NCRD’s Sterling Institute of Management Studies

Subject: Legal and Tax Aspect of Business

Corporate Social Responsibility

Submitted By:

Satyajeet Pawar

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INDEX

Sr. No. Topics Page No.

1 Introduction 1

2 History 3

3 Background of CSR 3

4 Advantages of CSR 6

5

Rationale for CSR

8

6 Trends in CSR 17

7. Future of CSR 20

8. Potential Benefits of CSR of implementing of CSR approach 22

9. Evaluation 28

10. Quantative Analysis 29

11 Conclusion 40

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INTRODUCTION

Your business doesn't exist in isolation, simply as a way of making money. Your

employees depend on your business. Customers, suppliers and the local community are all

affected by you and what you do. Your products, and the way you make them, have an impact on

the environment.

Corporate social responsibility (CSR) takes all this into account and can help you create

and maintain effective relationships with your stakeholders. It isn't about being "right on", or

mounting an expensive publicity exercise. It means taking a responsible attitude, going beyond

the minimum legal requirements and following straightforward principles that apply whatever

the size of your business. This guide explains how you can exploit the benefits that CSR can

bring to your bottom line.

Definition

CSR:

‘Corporate,’ ‘Social,’ and ‘Responsibility.’ In broad terms, CSR relates to responsibilities

corporations have towards society within which they are based and operate, not denying the fact

that the purview of CSR goes much beyond this. CSR is comprehended differently by different

people.

Philip Kotler and Nancy Lee (2005):

“A commitment to improve community well being through discretionary business practices

and contributions of corporate resources”

MallenBaker:

“A way companies manage the business processes to produce an overall positive impact

on society.”

World Business Council for Sustainable Development

“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”.

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HISTORY

The concept of CSR in India is not new, the term may be. The process though acclaimed

recently, has been followed since ancient times albeit informally. Philosophers like Kautilya

from India and pre-Christian era philosophers in the West preached and promoted ethical

principles while doing business. The concept of helping the poor and disadvantaged was cited in

much of the ancient literature. The idea was also supported by several religions where it has been

intertwined with religious laws. “Zakaat”, followed by Muslims, is donation from one’s earnings

which is specifically given to the poor and disadvantaged. Similarly Hindus follow the principle

of “Dhramada” and Sikhs the “Daashaant”. In the global context, the recent history goes back to

the seventeenth century when in 1790s, England witnessed the first large scale consumer boycott

over the issue of slave harvested sugar which finally forced importer to have free-labor

sourcing.In India, in the pre independence era, the businesses which pioneered industrialisation

along with fighting for independence also followed the idea. They put the idea into action by

setting upcharitable foundations, educational and healthcare institutions, and trusts for

community development. The donations either monetary or otherwise were sporadic activities of

charity or philanthropy that were taken out of personal savings which neither belonged to the

shareholders nor did it constitute an integral part of business. The term CSR itself came in to

common use in the early 1970s although it was seldom abbreviated. By late 1990s, the concept

was fully recognised; people and institutions across all sections of society started supporting it.

This can be corroborated by the fact that while in 1977 less than half of the Fortune 500 firms

even mentioned CSR in their annual reports, by the end of 1990, approximately 90 percent

Fortune 500 firms embraced CSR as an essential element in their organisational goals, and

actively promoted their CSR activities in annual reports (Boli and Hartsuiker,2001).

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BACKGROUND OF CSR

The role of corporates by and large has been understood in terms of a commercial

business paradigm of thinking that focuses purely on economic parameters of success. As

corporates have been regarded as institutions that cater to the market demand by providing

products and services, and have the onus for creating wealth and jobs, their market position has

traditionally been a function of financial performance and profitability. However, over the past

few years, as a consequence of rising globalisation and pressing ecological issues, the perception

of the role of corporates in the broader societal context within which it operates, has been altered.

Stakeholders (employees, community, suppliers and shareholders) today are redefining the role

of corporates taking into account the corporates’ broader responsibility towards society and

environment, beyond economic performance, and are evaluating whether they are conducting

their role in an ethical and socially responsible manner. As a result of this shift (from purely

economic to ‘economic with an added social dimension’), many forums, institutions and

corporates are endorsing the term Corporate Social Responsibility (CSR). They use the term to

define organisation’s commitment to the society and the environment within which it operates.

The World Business Council on Sustainable Development’s

(WBCSD) report was titled Corporate Social Responsibility:

Making Good Business Sense and the OECD Guidelines for 1 Multi-National Enterprises

which includes a discussion on how CSR is emerging as a global business standard. Further,

there is a global effort towards reinforcing CSR programmes and initiatives through local and

international schemes that try to identify best-in-class performers.

Arguments for socially-responsible behaviour

It is the ethical thing to do

It improves the firm’ public image

It is necessary in order to avoid excessive regulation

Socially responsible actions can be profitable

Improved social environment will be beneficial to the firm

It will be attractive to some investors

It can increase employee motivation

It helps to corrects social problems caused by business

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CSR behaviour can benefit the firm in several ways

It aids the attraction and retention of staff

It attracts green and ethical investment

It attracts ethically conscious customers

It can lead to a reduction in costs through re-cycling

It differentiates the firm from its competitor and can be a source of competitive

advantage

It can lead to increased profitability in the long run .

Corporate Social Responsibility (CSR) is a concept whereby organizations consider the

interests of society by taking responsibility for the impact of their activities on customers,

employees, shareholders, communities and the environment in all aspects of their operations.

This obligation is seen to extend beyond the statutory obligation to comply with legislation and

sees organizations voluntarily taking further steps to improve the quality of life for employees

and their families as well as for the local community and society at large.

With businesses focusing on generating profits, sustainability was not a popular concern

among companies up until recently. Now, in an era of globalization, multinational corporations

and local businesses are no longer able to conduct destructive and unethical practices, such as

polluting the environment, without attracting negative feedback from the general public. With

increased media attention, pressure from non-governmental organizations, and rapid global

information sharing, there is a surging demand from civil society, consumers, governments, and

others for corporations to conduct sustainable business practices. In addition, in order to attract

and retain employees and customers, companies are beginning to realize the importance of being

ethical while running their daily operations. The corporate response has often meant an adoption

of 'a new consciousness', and this has been known as Corporate Social Responsibility since the

1970’s. As stated by the department of Trade and Industry in the United Kingdom, CSR

represents "the integrity with which a company governs itself, fulfills its mission, lives by its

values, engages with its stakeholders, measures its impact and reports on its activities". Although

most people appreciate the recent advancement of CSR, some argue that corporations are still not

doing enough or are only acting in self interest. These people say that multinational corporations

are acting ethically in areas that are highly regulated, such as North America, but at the same

time, they are acting in an opposite manner in other parts of the world (such as using cheap or

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child labour). In addition, while corporations must have good CSR policies in order to maintain

their reputation, they are also expected to maximize profits for stakeholders such as shareholders,

employees, and customers. Therefore, people argue that businesses do not put in a sufficient

amount of resources to achieve what they have promised in their CSR policies.

In any case, companies are now expected to perform well in non-financial areas such as human

rights, business ethics, environmental policies, corporate contributions, community development,

corporate governance, and workplace issues. Some examples of CSR are safe working conditions

for employees, environmental stewardship, and contributions to community groups and charities.

The practice of CSR is subject to much debate and criticism. Proponents argue that there is a

strong business case for CSR, in that corporations benefit in multiple ways by operating with a

perspective broader and longer than their own immediate, short-term profits. Critics argue that

CSR distracts from the fundamental economic role of businesses; others argue that it is nothing

more than superficial window-dressing; still others argue that it is an attempt to pre-empt the role

of governments as a watchdog over powerful multinational corporations.

What is CSR or Corporate Social Responsibility?

