CSR

Meaning & Origin

Prof. Aparna Kanchan

REALITY CHECK

The Future Society: A Growth Story

World population (in Billions): 1950-2050
10 9

8
Source: United Nations Population Division, World Population Prospects: The 2006 Revision.

7 6 5

85%

4
3 2 1

Population in less developed countries

Population in more developed countries

0 1950 1960 1970 1980 1990 2000 2010 2020 2030

15%
2040 2050
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9 billion people
will live on this planet by 2050 . . . . . . will need
50% more food, 50% more energy, 30% more freshwater

Urban Future . . .
Billions of inhabitants
70% urban

Growth of mega-cities

urban rural
47% urban

60% urban

1900

6.4
36% urban

5.0 2.9 3.2 3.3 2.8

2.4 1.3 1970

2020
2000 2030

2050

Source: United Nations, World Urbanization Prospects: The 2007 Revision

70% urban in 2050

Source: Citymayors statistics, 2008

70% of world population

will live within cities by 2050
Buildings responsible for > 40% of energy used More people, more buildings, more cars, more energy

More CO2

The world is not running out of water, but it is not always available when and where people need it . . .
2.5% Fresh water but frozen 0.5% Fresh water available 10,217,120 km3

Aquifers (10,000,000 km3)

50% of all drinking water 40% of industrial water 20% of irrigation water reservoirs (5,000 km3) rainfall (119,000 km3)

97% Seawater (non-drinkable)

rivers (2,120 km3) Natural lakes (91,000 km3)

Source: WBCSD Source: Living Planet Report 2006

3,900 children die each day due to dirty water or poor hygiene 2.6 billion people without improved sanitation and more than 1
billion people without improved drinking water sources
Remarks : 1 km3 = 1,000,000,000 cubic meter = 400,000 Olympic size swimming pool
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50% rise in cereals demand 85% increase for meat demand

between 2000 & 2030
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50% more primary energy

will be needed in 2050

Nuclear?
CCS (Carbon Capture & Sequestration)?

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1.2 billion cars will drive on Earth by 2020 Alternative Energy:

Electric & Fuel Cell Vehicles

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From 1860-2002 global mean surface temperature increase ~ 1 oC and will reach 2-6 oC in 2100
@2000 ~ 32Gt CO2e Emission @2030 ~ 54 Gt CO2e Emission

1Gt CO2 ~ 700 conventional 1GW coal fired power stations or 600 million SUVs
CO2e : carbon dioxide equivalent
12 Source: Hadley Centre for Climate Prediction and Research, UK Met Office (http://www.metoffice.com)

Difference (OC) from 1961-1990 average

Global Emission Scenarios

Source: IEA. ETP 2008

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Shifting Fortunes
Emerging economies > 50% of global GDP and trend will continue
Emerging economies Developed economies 80
Source: Angus Maddison, OECD; IMF From The Economist print edition. Wrestling for influence. July 3rd 2008.

60 40 20 0

1913

1950

2005

2025
* At purchasing-power parity

% Share of GDP

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What is CSR?

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Intro to CSR
Corporate social responsibility also known as;
corporate responsibility, corporate citizenship, responsible business, sustainable business and corporate social performance

which is in the form of corporate self regulation integrated into a business model.
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Intro to CSR
Corporate Social responsibility is inclusion of public interest into Corporate decision making and honoring triple : People , Planet , Profit. Corporate Social Responsibility is how a company should conduct their business in a way which is ethical.

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Intro to CSR
Corporate Social Responsibility is a form of strategic management which would encourage the organization to scan and think laterally about its relationship , which will contribute for long term in changing world. Corporate Social Responsibility is a forwarded action which flows companys vision and mission as a part of companys everyday actions.

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Intro to CSR

Corporate Social Responsibility is being aware of and bringing about change to working practices to eradicate exploitation and promote fairness and safety . Corporate Social Responsibility is that which company gives back sometimes to the community locally and internationally purchasing on a ethical basis .
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Intro to CSR
Concept where by companys integrate social and environment concerns in their business operation and in their interaction with stakeholders.

