2What is Corporate social Responsibility? ‘CSR is 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.’EconomicEnvironmentSocial
3Corporate Social Responsibility Preliminary definitions of CSRThe impact of a company’s actions on societyRequires a manager to consider his acts in terms of a whole social system, and holds him responsible for the effects of his acts anywhere in that system
4Corporate Social Responsibility Corporate Citizenship ConceptsCorporate social responsibility – emphasizes obligation and accountability to societyCorporate social responsiveness – emphasizes action, activityCorporate social performance – emphasizes outcomes, results
5What is Corporate social Responsibility? Behaviour & conduct/good governanceResponsible impact on societyAccountability & transparencyStakeholder engagementReputation & risk managementSocially responsible investment
6Reasons for the focus on Business & Society Globalisation - increasing tradeMarkets growing faster than social and political structuresSheer scale of business (51 of the top largest economic entities are corporations)TechnologyGrowth of the internet and available dataIncrease of NGOs (non-governmental organisations)Increase in democracyGrowth of SRI (socially responsible investing)
7The Business Case for CSR Efficiencies - Reducing resource use, waste and emissions doesn't just help the environment - it saves money too.Risk Management - CSR helps ensure you comply with regulatory requirements. Building a genuine culture of ‘doing right thing’Financial Performance -Sales of environmentally friendly' products continue to grow - and these products often sell at a premium priceAccess to Capital - through SRI and institutional Investors7
8The Business Case for CSR(cont) Attract & Retain Top Talent - A good reputation makes it easier to recruit employees. Employees may stay longer, reducing the costs and disruption of recruitment and retraining.Enhanced Brand Image and Reputation - Building a reputation as a responsible business sets you apartIncreased Customer Loyalty – based on distinctive ethical valuesReduced Regulatory Oversight/Positive Public PolicyPositive impact on society and environmentImproved standing with governmentImproved standing with business partners, costumers, investors8
9The Business Case for CSR(cont) Employees are better motivated and more productive.Activities such as involvement with the local community are ideal opportunities to generate positive press coverage.Good relationships with local authorities make doing business easier.Understanding the wider impact of your business can help you develop new products and services.CSR can make you more competitive and reduces the risk of sudden damage to your reputation (and sales). Investors recognise this and are more willing to finance you.Stakeholder Activism9
10Sustainable Economical, Ecological & Social advantage risk minimationvalue increasingsometimes also a reduction of costsStrenghtening its´ marketpositionBetter Imageeconomical responsibilityEcolocial responsibilitynew cultur within corporationsmore confidenceSocial responsibilitybetter working conditionsmotivated staffUniqueness (unique selling position - USP)Benefit instead of Profit10
11The issues being addressed by CSR Supply chainHuman rightsPlant closuresCharitable givingWork life balanceCause related marketingEnvironmental pollutionSustainability……These mean different things to different firms
12CSR Areas not focused here…. EnvironmentEthicsCharitySustainabilityLegal
13Corporate Social Responsibility (CSR) Arguments ForAddresses social issues business caused and allows business to be part of the solutionProtects business self-interestLimits future government interventionAddresses issues by using business resources and expertiseAddresses issues by being proactiveArguments AgainstRestricts the free market goal of profit maximizationBusiness is not equipped to handle social activitiesDilutes the primary aim of businessIncrease business powerLimits the ability to compete in a global marketplace
14Spectrum of CSR Good CSR Poor CSR Taking care of workers Low dependence on non renewable resourcesHigh awareness about CSR initiativesLand compensationIncreased monitoring systemEnvironment responsibilityNo employmentNo concern for indirect effect (land, water, air)Destruction of agricultural landNot willing to listen to other stakeholdersAppropriate of land not being compensatedNon compliance of rule of land
15Corporate Social Responsibility (CSR) Business Criticism/ Social Response CycleFactors in the Societal EnvironmentCriticism of BusinessIncreased concernfor the Social EnvironmentA ChangedSocial ContractBusiness Assumption of Corporate Social ResponsibilitySocial Responsiveness, Social Performance, Corporate CitizenshipA More Satisfied SocietyFewer Factors Leadingto Business CriticismIncreased Expectations Leadingto More Criticism
16Corporate Social Responsibility (CSR) Historical PerspectiveEconomic model – the invisible hand of the marketplace protected societal interestLegal model – laws protected societal interests
17Corporate Social Responsibility (CSR) Historical PerspectiveModified economic modelPhilanthropyCommunity obligationsPaternalismWhat was the main motivation?To keep government at arms length
18Corporate Social Responsibility (CSR) Historical PerspectiveFrom the 1950’s to the present the concept of CSR has gained considerable acceptance and the meaning has been broadened to include additional components
19Corporate Social Responsibility (CSR)-Evolving View Points Bauer -“CSR considers the impact of the company’s actions on society”Davis and Blomstrom – “CSR requires decision makers to take actions that protect and improve the welfare of society as a whole along with their own interests”McGuire – “CSR mandates that the corporation has not only economic and legal obligations, but also certain responsibilities to society that extend beyond these obligations”Epstein –”CSR relates primarily to achieving outcomes from organizational decisions concerning specific issues or problems, which by some normative standard have beneficial rather than adverse effects upon pertinent corporate stakeholders. The normative correctness of the products of corporate action have been the main focus of CSR”
20Concepts & Methodology There are 3 levels of CSR :Level 1 : ComplianceLevel 2 : Philanthropy/Green washLevel 3 : - Innovations- Key business strategy- LeapfrogBased on :John Elkington & Stuart Hart, et al.
