Csr

INTRODUCTION TO CORPORATE  SOCIAL RESPONSIBILITY

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Corporate social responsibility is not a new concept in India. However, what is new is the shift in

focus from making profits to meeting societal challenges. Giving a universal definition of corporate

social responsibility is bit difficult as there is no common definition as such. However, there are few

common threads that connect all the perspectives of CSR with each other; the dedication to serve the

society being most important of them. Most ideal definition of corporate social responsibility (CSR)

has been given by world business council for Sustained Development which says, “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 ”.Thus, the meaning of CSR is twofold. On one hand, it

exhibits the ethical behavior that an organization exhibits towards its internal and external

stakeholders (customers as well as employees). On the other hand, it denotes the responsibility of an

organization towards the environment and society in which it operates. (Naukri hub [online], august

2009).CSR is also referred to as:• ‘corporate’ or ‘business responsibility’• ‘corporate’ or ‘business

citizenship’• ‘community relations’• ‘social responsibility’.

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ORIGIN OF CSR

“The phrase Corporate Social Responsibility was coined in 1953 with the publication of Bowen's

Social Responsibility of Businessmen” (Corporate watch report, 2006). The evolutionof CSR is as old

as trade and business for any of corporation. Industrialization and impact of  business on the society

led to completely new vision. By 80’s and 90’s academic CSR was takeninto discussion. The first

company to implement CSR was Shell in 1998. Although the term was not coined until 1953, new

research shows that corporate social responsibility (CSR) can trace its roots to the early years of the

20th century and to the editor of one of America's initial business magazines, The World's Work.

"From its beginnings in November 1900, The World's Work was devoted to social responsibility in

the public interest," says David L. Remund, a Legacy Scholar in the Arthur W. Page Center for

Integrity in Public Communication at Penn State University. Remund is completing his doctoral

studies at the University of North Carolina. The editor of The World's Work, Arthur W. Page, later

became one of the nation's pioneering and still-revered public relations practitioners. He was the first

to serve on the executive management team of a major corporation, AT&T. In 1927, he took his

editorial views to AT&T and put them into action, laying the groundwork for the modern CSR model.

Historians of corporate social responsibility generally agree that the concept emerged in the 1930s

and 1940s. It became formalized in 1953 with the publication of Social Responsibilities of the

Businessman, a book by Howard Bowen.

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WHY SHOULD BUSINESS BE SOCIALLY RESPONSIBLE

Social responsibility is a voluntary effort on the part of business to take various steps to

satisfy the expectation of the different interest groups. As you have already learnt, the interest

groups may be owners, investors, employees, consumers, government and society or

community. But the question arises, why should the business come forward and be responsible

towards these interest groups. Let us consider the following points:

i. Public Image - The activities of business towards the welfare of the society earn goodwill

and reputation for the business. The earnings of business also depend upon the public

image of its activities. People prefer to buy products of a company that engages itself

in various social welfare programmes. Again, good public image also attracts honest

and competent employees to work with such employers.

ii. Government Regulation - To avoid government regulations businessmen should

discharge their duties voluntarily. For example, if any business firm pollutes the

environment it will naturally come under strict government regulation, which may

ultimately force the firm to close down its business. Instead, the business firm should

engage itself in maintaining a pollution free environment.

iii. Survival and Growth -Every business is a part of the society. So for its survival and

growth, support from the society is very much essential. Business utilizes the available

resources like power, water, land, roads, etc. of the society. So it should be the

responsibility of every business to spend a part of its profit for the welfare of the

society.

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iv. Employee satisfaction - Besides getting good salary and working in a healthy atmosphere,

employees also expect other facilities like proper accommodation, transportation,

education and training. The employers should try to fulfill all the expectation of the

employees because employee satisfaction is directly related to productivity and it is

also required for the long-term prosperity of the organisation. For example, if business

spends money on training of the employees, it will have more efficient people to work

and thus, earn more profit.

v. Consumer Awareness - Now-a-days consumers have become very conscious about

their rights. They protest against the supply of inferior and harmful products by forming

different groups. This has made it obligatory for the business to protect the interest of

the consumers by providing quality products at the most competitive price.

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BENEFITS OF CORPORATE SOCIAL RESPONSIBILITY

 Corporate social responsibility offers manifold benefits both internally and externally to

thecompanies involved in various projects.Externally, it creates a positive image amongst the people

for its company and earns a specialrespect amongst its peers. It creates short term employment

opportunities by taking various projects like construction of parks, schools, etc. Working with

keeping in view the interests of local community bring a wide range of business benefits. For

example, for many businesses,local customers are an important source of sales. By improving the

reputation, one may find iteasier to recruit employees and retain them. Businesses have a wider

impact on the environmentalso. Plantation and cultivation activities taken up by Intel India are a step

towards the same.Recycling used products also acts as a step towards minimizing wastes.Internally, it

cultivates a sense of loyalty and trust amongst the employees in the organizationalethics. It improves

operational efficiency of the company and is often accompanied by increasesin quality and

productivity. More importantly, it serves as a soothing diversion from the routineworkplace practices

and gives a feeling of satisfaction and a meaning to their lives. Employeesfeel more motivated and

thus, are more productive. Apart from this, CSR helps ensure that theorganization comply with

regulatory requirements. . (Naukrihub [online], august 2009)

