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Subject: Fundamentals of Management Topic: Corporate Social Responsibility (CSR) Submitted by: QanitaZakir Hafiza Sarah Abdullah

Submitted to: Miss NazishNouman Class:BS(IT) 2010

DEPARTMENT OF COMPUTER SCIENCE AND INFORMATION TECHNOLOGY

JINNAH UNIVERSITY FOR WOMEN


5-C NAZIMABAD, KARACHI 74600 1

Table of Contents
Abstract ..................................................................................................................................................................................................... 4 WHAT IS CORPORATE SOCIAL RESPONSIBILITY? .................................................................................................................... 5 Definitions............................................................................................................................................................................................ 5 Distilling CSR into Essential Ingredients ..................................................................................................................................... 5 Ingredient 1-CSR is Good Business Ethics: ............................................................................................................................. 5 Ingredient 2-CSR Looks beyond Maximizing Financial Profit: ......................................................................................... 5 Ingredient 3-CSR Means Engaging With Stakeholders: ...................................................................................................... 5 Ingredient 4-CSR Strategy Must Guide the Business: ........................................................................................................ 5 WHAT ARE THE MAIN AREAS OF RISK TO A BUSINESS? ...................................................................................................... 6 Risk ........................................................................................................................................................................................................ 6 Supply chain......................................................................................................................................................................... 6 Operational risks................................................................................................................................................................. 6 Product .................................................................................................................................................................................. 6 Societal expectations .......................................................................................................................................................... 6 Governance .......................................................................................................................................................................................... 6 Corporate Reputation ....................................................................................................................................................................... 6 WHY CSR IS NECESSARY? .................................................................................................................................................................. 6 Corporate Power: ............................................................................................................................................................................... 6 Responsible Business Can Make a Worthwhile Contribution: ............................................................................................... 7 Unethical Business can be harmful: .............................................................................................................................................. 7 Stakeholders Demand Accountability: .......................................................................................................................................... 7 Corporate Decision-making:............................................................................................................................................................ 7 WHY CSR IS BECOMING POPULAR?............................................................................................................................................... 7 People, Planet, Profit ......................................................................................................................................................................... 7 Public Image ........................................................................................................................................................................................ 7 Protect, Enhance and Invest ............................................................................................................................................................ 7 Responsibility for Ethics................................................................................................................................................................... 8 Self-Regulation .................................................................................................................................................................................... 8 Mission for Stakeholders.................................................................................................................................................................. 8 CSR minus HR=PR .................................................................................................................................................................................. 8 CSR OPPORTUNITIES IN PAKISTAN ............................................................................................................................................... 9 Conclusion ................................................................................................................................................................................................ 9 Acknowledgements ............................................................................................................................ 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Abstract
In the 1970s and 80s environmental concerns such as loss of the rainforest and the effects of pollution led to a recognition that something had to be done to change the way we were using the planet resources. As a result, heads of state came together at Rio, Brazil in 1992 for what was called the Earth Summit. At Rio, governments pledged action to stop the unsustainable use of resources and to promote sustainable development. Poverty and disease became global concerns, as did examples of poor business practice in dealing with social issues such as child labor, bribery and corruption that were exposed by the media. Society began to recognize that governments alone could not solve these problems. CSR (Corporate Social Responsibility) is now sometimes considered as the business response to the challenge of sustainable development. The World Economic Forum (WEF) describe CSR as the manner in which a company manages its economic, social and environmental relationships, and the way it engages with its stakeholders, employees, customers, business partners, governments and communities has an impact on its success.There appears to be a role for everyone governments to provide fair and socially just laws, business to behave responsibly and consumers to think about their actions by reducing waste or asking questions about how and where their goods came from.

WHAT IS CORPORATE SOCIAL RESPONSIBILITY?


Definitions
Corporate social responsibility (CSR) refers to linking business decision-making to ethical values, compliance with legal requirements, and consideration for people, communities and the environment. Corporate Social Responsibility (CSR) is also often referred to as business responsibility and an organizations action on environmental, ethical, social and economic issues. CSR simply ensures that your business is aware of its impacts, is accountable for its actions, and that it undertakes these actions in a responsible manner.