21CSR Level 1: Key Question: The least that an industry can do beyond compliance
22Is industry voluntarily giving back something to the society? CSR Levels 2Key Questions :Is industry voluntarily giving back something to the society?Are these actions inspired by a sense of guilt to the society, earning good name in market, philanthropy, etc.?
23CSR Level 2 Infrastructure for physically challenged employees Foundations (i.e. : financial aid beyond immediate community/tax planning with positive impact)Income generation for communityForestation / “Greening”Community development officeCultivation in public landPaternity leave
24Is it part of core business strategy? Is it adopted by the board? CSR Level 3Key Questions:Is it part of core business strategy?Is it adopted by the board?
25CSR Level 3 Ash management: ash brick factory Quality Circle: empowering communityR&R: land for landDistributed Generation: Regional dev.Center for power efficiency and Env. Protection (CenPEEP)
26CR-related standards, guidelines and codes of conduct Now over 300 external CR tools, guidelines and codes of practiceEMASForest Stewardship CouncilHumane Cosmetics StandardEthical Trading InitiativeAustralian Criminal Code ActSocial Accountability 8000 (SA8000)PERI Reporting GuidelinesOHSAS18001South African Government Employment Equity ActUS Government Federal Sentencing GuidelinesICC Business Charter for Sustainable DevelopmentGlobal Reporting InitiativeSunshine Corporate ReportingGlobal Sullivan PrinciplesICFTU Basic Code of Labour PracticeISO 14001Caux Round Table Principles for BusinessCERES PrinciplesInvestors in People
27Corporate Social Responsibility-Phases and Drivers
28CSR-Business Responsibilities in the 21st Century Demonstrate a commitment to society’s values and contribute to society’s social, environmental, and economic goals through action.Insulate society from the negative impacts of company operations, products and services.Share benefits of company activities with key stakeholders as well as with shareholders.Demonstrate that the company can make more money by doing the right thing.
29World-wide critical events and issues 1970s Apartheid era South Africa - racial discrimination1970s Nestle - marketing of breast milk substituteUnion Carbide in Bhopal, India - environmentShell in North Sea (Brent Spar) - environmentShell in Nigeria (Ogoni) - distribution of resourcesBP in Colombia - security forces & complicityMars, Cadbury, Hershey, Ivory Coast - child labourChiquita, Del Monte etc., C. America - associationAdidas in Pakistan - child labourTalisman in Sudan - complicity in repression2000s Nokia, Motorola, Congolese Coltan - forced labour
30CSR vs Financial Crisis The ongoing financial crisis and its effects on the global economy have made it clear that the stability of our global market system depends on responsible behavior, sustainable business models and proactive management of business impacts on society as well as regulatory frameworks.Prof Craig SmithEthics & Social ResponsibilityINSEAD
31International Guidelines on CSR World Business Council for Sustainable DevelopmentCSR is 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 CommissionBeing 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.UK GovernmentThe Government sees CSR as the business contribution to our sustainable development goals. Essentially it is about how business takes account of its economic, social and environmental impacts in the way it operates – maximizing the benefits and minimizing the downsides.
32"We are not asking corporations to do something different from their normal business; we are asking them to do this normal business differently"Kofi Annan Global Compact meeting“ISO standards are crucial to sustainable development as they are key source of technological know how”Kofi Annan,ISO General Assembly, sept. 2004
33CSR Standards Global Reporting Initiative (GRI) SA 8000 “A set of international workplace and human rights standards developed by Social Accountability International, with input from numerous NGOs and based on the Conventions of the ILO and the Universal Declaration of Human Rights” (Miles, 2004)May emerge as international standard, required by vendors to remain a member of the supply chain of large MNCs (Miles, 2004)SA 8000GRI provides a “trusted and credible framework for sustainability reporting that can be used by organizations of any size, sector or location.” (GRI, 2008)GRI was developed over the last ten years and is now broadly recognized by many organizations as a standard for corporate responsibility and sustainability reportingGRI provides a public record of organizations which have voluntarily provided their sustainability reportsGlobal Reporting Initiative (GRI)33
34CSR StandardsThe ISO standard addresses core CSR subjects including governance, human rights, labour practices, the environment, fair operating practices, consumer issues and community involvement and developmentISO is a working draft that has not yet been ratified by ISO members and therefore has not yet been implementedThis standard provides a guide for organizations to voluntarily adopt CSR practicesWith participation from about 80 countries and many stakeholder groups, ISO will likely be recognized as a universal standard, across most industries, when it is completedISO 2600034
35ISO in brief International Organization for Standardization Federation of National Standards Bodies, one per countryCreated in 1946Currently almost valid ISO standardsHead office in Geneva146 members (110 from developing countries)What ISO doesDevelops International Standards for products, services, processes, materials and systems, and for conformity assessment, managerial and organizational practice.What ISO standards achieveHelp ensure quality, ecology, safety, economy, reliability, compatibility, interoperability, efficiency, effectiveness and other viral characteristics; facilitate trade and disseminate technology.Organisation; internationellt; ISO allm; 0; JS
36Guidance for Social Responsibility ISO (in 2010)
37Definition of CSR (ISO 26000) = responsibility of an organization for the impacts of its decisions and activities on society and the environment, through transparent and ethical behavior that:contributes to sustainable development, health and the welfare of society;takes into account the expectations of stakeholders;is in compliance with applicable law and consistent with international norms of behavior; andis integrated throughout the organization and practiced in its relationships.37
38Why is ISO developing an SR standard? Aren’t there enough models, theories, initiatives and conventions?There is a potential and a need for increased awareness in the area of Social Responsibility.We lack one internationally broadly accepted guideline.A standard could foster greater awareness and wider observance of agreed sets of universal principles.ISO has the experiences and the open and neutral organization to ensure a broad acceptance of the future standard.
