Part 6CSR

Introduction & flow of discussionwe will see evidence of why Business Enterprise or a Corporation should merge with society and other stakeholders in the communityThen, we will go through some Headlines, highlights, coffee corner debate, flow of SMSs, on this topic of the day.This will include what is going wrong today with India and the world? And global economy? Does this prove that we re not learning our lessons? We will try and answer this question or disprove the same with our future actions and behavior.

Introduction & flow of discussionThe Global Context of CSRIF : Business & its StakeholdersHistorical Perspective of SCRThe Business Case for CSRDeveloping CSR strategyMonitoring & Measuring CSRImplementing CSR / Reporting / Role of Govt & V. Codes

Some wise sayings

WHO IS RESPONSIBLE FOR SOCIAL RESP?

ArthashastraIn the Happiness of his Subjects lies the Kings Happiness and in their Welfare, his Welfare.Kautilyas ArthshastraToday we have Kings in the garb of politicians not good old kings likeslowly replaced by business barons?

Who is a Customer Mahatma Gandhi

A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is the purpose of it. He is not an outsider to our business. He is part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us the opportunity to do soA simple lesson for any Business Enterprise customer is anyone whom you have to serve. Quality definition by Philip Crosby: Quality is respect to humanity

One world, one citizenIn the South American mini-forest, there is a tribe called the Desana, who see the world as a fixed quantity of energy that flows between all creatures. Every birth must therefore engender a death, and every death bring forth another birth.

The Desana story - Lesson

WHAT WE TAKE, WE MUST REPLENISH. IT IS ONLY FAIR that we provide sustainability The way we live, at least, must be made available to those who follow us

Selfishness .. What is the end?People are only mean when they are threatened, and thats what our culture does. That is what our economy does.

Selfishness ..and the endyou are surrounded by people who say I want mine now. You end up with a few people with everything and a military to keep the poor ones from rising up and stealing it. (any visible examples?).If not for the fact RESOURES R SCARCE, everything will be hunky dory.

Concern for others goodness of collaborationYOU CAN STILL MAKE IT A WIN-WIN SITUATION.Good Businesses with Long Term Strategies achieve that -- collaborate

Business & Society the cyclical phenomenon - WAVESWaves crash !You are not a wave, YOU ARE PART OF THE OCEAN. (little drops of water), and waves come and go, but never lose your PEACE SANTOOLAN mat ko bhaitna

A Story potential class conflict

Recall the coolie story carrying a Fridge 7 floors.Depicts a picture of uncompassionate society.

James Baldwin on Bus & Society.. The moment we cease to hold each other, the sea engulfs us and the light goes out.

The Debate on US Bailout

Financial market reform cross benefits, Yes.. butFinancial market reforms, like pension, insurance, banking etc. has been dragging its feet. Example, a boost to the insurance sector will make -- more funds available for infrastructure projects, which will benefit everyone from the tycoon, who implements the project, to those sections of society whose lives become easier as a result of better infrastructure, to daily laborers who get assured work for longer periods of time.

Is it individuals honesty?

Distinction needs to be made between institutions and individuals.. Right institutions or instruments in the hands of wrong individuals can lead to disastrous consequences. (US situation partly explained by this... )We must reform our financial infrastructure so that the housewife in some small town, the laborer at a road building site and the vegetable seller at the street corner can also look forward for a better tomorrow.

US bailoutNo longer the dominant world power?

US melt downLehman, AIG, WaMU, Bunty or Bubli (Fenni & Freddie Mac)Merryl, European Banks, Japan, Indonesia, etc. More corporate on bankruptcies list come to the foreA 14$ Tn economy is on its knees for $700 million(Senate/Congress debate)

US bail out-- taloa me pani nahiTax Payer Money ????

Some saw this as an enormous set-aside of Taxpayer money as an unnecessary intrusion into free market.two streams of thought in America nowThey say bail out we say get the hell out (worst than terrorists?) already 1 US + family of 4 suicide).My interaction with Harshadbhai, Ranina +++

Voters will hit back Senate members who vote for bail out. They would be targeted and defeated .

Comment on bailout

Big banks, financial institutions and lenders who admittedly lent

INDIA SEES THAT NOW !!! Bandra Kurla

Points lesson from MeltdownOnly a nave like Lehmann would have fallen on the way out the process of insolvency would have set a long before. (or were they nave??)Was it vested interests, that prevented bringing this out?

Lessons to learn from US mdolatilitVy of market situation makes it difficult for truth to come out earlyit is a lesson that big is not only always the best Hypes mis-guide you.Reliable flow of timely information is the key. Any investment is only a value held. (BOOKS)At the end of the day they are prone to changes. CHARGING BULL RED BULL

Govt. not to regulate CEO salary, said Corp. Affairs Minister: We believe in essential freedom in a democracy.

What.. (contd.)Winston Churchill remarked that the Hun his disparaging term for Germans) was either at ones throat or at ones feet, a vicious adversary or a worshipful devotee.

Women use 500 chemicals on face & body every day A Question of product claim Most of which contain more than 20 ingredients including additives that could lead to cancer and various skin problems. A study of deodorant firm Bionsen.Beauty regimes have changed fro m wash and go to daily fake tan applications, manicures, false lashes and hair extension.Lipstick, most commonly used, contains an average of 33 chemicals. Perfumes contain a cocktail of 200 chemicals with soe containing as many as 400.

WhatsJawans spend second night in pavementSecurity van driver flew with Rs.40L ATMHC slams Delhi govt. for giving selective paroleTN prisoners grow fat on jail foodRanbaxy recalls Acne drug from US mkt Class IIIIndia can get Nobel for filth J.Ramesh

Clear the Air editorial ToI 20-11-09 Govt. announced a revised set of emission and pollution standards applicable across the country. Govt wants us to breathe easy. But noble intensions alone will not ensure fresh air. A/g to CPCB almost 80% of 110 cities monitored in the country do not even meet the existing norms. Because they do not provide penalties to be imposed on defaulters. Which is where credible and accurate monitoring levels comes in unfortunately we are crippled in this regard. Models in UK and Europe and US (EPA) works with federal state and tribal governments to ensure compliance. Where environment agency and dept of env food and rural affairs issue guidelines and give muscle to local bodies. So Agencies should spell out specific targets. Otherwise new norms will only give a feel good factor.

What is Farmers fake Bt Cotton as organic US, EU see red. Commerce Ministry tracks fraud in MP, Maharashtra through new software.Cases of Bt. Cotton contaminating organic cotton farms are on the rise. Adequate testing facilities lacking. We are working with customers to see tht every consignment is checked.Needs coordination between certification bodies, their inspects, farmers, NGOs, govt. representatives, monitoring and feeding information

What isMahindra-Satyam gets legal notices from 37 cos. Mahindra-Satyam says it is legally untenable.

Greatest mystery of all times and climes : SCAMS where did the money go??What has happened to all the money that gets unearthed in Indian scams? Frauds?Everytime a new scam is know, the sum of the scam is in multiples of earlier scams.Bofors ?? 25 years? ONLY (like you say in ABs Emami pain relief ad) 60 cr4000 cr. Harshad7800 cr. Satyam fraudMadhu Koda 4000 cr (slight decrease)20000 cr. Telgi fake stamp. How nice it would be if at least part of it is unearthed and some of our deficit financing can be eased out.

Whats If you want to know what has happened to these:Just send 5000 bucks in unmarked used 100 rupee notes and you will receive a sneak preview of the devastating denouncement by return post:

Consumer WatchDrive to make detailed servicing report a must:An Ahmedabad consumer based CE&RC plans to launch a campaign to make detailed service reports compulsory.Even Whirlpool and Philips said they do provide repair details on receipts, however, no uniform rules. There are no mandatory laws governing service obligations of manufacturers, not just of electronics, but all products As a customer I would like to know what was wrong (with a product), if the same problem recurs after warranteeIt is therefore necessary to have a report recording a products history.

Drive to make detailed servicing report a mustNormally the service centre could blame the recurring problem on rough handling of a product or voltage fluctuation.If a product is repaired by an authorized service person, the fault should not occur. If it goes back it amounts to a deficiency in service and shows there is a problem with the product. Then the consumer must take up the issue to a higher level

Let host nation regulate foreign finance Indias system of host regulation, which makes good economic sense has both empowered and insulated the economy from some of the worst excesses of current global crisis: Currently FI lending is partial; It is not on a level playing field. Developed countries have easy access, and cost of getting funds is much less than for developing countries. The effect on the economy again is therefore has unequal effects. Even Base II norms favor this.

Let host nation regulate foreign financeA host regulator cn ensure that certain institutions are not lending recklessly in a manner that leads to artificial asset booms. Host regulators can enable counter cyclical charges on institutions creating such book within a broader framework of national and macro prudential regulation. So that they are both empowered and insulated the economy from some of the worst excesses of the crisis. DEvelping economies must make their own choices in the world economy. Global warming, WTO, climate change !!! Disparity Haves and have nots

Some paradoxes in the Corporate World and their thinking.

Business wants freedom, and less intervention from GovernmentThey start ventures taking RISK.NOW ANYBODY CAN START ANY BUSINESS.AFTER ALL THEY WILL BE BAILED OUT.

