Chapter 1:

Understanding Corporate Social Responsibility

After studying this chapter you should be able to:

1. Understand organizations as living systems and assess their purpose

2. Get an overview of the concept of modern business

3. Get a glimpse of CSR

4. Define CSR as a concept

5. Analyze the different dimensions of CSR

 The word organization is a combination of two words;

Organic

Ization

If both the words are combined, they mean bringing a process to life. Organizations are living
systems that interact internally as well as externally. Organizations are made up of

Human aspect

Technical aspect

The technical aspect if also driven by the human aspect as technology whenever it is created, it is
done by individuals, if there are going to be no human there will be nobody to invent the
technology. The human aspect defines the purpose of the organizations and means of achieving it
through the technical aspect

Purpose of the business

Achieving the purpose requires processes which are called functional areas of business

Market research

Finance

Production and operation

Source raw material

Design

Produce

Distribute

Sales and marketing

HR to take care of employees

While achieving the purpose, socio economic as well as political structure of the nation gets
affected as the business operations can have both a positive as well as a negative impact on the
socio economic structure as well as political structure of the country. Globalization has further
increased the impact of businesses. Now the entire process of business requires human
intervention and in each step moral questions are to be answered. Moral questions needs to be
asked as only human are gifted with the power of discriminating between moral and immoral.
This judgment has become more important as new management jargon such as ambitious ,
survival of the fittest have glorified unethical activities and corporate sins are justified as long as
profits are earned. More and more companies believe that that if a company has to be profitable
it cannot be ethical and vice versa. This mind set has to be changed if real progress has to be
made in CSR. Similarly organization should not be asked to make a choice between progress and
ethics as both of them are integral to the survival of the business.

What is business:

All activities related to buying, selling and trade. Business also involves;

Creation of utility

Command a price for utility

Demand has to be more than the supply

Gap results in manipulation by corporations to earn profits

There is generally four types of utilities which are as follows:

Form utility

Converting the input in to output

Place utility

Transported to a destinations and value is added as a consequence

Time utility

Value added as a result of time factor

Knowledge utility

Development in the field of advance learning

Development of business:

In ancient times market places generally developed at borders of settlement and barter system
was used for transaction. Similarly trade was the foundation for countries like England, Spain,
Portugal and France. With time business evolved and today business can take the form of

Sole proprietor

Partnership firms

Joint stock companies

For the purpose of this course we will be discussing only a company which can be defined as an
association of persons coming together voluntarily to pursue a certain economic activity with the
motive to make profit. The distinct characteristics of business are:

Entity apart from the owner

Capable of rights and duties of its own

Company is a legal device for the attainment of any social or economic

end and to large extent this is done publicly and by being socially
responsible

Company is a combined political, social, economic and legal institution.

Corporations derive wealth from society, create wealth for society and earn profit by dealing
with the wealth of society. This is done when the society uses the resources or raw material
which is owned by the society, then the corporation uses the human capital which is again part of
the society and finally the society gives money which in turns is profit for the corporation. This
relationship between the corporation and the society involves:

Society gives permission to the business to operate and earn money

Business share the wealth that it earns from society

Corporate behavior should encompass those activities of the corporation

that ensures just and responsible behavior
The four dimensions to corporate behavior with respect to the society are as follows:

Setting boundaries to learning, accountability and responsiveness

Building activities that form basis of learning

Creating measures that validate and make knowledge effective form basis
of decision making

Institutionalizing trust in ways that creates a virtuous circle of practice and

further engagement with stakeholders

Values are essential to organizational function and dynamics and play a very important role with
respect to the relationship that business has with its stakeholders. Organizations are nothing but
the collective consciousness of all the members contributing to its activities. Human aspect is
very important than the objective as the objective is achieved through the efforts of the human
and if there will be no human involvement then the objectives will not be achieved. At this point
in time it should also be made very clear that the human are not for technology and industry but
both technology and industry is for humans and to improve the quality of life of humans.

CSR WHICH IS ABOUT THE BUSINESS TAKING IN TO ACCOUNT THEIR TOTAL

IMPACT ON SOCIETY AND THE NATURAL ENVIRONMENT

Businesses have ability to bring economic prosperity to communities and the corporate
community universal influence makes it very unlikely that society can wish it away. The need is
to transform instead trying to constraint, tame or offer general solutions to the relationship of
society and business. The above aspect is relevant today because of the modern economy which
has the following features:

Speed of change

Increased importance of knowledge, innovation and communication

Importance of intangible assets

 Diversity

To manage the modern economy it is important to establish values, leading to trust and integrity
among physically dispersed staff as the relationship between businesses and society should be
based upon trust. If trust is lost then we will not have an organization but only automation.
Where organization will work like robots without feeling for stakeholders. Just like there is
democratization of politics there should be democratization of economics i.e. the economic
benefits should be for the people by the people of the people (product of the people, by the
people and for the people). This is where the responsibility of corporate world becomes
pronounced. CSR provides the framework of boundary for the free market to operate
responsibly.

CSR, it is the most misunderstood concept, the reason for this are:

No formal structure

Defined vaguely

Ad hoc management policies

Definitions of CSR

Idea of legal responsibility

Social responsible behavior in an ethical way

Charitable contribution

The World Business Council for Sustainable Development defined CSR as:

The continuing commitment of business to behave ethically and contribute to economic

development while improving the quality of life of their workforce and their families as

well as the local community and society at large

President of WBCSD said

there is no universal definition of CSR because the concept is always being redefined it is up to

the companies to find their magnetic north

The values and principals are the companys internal compass that help the company to stay on

the ethical path.

Milton Friedman said

there is one and only one social responsibility of business to use resources and engage in
activities designed to create profit so long as it stays within the rule of the game which is to say
engage in open and free competition without deception and fraud

The shortcomings with the above mentioned concept is:

Lack of morals among the practitioners of business

Lack of ordered civil society in which business operate

Less importance to production and distribution as compared to exchange

and free economy concept is violated which says free entry and free exit
and equal sharing of information

Economic perspective doing business: Greatest social satisfaction is when individuals pursue
self-interest. However the fact that Government alone cannot alone bear responsibility for all
society welfare is also true hence the businesses now have to:

Resulted in looking beyond economic gains

Development of duty / responsibility perspective

Aspect cannot be ignored by businesses

Other definitions given for CSR are:

Keith Davis: The consideration of social needs wants and desire by the organization
decision makers can be considered as CSR
 Hopkins: CSR is concerned with treating stakeholders ethically or in a socially
responsible manner

CSR as a continuum: the concept of CSR can be taken in the form of a continuum. In this regards
the various views are:

Simon Zadek Development if CSR in terms of three generations

First generation: CSR does not interfere with commercial success

Second generation: integral part of long term strategy

Third generation: significant contributions towards issue as poverty, environment

degradation education etc

Archie B. Carrol: CSR is a four stage continuum

Economic goals

Legal goals

Ethical goals

Discretionary goals

Fitch said that CSR is an attempt to resolve social problems caused by businesses while Bowie

says it is the interest of the business to adopt a view of CSR that includes a duty to help solve

social problem and not as a duty that will benefit the business

CSR now is not only the maximization of shareholders value but also of stakeholders value. It is

about the management of a companys impact on stakeholders, the environment and the
community in which it operates. It is about the integrity, with which the company governs itself,

how it fulfills its mission, the values it has, what it wants to stand for, and how it engages with
transparency. Hence the organization have to move from the financial bottom line to social and

environment bottom line.

Understanding CSR

CSR goes beyond philanthropy and charity. It is a long term activity that the organizations

undertakes keeping in mind the welfare of the society and the environment.

Four aspect of CSR

Responsibility

Accountability

Sustainability

Social contract

Responsibility

Distinction between, corporate social performance, corporate social responsibility

and corporate social responsiveness

CRP or corporate social performance is management of corporate relationships

with its stake holders

Corporate social responsiveness is capacity of a corporation to respond to social

pressures

Creativity view of history

Liberation view of history

Learn lesson of empowerment and fall of the fittest i.e. if one (organizations or human) does not
adapt with change then eventually that one will fail and fall. Organization needs to realize the

changes in the society and pressures for CSR and also accept that ethically accepted corporate

activity and profit making are not mutually exclusive.

Relationship between victor and victor (domination, exploitation and oppression) cannot be the
basis of relationship between an organization and society as only profit making is not
sustainable. It results in degradation and social upheaval. In terms of CSR the following should
be kept in mind

Accountability

Inner circle: clear cut responsibilities for the efficient execution of the economic
function

Intermediate circle: responsibility to exercise the economic function with

sensitive awareness of changing social values and priorities

Outer circle: emerging responsibilities in actively improving the social

environment

Sustainability

CSR requires revolution in the way that companies think and act

The design, communication and implementation within the organization and

society should be geared for support and motivation of all stakeholders.

Social contract

Survey a decade ago summarized that 81% executives say that wealth
maximization and social involvement can go hand in hand
 Businesses have responded by short term program but no long term commitment

Balance between CSR and profits

Chapter 2

Evolution of Company and CSR

After Studying this chapter, you will be able to:

Understand the concept of corporation

Trace a brief history of corporations

 Understand how modern corporations come in to existence

Provide a brief outline of corporate governance

Analyze the importance of CSR in governance

Introduction

Concept of corporation has evolved over time

Hardly a human activity that does not fall under the shadow of corporation
 Definition of corporation

An economic system has the following characteristics:

Competition for scarce resources

Human creates process, capture resources and make products and create
exchange

Not possible for one individual to do

Group with different skills and financial resources is formed

Risk is also involved in this process

Economic corporation works to earn profit

Seeds of Early Corporations

Early corporations

Religious

Confraternity religious association members are committed to certain

rules and guidelines to promote religious life (middle ages to date)

Played significant role in religious and social life

Money was raised through banquets and feasts

They provided food and medical care

Activity was unorganized

Controversy as to who should control philanthropy state, municipality ,

confraternities or other institutions

16th to 18th centuries reflect conflicting policies

Establishment of merchant guilds i.e. specialized people of one trade were grouped
together

More organized concept of corporation with charter companies

 English East India Company

Development of Modern Corporations

Early firms had single owners or a small numbers of owners

Unlimited liability

Started as small firms

To counter the risk of unlimited liability legislation was made to make the corporate
entity and the owner separate

This laid the foundation of a corporation

Shares

Dividend (reduced during bad times)

Proprietor or the owner of the business has more information than the outside
shareholders

Corporate Governance: laws, codes, structures and processes put in place to run a
company

Proprietor becomes the first director

As shareholders grow they are also owners

Sharing of profits

Succession planning of directors

Rules and regulations that will result in a win-win situation for the owners,
management and the community

This process of restraining and control exerted by the company and the government
related to the concept of corporate governance
The Incorporation of a Company

Come in to existence under a law

Artificial person

Legally accountable and answerable

Shareholders can question the activities of a corporations

Shareholders are not agents. They are legal members

Selection of directors

Corporation have economic powers which can compete with modern state

Economic power Vs Political power

To rein in economic power

Corporate governance

File documents

Governance and Management of Company

Corporate governance is not an abstract goal

It serves corporate purposes by providing a structure within which stockholders, directors

and management can pursue most effectively the objectives of the corporations

Governance is the prerogative of the board of directors

The management structure is a pyramid

Authority, responsibility downwards and accountability upwards

Activities of the board of directors

Formulation of strategies, management and being answerable to shareholders

 First principal of fiduciary duties

One having been entrusted with powers for another's benefits in under an
obligation to act honestly

Board and external influences which can come from the following sources:

Institutional investors

Hostile takeovers

Banks

Shadow directors

Theories of Corporate Governance

Agency theory

Stewardship theory

Shareholders Vs stakeholders theory

Transaction cost theory

Sociological theory

Agency theory

The economic relationship that arises between two individuals

Principal

Agent

Three conditions to operate relationship

The agent has the freedom to choose between various course of actions

Actions of agent influence their own growth as well as the principals

 Difficult for the principal to observe the actions of the agent as
information is not enough

Agency theory

The supplier of finance need return on their investment

Principal needs assurance that agent does not steal the investment

Principal needs to control the agent

Control is dispersed and less effective

Problems with agency theory

Utility maximizer (agent will not act in the best interest of the principal

Unequal sharing of information

Element of risk (judge performance based on annual reports )

Agency theory

Agency loss

How to reduce it

Focuses on qualitative and not qualitative aspect

To overcome the problems mentioned above:

Transparent accounting practices and disclosure

Non executive independent directors

Stewardship Theory

Built on premise that directors will fulfill their duties towards the shareholders

Assumes that human are good and directors are trustworthy

Directors are stewards whose motives are aligned with the objectives of the principles
 Directors take in to account the stake holders but after the shareholders

Strengths

Trust is high and stewards are motivated

New ideas and growth

More liberal and believes in empowerment

Weaknesses

Causal relationship between governance and performance cannot be assessed

using this theory

Transaction Theory

Assumes that managers seek self interest

Managers operate under bounded rationality

Selfishly driven to undertake transaction that benefits them personally

Make transaction without study as the money invested is not their own

Strengths / weaknesses

Quantification is easy

Shareholders are residual receivers , concern about safety of investment

The sociological Theory

Composition of the board, transparency of the financial reporting, disclosure and auditing
are considered central to realizing the socio economic objectives

Strengths / weaknesses

Based on fair distribution of wealth in society

The challenge is that the board should not have absolute powers
 Government control, interference may increase leading to constraints and
red tape

Importance of CSR in corporate governance

Stakeholders theory is integral to corporate governance in addition to shareholders value

General acceptance that government cannot manage all needs of society and companies
have to involve themselves for the welfare of stakeholders

Corporations have the following responsibility

Economic

Legal

Ethical

Honor trust

Be culture sensitive to provide the right services

Discretionary

Undertake voluntary activities and expenses, keeping the greater

good of society in mind

Many countries have created lay

The companies act of 2006 of UK formally includes CSR as responsibility to be

undertaken by the companies

CG is a powerful tool which can ensure CSR permeates throughout the company

Operate in internal, intermediate and outer circle

Every company has to find and frame its own frame work of CSR

Leadership Crisis

The obligations of a corporations can be discharged if leaders believe in them

 Human aspect ensure success or failure as they are the process creator, process owners
and process deliverers

Organizations need a team that can identify with the mission statement

If the organization is defined by economic terms . The management fails to

realize the deeper values that the organization offers to employees in term of
security, personal growth, purpose in life

Organization cannot have a two set of moral

Organizations have to realize that making money is essential but it is certainly not
its purpose

Businesses do not operate outside society therefore it has a responsibility towards society

This can be fulfilled by the value orientation of the people within the business

Relations between Values and Skills

Are leaders value oriented?

