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Sustainable CSR(CSR Basics)

Harsha Mukherjee

Founder & Manager Director,International Institute of CSR,

CSR Development Stories Pvt. Ltd.,Ekjaa Foundation.

MUMBAI NEW DELHI NAGPUR BENGALURU HYDERABAD CHENNAI PUNE LUCKNOW AHMEDABAD ERNAKULAM BHUBANESWAR KOLKATA

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© AuthorNo part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form orby any means, electronic, mechanical, photocopying, recording and/or otherwise without the priorwritten permission of the publisher.

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Foreword

“As a nation, we have embarked on the journey of social change through inclusive growth. A

shared sense of community through shared responsibilities both by the Government and Corporates is

apparent today. The passage of Companies Act 2013 and within its framework Section 135 on

Corporate Social Responsibility, marks a major milestone. Engaging in CSR activities has become

mandatory for all financially sound organizations. For hundreds of corporates, it entails traversing into

a totally new trajectory. In the changed milieu, CSR needs to be focussed and strategic. It implies

ploughing in resources where the activities truly make a difference to the lives of the underserved

communities and where there is clearly evidence of impact.

Ms. Harsha Mukherjee’s book “Sustainable CSR – The Basics” walks you through the principles

and practice of sustainable CSR across geographies. Her approach is holistic. The national and global

case studies give interesting insights into how the CSR vision is embedded in the business vision,

coupled with razor sharp execution strategies, alongside gauging the impact and making midcourse

corrections.

On a personal note, let me add that the road ahead on the journey of inclusion is steep. But with

so many corporates now becoming CSR practitioners in the real sense of the term, in the foreseeable

future a more equitable society will no longer remain a pipe dream”.

Rajashree Birla,Chairperson,

Aditya Birla Centre for Community Initiativesand Rural Development.

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Reviews'This book is an important step forward in the appreciation of CSR in India. As I have done in

my own work, including my CSR Text Book that will appear at the same time as this book (CSR andSustainability – From the Margins to the Mainstream, Greenleaf, UK, 2015), Harsha treats CSR as asystems approach to running a business and not merely philanthropy which has been the trend in Indiawith its new CSR law. To me, CSR is simply treating key stakeholders responsibly. Sustainabilityhas gravitated from the environmental arena to a multi-stakeholder perspective – for instance in GRI’sG4 Sustainability guidelines. As such Harsha and I may diverge a little on its treatment. Nevertheless,it is greatly encouraging to see young dynamic Indians, such as Harsha, thinking about CSR andtaking the subject further to help Indian business and institutions further their concerns ondevelopment as well as catch up with the international community.’

– Prof. Dr. Michael HopkinsFounder and CEO, MHCI International Pvt. Ltd.,

CSR and Finance Institute – Geneva.

Sustainable CSR book starts with the very basics of what CSR is all about. It underlies theimportance of why India Inc. should understand Corporate Social Responsibility and Sustainability,more so after the promulgation of the Companies Act 2013. This book will help them in achievingorganizational objectives through efficient CSR and effective implementation processes. The bookcompares the CSR practices globally with that of India. It covers the entire gamut of CSR toolsincluding Corporate Governance, CSR Index, Sustainability, etc. It gives totality to the subject of CSR.A must read for all CSR professionals. Sustainable CSR fills a gap which exists now.

– Vinod PandeManaging Director,

SBI Foundation.

“This book is a compendium of ideas, views and references on the subject of CSR. Its emphasisis more on a systems approach to CSR and to provide tools to operate for a practitioner of CSR. Thiscompilation of Harsha will help those who get started in this otherwise new area – CSR in India. Tome, it’s more about the Mission to run business with responsibility towards community andenvironment. With most companies getting started and small, they should look at some basic areas ofthis big subject and implement something as basic as the banning staple pins and use staple clips ormetering water, power and paper consumption in their homes and offices and do all it takes to reduceby 50% in the 1st year (highly doable). Lastly sensitizing all those around us: employees, familymembers, and friends to accept their role under ISR/PSR – Individual/Public Social Responsibilityand practice it.

As they say Charity begins at home, so, let ISR begin with each of us, is the key.......”

– Venkat RollaCSR Practitioner,

CSR Head – Omkar Developers and Realtors.

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The book entitled “Sustainable CSR” covers issues relating to Corporate Social Responsibility(CSR) and its relevance to Sustainability, which have taken a centre stage in modern societies. It canno longer be denied that we are all expected to have a high degree of responsibility. Corporate has toplay a greater role for inclusive growth. This generation must ensure that future generations enjoy thesame standards of living; if not better standards of existence than theirs. In other words, we ought tocreate an environment that leads us towards sustainable development. This book is based on thepremise that corporate social responsibility should be taken directly to business and measurement withbenching indicators.

This book has taken a different approach to be for theoretical aspects of CSR with the practicaldimensions in order to give the readers an opportunity to have a balanced approach to CSR. I amconfident that this compilation of Harsha will not only help to CSR professionals of various corporatein measuring and benchmarking their social/community activities. This will be a good guiding tool forManagement Schools, Universities, Colleges and Communities around India where issues relating toCSR are explored for learning purposes.