39About the standard Title: Guidance on Social Responsibility Designation: ISO 26000Target group: To be applied by all types of organizationsType of standard: Guidelinesnot intended for 3rd party certificationTarget date: 5 years development - to be published in mid 2010
40Members of the Working Group ~ 300 experts from 54 countries:IndustryGovernmentConsumerLabourNon-governmental organization (NGO)Service, support, research and Others32 Liaison organizationse.g. Consumers International, UN-Global Compact, Global Reporting Initiative, ICC, IOE, ILO, OECD, Social Accountability Int., UNIDO, WBCSD, WHO, AICC
41Members of the Working Group (2) Stakeholder balance 666542413018
42ISO contains guidance, not requirements, and therefore will not be a certification standard like ISO 9001:2000 and ISO 14001:2004.
43Contents in the (Draft) standard IntroductionScopeNormative referencesTerms and definitionsThe SR context in which all organizations operateSR principles relevant to organizationsGuidance on core SR subjects/issuesGuidance for organizations on implementing SRGuidance annexes
45Proposed Scope of standard Assist an organization in addressing its social responsibilities.Provide practical guidance related to :Operationalizing social responsibility ;Identifying and engaging with stakeholders;Enhancing credibility of reports and claims made about SR.Emphasize performance results and improvements.Increase customer satisfaction and confidence.Promote common terminology in the SR field.Be consistent, and not in conflict, with existing documents, treaties, conventions and other ISO standards.
47CSR: A Historical Perspective of India The concept of CSR in India is not new, the term may be.The process has been followed since ancient times of Philosophers like Kautilya or even before.The ancient literature has various citations for helping the poor and disadvantaged.The concept of CSR Supported with religious laws.“Zakaat” is followed by Muslims. It is the donation from one’s earnings which is specifically given to the poor and disadvantaged.“Dhramada” is followed by TheHindus.“Daashaant” is followed by The Sikhs.47
48The businesses & industrial houses supported freedom movement. CSR: The pre independence eraThe businesses & industrial houses supported freedom movement.They setup charitable foundations, educational and healthcare institutions, and trusts for community development.But most of the donations were either monetary or otherwise were sporadic activities of charity or philanthropy.Expenses were met out of personal savings which neither belonged to the shareholders nor did it constitute an integral part of business.48
49CSR: The Indian modelsEthical Model(1930 –1950): This model was “trusteeship” model, it was revived and reinterpreted by Gandhiji. “Trusteeship” means the businesses were motivated to mange their business entity as a trust held in the interest of the community.Statistic Model (1950 –1970s): This model featured that the state ownership and legal requirements decide the corporateresponsibilities. Under the aegis of Jawaharlal Nehru, this model was driven by a mixed and socialist kind of economy.Liberal Model (1970s –1990s): This model implies that it is sufficient for business to obey the law and generate wealth, which through taxation and private charitable choices can be directed to social ends.Stakeholder Model (1990s – Present): The model came into existence during 1990s as a consequence of realisation that with growing economic profits, businesses also have certain societal roles to fulfill. The businesses are focusing on accountability and transparency through several mechanisms.49
50CSR: Contribution of Indian corporate Modern India was aware of CSR even before it became a global concern, due to the efforts of organizations such as the BIRLA Group and the TATA Group.ITC have made farmer development a vital part of its business strategy, and made major efforts to improve the livelihood standards of rural communities.Unilever is using micro enterprises to strategically augment the penetration of consumer products in rural markets.TCS and Wipro have developed software to help teachers and children in schools across India to further the cause of education. The adult literacy software has been a significant factor in reducing illiteracy in remote communities.Banks and insurance companies are targeting migrant laborers and street vendors to help them through micro-credits and related schemes.50
51CSR: Government’s Guidelines The first India Corporate Week, held on December 14-21, 2009, the Ministry of Corporate Affairs issued voluntary guidelines intended to encourage best practices in corporate governance and corporate social responsibility.It was asserted that “the business sector also needs to take the responsibility of exhibiting socially responsible business practices that ensures the distribution of wealth and well-being of the communities in which the business operates.” The intention of these guidelines is to encourage Indian corporations to acknowledge the need for observance of corporate social responsibility (CSR)51
52CSR: Government’s Guidelines Prime Minister Manmohan Singh said "Corporate social responsibility must not be defined by tax planning strategies alone. Rather, it should be defined within the framework of a corporate philosophy, which factors the needs of the community and the regions in which a corporate entity functions.”Minister of State for Corporate Affairs Salman Khurshid said “The corporate growth is sometimes seen as widening the gap between the India and Bharat through its income – skewing capability. This gap needs to be bridged. While the Government undertakes extensive developmental initiatives through a series of sectoral programmes, the business sector also needs to take the responsibility of exhibiting socially responsible business practices that ensures the distribution of wealth and well-being of the communities in which the business operates.52
53CSR: Government’s Guidelines The CSR guidelines state that the CSR initiatives of Indian companies should become integral parts of overall business policy and aligned with business goals. The guidelines set out six core elements for companies to address.Fundamental PrincipleEach business entity should formulate a CSR policy to guide its strategic planning and provide a roadmap for its CSR initiatives, which should be an integral part of overall business policy and aligned with its business goals. The policy should be framed with the participation of various level executives and should be approved by the Board.53
54CSR: Government’s Guidelines Core Elements:1. Care for all Stakeholders:The companies should respect the interests of, and be responsive towards all stakeholders, including shareholders, employees, customers, suppliers, project affected people, society at large etc. and create value for all of them. They should develop mechanism to actively engage with all stakeholders, inform them of inherent risks and mitigate them where they occur.2. Ethical functioning:Their governance systems should be underpinned by Ethics, Transparency and Accountability. They should not engage in business practices that are abusive, unfair, corrupt or anti-competitive.54