What is Global meltdown Bail outs in trillion dollarsAIG, LEHMAN SUDDENLY FIND THAT THEY ARE BANKRUPT !!!SATYAM BECOMES JHOOTA (juta nahi)MADHU KHODA AND HAWALALAW MAKERS LAW BREAKERS3 AUTO GIANTS WALK

Squeeze at Top (headcount & wages)A clutch of CEOs resorted to pay cuts in a tough year. Not all head honchos, however, were in such a spartan state of mind. Rahul BajajTo the extent govt finds that CII or any other business organization does not come out with a satisfactory voluntary code of conduct for remunerations of CEOs, I believe govt. could keep in the Companies Act a cap on emoluments of Promoter CEOs as a percentage of net profit of the co,. Currently, for an individual CEO the figure is 5% and for the Board as a whole, 11%. The figure of the individual CEO, if he is a promoter, may be fixed at 1 percent of the profits of the co. as calculated at present. However, a promoter CEO may be allowed a certain minimum emolument per annum in case of absence of inadequacy of profits in a company.

WhatsBus Opportunity.Vijay Govindrajan, Prof. of International Business.Reverse Innovation is the Key: Re-engg. Is passeSince 50s MNCs have innovated in the US \However, one can develop over the next 100 years with technology that is available today. E.g. Cell v landlines today. The trajectory of dev. need not be the same. RENEWABLE ENERGY, DECENTRALIZED POWER GENERATION AND AFFORDABLE HEALTHCARE ARE GOOD EXAMPLES OF SUCH BUS. OPP. In the half century after the II world war, the business corporation has brilliantly proved itself as an economic organization.. In the Next Society, the biggest challenge may be its social legitimacy: its values, its mission, its vision.= Peter Drucker

Whats Moists liberate people from exploitation and oppression fight against state terrorism Salwa Judum legitimate efforts??Fearing taunts, old dad dumps baby (45 year old)Sky Walks galore25% city women have caesarean. / MLA -- RAPECASUAL careless calamities collapseVegetables injectedPost Office- receives cards with AID virusPatangrao Kadam Rev Minister, land etc. release to BVIDYAPEETH.

What isCII AND INDUSTRY WITH B. BOWLS ONCE AGAINMONSOON FAILURESOCIAL CIVIC UNREST AX INDIA WAR WITH INTERNAL TERROREXTERNAL TERRORISMDEFICIT FINANCING NOKIA REPLACES CHARGERS (3rd party!!)

What isHadley seen in Lucknow, Trident MumbaiSEZs Monsanto & Dupont accused of pressure tacticsNano at Gujarat shift from WB .. The NDTV debateTata seeks capital to pay off its Corus dealM&A in some sectorsGlobalization end of the road?PWH SUIT 1 FILED IN USAKingfisher flight skids off the tarmac

What is.. Casual and carelessDelhi Metro tremblesPipeline falls on TrainMilk and Asli Ghee? Quality?Product claims questionedCultural IssuesHypes Anoraxia Aamir AidsRANBAXY US FDA questions GMP issuesBanks not lending -- NPA

What isFarmers suicide Water shortageGlobal warming Climate changeHimalays getting taller or over a heap of plastic piles

What isForeigners stake in India more than government holdingTax exemptions cost govt. Rs.4.2 Lakh crore in 08-09Overstated revenues in Books to inflate stock prices (e.g. if Co. says profits are up, but NFMs are down something is wrong)So, Answer, evaluate things that are verifiable, if complex tax systems unables to evaluate to create a new warning system to track corporate frauds. WTO US Europe Attitude Gl Warming war between D & UD economies does it ring a bell a parallel Haves & Have nots

What isPfizer charges SUN with another patent violation.Kathakali came to be known in Kerala after Moscow presented it.Karela & Neem importance known to us after some one else gets a patent.Story of Hospital, Stapler & courier. AI gets 2K crore lifeline

What isIn 2009, CBI graft cases doubled. LOT OF EMPLOYMENT OPPORTUNITIES. Trapped govt. officials for corruption (Railways, IT, FCI, Banks) 17 t 40 (26 from Mumbai)Rich or poor cit kids malnourished proteins missing17 year old held for luring girl into .PM Manmohan Singh --- patient death during securityP.Dinakaran High Court Judge Land at TiruvalluvarGood 2 supreme course judges quit Ambani dispute Conflict of InterestIT slueths break fellow officers safe to steal filesDrunk flier gets too close to an airhostess. Teenager steals dads cash to marryMira Road sick of garbage, they dump it at the ward office.

What is..Montac Blank Rs.14 L used a sketch of the Mahatma. Kerala HC bannedIssue: how free are cos. To use the image or name of a iconic historical personality. Legal experts not a problem if due permission is taken. - T.ShirtsCos. Shd check with intellectual property lawyers before such launchesThe subject of Gandhi is an emotional issue. The Judge may no take a deached view, as a TM will lead to commercial gain.Tend to attract objections that are gimmicks to gain publicity. K.Johar .. Kaminey

What is.. SustainabilityUID will not resolve bad delivery of public service, or alleviate poverty. Of course, will give unique ID nos. Using UID for fixing governance issues will be up to the public service providers. PORTABILITY OF MOBILE NOS. Will push s p to improve service quality gives freedom to switch operatorQ 09 indicates a recovery, but is it just a festive flash in the pan.?Good signs: Salary hike, uptick in pricing, lateral hiring.

Why cos fail#What is S?Sustainability is the mother lode of innovation that yields both bottom and top line returnsSus. Dev. global warming, water shortage, high commodity prices dont deny the obvious get on with it and innovate.30 years ago Quality movement That raised a debate will it increase costs, -- but really it reduced costs, brought products innovative, used technology Look at sustainability not from a compliance and regulations objective consider it as an opportunity and innovate -- TAKE IT TO THE U.S. !Washing machine when electricity is cut off runs into wash cycle mode. Inclusive growth and sustainability joined at the hipsHow to do more and more for people with less and less.

Why cos fail#Fannie Mae was good to great it is under Government conservator ship which is close to bankruptcy, They may call it a sectoral catastrophe went through some of the above waves. As a lender increased response to sub prime mortgages which it had rejected earlier to stay relevant, and serve low income business.

Why cos failWho does great, or not, is not a function of forces that hit them, but self created and self inflicted. Strategy starts with people. Assess, if it is advantages to themselves, or bigger than themselves. E.g.:Casualties causes calamity Delhi Metro, IOC inferno, Bhopal, Mulund train, Kingfisher, etc. Carelessness leads to downfall.

New SectionCSR GLOBAL CONTEXT

CSR global contextCarnegie Foundation definitionA process of interaction and integration among the people, companies, and governments of different countries, a process driven by international trade and investment and coded by information technology. This process affects the environment, culture, political systems, economic development and prosperity, and physical human well being in societies around the world.Some examples: new products, bpo, wto, MELTDOWN, DUMPTING, gl WARMING, ETC.

CSR global contextThis had both positive & negative impact.On Investments, governance structure of global financial Institutions, declined transport costs, revolution of IT and communication, Production process set worldwide, 6500MNCs, 8.5L foreign attached. Service sector SW / BPOs, etc

CSR global contextIts social impact: Small enterprises inability to access capital, credit, info, extension services, (increased unemployment)Resulting loss in jobs, exploitation of workers rights by various MNCs leading to a reduction in the CoG, at expense of basic access to humane conditions of work (ILO) Widening gap between the rich and the poor.Quality? -- improved ?? Asli Ghee

CSR global contextImpact:X border migration, illegal economy, relative poverty increased, X border tax evasion, money laundering, sex and drug trades, fall in transportation costs makes smuggling easierGlobal Natural environment in addition to poor pollution control mechanisms, lack of regulation. (Ganga)Corporate scandals, manipulations, over extension of credit to unstable local banks. Disrupted ecological balancesUsed unwisely extractive industries non judiciously,Water scarcity

CSR global contextSustainable development: Development that meets the need of the present without compromising the ability of future generations to meet their own needs (Brudtland commission)We now face the ultimate mgmt. challenge, that of managing our own future as species. Social upheavals impact entire societyAny visible signs in India??

CSR global context - MDGSept 2000 world leaders, NGOs, UN adopted eight specific, measurable, time bound targets called the Millennium Development Goals (MDGs) to address issues of inadequate incomes, widespread hunger, gender inequalities, environmental deterioration, lack of education, HC and water. (see details 1.5 in book p 11)

CSR global context India & MDGsMonitor able targets under 10th and Eleventh FY Plans: areas:Employment,Primary educationGender disparityPopulationInfant and maternal mortality rateHIV / AIDSMalaria and other diseasesEnvironmental dustainability

List of Social problems

Poverty, inequality, Data on Wealth, unemployment, hunger, malnutrition, literacy, population increase, discrimination, women degradation, child labor, HR, squalor, water shortage, food shortage, crime, violence, high cost of Medicare, education, HC, rural-urban divide, minority problems, sectarianism, business go slow, Global Warming, Eco imbalance, flora and fauna, deforestation, Questions on pesticide content of colas, groundwater depletion, impact on farmers livelihood ....

Bitter pill for Ranbaxy (under scanner)

The US FDA has now found serious manufacturing deficiencies at two of R plants in India after an inspection of its facilities. Ramifications The inspections by regulatory bodies will become sharper and more intense, but that shouldnt be a problem as Indian companies generally meet quality standardsLESSONS?

