corporate social responsibility

Corporate Social Responsibility Ramya Nair - 0821001975


INDEX:INDEX: Cont….Cont….

1.1. Social responsibility meansSocial responsibility means

2.2. Relationship b/w moral, values and ethicsRelationship b/w moral, values and ethics

3.3. Can business be socially responsible?Can business be socially responsible?

4.4. Corporate social responsibility (CSR)Corporate social responsibility (CSR)

5.5. Benefits of CSRBenefits of CSR

6.6. Types of business responsibilitiesTypes of business responsibilities

7.7. Responsibilities towards different groupsResponsibilities towards different groups

8.8. Factors affecting social orientation of enterpriseFactors affecting social orientation of enterprise

9.9. Arguments for social responsibility of businessArguments for social responsibility of business

10.10. Arguments against social responsibility of businessArguments against social responsibility of business

11.11.Social responsibility modelsSocial responsibility models

12.12.Social responsibility strategiesSocial responsibility strategies

13.13.Social auditSocial audit


INDEX:INDEX:

14.14.Objective and benefits of social auditObjective and benefits of social audit

15.15.Principles of social auditPrinciples of social audit

16.16.Social audit cycleSocial audit cycle

17.17.Methods of social auditMethods of social audit

18.18.Scope of social auditScope of social audit

19.19. ISO for Social responsibilityISO for Social responsibility


SOCIAL RESPONSIBILITY MEANS:SOCIAL RESPONSIBILITY MEANS:

Social ResponsibilitySocial Responsibility is an ethical or ideological theory that an is an ethical or ideological theory that an entity whether it is a government, corporation, organization or entity whether it is a government, corporation, organization or individual has a responsibility to society at large. This responsibility individual has a responsibility to society at large. This responsibility can be "negative", meaning there is exemption from blame or liability, can be "negative", meaning there is exemption from blame or liability, or it can be "positive," meaning there is a responsibility to act or it can be "positive," meaning there is a responsibility to act beneficently (proactive stance).beneficently (proactive stance).

According to Keith Denis:According to Keith Denis:““social responsibilities refer to the businessman’s decisions and social responsibilities refer to the businessman’s decisions and actions taken for reasons at least partially beyond the firm’s direct actions taken for reasons at least partially beyond the firm’s direct economic or technical interest”economic or technical interest”

Social responsibilities says that the corporation has not only economic Social responsibilities says that the corporation has not only economic and legal but also certain responsibilities to society which external and legal but also certain responsibilities to society which external beyond these obligation.beyond these obligation.


RELATIONSHIP B/W MORALS, VALUES AND ETHICS:RELATIONSHIP B/W MORALS, VALUES AND ETHICS:


CAN BUSINESS BE SOCIALLY RESPONSIBLE?CAN BUSINESS BE SOCIALLY RESPONSIBLE?

If it can be then what criteria does it need to ensure? The measurements are Economic function, Quality of life, Social investment and Problem solving.

In economic function, the goal that is trying to be achieved should be measured to see if it meets with the cost guidelines that the business is willing to contribute. For instance if the business were to try to better the plant by reducing its carbon footprint, how would it go about doing this?

In the quality of life measurement “should focus on whether the organization is improving or degrading the general quality of life in society”.

Social Investment looks at what the business is doing for the community. Does the business work with the community to fix outstanding issues and social problems? How much of an investment does it make? What issues are they addressing?

Problem solving looks at to what extent the business will work to fix the problem. Will the business simply contribute money to an organization working on the issue? Will they allow company employees to volunteer on company time to fix the problem?


CORPORATE SOCIAL RESPONSIBILITY:CORPORATE SOCIAL RESPONSIBILITY:

Corporate Social Responsibility (CSR),Corporate Social Responsibility (CSR), also known as corporate also known as corporate responsibility, corporate citizenship, responsible business, sustainable responsibility, corporate citizenship, responsible business, sustainable responsible (SRB), or corporate social performance, is a form of responsible (SRB), or corporate social performance, is a form of corporate self-regulation integrated into a business model. Ideally, corporate self-regulation integrated into a business model. Ideally, CSR policy would function as a built-in, self-regulating mechanism CSR policy would function as a built-in, self-regulating mechanism whereby business would monitor and ensure their adherence to law, whereby business would monitor and ensure their adherence to law, ethical standards, and international norms. Business would embrace ethical standards, and international norms. Business would embrace responsibility for the impact of their activities on the environment, responsibility for the impact of their activities on the environment, consumers, employees, communities, stockholders and all other consumers, employees, communities, stockholders and all other members of the public sphere. members of the public sphere.


