CORPORATE SOCIAL RESPONSIBILITY

• Person going from one side of the canyon to the other… a lot of clouds like fog. The point is going from one way of doing business to another is very tough. There’s a lot uncertainty. It takes a lot of skill, but we have to lift ourselves beyond that, above the fog, and that’s not going to be a simple exercise. CSR is about seeing the forest, the fog, and seeing how we can get on the other side, and how we can be well-equipped for doing that. So probably we need to develop additional skills, knowledge, and understanding.”

DEFINITION OF CORPORATE SOCIAL

RESPONSIBILITY

DEFINITION

CSR is about how companies manage the business

processes to produce an overall positive impact on

Society.

“Achieving commercial success in ways that honour ethical values and respect people, communities, and the natural environment”

DEFINITIONS: CONCEPT AND PRACTICE

• Philip Kotler & Nancy Lee (2005)

“A commitment to improve community well-being through discretionary business practices and contributions of corporate resources”.

• World Business Council for Sustainable Development (WBCSD)

“The continuing commitment by business to behave ethically and contribute to sustainable economic development while improving the quality of life of the workforce and their families as well as of the local community and society.”

CORPORATE SOCIAL RESPONSIBILITY (CSR)

CSR in Equation Form Is the Sum of:

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

corporate citizen)= Corporate Social Responsibility

HISTORICAL PERSPECTIVE

From the 1950’s to the present the concept of CSR has gained considerable acceptance and the meaning has been broadened to include additional components.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Evolving Viewpoints

• CSR considers the impact of the company’s actions on society.

• CSR requires decision makers to take actions that protect and improve the welfare of society as a whole along with their own interests.

DRIVERS OF CSR

• The shrinking role of government

• Demands for greater disclosure

• Growing investor pressure

• Competitive markets

OTHER NAME’S FOR CSR

• Sustainable Development• Corporate Citizenship• Triple Bottom Line• Business Ethics• Sustainable Business Practices

PHASES OF CORPORATE SOCIAL RESPONSIBILITY

Frederick provides expanded framework for understanding the evolution of CSR concept Divided into 4 phases:-

• Corporate social stewardship, 1950s – 1960s• Corporate social responsiveness, 1960s – 1970s• Corporate/business ethics, 1980s – 1990s• Corporate/global citizenship, 1990s – 2000s

BENEFITS OF CSR

• Strengthened brand positioning.

• Enhanced corporate image. • Increased ability to attract, motivate, and retain employees i.e. less employee turnover.

• Increased sales and market share.

• Increased appeal to investors and financial analysts.

CRITISISMS OF CSR

• Nature of business• Motive• Ethical consumerism• Social awareness and education• Globalization and market forces• Ethics training• Laws• Stakeholder priorities

Corporate Social Responsibility Practices in India sets a realistic agenda of grassroots development through alliances and partnerships with sustainable development approaches. At the heart of solution lies intrinsic coming together of all stakeholders in shaping up a distinct route for an equitable and just social order.

Corporate Social Responsibility Practices in India

CSR EXAMPLES IN INDIA

TATA GROUPTata Group in India has a range of CSR projects, most of which are community improvement programs.For example :-

•A leading provider of maternal and child health services.

•Co. also endorses sports as a way of life.

•It has also organized relief program in case of natural disasters, including long-term treatment and rebuilding efforts.

•It also supports education and also is a benefactor of the arts and culture

Infosys is aggressively involved in a variety of community growth programs. In 1996, the company created the Infosys Foundation as a not-for-profit trust to which it contributes up to 1 percent of profits after tax every year. Moreover, the Education and Research Department at Infosys also works with employee volunteers on community development projects.The management team at Infosys continues to set examples in the area of corporate citizenship and has involved itself vigorously in key national bodies. They have taken initiatives to work in the areas of research and education, community service, rural outreach programs, employment, healthcare for the poor, education, arts and culture, and welfare activities undertaken by the Infosys Foundation.

Infosys

At Mahindra & Mahindra, The K. C. Mahindra Education Trust was established in 1953 with the purpose of promoting education. Its vision is to renovate the lives of people in India through education and financial assistance across age groups and across income strata. The K. C. Mahindra Education Trust undertakes a number of education plans, which make a difference to the lives of worthy students. The Trust has provided more than Rs. 7.5 crore in the form of grants, scholarships and loans. It promotes education mostly by the way of scholarships. The Nanhi Kali (children) project has over 3,300 children under it and the company aims to increase the number to 10,000 in the next two years by reaching out to the underprivileged children, especially in rural areas.

Mahindra & Mahindra

CSR – A NEW PARADIGM

To think comprehensively and systematically about• The role of business in development.• The manner in which the business is conducted.• Corporate Governance• Poverty alleviation• Corporate contribution to peace and war against

terror.• Business, government and civil society

partnership- common ground and collective action.

NEW CSR LAW

The new companies bill, passed by one of the two houses of Parliament, prescribes the following CSR rules for companies:

Who: every company with a net worth of Rs. 500 crore or more, or turnover of Rs.1000 crore or more, or a net profit of Rs.5 crore or more during any financial yearHow much: al least 2% of its average net profit in the last three years

Where: the bill lists nine broad areas, which encompasses much that results in social goods. Companies have to disclose how much they spend and where

How: a CSR committee comprising three directors from the board, with at least one independent director, shall formulate a policy, recommend a budget and monitor it

POSITIVES

• Growth in the CSR field – need for professionals etc.• Forcing legislation can bring about innovative

ideas in CSR• A more structured approach to social

initiatives• Gives a roadmap for companies that would

join the circle in future

NEGATIVES

• Can be seen as a mere tick mark exercise• Forcing legislation can be a put-off for

companies that are already doing their part in the CSR area• Increased Green washing – Tainted

companies can make themselves can come clean and look good

MOVING TOWARDS CSV

CSV stands for creating shared value

-First appeared in HBR article “strategy and society” written by Michael Porter and Mark Kramer.-The central premise behind creating shared value is that the competitiveness of a company and the health of the communities around it are mutually dependent-CSR pit businesses against society, emphasizing the costs and limitations of compliance with externally imposed social and environmental standards whereas CSV acknowledges tradeoffs between short-term profitability and social goals, while focusing more on the opportunities for competitive advantage  from building a social value proposition into corporate strategy.

CSV

CSV, does not force companies to spend their profits but it points that :-

•A company’s goals must be in aligned with those of society•A company must be viewed as a Capital factory (not just goods & services one)•A company’s role as a community and•A  company as an institute of learning

If companies of all sizes – irrespective of their profits, start to weave these 4 strands into the fabric of their business models, some real tangible long lasting sustainable changes will happen – which are good for the businesses as well as environment and the society at large.