CORPORATE SOCIAL RESPONSIBILITY (CSR)

There is an impressive history associated with the evolution of the concept and definition of Corporate Social Responsibility (CSR). Definitions expanded during the 1960s and proliferated during the 1970s. In the 1980s, there were fewer new definitions, more empirical research, and alternative themes began to mature. These alternative themes included corporate social performance (CSP), stakeholder theory, and business ethics theory. One of the most frequently asked questions is the obviousjust what does "Corporate Social Responsibility" mean? Different organisations have framed different definitions, although there is considerable common ground between them. One common and very appropriate definition is that CSR is about how companies manage the business processes to produce an overall positive impact on society. 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 Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large". Traditionally in the United States, CSR has been defined much more in terms of a philanthropic model. Companies make profits, unhindered except by fulfilling their duty to pay taxes. Then they donate a certain share of the profits to charitable causes. The European model is much more focused on operating the core business in a socially responsible way, complemented by investment in communities for solid business case reasons. In European definition social responsibility becomes an integral part of the wealth creation process that, if managed properly, should enhance the competitiveness of business and maximize the value of wealth creation to society. The broad range of definitions (and theories) show that CSR means different things to different people and whilst all definitions share the belief that companies have a responsibility for the public good, different organisations emphasize different aspects of CSR, such as environmental management, human and workers rights, transparency and compliance, and stakeholder management. According to Blowfield and Murray, CSR is an umbrella term capturing the various ways in which business relates to society; it involves values that guide a companys interactions with other society members, it addresses business role in wider society and the different types of business-society interaction, and it looks at the categories in which business is expected to take action. Aided by equally globalizing communication technologies, international awareness of the consequences of global economic liberalization grew in the 1990s. While

labour and environmental conditions deteriorated and the number of people living in extreme poverty failed to decline, inequality increased. US companies such as Shell, Nike, Gapand Levi Strauss were challenged to justify their actions and Wall Street demonstrated that the increased significance of the brand and corporate reputation made leading companies vulnerable to the effect bad publicity has on profit. A series of UN summits and commissions were set up as public calls for greater regulation and supervision increased. Being concerned with the potential damage to their reputations as a result of media exposure and the threat of increased regulation, CSR emerged as a management response. It offered an alternative to regulation and became a way to deflect criticism, with a possibility to capitalize on business opportunities associated with doing, and being seen to be doing, good. Since then, business has become a proactive player in shaping and disseminating the CSR agenda through PR-related activities: the promotion of socially responsible investment; reporting and certification; concrete changes in business policies, management systems and performance; and the promotion of CSR partnerships with leading NGOs like World Wildlife Fund and Oxfam, international organizations such as the UN and the World Bank, and academia.

CSR in India Indian companies are now expected to discharge their stakeholder responsibilities and societal obligations, along with their shareholder -wealth maximization goal. Nearly all leading corporates in India are involved in CSR programmes in areas like education, health, livelihood creation, skill development, and empowerment of weaker sections of the society. Notable efforts have come from the Tata Group, Infosys, Bharti Enterprises, ITC Welcom group, Indian Oil Corporation among others.
The 2010 list of Forbes Asias 48 Heroes of Philanthropy contains four Indians. India has been named among the top ten Asian countries paying increasing importance towards corporate social responsibility disclosure norms. India was ranked fourth in the list, according to social enterprise CSR Asia's Asian Sustainability Ranking (ASR), released in October 2009. According to a study undertaken by an industry body in June 2009, which studied the CSR activities of 300 corporate houses, corporate India has spread its CSR activities across 20 States and Union territories, with Maharashtra gaining the most from them. About 36 per cent of the CSR activities are concentrated in the State, followed by about 12 per cent in Gujarat, 10 per cent in Delhi and 9 per cent in Tamil Nadu. Although corporate India is involved in CSR activities, the central government is working on a framework for quantifying the CSR initiatives of companies to promote them further. One of the ways being planned to attract companies towards CSR work is to develop a system of CSR credits, similar to the system of carbon credits which are given to companies for green initiatives. Besides the private sector, the government is also ensuring that the public sector companies participate actively in CSR initiatives. The Department of Public Enterprises (DPE) has prepared guidelines for central public sector enterprises to take up important corporate social responsibility projects to be funded by 2-5 per cent of the company's net profits.

The financial services sector is going green in a steady manner. With an eye on preserving energy, companies have started easing the carbon footprint in their offices. Efforts by companies such as HSBC India, Max New York Life and Standard Chartered Bank have ensured that the green movement has kept its momentum by asking their customers to shift to e-statements and e-receipts.

