BUSN9254 - Food Quality Influence on Customer Choice of Restaurant

This literature review examines the influence of food quality, specifically food presentation and menu variety, on customers' restaurant choices. It highlights that perceived food quality directly affects customer satisfaction and restaurant selection, with key attributes including taste, presentation, variety, health options, freshness, and temperature. The review emphasizes the equal importance of food presentation and menu variety in shaping the overall perception of food quality. The study suggests that restaurateurs should focus on enhancing plate presentation and utilizing the menu as a communication tool to attract and retain customers. It also identifies a gap in current research, recommending future studies to categorize the importance of various food quality attributes using a defined scale.

CORPORATE SOCIAL RESPONSIBILITY:
SOME CRITICAL QUESTIONS FOR
AUSTRALIA
HELEN ANDERSON*
Introduction
Corporate social responsibility (CSR) is currently one of the most
discussed topics by business and scholars alike. The concept has been
enthusiastically supported by three very disparate groups - by
government,l by non government organisations (NGOs) ranging from
charities to national and international industry groups, and by business
itself, in particular large corporations. 2 This support comes at a time
when there is greater awareness by individuals about environmental
matters, sustainability, workplace rights and issues concerning labour in
other countries, and occupational health and safety. Rhetoric about
corporations 'giving back' to the communities that made them successful
abounds.
2
LLB (Hons) (Melb), GradDipBus (Acc), LLM, PhD (Monash); Barrister and Solicitor
(Vic); Associate Professor, Department of Business Law and Taxation, Monash
University.
There have been a number of inquiries into CSR - see Corporations and Markets
Advisory Committee, Corporate Social Responsibility Discussion Paper, November,
2005, (CAMAC Discussion Paper) available at http://www.camac.gov.au/camac
/camac.nsf/byHeadline/PDFDiscussion+Papers/$file/CSR DP.pdf, accessed 11 th April,
2006; Parliament of Australia, Parliamentary Joint Committee on Corporations and
Financial Services, COlporate Responsibility: Managing Risk and Creating Value,
June 2006, (the Parliamentary Joint Committee Report) available at
http://www.aph.gov.au/Senate/committee/corporations ctte/comorate responsibilitv/re
port/index.htm, accessed 11 th April, 2006. The Prime Minister has also established the
Prime Minister's Community Business Partnership, discussed further below. See
http://www.partnerships.gov.au/csr/comorate links.shtml
In 2000, a study by the Centre for Corporate Public Affairs and the Business Council
of Australia found around half of Australia's large companies has policies related to
community involvement, social responsibility or stakeholder engagement. More than
half of these companies had developed policies in the last decade. Centre for Corporate
Public Affairs and Business Council of Australia, 'Corporate Community Involvement:
Establishing a Business Case' (2000) 38 - 9. In 2001, Cronin and Zappala concluded
from their survey of Australia's top 100 companies that just over 70 percent of
companies surveyed had CCI policies. Caitlin Cronin and Gianni Zappala, 'The
Coming of Age of Corporate Community Involvement: An Examination of Trends in
Australia's Top Companies' (Working Paper No 6, Research and Social Policy Team,
The Smith Family, 2002), 6.
© Law School, University of Tasmania 2007

144 University of Tasmania Law Review Vol 24 No 2 2005
Much of the corporate citizenship literature, both in Australia and
internationally, looks at the superficial 'what' of CSR and examines
actions that companies can take to be good corporate citizens. 3 Other
authors delve deeper by looking at the 'how',4 and examine the variety of
ways in which companies embrace CSR - ranging from cursory
philanthropy to stakeholder engagement in the most fundamental decision
making processes of the company.
This article takes a normative approach and looks at the 'why' of CSR; in
particular, it will question whether governmental support and enthusiasm
for CSR is appropriate, given the neo-classical view of corporations as
entities devoted to the maximisation of shareholder wealth. Milton
Friedman famously decried CSR as a 'fundamentally subversive doctrine'
with the capacity to distract companies from their primary focus. It will
be asked whether responsibility for the provision of some community
services or the protection of various aspects of society and the
environment should be devolved, albeit gradually and apparently with the
consent of all concerned, to an unaccountable being, the business
community, particularly where participation is on a voluntary basis.