Society gives them a high pedestal and this respect demands that leaders fulfill their
responsibility towards the society

Increased specializations has resulted in more interdependencies

Rules cannot be made for every relationship as they are guidelines and not end-all
of every relationship

Usually organizations have visions and values to guide decision makers and rely on
collaborations.

This can work if leaders are committed to work and work becomes the motivation
and not pay or perks

Usually rules results in complacency, but code signifies minimum necessary

The concept of compassion and common good should be guiding factors while reviewing
work and its results

According to business week annual executive compensation survey

 Between 1990-2003

The CE pay rose 313% compared with profits rising 128% and average
worker pay increasing only 49%

Professionals have to unite to create a leadership cadre that can fight such unethical
conduct that is sustained in the name of expertise

Leaders have to take a proactive stand and exert authority to shape policies conducive to
human good

Leader should develop unique qualities in every stakeholders as everybody knows

something that other dont and using this skills will result in successful corporation

The Social Impact

Law and order situation is also dependent on economics of a country

In case the economic situation is not good anger is directed towards big businesses

If business needs customer with buying power then it has to ensure that common man
position improves

Unless the business community contributes to the basic development needs, its own
survival will be threatened

Managers behave as if we are alone and that they dont have choices it is this lack of
choices which is the killer of humanity

Problem with the concept of survival of fittest

The spirit of cut throat competition has resulted in accumulation of wealth without
thinking of ethics

Result social havoc

Consensus management is the need of the day

Create a family within the corporation

Basic human values, trust, integrity, honesty, selfless

 Hence back to the principal of being ethical

Corporate social performance encompasses an organizations commitment to behave in an

economically and environmentally sustainable manner, while honoring the interest of the direct
stakeholders and benefitting the greater community at large

The success of this performance depends upon

What people think about the business

How people behave in an organization

The value of CSR is actually a transcendent value. When such inspirational ideology is combined
with formal structure the result is the following 4 types of organizations:

Anarchy

Hypothetical state, results in turmoil, chaos, conflict and extinction

Robot

Represents the mechanistic view

Organization acts as a machine and the humans act in a predefined pattern

Social

Humans are the only structure that exists

Interconnection between common values and direction

Difficult to find state other than certain small organizations

Incorporated

Ideal state where values and structures are strong

Integrated structures are because of collective consciousness of all the

members of the organization
The value of CSR is actually a transcendent value. When such inspirational ideology is combined
with formal structure the result is the following 4 types of organizations:

Anarchy

Hypothetical state, results in turmoil, chaos, conflict and extinction

Robot

Represents the mechanistic view

Organization acts as a machine and the humans act in a predefined pattern

Social

Humans are the only structure that exists

Interconnection between common values and direction

 Difficult to find state other than certain small organizations

Incorporated

Ideal state where values and structures are strong

Integrated structures are because of collective consciousness of all the

members of the organization

Chapter 3

Stakeholder Theory
After studying this chapter you should be able to:

1. Understand the definition of stakeholder

2. Understand why the stakeholder theory is important

3. Learn the taxonomy of

4. Stakeholder analyze stakeholder

5. Relationship understand holistic

6. Growth through tangible and intangible manifestations in a corporate business

Introduction

At ground level, resources include land, labour, and capital and their productive utilization needs
the consideration of economic, social, and environmental costs. at the higher end, the resources
include information, knowledge, and wisdom, which again require judicious application.
effective and efficient utilization of these resources is the focus of every business.

Effective and efficient utilization is the focus of all organizations

Find best method for value added utilization of resources

Interaction with number of entities i.e. stakeholders

Relationship has been analyzed from

Economic level

Moral level

Value level

Obstacles to ethical conduct

Individuals

Groups

Society
The need is for coexistence of two parties that is mutually beneficial so that both i.e. the society
as well as the companies and businesses are not at the losing end and it is a win win situation for
all. If we trace the history of ancient civilization we find that economics was rooted in local
communities and exchanges were based on high sense of morality. Even the the frontier cultures
of America (home to modern management) glorified harmonious existence. Industrial revolution
was driven by process that required rules and regulations while social scientist like Weber, Taylor
endorsed rule driven hierarchies, scalar chain and quantification of results that resulted in high
standards of efficiency but demise of human spirit. The free human spirit was now in search for
security. Superficial justice and equality was offered by creating stockholders relationships and
the relationship between the employee and the organizations (Loyalty in return for employment).
The lack of human sensitivity resulted in Maslow need hierarchy and two factor theory and
empowerment, autonomy etc. Post war development and political movements gave importance
to individuals. The individualism lead to the concept of free markets and that economic activity
should not be judged on moral ground. This culture led to burn out and resource exploitation and
market lost its stability

Taxonomy of stakeholders

Group who can affect or is affected by the organizations purpose

Benefits from or harmed by and whose rights are violated or respected by corporate
actions

People with the power to respond, negotiate and change the strategic future of the
organizations

Stockholders

Financial stake

Demand returns

Organizations have to honor the demand

Stake will be different based n the type of owner

Employees

Hired based on skills, expertise

In return for work demand compensation

 Levels of management and their work

Employee loyalty in return for need compensation

Problem of pseudo commitment

Ethical education should correspond to their level of action

Suppliers

Provide raw materials and gets rewarded by getting contract

Long term relations hip and partnership based approach

Based on trust and collaboration

Problem when parties underplay social responsibility and only focus on profits

Customers

Defined as king of business

Older tradition made right decisions to get the best gains

New concept companies success depends upon how closely the customer
relationship is monitored

More satisfied the customer = more profits

The relationship does not get honored because of the following producers rights:

The rights to make decisions about product offered for sale i.e. design and
sale

The right to set price including warranties

The right to determine how product will be made available to the customer

The right to promote

The consumer has the veto option

 Customer can switch from one product to another but that depends upon the
availability of similar goods

Relationship defined BUYER BEWARE

Consumer rights and consumer awareness

Competition

concept of free markets

Fix price and share information with consumers

Enter markets by cheating, lying and poaching

Competition affects and gets affected by mutual behavior that can or help the
organization responsiveness

Government

Large number of actors and institutions that can make and issue laws

Local to international level

Since society gives sanctions to business, laws codify what the society thinks as
right or wrong

The government relationship

Government as a representative of society trying to regulate businesses

and facilitating businesses

Government dependent upon the economic prosperity and the economy is

run by businesses

Government is a competition of business

Society and community

Include Non for profit, non-government, charities, religious groups, pressure

groups

Represents the voice and needs of individual stakeholders

Impact and dilemmas of business

Up till now the process of development pursued capital formation and raising GNP in the
belief that the mysterious hand would ensure the fair distribution of gains. However,
affluence cannot be the goal for society. Corporations have to recognize the philosophy of
empty plenty that is availability of abundant material goods that only fulfill the physical
needs but do not ensure emotional happiness and satisfaction. Businesses have to work
for the physical and emotional need of the people and ensure that

Issues of trust and values

Have open directed systems Vs closed entropic systems

To be meaningful the organizations should do an honest assessment of internal and

external environment

Threats and opportunities

Listening to diverse ideas

Encourage change

Avoid extremes

Total conformity Vs total disregard

Diversity in ideas is important for CSR to work internally and externally

The above mentioned system needs to be driven by professionals

Associated with values and ideals. Intertwined with social well being

As professionals cannot have stereotype meanings of entities

Use knowledge to diagnose, infer, analyze and then offer solutions

The danger

Misuse of specialized knowledge

The society trust professionals

Individual values that make the organizations values

Intangible aspect of the stakeholders approach

Stakeholders approach is based on long term relationships with stakeholders

Relationships need nurturing and trust has to be maintained so that all stakeholders
remain committed to the wellbeing of the organization, society and the community

Values can be experienced but they cannot be measured and quantified

Values are the intangible aspect of stakeholders approach

Balancing Emotional Quotient and Intelligent Quotient

Search for right professional who can make the incentive oriented journey towards
perfection

Realty instead of focusing on emotions attempts are made to annihilate emotions

Through the concept of an economic man

Asking our professionals to keep emotions at home while they do activities which have
profound global influence

The emotional intelligence decides whether the subjective individual is going to deliver
the correct objectives

The intelligent brain can justify any activity hence when emotions are not
managed individuals can commit the most heinous crimes

Unfortunately, management focuses more on skill development and less on value

development

Intellect and reasons are tool for skill development

Skills and action need to be guided by values of human existence

Right choice that people have to make as there is no area of life that does not contain
value and ethical elements

Importance of ethics

Healthy and wholesome growth in the corporate world cannot ignore ethics
 Main concern is to make profit and ethics has to be proactive part of business if profits
are to be sustained

Organizations have to pre-suppose accountability and integrity for perfect business

processes

Knowledge has no value if it is not creative

Creativity always related to positive sustainable growth

Difference between the right and the wrong professional

Right people are supposed to make life more comfortable

The purpose of business

To create material wealth so that life can be made enjoyable

As a reward for this, society allows them to make profits

Material wealth is of value if it results in human preservation

Understand the difference between need, want and greed

Selfish individuals preservation is fueled by want and greed and hence money

The tussle between means and ends

Means are as important as the ends

Free from stress and fear when one is committed to means and ends

This dedication leads to a balance

Failure becomes a stepping stone to success

Hope to try again

There is no alternative to work, it is the motivation which decides whether the result is
positive of negative

Unhappiness occurs when somebody else achieves success quicker than us by using
unfair mean but the question is that how long can that success last
Combining tangible gains with intangible satisfaction

Can a business ignore its stakeholders

Relationships depends upon trust and not skill

If the individual is not value orientated how can the his action be value oriented

Businesses depends on a vision

Vision is achieved through smaller missions

To achieve this organization should have

Sight

Day to day activity

Insight

Debriefing, appraisal is made of the activities and their results

Foresight

Setting the goals towards which the company ahs to proceed

Holistic growth

Professionals cannot work within their respective areas and believe that development
would happen

Can magic of the market place resolve the problems of the millions who live below the
poverty line

The process of globalization should have a human face

Economic growth has to be shared

Stakeholders Trade-Offs

While implementing the stakeholders theory

 Tradeoffs between stakeholders as it is not possible to meet the demand of all
equally

Donaldson and Preston (1995) proposed three uses of the stakeholder model:

Descriptive

Helps to understand how corporation are organized and managed

Description of the organization and what people believe their roles are

Instrumental

How stakeholders are a practical method of earning profits

Normative.

It relates to the interest of stakeholders which should be promoted for the

sake of the corporation

Mitchell et al. (1997) suggest that the importance or salience of the stakeholder can be
judged from the parameters of power, legitimacy, and urgency

Power is the ability to influence organizations decisions making and actions

Legitimacy relates to how far the organization perceives the activities of

stakeholders as appropriate and desirable

Urgency as the word suggests judges the importance of stakeholders claim to

immediate action

Based on which stakeholders demonstrate how many attributes, they can be classified as

Latent

Expectant

Definitive

Then the organization can decide how it would engage with various stakeholders

A framework for making the trade-off is offered by Jenson (2006). He calls it the
enlightened value maximization and enlightened stakeholder theory.
 Stakeholders theory directs corporate managers to serve many masters

Experience confusion, conflict, inefficiency

We cannot maximize the long term market value of the organizations if we ignore or
mistreat any important constituency

Value criteria would help the organizations to decide the trade-off more effectively

Cautioned that stakeholders theory can play in the hand of special interest groups who
would legitimize using resources for their own good under the guise of stakeholders
welfare

Result in more harm than good

We must set our organizations so that it is motivated to seek value and make strategies to
raise value
Chapter 4

Roles of Various Institutions in CSR

After studying this chapter you should be able to:

1. Understand that CSR is integral to the development process

2. Understand and the role of the major institutions of the civil society in CSR

3. Create and awareness of certain institutional initiatives in progress and the need for
further contribution in the field
Introduction

CSR brings to the forefront the human aspect of development

Reminds professionals that they are people first and therefore human relations have to be
managed effectively

Development cannot be uni-dimensional

Matrix of relationship based on trust needs to be developed

CSR signifies the concept that it is better to have a shared interest in a successful
development process than to dominate a failed, dissatisfied, socio-economic structure.
Therefore, the role of major institutions in the CSR process needs to be analyzed and
understood.

Each institution can act as a check and balance on the other

Analyze the role of

Government

Non-government

Educational institutions

Media

Role of Government

Inspite of growth, globalization no progress in addressing human issues

Instead of ensuring holistic growth there is a division of have and have not's

Pressure that government should intervene to ensure justice

Balancing between autocracy and democracy is the real challenge and CSR can be used
to create this balance
 Government should accept moral responsibility for the wellbeing of their citizens

Historical perspective

Governments through history have

Used force to manage people

Use manipulation to make the common believe that his interest are at the top of
the list

Actual contributed to the development

What the government has contributed towards CSR through its values, vision and
strategies

Concept of public and private partnership has to be debated

Win win situation for economy, society and politics

The concept of virtue of the market has faded when we are faced with consequences of
progress

Question is WHY HAS THE MARKET FALIED TO DELIVER?

