CORPORATE SOCIAL RESPONSIBILITY (CSR)

Introduction
o Organizations package their products in non-recyclable materials; have large pay inequities,
the difference is often linked to entitlement and “custom.” Large global corporations lower
their costs by outsourcing to developing countries and justify it by saying they are bringing
in jobs and helping to strengthen the local economies. Businesses facing a difficult economic
environment offer employees reduced hours and early retirement packages. Are these
companies being socially responsible?
o The basic idea of Corporate Social Responsibility (CSR) is that business and society are
interwoven rather than distinct entities; therefore, society has certain expectations for
appropriate business behavior and outcomes.
o CSR is practiced by the organizations when they conduct their business in an ethical way,
taking account of the social, environmental and economic impact of how they operate, and
going beyond compliance.
o CSR refers to the actions taken by businesses that further some social good beyond the
interests of the firm and what is required by law. It is concerned with the impact of business
behavior on society, and can be regarded as a process of integrating business and society.

CSR-Defined
CSR is defined as “Continuing commitment by business to behave ethically and contribute to
economic development while improving quality of the workforce and their families’ life as well
as the local community and society at large.”

Evolution of CSR
The idea that business enterprises have some responsibilities to society beyond that of making
profits for the shareholders has been around for centuries. However, the concept of CSR has
seen continued growth in significance for the last few decades. It has been the subject of
considerable debate and research. There have been two opposing views of social responsibility
of businesses:
o The classical view is the view that management’s only social responsibility is to
maximize profits. Economist and Nobel laureate Milton Friedman is the most outspoken
advocate of this view. Friedman argues that managers’ primary responsibility is to
operate the business in the best interests of the stockholders—the true owners of the
organization.
o The socioeconomic view is the view that management’s social responsibility goes
beyond the making of profits to include protecting and improving society’s welfare. This
view emphasizes that corporations are not independent entities, responsible only to
their stockholders.
From Obligations to Responsiveness to Responsibility

o Social obligation occurs when a firm engages in social actions because of its obligation
to meet certain economic and legal responsibilities.
o Social responsiveness is seen when a firm engages in social actions in response to some
popular social need.
o Social responsibility is a business’s intention, beyond its legal and economic obligations,
to do the right things and act in ways that are good for society.

Four Categories of CSR

1. The Community Category covers the company’s commitment with the local, national and
global community in which it does business. It reflects a company’s citizenship, charitable
giving, and volunteerism. This category covers the company’s human rights record and
treatment of its supply chain. It also covers the impacts of the company’s products and
services, and the development of acceptable products, processes and technologies.
2. The Employees Category includes policies, programs, and performance in diversity, labor
relations and labor rights, compensation, benefits, basic and industry-specific safety
training, employee health and safety, and wellbeing.
3. The Governance Category covers attention to stakeholder concerns, and evaluation of a
company’s culture of ethical leadership and compliance. Corporate governance refers to
leadership structure and the values that determine corporate direction, ethics and
performance. Governance focuses on how management is committed to social
responsibility at all levels.
4. The Environment Category covers a company’s interactions with the environment at
large, including use of natural resources, and a company’s impact on the Earth’s
ecosystems. The category includes compliance with environmental regulations, energy-
efficient operations, and the development of renewable energy and other alternative
environmental technologies, disclosure of sources of environmental risk and liability and
actions to minimize exposure to future risk, implementation of natural resource
conservation and efficiency programs & pollution prevention programs.

o Corporate Philanthropy. Giving to charitable foundations and causes is not limited to

individuals. Organizations, through their ability to coordinate large projects and their access
to capital, have made great strides in improving community and social efforts.

o Employee Volunteering Efforts. Employees in many organizations are encouraged to

volunteer their time to promote social change. Some organizations even allow employees
to spend part of their workday toward volunteer efforts.
Businesses Promoting Positive Change.
o Organizations regularly face decisions that have dimensions of social responsibility.
Examples include employee relations, philanthropy, pricing, resource conservation, product
quality and safety. They are increasingly expected to act responsibly in the way they
conduct business.
o Businesses promoting change use a social impact management approach, which examines
the social impacts of their decisions and actions.

Ten Principles of the UN Global Compact

A guide to being ethical in business is the United Nations Global Compact, which is a call to
businesses to align their strategies with certain principles. More than 7,700 corporate
participants and stakeholders from over 130 countries signed the document, in year 1999
making it the world’s largest voluntary corporate citizenship initiative. Organizations
making this commitment do so because they believe that the world business community
plays a significant role in improving economic and social conditions.
Human Rights
Principle 1: Support and respect the protection of international human rights within their
sphere of influence.
Principle 2: Make sure business corporations are not complicit in human rights abuses.
Labor Standards
Principle 3: Freedom of association and the effective recognition of the right to collective
bargaining.
Principle 4: The elimination of all forms of forced and compulsory labor.
Principle 5: The effective abolition of child labor.
Principle 6: The elimination of discrimination in respect to employment an d occupation.
Environment
Principle 7: Support a precautionary approach to environmental challenges.
Principle 8: Undertake initiatives to promote greater environmental responsibility.
Principle 9: Encourage the development and diffusion of environmentally friendly
technologies.
Anti-Corruption
Principle 10: Businesses should work against corruption in all its forms, including extortion
and bribery.

By integrating these principles into strategies, numerous companies are fulfilling their basic
responsibilities to people and planet and at the same time setting the stage for long-term
success through good reputation, strong brand names and becoming the employer of choice,
offering a fantastic workplace environment that attracts and retains employees.