Corporate Social Responsibility

03/21/2020 Sudhir K Sinha 1

Modern history of CSR goes back to 1970, which
witnessed following three major events:

1. Attempt by the UN center on TNCs (UNCTC) to develop an

international code of conduct for TNCs

2. Nestle’s boycott and the development of the WHO’s International

Code on the Marketing of Breast-milk substitute, and

3. Activities of the anti-apartheid movement targeting TNCs with

operations in or business relations with South Africa. (Sullivan
Principles)

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 Evolution of CSR ?
B
U
S
I
N
E
S
S
V PARTNERSHIPS
FOR SUSTAINABILITY
E
N
G IV. BEYOND
A COMPLIANCE
G III COMPLIANCE
E
M
E
N II DENIAL/CONFRONTATION
T

I BLISSFULL IGNORANCE

1945 1955 1965 1975 1985 1995 2005

1962 1972 1982 1992 2002

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 Stages in Emergence of CSR

1. The “business of business is business” (Milton Friedman) - SR is to make

money for owners and shareholders and obey the law.

2. Paying back to society.

3. Businesses must protect the environment and biodiversity.

4. Businesses must also be “ethical” in the ways they make money and not
engage in bribery, fraud or corruption.

5. Businesses must also protect and promote human rights, labor rights, and
sustainable development.

6. Businesses must adhere to a global standard for CSR enforced by law. (future?)

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 Definitions
1. 1951: Frank Abrams, Chairman – Standard Oil of New Jersey
“To conduct the affairs of the enterprise to maintain an equitable and workplace balance among the
claims of the various interested groups, a harmonious balance among stockholders, employees, customers,
and the public at large (Frederick 2006).”

2. 1953: Prof. Howard R. Bowen published, The social Responsibility of the Businessman, perhaps the first
book on social responsibility and defined CSR,
“The obligation of business to pursue those policies, to make those decisions or to follow those lines of
action which are desirable in terms of the objectives and values of our society.”

3. 1999: AB Carroll gave a four-part definition, presented a pyramid that is widely respected among CSR
scholars, He stated in 1999:
“The term (Social Responsibility) is a brilliant one: it means something, but not always the same thing, to
everybody. To some it conveys the idea of legal responsibility or liability; to other, it means socially
responsible behaviour in an ethical sense; to still others, the meaning transmitted is that of “responsible for,”
in a casual mode: many simply equate it with charitable contribution; some take it to mean socially
conscious; many of those who embrace it most fervently see it as a mere synonym for “legitimacy,” in the
context of “belonging” or being proper or valid; a few see it as a sort of fiduciary duty imposing higher
standards of behaviour on businessmen than on citizens at large.”
 Corporate Social Responsibility- What is it?

The EU defines Corporate Social Responsibility as:

“Companies who integrate social and
environmental concerns in their business
operations and in their interaction with their
stakeholders on a voluntary basis”
(Recognized by business to be in their longterm interests)

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 Corporate Social Responsibility

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 Corporate social responsibility is the continuing commitment by • Voluntariness
WBCSD 2000 • Stakeholder
business to behave ethically and contribute to economic
• Social
development while improving the quality of life of the workforce and • economic
their families as well as the local community and society at large

Commission of the CSR is the concept that an enterprise is accountable for its impact on • Voluntariness
all relevant stakeholders. It is the continuing commitment by business • Stakeholder
European • Social
Communities, to behave fairly and responsibly and contribute to economic
• economic
2003 development while improving the quality of life of the work force and
their families as well as of the local community and society at large

Hopkins, 2003 CSR is concerned with treating the stakeholders of the firm ethically • Voluntariness
or in a responsible manner. ‘Ethically or responsible’ means treating • Stakeholder
stakeholders in a manner deemed acceptable in civilized societies. • Ethics
• Social
Social includes economic responsibility. Stakeholders exist both within • economic
a firm and outside. The wider aim of social responsibility is to create
higher and higher standards of living, while preserving the profitability
of the corporation, for peoples both within and outside the
corporation
UK Government, Corporate social responsibility recognizes that the private sector’s • Voluntariness
wider commercial interests require it to manage its impact on society • Stakeholder
2001 • Social
and the environment in the widest sense. This requires it to establish
• Economic
an appropriate dialogue or partnership with relevant stakeholders, be • Environment
they employees, customers, investors, suppliers or communities. CSR
goes beyond legal obligations, involving voluntary, private sector-led
engagement, which reflects the priorities and characteristics of each
business, as well as sectoral and local factors
Chinese A concrete action taken by Chinese companies to Legal
Ministry of implement the political aspirations of the new Social
commerce communist party collective leadership – putting Stakeholder
people first to create a harmonious society.
GAP Inc Being socially responsible means striving to Ethics
incorporate our values and ethics into everything we Social
do – from how we run our business , to how we treat Stakeholders
our employees, to how we impact the communities Economic
where we live and work. Legal
HSBC Means managing our business responsibly and Economic
sensitively for long term success. Our goal is not, and Social
never has been, profit at any cost because we know Ethical
that tomorrows success depends on the trust we Legal
build today.
Christian Aid An entirely voluntary, corporate-led initiative to Voluntary
promote self-regulation as a substitute for regulation
at either national or international level.
CSR Asia A company’s commitment to operating in an Voluntary
economically, socially and environmentally Social
sustainable manner whilst balancing the interests of Economic
diverse stakeholders. Env
Transformational CSR – CSR Inc

