Building a CSR Perspective, by Insight Business Consultancy

8/22/2019 Building a CSR Perspective, by Insight Business Consultancy

1/53

BUILDING A CSR PERSPECTIVE

A WEB RESEARCH STUDY

by

in 2012


2/53


CONTENTS

Section Title Page

1 Executive Summary 1

2 Disclaimer 4

3 CSR Historical perspective 5

4 CSR Theoretical perspective 6

5 CSR Impact on business performance 15

6 CSR Governance considerations 19

7 CSR Approach to goal-setting 22

8 CSR Case studies from abroad 25

9 CSR Case studies from India 36

APPENDIX

REFERENCES


3/53


1

1. Executive Summary

BACKGROUND

This report has been prepared by Insight Business Consultancy to help

managers in small and medium Indian companies build a perspectiveon Corporate Social Responsibility and hopefully, take decisions to

adopt it and implement it in their organisations.

HISTORICAL PERSPECTIVE

The notion that productive enterprises must be conscious of theirobligations to society and do what they can to fulfil them goes back to

antiquity. CSR gradually evolved from a concern for the safety andwelfare of workmen, to a concern for consumers and eventually a

concern for the community as a whole.

In modern times, the phenomenon of global warming has sharpenedthe realisation that the capacities of the planet are indeed limited andwithout responsible behavior by corporations big and small, the

damage to the environment might be irreversible, spelling doom for all.

CSR today has evolved into an advanced concept, which leading

corporations have consciously integrated into the heart of their

businesses, to ensure that all activities are sustainable both socially aswell as environmentally. This is deployed within the organisation and

throughout its supply chains (material and human) and alsocontributes to the development of local communities as well as

safeguarding of the natural environment.THEORETICAL PERSPECTIVE

Business and academic leaders began to study CSR seriously in theearly years of the 20th century and although it always remained a

contentious subject, it was widely adopted in the late 1900s andevolved into its present form. Today it may be labelled Corporate

Citizenship or Corporate Responsiveness and modern practitionersmay measure their economic, social and environmental impact by the

Triple Bottom Line, but the term CSR is still the most popular.

In the late 1970s Archie B Carroll (USA) proposed four types ofresponsibility that corporations were expected by society to shoulder.

Running a profitable business (or Economic responsibility), complyingwith the laws of the land (or Legal responsibility), upholding ethicalbehaviour in all dealings (or Ethical responsibility) and finally, making avoluntary contribution towards improving the social and environmental

fabric of society (Discretionary responsibility).

The content of each tier would vary as society advanced and would bedifferent in different countries and cultures. This placed CSR in a more


4/53


2

serious context than merely philanthropic giving which it had hithertobeen confined to.

The advent of the science of ecology and global warming led to a new

battle cry sustainability, and the content of CSR expanded to addressthis new challenge. Social and economic disparities were seen to have

arisen from the ruthless irresponsible exploitation of communities andnatural resources and social pressures to contain such behaviour began

to be felt by businesses. Rather than merely comply with an expandingregulatory framework, leading corporations proactively adopted

progressive and responsible attitudes to these developments and ledthe way.

CSRs IMPACT ON BUSINESS

CSR in its various forms was resisted strongly by those who felt it was

an avoidable burden and threatened the competitiveness of thebusiness. The debate raged between the utilitarian school and the

altruists until sociological and behavioural research began to confirmsome surprising truths.

It was conclusively shown in study after study, that employees thought

better of their employer if he had shown sensitivity to social issues ofconcern to everyone. Such employers were able to hire and retain a

better calibre of employee, and the more humane and empathetic workculture that emerged resulted in more productive and innovative staff

which in turn led to happier and more loyal customers.

Some studies went further still, claiming that far from being a cost to

be minimised, CSR was a powerful and indispensible factor contributingto the delivery of exceptional competitive (and consequently financial)

performance and therefore ought to be positioned at the very centre ofbusiness strategy, steered directly by the Board of Directors, so that

social and environmental issues would be taken into account routinely,alongside economic factors, in decision-making at all levels.

CSR GOVERNANCE CONSIDERATIONS

With growing governmental and social scrutiny of every action of

business, and the growing evidence supporting the positive impact ithas on performance, CSR should be embraced by all businesses. Sowhat is the best way forward how should CSR be managed?


5/53


3

There are numerous CSR best practice manuals available today andone or two are included in this document for reference. However these

will not have any impact if the primary passion, drive and commitment

for CSR does not emanate from the very top of the corporation. Oncethis is in place, astute senior managers will deploy a very effective and

authentic CSR programme and it will improve and become deeper andmore impactful with time.

Given a serious and genuine commitment to CSR from the very top ofthe corporation, the challenge of selecting the right goals to be

addressed and striking the right balance between economic, social andenvironmental goals and provisioning each appropriately, needs to be

addressed. Some thoughts in this direction are included in this report.

Finally a few case studies of CSR interpretation and deployment by

foreign and Indian coprorations are presented.The various philosophicalpositions taken, organisational forms adopted and goals selected

provide opportunities for deeper reflection on the issues and optionsavailable to decision makers.

The main document starts from the next page..


6/53


4

2. DISCLAIMER

Insight has explored the web for valuable information and guidance on

all aspects of CSR, as well as areas related to CSR Strategy such asSocial Change, Social Engineering, Healthcare and the Environmentand put this report together.

This document is not an academic paper and therefore does not adhereto all the rules that are required to be followed in scholarly work. It

also does not present any original ideas. It is merely an attempt toextract items of wisdom drawn from many different internet sources,

select them based upon a judgement of relevance and then presentthem as a coherent set of ideas to support decision-making.

Sources are listed under references in Appendix 1.


7/53


3. CSR Historical Perspective :

The concept of extended responsibility of farming, manufacturingand trading entities beyond the narrow confines of profit and growth,goes back to ancient times. Nearly 4000 years ago, the code ofHammurabi required builders, farmers and innkeepers to conducttheir business in such a way as not to cause mortal injury to anyone,on pain of death.

The idea that those in an advantageous position, either in terms ofmoney or power, should conduct their activities in a sociallyresponsible way can be traced to classical Athens of 500 B.C.

Philosophers like Kautilya from India and pre-Christian era

philosophers in the West preached and promoted ethical principleswhile doing business. The concept of helping the poor anddisadvantaged has been cited in much of ancient literature.

The idea was also supported by several religions where it has beenintegrated into religious laws. Zakaat, followed by Muslims, isdonation from ones earnings which is specifically given to the poorand disadvantaged. Similarly Hindus follow the principle ofDhramada and Sikhs the Daashaant.

More recent history goes back to the 1790's, when Englandwitnessed the first large scale consumer boycott over the issue of

slave-harvested sugar which finally forced importers to move to free-labour sourcing.

In India, in the pre independence era, local businesses pioneeredindustrialisation along with fighting for independence by setting upcharitable foundations, educational and healthcare institutions, andtrusts for community development.

The term CSR itself came into common use in the early 1970s. Bythe late 1990s, the concept was being supported by institutionsaround the world. In 1977 less than half the firms listed in theFortune 500 even mentioned CSR in their annual reports, but by theend of 1990, approximately 90 percent of Fortune 500 firms hadembraced CSR as an essential component of their organisationalgoals, and actively promoted their CSR activities in annual reports.

The names of Harold Bowen (1953 The social responsibilities of thebusinessman) and Archie Carrol (University of Georgia, USA) arerecognized as the founders of the theoretical principles that underpinmuch of present day CSR thinking.


8/53


4. Corporate Social Responsibility Theoretical Perspective

While most people will have heard about CSR, very few will be ableto define it. This is because there is no commonly accepted definitionas the concept has been undergoing rapid evolution in recent times.

