CORPORATE SOCIAL RESPONSIBILTY

What Is Social Responsibility?

The Classical View:
Managements only social responsibility is to maximize profits (create a financial return) by operating the business in the best interests of the stockholders (owners of the corporation). Expending the firms resources on doing social good unjustifiably increases costs that lower profits to the owners and raises prices to consumers.

What Is Social Responsibility?

The Socioeconomic View
Managements social responsibility goes beyond making profits to include protecting and improving societys welfare.

Corporations are not independent entities responsible only to stockholders.

Firms have a moral responsibility to larger society to become involved in social, legal, and political issues. To do the right thing

Corporate Social Responsibility in a globalized industrial world is about making the business investment and the community promise sustainable for the company and for the communities we operate in, its people and environment. It demands responsible governance-based principles of:
LEADERSHIP INTEGRITY RESPECT COMMITMENT RELATIONSHIPS
ITS ABOUT RESPONSIBLE CITIZENSHIP

Corporate Social Responsibility (CSR)

CSR in Equation Form Is the Sum of:

Economic Responsibilities (Make a profit) Legal Responsibilities (Obey the law) Ethical Responsibilities (Be ethical) Philanthropic Responsibilities (Good corporate citizen)

CSR Activities
CSR ACTIVITIES

Corporate Ethicality

Social Activism / Community Development

Corporate Philanthropy

Environment al / Green Marketing

Traditional Corporate Responsibilities

Ensuring Health, Safety, Wellness & Security of Employees Management of Natural Resources Conservation

Minimizing Waste Recycling

Traditional Corporate Responsibilities Minimizing Pollution Compliance with Regulations & Legislation

Based on European Sustainable Cities Report

Leadership Imperatives
Sharing Best Practices Mentoring

Social Responsibility to Community & Workplace Activities

Concern for Individuals Colleagues & Neighbours

Support of Cultural Heritage

Corporate Community & Workplace Leadership Imperatives

Political Influence Locally Nationally

Maureen C. Shaw - IAPA

Ten Drivers of CSR

In 2002, the Conference Board of Canada examined the rationale behind social responsibility initiatives among Canadian companies. The National Corporate Social Responsibility Report Managing Risks, Leveraging Opportunities identifies nine common drivers that are the motivators:

Reputation and brand management

Business risk management Employee recruitment, motivation and retention Access to capital Learning and innovation Cost savings and operational efficiency

Ten Drivers of CSR (Contd)

Competitiveness and market positioning Social licence to operate

Improved relations with regulators

Organizational transformation and continued improvement

Implementing A CSR Plan Key Considerations

CSR Internal & External

Internal (carried out within the organisation) viz. Energy and water conservation Employee welfare training, healthcare Affirmative action employment of backward sections Corporate governance External (within vicinity or for society at large), viz. Community development Capacity building Environmental protection Healthcare Creating awareness - education, health, social issues E-initiatives Online Information, education, etc.

Channels of Implementing CSR

In-house team Trust or Foundation as an independent arm of the company Non-Governmental Organisation (NGO) Industry consortia Collaboration with on-going Government programmes

Common Pitfalls while planning a CSR Programme

Selecting an inappropriate CSR activity Effective launch, ineffective implementation Spreading resources too thin Weak monitoring mechanism Projected or perceived as a green wash or white wash Often mistaken for a Public Relations exercise

PHASE 1 CONCEPTUALISATION

Identify key areas of focus viz, skill development, education,health, etc. Define the programme - will it be Internal or External or Both Involve management from various levels in identifying focus areas (maybe create a committee, selecting candidates from top, middle and lower management)

Phase 2 Resource Allocation

Define your channel viz, in-house team, NGO, etc. Define budgets Identify key people to implement and monitor the programme Define milestones to achieve Define monitoring mechanism

PHASE 3 Launch

Launch the programme Run the programme Obtain necessary registrations

PHASE 4 Running the Programme

Annual/ bi-annual/ quarterly results and reviews Monitor and report success and/or failure Take corrective action

The test of a successful CSR activity :

Sustainability Can it be continued and replicated? Capacity building Does it lead to development of skills, living standards? Environmental protection Does it help conserve, protect and replenish resources? Company image Does it give the companys image a boost?