CSR IS ALSO REFERRED TO AS:CSR IS ALSO REFERRED TO AS:

‘‘CORPORATE’ OR ‘BUSINESS CORPORATE’ OR ‘BUSINESS RESPONSIBILITY’RESPONSIBILITY’

‘‘CORPORATE’ OR ‘BUSINESS CITIZENSHIP’CORPORATE’ OR ‘BUSINESS CITIZENSHIP’

‘‘COMMUNITY RELATIONS’COMMUNITY RELATIONS’

‘‘SOCIAL RESPONSIBILITY’ SOCIAL RESPONSIBILITY’


BENEFITS OF CSR:BENEFITS OF CSR: Cont….Cont….

1. Public Image : The activities of business towards the welfare of the society earn goodwill and reputation for the business. The earnings of business also depend upon the public image of its activities. People prefer to buy products of a company that engages itself in various social welfare programmers. Again, good public image also attracts honest and competent employees to work with such employers.

2. Government Regulation : To avoid government regulations businessmen should discharge their duties voluntarily. For example, if any business firm pollutes the environment it will naturally come under strict government regulation, which may ultimately force the firm to close down its business. Instead, the business firm should engage itself in maintaining a pollution free environment.


BENEFITS OF CSR:BENEFITS OF CSR: Cont...Cont...

3. Survival and Growth : Every business is a part of the society. So for its survival and growth, support from the society is very much essential. Business utilizes the available resources like power, water, land, roads, etc. of the society. So it should be the responsibility of every business to spend a part of its profit for the welfare of the society.

4. Employee satisfaction : Besides getting good salary and working in a healthy atmosphere, employees also expect other facilities like proper accommodation, transportation, education and training. The employers should try to fulfill all the expectation of the employees because employee satisfaction is directly related to productivity and it is also required for the long-term prosperity of the organization. For example, if business spends money on training of the employees, it will have more efficient people to work and thus, earn more profit.


BENEFITS OF CSR:BENEFITS OF CSR:

5. Consumer Awareness : Now-a-days consumers have become very conscious about their rights. They protest against the supply of inferior and harmful products by forming different groups. This has made it obligatory for the business to protect the interest of the consumers by providing quality products at the most competitive price.


TYPES OF BUSINESSS RESPONSIBILITIES:TYPES OF BUSINESSS RESPONSIBILITIES: Cont….Cont….

1. Economic Responsibility:

a) Efficient operation to fulfill monetary need

b) Generation of surplus

c) Keeping reserve

d) Further expansion

2. Legal Responsibility:

a) Fundamental in nature

b) Obey law and regulations

c) Insure law and order


TYPES OF BUSINESSS RESPONSIBILITIES:TYPES OF BUSINESSS RESPONSIBILITIES: Cont….Cont….

3. Ethical Responsibility:

a) Do what is right, fair and just

b) Make a healthy and competitive environment

c) Don’t use unfair advertisement

d) Produce quality products on fair prices

4. Discretionary Responsibility:

a) Contribute in social development

b) Provide basic facilities to employee

c) Contribute in development of community

d) Take initiative in emergencies


RESPONSIBILITIES TOWARDS DIFFERENT GROUPS: Cont….RESPONSIBILITIES TOWARDS DIFFERENT GROUPS: Cont….

