CORPORATE SOCIAL RESPONSIBILITY

(CSR)
 CSR
 The traditional view: business must utilise its
resources efficiently to provide goods service of the
right quality at reasonable prices to consumers.
 The modern view: business firm has many
responsibilities in addition to producing and
marketing goods and services at a profit. They are
responsible not only to shareholders but also to other
stakeholders like customers, employees, suppliers,
Govt, community, etc.
 Traditional perspective stressed corporate
philanthropy (charity for social, cultural &
religious purposes.
 Modern perspective focuses on long-term interests
of stakeholders and sustainable development.
 The term CSR is based on the idea that business
has social obligations beyond earning profits.
 DEFINITIONS OF CSR
 “Obligations to pursue to those policies, to make
those decisions or to follow those lines of action,
which are desirable in terms of the objectives and
values of our society.” — Howard R. Bawen
 “CSR requires managers to consider whether
their action is likely to promote the public good,
to advance the basic beliefs of our society, to
contribute to its stability, strength and harmony.”
— Peter F. Drucker
 “In the real sense, the assumption of CSR implies
recognition and understanding of the aspirations
of the society and determination to contribute to
its achievement.” — George A. Steiner
 “CSR encompasses economic, legal, ethical, and
discretionary expectations that the society has to
organisations at a given point of time.” — Carrol
 CSR is a process by which an organization thinks
about and evolves its relationships with stakeholders
for the common good and demonstrates its
commitment in this regard by adoption of appropriate
business processes and strategies. Thus, CSR is no
charity or mere donations.

 CSR is a way of conducting business, by which

corporate entities visibly contribute to the social
good. Socially responsible companies use CSR to
integrate economic, environmental and social
objectives with the company’s operations and growth.

 “CSR Policy” relates to the activities to be undertaken

by the company as specified in schedule VII of the
act and the expenditure thereon, excluding activities
undertaken in pursuance of normal course of
business of a company
 “CSR" means and include but not
limited to :-

• Projects or programs relating to activities

specified in the schedule VII of the Act; or

• Projects or Programs relating to activities

undertaken by BoDs of the company in
pursuance of the recommendations of the CSR
committee of the Board as per declared CSR
Policy of the company enumerated in schedule
VII of the Act.
 CSR: MAIN FEATURES
 An old idea with changing perspectives over the time.
 Business firms is more than an economic institution; an organ of
society. Focuses on idea ‘business has social obligations
above and beyond making a profit.’
 Does not mean mere philanthropy. A business can be socially
responsible without charity.
 It is a personal obligation. A business firm can discharge its
CSR only through the persons who manage & control it.
 CSR of business is commensurate with its social power, eg; a
small firm has less responsibility to society than MNC.
 Concept of CSR is based on ethical conduct.

