Corporate social responsibility

1. CORPORATE SOCIAL
RESPONSIBILITY

2. Corporate Social Responsibility:
What is it?
 Goal: Corporate Social Responsibility
(CSR) is a widely defined concept that
explores the responsibilities of business
towards society
 In terms of: the environment; employees
'and neighbours and consumers. This
responsibility lies outside of the financial
responsibilities that Companies have
towards shareholders and other investors

3. What is it? Cont…..
 CSR is also linked to the idea of social and
environmental sustainability; how businesses
should act to ensure that their business
contributes to a future where the environment is
protected and people's basic human rights are
protected, both in the short and long term.
Business' role as creators of wealth for society
can contribute but the wealth must be achieved
in a sustainable way.

4. KEY COMPONENTS
 ENVIRONMENT
 EMPLOYEES
 NEIGHBOURS AND CONSUMERS

5. ENVIRONMENT
 Responsibility not to pollute where they
operate
 Responsibility to make products which do
not damage the environment throughout
their life cycle
 Responsibility to improve the
sustainability of all their operations

6. EMPLOYEES
 Guaranteeing the right of association
for all employees
 Guaranteeing the freedom to form trade
unions without interference
 Guaranteeing the right to collective
bargaining.
 Providing training.
 Ensuring the health and safety of
employees
 Ensuring that child labour is not used in
their business

7. NEIGHBOURS AND
CONSUMERS
 Monitoring to ensure that all operations
have a positive impact upon the local
community .
 Actively seeking the views of those
affected by business operations .
 Ensuring that products are not
detrimental to the interests of consumers

8. Other Issues
CONSUMER RIGHTS: Companies
have responsibilities to all of those who
purchase their products, regarding the
safety of the product and its fitness for use

9. Other Issues
HUMAN RIGHTS :Companies have
responsibilities to ensure that their
operations never negatively influence
human rights, for example by ensuring that
security personnel are properly trained and
held accountable

10. Other Issues
GOVERNMENTAL RELATIONS :
Many companies hire public relations firms
to lobby governments. The tactics
employed should be open, accountable and
transparent

11. Other Issues
CORPORATE GOVERNANCE : As
recent scandals have shown, the extent to
which companies' boards CAN govern and
regulate the companies' activities is crucial
for their legitimacy and reputation

12. Examples - Human Rights and
Business
TotalFinaElf and Premier Oil are accused of
complicity in gross human rights abuses in
Myanmar/ Burma. Soldiers retained by the
companies to protect the oil pipeline allegedly
force civilians to carry heavy supplies, during
which time they are frequently beaten and left
for dead. ", demonstrating the companies'
complicity in this use of forced labour.

13. Example - Environment and
Business
In 1984 Union Carbide's production factory in Bhopal India
let out a cloud of poisonous gas that killed thousands of
people. Since then they have failed to make full
compensation to the victims and the tens of thousands of
people who still suffer from the effects of the poisoning.
According to Greenpeace, the area of the factory remains
contaminated to this day and still poses a health risk.
Attempts to hold Union Carbide and senior executives
accountable have not been successful, with Union Carbide
representatives and directors often failing to attend hearings.
The Indian Government has also controversially diluted the
charges against Union Carbide

14. Example -Consumer Issues and
Business
Over the 20th Century doubts have been growing about
the nutritional value of infant formula feed for babies in
place of breastfeeding. In the early 1970s several NGOs
started campaigns which raised the profile of the issues
substantially, most prominently being campaigns which
focused upon Nestle's role in the developing world. In
1981, an international code on the marketing of breast
milk substitutes was adopted by the World Health
Assembly (of the WHO). It is still disputed whether
Nestle acts according to the code, despite the fact that
UNICEF estimates that 1.5 million lives could be saved
each year if every child were breastfed for the first six
months. This example shows how business' operations
can have significant impacts on those who consume their
products.

15. What you get to develop through this
paper.
 Should businesses' responsibilities be limited to profits for
their shareholders?
 How responsible are businesses for the non-financial
effects of their operations?
 How far should this responsibility extend to subsidiary
companies, sub-contractors and suppliers?
 How should companies balance their role as generators of
wealth against their non-financial responsibilities?
 How much responsibility do businesses have for the society
in which we live

16. Syllabus Coverage
What is CSR?
Brief History of CSR
The importance and benefits of CSR in contemporary business world
CSR in the Textile and Apparel industry.
Origin of vendor code of conduct in Textile and Apparel industry
Important Multi stake holder initiatives for CSR in Apparel Industry.
The issues and challenges related to the Indian Apparel industry as regards
codes of conduct
Projects -
- Best practices case studies
- CSR Auditing: its role and auditing techniques

17. Corporate social responsibility is necessarily an
evolving term that does not have a standard
definition or a fully recognized set of specific
criteria. With the understanding that businesses
play a key role on job and wealth creation in
society, CSR is generally understood to be the
way a company achieves a balance or integration
of economic, environmental, and social
imperatives while at the same time addressing
shareholder and stakeholder expectations.