The book focuses on four sections which are of interest to all business and management students,academics, researchers, practitioners, consultants, corporate managers, governments, non-governmental organizations and international organizations with special interest in issues relating toCorporate Social Responsibility.

– Dr. Yogendra K. SaxenaRegional Director,

CASI-Global,Aug. 15, 2015.

The book is one of the most comprehensive books on CSR and it stands out for its reader-friendliness. I am sure it will be very useful especially for students, who wish to pursue a career inCSR and Sustainability, an upcoming and relevant sector.

– Arun AroraChief Communications Officer,

Cairn India.Harsha Mukherjee is as passionate about CSR as a painter is about her art or musicians about

their music. After years of following up with the developments that have shaped the evolution ofcorporate social responsibility legislation and practices and its teaching, internationally and in India,she has put together a primer that is concise, an executive’s handbook and a learner’s delight.

My personal association with how corporate social responsibility has come of age in India hastaken me on various sides of the idea and the reality of CSR – from a teacher, mentor, policy person,seeker of CSR support, giver of funds or adviser to those who need to comply or gain to guiding itsthink tanks – and its clear that this book meets a need of everyone involved in the business of CSR.

– Satish Jha,Founder and Principal Ashcroft,Sullivan Jha, Boston, MA, USA.

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The buzz word “CSR” has caught the nation’s imagination. India is awakening to the fact thatInclusion and Sustainability will go long way in strengthening the democratic fabric of the country.This book is an important landmark for the practitioners and people engaged in CSR activities tounderstand and apply CSR tools. The book covers both the theory and practical aspects and is a greatguide in the journey of CSR.

– Kewal Handa,Founder, Conexus Social Responsibility.

“The CSR and Sustainability debate in India is gradually, but surely, transpiring with time intoconcrete action and approaches that need replication. There remains a need for such approaches andlearnings to be placed in perspective for a professional outlook towards this fast-transforming space ofCSR. Towards this, Harsha’s book is a well-intentioned step forward. With a well-roundedcompilation of global as well as Indian CSR theory and practice, this book is definitely a beginner’shandbook and practitioner’s resource.”

Deepak Arora,CEO, Essar Foundation.

Corporate Social Responsibility (CSR) has been in existence for a long time in some form orother. However, the Government of India has formulated by an act a few years back. All companieswith a net worth of ` 500 crore or turnover of ` 1000 crore or a net profit of ` 5 crore are expected tospend 2% of the average net profit for the last 3 years towards the specified CSR projects. Theseprojects include education, healthcare and sanitation, poverty alleviation, women empowerment, ruraland slum area development to name a few.

CSR is an excellent social and development program which will benefit millions of people whoare below poverty line. However, many companies as well as several NGOs who are responsible toimplement the schemes are still not well conversant with how to execute the projects. This book onCorporate Social Responsibility by Harsha Mukherjee and Himalayan Publishers will go a long wayin educating them. I compliment them for this book. I recommend this book to everyone who is reallyconcerned with the CSR and its implementation for the benefit of the society.

Nanik Rupani,Chairman Emeritus,

Priyadarshni Academy.

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True to its name, the book explores the world of Sustainability, its evolution and its importancein India at a time when the country is undergoing a huge transformational shift. While introducing thebasics of corporate’s social commitment and its role in bringing about a sustained development, it putsin the onus of doing so through the Partnership model.

The recently announced United Nations Sustainable Development Goals, lay emphasis onbringing about the socio-environmental change by 2030 through its 17 global goals. This brings to thefore the very need to structure the approaches towards CSR and the partnerships which needs to becrafted amongst the governments, corporates, development sector and other stakeholder groups inachieving the same. Harsha has been able to present some of these aspects quite effectively at apractical level in the book. Wish her the very best.

Anupam Nidhi,Head – Group CSR,

Reliance ADA Group.“Corporates in this century are going beyond regulatory requirements and traditional

philanthropic initiatives to address several critical non-business problems. Further, there is a growingconsensus that well strategized and executed CSR programs can have a significant impact on theoverall value corporates create in the long term.

The regulatory environment in India has also changed in recent times. With that, it is no longerstrictly the job of CSR professionals – successful responsibility efforts originate at the corporate leveland eventually applied throughout the organization.

As the organizations and various actors set out to build complex frameworks for theresponsibility infrastructure that applies to business and inspires the stakeholders, it is important to getthe basics demystified. ‘Sustainable CSR’ will help define some of these core elements in Indiancontext. The book also touches upon the best practices and contemporary tools in the areas ofmeasurement and benchmarking. The book comes in as reckoner to a wider community to understandthe fundamentals and assist in better collaborations”.

Sumantra Sen,CEO – JSW Foundation.

“Sustainable CSR covers the technical essence of CSR in totality. The wide range of case studiesexplains CSR practices around the globe.

The book is recommended to all those who want to learn the basics of CSR.”Dr. Huzaifa Khorakiwala,

CEO – Wockhardt Foundation.

