Corporate Social Responsibility

Corporate Social Responsibility

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Social Responsibility- Some Definitions…

Corporate Social Responsibility (CSR), also known as Corporate Responsibility, Corporate citizenship, Responsible Business, Sustainable Responsible Business (SRB), or corporate social performance, is a form of corporate self-regulation integrated into a business model.

“….operating in a manner that meets or exceeds the ethical, legal, commercial and public expectations that society has of business….”Business for social responsibility.

Essentially, CSR is the deliberate inclusion of public interest into corporate decision-making, and the honoring of a triple bottom line: People, Planet,and Profit.

Carroll’s Four Part Definition

CSR encompasses the Economic, Legal, Ethical and Discretionary (Philanthropic) expectations that society has of organizations at a given point of time

Understanding the Four Components

Responsibility

Societal Expectation

Examples

Economic Required Be profitable. Maximize sales, minimize costs, etc.

Legal Required Obey laws and regulations.

Ethical Expected Do what is right, fair and just.

Discretionary(Philanthropic)

Expected Be a good corporate citizen.

Pyramid of CSR

Philanthropic ResponsibilitiesPhilanthropic ResponsibilitiesBe a good corporate citizen.

Ethical ResponsibilitiesEthical ResponsibilitiesBe ethical.

Legal ResponsibilitiesLegal ResponsibilitiesObey the law.

Economic ResponsibilitiesEconomic ResponsibilitiesBe profitable.

Economic Responsibilities...

how resources for the production of goods and services are distributed within the social system

Efficient operation to satisfy economic needs of the society and generation of surplus for rewarding the investors and further development.

Legal Responsibilities...

Refers to obeying governmental laws and regulations

civil law: Rights & Duties of individuals and organizations

criminal law: prohibits specific actions and imposes fines and/or imprisonment as punishment for breaking the law

Ethical Responsibilities...

behaviors and activities that are expected or prohibited by organizational members, the community, and society (not codified into law)

standards, norms, or expectations that reflect the concern of major stakeholders

For Example- a company should not resort to bribing, adulteration, unfair competitive practices etc.

Philanthropic Responsibilities...

Voluntary contributions of business to the society like involvement in community development or other social programmes

CSR towards different sections

Responsibility to Shareholders Responsibility to Employees Responsibility to Consumers Responsibility to Community Responsibility to Government

Corporate Social Responsibility: Initiatives

and Examples

Facts of India in CSR India has consistently ranked among the top

three along with Singapore and Hong Kong in a survey carried out by the Asian Governance Association

In another study undertaken by automotive research company, TNS Automotive, India has been ranked second in global Corporate Social Responsibility. Bharat Petroleum and Maruti Udyog were ranked as the best companies in India

Contd…

Contd… A recent KPMG study among 27 Indian

companies showed that a mere 8% mentioned their social expenditures in their annual reports, and only 25% filed CSR reports at all

According to Times, the Indian corporate sector spent Rs30,000 crore on social expenditure during the last year

Steel Authority of India Ltd (SAIL), the country's largest steel company, spent Rs100 crore on CSR last year; this was 2% of its Profit After Tax (PAT)

Contd…

Contd… Tata Steel Ltd spends an average of Rs150

crore as part of its annual revenue expenditure. Pharmaceuticals company Jubilant Organosys

Ltd, already runs an Anti-tuberculosis programme with the government of Uttar Pradesh

ITC Limited ITC partnered the Indian farmer for close to a century Leveraging Information-Technology through its

trailblazing 'e-Choupal' initiative Creating livelihoods by helping poor tribal make their

wastelands productive investing in rainwater harvesting to bring much-

needed irrigation to parched dry lands empowering rural women by helping them evolve into

entrepreneurs providing infrastructural support to make schools

exciting for village children. There are 6,500 e-Choupals today. ITC Limited plans

to scale up to 20,000 e-Choupals by 2012 covering 100,000 villages in 15 states, servicing 15 million farmers

Mahindra & Mahindra The K. C. Mahindra Education Trust was

established in 1953 by late Mr. K. C. Mahindra with an objective to promote education

Its vision is to transform the lives of people in India through education, financial assistance and recognition to them, across age groups and across income strata

The Trust has provided more than Rs. 7.5 Crore in the form of grants, scholarships and loans. It promotes education mainly by the way of scholarships.

The Nanhi Kali project has over 3,300 children under it. It aims to increase the number of Nanhi Kalis (children) to 10,000 in the next 2 years, by reaching out to the underprivileged children especially in rural areas

Aptech Limited Aptech Limited, a leading education player with a global

presence, has played an extensive and sustained role in encouraging and fostering education throughout the country since inception.

