CSR in Global Perspecctive by Amritraj D Bangera

7/28/2019 CSR in Global Perspecctive by Amritraj D Bangera

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Content

I. Introduction to CSR

II. Definition of Corporate Social Responsibility (CSR)

III. CSR in developed and developing countries

IV. CSR framework

V. Drivers of CSR

VI. Pyramid of CSR

VII. Pros and Cons of CSR

VIII. Potential business benefits of CSR

IX. CSR continuum

X. Reasons for CSR activities

XI. Four challenges to CSR with global ethics

XII. CSR following companies


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Introduction

In years, there have been many changes in the nature of the triangular

relationship between companies, the state and the society. No longer can firms

continue to act as independent entities regardless of the interest of the general

public. The evolution of the relationship between companies and society has

been one of slow transformation from a philanthropic coexistence to one where

the mutual interest of all the stakeholders is gaining paramount importance.

Companies are beginning to realise the fact that in order to gain strategic

initiative and to ensure continued existence, business practises may have to be

moulded from the normal practise of solely focussing on profits to factor in

public goodwill and responsible business etiquettes. An examination of some of

the factors which have led to the development of the concept of corporate social

responsibility would be ideal starting ground for the conceptual development of

suitable corporate business practises for emerging markets.

The business environment has undergone vast changes in the recent years

in terms of both the nature of competition and the wave of globalization that has

been sweeping across markets. Companies are expanding their boundaries from

the country of their origin to the evolving markets in the developing countries

which have been sometimes referred to as emerging markets. The current trend

of globalization has brought a realisation among the firms that in order to

compete effectively in a competitive environment; they need clearly defined

business practises with a sound focus on the public interest in the markets. The

increase in competition among the multinational companies to gain first mover

advantage in various developing countries by establishing goodwill

relationships with both the state and the civil society is ample testimony to this

transformation. Secondly, in most of the emerging markets, the state still holds

the key to business success because of the existence of trade and business


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regulations restricting the freedom of multinational companies to incorporate

their previously successful business doctrines which have been tried and tested

in the developed nations. The state with its duty of protecting the interests of the

general public would naturally be inclined to give preference to companies

which take care of the interests of all the stakeholders. Thirdly, emerging

markets have been identified as a source of immense talent with the rising

levels of education. For example, the expertise of India in churning out software

professionals and China in manufacturing has now become internationally

renowned. In order to draw from this vast talent pool coming up in developing

countries, companies need to gain a foothold in these markets by establishing

sound business practices addressing social and cultural concerns of the people.

It has been observed that consumers consider switching to another company's

products and services, speak out against the company to family/friends, refuse

to invest in that company's stock, refuse to work at the company and boycott the

company's products and services in case of negative corporate social behaviour.

Last but not the least, firms all over the world is beginning to grasp the

importance of intangible assets, be it brand name or employee morale. Only

firms that have gained the goodwill of the general public and are ideal corporate

citizens will be to develop these intangible assets into strategic advantages.


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Definition of Corporate Social Responsibility

What CSR is?

World Business Council for Sustainable Development defines Corporate

Social Responsibility (CSR) as 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.

The European Commission advocates CSR as Being socially

responsible means not only fulfilling legal expectations, but also going beyond

compliance and investing more into human capital, the environment and

relations with stakeholders. Corporate social responsibility (CSR) is the

process by which businesses negotiate their role in society.

A concept whereby companies decide voluntarily to contribute to a better

society and a cleaner environment. A concept whereby companies integrate

social and environmental concerns in their business operations and in their

interaction with their stakeholders on a voluntary basis. Operating a business in

a manner that meets or exceeds the ethical, legal, commercial and public

expectations that society has of business.