CSR IMPORTANCE AND ITS RELEVANCE TODAY5

The amount of information available to customer about the company, product, brand globallythrough

easy accessible and available mode of information; internet, communication, customer wants to buy

product from trusted brand, employee want to work for the company who respectthem, NGO’s want

to work with company who work with the same vision for the benefit of the people. As said by Peter

Duker “The 21st century will be the century of the social sector organization. The more economy,

money, and information become global, the more communitAccording to strategic corporate

social responsibility by William B. Werther, David Chandler there is three trends which are going to

have importance in future are

Increasing Affluence

: Customer from elite level can afford to buy and pay more for premium brand but the poor customer

might not be willing to pay so much for brand, instead they would prefer to spend their money on

business which can take their business to much better level.

Changing social expectation

: Its natural that customer expect more from the company whose product they buy but with recent

controversy and scandal of company has reduced the trust andconfidence in the regulatory body and

organization which manage the corporation

Globalization and free flow of Information

With growing trend of media and easy access to information through mobile, TV even the minor

mistake of the company is brought in public in no time, this sometime fuels the activist group

and likeminded people to spread message which can lead to situation like boycott of the product.

CSR AND BRANDS

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Brands are the way to success for a business. The sales and revenue of the company arewidely

dependent on the brand they give to customer.Few of the traits which affect the brand are

Positive Marketing/ Brand Building

- Times of India (kalingatimes.com)“Lead India Campaign” by Time of India is perfect example for

brand building through CSR.This was the brought by times of India to bring about change in society.

It was more of  business/brand building strategy than CSR. Such activities knowingly or unknowingly

prepare animage in mind of viewers and hence building image.

Brand insurance

- NIKE (Corporate Social Responsibility, 2003)NIKE has emerged as one of the most progressive

global corporations in terms of CSR  because it has learned from its past mistakes and attacks by

NGOs. As one of the firstcorporations to have a Vice-President for Corporate Responsibility and to

publish an annual CSR Report, the company has done a lot to mitigate public opinion, establish its

brand asrepresentative of a much more committed corporate citizen, and ‘insure’ itself against any

repeatof the consumer boycotts it faced in the mid-1990s.

Crisis management

- Pepsi (wikipedia.org)Crisis stated during the scandal about syringe being found in the diet Pepsi.

Pepsi, confidentthat tampering was not their fault and urged store not to remove any cans from

shelves. In themean time Pepsi released its first video about how Pepsi is processed making it clear

that suchfault cannot occur in the factory. Second video showed about the arrest of the man who

hadcommitted the scam. Basically corporation was completely transparent and open to public

whichmade them effective throughout the crisis.

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TYPES OF CSR:

Four types of CSR

1.Environmental Responsibility

People expect businesses to exhibit environmentally responsible behavior, as evidenced by a

PricewaterhouseCoopers survey that found that the No. 1 issue for companies in the future, according

to U.S. respondents, is carbon emissions reductions. Specific environmental issues that affect

businesses include global warming, sustainable resources and pollution. Businesses are being urged

by environmental groups and governments to reduce their carbon footprint, to obtain their materials

from sustainable sources and to reduce their pollution.

2.Human Rights Responsibility:

The 21st-century marketplace is highly global. This means that when a product is purchased in the

United States, for example, it may have been produced in China, or have components from South

America. The ethical issue for corporations is ensuring that human rights are respected throughout all

levels of the supply chain. Major companies have received criticism for their use of sweat shops and

for sourcing resources that are harvested by unfairly treated workers. This has lead to a push for the

use of strict labor standards to be applied to suppliers, and a demand for fair trade products such as

chocolate and coffee.

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3.Financial Responsibility:

Financial responsibility is an important issue in corporate social responsibility. In the wake of the

accounting fraud perpetrated by Enron and Arthur Andersen and Ponzi schemes orchestrated by the

likes of Bernie Madoff, businesses are questioned about the accuracy of their financial reporting by

increasingly skeptical shareholders and government officials, as evidenced by the Sarbanes-Oxley

Act. Employees are expected to act as whistle blowers in such situations, and white collar crime is

seeing high-profile prosecutions like that of Martha Stewart or former Worldcom CEO Bernie Ebbers.

4.Political Responsibility:

Trading with repressive regimes is a difficult issue in corporate social responsibility. Some businesses

argue that working with these regimes will help to advance them and bring rights to the countries.

