notes on CSR

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CCCCCCCNNNNNNNNCCCCANING AND DEFINITIONS
CSR is understood to be the way firms integrate social, environmental and economic concerns into their
values, culture, decision making, strategy and operations in a transparent and accountable manner and
thereby establish better practices within the firm, create wealth and improve society. CSR is also called
Corporate Citizenship or Corporate Responsibility.
The 1950s saw the start of the modern era of CSR when it was more commonly known as Social
Responsibility.
In 1953, Howard Bowen published his book, “Social Responsibilities of the Businessman”, and is
largely
credited with coining the phrase ‘corporate social responsibility’ and is perhaps the Father of modern
CSR.
Bowen asked: “what responsibilities to society can business people be reasonably expected to assume?”
Bowen also provided a preliminary definition of CSR: “its refers to the obligations of businessmen to
pursue those policies, to make those decisions, or to follow those lines of action which are desirable in
terms of the objectives and values of our society“.
According to Business for Social Responsibility (BSR) “Corporate social responsibility is operating a
business in
a manner which meets or excels the ethical, legal, commercial and public expectations that a society has
from
the business.”
Business entity is expected to undertake those activities, which are essential for betterment of the society.
Every
aspect of business has a social dimension. Corporate Social Responsibility means open and transparent
business
practices that are based on ethical values and respect for employees, communities and the environment.
It is
designed to deliver sustainable value to society at large as well as to shareholders.
Corporate Social Responsibility is nothing but what an organisation does, to positively influence the
society in
which it exists. It could take the form of community relationship, volunteer assistance programmes, and
special
Lesson 13 Corporate Social Responsibility 307
scholarships, preservation of cultural heritage and beautification of cities. The philosophy is basically to
return to
the society what it has taken from it, in the course of its quest for creation of wealth.
With the understanding that businesses play a key role of job and wealth creation in society, CSR is
generally
understood to be the way a company achieves a balance or integration of economic, environmental, and
social
imperatives while at the same time addressing shareholder and stakeholder expectations.
According to CSR Asia, a social enterprise, “CSR is a company’s commitment to operate in an
economically,
socially and environmentally sustainable manner whilst balancing the interests of diverse stakeholders”
CSR is generally accepted as applying to firms wherever they operate in the domestic and global
economy. The
way businesses engage/involve the shareholders, employees, customers, suppliers, Governments, non-
Governmental organizations, international organizations, and other stakeholders is usually a key feature
of the

2. concept. While an organisation’s compliance with laws and regulations on social, environmental and
economic
objectives set the official level of CSR performance, it is often understood as involving the private sector
commitments and activities that extend beyond this foundation of compliance with laws.
According to the Commission of the European Communities, 2003, “CSR is the concept
that an enterprise is accountable for its impact on all relevant stakeholders. It is the
continuing commitment by business to behave fairly and responsibly and contribute
to economic development while improving the quality of life of the work force and
their families as well as of the local community and society at large.”
According to the World Business Council for Sustainable Development, 1999
“Corporate Social Responsibility is the continuing commitment by business to behave
ethically and contribute to the economic development while improving the quality of
life of the workforce and their families as well as of the local community and the
society at large.”
CSR is a concept whereby companies integrate social and environmental concerns in their business
operations
and in their interaction with their stakeholders on a voluntary basis. The main function of an enterprise is
to create
value through producing goods and services that society demands, thereby generating profit for its
owners and
shareholders as well as welfare for society, particularly through an ongoing process of job creation.
However,
new social and market pressures are gradually leading to a change in the values and in the horizon of
business
activity.
Essentially, Corporate Social Responsibility is an inter-disciplinary subject in nature and encompasses in
its fold:
1. Social, economic, ethical and moral responsibility of companies and managers,
2. Compliance with legal and voluntary requirements for business and professional practice,
3. Challenges posed by needs of the economy and socially disadvantaged groups, and
4. Management of corporate responsibility activities.
CSR is an important business strategy because, wherever possible, consumers want to buy products
from
companies they trust; suppliers want to form business partnerships with companies they can rely on;
employees
want to work for companies they respect; and NGOs, increasingly, want to work together with companies
seeking
feasible solutions and innovations in areas of common concern. CSR is a tool in the hands of corporates
to
enhance the market penetration of their products, enhance its relation with stakeholders. CSR activities
carried
out by the enterprises affects all the stakeholders, thus making good business sense, the reason being
contribution
to the bottom line.
The term Corporate
Social responsibility refers
to the concept of business
being accountable for how
it manages the impact of
its processes on
stakeholders and takes
responsibility for
producing a positive effect
on society.
308 PP-EGAS
CSR is not Philanthropy

3. Philanthropy means the act of donating money, goods, time or effort to support a charitable cause in
regard to a
defined objective. Philanthropy can be equated with benevolence and charity for the poor and needy.
Philanthropy
can be any selfless giving towards any kind of social need that is not served, underserved, or perceived
as
unserved or underserved. Philanthropy can be by an individual or by a corporate.
It is the active effort to promote human welfare.
Corporate Social Responsibility on the other hand is about how a company aligns their values to social
causes by
including and collaborating with their investors, suppliers, employees, regulators and the society as a
whole. The
investment in CSR may be on people centric issues and/ or planet issues. A CSR initiative of a corporate
is not a
selfless act of giving; companies derive long-term benefits from the CSR initiatives and it is this
enlightened self
interest which is driving the CSR initiatives in companies.
CSR is a contract with society
It is the duty of company to undertake CSR activities because company and society are mutually
interdependent
on each other. No corporation in present world of globalization, liberalization can bear to have indifferent
attitude
towards the society, isolated existence is not possible.
According to Sir Adrian Cadbury (2002) - “The broadest way of defining social responsibility is to say that
the
continued existence of companies is based on an implied agreement between business and society. In
effect,
companies are licensed by society to provide the goods and services which society needs. The freedom
of
operation of companies is, therefore, dependent on their delivering whatever balance of economic and
social
benefits society currently expects of them. The problem for companies is that the balance of needs and
benefits
is continually changing and there is no generally accepted way of measuring those changes.
To start with, companies are expected to meet society’s demands for goods and services, to provide
employment,
to contribute to the exchequer, and to operate efficiently at a profit. There is no conflict between social
responsibility
and the obligation on companies to use scarce resources efficiently and to be profitable – an unprofitable
business
is a drain on society. The essence of the contract between society and business is that companies shall
not
pursue their immediate profit objectives at the expense of the long-term interests of the community.