SOCIAL RESPONSIBILITY

The practice of producing goods and services in a way that is not harmful to society or the
environment. Social responsibility (or, corporate social responsibility) is a theory that asserts
that businesses, in addition to maximizing shareholder value, have an obligation to act in a
manner that benefits society. The International Organization for Standardization (ISO)
emphasizes that a business's ability to maintain a balance between pursuing economic
performance and adhering to societal and environmental issues is a critical factor in operating
efficiently and effectively. Social responsibility means that individuals and companies have a
duty to act in the best interests of their environment and society as a whole. Social
responsibility, as it applies to business, is known as corporate social responsibility (CSR).

KEY TAKEAWAYS

 Businesses, in addition to maximizing shareholder value, have an obligation to act in

a manner that benefits society.
 Eliminate practices that harm or implement policies that benefit society and the
environment.
 Adopt socially responsible policies that can boost profitability and hence, shareholder
value.
 Moral imperative to "take care" of society and planet for future generations.

Social Responsibility in Practice

Social responsibility takes on different meanings within industries and companies. For
example, Starbucks Corp. and Ben & Jerry's Homemade Holdings Inc. have blended social
responsibility into the core of their operations. Both companies purchase Fair Trade Certified
ingredients to manufacture their products and actively support sustainable farming in the
regions where they source ingredients. Big-box retailer Target Corp., also well known for its
social responsibility programs, has donated money to communities in which the stores
operate, including education grants. The key ways a company embraces social responsibility
includes philanthropy, promoting volunteering and environmental changes. Companies
managing their environmental impact might look to reduce their carbon footprint and limit
waste. There's also the social responsibility of ethical practices for employees, which can
mean offering a fair wage, which arises when there are limited employee protection laws.  

Social Responsibility Concerns

Not everyone believes that businesses should have a social conscience. Economist Milton
Friedman stated that "social responsibilities of business are notable for their analytical
looseness and lack of rigor." Friedman believed only individuals can have a sense of social
responsibility. Businesses, by their very nature, cannot. Some experts believe that social
responsibility defies the very point of being in business: profit above all else.

Dabur – Food and Dairy Products: Sundesh is an initiative of Dabur under CSR.

1. Self Help Group: Dabur, Self Help Group (SHG)/Micro Credit Groups help financially
deprived people to earn and support their families.

2. Adult literacy/Vocational training program: Provides education to the women under the
age

group of 14 to 35 years. After this they also provide the training in various self- employment

activities.

3. Educating children: Provides education to the children age group of 6-14 at the village
centers

and under the National Child Labour Project they provide education to the child labours of

age group of 8-13 years.

Unilever Brands – Food and Personal Care Products:

1. Shakti initiative – Women empowerment: It is a micro enterprise program creates

opportunity

to women to sell their products door to door in rural areas.

2. Gondappa Campaign: Adopts villages of Central India to help every children to reach their
5th

birthday avoiding children dying from infections such as diarrhea and pneumonia.

3. Fulfill a wish: This campaign was initiated by Surf Excel Brand to extend the festive spirit
to

underprivileged kids.

Procter and Gamble:

1. Shiksha: Under this P&G help underprivileged kids to access their right to education. It
also

address the issues related to tangible assets required at the educational centers across India.

2. Parivartan – The Whisper The School Program: The objective of this program is to help

adolescent girls embrace womanhood positively and enable them to adopt right feminine

hygiene practices in schools.

Britannia – Food and Dairy Products:

1. The Britannia Nutrition Foundation(BNF): NDTV and Britannia came together to drive up

awareness of Nutrition across India.

ITC Group:

1. ITC’s Women Empowerment initiative: Provides sustainable economic opportunities to the

poor women of rural India forming microfinance self-help groups.

2. ITC’s Primary Education initiative: ITC’s supplementary learning centers provide

additional

coaching to the students avoiding dropouts from the schools.

Nestle:

1. The Nestle Healthy Kids Program: Provides nutrition education to teenage to create

awareness of good nutrition food amongst the village students.

2. The Sanitation Facilities for Female Students: Sponsors the construction of sanitation

facilities for female students in village schools.

ADVANTAGES

1.Better anticipation and management of an ever-expanding spectrum of risk.

Effectively managing governance, legal, social, environmental, economic and other risks in
an increasingly complex market environment, with greater oversight and stakeholder scrutiny
of corporate activities, can improve the security of supply and overall market stability.
Considering the interests of parties concerned about a company’s impact is one way of better
anticipating and managing risk.

2.Improved reputation management.

Organizations that perform well with regard to CSR can build their reputation, while those
that perform poorly can damage brand and company value when exposed. Reputation, or
brand equity, is founded on values such as trust, credibility, reliability, quality and
consistency. Even for companies that do not have direct retail exposure through brands, their
reputation for addressing CSR issues as a supply chain partner— both good and bad—can be
crucial commercially.