People and governments have demanded that businesses stop trading with repressive regimes, which

was most notably observed when several western governments launched an embargo against the

Apartheid government in South Africa during the 1980s. Shell Oil received considerable consumer

backlash during the 1990s for its complicit involvement with the Nigerian government that murdered

anti-oil activists.

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CSR ACTIVITIES :

In the report Catalogue of CSR Activities: A broad overview prepared by the Ashridge Centre

forBusiness and Society (2005), they have made a convenient classification of the CSR activities.The

report has clustered the CSR activities into seven main groups. The groups include;Leadership, vision

and values, Marketplace activities, Workforce activities, Supply chain

activities, Stakeholder engagement, Community activities and Environmental activities. These groups

have been identified based on practical activities undertaken by the business

community. The main groups are then divided into main classes of CSR activities within that

group which are further divided into actual activities. For details regarding the groups and

classes

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ISSUES AND CHALLENGES FOR CSR:

Many companies think that corporate social responsibility is a peripheral issue for their business and

customer satisfaction more important for them. They imagine that the customer satisfaction is now

only about price andservice, but they fail to point out on important changes that are taking place

worldwide that could blow the business out of the water. The change is named as social responsibility

which is an opportunity for the business.Some of the drivers pushing business towards CSR include:

The Shrinking Role of Government:

In the past, governments have relied on legislation and regulation to deliver social and environmental

objectivesin the business sector. Shrinking government resources, coupled with a distrust of

regulations, has led to the exploration of voluntary and non-regulatory initiatives instead.

Demands for Greater Disclosure:

There is a growing demand for corporate disclosure from stakeholders, including customers,

suppliers,employees, communities, investors, and activist organizations.

Increased Customer Interest:

There is evidence that the ethical conduct of companies exerts a growing influence on the purchasing

decisionsof customers. In a recent survey by Environics International, more than one in five

consumers reported having either rewarded or punished companies based on their perceived social

performance.

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Investors are changing the way they assess companies' performance, and are making decisions based

on criteria that include ethical concerns. The Social Investment Forum reports that in the US in 1999,

there was more than$2 trillion worth of assets invested in portfolios that used screens linked to the

environment and social responsibility. A separate survey by Environics International revealed that

more than a quarter of share-owning Americans took into account ethical considerations when buying

and selling stocks. (More on socially responsible investment can be found in the 'Banking and

investment' section of the site).

Competitive Labour Markets:

Employees are increasingly looking beyond paychecks and benefits, and seeking out employers

whose philosophies and operating practices match their own principles. In order to hire and retain

skilled employees,companies are being forced to improve working conditions.

Supplier Relations:

As stakeholders are becoming increasingly interested in business affairs, many companies are taking

steps toensure that their partners conduct themselves in a socially responsible manner. Some are

introducing codes of conduct for their suppliers, to ensure that other companies' policies or practices

do not tarnish their reputation

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RESPONSIBILITY TOWARDS DIFFERENT INTEREST GROUPS\

After getting some idea about the concept and importance of social responsibility of business

let us look into the various responsibilities that a business has towards different groups with

whom it interacts. The business generally interacts with owners, investors, employees,

suppliers, customers, competitors, government and society. They are called as interest groups

because by each and every activity of business

Responsibility of Business Towards Different Interest Groups.

Responsibility Towards Owners

Owners are the persons who own the business. They contribute capital and bear the business

risks. The primary responsibilities of business towards its owners are to:

a. Run the business efficiently.

b. Proper utilisation of capital and other resources.

c. Growth and appreciation of capital.

d. Regular and fair return on capital invested.

ii. Responsibility towards investors

Investors are those who provide finance by way of investment in debentures, bonds, deposits

etc. Banks, financial institutions, and investing public are all included in this category. The

responsibilities of business towards its investors are :

a. Ensuring safety of their investment,

b. Regular payment of interest,

c. Timely repayment of principal amount.

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iii. Responsibility towards employees

Business needs employees or workers to work for it. These employees put their best effort

for the benefit of the business. So it is the prime responsibility of every business to take care

of the interest of their employees. If the employees are satisfied and efficient, then the only

business can be successful. The responsibilities of business towards its employees include:

a. Timely and regular payment of wages and salaries.

b. Proper working conditions and welfare amenities.

d. Opportunity for better career prospects.

e. Job security as well as social security like facilities of provident fund, group

insurance, pension, retirement benefits, etc.

f. Better living conditions like housing, transport, canteen, crèches etc.

g. Timely training and development.

iv. Responsibility towards suppliers

Suppliers are businessmen who supply raw materials and other items required by

manufacturers and traders. Certain suppliers, called distributors, supply finished products

to the consumers. The responsibilities of business towards these suppliers are:

a. Giving regular orders for purchase of goods.

b. Dealing on fair terms and conditions.

c. Availing reasonable credit period.

d. Timely payment of dues.

