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Corporate Social Responsibility

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Unit 4 ethics and governance
Unit 4 ethics and governance
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Corporate Social Responsibility

  1. 1. Corporate Social Responsibility
  2. 2. Lecture Outline:  Corporate Social responsibility.  Types and nature of social responsibilities.  CSR principles and strategies.  Models of CSR.  Best practices of CSR.  Need of CSR.  Arguments for and against CSR.
  3. 3.  Person going from one side of the canyon to the other… a lot of clouds like fog. The point is going from one way of doing business to another is very tough. There’s a lot uncertainty. It takes a lot of skill, but we have to lift ourselves beyond that, above the fog, and that’s not going to be a simple exercise. CSR is about seeing the forest, the fog, and seeing how we can get on the other side, and how we can be well- equipped for doing that. So probably we need to develop additional skills, knowledge, and understanding.”
  4. 4. The message is that whatever we do today will have an impact on future generations. We should not hope that the walls we build to protect ourselves will be tall enough to protect our children. Only with very conscious effort we can make the world for them a better place to live…even if we address our most selfish needs we have to address the needs of the next generation. That’s what CSR is about.”
  5. 5. Meaning:  Corporate social responsibility is a gesture of showing the company’s concern & commitment towards society’s sustainability & development.  CSR is the ethical behaviour of a company towards society.
  6. 6. WBCSD (World Business Council for Sustainable Development) “The continuing commitment by business to behave ethically and contribute to sustainable economic development while improving the quality of life of the workforce and their families as well as of the local community and society.”
  7. 7. Basic Constituents of CSR Contribute towards a sustainable economic development Make desirable social changes Improvement of social environment Towards Business & Society
  8. 8. Types of Social Responsibility
  9. 9. Responsibility towards Society  Carrying on business with moral& ethical standards.  Prevention of environmental pollution.  Minimizing ecological imbalance.  Contributing towards the development of social health, education  Making use of appropriate technology.  Overall development of locality.
  10. 10. Responsibility towards Government Obey rules & regulations.  Regular payment of taxes.  Cooperating with the Govt to promote social values.  Not to take advantage of loopholes in business laws.  Cooperating with the Govt for economic growth & development.
  11. 11. Responsibility towards Shareholders  To ensure a reasonable rate of return over time.  To work for the survival & the growth of the concern.  To build reputation & goodwill of the company.  To remain transparent & accountable.
  12. 12. Responsibility towards Employee  To provide a healthy working environment.  To grant regular & fair wages.  To provide welfare services.  To providetraining & promotion facilities.  To provide reasonable working standard & norms.  To provide efficient mechanism to redress worker’s grievances.  Proper recognition of efficiency & hard work.
  13. 13. Responsibility towards consumers  Supplying socially harmless products.  Supplying the quality, standards, as promised.  Adopt fair pricing.  Provide after sales services.  Resisting black-marketing & profiteering.  Maintaining consumer’s grievances cell.  Fair competition.
  14. 14. Nature of social responsibility CSR is normative in nature.  CSR is a relative concept.  CSR may be started as a proactive or reactive.  All firms do not follow the same patterns of CSR.  Legal & socially responsible.  Legal but socially irresponsible.  Illegal & socially irresponsible.
  15. 15. 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 e dialogue  Self-realization & creativity.  Fair dealings & collaboration.  Feedback from the community.  Positive value- added  Long term economic & social development.
  16. 16. Models of corporate social responsibility  Friedman model  Ackerman Model  Carroll Model  Environmental Integrity & Community Model.  Corporate Citizenship Model.  Stockholders & Stakeholders Model.  New Model of CSR.
  17. 17. 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 & stockholders.
  18. 18. Ackerman Model (1976)  The model has emphasized on the internal policy goals & their relation to the CSR.  Four stages involved in CSR.  Managers of the company get to know the most common social problem & then express a willingness to take a particular project which will solve some social problems.  Intensive study of the problem by hiring experts & getting their suggestions to make it operational.  Managers take up the project actively & work hard.  Evaluating of the project by addressing the issues.
