M.S.

Ramaiah Institute of Technology (Autonomous Institute, Affiliated to VTU) Bangalore - 560054

Seminar Report on Corporate Social Responsibility-In Global Perspective Submitted by Amritraj D.Bangera - 1MS09MBA04

Under the guidance of N.Srikanth ReddyM.B.A, Lecturer, Department of MBA, MSRIT, Bangalore

Coordinated by M Rizwana M.B.A,(Ph.D) Lecturer, Department of MBA, MSRIT, Bangalore

Content I. II. III. IV. V. VI. VII. VIII. IX. X. XI. XII. Introduction to CSR Definition of Corporate Social Responsibility (CSR) CSR in developed and developing countries CSR framework Drivers of CSR Pyramid of CSR Pros and Cons of CSR Potential business benefits of CSR CSR continuum Reasons for CSR activities Four challenges to CSR with global ethics CSR following companies

Introduction
In years, there have been many changes in the nature of the triangular relationship between companies, the state and the society. No longer can firms continue to act as independent entities regardless of the interest of the general public. The evolution of the relationship between companies and society has been one of slow transformation from a philanthropic coexistence to one where the mutual interest of all the stakeholders is gaining paramount importance. Companies are beginning to realise the fact that in order to gain strategic initiative and to ensure continued existence, business practises may have to be moulded from the normal practise of solely focussing on profits to factor in public goodwill and responsible business etiquettes. An examination of some of the factors which have led to the development of the concept of corporate social responsibility would be ideal starting ground for the conceptual development of suitable corporate business practises for emerging markets. The business environment has undergone vast changes in the recent years in terms of both the nature of competition and the wave of globalization that has been sweeping across markets. Companies are expanding their boundaries from the country of their origin to the evolving markets in the developing countries which have been sometimes referred to as emerging markets. The current trend of globalization has brought a realisation among the firms that in order to compete effectively in a competitive environment; they need clearly defined business practises with a sound focus on the public interest in the markets. The increase in competition among the multinational companies to gain first mover advantage in various developing countries by establishing goodwill relationships with both the state and the civil society is ample testimony to this transformation. Secondly, in most of the emerging markets, the state still holds the key to business success because of the existence of trade and business

regulations restricting the freedom of multinational companies to incorporate their previously successful business doctrines which have been tried and tested in the developed nations. The state with its duty of protecting the interests of the general public would naturally be inclined to give preference to companies which take care of the interests of all the stakeholders. Thirdly, emerging markets have been identified as a source of immense talent with the rising levels of education. For example, the expertise of India in churning out software professionals and China in manufacturing has now become internationally renowned. In order to draw from this vast talent pool coming up in developing countries, companies need to gain a foothold in these markets by establishing sound business practices addressing social and cultural concerns of the people. It has been observed that consumers consider switching to another company's products and services, speak out against the company to family/friends, refuse to invest in that company's stock, refuse to work at the company and boycott the company's products and services in case of negative corporate social behaviour. Last but not the least, firms all over the world is beginning to grasp the importance of intangible assets, be it brand name or employee morale. Only firms that have gained the goodwill of the general public and are ideal corporate citizens will be to develop these intangible assets into strategic advantages.

Definition of Corporate Social Responsibility What CSR is? World Business Council for Sustainable Development defines Corporate Social Responsibility (CSR) as The continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large. The European Commission advocates CSR as Being socially responsible means not only fulfilling legal expectations, but also going beyond compliance and investing more into human capital, the environment and relations with stakeholders. Corporate social responsibility (CSR) is the process by which businesses negotiate their role in society. A concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment. A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis. Operating a business in a manner that meets or exceeds the ethical, legal, commercial and public expectations that society has of business.

