CSR

Every individual living in the society has certain obligations towards the society.

Business activities must be conducted according to what the society considers desirable.

Howard Bowen has defined social responsibilities of business obligations to pursue those policies, to make those decisions or to follow those lines of action, which are desirable in terms of the objectives and values of our society.

Assumption: what is good for the society is also good for the business.

Peter F. Drucker“Social responsibility requires managers to consider whether their action is likely to promote the public good, to advance the basic beliefs of our society,, to contribute to its stability, strength, harmony.”

CSR is not a new idea. It is based on right based perspective. This perspective stresses that shareholders, consumers, employees, affected communities and society have a right to know about corporations and their business.

Perspectives of CSRTraditional corporate philanthropy: Charity

for socio-cultural and religious purpose.It dates back to the 19th century and concern for the welfare of the immediate members of the corporation, i.e, the staff and their families.CSR is qualitatively different from the traditional concept of corporate philanthropy.Today CSR goes far beyond the old philanthropy of the past.; i.e, donating money to good causes at the end of the financial year.

Now we need to move towards a challenging measure of corporate responsibility, where we judge results not just by the inputs but by its outcomes, the difference we make to the world in which we live, and the contribution we make to reduce social inequality.

Shareholder’s interests and sustainable development: It focuses on responsibility towards stakeholders(shareholders, employees, management, consumers and community) rather than on maximization of profits for shareholders.

There is an increasing recognition of the triple-bottomline philosophy:

PEOPLEPLANETPROFIT

Ethical Business: More fundamental emerging trend on the international scene. Focuses on:

How a business is conceptualisedHow a business is operated; andThe notion of fair profit.

Triple Bottom-line PhilosophySustainable Development: Corporation should be obliged to make decisions based not only on the financial/economic factors but also on the social and environmental consequences of their activities.Some investors and investment fund managers have begun to take into account the corporation’s CSR policy in making investment decisions.

According to 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 local community and society at large.”

People, Planet and ProfitSustainable development is a process of

developing land,, cities,, business, communities and so on that “meet the needs of the present generation without compromising the ability of future generations to meet their own needs.”

The triple bottom-line philosophy generates long term gains for both business and society.

People: social obligations towards people including employees, customers, suppliers and members of the community.

Planet: They should not disturb ecological balance. Should take steps to check all types of pollution to have good environment.

Profits: Earn profits for the investors by taking care of the interest of both people and planet.

Case for social responsibilityUse of Society’s ResourcesLong-term Business interestMoral JustificationBetter Public ImageConscious CustomersStrong Trade UnionsGovernment Intervention

Case against Social ResponsibilityConflicting considerationsArbitrary powerDisregard of Market mechanismResponsibility of governmentBurden on ConsumersLack of self-interest

Stakeholders Model of Social ResponsibilityThe stakeholder model holds that the

management should consider earning of profits and performing of social obligations simultaneously.

A corporation has responsibilities towards several groups which may be classified under two heads, namely, Insiders and Outsiders.

Responsibility towards Owners or InvestorsResponsibility Towards EmployeesResponsibility towards customersResponsibility towards suppliersResponsibility towards governmentResponsibility towards community and

society