CSR was a buzzword created in the early 1970's although it was seldom abbreviated back

then. Corporate social responsibility (CSR, also called corporate citizenship, corporate

responsibility, responsible business and sometimes corporate social opportunity) is a concept

whereby a business organisation considers the wider social and environmental effects that it has

as a trading entity outside of its direct trading environment. For example, a mining company

destroys the natural landscape when mining so part of its social responsibility to the community

where they are mining could be to invest in reforestation projects.

Advantages of corporate social responsibility

Japanese companies often have 100 year business plans. If you are planning to be around

in business for the long-run then making sure ALL your stakeholders are looked after is

wise. If you mess the environment up people notice. If you mess people around people

remember. If you mistreat people they never forget. And yet when you care for the

environment you are awarded. When you care for people you are awarded. You are rarely

forgotten when you genuinely care. A business enterprise is no different to a human -

people will have feelings about it and that impacts business positively or negatively.

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Many companies say they care and yet they may not take the actions of caring. Going

beyond what is expected becomes exemplar and noted. An enterprise' actions are notes

the most by its employees and staff. The business team that runs an organization knows

what is going on. They know all the high and low points of a company. These exact same

people interact each and every day with the businesses customers. How they feel about

the company they work for impacts the bottom line of a company directly. A sales person

who loves his work and the company will sell more. The receptionist who cares for her

company will care for its customers making them feel better and of course they are then

more likely to return.

Many businesses make a loss the very first time a customer shops with them. This is an

amazing little known fact outside of the business world. It may cost thousands of dollars

for some companies to gain new customers because of long lead times or expensive

advertising campaigns. If they only sell to a customer once then they don't ever recover

their investment in acquiring that new customer or make a profit. Customers these days

are spoilt for choice. Many customers choose a business on how they feel about the

company of the people in the company. Most purchasing decisions are subjective. Adding

subjective and hard to measure components to a business such as solid CSR programmes

add to the perceived value added benefit a customer received when they shop with the

company.

2008's Good purpose™ global study of consumer thinking showed that almost seven out

of 10 (68%) consumers say they would remain loyal to a brand during an economic

downturn if it supports a good cause. Surprising. And logic-defying!

That same very recent study highlighted some other interesting things too. Like this: half

(52%) of global consumers are more likely to tell others about a brand that supports a

good cause over one that does not, with 54% saying they would help a brand promote a

product if there was a good cause behind it. And going even further…Around the world,

consumers have voiced a strong desire for business marketers to link their brands to

social action. Forty-two percent say that if two products are identical in price and quality

then the one that has the commitment to a social purpose trumps key factors like design,

innovation and brand loyalty when selecting one brand over the other. Stunning isn't it?

The citizen brand emerges. And this comment from this key report just says it all: It

means that putting meaning into marketing is more important than ever. One of the

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reporters puts it this way: "These findings present brands with an opportunity to engage

in 'mutual social responsibility'-brands and consumers working together to effect positive

social change for mutual benefit -and to realize a 'return on involvement,' a new metric

that looks at participation and involvement as true builders of brand loyalty. When a

brand acts as a 'citizen brand,' contributing to community and society beyond its

functional benefits, 'doing good' can translate to 'doing well' and the brand can forge a

stronger emotional bond with its consumers.

The rationale for Corporate Social Responsibility in India

Gandhiji was a person who in several respects was ahead of his time. His view of the

ownership of capital was one of trusteeship, motivated by the belief that essentially society was

providing capitalists with an opportunity to manage resources that should really be seen as a

form of trusteeship on behalf of society in general. Today, we are perhaps coming round full

circle in emphasizing this concept through an articulation of the principle of social responsibility

of business and industry. While the interests of shareholders and the actions of managers of any

business enterprise have to be governed by the laws of economics, requiring an adequate

financial return on investments made, in reality the operations of an enterprise need to be driven

by a much larger set of objectives that are today being defined under the term Corporate Social

Responsibility (CSR).

The broad rationale for a new set of ethics for corporate decision making, which clearly

constructs and upholds a company's social responsibility, arises from the fact that a business

enterprise derives several benefits from society, which must, therefore, require the enterprise to

provide returns to society as well. Of course, the system of taxation in most countries does

ensure that basic services provided by government such as a system of law and order, provision

of infrastructure that includes assets such as roads, transportation facilities, the benefits received

from the apparatus of society for respecting and enforcing property rights, etc. are paid for

through taxation on economic goods and services produced and consumed. But there are other

aspects of services provided by society that have now become even more important than

traditional relationship between government and business. These go far beyond what was the

case a few decades ago.

Why should companies whose major objective has been to maximize profits for the

benefit of their shareholders worry at all about serving the interest of society at large? The

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answer is simple and yet somewhat circular in nature. A business cannot succeed in a society

which fails. This, therefore, clearly establishes the stake of a business organization in the good

health and well being of a society of which it is a part. More importantly, in this age of

widespread communication and growing emphasis on transparency, customers of any product or

service are unlikely to feel satisfied in buying from a company that is seen to violate the

expectations of ethical and socially responsible behaviour. We find, therefore, that to a growing

degree companies that pay genuine attention to the principles of socially responsible behaviour

are also favoured by the public and preferred for their goods and services.

GLOBALIZATION AND CORPORATE SOCIAL RESPONSIBILITY

Globalization and Corporate Social Responsibility – Anything New?

The social responsibilities of business in a market society have been discussed for

decades, long before globalization became a catchword (see, e.g., Baumhart 1961; Bowen 1953;

Donham 1927). The capitalist system, i.e., voluntary exchange on free and open markets, is

widely considered the best societal coordination measure to contribute to individual freedom and

the wellbeing of society (Friedman 1962, Hayek 1996). Though the functions of the state system

have always been a matter of debate (see, e.g., Block 1994), it is generally acknowledged that in

capitalist societies it is the task of the state to establish the preconditions for the proper working

of markets, i.e., to define legal rules such as property rights and contractual rights, to erect an

enforcement body, to provide public goods, and to reduce or avoid the consequences of

externalities. At the same time, private firms are entitled to own means of production and to run

a business, i.e. to supply goods and services for a return in private profits, as it is the “invisible

hand” of the market which directs the behavior of firm owners towards the common good. The

state, it was assumed, is capable of setting the rules in such a way that the consequences of

market exchange contribute to (or at least do not harm) the well-being of society.

Business firms have to obey the law – this has always been a precondition and has been

accepted as a minimum social responsibility of businesses, even by the harshest critics of CSR

(see, e.g., Friedman 1970; Levitt 1970). However, as the system of law and the enforcement

apparatus of the state are incomplete there is a likely possibility of regulation gaps and

implementation deficits which have to be filled and balanced by diligent managers with prosocial

behavior and an aspiration to the common good (e.g., Stone 1975). In as much as the state

apparatus does not work perfectly there is a demand for social responsibilities of business, i.e.

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corporations are asked to comply to the law when the enforcement body is weak and to even go

beyond what is required by law, when the legal system is imperfect or legal rules incomplete.

With globalization, it seems, the negative consequences of businesses have intensified

(see, e.g. Mokhiber and Weissman 1999, Korten 2001), as has the public call for corporate

responsibility (Parker 1998). Several scholarly journals have dedicated special issues to the

relationship between globalization and CSR (see, e.g., Business Ethics Quarterly 2004, 2006;

Journal of Business Ethics 2005). Paradoxically, today, business firms are not just considered the

“bad guys”, causing environmental disasters, financial scandals, and social ills. They are at the

same time considered the solution of global regulation and public goods problems (e.g., Margolis

and Walsh 2003; Matten and Crane 2005) as in many instances state agencies are completely

overtaxed or unwilling to administer citizenship rights or contribute to the public good.

The solution of globalization problems is not just a matter of degree of engagement in

CSR, i.e. of more or less investment of business firms in CSR projects (McWilliams and Siegel

2001). Rather we suggest that with globalization a paradigm shift is necessary in the debate on

CSR. Current discussions in CSR are based on the assumption that responsible firms operate

within a more or less properly working political framework of rules and regulations which are

defined by governmental authorities. The global framework of rules is fragile and incomplete.

