CORPORATE

SOCIAL RESPONSIBILITY

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CSR just Marketing or really for a better

World?

The Concept
Definitions
1.

Corporate social responsibility (CSR) can be defined as the

"economic, legal, ethical, and discretionary expectations that society
has of organizations at a given point in time" (Carroll and Buchholtz)

2. The World Business Council in its publication wrote that "Corporate

Social Responsibility is the continuing commitment by business to
behave ethically and contribute to economic development while
improving the quality of life of the workforce and their families as
well as of the local community and society at large
CSR is a form of corporate self-regulation integrated into a business model. It
is when a corporation realizes its responsibility towards its stakeholders and
other members in the public sphere.
. An ethical and moral component is underpinned in this rapidly developing
concept.
. The concept of CSR means that organizations have moral, ethical, and
philanthropic responsibilities in addition to their responsibilities to earn a fair
return for investors and comply with the legal norms.
.

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It emphasizes on the realization of the ethical responsibility towards the

stakeholders.
According to Post, Lawrence, and Weber stakeholders are individuals and
groups that are affected by an organization's policies, procedures, and
actions.
The PRIMARY stakeholders, such as employees and owners have specific

legal rights and expectations in regard to the organization's operations

while the SECONDARY stakeholders not, but may perceive that they have
moral rights.

CSR is synchronized with the concept of sustainability in Development. In

1987, the UN appointed Brundtland commission which defined sustainable
development as 'development which meets the needs of the present without
compromising the ability of future generations to meet their own needs.' Since
then, the concept has caught up very fast. CSR introduces the concept of
sustainability into business operations meaning that business organizations
do not just become wealth hoarding chambers but also fulfill their duty towards
the larger community by investing in socially benefiting concerns. Our planet
has limited resources. Corporations and industrial houses cannot go on
exploiting this wealth without significant efforts for its refurbishment.

CSR is holistic in its approach. It does not include only one aspect but
embraces all aspects that a corporate organization touches and affects.
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Triple Bottom-Line Approach to CSR

This was proposed by John Ellington in
1997, Previously there was only one
bottom line for corporation, to reap
profit for shareholders.
But
CSR has three of them
1. Shareholders
2. Environment
3. Social.
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SUSTAINABILITY IN BUSINESS

It stresses the need to change from the old

sector-centered ways of doing business to
the modern approaches of high level integration,
coordination and cooperation in the operations
while at the same time addressing
efficiently the environmental and social issues.

An organization needs to be accountable for its

actions. Of all forms of social accounting, the
most widely used is called the Triple Bottom Line accounting. This term
was coined by John Elkington in 1994. It measure the success of an
organization as per the following three factors: economic, ecological and
social. Later on, the concept of People, Planet, Profit was added to the
triple bottom line.

In other words, todays business operations do not limit itself to mere

adherence to the legal norms while solely working on profit maximization.
The whole idea of CSR ensures that organizations be pro-active in their
efforts to be beneficial to the larger community as they use its resources
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to reach higher levels of profits.

HISTORY
The concept of corporate citizenship has existed for a long time however
it came to be recognized only since the 1970s. CSR in its contemporary
shape is of recent origin. It is accurate to say that all societies at all points
of time have had expectations that organizations would act responsibly.

In the eighteenth century the great economist Adam Smith suggested that
the needs and desires of society could best be met by the interaction of
individuals and organizations in the marketplace. This view expressed more
than 200 years ago still forms the basis of modern day economies. The
industrial revolution brought in tremendous changes in the industry,
especially in Europe and America. Business organizations and enterprises
sprang up in large number.

In the late 19th century many of these individuals believed and practiced a
philosophy that came to be called "Social Darwinism". This type of
philosophy justified cutthroat, even brutal, competitive strategies. Thus one
finds that even though some of these tycoons were big philanthropists
donating millions, the companies that made them rich were practicing
business methods that, by today's standards at least, were exploitative of
workers.
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By the 1960s the business world gradually began to accept additional

responsibilities other than making a profit and conforming to the laws.
Furthermore, society began to expect business to voluntarily participate in
solving societal problems.

The phrase CSR was coined in 1953

with the publication of Bowen's 'Social Responsibility of Businessmen.
Growing literacy, affluence, mass communication and many other factors
paced up the development of significant corporate citizenship.

In 1976, a grouping of 30 powerful industrialised countries, recognising the

complications associated with companies operating across borders,
established a set of guidelines to ease the workings of globalisation.

Such initiatives got a major boost when in 2000 the United Nations
adopted the UNGC, a ten principle based framework for businesses to
adopt sustainable and socially responsible policies.

We need business to give practical meaning and reach to the values

and principles that connect cultures and people everywhere. - Ban Kimoon, Secretary-General of the United Nations

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The 2002 session of the World Economic Forum witnessed the drafting of a
joint statement entitled Global corporate citizenship: the leadership
challenge for CEOs&boards.