18. While business compliance with laws
and regulations on social,
environmental and economic
objectives set the official level of
CSR performance, CSR is often
understood as involving the private
sector commitments and activities
that extend beyond this foundation
of compliance with laws.

19. From a progressive business perspective,
CSR usually involves focusing on new
opportunities as a way to respond to
interrelated economic, societal and
environmental demands in the
marketplace. Many firms believe that this
focus provides a clear competitive
advantage and stimulates corporate
innovation

20. CSR is generally seen as the business
contribution to sustainable development which
has been defined as "development that meets the
needs of the present without compromising the
ability of future generations to meet their own
needs", and is generally understood as focusing
on how to achieve the integration of economic,
environmental, and social imperatives. CSR also
overlaps and often is synonymous with many
features of other related concepts such as
corporate sustainability, corporate
accountability, corporate responsibility,
corporate citizenship, corporate stewardship,
etc..

21. CSR commitments and activities typically
address aspects of a firm's behaviour
(including its policies and practices) with
respect to such key elements as; health
and safety, environmental protection,
human rights, human resource
management practices, corporate
governance, community development, and
consumer protection, labour protection,
supplier relations, business ethics, and
stakeholder rights

22. Corporations are motivated to involve stakeholders in their
decision-making and to address societal challenges because
today's stakeholders are increasingly aware of the importance
and impact of corporate decisions upon society and the
environment. The stakeholders can reward or punish
corporations. Corporations can be motivated to change their
corporate behaviour in response to the business case which a
CSR approach potentially promises. This includes:
 stronger financial performance and profitability (e.g. through
eco-efficiency),
 improved accountability to and assessments from the
investment community,
 enhanced employee commitment,
 decreased vulnerability through stronger relationships with
communities, and
 improved reputation and branding

23. 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.

24.  Corporate social responsibility is essentially a concept
whereby companies integrate social and environmental
concerns in their business operations and in their
interaction with their stakeholders on a voluntary basis.
This means not only fulfilling legal expectations, but also
going beyond compliance and investing in human capital,
the environment and relations with stakeholders.
 The development of CSR reflects the growing expectations
of the community and stakeholders of the evolving role of
companies in society and the response of companies to
growing environmental, social and economic pressures.
Through voluntary commitment to CSR, companies are
hoping to send a positive signal of their behavior to their
various stakeholders (employees, shareholders, investors,
consumers, regulators and NGOs) and in so doing make an
investment in their future and help to increase profitability

25. Many driving forces are fostering the evolution of
corporate social responsibility:
 new concerns and expectations from citizens, consumers,
public authorities and investors in the context of
globalization and large scale industrial change;
 social criteria are increasingly influencing the investment
decisions of individuals and institutions both as consumers
and as investors;
 increased concern about the damage caused by economic
activity to the environment;
 transparency of business activities brought about by the
media and modern information and communication
technologies.

26. It is a multi-faceted concept. It involves
corporate philanthropy and corporate-citizen
social contracts. These are implicit contracts
between citizens and the corporates, which
promulgate that corporates exist for citizens and
come with expectations. The expectations are
that corporates conduct themselves in an ethical
manner, follow laws and have end goal of
betterment for the society. Some view CSR as
voluntary activity but ultimately someday it has
to be quantified in law.

27. Corporate Social
Responsibility is a
strategy and a culture!

28. The history of CSR
The debate about corporate social
responsibility (CSR) began in the early
20th century, as concerns about large
corporations and their power came to the
fore. Two broad principles—charity and
stewardship—have help to shape thinking
about CSR.

29. Ida Tarbell’s 1904 work The History of the
Standard Oil Company helped lead to the
Supreme Court’s decision to break up the
company on antitrust grounds.
Similarly, Upton Sinclair’s 1906 book The Jungle
led to the passage of the Pure Food and Drugs
Act and the Meat Inspection Act by Congress.

30. Early “muckrakers” Ida Tarbell and Upton Sinclair.

31. Arguments for CSR
The arguments for CSR tend to focus on
the relationship between power and
responsibility, the need for good
stakeholder relations, and business’
desire to forestall government regulation.
(The notion of “enlightened self-interest”
also fits in here.)

