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CSR & Ethics ppt

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IS MOTIVATION FOR CSR PROFIT OR ETHICS? Pradnya Naik Keval Kothari
Transcript
Page 1: CSR & Ethics ppt

IS MOTIVATION FOR CSR PROFIT OR ETHICS?

Pradnya Naik

Keval Kothari

Page 2: CSR & Ethics ppt

BRIEF RECAP

Page 3: CSR & Ethics ppt

MICHAEL PORTER’S VIEWS..

“If looked strategically, CSR can be more than a cost, constraint or a charitable deed and can be a source of opportunity, innovation and competitive advantage.”

Page 4: CSR & Ethics ppt

MICHAEL PORTER’S VIEWS..

Two reasons CSR hasn’t been nearly as productive as it could be.• They pit business against society, when

two are interdependent• Companies think CSR as a generic

responsibility instead of a firm’s strategy.

Prevailing approaches are disconnected from business as to obscure many great opportunity for companies to benefit society.

Page 5: CSR & Ethics ppt

WHAT IS CSR ?

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SOME DEFINITIONS

European Commission definition in 2004: “CSR is a concept whereby companies integrate

social and environmental concerns in their business operations and in their interactions with their stakeholders on a voluntary basis”

McKinsey: “Large companies need to build social issues

into strategy. They need to articulate business’s social contribution and define its ultimate purpose in a way that has more subtlety than “the business of business is business” worldview.”

Page 7: CSR & Ethics ppt

Philip Kotler: “CSR is the commitment to improve community

well- being through discretionary business practices and contributions of corporate resources”

World Business Council for Sustainable Development: “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.”

Some Definitions

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MOTIVES OF CSR

Page 9: CSR & Ethics ppt

ECONOMIC CSR

Strategic tool to achieve economic objectives, increased profit and wealth creation

The company’s activities are seen as assets to get economic results

Any expected social activity is accepted if it is consistent with wealth creation

This approach usually takes shareholder value maximization as the over-riding reference for corporate decision-making

Page 10: CSR & Ethics ppt

Economic CSR motive represent a defensive and business focus

Defensive focus Activity and strategy enquire increased economic profit in

their own business. This is important in market with competitive advantages Integration of CSR is a result of imitation or to get a

competitive comparative advantage

Business Focus Rationale for the CSR is derived entirely or very largely

from a concern with the interest of the enterprise itself. Corporations are seen as needing to adapt because it

makes good business for them to do so, and not because this not would make the world a better place.

Page 11: CSR & Ethics ppt

ECONOMIC CSR AND UTILITARIANISM

Utility perspective

The philosophy of utilitarianism: “An action is morally right if it results in the greatest amount of good for the greatest amount of people affected by the actions”

looking at the consequences of any particular action and judge the ethical standing of that action in terms of those consequences

If the action tends to maximize good consequences it is an ethical right action, and if not the actions is wrong.

Page 12: CSR & Ethics ppt

ETHICAL CSR

Approaches are focused on the ethical requirements that strengthen the relationship between business and society.

In general these approaches are based on values that

state the right thing to do or the obligation to create a good society.

Firms are obligated to make a payment in kind for using society’s infrastructure, land, air, water, plants, and animals to generate profit.

They have a duty to reimburse society for the negative externalities their activity generates.

Page 13: CSR & Ethics ppt

ETHICAL CSR

Ethical CSR actively seeks a greater balance between profit and ethics.

There is an overt effort to manage the organization’s culture to produce the desired ethical climate.

This change in the culture involves recognition of a social contract between the business and the society.

Management approaches problem solving with awareness of the ethical consequences of an action as well as its potential profitability

Page 14: CSR & Ethics ppt

ALTRUISTIC CSR

Altruistic CSR is equivalent to philanthropic responsibilities – to be “ a good corporate citizen” by giving back to society

Firms go beyond ethical CSR (preventing or rectifying the harms they have done) to assume liability for public welfare deficiencies they have not caused

Involves contributing to the good of various societal stakeholders, even if this sacrifices part of the business’ profitability.

Page 15: CSR & Ethics ppt

Unlike Economic CSR, where it is believed that the money put into good work will yield a return on investment for the business , with altruistic CSR this is not the motive (although the firm could conceivably benefit as a byproduct)

Firms practicing altruistic CSR help to alleviate various social ills within a community or society, such as lack of sufficient funding for educational institutions, inadequate moneys for the arts, chronic unemployment, urban blight, drug and alcohol problems, and illiteracy,

Page 16: CSR & Ethics ppt

EXAMPLES

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NESTLE EXAMPLE

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A TERRITORY NOT MEANT FOR BUSINESS

In 1962, company wanted to enter India.

Received government permission to build a dairy in Punjab’s district of Moga.

Poverty in the region was severe.

Infrastructure: No telephones, no electricity, no transportation, no medical care.

A farmer owned less than 5 Acres of poorly irrigated land with infertile soil.

Many kept one cow / buffalo for own consumption of milk.

60% of calves died newborn.

No methods to test for quality of milk, frequent contamination as there was lack of cold storage.

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THE TRANSFORMATION

Nestle built refrigerated dairies in each town and sent trucks to collect the milk.

With trucks went vets, nutritionists, agronomists & quality assurance experts.

Medical units were provided for sick animals.

Farmers were given monthly training sessions.

It enabled them to learn that milk quality depended on cow’s diet which in turn depended on feed crop irrigation.

It provided technical & financial assistance to dig bore-wells.

Irrigation improved, crop yields improved and standard of living improved.

