CORPORATE SOCIAL RESPONSIBILITY

Perspectives of Corporate Social Responsibility

There are three perspectives that prompt corporate social responsibility. These are: Business perspective Eco-social perspective Rights-based perspective

Perspectives of Corporate Social Responsibility

Business perspective
It is of the opinion that the only responsibility of business was

to perform its economic functions effectively & provide goods & services to earn maximum profit & leave social function to other institutions of the society like government They believe that business has no other social responsibility except making profits within legal & moral rules set by society

Perspectives of Corporate Social Responsibility

Eco-social perspective
In their views, government cannot & need not be the solely

responsible for promoting welfare of masses. It is imperative for businesses to be socially responsible. In this fast changing world, a businessman is judged on two counts- the social goals he meets, apart from profits he make.

Perspectives of Corporate Social Responsibility

Rights-based perspective
It is obligatory on part of business organizations to be socially

responsible as they primarily exist to benefit society Citizens give them special rights, powers, privileges & protection on understanding that their activities will fulfill citizens purposes Corporations cannot exist without our letting to do so & we let exist only if they are beneficial to us

The business in society in relation to its responsibility

Thus, CSR is about how companies manage the business

process to produce an overall impact on society. Companies need to answer 2 questions relating to their operations: 1. The quality of management- both in terms of people & processes (inner circle) 2. The nature & quality of their impact on society in various areas

The business in society in relation to its responsibility

Quality of management

Impact on Society

WHY SOCIAL RESPONSIBILITY OF BUSINESS?

Accountability to Society

In a democratic society any kind of enterprise exists for the

sake of society. If private enterprise are allowed to exist, it is because it is seen to contribute better than public enterprise to common good Private firm is not encouraged because individuals may accumulate wealth for their own selfish benefit at he expense of public

WHY SOCIAL RESPONSIBILITY OF BUSINESS?

Corporations Debt to Society

A corporation has to behave as a good citizen. The

corporation has to donate generously towards causes of public welfare and must get itself directly involved in social welfare programmes.

DEFINITIONS OF CSR
It is a set of obligations to pursue those policies, to make

those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society. It is the overall relationship of the corporate with all of its stakeholders. Elements of social responsibility include investment in community outreach, creation and maintenance of employment, environmental stewardship and financial performance.

DEFINITIONS OF CSR
CSR is the continuing commitment by business to behave

ethically & contribute to economic development while improving the quality of workforce & their families as well as of the local community & society at large.
World Business Council for Sustainable Development

DEFINITIONS OF CSR (Contd.)

The classical economic model: Adam Smith believed that an

invisible hand promoted the public welfare The socio-economic model: Business is seen as one subsystem among many in a highly interdependent society. It recognizes that companies have stakeholders other than their stockholders. Business has an obligation to respond to the needs of all stakeholders while pursuing its profit. A stakeholder audit allows companies to systematically identify all parties that could possibly be impacted by the companys performance

SOME FACTS
WHILE 94% OF THE COMPANIES BELIEVE THAT

DEVELOPMENT OF CSR STRATEGIES CAN DELIVER REAL BUSINESS BENEFITS ONLY 11% MADE ANY SIGNIFICANT PROGRESS IN IMPLEMENTING STRATEGY IN THE ORGANIZATION CEOS ARE FAILING TO RECOGNIZE THE BENEFITS OF IMPLEMENTING CSR STRATEGIES DESPITE INCREASING PRESSURES TO DO SO CSR PROGRAMMES INFLUENCE 70% OF ALL CUSTOMER PURCHASING DECISIONS

Todays Corporate Social Responsibility

The corporate social responsibility of an organization today,

is a set of obligations with which it has to protect, enhance, and otherwise work to the betterment of the society in which it functions. The concept of corporate social performance includes a business organisations Configuration of principles of social responsibility. Process of social responsiveness, and Policies, programmes, and observable outcomes as they relate to the firms societal relationships.

Implementation of CSR
The systematic implementation of CSR means:

The adoption of strong organizational values and norms depicting behaviours that are appropriate towards a variety of stakeholders. 2. The continuous generation of intelligence about stakeholder issues, along with positive responses to these issues.
1.

Bhopal Gas Tragedy

Theoretical Justification for CSR

Trusteeship Model adopts a realistic and descriptive

perspective by viewing corporation as a social institution with a corporate personality. Managers are the trustees of the corporation. The duty of the trustees is to sustain the corporations assets, expectations of customers & suppliers & company's reputation in the community. Mangers have to balance the conflicting interests of current & future stakeholders & to develop companys capacities in a long term perspective rather than focus on short term gains

Theoretical Justification for CSR(Contd.)

Social entity theory: The social entity conception of the

corporation regards the company not as a private association united by individual property rights, but as a public association constituted through political and legal processes and as a social entity for pursuing collective goals with public objectives.

