CORPORATE THAT CARE – Corporate Social Responsibilities.

By Prof. Moloy Ghoshal, MBA,PhD(Pu)

This research paper titled “Corporate That Care-corporate social responsibilities” has

been published by Shiva Institute of Management Studies, Ghaziabad on it’s esteemed

journal “ International Journal of Management & Sciences vol-2, No-1,July-2006”.

ABSTRACT: Corporate in India, just like any where in the world are striving to

improve their image of business through exercising social responsibilities. The

objective behind the endeavor is to create an image that they are in the society not

just to operate business and earn profit but to become a good corporate citizen .

Now a days CSR( Corporate Social Responsibilities) is not a mere philanthropy but

become an integral part of strategy. Corporate houses in India has realized that to

sustain the success in business, investment in social welfare is no longer an

expenditure but a road map to reach into the heart of consumers. It’s became an

established fact that corporates that exercising their responsibilities towards society

are harvesting a higher returns on a long term basis. Corporates body like TATA,

ONGC, BIRLA, NTPC have already established an example in practicing CSR, and

built up an image of friend of society in the mind of our citizens.

The present article will through light upon various aspects of social responsibility and

it’s implication towards the long term survival of companies.

1.Introduction:

1.1 What is CSR?

The question of social responsibility of business has been controversial, at least for

some times. To look at the social responsibility of business in specific terms, one

needs to recognize the fact that different sections of society- shareholders, employees,

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consumers, government and the society as a whole-are associated with business in

different ways, some directly and some indirectly and the interest of different sections

are affected by the business decisions and activities in different ways and different

measures. There fore we can say that the question whether business have social

responsibilities to fulfill is an ethical one and the answer to an ethical question is a

matter of opinion and the individual perception about an ethical issue.

Ethical problems are truly managerial dilemma, because they represent a conflict

between an organisation’s economics performance and it’s social performance or we

can say obligations to business. Unfortunately, the dilemma of management is that

these obligations are costly. It is possible of course to ignore the balance between

economic and social performance and to argue that the managerial dilemma does not

exist. Ethical issues are complex as well as interesting. Let us first understand what

does it mean by CSR-

Corporate social responsibility (CSR) is the alignment of business operation with

social welfare. It takes into account the interests of stakeholders in the company’s

business policies and actions.

It can also be define as, ‘commitment of business to contribute on a sustainable

economic development, welfare of employees and their families, the local community

and society as a whole, to improve their quality of life by providing different

amenities like hospital, school etc’.

So we can say CSR is the manner, a company operate it’s business which meets or

exceed the ethical, legal, commercial and public expectation that society has from the

company.

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1.2 Areas to franchise CSR:

Environment and Ecology: the exhaust from a diesel engine contains approximately

900 chemical compounds. Most of these compounds have been identified but the

environment effects of only a few of these compounds have been studied and it has

been found that some of these compounds have very negative impact on the road side

vegetation.

Now here comes the ethical dilemma. The companies manufacturing diesel engine

have two alternatives, either to stop production, which result increase in

unemployment and decrease in economic development or they can develop a catalytic

converter to reduce or eliminate the harmful compound and then raise their price,

which leads them out of the competition from market. Here comes the role of

government to establish a regulatory body which will determine an industrial wide

standard so that all producers will compete with the same cost and price structure. The

companies should also follow the principle of 4Rs(reduction in waste, reuse, recycle

and recovery) to manage waste of water, energy and other scare resources.

In China organic waste from thousands of small straw pulp mills is used as

agricultural fertilizer.

In Kalundborg , Denmark, a coal-fired power station, an oil refinery , a plastic board

factory, a pharmaceutical plant and the municipality have created an ‘industrial

symbiosis’ by exploiting each other’s waste streams.

Health and well beings: good health is the most precious wealth of human being and

we should ensure that. Generally what we found that temperature, humidity, noise

levels are too high; ventilation and lighting may be too low and dust and fumes are

still found in most of the heavy and small manufacturing plants, like innumerable

number of sponge iron factories in West-Bengal, the stone crashing mines of

Rajasthan , the tanneries of Kanpur and Kolkata to name a few.