55CSR: Government’s Guidelines 3. Respect for Workers' Rights and Welfare:Companies should provide a workplace environment that is safe, hygienic and humane and which upholds the dignity of employees. They should provide all employees with access to training and development of necessary skills for career advancement, on an equal and non-discriminatory basis. They should uphold the freedom of association and the effective recognition of the right to collective bargaining of labour, have an effective grievance redressal system, should not employ child or forced labour and provide and maintain equality of opportunities without any discrimination on any grounds in recruitment and during employment.4. Respect for Human Rights:Companies should respect human rights for all and avoid complicity with human rights abuses by them or by third party.55
56CSR: Government’s Guidelines 5. Respect for Environment:Companies should take measures to check and prevent pollution; recycle, manage and reduce waste, should manage natural resources in a sustainable manner and ensure optimal use of resources like land and water, should proactively respond to the challenges of climate change by adopting cleaner production methods, promoting efficient use of energy and environment friendly technologies.6. Activities for Social and Inclusive Development:Depending upon their core competency and business interest, companies should undertake activities for economic and social development of communities and geographical areas, particularly in the vicinity of their operations. These could include: education, skill building for livelihood of people, health, cultural and social welfare etc., particularly targeting at disadvantaged sections of society.56
57CSR: Implementation Guidelines Implementation Guidance:1. The CSR policy of the business entity should provide for an implementation strategy which should include identification of projects/activities, setting measurable physical targets with timeframe, organizational mechanism and responsibilities, time schedules and monitoring. Companies may partner with local authorities, business associations and civil society/non-government organizations. They may influence the supply chain for CSR initiative and motivate employees for voluntary effort for social development. They may evolve a system of need assessment and impact assessment while undertaking CSR activities in a particular area. Independent evaluation may also be undertaken for selected projects/activities from time to time.57
58CSR: Implementation Guidelines 2. Companies should allocate specific amount in their budgets for CSR activities. This amount may be related to profits after tax, cost of planned CSR activities or any other suitable parameter.3. To share experiences and network with other organizations the company should engage with well established and recognized programmes/platforms which encourage responsible business practices and CSR activities. This would help companies to improve on their CSR strategies and effectively project the image of being socially responsible.4. The companies should disseminate information on CSR policy, activities and progress in a structured manner to all their stakeholders and the public at large through their website, annual reports, and other communication media.58
59CSR: CII’s Social Code for Business Businesses are now excepted to consider the ethical, moral and social impact of their actions and decisions. A corporate that is sensitive to the surroundings and to the needs and aspirations of the community in which it operates not only creates goodwill and a strong market for its business, but also helps support a sustainable neighbourhood.Adopt an Article of Association on Corporate Social Responsibility (CSR) that advocates harmonizing economic progress with social and environmental considerations.The Company should have a specific written policy statement on CSR (social & environmental) which is in public domain.The Company should have an explicit strategy on social and environmental issues that can be seen in the form of an Annual Work Plan mainstreamed with its business process59
60CSR: CII’s Social Code for Business The Company should have included CSR as part of its corporate communications including newsletters and there is reporting on CSR in the Company's Annual ReportThe Company should have a senior executive under the CEO responsible for CSR.The Company should ensures equal access to employment and promotion opportunities across gender and cultures through policies and programmes.The Company should have allocated specific resources for CSR activities and has monitoring system to track implementation process and impact.60
61CSR: CII’s Social Code for Business The Company should demonstrates its CSR by providing an enabling environment for employees to volunteer.The Company should be committed to document its learning experiences in terms of human achievements, contribution to the community, the learning for all stakeholders for sharing with local governments and development agencies.The Company should also be known for the partnerships it builds with various development players in the fields to synergies all available opportunities to bring about holistic development of the local community.The Companies should expand the scope of learning from each other in their role of being good corporate citizens by way of exchanging data, views, implementation procedures and even exchange of expert personnel whenever necessary61
62CSR: Some facts of India Inc An estimated 100 corporate foundations and 25 foreign firms are involved in CSR activities in India, but statistics on input and output are elusive.According to a government report, the Indian corporate sector spent Rs30,000 crore on social expenditure during the last financial year, up from Rs17,500 crore the previous year. The report says, that companies drew a total exemptions of Rs5,500 crore under income-tax laws last year.These figures sound improbable as Indian companies still do not distinguish between philanthropy and internal practices to benefit stakeholders such as employees and community.62
63CSR: Some facts of India Inc A recent KPMG study among 27 Indian companies showed that a mere 8% mentioned their social expenditures in their annual reports, and only 25% filed CSR reports at all.While a quarter of them are also signatories of the Global Reporting Initiative, a 10-year-old movement started by an NGO called Coalition for Environmentally Responsible Economies (CERES) and the United Nations Environment Programme.The Indian corporate sector spent US$ 6.31 billion on social expenditure during , up from US$ 3.68 billion spent during the previous fiscal.The Steel Authority of India Ltd (SAIL), the country's largest steel company, spent US$ million on CSR last year.63
64CSR: Some facts of India Inc Tata Steel Ltd, (which runs a 850-bed hospital and rural projects in 800 villages around Jamshedpur), spends about US$ million as part of its annual revenue expenditure. Now there are plans to also introduce CSR in the small and medium enterprises (SME) sector to increase its reach in remote areas.ITC launched 'e-Choupal', in June 2000, it has become the largest initiative among all Internet-based interventions in rural India. 'e-Choupal' services today reach out to over 4 million farmers, in over 40,000 villages through 6500 kiosks across ten states (Madhya Pradesh, Haryana, Uttarakhand, Karnataka, Andhra Pradesh, Uttar Pradesh, Rajasthan, Maharashtra, Kerela and Tamil Nadu).64