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What is CSR
CSR:

In a developed country:
governance, Business ethics, human rights and Environment

In a developing country( India): Focus on nation building Socio-economic development Rural development Employment Education Health care Community support

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CSR- Definitions

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Some Definitions
...a concept whereby organizations consider the interests of society by taking responsibility for the impact of their activities on customers, suppliers, employees, shareholders, communities and other stakeholders, as well as the environment. (Wikipedia, 2008) "The social responsibility of business encompasses the economic, legal, ethical, and discretionary expectations that society has of organizations at a given point in time". (Carroll, 1979) "A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis. " (European Commission 2008) Late Victorian Quakers (Cadbury, Lever Brothers) and Victorian philanthropists credited with beginning 'modern' CSR. Owen (1771-1858) pioneered human capital
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Some Definitions
In 1953, Bowen "Father of CSR" conceptualised CSR as social obligation the obligation to follow those lines of action which are desirable in terms of the objectives and values of our society. Drucker was one of the first to explicitly address CSR, as one of the eight key areas for business objectives developed in his 1954 book, The Practice of Management. (Nowak, Thomas 2006) There is one and only one social responsibility of business to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engage in open and free competition, without deception or fraud. (Friedman 1970) Modern critics, such as Reich (2007) and commentators such as Gill (2008) say CSR is overly market friendly. Other critics include Clive Crook (2005) and David Henderson (2001)

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Carrolls Four-Part Definition of CSR

The social responsibility of business encompasses the economic, legal, ethical and discretionary expectations that society has of organizations at a given point in time.

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Carrolls Four-Part Definition of CSR

Societal Expectation Required

Responsibility

Examples Be profitable. Maximize sales, minimize costs.

Economic

Legal

Required

Obey laws, adhere to regulations

Avoid questionable practices. Do what is right, fair, and just Be a good corporate citizen. Give back.
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Ethical

Expected Desired/ Expected

Philanthropic

Legal Responsibilities
Law cannot address all the topics or issues that business may face

Law often lags behind more recent concepts of what is considered appropriate behavior
Laws are made by lawmakers and may reflect the personal interests/motivation of legislators rather than appropriate ethical justifications

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The Pyramid of CSR

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The CSR Equation

Economic Responsibilities

+ Legal Responsibilities + Ethical Responsibilities

Philanthropic Responsibilities

Total Corporate CSR

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Where does CSR Come from?

CSR is an evolution of business ethicswhich comes from human ethics and early Greeks
Adam Smith's Theory of Moral Sentiments is an important early text, since it addresses both ethics and business. Business ethics in some ways emanated from religion or paradigms: i.e. quakerism, jesuits But also from actions of large companies and societal expectations:
The East India Company, Dutch East India Company, Standard Oil, JP Morgan, (Robins 2006, Litvin 2003)

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Where does CSR Come from?

Scandals in the 1950s and 1960s over chemicals (Carson's Silent Spring) and automotive safety (GM and Ford, Ralph Naders Unsafe at any Speed) Increasing wealth in the 1960s in Europe e.g. Sweden

The 1960s - a decade of social activism. Late 1960s and early 1970s activism hits temporary peak.
Activities of companies such as DuPont in Vietnam (napalm) were questioned Earth Day 1970, publication of the Limits to Growth report, Erlich's Population Bomb added to fears of global collapse Economic and political turmoil of the mid and late 1970s overshadowed some of these fears
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Where does CSR Come from?

Early 1980s green groups founded in the 1960s and 1970s slowly gain traction. Rising middle class wealth in Europe and the US a factor Movements such as CND* raised public environmental and political awareness around issues such as nuclear, alongside whaling, acid rain and recycling 1980s also saw inner city riots in the UK and led to the creation of Business in the Community South Africa a big ethics issue in the 1980s, particularly for mining firms and Barclays

* Campaign for Nuclear Disarmament

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Where does CSR Come from?

