csr r

Business Ethics

Corporate Social Responsibility

IoBMCorporate Social Responsibility

Contents

Introduction.................................................................................................................................................3

What Is Corporate Social Responsibility?....................................................................................................4

Meaning and Definition...............................................................................................................................5

Need for Corporate Social Responsibility....................................................................................................6

Importance of CSR.......................................................................................................................................7

CSR in Today’s World...................................................................................................................................8

Implementing CSR.......................................................................................................................................9

Arguments of CSR......................................................................................................................................11

Measure for applying Corporate Social Responsibility..............................................................................14

The Five Capitals Model.............................................................................................................................17

Why do we need a framework for sustainability?.....................................................................................17

What is the Five Capitals Model?..............................................................................................................17

CORPORATE PHILANTHROPY & CORPORATE SOCIAL................................................................................22

RESPONSIBILITY:........................................................................................................................................22

SOCIAL COMPLIANCE , SOCIAL ACCOUNTABILITY......................................................................................23

&CORPORATE SOCIAL RESPONIBILITY:......................................................................................................23

BENEFITS OF CSR:......................................................................................................................................25

DEVELOPING CSR POLICIES:.......................................................................................................................27

CHALLENGES OF CSR AND ITS SOLUTION:.................................................................................................27

DRIVERS:....................................................................................................................................................29

HOW TO DEVELOP AND IMPLEMENT CSR INITIATIVES:.............................................................................30

HUMAN RESOURCE AND COMMUNITY RELATIONS:.................................................................................31

CONCLUSION.............................................................................................................................................34

REFERENCES :............................................................................................................................................36

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Introduction

As the pace of industrialization quickenedemployers became more and more concerned with the loss of productivityefficiency due to avoidable sickness or accidents or stoppage of work due to bad personal relationships. This gave rise to the idea of a welfare state, which was further strengthened by the growth of democracy and of respect to human dignity during the last 150 years. The frame work of a welfare state and with it the concept of social responsibility have thus come to stay in many countries of the world.The changing image of business in the recent years has lent further support to the idea of social responsibility. Some public opinion polls in the 1960’s and 1970’s in United States have left businessman disenchanted. These polls have revealed that the businessman is viewed as an individual who does not cares for others, who ignored social problems, who preys upon the population, who exploits labor, and who is a selfish money grabber. On the other hand, until these opinions were unveiled, the businessman in America believed that others viewed him as he viewed himself, as a practical, down-to-earth, hardworking, broadminded,progressive, interesting and a competitive free enterpriser. He believed that the society looked up at him as a self sacrificing community leader, pillar of society, generous to a fault, great supporter of education, patron of the arts, in short, the salt of the earth. Indeed, the businessman in the pre-poll days thought of himself as a happy mix of Plato, Gandhi, and Churchill.

What Is Corporate Social Responsibility?

Corporate social responsibility (CSR) is a form of

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business self-regulation to incorporate social and environmental concerns. It represents a business model that adheres to laws, ethical standards, andinternational norms. As part of the business model, businesses have to take into account the impact of their activities on the environment, employees, communities, stakeholders, and other members of the public. In short, CSR represents the deliberate inclusion of the public’s interest in a business’ decision making to ensure a triple bottom line that considers the planet, people, and profits. In general, CSR involves some kind of standardized reporting that allows the business to collect information on how it is making progress on various fronts. Businesses that engage in

CSR typically focus on some or all of the following:

· Environment: This requires a look at the environmental impacts of products and services, as well as what the business does outside the company to improve the environment.

· Employees: It’s important to ensure that all employees are cared for adequately. Businesses usually focus on workplace conditions, benefits, living wages, and training.

· Communities: Engaging the surrounding communities is an important part of not just creating good human capital that can serve the business, but also securing a reputation that can further establish the business.

· Regulations: Respecting regulations to the fullest and often exceeding them is part of being socially responsible.

· Crisis Preparedness: Being ready to address business crises and ensure safety for employees and surrounding communities is critical. Having plans ready and tried are important in ensuring minimal losses during times of crises.

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Meaning and Definition

CSR is about how companies manage the business processes to produce an overall positive impact on society.

Companies need to answer to two aspects of their operations.

1. The quality of their management - both in terms of people and processes (the inner circle).

2. The nature and quantity of their impact on society in the various areas.

Outside stakeholders are taking an increasing interest in the activity of the company. Most look to the outer circle - what the company has actually done, good or bad, in terms of its products and services, in terms of its impact on the environment and on local communities, or in how it treats and develops its workforce. Out of the various stakeholders, it is financial analysts who are predominantly focused - as well as past financial performance - on quality of management as an indicator of likely future performance.

Other definitions

The World Business Council for Sustainable Development in its publication "Making Good Business Sense" by Lord Holme and Richard Watts, used the following definition. "Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large"

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The same report gave some evidence of the different perceptions of what this should mean from a number of different societies across the world. Definitions as different as "CSR is about capacity building for sustainable livelihoods. It respects cultural differences and finds the business opportunities in building the skills of employees, the community and the government" from Ghana, through to "CSR is about business giving back to society" from the Phillipines.

On the other hand, the European Commission hedges its bets with two definitions wrapped into one: "A concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment. A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis".

Need for Corporate Social Responsibility

1. A societal approach to business is the contemporary business philosophy, which demands business organizations to be responsive to the social problems.

2. As a result of globalization of business, global companies and MNCs operate in a big way in their host countries. In order to establish a good corporate image, they include social responsibility as a corporate objective. Indigenous companies are forced to follow suit for maintaining their corporate identity.

3. In the terms and conditions of collaborations agreements, very often, social welfare terms are included which necessitates the collaborating company to take up social responsibility of business.

4. On the basis of legal provisions, companies have to concentrate on social problems. For example an industrial organization in India must obtain a certification from Pollution Control Board.

5. Corporate donations of social welfare projects of approved NGO’s are exempted from income tax in India.

6. An organizations commitment to social responsibility creates a good corporate image, and there by a better business environment.

7. Social responsibility of business enables the organization to improve its product positioning and thereby improve its market share.

