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7/28/2019 CSR in Global Perspecctive by Amritraj D Bangera
1/19
7/28/2019 CSR in Global Perspecctive by Amritraj D Bangera
2/19
Content
I. Introduction to CSR
II. Definition of Corporate Social Responsibility (CSR)
III. CSR in developed and developing countries
IV. CSR framework
V. Drivers of CSR
VI. Pyramid of CSR
VII. Pros and Cons of CSR
VIII. Potential business benefits of CSR
IX. CSR continuum
X. Reasons for CSR activities
XI. Four challenges to CSR with global ethics
XII. CSR following companies
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Introduction
In years, there have been many changes in the nature of the triangular
relationship between companies, the state and the society. No longer can firms
continue to act as independent entities regardless of the interest of the general
public. The evolution of the relationship between companies and society has
been one of slow transformation from a philanthropic coexistence to one where
the mutual interest of all the stakeholders is gaining paramount importance.
Companies are beginning to realise the fact that in order to gain strategic
initiative and to ensure continued existence, business practises may have to be
moulded from the normal practise of solely focussing on profits to factor in
public goodwill and responsible business etiquettes. An examination of some of
the factors which have led to the development of the concept of corporate social
responsibility would be ideal starting ground for the conceptual development of
suitable corporate business practises for emerging markets.
The business environment has undergone vast changes in the recent years
in terms of both the nature of competition and the wave of globalization that has
been sweeping across markets. Companies are expanding their boundaries from
the country of their origin to the evolving markets in the developing countries
which have been sometimes referred to as emerging markets. The current trend
of globalization has brought a realisation among the firms that in order to
compete effectively in a competitive environment; they need clearly defined
business practises with a sound focus on the public interest in the markets. The
increase in competition among the multinational companies to gain first mover
advantage in various developing countries by establishing goodwill
relationships with both the state and the civil society is ample testimony to this
transformation. Secondly, in most of the emerging markets, the state still holds
the key to business success because of the existence of trade and business
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regulations restricting the freedom of multinational companies to incorporate
their previously successful business doctrines which have been tried and tested
in the developed nations. The state with its duty of protecting the interests of the
general public would naturally be inclined to give preference to companies
which take care of the interests of all the stakeholders. Thirdly, emerging
markets have been identified as a source of immense talent with the rising
levels of education. For example, the expertise of India in churning out software
professionals and China in manufacturing has now become internationally
renowned. In order to draw from this vast talent pool coming up in developing
countries, companies need to gain a foothold in these markets by establishing
sound business practices addressing social and cultural concerns of the people.
It has been observed that consumers consider switching to another company's
products and services, speak out against the company to family/friends, refuse
to invest in that company's stock, refuse to work at the company and boycott the
company's products and services in case of negative corporate social behaviour.
Last but not the least, firms all over the world is beginning to grasp the
importance of intangible assets, be it brand name or employee morale. Only
firms that have gained the goodwill of the general public and are ideal corporate
citizens will be to develop these intangible assets into strategic advantages.
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Definition of Corporate Social Responsibility
What CSR is?
World Business Council for Sustainable Development defines Corporate
Social Responsibility (CSR) as The continuing commitment by business to
behave ethically and contribute to economic development while improving the
quality of life of the workforce and their families as well as of the local
community and society at large.
The European Commission advocates CSR as Being socially
responsible means not only fulfilling legal expectations, but also going beyond
compliance and investing more into human capital, the environment and
relations with stakeholders. Corporate social responsibility (CSR) is the
process by which businesses negotiate their role in society.
A concept whereby companies decide voluntarily to contribute to a better
society and a cleaner environment. A concept whereby companies integrate
social and environmental concerns in their business operations and in their
interaction with their stakeholders on a voluntary basis. Operating a business in
a manner that meets or exceeds the ethical, legal, commercial and public
expectations that society has of business.
