Corporate Social Responsibility

Lectures 1 & 2

Important Information
Reading is essential : Please go through the course outline for a detailed understanding of what readings have to be done before you come to the class Internal assessment
Mid Term :30 marks Presentation: 20 marks

External assessment
End Term: 50 marks

Important Websites
www.bsr.org Business Social Responsibility www.wbcsd.org World Business Council for Sustainable Development www.worldbank.org The World Bank www.csrforum.com Corporate Social Responsibility Forum www.infochangeindia.org Info Change India www.undp.org.in United Nations Development Programme www.bitc.org.uk Business in the Community

WHY ARE BUSINESSES SUDDENLY TALKING ABOUT CSR?

Power of Corporations
Corporations have far more power than the nation-states across whose borders they operate. The combined revenues of just General Motors and Ford -- the two largest automobile corporations in the world - exceed the combined Gross Domestic Product (GDP) for all of subSaharan Africa The combined sales of Mitsubishi, Mitsui, ITOCHU, Sumitomo, Marubeni, and Nissho Iwai are nearly equivalent to the combined GDP of all of South America

The United Nations has justly described these corporations as the productive core of the globalizing world economy.

What is a Corporate?

What is the role of corporates in a globalized economy?

A corporation is
Legal entity
A legal entity, created under the authority of a statute, which permits a group of people, as shareholders, to apply to the government for an independent organization to be created, which then pursues set objectives, and is empowered with legal rights usually only reserved for individuals, such as to sue and be sued, own property, hire employees or loan and borrow money.

Social entity
The most common form of business organization , which is chartered by a state and given many legal rights as an entity separate from its owners. Companies should contribute to the welfare of society and not be solely devoted to maximizing profits. Socially responsible companies can act in a number of ways to benefit society. For example, companies can give money to the arts, fund academic scholarships, support community-building initiatives, and so on. They can also commit to not pollute or to reduce the pollution they put out, to not build weapons, and so forth.

Globalization
Globalization is a process of Interaction and integration among the people, companies, and governments of different nations. This process has effects on the environment, on culture, on political systems, on economic development and prosperity, and on human physical well-being in societies around the world.
Source: http://www.globalization101.org

PROCESS Driven by
Trade & Investments Foreign Direct Investment (FDI) Financial flows Technology

China, India, Bangladesh, Philippines, Brazil, Costa Rica, Thailand,

Source: The World Bank

 Some 2 billion people particularly in subSaharan Africa, the Middle East, and the former Soviet Union live in countries that are being left behind. These countries have been unable to increase their integration into the world economy. On average, their economies have contracted and poverty has risen.

Poverty Facts and Stats

Source: Shah, Anup, 2009

A second industrial revolution?



Industrialisation
    

Globalisation
    

Expansion of capitalism New markets Clubs and coffee houses Unregulated workplace Urbanisation

Foreign direct investment Global markets: increase in crossborder trade Internet communications Lack of international health regulation Urban megacities

Has Globalization impacted Us??????

What is the impact of Globalization?

Impact of Globalization
Increase in global awareness about various economic, legal, political, technical and cultural aspects

New job creation Globalization of Information and Communication system : Global village Globalization of science leads to the fusion of scientific data and rules to form a uniform network of database

Self-employment increased in all developing Figure 15: Non-agricultural self-employment, 1980-89 and 1990-2000 regions except East and South-east Asia (in per cent of total non-agricultural employment)
48 50 1980/1989 1990/2000 40 32 30 29 26 26 32 44 44

20 13 10 12

0 World Developed Regions Africa Latin America Asia

Source: ILO, Women and men in the informal economy, 2002.

Impact of Globalization (Socio-Economic)

World highly vulnerable to changes which cannot be controlled. Unstable global financial systems Impact on culture & identity Rural & Informal economies remain on the margins resulting in persistent poverty Loss of jobs due to industrial restructuring Migration leading to brain-drain

Impact of Globalization (Socio-Economic)

[contd.]

Migrants particularly women driven to illegal economy( trafficking) leaving them vulnerable to exploitation. Investments leading to sweat shops and poor health as countries reduce environmental protection measures to attract investment

Impact on the Global Markets

More choice but can result in


Unhealthy lifestyles lack of activity, risky sexual behaviour, breakdown in traditional values Promotion of processed tobacco, alcohol and processed food with high salt sugar and fat content Unrealised expectations resulting in depression Increased tourism brings risks to health of tourists and communities

 

Impact on Global Health

Health conditions affecting people across boundaries, culture & generations
Infectious diseases: HIV/AIDS, TB, Influenza, SARS, Lifestyle diseases and conditions: obesity, lung cancer, heart disease, STDs, Type 2 Diabetes Threats to global stability and economy: HIV/AIDS, SARS, Swine Flu The vectors of these diseases may be-- travel, work place or

Impact of Globalization: Environment

Global warming
Agricultural development and food security Water stress and water insecurity Rising sea levels and exposure to climate disasters

Environmental pollution Loss of bio diversity

A World increasingly shaped by Sustainable Development issues

A carbon constrained world A water constrained world Ecosystems biodiversity Sustainable production and consumption Societal infrastructure and services Development and poverty

Current Trends in Globalization

IMBALANCE
North-South imbalance - unfair rules in Trade and FDI  Trade: Despite liberalization, expansion did not occur uniformly  Barriers to market entry for certain products of poor countries  FDI highly concentrated in about 10 developing countries despite efforts by many to attract FDI Capital & goods move more freely than labour & knowledge Disparities in enterprise competitiveness and labour markets More than 2 billion people particularly in sub-Saharan Africa, the Middle East, and the former Soviet Union live in countries that are being left behind.

What can be done to correct the imbalance?

CORRECTING THE IMBALANCE

How to build a fair globalization to reduce poverty and inequality

Millennium Development Goals

Eradicate extreme poverty and hunger Achieve universal primary education Promote gender equality and empower women Reduce child mortality Improve maternal health Combat HIV/AIDS, malaria, and other diseases Ensure environmental sustainability Develop a global partnership for development

What is the role of business in Sustainable development?

Need for Intervention of Business for Sustainable Development If business has to be developed, the society needs
to be developed, business sector cannot flourish in any country, if the environment required by business is not conducive. Increasing social issues impacts the entire society in general and business in particular because to a large extent business is dependent on the society for its growth and prosperity.

Need for Intervention of Business for Sustainable Development

y Challenges in the 21st Century cannot be tackled by yesterday s rule of governance. y There is a need to develop new ways of thinking and new approaches to governance at every level of society. y It is an accepted fact, that, there are crucial linkages between economic growth, human development, social cohesion and environmental sustainability. y New set of relationships between the business firm and the surrounding society. y Stakeholders, who have long remained dormant, have stirred awake and are now proving themselves as major forces to be reckoned with.

Any Questions?