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8. Very often situations demand due to natural calamities, accidents and so on. For example, gas leak at the Union Carbide plant in Bhopal, wherein the company had to monetarily compensate through medical treatment.

Importance of CSR

CSR is an important business strategy because, wherever possible, consumers want to buy products from companies they trust; suppliers want to form business partnerships with companies they can rely on; employees want to work for companies they respect; and NGOs, increasingly, want to work together with companies seeking feasible solutions and innovations in areas of common concern. Satisfying each of these stakeholder groups allows companies to maximize their commitment to another important stakeholder group—their investors, who benefit most when the needs of these other stakeholder groups are being met:

I honestly believe that the winning companies of this century will be those who prove with their actions that they can be profitable and increase social value—companies that both do well and do good….Increasingly, shareowners, customers, partners and employees are going to vote with their feet—rewarding those companies that fuel social change through business. This is simply the new reality of business—one that we should and must embrace.

Carly FiorinaChairman and Chief Executive OfficerHewlett Packard Company

The businesses most likely to succeed in the globalizing world will be those best able to combine the often conflicting interests of its multiple stakeholders, and incorporate a wider spectrum of opinions and values within the decision-making process and objectives of the organization. Lifestyle brand firms, in particular, need to live the ideals they convey to their consumers:

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CSR is increasingly crucial to maintaining success in business—by providing a corporate strategy around which the company can rally, but also by giving meaning and direction to day to day operations.

CSR in Today’s World

CSR as a strategy is becoming increasingly important for businesses today because of three identifiable trends:

Changing social expectations

Consumers and society in general expect more from the companies whose products they buy. This sense has increased in the light of recent corporate scandals, which reduced public trust of corporations, and reduced public confidence in the ability of regulatory bodies and organizations to control corporate excess.

Increasing affluence

This is true within developed nations, but also in comparison to developing nations. Affluent consumers can afford to pick and choose the products they buy. A society in need of work and inward investment is less likely to enforce strict regulations and penalize organizations that might take their business and money elsewhere.

Globalization

The growing influence of the media sees any ‘mistakes’ by companies brought immediately to the attention of the public. In addition, the Internet fuels communication among like-minded groups and consumers—empowering them to spread their message, while giving them the means to co-ordinate collective action (i.e. a product boycott).

These three trends combine with the growing importance of brands and brand value to corporate success (particularly lifestyle brands) to produce a shift in the relationship between

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corporation and consumer, in particular, and between corporation and all stakeholder groups, in general.

The result of this mix is that consumers today are better informed and feel more empowered to put their beliefs into action. From the corporate point of view, the market parameters within which companies must operate are increasingly being shaped by bottom-up, grassroots campaigns. NGOs and consumer activists are feeding, and often driving, this changing relationship between consumer and company.

CSR is particularly important within a globalizing world because of the way brands are built—on perceptions, ideals and concepts that usually appeal to higher values. CSR is a means of matching corporate operations with stakeholder values and demands, at a time when these values and demands are constantly evolving.

CSR can therefore best be described as a total approach to business. CSR creeps into all aspects of operations. Like quality, it is something that you know when you see it. It is something that businesses today should be genuinely and wholeheartedly committed to. The dangers of ignoring CSR are too dangerous when it is remembered how important brands are to overall company value; how difficult it is to build brand strength; yet how easy it can be to lose brand dominance.

CSR is, therefore, also something that a company should try and get right in implementation.

Implementing CSR

CSR is about common sense policies that represent a means of integrating a complete ‘social perspective’ into all aspects of operations. The goal is to maximize true value and benefit for an organization, while protecting the huge investments corporations make today in their brands.

CSR asks companies to ensure their business operations are clean and equitable, and contribute positively to the society in which they are based. Otherwise, they leave themselves open to too much danger from a potential consumer backlash.

CSR is good business sense, and a total approach to doing business, in a globalizing world where companies are increasingly relying on brand strength (particularly global lifestyle brands) to add value and product differentiation, and where NGO-driven consumer activism is increasing.

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Many believe the issue of how corporations integrate CSR into everyday operations and long-term strategic planning will define the business marketplace in the near future. It will become a key point of brand differentiation, both in terms of corporate entities and the products that carry their brands.

Key steps on the road to integrating CSR within all aspects of operations include:

Ensure the commitment of top management, and particularly the CEO, is communicated throughout the organization

Appoint a CSR position at the strategic decision-making level to manage the development of policy and its implementation

Develop relationships with all stakeholder groups and interests (particular relevant NGOs)

Incorporate a Social or CSR Audit within the company’s annual report

Ensure the compensation system within the organization reinforces the CSR policies that have been created, rather than merely the bottom-line

Any anonymous feedback/whistle-blower process, ideally overseen by an external ombudsperson, will allow the CSR Officer to operate more effectively

Corporations today are best positioned when they reflect the values of the constantly shifting and sensitive market environment in which they operate. It is vital that they are capable of meeting the needs of an increasingly demanding and socially-aware consumer market, especially as brands move front and center of a firm’s total value. Global firms with global lifestyle brands have the most to lose if the public perception of the brand fails to live up to the image portrayed.

Integrating a complete ‘social perspective’ into all aspects of operations will maximize true value and benefit for an organization, while protecting the huge investments companies make in corporate brands.

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Arguments of CSR

Arguments offered in favor of CSR can be broadly split into two camps—moral and economic.

1. A moral argument for CSR

While recognizing that profits are necessary for any business entity to exist, all groups in society should strive to add value and make life better. Businesses rely on the society within which they operate and could not exist or prosper in isolation. They need the infrastructure that society provides, its source of employees, not to mention its consumer base. CSR is recognition of that inter-dependence and a means of delivering on that obligation, to the mutual benefit of businesses and the societies within which they are based:

CSR broadly represents the relationship between a company and the wider community within which the company operates. It is recognition on the part of the business that ‘for profit’ entities do not exist in a vacuum, and that a large part of any success they enjoy is as much due to the context in which they operate as factors internal to the company alone.