Mulund shop in soup over juice

Woman falls sick after consuming expired product FDA raid on retail outlet. POSSIBILITY CUSTOMER EXPIRED !Approached by victim response: nothing could be done, victim free to approach authorities

Mumbai e-waste11000 kg of e-waste a day.Mumbai fails to find a disposal method. (obsolete computers, PCs fridges WM, CDs, etc)Cos like Nokia are stepping forward by collecting mobile phone waste for recycling and repairs. When Offices and Municipalities migrate, there would be a complete overhaul of all the IT equipment. (Toyota -- )Going by the prevailing market conditions and poor dismantling methods that discourage environmentally sound electronic recycling practices, the problem is not so easy to resolve.

Why they reject an SEZImpact of development was being felt most by small farmers. The Patalganga river had lived up to its name and farmers and locals used to walk by the river in the evenings to see what color it would be dyed in depending on the nature of chemicals that flowed through. Sometimes it was flaming red, at others, deep purple, but mostly black. Even then villagers expressed a lot of uncertainty about the transformation unfolding in the lush green coastal district of Maharashtra. If the farmers have rejected the SEZ, it is time we sit down and reflect why they have done so.. PAATAL GANGA.. Patal means Hell.

SEZIt is vital that the industrial-government lobby takes a hard look at this reason. Is it based on the same colonial approach policies followed in the case of mining activities and plantation in the NE and Bihar and other tribal belts a lot of which are now marked out to be politically troubled areas .. Violent resistance has sown self-destructive seedsThere is rarely a proper evaluation of the needs of the industrial lobby v/v those of the farmers themselves. 2 cos. under scanner

UN fears backlash over purchase of land

UN Food agency chief wants Mid East funds to sign JVs.

Oil rich ME states are discussing billions of dollars worth of agricultural investment in places such as Sudan and Pakistan. The deals are meant to ease food security concerns in the Gulf (imports > 50% foodstuff). Strategy guaranteed food supply at guaranteed prices by investing in land and the production of crops such as wheat and rice.

Director UN FAO said: he is advising the Gulf states against outright land purchases, which could trigger political backlash in DCs that are struggling to feed their own populations.

I had suggested Ek goni Chawal .. Ek barrel crude oil)

UN on Land purchaseUN does not want unintended scandals to cause this new wave of investment into agriculture to dry up. FDIs in ag. Is the only way we are going to eradicate global poverty.. I have no problems in Arabs doing the investment. However, Where I start getting worried is (a situation in which investors) rush and buy land all over the place land is political hot potato.. my job is to avoid .. provoking a negative response in the Developing world. (See any sour grapes?)

Some headlines:

RAIGAD NO TO SEZ jairam ji!!Supreme Court judges under scannerSEZs only on Barren Land is impractical.(How much % urbanization? Where Bus. Can improve balance % productivity US vs India yield 7-8 times more) WTO (whither to ho..)

Sunita Narain on Coke/pepsiCEO Director Centre for Science and EnvironmentIt is a misconception that we are against industry we want India Inc. to grow but the growth should be inclusive and benefit all sections of society.. We want to be impactful, and we want to be angry and remain angry,

StocksStocks are painful. You need to track a lot of things. They get affected by central banks, politics, corporate governance, balance sheet and environment issues- James B. Rogers, co-founder, Quantum Fund

The public smoking issuePro group on freedom of expression: Choice goes up in smokeOnce the govt. arrogates to itself the role of moral arbiter, the right to choose is lost.Measures have to come from within the community

Some other problemsInvestment in human capital low, Huge additional Resources required for Creating social action and group interaction.Enterprises not being subject to periodic elections, durable solutions are possible, irrespective of whichever government rules.. (sustainability)

Problems in India contd

Civic Unrest Militants, Gujjars, Deras, fundamentalism, maoism, naxalites, intolerance, superiority complex, arrogance, dalits, tribals, SC, tribesThey are all not cattle.. Human beings..Even cattle needs to be preserved

Problems (news HL) contd.Mass hysteria business to avoidThin skin polity the art of dividing the electorate without using freebies, but by hurt sentiments. Identify politics- to enterprises??

Business &Social causes- ChinaThe current baby milk contamination scandal confirms both a high level culture of flouting rules for profit, and also of official cover up. Collapse of so many schools in the Sichuan earthquake in May (again China) revealed publicly some shocking compromises in building standards that may be hidden NEARER HOME !!

ChinaChina monitoring performanceMonitoring email and internet is a way to understand growing public anxiety about what is not working and how they have to respond. The Chinese PM has made a new public statement of intent to allow media oversight with greater public power to criticize and supervise Chinas govt. MEDIA CONTROLS THE MINDS OF THE MASSES. (elsewhere Role of Media In CSR)

China govt. remarks

We will create conditions that allow people to criticize and supervise the work of the govt. more effectively, and foster a lively political environment.. we will further deepen and broaden opening up. Opening up also means reform. Is it regular spasms of control and loosening up with stunts, to exploit media power asked a critic.

Business & Community a viewFinancial inclusiveness is fine in small doses, but leads to disaster on a large scale. India is just the start of FI, but as it prospers, political pressures for cheap loans to the poor will grow. The lesson from the US is that Inc loans on sufficiently large scale can sink the financial system

CSR The ITC way business models focused on Rural India.

The vocal of the SH of the land and the growing marginalization of poor rural people (Single) will not be an isolated incident. While urban India shines in terms of best amenities.. rural India is bound to impugn them for a slice of the cake or some modest improvement in their dreary existence. Its no wonder therefore that ITC (TO $19 bn. Market capitalization, and $5 bn. Turnover with a diversified portfolio ranging from FMCG, hotels, paperboards, packaging, agri business, has forged unique business models that focuses on rural India and attracted universal approval. Lets see what they are doing.

ITC story (contd)

e-choupal initiativeis designed to enhance farm productivity and provide market linkagesSocial forestry schemeHas greened over 80000 hectaresR&D projectsHave evolved high-yielding, site specific, disease-resistant clonesComprehensive package of plantation mgmt practicesWatershed developmentProjects which benefit 333111 farmers in 24 districts

ITC story continued

Renewable energy96% energy required by Co. planned out internally with > 24% generated from renewable resources. ITC has been a water positive firm and today the co. generates three times more freshwater harvesting potential than it consumes and sequesters almost twice the amount of carbon its plants emit.

ITC story (contd)

Recycling solid wasteIn 2007-08 the co. also compassed he 100% benchmark in recycling solid waste in several of its operations. Also A total of 2178 water harvesting structures have been created, providing critical irrigation to 18,482 hectares of farmland.

ITC story contd.ITCs Mission Sunehra kal encompassing its sustainable development initiatives would continue to provide thrust to identified triple interventions viz. natural resource management (wasteland, watershed and agri. Development), sustainable livelihoods comprising genetic improvement in livestock and econ. Empowerment of women and community development with focus on primary education, health and sanitation.

ITC story contd.Social policy analysts contend that if corporate social responsibility (CSR) is taken by all companies earnestly with a view to building PPP for sustainable and inclusive growth, the simmering tensions and resistance to industrial development through setting up economic enclave (SEZ) or big project would gradually fade as rural people would hopefully find a decent way out of their dire predicament of penury.

Hyderabad Metro Rail/Bus project Gets US authority boost from FTA US Bus Rapid transit system, and Metro Rail. Outstanding, especially for the concession agreement under the PPP. Really the way America was build over the last 100 years. The US govt. granted land for taking up infrastructure development by the private parties and now we see it here. A/g to him, it was outstanding to have private sectors dollars to spend for public service without casting any burden on the tax payers money. The AP govt. would enter into a MoU with the FTA on public transport, which would involve strengthening and sharing of knowledge, science and technology in the sector.

Hyderabad ProjectOther opportunities for business: Head-hardened rails, high speed rails, metro rail technology, manufacture and supply of coaches, automatic fare collection points, etc. Railway stock yards, (market-marketable surplus)With Good ROADS mfg. location possible anywhere time and place utility

What we saw?Complementarity of Business and community with each otherMaintaining a stable and healthy community environment Improve the quality of lifeEffectiveness of institutionsCreate a fair business environment

A Comprehensive Corporate Reform AgendaExpose and punish acts of corruptionHold corporate officers more accountableProtect small investors and pension holdersMove corporate accounting out of the shadows Develop a stronger and more independent corporate audit system

A Comprehensive Corporate Reform AgendaCorporate officers must face stiffer penalties when they break the law

Corporate leaders who violate the trust should never be given that trust again

The administration must use the full weight of the law to and punish corruption

A Comprehensive Corporate Reform AgendaDouble the maximum prison term for mail fraud and wire fraud to ten years, and increase the prison time served for fraud committed by corporate leaders

Empower the SEC to freeze improper payments to corporate executives while a company is under investigation

End the practice of allowing corporate officers to receive loans from their companies

A Comprehensive Corporate Reform AgendaPrevent CEOs or other officers from profiting from erroneous financial statements

Ensure that CEOs or other officers who clearly abuse their power lose their right to serve in any corporate leadership positions

Require corporate leaders to tell the public promptly whenever they buy or sell company stock for personal gain

A Comprehensive Corporate Reform AgendaChallenge CEOs in America to fully comply with the spirit of existing SEC rules by explaining prominently and in clear English why their compensation packages are in the best interests of their companies.

