 there is one and only one social responsibility

of business –
to use it resources and engage in activities
designed to increase its profits
so long as it stays within the rules of the
game, which is to say,
engages in open and free competition without
deception or fraud."
Friedman 1970
 Much has changed since then.

 Business has grown bigger while the sphere

of activities of public sector has shrunk.

 Expansion of business activities have

infringed on the environment and the people.

 Much of welfare activities of the public sector

has become untenable.
 Being responsible for the impact of activities
on
- customers
- suppliers
- employees
- shareholders
- communities
- other stakeholders
- the environment
 extends beyond the statutory obligation to
comply with legislation

 sees organizations voluntarily taking further

steps to improve the quality of life for
employees and their families as well as for the
local community and society at large.

 CSR, as it is practiced, is subject to much

debate and some criticism.
 Proponents argue that there is a
strong business case for CSR, in that
corporations benefit in multiple ways
by operating with a broader and long
term perspective, than the immediate,
short-term profits.
 Critics argue that CSR distracts business
from the fundamental economic role of
maximizing shareholder value.

 Others argue that it is nothing more than

superficial window-dressing.

 Still others argue that it is an attempt to pre-

empt the role of governments as a watchdog
over powerful multinational corporations.
1. Moral Obligations :
- Being Good Citizen

2. Sustainability :
- Meeting present needs without compromising future
ability.

3. License to Operate :
- Explicit or Tacit permission to operate from government,
society, stakeholders.
4. Reputation :
- Company image, branding, enliven morale , stock prices.

5. Strategy
- Competitiveness
 Sustainability may be defined as the integration of
economic, social and environmental aspects to
meet the needs of the present without
compromising the ability of future generations to
meet their own needs .

 Credible business practices such as removing

exploitation of labour or the prevention of
fraudulent activities such as accounting
manipulation - integral part of sustainable
business.
 The challenge is how to put the principles into
practice and to implement SR effectively and
efficiently.

 Dow Jones and FTSE have special indices for

promoting companies that emphasize CSR.
These companies are traded under the banner
Dow Jones Sustainability and FTSE4Good.
 There are several ISO guidelines on social
responsibility and related issues.

 ISO 14000 is the international specification for an

environmental management system (EMS).

 It is similar to ISO 9000 quality management in that

both pertain to the process (the comprehensive
outcome of how a product is produced) rather than
to the product itself.
 The overall idea is to establish an organized
approach to systematically reduce the impact
of the environmental aspects which an
organization can control.

 As with ISO 9000, certification is performed

by third-party organizations rather than being
awarded by ISO directly.
 This is a recent addition to the ISO family that deals
specifically with CSR.

 Seven core elements of the standard are as follows;

- Community involvement & development
- Human rights
- Consumer issues
- Labour practices
- Organization governance
- Fair operating practices
- The environment
 Several independent agencies have developed
codes related to different aspects of CSR.

 Performance Oriented
- minimum standard of what constitutes
social responsibility SA8000

 Process Oriented
- procedures a company should follow
AA1000
 expands the traditional reporting framework to
include ecological and social performance in
addition to financial performance.

 It is an expanded spectrum of values and criteria

for measuring organizational success –
economic, environmental and social.

 Adopted in 2007 through the initiatives of the

UN.
pertains to fair and beneficial business
practices toward
- the labour
- the community
- the region
in which a corporation conducts its business.
refers to sustainable environmental practices.

 Life cycle (Cradle to Grave) assessment of

products to determine what the true
environmental cost is from
the growth and harvesting of raw material
to manufacture
to distribution
to eventual disposal by the end user.
is the bottom line shared by all
commerce, ethical or otherwise.
 Business and Society have at present an
adversarial relationship through a mistrust, to
pit one against another.

 CSR viewed from strategic perspective can

take much heat out of this strained
relationship.

 From this perspective a better approach to

CSR would be CSI, corporate social
integration.
Pure philanthropy
(Social)
Combined social and
Economic benefit

Pure business (Economic)

 Social issues affected by company activity are of three
types;
- Generic
- Value chain
- Competitive

 Generic : not affected by company activity

 Value Chain : have significant social impact
 Competitive : external factors that affect the
competitiveness of the company.
 A company needs to sort out social issues as per
these three categories and then rank them in terms
of relevance and potential impact such as,

 Carbon emission :

- generic activity for a finance company

- negative social impact activity for a transport

company

- negative + competitive for an automobile

manufacturer
 Social goals are part business decisions.

