C O R P O R AT E

SOCIAL
RESPONSIBILITY
Concept

Evolution

Types

Landscape

View!
 How does it feel to do CSR activities?
How does making a positive difference in
someone else’s life feel?
Does it contribute to your happiness?
By doing this, are we breaking some rules?
 How does it feel to do CSR activities?
How does making a positive difference in
someone else’s life feel?
Does it contribute to your happiness?
By doing this, are we breaking some rules?
 How does it feel to do CSR activities?
How does making a positive difference in
someone else’s life feel?
Does it contribute to your happiness?
By doing this, are we breaking some rules?
 How does it feel to do CSR activities?
How does making a positive difference in
someone else’s life feel?
Does it contribute to your happiness?
By doing this, are we breaking some rules?
 CSR Gives us Happiness!
- Martin Seligman work on Positive Psychology
- He suggests that happiness has three dimensions
- Pleasant Life (Can be achieved by Positive Emotions on our Past,
Present, and Future)
- Good Life (Can be achieved by earning enough gratification from
what we like)
- Meaningful Life (Can be achieved by something larger than us;
creating a positive difference in someone else’s life)
 What is CSR?

Corporate Social Responsibility is a management concept whereby companies integrate social

and environmental concerns into their business operations and interactions with their
stakeholders.

CSR is generally understood as being the way through which a company achieves a balance of
economic, environmental, and social imperatives (“Triple-Bottom-Line-Approach”), while at the
same time addressing the expectations of shareholders and stakeholders.

In this sense, it is important to draw a distinction between CSR, which can be a strategic
business management concept, and charity, sponsorships, or philanthropy. Even though the
latter can also make a valuable contribution to poverty reduction, will directly enhance the
reputation of a company, and strengthen its brand, the concept of CSR clearly goes beyond
that.
 What is CSR?

Corporate Social (STAKEHOLDER) Responsibility

Treating stakeholders in a socially responsible way

Stakeholders are Individuals or Groups who are affected or who can

affect the achievement of objectives by an Organization
 A constricted view of CSR
Let us do CSR Activities so that we, as a Business, can avoid people’s wrath for

the destructive impact of businesses on society, also avoiding government action

by showing we are a socially responsible organization (Can we use ITC as an

example?)
 A constructive view of CSR
Selection of Corporate Goals and evaluation of outcomes are not only based on

profitability and organizational well-being but also on ethical standards or

social desirability. Businesses have a role in social responsibility/philanthropy,

not because they create these problems but because they have the resources and

skills to help society solve them!

 Example of CSR
 Choosing to operate on an ethical level that is higher than what the law
requires (My company will not pay any bribe-cash or kind, even if it is not
restricted in law)
 Making contributions to civic and charitable organizations and nonprofit
institutions (Company’s foundation contributes towards a scholarship or free
medical treatment)
 Providing benefits for employees and improving the quality of life in the
workplace beyond economic and legal requirements (My company offers
flexible timings for employees so that they can take care of children; My
company offers paid leave in case employees contribute towards CSR)
 Example of CSR
 Opting for an economical option/choice that is considered less profitable but

more socially desirable than some alternatives (My company pays more for

the coffee beans as the method of growing the beans is sustainable)

 Using corporate resources to operate a program that addresses some major

social problems (I am a pharma company. Let me donate covid vaccine to the

less privileged nations/people)

 What is Corporate Social Irresponsibility (CSI)?

“Corporate actions that result in (potential) disadvantages and/or harm to

other actors,” E.g., Pollution, Unethical business practices, and Exploitation.

“A socially irresponsible act is accepting an alternative the decision-maker

considers inferior to another alternative when the effects upon all parties
are considered. Generally, this involves a gain by one party at the expense
of the total system”.
Components of CSR
Carroll’s Pyramid
 BRT, 2019
Stakeholder Capitalism

Freeman, 1984
Stakeholder Orientation

The Stakeholder View of Social Friedman, 1970

Shareholder Orientation
Responsibility/Firm
 Evolution

-The Purpose of the Business is to create Profits!