Corporations, especially large, successful ones, are willing participants in
CSR, for the protection and enhancement of their reputations. It is
arguable that, with the retreat of the welfare state, governments take
advantage of this to shift costs to the business sector. NGOs are also keen
to encourage CSR to ensure that their own social objectives are advanced.
However, the difficulty with reputation-driven CSR is that it might
encourage companies to engage in activities which are 'seen' to be doing
the right thing - conspicuous donations, support for high profile causes 5 -
rather than the more fundamental protection of stakeholder interests, such
4
Eg David Brereton, 'Self-regulation of Environmental and Social Performance in the
Australian Mining Industry' (2003) 20· Environmental and Planning Lmv Journal 1;
Jonathan Batten, Samanthala Hettihewa and Robert Mellor, 'The Ethical Management
Practices of Australian Firms' (1997) 16 Journal of Business Ethics 1261; Robert
Kagan, Neil Gunningham and Dorothy Thornton 'Explaining Corporate Environmental
Performance: How Does Regulation Matter' (2003) 37 Law and Society Review 51.
Eg David Birch and George Littlewood, 'Corporate Citizenship Some Perspectives
from Australian CEOs' (2004) 16 The Journal of Corporate Citizenship 6; Mark
Glazebrook, 'The Social Construction of Corporate Citizenship' (2005) 17 The Journal
of Corporate Citizenship 5; Gianni Zappala, 'Corporate Citizenship and Human
Resource Management: A New Tool or a Missed Opportunity' (2004) 42 Asia Pacific
Journal of Human Resources 185; Jonathan Batten and David Birch, 'Defining
Corporate Citizenship: Evidence from Australia' (2005) 11 Asia Pacific Business
Review 293.
A cursory look at the websites of major Australian corporations shows that
environmental, health, educational and indigenous causes are most popular, along with
support for the homeless and financially disadvantaged. See further n 103 below.

Corporate Social Responsibility
as good treatment of their employees, timely and full payment of
creditors and manufacturing of quality, safe and inexpensive products and
services. The more that government promotes the visible forms of CSR,
the more likely it is that companies will adopt these superficial measures
of good corporate behaviour, window dressed to the maximum extent,
rather than inherently sound business practices which are of true benefit
to the community. For this reason, the espousal of reputational indices,
which may support a culture of CSR 'form over substance', is to be
discouraged.
While there is an extensive international literature which looks at the
costs and benefits ofCSR to companies individually, the current debate in
Australia over CSR lacks a rigorous analysis of its costs and benefits to
society as a whole. It is assumed that with corporate reputational
enhancement flowing from schemes to benefit the community, all parties
win. But this does not take into account consideration of what
corporations could do in the alternative with their resources, which might
be of equal benefit to society. It also fails to examine the long term
consequences for society if a pattern of government retreat from the
provision of social services or the protection of vulnerable parties
becomes entrenched. It does not consider whether the money invested by
corporations into CSR achieves the corporations' stated objectives or
whether the money is spent in an economically efficient or effective way.
This article begins with a discussion of the meaning of CSR, and how
companies incorporate it into their activities. It then examines legislation
that already imposes obligations on companies to behave in a socially
responsible manner, and looks at some of the recent CSR initiatives in
Australia. Next, the motivations for CSR are examined, highlighting the
issue of protection of corporate reputation and the government's motives
for its encouragement of CSR. Finally, the proper role of CSR in
Australia will be analysed. It will be recommended that a redefined CSR
is appropriate to ensure the true protection of stakeholder interests.