3.Enhanced ability to recruit, develop and retain staff.

This can be the direct result of pride in the company’s products and practices, or of
introducing improved human resources practices, such as “family-friendly” policies. It can
also be the indirect result of programs and activities that improve employee morale and
loyalty. Employees are not only front-line sources of ideas for improved performance, but are
champions of a company for which they are proud to work.

4.Improved innovation, competitiveness and market positioning.

CSR is as much about seizing opportunity as avoiding risk. Drawing feedback from diverse
stakeholders can be a rich source of ideas for new products, processes and markets, resulting
in competitive advantages. For example, a company may become certified to environmental
and social standards so it can become a supplier to particular retailers. The history of good
business has always been one of being alert to trends, innovation, and responding to markets.
Increasingly, mainstream advertising features the environmental or social benefits of products
(e.g., hybrid cars, unleaded petrol, 14 ethically produced coffee, wind turbines, etc.).

5.Enhanced operational efficiencies and cost savings.

These flow in particular from improved efficiencies identified through a systematic approach
to management that includes continuous improvement. For example, assessing the
environmental and energy aspects of an operation can reveal opportunities for turning waste
streams into revenue streams (wood chips into particle board, for example) and for system-
wide reductions in energy use, and costs.

7. Improved ability to attract and build effective and efficient supply chain relationships.

A company is vulnerable to the weakest link in its supply chain. Like -minded companies
can form profitable long-term business relationships by improving standards, and thereby
reducing risks. Larger companies can stimulate smaller companies with whom they do
business to implement a CSR approach. For example, some large apparel retailers require
their suppliers to comply with worker codes and standards.

8.Enhanced ability to address change.

A company with its “ear to the ground” through regular stakeholder dialogue is in a better
position to anticipate and respond to regulatory, economic, social and environmental changes
that may occur. Increasingly, companies use CSR as a “radar” to detect evolving trends in the
market.

9.More robust “social licence” to operate in the community.

Improved citizen and stakeholder understanding of the company and its objectives and
activities translate into improved stakeholder relations. This, in turn, may evolve into more
robust and enduring public, private and civil society alliances (all of which relate closely to
CSR reputation, discussed above). CSR can help build “social capital.”

10. Access to capital.

Financial institutions are increasingly incorporating social and environmental criteria into
their assessment of projects. When making decisions about where to place their money,
investors are looking for indicators of effective CSR management. A business plan
incorporating a good CSR approach is often seen as a proxy for good management.

11.Improved relations with regulators.

In a number of jurisdictions, governments have expedited approval processes for companies
that have undertaken social and environmental activities beyond those required by regulation.
In some countries, governments use (or are considering using) CSR indicators in deciding on
procurement or export assistance contracts. This is being done because governments
recognize that without an increase in business sector engagement, government sustainability
goals cannot be reached.

12.A catalyst for responsible consumption.

Changing unsustainable patterns of consumption is widely seen as an important driver to

achieving sustainable development. Companies have a key role to play in facilitating
sustainable consumption patterns and lifestyles through the goods and services they provide
and the way they provide them. “Responsible consumerism” is not exclusively about
changing consumer preferences. It is also about what goods are supplied in the marketplace,
their relationship to consumer rights and sustainability issues, and how regulatory authorities
mediate the relationship between producers and consumers.

DISADVANTAGES
1.Shift in the profit-making objective:

Economist Milton Friedman often criticized CSR by saying that it shifts the company’s focus
of the profit-making objective. For any financial entity, profit-making is the utmost priority.
However, when you get involved in CSR activities, you need to cut on the profit margin,
which can make your shareholders unhappy.

2.Hamper the reputation of your company:

CSR policies mandate the companies to reveal the shortcomings of their own products in case
they are found to violate the CSR program. If your existing customers find out the flaws of
your products, they are most likely to lose faith in your company. So, it can reflect negatively
on your sales figures as well.

3.Customers can get impatient:

Everyone will appreciate you for adopting CSR program for the company at the beginning. In
fact, it can gain your company a significant amount of popularity in the market for being
associated with a good cause. However, if the program does not offer instant results, people
may think this is nothing but a PR stunt. That won’t be good for your company’s reputation.

4.Sudden rise in the cost of production:

Being involved in CSR activities can often increase the expenditure of your company. As you
may realize, when you are giving back to society, it costs you a significant amount of capital.
If you increase the price of your products to make up for the expenses, the customers will
have to bear the burn. Large businesses can absorb the blow, but small businesses can’t.
From the aforementioned discussion, it is quite clear that CSR programs can be a beneficial
strategy for a business, but it is not without a cost. If your company is practically a large
enterprise, it can be a suitable plan for your business. However, for small and medium
enterprises, it can be a risky move to adopt CSR.