Strengthen the SEC by seeking an additional $100 million in FY 2003 for the SEC to help hire more enforcement agents and improve other prosecutorial activities.

Ethical LapsesEthical Lapses

EnronAndersonSouthebys

But not all reforms will follow the US model now .Enron and the Arthur Andersen scandals;

Questionable accounting Practices at the dot comsand the telecoms;

Blue chip companies such as GE and IBM;

These issues have rendered the US Corporate governance model to be a piece of Swiss Cheese with loopholes

Where can you learn Ethics?Not necessarily in B-school, where too many focus too little on doing the right thing -- despite the rash of corporate scandals .

How should B-Schools contribute?Sharper focus on teaching the future business leaders to do the right thingHowever,B-schools have not negated the issue totallyClass Discussions on abuses,

Relating stories in class work

Where can you learn Ethics?But mere condemnation of the issue does not contract its recurrences.

Why this glacial pace in the academic pursuance of this issue?

Thomas Donaldson, Teacher of Business ethics at Wharton School- Academe is sloth when it comes to change

Where can you learn Ethics Virtue PaysMarc Orlitsky, lecturer at the Australian graduate school of management has analyzed

30 years worth of corporate data

Affirms a link between the social performance and the solid financial performance of the company

Cracks in Political & Administrative IndiaTehelkas Exposure of Defense Gate The Bofors Issue Inefficiency in the Tax Collections System Poor Ethics amongst Administrators CORRUPTIONRoot Cause - Lack of Corporate Governance

Cracks in Corporate IndiaAll of us know what boards and managements should do, but are doing what we should not do. We have done things that are questionable legal but questionable. Why must we need a committee to tell us what to do? - Rahul BajajThe NDTV Pay Commission debate CII nothing wrong, but accountability The NANO debate .. Singur

Cracks in Corporate IndiaBut Even Then What Did We Get !!! Bhopal Gas Tragedy Harshad Mehta & Ketan Parikh Stock Market Scams (Highly objectionable became acceptable as they were the prevailing market practices) UTI ScamRoot Cause - Lack of Corporate Governance

INFOSYSUnfortunately, money is the sole factor on which a premium is laid.without a certain value system, no corporate governance system will ever work --Mr Narayana Murthy

Social responsibility TATARight Sizing- Charging to CostIndustry OutlookOperationsCost ControlOngoing Modernization and Capital ProjectsAcquisitions and DivestmentsCorporate CitizenshipCorporate GovernanceEnergy, Technology and Foreign Exchange

Benefits of Efficient CSRImproved Financial PerformanceReduced Operating CostsEnhanced Brand Image and ReputationIncreased Sales and Customer LoyaltyIncreased Productivity and QualityAbility to Attract and Retain EmployeesReduced Regulatory OversightAccess to Capital

Implementation Steps- CSRMission, Vision and Value StatementsCulture ValuesCorporate GovernanceExecutive Management ResponsibilityStrategic PlanningGeneral Accountability, Reporting, DisclosuresCommunications, Education and TrainingEmployee Recognition and RewardsSocial and Environmental Auditing and ReportingUse of Influence .. Let us go to the B Ethics section

Chapter 2

From Philanthropy to CSR:Historical Perspective

Business & Stakeholders IntroductionBus Ent System (BES) it is a mechanism selected by society to produce G&S. Earlier, BE fulfilled its SR by surviving and realizing maximum profit, as long as it complied with a few regulations imposed by Govt to check abusive practices.Anyway, it was assumed the market system provided the regulations to police, and profits provided the necessary incentive and insured efficiency. Work ethic and self-interest were the guiding principle.

Historical perspective (contd)By this, business provided employment, and a growing healthy economic system. In other words, CSR was to operate profitably, (W/o which they would not survive), much less play a social role.The practice of BE contribution to SD continued through ages, and as econ and social conditions changed, the business response also changed to social needs. Accordingly, there was a shift from merchant charity to Corporate citizenship

I Phase Ethical practices -Merchant CharityPre-independent eraPart with ones surplus not a modern or western imported idea.Dates back to Vedic timesThe merchant class (nourished and ingrained by social and religious ethics) daan, daanam, madat, sahayat, etc.Relief's galore natural disasters, dev. Supportive infrastructure, dharamshalas, bathing ghats panjrapoles, drinking water stations, education, health, preservation of art and culture.

I Phase Ethical practices -Merchant Charity1850-1914: (Start of industrialization of India) slight Shift from ameliorate (alongside, but), slightly western form of rich business families setting up trusts, here too, endowed a host of modern institutions.

I phase - Ethical practices Merchant Charity Role of Business LeadersFor this credit to JRD, R Bajaj, A Mafatlal, Kasturbhai LalbhaiDo good, and therefore, less encroachment from Govt. on its behaviorAround this time, Gandhijis mantle of Trusteeship carried forward by Vinobhaji his business inspiring Triple Daan model Gramdaan, Bhoomidan, Sampatdi daan Nehru and others encouraged this, as a better way to do social transformation

I phase - Ethical practices Merchant Charity Role of Business LeadersReinforced traditional charity at the same time, promoted social ideal of classless agitation in society and was supported both by capitalists and the govt. Was it just a Lip Service? !!

The II/ III Phase - Trusteeship1914-1960Philosophy honed by vision of free, progressive, modern IndiaMany businessmen Tatas, Birlas, came under the spell of MG.Contributed liberally unsociability, womens emancipation, rural reconstruction. In the euphoria of Independence, business class confident of its capabilities, responded both, by creating more wealth and utilizing it for non-business purposes.

The II/ III Phase - TrusteeshipThe Third Phase Declaration of SR of BusinessThe 60;s saw (in an era of econ. And political troubles) business operating under several constraints.JPN carried forward the message of Vinobhaji. Moving spirit of Delhi (IIC & Institute of Gandhian Studies, Varanasi) Seminar on SR of B While relationship of B with Employees, consumers and SH. was legally spelt out, no such law governed it with society/community. They felt this should be broader than usual current charitable dispositions.66 Calcutta Seminar- Study group hurdles in implementing law and recommend measures. B shd be responsible to SH .. (Fall out) JRD + initiated FTPA codify and implement FTP.

The third PhaseThe State took some responsibility levied taxes at this stage.This led to dwindling interest of Business, At the same time, era of Tax Planning / Evasion by Charitable Trusts were noticed.Ever heard?? converting black money into white?

The fourth Phase Managerial Trusteeship1970sBus renewed interest shift with global trends.Now, distinctly there were Corporate Family Business phil.

Mgrs realized their involvement shd be beyond customer relations, etc. U/s that together with massive investment in bldg. up countrys infrastructure, equal attention to basic social amenities like drinking water, dispensaries, schools, etc. is necessary.

This condition accelerated the growth of NGOs commitment to work but lacked financial resources. It exerted pressure on Govt. and business.

The fourth Phase Managerial TrusteeshipLed govt. give tax concessions to corporate involved. 1977 Sect.35 CC 100% redn for exp. On approved programs of Rural Dev. - led to variety of activities. (schools adoption, etc.)1980 business fortune increased - 84 tax incentives withdrawn as it was misused. JRD + realized importance of involving in social causes.He committed all Tata cos. to ethical behavior and programs of CD.He wanted Indian Cos. conduct as honest citizens He advised: next..

JRD Tata 1986 exhortationApart from donating for social causes, we can use our financial, managerial, and human resources to provide task forces for undertaking direct relief and reconstruction measures. This form of public community service would be expanded by the cooperative effort among members of various industries Create wealth, but also promote ethical and social goals of the community.Arvind Mafatlal Bhartiya Agro Industries foundationProvides both moneary funds and management inputs. He coined 3 As ANNA, AKSHAR & AROGYA (food, literacy and health)This period a swing from charity P to more direct engagement.

5th Phase CORPORATE CITIZENSHIP1990 Phenomenal growth in Corp Sector size, complex, sophistcn.1991 effect of LPG MNCs Growing importance of Business in community as a SH.Realized govt. alone cannot tackle social system. SO,Excel NGos in Rural (drought prone) Gujaratis sponsored trusts. The Lalbhais, Shroffs, Maftlal, L&T, HLL, Deepak F. Many felt, Trusts just played a facilitating role, leaving WB, IRDP etc. contribution was considered paltry v/v profits.Mangalore Chem & F L (MCFL) TN, AP (double crop, better water management, improved farm income)

5th Phase CORPORATE CITIZENSHIPSPIC Agro Tr. Scientific farming, Urea Brand image improved.MNC Coco Cola, Pepsi, Motorola CDA improved imageP&G cause related marketing and improved salesIMRD 93 survey adapting Credo blends CD report 70% into CD for selfless reasons, 50% concern for a specific group 20% benefit for organsn.

5th Phase CORPORATE CITIZENSHIPIMRB findings:

86% agree corporate have a social resp.Health & education the most chosen52% - mention employees as targets for SD 71% comm. Too19% policy on SD activities written, unwritten70% - involvement up where written policyDonation most preferred modeAll agree , does help in image bldg.