Charles Handy makes a convincing and logical argument for the purpose of a business laying beyond the goals of maximizing profit and satisfying shareholders above all other stakeholders in an organization:

The purpose of a business is not to make a profit, full stop. It is to make a profit so that the business can do something more or better. That “something” becomes the real justification for the business….It is a moral issue. To mistake the means for the end is to be turned in on oneself, which Saint Augustine called one of the greatest sins….It is salutary to ask about any organization, “If it did not exist, would we invent it?” Only if it could do something better or more useful than anyone else” would have to be the answer, and profit would be the means to that larger end.

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Advocates of CSR believe that, in general, the goal of any economic system should be to further the general social welfare. In advanced economies, the purpose of business should extend beyond the maximization of efficiency and profit. Increasingly, society expects businesses to have an obligation to the society in which they are located, to the people they employ, and their customers, beyond their traditional bottom-line and narrow shareholder concerns.

At a minimum, businesses operating in a community benefit from the infrastructure of that community (tangible, practical elements such as the roads, other transport infrastructure, the police, firefighters, etc) as well as more intangible benefits, such as a safe or clean environment.

But, in most cases, businesses also draw their most important resource, its employees, largely from the local community. Any business will be more successful if it employs a well-educated workforce that can attend good hospitals if they become sick, and who have grown up in a positive environment. This is not to mention consumers, also often members of the local community, without whom no business could survive.

CSR advocates point out that no organization exists in isolation. They believe that businesses, without exception, have an obligation to contribute as well as draw from the community, on which they rely so heavily.

2. An economic argument for CSR

An economic argument in favor of CSR can also be made. It is an argument of economic self-interest that there are very real economic benefits to businesses pursuing a CSR strategy—and is designed to persuade those business managers who are not persuaded by the moral case. Proponents of this argument believe that CSR represents an holistic approach to business.

Therefore, an effective CSR policy will infuse all aspects of operations. They believe the actions corporations take today to incorporate CSR throughout the organization represent a real point of differentiation and competitive market advantage on which future success can hinge:

CSR is an argument of economic self-interest for a business. In today’s brand-driven markets, CSR is a means of matching corporate operations with stakeholder values and demands, at a time when these parameters can change rapidly. One example is a company’s customers: CSR adds value because it allows companies to better reflect the values of this important constituent base that the company aims to serve.

CSR covers all aspects of a business’ day-to-day operations. Everything an organization does in some way interacts with one or more of its stakeholder groups, and companies today need to build a watertight brand with respect to all stakeholders. Whether as an employer, producer,

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buyer, supplier, or investment, the attractiveness and success of a company today is directly linked to the strength of its brand.

CSR affects all aspects of all operations within a corporation because of the need to consider the needs of all constituent groups. Each area builds on all the others to create a composite of the corporation (its brand) in the eyes of all stakeholder groups.

3. Arguments against corporate social responsibility

If the arguments for a socially responsible approach were widely accepted, nobody would even using the label "CSR" because everyone would be doing it. Those of us who spend our time marshalling the case for would do well to spend a little time hearing the case against, and considering what should be the response.

Of course, one of the challenges in considering cases "for" and "against" CSR is the wide variety of definitions of CSR that people use. We assume here we are talking about responsibility in how the company carries out its core function - not simply about companies giving money away to charity.

Below are some of the key arguments most often used against CSR and some responses.

Businesses are owned by their shareholders - money spent on CSR by managers is theft of the rightful property of the owners

The leading companies who report on their social responsibility are basket cases - the most effective business leaders don't waste time with this stuff

Our company is too busy surviving hard times to do this. We can't afford to take our eye off the ball - we have to focus on core business

It's the responsibility of the politicians to deal with all this stuff. It's not our role to get involved

I have no time for this. I've got to get out and sell more to make our profit line.

Corporations don't really care - they're just out to screw the poor and the environment to make their obscene profits

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http://www.mallenbaker.net/csr/against.php#antiprofit

http://www.mallenbaker.net/csr/against.php#antiprofit

http://www.mallenbaker.net/csr/against.php#sellsellsell

http://www.mallenbaker.net/csr/against.php#notourjob

http://www.mallenbaker.net/csr/against.php#notourjob

http://www.mallenbaker.net/csr/against.php#justsurviving

http://www.mallenbaker.net/csr/against.php#justsurviving

http://www.mallenbaker.net/csr/against.php#basketcase

http://www.mallenbaker.net/csr/against.php#basketcase

http://www.mallenbaker.net/csr/against.php#shareholdertheft

http://www.mallenbaker.net/csr/against.php#shareholdertheft


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Measure for applying Corporate Social Responsibility

Sustainability reporting

It is recommended that every company should publish a separate Corporate Sustainability Report (as per the Global Reporting Initiative (GRI) framework) along with their Annual Report. At the very least, every company must include a Corporate Sustainability section in its Annual Report (similar to the mandatory section on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo).

CSR philosophy to be defined and articulated

Every company must clearly define its own CSR philosophy and objectives, stating which issues it intends working on or contributing to. It is recommended that a company first takes up areas that directly concern its business processes, and thereafter any other related or unrelated issues. These can also yield strategic benefits to the company.

Minimum annual CSR expenditure

Every company must spend a minimum of 0.2% of its annual income on CSR activities. The CSR spending of a company should not be linked to the profit made by the company because this would vary from year to year and the CSR activities would thus not be consistently maintained.

The scale of operations of a company and its impact is connected with its sales, and not with its profits. The larger the company, the greater is the damage it is doing to the environment. Conversely, the greater is the company's ability to do good.

Protection and restoration of the environment

Every company must be engaged in CSR activities that minimise its harm to the environment, and which help restore damage done to the environment because of the company. For

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example, all companies should use energy-efficient technologies for their factories and offices, and adopt rainwater harvesting irrespective of the production process they are engaged in.

Employment for marginalized groups

Every company should provide inclusive employment opportunities and include the physically-challenged and marginalized groups in their workforce. The number of employment opportunities offered to such groups should be stated in the Annual Reports as is done by Public Sector Undertakings.

