Group D, MBA (PT) CORPORATE SOCIAL RESPONSIBILITY (CSR) Ajit Singh S-07CRIS Ankur Garg S-10Utstarcom...

Group D , MBA (PT)

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Ajit Singh S-07 CRIS

Ankur Garg S-10 Utstarcom

Anokha Sharma N-06 LIC

Arvind Bhisikar S-13 NPC

Harish Chauhan N-19 MCD

Nagendra Shekhar S-36 BSES

Ravi Kumar N-48 TCS

Saurabh Aggarwal N-70 IREO

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What 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.’

Economic Environment

Social

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Corporate Social Responsibility

Preliminary definitions of CSR

• The impact of a company’s actions on society

• Requires 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

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Corporate Social Responsibility

Corporate Citizenship Concepts

• Corporate social responsibility – emphasizes obligation and accountability to society

• Corporate social responsiveness – emphasizes action, activity

• Corporate social performance – emphasizes outcomes, results

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What is Corporate social Responsibility?

• Behaviour & conduct/good governance

• Responsible impact on society

• Accountability & transparency

• Stakeholder engagement

• Reputation & risk management

• Socially responsible investment

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Reasons for the focus on Business & Society

• Globalisation - increasing trade

• Markets growing faster than social and political structures

• Sheer scale of business (51 of the top largest economic entities are

corporations)

• Technology

– Growth of the internet and available data

• Increase of NGOs (non-governmental organisations)

• Increase in democracy

• Growth of SRI (socially responsible investing)

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The 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 price

• Access to Capital - through SRI and institutional Investors

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The 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 apart

• Increased Customer Loyalty – based on distinctive ethical values

• Reduced Regulatory Oversight/Positive Public Policy

• Positive impact on society and environment• Improved standing with government • Improved standing with business partners, costumers,

investors

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The 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 Activism

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The issues being addressed by CSR

• Supply chain

• Human rights

• Plant closures

• Charitable giving

• Work life balance

• Cause related marketing

• Environmental pollution

• Sustainability……

These mean different things to different firms

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Corporate Social Responsibility (CSR)

• Addresses social issues business caused and allows business to be part of the solution

• Protects business self-interest• Limits future government intervention• Addresses issues by using business resources and

expertise • Addresses issues by being proactive

Arguments For

Arguments Against• Restricts the free market goal of profit maximization• Business is not equipped to handle social activities• Dilutes the primary aim of business• Increase business power• Limits the ability to compete in a global marketplace

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Spectrum of CSR

Good CSRPoor CSR•No employment

•No concern for indirect effect (land, water, air)

•Destruction of agricultural land

•Not willing to listen to other stakeholders

•Appropriate of land not being compensated

•Non compliance of rule of land

•Taking care of workers

•Low dependence on non renewable resources

•High awareness about CSR initiatives

•Land compensation

•Increased monitoring system

•Environment responsibility

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Business Criticism/ Social Response CycleFactors in the Societal Environment

Criticism of Business

Increased concern for the Social Environment

A Changed Social Contract

Business Assumption of Corporate Social Responsibility

Social Responsiveness, Social Performance, Corporate Citizenship

A More Satisfied Society

Fewer Factors Leading

to Business Criticism

Increased Expectations Leading to More Criticism

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Historical Perspective

• Economic model – the invisible hand of the marketplace protected societal interest

• Legal model – laws protected societal interests

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Historical Perspective• Modified economic model

– Philanthropy– Community obligations– Paternalism

• What was the main motivation?– To keep government at arms length

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Historical Perspective

From the 1950’s to the present the concept of CSR has gained considerable acceptance and the meaning has been broadened to include additional components

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Corporate 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”

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Concepts & Methodology

There are 3 levels of CSR :

Level 1 : Compliance

Level 2 : Philanthropy/Green wash

Level 3 : - Innovations - Key business strategy - Leapfrog

Based on : John Elkington & Stuart Hart, et al.

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CSR Level 1:

Key Question:

The least that an industry can do beyond compliance

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CSR Levels 2

Key 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.?

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CSR Level 2

• Infrastructure for physically challenged employees

• Foundations (i.e. : financial aid beyond immediate community/tax planning with positive impact)

• Income generation for community

• Forestation / “Greening”

• Community development office

• Cultivation in public land

• Paternity leave

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CSR Level 3

Key Questions:

Is it part of core business strategy?

Is it adopted by the board?