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CSR in developed and developing country
In develop ing country
The main focus is on nation building
To develop the current socio-economic status at present time
To develop the rural area with the urban
Provide employment to the present workforce and future
Provide education to all
Provide quality health care to all
Community support to full extend for improved quality of life in
community
In developed country
To attain stable governance
To follow proper business ethics
Obey the human rights law at all costs
Protect the environment from destruction from big multinational
corporation
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CSR Framework
It is made up of six characteristics:
1. Understanding society
Understanding how the business operates in broader context and knowing
the social and environmental impact that the business has on society.
2. Building capacity
Building the capacity of others to help manage the business effectively.
For example, suppliers understand the businesss approach to the
environment and employees can apply social and environmental concerns
in their day-to-day roles.
3. Questioning business as usual
Individuals continually questioning the business in relation to a more
sustainable future and being open to improving the quality of life and the
environment.
4. Stakeholder relationsUnderstanding who the key stakeholders are and the risks and
opportunities they present. Working with them through consultation and
taking their views into account.
5. Strategic view
Ensuring that social and environmental views are included in the business
strategy such that they are accepted as integral to the way the business
operates.
6. Harnessing diversity
Respecting that people are different, which is reflected in fair and
transparent employment and business practices.
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Drivers of CSR
Non-
government
al
organization
Government
Investors
Suppliers
Employees
Consumers
CSR
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CSR
NGOs
Government
Investors
Suppliers
Employees
Consumers
Pyramid of CSR
Philanthropic
Be good corporate citizen, Contribute resources to the Community, improve
quality of life
Ethical
phlant
hropic
Ethical
Legal
Economic
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Be ethical Obligation to do what is right, just and fair avoid harm
Legal
Obey the Law Law is societys codification of right and wrong Play by the
rules of the game.
Economic
Be profitable the foundation upon which all others rest
Pros and Cons of CSR
It is difficult to distinguish between CSR and good business practice, but
perhaps one upside of CSR's holistic approach is that it encourages businesses
to safeguard their corporate reputation for the future. Responsible business
practice could help protect a company from consumer boycotts.
It also encourages greater emphasis on people issues, which is good news for
HR managers. Claims that CSR can help employers attract and retain graduate
high-flyers.
Legislation is another danger as the EU gears up for a directive forcing
organizations to report on their environmental, diversity and community
relations record.
Pros Cons
Balances corporate power with
responsibility.
Discourages government regulation.
Promotes long-term profits for
business.
Lowers economic efficiency and
profit.
Imposes unequal costs among
competitors.
Imposes hidden costs passed on to
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Responds to changing stakeholders
demands.
Corrects social problems caused by
business.
stakeholders.
Requires social skills which business
may lack.
Places responsibility on business rather
than individuals.
Potential business benefits of CSR
The scale and nature of the benefits of CSR for an organization can vary
depending on the nature of the enterprise, and are difficult to quantify, though
there is a large body of literature exhorting business to adopt measures beyond
financial ones. However, businesses may not be looking at short-run financial
returns when developing their CSR strategy.
The definition of CSR used within an organization can vary from the strict
"stakeholder impacts" definition used by many CSR advocates and will often
include charitable efforts and volunteering. CSR may be based within the
human resources, business development orpublic relations departments of an
organization,or may be given a separate unit reporting to the CEO or in some
cases directly to theboard. Some companies may implement CSR-type values
without a clearly defined team or program.