Local community development

It is recommended that a company first undertakes projects in the places where it functions, and helps those local communities and environments that are affected by its work.

Use of core competence

Every company should use its core competence to benefit its stakeholders and society. For instance, banks can use their expertise to identify and counsel debtors who are likely to run into financial trouble

Extending profile and area of businesses

A company should attempt to stretch its business beyond its existing profile and into areas where it does not normally work so as to reach out to under-served groups and populations. While this may sometimes mean smaller profit margins or marginal losses for the company, it will invariably result in valuable business learning's as well as effective CSR for the company.

Developing internal CSR implementation systems

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A company may choose to develop an in-house CSR team or division that undertakes the CSR activities for the company. This is desirable as it leads to greater sensitization and awareness within the company about it's processes, responsibilities, role, etc. and leads to the internalization of the company's CSR philosophy.

Instead of contributing to the trust of the CEO or the promoter family, a company should set up its own trust/foundation as a matter of proper business ethics.

It is recommended that a company set up a committee that includes an external Director, an NGO and local stakeholders for selecting, monitoring and evaluating its CSR activities.

Focused CSR activities for greater impact

It is recommended that a company identifies a few issues for it's CSR activities and works on these areas for a sustained period of time so that measurable results and improvements can be achieved, rather than undertaking or supporting several small initiatives across several areas thereby reducing effective impact.

The Five Capitals Model

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Why do we need a framework for sustainability?

Many businesses are struggling to understand the vast array of issues that are coming theirway. Climate change, poverty, resource depletion, peak oil, overfishingnot only does thelist seem to be growing, but the items on it seem to get more complex and bewildering bythe minute.That’s why a framework can be handy. It provides a simple way of understanding the fullrange of seemingly unrelated subjects, which can be handy if you’re a busy Chief Executive.

What is the Five Capitals Model?

The Five Capitals Model provides a basis for understanding sustainability in terms of theeconomic concept of wealth creation or ‘capital’. Any organisation will use five types of capital to deliver its products or services. A sustainable organisation will maintain andwhere possible enhance these stocks of capital assets, rather than deplete or degrade them.The model allows business to broaden its understanding of financial sustainability byallowing business to consider how wider environmental and social issues can affect long-term profitability.

Building a vision and links to existing policies

The Five Capitals Model can be used to allow organisations to develop a vision of what sustainability looks like for its own operations, products and services. The vision isdeveloped by considering what an organisation needs to do in order to maximise the valueof each capital. However, an organisation needs to consider the impact of its activities oneach of the capitals in an integrated way in order to avoid ‘tradeoffs’. Using the model in this way for decision-making can lead to more sustainable outcomes.

Natural Capital

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What is it?

Natural capital (also sometimes referred to as environmental or ecological capital) is thenatural resources (energy and matter) and processes needed by organisations to producetheir products and deliver their services. This includessinksthat absorb, neutralise orrecycle wastes (e.g. forests, oceans);resources, some of which are renewable (timber, grain,fish and water), whilst others are not (fossil fuels); and processes, such as climateregulation and the carbon cycle, that enable life to continue in a balanced way.

Why it is important to organisations

All organisations rely on natural capital to some degree and have an environmental impact.All organisations consume energy and create waste. Organisations need to be aware of thelimits to our use of the natural environment, and operate within them. Ways organisations can maintain and enhance natural capital

Substitute naturally scarce materials with those that are more abundant.Ensure that all mined materials are used efficiently wsystematically reduce dependenceon fossil fuelsuse renewable resources instead. Eliminate the accumsubstances and products in nature subspersistent and unnatural compounds withsubstances that can be easily assimilated broken down by natural systems. Eliminatewaste, re-use or recycleProtect biodiversity and ecosystem functions.Use renewable resources only from well manage and restorative eco-systems.thin cyclic systems and evaulation of man made titute all and where possible.

Human Capital

What is it?

Human capital incorporates the health, knowledge, skills, intellectual outputs, motivationand

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capacity for relationships of the individual. Human Capital is also about joy, passion,empathy and spirituality.


Organisations depend on individuals to function–they need a healthy, motivated andskilled workforce, for instance. Intellectual capital and knowledge management isincreasingly recognised as a key intangible creator of wealth. Damaging human capital byabuse of human or labour rights or compromising health and safety has direct, as well asreputational costs.

Ways that an organisation can enhance its human capital

Give employees (and where possible other stakeholders) access to training, development and life long learning and capture and sharing knowledge. Respect human rights throughout its operations and geographical regions. Understand and respect human values and their different cultural contexts. Ensure adequate health and safetyarrangements, incorporating physical and mentalwellbeing Use health promotion and education to support a high standard of health. Provide a reasonable living wage and fair remuneration for employees and businesspartners. Create opportunities forvaried and satisfying work. Allow for and enhance recreation time and support individuals’ active involvement insociety.

Social Capital

What is it?

Social capital is any value added to the activities and economic outputs of an organisationby human relationships, partnerships and co-operation. For example networks,communication channels, families, communities, businesses, trade unions, schools andvoluntary organisations as well as social norms, values and trust.

Why is it important to an organisation

Organisations rely on social relationships and interactions to achieve their objectives.Internally: social capital takes the form of shared values, trust, communications and sharedcultural norms which enable people to work cohesively and so enable the organisation tooperate effectively.Externally: Social structures help create a climate of consent, or a licence to operate,

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inwhich trade and the wider functions of society are possible. Organisations also rely onwider socio / political structures to create a stable society in which to operate: e.g.Government and public services, effective legal systems, trade unions and otherorganisations.Ways an organisation can enhance social capital

Provide safe, supportive living and working conditions, including family friendly policies. Source materials ethically and treat suppliers, customers and citizens fairly. Respect and comply with local,national and international law. Prompt and full payment of taxes and support of social infrastructure. Effective communication systems throughout the organisation, reflecting shared valuesand objectives. Minimisation of the negative social impact s of products and services [or maximisation of the positive…] Support the development of the community in which the organisation operates, includingeconomic opportunities). Contribute to open, transparent and fair governance systems.

Manufactured capitalWhat is it?