Developments in the WestGreece and Rome Breakup of self supporting kinship groups caused by urbanization led to state sanctioned measured to aid infirm, poor and disadvantaged. Middle Age Europe plethora of alms houses, orphanages, etc. Credit to Andrew Carnegie 1989 Gospel of Wealth No system could maintain complete equality between drones and bees. Private wealth was necessary, differential reward was necessary for progress. .. Capitalists reaped far more than they had sown .. So they owed it to society what is not their due

Developments in the WestJohn D Rockfeller, and several others arms length phil. let professionals better administer than owners of wealthSimilarly in Britain. No better impact on society, especially on R&D than the American foundations. The spirit of charity and service did not die with the rise of business Corporation, although institutionalization and talk of ROI may have obscured the fact.

Post Liberalization India & global impact on CD the disparity Globalization had a worrisome impactUS $700 bn B/out = 155 countries GDP250 yrs ago Rich countries only 5 times richer than poorest76 Switzerland 52 times richer than Mozambique, in 2000 it was 508 times richer. UN Development Report of 2003:Indias expenditure on human priority concerns basic, education, primary health care, child nutrition, is very low investing far too little, it has to explore other avenues, one such is Corporate Sector.

Amartya Sen:The central issue is to expand the social opportunities open to people. In so far as counter productive regulations and bureaucratic controls compromise the opportunities, the removal of these hindrances must be seen to be extremely important. It is much more than freeing markets. It calls for expansion of educational and health care facilities, nutritional support and security. It also demands a general political, economic and social program for reducing the inequalities that blot out opportunities from 100 millions of Indian citizensThough private bus phil. Or social action can never match or supplant the resources or services provided by the State, its value lies in providing plurality of funding, and In the quality of its support innovative, flexible and or direct consequence.

CD NEW RELATIONSHIP.Globalization entails a new relationship bet Govt business and society.World class business recognizes this implicit in the now universally accepted imperative to make development SUSTAINABLE. In Feb 1990 PWBLF (Prince of Wales Bus Leader Forum -supported by Europe, N & S America & Asia) registered In UK as an international education charityINDIA Centre for Corp Phil, Bus Comm Fndn, Action Aid, Centre for Adv. Of Phil, ND, work in close cooperation with corporate to make them more socially responsible.

Main reason for recognizing Communityas a SHIt is long term educated self-interest, not altruism. It has now become a strategy for gaining competitive adv. And a vehicle that helps it achieve its str. Goals. - commercial applicability of good reputation- can reap a reputation al dividend- proven by consumer experience- no longer smoke & mirror attitude can succeed. - can see through perceptions and reality GAP is visible.- implies a deeper and wider engagement.

Main reason for recognizing Communityas a SH- Cos get new insights ito these societies and increase u/d of the new environment. will make them more politically and culturally sensitive. Concept of giving enlarged incl. contribution of fin, managerial, organizational, and personnel resources to the comm. BEING A GOOD CORP CITIZEN MEANS, CONTRIBUTING BACK TO THE SAME COMMUNITY THAT GENERATED YOUR PROFIT The Dessana story

CD Difference between Old &New conceptsFirst,While the former result of personal interest of phil. Of founder / owner, the Latter considered decision by the Board and part of Corp policySecond, latter eschews the older practice of endowing institutions in favor of direct involvement in CDConcept of CSR involving maximization of profit is modified

CD Difference between Old &New conceptsYes, although profits ok, but it has to be along with social and economic goals to receive attention.Increasing pressure on corporate to play a more explicit role.Create a dynamic relationship between C and B. putting backYes, of course, it is self-interest

conclusionBusiness is steadily being drawn into the new relationship with community, voluntary organizations, govt, local and international levels, and economic and social development.

Chief reason: decline of the role of nation state, the contracting role of govt, the expanding role of business, and the emergence of an organized voluntary sector and a changing intellectual climate within companies.

DO YOU AGREE ???

Generations of CSRNot in your new book, but u can go through

Generations of CSRIntroduction:Need for a stable environment, (not as a result of 1990 mismanagement and guilt), was envisaged much before1970 perceptible capacity of business to respond to social pressures. focus from phil. To managerial actionNow more mainstream and leadership cos have become more focus, -- restrictions and contradictions imposed by a limited approach, has led to more ambitious in tackling issues. Simon Zadek (2001) CSR dev in terms of 3 G.

1st Generation of CSRShowed cos. Can be responsible in ways that do not detract from, but may contribute to commercial success.- manifested as traditional and corp. phil.Many cos. Have played significant role in local communities.The most prominent changes include:

adoption of a str. App. To phil. Aligning charity with core bus. Int.Expansion of geog. Focus,/ needs & exp. Of global workforceDev. Of measurement tools for evaluating impactInnovation in the ways cos. Incorporate greater SH participation, create long term relationships with non-profit organizations, and do programs accordingly.

The Second GenerationCos see CSR as an integral part of their l,ong term business strategyCitizen CEOs have been crucial in moving cos. Towards 2nd G.The LT BL str. Addresses Q how should a firm compete in a given business? or tactically behave in order to survive and prosper in the market that it has chosen to enter.The natural hierarchy of goals and str. Becomes obvious.An orgn. Does not set goals in isolation, but thru a process of careful planning and integration into larger environment and interactions among subdivisions. So optimal coordination and integration is needed.

A third generation of CSR a vision??Is needed to make a significant contribution to addressing poverty, exclusion and environmental degradation. This is beyond voluntary approaches, to cos. Influencing the market in which they operate and re-mould them into sustainability.Involves partnerships with civil society, changes in public policy, which both rewards CSR and penalize poor performance. May need changes in tax regime, mandatory social and env. Reporting and support for consumer educaton. Raises Q on parameters of resp. lines where to draw? Corp, publlic, civil actors to deliver public good.

A third generation of CSR a vision??What will become of the leading lights? What pathway to adopt.What wd be conditions under which emerging relationships be?What about critics?At present, can we say 3G is a vision? But clearly we are all DELAYED.

Definition of CSRBuchholz 1921 identified 5 elements1. Corps hv resp. that go beyond the production of g/s at a profit.2. These resp. involve helping to solve important social problems, esp. those they have helped create.Corps. Have a broader constituency than Stockholders aloneCorps. Have impacts that go beyond simple marketplace transactions.Corps. Serve a wider range of human values than can be captured by sole focus on economic values. A/g to Wood 1991, the basic idea of csr is that bus and society are interwoven rather than distinct entities.

Certain principlesPrinciple of legitimacy - - societys granting of legitimacy and power to business, and bus. appropriate use of that power & possibility of losing that power.Principle of public responsibility - - Bus resources - for outcome related to areas of its involvement with society. Principle of managerial discretion moral actors who are obliged to exercise such discretion as is available to them to achieve socially responsible outcomes. The Concept genesis:businesses exist at the pleasure of society and their behavior and MoOp must fall within guidelines set by itBs act as moral agents within society.

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The Business Case for CSR

The Social Responsibility debate THE CASE FORExistence of Business depends on its acceptance by society.A social resp. role shd be u/taken in order to prevent some public criticism and discourage further govt. involvement in reg. There is a need for social participate in the complex systemBeing socially resp. will simply be profitable esp. in the LT A poor social resp. role means poor mgmt to some investorsBus to realize that social problems can become opportunities, and lead to profits

The Social Responsibility debate THE CASE FORWith re: to this, Co shd take a LT rather than a St viewBus shd concern with public image and the good will generatedBus shd be given some opp. To solve social problems cannot do any worse than govt. Better take a proactive rather than a reactive role Prevention v CureBus people are also concerned citizens and humans & cannot ignore social issues.

The Counter ArgumentFriedman 70 Role specialization of institutions. E.g. econ. Inst. Shd specialize in econ. Sphere, and socially resp. behavior will be rectified by market through profits. Only one resp. i.e. to maximize profits of its owners (to protect their property rights).Legal entities incapable of value decisions. Manager who diverts funds for SC is diverting econ. Efficiency and levying illegal tax on orgn.

The Counter ArgumentOthersOnly profit otherwise distorts allocation of resources.Only resp. to shareholders, & no authority to operate socially.SR is jurisdiction of govt. and not businessBus. Lacks training in social issues, & skills reqd. not competentSR as another excuse to let big business increase its powerMay lead to inappropriate domination contd

The Counter Argument (contd)Bus. Involvement in social matters only increases costs, even social costs i/o decreasing them. May lead to bus. FailuresThere is no ack. Source of reliable guidance or policy for bus in SR questions, and not easy to make choice bet. Res. & selfish action. It is an elusive concept for which few stds. Are a/v

The Counter Argument (contd)As inst. In society, BC cannot be held a/ble for their actions In a way sufficient to satisfy demands for social involvement. There is divided support in bus. Com. For social involvement, and hence unlikely to be a very satisfactory treatment to issue.E.g. Amoral view, personal view etc.

An alternative approach to CSRProposed by Freeman and Liedika 1991.Claim that conversations about corporations and the good life have been hampered by the concept, and a new form of conversation is necessary. They proposed the flg. conversation.THREE PROPOSITIONS FOR NEW CONSEVATIONS.1. Corp. are connected networks of SH interests. To include suppliers, employees, consumers among others making them legitimate partners in the dialogue

An alternative approach to CSR2. Corp. are places in which both individual human beings and human communities engage in caring activities that are aimed at mutual support and unparalleled human achievement. This pushes us beyond the language of R& R to a focus on the ethic of care, which recognizes needs and affirms the self and it linkage with others. Pr. 3

New Propositions contd.Prop. 3Corp. are mere means through which human beings are able to create and recreate, describe and re-describe, their visions for self and community.This urges us to see the projects of self creation and community creation as two sides of the same coin, and see in institutions many possibilities for different ways of living together to pursue the joint ends of individual and collective good.