Managerial Ethics
The rules and principles that define right and wrong conduct. Set of moral principles and values that shape the actions of either an individual or a group of individuals. Ethical principles set a standard for behavior in a society

Four Views of Ethics

1. The utilitarian view

2. The rights view

3. The theory of justice view

4. The integrative social contracts theory

 Utilitarian View
Ethical decisions are made solely on the basis of their outcomes or consequences such that the greatest good is provided for the greatest number.
Encourages efficiency and productivity and is consistent with the goal of profit maximization.

Rights View
Concerned with respecting and protecting individual liberties and privacy.
Seeks to protect individual rights of conscience, free speech, life and safety, and due process.

 The Theory of Justice

Organizational rules are enforced fairly and impartially and follow all legal rules and regulations.
Protects the interests of underrepresented stakeholders and the rights of employee.

Integrative Social Contracts Theory

Ethical decisions should be based on existing ethical norms in industries and communities in order to determine what constitutes right and wrong.
Based on integration of the general social contract and the specific contract between community members.

Code of Ethics
A formal statement of an organizations primary values and the ethical rules it expects its employees to follow.

Be a dependable organizational citizen

Dont do anything unlawful or improper that will harm the organization Be good to customers

Effective Use of a Code of Ethics

Develop a code of ethics as a guide in handling ethical dilemmas in decision making. Communicate the code regularly to all employees. Have all levels of management continually reaffirm the importance of the ethics code and the organizations commitment to the code. Publicly reprimand and consistently discipline those who break the code.

Ethical Leadership
Managers must provide a good role model by: Being ethical and honest at all times. Telling the truth; dont hide or manipulate information. Admitting failure and not trying to cover it up. Communicating shared ethical values to employees through symbols, stories, and slogans. Rewarding employees who behave ethically and punish those who do not. Protecting employees (whistleblowers) who bring to light unethical behaviors or raise ethical issues.

CRM

Cause Related Marketing

Implementing CRM(Cause related Marketing)

Make unconditional donations on regular basis Link donations to customer purchase behavior

Concerns Associated with Donations

Hot cause of charity today may loose resonance tomorrow Cause must have logical association with the companys brand MNCs must realize the variety in customers results in variety of perceptions

Green Marketing

The Greening of Management

The recognition of the close link between an organizations decision and activities and its impact on the natural environment.
Global environmental problems facing managers:
Air, water, and soil pollution from toxic wastes Global warming from greenhouse gas emissions Natural resource depletion

How Organizations Go Green

Legal (Light Green) Approach
Firms simply do what is legally required by obeying laws, rules, and regulations willingly and without legal challenge.

Market Approach
Firms respond to the preferences of their customers for environmentally friendly products.

Stakeholder Approach
Firms work to meet the environmental demands of multiple stakeholdersemployees, suppliers, and the community.

Activist Approach
Firms look for ways to respect and preserve environment and be actively socially responsible.

Approaches to Being Green

Social Activism / Community Involvement

Develop Corporate Social Initiatives or CSI

This can be done by:

o Indulging in welfare of business locality. Example Home Depot, 325,000 employees donate 2 million hours for social development o Associate with an NGO. Example Cadburys, Earthwatch, and Ghana Nature Conservation Research Centre tie up

Projects Under CSI

Education and training of youth Financial aids for disasters Habitat for humanity

Food banks
Art & Music

REMEMBER
CSI initiatives should: Connect to the core values of the firm involved

Be built upon the core competencies of the firm

Be systematically reviewed, evaluated and reported to relevant stakeholders