 Social and Economic goals are not necessarily

conflicting.

 Using philanthropy to enhance competitive

context can bring social and economic goals into
alignment and improve a company’s long-term
business prospects.

 The alignment not only enables a company to

leverage its capabilities and relationships in
support of charitable causes.
 Competitiveness is a function of how
companies can use labour, capital and
natural resources to produce high-quality
goods and services.

 Productivity depends on having workers

who are educated, safe, healthy, decently
housed and motivated by a sense of
opportunity.
 Preserving environment benefits not only society
but also companies, because reducing pollution
and waste can lead to a more productive use of
resources and help produce goods that the
consumers value.

 This does not mean that every corporate

expenditure can bring a social benefit or that every
social benefit will bring competitiveness. But some
can combine the both.
 CSR can be placed on a much firmer ground if
it is viewed from a broader understanding of
the interrelationship between the corporation
and the society.

 This requires anchoring the CSR activities

with the strategic activities of the company.

 Outcome is a truly win-win relationship

between the society and the organization.
 Strategic CSR is about choosing a unique
position in relation to the competitors.

 Toyota’s Prius is a good example of Strategic

CSR , that has taken the company far ahead
of the competitors, through attention to
negative value chain impact of carbon
emission.
 The basis of this strategic relationship is a
two-way linkage;
- Inside-out (Porter’s Value Chain) :
how a company impinges upon society
through its operations in the normal course
of business
- Outside-in (Porter’s Diamond):
the external social conditions that influence
the corporation
 Inside-Out
Value Chain Activities

M
Outboun Marketin A
Inbound
Operatio d g R
> > > > Service >
ns & G
Logistics
Logistics Sales I
N
^
Firm Infrastructure

HR Management

Technology Development

Procurement
 Factor conditions
- trained worker, physical infrastructure,
administrative processes

 Demand conditions
- sophistication of local customers, product
standards
 Supporting industries
- local suppliers of services

 Rivalry
- rules governing competition, intellectual property
protection
 This blending of the inside-out with the
outside-in linkages is visible in the dairy
businesses of Nestle and Amul in India and
Brac in Bangladesh.

 Milk being their business these companies

have connected with the local community
through sponsoring much activities that feed
into their value chain from procuring to
distribution.
 We see an abundance of CSR initiatives in the
country.

 Though going alone has attractions, an

alternative approach through foundations has
some advantages.

 Foundations provide the institutional framework

for delivering CSR.

 Compared to individual donors, foundations have

the scale, the time horizon, and the expertise to
create greater benefits for the society.
 Assigning CSR tasks to a foundation is
comparable to business outsourcing.

 The Bill Gates foundation has drawn much

attention through the multi-billion dollar
endowment of Warren Buffet.

 The advantage of a Foundation over a business

organization, is the ability to pool resources that
can be used in focused areas of activity such as
Bill Gates work on HIV/AIDS in Africa.
 A Foundation may employ any of the following options of
CSR engagement;

a. Selecting the best grantees for allocation

b. Signaling other funders to work in a consortia

(choosing other donors and work jointly
through sharing donations such as matching
grants)

c. Working in tandem with the grant recipient to

help them improve the performance
d. Advancing knowledge and practice.

- The business education in Bangladesh owes

much to the Ford Foundations grant that led
to the creation of the IBA and consequent
linkages with the Mid Western Universities in the
USA.

- Today’s green revolution has its roots in

research sponsored jointly by the Ford and the
Rockefeller Foundations in the late 1950s and
early 1960s.
 The following is a five step guideline for a
company to embrace CSI;

# 1. Examine competitive context

in each of the company’s
geographic location

# 2. Review existing philanthropic

portfolio to see how it fits
the given context
# 3. Assess existing and potential
social giving initiatives against the
value chain activities

# 4. Seek opportunities for collective

action within a cluster and with
other partners

# 5. Track and evaluate results