CSR & SD

❑Corporate Social Responsibility simply put:

❑Actions taken by businesses that extend beyond profit
maximization and growth by balancing the economic and
social needs and values of all its stakeholders, without
compromising on the demands of future generations
❑Businesses losing Trust-’Trust Deficit’ high…Why ?

❑EEPM
❑-Relating to the Environment( climate change)
❑Exploitation(child labour, low wages, unsafe work
conditions
❑Prejudices ( caste, creed, race)
❑Moral Values( unethical practices, frauds)
❑Strategic CSR & Corporate Citizenship
 Strategic CSR & Corporate Citizenship
 Strategic CSR- A comprehensive approach that ensures
business success by balancing the economic and social
needs without endangering or exploiting the social
fabric of all stakeholders
Social(concern &
care for
stakeholder
needs- (tangible&
intangibles)

Economic
(profitable &
competitive)

 Corporate Citizenship: Acting with foresight, maturity

and concern, ahead of others in the industry-setting
admirable benchmarks of performance and
demonstrating stewardship
 Terminology, Concepts and Definitions ( 36)

➢ 1)Corporate Social Responsibility(CSR): A view of the

corporation and its role in society that assumes its
responsibility to pursue goals beyond profit maximization
➢ 2)Strategic Corporate Social Responsibility : The
incorporation of a holistic CSR perspective within a firm’s
strategic planning and core operations so that the firm is
managed in the interests of a broad set of stakeholders to
achieve maximum economic and social value
➢ 3)Accountability: The extent to which attends to the needs
and demands of its primary stakeholders
 4) Advocacy advertising : Efforts by orgns. to communicate
their political, social or business interests with their
stakeholders to generate awareness and favourability
5) Business Citizenship : Societal –oriented actions by orgns.
6) Business Ethics : Application of ethics and ethical theory to
business decisions
7)Cause-related marketing: Initiatives by orgns. to link
purchases of products with a benefit provided by them to a
non-profit organization or charity
8)Civic-engagement : Efforts by orgns. to improve the lot of
communities
9)Coalitions: Collection of orgns., stakeholders or individuals
that collaborate to achieve common goals
10) Community Advocacy Panels( CAPS):Groups of citizens
who advise orgns. On common areas of interest
11)Consumer activism: Consumer action aimed at representing,
highlighting and demanding their expectations and rights
12)Consumer boycott: Actions by consumers to avoid certain
industries and products based on their assessment of their
performance and commitments
13)Consumer buycott: Actions by consumers to actively support
certain industries and their products based on their performance
metrics
14)Corporate Philanthropy: Contributions by orgns. To non-profit
orgns. that benefit stakeholders and the community
15)Corporate responsibility: similar to CSR used by some orgns.
16)Corporate Social Performance: Performance benefits measured
through financial metrics accrued to an orgn. By implementing its
CSR programme
➢ 17) Corporate Social Responsiveness : Actions by an orgn.
to meets its CSR agenda
➢ 18)Corporate Sustainability: Business operations that can
be continued over the long –term without degrading the
ecological environment
➢ 19) Enlightened Self-Interest: The recognition that
businesses can operate in a socially conscious manner
without forsaking its economic goals
➢ 20) Ethics: A guide to moral behaviour based on culturally
embedded definitions of right and wrong
➢ 21) Externality: A side-effect or consequence of an
industrial or commercial activity which affects other parties
without this being reflected in the cost of goods or services
involved, a social cost or benefit
➢ 22) Greenwash: Act of misleading consumers regarding the
environmental practices/benefits of an orgn or its products
24) Iron Law of Social Responsibility: The axiom that suggest that
those who abuse the power they hold in ways that society
deems them to be abusive will eventually lose their ability to
continue abusing their power
25) Non-governmental orgns(NGO): Orgns. that pursue social
good exclusively, rather than profits or the political
compulsions of govt.
26) Nonprofits: Orgns that exist to meet societal needs , rather
than seek profits for their owners or the govt. They differ from
NGOs as their main focus is –domestic
27) Public policy : Govt. decisions aimed at establishing norms
and guidelines for the well being of society as a whole
28) Stakeholders : Any group or individual who can affect or is
affected by the meeting of an orgn.’s objectives
29) Sustainability: Sustainable development is development that
meets the needs of the present without compromising the
ability of future generations
1/9/2020 to meet their own needs
Title: "Presentation Template" 7
30) Operations that employ children or apply working standards
with little or no respect for human rights
31) Transparency : The extent to which organizational decisions
and operating procedures are open or visible to outsiders
32) Triple bottom line : An evaluation of businesses by
comprehensively assessing their financial, environmental and social
performance
33) Values : Beliefs about appropriate goals, actions and conditions
34) Tactics: Day-to day management decisions to implement the
orgn’s strategy
35) Mission :Type of activities that an orgn, intends to perform to
meet its vision
36) Vision: Statement that answers an organization’s purpose,
”Why it exists?”-the needs that it aspires to solve for others
 Definitions
 United Nations: ‘the integration of social and environmental
concerns into business policies and operations’

