A WARM WELCOME FROM SVKMS NMIMS

Department of Distance Learning

CORPORATE SOCIAL RESPONSIBILITY

OBJECTIVES

To sensitize students to social issues impacting society in general and business in particular Development scenario and its impact on various sectors. Interdependence between business and society Conceptual clarity of the term responsible business

COURSE OUTLINE

Development scenario , Globalization &impact Generation of Corporate Social Responsibility Enhance the understanding of CSR in the modern context: Driver & Models of CSR Discuss the trends, strategies and approaches in CSR Identify indicators of CSR and tools to measure the impact

COURSE OUTLINE
Designing CSR policies. Role of NGOs and international agencies like World Business Council in promoting CSR Measuring CSR Operationalising CSR

India: a Demographic profile

29 states, 7 U.T. & 600 districts Population - 1027 million in 2001 Population growth rate - 1.7 % pa Sex ratio (females per 1000 males) 933 Literacy : 65%, (M) 76%, (F) 54% Life expectancy : 63.9 years in 2001 HDI Ranking : 128 in 2007

Development Scene

WHAT CAN THE BILLIONTH INDIAN BABY EXPECT IN THE 21ST CENTURY? The good news:

Life expectancy at birth and infant mortality are two important indicators of a society's health. And the billionth Indian baby is less likely to die in childhood, more likely to live a long life. She can expect to live beyond her 60th year, twice as long as her greatgrandfather did.
If in 1947, 146 of every 1,000 babies born died before their first birthday, the infant mortality rate (IMR) is half that today, at 68/1,000.

Achievements

The political environment has fostered a vocal and free press, an articulate educated segment and a relatively free exchange of ideas. The Indian economy has developed the capacity to produce a range of goods for domestic consumption. Mass famines and epidemics have been prevented due to effective organization of relief by the central and state governments.

Achievements

The lives of ordinary people have improved on many counts: Average Indian (as compared to 50 years ago)

Lives longer, Less likely to die in infancy or childhood, Better equipped to resist the depredations of infectious diseases and More likely to be literate

Globalization

Globalization is a process of
A process driven by international trade and investment and aided by information technology

Interaction and integration among the people, companies, and governments of different nations

It impacts environment, culture, political systems, economic development and prosperity, and human physical well-being in societies around the world.

What is the impact of Globalization?

Impact of Globalization
Increase in global awareness about various economic, legal, political, technical and cultural aspects

New job creation Globalization of Information and Communication system : Global village Globalization of science leads to the fusion of scientific data and rules to form a uniform network of database

Is this growth affecting business and in what way?

Impact on the Global Markets

More choice but can result in

Unhealthy lifestyles lack of activity, risky sexual behaviour, breakdown in traditional values
Promotion of processed tobacco, alcohol and processed food with high salt sugar and fat content Unrealised expectations resulting in depression Increased tourism brings risks to health of tourists and communities

Impact on Global Health

Health conditions affecting people across boundaries, culture & generations

Infectious diseases: HIV/AIDS, TB, Influenza, SARS, Lifestyle diseases and conditions: obesity, lung cancer, heart disease, STDs, Type 2 Diabetes Threats to global stability and economy: HIV/AIDS, SARS. The vectors of these diseases may be travel or work place

Impact of Globalization: Environment

Threats to the Globe

Global warming

Agricultural development and food security Water stress and water insecurity Rising sea levels and exposure to climate disasters

Environmental pollution Loss of bio diversity

Impact of Globalization on Women

Gender imbalance Trade liberalization has wiped out livelihood sources of women producers Migrants particularly women driven to illegal economy( trafficking) leaving them vulnerable to exploitation.

Impact of Globalization (Wider Effects)

Global revolution has impacted culture & identity---- Values, norms Illicit cross border activities-increased tax evasion, rise in multinational crime syndicates money laundering Trafficking of human beings Rural & Informal economies remain on the margins resulting in persistent poverty Loss of jobs due to industrial restructuring Migration leading to brain-drain

Globalisation & its concerns

Negative impact of globalisation includes

Increased inequality between nations Large adverse impact on the marginalised, poor people

Govt spending on human capital too little Felt need for corporates to step in because

Access to financial resources Leadership & organisational skills Trained manpower

World increasingly shaped by Sustainable Development issues

A carbon constrained world A water constrained world Issues of sustainable production Poverty

CORRECTING THE IMBALANCE

How to build a fair globalization to reduce poverty and inequality

Millennium Development Goals

Eradicate extreme poverty and hunger Achieve universal primary education Promote gender equality and empower women Reduce child mortality Improve maternal health Combat HIV/AIDS, malaria, and other diseases Ensure environmental sustainability Develop a global partnership for development

Adverse Effects of Globalization Can be Controlled

Human Rights Principles of democracy social equity

Respect the Law

Smart Partnerships between State and Businesses

What is the role of business in Sustainable development?

Need for Intervention of Business for Sustainable Development

If business has to be developed, the society needs to be developed, business sector cannot flourish in any country, if the environment required by business is not conducive. Increasing social issues impacts the entire society in general and business in particular because to a large extent business is dependent on the society for its growth and prosperity.

Need for Intervention of Business for Sustainable Development

The most fundamental impact on society is from technological and social change. Creation of new cultural and social attitudes New set of relationships between the business firm and the surrounding society. Stakeholders, who have long remained dormant, have stirred awake and are now proving themselves as major forces to be reckoned with.

Need for Intervention of Business for Sustainable Development

Challenges in the 21st Century cannot be tackled by yesterdays rule of governance. There is a need to develop new ways of thinking and new approaches to governance at every level of society. It is an accepted fact, that, there are crucial linkages between economic growth, human development, social cohesion and environmental sustainability.