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CSR in developed and developing country

In develop ing country

The main focus is on nation building

To develop the current socio-economic status at present time

To develop the rural area with the urban

Provide employment to the present workforce and future

Provide education to all

Provide quality health care to all

Community support to full extend for improved quality of life in

community

In developed country

To attain stable governance

To follow proper business ethics

Obey the human rights law at all costs

Protect the environment from destruction from big multinational

corporation


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CSR Framework

It is made up of six characteristics:

1. Understanding society

Understanding how the business operates in broader context and knowing

the social and environmental impact that the business has on society.

2. Building capacity

Building the capacity of others to help manage the business effectively.

For example, suppliers understand the businesss approach to the

environment and employees can apply social and environmental concerns

in their day-to-day roles.

3. Questioning business as usual

Individuals continually questioning the business in relation to a more

sustainable future and being open to improving the quality of life and the

environment.

4. Stakeholder relationsUnderstanding who the key stakeholders are and the risks and

opportunities they present. Working with them through consultation and

taking their views into account.

5. Strategic view

Ensuring that social and environmental views are included in the business

strategy such that they are accepted as integral to the way the business

operates.

6. Harnessing diversity

Respecting that people are different, which is reflected in fair and

transparent employment and business practices.


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Drivers of CSR

Non-

government

al

organization

Government

Investors

Suppliers

Employees

Consumers

CSR


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CSR

NGOs

Government

Investors

Suppliers

Employees

Consumers

Pyramid of CSR

Philanthropic

Be good corporate citizen, Contribute resources to the Community, improve

quality of life

Ethical

phlant

hropic

Ethical

Legal

Economic


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Be ethical Obligation to do what is right, just and fair avoid harm

Legal

Obey the Law Law is societys codification of right and wrong Play by the

rules of the game.

Economic

Be profitable the foundation upon which all others rest

Pros and Cons of CSR

It is difficult to distinguish between CSR and good business practice, but

perhaps one upside of CSR's holistic approach is that it encourages businesses

to safeguard their corporate reputation for the future. Responsible business

practice could help protect a company from consumer boycotts.

It also encourages greater emphasis on people issues, which is good news for

HR managers. Claims that CSR can help employers attract and retain graduate

high-flyers.

Legislation is another danger as the EU gears up for a directive forcing

organizations to report on their environmental, diversity and community

relations record.

Pros Cons

Balances corporate power with

responsibility.

Discourages government regulation.

Promotes long-term profits for

business.

Lowers economic efficiency and

profit.

Imposes unequal costs among

competitors.

Imposes hidden costs passed on to


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Responds to changing stakeholders

demands.

Corrects social problems caused by

business.

stakeholders.

Requires social skills which business

may lack.

Places responsibility on business rather

than individuals.

Potential business benefits of CSR

The scale and nature of the benefits of CSR for an organization can vary

depending on the nature of the enterprise, and are difficult to quantify, though

there is a large body of literature exhorting business to adopt measures beyond

financial ones. However, businesses may not be looking at short-run financial

returns when developing their CSR strategy.

The definition of CSR used within an organization can vary from the strict

"stakeholder impacts" definition used by many CSR advocates and will often

include charitable efforts and volunteering. CSR may be based within the

human resources, business development orpublic relations departments of an

organization,or may be given a separate unit reporting to the CEO or in some

cases directly to theboard. Some companies may implement CSR-type values

without a clearly defined team or program.

Thebusiness case for CSR within a company will likely rest on one or more of

these arguments:

Human resources
http://en.wikipedia.org/wiki/Philanthropyhttp://en.wikipedia.org/wiki/Volunteeringhttp://en.wikipedia.org/wiki/Human_resourceshttp://en.wikipedia.org/wiki/Business_developmenthttp://en.wikipedia.org/wiki/Public_relationshttp://en.wikipedia.org/wiki/CEOhttp://en.wikipedia.org/wiki/Board_of_directorshttp://en.wikipedia.org/wiki/Business_casehttp://en.wikipedia.org/wiki/Philanthropyhttp://en.wikipedia.org/wiki/Volunteeringhttp://en.wikipedia.org/wiki/Human_resourceshttp://en.wikipedia.org/wiki/Business_developmenthttp://en.wikipedia.org/wiki/Public_relationshttp://en.wikipedia.org/wiki/CEOhttp://en.wikipedia.org/wiki/Board_of_directorshttp://en.wikipedia.org/wiki/Business_case


