Corporate social responsibility - presentation

• 1. CORPORATE SOCIAL RESPONSIBILITY By Nandu Warrier www.nanduwarrier.co.in

2. PART I WHAT IS CSR? WHY IS IT REQUIRED 3. IMPACT OF GLOBALIZATION INTEGRATION OF FINANCIAL MARKETS CHANGES IN GOVERNANCE STRUCTURES IT REVOLUTION MULTI COUNTRY PRODUCTION OF GOODS EFFECT ON SMES MIGRATION OF WORK FORCE INJUDICIOUS USE OF RESOURCES CLOUT DISPLAYED BY FINANCIAL INSTITUTIONS IRRESPONSIBLE BEHAVIOUR BY MNCS 4. ROLE OF BUSINESS IN SUSTAINABLE DEVELOPMENT COLLABORATION WITH SOCIETY AND GOVT TO CREATE A QUALITATIVELY BETTER WORLD TO LIVE IN BUSINESS IS DEPENDENT ON SOCIETY FOR GROWTH AND PROSPERITY STAKEHOLDER CONCEPT SYSTEMS APPROACH OWNERSHIP CONCEPT 5. MILLENNIUM DEVELOPMENT GOALS ERADICATE EXTREME POVERTY AND HUNGER ACHIEVE UNIVERSAL PRIMARY EDUCATION PROMOTE GENDER EQUALITY AND EMPOWER WOMEN REDUCE CHILD MORTALITY IMPROVE MATERNAL HEALTH COMBAT HIV/AIDS,MALARIA AND OTHER DISEASES ENSURE ENVIRONMENTAL SUSTAINABILITY GLOBAL PARTNERSHIP FOR DEVELOPMENT 6. THE TRIPLE BOTTOM LINESOCIAL ECONOMICENVIRONMENTAL 7. WHAT IS CSR? CORPORATE SOCIAL RESPONSIBILITY ENCOMPASSES THE ECONOMIC, LEGAL,ETHICAL AND PHILANTHROPIC EXPECTATIONS PLACED ON ORGANIZATIONS BY SOCIETY AT A GIVEN POINT OF TIME CORPORATE SOCIAL RESPONSIVENESS REFERS TO THE CAPACITY OF A CORPORATION TO RESPOND TO SOCIAL PRESSURES 8. WHAT IS CSR CSR 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. WORLD BUSINESS COUNCIL FOR SUSTAINED DEVELOPMENT 9. SOME FACTS WHILE 94% OF THE COMPANIES BELIEVE THAT DEVELOPMENT OF CSR STRATEGIES CAN DELIVER REAL BUSINESS BENEFITS ONLY 11% MADE ANY SIGNIFICANT PROGRESS IN IMPLEMENTING STRATEGY IN THE ORGANIZATION CEOS ARE FAILING TO RECOGNIZE THE BENEFITS OF IMPLEMENTING CSR STRATEGIES DESPITE INCREASING PRESSURES TO DO SO CSR PROGRAMMES INFLUENCE 70% OF ALL CUSTOMER PURCHASING DECISIONS 10. EMERGING TRENDS DRIVERS ARE PHILANTHROPY, IMAGE BUILDING, EMPLOYEE MORALE AND ETHICS(IN THAT ORDER) CSR AN EXTENSION OF PHILANTHROPY FOUR MODELS CO-EXIST IN INDIA- THE ETHICAL MODEL, THE STATIST MODEL,THE LIBERAL MODEL AND THE STAKEHOLDER MODEL BRAND QUALITY MORE IMPORTANT THAN CSR BANKING TOPS IN THE LIST OF CSR ACTIVITIES WHILE CONSTRUCTION IS AT THE BOTTOM INCLUSIVE GROWTH 11. THEORIES OF CSR FRIEDMAN CONTRACT THEORY SOCIAL JUSTICE THEORY RIGHTS THEORY DEONTOLOGICAL THEORY STAKEHOLDER THEORY TRUSTEESHIP THEORY 12. ARGUMENTS FOR AND AGAINST CSR FOR CREATING SHAREHOLDER VALUE REPUTATION STRATEGIC BRANDING OP EFFICIENCY PRODUCTIVITY AND QUALITY ACCESS TO NEW MARKETS HUMAN AND INTELLECTUAL