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Corporate Social Responsibility

Lectures 1 & 2

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Important Information

Reading is essential : Please go through the course

outline for a detailed understanding of what readings

have to be done before you come to the class

Internal assessment Mid Term:30marks

Presentation: 20marks

External assessment

End Term: 50marks

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WHY ARE

BUSINESSES

SUDDENLY TALKING

ABOUT CSR?

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Power of Corporations

The combined revenues

of just General Motors

and Ford -- the twolargest automobile

corporations in the world -

- exceed the combined

Gross Domestic Product

(GDP) for all of sub-

Saharan Africa

The combined sales of

Mitsubishi, Mitsui,

ITOCHU, Sumitomo,Marubeni, and Nissho

Iwai are nearly equivalent

to the combined GDP of

all of South America

The United Nations has justly described these corporations

as the productive core of the globalizing world economy.

Corporations have far more power than the nation-statesacross whose borders they operate.

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What is a Corporate?

What is the role ofcorporates in a globalized

economy?

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A corporation is

Legal entity

A legal entity, created underthe authority of a statute,which permits a group ofpeople, as shareholders, to

apply to the government foran independent organizationto be created, which thenpursues set objectives, and isempowered with legal rightsusually only reserved for

individuals, such as to sue andbe sued, own property, hireemployees or loan and borrowmoney.

Social entity

The most common form of businessorganization , which is chartered by astate and given many legal rights asan entity separate from its owners.

Companies should contribute to the

welfare of society and not be solelydevoted to maximizing profits.

Socially responsible companies canact in a number of ways to benefitsociety. For example, companies cangive money to the arts, fundacademic scholarships, supportcommunity-building initiatives, andso on. They can also commit to notpollute or to reduce the pollutionthey put out, to not build weapons,and so forth.

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Globalization

Globalization is a process of

Interaction and integration among the people,

companies, and governments of different nations.

This process has effects on the environment, on

culture, on political systems, on economic

development and prosperity, and on human

physical well-being in societies around the world.

Source: http://www.globalization101.org

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PROCESS Driven by

Trade & Investments

Foreign Direct Investment (FDI)

Financial flows Technology

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China, India,

Bangladesh,Philippines, Brazil,Costa Rica, Thailand,

Source: The World Bank

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Some 2 billion people particularly in sub-

Saharan Africa, the Middle East, and the

former Soviet Union live in countries that

are being left behind.

These countries have been unable to increase

their integration into the world economy. On

average, their economies have contracted and

poverty has risen.

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Poverty Facts and Stats

Source: Shah, Anup, 2009

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A second industrial revolution?

Industrialisation Expansion of capitalism

New markets

Clubs and coffee houses

Unregulated workplace

Urbanisation

Has Globalization impacted Us??????

Globalisation Foreign direct investment

Global markets: increase in cross-border trade

Internet communications Lack of international health

regulation

Urban megacities

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What is the impact

ofGlobalization?

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Impact ofGlobalization

New job creation

Globalization of Informationand

Communication system :

Global village

Globalization of science

leads to the fusion of

scientific data and

rules to

form a uniform

network of database

Increase in global awareness

about various

economic, legal, political,

technical and

cultural aspects

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Self-employment increased in all developing

regions except East and South-east AsiaFigure 15: Non-agricultural self-employment, 1980-89 and 1990-2000

(in per cent of total non-agricultural employment)

26

13

44

29

26

32

12

44

32

48

0

10

20

30

40

50

World Developed Regions Africa Latin America Asia

Source: ILO, Women and men in the informal economy, 2002.

1980/1989

1990/2000

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Impact ofGlobalization (Socio-Economic)

World highly vulnerable to changes which

cannot be controlled.

Unstable global financial systems

Impact on culture & identity

Rural & Informal economies remain on the

margins resulting in persistent poverty

Loss of jobs due to industrial restructuring

Migration leading to brain-drain

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Impact ofGlobalization (Socio-Economic)[contd.]

Migrants particularly women driven to illegal

economy( trafficking) leaving them vulnerable

to exploitation.

Investments leading to sweat shops and

poor health as countries reduce

environmental protection measures to attract

investment

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Impact on the Global Markets

More choice but can result in

Unhealthy lifestyles lack of activity, risky sexual

behaviour, breakdown in traditional values Promotion of processed tobacco, alcohol and

processed food with high salt sugar and fat content

Unrealised expectations resulting in depression

Increased tourism brings risks to health of tourists and

communities

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Impact on Global Health

Health conditions affecting people acrossboundaries, culture & generations

Infectious diseases: HIV/AIDS, TB, Influenza, SARS,

Lifestyle diseases and conditions: obesity, lungcancer, heart disease, STDs, Type 2 Diabetes

Threats to global stability and economy: HIV/AIDS,SARS, Swine Flu

The vectors of these diseases may be-- travel,work place or

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Impact ofGlobalization:Environment

Global warming

Agricultural development and food security

Water stress and water insecurity

Rising sea levels and exposure to climate disasters

Environmental pollution

Loss of bio diversity

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AWorld increasingly shaped by Sustainable Development issues

A carbon constrained world

A water constrained world

Ecosystems biodiversity

Sustainable production and consumption

Societal infrastructure and services

Development and poverty

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Current Trends in GlobalizationCurrent Trends in Globalization

IMBALANCEIMBALANCE North-South imbalance - unfair rules in Trade and FDI

Trade: Despite liberalization, expansion did not occur uniformly

Barriers to market entry for certain products of poor countries

FDI highly concentrated in about 10 developing countries despiteefforts by many to attract FDI

Capital & goods move more freely than labour & knowledge

Disparities in enterprise competitiveness and labour markets

More than 2 billion people particularly in sub-Saharan Africa, the

Middle East, and the former Soviet Union live in countries that are

being left behind.

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What can be done

to correct theimbalance?

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CORRECTING THE

IMBALANCE

How to build a fair globalization to reducepoverty and inequality

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Millennium Development Goals

Eradicate extreme poverty and hunger

Achieve universal primary education

Promote gender equality and empower women

Reduce child mortality

Improve maternal health

Combat HIV/AIDS, malaria, and other diseases

Ensure environmental sustainability Develop a global partnership for development

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What is the role of business in

Sustainable development?

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Need for Intervention of Business for

Sustainable Development If business has to be developed, the society needsto be developed, business sector cannot flourish inany country, if the environment required by

business is not conducive.

Increasing social issues impacts the entire society ingeneral and business in particular because to a large

extent business is dependent on the society for itsgrowth and prosperity.

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Need for Intervention of Business for

Sustainable Developmenty Challenges in the 21st Century cannot be tackled by

yesterdays rule of governance.

y There is a need to develop new ways of thinking and new

approaches to governance at every level of society.y It is an accepted fact, that, there are crucial linkages

between economic growth, human development, socialcohesion and environmental sustainability.

y New set of relationships between the business firm andthe surrounding society.

y Stakeholders, who have long remained dormant, havestirred awake and are now proving themselves as majorforces to be reckoned with.

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Any Questions?