CORPORATE

SOCIAL
RESPONSIBILITY
Unit 4 (30%)
Topics to cover

■ Meaning, corporate philanthropy, ■ drivers of CSR,

■ CSR-an overlapping concept, ■ global reporting initiatives,
■ corporate sustainability reporting, ■ major codes on CSR initiatives in India
■ CSR through triple bottom line,
■ CSR and business ethics,
■ CSR and corporate governance,
■ environmental aspect of CSR,
■ CSR models,
Meaning of CSR
■ Corporate social responsibility (CSR) is a self-regulating business model that helps a company be
socially accountable—to itself, its stakeholders, and the public. By practicing corporate social
responsibility, also called corporate citizenship, companies can be conscious of the kind of impact
they are having on all aspects of society, including economic, social, and environmental. -
According to Investopedia

■ In these guidelines, ISO defines CSR as: “The responsibility of an organization for the impacts
of its decisions and activities on society and the environment, resulting in ethical behavior and
transparency which contributes to sustainable development, including the health and well-
being of society; takes into account the expectations of stakeholders; complies with current
laws and is consistent with international standards of behavior; and is integrated throughout
the organization and implemented in its relations.”
What Is Corporate Philanthropy?
■ Philanthropy is most often seen in the form of financial contributions, but it can also include time
and resources.
■ The concept behind philanthropy involves making an effort to drive social change.
■ It’s not only the charitable donations that can go toward any number of direct- giving scenarios,
such as disaster relief or feeding the homeless.
■ Philanthropy involves finding a long-term solution to homelessness, rather than delivering
temporary relief.
■ On the corporate level, philanthropy is practiced in many different ways.
■ Many corporations simply donate money to causes that are intended to bring about social change.
■ They may or may not place their brand on the cause and take credit for the resources offered. This
kind of giving often happens without any direct involvement outside of the funds offered.
■ Corporations may also be directly involved in philanthropy by partnering closely with a cause, or,
in some cases, by bringing the efforts in-house.
What is CSR?
■ Corporate social responsibility directly involves the corporation’s business model and its business
practices.
■ It goes a step further than philanthropy by directly involving the corporation in the causes and in
the community.
■ Corporate social responsibility is not mandatory and is not always practiced, but it should be a
major aspect of any large-scale corporation, as some negative side effects may stem from the
business practices.
■ Corporate Social Responsibility or CSR means that the corporation is working to mitigate
potentially negative effects on the community and also to solve for the effects it has socially,
environmentally and on general public health.
Why is corporate philanthropy different from CSR?

Corporate Philanthropy Corporate Social Responsibility

Corporate philanthropy is meant to be Corporate social responsibility, on the
driven by a desire to make a social other hand, is really integrated into the
change. The company just makes company’s activities and identity.
donations of property or money to have
an impact and improve their brand
image. But it isn’t involved in the
corporate main activities.
Corporate philanthropy focuses more CSR is a concept focusing on general
on support of required fields and impact of company’s actions on society,
publicly beneficial projects namely both on national and global
level
Corporate sustainability Reporting
■ According to the Global Reporting Initiative, a CSR report can be defined as: “A sustainability
report is a report published by a company or organization about the economic, environmental and
social impacts caused by its everyday activities. A sustainability report also presents the
organization’s values and governance model, and demonstrates the link between its strategy and
its commitment to a sustainable global economy.”

■ There’s is no one-size-fits-all approach to designing a sustainability report.

■ While some (medium-large) organizations choose to write a standardized report that becomes
along with certification, others opt instead for a free-style sustainability report.
 Benefits of Sustainability Reporting
■ Highlights inefficiencies and risk, and helps identify opportunities for supply chain, management, and business improvement. Societal
competition / reputational dividends
■ As sustainability reporting gains a higher profile with employees, investors, and stakeholders, quality reporting will be considered a
factor in whether to engage with a company or market.
■ It can increase employee retention, attract investors, and improve relationships with stakeholders.
■ As and when sustainability reporting becomes mandatory, it will be accompanied by fines and non-financial consequences for non-
compliance, such as barring an IPO at a specific stock market. Business opportunities and improvement
■ Improved employee attraction and retention
■ Attraction of investors
■ Stronger communication with governments, regulators, NGOs and local communities Raises corporate transparency
■ Improves trust from employees, stakeholders, and investors
■ Highlights management quality,
■ Increases brand value Balanced assessment by stakeholders
■ Gives a strong indication of how well a company is being managed Holistic assessment of emerging risks and opportunities
■ Increases business resilience
■ Highlights emerging markets and opportunities,
■ Mitigates social and environmental (non-financial) risk
■ Reassures investors that company is managing non-financial risk Promotes stakeholder engagement and communications
Barriers to Sustainability Reporting