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CSR Level 3

• Ash management: ash brick factory• Quality Circle: empowering community• R&R: land for land• Distributed Generation: Regional dev.• Center for power efficiency and Env. Protection (CenPEEP)

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CR-related standards, guidelines and codes of conduct

Now over 300 external CR tools, guidelines and codes of practice

Australian Criminal Code Act

Caux Round Table

Principles for Business

CERES Principles

EMASEthical Trading InitiativeForest Stewardship

Council

Global Reporting Initiative

Global Sullivan Principles

Humane Cosmetics Standard

ICFTU Basic Code of Labour Practice

Investors in People

ICC Business Charter for Sustainable Development

ISO 14001

OHSAS18001PERI Reporting

Guidelines

Social Accountability 8000 (SA8000)

South African

Government Employment

Equity Act

Sunshine Corporate

Reporting

US Government Federal Sentencing Guidelines

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Corporate Social Responsibility-Phases and Drivers

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CSR-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.

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World-wide critical events and issues

• 1970s Apartheid era South Africa - racial discrimination

• 1970s Nestle - marketing of breast milk substitute

• 1984 Union Carbide in Bhopal, India - environment

• 1995 Shell in North Sea (Brent Spar) - environment

• 1995 Shell in Nigeria (Ogoni) - distribution of resources

• 1996 BP in Colombia - security forces & complicity

• 2000 Mars, Cadbury, Hershey, Ivory Coast - child labour

• 2000 Chiquita, Del Monte etc., C. America - association

• 2000 Adidas in Pakistan - child labour

• 2002 Talisman in Sudan - complicity in repression

• 2000s Nokia, Motorola, Congolese Coltan - forced labour

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CSR 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 Responsibility

INSEAD

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• World Business Council for Sustainable Development 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.

• The European Commission 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.

• UK Government The 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.

International Guidelines on CSR

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“ISO standards are crucial to sustainable development as they are key source of technological know how”

Kofi Annan, ISO General Assembly, sept. 2004

"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

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CSR Standards

• SA 8000

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• “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)

• Global Reporting Initiative (GRI)

• GRI 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 reporting

• GRI provides a public record of organizations which have voluntarily provided their sustainability reports

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CSR Standards

• ISO 26000

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• The ISO 26000 standard addresses core CSR subjects including governance, human rights, labour practices, the environment, fair operating practices, consumer issues and community involvement and development

• ISO 26000 is a working draft that has not yet been ratified by ISO members and therefore has not yet been implemented

• This standard provides a guide for organizations to voluntarily adopt CSR practices

• With participation from about 80 countries and many stakeholder groups, ISO 26000 will likely be recognized as a universal standard, across most industries, when it is completed

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ISO in brief

International Organization for Standardization

Federation of National Standards Bodies, one per country

Created in 1946

Currently almost 15000 valid ISO standards

Head office in Geneva

146 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.

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Guidance for Social Responsibility

ISO 26000 (in 2010)

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= 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; and is integrated throughout the organization and practiced

in its relationships.

Definition of CSR (ISO 26000)

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Why 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.

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About the standard • Title: Guidance on Social Responsibility • Designation: ISO 26000 • Target group: To be applied by all types of organizations

• Type of standard: Guidelines – not intended for 3rd party certification

• Target date: 5 years development - to be published in mid 2010

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Members of the Working Group

• ~ 300 experts from 54 countries:– Industry– Government– Consumer– Labour– Non-governmental organization (NGO)– Service, support, research and Others

• 32 Liaison organizations e.g. Consumers International, UN-Global Compact, Global

Reporting Initiative, ICC, IOE, ILO, OECD, Social Accountability Int., UNIDO, WBCSD, WHO, AICC

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Members of the Working Group (2)

Stakeholder balance

0

10

20

30

40

50

60

70

Number of experts in differentstakeholder categories

IndustryGovernmentConsumerLabourNGOOther

66

41

30

18

42

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ISO 26000 contains guidance, not requirements, and therefore will not be a

certification standard like ISO 9001:2000 and ISO 14001:2004.

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Contents in the (Draft) standard

IntroductionScopeNormative referencesTerms and definitions The SR context in which all organizations operate SR principles relevant to organizations Guidance on core SR subjects/issues Guidance for organizations on implementing SR Guidance annexes

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Proposed 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.

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CSR: The Indian scenario

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CSR: 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.

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•The 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.

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CSR: The pre independence era

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Ethical 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.

CSR: The Indian models

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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.