Besides mitigating negative impacts and externalities of

companies on the environment and stakeholders as a primary
responsibility, 'Transformational CSR'  promotes inclusive
development that seeks businesses to work towards
bringing permanent changes in ‘conditions’ that deny people
their ‘rights’ to have equal access to knowledge, economic
opportunities, quality of life, and democratic process.

Key words:
1. Mitigation of impacts/externalities
2. Environment
3. stakeholders
4. Inclusive development
5. Permanent changes in conditions
6. Denial of rights
7. Equal access to knowledge, economic opportunities, quality of life &
democratic process
 Analysis of 37 CSR definitions
Dimensions The definition is coded to the
dimension if it refers to
The environmental The natural environment
dimension
The social dimension
  The relationship between
business and society
The economic dimension Socio-economic or financial •
  aspects, including describing •
Example phrases
• ‘a cleaner environment’
• ‘environmental stewardship’
• ‘environmental concerns in business
operations’
• ‘contribute to a better society’
• ‘integrate social concerns in their business
operations’
• ‘consider the full scope of their impact on
communities’
‘contribute to economic development’
‘preserving the profitability’

  CSR in terms of a business • ‘business operations’

The stakeholder dimension
 
The voluntariness dimension
operation
Stakeholders or stakeholder
groups
Actions not prescribed by law
• ‘interaction with their stakeholders’
• ‘how organizations interact with their
employees, suppliers, customers and
communities’ ‘treating the stakeholders of
the firm’
• ‘based on ethical values’
• ‘beyond legal obligations’
• ‘voluntary’
 Dimension
Dimension Dimension score
ratio (%)

The stakeholder dimension 1213 88

The social dimension 1213 88
The economic dimension 1187 86
The voluntariness dimension 1104 80
The environmental dimension 818 59

% of total
Dimensions included in a Number of definitions frequency
definition   count from
Google
=5 8 40
≥4 20 64
≥3 31 97
≥2 33 99
≥1 37 100
 Case Analysis
Drivers Dimensions Morality Score
Case No-1 Brand + Reputation Eco – yes AMORAL 3
Philanthropy (as a Env - unexplored
means) Legal – Yes, half explored
Ethical –Yes, unexplored
Social/Phil- Underlying impact is
negative
Case No-2 Values/Principles Eco – yes (long-term) Moral 3/5
Env - unexplored
Legal – Yes, non-negotiable
Ethical –Yes, zero tolerance
Social/Phil- Poor
Case No-3 Socio-political pressure Eco – yes (long-term) AMORAL 1
Ignorance+Arrogance Env - unexplored
Legal – Yes, (ESIA)
Ethical –Yes, Failed on ethics
Social/Phil- yes but ad hoc &
unstructured which failed to
make sustainable impact
 Case Analysis
Drivers Dimensions Morality Score
Case No-4 Forced Compliance Eco – yes but Greed IMMORAL 1
To Env - unexplored
Dev of new products Legal – Yes, using loopholes
& improving sales Ethical –Yes, but ignored
Social/Phil- yes/ the result is
not known

Case No-5 Social license Eco – yes IMMORAL 1

Reputation Env – yes but unconsidered
Legal – Yes, (ESIA)/ Unexplored
Ethical –Yes, Failed on ethics as
ignored the interests of 90
villages
Social/Phil- yes but underlying
impact is negative
Carroll’s Pyramid Model of CSR
Concentric Circles Model of CSR
Ethical Model or DNA Model of CSR

Legal
Responsible
Business

Eco Env

Ethical Social
Qualitative Analysis of different models of CSR
Pyramid Intersecting circles Concentric circles Ethical/DNA
Order of Hierarchical No particular order Inclusion system; Equal
importance Eco Resp. Eco. Resp. at the weightage to
first core all
Scope of Narrow Split Wide Wide
responsibilities

Role of Discretionary Independent Integral to the design Integral

philanthropy essence

Social index Moderate High High High

Environment Moderate Moderate Moderate High
Index
Governance Moderate Low Moderate High
Index
Acceptance Moderate Low Moderate Wide

