CSR Analysis
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The document provides an in-depth analysis of Corporate Social Responsibility (CSR), outlining its purpose, scope, definitions, and historical development. It emphasizes the importance of CSR in balancing economic, social, and environmental responsibilities, highlighting benefits such as improved brand reputation, customer loyalty, and employee morale. Additionally, the document discusses frameworks for CSR compliance and monitoring, alongside the role of stakeholders in implementing effective CSR strategies.
CSR Analysis
- 1. 2021 CSR ANALYSIS Ahmad Tariq Bhatti FCMA (Pak), ACMA (UK), CGMA, FPFA, MA (Eco.), BSc 1
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- 3. Dedicated to CIMA & ACCA students 3
- 4. 5 Reporting on CSR Activities and Outcomes of CSR Reporting Relationship of CSR with Sustainable Development and the Concept of Corporate Citizenship Drafting a CSR Policy, Monitoring and Controlling CSR activities, Cost & Benefit Analysis and Implementation Examples, Benefits, Framework and Triple Bottom-line for CSR Examples of CSR Compliance and Stakeholder Influence on CSR Compliance Purpose, Scope, Definitions, Brief History and Importance of CSR Drivers for CSR, Areas of CSR Application and Reducing Carbon Foot-Prints 1 2 3 4 6 7 4
- 5. The purpose of CSR is to return benefits to the society, participate in philanthropic causes, protect the environment from various kinds of harmful effects of industrial activity and demonstrate positive social values. The term CSR refers to the company's practices and policies aimed at having a positive impact on the world. The key idea behind CSR is that in addition to pursuing profit maximization, companies must also pursue social and environmental goals. Purpose of CSR 5
- 6. Scope of CSR ► CSR has three pillars: economic, social, and environmental. These three pillars are connected with profit, people, and planet respectively ► At first, CSR focused on the social behavior of businesses only. Later, it included in its scope, the behavior of suppliers and the purpose of a product, as well as how to dispose it off after it loses the utility or value 6
- 7. CSR Definitions Corporate Social Responsibility (CSR) is a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders. - United Nations, Industrial Development Organization The European Commission defines CSR as, “the responsibility of an entity for their impact on society.” Continuing commitment by a 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. - World Business Council for Sustainable Development 7
- 8. Brief History of CSR 1. The term was officially introduced by an American economist, Howard Bowen, in 1953. 2. According to Bowen (1953), CSR is defined as, "the obligation of businessmen to pursue those policies, to make those decisions or to follow those lines of action which are desirable in terms of objectives and values of society.” 3. In 1971, the concept of “social contract” was introduced between businesses and society by the Committee of Economic Development in USA. 4. In 1980s, CSR evolved as more and more organizations started accepting social interest in their business practices. 5. In 1990s, CSR was approved widely across the industries. 6. In 1991, a professor at University of Pittsburgh, Donna J. Wood, wrote an article entitled as, “Corporate Social Performance Revisited.” He provided a framework for assessing the impacts and outcomes of CSR programs. 7. By early 2000s, CSR, became an essential strategy for companies such as, Wells Fargo, Coca- Cola, Walt Disney and Pfizer. 8. Today, CSR has become an essential part of company reporting and has a legal acceptance all over the world. 8
- 9. Importance of CSR It is becoming increasingly important to have a socially conscious image of a business organization. Consumers, employees and other stakeholders prioritize CSR when choosing a brand or a company. They are holding corporations accountable for effecting social change with their business ideas, beliefs, norms, standards and practices. "A robust CSR program is an opportunity for companies to demonstrate their good corporate citizenship and protect the company from outsized risk by looking at the whole social and environmental sphere that surrounds the company." - Jen Boynton, CEO of B Targeted Marketing Co. 9
- 10. Benefits of CSR 4. Increasing access to funding opportunities 5. Attracting, retaining & maintaining a talented workforce 3. Better brand recognition & positive business reputation 2. Saving money on energy & operating cost 1. Increasing customer retention 6. Enhancing working relationship with all stakeholders 7. Attracting new and retaining existing business 8. Increasing influence in the industry through meeting CSR 9. Increasing sales through greater customer loyalty 10. Boosting morale of employees 10
- 12. 12 Carroll’s Pyramid of CSR Philanthropic Responsibilities Be a Good Corporate Citizen (Desired by Society) Ethical Responsibilities Follow Ethics in doing Business (Expected by Business Partners & Society) Legal Responsibilities Obey Laws & Regulations (Required by Law Enforcement Agencies & Society) Economic Responsibilities Be profitable – basic requirement of a business enterprise (Required by Stakeholders) Archie B. Carroll developed in 1991, the pyramid of CSR, which explains what CSR is and why companies participate in CSR. This pyramid is useful in explaining the motives for CSR, which are shown in the pyramid. The four levels of the pyramid reflect a company’s reason to engage in CSR. The purpose of the pyramid is to point out the defining aspects of CSR and explain the basic components of the four-part framework.
