have adopted different mechanisms. The most important of these have been inter-firm cooperative instruments, fundamentally through the creation of CSR business associations” (Albareda, 2008; 434).

The implications of poor corporate governance for people’s lives are tremendous, either in a developed or in a developing country, like Brazil for instance.

Most of the Brazilian corporations are still dominated by a family-owned management, who are therefore, the main, if not the only shareholders of the company. This fact can interfere severely in the potential of corporate governance. “Brazil is a country with strong authoritarian traditions, and inadequate corporate governance laws make it possible to perpetuate authoritarian and concentrated influence over governance structures” (Oman, 2003; 35).

Nevertheless, especially in the past decades, there has been intensification of businesses in relation to governance and sustainability in countries like Brazil.

Paro and Boechat (2008; 533-534) illustrate it: “One of the most significant Brazilian non-governmental organizations with the specific mission to mobilize companies around this issue – the Ethos Institute of Business and Social Responsibility, founded in 1998 – had 1,266 member companies in November 2007. Around 74 Brazilian companies have published reports based on the Global Reporting Initiative guidelines (GRI, 2007), and the Sao Paulo Stock Exchange (Bovespa) launched in 2005 its own Corporate Sustainability Index (ISE), which now has 32 companies listed”.

Well-managed corporate governance can have positive effects on socio-economic development; it also hence sustained productivity growth and reforms on regulatory practices, although its benefits cannot be taken into consideration without strengthening the examination of business practices and the government environment as a whole.

2.5 Building Corporate Social Responsibility into Strategy

Corporate and business strategy according to Foss (1997) has different meanings in relation to the kind of decisions to be made. The first relates to decisions that determines the company’s goals and objectives, the latter though, determines how the company will position itself in relation to its competitors, defining its business and resources.

McManus (2008; 1069) affirms: “The term strategy is derived from the Greek Strategia or generalship, sometimes translated as the art of war. The metaphor of business as war, a competition to be won, is pervasive.”

The first author who actually exposed the link between strategy and Corporate Social Responsibility was Michael Porter. He argues that “corporate social responsibility can be a source of innovation and competitive advantage if incorporated into the framework of analysis that companies use to guide their business strategy” (Porter and Kramer, 2006 cited by McManus, 2008; 1077).

Corporations have now added value-creation to their core business always considering its stakeholders’ needs to develop a strategy that is going to keep the company in a competitive advantage position. This is what drives a company to strive in management initiatives, especially if those initiatives are driven towards the achievement of sustainable development.

Lee (2008, cited by McManus, 2008; 1075) argues, “There has been an evolution in CSR from the macro-societal level to the organizational level, with a greater emphasis on managerial, strategic, and ultimately financial issues to the point that the key issue in 2008 is how to integrate CSR into one’s core business.”

Organizations integrated to societal aspects are trying to be aware of the implications of the environment they are in and building, therefore, its strategy based in a social/environmental mission and vision.

On the other hand, “recent reports reveal that almost six out of ten organizations have no strategy for CSR while many companies are unclear as to how to adequately anticipate which social issues will affect their overall strategy” (The Work Foundation, 2002; McKinsey and Company, 2006 cited by Galbreath, 2009; 109)

The importance of keeping the integration of a company’s core business and its strategy according to the society’s (stakeholders) needs determine the effectiveness of a business and its position in the marketplace.

Galbreath (2009; 122) also draws a model of corporate strategy in relation to the society as follows:

[image]

Figure 2 - Source: Strategy in the context of society (Galbreath, 2009; 122).

Not only the strategy itself, but also a change on the decision-making framework plays an important role. The use of the classical American pragmatic decision-making is one example. “The use of pragmatic decision making would inherently lead to the consideration of ecological issues within the decision-making process while fostering competitive advantage” (York, 2009; 102)

In conclusion, as McManus (2008; 1068) says, “Perhaps, the greatest contribution of the mash-up CSR and business strategy will be, not in the details of particular approaches to its realization, but rather the change in consciousness of individual business people its emergence may signal.”

2.6 Leadership and Corporate Social Responsibility

The first important point in the leadership context is to understand that ethics is not something we born with. Many authors say that along the years we are taught by the community conventions, norms, and regulations that guide our ethical behaviours (Trevino and Nelson, 2004). The same occurs with an organization, where norms, regulations, and values are drawn along the years, guiding their employees and creating its culture, but in this case, the founder has a crucial position, being the one who first underlie most of the organization’s ethics code.

Another important issue consists in how hierarchy of power is distributed in the organization; this is explained because the flow of integrity and moral actions always comes from the top to the bottom of the organization hierarchy and this explains why the founder plays a key role in creating the culture and guiding decisions. This relates to the called learning theory, where leaders are perceived as role models. (Hind et al, 2009)

Daboub et al (1995 cited by Hind et al, 2009; 8) “developed a model which suggested a relationship between the characteristics of an organization’s top management team and corporate irresponsibility, even criminality. The model holds that, other variables being equal, the greater the proliferation of formal management qualifications (e.g. MBA’s) in a top management team, the higher the chances of corporate criminality. The implication of this is that management educators do not seem to be addressing the current and future developmental needs of managers who are required to respond to changing social norms for higher ethical, accountable, and sustainable standards in business.”

2.7 Voluntarism and Accountability of Companies

There are two contradicting views in the role of voluntarism in CSR: The first view is supported by Carrol and Buchholtz, (1999 cited by Yakovleva, 2005; 14) and suggests that “CSR refers to both types of corporate operations: operations towards compliance with legislation requirements and voluntary operations towards social benefit not stipulated by law or economic requirements”. The second view, however, suggests that the firm itself should call for the stakeholder’s interest voluntarily and “considers that CSR starts when law ends” (Yakovleva, 2005; 14).

All those contradictions are part of the inconsistency in defining the term CSR. Corporate Social Responsibility according to Keinert (2008) is concerned to how corporations tackle external pressures responding to them accordingly. Moreover, she adds “It does not question the ‘rightness’ of social expectations from an ethical, theoretical point of view, but seeks way of implementing them” (Keinert 2008; 45)

Apart from this point of view, corporations are responsible, nowadays, alongside the government, to the interests of its employees and society as a whole being also accountable for its actions. Thus, accountability is another important feature of Corporate Social Responsibility.

Zadek (2007; 10) argues: embracing accountability for their actions, corporations “contribute to addressing societal needs and challenges in ways that could also deliver economic value and success.”

According to the IPEA (Instituto de Pesquisa Econômica Aplicada), “Social Accountability 8000 is the first norm turned to the improvement of the conditions of work, including the principal labour rights and certifying the fulfilment through independent auditors. The Social Accountability International LEAVES-, a non-government organization created in 1997 in USA, developed it and which has its action turned to the preoccupation of the consumers for the conditions of work in the world. The norm follows the standard of the ISO 9000 and of the ISO 14000, which makes its introduction easier for enterprises that already know this system”” (www.ipea.gov.br).

“One of the basic propositions from social accountability favourable to the contemporary point of view is based on Keith Davis’ ideas” (apud Certo & Peter, 1993; 281 cited by Souza, 2004; 31). According to them, “enterprises must operate as an opened system with two hands, with information reception from society and opened advertisement about their operations with the public.” (Souza, 2004; 31) In agreement with this proposition, the enterprise must be disposed to hearing the society and working in the construction of its well-being.

2.8 Corporate Social Responsibility and Profitability

Whilst some authors defend Social Responsibility as a solution for organizations and society’s sustainability issues in the long-term, others are emphatic, affirming that it is not reasonable to imagine that the enterprises are able to answer to social, environmental demands and, even so, maintain sufficient levels of success in a more and more hostile environment of business (Ansoff, 1981; Gray, 2002). The latter view, is called instrumental theory (Garriga and Mele, 2004 cited by Secchi, 2007; 349).

Friedman (1970 cited by Crane and Matten, 2007; 47) argues that: when actions “(…) are carried out for reasons of self-interest, are not CSR at all, but merely profit-maximization under the cloak of social responsibility.”

“Harvard professor Theodore Levitt echoed this point when he wrote, ‘In the end business has only two responsibilities – to obey the elementary canons of face-to-face- civility (honesty, good faith, and so on) and to seek material gain’ ” (Shaw and Barry, 2004; 212).

However, critics of a different view, like Davis and Melvin Anshen, affirm that there is nothing wrong with corporations making profit; they have though other responsibilities related to consumers, employees and the society as a whole. (Shaw and Barry, 2004).

Furthermore, defenders of the Social Responsibility, such as Pascal Lamy, I Trade Comissioner, affirm that there is a straight correlation between the social and environmental beginnings of the organization and its financial performance (Zadek, 2007). According to this current of thought, more and more Social Responsibility of the enterprises oversteps their legal obligations, which confront authors like Friedman who believes in the increasing of profits as the only objective of enterprises.

The Social Responsibility is still an open concept, subject to several interpretations, as the literature demonstrates.

In general, arguments on behalf of Business Social Responsibility are based on the idea that a better society has more conditions to supply organizations’ profit. Besides, actions connected with the well-being of the society improve the organizations’ public image, avoid the necessity of government regulations, prevent against aggravation of basic problems, and, above all, are ethically desirable. On the other hand, opposite aruments do serious restrictions to the viability of business actions that does not aim profit, at the risk of a business’ paralysation.

Galbreath (2009; 127) cites Halal (2000) who draws a model of profit-centered and social responsibility-centered organizations:

[image]

Figure 3 – Source: Halal (2000 cited by Galbreath, 2009; 127)

The literature still has gaps whether Corporate Social Responsibility and profitability have a relationship, and the concept is still questionable. Nevertheless, in overall, we can conclude that CSR can probably improve the organizations brand image, especially socially and environmentally saying.

“Social obligations should not be seen as just another cost. On the contrary, a clear CSR strategy could improve profitability because it will reduce costs by helping to enhance positive social effects and avoid the negative. Furthermore, such a strategy will help align corporate and social values, and because of this may well identify new commercial opportunities” (Shrivastava et al, 2007; 180).

