Corporate Social Responsibility

Dr. M.
Mohanasundari
Assistant Professor
Department of Management Studies
Kongu Engineering College, Perundurai.
2
Dr. M. Mohanasundari
Introduction
• Gradual changes in the global economy, such as the
rise in social activism, the emergence of new
expectations, globalization, international trade,
increased expectations of transparency, and corporate
citizenship now increasingly require corporations
worldwide to perform well in every aspect of
corporations (economic, social and environmental).
• CSR is the entry point for understanding a number of
firm-related and societal issues and responding to them
in the firm’s business strategy.
3
Introduction (Contd.)
• 4CR taxonomy highlights the four Corporate
Responsibility (CR) areas:
▫ Corporate Competitiveness (CC)
▫ Corporate Governance (CG)
▫ Corporate Social Responsibility (CSR)
▫ Corporate Sustainability (CS)
4
4CR Taxonomy Map Dr. M. Mohanasundari

5
Definition (Contd.)
• The World Bank states: ‘CSR is the commitment of
businesses to behave ethically and to contribute to
sustainable economic development by working with all
relevant stakeholders to improve their lives in way that
are good for business, the sustainable development
agenda, and society at large’.
• CSR refers to ensuring the success of the business by
inclusion of social and environmental considerations into
a company’s operations.
6
Definition (Contd.)
• According to Barnard, ‘CSR analyses economic, legal,
moral, social and physical aspects of environment’.
• The European Commission defines CSR as ‘a concept
whereby companies integrate social and environmental
concerns in their business operations and in their
interaction with their stakeholders on a voluntary basis’.
7
Dimensions of CSR
• The environmental dimension
 The natural environment (a cleaner environment, environmental stewardship,
environmental concerns in business operations)
• The social dimension
 The relationship between business and society (contribute to better society,
integrate social concern in their operations, consider the full scope of their impact on
communities)
• The economic dimension
 Socio-economic or financial aspects, including describing CSR in terms of a business
(contribute to economic development, preserving the profitability, business operations)
• The stakeholder dimension
 Stakeholders or stakeholder groups (interaction with their stakeholders, how organizations
interact with their employees, suppliers, customers and communities )
• The voluntariness dimension
 Actions not prescribed by law (based on ethical values, beyond legal obligations,
voluntary)
8
Need for CSR

• CSR deals with the motivation and encouragement to take up
socially responsible activities that will improve the economic
and ethical standards.
• Companies should make sure that environment is no way
affected by executing their business activities.
• Bridges the company with its consumer and investor

• Shifting paradigm of consumer awareness (green to ethical
consumerism)
• Legislation (CSR covers health & safety ,environmental
protection and sustainability surety)
• Visibility of Codes of Practice Globalization
9
Importance of Corporate Responsibility (CR)

• Main drivers of the change
▫ Corporate scandals
▫ Greater focus by shareholders on issues of CR
▫ Greater pressure from Government or regulations
▫ Greater focus by media on issues of CR
▫ Evidence that it offers a competitive advantage
▫ Globalization and off shoring
▫ Increasing customer power/pressure
▫ NGO action
10
Importance of CR (Contd.)
• Important aspects of CR to company
▫ Ethical behaviour on the part of all staff
▫ High standards of CR
▫ Transparency in corporate dealings
▫ Labour practices and employee rights
▫ Environmental practices
▫ Equitable pricing and remuneration policies
▫ Philanthropy and charitable giving
▫ Ethical investments
11
Importance of CR (Contd.)
• The ways in which CR can affect the bottom line
▫ Higher employee morale and commitment
▫ Enhancement of the brand with customers
▫ Better relations with government, local communities
▫ Competitive advantage over rivals
▫ Reduced likelihood of regulatory intervention
▫ Cheaper capital from investors
12
Models of CSR
• Models describe the evolution and scope of social orientation
of companies.
• Carroll’s Model
▫ Archie B Carroll has defined CSR as the complete range of
duties business has towards the society. He has proposed a 3D
conceptual model of corporate performance. According to him, a
firm has the following four categories of obligations of corporate
performance
 Economic
 Legal
 Ethical
 Discretionary
13
Carroll’s CSR Pyramid

14
Models of CSR (Contd.)

• Halal’s Model
▫ Halal’s return on resource model of corporate performance
recognizes the fact that the corporate social
responsiveness is a quite difficult task as no corporate
posture is value free.
▫ A firm can only attempt to form a workable coalition among
group having diverse interests, engaged in creating value
for distribution among members of coalition.
15
Models of CSR (Contd.)