CSR defined
Definitions of corporate social responsibility proliferate, although each is
generally accompanied by the disclaimer that the term is neither
universally or easily defined. 6 For brevity and simplicity, it is hard to go
145
6 Mr Jeremy Cooper of the Australian Securities and Investments Commission (ASIC)
outlined the definitional issues that arise in the area of corporate responsibility: '[t]here
are some very vexing terminology problems ... such as what a stakeholder is, what
sustainability means, what triple bottom line reporting is and what we really mean by
corporate social responsibility itself ...' Parliamentary Joint Committee Report, above n
1 [2.3]. For an extensive coverage of the development of the term in the American

146 University of Tasmania Law Review Vol 24 No 2 2005
past Baron, who states that '[fjrom one perspective, it is the assumption
and fulfilment of responsibilities beyond those dictated by markets' . 7 The
report of the Parlialnentary Joint Committee on Corporations and
Financial Services, issued in June 2006 and entitled Corporate
Responsibility: Manag"ing Risk and Creating Value, stated that
[c]orporate responsibility is usually described in tenns of a company
considering, managing and balancing the economic, social and
environmental impacts of its activities. It is about companies assessing and
managing risks, pursuing opportunities and creating corporate value, in
areas beyond what would traditionally be regarded as a company's core
business. It is also about companies taking an 'enlightened self-interest'
approach to considering the legitimate interests of a company's
stakeholders.8
Recognising that corporate responsibility is a multi-faceted concept the
committee makes no attempt to reach a conclusive definition. Because of
the sheer diversity of modem corporations - in tenns of size, sectors,
stakeholders, structures and strategies - the concept of corporate
responsibility can have a different meaning to different people and different
organisations.9
The implementation of all CSR activities entails costs for all companies,
regardless of the form of those activities. One common point of
difference in definitions is whether corporate social responsibility
involves the company's core activities or is outside of those - in other
words, whether the company should be recovering the costs of the
programs or indeed be making money from them. At one end of the
spectrum are those who consider it wrong to profit from these activities,
7
8
9
literature, see Archie B Carroll 'Corporate Social Responsibility Evolution of a
Definitional Construct' (1999) 38(3) Business and Society 268.
David P Baron 'Private Politics, Corporate Social Responsibility, and Integrated
Strategy' (2001) 10 Journal ofEconomics and Management Strategy 7, 9.
Parliamentary Joint Committee report, above n 1 [2.7].
Ibid [2.15]. The CAMAC Discussion Paper noted that [w]hile there is an increasing
recognition and acknowledgement of corporate social responsibility (or comparable
notions such as 'corporate citizenship' or 'corporate social accountability') as an issue,
the term does not have a precise or fixed meaning. Some descriptions focus on
compliance with the spirit as well as the letter of applicable laws regulating corporate
conduct, while other descriptions concentrate on the societal impacts of corporate
activities (sometimes encapsulated in the notion of sustainability) on groups (usually
referred to as stakeholders) including, but extending beyond, shareholders. These
societal effects, going beyond the physical or social goods or services provided by
companies and returns to shareholders, are sometimes subdivided into environmental,
social and economic impacts. CAMAC Discussion Paper, above n 1, [1.1].

Corporate Social Responsibility
and therefore treat CSR as external to the core business of the company.
10
Indeed some definitions demand that the company's CSR activities are
less profitable than 'nonnal' corporate actions. Manne and Wallich
observed that '[t]o qualify as socially responsible corporate action, a
business expenditure or activity must be one 'for which the marginal
returns to the corporation are less than the returns available from some
other expenditure ... ' .11
At the other end are those who believe that truly successful corporate
social responsibility is embedded into a corporation's core profit making
activities and values, and goes far beyond superficial philanthropy. This
approach was mentioned with interest in the Parliamentary Joint
Committee report, where it was noted that '[e]vidence received by the
committee . . . strongly underlined the importance of integrating the
consideration of broader community interests into the core business
strategy of companies, if corporate responsibility was to succeed' .12
This view is shared by a number of commentators, 13 but how widely this
view has been adopted is debatable. The CAMAC Discussion Paper
revealed research which found that
[w]hereas 54% of executives in one global survey in 2000 said that this
notion was 'central' or 'important' to their corporate decision-making, that
10 For example, Moon maintains that '[i]t is not suggested here that companies derive no
benefit from pursuing social responsibility. They may improve their reputation among
customers and among public contractors thereby. Nonetheless, the activities so
described are not directly for-profit, nor do they represent direct product advertising.'
Jeremy Moon, 'The Firm as Citizen? Social Responsibility of Business in Australia'
(1995) 30 Australian Journal of Political Science 1, 1. See further JF Vos 'Corporate
Social Responsibility and the Identification of Stakeholders' (2003) 10 Corporate
Social Responsibility and Environmental Management 141, who maintains that CSR is
an obligation to stakeholders 'to carry out actions that appear to further some social
good, beyond the interest of the firm and that which is required by law to do'.