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The government should enact different laws not on pen and paper but in reality. The

companies should establish policies to ensure health and safety of all the employees-

which must be known to employees. They should involve employees in business

decisions that affect them; consult employees on how to handle a down turn in the

business if layoffs are avoidable. Establish a open book policy for training, retirement

planning and dependents care.

Education and social upliftment: To eradicate illiteracy is a greater challenge for the

nation and as responsible citizen the corporate houses can not deny it’s role in this

direction. The corporate houses should setup primary as well as higher education

facility in the village and urban area, so that along with the noble mission of

urbanization, the education level, attitude and the habits of the villagers must be

changed. Along with the conventional education mission, the business houses should

also facilitate to set–up adult education programme so that who were deprive from

basic education in their schooling days can get the opportunity to enlighten them with

knowledge. The business houses may sponsor for new buildings, computer,

laboratories, toilets, play grounds etc for already established schools and colleges.

In the direction of social upliftment the business house make an effort to create an

awareness regarding hygiene, cleanliness, prevention of dieses, female and child

health care etc.

2 Implementing CSR:

There is no one-size-fit-all method for implementing CSR approach; each firm has it’s

unique characteristics and circumstances that will affect how it views it’s social

responsibility; and each will vary on it’s awareness of CSR issues and how much

work it has already done towards implementing a CSR approach.

But we can’t deny the importance of successful and systematic implementation of

CSR-in harmony with the firms mission, objectives, business culture, environment,

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risk profile and operating conditions. What I do feel is that it requires a broad

framework for implementing CSR which will be built on existing experience as well

as knowledge of other fields such as quality and environment management. The

framework would follow the well known “plain, do, check and improvement”

model of total quality management under the guideline of international organisations

like ISO. The framework must be flexible enough and the firms are encourage to

adopt it as appropriate for their organisation. The implementation framework

comprises six key tasks viz conduct a CSR assessment, develop a CSR strategy,

develop CSR commitments, implements CSR commitments, verify and report on

progress and finally evaluate and improve. In recognition of the fact that firms are at

different level of sophistication and development with respect to CSR, it is understood

that firms may choose to forego a particular aspect or task when it has already been

undertaken.

The implementation framework:

When? What? How?

(Conceptual phase) (Task delineation) (Checkpoints on the journey)
Plan
Assemble a CSR leadership team

Develop a working definition of CSR
1.Conduct a CSR
Review corporate documents, processes and activities
assessment

Identify and engage key stakeholders

Build support with senior management and employees

Research what others are doing
2. Develop a CSR
prepare a matrix of proposed CSR actions
strategy
Develop ideas for proceeding and the business case for them

Decide on direction, approach and focus areas

Do
Do a scan of CSR commitments

Hold discussions with major stakeholders
3. Develop CSR
Create a working group to develop the commitments
commitments
Prepare a preliminary draft

Consult with affected stakeholders

Develop an integrated CSR decision-making structure

Prepare and implement a CSR business plan

Set measurable targets and identify performance measures

Engage employees and others to whom CSR commitments
4. Implement CSR apply
commitments

Design and conduct CSR training

Establish mechanisms for addressing problematic behaviour

Create internal and external communications plans

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 Check

Measure and verify performance
5. Verify and report on
Engage stakeholders
progress
Report on performance

Improve

Evaluate performance
6. Evaluate and
Identify opportunities for improvement
improve
Engage stakeholders

Return to plan and start the next cycle

Cross-check: One cycle completed

The framework is intended to help board of directors, managers, employees and

others to assess a firm’s effects on society, and the challenges and opportunities

associated with taking these impact into account in decision making and business

activities.

3. Measuring CSR:

It is general practice in business that things that can’t be measured often get

overlooked, CSR is no exception.

Effective CSR can cut costs and boost sales. But focusing only on financial measurers

overlooks true value. CSR can also improve your reputation, boost customer loyalty

and motivate employees; which leads to reduce absenteeism and reduce staff turnover.

At the same time customer loyalty could increase level of repeat purchasing.