2.9 Corporate Social Responsibility and Corporate Social Performance

As defined by Wood (1991; 693 cited by Crane, 2008; 115) Corporate Social Performance is “a business organization’s configuration of principles of social responsibility, processes of social responsiveness, and policies, programs and observable outcomes as they relate to the firm’s societal relationships”. According to him, this definition involves a broader aspect than the Corporate Social Responsibility’s definition and is different from the term Corporate Financial Performance (Crane et al, 2008).

In his book, ‘The Competitive Advantage of Corporate Philanthropy’, Michael Porter assures how a company can achieve its maximum potential by linking economical and social goals (Gugler and Shi, 2009). “Porter and Kramer (2003, cited by Gugler and Shi, 2008; 4) further postulates that a strategic approach to corporate philanthropy can align both economic and social objectives.”

“A survey by the Economist Intelligence Unit on ‘‘The Importance of Corporate social responsibility’’ indicated that whereas 54% of executives in a global survey in 2000 said that the notion of CSR was ‘‘central’’ or ‘‘important’’ to their corporate decision-making, that figure has grown by 2005 to 88% of executives surveyed” (EIU, 2005 cited by Gugler and Shi, 2008; 5).

2.10 Corporate Social Responsibility and Competitiveness

Studies about the relationship between Corporate Social Responsibility and Competitiveness have been intense along the past decade.

Traditionally, “pollution abatement and environmental performance improvements are expected to have decreasing marginal benefits.” This can be seen especially in the work of Wagner (2005).

However, there are proponents who argue that responsible and sustainable practices followed by a company leads to cost savings, like for example, reduction of pollution, consumption reduction of energy, practice incorporated by Alcoa Incorporation in Brazil, lower expenditures with litigation or insurance, etc.

Additionally, CSR and a good knowledge by the employees of the company’s practices can increase employee motivation and lower indices of turnover.

This means that a well-managed social responsibility strategy can help the company in taking advantage of new opportunities in the market to increase its performance, which also means that an ethical culture also helps providing stability to the organization improving its competitiveness in the marketplace.

2.11 Theories to Analyse and Explain Corporate Social Responsibility

Related to the topic above but as a matter of facilitation to the understanding of the subject, different theories are involved with the concept of Corporate Social Responsibility and Profitability. They have slightly variations according to one author to another but eventually define the same characteristics:

2.11.1 Stakeholder Theories

This theory analyses those groups to whom the company should be responsible for, the stakeholders (Moir, 2001).

Freeman's (1984; 46 cited by Moir, 2001; 19) definition of a stakeholder is “any group or individual who can affect or is affected by the achievement of the organization's objectives.”

211.2 Social Contracts Theory

Gray et al (1996 cited by Moir, 2001;) ‘Describes society as a series of social contracts between members of society and society itself’. This theory relates the activities of an organization as part of the expectations of the society as a whole and not only its commercial interests (Moir, 2001; Gyves and O’Higgins, 2008).

2.11.3 Legitimacy Theory

Belal (2008; 14) explains that, “Broadly, legitimacy theory indicates that organizations may try to legitimise their activities by engaging in CSR reporting in order to get approval from society in support of their consistent existence and ‘license to operate’”.

Apart from the theories cited above, many others were created to explain Corporate Social Responsibility, profitability and its impacts in the society; however, those are the most common ones.

2.12 Corporate Responsibility in Emerging Markets

With the advent of globalization, governments and companies had to find out ways of expanding their relations and businesses throughout the world, not only with the enhancement of communication practices but along with the expansion of different strategies giving emphasis to Corporate Social Responsibility and Sustainable Development.

“The Dow Jones Sustainability World Index (DJSI World) comprises the leading companies in terms of sustainability around the world. It captures the top 10% based on long-term economic, environmental and social criteria out of the biggest 2500 companies worldwide” (DJSI, 2009; 1).

According to those indexes, many emerging markets like Brazil are becoming interested in the concept of Corporate Social Responsibility and Sustainability.

The argument in pro of CSR is that, “A visible commitment to CSR can help emerging market firms attract multinational partners, access international sources of capital, and reach socially-conscious consumers with their products and services. It also better positions IFC (International Finance Corporation) investments to make lasting contributions to local development” (www.ifc.org)

Governments are taking advantage of Corporate Social Responsibility practices in order to enhance competitiveness, achieve sustainable development strategies, attract foreign investment, and gain a better position in the market place.

2.13 The Business Social Responsibility in Brazil

According to Griesse (2007; 31) “The first business organization to address the area of corporate social responsibility in Brazil was the Associacao de Dirigentes Cristaos de Empresas do Brasil (ADCE–Brasil), a branch of the International Christian Union of Business Executives (UNIAPAC), which since its foundation in Sao Paulo in 1961 has grown into a national network”.

After that, many other institutions were created in order to promote high ethical standards in business: Instituto de Desenvolvimento Empresarial e Social (FIDES) founded in 1986, Pensamento Nacional das Bases Empresariais (PNBE), ‘‘National Thinking on Business Foundations,’’ formed in 1987, Grupo de Institutos, Fundac¸o˜es e Empresas (GIFE), the Group of Institutes, Foundations and Companies, The Associacao Brasiliera dos Fabricantes de Brinquedos (ABRINQ), the Toy Manufacturers’ Association, Associacao Brasileira de Empresarios pela Cidadania (CIVES), the Brazilian Association of Business people for Citizenship, The Conselho Empresarial Brasileiro para o Desenvovlimento Sustentavel (CEBDS), the Brazilian Business Council for Sustainable Development, founded in 1997 (Griesse, 2007).

The World Business Council for Sustainable Development affirms: “In Brazil, public support for corporate responsibility is very high and some of its domestic corporate responsibility organizations – like Instituto Ethos – are genuine role models for how business' involvement in communities can be encouraged” (www.wbcsd.org).

As said in one of the topics above, The Ethos Institute was created in 1998, with the objective of disseminate the concept of corporate social responsibility and make sure that this practice would become part of the daily activities of organizations (www1.ethos.org.br).

As a result of a growing economy, the corporate sector in Brazil has been taking a significant role in social responsibility. Especially multinationals corporations like Alcoa Inc., Vale do Rio Doce, Nestle and many others, are becoming increasingly aware of their responsibilities towards their stakeholders, pursuing environmentally friendly practices regarding the use of resources and energy, others have developed projects with NGOs or public institutions (Griessi, 2007).

In 1992, the first United Nations Conference in Environment and Development (Earth Summit) was held in the city of Rio de Janeiro – Brazil and had as one of its main aims “protecting the planets environment and improving life for the most impoverished of its human inhabitants. In addition, the several-hundred-page text known as Agenda 21 set forth a series of guidelines that have served as tools for local environmental movements …” (Bruno and Karliner, 2002; 3)

Yet, “the full implementation of Agenda 21, the Programme for Further Implementation of Agenda 21 and the Commitments to the Rio principles, were strongly reaffirmed at the World Summit on Sustainable Development (WSSD) held in Johannesburg, South Africa from 26 August to 4 September 2002” (www.un.org)

2.14 Sustainable Development

As Forrant et al (2001; 17) points out, “Sustainable development is a process that links economics and politics. As such, it should be studied in terms of the industrial, organizational, and institutional conditions that can promote economic growth that is stable, equitable, and environmentally sound.” This notion is known as ‘ecomodernist discourse’ (Robbins, 2001)

“As such a normative concept sustainable development is based on a number of fundamental ethical ideas. One of these fundamentals is the Kantian Categorical Imperative ‘Act only according to that maxim whereby you can at the same time will that it should become a universal law’” (Kant, 1993; 30 cited by Hahn, 2009; 315).

In spite of being subject of ethical frameworks such as “Bentham’s utilitarism (including, of course, his allusions to the rights of animals), or Kant’s categorical imperative”, or other examples, “based on virtue ethics focused on sustainable decisions and the emergence of environmental pragmatism (Gurdorf and Hutchingson, 2003 cited by York, 2009; 101); ethics has been seen under an ample angle in the past decades.

Especially by developed economies, ethics now involves not only the economic or human side of a business relation but also the environmental one, being called ‘environmental ethics’ (York, 2009).

In spite of most of the literature focuses only on the environmental aspect, the term sustainable development does include various economical and social aspects (Nemetz, 2003 cited by Brenkert, 2004).

The work of Hopwood et al, (2005; 39) clearly exemplifies: “The concept of sustainable development is the result of the growing awareness of the global links between mounting environmental problems, socio-economic issues to do with poverty and inequality and concerns about a healthy future for humanity. It strongly links environmental and socio-economic issues.” He also adds: “The first important use of the term was in 1980 in the World Conservation Strategy (IUCN et al., 1980 cited by Hopwood et al, 2005; 39).

On the other hand, Haughton (1999 cited by Hopwood et al, 2005; 40) “has usefully summarized the ideas of sustainable development in five principles based on equity: futurity – inter-generational equity; social justice – intra-generational equity; transfrontier responsibility – geographical equity; procedural equity – people treated openly and fairly; interspecies equity – importance of biodiversity”.

“A more pragmatic view is that of Hilson and Murck (2000; 227–228 cited by Enriquez and Drummond, 2007; 73), According to them the Brundtland report (WCED, 1987) defines sustainable development in a manner that fails to “outline an effective sustainability framework for any industry to follow.”

Summing up, all those views of sustainable development in their different ways, try to link the importance of a ‘Pestel’ analysis (political, economical, social, technological, environmental and legal) in business, and the necessity of a balance between all those sectors with government and society.

Economic growth, development, and globalization, however, have their negative impacts contributing to the growth of poverty, inequality, diseases, climate change, biodiversity imbalances etc. The necessity of healing problems of sheltering, starvation, and health sometimes live little space for issues like the environment.