1.1. Responsibility towards Shareholders Responsibility towards Shareholders

a)a) Fair rate of returnFair rate of return

b)b) Safety of investmentSafety of investment

c)c) Steady appreciation of investmentSteady appreciation of investment

d)d) Regular, accurate, and full information about the worker and Regular, accurate, and full information about the worker and progress of organizationprogress of organization

2.2. Responsibility towards EmployeesResponsibility towards Employees

a)a) Fair wages and salaryFair wages and salary

b)b) Good and safe working conditionGood and safe working condition

c)c) Adequate service benefits such as gratuity, insurance, provident fundAdequate service benefits such as gratuity, insurance, provident fund

d)d) Opportunity for promotion, tradingOpportunity for promotion, trading

e)e) Worker participation and decision making Worker participation and decision making


3.3. Responsibility towards CustomersResponsibility towards Customers

a)a) Regular supply of right quality goods at right time and right Regular supply of right quality goods at right time and right place place

b)b) Charge reasonable prices Charge reasonable prices

c)c) Supply goods that meet the needs of different classes and taste Supply goods that meet the needs of different classes and taste with different purchasing power with different purchasing power

d)d) Prompt adequate and continuous services Prompt adequate and continuous services

e)e) Prompt of solution of customer Prompt of solution of customer

f)f) True and fair information through advertisement True and fair information through advertisement

g)g) Avoid unfair and unethical like black marketing.Avoid unfair and unethical like black marketing.

4.4. Responsibility towards GovernmentResponsibility towards Government

a)a) To pay the taxes honestly and timely To pay the taxes honestly and timely

b)b) To avoid corrupting public servants To avoid corrupting public servants

c)c) To encourage fair tradeTo encourage fair trade

d)d) To avoid monopolyTo avoid monopoly

RESPONSIBILITIES TOWARDS DIFFERENT GROUPS: Cont….RESPONSIBILITIES TOWARDS DIFFERENT GROUPS: Cont….


RESPONSIBILITIES TOWARDS DIFFERENT GROUPS:RESPONSIBILITIES TOWARDS DIFFERENT GROUPS:

5. Responsibility towards Community

a) To make best possible or efficient use of societies resources

b) To provide maximum possible employee opportunity

c) To keep environment healthy and free from all types of pollution

d) To contribute to the enlistment of weaker section of society

e) To improve public health, educations and cultural life of community.


FACTORS EFFECTING SOCIAL ORIENTATION OF ENTERPRISEFACTORS EFFECTING SOCIAL ORIENTATION OF ENTERPRISE

1.1. Promoters, Directors and Top Management:Promoters, Directors and Top Management: The values and The values and vision of promoters and top management is a key influencing factor.vision of promoters and top management is a key influencing factor.

2.2. Stakeholders:Stakeholders: Attitude of various stakeholders like shareholders, Attitude of various stakeholders like shareholders, creditors, employees etc. also affect the social orientation of a creditors, employees etc. also affect the social orientation of a company.company.

3.3. Societal FactorsSocietal Factors: Social orientation could also be affected by the : Social orientation could also be affected by the expectation of the society from the Corporation. Eg: A resourceful expectation of the society from the Corporation. Eg: A resourceful firm located in a poor community may be expected to contribute to firm located in a poor community may be expected to contribute to the development of education facilities of the locality etc.the development of education facilities of the locality etc.

4.4. Industry and Trade Associations: Industry and Trade Associations: They influence the behavior of They influence the behavior of firms by establishing professional and ethical codes and norms.firms by establishing professional and ethical codes and norms.

5.5. Government and LawsGovernment and Laws: Laws to curb corruption, unfair practices : Laws to curb corruption, unfair practices etc. and the government’s view of social responsibility also acts as etc. and the government’s view of social responsibility also acts as an influencing factor.an influencing factor.

6.6. Political InfluencesPolitical Influences7.7. CompetitorsCompetitors8.8. ResourcesResources


ARGUMENTS FOR SOCIAL RESPONSIBILITIES OF BUSINESSARGUMENTS FOR SOCIAL RESPONSIBILITIES OF BUSINESS ::

1.1. Change in public expectations: Change in public expectations: The need’s of today The need’s of today consumes have changed ,resulting in a change in their consumes have changed ,resulting in a change in their expectations of business. since businesses owe their profits to expectations of business. since businesses owe their profits to society ,they have to therefore respond to the needs of society.society ,they have to therefore respond to the needs of society.

2.2. Business is part of society: Business is part of society: Society and business are Society and business are benefited when there is a symbiotic relationship between the benefited when there is a symbiotic relationship between the two. Society gains through economic development and the two. Society gains through economic development and the provision of employment opportunities and business benefits provision of employment opportunities and business benefits through the workforce and consumers provided by society. through the workforce and consumers provided by society.