65CSR: Some negatives of India Inc The worst industrial disaster in human history is chemical gas leakage of “Union Carbide plant” in Bhopal. More than half a million people were suffered from the gas methyl isocyanate. Approximate 20,000 have died to date as a result of their exposure to gas.In 2001, the US-based gigantic Dow Chemical purchased Union Carbide, thereby acquiring its assets and liabilities.However it has been steadfastly refusing to clean up the site, provide safe drinking water or compensate the victims, or even disclose the composition of the gas leak, Dow, like UCIL earlier, claims that it has no liability of the past.65
66CSR: Some facts of India are The Dow Chemical Company, with annualsales of $28 billion, says in its web site: it is “committed to the principles of Sustainable Development and its approximately 50,000 employees seek to balance economic, environmental and social responsibilities.”In the year 2001 the Unilever Company has dumped 300 metric tones of mercury waste at Kodaikanal located at South India.As a contrast to the above activity the Unilever website states, “We are committed to conducting our operations with integrity and with respect for the interests of our stakeholders…..We are also committed to making continuous improvements in the management of our environmental impacts and to working towards our longer term goal of developing a sustainable business.”66
67CSR: NGOs Participation Assocham conducted a study of 100 corporate houses on their most favoured organisation for CSR initiatives as reported by Business standard 1/01/2010.The findings of surveyAs much as 70 per cent of companies surveyed prefer to work with NGOs to implement their CSR initiatives."About 67 per cent of domestic corporates have chosen NGOs to partner closely for discharging their CSR initiatives.While 58 per cent of corporates preferred government departments.67
68CSR: NGOs Participation Over 200 NGOs in the country are specialized in CSR projects. Survey finds that companies prefer to work with these non-profit bodies.Because these NGOs are well-versed with such CSR activities and their norms and guidelines are simpler and transparent.Further, it said, many companies have a separate CSR department to implement their initiatives.Assocham President Swati Piramal said. “The importance of building strong public-private partnerships and working closely with NGOs is being increasingly realized by corporates”,68
69CSR: Times Foundation & TNS Survey A national survey on CSR was undertaken by Times Foundation and TNS India, a leading social and market research agency, to look into the various issues of social relevance under the realm of CSR.The survey has helped us to get credible data on CSR policies of leading Corporate Houses in India in co-relation with the policies of the Government of India.The survey targeted companies in three sectors, i.e. Public Sector Undertakings, Private Sector Undertakings that have been nationalised and Private Companies. The questions were addressed to the CEOs and CSR heads of the companies.69
70CSR: Times Foundation & TNS Survey Some of the questions that were asked included whether the organisation has a CSR wing.If yes then which areas it works in, which are the popular areas of functioning as well as the reason behind these choices?Who were the beneficiaries of the CSR activities, the role of the government when it came to CSR policies?How was the communication and coordination between the government and the companies and any more?More than 100 companies participated in the survey and gave their inputs on CSR policies and initiatives.The result of this exhaustive survey has been published in Times of India.70
74CSR: Asia Sustainability Ratings Ten Asia Pacific markets are included in the Asian Sustainability Rating™ (ASR™): Australia, China, Hong Kong, India, Japan, Malaysia, Pakistan, Philippines, Singapore and Thailand . 51 indicators were used to score each of the companies under six indicator section headings (Indicator Sections). Scoring is a points system with points given for each of the criteria: 2 points awarded for comprehensive disclosure, 1 point for partial disclosure and 0 points for non-disclosure.Indicator SectionNumber of IndicatorsMaximum Section ScoreGovernance, Codes, and Policies1224CSR Strategy and Communication1122Marketplace and Supply Chain510Workplace and People20Environment816Community and DevelopmentTotal Indicators5110274
75CSR: ASR India Inc’s Position Rank inRank in total ASRCompany% 200913Tata Consultancy Services Ltd.90.227ITC Ltd.85.314Infosys Technologies Ltd.80.4417Larsen and Toubro Ltd.79.4524Reliance Industries Ltd.71.6632Oil and Natural Gas Corporation Ltd.62.737Indian Oil Corporation Ltd.58.8842Bharti Airtel Ltd.56.9946Steel Authority of India Ltd.55.91056NMDC Ltd.51.91161ICICI Bank49.01267NTPC Ltd.47.11372MMTC Ltd.45.177Bharat Heavy Electricals Ltd.44.11591State Bank of39.21697DLF Ltd.37.3108Reliance Communications Ltd.34.318134Reliance Petroleum Ltd.27.519141Housing Development Finance Corporation Ltd.24.5HDFC Bank75
76CSR ModelsCSR models are revolves around the controversy whether the business is single dimension entity of profit maximization or multidimensional entity serving greater societal interests.Models are classified as :Social-Economic Model of CSRCarroll’s Pyramid ModelIntersecting CirclesConcentric CirclesStakeholder ModelTriple-bottom line Method
77Social-Economic Model-Two Dimensional Model (Quazi and O’Brien) Benefits forCSR ActionModern ViewSocial-EconomicViewNarrow CSRWide CSRPhilanthropicViewClassic ViewCosts forCSR Action
78Social-Economic by Aviva Geva-Pyramid Model The Pyramid of Corporate Social Responsibility*Social Responsibility to StakeholdersBe a good corporate citizen.Contribute resources to the community; improve the quality of life.PhilanthropicResponsibilitiesBe ethical.Obligation to do what is right, just, and fair. Avoid harm.EthicalResponsibilitiesLegalResponsibilitiesObey the law.Law is society’s codification of right and wrong. Play by the rules of the game.EconomicResponsibilitiesBe profitable.The foundation on which all others rest.78
79Social-Economic by Aviva Geva-Intersecting Circles Model PhilanthropicEthicallegalEconomic
80Social-Economic by Aviva Geva-Concentric Circles Model PhilanthropicEthicallegalEconomic
81Stakeholder ModelStakeholder Theory of the Firm argues that the focusing purely on the Economic Function of the firm ignores the complexity that firm deal with along with the related inefficiency, information asymmetric and multiple incentive problems.Market Stakeholder of BusinessNon-Market Stakeholder of Business
82Market Stakeholder of Business ShareHoldersEmployeesCreditorsBUSINESSFIRMSSuppliersWholesalersRetailersCustomersDistributors
83Non-Market Stakeholder of Business CommunitiesGovernmentsMediaBUSINESSFIRMSActivistGroupGeneralPublicBusiness SupportGroup
84Triple Bottom Line Model of CSR TBL concept is mainly focuses on that a corporation’s ultimate success or health can and should be measured not only the traditional financial bottom line but also by the social/ethical and environmental performance.It captures an expanded spectrum of Values and criteria for measuring organizational success.A positive Triple Bottom line reflects an increase in company value, including both its profitability and shareholder value and its social ,human and environmental capital.