Thebusiness case for CSR within a company will likely rest on one or more of
these arguments:
Human resources
http://en.wikipedia.org/wiki/Philanthropyhttp://en.wikipedia.org/wiki/Volunteeringhttp://en.wikipedia.org/wiki/Human_resourceshttp://en.wikipedia.org/wiki/Business_developmenthttp://en.wikipedia.org/wiki/Public_relationshttp://en.wikipedia.org/wiki/CEOhttp://en.wikipedia.org/wiki/Board_of_directorshttp://en.wikipedia.org/wiki/Business_casehttp://en.wikipedia.org/wiki/Philanthropyhttp://en.wikipedia.org/wiki/Volunteeringhttp://en.wikipedia.org/wiki/Human_resourceshttp://en.wikipedia.org/wiki/Business_developmenthttp://en.wikipedia.org/wiki/Public_relationshttp://en.wikipedia.org/wiki/CEOhttp://en.wikipedia.org/wiki/Board_of_directorshttp://en.wikipedia.org/wiki/Business_case7/28/2019 CSR in Global Perspecctive by Amritraj D Bangera
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A CSR program can be an aid to recruitment and retention particularly within
the competitive graduate student market. Potential recruits often ask about a
firm's CSR policy during an interview, and having a comprehensive policy can
give an advantage. CSR can also help improve the perception of a company
among its staff, particularly when staff can become involved through payroll
giving, fundraising activities or community volunteering. See also Corporate
Social Entrepreneurship, whereby CSR can also be driven by employees'
personal values, in addition to the more obvious economic and governmental
drivers.
Risk management
Managing risk is a central part of many corporate strategies. Reputations that
take decades to build up can be ruined in hours through incidents such as
corruption scandals or environmental accidents. These can also draw unwanted
attention from regulators, courts, governments and media. Building a genuine
culture of 'doing the right thing' within a corporation can offset these risk.
Brand differentiation
In crowded marketplaces, companies strive for a unique selling proposition that
can separate them from the competition in the minds of consumers. CSR can
play a role in building customer loyalty based on distinctive ethical values.
Several majorbrands, such as The Co-operative Group, The Body Shop and
American Apparel are built on ethical values. Business service organizations
can benefit too from building a reputation for integrity and best practice.
License to operate
Corporations are keen to avoid interference in their business through taxation or
regulations. By taking substantive voluntary steps, they can persuade
http://en.wikipedia.org/wiki/Recruitmenthttp://en.wikipedia.org/wiki/Retentionhttp://en.wikipedia.org/wiki/Graduate_schoolhttp://en.wikipedia.org/wiki/Payroll_givinghttp://en.wikipedia.org/wiki/Payroll_givinghttp://en.wikipedia.org/wiki/Fundraisinghttp://en.wikipedia.org/wiki/Corporate_Social_Entrepreneurshiphttp://en.wikipedia.org/wiki/Corporate_Social_Entrepreneurshiphttp://en.wikipedia.org/wiki/Riskhttp://en.wikipedia.org/wiki/Unique_selling_propositionhttp://en.wikipedia.org/wiki/Brandshttp://en.wikipedia.org/wiki/The_Co-operative_Grouphttp://en.wikipedia.org/wiki/The_Body_Shophttp://en.wikipedia.org/wiki/American_Apparelhttp://en.wikipedia.org/wiki/American_Apparelhttp://en.wikipedia.org/wiki/Taxationhttp://en.wikipedia.org/wiki/Regulationshttp://en.wikipedia.org/wiki/Recruitmenthttp://en.wikipedia.org/wiki/Retentionhttp://en.wikipedia.org/wiki/Graduate_schoolhttp://en.wikipedia.org/wiki/Payroll_givinghttp://en.wikipedia.org/wiki/Payroll_givinghttp://en.wikipedia.org/wiki/Fundraisinghttp://en.wikipedia.org/wiki/Corporate_Social_Entrepreneurshiphttp://en.wikipedia.org/wiki/Corporate_Social_Entrepreneurshiphttp://en.wikipedia.org/wiki/Riskhttp://en.wikipedia.org/wiki/Unique_selling_propositionhttp://en.wikipedia.org/wiki/Brandshttp://en.wikipedia.org/wiki/The_Co-operative_Grouphttp://en.wikipedia.org/wiki/The_Body_Shophttp://en.wikipedia.org/wiki/American_Apparelhttp://en.wikipedia.org/wiki/Taxationhttp://en.wikipedia.org/wiki/Regulations7/28/2019 CSR in Global Perspecctive by Amritraj D Bangera
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governments and the wider public that they are taking issues such as health and
safety, diversity, or the environment seriously as good corporate citizens with
respect to labor standards and impacts on the environment
Corporate Social Responsibility Continuum
http://en.wikipedia.org/wiki/Health_and_safetyhttp://en.wikipedia.org/wiki/Health_and_safetyhttp://en.wikipedia.org/wiki/Health_and_safetyhttp://en.wikipedia.org/wiki/Health_and_safety7/28/2019 CSR in Global Perspecctive by Amritraj D Bangera
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Reasons for CSR Activities
CSR activities are important to and even expected by the public and they
are easily monitored worldwide
CSR activities help organizations hire and retain the people they want
CSR activities contribute to business performance
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Four Challenges to a CSR with Global Ethic
Global rules emerge from negotiations and will reflect values of the
strong
Global rules may be viewed as an end rather than a beginning
Rules can depress innovation and creativity
Rules are static but globalization is dynamic
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CSR following Companies
CSR at TATA
First Indian company committed to national and global CSR principles
Tata Steel believes that the primary purpose of a business is to improve
the quality of life of people.
