The concept of corporate citizenship and corporate social responsibility is consistent with a stakeholder view of how a company should be governed.
A company has responsibilities not only to its shareholders, but also to its employees, all its customers and suppliers, and to society as a whole.
When a company promotes itself as a company with strong ethical views and a considered policy on CSR, it exposes itself to reputation risk.
This is the risk that its reputation with the general public and customers will be damaged by an unexpected event or disclosure.
For example, an ethical company might find that one or more of its major suppliers, based in a foreign country, is using forced labour or child labour in the production of goods that the company buys.
In developing strategies for the future, a company should recognise these responsibilities.
The objective of profit maximisation without regard for social and environmental responsibilities should not be acceptable.