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CSR: Contribution of Indian corporate

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CSR: 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)

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• 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.

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• 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 Principle Each 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.

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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.

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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.

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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.

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CSR: 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.

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CSR: 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.

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CSR: 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 process

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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 Report

The 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.

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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 necessary

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CSR: 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.

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• 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 2007-08, 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$ 21.05 million on CSR last year.

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• Tata Steel Ltd, (which runs a 850-bed hospital and rural projects in 800 villages around Jamshedpur), spends about US$ 31.58 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).

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CSR: 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.

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CSR: Some facts of India are

• The Dow Chemical Company, with annual sales 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.”

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CSR: 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 survey

• As 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.

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CSR: 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”,

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CSR: 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.

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• 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.

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CSR: Asia Sustainability Ratings

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Indicator Section Number of IndicatorsMaximum Section

Score

Governance, Codes, and Policies 12 24

CSR Strategy and Communication 11 22

Marketplace and Supply Chain 5 10

Workplace and People 10 20

Environment 8 16

Community and Development 5 10

Total Indicators 51 102

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.

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CSR: ASR India Inc’s Position

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Rank in Rank in total ASR

Company % 2009

1 3 Tata Consultancy Services Ltd. 90.2

2 7 ITC Ltd. 85.3

3 14 Infosys Technologies Ltd. 80.4

4 17 Larsen and Toubro Ltd. 79.4

5 24 Reliance Industries Ltd. 71.6

6 32 Oil and Natural Gas Corporation Ltd. 62.7

7 37 Indian Oil Corporation Ltd. 58.8

8 42 Bharti Airtel Ltd. 56.9

9 46 Steel Authority of India Ltd. 55.9

10 56 NMDC Ltd. 51.9

11 61 ICICI Bank 49.0

12 67 NTPC Ltd. 47.1

13 72 MMTC Ltd. 45.1

14 77 Bharat Heavy Electricals Ltd. 44.1

15 91 State Bank of 39.2

16 97 DLF Ltd. 37.3

17 108 Reliance Communications Ltd. 34.3

18 134 Reliance Petroleum Ltd. 27.5

19 141 Housing Development Finance Corporation Ltd. 24.5

19 141 HDFC Bank 24.5

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CSR Models

• CSR 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 CSR

Carroll’s Pyramid Model Intersecting Circles Concentric Circles

– Stakeholder Model

– Triple-bottom line Method

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Social-Economic Model-Two Dimensional Model (Quazi and O’Brien)

Wide CSR

Costs for CSR Action

Benefits for CSR Action

Narrow CSR

Modern View

Classic ViewPhilanthropic

View

Social-Economic View

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Social-Economic by Aviva Geva-Pyramid Model

PhilanthropicResponsibilities

EthicalResponsibilities

LegalResponsibilities

EconomicResponsibilities

Be a good corporate citizen.Contribute resources to the community; improve the quality of life.

Be ethical.Obligation to do what is right, just, and fair. Avoid harm.

Obey the law.Law is society’s codification of right and wrong. Play by the rules of the game.

Be profitable.The foundation on which all others rest.

Social Responsibility to Stakeholders

The Pyramid of Corporate Social Responsibility*

78

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Social-Economic by Aviva Geva-Intersecting Circles Model

Ethical legal

Philanthropic

Economic

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Social-Economic by Aviva Geva-Concentric Circles Model

Philanthropic

Ethicallegal

Economic

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Stakeholder Model

• Stakeholder 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 Business

– Non-Market Stakeholder of Business

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Market Stakeholder of Business

ShareHolders

Creditors Employees

Customers

Distributors

SuppliersWholesalersRetailers

BUSINESS FIRMS

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Non-Market Stakeholder of Business

Communities

Media Governments

General Public

Business Support Group

Activist Group

BUSINESS FIRMS

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Triple 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.

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Triple Bottom Line Model of CSR

Social

EconomicEnvironment

Bearable Equitable

Viable

Sustainable

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Drivers of CSR

National Drivers

International Drivers

Political Reform

Crisis AccessMarket Access

Governance Gap

Socio-Economic Priorities

Cultural Tradition

Stake Holder Activism

Supply Chain

Investment Incentives

International Standards

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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.”

