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Chp 1 intro

Chp2 obj of study

Chp3 research methodology

Chp 4 conceptual framework in grnl abt d topic

Chp5 case study / primary data

Chp 6 conclusion

Chp7 suggestions and recommendations

Chp8 bibliography

Chp9 wibliography

Introduction

As the pace of industrialization quickened employers became more and more

concerned with the loss of productivity efficiency due to avoidable sickness or

accidents or stoppage of work due to bad personal relationships. This gave rise to

the idea of a welfare state, which was further strengthened by the growth of

democracy and of respect to human dignity during the last 150 years.

The frame work of a welfare state and with it the concept of social responsibility

have thus come to stay in many countries of the world. The changing image of

business in the recent years has lent further support to the idea of social

responsibility. Some public opinion polls in the 1960s and 1970s in United States

have left businessman disenchanted.

These polls have revealed that the businessman is viewed as an individual who

does not cares for others, who ignored social problems, who preys upon the

population, who exploits labor, and who is a selfish money grabber. On the other

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hand, until these opinions were unveiled, the businessman in America believed that

others viewed him as he viewed himself, as a practical, down-to-earth,

hardworking, broadminded, progressive, interesting and a competitive free

enterpriser.

He believed that the society looked up at him as a self sacrificing community

leader, pillar of society, generous to a fault, great supporter of education, patron of

the arts, in short, the salt of the earth. Indeed, the businessman in the pre-poll days

thought of himself as a happy mix of Plato, Gandhi, and Churchill. Although the

subject Corporate Social Responsibility in its present form and content has

gained popular attention only in recent years, its origin can be traced

back to the evolution of the concept of a welfare state.

What Is Corporate Social Responsibility?

Corporate social responsibility (CSR) is a form of business self-regulation to

incorporate social and environmental concerns. It represents a business model that

adheres to laws, ethical standards, and international norms.

As part of the business model, businesses have to take into account the impact of

their activities on the environment, employees, communities, stakeholders, and

other members of the public. In short, CSR represents the deliberate inclusion of

the publics interest in a business decision making to ensure a triple bottom line

that considers the planet, people, and profits. In general, CSR involves some kind

of standardized reporting that allows the business to collect information on how it

is making progress on various fronts.

Businesses that engage in CSR typically focus on some or all of the following

1. Environment: This requires a look at the environmental impacts of productsand services, as well as what the business does outside the company to

improve the environment.

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2. Employees: Its important to ensure that all employees are cared foradequately. Businesses usually focus on workplace conditions, benefits,

living wages, and training.

3. Communities: Engaging the surrounding communities is an important part ofnot just creating good human capital that can serve the business, but also

securing a reputation that can further establish the business.

4. Regulations: Respecting regulations to the fullest and often exceeding themis part of being socially responsible.

5. Crisis Preparedness: Being ready to address business crises and ensuresafety for employees and surrounding communities is critical. Having plans

ready and tried are important in ensuring minimal losses during times of

crises.

Meaning and Definition

CSR is about how companies manage the business processes to produce an

overall positive impact on society.

Take the following illustration:Companies need to answer to two aspects of their

operations.

1. The quality of their management - both in terms of people and processes (the

inner circle).

2. The nature and quantity of their impact on society in the various areas. Outside

stakeholders are taking an increasing interest in the activity of the company. Most

look to the outer circle - what the company has actually done, good or bad, in

terms of its products and services, in terms of its impact on the environment and on

local communities, or in how it treats and develops its workforce. Out of the

various stakeholders, it is financial analysts who are predominantly focused - as

well as past financial performance - on quality of management as an indicator of

likely future performance.

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Other definitions

The World Business Council for Sustainable Development in its publication

"Making Good Business Sense" by Lord Holme and Richard Watts, used the

following definition. " Corporate Social Responsibi li ty is the continuing

commitment by business to behave ethically and contribute to economic

development whil e improving the quality of l if e of the workforce and their

famili es as well as of the local communi ty and society at large"

The same report gave some evidence of the different perceptions of what this

should mean from a number of different societies across the world. Definitions as

different as " CSR is about capacity bui lding for sustainable liveli hoods. I t

respects cul tur al di f ferences and finds the business opportuni ties in bui lding the

ski l ls of employees, the community and the government" from Ghana, through to

" CSR is about business giving back to society" from the Phillipines.

