A REPORT ON CONTEMPORARY ISSUES IN MANAGEMENT ON

CORPORATE SOCIAL RESPONSLIBITY Need for today Submitted in partial fulfillment for the Award of degree of Master of Business Administration 2009-2011

Maharaja College of Management (Affliated to Rajasthan Technical University, Kota)

Submitted By:Neha Mandawat MBA- 2nd Semester

Submitted to:Ms. Shilpa Mehta Lecturer (H.R Dept.) 1

DECLARATION

I here by declare that the work incorporated in the present report entitled: CORPORATE SOCIAL RESPONSLIBITY is my own work and is original in nature. This work (in part or in full) has not been submitted to any university for the award of a degree or diploma.

Neha Mandawat MBA 2nd Semester

ACKNOWLEDGEMENT

I extend my sincere thanks to Prof (Dr). Harvinder Soni, Director, Maharaja College Of Management, for guiding me right from the inception till the successful completion of the report.

I also express my thanks to my Internal Guide, Ms. Shilpa Mehta, lecturer, Human Resource Deptt, for extending her valuable guidance, support for literature, critical reviews the report and above all the moral support she had provided to me with all stages of this report.

I would also like to thank the supporting staff of Maharaja College of Management, for their help and cooperation throughout our report.

Neha Mandawat

Date 24.04.2010 Place - Udaipur

Index of content

S. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

Name of the topic Introduction of CSR CRS Vocabulary CSR Corporate Brands Relevance of CSR Asia Pacific Perspective World Economic Forum & CSR CSR Imitativeness & Green Measures CSR & Economic Crisis Importance of CSR . Conclusion Bibliography

Page No. 5. 12. 19. 22. 25 27 29. 39. 43. 53. 54.

INTRODUCTION

Meaning:

The term CSR came in to common use in the early 1970s, after many Multinational corporations formed, although it was seldom abbreviated. The term Stakeholder, meaning those on whom an organization's activities have an impact, was used to describe corporate owners beyond shareholders.

The European Commission's definition of 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."

Corporate Social Responsibility (CSR)

Starting point Why do businesses exist? What is the purpose of a business, or, in the bigger picture, any economic system? The derivation of the word company? Two Latin words, cum and panis, which mean breaking bread together. How does this origin translate in todays business environment? What are or should be the goals of the modern corporation? Opinions differ and cover a wide 5

spectrum: Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible. Milton Friedman, 19622 I think many people assume, wrongly, that a company exists simply to make money. While this is an important result of a companys existence, we have to go deeper and find the real reasons for our being. As we investigate this, we inevitably come to the conclusion that a group of people get together and exist as an institution that we call a company so that they are able to accomplish something collectively that they could not accomplish separately they make a contribution to society, a phrase which sounds trite but is fundamental. Dave Packard3 Co-founder of Hewlett Packard Company in 1939 Corporate Social Responsibility (CSR) represents an attempt to address these questions. What is CSR? The entirety of CSR can be discerned from the three words contained within its title phrase: corporate, social, and responsibility. Therefore, in broad terms, CSR covers the responsibilities corporations (or other for-profit organizations) have to the societies within which they are based and operate. More specifically, CSR involves a business identifying its stakeholder groups and incorporating their needs and values within the strategic and day-to-day decision-making process. Therefore, a business society within which it operates, which defines the number of stakeholders to which the organization has a responsibility, may be broad or narrow depending on the industry in which the firm operates and its perspective.

Other definitions of CSR: The notion of companies looking beyond profits to their role in society is generally termed corporate social responsibility (CSR).It refers to a company linking itself with ethical values, transparency, employee relations, compliance with legal requirements and overall respect for the communities in which they operate. It goes beyond the occasional community service action, however, as CSR is a corporate philosophy that drives strategic decision-making, partner selection, hiring practices and, ultimately, brand development. The social responsibility of business encompasses the economic, legal, ethical, and discretionary expectations that society has of organizations at a given point in time. CSR is about businesses and other organizations going beyond the legal obligations to manage the impact they have on the environment and society. In particular, this could include how organizations interact with their employees, suppliers, customers and the communities in which they operate, as well as the extent they attempt to protect the environment.

CSR is a means of analyzing the inter-dependent relationships that exist between businesses and economic systems, and the communities within which they are based. CSR is a means of discussing the extent of any obligations a business has to its immediate society; a way of proposing policy ideas on how those obligations can be met; as well as a tool by which the benefits to a business for meeting those obligations can be identified.

CSR covers all aspects of an organizations operations and can be divided into the subsections.

An essential component of our corporate social responsibility is to care for the Community. We endeavor to make a positive contribution to the underprivileged communities by supporting a wide range of socio-economic, educational and health initiatives. Many of the community projects and programs are driven by active participation from our employees. Our commitment to address important societal needs extends throughout our philanthropic outreach programs driven by the Zensar Foundation. Established for the purpose of improving, guiding and inspiring the lives of the underprivileged, the Foundation facilitates programs and gives direct assistance and resources to individuals, families and other charitable organizations. Nurturing experiences and personal opportunities are also provided for those in the community who have little or no access to any assistance. Established for the purpose of improving, guiding and inspiring the lives of the underprivileged, the Foundation facilitates programs and gives direct assistance and resources to individuals, families and other charitable organizations. Nurturing experiences and personal opportunities are also provided for those in the community who have little or no access to any assistance.

Indian

companies

are

now

expected

to

discharge

their

stakeholder

responsibilities and societal obligations, along with their shareholder-wealth maximisation goal. Nearly all leading corporate in India are involved in corporate social responsibility (CSR) programmes in areas like education, health, livelihood creation, skill development, and empowerment of weaker sections of the society. Notable 9

efforts have come from the Tata Group, Infosys, Bharti Enterprises, Coca Cola India, PepsiCo and ITC Welcome group, among others. In fact, four Indians, including Sunil Mittal, Chairman and Managing Director of the Bharti Group, non -resident Indian (NRI) businessman Anil Agarwal, Shiv Nadar, HCL Technologies Chairman and non government organization (NGO) activist Rohini Nilekani were featured in the Forbes list of '48 Heroes of Philanthropy'. India has been named among the top ten Asian countries paying increasing importance towards corporate social responsibility (CSR) disclosure norms. India was ranked fourth in the list, according to social enterprise CSR Asia's Asian Sustainability Ranking (ASR). Corporate India has spread its CSR activities across 20 states and Union territories, with Maharashtra gaining the most from them. About 36 per cent of the CSR activities are concentrated in the state, followed by about 12 per cent in Gujarat, 10 per cent in Delhi and 9 per cent in Tamil Nadu. ASSOC Hams 'Eco Pulse Study' on CSR for 2009-10, released in June 2009, says some 300 corporate houses, on an aggregate, have identified 26 different themes for their CSR initiatives. Of these 26 schemes, community welfare tops the list, followed by education, the environment, health, as well as rural development. In another study undertaken by automotive research company, TNS Automotive, India has been ranked second in global corporate social responsibility. The study was based on a public goodwill index and India received 119 points in the index against a global average of 100. Thailand was at the top slot with 124 points.

