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CONCEPTUAL FRAMEWORK

Wealth created from society has to be ploughed back into Society. Mahatma Gandhi This is the concept on which the foundation of Corporate Social Responsibility of CSR as it is popularly known as is laid. CSR is a genuine attempt by a company to build meaningful relationship between the corporate sector & the rest of society. CSR is achieved when a business adapts all of its practices to ensure that is operates in ways that meet, or exceed, the ethical, legal, commercial & public expectations that society has of business. To be considered effective, Corporate Social Responsibility must be an integrated part of day-to-day business, engaging all stakeholders & including strategies to support individual managers to make socially responsible decisions, confirm to ethical behavior & obey the law. Corporate Social Responsibility (CSR) is a growing

phenomenon worldwide thats trying to change the role & nature of corporations. CSR deals with the thorny issues ground a corporations responsibility to society, & how it relates to the companys traditional commitment to maximize share holder profits. Organizations & industries of all sizes find it necessary & desirable to consider Corporate Social Responsibility in Strategic decision making processes. In some companies this

has had a profound effect from the shop floor to the executive suite. Not surprisingly the maintenance department has potential to be a leader in implementing initiatives that align with CSR related goals & objectives, including improved safety on the job, waste Reduction, improved energy management, selection of vendors that can supply CSR approved parts, increased employee diversity, alternative working arrangements & balancing work and lifestyle. Corporate Social Responsibility (CSR) has been influenced by two major concepts stake-holder model, wherein it is recognized that good business practice entails engaging all stake holders in company business. So good business is not only where seen as maximizing would no shareholder longer be value judged but by also the stakeholder value. The other concept is triple bottom line, companies conventional single i.e. financial bottom line, but also on there performance in social & environmental bottom-lines CSR is a concept that an enterprise is accountable for its impact on all relevant stake holders to behave fairly and responsibly, contribute to economic development while improving the quality of life of the workforce and their families as well of the local community and society at large. By expressing their social responsibility, companies are at firming their role in societal and territorial cohesion, quality and environment.

Corporate Social Responsibility is the commitment of business to contribute to sustainable economic development working with employees and their families, the local community and society at large to improve their quality of life in ways that are good for business and good for development.

1.1 CONCEPT
The role of business in society has been debated in economic literature for a long time. By the term Corporate Social Responsibility (CSR), what is generally understood is that business has an obligation to society that extends beyond its narrow obligation to its owners or shareholders, this idea has been discussed throughout the twentieth century but is was Haw ard R. Bowens book on Social Responsibilities of Businessman published in 1953, which was the origin of the modem debate on the subject. Bowen reasoned that there would be general social and economic benefits that would accrue to society, if business recognized broader social goals in its decisions. Corporate Social Responsibility is nothing but what an organization does to positively influence the society in which it exists. It could take the form of community relationship. Volunteer special assistance programmes, healthcare ad initiatives, education running programmes scholarships,

preservation of cultural heritage and beautification of cities. The philosophy is, basically to give back to the society, whats (business) has taken from it, in the course of its quest for creation of wealth. The debate, on whether responsibility of a business enterprise is only to its shareholders (owners) or to all stakeholders, including environment and the society at large, is an ongoing one and continues. In present literature Stakeholder, as an expression is fairly recent in origin, reportedly appearing first in an internal memorandum of the Stanford Research Institute in the year 1963. According to a definition given by Edward Freeman A stakeholder is any group of individual who can effect, or is effected by the activities and achievements of an organization. Friedricn Neubauer and Ada DembThe Legitimate Corporation (not indentify six groups of distinguishable stakeholders necessarily in this order) as follows

Providers of funds
Employees General public Government

Customers and Suppliers On the one hand experts have argued that shareholders

put their risk capital in a Joint Stock Company (or business) and therefore, companies should be managed in the interest of the

owners or the shareholders. This primacy of treatment given to the shareholders is being justified on the grounds of ownership and shareholding. It is felt that the maximization of profits or the bottom line should be ultimate objective of the management. On the other hand, a number of experts will not agree with this position For example, in Japan employees are treated as family. It is felt that an employee who devotes his or her life to the company has a bigger stake in it as compared to a shareholder. Germany is another nation where stakeholder recognition is high. Prominent among the experts who has taken a broader view is Minks who has argued that any company with a short term in view, only maximizing profits for the shareholder, will destroy value in the medium to long run. It is felt that the moot point here is the time frame. And that in the long run, the sustainability of the enterprises will be of paramount importance. In the long run, interests of both the stakeholders and the shareholders are not only likely to converge, but also have to be balanced. In the tradition of Hobbes, Locke & Jean lacque Russeau (writing in year 1962), society and corporation must co-exist and contribute to the well being of each other. There is a contract, which is at once explicit and implicit, that governs the operation of business within a given community. Benjamin Franklin has also expressed a similar sentiment when he says that Doing good is not a private act between a bountiful giver and a grateful receiver, it is a prudent social act.

1.2 HISTORICAL PERSPECTIVE

The view that a business can have obligations that extend beyond economic roles is not new in many of respects. Throughout recorded history the roles organizations

producing goods and services for the market place were frequently linked with and include political, social, and/or military roles. For example, throughout the early evolutionary stages of company development in England (where organizations such as the Hudson Bay Company and the East India Company received board mandates), there was a public policy understanding that corporations were to help achieve societal objectives such as the exploration of colonial territory, setting up settlements, providing transportation services, developing bank and financial services, etc. During the nineteenth century, the corporation as a business form of organization evolved rapidly in the US. It took on a commercial form that spelled out responsibilities of the board of directors and management of shareholders (i.e. fiduciary duty). In this later evolutionary form, public policy frequently addressed specific social domains such as health and safety for workers, consumer protection, protection, etc. Thus because labour they practices, were environmental to to soci1 be in corporations responded obligated

responsibilities

compliance with the law public policy. They also responded voluntarily to market demands that reflected consumer morals and social tastes. By the mid-point of the twentieth century, corporate social responsibility was being discussed in the US by business management experts such as Peter Druckers and being

considered in business literature. In 1970, economist Milton Friedman outlined his view that the social responsibility of corporations is to make profits within the boundaries of society morals and laws (but cautioned that socially responsible initiatives By corporations could lead to unfocused management directions, misallocations of resources and reduced market competition, opportunity and choice). CSR emerged and continues to be a key business management, marketing, and accounting concern in the US, Europe, Canada, and other nations. In the last decade, CSR and related concepts such as corporate challenges citizenship such as and those corporate sustainability from have expanded. This has perhaps occurred in response to new emanating increased globalization on the agenda of business managers as well as for related stakeholder communities. It is now more a part of both the vocabulary and agenda of academics, professionals, nongovernmental organizations, consumer groups, employees, suppliers, shareholders, and investors.

Values, Ethics & Social Responsibility


Business ethics is not a distinct and separate aspect of corporate life. It permeates all aspects and departments of the firm, its operations and its links with the community. At times, the word ethics and values are used interchangeably. Values, are set of beliefs germane to the individual, group or

organization and is the basis for action. It is something, which is held in regard, importance or worth. Values, is essentially a thought based concept. While ethics is a set of actions, born out of beliefs, attitudes and values. It is a branch of knowledge concerned with moral principles that govern influence conduct. Ethics, is essentially an activity based concept. Ethics is person specific, context specific and culture specific. It is also important to distinguish between managerial ethics and business ethic. While the former is a micro view and is an examination of individual Level behavior. The latter is a macro view and examines organizational behavior. It is important to look at the micro level behavior because (a) Most unethical decisions emanate at the individual level, rather than as collective decision of boards or committees, and (b) Individual sensitivities will contribute to companies taking an active ethical stand while making decisions. Ethics and CSR are closely related concepts. Ethics deal with issues pertaining to organizations and its stakeholders in day-to-day business transactions. Social responsibility refers to a companys posture relative to the community either narrowly or broadly defined. Ethics tends to be more internal in orientation, while social responsibility is more external, but this orientation is not an absolute one. Many companies that are highly ethical also exhibit heightened levels of social responsibility. In fact, the term corporate citizenship is used

now to denote many of the activities that fell under the CSR umbrella earlier.

Social Accounting & Reporting


An increasing number of companies are reporting publicly on their social, environmental and ethical performance, both as a communication to stakeholders, and as a management tool. However, as this practice has only become more widespread since the mid 1 990s, there is as yet no standard format to address the type of information companies choose to report, or how that information is collected, analyzed and presented. At the same time, many stakeholders are becoming increasingly sophisticated in the type and quality 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-some companies are Choosing to have their reports externally verified. In doing so, companies recognize that verification by a third party can add value to the overall social and environmental reporting process practice by with enhancing relationships values, with and stakeholders, strengthening improving business performance and decision-making, aligning organizational reputation risk management. A small, but growing, number of companies are producing verified social and environmental reports, with the social report movement, in particular, being led in large part by European companies. Verification refers to any independent assessment

as to the quality, accuracy, or completeness of a companys report and can include audits, reviews, attestations, or other forms of assurance. As shell has noted in its Principles and Profits Report, society has moved from a Trust Me position, through a Tell Me position to a Show Me position, implying that verbal assurances by corporate management are no longer sufficient to gain the trust of stakeholders. Independent verification of social and environmental reports is one way in which companies are addressing this lack of trust. During the 1 990s, calls for greater corporate social accountability by activists, non-governmental organizations (NGOs), governments and the general public increases, both in the United States and internationally. Additionally, increasing numbers decision. The trends in environmental reporting have begun to be duplicated in social reporting. Standards developed by noncorporate organizations provide targets against which social performance may be measured. Guidelines also address how social performance can and should be reported. For example, SA8000, launched in 1997 by Social of investors taking companies social and environmental performance into account in their investment

Accountability International (formerly Council on Economic Priorities Accreditation Agency) is an auditable standard specifically addressing labor and workplace conditions. The Global Reporting Initiative Sustainability Guidelines, revised in

June 2000, provide a framework and principles for reporting on environmental, social and economic corporate performance. AA1000, a standard for the social reporting process, was developed by the Institute of Social and Ethical Accountability and publicly released in 1999. During the late 1980s and 1990s, non-governmental organizations have been at the forefront of campaigns on social and environmental issues, becoming a powerful force in both publicizing a wide range of corporate social responsibility issues and in pressuring companies to address them. Representing particular stakeholder issues, they have challenged corporate reporting of social and environmental performance and demanded independent monitoring of social issues, as well as audits of social and environmental reporting processes.

Global

Reporting

Initiative

Sustainability

Reporting Guideline:
The Global Reporting Initiative (GRI) is multi-stakeholder initiative, formed to develop globally applicable guidelines that can be used voluntarily by reporting organizations. The Sustainability Guidelines on Economic, Environmental and Social performance, launched in May 1999 and updated for rerelease in June 2000, were designed to help companies report on the economic, environmental and social impact of their business operations. The guidelines acknowledge independent verification as a measure of providing assurance for reliability

and completeness of sustainability reports. They also recognize the potential for verification to enhance the quality of Information within an organization and the underlying management systems and processes. An annex of the guidelines outlines principles for verification and offers advice as to what may be expected from verifiers such as contents for inclusion in the verification report. The guidelines suggest the principles and standards for verification of social reports need to allow for more diverse approaches than are used in traditional financial auditing, while maintaining fundamental audit concepts necessary to provide assurance and credibility. Accountability 1000 (AA1000): AA1000, developed by the Institute of Social and Ethical Accountability and launched in November 1999, is a process standard setting out principles and a method for social reporting that focus on the process rather than the content of the social report. Within the standard are guidelines addressing principles for the conduct of the social and ethical auditor. They also offer a framework for the audit process, covering the terms of engagement through to reporting the audit. These guidelines however, do not form part of the AA1 000 standards and are not for the purpose of certifying a social report AA1000 compliant. They are aimed to be a tool for companies and a framework that can be referenced by auditors, in order to describe to readers of the report, the audit process and principles that have been followed.

Social Accountability 8000 (SA8000): Social Accountability International (formerly Council on Economic Priorities Accreditation Agency) launched SA8000 in 1997, as a standard labor and workplace Conditions. It is also a system for independent verification of factories compliance to the standard. The SA8000 system is modeled On the International Standards Organization (ISO) standard, ISO 9000, used by companies to ensure quality control and to demonstrate the quality of business systems and operations to customers. SA8000 builds on ISO auditing techniques: specifying corrective and preventive actions; encouraging continuous improvement; and focusing on management system and documentation proving these systems effectiveness. SAl accredits firms usually known as certification bodies to be external auditors, certifying manufacturing facilities for conformance to SA8000. While SA8000 uses independent auditors to certify companies as compliant with the standard, this certification and audit relates to companies actual performance in regard to labor condition, rather than the public reporting of their performance. It is including here however, as a significant contributor to the development of auditable social performance factors. International Standards Organization: The International

Standards Organization (ISO) has produced a number of auditable standards and accreditation systems for reporting on corporate performance. In particular, it provides on

environmental management systems (ISO 14000 series). ISO 14002 is a guide for environmental auditing and qualification criteria for environmental auditors. As yet, however, there are no ISO standards that specifically address social reporting and auditing. International Audit Practices Committee (IAPC)

International Standards on Auditing (ISAs): the Committee is part of the International Federation of Accountants, and organization of national professional accountancy organizations that represent qualified public Accountants. Recognizing the differences in national auditing standards, the IAPC has developed International Standards on Auditing that can be applied to the practice of financial audit internationally. However, they contain standards and principles that can be applied and adapted to the audit of non-financial information.

Coalition

of

Environmentally

Responsible

Economies (CERES):
The CERES Report is a standardized format for corporate environmental reporting developed through collaboration by companies, institutional investors and environmental organizations. The CERES Report establishes the environmental performance data that should be disclosed, suggests methods of measurement, and thereby helps companies to track their environmental performance in quantifiable ways. Participating companies receive feedback on their reports, and the reports

undergo a joint prepublication review to ensure clarity and conformity to the standard. The idea that business has stakeholders other than shareholders is not new, at least in the western advanced economies. Large auditing firms like KPMG and Price water House Coopers continue to receive assignments of audit Triple Bottom lines the financial bottom-line, environmental bottom lines and ethical/social bottom lines.

1.3

CORPORATE

SOCIAL

RESPONSIBILITY

DEFINED
Corporate social responsibility is necessarily an evolving term that does not have a standard definition or a fully recognized set of specific criteria, With the understanding that businesses play a key sole on job and wealth creation in society, CSR is generally understood to be the way a company achieves a balance or integration of economic, environmental and Social imperatives while at the same time addressing shareholder and stakeholder expectations. Different organization has framed different definitions: The World Business Council for Sustainable Development (WBCSA) in its publication Making Good Business Sense by Lord Holmes and Richard Watts, Used the following definition.

Corporate

Social

Responsibility

is

the

continuing

commitment by business to 1? have 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. 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 and the From Ghana, through to CSR is about business giving back to Government Society from the Philippines. Traditionally in the United States, CSR has been defined much more in terms of a philanthropic model. Companies make profits, unhindered except by fulfilling their duty to pay taxes. Then they donate a certain share of the profits to charitable causes. It is seen as tainting the act for the company to receive any benefit from the giving. The European model is much more focused on operating the core business in a socially responsible way, complemented by investment in communities for solid business case reasons. This model is more sustainable because: cultural differences and finds the business opportunities in building the skills of employees, the community

1. Social responsibility becomes an integral part of the wealth creation process which if managed properly should enhance the competitiveness of business and maximize the value of wealth creation to society. 2. When times get hard, there is the incentive to practice CSR more and better if it is a philanthropic exercise which is peripheral to the main business, it will always be the first thing to go when push comes to shove. The business for social responsibility defined CSR. as follows: Corporate social responsibility operating a business in a manner which meets or excel the ethical, legal commercial and public expectations that a society has from business. Corporate social responsibility is essentially a concept where by companies decide voluntarily to contribute to a better society and a cleaner environment is how phrased in the European green paper Promoting European frame work for CSR. In the words of Millen baker CSR is about how companies manage the business processes to produce an overall positive impact on society. CSR is accepted as applying to firms where ever they operate in the domestic and global economy. The way business engage/involve suppliers, the shareholders, employees, customers, governments, nongovernmental organizations

(NGOS), International organization and other stake holder is a key feature of the concept. While business compliance with

laws and regulations on social, environmental and economic objectives set the official level of CSR performance. From a progressive business prospective, CSR usually involves focusing on new opportunities as way to respond to interrelated economic, societal and environmental demands in the market place. Many firms believe that this focus provides a clear competitive advantage and stimulates corporate innovation. CSR is seen as the business contribution to sustainable development which has been defined as development that meets the need of the present without compromising the ability of the future generation to meet their own needs. CSR commitments and activities typically address aspects of a firms behaviors (including its policies and practices) with respect to such key elements as: health & safety, environmental protection, human rights, human resource management practices, corporate governance, community development and consumer protection, labor protection, supplier relations, business ethics, and stakeholder rights. Thus, CSR is viewed as a comprehensive set of policies, practices and programs that are integrated throughout business operation and decision making process that are supported and rewarded by top management. 1.4 THEORETICAL VIEWS: Many experts feel that business corporation exist primarily to produce goods and service that society wants and needs.