Important Questions

How has globalization impacted social development in India? What are the Millennium Development Goals? What is the role of business in changing the development scenario?

Interface Between Business & Society

Business Contribution to Social Development

Business has been contributing for social development Changes in the economic, political & social conditions changed the response of business to social needs.

Developments of CSR in India

Merchant charity Dates back to Vedic period Religious and social ethics Relief in natural disasters Dharam Shalas Drinking water Trusteeship - Gandhiji & Vinoba Bhave Business leaders like JRD Tata, Ramakrishna Bajaj, Arvind Mafatlal & Kasturbhai Lalbhai: credit of bringing social responsibility into business communitys consciousness Vinoba Bhave wanted the business community to invest in humanitarian, cultural, educational &other beneficial social activirties

Developments in India

Declaration of social responsibility Role of Jaiprakash Narayan Conferences and study group in 1965 66 Setting up of Fair Trade Practices Association to codify & implement fair trade practices. Managerial Trusteeship 1970s & later realisation that continued profitability depended on involvement with local communities Emergence & role of NGOs

Developments in India

Corporate citizenship

Realisation that if social development is neglected, business cannot prosper Govt alone cannot handle all social issues. If businesses have to be grow & made profitable then their active participation in social development is required.

Self interest that is propelling social engagement Management skills as an input in the voluntary sector

Survey by Partners in Change

86 % of respondents say that corporates have social responsibility Only 19 % have a policy written or unwritten Donation remains the most preferred mode Health & education most chosen sectors Companys realise social engagement help in image building

International Developments

Philanthropy as old as recorded history Initially directed towards the poor in meeting their immediate needs. Later towards research, education etc Role of Andrew Carnegie & Rockfeller Donating both time & money Professionalisation of altruism

Differences between the old and the new concepts of CSR

Based on the philosophy of the founder Donation of resources / money

Considered decision of the board a part of strategy Direct involvement Explicit realisation of complementarity of business and society

Concluding Observations

Changed perception about CSR on account of

Contracting role of government Expanding role and large size of business / corporations Emergence of the voluntary sector Changing intellectual climate

Important questions

What are the phases of development of CSR in India? What is Corporate citizenship? What is the difference between the old and new concept of CSR?

Generations of CSR

Generations of CSR What is CSR Theories of CSR Pyramid of CSR Economic and Social Responsibility of Businesses

Generations of CSR

First Generation : Corporate philanthropy. Second Generation: Integral part of the long
term strategy

Third Generation: Go beyond addressing

voluntary approaches by individual companies & will involve leadership companies & organisations influencing the market to remould whole markets towards sustainability

First Generation of CSR

Corporate Philanthropy: Rose to heights in 1990s Investment of huge amount of money for social causes

Milenda & Bill Gates foundation: HIV/AIDs Awareness generation: World wide

Not a part of main business but may add commercial value through reputation enhancement

Corporate Philanthropy

Charitable contribution to address a variety of social, economic and other issues as a part of their overall corporate citizen strategy. Significant contributions in their local communities. Recent years change in the approach to philanthropy.

Change in the Philanthropic approach

Adoption of a strategic approach to philanthropy by aligning charitable donations with the companys core business interest Expansion of geographic focus of the corporate giving to reflect the needs and expectations of the global workforce and customer base Development of measurement tools for evaluating the impact of charitable tools Innovations in ways companies incorporate greater stakeholder participation in philanthropic activities, creating long-term relationships with NGOs and organizing their philanthropic activities.

Second Generation CSR

Developing now where companies integrate CSR with their long term business strategy. CSR for good of business. Citizen CEOs play a crucial role of taking the agenda of CSR forward. Business strategy and goal setting addresses on how a firm should compete in business i.e how an organization should tactfully behave in order to survive and prosper in the market in the area it has chosen to enter

Second Generation CSR

Goals and strategies not set in isolation but in the larger context of the environment and interaction with its subdivisions Proper management requires optimal coordination & integration

Third Generation CSR

Partnership with civil society Changes in public policy with rewards for CSR and penalize for poor performance.

Eg. Changes in corporate tax regimes, mandatory social and environmental reporting and support for consumer education

Clearer understanding of the newly emerging partnership between business and the challenges brought by critics of CSR

What is CSR
There is no accepted definition of Corporate Social Responsibility. However we have two extreme views on this subject:
a)

A company that complies with the laws of the land in which it operates is being socially responsible.

b) A socially responsible company is one that is purely philanthropic in that it gives without expecting a return or a benefit. (PIC,2004). Increasingly, there seems to be a convergence that neither of these two extreme positions adequately describes CSR.

Buchholz identified 5 key elements to define CSR

Corporations have responsibilities that go beyond the production of goods and services at a profit. These responsibilities involve helping to solve important social problems, especially those they have helped create. Corporations have broader constituency than stockholders alone. Corporations have impacts that go beyond simple market place transactions. Corporations serve a wider range of human values than can be captured by a sole focus on economic values.

Woods Definition of CSR

The basic idea of corporate social responsibility is that business and society are interwoven rather than distinct entities Expectations are placed on business due to its roles:

As an institution in society As a particular corporation in society, and As individual managers who are moral actors within the corporations.

Woods Definition of CSR

Three principles of CSR :legitimacy, public responsibility & managerial discretion

Principle of legitimacy: Society granting legitimacy & power to business & businesss appropriate use of that power and the possibility of losing that power. Principle of public responsibility: business is responsible to outcomes related to its areas of involvement with society. Principle of managerial discretion: managers as moral actors who are obliged to exercise such discretion as is available to them tom achieve socially responsible outcomes.