 WBCSD: ‘the continuing commitment to behave ethically and

contribute to the economic development while improving the
quality of life for the workforce, their families, local
communities and society’

 World Bank: ‘the commitment of business to contribute to

sustainable economic development with employees, their
families and society at large and to improve their lives in ways
that is good for its business and for development’
 Changing Market Scenario

NEW
Brand capital ECONOMY
Sales “push” focus Customer “pull”
focus

Human capital
Production focus Customer
focus

Working capital
OLD High
Low

ECONOMY (WIP, finished goods) (direct delivery to

customers)
Physical capital
Increasingly the contribution of an
organisation’s physical assets to its value
( mkt.cap) is being replaced with its own
January 9, 2020
corporate /product and service brands 10
Background to Corporate Skepticism :
Economic Crisis- 2000 ( Enron) ; 2009 ( Sub-Prime)→
low interest rates, easy access to mortgages &
inadequate regulatory frameworks
CSR & CC: Intervention if any by govt: slow, NGO’s funding issue
Are there simple answers to addressing CSR challenges?
NO-→ Few Absolutes—<from non polluting sectors –
heavily polluting ones>
Answers : Contextual-situations-industry -> Trade-offs
amongst Stakeholders- lays the ground for public
discourses and debates-demands Critical Thinking: five
attributes :Analytical Thinking, Communication& Evaluation, Open
Mindedness, Creativity and Problem Solving
Stakeholders : Who have a stake in a firm?
Employees, Suppliers, Customers, Public, Influencers, Govt.
Regulators, Media etc.
What are Stakeholders evaluating ?
WHAT ? & HOW ? –( An Orgn. Does what and how?)
STRATEGY : What is it ? Two ways : a) the route map to get to
a point B(achieve its Vision & Mission) from a point A b)
Meeting defined Aspirations ..basic need : revenue earned>
Cost incurred R-C = +ve ( food , shelter clothing) CSR comes
post r>c
Strategy evolves from three things : Vision, Mission &
Tactics; Vision: aspirational, ennobling eg: To provide safe
transpiration, Ending Hunger in the Community *etc.-
INTENTION
Mission: What a firm does to attain the vison: Feed the Poor*
Tactics : Day to day mgmt. decisions
STRATEGY + TACTICS =>VISION + MISSION
Building on the SWOT Framework, Strategy allocates :->]
Internal : Strengths & Weaknesses, External: Opportunities &
Threats thr’ TWO different perspectives:

 1] Resources Perspective ( Internal focus) & 2] Industry

Perspective ( External focus)
 Resources Perspective: CK Prahalad & Gary Hamel) core
competencies), Industry Perspective: Michael Porter (five
force model-industry rivals, threat of new entrants, power
of buyers, threat of substitutes, power of suppliers)
Corporate Social Responsibility Hierarchy/Pyramid
(Archie Carroll)

Discretionary
Responsibility

Ethical Responsibility

Legal responsibility
Economic
Responsibility

14
Evolution of Corporate Responsibility

From From to to to
profit focus philanthropy community corporate Sustainable
a company exists passive donations affaires community Business
only for short- to charities when strategic giving investment Integrated into
term shareholder requested linked to business strategic business functions,
profit interests (includes partnerships goals, strategy
cause-related initiated by
marketing) company

Adapted from PwC

 Evolution of CSR
1790-300,000 Britons boycotting of slave –harvesting-Sugar Industry
Consumer & Social Activism, Public Engagement, Sweat shops-
Nike-child labour issue-Agra, India
Eg: Malden Mills(CEO- Aaron Feuerstein -1995-Lawrence –NE
Massachusetts-fire rebuilt textile plan with insurance money $ 300
million—kept 1400 laid off workers on salary for three months-
focussed on Social/Ethical angle-competition-bankruptcy in Nov
2001, ; Alacrity Construction in Chennai ( 1980s)
i)Democracy &Economic dimensions influence CSR
a) Cultural Context : Economic state set standards & norms
b)Moral Argument: Firms exist to go beyond profits, products and
markets, Rational approach, Affirmative Action(caste, gender ,race)
c)Rational Argument : Financial scandals- Enron, WorldCom-
Sarbanes-Oxley legislation, 2002 moved discretionary /ethical
issues to legal arena d) Economic Argument-matching corpn’s.
operations with societal values
“ Only Social responsibility of business is to increase its
profits”- Milton Friedman- American Nobel Prize inning Economist

“Businesses have a moral obligation to move beyond the

goals of maximizing profit and satisfying shareholders
above all other stakeholders ”- Charles Handy-Irish Author
 Why is CSR increasingly Relevant Today ?