Therefore, business firms have an additional political responsibility to contribute to the

development and proper working of global governance.

Globalization: A Social and Economic Phenomenon

What is Globalization?

Globalization is one of the most cited catchwords of our time and is used to describe a

process of social change on the macro level of societies. Today, many social and economic

phenomena such as peace, crime, migration, production, employment, technological

developments, environmental risks, distribution of income and welfare, and social cohesion and

identity are considered to be affected by the process of globalization (see, e.g., Brakman,

Garretsen, van Marrewijk, van Witteloostuijn 2006; Cohen and Kennedy 2000; Held, McGrew,

Goldblatt, and Perraton 1999; Scholte 2005). We define globalization as the process of

intensification of cross-area and cross-border social relations between actors from very distant

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locations, and of growing transnational interdependence of economic and social activities (see,

e.g., Beck 2000; Giddens 1990). Giddens (1990: 64) holds that with globalization “the modes of

connection between different social contexts or regions become networked across the earth’s

surface as a whole.“During this process the nation state loses much of its political steering

capacity (e.g., Beck 2000; Habermas 2001; Strange 1996). The state’s enforcement power is

bound to its territory while the subjects of state regulation, especially the business firms, have

massively expanded their activities beyond national borders. At the same time, new social and

environmental challenges emerge which are transnational in scope and cannot be regulated or

governed unilaterally (e.g., global warming, crime and terrorism, diseases, etc). Also, new actors

and institutions, such as international organizations, transnational corporations, nongovernmental

organizations, and civil society groups gain political influence. Their activities are not limited to

a certain territory. Their influence stems from the political power they can exert inside and

outside the traditional institutions of nation-state politics, e.g., by lobbying, public relations,

campaigning, knowledge and competence, offering material or symbolic support, or threatening

with disinvestments or the retreat of resources.

As a result we observe new forms of governance below, above and beyond the nation

state (Beck 2000; Zürn 2002).This definition of globalization emphasizes the process aspect of

change and is related to other concepts that describe the status quo towards this change process

develops (“globality”) and the normative claims that are related to this process.

The concept of “globalism” is used to describe an ideology, i.e., a normative attitude

towards the process of globalization. While globalization protesters and skeptics reject the idea

that the globalization process will lead to more prosperity and social well-being in the world

(“anti-globalism”) (see, e.g., Klein 2000), the adherents of globalism are convinced that an

unconstrained and borderless world economy will make everybody better off (e.g., Irwin 2002;

Krauss 1997; Norberg 2003). They advocate a primacy of market imperatives over political

regulation via the nation state. The central idea of modernity – that nation state politics shall

define the legal, social and ecological framework and the restrictions within which market

transactions take place – is abandoned in favor of a dominance of economic rationality (see,

critically, Beck 2000; Giddens 1990). As a consequence of cross-border trade, multinational

enterprises and global supply chains, there is an increased awareness on CSR concerns related to

human resource management practices, environmental protection, and health and safety, among

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other things. Reporting on the CSR activities by corporates is therefore increasingly becoming

mandatory.

In an increasingly fast-paced global economy, CSR initiatives enable corporates to

engage in more meaningful and regular stakeholder dialogue and thus be in a better position to

anticipate and respond to regulatory, economic, social and environmental changes that may

occur. There is a drive to create a sustainable global economy where markets, labour and

communities are able to function well together and companies have better access to capital and

new markets. Financial investors are increasingly incorporating social and environmental criteria

when making decisions about where to place their money, and are looking to maximise the social

impact of the investment at local or regional levels.

What are the Causes of Globalization?

One could suggest that the globalization process was started to some extent deliberately

by political decisions. However, it was also caused and/or supported by technological, social,

and economic developments. The intensified cross border transfer of resources, such as assets,

capital, and knowledge, is in part a result of the liberalization policy of many nation state

governments after WWII. The growing cross-area and cross-country social exchange was also

made possible through technological inventions and achievements (e.g., telecommunications,

mass media, the Internet, transportation, etc.). The exchange processes are accompanied by a

growing interdependence between citizens from different communities through the emergence of

global risks (e.g., nuclear weapons, global warming, global diseases, etc.) which connect the

destinies of peoples with each other. In the following we will describe some dimensions of

globalization.

Dimensions of Globalization

• Political Decisions and Disruptions

The General Agreement on Tariffs and Trade (GATT) at the end of WWII was certainly

an important factor for the liberalization of the world economy (see, e.g., Hoekman and

Kostecki1995). At the end of WWII in Bretton Woods politicians from over twenty countries

decided on the post-war economic order. They shared the conviction that free and open trade

would lead to world-wide prosperity and would in turn reduce the possibility of war and forceful

conflicts. The GATT (and later the WTO) member states decided to reduce tariffs and decrease

non-tariff barriers to trade step by step. This process of liberalization in cross country trade and

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investments was accompanied by a policy of liberalization and privatization in many of the

industrial states in the Western world. Highly regulated industries with state owned or controlled

firms and monopolies such as telecommunications, public transport, electricity, and water were

privatized. In the 1980s, the collapse of the iron curtain of the Com6 munist countries in Eastern

Europe, and in many other countries in the world, led to another breakdown of trade barriers and

encouraged intensified cross-border trade and investments.

• Technological Developments and Achievements

The rapid technological development in the communication industry led to a significant

decline in communication costs. Perraton, Goldblatt, Held, and McGrew (1998: 143) reported

that the costs for a 3min phone call from New York to London dropped from 244.65 US $ in

1930 to 3.32 US $ in 1990 (measured in 1990 US $). The advances in telecommunications and in

computer technology along with the invention and growth of the Internet have made it possible

for people to communicate with each other between virtually all points on the earth.

Along with the decrease in communication costs there has been a dramatic drop in

transportation costs (Perraton et al. 1998: 143).

• Socio-cultural Developments

As a result of globalization, the more or less homogenous cultures of the preglobalization

world were dissolved. New values and life styles have entered the static world of traditional

cultures: values, attitudes and social practices that were once taken for granted have lost their

certainty. This process is accompanied by the various migration processes which lead to a

pluralism of cultures and values and to a growing heterogeneity of social expectations. At the

same time we observe the emergence of new social movements, civil society groups, and NGOs

which aggregate diverse and disparate opinions and concerns into shared interests and thus create

new identities for people who lose the backing of their traditional home culture and their reliance

on the capacity of official state agencies to resolve issues of public concern. These new social

movements can gain political currency outside and beyond the traditional institutions of the state

system (such as, e.g., political parties, parliaments etc.).

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• Economic Developments

On the macro level, the liberalization of trade, investments and financial transactions has

led to a huge increase both in foreign direct investments and in cross-border trade (see, e.g.,

Brakman et al. 2006; Held et al. 1999). Though some authors suggest that with regard to certain

macroeconomic measures the situation today is not much different than it was one hundred years

ago (see, e.g., Hirst and Thompson, 1996), we hold that we are confronted with a new situation

without precedent in history.

First, economic measures show that for several decades the growth rate in the volume of

world merchandise exports has been much higher than the growth rate of world GDP and that the

intra-firm trade has expanded dramatically (Held, et al. 1999). Second, the unprecedented

interconnectedness of the destiny of people from different social settings and distinct locations

has created new challenges. Also, on the firm level, one can observe an entirely new situation.

Business firms are able to split up their value chain and to source where the production of goods

and services is most efficient. By means of technology they are able to collect information about

sources, qualities and prices, and to coordinate the various value chain processes inside and

outside the boundaries of the firm. Today, large multinational corporations have become very

powerful economic and social agents. The world’s biggest corporations have revenues that equal

or even exceed the gross domestic product of some developed states (Chandler and Mazlish

2005). The power of MNCs is not just based on the enormous amount of resources they control.

Their power is further enhanced by their mobility and their capacity to shift resources to

locations where they can be used most profitably and to choose among suppliers applying criteria

of efficiency. In effect this gives multinational firms the latitude to choose locations and the legal

systems under which they will operate (Roach 2005; Scherer, Palazzo, and Baumann 2006).