  19. 19. Contd….  Six Strategies in the adoption of CSR.  Rejection strategy  Adversary strategy  Resistance strategy  Compliance strategy  Accommodation strategy  Proactive strategy
  20. 20. Carroll Model(1991)
  21. 21.    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. Carroll Model(1991)
  22. 22. 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.
  23. 23. 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.
  24. 24. Stockholders & Stakeholders Model 1 Productivism 2 Progressivism 3 Philanthropy 4 Ethical Idealism Self Duty Interest Stakeholder Model Stockholders Model Moral ORIENTATIO N
  25. 25. Contd………….  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.
  26. 26. New Model of CSR CSR (+) CSR(-) CSR(-) CSR(-) Strong Ethical Rooting Poor
  27. 27. 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.
  28. 28. Need for Corporate Social Responsibility  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.
  29. 29.  Fundamental principles of business gets violated.  It vey expensive for business houses.  CSR projects will not be successful.  There are not the special areas of any business.  CSR is to induce them to steal away the shareholders money. Arguments against the CSR
  30. 30. Arguments for the CSR  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.
  31. 31. Indian Perspective.  The Sachar committee was appointed in 1978 to look into corporate social responsibility issues concerning Indian companies .  The company must behave & function as a responsible member of society.  Committee suggests openness in corporate affairs & behaviour.  Some business houses have established social institutions like Schools, colleges, charitable hospitals etc.  Corporate sectors have not made significant contributions. (Polluting Environment).
  32. 32. CSR EXAMPLES  IBM UK - Reinventing Education Partnership programme Interactions and sharing of knowledge through a web-based technology - the “Learning Village” software. Culture of openness and sharing of good practice  AVON - a partnership with Breakthrough Breast Cancer, and its Breast Cancer Crusade has raised over 10 million pounds since its launch 12 years ago  TOI’s Lead India campaign, campaign for contribution towards educating the poor
  33. 33. Companies in trouble  Dasani mineral water (part of Coca-Cola).  Coke’s sale was banned as the result of tests, including those by the Indian government, which found high concentrations of pesticides.  Communities in India , around Coca-Cola's bottling operations are facing severe shortages of water as a result of the cola major sucking huge amounts of water from the common groundwater source.
  34. 34. Issues at NIKE • Nike Inc producer of footwear, clothing, equipment and accessory products for the sports and athletic market. selling to approximately 19,000 retail accounts in the US, and approximately 140 countries around the world. Manufactures in China, Taiwan, Korea, Indonesia , Mexico as well as in the US and in Italy. • People working - 58% young adults between 20 and 24 years old, 83% -women. • Issue- unhealthy work environment – debates heated arguments, verbal abuse , 7.8% of workers reported receiving unwelcome sexual comments, and 3.3% reported being physically abused. In addition, sexual trade practices in recruitment and promotion were reported
  35. 35. Case Study Jack Cohen founded Tesco in 1919 when he began to sell surplus groceries from a stall in the East End of London. The Tesco brand first appeared in 1924. The name came about after Jack Cohen bought a shipment of tea from T.E. Stockwell. He made new labels using the first three letters of the supplier's name (TES), and the first two letters of his surname (CO), forming the word TESCO. The first Tesco store was opened in 1929 in Burnt Oak, Edgware, Middlesex. Tesco was floated on the London Stock Exchange in 1947 as Tesco Stores (Holdings) Limited.