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v. Responsibility towards customers

No business can survive without the support of customers. As a part of the responsibility of

business towards them the business should provide the following facilities:

a. Products and services must be able to take care of the needs of the customers.

b. Products and services must be qualitative

c. There must be regularity in supply of goods and services

d. Price of the goods and services should be reasonable and affordable.

e. All the advantages and disadvantages of the product as well as procedure to use

the products must be informed do the customers.

f. There must be proper after-sales service.

g. Grievances of the consumers, if any, must be settled quickly.

h. Unfair means like under weighing the product, adulteration, etc. must be avoided

vi. Responsibility towards competitors

Competitors are the other businessmen or organizations involved in a similar type of business.

Existence of competition helps the business in becoming more dynamic and innovative so as

to make itself better than its competitors. It also sometimes encourages the business to

indulge in negative activities like resorting to unfair trade practices. The responsibilities of

business towards its competitors are

i. not to offer exceptionally high sales commission to distributers, agents etc.

ii. not to offer to customers heavy discounts and /or free products in every sale.

iii. not to defame competitors through false or ambiguous advertisements.

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vii. Responsibility towards government

Business activities are governed by the rules and regulations framed by the government. The

various responsibilities of business towards government are:

a. Setting up units as per guidelines of government

b. Payment of fees, duties and taxes regularly as well as honestly.

c. Not to indulge in monopolistic and restrictive trade practices.

d. Conforming to pollution control norms set up by government.

h. Not to indulge in corruption through bribing and other unlawful activities.

viii. Responsibility towards society

A society consists of individuals, groups, organizations, families etc. They all are the members

of the society. They interact with each other and are also dependent on each other in almost

all activities. There exists a relationship among them, which may be direct or indirect. Business,

being a part of the society, also maintains its relationship with all other members of the

society. Thus, it has certain responsibilities towards society, which may be as follows:

a. to help the weaker and backward sections of the society

b. to preserve and promote social and cultural values

c. to generate employment

d. to protect the environment

e. to conserve natural resources and wildlife

f. to promote sports and culture

g. to provide assistance in the field of developmental research on education, medical

science, technology etc.

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SOCIAL VALUES AND BUSINESS ETHICS

Every society generally views certain activities, conduct and behaviour of its members to be

undesirable or harmful to others. Similarly, desirable acts and conduct of people are recognised

and appreciated in society. Social values refer to the general recognition in society about

which acts are good and desirable on the part of people and which acts are not. In relation

to business, social values of business may indicate:

a. the characteristics of good business;

b. objectives which are desirable for business to follow; and

c. the manner in which business activities should be conducted in the interest of

society.

For example, we consider it bad, if any business indulges itself in selling adulterated goods

or charging higher price or polluting the environment. Thus, social values of the business

form the base for social responsibilities.

Ethics refers to conduct and activities of people based on moral principles. Honesty,

truthfulness, compassion, sympathy, feeling of brotherhood etc. are considered ethical.

Business can also be guided by certain moral principles say, running the business without

adopting unfair practices, being honest and truthful about quality of goods, charging fair

prices, abiding to laws, paying taxes, duties and fees to the government honestly. Indeed

business ethics suggest certain principles to conduct business so as to be morally justified. Just like

social values,

business ethics also play a major role while fulfulling social responsibilities.

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ENVIRONMENTAL POLLUTION AND ROLE OF BUSINESS

To preserve the society it is important to protect the environment. And, therefore, every

business must take measures to protect the environment rather than damaging it. In this

section let us learn more about different types of environmental pollution and role of business.

Nature has given us air, land including mountains, hills, forests etc. and water in the form of

rivers, lakes, sea etc., which create an environment in which we live. Our health and well

being largely depend on the quality of such environment. However, it is observed that the

quality of this environment is deteriorating day by day. We are getting neither pure water to

drink nor clean air to breathe. We are having untimely rains, storms, cyclones, floods, extended

summer, etc. We are also suffering from various diseases because of such lower quality of

environment. When the quality of environment deteriorates, it is said that the environment is

getting polluted. Thus, environmental pollution refers to contamination of environment by

various substances that have adverse effects on living and non-living matters.

Environmental pollution is of three types:

i) Air pollution,

ii) Water pollution, and

iii) Land Pollution.

Let us have a brief discussion about these three types of pollution.

i. Air Pollution

As we know the air we breathe contains several gases, dust particles etc. Our body mechanism

helps us in filtering the unwanted ones and retaining those required for our survival. However,

if there is an imbalance in the proportion of gases and dust particles in air, beyond a certain

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point, our body mechanism fails to filter them and we face problem. This is also true in care

of other natural things like forests, river etc. Thus, air pollution refers to the presence of any

unwanted gases, dust particles etc. in the air, that can cause damage to people as well as

nature.

