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PSGIM, CSR-Oct 2012

Introduction to the concept of CSR
Difference between CSR and Business Ethics Why is it essential to have knowledge about CSR?

How does this subject fit into your programme?

PSGIM, CSR-Oct 2012

What is the purpose of a corporation?

PSGIM, CSR-Oct 2012

1. Who/What decides the purpose?

2. What are the factors based on which the purpose is determined?
PSGIM, CSR-Oct 2012

Is it made known to others?

PSGIM, CSR-Oct 2012

Is the purpose constant or does it change?

PSGIM, CSR-Oct 2012

Each firm has its own unique purpose and value from which it derives its critical success factors and measures
It has to balance trade offs of different groups such as customers, employees, shareholders and community Internal competitiveness requires a supportive operating environment This requires shared vision and common agenda
PSGIM, CSR-Oct 2012

What should a firm do to achieve the above?

PSGIM, CSR-Oct 2012

Identify key stakeholders
Identify key relationships Understand the demands of these relationships

Define measures of success

Set appropriate performance targets Evaluate performance against these targets Communicate the performance

PSGIM, CSR-Oct 2012

What is CSR?
The relationship between corporations and societies

with which they interact It includes the responsibilities that are inherent on both sides of these relationships
What a firm does to the society What a society does to a firm

PSGIM, CSR-Oct 2012

CSR Asia: A companys commitment to operating in

an economically, socially and environmentally sustainable manner while balancing the interests of diverse stakeholders. Archie B.Carroll :- The social responsibility of business encompasses the economic, legal, ethical and discretionary expectations that society has of organisations at a given point in time.

PSGIM, CSR-Oct 2012

Core Characteristics of CSR

1. Voluntary
- Go beyond actions prescribed by law - Self-regulatory approach - To be in compliance with societal

moral norms - Can be industry driven

PSGIM, CSR-Oct 2012

2. Internalizing or managing externalities

Externalities are +ve & -ve side effects of economic activity that are borne by others, but not considered either in a firms decision making process or in fixation of prices Eg: Pollution

PSGIM, CSR-Oct 2012

3.Multiple stakeholder orientation

It considers larger interests Has stakeholder rather than shareholder perspective

PSGIM, CSR-Oct 2012

4.Alignment of social and economic responsibilities

It cannot conflict with CFP The social and economic responsibilities should be aligned It is for long term success and sustainability

PSGIM, CSR-Oct 2012

5.Practices and values

Philosophy based It not about what a company is doing in the social arena but why it is done

PSGIM, CSR-Oct 2012

6. Beyond philanthropy

Much more than money contributions or community projects It is about how the entire operations of the firm impact on society This requires integration of CSR into normal business functions rather than being discretionary Should be built in and not bolted on

PSGIM, CSR-Oct 2012

Ethics vs. CSR

Ethics Moral Character

Ethical behavior What is right and good

(rightness or wrongness of actions and goodness or badness of motives) Business Ethics Behavior of the firm in dealing with the community or society (use of ethical decision making in commercial contexts) Mostly internal actions, but includes impact on internal and external stakeholders Very Broad, but in most cases has a right or wrong
PSGIM, CSR-Oct 2012

Ethics vs. CSR contd..

CSR is more narrow
It refers to the social obligations of a firm (mostly to

external stakeholders i.e., those who do not have a direct involvement with the business). Does not have right or wrong It is a mode of ethics.. A way in which it is expressed

PSGIM, CSR-Oct 2012

Both are concerned decisions based on something

other than the pursuit of profit Both are concerned about the firms interactions with various stakeholders Based on the society in which the firm exists

PSGIM, CSR-Oct 2012

Importance of CSR
Niall Fitzgerald Former CEO, Unilever "Corporate social responsibility is a hard-edged business

decision. Not because it is a nice thing to do or because people are forcing us to do it... because it is good for our business"

Dame Anita Roddick, Body Shop The business of business should not be about money, it should

be about responsibility. It should be about public good, not private greed

Warren Buffett, Berkshire Hathaway It takes 20 years to build a reputation and five minutes to ruin


PSGIM, CSR-Oct 2012

Next Class..

PSGIM, CSR-Oct 2012