Community Empowerment by Dr. SBM Prasanna, Dr. K Puttaraju, Dr.MS Mahadevaswamy (books under 200 pages TXT) 📕

Not an Alternative: CSR is not an alternative to regulation. Governments must be responsible for the implementation and enforcement of national laws.

Scope of CSR

Brummet suggested five possible areas in which corporate social responsibility objectives may be found. The term ‘contribution’ includes social costs as well as social benefits associated with an organization’s activities. They are as follows

1.Net Income Contribution: The social objectives of a business by no means reduce the importance of the income objective .Without an adequate return on investment, a business organization cannot exist. Furthermore, long-range planning for a business unit includes calculating the minimum return on shareholder’s equity. A business must contribute to the overall economic development of the society. If the business fails to recognize the social problems, its performances may be affected either in the short-run or in the long-run. This improper working condition may lead to lower productivity or causes damage to the quality of the product.

Human Resource Contribution: The impact of organizational activities reflects on the people who constitute the human resources of the organization. i.e., social performance of a business directed towards the well-being of employees. These activities includes following:

Recruitment practices and training programs,

Employee skill, knowledge, attitudes and self-actualization,

Wages and salary level, fringe benefits,

Experience building-job rotation,

Job enrichment,

Management-trade union relationship,

On-the-job physical environment and safety,

Congruence of employee and organization goals,

Occupational health,

Transfer and promotion policies,

Freedom from undue stress, and

Job security, stability of workforce, lay-off and recall practices.

Public Contribution: The impact of organizational activities on individuals or groups of individuals generally outside the business is the topic for discussion under this area. Examples include:

Generally philanthropy –contributions of the organization towards educational, charitable or cultural organizations

Equal opportunity employment practices,

Employment and training of physically handicapped persons,

Taxes and duties paid, and

Financial or manpower support of the business for urban housing, health services, public transportation , etc.

Environmental Contribution: This area involves the environmental aspects of production. Activities directed towards alleviating or preventing environmental deterioration. E.g., air, water, noise pollution, conservation of scarce resources and the disposal of solid waste .

Product or Service Contribution: This area concerns the qualitative aspects of the organization product or service which includes consumerism, product quality, packaging, advertising, warranty provisions, product safety. There are differences in relative importance of product and service contribution to society in various industries.

Need of CSR

Corporate social responsibility becomes a necessity for an organization due to the following reasons:

To Provide Sense of Responsibility: The institution of business exists only because it performs invaluable services for society. Society gives business its charter can be amended or revoked at any time if it fails to live up society’s expectations. Therefore, if business intends to retain its existing social role and social power it must respond to society’s needs constructively.

To Fulfils Long-Run Self–Interest: a business organization most sensitive to community needs would, in its own self-interest, like to have a better community in which to conducts its business. To achieve that, it would implement special programs for social welfare. As a result of social improvements, crime will decrease. Less money will be required to protect property.

To Improve Public Image: Each business organization must enhance its public image to secure more customers, better employees, and higher profit. The public image concept may be extended to the accomplishment of various types of social goals. So if the firm wants to capture a favorable public image, it will have to show that it also supports these social goals.

To Avoid Government Regulation or Control: Regulation and control are costly to business, both in terms of energy and money and restrict its flexibility of decision making. Failure of businessmen to assume social responsibilities invites government to intervene and regulate or control their activities. By their own socially responsible behavior, they can prevent government intervention.

To Avoid Misuse of National Resources and Economic Power: Businessmen command considerable power over the productive resources of a community. They are obliged to use those resources for the common good of society. They should not forget that the power to command national resources has been delegated to them by the society to generate more wealth for its betterment.

To Avoid Class Conflicts: Industrial peace is a precondition for the success of business. Trade unions are becoming more and more militant and demand social welfare measures, better wages, better working conditions, etc. Their demand derives its force from the fast changing social environment.

To Convert Resistance into Resources: If the innovative ability of a business is turned to social problems, many resistances can be transformed into resources and the functional capacity of resources may be increased manifold. All problems may not be capable of being handled this way, but many of them would be solved to the ultimate benefit of society.

To Minimize Environmental Damage: The effluence of many businesses positively damages the surrounding environment. They are duty bound to repair damage by recognizing their ecological responsibility towards society.

CSR Principles

No universal rules for social responsibility to every company. However, the following broad principles are widely accepted by managers:

Corporations are Economic Institutions Run for Profit: Corporations greatest responsibility is to create economic benefits. They should be judged primarily on economic criteria and can be expected to meet major social objectives without financial incentives. Corporations may incur short run costs on social incentives that promise long term benefits and should seek ways to solve social problems at a profit.

A) Follow Multiple Bodies Law: All firms must follow multiple bodies of law including:

Corporation laws and chartering provisions,

The civil and criminal laws of nations,

Government regulation,

International law .

B) Managers Must Act Ethically: Managers must respect the law and , addition, confirms their behavior to ethical principles. They should also set up codes, policies, producers to elevate behavior within the firm.

Correct Adverse Social Impacts: Corporations have a duty to correct the adverse social impacts they cause. They should internalized external costs, or costs of production borne by society. A factory dumping toxic effluent into a stream creates cost such as human animal disease that are imposed on innocents, not on the company or its customers.