85Triple Bottom Line Model of CSR SocialBearableEquitableSustainableEnvironmentViableEconomic
86Drivers of CSR National Drivers International Drivers Market Access Crisis AccessSocio-Economic PrioritiesCultural TraditionGovernance GapPolitical ReformSupply ChainInternational StandardsInvestment IncentivesStake Holder ActivismInternational Drivers
87Who/what are stakeholders? CSR relates to the idea whereby a business addresses and balances the needs of stakeholders.Who/what are stakeholders?“Individuals and groups who may affect or be affected by the actions, decisions, policies, practices or goals of an enterprise.”87
88Types of Stakeholders Primary/ Market Stakeholders Those that engage in economic transaction with company or who have a formal, official or contractual relationship with the companyE.g. Shareholders, Customers, Employees, Distributors, Suppliers, Creditors, …Secondary/ Non-market StakeholdersThose who do not engage in direct economic exchange with the companyE.g. Governments, General public, NGO, Communities, Environmentalists, Media, Trade associations, …
89Corporate Social Responsibility (CSR) Stakeholder ViewStakeholder Group Addressed and AffectedCSR ComponentOwnersConsumersEmployeesCommunityOthersEconomic14235LegalEthicalPhilanthropic
90Topics Involved Respect for human rights Consumer protection Environmental protectionRight to security of personsRights of workersRight to equal opportunity and non-discriminatory treatmentLabor PracticesCommunity “License to Operate”TransparencyGood GovernanceValues-Driven Decision MakingEthical Marketing Practices
91Stakeholder Management Approach Strategic ApproachViews stakeholders as factors to be taken into consideration and managed while the firm is pursuing profits for the shareholdersMultifiduciary ApproachManagement has a fiduciary responsibility to stakeholders just as it does to shareholders. Places stakeholders and shareholders on roughly equal footing.Stakeholder SynthesisThe firm has a moral but not a fiduciary responsibility to stakeholders
93Stakeholders Engagement Process Task 1-Identify StakeholdersStakeholder mapping: This is a way of visually representing the variety of stakeholder relationships the firm has and their relative proximity or strength. The location, scale and nature of operations will determine who sees themselves as stakeholders.Task 2 - Understand the Reasons for Stakeholder EngagementThe firm may be contemplating stakeholder engagement to better understand its impacts, to help articulate its values, mission, strategy, commitments and implementation, to facilitate a regulatory approvals process, to participate in measurement and reporting, to avert or solve a crisis, or to proactively improve relationships. The reason for engaging stakeholders will determine the style of engagement and stakeholders' expectations.
94Stakeholders Engagement Process (contd.) Task3 - Plan the Engagement ProcessDetermine the engagement objectives. What do the firm and the stakeholders want and need to get from the engagement?Select the appropriate engagement approach. This may be focus groups, individual or small group interviews, surveys, formal referrals, key-person meetings, advisory councils or some other. The approach chosen should reflect the engagement objectives, stakeholder capacity, cost and time constraints, and whether qualitative or quantitative information is required.
95Stakeholders Engagement Process (contd.) Task4 - Start the DialogueEntering into engagement in a spirit of respect and openness will increase the opportunities for mutual benefit. When inviting stakeholders to participate, be clear about the degree of influence they will have and commit to it.Task 5 - Maintain the Dialogue and Deliver on commitmentsThere can be a wide range of engagement approaches. There is no “one size fits all.” After the dialogue and engagement process have commenced and there is agreement by both the company and the stakeholders on the approach and deliverables, it is important for the participating parties to deliver on their engagement commitments. The dialogue should be maintained in accordance with the process that has been endorsed.