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Types of Stakeholders

• Primary/ Market Stakeholders – Those that engage in economic transaction

with company or who have a formal, official or contractual relationship with the company

– E.g. Shareholders, Customers, Employees, Distributors, Suppliers, Creditors, …

• Secondary/ Non-market Stakeholders– Those who do not engage in direct economic

exchange with the company– E.g. Governments, General public, NGO,

Communities, Environmentalists, Media, Trade associations, …

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Stakeholder View

Stakeholder Group Addressed and Affected

CSR Component

Owners Consumers Employees Community Others

Economic 1 4 2 3 5

Legal 3 2 1 4 5

Ethical 4 1 2 3 5

Philanthropic 3 4 2 1 5

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Stakeholder Management Approach

•Strategic Approach–Views stakeholders as factors to be taken into

consideration and managed while the firm is pursuing profits for the shareholders

• Multifiduciary Approach–Management has a fiduciary responsibility to stakeholders

just as it does to shareholders. Places stakeholders and shareholders on roughly equal footing.

•Stakeholder Synthesis–The firm has a moral but not a fiduciary responsibility to

stakeholders

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Stakeholder Management

•Mapping Stakeholders

•Understanding Expectations

•Engagement

•Partnership

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Stakeholders Engagement Process

Task 1-Identify Stakeholders Stakeholder 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 Engagement

The 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.

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Stakeholders Engagement Process (contd.)

Task3 - Plan the Engagement Process

• Determine 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.

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Stakeholders Engagement Process (contd.)

Task4 - Start the Dialogue• Entering 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 commitments

• There 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.

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Stakeholder Engagement examples

• Engagement for performance measurement and accountability - reporting to stakeholders on environmental performance, social performance and sustainability performance

• Engagement for innovation - Innovation Through Partnership- engagement can produce demonstrable and significant sources of Community-enabled Innovation, which benefit companies and their significant communities

• Engagement for social capital creation• Engagement with non-governmental organizations

• Corporate Engagement Project

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Corporate 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

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Stakeholder 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.

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The business of business is business ---- Milton Friedman

Business has no responsibilities other than to maximize profits for the shareholders

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CORPORATE 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 responsibility

emphasizes obligation and accountability to society

Corporate social responsiveness

emphasizes action, activity

Corporate social performance

emphasizes outcomes,

results

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CORPORATE 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 accountability • Retention & attraction of investment – Social screening is a

technique used to screen firms for investment purposes.

• Gain public confidence

• Tool for brand and image building based on distinct ethical values

• Recruitment and retention of staff

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CORPORATE 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 countries

•Besides PSUs, mostly large organizations having global exposure report CSR activities and policy in a meaningful way

• Dr. 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 (2004-05) 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.

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Just a Few You may Have Heard of…

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CSP 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 dispute• Measurement 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 targets •New 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.

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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 others – This relationship is shown to be due to improved

managerial competency and improved corporate reputation.


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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

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• 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.

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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

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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.


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CSR IN PRACTICE

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The top 10 companies in India's CSR rankings include:

According to a survey of Social Enterprise Research by CSR Asia, India ranked fourth in the list topped by Australia. The

CSR disclosure: India ranks 4th in Australasia

Rank Country

1 Australia 2 China 3 Hong Kong 4 India 5 Japan 6 Malaysia

Asian Sustainability Ratings (ASRTM) released by CSR Asia, October 29th, 2009

6.Oil and Natural Gas Corporation 7.Indian Oil Corporation

8.Bharti Airtel 9.Steel Authority of India Ltd 10.NMDC Ltd.

1. Tata Consultancy Services 2. ITC 3. Infosys Technologies 4. Larsen & Toubro 5. Reliance Industries

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Tata 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 Maitree

TCS-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.

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TCS 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-abled

With 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

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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 kids • Computer literacy program • A state-of-the-art science lab • Taking 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 Drive In a partnership with Red Cross, TCS embarks on periodic blood-donation drives towards the treatment of Thalassaemia.

E). HIV AIDS awareness program

Associates across the TCS are participating in TCS-Maitree's aim to spread awareness and sensitize people about HIV/AIDS.

TCS Cont….

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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 productivity

Through 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.

ITC Ltd ( e-Choupal)

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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 and improved 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 employability

ITC 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.

ITC Ltd ( e-Choupal)

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Indian Oil Corporation Ltd

Indian Oil units identify deserving causes in their vicinity for allocation offunds 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.

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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 15-18 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.

Indian Oil Cont….

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Group D, MBA (PT) CORPORATE SOCIAL RESPONSIBILITY (CSR) Ajit Singh S-07CRIS Ankur Garg S-10Utstarcom...

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