- 13. Formulate Environm ent conservat ion Philant hropy Evaluate Monitor Analysis & Reporting Explain Areas of CSR Compliance • Donations & charities • Recycling production and industrial wastes • Conserving energy through use of latest technology • Organizing re-forestation campaigns • Using environment-friendly technologies • Separate Codes of conduct for both company and its employees Environment Conservation Philanthropy Ethical Concerns & Practices Volunteerism • Sponsorships CSR means that the protection of the environment and the promotion of social welfare should be prioritized like the legal requirements in the course of conducting business. 13
- 14. A good corporate citizen refers to a company that is guided by strict ethics and ethical standards in the execution of daily business. It includes balancing all stakeholders’ needs and interests (like wealth maximization, profits, returns, share price increase) with those of society and the environment. It is fully aware of the environmental impact of its business operations. Good corporate citizenship establishes a positive brand image – people want to do business with companies that are respected for fulfilling their social and environmental responsibilities. In addition, they want to be part of a company that is willing to voluntarily lend a hand and help our society face difficult social and environmental issues. In companies that invest time and money in ethical and socially responsible behaviors, employee morale tends to be higher, and these behaviors directly affect employee performance and loyalty. Good Corporate Citizenship 14
- 15. Examples of CSR Compliance 1. Reducing carbon footprints 2. Controlling emissions to soil, water and air 3. Not allowing child and bonded labor 4. Helping people during a massive and devastative earthquake 5. Helping flood victims by sending food, blankets, medicines, camps, etc. 6. Improving labor policies and working standards 7. Ensuring ethical compliance by all employees through a code of conduct 8. Minimizing industrial effluents and disposing them properly 9. Allowing the fair trade practices 10. Charitable giving 11. Giving scholarships to needy students 12. Making the production of a company environment friendly 13. Recycling industrial wastes and eliminating their harmful effects 14. Volunteering in the community welfare projects 15. Sponsoring a game event for promoting games 16. Devising corporate policies that benefit the environment 17. Participating in go-green drives by planting trees 18. Holding seminars and events for promoting environment protection 19. Making socially and environmentally conscious investments 15
- 16. Sustainable Development 16 PLANET PROSPERITY PARTNERSHIP PEOPLE PEACE Sustainability and corporate social responsibility are closely related business concepts that have greatly affected corporate governance. Sustainable business development involves the use of socially and environmentally responsible and efficient operating practices along with achieving the target profitability. Sustainable business development depends on strong partnerships with all groups concerned with social and environmental issues
- 17. 17 Agenda 2030 for Sustainable Development United Nations Department of Economic and Social Affairs Courtesy: DESA, UN
- 18. Five Factors that Promote Sustainable Business Growth 3 1 2 4 5 The ability of a business enterprise to generate and build its positive image and reputation in a society Maintaining a consistent customer appeal through social works and environment friendly measures along with making profits Retaining highly skilled workforce through their satisfaction and following high ethics Maximizing returns of the shareholders through a better financial performance. More investors will be attracted on seeing a healthy bottom-line Promoting strong customer and social relationships. Community-based service events, give a business greater recognition and positive associations with its potential customers. Sustainable Business Growth Through CSR 18
- 19. Effective Discharge of CSR Management of Brand Image & Corporate Reputation Good Corporate Citizenship Benefits, Practices & Principles Environmental Stewardship Diversity & Inclusivity Governance related to Social & Environmental Issues 19
- 20. "The way a corporation achieves a balance among its economic, social, and environmental responsibilities in its operations so as to address shareholder and other stakeholder expectations.“ - International Standardization Organization 20 The triple bottom line (3B/L or TB/L) is a report on the impact of a business performance on the economy, society, and environment. Furthermore, it is used to describe the integration of social and environmental issues and concerns into a business’s decisions, goals, and operations. Economic responsibility is to maximize shareholders’ wealth through increasing profits and protecting the rights of all stakeholders, social responsibility is to obey the laws and follow ethical standards in the conduct of the business, and environmental responsibility is to protect the environment in which a business enterprise operates.
- 21. Top 10 Companies with the Best CSR Reputation 1. Rolex 2. Lego 3. Disney 4. Adidas Group 5. Microsoft 6. Sony 7. Cannon 8. Michelin 9. Netflix 10. Bosch Report 2018-19 https://youmatter.world 21
- 22. The Pressure of Social Groups The Potential for a Competitive Advantage The Threat of Media Groups Customer Requirements The Extent of Costs & Investment Involved Legal & Ethical Requirements Drivers for CSR Compliance 22
- 23. Carbon footprint is the amount of carbon dioxide released into the atmosphere as a result of the activities of an individual, an organization or a community. Reducing the Carbon Footprints Sources of Carbon Emissions 23
- 24. CSR Analysis 24 Sustainable Development Stakeholders’ Role in the Implentation of CSR Business Social Responsibility Responsible Business It pertains to people and organizations behaving and conducting business ethically and with the sensitivity towards social, cultural, economic, and environmental issues. Businesses that practise CSR and sustainable development need to operate in ways that are respectful to the general population and their surrounding environment. A responsible business is essentially one that benefits society by eliminating the negative impacts it might have on society, people and planet. Stakeholders play a key role in the decision making process when businesses decide to engage in CSR projects. CSR is about a business approach to sustainable development by delivering economic, social and environmental benefits. It encapsulates the initiatives by which a company takes responsibility for its effect on social and environmental well-being.
