Shareholder Theory

On the other side of the debate, shareholder theory proposes that the corporation should legally maximize long-term shareholder wealth By providing a necessary product or service at a reasonable price, a business is benefiting society. In financial language, shareholder theory advocates that a firm should maximize the present value of all future cash flows. It is unnecessary and unwise to spend shareholder money for unprofitable social causes. The shareholders have made an investment and are dependent on the firm to provide them with a return. Steve Milloy, a mutual fund manager and critic of CSR, proclaimed the following: “Shareholders do not hire CEOs to be the U.N., to act like a government or to be a charity. They were hired to make money for shareholders.” Milloy’s argument is similar to the reasoning of Adam Smith and Milton Friedman. The business of business is to make money. By serving the needs of shareholders, businesses generate wealth that benefits society. If CSR initiatives increase the bottom line, then shareholder theory advocates recommend implementing such initiatives. However, using shareholder money in an unprofitable manner is wrong. No matter how noble the cause, it is inappropriate to be generous with another’s money.

On the extreme end of shareholder theory are some scholars who believe that CSR should be abandoned altogether. Although they concede that CSR has increased global awareness of business ethics, the concept is no longer practical. For example, Freeman and Liedtka, professors at the University of Virginia’s Darden School of Business, argued that CSR has failed and should be forsaken. They claimed that CSR has not delivered on its promise to create the good society. Furthermore, they asserted that the concept of CSR promotes incompetence by prodding business managers to improve society’s shortcomings. According to Freeman and Liedtka, businessmen do not have sufficient expertise regarding individuals and communities to alleviate social problems.

A common argument voiced in support of shareholder theory is that social actions are the role of political and social institutions, not businesses. Bill Shaw, former chair of the Philosophy Department at San Jose State University, insisted that the government through its regulations determines the moral responsibilities of a corporation. Business should make decisions based on an objective ethical code in addition to the laws of society. Thomas Mulligan, assistant professor of management at Brock University, emphasized, “Ethics is more fundamental than law. It is more appropriate to use moral principles to test the validity of laws than to invoke laws to test the validity of moral principles”. The findings of this study indicate that the stakeholder and shareholder theories are both incomplete. Firms should maximize long-term shareholder wealth, but not at the expense of stakeholders and ethical guidelines. They should not deliberately harm stakeholders to make a profit, and they should not go out of their way to promote stakeholders’ interests if doing so does not increase shareholder wealth. Firms cannot be profitable in the long term if they have poor relations with their stakeholders. At the same time, firms cannot meet all the needs of their stakeholders and remain profitable. Additionally, business decisions should be based on an objective ethical code of conduct.

Having described the basic responsibilities, which companies should obey, and having compared main approaches to corporate social responsibilities we must conclude in general that development of the concept of corporate social responsibility happens as the reply of business community to a problem of a sustainable development. Among the set of the interested groups we can mark out: owners, shareholders, bodies of federal and local government, suppliers, top managers, workers, labor unions, trade groups, consumers, population, partners, etc. If any interested group of persons isn't satisfied with activity of the organization, its reaction can threaten further existence of the organization. Need of corporate social responsibility is shown available requirements of corporations to provide a resource basis for the activity as social and economic system. Existence of manpower is a key factor of their development in the competitive environment. Socially responsible companies pay much attention to providing such work which would be significant for performers and would help employees to develop and realize the potential. Corporate social responsibility is voluntary and conscious activity therefore originally each organization, the group of workers determines for itself social norms. Social responsibility is considered for each organization individually. In more detail we will consider this question in practical part of our work.

Part 2

The principles of CSR: features and problems

2.1 The global need for CSR

Development of corporate social responsibility in Russia goes in compliance with world tendencies, but meanwhile slowly and actually doesn't cover small and medium business. Activity of the company has to be carried out on the basis of those types of responsibility that were considered earlier. However, the Russian small and medium business is limited, as a rule, only to charity. And only a small amount of the large Russian companies is understood that CSR is part of strategic management, but not just a simply function of public relations. The problem of social responsibility of business, i.e. its responsibility for the people or society in general, gained in recent years the ambiguous development in the Russian Federation. On the one hand, actually since the XIII congress of the Russian Union of Industrialists and Entrepreneurs at which the Russian President in 2003 urged the Russian business to become "socially responsible", rather obvious process of voluntary activity in this area from the most conscious and strategically conceiving part of the Russian business began. Generally it is large private business. It began active dialogue with the interested public groups, began to introduce modern international standards of socially oriented and ecological management, published the first social reports, sometimes in the form of reports of a sustainable development, considered as the most progressive among leaders of world business. Among them generally the largest Russian companies and some banks, such as Norilsk Nickel MMC, JSC Lukoil, RAO UES of Russia, JSC Tatneft, Ilim Pulp corporation, JSC NOVOGOR-Prikamye, JSC EvrazHolding, SUAL group, JSC Magnitogorsky MK, JSB ROSBANK and Tolyatti "FIA-BANK", and others. Activity of the companies in this area is directed also on forming of clear, regular and effective relationship with regional and local government, and also civil society. One of these companies is the Sanofi company.