3.3. Avoiding intervention by government : Avoiding intervention by government : By being socially By being socially responsible, organizations attract less attenuation from responsible, organizations attract less attenuation from regulatory agencies. This gives them greater freedom and regulatory agencies. This gives them greater freedom and flexibility in their operations.flexibility in their operations.

4.4. Balance of responsibility and power: Balance of responsibility and power: Businesses have Businesses have considerable power and authority. The exercise of this power considerable power and authority. The exercise of this power should be accompanied by a corresponding amount of should be accompanied by a corresponding amount of responsibility.responsibility.


ARGUMENTS FOR SOCIAL RESPONSIBILITIES OF BUSINESSARGUMENTS FOR SOCIAL RESPONSIBILITIES OF BUSINESS ::

4.4. Protecting share holder interests: Protecting share holder interests: By being socially By being socially involved, a company can improve its image and thus protect its involved, a company can improve its image and thus protect its shareholder’s interest.shareholder’s interest.

5. New avenues to create profits : 5. New avenues to create profits : Social responsibility involves Social responsibility involves the conservation of natural resources. Conservation can be the conservation of natural resources. Conservation can be beneficial for firms.beneficial for firms.

6.Favorable public image : 6.Favorable public image : Through social involvement, affirm Through social involvement, affirm can create a favorable public image for itself and ender to can create a favorable public image for itself and ender to society. By so doing, a firm can attract customers, employees society. By so doing, a firm can attract customers, employees and investors and investors


ARGUMENTS AGAINST SOCIAL RESPONSIBILITIES OF ARGUMENTS AGAINST SOCIAL RESPONSIBILITIES OF BUSINESSBUSINESS :: Cont….Cont….

1. Profit Maximization:1. Profit Maximization: Economic efficiency of business should Economic efficiency of business should be the top priority and the sole mission of business. In this be the top priority and the sole mission of business. In this situation decisions are controlled by their desire to maximize situation decisions are controlled by their desire to maximize profits for the shareholders while reasonable complying with profits for the shareholders while reasonable complying with law.law.

2. Society has to pay the Cost:2. Society has to pay the Cost: Costs of social responsibility will Costs of social responsibility will be passed on to the society and eventually it is the society be passed on to the society and eventually it is the society which has to bear them. which has to bear them.

3. Lack of social skills:3. Lack of social skills: Business managers are goods at solving Business managers are goods at solving matters relating to business and not very effective at solving matters relating to business and not very effective at solving social problems as their outlook is primarily economic.social problems as their outlook is primarily economic.

4. Business has enough Power:4. Business has enough Power: Business already has enough Business already has enough social power and the society should not take any steps which social power and the society should not take any steps which give it more power as it could mould social values.give it more power as it could mould social values.


ARGUMENTS AGAINST SOCIAL RESPONSIBILITIES OF ARGUMENTS AGAINST SOCIAL RESPONSIBILITIES OF BUSINESSBUSINESS ::

5.5. Social Overhead Costs:Social Overhead Costs: Cost of social responsibility will not Cost of social responsibility will not immediately benefit the business. Why spend money on an immediately benefit the business. Why spend money on an object, benefits of which will be realized only in future.object, benefits of which will be realized only in future.

6.6. Lack of accountability:Lack of accountability: Businessmen have no direct Businessmen have no direct accountability to the people. Unless the society can develop accountability to the people. Unless the society can develop mechanisms which establish direct lines of social accountability mechanisms which establish direct lines of social accountability from the business to the public, business must not stay away from the business to the public, business must not stay away from social activities.from social activities.

7.7. Friedman’s Views: Friedman’s Views: Friedman asserted that if managers spend Friedman asserted that if managers spend corporate funds on projects not intended to maximize profits, corporate funds on projects not intended to maximize profits, the efficiency of the market mechanism will be undermined and the efficiency of the market mechanism will be undermined and resources will be misallocated within the economy. Many resources will be misallocated within the economy. Many companies involve themselves in social activities because of the companies involve themselves in social activities because of the tax exemptions on the income spent on social purposes.tax exemptions on the income spent on social purposes.