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The Tamil Nadu government has presented its Corporate Social Responsibility Awards, to corporate companies including Oil and Natural Gas Corporation (ONGC), Chennai Petroleum Corporation Limited (CPCL), Steel Authority of India (SAIL) and Orchid Chemicals and Pharmaceuticals, for their CSR activities in different spheres, including agriculture, education, women's empowerment and new and renewable energy. Although corporate India is involved in CSR activities, the central government is working on a framework for quantifying the CSR initiatives of companies to promote them further. According to Minister for Corporate Affairs, Mr Salman Khurshid, one of the ways to attract companies towards CSR work is to develop a system of CSR credits, similar to the system of carbon credits which are given to companies for green initiatives. The government is also finalizing plans to ensure that public sector companies also participate actively in CSR initiatives. The Department of Public Enterprises (DPE) is in the final stage of preparing guidelines for central public sector enterprises to take up important corporate social responsibility projects to be funded by 2-5 per cent of the company's net profits.

Corporate Social Responsibility (CSR) is becoming an increasingly important activity to businesses nationally and internationally. As globalisation accelerates and large corporations serve as global providers, these corporations have progressively recognised the benefits of providing CSR programs in their various locations. CSR activities are now being undertaken throughout the globe.

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The term is often used interchangeably for other terms such as Corporate Citizenship and is also linked to the concept of Triple Bottom Line Reporting (TBL), which is used as a framework for measuring an organisations performance against economic, social and environmental parameters. The rationale for CSR has been articulated in a number of ways. In essence it is about building sustainable businesses, which need healthy economies, markets and communities. The key drivers for CSR are: ?? Enlightened self-interest - creating a synergy of ethics, a cohesive society and a sustainable global economy where markets, labour and communities are able to function well together. ?? Social investment - contributing to physical infrastructure and social capital is increasingly seen as a necessary part of doing business. ?? Transparency and trust - business has low ratings of trust in public perception. There is increasing expectation that companies will be more open, more accountable and be prepared to report publicly on their performance in social and environmental arenas. ?? Increased public expectations of business - globally companies are expected to do more than merely provide jobs and contribute to the economy through taxes and employment.

CSR vocabulary
CSR is also referred to as: corporate or business responsibility corporate or business citizenship community relations 12

 social responsibility. Closely related concepts that are all contained with the total CSR perspective are: social and environmental auditing stakeholder theory business ethics environmental sustainability strategic philanthropy (cause-related marketing) corporate governance Consistent definitions, labels and vocabulary have yet to be solidly established in the field. What CSR is not It is important to stress that the study of CSR focuses largely on the margins of a business discretionary actions and obligations. This is rather than any legal or regulatory obligations individuals and corporations face in the day-to-day management of operations within any specific industry. To break these rules and regulations is to break the law. Such infractions are simply actions that are illegal. Of course, adhering to the law is an important component of an ethical organizations ethos, but it is not the primary concern of CSR, which primarily deals with decisions incorporating discretionary actions. CSR is a business strategy and, therefore, represents actions that need to be positively selected, or avoided. CSR advocates believe there is strategic advantage to a company that makes these choices. It is also important that CSR focuses on areas of immediate relevance to an organizations sphere of operations. CSR is not about pursuing the CEOs pet interest and saving the whales. CSR should be distinguished from concepts such as strategic philosophy and cause-related marketing, which are valid business strategies and form an element of an organizations CSR policy, but are not a central component of CSR. CSR is a much more holistic approach to business, which is designed to enhance corporate success because of its relevance, rather than represent something unconnected to an organizations core business. The origins of CSR

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CSR as an issue has been around since commerce began: The history of CSR is almost as long as that of companies. Concerns about the excesses of the East India Company were commonly expressed in the seventeenth century. There has been a tradition of benevolent capitalism in the UK for over 150 years. Quakers, such as Barclays and Cadbury, as well as socialists, such as Engels and Morris, experimented with socially responsible and values-based forms of business. And Victorian philanthropy could be said to be responsible for considerable portions of the urban landscape of older town centres today. In terms of activism aimed at companies perceived as acting against the general interest: The first large-scale consumer boycott? England in the 1790s over slave-harvested sugar. (It succeeded in forcing the importer to switch to free-labor sources.).In 1612, English jurist Edward Coke complained that corporations cannot commit treason, nor be outlawed or excommunicated, for they have no souls. Arguments underpinning CSR Arguments offered in favor of CSR can be broadly split into two campsmoral and economic. 1. A moral argument for CSR While recognizing that profits are necessary for any business entity to exist, all groups in society should strive to add value and make life better. Businesses rely on the society within which they operate and could not exist or prosper in isolation. They need the infrastructure that society provides, its source of employees, not to mention its consumer base. CSR is recognition of that inter-dependence and a means of delivering on that obligation, to the mutual benefit of businesses and the societies within which they are based:

CSR broadly represents the relationship between a company and the widern community within which the company operates. It is recognition on the part of 14

the business that for profit entitiesdo not exist in a vacuum, and that a large part of any success they enjoy is as much due to the context in which they operate as factors internal to the company alone. Charles Handy makes a convincing and logical argument for the purpose of a business laying beyond the goals of maximizing profit and satisfying shareholders above all other stakeholders in an organization:

The purpose of a business.is not to make a profit, full stop. It is to make a profit so that the business can do something more or better. That something becomes the real justification for the business.It is a moral issue. To mistake the means for the end is to be turned in on oneself, which Saint Augustine called one of the greatest sins.It is salutary to ask about any organization, If it did not exist, would we invent it? Only if it could do something better or more useful than anyone else would have to be the answer, and profit would be the means to that larger end. Advocates of CSR believe that, in general, the goal of any economic system should be to further the general social welfare. In advanced economies, the purpose of business should extend beyond the maximization of efficiency and profit. Increasingly, society expects businesses to have an obligation to the society in which they are located, to the people they employ, and their customers, beyond their traditional bottom-line and narrow shareholder concerns. At a minimum, businesses operating in a community benefit from the infrastructure of that community (tangible, practical elements such as the roads, other transport infrastructure, the police, firefighters, etc) as well as more intangible benefits, such as a safe or clean environment. But, in most cases, businesses also draw their most important resource, its employees, largely from the local community. Any business will be more successful if it employs a well-educated workforce that can attend good hospitals if they become sick, and who have grown up in a positive environment. This is not to mention consumers, also often members of the local community, without whom no business could survive. CSR advocates point out that no organization exists in isolation. They

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believe that businesses, without exception, have an obligation to contribute as well as draw from the community, on which they rely so heavily. 2. An economic argument for CSR An economic argument in favor of CSR can also be made. It is an argument of economic selfinterest that there are very real economic benefits to businesses pursuing a CSR strategyand is designed to persuade those business managers who are not persuaded by the moral case. Proponents of this argument believe that CSR represents an holistic approach to business. Therefore, an effective CSR policy will infuse all aspects of operations. They believe the actions corporations take today to incorporate CSR throughout the organization represent a real point of differentiation and competitive market advantage on which future success can hinge: CSR is an argument of economic self-interest for a business. In todays brand-driven markets, CSR is a means of matching corporate operations with stakeholder values and demands, at a time when these parameters can change rapidly. One example is a companys customers: CSR adds value because it allows companies to better reflect the values of this important constituent base that the company aims to serve.