• Ackerman’s Model
▫ This model defines CSR in three different phases
 First phase – Top management recognizes social problem
 Second phase – Company appoints staff specialists to look
into the issue and find measures to tackle it
 Third phase – Implementation of the strategy derived by the
specialists
16
Corporate Social Responsibility (CSR)

in the World
• The history of CSR is almost as long as that of firms. Concerns about the
excesses of the East India Firm were commonly expressed in the
seventeenth century.
• There has been a tradition of benevolent (helping needy) capitalism in the
UK for over 150 years, for example, Quaker families such as the Cadburys,
Rowntrees and Hersheys who sought to improve their standard of living as
well as enhancing the communities in which they lived.
• In the 19th century, many of owners assumed an active, and indeed, a
leading role in the development of the local communities and society
where they were based.
• Business leaders helped get schools and universities built and made
financial contributions over and above their taxes to support infrastructure
projects, museums, sports, and recration facilities. Great cities like
Manchester, Bombay, New York, and Sydney were given many of their
public assets such as libraries and concert halls by the business leaders of
the time.
17
Cont...
➤Business leaders such as, Carnegie, Rockefeller and Wellcome went

on to endow great foundations to carry on the community work that
they saw as their social responsibility or good citizenship and
established a new level in corporate charitable behavior.
This tradition seems to have been based on two complementary
motives.
First, the ethical imperative often articulated by religious groups was
that those who have wealth and power should help those who do not,
and so charitable giving was expected of wealthy industrialists.
Second, there was an element of social investment in which businesses
would gain long-term benefits from having first-class schools,
technical institutes, and universities in their cities U.S. business
schools, for example, were often started by business leaders and still
receive extensive support from firms.
Carroll has described Bowen as the modern Father of Corporate Social
Responsibility and believes that his work marks the beginning of the
modern period
18
CSR in India
• CSR in India has evolved through different phases, like community
engagement, socially responsible production and socially
responsible employee relations. Its history and evolution can be
divided into four major phases.
• PHASE 1 (1850 TO 1914)
• The first phase of CSR is known for its charity and philanthropic
nature. CSR was influenced by family values, traditions, culture and
religion, as also industrialization.
• The wealth of businessmen was spent on the welfare of society, by
setting up temples and religious institutions. In times of drought
and famine these businessmen opened up their granaries for the
poor and hungry.
• With the start of the colonial era, this approach to CSR underwent a
significant change. In pre-Independence times, the pioneers of
industrialization, names like Tata, Birla, Godrej, Bajaj, promoted
the concept of CSR by setting up charitable foundations, educational
and healthcare institutions, and trusts for community development.
During this period social benefits were driven by political motives.
19
PHASE 2 (1914 TO 1960)

• The second phase was during the Independence

movement. Mahatma Gandhi urged rich
industrialists to share their wealth and benefit
the poor and marginalized in society.
• His concept of trusteeship helped socio-
economic growth. According to Gandhi,
companies and industries were the 'temples of
modern India'.
• He influenced industrialists to set up trusts for
colleges, and research and training institutions.
These trusts were also involved in social reform,
like rural development, education and
empowerment
20
PHASE 3 (1960 TO 1980)

• This phase was characterized by the emergence of PSUs

(Public Sector Undertakings) to ensure better
distribution of wealth in society.
• The policy on industrial licensing and taxes, and
restrictions on the private sector resulted in corporate
malpractices which finally triggered suitable legislation
on corporate governance, labour and environmental
issues.
• Since the success rate of PSUs was not significant there
was a natural shift in expectations from public to private
sector, with the latter getting actively involved in socio-
economic development.
• In 1965, academicians, politicians and businessmen
conducted a nationwide workshop on CSR where major
emphasis was given to social accountability and
transparency.
21
PHASE 4 (1980 ONWARDS)