"Corporate social responsibility means something to everybody, butnot always the same thing to everybody.Votaw (1972)

The Corporate Social Responsibility (CSR) field presents not only alandscape of theories but also a proliferation of approaches, whichare controversial, complex and unclear.Garriga and Mel (2004)

The practical implication of this fact is that each business entity mustmake up its own mind about what CSR will mean for it and how itmight be given shape and implemented.

However, there is a definite upward evolution of thought andexperience of CSR, enriched by recent influences from ecology,sociology and the behavioural sciences. Therefore any right thinkingleadership will be bound to examine the most contemporary modelsand approaches before making up its mind.

Corporate Social Responsibility seeks to define the relationshipbetween business and society through notions such as

1. the expectation that business is responsible to societyin the senseof accountability (Bowen 1953, Carroll 1979)

2. and forsocietyin the sense of compensating for negativeexternalities and contributing to social welfare (Crouch 2006, Arrow1974)

3. the expectation that business conducts itself a responsible fashion(Carroll 1979); and more specifically

4. the pro-active management by business of the corporation-societyinterface through the enhancement of stakeholder relationships(Barnett 2007, Gond and Matten 2007, Freeman 1984) .

Thus CSR is simultaneously dynamic, overlapping and contextual.Its dynamic quality derives from the changing nature of business-society relations including through new or re-invigoratedunderstandings ofirresponsibility. Its overlapping quality arises sinceit interfaces and intertwines with fields such as ethics, sustainability,morality and business performance. It is contextual since it mustadopt a shape and character consistent with the culture and state ofdevelopment of a particular society.

From the 1920's to the 1950's and 60's, CSR was thus successivelyapproached in the managerial world through notions as diverse as"public service", "stewardship" and "trusteeship" which in turndeveloped into "social responsibility".


9/53


The newer terms do not necessarily render the earlier ones obsolete,but rather include, extend and enrich them. The whole field

continues to be in ferment and evolution. The diagram belowsummarises the situation almost upto the present day -

It is worth examining the six most recent terms in some detail.

CORPORATE SOCIAL RESPONSIBILITY

In 1970, Milton Friedman famously stated that the only socialresponsibility of business is to increase profits. This was applied in acontext in which the Government discharged its responsibility for

caring for the backward and disadvantaged on behalf of society as awhole, and the Legislature and Judiciary enacted and enforced lawsto regulate the behaviour of all members of society. The job ofbusiness was simply to maximise the creation of wealth while payingits taxes and complying with the law.

Friedmans statement evoked an instant strong reaction and thedebate continues to this day. Detractors argued that the reality isthat governments frequently fail in their duty to care for thedisadvantaged, the framework of law lags behind social conscienceand its weak implementation renders it incapable of properly

regulating the behaviour of members of society.


10/53


The Committee for Economic Development, (CED - a highlyrespected and independent , non-profit, Washington Think Tank) in

a 1971 article entitled The Social Responsibilities of BusinessCorporations observed that businesses are able to function only bysocial consent and their basic purpose was to serve the needs ofsociety constructively. There was thus an unwritten social contractbetween society at large and the business corporation.

As society evolved and changed in significant ways so the content ofthe social contract had to change to respond to the newexpectations and demands of society.

The CED noted that business assumes a commercial role incontributing to the quality of life but this role is more than justproviding goods and services. Since business, as an institution, existsto fulfil the needs of society in return for profits, its continuedacceptability will be a direct result of how effectively it responds tothe changing expectations of the public.

The CED proposed a simple, but profound, way of visualising thisreality


11/53


CORPORATE RESPONSIVENESS

The recognition that CSR could, and indeed should, mean more thanjust philanthropy began to emerge in the early 1970s. It was aroundthis time that far-sighted leaders in the USA helped create socialagencies such as The Environmental Protection Agency and the EqualOpportunities Commission in response to a changing social climate.

The CED (referred to above), made up of down-to-earth businessleaders and educators, began to exert considerable influence onpoliticans and legislators to get them to respond to rapidly growingsocial pressures.

This led to the spread of a doctrine wherein social sensitivity and

social responsiveness increasingly became part and parcel ofregular business decision-making, expected of managers at all levelsof a business enterprise.

The recognition grew that for business to prosper in the long run, itwas necessary to be sincerely concerned about addressing the ills ofsociety in general. This new attitude of enlightened self-interestbegan to replace the untrammelled self-interest view that hadcharacterised corporate behaviour till then.

This enlarged view of CSR was embraced initially by leading businessorganisations, while the majority remained content to stick to older

outdated concepts. The increasing pace of social change and thepressures these began to impose upon business, led to the rapidadoption of these advanced CSR concepts, which in turn provokedeven more rapid theoretical development.

CORPORATE SOCIAL PERFORMANCE

The notion that business corporations are accountable to society fortheir behaviour and actions, in much the same way as individualsare, underlined the need for clarity on what exactly society oughtand ought not to expect from business.

Archie B Carroll suggested in 1979, that society expected business toconduct commercial activities and make a reasonable profit, thatprofit wasnt a dirty word at all; but society also expected business tocomply with the law and behave ethically. Further, society expectedbusinesses to carry out discretionary philanthropic work of analtruistic nature to assist those who were less fortunate, to whateverextent they felt able, and considered it fair that the corporationshould derive intangible, reputational benefits from suchdiscretionary activity.


12/53


Carroll visualised the different domains of business responsibility inthe shape of a pyramid as shown below

Every business corporation therefore owed society a periodic reporton each of these four domains, explaining in detail how it had chosento interpret and define each domain, what goals it had set out tomeet, and how well it had fulfilled each one. This was, in essence, aSocial Performance Report.

SUSTAINABLE DEVELOPMENT

As modern concepts of CSR began to take hold and spreadthroughout the world, a new and unexpected global challengeemerged - global climate change.

While environmentalists and ecologists had long been raising their

voices against the rampant plunder of natural resources to fuel aninsatiable appetite for consumption all in the name of economicgrowth nobody had taken them seriously.

It was only when this kind of unrestrained economic behaviour wasscientifically linked to measurable changes in the earths climaticpatterns in an indisputable manner that the world came to acceptthat there may well be some absolute limits to the ability of the earthto cope with the effects of Mans greed.

The realisation began to dawn that the unconscious, unrestrained,headlong race for more and more consumption was unsustainable that the earths resources and capacities were indeed limited, aswere the components of a zero-sum game.


13/53


Studies have shown that the depletion of fish stocks in the oceans bya few powerful fishing nations could one day permanently cripple the

ability of the seas to provide any fish at all for anyone again. Thisnew understanding of the workings of nature was then extended toapply to almost every natural resource.

Furthermore, the distorted and unequal patterns of consumption andquality of life that were visible globally across countries, wererepeated within each country (albeit at a different scale), betweencities and villages, and even within cities. This seemed to indicatethat disparity was the effect of a universal pattern of behaviour.

A universal behaviour pattern of irresponsible extraction andconsumption, leading to growing disparities in wealth and quality oflife. Followed inexorably by escalating social and political tensions.

There is now widespread recognition that if civilised society is to besustainable indefinitely, universal behaviour has to change, fromirresponsible (ie unconcerned about consequences), to responsible(ie concerned about consequences).

At a global level the recognition of this challenge has not yet led toany meaningful collective global action. It still appears to be everynation for itself and the devil take the hind-most. However, therapidly growing Green movement around the world is meeting more

success at the micro level through more and more individuals andbusinesses of all sizes taking up the challenge of sustainability. Thisis the need of the hour.

Sustainable Development is defined as working to fulfil the needs ofpresent-day society in such a way so as not to compromise theability of future generations to fulfil theirs.

The challenge of Sustainable Development (at a global level as wellas at a local level) lies at the heart of the content of todays CSRthinking. Corporate Philanthropy, which typically is cosmetic andsuperficial, has a short-term impact and is episodic in nature, is no

longer enough. To address the broad challenge of Sustainable Development,

businesses must replace episodic philanthropy by sustainedinterventions that result in long-term and sustainable change andimprovement both socially and environmentally.