The 1980's 1984 Union Carbide explosion in India pushed the chemical industry in the US and in Europe to adopt their "responsible care" initiative Late 1980's Green groups grew in appeal across Europe 1989 European Elections the Green party took over 2 million votes and 15% of the vote share Another watershed moment was the Exxon Valdez spill in March 1989. 10.8 million US gallons of oil were spilled off the Alaskan coast. This sparked international environmental outrage (Exxon fights the clean up costs lawsuits for 19 years)
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Where does CSR Come from?

The 1990's In the 1990s globalised labour practices as firms such as Nike and Gap on the agenda Nike handles the initial reaction badly, fuelling critics. Media jumps on CSR, hard! Labour activists from NGOs focusing on supply chains Also in the 1990s Shell suffered double reputational blow in the North Sea and in Nigeria Hugely significant for the development of CSR

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Where does CSR Come from?

The 1990's Other significant activities In 1995 The Body Shop published it's Values Report. Another CSR landmark Naomi Klein - "No Logo". in 1999/2000 David Korten - "When Corporations Rule The World

Anti-globalisation riots - Seattle in 2000 and Genoa in 2001

In 2000/1/2 the CSR Agenda received a triple stimulus:
1. 2. 3. Jubilee 2000 Campaign on African debt 2002 Johannesburg Summit on Sustainable Development, 2001 scandal over HIV / Aids drugs distribution in Africa.
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China (2003/4/5) and the explosion of definitions

As China began to enter the world stage, debate begins about CSR Issues: basic pollution management, anti-corruption and workers rights / health and safety Chinese government quickly saw the potential for CSR to be used as a control tool (ACFTU)* Resulting change in Chinese labour law has pushed up labour costs Since 2003/4 the CSR scene has exploded - climate change, "sustainability" / corporate responsibility, supply chain risk, anti corruption, obesity marketing, human capital, marketing, etc Myriad issues are now seen as relevant to CSR!
* All China Federation of Trade Union
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CSR around the world

In India, it often means working with NGOs, taking a philanthropic approach In Colombia, it can mean helping with post conflict reconstruction and societal rebuilding In South Africa, it can mean building up a supply base, that is both economically sustainable and worker-friendly and helping tackle HIV / Aids. In France, it can mean picking up where the government has failed on some social issues, negotiated agreements on working hours and conditions, and environmental issues
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CSR around the world

In Ukraine, it can mean sponsoring church rebuilding, book publishing and encouraging basic skills improvements in the workforce, alongside health and safety Finally, in Cambodia, it can mean a partnership with the ILO, NGOs and IGOs to create a cluster of factories where labour standards and union rights are respected.

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CSR- INDIAN PERSPECTIVES

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CSR in India
CSR approaches and strategies are based on the ethical beliefs of the founding fathers, business areas in which the companies operate, the socio-economic environment, opportunities emerging over long periods of their existence. visibility(Global) perception of customer oversight Tied up with philanthropy and community development. Community influence and paternalism among traders- turned entrepreneurs. Foundations within companies that follow the Gandhian ideology of giving back to society.
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Companies & CSR

Three kinds of Indian companies when it comes to corporate responsibility: big Indian multinational corporations that have proper corporate responsibility mechanisms in place;

large national companies that appreciate the value of corporate responsibility but have no inherent structures to show for it; and the many small and medium-sized enterprises that are doing only piecemeal work at best
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CSR philosophies India

Model Ethical Focus Champions

Voluntary commitment by companies to public welfare M K Gandhi State ownership & legal requirements determine corporate responsibilities Jawaharlal Nehru Corporate responsibilities limited to private owners (shareholders) Milton Friedman

Statist Liberal

Companies respond to the needs of stakeholders- customers, employees, r Stakeholder communities etc. R Edward Freeman
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Communicating Corporate Social Responsibility

General values statement

Organisations should develop a general values statement which reflects their stance towards CSR This may form part of a more comprehensive Mission Statement Should define ethical framework that guides the accomplishment of the overall mission of an organization within a society

Example: Organisational Focus

JP Morgan Chase

Example: Environmental Focus

Coca Cola

Example: Employee Focus

Johnson and Johnson

Example: Stakeholder Focus

Credit Suisse

United Technologies

THANK- YOU

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