CSR in developed and developing country In developing country

The main focus is on nation building To develop the current socio-economic status at present time To develop the rural area with the urban Provide employment to the present workforce and future Provide education to all Provide quality health care to all Community support to full extend for improved quality of life in community

In developed country

To attain stable governance To follow proper business ethics Obey the human rights law at all costs Protect the environment from destruction from big multinational corporation

CSR Framework It is made up of six characteristics: 1. Understanding society Understanding how the business operates in broader context and knowing the social and environmental impact that the business has on society. 2. Building capacity Building the capacity of others to help manage the business effectively. For example, suppliers understand the businesss approach to the environment and employees can apply social and environmental concerns in their day-to-day roles. 3. Questioning business as usual Individuals continually questioning the business in relation to a more sustainable future and being open to improving the quality of life and the environment. 4. Stakeholder relations Understanding who the key stakeholders are and the risks and opportunities they present. Working with them through consultation and taking their views into account. 5. Strategic view Ensuring that social and environmental views are included in the business strategy such that they are accepted as integral to the way the business operates. 6. Harnessing diversity Respecting that people are different, which is reflected in fair and transparent employment and business practices.

Drivers of CSR

Nongovernment al organization

Consumers

Government

CSR

Employees

Investors

Suppliers

CSR NGOs Government Investors Suppliers Employees Consumers Pyramid of CSR

phlant hropic

Ethical

Legal

Economic

Philanthropic Be good corporate citizen, Contribute resources to the Community, improve quality of life Ethical

Be ethical Obligation to do what is right, just and fair avoid harm Legal Obey the Law Law is societys codification of right and wrong Play by the rules of the game. Economic Be profitable the foundation upon which all others rest

Pros and Cons of CSR It is difficult to distinguish between CSR and good business practice, but perhaps one upside of CSR's holistic approach is that it encourages businesses to safeguard their corporate reputation for the future. Responsible business practice could help protect a company from consumer boycotts. It also encourages greater emphasis on people issues, which is good news for HR managers. Claims that CSR can help employers attract and retain graduate high-flyers. Legislation is another danger as the EU gears up for a directive forcing organizations to report on their environmental, diversity and community relations record. Pros corporate Cons economic efficiency

Balances

power

with Lowers profit. Imposes for

and

responsibility. Discourages government regulation. Promotes business. long-term profits

unequal

costs

among

competitors. Imposes hidden costs passed on to

Responds to changing stakeholders stakeholders. demands. Requires social skills which business

Corrects social problems caused by may lack. business. Places responsibility on business rather than individuals.

Potential business benefits of CSR The scale and nature of the benefits of CSR for an organization can vary depending on the nature of the enterprise, and are difficult to quantify, though there is a large body of literature exhorting business to adopt measures beyond financial ones. However, businesses may not be looking at short-run financial returns when developing their CSR strategy. The definition of CSR used within an organization can vary from the strict "stakeholder impacts" definition used by many CSR advocates and will often include charitable efforts and volunteering. CSR may be based within the human resources, business development or public relations departments of an organization, or may be given a separate unit reporting to the CEO or in some cases directly to the board. Some companies may implement CSR-type values without a clearly defined team or program. The business case for CSR within a company will likely rest on one or more of these arguments: Human resources

A CSR program can be an aid to recruitment and retention particularly within the competitive graduate student market. Potential recruits often ask about a firm's CSR policy during an interview, and having a comprehensive policy can give an advantage. CSR can also help improve the perception of a company among its staff, particularly when staff can become involved through payroll giving, fundraising activities or community volunteering. See also Corporate Social Entrepreneurship, whereby CSR can also be driven by employees' personal values, in addition to the more obvious economic and governmental drivers. Risk management Managing risk is a central part of many corporate strategies. Reputations that take decades to build up can be ruined in hours through incidents such as corruption scandals or environmental accidents. These can also draw unwanted attention from regulators, courts, governments and media. Building a genuine culture of 'doing the right thing' within a corporation can offset these risk. Brand differentiation In crowded marketplaces, companies strive for a unique selling proposition that can separate them from the competition in the minds of consumers. CSR can play a role in building customer loyalty based on distinctive ethical values. Several major brands, such as The Co-operative Group, The Body Shop and American Apparel are built on ethical values. Business service organizations can benefit too from building a reputation for integrity and best practice. License to operate Corporations are keen to avoid interference in their business through taxation or regulations. By taking substantive voluntary steps, they can persuade

governments and the wider public that they are taking issues such as health and safety, diversity, or the environment seriously as good corporate citizens with respect to labor standards and impacts on the environment