11 Henry G Manne and Henry C Wallich 'The Modern Corporation and Social
Responsibility' (1972) 4.
12 Parliamentary Joint Committee Report, above n 1, [3.89].
13 Batten and Birch concluded that '[i]t is becoming clearer that the social (and
environmental) has to be incorporated, not as an add-on to a corporation's economic
activities, but as an essential, integral, more social redefinition of that corporation, in
order to better reflect. the rapidly changing post industrial economy we now find
ourselves operating in.' .Batten and Birch, above n 4, 293. Amongst scholars, it is
commonly emphasised that CSR is more than simple 'chequebook philanthropy',
'cause-related marketing' or business ethics. See David Birch, 'Corporate Citizenship:
Rethinking Business Beyond Corporate Social Responsibility' in Jorg Andriof and
Malcolm McIntosh (eds) Perspectives on Corporate Citizenship ( Sheffield: Greenleaf,
2001) 53, 54.
147

148 University of Tasmania Law Review Vol 24 No 2 2005
figure had grown by 2005 to 88% of executives surveyed. Likewise,
whereas 34% of professional investors in that same global survey in 2000
said that corporate social responsibility was 'central' or 'important' to their
investment decisions, that figure had risen by 2005 to 81 %. 14
This was noted by the Parliamentary Joint Committee who concluded that
it demonstrated 'the significant global rise of corporate responsibility as a
factor in corporate decision-making and investment practices.
Importantly, there also appears to be a global trend towards "doing"
rather than mere rhetoric.' 15
In contrast, Batten and Birch noted 16 research in 1999 which found that
only 7 percent of CEOs of top corporations viewed corporate citizenship
as central to the strategic direction of their business. Their own survey,
published in 2005, found that '[m]ost respondents defined corporate
citizenship in terms of the community activities of the corporation ... and
felt that it did not include core products or services ... or the way in
which the corporation was organised or run. . .. '.17
Indeed, a report commissioned by the Prime Minister's Community
Business Partnershi p 18 observed that while businesses are aware of the
big picture issues of CSR and corporate citizenship, they lack expertise
rather than commitment in implementing their CSR goals. 19
14 CAMAC Discussion Paper, above n 1, [1.1].
15 Parliamentary Joint Committee Report, [2.30].
16 Batten and Birch, above n 4, 296.
17 Ibid 300. In a case study involving BP, Glazebrook observed that 'corporate
citizenship was predominantly interpreted through the language of "community
affairs" which occupied a centralised and monetised function within BP undertaken on
behalf of the organisation, but not in conjunction with its core operations ... . By
limiting this function to a discretionary "spend" allocated outside the operational
considerations of BP's business, managers, employees and stakeholders external to the
company had been acculturated into viewing BP's corporate citizenship expressed
through a discrete, separate pot of money unrelated to core business, but spent because
of a prevailing social norm that "companies must give something back"'. Glazebrook,
above n 4, 61.
18 Jehan Loza and Sarah Ogilvie, Corporate Australia Building Trust and Stronger
Communities? A Review of Current Trends and Themes, Australian Government
Department of Family and Community Services For the Prime Minister's Community
Business Partnership, November, 2005 (the Community Business Partnership report).
Available at http://www.partnerships.~ov.au/pdf/Corporate%20Australia%20Buildin~
%20Trust%20and%20StronieflI020Communities pdf
19 '[T]hese activities generally take the form of transactive relations (involving little or no
interaction beyond the provision of money or in-kind support) rather than interactive
partnerships (involving a much greater interaction of the company with the community
or partnering organisation beyond a simple transaction of funds or equipment).' Ibid
16-17.

Corporate Social Responsibility
The confusion over the definition of CSR and the fact that corporations
struggle to determine how to integrate CSR into their operations suggests
that businesses do not really understand the meaning or the purpose of
CSR. Part V will suggest a new paradigm.