In this last phase CSR became characterized as a
sustainable business strategy.
The wave of liberalization, privatization and
globalization (LPG), together with a comparatively
relaxed licensing system, led to a boom in the
country's economic growth.
This further led to an increased momentum in
industrial growth, making it possible for
companies to contribute more towards social
responsibility. What started as charity is now
understood and accepted as responsibility.
22
Classification of Social Responsibility

• Responsibility towards itself
• Responsibility towards employees
• Responsibility towards shareholders
• Responsibility towards state
• Responsibility towards consumers
• Responsibility towards environment
23
Challenges of CSR
• Lack of budget allocations
• Lack of support from employees
• Lack of knowledge
• Lack of professionalism
• Small companies do not take adequate interest in CSR
activities
• Failure to disclose to the society.
24
Challenges of CSR by
Research of Times of India Group
• Lack of Community Participation in CSR activities
• Need to build Local Capacities
• Issues of Transparency
• Non-availability of well-organized NGOs
• Visibility Factor
• Narrow perception towards CSR initiatives
• Non-availability of clear CSR Guidelines
• Lack of Consensus on implementing CSR issues
25
CSR Strategies
• CSR strategies vary by company and industry and
include difficult business decisions and trade-offs.
• CSR strategies can include a moral obligations to ‘do
the right thing’, a commitment to sustainability, a desire
to maintain social license to operate and a need to
guard reputation.
26
CSR Strategies (Contd.)

The choice of CSR strategies in practice comes down to
decisions in three main areas:
• Voluntary Sustainability Initiatives
▫ There is a growing range of voluntary social and environmental
CSR programmes
▫ A company looking to report its own sustainability performance
should define a list of criteria depending on the industry and
scope of business or use of combination of a few options
▫ Companies can choose to follow legal and regulatory
requirements as a potential option to lower penalties, costs and
risks.
▫ Voluntary CSR reports improve brand loyalty.
27

• Non-financial Performance Measures
▫ The heart of any CSR strategy lies in the area of non-
financial reports.
▫ The company should clearly define a number of non-
financial performance measures to track and report.
▫ It could be figures related to waste or energy management,
personnel or HR development, or improvements in the
supply chain.
28

• Stakeholder Groups and Concerns
▫ By answering questions such as
who is the company responsible to?
Is it all of society or a subset of relevant stakeholders?
How to balance interest of owners and external
stakeholders?
▫ A company defines its own social license to operate and
meets the public expectations beyond the law.
▫ Although stakeholder interests often do not align, the
company should fairly address the concerns and
expectations of all of its various stakeholder groups and
balance their priorities.
29
Implementation of CSR
Every firm is different and will approach CSR implementation in
different ways.
• Develop an integrated CSR decision-making structure
• Prepare and implement a CSR business plan
• Set measurable targets and identify performance measures
• Engage employees and others
• Design and conduct CSR training
• Establish mechanisms for addressing problematic behaviour
• Create internal and external communication plans

Corporate Social Responsibility

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Corporate Social Responsibility

Uploaded by

Copyright:

Available Formats

Dr. M.

4CR Taxonomy Map Dr. M. Mohanasundari

Need for CSR

• Bridges the company with its consumer and investor

Importance of Corporate Responsibility (CR)

Carroll’s CSR Pyramid

Models of CSR (Contd.)

Models of CSR (Contd.)

Corporate Social Responsibility (CSR)

➤Business leaders such as, Carnegie, Rockefeller and Wellcome went

PHASE 2 (1914 TO 1960)

• The second phase was during the Independence

PHASE 3 (1960 TO 1980)

• This phase was characterized by the emergence of PSUs

PHASE 4 (1980 ONWARDS)

Classification of Social Responsibility

CSR Strategies (Contd.)

CSR Strategies (Contd.)

CSR Strategies (Contd.)

You might also like