 Five identifiable Trends :

✓Growing Affluence

✓Ecological Sustainability
✓Globalization

✓Free Flow of Information-CSR Newsletter :Google

(http://www.google.org/)

✓Brands-intangible asset & reputation mgmt.

 The Path to Corporate Responsibility- Simon Zadek-CEO
AccountAbility(http://www.acountability21.net/)
➢ Tool to evaluate which stakeholders and issues pose greatest
potential or danger

Civil Max,Opportunity

Strategic

Managerial
MMax.
Compliance Danger

Defensive

Latent Emerging Consolidating Institutionalized

 Strategic CSR-Four Components

1) CSR perspective within the strategic planning process

2) CSR actions directly related to core operations- eg: financial

firm vs oil company donating to research on ’climate
change’?*

3) Stakeholder perspective

4) Short term to ->> medium/long term perspective as regards

managing firm’s resources
Strategic Strategic and relations
CSR approach resolves the Milton
Friedman Vs Charles Handy approach *
 Stakeholder Responsibility( consumer
education) as important as Corporate
Responsibility
➢ Full page advt. in New York Times for the
environmental activist group-Earthshare.org
➢ Headline: WE LIVE IN THE HOUSE WE BUILD
➢ “Every decision we make has consequences. We chose
what we put into our lakes and rivers. We chose what
we put into our bodies, and where we let our children
run and play. We choose the world we live in, so make
the right choices. Learn what you can do to care for
our water, our air, our land and yourself at
earthshare.org”
➢ Focus : individual responsibility rather than corporation
➢ Be the change that you want the world to be (Mahatma Gandhi)
 Strategic
Strategic CSR Window
CSR
of Opportunity CSR
Deficit

Economic
Value
CCSR Deficit

Social Value

e.g.: 1)Equal Pay Act,1963(US)-min. wages payable to take care of discrimination

2)Walmart’s focussed pursuit of economic benefits via its low-cost model-devastates
smaller retailers-led to ‘zoning restrictions’ by local govt authorities
 Intention vs Reality
➢ Surveys of stakeholders may reveal a more than actual prevalence of
ethical or societal committment
➢ Disconnect between perception and personal practice
➢ A survey of MBA students by Donald McCabe(2008), Professor at Rutgers University
showed that “ 56% of MBA students admitted to cheating and , according to McCabe, they
were doing it to ‘get ahead’’

➢ This figure is little changed from a 2002 survey of 1,100 undergraduate students
on 27 university campuses in the US by the non-profit orgn. SIFE( Students in
free Enterprise) which aims to teach ethical business practices to students;
identified a similar discrepancy between ideals and application: 59% of college
students polled admitted to cheating on a test ( 66% of men, 54% of women).
Only 19% said they would report a classmate who cheated ( 23% of men,15%
of women) !

➢ INFERENCE : “ To get what you want , you must appeal to people’s

self-interest, not to their mercy !”-price over good corp.practices?
➢ Growing awareness of the importance of CSR & Ethics in MBA course
curriculum and by corporate houses
 The Walmart Conundrum-Case
 World’s largest retailer -500 billion in sales –2018
 US: operates more than 11,300 facilities
 Internationally: operates 3,600 additional facilities in
16 markets worldwide
 Employs more than 2 million associates worldwide,
more than 1.5 million in the US
 Total revenues – greater than the economies of all but
30 of the world’s nations-extremely successful and
influential
 Business Strategy: minimizing costs-affecting
stakeholders in many ways
 WalMart

