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Corporate Social Responsibility: What is it?

Goal: Corporate Social Responsibility

(CSR) is a widely defined concept that explores the responsibilities of business towards society
In terms of: the environment; employees

'and neighbours and consumers. This responsibility lies outside of the financial responsibilities that Companies have towards shareholders and other investors

What is it? Cont..

CSR is also linked to the idea of social and

environmental sustainability; how businesses should act to ensure that their business contributes to a future where the environment is protected and people's basic human rights are protected, both in the short and long term. Business' role as creators of wealth for society can contribute but the wealth must be achieved in a sustainable way.


Responsibility not to pollute where they

operate Responsibility to make products which do not damage the environment throughout their life cycle Responsibility to improve the sustainability of all their operations

Guaranteeing the right of association

for all employees

Guaranteeing the freedom to form trade

unions without interference Guaranteeing the right to collective bargaining. Providing training. Ensuring the health and safety of employees Ensuring that child labour is not used in their business


Monitoring to ensure that all operations

have a positive impact upon the local community . Actively seeking the views of those affected by business operations . Ensuring that products are not detrimental to the interests of consumers

Other Issues
CONSUMER RIGHTS: Companies have responsibilities to all of those who purchase their products, regarding the safety of the product and its fitness for use

Other Issues
HUMAN RIGHTS :Companies have responsibilities to ensure that their operations never negatively influence human rights.

Other Issues
GOVERNMENTAL RELATIONS : Many companies hire public relations firms to lobby governments. The tactics employed should be open, accountable and transparent

Other Issues
CORPORATE GOVERNANCE : As recent scandals have shown, the extent to which companies' boards CAN govern and regulate the companies' activities is crucial for their legitimacy and reputation

Examples - Human Rights and Business

TotalFinaElf and Premier Oil are accused of complicity in gross human rights abuses in Myanmar/ Burma. Soldiers retained by the companies to protect the oil pipeline allegedly force civilians to carry heavy supplies, during which time they are frequently beaten and left for dead. ", demonstrating the companies' complicity in this use of forced labour.

Example - Environment and Business

In 1984 Union Carbide's production factory in Bhopal India let out a cloud of poisonous gas that killed thousands of people. Since then they have failed to make full compensation to the victims and the tens of thousands of people who still suffer from the effects of the poisoning. According to Greenpeace, the area of the factory remains contaminated to this day and still poses a health risk. Attempts to hold Union Carbide and senior executives accountable have not been successful, with Union Carbide representatives and directors often failing to attend hearings. The Indian Government has also controversially diluted the charges against Union Carbide

Example -Consumer Issues and Business

Over the 20th Century doubts have been growing about the nutritional value of infant formula feed for babies in place of breastfeeding. In the early 1970s several NGOs started campaigns which raised the profile of the issues substantially, most prominently being campaigns which focused upon Nestle's role in the developing world. In 1981, an international code on the marketing of breast milk substitutes was adopted by the World Health Assembly (of the WHO). It is still disputed whether Nestle acts according to the code, despite the fact that UNICEF estimates that 1.5 million lives could be saved each year if every child were breastfed for the first six months. This example shows how business' operations can have significant impacts on those who consume their products.

What you get to develop through this paper.

Should businesses' responsibilities be limited to profits for

their shareholders?
How responsible are businesses for the non-financial

effects of their operations?

How far should this responsibility extend to subsidiary

companies, sub-contractors and suppliers?

How should companies balance their role as generators of

wealth against their non-financial responsibilities?

How much responsibility do businesses have for the society

in which we live

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 role 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.

While business compliance with laws and regulations on social, environmental and economic objectives set the official level of CSR performance, CSR is often understood as involving the private sector commitments and activities that extend beyond this foundation of compliance with laws.

From a progressive business perspective, CSR usually involves focusing on new opportunities as a way to respond to interrelated economic, societal and environmental demands in the marketplace. Many firms believe that this focus provides a clear competitive advantage and stimulates corporate innovation

CSR is generally seen as the business contribution to sustainable development which has been defined as "development that meets the needs of the present without compromising the ability of future generations to meet their own needs", and is generally understood as focusing on how to achieve the integration of economic, environmental, and social imperatives. CSR also overlaps and often is synonymous with many features of other related concepts such as corporate sustainability, corporate accountability, corporate responsibility, corporate citizenship, corporate stewardship, etc..

CSR commitments and activities typically address aspects of a firm's behaviour (including its policies and practices) with respect to such key elements as; health and safety, environmental protection, human rights, human resource management practices, corporate governance, community development, and consumer protection, labour protection, supplier relations, business ethics, and stakeholder rights

Corporations are motivated to involve stakeholders in their decision-making and to address societal challenges because today's stakeholders are increasingly aware of the importance and impact of corporate decisions upon society and the environment. The stakeholders can reward or punish corporations. Corporations can be motivated to change their corporate behaviour in response to the business case which a CSR approach potentially promises. This includes: stronger financial performance and profitability (e.g. through eco-efficiency), improved accountability to and assessments from the investment community, enhanced employee commitment, decreased vulnerability through stronger relationships with communities, and improved reputation and branding

Corporate Social Responsibility is the continuing commitment by business to behave 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.

Corporate social responsibility is essentially a concept

whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis. This means not only fulfilling legal expectations, but also going beyond compliance and investing in human capital, the environment and relations with stakeholders.
of the community and stakeholders of the evolving role of companies in society and the response of companies to growing environmental, social and economic pressures. Through voluntary commitment to CSR, companies are hoping to send a positive signal of their behavior to their various stakeholders (employees, shareholders, investors, consumers, regulators and NGOs) and in so doing make an investment in their future and help to increase profitability

The development of CSR reflects the growing expectations

Many driving forces are fostering the evolution of corporate social responsibility:
new concerns and expectations from citizens,

consumers, public authorities and investors in the context of globalization and large scale industrial change; social criteria are increasingly influencing the investment decisions of individuals and institutions both as consumers and as investors; increased concern about the damage caused by economic activity to the environment; transparency of business activities brought about by the media and modern information and communication technologies.

It is a multi-faceted concept. It involves corporate philanthropy and corporate-citizen social contracts. These are implicit contracts between citizens and the corporates, which promulgate that corporates exist for citizens and come with expectations. The expectations are that corporates conduct themselves in an ethical manner, follow laws and have end goal of betterment for the society. Some view CSR as voluntary activity but ultimately someday it has to be quantified in law.