14/53


TRIPLE BOTTOM LINE

The ethically driven discourse on the present-day content of CSR,leads inevitably to the issue of striking the most appropriate balancebetween the commercial impact that a business makes for itsshareholders and the total impact it has on all its stakeholders.

Put starkly, a business has to balance its drive for profits andcommercial success with ensuring that it does no harm to theenvironment and benefits the wider stakeholder community,including future generations.

Stakeholders are all those who are affected in one way or another bythe actions of the firm including customers, employees, suppliers,

partners, shareholders, governments, business peers and the publicat large. Achieving the right balance is indeed a challenge.

The term Triple Bottom Line was coined by John Elkington, thefather of the concept, in 1998, in his famous book Cannibals withForks The Triple Bottom Line of 21st Century Business.

It presents a modern approach to addressing this challenge.According to Triple Bottom Line practice, the true economic cost ofany product or service must include the costs of social capital andenvironmental capital used up while producing and delivering it, aswell as consuming it and disposing of it.

The popular Triple Bottom Line slogan First Planet, then People,then Profits may be visualised as below


15/53


Commercial activity invariably impacts people, communities and theenvironment. Irresponsible commercial activity driven solely by

concern for short-term profits can cause long-lasting, evenirrecoverable damage to communities and the natural environment.Witness the forcible displacement of tribal populations to exploit theriches above and below their territories.

Instead of placing profit at the centre of the diagram above, it isargued that planet should be the primary concern at the core,people next and finally profit. It is also necessary to include futurestakeholders (who have no voice in the present) in the mix.

Instead of waiting till a business is profitable before commencingsocially and environmentally responsible behaviour, there is a strongcase to do so from the very beginning. This reduces the possibility ofincorrect and unsustainable models being adopted, which are thendifficult, if not impossible, to change later.

Techniques for measuring the cost of social and environment capitalthat are applied to production and delivery of a commercial productor service have been developed during the last decade5. If these areapplied to any given business it is invariably found that while thecommercial bottom line looks excellent, the social and environmentalbottom lines will be in the red. The extent of red might evencompletely overwhelm the black of the commercial bottom line!

The discovery that a business is in the red overall on a triplebottom line basis triggers an enormous corporation-wide effort tocorrect this. All manner of strategies and approaches will beimplemented, new research and development will be carried out, andthe overall red will gradually be turned into an overall black.

The social and environmental debit column may not be possible toeliminate altogether, so the most cost-effective methods of creatingand sustaining a balancing credit column will be implemented. Thisnew focus points the corporations discretionary philanthropic activity

towards more meaningful interventions. Once a business has successfully learned how to manage its triple

bottom line to be strongly in the black over a period of time, it canbe sure its policies, practices and business activities are sustainableand responsible.

Implementing the Triple Bottom Line is a journey, but it is anassured way of creating a new responsible consciousness which willpervade the organisation. Socially and environmentally responsibledecisions will start to be taken at every level of the business.Responsible business behaviour will thus lie at the centre of business

strategy.


16/53


Over one thousand companies around the world now use some formof triple bottom line accounting, in line with GRI (Global Reporting

Initiative) guidelinesreporting on economic, environmental, andsocial activities and outcomes. Among these are 3M, AT&T, GeneralMotors, Ford, Shell, McDonalds, Dupont, Dow Chemical, Nike,Canon, Electrolux, Ericsson, France Telecom, and several othersmaller companies as well.

In India, ITC and the Tata Group stand out as Indias major privatesector triple bottom line companies. In the public sector variousvariants of triple (and double) bottom line accounting practices withrelated CSR activities have been adopted by ONGC, NTPC, SAIL,IOCL, BPCL and HPCL, among others.

CORPORATE CITIZENSHIP

Nearly twenty-five years ago, Peter French stated in his influentialessay Corporate Moral Agency, that corporations, like individuals,are moral agents at large in society, and should therefore be treatedon par with individuals and held accountable for their morality.

He based his belief on three premises that Corporations exhibitRationality, Intentionality and the Ability to Learn and Change.

While this view has been challenged repeatedly on various grounds,

it does serve a practical purpose in the discourse on CSR. Ifcorporations are indeed moral agents like individual citizens, surelythey must operate according to an explicit moral compass.

Typical manifestations of CSR occur through philanthropic programs,volunteer activities, in-kind giving, community relations andcapacity-building. In contrast, the dominant concern of corporatecitizenship is the way a company operates; that is, its fundamentalbusiness model, and the economic, societal, and environment-relatedimpacts that derive from the way the company does business.

Although some definitions of corporate citizenship focus more

narrowly on activities of companies that contribute to the socialgood, those definitions related to the overall corporate businessmodel are gaining acceptance.

The reach, scope, and size of many large companies have createdsignificant pressures from different groups in society for higherstandards of corporate citizenship and greater attention to the ethicalvalues that underpin it.

These pressures are highlighted by the fact that, by 2002, 51 of theworlds largest economies were said not to be countries butcompanies. In part, it is this spectacular size and attendant powerthat have generated much of the attention to corporate citizenship.


17/53


These are fueled further by concerns about the social impact ofglobalization - eg outsourcing of key functions to developing nations

to reduce costs; polluting activities being moved to countries withweaker environmental oversight, ethical failures and accountingscandals; corporate-government corruption; undue corporateinfluence on elections and on governments, communities, and wholesocieties.

Corporate Citizenship is an advanced concept which is typically pro-actively self-determined and self-applied, without any external legal,ethical or moral framework which demands compliance. It sets thephilosophical base for the sense of responsibility of the corporationand provides the internal moral compass that guides its strategic

agenda (including CSR).

5. CSR - Impact on Business Performance :

CSR AS AN UNAVOIDABLE BURDEN

A commonly held view is that CSR is a painful, but unavoidable costof doing business. Modern business corporations face an increasinglycompetitive and globalised environment where business activitiesand perceptions are placed under escalating scrutiny. The businesslives in a web of social relationships with the rest of society

including customers, employees, suppliers, government, media andthe public at large. It is very important to do the minimum necessaryto maintain harmony in these relationships.

A view held by many business leaders is that when a businessdelivers profitable performance, exhibits transparency and integrityin its commercial operations, and also demonstrates some socialconscience, it should be well thought of and therefore sought after.

This minimalist assessment invariably leads to CSR being given lipservice at the Board level. The responsibility for CSR is relegated to alower level, often as part of the Human Resources or BrandManagement function or outsourced to a company Foundationwhich valiantly struggles to command top management time andattention. High visibility activities with high potential for brandpromotion and heart-tugging publicity are focused upon.

CSR AS A SOURCE OF COMPETITIVE EDGE

However, today new expectations are emerging. Businesses are nowexpected to take the lead in safeguarding the environment and inpromoting and supporting social engineering with the goal of making

life better for everyone, not just those who are well off.


18/53


Socially relevant and meaningful CSR activities can providedifferentiation that generates competitive advantage in a number of

ways for instance ina) adding an intangible plus to customer choices

b) attracting and retaining desirable employees

c) attracting and securing investment capital

d) attracting and retaining desirable partners/suppliers

What is less clear is exactly how this competitive advantage actuallyaccrues. A generally held view is that it is generated merely by theastute management of public perceptions through appropriatepublicity about the businesss CSR activities. While this was probably

true some years ago, the situation today appears to be changing. Studies of the competitive impact of CSR programmes suggest a

particularly useful distinction between different CSR approaches6.CSR investments that build long-term interactions with stakeholdersthat are programmatic, involving capacity-building, rather thanepisodic or transactional, result in the gradual creation of uniquecollective resources and capabilities that are difficult for competingfirms to emulate. This provides for more sustainable differentiation inthe marketplace and results in a more durable competitiveadvantage.