Distilling CSR into Essential Ingredients


Ingredient 1-CSR is Good Business Ethics:
Business ethicsinvolve deciding what is right and wrong with a companys activities and behaviors. This does not mean what is strategically, commercially or financially right or wrong. Business ethics is concerned with what is morally right or wrong with the decisions and actions of a company. Corporate Social Responsibility is a framework for thinking about business ethics and making ethical decisions. CSR says a company has a responsibility to operate ethically and within the law. It helps a corporation understand that responsibilities reach further than just making a profit. These extended responsibilities cultivate a deeper understanding of ethical decision-making and the necessity for greater transparency about the impact of business decisions.

Ingredient 2-CSR Looks beyond Maximizing Financial Profit:


CSR compels companies to look beyond the making of financial profits. It acknowledges that companies make a significant economic contribution to society. They create jobs. They generate investment. They bring development and opportunity. However, in doing so, they also generate environmental and social impacts. Companies use natural resources, some create toxic pollution and some remove wildlife habitat. Some companies pay employees poorly. Some require employees to live long periods away from their families and some companies ignore how their operations effect the health of local communities. Corporate Social Responsibility asks companies to look beyond their own financial interests and to also consider these social and environmental aspects. Companies cannot transact without creating some form of environmental or social impact. Some may be negative. Some may be positive. A key ingredient of CSR is that it recognizes that companies have a responsibility to take account of those impacts.

Ingredient 3-CSR Means Engaging With Stakeholders:


Stakeholders are people whose lives and livelihoods are impacted by the companys activities. They include the owners (shareholders/investors), employees, customers, suppliers, the community, competitors and government. At any point in time, society will have certain expectations about what a company should or should not do. Corporate Social Responsibility means that a company will make decisions with those expectations in mind. It will recognize that its stakeholders are a broad and varied group. Further, the company will recognize that stakeholder opinions and values are important to the future functioning of the company and it will actively engage with its stakeholders to understand their aspirations, goals and concerns.

Ingredient 4-CSR Strategy Must Guide the Business:


CSR must be integrated into the business at all levels and in all practices. It must not only be words. It must be an active strategy because its absence or failure will, in time, become obvious to stakeholders.

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To practice CSR, means to weave it into the whole business. This requires learning new skills and new knowledge as well as reviving skills and attributes which the business culture has not readily valued. It usually means changing the way things are done. It can cause the company to question how and what it does; and whether that contributes to a sustainable future for us all.

WHAT ARE THE MAIN AREAS OF RISK TO A BUSINESS?


Corporate reputation, governance and ethics are headline issues associated with corporate social responsibility (CSR) that have made the news headlines in the last few years.

Risk
Managing and controlling risk is key to running a successful organisation. Risk can be defined as the possibility of suffering harm or loss. Within the area of CSR there are four general areas of risk. Supply chain country specific such as human rights abuses, or company specific risks such as pollution. Operational risks this covers compliance with regulation, employee satisfaction and dangerous operations Product this covers use of hazardous raw materials (e.g. nuclear energy) waste during production, and health and safety issues. Societal expectations this covers what society demands of a business in the 21st Century

Governance
Good governance will ensure both current and future risks that affect all stakeholders are identified and that the appropriate internal controls (accountability mechanisms, systems and procedures) are used to mitigate, and in some cases, turn risk into opportunities. Poor governance reflects a culture where employees are not involved in the way things are done, or even worse one where corporate governance (the way a business operates and the role of the board) procedures do not exist and whistle blowing becomes necessary.

Corporate Reputation
An organisations reputation is built on its relationship with staff, customers, suppliers, investors and the community they operate within. These stakeholders are the very same that CSR activities seek to involve. This is why CSR can help maintain and enhance reputations. A change in reputation can lead to a number of negative impacts such as a drop in share value of the a business, a decrease in profitability as customer and staff loyalty drops, a decrease in business opportunities (as potential partners question the trust and integrity), a decrease in new investment as the business is seen as a greater risk, and even increased insurance premiums.