CSR covers all aspects of a business day-to-day operations. Everything an organization does in some way interacts with one or more of its stakeholder groups, and companies today need to build a watertight brand with respect to all stakeholders. Whether as an employer, producer, buyer, supplier, or investment, the attractiveness and success of a company today is directly linked to the strength of its brand. CSR affects all aspects of all operations within a corporation because of the need to consider the needs of all constituent groups. Each area builds on all the others to create a composite of the corporation (its brand) in the eyes of all stakeholder groups. Example CSR issues :- Examples of issues within the economic sphere that contain a CSR component range from

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corporate governance to patriotism; from the issue of fair trade to diversity in the workplace. All contain, in some form or another, issues connected to the perception of the company, and therefore its brand, in the eyes of one or more of its stakeholder groups: Corporate governance Transparency is the key to encouraging trust in the managers selected to run a company on behalf of the shareholders. It is also vital to maintaining confidence within other stakeholder groups and the general public. The issues of accurate financial statements, executive compensation, and independent oversight, have become particularly sensitive and important for companies to get right. Patriotism An issue such as patriotism is by definition subjective, but has risen in importance in the U.S. following the September 11, 2001 terrorist attacks. A good example of an issue that falls into this category is the trend today of companies attempting to avoid paying corporation tax, some even going to the lengths of incorporating off-shore (particularly Bermuda), even though company headquarters and the majority of workers are based in the U.S: According to a recent Harvard University study, U.S. companies avoided paying tax on nearly $300 billion in income in 1998. In 1940, companies and individuals each paid about half the federal income tax collected; now the companies pay 13.7% and individuals 86.3% Fair trade 10 Nanette Byrnes & Louis Lavelle, Special Report: The Corporate Tax Game How blue-chip companies are paying less and less of the nations tax bill, BusinessWeek, March 31, 2003, pp79-87.

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Companies in particular industries have felt pressured to pay a fair price for the goods they purchase, over and above the market-driven price, directly to the producer. This is particularly the case in many food industries, where world market prices may well have decreased over time, while costs have either remained the same or increased: Today, with suppliers at small farmer cooperatives in Peru, Mexico, and Sumatra, Green Mountain pays Fair Trade prices for coffee beans -- not the market price of 24 to 50 cents per pound, but a minimum of $1.26 per pound for conventional coffee and $1.41 for organically grown. In 2002, these Fair Trade purchases represented 8 percent of sales. Green Mountain also has a farm direct program that cuts out middlemen to deliver higher prices to farmers. Roughly a quarter of its coffee purchases are farm direct. Diversity The 2000 Census data has revealed that the ethnic make-up of the U.S. is changing rapidly. Organizations need to adapt their traditional structures and mind-sets, which prevent companies from marketing products effectively to significant segments within the market: Latinos are now the largest minority in the U.S., making up 13 percent of the overall U.S. populationa 58 percent increase from 1990. As black, Asian, and Pacific Islander populations also experience strong growth rates, whites are steadily heading toward minority status. Already in California, New Mexico, Hawaii and the District of Columbia, the majority of residents are nonwhite. Thats also true in 48 of the nations 100 largest cities.12 Literally, CSR (the extent to which an organizations decisions reflect the values and needs of consumers and other stakeholders) can creep into every decision that a company makes. One sub-area of the issue of diversity involves the equal treatment of men and women. There are plenty of examples of both good and bad practice: Bad The US Masters, women, and the Ku Klux Klan. In response to Augusta National Golf Clubs failure to invite women to become members of the club, the National Council of Womens Organizations (NCWO) launched a campaign aimed at

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corporations supporting the 2003 U.S. Masters golf tournament and demanding they withdraw their support, with some success. As the club dug-in its heels, the situation got worse with the Ku Klux Klan announcing it would protest at the Masters tournament in support of the Golf Clubs right to exclude female members. A PR nightmare!! Whatever the merits of the case, the Club could have avoided a lot of negative press coverage by adopting a more enlightened stance on this issue at an early stage.

CSR & corporate brands

Brands today are one of the key focal points of corporate success. Companies try to establish popular brands in consumer minds because it increases leverage, which is directly reflected in sales and revenue. All aspects of a companys operations today feed into helping build the corporate brand. Crucial is how a brand is perceived by all stakeholders. Three benefits in particular indicate the positive value for a company in striving to remain in tune with the community within which it is based by implementing a strong CSR policy: Positive marketing/brand-building BP BP, with a $200 million re-branding exercise, has effectively re-positioned itself as the most environmentally sound and socially responsible of the extraction companies. The company stands in stark contrast today with Exxon Mobil that faces on-going NGO (Non-Governmental Organization) attacks, consumer boycotts, and activist-led litigation because of its decision to fight the environmental movement, and its failure to recognize the wider importance of CSR as a corporate strategy. 19

 Brand insurance NIKE NIKE has emerged as one of the most progressive global corporations in terms of CSR because it has learned from its past mistakes and attacks by NGOs. As one of the first corporations to have a Vice-President for Corporate Responsibility and to publish an annual CSR Report, the company has done a lot to mitigate public opinion, establish its brand as representative of a much more committed corporate citizen, and insure itself against any repeat of the consumer boycotts it faced in the mid-1990s. Crisis management Johnson & Johnson Johnson & Johnsons transparent handling of the crisis facing its Tylenol brand in 1982 is widely heralded as the model case in the area of crisis management. J&J went far and above what had previously been expected of corporations in such situations, instigating a $100 million re-call of 31 million bottles of the drug following a suspected poisoning/product tampering incident. In acting in the way it did , J&J saved the Tylenol brand, enabling it to remain a strong revenue earner for the company to this day. Given the large amount of time, money and effort companies invest in their brands, a good CSR policy is an effective means of protecting that investment and maximizing its impact. Why is CSR important? CSR is an important business strategy because, wherever possible, consumers want to buy products from companies they trust; suppliers want to form business partnerships with companies they can rely on; employees want to work for companies they respect; and NGOs, increasingly, want to work together with companies seeking feasible solutions and innovations in areas of common concern. Satisfying each of these stakeholder groups allows companies to

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maximize their commitment to another important stakeholder grouptheir investors, who benefit most when the needs of these other stakeholder groups are being met: I honestly believe that the winning companies of this century will be those who prove with their actions that they can be profitable and increase social valuecompanies that both do well and do good.Increasingly, shareowners, customers, partners and employees are going to vote with their feetrewarding those companies that fuel social change through business. This is simply the new reality of businessone that we should and must embrace.

The businesses most likely to succeed in the globalizing world will be those best able to combine the often conflicting interests of its multiple stakeholders, and incorporate a wider spectrum of opinions and values within the decision-making process and objectives of the organization. Lifestyle brand firms, in particular, need to live the ideals they convey to their consumers: The 21st century will be the century of the social sector organization. The more economy, money, and information become global, the more community will matter. CSR is increasingly crucial to maintaining success in businessby providing a corporate strategy around which the company can rally, but also by giving meaning and direction to dayto- day operations.