All human are basically good and believe in collectivist living

Question is WHY THE DIVIDE BETWEEN THE RICH AND THE POOOR IS
INCREASING

Have our own mechanism failed us by creating unethical negative emotions like greed,
hatred and jealousy

The answer may be found when we analyze the different markets in which business
operates

The three major markets are

Capital markets

Labor markets

Consumer markets
 Capital markets

Provides basic necessities for production i.e. land, finances, technology, raw
material

While participating in these markets are the firms operating with CSR?

Reason

Search for cheaper, quicker sources rather than ethical sources

Quality of inputs is compromised

CSR Vs productivity

Short term Vs long term

Firms may use CSR to keep government regulations away

Labour markets

It is believed that education creates responsible, trustworthy dependable people.

Also the need for highly specialized world of today

As we specialize the depth of knowledge increases but the width of knowledge

decreases

This means we are more interdependent and for that one needs trust

If ask a class to identify their favorite company

It would relate back to pay package

And not about how responsible the company was or is

Therefore the company that offers the highest package gets the best brains

Our system of education sharpens the intellect more than the emotions, the labour
markets also participates in exploitive behavior

Example Harvard Business School

Consumer markets
 Not driven by CSR

Consumer not driven to bear the extra cost of CSR

Driven by advertising and not whether the company has been operating
ethically

Companies say that since CSR does not sell we do not highlight it

Though business say that customer is the king but what powers does the
king have

Veto power

Veto power can operate when there is equal sharing and

transparency

Monopolies and oligopoly limit free choice of consumers thus

limiting the virtue of the markets

Consumer at the mercy of the producers

Consumers have to come together collective bargaining power to ensure

responsible behaviors

Looking at the above concerns it is important for the government to play a proactive
roles to ensure that CSR is promoted

Limit to corporation efforts hence support is needed by government

Responsibility of the government to create safe environment for business investment,

provide basic infrastructure, reasonable regulatory processes and public policies

Create a level playing flied

Obstacles

MNCs may increase the standards of living but other factors nullify CSR

Vested interest of corporations may lead to unfair policies

Promote products behind the faade of CSR

 Government engineering policies that may cater to party funds

Role of the government is to seek balance between authority and responsibility

Ensure that social responsibility is incorporated in their role, relationship and influence

Governance is

Enforcing laws with the objective of ensuring justice, peace

Proactive actions that reduces gaps between have and have not's

Ensure welfare of people

Government justify behavior based on utilitarianism

Problem is moderate benefits to large and severe discomfort to smaller groups

This discomfort may fester in to activities like terrorism and

fundamentalist movements

Eat in the process of development

Government has to ensure distributive justice

It has to based on the absence of specific information

Advantage or disadvantaged based on social class and fortune

Government should ensure

Markets remain competitive

Equal opportunity

Resources are utilized efficiently

Outcome of business is distributed

Social capital has to be enhanced by developing human capital

Corruption has to be rooted out to ensure true competitiveness

 The role of the government is to provide guidance to business about CSR

Unethical activities thrives best in Chaos

Expectations regarding welfare have to be clear with a proper chain of accountability

laid out for monitoring

The role of the government is to provide clear guidance to companies regarding CSR

Government can insist on internalizing the social and environment cost

Business can pressurize the government for better mechanism of distribution of wealth
(result in more purchasing power)

In a globalized world

The business represents the nation and the governance structure

In the interest of the government that domestic firm adhere to the norms of
responsible social behavior

A company misadventure can compromise a country reputation

A two pronged approach has to be adopted by the government

Mandatory disclosure of the activities impacting society

Educate people to understand such information

Result an environment of informed choices i.e. just and fair decisions

Government should enforce legislation that should internalize their externalities

This demands that companies engage in socially relevant activities that are not profitable,
thus do not meet the market test, monitoring may become a big challenge

Companies can falsify information is monitoring is not strict or of the government

officials join hands with companies

While monitoring government should ensure that involvement does not become
interference and legal coercion

Conclusion
 Broad based social and moral consensus in the global arena is the need for
effective CSR

Sullivan principle

Given by Reverend Leon Sullivan, member board of General Motors in

1977

Persuade US companies with investment in South Africa not to participate

in the negative practices

Gained popularity and was relaunched in 1999 as a Global Sullivan

principle to foster human dignity

This refers to support for universal human rights, equal opportunity,

respect for freedom of association, levels of employee compensation,
training, health, safety, sustainable development, working in partnership to
improve quality of life

This and other UN institutions principles can become yard sticks for the local
governments to measure and evaluate their CSR activities

Finally one cannot ignore the fact that at the final assessment

Every regulation is dependent upon the human subjective

Humans designs , works and can break them

Governments especially the democratic governments have to be careful about the balance
between freedom and responsibility

If the government allows direct democracy it can lead to tyranny of the majority

This is where the utilitarianism faces road blocks

Concept of majority is flexible

In a group of ten, six is a majority and so is none

Direct democracy

may actually undermine and over rule representative government

 Threat to individual freedom as minorities may lose out in the race of
representation

Government has to be vigilant about misuse of power by corporation but it should also
ensure that citizens do not abuse their rights and freedom to exploit others

Role of NGOs and N-F-P Organizations

NGO is a legally constructed body without any government involvement

Even after receiving government funding they keep their non government status
intact

Not for profit organization

An incorporated organization that exist for educational and charitable

reasons and from which its shareholders or trustees do not benefit
financially

Any profits earned must be retained by the organizations

Get tax exemption

It is managed like any other company

Dedication and commitment to work is inherent in the structure of an NPO

Considering the region where the NPO is working, the work can be
demanding

Funds are donations routed through entities or directly

NPO is a bridge between the beneficiary and the donor and is accountable
to both

NPO and NGO play an important role in CSR

Facilitate social responsibility by joining hands with corporations

 Can also become agents of money laundering by unscrupulous businesses

Since funds are received by donors, choice of cause is also donors

Priority issues get ignored

Superficial social work

Unbridled growth of commercial activities have both positive and negative fallouts

NPOs can keep traditions alive

Reduces burden on already stretched facilities of the urban centers

Help reduce poverty

Sum total of multiplicity factors

Health

Access to land, credit and education and infrastructural facilities

Results in less productive workforce

CSR has to deal with this issue unleashed because of market forces, government
apathy or corruption

CSR would have to confront issues like

female feticides

Women empowerment

Corporates have to reinvent their human resources policies to support women

Not hire women

NGOs and NPOs can contribute with government and the corporate world

Role of educational Institutions

 university does not only need to become more open minded, it also needs to
transform itself into a learning academia, constantly adapting itself to new
challenges and comprehending itself as one player interacting with other

Educational institutions can mold the young minds

Importance aspect of CSR that organizations cannot handle

Academic institutions have to provide the platform

For interactions between corporate and academia

Students should be given the opportunity to learn hands on about CSR

Educational institutions can play an important role in improving the quality of life

Educational institutions have the responsibility to

Educate human capital

Promoting the development of knowledge by encouraging lifelong leaning

Create an environment for innovations

Collaborate with the corporate world

Disseminate knowledge the create synergy

Revamp teaching processes to ensure that future leaders are socially responsible

Business ethics and CSR

The role of media

Media is the most powerful engines of social change

It has not been taped to bring about responsible social change

 Benefits of free press

Tremendous positive influence on society

The competition for survival is strong and media trade value and integrity to
remain in business

Show or write what the society wants

Increase ratings

Media has to play the role of a true detective

Uncover truth while maintaining the dignity and privacy of citizens

Balance between the right to privacy and the right to information

Create a self-regulatory process keeping the wellbeing of society in mind

This is where the concept of CSR fits in media world

Power and pressure that media can exert

It is not the moral police but can promote morality by reporting cases

Act as a channel for dialogue between stakeholders

Be an instrument for disseminating, development and goodwill

Monitor government and corporations

Play the role of a mediator

Media should be transparent and accountable

Media has to be a role model of CSR

It can motivate companies

Chapter 5

Creating CSR Framework

After studying this chapter you should be able to:

1. Understand the importance of historical evidence in exploring the concept of CSR

2. Examine the processes of integrating CSR into the strategic framework of

organizations

3. Provide simple suggestions on implementation processes of CSR for organizations

understand that CSR

4. Perception and delivery have to take into account both global and local practices
 Introduction

The purpose of business is to earn profit. Profit is a culmination of risk, return and growth
of an organization. All three have deep relationship with the internal and external
environment

CSR caters to both these environments

CSR has to be woven in to the daily activities of the organization so that it cannot
be thrown out when the organization is going through a down time

We will begin by appreciating the role that history and cultures play in the
economic development of any country and then study how a strategy can be
created to incorporate and implement CSR

Relevance of history and cultures

Business aiming for total development cannot ignore historical and cultural aspect
of a country

A durable socio economic environment has to create a harmonious relationship

with new changes without losing its originality

Our view of history shapes the way we view our present, and it dictates the
answer we offer for existing problems

We have to learn from history carefully

Historian distortion is more than technical it is ideological

It is released in to a world of opposing interest where any chosen emphasis

supports some kind of interest
 Economic, political, racial, national

When use history to evaluate a concept we should be aware that true history and
pseudo history can coexist

Early history emphasized as to how the institutions of capitalism and industrialism

evolved

Sociologist explored the role of religious and social relation in the development of
modern capitalist attitude towards economic gain and opportunity

History provides us with information which helps us in understanding the changes in

industries, markets, societies, economies and the political system

Management and the industry has to respond to cultural elements that include
psychographics and physiological needs of its various stakeholders

While designing strategies for growth and corresponding profits the business world
would have to take in to account all this to create a sustainable socio economic
environment

Creation of strategy

Definition of strategy

Analyzing, projecting and directing the different engagements

How each engagement is linked

Operates in a controlled environment

Not a guessing game

It is rational and a conscious reaction to environment

Some important assessments that an organizations needs to make on pursuing

CSR are
 Risk analysis

Strategy is built from studying history and culture

Foremost policy that needs to be articulated

Goals and objectives

Long term and short term

Analyze the impact on society and community both long

term and short term

Required because resources are derived from the society which are
needed to fulfill the aims and objectives

This is where the stakeholders theory finds its

legitimacy

To implement this organizations needs to be committed towards

governance and transparency

Accountability and integrity are brand ambassadors and cannot be

quantified

Intangible assets having effect on financial bottom line

Risk management would have to be undertaken with sincerity

Within the organization

Within the departments

The firm has to take stock of assets, relationships, processes,

technology and its capabilities to achieve its mission

Mission neither too broad nor too narrow

Create competitive advantage and long term viability

Building trust
 Investor friendly environment

Built trust In the mind of the customers

Trust is not a unilateral process

Reciprocal relationship with all stakeholders

CSR is the prime intervention required to create good relationship

with all stakeholders

Go beyond financial reporting and report intangible aspects

All governance codes demand reporting of the non financial

factors impacting profits

The corporate needs to stream line its value chain to bring

transparency

Allow stakeholders to judge the corporate strategy and actions

related to quality and sustainability and thus create trust

Subliminal impact of history

History provides tools which are pivotal to every day life

To understand thought , feeling and actions comprehend history

History = culture= way of life

Social cohesion needs an in depth study of history

Form of government and political system plays an important role

in deciding the terms of social reforms

In the name of cohesion, public sector employees retain perks

while private sector suffers

Highlight the disparity in CSR within the same country as a fall out
of their past historical traditions
 Linking democracy and economy

World wars were fought between economically developed

nations

21% of the poorest democracy will go to war

Conflict is not related to economic prosperity

China and Saudi Arabia have state managed economies

Democracy and civil peace are related when country has a

high literacy rate and development

Risk of civil war decreases with development in democratic

countries

Conclusion: formulating business strategies without

understanding these contradictory factors may not lead to
expected gains by the business world

Corporate ideology and history

the history and cultures of countries play a crucial role with

respect to accountability, integrity and transparency

There is a correlation between economic growth and

economic behavior

The advancement and development of the legal

system and/or social expectations and the need for
involved parties contributed to that

This is corroborated when the corruption indexed is

viewed

Corruption in India is wide spread despite the fact

that the economy is growing
 This is because the corrupt money is spread
over a large number of people and they
return it back to the economy

CSR needs to give warning that such practices

would corrode economy over time and sustainable
growth would be a illusion

Corporations need to realize that corruption is a cost that they are

passing on to the unit price of their products

Never be competitive in the market

The government/corporate corruption is harming national

competitiveness

Role of tax haven

End to secrecy in bank accounts

Root of CSR being challenged due to the unique practice of

different countries

Appreciating cultures

Society is people who carry the baggage of their cultures

Cultures process initiated by historical events may lead to

group think or satisficing

Different decision in corporate world may result from

different value systems

Globalization and liberalization may push countries

towards convergence of ideas

Corporations have to take in to account the local and

international tensions to this effect
 Apprehensions of societies

Sweeping changes in the global economy has created an

uncertain environment

Business needs to rethink strategies

1990s was abundance

Recession = scarcity

Debate has shifted to taking power and save

themselves

History and culture shape the sub conscious behavior of

managers who design the strategies

Culture provides the cushion in times of uncertainty by

offering guidelines to social integration

To understand CSR one has to enter the domain of history

and culture

Country efforts are again embedded and integrally

connected to the history and culture of the country

True nationalism

In the global economy disparities cannot increase

Will result in discontentment

Small companies are now competing with giants

This needs to be monitored to see if resource

utilization is right or not

A good measure of nationalism is how honestly the

corporations and citizens pay their taxes

 Creating a framework for CSR

Creation of a corporate culture

The relationship between the organization and the environment is known

Open system organization

Porous boundaries i.e. boundaries that can interact

The institutional environment must reflect the beliefs, values and norms of
the members of the institutions

Industry culture is the organizational manifestation of institutional beliefs

and values

While implementing CSR one has to keep in mind the concept of invented
traditions

Set of practices governed by overtly or tacitly accepted rules.

