Corporate Social

Responsibility

To whom Business Organizations are

responsible?????

Primary Stakeholders
Secondary Stakeholders

Relations between a business firm and its primary

stakeholders
Employees
(Unions)
Shareholders
Wholesalers
(Retailers)

Distribute
products

Sell
labor
Business firm

Buy
products

Customers

Invest
capital

(Managers)
Lend
money

Sell
materials

Suppliers

Creditors

Relations between a business firm and some of its

other (secondary) stakeholders

The
General
Public

Business
Support
Groups

Local
Communities
Positive,
negative
opinion

Advice,
research

Jobs,
environment
Regulation,
taxes
Business Firm
(Managers)
Friendly,
hostile

Image,
publicity

Media

Central/State
and Local
Governments

Social
demands

Social
Activist
Groups

Governments

Perspectives of Corporate Social Responsibility

There are three perspectives on
corporate social responsibility:
Business perspective: business
responsibility is to make profit within
legal rules; employment & delivery of
commodities is in itself social
responsibility
Eco-social perspective: business use
resources, earn profits from it &
situated within a society
Rights-based perspective: obligatory
for business

Meaning of CSR
By the term Corporate Social Responsibility
(CSR) what is generally understood is that
business has an obligation to society that
extends
beyond
its
obligation
to
its
shareholders or owners.

DEFINITIONS OF CSR

It is the overall relationship of the corporate

with all of its stakeholders.
Social responsibility: investment in community
outreach, employee relations, creation and
maintenance of employment, environmental
stewardship and financial performance.
The concept of corporate social performance
includes a business organisations
Principles of social responsibility.
Process of social responsiveness, and
Policies, programmes, and observable
outcomes as they relate to the firms societal
relationships.

Social Responsibilities of Business

Archie B Carroll

Social Responsibility Debate:

Arguments in Against
In Friedmans view business has only one social
responsibility and that is to maximize the profits of its
owners. His very famous statement says it all, The
business of business is business.
Distorts allocation of Resources
Business lacks training in social issues, and lacks social
skills necessary to carry out social programs.
Social policy is the jurisdiction of governments, not
business

Social Responsibility Debate:

Arguments in Favor
Corporations have too much power
United Nations reported that the worlds three richest
people-Bill Gates of Microsoft, the Sultan of Brunei and
the Walton family of the Wall Mart retail chain were
worth more than the combined GDP of the worlds 34
poorest nations.

With great power and size comes

great responsibility.

Social Responsibility Debate: Arguments in

Favor

Accountability to Society
In a democratic society any kind of
enterprise exists for the sake of society.
Corporations Debt to Society
A corporation has to behave as a good
citizen as it draws its resources from
society. The corporation has to donate
generously towards causes of public
welfare and must get itself directly
involved in social welfare programmes.

How Does CSR benefit Business???

Reputation
Less Law Suits

Loyal Employees
&
Customers

Less Media
Harassment

Access to
Capital
Improves

Improves
Productivity
Better
Environment

Community
Goodwill

Advantages of Corporate Social Responsibility

There are several advantages to corporations
when they exhibit a sense of CSR and implement
it, such as:
1.Enhanced brand image and reputation
2.Increased sales and customer loyalty
3.Increased ability to attract and retain
employees
4.Reduced regulatory oversight
5.Risk management
6.Easier access to capital

DIFFERENCE
GOOD
COMPANY

GREAT
COMPANY

Excellent Products
&
Services

Excellent
Products/services
&
Makes the world a better
place

Developments of CSR in India

First Phase :Merchant charity Dates back
to Vedic period Religious and social
ethics
Relief in natural disasters
Dharam Shalas
Drinking water

MODELS FOR IMPLEMENTATION OF CSR

Four Models of CSR
Model

Emphasis

Proponent

Ethical

Voluntary commitment by
companies to public welfare;
Org as trustee

Mahatma Gandhi

Statist

State ownership and legal

requirements determine
corporate responsibilities

Jawaharlal Nehru

Liberal

Corporate responsibilities
limited to shareholders

Milton Friedman

Stakeholder

Companies respond to the

needs of stakeholders for
economic, social &
environmental responsibility

R. Edward Freeman

Developments of CSR in India

Second Phase Trusteeship
Social responsibility was brought into communitys
consciousness goes principally to business leaders like
JRD Tata, Ramakrishna Bajaj, Arvind Mafatlal,
Kasturbhai Lalbhai.
Vinoba Bhave on whom Gandhijis mantle had fallen
wanted businessmen to interest themselves in
humanitarian, educational and other beneficial social
activities and consider business as a social mission
while promoting the trusteeship of wealth theory
of Gandhiji whereby owners and workers were cotrustees of business for society.

