CORPORATE SOCIAL

RESPONSIBILITY
 The concept of CSR
•“ CORPOATE SOCIAL RESPONSIBILITY ENCOMPASSES THE ECONOMIC, LEGAL,
ETHICAL AND DISCRETIONARY EXPECTATIONS THAT THE SOCIETY HAS TO
ORGANISATIONS AT A GIVEN POINT OF TIME.”- Carrol
• The traditional perspective stressed corporate philanthropy which means charity for social,
cultural and religious purposes.
• The modern perspective focuses on long term interests of stakeholders and sustainable
development.
• CSR is an old idea though the perspectives on it have been changing over time.
• CSR focuses on the idea that a business has social obligations above and beyond making a
profit.
• A business firm is more than the economic institution .it is an organ of the society & it should work
beyond the narrow goal of profit making.
• It is not about philanthropy. It can be socially responsible without doing charity.
• In the long run social responsibility is consistent with profit motive.. A business cannot survive &
grow without serving the society. By fulfilling its social obligations, business creates an
environment which is conducive to its success.
 The concept
• Social responsibility is a reciprocal relationship. Just as
business owes responsibility to society, society also is
responsible for business.
• Social responsibility is commensurate with its social power. A
small firm has less responsibility as compared to a
multinational firm towards society.
• Social responsibility is a continuing obligation. A business firm
remains responsible to the society throughout its life.
• The concept of CSR is based on ethical conduct as it involves
the application of moral values in the business.
• CSR has to be adopted as a voluntary effort & not mere a legal
obligation. As the existence & sustenance is dependent on the
society.
Definition-Harvard's School of Business
Studies

• CSR encompasses not only what companies

do with their profits , but also how they make
them. It goes beyond philanthropy and
compliance and addresses how companies
manage their economic, social and
environmental impacts, as well as their
relationships in all key spheres of influence:
the workplace, the market place, the supply
chain , the community, and the public policy
realm.
Definition-WBCSD

• According to World Business Council for

Sustainable Development “CSR is the
continuing 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 of the local
community and society at large”.
Dimensions of Corporate
Responsibility(CR)

Corporate Social
Responsibility

Corporate Financial
Responsibility

Corporate Environment
responsibility

Source: World Business Council for Sustainable Development(WBSCD)

 Arguments for CSR
• The Iron law of Responsibility
• Long term self interest
• Moral justification
• Freedom of enterprise
• Better public image
• Proper use of resources
• Environmental protection
• Business opportunities
 Arguments against CSR
• Vague concept
• Loss of incentive
• Conflicting considerations
• Disregard of market mechanism
• Arbitrary power
• Burden on consumers
• Responsibility of government
Is Philanthropy the same as CSR?
• Philanthropy means charity for the welfare of the society
• CSR goes far beyond the traditional concept & also
covers economic, legal & ethical responsibilities of the
organisation.
• CSR is a mandatory activity & requires service of experts
to meet the expectations of the stakeholders. The
philanthropic efforts are voluntary in nature and they may
not require the services of experts.
 Is Philanthropy the same as CSR?
•

Corporate social responsibility Corporate Philanthropy

Wider concept- focus on TBL- Narrow perspective-focus more on charitable

people,planet & profit activities

Deals with business ethics Deals with humanitarian cause

Corporates must respond to the Aims at profit maximisation & spending a part
needs of stakeholders on public welfare activities

Involves the entire organisation & Flows from corporate management values
has to be embedded in the culture
 Environmental Aspects of CSR
• A company is-
• Duty bound to consider the impact of its operations, products
& facilities on the environment.
• Must eliminate/minimise waste & emission.
• Has the obligation to maximise the efficiency & productivity of
its resources.
• Must minimise the adverse impact of its practices on the
world’s resources, so that future generations can enjoy these
resources.
 Environment Issues
• Global warming
• Green house effect
• Ozone depletion
• Deforestation
• Pollution
 Land pollution
 Air pollution
 Water pollution
• Acid rain
Drivers of CSR

• Globalisation & increasing competition

• Interdependence between corporation & community
• Legal compliance
• Pressure from investors
• Good employee relations
• Image building
• Increase in market share
• Cost saving & enhanced profits
• Risk management
 CSR Models
• The Ethical Model
• The owners of the wealth should voluntarily manage their
wealth on behalf of and for the public.
• The big business houses were encouraged by Gandhi Ji to
invest in the socio-economic development and play an active
role in nation building.
• Their commitment towards society’s welfare is reflected in
there investment in schools, colleges, hospitals & other public
sources.
• Many of them have created trusts & foundations & making
donations in cash & kind to NGO’s engaged in social service.
• Thus this model focuses on corporate philanthropy.
 The Statist Model

• This model was developed in India after independence.