There are three or four theoretical views about Corporate Social Responsibility. They are discussed in the following paragraphs. Milton Friedman, a Nobel laureate, held the view that the only social responsibility of business was to maximize profits for shareholders, staying within the realm law. Achieving this is their First objective and foremost responsibility. If they are

unsuccessful in this mission, they cannot reasonably be expected to assume other responsibility. His very famous statement says it all The business of business is business. Friedmans defense of this theory depends importantly on the factual claims about the efficient working of the markets. He has also proposed the following arguments: (a) Business executives have no special competence to directly promote th general welfare. And since they are not democratically elected and are not accountable to the general public, business executives should not impose their own vision of the public good on the society. (b) When business sacrifices profits for the sake of promoting social ends, they are violating the rights of the shareholders, and in effect stealing their money. Wang & Coffey also hold a similar view, when they saw that Business has no democratic mandate, historic role or other basis for legitimacy in this area. Any choices made by them e.g. to back one type of cause or another, are not sanctioned by

any agreed system of legitimacy and end up reflecting the interest, prejudice and aims of current corporate leaders. Hayek and Heilbroner also express similar view in their wellknown essay In the Name of Profit. Task Force set up in the USA as also the Libertarian Party in the USA is known to have taken similar position on the subject. Andrew Carne2ie, The legendary steel tycoon, writing in the year 1889 believed that rich had the moral obligation to give away their fortunes and that personal wealth beyond the familys needs should Be regarded as trust fund for the benefit of the society. The Trusteeship Concept advocated by M.K. Gandhi in India is something very similar. The steel tycoon also believed that the money should be given during the benefactors lifetime to ensure that it achieved the maximum good. Carnegie had identified seven best uses to which a millionaire can devote the surplus of which be must regard himself as only the trustee. These were: The founding of a university Providing free libraries Founding or extension of hospitals, medical colleges and laboratories Public parks Providing halls suitable for meetings and concerts of elevating music.

Public swimming baths Ones own church and churches in poor neighborhoods. He advocates benevolent, paternalistic leadership and has enunciated the Charity Principle and Stewardship principal Keith Davis feels that social responsibility is often referred to as having risen from an Enlightened Self Interest where organisations realize that it is in their own best interest to act in ways that community considers socially responsible. He talks about the Iron Law Responsibility. In the long run, those who do not use power in a way society considers responsible will tend to lose it. In USA, there is 5% club, where a group of companies donate five percent of their pre-tax profit to charity. In India, many large companies do the same thing in the name of religion either build temples (mainly Hindu), run charitable religious trusts (mainly Paris), give to the church fund (mainly Christian) or promote the study of religious (mainly Kuranic) literature. Some experts classify these as enlightened self-interest. Tom Cannon, holds the view that society and the corporation or business have to co-exist and have a mutually beneficial relationship. Business is expected to create wealth, supply market, generate employment, innovate and produce a sufficient surplus to sustain its activities and improve its competitiveness while contributing to the maintenance of the

community in which it operates. Society is expected to provide an environment in which business can develop and prosper, allowing irwestors to earn returns while ensuring that the stakeholders can enjoy the benefits of their involvement without fear of arbitrary and unjust action. Business depends for its survival and long-term prosperity on society providing the resources people, raw materials, services, infrastructure. To convert raw material into profitable goods/services, it needs these inputs from the society. Business relies on society. a) Supplying a mean of exchange typically money to allow it to convert the goods it produces into assets. b) Without a legal, judiciary and a policing system, business could not be certain that it was safe to enjoy the rewards of its enterprise. c) Trade agreements and defense are needed to ensure long term stable trading conditions. SOCIETY provides BUSINESS provides > Means of Exchange > Products & Services > Trained Manpower > Direct & Indirect Employment > Legal & Banking > Income Generation in System terms of Wages, dividends, taxes, interest > Social infrastructure

Like Road, Schools, Hospitals etc. In addition to the above, with the advent of the joint Stock Company society grants to business two very special rights to assist business in performing its role-The first is Potential immortality and the second is Limited Liability. Thus, according to Cannon, in return for these special privileges being granted to business, it does have a responsibility to fulfill to the society/community at large.

1.5

ACTION

PLAN

FOR

CORPORATE

SOCIAL

RESPONSIBILITY
There are several areas of action plan for corporate socialresponsibility. 1- Environment and Eco1oy Reduce consumption of energy, water and other natural resources and emission of hazardous substances. Established environment management system. Use recycled and recyclable products. Increase durability of products and minimize packaging. Train staff in environmental issues.

2. Health and Well Being Establish policies to ensure the health and safety of all employees which are known to employees. Involve employees in business decisions that affect them. Operate open book policies. Consult employees on how to handle a down turn in the business if layoffs are avoidable, offer outplacement services, retraining and severance benefits. Provide training opportunities. Extend training to life management, retirement planning and dependents care

3. Diversity and Human Rights Work with charities, job centers to redesign jobs to make them accessible to disadvantaged. Set the tone in not tolerating sexist, racist, homophobic jokes. Support organizations that promote fair trade and human rights compliance. Make sure that staff member is aware that there are explicit policies against discrimination in hiring, salary, promotion, training, or termination of any employee on basis of gender, race, age, ethnicity, disability. 4. Community

Encourage employee volunteering in the community, payroll giving and back up with financial contributions and help in kind. Make some of business products or services available free or at cost to charitable products. Look for opportunities to make surplus product and redundant equipment available to local schools, charities and community organizations. Offer quality work experience for school children and students. Collaborate with local teachers to make the activity of business the subject of school project. Use business experience to help local school of charity. Use marketing budget to associate business with social cause. 1.6 EMERGING AREAS OF CORPORATE SOCIAL

RESPONSIBILITY There are several emerging areas of corporate social

responsibility social responsibility, business responsibility, environmental responsibility and stakeholder involvement. Areas of social responsibility include respecting human rights, contributing to social economic development, employee welfare this includes right to organize, eliminating child labour, non discrimination, living wage and social security, training, safety, health and well being, lifelong learning, empowerment of employees etc.

Consumer protection includes right to information. Respect for national sovereignty and local communities for multinationals. Sharing resources with underprivileged communities. Investing in sustainable development programmes for the community. Areas of environmental responsibility include respect for environment and environment friendly technologies. Use, conservation and discharge of energy, material and water in eco-friendly manner. Adopting preventive and precautionary measures for

environment pollution control. Rectifying environmental damage at source. Treating waste before disposing it. Preservation of biodiversity. Promoting and implementing an environmental policy for sustainable energy and environment. Areas of business responsibility include Compliance with tax laws and other regulations. > Investing in developing science and technology. > Fostering ethical trade practices.

Regulating suppliers CSR practices and distributors CSR practices and transparent financial reporting. Areas of corporate social responsibility includes Extension of principles and ethical values enshrined in organization to all its stakeholders such as authorities, customer groups, business partners and external influences. 1.7 WHY CORPORATE SOCIAL RESPONSIBILITY? David Wheeler and Maria Silanpa in The Stakeholder

Corporation state that by 1998. 51 out of the 100 largest economies were not nation states, but corporations. According to Wheeler & Sillanpa, in 1998. General Motors was bigger than Denmark. Toyota was bigger than South Africa. Yet at the beginning of the 2l century, the gap between the worlds rich and poor is wider than ever before. In 1999, The United Nations reported that the worlds then three richest people Bill Gates of Microsoft, the Suttan of Brunei and the Watton family of the Wall Mart retail chain were worth more than the combined gross domestic product of the worlds 34 poorest nations. Thus, the modern day large corporations are often large than nation states. Rich individuals on and command resources that are so large, often larger as compared own smaller/poorer nations. With great power (and size), comes great responsibility. The second important development in the late 20th century has been the rollong back of the State. It is increasing being realized that the State cannot and should not perform all

functions it was performing in the earlier periods. In many countries, national and local governments have taken a hands off approach to regulating business, both due to (a) Globalization of Trade & Commerce most experts are averse to legal interventions. Internationally self-regulation linked to openness, transparency & accountability seems to generate by far the maximum response, in response to liberalization role of state is shrinking. (b) Shrinking of resources Most of the government at the national and local levels are experiencing shortage of funds and a shrinking resource base. Over the past decades, a growing number of companies have recognized the business benefits of CSR polices and practices. Their experience has been bolstered by a growing body of empirical studies, which demonstrate that CSR has a positive impact on business economic performance and it is not harmful to shareholder value. Companies have also been encouraged to adopt and / or expand CSR effects as a result of pressures from customers, suppliers, employees, communities, investors, activist organization and others stake holder. As a result, CSR has grown dramatically in recent years with companies of all sizes and sectors developing innovative strategies. 1.8 BUSINESS CASE FOR CSR (BENEFITS)

The factors that have become the primary measures of an organization credibility for todays CSR success are as follows: 1. Improved financial performance: - A recent longitudinal Harvard University study has found that stakeholder balanced Companies showed four times the growth rate and eight times employment growth when compared to companies that focused only on shareholder and profit maximization, 2. Enhanced brand image & reputation A company

consultant socially responsible can benefit both by its enhanced reputation with the public, as well as reputation within the business community, increasing a companys ability to attract capital and trading partners. For example, a 1997 study by two Boston College management professors found that excellent employee, important customer than and community shareholder relations returns are in more strong earning

corporations a place and Fortune magazines annual Most Admired Companies list. 3. Increased sales and customer loyalty - A number of studies have suggested a large and growing market for the products and service of companies perceived to be socially responsible. While business must first satisfy customers key buying criteria such as price, quality, Appearance, taste, availability, safety and convenience. Studies also show a growing desire to buy based on other value-based criteria, such as sweatshop-free and child labour-free clothing, products with smaller environmental impact, and absence of genetically modified materials or ingredients.

4. Increased ability to attract and retain employees Companies perceived to have strong CSR commitments often find it easier to recruit employees, particularly in tight labour markets. Retention level may be higher too, resulting in a reduction in turnover and associated recruitment and training costs. Tight labour markets as well the trend toward multiple jobs for shorter periods of time are challenging companies to develop ways to generate a return on the consideration resources invested in recruiting, hiring, and training. 5. Reduced regulatory oversight - Companies that demonstrate that they are engaging in practices that satisfy and go beyond regulatory compliance requirements are being given less scrutiny and more free reign by both national and local government entities. In many cases, such companies are subject to fewer inspections and paperwork, and may be given preference operating or fast-track zoning treatment variances when or applying forms for of permits, other

governmental permission. 6. Easier access to capital - The Social Investment Forum reports that, in the U.S. in 1999, there is more than S2 trillion in assets under management in portfolios that use screens linked to ethics, the environment, and corporate social responsibility. It is clear that companies addressing ethics social and environmental responsibility Have rapidly growing access to capital that might not otherwise been available. 1.9 FACTORS AFFECTING CSR

Important factors which influence the CSR of companies include the following Promoters and top mana2ement The values and vision of promoters and top management is one of the very important factors which influence the corporate social responsibility. 2. Board of directors As it is the Board of Directors which decides the major polices and resource allocation of company, the attitude of the members of the Board is an important influence of the social orientation 3. Stakeholders and internal power relationship- The attitude of various stakeholders like shareholders, creditors, employees, etc. and the internal power relationship also affect the social orientation of a company. As suggested by the Halals model, a firm can only attempt to unite the diverse interests of various social groups to form a workable coalition engaged increasing value for distribution among members of the coalition. Beyond a certain level of economic activity, the social issues at stake may become conflicting. 4. Societal factors The social orientation of company is also influenced by certain characteristics of the society and general attitude and expectation of the society regarding he social responsibility of business. For example, a resourceful firm located in a poor community may be expected to contribute to the development of education and health facilities, etc. of the locality where as such involvement may not be required of a firm in a well developed community. The orientations or approaches may

vary in accordance with the environment. The behavior or social orientation expected of business may vary between different societies. 5. Industry and trade associations Industry and trade associations also influence the behavior of the firms by establishing professional and ethical codes and norms, education and collective decision. 6. Government and laws Laws are societys codification of right and wrong. Business shall play the rules of the game. Antitrust legislations, legislations to curb corruption, unfair practice, etc. vary between nations. What is right or not antilaw in one county may not be so in some other county. Further, what is legally controlled in some countries have no legal control in some other counties. Beside legislation, there are other methods of government influence like guidelines, persuasion, incentives (like tax exemptions) and pressurizing. The social orientation would also depend on the

governments view of social responsibility and the power and earnestness of government/agencies (like SEBI, for example) in dealing with defaulting companies. 7. Political influences Political influences include pressure exerted by special interest groups in society and media to control business practices. These include a variety of nongovernment organizations (NGOs) like consumer interest groups, environmentalist, etc, They use a variety of methods like lobbying to persuade government and public agencies to adopt regulatory measures, conducting public awareness

campaigns, and even direct confrontation with the business in some cases. 8. Competitors- Social orientation of company is also influenced by competitive forces. Two types of competitive behavior are often noted. When one or some companies become socially involved, others may be encouraged or provoked to do something. Sometimes, there may be competition between companies to out-perform others. The other way by which the society benefit by competitive behavior is the actions of suing competitors for unfair practices or publicly exposing the misbehavior of competitors. 9. Resources Social involvement of companies is also affected by the financial position and other resources of the company. It may be noted that the Tisco has been constrained to cap, albeit at fairly high level, its social responsibility expenditure. 10 Ethical influence another factor influencing the social orientation is the ethical decision making and self-regulation of business conduct. Some companies have well laid down codes and norms of ethical behavior. Five ethical standards that are in vague are summarized by Gene Laczniak as follows. 1. The golden rule Act in the way you would expect others to act towards you. 2. The utilitarian principle Act in a way that result in the greatest good for the greatest number.

3. Kants categorical imperative Act in such a way that the action you take could be a universal law or rule of behavior under the circumstances. 4. The professional ethic Take actions that a disinterested panel of professional colleague would view as proper. 5. The TV test Ask, Would I feel comfortable explaining to a national TV audience why I took this action. 1.10 RESPONSIBILITIES TOWARDS DIFFERENT SECTIONS OF SOCIETY This is no unanimity as to what constitutes social responsibility of business. The important generally accepted responsibilities of business to society are described below. The pity is that some multinationals which appreciate their social responsibility in respect of the developed countries do not have the same approach in respect of the developing countries they operate in. It is at the same time equally true that some MNCs fair much better in social responsibility than many domestic firms. Responsibility to Shareholders The responsibility of a company to its shareholders, who are the owners, is indeed a primary one. The fact that the shareholders have taken a great risk in making investment in the business should be adequately recognized.