It has, in association with leading NGOs, provided computers at schools, education to the underprivileged and conducted training and awareness-camps.

Aptech students donate part of the proceeds from the sale of their art work to NGOs

Aptech fosters tie-ups with leading NGOs throughout the country, including the Barrackpur-based NGO, Udayan, a residential school for children of leprosy patients in Barrackpur, established in 1970.

The company strongly believes that education is an integral part of the country’s social fabric and works towards supporting basic education and basic computer literacy amongst the underprivileged children in India

Avon Cycle Limited The poor and ignorant of India’s rural population turn to

nearest towns and cities for healthcare. They face indifference and exploitation.

This gave inspiration to AVON for locating MATAKAUSHALYA DEVI PAHWA CHARITABLE HOSPITAL.

Mr. Sohan Lal Pahwa, Avon's Chairman and Principal Trustee of the hospital, spent a good part of his working life devoted to philanthropy.

Reaching out to the needy farther a field, the hospital holds regular camps in surrounding villages to propagate scientific approach to healthcare.

Recently the hospital took the social responsibility concept a step further and formulated a scheme titled 'Celebrating Female Child' to enable and inspire positive and enduring environment for society's all–consuming passion for 'sons only' to end.

Satyam Computer Services Limited Alambana (support) is the corporate social

responsibility arm of Satyam Computer Services Limited, formed to support and strengthen the vulnerable and underprivileged sections in urban India.

Registered as Satyam Alambana Trust in 2000, Alambana aims at transforming the quality of life among urban population.

Alambana's services are directed primarily at the disadvantaged sections in all the cities that Satyam has offices in.

Volunteers from Satyam associates and their family members lead the services and perform the required tasks.

Tata Consultancy Services

The Adult Literacy Program (ALP) was conceived and set up by Dr. F C Kohli along with Prof. P N Murthy and Prof. Kesav Nori of Tata Consultancy Services in May 2000 to address the problem of illiteracy.

ALP believes illiteracy is a major social concern affecting one-third of the Indian population comprising old and young adults.

To accelerate the rate of learning, it uses a TCS-designed Computer–Based Functional Literacy Method (CBFL), an innovative teaching strategy that uses multimedia software to teach adults to read within 40 learning hours.

Principles of CSRCorporate Social Responsibility strives to conduct all business dealings in an ethical manner, make a concerned effort to balance the needs of all stake holders,while working to protect the environment.

1) Engages in fair and honest business practices in its relationship with stakeholders.

2) Sets high standards of behavior for all employees.

3) Exercises ethical oversight of the executive and board levels.

4) Strives to manage the company for the benefit of all stakeholders.

5) Initiates and engages in genuine dialogue with stakeholders.

6) Values and implements dialogue.

7) Fosters a reciprocal relationship between the corporation and community.

8) Invests in the communities in which corporation operates.

9) Respects the rights of consumers.

Principles of CSR 10) Offers quality products and services.

11) Provides information that is truthful and useful.

12) Provides a family-friendly work environment.

13) Engages in responsible human-resource management.

14) Provides an equitable reward and wage system for employees.

15) Engages in open and flexible communication with employees.

16) Invests in employee development.

17) Strives for a competitive return on investment.

18) Engages in fair trading practices with suppliers.

19) Demonstrates a commitment to the environment.

20) Demonstrates a commitment to sustainable development.

Arguments for corporate Social responsibility

Balances corporate power with responsibility. Discourages government regulation. Promotes long-term profits for business. Responds to changing stakeholders’ demands. Corrects social problems caused by business.

Arguments against Corporate Social Responsibility

It is the duty of Government and Social organisation to carry out social activities

Lowers economic efficiency and profit. Imposes unequal costs among competitors. Sometimes imposes costs of the social

responsibility on consumers and stakeholders. Many companies getting involved because of the

Tax exemption It could lead to an increase in the dominance or

influence of business over the society. A business may lack required social skills. Places responsibility on business rather than

individuals.

Social Audit

A social Audit enables the public as well as the company to evaluate the social performance of the company.

The “ social audit – much like the financial audit – is an identification and examination of the activities of the firm in order to assess, evaluate measure and report their impact on the immediate social environment.”

Social Audit is the process of communicating the social and environmental effects of organisations' economic actions to particular interest groups within society and to society at large.

Key Principles of Social Auditing

Multi Perspective/Polyvocal Comprehensive Participatory Multidirectional Regular Comparative Verification Disclosure

Methods of Social Audit

Social Process Audit Financial Statement Format Audit Macro-Micro Social Indicator Audit Constituency Group Audit Partial Social Audit Comprehensive Audit Corporate Rating Approach

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