Theoretical Justification for CSR(Contd.)

The Pluralistic Model: This model supports the idea of

multiple interests of stakeholders, rather than shareholder interest alone. It argues that the corporation should serve and accommodate wider stakeholder interests in order to make the corporation more efficient and more legitimate.

What are Corporations Expected to do?

Corporations need to erase the perception of the public that they

accumulate wealth for their own cause; They should participate in social welfare projects, which will improve their image in public esteem; They also have to make quality products and stick to delivery schedules while importing and exporting goods; and They should create employment opportunities for the disadvantaged. They have to pay taxes in full & on time, observe the laws of land Ensure a clean & healthy environment

Thus they should understand the fact that economic goals & social

responsibility objectives needs not be contradictory to each other & could be achieved simultaneously

MODELS FOR IMPLEMENTATION OF CSR

Four Models of CSR
Model Emphasis Proponent

Ethical
Statist

Voluntary commitment by companies to public welfare

State ownership and legal requirements determine corporate responsibilities Corporate responsibilities limited to private owners (shareholders) Companies respond to the needs of stakeholders customers, creditors, employees, communities, etc.

Mahatma Gandhi
Jawaharlal Nehru

Liberal Stakeholder

Milton Friedman R. Edward Freeman

CSR as a business strategy for sustainable development

When CSR is adopted as a business strategy for sustainable

development, it goes to improve corporate performance:It offers multiple benefits to corporations both internally & externallyExternally it creates a positive image & goodwill among the public & earns a special respect amongst different stakeholders which go a long way in promoting long term shareholder value & sustainable development Internally it cultivates a sense of loyalty & trust amongst employees It provides workers a feeling of satisfaction & a meaning to their lives Thus because of all these positive factors that organizations involve themselves in socially responsible investing (SRI)

CSR as a business strategy for sustainable development

CSR is a cost effective way to gain competitive advantage.

Corporations in their effort to engage in strategic CSR aim

to match business objectives with the needs of community

Evaluation of CSR Activity

3 basic principles to measure the impact of CSR:-

Sustainability 2. Accountability 3. Transparency

1.

Evaluation of CSR Activity

Sustainability:

Implies that there must be a clear linkage established between

use of resources & their regeneration

Accountability:
an organization should assume responsibility for the effects of

its action that have impacted the external environment The organization needs to compensate for the cost of damages caused by its action, by creating benefits that exceeds costs to all affected stakeholders

Evaluation of CSR Activity

Transparency:

The organization reports the impacts of its action to all

stakeholders truthfully without misguiding them in any manner This enables stakeholders to have a full & fair view of the situation

Advantages of Corporate Social Responsibility

There are several advantages to corporations when they

exhibit a sense of CSR and implement it, such as: 1. Improved financial performance 2. Enhanced brand image and reputation 3. Increased sales and customer loyalty 4. Increased ability to attract and retain employees 5. Reduced regulatory oversight 6. Innovation and learning 7. Easier access to capital

SCOPE OF CORPORATE SOCIAL RESPONSIBILITY

Three levels of social responsibility can be identified

(evolution of areas of social responsibility) 1. Market forces : Need to respond to the demands of the market. Managerial decisions may involve business responding to the economics of the market by efficiently & effectively using resources. 2. Mandated actions: Managerial decisions may reflect business responses to government mandated requirements or pressure group stakeholder (unions)

SCOPE OF CORPORATE SOCIAL RESPONSIBILITY

3. Voluntary actions: Managerial decisions may be undertaken without outside pressure.

CSR addresses the following issues: Assistance in solving community problems Health & welfare Education Human rights Natural environment Culture

Understanding Social Responsibility of Business

1) Protecting and promoting stakeholders Interests.
a) To Consumers and Community b) Social Responsibilities of Business Towards Employees c) To Owners and Inter-Business Establishments

2) Promotion of Common Welfare Programmes 3) Philanthropy

Understanding Social Responsibility of Business (Contd.)

4)Good Corporate Governance
5)Render Social Service 6)Abiding by Rules and Regulations 7)Ensure Ecological Balance

Understanding Social Responsibility of Business (Contd.)

8) Focus on the Human Element
9) Improve Productivity 10) Sponsor Social and Charitable Causes 11) Supplement State Efforts

Steps to Attain Corporate Social Responsibility

The International Chamber of Commerce recommends the

following nine steps to attain Corporate Social Responsibility: 1. Confirm CEO/Board commitment to prioritize responsible business conduct 2. State company purpose and agree on company values 3. Identify key stakeholders 4. Define business principles and policies

Steps to Corporate Social Responsibility(Contd.)

5. Establish implementation procedures and management systems 6. Benchmark against selected external codes and standards 7. Set up internal monitoring 8. Use language that everyone can understand 9. Set pragmatic and realistic objectives.