CSR AS A KEY TO DELIVERING EXCEPTIONAL BUSINESS PERFORMANCE

CSR appears to be coming of age. A UK paper called Achieving HighPerformance CSR at the Heart of Business7, seeks to demonstratethat when CSR is fully integrated into top management thinking at astrategic level, it results in exceptional performance through highlycommitted people. And conversely, businesses that consider theirworkforce as a cost to minimise, or just another asset to sweat, aremore likely to be irresponsible employers and under-performers.

The paper describes three stages that companies typically gothrough in their adoption of CSR


19/53


The first stage of CSR is adopted when it is the fashionable thing todo. Companies start their own Foundations and engage in high

profile philanthropy. Annual reports carry glossy photographs ofcharitable events and everyone is self-congratulatory about theeffort. There is a definite positive spinoff in terms of employeemorale but this is patchy and hard to sustain.

As the understanding of CSR grows, business leaders move to thestage of Conviction. In this stage some of the leadership team have agut feeling about the benefits of CSR, although they are unable tomuster any hard evidence to support it. They support CSR initiativesdespite the fact that the prevailing incentives and performanceevaluation climate militates against it.

Finally, with the combined impact of growing internal evidence of thepositive benefits as well as the growing pressure of society as awhole, the organisation moves on to the stage of Commitment.Reponsibility for CSR is assumed by the Board and advanced thinkingand attitudes towards social responsibility begin to pemeate theorganisation.

The key catalyst of this change is a growing understanding of exactlywhy and how CSR delivers real business benefits. There is nowcompelling evidence that CSR delivers

1. An enhanced employer brand2. Superior performance by committed employees

3. Positive customer attitudes and preferences

Most of the supporting research has been done in the West.However, on the basis that human beings are esentially the sameeverywhere, the conclusions should apply to India as well.

ENHANCING THE EMPLOYER BRAND

A study done in the UK in 2004, of 30 British corporations, showedthat the perception of employees of the degree of social

responsibility shown by their employer was strongly correlated withperceptions that the employer was a good company to work for.


20/53


The conclusion is inescapable that those companies that are seen todemonstrate serious social responsibility through their CSR activities

enjoy a significant advantage in attracting and retaining desirableemployees. CSR is clearly good for the brand as an employer.

COMMITTED EMPLOYEES DELIVER SUPERIOR PERFORMANCE

From People to Profits, a study conducted by the Institute forEmployment Studies, UK7, in 1999, demonstrated a positivecorrelation between employee commitment, customer satisfactionand revenues. Its approach was based on a study conducted in theUSA at Sears which showed that retaining existing customers was farmore cost-effective than acquiring new ones, and that the serviceclimate created by committed employees was a central driver offinancial performance.

The British research study focused on one of the UKs largest retailcompanies, based on a selection of almost 100 of its stores. It used adatabase collected over two years containing the attitudes of over65,000 employees and 25,000 customers.

The results of the study were presented in the form of a quantifiedconsequence diagram shown below

Starting at the left this indicates that the behaviour of linemanagement has an 82% direct consequence upon company culture(whether positive or negative), which in turn has a 75% directimpact upon employee commitment.

Increased employee commitment tends to lead to decreasedabsenteeism (inverse consequence) which then positively impactscustomer satisfaction; increased employee commitment also leads tobetter customer satisfaction directly and, through a positive impactupon customer buying intentions, helps boost sales revenues.

CSRCSR


21/53


These findings have been corroborated by several other studies andare now generally well accepted. What remains to be demonstrated

is the explicit connection with CSR. This may be deduced by linkingthis broader finding to studies specifically looking at CSR.

A US study of the effect of CSR on consumer purchase intentions9

concluded that there was a positive correlation, through a set ofgenerally held salient beliefs about socially responsible behaviour andthe perceived reputation of the business. This is shown superimposedin red on the consequence diagram above.

The earlier referenced British study of employee perceptions of theiremployer suggests that CSR positively impacts company culture. Thisis therefore also shown superimposed upon the consequencediagram above.

There are numerous studies which conclude that there is a positivecorrelation of CSR with business performance, but there are alsoseveral which suggest that there might be a negative correlation ornone at all9. This is clearly an area where further research isrequired.

Exploring the relationship of HR Practices with business performance,and determining whether CSR plays a supportive role, is beyond thescope of this research exercise. The broad consequence diagram

above may provide some insight as to where these supportiveimpacts might reasonably be expected.

6. CSR Governance considerations :

GOVERNANCE CHOICES REFLECT SHAREHOLDER COMMITMENT

Governance is taken to mean the organisational arrangementsestablished for ultimate responsibility and accountability for abusiness subject, and the level at which goals are set and strategydeveloped, and where the ultimate oversight of implementation and

progress rests.

The greater the importance of a business subject to shareholders,the more likely that ultimate responsibility for it will lie at Boardlevel. Even within the Board it will command time and attention inproportion to the perceived impact it has on the ability of theoranisation to survive and thrive. Consequently, Quality, Culture andCSR will vie with Legal Threat, Sales Revenues, Profits, ConsumerComplaints and Cash Flow for Board attention.


22/53


Various kinds of governance choices are regularly made by businessowners and shareholders, for CSR. If these are related to the three

stages of evolution mentioned in the previous section, the followingbroad pattern is observed

STAGE OF DEVELOPMENT OF CSR TYPE OF GOVERNANCE ARRANGEMENT CHOSEN

Reactive A separate body, disconnected from the main Board,accountable for CSR direction setting and oversight

Conviction A separate body, disconnected from the main Board,accountable for CSR direction setting and oversight

Main Board accountable for selected aspects of CSR

Commitment Main Board accountable for all aspects of CSR

Along with the decision about where to place ultimate accountabilityfor CSR, the evolutionary stage also appears to determine the qualityand rigour of management attention devoted to the subject, themost advanced practices being adopted by businesses that have fullyembraced CSR as they reach the Commitment stage.

An impressive paper entitled CSR Governance Guidelines10

published by Strandberg Consulting, of Canada, spells out acomprehensive set of ideal requirements outlined below

ENHANCED BOARD ACCOUNTABILITY

The Board would have to incorporate additional accountabilities to protectand enhance long term shareholder (and stakeholder) interests in thecontext of a commitment to world class CSR -

a) Review and enhance the Company Vision and Missionb) Establish arrangements for Board oversight & accountabilityc) Identify new risks and make arrangements for risk managementd) Review and change Board composition to strengthen CSR expertisee) Decide how to improve external disclosure and take action

BASELINE ASSESSMENT TOOL

The Board would deploy an Assessment Tool (sample below) to ascertainthe starting situation and prepare a roadmap for implementation. The

same assessment tool can be used annually to determine extent ofprogress made.


23/53


The Board would design and deploy its own assessment tool to suit itsown requirements. The referred document suggests a possible format.

ROADMAP TOWARDS GOOD CSR GOVERNANCEBased upon the findings of the Baseline Assessment, the Board woulddesign a detailed roadmap to move the organisation towards thechosen structure for governance. This would have two broad phases

PHASE 1

a) Integrate CSR into Vision and Mission (for all entities)b) Mandate a Board Committee with CSR responsibilityc) Educate the Board and Committee on CSR Opportunities and Risksd) Ensure CSR is built into all business goals, strategies and risk

managemente) Include explicit CSR evaluation into every business decision

f) Review and upgrade CSR disclosures to stakeholders

PHASE II

Ensure effective management of policies, processes, tools andinformation systems to support CSR throughout the organisation

Incorporate CSR explicitly into the Code of Conduct/Ethics in allfunctions of the organisation

Design and put in place formal mechanisms for unfiltered stakeholderinput

Incorporate CSR values and expertise requirements into recruitment ofsenior personnel, especially directors and CEOs.

Ensure that the system of evaluation and reward for performance

incorporate CSR achievements explicitly for all employees Implement initiatives that demonstrate the will to walk the talk (eg

carbon footprint of the Board, sustainable travel and hospitalityarrangements of senior personnel etc)

Ensure continuous improvement of CSR governance practices byevaluating Board performance on CSR, and staying abreast of CSRdevelopments.