Bowens view

Bowens Social responsibilities of an businessman argues that industry has an obligation 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 society Thus according to Bowen,

Business exists at the pleasure of society and that their behaviour & methods of operation must fall within the guidelines set by society ; and Businesses act as moral agents within society.

Fundamental Question
Does business and corporation have a social nature or not?

The debate is treated in two ways

Listing of arguments for & against social responsibility Theory of Corporate Social Responsibility

Arguments for CSR

The existence of business enterprise depends on its acceptance by society. The social responsibility role should be undertaken in order to prevent public criticism and discourage further government involvement or regulation. Business must realize that society is a system of which corporation is a part, and the system is interdependent. If business institutions interact with others in society, there is a need for social participation in the complex system that exists in society. It is in the interest of the stockholders to be socially responsible as it will be profitable in the long run.

Arguments for CSR

Failure in performing their social responsibility role is viewed as failure to perform in financial matters by certain investors. Business must realize that social problems can become opportunities, or can even lead to profits. Eg. Adoption of methods to recycle waste can lead to profits in the future. ITC Businesses must be concerned with the public image & the good will generated by responsible social actions. Business people are also concerned citizens who are interested in social matters. It is not appropriate for them to ignore social matters.

The Counterarguments

The primary purpose of business is profit maximization and to have any other purpose is not socially responsible. Business corporations are responsible to shareholders and have no authority to operate in the social area. Social policy is the jurisdiction of government , not business Business lacks training and skills in dealing with social issues. Social responsibility is viewed by some as another excuse to let big business increase its power.

The Counterarguments

Involvement of business in social matters can increase the cost for business and may lead to business failures. Being an elusive concept, there are no standards available to evaluate & control the actions of corporations. The business community is divided in supporting social involvement and thus there is unlikely to be a very satisfactory treatment of social issues by business.

Does business have a social nature or not ?

The Amoral View

Represents a traditional view of business and the role of the corporation i.e. the corporation is seen as a highly individualised rights bearing economic entity designed for profit making and legitimatised by the laws governing incorporated businesses. The free market defenders and legal recognition theorists who hold this view believe that there is no such thing as CSR Amoral refers to an activity without a moral quality i.e. something that is neither moral or immoral Immoral: activities that are not moral & do not conform to usually accepted or established patterns of conduct.

The Personal View

Nature of the corporation in ascertaining whether or not it can be held accountable. Whether corporations are moral agents or full fledged moral persons. Those arguing that corporations are persons claim that corporations are responsible for their actions comparable to any action taken by an individual. Those claiming that corporations are not persons argue that it is not possible to impose moral sanctions or punishments on Corporations. It is possible to blame or punish persons who work or manage the corporations.

The Social View

The activities of corporations occur within an social context. The corporation is a social institution with social responsibilities. It is a social corporations as individuals come together to achieve some objective related to the provision of goods and services. Corporations exists because society implicitly sanctions them to operate in that form.

The CSR Pyramid

LEGAL Obey the Law

PHILANTHROPIC Responsibilities Be a good corporate citizen

ETHICAL Responsibilities Be ethical,Be Profitable

Corporate Citizen

The corporation is viewed as a citizen because of the economic and social influences or forces it has on society. Is the process of serving a variety of stakeholders focusing on economic and social responsibilities. It includes Basic values,policies &practices of the corporations Mgmt of social , ethical and environmental issues within the corporations value chain Voluntary contribution made for socio-economic development Understanding stakeholders relationships thru social &environmental reporting, social auditing & stakeholders consultation

CSR & Corporate Citizenship

CSR 1920s Principles of charity & stewardship Corporate citizenship 1990s Building collaborative partnerships with stakeholder groups Discovering business opportunities through partnerships Managing corporate social & financial performance

Moral obligation to society at large

Philanthropy , trustee of the public interests

Corporate Sustainability

Is a business approach that creates longterm shareholders value by embracing opportunities & managing risk deriving from economic, environmental & social development

Triple E Bottom Line

Economic Ethical and Environmental Value the corporation adds or destroys A framework for measuring and reporting corporate performance against economic,social and environmental indicators. In a broader sense it captures a whole set of values,issues and processes that corporations must address in order to minimise any harm resulting from their value adding or destroying activities.

What are the drivers that influence business to undertake CSR?

Factors taken into account for understanding CSR

Globalization and the increase in market competition Increased size and influence of companies Retrenchment or repositioning of government and its roles Growth of global civil society activism Increased importance of intangible assets

Traditional drivers for CSR

Values Strategy Public

Pressure

Traditional Drivers of CSR

Values: A change is noticed in the value within businesses,where they not only feel responsible for wealth creation but also for social and environmental goods Strategy: The stress on social and environment is important for strategic development of the company Public pressure: Various pressure groups, consumers, media, the state etc are putting pressure on the companies to become socially responsible.

Present Drivers for CSR

Stakeholder Management Corporate Social Performance Corporate Environment Management Consumer Pressure Risk Management and Sustainability Business Ethics Attracting employees Personal Values

Definition of Stakeholders

Groups and individuals who benefit from or are harmed by , and whose rights are violated or respected by, corporate action

Freeman,2001

Primary stakeholders ( Market Stakeholders)

Employees (Unions)
Wholesalers (Retailers)
Distribute products Sell labor

Stockholders
Invest capital

Buy products

Business firm (Managers)

Sell materials

Creditors
Lend money

Customers

Suppliers

Secondary stakeholders (Non-market Stakeholders)

Local Communities Positive, negative opinion
Jobs, environment

The General Public

Central/State and Local Governments Regulation, taxes

Business Support Groups

Advice, research Image, publicity

Business Firm (Managers)

Friendly, hostile

Governments Social Activist Groups

Media
Social demands

Stakeholder Management

Widely used and accepted concept in the business world. Greater media exposure, environmental and health related incidents have caused public anxiety and local community conflicts resulting in companies putting stress on stakeholder management. The motivation for business to become involved in CSR is to address the wide ranging and constantly changing set of demands that stakeholders have.