Manufactured capital is material goods and infrastructure owned, leased or controlled byan organisation that contribute to production or service provision, but do not become part of its output. The main components include buildings, infrastructure (transport networks,communications, waste disposal systems) and technologies (from simple tools andmachines to IT and engineering).


Manufactured capital is important for a sustainable organisation in two ways. Firstly, theefficient use of manufactured capital enables an organisation to be flexible, innovative andincrease the speed to market of its products and services. Secondly, manufactured capitaland technology can be used to reduce resource use and enhance both efficiency

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andsustainability.

Ways an organisation can enhance manufactured capital Using infrastructure, technologies and processes in a way that uses resources most efficiently. Modular manufacturing systems. Product to service shifts, for example leasing products on a continual service contract rather than a sell and forget approach. Reverse logistics and re-use and re-manufacturing systems. Zero-waste and zero emissions production systems. Industrial ecology –looking at synergistic production systems where one organisation’swaste streams are another’s resources. Bio mimicry –mimicking nature and natural processes in industrial processes andindustrial systems design. Improvements in product systems (eco-efficiency and eco-innovation). Sustainable construction techniques when looking at new infrastructure or offices.

Financial Capital

What is it? Those assets of an organisation that exist in a form of currency that can be owned ortraded, including (but not limited to) shares, bonds and banknotes. Financial capital(shares, bonds, notes and coin) reflects the productive power of the other types of capital.

CORPORATE PHILANTHROPY & CORPORATE SOCIAL

RESPONSIBILITY:

CORPORATE PHILANTHROPY

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Those activities that companies voluntarily undertake to have a positive impact onsociety, including cash contributions, contributions of products and services,volunteerism, and other business transactions to advance a cause, issue or nonprofitorganization.Donating money and other corporate resources to social causes.Corporate philanthropy refers to the practice of companies of all sizes and sectors makingcharitable contributions to address a variety of social, economic and other issues as partof their overall corporate citizenship strategy. Corporate philanthropy is a key component of a corporation’s broader socialresponsibility and includes cash gifts, product donations and employee volunteerism. Itserves as a major link between the corporation and its communities.

CORPORATE SOCIAL RESPONSIBILITY:

Obeying the letter and spirit of the law; mitigating or remedying operational harm; andsustainable development of natural resources. Achieving commercial success in ways that honor ethical values and respect people,communities, and the natural environment. Addressing the legal, ethical, commercial and other expectations society has for business,and making decisions that fairly balance the claims of all key stakeholders Companies that consciously integrate strategies that seek to maximize the creation ofenvironmental and social value within their core business models, operations and supplychains.

SOCIAL COMPLIANCE , SOCIAL ACCOUNTABILITY&CORPORATE SOCIAL RESPONIBILITY:

The idea of responsible business behaviour is far from new. But since the 1990s, increasingconcern over the impacts of economic globalisation has led to new demands for corporations toplay a central role in efforts to eliminate poverty, achieve equitable and accountable systems ofgovernance and ensure environmental security. In essence, the approach is to view business as

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part of society and to find ways to maximise the positive benefits that business endeavour canbring to human and environmental well-being whilst minimising the harmful impacts ofirresponsible business. The agenda that has resulted from these concerns has variously beencalled ‘corporate citizenship’, ‘corporate social responsibility’ (CSR), ‘corporateaccountability’ or simply ‘corporate responsibility’.As we all know, Corporate Social Responsibility (CSR) is an expression used to describe whatsome see as a company’s obligation to be sensitive to the needs of all to take account not only ofthe financial/economic dimension in decision-making, but also the social and environmentalconsequences.

1.SUSTAINABLE DEVELOPMENT:

ONE of the most significant developments in the field of CSR over the past few years has beenthe growth in public expectations that the companies not only make commitments to itsstakeholders in its business operations. The principle is closely linked with the imperative ofensuring that these operations are “sustainable”, that is, that CSR is recognised as not onlynecessary but also develop systems to manage implementation and systematically assess andreport on progress relative to those commitments. Corporate accountability encompasses thesystems a company establishes to develop policies, indicators, targets and processes to managethe full range of activities. The scope of operations for which companies are expected to beaccountable has increased dramatically in recent years to include not only company’s ownperformance but also that of the business partners and other actors throughout the company’svalue chain. The mechanisms a company uses to demonstrate accountability are varied andinevitably need to change and grow as a company evolves; at the same time effective systems forincreasing accountability generally allow the company to be inclusive, responsive and engagedwith its stakeholders.

2.CORPORATE ACCOUNTABILITY:

Accountability in its basic sense implies render-ing of accounts and, by extension, indicateanswer-ability to an external agency or group and, further, implies ensuring propriety, legalityand safeguarding public interest in satisfaction of the expectations of the external agency orgroup. Social Accountability suggests accountability to the people; this is a core value in ademocratic set-up. In a decentralised democracy the basic objec-tive is power to the people.Corporate accountability today spans emerging CSR issues like business ethics, diversity,marketplace behaviour, governance, human rights and labour rights as well as more traditionalareas of financial and environmental performance. Therefore, an increasing number ofcompanies are reporting publicly on their social, environmental and ethical performance, both asa communication to stakeholders and as a management tool. However, as this practice has onlybecome more widespread since the mid-1990s, there are as yet no standard formats to address

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thetype of information companies choose to report, or how that information is collected, analysedand presented.Effective and accountable management systems help companies shape cultures that support andreward CSR performance at all levels. As part of this effort, many companies are working toincrease accountability for CSR performance at the Board level. This can lead to changes in whoserves on the Board, how Directors handle social and environmental issues, and how the Boardmanages itself, and fulfils its responsibilities to investors and other stakeholders. Companies arealso seeking to build accountability for CSR performance at the senior management level, insome cases by creating a dedicated position responsible for broad oversight of a company’s CSRactivities. Finally, many companies are working to integrate accountability for CSR performanceinto actions ranging from long-term planning to everyday decision-making, including rethinkingprocesses for designing products and services and changing practices used to hire, retain, reward,and promote employees.At the same time, many stakeholders are becoming increasingly sophisticated in the type andquality of information they are demanding from companies. In an effort to meet these demands—as well as to strengthen the credibility of their social and environmental reports—somecompanies are choosing to have their reports externally verified. In doing so, the companiesrecognise that verification by a third party can add value to the overall social and environmentalreporting process by enhancing relationships with stakeholders, improving business performanceand decision-making, aligning practice with organisational values, and strengthening reputationrisk management.