However, the power of the MNCs and their leaders is not unlimited. Rather, top managers more

and more feel the pressure of the global financial markets when they have to respond to the

profitability demands of investors and have to protect their firms from hostile takeovers.

Institutional investors direct their attention and money to profitable firms and investments.

Corporations that do not earn a high enough profit are sanctioned with disinvestment. Managers

who do not focus on a high stock price may become the targets of takeovers. All in all the global

financial market pressures business firms to stress profit and to engage only in such projects that

will lead to a satisfactory return. Altruistic managers with pro-social attitudes may therefore be

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suspect in the emerging shareholder society and may be forced to adapt their behavior to the

expectations of profit seeking investors.

• The Emergence of Transnational Risks

The process of globalization is accompanied by the emergence of global risks (Beck

1992, 1999): Citizens from very different communities and countries realize that their destiny is

bound together and depends on how economic and political actors in other countries behave,

though they often have no influence to regulate or determine their behavior. Environmental

disasters (Chernobyl, global warming, overfishing of oceans, loss of bio-diversity, etc.), global

diseases (bird flu, mad cow disease etc.) and social problems (drugs, organized criminality,

terrorism etc.) do not halt at national borders but affect the live of people who become aware that

their traditional nation state institutions have become unable to protect them from harm.

Changing Public Expectations of Business

Globally companies are expected to do more than merely provide jobs and contribute to

the economy through taxes and employment. Consumers and society in general expect more

from the companies whose products hey buy. This is coherent with believing the idea that

whatever profit is generated is because of society, and hence mandates contributing a part of

business to the less privileged

Further, separately in the light of recent corporate scandals, which reduced public trust of

corporations, and reduced public confidence in the ability of regulatory bodies and organisations

to control corporate excess. This has led to an increasing expectation that companies will be

more open, more accountable and be prepared to report publicly on their performance in social

and environmental arenas.

Corporate Brand

In an economy where corporates strive for a unique selling Proposition to differentiate

themselves from their competitors; CSR initiatives enable corporates to build a stronger brand

that resonates with key external stakeholders–customers, general public and the government.

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Businesses are recognising that adopting an effective approach to CSR can open up new

opportunities, and increasingly contribute to the corporates’ ability to attract passionate and

committed workforces.

Corporates in India are also realising that their reputation is intrinsically connected with how

well they consider the effects of their activities on those with whom they interact. Wherever the

corporates fail to involve parties, affected by their activities, it may put at risk their ability to

create wealth for themselves and society. Therefore, in terms of business, CSR is essentially a

strategic approach for firms to anticipate and address issues associated with their interactions

with others and, through those interactions, to succeed in their businessendeavors. The idea that

CSR is important to profitability and can prevent the loss of customers, shareholders, and even

employees is gaining increasing acceptance.

Further, CSR can help to boost the employee morale in the organisation and create a

positive brand-centric corporate culture in the organisation. By developing and implementing

CSR initiatives, corporates feel contented and proud, and this pride trickles down to their

employees. The sense of fulfilling the social responsibility leaves them with a feeling of elation.

Moreover it serves as a soothing diversion from the mundane workplace routine and gives one a

feeling of satisfaction and a meaning to their lives.

Corporate branding is the process by which you impart a personality or public image to

an entire company, not just its products or services. It's different from "umbrella branding"

because "umbrella" suggests that there are specific sub-brands sharing an identity.

Maybe this will help:

Procter & Gamble, a corporate entity, has a brand image or "corporate brand." It's often

referred to as "P&G" (a friendlier version of the more formal company name).

The company also has a number of brands, each with their own identities and

personalities -- Tide, Crest, Pampers, etc., etc.

In a few cases, it has "umbrella" brands, like Ivory -- which is a bar soap, a liquid

dishwashing detergent, and a light-duty laundry product. (That's unusual for P&G, but it

happened.)

None of the individual brands, or the umbrella brand, use the P&G brand as part of their

identity. P&G is strictly the corporate brand.

Of course, sometime the corporate image is so important to the individual brands that the

corporate brand is also an umbrella brand, covering many different products/services as well as

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the corporation. It can work (think about IBM, for example), but usually it's difficult to suggest a

single benefit for a diverse family of products and services, so the corporate brand is better left

intact for the corporation.

An excellent answer from good man, but one of the things I enjoy about branding is it’s

so imprecise – so here another example of the same thing –

Corporate Brand is the brand that applies to corporate (or legal) entity, the key difference

is its target market is shareholders, analysts, fund managers, ie.the investment community.

Trends in Corporate Social Responsibility

‘Thinking globally’ to ‘Thinking locally”

The last decade has seen a mad rush amongst multinational companies to gain first mover

advantages in emerging markets by establishing operations and subsidiaries. However most of

the firms have found out to their cost that local competition was not as easy to overcome as they

had thought with matters made being worse by cutthroat competition amongst the multinationals

themselves. Most multinationals are beginning to realise that loss making operations cannot be

continued year after year under the pretext of investment for future expectation of profits. It is

high time that the local subsidiaries start to deliver profits of their rather than continuing to act as

sinks of the firm’s global resources.

According to Dawar and Chattopadhyay (2000) “Local operations now realize that the

three to five percent of consumers in emerging markets who have global preferences and

purchasing power no longer suffice as the only target market. Instead, they must delve deeper

into the local consumer base in order to deliver on the promise of tapping into billion-consumer

markets”. Batra (1999) argues that the usual business strategy of using products that have been

historically successful in developed nations will not work in emerging markets. Prahlad and

Lieberthal (1998) point out that companies must make the transition in their business strategy of

‘thinking globally’ to ‘thinking locally’ as each of the merging markets represents an intriguing

challenge for marketing with its vast diversities existing across nations and even within nations

in culture and socio economic conditions. It is in marketing across such diverse cultures and

varying conditions that the concept of corporate social responsibility becomes critical to success.

In this paper, we will focus on two main paradigms of marketing in which CSR plays an

important part.

Graphical Representation:

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19

Redesigning marketing paradigms for emerging markets

CSR refers to the obligation of an organisation which considers the interests of all their

stakeholders which includes the customers, employees, shareholders, communities and

ecological considerations in all aspects of their operations.

Companies which aspire to be, or are, leaders in corporate social responsibility are

challenged by rising public expectations, increasing innovation, continuous quality improvement

and heightened social and environmental problems. They are forced to chart their CSR course

within a very complex and dynamic environment.

CSR trends that provide rewards for companies, communities and the world…

Return on Investment (ROI): More businesses are recognizing the benefits of CSR, from

cost savings on energy and materials to direct benefits like enhanced reputation among

customers and clients and indirect benefits like employee satisfaction. Most importantly,

CSR programs provide rewards—and increased monetary value—through the creation of

products and services that support sustainability.

Increasing Rewards for Communities and Workers: Companies are working to mitigate

their impacts on community resources such as water through conservation and by

promoting sustainable development that benefits communities and employees.

New Media and the Fight for Customers’ Mindshare: Through CEO blogs, YouTube

videos and other new media tools, smart companies are arming customers with more

information about CSR efforts.

Carbon Footprinting Reaches Supply Chains: More companies are gathering credible data

about the carbon emissions in their global supply chain.

New Opportunities in Environmental Markets: Beyond reducing their climate impact

through decreased carbon emissions, advanced companies are working to monetize and

develop markets for environmental services like water, nutrients and biodiversity.

EX: Yahoo! Launches New Business & Human Rights Initiative

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THE FUTURE OF CORPORATE SOCIAL RESPONSIBILITY

Companies today are increasingly sensitive about their social role. The companies not

only concentrate on how they will position their product or how they will sell it but also they

have a social strategy because they have started feeling that brands are built not only around

good quality of the product; but also around emotions and values that people ascribe to those

products

In addition to be more precisely defined, the CSR movement is evolving following some

trends that I intend to describe briefly:

First, there are no more a few companies, which have consecrated themselves to this new

doctrine, but the majority of large enterprises have introduced it in their agenda. Philip

Kotler and Nancy Lee in their book “Corporate Social Responsibility” indicate that

charitable giving has risen from $9.6 b in 1999 to $12, 19 b. In spite of some opponents

like the survey in The Economist last year which maintains that CSR is eroding the basis

of the free enterprise system, every time more this new doctrine is catching the attention

of business people.

