5.2: CSR and Various Stakeholders

Let’s look at some of the ways in which companies can be “socially responsible” in considering the claims of various stakeholders: owners and investors, managers, employees, customers and communities.

Owners and Investors

Owners invest money in companies. In return, the people who run a company have a responsibility to increase the value of the owners’ investments through profitable operations. Managers also have a responsibility to provide owners (as well as other stakeholders having financial interests, such as creditors, suppliers, and the government) with accurate, reliable information about the performance of the business. Some of the most notorious accounting fraud scandals in business include: WorldCom inflating revenue and assets, Lehman Brothers repurchasing agreements, Bernie Madoff’s Ponzi scheme, Satyam falsifying records, and Enron hiding debts.

Managers

Managers have what is known as a fiduciary responsibility to owners: they’re responsible for safeguarding the company’s assets and handling its funds in a trustworthy manner. Yet managers experience what is called the agency problem: a situation in which their best interests do not align with those of the owners who employ them. To enforce managers’ fiduciary responsibilities for a firm’s financial statements and accounting records, Ontario’s Keeping the Promise for a Strong Economy Act (Budget Measures) 2002, also known as Bill 198, (a Canadian equivalent to the Sarbanes-Oxley Act of 2002 in the United States) requires CEOs and CFOs to attest to their accuracy. The law also imposes penalties on corporate officers, auditors, board members, and any others who commit fraud. You’ll learn more about this law in your accounting and business law courses.

Employees

Companies are responsible for providing employees with safe, healthy places to work, as well as environments that are free from sexual harassment and all types of discrimination. They should also offer appropriate wages and benefits. In the following sections, we’ll take a closer look at these areas of corporate responsibility.

Wages and Benefits

At the very least, employers must obey laws governing minimum wage and overtime pay. A minimum wage is set by the provincial government. As of October 2024, the Ontario rate is $17.20 per hour.  By law, employers must also provide certain benefits—Canada Pension Plan or CPP (retirement funds), employment insurance or EI (protects against loss of income in case of job loss), and, depending on the industry, workers’ compensation (covers lost wages and medical costs in case of on-the-job injury). Most large companies pay most of their workers more than minimum wage and offer broader benefits, including medical, dental, and vision care, as well as savings programs, in order to compete for talent.

Safety and Health

In Canada, workplace health and safety are governed by several key pieces of legislation designed to protect workers and ensure safe working environments. These include the Canada Labour Code, provincial and territorial health and safety legislation, and occupational health and safety regulations. There are fourteen jurisdictions in Canada —one federal, ten provincial and three territorial, each having its own occupational health and safety legislation. For most people in Canada, the agency that you would contact is the provincial or territorial agency in the area where you work. There is one exception —federal legislation covers employees of the federal government, including Crown agencies and corporations across Canada, regardless of location.^[1]

The Federal Government of Canada reported a noticeable increase in work-related injuries in 2022, with 18,131 disabling injuries reported (an increase of 10%) from 2021, when 16,342 injuries were reported.^[2]

In the United States, workplace health and safety are primarily regulated by the Occupational Safety and Health Act (OSHA) of 1970, along with additional state-specific laws and regulations.

Together, these laws aim to safeguard workers from injury and illness in the workplace, ensuring compliance through inspections, reporting systems, and penalties for non-compliance.

Customers

The purpose of any business is to satisfy customers, who reward businesses by buying their products. Sellers are also responsible—both ethically and legally—for treating customers fairly. This means customers have rights. Customer rights include:

• The right to safe products. A company should sell no product that it suspects of being unsafe for buyers. Thus, producers have an obligation to safety-test products before releasing them for public consumption. The automobile industry, for example, conducts extensive safety testing before introducing new models (though recalls remain common).
• The right to be informed about a product. Sellers should furnish consumers with the product information that they need to make an informed purchase decision. That’s why pillows have labels identifying the materials used to make them, for instance.
• The right to choose what to buy. Consumers have a right to decide which products to purchase, and sellers should let them know what their options are. Pharmacists, for example, should tell patients when a prescription can be filled with a cheaper brand-name or generic drug. Telephone companies should explain alternative calling plans.
• The right to be heard. Companies must tell customers how to contact them with complaints or concerns. They should also listen and respond.

Companies share the responsibility for the legal and ethical treatment of consumers with several government agencies.

Consumer Protection Legislation in Canada

In Canada, consumer complaints are regulated by different levels of government, as well as non-government organizations. Finding the right place to direct your complaint is not always easy, but understanding your rights as a consumer is an important part of the complaint-filing process.

Provincial and Territorial Consumer Protection Legislation

Many consumer complaints fall under provincial and territorial jurisdiction, including issues related to:

• buying goods and services
• contracts
• the purchase, maintenance or repair of motor vehicles
• credit reporting agencies and the practices of collection agencies

Federal Consumer Protection Legislation

The Government of Canada has an important role in consumer awareness and protection.

Federal agencies and departments are responsible for enforcing legislation related to various issues, including:

• consumer product safety
• food safety
• consumer product packaging and labelling
• anti-competitive practices, such as price fixing and misleading advertising
• privacy complaints

Additional Resources to Remember

For more relevant areas where federal agencies and departments regulate consumer issues, consult the Government of Canada website: Federal consumer protection legislation in Canada. In Ontario, customers have the added protection of the Consumer Protection Act.

Did you know that protections for Ontario consumers include a cooling-off period for signed contracts? The cooling-off period covers the following areas:

• purchase of a product or service from a door-to-door salesperson (also called a direct agreement)
• advance payment to join a fitness club or gym (also called a personal development contract)
• purchase of a newly-built condo (under the Condominium Act)
• getting a payday loan (under the Payday Loans Act)
• purchase of a timeshare

Communities

For obvious reasons, most communities see getting a new business as an asset and view losing one, especially a large employer, as a detriment. After all, the economic impact of business activities on local communities is substantial: they provide jobs, pay taxes, and support local education, health, and recreation programs. Both big and small businesses donate funds to community projects, encourage employees to volunteer their time, and donate equipment and products for a variety of activities. Larger companies can make greater financial contributions.

Many large corporations support various charities, an activity called corporate philanthropy. Some donate a percentage of sales or profits to worthwhile causes.  Loblaws, one of Canada’s largest grocery retailers, is involved in numerous community initiatives, especially focused on food security and environmental sustainability. Through its Loblaw’s Good Food Program, the company works to reduce food waste and help Canadians in need. They provide food donations to local charities and help fund nutrition programs. Additionally, Loblaws has worked to help communities during times of crisis, such as through their support for food banks and disaster relief efforts.^[3]

Telus is a prominent Canadian telecommunications company known for its commitment to social responsibility. Through its Telus Friendly Future Foundation, the company supports initiatives focused on education, healthcare, and community wellness. The foundation has invested in improving access to technology, especially for underserved communities, and has donated millions of dollars to support mental health programs, healthcare initiatives, and environmental sustainability.^[4]

These companies not only contribute financially but also engage in programs that benefit the broader community through direct action, volunteerism, and supporting local organizations.

Media Attributions

“Shopping, Online, E-commerce image” by justynafaliszek, used under the Pixabay license.