CSR at Present in Australia
There is already considerable amounts of legislation in Australia which
impose obligations on companies to behave in a socially responsible
manner. Companies, as separate legal entities, have the usual obligations
of legal persons in tort and in contract. The corporate veil is lifted by the
Corporations Act 2001 (Cth)20 to impose liability on directors personally
if their companies fail to meet some of these obligations. Examples
include the protection of employee entitlements under Part 5.8A and the
directors' duty to prevent insolvent trading under Part 5.7B. Creditors are
also protected against the improper actions of directors in the prelude to
the company's insolvency by the voidable transaction provisions of Part
5.7B.
Legislation other than the Corporations Act imposes additional
obligations on companies and their directors in relation to employees and
the. environment. For example, companies must pay their employees at
least minimum rates of pay21 and they must comply with occupational
health and safety, 22 anti-discrimination and equal opportunity
requirements. 23 Companies must also comply with a wide range of
environmental requirements. 24 Consumers and businesses are protected
by laws proscribing companies engaging in anti-competitive behaviour
and misleading or deceptive conduct. 25
20 Hereinafter referred to as the Corporations Act.
21 Workplace Relations Act 1996 (Cth).
22 For example, Occupational Health and Safety Act 2004 (Vic), Occupational Health
and Safety Act 2000 (NSW), Workplace Health and Safety Act 1995 (Qld), Workplace
Health and Safety Act 1995 (Tas), Occupational Health, Safety and Welfare Act 1986
(SA), Occupational Safety and Health Act 1984 (WA), Occupational Health and
Safety Act 1989 (ACT), and the Occupational Health and Safety (Commonwealth
Employment) Act 1991 (Cth).
23 For example, Equal Opportunity Act 1995 (Vic), Equal Opportunity in Public
En1ployment Act 1992 (Qld), Equal Opportunity Act 1984 (SA), Equal Opportunity
Act 1984 (WA).
24 For example, Environment Protection Act 1970 (Vic), Waste Management and
Pollution Control Act 1998 (NT), Environn1ent Protection Act 1997 (ACT), Protection
of the Environment Operations Act 1997 (NSW), Environmental Protection Act 1986
(WA), Environment Protection Act 1993 (SA), Environmental Protection Act 1994
(Qld) and the Environmental Management and Pollution Control Act 1994 (Tas).
25 For example, Trade Practices Act 1974 (Cth) , Fair Trading Act 1999 (Vic), Fair
Trading Act 1987 (SA), Fair Trading Act 1989 (Qld), Fair Trading Act 1987 (WA),
149

150 University of Tasmania Law Review Vol 24 No 2 2005
In terms of reporting, there are two specific sections in the Corporations
Act that are widely recognised as expanding company reporting in a way
that relates to CSR. Section 1013D(1) of the Act imposes obligations on
superannuation, life insurance and managed funds to disclose the extent
to which they take account of environmental, social, labour and ethical
standards in their investment decisions. Section 299( 1)(f) requires
companies to include within their annual reports details of breaches of
environmental laws and licences.
However, despite the evident ability26 of governments to legislate for the
protection of corporate stakeholders in particular and society in general,
there has been a push by government to increase the responsibility of
corporations for these matters, not through regulation but by the
enthusiastic promotion of CSR. 27 This is apparent from initiatives such as
the Prime Minister's Community Business Partnership, which was
established in 1999. Chaired by the Prime Minister. it is 'a group of
prominent Australians from the community and business sectors,
appointed by the Prime Minister to advise and assist the Government on
issues concerning individual and corporate social responsibility.' 28 It
does this through three streams of activities - advocacy of the business
case for CSR and for partnerships between business and the community,
Fair Trading Act 1987 (NSW), Fair Trading Act 1990 (Tas), Fair Trading Act 1992
(ACT), Consumer Affairs and Fair Trading Act 1991 (NT).
26 Whether these laws are sufficient to meet their stated objectives is another matter.
While the ability to legislate for socially responsible behaviour by corporations is
obvious, it is arguable that some of the laws to protect vulnerable stakeholder groups
are demonstrably deficient. An example is the laws for the protection of employee
entitlements under Part 5.8A of the Corporations Act. The Parliamentary Joint
Committee on Corporations and Financial Services, Parliament of Australia, Corporate
Insolvency Laws: A Stocktake (2004) described the employee entitlement sections as a
'toothless tiger', at [10.59]. See also Celia Hammond, 'Insolvent Companies and
Employees: The Government's Year 2000 Solutions' (2000) 8 Insolvency Law Journal
86, 92; David Noakes, 'The Recovery of Employee Entitlements in Insolvency' in Ian
Ramsay (ed), Company Directors' Liabilityfor Insolvent Trading (2000) 129, 129.