CAPITAL 13. CONTD--AGAINST MONEY RIGHTFULLY BELONGS TO SHAREHOLDERS POLITICIANS MUST DEAL WITH SOCIAL ISSUES INVESTMENT ON CORE BUSINESS MORE A PUBLICITY STUNT POWER AND RESPONSIBILITY DO NOT NECESSARILY GO HAND IN HAND 14. THE STAKEHOLDER CONCEPTLEGALLY BINDING CONTRACTS RIGHTS AND CLAIMS TO CORPORATIONS PROTECTION OF EMPLOYEE RIGHTS SPECULATIVE INTERESTS OF SHAREHOLDERS STAKEHOLDER S ABILITY TO INFLUENCE CORPORATE DECISIONS CORPORATE GOVERNANCE 15. STAKEHOLDER TYPES LATENT-DORMANT, DISCRETIONARY AND DEMANDING EXPECTANT-DOMINANT,DANGEROUS DEPENDENT. DEFINITIVE NON-STAKEHOLDERS 16. CHALLENGES IN STAKEHOLDER ENGAGEMENT ASSESSING KEY STAKEHOLDERS AND THEIR CONCERNS EFFECTIVE MANAGEMENT PROGRAMMES,MEASUREMENT AND COMMUNICATION OF PERFORMANCE RESPONSE TO STAKEHOLDER VIEWS COMMUNICATION OF VALUES CONSISTENT AND ACCURATE INFORMATION COMMITMENT AND ACCOUNTABILITY 17. CARROLLS 4 PART MODELphilanthropicethicallegal economicDesired by societyExpected by societyRequired by societyRequired by society 18. NOVARTIS CORPORATE CITIZENSHIP AT NOVARTIS BEGINS WITH THE SUCCESS OF OUR CORE BUSINESS.THE MORE WE ARE SUCCESSFUL IN THE DISCOVERY,DEVELOPING, MANUFACTURING AND MARKETING OF NEW MEDICINES,THE GREATER THE BENEFITS WE CAN OFFER TO ASSOCIATES AND SHAREHOLDERS, PATIENTS, HEALTH CARE PROFESSIONALS AND OTHER KEY STAKEHOLDERS. 19. THIS IS HALLMARK WE BELIEVE THAT OUR PRODUCTS AND SERVICES MUST ENRICH PEOPLES LIVES AND ENHANCE THEIR RELATIONSHIPS THAT CREATIVITY AND QUALITY IS ESSENTIAL TO SUCCESS THAT THE PEOPLE OF HALLMARK ARE OUR COMPANYS MOST VALUABLE RESOURCE THAT DISTINGUISHED FINANCIAL PERFORMANCE IS A MUST THAT OUR PRIVATE OWNERSHIP SHOULD BE PRESERVED 20. THE VALUES THAT GUIDE US ARE--EXCELLENCE IN ALL WE DO ETHICAL AND MORAL CONDUCT AT ALL TIMES INNOVATION IN ALL AREAS OF BUSINESS AS A MEANS OF ATTAINING AND SUSTAINING LEADERSHIP CSR TO EACH COMMUNITY IN WHICH WE OPERATE 21. PART II DEVELOPING A CSR STRATEGY 22. CSR ASSESSMENT ORGANIZATIONS VALUES AND ETHICS EXTERNAL AND INTERNAL DRIVERS KEY CSR ISSUES THAT COULD AFFECT THE ORGANIZATION KEY STAKEHOLDERS CURRENT CORPORATE DECISION MAKING STRUCTURE HUMAN RESOURCES AND BUDGETARY IMPLICATIONS EXISTING CSR INITIATIVES 23. ASSESS BY--ASSEMBLING A CSR TEAM DEVELOP A WORKING DEFINITION OF CSR REVIEW CORPORATE DOCUMENTS, PROCESSES AND ACTIVITIES IDENTIFY AND ENGAGE KEY STAKEHOLDERS 24. DEVELOP STRATEGY BY--BUILD SUPPORT WITH SENIOR MANAGEMENT AND EMPLOYEES RESEARCH WHAT BUSINESS IS DOING PREPARE A MATRIX OF PROPOSED CSR ACTIONS DEVELOP ACTIONS AND THE BUSINESS CASE FOR THEM DECIDE ON DIRECTION,APPROACH AND FOCUS AREAS. 