everybody has some responsibilities
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INTRODUCTION
Everybody has some responsibilities. And responsibilities are realized by a person whenhe get maturity. So like a persons personal responsibility business also has responsibilityand it is not a very new concept but it comes when business get maturity. So lets know
what is corporate social Responsibility? And when it comes.
CSR as the name suggests is a term which shows the responsibility taken by an
organization towards the society.
Business depends upon society directly or indirectly because the business needed inputs
like men, money and skills and the society is the market on which business depends tosale, product to their buyers. Thats why so much depends upon society business has
definite responsibility towards the society which is popular as corporate social
responsibility.
Corporate plays vital role in shaping the quality of life of the society as a whole in
todays globalized economy. According to Nobel Laureate Amartya Sen, Market forcesalone are not sufficient for equitable distribution, and some sort of intervention is
required, be it political or from business houses, towards society.
It covers various issues, like human rights, working conditions, equality and diversity ,consumer protection, environment and health impacts, economic development, ethical
business practices and lobbying and political influence.
It is not a new concept to our country. In olden days, the merchants committedthemselves to society for religious reasons sharing their wealth in building temples. The
business community ( vaishyas ) occupied a special place in ancient Indian society. Theyalso provided relief in times of famine and other calamities.
The pioneers of industrialization in those times were
families like Tata, Birla, Bajaj, Godrej, Mahindra etc all who were strongly in favor of
philanthropy. But their interests were not necessarily motivated by religious sentiments.The underlying pattern of charity included sporadic donations ( to schools and hospitals )
without any long-term engagements.
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DEFINITON OF CSR
There is no national or international governing body which control or regulates the CSRactivities carried but in different org. and as such there is also no globally accepted
definition of CSR.But different organization & people have framed different definitions:
The world Business Council for Sustainable Development in its publication Making
Good Business Sense by Lord Holme and Richard Watts used the following definition.
Corporate Social Responsibility is the continuing commitment by business to be have
ethically and contribute to economic development while improving the quality of life ofthe workforce and their families as well as of the local community and society at large.
According to World Bank Group Corporate Social Responsibility Practice, Corporatesocial responsibility is the commitment of business to contribute to sustainable economic
development by working with employees, their families, the local community and society
at large to improve their lives in ways that are good for business and for development.
According to Howard R. Bowen, Social responsibility of business refers to the
obligation of business to pursue those policies to make those decisions or to follow thoselines of action which are desirable in terms of the objectives and values of the society.
According to Koontz and ODonnel, social responsibility is the personel obligation of
every one as he acts for his own interests to assure that the rights and legitimate interestsof all others are not impinged.
According to K.R.Andrews, Conceptually social responsibility may be taken to mean
intelligent and objective concern for the welfare of the society.
According to International Finance Corporation, Corporate social responsibility is thecommitment of businesses to contribute to sustainable economic development by
working with employees, their families, the local community and society at large to
improve their lives in ways that are good for business and for development.
As per European Commission, CSR is a concept whereby companies integrate social
and environmental concerns in their business operations and in their interaction with their
stakeholders on a voluntary basis.
Simply put, CSR is corporates responsibility to the social context, which is outside
immediate stakeholders. While some stakeholders will be involved in implementing anysuch social cause,the benefits of such initiatives spread across the society at large. From
the PR perspective, CSR is a tool for building corporate reputation by taking initiatives
that helps in developing and sustaining the image of socially responsible corporation
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Reason behind CSR
If CSR does not brings any profit to an organization then the question arises why
companies are getting associated with it?
The reasons or drive behind social responsibility towards human and environmentalresponsibility is still questionable whether based on genuine interest or have underlining
ulterior motives could be:
1. Capital Reputation-Corporate social responsibility is basically a new businessstrategy to reduce investment risks and maximize profits by taking all the key
stake-holders into confidence. The proponents of this perspective often include
corporate social responsibility in their advertising and social marketing initiatives.
2. No one knows how many AIDS patients are there in India other countries but it is
possible that everyone has heard about Bill & Melinda Gates Foundations
supporting the cause of AIDS Because CSR stories are easier to be picked up in
the media if the social cause supported is the one needing immediate attention.