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A CSR program can be an aid to recruitment and retention particularly within

the competitive graduate student market. Potential recruits often ask about a

firm's CSR policy during an interview, and having a comprehensive policy can

give an advantage. CSR can also help improve the perception of a company

among its staff, particularly when staff can become involved through payroll

giving, fundraising activities or community volunteering. See also Corporate

Social Entrepreneurship, whereby CSR can also be driven by employees'

personal values, in addition to the more obvious economic and governmental

drivers.

Risk management

Managing risk is a central part of many corporate strategies. Reputations that

take decades to build up can be ruined in hours through incidents such as

corruption scandals or environmental accidents. These can also draw unwanted

attention from regulators, courts, governments and media. Building a genuine

culture of 'doing the right thing' within a corporation can offset these risk.

Brand differentiation

In crowded marketplaces, companies strive for a unique selling proposition that

can separate them from the competition in the minds of consumers. CSR can

play a role in building customer loyalty based on distinctive ethical values.

Several majorbrands, such as The Co-operative Group, The Body Shop and

American Apparel are built on ethical values. Business service organizations

can benefit too from building a reputation for integrity and best practice.

License to operate

Corporations are keen to avoid interference in their business through taxation or

regulations. By taking substantive voluntary steps, they can persuade
http://en.wikipedia.org/wiki/Recruitmenthttp://en.wikipedia.org/wiki/Retentionhttp://en.wikipedia.org/wiki/Graduate_schoolhttp://en.wikipedia.org/wiki/Payroll_givinghttp://en.wikipedia.org/wiki/Payroll_givinghttp://en.wikipedia.org/wiki/Fundraisinghttp://en.wikipedia.org/wiki/Corporate_Social_Entrepreneurshiphttp://en.wikipedia.org/wiki/Corporate_Social_Entrepreneurshiphttp://en.wikipedia.org/wiki/Riskhttp://en.wikipedia.org/wiki/Unique_selling_propositionhttp://en.wikipedia.org/wiki/Brandshttp://en.wikipedia.org/wiki/The_Co-operative_Grouphttp://en.wikipedia.org/wiki/The_Body_Shophttp://en.wikipedia.org/wiki/American_Apparelhttp://en.wikipedia.org/wiki/American_Apparelhttp://en.wikipedia.org/wiki/Taxationhttp://en.wikipedia.org/wiki/Regulationshttp://en.wikipedia.org/wiki/Recruitmenthttp://en.wikipedia.org/wiki/Retentionhttp://en.wikipedia.org/wiki/Graduate_schoolhttp://en.wikipedia.org/wiki/Payroll_givinghttp://en.wikipedia.org/wiki/Payroll_givinghttp://en.wikipedia.org/wiki/Fundraisinghttp://en.wikipedia.org/wiki/Corporate_Social_Entrepreneurshiphttp://en.wikipedia.org/wiki/Corporate_Social_Entrepreneurshiphttp://en.wikipedia.org/wiki/Riskhttp://en.wikipedia.org/wiki/Unique_selling_propositionhttp://en.wikipedia.org/wiki/Brandshttp://en.wikipedia.org/wiki/The_Co-operative_Grouphttp://en.wikipedia.org/wiki/The_Body_Shophttp://en.wikipedia.org/wiki/American_Apparelhttp://en.wikipedia.org/wiki/Taxationhttp://en.wikipedia.org/wiki/Regulations


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governments and the wider public that they are taking issues such as health and

safety, diversity, or the environment seriously as good corporate citizens with

respect to labor standards and impacts on the environment

Corporate Social Responsibility Continuum
http://en.wikipedia.org/wiki/Health_and_safetyhttp://en.wikipedia.org/wiki/Health_and_safetyhttp://en.wikipedia.org/wiki/Health_and_safetyhttp://en.wikipedia.org/wiki/Health_and_safety