Different approaches were created to explain and try to solve problems of the imbalance of all those sectors especially in developing countries (It is assumed here that the term developed and developing countries are already known). The first approach used to associate increasing production to economic growth, which over the time could overcome problems as poverty (Hopwood et al, 2005; 39).

Another approach sympathises with the called ‘status quo’, supporting that “business are drivers towards sustainability”… actually, they “are reluctant to use laws and regulations. Instead, consumer power, informed about sustainability issues and based on lifestyle choices, will combine with ‘green’ capitalists who practice ‘corporate citizenship’ and ethical business to achieve sustainable development (Elkington and Burke, 1987 cited by Hopwood et al, 2005; 42). Their belief is that technology can easily replace nature (Hopwood et al, 2005; 42).

Reformists, on the other hand, claim that “new technologies will provide wider economic and social benefits for humanity as well as protecting the environment”. They believe governments can help business with its regulations, taxations etc (Hopwood et al, 2005; 44) In contrast, “transformationists see mounting problems in the environment and/or society as rooted in fundamental features of society today and how humans interrelate and relate with the environment. They argue that a transformation of society and/or human relations with the environment is necessary to avoid a mounting crisis and even a possible future collapse, etc (Hopwood et al, 2005; 45).

One of the most important associations related to sustainable development is the World Business Council for Sustainable Development. It is drawn by 35 countries, 20 different industry sectors and where 200 companies deal exclusively with business and sustainable development. (www.wbcsd.org)

According to Andriof et al (2002; 217), based on the WBCSD mission statement, “The Council’s aim is to provide business leadership as a catalyst for change towards sustainable development and to promote the role of eco-efficiency, innovation, and corporate social responsibility towards sustainable development” (Andriof et al, 2002; 217).

Sustainable development is defined by the World Commission on Environment and Development (1987) as a “development that meets the needs of present without compromising the ability of future generations to meet their own needs” (Lawrence et al, 2005; 213).

The challenge here is how to promote development and business economic performance acting in a sustainable development way? Different views are drawn: some authors affirm that economic performance, and environmentally actions are negative or an inversely U-shaped form (Wagner, 2005; 88).

Environmentalists, for example, “will argue that environmental goods are beyond value and thus cannot be part of cost–benefit analysis, this argument, when applied in a business setting, ignore the fundamental reality of corporate operations” (York, 2009; 106).

However, the practice shows that many different companies have been successful using a well-managed sustainable strategy always aligned to the government’s sustainable strategy.

According to information from the UN Division for Sustainable Development (UNDESA, 2004) over a third of all countries had at least initiated the development of Sustainable Development strategies by the end of 2003 (Meadowcroft, 2007)

One of the most famous examples of competitive advantage using a strong sustainable development strategy, as found in its website, “Our commitment to seeking and sustaining natural materials and ingredients, and using all our planet’s resources wisely, guides our approach to business” ( www.thebodyshop.co.uk)

In fact, the drawback of sustainable development is probably not the concept itself, but how strategists use it within the strategic process of a company.

Meadowcroft (2007; 155) points out that “national strategies are one tool that governments can use to enhance strategic decision making for sustainable development,” therefore helping organizations with its own sustainable development process.

The main point when talking about sustainable development is the growth in awareness from businesses and society in relation to the environment aspect.

Hind (2009; 8) emphasises: “The rising importance of this new business awareness is indicated by the fact that over 2000 companies have now signed up to the ten principles of ‘‘global corporate citizenship of the global compact’’ launched by the UN in 2000, covering human rights, workplace safety, justice, anti-corruption ILO standards, and environmental impact. Henderson (2006) reports that some 77 per cent of CEO’s of major corporations surveyed by KPMG and the World Economic Forum in 2005 said that higher ethical behaviour was ‘vital to profitability’.”

What is important bear in mind is: What has been driving companies to act in a sustainable way? Concern about future generations? Increase in performance and competitive advantage? Strict government regulations? Globalization? In addition, how is society contributing to reinforce actions on sustainable development?

Hahn (2009; 317) points out some different interdependent phenomena that contribute to public awareness towards corporate behaviour: “A growing influence of multinational corporations; More complex (global) problems and global action spheres; The loss of governmental influence and control; A growing influence of certain civil society actors.”

Intrinsically related to the context of sustainable development is environmental sustainability and one important point that cannot be forgotten here is the fact that sustainable development has been used as a synonym for sustainability.

Besides some authors use both terms interrelated, others clearly separate their meanings. As Dunphy et al (2003; 22) points out “They cannot be defined in the same way that physical scientists might define the standard metre.” He also adds “Sustainability and sustainable futures are treated here as the goals or endpoints of a process called ‘sustainable development’.

“The central idea of sustainability is to prescribe and implement new usage of natural resources (Turner, 1993 cited by Crane and Matten, 2007; 499). With regard to renewable resources, such as wood, agricultural products, water, or air, the key principle would be not to use those resources beyond their capacity of regeneration. The more critical issue though are the so-called non-renewable, such as coal, oil, minerals, metals, and other key resources of modern industry” (Crane and Matten, 2007; 499)

In fact, sustainability is referred not only with environmental practices, but also embraces the long-term maintenance of systems according to economic and social aspects (Crane and Matten, 2007)

DeSimone and Popoff (2000; 79) affirm that “A final difficulty is that even if an individual organization can demonstrate that its activities and products are becoming more eco-efficient, this says nothing about its sustainability. When markets are expanding rapidly, for example, any improvements in the eco-efficiency of making products may be outweighed by the effects of increased numbers in use and/or their greater utilization. The effects of some products and processes will also be unsustainable even with radical improvements in their eco-efficiency.”

2.15 Environmental Management

Another interrelated term used to sustainable development and sustainability is environmental management.

De Graaf et al (1996; cited by Enriquez and Drummond, 2007; 72) emphasizes: “That means that only one aspect — physical deterioration of the natural environment — is being considered, while economic and social issues, which are of central importance, are being ignored.”

On the other hand, Hopwood et al (2005) using the Pinchot’s example, affirms that rather than being irresponsibly exploited, natural resources should be managed to ensure its long-term use.

In the context of environmental management the sustainable development definition given by Buultjens (2005) is more appropriate because utilizes the term ‘Ecological Sustainable Development’, which leads to an environmental aspect that according to him “has been suggested as a means for ensuring economic growth” (Buultjens, 2005; 57).

The term environmental management relates more to the strategic process of a company and its environmental mission statement, which is how the company will manage with its economic growth and the natural resources that it uses or exploit.

2.16 Social Responsibility and Sustainable Development: Legislations, Policies, and Regulations in Brazil

Legislations, regulations, and policies have been given incentives and play an important role regarding CSR and Sustainable Development in Brazil.

By a way of example, we can cite the law that establishes the National Politics of the Environment - Law 6.938, of 31 of August, 1981; The Water Law - Law 9.433, of 1997; Resolution 237, a form of accomplishment to the use of the licensing system as an instrument for environmental management; The Environmental Criminal Law – Law 9.605 of 1998; The Federal Law n. 9790, of 23/3/1999 (www.cebds.org.br).

With regard to sustainable development, Brazilian environmental policy implemented by the federal government in the early 1980s was based on regulatory instruments such as licensing, and it required environmental impact studies” (Griesse, 2007; 33).

In this context, imperative was the advent of Law 9,985, of 18/07/2000, that it instituted the National System of Units of Conservation of the Nature; The Decree 4.340, which determines in its Chapter VIII the main beddings of the ambient compensation; A ação do Conselho Empresarial Brasileiro para o Desenvolvimento Sustentável (The action of the Brazilian Enterprise Advice for Sustainable Development (CEBDS)) among others (www.cebds.org.br).

“In May 2003, ICMM’s CEO-led Council committed corporate members to implement and measure their performance against 10 principles. The principles are based upon the issues identified in the Mining, Minerals and Sustainable Development (MMSD) project - a two-year consultation process with stakeholders to identify the issues relating to sustainable development in the mining and minerals sector. These issues align almost completely with those identified in the Extractive Industries Review chaired by Dr Emil Salim” (www.icmm.com).

Not less important, but probably one of the keys for Sustainable Development is the ‘Conselho Empresarial Brasileiro para o Desenvolvimento Sustentavel’. “Fundado em 1997, o CEBDS é uma coalizão dos maiores e mais expressivos grupos empresariais do Brasil. Com faturamento anual correspondente a 40% do PIB nacional, nossas empresas geram juntas mais de 600 mil empregos diretos e um número mais expressivo ainda de empregos indiretos. Mas o CEBDS não atua sozinho. Como representante do World Business Council for Sustainable Development (WBCSD), que conta com a participação de 185 grupos multinacionais ” (www.cebds.org.br)

As another example of incentive given to companies, particularly those who operate internationally, is the ISO 14001, a Certificate for Environmental Responsibility given by the International Organization for Standardization.

“Between 1998 and 2003, 459 companies were awarded the ISO 14001 certificate in Brazil by Inmetro, the National Institute of Standardization and Industrial Quality” (Enriquez and Drummond, 2007; 76).

2.17 Social Responsibillity and Sustainability Auditing Report

According to Schaltegger et al (2006; 4) “In this view, the term ‘reporting’ is not limited only to external reporting as it is in financial reporting but rather encompasses the whole information communication process, internally as well as with external stakeholders”

“The expression “social auditing,” reminiscent of the 1940s, is often heard in debates about the social responsibility of corporations” (Enriquez and Drummond, 2007; 76), however, in Brazil the social auditing term is very recent.

“Brazilian companies, mainly started to report on social and environmental activities since the late 1990s with the development of social reporting model for companies (Social Balance) by the Brazilian Institute of Social and Economic Analyses (IBASE) which was further developed by the Ethos Institute in 2001 by publishing a CSR reporting guide (ACCA and CorporateRegister.com, 2004 cited by Belal, 2008; 125).

