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Introduction to social responsibility of business Concept of CSR Nature of Corporations and their Objectives Why Should Business be Socially Responsible Responsibility Towards Different Interest Groups Environmental Pollution and Role of Business 1 2 3 4 5 9
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all these activities? It is because you live in a family as well as in a society and the members of your family as well as the society want you to do all of them. They do several things for you and expect something from you, which you must do. The expectations of the family or society become your obligations, which you need to fulfill. For example, taking care of your parents or children, keeping the road clean by not throwing garbage on it, etc. There are also obligations towards yourself, which you need to fulfill. For example, taking food timely, going to sleep early at night, etc. that keep you fit and takes care of your health. Now you fulfill all these obligations by performing certain activities which are called your responsibilities. Any responsibility you have, particularly towards members of the society with whom you interact or towards the society in general, are called your social responsibility. This is true in case of business also. As we know, every business operates within a society. It uses the resources of the society and depends on the society for its functioning. This creates an obligation on the part of business to look after the welfare of society. So all the activities of the business should be such that they will not harm, rather they will protect and contribute to the interests of the society. Social responsibility of business refers to all such duties and obligations of business directed towards the welfare of society. These duties can be a part of the routine functions of carrying on business activity or they may be an additional function of carrying out welfare activity. Let us take an example. A drug-manufacturing firm undertakes extensive research and thus, produces drugs which are qualitatively superior. It also provides scholarships or fellowships to the family members of its employees for studying abroad. We find, in both the cases, the drugmanufacturing firm is carrying out its social responsibility. In case of the former, it is a part of its routine business function while in the latter case it is a welfare function. Social Responsibility of business refers to what business does over and above the statutory requirement for the benefit of the society. The word responsibility emphasizes that the business has some moral obligations towards the society. The term corporate citizenship is also commonly used to refer to the moral obligations of the business towards the society. It implies that like individuals, corporate are also the part of the society and their behavior shall be guided by the social norms.
Social responsibilities refer to businessmans decision and actions taken to reason at least partially beyond the firms direct economic or technical interest. CSR into two categories: (i) The manner in which a business carries out its own business activity. (ii) The welfare activity that it takes upon itself as an additional function.
Concept of CSR
The concept of CSR originated in the 1950s in the USA and the concept came into prominence in public debate during the 1960s and 1970s. At that time US had lots of pressing social problems like poverty, unemployment, race, urban blight and pollution. Corporate Social Responsibility became a matter of utmost importance for diverse groups demanding change in the business. During the 1980s to 2000, corporations generally recognized a responsibility towards society and weighed against the demands of being competitive in a rapidly changing global economy. We all know that people engage in business to earn profit. However, profit making is not the sole function of business. It performs a number of social functions, as it is a part of the society. It takes care of those who are instrumental in securing its existence and survival like- the owners, investors, employees, consumers and government in particular and the society and community in general. So, every business must contribute in some way or the other for their benefit. For example, every business must ensure a satisfactory rate of return to investors, provide good salary, security and proper working condition to its employees, make available quality products at reasonable price to its consumers, maintain the environment properly etc. However, while doing so two things need to be noted to view it as social responsibility of business. First, any such activity is not charity. It means that if any business donates some amount of money to any hospital or temple or school and college etc., it is not to be considered as discharge of social responsibility because charity does not imply fulfilling responsibility. Secondly, any such activity should not be such that it is good for somebody and bad for others. Suppose a businessman makes a lot of money by smuggling or by cheating customers, and then
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runs a hospital to treat poor patients at low prices his actions cannot be socially justified. Social responsibility implies that a businessman should not do anything harmful to the society in course of his business activities. The Social Responsibility cannot be understood without an examination of the nature of corporations and their objectives.
3. Ethical Responsibilities:
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Additional behaviors and activities that are not necessarily codified into law but nevertheless are expected of business by society members.