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Reasons for CSR Activities

CSR activities are important to and even expected by the public and they

are easily monitored worldwide

CSR activities help organizations hire and retain the people they want

CSR activities contribute to business performance


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Four Challenges to a CSR with Global Ethic

Global rules emerge from negotiations and will reflect values of the

strong

Global rules may be viewed as an end rather than a beginning

Rules can depress innovation and creativity

Rules are static but globalization is dynamic


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CSR following Companies

CSR at TATA

First Indian company committed to national and global CSR principles

Tata Steel believes that the primary purpose of a business is to improve

the quality of life of people.

Tata Steel will volunteer its resources, to the extent that it can reasonably

afford, to sustain and improve a healthy and prosperous environment and

to improve the quality of life of the people of the areas in which it

operates.

TATAs core CSR activities are in the field of:

Environment

Employee Relations

Stimulating Economic Growth

Civic Amenities & Community Service

Population Management

Sports and Adventure

Health for All


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Relief During Natural Calamities

Education / Arts and Culture

CSR at PepsiCo

PepsiCo India continues to strengthen its Solid Waste Management

initiatives in partnership with Exnora, an environmental NGO. This

award winning, income generating partnership provides a clean

environment to more than 450000 people across Pammal, Chennai,

Nagapattinam, Tenkasi and Cuddalore in Tamil Nadu, Sangareddy in

Andhra Pradesh and Panipat, Haryana.

Designed and supported by the Pepsico Health & Wellness team, the

programs have been implemented in schools in collaboration with

prominent NGOs & Hriday, Swashrit and the Indian Medical

Association.

Get Active programs have a central objective: to raise awareness on the

importance of balanced nutrition and regular physical activity for a

healthy lifestyle among school children.

CSR at ITC

E-Choupal from ITC is a outstanding CSR program contributing to village

development dealing with the following activities

Relevant & Real-time Information

Customised Knowledge

Supply Chain for Farm Inputs

Direct Marketing Channel for Farm Produce

Marketing Services

Governance services

Health with Private Health Service Providers


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Choupal Sagar services

CSR at Reliance

The Reliance DOTS -TB HIV and AIDS therapy centre is a public-

private partnership to combat TB, HIV and AIDS. Pilot program started

at Hazira in 2004 and expanded to Jamnagar in 2005. The center offers

financial assistance, counseling services, awareness programs, treatment,

alternate therapies yoga and pranyama and also nutritional support to the

underprivileged.

CSR at GTL

GTL sets aside up to 1% of its profits towards CSR activities and encourages

active employee participation

Gyan IT (Spreading IT literacy among rural areas)

Know (Mobile Computer lab) VKC (Village Knowledge Centre)

Gyan Deep (Train the trainer Teachers)

Netra (Computer Lab for Blind)

Talk 64 (Chess software for Blind)

Swayam (Self Employment opportunities)

Samman (Mobility for the disabled)

Gyan Jyot (Scholarships for higher studies)

Samrakshan (Financial assistance to bereaved families)

Idaya (Assistance to Tsunami Victims)

Pralay (Assistance in case of natural disasters)

CSR at IBM

IBM - Japans e-elder


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Initiative is a national program using training materials and other support

from IBM Japan which will hire and train seniors as instructors for other

seniors in an effort to help elder citizens (expected to make up one-fifth

of Japans total population) more fully participate in a Web-based

society.

Conclusion

According to a survey

79% want to work for a company heavily engaged in CSR

56% will refuse to work for a company who is not at all committed to and

engaged in CSR.

Over 80% customers will switch brands if no CSR.

CSR in Global Perspecctive by Amritraj D Bangera

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Transcript of CSR in Global Perspecctive by Amritraj D Bangera