To

protect

the

interests

of

the

shareholders

and

employees, #the primary business of a business is to stay in business. To safeguard the capital of the shareholders and to provide a reasonable dividend, the company has to strengthen and consolidate its position. Hence, it should develop and improve its business and build up its financial independence. Needless to say, to provide dividend, the company should earn sufficient profit. Adequate reserves should be built up so that it will be able to declare a reasonable dividend during a lean period as well. If a company fails to cope with changes in a changing and dynamic world, its position will be shaken, and the shareholders interests will be affected. By innovation and growth the company should consolidate and improve its position and help strengthen the share prices. The shareholders are interested not only in the protection of their investment and the return on it but also in the image of the company. It shall, therefore, be the endeavour of the company to ensure that its public image is such that the shareholders can feel proud of their company. It may be mentioned here that the shareholders also have certain responsibility which they have to discharge to protect their own interests. They shall not only offer whole-hearted support and co-operation in the positive efforts of the company but shall also guide and control properly its policies and activities. At the same time, they shall appreciate the

responsibility of the business to other sections of society-to the workers, consumers and the community Responsibility to the Employees The success of an organization depends to a very large extent on the morale of the employees and their whole-hearted cooperation. Employee morale depends to a large extent on the discharge of the companys responsibilities to them and the employer-employee relationship. The responsibility of the organization to the workers include: 1. The payment of fair wages. 2. The provision of the best possible working conditions. 3. The establishment of fair work standards and norms. Responsibility to Consumers According to Peter Drucker, there is only one valid definition of business purpose; to create a customer. Drucker observes. The customer is the foundation of a business and keeps it in existence. He alone vies employment. To supply the wants and needs of a consumer, society entrusts wealth-producing resources to the business enterprises. It has been widely recognized that customer satisfaction shall be the key to satisfying the organizational goals, important responsibility of the business to the customers are:

1. To improve the efficiency of the functioning of the business so as to (a) increases productivity and reduce prices, (b) improve quality, and (c) smoothen the distribution system to make goods easily available. 2. To do research and development, to improve quality and introduce better and new products. 3. To take appropriate steps to remove the imperfection in the distribution system, including black-marketing or profiteering by middlemen or anti-social elements. 4. To supply goods at reasonable prices even when there is a sellers market. 5. To provide the required after-sales services. 6. To ensure that the product supplied has no advice effect on the consumer. 7. To provide sufficient information about the products, including their adverse effects, risks, and care to be taken while using the products. 8. To avoid misleading the customers by improper

advertisements or otherwise. 9. To provide an opportunity for being heard and to redress genuine grievances. 10. To understand customer needs and to take necessary measures to satisfy these needs.

Despite the popularity of the Marketing Concept and the growing awareness of consumer rights, consumers all over the world are, by and large, dissatisfied. Consumerism, which is an organized Endeavour of the consumer to protects their rights. [s a manifestation of this fact? In shortage economies like India many businessmen pay scant attention to their responsibilities to consumers. To protect consumer rights and to make business discharge its responsibilities to them, the consumer should give up their indifferent attitude and build up a strong consumer movement. Responsibility to the Community A business has a lot of responsibility to the community around its location and to the society at large. These responsibilities include: 1. Taking appropriate steps to prevent environmental pollution and to preserve the ecological balance. 2. Rehabilitating the population displaced by the operation of the business, if any. 3. Assisting in the overall development of the locality. 4. Taking steps to conserve scarce resources and developing alternatives, wherever possible. 5. Improving the efficiency of the business operation. 6. Contributing to research and development. 7. Development of backward areas.

8. Promotion of ancillarisation and small-scale industries. 9. Making possible contribution to furthering social causes like the promotion of education and population control. 10. Contributing to the national effort to build up a better society. 1.11 CORPORATE SOCIAL RESPONSIBILITY IN INDIA In India, corporate, as anywhere else in the world are striving to improve the public image of business. It is not dirty business any more. Most companies believe in being and becoming good corporate citizen. They see the value or giving back to the community which contributed to their success. Corporate social responsibility is no longer mere philanthropy. Though still largely voluntary, it is seen as imperative for sustainable business. And, there is growing evidence that socially responsible investment by ethical companies brings in higher returns on a long term basis. Large public sector companies are investing up to 5 percent of profits towards social uplift and community development. Companies in the Energy sector especially ONGC have committed resources by adopting a few villages to implement President Abdul Kalams idea of PURA (Provision of Urban Amentities in Rural Areas), National Thermal Power Corporation has established a trust to work for the cause of the physically challenged people. In the private sector the Tata Steel has been a pioneer. Their contribution to social and community development in the tribal belt of Jharkand is so

legendary that at one time the company used to say that we also make steelThey were the first in the country to have got a social audit done. In 1999 Kofi Annan of the United Nations invited corporate leaders for Global Compact to promote nine principles covering three areas: human rights, labour rights and sustainable development. Today, India can be legitimately proud to have had the second largest number of companies from any county sub-scribing to Global Company. Several public sector companies have joined together to form Global Compact Society of India. In 2001, European Union-India Network for CSR was launched to bring together European and India Companies and Stakeholders to look at selected issues of CSR. The Indian partner in this venture is the Business and community Fundation (BCF), a non-profit body set up in New Delhi for Indian and international companies, in association with the International Business Leaders Forum. In 2004-5 UNDP and the Confederation of Indian Industry (CII) have networked with academics and brought out 18 case studies on CSR covering as many companies BILT, Excel, Hindustan Lever, IFF-CO, NTPC, Times of India and Titan among others in a book edited by CV Baxi of MDI and Ajit Prasad of IMI. Rajeshree Biria, Chaiperson, Centre for Community Initiatives and Rural Development Initiatives and Rural Development at Birla Group makes a business case for corporate in India to shoulder CSR, For us in corporate world to expect that the government alone should address welfare issues is both unfair and unrealistic Indias needs are huge and the resources of the state are

limited. Chairman Y C Deveshwar asserted in ITCs Sustainable Development Report, 2005, the contribution of companies should be measured by the triple bottom line: economic, environmental and social. The message is loud and clear: Societal well being is a prerequisite for business prosperity. Companies which put people before profits and which care for sustainable development are the ones who will survive the competitive pressures. 1.12 ARGUMENTS AGAINST CSR If the arguments against a socially responsible approach were widely accepted no body would even be talking CSR. But those of us who spend out time hearing the case for would do well to spend a little time hearing the case against, and considering what should be the response. The following are some of the arguments advance against corporate social responsibility. 1. Business are owned by their shareholders any money they spend on so-called social responsibility is effectively theft from those shareholders-who can, after all, decide for themselves if they want to give to charity. This is the voice of the laisser-faire in the 1 980s still being given powerful voice by advocates as Elaine Strenberg. in US Sternberg argues that there is a human rights case against CSR, which is that a stakeholder approach to management deprives shareholders of their property rights. She states that the objectives sought by conventional views of Social responsibility are absurd. Not all aspects of CSR are guilty of this however, Sternberg stats that ordinary decency, honesty and fairness should be expected of any corporation.

In the first instance, this case strongly depends on the model of social responsibility adopated by the business being a philanthropic one. The starting point assumption is that through CSR, corporations simply get to give away money which rightfully belongs to other people. If CSR is seen as a process by which the business manages its relationships with a variety of influential stakeholders who can have a real influence on its license to operate, the business case becomes immediately apparent. CSR is about building relationship with customers, about attracting and retaining talented staff, about managing risk, and about assuring reputation. The market capitalization of a company often far exceeds the property value of the company. For instance, in many knowledge based industries intangibles account for a large percentage of Capitalization a major part of which rests on the reputation of the company. No company would like to or should risk the reputation of the company. In any case, if shareholders are to be accorded full property right one would expect to see the balancing feature of responsibility for the actiohs taken by the enterprises the often fleetingly own. Since most shareholders remain completely unaware of any such responsibility, it can only fall to the management the controlling mind of the company, to take that responsibility on. 2. The second argument being advanced is that the leading companies who report on their social responsibility are basket cases-the most effective business leaders dont waste time with

this stuff. Look at the recent Most Respected Companies survey by the Financial Times. Who are the most respected companies and business leaders at the current timer? Rather predictably, they are lack Welch and General Electric, and Bill Gates and Microsoft. Neither has achieved their world class status through playing nice. Welch is still remembered for the brutal downsizing that he led his business through, and for the environmental population incidents and prosecutions. Microsoft has had one of the highest profile cases of bullying market dominance of recent times and Gates has been able to achieve the financial status where he can choose to give lots of money away by being ruthless in business. Here again the argument is against short termism (profit maximization) and building to last. Sustainability of enterprise over a long period pre-supposes, co-option of stakeholders on the agenda. 3. The third argument against CSR, runs some what like this Our company is too busy surviving hard times to do this. We cant afford to take our eye off the ball-we have to focus on core business. Its all very well for the very big companies with lots of resources at their disposil. For those fighting for survival, its a very different picture. You cant go spending money on unnecessary frills when youre laying people off and morale is rock bottom. And the odd bit of employee volunteering wont make any difference to our people when they feel cynical and negative about how the company operates.

Corporate social responsibility is often presented as an extra cost, an added burden born by the corporation already struggling to be profitable in a difficult economic phase. But in some situations, the opportunity to improve its business ethics also offers the company extra ordinary marketing and branding possibilities. It is argued that high values are a luxury, which only wealthy and successful companies can afford. We need to pint out that companies known for their ethics adopted these values not when they had become big and prosperous, but when they were small outfits. And it is precisely their values that gave them the backing of the public in difficult times, which enabled them to grow to their present giant size. 4. It is argued that CSR is the responsibility of the politicians. Its not business role to get involved. Business has traditionally been beyond morality and public policy. We expect governments to provide the legal frame work that says what society will put up with. Theres no point, for instance, allowing smoking to remain legal even making large tax receipt from it and then acting as though tobacco companies are all immediately beyond the pale. If you think its to dreadful, you should make it illegal. If not then let us on with the job of meeting the demand out there of adults who can choose for themselves. Whether or not business should undertake CSR and the forms that responsibility should take depends upon the economic perspective of the firm that is adopted. Those who

adopt No classical. View of the firm would believe that the only social responsibility of business is provision of employment and payment of taxes. An alternative view of the firm following the behavioral standpoint theorists that might view CSR activities from a examines political and non-economical

influences on managerial behavior

Friday conference at the American Enterprises Institute will try to answer the question. Is Corporate Social Responsibility (CSR) Serious Business?And not a moment too soon. Though CSR was labeled by free- market icon Milton Friedman as a subversive doctrine much of the business community has embraced it, arguing that it is simply good for our business. Opponents of CSR have naturally argued the contrary. Emphasizing the economic costs of following such a misguide virtue as CSR. But little attention has been paid to the actual arguments made by advocates of CSR within the business community. This is a shame, because a closer analysis of the business case for CSR shows that it is, indeed, based on a set of assumptions that undermine the legitimacy of the free- enterprise system. But before examination the larger question, let us first consider the extent of support that CSR enjoys among the business community. In a 2005 survey of its membership, the U.S. Chamber of Commerce found that 81 percent of respondents agreed that corporate citizenship needs to be a priority for companies. Similarly. KPMGs 2005 International Survey on CSR found that of the top 250 companies in the Fortune 500. 52 percent now publish separate CSR reports, alongside their annual financial reports. And claiming it wants to be one with the consumer. McDonalds has even started a biog devoted to CSR issues. (Issac Post a Regulatory Policy Analyst at the Competitive Enterprises Institute, Washingont DC)

Today, there are many references to corporate social responsibility (CSR), sometimes referred to as corporate citizenship, in our workplaces, in the media, in the government, in our communities. While there is no agreed- upon definition, the World Business Council for Sustainable Development defines CSR as the business commitment and contribution to the quality of life of employees, their families and the local community and society overall to support sustainable economic development. Simply put, the business case for CSR establishing a positive company reputation and brand in the public eye through good work that yields a competitive edge while at the same time contributing to others-demands that organizations shift from solely focusing on making a profit to including financial, environmental and social responsibility in their core business strategies. Despite what the phrase corporate social responsibility suggests, the concept is not restricted to corporations but rather is intended for most types of organization, that such as associations, the community labour for unions, scientific, organizations serve

educational, artistic, public health or charitable purposes, and governmental agencies. In the late l990s, CSR began gain momentum as pressure from consumers, the media, activists and various public organization demanded that companies contribute to society. In large part, the increasing focus on CSR has been fueled by a number of events in recent years, such as the highly publicized financial scandals of Enron and WorldCom, alleged sweatshop labor by retail clothing and sports shoe manufacturers and the

alleged

under-the-table

deals

that

companies

such

as

Halliburton have received. Now, reputation, brand, integrity and trust are increasingly considered important measures of corporate social responsibility. CSR in the Business Community Worldwide, companies and their HR leadership are coming to grips with what exactly CSR means in their organizations and how to strategically include CSR within business goals and objectives. There is growing evidence pointing to the validity of and the demand for CSR. For example, 82% of companies noted that good corporate citizenship helps the bottom line and 74% said the public has the right to expect good corporate citizenship. However, as Niall FirzGerald, chairman of Unilever, explained in his presentation at the London Business School, the reality of corporate social responsibility is there are no precedents to fall back on, and decisions must be based on judgment rather than tried and tested formulae. As the concept of CSR becomes more widely accepted and integrated in business, it is helpful in this discussion to understand that the development of CSR in organizations is in transition. There are basically three generations of CSR in varying stages of sophistication. The first generation has demonstrated that companies can contribute to society without risking commercial success. Today, the second generation is developing more fully as CSR gradually becomes an integral part of companies long-term business strategies. Finally, the third generation addresses significant social issues, such as

poverty and cleanup of the environment. Evidence of the transition of CSR will be discussed throughout this article, with suggestions of how HR professionals can take on leadership roles that can contribute to CSR initiatives in their organizations. The article will also highlight some examples of the impact of CSR and how it may link to the bottom line. Making the business Case for CSR In recent years, intangible assets-company values, human and intellectual capital, reputation and brand equity-have become increasingly important to organizations. Companies that exhibit good corporate citizenship are likely to gain a competitive edge. Below are just a few examples of todays CSR success factors that are fast becoming the primary measures of an organizations credibility. Reputation and Brand Enhancement Company reputation and brand are greatly influenced by public perception. For example, in the largest global survey of the publics expectations, the Millennium Poll on Corporate Social Responsibility documented that over 25,000 individuals across 23 countries on six continents revealed they form their impressions of companies by focusing on corporate citizenship and two out of three people want companies to go beyond making money and contribute to broader society goals. Increasingly, there are success stories that show companies are listening to the public. A recent example is that of Ecolab of St. Paul, Minnesota, that quickly developed new products to address unexpected hazards with an antimicrobial disinfectant

product in response to foot and mouth disease in livestock and another new product to combat SARS at the Toronto airport. Today, companies are also seeking avenues of public acknowledgement of their employer brand. For example, Business Ethics Corporate Social Responsibility Report publishes a list of the 100 best corporate citizens. Companies are ranked by social scores regarding environment, community and customer relations, employee relationships, and diversity. One of the 2004 winners was Proctor & Gamble, which donated funds to help disadvantaged youth in Vietnam, combat childhood malnutrition in India and provide earthquake relief in Turkey. Another critical aspect of reputation and brand, as a CSR success factor, is the impact on a companys sustainability-that is, the conditions or characteristics that support an organization to continue its business, including environmental, social and economic aspects of the company. Ultimately, the environmental, social and economic health of a company transfers into dollars that either directly or indirectly affect reputation and brand, and thus the bottom line. For example, a company whose product contributes tO the safety of the environment will likely be favorably viewed by the public. Or, a company that supports community events may generate public approval. Both examples may yield additional applications for employment or employee referrals, thus potentially lowering the time and cost per hire. The final CSR report card is directly linked to the companys sustainability and consequently influences critical success factors such as reputation and brand.

Accountability and Transparency Open, reliable and regular reporting of a companys performance- known as accountability and transparency in CSR terminology-is quickly becoming a public issue and one that FIR leaders will need to keep in the forefront, As a sign of the times, large companies are beginning to publish company information, once deemed at too sensitive to release, with expectations for their suppliers and their internal human resources practices. However, few companies give robust performance measures, with fewer yet being independently verified. The clothing industry, fir example, has been criticized for how workers are treated in factories in their supply chain. Setting an example, Gap, Inc. released its first Social Responsibility Report, emphasizing the organizations commitment to working with key players to create industrywide change. It also took a proactive stance on employee treatment workers. Risk Management Managing investor confidence is another factor supporting the business cake for CSR, Today, the financial community is examining organizations CSR report cards and their risk profile. The rapid rise of socially responsible investment illustrates that corporate citizenship is becoming a key measure that investors consider when aligning ethical concerns with publicly held corporations. For example, the Dow Jones Sustainability by prohibiting child labor, forced labor and discrimination and protecting freedom of association for

Indexes

track

the

financial

performance

of

the

leading

sustainability-driven companies worldwide, and the Domini Social Investments screen companies for corporate citizenship, diversity, employee relations, non-U.S. impact, environmental responsibility and safe and useful products. In view of the increasing importance placed on socially responsible investment, this is an opportunity for HR leaders to consider programs, such as community events, that may generate investor confidence linkirg CSR initiatives to the bottom line. The Talent War With the anticipated labor shortage in the next 10 to 25 years, attracting, developing, motivating and retaining talent is, and will continue to be, very important. Correspondingly, CSR influences a companys competitive advantage today through two key value drivers: 1) company reputation and brand; and 2) human capital, HR leaders have begun to assume leadership roles to address both areas. For example, a positive CSR initiative was documented by an employee survey that illustrated the pride of employees regarding their companys contribution to a local AIDS organization In addition, the talent war is evidenced by an influx of best places to work awards (e.g. Fortune magazines 100 Best Companies to Work For.) There are many such programs, located in communities and business organizations that highlight the company andJor the HR professional. By applying for and winning these awards, HR leaders can gain invaluable exposure for their organizations and use the award as a key

feature in recruiting campaigns. Thus, a strong argument for CSR is talent management in both the short and the long term. Challen2es to the Business Case for CSR The business case for CSR is not necessarily a simple one. Among the challenges is that social andlor environmental impact differs across industries, complicated by the fact that the term CSR has different meaning 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 of company core business activities-or is it merely an insincere effort to boost public relations? In some organizations, CSR is still considered to mean compliance and philanthropy, although some large companies are now placing CSR in a more strategic framework. Further, there is the question of how to measure CSR. For example, a survey of 539 CEOs in 40 countries examined the strategic importance of communication regarding corporate citizenship to investors. One of the largest obstacles noted was the lack of a rigorous, credible business case backed up by performance indicators and metrics that can be quantified and benchmarked. Further, investment in CSR is not yet being taken seriously by some organizations. Only 30% of executive said their company increased overall business investments in corporate citizenship in the last year. The same report indicates resources and resistance as barriers to practicing corporate citizenship and CSR.