 CSR is more than legal obligations. It involves voluntary

efforts for the welfare of society.
 WHAT IS CSR?
 CSR refers to a concept in which companies balance
three aspects: profit, people, & environment.
 They pursue high profits and operate ethically in a
socially and environmentally responsible manner.
 It requires them to be not only economically efficient but
also fair in their dealings with their stakeholders.
 Philanthropic activity is an example of CSR.
 Other examples: company’s efforts to deal fairly with
stakeholders, comply with law, operate environmentally
soundly, and adopt diversity & fair employment practices
IMPORTANCE OF CSR: REASONS
 Public Expectations from the Enterprise .
 Better Environment for Business.
 Good Public Image.
 Responsibility with Power: An enterprise enjoys
a social power as its decisions have an impact on
the environment, consumers, employees & many
other areas of the society. Any imbalance in the
decisions may lead to a negative effect to the
welfare of the society.
ORGANISATIONAL RESPONSIBILITIES:
A FIRM’S “PYRAMID OF CSR
 Economic Responsibility
produce an acceptable RoI for
its owners’ investment.
 Legal Responsibility duty to
act within the legal
framework drawn up by govt
and judiciary.
 Ethical Responsibility No
harm to its stakeholders and
within its operating
environment.
 Discretionary
Responsibility, which
represents more proactive,
strategic behaviors that can
benefit the firm and society,
or both.
 DRIVERS FOR CSR ACTIVITIES
• Globalisation: Coys want to improve their image by
meeting expectations of various stakeholders.
• Pressure from Investors: Institutional investors (home &
abroad) want to invest in SR Coys.
• Good Employees Relations: SR Coys are able to attract &
retain talent. People want to work in coys which offer a
healthy, safe, & comfortable working environment.
• Image Building: A coy can build a good public image
through CSR activities and strengthen coy’s relations with
its suppliers, distributors, Govt, and the community.
• Increase in Market Share: Customers prefer buying from
ethically and SR firms.
• Legal Requirements: To disclose all material information
in its reports, listed companies must abide by stipulated
requirements under Clause 49 of listing agreement.
• Cost Saving: Coys which follow sound waste mgt &
pollution control policies can reduce costs. Envt friendly
practices also protect coy from penalties & legal actions.
• Risk Cover: A coy can protect itself from several risks by
having a genuine care for society. CSR activities reduce risk
of sudden damage to reputation & economic performance.
 CSR TOWARDS STAKEHOLDERS 
 Stakeholders : individuals, who hold some
interest, investment, & share in enterprise. It
incl shareholders, customers, employees,
community, society, govt & others. They directly
affect or are affected by its business activities.
Responsibilities towards stakeholders are ;
 Responsibility towards Shareholders:
 a. Providing accurate financial information of the
enterprise to shareholders
 b. Providing fair and adequate returns on the
capital invested by them
 c. Maintaining regular and effective communication
with them
 d. Preparing audited financial reports of business
 e. Informing shareholders about annual, general,
and emergency meetings.
 CSR TOWARDS STAKEHOLDERS 
 ii. Responsibility towards Customers:
 It involves the accountability of an enterprise
towards the individuals, who buy the products or
services of the enterprise.
 The responsibilities towards its customers are;
 a. Providing high quality products and services at
reasonable prices to customers
 b. Ensuring maximum satisfaction to customers by
giving value for money
 c. Restraining the selling of adulterated and low-
quality products and services
 d. Advertising products and services to make
customers aware about them
 e. Introducing customer care centers & consumer
advisory councils to solve customer’s grievances
 f. Abiding by rules & regulations under CPA 1986.
 CSR TOWARDS STAKEHOLDERS 
 iii. Responsibility towards Employees:
 It involves the responsibility of an enterprise
towards the individuals, who are appointed to
render services to the enterprise in exchange of a
fixed amount of wages and salaries.
 Responsibilities towards its employees are;
 a. Providing fair & timely wages and bonus.
 b. Appreciating and recognizing employees
according to their performance
 c. Motivating & encouraging to perform efficiently.
 d. Ensuring healthy, harmonious, and productive
working conditions in the enterprise
 e. Providing growth opportunities to employees
 f. Facilitating effective communication with
employees
 g. Providing necessary training to employees.
 CSR TOWARDS STAKEHOLDERS 
Responsibility towards Community & Society:
 a. Generating employment opportunities for people
in the society
 b. Avoiding the manufacturing processes that
create environmental pollution
 c. Providing education, health, and other basic
amenities to the people
 d. Working for the growth and development of the
society
Responsibility towards Government:
 a. Abiding by the rules and regulations prepared by
the government
 b. Paying taxes on a regular basis
 c. Abstaining from submitting misleading and false
information or documents
 CSR TOWARDS STAKEHOLDERS 
Responsibility towards other Stakeholders:
 It includes suppliers, distributors, banks, and
financial institutions. The responsibilities
towards these stakeholders are as follows:
a. Providing accurate and clear information,
such as balance sheets, profits and loss
statements, and ratio analysis, to banks and
financial institutions
b. Providing fair margins to distributors
c. Providing correct and clear specifications to
suppliers regarding raw materials
d. Ensuring timely payment to suppliers
e. Working in association with different NGOs to
develop the weaker section of the society.
 BASIC CONSTITUENTS OF CSR

Contribute Make Improvement Towards

towards a desirable of social
sustainable
Business
social environment &
economic changes
development Society
nt
CSR PRINCIPLES & STRATEGIES
• Respect for human rights.
• Respect for the differences of views.
• Diversity & non-discrimination should be the
guiding principle.
• Make some social contribution.
•Enter into dialogue
•Self-realization & creativity.
•Fair dealings & collaboration.
• Feedback from the community.
• Positive value- added
• Long term economic & social
development.
MODELS OFCSR
 FRIEDMAN MODEL (1962-73)
• A businessmen should perform his duty well, he is
performing a social as well as a moral duty.