Causes of Air Pollution

Let us know how air gets polluted. Some of the common causes of air pollution are

Emission of fumes from vehicles .Pollution simply means presence of any unwanted substance that

creates inconvenience in the natural behavior of living and non-living matter.

ii. Emission of smoke dust and chemicals from manufacturing plants.

iii. Emission of gases and dust arising from atomic plants

iv. Emission of smoke from oil refineries, burning of trees and plants in forests,

buring of coal, etc.

Impact of Air Pollution

Air pollution has a lot of impact on our surroundings and on us. Some of them are-

Presence of gases in air, which are not required by human beings, animals and birds,

creates serious health problems. It can create diseases like asthma, cough and cold,

blindness, hearing loss, skin disease etc. It also causes genetic disorders. In the long

run and in extreme cases it can also be fatal.

Air Pollution creates smog in the winter, which is caused by smoke and dust when

they mix with fog. It reduces natural visibility and irritates the eyes and respiratory

tract.

Ozone layer is a protective layer of gases around our earth, which protects us from

harmful ultraviolet rays that come from the sun. It gets depleted because of air pollution

and thereby causes gene mutation, genetic defects and skin cancer.19

The temperature of the earth increases due to air pollution. This is because whatever

heat our earth receives from the sun is not radiated to the atmosphere due to the

excessive presence of gases like carbon dioxide, methane, nitrous oxide, etc.

Air pollution causes acid rain which means excessive presence of various poisonous

gases like sulphur dioxide, nitrogen oxide etc. in the rainwater. This causes lot of

damage to vegetation, trees and marine life, buildings and monuments etc.

Environment is also polluted through excessive noise, known as Noise Pollution. Noise

simply means an unwanted sound that causes irritation. It is caused by modern machines

and gadgets such as rail engines, loud speakers, generators, aeroplanes, vehicles,

machineries, telephones, televisions etc. It initially distorts communication process, but

prolonged exposure to noise pollution can cause loss of hearing, headache, irritation, high

blood pressure, neurological or psychological disorders, etc.

b. Water Pollution

Have you seen river Yamuna near Delhi? Are you aware about the clean Ganga project?

These two questions almost immediately remind us about the extent to which the water of

our rivers has been polluted. Water pollution refers to contamination of water due to presence

of unwanted and harmful substances thus, making water unfit for use.

Causes of Water Pollution

The various reasons of water pollution arei.

Drainage of human excreta into rivers, canals etc.

ii. Improper sanitation and sewage system.

iii. Dumping of wastes and effluents by various industrial units into the rivers and

canals.

iv. Drainage of toxic substances like chemicals and fertilizers used in cultivation, into20

streams and rivers.

Business Studies

v. Dumping of garbage, dead bodies and almost every thing used in rituals to the

nearby water source by households.

Effects of Water Pollution

The effects of water pollution are:

a. It can create health hazards among human beings, animals and birds. Diseases

like typhoid, jaundice, cholera, gastroentytis etc. are common.

b. It can endanger lives of various aquatic species.

c. It can lead to scarcity of drinking water as the water of rivers and canals as well

as underground water get polluted.

c. Land Pollution

Land Pollution refers to dumping of useless, unwanted as well as hazardous substances on

the land that degrades the quality of soil we use. Our land gets polluted because of the

human carelessness towards the soil.

Causes of Land Pollution

The main causes of land pollution are:

(i) Excessive use of fertilizers, chemicals and pesticides in cultivation.

(ii) Disposal of solid waste of industries, mines and quarries.

(iii) Disposal of solid waste from construction of roads, buildings etc.

Social Responsibilities of Business

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(v) Effluents of some plants like paper, sugar etc. which are not absorbed by soil.

(vi) Excessive use of plastic bags, which are non-biodegradable.21

(vii) Dumping of non-composable wastes from households, hotels and hospitals as well as

from industries. These may include combustible items like plastic, cloth, wood etc.,

and non-combustible items like metal, glass, ceramics, cement etc.

Effects of Land Pollution

Land Pollution has the following harmful effectsa.

Reduces the quantum of cultivable land area.

b. Causes health hazards as it contaminates the sources of food.

c. Causes damage to the landscape.

d. Leads to water and air pollution.

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ROLE OF BUSINESS IN ENVIRONMENTAL POLLUTION

From the above discussion on environmental pollution, one thing can clearly be seen that, it

is business that mainly contributes to all sorts of pollution -air, noise, water and land.

Business causes pollution in the following ways:

- Emission of gas and smoke from manufacturing plants;

- Use of machines, vehicles etc. contributing to noise pollution;

- Deforestation due to acquisition of forest lands for setting up plants;

- Growth of urbanization and industrialization;

- Disposal of wastes and effluents into rivers and canals;

- Disposal of solid wastes in the open space;

- Mining and quarrying activities; and

- Increasing use of transport.

