Social involvement: Legal & socially responsible Wipro, Infosys etc.Social obligation : legal but socially irresponsible private, small scale industries.Social reaction: Illegal but socially responsible Coca cola. Satyam computers.Social obstruction Illegal & socially irresponsible : Liquor shops.
Rejection strategy: reluctance to adopt any social work or project.Adversary strategy: Adopt CSR project only when pressure comes from external sources.Resistance Strategy: Adopt the CSR when pressurized by the government.Compliance Strategy: CSR is accepted & tries to finish the project.Accommodation Strategy: Accommodate the request of the shareholders or government in fulfilling the CSR.Proactive Strategy: self interest of the firm to adopt the CSR voluntarily.
CASE I – CSR undertaken because both are strong.CASE II – Rooting strong but capability is poor CSR is not undertaken.CASEIII- Rooting poor CSR Not undertaken.CASEIV – Both poor CSR Not undertaken.
Internet facility in rural areas to help farmers to sell their crops directly to ITC – e- choupal
Corporate social responsibility
Corporate Social ResponsibilityModule-7
Lecture Outline: Corporate Social responsibility. Types and nature of social responsibilities. CSR principles and strategies. Models of CSR. Best practices of CSR. Need of CSR. Arguments for and against CSR.
Person going from one side of the canyon to the other… a lotof clouds like fog. The point is going from one way of doingbusiness to another is very tough. There’s a lot uncertainty.It takes a lot of skill, but we have to lift ourselves beyondthat, above the fog, and that’s not going to be a simpleexercise. CSR is about seeing the forest, the fog, and seeinghow we can get on the other side, and how we can be well-equipped for doing that. So probably we need to developadditional skills, knowledge, and understanding.”
The message is that whateverwe do today will have an impacton future generations. Weshould not hope that the wallswe build to protect ourselveswill be tall enough to protectour children. Only with veryconscious effort we can makethe world for them a better placeto live…even if we address ourmost selfish needs we have toaddress the needs of the nextgeneration. That’s what CSR isabout.”
Meaning: Corporate social responsibility is a gesture of showing thecompany’s concern & commitment towards society’ssustainability & development. CSR is the ethical behaviour of a company towards society.
WBCSD (World Business Council forSustainable Development)“The continuing commitment by business to behaveethically and contribute to sustainable economicdevelopment while improving the quality of life of theworkforce and their families as well as of the localcommunity and society.”
Basic Constituents of CSRContributetowards asustainableeconomicdevelopmentMakedesirablesocialchangesImprovementof socialenvironmentTowardsBusiness& Society
Responsibility towards Society Carrying on business with moral& ethical standards. Prevention of environmental pollution. Minimizing ecological imbalance. Contributing towards the development of social health,education Making use of appropriate technology. Overall development of locality.
Responsibility towards Government Obey rules & regulations. Regular payment of taxes. Cooperating with the Govt topromote social values. Not to take advantage ofloopholes in business laws. Cooperating with the Govt foreconomic growth & development.
Responsibility towards Shareholders To ensure a reasonable rate ofreturn over time. To work for the survival & thegrowth of the concern. To build reputation & goodwillof 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 redressworker’s grievances. Proper recognition of efficiency & hard work.
Responsibility towards consumers Supplying socially harmlessproducts. Supplying the quality, standards,as promised. Adopt fair pricing. Provide after sales services. Resisting black-marketing &profiteering. Maintaining consumer’sgrievances cell. Fair competition.
Nature of social responsibility CSR is normative in nature. CSR is a relative concept. CSR may be started as a proactive or reactive. All firms do not follow the same patterns of CSR. Legal & socially responsible. Legal but socially irresponsible. Illegal but socially responsible. Illegal & socially irresponsible.
CSR Principles & Strategies. Respect for human rights. Respect for the differences of views. Diversity & non-discrimination should be the guidingprinciple. Make some social contribution. Enter into e dialogue Self-realization & creativity. Fair dealings & collaboration. Feedback from the community. Positive value- added Long term economic & social development.
Models of corporate socialresponsibility Friedman model Ackerman Model Carroll Model Environmental Integrity & Community Model. Corporate Citizenship Model. Stockholders & Stakeholders Model. New Model of CSR.
Friedman Model(1962-73) A businessmen should perform his duty well, he isperforming a social as well as a moral duty. A businessmen has no other social responsibility to performexcept to serve his shareholders & stockholders.
Ackerman Model (1976) The model has emphasized on the internal policy goals & theirrelation to the CSR. Four stages involved in CSR. Managers of the company get to know the mostcommon social problem & then express awillingness to take a particular project which willsolve some social problems. Intensive study of the problem by hiring experts &getting their suggestions to make it operational. Managers take up the project actively & workhard. Evaluating of the project by addressing the issues.
Contd…. Six Strategies in the adoption of CSR. Rejection strategy Adversary strategy Resistance strategy Compliance strategy Accommodation strategy Proactive strategy
Philanthropic requirements: Donation, gifts, helpingthe poor. It ensure goodwill & social welfare. Ethical responsibility: Follow moral & ethical valuesto deal with all the stakeholders. Economic responsibility: Maximize the shareholdersvalue by paying good return. Legal responsibility: Abiding the laws of the land.Carroll Model(1991)
Environmental Integrity & CommunityHealth Model. This model developed by Redman. Many corporate in US adopted this model. Corporate contribution towards environmental integrity &human health, there will be greater expansion opportunities. Healthy people can work more & earn more. CSR is beneficial for the corporate sector. CSR in a particular form is welcome.
Corporate Citizenship Model To be a corporate citizen, a corporate firm has to satisfy fourconditions: Consistently satisfactory Sustainable economic performance Ethical actions Behaviour. A particular firm’s commitment to corporate citizenshiprequires the fulfillment of certain social responsibilty.