Page 20: CSR & Ethics ppt

MAHINDRA AND MAHINDRA

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NANHI KALI The Mahindra group started the project Nanhi

Kali in 1996 with an objective of providing primary education to the underprivileged girl child in India .

In 2005 , K.C.Mahindra education trust entered into a partnership with Nandi foundation , a reputed NGO to manage programme for 10 years .

Over the years the project Nanhi Kali has successfully evolved into a major national girl child sponsorship programme , which not only provides money but also material support in form of clothes , uniforms , notebooks etc.

Page 22: CSR & Ethics ppt

PEPSICO

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CSR ACTIVITIES BY PEPSICO INDIA PepsiCo India has pioneered several major initiatives

to Replenish water in communities

Solid Waste Management initiatives in partnership with Exnora, an environmental NGO

Continues to strengthen its partnerships with farmers across the country to boost their productivity and income

PepsiCo's Get Active & a Good Nutrition and Active Lifestyle Program for Children: to raise awareness on the importance of balanced nutrition and regular physical activity for a healthy lifestyle among school children.

Page 24: CSR & Ethics ppt

PRACTICALITY AND FEASIBILITY

Economic CSR

Altruistic CSR

Is this the only duty ofthe firm?

Nestle ??

Is it too much for a firm ?

Nanhi Kali??

Practical ANDFeasible?

Ethical CSR

Pepsi Co??

Page 25: CSR & Ethics ppt

RECAP OF LAST LECTURE

Business only has an economic

responsibility to make a profit“Pure profit-

making view or economic CSR”

Corporate management to be

more sensitive to the societal impact of

their decisions “Socially aware view or ethical

CSR”

Corporations actively involved in programs which can ameliorate various

social ills “Community

service view or altruistic CSR”

Page 26: CSR & Ethics ppt

KARMAYOG CSR RATINGS Watchdog organizations that look specifically at CSR

activities of top 500 companies in India

 “Every company harms the environment and

people!”Corporate Social Responsibility is thus just about two aspects: 1) The steps taken by a company to neutralise, minimise or

offset the harmful effects caused by its processes and product-usage

2) The further steps a company takes using its resources, core competence, skills, location and funds for the benefit of people and the environment

Page 27: CSR & Ethics ppt

CRITERIA FOR CSR RATINGS

Sufficient Criteria Company fulfilling the basic needs of society through its

products or services Unique CSR activity Company reducing negative impact of others Company’s annual expenditure on CSR = 0.2% of sales

Necessary Criteria Focus on local community CSR embedded in the business operations Innovative ideas and practices are developed for CSR Activities sustainable, replicable, beneficial to the

society Negative Criteria

Companies that make liquor, tobacco, genetically modified crops

Companies that violate laws/rules/regulations

Page 28: CSR & Ethics ppt

HUL’ COMPETITIVE, PROFITABLE & SUSTAINABLE GROWTH

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8888888888888

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“DOING WELL BY DOING GOOD”

Nitin Paranjpe: It is the mandate of business to offer goods and

services that meet the needs of consumers and generate a profit.

Only if you make a profit can you invest, innovate and build for the future.

Serving the Bottom of the Pyramid (BoP) can be a profitable opportunity for a business. The BoP markets can provide new focus to firms

ET Article: “Doing well by doing good” (2nd March 2012)

Page 31: CSR & Ethics ppt

HUL’S SUCCESS AT BOTTOM OF PYRAMID

Lifebuoy’s Swasthya Chetna: The single largest private rural health and hygiene

programme The objective of the programme is to educate people

about basic hygiene habits. With a focus on rural communities, the programme

targets school children, women, and community elders.

Shakti Reach the so-called media-dark regions by turning rural

women into direct-to home distributors of its mass-market products

Provides livelihoods to thousands of women

Page 32: CSR & Ethics ppt

PHILANTHROPY & CSRSAME OR DIFFERENT?

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SOME DEFINITIONS Philanthropy:

Altruistic concern for human welfare and advancement, usually

manifested by donations of money, property, or work to needy

persons, by endowment of institutions of learning and hospitals, and

by generosity to other socially useful purposes.

Corporate Philanthropy:

Corporate Philanthropy mirrors individual philanthropy except for the

fact that a corporation, not an individual, is donating funds, time,

or talent.

Although done on a larger scale, corporate philanthropy is still

done without any expectation of direct corporate gain (such as

increases in revenue), but usually involves indirect gains (such as

enhancing a company’s brand, engaging employees, recognition, etc.).

Page 34: CSR & Ethics ppt

Although Corporate Philanthropy and CSR are used interchangeably, there is a thin line of difference.

CSR is going beyond philanthropy and is not just about donations.

Page 35: CSR & Ethics ppt

SOME BRAINSTORMING QUESTIONS..1. The ministry of Company Affairs is drafting the new Companies Bill and

has proposed the companies with turnover of more than Rs. 1000 crores

OR net profit of Rs. 5 crores should spend 2% of their profits on CSR.

Is this the only way companies can be obliged to indulge in CSR?

Is it Ethical?

2. Warren Buffet, in March 2011, persuaded Indian billionaires to donate

their wealth to charity. However, India has witnessed charitable activities

only Shiv Nadar and Azim Premji. Rahul Bajaj says “ Since time of

Buddha, India has been involved in philanthropy; its in our culture ;

however such activities are different from those in the first world.” Even

Sam Walton, an American, says “ Walmart was never and should never

be in the business of charity”.

Who of them is ethical and correct?


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