Corporate Social Responsibility Continuum

Reasons for CSR Activities

CSR activities are important to and even expected by the public and they are easily monitored worldwide

CSR activities help organizations hire and retain the people they want CSR activities contribute to business performance

Four Challenges to a CSR with Global Ethic Global rules emerge from negotiations and will reflect values of the strong Global rules may be viewed as an end rather than a beginning Rules can depress innovation and creativity Rules are static but globalization is dynamic

CSR following Companies CSR at TATA First Indian company committed to national and global CSR principles Tata Steel believes that the primary purpose of a business is to improve the quality of life of people. Tata Steel will volunteer its resources, to the extent that it can reasonably afford, to sustain and improve a healthy and prosperous environment and to improve the quality of life of the people of the areas in which it operates. TATAs core CSR activities are in the field of: Environment Employee Relations Stimulating Economic Growth Civic Amenities & Community Service Population Management Sports and Adventure Health for All

 Relief During Natural Calamities Education / Arts and Culture CSR at PepsiCo PepsiCo India continues to strengthen its Solid Waste Management initiatives in partnership with Exnora, an environmental NGO. This award winning, income generating partnership provides a clean environment to more than 450000 people across Pammal, Chennai, Nagapattinam, Tenkasi and Cuddalore in Tamil Nadu, Sangareddy in Andhra Pradesh and Panipat, Haryana. Designed and supported by the Pepsico Health & Wellness team, the programs have been implemented in schools in collaboration with prominent NGOs & Hriday, Swashrit and the Indian Medical Association. Get Active programs have a central objective: to raise awareness on the importance of balanced nutrition and regular physical activity for a healthy lifestyle among school children. CSR at ITC E-Choupal from ITC is a outstanding CSR program contributing to village development dealing with the following activities Relevant & Real-time Information Customised Knowledge Supply Chain for Farm Inputs Direct Marketing Channel for Farm Produce Marketing Services Governance services Health with Private Health Service Providers

 Choupal Sagar services CSR at Reliance

The Reliance DOTS -TB HIV and AIDS therapy centre is a publicprivate partnership to combat TB, HIV and AIDS. Pilot program started at Hazira in 2004 and expanded to Jamnagar in 2005. The center offers financial assistance, counseling services, awareness programs, treatment, alternate therapies yoga and pranyama and also nutritional support to the underprivileged.

CSR at GTL GTL sets aside up to 1% of its profits towards CSR activities and encourages active employee participation Gyan IT (Spreading IT literacy among rural areas) Know (Mobile Computer lab) VKC (Village Knowledge Centre) Gyan Deep (Train the trainer Teachers) Netra (Computer Lab for Blind) Talk 64 (Chess software for Blind) Swayam (Self Employment opportunities) Samman (Mobility for the disabled) Gyan Jyot (Scholarships for higher studies) Samrakshan (Financial assistance to bereaved families) Idaya (Assistance to Tsunami Victims) Pralay (Assistance in case of natural disasters) CSR at IBM IBM - Japans e-elder

 Initiative is a national program using training materials and other support from IBM Japan which will hire and train seniors as instructors for other seniors in an effort to help elder citizens (expected to make up one-fifth of Japans total population) more fully participate in a Web-based society.

Conclusion According to a survey 79% want to work for a company heavily engaged in CSR 56% will refuse to work for a company who is not at all committed to and engaged in CSR.

Over 80% customers will switch brands if no CSR.