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Why is CSR relevant today? Need of today

CSR as a strategy is becoming increasingly important for businesses today because of three identifiable trends: Changing social expectations Consumers and society in general expect more from the companies whose products they buy. This sense has increased in the light of recent corporate scandals, which reduced public trust of corporations, and reduced public confidence in the ability of regulatory bodies and organizations to control corporate excess. Increasing affluence This is true within developed nations, but also in comparison to developing nations. Affluent consumers can afford to pick and choose the products they buy. A society in need of work and inward investment is less likely to enforce strict regulations and penalize organizations that might take their business and money elsewhere. Globalization The growing influence of the media sees any mistakes by companies brought immediately to the attention of the public. In addition, the Internet fuels communication among like-minded groups and consumersempowering them to spread their message, while giving them the means to co-ordinate collective action (i.e. a product boycott). These three trends combine with the growing importance of brands and brand value to corporate success (particularly lifestyle brands) to produce a shift in the relationship between corporation and consumer, in particular, and between corporation and all stakeholder groups, in general. The

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result of this mix is that consumers today are better informed and feel more empowered to put their beliefs into action. From the corporate point of view, the market parameters within which companies must operate are increasingly being shaped by bottom-up, grassroots campaigns. NGOs and consumer activists are feeding, and often driving, this changing relationship between consumer and company. CSR is particularly important within a globalizing world because of the way brands are builton perceptions, ideals and concepts that usually appeal to higher values. CSR is a means of matching corporate operations with stakeholder values and demands, at a time when these values and demands are constantly evolving. CSR can therefore best be described as a total approach to business. CSR creeps into all aspects of operations. Like quality, it is something that you know when you see it. It is something that businesses today should be genuinely and wholeheartedly committed to. The dangers of ignoring CSR are too dangerous when it is remembered how important brands are to overall company value; how difficult it is to build brand strength; yet how easy it can be to lose brand dominance. CSR is, therefore, also something that a company should try and get right in implementation. Implementing CSR: Key steps CSR is about common sense policies that represent a means of integrating a complete social perspective into all aspects of operations. The goal is to maximize true value and benefit for an organization, while protecting the huge investments corporations make today in their brands. CSR asks companies to ensure their business operations are clean and equitable, and contribute positively to the society in which they are based. Otherwise, they leave themselves open to too much danger from a potential consumer backlash. CSR is good business sense, and a total approach to doing business, in a globalizing world where companies are increasingly relying on brand strength (particularly global lifestyle brands) to add value and product differentiation, and where NGO-driven consumer activism is increasing. Many

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believe the issue of how corporations integrate CSR into everyday operations and longterm strategic planning will define the business marketplace in the near future. It will become a key point of brand differentiation, both in terms of corporate entities and the products that carry their brands. Key steps on the road to integrating CSR within all aspects of operations include: Ensure the commitment of top management, and particularly the CEO, is communicated throughout the organization Appoint a CSR position at the strategic decision-making level to manage the development of policy and its implementation Develop relationships with all stakeholder groups and interests (particular relevant NGOs) Incorporate a Social or CSR Audit within the companys annual report Ensure the compensation system within the organization reinforces the CSR policies that have been created, rather than merely the bottom-line Any anonymous feedback/whistle-blower process, ideally overseen by an external ombudsperson, will allow the CSR Officer to operate more effectively Corporations today are best positioned when they reflect the values of the constantly shifting and sensitive market environment in which they operate. It is vital that they are capable of meeting the needs of an increasingly demanding and socially-aware consumer market, especially as brands move front and center of a firms total value. Global firms with global lifestyle brands have the most to lose if the public perception of the brand fails to live up to the image portrayed. Integrating a complete social perspective into all aspects of operations will maximize true value and benefit for an organization, while protecting the huge investments companies make in corporate brands.

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Asia Pacific Perspective

Corporate social responsibility is represented by the contributions undertaken by companies to society through its core business activities, its social investment and philanthropy programmes and its engagement in public policy. In recent years CSR has become a fundamental business practice and has gained much attention from chief executives, chairmen, boards of directors and executive management teams of larger international companies. They understand that a strong CSR program is an essential element in achieving good business practices and effective leadership. Companies have determined that their impact on the economic, social and environmental landscape directly affects their relationships with stakeholders, in particular investors, employees, customers, business partners, governments and communities. The Asia Pacific context is distinct. On the one hand, there are long-standing traditions of respect for family and social networks, and high value placed on relationships, social stability and education. Diverse religions and cultures also bring distinct attitudes towards community social behaviour and engagement as well as support and philanthropic contributions. Governments in the region also play distinct roles often stronger in terms of influence on economic and social priorities, yet not as advanced in terms of social safety nets. This has resulted in the drivers for corporate citizenship being very different from those in other regions.

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Many of the large corporations in Asia Pacific are private, and many do not have the same public pressures on corporate behaviour that public companies in Europe and North America have for progress on corporate social responsibility, although this is changing. Yet many of the larger companies in Asia Pacific have strong localized philanthropic programmes. Also, regional companies that are engaged in supply chains of major global corporations, and local affiliates of global corporations from Europe and America have significant pressures and a strong business case to develop corporate citizenship policies and practices within the region, not least on the environment, human rights and labour standards.

Corporate Social Responsibility: Unlocking the value According to the results of a global survey in 2002 by Ernst & Young, 94 per cent of companies believe the development of a Corporate Social Responsibility (CSR) strategy can deliver real business benefits, however only 11 per cent have made significant progress in implementing the strategy in their organisation. Senior executives from 147 companies in a range of industry sectors across Europe, North America and Australasia were interviewed for the survey. The survey concluded that CEOs are failing to recognise the benefits of implementing Corporate Social Responsibility strategies, despite increased pressure to include ethical, social and environmental issues into their decision-making processes. Research found that company CSR programs influence 70 per cent of all consumer purchasing decisions, with many investors and employees also being swayed in their choice of companies. "While companies recognise the value of an integrated CSR strategy, the majority are failing to maximise the associated business opportunities," said Andrew Grant, Ernst & Young Environment and Sustainability Services Principal. "Corporate Social Responsibility is now a determining factor in consumer and client choice which companies cannot afford to ignore. Companies who fail to maximise their adoption of a CSR strategy will be left behind."

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World Economic Forum & CSR

The World Economic Forum has recognised the importance of corporate social responsibility by establishing the Global Corporate Citizenship Initiative. The Initiative hopes to increase businesses' engagement in and support for corporate social responsibility as a business strategy with long-term benefits both for the companies themselves as well as society in general.

Case Studies

The case studies below demonstrate how diverse company activities can be for businesses of all sizes. SAP Here for Life is a not-for-profit public benevolent organisation focusing on education, awareness and research aimed at the prevention of youth suicide. The organization provides resources, education and school based life skills programs to help prevent suicide amongst young people. Through its charity sponsorship program SAP Australia supports Here for Life with monetary contributions, volunteering and staff involvement in the agency's programs Sun Microsystems. In 1998, Sun became Musica Viva's first and only principal sponsor. By associating itself with a leader in the IT industry, Musica Viva gains networking opportunities within the corporate sector, resulting in further sponsorship openings. It gains access to Sun's staff and customer base to increase awareness of Musica Viva's activities and performances, enabling it to achieve its 27

own aims of taking the beauty of music into the lives of ordinary Australians and forging meaningful links between the arts and the corporate world. The exchange of expertise helps both partners. Sun provides its technological know-how and assists with market reach for Musica Viva, which in turn provides opportunities to give something back to Australia's cultural life through supporting and engaging with music in various ways. IBM IBM - Japans e-elder initiative is a national program using training materials and other support from IBM Japan which will hire and train seniors as instructors for other seniors in an effort to help elder citizens (expected to make up one-fifth of Japans population by 2008) more fully participate in a Web-based society. HP In Singapore, HP staff raised nearly $295,000 for charity in 2003 and received a SHARE Gold Award from the Community Chest of Singapore for employee participation exceeding 50%. One event was Gladiathon, a fundraiser in support of the President's Challenge 2003. Leading by example was the Managing Director from HP Asia Pacific, who wore a gladiator costume and competed with other IT industry leaders in the battle for charity. HP was the largest corporate donor of this event, raising a total of $121,000.

Microsoft Microsoft works closely with international organizations such as the World Food Programme, Save the Children, and Mercy Corps to provide technology-based development assistance through the HEART (Humanitarian Empowerment and Response through Technology) program. More and more, global organizations rely on technology to improve theeffectiveness of their humanitarian efforts around the world.

