7/31/2019 CSR(New) (2)

1/21

Corporate Social Responsibility :

Overview and Its Importance

Col. P. S. Sandhu,

Registrar

National Institute of Technology

Durgapur West Bengal - India713209.

7/31/2019 CSR(New) (2)

2/21

Definition of CSRCorporate Social Responsibility can be defined as

the ethical behavior of business towards its

constituencies or stakeholders.

Corporate Social Responsibility is a concept that

organizations, especially corporations, have an

obligation to consider the interests of customers,

employees, shareholders, communities, and

ecological considerations in all aspects of their

operations.

7/31/2019 CSR(New) (2)

3/21

European Commission Definition of

CSR :

Two Concepts of CSR :1ST Concept :

A concept whereby companies decide voluntarily

to contribute to a better society and a cleanerenvironment.

2nd Concept :

A concept whereby companies integrate social andenvironmental concerns in their business operations and in

their interaction with their stakeholders on a voluntary

basis.

7/31/2019 CSR(New) (2)

4/21

CSR is not mere philanthropy Philanthropy often is translated as one time financial

grant. And hence there is no commitment on the part

of the company as a regular provider.

Since it is an act of charity, company does not feel the

need to involve the community in the designing and

management of such initiatives and peopleparticipation if any is restricted to limited

implementation aspect reducing the efficiency and

effectiveness of CSR measures at the ground level.

The lack of the involvement from the primary

resource providersthe companyleads to low

levels of accountability and transparency at the

implementation level.

7/31/2019 CSR(New) (2)

5/21

7/31/2019 CSR(New) (2)

6/21

Stake HoldersPrimary Stakeholders Secondary Stakeholders Special Interest Parties

Shareholders Local, state and union Govt Trade and Industry Groups

Employees Regulatory Bodies Media

Business Partners Civic Institutions Competitors

Communities

Natural environment

Bankers, lenders, and those

providing Insurance

Customer

7/31/2019 CSR(New) (2)

7/21

UN Global Compact

1)Human Rights

Principle 1: Businesses should support and

respect the protection of internationally

proclaimed human rights; and

Principle 2: make sure that they are not

complicit in human rights abuses.

2)Labour Standards Principle 3: Businesses should uphold the

freedom of association and the effective

recognition of the right to collective bargaining

7/31/2019 CSR(New) (2)

8/21

Contd . Principle 4: Elimination of all forms of forced

and compulsory labour.

Principle 5: Effective abolition of child labour.

Principle 6: Elimination of discrimination in

respect of employment and occupation.

3)Environment

Principle 7: Businesses should support a

precautionary approach to environmental

challenges

7/31/2019 CSR(New) (2)

9/21

Contd . Principle 8: Businesses should undertake

initiatives to promote greater environmentalresponsibility; and

Principle 9: Businesses should encourage the

development and diffusion of environmentallyfriendly technologies

4) Anti-corruption

Principle 10: Businesses should work againstall forms of corruption, including extortion and

bribery

7/31/2019 CSR(New) (2)

10/21

7/31/2019 CSR(New) (2)

11/21

7/31/2019 CSR(New) (2)

12/21

Some Features of CSR

CSR is behavior by business over and above legal

requirements, voluntarily adopted because business deem

it to be in their long-term interest.

CSR is intrinsically linked to the concept of sustainabledevelopment: businesses need to integrate the economic,

social and environmental impact in their operations.

CSR is not an optional add-on to business core activities

but about the way in which business is managed.

7/31/2019 CSR(New) (2)

13/21

Drivers of CSR in Developing Countries

Internal Drivers External Drivers

Cultural Traditions International Pressure

Socio Economic Priorities Investment incentives

Government Initiatives Stakeholders activism

Market driven Priorities Supply Chain

7/31/2019 CSR(New) (2)

14/21

Models of CSRModel Focus Constructed and

Championed by

Ethical ( Trusteeship) Voluntary commitment byBusinessmen to public

well beingM.K.Gandhi

Statist ( socialistic pattern

of Society

State Ownership and legal

requirements determine

corporate responsibility

Jawaharlal Nehru

Liberal Corporate Responsibility

limited to private owners(Shareholders)

Milton Friedman

Stakeholder Companies respond to theneed of stakeholders

Customers , employees,

communities etc.

