Corporate social responsibility

Corporate Social Responsibility
Module-7

Lecture Outline:
 Corporate Social responsibility.
 Types and nature of social responsibilities.
 CSR principles and strategies.
 Models of CSR.
 Best practices of CSR.
 Need of CSR.
 Arguments for and against CSR.

 Person going from one side of the canyon to the other… a lot
of clouds like fog. The point is going from one way of doing
business to another is very tough. There’s a lot uncertainty.
It takes a lot of skill, but we have to lift ourselves beyond
that, above the fog, and that’s not going to be a simple
exercise. CSR is about seeing the forest, the fog, and seeing
how we can get on the other side, and how we can be well-
equipped for doing that. So probably we need to develop
additional skills, knowledge, and understanding.”

The message is that whatever
we do today will have an impact
on future generations. We
should not hope that the walls
we build to protect ourselves
will be tall enough to protect
our children. Only with very
conscious effort we can make
the world for them a better place
to live…even if we address our
most selfish needs we have to
address the needs of the next
generation. That’s what CSR is
about.”

Meaning:
 Corporate social responsibility is a gesture of showing the
company’s concern & commitment towards society’s
sustainability & development.
 CSR is the ethical behaviour of a company towards society.

WBCSD (World Business Council for
Sustainable Development)
“The continuing commitment by business to behave
ethically and contribute to sustainable economic
development while improving the quality of life of the
workforce and their families as well as of the local
community and society.”

Basic Constituents of CSR
Contribute
towards a
sustainable
economic
development
Make
desirable
social
changes
Improvement
of social
environment
Towards
Business
& Society

Types of Social Responsibility

Responsibility towards Society
 Carrying on business with moral& ethical standards.
 Prevention of environmental pollution.
 Minimizing ecological imbalance.
 Contributing towards the development of social health,
education
 Making use of appropriate technology.
 Overall development of locality.

Responsibility towards Government
 Obey rules & regulations.
 Regular payment of taxes.
 Cooperating with the Govt to
promote social values.
 Not to take advantage of
loopholes in business laws.
 Cooperating with the Govt for
economic growth & development.

Responsibility towards Shareholders
 To ensure a reasonable rate of
return over time.
 To work for the survival & the
growth of the concern.
 To build reputation & goodwill
of the company.
 To remain transparent &
accountable.

Responsibility towards Employee
 To provide a healthy working environment.
 To grant regular & fair wages.
 To provide welfare services.
 To provide training & promotion facilities.
 To provide reasonable working standard &
norms.
 To provide efficient mechanism to redress
worker’s grievances.
 Proper recognition of efficiency & hard work.

Responsibility towards consumers
 Supplying socially harmless
products.
 Supplying the quality, standards,
as promised.
 Adopt fair pricing.
 Provide after sales services.
 Resisting black-marketing &
profiteering.
 Maintaining consumer’s
grievances cell.
 Fair competition.

Nature of social responsibility
 CSR is normative in nature.
 CSR is a relative concept.
 CSR may be started as a proactive or reactive.
 All firms do not follow the same patterns of CSR.
 Legal & socially responsible.
 Legal but socially irresponsible.
 Illegal but socially responsible.
 Illegal & socially irresponsible.

CSR Principles & Strategies.
 Respect for human rights.
 Respect for the differences of views.
 Diversity & non-discrimination should be the guiding
principle.
 Make some social contribution.
 Enter into e dialogue
 Self-realization & creativity.
 Fair dealings & collaboration.
 Feedback from the community.
 Positive value- added
 Long term economic & social development.

Models of corporate social
responsibility
 Friedman model
 Ackerman Model
 Carroll Model
 Environmental Integrity & Community Model.
 Corporate Citizenship Model.
 Stockholders & Stakeholders Model.
 New Model of CSR.

Friedman Model(1962-73)
 A businessmen should perform his duty well, he is
performing a social as well as a moral duty.
 A businessmen has no other social responsibility to perform
except to serve his shareholders & stockholders.