3.CSR AND GOOD GOVERNANCE:

One of the most significant issues within the CSR agenda concerns the dynamic relationshipbetween CSR and good public governance. The limits both to corporate accountability throughlaw and to ‘voluntary’ CSR-related actions by businesses lie with the public good governanceagenda. Legislation to deal with worst case instances of irresponsible behaviour and to set aminimum floor for business conduct will not work in the absence of effective drivers forbusiness implementation and enforcement, whether they are market-based, or a result ofenforcement through the state..The need is to implement social, ethical and environmental policy (commonly known as codes ofconduct) through the development of objectives, programmes and mechanisms for monitoringsocial compliance performance.One very important aspect of ensuring social accountability is establishing social compliancethrough continuous audit and monitoring. The demand for increased corporate accountabilitytoday comes from all sectors. Thus social accountability ensures transparency, reduces

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leakages,forces proper spending of funds, generates trust and peace, and creates demand led improvementin services. In a sense, it is a continuing audit and a constant check on malfeasance.

BENEFITS OF CSR:

The scale and nature of the benefits of CSR for an organization can vary depending on the natureof the enterprise, and are difficult to quantify, though there is a large body of literature exhortingbusiness to adopt measures beyond financial ones found a correlation betweensocial/environmental performance and financial performance. However, businesses may not belooking at short-run financial returns when developing their CSR strategy.The definition of CSR used within an organization can vary from the strict "stakeholder impacts"definition used by many CSR advocates and will often include charitable efforts andvolunteering. CSR may be based within the human resources, business development or publicrelations departments of an organisation, of may be given a separate unit reporting to the CEO orin some cases directly to the board. Some companies may implement CSR-type values without aclearly defined team or programme.

1.HUMAN RESOURCES:

A CSR programme can be seen as an aid to recruitment and retention particularly within thecompetitive graduate student market. Potential recruits often ask about a firm's CSR policyduring an interview, and having a comprehensive policy can give an advantage. CSR can alsohelp to improve the perception of a company among its staff, particularly when staff can becomeinvolved through payroll giving, fundraising activities or community volunteering.

2.RISK MANGEMENT:

Managing risk is a central part of many corporate strategies. Reputations that take decades tobuild up can be ruined in hours through incidents such as corruption scandals or environmentalaccidents. These events can also draw unwanted attention from regulators, courts, governmentsand media. Building a genuine culture of 'doing the right thing' within a corporation can offsetthese risks.

3.BRAND DIFFERENTIATION:

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In crowded marketplaces, companies strive for a unique selling proposition which can separatethem from the competition in the minds of consumers. CSR can play a role in building customerloyalty based on distinctive ethical values. Several major brands, such as The Co-operativeGroup and The Body Shop are built on ethical values. Business service organisations can benefittoo from building a reputation for integrity and best practice.

4.LICENSE TO OPERATE:

Corporations are keen to avoid interference in their business through taxation or regulations. Bytaking substantive voluntary steps, they can persuade governments and the wider public that theyare taking issues such as health and safety, diversity or the environment seriously, and so avoidintervention. This also applies to firms seeking to justify eye-catching profits and high levels ofboardroom pay. Those operating away from their home country can make sure they staywelcome by being good corporate citizens with respect to labour standards and impacts on theenvironment.

DEVELOPING CSR POLICIES:

Firms that acknowledge the influence of stakeholders on their business can provide effective andsuccessful CSR programmes which can deliver real value in the form of reputation, customerattraction, employee loyalty and investment opportunities. Moving from theory to practice andputting corporate responsibility into action can be achieved in a number of ways including:

Incorporating a clear CSR policy into mission, vision and values statement

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Adopting a meaningful code of ethics that is implemented consistently Publishing formal social and environmental reports and audits Community Investment Programmes Providing products and services Employee volunteering schemes Public education and awareness programs Mentoring programs Corporate community partnerships Supporting good causes in marketing campaigns Supporting and contributing to community forums

CHALLENGES OF CSR AND ITS SOLUTION:

1.CHALLENGES IN CSR AND SOCIAL ACCOUNTABILITY:

The business case for CSR is not necessarily a simple one. Among the challenges is the fact thatthe social and/or environmental impact differs across industries, complicated by the fact that theterm CSR has different meanings to different industry sectors in different parts of the globe.Also, some may question if the message CEOs communicate about CSR is an add—on or part ofcompany core business activities—or is it merely an insincere effort to boost public relations? Insome organisations, CSR is still considered to mean compliance and philanthropy, althoughsome large companies are now placing CSR in a more strategic framework.Further, there is the question of how to measure CSR. One of the largest obstacles is lack of arigorous, credible business case backed up by performance indicators and metrics that can bequantified and benchmarked. Further, investment in CSR is not yet being taken seriously bysome organisations.Not all organisations may have the resources (for example, funds, time, staff) to funnel into CSRinitiatives. However, CSR programmes may not be expensive or require a significant timecommitment. Organisations that are interested in CSR may choose to start with small projectsthat showcase their commitment to their workforce and the community. Social Workprofessionals with their professional knowledge and expertise can help address this challenge byconsidering different options and developing creative approaches to CSR to in the company.Thus, it is at this point that the HR leadership, as the eyes and ears of the organisation, is key tothe CSR equation. Social Work professionals as HR leaders have the expertise to manageprogrammes, policies and practices, to engage the organisation and its stakeholders (for example,owners, employees, management, customers, creditors, the government and other publicorganisations) in the value of CSR by focusing on communications, employee relations, health,safety and community relations to provide their organisations with a competitive

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advantage.Besides, the greatest challenge to CSR and accountability are in three areas.