25. POSSIBLE BUSINESS CASE LEVERAGING CSR COMPETITIVE ADVANTAGE STAKEHOLDER INFLUENCE SHORT AND LONG TERM GOALS COSTS VS BENEFITS CHANGES ORG MAY BE REQD TO MAKE RISKS/THREATS 26. IMPLEMENTING CSR STRATEGY DEVELOP AN INTEGRATED CSR DECISION MAKING STRUCTURE PREPAREAND IMPLEMENT CSR BUSINESS PLAN SET MEASURABLE TARGETS AND IDENTIFY PERFORMANCE MEASURES ENGAGE THOSE TO WHOM CSR COMMITMENTS APPLY DESIGN AND CONDUCT CSR TRAINING ESTABLISH MECHANISMS FOR ADDRESSING PROBLEMATIC BEHAVIOUR CREATE INTERNAL AND EXTERNAL COMMUNICATION PLAN 27. AREAS OF CSR IMPLEMENTATION LABOUR/HUMAN RTS HRENVIRONMENTCGECO DEVPACCOUNTABILITYETHICSCSR 28. CSR AT WORKPLACE REMUNERATION ETHICAL HR PRACTICES HEALTH/SAFETY WORK LIFE BALANCE AGE OF EMPLOYEES DOWNSIZING DIVERSITY IN WORK CULTURE PRIVACYCONCERNS FOR FREEDOM CONSISTENCY ACROSS DIFFERENT WORK ENVIRONMENTS TELECOMMUTING/WORKING FROM HOME WOMEN AT THE WORKPLACE 29. CSR AND THE ENVIRONMENT AIR POLLUTION WATER POLLUTION SOIL POLLUTION DEGRADATION OF THE ENVIRONMENT DESTRUCTION OF LIVELIHOOD INDUSTRIAL ACCIDENTS/WASTE DISPOSAL E WASTE 30. CSR INTERVENTIONS EMPLOYEE VOLUNTEERING INFRASTRUCTURAL SUPPORT FINANCIAL SUPPORT PRODUCT/SERVICE SUPPORT 31. IMPORTANCE OF NGO PARTNERSHIPS INVOLVE GOVT AND NGOS CHOOSE NGOS DISPLAYING COMPETENCE AND GOOD RESULTS OVER TIME CAPABILITY TO ADVANCE PROJECTS ON A LARGE SCALE REPUTATION/RELIABILITY PROFESSIONALLY MANAGED PREDOMINANT POSITION IN SECTOR INDEPENDENCE FROM COMPANY AND AUTHORITIES 32. PART III CSR MONITORING, MEASUREMENT AND REPORTING 33. MONITORING AND MEASUREMENT MONITORING THROUGH NGOS EMPLOYEE LOYALTY CSR COMMITTEE PERFORMANCE PERFORMANCE INDICATORS GLOBAL REPORTING INITIATIVES KPIS ACCOUNTABILITY 1000 SERIES TBL 34. REPORTING CORPORATE SUSTAINABILITY REPORT INTERNAL AND EXTERNAL STAKEHOLDERS INFORMATION ABOUT CHALLENGES AND ACHIEVEMENTS COMMITMENT TO ENVIRONMENTAL AND SOCIAL RESPONSIBILITY PERFORMANCE-CODE OF CONDUCT, CG,MITIGATION OF RISKS ENVIRONMENT MGT 35. MEASUREMENT AND MONITORING TOOLS EMPLOYEE AND CUSTOMER SURVEYS PUBLIC ATTITUDE AND TRUST SVYS EMPLOYEE SAFETY WASTE MGT POSITIVE AND NEGATIVE MEDIA COVERAGE PEER AND EXPERT EVALUATION IMAGE AMONG FINANCIAL ANALYSTS AND REGULATORS PERCEPTION AMONGST STAKEHOLDERS 36. CSR PROGRAMMES EDUCATION HEALTH LIVELIHOOD CREATION SKILL DEVELOPMENT EMPOWERMENT OF WEAKER SECTIONS ENVIRONMENT 37. COMPANIES TAKING CSR INITIATIVES TATA GROUP INFOSYS BHARTI ENTERPRISES HCL ITC WELCOME GROUP ONGC SAIL ORCHID CHEMICALS AND PHARMA NDTV AIRCEL 