Establishing appropriate governance arrangements which accuratelyreflect the highest aspirations of the shareholders for CSR, lies at theheart of any authentic effort to deploy an advanced CSR concept.

Concern for details such as which area of engagement to enter, inwhich manner and to what extent, need to be addressed only after avery clear and irreversible set of decisions are taken by theshareholders about the place that CSR should occupy in theirbusiness in the long run, and the governance arrangements that willcorrectly reflect their values and their aspirations for the business.


24/53


7. CSR Approach to Goal Setting :

SOURCES OF CSR GOALS

CSR goals may arise from several sources, and rather like ideasduring a brainstorming session, they need to be permitted the spaceto emerge fully, before being evaluated systematically and finallyaccepted, parked or discarded.

By inviting ideas and suggestions for goals from a range ofstakeholders, including customers, employees, suppliers, partners,government, etc, several advantages accrue stakeholders becomeenrolled into the process of engaging with the CSR activities of theorganisation, strengthening the emotional bond; and the geographic

distribution of ideas provides clues as to what may be needed where,and by whom.

Intuitively, all stakeholders would agree that CSR must deliversustainable results. These results should flow from long termprogrammes which address real needs, and not imagined ones, orthose that are pet projects of various well-meaning individuals.

Real social and environmental goals may be found in theprogrammes of serious change-oriented initiatives of otherorganisations, such as the UNs Millenium Development Goals, theFive Year Plan goals that the government is working towards, or

those of NGOs which have built up credible and worthwhile fieldoperations. (These are readily available on the net)

Equally, the goals must bear some relationship to the level ofresources that are likely to be made available for the CSR effort andthe competencies that the business possesses. In this regard, it isadvisable to identify technical competencies not merely from thebusiness domains of the organisation, but also from its widerportfolio of managerial capabilities.

The work of mapping potential goals against a framework ofmotivations, competiencies and resources and making strategicselections needs to be carried out by a very senior team, closelysupervised by the Board and supported by representatives ofstakeholders.

Incorrect management of the goal setting process or undue hastewill result in unstable goals which will need to be changed, resultingin delays, expense, frustration and loss of credibility. It is thereforeimportant to establish a sound process for goal-setting with built-inarrangements for interaction with stakeholders and supported byprimary and secondary field research as may be needed.


25/53


MANAGING DIFFERENT TYPES OF GOALS

Depending upon the kind of CSR concept that the shareholders wishto deploy, different types of goals may need to be addressedsimultaneously. Whichever model or concept is eventually chosen itsgoals are likely to lie somewhere inside a three dimensional grid, firstproposed by Archie B Carroll11 in 1979, as shown below

The Response Philosophy axis indicates four possible types ofresponse to stakeholder or regulatory scrutiny that can be chosen a reactive approach which is activated only when an issue is raisedin the public arena, a defensive response to any allegations of

irresponsibility or impropriety, a compliant or accommodativestance when resistance is felt to be futile and a leading approachwhich is a pro-actively choice to act responsibly, well beyondnormally expected limits, without any external pressure at all.

The Responsibility Domains, namely economic which coversfinancial, operations and business risk related issues, legal whichcovers the whole statutory framework within which the business (andindeed, society as a whole) operates, ethical which covers issues ofsocietal concern not yet addressed by law and finally, discretionary,which covers everything else, including philanthropic giving,

capacity-building, employee volunteering, programmatic support tothird parties and many other things.


26/53


The Issue Arenas axis identifies examples suggested by Caroll oflarge yet distinct areas within which specific issues may be identified

and selected as being relevant and important to the business. Themarketplace arena would include issues related to customers,products and services, supply chain etc. The occupational health &safety arena would include all aspects of employee conditions at theworkplace, perhaps also extending up and down the supply chain.The human rights arena would include things like the right toeducation, employment, basic services, nutrition, clean environment,water and health, equal opportunity/diversity, child labour and so on.The environment arena would include issues such as responsiblemanagement of internal waste and effluent, mitigation or offsetting

of negative efffects on the natural environment of business activitiesup and down the supply chain etc. Finally, shareholders arena wouldinclude issues dear to the hearts of shareholders, not necessarilylimited to profits and growth alone.

Once the high level, long term goals are identified and committed toby the Board, the task of developing strategies to deliver them canthen be addressed by the management team.


27/53


8. CSR Case Studies (Foreign)

1. TOYOTA MOTOR CORPORATION, Japan

Toyota Motor Corporation has integrated CSR into its corporatestrategy at the highest level. It does not have a separate CSR

Foundation. The Chairman, Akio Toyoda holds himself personallyaccountable for the programme. The over-arching mission issustainable development and good corporate citizenship.

Toyota has 50 large manufacturing locations around the worldsupported by a huge number of sales and service locations. It relieson local initiatives to give expression to its CSR goals and generallyaims at strengthening bonds with all stakeholders at the local level.

Toyota employs 326,000 people around the world and treats itsworkforce as a key stakeholder on par with all other stakeholders.


28/53


2. DAIICHI SANKYO, Japan

At Daiichi Sankyo, CSR is integrated into corporate strategy and ismanaged by the Board. (Full details are available athttp://www.daiichisankyo.com/csr/report/index.html)


29/53


3. IKEA, Sweden

IKEA does not use the term CSR anywhere. It focuses onSustainability and integrates this into every aspect of its businessand also carries out social welfare activities through the IKEAFoundation.

This is an example ofhow IKEA participatesin UNICEF initiatives


30/53


4. BOMBARDIER CORPORATION, Canada

The CSR initiativein Bombardier isBoard managed.

It contributes financially towards the altruistic philanthropic activitiesof the Bombardier Foundation and quite separately towardsstrengthening stakeholder relationships in the communities where itoperates and to major projects around the world in Education,Environment and Entrepreneurship (3 E strategy).


31/53


5. 3M, USA


32/53


6. CSR BEST PRACTICES - CHINA

While the following document is not a case study, it is a valuablesource of ideas and best practices as defined by the US-ChinaBusiness Council. It is reproduced here in full for reference.

The subsidiaries and local partners of US corporations in China areencouraged to adopt advanced concepts of CSR in their Chinaoperations by their US principals, and are helping propogate theseinto domestic businesses.

Best Practices: Corporate Social Responsibility in China

October 2006

What Is CSR in China?

Corporate social responsibility (CSR) in China is typically broken down into community outreach,environmental health and safety (EHS), and environmental protection. Education is also an importantfocus.

"Community Outreach" refers to the actions that companies take to improve the standard ofliving for those living in the communities in which they operate. Examples include rebuildinglocal schools, providing computer education classes to local schoolchildren, or hostinginformation sessions for farmers to help them maximize their crop yield.

"Environmental Health and Safety" refers to the efforts that companies make to ensuretheir employees work in a safe, comfortable, and properly regulated workplace. While thebackbone of EHS is ensuring that all company locations are in compliance with local labor lawsand regulations, many companies go far beyond this in setting their own, more stringentstandards, and rigorously extend these standards down to their suppliers and sub-contractors.

"Environmental Protection" activities include all efforts that companies take to ensure thattheir impact on the environment is minimal. Examples include using "clean energy," safelydisposing of waste material, and minimizing energy consumption.

Education Improving education--from the primary level through college--can be an excellent

way to give back to local communities. It can also be a good way for companies to improve theskills of current employees, expand the talent pool, and strengthen future recruiting efforts.

Many foreign companies are seeking to implement or expand corporate social responsibility (CSR)programs in China. The experiences of several leading multinational corporations (MNCs) with well-established and effective CSR programs there provide some important best practices.