➢ Conflicting views : Liberating Force vs Conquering Imperialist

➢ Article headlines: WalMart Invades, and Mexico Gladly

Surrenders
➢ WalMart Invaded India- Who’s Next?
➢ Is WalMart Too Powerful?
➢ The Wal- Martization of America
➢ Is WalMart God for America?
 WalMart
➢ Positives – YES !
➢ Lower Prices for consumers( lower inflation)
➢ Good jobs in economically deprived regions
➢ Wide range of products
➢ Redefinition of SCM & technology services
➢ Increased productivity
➢ Negatives –NO!
➢ Loss of jobs to overseas suppliers
➢ Strong opposition against collective representation of workforce
➢ Relatively low employee wages and benefits
➢ Competitors( and sometimes suppliers) go out of business,
reducing consumer choice
➢ Litigation issues: alleged discrimination, employment of illegal
immigrants, refusal to pay employee overtime…etc.
➢ Wall Mart CEO Lee Scott(2007) & Mike Duke CEO ( 2009)
➢ Post Hurricane Katrina 2005, New Orleans, Wal Mart has
consciously engaged in the issues of environment and
sustainability-repositioned WalMart in the eyes of its
stakeholders (goals:100% renewable energy, zero waste
and sell products that sustain our resources and
environment
➢ In 2007-sold 137 million CFL bulbs against a target of 100
million, reduced its waste packaging
➢ July 2008-New logo and slogan( tag line): earlier :Always-
Low Prices to- “Save money. Live better”
 Walmart”s-New logo –intent: show progressive action on
environment & sustainability

 Walmart
Does the new logo meet its intent: demonstrate the co’s intent
and genuineness in its commitment to sustainability and
environmental issues-more environment friendly
Reducing the packaging size on one private label toy-497
fewer containers; freight savings> $2.4 million, saved 3,800
trees from felling & more than a thousand barrels of oil- so
much due to just ONE package change on ONE pvt. toy label

Irrespective of whether some stakeholders care or not, in the

medium to long term, co’s that remain ahead of evolving
standards will benefit by adopting a Stakeholder’s Perspective
 Value
Creation
Across all
stakeholder
constituencies

B Brand
Stage of Orientation

Development
Brand C Customer
Organization Orientation

P Product
orientation

Market/Economic Evolution

Concept: Philip Kotler

World Marketing Congress, Dhaka
March 2012
Basic components of Sustainability

Ecological Development
sustainability

Equity
Equity within
between
the same
generations
generation
 Driving the change
5 Mega Issues

Climate Change

Pollution/Health

Globalization backlash

The energy crunch

Erosion of Trust
Driving the change
5 Stakeholders

Green “consumers”

Activist shareholders

Civil Society/NGOs

Govt. & Regulators

Financial Sectors
 Few cases of
unsustainable
management
Fukushima nuclear plant explosion 2011,
on par with Chernobyl Crisis 1986
 We sigh out not because
incidents happen, but once they
start we can’t alter them…
"The roads we take are
more important than the
goals we announce”

Frederick Speakman-British Naturalist & Author

 It takes 20 years to build a
reputation and 5 minutes to
ruin it …
Warren Buffet
 Corporate Iceberg

Balance Sheet Tangibles

NGOs Investors Media

Employees The Public
Insurers Governments

Competitors

Intangibles
Market Capitalizations
Key trends in CR

▪ The significance of intangible assets in market value of a company

has been steadily rising.

– In 1980’s, intangibles accounted for 40% of S&P 500

companies’ market value; now, it is as high as 85%.

– As a result, management of intangibles (and non-financials

that constitute most part of intangibles) is emerging as a major
area of concern, study and action.

– S&P ESG ( Env., Social & Corp.Gov.)India Index (50 best

stocks on ESG parameters), over a five year period between
2014 and 2019 has shown a performance above S&P CNX
NIFTY, indicating the potential of ESG performance to enhance
market performance.
 What will be your approach?

Dialogue – Decide – Deliver

Decide – Announce – Defend

From Local to Global
Clean Clothes Campaign is a global alliance
dedicated to improving the working
conditions and empowering workers in the
global garment and sportswear industries
From Local to Global
 Traceable to Randomized

3.12 litres
of water to
produce
one litre of
final
product
Traceable to Randomized
 Micro to Macro

Internationa
l

National

Local
The Brent Spar
 1991 – 1993  Examines the sinking option

 December 94  Sinking plan approved by UK

Govt.
 April – May 95  Greenpeace enter the scene

 June 95  Shell tows ship towards

Germany
 Shell reviews decision and
 January 1998
tow ship towards Norway
 August 1999
 Brent spar dismantled and
used to build new ferry
terminal.
 Products(A) & Issues(B) with critical life
challenges- egs.

Asbestos –(A& B)
Tobacco – (A&B)
Climate change(B)
Mobile Phones(A&B)
Bio-technology (A&B)
Products/services and issues can have manifold effects –complex in
terms of consequences-need to be well thought out with a focus on the
strategic aspects of CSR –long-term impact not just immediate gains