These rules have symbolic nature and inculcate certain values and
norms of repeated behavior which implies continuity with the past

Examples are founders beliefs, national cultures and industry

pressures

CSR practices should be woven in to the fabric of the organization

CSR cannot remain as a separate voluntary activity

Corporate scams like Enron, and Satyam have clearly exposed the need to do more

Not park a part of profits in trust and use that for social work

Such efforts does not protect society from fraud

Creating a framework for CSR

Three level implementation framework

The implementation has to be integrated through three stages

Inner corporate level

 Intermediate national level

Outer universal level

Inner corporate ideology

Core value foundation based on integrity, accountability and

transparency needs to be built

Can give directions to decision makers to choose between two

rights and one right and one wrong alternative

choosing between two rights is difficult (right to privacy and right

to freedom

CSR becomes handy because if it is woven in to the business plan

and mission it would be easier to see that which right needs
priority at a particular time and location

Law and order situation is also dependent on economic conditions

A practical approach to judging value based management would be

to understand

Micro level integration

Macro level integration

Integration of CSR at operation and process level

Micro level integration by the firm

Relates to individual activities that the firm undertakes both as suppliers and a
consumer of labour and capital

The concept of integration helps the firm examine how values can become an
integral part of the various activities that they undertake to allocate resources
drawn from the society to earn profits

The individual activities that needs to be viewed in their pursuit for CSR are

Position in the stock market

 Value creation to be judged through

Portfolio management

Choice between the strategic option

Assessment of impact of business plan

Target setting and bench marking

Analyze resource sourcing, prioritizing and allocating resources

Appraisal of performance and organizational image

Focus on business and operational strategies that maximize value

Learn the skills to enhance delegation as well increase accountability and

responsibility

Break down plans in to keep objective, ensure value throughout the

organization

Provide undiluted support for difficult but essential long term initiatives

Invest in R&D

Be transparent about risk and benefits of technology and be open to

disruptive innovations

Macro level integration by the government

Refers to national and international level policies that impact business

When policy makers become accountable and show responsible behavior

while formulating economic policies then CSR becomes easy

The immediate areas of implementation are:

The immediate areas of implementation are:

Draw long term unambiguous policy framework of target and

regulations
 Establish mandatory minimum standards for public participation,
supported by improved incentives and performance appraisal

Incorporate public welfare in decision making and each stage of

firms policy cycle

Improve transparency of governance and operations

Expand and protect political space for democratic decision making

at the national level

Find new and attractive ways to finance social initiatives related to

sustainable growth

Integration of CSR at the operations and process level

See the flow production and operations flowcharts to see if the responsibilities are
being handled ethically

This strategy would ensure

Poor substitute of collective bargaining are not made

Remove danger of stakeholders becoming docile and flexible at the cost of

profit mongering

Long term viability would be addresses because at every stage quality

would be scrutinized

The potential danger of pseudo NGO can be addressed

Importance of flow chart

Give an overview of all activities

Is the building CSR ate every level

The firm can start by doing the following

Resources
 Sourced and utilized for profit as well as sustainable
economic activity

Built social concern at the beginning of the production

process

Production processes

Importance of flow chart

Give an overview of all activities

Is the building CSR ate every level

The firm can start by doing the following

Resources

Production processes

Is the organization alert about satisfying the internal and

external customer

Production of goods

Specifications are being met

Selection of design

Selection of raw material

Planning

While planning for men and machinery

Product, basic need, existing solution and current

problem

Focus on these variables would help to analyze the

ethical impacts

Give an overview of all activities

 Is the building CSR ate every level

The firm can start by doing the following

Resources

Production processes

Production of goods

Planning

Organizing

Processes, plant location, plant layout, routing, stores and

record keeping

Impact of these on internal and external conditions CSR

would be built in the system

Control

Audit done of ethicality followed then CSR would be

incorporated

Operations

Implement strategic decisions made by marketing, finance,

and management

If the vision is integrated with CSR then the entire business

strategy would be consistent with CSR

Give an overview of all activities

Is the building CSR ate every level

The firm can start by doing the following

Resources

Production processes
 Production of goods

Planning

Organizing

Control

Operations

Human resource

Work culture

Empowerment, engaged, accountable

Leadership

Communicative, emphatic, accessible

People

Work/life balance, encouraged to take care of

themselves and families, flexible policies

Give an overview of all activities

Is the building CSR ate every level

The firm can start by doing the following

Resources

Production processes

Production of goods

Planning

Organizing

Control
 Operations

Human resource

Work culture

Leadership

People

Work

Growth and opportunity

Compensation and benefits

Social awareness

Intermediate national ideology

CSR becomes difficult when companies maintain and build facilities in countries
without the appreciation of the natural cultures and history

The relation between the culture and the CSR depends upon the size of the
company

Companies have to be actively committed to a sustainable improvement in the

macro environment situation and introduce measure that go beyond statutory
requirements on the countries in which they operate

With globalization and outsourcing, companies have to be alert with respect to

subsidiaries, partners, suppliers and license holders

Statutory regulations

Should take in to account the socio economic situation

The reason that high social responsibility standards may not be

immediately possible in developing countries. This is because

Statutory regulations
 Should take in to account the socio economic situation

The reason that high social responsibility standards may not be

immediately possible in developing countries. This is because

The infrastructure is not available

The implementation may reduce the competitive advantage

of low cost of production

Removal of social evil without a contingency plan may

increase rate of crime

Formal modern education results in decline in vocational

skills and indigenous heritage

The nation should have a structured policy aimed at reducing red

tape, corruption and increase fair distribution instead of piecemeal
solutions

Danger of stereotyping

To create an environment at the national level

Mistake of copying system

Stereotyping is bracketing problems and solutions

under a common frame because theoretically they
look similar

The reality is when we analyze the problem at the

practical level and try to implement solution, stark
differences and challenges are revealed

Outer global ideology

Standards laid by UN and ILO have to be practiced

Conflict issues are

Collective bargaining
 Gender equality

Human rights

Environmental protection

Free trade

Financial transparency

Corporate governance

To overcome conflict in addition to CSR, and understanding cultural relativism,

the issue of economic justice have to be taken up

Need balance between total control and absolute laissez faire at the macro level

International bodies have to be involved in brining social justice and economic

welfare in an accountable and transparent manner

Creating an implementation framework

The strategy needs to build the CSR structure that helps analyze risks and build trusts so
that profits can be earned

This can be visualized at different levels of value implementation

Inner circle is where the values are entrenched

Second circle is where the application of the values occur

Third is the layer of rules, structures, systems, processes and codes that are put in place

Leader journey

The training approach for value implementation should follow three simple stages
(evaluation of risk and opportunities will be easy)

Information sharing

Organization values
 Vision and mission

Cultural briefing

Tolerance/intolerance of ethical activities

Zero tolerance

Checking effectiveness

Reminder of values, vision and mission

Problem faced and solved

Critical decisions should be supported by values

Training in ethics

Learning to assimilate ethics at workplace

Integration approach

Formation of an assessment center

Real on the job experience

Analysis of response

Developing sensitivity

Appreciating differences

The usual method of taking CSR decisions are result, duties and moral obligation
dependent

Manager gets confused if analysis is from cultural perspective

Long term value creation should be the practical objective of all businesses

This can be understood through

 If an organization attitudes towards social existence is driven and inspired by this
orientation, the journey will be towards duties, responsibilities and sacrifice core
essence of CSR

Another way of implementing CSR is the integrative model of development C covering

the three cs

Understanding concepts

Acquiring competencies

Building connectivity
Chapter 6
Framework For Rating Corporate Social Responsibility

After studying this chapter you should be able to:

1. Understand the importance of CSR reporting

2. Create awareness about the various reporting criteria followed to report CSR

3. Understand how conscientious organizations are committed to the concept of CSR

4. Learn from CSR reporting frameworks of various agencies and organization

Introduction

Business world has to create their own code of decency if it wants sustainable long term
existence. For this it is important that relationships with society based on trust stemming
from transparency are created. Hence intentions of the organizations should be portrayed
to the stakeholders by providing a measurement of its impact on stakeholders. This has
created awareness that CSR should be rated. Since CSR includes the socio cultural
paradigm it is difficult to create a universal rating mechanism. The rating mechanism best
works as a signaling factor for stakeholders to reevaluate their financial and economic
 commitment to the business world and also helps the business world to rectify processes
to remain in the good books of the stakeholders

Understanding CSR ratings

In tracing the history of rating process, two important conferences come to the
forefront

The UN biosphere conference

Conference on the ecological aspect of international development

In 1972, the limits to growth was published by the club of Rome, representing
initial steps in the direction of sustainability reporting

During the same year the UN conference on Human environment was held

Many sustainability related publications were launched

World Conservation Strategy 1980

UN global impact 2000

Green book of the EU commission on CSR 2001

Business is undertaken to cater to prevailing or created needs of society

Business has to analyze the overt and covert impact of its activities on society.

This relates to the market forces that impact and are impacted by the following factors

What is the need that is being catered to

What are the alternatives available

What is the competition offering and what price

The demands of the regulation

Macro-economic factors

Demographic
 Economic policies

Political ideology

CSR rating tools helps in corporate governance process by providing information and
help in monitoring socially responsible behavior

They provide the incentive to screen activities and reduce losses

This adds value to the corporation

This kind of evaluation requires organizational structure analysis

This will lead to a creation of a sustainability sensitive organization that caters to holistic
growth

Green book of the EU commission on CSR 2001

Corporate social responsibility can make a positive contribution to the strategic goal
decided by the Lisbon European Council: "to become the most competitive and dynamic
knowledge-based economy in the world". A European approach to corporate social
responsibility forms part of the broader context of various international initiatives, such
as the United Nations Global Compact (2000), the International Labor Organizations
(ILO) Tripartite Declaration of Principles concerning Multinational Enterprises and
Social Policy (1997-2000), or the Organization for Economic Cooperation and
Development (OECD) Guidelines for Multinational Enterprises (2000).

While these initiatives are not legally binding, the European Commission is committed to
the active promotion of the OECD guidelines. Observance of the core ILO labor
standards (freedom of association, abolition of forced labor, non-discrimination and
elimination of child labor) is central to corporate social responsibility.

Corporate social responsibility

Being socially responsible means not only fulfilling the applicable legal obligations, but
also going beyond compliance and investing "more" into human capital, the environment
 and relations with stakeholders. The experience with investment in environmentally
responsible technologies and business practices suggests that in going beyond legal
compliance companies can increase competitiveness and it can have a direct impact on
productivity.

Corporate social responsibility should nevertheless not be seen as a substitute to

regulation or legislation concerning social rights or environmental standards In countries
where such regulations do not exist, efforts should focus on putting the proper regulatory
or legislative framework in place in order to define a level playing field on the basis of
which socially responsible practices can be developed.

Whilst corporate social responsibility is so far mainly promoted by large or multinational

companies, it is relevant in all types of companies and in all sectors of activity, from
small and medium-sized enterprises (SMEs) to multinationals. Certain SMEs already
assume their social responsibility, particularly through community involvement. Worker
cooperatives and participation schemes, as well as other forms of cooperative, mutual and
associative enterprises structurally integrate other stakeholder interests and take up
spontaneous social and civil responsibilities.

Corporate social responsibility: the internal and external dimensions

Under increasing pressure from non-governmental organizations (NGOs), consumer

groups and now also investors, companies and sectors are increasingly adopting codes of
conduct covering working conditions, human rights and environmental aspects, in
particular those of their subcontractors and suppliers. Socially responsible practices can
thus help open the way to reconciling social development with improved
competitiveness.

Within the company, socially responsible practices primarily involve investment in

human capital, health and safety, and managing change. They also cover environmentally
responsible practices relating to the management of the natural resources used in
production. In addition to these internal aspects, companies also contribute externally to
their local communities, by providing jobs, wages, services and tax revenues. On the
other hand companies depend on the health, stability, and prosperity of the communities
in which they operate. In this sense, corporate social responsibility involves a wide range
of stakeholders: business partners and suppliers, customers, public authorities and NGOs
representing local communities, as well as the environment.
 In a world of multinational investment and global supply chains, corporate social
responsibility must also extend beyond the borders of Europe. One of the external
dimensions to corporate social responsibility is that of human rights, particularly in
relation to global production activities. Despite the existence of international instruments
such as the ILO Tripartite Declaration of Principles concerning Multinational Enterprises
and Social Policy and the OECD Guidelines for Multinational Enterprises, human rights
remain a very complex issue presenting political, legal and moral dilemmas.

In a world of multinational investment and global supply chains, corporate social

responsibility must also extend beyond the borders of Europe. One of the external
dimensions to corporate social responsibility is that of human rights, particularly in
relation to global production activities. Despite the existence of international instruments
such as the ILO Tripartite Declaration of Principles concerning Multinational Enterprises
and Social Policy and the OECD Guidelines for Multinational Enterprises, human rights
remain a very complex issue presenting political, legal and moral dilemmas.

Integrated management of social responsibility

Companies' approaches in dealing with their responsibilities and relationships with their
different stakeholders vary according to sectoral and cultural differences. In general,
companies tend to adopt a mission statement, code of conduct, or credo where they state
their purpose, core values, and responsibilities towards their stakeholders. These values
are then translated into action across the organization, adding a social or environmental
dimension to their plans and budgets in order to carry out social or environmental audits
and set up continuing education programmes.

Many multinational companies are now issuing social responsibility reports. While
environmental, health, and safety reports are common, reports tackling issues such as
human rights or child labor are not. In order for these reports to be useful, a global
consensus needs to evolve on the type of information to be disclosed, the reporting
format to be used, and the reliability of the evaluation and audit procedures.