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Should ASOCIO have a role? Increasingly, for many organisations, CSR is an integral part of the way they operate and a key element in productivity and competitiveness, particularly through managing their impact on society and engaging stakeholders. Many business leaders wish to have a beneficial impact on the societies in which they operate, and offer some accountability to their stakeholders. CSR takes place at the level of the individual company, which has to take decisions on priorities, purpose and values, strategy and engagement with its stakeholders. By engaging in dialogue with industry and government, ASOCIO can assist in: ?? supporting and stimulating collaboration and greater understanding between the corporate, Government and community sectors regionally; ?? raising awareness of the positive contributions that ICT industry makes towards key social and environmental issues relevant to the ICT industry; and ?? developing a network of representatives across the ASOCIO membership to shape and drive this program on CSR.

CSR Initiatives and Green Measures

India Inc has joined hands to fine-tune all its activities falling under CSR. For this, it has set up a global platform to showcase all the work done by Indian firms. Confederation of Indian Industry (CII) and the TVS Group have collaborated to form the CII-TVS Centre of Excellence for Responsive Corporate Citizenship. It will provide consultancy services and technical assistance on social development and CSR. Reliance Industries and two Tata Group firmsTata Motors and Tata Steelare the country's most admired companies for their corporate social responsibility initiatives, according to a Nielsen survey.

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As part of its Corporate Service Corps (CSC) programme, IBM has joined hands with the Tribal Development Department of Gujarat for a development project aimed at upliftment of tribals in the Sasan area of Gir forest. The Indian paints industry is making its products more environment-friendly by opting for water-based paints and making it carcinogen- free. The heating, ventilation, air-conditioning and refrigeration (HVAC) industry is working to get rid of its 'global warmer' stigma through greater use of gases with zero ozone depletion potential (zero ODP). Sustainable Technologies and Environmental Projects Ltd (STEPS) is planning to start a project to change plastic, organic and electronic waste into petroleum without the usual harmful residue. The financial services sector is going green in a steady manner. With an eye on preserving energy, companies have started easing the carbon footprint in their offices. The year 2009 witnessed initiatives including application of renewable energy technologies, moving to paperless operations and recognition of environmental standards. Efforts by companies such as HSBC India, Max New York Life and Standard Chartered Bank have ensured that the green movement has kept its momentum. These companies are sending mailers and SMSes to their customers asking them to shift to e-statements and e-receipts.

Rural Development
Rural development is attracting major CSR initiatives from various corporates. In an effort to modernise rural health services in India, GE Healthcare now wants to focus on maternal health.

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SREI Sahaj e-Village Ltd will set up 25,000 IT kiosks to be known as common service centres (CSC) across West Bengal, Bihar, Orissa, Assam, Uttar Pradesh and Tamil Nadu by 2010. ITC's e-Chaupal has been a great developmental initiative which has also added value to its own agricultural products. It comprises improving the lives of farmers and villagers. HDFC has started a 'village adoption' scheme to improve the investment climate in Indian villages. Mahindra Shubhlabh, the agricultural business arm of Mahindra & Mahindra, aims to use especially cultured seeds to improve contract-farming productivity. Various corporate houses such as the Usha Martin Group, Bhushan Steel and Adhunik Group have undertaken several CSR initiatives in the mineral-rich belt of Jharkhand, Chhattisgarh and Orissa. The successful CSR activities under way in these areas vary from plain-vanilla livelihood work to re-skilling training at industrial training institutes with the promise that the candidates will be absorbed into the new industrial projects of the parent company.

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India's Human Resource (HR).

Over the last decade, India's vast manpower has played an instrumental role in its economic success story. Several corporate bigwigs are now thinking of ways of building the skill sets of their employees. India Inc has started encouraging 'intrapreneurs' or employees who have ideas that could potentially become a venture, whereby most of these intrapreneurs end up directing these projects and ventures. Some companies promoting intrapreneurship include Adobe, NIIT, KPMG, Pepsi and Microsoft. A study, titled 'How the Disciple became the Guru' (released by the Kauffman Foundation and conducted by Duke University's global engineering and entrepreneurship project team), has extolled the workforce training carried out by Indian firms across sectors such as IT, BPO, banking and pharmaceuticals. The study revealed that Indian companies go to colleges much before the hiring process begins so that students are prepared for employment.

Moreover, as the global economy recovers from recession and Indian companies expand in the US and European markets, India Inc is grooming global managers who can effortlessly connect with diverse geographies and fuel opportunities for growth. Indian companies are shifting their young managers abroad to handle diversity at an early stage and help create a reserve of globally competent people. The Tatas, the Aditya Birla Group, the Essar Group, Infosys and mid-cap firms like Glenmark Pharmaceuticals and S Kumars Nationwide (SKNL) are among companies that nurture global talent. Not only is India Inc grooming global managers, but companies from across the globe are scouting the country for quality talent to fill positions across

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geographies. India is fast gaining the distinction of becoming one of the world's largest talent incubators. While multinational corporations have been regularly placing some of their best brains in their global system for a while, the search for talent among these global enterprises is now gathering pace. Recruitment companies say Europe, Africa, Asia-Pacific, Middle East and the rest of the South Asian Association for Regional Cooperation (SAARC) region are expected to import talent from India across profiles and domains, in significant numbers. According to industry estimates, close to 100 top level executive (CXO) positions and 30,000 middle- to junior-level hirings, across profiles and domains are expected during 2010, and these numbers are expected to go up in the coming years. A recent survey by global HR services firm, Hewitt Associates, says that a majority of Indian companies, particularly those in infrastructure and energy sectors, are planning to hire in a big way this year. About 93.4 per cent of the firms surveyed are expected to hire this year. Firms in sectors like telecom, oil and gas and infrastructure are likely to recruit the most, across lateral and entry levels.

Some facts about India's HR industry:

HR services is a US$ 4-billion industry spawning hundreds of start-ups and attracting a horde of MNCs. The temporary staffing industry size in India is around US$ 111 million. It has been growing at 100 per cent year-on-year for the last four years and is expected to continue to grow at 75-100 per cent for the next two years. Human resource outsourcing (HRO) is one of the most rapidly-growing segments in the Indian as well as global-outsourcing market. According to a combined

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survey carried out by Nasscom-McKinsey, the revenues in the HR outsourcing were estimated at US$ 3.5 billion in 2008. Recruitment Process Outsourcing (RPO) is rapidly gaining popularity in India. Research firm IDC forecasts staffing and recruitment spending to reach US$ 92 billion globally by 2009 and that India has a good chance of attracting a large portion of this spending. Corporate social responsibility (CSR), also known as corporate responsibility, corporate citizenship, responsible business, sustainable responsible business (SRB), or corporate social performance,[1] is a form of corporate self-regulation integrated into a business model. Ideally, CSR policy would function as a built-in, self-regulating mechanism whereby business would monitor and ensure its 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. Furthermore, business would proactively promote the public interest by encouraging community growth and development, and voluntarily eliminating 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.

