CORPORATE CITIZENSHIP

DEFINATION

The extent to which businesses are socially responsible for meeting legal, ethical and
economic responsibilities placed on them by shareholders. The aim is for businesses to
create higher standards of living and quality of life in the communities in which they
operate, while still preserving profitability for stakeholders.

“Corporate Citizenship is recognition that a business, corporation or business-like

organisation, has social, cultural and environmental responsibilities to the community in
which it seeks a licence to operate, as well as economic and financial ones to its
shareholders or immediate stakeholders. Corporate citizenship involves an organisation
coming to terms with the need for, often, radical internal and external changes, in order to
better meet its responsibilities to all of its stakeholders (direct or indirect), in order to
establish, and maintain, sustainable success for the organisation, and, as a result of that
success, to achieve long term sustainable success for the community at large.” (CCRU
(Corporate Citizen Research Unit) at Deakin University in Australia)

“Corporate citizenship is the business strategy that shapes the values underpinning a
company’s mission and the choices made each day by its executives, managers and
employees as they engage with society.” (The Center for Corporate Citizenship at Boston
College)

“Corporate citizenship is about how companies manage the business processes to produce
an overall positive impact on society”

Sloan work and family research network, Bosten College

In following diagram:

Companies need to answer to two aspects of their operations. 1. The quality of their
management - both in terms of people and processes (the inner circle). 2. The nature of,
and quantity of their impact on society in the various areas.

Outside stakeholders are taking an increasing interest in the activity of the company.
Most look to the outer circle - what the company has actually done, good or bad, in terms
of its products and services, in terms of its impact on the environment and on local
communities, or in how it treats and develops its workforce. Out of the various
stakeholders, it is financial analysts who are predominantly focused - as well as past
financial performance - on quality of management as an indicator of likely future
performance.

www.mallenbaker.net
 GOOD CORPORATE CITIZEN

Corporate citizenship recognizes that businesses have a responsibility to respect the

individuals, the community and the environment in a way that when devising or
implementing any rightful business strategy they will abide by laws and regulations, and
adhere to high ethical standards.

Individual citizens also have responsibilities and rights. Together with corporate citizens
these entail a set of social values that provide a benchmark upon which they can perform
their respective roles in harmony with the wider community, for mutual benefit.

Broadly speaking, the social responsibility of businesses may cover the following
principles:

1. Maintaining a high standard of business ethics

2. Working as part of the community;
3. Protecting the environment;
4. Providing good corporate governance;
5. Engaging in fair trade and business practices, as well as fair workplace relations.

It is believed that when businesses apply high standards of service, thereby instilling
consumer confidence in their products and services, they ensure that not only will the
business succeed in its endeavors, but also that the community as a whole will benefit
from the positive effect this has on maintaining dynamism in the economy.

Corporate citizenship/Corporate social responsibility is a growing need in today’s

complex business environment. Prudent corporations have realized their role is not only
to make profits for their companies and shareholders, but also to be recognized as
socially responsible enterprises.

In recent years the concept of corporate Social responsibility has gained prominence to
such an extent that the concept seems ubiquitous in popular media and is gaining
increasing attention around the world among business people, media people and
academics from a wide range of discipline. There are probably many reasons for attention
given to this phenomenon , not least of which is the corporate excesses which continues
to become manifest in various parts of the world. These have left an indelible impression
among people that all is not well with corporate world and that there are problems which
need to be addressed. Such incidents are too common to recount but have left ordinary
people to wonder if such a thing as honesty exists any longer in business.

www.goodcorporatecitizen.com/
 Formalities v. Real scenario: Investment in Real sense

Companies that are breaking the mould are moving beyond corporate social
responsibility to social innovation. These companies are the vanguard of the new
paradigm. They view community needs as opportunities to develop ideas and
demonstrate business technologies, to find and serve new markets, and to solve
longstanding business problems.

Increased globalization along with increasing the opportunities for business has also
brought the businesses under the scrutiny of different audiences, NGOs and media. It is
predicted that in the times to come companies will be judged more by their social policies
than on their delivery of products and services.

Many theorists have also argued about the economic impact of CSR, some relating it
positively with the profit and some feeling that no such relationship exists. It was studied
that the market is influenced by the independent CSR activities and also by the totality of
these activities and the gains can be in terms of economic performance or social
performance. Since CSR and corporate reputation are the two sides of the same coin.

