Corporate Social Responsibility Session 1: Introduction to CSR

CSR _ B.F.Tech Sem VI

By: Nupur Chopra Assistant Professor DFT,NIFT-Gnagar
Session 12
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Session One Objectives

Explain corporate social responsibility (CSR) Provide business examples of CSR Differentiate social responsibility and responsiveness Relate social performance to financial performance

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Sesssion One Outline

The CSR Concept Arguments For and Against Corporate Social Responsibility Corporate Social Responsiveness

Social Performance and Financial Performance Socially Conscious or Ethical Investing Summary

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Introduction to Session One

The focus in this chapter is on corporate social responsibility, which involves responsibilities outside of making a profit and the key questions for corporations include:
Does business have a social responsibility? If so, what is the extent and type of the responsibility?

Search the Web

One of the leading corporations promoting corporate responsibility is Proctor and Gamble: www.pg.com/about_pg/corporate/corp_citize nship_main.jhtml

Class Reference Material [email protected] "Knowledge is experience, everything else is information" ... Albert Einstein, Genius Physicist

Corporate Social Responsibility (CSR)

Preliminary definitions of CSR

The impact of a companys actions on society Requires a manager to consider his acts in terms of a whole social system, and holds him responsible for the effects of his acts anywhere in that system CSR analyses economic, legal, moral, social and physical aspects of environment. Baranard(1938)
Class Reference Material [email protected] "Knowledge is experience, everything else is information" ... Albert Einstein, Genius Physicist

Corporate Social Responsibility (CSR)

Preliminary definitions of CSR

The relationship between global corporations, governments of countries and individual citizens. CSR is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis. EU commission 2002.
Class Reference Material [email protected] "Knowledge is experience, everything else is information" ... Albert Einstein, Genius Physicist

Corporate Social Responsibility (CSR)

Corporate Citizenship Concepts Corporate social responsibility emphasizes obligation and accountability to society Corporate social responsiveness emphasizes action, activity Corporate social performance emphasizes outcomes, results
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CSR
Business Criticism/ Social Response Cycle

Factors in the Societal Environment Criticism of Business Increased concern for the Social Environment A Changed Social Contract

Business Assumption of Corporate Social Responsibility Social Responsiveness, Social Performance, Corporate Citizenship

A More Satisfied Society

Fewer Factors Leading to Business Criticism Increased Expectations Leading to More Criticism

Class Reference Material [email protected] "Knowledge is experience, everything else is information" ... Albert Einstein, Genius Physicist

Main Concepts of CSR

CSR (Carrol, 1979) Firms have responsibilities to societies including economic, legal, ethical and discretionary (or philanthropic). - See also DeGeorge (1999) on the Myth of the Amoral Firm Social Contract (Donaldson, 1982; Donaldson and Dunfee, 1999) There is a tacit social contract between the firm and society; the contract bestows certain rights in exchange for certain responsibilities.

Stakeholder Theory (Freeman, 1984) A stakeholder is any group or individual who can affect or is affected by the achievement of an organisations purpose. Argues that it is in the companys strategic interest to respect the interests of all its stakeholders.

Corporate Social Responsibility (CSR)

Historical Perspective Economic model the invisible hand of the marketplace protected societal interest Legal model laws protected societal interests

Class Reference Material [email protected] "Knowledge is experience, everything else is information" ... Albert Einstein, Genius Physicist

Key Issues in CSR

Labour rights: child labour forced labour right to organise safety and health Environmental conditions water & air emissions climate change Human rights cooperation with paramilitary forces complicity in extra-judicial killings Poverty Alleviation job creation public revenues skills and technology

Corporate Social Responsibility (CSR)

Historical Perspective

Modified the economic model

Philanthropy Community obligations Paternalism

Search the Web

Milton Hershey was a leading example of an individual who employed philanthropy, community obligation and paternalism To learn more about Milton Hershey and the company, school and town he built, log on to: http://www.miltonhershey.com/

Class Reference Material [email protected] "Knowledge is experience, everything else is information" ... Albert Einstein, Genius Physicist

Corporate Social Responsibility (CSR)

Historical Perspective

What was the main motivation?

To keep government at arms length

Search the Web

Businesses are interested in CSR and one leading business organization that companies can join is Business for Social Responsibility. To learn more about BSR, visit their web site at:: http://www.bsr.org/

Class Reference Material [email protected] "Knowledge is experience, everything else is information" ... Albert Einstein, Genius Physicist

Corporate Social Responsibility (CSR)

Historical Perspective From the 1950s to the present the concept of CSR has gained considerable acceptance and the meaning has been broadened to include additional components.