At its General Assembly in Stockholm, Sweden, in September 2002, the

International Standardization Organization decided that the time had come
to consider the value of developing management standards on CSR. This
resolution recognized the value of the ISO 14000 environmental
management system standard in improving the efficiency of corporate
environmental management. Along with this, ISO 26000 is the recognized
international standard for CSR which is currently being drafted.

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Arguments against CSR

The company makes profit and the society benefits. Is it really
possible ?
The primary motive of business is to earn profits for its owners and
investors and it should focus on profit-making.
Giving away shareholders money for charity purposes is wrong.
Assuming social responsibility leads to a competitive disadvantage.
Those in the corporate world are not equipped to deal with social
problems.
CSR is a strategy for avoiding regulation and also to gain
competitive advantage. Highlighting their best practices to divert
attention from their bad practices.
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Arguments in favor of CSR

The rise of the modern corporation created and continues to create

many social problems. Therefore, the corporate world should assume
responsibility for addressing these problems.
In the long run, it is in corporations' best interest to assume social
responsibilities.
Large corporations have huge reserves of human and financial capital.
They should devote at least some of their resources to addressing social
issues.
The corporate world has some of the brightest minds in the world, and it
possesses tremendous financial resources.
Ethical consumerism is catching up with people.
CSR can serve as the USP that companies look for their products.
Corporations are keen to avoid interference in their business through
taxation or regulations.

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'The twentieth century has been characterised by three developments of

great political importance: the growth of democracy, the growth of
corporate power and the growth of corporate propaganda to protect
corporate power against democracy.' Alex Carey.
On the other hand, a significant number of investors are keeping track of a
companys social decisions in order to decide of their investment. Many
believe that it adds to the companys reputation more than the brand
image. This is pretty obvious in the first world. In the rich countries, the
consumer trend is marked by a growing consciousness regarding a
companys social responsibility. Socially Responsible Investment (SRI) is
being highly emphasized upon these days.

Scenario in India
Corporate Social Responsibility (CSR) has been on the agenda in India for a
considerable period. Most big Indian corporations are engaged in some
CSR activities. As is the case in many countries, the private sector is
generally more active in this area than the governmental/public sector.
A National Foundation for Corporate Governance (NFCG) has been
established by the Ministry of Corporate Affairs.
India being a member of the International Labour Organization (ILO) has
ratified 40 of its conventions. However in certain areas of key concern
India is still lagging behind.
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 Labour laws
India has altogether ratified 333 labour laws. However, these vary in terms
of implementation. The Minimum Wage Act was implemented in 1948. Since,
most of the labour is in the informal sector its implementation still remains a
far-fetched reality. Bonded labour is another serious issue to be dealt with .

Environment laws
The main law on environment and production is The Environment
(Protection) Act (1986). This law gives the central government the authority
to protect and improve environmental quality, as well as control and reduce
pollution.Many bodies like the CII and the Indian Chamber of commerce have
taken several energy efficient initiatives .

Right to Information and Corruption

India currently ranks 76th in the Corruption Perceptions Index devised by
Transparency International.(Hindu dt 27 Jan 2016)
The introduction of RTI in 2005 has led to changes in the transparency
regarding establishment and implementation of strategies, programmes and
laws.
Even much before the issue became a global concern, India was aware of
corporate social responsibility (CSR), due to the efforts of organisations such
as the Tata Group.
Corporate companies like ITC have made farmer development a vital part
of its business strategy, and made major efforts to improve the livelihood
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standards of rural communities.

 IT companies like TCS and Wipro have developed software to help teachers and
children in schools across India to further the cause of education.

Banks and insurance companies are targeting migrant labourers and street
vendors to help them through micro-credits and related schemes.

In June 2008, a survey was carried out by TNS India (a research organization) and
the Times Foundation with the aim of providing an understanding of the role of
corporations in CSR. The findings revealed that over 90 per cent of all major Indian
organizations surveyed were involved in CSR initiatives. An estimated 100
corporate foundations and 25 foreign firms are involved in CSR activities in India,
but statistics on input and output are elusive.
The Indian corporate sector spent US$ 6.31 billion on social expenditure during
2007-08, up from US$ 3.68 billion spent during the previous fiscal.
The need is for a better tie-up between corporations and government so that
significant betterment is achieved. This is not merely a game of expenditure and
revenue but of real change. It is time that businesses play their proactive role with
this realization.

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 India based Satyam Computers which was a leading global

consulting and IT service company leverages its core business
namely Information Technology to bridge the yawning digital
divide between the urban and rural areas. Satyam has
integrated its business with in built social values and is a
staunch community reformer. Satyam views its socially
responsible initiatives as an important strategic aspect for the
long term sustainability of the organization. This case focuses on
the Gram IT approach, an initiative taken by the Byrraju
Foundation, an NGO promoted by Satyam Computers. Gram IT
takes business process outsourcing to the educated unemployed
youth in villages. It is an initiative that enables rural youth to
create wealth by honing their computer and English skills for
world class service delivery. Gram IT was such a unique model
that it is found near perfect for rural India. For this venture,
Satyam bagged the Asian CSR award under poverty alleviation
category in 2007. The case examines how this unique
technology platform can endure the teething troubles usually
associated with growing economies.
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