■ Breadth of topics under sustainability can be overwhelming Resources: cost, time, expertise

■ New processes may feel uncomfortable, especially stakeholder engagement

■ Lack of management support or understanding

■ Fear of risking credibility and reputation, risking misinterpretation – Senior-level ownership is

important
■ Training and education of management and employees responsible for report Mandating
sustainability reporting places companies and stock exchanges at a competitive disadvantage
■ Companies risk credibility or misinterpretation – Stock exchanges risk discouraging new IPOs
Corporate Social Responsibility and the Triple
Bottom Line
Why to Use the Triple Bottom Line Method
■ By using the Triple Bottom Line method, your business can expand how it understands its
position in the current economy and its ability to survive in the future.
■ Corporate sustainability measures your ability to be in business indefinitely, based on your impact
on the environment, your relationship to your community, and contribution to your economy.
■ In reality, all three factors play a major role in determining if your business can stay in business
and generate a profit - no single bottom line can sustain a business alone.
Understanding the Triple Bottom Line
■ TBL theory says that if a company focuses on finances only and does not examine how it interacts
socially, then that company is not able to see the whole picture, so cannot account for the full cost
of doing business. It focuses on
■ People + Planet = Social + Environmental Responsibility
■ According to TBL theory, companies should be working simultaneously on these three bottom
lines:
Triple bottom line
Profit
People
Planet

3P’s by
John
Elkingt
on
■ "Profit" is the economic value created by the organization after deducting the cost of all
inputs, including the cost of the capital tied up. It therefore differs from traditional accounting
definitions of profit.
■ "People" (human capital) pertains to fair and beneficial business practices toward labour and
the community and region in which a corporation conducts its business.
■ "Planet" (natural capital) refers to sustainable environmental practices. A TBL company
endeavors to benefit the natural order as much as possible or at the least do no harm and
curtail environmental impact.

■ A triple bottom line company does not produce harmful or destructive products such as
weapons, toxic chemicals or batteries containing dangerous heavy metals for example.
■ Triple Bottom Line works on the assumption that the corporation is a member of the moral
community, arequires that any company weigh its actions on three independent scales:
economic sustainability, social sustainability, and environmental sustainability nd this gives
it social responsibilities. This theory focuses on sustainability, and requires that any company
weigh its actions on three independent scales: economic sustainability, social sustainability,
and environmental sustainability.
■ Triple-bottom-line theory says that companies should focus as much attention on social
and environmental issues as they do on financial issues.
Challenges of Applying the Triple Bottom Line (TBL)

1. Measuring the TBL

2. Mixing Inverse Elements
3. Repercussions of Ignoring the TBL Framework

(TedX video - https://www.youtube.com/watch?v=r2-M4ZhBJe0)

CSR & Ethics
CSR and Corporate Governance
■ Corporate Governance is concerned with holding the balance between
economic and social goals and between individual and communal goals.
The corporate governance framework is there to encourage the efficient
use of resources and equally to require accountability for the stewardship
of those resources. The aim is to align as nearly as possible the interests
of individuals, corporations and society
■ Corporate social responsibility is concerned with treating the
stakeholders of the firm ethically or in a socially responsible manner.
Stakeholders exist both within a firm and outside. Consequently,
behaving socially responsibly will increase the human development of
stakeholders both within and outside the corporation.
Relationship between Corporate Governance and
CSR
Environmental CSR
Environmental CSR aims to reduce any damaging effects on the environment from your business'
processes. Activities may focus on:
■ energy use
■ water use
■ waste management
■ recycling
■ emissions
■ eco-friendly office and business travel policies

Corporate social responsibility (CSR) is the process of integrating social and ecological values into a
business. Experts refer to this concept as the triple bottom line — people, planet and profit.
Various Environmental Aspects in
CSR
1. Improved Supply Chain Efficiency
2. Investment in Renewable Energy
3. Philanthropic Investments
4. Reducing Packaging Waste
5. Mindful Water Consumption
6. Rethinking Lighting
7. Environmentally-Conscious Construction
8. Waste Removal
9. Efficient Transportation
10. Innovative Technology
MODELS OF CSR
Friedman Model(1962-73)

■ A businessman should perform his duty well; he is performing a social as well as a moral duty. A
businessman has no other social responsibility to perform except to serve his shareholders &
stockholders.
Ackerman Model (1976)