R.Edward Freeman

7/31/2019 CSR(New) (2)

15/21

HOW TO OPTIMIZE CSR SPENDING ?

7/31/2019 CSR(New) (2)

16/21

Articulation of CSR in IndiaIssue Company ActionCommunity Development Hindalco Asian CSR Award for its

Integrated Rural Poverty

Alleviation Programme

Corporate Giving Indian Oil Corporation Dedicating .75% of the net profitto community development

initiativesHealth Larsen and Toubro One of first companies to launch

an HV/AIDS Programme.

Gender equality National Thermal

Power CorporationOne of the few organizations to

have a policy for grant ofpaternity leave

Labour Standards Indian Tobacco

CompanyFirst company in India to be

certified to the SA 8000 social

accountability standard for the

Chirala facility.

7/31/2019 CSR(New) (2)

17/21

Contd Issue Company ActionHuman Capital Infosys Pioneering evaluation of

Human Capital using an

education index for its

employees.Environmental Management Bharat Heavy Electrical

LimitedAll units in this company are

certified to the ISO 14001

environmental management

system.

Energy Conservation Reliance Energy conservation measuresare saving the company 1150

million rupees per anum.Water Conservation Hindustan Sanitary ware Reduced flushing WC is

estimated to save 2 billion

litres of water.

Disclosure Tata Iron and Steel First Indian company to

publish a sustainability report

in line with Global Reporting

Initiative Guidelines

7/31/2019 CSR(New) (2)

18/21

PHASE 1 -

Awakening

Marketing to consumers

Free Enterprise and

Competition

Business of business is

business

Individual responsibility

Advertising and self

interest

Denial or prove it

Shareholder Value

Peripheral

Rule of Society

Evolving of CSR ParadigmPHASE 2

Compliance

Dependency

Regulation and

compliance

Do no Harm

Crisis Management

Public Relation

Description or we are

Regulatory Drivers

Tangential

Human Rights

PHASE 3

Citizenship

Partnership

Rights and Responsibility

Guarantee + ve good

Precautionary Approach

Social Reporting

Indicators or we are

Financial Drivers

Strategic

Development rights

PHASE 4

Reset

Strategic engagement

Transparency and

Accountability

Align with core competence

Integrated risk Management

Substantive ongoing dialogue

Impact and outcome or youare

Profitability and Cost

effectiveness

Main stream business process

Societal well being

f i i d

7/31/2019 CSR(New) (2)

19/21

Range of Corporate position towards CSR

Field Negative Positive Active Pro- Active

Organization Suppresses alldiscussion of

responsibility

issues

No Fixed policy Upgradesbusiness to

ensure high social

responsiveness.

Structuresorganization around

trying to shape as

well as anticipate

emerging social

issues

Market Seek price

advantages by

avoiding all cost

imposed by

responsibility

appeals

Responds to become

strongly expressed

employer/customer/

Shareholders

Shapes market

strategy in

response to

Perceived

concerns

Tries to shape

future CSR- related

taste development.

Polity Evades law and

regulation : lobbiesagainst legislation

Accepts regulation

and obey law: playsno active part in

politics

Counter

regulatory threatswith offer of

CSR.

Shapes and even

provides, generalgovernance.

Values Rejects and

contests any

assertion that value

consideration .

Avoids becoming

involved in

controversies by

confirming todominant values

Takes part in

debates over

application of

vales to business .

Tries to shape

terms of values

Debates relevance

of them to business.

7/31/2019 CSR(New) (2)

20/21

Challenges Faced by the Corporate in 21st

Century

To bring corporate governance into the realm ofcorporate citizenship and address the key element of

social justice in respect of employees rights : to

integrate corporate citizenship as a proven part of a

companys failure. To broaden risk and impact assessment and

communication to include intangible and long term

consideration across the environment, economic and

social dimension.

To maintain consumer confidence through embedding

corporate responsibility in all organization policy and

procedures.

7/31/2019 CSR(New) (2)

21/21

Contd . To manage a company supply chain ethically and to

avoid complicity in human right violation.

To systematically address business accountability using

tools such as internal review ,corporate governance

principle, key performance indicators.

To develop management system and tools which focuson capacity to manage than to audit.

To ensure transparent , accountable and strategic

engagement with government.

To align community investment programmes through a

companys CSR as a extension of core business

practice.