Concept and evolution of csr f inal
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Corporate social responsibility has evolved over time from religious and philosophical roots to its current form. During the 1950s-1990s, CSR developed as a concept through the work of thought leaders and in response to social issues. In the 1990s-2000s, tools and frameworks like the triple bottom line and UN Global Compact helped build momentum and mainstream CSR. Today, CSR is integrated into business strategy and viewed as contributing to competitive advantage and social license to operate. Mandatory CSR spending laws in countries like India have further advanced the evolution of CSR into practice.
Concept and evolution of csr f inal
- 1. CONCEPT AND EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY
- 2. • THE IDEA OF CSR IN NEITHER NEW NOR RADICAL • IT HAS LONG HISTORICAL ROOTS • DURING LAST 60 YEARS, CSR CONCEPT HAS GOT TRACTION AND INTEGRATED WITH BUSINESS STARTEGY AND OPEARTIONS
- 3. Basic Idea of CSR
- 4. Evolution of concept • Early phase • CSR initiation phase (1950- 1990) • CSR momentum building phase ( 1990- 2000) • Mainstreaming phase ( 2000 – onwards)
- 5. Evolution of Concept Early Period : Role of Religions and Faiths • Around the world, ancient civilizations have a rich history of understanding the symbiotic connection between human beings and nature • The Vedic traditions of Hinduism offer imagery that attests to the power of the natural world. Scholars of the Vedas have identified various texts and rituals that extol the earth (bhu), the atmosphere (Bhuvah), and sky (sva), as well as the goddess associated with the earth (Prithvi), and the gods associated with water (Ap), fire and heat (Agni) and wind (Vayu).
- 6. Evolution of Concept Early Period : Role of Religions and Faiths • In the Atharva Veda, for instance, a hymn goes, “May that Mother Earth, like a Cosmic Cow, give us the thousand fold prosperity without any hesitation, without being outraged by our destructive actions.” • When a classical Bharata Natyam dancer steps on to the stage, she touches the floor and asks forgiveness from the Earth for the as she is going to stamp hard on the ground while she dances
- 7. Evolution of Concept Early Period : Role of Religions and Faiths “The whole emphasis of the present as also the ancient Hindu religious practices is that human beings cannot separate themselves from their natural surroundings, because Earth has the same relationship with man as that of mother with her child” • The first verse of the Upanishad is: “Ishavasyam Idam Sarvam Yat Kim Cha Jagatyam Jagat Tena Tyaktena bhunjitha, ma gradha kasyasvid dhanam”. (Know that all this whatever moves in this moving world is enveloped by God. Therefore find your enjoyment in renunciation, do not covet what belongs to others.)
- 8. Evolution of Concept Early Period : Role of Religions and Faiths • Apostle Paul says “if one part suffers, every part suffers with it; if one part is honoured, every part rejoices with it” • There are numerous citations from Holy Quran and the Hadiths on sustainability and wise utilisation of natural resources. • All elements, species, habitats, and ecosystems are part of the perfect universe created by the Al- Mighty
- 9. Evolution of Concept Early Period : Role of Religions and Faiths • Basic premise of Budhism sees all things and phenomena as interdependent and arising from multiple causes and conditions • Core values of major religious traditions are “REVERANCE, RESPECT, RESTRAINT, REDISTRIBUTION, RESPONSIBILITY and RENEWAL”.
- 10. Evolution of Concept Early Period : Role of Intellectuals •Even prior to word “social responsibilities was coined”, in 1916 J.M.Clark in the Journal of Political Economy noted that “if men are responsible for known results of their own actions, business responsibilities must include the known results of business dealings, whether these have been recognised by law or not” •Peter Drucker, who is regarded as father of management argued in his book “The Future of Industrial Man” in 1942 argued that companies have a social dimension as well as economic purpose. •Mahatma Gandhi espoused the concept of “ Trusteeship”.
- 11. Evolution of Concept CSR Initiation Phase (1950- 1990) Howard R. Bowen in 1953 published a book whose title was “Social Responsibilities of the Businessman” and he underscored the importance of social responsibilities of business. Bowen is being called “Father of Corporate Social Responsibility”
- 12. Evolution of Concept CSR Initiation Phase (1950- 1990) •During 60s and 70s many management thinkers Geroge Goyder, Keith Davis, Clarence C. Walton, Mlikeorrel Heald, Harold Johnson etc. popularized the term and gave many dimensions to CSR. •Controversy generated by Milton Friedman’s dictum in 1970 that “the social responsibility of business is to increase its profits” •A landmark contribution to the concept of CSR was made by Committee for Economic Development (CED) and in its report in 1971 it was underscored that “business functions by public consent and its basic purpose is to serve constructively the needs of society – to the satisfaction of the society
- 13. Evolution of Concept CSR Initiation Phase (1950- 1990) • CSR moved to mainstream of management theory by publication of Edward Freeman’s classic “Strategic Management: A stakeholders Approach” in 1984 • Concept of CSR was fuelled by some international events like The Bruntland Commission appointed by the UN in 1986 to study connection between development and environment and its report introduced and defined the term “Sustainable Development”.