Stakeholder Management

The development of the stakeholders concept revolves around finding ways to integrate stakeholders and their concerns into business activity. In 1995 Clarkson in his endeavour of Redefining the Corporation stressed on a process- anddialogue based approach to treating stakeholders with respect by consistently monitoring their interests and status and taking those into account in corporate decision making.

Corporate Social Performance (CSP)

Debate in the 80s whether there is a relationship between CSP and strong financial performance and what type of relationship. It is argued that strategic CSR can be carried out if a company also profits from its good work. Today businesses are interested in the Triple Bottom Line This ideas focuses on not just the economic value that a company may accrue but also the value they may get by engaging in environmentally and socially beneficial practices.

CSP

Whether companies benefit: difficult to measure as socially responsible behavior resulting in financial benefit not clear Govt. agencies and organizations promoting the CSR agenda seem to be convinced that assuming a CSR role will bring financial gains. Concrete evidences provided to managers about the financial benefits of CSR can motivate companies to integrate CSR into their business activities.

Corporate Environmental Management (CEM)

Focus on CEM specifically during the last decade. Shows the growing interest of the private sector companies in environmentally responsible strategy. In the 1960s companies did damage control after their was a crisis In the 1970s and 80s did environmental management to minimise the cost associated with rapidly changing government environmental regulations

CEM

In the 1990s Companies adopted more proactive strategies like Anticipating environmental impacts of operations Taking measures to reduce waste and Taking care of business opportunities in the environmental arena

Ex. Of environment initiatives

Total Quality Environmental Management Ecological footprints

Consumers

Consumer pressure and damage to the global image of popular brands : reason for companies to behave in a socially responsible way. Most recent pressures have centered around

Protection of the environment: Campaigns against deforestation Protection of human & animal rights Safe guarding jobs Inclusion of minorities Behaviour of Companies in the developing world

Consumers

Consumer pressure is a strong force in the developed world. Eg. Nestles milk marketing strategy Consumer pressure likely to increase esp in the area of public health.

Risk Management

Centres on wider range of stakeholders not only consumers: to avoid pitfalls and protect its reputation. Companies often venture out in areas where they could be at risk: CSR activities can to used to mitigate these risks Exposures of companies to public scrutiny has compelled business to be transparent in their environmental and social disclosures. Firms are encouraged to make their own operation sustainable.

Risk Management

Business community is encouraged to sustain the global environment, stabilize the global economy for the future generations. Sustainability also provides continuing resources for the companies Sustainability linked to resource usage Sustainable companies do not deplete the raw material or human resources: takes steps to ensure consistent availability and productivity.

Business Ethics

Business ethics examines the moral controversies that commonly arise in the business world They include

Social responsibilities of capitalist business practices Moral status of corporate entities Basic employee rights Job discrimination Whether drug testing violates privacy and Whistle blowing

Employees

Investing in employees bring direct benefits to a company: increased employee loyalty & productivity Employees investment is an essential aspect of CSR at workplace Good social performance provides a competitive advantage to companies to attract skilled workers. Access to highly skilled and high value labour is possible through CSR activities Ex : IBM, Microsoft , General Motors use CSP for attracting quality employees

Personal Values

Companies may be motivated to pursue CSR activities for moral reasons Voluntary CSR goes beyond economic contribution. It is more than just preventing and rectifying the harm caused by a company. Companies undertake CSR activities because it lies in the personal values and commitment of some individuals in the business to so the right thing

How Does CSR benefit Business

Reputation

Less Law Suits

Less Media Harassment

Loyal Employees

& Customers Improves Productivity

Better Environment Community Goodwill

Access to Capital Improves

Parameters & legitimacy of CSR for an enterprise can be drawn by distinguishing between three different types of CSR a business practice

Models of CSR

Ethical CSR Altruistic /Humanitarian CSR Strategic CSR or Strategic philanthropy

Ethical CSR
Fulfilling the firms ethical duties. Social responsibility that a corporation is morally responsible to any individuals or groups where it might inflict actual or potential injury Organizations not adhering to ethical responsibilities would be acting in a morally irresponsible way

Ethical CSR

Although harms cannot be avoided they should be minimized where possible Ethical edicts must be adhered to even if it means possible foregoing of profits Ethics deals with moral interests that is beyond self-interest Sometimes action need to be taken because they are right not because they are profitable. Managers in an organization do not have the obligation to maximize profits for shareholders without regards to the means used.

Ethical CSR

Ethical CSR tradeoff is often between short-run profitability and moral actions Ex. Money spent on product safety or pollution control might reduce shareholders profit, if not done it threatens unethically the welfare of others in society.

Ethical CSR

Empirical evidence reveals: Good ethics is good business Moral behaviour builds trust and enhances the firms reputation , attracts customers, employees, suppliers, distributors etc. Attracts public goodwill Miminizes the cost of fines and litigation and bad publicity Boundaries not clear

Altruistic or Humanitarian CSR

Coined to suggest genuine optional caring even at personal or organizational sacrifice. To be a good corporate citizen by giving back to society furthering some social good. It demands that corporations help alleviate public welfare deficiencies. It is based on capability responsibility the company has the resources to do some social good.