“The term sustainability report is usually used to refer to the publication of external reports, as either printed brochures or electronic versions on the internet. (Schaltegger et al, 2006; 4)

2.18 Corporate Social Responsibility as a means of achieving Sustainable Development

Corporate Social Responsibility and Sustainable Development are concepts of major importance especially within this century where environmental issues play a big role.

Some authors use the term Corporate Social Responsibility and Sustainable Development as two different approaches, however, as we could see on the literature explained above, apart from being two different concepts they relate to the same ethical aspects, like for example, social and environmental issues.

Researches have shown that Sustainable Development and Corporate Social Responsibility have become ubiquitous terms, used by multiple players in different contexts worldwide, but there is a lack of consensus on what they mean (Heincke, 2006).

May et al (2007; 381) based on the WBCSD’s mission statement defines CSR in relation to sustainable development: “the commitment of business to contribute to sustainable economic development, working with employees, their families, the local community and society at large to improve their quality of life.”

Watts et al (1998, cited by Yakovleva, 2005; 40) affirms this statement: “The WBCSD views corporate social responsibility as the third pillar of sustainable development along with economic growth and ecological balance, and therefore, a key component for a sustainable future.”

In fact, we can interpret the relationship between Sustainable Development (SD) and Corporate Social Responsibility (CSR) under different perspectives. However, the major themes of Corporate Social Responsibility are aspects also covered by Sustainable Development, which includes not only environmental issues but also concerns related to business ethics, human rights, labour etc.

The two terms are intrinsically interrelated; however, Sustainable Development has usually more involvement to the government’s policies, but as said before all this derives from the fact that the concept is still vague.

In this context, “There is a technocratic view that sustainable development can only be made ‘operational’ in policy terms if a single and precise meaning can be agreed upon” (Dobson, 2004; 25). In contrast, There is a political concern among the environmentalists that the lack of clarity of the definitions allows anything to be claimed as ‘sustainable’ or as ‘promoting sustainable development’” (Dobson, 2004; 25).

On the other hand, the term Corporate Social Responsibility does not link to government actions or policies, but a voluntary contribution from organizations in order to improve stakeholders’ well-being.

Nonetheless, there is no consensus on the literature whether Corporate Social Responsibility and Sustainable Development have essentially the same implications for corporations.

As we could see in this project, through a well-managed CSR strategy a company can effectively achieve Sustainable Development. This is clearly emphasized by the WBCSD’s definition of Corporate Social Responsibility: “Corporate social responsibility is the continuing commitment by business to contribute to economic development while improving the quality of life of the workforce and their families as well as of the community and society at large” (www.wbcsd.org).

2.19 Sustainable Development in the Mining Industry

After agriculture, the mining industry is considered the most important industry (Down and Stocks, 1977 cited by Yakovleva, 2005).

Madeley, (1999; Pastizzi-Ferencic, 1992 cited by Yakovleva, 2005; 31-32) also affirms that “Mining is currently the fifth largest industry in the world and it plays a crucial role in world economic development and the trade of mineral commodities represents a substantial part of international trade.”

Environmental resources can be divided into renewable and non-renewable resources and minerals in general are regarded as non-renewable ones (Carr, 1997).

Minerals have always been regarded as non-renewable resources, however, as the graph shows it is non-renewable depending on human investment and of its level of usage.

Literature, therefore, has been questioned and arguments exist affirming, “that unlike fossil fuels, many metals and minerals can be recycled without losing their chemical and physical properties. Consequently, this means that the issue of depletion and the classification of metals as non-renewable resources are two concepts increasingly being challenged” (Crowson, 1998; Sanchez, 1998 cited by Yakovleva, 2005; 40).

Mining industries deal exactly with this source of materials, like Alcoa Inc., for example, that extracts bauxite in order to transform into aluminium. The same way as Alcoa does, every single mineral industry have to develop an accurate environmental strategy, to comply with regulations as well as the damages caused to the environment, towards the achievement of a sustainable execution of its overall activities.

Different and major are the issues caused by the mining industry, among them are:

Destruction of habitat and bio-diversity into the mining site;

Exosystem/habitat/bio-diversity protection in adjacent land;

Climate change;

Energy consumption;

Radiation, etc (Yakovleva, 2005)

In this context Yakovleva (2005; 40) states: “Sustainable development demands that the environmental impacts of natural resource exploitation, extraction, transformation, consumption, and recycling and final disposable should be minimized. This means that land that has been used for mining operations must be rehabilitated to a state that allows successive uses to benefit from it.”

Several industries, especially mining corporations are increasing their awareness regarding the preservation of the environment for a sustainable future as well as to keep up with performance and competence.

“A study recently conducted by PricewaterhouseCoopers of 32 world-class mining and mineral organizations revealed that 18 of the studied organizations use the term of sustainable development for various internal and external uses, and have an understanding of sustainable development which primarily focuses on local operational impacts, particularly on employees and local communities” (PricewaterhouseCoopers and MMSD, 2001 cited by Yakovleva, 2005; 40).

The production of aluminium in Brazil is increasing each year and companies see themselves trapped in regulations, policies, and pressures from environmentalist groups.

For example, “Brazil produced 24.8 Mt of bauxite in 2003, with the marketable output increasing 29% to 17 Mt. Of this total Mineracao Rio do Norte (MRN) accounted for 14.2 Mt with the remaining 3 Mt being produces by CBA, Alcoa, Alcan, Mineracao Curimbaba and MSI Minerais S.A. Total Braziliam alumina production in 2003 was estimated at 4.7 Mt, a 34% increase from 2002. Alumina exports were estimated at 1.95 Mt at US$ 334 million” (www.mbendi.com).

“Corporate Social Responsibility employing mechanisms of tri-sector partnerships can minimize the negative impacts and risks of social issues related to mining project development” (Accut et al, 2001 cited by Yakovleva, 2005; 63).

Different are the states in Brazil strong in deposits of iron, bauxite etc, like for example, Para, which is growing economically, thanks to the investments of multinational organizations. However, are those organizations really acting to reach a sustainable future?

According to Veiga et al (2001; 191-192 cited by Enriquez and Drummond, 2007; 72), “The main message propagated by the International Council on Metals and the Environment (ICME) and the World Bank in respect of the viability of the mining is that, in order to achieve long-term sustainability and viability of the mining industry itself and local communities, mining companies must now pursue their interests in a way that also promotes those of the local communities in the regions where they are operating.”

Whitemore (2006 cited by Enriquez and Drummond, 2007; 72) “emphasizes that the mineral industry’s efforts to announce its adherence to the principles of sustainable development stem not from the 1992 Earth Summit in Rio, but from the 1998 Global Mining Initiative (GMI), an event organized by the mining industry itself. The GMI generated a two-year research and dialogue effort (Mining, Minerals and Sustainable Development, MMSD), followed by a conference and by the formation of the International Council of Mining and Metals (ICMM).”

2.20 Company Review: Alcoa Incorporation

Alcoa, a multinational corporation initiated in 1888 by Charles Martin Hall, has 87,000 employees in 34 countries. In Latin America and Caribbean, Alcoa counts on more than seven thousand officials and operates in six Brazilian states – Pernambuco, Minas Gerais, Maranhao, Para, Sao Paulo and Santa Catarina – including a new mine of bauxite, which is being installed in Juriti-PA. (www.alcoa.com)

“The company has established its Brazilian presence in 1965, with the first plant opening in 1970 at Pocos de Caldas, which now includes mining, refining, smelting and a powder plant” (www.alcoa.com) and “acts in markets such as aerospace, automotive, packing, construction, commercial transports and in the industrial market” (www.alcoa.com).

Today, eight operating locations include one of the largest aluminium smelters and alumina refineries in all of South America. In addition, to alumina and primary aluminum, products manufactured at these facilities include extrusions, sheet and foil, aluminium powder, industrial chemical products, wiring harnesses, and plastic closures. Beyond local production, Brazil also constitutes a growing market for imported Alcoa products, such as forged wheels, heat-treated sheet and plate for aerospace applications, and fasteners” (www.alcoa.com)

One of the main challenges that Alcoa Inc. faces though, is “not just to find a mode of sustainable development but also of sustainable knowledge” (Irwin, 1995; 182) making use of “responsible management of natural resources (…) bearing on the company’s competitiveness in terms of continuously improving the quality of products and services, minimizing environmental impact and reducing costs” (Alcoa annual report, 2004; 22)

This is one of Alcoa’s main values “Environment, Health, and Safety. The company’s performance in this area hinges on the following policy: “Operate globally in a safe and responsible manner, respecting the environment and protecting and promoting the health of our employees, clients and the communities where we have an impact. We do not comprise our Environment, Health and Safety Value for profit production” (Alcoa annual report, 2004; 25).

The company has invested millions in programs of sustainability all over the world in each of its single plants, but especially in Brazil, which is Alcoa’s world’s sixth largest primary aluminum producer, according to data published by ABAL (Brazilian Aluminum Association) (Alcoa annual report, 2004; 25).

According to the company’s website’s releases, “Alcoa is one of the world’s leading aluminum producers, stands out because of its performance and strategic capacity when it comes to dealing with environmental and social issues”. In 2008 this constant search for excellence in sustainable development practices led the company being named for the fourth year running as one of the most sustainable corporations in the world, during the World Economic Forum in Davos, Switzerland (www.alcoa.com).

Alcoa Inc. has ambitious goals, which leads the company’s activities planned up to the year of 2020, as well as the maintenance of its programs in accordance to the company’s strategic process and responsibilities.

All this data retrieved from the company’s reports and websites will be deeply analysed making use of the literature above and a questionnaire answered by different managers of the organization in Brazil, in order to find out whether publications, actual perception of managers and current issues showed by different authors are congruent, being possible to make assertive conclusions.