3. While corporates are doing their level best talent, CSR is turning out to be an
opportunity to retain the talented staff as people look forward to make difference
in the lives of people around them and are willing to support the cause theiremployer backs up
4 CSR gets featured in corporate annual reports, marketing document and HR
presentation , as well as advertising, thus creating a higher overall impact.
5. Another important reason why CSR matters is that financial success is no longer
an indicator of long-term survival. Companies are subjected to increasing regulation
and forced transparency and scrutiny, which might make them out of the business,
should the business neglect social concerns. Thus, corporate reputation is at stake androle of CSR becomes all the more important and critical.
Why Be Socially Responsible?
Corporations and leaders must ask the Why questions here:
Why be concerned about being socially responsible?
Why care about being a corporation that is socially responsible- does it really
matter?The answer, simple, is yes- being socially responsible can make a difference and has
multiple benefits, including creating a positive corporate reputation, building a positive
corporate image, increasing profit margins, enhanced corporate efficiency while reducingoperating cost and creating a competitive edge.
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The first benefit is reputation building; from a practical perspective, being socially
responsible is good business as in when a corporation makes the stand to be a corporationthat is corporation that is corporately socially responsible they set themselves apart and
begin to build a reputation attracts good employees, as well as increases corporate
commitment, employee motivation , and overall productivity-all good side benefits.Further, a reputation for being socially responsible attracts attention from the
government, national leaders, and community leaders-and who may seek ways to help acorporation continue their service and reward them for such service.
A second benefit of being socially responsible is the increased involvement in the
community which also increases the positiveness with which ones corporation is seen
and breeds good relationships with others as well as the potential for broader impact.Connected with reputation, a positive corporate image builds customer trust and attracts
new customers trust and attracts new customers for the business all of which build the
bottom line for the corporation.
The third benefit is about profit. According to the CSR Network, being a socially
responsible corporation builds higher profit margins, in fact corporations which reporthaving a socially responsible agenda just do better financially, reporting higher sales and
revenues. In an era where profit margins are stretched thin throughout all industries, this
unique idea of serving others ends up serving the corporation at the same time.
A fourth, and interesting benefit, is reduced operating cost in conjunction with higher
operational efficiency. According to the csrnetwork, this benefit goes against the grain of
common thought as one might tend to think of being socially conscious might be anexpensive endeavor, when in actually it creates operational efficiency improving
operational effectiveness. For example, corporations are increasingly turning their
attention to their supply chains to ensure they are sourcing products and services
responsibly to make sure their supplier are providing fair conditions for workers,protecting the environment and generally aiming to achieve an appropriate level of
corporate behavior. This in turn, has led to innovative procedures and processes andalternative options which can lead to efficiency.
A fifth benefit is creating a competitive edge in the marketplace. There are multiple
benefits to operating from a socially responsible aware position, least of which ought tobe the very fact that corporations that are socially responsible are those corporations that
are concerned about the world in which they live and operate in, the bottom line-a good
agenda. In marketing, a corporations image is a highly competitive tool to gain newcustomers. Good publicity, connected with the social initiatives of the corporation ,
opens the channels of marketing to a broader audience.
In many cases, todays consumers are looking to do business with corporations who care
about their local, national, and global responsibility to do good business and give
back in a positive way. These lead to new competitive advantages that corporations can
use to leverage their own position.
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Measuring Corporate Social Responsibility
The csr network and accountability evaluates and ranks global corporations on six
issues : public disclosure, governance management, assurance and stakeholder
engagement. Together, they form a total social accountability rating on the top 50 largestcorporations in the world based on the Fortune Global 500. Here is how the measurement
breaks down according to the, Accountability Rating Report published on Oct 23,2006:
1. Stakeholder Engagement
Engaging in dialogues with people who have an interest in, may be affected
by, or may affect its business.
2. Governance
Executives and the advisory board properly consider stakeholder issues when
setting strategy and formulating.
3. Strategy
Core business strategy integrates social and environmental targets with financialones.
4. Performance Management
Management processes, business standards, incentives and targets seek to achieve
social and environmental goals.
5. Public Disclosure
Provide a detailed report of social and environmental performance.
6. Assurance
Secures appropriate independent assurance.
