CSC Corporate Social Responsibility & Ethical Standards 3 — Questions and Answers
Question 1: Which concept describes the idea that corporations owe duties not just to shareholders but to all parties affected by their operations?
- Shareholder primacy
- Stakeholder theory (Correct answer)
- Agency theory
- Fiduciary capitalism
Correct answer: Stakeholder theory
Stakeholder theory, advanced by R. Edward Freeman, holds that firms must consider the interests of all stakeholders, not just investors.
Question 2: The B Team Responsible Tax Principles primarily call on companies to:
- Minimize tax payments using all legal avenues
- Pay taxes in line with economic substance and disclose tax approaches transparently (Correct answer)
- Advocate for lower corporate tax rates globally
- Offshore profits to reduce effective tax rates
Correct answer: Pay taxes in line with economic substance and disclose tax approaches transparently
The B Team principles urge companies to pay taxes where economic activity occurs and to be transparent about their tax strategies.
Question 3: What is the primary purpose of a supplier code of conduct?
- To set product quality specifications
- To communicate the company's minimum expectations for supplier labor, environmental, and ethical practices (Correct answer)
- To establish pricing agreements
- To define intellectual property rights in contracts
Correct answer: To communicate the company's minimum expectations for supplier labor, environmental, and ethical practices
A supplier code of conduct defines the non-negotiable baseline standards vendors must meet to work with the company.
Question 4: In CSR, 'shared value' (as defined by Porter and Kramer) means:
- Distributing profits equally among all employees
- Creating economic value in a way that also creates value for society (Correct answer)
- Sharing ESG data publicly with competitors
- Dividing sustainability costs across the supply chain
Correct answer: Creating economic value in a way that also creates value for society
Porter and Kramer's shared value concept argues that companies can generate competitive advantage by addressing societal problems.
Question 5: Which principle of the UN Global Compact specifically addresses anti-corruption?
- Principle 3
- Principle 6
- Principle 8
- Principle 10 (Correct answer)
Correct answer: Principle 10
Principle 10 of the UN Global Compact calls on businesses to work against corruption in all its forms, including extortion and bribery.
Question 6: When a company's stated values conflict with employee behavior, this gap is often called:
- Value chain disconnect
- Ethical drift (Correct answer)
- Governance arbitrage
- Mission misalignment
Correct answer: Ethical drift
Ethical drift occurs when day-to-day employee actions gradually diverge from the organization's stated ethical principles.
Question 7: The US Foreign Corrupt Practices Act (FCPA) prohibits American companies from:
- Hiring foreign nationals for executive roles without disclosure
- Bribing foreign government officials to obtain business advantages (Correct answer)
- Operating in countries under US trade sanctions
- Transferring profits from foreign subsidiaries without tax declaration
Correct answer: Bribing foreign government officials to obtain business advantages
The FCPA makes it illegal for US persons and companies to bribe foreign officials to gain or retain business.
CSC Corporate Social Responsibility & Ethical Standards 3
Which concept describes the idea that corporations owe duties not just to shareholders but to all parties affected by their operations?