CHAPTER III

RESEARCH METHODOLOGY

3.1 Research Process

The research aims and objectives of the project were outlined in Chapter I along with an overview of the methodology used to empirically investigate the associated propositions. This chapter provides further particulars of the methodology undertaken to collect data to analyse the research trends.

The purpose for this project was twofold: (a) to explore the importance of the concepts of corporate social responsibility and sustainable development (b) to provide an overall understanding of the necessity of implementing environmental strategies through the use of corporate social responsibility in order to achieve competitive advantage for a sustainable future; making use of the example of Alcoa Incorporation’s successful strategy.

The following research question was developed: How effective is corporate social responsibility as a means of achieving sustainable development? It was intended that the answers would broaden the depth of awareness of Corporate Social Responsibility and Sustainable Development in this relatively new field.

A narrative analysis process was implemented to interpret the data collected from the research portion of this project. Hopkins (1999) argues that CSR as a new philosophy meets the financial needs as well as addressing the humanistic attributes of the organization.

That is the reason why a narrative analysis is seen by the author as the best model to relate the organization to Corporate Social Responsibility and Sustainability.

The qualitative data was used to build this project including, (a) historical data on Corporate Social Responsibility and Sustainable Development (b) published literature on Corporate Social Responsibility and Sustainable Development (c) a questionnaire used to analyse the awareness of Alcoa’s management in relation to the company’s CSR towards the achievement of sustainable development.

Moreover, a phenomenological philosophy will be implemented, applying a case study approach, since this kind of research methodology is ideally suited to investigate the insights into corporate social responsibility in theory and practice. Furthermore, it seems to be the best option to elicit responses to particular events or occurrences and explain the nature of relationships between corporate social responsibility and sustainable development. In contrast to other types of research methods, case studies offer the flexibility of using a less structured approach, more in-depth interviewing methods, and the opportunity for the interviewer to understand and explore nuances in evidence.

These approaches were intended to build the literature review as well as to assist in exploring the current issues relating the use of CSR towards a competitive and prosperous business and a sustainable society and environment.

The purpose of the literature review is theoretically discussing ideas that exist about the given topic, and this will form the majority of the paper. Data sources, such as library catalogues and indexes will be scanned for secondary data. This will produce an exhausting list of journals and newspaper articles, published books and internet addresses. With the amount of literature, it will take time to sort out the relevant material for the research.

The secondary research will be complemented by primary research, through questionnaires with members of the management of Alcoa in Pocos de Caldas.

Following the basic and most important aspect of the project, the research will be designed, reviewed and undertaken to ensure integrity and quality of the work; In case of interviews and questionnaires, staff and subjects will be fully informed about the purpose, methods and intended possible uses of the research, what their participation in the research entails and what risks, if any, are involved. In summary, the confidentiality of information supplied by the research is in accordance to the research ethics and subject to appropriate ethical review.

This research work will include several components of different character, promoting the approach to new problems, providing bibliographic survey, offering a selection of methodologies, as well as providing a critical analysis of results.

The research and development will comprise creative work undertaken on a systematic basis in order to increase the stock of knowledge, including not only knowledge of ethics, corporate social responsibility and sustainable development in a general way but their implementation by Alcoa Inc. in the current days in order to achieve competitive advantage and business success.

The development of a questionnaire to determine the awareness of Alcoa’s management relatively to the gain of competitive advantage by the corporation was developed as part of an integrated methodology.

As affirmed by Gill and Johnson (2001; cited by Beinske, 2002; 8) “A questionnaire can serve as an inductive method with the aim to formulate new theory, where open-ended questions are used to ‘explore a substantive area’”.

The purpose of the questions asked was an attempt to uncover the guidelines the organization had implemented in developing sustainable practices making use of any corporate social responsibility tools that they had in place to measure the levels of achievement related to these efforts.

The questions, which were qualitative in design, were grouped into themes and ordered according to the importance of the subject.

The results and limitations of the survey can be found in chapter V. The interviewee’s were members of the organization’s (Alcoa) management. This method was used in an effort to develop trust on the work and where additional perspectives had the potential to be expanded upon, and possibly generate additional information on the topic. This approach provided an opportunity to understand the current trends related to corporate social responsibility and to elicit best practices in this area as a means for achieving sustainable development for future generations.

3.2 Research Theories

In the research process, it was essential the adoption of many scientific methodology approaches, that altogether will enable to fulfil the requirements to achieve the objectives of this research finally drawing any conclusions. The various approaches used to build the project will be further explained.

3.2.1 Case Study

According to Robson (2002; 178 cited by Saunders et al, 2003; 93), a case study is “a strategy for doing research which involves an empirical investigation of a particular contemporary phenomenon within its real life context using multiple sources of evidence.”

The use of a case study strategy is ideal to answer questions such as, why? what? or how? In this case, the data collection can vary among questionnaires, documentary, interviews and also observation (Saunders et al, 2003).

Furthermore, it seems to be the best option to elicit responses to particular events or occurrences and explain the nature of relationships between corporate social responsibility and sustainable development. In contrast to other types of research methods, case studies offer the flexibility of using a less structured approach, more in-depth interviewing methods, and the opportunity for the interviewer to understand and explore nuances in evidence.

Following up attempts to improve on the work, a case study of Alcoa Incorporation’s was used for the analysis of how efficient the company’s Corporate Social Responsibility strategy was in achieving a Sustainable competitiveness.

3.2.2 Descriptive Study

It is essential “to portray an accurate profile of persons, events, or situations” (Robson, 2002; 59 cited by Saunders, 2003; 97), to clearly understand the overall scenario of the study. As cited above, this is the object of descriptive study.

However, the project proposes to use analytical and theoretical framework, which extends descriptive research, making suggestions of why and how Corporate Social Responsibility plays a major role in Sustainable Development and identifying the different variables involved to the topic.

3.2.3 Qualitative and Quantitative Analysis

A narrative analysis process was implemented to interpret the data that were collected from the research portion of this project.

The qualitative data used to build this project included, (a) historical data on Corporate Social Responsibility and Sustainable Development (b) published literature on Corporate Social Responsibility and Sustainable Development (c) a questionnaire used to analyse the awareness of Alcoa’s management in relation to the company’s CSR towards sustainable development.

Thomas (2003; 1) argues that “Qualitative methods involves a researcher describing kinds of characteristics of people and events without comparing events in terms of measurements or amounts”.

On the other hand quantitative research apply measurements and normally considered as better than qualitative research. Ghauri and Gronhaug (2005; 109) explain that “the difference between quantitative and qualitative methods and approach is not just a question of quantification, but also a reflection of different perspectives on knowledge and research objectives”.

3.2.4 Deductive and Inductive Theories

According to the literature, two approaches can be conducted in researching for thesis. The deductive approach “… is the dominant approach in natural sciences, where ‘laws provide the basis of explanation, permit the anticipation of phenomena, predict their occurrence and therefore allow them to be controlled’” (Hussey and Hussey, 1997; 52 cited by Saunders, 2003; 86).

On the contrary the inductive theory, as argued by Saunders (2003; 87) “enabled a cause-effect link to be made between particular variables without an understanding of the way in which humans interpreted their social world.”

The departure point will be inductive, with the observation of the organization, fed by theoretical information where conclusions will be critically evaluated against facts, as a complement of the case study which could be described as a way of what we would think of a scientific research or theory (Bailey, 2006, Cottrell, 2005; cited by Saunders, 2003).

3.2.5 Phenomenological

A phenomenological philosophy was implemented in this project with the aim to construct a meaning, and understanding a world composed of different and important realities.

As affirmed by Remenyi et al (1998; 35) “To use a phenomenological approach the researcher has to look beyond the details of the situation to understand the reality or perhaps a reality working behind them.”

CHAPTER IV

FINDINGS

4.1 Introduction

This chapter will explain the use of secondary and primary data in relation to the company researched, Alcoa Inc., making possible the analysis of the company’s actual actions in CSR and Sustainable Development based on a questionnaire answered by managers from inside the organization.

All this information will be useful to draw future conclusions and make recommendations regarding possible contradictions between theory and actual practices of the company.

4.2 Secondary Data

Secondary data was part of the data analysis making use books, journals, the company’s website, annual reports, and publications. Moreover, comparisons between managers’ perceptions and the organization’s actual activities and publications related to Corporate Social Responsibility and Sustainable Development, which finally will enable deeper conclusions and recommendations to be drawn.

4.3 Primary Data

The primary data consists of two questionnaires, the first one with 12 subjective questions taken from a journal and adapted to the needs of this research. The second questionnaire consists of objective questions regarding aspects such as, business ethics, corporate culture and practices.

4.3.1 Qualitative Analysis

The qualitative analysis of this research will be based on the current issues of Corporate Social Responsibility and Sustainable Development. The data analysis will be developed according to the perceptions of different managers from different sectors of Alcoa Inc.

Adapting this research to the data acquired, by using a questionnaire, an overview of what is current happening in the organization against the findings of the literature review will be useful for future conclusions. A copy of the questionnaire can also be found in Appendix I.

In addition to the questionnaire’s responses, the data from the company’s website was reviewed in order to help validating or extending statements made by managers.

Concerning the questionnaire given to the managers a brief analysis of their answers in each subject asked will be conducted as follows:

4.3.1.1 Questionnaire 1

Does Alcoa Inc. have written ethics policies? What about a Corporate Governance policy?

According to all the managers, Alcoa has a strong Corporate Governance which can be found through different written ethics codes, varying, as they say, from Codes of Conduct (which can be found in the Guide for Business Conduct, in different languages), Code of Ethics, especially in relation to financial professionals; Not only that the company also carries out an ethics and compliance program, in which its key challenge is corruption inside the company.

Manager 1 affirms that the company’s corporate governance guidelines, as they call, is strictly followed by all the employees, including relationships with shareholders, board of directors, management, suppliers and the society at large.

As Manager 3 argues, the company also make use of the Code of best practices in Corporate Governance’, which is a published code created by the Brazilian Institute of Corporate Governance.