32. Arguments against CSR
The arguments against CSR tend to
focus on the economic function of
business (to make products, not to
solve social problems that are the
responsibility of individuals, society,
and the government),

33. Achieving balance
Businesses need to balance economic,
legal, and social responsibilities in order
to achieve long-run success. More
generally, there is often a relationship
between good social and good financial
performance.

34. Further, firms that are seen as acting
illegitimately are likely to face difficult
relations with employees, governments,
communities, and consumers—which all
have direct impacts on the top and bottom
lines.

35. One defense of the shareholder view of
CSR is that shareholders take on a unique
set of risks, but other stakeholders are
protected by contractual relations with
organizations. On the contrary most
stakeholders take on risk—many a times
without knowing it.

36. One result of increasing globalization is
that there are many different voices
around the world with differing views on
corporate social responsibility. What is
seen as “ethical” in one country may not
be in another

37.  CSR is at a crossroads. After a decade of evolution, the
pathway forward defies easy prognosis. Will external
events and company choices relegate CSR to a passing fad,
leading to its fading from corporate and public agendas?
 Or will CSR reach full fruition as it becomes aligned,
integrated and fully institutionalized in company strategy
and operations?
 Or, alternatively, is something more transformational on
the horizon as CSR morphs into a deeper change mode,
becoming a force for altering corporate purpose at the
most fundamental and systemic level?

38. These questions have profound
implications for the future of all
corporate enterprises. Exploring
possible futures yields insight into
where we find ourselves today and
provides guidance about where we
would like to be and how to get
there.

39.  Virtually all large companies pursue some form of scenario
planning to optimize deployment of their financial and
human capital.
 In a globalizing world where capital, technology,
information and trade flow are increasing freely across
borders, prudent management requires nothing less for
building a healthy, competitive business in the 21st
century.
 In an interconnected world, companies operate not as
discrete, atomistic entities, but rather as elements of a
global system characterized by complexity and rapid
change. It is the struggle to define and manage the
opportunities and risks of this new world that has fueled
the emergence of CSR during the last few years, and will
continue to do so in coming decades.

40. From its genesis in the early Industrial Revolution, the
joint-stock corporation took root as the heir to the private-
partnership organization, wherein close owner-capitalists
maintained high levels of familiarity with the workings of
the companies that they partially owned.
As the scale of companies grew, so did the need for capital
well beyond what the original entrepreneur and close
partners could provide. Thus, the idea of passive investors
purchasing equity shares emerged, and by the end of the
19th century this would come to dominate the industrial
landscape and become a central driving force of the
economic expansion of Western nations.
,

41. This development was not warmly embraced by all.
Indeed, as early as the late 18th century, Adam Smith
harbored doubts about the social repercussions of the
joint-stock company. Notwithstanding his observation
that individuals working to advance their self-interests is
the surest route to aggregate societal well-being, Smith
understood the threat of business monopoly, privilege
and protection to societal interests. His concern with
business power to “intimidate the legislature” was a
premonition of contemporary corporate political influence

42. U.S. court decisions in the late 19th century fueled the rise of
shareholder supremacy, a notion built on the premise that
shareholding entitles shareholders to be the dominant recipients
of surplus generated by corporate wealth creation.
This view, while upheld in the courts, met with opposition, even
among business leaders. Henry Ford and Owen D. Young, GE’s
chairman in the 1920s, questioned the supremacy of shareholders
relative to other parties that contribute to wealth creation. Ford
was sued by two shareholders for suspending dividends in favor
of plant expansion. When asked what is the purpose of his
corporation, Ford responded: “To do as much good as we can,
everywhere, for everybody concerned … and incidentally to make
money.” Ford lost his case in a Michigan court. A few years later,
Young rhetorically asked: “To whom do I owe my obligations?”
His answer: the company owes “a fair rate of return to
shareholders” at the same time as it serves the interests of
employees, customers and the public.

43. Today, the received wisdom of shareholder value as the
central purpose of business poses a continuing challenge to
CSR. The conflict begins with management education and is
entrenched deeply as to be the core driver of board and
executive decision-making.
“If the value creation is achieved by combining the resources
of both employees and shareholders, why should the value
distribution favor on the latter? Why must the mainstream of
our theory be premised on maximizing the returns to just one
of these various contributors?”
In a fundamental sense, the emergence of CSR may be
viewed as a modest corrective mechanism to shareholderism.
Its emphasis on stakeholder rights and participation opposes
the unrelenting focus on shareholder interests, especially
those that place short-term share price above all other
goals.