Government has taken a major step in protecting the environment by passing the Environment

Protection Act, 1986 in addition to having Water (Prevention and Control of Pollution) Act,

1974, Air (Prevention and Control of Pollution) Act, 1981 and several other Acts. Business

can equally be instrumental in fighting pollution and protecting the environment. Business

can have three types of role - preventive, curative and awareness.

i. Preventive Role

It means business should take all steps so that no further damage is done to the environment.

For this, business must follow the regulations laid down by government to control pollution.

For example, more and more environmental friendly products can be produced, filters can

be used in chimneys; silencers can be fitted in generators; instead of dumping industrial

wastes into river and land it can be treated properly for further productive use etc.

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Businessmen should come forward to play a major role in preventing further damage done

to the environment by human beings. Sulabh International is the leading example of how to

provide proper sanitation facilities to the public.

ii. Curative Role

It means business should rectify whatever damage has been done to the environment. In

addition, if it is not possible to prevent pollution then simultaneous curative measures can be

taken. For example, planting of trees (afforestation programmes) can substantially reduce

air pollution near the industrial area.

iii. Awareness Role

It means making people (both the employees as well as the general public) aware about the

causes and consequences of environmental pollution so that they voluntarily try to protect

rather than damage the environment. For example, business can undertake public awareness

programmes. Now-a-days, we find that some business houses have taken the responsibilities

to develop and maintain parks and gardens in cities and towns, which shows that they care

for the environment.

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POSITION OF CSR TODAY AND ITS SCOPE :

In many Asian societies, Corporate Social Responsibility (CSR) is generally understood as being no

more than corporate-run community development projects to compensate for social and economic

injustices. Most of such projects, like constructing schools and health care centres, have been

effectively hegemonic, providing strong legitimacy and extensive license tocorporations to sustain the

exploitation of the human and natural resources in many countries. A further implication of CSR is

that it makes people think that it is the company’s obligation to meet people’s rights to a

better education system, clean water, health care, etc., instead of the State or government. At the same

time, this has allowed the State to escape from its obligations towards society.

CSR is a simple but effective method for corporations to obtain legitimacy as a responsible social

actor. It is also a status-enhancing way for them to acquire an excellent and clean image in the public.

For many corporations, the implementation of CSR can increase the sales of their products and

market share. CSR can also help the brand attain a good reputation and promote workers’

productivity. It can reduce production costs, attract more investment, and achieve more

favourable credit and ratings. In this respect, there is no doubt that CSR is a vehicle for increased

corporate power in society

There are many actors involved in CSR activities: NGOs, government, and international institutions,

which eventually make CSR an emerging industry itself, valued at US$ 31.7 billion in 2007. CSR-

driven initiatives such as Multi-Stakeholders Initiatives (MSI) claim to have an impact

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on core labour issues such as freedom of association and collective bargaining. However, the reality

has proven that CSR has more harm than good.

In the labour movement, CSR has transformed itself into a mechanism called Code of Conduct. The

Code of Conduct is a fundamental manifestation of the CSR, which corporations consider as part of

their business public relations in response to accusations made by activists. Certainly, corporations by

nature do not see CSR as their obligation, but as a business strategy to achieve greater profit by

fulfilling its social responsibility.

By promoting Codes of Conduct, employers alter labour relations in the factories towards a

harmonious industrial relation to sustain their violations against labour rights without facing any

resistance. Codes of Conduct are aimed at making people feel good and pacifying labour, consumer,

and civil society movements. It has the mission of protecting Multinational Corporations’ interests in

international sub-contracting. The way that Codes of Conduct

domesticate the movements is that it serves as the basis for NGOs, and even labour unions, to be

engaged in the supervision work of the manufacturing process of Multinational Corporations. In the

end, many NGOs and labour unions participate in the band wagon of Code of Conduct monitoring,

taskforces, stakeholders’ roundtables, etc., forsaking their core work at the grass-roots.

Codes of Conduct create the privatization of labour law and promote self-regulation in the factories.

By promoting Codes of Conduct, employers divert the focus of labour and consumer movement into

setting up localised regulation, but at the same time

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neglect the national constitution and the labour law. Employers try to convince us that

voluntary standards are better than the existing labour law, which suffers from a lack of

implementation. Thus, the Code of Conduct logically has an inherent contradiction in itself: as the

root-problem is the defect of labour law, Code of Conduct then has a similar limitation of its

functioning. For that reason, we are very doubtful that local labour laws will be improved and

properly enforced under the Code of Conduct influence.

Moreover, Codes of Conduct and other types of CSR have the ‘divide and rule’ effect. At the

workplace level, CSR hampers the development of genuine, free and independent unions, which

are further stigmatised as trouble-makers in society. At the community level,

CSR affects the loss of harmony within society, as a number of people get benefits through jobs, gifts

or trade opportunities, while others get none; some people are even deprived, such as when they have

to give up their land. At the national level, the impact of CSR is obviously seen as

the rupture between the proponents and opponents of CSR is ever widening. Meanwhile, in the global

level, Northern and Southern workers become less and less likely to reach out each

other, as they get co-opted by multi-stakeholder initiatives and become more invested in them, rather

than in seeking the solidarity of other workers. In a nutshell, CSR undermines solidarity between

worker.