A growing number of companies in many sectors and geographic regions have

discovered concrete value and competitive advantage from socially responsible practices
in pollution prevention, energy efficiency, environmentally oriented design, supply chain
management, and health and sustainable agriculture initiatives, among others. For these
firms, CSR has had positive impacts on profits.

A corporation’s environmental policy, the way they treat their employees and the way
they treat the communities they exist in are all part of their overall behaviour and this in
turn is the principle factor in determining their public image. As proof of this, even
though Wal-Mart makes products that have a decent quality and an extremely low price,
they still have a negative public image.

Since public image is largely a result of company behaviour, business ethics play a large
role in determining public image since they determine behaviour. And public image is
important to success in most cases, which is one of the reasons as to why business ethics
are important to a company’s overall success.

Another reason that business ethics are important is the relationship they have to
investment. When a person or an entity is considering investment in a particular stock,
there are a number of things they take into account. Aside from the quantitative factors
surrounding a company’s profit margin a future prospects, consideration is also given to a
particular company from the point of view of the qualitative aspects such as their public
image and the products that they happen to sell. All of these things are taken into account
before the final investment is made.
Therefore, a company that would like to encourage extra investment is a company that
has a strong sense of business ethics. Part of business ethics is responsibility to the
investor and for that reason companies with strong reputations in the field of ethical
business behaviour are also companies that tend to attract more investment from people
that are new into the market. Investment is most definitely important to success.

Consumer and supplier pressure have compelled many companies to adopt formal
corporate social responsibility programs, but what started as a pricking of conscience has
turned into a financial benefit.

77% of executives said that corporate responsibility programs enhance profitability.

Fortune 500 companies with a reputation for social responsibility averaged nearly $2.5
million more in revenue annually than companies lacking a reputation for corporate
social responsibility.
Active companies use it as a differentiator. And companies who don’t integrate social
responsibility will find themselves at a disadvantage. Companies need to understand who
their customers are -- consumers or other companies -- and those they evaluate
companies relative to their corporate responsibility.

Research also shows that as companies invest in social responsibility, they become more
successful, creating a cycle of giving and increased profits.
It is stated that corporate social performance is positively correlated with corporate
financial performance
Corporate social performance and financial performance are generally positively related
across a wide variety of industry and study contexts.
Social responsibility is a trend that’s here to stay. Consumers are insisting on it, and
businesses are profiting from it.

CSR refers to the corporation’s obligation to all the stakeholders. It stems from the desire
to do well and get self satisfaction in return as well as societal obligation of business.
This could be a strategic marketing activity a way for a company to do well by doing
good-distinct from sales promotion, corporate philanthropy, corporate sponsorship,
corporate Samaritan acts and public relations. Now, it is assumed to be responsibility of
the business houses too.

Nothing builds brand loyalty among today’s increasingly hard to please consumers, like a
company’s proven commitment to a worthy cause. Other things being equal many
consumers would do business with a company that stands for something beyond profits.
In nutshell, CSR and cause related marketing results in increased sales, visibility, and
consumer loyalty and enhanced company image along with positive media coverage.

There is a marketing industry term called Generated Impressions, this term refers to
company’s products and services being constantly visible through media images and
slogans. These products images literally appear everywhere, millions of times per minute
worldwide. When a company like Coca Cola spends a million dollars to purchase a
commercial spot during the Super Bowl, it is not so that individual immediately will run
to the store and purchase Coke, it is to make sure that Coca Cola stays on Top of Mind of
all its potential customers.

One of the way for companies to internalize stakeholder concern is to increase their
credibility and trustworthiness through implicit contracts based on reputation and
corporate culture or socialization.

Reputation may be built by consistent behaviour over a long period of time and facilitated
for honesty is a valuable assets which will be lost if the company is not truthful, which
implies an economic incentives to honesty. It is argued that ethical codes may improve
economic efficiency when other social institution fails to achieve optimal results, in
particular the classic market failures when the firm has access to unique information.

