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Brian Child from International Herald Tribune brought the CSR new standard formula: Social+ Responsibility=Reward.
Responsible action towards employees, suppliers, stakeholders, shareholders supports the economical success of the company.
CSR has been the main topic of discussion for the European Commission, United Nations as well as other NGO's and in Johannesburg 2002 was established in the action plan of World Summit for Sustainable Development as an international goal.
A report on CSR was published in 2004 by the European Commission and in March 2006 the European Committee founded the "European alliance for CSR" which is mainly powered by enterprises.
In Romania, the "American Chamber of Commerce" started CSR conferences in 2002.
In order to get a proper comprehension of the sustainable development and business ethics we will offer the definition of the main concepts starting with Dennis A. Rondinelli who has prepared for International Research Colloquium on Multinational Enterprise and Sustainable Development: Strategic Tool for Competitiveness, Center for International Business Education and Research, Georgia Tech, October 19-20, 2006 the article named: Globalization of sustainable development?: Principles and practices in transnational corporations.
In this article the author is studying the growing public concern that private corporations should not only earn reasonable profits and provide fair returns to shareholders but also operate as good corporate citizens and socially responsible organizations has spread to the largest transnational corporations (TNCs) and seems to have been taken up by companies in both richer and poorer countries. Sustainable development - a concept that has been widely adopted by international organizations, national and local governments, and businesses - calls for people and organizations "to meet the needs of the present without compromising the ability of future generations to meet their own needs."
The concept of sustainable development includes the simultaneous consideration of economic growth, environmental protection, and social equity in business planning and decision-making.
As part of their corporate citizenship or social responsibility strategies many TNC's are creating voluntary environmental programs to manage more effectively the environmental impacts of their plants, facilities, and operations.
Study of the Transnationality Index (TNI)
This study is following two directions, based on UNCTAD statistics for 2008 . The first one is presenting the top 10 non-financial multinational corporations analyzing TNI ranking by percent. The second study is focused on top 100 non-financial multinational corporations analyzing TNI ranking by foreign assets.
For a better understanding of the CSR of TNC's we have to discuss further about the Transnationality Index.
The Transnationality Index (TNI) is a means of ranking multinational corporations that is employed by economists and politicians. It is calculated as the arithmetic mean of the following three ratios (where "foreign" means outside of the corporation's home country):
the ratio of foreign assets to total assets;
the ratio of foreign sales to total sales;
the ratio of foreign employment to total employment.
Table 1. The world's top 10 non-financial multinational corporations by Transnationality Index as calculated by the United Nations Conference on Trade and Development in 2008
Electrical &electronic equipment
Pernod Ricard SA
Food, beverages and tobacco
Vodafone Group Plc
Food, beverages and tobacco
Metal and metal products
Xstrata, founded as home country in UK, has the leading position in 2008 with a calculated percent of 93.2, followed by the ABB Ltd from Switzerland with 90.4 percent and Nokia from Finland with 90.3 percent. As total percentage the top the companies are competing with very tight results.
The globalization of industry and services was a good opportunity for these top level companies to achieve high level of performance in their business field and to cross the national borders becoming highly performance transnational companies.
Multinational corporations are also ranked by the amount of foreign assets that they own.
All the data are from the companies annual reports' unless otherwise stated.
TNI, the Transnationality Index is calculated as the average of the following three rations: foreign assets to total assets, foreign sales to total sales and foreign employment to total employment.
Industry classification for the companies follows the United States Standard Industrial Classification as used by the United States Security and Exchange Commission (SEC).
In a number of cases foreign employment data were calculating by applying the share of foreign employment in total employment of the previous year to total employment of 2008.
As is presented by the UNCTAD it results that USA, by General Electric has the first position in the world top 100 non-financial TNC's ranked by the foreign assets in 2008, followed by Royal Duch/Shell Group from UK, second place and Vodafone Group Plc, UK on the third place.
Starting with this situation analyzed by UNCTAD, other organizations evolved in business ethics implementation of the TNC's are presenting their own rewards for good ethical practice, applying different criteria for their classification.
The research-based Ethisphere Institute is a leading international think-tank dedicated to the creation, advancement and sharing of best practices in business ethics, corporate social responsibility, anti-corruption and sustainability. The Institute's associated membership groups, the Ethisphere Council and Business Ethics Leadership Alliance, are forums for business ethics that includes over 200 leading corporations, universities and institutions.
Ethisphere Institute provides the only third-party verifications of compliance programs and ethical cultures, Ethics Inside CertificationÂ® and Compliance Leader Verification.
Business Ethics Leadership Alliance (BELA) founded by The Ethisphere Institut promotes ethical business practice to encourage openness, transparency, responsibility and accountability.
BELA seeks to establish a benchmark framework for ethical behavior in the corporate world by focusing on four core values:
Legal Compliance - Following both the letter and spirit of the law to counter fraud, corruption, bribery and deceit
Transparency - Setting the cultural tone from the top by encouraging dialogue on ethical issues and disclosing information in a full, accurate and timely manner
Conflict Identification - Actively identifying and addressing potential conflicts of interest and appearances of impropriety
Accountability - Emphasizing quality, customer protection, environmental sustainability and integrity in the supply chain
Ford Motor Company was named in 2010 The Most Ethical Company by the Ethisphere Institut, the only automaker to receive the honor in 2010, is among 100 global companies chosen for the designation from a field of thousands of companies in more than 100 countries and 36 industries.
In the World top 100 non-financial TNC's ranked by foreign assets, Ford Motor Company has the position 16, with 102 588 million dollars in foreign assets, from a total of 222 977 million dollars assets. It has 124 000 foreign employees from a total of 213 000 employees. TNI for Ford is 54.3%.
David Leitch, Group Vice President and General Counsel for Ford reminds about the heritage of business ethics from the founder of this company, Henry Ford:
"Another way to encourage ethical conduct is to have a heritage of ethics. Our founder Henry Ford once said, "There is a most intimate connection between decency and good business." He believed that the main purpose of a corporation should be to serve customers, employees, and communities, and we still talk today about working to make great products, grow a strong business, and contribute to a better world."
As a conclusion of the previous analyze we see the competition in the business environment founded on the common interest and on mutual agreement concerning the leadership rules and in a total understanding of the fact that this competition takes place in a community that it serves and depend on, thereby resulting the mutuality. When a mutual business gain and/or business dependency relationship is perceived, people can expect a higher trust level between the parties.
Business doesn't means only the company itself, but also the networks of suppliers, workers, clients and investors that are sharing common interests, implying cooperation and mutual trust.
The social responsibility is a moral concept that sums-up private virtues (honesty, mutuality, usefulness) and also the social and moral availability and capability.
International organizations as European Committee, United Nations or private organizations (for example Ethispere Institut, Caux Round Table, Globethics) are continuously observing the business environment and analyzing the corporate behavior based on various ethics principles.
Managing environmental, social and governance issues based on ethical business behavior must be a key part of the investment-decision making for institutions and companies. In fact, people can even blame the corporations for lack of ethical practices and being responsible for the actual economical crises.
The awarded of best ethical business practice corporate offer a model of behavior regarding all parts involved with their business (shareholders, stakeholders, social communities and environment), following the sustainable development pattern to meet the needs of the present without compromising the ability of future generations to meet their own needs.