1 Corporate Social Responsibility

2 Concept Business decision making linked with: Ethical values Ethical values Compliance with the law Compliance with the law Respect for people, communities and the environment. Respect for people, communities and the environment.

3 Another definition Lord Holme and Richard Watts define CSR as: CSR is the continuing commitment CSR is the continuing commitment By a business firm (company) By a business firm (company) To behave ethically, and To behave ethically, and Contribute to country’s economic development Contribute to country’s economic development While improving the quality of life of: While improving the quality of life of: the workforce the workforce as well as the community and society at large. as well as the community and society at large.

4 The American & European Concepts American businesses mostly think CSR is only about giving money for worthy causes. American businesses mostly think CSR is only about giving money for worthy causes. Europeans think CSR is a tool for promoting business. Treat the society well so that society can buy your products. Do more CSR when times are bad. Europeans think CSR is a tool for promoting business. Treat the society well so that society can buy your products. Do more CSR when times are bad.

5 Trusteeship Theory Companies really do not belong to any one. Companies really do not belong to any one. Shareholders own share of “what remains” but not specific assets of the company. Shareholders own share of “what remains” but not specific assets of the company. Directors hold the assets of the company in trust on behalf of not just shareholders but the society at large. Directors hold the assets of the company in trust on behalf of not just shareholders but the society at large. A company is a social asset. A company is a social asset.

6 Historical Perspective In fact, CSR came much after Business Ethics. In fact, CSR came much after Business Ethics. Business have learned that chasing only profit does not give enough profit. Business have learned that chasing only profit does not give enough profit. CSR can actually improve their profitability and sustainability of their ventures. CSR can actually improve their profitability and sustainability of their ventures.

7 Scope of CSR Philanthropy Philanthropy Doing Business Responsibly Doing Business Responsibly Being a good citizen Being a good citizen

8 Philanthropy Financial donations to worthy causes: Financial donations to worthy causes: Do not just throw away money – be careful Do not just throw away money – be careful Do not wait for disasters to show your kindness Do not wait for disasters to show your kindness Setting, running or supporting socially desirable bodies: Setting, running or supporting socially desirable bodies: Monitoring and evaluating them in the process Monitoring and evaluating them in the process Supplementing the governmental efforts towards social welfare Supplementing the governmental efforts towards social welfare

9 Doing business responsibly Essentially being ethical Essentially being ethical Integrity in all that you do Integrity in all that you do Fairness Fairness To every one: employees, clients, suppliers, all To every one: employees, clients, suppliers, all Protection of all stakeholders’ interest Protection of all stakeholders’ interest Serving the common interest of all stakeholders Serving the common interest of all stakeholders

10 Being a good citizen Compliance with law. Compliance with law. Paying your dues Paying your dues No tax evasion, directly or indirectly No tax evasion, directly or indirectly Investment in community: Investment in community: Capital nature rather than just recurrent Capital nature rather than just recurrent Concern for environment Concern for environment

11 Concern for Environment Eco-balance Eco-balance Deforestation Deforestation Soil degradation Soil degradation Atmospheric changes Atmospheric changes Pollution Pollution Waste/Discharges management Waste/Discharges management Depletion of resources Depletion of resources Emphasis on creating re-usable resources Emphasis on creating re-usable resources

12 Environmental Risk Management Identify and define risks being posed (or faced) by the company. Identify and define risks being posed (or faced) by the company. Establish the extent and probability of risks. Establish the extent and probability of risks. Assess cost of: Assess cost of: The consequences of the risk after it takes place The consequences of the risk after it takes place preventing it from happening preventing it from happening Assign specific responsibility Assign specific responsibility

13 ERM -2 Define means of handling it. Define means of handling it. Preventing it through: Preventing it through: Better technology Better technology Better materials Better materials Better maintenance Better maintenance Insurance: Insurance: Actual loss Actual loss Claims against the company Claims against the company

14 Strategies for Prevention of Industrial Pollution Environmental processes’ audit Environmental processes’ audit Waste management audit Waste management audit Material usage review Material usage review Non-solid effluents audit Non-solid effluents audit Financial considerations Financial considerations Cost benefit analysis of being eco-balanced Cost benefit analysis of being eco-balanced Use of new cleaner technology Use of new cleaner technology Life cycle assessments Life cycle assessments Spreading awareness among users Spreading awareness among users

15 Resource Management Energy resources (fossil fuels vs. others) Energy resources (fossil fuels vs. others) Re-cycling of materials Re-cycling of materials Using re-cycled material Using re-cycled material Using bio-degradable material Using bio-degradable material Conservation of life supporting systems Conservation of life supporting systems Forests, trees, water sources, mountains Forests, trees, water sources, mountains Wild life Wild life Responsible use of land Responsible use of land

16 EP Law The law is there. The law is there. EPA has been set up. EPA has been set up. But law does not make any one responsible. But law does not make any one responsible. Companies have to want to be environmentally responsible. Companies have to want to be environmentally responsible.

17 Some Big Environmental Disasters Chernobyl Nuclear Disaster (1986) Chernobyl Nuclear Disaster (1986) Nuclear reactors went berserk Nuclear reactors went berserk Exxon Valdez (1989) in Alaska Exxon Valdez (1989) in Alaska 11.5 million barrels of crude spilled 11.5 million barrels of crude spilled Tokiamora Accident (1999) Tokiamora Accident (1999) Nuclear radiation leaked Nuclear radiation leaked Bhopal Tragedy (1984) Bhopal Tragedy (1984) Leakage of poisonous gas, killing 300 and affecting 400,000 persons Leakage of poisonous gas, killing 300 and affecting 400,000 persons Gulf of Mexico (2010) Gulf of Mexico (2010) Leakage of crude oil, polluting virtually the entire gulf Leakage of crude oil, polluting virtually the entire gulf

18 Shades of CSR Official posture and reality Official posture and reality Spending more money on publicizing CSR than actual CSR work. Spending more money on publicizing CSR than actual CSR work. Lip service: strings attached help Lip service: strings attached help IPPR says most CSR is lip service IPPR says most CSR is lip service

19 CSR – Who is watching what? Institutional investors PIRC provide web based data on how companies are acting on CSR, ethics, environment, etc. Regulators / Kings Report in SA Disclosure Requirements

20 Formulating CSR Policy Set a Code of Ethics outlining CSR Values to be upheld Establish current position on CSR values Discuss with relevant stakeholders Employees Pressure groups Clients Draw up a formal CSR Policy

21 CSR Policy Formally promulgate the CSR policy Prescribe systems Establish responsibility for each party Set realistic strategies and targets Keep all concerned informed Monitor achievements Revise policy or targets as necessary

22 Bench Marking in CSR You do as much as others are doing. Can any one set “minimums”? Who ensures compliance? How to monitor compliance?

23 CSR in Pakistan Mostly companies consider philanthropy to be the only means of CSR. Mostly companies consider philanthropy to be the only means of CSR. However change is coming. However change is coming. Telenor’s Karo Mumkin Telenor’s Karo Mumkin PTC’s tree planting PTC’s tree planting Mobilink’s medical helpline Mobilink’s medical helpline

24 CSR Survey People in Pakistan want companies to: Promote education Promote education Create employment Create employment Provide health care to public Provide health care to public Reduce pollution Reduce pollution Provide better work place Provide better work place

25 Thank you