FIRST, the companies have to decide to look at CSR and accountability as a core part of theirbusiness. Many more companies are looking at the world that way today than they were ten yearsago, but it probably still is a minority opinion and so part of the challenge is simply about thepolitical will on the part of companies to look at their impact through the prism of sustainability.

SECONDLY, there are two communities out there that exert immense influence on businessacross all sectors: consumers and financial institutions. Financial institutions have actuallystarted to move significantly over the last couple of years—a very important developmentbecause it’s remaking the way markets work.

The THIRD actor is the government.Whether it’s through global trade agreements and the WTOor whether it’s their own enforcement of laws or “smart” regulation that looks at creatingincentives to engage the business community as a partner, the government remains an incrediblysignificant actor and can be a net negative, net positive, or neutral in terms of influencing thekinds of decisions that businesses make.

2.CHALLENGES TO SOCIAL COMPLIANCE:

Though many multinational retailers can now boast of a Code of Conduct, only a few have beenable to roll out a full scale and independent monitoring programme. The issues involve fromfinding resources to conflicts with short-term business objectives. On the other hand, mostsuppliers consider compliance programmes a new burden resulting in poor and untrustworthypartnership with their buyers when it comes to implementing the code of conduct.External challenges include cultural diversity, understanding the local law and at times findingthe local law, finding local language and dialect skills, finding local audit and monitoringprofessionals who are well conversant with the local issues, involving workers, localcommunities, NGOs and other stakeholders.

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DRIVERS:

1.CONCERN FOR PROFIT:

Corporations like all other social institutions are an integral part of society and must depend onit for their existence, continuity, and growth. As organizations usually behave in response tomarket forces, they initiate certain socially responsible activities that may have a direct impacton their economic performance .Although these activities are social in nature and aim forcommunity welfare and societal development somewhere they have a hidden concern for profits.Here the management cares only about its company’s gains, profitability and organizationalsuccess at any price. Their main strategy to have these activities is to exploit opportunities forcorporate gain. These activities have a direct economic benefit that is clearly visible. Activitiesthat are undertaken to improve the image or reputation of an organization can be included in thiscategory. As the criteria for legitimacy for such activities is economic in nature the cost that isincurred in implementing these activities is treated as an investment. This is the also termed asthe required behaviour of any organization. Such activities are undertaken after a detailedplanning and doing a thorough cost benefit analysis. These activities generally become aninvestment that helps the organization in improving long-term economic performance.Organizations following these activities are called as “Economic Citizens”.

2.CONCERN FOR LAW:

Organizations prefers to conduct its operations within the legal framework imposed by socialsystem within which it operates. Those activities that are driven in response to legal constraintsfall under this category. Responsible behaviour that is driven by legal concern aims either atcompliance with the existing laws or to avoid any litigation. As the criteria for legitimacy here islegal in nature it implies that bringing corporate behaviour to a level where it is congruent withthe prevailing legal framework. These activities intend not to violate laws and equate socialresponsibility with fulfilling minimum legal requirements. This is the expected behaviour of anyorganization. And those organizations that do not abide with the legal framework are termed asillegal organizations. Organizations following these activities are called as “Legal Citizens”.

3.CONCERN FOR SOCIETY:

These activities have very limited relevance of legal and market forces and they are above suchcriteria. Although these activities are not compulsory for any organization to undertake but theseare definitely appreciated by the stakeholders. Organizations or activities belonging to thiscategory are driven by a high concern for society. As these activities are not legally forced they

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are in congruence with the prevailing social norms and values. Organizations having theseactivities do recognize the importance of profitable operations but also takes definite stand onissues of public concern. All ongoing community development programmes that are voluntary innature and are ultimately implemented to benefit the society at large come under in this category.This is the desired behaviour of any organization.Organizations having such activities areprogressive; they are the leaders in the industry and are called as “Responsible Citizens”.

HOW TO DEVELOP AND IMPLEMENT CSR INITIATIVES:

With company reputation, viability and sometimes survival at stake, one of the critical roles ofthe HR leadership today is to spearhead the development and strategic implementation of theCSR throughout the organisation and promote sound corporate citizenship. As HR leaders, wecan influence three primary standards of CSR—ethics, employment practices and communityinvolvement—that relate either directly or indirectly to employees, customers and the localcommunity, as outlined below. By considering these three CSR standards, HR leaders can thenidentify the CSR stage of their organisation before making decisions to develop and implementCSR initiatives.

ETHICS

Ethical standards and practices are developed and implemented in dealings with all companystakeholders. Commitment to ethical behaviour is widely communicated in an explicit statementand is rigorously upheld.

EMPLOYMENT PRACTICES

Human resource management practices promote personal and professional employeedevelopment, diversity at all levels and empowerment. Employees are valued partners, with theright to fair labour practices, competitive wages and benefits and a safe, harassment-free, familyfriendlywork environment.

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COMMUNITY INVOLVEMENT

The company fosters an open relationship that is sensitive to community culture and needs andplays a proactive, cooperative and collaborative role to make the community a better place to liveand conduct business.

HUMAN RESOURCE AND COMMUNITY RELATIONS:

One of the most visible CSR initiatives is in community relations. Strong community relationscan have a positive impact on company reputation and brand. Through community programmesthat highlight the company doing good work, we can link critical issues—decreasing turnover,savings on cost per hire and attracting talented individuals—to CSR and the bottom line. Thereare many other possibilities that HR leaders could explore to match both company andcommunity needs (for example, cultural facilities for the community, recreational facilities foremployees and their families, an educational project to help prepare tomorrow’s workforce). As HR leaders, a development professional can perform the following: . Scan the environment to identify potential threats (for example, competition for talent withinthe organisation’s industry sector). Build personal and professional capability of the workforce (for example, expand intellectualcapital within the organisation and in collaboration with other organisations). Include ethical concerns in staff performance measures. Support participative decisionmaking.