In addition, Manager 1 and 5 also cites Alcoa’s prizes as one of the most ethical companies, like for example the one named by Ethisphere in New York.

Does Alcoa Inc. have a system to encourage managers to include corporate social responsibility and sustainable development criteria in business decisions? Does that system work? (Shahin and Zairi, 2007)

Alcoa shows that employees and mangers are keen on making their decisions accordingly to a social responsibility and sustainable development perspective. As an example, the “Nobel Winner IPCC recognizes four Alcoa employees for their efforts in accumulating and disseminating knowledge about climate change. The four employees are: Ken Martchek, Manager for Environment and Sustainability, based in Pittsburgh; Vince Van Son, Commercial Manager - Sustainable Solutions, located in Tennessee; Mauricio Born, Manager for Health, Safety, Environment and Sustainability, for Alcoa Latin America; and Hezio Oliveira, Environment Superintendent for the Alumar consortium in Brazil”(www.allbusiness.com).

According to Manager 3: “All the company’s actions are turned to social responsibility and sustainable regional development reflecting the values of the system of management of the Alcoa ".

In overall, the managers’ responses shows that Alcoa develops a series of programmes that encourage employees in voluntary actions. Manager 4 also cites the program Bravo! which Alcoa Pocos de Caldas was the unit that had the largest participation (73%). All this information is also in accordance to what the company current publishes in its website: “Some 3,300 employees of Alcoa in Brazil (53% of all staff) were involved with volunteer activities in 2008, via the Bravo! program. Around 167, 400 hours were dedicated to entities. The company has already donated R$ 1.9 million to more than 390 institutions in various states.” (www.alcoa.com)

Reinforcing the manager’s statement, Alcoa’s Corporate Social Responsibility volunteer actions were also subject of an entire television’s program at TV Cultura channel called Social Balance. The program shows Alcoa’s Social Responsibility action in a state school in Sao Paulo, including volunteer activities of Alcoa’s engineers, buyers and admiringly Alcoa’s ex-employees (www.info4.com.br)

However, Manager 1 criticizes the company’s training programs in CSR in some cases. He says: “Alcoa is a great company, very respectful, but sometimes the company’s training programs occur so often that makes difficult the development of our work. We definitely learn, on the other hand, our sectors responsibilities sometimes are compromised.”

How much has Alcoa Inc. developed knowledge towards CSR? (Shahin and Zairi, 2007)

Manager 1 repeat himself saying that, in relation to the employees, whereas the company has a bunch of different training programs it can also compromise some sectors as not every employee needs to be trained in all aspects.

The company, though reinforces its commitment to social responsibility and sustainable development encouraging employees to interpret those meanings not only in a professional level but in a personal level too, which shows exactly the company’s corporate culture towards social responsibility and sustainable development; where norms, regulations and values are drawn along the years, guiding their employees and creating its culture, and where the founder has a crucial position, being the one who first underlie most of the organization’s ethics code.

As argued by Schneider and Barsoux, (2003; 292) “Many Western business schools preach profit maximization as the ultimate goals to be achieved. They promote the idea that firms exist in order to provide benefits to shareholders, or to reduce transaction costs. These notions reflect underlying assumptions of organizations as instrumental, and of managers as ‘rational economic’ actors, driven by self-interest (individualism).”

In contrast, to this idea, “… firms exist to promote the well-being of society (social responsibility) reflects assumptions of organizations as systems of relationships’, and of managers as ‘paternalistic’, driven by concern for the ‘collective’ (stakeholders).” (Schneider and Barsoux, 2003, p. 292) These notions can be found in Alcoa’s visions: “At Alcoa, our vision is to be the best company in the world--in the eyes of our customers, shareholders, communities and people. We expect and demand the best we have to offer by always keeping Alcoa's values top of mind” (www.alcoa.com).

Does Alcoa Inc. realise the role of stakeholders in the continuous improving system of CSR? (Shahin and Zairi, 2007)

In general, manager’s responses show that Alcoa’s efforts in building relationships with all stakeholders is part of an strategic routine context for the company and which has also been influencing some other companies especially regarding social and environmental issues.

Manager 1: “The company’s commitment guarantee the future of its business reaching the expectations of its shareholders in accordance to the expectations of other stakeholders, whether they are employees or the society (…)”

Manager 4 affirms: “Alcoa’s concerns, especially with the interests of its immediate society are of extremely importance since it is the society who, in fact, legitimizes the work of the organization in all its unities.”

Manager 1 says: “Alcoa’s commitment to stakeholders as a whole is proved. For example, this year Alcoa has been nominated as one of the most sustainable and exemplary enterprises of the world in the annual Global ranking 100, during the Economical World-wide Forum, in Davos, Switzerland. The evaluation includes not only activities in an environmental perspective but also the relationship of the company with its stakeholders since the beginning of its activities.”

The company’s website proves what the managers affirm: “Our actions generate economic, social, and environmental effects not only in the workplace but also externally. In turn, we are affected by the demands and actions of internal and external stakeholders.
Stability within our relationships with stakeholders is a primary objective of our stakeholder engagement processes. Pursuit of this stability is an essential, desirable, rewarding, but often challenging aspect of modern business.” (www.alcoa.com)

What has Alcoa Inc. done to preserve the local and global environment? (Shahin and Zairi, 2007)

According to Manager 2: “This is not a difficult answer when talking about one of the most sustainable companies in the world.”

Manager 5: “Alcoa has different programs in relation to the environment and each of them has its unique contribution to global environmental problems, such as global warming etc (…)”

Environmental concerns integrate the company’s overall strategy. The company has a decentralized structure and develops differentiated programs within each one of its units.

This makes possible to the organization to analyse the region’s specific environmental problems, driving its efforts in the solution of local and regional environmental issues, contributing, therefore to the improvement in the global environment.

For example, as published by ‘Epoca Negocios’ magazine (n. 23 of January 2009): The responsible exploration by Alcoa in the region of Juriti in the bank of the Amazon River. The magazine says: “The challenge: to manage the impact of the project on the lives of thousands of residents who think Alcoa should not even be there in the first place” (Ribeiro, 2009; 105).

The magazine also adds: “One of the concerns of Alcoa is to avoid the residents from becoming dependent on the project. Hence the creation of initiatives like the family vegetable garden program” (Ribeiro, 2009; 113)

All the managers cite the company’s Sustainability report as an important guide for the company’s activities towards the preservation of the environment.

Therefore, the decision of collecting information from its report was made giving examples of the company’s commitment to the global environment and is shown as follows:

“In 1998, Alcoa established a Climate Change Strategy Team that developed and promoted our position on climate change, including our target of reducing greenhouse gas (GHG) emissions by 25% below 1990 levels by 2010. We achieved that goal in 2003, despite our continuous growth;

Alcoa participated in the United Nations Framework Convention on Climate Change’s 14th Conference of Parties in Poznan, Poland, and maintained our leadership position on federal climate policy through our involvement in the U.S. Climate Action Partnership (USCAP);

Alcoa continued to reduce our absolute greenhouse gas emissions in 2008, achieving a 36% reduction from 1990 levels. It also continues to research transformational production technology that will reduce direct emissions, improve energy efficiency, or both;

Alcoa supports the use of renewable energy, and we are engaged in the installation of solar and wind generation projects at several of our smaller plants. For our primary metals operations, we incorporate a preference for no to low carbon sources to power our smelters. Today, our company’s hydroelectric facilities generate billions of kilowatt hours for Alcoa operations worldwide, with about 60% of our smelter output powered by hydroelectricity;

In 2008, we announced a goal to help drive the recycling rate of used beverage containers (UBCs) from the 2007 U.S. recycling rate of around 54% to 75% by 2015;

In 2008, our reduction in freshwater use versus 2000 levels improved to 28%. However, we now know that our goal of a 60% reduction in water use by 2009 and 70% by 2010 from a base year of 2000 will not be met.” (Alcoa Sustainability Report, 2008; 7-8)

Regional environmental initiatives are:

“Saving the Turtles of the Amazon: In early 2008, Alcoa and the citizens of Juruti helped release almost 7,700 baby turtles into the wild as part of Juruti’s participation in the “Turtles of the Amazon” project. Designed to help citizens in Amazonian communities conserve and manage turtles in their area, the project is a joint effort between the Chico Mendes Institute for Biodiversity Conservation (ICMBio) through the National Center for Conservation and Management of Reptiles and Amphibians (RAN), as well as Alcoa and the communities.” (Alcoa Sustainability Report, 2008; 13)

“We have over 1,800 hectares of Environmental Parks voluntarily maintained by Alcoa, which annually receives thousands of visitors and where environmental education actions are carried out.

We have acquired an area to create an Environmental Parkvin Tubarão-SC.

We have established an agreement with International Conservation- Brazil to support the PARNA - Amazon National Park.

We have invested resources from the expansion compensation for the Alumar plant in the Itapiracó Park and the Rangedor Ecological Reserve in São Luís-MA.

We support CEPEMA (Environmental Research Center) of the University of São Paulo in Cubatão – SP.” (Latin America Alcoa Sustainability Report, 2006/2007; 11)

All this information shows how much Alcoa is engaged in environmental issues, participating in different ways to the improvement of environment’s quality.

Are there any industrial eyesores for which Alcoa Inc. was responsible a decade ago, but which have not been rehabilitated? (Shahin and Zairi, 2007)

Managers were not able to give statistics or clear information about past activities of the company in relation to the existence of eyesores that could not have been rehabilitated. The only statement they could give was that a range of environmental and financial aspects are considered by the company when developing options for treating, disposing, or using bauxite or any other residues or products.

Would you be happy about the good-neighbourliness of Alcoa if you had to live next door to it? (Shahin and Zairi, 2007)

In general, managers do not show any controversies against being neighbour of the company, in fact they say they would be pleased to “share their garden” to a company that seeks development in a sustainable way.

