BBA VI Semester Business and Society

1. BBA VI Semester Business and Society POST RAJ POKHAREL M.Phil. (TU) 01/2010), Ph.D. in Progress

2. Unit II: Fundamentals of CSR 8 Hrs Concept of corporate social responsibility (CSR); Basic elements of social responsibility; Benefits of CSR to business and society; Historical evolution of CSR; Drivers of CSR; Theories of CSR - shareholder value theory and stakeholder theory; Concept of corporate citizenship and corporate social performance.

3. Concept of corporate social responsibility (CSR) Definition • What is Corporate Social Responsibility? Corporate Social Responsibility The responsibility of business towards the society

4. Concept of corporate social responsibility (CSR) • ‘Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large’. • “CSR is about how companies manage the business processes to produce an overall positive impact on society.” • “Achieving commercial success in ways that honour ethical values and respect people, communities, and the natural environment”

5. Concept of corporate social responsibility (CSR) Philip Kotler & Nancy Lee (2005) “a commitment to improve community well-being through discretionary business practices and contributions of corporate resources”. 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)

6. Basic elements of social responsibility Community Involvement:actions taken by companies to maximize the impacts of their spending, time products, services for the welfare of community Human Rights:developing workplace free from discriminations where creativity and learning can flourish Labour Security: Environmental Protection: Business Standard:corporate activist such as ethics, financial return and environment protections. Educations and Leadership Development:

7. Basic elements of social responsibility Internal Assessment. Before designing a CSR strategy it is often helpful to assess your current CSR activities, looking at the whole picture what CSR policies, programs and structures are already in place and where the “gaps” are. Put it in writing. Ensure that your company creates a separate CSR statement or embeds its CSR commitment within the company’s mission or values statement, code of conduct or other appropriate company policy. Embed CSR into the company planning and budget processes. The ultimate goal of creating a CSR management system is to ensure that CSR considerations are a part of all business decisions.

8. Basic elements of social responsibility Develop processes for employees to raise CSR issues and concerns to appropriate decision makers and advocates. An open environment is one of the easiest ways to solicit valuable feedback on CSR issues and problems. Formalize the board- and executive- level responsibility for CSR issues. It is virtually impossible to successfully implement CSR in your company without board, executive and senior management buy-in, support and accountability for CSR performance. Your ability to build senior-level vision and support will have a direct impact on the depth, breadth, longevity and overall effectiveness of your CSR work. Communicate CSR performance visibly and frequently to all employees. Whether through newsletters, annual reports, intranet communication, meetings, trainings or other informal mechanisms, make sure your employees know CSR is a company priority.

9. Basic elements of social responsibility Put CSR on the agenda of meetings at all levels of the company. This includes the board, executive and senior management, companywide meetings and departmental communications. Provide training for employees directly involved with CSR activities. This is an ongoing commitment since training needs will change as the company’s CSR issues change and evolve. Create CSR accountability at all employee levels. Build CSR responsibilities into the job descriptions and performance evaluations of employees at all levels. Measure and communicate your performance. Whether you choose to engage in an internally managed assessment of your CSR performance or contract out a formal external assessment of your CSR performance, find an honest and appropriate way to share the results with internal and external stakeholders .

10. Benefits of CSR to business and society • Strengthened brand positioning. • Enhanced corporate image. • Increased ability to attract, motivate, and retain employees. • Increased sales and market share. • Increased appeal to investors and financial analysts.

11. Historical evolution of CSR From the 1950’s to the present the concept of CSR has gained considerable acceptance and the meaning has been broadened to include additional components the evolution of CSR concept Divided into 4 phases: Corporate social stewardship, 1950s – 1960s Corporate social responsiveness, 1960s – 1970s Corporate/business ethics, 1980s – 1990s Corporate/global citizenship, 1990s – 2000s

13. Drivers of CSR • The shrinking role of government • Demands for greater disclosure • Growing investor pressure • Competitive markets

14. Theories of CSR - shareholder value theory and stakeholder theory • “Ownership Theory of the Firm” (also called property or finance theory) • The firm is seen as the property of its owners (shareholders) • Argues the owners’ interests are paramount and take precedence over the interests of others • The purpose of the firm is to maximize its long-term market value, that is, to make the most money it can for shareholders “Stakeholder Theory of the Firm” • Argues the corporation serves a broader purpose, to create value for society • Must make profit for owners to survive, however, creates other kinds of value too • Corporations have multiple obligations, all “stakeholder” groups must be taken into account

15. Corporate citizens Good corporate citizens strive to conduct all business dealings in an ethical manner, make a concerned effort to balance the needs of all stakeholders, while working to protect the environment. 1) Engages in fair and honest business practices in its relationship with stakeholders. 2) Sets high standards of behavior for all employees. 3) Exercises ethical oversight of the executive and board levels. 4) Strives to manage the company for the benefit of all stakeholders. 5) Initiates and engages in genuine dialogue with stakeholders. 6) Values and implements dialogue. 7) Fosters a reciprocal relationship between the corporation and community. 8) Invests in the communities in which corporation operates. 9) Respects the rights of consumers.

16. Corporate citizens 10) Offers quality products and services. 11) Provides information that is truthful and useful. 12) Provides a family-friendly work environment. 13) Engages in responsible human-resource management. 14) Provides an equitable reward and wage system for employees. 15) Engages in open and flexible communication with employees. 16) Invests in employee development. 17) Strives for a competitive return on investment. 18) Engages in fair trading practices with suppliers. 19) Demonstrates a commitment to the environment. 20) Demonstrates a commitment to sustainable development.

17. Concept of corporate social performance • Corporate Social Performance (CSP) is an increasingly important concept used to ensure the private sector has a positive impact on communities, employees and consumers. This is especially so in geographies where basic governance, the rule of law and accountability mechanisms are lacking or limited. • element of the corporate social performance model is the social responsibility categories, which include economic, legal, ethical, and philanthropic areas

18. A three-stage model of corporate social responsiveness STAGE Organizational Policy Learning Commitment High • Organizational • changes • Administrative learning • Specialized • learning Degree of responsiveness to a specific issue • Formulate policy • Identity problem Low Time (years)

19. CSR is also known as • Sustainable Development • Corporate Citizenship • Business Ethics • Sustainable Business Practices