On the other hand, the European Commission hedges its bets with two definitions

wrapped into one: " A concept whereby companies decide volun tari ly to

contr ibute to a better society and a cleaner envir onment. A concept whereby

companies in tegrate social and environmental concerns in their business

operations and in their in teraction with their stakeholders on a voluntary basis".

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Need for Corporate Social

Responsibility

1. A societal approach to business is the contemporary business philosophy, which

demands business organizations to be responsive to the social problems.

2. As a result of globalization of business, global companies and MNCs operate in

a big way in their host countries. In order to establish a good corporate image, they

include social responsibility as a corporate objective. Indigenous companies are

forced to follow suit for maintaining their corporate identity.

3. In the terms and conditions of collaborations agreements, very often, social

welfare terms are included which necessitates the collaborating company to take up

social responsibility of business.

4. On the basis of legal provisions, companies have to concentrate on social

problems. For example an industrial organization in India must obtain a

certification from Pollution Control Board.

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5. Corporate donations of social welfare projects of approved NGOs areexempted

from income tax in India.

6. An organizations commitment to social responsibility creates a good corporate

image, and there by a better business environment. There are many situations

where social responsibility of a business becomes necessary. Few of these

situations which show the need for Corporate Social Responsibility are discussed

below.

7. Social responsibility of business enables the organization to improve its product

positioning and thereby improve its market share.

8. Very often situations demand due to natural calamities, accidents and so on. For

example, gas leak at the Union Carbide plant in Bhopal, wherein the company had

to monetarily compensate through medical treatment.

Importance of CSR

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 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

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that we should and must embrace. Carly Fiorina Chairman and Chief Executive

Officer Hewlett Packard Compan 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:

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 day to day operations.

CSR in Todays World

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.

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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 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.

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Implementing CSR

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 believe the issue of

how corporations integrate CSR into everyday operations and long-term strategic

planning will define the business marketplace in the near future. It will become a

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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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Arguments of 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 wider community within which the company operates.

It is recognition on the part of thebusiness that for profit entities do 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

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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 believe that businesses, without

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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 self-interest 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

branddriven 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.

3. Arguments against corporate social responsibility

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Corporate Social responsibility in India

Most companies are not doing any CSR

Many companies are only making token gestures towards CSR in tangential

ways such as donations to charitable trusts or NGOs, sponsorship of events, etc.

Most companies believe that charity and philanthropy equals to CSR; very few

companies are using their core competence to benefit the community.

Most companies use CSR as a marketing tool to further spread the word about

their business. For instance, donation of a token amount to some cause on

purchase of a particular product. The fact that companies are hiring advertising

agencies for their CSR further highlights this.

Only Few Indian companies (from this study) publish a Corporate

Sustainability Report to measure and assess the impact of their business on the

environment .

Very few companies openly state the processes followed by them, the damage

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caused by these processes, and the steps taken to minimize this damage.

Very few companies state how much they spend on CSR. There is no mention

of the amount spent in any of their balance sheets or annual reports. Most

companies just list and describe their CSR activities and seem to be spending

minimal amounts on CSR.

Very few companies are engaged in CSR activities in the local communities

where they are based.

Very few companies have a clearly defined CSR philosophy. Most implement

their CSR in an ad-hoc manner, unconnected with their business process.

Most companies spread their CSR funds thinly across many activities, thus

somewhere losing the purpose of undertaking that activity.

Most companies appear reluctant to themselves fulfill their CSR unless it is

mandatory by law.

Generally speaking, most companies seem either unaware or dont care about

CSR. However, all companies can be considered to be an upward learning

curve with respect to CSR and it is expected that the situation will improve.

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Measure for applying Corporate

Social Responsibility

Sustainability reporting

It is recommended that every company should publish a separate Corporate

Sustainability Report (as per the Global Reporting Initiative (GRI) framework)

along with their Annual Report. At the very least, every company must include a

Corporate Sustainability section in its Annual Report (similar to the mandatory

section on Conservation of Energy, Technology Absorption and Foreign Exchange

Earnings and Outgo).

CSR philosophy to be defined and articulated

Every company must clearly define its own CSR philosophy and objectives, stating

which issues it intends working on or contributing to. It is recommended that a

company first takes up areas that directly concern its business processes, and

thereafter any other related or unrelated issues. These can also yield strategic

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benefits to the company.