However, they affirm that the company situated in Pocos de Caldas, is located in an area where population is not intense, therefore, being difficult to make a good judgement taking into consideration all the aspects and not only environmental aspects.

Do you have an efficient environmental control and protection system? Have you tested it to see that it does work? Does the company environmental supremo – if there is one – have the authority to impose his decisions over those of plant managers, or does corporate policy ensure compliance in some other way? (Shahin and Zairi, 2007)

Managers agree that the company has an efficient control system in relation to its social responsibilities, especially concerning the global environment. They point out the company’s web page where environment values, policies and principles can be found.

According to them, environmental concerns are part of the company’s overall strategy, however, and as explained in question 5, the decentralization of the company’s structure make possible to analyse environmental problems of each of its plant’s surroundings, driving efforts in the solution of local and regional environmental issues also contributing to the global environment.

In addition, they believe that Alcoa’s business system in Brazil has efficiently been managed, especially in which concerns wastage, which according to them has also contributed to the improvement of its image and performance.

The following example found in the company’s website shows the performance of the company in recycling aluminium cans:

Aluminum Metal Recovered by Alcoa from Purchased Scrap

Thousands of metric tons [image]

Figure 4 – Source: Material Use & Recycling—Performance Data (www.alcoa.com)

Aluminum Can Recycling Rate %

[image]

Figure 5 - Source: Alcoa’s Material Use & Recycling—Performance Data (www.alcoa.com)

According to Alcoa’s website:

Values: We work with safety and in such a way as to protect and promote the health and well-being of people and the environment.

Policy: Alcoa's policy is to operate worldwide in a safe and responsible way, respecting the environment and health of our employees, clients and the communities where we operate. We do not compromise the Health, Safety and Environmental Value as a function of profit or production. All Alcoans have a duty to understand, promote and support implementation of this policy and all its principles.

Principles: We support the prevention of pollution and sustainable development, incorporating social responsibility, economic success and environmental excellence in our decision-making processes ; (…)” (www.alcoa.com)

Have you developed any products primarily because they meet a social rather than a commercial need? (Shahin and Zairi, 2007)

The process of social responsibility and sustainable development is not recent within Alcoa’s Industry, not only in Brazil but also especially all over the world and according to what was analysed, Alcoa does not compromise its environment, health and safety of its employees and the interest of its shareholders as a whole in order to make profit or production.

However, managers seemed unclear about the development of a product especially made to meet social needs rather than commercial.

Has Alcoa obtained an outside view of its social responsibility and sustainable development performance? Do you know where it stands now? (Shahin and Zairi, 2007)

Along the years, Alcoa is being considered as a role model organization for social responsibility and sustainable development practices. Many examples are cited by the managers interviewed and proved through different websites where Alcoa’s name is synonym of a ‘green’ and responsible corporation.

In a global perspective, Alcoa has received in the past decade different prizes:

Alcoa has been in the Global 100 list of the most sustainable corporations in the world for 5 consecutive years (www.global100.org).

Alcoa was considered in 2008 one of the most ethical companies in the world (www.ethisphere.com, www.ethicalmarkets.com)

Fortune also names Alcoa one of the Most Admired Metals Company (money.cnn.com) In Brazil, specifically the company has also been award:

Environmental Impact Award – American Society for Quality: Alcoa Aluminio, Pocos de Caldas (www4.asq.org)

Brazil protection award for Health and Safety (five awards) – Protecao Magazine and the Brazilan Protection Directory (www.alcoa.com)

According to all the managers, the awards have led the company to stand out its good reputation in relation to ethical and sustainable practices, improving its image within the business sector, with shareholders and stakeholders as a hole.

Would you say your relationships are (a) good, (b) tolerable, (c) awful in relation to:

. Environmental and other pressure groups?

According to the various actions in pro of the environment and towards sustainable development, managers agree that Alcoa’s reputation is considerable high as well as its relationship with environmental groups.

However, 2 of the managers cite the fact that environmental groups are not always in completely accordance to the organization’s practices and a completely “piece” among them is almost impossible.

Alcoa develops different programs jointly to other organizations, NGOs, environmental groups, and the government, for example, INCRA Institute (an Institute responsible for promoting equal distribution of land in Brazil, benefiting small farmers) and ETHOS Institute, among others, which, according to the managers keep company’s prestige among its competitors and opposition groups.

. Consumers?

In a general view, Alcoa as a mineral extractor, does not sell its products straight into the retail market, or better explaining Alcoa supplies aluminium to different other companies that make use of the raw-material to make their own products.

. Stakeholders?

According to the managers, Alcoa usually promotes meetings with the community towards the achievement of agreements regarding all aspects involving the company and the society as a whole.

Manager 1 states: “I make mine the words once said by Franklin L. Feder, who is the president of Alcoa Latin America and the Caribbean: ‘The relationship with the Company’s other stakeholders is just as important as committing to the development of projects, both with respect to sustainable good practices and to activities with the communities’.

. Employees?

In relation to the employees, for example, the company has a centre called CoE-Center of Expertise in Talent Management (HR), which has been promoting seminars and administered trainings for professionals of the Alcoa on subjects of interest or on areas of acting in the Company. The objective of the seminars is sharing knowledge and to contribute for the process of apprenticeship of the officials. The seminars take place monthly in virtual way for all the towns simultaneously and they spread to the officials by University Alcoa’s e-mail.

To demonstrate the company’s commitment to its employees regarding their work environment is shown according to the graph below where the rate of accidents resulting in absences is low, especially in America Latina and Caribbean compared to Alcoa Inc. in general.

[image]

Figure 6 – Safety Performance -Incident frequency rate until February / 2009

Source: Gente em Acao – Alcoa’s Internal Newspaper (www.alcoa.com)

One of the company’s plant, Alumar in the state of Maranhao, ended the first one of four works of improvement in the highway BR-135, the only land connection of the island of Sao Luís, capital of Maranhão, with the continent. The objective is to provide security to the drivers as well as pedestrians and which make part of the Program of Security in the BR-135. This communitarian project of the Expansion of the Refinery is developed with the finality of contributing to the reduction of the high rates of accidents in this highway. This Program carries out actions in the areas of education in the traffic, inspection and engineering (www.alcoa.com).

Manager 5 affirms: “Even being a multinational company, Alcoa favours a familiar environment, promoting the integration among its employees and stimulating them in expressing opinions, ideas and suggestions. This close relationship between enterprise and employees makes us believe that each one can do the difference for the success of the business.”

. Government? (Shahin and Zairi, 2007)

In overall, managers believe that the company’s relationship to the government is good.

As an example, its internal magazine called Gente em Acao, published and distributed to all its plants in the country, demonstrates that the states governments for example Goias, through AGETOP- Agencia Goiana de Transportes e Obras and to SEFAC-Serra do Facao Energia S.A. handed over in January the work of paving a passage of the GO-301 highway. The inaugurated passage is located between GO-210 highway and the Hydroelectric Serra do Facao in which Alcoa has participation, and it will allows users of the highway to have access to future lakes of the factory. The services counted with resources of the SEFAC and of the Government of Goiás, totalizing R$ 3 millions ($1.5 millions) (www.alcoa.com).

In your opinion, does Social Responsibility lead to Sustainability?

All managers interviewed agree that a Social Responsibility strategy can lead to a Sustainable future of societies. They also add the importance of employee involvement in the perceived prospects for success, and the strategies in place, as those vary largely across locations and companies, as well as in terms of personal convictions. They also stress the positive impact of such activities where engagement especially in local areas and everyday actions in a local context are the likeliest to achieve success.

However, two of the managers seem to believe that besides acting ethically a company will never put in second plan its goals of making profit.

An important aspect, is the fact that one of the managers pointed out self-promotion and advertising as been a motivation to start actions of Social Responsibility instead of the real achievement of Sustainable Development.

4.3.1.2 Questionnaire 2

A second and subjective questionnaire was also formulated and given to the managers with the objective of helping towards a critical evaluation of how personal ethics, organizational culture and organizational systems are related to each other contributing to the ethical values of the organization, as well as its effectiveness and performance. A copy of the questionnaire can be found in Appendix I.

How most companies are dealing with the fact of being driven by the aims of profits and high performances instead of paying attention to their ethical behaviour, as well as how ethics is still not an important part of the organizations, is demonstrated in a daily basis all around the world. The paragraphs below, guide us in analysing what are the personal perceptions of the companies interviewed managers in relation to business ethics corporate culture and social responsibility in Alcoa Inc.

Many companies still do not have any formal or written ethics code, concluding that ethics is just an informal aspect and is not an important part of the leaderships’ agenda. However, as we could see along the organization analysis and the manager’s responses to the questionnaire, at Alcoa, informal communication channels, as well as training, seminars or audits transmit ethics.

Moreover, the company shows a formal way of ethically guiding their employees; managers agree that the values of the organization play an important role, being as important as the objective of making profit. They relate it as being a key to the organization effectiveness and performance. Not only have they agreed that the values are important but also that an ethical environment is a motivation towards employees’ personal growth and development, consequently increasing the performance of the organization.

When asked if social responsibility is something that can be manipulated or controlled, managers have separated opinions: three believe that a well-managed social responsibility strategy can help the company in taking advantage of new opportunities in the market to increase its performance, which means that an ethical culture helps providing stability to the organization. On the other hand, two of the managers also point out the fact that a disguised and poorly controlled culture can have a major negative effect to the organization’s social responsibility actions and end up creating an opposite image.

Kogel (2006; 137) affirms: “Corporate culture is the very basis for corporate social responsibility”. The questionnaire also shows that the organization is engaged in many environmental and social programs and managers do consider their organizations concerned about wastage, recycling, global warming etc, which demonstrates a strong corporate social responsibility, and how the company responds to the growing need to manage issues that can affect their business reputation.