SOCIAL RESPONSIBILITY MODELS:SOCIAL RESPONSIBILITY MODELS:

CARROLL’S CSR CARROLL’S CSR

MODELMODEL


1. CARROLL’S CSR MODEL:1. CARROLL’S CSR MODEL:

Carroll has proposed a three dimensional conceptual model of corporate performance. A firm has the following four categories of obligations of corporate performance:

a) Economicb) Legalc) Ethicald) Discretionary

Firm being an economic activity, the main responsibility is economic along with complying with the legal responsibilities.

Ethical responsibilities are norms which the society expects the business concern to observe even though they are not mandated by law. While discretionary responsibilities refer to the voluntary contribution of the business to the social cause like involvement in community development etc. Carroll points out that these four categories are not mutually exclusive and presented them as a pyramid of CSR.


2. HALAL’S MODEL2. HALAL’S MODEL

Halal’s return on resources model of corporate performance points out that a firm can only attempt to unite the diverse interests of various social groups to form a workable coalition engaged in creating value for distribution among members of the coalition. Beyond a certain level of economic activity the social issues at stake become conflicting.

3. 3. ACKERMAN’S MODELACKERMAN’S MODEL

There are three phases:There are three phases:1.1. The first phase is one when top management recognizes the The first phase is one when top management recognizes the

existence of a social problem and acknowledges the company’s existence of a social problem and acknowledges the company’s policy by making it an oral or written statement.policy by making it an oral or written statement.

2.2. The second phase is characterized by the company appointing The second phase is characterized by the company appointing staff specialists to study the problem and provide staff specialists to study the problem and provide recommendations.recommendations.

3.3. The third phase involves the implementation of the social The third phase involves the implementation of the social responsibility programs.responsibility programs.


SOCIAL RESPONSIBILTY STRATEGIES:SOCIAL RESPONSIBILTY STRATEGIES:

Businesses response to social responsibility tend to fall within four categories:

1. Social Opposition: View taken by business is that they have no obligation to the society in which they operate.

2. Social obligation: Companies believe that they have an obligation to obey the law.

3. Social response: Position taken by companies which believe that their social responsibilities are as dictated by law and will on selective basis go beyond the legal requirements. These units may volunteer to participate in limited socially responsible efforts, but not until they are convinced that the benefits outweigh the costs.

4.Social contribution: Position taken by Companies which believe that they have a deep obligation to serve the society.


SOCIAL AUDIT:SOCIAL AUDIT:

Social audit is a tool for evaluating how satisfactorily a company has discharged its social responsibilities. Social audit enables the public as well as the company to evaluate the social performance of the company.

Social audit involves:

1. Identification of the firm’s activities having potential social impact

2. Assessment and evaluation of the social costs and social benefits of such activities

3. Measurement of the social costs and benefits

4. Reporting


OBJECTIVES AND BENEFITS OF SOCIAL AUDITS:OBJECTIVES AND BENEFITS OF SOCIAL AUDITS:

1. Evaluate the social dimension of the performance of the company.

2. Take measures to improve the social performance of the company on the basis of feedback provided by the social audit.

3. Social audit increases the public visibility of the organization.

4. In case the social audit reveals a socially commendable performance, it helps boost the public image of the company.


PRINCIPLES OF SOCIAL AUDIT:PRINCIPLES OF SOCIAL AUDIT:

There are six underpinning principles to social audit:There are six underpinning principles to social audit:

1.1. It should reflect the opinions of a wide variety of people affected It should reflect the opinions of a wide variety of people affected by the Program (by the Program (multi-perspectivemulti-perspective).).

2.2. It should cover all the activities of the community It should cover all the activities of the community ((comprehensivecomprehensive).).

3.3. The program/activity should be able to compare performance The program/activity should be able to compare performance over time and between similar organizations (over time and between similar organizations (comparativecomparative).).

4.4. It should happen each year and not just as a one-off exercise It should happen each year and not just as a one-off exercise ((regular)regular)

5.5. The findings of the social audit should be widely circulated The findings of the social audit should be widely circulated ((disclosuredisclosure).).


