What is CSR?

1. What is CSR? Corporations have an obligation to society as it impacts both society and environment. It could be that they generate & distribute wealth, which may not be in conformity with the norms of nature or social behaviour, or rules governing trade & commerce. Hence, to return to society and environment in lieu of what is being drawn, CSR has been instituted. This is considered to be a responsibility of every business. A social responsibility.

2. Contd. • CSR emphasizes social relevance. It is not philanthropy. It is the corporate effort to repay back or reach out to the society. • Corporate social action is not incompatible with profit making, provided the norms of transparency are introduced by the corporation & best practices are taken into account. • Corporate social accountability is being demanded by the society & accordingly worldwide legal & regulatory reforms are taking place.

3. Contd. • Socially responsible principles of investment are gaining world-wide recognition. Hence, investment plans should be made accordingly. • Ethical consumerism and ethical purchasing is growing at phenomenal pace. Ethics programs are now a part of HR policies of modern corporations --- (an issue of reputation) • Socially responsible business.

4. What is the focus of CSR? • To maintain ethics • To abide by rules • To keep employees happy and relaxed for better productivity, stability, profit, image • Today CSR is also having brand values – leading from demand for ethical transactions, transparency, RTI, empowerment, increased customer interest, growing labour competitions, etc. • Supports and encourages employees and other stakeholders, customers, partners, government, employees, etc. • CSR is a new market strategy to enhance business in a socially responsible manner

5. Different Modules of CSR • Partnership with civil society in making (public) policy changes (NGOs, CBOs). • Balancing corporate power with corporate responsibility. • Focusing on social problems. • True CSR is when the company also profits from its good works. • Triple Bottom Line (TBL) of business – economy, environment & society. • Attributes to Risk Management • Employees’ welfare, personal values, consumers’ long-term interest in the economic & social welfare of the wider community.

6. Different models of CSR • Business ethics – examines moral controversies • Articulation & integration of core values, stakeholder interactions, social audit & forms of social-performance measurements & reporting. • Altruistic CSR or humanitarian CSR --- strategic philanthropy.

7. What are the benefits of having CSR? • Helps to face competition • Differentiates from others • Brand name (benefits) …. • Promotes visibility • Driver of innovation • A new way to get into fresh marketing • If properly implemented can reduce cost and improve profitability • Human resource development • Technology access

8. Contd. • Customer satisfaction • Enhanced company reputation • Sensitive and creative industrial restructuring • “Corporates don’t just make money, they create wealth” so that the quality of life improves. That also makes happy workers (Tata’s, Infosys, Microsoft, Rockefeller Foundation, Amul, etc.) • Long-term sustainability is established strongly when CSR is practiced & the community is involved in the process of development & management. Such companies acquire greater credibility & promote corporate citizenship.

9. Contd. • Expected outcomes of social responsibility are: improved financial performance, increased customer loyalty, higher ability to attract & retain employees, reduced regularity oversight, workforce diversity, product safety & decreased liability, employee volunteer programs & greater use of renewable resources. • Contributing to sustainable economic development.

10. What are the costs of not having CSR? • Lose competitiveness • Unable to sustain employees • Loses the opportunity to create a “brand” • Unable to create new opportunities

11. Principles of CSR • Contribution to Society • Fairness and Honesty • Cooperation and team spirit • Untiring effort for improvement • Courtesy and humility • Adaptability • Gratitude • Business sensitive

12. Generations of CSR • First generation showed that companies can be responsible in ways that do not detract from commercial success. • Second generation focused on CSR as an integral part of long-term business strategy. • Third generation is expected to make significant contribution to address issues such as poverty, exclusion & environmental degradation.

13. Operational modules of CSR competency-driven • competency-driven: when the company reaches out to the society by depending on its core competencies. Adds to evolving higher efficiency stds. – corporate outreach. Eg. Sugar cooperatives in Kolhapur (Maharashtra) have helped to construct dams to improve irrigation for farmers supplying cane to them – have in the process become more aware of production processes & technologies.

14. Contd. community-driven • Community-driven CSR: invest in social welfare – TELCO & Tata Chemicals have created recreational facilities around artificial lakes that are filled with water purified from the industrial effluents. consumer-driven • Consumer pressure makes a difference in sensitizing companies to the needs of stakeholders. In addition, it raises consumer standards & expectations.

15. How to decide what CSR to engage and how much is enough? • The question is how to devise a system of CSR that is related to business, so that both can be sustained in synergy. • It is different from corporate philanthropy, which can be allowed only after profits are properly secured. • The firm has to make profit in order to survive. Without profit there is no firm & no corporate social activity. Neither does CSR come after profit. • In order to make CSR sustainable, it is necessary to develop an ethical perspective in corporate matters.

16. Contd. • To make CSR sustainable, it is necessary to keep business interests of the company uppermost in mind. • CSR should not be erratic. It is an aspect of everyday business & executives would do well to see it that way. • The mantra to sustainable CSR is related to fundamental principles of business ethics which force one to reach out in terms of business interests. • Sustainable CSR is truly stakeholder oriented & not just indiscriminate philanthropy.

17. Definition of CSR • Corporate social responsibility (CSR), also known as corporate responsibility, corporate citizenship, responsible business, sustainable responsible business (SRB), or corporate social performance, is a form of corporateself-regulation integrated into a business model. Ideally, CSR policy would function as a built-in, self-regulating mechanism whereby business would monitor and ensure their adherence to law, ethical standards, and international norms. Business would embrace responsibility for the impact of their activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere.

18. Contd. • Furthermore, business should proactively promote public interest by encouraging community growth and development, and voluntarily eliminate practices that harm the public sphere, regardless of legality. Essentially, CSR is the deliberate inclusion of public interest into corporate decision-making, and the honoring of a triple bottom line: People, Planet, Profit.

19. CSR Reporting • Sustainability reporting is highly dynamic and a competitive area in business thinking. • Some include CSR reporting as part of their financial reporting. At the international level Japan and UK publish stand-alone CR reports, mostly on environment, employees and social & community. In some countries it is part of the Operating and Financial Review • Many companies have come out with their own codes of Business Conduct and Ethics

20. CSR Reporting • Looks at business threats and opportunities afresh and with long-term perspectives • In India CSR reporting is not mandatory; examples Tata Steel, Dr. Reddy’s Laboratory, Ford India, etc. • Many large companies have their own code of business ethics • There is no clear legislative framework • Trends are: standardization, consolidation, regulation & integration