The Green Paper invites public authorities at all levels, including international
organizations, enterprises from SMEs to multinationals, social partners, NGOs, other
stakeholders and all interested individuals to express their views on how to build a
partnership for the development of a new framework for the promotion of corporate
social responsibility, taking account of the interests of both business and the various
stakeholders. Enterprises need to work together with public authorities to find innovative
ways of developing corporate social responsibility.
 Integrated management of social responsibility

Many multinational companies are now issuing social responsibility reports. While
environmental, health, and safety reports are common, reports tackling issues such as
human rights or child labour are not. In order for these reports to be useful, a global
consensus needs to evolve on the type of information to be disclosed, the reporting
format to be used, and the reliability of the evaluation and audit procedures.

The Green Paper invites public authorities at all levels, including international
organizations, enterprises from SMEs to multinationals, social partners, NGOs, other
stakeholders and all interested individuals to express their views on how to build a
partnership for the development of a new framework for the promotion of corporate
social responsibility, taking account of the interests of both business and the various
stakeholders. Enterprises need to work together with public authorities to find innovative
ways of developing corporate social responsibility.

Available accepted rating frameworks

Some of the established quantitative rating frameworks that are available for
organizations to report on sustainability

Global Reporting Initiative (GRI)

Birthplace is US

Envisioned by nonprofits CERES (Coalition for Environmentally

Responsible Economies) and Telles Institute , with the support of the UN
environment Program (UNEP) in 1997

In 1999 the first version of the sustainability reporting guidelines was

published

The full version was released in 2000

GRI is an independent body but has close connection with UN

It is a network based organization that seeks consensus from business,

civil society, labour and professional institutions
 It offers principles and indicators that can be used to measure and report
economic, environmental and social performance

It prides itself with quality, credibility and relevance

Keeps updating its guidelines last updation in 2006

The guidelines is a free public good

As of January 2009 more than 1500 companies in 60 countries used the

guidelines

Relevant to all organization regardless of location, size, sector or industry

Used as reporting guidelines

Framework is flexible and is a voluntary initiative

Features of reporting methodology

Principles for defining report content

Materiality

Major content of the report

Topics that reflect organization economic, social

and environmental impact

Stakeholders inclusiveness

Identify

How the organization has responded to expectations

and interest

Sustainability context

Organization performance in the context of sustainability

Completeness

Principles for ensuring report quality

 Balance

Positive and negative aspect of the organization

performance

Comparability

Information should be selected, compiled and

reported consistently

Accuracy

Timeliness

Clarity

Understandable

Accessible

Reliability

Gathered, recorded, compiled, analyzed and

disclosed in a way that could be subjected to
examination and that establishes quality of the
information

Specialized Securities Indexes

Replicate stock sector reporting in social and environmental sector

Dow Jones US water Index

Global Water Resources:

About 70% of the earth's surface is covered in water, but 97% of it is salt
water, which is unfit for human use. Salt water cannot be used for
drinking, crop irrigation or most industrial uses. Of the remaining 3% of
the world's water resources, only about 1% is readily available for human
consumption.
 Global Shortage:
Rapid industrialization and increasing agricultural use have contributed to
worldwide water shortages. Areas that have experienced water
shortages include China, Egypt, India, Israel, Pakistan, Mexico, parts
of Africa and the United States (Colorado, California, Las Vegas and the
East Coast), to name but a few.

Pollution also highlights the need for clean water. In the U.S., the dead
zone off the Gulf Coast highlights the impact of fertilizer runoff,
and methyl tertiary butyl ether (MTBE), an additive in unleaded
gasoline, can be found in well water from California to Maryland.
Overseas, highly publicized incidents in Russia, China and elsewhere
demonstrate that pollution isn't limited to the West. Of course, fouled
water supplies further limit the amount of fresh water available for human use.

Indexes
Like any other scarcity, the water shortage creates investment opportunities, and interest in water
is at an all-time high. Here are some of the more popular indexes designed to track various
water-related investment opportunities:

- Palisades Water Index - This index was designed to track the performance of companies
involved in the global water industry, including pump and filter manufacturers, water utilities
and irrigation equipment manufacturers. The ticker symbol for the Palisades Water Index is ZWI.
The index was set at 1000 as of December 31, 2003. It closed at 1351.08 on December 30, 2005.

- Dow Jones U.S. Water Index - Composed of approximately 23

stocks, this barometer climbed from 500 to 800 over the 12
months ending December 31, 2005. The ticker for the Dow Jones
Water Index is DJUSWU.
- ISE-B&S Water Index - Launched in January 2006, this new
index represents water distribution, water filtration, flow
technology and other companies that specialize in
water-related solutions. It contains 20 stocks. The ticker for the
ISE-B&S Water Index is HHO. Available accepted rating
frameworks

Specialized Securities Indexes

 FTSE4GOOD Index Series

The FTSE4Good Index Series has been designed to objectively

measure the performance of companies that meet globally
recognised corporate responsibility standards. Transparent
management and criteria make FTSE4Good a valuable tool for
consultants, asset owners, fund managers, investment banks, stock
exchanges and brokers when assessing or creating responsible
investment products

FTSE4Good can be used in four main ways:

Investment: As a basis for creating index-tracking

investments, financial instruments or fund products
focusing on responsible investment

Research: To identify environmentally and socially responsible

companies

Reference:As reference by which companies with a transparent

and evolving global corporate responsibility standard can
assess their progress and achievement

Benchmarking: As a benchmark index to track the performance

of responsible investment portfolios

Available accepted rating frameworks

Regulatory bodies and stock exchanges

SEBI in India

SEC in US

CRE in UK

Companies do in house CSR reporting and publish it for public consumption

Agencies that help in rating socially relevant activities and companies often solicit
their intervention in rating sustainable activities
Business in the community (BITC)

At the start: Why and how we began

In 1982, in the wake of riots in Toxteth and Brixton, the UK was suffering from high
levels of unemployment and inner-city unrest.

Business in the Community was created following a government conference where a

group of US business leaders involved in the urban regeneration of Baltimore and Detroit
in the 1970s shared their experiences with their British counterparts.

Supporting economic regeneration

Our organisation was formed by a small number of companies from both private and the
public sector. Early supporters included Barclays Bank, BP, British Steel (Industry), IBM,
ICI, Marks and Spencer, Midland Bank and WHSmith.

Regeneration was our initial focus; we acted as a broker for companies supporting local
enterprise agencies with cash, premises, equipment, expertise and employee volunteering.

1980s: Local enterprise agency champion

Business in the Community encouraged companies to support local enterprise agencies as

a way of business helping to regenerate local economies affected by corporate closures to
create new employment opportunities.
We recognised the social costs of ignoring the human consequences of massive corporate
restructuring. Major activities included supporting small business development and re-
skilling.

Following the enterprise agency model

In the early to mid 1980s many companies were restructuring, partly as a result of
government reforms, and Business in the Community was actively promoting the
Enterprise Agencies. This received a boost when the government announced a cash
incentive on a declining scale over three years to match rising business contributions.
We then travelled around the UK to persuade local businesses to get involved in
regeneration initiatives based on this model.

Charitable status and a royal president

 In 1985, we had 108 member companies and HRH The Prince of Wales became the
organisations president. We were also the umbrella for more than 300 local enterprise
agencies.

1990s: A maturing agenda

Business was driven by a need to address the UKs decline in the international
competitiveness league tables, improve basic skills in literacy and numeracy, and find
new talent through a diversified workforce.

Engaging business leaders and rising stars

In 1990, HRH The Prince of Wales established his Seeing is Believing programme; a
simple yet effective tool to inspire business leaders to take action in their local
communities. It began as a single project and we asked executive search firms to share
the business leaders they were tracking in order to produce an invitation list for the first
SiB visits.

Each visit was led by a business leader committed to Business in the Community and the
relevant topic. Senior business figures and rising stars were taken to look at a social
problem in a specific part of the UK and then report back to The Prince.

2000s: From CSR to responsible business

By 2001, we had 700 member companies. Competitive advantage for individual

companies and the pressures of sustainability as a business challenge were the new
business drivers.

We turned our attention to how business carries out its core activities and the effects it has
in the workplace, the marketplace, the community and on the environment.

A more accurate language

Our language switched to corporate social responsibility (CSR), but this was often used
to describe community involvement only. We then began to refer to corporate
responsibility (CR), which was understood to include environmental impacts too.
However, US business often linked CR with corporate governance, so we moved to
responsible business. This signifies how business aims to operate overall, as well as
particular activities and programmes.

The context of our organisation today

 Since 1982, we have mobilised business and worked with leaders to take action in some
of the UKs most deprived communities. Our greatest success has been getting influential
business figures involved, and keeping them involved.
Were now the UKs largest business membership organisation committed to corporate
responsibility. Our staff numbers have grown from 5 secondees in 1982 to over 350
employees today.
We have over 830 members, with 1 in 5 of the UK private sector workforce employed by
a member company. In addition, a further 3,000 companies are engaged through our
programmes and campaigns.

Global reach and local action

Leading politicians from all the major parties and thousands of voluntary and community
organisations have been involved. We have a local and global reach through our regional
network and worldwide partners.

With the G20 protests in London and the global recession as a back drop, we are working
with business to rebuild public trust. We are also continuing with campaigns related to
climate change and investment in staff.

CR Index

Developed in consultation with businesses, the CR Index of BITC challenges and supports large
organisations to integrate responsible business practices.

Our approach

It takes the form of an online survey and companies follow a self-assessment process intended to
help them identify both the strengths in their management and performance and gaps, where
future progress can be made. Business in the Community believes that self-assessment is the
starting point for action and improvement, but it independently validates submissions to ensure
reliability and consistency

The CR Index supports companies to:

-Identify gaps for improvement and reinforces good practice and track progress over time and
drive continuous improvement

-Benchmark performance against peers and leading practice and engage board members and
raise awareness of CR issues internally
Participation

Companies can choose to use the tool on either a public or private basis. Public participants are
included in the annual CR Index ranking and demonstrate a commitment to transparently
improving their social and environmental performance. Private participation is designed for
companies not ready to disclose their performance and focuses on providing guidance and
feedback help organisations better integrate and improve their CR performance.

The CR Index follows a systematic approach to managing, measuring and reporting on business
responsible business practices, companies are assessed using the framework below.

Corporate Strategy looks at the main corporate responsibility risks and opportunities to the
business and how these are being identified and then addressed through strategy, policies and
responsibilities held at a senior level in the company.

Integration is about how companies organise, manage and embed corporate responsibility into
their operations through KPIs, performance management, effective stakeholder engagement and
reporting.

Management builds on the Integration section looking at how companies are managing their
risks and opportunities in the areas of Community, Environment, Marketplace and Workplace.

Performance and Impact asks companies to report performance in a range of social and
environmental impacts areas. Participants complete three environmental and three social areas
based on the relevance to their business.
The Index supports companies to integrate responsible business by helping them:

Gap analysis, helping organisations identify both the strengths in their management and the gaps
where future progress can be made

Benchmarking performance against sector peers and leading practice from across the CR Index

Tracking progress, reinforcing good practice and driving continuous improvement

And the CR Index provides a powerful way to engage board members and raise awareness of
material corporate responsibility issues
EIRIA or Experts in responsible Investment Solutions:

EIRIS is a global leader in the provision of environmental, social, governance (ESG) research for
responsible investors. An independent, not-for-profit organisation, we work to help our clients
develop the market in ways that benefit investors, asset managers and the wider world. Our
mission is to empower responsible investors with independent assessments of companies' ESG
performance and advice on integrating them with investment decisions.

EIRIS provides responsible investment services to more than 100 asset owners, asset managers,
banks, stock brokers and governments around the world - as well as major index providers.

We bring almost 30 years' experience of promoting responsible investment and helping global
investors, consumers, charities and financial advisers to invest responsibly.

Our research is client-driven and designed to allow investors to compare company performance.
We research a range of environmental, social and governance (ESG) issues and specific ethical
concerns such as involvement in arms or tobacco.

Investors are increasingly factoring ESG performance analysis into their investment decisions.
As a result of this it has become increasingly important for companies to engage with these
issues and to report on that engagement. Completing our surveys gives companies an opportunity
to provide the most up-to-date and accurate information on their ESG performance to more than
100 investment institutions.

EIRIS is a global market leader and our research is used by a variety of asset owners and asset
managers (including pension funds), investment banks and charities throughout the world. Over
60% of the UK's responsible investment funds are managed by our clients.
A not-for-profit organisation, EIRIS does not assess companies' financial status but looks at their
ESG policies and practices. We do not give overall company rankings but provide assessments
on over 150 individual criteria.

Sustainable Investment Research International (SiRi)

Socially responsible investment (SRI) is one of the fastest growing investment trends. This
process has been driven by increasing concerns over the environmental and social impacts of
companies which have raised consumer awareness and fuelled high-profile NGO campaigns. At
the same time, there has been a growing understanding of the potential benefits for investment
returns of companies adopting higher corporate social responsibility standards as a way of both
managing risk and identifying ways of enhancing future performance.

With increasing pressure on both companies and investors to demonstrate that their activities are

sustainable, many markets now have regulations requiring disclosure and consideration of social,

ethical or environmental issues by investors.

The growth in SRI represents a recognition that traditional financial analysis and investment
techniques do not capture the full range of factors of concern to investors and which increasingly
affect company performance.

The agenda of SRI issues is constantly changing as the market develops, and as our nderstanding

of how to achieve sustainability evolves. For example, the concept of stakeholder accountability
and engagement has quickly become a key theme for socially responsible investors. Equally, the
types of performance metrics that can be used to report on corporate social performance are
undergoing rapid development.
The SiRi Groups unique business model, global reach and wealth of specialist experience
enables us to track market developments globally and identify SRI investment issues to create
innovative solutions for our clients.