  36. 36. Corporate Social Responsibility of Tesco  Tesco has made a commitment to corporate social responsibility, in the form of contributions of 1.87% in 2006 of its pre-tax profits to charities/local community organisations.  In 1992 Tesco started a "computers for schools scheme", offering computers in return for schools and hospitals getting vouchers from people who shopped at Tesco. Until 2004, £92 million of equipment went to these organizations. The scheme has been also implemented in Poland.  Starting during the 2005/2006 football season the company now sponsors the Tesco Cup, a football competition for young players throughout the UK. The cup now runs a boy's competition at Under 13 level and two girl's cups at Under 14 level and Under 16 level. Over 40,000 boys alone took part in the 2007/08 competitions.  In 2009 Tesco used “Change for Good” as advertising, which is trade marked by Unicef for charity usage but is not trademarked for commercial or retail use which prompted the agency to say "it is the first time in Unicef’s history that a commercial entity has purposely set out to capitalise on one of our campaigns and subsequently damage an income stream which several of our programmes for children are dependent on”.
  37. 37. Vodafone promised to cut down their carbon dioxide emissions in half by 2020 through improving the energy efficiency of its global mobile -phone networks. Additional points for Vodafone on CSR because they are constantly updating us with the results of the campaign; no matter whether it’s going well or not. . Future promises includes pledging to recycle 95% of network equipment waste and plans to reduce work-related accidents that cause lost time by 10%. On top of that, Vodafone is a leading business in socially responsible products such as the text-to-speech software for blind people and easy-to-use handsets for the elderly.
  38. 38. The bank’s head of corporate sustainability, Teresa Au, has said that despite the economic situation, HSBC would continue to support its sustainability campaign. Initiatives include providing small businesses with sustainability insurance options and developing an index for climate change. The business has also boosted its management of ethical and socially responsible investing funds by 60% over the last two years. HSBC has an American unit that is dedicated to assisting local communities by promoting affordable homeownership, among other goals.
  39. 39. The Concept: • Triple bottom line means expanding the traditional framework to take into account ecological and social performance in addition to financial performance. • In 1981 Freer Spreckley first articulated the term in a publication called 'Social Audit - A Management Tool for Co-operative Working'. • The phrase was coined by John Elkington in his book ’Cannibals with Forks: the Triple Bottom Line of 21st Century Business’ in the year 1998. • The concept of TBL demands that a company‘s responsibility lies with stakeholders rather than shareholders. In this case, "stakeholders" refers to anyone who is influenced, either directly or indirectly, by the actions of the firm.
  40. 40. Three pillars of TBL PEOPLE PLANET PROFIT
  41. 41. PEOPLE "People" (human capital) pertains to fair and beneficial business practices toward labour and the community and region in which a corporation conducts its business. A TBL company conceives a reciprocal social structure in which the well-being of corporate, labour and other stakeholder interests are interdependent.
  42. 42. PLANET •"Planet" (natural capital) refers to sustainable environmental practices. A TBL company endeavors to benefit the natural order as much as possible or at the least do no harm and curtail environmental impact. •A TBL endeavor reduces its ecological footprint by, among other things, carefully managing its consumption of energy and non- renewable and reducing manufacturing waste as well as rendering waste less toxic before disposing of it in a safe and legal manner. •TBL manufacturing businesses which typically conduct a life cycle assessment of products to determine what the true environmental cost is from the growth and harvesting of raw materials to manufacture to distribution to eventual disposal by the end user. •A triple bottom line company does not produce harmful or destructive products such as weapons, toxic chemicals or batteries containing dangerous heavy metals for example.
  43. 43. PROFIT "Profit" is the economic value created by the organization after deducting the cost of all inputs, including the cost of the capital tied up. It therefore differs from traditional accounting definitions of profit. In the original concept, within a sustainability framework, the "profit" aspect needs to be seen as the real economic benefit enjoyed by the host society. It is the real economic impact the organization has on its economic environment. This is often confused to be limited to the internal profit made by a company or organization (which nevertheless remains an essential starting point for the computation). Therefore, an original TBL approach cannot be interpreted as simply traditional corporate accounting profit plus social and environmental impacts unless the "profits" of other entities are included as a social benefits.