44. In India, South Africa and Brazil, skepticism of
shareholderism has cast CSR as an antidote or preemptive
mechanism. In India, the Ghandian model of voluntary
commitment to public welfare and social needs is at least as
influential in shaping attitudes toward corporate purpose.
Many multinationals, of course, are well aware of these
differences as they navigate relationships with host
governments and business partners who may hold different
views on such critical issues as labor standards,
transparency and engagement of indigenous peoples. But
with the globalization of business likely to continue unabated,
the challenges of understanding and reconciling different
CSR cultures will persist for many years to come.

45. No single historical event marks the birth of CSR. Some observers
date its origins to the early environmentalism of the 1960s, when
the first serious regulations were put in place in North America and
Europe. At the same time, the long tradition of corporate
philanthropy in the U.S. has remained a standard component and
expectation of “responsible business” since the early days of the
large American
industrial firm.
Distilled to its basics, the CSR story is a chronicle of gradual
redefinition and expansion ranging from “must do” legal compliance
blended with traditional philanthropy, to “should do” based on
traditional benefit/cost analysis, to “ought to do” based on emerging
global norms of integrity, ethics and justice.
Despite its uneven and disjointed evolution, it is fair to say that one
identifiable thread in CSR history is a three-fold shift in focus from
what is legally required and charitable to what is financially justified
and, most recently, to what is morally expected.

46. Since 2000, CSR has entered yet another phase often called
“integration.” This stage reflects a maturation of the CSR
idea and recognition of the inherent limits of distancing CSR
from core business strategy and operations. The leading
edge is now characterized by the idea of seamlessness —
identifying and implementing actions that make CSR
everyone’s business and ending its isolation as a useful but
Dispensable add-on to “real” business activities.
This Emergence in the integration phase is actually
multifaceted, and comprises of
· Alignment with business objectives within overall
company strategy
· Integration across business entities and functional areas
· Institutionalization by embedding strategies, policies,
processes and systems into the fabric of the organization

47. The Wall Street Journal and Fortune now often report on a range
of CSR issues such as sweatshops, climate change and fair trade.
Another barometer of integration is the extent to which leading
companies are blending financial and CSR reporting.
Integration in its various forms will continue unabated. The blurring
of CSR with issues of corporate strategy, management and
governance seems destined to continue
For companies that have embraced CSR, this future would vindicate
their efforts. At the same time, this trend would challenge the
skeptics who continue to dismiss CSR as a costly, unjustified
deviation from business’ principal purpose of creating shareholder
value. For those who have resisted CSR, it would lay bare the
foolishness of coloring CSR as diversionary and immaterial to core
business concerns.

48. The global future is inextricably linked to the corporate
future. As such, CSR is not an option; it is a reality. The
sheer weight of the corporate role in wealth creation and
the footprint associated with this creative process makes
responsibility inevitable.
We may argue about the degree and proper responses
associated with such responsibility, but there can be little
argument about the fact itself.
The core question facing companies is how to harness the
full potential of business to serve the public interest while
preserving and enhancing core assets — creativity,
innovation and competitive drive. In some sense, this has
always been the central challenge of CSR.

49. But for every opportunity realized, dozens
remain untapped. Why is there a paucity of
initiatives like Nike’s challenge to apparel
makers to create common standards and audits
for contract manufacturers? Is it a question of
political will? Legal impediments? Or just blind
competitiveness that obscures the potential
payoffs?

50. Two centuries ago, social purpose was central
to the charter of U.S. corporations. One
hundred years ago, well into the era of the
large, investor-owned companies, industrialists
like Ford and Young understood the concept of
harnessing the private interest to serve a
broader public purpose. With the right mix of
wisdom and will, the next decades may well
witness a turn away from the deleterious
effects of single-minded shareholderism
toward next-generation CSR that meets the
dual goals of prosperous corporations and
prosperous societies.

51. Business is at a crossroads. Increasing pressure to deliver
immediate results to shareholders has compromised the
long-term viability of many corporations, sometimes with
disastrous results
Tomorrow's leading organizations will practice a more
balanced approach to management, recognizing that long-
term success and profitability is critically linked to the
welfare of a broader set of stakeholders.

52. Explore corporate social responsibility theory and
resources
Experience theory in action in a sophisticated
business simulation
Reflect on simulation results and identify
opportunities to improve
Apply learning to real-world CSR projects with
decision support tools
Share knowledge with peers in a collaboration
space