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Table : Measures of Corporate Social ResponsibilityLevel Measures Indicators Recognition/reward Example
Corporate Corporatecommitment
Visionstatement
ITC, Infosys,Godrej etc.
Corporate Actualimplementation
Allocation offund
Birlas, Bajajetc.
Corporate Executionability
Specific,need-based
plans
Teri
Operational Commitment toexecutive
corporate
Vision
Fixing ofsuitable NGO
or in house
system
Operational Accountability Feedback
systems
Quarterly review of
progress andawarding certificates
of merit etc.,
Infosys, ABB
NGO Expertise-level Objectives,
previous
projects etc.,
Christle
House
Learning
Centre
Employee
Involvement
Initiative Participation
in specificvoluntary
activities
Limited time off,
Certificate of Meritetc.,
Philips,
Bosch,McDonalds,
Pizza Hut,etc.,
Community
Perception
Program
efficacy
Satisfaction
survey ( pre
and post
program )
Companys Senior
Management team is
publicly felicitated.
Employees are givenconcessions where
possible.
GIVE-TEJ
Hotels
partnership
Community
Perception
Overall impact
on social life of
people in thecommunity
Annual or Bi
annual Social
Audit
NGOs and other
agencies involved
are felicitated andpublicly honored
Citi Group
International
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Co
Components of Corporate Social Responsibility
Even after independence, companies such as TISCO and other public sector enterprises
voluntarily contribution to community development. However, mere contribution tocommunity building doesnt make a company socially responsible. A company should
take a balanced view of the components of CSR and implement the strategies in line with
the vision, mission and values of the company. While companies in North America andEurope are pressured by stakeholders to adopt CSR practices, the Indian companies so
far have not faced any such pressures. Also, while companies in developed countries
report their activities adhering to the Global Reporting Initiatives ( fig-2); in India,companies are still not legally bound to formally report CSR activities.
According to a study,
Only 12.4% of Indian companies pursue strategic philanthropy as compared
to 48% of the Multinational Corporations (MNCs).
Charity is pursued by 35%of Indian companies as against 62% of MNCs.
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Both Indian and multinational corporations give money primarily to supporteducation services, environment, health services, and uplifting living
conditions. Support for art and culture, employee volunteering, event
sponsorship, and matching grants (8.0%) are some of the important activities
of the MNCs but not Indian companies.
Other forms of corporate philanthropy include diversity management,
generating alternatives resources and support for agriculture.
It found that the group companies, transport companies and banks practiced philanthropy
in all forms. Entertainment and R&D companies were not involved in any philanthropic
activities. Healthcare, consultancy, software and pharmaceutical companies followed a
more strategic approach to their social activities.
CSR in a Global Context
Although the debate about CSR is often framed in a global context, there is very littleempirical research on the nature and extent of CSR in the developing countries. One
notable exception is a survey by Jeremy Baskin which analyzed reported CSR behavior
of 127 leading companies from 21 emerging markets across Asia, Africa, Latin Americaand central and Eastern Europe. This compares with over 1700 leading companies in high
income Organization for Economic Co-operation and development countries.
Asia is the most covered region in the writing on CSR in developing countries. A2005
survey of CSR reporting in Asia find nearly three quarters of large companies in India
present themselves as having CSR policies and practices verses only a quarter in
Indonesia.The evolution of CSR in Asia tends to occur in 3 waves, with community involvement
being the most established form of CSR, followed by successive second and third waves
of socially responsible production process and employee relations.
A CSR Pyramid for Developing Countries
The most popular model Archie Carrolls CSR Pyramid, comprising economic, legal ,ethical and philanthropic responsibilities almost entirely based on research in anAmerican context. But the order of the CSR layers in developing countries, if they are
taken as an indicator of relative emphasis assigned to various responsibilities, differ from
Carrolls classic pyramid. The CSR Pyramid for Developing Countries is explainedbelow :-
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Economic Responsibilities
Many developing countries suffer from a shortage of FDI, as well as from high
unemployment and widespread poverty. Thats why the economic contribution of
companies in developing countries is highly prized, by governments and communitiesalike. This should not be seen in a negative light, but rather as a more development-
oriented approach to CSR that focuses on the enabling environment for responsiblebusiness in developing countries and that brings economic and equity aspects ofsustainable development to the forefront of the agenda.
