corpoarte social resposibility

1. What is CSR?
Definition by Michael Hopkins
• Concerned with treating stakeholders of the
firm ethically or in a responsible manner
• it includes social and environmental
responsibility
• wider aim of social responsibility is to create
higher and higher standards of living, while
preserving the profitability of the corporation
for people within and outside the corporation.

2. Questions arising out of above definition-
• Who are the stakeholders?
• What is meant by ethical?
• Why include ‘social’ word in corporate
responsibility?
• What does responsibility actually mean?
• Does social include economics and
environment?
• Why should CSR be involved in creating
higher standards of living for people outside
the corporation?

3. Sustainable development meets the
needs of the present without
compromising the ability of future
generations to meet their own need.
Thus Corporate sustainability can be
defined as meeting society’s
expectations that companies add,
social, economic and environmental
value from their operations, products
and services.

4. Word social should be included in CSR
because without it, the definition will be
equivalent to corporate governance, agreeing
to obey law.
Word social should include economic and
environmental.
Meaning of the word responsibility means
corporations are morally duty bound and
accountable for social good.

5. Other definitions of CSR
HSBC- Definition
Corporate Social Responsibility
means managing our business
responsibly and sensitively for long
term success. Our goal is not and
never has been profit at any cost
because we know that tomorrow’s
success depends on the trust we
build today.

6. Definition by CSR Asia
A company’s commitment to
operating in an economically
socially and environmentally
sustainable manner while balancing
the interests of diverse
stakeholders.

7. Core characteristics of CSR
• Voluntary
• Internalising or managing externalities
• Multiple stakeholder orientation
• Alignment of social and economic
responsibilities
• Practises and values
• beyond philanthropy
These six core characteristics capture the main
thrust of CSR

8. Corporate Governance and CSR as a systems
approach.
Corporate governance is a part of CSR system.
This is clear from the following quotation from
Adrian Cadbury. Corporate governance is
concerned with holding the balance between
social goals and between individual and
communal goals. The corporate governance
framework is there to encourage the efficient
use of resources and equally to require
accountability for the stewardship of those
resources. The aim is to align as nearly as
possible the interest of individuals
corporations and society.

9. Case against
• Business of business is business
• CSR has no life (Friedman)
• Only people can have responsibility
• It is pure rhetoric
• In practice, the doctrine of social
responsibility is frequently a cloak for actions
that are justified on other grounds rather than
a reason for those actions.

10. • Doctrine of social responsibility
taken seriously would extend the
scope of the political mechanism
to every human activity. It does not
differ in philisophy from the moot
explicitly collective doctrine. M
Friedman

11. • Corporate structure precludes
social responsibility
• Corporations have no right to
pursue social goals.
• It is difficult for businessmen to
determine what is socially
responsible.

12. The central point of the argument against
CSR is that the chief arbiter of wider
welfare of the society is the government
of the country. The decision on which
social causes should be met, what
labour standards are considered
adequate or what education should look
like- is the domain of the government.
Private actors, notably corporation do
not have mandate to decide on these
issues.

13. Case for CSR.
• Enlightened self-interest
• sound investment
• avoiding interference
• social responsibility is the noble way for
corporations to behave
• it only makes the company sustainable
• it creates reputation and allows the
growth of the company.

14. • It provides the basis for meaningful
corporate social investment.
• It thereby helps development,
becomes effective instruments in
the process development and
removal of poverty.
• Thereby CSR helps in creating
better quality of life for all.

15. • Corporation’s do not work in moral free
zones.
• Government’s capability to enforce legal
framework is limited.
• Similarly government has limited scope to
enforce ethically and socially responsible
organisational behaviour.
• Business should to day be engaged in a war
with the evils of our time, a war it must win.
• Due to liberalization and globalization
Government’s ability to steer abilities in many
sectors has diminished.

16. The more important social responsibility
becomes to a society of free individual the
more that society have to question the
present system of increased bureaucracy and
stress an individualistic, socially non
responsive attitude.
Social responsibility of collection of individuals
representing business represents our best
hope, perhaps the only real hope of reversing
the present trend. Without responsibility and
ethical people in important places, the society
we know and wish to improve will never
survive.