Ackerman Model (1976)
 The model has emphasized on the internal policy goals & their
relation to the CSR.
 Four stages involved in CSR.
 Managers of the company get to know the most
common social problem & then express a
willingness to take a particular project which will
solve some social problems.
 Intensive study of the problem by hiring experts &
getting their suggestions to make it operational.
 Managers take up the project actively & work
hard.
 Evaluating of the project by addressing the issues.

Contd….
 Six Strategies in the adoption of CSR.
 Rejection strategy
 Adversary strategy
 Resistance strategy
 Compliance strategy
 Accommodation strategy
 Proactive strategy

 Philanthropic requirements: Donation, gifts, helping
the poor. It ensure goodwill & social welfare.
 Ethical responsibility: Follow moral & ethical values
to deal with all the stakeholders.
 Economic responsibility: Maximize the shareholders
value by paying good return.
 Legal responsibility: Abiding the laws of the land.
Carroll Model(1991)

Environmental Integrity & Community
Health Model.
 This model developed by Redman.
 Many corporate in US adopted this model.
 Corporate contribution towards environmental integrity &
human health, there will be greater expansion opportunities.
 Healthy people can work more & earn more.
 CSR is beneficial for the corporate sector.
 CSR in a particular form is welcome.

Corporate Citizenship Model
 To be a corporate citizen, a corporate firm has to satisfy four
conditions:
 Consistently satisfactory
 Sustainable economic performance
 Ethical actions
 Behaviour.
 A particular firm’s commitment to corporate citizenship
requires the fulfillment of certain social responsibilty.

Stockholders & Stakeholders Model
1
Productivism
2
Progressivism
3
Philanthropy
4
Ethical Idealism
Self
Duty
Interest
Stakeholder
Model
Stockholders
Model
Moral
ORIENTATION
MOTIVES

Contd………….
 Productvists believe that the only mission of a firm is to
maximize the profit.
 Philanthropists who entertain the stockholders. CSR is
dominated by moral obligations & not self-interest.
 Progressivists believes the corporate behaviour basically
motivated by self interest & should have ability to transform
the society for good.
 Ethical Idealism concern with sharing of corporate profits for
humanitarian activities.

New Model of CSR
CSR (+) CSR(-)
CSR(-) CSR(-)
Ethical Rooting
FinancialCapability
Strong Poor
StrongPoor

Best Practices of CSR
 To set a feasible, Viable & measureable goal.
 Build a long lasting relationship with the community.
 Retain the community core values.
 The impact of the CSR needs to be assessed.
 Reporting the impact.
 Create community awareness.

Need for Corporate Social Responsibility
 To reduce the social cost.
 To enhance the performance of employees.
 It a type of investment.
 It leads to industrial peace.
 It improves the public image.
 Can generate more profit.
 To provide moral justification.
 It satisfies the stakeholders.
 Helps to avoid government regulations & control.
 Enhance the health by non polluting measures.

Arguments for & against the CSR
 Corporate should have some moral & social obligations to
undertake for the welfare of the society.
 Proper use of resources, capability & competence.
 The expenditure on CSR is a sort of investment.
 Company can avoid many legal complications.
 It create a better impression.
 Corporate should return a part of wealth.

 Fundamental principles of business gets violated.
 It vey expensive for business houses.
 CSR projects will not be successful.
 There are not the special areas of any business.
 CSR is to induce them to steal away the shareholders money.
Arguments against the CSR

Indian Perspective.
 The Sachar committee was appointed in 1978 to look into
corporate social responsibility issues concerning Indian
companies .
 The company must behave & function as a responsible
member of society.
 Committee suggests openness in corporate affairs &
behaviour.
 Some business houses have established social institutions like
Schools, colleges, charitable hospitals etc.
 Corporate sectors have not made significant contributions.
(Polluting Environment).