Define clearly the goals for the program and how your company willmeasure success

Large MNCs often have company-wide CSR goals; programs designed to reach these goals in Chinamay differ from those in other countries. Regardless of the size of the company, however, its USheadquarters generally defines broad principles and goals for the company's CSR efforts, which ideallyare aligned with the overall business model and industry of the company. The US headquarters oflarge MNCs typically manage a foundation or fund that disburses CSR-designated money to suitableprojects around the globe.


33/53


Weave CSR into your corporate structure

Involve top executives One of the key characteristics of successful CSR programs is involvement ofthe company's top executives. These executives ensure that all employees embrace and embody thecompany's CSR-related principles and encourage employees and managers to participate in efforts togive back to the community. These executives also stress the importance of CSR in in-housecommunications.

Divide up responsibilities and create oversight committees In China, large companies withprograms in all of the typical categories of CSR in China often divide oversight up among variouscompany departments (see Box). For example, the corporate communications department mightoversee community outreach efforts while the legal department oversees environmental health andsafety (EHS) programs. If such efforts are divided among departments, the company should be sureto link them together. For these larger companies, the CEOs of China operations generally oversee allprograms and organize a "CSR Committee" of executives from all departments, such as operations,sales and marketing, human resources, and government relations, to meet regularly to coordinate

CSR-related efforts.

Smaller companies with limited resources and fewer programs might instead designate key managersto report directly to their China CEOs. In China, many companies find that the government relationsdirector is a good fit to oversee CSR programs because all three categories of CSR require significantinteraction with PRC government bodies to be successful in China.

Establish communication links The managers of the CSR committee (for larger firms) and theCSR manager (for smaller firms) should have direct and frequent communication with all thoseinvolved with CSR in the United States. The CSR committee or manager in China thus can ensurethat all CSR initiatives are aligned with the company's overall CSR vision and that the funds arebeing spent efficiently.

Appoint managers to oversee every project location In addition to an executive-level CSRcommittee or manager at the China headquarters, companies should designate a mid-levelposition at each China office or manufacturing plant. This employee can supervise the company'slocal CSR programs and report to the China CSR committee or manager. For instance, if acompany has operations in Shanghai, Beijing, and Chengdu, Sichuan, ideally it would havesomeone in charge of CSR at each location to ensure maximum accountability and communicationfrom US headquarters to local China operations, and vice versa.

Establish community outreach councils Companies also would do well to set up communityoutreach councils (COCs) at each location in China to help initiate, organize, and administer theCSR programs locally. COCs would be made up of executives and low- and mid-level employees.Participation in the COCs should be voluntary. Most companies find that local employees areenthusiastic about participating in CSR programs because it is their community that the programsseek to improve.

Streamline communications Once a CSR committee or manager is designated in China andCOCs are in place, all CSR-related information, ideas, and news can be streamlined throughoutthe corporate structure. Corporate communications, public relations, and external affairsmanagers should be informed of all CSR projects in China. One of the key tasks of thecommunications executives should be to connect company values and goals, expressed by CSRefforts, to the brand image of the company through marketing, events, and media. This willensure that the goals and results of all CSR projects are disseminated throughout the companyand, of course, outside the company to the media, nongovernmental organizations (NGOs), andgovernments.

(contd)


34/53


Select projects carefully

Companies with successful programs generally ask the following questions when selecting a project:

Is the prospective CSR project in China consistent with the CSR framework and principlesdeveloped by the headquarters in the United States?

Has research been done on the geographic area surrounding the company's operation in China toidentify the local communities' greatest needs? For example, a company might not want torebuild a school when the local community is in greater need of a new hospital. In cases where acompany's facilities are staffed mainly by migrant workers, who are generally separated fromlocal communities, it is important for companies to coordinate with local governments tounderstand the needs of both the workers and the surrounding community.

Is the prospective CSR program relevant to the goods and services that the company offers? Forexample, a financial services company might gain most from creating a microlending initiative or

a financial education program that teaches local citizens how to manage their money. And anagricultural firm could help local farms increase their crop yields through bio-education programs.

Get employees involved

The most successful CSR programs are those in which there is high employee participation. Companiescan ensure a high level of employee participation in CSR-related activities in a number of ways:

Design local CSR initiatives around the interests and concerns of local employeesThese employees are more likely to have grown up in the area surrounding a company's location,and therefore are more likely to have a greater interest in seeing CSR projects carried out there.They are also likely to have a better grasp of local needs and can better tailor companies' CSR

programs to address the most pressing issues. Establish an employee-run COC in which CSR initiatives are discussed, planned, and

monitored Positions in the COC can be voluntary, mandatory, rotating, or elected, dependingon a company's preference.

Set up listserv or other communication links for CSR managers from all company

locations Improving communication links enables staff to better share experiences, bestpractices, and advice relating to their respective CSR programs.

Consider hosting a yearly, country-wide awards banquet or recognition event to rewardemployees for their CSR-related work This not only boosts morale and motivation toparticipate but also allows employees from different locations to meet face-to-face. These eventsalso allow employees to see the aggregate impact that CSR has on communities throughoutChina. Annual awards can be given to the best CSR project, the location with the top CSR

program, and the employee who best embodies the company's CSR objectives.

Select partners carefully

Many foreign company operations in China lack the infrastructure and staff to undertake CSR projectsalone. As a result, many companies work with aid organizations--whether international NGOs ordomestic Chinese organizations--to help implement their CSR initiatives.

International NGOs

International NGOs that operate in China generally have a "host" government body that oversees theirwork in country. This does not prevent such organizations from doing excellent work, but it can poseunique transparency and management challenges depending on the nature of the relationship.

Because of the difficulty of acquiring official backing, many smaller international NGOs have registeredin China as profit-making businesses.


35/53


International NGOs are, in general, excellent resources, able to help implement a company's CSR-related objectives in target communities and assist in training company employees in CSR-relatedtasks. International NGOs--particularly those with lengthy track records in China and links to the PRC

government--are typically accountable, trustworthy, transparent, and extremely diligent.

The China Development Brief has an excellent database of all international NGOs operating in China.

Domestic NGOsDomestic aid organizations in China are quasi-governmental organizations or government-ownedNGOs (sometimes referred to as GONGOs) because most are organized and directly supervised by aPRC government organ and because China lacks a legal framework for the estabilishment ofnongovernmental and nonprofit entities. (The PRC Ministry of Civil Affairs' Bureau of NGOs has beenslow to establish a policy and regulatory framework for all NGO activity in China. China has beendrafting a "Civil Associations Law" for a number of years, but this law is unlikely to be completed overthe next five years because it does not appear on the National People's Congress Legislative Calendarfor the 11th Five-Year Plan [FYP, 2006-10]).

Companies should keep in mind that, traditionally, the PRC government has organized CSR in China toconsist primarily of charitable or philanthropic projects. For example, if a natural disaster hits or aschool needs textbooks, Chinese NGOs and government-linked charitable organizations will requestdonations from MNCs. Such government-sponsored efforts are worthwhile but are no substitute forCSR initiatives that require long-term commitments, employee involvement, and other responsibilitiesbeyond charitable donations. More recently, the PRC Ministry of Commerce has been authorized toexpand government-sponsored CSR programs.

Domestic NGOs with which companies form successful partnerships tend to be selected usingtechniques similar to those companies use to select commercial suppliers. The China CSR programs oflarge MNCs are measured according to Western standards and thus require measurable results andtransparent accounting. Because Chinese NGOs are not always accustomed to these standards,

foreign company executives and employees at the most successful programs are deeply involved indecision- making and supervision. One foreign company executive involved in her company's CSRprograms in China noted that organizations that try to limit companies' contributions to mere cashdonations are immediately crossed off her list of potential partners.

Companies should ask any potential Chinese NGO partner the following questions:

What does the NGO want from the partnership with the company? (an NGO that seeks onlymoney or a donation is unlikely to be a credible partner.)

Do the NGO's goals and values match those of the company?

What other major companies or MNCs have partnered with the NGO?