Related Economic & SR conceptsOther terms and concepts have emerged.CORPORATE CITIZENSHIPViewed as a citizen, because of its econ. And social influence. A way of serving a variety of SH.Based on nature and quality of various SH inputs and the practices corporations use to develop relationships with SH.

Related Economic & SR conceptsAspects of multi-disciplinary nature of CS include:Basic values, policies & practices e.g. dev of value statements, CoE, sust. Str. And governance practicesMgmt. of social, ethical and env. Issues within Co Value ChainVoluntary contr. Made towards econ. And soc. Dev. Of comm.The u/s of SH relationships thru soc. And env. Reporting, social auditing, and SH consultation.

CORPORATE SUSTAINABILITY

This is a bus. Approach that creates LT Sh H value by embracing opp. And managing r4isks deriving from econ.env. And soc. Dev. These leaders achieve long term sh. H. value creation by gearing their strategies and management to harness the market potential for sustainability products and services while at the same time successfully reducing and avoiding Sus. Costs and risks.

CORPORATE SUSTAINABILITY

These can be quantified and used to identify and select leading cos. For investment purposes. Leading sus. Cos lead their industries and set industry wide best practices in the following areas: straegy, innovation, governance, shareholders, employees and other SH.

Triple E Bottom LineTriple E economic, ethical and environmental BL evaluates a corp. performance a/g to a summary of econ. social and env. Value the corp. adds or destroys. The narrowest meaning of the term is a framework for measuring and reporting C perf. Against econ. Social and env. Indicators. A recent broader meaning attributed is used to capture a whole set of values, issues and processes that corps. Must address in order to minimize any harm resulting from these value adding or destroying activities. This includes clarifying the corp. purpose and taking into consideration all SH.

ConclusionCSR is a reflection of the fact that bus. And society are inter-woven and can be expressed in terms of 3 principles:Legitimacy, public resp. and managerial discretion. The debate on CSR has not been resolved to date1In recent years, the ethical and phil. resp. have received more attention. Soc. Resp. has evolved and today there is other terminology being used to describe the concept.This terminology includes C Citizenship, Cor Sustainability and Triple Botoom Line.

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NEW SECTION DRIVERS AND MODELS OF CSR(part of it in new book)

DRIVERS AND MODELS OF CSRFactors driving CSRGlobalization and associated growth in competitionIncreased size and influence of companiesRetrenchment or reposition of govt and its roleWar for talent; cos. Competing for expertiseGrowth of global civil society activismIncreased importance of intangible assets

Zadek S., Puran P and R Evans 97:Main drivers are Values, Strategy & Public pressureLets see what these are:

Values:Businesses u/s not only for wealth creation, but also for social and environmental goodsStrategies:Being so, they are socially and environmentally responsible for str. Dev. Of a company.Public pressure:Consumers, media, the state, the deprived in the society become more active.

The above, may in general be a traditional view, but today, several factors motivate cos, especially SH management. Hence CS Performance, Corp env. Mgmt, consumer pressure, risk management and sustainability, business ethics, attracting employees and personal values. Media exposure, env. And health related incidents causing public anxiety, and local community conflict CSR has risen up in Cos list of priorities.

Stakeholder ManagementStakeholders have been defined as: (Freeman 2001).. Groups and individuals who benefit from or are harmed by, and whose rights are violated or respected by corporate actionsSH model of the Corporation (Donaldson & Preston 95)FIRM: Investors, employees, political group (s), customers, communities, govt., suppliers, trade associations. Society? Who? Wide range, expectation & demands. CSR to address wide ranging, and constantly changing set of demands.Integrate concerns into business activity Clarkson (95) Redefining the Corpn project, a ten-year endeavor to set out a process-and-dialogue-based approach in decision making.

Corporate Social Performance (CSP)Good relationship between CSP and strong financial perf. That is strategic CSR, if only it can profit also from its good works.Today, increasing interest in TBL gain, not just economic value, but benefit accruing from engaging in env. And socially beneficial practices. These triple lines representTHE ECONOMY, THE ENVIRONMENT AND THE SOCIETY, sustainability and are all dependent on each other. Cos. Are convinced about this now. For e.g. CSR is a powerful way of making sustainable competitive profit and achieving lasting value for the shareholder as well as SH. CSR and reporting thereof is a win-win opportunity, for everyoneSocially responsible business practices contribute to corporate productivity and profitability (Business for SR 2002)See p 49 for survey results on studies.

Corporate Environmental Mgmt (CEM)Increased focus today. 60s they coped after the crisis by some damage control, 70-80s they simply tried to minimize costs associated, 90s more active interest in pro-active strategies, studying env. Impacts of waste, measures to reduce them. Initiatives like TQEnv. Mgmt emerged further.

CONSUMERSConsumer pressure (this is likely to increase in the future) centered on protection of env. Campaigns to stop deforestation, protect human and animal rights, safeguarding jobs, inclusion of minorities, and behavior of Cos operating in developing world.P51. Brent Spar affair Shell operations in Nigeria consumers asking Co to find solutions to local political and societal problems. (though it is outside their sphere of influence and indeed outside the consumers experience.

RISK MANAGEMENTDifferent SH different strokesCos problems, also working in Dev. Nations or with bad practices.Media glare forces Co. to behave transparently increasingly, and in their disclosures, and a commitment to improve. Sustainability 1987 Our Common Future report Brundtland RS meeting the needs of the present without compromising the ability of future generations to meet their needs . RIP (nk)s inextricably linked to resource usage. (See Toyota newscutting)

Business EthicsFieser 2001: the field of BE examines moral controversies that commonly arise in the business world. These include the social responsibilities of capitalist business practices, the moral status of corporate entities deceptive advertising, insider trading, basic employee right, job discrimination, affirmative action, whether drug testing violates privacy and whistle blowing.Defining feature: moral standard. In a global business world, increasingly becoming difficult to define as varying cultural and legal standards are brought to bear on business decisionsCorporate: Ethics officers, workplace ethics teams. Articulated thru:: integration of core values, SH interactions, vision statements, social audits, and other forms of social performance measurement and reporting.

EmployeesInvest return with loyalty & productivity.How? provision of childcare facilities, flexible work hours, job sharing, medical care; workplace is from local community. Use them also in CSR. With CSR Cos are more likely to attract skilled and high quality labor, with high self-image, (A Study report) e.g. Microsoft, IBM GM, more closer TATAs, ITC.PERSONAL VALUES:People carry out Social work for moral reasons also (dxbd as discretionary, voluntary or philanthropic. This is beyond the economic confines of SR in helping common good. This is not restricted to rectifying Co. created harms, but also outside. Called as Corporqte Citizenship. Approach (Qd by commentators Milton Friedman) The social resp. of business is to increase profifts Why involve? Others argue fundamentally the right thing to do.

MODELS OF CSRWhat are the parameters and legitimacy?Ethical: Cos responsible to ind. And groups where it might inflict actual or potential injury, mental, econ. Spiritual, emotional, physical). Even if 2 parties involved, it may affect other SH.E.g. when closing or relocate a plant, or low sales, etc. minimize loss, (obviously if it is a better proposition) solve by severance pay or advance notification).Ethics edicts overrides self interest, even if actions are non-profitable.Trade Offs which SH to maximize or minimize? E.g. money spent on pollution may reduce dividends. Empirical evidence good ethics is good business. Attracts attention image enhanced. Also, some allow O/S or suppliers manage sweatshops. We do seem to have many ethical controversies / debates these days.

Altruistic CSR

Or Humanitarian caring even with sacrifice. Fourth face of GCS giving back.Demands that Corporate alleviate public deficiencies urban blight, drug alcohol, crime illiteracy, education etc.. DeGeorge 90 no moral obligations only alleged social obl.Involves incorporating Co core competencies to societal & community needsQuality of Life issues incl. job training, rebuilding inner cities, renovate parks, cleanup, education, healthcare (primary)Business is a major social institution that shd bear the same kind of citizenship costs for society that an individual citizen bears Davis 83. Altruistic or affirmative? (correction of social injury). Best avoid controversial issues. Friendman 96 settling personal issues arising out of conflict between managers and shareholders. An agency problem.

Strategic CSRStr. Philanthropy (Carroll, 2001) good deeds are good for business. It is in their best financial interests to give back. ? Ph.. Aligned with profit motive? Market favor perceived socially resp. behaviour. SH outside the stockholder group are viewed as means to the ends of maximizing shareholders wealth (goodpaster 96)Short run pains (costs) long run gains).View it as Goodwill bank (Vaughn 99), an asset, nurture it and grow. E.g. Ford gave 1 mn booster seats safe ride for children. Bldg. a destitute house, garden local park renovation, helps.NOVAKs Responsibility list outside business (next)

3 of Novaks extra-legal social resp. wd appear to benefit society directly.1. Communicate frequently and fully with investors, share holders, cust, employees & other const. to gain their support. 2. Establish within firm a sense of community and respect for the dignity of persons, which shd foster motivation, teamwork, fulfilment, and hence productivity.3. Protect the moral ecology by accepting some resp. for TV programs in which they advertise avoiding shows laced with sex, violence and denigration of either business or religion

ConclusionSociety has wide range of people who have interests, expectations, demands as to what Cos ought to provide, and ways they should behave. Cos. Embrace this group and also wove them in their decision making. The motivation is to u/s wide ranging and changing set of demands.