-The Profits, however, became the Maximum Profit!
-The New Purpose of Businesses became Maximizing Shareholder
Wealth by Maximizing Profits.
-Howard Bowen, the father of CSR, published Social Responsibilities of
Businessman in 1953.
 Evolution
Friedman, 1970
- Social Responsibility is not a corporate’s business
- Social Responsibility is fine if it adds to profits
- Businesses are for profits only
- On Carroll Pyramid, Philanthropy is missing! ?
 Evolution
Freeman, 1984
- The organization’s purpose is to care for all stakeholders, not
shareholders alone.

BRT 2019
- 181 CEOs pledged to care for all stakeholders, not shareholders alone.

- The walls between businesses and society is getting broken.

 Evolution
Why Redefine Capitalism through BRT 2019?
- Profit is the only purpose as per neo-classical economics.
- It is assumed that capital is the scarcest of all resources.
- No, finding solutions to people’s problems is!
- Providing return to investors is important but is not the sole purpose!
- Managing stakeholders is critical as the economy is wild and not a
rocking horse (Financial Crisis Impacted many and not any).
 Arrival of Sustainability and Triple Bottom Line
- Focused on Social, Economic, and Environmental spheres.
- Talks about present and future and hence is adopted by businesses.
- Elkington’s triple bottom line (There is not one but 3BL; Businesses) is at
the center of sustainability (Take care of present without compromising
future; Resources).
- Concerned with People, Profits, and the Planet.
 Arrival of Sustainable Development Goals (SDGs)
-2030 Agenda for Sustainable Development

-Adopted by United Nations in 2015

-In the next 15 years, countries will strive to end all forms of poverty, fight

inequalities, tackle climate change, and ensure no one is left behind.

-17 SDGs are effective from 1st Jan 2016

-5 Pillars of SDGs are People, Planet, Prosperity, Peace, and Partnership.

 How do you think Development is Different
from Social Development?
Development Economic Development
Social Development Economic Development + Human Welfare
Every individual can achieve their full potential
Every individual can live an economically and socially stable life.
 CSR and SDGs got Married!
CSR rules guide social development

SDGs provide measurable goals for social development

It makes sense to direct resources toward the achievement of SDGs

Research suggests CSR has a positive impact on the achievement of SDGs

Togetherness Continues…..

Bhatt, 2022
CSR Family
So….CSR is
Types of CSR
5/5/2023 Sample Footer Text 29
 Types of CSR
-Altruistic (Stakeholder Capitalism) (Normative; Moral CSR)

-Egoistic (Shareholder Capitalism) (Instrumental; Profiting Case for CSR)

-Strategic (Enlightened Self Interest) (Strategic; Business Case for CSR)
(Unilever’s Shakti, ITCs E-Chaupal; Non-Polluting, Sustainable Production Process; Industrial Towns)
 Normative Versus Business Arguments towards CSR
We must undertake CSR as it is our moral responsibility to do so.

Business Case for CSR

CSR has moved ahead from normative to strategic in nature.
CSR is the right thing to do (morally)  CSR is for a business’s advantage.

Argument -1- CSR adds to profitability as Markets reward responsible and

punish Irresponsible behavior (Creating a market for Virtues. Customers may
pay more for social responsibility. Investors may take less………….)
Argument -2- CSR can help create a competitive advantage.
 Strategic CSR
Benefit to the firm (corporate benefit) and benefit to the society (public
good) Win-win situation Create shared value.
Why? Most of the traditional tangible sources for creating competitive
advantage can be copied. CSR is an intangible source. (Nestle’s dairy
operations in India)
Strategic CSR

S-CSR
CSR CFP
 Types of CSR
What do you call Indian CSR as Altruistic, Egoistic, or Strategic?

-CSR in India has enhanced the value of a firm in the long term (Jadiyappa, 2019)

Social and Environmental Performance leads to Financial Performance.