But firstly, we should start with the quite important research of CSR in global form. Results of the International business research 2008 emphasize one weighty fact – introduction of ethic methods of maintaining business is fundamental for success the enterprises operated by owners. The major factor standing for increase of corporate responsibility, need to attract and hold is the highly skilled personnel for maintenance and further development business (see Fig. 1). This factor was called by 65% respondents of the real research. Further the factor of management of expenses (63%) follows. It reflects understanding of that control over expenses positively influences business and on environment. Requirement to secure trust and loyalty of clients forced 56% respondents to put in a row the most important factors public opinion / formation brand.

The companies operated by owners aren't under such close public attention as transnational corporations, nevertheless they consider responsible business is the component of the reputation making management process and its long-term strategy. 56% respondents claim that a factor of public/formation of a brand is one of main incentives of ethic business. With growth of the enterprises also grows the level of public attention that forces large multinational companies to take into account a factor of public opinion/formations of a brand. There is no country, where Environmental protection or Pressure of the government was called the most important incentive increases of corporate responsibility.

However three quarters and more respondents from Brazil (84%) and India (75%) called rescue of the planet among important factors. On the contrary, only 21% of owners of business The USA, and also there is less than a third of respondents in other countries with developed economy carried this factor to number of key incentives. Only 38% of respondents called ‘pressure of the government’ important incentive that is the lowest indicator among seven factors offered respondents within this International business research. Results of poll of businessmen, directors managing their own business, concerning their last year's activity within corporate responsibility, show that at the head of the list are actions directed on attraction /deduction of employees (see fig. 3). It confirms results of research, testifying that this factor is one of the main incentives of ethic maintaining business.

Four of five most popular initiatives are related to employees and their workers to places – active promotion of the healthy mode work and wellbeing (71%); granting possibilities of training and acquisition of experience (67%); encouragement of a variety is independent from a nationality, a floor and etc. / the equal opportunities (64%) and granting the flexible operating schedule (62%). All above-stated measures play an important role in a context of social responsibility, nevertheless, same measures play a key role and in questions of managing personnel.

Charity among other measures, increasing the social the companies’ responsibility, borrows in our research the third place and it is the only thing from five most popular ways, which has no relation to personnel questions. The international practice testifies about existence of essential distinctions in the cultural spheres and questions of the taxation, which have strong impact on indicators certain countries.

Improvement of control over production wastes and efficiency increase of energy consumption are interconnected. Respondents from many countries including Ireland, Malaysia and Taiwan, reported about taken measures on improvement of control over waste productions and on increase of energy consumption efficiency. In general, leaders among the countries, which are characterized by a maturity economies and shortage of resources, that is strong incentive for initiatives in the field of the effective energy consumption and related areas.

Rules of control over waste and questions about energy consumption are more global and universal for observance now, at the growing markets there can be problems, connected with inability to leave on the levels set by more mature economies. Russia is among those countries which started introducing measures of improvement of control over waste and efficiency of energy consumption not so long ago. The company Sanofi Group is one of the few Russian companies which introduced the concept of corporate social responsibility and resolves the issues concerning quality of production, satisfaction of the personnel, ecological safety, etc.

2.2 Sanofi Group company and its CSR program. Results and Perspectives.

The Sanofi Group is represented in Russia by the following companies: Sanofi, Sanofi Pasteur, Zentiva, Genzyme, Merial. Sanofi products have been available to Russian patients for over 40 years. Currently, Sanofi Russia offers patients a wide range of medicines for socially significant diseases such as diabetes, cancer, cardiovascular disease and thrombosis, as well as diseases of the central nervous system. The world’s largest vaccine manufacturer with a portfolio including vaccines against 20 infectious diseases. Sanofi Pasteur has been in the Russian market since 1992 and is now ranked among the leaders of this segment in Russia offering Russian patients 9 different vaccines. Sanofi’s generic pharmaceutical platform since 2009, it is the third-largest manufacturer of generic drugs in Europe and one of the fastest growing companies. Its diversified portfolio comprises high-quality, affordable medicines and covers all major areas of medicine. Zentiva has been in the Russian market since 2003.