96Stakeholder Engagement examples Engagement for performance measurement and accountability - reporting to stakeholders on environmental performance, social performance and sustainability performanceEngagement for innovation - Innovation Through Partnership- engagement can produce demonstrable and significant sources of Community-enabled Innovation, which benefit companies and their significant communitiesEngagement for social capital creationEngagement with non-governmental organizationsCorporate Engagement Project
97Corporate Engagement Project The Corporate Engagement Project is a collaborative effort involving multinational corporations that operate in areas of conflict or socio-political tension. Its purpose is to help corporate managers better understand the impact of activities on the context in which they work and to help companies respond to local challenges and to address stakeholder issues by helping them to develop a range of practical options and management tools
98Stakeholder Engagement Prioritize which stakeholders to engage with in terms of their ability to impact positively or negatively on the firm.Make sure you know in advance why it is you are engaging with your stakeholders and how you are going to engage with them.Consider using professional facilitators or consultants to assist in constructing an effective engagement process.Done properly, stakeholder engagement is an excellent way for a business to tell its story and explain its goals and plans, while also affording the firm an opportunity to learn about stakeholders' views and incorporate these into business planning.
99The business of business is business ---- Milton Friedman Business has no responsibilities other than to maximize profits for the shareholders
100The business of business is business ---- Milton Friedman Business has no responsibilities other than to maximize profits for the shareholders
101CORPORATE SOCIAL PERFORMANCE (CSP) - Definition CSP is defined as “a business organization's configuration of principles of social responsibility, processes of social responsiveness, and policies, programs and observable outcomes as they relate to the firm's societal relationships.”Measurement and reporting of the social performance of profit oriented firms forms the core of corporate social performance.Corporate social responsibilityemphasizes obligation and accountability to societyCorporate social responsivenessemphasizes action, activityCorporate social performanceemphasizes outcomes, results
102CORPORATE SOCIAL PERFORMANCE - Reporting As a consequence of globalization and increased awareness on CSR concerns, reporting in a meaningful way, is increasingly becoming mandatory.Rationale for Disclosure and Reporting of Social Performance:Displaying commitment towards transparency and accountabilityRetention & attraction of investment – Social screening is a technique used to screen firms for investment purposes.Gain public confidenceTool for brand and image building based on distinct ethical valuesRecruitment and retention of staff
103CORPORATE SOCIAL PERFORMANCE – Reporting Reporting standards:Global Reporting Initiatives (GRI) guidelines – the official collaborating centre of the United Nations Environment Program (UNEP)Sustainability Reporting (SR) framework – as rigorous and transparent as financial reporting.Voluntary reporting on sustainability is on the increase across all the countriesBesides PSUs, mostly large organizations having global exposure report CSR activities and policy in a meaningful wayDr. Reddy’s is the only Indian pharmaceutical company to publish a sustainability report and among the few Indian companies to do so.Reliance Industries Ltd’s Corporate Sustainability Report ( ) report was the first Corporate Sustainability Report from the Indian Oil & Gas sector. Further, this report obtained “in-accordance” 2002-guidelines status from the Global Reporting Initiative (GRI). This report is the only "GRI Checked A+ level" rating report from India.
105CSP and FINANCIAL PERFORMANCE - Linkages Whether a link can be drawn:Despite the intensity of study directed at it, the relationship between CSP and CFP remains in disputeMeasurement of social performance is very tricky and separate data are not available for most corporate. There must be objectives and targets for each of these outcome areas for the companies as they generally have financial objectives and targetsNew metrics has to be created to track performance of corporate on CSP the non financial performance of corporate has to be documented. Triple (or multiple) bottom line performance has to be reported periodically – its focus should change from external reporting to internal with an integrated MIS.
106CSP and FINANCIAL PERFORMANCE - Linkages Marc Orlitzsky, Sara L. Rynes used Meta Analysis (meta-analysis of 52 studies from 1970 to 2003) to demonstrate this linkage:Results:There is a relationship in significant statistical between CSP & CFP. The correlation was a non trivial 36%CSP and CFP mutually reinforce othersThis relationship is shown to be due to improved managerial competency and improved corporate reputation.
108CSP and FINANCIAL PERFORMANCE - Linkages Does the investment in different social performance domains have similar effect on firms ‘financial performance’?Principle of Reciprocity approach (resource based view)Study on the basis of resource-based view reveals:Proactive policies with respect to employees (Employee Relations) are the policies most strongly related to firm’s financial performance. Only satisfied employees can create satisfied consumer base and lifelong profits.better consumer relations lead to superior financial performance – firms with satisfied customers enjoy premium prices, higher levels of cash flow and less price volatility
109CSP and FINANCIAL PERFORMANCE - Linkages Diversity promotion and management leads to superior financial performance - include activities such as workforce recruitment, development and promotion policies, protecting gender, disability and gay rights, creating minority friendly environs, provision for childcare, and promoting balanced work-life situations.Community relations (activities such as making philanthropic contributions, supporting human right issues, promoting welfare of indigenous people, avoiding South Africa during apartheid era, etc), often laudable in nature, is on weak ground and is not related to superior financial performance.
110CSP and FINANCIAL PERFORMANCE - Linkages Overall, these hypotheses depict:the importance of studying the business case for social performance at the level of different stakeholders.combining various social performance domains, without much theoretical or empirical validity, could be a major cause for confounding the business case of social performance
111CSP and FINANCIAL PERFORMANCE - Linkages Certain corporate social policies can reduce the negative impact of anti-takeover protection measures.Example: Tata Group’s acquisitions of Jaguar, Land Rover and Corus were also facilitated by the perception among the target company’s unions that Tatas follow sound labour practices.
113CSR disclosure: India ranks 4th in Australasia Asian Sustainability Ratings (ASRTM) released by CSR Asia, October 29th, 2009According to a survey of Social Enterprise Research by CSR Asia, India ranked fourth in the list topped by Australia. TheRank Country1 Australia2 China3 Hong Kong4 India5 Japan6 MalaysiaThe top 10 companies in India's CSR rankings include:Tata Consultancy ServicesITCInfosys TechnologiesLarsen & ToubroReliance Industries6.Oil and Natural Gas Corporation 7.Indian Oil Corporation8.Bharti Airtel9.Steel Authority of India Ltd10.NMDC Ltd.