4. Discriminatory Responsibilities:
Not legally required or even demanded by ethics. Corporations accept them in order to meet societys expectations.
i. Public Image - The activities of business towards the welfare of the society earn goodwill
and reputation for the business. The earnings of business also depend upon the public image of its activities. People prefer to buy products of a company that engages itself in various social welfare programmers. Again, good public image also attracts honest and competent employees to work with such employers.
iii. Survival and Growth -Every business is a part of the society. So for its survival and
growth, support from the society is very much essential. Business utilizes the available resources like power, water, land, roads, etc. of the society. So it should be the responsibility of every business to spend a part of its profit for the welfare of the society.
iv. Employee satisfaction - Besides getting good salary and working in a healthy
atmosphere, employees also expect other facilities like proper accommodation, transportation,
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education and training. The employers should try to fulfill all the expectation of the employees because employee satisfaction is directly related to productivity and it is also required for the long-term prosperity of the organization. For example, if business spends money on training of the employees, it will have more efficient people to work and thus, earn more profit.
v. Consumer Awareness - Now-a-days consumers have become very conscious about their
rights. They protest against the supply of inferior and harmful products by forming different groups. This has made it obligatory for the business to protect the interest of the consumers by providing quality products at the most competitive price.
Owners are the persons who own the business. They contribute capital and bear the business risks. The primary responsibilities of business towards its owners are to: Run the business efficiently Proper utilization of capital and other resources. Growth and appreciation of capital. Regular and fair return on capital invested
i. not to offer
exceptionally
high sales
commission to
distributers,
agents
etc.
ii. not to offer to customers heavy discounts and /or free products in every sale. iii. not to defame competitors through false or ambiguous advertisements.
air, land including mountains, hills, forests etc. and water in the form of rivers, lakes, sea etc., which create an environment in which we live. Our health and wellbeing largely depend on the quality of such environment. However, it is observed that the quality of this environment is deteriorating day by day. We are getting neither pure water to drink nor clean air to breathe. We are having untimely rains, storms, cyclones, floods, extended summer, etc. We are also suffering from various diseases because of such lower quality of environment. When the quality of environment deteriorates, it is said that the environment is getting polluted. Thus, environmental pollution refers to contamination of environment by various substances that have adverse effects on living and non-living matters.
i. Air Pollution
As we know the air we breathe contains several gases, dust particles etc. Our body mechanism helps us in filtering the unwanted ones and retaining those required for our survival. However, if there is an imbalance in the proportion of gases and dust particles in air, beyond a certain point, our body mechanism fails to filter them and we face problem. This is also true in care of other natural things like forests, river etc. Thus, air pollution refers to the presence of any unwanted gases, dust particles etc. in the air, that can cause damage to people as well as nature.
Emission of gases and dust arising from atomic plants Emission of smoke from oil refineries, burning of trees and plants in forests, burring of coal, etc.
b. Water Pollution
Have you seen river Yamuna near Delhi? Are you aware about the clean Ganga project? These two questions almost immediately remind us about the extent to which the water of our rivers has been polluted. Water pollution refers to contamination of water due to presence of unwanted and harmful substances thus, making water unfit for use.
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C. Land Pollution
Land Pollution refers to dumping of useless, unwanted as well as hazardous substances on the land that degrades the quality of soil we use. Our land gets polluted because of the human carelessness towards the soil.
Reduces the quantum of cultivable land area. Causes health hazards as it contaminate the sources of food. Causes damage to the landscape. Leads to water and air pollution.
Business can have three types of role - preventive, curative and awareness. i. Preventive Role
It means business should take all steps so that no further damage is done to the environment. For this, business must follow the regulations laid down by government to control pollution. For example, more and more environmental friendly products can be produced, filters can be used in chimneys; silencers can be fitted in generators; instead of dumping industrial wastes into river and land it can be treated properly for further productive use etc. Businessmen should come
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forward to play a major role in preventing further damage done to the environment by human beings. Sulabh International is the leading example of how to provide proper sanitation facilities to the public
ii Curative Role
It means business should rectify whatever damage has been done to the environment. In addition, if it is not possible to prevent pollution then simultaneous curative measures can be taken. For example, planting of trees (afforestation programmes) can substantially reduce air pollution near the industrial area.
There is a growing demand for corporate disclosure from stakeholders, including customers, suppliers, employees, communities, investors, and activist organizations.
5.Supplier Relations
As stakeholders are becoming increasingly interested in business affairs, many companies are taking steps to ensure that their partners conduct themselves in a socially responsible manner. Some are introducing codes of conduct for their suppliers, to ensure that other companies' policies or practices do not tarnish their reputation.
