Corporate Social Responsibility

 Corporate Social Responsibility

Corporate Social Responsibility has become a big factor in today’s world. Each & every single
company wants to establish CSR. CSR is about a company’s positive contribution to the social
&physical worlds through the way they conduct business.
Again CSR is a gesture of showing the company’s concern & commitment towards society’s
sustainability & development. Or it can be defined as the ethical behavior of a company towards
the society.
In words it is the ethical behavior of a company towards society.

 Goal of CSR:
 Behave ethically
 Contribute to economic development
 Improving the quality of life of the workplace & their familiar, local communities & the
society at large.
 Create a happy & healthy society
 Foster sustainable use of resources
 Growth & enrichment of future generation.

 Basic constituents of CSR:

Contribution
towards a Make Towards
sustainable desirable Business &
Improvement Society
economic social changes
of social
development
environment

 CSR toward different sectors:

Responsibility towards Society:

 Carrying on business with moral & ethical standards

 Prevention of environmental pollution.
 Minimizing ecological imbalance
 Contributing towards the development of social health.
  Making use of appropriate technology.
 Overall development of locality.
Responsibility towards Government:

 Obey rules & regulations.

 Regular payment of taxes.
 Cooperating with the Govt. to promote social values.
 Not to take advantage of loopholes in business laws.
 Cooperating with the Govt. for economic growth & development.
Responsibilities towards Shareholders:

 To ensure a reasonable rate of return over time.

 To work for the survival & the growth of concern.
 To build reputation & goodwill of the company.
 To remain transparent & accountable.
Responsibility towards Employee:

 To provide a healthy working environment.

 To grant regular & fair wages.
 To provide welfare services.
 To provide training & promotion facilities.
 To provide reasonable working standard & norms.
 To provide efficient mechanism to redress worker’s grievances.
 Proper recognition of efficiency & hard work.
Responsibility towards Consumers:

 Supplying socially harmless product.

 Supplying the quality, standards, as promised.
 Adopt fair pricing.
 Provide after sales services.
 Resisting black marketing and profiteering.
 Maintain customer’s grievances cell.
 Fair competition.

 CSR Principles and strategies.

 Respect for human right.
 Respect for the differences of views.
 Diversity and non –discrimination should be the guiding.
 Make some social contribution.
 Enter into a dialogue.
 Self-realization and creativity.
  Fair dealings and collaboration.
 Feedback from the community.
 Positive value-added.
 Long term economic and social development

 Nature of Social Responsibility: (Main Components)

Discretionary
Responsibility.
(Contribute to the
Community, be a good
Corporate Citizen)
Ethical Responsibility
Be ethical. Do what is right. Avoid harm

Legal Responsibility
Obey the law
Economic Responsibility
Be profitable

1. Practice Economic Social Responsibility:

ESR begins with being profitable. Before a business can give back it must be sustainable.
Sustainability includes making a profit for shareholders, paying its employees an appropriate wage,
paying business taxes and meeting other financial obligations. Corporation can show economic SR
by being transparent with all stakeholders regarding the financial status of their business.
2. Practice Legal Social Responsibility:
Consumers are more likely to buy products and utilize service from companies they trust.. A part of
building that trust is abiding by laws that regulate your business.
 Paying the required taxes
 Adhering to labor laws
 Allowing inspections
 Business reputation &
 Personal reputation.
3. Practice Ethical Social Responsibility:
Economic & legal ethical responsibility by the ground work for corporations to move into ethical
social responsibility, which means doing the right thing at all levels of business. To ensure the
ethical work place practices, we should have to look at the environmental impact that the business
makes.
4. Practice Discretionary Social Responsibility:

Discretionary Social Responsibility means use our company’s time & resources to contribute to
the community at large in whatever way is meaningful for our corporate brand.

a. Donating money.
b. Services or products to charitable organization.
c. Initiating own charitable organization.

 Best Practices of CSR:

1. To set a feasible, viable & measurable goal.
2. Build a long lasting relationship with the community.
3. Retain the community core values.
4. The impact of the CSR needed to be assessed.
5. Reporting the impact.
6. Create community awareness.

 Need for Corporate Social Responsibility:

1. To reduce the social cost.
2. To enhance the performance of employees.
3. It a type of investment.
4. It leads to industrial peace.
5. It improves the public image.
6. Can generate more profit.
7. To provide moral justification.
8. It satisfies the stakeholders.
9. Helps to avoid government regulations & control.
10. Enhance the health by non polluting measures.
 Arguments for & Against the CSR:
1. Corporate should have some moral & social obligations to undertake for the welfare of
the society.
2. Proper use of resources, capability & competence.
3. The expenditure on CSR is a sort of investment.
4. Company can avoid many legal complications.
5. It creates a better impression.
 Guidelines for Corporate Social Responsibility:
1. The simpler, the better: A simple & clear cut policy ensures advantages to the organization in the
long- run. Clarity is such a method leaves less chance for complications & mistakes.
2. Concentrate on the goal: The emphasis should be on the core principles of CSR instead of
policies & procedures. While sticking to the policies and procedures, the focus should be in
maintaining principles set.
3. Try & set measurable goals: The more measurable the goals the more effective management of
the CSR is.
4. Target pivotal industry concerns: The main focus should lie on achieving good corporate
citizenship in are such as the environment, employee/ labor relation & Corporate governance.
5. Conduct business with honesty: In the realm of CSR, this attitude can result in addressing
industry specific concerns. The alcohol manufacturers can make a difference in the area of
discouraging people drinking & driving. Or fast- food companies can help in promoting healthy
eating habits and enabling fit & active lifestyles.