The practice of CSR is subject to much debate and criticism. Proponents argue that there is a strong business case for CSR, in that corporations benefit in multiple ways by operating with a perspective broader and longer than their own immediate, short-term profits. Critics argue that CSR distracts from the fundamental economic role of businesses; others argue that it is nothing more than superficial window-dressing; others yet argue that it is an attempt to preempt the role of governments as a watchdog over powerful multinational corporations. Corporate Social Responsibility has been redefined throughout the

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years. However, it essentially is titled to aid to an organization's mission as well as a guide to what the company stands for and will uphold to its consumers. Development Business ethics is one of the forms of applied ethics that examines ethical principles and moral or ethical problems that can arise in a business environment. In the increasingly conscience-focused marketplaces of the 21st century, the demand for more ethical business processes and actions (known as ethicism) is increasing. Simultaneously, pressure is applied on industry to improve business ethics through new public initiatives and laws (e.g. higher UK road tax for higheremission vehicles). Business ethics can be both a normative and a descriptive discipline. As a corporate practice and a career specialization, the field is primarily normative. In academia, descriptive approaches are also taken. The range and quantity of business ethical issues reflects the degree to which business is perceived to be at odds with non-economic social values. Historically, interest in business ethics accelerated dramatically during the 1980s and 1990s, both within major corporations and within academia. For example, today most major corporate websites lay emphasis on commitment to promoting non-economic social values under a variety of headings (e.g. ethics codes, social responsibility charters). In some cases, corporations have re-branded their core values in the light of business ethical considerations (e.g. BP's "beyond petroleum" environmental tilt).

ISO 26000 is the recognized international standard for CSR (currently a Draft International Standard). Public sector organizations (the United Nations for example) adhere to the Triple Bottom Line (TBL). It is widely accepted that CSR

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adheres to similar principles but with no formal act of legislation. The UN has developed the Principles for Responsible Investment as guidelines for investing entities.

"CSR: A Cornerstone of our Enduring Success"

At IndianOil, corporate social responsibility (CSR) has been the cornerstone of success right from inception in the year 1964. The Corporations objectives in this key performance area are enshrined in its Mission statement: "to help enrich the quality of life of the community and preserve ecological balance and heritage through a strong environment conscience." We at IndianOil have defined a set of core values for ourselves Care, Innovation, Passion and Trust to guide us in all we do. We take pride in being able to claim all our countrymen as our customers. Thats why, we coined the phrase, IndianOil India Inspired", in our corporate campaigns. Public corporations like IndianOil are essentially organs of society deploying significant public resources. We, therefore, are aware of the need to work beyond financial considerations and put in that little extra to ensure that we are perceived not just as corporate behemoths that exist for profits, but as wholesome entities created for the good of the society and for improving the quality of life of the communities we serve. As a constructive partner in the communities in which it operates, IndianOil has been taking concrete action to realise its social responsibility objectives, thereby building value for its shareholders and customers. The Corporation respects human rights, values its employees, and invests in innovative technologies and solutions for sustainable energy flow and economic growth. In the past four

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decades, IndianOil has supported innumerable social and community initiatives in India. Touching the lives of millions of people positively by supporting environmental and health-care projects and social, cultural and educational programmes. Besides focussing primarily on the welfare of economically and socially deprived sections of society, IndianOil also aims at developing techno-economically viable and environment-friendly products&services for the benefit of millions of its consumers, while at the same time ensuring the highest standards of safety and environment protection in its operations.

Sharing Profits

Every year, IndianOil sets aside a fixed portion of its profits for spreading smiles in millions of lives across the country through a comprehensive community welfare and development programme. About one-fourth of the community development funds are spent on the welfare of Scheduled Caste and Scheduled Tribe beneficiaries. IndianOil has a concerted social responsibility programme to partner

communities in health, family welfare, education, environment protection, providing potable water, sanitation, and empowerment of women and other marginalised groups. IndianOil has always been in the forefront in times of national emergencies. IndianOilPeople have time and again rallied to help victims of natural calamities, maintaining uninterrupted supply of petroleum products and contributing to relief and rehabilitation measures in cash and kind.

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IndianOils community-focussed initiatives include allotment of petrol/diesel station dealerships and LPG distributorships to beneficiaries from among Scheduled Castes, Scheduled Tribes, physically handicapped, ex-servicemen, war widows, etc. The Corporation has also unveiled kisan seva kendras as smallformat retail outlets to reach quality products and services to people in the rural areas. IndianOil has also set up the IndianOil Foundation (IOF) as a non-profit trust to protect, preserve and promote national heritage monuments. The Corporation also supports a variety of endeavours in arts, culture, music and dance, apart from organising programmes on its own under the banners of IndianOil Art Exhibition, IndianOil Sangeet Sabha and IndianOil Kavi Sammelan. As part of its environment-protection initiatives, IndianOil has invested close to Rs. 7,000 crore in state-of-the-art technologies at its refineries for production of green fuels meeting global standards. To further reduce dependence on precious petroleum products and secure the nations energy security, the Corporation is now in the process of commercialising various options in alternative fuels such as ethanol-blended petrol, biodiesel, and Hydrogen and Hydrogen-CNG mixture. With safety, health and environment protection high on its corporate agenda, IndianOil is committed to conducting business with a strong environment conscience, so as to ensure sustainable development, safe work places and enrichment of the quality of life of its employees, customers and the community. IndianOil is also committed to the Global Compact Programme of the United Nations and endeavours to abide by the 10 principles ofCorporate Social Responsibility (CSR) Corporate Social Responsibility (CSR) can make a significant contribution towards sustainability and competitiveness, both in Europe and globally.

Corporate Social Responsibility is part of the Europe 2020 strategy for smart, sustainable and inclusive growth.

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It can help to shape the kind of competitiveness model that Europe wants.

CSR and the economic crisis

CSR is more relevant than ever in the context economic crisis. It can help to build (and rebuild) trust in business, which is vital for the health of Europe's social market economy. It can also point the way to new forms of value of creation based on addressing societal challenges, which may represent a way out of the crisis. the programme, some of which are already part of the Corporations Vision and Mission statements. It is the firm resolve of IndianOilpeople to move beyond business, touch every heart and fuel a billion dreams.

The Big Picture:

ITCs Agri Business Division, one of Indias largest exporters of agricultural commodities, has conceived e-Choupal as a more efficient supply chain aimed at delivering value to its customers around the world on a sustainable basis. The e-Choupal model has been specifically designed to tackle the challenges posed by the unique features of Indian agriculture, characterised by fragmented farms, weak infrastructure and the involvement of numerous intermediaries, among others.

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The Value Chain - Farm to Factory Gate:

e-Choupal also unshackles the potential of Indian farmer who has been trapped in a vicious cycle of low risk taking ability > low investment > low productivity > weak market orientation > low value addition > low margin > low risk taking ability. This made him and Indian agribusiness sector globally uncompetitive, despite rich & abundant natural resources. Such a market-led business model can enhance the competitiveness of Indian agriculture and trigger a virtuous cycle of higher productivity, higher incomes, enlarged capacity for farmer risk management, larger investments and higher quality and productivity. Further, a growth in rural incomes will also unleash the latent demand for industrial goods so necessary for the continued growth of the Indian economy. This will create another virtuous cycle propelling the economy into a higher growth trajectory.

The Model in Action:

Appreciating the imperative of intermediaries in the Indian context, e-Choupal leverages Information Technology to virtually cluster all the value chain participants, delivering the same benefits as vertical integration does in mature agricultural economies like the USA.

