CSR – Corporate Social

Responsibility
 Why Social Responsibility of Business?
• Accountability to Society
In a democratic society any kind of enterprise exists for
the sake of society.
• Corporations’ Debt to Society
A corporation has to behave as a good citizen. The
corporation has to donate generously towards causes of
public welfare and must get itself directly involved in
social welfare programmes.
 Definitions of CSR

World business council defines 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.
Mahatma Gandhi: “wealth created from society has to be
ploughed back into society”
Dr. Manmohan Singh : CSR is no philanthropy. It is not
charity. It is an investment in our collective future.
 Definitions of CSR (Contd.)

The classical economic model: Adam Smith believed that

public interest was served best by individuals pursuing their
own self-interests.
The socio-economic model: Business is seen as one
subsystem among many in a highly interdependent society.
• It recognizes that companies have stakeholders other
than their stockholders.
• Business has an obligation to respond to the needs of all
stakeholders while pursuing its profit.
 Voluntary effort and not legal binding for company
 CSR= Economic Responsibility + legal Responsibility
+ Ethical Responsibility + philanthropic
responsibility
 CSR is society based
 What are Corporations Expected to Do?

Corporations need to erase the perception of the public

that they accumulate wealth for their own cause;
They should participate in social welfare projects, which will
improve their image in public esteem;
They also have to make quality products and stick to
delivery schedules while importing and exporting goods;
and
They should create employment opportunities for the
disadvantaged.
 Models for Implementation of CSR
Four Models of CSR

Model Emphasis Proponent

Ethical Voluntary commitment by Mahatma Gandhi
companies to public welfare
Statist State ownership and legal Jawaharlal Nehru
requirements determine
corporate responsibilities
Liberal Corporate responsibilities Milton Friedman
limited to private owners
(shareholders)
Stakeholder Companies respond to the R. Edward Freeman
needs of stakeholders –
customers, creditors,
employees, communities, etc.
 Advantages of Corporate Social
Responsibility
There are several advantages to corporations when they
exhibit a sense of CSR and implement it, such as:
1. Improved financial performance
2. Enhanced brand image and reputation
3. Increased sales and customer loyalty
4. Increased ability to attract and retain employees
5. Reduced regulatory oversight
6. Innovation and learning
7. Risk management
8. Easier access to capital
9. Reduced operating costs
 Scope of Corporate Social Responsibility

Three levels of social responsibility can be identified

(evolution of areas of social responsibility)
1. Market forces ( Routine activity )
2. Mandated actions (Govt Mandate )
3. Voluntary actions
 Understanding Social Responsibility of
Business
1) Protecting and promoting stakeholders’ interests
a) to consumers and community
b) social responsibilities of business towards employees
c) to owners and inter-business establishments
2) Promotion of common welfare programmes
3) Philanthropy
4) Good corporate governance
5) Render social service
6) Abiding by rules and regulations
7) Creation of wealth
8) Ensure ecological balance
9) Focus on the human element
10) Improve productivity
11) Sponsor social and charitable causes
12) Supplement state efforts
 Steps to Corporate Social Responsibility
The International Chamber of Commerce recommends the
following nine steps to attain Corporate Social Responsibility:
1. Confirm CEO/Board commitment to prioritize responsible
business conduct
2. State company purpose and agree on company values
3. Identify key stakeholders
4. Define business principles and policies
5. Establish implementation procedures and management
systems
6. Benchmark against selected external codes and
standards
7. Set up internal monitoring
8. Use language that everyone can understand
9. Set pragmatic and realistic objectives
 India on the Ethical/CSR Matrix

Indian corporations consider business ethics, compliance

with regulatory requirements and consistency in value
delivery as the three most important factors that impact their
social reputation.
 India on the Ethical/CSR Matrix (Contd.)

Wider adoption of CSR in Indian companies will be enabled by:

• Provision of tax, duties and custom benefits.
• Inclusion of CSR performance of promoters as a parameter
in according fast track clearance to projects.
• Decreased government interventions.
• Development guidelines on estimation of socio-economic
impacts.
Core BCSD India
Business Council for sustainable Development:

 Present and future need

 Balance between Financial performance and CSR
 Measurement of result of CSR is difficult
 Intervention from regulatory body leads to
deterioration of quality
 Ethics and Social Responsibility of Business

• Why so much corruption?

• The license raj
• Black money
 Future of Indian CSR

There is a clear need for

• Transition from the present compliance centric approach
to the new paradigm of transparency
• Creation of an enabling environment and an array of
support measures.
• Business schools teaching CSR to facilitate this process
• Industry associations to share experiences and reward
best practice
• Need to incorporate public policies into the Indian CSR.
• International agencies to share cross-country experience.