Contd…………. Productvists believe that the only mission of a firm is tomaximize the profit. Philanthropists who entertain the stockholders. CSR isdominated by moral obligations & not self-interest. Progressivists believes the corporate behaviour basicallymotivated by self interest & should have ability to transformthe society for good. Ethical Idealism concern with sharing of corporate profits forhumanitarian activities.
New Model of CSRCSR (+) CSR(-)CSR(-) CSR(-)Ethical RootingFinancialCapabilityStrong PoorStrongPoor
Best Practices of CSR To set a feasible, Viable & measureable goal. Build a long lasting relationship with the community. Retain the community core values. The impact of the CSR needs to be assessed. Reporting the impact. Create community awareness.
Need for Corporate Social Responsibility To reduce the social cost. To enhance the performance of employees. It a type of investment. It leads to industrial peace. It improves the public image. Can generate more profit. To provide moral justification. It satisfies the stakeholders. Helps to avoid government regulations & control. Enhance the health by non polluting measures.
Arguments for & against the CSR Corporate should have some moral & social obligations toundertake for the welfare of the society. Proper use of resources, capability & competence. The expenditure on CSR is a sort of investment. Company can avoid many legal complications. It create a better impression. Corporate should return a part of wealth.
Fundamental principles of business gets violated. It vey expensive for business houses. CSR projects will not be successful. There are not the special areas of any business. CSR is to induce them to steal away the shareholders money.Arguments against the CSR
Indian Perspective. The Sachar committee was appointed in 1978 to look intocorporate social responsibility issues concerning Indiancompanies . The company must behave & function as a responsiblemember of society. Committee suggests openness in corporate affairs &behaviour. Some business houses have established social institutions likeSchools, colleges, charitable hospitals etc. Corporate sectors have not made significant contributions.(Polluting Environment).
CSR EXAMPLES IBM UK - Reinventing Education Partnership programmeInteractions and sharing of knowledge through a web-basedtechnology - the “Learning Village” software. Culture ofopenness and sharing of good practice AVON - a partnership with Breakthrough Breast Cancer, andits Breast Cancer Crusade has raised over 10 million poundssince its launch 12 years ago TOI’s Lead India campaign, campaign for contributiontowards educating the poor
Companies in trouble Dasani mineral water (part of Coca-Cola). Coke’s sale was banned as the result of tests, includingthose by the Indian government, which found highconcentrations of pesticides. Communities in India , around Coca-Colas bottlingoperations are facing severe shortages of water as a resultof the cola major sucking huge amounts of water from thecommon groundwater source.
Issues at NIKE Nike Inc producer of footwear, clothing, equipment and accessoryproducts for the sports and athletic market. Selling to approximately 19,000 retail accounts in the US, andapproximately 140 countries around the world. Manufactures in China, Taiwan, Korea, Indonesia , Mexico as well asin the US and in Italy. People working - 58% young adults between 20 and 24 years old,83% - women. Few have work-related skills when they arrive at the factory. Issue- unhealthy work environment – debates heated arguments,verbal abuse , 7.8% of workers reported receiving unwelcome sexualcomments, and 3.3% reported being physically abused. In addition,sexual trade practices in recruitment and promotion were reported
Case StudyJack Cohen founded Tesco in 1919when he began to sell surplusgroceries from a stall in the EastEnd of London.The Tesco brandfirst appeared in 1924. The namecame about after Jack Cohenbought a shipment of tea from T.E.Stockwell. He made new labelsusing the first three letters of thesuppliers name (TES), and the firsttwo letters of his surname (CO),forming the word TESCO. The firstTesco store was opened in 1929 inBurnt Oak, Edgware, Middlesex.Tesco was floated on the LondonStock Exchange in 1947 as TescoStores (Holdings) Limited.
Corporate Social Responsibility of Tesco Tesco has made a commitment to corporate social responsibility, in the form ofcontributions of 1.87% in 2006 of its pre-tax profits to charities/local communityorganisations. In 1992 Tesco started a "computers for schools scheme", offering computers in returnfor schools and hospitals getting vouchers from people who shopped at Tesco. Until2004, £92 million of equipment went to these organisations. The scheme has been alsoimplemented in Poland. Starting during the 2005/2006 football season the company now sponsors the TescoCup, a football competition for young players throughout the UK. The cup now runs aboys competition at Under 13 level and two girls cups at Under 14 level and Under 16level. Over 40,000 boys alone took part in the 2007/08 competitions. In 2009 Tesco used “Change for Good” as advertising, which is trade marked byUnicef for charity usage but is not trademarked for commercial or retail use whichprompted the agency to say "it is the first time in Unicef’s history that a commercialentity has purposely set out to capitalise on one of our campaigns and subsequentlydamage an income stream which several of our programmes for children are dependenton”.
Vodafone promised to cut down their carbondioxide emissions in half by 2020 throughimproving the energy efficiency of itsglobal mobile -phone networks. Additionalpoints for Vodafone on CSR because they areconstantly updating us with the results of thecampaign; no matter whether it’s going well ornot.Future promises includes pledging to recycle95% of network equipment waste and plans toreduce work-related accidents that cause losttime by 10%. On top of that, Vodafone is aleading business in socially responsibleproducts such as the text-to-speech softwarefor blind people and easy-to-use handsets forthe elderly.
The bank’s head of corporatesustainability, Teresa Au, has said thatdespite the economic situation, HSBCwould continue to support itssustainability campaign. Initiativesinclude providing small businesses withsustainability insurance options anddeveloping an index for climate change.The business has also boosted itsmanagement of ethical and sociallyresponsible investing funds by 60% overthe last two years. HSBC has anAmerican unit that is dedicated toassisting local communities bypromoting affordablehomeownership, among other goals.