27 Motivations for this will be discussed in Part IV. It is interesting to note the comments
of Johns here. He describes it as the 'socialisation of the corporation and the
privatisation of regulation', at 369. He says '[i]n the new terminology, tax laws are
social justice laws, environment and planning laws are sustainability laws,
employment, OH&S, consumer and contract laws are human rights laws, and self-
regulation is governance. ' Gary Johns 'Deconstructing Corporate Social
Responsibility' (2005) 12 Agenda 369, 370.
28 http://www.partnerships.gov.au/about/about the historv the challenge.shtml accessed
on 31st July, 2006.

Corporate Social Responsibility
facilitation through the prOVISIon of information, and recognition of
successful CSR through an awards program. 29
The Australian Stock Exchange has also taken an active step In
encouraging socially responsible business practices amongst listed
companies. Its Listing Rules 30 require companies to state in their annual
reports the extent to which they have complied with 28 ASX Council
Recommendations, which are pursuant to ten Principles of Good
Corporate Governance. Compliance with the recommendations is not
mandatory, although companies must explain why an alternative
approach was adopted. Three of the recommendations are relevant to
CSR. They are Principle 3: Promote ethical and responsible decision-
making; Principle 7: Recognise and manage risk; and Principle 10:
Recognise the legitimate interests of stakeholders. 31
Business appears to have enthusiastically embraced the trend towards
corporate social responsibility. The Parliamentary Joint Committee report
noted a submission by Philanthropy Australia, stating that:
[t]here is undoubted growth in corporate community activity in Australia,
evidenced through Australian Bureau of Statistics data and more generally
in the growth of voluntary corporate participation in initiatives such as the
Australian Corporate Responsibility Index, the Prime Minister's
Community Business Partnership Awards, and the Global Reporting
[Initiative].32
Australia also has many companies that are leading the push towards greater
sustainability.33 It is impossible to provide a comprehensive list of strong
corporate performers in this area without the risk of omitting a committed
company. 34
29 Prime Minister's Awards for Excellence in Community Business Partnerships are
divided into small, medium and large business categories and are presented a the state
and territory level and at the national level.
30 ASX Listing Rule 4.10.3.
31 See http://v~'v,rV'v.asx.con1.auisuper\·ision/governancc!princinies good comoratc eoven1
ance.htrn. These principles have recently been reviewed, with revised rules taking
effect from 1 January, 2008 .
32 Parliamentary Joint Committee report, above n 1, [2.54].
33 Sustainability is a term that also lacks precise definition in the CSR debate. It is
generally used in the context of reporting. The Parliamentary Joint Committee report,
above n 1, [2.23] notes that 'sustainability reporting refers to reporting mechanisms
used by organisations to disclose information on social, environmental, and economic
performance. It facilitates reporting on achievements in sustainable development, and
allows a degree of transparency to shareholders and other stakeholders of
organisational performance and behaviour.'
34 Ibid [2.55].
151

152 University of Tasmania Law Review Vo124 No 2 2005
Much of this community involvement has manifested itself in
philanthropic activities. 35 Recently, the Parliamentary Joint Committee
on Corporations and Financial Services has released a report entitled
Corporate Responsibility: Managing Risk and Creating Value 36 which
has made a number of important recommendations, which encourage, but
do not mandate, socially responsible activity by companies. 37
Motivations for CSR
Much has been written about the multiplicity of drivers for companies to
engage in CSR,38 but it would probably be fair to say that few companies
would engage in socially responsible activities, beyond compliance with
the law and the generation of profit for their shareholders, if nobody knew
about it. 39 For this reason, CSR in Australia is most likely to fall into the
35 The Parliamentary Joint Committee report notes a recent study entitled 'Giving
Australia: Research on Australian Philanthropy' which 'identified that business giving
in 2003~04 more than doubled since 2000~01, with more than 525,000 businesses, or
67 per cent of all businesses, giving $3.3 billion in money, goods, services and time
during 2003~04. The report was coordinated by the Australian Council of Social
Service and funded by the Prime Minister's Community Partnerships Program.' Ibid
[2.66].