Ensure highest standards in workplace health and safety. Encourage active engagement in community activities.Moving Forward with CSR—HR as a Change Agent

FOCUSING on company values, we as HR leaders can set the tone for an organisational culturethat is open to and understands CSR. HR’s role as a change agent—grounded in mutual respectand open and honest communication—is essential to educate management and employees aboutincluding CSR when setting business goals and objectives. Three practical steps to promotechange regarding CSR are to:1) establish a workable stakeholder consultation process;

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2) use the process to understand the local culture (for example, internal—the workforce—orexternal—the community) at all stages of implementing CSR;3) create a sense of ownership between the staff who set up a project and those who implementit.Beyond including CSR in the HR management system, our role as a change agent continuesthrough keeping the CEO and other members of the senior management team informed of humancapital initiatives, the status of community relations, measurements of employment activities anddevelopment of partnerships for CSR programmes, both inside and outside the organisation.

CORPORATE SOCIAL RESPONSIBILITY -COMPANIES INNEWS:

ENRON:

Following the company's collapse, Enron has become a by-word for corporate irresponsibility.The financial misrepresentation that covered-up the giant black hole at the heart of the company'sfinances have fuelled interest in how such corporations can be identified and held to account.This is made all the more challenging on account of that fact that - to some observers - Enronwas doing the whole "social responsibility thing" with its CSR reporting, environmental andcommunity programmes.ISSUES - The firm projected itself as a highly profitable, growing company - an image whichquickly turned out to be an elaborate mistruth. Enron's statements about profits were shown to be untrue, with massive debts concealed so that they didn't show up in the company's accounts.

CSR REPORTING - The Enron last social and environmental report was rather light on the kindof measures that are increasingly being demanded. The company was gearing up to addresshuman rights and other issues. It did include a number of figures on environmental performance,and on health and safety records.But there is a bigger challenge here. The move towards morerobust social and environmental reporting will not quickly get to the point where its indicatorspick up the deliberate actions at the top that typify this story. After all, what social reporters aretrying to do is identify the core reporting data which will give a real picture of the health of thecompany - just like we already have in financial reporting. But financial reporting was notsufficiently transparent and robust to pick up on the Enron problem - how much more difficultfor the hard-to-define measures of stakeholder engagement and social performance?

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The main message from this is that expectations of company reporting need to be kept realistic.The CSR movement needs to be wary of promoting the achievements of companies when allthey are doing is going through the motions.

NIKE:

Nike has become one of those global companies targeted by a broad range of campaigningNGOs and journalists as a symbolic representation of the business in society. In Nike’s case, theissues are those of human rights and conditions for workers in factories in developing countries.In the face of constant accusations, Nike has developed a considered response, supported bycorporate website reporting. It now has a well developed focus for its corporate responsibility onimproving conditions in contracted factories, aiming for carbon neutrality, and making sportsavailable to young people across the world. The criticism continues, however.ISSUES - Nike has around 700 contract factories, within which around 20% of the workers arecreating Nike products. Conditions for these workers has been a source of heated debate, withallegations made by campaigns of poor conditions, with commonplace harassment and abuse.CRITICS’ OPINION - Critics have suggested that Nike should publicise all of its factories, andallow independent inspection to verify conditions there. Any auditing carried out by Nike shouldbe made public. A lot of focus is given to wage rates paid by the company’s suppliers. By andlarge, audits have found that wage rates are above the national legal minimum, but criticscontend that this does not actually constitute a fair living wage

CONCLUSION

Corporate Social Responsibility is one such niche area of Corporate Behaviour and Governance that needs to get aggressively addressed and implemented tactfully in the organizations. At the same time CSR is one such effective tool that synergizes the efforts of Corporate and the social sector agencies towards sustainable growth and development of societal objectives at large. India is a fast growing economy and is booming with national and multinational firms. At the same time, the Indian land also faces social challenges like poverty, population growth,

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corruption, illiteracy just to name a few. Therefore it is all the more imperative for the Indian companies to be sensitized to CSR in the right perspective in order to facilitate and create an enabling environment for equitable partnership between the civil society and business.

The impact of CSR is under close scrutiny. There are three primary areas of concern:

1) product responsibility;2) strategies for sustainability;3) the quality of CSR management

Therefore, with the growing importance of human capital as a success factor for today’sorganisations, the role of HR leadership will become ever more critical in leading and educatingorganisations on the value of CSR and how best to carry out the strategic implementation of CSRpolicies and programmes in India and abroad.

Corporate Social Responsibility is a difficult and elusive topic for companies to deal with. It can often be very costly and yield benefits that are hard to quantify. Perhaps this is one reason why companies, according to the survey, have put so much focus on the internal improvements that can be made, such as improving corporate governance and transparency. This could also explain why the most important stakeholders, after customers, are the traditionally important employees and shareholders.

There’s also the issue of just what standard of corporate social responsibility should companies use and how far companies should go to perform their responsibilities beyond what the laws call for. The issue of what is the “responsibility” of a corporation is far from being settled, and there is an unresolved argument over what corporate social responsibility means. Companies face a plethora of options among the various standards, guidelines, benchmarks and other proposed measures of corporate social responsibility.

One point that all can agree on is that corporate social responsibility is not a neutral topic. There is a persistent debate about whether the corporate social responsibility “movement” represents an unjustified intrusion into corporate affairs, and whether companies should invest

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profits in their own corporate social responsibility projects or return the money to shareholders to let them invest as they see fit. But there is no denying that corporate social responsibility has become an important issue facing the global business community and one that promises to grow in importance in the coming years.

REFERENCES :

• Www.wikipedia.com

• www.csr.com

• www.google.com

• Foundation for Corporate Social Responsibility (http:/ www.Fcsr. Com)

• Saeen, Sandeeep(2001). Ethics Management. New Delhi: Sarup.

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http://www.google.com/

http://www.csr.com/

http://Www.wikipedia.com/


• Corporate Social Responsibility in India - An Empirical Research

By Bernadette Dsilva

• 2. CSR could prove to be a valuable asset in an age of M&As, as it helps firms spread

their brand name - Maitreyee Handique

• 3. Corporate Social Responsibility is no longer just an addition, it is a key

differentiator." Prasad Chandra, CMD, BASF South Asia

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