38. SOME INITIATIVES IBM- UPLIFTMENT OF TRIBALS IN SASAN INDIAN PAINT INDUSTRY MAKING PAINTS MORE ENVIRONMENT FRIENDLY FINANCIAL SERVICES-NEASING OF CARBON FOOTPRINTSRENEWABLE ENERGY ETC- HSBC, MAX NEWYORK LIFE, SCB E CHAUPAL ADOBE, KPMG, PROMOTING ENTREPRENEURSHIP RELIANCE- PROJECT DRISHTI NDTV-GREENATHON AIRCEL-SAVE THE TIGER COPENHAGEN- ENVIRONMENT ISSUES E WASTE MANAGEMENT 39. PART IV CORPORATE GOVERNANCE 40. CORPORATION A CORPORATION IS AN ARTIFICIAL BEING, INVISIBLE, INTANGIBLE,EXISTING ONLY IN THE CONTEMPLATION OF THE LAW. BEING THE MERE CREATURE OF THE LAW,IT POSSESSES ONLY THREE QUALITIES WHICH THE CHARTER OF ITS CREATION CONFERS UPON IT, EITHER EXPRESSLY OR AS INCIDENTAL AS ITS VERY EXISTENCE----(THE MOST)IMPORTANT ARE IMMORALITY AND, IF THE EXPRESSION MAY BE ALLOWED,INDIVIDUALITY:PROPERTIES BY WHICH A PERPETUAL SUCCESSION OF MANY PERSONS ARE CONSIDERED AS THE SAME, AND MAY ACT AS A SINGLE INDIVIDUAL. 41. ROLE OF CORPORATE GOVERNANCE` o o o o o o o o oSTRONG VS WEAK PERFORMANCE PUBLICLY OWNED BUSINESS VS PRIVATELY OWNED BUSINESS PROSPECT OF ATTRACTING LONG TERM, STABLE CAPITAL INCLUDES QUESTIONS OF STRATEGY,VISION OF TOP MANAGEMENT,TRANSPARENCY,CODE OF CONDUCT, STDS OF PERFORMANCE, ACCOUNTABILITY ETC DIRECTION OF BUSINESS PERFORMANCE MEETING STAKEHOLDER INTEREST RECONCILIATION OF CONFLICTING INTERESTS SYSTEMS FOR ACCOUNTING, AUDITING AND FISCL DISCIPLINE MANAGER DISCIPLINE 42. Concept of Corporate Governance CG aims at enhancement of shareholder value, keeping in view the interests of other stakeholders. CG may be defined as a set of systems, processes and principles which ensure that a Company is governed in the best interests of all the stakeholders. 43. Objectives of Corporate Governance Define clearly the rights, roles, responsibilities and accountability of all stakeholders. Continuous disclosure of material information - financial & non-financial. High quality accounting practices. Protect investors interest. 44. Objectives of Corporate Governance (Contd) High level of transparency. Make Corporate boards an active body for CG. Bring about high level of public confidence in business and industry. 45. GOVERNANCE AND MANAGEMENT BOARD NOT PART OF THE MANAGEMENT STRUCTURE LINE AND STAFF MANAGERS REPORT TO THE CEO WHO HAS OVERALL RESPONSIBILITY BOARD HAS BOTH EXECUTIVE AND NON EXECUTIVE /OUTSIDE DIRECTORS EXECUTIVE DIRECTORS HOLD A MANAGERIAL ROLE INDEPENDENT DIRECTORS HAVE NO RELATION WITH THE COMPANY 46. ADDING TEETH TO CORPORATE GOVERNANCE STRIVING TO ENSURE THAT CODE OF CONDUCT IS UNDERSTOOD