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STRATEGIC PLAN FOR CSR:

The principal goal of the Strategic Plan for Corporate Social Responsibility is to establish some

management directives to guarantee certain ethical principles,respect for people and for the

environment The specific objectives that have been established in the Strategic Plan for Corporate

Social Responsibility coincide with the strategic lines defined:

1. Minimise the environmental impact

2. Guarantee transparency with the investment community

3. Ensure that employees are motivated and involved in the

continuous improvement of the company

4. Maintain a close relationship with the client to guarantee client

satisfaction

5. Extend the commitment to Social Responsibility to suppliers

and sub-contracted companies

6. Involvement with the community and the society as a whole

7. Encourage and systematise communication channels

8. Guarantee that the implementation of the Strategic Plan for

Corporate Social Responsibility is controlled and monitored

Each strategic line is developed through various actions, some being applied

across all the companies in the group and others specific to different sectors of activity.

Strategic line 1: minimise environmental impact

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Respect for the environment is a fundamental aspect of Social Responsibility .In fact, it is one of the

three premises for sustainable development: “…economic prosperity, environmental quality and

social equity. Companies aiming for sustainability need to perform not against a single, financial

bottom line, but also against the triple

Any activity has an impact, to a greater or lesser degree, on the environment. To minimise this impact,

a first step is to identify it and evaluate it, so as to then establish the necessary improvements

Both the identification and evaluation, as well as the subsequent implementation of improvements,

are actions that this strategic line covers. Maintaining a register of environmental legislation that

affects the activity, and ensuring that it is kept up to date and complied with is part of the process of

implementing a system of environmental management for all companies in the Corporation.

Specific actions are also proposed to improve environmental management in

different sectors of activity.Some of these are already in placeand,therefore, it is necessary to broaden

or strengthen their implementation; others represent new challenges to improve environmental

management.

Area of application:

General:

1.1. Identify and evaluate the activity’s main environmental impacts.

1.2. Establish improved objectives to reduce the activity’s environmental impacts.

1.3. Maintain a register of environmental legislation that affects the activity and guarantee that it is

complied with and kept up to date.29

1.4. Systematically control water and energy consumption and the production of residues.

1.5. Manage residues appropriately.

1.6. Optimise energy consumption.

Highways:

1.7. Manage the highways’ forestry diversity.

1.8. Build awareness amongst users of the forestry and scenic value.

1.9. Expand the Teletac service.

1.10. Expand the waste water collection service for buses and caravans.

1.11. Ensure that waste waters generated by activities are correctly managed.

1.12. Carry out diagnosis and audit of energy usage in different installations.

1.13. Prepare a map of the impact of traffic noise on the highways.

Car parks:

1.14. Ensure optimum levels of interior air quality.

1.15. Collaborate in Car Sharing projects.

1.16. Facilitate parking for bicycles.

1.17. Carry out diagnosis and audit of energy usage in

different installations.

Telecommunication:

Follow the measures established by Tradia in its environmentalmanagement system in line with ISO

14001.

Logistic services:

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Given the characteristics of this area of activity, focus efforts on involving the client operators in

adopting management practices that respect the environment

Strategic line 2: guarantee transparency with the investment

Community

This strategic line is applicable to the Corporation, given that as a publicly traded company it has a

relationship with the investment community.Includes all the aspects related to corporate governance

stipulated in the new law of transparency, as well as the recommendations made in the Olivencia

Code and the Aldama Report, even though these are not binding.

Reference is also made to dialogue, with the objective of finding the ideal

channels to guarantee feedback from the investment community.

Area of application:

Corporation:

2.1. Comply with the rules on transparency and adopt the recommendations from the Olivencia Code

and Aldama Report.

2.2. Guarantee two-way communication with the investment community.

2.3. Have a system for the evaluation, application and monitoring of opinions and demands from the

investment community.

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Strategic line 3: ensure that employees are motivated andinvolved in the continuous improvement of

the companyThe objective of abertisis to provide a workplace for the professional team of almost

6,000 people – between the Corporation and its subsidiary companies for professional and personal

development.For this reason, issues covered in this point include no discrimination; continuous

training; participative management; balance between work, family and leisure;health and safety in the

workplace, and business ethics.The international standard SA 8000 has been taken as a reference,

which adopts a system of accountable management to focus specifically on the relationship with the

employee.

Area of application:

General:

3.1. Increase the representation of women.

3.2. Ensure employment of disabled personnel.

3.3. Value the training needs of all personnel and prepare an annual training program that includes

issues of Corporate Social Responsibility in the training sessions.