Altruistic or Humanitarian CSR

Humanitarian CSR includes all policies, procedures and actions intended for the welfare of society and improving the quality of life

It involves linking of core corporate competencies to societal and community needs

Altruistic CSR goes beyond ethics to making the world a better place to live by helping solve social problems Ex. Charitable contributions, Community service programs Employee volunteering ,Environmentally friendly policies Executive loan programs Quality of life efforts: renovation of parks. sponsoring cheap clean-up programs, providing primary education, Primary health care facilities

Altruistic or Humanitarian CSR

Ex. Though there are a number of arguments for altruistic CSR but none of then individually or collectively build a strong case for practice The basic judgment for humanitarian CSR is that Business is a major social institution that should bear the same kinds of citizenship costs for society that an individual citizen bears.

Strategic CSR

Strategic philanthropy is done to accomplish strategic business goals. Good deeds are believed to be good for business as well as for society. Philanthropy aligned with profit motives. Social goals might be profitable in the long run since market forces provide financial incentives for perceived socially responsible behaviour. This model gained popularity beginning around mid-1980s

Strategic CSR

While being socially responsible often entails short-run sacrifice and pain but ultimately results in long gain Expenditure on strategic CSR activities should be viewed as investment in Goodwill bank Ex. Ford motor company spent millions of dollars in advertising campaign to convince parents that children in the 4-8 yrs age bracket should ride in booster seats and gave away one million such seats

Strategic CSR

Corporation practice strategic CSR by doing charitable good deeds like providing shelter for destitute, building a museum, renovating a local park etc. People indebted will reciprocate in various ways like being loyal customers, recommending to others, asking government regulators to stay at bay etc.

Strategic CSR

Critics view strategic CSR as self-serving and impoverishing the notion of citizenship. Scholars like Novak suggest that responsibility outside business is necessary for survival. Further suggested that extra-legal social responsibilities benefits a business directly

Integrated Model of CSR

Strategic CSR

Altruistic CSR

Ethical CSR

Important Questions

Discuss how ethical CSR is different from Strategic CSR? Discuss stakeholder management with examples. Why is business ethics important for doing business?

Typology of Corporate Activities to Promote CSR

Labour & Human Rights
Human Resources

Environmental Management

Corporate Structure & Governance

Community Involvement & Economic Development

Business Ethics

CSR PROGRAMS

Accountability

Labour and Human Rights

Engagement with unions and adherence to union standards Codes of conduct that set standards for a company or entire industry on labour treatment Responsible supply chain management ensuring that suppliers adhere to companys code of conduct Product design and development

Human Resources

Health and other insurance benefits Employee recognition and rewards Equal opportunity, diversity, diversity training and religious freedom Work/life balance and wellness programs Employee compensation for downsizing, plant closing and reengineering measures Volunteering in local communities Health and safety of the job

Environment Management

Environment supply chain management Consumption reduction Natural resource stewardship Alternative energy Green real estate development and ecological building design Clean technology innovation Product and packaging design End-of-life-cycle product stewardship Philanthropy and sponsorships

Trends in CSR Programme Development

CSR programme trends have developed over time changing with the changing conditions and directions in the business world

Branding Core competency fit Partnerships Outsourcing and Integration

Branding

Branding & signature programmes are very popular Developing a brand name helps companies to position and advertise their values in public Ex. TOI : various NGOs to collect funds

Core Competency Fit

Develop CSR initiatives that deliberately tie with their core competencies. Product, human resources and equipments are the major competencies of any business. Companies may volunteer to lend these & contribute to community development Ex. Ballarpur Paper Industries have a social forestry programme. Providing material aid to NGOs for establishing a base for wider relationships

Partnerships

Companies develop or implement CSR programmes thru partnerships with external actors: Local Government, NGOs Cross sector partnerships are extremely beneficial for those who are involved in it Successful partnerships relies on mutual recognition of skills and resources that each sector can contribute For partnership to sustain it is essential that they provide a win-win situation to all those who are involved

Partnerships

For corporates they should be able to contribute to the financial profits & provide a positive environment for growth

Increase the corporates value from the shareholders point of view & contribute to the societal value

To civil society organization it should strengthen its functioning and ability to create an impact

Partnerships

Public sector : it should aid in achieving its target To the government: Cross sector partnerships should benefit in improving its governance by providing specific interventions in managerial and technical areas

Partnerships

Cash donations from corporates to struggling community organization helps to attract further support Companies planning to donate are increasing: issue/cause specific Ex. Mahindra & Mahindra : encouraging education at all levels: has partnered with various NGOs in both rural & urban areas to further the cause of education

Partnerships

The NGO Pratham : catalytic role in improving primary education in Mumbai Developing low-cost mass replicable innovative models to address existing problems, motivating teachers & parents & studying the current system to make it more effective. Pratham & MCGM are the active partners in this time bound effort to achieve universalization of primary education The business partners are ICICI,IDBI, British airways,BEST and Mahindras

Partnerships

Cause related marketing strategy Companies adopting this view feel that a social attribute added to the products influences consumers brand behaviour which results in increased sales

Cause related marketing

P&G , Hygiene & Health Care India : project DRISHTI 1st ever Sight Restoration Corporate project in association with NAB Project DRISHTI: attempts to restore sight of 250 blind girls across the country thru corneal transplant operation These initiatives are support by their brand. Part of the sale of the products is contributed towards these initiatives

Activating active citizenship and exchange of skills

HLL deputes management trainees to NGOs to sensitize them to the rural ethos, markets & culture OTIS elevators motivates its employees to work with mentally challenged . Tata Group of Companies encourages its employees to participate in community development activities

Partnerships

The Infyosys Foundation: grants to socially & physically challenged children for education. Has also partnered with various NGOs & local government in strengthening rural development activities and infrastructure Cadbury India : funds a street children project focusing on education Ranbaxy has contributed for community health care programmes

Benefits for Partnerships

Voluntary Sector has skills in the areas of mobilizing & motivating volunteers, networking , advocacy campaigning and generating financiers & local people Business contact with NGOs help in learning community development skills

Promotion of CSR

To make CSR a strategic and sustainable corporate commitment and not a temporary fashion fad it needs to be promoted. There are large number of proposals for promotion, seven in particular need to be highlighted.