Not all organizations may have the resources (e.g., funds, time, staff) to fund. Into CSR initiatives. However, CSR programs may not be expensive or require a significant time commitment. Organizations that are interested in CSR may choose to start with small projects that showcase their commitment to their workforce and the community. HR leaders can help address this challenge by considering different options and developing creative approaches to CSR to present to their company. Below are recommendations to consider: Network with other HR professional to learn about their organization, CSR initiatives (ideas and information about programs; what worked and lessons learned) o Explore partnering with other organization (e.g., co-sponsor a community event). o Contact local business organization, such as the Chamber of Commerce, to learn what events they sponsor and how the company may contribute. o Solicit employee suggestions regarding CSR initiatives. Thus, it is at this point that FIR leadership, as the eyes and ears of the organization, is key to the CSR equation. As discussed in the next section, HR has the opportunity, through wellmanaged programs, policies and practices, to engage the organization and its stakeholders (e.g., owners, employees, management, customers, creditors, the government and other public organization) in the value of CSR by focusing on communications, employee relations, health, safety and

community relations to provide their organizations with a competitive advantage. HRs Leadership Role With company reputation, viability and sometimes survival at stake, one of the critical roles of HR leadership today is to spearhead the development and strategic implementation of CSR throughout the organization and promote sound corporate citizenship. Attracting and retaining competent people is one of the primary business reasons for CSR. While strategically including CSR in the organization can begin from different points (e.g., product safety, the board of directors, business development), it makes good business sense for FIR to head the process and partner with strategic leaders in the firm because human capital is arguably the number one intangible value driver. Many HR leaders are already looking ahead to the future. According to the SHRM 2004-2005 Workplace Forecast, key HR trends are 1) demonstrating HRs return on investment; 2) HRs role in promoting corporate ethics; and 3) building people management and human capital components into key business transactions. As this report documents, some HR leaders are taking action now: o 63% are increasing spending on learning and training initiatives. o 40% are changing company policy as a response to environmental issues.

o 36% are changing company policy as a response to grassroots pressure to change specific business practices. o 32% are increasing involvement in social programs. The Status of CSR in the Organization FIR leaders can influence three primary standards of CSRethics, employment practices and community involvement-that relate either directly or indirectly: to employees, customers and the local community, as outlined below. By considering these three CSR standards, HR leaders can then identify the CSR stage or their organization before making decision to develop and implement CSR initiatives. o Ethics Ethical standards and practices are developed and implemented in dealings with all company stakeholders. Commitment to ethical behavior is widely communicated in an explicit statement and is rigorously upheld. o Employment Practicesat Human and all resource and management employed empowerment. and a safe,

practices

promote

personal

professional

development, practices,

diversity

levels and

Employees are valued partners, with the right to fair labor competitive wages benefits harassment-free, family-friendly work environment. o Community Involvement - The Company fosters an open relationship that is sensitive to community culture and needs and plays a proactive, cooperative and collaborative role to make the community a better place to live and conduct business.

Next, prior to launching and/or evaluating CSR initiatives in the organization, consideration of principles, implementation and employer brand will assist HR leaders in determining how and/or why to include CSR initiatives in their company. First, question of principle provide the broad view of CSR-moving from philanthropy and donations to contributing solutions to help solve the large issues such as poverty. Second questions of implementation address practical issues such as incorporating CSR into the performance appraisal process and the softer issues of creating an organizational culture that supports CSR initiatives. And third, question regarding employer brand provide an opportunity for HR leaders to look closely at how their current polices and programs can more positively affect recruitment, retention and talent management. HRs CSR Checklist Taking the long-range view, HR leaders can use a checklist to track the FIR scorecard on CSR as initiatives are developed and implemented over time. As appropriate, changes in direction can be made to correspond with the organizations overall strategy. o Create a strong organizational culture around core company values. o Scan the environment to identif\j potential threats (e.g., competition for talent within the organizations industry sector).

o Build personal and professional capability of the workforce (e.g., expand intellectual capital within the organization and in collaboration with other organizations). o Include ethical concerns in staff performance measures. o Support participated decision-making. Ensure highest standards in work place health and safety. o Encourage active engagement in community activities. Moving Forward with CSR-HR as a Change Agent Focusing on company values, HR leaders set the tone for an organizational culture that is open to and understands CSR, 1IRs role as a change agent-grounded in mutual respect, and open and honest communication-is essential to educate management and employees about including CSR when setting business goals and objectives. Three practical steps to promote change regarding CSR are to 1) establish a workable stakeholder cbnsultation process; 2) use the process to understand the local culture (e.g,. internal-the workforce-or external-the community) at all stages of implementation CSR; and 3) create a sense of ownership between staff who set up a project and those who implement it. Beyond including CSR in the HR management system, HRs role as a change agent continues through keeping the CEO and other members of the senior management team informed of human capital initiatives, the status of community relations, measurements of employment activities and

development of partnerships and for CSR program, both inside and outside the organization. HR and Community Relations One of the most visible CSR initiatives is community relations. Strong community relations can have a positive impact on company reputation and brand. Through community programs that highlight the company doing good work, HR can link critical issues-decreasing turnover, savings on cost per hire and attracting talented individuals-to CSR and the bottom line. There are many other possibilities that HR leaders could explore to match both company and community needs (e.g., cultural facilities for the community,recreational lacilities br employees and their families, an educational project to help prepare tomorrows work force). For example, employees from high-tech companies could work with students on science projects that require technical skills. Further, programs that affect both short-and long- term goals are also strategically advantageous as CSR initiatives, an illustration of such a program is the literacy initiative developed by Time Warner when the company saw that the reading public could have an impact on their short- and long-term goals of product sales. CSR is the Global Arena Internationally, CSR has a strong human rights dimension. This is evidenced, for example, by the United Nations Global Compact the addresses 10 principles in the areas of human rights, labor and the environment with the goal to have the private sector help realize United Nations vision of a more

sustainable and inclusive global economy. Global companies are increasingly placing a stronger emphasis on corporate citizenship activities. The top four citizenship priorities are 1) employee health opportunities/global and safety; 2) sustainability; 4) 3) equal of diversity; and globalization

contributions. Further, companies worldwide are beginning to emphasize the importance of citizenship activities beyond philanthropy. For example, a recent study documents that about 60% of global managers polled indicated these activities result in an enhanced reputation with customers and goodwill that opens doors in local communities. The global CSR agenda is associated with multilateral processes and guidelines. In recent years, there has been a significant growth of codes of conduct worldwide, sometimes referred to as global regime of soft law. These voluntary business conduct principles cover a wide range of corporate citizenship topics from corporate social and environmental responsibility to transparency and fair business practices. Following these international codes of conduct has been shown to yield similar outcomes as domestic C.SR initiatives, such as enhancement of company reputation, increased stakeholder confidence and higher standards of business joining accountability. organizations For such example, as Social companies are increasingly publicly strengthening their global partnerships by Accountability Internationa1s Corporate Involvement Program, the Ethical Trading Initiative and the United Nations Global Compact Therefore, as organizations continue to expand globally, HR

leaders must be cognizant of, promote and demonstrate public support of these codes. Globally, CSR has s significant impact on HR management. For example, HR must be aware that effective CSR means respect for cultural and development differences and sensitivity to imposing values, ideas and beliefs when establishing global HR policies and programs. Externally, global organizations are publishing mission statements, such as the one below by Shell, to publicly announce their intentions of corporate citizenship. using terms such as respect and cultural differences, and focusing on CSR priorities of diversity, health, safety and equal opportunity. We aim to treat everyone with respect. We strive to protect people from harm. from our products and operations. We aim to respect and value personal and cultural differences and try to help people realise their potential . Internally, HR leaders are beginning to take steps regarding CSR by developing and implementing incentives and appraisal systems that reflect citizenship vision and purpose as well as hiring personnel that reflect these traits. For example, research by the Conference Board reveals that 50% of global mangers report their companies do, or plan to, include citizenship as a performance evaluation category. Additionally, 68% of respondents cite the link between citizenship and performance appraisal as increasingly important.

What Does the Future Hold? The impact of CSR is under close scrutiny. There are four primary areas of concern: 1) product responsibility; 2) strategies for sustainability; 3) the quality of CSR management; and 4) the future of CSR overall. Importantly, indications are that organizations will increasingly be held accountable for their actions. According to PricewaterhouseCoopers, within the next 10 years evaluation methods used by Wall Street analyst will include new metrics- social performance and intellectual capital-to more accurately assess the net worth of a company, and within the next five years, 70% of North American and European companies will assign board responsibility for reputation and social responsibility. Over the next five to 10 years, one of the primary test of how society will judge companies will be based on where corporations place their facilities, how they source goods and services and what economic impact they have on poor and disadvantaged communities. Companies will increasingly adopt a comprehensive view of corporate citizenship that includes the environment and community engagement. A proactive and perhaps controversial recommendation regarding human capital and emerging markets is that global corporations consider putting the worlds five billion or so poorest people at the heart of their profit-making strategies-. Not surprisingly, evidence suggests that companies have a long way to go to clearly demonstrate substantive CSR performance For example, a global ranking report notes that

the worlds 100 largest companies have a poor record of accounting for their impact on society and the environment. A range of measures that include strategy, governance and stakeholder involvement show these companies scoring an average of 24 out of 100 points with only five companies scoring more than 50% and only one U.S. Company, HewlettPackard, placing among the 10 highest scorers. Further, the level of effort that the worldwide community is putting into the achievement of the United Nations Millennium Declaration goals is less than half the effort necessary to meet any of the goals. Consequently, since the CSR initiatives of most organizations tend to be peripheral and isolated from their core businesses and the initial momentum gained in the past few years appears too disjointed to make a significant impact in the world, the CSR movement must significantly shift gears in orders to reach its full potential. In conclusion, with the growing importance of human capital as a success factor for todays organizations, the role of HR leadership will become evermore critical in leading and educating organization on the value of CSR and how best to strategically implement CSR policies and programs domestically and abroad. (Nancy R. Lockwood, SPHR, GPNR, HR Content expert, December 2004) CSR and Public Relations With the growing popularity of CSR in the last few years, especially in Europe and more recently in the US a number of

major PR firms have responded by establishing specialist CSR practice groups within their companies. In a review of the role of PR firms in corporate social responsibility programs. Lisa Roner wrote in Ethical Corporation that many early efforts to communicate on corporate responsibility have been high on production value and low on substance. Citing examples such as Hill & Knowition s role in the first Gulf War and the more recent over billing controversy that engulfed Fieishman Hillard over its contracts with a Los Angeles government agency Roner argues, It appears PR firms may have to clean up their own ethics since many corporat&buyers seem to believe that a messenger with internal issues of its own may not be best placed to deliver a credible message. When British American Tobacco was contemplating

producing its first corporate social responsibility report their Corporate and Regulatory Affairs director, Michael Prideaux, sketched some of the benefits of the process as being to build credibility and establish a robust platform on which to build at reputation communication campaign The process will not only help BAT achieve a position of recognized responsibility but also provide air cover from criticism while improvements are being made. Essentially it provides a degree of publicity endoresed amnesty. he wrote. CSR and Regulations

CSR is often used to promote voluntary corporate initiative as an alternative to additional or existing mandatory regulation. The International Chamber of Commerce has aggressively promoted a standards-free concept of corporate responsibility that enables companies to proclaim their responsibility without necessitating companies to meet minimum standard. Accordingly many non-governmental organization are

suspicious of the CSR movement as corporate PR or regulation-dodging The burgeoning industry known as CSR is now seen as a vital tool in promoting and improving the public image of some of the worlds largest companies and corporations. Christian Aid state in its report scrutinizing the record of several major companies. The image of multinational companies working hard to make the world a better place is often just that an image. Whats needed are new laws to make business responsible for protecting human rights, and the environment whatever they work. Christain Aid argued.

CSR & Sales Peoples consumptions patterns are influenced by CSR efforts, according to 2004 survey of more than 400 opinion elites # members of the top 10 percent of society, with regard to media consumption, civic engagement, and interests in public policy issues) in 10 countries, by APCO World wide. Positive CSR information has 72% of the respondents to

purchases a companys product or services and 61% of recommend the company to others. Consersely, negative CSR news led 60% to a boycott a companys products and services. Reported PR week Based its survey, APCO suggested that companies Shape the opinion environment by touching their own CSR efforts, although 91 percent of respondents found CSR more credible when verified by a third-party such as non-governmental organization or local government. The UNs Global Compact The meaning and practical effect of one international CSR program, The Global Compapt of the United Nations, has been debated. Some companies are using it for public relations, admitted consultant Scott Great head, but it fosters dialogue between companies and their civil society critics and lends the stature of the Secretary General to the concept of corporate responsibility. Consultant John Elkigton contends, More attention should be paid to the extent to which corporate lobbying by Global Compact members align or dont align with their state commitment. Also, the lack of enforcement raises real concerns about the longer-term risk to the UNs reputation. he warns according to Business. Business and Conservative Opposition to CSR The Business Council of Australia has come out against Government plans to create legislation forcing directors to meet certain levels of corporate social responsibility (CSR).

Mandating CSR through legislative intervention runs the risk of stifling the innovation and creative approaches to CSR that are being adopted by Australian companies, claims the lobby group, in a submission to a Parliamentary inquiry. The submission stresses, The greatest social contribution made by corporation is through employment, the goods and services they create and the wealth these produce. It also highlights the existing CSR efforts of Council members. The chair of Morgan Stanley Australia says government mandates would result in less meaningful CSR, People would invent a bit of jargon, for example societaly appropriate value maximization, as a way of asserting that they were doing whatever Canberra thought is was causing them to do. In March 2006 Competitive Enterprise Institute analyst Isasc Post wrote, Though CSR was labeled by free-market icon Milton Friedman as s subversive doctrine much of the business community has embraced it, arguing that it is simply good for our business Opponents of CSR have naturally argued the contrary, emphasizing the economic costs of following such misguided virtue as CSR, But little attention has been paid to the actual arguments made by advocates of CSR within the business community this is a shame, because a closer analysis of the business case for CSR shows that it is indeed, based on a set of assumptions that undermine the legitimacy of the free-enterprise system. Competitive Enterprise Institute Editorial Director Ivan Osorio wrote, Clive Crook of the Atlantic Monthly, whose article in The Economist, The Good Corporation, sparked

considerable

debate

on

CSR,

adds

another

important

consideration: Profit seeking serves the social purpose To that I- would add the corollary: By doing anything to reduce their bottom line, companies make the world poorer-and theres nothing responsible in that. On March 3, 2006, the American Enterprise Instittute hosted a conference on CSR titled, Is Corporate Social Responsibility Good Business? The event was part of their joint project with the Federalist Society called NGO Watch. The conference description asked, Is CSR really a win-win situation-as its promoters claim-for both corporations and the public? Corporate leaders struggle with determining to whom their social responsibilities extend: to shareholders, employees, local communities, the environment humanity as a whole, future generations? The conference promised to examine the complex global CSR phenomenon and take an indepth look at Wal-mart. which has been under fire for some of its corporate, social, and environmental practices. Playing FTSE With Social Responsibility Nearly a fifth of the UKs top public companies are still failing to deliver comprehensive reports detailing the economic, environmental and social impact of their business, reports Andy Favell for the Independent Analyses have found corporate social responsibility (CSR) reports form 18 of the British companies on the FTSE 100 Index to be inadequate. Nine of the poor performers are also listed on FTSE-4 Good, which is geared towards socially responsible investment, Favell

explains. FTSE-4 Good initially set fhe bar relatively low and listing requirements are lifted each year, He concludes. It is common to hear both investors and (non-governmental organization) leveling criticism at the standard of CSR reporting as a whole... With a significant number of the FTSE 100 still failing to satisfy on CSR reporting, and green wash accusations against many others, are we really getting the information we deserve? (Source watch, a Project of the centre for Media & Democracy) A survey conducted by Business Community Foundation for TERIEurope during the year 200 1-02. This was a follow- up of an earlier opinion poii conducted by the same foundation during 2000-01. The preliminary conclusions of the earlier poii had noted that high expectations from companies are not yet matched by judgments about corporate responsibility. More trust is placed in the media and NGOs than in business. Multinational Corporations are being viewed with suspicion. Gender discrimination is a real issue in the workplace. Workers and management have sharply diverging perceptions of working conditions. While the first poll sought to explore the perception of workers, company executives and the general public about social, economic and environmental responsibilities of companies in India; the second poi was structured to facilitate documentation of corporate responsibility practices from the perspective of the three stakeholder groups-companies, NonGovernment Organizations (NGOs) and trade unions.

