Corporate Social Responsibility (CSR) ± An Overview

Dr. Sudipti Banerjea Professor Department of Commerce University of Calcutta

CSR ± A Conceptual Discussion

³Social Responsibilities refer to the businessman¶s decisions and actions taken for reasons at least partially beyond the firm¶s direct economic or technical interest.´ ± Keith Davis

‡ ³A concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment. A concept whereby companies integrate social and environmental concerns in their business operations and in their interactions with their stakeholders on a voluntary basis.´± European Commission

‡ "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." ± The World Business Council for Sustainable Development in its publication "Making Good Business Sense" by Lord Holme and Richard Watts .

Ernst & Young Environment and Sustainability Services Principal .‡ "Corporate Social Responsibility is now a determining factor in consumer and client choice which companies cannot afford to ignore. Companies who fail to maximise their adoption of a CSR strategy will be left behind." ± Andrew Grant.

 It is a form of corporate self-regulation integrated into a business model. responsible business. corporate citizenship. or corporate social performance. . sustainable responsible business (SRB). CSR is also known as corporate responsibility.  CSR is the sense of obligation on the part of companies to build certain criteria and manage the business activities by taking strategic decisions.

 Furthermore. employees. and voluntarily eliminating practices that harm the public sphere. Thus. communities and the environment in all aspects of their operations. shareholders. business would proactively promote the public interest by encouraging community growth and development. . regardless of legality. CSR is a concept whereby organisations consider the interests of society by taking responsibility for the impact of their activities on customers.

Planet. Essentially. . CSR is the deliberate inclusion of public interest into corporate decision-making. Profit. and the honouring of a triple bottom line : People.

Historical Perspectives of CSR ‡ The First Industrial Revolution(1712-1830) ‡ The Spread of Industrial Revolution(18301875) ‡ The Second Industrial Revolution(1875-1905) ‡ The Non-Conformist Challenge in Britain ‡ Progressives in North America ‡ Pos-War Statism .

. to help alleviate poverty and hunger. especially MNCs. the increased awareness of CSR has come about as a result of the United Nations Millennium Development Goals in which a major goal is the increased contribution of assistance from large organizations.In recent times. and for businesses to be more aware of their impact on society.

‡ The GCCI hopes to increase businesses' engagement in and support for CSR as a business strategy with long-term benefits both for the companies themselves as well as society in general. .‡ The World Economic Forum has also recognised the importance of CSR by establishing the Global Corporate Citizenship Initiative (GCCI).

CSR . labour and communities are able to function well together. . ‡ Social Investment ± Contribution to physical infrastructure and social capital is increasingly seen as a necessary part of doing business.Key Drivers ‡ Enlightened Self-interest ± Creation of a synergy of ethics. a cohesive society and a sustainable global economy where markets.

. There is increasing expectation that companies will be more open.‡ Transparency and Trust ± Business has low ratings of trust in public perception. more accountable and be prepared to report publicly on their performance in social and environmental arenas. ‡ Increased Public Expectations of Business ±Globally companies are expected to do more than merely provide jobs and contribute to the economy through taxes and employment.

 The CSR report concentrates on their non-financial societal activities (usually positive contributions). .CSR Reporting  Many large companies now voluntarily issue a CSR report along with their annual report.

Reporting Guidelines or Standards which serve as frameworks for Social Accounting. based on John Elkington's Triple Bottom Line (3BL) Reporting ‡ Accounting for Sustainability's Connected Reporting Framework . Auditing and Reporting within the CSR framework ‡ AccountAbility's AA1000 Standard.

‡ Global Reporting Initiative's Sustainability Reporting Guidelines ‡ GoodCorporation's Standard developed in association with the Institute of Business Ethics .‡ The Fair Labor Association conducts audits based on its Workplace Code of Conduct and posts audit results on the FLA website.

‡ Green Globe Certification / Standard ‡ Social Accountability International's SA8000 Standard ‡ The ISO 14000 Environmental Management Standard ‡ Verite's Monitoring Guidelines .

corporate responsibility reporting. A COP report describes the company's implementation of the Compact's ten universal principles.‡ The United Nations Global Compact promotes companies¶ reporting in the format of a Communication on Progress (COP). ‡ The United Nations Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR) provides voluntary technical guidance on eco-efficiency indicators. and corporate governance disclosure. .