Strategies for promoting CSR

Promotion of CSR-friendly social dialogue Rethinking the governance Enabling the actors to play their role Promoting the internal as well as external aspects of CSR Intensifying the dialogue Fostering CSR among SMEs Promoting CSR as a tool to anticipate change

CSR-friendly social dialogue

It is not easy for the traditional players in social dialogue to practice CSR Incorporation of CSR into the agenda of in-house social dialogue is still minimal Many information/consulting procedures ignore it or deal with it at minimal level While companies are simultaneously developing a significant quantity of CSR activities at the management level.

CSR-friendly social dialogue

Thus how can information on CSR be promoted so that the existing social dialogue can expand to include these new dimensions. Decentralized production networks, recurrent restructuring mergers & acquisitions makes it difficult for company boundaries to coincide with the boundaries of social dialogue

CSR-friendly social dialogue

Different Options in Social Dialogue

Based on a binary model with two actors and two different logic Dialogue with other stakeholders can be developed in parallel to the social dialogue and bridges built between them Could be opened to multiple logics which may result in reducing employees and their representatives to one stakeholder among many Challenge lies in expanding social dialogue without weakening the traditional social dialogue

Rethinking the Governance

Governance is designing and implementing rules, processes and practices In relation to CSR governance is at two levels: Company and Society At the Company level it means taking on board a diversity of stakeholders and multitude of expectations Taking these considerations &organizing necessary processes and making tradeoffs between the different expectations However the management receives primary mandate from stockholders

Rethinking the Governance

Question is whether the executives receive a real social mandate which allows them to commit to other stakeholders Society level: Influence of companies not limited to their borders Applying CSR may also affect the way governance is exercised in society

Enabling the actors to play their role

Skills & tools are important to allow stakeholders to play their role properly Today the acquisition of these skills by stakeholders and the development of these tools is not sufficient to allow them to act efficiently Ex.: Civil Society has difficulties in playing its role because

The actors & their expectations are not clearly identified The members do not have the necessary skills and resources to act properly

Enabling the actors to play their role

Initiatives already existing which can help actors both inside & outside the company should be reinforced Ex: Helping stakeholders to be more structured & professional thereby increasing efficiency

Creating appropriate institutional frameworks which permit stakeholders to meet & discuss CSR

Promoting the internal as well as external aspects of CSR

External aspect of CSR is important and tends to get a lot of attention Internal aspect also important In an economy of decentralized production and networking it is important to look at issues of job quality, health & safety provisions, working conditions of employees of subcontracting companies play a major role in CSR policies

Intensifying Dialogue

Active dialogue among stakeholders : crucial for success of CSR Research: Companies have interest of enlarging the focus to other stakeholder & not just consumers New way of business: Based on management and dialogue with stakeholders Trust , transparency, internal & external audit can create and foster successful dialogue & sustainable corporate governance Local municipalities and governments have an important role to play in facilitating partnerships

Fostering CSR among SMEs

Smaller companies have little knowledge of what is CSR They do not possess the human & financial resources when it comes to developing tools for reporting CSR Moreover companies employing subcontractors can have a strong influence on their suppliers by compelling them to standardize & label their practices in the areas of quality, safety and the environment.

Promoting CSR as a tool to anticipate change

Pro-active, prevention approach to restructuring can be beneficial to all stakeholders Practices positioned in advance of restructuring can prepare employees to anticipate & prepare for the coming change Relevant prior information & consultation with parties involved are prerequisites for socially successful restructuring It raises the question of how far socially responsible companies should commit themselves to that approach and which priorities could be used in this approach

Important Questions

What are the various types of programmes that could be developed for promoting CSR? Discuss the strategies for promoting CSR? What are the CSR programme trend? Discuss with examples any two trends.

Steps for Operationalizing CSR

Operationalising Corporate Social Responsibility Trigger Motivate Management Form CSR Core Group Identify Focus Areas Design and Implement CSR Action Plan

Monitor and Evaluate CSR Action

Report and Communicate CSR Initiatives

Operationalizing CSR

Trigger : The process normally begins with a trigger or an event that requires management attention and action. This trigger or motivation can come from a product, workplace crisis, from external pressures or from inner values and principles.
Motivated Management : The trigger motivates management to take required steps for initiating CSR action in the Company. Motivated management formulates the CSR Policy and describes the Vision and Mission Statement of the Company. Written CSR Policy ensure a common understanding amongst Board members, will define how much and what a company wants to achieve and will ensure effective implementation. The CSR Policy of the company should clearly define the key stakeholders and their level of involvement.

CSR Policy , vision and mission of the company

Forming a CSR Core Group :, Management should form a Core Group or a Committee. A core group will be responsible to plan, execute, monitor, evaluate, report and communicate the progress and impact of CSR programmes. The Core Group will be responsible to identify the resources, execute planned activities and sustain the commitment for motivation to responsible business practices.

CSR CORE GROUP MEMBERS

CEO or MD should be the Chairman of CSR Core Group

and responsible for overall coordination and decision making. CSR Personnel Human resource personnel : Employee Welfare, Employee Volunteering Corporate Personnel Communication and Public Relations

Finance Personnel

Operationalizing CSR
Monitor

and Evaluate CSR Action :Monitoring and evaluating CSR action helps to analyze the impact of CSR action and plan future actions. It will vary from company to company in accordance with their focus areas. This step is critically important to boost the morale and sustain motivation of the core group and employees to sustain CSR action.
Report and Communicate CSR Initiatives: The impact of CSR initiatives should be reported and communicated under different focus area like employee welfare, environment, community, etc. Communicating CSR action to all stakeholders can act as an incentive to broaden the CSR initiative.