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3.Issues of Transparency:
Lack of transparency is one of the key issues brought forth by the survey. there is an expression by the companies that there exists lack of transparency on the part of the local implementing agencies as they do not make adequate efforts to disclose information on their programs, audit issues, impact assessment and utilization of funds. This reported lack of transparency negatively impacts the process of trust building between companies and local communities, which is a key to the success of any CSR initiative at the local level.
5.Visibility Factor:
The role of media in highlighting good cases of successful CSR initiatives is welcomed as it spreads good stories and sensitizes the local population about various ongoing CSR initiatives of companies. This apparent influence of gaining visibility and branding exercise often leads many nongovernmental organizations to involve themselves in event-based programs; in the process, they often miss out on meaningful grassroots interventions.
Non-governmental organizations and Government agencies usually possess a narrow outlook towards the CSR initiatives of companies, often defining CSR initiatives more donor-driven than local in approach. As a result, they find it hard to decide whether they should participate in such activities at all in medium and long run.
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Aptech
Aptech a leading education player with a global presence that has played a broad and continued role in encouraging and nurturing education throughout the country since its inception. As a global player with complete solutions-providing capabilities, Aptech has a long history of participating in community activities. It has, in association with leading NGOs, provided computers at schools, education to the deprived, and training and awareness-camps.
Infosys
Infosys is aggressively involved in a variety of community growth programs. In 1996, the company created the Infosys Foundation as a not-for-profit trust to which it contributes up to 1 percent of profits after tax every year. Moreover, the Education and Research Department at Infosys also works with employee volunteers on community development projects. The management team at Infosys continues to set examples in the area of corporate citizenship and has involved itself vigorously in key national bodies. They have taken initiatives to work in the areas of research and education, community service, rural outreach programs, employment, healthcare for the poor, education, arts and culture, and welfare activities undertaken by the Infosys Foundation.
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At Mahindra & Mahindra, The K. C. Mahindra Education Trust was established in 1953 with the purpose of promoting education. Its vision is to renovate the lives of people in India through education and financial assistance across age groups and across income strata. The K. C. Mahindra Education Trust undertakes a number of education plans, which make a difference to the lives of worthy students. The Trust has provided more than Rs. 7.5 crore in the form of grants, scholarships and loans. It promotes education mostly by the way of scholarships. The Nanhi Kali (children) project has over 3,300 children under it and the company aims to increase the number to 10,000 in the next two years by reaching out to the underprivileged children, especially in rural areas.
Status of employees Mobility of staff Work hours Social relations Health and safety Training Health policy Profits distribution Outsourcing
They must also illustrate their manners when it comes to communities who are concerned by their activities in the countries where they have offices. They must explain the ways in which their sub-contractors respect International Labor Organization agreements. They must also report on ecological issues such as the measure of progress in terms of energy effectiveness and dipping environmental impacts; conditions on use of land, air and water; and documentation obtained in the area of environmental safety.
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Alstom
At Alstom, people, sustainability, and the environment are positioned at the heart of corporate strategy. Alstom offers rail transport, power generation and transmission solutions that defend the environment while ensuring financial expansion and social progress, providing a major contribution to global sustainable development. Alstom expects to further its cooperation with the local communities and people in the countries they are operating in.
Conclusion
The concept of corporate social responsibility is now firmly rooted on the global business agenda. But in order to move from theory to concrete action, many obstacles need to be overcome. A key challenge facing business is the need for more reliable indicators of progress in the field of CSR, along with the dissemination of CSR strategies. Transparency and dialogue can help to make a business appear more trustworthy, and push up the standards of other organizations at the same time. Some of the positive outcomes that can arise when businesses adopt a policy of social responsibility include:
Company Benefits
Improved financial performance; Lower operating costs; Enhanced brand image and reputation;
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Increased sales and customer loyalty; Greater productivity and quality; More ability to attract and retain employees; Reduced regulatory oversight; Access to capital; Workforce diversity; Product safety and decreased liability.
Environmental Benefits
Greater material recyclability; Better product durability and functionality; Greater use of renewable resources;
Bibliography:
www.trikal.org/ictbm11/pdf/csr/d1142-done.pdf
http://www.india-briefing.com/news/corporate-social-responsibility-india5511.html http://timesfoundation.indiatimes.com/articleshow/4662536.cms
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