• India adopted the mixed economy & socialistic pattern of the
society, consisting of a large & growing public sector.
• State ownership of basic & heavy industries like oil & gas
explorations, power generation, mining, iron & steel,
petrochemicals etc. and the legal framework of India reflects
CSR initiatives.
• Several PSE’s that have survived the wave of privatisation
even today reflect the govt. sponsored corporate philosophy.
• Thus, this model suggests state control over business to
ensure that it is responsible to society.
The Liberal Model
• A company is mainly responsible to its shareholders.
• A company discharges its CSR functions if it obeys the
laws & generates wealth for its shareholders.
• This model is based on the Milton Friedman’s theory who
argues that the only responsibility of the business is to
maximise profits.
The Stakeholder Model
• This model suggests that a company is responsible to all
those groups who have a direct or indirect stake in it.
• These groups are known as stakeholders.
• Which includes shareholders, customers, employees,
suppliers, distributors, govt., media & the community
CSR & CORPORATE SUSTAINABILITY

• The term CS first came to widespread acceptance when

Bruntland Commission report in 1987 came out which defined
the concept as “ development that fulfills the need of the present
without limiting the potential for meeting the needs of the future
generations.”
• The term evolved out of the environmental movement at that time
but gradually it included the social & economic aspect as well.
• PWC has defined CS as a wider concept- “meeting society’s
expectations that company add social, economic & environment
value from their operations, products & servicers.”
 Difference between CSR & CS

• CSR & CS are two sides of the same coin.

• “ CSR defines the social responsibilities of a corporation
which, if implemented will lead to the corporation being
sustained.”
• It implies that CSR is a tool to achieve sustainable
development & forms part of it.
 CSR & CORPORATE GOVERNANCE

• CG means the systems & mechanisms which ensures proper

working of a company & thereby protects its stakeholders.
• CSR means the company conducts its affairs keeping in view
the interests of its stakeholders.
• CSR & CG are complementary to each other.
• Both the concept restrain the functioning & freedom of the
company to some extent.
• Code on both the systems prevent illegal actions by the
corporates ensuring undesirable consequences for the
stakeholders.
CSR & CORPORATE GOVERNANCE

• In the long run, both CSR & CG help to maximise the

market value of a company.
• Good CG & CSR activities lead to a long lasting relationship
between a company & its stakeholders for sustainable
development.
• When the economic, social & environmental expectations of
the stakeholders are met, they develop a vested interest in
the survival & growth of the company.
• To meet these expectations of the stakeholders the
corporate sector is taking care of both these codes while
formulating policies & for the actions involved.
 ISO 26000

• ISO had laid down standards not only for quality but also with
respect to social responsibilities.
• In 2004, the ISO set up a working group on social
responsibility. This group developed ISO26000, standards in
consultation with various stakeholders such as industry ,
labour, consumers, government & others.
• It seeks to encourage voluntary commitment to social
responsibility.
• These standards provide guidance on concepts, issues &
evaluation methods relating to social responsibility.
• These are consistent with the conventions & declarations of
the UN.
ISO 26000
• It is applicable to both private & public sector in developed &
developing countries.
• These represent international consensus on SR issues that
organisations should address to satisfy various stakeholders.
• These are expected to guide companies in developing best SR
practices & actions.
• The ISO has also signed a memorandum with the UN global, a
pact for developing ISO26000 standards in future.
 Uses of ISO26000

• To promote common terminology in the field of social

responsibility.
• To widen awareness about social responsibility.
• To operationalise SR initiatives.
• To enhance the credibility of reports & claims on SR.
• To help win companies the confidence of stakeholders.
• Standards do not encroach upon the govt’s authority on social
issues.
• Consistent with the international conventions & treaties.
• Recognise economic, legal. Social & cultural difference
between nations.