Professional Documents
Culture Documents
TERM PAPER
ON
CORPORATE SOCIAL
RESPONSIBILITY
Submitted to:
(LOVELY INSTITUTE OF MANAGEMENT)
MBA Ist – B(Ist Sem.)
(Session 2009-2011)
Date- 05 Dec 2009
Reg. No.10904478
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Table of Contents
Introduction ..........................................................5
What Is Corporate Social Responsibility? ...............6
Meaning and Definition...........................................7
Need for Corporate Social Responsibility..............10
Importance of CSR ...............................................11
CSR in Today’s World ...........................................12
Implementing CSR ...............................................14
Arguments of CSR.................................................15
Corporate Social responsibility in India ................19
Measure for applying Corporate Social
Responsibility .......................................................20
Conclusion ...........................................................23
References ...........................................................24
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ACKNOWLEDGEMENT
Chhibber for giving me the opportunity to expel and work in the field of
I would also like to thank all those people who directly or indirectly
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Literature Review
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Introduction
Although the subject “Corporate Social
Responsibility” in its present form and
content has gained popular attention only
in recent years, its origin can be traced
back to the evolution of the concept of a
welfare state.
The changing image of business in the recent years has lent further support to the
idea of social responsibility. Some public opinion polls in the 1960’s and 1970’s in
United States have left businessman disenchanted. These polls have revealed that
the businessman is viewed as an individual who does not cares for others, who
ignored social problems, who preys upon the population, who exploits labor, and
who is a selfish money grabber. On the other hand, until these opinions were
unveiled, the businessman in America believed that others viewed him as he
viewed himself, as a practical, down-to-earth, hardworking, broadminded,
progressive, interesting and a competitive free enterpriser. He believed that the
society looked up at him as a self sacrificing community leader, pillar of society,
generous to a fault, great supporter of education, patron of the arts, in short, the salt
of the earth. Indeed, the businessman in the pre-poll days thought of himself as a
happy mix of Plato, Gandhi, and Churchill.
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As part of the business model, businesses have to take into account the impact of
their activities on the environment, employees, communities, stakeholders, and
other members of the public. In short, CSR represents the deliberate inclusion of
the public’s interest in a business’ decision making to ensure a triple bottom line
that considers the planet, people, and profits.
In general, CSR involves some kind of standardized reporting that allows the
business to collect information on how it is making progress on various fronts.
Businesses that engage in CSR typically focus on some or all of the following:
• Employees: It’s important to ensure that all employees are cared for
adequately. Businesses usually focus on workplace conditions, benefits,
living wages, and training.
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1. The quality of their management - both in terms of people and processes (the
inner circle).
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2. The nature and quantity of their impact on society in the various areas.
Other definitions
The same report gave some evidence of the different perceptions of what this
should mean from a number of different societies across the world. Definitions as
different as "CSR is about capacity building for sustainable livelihoods. It
respects cultural differences and finds the business opportunities in building the
skills of employees, the community and the government" from Ghana, through to
"CSR is about business giving back to society" from the Phillipines.
On the other hand, the European Commission hedges its bets with two definitions
wrapped into one: "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".
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8. Very often situations demand due to natural calamities, accidents and so on.
For example, gas leak at the Union Carbide plant in Bhopal, wherein the
company had to monetarily compensate through medical treatment.
Importance of CSR
CSR is an important business strategy because, wherever possible, consumers want
to buy products from companies they trust; suppliers want to form business
partnerships with companies they can rely on; employees want to work for
companies they respect; and NGOs, increasingly, want to work together with
companies seeking feasible solutions and innovations in areas of common concern.
Satisfying each of these stakeholder groups allows companies to maximize their
commitment to another important stakeholder group—their investors, who benefit
most when the needs of these other stakeholder groups are being met:
Carly Fiorina
The businesses most likely to succeed in the globalizing world will be those best
able to combine the often conflicting interests of its multiple stakeholders, and
incorporate a wider spectrum of opinions and values within the decision-making
process and objectives of the organization. Lifestyle brand firms, in particular,
need to live the ideals they convey to their consumers:
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Consumers and society in general expect more from the companies whose products
they buy. This sense has increased in the light of recent corporate scandals, which
reduced public trust of corporations, and reduced public confidence in the ability of
regulatory bodies and organizations to control corporate excess.