Social Responsibility Varies with Company Characteristics: social responsibility varies with company characteristics such as size, industry, product, strategies, marketing techniques, location, internal cultures and external demands.

b)Meet Legitimate Needs of Stakeholders: Manager should try to meet legitimate needs of multiple stakeholders. Although corporations have a fiduciary duty to stakeholders, it is not legally required, or desirable or possible to manage solely in their interest. Customers, employees, governments, communities, and other groups also have

c )Company with Norms: corporate behavior must comply with norms in an underlying social contact. To understand this contract and how it changes, managers can study direction of the national policies and global norms as evident in legislation, regulations, treaties, trade agreements, declarations and public opinions.

d)Accept a Measure of Accountability of Integrity: Corporations should accept a measure of accountability towards society and publicly report on their market, mandated and voluntary actions.

e)Maintain High Standards of Integrity: Corporations should maintain high standards of integrity. This means that one must be honest and fair in all dealings. No tolerance for engagement in bribery or other forms of corruption.

CSR Strategies

Organization can adopt a variety of strategies to social responsibility. For example, a firm that never considers the consequences of its decisions and tries to hide its transgressions taking on obstructionist stance. At the other extreme, a firm that actively seeks to identify areas where it can help society is pursuing a practice stance towards social responsibility.

Some people advocate a larger social role for organizations and others argue that the role is already too large. Not surprisingly, organizations themselves adopt a wide range of positions on social responsibility.

The four stances that on organization can take concerning its obligations to society fall along a continuum ranging from the lowest to the highest degree of socially responsible practices

Obstructionist Stance: The few organizations that take what might be called an obstructionist stance to social responsibility usually do as little as possible to solve social or environmental problems. When they cross the ethical or legal line that separates acceptable firm unacceptable practices, their typical response is to deny or avoid accepting responsibility for their actions.

Defensive Stance: One step removed from the obstructionist stance is the defensive stance, whereby organization does everything that it required of it legally, but nothing more. This approach is most consistent with the arguments used against social responsibility. Managers in organizations that take a defensive stance insist that their job is to generate profits. For example, such a firm would install pollution control equipment dictated by law but would not install higher quality but slightly more expensive equipment even though it might limit pollution further. Tobacco companies like Philip Morris take this position in their marketing efforts. In the united state, they are legally required to include warning to smokers on their product and to limit their advertising to prescribed media. Domestically they follow these rules to the letter of the law but use stronger marketing methods in countries that have no such rules

Accommodative Stance: A firm that adopts an accommodative stance meets its legal and ethical obligations but will also go beyond these obligations in selected cases. The such firm voluntarily agree to participate in social programs but solicitors have to convince the organization that the programs are worthly of its support.

Proactive Stance: The highest degree of social responsibility that a firm can exhibit is the proactive stance. Firms that adopt this approach take to heart the arguments in favor of social responsibility. They view themselves as citizens in a society and proactively seek opportunities to contribute.

Types of CSR

Environmental Corporate Social Responsibility: People expect business to exhibit environmentally responsible behavior, as evidenced by a price water house coopers survey that found that the no.1 issue for companies in the future, accordingly to U.S respondents, is carbon emissions reductions. Specific environmental issues that effects business includes global warming, sustainable resources and pollution.

Human Rights Corporate Social Responsibility: The 21 century marketplace is highly global. This means that when a product is purchased in the united state, e.g., it may have been produced in China, or have components from South America. The ethical issue for corporations is ensuring that human rights are respected throughout all levels of the supply chain.

Financial Corporate Social Responsibility: Financial responsibility is an important issue in corporate responsibility. In the wake of the accounting fraud perpetrated by Enron and Arthur Anderson and Ponzi schemes orchestrated by the likes of Bernie Madoff and Satyam in India, business are questioned about the accuracy of their financial reporting by leyincreasingly skeptical shareholders and government officials, as evidence by the Sarbanes Oxely act.

Political Corporate Social Responsibility: Trading repressive regimes is a difficult issue in corporate social responsibility. Some business argues that working with these regimes will help to advance them and bring rights to the countries. People and government have demanded that business stop trading with repressive regimes, which was most notably observed when several western government launched an embargo against the apartheid government in South Africa during the 980s.

Best Practices of CSR

Set Measurable Goals: Return on investment has always been a difficult thing to measure. In order to accomplish this in CSR policy. Goldschein suggests an implementing small changes to home, such as improving employee policies that decrease turnover and improve recruitment. Simple steps, like minimizing waste and resources use, are changes that can be developed into a memorable story about how sustainability efforts support company’s overall corporate strategy.

Stakeholder Engagement: Leaving their stakeholders out of the loop is one of the top mistakes companies make when trying to jump on the green/socially responsible bandwagon. In order for company to articulate its value, missions, strategy and implementation in the creation of CSR plan, it is important for everyone to be some page. Stakeholders can help by partaking in the regulatory approvals process, improving relationships proactively, or solving CSR roadblocks and potential crises.

Sustainability Issues Mapping: This approach uses interactive maps to help in priorities and narrow down key issues, saving company time and money during in the initial research stage. For e.g., Sir Geoffrey Chandler, founder and chair of Amnesty International U. K, praises sustainability issues