Developing a CSR Strategy

Typology of Corp Prog to Promote CSRIntroductionCSR programs connected to:- HR / Labor & Human Rights / Corp Structure & GovernanceBusiness ethics / Env. Mgmt / Community involvement & Economic Involvement / Accountability CSR programs Categories and types

Typology of Corp Prog to Promote CSRMost of tasks are not industry specific, but activities by any Co. Hwr, there are a few consulting (Brokering) firms,- with core competency - (social inv. Firms and social entrepreneurship. Work on compliance, monitoring and reporting standards, assessment and measurement functions. Social Entrship Social VC build business models.

Trends in Program DevelopmentAs in any other world, CSR programs trends also develop over time. These trends include, branding, CC fit, partnerships, O/S and integration. Branding signature programs helps positioning & advtg. E.g. ToI lends its name for NGOsCC Cos, lend e.g. product, HR and equip. Paper industry forestry programAn educational product Co. can tie up with some M. Inst. A base to start with providing material aid to NGOs.I

Promotion of CSRHow to do it if there is a commitment and not a fashion fad1. Promotion a CSR-friendly social dialogue (in-house, access to info. Be promoted, Dynamic changes / Restructuring, relocation, M&A, TOvers, (co. boundaries to coincide ) what does presently MNCs do?Create a social dialogue (a) binary model, (b) build bridges between SH. And multiple logics, but risk of one SH many.Expand multiple w/o weakening the traditional social dialogue.

Promotion of CSR2. Rethinking the governance design, and implementation of the rules, processes and practices applied at Co. or society level. Take on board a diversity of SH, and hence a wide range of expectations and t/offs thereof. Build processes around it. Mutual enrichment what about mandate? Global? Or local

Promotion of CSR cond.Proposal 3Enabling the actors to play their roleTools, resources and skills r they sufficient? Solution prepare framework (institutional) Proposal 4Promoting the internal as well as external aspects of CSR.In an economy of decentralized production and NW cos, issues around job quality and health and safety provisions and working conditions of the employees of subcontracting cos. Play a major role in CSR policies.

Promotion of CSR cond.Proposal 5Identifying the dialogueJust on consumers, but also on other SH? A new way of doing business can be developed. Trust, transparency, internal and external auditing can create and foster successful dialogue and sustainable CG. Local municipalities and national governments, for example, have an important role to play in facilitating partnerships.

Promotion of CSR cond.Proposal 6Fostering CSR among SMEs:They do not have the human and fin. Resources. Esp. reporting tools consider it as an addl. Bur. Expenses. Cos. With sub-contractors can hv a strong influence on their suppliers by compelling them to standardize and label their practices, q, safety, env. increased dissemination.

Promotion of CSR cond.Proposal 6:Promoting CSR as a tool to anticipate change:Pro-active, preventive approach wd be beneficial to all SHPractices positioned in advance of restructuring can anticipate the effects on employees and prepare them for coming changes. Prior consultations and information with parties involved is necessary, before successfully restructuring.

Promotion of CSR cond.CONCLUSIONIn the bus. Climate of 21st century some identifiable factors that make some cos. More responsive to CSR.Currently a revolutions in governance characterized by empowerment and consultative action based on mutual respect and benefits. More creative, innovative strategies-methodologies creating win-win situation for all and communicate to others how consultative and collaborative model of change is really rofitable to all.

Monitoring & Measuring the Impact of CSR

Monitoring & Measuring the Impact of CSRSimple principlesMeasure fewer things betterMeasure what matters top 2 or 3 good metrics (HP energy optimization strategy penetrated new marks, or gain new customer segments or won big govt. contracts. How your CSR strategy can affect overall Bus strategy

Monitoring & Measuring the Impact of CSRCommunicate fewer metrics in multiple ways: Measure the same thing and articulate its value its dimension:A/g Based monetary inflow and outflow of cashFinancial in kind contributions covert into monetary termsQuantitative - no. of new energy savings products or sustainable ones addedQualitative types and descriptions of new energy saving products (story telling) ;; e.g. Dows, Toyota, NDTV

Monitoring & Measuring the Impact of CSRQuantitative toolsEmp. & customer surveysPublic attitude and trust surveysEmployee health and safety, reduction of waste, efficiencies in resource usage and production surveysSRI rankingsListings and rankings in SEs

Qualitative toolsPositive & negative media coveragePeer and expert evaluationShareholder dialogue and feedbackImage among financial analysts and regulatorsPerception about company amongst stakeholders. PRODUCT SALES GROW?

Measuring the impact of CSRIntroductionOne can name as many type of programs & activities, but difficult to draw quantifiable conclusions. 3 categories:1. Measuring magnitude of CSR at present time2. quantifying (Performance) the social and env. Impact of existing programs.3. Identifying, measuring and explaining cause and effect relationship between cos. Csr activities and their financial performance.

1. Measuring current order of magnitudeThere are no aggregate numbers a/v on CSR at present time.Global Reporting Initiative a coalition of corp, ngos, a/cy org, bus asscn, env. Prog, confirmedthere is a need to assess the uptake of CSR practices and aggregate and disaggregate data from various sourcesSome case studies and quantitative data is a/v. UN Global Compact website info. On 180 countries

Measuring CS & environmental performanceA plethora of M&A tools. Specific to a category, with govt. requiring certain reports of reporting, most voluntary, comparison and aggregation is difficult. Caux Round Table (25 countries) published Principles for Business 94.seeks to express a worldwide std. for ethical and responsible corp. behavior.Private sector developing its own stds. Is the a/g profession.American Inst. Of CPA, ICA Eng Wales, etc. KMPG 35% of worlds 250 biggest corporations now issue environmental reports. Good ex. Social investing field. KLD Res & Analy. FDI screens for alcohol, tobacoo, gambling, nuclear power, and military contracting involvement, env. Impact, charitable contribution, women and minority directors and managers and other issues.

3. Determining linkages between social & environmental outcomes and financial performanceMany managers & cos. Why should they be involved?Most believe, only a lproven cause-and-effect R between CSR activities & fin. Perf. Can dramatically increase CSR activity.Making the business case The search for a link is not concluded Despite, during past 25 years dozen studies done.A plethora of diff. methods quantitative KLD and TRI, Co. voluntary reporting, co. levels of phil. And manager surveys such as Fortune magazine Most Admired Lists, are compared to Financial statements.

Making the Business case

Making the Business case

MAKING THE BUSINESS CASEA. CRR as a source of competitive advantage:Not only measure, but how they can be conceived.How do they contribute to financial bottom line. Benefits, such as cost reduction, human capital, reduced regulations, access to capital, consumer demand, improved business conditions, and new market opportunities are frequently reported.B. Cost ReductionThru cleaner, more efficient technologies, recycling, pollution prevention, etc. Not only reduces input costs, but compliance and liability costs in the long run. E.g, 3M pollution prevention pays, Dow Waste Reduction always Pays 100 mn $ savings over the past decade.

C. Human Capital considerations imp. Competitive adv.ability to attract and retain employees, reduce emp. TO, incr. prody and quality of work. Greening & Turban prospective job applicants more likely to pursue socially resp. than othersD. Reduced regulatory oversightCos. With track proven record on CSR given less scrutiny and more free reign by both national & local govt. entities. US Fed Screening guidelines allows reduced fines for good CSRAnd an effective ethics programs in place.

E. Consumer demandConsumers patronize good CS and boycott cos. With poor reputation. Webside The Responsible Shopper alters cons. BehaviorScholars have compared consumer sensitivity to CSR ax cultures. Studies say women and people with left-leaning political orientations were more likely to develop sensitivity to Cos. Cos. Can capitalize this by using social and env. Perf. And build reputations and brand image.One way to do is to use cause marketing a strategy designed to promote the achievement of marketing objectives (e.g. brand sales) via co. support of social causes. Telco, Hindalco, Wipro, Indal, Canara Bank, Guj. Ambuja etc.

F. Improved conditions for doing business. Str. Community investment can enhance the capacity of a local env. Over the long term. Greater a/v of its natural resources, a better trained workforce, and a consumer market better able to patronize and sustain the business. ITC Rural Area E-Chaupal.

ConclusionMeasurement of CSR helps Bus to better align orgl responses to the requirements of the SH that they serve. Certainly useful for the CEOs and employees who devote precious time and resources in upholding their common commitment to society. Measurement in 3 categories1. Order of magnitude of CSR at present time. How many, on what scale, and in what specific ways2. Quantifying the social and env. Impact of existing programs, CSP that is3. identifying, measuring and explaining cause and effect relationships bet. Cos CSR activities & their financial performance.

New SectionDEVLOPING / OPERATIONALIZING CSR STRATEGY

Operationalizing CSRINTRODUCTIONFramework of Companies (forerunners) have evolved over a period of time. Specific approaches / strategies based on ethical beliefs (of founding fathers, business areas the cos. Operate, socio-econ. Environment, and opportunities over long periods)Hence no standard approach for operationalizing CSR possible.