36 Parliamentary Joint Committee report, above n 1. The Corporations and Markets
Advisory Committee (CAMAC) has also sought public submissions. Reference from
the Hon Chris Pearce to the Corporations and Markets Advisory Committee,
'Reference in Relation to Directors' Duties and Corporate Social Responsibility' 23
March, 2005. See http://www.camac.gov.au/CAMAC/camac.nsflbyHeadline/Whats
+NewDirectors%27+duties+and+corporate+social+responsibility?openDocument,
accessed on 30th April, 2006.
37 A summary of these recommendations is at Parliamentary Joint Committee report,
above n 1, xxi.
38 The Parliamentary Joint Committee Report lists them as 'competitiveness and
profitability, attracting investments, attracting and retaining employees, reputation, risk
management, corporate failures, community expectations and license to operate,
avoidance of regulation and globalisation', above n 1, [3.15] Brereton records them as
'the growing size and influence of "ethical investment funds", increasing requirements
and expectations being placed on companies to report publicly on their environmental
and social, as well as economic, performance, the explosive growth in the number of
NGGs, industry organisations and professional networks focused on promoting
corporate social responsibility and sustainable development principles [and] a parallel
growth in the number of voluntary standards, codes, certification schemes being
developed and promoted by industry bodies, NGGs and international institutions such
as the United Nations, the GECD and the World Bank' above n 3, 3. See also, the
KPMG International Survey of Corporate Responsibility Reporting 2005, conducted
by the University of Amsterdam and KPMG Global Sustainability Services, 18,
available at http://www.kpmg.nl/Docs/Comorate Site/Publicaties/Intemational
Survey Comorate Responsibility 2005.pdf.
39 Moon notes research from the United States which indicates that 'social responsibility
of small firms tends to be smaller and less institutionalised than larger firms'. One
explanation for this which Moon offers is that 'large firms, which by definition has a

Corporate Social Responsibility
category of strategic CSR 40 and not be seen by courts as a breach of
directors'duties. 41
Building and retaining a good reputation is therefore arguably the main
motivator for CSR.42 However, there are many aspects of reputation-
driven CSR, which can be broken down into three broad and sometimes
overlapping and interrelated categories: company strategy, responding to
community demands, and responding to external demands from
government, industry, or national and international NGOs.
There are many strategic reasons why a company may choose to improve
their reputation by the adoption of CSR practices. A company may
undertake socially responsible initiatives to improve competitiveness and
profitability,43 to win government favour 44 or to attract investment from
public profile, see their reputations as an important part of their marketing mix.' Moon,
above n 10, 12. Porter and Kramer noted that '[w]hile these [sponsorship] campaigns
do provide much needed support to worthy causes, they are intended as much to
increase company visibility and improve employee morale as to create social impact.
Tobacco giant Philip Morris, for example, spent $75 million on its charitable
contributions in 1999 and then launched a $100 million advertising campaign to
publicize them.' Michael E Porter and Mark R Kramer 'The Competitive Advantage of
Corporate Philanthropy' [2002] Harvard Business Review 5,5
40 Profit sacrificing social activism which involves socially beneficial behaviour lacking a
calculated benefit to the corporation, may be in breach of directors' duties, while
strategic corporate social responsibility, designed to directly benefit key stakeholders
or build the company's reputation, does not. Wilson notes that the latter is the
predominant form of corporate social responsibility in Australia.
Therese Wilson, 'The Pursuit of Profit at all Costs: Corporate Law as a Barrier to
Corporate Social Responsibility (2005) 30 Alternative Law Journal 278, 279, drawing
on the research of Parkinson: John Parkinson, Corporate Power and Responsibility:
Issues in the Theory of Company Law (1994) 279.