- 14. Evolution of Concept CSR initiation phase (1950- 1990) • During initiation phase, especially during 60s and 70s, the focus was on environmental issues. In 80s issues were poverty, social inequality etc. • As a result of various efforts and academic interest, CSR became a topic of discussion in business circles.
- 15. Evolution of Concept CSR Momentum Building Phase ( 1990- 2000) • During this period CSR got unparalleled prominence in political – economic discourse. • Corporates in UK , USA and a few countries formed membership organisations espousing the efficacy of responsive business • World Business Council for Sustainable Development was formed in 1995 to act as catalyst for change of mindset among businesses. • SA8000 was launched in 1997 It is an international standard to keep oversight of voluntary verifiable social accountability standards
- 16. Evolution of Concept CSR Momentum Building Phase ( 1990- 2000) • In 1997, John Elkington came out with the concept of TRIPLE BOTTOM LINE which caught the fancy of business thinkers and thought leaders. • In 1997, Global Reporting Initiative (GRI) was launched to develop a monitoring framework of reporting on environment, social and economic performance of companies • In 1999 at the initiative Kofi Annan Ex Secretary General, UN GLOBAL COMPACT was formed comprising of business leaders to support and follow ten principles which are at the core of CSR agenda
- 17. Evolution of Concept CSR Momentum Building Phase ( 1990- 2000) • In 1999, Dow Sustainability Indexes came into being tracking the financial performance of leading sustainability – driven companies worldwide. • During this phase concept of CSR became a living and compelling idea and also acquired specifics and acceptance among businesses and tools for measurement and comparison were available
- 18. Evolution of Concept Mainstreaming Phase ( 2000 – onwards) • During this phase CSR moved from periphery to centre of business strategy and being viewed as a source of competitive advantage and also in many situations an instrument to get a “social license” to operate a business. • In 2002, European Commission launched a European Strategy and Action Framework for promoting CSR • In 2009, at Global Forum for Responsible Management Education attended by 260 business school leaders from 43 countries discussed as to how academic institutions can instill a sense of social responsibility among future business leaders.
- 19. Evolution of Concept • In 2009, Ministry of Corporate Affairs issued National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business (amended in 2011) • Department of Public Enterprises (DPE), GoI issued instructions in respect of CSR in 2010. (amended in 2013) • After passage of Companies Act in 2013 by both houses of Parliament, CSR expenditure has been made mandatory for certain category of corporate. • DPE issued fresh guidelines in October 2014 for PSUs advising compliance of provisions of the Companies Act 2013 and also going beyond compliance provisions.
- 20. Defining CSR Foundation for defining CSR Historical roots and basic urge to serve society Role of thought leaders like : • Howard R.Bowen (1953) : Father of CSR in modern times • John Elkington (1997) : Triple Bottom Line Approach • Edward Freeman (1984) : Stakeholders Approach • Archie B. Carroll (1991) : The Pyramid of CSR
- 21. Definitions of CSR “Corporate social responsibility is the 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) “CSR is a concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment” (European Commission)
- 22. Definitions of CSR CSR is a management concept whereby companies integrate social and environmental concerns in their business operations and interaction with their stakeholders. CSR is a way in which companies achieve a balance of economic, environmental and social imperatives. (UNIDO) “CSR AND SUSTAINABILITY IS A COMPANY’S COMMITMENT TO ITS STAKEHOLDERS TO CONDUCT BUSINESSES IN AN ECONOMICALLY, SOCIALLY AND ENVIRONMENTALLY SUSTAINABLE MANNER THAT IS TRANSPARENT AND ETHICAL” ( PSU Guidelines)
- 24. EVOLUTION OF CSR IN PRACTICE Corporate profit Philanthropy Strategic Community investment Good corporate citizenship Pure self interest Passive donations to charities Investment in social development as part of the Business plan (NVGs) We are getting here Section 135 Compliance Strategic giving linked to business interest 24