3.4. Provide training to new employees on the commitments to Corporate Social Responsibility.

3.5. Develop a system of management by objectives.

3.6. Develop a system to encourage employee participation through suggestions.

3.7. Adopt measures to balance work-family-leisure.

3.8. Guarantee coherence, equal opportunities and no discrimination

3.9. Protect the stability of the workforce.

3.10. Evaluate the level of employee satisfaction.

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3.11. Adopt the necessary measures (ergonomics in space, material, equipment, etc.) to guarantee a

good work environment.

3.12. Ensure basic health, safety and accident prevention measures are taken.

3.13. Encourage good environmental practices at home amongst employees.

3.14. Prepare an employee’s code of ethics.

3.15. Work to comply with the requirements stipulated in the SA 8000 standard.

NOTABLE WORK BY SOME COMPANIES

Ashok Leyland

Operates a FunBus in Chennai and New Delhi. This bus, equipped with a hydraulic lift, takes

differently abled children and those from orphanages and corporation primary schools on a day‟s

picnic. The company also runs AIDS awareness and prevention programmes in its Hosur factories for

about 3.5 lakh drivers.

Axis Bank

The Axis Bank Foundation runs Balwadis which are learning places for children living in large urban

slum clusters. It also conducts skill development programmes (PREMA and Yuva Parivartan) in

motor driving, welding, mobile repairing, tailoring etc, for the youth in backward districts.

Bharat Petroleum Corporation

Its rain water harvesting project Boond, in association with the Oil Industries Development Board,

selects draught-stricken villages to turn them from „water-scarce to water-positive‟. Some of BPCL‟s

other social programmes include adoption of villages, prevention and care for HIV/AIDS and rural

health care. 33

Hindalco Industries

Its CSR activities are concentrated in 692 villages and 12 urban slums, where it reaches out to about

26 lakh people. It has constructed check dams, ponds and bore wells to provide safe drinking water.

In education, it awards scholarships to students from the rural schools it support. Its other interests

include women‟s empowerment and health care, in which it treats patients in hospitals, runs medical

camps and operates rural mobile medical van services.

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Infosys

The Infosys Science Foundation, set up in 2009, gives away the annual Infosys Prize to honour

outstanding achievements in the fields of science and engineering. The company supports causes in

health care, culture and rural development. In an interesting initiative undertaken by it, 100 school

teachers in Karnataka, who were suffering from arthritis, underwent free surgery as a part of a week-

long programme.

Mahindra & Mahindra

Nanhi Kali, a programme run by the KC Mahindra Education Trust, supports education of over

75,000 underprivileged girls. The trust has awarded grants and scholarships to 83,245 students so far.

In vocational training, the Mahindra Pride School provides livelihood training to youth from socially

and economically disadvantaged communities. M&M also works for causes related to environment,

health care, sports and culture.

Oil & Natural Gas Corporation

It offers community-based health care services in rural areas through 30 Mobile Medicare Units

(MMUs). The ONGC-Eastern Swamp Deer Conservation Project works to protect the rare species of

Easter Swamp Deer at the Kaziranga National Park in Assam. ONGC also supports education and

women empowerment.

Tata Consultancy Services

Its Computer Based Functional Literacy (CBFL) initiative for providing adult literacy has already

benefitted 1.2 lakh people. The programme is available in nine Indian languages. Besides adult

education, TCS also works in the areas of skill development, health care and agriculture

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Case study: TATA GROUP & CSR

Introduction Ranging from steel, automobiles and software to consumer goods and

telecommunications the Tata Group operates more than 80 companies . It has around 200,000

employees across India and thus has the pride to be nation‘s largest private employer. Mr. Ratan N.

Tata has led the eminent Tata Group successfully. He was trained as an architect at New York's

Cornell University but he chose to enter the family business .He assumed the Chairmanship of the

Group in 1991. Named Business Man of the Year for Asia by Forbes in 2004, Mr. Ratan Tata serves

on the board of the Ford Foundation and the program board of the Bill & Melinda Gates Foundation's

India AIDS initiative. Tata Group chairman Ratan Naval Tata has stepped down to pass on the entire

responsibility to Cyrus Mistry . Under Tata, the group went through major organisational phases —

rationalisation, globalisation, and now innovation, as it attempts to reach a reported $500 billion in

revenues by 2020-21, roughly the size of what Walmart is today. 13 Approximately two third of the

equity of the parent firm, Tata Sons Ltd., is held by philanthropic trusts endowed by Sir Dorabji Tata

and Sir Ratan Tata, sons of Jamsetji Tata, the founder of todays Tata empire in the 1860s. Through

these trusts, Tata Sons Ltd. utilizes on average between 8 to 14 percent of its net profit every year for

various social causes. Even when economic conditions were adverse, as in the late 1990s, the

financial commitment of the group towards social activities kept on increasing, from Rs 670 million

in 1997-98 to Rs 1.36 billion in 1999-2000. In the fiscal year 2004 Tata Steel alone spent Rs 45 crore

on social services.

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