17. Theories and Models of CSR
• At present CSR theories are focussed on
following four main aspects
• These are:-
i. Meeting objectives that produce long term
profits
ii. Using business power in a responsible way
iii. Integrating social demand and
iv. Contributing to a good society by doing what
is ethically correct

18. • The theories dealing with (I) are
called instrumental theories of CSR
• theories dealing with (ii) are called
political theories of CSR
• theories dealing with (iii) are
integrative theories of CSR
• theories dealing with (iv) are called
value theories of CSR

19. • Instrumental theory believes that only one
responsibility of business towards society is
maximisation of profit of the shareholders within the
legal framework and ethical custom of a country.
• However, concern for profit does not exclude taking
into account the interest of all who have a stake in
the firm satisfaction of these interests can often
contribute to maximising shareholder value
• instead of short term profit orientation CSR only
stresses attention toward enlightened self interest.
• By CSR activities, we may create and conquer new
markets- thus CSR is a business opportunity

20. • Political theory
Corporation is a social institution. It
must use corporate power
responsibly
• Course that generate power are
both internal and external.
• Social responsibility of businesses
arises from the amount of social
power they have.

21. Use of power
• Whoever does not use his/her power
responsibly will lose it
• this is called the iron law of responsibility
• so if a corporation does not use its social
power, it will lose its position in society and
other groups will occupy it.
• The limits of functional power comes from
different constituency groups. This restricts
organisational power in the same way that a
governmental constitution does. In view of
this it is called “Corporate Constitutionalism”.

22. Integrative theory:-
• There is a sort of implicit social contract
between business and society.
• This social contract implies some indirect
obligations of business towards society
• social responsibilities come from consent.

23. In this connection, it is pertinent to
understand the concept of
corporate citizenship.
• Corporate citizenship or business
citizenship concepts convey a
strong sense of business
responsibility towards the local
community and for consideration
towards environment.

24. Integrative theories are focussed
on the detection and scanning
of and response to social
demands that achieve social
legitimacy greater social
acceptance and prestige.

25. Corporate Social Performance (CSP)
CSP includes a search for social
legitimacy with processes for giving
appropriate responses; model
corporate social performance is
composed of (i) principles of CSR,
(ii) processes of corporate social
responsiveness and (iii) outcomes
of corporate behaviour

26. Corporate Social Performance evaluation
will therefore include analysis of
principles of CSR, expressed on
institutional, organisational and
individual levels, processes of corporate
responsiveness such as environmental
assessment, stakeholder management
and outcomes of corporate behaviour
including social impacts, social
programmes and social policies.

27. • Corporations need to be increasingly
conscious of triple bottom line, and only on
single bottom line of financial profit.
• Business impacts society in three dimensions
(TBL approach)
• Environmental dimension- work done in
matters related to pollution and emission
control, product life cycle strategies, energy
conservation, climate change
• Social dimension- deals with social impact in
terms of employment generation and creating
equal opportunities, inclusive development,
community regeneration and other such
social issues.

28. Criticism of TBL approach
• Though enthusiastically advocated the
approach difficult measurement problems
• there is doubtful utility of the concept at
practical level though it is desirable at a broad
aspirational level.
• Financial bottomline is normally clearly
defined and is based on rigourous accounting
and reporting standards
• other two bottomlines are vaguely defined
and often are not precisely derived.

29. • Inspite of above criticisms the FBL approach
is very useful in highlighting the imperatives
of managing all stakeholders in buiness
before achieving the objective of
maximisation of shareholders wealth.
• Large number of corporation abroad and in
India are adopting this approach.
• CII has issued guidelines regarding this for
Indian corporations.

30. ETHICAL THEORIES
• These group theories focuss on ethical
requirements that cement relationships
between business and society.
• They are based on principles that express the
right thing to do or the necessity to achieve a
good society
These include
a. Normative stakeholder theory
b. Universal rights
c. Approach to sustanable development
d. The common good approach

31. Seven pillars of sustained corporate
reputation.
PILLAR 1- Integrity
PILLAR 2- Trust
PILLAR 3 - Social Responsibility
PILLAR 4 - Corporate Giving
PILLAR 5 - Business Ethics
PILLAR6 -Transparency and
Communication
PILLAR 7 - Corporate Citizenship