Opposition to CSR A range of scholars questions whether CSR can be adapted into meeting the needs of the poor. The very idea of business playing a role in development is subject to considerable debate, because it implies the acceptance that you can meet social and environmental challenges through market-based solutions, and that the private sector is better at optimizing resources than the public sector.
Criticism is aimed at CSR being 1) misplaced as a concept; 2) competing interests between short-term and long-term horizons; between shareholders and any other stakeholders; between outputs and outcomes when defining CSRs actual impact; and between sharing and withholding social learning; 3) Criticism is also directed at not addressing power and participation issues. Opponents to CSR argue that there is no place for business to be involved in social development. Neo-liberal economists such as Milton Friedman (1970), argue that companies have no business getting involved in the public as they already contribute to society through the creation of jobs, the payment of tax and the delivery of goods and services. A study conducted jointly by Unilever and Oxfam in 2004-05 found that Unilever in Indonesia supported the equivalent of 300,000 fulltime jobs and contributed $130m a year in taxes to the Indonesian government, leading The Economist to conclude that this was a lesson for firms not to be too defensive about their contribution to society. Other opponents argue that CSR is only a public relations tool used to mask the sometimes devastating impact large corporations can have on vulnerable people and the environments in which they live. Case in point are continuing negative effects on Nigerian communities because of Shells oil extractions; the health issues of workers on the plantations under British American Tobacco contract; and Coca Cola depriving local communities in southern India of clean water. Another strong argument against CSR is that the focus on the business case of CSR avoids addressing issues of power and participation that are key in poverty reduction debates. Because power relations shape the issues that are raised, the alliances that are formed and the successes that are identified tend to reproduce poverty as those who do not normally have a voice in society anywaysuch as small-scale farmers, children, workers, and womenwho are often excluded. Finally, a number of companies that have initiated or are otherwise involved in CSR are the same companies that continue to ignore or fail to address the human rights abuses, poor labour standards, and environmentally harmful activities that occur within their core operations For example, even though British Petroleum had complied with the codes of conduct laid down in the Extractive Industries Transparency Initiative, in relation to the construction of the Baku-Tbilisi-Ceyhan pipeline, it did not address the human rights abuses and the destruction of livelihoods of the local communities as a result.

The CSR message is furthermore often contradicted by actions like corporate lobbying and tax evasion or avoidance. The power of worldwide corporate lobbying is huge, influencing policies and outcomes of national governments and international institutions such as the World Trade Organisation. Toyota is a case in point; whilst championing green motoring with its Prius hybrid model, the car manufacturer joined the lobby against a tough fuel -economy standard in USA. In his book, Capitalism and Freedom, Friedman argues that there is one and only one social responsibility of businessto use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud. His theories are appealing, though unfortunately in the real world, many companies, larger ones in particular are often involved in exploitative practices of some sort, knowingly or unknowingly (through sub-contractors, for example). Furthermore, with their increasing financial muscle comes increasing financial power in the political arena to influence policies in their favour. This is not necessarily engaging in open and free competition (some lobbying is often to actively prevent competition, for example). Given the immense impact businesses can have on peoples lives, and their increasing power, environmental, human-rights, and social justice activists have tried different ways to get businesses to be more accountable for their actions. They have tried to go through their government (that is supposed to be representative of their people, in a democracy), and even to businesses and shareholders themselves to urge better responsibility. As a result, many business leaders have tried to pursue corporate social responsibility practices, or attempted to.

Do CSR initiatives pay? Who would not want to live in a world in which corporate virtue is rewarded and corporate irresponsibility punished? Unfortunately, the evidence for these rewards and punishment is rather weak. There is a "'market for virtue," but it is a very limited one. Nor is it growing.
One can certainly find examples of firms with superior CSR performance that have done well, as well as firms with poor CSR reputations that have performed poorly. But there are at least as many examples of firms with good CSR records that have not done well and firms with poor CSR reputations that rewarded their shareholders. The good news is that firms with superior CSR performance have not performed any worse than their less virtuous competitors. But the disappointing news is that neither have they done any better. For most firms, most of the time, CSR is largely irrelevant to their financial performance. Part of the reason why CSR does not necessarily pay is that only a handful of consumers know or care about the environmental or social records of more than a handful of firms. "Ethical" products are a niche market: Virtually all goods and services continue to be purchased on the basis of price, convenience and quality. To assume that the business environment has fundamentally changed and that we

are entering a new world in which CSR has become critical to the success of all or even most firms is misinformed. The market has many virtues, but reconciling corporate goals and public purposes is unfortunately not among them. Managers should try to act more responsibly. But they should not expect the market to necessarily reward themor punish their less responsible competitors.

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