ARGUMENTS FOR AND AGAINST CSR

FOR

CREATING SHAREHOLDER VALUE

REPUTATION STRATEGIC BRANDING

PRODUCTIVITY AND QUALITY

HUMAN AND INTELLECTUAL CAPITAL

CONTD-- AGAINST

MONEY RIGHTFULLY BELONGS TO SHAREHOLDERS

POLITICIANS MUST DEAL WITH SOCIAL ISSUES INVESTMENT ON CORE BUSINESS

MORE A PUBLICITY STUNT

POWER AND RESPONSIBILITY DO NOT NECESSARILY

GO HAND IN HAND

EXTERNAL STANDARDS ON CSR

There has been a substantial growth in the number of external

standards produced for business by governmental & nongovernmental organizations with a view to support, measure & assist in implementation & to create a platform for accountability for performance of CSR issues. These standards are necessary as companies do not have a clear vision about what constitutes CSR, how their investment on it is decided, how to evaluate the outcome & so on. Some standards address single issue (e.g. focused on environmental performance or corporate governance) while others address a range of CSR issues

EXTERNAL STANDARDS ON CSR

The Caux Round Table (CRT) Organization for Economic Cooperation and Development

(OECD) United Nations Global Compact Asian-Pacific Economic Cooperation (APEC) Business Code of Conduct The Global Reporting Initiative (GRI)

EXTERNAL STANDARDS ON CSR

AA1000 Accountability

Social Accountability 8000

Principles for Global Corporate Responsibility The Global Sullivan Principles

The Keidanren Charter for Good Corporate Behaviour

CSR-The Indian Perspective

Companies in US & Europe are pressured by stakeholders to

adopt CSR practices but Indian companies so far have not experienced any such pressures Indian companies are not legally bound to formally report CSR activities unlike developed countries which adhere to the Global Reporting Initiative (GRI) India ranks last in terms of the level of CSR demanded from companies, but according to the survey conducted by Centre of Social Markets, there has been a growing change in the attitude of Indian firms towards CSR

CSR-The Indian Perspective

The most responsible companies in India are:

MNCs: Unilever, Sony, Johnson& Johnson, Coca cola, P&G

Indian: Tatas, Reliance, Birlas, BHEL
Tatas are known for their work in Tatanagar & have set up a

Tata Council for Community Initiatives.

INDIA ON THE ETHICAL/CSR MATRIX

Indian corporations consider business ethics, compliance with

regulatory requirements and consistency in value delivery as the three most important factors that impact their social . reputation There is a transition from statist model & liberal model of CSR to ethical model Wider adoption of CSR in Indian companies will be enabled by: Provision of tax, duties & custom benefits, Inclusion of CSR performance of promoter as a parameter for fast track clearance to projects Depreciation benefits where asset investments are made

Future of Indian CSR

There is a clear need for

Transition from the present compliance centric approach to

the new paradigm Creation of an enabling environment and an array of support measures. Business schools teaching CSR to facilitate this process Industry associations to share experiences and reward best practice Need to incorporate public policies into the Indian CSR. International agencies to share cross-country experience.

SOME INITIATIVES
IBM- UPLIFTMENT OF TRIBALS IN SASAN INDIAN PAINT INDUSTRY MAKING PAINTS MORE ENVIRONMENT

FRIENDLY FINANCIAL SERVICES-NEASING OF CARBON FOOTPRINTSRENEWABLE ENERGY ETC- HSBC, MAX NEWYORK LIFE, SCB E CHAUPAL ADOBE, KPMG, PROMOTING ENTREPRENEURSHIP RELIANCE- PROJECT DRISHTI NDTV-GREENATHON AIRCEL-SAVE THE TIGER COPENHAGEN- ENVIRONMENT ISSUES E WASTE MANAGEMENT

DEVELOP STRATEGY BY-- BUILD SUPPORT WITH SENIOR MANAGEMENT AND

EMPLOYEES RESEARCH WHAT BUSINESS IS DOING PREPARE A MATRIX OF PROPOSED CSR ACTIONS DEVELOP ACTIONS FOR THEM DECIDE ON DIRECTION,APPROACH AND FOCUS AREAS.

IMPLEMENTING CSR STRATEGY

DEVELOP AN INTEGRATED CSR DECISION MAKING

STRUCTURE PREPARE AND IMPLEMENT CSR BUSINESS PLAN SET MEASURABLE TARGETS AND IDENTIFY PERFORMANCE MEASURES DESIGN AND CONDUCT CSR TRAINING ESTABLISH MECHANISMS FOR ADDRESSING PROBLEMATIC BEHAVIOUR CREATE INTERNAL AND EXTERNAL COMMUNICATION PLAN

AREAS OF CSR IMPLEMENTATION

LABOUR/HUMAN RTS

HR

ENVIRONMENT

CG ECO DEVP

ETHICS

ACCOUNTABILITY

CSR