AND ADHERED TO BY ALL MEMBERS OF THE ORGANIZATION PERFORMANCE MANAGEMENT SYSTEM SHOULD RECOGNIZE AND REWARD ETHICAL BEHAVIOUR EXCLUSIVE BACKGROUND CHECKS ON SENIOR MANAGEMENT OF THE ORGANIZATION SCREENING OF THIRD PARTIES WITH WHOM COMPANY DOES BUSINESS SCOPE OF WHISTLEBLOWER POLICIES EXTENDED TO WIDER STAKEHOLDER GROUPS INVESTORS, LENDERS ANALYSTS SHOULD PROACTIVELY CHALLENGE CG PRACTICES 47. CONTD CHAIRMEN OF BOARDS SHOULD ACTIVELY MONITOR HOW INDIVIDUAL DIRECTORS PROACTIVELY IDENTIFYING AND FULFILLING THEIR KNOWLEDGE AND COMPETENCY LEVELS COMPULSORY ATTENDANCE ON BOARD MEETINGS MANDATORY BOARD AND AUDIT COMMITTEE EVALUATIONS HEFTY MONETARY PENALTIES ON INDEPENDENT DIRECTORS AND AUDITORS WHO DO NOT CARRY OUT THEIR JOBS 48. SOX ACT 2002 PENALTY FOR CORPORATE FRAUD- UPTO 20 YRS IMPRISONMENT FOR ALTERING/DESTROYING DOCUMENTS CEOs LIABLE FOR UPTO 20 YRS IMPRISONMENT WITH FINES UPTO USD 5 MN FOR CERTIFYING FALSE ACCOUNTS TIME PD FOR ENGAGING IN LAW SUITS BY DEFRAUDED INVESTORS ENHANCED ACCTG FIRMS AND CONSULTACY/NON AUDIT SERVICES ACCTG PROFESSION TO BE UNDER STRICT SCRUTINY BY 5 MEMBER PVT SECTOR BOARD WHICH WILL HAVE DISCIPLINARY AS WELL AS COURT/SUBPOENA POWERS 49. CADBURY REPORT PUBLISHED 1992-COMMITTEE CHAIRED BY SIR ADRIAN CADBURY REPORT RECOMMENDATIONS ADOPTED BY EU,THE US AND THE WORLD BANK BACKGROUND- MAXWELL GROUP OF COMPANIES PUBLICALLY TRADED CORPORATIONS SHOULD HAVE THREE OUTSIDE DIRECTORS POSITIONS OF CEO/CHAIRMAN BY DIFFERENT PEOPLE SUPREMACY OF THE BOARD, ITS INTEGRITY AND ACCOUNTABILITY. LISTED COMPANIES TO ANNUALLY REPORT TO THE SHARE HOLDERS AS RGARDS ASSESSMENT OF RISKS AND THE PROCESSOF DECISION MAKING INDEPENDENT DIRECTOR SHOULD NOT SERVE FOR MORE THAN TWO TERMS FINES AND JAIL TERMS FOR FRAUD 50. CADBURY COMMITTEE REPORT May 1991- Code Of best practices Bd Should meet regularly, retain full and effective control over the company , monitor the executive management Clearly accepted division of responsibilities Non Executive Directors of sufficient calibre and number 51. contd Agreed procedure for furtherance of duties of the Directors All Directors should have access to the advice and services of the Company Secretary Non Independent directors should have independent judgement on issue regarding strategy, performance,resources , key appts etc 52. LEGAL OBLIGATIONS OF DIRECTORS REPRESENTING THE INTEREST OF OWNERS SCRUTINY OF STAKEHOLDERS THE FIDUCIARY DUTIES THE DUTY OF LOYALTY AND FAIR DEALING DUTY OF CARE DUTY NOT TO ENTRENCH DUTY OF SUPERVISION DEALING WITH HOSTILE TAKEOVER OFFERS