SOCIAL AUDIT CYCLE:SOCIAL AUDIT CYCLE: Cont…..Cont…..


The four main components of a Social Audit are:The four main components of a Social Audit are:

1.1.Statement of PurposeStatement of Purpose – engaging the community in setting – engaging the community in setting priorities: long term vision – medium term strategy – short term priorities: long term vision – medium term strategy – short term operational criteriaoperational criteria2.2.External ViewExternal View - stakeholder and service assessment: benefits - stakeholder and service assessment: benefits received – problems identified – solutions designed, planned and received – problems identified – solutions designed, planned and implementedimplemented3.3.Internal View Internal View – organizational assessment: effectiveness of – organizational assessment: effectiveness of operational methodology – efficiency of management systems – operational methodology – efficiency of management systems – satisfaction of board members, staff and volunteerssatisfaction of board members, staff and volunteers4.4.Review and PlanningReview and Planning – the learning loop: learning lessons from – the learning loop: learning lessons from the previous years planned and actual results, making changes the previous years planned and actual results, making changes and planning the next years strategy and criteriaand planning the next years strategy and criteria

The Social Audit cycle starts with the Statement of Purpose and The Social Audit cycle starts with the Statement of Purpose and Planning, this reviews the results of last year's purpose and plans Planning, this reviews the results of last year's purpose and plans and establishes this year's purpose and plans. and establishes this year's purpose and plans.

SOCIAL AUDIT CYCLE:SOCIAL AUDIT CYCLE:


METHOD OF SOCIAL AUDIT:METHOD OF SOCIAL AUDIT:

1. Social Process Audit: To develop an internal management information system which would allow the management to create and administer the social program in a better way.

2. Financial Statement Format Audit: Social information is presented in the conventional financial statement format i.e. balance sheet

3. Macro-Micro Social Indicator Audit: It attempts to evaluate the micro indicators (i.e. the company’s performance) against a set of macro indicators such as national policies.

4. Constituency Group Audit: Preference and attitude of various constituencies (like employees, creditors, suppliers etc) are identified and measured and the firm’s performance is evaluated.

5. Corporate Rating Approach: This is an external evaluation of the company’s performance by public groups


SCOPE OF SOCIAL AUDIT:SCOPE OF SOCIAL AUDIT:

The scope of social audit is very wide and not limited to a particular The scope of social audit is very wide and not limited to a particular scheme or activities or area. It can be taken up at village level, GP scheme or activities or area. It can be taken up at village level, GP level or even block or district level depending on nature of work level or even block or district level depending on nature of work and program. Similarly it can be organized on a single activity or and program. Similarly it can be organized on a single activity or collectively taking more than one activities together applicable in collectively taking more than one activities together applicable in that specific area. that specific area.


ISO 26000 FOR SOCIAL RESPONSIBILITY:ISO 26000 FOR SOCIAL RESPONSIBILITY:

ISO, the International Organization for Standardization, has decided to launch the development of an International Standard providing guidelines for social responsibility (SR).

The guidance standard will be published in 2010 as ISO 26000 and be voluntary to use. It will not include requirements and will thus not be a certification standard.

There is a range of many different opinions as to the right approach ranging from strict legislation at one end to complete freedom at the other. We are looking for a golden middle way that promotes respect and responsibility based on known reference documents without stifling creativity and development.

Our work will aim to encourage voluntary commitment to social responsibility and will lead to common guidance on concepts, definitions and methods of evaluation.


ISO 26000 FOR SOCIAL RESPONSIBILITY:ISO 26000 FOR SOCIAL RESPONSIBILITY:

The need for organizations in both public and private sectors to behave in a socially responsible way is becoming a generalized requirement of society. It is shared by the stakeholder groups that are participating in the WG SR to develop ISO 26000: industry, government, labor, consumers, nongovernmental organizations and others, in addition to geographical and gender-based balance.

ISO has chosen (SIS) Swedish Standards Institute and (ABNT) Brazilian Association of Technical Standards to provide the joint leadership of the ISO Working Group on Social Responsibility (WG SR). The WG SR has been given the task of drafting an International Standard for social responsibility that will be published in 2010 as ISO 26000.

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