Identify the Focus Area

: The CSR core group must identify the focus area of the company. The focus area will be based on the CSR Policy, Vision and Mission of the Company. For example: Orchid Hotel, CSR action is focussed around environmental issues.

Design and Implement CSR Action Plan

The CSR core group will design the CSR action plan for the company, integrating company values, focus areas and resources. Networking with local NGOs, Government bodies and like minded corporates will facilitate effective implementation of the action plan.

Emerging Areas of Corporate Social Responsibility

Social Responsibility

Respect for Human Rights

Socio-economic development Employee Welfare Consumer Protection

Business Responsibility Tax Compliance Corporate Governance Investment in R & D Academic Research

Respect for National Sovereignty

Resource Sharing Corporate Community Investment Socially Responsible Investments. Environmental Responsibility Environmental Friendly Technology Ecofriendly Waste Disposal Preventive and Precautionary control of environment pollution Rectifying environmental damage Bio-diversity Preservation

Stakeholder Involvement Proporgation of principles and ethical values enshried in the organisation to all stakeholders

Area of Social Responsibility

Respecting

Human Rights: not discriminating against caste, creed,

gender, etc Contributing to socio-economic development

Employee Welfare: which includes the right to organize, eliminating child labour, non-discrimination, living wage and social security, training, safety, health and wellbeing, lifelong learning, empowerment of employees,share ownership schemes etc.
Consumer Protection: includes right to information, impact of product on local market, etc Respect for national sovereignty and local communities for multinationals.

Areas of Social Responsibility

Participating in academic research. Share resources with under-privileged communities e.g., transportation and medical facilities with the community senior citizens, etc. Community Investments e.g., companies can invest in sustainable development programmes for the community. Socially Responsible Investments e.g., Investors should to invest in companies who follow responsible business practices Share expertise and knowledge with peers and learn from others experience.

Areas of Environmental Responsibility

Respect for the Environment

Environmental friendly technologies: investment in eco-friendly technologies. Use, conserve and discharge: energy,material and water in an ecofriendly manner. Adopt preventive and precautionary measures for environment pollution control: Educate employees and the community to take collective, preventive and precautionary measures to reduce environmental pollution. Rectify environmental damage at source: Treat waste before disposing it. Bio - diversity preservation Promote and implement an environmental policy for sustainable energy and sustainable environment.

Areas of Business Responsibility Compliance with Tax Laws and other regulations. Corporate Governance: Transparent Financial Reporting; Auditing / Verification and Accountability; addressing customer redressals and grievances. Invest in developing science and technology. Foster ethical trade practices Regulate suppliers CSR practices and distributors CSR practices. e.g. stop working with suppliers and distributors who do not follow responsible business practices

Transparent financial reporting : Public financial reports in newspapers for public information.

Why measure, monitor and report CSR?

Measure, Monitor and Reporting CSR

Accountability

Avoiding action from pressure groups and local communities

Avoid reputation (and hence business) risk

Improve brand (targeted at customers, employees, investors and suppliers)

Improve financial performance

Satisfy regulators

Measurement of Community Initiatives

Cash value of community support as a percentage of pre-tax profit. Impact evaluations carried out on community programmes such as improved educational attainment, number of jobs created, professional support for community organizations etc. Project progress and achievement measures

Perception measures of the company as a Good Corporate

Positive and negative media comment on community activities Individual value of staff time, gifts in kind and management costs Frequency of formal and informal dialogue between the stakeholders Measuring impact on the beneficiaries.

Measurement of Workplace Initiatives

Workplace

profile (race, gender, disability, age, etc)

Staff absenteeism
Number of legal non-compliance (on health and safety, equal opportunities and other legislation) Number of staff grievances Upheld cases of corrupt or unprofessional behavior

Staff turnover Training and development provided to staff Pay and conditions compared against local equivalent averages Workplace profile compared to the community profile for the travel to work area or equivalent Evaluating impact as a result of downsizing, reskilling, etc Perception measures of the company (eg: equal opportunities, work/life balance)

Measurement of Environment Initiatives

Overall energy consumption Water Usage

Quantity of solid waste produced (measured by weight/volume)

Upheld cases of prosecution for environmental offences CO2 / Greenhouse gas emissions Use of recycled material Positive and negative media comment for environmental activities

Environmental impact over the supply chain.

Level of waste that is recyclable.

Measurement of Marketplace Initiatives

Number

of products complaints regarding products and

services Advertising complaints upheld Complaints about late payment of bills Upheld cases of anti-corruptive behavior Customer satisfaction levels Customer retention

Provision for customers with special needs Average time to pay bills to suppliers Extra sales gained attributable to social policy/ cause related marketing Customer loyalty measures Recognizing and catering for diversity in advertising and product labeling Perception of a company as a desirable commercial partner Social impact, costs or benefits of core products / services

Measuring CSR
Different measures for different purposes Types of Measures

Internal Performance Management

Internal operational measures

External reports (auditable)

Measurement

Performance Standards Accreditation

External Reporting

Self Assessment / Audit tools (for internal or external use)

CSR Measurement

Few Measurement Tools

SA 8000
Overview

SA8000, is a way for retailers ,brand companies, suppliers and other organizations to maintain just an decent working conditions throughout the supply chain. It includes:
A standard that covers all widely accepted international labor rights.
Factory

level management system requirement for ongoing compliance and improvement.