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e-Choupal makes use of the physical transmission capabilities of current intermediaries aggregation, logistics, counter-party risk and bridge financing while disintermediating them from the chain of information flow and market signals. With a judicious blend of click & mortar capabilities, village internet kiosks managed by farmers called sanchalaks themselves, enable the agricultural community access ready information in their local language on the weather & market prices, disseminate knowledge on scientific farm practices & risk management, facilitate the sale of farm inputs (now with embedded knowledge) and purchase farm produce from the farmers doorsteps (decision making is now information-based). Real-time information and customised knowledge provided by e-Choupal enhance the ability of farmers to take decisions and align their farm output with market demand and secure quality & productivity. The aggregation of the demand for farm inputs from individual farmers gives them access to high quality inputs from established and reputed manufacturers at fair prices. As a direct marketing channel, virtually linked to the mandi system for price discovery, eChoupal eliminates wasteful intermediation and multiple handling. Thereby it significantly reduces transaction costs. e-Choupal ensures world-class quality in delivering all these goods & services through several product / service specific partnerships with the leaders in the respective fields, in addition to ITCs own expertise. While the farmers benefit through enhanced farm productivity and higher farm gate prices, ITC benefits from the lower net cost of procurement (despite offering better prices to the farmer) having eliminated costs in the supply chain that do not add value.

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The Status of Execution:

Launched in June 2000, 'e-Choupal', has already become the largest initiative among all Internet-based interventions in rural India. 'e-Choupal' services today reach out to over 4 million farmers growing a range of crops - soyabean, coffee, wheat, rice, pulses, shrimp - in over 40,000 villages through 6500 kiosks across ten states (Madhya Pradesh, Haryana, Uttarakhand, Karnataka, Andhra Pradesh, Uttar Pradesh, Rajasthan, Maharashtra, Kerela and Tamil Nadu). The problems encountered while setting up and managing these e-Choupals are primarily of infrastructural inadequacies, including power supply, telecom connectivity and bandwidth, apart from the challenge of imparting skills to the first time internet users in remote and inaccessible areas of rural India.

Several alternative and innovative solutions some of them expensive are being deployed to overcome these challenges e.g. Power back-up through batteries charged by Solar panels, upgrading BSNL exchanges with RNS kits, installation of VSAT equipment, Mobile Choupals, local caching of static content on website to stream in the dynamic content more efficiently, 24x7 helpdesk etc.

Going forward, the roadmap includes plans to integrate bulk storage, handling & transportation facilities to improve logistics efficiencies. As Indias kissan Company, ITC has taken care to involve farmers in the designing and management of the entire e-Choupal initiative. The active participation of farmers in this rural initiative has created a sense of ownership in

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the project among the farmers. They see the e-Choupal as the new age cooperative for all practical purposes. This enthusiastic response from farmers has encouraged ITC to plan for the extension of the e-Choupal initiative to altogether 15 states across India over the next few years. On the anvil are plans to channelise other services related to micro-credit, health and education through the same 'e-Choupal' infrastructure. Another path-breaking initiative the Choupal Pradarshan Khet, brings the benefits of agricultural best practices to small and marginal farmers. Backed by intensive research and knowledge, this initiative provides Agri-extension services which are qualitatively superior and involves pro-active handholding of farmers to ensure productivity gains. The services are customised to meet local conditions, ensure timely availability of farm inputs including credit, and provide a cluster of farmer schools for capturing indigenous knowledge. This initiative, which had covered over 70,000 hectares, has a multiplier impact and reaches out to over 1.6 million farmers.

The importance of corporate social responsibility.

Abstract Companies are, in a broad sense, a group of different agents that have a relationship with shareholders, citizens, providers, and customers. In other words, they are known as stakeholders. Corporate social responsibility may help to establish clear boundaries among the different interests of the groups described above. In this paper, the authors will describe, analyze, and formalize the critical responsibility parameters, as well as the variables that shape them. Corporate social responsibility is proposed as a new management tool and not as a fashionable concept. Furthermore, the advantages and limitations of 43

corporate social responsibility will be analyzed in order to define a management model for achieving responsibility among organizations. Finally, the model limitations are presented, both in the verbal and the mathematical formalizations.

Antecedents and Commitments

Corporate social responsibility is becoming a relevant subject, and it appears repeatedly in the vast majority of academic and professional journals. Most of them have dedicated a special issue to it, and an increasing number of articles have been published concerning corporate social responsibility. In this paper, the authors ask themselves whether this is simply a new fashionable concept, as many others within the business argot, or, on the other hand, is it becoming a leading principle of top management and entrepreneurs' behavior. In the first part of this paper, different dilemmas concerning corporate social responsibility are analyzed, and the authors' perception about it is depicted. Then, the authors will describe a method for measuring and evaluating corporate sociaCorporate Social Responsibility Understood as a New Management Tool In order to develop this proposal, it is necessary to define corporate social responsibility. It is very important to thoroughly understand the concept of company, not from a macroeconomic point of view as the economic science does (specially the neo liberal trend), but from the business economy point of view. A company understood as a transforming organ, thanks to social agents (people) and technical and technological means, all of them working in a global and competitive context. By looking at this concept of a company, the following is always present:

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* People/human beings: employees, shareholders, providers, collaborators, customers, competitors, and public agents (local, state, or federal). * Context: the company develops its economic activity in a geographical area, within an economic, social, and political context. At this point, a question emerges: does the company, or even better, the company's top management have any responsibility--implication or commitment-concerning the people and the context where they develop its activity? It is fair and reasonable--following the trend of those who consider shareholders as the main human collective concerned--that top management within the company has to work driven by shareholders interests, mainly focusing on the profit and loss account, trying to maximize profits (Gil 2003, p. 51). In other words, "If management would accept the idea that they have a social responsibility different from achieving the maximum profit for shareholders, it would be undermining the foundation of our free society" l responsibility, as well as its limitations. This point of view can be confusing for two reasons: 1. It does not take into account the fact that in order to make a profit, all the people described before have to cooperate and perform their activities within a geographical space, regardless of its size. If certain aspects are not attended to and if there is no responsibility toward these collectives, a sustainable profit will not be reachable. Furthermore, competitive advantages will not be achieved either. 2. Maximum profit is simply a mathematical concept. The formula can measure the quantity but, in the real world, there is always the possibility of achieving a higher performance. What if fewer salaries had been paid? What if training

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investment had been cut? What about misbehavior concerning taxation? Probably the axiom of "cutting expenses or increasing turnover by increasing prices will improve long term profits" is not always true.

In the current business context--extremely competitive, with a lot of information moving quickly--companies have to treat every one of their human collectives responsibly, and the context in which it is located, in order to grow and make profits. In other words, having a corporate social policy and a responsible attitude toward stakeholders is necessary to achieve great results. The World Business Council for Sustainable Development (WBCSD) defines corporate social responsibility as "the commitment of the company to contribute to the sustained economic development by working with employees, their families, the local community, and the entire society in order to improve life quality" Corporate social responsibility can be defined as the assumption of rights and obligations due to the economic, political, and social activity performed by organizations. In other words, this is to create and develop values, such as protection, sustainability, compromise, and acting responsibly and economically as far as the environment is concerned. This is also applicable to the people and society in general, both short and long term, and independently of the distance (here it applies "thinking locally and globally at the same time"). The final goal has to be the increase of the humanity welfare If the WBCSD definition is accepted, and also the concept just depicted, a new proposition emerges. This is different from former propositions, basically because of its extension--the number of human collectives taken into account and the consideration of the physical context--over which there is an interest to expand corporate social responsibility.

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In the past, there was a concern about corporate social responsibility, but it is only recently that this concern strongly emerged. Mainly because of globalization, environment catastrophes, several known business misbehaviors that occurred previously by multinational corporations. It is at that point when the issue of corporate social responsibility came out, and the media started to create an opinion related to the necessary revision of the commitment companies have with the human collectives and environment. Currently, several laws concerning this issue already exist. The starting point was the OECD guidelines, and also a high degree of social consciousness that acts and organizes itself wherever an important meeting related to business is organized. For instance, the Davos or G-7 meetings.