 What do you think are the Benefits?
Reputation (Enhancement)
Brand Equity (Enhancement)
Stakeholders (Investors, Employees, Customers) (Happy)
Choice of the Company for Resources (Retain/Acquire) (Enhanced)
Happiness (Enhanced)
Compliance (Satisfied)
 Benefits of CSR (Business+Society)
• What could be some of the benefits of CSR for Businesses?

• What could be some of the benefits of CSR for Communities?

• What could be some of the benefits of CSR for the Environment

(Sustainability is one part of CSR)?

• Do you agree that some of the most successful companies are also the most

socially responsible businesses?

 Evolution of CSR in India
2009The National Voluntary Guidelines on Social, Environmental, and
Economic Responsibilities of Business (MCA) To boost CSR activities
2011DPE Sustainable Development Guidelines (CSR, Sustainability were separate)
2011Amendment to Companies Bill, 2011
2013DPEGuidelines on CSR and Sustainability for CPSEs
2013Section 135, Companies Act, 2013
2021 Section 135, Companies Act, 2013, (amendment)
Companies are Responsible towards the Society
 Is it applicable to all Companies?
-Net worth of Rs. 500 Cr. or more
-Turnover of Rs. 1000 Cr. or more
-Net profit of Rs. 5 Cr. or more in the preceding financial year

-2% of average net profits of the preceding three financial years

on CSR activities as per Schedule VII
 Do you like the idea of Mandatory CSR?

Explicit CSR Voluntary, Self-Interest (US).

Implicit CSR Infused into the culture, sometimes mandated by Govt
(Europe, India).
-Many countries (Sweden, Denmark, Norway, Netherlands, Australia,
France, etc.) made CSR Reporting mandatory.
-India went ahead and made CSR Activities mandatory in 2013.
-India is the FIRST country in the world to make CSR mandatory.
CSR in India-Landscape
 India’s Position on SDGs
India still ranks 121 amongst 163 participating countries on SDG Index.

Are we doing enough??

 Is R&D an Expense or an Investment?
Is Advertisement an Expense or an Investment?
Is CSR an Expense or an Investment?
 Corporate Governance & CSR

How do you think CG is linked to CSR?

"Corporate Governance is the application of best management practices, compliance

of law in true letter and spirit and adherence to ethical standards for effective

management and distribution of wealth and discharge of social responsibility for

sustainable development of all stakeholders*.“

*Report of N.R. Narayana Murthy Committee on Corporate Governance constituted by SEBI (2003)
 For CSR, a Business must have CSR!
Corporate Social Responsiveness “refers to the capacity of a corporation to respond to
social pressures.” (Readiness or the Process of Responding!). CSR is Proactive and not
Reactive. Anticipate Social Responsibility! (Normative? Instrumental?)
• Stakeholder Engagement
• Utility Information
• Avoid Harmful Stakeholder Strategies
• Similar to Moral Imagination
• Integrate into Strategic Planning Process
 Reasons for Thrust on CSR (Business+Society)
Should we do CSR     How should we do CSR?
• De-Regulations-Government is moving from mandatory regulations to self-
regulations
• Disclosure-Businesses are asked to disclose what they do for society (BRSR, ESG,
GRI, etc..)
• Stakeholder Awareness- Customers would like to buy Green! From Ethical
Businesses! Employees would join Ethical Businesses (Would you join- Yes Bank?
Companies responsible for Rana Plaza?); Investors would like to invest in Ethical
and Socially responsive businesses- Would you invest in a company that has just
received a notice from NGT?
 Social Enterprise
• Social Enterprise,

• Social Innovation,

• Social Venturing, and

• Social Entrepreneurship

 Only in Operations (No)

 As an Additional Activity (No)

 As a Core Activity (Yes); Example-Aravind Eye Care System

 CSR & ESG
 ESG are Environment, Social, and Governance- Pillars/Dimensions/Topic Areas of ESG Reporting

 It captures the non-financial risks and opportunities in the day-to-day activities of a company

 ESG is important from the point of view of getting investments

 Investors are including ESG reporting as an essential input while making investment decisions

 Environment Contribution (+/-) towards climate, environment, pollution, recycling, waste, water

 Social Labor practices, employee development, safety standards, sourcing, benefit to the society

 Governance Shareholder’s rights, board’s diversity, executive compensation, etc.