Minimum annual CSR expenditure

Every company must spend a minimum of 0.2% of its annual income on CSR

activities. The CSR spending of a company should not be linked to the profit made

by the company because this would vary from year to year and the CSR activities

would thus not be consistently maintained.

The scale of operations of a company and its impact is connected with its sales,

and not with its profits. The larger the company, the greater is the damage it is

doing to the environment. Conversely, the greater is the company's ability to do

good.

Protection and restoration of the environment

Every company must be engaged in CSR activities that minimise its harm to the

environment, and which help restore damage done to the environment because of

the company. For example, all companies should use energy-efficient technologies

for their factories and offices, and adopt rainwater harvesting irrespective of the

production process they are engaged in.

Employment for marginalized groups

Every company should provide inclusive employment opportunities and include

the physically-challenged and marginalized groups in their workforce. The number

of employment opportunities offered to such groups should be stated in the Annual

Reports as is done by Public Sector Undertakings.

Local community development

It is recommended that a company first undertakes projects in the places where it

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functions, and helps those local communities and environments that are affected by

its work.

Use of core competence

Every company should use its core competence to benefit its stakeholders and

society. For instance, banks can use their expertise to identify and counsel debtors

who are likely to run into financial trouble

Extending profile and area of businesses

A company should attempt to stretch its business beyond its existing profile and

into areas where it does not normally work so as to reach out to under-served

groups and populations. While this may sometimes mean smaller profit margins or

marginal losses for the company, it will invariably result in valuable business

learning's as well as effective CSR for the company.

Developing internal CSR implementation systems

A company may choose to develop an in-house CSR team or division that

undertakes the CSR activities for the company. This is desirable as it leads to

greater sensitization and awareness within the company about it's processes,

responsibilities, role, etc. and leads to the internalization of the company's CSR

philosophy. Instead of contributing to the trust of the CEO or the promoter family,

a company should set up its own trust/foundation as a matter of proper business

ethics. It is recommended that a company set up a committee that includes an

external Director, an NGO and local stakeholders for selecting, monitoring and

evaluating its CSR activities.

Focused CSR activities for greater impact

It is recommended that a company identifies a few issues for it's CSR activities and

works on these areas for a sustained period of time so that measurable results and

improvements can be achieved, rather than undertaking or supporting several small

initiatives across several areas thereby reducing effective impact.

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Conclusion

Corporate Social Responsibility is a difficult and elusive topic for companies to

deal with. It can often be very costly and yield benefits that are hard to quantify.

Perhaps this is one reason why companies, according to the survey, have put so

much focus on the internal improvements that can be made, such as improving

corporate governance and transparency. This could also explain why the most

important stakeholders, after customers, are the traditionally important employees

and shareholders. Theres also the issue of just what standard of corporate social

responsibility should companies use and how far companies should go to perform

their responsibilities beyond what the laws call for. The issue of what is the

responsibility of a corporation is far from being settled, and there is an

unresolved argument over what corporate social responsibility means. Companies

face a plethora of options among the various standards, guidelines, benchmarks

and other proposed measures of corporate social responsibility.

One point that all can agree on is that corporate social responsibility is not a neutral

topic. There is a persistent debate about whether the corporate social responsibility

movement represents an unjustified intrusion into corporate affairs, and whether

companies should invest profits in their own corporate social responsibility

projects or return the money to shareholders to let them invest as they see fit. But

there is no denying that corporate social responsibility has become an important

issue facing the global business community and one that promises to grow in

importance in the coming years.

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Reference

1. Sen Gupta, Sunita Singh (2004).Business Social Partnership : An

International Perspective. Jaipur: Aalekh publications.

2. Jagdish (2004). Social Welfare in the Twenty-First Century : Issues ,

Critique and Relevance.New Delhi: Akansha.

3. Sharma, Shashi Prabha (2004).Basic Principles of Education.New Delhi:

kanishka.

4. Saeen, Sandeeep(2001). Ethics Management. New Delhi: Sarup.

5. Corporate Social Responsibility in India - An Empirical Research

By Bernadette Dsilva

6. 2. CSR could prove to be a valuable asset in an age of M&As, as it helps

firms spread their brand name - Maitreyee Handique

7. 3. Corporate Social Responsibility is no longer just an addition, it is a key

differentiator." Prasad Chandra, CMD, BASF South Asia