Measuring CSR initiatives is important to ensure effective implementation of planned

strategy to determine future action plans. Each company can design measuring

strategies ,based on their selected CSR focus areas. There are several ways to measure

impact of CSR initiatives-

Measurement of community initiatives: following points should be considered in this

purpose-

 Cash value of community support,

 Impact of evaluations carried out on community programmes,

 Project progress,

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  Perception measures,

 Positive and negative media comments.

Measurement of work place initiatives: The points to be considered-

 Work place profile,

 Staff absenteeism,

 Legal non compliance,

 Staff grievances,

 Staff turnover.

Measurement of environment initiatives: the following points should be kept in

mind for measuring environmental impact:

 Overall energy consumption,

 Water usage,

 Quantity of solid waste produced,

 Used of recycle materials,

 Environment impact.

Measurement of market place initiatives: the following points should be considered

in this respect-

 Number of product complaints regarding products and services,

 Advertising complaints upheld,

 Complaints about late payment of bills,

 Upheld cases of anti corruptive behaviour,

 Customer satisfaction levels,

 Consumer retention.

Examples: Let us see the performance of some big Indian corporate houses who have

already proved their excellence in this field.

ONGC- as a responsible corporate citizen it promote education, health care and

entrepreneurship in community and support water management and disaster relief in

the country. In this endeavor ONGC is committed to allocate fund equivalent to

0.75% of net profit of previous year.

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BPCL- started it’s endeavor in this direction in the year 1984 along with the

philosophy “to give back to the society/community our best”.

HINDALCO- to make the life of young widows better, Hindalco initiated a widow

remarriage scheme which is truly path breaking. Along with the help of village

influentials, Hindalco manage to get more than 300 widows remarried, thereby

bringing the smile back on the girl’s faces. Hindalco also stresses to discourage child

marriage.

TATA-Motors- the Indian leading auto maker has won golden peacock award for

CSR for the year 2004. The other awardees for CSR in private sector along with

TATA-Motors are the Times Foundation, Rail Wheel Factory and ONGC.

The award for excellence in corporate governance went to Gail India ltd, Shipping

Corporation of India Ltd and ICICI bank.

Other big names in this field are Aditya Birla Group, Greater Noida Industrial

Development Authority, SAIL, Subros Ltd, NTPC and the list continue, which

shows the success of a noble endeavor.

Conclusion: CSR is gaining ground in the world bank group work portfolio. Client

governments are realizing that CSR can help to improve their national

competitiveness and companies are using good standers to meet the lending condition

of the IFC ( International Finance Corporation)- the private arm of the world bank.

CSR has become the password not only to overcome competition but to ensure

sustainable growth. It has been supported not only by the shareholders but

stakeholders by and large encompassing the whole community. Corporate virtue is in,

is the slogan and why not? As it offers so many advantages including hike in profits.

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 Exercising social responsibilities is no doubt a noble mission; still only the big

business houses are practicing it voluntarily. But our aim is overall development of

the society, which is a mammoth like task and no one government or few business

houses are sufficient to accomplish the mission. What the author suggest, the

Government should pass a bill and make it mandatory for all large scale business

houses to contribute a particular percentage of profit for social upliftment if not

possible directly, it must be through some NGOs.

Last but not the least the philosophy of CSR is best articulated by the Chinese

proverb: “ Give a man a fish and you feed him for a day. Teach a man to fish and you

feed him for a lifetime.”

References:

The Ethics of Management-LaRue Tone Hosmer, UBS New Delhi.

Managerial economics- Dr. D.N.Dwivedi, 6th edition, Vikas Publishing House(P)Ltd

www.bsdglobal.com

www.strategis.gc.ca

www.timesfoundation.indiatimes.com

The Economic Times, March17th and April 28th 2006.

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Title: CORPORATE THAT CARE.-Corporate social responsibilities.

Name of the Author: Prof. Moloy Ghoshal

Designation: Asst. Director.

Name of the Organisation: Institute of Productivity and Management.

1- Kalyanpur,G.T.Road,Kanpur-208026(U.P)

Email:moloybreeze@rediffmail.com

Web: www.ipmkanpur.edu.in

Mob: 09839102543

Ph: (0512)2573783/84.

Fax: (0512)2570151

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