Sustainable Investment Research International (SiRi)

The SiRi Group has pioneered the publication of detailed harmonised profiles of
the largest global corporations

These SiRi Global Profiles are researched according to consistent criteria and in a
standardised format using a stakeholder-based model

Each Profile contains over 350 data points and associated analysis, providing
unrivalled detail and breadth of comment. All major stakeholder issues are
covered including community involvement, environmental impact, employment
relations, customer policies, human rights issues and corporate governance. For
each issue, SiRi describes and analyses the companys policies, management
systems, reporting standards and impacts together with particular strengths and
weaknesses

Infosys sustainability solutions:

Infosys focuses on helping clients in 'Building Tomorrow's Enterprise' and 'Sustainable

Tomorrow' is central to this strategic market focus. Our Sustainable Tomorrow framework
addresses three key dimensions:

Social Contract
Addresses the need for businesses to be granted an implicit license by key stakeholders to
conduct their business in a transparent and a sustainable manner. This enhances brand value and
reputation based on real initiatives that make a real impact on environment, social and economic
issues

Resource Intensity
Seeks ways to do more with less, conserving precious natural resources, eliminating waste,
reusing/ recycling raw materials and finding suitable substitutes. These include achieving energy
efficiency across the enterprise, lowering CO2 emissions to meet emerging regulations as well as
lowering cost and improving efficiency

Green Innovation
Addresses issues around skill sets, innovation and collaboration frameworks, partnerships and
alliances, co-creation, research and analytics. Outcomes include building new products and
services for the Sustainability market, thereby creating new engines for growth and profits

Challenges

Complexity and transformative nature of enterprise-wide Sustainability initiatives:

Successful Sustainability initiatives demand an intimate understanding of the business,
Sustainability goals and metrics to measure success, enterprise data models, enterprise
technology architecture and footprint, effective communications, program and change
management, and executive sponsorship

Skill scarcity: There is a scarcity of experienced Sustainability consultants in the areas of carbon
management, Sustainability reporting, green IT, energy efficiency, corporate social responsibility
and related areas.

Organizational and behavioral change: Most Sustainability initiatives need to percolate deep
into organizational processes. This will require significant employee engagement, change
management, education and training efforts.

Budgets: Organizations need to aggressively make investments in their Sustainability initiatives

while constantly driving ways to lower the cost of ownership and establish clear ROI.

Opportunities

-Align Sustainability with the organizations core strategy and values to ensure that it is a guiding
principle in all initiatives.

-Build your brand and reputation around Sustainability and improve engagement with your
employees, customers, investors, suppliers and other stakeholders.

-Tap new markets, customer segments and revenue streams through innovative new products and
services that are inspired by your Sustainability goals.
-Manage regulatory compliance needs and risks arising from energy and resources price / supply
volatility

TATA groups CSR rating framework:

The Tata Index for Sustainable Human Development is a trendsetting attempt to map and
measure the social development endeavours of Tata Group companies.

The Tata Index is a matrix through which Tata companies can implement, direct and measure the
social development endeavours they are involved in. Developed by the Tata Council for
Community Initiatives (TCCI), the umbrella entity that coordinates and integrates the various
social projects undertaken across the group, the Index brings business processes to bear on the
development work done by various Tata companies as part of their social responsibility.

This is not some grand thing we are doing," says Anant G. Nadkarni, general manager, Group
Corporate Social Responsibility. "We have adopted a business model to drive social
responsibility efforts within the group because that way you ensure a huge network. Also, the
emphasis on measuring the impact of these programmes is greater now than ever before. The
Index will help structure our efforts and quantity their effect on the communities and people they
are aimed at.

The Index is actually a set of guidelines for Tata companies looking to fulfil their social
responsibilities, and it is the third set of such guidelines crafted by TCCI. Established in 1996,
the Council came out with the first set in 1997. A revised version was brought out in 2000. The
Index is an improvement of the two guidelines that preceded it, and it has been built around the
Tata Business Excellence Model (TBEM), an open-ended framework that drives business
excellence in Tata companies. Companies that embrace the TBEM concept are evaluated in
seven categories, and ranked on the basis of their scores in each.

The Tata Index is constructed around the core beliefs of the Tata Group in the matter of corporate
social responsibility. These include serving the wider community, protecting the environment,
using core competence to help the poor, becoming partners in development, encouraging
volunteerism, and pursuing socially sustainable activities.

The Index prescribes an 'assurance' process to ensure that the community development projects
are measured and reviewed so that they perform in a manner that matches the objectives behind
them. This assurance links processes to outcomes and divides the entire corporate social
responsibility function into three levels: systems, people and programmes.
Chapter 7
SUSTAINABILITY AND ITS CHALLENGES

After studying this chapter you should be able to:

1. Understand capitalism and the relationship between capitalism and sustainability

2. Understand the efforts to measure sustainability

3. Know the difficulties faced in the implementation of measurement frameworks

 Globalization is not a passing trend and it is impacting and shaping all aspects of doing
business. Understanding of globalization should guide every activity that deals with socio
economic factors. Globalization is based on the concept of capitalism. Capitalism needs
responsible business as an ally. Lack of regulations resulted in capitalism becoming
exploitative as greed for more increased

Socialism Vs Capitalism

It is apparent that a middle path is needed for sustainable development

Conspicuous consumption Vs annihilation of human freedom

Selfish exploitation of resources would result in lopsided growth in the society

Promoting restriction cannot be justified

Equality of poverty should not be the objective but a culture of hand holding
should be encouraged

Capitalism

Business has to realize that they owe a social obligation

If the social system is destroyed in the rush for economic growth?

Capitalism promised freedom and a life that would be comfortable and self-
fulfilling

It answered the mans aspirations to move beyond the basic needs

To achieve this objective rationalism explained as self-interest not selfishness

soon replaced emotions and values
 To judge a activity, ask a a question what would I gain?

Capitalism is based on the forces of supply and demand

Utilitarianism ethics is achieved when individuals are allowed self interest

Duty based morality is ignored and authority and persuasion is accepted

Example: tragedy of the commons

Capitalism and socialism failed to delivered the goods that they promised

In socialism freedom of spirit is more important than control, hence socialism

failed and lost its enchantment

Capitalism has t reinvent everyone should enjoy their life as long as they take
care that others enjoy the same freedom

Capitalism cannot depend on charity but it has to make ethical behavior

mandatory for corporations

Build symbiotic relationship

Humanizing capital

Capitalism forgot interdependencies

Contrary to the belief of competition i.e. can never result in a win win
situation

To make competition more endearing , level playing fields are created

The prerequisite of this field is collaboration that requires development of

spirit of sharing

Business needs to have a human face

Based on trust

Freedom has to be used responsibly

This should be the driving force behind globalization

 Improving the quality of life

Reality globalization has resulted in disparity between the rich and the poor

CSR demands that the business embrace globalization to create a perfect world

Equal distribution

Transparent flow of information and products and human beings between

the geographical borders

Capitalism and globalization cannot lead to economic and ethical imperialism

Lack of host countries stringent rules resulting from lack of resources

Guiding factor for business is the value foundation

List of moral rights that organization must practice as moral

minimum

Rational empathy test

Corporations must realize that CSR is not charity and cannot work on Robin Hood
principle

Pseudo NGOs

Dont make profits the mantra

Sustainability will become an issue if that is the case

Human subdued to business rather than the other way

Danger of profits becoming the only driving force as long as business remains
within rules

Who makes the rules and who monitors?

CSR cannot remain philanthropy but has to be woven

Capitalism has to look beyond materialistic world towards the human aspect
 Sustainability

Related to capitalism and urgent need to give growth a human face

Not easy to define as dependent upon various perceptions

Various definitions are

The word sustainability is derived from the Latin sustinere (tenere means
to hold, sus means up)

Sustainable development is development that meets the needs of the

present without compromising the ability of future generations to meet
their own needs (WCED 1987).

Finding a balance between economic prosperity, environmental quality,

andthe element which business has tended to overlooksocial justice,
move organizations in an absolute state of sustainability Elkington
(1999).

The sustainable society is one that lives within the self-perpetuating limits
of its environment Coomer (1979).

Sustainability is measured through the lens of either social development and justice or
human welfare and social justice

Because of this sustainability is a buzz word

However, important as it is the dialogue of values that defies consensual

definitions

Bruntland report
 The Report of the Brundtland Commission, Our Common Future, was published
by Oxford University Press in 1987, and was welcomed by the General Assembly
Resolution

The document was the culmination of a 900 day international-exercise which

catalogued, analyzed, and synthesized: written submissions and expert testimony
from senior government representatives, scientists and experts, research
institutes, industrialists, representatives of non-governmental organizations, and
the general public held at public hearings throughout the world.

The Brundtland Commission's mandate was to: [1] re-examine the critical issues of
environment and development and to formulate innovative, concrete, and realistic action
proposals to deal with them; [2] strengthen international cooperation on environment and
development and assess and propose new forms of cooperation that can break out of
existing patterns and influence policies and events in the direction of needed change; and
[3] raise the level of understanding and commitment to action on the part of individuals,
voluntary organizations, businesses, institutes, and governments (1987: 347). The
Commission focused its attention on the areas of population, food security, the loss of
species and genetic resources, energy, industry, and human settlements - realizing that all
of these are connected and cannot be treated in isolation one from another (1987: 27).

The Brundtland Commission Report recognized that human resource development in the
form of poverty reduction, gender equity, and wealth redistribution was crucial to
formulating strategies for environmental conservation, and it also recognized that
environmental-limits to economic growth in industrialized and industrializing societies
existed. As such, the Report offered [the] analysis, the broad remedies, and the
recommendations for a sustainable course of development within such societies (1987:
16). However, the Report was unable to identify the mode(s) of production that are
responsible for degradation of the environment, and in the absence of analyzing the
principles governing market-led economic growth, the Report postulated that such
growth could be reformed (and expanded); this lack of analysis resulted in an obfuscated-
introduction of the term sustainable development.

The report deals with sustainable development and the change of politics needed for achieving it.
The definition of this term in the report is quite well known and often cited:
"Sustainable development is development that meets the needs of the present without
compromising the ability of future generations to meet their own needs". It contains two key
concepts:

the concept of "needs", in particular the essential needs of the

world's poor, to which overriding priority should be given; and

the idea of limitations imposed by the state of technology and

social organization on the environment's ability to meet present
and future needs."

Sustainability efforts

The three main pillars of sustainable development include economic growth,

environmental protection, and social equality. While many people agree that each of these
three ideas contribute to the overall idea of sustainability, it is difficult to find evidence of
equal levels of initiatives for the three pillars in countries' policies worldwide. With the
overwhelming number of countries that put economic growth on the forefront of
sustainable development, it is evident that the other two pillars have been suffering,
especially with the overall wellbeing of the environment in a dangerously unhealthy state.

The Brundtland Commission has put forth a conceptual framework that many nations
agree with and want to try to make a difference with in their countries, but it has been
difficult to change these concepts about sustainability into concrete actions and programs.
Implementing sustainable development globally is still a challenge, but because of the
Brundtland Commission's efforts, progress has been made. After releasing their
report, Our Common Future, the Brundtland Commission called for an international
meeting to take place where more concrete initiatives and goals could be mapped out.
This meeting was held in Rio de Janeiro, Brazil. A comprehensive plan of action, known
as Agenda 21, came out of the meeting. Agenda 21 entailed actions to be taken globally,
nationally, and locally in order to make life on Earth more sustainable going into the
future.

1. Economic Growth

Economic Growth is the pillar that most groups focus on when attempting to attain more
sustainable efforts and development. In trying to build their economies, many countries
focus their efforts on resource extraction, which leads to unsustainable efforts for
environmental protection as well as economic growth sustainability. While the
 Commission was able to help to change the association between economic growth and
resource extraction, the total worldwide consumption of resources is projected to increase
in the future. So much of the natural world has already been converted into human use
that the focus cannot simply remain on economic growth and omit the ever growing
problem of environmental sustainability. Agenda 21 reinforces the importance of finding
ways to generate economic growth without hurting the environment. Through various
trade negotiations such as improving access to markets for exports of developing
countries, Agenda 21 looks to increase economic growth sustainability in countries that
need it most.

2. Environmental Protection

Environmental Protection has become more important to government and businesses over
the last 20 years, leading to great improvements in the number of people willing to invest
in green technologies. For the second year in a row in 2010, the United States and Europe
added more power capacity from renewable sources such as wind and solar. In 2011 the
efforts continue with 45 new wind energy projects beginning in 25 different states. The
focus on environmental protection has transpired globally as well, including a great deal
of investment in renewable energy power capacity. Eco-city development occurring
around the world helps to develop and implement water conservation, smart grids with
renewable energy sources, LED street lights and energy efficient building. The
consumption gap remains, consisting of the fact that "roughly 80 percent of the natural
resources used each year are consumed by about 20 percent of the world's population".
This level is striking and still needs to be addressed now and throughout the future

3. Social Equality

The Social Equality pillar of sustainable development focuses on the social well-being of
people. The growing gap between incomes of rich and poor is evident throughout the
world with the incomes of richer households increasing relative to the incomes of middle-
or lower-class households. Global inequality has been declining, but the world is still
extremely unequal, with the richest 1% of the worlds population owning 40% of the
worlds wealth and the poorest 50% owning around 1%. The Brundtland Commission has
made an impact in helping to reduce the number of people living on less than a dollar a
day to just half of what it used to be, but this can also be attributed to growth in China
and India
 Brundtland Report

Sustainability development needs to have achievements targets or goals within a specific

time frame

Certain illustration of such analysis can be seen in the three sets of goals that use different
time-horizons: the short-term goals (2015) of the Millennium Declaration of the United
Nations (see Annexure 2); the two-generation goals (2050) of the Sustain ability
Transition of the Board on Sustainable Development; and the long-term goals (beyond
2050) of the Great Transition of the Global Scenario Group.

Corporations have to look beyond the bottom line if they want significant improvements
in their bottom line

Integrating CSR in Organization: Guidelines to Effective Change

ISO 26000

Triple bottom line

Triple loop learning

ISO 26000

Business and organizations do not operate in a vacuum. Their relationship to the society
and environment in which they operate is a critical factor in their ability to continue to
operate effectively. It is also increasingly being used as a measure of their overall
performance.

ISO 26000 provides guidance on how businesses and organizations can operate in a
socially responsible way. This means acting in an ethical and transparent way that
contributes to the health and welfare of society.