Medicines to treat rare diseases in the Sanofi Russia portfolio are represented by products from Genzyme - one of the leading biotech companies in the world which joined the Sanofi group in 2011. Veterinary drugs produced by Merial can also be found in Sanofi Russia’s portfolio. Merial, which joined Sanofi in 2011, is a world leader in the field of veterinary medicine that focuses on the development and production of innovative products and solutions to protect the health of animals.

Sanofi is a global integrated healthcare leader and the needs of our patients are at the very core of our work. Our mission is to improve the health of patients, improve the quality of their lives and satisfy

their needs. As part of the Company’s strategy, Sanofi takes on social, environmental and ethical obligations. Their global strategy focuses on four main categories: “Patient”, “Ethics”, “People” and “Planet”.

Patient	1. Fighting diabetes as part of the program “Every day is your day!” 2. Treatment of cardiovascular diseases in the “Heart Help” program 3. Fighting venous complications as part of the program “Safe zone from venous thromboembolism” 4. Treating patients with chronic kidney disease: program “Choice for Life” 5. Fighting epilepsy as part of the program “Epicenters” and “Attention, epilepsy!” 6. Nationwide program to help patients with breast cancer “Giving Life a Chance” 7. The program “Help Children with Acute Lymphoblastic Leukemia” 8. The program “School of Future Mothers” 9. The program “Educational Campaign for Parents” 10. Increasing access to high-quality medicines 11. Fighting counterfeit and adulterated medicines 12. Safety drug monitoring 13. Protecting the health of animals
Ethics	1. Ethics in clinical trials 2. Responsible marketing 3. Restrictions on advertising of medicines 4. The control mechanism over the printed promotional materials 5. Fighting corruption
People	1. Attracting personnel 2. Development and Training 3. Assessment of staff performance 4. The employee compensation system 5. Life insurance program (including accident insurance and insurance against lifethreatening diseases) 6. Travel insurance program for foreign travel and trips within the territory of Russia 7. Additional payment for periods of temporary disability 8. Maternity support policy (special insurance programs for mothers and children as well as compensation payments when the employee takes a leave from work) 9. Program for children of company employees, “Holiday Exchange Program” 10. Financial assistance program for children of employees who find themselves in difficult situations within the framework of the Sanofi Children Association 11. Increasing the level of engagement and staff satisfaction 12. Forming a corporate culture 13. Project Innovation Box 14. Health and safety of employees in the workplace
Planet	1. Reducing energy consumption and carbon emissions 2. Management of water resources 3. Pharmaceuticals in the environment, including processing issues

Public awareness programs, educational programs for healthcare professionals and patients, and programs for patient care are a priority area for the Group. The results of the “materiality test”1 conducted in December 2012 confirmed the importance of this area for the company’s stakeholders especially in regards to treatment for non-communicable diseases. In the reporting period, 10 programs to improve access to healthcare were conducted. Most of them were launched in 2009 while 1 began in 2012. The number of patients taking part in Sanofi Russia programs is increasing and coverage of Russian regions and cities has been expanded to ensure that more patients benefit from them.

The programs focus on the following key objectives: increasing public awareness of illnesses; improving the skills of specialists in the sphere of healthcare; providing affordable and accessible medicines; educating and informing patients.

The activities of Sanofi Russia are aimed at ensuring the quality of medicines throughout the entire process of distributing pharmaceutical products. The company’s responsibility does not end at the stage of product sales to distributors but extends to ensuring the physical availability of Sanofi drugs in pharmacies and hospitals. Sanofi’s area of responsibility includes all issues related to the quality of medicines that may arise in the course of storage, sale, or transportation of medicines, including their use by end-users.

Sanofi is committed to providing safe and effective products worldwide that are developed, manufactured, distributed, and marketed in compliance with statutory and regulatory requirements and our corporate values. To ensure patients’ safety and satisfy stakeholders’ expectations, the Group upholds the same standards of quality across the globe.

Respect for ethics in clinical trials, one of Sanofi’s primary focuses, is based on providing solid and reliable data, ensuring the welfare of trial participants, and helping build trust in the pharmaceutical industry.