Serious

and

committed

approach

to

corporate

responsibility practices is increasing its reach, but there is a vast ground yet to be covered. Corporate sector is slowly realizing the positive work aspects of corporate and responsibility All practices (goof for business is good business). There is growing collaborative between NGOs companies. stakeholders are increasingly becoming aware of the diverse facets of corporate responsibility practices. Due various internal and external pressures, the climate is conducive for the growth of corporate responsibility practices in India. Although many companies, NGOs and trade were aware of corporate responsibility practices, the study findings suggest that the concepts has yet to become part of core business strategy in most companies in India. Almost all companies, irrespective of size and sector had some awareness of corporate responsibility and its potential benefits. While most companies also had polices in place related to labor issues, community relations and environmental practices, they were for the most part and not backed up by comprehensive Community implementation monitoring system.

programmes or social development initiatives, in most cases, were philanthropic and/or ad hoc in nature and not integrated into core business activities such as marketing and brand management Most companies have labour and environmental policy guidelines in place. This is not surprising given that Indian State Law require that companies meet minimum standards. Policies on working conditions include minimum wage requirements,

health and safety, equal opportunities, nonemployment of child labour, and employee welfare in general. In the area ofenvironmental policy, most companies, especially those industries with a direct impact on the natural environment extractive industries, chemical, manufacturing industries have policies and management system in place. However, there is a wide discrepancy between the perceptions of workers and management about company compliance with labour regulations. Monitoring and reporting on social and environmental issues is found to be limited. Whereas environmental assessments and audits are undertaken in some cases, there is almost no evidence of social audits taking place. The sul4ey observes that they are visible differences by company sector ad size Bigger company, with numerous employees and a large turnover, have more corporate responsibility practices and guidelines in place. However, these tend to be more philanthropic in nature than strategic. There are also some differences with respect to sectors, with the IT industry appearing to have an edge over other (Business Community Founded for TERI Europe) A survey was jointly conducted by Confederation of Indian Industry (CII), United Nations Development Programme (UNDP), British Council (BC) and Price Water. Coopers (PWC). Labeled as the most ambitious attempt to capture the entire gamut of issue pertaining to Corporate Social Responsibility (CSR) in

India, the survey was carried out in September October 2002. The only limitation of the survey was that of the 1,000 companiessmall, medium and large that were sent the questionnaire, only 102 companies responded. Those companies, that see themselves as leaders or early movers appears to represent a high portion of the respondents, says the survey report. The most striking features of the responses to the survey is that the respondents are in near unanimity that CRS is very much a part of United Nations Development Programme (IJNDP), British Council (BC) and Price wates coopers (PWC)j. The first International Conference on Business-Social Partnership: Beyond Philanthropy at the Indian Institute of

Management (TIM) Calcutta, assumes special significance. The four day conference (December 4-7.2002) at TIM-C has brought together the policy makers, corporate heads, trade union leaders, social workers and academicians on a forum to analyze the organizational practices that govern business today. The focus of the conference was to understand the global partnership process between businesses, government add NGOs. (Indian Institute of Management Calcutta, December 4-7, 2002) Corporate Social Responsibility (CSR) has permeated management practice and theory up to a point where CSR can be referred to as the latest management fad (Guthey, Langer, & Morsing, 2006). However,

so far CSR integration into business processes has been very uneven. Hockerts (2008), for example, finds that most firms conceptualize CSR primarily as a tool to reduce risks and operational cost. Only a minority of firms is actually using CSR as a means to drive innovation. In their study of 150 German and British pharmaceutical companies Blum-Kusterer and Hussain (2001) similarly find that regulation and technological progress are the two main drivers for sustainability innovations. They observed that the lure of emerging market niches was no important motivator for the firms studied. This is unfortunate since bringing stakeholders into the innovation process offers important opportunities to increase both the social and financial performance of firms. This report is part of the Nordic Centre on Corporate Responsibility (NCCR) a collaborative research effort, bringing together CSR scholars from Denmark, Sweden, Norway, Finland, and Iceland under the sponsorship of the Danish Commerce and Companies Agency (DCCA) with the goal of studying CSR-driven innovation in the Nordic region. With this literature review Copenhagen Business School (CBS) aims to provide the theoretical grounding of the empirical work to be undertaken by the NCCR. The report falls into five parts: a brief review of key concepts in the CSR debate (i.e. organizational legitimacy, moral choices, stakeholder interaction, and sustainable development) a short discussion of the state of the art of innovation literature (i.e. incremental vs. radical innovations; sustaining vs. disruptive innovation; userdriven innovation, the entrepreneurial process, the role of the

entrepreneur, institutional entrepreneurship) an analysis of extant publications on CSR and innovation (corporate social innovation, base of the pyramid (BOP), social entrepreneurship, and eco-innovations) an analysis of social innovation on all four levels discussed in the first part. we close by providing a list of global examples of social innovation brands.

PART

I:

CSR

BETWEEN DIALOGUE,

LEGITIMACY, AND

ETHICS,

STAKEHOLDER DEVELOPMENT

SUSTAINABILE

In recent years the business strategy field has experienced the renaissance of corporate social responsibility (CSR) as a major topic of interest. The concept has not surfaced for the first time. CSR had already known considerable interest in the 1960s and 70s, spawning a broad range of scholarly contributions (Cheit, 1964; Heald, 1970; Ackermann & Bauer, 1976; Carroll, 1979), and a veritable industry of social auditors and consultants. However, the topic all but vanished from most managers' minds in the 1980s (Dierkes & Antal, 1986; Vogel, 1986). Having blossomed in the 1970s CSR all but vanished and only re-emerged in recent years. CSR resurfaced forcefully over the past ten years in response to mounting public concern about globalization. Firms find themselves held responsible for human rights abuses by their suppliers in developing countries; interest groups demand

corporate governance to be transparent and accountable; rioters from Seattle to Genoa protest violently against the cost of free trade and other perceived negative consequences of globalization. However, nearly two decades of neglect have helped to undo much of the past achievements of corporate social responsibility. It is thus no surprise that both practitioners and scholars are struggling once again to answer the question what the strategic implications of CSR are. The literature on CSR and innovation draws on a number of different theoretical traditions, which often are in contradiction to each other. Wood (1991) describes three levels of analysis: institutional, individual, and organizational. We add to this analysis a fourth level which we will characterize as global. Institutional Level: CSR as Organizational Legitimacy Davis (1973) describes the iron law of responsibility, as the fact that firms exercising power will eventually be held accountable by society. At this level CSR can be best understood as a quest for organizational legitimacy. Firms are under the obligation not to abuse the power invested on them by society or they risk losing societys implicit A Literature Review on Corporate Social Responsibility in the Innovation Process endorsement. More recently this view point has resurfaced as a firms need to retain its license to operate (Post, Preston, & Sachs, 2002: 21). Individual Level: CSR as Moral Choices of Managers

At

the

individual

level,

CSR

has

been

constructed

by

Ackermann (1975) as managerial discretion. According to this view managerial actions are not fully defined by corporate policies and procedures. So although managers are constrained by their work environment they nonetheless have to weigh the moral consequences of the choices they make. The view of CSR is strongly anchored in the business ethics literature (Jones, 1991; Donaldson & Dunfee, 1994; Crane & Matten, 2003). Organizational Level: CSR as Stakeholder Management With Freemans (1984) seminal book the focus moved from legitimacy and morals towards a new theory of the firm. Social considerations are thus no longer outside an organization but are part of its purpose of being. CSR thus becomes a question of stakeholder identification, involvement, and communication (Mitchell, Agle, & Wood, 1997; Morsing & Beckmann, 2006; Morsing & Schultz, 2006). The purpose of stakeholder management was to devise a framework to manage strategically the myriad groups that influenced, directly and indirectly, the ability of a firm to achieve its objectives. (Freeman & Velamuri, 2006) The aim of stakeholder management is thus to analyze how a company can serve its customers and be lucrative while also serving its other stakeholders such as suppliers, employees, and communities.

Recently the stakeholder perspective has dominated the reinterpretation of CSR pushing the question of the legitimacy of corporate power as well as the moral dimension of managerial decisions more into the background. Global Level: CSR as Sustainable Development The latest literature tradition to have impacted our

understanding of corporate social responsibility is that of sustainable development. It was the Brundtland Commission (1987) that for the first time systematically emphasized the link between poverty, environmental degradation, and economic development. Its definition of sustainable development, as meeting the needs of the present, without compromising the ability of future generations to meet theirs, extends the responsibility of firms both inter- and intra generationally. Thus firms are expected to also consider traditionally

unrepresented Stakeholders such as the environment and as well as future generations. Although many CSR authors have taken up the notion of a triple bottom line (Elkington, 1997) there remain important tensions between the CSR and the sustainable development debate (i.e.Dyllick & Hockerts, 2002). PART II: ORGANIZATIONS AND INNOVATION Definitions for innovation abound. From an economic

perspective the following definition can be a useful point of departure:

"Innovation is the process through which productive resources are developed and utilized to generate higher quality and/or lower cost products than had been previously available. [Innovation] requires the visualization of a range of

potentialities that were Previously hidden and that are now believed to be accessible. Thus, innovation strategy is in its essence, interpretative and therefore subjective, rather than 'rational' and objective." (O'Sullivan, 2000: 393, 409) It is important to note, as do Nelson and Winter (1977: 66), that market environments are only one possible social system within which innovations can occur. As will be discussed later innovation can also happen in non-market environments such as the public or voluntary sector.

In this part we will focus on three schools of innovation (Incremental and Radical Innovation, Sustaining and Disruptive Innovation, User-driven Innovation) and three focus areas of entrepreneurship (Exploiting Entrepreneurial Opportunities, The Role of the Entrepreneur, Institutional Entrepreneurship). Incremental and Radical Innovation Radical improvements "represent technical advance so

significant that no increase in scale, efficiency, or design can make older technologies competitive with the new technology."

(Tushman & Anderson, 1986: 441) Lazonick (2001), therefore, differentiates innovating enterprises from merely optimizing enterprises by characterizing innovative enterprises as transforming technological and/or market conditions, so as to differentiate themselves from other forms in an industry to gain sustained competitive advantage. It is an important goal of innovation research to identify, analyze, and select possible innovations and then to implement them internally or through the foundation of new ventures (Servatius, 1994; Van de Ven, Polley, Garud, & Venkataraman, 1999). American aircraft manufacturer Boeing came up with a virtual team combining people from very diverse backgrounds in order to spark radical innovation. Creativity was enhanced by people collaborating across different disciplines, product groups and industries. This became a huge success in the case of the Boeing-Rocketdyne, fundamentally changing the engine structure and thereby the market mechanisms. On the other hand, incremental innovation is non-radical improvements and restructuring of processes occurring within the organization. Consumer goods manufacturer Gillette use incremental innovation to improve the way business is done by every employee at every level and every function within the organization. This came to a restructuring of the collection of receivables by upgrading training and incentives programmes and removing the collection team from the sales department. This generated about $700 million of excess cash.

Sustaining and Disruptive Innovation Innovation can also be characterized by its ability to either strengthen a firm's existing capabilities and market position or to disrupt them by rendering competencies obsolete or reaching out to new customers and so-far unserved markets (Abernathy & Clark, 1985). Christensen (1997) points out that established firms often find it difficult to react properly to new technologies if they happen outside their current markets. He differentiates between sustaining and disruptive technologies (Bower & Christensen, 1995; Christensen, 1997; Christensen & Overdorf, 2000). Sustaining innovations happen in the core market of a firm and result in a product delivering better quality at a lower price. Disruptive innovations occur at the margins of established markets. Providing at first worse quality than existing products, these innovations are ignored by the mass market and consequently by the leading producers. Usually there is only a small group of dedicated customers who buy these products because they like a distinctive feature of the disruptive innovation and otherwise do not care too much about bad quality or high prices. By serving these niche markets innovative firms can build new capabilities that will allow them to extend the niche. Once the disruptive innovation has improved on the

Traditional quality and cost dimensions, innovative firms are then well positioned to attack the mass market. A great industrial example of disruptive innovation is the health care industry, where the so-called Minute Clinics have become an alternative for some people to the hospital emergency room. These walk-in offices provide offerings limited to relatively simple from treatments the specialist and diagnoses. The treatments the are affordable and convenient to a client base otherwise excluded treatments. Thereby, disruptive innovation is established at the rim of the market, eventually positioning itself within the niche to attack the mass market.

Large corporations are many times accused of focusing too much on cost efficiency and defending established market shares on behalf of innovation strategies. Ford Motor Company has seen a decrease in performance due to a corporate culture that prioritized efficiency over innovation. The Toyota story on the other hand offers plenty of sustaining innovation examples that turned the company into a market leader, among these the lean management system. Kim and Mauborgne (1997; 1999; 2005) talk of disruptive innovations as value innovations or blue ocean strategies. Value innovators do not take as given the structures and dynamics in their market, but rather see the possibility of creating new market space. Schumpeter has been the first to describe the creation of competitive space through disruptive

innovation. He calls this the quintessential entrepreneurial act (Schumpeter, 1962 [1934]: 132). User-driven Innovation Eric von Hippel (1979; 1986; 2001) has introduced the notion of (lead) user-driven innovation to describe the ability of user communities to initiate and develop exceedingly complex products sometimes even without any specific manufacturer involvement. He speculates that the power and pervasiveness of such communities could become enormously amplified by the Internets capacity to support collaboration and distribution. While incremental user innovation has been known for many years it is the question whether users can also drive radical innovations that is most debated (Lettl & Gemnden, 2005; Lettl, Herstatt, & Gemuenden, 2006). Empirical research has studied user innovation in so disparate sectors as the medical sector (Shaw, 1985), the sports industry (Shah, 2000; Lthje, 2002; Franke & Shah, 2003; Hienerth, 2004, 2006), and software development (von Hippel, 2001; Franke & Hippel, 2003; von Krogh, Spaeth, & Lakhani, 2003). Recent research has focused on what commercial firms can do to motivate and capture such innovations and their related benefits. Learning and innovation efforts from which a firm may benefit need not necessarily be located within the organization, but may well reside in the consumer environment (Franke & Shah, 2003). These learning processes can, however, be structured, motivated, and partly organized by a commercial

firm by organizing the infrastructure for consumers' interactive learning activities (Jeppesen & Molin, 2003; Jeppesen, 2005; Baldwin, Hienerth, & von Hippel, 2006; Hienerth, 2006). But user-driven innovation does not only benefit firms. It also creates public goods as well as specific benefits for the involved users (Harhoff, Henkel, & von Hippel, 2003; Henkel & Hippel, 2004). Since 2005 the Danish Government has made support of userdriven innovation a national priority, launching a particular program to build the abilities of Danish companies to change on user generated knowledge. IT company Intel provides an example of user-driven innovation in the 1990s with the launch of two in-house departments implementing concrete product innovations and long-term strategic implications directly derived from userobtained knowledge. Exploiting Entrepreneurial Opportunities For a long time research of entrepreneurship has been part of either economic research or business strategy research. It is only over the past two decades that entrepreneurship has emerged as its own field of research. It is thus not very surprising that the exact definition and focus of this field is still debated among its members (Bruyat & Julien, 2000; Shane & Venkataraman, 2000; Low, 2001; Ucbasaran, Westhead, & Wright, 2001). For this report entrepreneurship shall be defined as the discovery and profitable exploitation of (so-far unrealised)

opportunities to create new competitive space by generating market disequilibria (Stevenson & Gumpert, 1985; Drucker, 1986; Shane & Venkataraman, 2000). An entrepreneurial opportunity allows the generation of entrepreneurial profits. However, as Schumpeter (1962 [1934]: 133) explains, this profit is only temporary. Once an entrepreneurial venture has been successful, other market players are likely to follow the example, thereby competing away the entrepreneurial profit.