 If CSR is a philosophy, ESG is a measure!

 ESG Reporting  Using Sustainability Reporting  GRI (Global Reporting Initiative) Or SASB

(Sustainable Accounting Standard Board) Uniform understanding of reporting measures.

ESG reported
using
Sustainability
Reports
 CSR & CSP*
Corporate Social Performance includes
-The Principle- of being socially responsible
-The Process- of being socially responsive
-The Outcome- of social responsibility

Example

-The Principle- We must have pollution control equipment

-The Process- We must establish a team to control pollution
-The Outcome- We have controlled the pollution by establishing the
pollution control equipment
*Corporate Social Performance
 CSR & Corporate Citizenship(CC)
“Corporate Citizenship is the process of identifying, analyzing, and
responding to the company’s social, political, and economic responsibilities as
defined through law and public policy, stakeholder expectations, and
voluntary acts flowing from corporate values and business strategies.”

CSR is over and above business (except strategic CSR), whereas CC is business
as a good citizen. (Society gives you a license to operate. You owe a license
fee by being a good citizen (CC)). (Beingness v/s Actions)
 Implementation of CSR
Selection of Program and Design Business and Society are Inter-related,
and there is an opportunity for a Strategic CSR Program for Mutual Benefit.

(1) Identify sources of reputation risk

• Human Rights (Apple Mining; Nike)
• Environment (Fukushima; Coca-Cola’s Water Usage in India)
• Public Health (JUUL)
(2) Activities linked to employee and customer benefits
(3) CSR Programs aligned with a company’s mission and core competence
(4) Opportunity in line with the company’s strategy
(5) CSR Programs generated from stakeholder engagement
 Case in Point
(1) Starbucks
(2) Timberland
(3) Coca-Cola
 Ingredients of CSR as a Discipline
Introduction to Corporate Social Responsibility (CSR)
· Benefits of CSR
· CSR and Stakeholder Engagement
· Thrust Areas of CSR
 Overview of the CSR project life cycle
Scouting CSR Projects
· Identifying relevant stakeholders
· Understanding community needs and expectations
· Conducting a needs assessment
· Analyzing the feasibility of potential projects
· Project Conceptualization
 Overview of the CSR project life cycle
Preparing the Project Report
· Defining project goals, objectives, and outcomes
· Developing a project plan and budget
· Creating a monitoring and evaluation plan
· Writing a persuasive project proposal
· Placing the project report to the board/competent authority
· Getting the project report approved
 Overview of the CSR project life cycle
Implementing the CSR Project
· Building a project team
· Managing project risks
· Monitoring and evaluating project progress
· Addressing project challenges and obstacles
· Measuring project impact and success
· CSR Audit and Social Impact Assessment
 Other Essential Ingredients
• Ethical Leadership
• Drawing Equity from the CSR Project
· Develop communication and marketing strategies
· Leveraging project outcomes
CSR Projects
CSR Projects
CSR Projects
CSR Projects
 In Class Assignment (Do any 2)
• How do you think CSR differs from CSiR
• What are the multiple dimensions through which we must look at CSR
• How CSR has evolved over the years from Stakeholder’s perspective?
• Can you give few examples of CSiR?
• Can you give some examples of Strategic CSR?
• An organization donates 75 Cr to PMRF for Covid Medicines. Which type
of CSR is this? And why?
 Any Questions/Comments

Introduction
to CSR

Thank you!

Sumit Arora, Associate Professor of Practice, JGBS