Corporate social responsibility (CSR) aligns business goals with social values to benefit both society and companies. While some see CSR as charity, it is most effective when social impact is creatively integrated into business strategies. Done right, CSR can boost profits by attracting customers, retaining employees, cutting costs, and increasing revenues, all while generating positive social change. For CSR to be successful, companies must develop workable strategies, implement them effectively over the long term, measure results, and manage public perception of their efforts.

1. CSR* is not charity! * C orporate S ocial R esponsibility Pradeep N Tonpe 20 November 2010

2. Objective Why CSR is important for you What is CSR? How do organizations view CSR Would CSR really help grow revenues and profitability? How? Global and Indian Perspective Conclusion Agenda Demonstrate immense potential of CSR as a key differentiator that can improve margins, grow revenues, attract customers, retain employees & generate a positive social impact !

3. Why is CSR important for PMs Need of the hour Resources getting scarce Exploding Population Its not a buzzword that will ‘go away’! 85% of Fortune 500 publish CSR reports More importantly – its an opportunity to differentiate and grow PMs would be expected to understand and align objectives with Social Responsibility

4. What is CSR? CSR is alignment of business goals with social values ..and thereby Boost profits Cut Costs Increase Revenues Attract and Retain Top Talent and Enhance Reputation CSR is also Inclusion of Societal Impact in Business Decisions Corporate Social Responsibility is the way companies manage their businesses to produce an overall positive impact on society through economic, environmental and social actions . CSR is alignment of business goals with social values Corporate Social Responsibility is the way companies manage their businesses to produce an overall positive impact on society through economic, environmental and social actions .

5. Socially responsible decisions One of the worst oil spills in Gulf of Mexico by BP Cause Significant failures of equipment designed to prevent a blowout. Alwin J. Landry, captain of the ships Senate testimony: “Rig men tried to activate a ‘kill switch’. They didn't know if it worked or not” . Rig workers: BP knew weeks before the blowout that equipment was malfunctioning Price Paid $ 8 B upwards Seafood contaminated, Fishermens’ livelihood impacted Irreparable damage to the “borrowed earth” Lack of Socially Responsible Behavior can wipe out decades of good will

6. How do Organizations view CSR? Type CSR? Comment Effectiveness Charity Organization commit to ‘donate’ a fraction of their profits to charitable causes -Simple but not sustainable: What if the profits decrease -Very difficult for executives to ‘justify’ and show Value Low Outsourced Contribution to an NGO/ organization that minimizes negative impact of business operations -Simple but not sustainable: What if the profits decrease - But can help organization ‘loosely’ justify CSR investment by tying Business Goals to Social Impact Medium Business Goal Creatively align business Goals for positive societal impact -Most effective and sustainable -Executives can justify investment with ROI! High

7. How do Organizations view CSR? Type CSR? Comment Effectiveness Charity Organization commit to ‘donate’ a fraction of their profits to charitable causes -Simple but not sustainable: What if the profits decrease -Very difficult for executives to ‘justify’ and show Value Low Outsourced Contribution to an NGO/ organization that minimizes negative impact of business operations -Simple but not sustainable: What if the profits decrease - But can help organization ‘loosely’ justify CSR investment by tying Business Goals to Social Impact Medium Business Goal Creatively align business Goals for positive societal impact -Most effective and sustainable -Executives can justify investment with ROI! High Is this really possible?

8. Aren’t Business Goals and Social Responsibility always in conflict?!

9. Societal Impact Business Impact Income Generation: The farmers with un-utilized/ degraded land grow pulpwood and the company gives a buy back guarantee & an assured minimum price. 1000 + of poorest farmers (having low credibility with banks) benefited Raw material base around the mills: Logistical efficiencies + assured supply … Minimize Environmental Damage -Uses its by-products to power its operations -Regains heat from effluents to warm process water and thereby further reduces carbon emissions In 2005 and 2006, the company saved US$4.4 million through a 2 percent reduction in fuel consumption Minimize Environmental Damage INR 1.1 B per annum savings in Energy Cost Income-generating capabilities for underprivileged rural women -Increase rural family incomes : put more money in their hands to purchase products that HLL makes -Access to unexplored rural areas

10. Making CSR work Negative influences stronger than positive Driven Top down, from CEO No CSR initiative is better than a poorly managed or prematurely closed initiative Engage Employees Keep a long term perspective Manage Media Place Customer first Cost Saving Ask tough questions Higher Margins Workable CSR Strategy Effective Implementation Measure Results Manage Perception

11. Workable CSR Strategy Effective Implementation Driven Top down, from CEO Engage Employees Place Customer first Ask tough questions Workable CSR Strategy Measure Results Manage Perception Sponsorship is key. CSR IS an investment with ROI- if you cannot justify, revisit the strategy Employees can innovate to align business objectives to social goals. Great way to motivate and retain employees! Cliché d as it sounds, if the customers expectations are not met by the products and services arising from socially responsible initiatives, it is not sustainable - How would the organization re-align CSR investment during tough times? - Is the impact on the balance sheet clear and explicit? Keep a long term perspective Like anything strategic, be in it for the long haul. Do not expect immediate returns

12. Effective Implementation Start Small & simple Workable CSR Strategy Effective Implementation Measure Results Manage Perception Avoid premature closure Implement like any other Business Initiative Set Goals, timelines, assign resources, manage risks Communicate Internal- Employees, Sponsors External- Customers, Public A prematurely closed CSR can cause considerable damage Celebrate Quick hits (energy, paper..) and gradually move to alignment of social and business goals

13. Measure Results Cost Saving Higher Margins Workable CSR Strategy Effective Implementation Measure Results Manage Perception Laudable, but has two drawbacks: May not be applicable to a large variety of modern industries As the potential margin to save dwindles, does not remain a sustainable option to justify CSR Key question- would customers pay extra for socially responsible products & services? Sloan institute conducted a series of experiments that proved: * Consumers are willing to pay more for ethically produced goods * Consumers will demand a substantial discount from companies that produce goods in an unethical manner Ethical Products/Services Un ethical Products/Services Reward Punish Pay a premium Expect a discount OR worse don’t buy

14. Manage Perception Negative influences register stronger than positive Manage Media Workable CSR Strategy Effective Implementation Measure Results Manage Perception Consumers treat negative and positive information differently. Know when and what to communicate- Be authentic Effective marketing tool to attract customers and talent Positive Information Negative Information LOW Impact HIGH & Lasting Impact Examples Nike – Child Labour Sivakasi- Child Labour BP- Environment

15. Global Perspective About 1 off every 9 $ under professional management in the US is involved in socially responsible investing.” 85 percent of the Fortune 50 companies’ publish corporate citizenship and/or sustainability reports Bond rating agencies and investment funds include CSR while accounting non-financial measures as they determine risk premiums CSR is becoming a mandate for attracting funds! Socially Responsible Investment Funds (SRI’s) consider CSR when deciding to invest

16. Indian Perspective It took Britain half the resources of the planet to achieve (their) prosperity. How many planets will a country like India require? M.K. Gandhi Demand for food, water, housing, education, health care Current population > 1.1 billion. Overtake China by 2026, as most populous: 1.5 billion Can we work together to build a literate, healthy, capable society with enough jobs ? Income Disparity – social unrest

17. Conclusion Deep down every business leader intuitively accepts the importance of socially responsible behaviour Break the mindset that CSR and Business Goals are at conflict and find creative solutions! CSR investments can be monetarily justified – in the long term Done right, CSR offers a company: loyal customers lower costs motivated employees improved brand value higher revenues improvement of the business’ standing in society

18. Thank you!