114Tata Consultancy Services Ltd Winner of the 'Golden Peacock Global Award for Corporate Social Responsibility (Asia) – 2007 and 2010'TCS believes in using IT as an instrument for social development and change.A). TCS MaitreeTCS-Maitree was established with an intention to strengthen the bond between TCS employees and their families, even beyond the TCS Community Maitree also strives to enable the development of the society:Working with the differently-abled, aiding under-privileged children across various schools in Mumbai.Helping rural community in Vazapur, among others.Employment opportunities for the differently-abled.HIV/AIDS sensitization.Peer education.Green Audits to check the excess consumption of energy resources have now been accepted as best practices by the organization.
115TCS Cont…. B). Advanced Computer Training Centre for visually impaired TCS pioneered an Advanced Computer Training Center in Mumbai (the first of its kind in India) for the visually impaired, providing the visually-impaired with life-affirming employment opportunities.C). Employment for differently-abledWith the belief that people with disabilities offer incredible reserves of untapped potential and an alternative talent pool, TCS-Maitree has recruited more than 30 differently-abled people in various branches of TCS.The following are some of the roles in which the visually impaired persons are working in TCS:· Infrastructure Services Management· BPO processes· Learning & Development coordinator· Human Resource Manager· Global Helpdesk· Accessibility testing
116TCS Cont…. C). Rural Development Initiative (at Panvel) Wazapur (Raigad district of Maharashtra) is a village just off the Mumbai-Pune highway, near Panvel. In spite of being so close to the city, the village is devoid of even the most basic infrastructure and amenities.The developmental activities in the areas of water supply, illiteracy, and women empowerment in addition to the focal point of education. Apart from setting up a primary and a secondary school, some other highlights of the education initiative are:Mid-day meal scheme for Balwadi kidsComputer literacy programA state-of-the-art science labTaking up the cause of women empowerment, TCS-Maitree launched the WEP (Women Empowerment Program) where the women of the village were taught basic arithmetic and created awareness in health and hygiene.D). Thalassaemia DriveIn a partnership with Red Cross, TCS embarks on periodic blood-donation drives towards the treatment of Thalassaemia.E). HIV AIDS awareness programAssociates across the TCS are participating in TCS-Maitree's aim to spread awareness and sensitize people about HIV/AIDS.
117ITC Ltd ( e-Choupal)ITC's diversified business portfolio has enabled the Company to create and nurture numerous farmer partnerships in many value chains. :The core principles that drive these initiatives are:Customise the development model to address the diversity of rural India.Enable even marginal farmers to access knowledge to compete on an equal footing in the market place.Empower rural communities, so that development planning and implementation are participatory.ITC's rural development initiatives embrace several critical areas:Web-enablement of the Indian farmer to help him access relevant knowledge and services to enhance farm productivityThrough the e-Choupal initiative, ITC aims to confer the power of expert knowledge on even the smallest individual farmer. Thus enhancing his competitiveness in the global market.
118ITC Ltd ( e-Choupal)e-Choupal delivers real-time information and customised knowledge to improve the farmer's decision-making ability, thereby;better aligning farm output to market demands;securing better quality, productivity andimproved price discovery.The model helps aggregate demand in the nature of a virtual producers' co-operative, in the process facilitating access to higher quality farm inputs at lower costs for the farmer.The e-Choupal initiative also creates a direct marketing channel, eliminating wasteful intermediation and multiple handling, thus reducing transaction costs and making logistics efficient.The e-Choupal project is already benefiting over 3.5 million farmers. Over the next decade, the e-Choupal network will cover over 100,000 villages, representing 1/6th of rural India, and create more than 10 million e-farmers.Primary education for the rural poor to enhance employabilityITC believes that the extensive network of government-supported schools must be made more attractive to children.Its initiatives include improving school buildings, constructing toilets, providing electricity connections and supplying fans and lights. ITC provides students with uniforms, satchels and books. So far, 50,260 children have benefited in 7 states.
119Indian Oil Corporation Ltd Indian Oil units identify deserving causes in their vicinity for allocation of funds from their Community Development budget. The local gram panchayats, district administration, NGOs and social workers are involved wherever necessary:Indian Oil contributed Rs. 5 crore to the Satya Sai Central Trust for undertaking a massive drinking water project in Chennai.To promote and improve the health of communities in the vicinity of its areas of operation.Indian Oil's 9,000 km cross-country crude oil and petroleum product pipelines traverse through many remote and underdeveloped villages where the Corporation partners the villagers by extending support in the areas of education, health, sanitation, runs child and maternity health centres and sensitise them about the need for safety and security of the pipelines.Indian Oil is one of the biggest donor to Sankara Nethralaya, a reputed eye hospital & research centre and has donated major state of art surgical laser machines.
120Indian Oil Cont….Indian Oil is a major contributor to the Cancer Research Institute at Chennai, a micro array system in the Department of Molecular Oncology was funded by Indian Oil.Scholarships: Indian Oil offers 450 scholarships every year to bright students selected on 'merit cum- means' basis, of these, 250 scholarships are for 10+/ITI students on a zonal basis.Indian oil sports scholarships:Sports scholarships are offered to upcoming players in the age group of years and potential/talented players below 15 years but above 14 years.Indian oil foundation:A project of Government of India to preserve ecological balance and heritage is exclusively funded by Indian Oil with an initial corpus of Rs. 25 crore and an annual contribution of Rs.10 crore, IOF will adopt at least one heritage site in every State and Union Territory.