Attractiveness Low Low Moderate High

 Ethics Morals
What are they? The rules of conduct recognized in respect Principles or habits with respect to
to a particular class of human actions or a right or wrong conduct. While morals
particular group or culture. also prescribe dos and don'ts,
morality is ultimately a personal
compass of right and wrong.
Where do they come Social system - External Individual - Internal
from?
Why we do it? Because society says it is the right thing to Because we believe in something
do. being right or wrong.
Flexibility Ethics are dependent on others for Usually consistent, although can
definition. They tend to be consistent change if an individual’s beliefs
within a certain context, but can vary change.
between contexts.
The "Gray" A person strictly following Ethical A Moral Person although perhaps
Principles may not have any Morals at all. bound by a higher covenant, may
Likewise, one could violate Ethical choose to follow a code of ethics as it
Principles within a given system of rules in would apply to a system. "Make it fit"
order to maintain Moral integrity.
Origin Greek word "ethos" meaning"character" Latin word "mos" meaning "custom"
Acceptability Ethics are governed by professional and Morality transcends cultural norms
legal guidelines within a particular time
and place
 CSR Arguments
on
‘Moral/Ethical Management’

Immoral Amoral Moral

Decisions are discordant Decisions are based on
with accepted ethical ‘letters’; invariably ‘sprit’ of
principles the matter is ignored
conveniently
Profit-maximization Profit-making
Legal standards are taken Minimum Compliance
as barriers or impediments
Selfish Committed to business
goals & managers
Insensitive Limited sensitivity
‘Spirit’ of the matter given
priority over the letters and
decisions are weighed on
‘no-harm’ basis
Profit-earning
Compliance & respect to
Customary laws
Empathy driven
management
Extra-ordinary sensitive
CSR is a dynamic process factored by various business
drivers

• Values / Principles
• Brand Image
• Compliance
• Reputation and public relations
• Philanthropy
• Mitigating business challenges/ operational risks
• Developing new products & improving sales revenue

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Key Drivers: NGO Activism

• Facilitators: IT (esp
Internet), media, low cost
travel

• Boycotts, brand damage,

influence legislation,
domino effect

• e.g. Shell in Nigeria, Exxon

in Cameroon, Sinopec in
Sudan, Apparel Industry
(Nike, Gap), GMO, Wood
Products, Vedanta in
Odisha, etc.
 Characteristics of CSR ?

Stakeholder
Voluntary orientation

Managing negative impacts or externalities

Ethics & Values

Alignment of
social & economic
responsibilities

Beyond philanthropy
 Benefits of CSR

1 SOCIAL LICENSE B
O
2 Reputation/Brand T
T
3 Attracting or retaining employees O
M
L
4 Loyalty of consumers/customers
I
N
5 Community as suppliers
E
 Benefits - Drivers
• Minimizes business risk(s)
• Enhances reputation and brand image
• Maximizes economic gain

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CSR in different organizational contexts

1. CSR and the private sector

2. CSR and the public sector
3. CSR and civil society organizations
Where does the world stand on CSR?

18
 Current global trends in CSR?

Social Responsibility to Social Responsiveness

1. Shareholders to ‘stakeholders’
2. Charity to ‘strategic philanthropy’
3. Voluntary to ‘mandatory’
4. Compliance to Self-regulatory
5. ‘Fair weather approach’ to ‘institutionalizing CSR into
core business practices’
6. ‘Social Mask’ to ‘integrating it into DNA of the
Business’
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 Key Issues in CSR
• Labour rights:
– child labour
– forced labour
– right to collective bargaining
– safety and health

• Environmental conditions
Socio-economic – water & air emissions
– Waste management
 Inequality – climate change
 Injustice
• Human rights
– political influence against voices/concerns
– connivance in conflict/weak zones
– complicity in extra-judicial killings

• Poverty Alleviation
– job creation
– livelihood enhancement
– Skills
– Education & health
 What is CSR
• CSR is a way to do business:
‘Doing Right’ + ‘Doing Good’ = ‘Doing well’

• CSR is an evolving market-based response to several wide-

ranging challenges that corporates are currently facing.

• CSR is about business and other organizations going beyond

the legal obligations to manage the impact they have on
the environment and society

• CSR is a business strategy and advocates to believe that

there is strategic advantage to a company.
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 • It is a behavior/conduct of business over and above
legal requirements
• It is intrinsically linked with the concept of
sustainable development
• It is not an optional add-on to business core
activities, but it’s about the way business are
managed/ conducted
• It is about how profits are made rather than how
much profit there is and how much given away

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 What is not CSR

• Legal or regulatory compliance

• Charity/ philanthropy

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 Strategic CSR

CSR must surely be about reciprocal relationships that deliver social values
throughout the ecosystem. It must be about a mutually beneficial and mutually
reinforcing strategic relationship between a company and the society that it
interacts with and impacts on the local community; or parts of the globe where a
company transacts business.

Adding a social dimension to the value proposition and understanding inside-out and outside-in
linkages is strategic CSR, which results in the contemporary organisation being able to impact
positively on society, rather than merely dishing up PR and marketing hype.
 Thank you……

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 Summary
1. Evolution of CSR
2. Definitions of CSR
3. Dimensions & dynamics of CSR
4. Types of Morality in CSR
5. Characteristics of CSR
6. Drivers of CSR
7. CSR and sectors
8. CSR and geographies
9. Strategic CSR
10.Transformational CSR