CORPORATE SOCIAL RESPONSIBILITY-INTRODUCTION

DEFINITION
World Business Council for sustainable development defines corporate social responsibility as
follows:
Corporate Social Responsibility is the continuing commitment by business to behave ethically
and contribute to economic development while improving the quality of life of workforce and
their families as well as of the local community and society at large.
MEANNIG AND CONCEPT
1. The concept of CSR envisages that a business entity can no longer continue to exploit the
environmental resources and escape from its responsibility towards the society. It should
realize the need to shift its focus on the interest of the society. CSR requires various
voluntary efforts in which company engage themselves in order to give something back
to the society.

2. CSR requires an organization to act beyond its legal obligations and to integrate social,
environmental and ethical concerns into its business process.


3. CSR is achieving commercial success in ways that honour ethical values and respect
people, communities, and the environment. It means addressing the legal, ethical,
commercial, and other expectations that the society has for business, and making
decisions that fairly balance the claims of all stakeholders.

4. Organisations are expected to consider the interest of society while carrying out their
operations. CSR advocates moving away from a shareholder alone focus to a
multistakeholders focus.


5. CSR mandates the organisations have certain responsibilities towards the society that
extend beyond their economic and legal obligations. Thus, CSR goes beyond statutory
obligations.

6. CSR requires the organisations to consider the impact of their actions on full range of
stakeholders. Thus, CSR requires the organisations to consider their acts in terms of a
whole social system, and be accountable for their acts anywhere in that system.


LEVELS OF CORPORATE RESPONSIBILTY

1. Economic Responsibility
At the most basic level, an organization has economic responsibility
to be profitable so that it can provide return on investment to the
investors.
This is the basis upon which the whole foundation of an organization
stands.
2. Legal Responsibility
An organization must obey the laws of the country. Every business
decision and action must be in accordance with the laws and
regulation.
3. Ethical Responsibility
Every action, decision and policy is bound to be right, just and fair.
4. Philanthropic Responsibility
Philanthropic Responsibility refers to such obligations undertaken
by an organization which are not at all required for carrying on its
business, but promote human welfare and goodwill.
An organization must be a good corporate citizen contributing
resources to the community and improving its quality of life.
Though voluntary, this is an urgent need of modern society.











ACTIVITES TO PROMOTE CSR

1. Safety, Health and Environment
I. Safety
A. Ensure safety during transportation/storage/use of
products
B. Disaster Management Training

II. Health
A. Providing Clean Drinking Water, Health & Medical Care
B. Health care in backward areas

III. Environment
A. Adherence to stringent norms for effluents and emissions
B. Raising Environment Awareness
C. Planting trees, development of green belts, and ecological
parks
D. Developing Environment friendly products
E. Water Harvesting
2. Community Development Activities
i. Setting up Hospitals and Schools
ii. Donations and Charities, e.g. giving support to Cancer
society, Orphanages, Blind Schools etc.
iii. Taking up AIDS awareness campaign.
iv. Alcohol De-addiction Centre
v. Contribution towards national causes / natural calamities
vi. Road Safety Road shows
vii. Programs for rural healthcare and women empowerment
viii. Contribution towards scholarships to students of weaker
sections
ix. Providing computer training and distributing books and
stationery to students of weaker sections
x. Supporting education and research activities and events
xi. Imparting training to apprentices and students pursuing
professional courses
3. Investors / Shareholders
a) Regularly conducting Annual Shareholders Satisfaction
Survey. Responses are summarized and reviewed by the
Shareholder/Investor Grievance Committee
b) Regularly sending an Investor Guide to all the shareholders
c) Disclosure in Annual Reports beyond mandatory requirements
4. Employees
i. Elimination of forced and compulsory labour
ii. Abolition of child labour
iii. Eliminate discrimination in respect of employment




















Benefits of CSR
Improved
financial
performance
Business and investment communities have
long debated whether there is a direct and
real connection between socially responsible
business practices and positive financial
performance, and there is now a wealth of
evidence to suggest that there is. Several
academic studies have shown that
stakeholder-balanced companies witnessed
manifold growth rate and employment growth
when compared to companies that were
shareholder-only focused.
Reduced
operating
costs/increased
operational
efficiency
Contrary to widely-held opinion, integrating
socially responsible practices into business
processes and decisions do not automatically
result in greater costs. In the long run, CSR
help an entity reduce costs dramatically by
cutting waste and inefficiencies, improving
productivity, promoting innovation and
creativity, thus resulting in operational
efficiency.
For example, many initiatives aimed at
reducing emissions of gases and wastes that
contribute to global climate change not only
help to save the environment, but also
increase energy efficiency, thus reducing
utility bills resulting in saving of money.
Many recycling units also cut waste-disposal
costs and generate income by selling recycled
materials.
Increased
An entitys reputation is fundamental in
brand image
and reputation
maintaining and attracting new customer
base. Consumers today are more
sophisticated, becoming more selective and
sensitive to a companys image and
reputation. A good CSR image serves as a
strategic branding tool in differentiating from
competitors. It also helps an entity to build
trust with all its stakeholders.
An entitys involvement in CSR activities
results in positive press coverage, thus
enhancing its reputation with the public,
customers and within the business
community. A good CSR image makes an
entity more competitive and reduces business
risk.
Increased sales
and customer
loyalty
Research has shown that consumers not only
want good and safe products, but they also
want to know that what they buy was
produced in a socially and environmentally
responsible way. Thus, an entitys
commitment to CSR is given due weightage by
the consumers at the time of purchasing. Even
many customers dont just prefer to deal with
responsible companies, but insist on it, and
they are willing to pay more for environment
friendly products. Thus, CSR can lead to new
markets and product lines.
As competition and consumer awareness
would increase, the decision to purchase
products and services may ultimately depend
on whether an entity is socially responsible.
Increased
An entitys efforts to improve working
conditions and labour practices often lead to
productivity
and quality
increased productivity and reduced error rate.
Positive management-employee relations are
also crucial in bringing about good customer
service, productivity and product innovation.
Increased
ability to
attract and
retain
employees
A companys dedication to CSR helps it to
attract and retain employees. An entity which
is perceived to be socially responsible often
finds it easier to recruit employees. Retention
levels are also higher resulting in a reduction
in labour turnover and associated recruitment
and training costs.
People want to work for a company that is in
accordance with their own values and beliefs.
Promotion and salary hike are not the only
motivating factors. Many employees would
rather work or an entity which is ethical and
reputed rather than working for an entity
which pays more but is unethical.
In a socially responsible entity, the employees
are better motivated and are more
productive.
Reduced
regulatory
supervision
It is the responsibility of the Government to
regulate businesses so as to protect the
interest of all stakeholders from
manipulations and exploitation. The
government discharges its responsibility by
enacting and enforcing laws.
An entity which compiles with, and even goes
beyond legislation and regulatory compliance
requirements, would be subject to lesser
government and regulatory intervention, and
fewer inspections and paper-work. Such an
entity may also be given preferential
treatment when applying for permits, licenses
and regulatory clearances. If an accident
occurs, an entity will be regarded more
favourably if it has been transparent and
socially responsible in the past.
Access to
capital
Investors are more willing to finance an entity
which is considered as socially responsible.
Thus, an entity with good CSR standing is likely
to secure equity and debt capital with most
ease. CSR performance and disclosures also
help an entity to reduce the cost of capital.