A more stable long term owner provides a better basis for CSR. For example: family
owned companies can credibility commit to CSR. In the same way, the preference of
some institutional investors for ethical investment provides a base for CSR, if and only if
these preferences translates into stable ownership shares and voting behaviour at annual
general meeting. Companies will respond to stakeholders and media pressure through
CSR. Increased CSR may therefore be implemented by greater media coverage and
stronger bargaining positions of relevant stakeholder groups-which may be influenced
inter alias by public policy.

Indlaw news.com article dated 11th April, 2010, editor’s Pick- Nivedita Shree
Why has CORPORATE CITIZENSHIP become important?
Many factors and influences, including the following, have led to increasing attention
being devoted to CSR:

• Globalization -- with its attendant focus on cross-border trade, multinational

enterprises and global supply chains -- is increasingly raising CSR concerns
related to human resource management practices, environmental protection, and
health and safety, among other things.
• Governments and intergovernmental bodies, such as the United Nations, the
Organization for Economic Co-operation and Development and the International
Labor Organization have developed compacts, declarations, guidelines, principles
and other instruments that outline social norms for acceptable conduct.
• Advances in communications technology, such as the Internet, cellular phones
and personal digital assistants, are making it easier to track corporate activities
and disseminate information about them. Non-governmental organizations now
regularly draw attention through their websites to business practices they view as
problematic.
• Consumers and investors are showing increasing interest in supporting
responsible business practices and are demanding more information on how
companies are addressing risks and opportunities related to social and
environmental issues.
• Numerous serious and high-profile breaches of corporate ethics have contributed
to elevated public mistrust of corporations and highlighted the need for improved
corporate governance, transparency, accountability and ethical standards.
• Citizens in many countries are making it clear that corporations should meet
standards of social and environmental care, no matter where they operate.
• There is increasing awareness of the limits of government legislative and
regulatory initiatives to effectively capture all the issues that corporate social
responsibility addresses.
• Businesses are recognizing that adopting an effective approach to CSR can reduce
risk of business disruptions, open up new opportunities, and enhance brand and
company reputation.

RISE OF CORPORATE CITIZENSHIP IN INDIA

The Indian economy has been under the influence of two distinct and diverse forces
pertaining to the swadeshi concept i.e. buys Indian goods and integrates with global
economy. Both forces have significant economic and political implications in the region.

Liberalization of the Indian economy in the late 1980s and early 1990s also saw the re-
establishments of transnational corporation on the Indian horizon. The Indian political
and economic climate has been far from stable in the last decade and it has been claimed
that Tran’s national corporations, to influence this unstable political and economic
climate in their favour, have used the concept of corporate social responsibility as bait. It
is worth mentioning that though the concept of corporate social responsibility is gaining
popularity with the Indian business too, its practice has been subject to varied external
and internal influences.

The Indian economy seems to have come full circle in the last seventy-eighty years since
the 1920-1930. It started as a highly privatized state in the pre-independence era: under
the banner of Swadeshi, the public sector emerged strong in the early post independence
decades, yet under duress and debt imbalances, privatization and liberalization, foreign
direct investment has been encouraged in the last decade. Thus under international
pressure, India, since the 1990s has liberalized its economy in favour of the market.
Many multinational and transnational firms have therefore, since set up both marketing
and production- orientated operations in India.

Charity is an intrinsic part of the Indian culture and is encouraged as a means of salvation
by most religious practiced in India. Charitable giving in the Indian business context is
much like the philanthropic donations of the British companies where some causes are
supported at random without any strategic planning. Corporate philanthropy is akin to
charitable activities which are voluntary in nature. Such activities are not just restricted to
monetary donations and do not comprises part of the normal and daily business function.

One type of corporate philanthropy was put into practice under the guise of the industrial
welfare by the industrial houses of the 1920s and 1930s. It was believed that industrial
welfare could improve the living conditions of the workers more effectively than what
was delivered by government agencies, primarily because workers were tied to the
factory and could not more effectively utilize facilities that remained under utilized under
government provision.