At this point most entrepreneurial enterprises become just another optimizing firm, unless they can identify a new entrepreneurial opportunity and exploit it. Within this view it is the entrepreneurial opportunity (its identification, selection, and implementation) that is at the heart of entrepreneurship research. It is true that small businesses or start-ups are well placed to realize entrepreneurial opportunities; however, this is no constitutive condition. On the contrary, multinational corporations (MNC) are as capable of identifying entrepreneurial opportunities as are small businesses. If entrepreneurial opportunities are realized within an existing organization one often speaks of internal corporate venturing or of intrapreneurship (Burgelman, 1983; Kuratko, Montagno, & Hornsby, 1990; Antoncic & Hisrich, 2001). The Role of the Entrepreneur Another research focus is on the enterprising individual, the entrepreneur, who is responsible for the discovery and exploitation of profitable opportunities. Penrose describes

entrepreneurs as having "a psychological predisposition on the part of the individuals to take a chance in the hope of gain, and, in particular, to commit effort and resources to speculative activity" (Penrose, 1959: 33). However, the belief of conventional wisdom that it is usually one entrepreneur who can single-handedly identify, implement and exploit a valuable opportunity is probably as far-fetched as the assumption that the CEO alone can make or break a corporation. There are undoubtedly examples of strong personalities for whom this has the the been result action the of of A case; however, in many on & circumstances Social 1990; entrepreneurial accomplishments are much more likely to be Literature Review Corporate Shuman, Responsibility in the Innovation Process teamwork rather than one individual (Kamm Ucbasaran, Westhead, & Wright, 2001: 60). Although it is safe to assume that profits are a strong motivation for most entrepreneurs, research indicates that other motives such as independence, control of ones own destiny, as psychic benefits or the availability the need for of alternative admiration (Kets de Vries, 1985, 1996, 1997), and issues such employment opportunities (Gimeno, Folta, Cooper, & Woo, 1997) are also present. As shall be discussed in this report, the pursuit of social goals can also be a strong motivation. A final aspect of entrepreneurship research concerns the question of organizational form and the access to capital. Some scholars identify gaps in financing as an important reason for closure, accounting for the fact that the vast majority of startup firms actually fail (Amit, Brander, & Zott, 2000).

Institutional Entrepreneurship The term institutional entrepreneurship was introduced by DiMaggio (1988) as means to describe how actors can shape institutions even within the constraints they face. Institutional entrepreneurs initially are in conflict with established institutions but through their actions contribute towards changing them eventually (Lawrence, 1999; Garud, Jain, & Kumaraswamy, 2002; Dorado, 2005). In their literature review Leca, Battilana and Boxenbaum (2005) identify four key research questions about institutional entrepreneurs addressed in prior publications: What motivates them? Do they act intentionally? What type of change do they implement? How do they succeed in the face of institutional constraints? Examples of entrepreneurial start-ups are plenty. The following examples provide a basis to separate entrepreneurs and intrapreneurs. Well-known examples include Starbucks, where entrepreneur Howard Schulz identified an opportunity to take over and extend three coffee shops to a global scale operation. An intrapreneurial example is provided by 3M launching the Post-it product after one employee past on the concept idea to another employee who developed the actual product features. Every step of the innovation A Literature Review on Corporate Social Responsibility in the Innovation Process global success of the product. process happened within 3M, which eventually benefited from the

PART III: CSR AND INNOVATION WHAT IS IT? Literature bringing together CSR and innovation has emerged gradually over the past decade. One interpretation of social innovation can refer to improvements in the CSR process. Examples could be improved social reporting tools or CSR management systems. In this review we do, however, not consider these kinds of improvements and instead focus mainly on product related social innovation. In the following we will discuss some of the main themes standing out from literature. Broadly speaking there are two schools of thought: The first line of publications deals (i.e. with innovations aiming at social improvements health, education, community

development). Here the term social innovation can refer to product innovations with a social purpose. A subgroup of these types of innovations concerns Base of the Pyramid thinking. Social innovation is also used to refer to the process of starting and improving social enterprises. A second group of authors put environmental innovation at the heart of their work. These literature contributions have coalesced around the theme of eco-innovation, which more recently has spawned the discipline of clean-technology venturing. Corporate Social Innovation

The term corporate social innovation was first introduced by Rosabeth Moss Kanter (1999: 125) who argues that firms should use social issues as a learning laboratory for identifying unmet needs and for developing solutions that create new markets. She describes, for example, BankBostons effort in setting up a Community Bank, which has eventually evolved into a new market for the bank. Similarly Bell Atlantic has equipped schools with HDSL computers, in the processing learning a lot about how to use and A Literature Review on Corporate Social Responsibility in the Innovation Process market this new technology. The term corporate social innovation is increasingly taken up by practitioners. Patrick Cescau CEO of Unilever for example defines corporate social innovation as a way of "finding new products and services that meet not only the functional needs of consumers for tasty food or clean clothes but also their wider aspirations as citizens."(cited in Webb, 2007) However, as pointed out by Hackers (2008), most firms remain focused on CSR as a tool to reduce risks and operational cost. In his study of twelve multinationals he finds that only firms with very high social performance rankings think about CSR as a means to drive product innovation. He proposes that corporate social innovation requires the creation of knowledge structures that result from investments in corporate social performance. Examples for such scripts could be CSR management and communication tools (i.e. Kuhndt, Tuner, & Liedtke, 2003; Seuring, 2004; Beske, Koplin, & Seuring, 2006; Burritt & Saka, 2006; Morsing, 2006; Perrini, 2006b; Von Hauff

& Kleine, 2006; Vallentin, 2007) that in turn can initiate corporate learning processes (Mller & Siebenhner, 2005). Base of the Pyramid (BOP) An important subtheme of corporate social innovation is the focus on low-income markets. Prahalad and Hart (1999) talk in this context of the potential of the bottom or base of the pyramid (BOP). The BOP premise is that by focusing on the unmet needs of low-income populations firms can create profitable markets while also helping the poor address some of their most urgent needs (Christensen, Craig, & Hart, 2001; Prahalad &Hammond, 2002; Prahalad & Hart, 2002). Prahalads most notable assumption is that BOP markets have to pay a poverty premium(Prahalad & Hammond, 2002: 8). This means that many poor have to pay more for products and services such as food, than water, their medication, middle or credit, upper or telecommunication, compatriots. By using BOP thinking MNCs are believed to better target their design as well as improve the distribution so as to bring down the poverty premium. The Mexican cement manufacturer Cemex launched an initative that enable low-income rural Mexican households to by the cement to build a house. The purchase includes low-weekly payments and consultation and inspections from Cemex architects. The initiative allows a Literature Review on Corporate Social Responsibility in the Innovation Process great deal of flexibility and assistance to the class

poor, who would not have been able to construct a house at traditionally fluctuating market prices.

Social Entrepreneurship The concept of social entrepreneurship has emerged in the late 1990s in the U.S. (Boschee, 1995; Henton, Melville, & Walesh, 1997; Bornstein, 1998; Dees, 1998b, a; Brinckerhoff, 2000; Dees, Emerson, & Economy, 2001a, b; Drayton, 2002), and the UK (Leadbeater, 1997; Warwick, 1997; Zadek & Thake, 1997; SSE, 2002). However, it has only recently reached the acacedmic debate (Haugh, 2006; Light, 2006; Mair & Marti, 2006; Mair, Robinson, & Hockerts, 2006; Perrini, 2006a; Hockerts, 2007; Robinson, Blockson, & Robinson, 2007). According to Hockerts it describes the discovery and sustainable exploitation of opportunities to create public goods (Hockerts, 2007: 422). This is usually done through the generation of disequilibria in market and non-market environments. Social Entrepreneurship can in some cases lead to the creation of social enterprises. These social ventures are hybrid organizations exhibiting characteristics of both the forprofit and notfor profit sector. Successful examples of social innovation often originate from social enterprises and firms thus can learn a lot from the NGO or voluntary sector (Hockerts, 2003). SustainAbility is an example of a value-driven for-profit organization specializing in sustainable business models. The company consults MNCs like Coca Cola, Ford,

Nestl

and

Nike

in

implementing

sustainable

business

strategies. Eco-Innovation The notion that sustainable development drives disruptive innovations has come quite naturally to the sustainability debate (Hockerts, 1999, 2003). Sustainability innovations(also called eco-innovations, eco-design, eco-preneurship, or cleantechnology venturing) have been proposed as a source for "environmentally benign growth" (Dyllick, 1994: 60), as a "breakthrough discipline for innovation" (Fussler, 1996), as a "source of creative destruction" (Hart & Milstein, 1999: 23), as well as the beginning of the "next industrial A Literature Review on Corporate Social Responsibility in the Innovation Process revolution" (Braungart & McDonough, 1998: 82; Lovins, Lovins, & Hawken, 1999: 1; Senge & Carstedt, 2001: 24), or a source for "the great leap downward" (Christensen, Craig, & Hart, 2001: 92). From this has emerged a large number of publications advancing management tools for furthering the creation of new markets through environmental innovation (Fussler, 1996; McDonough & Braungart, 2002b, a; Randelovic, O'Rourke, & Orsato, 2003; Wstenhagen, 2003; Kolk & Pinkse, 2004; Cohen, Smith, & Mitchell, 2008). In his seminal book on Eco-Innovation Fussler (1996) states that a majority of today's firms is not actively pursuing eco-innovations as a strategy to create market share. However, he does not believe that this "innovation lethargy" (Fussler, 1996: 9) will persist in the years to come.

Using a number of anecdotal case studies he shows that innovative firms can succeed in driving ecological innovation profitably, not by following current customer demand but by creating future market space. This notion that firms can actively transform market structures so that they better support ecological innovations is also proposed by Dyllick (1994: 66; 1999) and particularly by Schneidewind (1998). Ecological innovation will happen both in large corporations, the ecological "Goliaths", and small start-ups, the ecological "Davids" (Wstenhagen, 2003). A Literature Review on Corporate Social Responsibility in the Innovation Process PART IV: CSR AND INNOVATION HOW DOES IT HAPPEN? In the following, the four levels of analysis introduced in part one will serve as foundation for further analysis of how CSR and innovation interlink and come together. Institutional Level: Innovation and Legitimacy At the institutional level, literature on innovation and CSR has mainly focused on standards-driven institutional entrepreneurship. Examples, include research work on the creation of the Global Compact, an institutional innovation aiming at creating a framework for reporting the social, environmental, and economic performance of firms (Etzion & Ferraro, 2006; Brown, de Jong, & Lessidrenska, 2007). As such the Global Compact aims to help firms attain and maintain legitimacy with society. Another empirical study is Boxenbaums research of diversity management in Denmark in which she chronicles the evolution of this emerging institution

(Boxenbaum, 2004). Typically such innovations can be qualified as sustaining since they aim at strengthening a firm's existing capabilities and market position. Individual Level: The Social Entrepreneur At the individual level social entrepreneurship focuses on persons driving social change and innovation. These social or civic entrepreneurs can be individual citizens, community activists (Swamy, 1990; Henton, Melville, & Walesh, 1997; Leadbeater, 1997; Thompson, Alvy, & Lees, 2000) or civil servants (Leadbeater, 2000; James, 2001) who use entrepreneurial spirit in order to reach social objectives. Bornstein defines a social entrepreneur as "a path-breaker with a powerful new idea, who combines visionary and real-world problem-solving creativity, who has a strong ethical fibre and who is 'totally possessed' by his or her vision for change." (Bornstein, 1998: 36) Mair and Noboa (2006) identify empathy, moral judgement, self-efficacy, and social support as the key aspects that distinguish social entrepreneurs. Although the motivation to build a viable business can be part of social entrepreneurship, many authors do not think this to be a necessary A Literature Review on Corporate Social Responsibility in the Innovation Process condition. A real-life example of a social entrepreneur is Florence Nightingale, who was the founder of modern nursing. She established the first school for nurses and fought to improve hospital conditions balancing an innovative drive and a passion for social improvements.

Organizational level: Stakeholder-driven Innovation While there is a growing literature stream on user-driven innovation there exists so far very little research on how innovation can be driven by other stakeholders besides users and consumers. Empirical examples, for stakeholder-driven innovation include the role of Greenpeace in developing and marketing the Greenfreeze technology (Stafford & Hartman, 2001; Matsumoto, 2002; Stafford, Hartman, & Liang, 2003) and in launching the fuel efficient SmILE vehicle (Plante, 1999), which Neuner calls a case of collective prototyping (Neuner, 2000). Another example of activist-driven innovation concerns the fair trade movement which as initiated and launched by activist NGOs (Tallontire, 2000; Hockerts, 2006). Drawing on church groups, developmental charities, and activist networks fair trade has matured from a non-profit start-up idea into a profitable business proposition. The Danish start-up company MyC4, a provider of online peer-to-peer microfinance lending in Africa is another example, for stakeholder driven innovation. Rather than basing its innovation process on in house development the firm is sharing the innovation process with all types of stakeholders. It thus includes the both investors so and lenders providers setting of in to the process of developing its business processes. More important MyC4 offers possibilities called the suggest microand entrepreneurs leaving interest rates

transaction costs to the providers.

Global level: Sustainability Innovation At the global level much attention has been paid to the role venture capital (VC) plays in promoting sustainability innovation. The term clean technology venture capital has been introduced in order to delimit this new type of innovation from earlier environmental technology or "green tech" investments popularized in the 1970's and 80's. The latter were mainly endof-pipe solutions that strongly relied on particular legislation support. Cleantech on the other hand is meant to denote new technology and related business models offering competitive returns for investors and customers while providing solutions to global challenges through breakthrough product innovation. Cleantech venturing is thus driven by two main forces: technology and competitiveness which both are superimposed on certain environmental or social problems in order to generate new ideas. Whereas, stakeholder-driven innovation is very outwards oriented, cleantech or sustainability innovation uses technology and traditional innovation mechanisms.

PART V: INTERNATIONAL SOCIAL INNOVATION BRANDS Social innovation takes many forms especially in a global context. In order to grasp the different levels and forms of social innovation the following examples will serve as inspiration.

