Corporate Social Responsibility

Perspectives of Corporate Social Responsibility

There are three perspectives that prompt corporate social

responsibility. These are:
•Business perspective
•Eco-social perspective
•Rights-based perspective
WHY SOCIAL RESPONSIBILITY OF BUSINESS?

• Accountability to Society
In a democratic society any kind of enterprise exists for the
sake of society.
• Corporations’ Debt to Society
A corporation has to behave as a good citizen. The
corporation has to donate generously towards causes of public
welfare and must get itself directly involved in social welfare
programmes.
DEFINITIONS OF CSR

It is a set of obligations to pursue those policies, to make those

decisions, or to follow those lines of action which are desirable in
terms of the objectives and values of our society.
It is the overall relationship of the corporate with all of its
stakeholders.
Elements of social responsibility include investment in community
outreach, employee relations, creation and maintenance of
employment, environmental stewardship and financial performance.
DEFINITIONS OF CSR (Contd.)

The classical economic model: Adam Smith believed that public

interest was served best by individuals pursuing their own self-
interests.
The socio-economic model: Business is seen as one subsystem
among many in a highly interdependent society.
•It recognizes that companies have stakeholders other than their
stockholders.
•Business has an obligation to respond to the needs of all
stakeholders while pursuing its profit.
Today’s Corporate Social Responsibility

The corporate social responsibility of an organization today, is a set

of obligations with which it has to protect, enhance, and otherwise
work to the betterment of the society in which it functions.
The concept of corporate social performance includes a business
organisation’s
• Configuration of principles of social responsibility.
• Process of social responsiveness, and
• Policies, programmes, and observable outcomes as they relate to
the firm’s societal relationships.
Implementation of CSR

The systematic implementation of CSR means:

 The adoption of strong organizational values and norms depicting
behaviours that are appropriate towards a variety of stakeholders.
 The continuous generation of intelligence about stakeholder issues,
along with positive responses to these issues.
Theoretical Justification for CSR

Trusteeship Model adopts a realistic and descriptive perspective in

viewing the current governing situation of a publicly held
corporation, drawing from the continental European conception of the
corporation as a social institution with a corporate personality.
• Trusteeship, as applicable to the corporate
world, refers to the act of holding and
managing resources on behalf of the
stakeholders of the firm.
 Principles of Trusteeship

Principles of Trusteeship
– No recognition to right to individual property
– Public corporation is not the creation of private contract and thus
does not owned by any individual.
– Shareholders only own shares in a company.
– Shareholder do not have right to posses and use assets of the
company.
– They can not decision about the direction of the company.
– Cannot transfer assets of the company to others.
– If they are not satisfied then they exit.
 Principles of Trusteeship

– Mangers are the trustee of the corporation.

– Fiduciary duty of the trustee is to sustain the corporations assets,
skills of employees, expectation of customers and suppliers and
company’s reputation
– Resources must be held and utilised for the benefit of society.
– Management is the trustees of the stakeholders and must work
towards optimising stakeholder value, not merely maximising
shareholder value.
• theoretical Justification for`CSR

• Trusteeship Model adopts a realistic and descriptive perspective by viewing

corporation as  a social institution with a corporate personality.

• Managers are the trustees of the corporation.

• The duty of the trustees is to sustain the corporation’s assets, expectations

of customers & suppliers & company's reputation in the community.

• Mangers have to balance the conflicting interests of current & future

stakeholders & to develop company’s capacities in a long term perspective
rather than focus on short term gains
Theoretical Justification for CSR(Contd.)

Social entity theory:

The social entity conception of the corporation regards the company

not as a private association united by individual property rights, but as
a public association constituted through political and legal processes
and as a social entity for pursuing collective goals with public
objectives.
 Social entity theory
• Company is a public association constituted through
political and legal process.
• It is a social entity for pursuing collective goals with
public objectives.
• Corporation is a social institution for general
community needs.
• It is based on fundamental values and moral order of
the community.
• Corporation executives represent the interests of all
stakeholders.
Theoretical Justification for CSR(Contd.)