Second, since the term “triple bottom line” (people, planet and profit) was carried in

1994, an accelerating progression from early concerns about safety, health and

environment to a growing range of social concerns have been seen, among them human

rights and diversity. Recently other concerns like fair trade pricing and fair wages as well

as socially increasingly have increasingly made headlines. There is an increasing

conviction that there is not a conflict but a positive correlation between CSR and

profitability and that profit can go hand-in-hand with social and environmental

responsibility.

Third, the social responsible enterprises every time more publish their activities for their

shareholders and the public in general, either in their general annual report or in CSR

specific reports. According to a survey of KPMG in 2002, 45% of co portions issued

environmental, social or sustainability reports compared with 35% in their 1999 survey.

Greater transparency is a means to improve accountability and trust.

Fourth, CSR has ceased to be a form of philanthropy so that it is no more the case to sign

a check at the end of each financial year, after a positive result - and CSR enters into the

normal activities of the corporation before declaring its profits and becoming a all year

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around responsibility. It is a shift to making long-term commitments to especial social

issues providing more than cash contributions, sourcing funds from business units as well

as philanthropic budgets, forming strategic alliances, etc. CSR is becoming as much as

anything a way of thinking about and doing business. Corporate investment decisions

driven by quarterly profit earnings are short-sighted and sacrifice long-term wealth

creation.

Fifth, it is no longer the owner or the CEO the one which decides to write the check, but

it is the collective commitment of all the corporation from the CEO until the last

employee; it is precisely the employees’ satisfaction one of the objectives of CSR. There

is an increasing awareness of CSR among the workforce.

Sixth, before a social activity generally dissociated from the cooperation, the trend is that

the activity be totally related with the core business of the cooperation, its products or

services (for instance when an electronic corporation decides to train the students of a

school on the use of computers).

Seventh, the establishment of a social norm to do good. As William Clay Ford Ford

Motor Company CEO “there is a difference between a good company and a great

company. A good company offers excellent products ands services. A great company also

offers excellent products and services but also thrives to make the world a better place”.

From the philosophy of “doing good to look good”, to the conviction of “doing well and

doing good”.

Eighth, it is clear today that CSR’s success requires the decisive cooperation of the

government and business in a strong symbiosis. This is particularly clear in developing

countries. As the World Summit on Sustainable Development (Johannesburg 2000)

recognized, partnership between business, government and civil society is the key to the

progress we need on sustainable development.

Ninth, every time sectoral projects on CSR are materializing like in the mining industry,

the energy industry or the apparel industry, for example, the Multi-fibre Arrangement

Forum, or like the Equator Principles where a group of large financial institution decided

to impose conditions particularly environmental conditions to their clients’ projects.

Ten. Up to now CSR has been something voluntary (voluntary to adopt and voluntary to

comply with). Today there is a big debate where CSR should remain voluntary or should

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become compulsory. Many believe for example that the limitation off the CO2 in the

atmosphere emissions will not stop voluntary unless it becomes a legal duty.

All of these trends mean that businesses need to manage their environmental and social

impacts much better: corporate responsibility has to cease being a bolt-on to business operations;

and instead be built-in to business purpose and strategy. This involves a clear link to business

values and culture; strong leadership form the top; and the active engagement of stakeholders.

Potential benefits of implementing a CSR approach

Key potential benefits for firms implementing CSR include: Better anticipation and

management of an ever-expanding spectrum of risk. Effectively managing social, environmental,

legal, economic and other risks in an increasingly complex market environment, with greater

oversight and stakeholder scrutiny of corporate activities, can improve the security of supply and

overall market stability. Considering the interests of parties concerned about a firm's impact is

one way of anticipating and managing risk.

Improved reputation management. Organizations that perform well with regard to CSR

can build reputation, while those that perform poorly can damage brand and company value

when exposed. This is particularly important for organizations with high-value retail brands,

which are often the focus of media, activist and consumer pressure. Reputation, or brand equity,

is founded on values such as trust, credibility, reliability, quality and consistency. Even for

companies that do not have direct retail exposure through brands, their reputation as a supply

chain partner -- both good and bad -- for addressing CSR issues can make the difference between

a business opportunity positively realized and an uphill climb to respectability.

Enhanced ability to recruit, develop and retain staff. This can be the direct result of pride

in the company's products and practices, or of introducing improved human resources practices,

such as “family-friendly” policies. It can also be the indirect result of programs and activities that

improve employee morale and loyalty. Employees become champions of a company for which

they are proud to work.

Improved competitiveness and market positioning. This can result from organizational,

process and product differentiation and innovation. Good CSR practices can also lead to better 23

access to new markets. For example, a firm may become certified to environmental and social

standards so it can become a supplier to particular retailers.

Enhanced operational efficiencies and cost savings. These flow in particular from

improved efficiencies identified through a systematic approach to management that includes

continuous improvement. For example, assessing the environmental and energy aspects of an

operation can reveal opportunities for turning waste streams into revenue streams (wood chips

into particle board, for example) and for system-wide reductions in energy use.Corporate social

responsibility (CSR) promotes a vision of business accountability to a wide range of

stakeholders, besides shareholders and investors. Key areas of concern are environmental

protection and the wellbeing of employees, the community and civil society in general, both now

and in the future. The concept of CSR is underpinned by the idea that corporations can no longer

act as isolated economic entities operating in detachment from broader society. Traditional views

about competitiveness, survival and profitability are being swept away.

Some of the drivers pushing business towards CSR include:

1. The shrinking role of government

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

environmental objectives in the business sector. Shrinking government resources,

coupled with a distrust of regulations, has led to the exploration of voluntary and non-

regulatory initiatives instead.

2. Demands for greater disclosure

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

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

3. Increased customer interest

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

purchasing decisions of customers. In a recent survey by Environics Internationals, more than

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one in five consumers reported having either rewarded or punished companies based on their

perceived social performance.

4. Growing investor pressure

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 Envirnics

Internationals 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.)

5. Competitive labour markets

Employees are increasingly looking beyond pay checks 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.

6. Supplier relations

As stakeholders are becoming increasingly interested in business affairs, many

companies are taking steps to ensure 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.

Some of the positive outcomes that can arise when businesses adopt a policy of social

responsibility include:

Company benefits:

• Improved financial performance;

• Lower operating costs;

• Enhanced brand image and reputation;

• Increased sales and customer loyalty;

• Greater productivity and quality; 25

• More ability to attract and retain employees;

• Reduced regulatory oversight;

• Access to capital;

• Workforce diversity;

• Product safety and decreased liability.

2. Benefits to the community and the general public:

Charitable contributions;

Employee volunteer programmes;

Corporate involvement in community education, employment and homelessness

programmes;

Product safety and quality.

3. Environmental benefits:

Greater material recyclability;

Better product durability and functionality;

Greater use of renewable resources;

Integration of environmental management tools into business plans, including life-cycle

assessment and costing, environmental management standards, and eco-labelling.

Nevertheless, many companies continue to overlook CSR in the supply chain - for example

by importing and retailing timber that has been illegally harvested. While governments can

impose embargos and penalties on offending companies, the organizations themselves can make

a commitment to sustainability by being more discerning in their choice of suppliers.

The concept of corporate social responsibility is now firmly rooted on the global business

agenda. But in order to move from theory to concrete action, many obstacles need to be

overcome.

A key challenge facing business is the need for more reliable indicators of progress in the

field of CSR, along with the dissemination of CSR strategies. Transparency and dialogue can

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help to make a business appear more trustworthy, and push up the standards of other

organizations at the same time.