ABN AMRO ABN AMRO is a Dutch corporation working in the financial service industry. It was acquired in 2007 by a consortium of three European banks, Royal Bank of Scotland Group, Fortis, and Banco Santander. Before this take over, ABN AMRO had initiated a large scale acquisition scheme in Brazil in 1998. The take over of several major Brazilian banks resulted in the establishment of Banco ABN AMRO Real. This new consortium took some pioneering initiatives like the establishment of a new social-environmental policy when making decisions on loans, the creation of the Real MicroCrdito, which provided financing for small business and entrepreneurs, and the implementation of the Ethical Fund, which was the first Social Responsible Investment fund in Brazil. These initiatives were primarily led as a first mover within the Brazilian market, and introduced in a market context with little previous experience in social banking practices. Electricit de France The French electricity company focuses on electricity access in developing parts of the world. The initiative, Energy Access Programme through Rural Electricity and Services Companies, has helped bringing electricity to rural areas of Mali, Morocco and South Africa, which would have been otherwise off the grid. EDF has brought electricity to 800,000 people and the 2010 goal is one million people. EDF considers this a drop in the ocean but emphasizes the difference they make in these specific countries. Around 8-10 per cent of

electricity is provided through this initiative, affecting a lot of people and businesses within the region. One of the projects in Morocco is called Temasol and has A Literature Review on Corporate Social Responsibility in the Innovation Process provided solar energy for more than 20,000 households in rural areas. Temasol has undertaken a pilot project of delivering drinking water to the same households, while at the same time extending operations to other parts of the country. The initiatives are innovating both in terms of social capacity building, while at the same time having a low environmental impact. It is an important first step, and a basis for other people to further develop infrastructure in these communities. The presence in these markets has allowed the company to innovate social schemes further in areas of housing, employment and education. Essilor International Social innovation in the French company is realized through value-led innovation systems and Base of the pyramid activities. Essilor International has developed both manufacturing and distribution systems in rural India for optical lenses. The initiative was undertaken in the absence of adequate eye care facilities, which resulted in very low usage of spectacles. Uncorrected refractive error is one of the major causes of blindness, which if detected and corrected, would give a fresh lease of life to individuals. In 2004, Essilor India established a Rural Marketing Division. Access was even more important than costs so innovation within both manufacturing

and distribution was urgent. After an initial study of the situation, Essilor realized that the lack of consumption of spectacles was connected to a lack of product access. Essilor has now developed a system of mobile low cost testing in rural areas as a means to reach the remote, rural population of India and manufacture cheap, affordable products through a steep learning curve and immense scale in production. Novo Nordisk Stakeholder-driven innovation is at the core of social innovation in Novo Nordisk. Several programmes have been initiated during the past decade, all with global perspectives and growth potential. Novo Nordisk has undertaken a shift from an internal focus to a reflective view through a corporate history and culture that lays the foundation for its values-based and holistic approach to doing business. By establishing the link between healths as a driver of wealth, it has been possible to pursue Triple Bottom Line strategies in a way that increasingly gets at the heart of core business processes in the markets, as well as in the corporate functions and in governance mechanisms. The approach is shaped through extensive stakeholder engagement embedded organizational behaviour and business operations. An example of these stakeholder-driven initiatives is the DAWN programme, the largest-ever, global survey to uncover diabetes attitudes, wishes and needs. The study focuses on the person behind the disease and is aimed to uncover the psychosocial aspects of diabetes. The DAWN programme taught all parties involved, that the patients also need mental encouragement and positive

guidance empowering them to take charge of their own health. Such innovation in public health promotion activities help effectively reduce the burden of diseases such as diabetes. Furthermore, Novo Nordisk is driving National Diabetes Programmes to educate stakeholders as well as actively supporting the growing international advocacy platform to put chronic disease prevention on the political agenda. One such initiative is the Oxford Health Alliance. Philips 1The Green Flagships project at Philips is a gathering and quantitative measuring of the best lighting products. To be considered a Green Flagship, a product must first undergo a divisional EcoDesign procedure. Next, the product or product family is investigated in at least three of the six Green Focal Areas. These Green Focal Areas consist of Energy Efficiency, Recyclability, Lifetime Reliability, Packaging, Hazardous Substances and Weight. Based on this analysis, the product or product family must be proven to offer at least 10% improved environmental performance in at least one Green Focal Area compared to a predecessor or competitive product, and the overall lifecycle score must be equal or better. So while many products may be green, only the top Eco-designed products achieve Green Flagship status. A Philips Green Flagship product is a best environmental choice and a product that either has the best environmental performance in the market, is the most innovative environmental friendly product in its portfolio, or is the best environmental solution in its application area. The

development of Green Energy has experienced a major boom within the last decade. The labelling of green energy cleantech is increasingly attracting finance from both venture capital and MNCs. The Green Flagship label is an example of this environmental progress.

CORPORATE SOCIAL RESPONSIBILITY : : Top of Form


off

Today we define Corporate Social Responsibility as the way a company balances its economic, social and environmental objectives while addressing stakeholder expectations and enhancing shareholder value. But ACC has undertaken social volunteering practices almost from its inception, long before the term corporate social responsibility was coined. The companys earliest initiatives in community development date back to the 1940's in a village on the outskirts of Mumbai while the first formal Village Welfare Scheme was launched in 1952. The community living around many of our factories comprises the weakest sections of rural and tribal India with no access to basic amenities.

Corporate Social Responsibility Policy The Company shall continue to have among its objectives the promotion and growth of the national economy through increased productivity, effective utilization of material and manpower resources and continued application of modern scientific and managerial techniques, in keeping with the national aspiration; and the Company shall continue to be mindful of its social and moral responsibilities to consumers, employees, shareholders, society and the local community. In pursuance of the above objective, ACC acknowledges the importance of the concept of inter-dependence of all sections

of society. In particular, its focus revolves around the community residing in the immediate vicinity of its Cement Plants and Mines where it seeks to actively assist in improving the quality of life and making this community self-reliant. In line with its abiding concern for preservation of the ecological balance and safeguarding the health of the community, ACC has always actively demonstrated its firm resolve to protect the environment Mindful of its great tradition, ACC is deeply committed to enhancing its reputation and respect built over the years in industry and society for its professional style of management based on philosophy of the best in business ethics. | TOP | CLOSE |

Community & Rural Welfare Our community development activities revolve around the under-privileged community that lives in the immediate vicinity of our cement plants and is thus more dependent on us. The range of our activities begins with extending educational and medical facilities and goes on to cover vocational guidance and supporting employment-oriented and income-generation projects like agriculture, animal husbandry, cottage industries by developing local skills, using local raw materials and helping create marketing outlets.

At all our cement factories we share our amenities and facilities with members of the local community. This includes sharing education and medical facilities, sports and recreation. Wherever possible we share access to Bore Wells, drinking

water and the usage of colony roads. | TOP | CLOSE |

Education Education is imparted not only to children of ACC employees but also more importantly to children from rural areas who do not have access to any medium of information or education. ACC schools maintain high standards and are open to other children of the vicinity. Often these schools are the most preferred centers of learning in the district and adjoining areas. Wherever possible, ACC provides funds and infrastructure to help set up local schools, colleges and centers for learning and education.

| TOP | CLOSE |

Healthcare ACC takes pride in providing various forms of medical assistance to the families of our employees and also to all those living in surrounding villages. Each factory has a medical center with full-fledged doctors and the latest of basic equipment. Mobile medical services are provided in the vicinity and regular medical camps are held to eradicate diseases, offer medical help, treatment and preventive care.

ACC has come out to provide support to state and national health initiatives such as the eradication of malaria, dengue fever and the dreaded HIV. | TOP | CLOSE |

HIV/AIDS - Workplace Policy ACC is desirous of playing a meaningful role in the nationwide effort to eradicate HIV/AIDS and has pledged to support the Confederation of Indian Industry in their initiative. ACC recognizes that a fundamental step in this respect involves a clear statement of the companys internal policy to deal with employees affected by HIV/AIDS. CII has framed a Code of Practice for Industry to guarantee and safeguard the rights of employees infected and affected by HIV/AIDS. We adopt this as ACCs internal workplace policy for HIV/AIDS. The policy states that:: 1. The company will provide a safe and healthy work environment for employees. 2. The company will educate its employees and the family on prevention, care and counseling of HIV/AIDS. 3. The company will educate its employees on safe blood donation and transfusion. 4. If an employee has been infected, information about the illness would be kept confidential by the company. Only the immediate superior would be kept advised to prevent any medical eventuality. 5. A HIV positive employee will be allowed to continue to work in his or her job unless medical conditions interfere with the specific job he or she is doing. On account of health conditions the employee may be shifted to another comfortable position. 6. The employer should ensure that the coemployees cannot or should not shun their HIV positive peer or refuse to work alongside them. In fact, the company will assure his or her comfort level in the work place. 7. The company will, as a policy, not discriminate against any employee infected by HIV/AIDS with regard to promotions, training and any other privileges, applicable to all employees of the organisation. 8. While the company may ask a person who is being offered

a job to undergo general medical tests before the issue of the appointment letter, the test will not cover HIV/AIDS, without an informed consent and pre test counseling of the candidate. | 9. The company will educate its employees and encourage them to participate in voluntary counseling and testing. However, HIV/AIDS tests will not be a part of any annual or regular health check ups, without the employees informed consent and pre test counseling. 10.The company will ensure that proper treatment is available to employees infected with HIV/AIDS. The company will assist the employee in meeting the cost of antiretroviral (ARV) drugs within the prescribed limits as fixed by the Company. The arrangements for treatment will be made at hospitals pre-identified by the company and payment will be made directly to the service provider. All other (non-ARV) HIV/AIDS related costs will be covered as per the companys prevailing scheme for Health and Medical treatment. It is hoped that this policy will help build positive and supportive attitudes towards those infected as well as promote health and safety amongst the employees. | TOP | CLOSE |

HIV/AIDS treatment - Anti Retroviral Treatment Centres In close consultation with the Confederation of Indian Industry (CII), the management of ACC decided to step forward to participate in the national effort to eradicate the HIV/AIDS virus that we recognize as being among the countrys most important public health issues. As a first step, we announced a Workplace policy for HIV/AIDS that protects the fundamental human rights of employees who may unfortunately become affected by HIV/AIDS, while also ensuring that these affected persons get proper care and treatment. Next we decided to set up an Anti Retroviral

Treatment Centre for HIV/AIDS treatment. We chose to put up this project in Wadi in the state of Karnataka where we have the largest of our cement plants. Karnataka also happens to be a state where the virus is highly prevalent. The ACC Wadi ART Centre has all the basic physical infrastructure, Laboratory facilities and trained medical and support personnel. It is housed in a new building constructed by us on an independent piece of land outside our plant and colony. The building has an area of over 2500 square feet and comprises a large reception area with adequate seating, consulting rooms for the doctors, rooms for social workers and counselors, laboratory, pharmacy, pantry and toilets. The center is fully equipped with new machines and medical equipment as prescribed by NACO ART guidelines. These include a state-of-the art CD4/ CD8 cell counting machine. We believe this is the only center in the district and adjoining districts with such a machine. The ACC Wadi ART Centre has a full complement of medical and support personnel including a doctor, nurse, lab technicians and other staff. The doctor has been trained at Christian Medical College Vellore. The center includes a Voluntary Counseling and Testing Centre (VCTC). We will also be tying up with reputed hospitals in Gulbarga for referaal linkages. We aim to develop the skill and capability to run this center at Wadi as a world-class facility for the benefit of the public, with the assistance of NACO, CII and prestigious medical institutes such as CMC Vellore. | TOP | CLOSE |

Disaster Relief ACC and its employees make timely contribution to help in any national disaster. This is done both at the corporate level, by local units and employees. Apart from the Kargil cause, collective contributions by way of cash, food and clothing has been sent to help victims of calamities such as the Latur earthquake, Himachal Pradesh floods, Orissa cyclone, Gujarat earthquake, Tsunami and floods in Maharashtra.

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Gujarat Masons Training ACCs contribution to the rebuilding effort after the 2001 earthquake in Gujarat was unique. Anticipating a scarcity of skilled masons and trained supervisors for the reconstruction work - especially in Kutch, Rajkot and Surendranagar districts, the company evolved a scheme to provide construction related training to over 2500 unemployed persons (mostly youth) in earthquake affected villages. Our best civil engineers were deputed to impart training on basic skills needed to work as masons and construction site supervisors and to make earthquake resistant structures, using local materials. This was perhaps the countrys first formal training programme of this magnitude for masons and site supervisors, organised by ACC. | TOP | CLOSE |

Conservation of heritage structures The services of ACCs Concrete experts have often been utilized in the restoration of several national heritage buildings across the country - such as sections of the Chhatrapati Shivaji Terminus (formerly Victoria Terminus) at Mumbai, the J N Petit and David Sassoon Libraries in Mumbai, churches in Goa, palaces and royal mansions in Mysore and Hyderabad and other old structures in the country.

The historic Vijayraghavgarh fort in Madhya Pradesh was recently restored under ACCs patronage. This is not a core business of the company but an act of corporate volunteering by way of sharing knowledge and expertise. | TOP | CLOSE |

Global Compact

ACC Limited is a signatory to the United Nations Global Compact. We are committed to the ten principles of the Compact which foster better corporate responsibility in the areas of human rights, labour, environment and anticorruption. Established in 1936, this company has from its very inception been conscious of its obligations to the community and has always kept in view its social responsibilities. ACCs Vision vividly declares the companys commitment to its corporate social responsibility and sustainable development issues making these an essential part of the business goals for the company. This communication on Progress provides an insight into our recent activities in support of the Global Compacts Objective and our efforts towards continuous improvement. Communication on Progress 2009 Communication on Progress 2008 Communication on Progress 2007 | TOP | CLOSE |

Support to national Sport ACC has had an old and close association with the game of cricket. From the 1950s to the 70s, many cricket legends were employees of ACC during their active cricket careers. This was in the days before cricketers became like the superstars they are today. ACC was then among the few companies which

went out of its way to employ young cricketers, including budding young Ranji Trophy hopefuls. ACC joined hands with the Confederation of Indian Industry to sponsor Indias National Boxing team at the Athens Olympics in 2004 and the Commonwealth Games. ACC also sponsors and supports other sports at National, regional and local levels such as interregional Badminton championships, youth soccer and Rural Sports Meets.

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Awards & Accolades ACC was the first recipient of ASSOCHAMs first ever National Award for outstanding performance in promoting rural and agricultural development activities in 1976. Decades later, PHD Chamber of Commerce and Industry selected ACC as winner of its Good Corporate Citizen Award for the year 2002. Over the years, there have been many awards and felicitations for achievements in Rural and community development, Safety, Health, Tree plantation, afforestation, Clean mining, Environment awareness and protection. In 2006, we were selected to receive the Good Corporate Citizen Award of the Bombay Chamber of Commerce and Industry. Awards & Accolades

National Award for outstanding performance in promoting rural and agricultural development by ASSOCHAM Sword of Honour - by British Safety Council, United Kingdom for excellence in safety performance. Indira Priyadarshini Vrikshamitra Award --- by The Ministry of Environment and Forests for "extraordinary

work" carried out in the area of afforestation.

FICCI Award --- for innovative measures for control of pollution, waste management & conservation of mineral resources in mines and plant. Subh Karan Sarawagi Environment Award - by The Federation of Indian Mineral Industries for environment protection measures. Drona Trophy - By Indian Bureau Of Mines for extra ordinary efforts in protection of Environment and mineral conservation in the large mechanized mines sector.

Indo German Greentech Environment Excellence Award

Golden Peacock Environment Management Special Award - for outstanding efforts in Environment Management in the large manufacturing sector. Indira Gandhi Memorial National Award - for excellent performance in prevention of pollution and ecological development Excellence in Management of Health, Safety and Environment : Certificate of Merit by Indian Chemical Manufacturers Association Vishwakarma Rashtriya Puraskar trophy for outstanding performance in safety and mine working Good Corporate Citizen Award - by PHD Chamber of Commerce and Industry Jamnalal Bajaj Uchit Vyavahar Puraskar - Certificate of Merit by Council for Fair Business Practices Greentech Safety Gold and Silver Awards - for outstanding performance in Safety management systems by Greentech Foundation FIMI National Award - for valuable contribution in Mining activities from the Federation of Indian Mineral

Industry under the Ministry of Coal.

Rajya Sthariya Paryavaran Puraskar - for outstanding work in Environmental Protection and Environment Performance by the Madhya Pradesh Pollution. Control Board. National Award for Fly Ash Utilisation - by Ministry of Power, Ministry of Environment & Forests and Dept of Science & Technology, Govt of India - for manufacture of Portland Pozzolana Cement. Good Corporate Citizen Award - by Bombay Chamber of Commerce and Industry for working towards an environmentally sustainable industry while pursuing the objective of creation of a better society. National Award for Excellence in Water Management - by the Confederation of Indian Industry (CII) Golden Peacock Eco-Innovation Award 2008 won by AFR Business for efficient disposal of industrial wastes "Vanvasi Sant Gahira Guruji Maharaj - Chhattisgarh Paryavaran Puraskar" 2008, in the Industrial Category for best efforts in Environment Conservation in Chhattisgarh State . Safety Innovation Award by the Institution of Engineers, New Delhi Greentech Environment Excellence Award by Greentech Foundation Good Green Governance Award by Srishti Publications, Delhi The Federation of Indian Mineral Industries, (FIMI) New Delhi has selected ACC, one of the four companies in India, to be Members of the "Sustainable Miners Club" for outstanding contribution to the national goal of sustainable development through excellence in environmental conservation' scientific research and social

development in harnessing natural resources.

Tikaria wins IMC Ramkrishna Bajaj Certificate of Merit 2008 Gagal wins IMC Ramkrishna Bajaj National Quality Performance Excellence Trophy 2008 CNBC-TV18's India Business Leaders Award in the category India Corporate Citizen of the Year 2008 Greentech Safety Gold Awards 2009 - for outstanding performance in Safety management systems by Greentech Foundation

International Safety Award 2008 by British Safety Council ACC tops cement industry in Karmayog CSR rating

Council for Fair Business Practices, Jamnalal Bajaj UCHIT VYAVAHAR PURASKAR 2008 - in the category Manufacturing Enterprises Large for exemplary record of practicing and promoting fair business practices.