- 25. Business Social Responsibility 25 Local Community General Public Employees or Workers Government and Administrative Bodies Environment Shareholders or Investors Consumers or Customers
- 26. Stakeholders Influence on CSR Activity 26 Government bodies looking after CSR activities and ensuring compliance with the laws related with it. Customers have policies to buy from companies that fulfill their CSR efficiently and effectively. Suppliers may be more interested to sell their goods to a company that has robust system for CSR compliance Investors would be more inclined towards a company that enjoys better reputation with all internal and external stakeholders and have fulfilled its CSR. 1 3 4 2 1 2 3 4
- 27. 27 Soil management, enteric fermentation, and manure management from livestock are the largest sources. Agriculture 11% According to a report, the five industry categories of paper, food, petroleum refineries, chemicals and metal/mineral products are responsible for contributing the most greenhouse gases. Industrial Processes 6% Agriculture, livestock-raising, deforestation and the conversion of forest lands all contribute to substantial carbon emissions.. Land Change & Forestry 6% Energy production and consumption of all types accounts for 72 percent of all emissions. Hence, it is the biggest source of carbon emissions into the atmosphere. Energy Production & Consumption 72% Carbon Emissions Report, 2017 According to a 2017 report by the World Resources Institute (https://www.c2es.org), energy production and consumption are the largest sources of carbon emissions into the atmosphere. It is 72% of the total emissions from all sources. The breakdown of energy-related carbon emissions is as follows. • Electricity and heat 31% • Transportation 15% • Manufacturing and construction 12.4% • Other fuel consumption 8.4% • Fugitive emissions 5.2%
- 28. An Example of a CSR Policy Our company’s CSR policy outlines our efforts to give back to the world. Scope This policy applies to our all group companies. It can also refer to suppliers and partners. Policy Elements We want to be a responsible business that meets the highest standards of ethics and professionalism in the conduct of the business. Our company’s social responsibility falls under two categories: compliance and pro-activeness. Compliance refers to our company’s commitment to legality and willingness to observe community values. Whereas pro-activeness refers to the participation of our company in every event that promotes human rights, helps communities and protects our natural environment. Compliance A: Legal Our company will: 1. Respect the law 2. Honor its internal policies 3. Ensure that all its business operations are legitimate 4. Keep every partnership and collaboration open and transparent B: Business Ethics We’ll always conduct business with integrity and respect to human rights. We’ll promote: 1. Safety and fair dealing 2. Respect toward the consumer 3. Anti-bribery and anti-corruption practices 28
- 29. Monitoring CSR The following is the step-by-step approach for monitoring a CSR program: Break down the CSR goals into categories. Some classes include philanthropy, labor practices, social practices and environmental efforts. It is easy to track how much time and money is invested into each of these categories. Track the success of these investments, look for measurable KPIs. How much has the carbon footprint of the company changed? How many people were reached by a charitable effort? While doing these things, continue to check the changes related to each class, and keep an eye on public perception of which issues are most important? Take public feedback through surveys about the effectiveness of CSR policies, practices and goals. Examine reports of the environmental reporting agencies about the common violations of environmental laws in the area it operates. Recommend corrective actions based on the results of the feedback from public. 29
- 30. 30 CSR Report Purpose Reporting to the internal stakeholders Reporting to external stakeholders Reporting to potential investors Feedback surveys & reports Contents of a CSR report. Standardized vs personalized CSR report Is CSR report mandatory?. Benefits of a CSR report. 1 3 2 8 9 5 4 7 6
- 31. 31 Monitoring & Evaluation of a CSR Project A CSR assessment is the monitoring and evaluation of how well a company has integrated the principles of CSR into its business. The aim of the assessment is to get a clear picture of the CSR practices (i.e., environment, social, ethics, supply chain). Needs an Initial Assessment Monitoring & Evaluation Midterm Assessment How a CSR program fits to the needs of a business enterprise? 01 The operational design of a project, its CSR objectives and means of monitoring & evaluation. 02 The assessment of initial conditions before the start of a CSR project. 04 The assessment of indicators during implementation of a CSR project. 05 Steps for monitoring & evaluation of CSR activities. 03 Measuring indicators upon completion of a CSR project and sharing the results of such implementation with the stakeholders. . 06 Indicators Basic Assessment Final Evaluation & Sharing of results
- 32. THANK YOU
- 33. Ahmad Tariq Bhatti FCMA (Pak), ACMA (UK), CGMA, FPFA, MA (Eco.), BSc For Feedback & Queries at.bhatty@gmail.com