What is the supervising government body of the NGO?

How does the NGO manage media relations? What kind of press coverage have past projectsreceived?

Can the NGO present credible results of its previous projects? Can company executives visitproject sites and speak with local beneficiaries?

Does the NGO have audited accounts?

Does the NGO have partnerships with well-known or well-regarded international NGOs?

The China Association for NGO Cooperation (CANGO, http://www.cango.org) serves as an umbrellaorganization that aims to link the top NGOs in China with foreign counterparts and donors. CANGO isan excellent resource for finding CSR partners and staying up to date on all CSR-related news inChina.


36/53


(contd)

International and/or domestic NGOs

In addition to the above considerations, MNCs should take other steps to evaluate potential NGOpartners, whether international or domestic:

Even if an aid organization is well known and respected, MNCs should speak with a potentialpartner organization's leaders and invite them to the company's facilities and other locationswhere the potential project will be carried out.

MNCs should make sure that executives from the company articulate exactly what they expectfrom the aid organization and what the aid organization can expect as a contribution in return.

Consider partnering with educational institutions and professors

Many companies focus their CSR initiatives on improving education in China. Aside from scholarshipprograms, companies can structure CSR projects as competitions between universities, requiringstudents to work in teams and submit proposals on projects to benefit their communities. Manycompanies work with vocational and technical schools to improve their curriculum and ensure thatgraduates have the practical skills necessary for modern business operations.

Professors who specialize in CSR-related public policy or social issues are also an excellent resourcefor companies that partner with universities. Many of these professors are in good positions to helpcompanies select local projects and partners. In addition, professors at major universities in Chinaoften play important roles in shaping government policy in their particular fields of expertise. In mostcases, foreign companies' long-term CSR goals should align with the government's strategic vision onsocial welfare.

Relate CSR efforts to government development goals

It is important that foreign companies' CSR efforts relate to China's social development goals, whichare outlined in official government documents such as the national 11th FYP and provincial- andcounty-level statements. Several of the issues that China hopes to address in the 11th FYP includeimproving access to and quality of social services, particularly health and education, fosteringinnovation, and improving environmental conditions in China. These areas are quite broad and manyCSR activities will likely fall under one category or another.

Best practices include the following:

As previously mentioned, review local development plans to identify overlap among a company's

business goals in the China market, its global CSR activities, and local development priorities; Communicate to PRC government officials how their CSR initiatives will specifically benefit China

and the Chinese people;

Consider aligning the language of CSR-related company communications with government goalsand visions;

At the provincial level, highlight the positive impact that CSR initiatives have on workingconditions, employee morale, the surrounding community, and the environment;

Invite government officials to all CSR-related events and award banquets to ensure that theofficials see the positive impact the company is having on the community; and

Consider holding quarterly meetings between high-level company managers and localgovernment officials, in which CSR is an important discussion topic.


37/53


Craft media outreach plans

CSR programs in China generally are part of a company's core business strategy. It is important forcompanies to plan ahead when it comes to presenting CSR efforts to the media.

Have CSR departments include a media plan for each CSR project that details how the project willbe reported and communicated to all stakeholders, including the community at large, employees,corporate headquarters, and various levels of government. Implementing this plan throughoutthe project ensures transparency and maximizes its impact.

Customize media reports for industry-specific media outlets so as to relate CSR efforts to topicsthat readers are most concerned about.

Link CSR initiatives to marketing campaigns to enhance a company's overall brand image.Marketing and corporate communications departments can work closely with CSR project leadersto maximize positive exposure.

Set clear rules regarding usage of the company's logo, trademarks, brands, and company nameby partner NGOs or other partners on CSR projects. Also consider whether it is important toensure that internal communications about CSR projects remain internal and are not leaked tothe press.

Conclusion

As stakeholders--both in China and around the world--continue to place an increasing emphasis onresponsible corporate citizenship, EHS, and the environment, companies in China are likely tomaintain and expand their CSR efforts for the foreseeable future. Indeed, companies are already goingbeyond legal compliance and occasional charitable giving to engage with their surroundingcommunities to develop programs that help improve educational opportunities, the local environment,

and working conditions, as well as other areas that need assistance.

Copyright 1996-2012 by the US-China Business Council. All rights reserved.


38/53


9. CSR Case Studies (India) :

1. BHARAT PETROLEUM This case is a good example of a successful transformation of a

single village in Orissa through a sustained, long-term CSRintervention by BPCL through a local NGO. It is presented in full.

Case Study:Integrated Community Development at village Ramthenga, Jajpur Dist, Orissa

Thematic Areas: Health, Education, Infrastructure, Livelihood & IncomeGeneration, Vocational Guidance and Environment Conservation

Objectives of the Project To help the village become socially conscious To improve the general health of the villagers To improve community participation To help them become self-reliant.

This village is dominated by the tribal population Santhal Tribe. Their socio-economic statuswas highly impoverished. Most of the villagers worked in the nearby mines. Due to prolongedexposure to a toxic working environment, they had developed severe respiratory/skininfections.The children did not attend any school and the nutrition status of the children was very poor.There was also a severe problem of alcohol abuse amongst the men. The women weresuppressed and worked in the farm as well as in the mines. Lack of availability of water wasalso one of the main concerns of the villagers. There were bore wells but they were non-functional. Major interventions were required in the areas of:

Health Education Awareness about health/ sanitation/ hazards of working in the mines Precautions to prevent respiratory illness Making water available

Having understood the needs of the community, BPCL constituted a team to implement thework in the community. The main participants in the project were:

Villagers NGO partner Research Analysis Consultants BPCL LPG Team based in Bhuvaneshwar and Khurda headed by TM Khurda BPCL HR Team at Kolkata headed by HR Chief and CSR co-ordinator BPCL Corporate CSR Team headed by GM (Admin)

Strategy & ExecutionA plethora of activities were undertaken in the village. How- ever, depending upon the need atthat particular time, the activities were phased out. The activity matrix developed was verystrategically planned and executed.

Phase 1A visit was made to the village by BPCL Kurda Team. There was lot of inhibition among thevillagers to discuss and participate. However with repeated visits the villagers began to openup. Since there was a need to execute the project very profes- sionally, the BPCL Khurda Teamidentified an NGO with its main office in Bhuvaneshwar. The NGO had extensive experi- enceof having worked in the mentioned areas and implemented community developmentprojects. The NGO did a needs assessment of the village with complete village participation.Assistance for providing health services and primary education emerged as one of the mainneeds. Another conclusion that emerged from the needs assessment was the need to form SelfHelp Groups (SHGs). The general participation level among the villagers was very high.


39/53


Phase 2BPCL supported the project through NGO RAC by:Providing the services of a doctor (from neighboring area)

The Homeopathic Doctor would check the patients for free thrice in a week. Since themedicines were sweet there was less resistance among the villagers and children to eat thesame. Moreover for the problems that they were more suc- cumbing to, like respiratoryillness, skin infections, homeopathic medicines were much more effective.Initiating a Balwadi (pre-primary) for children within the village

This put the children into the habit of attending school especially when their parents wouldgo to work in the mine. The teacher for the village was identified from within the village. Shewas subsequently trained about innovative methods in teaching and needs of pre primarychildren. She was also the main force in convincing the parents to put the children in mainschool after their pre primary.

Phase 3Once the basic trust level amongst the villagers was attained, then:Awareness was created about precautions for working in the mines

Awareness was created amongst the villagers about the precautions they need to take whileworking in the mines near by. The modes of communication were through street plays, skitsduring village festivals, drawing competitions for children. The homeopathic doctor played a vitalrole in creating this awareness. A lot of awareness was also created about alcohol abuse.Deepening of village pond and encouraged fisheryThere was a pond in the village, which had to be cleaned. With support from RAC the villagersengaged in cleaning the pond and also dredging the same. With the help of Central Institute ofFresh Acqua Culture, Bhuvaneshwar, the villagers were trained of fishery management. It wasa community pond, and the fishes caught were shared by the villagers This activity was morefavored by villagers during monsoon, when there is ample of water in pond.