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Key Drivers: NGO Activism

Facilitators: IT (esp Internet), media, low cost travel Boycotts, brand damage, influence legislation, domino effect e.g. Shell in Nigeria, Exxon in Cameroon, Sinopec in Sudan, Apparel Industry (Nike, Gap), GMO, Wood Products, etc.

Corporate Social Responsibility (CSR)

Evolving Viewpoints

CSR considers the impact of the companys actions on society (Bauer) CSR requires decision makers to take actions that protect and improve the welfare of society as a whole along with their own interests (Davis and Blomstrom)
Class Reference Material [email protected] "Knowledge is experience, everything else is information" ... Albert Einstein, Genius Physicist

Corporate Social Responsibility (CSR)

Evolving Viewpoints

CSR mandates that the corporation has not only economic and legal obligations, but also certain responsibilities to society that extend beyond these obligations (McGuire)

Class Reference Material [email protected] "Knowledge is experience, everything else is information" ... Albert Einstein, Genius Physicist

Corporate Social Responsibility (CSR)

Evolving Viewpoints CSR relates primarily to achieving outcomes from organizational decisions concerning specific issues or problems, which by some normative standard have beneficial rather than adverse effects upon pertinent corporate stakeholders. The normative correctness of the products of corporate action have been the main focus of CSR (Epstein)
Class Reference Material [email protected] "Knowledge is experience, everything else is information" ... Albert Einstein, Genius Physicist

Corporate Social Responsibility (CSR)

Carrolls Four Part Definition CSR encompasses the economic, legal, ethical and discretionary (philanthropic) expectations that society has of organizations at a given point in time

Class Reference Material [email protected] "Knowledge is experience, everything else is information" ... Albert Einstein, Genius Physicist

Corporate Social Responsibility (CSR)

Carrolls Four Part Definition Understanding the Four Components
Responsibility Economic Legal Ethical Societal Examples Expectation Required Be profitable. Maximize sales, minimize costs, etc. Required Expected Obey laws and regulations. Do what is right, fair and just.

Discretionary Desired/ (Philanthropic) Expected

Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright 2003 by South-Western, a division of Thomson Learning. All rights reserved

Be a good corporate citizen.

Pyramid of CSR

Class Reference Material [email protected] "Knowledge is experience, everything else is information" ... Albert Einstein, Genius Physicist

Corporate Social Responsibility (CSR) CSR in Equation Form Is the Sum of:
Economic Responsibilities (Make a profit) Legal Responsibilities (Obey the law) Ethical Responsibilities (Be ethical) Philanthropic Responsibilities (Good corporate citizen)
Class Reference Material [email protected] "Knowledge is experience, everything else is information" ... Albert Einstein, Genius Physicist

Corporate Social Responsibility (CSR) Arguments Against

Restricts the free market goal of profit maximization Business is not equipped to handle social activities Dilutes the primary aim of business

Increase business power Limits the ability to compete in a global marketplace

Class Reference Material [email protected] "Knowledge is experience, everything else is information" ... Albert Einstein, Genius Physicist

Corporate Social Responsibility (CSR) Arguments For

Addresses social issues business caused and allows business to be part of the solution Protects business self-interest

Limits future government intervention Addresses issues by using business resources and expertise Addresses issues by being proactive

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Corporate Social Responsibility (CSR) Business Responsibilities in the 21st Century

Demonstrate a commitment to societys values and contribute to societys social, environmental, and economic goals through action. Insulate society from the negative impacts of company operations, products and services. Share benefits of company activities with key stakeholders as well as with shareholders. Demonstrate that the company can make more money by doing the right thing.

Class Reference Material [email protected] "Knowledge is experience, everything else is information" ... Albert Einstein, Genius Physicist

Corporate Citizenship
Corporate citizenship embraces all the facets of corporate social responsibility, responsiveness and performance

Class Reference Material [email protected] "Knowledge is experience, everything else is information" ... Albert Einstein, Genius Physicist

Corporate Citizenship

List down 10 corporate scandals which are also involved in CSR activities. Pick up one company and list down its CSR activities. Classify them as per the class discussion under * heads. Give your opinion for that classification.

Class Reference Material [email protected] "Knowledge is experience, everything else is information" ... Albert Einstein, Genius Physicist

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