csr challenges of modern times

8/2/2019 CSR Challenges of Modern Times

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External Factors AffectingBusiness

Degree of Competition

Other factors PESTEL


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PESTEL ANALYSIS

P Political

E Economic

S Social

T Technological

E Environmental

L Legal


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Political

how changes in government policy mightaffect the business e.g. a decision tosubsidise building new houses in an areacould be good for a local brick works.

Political factors are how and to whatdegree a government intervenes in the

economy. Specifically, political factorsinclude areas such as tax policy, labourlaw, environmental law, trade restrictions,tariffs, and political stability.


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Economic

how the economy affects a business in termsof taxation, government spending, generaldemand, interest rates, exchange rates andglobal economic factors.

Economic factors include economic growth,interest rates, exchange rates and the inflationrate. These factors have major impacts onhow businesses operate and make decisions.

For example, Exchange rates affect the costsof exporting goods and the supply and price ofimported goods in an economy


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Social

how consumers, households and communities behave andtheir beliefs. For instance, changes in attitude towards health,or a greater number of pensioners in a population.

Social factors include the cultural aspects and include healthconsciousness, population growth rate, age distribution,career attitudes and emphasis on safety. Trends in socialfactors affect the demand for a company's products and howthat company operates.

For example, an aging population may imply a smaller andless-willing workforce (thus increasing the cost of labor).Furthermore, companies may change various managementstrategies to adapt to these social trends (such as recruitingolder workers).


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Technological

how the rapid pace of change in productionprocesses and product innovation affect abusiness.

Technological factors includetechnological aspects such as R&D activity,automation, technology incentives and the

rate of technological change. They candetermine barriers to entry, minimumefficient production level and influenceoutsourcing decisions.


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Environmental

Environmental factors include ecological andenvironmental aspects such as weather,climate, and climate change, which may

especially affect industries such as tourism,farming, and insurance.

Furthermore, growing awareness of thepotential impacts of climate change is affecting

how companies operate and the products theyoffer, both creating new markets anddiminishing or destroying existing ones.


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Legal

the way in which legislation in societyaffects the business. E.g. changes inemployment laws on working hours

Legal factors include discrimination law,consumer law, antitrust law, employmentlaw, and health and safety law. These

factors can affect how a companyoperates, its costs, and the demand forits products.


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Ethical

what is regarded as morally right orwrong for a business to do. For instanceshould it trade with countries which have

a poor record on human rights.


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Social Environment and theBusiness Social change is when the people in the community

adjust their attitudes to way they live. Businesses willneed to adjust their products to meet these changes, e.g.taking sugar out of childrens drinks, because parents feeltheir children are having too much sugar in their diets.

A social benefit is where a business action leads tobenefits above and beyond the direct benefits to thebusiness and/or customer. For example, the building of anattractive new factory provides employment opportunitiesto the local community.

A social cost is where the action has the reverse effectthere are costs imposed on the rest of society, forinstance pollution.


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Sustainable Business Practices

Sustainable business, or green business, is enterprise thathas no negative impact on the global or local environment,community, society, or economya business that strives tomeet the triple bottom line. Often, sustainable businesses haveprogressive environmental and human rights policies.

In general, business is described as green if it matches thefollowing four criteria:

It incorporates principles of sustainability into each of itsbusiness decisions.

It supplies environmentally friendly products or services thatreplaces demand for non-green products and/or services.

It is greener than traditional competition. It has made an enduring commitment to environmental

principles in its business operations.


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Sustainable Development is thedevelopment that "meets the needs ofthe present without compromising theability of future generations to meet theirown needs. WCED 1987

Brundtland report

A sustainable business is any organization that participates

in environmentally friendly or green activities to ensure thatall processes, products, and manufacturing activitiesadequately address current environmental concerns while

maintaining a profit


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TBL

The Brundtland Report emphasized thatsustainability is a three-legged stool ofpeople, planet, and profit

The triple bottom line (abbreviated as"TBL" or "3BL", and also known as"people, planet, profit" or "the threepillars") captures an expanded spectrum

of values and criteria for measuringorganizational (and societal) success:social, ecological and economic.


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The Global Perspective

By 2025 we expect to have an additional three billionpeople living on this planet.

Natural resources are consumed faster than they can berestored.

According to current trends in world population growthand industrialisation, waste and pollutants are releasedfaster than the earth can absorb them.

According to preliminary assessments, reductions of

over 90% on material throughput, energy use andenvironmental degradation will be required by the year2040 to meet the needs of a growing population withinthe planets ecological means.


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The Global Perspective

If sustainable development is to be achieved,production processes, products and serviceshave to be redesigned. This requires the

development of : New systems and approaches in industry

Environmentally sound technologies with a

focus on cleaner and safer and more efficientuse of raw materials

Government policies that encourage thedevelopment of these systems and

technologies.