In conclusion, the analysis of the optional questionnaire shows that a constructive organizational culture is not dictated by one person or by the leadership. In organizations with constructive cultures, all group members are responsible for its success. Therefore, leadership's task is to empower its staff through participatory decision-making and motivation. Always following the organization’s codes of ethics, policies, rules and the law, preventing negative consequences of a weak culture's impact on the human behaviour at work; because the weaker the culture of the organization, the lower the work motivation, work commitment, work relation, work ethics and loyalty, which affects the overall company’s strategies and objectives.

Alcoa views as a very important task the periodic revision of its culture to make sure it still allows the organization to succeed in its competitive environment, also giving attention to its corporate social responsibility, a subject that is becoming more and more part of the organization’s main goals.

At Alcoa an ethical culture was created since the beginning, with its founder Charles Martin Hall, to integrate it into how you hire people, how you treat employees, the type of customer service you provide, and the general environment of your organization. It was clear that the founder’s view is still echoing inside the company.

CHAPTER V

5.1 Conclusion

The end of the 20th and beginning of 21st century have been marked by the transference of society’s aspirations, from quantity to quality, from brand products to ethical ones. Therefore organizations are been questioned by the ethics of its practices and for the necessity to realign those to social priorities.

In this context, Corporate Social Responsibility has been considered as a basic element in the strategic decision-making. Considering so, one of the central questions of the strategic process of an enterprise is to determine which type of goals the company will pursue: maximization of wealth and generation of profit for shareholders or the balance between those and satisfaction of stakeholders as whole.

According to Addo (1999; 62) “Enlightened companies will recognise that responsible behaviour is often a pre-requisite for long-term profitability, but ethically and socially desirable conduct should not be seen merely as a means of promoting competitive success. Rather, managers should regard ethical and social values as possessing independent weight, and should accept that respect for them will sometimes require companies to make less than maximum possible profits.”

Meantime, the subject of Social Responsibility in business is still a target of intense discussions among defenders and critics. The major discussion lies around the viability of developing Sustainable practices taking strategies based on Social Responsibility as a foundation, in order to achieve long-term objectives.

In fact, Corporate Social Responsibility arises in the context where laws and regulations reach their limits, especially regarding environmental aspects.

Despite being a question of high complexity, to reach the success of sustainable undertakings carried out by enterprises have been an objective pursued by great part of the multinationals corporations acting in developing countries like Brazil.

Initiatives taken by Alcoa, in particular, have been successful and already reveal some characteristics that accompany the enterprise in its Social Responsibilities’ practices towards sustainable development. Not only the company uses applied concepts of basic administration, but also there is involvement of the employees around the causes chosen, there is a clear and quite definite focus of action towards the society and environment, successful partnerships are carried out with competent organizations and a good relationship with pressure groups, NGOs and the government.

The company undertakes a proactive environmental policy linked to social and sustainable practices as its core business, based on strategic planning and implementation. Key elements are: commitment to prevention of the environment and the continual adaptation to stakeholders needs as well as an assurance of compliance with regulations and laws. Proactive policy can help multinational companies build social responsibility into sustainable development. Strategies, goals, and objectives are formulated only after consideration of factors such as: stakeholder demands, cost reductions and productivity increases gained from initiatives linking environmental performance and company reputation and competitiveness always taking in consideration the strengths and weaknesses of its social and environmental policies.

If strategy is to lead to sustained competitive advantage, the organization must assess the impact of its activities on stakeholders perceptions and strategic cost concerns. These cost issues cover short and long-term considerations as well as the measurement of financial impact of implementation.

A successful responsible organization structure involves training, awareness, and compliance with society, consumers, and shareholders as a whole, communication, and willingness for embracing environmental causes.

As Al Gore (2008; 2) states in its book ‘Earth in the balance: forging a new common purpose’: “The ecological perspective begins with a view of the whole, an understanding of how the various parts of nature interact in patterns that tend toward balance and persist over time. But this perspective cannot treat the Earth as something separate from human civilization; we are part of the whole too, and looking at it ultimately means also looking to ourselves.”

5.2 Limitations

Although the research aims have been realised and the research objectives have been achieved, is acknowledged that there have been certain limitations to the research project. Alcoa’s analysis was made in its plant based in Brazil, which obviously limited the data gathering process, relying on third parties for the acquisition of these datas. Also because of that, it was not possible to include interviews with employees and members of the society, restricting the enrichment and accuracy of the results perceived.

In fact, a combined questionnaire should have been directed to employees and different stakeholders, making the vision of Corporate Social Responsibility of the organization more clear and taking in consideration different angles, which could allow for a more comprehensive testing of the trends in question.

Time restrictions and manager’s availability limited the number of interviewees, which could have had an impact in the conclusions. Furthermore, it was noticed some lack of knowledge regarding previous activities impact of the company, by the managers interviewed. A small sample size of only 5 different managers from only one of Alcoa’s plant, situated in Pocos de Caldas, limited the number of variables and weakened the statistical power of the analysis’ trends that relate to a multinational organization with a great amount of managers and employees.

Despite these limitations, the findings offer direction for future projects, especially in light of the research of different issues relating terms as Corporate Social Responsibility and Sustainable Development.

5.3 Recommendations

As Alcoa Inc. is a role model company in what regards corporate social responsibility and environmental ethics, with many awards winning, is hard to draw recommendations for the company itself. However, was noticed some lack of engagement in other activities that the company could perform in order to improve life quality of those living around the areas where the company has extracting fields (e.g. river Amazon, Pocos de Caldas, etc); as these areas are extremely affected by mosquitoes and insects transmitters of diseases such as malaria.

The strategy training and development could also be reviewed, making the most when allocating resources. Prioritising quality than quantity, in order to refrain from wastes and achieving better results, as some managers recognised that some of the training activities were redundant.

5.4 Field for further research

The focus of this research was mainly concerned with environmental issues, leaving a broad margin to other areas to be researched, such as, social, health and safety, human resources, corporate governance, financial ethics just to cite a few.

In addition, the research could be enriched with a broader range of opinions (costumers, community, business partners, etc) rather than just managers.

5.5 Ethics in research

Research ethics is mainly concerned on the rights of those people who contributes and or become subject of the study. Wells (1994; 248 cited by Saunders 2003; 129) “defines ‘ethics in terms of a code of behaviour appropriate to academics and the conduct of research’”. The course of research should be guided by a code of ethics, providing a statement of principles and procedures that may be followed.

Therefore, the project research will be designed, reviewed and undertaken to ensure integrity and quality of the work. Interviews and questionnaires given by the manager cooperating with this research will be used of academic purpose only; they will be fully informed about the purpose, methods and intended possible uses of the research, what their participation in the research entails and what risks, if any, are involved.

To not compromise the work of the 5 managers involved in the research process, their names will be maintained confidential. The confidentiality of information supplied by the research is in accordance to the research ethics and subject to appropriate ethical review.

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APENDIX I

Questionnaire 1

Does Alcoa Inc. have written ethics policies?

Does Alcoa Inc. have a system to encourage managers to include corporate social responsibility criteria in business decisions? Does that system work? (Shahin and Zairi, 2007)

How much has Alcoa Inc. developed knowledge towards CSR? (Shahin and Zairi, 2007)

Does Alcoa Inc. realise the role of stakeholders in the continuous improving system of CSR? (Shahin and Zairi, 2007)

What has Alcoa Inc. done to preserve the local and global environment? (Shahin and Zairi, 2007)

Are there any industrial eyesores for which Alcoa Inc. was responsible a decade ago, but which have not been rehabilitated? (Shahin and Zairi, 2007)

Would you be happy about the good-neighbourliness of your factory if you had to live next door to it? (Shahin and Zairi, 2007)

Does Alcoa Inc. have an efficient environmental control and protection system? Does the company environmental supremo – if there is one – have the authority to impose his decisions over those of plant managers, or does corporate policy ensure compliance in some other way? (Shahin and Zairi, 2007)

Has Alcoa Inc. developed any products primarily because they meet a social rather than a commercial need? (Shahin and Zairi, 2007)

Has Alcoa Inc. obtained an outside view of its social responsibility performance? Do you know where it stands now? (Shahin and Zairi, 2007)

Would you say Alcoa’s relationships with government are (a) good, (b) tolerable, (c) awful?

. Environmental and other pressure groups?

. Employees?

. Consumers?

. Stakeholders? (Shahin and Zairi, 2007)

In your opinion, does Social Responsibility lead to sustainability?

Questionnaire 2

In which extent ethics is an important part of the leadership’s agenda in your organization?

□ Extremely important

□ Very important

□ Not very important

□ Not important, whatsoever.

How ethics is transmitted to employees in your organization?

□ Ethics codes

□ Training Programs

□ Speeches

□ Other communication channels

Social Responsibility can be manipulated and controlled taking advantage of new opportunities in the market to increase its performance.

□ Strongly agree

□ Agree

□ Disagree

□ Strongly disagree

An ethical culture in an organization is as important as its monthly or annually profit; it plays a key role in the organization sphere.

□ Strongly agree

□ Agree

□ Disagree

□ Strongly disagree

Business ethics can be measured?

□ Strongly agree

□ Agree

□ Disagree

□ Strongly disagree

If the organization provides an environment that is ethical, supportive and challenging, most employees will drive toward personal growth and development, consequently increasing the organization performance.

□ Strongly agree

□ Agree

□ Disagree

□ Strongly disagree

How do you describe the culture of your organization?

□ Extremely formal

□ Formal

□ Informal

□ Extremely informal

The organization values are intrinsic related to the organization effectiveness.

□ Strongly agree

□ Agree

□ Disagree

□ Strongly disagree

Does your organization have audits to discuss about ethics?

□ Very often

□ Often

□ Once a year

□ Never

Is your organization engaged in any environmental or social program? If yes, specify.

□ Yes - ________________________________________________________

_________________________________________________________________

□ No

How concerned is your organization’s regarding aspects such as global warming, wastage, green issues, etc?

□ 100 %

□ 60%

□ 40%

□ 15%


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