CH 7

CORPORATE SOCIAL
RESPONSIBILITY
 CH 7
CORPORATE SOCIAL RESPONSIBILITY
 Meaning of Corporate Social Responsibility
 Arguments for CSR
 Arguments Against CSR
 CSR and Corporate Responsibility (CR)
 CSR and Corporate Philanthropy (CP)
 CSR and Corporate Sustainability (CS)
 CSR and Corporate Ethics
 CSR and Corporate Governance (CG)
 CSR Under the Companies Act, 2013
 Environmental Aspects of CSR
 Models of CSR
 Drivers of CSR
 ISO 26000
CORPORATE SOCIAL RESPONSIBILITY
 PROS AND CONS OF CSR

PROS CONS

THE IRON LAW OF RESPONSIBILITY VAGUE CONCEPT

MORAL JUSTIFICATION LOSS OF INCENTIVE

PROPER USE OF RESOURCES ARBITRARY POWER

BETTER PUBLIC IMAGE BURDEN ON CONSUMERS

ENVIRONMENT PROTECTION RESPONSIBILITY OF GOVERNMENT

BUSINESS OPPORTUNITIES DISREGARD OF MARKET MECHANISM

 CSR AND CORPORATE PHILANTHROPY

 Philanthropy means charity for the welfare of the society. Corporate philanthropy refers to the practice of corporations making charitable

contributions for public health, education and other social causes. It is also known as ‘Business giving’. Companies, voluntarily donate

cash, good, etc. for the welfare of general public.

 For example, companies donate clothes to schools, computers to colleges, funds to NGOs like Help Age India, CRY and Red Cross and

their staff works with local community groups.

 CSR is not just corporate philanthropy. To begin corporations made donations to charitable institutions. Therefore, corporate philanthropy

is the most traditional form of CSR. But CSR is no longer restricted to corporate philanthropy. Rather the concept of giving back to

society or corporate citizenship has undergone a sea change.

 Now companies are adopting CSR as an integral component of their long term business strategy. They are aligning there business

practices with, social values by addressing poverty, health care, education, employment, environment and other social issues.

 CSR involves taking care of the interests of employees, investors, customers, suppliers dealers, government, community and other

stakeholders. Some of the common forms of corporate philanthropy are: (a) Cash Donations: including grants, donations and

sponsorships. (b) In-Kind Donations: such as donating products, access to employee volunteer groups etc.
 CSR AND CORPORATE SUSTAINABILITY (CS)
 The three pillars of corporate sustainability- economic, social, and environmental are commonly referred to as 'The Triple Bottom Line' (TBL) and these are

interlinked.

 (a) Economic Stability: It refers to financial viability of the company and adequate returns to investors. For instance, job creation, profitability etc.

 (b) Social Sustainability: It includes companies' commitment to gender equality, abolition of child labor, workplace diversity etc.

 (c) Environmental Sustainability: It highlights the companies' efforts to "go green" and help improve organizational reputations.

 Principles of Corporate Sustainability

 1. Ethics

 2. Governance

 3. Accountability

 4. Transparency

 5. Financial Returns

 6. Value of Products and Services

ENVIRONMENTAL ASPECTS OF CSR

GLOBAL
WARMIMG

GREEN
DEFORESTA
HOUSE
TION
EFFECT

OZONE
POLLUTION
DEPLETION
MODELS OF CSR

TRUSTEESHIP MODEL

THE STATIST MODEL

THE LIBERAL MODEL

THE STAKEHOLDER
MODEL

CARROLL’S MODEL
 DRIVERS OF CSR

PRESSURE GOOD
GLOBALIZATIO
FROM EMPLOYEES
N
INVESTORS RELATIONS

INCREASE IN LEGAL
IMAGE
MARKET REQUIREMENT
BUILDING
SHARE S

COST SAVINGS RISK COVER

1. The Ethical Model/Trusteeship Model: Mahatma Gandhi developed the concept of trusteeship. According to this concept, owners of
wealth should voluntarily manage their wealth on behalf of and for the public. The charisma of Gandhiji prompted big business houses in
India to play an active role in socio-economic development and nation building. Their commitment towards society’ welfare is reflected in
their investment in schools, colleges, hospitals and other public sources. Many of them have created trusts and foundations and are making
donations in cash and kind to non-government organisations (NGOs) engaged in social service. Thus, the ethical model suggests mainly
corporate philanthropy.

2. The Statist Model: This model was developed in India after independence. India adopted the mixed economy and socialistic pattern of
society, consisting of a large and growing public sector. State ownership of basic and heavy industries (oil exploration, power generation
mining, iron and steel, petrochemicals etc.) and the legal framework of India reflects CSR. Several public sector enterprises that have
survived the wave of privatization even today reflect the Government sponsored corporate philosophy. Thus, the statist model suggests state
control over business to ensure that it is responsible to society.

3. The Liberal Model : According to this model, a company is mainly responsible to its shareholders. A company discharges its CSR if it
obeys the law and generates wealth for its shareholders. This model is based on the view point of Milton Friedman who argues that the
only social responsibility of business to maximize profits.
THE STAKEHOLDER MODEL
CARROLL’S MODEL
 ISO 26000
 ISO 26000 are useful in the following ways :

 (i) These promote common terminology in the field of social responsibility.

 (ii) These widen awareness about social responsibility.

 (iii) These help to operationalize social responsibility initiatives.

 (iv) These enhance the credibility of reports and claims on social responsibility.

 (v) These help companies win the confidence of stakeholders.

 (vi) These do not encroach upon Government’s authority on social issues.

 (vii) These are consistent with international conventions and treaties

 (viii) These recognise economic, legal, social and cultural difference between nations
 RELATED QUESTIONS
 1. Define the term ‘Corporate Social Responsibility’ (CSR). How is it different from the term Social Responsibility (SR)?

 2. “CSR is much more than corporate philanthropy”. Explain. (DU 2014)

 3. Distinguish between (a) CSR and Business Ethics (b) CSR and Corporate Sustainability (c) CSR and Corporate
Governance.

 4. Discuss the environmental aspects of CSR. (DU 2013)

 5. Explain various models of CSR.

 6. Discuss the main driving forces behind CSR.

 7. Explain ISO 26000. (DU 2014)

 8. What is Global Reporting Initiative (GRI)? Explain its importance.

 9. Define the form ‘Corporate Social Responsibility’ (CSR). How is it different from corporate reponsibility? (DU 2013)

 10. Differentiate between the ‘Ethical Model’ and Statist Model. (DU 2014)