The hypothesis establishing that corporate social responsibility (considering the WBCSD definition and the authors' concept) appearing at the beginning of the 21st century as a management tool, which will remain through time, is posed by the authors. This hypothesis is supported by the following facts: 1. The globalization process is emphasized after the Berlin wall fell in December 1989. The three zones of economic influence emerged: the US and its influential area; the European Union; and Southeast Asia, including China and India. This phenomenon creates a certain social concern. 2. Despite the focus on different aspects, there is a huge law development within developed countries. So, there is still a long way to go in order to find a common and universal criterion about corporate social responsibility. Moreover, it is necessary to develop a formal and measurable model that is widely accepted.

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3. The larger companies are increasingly writing behavior codes and corporate social responsibility memoranda. In Spain, the 35 companies included in the IBEX index are obliged to write an annual report about the applied good corporate governance practices. 4. Financial markets have also adopted corporate social responsibility by developing tools which permit to reflect this concept within the price of shares. For instance, the concept of socially responsible investment appears. This is to evaluate which is the position of the company, as far as social and environmental behavior is concerned. With this information, investors may make a better decision about which companies to invest in. There are also several rating agencies which evaluate companies' commitment related to social and environmental behavior.In Spain there are several mutual funds that are taking corporate social responsibility aspects into account. Currently, 12 of this kind exist, despite one of them (BBVA Extra 5 II Garantizado) representing 83.5% of the total amount managed by mutual funds. However, globally, it only represents 0.56% of the total amount. Therefore, it seems that Spain is still at a starting point at investing into companies with ethical behaviors. 5. There is an increasing consciousness among human collectives in general. Non governmental organizations (NGO's), fair trading organizations, as well as the media materialize this consciousness. At the same time, information technology makes it widely visible. Because of the previous reasons, the authors believe that corporate social responsibility will remain definitely and permanently. There are two more reasons which emphasize this belief:

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a) Long term socially responsible behavior can yield higher levels of profit for companies, which might become a competitive advantage. b) In general, companies have legal behaviors. But those which do not have it normally have to pay a small penalty with no further consequences. Currently the market-millions of customers and employees, as well as the rest of human collectives related to companies-has a powerful tool: information and communication technologies. By using them, people have some power to make companies apply corporate social responsibility practices.

A Business Proposal of Corporate Social Responsibility

After reasoning has been depicted, it is possible to conclude that developed societies are making the means to permit corporate social responsibility to consolidate. This, despite the existence of certain chaos, with a few points in common as criteria, principles, and range of the concept are concerned. Certain literature, of course not neo liberal, has often emphasized the need to establish the previously mentioned tool. At times, it tried to give rules related to a proposed model or several aspects to take into account as far as corporate social responsibility is concerned. Argandona 1997, p. 177) (12) lists several aspects found within a company ruled by ethical criteria: * Entrepreneurs and management with a vision, who focus on the moral aspects of the company.

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* Production of responsible products, as far as security, usefulness, and composition are concerned. These products should respond to real customers and consumers' needs. * To take into account the customers' opinions. * Reducing bureaucracy, which leads to employees' empowerment. * Emphasis on training the staff. * Internal promotion. * Management has to be conscious about which are its own limitations; thus, they have to relay both in internal as well as external help. Moreover, they have to prepare their succession. * It is necessary to plan how employees might take part to the company's stock. * To give enough information to employees about the company situation and its future projects. * To establish fair salaries, permitting the participation in company's profit and sharing the productivity increases. It is necessary for a reduced range of salaries. * To evaluate performance not only from an economic point of view. * To be oriented to people at any level. * To have a true interest in what is going on outside the company, cooperating to solve problems, such as environment and local community. For instance, by means of creating a fund.

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* These companies do not hide their ethical attitudes, but they do not make publicity about it either. * They are opened to cooperate with other companies. * They avoid unnecessary expenses, and they try to convince customers and employees to be austere. * Quite often these companies establish written ethical codes. * They are proactive when facing ethical problems (they do not simply clean the river after having polluted it).

Corporate Social Responsibility and its Management Model

All kinds of organizations, both public and private, have a mission, a strategy, a policy and several objectives (goals). On the other hand, these organizations have limited resources to perform these things. Moreover, organizations have an area of actuation more or less defined, and it is not possible to pretend that they will act beyond their own responsibilities.

Companies should take into account social responsibility in every decision they make: from product design to selling and distribution; personnel recruitment until they leave the company; and getting financial resources for investment. Mission,

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strategy, and company policies are more or less verbal definitions, and it is difficult to express them within a mathematical and quantifiable model. From the objective point of view, the authors focus on the quantifiable ones, which are capable to be evaluated and verified in the course of time. Moreover, they have to be easily evaluated through indicators. Therefore, the first thing to do is to classify objectives into categories (from the most abstract to the specific): political objectives; social objectives; economic objectives; and business objectives. The available resources the company might have at certain times will limit the former objectives. These resources are: human resources, social resources, economic resources, and business resources. These objectives and resources will make the evaluated results obtainable by using the following indicators: economic indicators; social indicators; environmental indicators; and business indicators.

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Conclusion
First of all, the definition of corporate social responsibility was important to clearly understand the implications of the concept on the business world. As many of the new business concepts, there is not a single definition, and the authors have tried to analyze and define which would be a useful definition as far as the business economy is concerned. Following this reasoning, a business proposal of corporate social responsibility has been described, taking into account its limitations.

Finally, a formal model was described. To do this, several key indicators (economic, social, environmental, and business) were defined. The two ways for expressing the model were shown: the multi-criterion optimization and the goal programming. In both cases, several restrictions existed, and they were taken into account. The model showed a feasible region F, in which different policies socially responsible are possible.

CSR is about common sense policies that represent a means of integrating a complete social perspective into all aspects of operations. The goal is to maximize true value and benefit for an organization, while protecting the huge investments corporations make today in their brands.

Companies should take into account social responsibility in every decision they make: from product design to selling and distribution; personnel recruitment until they leave the company; and getting financial resources for investment. Mission, strategy, and company policies are more or less verbal definitions, and it is difficult to express them within a mathematical and quantifiable models.

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BIBLIOGRAPHY
Adopted as ASOCIO Position Paper on 1st December 2004. Michael Arndt, An Ode to The Money-Spinner, BusinessWeek, March 24, 2003, pp22-23; review of The Company: A Short History of a Revolutionary Idea, by John Micklethwait & Adrian Wooldridge, Modern Library, 2003. Milton Friedman, Capitalism and Freedom, Chicago: University of Chicago Press, 1962. Charles Handy, Whats a Business For? Harvard Business Review, December 2002, p54. South China Morning Post, 2002 Archie B. Carroll, 1979 The Institute of Directors, UK, 2002

Adrian Henriques, Ten things you always wanted to know about CSR (but were afraid to ask); Part One: A brief history of corporate social responsibility (CSR), Ethical Corporation Magazine, May 26, 2003, http://www.ethicalcorp.com/content.asp?ContentID=594 Michael Arndt, An Ode to The Money-Spinner, BusinessWeek, March 24, 2003, pp22-23; review of The Company: A Short History of a Revolutionary Idea, by John Micklethwait & Adrian Wooldridge, Charles Handy, Whats a Business For? Harvard Business Review, Vol. 80, No. 12, December 2002, pp. 49-55. Modern Library,

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