• Increasing affluence
• Globalization
The growing influence of the media sees any ‘mistakes’ by companies brought
immediately to the attention of the public. In addition, the Internet fuels
communication among like-minded groups and consumers—empowering them to
spread their message, while giving them the means to co-ordinate collective action
(i.e. a product boycott).
These three trends combine with the growing importance of brands and brand
value to corporate success (particularly lifestyle brands) to produce a shift in the
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The result of this mix is that consumers today are better informed and feel more
empowered to put their beliefs into action. From the corporate point of view, the
market parameters within which companies must operate are increasingly being
shaped by bottom-up, grassroots campaigns. NGOs and consumer activists are
feeding, and often driving, this changing relationship between consumer and
company.
CSR can therefore best be described as a total approach to business. CSR creeps
into all aspects of operations. Like quality, it is something that you know when you
see it. It is something that businesses today should be genuinely and
wholeheartedly committed to. The dangers of ignoring CSR are too dangerous
when it is remembered how important brands are to overall company value; how
difficult it is to build brand strength; yet how easy it can be to lose brand
dominance.
CSR is, therefore, also something that a company should try and get right in
implementation.
Implementing CSR
CSR is about common sense policies that represent a means of integrating a
complete ‘social perspective’ into all aspects of operations. The goal is to
maximize true value and benefit for an organization, while protecting the huge
investments corporations make today in their brands.
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CSR asks companies to ensure their business operations are clean and equitable,
and contribute positively to the society in which they are based. Otherwise, they
leave themselves open to too much danger from a potential consumer backlash.
Many believe the issue of how corporations integrate CSR into everyday
operations and long-term strategic planning will define the business marketplace in
the near future. It will become a key point of brand differentiation, both in terms of
corporate entities and the products that carry their brands.
Key steps on the road to integrating CSR within all aspects of operations include:
Corporations today are best positioned when they reflect the values of the
constantly shifting and sensitive market environment in which they operate. It is
vital that they are capable of meeting the needs of an increasingly demanding and
socially-aware consumer market, especially as brands move front and center of a
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firm’s total value. Global firms with global lifestyle brands have the most to lose if
the public perception of the brand fails to live up to the image portrayed.
Arguments of CSR
Arguments offered in favor of CSR can be broadly split into two camps—moral
and economic.
CSR broadly represents the relationship between a company and the wider
community within which the company operates. It is recognition on the part of the
business that ‘for profit’ entities do not exist in a vacuum, and that a large part of
any success they enjoy is as much due to the context in which they operate as
factors internal to the company alone.
Charles Handy makes a convincing and logical argument for the purpose of a
business laying beyond the goals of maximizing profit and satisfying shareholders
above all other stakeholders in an organization:
The purpose of a business is not to make a profit, full stop. It is to make a profit so
that the business can do something more or better. That “something” becomes the
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real justification for the business….It is a moral issue. To mistake the means for
the end is to be turned in on oneself, which Saint Augustine called one of the
greatest sins….It is salutary to ask about any organization, “If it did not exist,
would we invent it?” Only if it could do something better or more useful than
anyone else” would have to be the answer, and profit would be the means to that
larger end.
Advocates of CSR believe that, in general, the goal of any economic system should
be to further the general social welfare. In advanced economies, the purpose of
business should extend beyond the maximization of efficiency and profit.
Increasingly, society expects businesses to have an obligation to the society in
which they are located, to the people they employ, and their customers, beyond
their traditional bottom-line and narrow shareholder concerns.
But, in most cases, businesses also draw their most important resource, its
employees, largely from the local community. Any business will be more
successful if it employs a well-educated workforce that can attend good hospitals if
they become sick, and who have grown up in a positive environment. This is not to
mention consumers, also often members of the local community, without whom no
business could survive.
CSR advocates point out that no organization exists in isolation. They believe that
businesses, without exception, have an obligation to contribute as well as draw
from the community, on which they rely so heavily.
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who are not persuaded by the moral case. Proponents of this argument believe that
CSR represents an holistic approach to business.
Therefore, an effective CSR policy will infuse all aspects of operations. They
believe the actions corporations take today to incorporate CSR throughout the
organization represent a real point of differentiation and competitive market
advantage on which future success can hinge:
CSR affects all aspects of all operations within a corporation because of the need
to consider the needs of all constituent groups. Each area builds on all the others to
create a composite of the corporation (its brand) in the eyes of all stakeholder
groups.