The Global Reporting Initiatives is an international, multi-stakeholder effort to create a

common framework for voluntary reporting of the economic, environmental, and social impact

of organization-level activity. Its mission is to improve the comparability and credibility of

sustainability reporting worldwide.

There is increasing recognition of the importance of public-private partnerships in CSR.

Private enterprise is beginning to reach out to other members of civil society such as non-

governmental organizations, the United Nations, and national and regional governments.

An example of such a partnership is the 'Global compact'. Launched in 1999 by the United

Nations, the Global Compact is a coalition of large businesses, trade unions and environmental

and human rights groups, brought together to share a dialogue on corporate social

responsibility.The 'Working with NGOs' section offers some insights into the way businesses and

lobby groups are working together to mutual benefit. Management training plays an important

role in implementation of CSR strategies, and there is a growing number of conferences and

courses available on the subject. Organizations that provide such training include Global

Responsibility, Business for Social Responsibility and the Corporate Social Responsibility

Forum. The idea of Indian companies going beyond business imperatives to do something for

society has undergone remarkable changes over the years. Time was when companies merely

dispensed cash by way of charity to organisations or NGOs engaged in social work. Others

promoted activities that were mutually beneficial, to villagers living around a company plant or

town as well as to their own employees.   For instance, villagers were encouraged to produce

more vegetables or keep cattle for milk, with the company providing the start-up money, the

knowledge and the marketing infrastructure that ensured the extra produce got to town.  The

villagers were encouraged to take the risk and try their hand at new farming activities because of

the assurance of a dependable market and a steady income. That changed over time to

“community outreach”: reaching out to the communities around company plants or offices, and

providing amenities that were lacking.  Companies supplemented facilities in schools or

hospitals, helped women earn extra income through sponsorship of, say, sewing machines or

community centres which, apart from generating income, promoted adult literacy and family

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welfare activities.  With the growth of environment consciousness in the 1960s, companies felt

the need to redeem themselves for some of the damage done. They got involved in forestation,

water conservation and similar projects.  The concept of corporate social responsibility (CSR)

thus evolved — from philanthropy to a more elaborate concept that encompassed the

environment, employee relations, corporate governance and engaging with the community.  The

current understanding of CSR also attempts to deploy a company’s core competencies to help

address society’s problems.  Examples of this approach abound, and one standout example is

TCS, which has used its expertise in information technology to help communities in different

parts of India help themselves. TCS has developed a database for Child Line, which supports

children in distress in 54 centres in India, all using volunteers from among its employees; it has

also designed and implemented a ‘computer-based functional literacy’ project, a unique idea that

enables adults to learn to read — using low-end computers and a breakthrough software solution

— within 30 to 40 hours, over two-three months.   Similarly, NIIT has used its IT expertise for

its ‘hole in the wall’ experiment, where children from slums learn to use computers with a touch

screen. Cut from the same cloth is ITC’s much-celebrated e-choupals, which help farmers check

prices in Indian and global markets before going to the marketplace with their produce. 

  An important aspect of CSR today is the encouragement given to employees to get

involved in tackling social issues. Mother Teresa used to tell admirers eager to offer her money:

“I don’t want your money; I want your time.” She ended up getting both.  CSR is no longer a

fringe activity that companies engage in to look good.  Effective CSR today is that which relates

directly to the giver’s core competencies and offers real value, not just philanthropy. It is no

longer considered good for business, but simply good business.  Because when you give back to

the society you operate in, you become truly embedded in that society, rather than being

perceived as seeking profits alone.

Evaluation

Along with innovation at conceptualisation and implementation, corporates are now

undertaking greater evaluation and stricter accountability and transparency norms. Evaluating the

programme essentially answers the question “what good did we do?” Evaluating programmes,

based on internationally accepted formats provide feedback for correction and based on that

public disclosure is done.

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What is an evaluation?

An evaluation tracks the overall progress of a firm's CSR approach and forms the basis

for improvements and modification. With the information derived from verification and

reporting, a firm is in a good position to rethink its current approaches and make adjustments.

Evaluation is all about learning. Learning organizations are those whose existence is based on

continuous receipt and comprehension of new information and adaptation for sustainable

advantage. They do not simply attempt to achieve objectives; they are constantly on the alert to

adapt to changing circumstances or to find ways for improving their approaches. An evaluation

should involve stakeholder engagement, including comments and suggestions from management,

CSR coordinators, managers and committees, employees and outside stakeholders.

Why evaluate?

An evaluation allows a firm to do the following:

Determine what is working well, why and how to ensure that it continues to do so

investigate what is not working well and why not, to explore the barriers to success and

what can be changed to overcome the barriers

revisit original goals and make new ones as necessary.

This base of information should allow the firm to determine whether the current CSR approach is

achieving its objectives and whether the implementation approach and overall strategy are

correct.

How to do an evaluation

Drawing on the CSR objectives and indicators, and the information obtained through the

verification and reporting process, firms should consider and respond to the following questions.

What worked well? In what areas did the firm meet or exceed targets?

Why did it work well? Were there factors within or outside the firm that helped it meet its

targets?

What did not work well? In what areas did the firm not meet its targets?

Why were these areas problematic? Were there factors within or outside the firm that

made the process more difficult or created obstacles?

What did the firm learn from this experience? What should continue and what should be

done differently?

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Drawing on this knowledge, and information concerning new trends, what are the CSR

priorities for the firm in the coming year?

Are there new CSR objectives?

Finally, it is important that firms celebrate their successes. When goals are met and progress is

achieved all parties concerned need to give each other a pat on the back for a job well done.

Reporting

A very important aspect of CSR is the reporting practices that corporates adhere to

inform their key internal and external stakeholders of social responsibility practices. In the recent

past, several indicators such as the Global Reporting Initiatives guidelines and sustainability

reporting have been developed. Sustainability Reporting (SR) frameworks help the companies

conform to the global standards of disclosures for maintaining transparency with regard to its

operations and value chain and ensuring accountability towards its internal and external

stakeholders.

CSR : A Quantitative Analysis

The Case Study quantitative analysis represents an objective overview of the corporate

social responsibility trends in India based on the desktop research and case study analysis of the

corporates who have responded to the request by ASSOCHAM to share their CSR efforts and

initiatives, for the compendium. 27 case studies were submitted in total and out of these 24 were

used as a base to deduce some directional pointers on the status of CSR and some trends in India.

The analysis does not intend or aim to pass a qualitative judgement on any corporate initiative or

how good or bad it is, but rather focuses on presenting a broad overview of implementing the

CSR practices. It is assumed that there is an inherent bias, as the corporates that have submitted

case studies are implementing the CSR in a way or other. Moreover the source of information

being they (corporates) is not an unbiased source.

Thematic Areas

Action in CSR in India largely spans a diverse set of thematic areas – health, education,

livelihood, poverty alleviation, environment, water, housing, energy and microfinance. However

some other areas like women empowerment, child development and infrastructure also appeared

in the case studies. Based on the comparative study of the 24 companies, it was found that while

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some companies chose to narrow their focus on a few thematic areas, others took a broader view

and undertook a larger scope of areas to focus on. Out of 24 case studies that were analysed, it

was found that there were as many as 16 corporates focusing on 3-5 thematic areas, whereas only

4 corporates catered to 1-2 thematic areas of

work and remaining four stuck to six or more thematic areas. In terms of the area focus,

environment garnered the maximum attention from corporates while women empowerment and

poverty alleviation were neglected areas with minimal corporates focusing on the same.

Health

Health has been identified as a primary objective in the community development process.

As a part of the healthcare initiatives weekly clinics, counseling sessions, health camps are

regularly held to promote general health and well-being in the community. The health perils in

the community are numerous and in order to treat some minor ailments and casualties,

community members have been identified and are being trained to treat minor ailments.