In developing countries, CSR tends to stress the importance of economic multipliers,
including the capacity to generate investment and income, produce safe products andservices, create jobs, invest in human capital, establish local business linkages, spread
international business standards, support technology transfer and build physical and
institutional infrastructure. For this reason, companies that operate in developingcountries increasingly report on their economic responsibilities by constructing
economic value added statements.
Philanthropic Responsibilities
Philanthropic responsibility in Europe tends to be rather more compulsory via the legalframework than discretionary acts of successful companies or rich capitalists like in the
US. In this respect, developing countries have more in common with the American
model, although philanthropy generally gets an even higher priority as a manifestation ofCSR.
Partly, this is a result of strong indigenous traditions of philanthropy in developing
countries, as previously discussed. However, there are several other reasons as well. Inthe first instance, the socioeconomic needs of the developing countries in which
companies operate are so great that philanthropy is an expected norm-it is considered theright thing to do by business.
Second, companies realizes that they cannot succeed in societies that fail, and
philanthropy is seen as the most direct way to improve the prospects of the communitiesin which their businesses operate.
Third, over the past 50 years, many developing countries have become reliant on foreignaid or donor assistance. Hence, there is often an ingrained culture of philanthropy.
And a final reason for developing countries prioritization of philanthropy is that they aregenerally still at an early stage of maturity in CSR, sometimes even equating CSR and
philanthropy, rather than embracing the more embedded approaches now common in
developed countries.
Legal Responsibilities
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In developing countries, legal responsibilities generally have a lower priority than indeveloped countries. This does not necessarily mean that companies flaunt the law, but it
is far less of a pressure for good conduct. This is because in many developing countries,
the legal infrastructure is poorly developed, and often lacks independence, resource andadministrative efficiency.
Many developing countries are also behind the developed world in terms of incorporatinghuman rights and other issues relevant to CSR into their legislation. Admittedly, there are
exceptions and some developing countries have seen significant progress in strengthening
the social and environmental aspects of their legislation. However, government capacity
for enforcement remains a serious limitation, and reduces the effectiveness of legislationas a driver for CSR. Hence, tax avoidance by companies is one of the most significant
examples of irresponsible business behavior in developing countries, often contradicting
their CSR claims of good conduct.
Ethical Responsibilities
The 1992 King report was the first global corporate governance code to talk about
stakeholders and to stress the importance of business accountability beyond the
interests of shareholders. Similarly, the 2002 revised King Report was the first to include
a section on integrated sustainability reporting, covering social, health andenvironmental management policies and practices.
This progress is certainly encouraging, but in general, it is still the exception rather thanthe rule. For instance, in Transparency Inter nationals annual Corruption Barometer,
developing countries usually make up the bulk of the most poorly ranked countries.
Further more, survey respondents from these countries generally agree that corruption
still affects business to a large extent. The World Banks Investment Climate Surveypaints a similar picture.
CSR in India
In the new millennium, there is an increased interest in CSR among corporate andmanagement institutes in India. The TATA group is planning to prepare a Human
Development Index Report, which will be the first of its kind in collaboration with theHuman Development Resource Centre (HDRC) of the UNDP and is trying to create anew standard for accountability along the lines of the Human Development Index (HDI).
This will make it simpler for the group companies to report in their balance sheets about
the work being done on other fronts besides business.
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The management schools are committed to train a breed of new age managers, who willbe socially responsible. Even as corporates are embraking upon defining good corporate
citizenship in terms of management practices, the management schools are developing
modules and full-fledged programs to build up a deep sense of corporate responsibility.
Infosys TecnologiesInfosys, formed in 1981 by NR Narayana Murthy, follows a socially responsible and
sustainable path in conducting business. Even during the boom time of the 1990s when
the stock prices of IT companies were skyrocketing, the company believed in sharing the
wealth with the society and its employees. This practice of the company stems from thepersonal belief of Murthy to give back to the society more than what it gave him. It also
substantiates the role and motivation of the CEO and the top management in making the
company a responsible corporate citizen.
Infosys has won many awards such as Best Employers to Work for in India, Golden
Peacock Award for Excellence in Corporate Governance in the Global Category by theWorld Council for Corporate Governance, London, and Corporate Citizenship Award by
The economic Times.