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World population is increasingto unprecedented levels.


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First Millennium - 25 million

Second Millennium - 6.1 billionForecast to reach 9.3 billion by 2050!

Population growth and poverty

Country Life expectancy atbirth (years) 2001

Norway 78.7Iceland 79.6

Sweden 79.9

Australia 79.0

Netherlands 78.2

Burundi 40.4

Mali 48.4

Burkina Faso 45.8

Niger 45.6

Sierra Leone 34.5

1.2 billon people live below

the poverty line on less thanone dollar a day.

Almost 3 billion - or nearlyhalf the world's people -

survive on less than 2dollars a day.

Human Development Index 2003

At th ti illi f


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At the same time, millions ofpeople worldwide are struggling

to meet their basic needs. 1.3 billion people live in

absolute poverty, withincomes less than $1/day(World Bank)

841 million people indeveloping countries sufferfrom basic protein-energymalnutrition (UN Food and AgricultureOrganization)

Nearly 1 billion peopleeither cannot work or areemployed in jobs wherethey cannot support theirfamily (International Labor Organization)

11.7%

2.3%

1.9%

1.4%

RichestFifth

PoorestFifth

(UNDP, Human Development Report 1992)

82.7%

Distribution of Total World Income


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Stakeholder expectations

Employee pressurePeople expect more from their workplace

Investor pressure

People and organisations are attaching more weight to ethics,

values and principles when making investment decisions

Consumer pressure

Consumers are balancing their purchase choices against theirown set of values

Licence tooperate


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Triple Bottom Line

Social acceptability

Environmental performance Economic viability

SUSTAINABILITY


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ENVIRONMENTAL 2002-0210% improvement in energy efficiency25% reduction in volatile organic air

emissions12% reduction in solid waste

SOCIAL 2002$8,263 per U.S. employee formedical benefits$43.7 million contributed foreducation, social, environmentaland other community needs inthe U.S.

ECONOMIC 2002$16.332 billion in net sales$1.974 billion in reported netincome$966 million in taxes paid

3Ms triple bottom line performance


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FORD Total Cost Management

Supply Chain Cost Management Ford Production system

Lean Manufacturing

Ford Environmental system

ISO 14001

Ford Product Development System

When Henry Ford recycled wooden cratesinto running boards and leftover wood scrapsinto charcoal, people didnt call him a greatenvironmentalist They called him a smart

businessman.


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Sustainability at what level?

It took Britain half the resources of theplanet to achieve prosperity; how manyplanets will India require.?

Mahatma Gandhi when asked if afterindependence India would acquire the UKstandard of living


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Business & Ecosystem Positiveinteraction

Cleaner Production

Ecoefficiency


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Cleaner Production

Cleaner Production is the continualeffort to prevent pollution, reduce theuse of energy, water and material

resources and minimise waste, allwithout reducing production capacity.

Water Management- by the way of storing,recycling and other means.

Waste management- need to activelyhandle the disposal of waste so as to lessenthe impact on the environment


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Water Management

Larsen & Toubro Ltd., the company has Zero DischargeCampus at Powai, and the concept is such that not a singledrop of the untreated waste water is let out of the campus

premises. The treated wastewater is reused for gardening,toilet flushing, etc. The rain water harvesting is also practicedin manufacturing locations at Powai and Mysore campus.

Maruti Suzuki India Ltd. Water resource managementprovides for: 100% Recycling of treated waste water, Reuse of treated water in process or horticulture, Rain water harvesting.


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Waste Management

Tata Sponge Iron Ltd.'s solid waste managementpractice uses the waste materials as input to othercompanies. Hazardous waste management practice

involves selling of waste to government authorizedrecyclers.

Nucleus Software Export Ltd., has introduced LeanManagement and Kaizen initiatives at workplace to

satisfy its customers and reduce waste. Company'sKaizen projects include Paper saving, Energysaving, Water saving etc.


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Eco-efficiency

Delivery of competitively

priced goods and servicesthat satisfy human needsand bring quality to life whileprogressively reducingecological impacts and

resource intensitythroughout the life cycle to alevel which is in line with theearths carrying capacity

Reduce the material

intensity of goods andservices Reduce the energy

intensity of goods andservices

Reduce toxic dispersion

Enhance materialrecyclability Maximise sustainable use

of renewable resources Enhance material

durability, and Increase the service

intensity of goods andservices


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Benefits of eco-efficiency

Direct savings Water reduction Input reduction Waste savings

Increased efficiency Fewer defectives Better work practices

Marketing advantage Customer relations New products Green tick?

Risk minimisation Lower impacts EPA relations Community relations

csr challenges of modern times

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