 Models of CSR:
1. Fried man Model (1962-73):
Milton Friedman proposed a guiding principle for business ethics in a NewYork Time article,
Provocative titled: “The Social Responsibility of business is to increase profit”.
According to Friedman, There is one and only social responsibility of business to use its
resources and engage in activities designed to increase its profits so long as it stays in the riles
of the game, which is to say engages in open and free competition, without deception of fraud.

One of the main Friedman’s arguments for excluding CSR from business stems from his views
on the ethical spending:

 Spending your money on yourself- Spent wisely.

 Spending your money on others- Spent wisely but challenging.
 Spending people’s money on you- Little incentive to economies.
 Spending people’s money on other people- The role of Corporate Governance & CSR
program starts.

The various CSR approaches all lead to some type of corporate activity integrated into
organization business model its adherence to law, ethical standards, and international social
norms and would include businesses accepting responsibility for the impact of their activities,
regardless of legality on:

# Environment # Consumers

# Employees # Communities

# Stakeholders and # All other relevant members.

 In each of these cases the corporate executive would be spending someone else’s money for a
general social interest. Insofar as his actions in accord with his actions “Social responsibility”
reduce returns to stockholders, he is spending their money. Insofar as his actions raise the
price to customer, he is spending the customers’ money. Insofar as his actions lower the
wages of some employees, he is spending their money.”

Friedman argued that such actions in effect turned executives into public employees or civil
servants, and making “ expenditures “a part of “ the socialist view that political mechanisms,
not market mechanisms are the appropriate way to determine the allocation of scarce
resources to alternative uses.”

2. Ackerman Model: (1967)

Focuses more on interval policy goals & their relation to these responsibilities. There is something
called triple bottom line. It means company should focus on three things:

a. Economic Responsibility (Profit)

b. Social Responsibility (People)
c. Environmental Responsibility (planet)

Company shows commitment towards society’s sustainability.

Four stages involved in CSR:

1. Managers of the company get to know the most common social problem & then express a
willingness to take a particular project which will solve some social problems.
2. Intensive study of the problem by hiring experts & getting their suggestions to make it
operational.
3. Managers take up the project actively & work hard.
4. Evaluating of the project by addressing the issues.

5. Evaluate
Work on it
Study Problem
Find the Social Problem

3. Carroll’s Model (1991):

In 1991 Dr. Archie B Caroll, a professor & business management author, came up with an idea & wrote
an article “the pyramid of CSR”. The pyramid is a structure of four different areas:

Philanthropic Responsibility: These are the activities that corporate might think of doing it. Donation,
gifts, helping the poor. It ensures goodwill & social welfare.

Ethical Responsibility: Oblige to do what is right & fair avoid hurting anyone. These are “should
doresponsibilities”. Follow moral & ethical values to deal with all the stakeholders.
Legal Responsibility: are “have to” do responsibilities such as following government’s laws and
regulations.

Economic Responsibility: are “must do” responsibilities which affect shareholders, creditor. Customers,
maximizing the shareholders value by paying good return.

Desired by Society
Be a good global corporate citizenPhilanthro
pic
responsibil
Be Ethical Ethical
ity
Expected by Society
Responsibilit
Obey the law y
Legal
Required by Society
Responsibility
Be profitable Economic Required by Society
Responsibility

4. Redmans Model:
This models developed by Elizabeth Redman in the late 1990s. It is a popular model. This model is called
Environmental Integrity & Community Health Model. In this model corporation addressing
environmental issues usually just donate money to them to gain public support to do more business with
them.

This is called green washing. It is based on the idea of whitewashing, which is to cover up a persons’
negative behavior by performing an inadequate investigation intended to clear the person of any wrong
doing.

It believes that Healthy people can work more & earn more.

6. Corporate Citizenship Model:

CC involves the social responsibility of business & the extent to which they meet legal, ethical &
economic responsibilities, as established by shareholder. The goal of this model is:

 To produce higher standards of living.

 To produce higher quality of life for the communities that surrounds them.
 To maintain profitability for stakeholders.

To be a corporate citizen a corporate firm has to satisfy four conditions:

 Consistently satisfactory
 Sustainable economic performance
 Ethical actions
 Behavior.

7. Stock holder and Stakeholders Model:

It is the theory of organizational management & business ethics that addresses morals & values in
managing an organization.

Orientation

Stock holders Stake holder

Model Model

Self 1.Productinism 2.Progressivism Interest

Motives

Moral 3.Philanthrophy 4.Ethical Relation Duty

Here,

1. Protectionism believe that the only mission of a firms is to maximize the profit.(stockholders)
2. Progressivisms believe that the corporate behavior basically motivated by self interest & should
have ability to transform the society for good.( stakeholders)

3. Philanthropists who entertain the stockholders. CSR is dominated by moral delegations & not self
interest.
 4. Ethical idealism concern with sharing the corporate profits for humanitarian activities.

8. New Model of CSR:

Ethical Rooting
Financial Capability

Strong Poor
CSR CSR
Strong
+ -
CSR CSR
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Poor