41 Corporations Act 2001 (Cth) s 181(1). On the question of whether consideration of the
interests of external stakeholders amounts to a breach of directors duties, see Hugh
Grossman, 'Redefining the Role of the Corporation: The Impact of Corporate Social
Responsibility on Shareholder Primacy Theory' (2005) 10 Deakin Law Review 572.
42 Orlitzky, Schmidt and Rynes, in a meta-analysis of 52 studies examining the link
between corporate social and financial performance, made the following
recommendation: 'Top managers must learn to use CSP [corporate social performance]
as a reputational lever ... and be attentive to the perceptions of third parties, regardless
of whether they are market analysts, public interest groups, or the media . .. .the key to
reaping benefits from CSP is a return from reputation ... ' Marc Orlitzky, Frank L
Schmidt and Sara Rynes 'Corporate Social and Financial Performance: A Meta-
analysis' (2003) 24(3) Organizational Studies 403, 426.
43 The Parliamentary Joint Committee Report, above n 1, [3.20] noted recent research
which 'found that issues relating to competitiveness were cited frequently by large
companies as the benefits of producing sustainability reports. The four most often cited
benefits were reputation enhancement (82%); ability to benchmark performance
(68%); operational and management improvements (64%); and improved management
of risks (62%). All have some bearing on a company's competitiveness, revenue and
153

154 University of Tasmania Law Review Vol 24 No 2 2005
ethical investment funds, such as superannuation funds. 45 Improving
employee morale is also often cited as a driver for CSR activities,46 as
people, given a choice, would rather work for a company saving the
planet than one which is destroying it.
CSR also allows companies to combine normal risk management
practices with the appearance of social responsibility. Providing a safe
workplace beyond the legally required limits or a stress reduction
program for staff is both beneficial for building the appearance of a
caring work environment, as well as reducing the financial cost from staff
injury and absenteeism.
Another strategic reason for the voluntary adoption of CSR activities is
the desire to avoid CSR regulation. 47 This is openly acknowledged by
companies,48 often with the justification that legislative mandate would
encourage a culture of box ticking and compliance, rather than a genuine
expression of care for the communities in which companies operate.
Responding to cOlTIlTIunitydemands and expectations, and enhancing and
retaining a good reputation for doing so, are also drivers for companies to
embrace CSR. The ready availability, via the media and internet, of
profitability.' Whether the adoption of CSR practices do in fact lead to increased
profitability will be discussed in Part V below.
44 Ruth Phillips, 'Australia's NGOs Current Experiences of Corporate Citizenship'
(2005) 17 Journal of Corporate Citizenship 21,23.
45 The Financial Services Reform Act 2001 (Cth) s 1013D(I)(l) imposes obligations on
superannuation, life insurance and managed funds to disclose the extent to which they
take account of environmental, social, labour and ethical standards in their investment
decisions. See also Zappala, above n 4, 187; Brereton, above n 3,3. The Parliamentary
Joint Committee report also notes that '[a]ccording to the Ethical Investment
Association (EIA), there has been a significant increase in Australian funds managed
as sustainable investments, also known as Sustainable Responsible Investment (SRI).
The EIA in its survey entitled Sustainable Responsible Investment in Australia 2005
reported that during the 2005 financial year, SRI managed funds grew by around 70
percent (from $4.5 billion. to $7.7 billion). In the five years between 2000-05, SRI
managed funds grew by over 2 000 percent. The main factors contributing to this
significant increase were large superannuation funds adopting SRI policies for existing
portfolios, and the strong investment performance of SRI managed funds. '
Parliamentary Joint Committee report, above n 1, [2.70].
46 Parliamentary Joint Committee report, above n 1, xiv, where the committee stated that
'[ e]vidence also strongly suggested that an "enlightened self-interest approach" assists
companies in their efforts to recruit and retain high quality staff, particularly in the
current tight labour market'. See also Zappala, above n 4, 188; Moon, above n 10, 4.
47 Zappala, above n 4, 187.
48 The Parliamentary Joint Committee Report, above n 1, xiv and [4.35]. See also Johns,
above n 27, 381, where he talks about the World Business Council for Sustainable
Development, a group of 175 international companies committed to sustainable
development. Johns comments that '[t]he bravest interpretation of the group is that it is
attempting to hold back the tide of CSR regulation by appearing to be CSR friendly.'