WHY CSR IS NECESSARY?


Corporations are powerful institutions that can make a significant difference to society. That difference can be a positive contribution or it could equally be harmful. Learning about Corporate Social Responsibility (CSR) contributes to better thinking about what is morally right and wrong with the decisions and activities of these institutions. This knowledge can produce decisions and behavior that meet the demands of stakeholders for greater accountability. It can help stakeholders to recognize unethical behavior which is still too common and it can help managers assess the changes needed to manage corporate responsibility. There are five compelling reasons for corporations and their stakeholders to be active in business ethics training.

Corporate Power:
Corporations are powerful institutions that influence many facets of society. They are private enterprises formed to pursue commercial purposes but their processes have a very public impact. Companies affect many lives through their actions and

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behaviors. It is important that they act and behave responsibly. Learning about corporate social responsibility (CSR) explains why these responsibilities arise, what they are and how they can be delivered.

Responsible Business Can Make a Worthwhile Contribution:


Responsible business can make a worthwhile contribution to society. Companies make products and deliver services. They create jobs. They generate investment. Companies have the potential to fulfill not only a major economic role within society but also a major environmental and societal role. Their decisions and activities can positively impact on the use of natural resources and the quality of lives of many people both internal to their operations like managers and employees; and external to their operations like customers, suppliers, governments and local communities. Responsible business can help build sustainable lives and livelihoods for many.

Unethical Business can be harmful:


While responsible business can be positive in its impact, irresponsible business can be harmful in equal measure. Companies that lack awareness or regard for their responsibilities can act and behave in ways that are very damaging to the worlds natural resources, to the lives of local communities and to the well-being of staff and managers. The potential for impact is heightened in a globalised economy where the activities of corporations reach across many countries and cultures.

Stakeholders Demand Accountability:


Tolerance of corporate impacts is changing and stakeholders, whose lives and livelihoods are impacted by irresponsible business activities, are demanding greater accountability. Stakeholders are placing greater demands on companies to be accountable for corporate activities and their impacts. Stakeholders include the owners (shareholders/investors), employees, customers, suppliers, the community, competitors and government. Developments in communications technology allow stakeholders greater and quicker access to information, and to each other. Global communication via the internet and cell phones means that issues of malpractice can surface more rapidly and stakeholders can mobilize to respond more quickly.

Corporate Decision-making:
Corporate Social Responsibility involves more complex decision-making. It moves business away from single dimensional thinking (maximizing financial profit) and toward multi-dimensional thinking (the economic, social and environmental facets of corporate impact). It shifts business thinking about whether a decision is only financially profitable or strategically strong to whether it is morally right or wrong. Knowledge of CSR is necessary for corporate managers to identify, understand, analyze and resolve the complexity of these multiple issues. It also assists other stakeholders to do the same.

WHY CSR IS BECOMING POPULAR?


People, Planet, Profit
CSR-focused businesses proactively promote the public interest by encouraging community growth and development, and voluntarily eliminating practices that harm the public. Essentially, CSR is a triple bottom line: People, Planet, Profit.

Public Image
As more companies adopt a CSR strategy, a companys reputation could be damaged if they dont have a similar strategy. In a peer-pressure-style environment, companies are backed into a corner and have no choice. However, its important to recognize that arent truly victims in this situation. There are plenty of benefits, financially and reputation-wise, that make CSR mutually beneficial for the company and the public.

Protect, Enhance and Invest


CSR is a complete business strategy that aims to ensure the long-term viability of the business, by assuming an active role in the development of the community, the economy, and the environment through good business practices. It is not different from being a good citizen of a country! It is not about restricting business growth; its about creating new opportunities, the better way of doing business.

Responsibility for Ethics


Its possible that things have gotten so bad, genuine empathy is driving the CSR trend. Such wide spectrums of people have been affected by an economic depression, natural disaster, or another event equally devastating. Its possible the trend isnt corporate, but personal. The senior executives see the despair and the lack of relief or are experiencing it themselves and decided to step up to plate.