Tata Steel will volunteer its resources, to the extent that it can reasonably
afford, to sustain and improve a healthy and prosperous environment and
to improve the quality of life of the people of the areas in which it
operates.
TATAs core CSR activities are in the field of:
Environment
Employee Relations
Stimulating Economic Growth
Civic Amenities & Community Service
Population Management
Sports and Adventure
Health for All
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Relief During Natural Calamities
Education / Arts and Culture
CSR at PepsiCo
PepsiCo India continues to strengthen its Solid Waste Management
initiatives in partnership with Exnora, an environmental NGO. This
award winning, income generating partnership provides a clean
environment to more than 450000 people across Pammal, Chennai,
Nagapattinam, Tenkasi and Cuddalore in Tamil Nadu, Sangareddy in
Andhra Pradesh and Panipat, Haryana.
Designed and supported by the Pepsico Health & Wellness team, the
programs have been implemented in schools in collaboration with
prominent NGOs & Hriday, Swashrit and the Indian Medical
Association.
Get Active programs have a central objective: to raise awareness on the
importance of balanced nutrition and regular physical activity for a
healthy lifestyle among school children.
CSR at ITC
E-Choupal from ITC is a outstanding CSR program contributing to village
development dealing with the following activities
Relevant & Real-time Information
Customised Knowledge
Supply Chain for Farm Inputs
Direct Marketing Channel for Farm Produce
Marketing Services
Governance services
Health with Private Health Service Providers
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Choupal Sagar services
CSR at Reliance
The Reliance DOTS -TB HIV and AIDS therapy centre is a public-
private partnership to combat TB, HIV and AIDS. Pilot program started
at Hazira in 2004 and expanded to Jamnagar in 2005. The center offers
financial assistance, counseling services, awareness programs, treatment,
alternate therapies yoga and pranyama and also nutritional support to the
underprivileged.
CSR at GTL
GTL sets aside up to 1% of its profits towards CSR activities and encourages
active employee participation
Gyan IT (Spreading IT literacy among rural areas)
Know (Mobile Computer lab) VKC (Village Knowledge Centre)
Gyan Deep (Train the trainer Teachers)
Netra (Computer Lab for Blind)
Talk 64 (Chess software for Blind)
Swayam (Self Employment opportunities)
Samman (Mobility for the disabled)
Gyan Jyot (Scholarships for higher studies)
Samrakshan (Financial assistance to bereaved families)
Idaya (Assistance to Tsunami Victims)
Pralay (Assistance in case of natural disasters)
CSR at IBM
IBM - Japans e-elder
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Initiative is a national program using training materials and other support
from IBM Japan which will hire and train seniors as instructors for other
seniors in an effort to help elder citizens (expected to make up one-fifth
of Japans total population) more fully participate in a Web-based
society.
Conclusion
According to a survey
79% want to work for a company heavily engaged in CSR
56% will refuse to work for a company who is not at all committed to and
engaged in CSR.
Over 80% customers will switch brands if no CSR.