Independent,

expert verification of compliance

SA8000 is based on international workplace norms in the ILO conventions and the UN` s Universal Declaration of Human Rights and the convention on Rights of the child. Some of the key elements are: Child labor, Forced labor, Health and Safety, Freedom of Association and Right to Collective Bargaining, Discrimination, Discipline , Working Hours, Compensation , Management Systems

Global Reporting Initiative

GLOBAL REPORTING INITIATIVE

A COMMON FRAMEWORK FOR SUSTAINABILITY REPORTING

The developing world has two options. The first is to sit back and react only when the problems arise. The second is to act as conscious citizens and rise above our vested interests for the sake of future generations, so that history does not record that we deprived them of their livelihood Ratan N Tata Chairman, Tata Steel On Sustainability

What is GRI?
The Global Reporting Initiative (GRI) is a multi-stakeholder process and independent institution whose mission is to develop and disseminate globally applicable Sustainability Reporting Guidelines. Guidelines are for voluntary use by organizations for reporting on the economic, environmental, and social dimensions of their activities, products, and services. Started in 1997 by the Coalition for Environmentally Responsible Economies (CERES), the GRI became independent in 2002, and is an official collaborating centre of the United Nations Environment Programme (UNEP) .

GRIs Sustainability Reporting Guidelines

GRIs Sustainability Reporting Guidelines are the result of a transparent, consensus-driven global consultation process, involving hundreds of stakeholders from around the world, and built on a foundation of support by leading corporations, non-governmental organisations, labour groups, governments, and others.

A similar framework for credibility, consistency, and comparability.

Simplify report preparation and assessment, helping both reporters and report users gain greater value from sustainability reporting.

What is an NGO?

NGO

An organization formally independent of the state and private sector having its own constitutional identity that doesnt seek profit for individuals/members.

What are the various types of NGOs?

Types of NGOs

The World Bank classifies NGOs as

Operational NGO: Design and implementation of development-related projects. These NGOs can be community based, national or international Advocacy NGO: Defend or promote a specific cause. These NGOs typically try to raise awareness, acceptance & knowledge by lobbying, press work & activist events.

Levels of NGOs

Local, State and National Level The Energy and Resources Institute (TERI) Centre for Science and the Environment (CSE) www.cseindia.org Consumer Unity & Trust Society (CUTS) www.cuts.org iVolunteer www.ivolunteer.org International NGOs The Centre for Social Markets (CSM) www.csmworld.org Partners in Change (PIC) www.picindia.org Business and Community Foundation (BCF)www.bcfindia.org Greenpeace www.greenpeace.org

Legal Identities of NGOs

NGO

Society
registered under Societies Registration Act, 1860

Trust
formed under the Trust Deed & registered with Income Tax Authority

Limited Company
incorporated under Section 25 of the Companies Act, 1956

Few Examples: Workplace Intervention

L&T collaborated with DKT , an NGO for AIDS awareness programme at the Powai plant. Voluntary Counseling and Training Centre at the L&T Health Centre in collaboration with MDACS for employees.

Recently identified 5-6 cases & referred to MDACS for followup & ART

Management trainees of L&T and students of the L&T Institute of Technology contact workmen, transport drivers, children of employees and impart HIV/AIDS education.

Few Examples: Workplace Intervention

BPCL collaborated with Kripa Foundation , Deaddiction centre for employees addicted to alcohol. Accenture partner with NGOs to train employees in entrepreneurship IBM Daksh, GE Money partner with Academic Insitutions to provide higher education to employees Standard Chartered Bank- Environment Education is given to employees with the help of BEAG ICHRL provides guidance to various companies on setting up Cells to address women employees issues

Few Examples: Market place Interventions

Godrej Agrovet has partnered with Spandana (MFI) for their cattle feed products.

Few Examples: Environmental Intervention

Infosys, HSBC India, ABN Amro ,British Gas, TESCO, O2 & Climate Group have partnered to deal with climate change. For more info go to www.theclimategroup.org Nike, IBM, Nokia, HP partnered with WWFs Climate Savers Programme of making absolute goals to reduce emissions.

Few Examples: Community Intervention

The Infyosys Foundation:

Grants to socially & physically challenged children for education. partnered with various NGOs & local government in strengthening rural development activities and infrastructure

Ranbaxy has contributed for community health care programmes

Few Examples: Community Intervention

Pratham & its Corporate Partners ICICI Bank, ACC, HSBC, Ballarpur Industries & MCGM

Improving primary education in Mumbai & making efforts to promote universalization of primary education.

Strategies and tactics for promoting CSR

Research and Reporting media exposure; Social Responsibility dialogue with Companies Social Accountability standards and audits; Shareholder Activism shareholder resolutions; Economic Pressure boycotts; Government Regulations supporting legislation; Litigation bringing law suits; and Norm Creation development of international law

Few Examples: NGO Pressure Tactics

Greenpeace as a part of its global Tox Tech Campaign had issued a public challenge to WIPRO to phase out its hazardous chemicals from its electronics products. Sustained campaign of Greenpeace has already resulted in international market leaders like HP, Dell, LG Electronics, Samsung , Sony, Sony Ericssion & Nokia committing to eliminate some of the most hazardous chemicals from their products. See www.greenpeace.org for more info

Few Examples: NGO Pressure Tactics

Nestles , Nesquik milk powder contained GE ingredients which was not indicated in the label when sold in China. Greenpeace has been campaigning globally to eradicate GE ingredients from food products.

Important Questions

Discuss the steps for operationalising CSR? Discuss the strategies adopted by NGOs in helping companies to attain its CSR goals?

Question & Answer Session