Self-Regulation
A comprehensive set of policies, practices and programmes incorporated throughout a business can increase productivity, contribute to competitiveness, improve staff recruitment and retention rates and create a more positive corporate image.

Mission for Stakeholders


The expectations of the traditional stakeholders shareholders, customers, and employees are increasing and so, too, is the list of groups wanting to know how your organization is run. As a result, more and more companies are working harder not only to make a positive impact on society and the environment through their operations, products or services, but also to demonstrate it to these groups.

CSR minus HR=PR


HR departments are responsible for many of the key systems and processes, including recruitment, training and communications, on which effective delivery of CSR initiatives depends. As CSR is all about values and accountability then it is also about the behavior of your people and the behavior of your suppliers. In this sense virtually everything that is found within the HR remit involves CSR. HR practices are heavily underpinned by ethical beliefs so good HR is the obvious basis for building trust levels across the organisation and providing a solid foundation for CSR. Research evidence shows that employees have relatively high levels of trust in their line manager but very low levels of trust in senior management. HR practices are heavily underpinned by ethical beliefs so good HR is the obvious basis for building trust levels across the organisation and providing a solid foundation for CSR. HR can give substance to company aspirations to be - and be seen to be - a good employer by championing policies on diversity, work-life balance, employee involvement and training and development. Successful practices of this kind not only build credibility and trust with customers and employees but have other positive effects such as improved recruitment and retention rates.

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HR has a crucial role in the development and implementation of CSR within an organisation. The development and implementation of CSR policies acts as a mechanism to support employees facing risks. By first benchmarking your organisations performance on CSR activities you will identify areas of risk. Other tactics include: Workshops to engage with staff and suppliers to explore areas of risk Develop interactive intranet sites that show case examples of good practice, or build in opportunities for promotion of good practice at staff meetings Review company policy and procedures to ensure values are consistent procurement, recruitment, training, appraisals and exit interviews Consult and involve staff more in the running of a business Provide feedback questionnaires for employees, customers and suppliers to show the organisation is living its values

CSR OPPORTUNITIES IN PAKISTAN


Pakistan is the worlds sixth most populous country and more than 70 per cent of its 165 million people live in the rural areas. Development of infrastructure and community improvement programmes in rural areas could reduce the population pressure on cities, as well as bridge the widening gap between the standards of living of urban and rural communities. For Pakistan to become a productive and progressive nation able to feed itself, development of rural areas is essential. The poor infrastructure and lack of basic amenities of life in remote rural communities is one of the biggest challenges. For the continuity of a self-sustaining and merit-based political and judicial system in Pakistan, development of rural areas ought to be a priority. Rural areas account for more than 75 per cent of the registered voters in Pakistan. They could only produce better leadership to represent them at the federal level if people are able to make informed decisions. If they have security and protection of law, access to education, healthcare, water and sanitation, roads and telecommunications facilities, as well as awareness about individual and collective human rights and duties towards community and country. Selected sectors in need of CSR: There are several sectors and areas that need immediate attention, funding and management support: Education Healthcare Water and Sanitation HIV/AIDS Child Protection Biogas power projects for small communities Development Research Vocational Education & Skills Training Information Technology Awareness creation through: Knowledge and research on rural, provincial and national issues Social networks and platforms to highlight development challenges and how they could be overcome Encouraging and inciting positive action among a maximum number of people by engaging them through constructive participation

Conclusion
CSR pertains the corporations interaction with society and its responsibilities to society in general . CSR demands commercial success be gained through positive practices that aim to promote general welfare . CSR is about creating new opportunities, the better way of doing business.

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References
http://www.management-issues.com/2006/5/25/opinion/how-csr-can-help-manage-risk.asp http://www.management-issues.com/2006/8/24/research/csr-minus-hr-pr.asp http://www.mallenbaker.net/csr/definition.php http://www.csrpakistan.pk/ http://www.prscoup.com/446/why-is-csr-popular http://www.suite101.com/content/what-is-corporate-social-responsibility-a92588 http://www.suite101.com/content/how-to-understand-corporate-social-responsibility-a272656

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