Need for formation of Self Help Groups (SHGs)The fishery management activity established the need for the formation of Self Help Groups

a mutual support group which would be trained in activities that can generate income.Meetings were held in the village for formation of Self Help Groups.Repair and maintenance of Bore wellsAvailability of water was an area of concern for the villagers. There were bore wells in thevillage, but they were non-functional. With the help of volunteers from the village, the borewells were repaired and the villagers were also trained to maintain the same. Now there isample water to sustain throughout the year.

Phase 4

Formation of 1st SHG in the villageThe group comprised mainly of women. They had mutually agreed to learn stitching andappliqu work (a form of embroi- dery famous in Easter India). BPCL supported by way of pro-viding teacher from the nearby village and also 4 sewing machines. Initially the women used to

learn stitching work etc in the spare time they got after working in the mines. Subsequentlywhen the first batch finished the course, simultaneously a course was conducted on marketing thestitched products. A group of women were trained to market the stitched products in the local haats(local bazaar). The course included:

Communication skills Perceiving the market requirements Quality of stitched products Pricing the clothes stitched Co-ordination within SHG Roles and responsibilities

The group slowly began to generate income through stitching and that made a breakthroughin the village. The women from the SHG were able to, though in very small way, add to the

family income which came mainly from mining and agriculture. More and more women beganto learn stitching and discontinued their mining jobs.


40/53


Promoting Mushroom Cultivation

The NGO assisted the villagers through the SHG to initiate mushroom cultivation. The SHGwould purchase mushroom spawn at INR 17 a packet from Orissa Institute of Agricultureand Technology Bhuvaneshwar. Each packet of spawn would generate approximately 1.5 kgof mushroom. This mushroom when sold generates INR 80 from the INR 17 per packet.The villagers who had very poor health, especially the children were encouraged to includemushroom in their diet and the extra ones were sold in the local market. This activity alsogenerated income for the SHG.

Phase 5There were 2 well-functioning SHGs in the village. The success of the womens group SHGwas instrumental in the formation of the 2nd group, which was a mixed group of men andwomen. The good work done by SHGs in this village was duly recognised by the BlockDevelopment Officer (BDO), who in turn has rewarded them with the BEST SHG AWARD inthe District. As an incentive they were given a sum of Rs 2 lakhs. With this, the SHG hasbought a stone-cutting machine, which is in turn earning the members INR 15,000 to 20,000

per month. Where working in the mines the villagers use to earn a meager amount of INR 50per day, and were employed hardly for 10 to 12 days in a month, now the members of theSHG earn INR 2000 per month, through the various activities of the SHG.

Phase 6A new group of 20 villagers has been formed in the village, wherein they have been enrolledin an income generation programme Agro Based Programme. They have been given 2000banana saplings. The saplings are being grown on 2 hectares of common land. The newshoots of the banana plants would be given to another 20 families free of cost. A marketlinkage for the same has already been created for the fruit when it will be harvested. Throughthis activity the results are that each house hold is getting an additional income of INR 7,000to 8,000 in the first year. Another group of 20 villagers are being supported in poultry. In thefirst year itself all the group members will benefit. However from the second year offspring of

the nurtured animals will be freely distributed to other needy villagers and the process willcontinue.

Phase 7Already necessary approvals have been obtained to support another set of 20 and 20 familiesby way of papaya cultivation under agro-based initiatives and goatry under non-farm sector.This way the entire village will have been roped into diverse activities and each family is canearn extra income for the sustenance of the entire family. The education of pre-primarystudents, which was initiated and supported by BPCL, has been withdrawn. The pre-primaryeducation has now been taken over under central Government ICDS scheme. This way theCorporations funds were more channelised towards health support, formation of SHGs anddeveloping income generation programmes.

(contd)


41/53


Evaluation of Success/ResultsThe impact of the whole programme has been overwhelming. In another two years, BPCLwould be in a position to withdraw all the financial support being extended to this village, andextend its support to other deserving villages.

Where the entire village was mainly into mining work, now there are hardly a coupleof families still working in the mines

There are two registered SHGs functioning very well with good co-ordination BPCL initiated pre-primary school and mid-day meal scheme, which has now been

withdrawn and through the NGO made village, children receive the same benefit formcentral Governments ICDS scheme

The State health workers are involved in creating awareness about health andhygiene issues in the village

All the bore wells of the village are functional and there is no scarcity of water evenduring summers

The pond, which was a breeding ground for mosquitoes, is now being utilised forfishery

The SHG group members are earning a steady income of INR 2000 per month The members of the banana plantations and poultry are earning an additional income

of INR 7,000 to 8,000 per annum The work done by SHGs in this village has been recognised by the Block Development

Officer (BDO), who in turn has rewarded them with the BEST SHG AWARD in theDistrict.

The entire project has created enormous goodwill for the company in the heartsof villagers in and around Ramthenga. More so the success of this project hasgiven us the confidence about project replication in other regions.


42/53


2. ITC

ITC is one of Indias leading CSR practitioners. To ITC CSR issustainability in all its operations, throughout its supply chain andacross all its stakeholders.

ITC is one of a handful of Indian corporations that has adopted theTriple Bottom Line approach for appraising and reporting itsperformance on economic, social and environmental fronts.

ITCs sustainability philosophy is fully integrated at the level ofcorporate strategy and is led by its Chairman & Board of Directors.


43/53


ITC contd


44/53


3. LARSEN & TOUBRO

CSR in L & T is summed by one word Sustainability. In additionCSR provides a wide range of support to initiatives deployed intolocal communities to help achieve goals under the UN GlobalCompact.

The company was the first in Asia to submit a comprehensiveSustainability Report in 2008-09 for which it was awarded an A+commendation by GRI (Global Reporting Initiative).


45/53


43

4. JINDAL STAINLESS

Jindal Stainless has a focussed CSR programme that encompassesinternal initiatives as well as external ones. The Jindal Stainless

Foundation is the specialised CSR wing of the company.


46/53


44

JINDAL STAINLESS (contd)


47/53


45



48/53


46



49/53


47

5. TATA STEEL


50/53


48

TATA STEEL (contd)


51/53


49

TATA STEEL (contd)


52/53


50

TATA STEEL (contd)


53/53


APPENDIX

REFERENCES

1. Milton Friedman (1970), article in New York Times Magazine2. Committee for Economic Development (CED) (1971) Social

Responsibilities of Business Corporations

3. Mark S Schwartz (2011), Corporate Social Responsibility an EthicalApproach

4. Suzanne Benn and Diane Bolton (2011) Key Concepts in CorporateSocial Responsibility

5. RISE (2001 to 2010) Research Initiative for Social Enterprise (RISE is

currently run by Cathy Clark, Adjunct Assistant Professor of CASE at DukeUniversity).

6. Kevin Jones and Jennifer Bartlett The Strategic Value of Corporate

Social Responsibility(a relationship management framework for publicrelations practice)

7. Steven Brown, Nick Isles, Peter Emery, Tony Hoskins (2004) Achieving High Performance CSR at the Heart of Business The WorkFoundation, The Virtuous Circle, UK

8. Global Reporting Initiative -

9. Melissa D Dodd and Dustin W Supa (2011) Understanding the Effect

of Corporate Social Responsibility on Consumer Purchase Intention10. Andrea Baldwin (Canadian Business for Social responsibility) &

Coro Strandberg (Strandberg Consulting) (2010) CSR GovernanceGuidelines

11. Archie B Carroll (1979) A Three Dimensional Conceptual Model ofCorporate Performance

Insight Business Consultancy may be contacted at

[email protected]

Building a CSR Perspective, by Insight Business Consultancy

Documents

Transcript of Building a CSR Perspective, by Insight Business Consultancy