Education

Education too has been a primary focus area for the foundation, and a number of

initiatives have been designed to promote non-formal education in the community. Akanksha, a

non governmental organization that focuses on developing a strong educational foundation, deep

sense of self-esteem and facilitates fun activities for underprivileged children has been identified

to facilitate education and awareness. PMC schools have been given computers to promote IT

education in the neighboring area of Chandan Nagar. Simultaneously, IT education programs

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have also been deployed to spread computer literacy within Zensar's support staff. The response

to all these initiatives has been overwhelming and the foundation is now taking up more

initiatives to address the requirement.

Environment

• Your business affects many different people - employees, customers, suppliers and the

local community. It also has a wider impact on the environment.

• Even the simplest energy efficiency measures, like switching off lights and equipment

when they aren't needed, makes a real difference. Reducing the use of water also directly

cuts your costs.

• Minimising waste can also make an important contribution. Simple steps like reducing

the amount of paper you waste can immediately cut costs. You can save even more by

thinking about waste implications when you design new products and production

processes.

• Caring about the environment can increase income too. Many customers prefer to buy

from responsible companies. There are all sorts of ways you could think about reducing

the environmental impact of your business.

Livelihood

A unique program to create more opportunities for less privileged youth. Pune Corporate

Consortium for LABS was inaugurated on April 4, 2006. LABS, a flagship program of Dr.

Reddy’s Foundation (DRF), promotes customized programs for youth and women in the age

group of 18-30 years from economically weaker sections of society, and empowers them to gain

access to opportunities for sustainable livelihoods and growth in the New Economy. This

program is implemented in Pune with the help of organizations such as Thermax, Forbes

Marshall, Confederation of Indian Industries – Young Indians (CII-YI) and Zensar Technologies

in association with Pune Municipal Corporation to actively support this initiative. CII-YI is the

primary coordinator of this activity that plans to train 300 young members in the coming year.

This program aims to empower students who have discontinued formal education for various

reasons. A total of 80 students have already enrolled for this batch which began from April 4,

2006 in Pune.

CSR Management

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It has been observed that for 37 percent corporates, the CSR initiative is being

implemented through a well structured separated Foundation. Among 58 percent corporates there

is a separate CSR department that takes care of the activities to be implemented.

Partnerships

The importance of building strong public-private partnerships as well as working closely

with NGOs as implementation partners is being increasingly realised by corporates. It has been

observed that 58 percent of the corporates within the surveyed sample partnered with the

government departments. The number is higher for the engagement with NGOs, where

approximately 67 percent corporates have formed linkages. 21 percent corporates were working

in partnership with multilateral or bilateral organisations.

Stakeholders

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Stakeholder engagement has become one of the important aspects of CSR practices.

Though there are different sets of stakeholders that can be taken into account while

implementing CSR, we decided to obtain information on the following – employees, neighboring

community and general public. Neighboring community refers to the people in catchment area of

corporate who have a direct effect of business on them. Out of total 24, five corporates work

towards the benefit of employees, neighboring community and general public. There are 2

corporates that have set of employees and general public as their stakeholders. Five and two

corporates have as their stakeholders the set of general public and neighboring community and

employees and neighboring community respectively. Only one corporate has decided to

concentrate on the neighboring community as the stakeholder.

Sustainability Reporting (SR) is also gaining prominence and recognition as a value

added tool for displaying a corporate’s commitment towards transparency and accountability

towards its stakeholders. It helps a company to report on the social, environmental and economic

impact of its activities, along with a report on the internal state of its management and employee

welfare system in a manner as rigorous and transparent as financial reporting. A well drafted

Sustainability report provides a balanced and reasonable representation of the sustainability

performance of a reporting organisation (both positive and negative). SR helps the organisations

define and communicate their overall context and rationale to solve global problems through its

specific business model or elicit whether its business

model design is influenced by those problems. SR is also increasingly recognised as a tool for

brand and image building.

Reporting Initiatives

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Public disclosure and reporting was another metric used to compare the CSR initiatives

of corporates. It was observed that within the sample of 24 companies used, 25 percent are

reporting as per the GRI guidelines while 21 percent were signatories of the UN Global

Compact. An equal number of corporates (21 percent) come up with a separate CSR report while

there are only a few (8 percent) who have a mention of their CSR activities in the annual report.

Comparative numbers of reporting of CSR in the annual report at global level are much higher.

For instance in 1977 the number was 50 percent, which rose to 90 percent in 1990.

THE FUTURE OF CORPORATE SOCIAL RESPONSIBILITY

The reasons for companies becoming interested in social responsibility are diverse. Risk

protection, market positioning, recruitment, political-social relationships--each displaying an

inverse relationship between immediate economic impact and degree of commitment. Corporate

social responsibility (CSR) is about the acknowledging that sustainable competitive advantage

requires companies to be economically viable, environmentally sound and socially responsible.

CSR is the continuing commitment by business to behave ethically and contribute to economic

development while improving the quality of life of the workforce and their families as well as the

local community and society at large.

--World Business Council for Sustainable Development (WBCSD)

CSR has now been discussed in the companies across the globe for more the 15 years but

a lot of people in and outside of business are very critical of CSR. Their argument is that CSR is

a management fashion that will go away at one point and be replaced by something else.

Corporate Social Responsibility (CSR) and its potential role as a force for change in a

globalised world:

CSR is a concept whereby companies and financial institutions not only consider their

profitability and growth, but also the interests of society and the environment by taking

responsibility for the impact of their activities on stakeholders, employees, shareholders,

customers, suppliers, and civil society represented by NGOs. Companies (including banks) must

take on new responsibilities that go beyond a simple policy of “paternalism” vis-à-vis their

suppliers, customers and employees, such as that practised up until recent times. Companies

which aspire to be, or are, leaders in corporate social responsibility are challenged by rising

35

public expectations, increasing innovation, continuous quality improvement and heightened

social and environmental problems. They are forced to chart their CSR course within a very

complex and dynamic environment. To assist this exercise it can be useful to reflect on the

longer term trends in CSR - the future of corporate social, environmental and ethical

responsibility 5 - 10 years from now, beyond the immediate operating environment. How will the

social/environmental /economic dimensions of corporate sustainability evolve 5 - 10 years out?

What will be the stakeholder demands on companies in the future? What forms of collaboration

and partner- ship will emerge? What will be the new CSR issues confronting corporations? What

will be the regulatory environment and government’s role in CSR? In effect,what will be the new

CSR operating environment for companies? In the future a significant number of companies will

be convinced it’s in their strategic interest to incorporate CSR substantively into their operations

There will be pressure through competition for better CSR performance - this will impact on

suppliers,etc. A small group of companies will be There will be differentiation between different

models and levels of CSR as a result of continuous efforts.

Improvement and Quality Assurance:

CSR will advance, but it will advance inconsistently across sectors, depending on a

company’s economic performance, economic downturns, competitiveness of the market, etc.

• Underlying structural drivers will impact large scale companies, such as the value of

knowledge workers and other intangible assets, driving companies to take different issues into

account.

• Increasingly businesses will see CSR as resulting in increased competitiveness and profitability

• The cynical corporations are dinosaurs and will be swept aside, though not in 10 years; change

will be there, but it won’t be dramatic

• CSR is part of a search for a new social contract between business and society. This new social

contract will not necessarily be through the creation of a set of rules, but about a new set of

norms arrived at through experimentation In spite of the difference in views of social impact and

degree of corporate commitment, the majority of the optimists and the pessimists agreed that 5 -

10 years from now CSR will nonetheless become increasingly main- stream within business,

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even if not within the public consciousness. CSR tools, resources, language - all will become

more aligned with business norms and systems.CSR standards - to greater or lesser effect - will

be part of business basics and not an add-on. Most of this speculation points to continued, albeit

slow progress toward increasing integration of CSR values into the corporate sector with varying

levels of commitment and impact within the 5 - 10 year time frame.