Srishti Good Green Governance Award 2008 by Srishti Publications

State Safety Award for 2007 by Government of Orissa for best performance in accident prevention, safety management and communication systems among industries in Orissa Bottom of Form

CORPORATE SOCIAL RESPONSIBILITY : : Top of Form


off

Today we define Corporate Social Responsibility as the way a company balances its economic, social and environmental

objectives while addressing stakeholder expectations and enhancing shareholder value. But ACC has undertaken social volunteering practices almost from its inception, long before the term corporate social responsibility was coined. The companys earliest initiatives in community development date back to the 1940's in a village on the outskirts of Mumbai while the first formal Village Welfare Scheme was launched in 1952. The community living around many of our factories comprises the weakest sections of rural and tribal India with no access to basic amenities.

Corporate Social Responsibility Policy The Company shall continue to have among its objectives the promotion and growth of the national economy through increased productivity, effective utilization of material and manpower resources and continued application of modern scientific and managerial techniques, in keeping with the national aspiration; and the Company shall continue to be mindful of its social and moral responsibilities to consumers, employees, shareholders, society and the local community. In pursuance of the above objective, ACC acknowledges the importance of the concept of inter-dependence of all sections of society. In particular, its focus revolves around the community residing in the immediate vicinity of its Cement Plants and Mines where it seeks to actively assist in improving the quality of life and making this community self-reliant. In line with its abiding concern for preservation of the ecological balance and safeguarding the health of the community, ACC has always actively demonstrated its firm resolve to protect the environment Mindful of its great tradition, ACC is deeply committed to enhancing its reputation and respect built over the years in industry and society for its professional style of management based on philosophy of the best in business ethics. | TOP | CLOSE |

Community & Rural Welfare Our community development activities revolve around the under-privileged community that lives in the immediate vicinity of our cement plants and is thus more dependent on us. The range of our activities begins with extending educational and medical facilities and goes on to cover vocational guidance and supporting employment-oriented and income-generation projects like agriculture, animal husbandry, cottage industries by developing local skills, using local raw materials and helping create marketing outlets.

At all our cement factories we share our amenities and facilities with members of the local community. This includes sharing education and medical facilities, sports and recreation. Wherever possible we share access to Bore Wells, drinking water and the usage of colony roads. | TOP | CLOSE |

Education Education is imparted not only to children of ACC employees but also more importantly to children from rural areas who do not have access to any medium of information or education. ACC schools maintain high standards and are open to other children of the vicinity. Often these schools are the most preferred centers of learning in the district and adjoining areas. Wherever possible, ACC provides funds and infrastructure to help set up local schools, colleges and centers for learning and education.

| TOP | CLOSE |

Healthcare ACC takes pride in providing various forms of medical assistance to the families of our employees and also to all those living in surrounding villages. Each factory has a medical center with full-fledged doctors and the latest of basic equipment. Mobile medical services are provided in the vicinity and regular medical camps are held to eradicate diseases, offer medical help, treatment and preventive care.

ACC has come out to provide support to state and national health initiatives such as the eradication of malaria, dengue fever and the dreaded HIV. | TOP | CLOSE |

HIV/AIDS - Workplace Policy ACC is desirous of playing a meaningful role in the nationwide effort to eradicate HIV/AIDS and has pledged to support the Confederation of Indian Industry in their initiative. ACC recognizes that a fundamental step in this respect involves a clear statement of the companys internal policy to deal with employees affected by HIV/AIDS. CII has framed a Code of Practice for Industry to guarantee and safeguard the rights of

employees infected and affected by HIV/AIDS. We adopt this as ACCs internal workplace policy for HIV/AIDS. The policy states that:: 1. The company will provide a safe and healthy work environment for employees. 2. The company will educate its employees and the family on prevention, care and counseling of HIV/AIDS. 3. The company will educate its employees on safe blood donation and transfusion. 4. If an employee has been infected, information about the illness would be kept confidential by the company. Only the immediate superior would be kept advised to prevent any medical eventuality. 5. A HIV positive employee will be allowed to continue to work in his or her job unless medical conditions interfere with the specific job he or she is doing. On account of health conditions the employee may be shifted to another comfortable position. 6. The employer should ensure that the coemployees cannot or should not shun their HIV positive peer or refuse to work alongside them. In fact, the company will assure his or her comfort level in the work place. 7. The company will, as a policy, not discriminate against any employee infected by HIV/AIDS with regard to promotions, training and any other privileges, applicable to all employees of the organisation. 8. While the company may ask a person who is being offered a job to undergo general medical tests before the issue of the appointment letter, the test will not cover HIV/AIDS, without an informed consent and pre test counseling of the candidate. | 9. The company will educate its employees and encourage them to participate in voluntary counseling and testing. However, HIV/AIDS tests will not be a part of any annual or regular health check ups, without the employees informed consent and pre test counseling. 10.The company will ensure that proper treatment is available to employees infected with HIV/AIDS. The company will assist the employee in meeting the cost of antiretroviral (ARV) drugs within the prescribed limits as fixed by the Company. The arrangements for treatment will be made at hospitals pre-identified by the company

and payment will be made directly to the service provider. All other (non-ARV) HIV/AIDS related costs will be covered as per the companys prevailing scheme for Health and Medical treatment. It is hoped that this policy will help build positive and supportive attitudes towards those infected as well as promote health and safety amongst the employees. | TOP | CLOSE |

HIV/AIDS treatment - Anti Retroviral Treatment Centres In close consultation with the Confederation of Indian Industry (CII), the management of ACC decided to step forward to participate in the national effort to eradicate the HIV/AIDS virus that we recognize as being among the countrys most important public health issues. As a first step, we announced a Workplace policy for HIV/AIDS that protects the fundamental human rights of employees who may unfortunately become affected by HIV/AIDS, while also ensuring that these affected persons get proper care and treatment. Next we decided to set up an Anti Retroviral Treatment Centre for HIV/AIDS treatment. We chose to put up this project in Wadi in the state of Karnataka where we have the largest of our cement plants. Karnataka also happens to be a state where the virus is highly prevalent. The ACC Wadi ART Centre has all the basic physical infrastructure, Laboratory facilities and trained medical and support personnel. It is housed in a new building constructed by us on an independent piece of land outside our plant and colony. The building has an area of over 2500 square feet and comprises a large reception area with adequate seating, consulting rooms for the doctors, rooms for social workers and counselors, laboratory, pharmacy, pantry and toilets. The center is fully equipped with new machines and medical equipment as prescribed by NACO ART guidelines. These

include a state-of-the art CD4/ CD8 cell counting machine. We believe this is the only center in the district and adjoining districts with such a machine. The ACC Wadi ART Centre has a full complement of medical and support personnel including a doctor, nurse, lab technicians and other staff. The doctor has been trained at Christian Medical College Vellore. The center includes a Voluntary Counseling and Testing Centre (VCTC). We will also be tying up with reputed hospitals in Gulbarga for referaal linkages. We aim to develop the skill and capability to run this center at Wadi as a world-class facility for the benefit of the public, with the assistance of NACO, CII and prestigious medical institutes such as CMC Vellore. | TOP | CLOSE |

Disaster Relief ACC and its employees make timely contribution to help in any national disaster. This is done both at the corporate level, by local units and employees. Apart from the Kargil cause, collective contributions by way of cash, food and clothing has been sent to help victims of calamities such as the Latur earthquake, Himachal Pradesh floods, Orissa cyclone, Gujarat earthquake, Tsunami and floods in Maharashtra.

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Gujarat Masons Training ACCs contribution to the rebuilding effort after the 2001 earthquake in Gujarat was unique. Anticipating a scarcity of skilled masons and trained supervisors for the reconstruction work - especially in Kutch, Rajkot and Surendranagar districts, the company evolved a scheme to provide construction related

training to over 2500 unemployed persons (mostly youth) in earthquake affected villages. Our best civil engineers were deputed to impart training on basic skills needed to work as masons and construction site supervisors and to make earthquake resistant structures, using local materials. This was perhaps the countrys first formal training programme of this magnitude for masons and site supervisors, organised by ACC. | TOP | CLOSE |

Conservation of heritage structures The services of ACCs Concrete experts have often been utilized in the restoration of several national heritage buildings across the country - such as sections of the Chhatrapati Shivaji Terminus (formerly Victoria Terminus) at Mumbai, the J N Petit and David Sassoon Libraries in Mumbai, churches in Goa, palaces and royal mansions in Mysore and Hyderabad and other old structures in the country.

The historic Vijayraghavgarh fort in Madhya Pradesh was recently restored under ACCs patronage. This is not a core business of the company but an act of corporate volunteering by way of sharing knowledge and expertise. | TOP | CLOSE |

Global Compact

ACC Limited is a signatory to the United Nations Global Compact. We are committed to the ten principles of the Compact which foster better corporate responsibility in the areas of human rights, labour, environment and anti-

corruption. Established in 1936, this company has from its very inception been conscious of its obligations to the community and has always kept in view its social responsibilities. ACCs Vision vividly declares the companys commitment to its corporate social responsibility and sustainable development issues making these an essential part of the business goals for the company. This communication on Progress provides an insight into our recent activities in support of the Global Compacts Objective and our efforts towards continuous improvement. Communication on Progress 2009 Communication on Progress 2008 Communication on Progress 2007 | TOP | CLOSE |

Support to national Sport ACC has had an old and close association with the game of cricket. From the 1950s to the 70s, many cricket legends were employees of ACC during their active cricket careers. This was in the days before cricketers became like the superstars they are today. ACC was then among the few companies which went out of its way to employ young cricketers, including budding young Ranji Trophy hopefuls. ACC joined hands with the Confederation of Indian Industry to sponsor Indias National Boxing team at the Athens Olympics in 2004 and the Commonwealth Games. ACC also sponsors and supports other sports at National, regional and local levels such as interregional Badminton championships, youth soccer and Rural Sports Meets.

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Awards & Accolades ACC was the first recipient of ASSOCHAMs first ever National Award for outstanding performance in promoting rural and agricultural development activities in 1976. Decades later, PHD Chamber of Commerce and Industry selected ACC as winner of its Good Corporate Citizen Award for the year 2002. Over the years, there have been many awards and felicitations for achievements in Rural and community development, Safety, Health, Tree plantation, afforestation, Clean mining, Environment awareness and protection. In 2006, we were selected to receive the Good Corporate Citizen Award of the Bombay Chamber of Commerce and Industry. Awards & Accolades

National Award for outstanding performance in promoting rural and agricultural development by ASSOCHAM Sword of Honour - by British Safety Council, United Kingdom for excellence in safety performance. Indira Priyadarshini Vrikshamitra Award --- by The Ministry of Environment and Forests for "extraordinary work" carried out in the area of afforestation. FICCI Award --- for innovative measures for control of pollution, waste management & conservation of mineral resources in mines and plant. Subh Karan Sarawagi Environment Award - by The Federation of Indian Mineral Industries for environment protection measures. Drona Trophy - By Indian Bureau Of Mines for extra ordinary efforts in protection of Environment and mineral conservation in the large mechanized mines sector.

Indo German Greentech Environment Excellence Award

Golden Peacock Environment Management Special

Award - for outstanding efforts in Environment Management in the large manufacturing sector.

Indira Gandhi Memorial National Award - for excellent performance in prevention of pollution and ecological development Excellence in Management of Health, Safety and Environment : Certificate of Merit by Indian Chemical Manufacturers Association Vishwakarma Rashtriya Puraskar trophy for outstanding performance in safety and mine working Good Corporate Citizen Award - by PHD Chamber of Commerce and Industry Jamnalal Bajaj Uchit Vyavahar Puraskar - Certificate of Merit by Council for Fair Business Practices Greentech Safety Gold and Silver Awards - for outstanding performance in Safety management systems by Greentech Foundation FIMI National Award - for valuable contribution in Mining activities from the Federation of Indian Mineral Industry under the Ministry of Coal. Rajya Sthariya Paryavaran Puraskar - for outstanding work in Environmental Protection and Environment Performance by the Madhya Pradesh Pollution. Control Board. National Award for Fly Ash Utilisation - by Ministry of Power, Ministry of Environment & Forests and Dept of Science & Technology, Govt of India - for manufacture of Portland Pozzolana Cement. Good Corporate Citizen Award - by Bombay Chamber of Commerce and Industry for working towards an environmentally sustainable industry while pursuing the objective of creation of a better society. National Award for Excellence in Water Management - by the Confederation of Indian Industry

(CII)

Golden Peacock Eco-Innovation Award 2008 won by AFR Business for efficient disposal of industrial wastes "Vanvasi Sant Gahira Guruji Maharaj - Chhattisgarh Paryavaran Puraskar" 2008, in the Industrial Category for best efforts in Environment Conservation in Chhattisgarh State . Safety Innovation Award by the Institution of Engineers, New Delhi Greentech Environment Excellence Award by Greentech Foundation Good Green Governance Award by Srishti Publications, Delhi The Federation of Indian Mineral Industries, (FIMI) New Delhi has selected ACC, one of the four companies in India, to be Members of the "Sustainable Miners Club" for outstanding contribution to the national goal of sustainable development through excellence in environmental conservation' scientific research and social development in harnessing natural resources. Tikaria wins IMC Ramkrishna Bajaj Certificate of Merit 2008 Gagal wins IMC Ramkrishna Bajaj National Quality Performance Excellence Trophy 2008 CNBC-TV18's India Business Leaders Award in the category India Corporate Citizen of the Year 2008 Greentech Safety Gold Awards 2009 - for outstanding performance in Safety management systems by Greentech Foundation

International Safety Award 2008 by British Safety Council ACC tops cement industry in Karmayog CSR rating

Council for Fair Business Practices, Jamnalal Bajaj UCHIT VYAVAHAR PURASKAR 2008 - in the category Manufacturing Enterprises Large for exemplary record of practicing and promoting fair business practices.

Srishti Good Green Governance Award 2008 by Srishti Publications

1. 2.

State Safety Award for 2007 by Government of Orissa prevention, Responses for best performance in accidentRespondents% safety management and communication systems among Yes % industries in Orissa Bottom of Form No %

Q-1 Does your company have a formalized CSR policy.

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Q- 2 Do CSR policies are of your company include policy on business ethics.

Responses 1. 2. Yes No

Respondents% % %

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Q-3 Does your company produce an annual sustainable CSR Report

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Q-4 Does your company have separate department / cell CSR.

Responses 1. 2. 3. 4. Strongly agree Yes Agree No Uncertain Disagree

Respondents% % % % %

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Q-5 ACC gives compensation to pollution affected people.

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Responses 1. 2. 3. 4. Strongly agree Agree Uncertain Disagree

Respondents% % % % %

Q-6 Health check up by medical facility is going routinely and in proper manner

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Q- 7 Malaria control operation is going properly.

Responses 1. 2. 3. 4. Strongly agree Agree Uncertain Neutral Disagree

Respondents% % % % %

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Q-8 There is available necessary machine and equipment in ACC hospital.

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Q-9 There is given concession in fees to student those belong from poor class family

Responses 1. 2. 3. 4. Strongly agree Agree Uncertain Disagree

Respondents% % % % % % % %

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Q-10There is proper setting arrangement and furniture in school those run by ACC

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Q-10There is proper setting arrangement and furniture in school those run by ACC. Responses 1. 2. 3. 4. Strongly agree Agree Uncertain Disagree Respondents% % % % %

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Q-12 Road are repaired after certain period.

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Responses 1. 2. 3. 4. Strongly agree Agree Uncertain Disagree

Respondents% % % % %

Q-13 There is problem of drinking water.

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Q-14 Hand pumps are repaired.

INTERPRETATIONResponses 1. 2. 3. 4. Strongly agree Agree Uncertain Disagree Respondents% % % % %

Q-15 Cleanliness of sulabh toilets is done neighbouring villages.

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Q-16 Dirking water is supplied during the summer through water tanker.

Responses 1. 2. 3. 4. Strongly agree Agree Uncertain Disagree

Respondents% % % % %

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Q-17- ACC pays attention toward making neighbouring villages hygienic.

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Responses 1. 2. 3. 4. Strongly agree Agree Uncertain Disagree

Respondents% % % % %

Q.1-

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Q.1-

INTERPRETATIONResponses 1. 2. 3. 4. Strongly agree Agree Uncertain Disagree Respondents% % % % %

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