Developments of CSR in India

Third
Phase
responsibility

Declaration

of

social

Organized Conferences on responsibilities

of business
Setting up of Fair Trade Practices
Association by Tata, Bajaj and others

Developments of CSR in India

Fourth Phase Managerial Trusteeship
1970s & later realization that continued
profitability
depended
on
involvement
towards development of society
Importance of ethical business practices and
concern for the environment in which the
business operates was also recognized.

Developments of CSR in India

Fifth Phase

Corporate citizenship
Realization that if social development is
neglected, business cannot prosper.
Government alone cannot handle all social
issues.

Traditional drivers for CSR

Values
Strategy
Public Pressure

Present Drivers for CSR

Corporate Social Performance

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

Significant Drivers of CSR

CSR report card

3 basic principles to measure the
impact of CSR activities:
Sustainability: linkage between use of
resources & their regeneration
Accountability: responsibility for the
affects of actions on society,
environment (stakeholders)
Transparency: reporting the impact of
actions/decisions to stakeholders

INDIA ON THE ETHICAL/CSR MATRIX

3 important factors that Indian corporations

consider
- business ethics (shift to holistic approach),
- compliance with regulatory requirements (shift
towards self-articulated guidelines & structured
systems) and
- consistency in value delivery (shift towards an
identity that is based on economic gains
through ethical means, sustainability, protect
stakeholder driven approach)

INDIA ON THE ETHICAL/CSR MATRIX (Contd.)

Wider adoption of CSR in Indian companies will

be enabled by:
Provision of tax, duties and custom benefits.
Inclusion of CSR performance as a parameter
in fast tracking clearance to projects.
Development guidelines on estimation of
socio-economic impacts.

Steps to implement CSR

Mainstreaming CSR vision in Articles of Association
Develop a written policy CSR and make it available in
the public domain
Assessment of internal environment
Identification of drivers and barriers to change
Assessment
company

of

core

competencies

of

the

Building in the strategic business case

Assessment of external environment
Legal Context & Development Context
Identification & prioritization of the opportunities for
corporate collaboration
Putting CSR policy in the public domain

Implementation of CSR

The systematic implementation of CSR means:

The adoption of strong organizational values
and norms that are appropriate towards a
variety of stakeholders.

The continuous generation of intelligence

about stakeholder issues, along with positive
responses to these issues.

Steps to Corporate Social Responsibility

The International Chamber of Commerce
recommends the following steps to attain
Corporate Social Responsibility:
1. Confirm CEO & Board commitment to
prioritize responsible business conduct
2. State company purpose and agree on
company values
3. Identify key stakeholders
4. Define business principles and policies

Steps to Corporate Social Responsibility(Contd.)

5.

Establish implementation procedures and

management systems
6.
Benchmark against selected external codes and
standards
7.
Set up internal monitoring
8.

Use language that everyone can understand

Understanding Social Responsibility of

Business

1)

Protecting and promoting stakeholders

Interests.
a) To Consumers and Community
b) Social Responsibilities of Business
Towards Employees
c) To Owners and Inter-Business
Establishments
2) Promotion of Common Welfare Programmes
3) Philanthropy

Understanding Social Responsibility of

Business (Contd.)

4)
5)
6)
7)
8)
9)

Good Corporate Governance

Render Social Service
Abiding by Rules and Regulations
Creation of Wealth
Ensure Ecological Balance
Supplement State Efforts

EXTERNAL STANDARDS ON CSR

Increased interest in CSR has led to numerous

world-wide standards :
Standards provide guidelines to report on
social, environmental & economic
performance.
Examples include: AA1000 Accountability,
Social Accountability 8000, OECD guidelines

Ten Principles: The Global Compact

Human rights
1. Businesses should support and respect the protection of
internationally proclaimed human rights; and
2. Make sure that they are not complicit in human rights
abuses.
Labor standards
3. Businesses should uphold the freedom of association and
the effective recognition of the right to collective bargaining;
4. The elimination of all forms of forced and compulsory
labor;
5. The effective abolition of child labor; and
6. The elimination of discrimination in respect of employment
and occupation.

Ten Principles: The Global Compact

Environment
7. Business should support a precautionary approach to
environmental challenges;
8. Undertake initiatives to promote greater environmental
responsibility; and
9. Encourage the development and diffusion of
environmentally friendly technologies.
Anti-Corruption
10. Business should work against all forms of corruption,
including extortion and bribery.

Key Elements in Definition of 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
stockholders alone.

broader

Corporations have impacts

marketplace transactions.

that

constituency
go

beyond

than
simple

Corporations serve wider range of human values than

can be captured by a sole focus on economic values.

Definition of CSR
CSR means operating a business in a manner that
meets or exceeds the ethical, legal, commercial
and public expectations that the society has of
business.
The World Business Council for Sustainable
Development defines CSR as: the continuing
commitment by business to behave ethically and
contribute to economic development while
improving the quality of life of the workforce and
their families as well as of the local community
and society at large.