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us who spend our time marshalling the case for would do well to spend a little time
hearing the case against, and considering what should be the response.
Of course, one of the challenges in considering cases "for" and "against" CSR is
the wide variety of definitions of CSR that people use. We assume here we are
talking about responsibility in how the company carries out its core function - not
simply about companies giving money away to charity.
Below are some of the key arguments most often used against CSR and some
responses.
• The leading companies who report on their social responsibility are basket
cases - the most effective business leaders don't waste time with this stuff
• Our company is too busy surviving hard times to do this. We can't afford to
take our eye off the ball - we have to focus on core business
• It's the responsibility of the politicians to deal with all this stuff. It's not our
role to get involved
• I have no time for this. I've got to get out and sell more to make our profit
line.
• Corporations don't really care - they're just out to screw the poor and the
environment to make their obscene profits
• Many companies are only making token gestures towards CSR in tangential
ways such as donations to charitable trusts or NGOs, sponsorship of events, etc.
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• Most companies believe that charity and philanthropy equals to CSR; very few
companies are using their core competence to benefit the community.
• Most companies use CSR as a marketing tool to further spread the word about
their business. For instance, donation of a token amount to some cause on
purchase of a particular product. The fact that companies are hiring advertising
agencies for their CSR further highlights this.
• Very few companies openly state the processes followed by them, the damage
caused by these processes, and the steps taken to minimize this damage.
• Very few companies state how much they spend on CSR. There is no mention
of the amount spent in any of their balance sheets or annual reports. Most
companies just list and describe their CSR activities and seem to be spending
minimal amounts on CSR.
• Very few companies are engaged in CSR activities in the local communities
where they are based.
• Very few companies have a clearly defined CSR philosophy. Most implement
their CSR in an ad-hoc manner, unconnected with their business process.
• Most companies spread their CSR funds thinly across many activities, thus
somewhere losing the purpose of undertaking that activity.
• Generally speaking, most companies seem either unaware or don’t care about
CSR. However, all companies can be considered to be an upward learning
curve with respect to CSR and it is expected that the situation will improve.
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Sustainability reporting
It is recommended that every company should publish a separate Corporate
Sustainability Report (as per the Global Reporting Initiative (GRI) framework)
along with their Annual Report. At the very least, every company must include a
Corporate Sustainability section in its Annual Report (similar to the mandatory
section on Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo).
CSR philosophy to be defined and articulated
Every company must clearly define its own CSR philosophy and objectives, stating
which issues it intends working on or contributing to. It is recommended that a
company first takes up areas that directly concern its business processes, and
thereafter any other related or unrelated issues. These can also yield strategic
benefits to the company.
The scale of operations of a company and its impact is connected with its sales,
and not with its profits. The larger the company, the greater is the damage it is
doing to the environment. Conversely, the greater is the company's ability to do
good.
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for their factories and offices, and adopt rainwater harvesting irrespective of the
production process they are engaged in.
Instead of contributing to the trust of the CEO or the promoter family, a company
should set up its own trust/foundation as a matter of proper business ethics.
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Conclusion
Corporate Social Responsibility is a difficult and elusive topic for companies to
deal with. It can often be very costly and yield benefits that are hard to quantify.
Perhaps this is one reason why companies, according to the survey, have put so
much focus on the internal improvements that can be made, such as improving
corporate governance and transparency. This could also explain why the most
important stakeholders, after customers, are the traditionally important employees
and shareholders.
There’s also the issue of just what standard of corporate social responsibility
should companies use and how far companies should go to perform their
responsibilities beyond what the laws call for. The issue of what is the
“responsibility” of a corporation is far from being settled, and there is an
unresolved argument over what corporate social responsibility means. Companies
face a plethora of options among the various standards, guidelines, benchmarks
and other proposed measures of corporate social responsibility.
One point that all can agree on is that corporate social responsibility is not a neutral
topic. There is a persistent debate about whether the corporate social responsibility
“movement” represents an unjustified intrusion into corporate affairs, and whether
companies should invest profits in their own corporate social responsibility
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projects or return the money to shareholders to let them invest as they see fit. But
there is no denying that corporate social responsibility has become an important
issue facing the global business community and one that promises to grow in
importance in the coming years.
Reference
1. Sen Gupta, Sunita Singh (2004). Business Social Partnership : An
International Perspective. Jaipur: Aalekh publications.
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