DEVLOPING /Basic objective maximize Cos overall impact on society and SH.Business see CSR as more than a collection of discrete practices of occasional gestures or initiatives motivated by marketing, PR and other benefits. Rather it is viewed as a set of comprehensive set of policies, practices, programs thruout bus. Operations and decision making process.

DEVLOPING /Growing evidence now that CSR is not seen as only a cost to the bottom line amidst fierce competition and survival self interest.Seen as critical for protecting reputations, defending attacks, bldg. edge, as a overall business strategy, - to protect against sudden corporate downfalls. SO, IT IS CLEAR CSR requires fundamentally new approach and outlook. WHAT IS THAT? See next pg

DEVLOPING /CREATING NEW MINDSETBuilding self-reliance i/o just charity and welfareProcess & Brand driven than person centric or opportunisticMultiple goal paradigm rather than single goal profit syndromeTO GOVERNANCE

NOW, CREATING NEW PROGRMG PARADIGMS

StrategiesNOW, CREATING NEW PROGRMG /PARADIGMSEnablement (social benefit activity) will replace human excellenceInvolving in bldg. livelihoods rather than just funding that just creates dependence/loyalty)A more continuous partnership than sporadic act.Long term dev. Growth vs Sh T immediate results.

STEPS TO OPERATIONALIZE CSRINDIA PARTNERSHIP FORUM suggestsStep 1Mainstreaming CSR vision in the Art. Of Asscn.TATAs: The Co. shall hv among its objectives the promotion and growth of the national economy thru increased productivity, effective utilization of material and manpower resources & continued application of modern, scientific and managerial techniques in keeping with the national aspirations; and the Co. shall be mindful of its social and moral responsibilities to the consumers, employees, shareholders, society and the local community. The Co. may like to further emphasize the values and principles it stands for to set its own magnetic north

nStep 2Develop a Written Policy on CSR & make it available to the public domain.A critical step translating goals enshrined in AA.Building blocks for the same:A) Identification of drivers & barriers of changeInternal (to change) and views of employeesB) Ident/assessment of the core competencies of the co. in the broader socio-econ. Context. (e.g. IT Infosys?)C) Bldg. in the Strategic business case i.e. long term sustainability of efforts v/v profits object. Strategically B.inentreprenership.

cStep 2 (contd) D) Assessment of external environments (Legal context) Laws, fin. & trade regulations, Co Act, -- also u/s incentives available.- and globalization legal stds in Business ethics, L stds,etc& Dev. Context reports, speeches, thematic etc. priorities At National and Intl levels.Also bring in potential opportunities for bus. & social entrepship.IDENTIFY, MAP OUT / PRIOROTIZE FOR CORP. COLLABORATION WITH SH ANALYSIS AND MATRIX OF INTERACTION, SC, Serv. providers, then proximate SH (community), then broader definition of developmental needs and opportunities. (step 3 next)

Strategies STEP 3 Translating CSR into action (Critical)

Appoint resp. sr. exec. Reporting to CEOFormulate annual social investment planAllocate specific resources, funding criteria, ensure stability of fundingEstablish a good Internal Assurance system credibleProvide enabling environment emp. volunteeringFormulate policies to ensure equal access to empl. And promotion opp. Ax gender and culture, as employees remain the first charge of social resp. corp. behaviour.

cStep 4: Reporting, Experience Sharing, Mutl LrngInstitute a monitoring system tracking implementation, and evaluating impact eventually in the Annual ReportEncourage exchange programs for professionals.

Step 5: Those at advanced level of compliance, obtain certification from external rating/cerification agencies.

ROLE OF GOVT IN CSR

ROLE OF GOVT IN CSR

ROLE OF GOVT IN CSR

CSR is what organizations do of their own volition. Whilst govt. can provide leadership Promote greater transparency in the marketplace, creating an effective dialogue with SH.Pursue policy objectives using different tools.Introduce regulations, setting min. stds, where risks of harm or abuse are greatest. Establish codes of practice to encourage communities of interest to share information.

Recognize the need to avoid duplicating or displaying the contribution that public and private sector is already making. (contd next)

ROLE OF GOVT IN CSRDebate should not focus only on balance of arguments between a voluntary and regulatory approach. Subtlety is needed. Use intervention where it supports productivity and competitiveness, ensuring market mechanisms drive CSR dev. Work effectively. Focus on key policy concerns. Recognise the power of voluntary app.Not on govt. offloading its responsibility to P & P.Include SH, NGOs, consumers and investors.

ROLE OF GOVT IN CSRGovt. acting as a broker or providing funding to reflect the public policy interest e.g. in economic regeneration. Develop guidelines and standards using a regulatory approach.Recognize achievements, celebrate innovations, provide consistent framework, drive agenda forward, ensure policies are consistent and makes business sense. (contd

ROLE OF NGOs in CSRNGO orgn formally independent of State & Private sector.Its constitutional identity doesnt seek profit for individuals or shareholders. They u/s intricacies various policies and their consequences. They can generate a public mandate and so influence course of action. They can initiate action on irresponsible cos. They use following, inter alia, strategies:Research and reporting media exposureSR dialogue with MNCsSocial accountability standards and auditsShareholder activism shareholder resolutionsEconomic pressure boycottsSanctions / divestment selective purchasingGovt. Regulations supporting themLitigations bring law suits, and Norm Creation dev. Of Intl law.

Role of NGOsUniquely positioned to work at grass root levels, identify needs and matching response.They realize great benefits the corporate skills, time and resources and bring synergistic partnerships. Partnerships between govt. business and NGOs can accelerate pace of social development. CONCLUSIONBasic objective maximize impact on SH developmentGovt. action better if centered around productivity, competitiveness, transparency in the market to promote effective dialogue. Ngos advise on areas of approach will only accelerate the process.

BUSINESS Ethics & A VISION FOR STAKEHOLDERS

BUSINESS Ethics & A VISION FOR STAKEHOLDERS

HENRY FORDTHE HIGHEST USE OF CAPITAL IS NOT TO MAKE MORE MONEY BUT TO MAKE MONEY DO MORE FOR THE BETTERMENT OF LIFE.

PETER DRUCKERMANAGEMENT IS NOT ALL BUSINESS. MANAGEMENT EDUCATION MUST DEVELOP TO TEACH AND EXEMPLIFY THE VALUES, THE METHODS AND THE TOOLS FOR ALL LEADERSHIP.

BUSINESS Ethics & A VISION FOR STAKEHOLDERS

WHAT ARE THE BUS. CONSTITUENCIES WHICH MAKES ETHICS SO DESIRABLE?Customers ColleaguesemployeesShareholders Suppliers-Service providersBusiness partnersSociety

BUSINESS Ethics & A VISION FOR STAKEHOLDERS

THROUGH WHAT NORMALLY A COMPANY ANNOUNCES ITS ETHICAL CHARACTER?Vision StatementCreed Statement Style StatementM I P

BUSINESS Ethics & A VISION FOR STAKEHOLDERS

WHAT DO EACH ORGANIZATION TRIES TO SAY BY THESE STATEMENTSInnovativecreative high quality products fast & first to opportunityFocus on what is important open & candid all dealings with integrityAdhere to the highest standards of ethical and just conductHonest and integrity characterize our business activityHealth & well being of allProvide an environment where all can excelQ. ARE THEY LIVING UP TO IT?

BUSINESS Ethics & A VISION FOR STAKEHOLDERS

WHAT DOES A V. STATEMENT SIGNIFY FOR EACH CONSTITUENCY?Customers:Anticipating needs, superior products, continued investmentColleagues:Attract & retain excellence, no discrimination, good work environment, equal opportunity, objective evaluation, fair & objective, etc.Shareholders:Fair & attractive returns, prudent risks to get sustainable growth

BUSINESS Ethics & A VISION FOR STAKEHOLDERS

Business Partners:Fair, equitable, recognize mutual interests.Society:Responsible corporate citizens, actively initiate & support efforts for keeping health and environment, improve vitality of worldwide communities.All this with utmost integrity, adhering to the highest standards of ethical & just conduct

BUSINESS Ethics & A VISION FOR STAKEHOLDERS

Style Statement of a Business Enterprise that sets forth goals, commitments and foundations for Decision making, and sets forth guidance for achieving these goals: Go for global reach, harvest ideas, be first, focus resources on important challenges etc.To show restless discontent with the way we are today and pursue better ways to serve customers.These are best achieved thru teamwork, sharing information quickly, widely and candidly.Open communication, environment where true success is well rewarded.

BUSINESS Ethics & A VISION FOR STAKEHOLDERS

MANAGEMENT INTEGRITY POLICY (Expectations from employees)General Integrity:Compatible with local laws & regulations, honesty, integrity & characterPolitical Contributions:Not admissible unless satisfied with legalityProper AccountingAccepted a/g rules and regulations and controls. Truly reflecting transactions recorded. Fees /CommissionsShould represent fair & reasonable consideration for services.Payment to Govt. Employees or Officials.To influence decisions of a judgmental nature.Specific responsibilityReport, Consult, No violation allowed of any rules, no retribution, environment concerns to be fully complied with.

BUSINESS Ethics & A VISION FOR STAKEHOLDERS

OPERATING SPHERES WHICH CAN IMPACT THE ETHICAL ASPECTSGMPsbuild quality into products from the start instead of relying testing finished products.