. environmental.‡ The Global Reporting Initiative¶s (GRI) vision is that disclosure on economic. and social performance becomes as commonplace and comparable as financial reporting and as important to organizational success. ‡ GRI¶s mission is to create conditions for the transparent and reliable exchange of sustainability information through the development and continuous improvement of the GRI Sustainability Reporting Framework.

In India. the Ministry of Corporate Affairs has issued the Corporate Social Responsibility Voluntary Guidelines. 2009 for compliance by companies on voluntary basis. .

The Stakeholders .

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age race. ideas.Responsibilities towards Employees Some specific responsibilities of organisations towards their employees are:  To provide adequate compensation  To provide working conditions that respect each employee¶s health and dignity  To be honest in communications with employees and open in sharing information  To listen to. and where possible. and religion  To protect employees from avoidable injury and illness in the workplace  To encourage and assist employees in developing skills and knowledge that are required for accomplishing the task . act on employee suggestions. requests and complaints  To engage in negotiations when conflict arises  To avoid discriminatory practices and guarantee equal treatment and opportunity regardless of gender.

Responsibilities towards Consumers The responsibilities of business corporations towards their consumers are summed up by the five µR¶s ± the right quality.  Offering quality goods at reasonable prices  Providing prompt and adequate service to consumers  Improving the standard of living by producing goods and services of high quality  Treating customers fairly in all aspects of business transactions  Ensuring the health and safety of customers . etc. A few responsibilities are:  Producing goods according to the specific needs of consumers. right time. their purchasing power. right quantity. right place and right price.

organisations must ‡ Seek fairness and truthfulness in all activities. encourage and prefer suppliers and sub-contractors whose employment practices respect human dignity . competitiveness and reliability ‡ Share information with suppliers and integrate them in the planning processes ‡ Pay suppliers on time and in accordance with agreed terms of trade ‡ Seek. quality.Responsibilities towards Suppliers A company¶s relationship with suppliers and sub-contractors must be based on mutual respect. including pricing and licensing ‡ Ensure that business activities are free from coercion and unnecessary litigation ‡ Foster long-term stability in the supplier relationship in return for value. When dealing with the suppliers.

Responsibilities towards Competitors ‡ Foster open markets for trade and investment ‡ Promote competitive behaviour that is socially and environmentally beneficial and demonstrates mutual respect among competitors ‡ Refrain from either seeking or participating in questionable payments or favours to secure competitive advantage ‡ Respect both tangible and intellectual property rights ‡ Refuse to acquire commercial information by dishonest or unethical means such as industrial espionage .

In return for their services.Responsibilities towards Communities The community gives the business the right to build or rent facilities. infrastructure. etc. benefit from the tax revenues raised in the form of local services. workplace safety and economic well-being Promoting and stimulating sustainable development and playing a leading role in preserving and enhancing the physical environment and conserving the earth¶s resources . A firm¶s responsibility towards the society include: Respecting human rights and democratic institutions Supporting public policies and practices that promote human development through harmonious relations between business and other segments of society Collaborating with such activities that aim at improving the standards of heath. The firm cannot expose the community to unreasonable hazards in the form of pollution and toxic waste. the firm should act in a responsible way. education.

94 per cent.CSR in Practice According to the results of a global survey in 2002 by Ernst & Young. have made significant progress in implementing the strategy in their organisations. only 11 per cent. . however. of companies believe that the development of a CSR strategy can deliver real business benefits.

short-term profits. ± It is nothing more than superficial window dressing. ± It is an attempt to pre-empt the role of governments as a watchdog over powerful MNCs.CSR ± Arguments for and Against ‡ Proponents argue that there is a strong business case for CSR in that corporations benefit in many ways by operating with a perspective broader and longer than their own immediate. . ‡ Critics argue: ± CSR distracts from the fundamental economic role of business.

.Thank You (C) Prof. Sudipti Banerjea.U. C.