The model has emphasized on the internal policy goals & their relation to the CSR.
Four stages involved in CSR.
■ Managers of the company get to know the most common social problem & then express
a willingness to take a particular project which will solve some social problems.
■ Intensive study of the problem by hiring experts & getting their suggestions to make it
operational.
■ Managers take up the project actively & work hard.
■ Evaluating of the project by addressing the issues.
Carroll Model(1991)
■ Philanthropic requirements:
Donation, gifts, helping the poor. It
ensure goodwill & social welfare.
■ Ethical responsibility: Follow moral
& ethical values to deal with all the
stakeholders.
■ Economic responsibility: Maximize
the shareholders value by paying
good return.
■ Legal responsibility: Abiding the
laws of the land.
Environmental Integrity & Community
Health Model
■ This model developed by Redman.
■ Many corporate in US adopted this model.
■ Corporate contribution towards environmental integrity & human health, there will be greater
expansion opportunities.
■ Healthy people can work more & earn more.
■ CSR is beneficial for the corporate sector.
■ CSR in a particular form is welcome.
Corporate Citizenship Model

To be a corporate citizen, a corporate firm has to satisfy four conditions:

■ Consistently satisfactory
■ Sustainable economic performance
■ Ethical actions
■ Behaviour.

A particular firm’s commitment to corporate citizenship requires the fulfillment of certain social
responsibility
Stockholders & Stakeholders Model
■ Productvists believe that the only
mission of a firm is to maximize the
profit.
■ Philanthropists who entertain the
stockholders. CSR is dominated by
moral obligations & not self-
interest.
■ Progressivists believes the
corporate behaviour basically
motivated by self interest& should
have ability to transform the society
for good.
■ Ethical Idealism concern with
sharing of corporate profits for
humanitarian activities.
Drivers of CSR OR Why the shift to corporate
social responsibility (CSR)?
There are numerous drivers in the marketplace that have encouraged larger companies to be
more socially responsible, as discussed in more detail below. But the key drivers for firms
becoming more socially responsible are:
1. Government legislation
2. Customers’ expectations of firms
3. Consumer lobby groups
4. The extent of costs involved
5. The type of industry in which they operate
6. The potential for competitive advantage
7. Top-level corporate culture
1. Government legislation
■ In many countries across certain industries, the government has imposed legislation that
requires companies to conform and behave in a certain manner.
■ In this case, however, the organizations impacted by this legislation are only complying
with various requirements because of regulation.
■ They may or may not be willing to incorporate social responsibility initiatives into their
day-to-day operations of an overall strategy.
■ Examples here would include legislation relating to environment, pollution, use of
workers and conditions, product disposal, materials used in production, and so on.
■ Therefore, this is not necessarily a driver of corporate social responsibility, but is
adopted and followed by companies as it is a requirement imposed upon them by
government.
2. Customers expectations of firms
■ Consumers are becoming more aware of social and environmental issues and the
consideration of the future is becoming slightly more important when consumers
consider purchase decisions.
■ As a result, some consumers will have an expectation that certain companies behave in
an appropriate manner, relative to society and the communities.
■ For instance, Disney has faced significant criticism in the past relating to the use of low
paid workers in developing countries to produce toys, games and novelties.
■ Likewise, some consumers have been critical of KFC because of the conditions that
their supply chickens are held in.
■ The changing expectations of consumers has resulted in firms being more responsive to
these issues and adopting a more corporate responsible outlook
3. Consumer Lobby groups
■ In conjunction to the previous driver of corporate social responsibility, the Internet and
social media has made it much easier for consumer lobby groups to form, to generate
attention and adverse media coverage, and therefore achieve its goals of change.
■ Typically, these consumer lobby groups will target large and well-known companies
within industries that adversely affect the environment were deemed to not provide a of
product value.
■ For example, Walmart is often the target of lobby groups because of their perceived
actions and impact on local communities and business centers. Another example is
McDonald’s, who are frequently criticized for the perceived impact that they may have
on obesity and people’s health.
■ Therefore, larger companies who are more likely to be the target of lobby groups,
become more likely to be willing to be engaged in corporate social responsibility
initiatives.
4. The extent of Costs involved
■ A shift to increase social responsibility may come at a reasonable cost to the organization.
■ For example, a manufacturer choosing to manufacture its products in more developed
countries or choosing to pay the production workers are much better salary – rather than
“exploiting" unskilled workers in developing countries – will significantly impact their unit
margin and overall profitability.
■ However, a bank can shift its customer bank statements from paper-based to electronic
(known as e-statements) on the basis that they are saving lots of paper – but this has the
impact of reducing costs for the organization.
■ Likewise, a major hotel chain can encourage its customers to reuse their bath towels each
day.
■ Again the hotel can claim an environmental benefit of reduced water and power usage, all
the while delivering themselves a reduction in costs and increase in profitability.
■ Therefore, where the social responsibility initiative represents a win-win scenario, an
organization is far more likely to implement it.
5. The type of industry in which
they operate
■ There are a number of more significant industries where there is greater pressure an
expectation on the firms to become responsible corporate citizens.
■ Following the Global Financial Crisis, there has been in increased expectation on banks
and other financial institutions to be more transparent and ethical in their business
operations.
■ Obviously manufacturing is another industry that has greater pressure on it –
particularly heavy manufacturing where there could be significant pollution, or large
companies deciding to manufacture in developing countries, or manufacturers who have
issues with product disposal (e.g. mobile phones and batteries and chemicals).
6. Potential for a competitive
advantage by image
■ There are some companies that are attempting to build their core image, or at least parts
of their brand association around their socially responsible behavior.
■ Some companies will highlight that they are ethical manufacturers – Etiko is one such
manufacturer, and bankmecu is a financial institution that rewards customers with
cheaper home loans if they have environmentally friendly houses.
■ In this case, these types of organizations are truly practicing the societal marketing
concept.
■ They are foregoing some profitability in order to contribute to society or to certain
communities.
7. Corporate Culture and top
management values
■ Corporate social responsibility is also a reflection of the overall corporate culture and of
top management values.
■ In other words, how important is making a contribution to society to the senior
management of the organization?
■ This will guide how embedded social responsibility is the overall strategy, or is it
simply an exercise in publicity
 GLOBAL
REPORTING
INITIATIVES (GRI)
Introduction:
■ The GRI Standards represent global best practice for reporting publicly on a range of
economic, environmental and social impacts.
■ Sustainability reporting based on the Standards provides information about an
organization’s positive or negative contributions to sustainable development.
■ The modular, interrelated GRI Standards are designed primarily to be used as a set, to
prepare a sustainability report focused on material topics.
■ The three universal Standards are used by every organization that prepares a
sustainability report.
■ An organization also chooses from the topic-specific Standards to report on its material
topics – economic, environmental or social.
Major codes on CSR initiatives in
India
■ The Ministry of Corporate Affairs (MCA), Government of India, released a set of guidelines in
2011 called the National Voluntary Guidelines on the Social, Environmental and Economic
Responsibilities of Business (NVGs).
■ This was expected to provide guidance to businesses on what constitutes responsible business
conduct.
■ In order to align the NVGs with the Sustainable Development Goals (SDGs) and the ‘Respect’
pillar of the United Nations Guiding Principles (UNGP) the process of revision of NVGs was
started in 2015.
■ After, revision and updation, the new principles are called the National Guidelines on Responsible
Business Conduct (NGRBC).
■ As with the NVGs, the NGRBC has been designed to assist businesses to perform above and
beyond the requirements of regulatory compliance.
Mandate & Rationale
■ The primary rationale for the update is to capture key national and international developments in
the sustainable development agenda and business responsibility field that have occurred since the
release of the NVGs in 2011. Some of the key drivers of the NGRBC are given below:

1. The UN Guiding Principles for Business and Human Rights (UNGPs)

2. UN Sustainable Development Goals (SDGs):

3. Paris Agreement on Climate Change (2015)

4. Core Conventions 138 and 182 on Child Labour by the International Labour Organization
(ILO)

5. Annual Business Responsibility Reports (ABRRs)

6. Companies’ Act 2013: Notified in the Gazette of India on 30 August 2013, Section 135 of
the Companies Act 2013
 Applicability
■ The NGRBC are designed to be used by all businesses, irrespective of their ownership, size, sector, structure
or location. It is expected that all businesses investing or operating in India, including foreign multinational
corporations (MNCs) will follow these guidelines.
■ Principle 1: Businesses should conduct and govern themselves with integrity, and in a manner that is ethical,
transparent, and accountable.
■ Principle 2: Businesses should provide goods and services in a manner that is sustainable and safe.
■ Principle 3: Businesses should respect and promote the well-being of all employees, including those in their
value chains.
■ Principle 4: Businesses should respect the interests of and be responsive to all its stakeholders. Principle 5:
Businesses should respect and promote human rights.
■ Principle 6: Businesses should respect and make efforts to protect and restore the environment.
■ Principle 7: Businesses, when engaging in influencing public and regulatory policy, should do so in a manner
that is responsible and transparent.
■ Principle 8: Businesses should promote inclusive growth and equitable development.
■ Principle 9: Businesses should engage with and provide value to their consumers in a responsible manner.