ISO 26000
ISO 26000:2010 provides guidance rather than requirements, so it cannot be certified to unlike
some other well-known ISO standards. Instead, it helps clarify what social responsibility is,
helps businesses and organizations translate principles into effective actions and shares best
practices relating to social responsibility, globally. It is aimed at all types of organizations
regardless of their activity, size or location.

The standard was launched in 2010 following five years of negotiations between many different
stakeholders across the world. Representatives from government, NGOs, industry, consumer
groups and labour organizations around the world were involved in its development, which
means it represents an international consensus.

This International Standard was developed using a multi-stakeholder approach involving experts
from more than 90 countries and 40 international or broadly-based regional organizations
involved in different aspects of social responsibility. These experts were from six different
stakeholder groups: consumers; government; industry; labour; non-governmental organizations
(NGOs); and service, support, research, academics and others. In addition, specific provision was
made to achieve a balance between developing and developed countries as well as a gender
balance in drafting groups. Although efforts were made to ensure balanced participation of all the
stakeholder groups, a full and equitable balance of stakeholders was constrained by various
factors, including the availability of resources and the need for English language skills

Organizations around the world, and their stakeholders, are becoming increasingly aware of the
need for and benefits of socially responsible behaviour. The objective of social responsibility is
to contribute to sustainable development.

An organization's performance in relation to the society in which it operates and to its impact on
the environment has become a critical part of measuring its overall performance and its ability to
continue operating effectively. This is, in part, a reflection of the growing recognition of the need
to ensure healthy ecosystems, social equity and good organizational governance. In the long run,
all organizations' activities depend on the health of the world's ecosystems.

Organizations are subject to greater scrutiny by their various stakeholders. The perception and
reality of an organization's performance on social responsibility can influence, among other
things:
 its competitive advantage;

its reputation;

its ability to attract and retain workers or members, customers, clients or users;

the maintenance of employees' morale, commitment and productivity;

the view of investors, owners, donors, sponsors and the financial community; and

its relationship with companies, governments, the media, suppliers, peers, customers and the
community in which it operates.

This International Standard provides guidance on the underlying principles of social

responsibility, recognizing social responsibility and engaging stakeholders, the core subjects and
issues pertaining to social responsibility and on ways to integrate socially responsible behavior
into the organization. This International Standard emphasizes the importance of results and
improvements in performance on social responsibility. This International Standard is intended to
be useful to all types of organizations in the private, public and non-profit sectors, whether large
or small, and whether operating in developed or developing countries. While not all parts of this
International Standard will be of equal use to all types of organizations, all core subjects are
relevant to every organization. All core subjects comprise a number of issues, and it is an
individual organization's responsibility to identify which issues are relevant and significant for
the organization to address, through its own considerations and through dialogue with
stakeholders

Governmental organizations, like any other organization, may wish to use this International
Standard. However, it is not intended to replace, alter or in any way change the obligations of the
state.

Every organization is encouraged to become more socially responsible by using this International
Standard.

Recognizing that organizations are at various stages of understanding and integrating social
responsibility, this International Standard is intended for use by those beginning to address social
responsibility, as well as those more experienced with its implementation.
The beginner may find it useful to read and apply this International Standard as a primer on
social responsibility, while the experienced user may wish to use it to improve existing practices
and to further integrate social responsibility into the organization.

Triple bottom line

The phrase the triple bottom line was first coined in 1994 by John Elkington,
the founder of a British consultancy called SustainAbility. His argument was that
companies should be preparing three different (and quite separate) bottom lines.
One is the traditional measure of corporate profitthe bottom line of the profit
and loss account. The second is the bottom line of a company's people
accounta measure in some shape or form of how socially responsible an
organisation has been throughout its operations. The third is the bottom line of the
company's planet accounta measure of how environmentally responsible it
has been. The triple bottom line (TBL) thus consists of three Ps: profit, people and
planet. It aims to measure the financial, social and environmental performance of
the corporation over a period of time. Only a company that produces a TBL is
taking account of the full cost involved in doing business.

In some senses the TBL is a particular manifestation of the balanced scorecard. Behind it
lies the same fundamental principle: what you measure is what you get, because what you
measure is what you are likely to pay attention to. Only when companies measure their
social and environmental impact will we have socially and environmentally responsible
organisations.

The idea enjoyed some success in the turn-of-the-century zeitgeist of corporate social
responsibility, climate change and fair trade. After more than a decade in which cost-
cutting had been the number-one business priority, the hidden social and environmental
costs of transferring production and services to low-cost countries such as China, India
and Brazil became increasingly apparent to western consumers. These included such
things as the indiscriminate logging of the Amazon basin, the excessive use of
hydrocarbons and the exploitation of cheap labour.
 Growing awareness of corporate malpractice in these areas forced several companies,
including Nike and Tesco, to re-examine their sourcing policies and to keep a closer eye
on the ethical standards of their suppliers in places as far apart as Mexico and
Bangladesh, where labour markets are unregulated and manufacturers are able to ride
roughshod over social and environmental standards. It also encouraged the growth of the
Fairtrade movement, which adds its brand to products that have been produced and traded
in an environmentally and socially fair way (of course, that concept is open to
interpretation). From small beginnings, the movement has picked up steam in the past
five years. Nevertheless, the Fairtrade movement is still only small, focused essentially
on coffee, tea, bananas and cotton, and accounting for less than 0.2% of all UK grocery
sales in 2006.

One problem with the triple bottom line is that the three separate accounts cannot easily
be added up. It is difficult to measure the planet and people accounts in the same terms as
profitsthat is, in terms of cash. The full cost of an oil-tanker spillage, for example, is
probably immeasurable in monetary terms, as is the cost of displacing whole
communities to clear forests, or the cost of depriving children of their freedom to learn in
order to make them work at a young age.

Triple Loop Learning:

Single-loop learning assumes that problems and their solutions are close to each other in time
and space (thought they often aren't). In this form of learning, we are primarily considering our
actions. Small changes are made to specific practices or behaviors, based on what has or has not
worked in the past. This involves doing things better without necessarily examining or
challenging our underlying beliefs and assumptions. The goal is improvements and fixes that
often take the form of procedures or rules. Single-loop learning leads to making minor fixes or
adjustments, like using a thermostat to regulate temperature

Double-loop learning leads to insights about why a solution works. In this form of learning, we
are considering our actions in the framework of our operating assumptions. This is the level of
process analysis where people become observers of themselves, asking, What is going on here?
What are the patterns? We need this insight to understand the pattern. We change the way we
make decisions and deepen understanding of our assumptions. Double-loop learning works with
major fixes or changes, like redesigning an organizational function or structure.

Triple-loop learning involves principles. The learning goes beyond insight and patterns to
context. The result creates a shift in understanding our context or point of view. We produce new
commitments and ways of learning. This form of learning challenges us to understand how
problems and solutions are related, even when separated widely by time and space. It also
challenges us to understand how our previous actions created the conditions that led to our
current problems. The relationship between organizational structure and behavior is
fundamentally changed because the organization learns how to learn. The results of this learning
includes enhancing ways to comprehend and change our purpose, developing better
understanding of how to respond to our environment, and deepening our comprehension of why
we chose to do things we do.

Global CSR

Although the concept has been developing since the early 1970s, there is no single, commonly

accepted definition of Corporate Social Responsibility (CSR). There are different perceptions

of the concept among the private sector, governments and civil society organizations. Depending

on the perspective, CSR may cover:

a) a company running its business responsibly in relation to internal stakeholders (shareholders,

employees, customers and suppliers);

b) the role of business in relationship to the state, locally and nationally, as well as to inter-state

institutions or standards; and

c) business performance as a responsible member of the society in which it operates and the

global community.

So far there have been over 300 CSR codes, principles, performance standards, management
standards developed by governments, business associations, or academia, not mentioning a huge

number of individual companies codes of conduct or reporting initiatives.

This richness of approaches creates confusions, among businesses, governments or consumers.

However, a closer collaboration of initiatives, addressing specific aspects of the implementation

of the CSR agenda: what has to be done (codes, standards, governance principles), how to be
done (management and assurance standards), and how to measure progress (reporting) on a
global scale could lead to emergence of the global commonly accepted CSR framework. This
seems to be inevitable if the CSR agenda is going to succeed.

A growing number of companies in a wide range of sectors and geographic regions have
discovered concrete value and competitive advantages from taking environmental initiatives, for
example, in areas such as pollution prevention, energy efficiency, environmentally oriented
design, supply-chain management and industrial ecology. For instance, cement production,
requires intensive use of natural raw materials and energy. It also results in emissions to the
atmosphere, the most significant being carbon dioxide (CO2). That is why eco-efficiency is at
the core of St. Lawrence Cement business - producing more cement while using fewer resources
and producing less waste and pollution per ton.
An example from other sector is KPMG. Since 1996, KPMG has been actively involved in a
range of environmental programs and are currently preparing for the ISO14001. They have
integrated all their environmental programs into mainstream operations to provide sustainability.
There are 5 key areas where they, as a firm, are making an environmental impact: Water, Waste,
Paper, Energy and Transport. Savings made by the environmental management program
currently stand at 250,000 per year. By switching to greener energy suppliers, energy reduction
targets of 30% over three years have been built into all maintenance contracts and can account
for a further 600,000 of savings.

The implementation of CSR initiatives usually differs for each company, or even sector,
depending on a number of factors, such as size and culture. Manufacturing-based companies are
confronted by a wide range of environmental challenges, while retail or service-sector companies
face these to a lesser extent. Although some companies address environmental issues one facility
or department at a time, companies are increasingly integrating the environment into all parts of
their operations. Whatever the nature of the commitment, most companies follow a similar series
of steps when addressing their impact on the environment:

Corporate Environmental Policy: Companies committed to reducing their environmental impact

usually create a set of environmental principles and standards, often including formal goals. At
minimum, most such statements express a companys intentions to respect the environment in
the design, production and distribution of its products and services; to commit the company to
be in full compliance with all laws and go beyond compliance whenever possible; and establish
an open-book policy whereby employees, community members and others can be informed of
any potentially adverse effects the company might have on the environment.

Environmental Audit: Before a company attempts to reduce its impact on the environment, it is
essential that it first gains a full understanding of it. For most companies, this usually involves
some kind of environmental audit. The goal of audits is to understand the type and amount of
resources used by a company, product line or facility, and the types of waste and emissions
generated. Some companies also try to quantify this data in monetary terms to understand the
bottom-line impact. This also helps to set priorities as to how a company can get the greatest
return on its efforts.
Employee Involvement: Leadership companies recognize that to be effective, an environmental
policy needs to be embraced by employees throughout the organization, not just those whose
work is related to the environment. To do that, companies engage in a variety of activities,
especially education, to help employees understand the environmental impact of their jobs and to
support their efforts to make positive changes. Some companies go further, helping employees
become more environmentally responsible throughout their daily lives, helping them build a true
environmental ethic. Besides education, many companies create incentives, rewards and
recognition programs for employees who demonstrate their environmental commitment.

Green Procurement: To help ensure that their products and processes are environmentally
responsible, many companies seek to buy greener products and materials from their suppliers.
Some companies participate in buyers groups in which they leverage their collective buying
clout to push suppliers to consider alternative products or processes.

Green Products: Products themselves may be made more environmentally friendly, with regard
to, for example, the control of emissions, noise, reduced health and safety risks, and reduced
energy requirements

Additionally, as more and more companies and their stakeholders are attracted to CSR
initiatives, but are often uncertain as to what steps may create an adequate environment for
putting the concept into operation. Three such steps could assist in facilitating the process:

(i) promote dialogue among stakeholders;

(ii)create the actual partnerships necessary for bringing voluntary initiatives to fruition; and

(iii) agree on a systematic and monitorable program for establishing and financing voluntary
initiative.
Chapter 9/10
Global CSR
The Road Ahead

After studying this chapter you should be able to:

1. Understand if there is a commonality in CSR practice

2. Understand how CSR will evolve in the future

3. Analyse the importance of shared growth through different models

4. Understand that CSR has to be integrated in the business process for sustainable
development
If we analyze the three words in CSR, i.e. corporate, social, and responsibility, it would
be easier for us to evaluate whether a common CSR formula can be created

Corporation is easy to define

Society includes the wide concept of a national social system to narrow the vision
of the surrounding community around a company

Number of actors and number of relationships

Have a close relationships with history and culture

Differ from country to country

Responsibility deals with intangible emotions like accountability and integrity

measuring is not easy

 Cannot segregate the action of policies if multiple companies are working
together

One fit for all is not easy. Universal ethical concepts can serve as basis. For
implementation, socio economic situation and political situation has to be taken in to
account

The better the needs analysis, the better CSR practices

CSR practices cannot be imitated

CSR has been around in various forms since ancient times, depending on ones view of
history.

It is being discussed on the world stage in every forum that is looking at sustainable
development.

The possible ways of achieving symbiosis between the global and local paradigms
requires us to understand the modern business world

Figure 10.1 is a simplified explanation of the stages of human existence

The Millennium Development Goals (MDGs) are eight international development goals that
were officially established following the Millinium Summit of the United Nations in 2000,
following the adoption of the United Nation Millennium Declaration. All 193 United Nations
member states and at least 23 international organizations have agreed to achieve these goals by
the year 2015. The goals are:

Eradicating extreme poverty and hunger,

Achieving universal primary education,

Promoting gender equality and empowering women,

Reducing child mortality rates,

Improving maternal health,

Combating HIV/AIDS, malaria, and other diseases,

Ensuring environmental sustainability, and Developing a global partnership for development.

Each of the goals has specific stated targets and dates for achieving those targets. To accelerate
progress, the GG8 Finance Ministers agreed in June 2005 to provide enough funds to the World
Bank , the International Monetary Fund (IMF), and the African Development Bank (AfDB) to
cancel an additional $40 to $55 billion in debt owed by members of the Heavily Indebted Poor
Countries (HIPC) to allow impoverished countries to re-channel the resources saved from the
forgiven debt to social programs for improving health and education and for alleviating poverty.