CSR EXAMPLES
 IBM UK - Reinventing Education Partnership programme
Interactions and sharing of knowledge through a web-based
technology - the “Learning Village” software. Culture of
openness and sharing of good practice
 AVON - a partnership with Breakthrough Breast Cancer, and
its Breast Cancer Crusade has raised over 10 million pounds
since its launch 12 years ago
 TOI’s Lead India campaign, campaign for contribution
towards educating the poor

Companies in trouble
 Dasani mineral water (part of Coca-Cola).
 Coke’s sale was banned as the result of tests, including
those by the Indian government, which found high
concentrations of pesticides.
 Communities in India , around Coca-Cola's bottling
operations are facing severe shortages of water as a result
of the cola major sucking huge amounts of water from the
common groundwater source.

Issues at NIKE
 Nike Inc producer of footwear, clothing, equipment and accessory
products for the sports and athletic market.
 Selling to approximately 19,000 retail accounts in the US, and
approximately 140 countries around the world.
 Manufactures in China, Taiwan, Korea, Indonesia , Mexico as well as
in the US and in Italy.
 People working - 58% young adults between 20 and 24 years old,
83% - women.
 Few have work-related skills when they arrive at the factory.
 Issue- unhealthy work environment – debates heated arguments,
verbal abuse , 7.8% of workers reported receiving unwelcome sexual
comments, and 3.3% reported being physically abused. In addition,
sexual trade practices in recruitment and promotion were reported

Case Study
Jack Cohen founded Tesco in 1919
when he began to sell surplus
groceries from a stall in the East
End of London.The Tesco brand
first appeared in 1924. The name
came about after Jack Cohen
bought a shipment of tea from T.E.
Stockwell. He made new labels
using the first three letters of the
supplier's name (TES), and the first
two letters of his surname (CO),
forming the word TESCO. The first
Tesco store was opened in 1929 in
Burnt Oak, Edgware, Middlesex.
Tesco was floated on the London
Stock Exchange in 1947 as Tesco
Stores (Holdings) Limited.

Corporate Social Responsibility of Tesco
 Tesco has made a commitment to corporate social responsibility, in the form of
contributions of 1.87% in 2006 of its pre-tax profits to charities/local community
organisations.
 In 1992 Tesco started a "computers for schools scheme", offering computers in return
for schools and hospitals getting vouchers from people who shopped at Tesco. Until
2004, £92 million of equipment went to these organisations. The scheme has been also
implemented in Poland.
 Starting during the 2005/2006 football season the company now sponsors the Tesco
Cup, a football competition for young players throughout the UK. The cup now runs a
boy's competition at Under 13 level and two girl's cups at Under 14 level and Under 16
level. Over 40,000 boys alone took part in the 2007/08 competitions.
 In 2009 Tesco used “Change for Good” as advertising, which is trade marked by
Unicef for charity usage but is not trademarked for commercial or retail use which
prompted the agency to say "it is the first time in Unicef’s history that a commercial
entity has purposely set out to capitalise on one of our campaigns and subsequently
damage an income stream which several of our programmes for children are dependent
on”.

Vodafone promised to cut down their carbon
dioxide emissions in half by 2020 through
improving the energy efficiency of its
global mobile -phone networks. Additional
points for Vodafone on CSR because they are
constantly updating us with the results of the
campaign; no matter whether it’s going well or
not.
Future promises includes pledging to recycle
95% of network equipment waste and plans to
reduce work-related accidents that cause lost
time by 10%. On top of that, Vodafone is a
leading business in socially responsible
products such as the text-to-speech software
for blind people and easy-to-use handsets for
the elderly.

The bank’s head of corporate
sustainability, Teresa Au, has said that
despite the economic situation, HSBC
would continue to support its
sustainability campaign. Initiatives
include providing small businesses with
sustainability insurance options and
developing an index for climate change.
The business has also boosted its
management of ethical and socially
responsible investing funds by 60% over
the last two years. HSBC has an
American unit that is dedicated to
assisting local communities by
promoting affordable
homeownership, among other goals.

Corporate social responsibility

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