• A businessmen has no other social responsibility to

perform except to serve his shareholders &
stakeholders.
ACKERMAN MODEL (1976)
 The model has emphasized on the internal
policy goals & their relation to the CSR.
 Four stages involved in CSR;
Managers get to know most common social
problem & then express a willingness to take a
particular project which will solve some
problems.
Intensive study of the problem by hiring experts
& getting their suggestions to make it
operational.
Managers take up project actively & work hard.
Evaluating of the project by addressing issues.
CARROLL MODEL(1991)
 •Philanthropic requirements: Donation, gifts,
helping the poor. It ensure goodwill &
 social welfare.
•Ethical responsibility: Follow moral & ethical
 values to deal with all the stakeholders.
• Economic responsibility: Maximize the
shareholders value by paying good
return.

• Legal responsibility: Abiding the laws of
the land.
ENVIRONMENTAL INTEGRITY &
COMMUNITY HEALTH MODEL
 This model developed by Redman.
 Many corporate in US adopted this model.
 Corporate contribution towards environmental
integrity & human health, there will be greater
expansion opportunities.
 Healthy people can work more & earn more.
 CSR is beneficial for the corporate sector.
 CSR in a particular form is welcome.
CORPORATE CITIZENSHIP
MODEL
 To be a corporate citizen, a corporate firm has to
satisfy four conditions:
 Consistently satisfactory
 Sustainable economic performance
 Ethical actions
 Behaviour.
 A particular firm’s commitment to corporate
citizenship requires the fulfillment of certain
social responsibilty.
 STOCKHOLDERS & STAKEHOLDERS
MODEL
Stockholders Stakeholder
ORIENTATION
Model Model

1 2
Self Interest
Productivism Progressivism
MOTIVES

3 4
Duty
Moral Philanthropy Ethical Idealism
 Productvists believe that the only mission of a
firm is to maximize the profit.
 Philanthropists who entertain the
stockholders. CSR is dominated by moral
obligations & not self-interest.
 Progressivists believes the corporate behaviour
basically motivated by self interest & should
have ability to transform the society for good.
 Ethical Idealism concern with sharing of
corporate profits for humanitarian activities.
 NEW MODEL OF CSR
Ethical Rooting
Strong Poor

CSR (+) CSR(-)

Strong
Financial Capability

CSR(-) CSR(-)
Poor
ENVIRONMENTAL ASPECTS OF CSR
 Duty bound to consider impact of its operations,
products and facilities on the environment.
 Must eliminate/minimise waste and emission.
 Obligation to maximise the efficiency and
productivity of its resources.
 Must minimise the adverse impact of its
practices on the world’s resources, that future
generations can enjoy these resources.
Environment Issues:
 Business corporations exercise tremendous
influences (positive & negative) on environment.
 Environment : a major concern across globe as
various kinds of pollutants causing severe
damage to environment.
 Industrialisation & urbanisation have created
several environmental problems.
PROBLEMS RELATING TO ENVIRONMENT
Global Warming:
 Rise in average temperature of air near the earth’s surface
and an ocean is known as global warming.
 As the earth get hotter, natural disasters eg storms, flood,
droughts, hurricanes, increases.
 Excessive emission of manmade greenhouse gases (GHGs)
is the main cause of global warming.
 GHGs trap heat in the earth’s atmosphere leading to
warming of earth’s surface and oceans.
Green House Effect:
 It is a natural process, helps to regulate the earth’s
temperature, essential for life, by itself is not harmful.
 But when certain gases trap heat and re-radiate it, planet
gets surrounded by a kind of warm-air blanket.
 Vehicles, factories, electricity generation plants emit gases.
 Increasing concentration of gases cause melting of sheets
such as Antarctica & Green land leading to rise in sea level.
PROBLEMS RELATING TO ENVIRONMENT
Ozone Depletion:
 Global warming is destroying ozone. GHGs warm the
lower atmosphere by trapping heat. But the upper
atmosphere remains cool as less heat reaches it.
When the upper atmosphere (stratosphere) becomes
colder, ozone is depleted faster.
Deforestation:
 Trees collect CO2 breathed out by human beings and
released by other sources and produce oxygen needed
by people and other living creatures.
 Deforestation (large scale cutting & burning of trees)
leads to concentration of CO2 in atmosphere and is a
major cause of global warming.
 Increasing urbanisation, industrialisation and timber
requirement are the main reasons behind
deforestation.
PROBLEMS RELATING TO ENVIRONMENT
Pollution:

