Corporate Social Responsibility- An explanation and some examples

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I made this presentation to illustrate how Corporate Social Responsibility is demonstrated by many companies who are keen to maintain their image and position in society.

I made this presentation to illustrate how Corporate Social Responsibility is demonstrated by many companies who are keen to maintain their image and position in society.

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  • Corporate Social Responsibility refers to the firm’s responsibility of improving society’s welfare and not just pursuing its own profits. The hand of management approach is much more advanced thinking than the Invisible Hand approach which assumes Markets and Self Interest is supreme. It is also ahead of the Hand of Government approach which assumes that as long as we obey the laws, things will take care of themselves. Hand of management assumes that it is not enough to just pursue self-interest and obey the law, but companies need to ACTIVELY concerned about their company’s impact on society and how to improve social welfare.
  • When there was a horrible fire in a textile factory in Bangladesh which killed 1000s of workers. This factory was a subcontractor to large multinational companies (like Gap and Banana Republic). In the eyes of international customers these brands are being affected- because of their poor CSR that allowed such conditions to exist in their supplier factories. Customers are threatening to boycott these global brands if they source from suppliers who are so careless. This has raised the profile of the poor worker’ situation internationally. So these companies are forced to recognize that CSR is important. They have to care about even their suppliers’s conditions, not just in their own factories. Now many of these companies have agreed to give workers compensation for the deaths and are also supervising that factory conditions are improved.
  • Body Shop is a cosmetics firm that promises not to do animal testing when creating new products. This appeals to customers who don’t want to encourage cruelty to animals. These customers will not buy traditional chemicals but only from Body Shop even though it is much more expensive. Therefore this has raised awareness about animal testing, and also the profits of Body Shop has increased. So CSR can also be profitable.
  • Bayer, Merck and other large pharma firms make drugs like
  • https://blogs.commons.georgetown.edu/journal-of-health-sciences/issues-2/previous-volumes/vol-3-no-1-march-2006/the-cost-of-aids-drugs-a-moral-imperative/

Transcript

  • 1. The Hand of Management inCorporate & SocialResponsibility29 May 2013By Nikhil Sen
  • 2. What is CSR?• Corporate Social Responsibility is the firm’sobligation to improve society’s welfare besides itsown profits.• The Hand of Management view on CSR  incontrast to the Invisible Hand (markets) and Handof Government• Opines that businesses should care about theirstakeholders’ welfare even when this does notdirect improve profitability and not required by law.
  • 3. Global Garment Retailers take steps to improve their CSRafter the recent tragedy in BangladeshNormal conditionsAfter the double disaster- factory building collapse & fire• No laws for workerprotection enforced inBangladesh• Providing safetyequipment andprocesses adds to thecost, so many factoryowners don’t provideit.• Bangladesh is lowestcost garment supplierin the world.Now since customers have threatened to boycott these brands, they are forced to ensureCSR and to see that worker conditions in their suppliers’ factories are improved.
  • 4. Relevance of CSR• Leading companies that are involved in CSR build theirentire organization not only to satisfy profit requirements,but also needs of other stakeholders.• Stakeholders include Employees, Local community inwhich the company has its facilities, its customers andsuppliers, as well as society at large.• The leading companies that do CSR will monitor theneeds and expectations of its stakeholders.• Such companies will also set up their internalorganization’s structure in such a way as to effectivelyand innovatively respond to these demands of itsstakeholders.
  • 5. Positives of doing CSR• Studies show that it is possible to be both socially responsibleand financially successful.• More and more companies are now working to be sociallyresponsible, and they are finding that this gives them acompetitive edge in terms of improved brand image as well asgreater sales to ethically conscious customers.• Example of Body Shop – “cruelty-free” cosmetics
  • 6. Another example of CSR• International drug companies do a lot of research inorder to come up with new life saving drugs for AIDS.• However these drugs are expensive because theresearch costs are recovered through sale to customers.• Poor customers in Africa and other developing nationscannot afford these drugs but without them, diseaseslike AIDS will be uncontrolled and have huge impact ontheir populations.• In contrast, generic drug manufacturers in India arecreating low cost versions of these same drugs for sale inAfrica. The debate is on whether sales of these drugsshould be promoted in these countries?• Depends on the ethical stance taken by the managersin these companies, as well as the organization’s culture.
  • 7. The ethical dilemmaShould the genericdrugs be sold to poorcountries at a fraction ofthe cost of rich pharmacompanies? Or are theirprofits more importantthan lives?
  • 8. Conclusions• It is very important to educate managers about theneed for exercising Corporate Social Responsibility• The organization should track the media for findingout opinion about the company in the society atlarge.• The ways and processes to respond to suchfeedback should be in place.• The managers should be paid based on theirsuccessful performance but also in their ethical andmorally correct behaviour towards stakeholders.