CSR Strategic:

Companies will become strategic about different aspects of CSR They will become

compliant with standards and then will create niches in specific areas of CSR more strategic to

their companies. They will develop business strategies within one or two aspects of CSR around

which they can develop a competitive advantage Companies in certain sectors will believe their

key to survival is providing products and services acceptable to broad public interests or they

will go out of business

CSR Integrated:

Further along the continuum will be those companies that fully integrate CSR throughout

their business model, not as a strategic advantage, but in the belief of the need to take social and

environmental impacts and opportunities into account They will have comprehensive CSR

policies covering all areas of their operations and will be operationalizing their CSR principles

through rigorous performance, reward mechanisms, etc. CSR or sustainable development will

inform decision-making and business strategy throughout the company

Deep CSR:

A group of companies will adopt or be founded on business models whose mission is to

improve social or environmental conditions

More Significant Roles For Stakeholders:

One of the top trends around which there is consistent agreement is the increasing

importance of stakeholder engagement in the future of CSR. Not only will stakeholders be

engaged in increasingly significant ways, they will gain in influence, and will continue to

innovate and bring forward new and challenging values. consumers, employees, shareholders,

suppliers, NGOs, governments and business partners - all those that have a “stake” in a

company’s operations.

Employees a Growing CSR Force:

Most predictions point to increasing numbers of employees concerned about the social

values of their employer. companies with a bad CSR track record will have difficulty recruiting

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compared to their more advanced CSR counterparts. Younger entrants to the work force,

particularly, are expected to seek work with companies aligned to their values. More generally it

is expected that employees will increasingly demand that their work and the organizations they

work for be aligned with their personal values. Non-responsive employers will find their staff,

particularly their most talented staff, leaving for other more compatible settings. In a mobile

workforce employees won’t put up with companies that don’t reflect their values. Another

expected trend 5 - 10 years from now is the increased hiring of NGO activists and social

scientists within corporations. CSR Management Systems Standardize and Differentiate -

Improvement and Impact are Key There is widespread consensus that basic CSR systems will

become more standardized and routine within 10 years. The codes of conduct debate will have

been resolved. There will be convergence in codes and standards. CSR Management Systems

Standardize and Differentiate - Improvement and Impact are Key:

There is widespread consensus that basic CSR systems will become more standardized

and routine within 10 years. The codes of conduct debate will have been resolved. There will be

convergence in codes and standards. There will be more clarification of what is meant

by‘real’CSR to distinguish it from ‘cosmetic’ CSR. Leading edge CSR today will be baseline 5 -

10 years from now and the bar will be continuously lifted. CSR will continue to evolve with the

evolution of social and environmental issues. Standards and systems will continue to be affected

by these developments in a very “organic” process. The future will also see not only increased

adoption of these standards, but increased experimentation within companies, sectors, at the site

level and in regions. The new focus will be measuring and reporting on CSR impact - the degree

to which a corporation’s CSR performance has actually improved conditions in society or the

Environment. Companies will be showing how they have used the data and information on

which they report and how they have used stakeholder input to improve their operations.

Through this they will be enhancing their accountability to stakeholders. As a result of this

increased impact reporting, there will be more focus on outcome comparisons between

companies. There will also be an increase in board CSR committees or sub-groups focused on

CSR policy. Tools will be developed to enhance CSR corporate governance. In the future

companies will stop looking at CSR as a way of responding to external pressures and will start

managing it, using the systems, tools and standards available to them, to increase CSR reputation

and results, reduce risks and improve relationships Most expect that governments will be

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working to support accountability and transparency in company operations, particularly through

reporting.

Innovation and Learning Drive CSR:

There will be in-house training programs to bring up the skills of employees across the

company focused on how CSR is defined, how it is applied and how it impacts the business

process. For companies going through a deeper CSR integration process there will be a focus on

internal transformation beginning with personal and professional development of key personnel

There will be more academic research into CSR and CSR fundamentals. There will continue to

be research on the business case, which itself will continue to evolve. CSR in this environment

will become a stimulant for creativity and innovation. New products and services which integrate

CSR and stakeholder values will be developed and become market makers. Some companies will

have discovered that by creating new environmentally and socially sustainable markets they can

benefit from increased business opportunities.

Companies Expected to Achieve or Lever Greater Social Change:

The big debate in CSR in 5 - 10 years is expected to be over its impact on social change

Many are pinning their hopes on an emergent sector whose entire mission and agenda is

sustainability, both social and ecological. Sometimes called the third sector or the civil economy,

these companies have core CSR values and an ethos committed to integrated social and

environmental responsibility. They include natural, clothing, building and construction,

community banking, social investment, travel and educational services, Co-operatives, credit

unions and non-profit enterprises are found in this sector. This sector is expected to grow and

evolve over the next 5 - 10 years and will impact the. marketplace, society and the environment.

They will be a competitive force in the economy, albeit in niche markets. They will be leaders in

CSR innovation and will help raise the bar for CSR performance across sectors. The future of

CSR lies in the hands of the public and civil society organizations and their changing

expectations ,and the vision and leadership of the private sector.

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Corporate Social Responsibility is not charity:

The originally defined concept of CSR needs to be interpreted and dimensionalised in the

broader conceptual framework of how the corporate embed their corporate values as a new

strategic asset, build a basis for trust and cooperation within the wider stakeholder community.

Though there have been evidences that record a paradigm shift from charity to a long-term

strategy, yet the concept still is believed to be strongly linked to philanthropy. There is a need to

bring about an attitudinal change in people about the concept. Several corporate today have

specific departments to operationalise CSR. There are either foundations or trusts or a separate

department within an organisation that looks into implementation of practices. Being treated as a

separate entity, there is always a flexibility and independence to carry out the tasks. But often

these entities work in isolation without creating a synergy with the other departments of the

corporate. There is a need to understand that CSR is not only a pure management directive but it

is something that is central to the company and has to be embedded in the core values and

principles of the corporate.

Corporate Citizenship: A new way to market CSR?

A new terminology that has been gaining grounds in the community today is Corporate

Citizenship. So what is corporate citizenship and is this fundamentally different from corporate

responsibility? Corporate citizenship is defined by the Boston College Centre for Corporate

Citizenship, as the business strategy that shapes the values underpinning a company’s mission

and the choices made each day by its executives, managers and employees as they engage with

society. According to this definition, the four key principles that define the essence of corporate

citizenship are: (i) Minimise harm (ii) Maximise benefit (iii) Be accountable and responsive to

key stakeholders (iv) Support strong financial results. Thus, corporate citizenship, similar to its

CSR concept, is focusing on the membership of the corporation in the political, social and

cultural community, with a focus on enhancing social capital. Notwithstanding the different

terminologies and nomenclature

used, the focus for companies today should be to focus on delivering to the basic essence and

promise of the message that embodies these key concepts – CSR and Corporate Citizenship.

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Conclusion:

Corporate Social Responsibility is not a fad or a passing trend, it is a business imperative

that many Indian companies are either beginning to think about or are engaging with in one way

or another. While some of these initiatives may be labeled as corporate citizenship by some

organisations, there basic message and purpose is the same. A successfully implemented CSR

strategy calls for aligning these initiatives with business objectives and corporate values thereby

integrating corporate responsibility across the business functions and enhancing business

reputation. The challenge for us is to apply fundamental business principles to make CSR

sharper, smarter, and focused on what really matters.

This can be done by:

• Focusing on priorities

• Allocating finance for treating CSR as an investment from which returns are expected

• Optimising available resources by ensuring that efforts are not duplicated and existing

services are strengthened and supplemented

• Monitoring activities and liaising closely with implementation partners such as NGOs to

ensure that initiatives really deliver the desired outcomes

• Reporting performance in an open and transparent way so that all can celebrate progress

and identify areas for further action.

A long term perspective by organisations, which encom-passes their commitment to both

internal and external stakeholders will be critical to the success of CSR and the ability of

companies to deliver on the goals of their CSR strategy. Wealth has to be created before it can be

distributed. The responsibility to create wealth is of business. And responsibilities and rights

must go together. Hence, the society cannot disarm business of its rights which are essential for

creating value.

Corporate Social Responsibility: The journey has begun!

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