  44. 44. Interdependence
  45. 45. Currently, the cost of disposing of non-degradable or toxic products is borne financially by governments and environmentally by the residents near the disposal site and elsewhere. In TBL thinking, an enterprise which produces and markets a product which will create a waste problem should not be given a free ride by society. It would be more equitable for the business which manufactures and sells a problematic product to bear part of the cost of its ultimate disposal.
  46. 46. •Ecologically destructive practices, such as overfishing or other endangering depletions of resources are avoided by TBL companies. •Often environmental sustainability is the more profitable course for a business in the long run. •Arguments that it costs more to be environmentally sound are often specious when the course of the business is analyzed over a period of time. •Generally, sustainability reporting metrics are better quantified and standardized for environmental issues than for social ones.
  47. 47. Some well knows sustainability issues • ExxonMobil • KFC • Nike • Body Shop • Coca Cola
  48. 48. Top 10 Companies for Sustainability & CSR in 2018 1. Tata Chemicals 2. Ambuja Cement 3. Infosys Ltd. 4. Mahindra & Mahindra Ltd. 5. Tata Motors Ltd. 6. Tata Power Company Ltd. 7. Bharat Petroleum Corporation 8. ITC Ltd. 9. Hindustan Zinc Ltd. 10. Indian Oil Corporation Source: The CSR Journal 2018
  49. 49. Few useful actions for all management teams to improve sustainability practices. 1. Align strategy and sustainability 2. Compliance first, then competitive advantage 3. Reactive to proactive 4. Quantify, including the business case 5. Transparency 6. Engage the Board 7. Engage your ecosystem 8. Finally – and most importantly – engage the organization broadly
  50. 50. Thank you..

Notes de l'éditeur

  • Target company
    CSO Organizer
    Dates
    Main issues
    Outcomes
    ExxonMobil (Esso)
    Greenpeace, Friends of the Earth, People and Planet
    2001-4
    Anti climate change position, including active lobbying against Kyoto global warming treaty; lack of investment in renewable energy
    Raised awareness and brought (unsuccessful) shareholder resolutions to the AGM. ExxonMobil has since shifted to a more accommodating climate change position
    Triumph International
    Burma Campaign
    2001-2
    Manufacturing operations in Burma
    Announced withdrawal from the country in 2002
    KFC
    People for the Ethical Treatment of Animals (PETA)
    2003-
    Cruelty towards chickens in the KFC supply chain
    Some improvements in practices. Campaign called off in Canada due to new animal welfare plan but continues in US, UK, and several other countries.
    PG Tips Tea
    Captive Animals' Protection Society (CAPS)
    2004
    Use of performing chimpanzees in advertisements - claimed to reduce animals to ridicule, and to involve taking young chimps from their mothers, and potential physical punishment
    Removed advertisements featuring the chimpanzees in 2004, having used the image for 45 years. Now uses animated animals.
    Body Shop
    Naturewatch,2006-
    Sale of Body Shop to L’Oreal, which is part owned by Nestlé. Main issues involved L’Oreal’s use of animal testing
    A Naturewatch press release claimed that the Body Shop had lost millions in revenue in just one year due to the campaign. No change in policy at L’Oreal.
    Guess
    The Coalition to Abolish the Fur Trade (CAFT)
    2007-8
    The international clothes retailer Guess sells products made with real fur.
    Following an international campaign, Guess announced that it would not buy fur after September 2007, and would stop selling fur in their 800 shops worldwide by April 2008.
    Heinz
    Stonewall
    2008
    Company accused of discrimination against homosexuals after it dropped a UK advert featuring two men kissing following the receipt of more than 200 customer complaints
    Ad is investigated by Advertising Standards Authority. Heinz sticks to decision not reinstate ad despite a motion being filed in Parliament condemning decision.
  • https://thecsrjournal.in/csr-top-10-responsible-business-rankings-2018/

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