Class 1: Role of Business in Society

Dr. Satish M.K

Email: satish.kajjer@nmims.edu
Agenda for the CEO
 A CEO needs to manage the firm operations profitable and aim towards delivery of wealth
 But leadership also requires responsibility towards people and the societies in which the
company operates
 Stewardship of the natural resources on which it relies
 This should not be a conflict with growth or profitability but an integral part of successful management
practice and sustainable business building
EXAMPLE
 Unilever is one of the world’s largest buyers of white fish with a direct business interest
in the sustainability of fish stocks
 Unilever in 1996 tied up with WWF and set up a Marine Stewardship Council
 Committed to source fish from sustainable sources
 This involved investment, dialogue and support for our suppliers
 Principle 1: Fishing should be conducted in such a manner that it should not lead to over fishing
 Principle 2: fishing operations should allow for the maintenance of the ecosystem
 Principle 3: fishing activities respect local, national and international law
Corporate Social Responsibility
 CSR- Social and Environmental responsibilities that go to the heart of
the debate on the role of business in society
 Debate on “ whether the business of business is business” or whether
companies have a “ responsibility to mitigate their social and
environmental impacts”

There are three questions for the CEO and Board

1. What is the role of business in society in the 21st century
2. What differences does globalization makes
3. How can the Board get on the front foot
What is the role of business in society in the
21st century
Role of Business in Society
 Changes brought about by major trends in science and technology, education,
lifestyle and life expectancy have disrupted many sources of social traditions and
norms
 The media environment in which business operates has also changed
 Media is ready to challenge and to pass judgements
 There is increasingly the informal running commentary of bloggers
 Pressure from two sides
 Pressure for short-term returns
 Pressure from the socially responsible investment community to report on corporate ethical
performance
 Company leaders are not only leaders of business but leaders within society

ROLE OF BUSINESS IN THE 21ST CENTURY

 To innovate and deliver products and services, to use resources efficiently so that
value is created and to conduct operations so that they are performed profitably
and accepted by society
Corporate Social Responsibility
 CSR-social and environmental responsibility has evolved in recent years as a
coherent way of thinking about a company’ s impact and interaction with society
 CSR covers subjects that affects all companies– such as employment standards,
equal opportunities, diversity and carbon emissions as well as those that are specific
to a particular industry
 Advertising to children, drug pricing, nanotechnology or sustainable use of water

 For the CEO and Board, the challenge is to have a clear map of their businesses
impact on and interactions with society
 Its about proactively managing the company’s role in society rather than having
others do it for you
What differences does globalization makes
Globalization
 To date globalization has been achieved at the cost of a big increase in inequality
and with insufficient regard to its negative environmental impacts
 For companies operating internationally the reaction of different societies will be a
key determinant in shaping the markets of the future
 Globalization has magnified the social impacts of business
 Business will need to be able to source its raw materials and manage its
manufacturing sustainably at a time when natural resources are under pressure
 It is estimated that current use of agriculture will leave 5 percent of world’s land barren by
2025
 Water shortages which currently affects 20 percent of world’s population in 30 countries
are expected to rise to 30 percent of the world’s population in 50 countries by 2025
How can the Board get on the front foot
How can the Board get on the front foot
 International companies can help spread the benefits of globalization such as raising
the quality of life and standards of living to some of the poorest countries of the
world in doing business in these countries in a responsible sustainable way
 One of the way, global company boards have responded to the social concerns
around globalization is through their philanthropic activities
 Philanthropy in diverse field such as HIV/AIDS, education, emergency, disaster relief etc

 However generous or creative the philanthropic activity of the company is, it can
not substitute for the impact of doing business in a responsible and sustainable way
 Voluntary contributions pale into insignificance in comparison with the impact of
core business activities
Role of Business in Society: Social Impacts
Company’s role in society
Board should review the following five areas while evaluating the company’s
role in society
1. Companies “ foot print” in society
2. Values governance and employee engagement
3. Strategy and marketing development
4. Industry priorities
5. Consistency of corporate relations and communications
Checklist for CEO and Board
 Check that your own house is in order, own operations and throughout the
value chain.
 Understand your company’s footprint- your impact on society and the
environment
 Has your company joined-up corporate governance and corporate
responsibility
 Have all employees been engaged in delivering the standards of social,
economic and environment performance
 Has the social and environmental footprint of the company been incorporated
into corporate strategy development
 Is the development and marketing of brands, products and services meeting the
needs of consumers as citizens
 What are the industry priorities-environmental, social and economic- and what
are company’s corresponding strategies
 Do your corporate communications offer society the opportunity to form a
well-founded view of your company
 Do you engage with your stakeholders and listen to their concerns and
expectations
Interlocking Agenda: overlapping interests of
different groups in Society
Framework of engagement with society
How to build trust?
 ‘walking the talk’ on social and environmental commitments
 Making performance transparent and accounting for what is and what is
not achieved
 Demonstrating through a willingness to work in partnership that the
company is alive to the issues of globalization and willing to pay its part in
addressing them
HUL- Different approaches to addressing
social issues
LIFEBUOY- SWASTHYA CHETANA
 Aims to educate 200 million people about basic hygiene habits- including hand
washing by soap
 Good example of a marketing programme with social benefits

PROJECT SHAKTI
 HUL worked through SHGs where in women were recruited as distributors
 Women as a Salesforce would go house to house selling HUL products earning a
commission
Thank You