The Pluralistic Model:

This model supports the idea of multiple interests of

stakeholders, rather than shareholder interest alone. It argues
that the corporation should serve and accommodate wider
stakeholder interests in order to make the corporation more
efficient and more legitimate.
 The Pluralistic Model:

• According to this theory CG should not move

away from ownership rights.
• Rights should be concentrated towards
shareholders.
• Ownership rights can also be claimed by other
stakeholders particularly employees.
What are Corporations Expected to do?
Corporations need to erase the perception of the public that they
accumulate wealth for their own cause;
They should participate in social welfare projects, which will
improve their image in public esteem;
They also have to make quality products and stick to delivery
schedules while importing and exporting goods; and
They should create employment opportunities for the disadvantaged.
 MODELS FOR IMPLEMENTATION OF CSR
Four Models of CSR

Model Emphasis Proponent

Ethical Voluntary commitment by Mahatma Gandhi
companies to public welfare
Statist State ownership and legal Jawaharlal Nehru
requirements determine corporate
responsibilities

Liberal Corporate responsibilities limited Milton Friedman

to private owners (shareholders)
Stakeholder Companies respond to the needs of R. Edward Freeman
stakeholders – customers, creditors,
employees, communities, etc.
Advantages of Corporate Social Responsibility

There are several advantages to corporations when they exhibit a

sense of CSR and implement it, such as:
1.Improved financial performance
2.Enhanced brand image and reputation
3.Increased sales and customer loyalty
4.Increased ability to attract and retain employees
5.Reduced regulatory oversight
6.Innovation and learning
7.Risk management
8.Easier access to capital
9.Reduced operating costs
SCOPE OF CORPORATE SOCIAL RESPONSIBILITY

Three levels of social responsibility can be identified (evolution of areas of

social responsibility)
1.Market forces
2.Mandated actions
3.Voluntary actions
Understanding Social Responsibility of Business

1) Protecting and promoting stakeholders’ Interests.

a) To Consumers and Community
b) Social Responsibilities of Business Towards Employees
c) To Owners and Inter-Business Establishments
2) Promotion of Common Welfare Programmes
3) Philanthropy
Understanding Social Responsibility of Business (Contd.)

4) Good Corporate Governance

5) Render Social Service
6) Abiding by Rules and Regulations
7) Creation of Wealth
8) Ensure Ecological Balance
Understanding Social Responsibility of Business (Contd.)

9) Focus on the Human Element

10) Improve Productivity
11) Sponsor Social and Charitable Causes
12) Supplement State Efforts
Steps to Corporate Social Responsibility

The International Chamber of Commerce recommends the following

nine steps to attain Corporate Social Responsibility:
1. Confirm CEO/Board commitment to prioritize responsible
business conduct
2. State company purpose and agree on company values
3. Identify key stakeholders
4. Define business principles and policies
Steps to Corporate Social Responsibility(Contd.)

5. Establish implementation procedures and management systems

6. Benchmark against selected external codes and standards
7. Set up internal monitoring
8. Use language that everyone can understand
9. Set pragmatic and realistic objectives.
EXTERNAL STANDARDS ON CSR

• The Caux Round Table (CRT)

• Organization for Economic Cooperation and Development
(OECD)
• United Nations Global Compact
• Asian-Pacific Economic Cooperation (APEC) Business Code of
Conduct
• The Global Reporting Initiative (GRI)
EXTERNAL STANDARDS ON CSR

• AA1000 Accountability
• Social Accountability 8000
• Principles for Global Corporate Responsibility
• The Global Sullivan Principles
• The Keidanren Charter for Good Corporate Behaviour
INDIA ON THE ETHICAL/CSR MATRIX

Indian corporations consider business ethics, compliance with

regulatory requirements and consistency in value delivery as the three
most important factors that impact their social reputation.
INDIA ON THE ETHICAL/CSR MATRIX (Contd.)

Wider adoption of CSR in Indian companies will be enabled by:

• Provision of tax, duties and custom benefits.
• Inclusion of CSR performance of promoters as a parameter in
according fast track clearance to projects.
• Decreased government interventions.
• Depreciation benefits where asset investments are made.
• Development guidelines on estimation of socio-economic
impacts.
ETHICS AND SOCIAL RESPONSIBILITY OF BUSINESS

 Business Ethics in India Today

 Why So Much Corruption?
 The License Raj
 Black Money
 Future of Indian CSR

There is a clear need for

 Transition from the present compliance centric approach to the
new paradigm
 Creation of an enabling environment and an array of support
measures.
 Business schools teaching CSR to facilitate this process
 Industry associations to share experiences and reward best
practice
 Need to incorporate public policies into the Indian CSR.
 International agencies to share cross-country experience.