Debate has surrounded adoption of the MDGs, focusing on lack of analysis and justification
behind the chosen objectives, the difficulty or lack of measurements for some of the goals, and
uneven progress towards reaching the goals, among other criticisms. Although developed
countries' aid for achieving the MDGs has been rising over recent years, more than half the aid is
towards debt relief owed by poor countries, with much of the remaining aid money going
towards natural disaster relief and military aid which do not further development.

Progress towards reaching the goals has been uneven. Some countries have achieved many of the
goals, while others are not on track to realize any. A UN conference in September 2010 reviewed
progress to date and concluded with the adoption of a global action plan to achieve the eight anti-
poverty goals by their 2015 target date. There were also new commitments on women's and
children's health, and new initiatives in the worldwide battle against poverty, hunger, and disease.
Goal 1: Eradicate extreme poverty and hunger

Target 1A: Halve the proportion of people living on less than $1 a day

Proportion of population below $1 per day (PPP values)

Poverty gap ratio [incidence x depth of poverty]

Share of poorest quintile in national consumption

Target 1B: Achieve Decent Employment for Women, Men, and Young People

GDP Growth per Employed Person

Employment Rate

Proportion of employed population below $1 per day (PPP values)

Proportion of family-based workers in employed population

Target 1C: Halve the proportion of people who suffer from hunger

Prevalence of underweight children under five years of age

Proportion of population below minimum level of dietary energy consumption[

Goal 2: Achieve universal primary education

Target 2A: By 2015, all children can complete a full course of primary schooling, girls and
boys

Enrollment in primary education

Completion of primary education

everyone will get into school

Promote gender equality and empower women

Target 3A: Eliminate gender disparity in primary and secondary education preferably by
2005, and at all levels by 2015

Ratios of girls to boys in primary, secondary and tertiary education

Share of women in wage employment in the non-agricultural sector

Proportion of seats held by women in national parliament

For girls in some regions, education remains elusive

Poverty is a major barrier to education, especially among older girls

In every developing region except the CIS, men outnumber women in paid employment

Women are largely relegated to more vulnerable forms of employment

Women are over-represented in informal employment, with its lack of benefits and security

Top-level jobs still go to men to an overwhelming degree

Women are slowly rising to political power, but mainly when boosted by quotas and other special
measures

Goal 4: Reduce child mortality rates

Target 4A: Reduce by two-thirds, between 1990 and 2015, the under-five mortality rate

Under five mortality rate

Infant under I mortality rate

Proportion of 1-year-old children immunized against measles

Goal 5: Improve maternal health

Target 5A: Reduce by three quarters, between 1990 and 2015, the maternal mortality ratio

Maternal mortality ratio

Proportion of births attended by skilled health personnel

Target 5B: Achieve, by 2015, universal access to reproductive health

Contraceptive prevalence rate

Adolescent birth rate

Antenatal care coverage

Unmet need for family planning

Goal 6: Combat HIV/AIDS, malaria, and other diseases

Target 6A: Have halted by 2015 and begun to reverse the spread of HIV Aids

HIV prevalence among population aged 1524 years

Condom use at last high-risk sex

Proportion of population aged 1524 years with comprehensive correct knowledge of HIV/AIDS

Target 6B: Achieve, by 2010, universal access to treatment for HIV/AIDS for all those who
need it

Proportion of population with advanced HIV infection with access to antiretroviral drugs

Target 6C: Have halted by 2015 and begun to reverse the incidence of malaria and other
major diseases

Prevalence and death rates associated with malaria

Proportion of children under 5 sleeping under insecticide-treated bednets

Proportion of children under 5 with fever who are treated with appropriate anti-malarial drugs

Incidence, prevalence and death rates associated with tuberculosis

Proportion of tuberculosis cases detected and cured under DOTS (Directly Observed Treatment
Short Course)

Goal 7: Ensure environmental sustainability

Target 7A: Integrate the principles of sustainable deveopment into country policies and
programs; reverse loss of environmental resources

Target 7B: Reduce biodiversity loss, achieving, by 2010, a significant reduction in the rate
of loss

Proportion of land area covered by forest

carbon dioxide emissions total, per capita and per $1 GDP

Consumption of ozone depleting substance

Proportion of fish stocks within safe biological limits

Proportion of total water resources used

Proportion of terrestrial and marine areas protected

Proportion of species threatened with extinction

Target 7C: Halve, by 2015, the proportion of the population without sustainable access to
safe drinking water and basic sanitation (for more information see the entry on water
supply)

Proportion of population with sustainable access to an improved water source, urban and rural

Proportion of urban population with access to improved sanitation

Target 7D: By 2020, to have achieved a significant improvement in the lives of at least 100
million slum-dwellers

Proportion of urban population living in slums

Goal 8: Develop a global partnership for development

Target 8A: Develop further an open, rule-based, predictable, non-discriminatory trading

and financial system

Includes a commitment to good governance , development, and poverty reduction both

nationally and internationally

Target 8B: Address the Special Needs of the Least Developed Countries (LDCs)

Includes: tariff and quota free access for LDC exports; enhanced programme of debt relief for
HIPC and cancellation of official bilateral debt; and more generous ODA (Official Development
Assistance) for countries committed to poverty reduction

Target 8C: Address the special needs of landlocked developing countries and small island
developing States
Through the Programme of Action for the Sustainable Development of Small Island Development
States and the outcome of the twenty-second special session of the General Assembly

Target 8D: Deal comprehensively with the debt problems of developing countries through
national and international measures in order to make debt sustainable in the long term

Some of the indicators listed below are monitored separately for the least developed countries
(LDCs), Africa, landlocked developing countries and small island developing States.

Official development assistance (ODA):

Net ODA, total and to LDCs, as percentage of OECD/DAC donors GNI

Proportion of total sector-allocable ODA of OECD/DAC donors to basic social services (basic
education, primary health care, nutrition, safe water and sanitation)

Proportion of bilateral ODA of OECD/DAC donors that is untied

ODA received in landlocked countries as proportion of their GNIs

ODA received in small island developing States as proportion of their GNIs

Market access:

Proportion of total developed country imports (by value and excluding arms) from developing
countries and from LDCs, admitted free of duty

Average tariffs imposed by developed countries on agricultural products and textiles and
clothing from developing countries

Agricultural support estimate for OECD countries as percentage of their GDP

Proportion of ODA provided to help build trade capacity

Debt sustainability:

Total number of countries that have reached their HIPC decision points and number that have
reached their HIPC completion points (cumulative)

Debt relief committed under HIPC initiative, US$

Debt service as a percentage of exports of goods and services

Target 8E: In co-operation with pharmaceutical companies, provide access to affordable,
essential drugs in developing countries

Proportion of population with access to affordable essential drugs on a sustainable basis

Target 8F: In co-operation with the private sector, make available the benefits of new
technologies, especially information and communications

Telephone lines and cellular subscribers per 100 population

Personal computers in use per 100 population

Internet users per 100 Population

View of CSR

There were different levels of optimism about the future of CSR, ranging from disillusionment
that CSR will never be more than a cover for corporate activity to the most hopeful view that
CSR is part of a paradigm shift from industrial capitalism to sustainability capitalism. This
paradigm shift, it is predicted, will witness businesses finding a way to deliver on substantial
social change, even - in some quarters - working to curtail the power business itself wields in
society.

CSR pessimists predict:

Increasing inconsistencies between corporate actions and stated CSR commitments; companies
will become astute at shielding their actual performance

CSR will be a technical fix

Really substantive issues wont be addressed by CSR; we will come to the point where we say
there have been great improvements, but whats really changing?

Most businesses will hold back waiting for the business case to develop - however, they may
never be satisfied by the evidence of business case and may use this as an excuse for inaction

The business case will not be clear enough for companies to take up en masse, unless it is
legislated or there are other incentives

CSR will not be on the publics radar screen and there wont be any clarity around what CSR is
and why it is important
 CSR will become too prescriptive and get labeled as needless red tape increasing the cost of
business

Companies that once embraced CSR will lose interest and pursue other objectives

Those engaged in CSR shift to minimal CSR activities, never moving beyond baseline CSR

Pressures on business to cater to shareholders at expense of all other stakeholders will continue
if not increase; the imbalance of power will not change unless the membership on company
boards changes to include stakeholder interests or until government legislation is brought to bear

CSR optimists believe that the pessimists are only looking at the gap of where we are and where
we need to be, without acknowledging that mindset change takes time and recognizing that the
slow incorporation of these ideas is underway in business. They believe that the disillusionment
is a function of the hope for too much too quickly.

CSR optimists believe that:

In the future a significant number of companies will be convinced its in their strategic interest
to incorporate CSR substantively into their operations

There is a crisis in industrial capitalism, which lacks in trust and social responsibility, and
within this we will see a rethinking of the role companies should play in society.

CSR is at a crossroads, in a time of real discontinuity, enormously in flux. We are in the very
early stages of transition with cracks in the foundation of business such as Enron, Worldcom,
WTO protests, sustainable forestry campaigning, 9 - 11. These are little tremors before the big
earthquake - we will see bigger and deeper cracks; there will be more shocks similar to 9-11
environmentally and socially - this will drive CSR in substantial and unpredictable ways in the
future

High profile stumbles will continue to drive CSR

The crisis in global markets is broadening the discussion of accountability and transparency - in
this climate there is more openness to CSR ideas. CSR will be seen as good corporate
governance

There will be pressure through competition for better CSR performance - this will impact on
suppliers, etc.

A small group of companies will be moving ahead quickly

 There will be differentiation between different models and levels of CSR as a result of
continuous improvement and quality assurance

CSR will advance, but it will advance inconsistently across sectors, depending on a companys
economic performance, economic downturns, competitiveness of the market, etc.

Underlying structural drivers will impact large scale companies, such as the value of
knowledge workers and other intangible assets, driving companies to take different issues into
account

We see only a few companies committed to CSR because we are at the beginning of a long path
on this journey; the shift toward sustainable capitalism is a long term trend and in 5 - 10 years
only a few companies will be moving in this direction

Increasingly businesses will see CSR as resulting in increased competitiveness and profitability

The cynical corporations are dinosaurs and will be swept aside, though not in 10 years; change
will be there, but it wont be dramatic

CSR is part of a search for a new social contract between business and society. This new social
contract will not necessarily be through the creation of a set of rules, but about a new set of
norms arrived at through experimentation

In spite of the difference in views of social impact and degree of corporate commitment, the
majority of the optimists and the pessimists agreed that 5 - 10 years from now CSR will
nonetheless become increasingly mainstream within business, even if not within the public
consciousness. CSR tools, resources, language - all will

become more aligned with business norms and systems. CSR standards - to greater or lesser
effect - will be part of business basics and not an add-on

A CSR Continuum - CSR-lite to deep-CSR

Consistent with their views on the progress of CSR and the ability of CSR to bring about social
and environmental improvements, CSR thought leaders felt there will be different degrees of
commitment to and styles of applying CSR within industry in the future, much like today.
Collectively they described a continuum of CSR, from CSR lite to deep-CSR:

CSR Lite

These companies will have a superficial or marginal commitment to meaningful social or

environmental improvement
 They will be primarily concerned about responsiveness to complaints, not CSR - the business
model will not be changed

They may be using generalized standards such as the Global Reporting Initiative and as such
think they have a handle on CSR when in fact they dont

Included in this group will be those companies which have been legislated into compliance
with CSR objectives, whether their transgressions have been on the environment, corrupt
business practices, etc.

They do not show any commitment to social or environmental progress.

CSR Compliant

Companies will take on voluntary environmental and social obligations to maintain their
license to operate

They will keep abreast of emerging standards and norms of CSR and ensure they are compliant
with those standards

CSR Strategic

Companies will become strategic about different aspects of CSR

They will become compliant with standards and then will create niches in specific areas of CSR
more strategic to their companies. They will develop business strategies within one or two
aspects of CSR around which they can develop a competitive advantage and have significant
impact

Companies in certain sectors will believe their key to survival is providing products and
services acceptable to broad public interests or they will go out of business

CSR Integrated

Further along the continuum will be those companies that fully integrate CSR throughout their
business model, not as a strategic advantage, but in the belief of the need to take social and
environmental impacts and opportunities into account
 They will have comprehensive CSR policies covering all areas of their operations and will be
operationalizing their CSR principles through rigorous performance standards, objectives,
reward mechanisms, etc.

CSR or sustainable development will inform decision-making and business strategy throughout
the company

Deep CSR

A group of companies will adopt or be founded on business models whose mission is to

improve social or environmental conditions

Some leading companies will realize that the low-hanging benefits of CSR have been achieved
and the early stage CSR measures have been mined and exhausted. These companies will move
to addressing the real

tradeoffs between different elements of the triple bottom line in sustainable consumption,
resource extraction, just transitions, intergenerational equity, etc.

The myriad CSR standards operating today will themselves become standardized and available
as starter kits to new CSR companies. Companies will be adopting the core standards and
tailoring the rest to their unique environments. The focus in future will be on continuous CSR
improvement and most especially the impact CSR

operations have on social and environmental conditions. The future CSR company will require
every policy, practice, operation, activity, member of staff, every decision to be measured against
CSR criteria. Many companies will be redefining business purpose to optimize profits, that is,
making profits responsibly and developing business principles consistent with this.

Companies will be increasingly called upon to help address the growing social and
environmental challenges emerging globally and locally. They will be bringing their resources
and influence to bear on those problems through cross-sectoral initiatives. CSR companies will
be promoting protection of human rights and generating

economic, social and environmental benefits. While this trend will still be in its infancy within
10 years, a more advanced trend will be catching attention. Increasing numbers of primarily
small business whose mission is to enhance social and ecological conditions will be having an
impact and will be part of the force that drives advances in CSR.