:
Increasing population is disturbing balance in nature.
 Fast depletion of natural resources poses a danger for
future generations.
 Ecology, plants, and animal life are being disrupted.
Pollution has become a serious problem worldwide.
Major Types of Environmental Problems :
 Land Pollution: Indiscriminate dumping of urban &
industrial waste and mining are the main cause. Soil
pollution occurs due to harmful agri practices.
 Air Pollution: CO2created by human activities is the
chief cause of air pollution. The combustion of fossil
and deforestation also results in air pollution.
 Water Pollution: Huge shortage of drinking water
despite water bodies cover 71 % of the earth’s surface.
 Acid Rain: Harmful gases in combination with
moisture in the air lead to formation of acidic clouds
 BEST PRACTICES OF CSR
• To set a feasible, Viable & measureable goal.
• Build a long lasting relationship with the
community.

• Retain the community core values.

• The impact of the CSR needs to be assessed.
• Reporting the impact.
• Create community awareness.
 NEED FOR CSR
• To reduce the social cost.
• To enhance the performance of employees.
• It a type of investment.
• It leads to industrial peace.
• It improves the public image.
• Can generate more profit.
• To provide moral justification.
• It satisfies the stakeholders.
• Helps to avoid government regulations & control.
• Enhance the health by non polluting measures.
 ARGUMENTS FOR THE
CSR:GENERAL
• Corporate should have some moral & social
obligations to undertake for the welfare of the
society.
• Proper use of resources, capability & competence.

• The expenditure on CSR is a sort of investment.

• Company can avoid many legal complications.

• It create a better impression.

• Corporate should return a part of wealth.

 ARGUMENT FOR CSR
1. The Iron Law of Responsibility:
 Society gives business the charter to exist which
can be amended or revoked, if business fails to
live up to the expectations of society.
 In order to retain its social power, business must
respond constructively to the needs of society.
 In the long run, those who do not use power in a
socially responsible manner will lose it. This is
the Iron Law of Responsibility.
 Businesses have been delegated economic power
& have access to productive resources of
community to be used for the common good of
society so that more wealth for its betterment
may be generated.
 Technical & creative resources are also helpful to
it.
 ARGUMENT FOR CSR (contd)
 This way, the resulting benefits would be:
 Decrease in crime.
 Easier labour recruitment.
 Reduced employee absenteeism.
 Easier access to international capital, better
conditions for loans on international money
markets.
 Dependable and preferred as supplier,
exporter, importer, and retailer of
responsibility manufactured components,
and products.
 This way a better society would produce a
better environment in which the business
may gain long-term profit maximisation.
 ARGUMENT FOR CSR (contd)
2. Long-Term Self Interest: Grow in the long run
only healthy and peaceful social environment.
3. Moral Justification:It is ethically essential.
4. Freedom of Enterprise: Socially responsible
behaviour can prevent Govt intervention & control.
5. Better Public Image: Business can develop
favourable public image by supporting the interests
and goals of society.
6. Proper Use of Resources:
7. Environmental Protection: It is their duty to
maintain the ecological balance.
8. Business Opportunities: With their innovative
skills and resources big business firms can convert
social problems into opportunities, eg, through its
“project Shakti” initiative, HUL has not only helped
rural people but increased its own revenues.
 ARGUMENT AGAINST CSR
1. Vague Concept:There are no clear guidelines as to
the extent of these responsibilities.
2. Loss of Incentive: There is no substitute for self-
interest & profit as the drive towards efficiency.
3. Conflicting Considerations: Namely profits & SR.
Decision making become very difficult.
4. Disregard of Market Mechanism: Doctrine of SR
based on implied assumption that political
mechanism is better than market mechanism as
basis for allocation of scarce resources. Distortion
likely to result in inefficient utilisation of resources.
5. Arbitrary Power: To dominate social institutions &
perpetuate their own value system to detriment .
6. Burden on Consumers: – Additional costs, likely
to transfer to consumers by increasing prices.
7. Responsibility of Govt: Welfare of weaker sec of
the society is solely responsibility of govt.