In the selection of candidates, Sanofi Russia adheres to the principle of objectivity and validity of decisions. To this end, the selection of candidates consists of several steps using various assessment tools. Final decisions are made collectively, taking into account the views of all participants in the selection process. The approach to training and development is based on an annual analysis of business needs and the creation of individual development plans (IDP) which are developed for each employee at the beginning of the year based on his strengths and areas for development.

Sanofi Russia has implemented an effective system for remunerating employees aimed at attracting and retaining staff, and motivating employee performance. The level of employee loyalty at Sanofi

Russia remains high. According to a 2012 survey, the employee engagement index at Sanofi Russia is 82%, up 5% from a similar survey in 2010. Thus, 91% of employees take pride in their work at Sanofi Russia and 73% of employees rarely think about changing jobs which is 11% higher than the Russian average.

To safeguard the health of communities everywhere, we continually seek to limit the environmental impact of our activities. The most significant aspects of the impact of Sanofi Russia on the environment in the office are electricity consumption, water consumption and paper usage.

The organization of safe and effective waste management is one of the priorities of Sanofi-Aventis Vostok’s environmental protection activity. In 2012, 97.301 tons of waste were created at the site, most of which fall into low and very low hazard classes (39% and 60%, respectively). Sanofi Russia pays attention to environmental safety in the office and in the factory. The basic document governing the operations of the company in the environmental field is the policy on health, safety and the environment. Plant conservation activities are coordinated by the HSE Committee. The main initiatives to reduce the impact on the environment in the office are the use of motion sensors in warehouses, meeting rooms, bathrooms and faucets.

Sanofi Russia sees the development of performance indicators for topics that are significant from the point of view of CSR as the next step in improving Sanofi Russia’s CSR management. These topics include aspects such as the environment and people. Currently, Sanofi Russia has built a system for recording CSR performance.Thus, the company now records carbon dioxide emissions, energy consumption, and occupational injury statistics. Sanofi Russia pays significant attention to compliance with ethical business practices. The company has built processes to ensure compliance in clinical trials, marketing activities and combating corruption.

It has been no part of our aim to make a comprehensive study of CSR principles in Russian business companies. Nonetheless, we can sum up as follows that the social responsibility presented to society in an open form in its most developed option, that is understood as activities of the companies for three types of responsibility: economic (quality, safety of production and services, and also their physical and price availability), ecological (decrease in harmful emissions and other loads of environment) and social (development of own collective and external social projects, including charity). On the example of the company Sanofi Group we were convinced that activity of the large companies radically changes a situation. Regardless, whether such social activity is caused by desire to become more attractive employer or the supplier for the large companies, or simply ethical belief of owners, this research testifies that the Russian enterprises become more and more socially responsible.

Conclusion

All of us bear a personal responsibility the friend before the friend and before society in which we live. Everything that we do, has impact on others people. Regardless of, whether is company large or small, state or private, its actions infringe on interests large number of interested parties, in which number clients, shareholders enter, workers, suppliers and society in general. In conditions when the fixed grows public attention to the business to operations, the company are more and more compelled to satisfy expectations of those who forms opinion of the public, and also expectation government institutions and clients, to continue successful activity.

In effect, the companies adopt the principles of CSR because they believe that the ethic and socially responsible business gives they have more than chances of success. As at the private businessmen of interested parties it is less, their main effort is directed on satisfaction of inquiries of clients, and also on own ability effectively to satisfy demand of the consumer.

The companies testify that correctly built work within helps social responsibility in achievement of commercial purposes. Especially it is right for big corporations, in which compliance to the legislative to requirements, and also strengthening of reputation and relationship directly affects on increase of a stock value and profitability.

As for the enterprises operated owners, their increase social activity cause the large multinational companies, which even more often demand from the suppliers of commitment to ethic business. Integration corporate social responsibility in the structure of the main business strategy can also to increase appeal of the company in quality employer.

On the example of the company Sanofi Group we were convinced that activity of the large companies radically changes a situation. Regardless, whether such social activity is caused by desire to become more attractive employer or the supplier for the large companies, or simply ethical belief of owners, this research testifies that the Russian enterprises become more and more socially responsible.

It comes the time when all enterprises of private business are compelled to take into account the growing need to do business socially responsible and transparent. Only those, who sensitively and quickly react to changes and also make non-standard decisions, will survive and win.

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