The Infosys Foundation was formed to focus on healthcare, primary education, social
rehabilitation and rural uplift, art and culture. The Foundation began its activities in
Karnataka in 1996. according to recent report, Infosys spends about Rs.50 mn on social
activities.
IBM
The Reinventing Education program sponsored by International Business Machines
(IBM) maximized the benefits to the society and created new business opportunities.IBM has developed a teaching model in Philadelphia school system that uses voice
recognition technology to instruct non-English-speaking children in their native
languages. Computers act as personal instructor for these children.
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CSR Initiative Undertaken by Few Indian Companies
Corporate CSR Focus and Initiatives
Infosys Technologies Infosys Foundation: Through creating opportunities and working towardsa more equitable society, the Infosys Foundation has made small, but
effective strides in the areas of healthcare, education, social rehabilitation
and the arts. Promoted by Infosys technologies Limited, the Foundationoffer the promise of a better tomorrow, through its projects across India.
Focus Area: Healthcare, Social Rehabilitation, Learning and Education,
Art and Culture.
Hero Honda Hero Honda Motors takes considerable pride in its stakeholder
relationships, especially in ones developed at the grassroots. The company
believes it has managed to bring an economically and socially backwardregion in Dharuhera, Haryana, into the national economic mainstream.
Some initiatives taken includes:
Setting up of integrated Rural Development Center on Delhi Jaipur
Highway
Raman Munjal Memorial Hospital
Vocational Training Centre
Adult Literacy Programs
Marriages of underprivileged girls
ONGC ONGC takes a proactive approach towards socioeconomic development
by identifying projects at the plant level by involving the districtadministration, local representatives and recognized voluntaryorganization. Priority is given to areas around the projects with the
following themes: Education, Healthcare and Family Welfare, Community
Development.
Hindustan Lever
Limited
HLL is very committed to social and inclusive development of the
community. Some of the major projects taken by HLL includes: Project
Shakti: The project, which aims to empower underprivildged rural
women, targets small villages with population of less than 2000 people or
less. It provides income-generating opportunities, health and hygiene
education through the Shakti Vani program and creating access to relevant
information through the iShakti community portalYashodham: Rebuilding Lives- HLL has reconstructed a village in the
Bhachau Taluka of Gujarats Kachch district
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CONCLUSION
John D Rockefeller says, Think of giving not as a duty but as a privilege. It seemscompanies have accepted that business is not just making money. This is evident from
their involvement in various community development activities. In the Indian context, thephilanthropic outlook of CSR appears to have vanished and the companies are seeing it asan opportunity to serve the society in whereby contributing their shares for the well-being
of their society in which they exist. Some companies have integrated the term CSR into
their business and are using it as a strategy which is directed to the mutual development
of society and company itself, simultaneously.
CSR is a dynamic concept and it will keep on changing as per the new requirements of
society, to push it to achieve higher standards. It is a choice a choice to commit tobetter the world around you by changing business practices and procedures and giving
resources to those initiatives where we can voluntarily serve local, national, and global
communities.
CSR is a long term endeavor where corporate values, traditions, and visions must change
to reflect a responsibility to the world in which we all live and work. Thiss everyonesresponsibility. It is not enough for a business firm to be conscious of the need for
discharging of its responsibility towards different segments of the community. The
public relations function of management is concerned with the establishment of sound
and mutually fruitful relations with the different public which contribute towards thegrowth and prosperity of the business firm.
Some organizations are successfully implementing CSR initiatives through tie-ups with
NGOs. Hence, It can be observed that the fundamental Ethical model of CSR has nowtaken different forms. It has now moved from just being philanthropy to a self-sustainable
holistic approach.
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Contents
1. Introduction 1
2. Definition 2
3. Reason behind Corporate Social Responsibility 3
4. Why be socially responsible? 3
5. Measuring Corporate Social Responsibility 5
6. Components of Corporate Social Responsibility 7
7. Corporate Social Responsibility in a Global Context 8
8. A Pyramid of Corporate Social Responsibility in 8
Developing Countries
9. Corporate Social Responsibility in India 10
10. Infosys Technologies 11
11. IBM 11
12. CSR Initiative Undertaken by Few Indian Companies 12
13. Conclusion 13
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