Corporate philanthropy in India started to change in favour of corporate social

responsibility with the re-emergence of transnational corporation on the Indian business
scenario in the early 1990s. The transnational corporation planning to set up operations in
India needed to develop an image, or rather, rather an Indian identity which the Indian
customer could associate with. The need could also have been to proactively engage with
the media, pressure groups and other stakeholders. This was specifically important in
India, as experience had shown, that ignoring any of these stakeholders, was detrimental
to the establishment of new bases of transnational corporations since the media etc had
been instrumental in establishment of new operations in India.
India has extensive bureaucratic machinery and even after liberalization and dilution of
the licence raj, each new industrial setup may require 70-90 clearance from local and
state and national governmental authorities. The Swadeshi fervours create a fear among
the corporations of being asked to stop functioning. In an unstable political setup and
rigid bureaucracy, businesses have to act with caution when dealing with government and
political parties. Corporate social responsibility in a situation where dealing with the
stakeholders is imperative for survival and the stakeholders is imperative for survival and
the stakeholders stance may change overnight under political considerations is thus
gaining round in becoming an important corporate strategy for survival.

It is defined as the business corporation’s partnership with social action groups in

providing financial and other resources to support development plans. The emerging
perspective on corporate citizenship favours stakeholders. Ethical business is also
considered more important emerging trend on the international business scenario. In the
ethical business, the essential thrust is on social values and business is conducted in
consonance with broader social values keeping in view the stake holders long term
interest.
 DABUR-CORPORATE CITIZENSHIP

When our Founder Dr. S. K. Burman first established Dabur, he had a vision that saw
beyond the profit motive. In his words, "What is that life worth which cannot bring
comfort to others?" This ideal of a humane and equitable society led to initiatives taken to
give back some part of what Dabur has gained from the community.

Our major initiatives in the Social sector include:

 Establishment of the Sustainable Development Society, or Sundesh, in 1993 - a

non-profit organization to promote research and welfare activities in rural areas;
 Promoting health and hygiene amongst the underprivileged through the Chunni
Lal Medical Trust; and

Organizing the Plant for Life programme for schoolchildren - to create environmental
awareness amongst young minds.

Our COMMITMENT to Environment

Ancient wisdom of conservation

From times immemorial, Indian sages and men of wisdom have understood and
appreciated the value of nature and its conservation. Our ancestors recognised that if we
grabbed from nature beyond what was healthy, it would lead to all round degradation,
and even the extinction of humanity. That is why nature was sanctified and worshipped in
the form of gods and goddesses.

Dabur upholds the tradition

Today, we at Dabur also value nature's bounty. Without the fruits of nature, the vision of
Dabur would never have been fulfilled. And that is the reason for our unfailing
commitment to ecological conservation and regeneration. We would like to follow the
principles of our ancient texts, which say:

"Dehi me dadami Te" - "you give me, and I give you"

.BACK TO NATURE

Rare herbs and medicinal plants are our most valuable resource, from which all our
products are derived. Due to overexploitation of these resources and unsustainable
practices, these plants and herbs are fast reaching the point of extinction. In view of this
critical situation, Dabur has initiated some significant programmers for ecological
regeneration and protection of endangered plant species

PLANT FOR LIFE

We have set up the "Plants for Life" project in the mountainous regions of the Himalayas.
Under the project, a high-tech greenhouse facility has been set up for developing saplings
of rare and endangered medicinal plants. Fully computer-controlled and monitored, this
greenhouse maintains the highly critical environmental parameters required for their
survival. We are also developing quality saplings of more than 20 herbs, 8 of them
endangered, through micro propagation.

In addition, satellite nurseries spread across mountain villages and contract cultivation of
medicinal herbs helps in maintaining the ecological balance. These measures have also
helped provide local cultivators the scientific knowledge for harvesting herbs and a
steady source of income. So that they are not forced to exploit the environment to earn a
livelihood.

LIVI NG A GREEN HERITAGE

These are significant steps that can contribute to a better world for coming generations.
To whom we would like to bequeath a world not bereft of nature. But full of flowering
and fruit bearing trees, animals, birds and humans living in good health and complete
harmony.

Above article is taken from.dabur.com/AboutDabur-CorporateCitizenship

CONCLUSION
“Corporate citizenship” is no longer the purview of just a handful of manager concerned
with the social or environmental impact of their firms operations and increasingly has
become part of overall business strategy.
Together the trends indicated provides the context in which business must operate in
future suggests the following imperatives which all corporations will face:
(1) Maintaining a license to operate via transparency and accountability serving
society;
(2) Generating more value with less impact;
(3) Preserving the resources base; and
(4) Doing business in a networked world.

In summary, the challenge is to find means of enduring value creation without social or
environmental harm.