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Preface

This book is divided into four sections each concentrating on different core aspects of

CSR. The first section deals with CSR Concepts which takes you through the journey of

history of CSR, briefing about the Social Causes and Sustainability.

The second section of the book is CSR and Measurement with a focus on Social Angle

and traverses through measurement of Social Projects, CSR Life Cycle, CSR Indexes and

Benchmarking Indicators.

In the third section, you graduate with the governance angle from CSR and Corporate

Governance and learn in-depth knowledge about Code of Ethics, CSR Laws in India and

Internationally along with their application.

Lastly, we focus on CSR and Strategic Management with concentration on sustainability.

This section enables us to think about CSR Business Cases, CSR Policy, Framework and

Developing Strategy.

Each section empowers you with a brief knowledge of the topics included in CSR.

Harsha Mukherjee

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Contents

SECTION 1

1. What is Corporate Social Responsibility (CSR)? 3 - 101.1 Definition of CSR across the Globe 31.2 History of CSR 41.3 CSR Evolution in India 9

2. What are Social Causes? 11 - 292.1 Types of Social Causes 112.2 Theory to Reality: Social Reports 202.3 CSR in Emerging Market Economies 27

3. Sustainability 30 - 413.1 What is Sustainability? 303.2 Sustainability in Business Practices and its Applicability 313.3 Environment as a Key Stakeholder of Sustainability 36Bibliography 40

SECTION 2

4. CSR and Measurement 45 - 644.1 Measurement Tools 454.2 Widely Used CSR Self-assessment Online Tools 474.3 Frameworks and Guidelines 554.4 External Assessment Tools 574.5 CSR Reporting Standards 59

5. CSR Index 65 - 785.1 What is CSR Index? 655.2 Stock Exchanges with CSR Index 665.3 Sustainability Stock Exchange (SSE) 77

6. Benchmarking Tools in CSR 79 - 1006.1 Significance of Benchmarking in CSR 796.2 Benefits of CSR Benchmarking System 796.3 Benchmarking Tools 806.4 Annexure 1: CSR Measurement Tools 886.5 Annexure 2: CSR Reporting Formats 95Bibliography 100

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SECTION 3

7. CSR and Corporate Governance 103 - 1167.1 What is Corporate Governance (CG)? 1037.2 Organization for Economic Corporation and Development (OECD) 1057.3 CSR and Ethics 1067.4 Quality of Social and Ethical Responsibility of Corporations (Q-RES) 1117.5 Cadbury Committee 1127.6 Developing Generic Corporate Governance Framework 114

8. Corporate Codes of Conduct and Ethics 117 - 1268.1 What is Code of Conduct and Ethics? 1178.2 Contents of Code of Conduct and Ethics 1198.3 Examples of Ethical and Unethical Companies 122

9. CSR Laws 127 - 1339.1 CSR Laws across the Globe 1279.2 Indian CSR Laws 1299.3 Government Commandments for CSR 132Bibliography 133

SECTION 4

10. CSR and Business 137 - 15010.1 CSR Sustainability Business Model (CSBM) 13710.2 Converting Intangible Gains to Tangible Outcomes 14010.3 Market Rewarding CSR Compliant Companies and CSBM Models Individually 147

11. CSR Policy and Framework 151 - 17311.1 CSR Management Structure 15111.2 CSR and Strategic Management 16611.3 Roles and Qualifications of CSR Professionals 168

12. CSR and Strategy 174 - 18912.1 Centralization (CZ) and Decentralization (DCZ) of CSR 17412.2 CSR and Marketplace 18012.3 CSR for Large-scale Companies and Medium and 183

Small-scale Companies (MSMEs)Bibliography 188

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LIST OF FIGURES

Fig. 1.1 Caroll’s CSR Pyramid 6Fig. 1.2 CSR Challenges Faced in Early 70s 7Fig. 1.3 African CSR Pyramid – Wayne Visser 9Fig. 1.4 Indian Evolution of CSR 10Fig. 2.1 Indian School Girls 14Fig. 2.2 Project Evaluation Cycle 23Fig. 2.3 Types of Impact Assessed 25Fig. 2.4 CSR Reporting by Government of India 26Fig. 2.5 CSR Index of Brazil 27Fig. 3.1 Difference between CSR and Sustainability 31Fig. 3.2 Pager 36Fig. 4.1 London Benchmarking Group Framework 51Fig. 4.2 London Benchmarking Group Mechanism 51Fig. 4.3 GIIRS 3-tiered Assessment Structure 52Fig. 4.4 Four Step Methodology for Impact Framework 56Fig. 4.5 Oxfam Poverty Footprint Methodology 58Fig. 4.6 TATA - Integrated Reporting 61Fig: 4.7 Global Compact Management Model 63Fig. 5.1 Sarasin Multi-modal Matrix 68Fig. 5.2 Sarasin Company vs. Sector Matrix Mechanism 70

2 Sarasin Matrix Country InclusionFig. 5.3 BM&FBOVESPA, Methodology 74Fig. 6.1 Content-oriented Framework of Standards DTB 81Fig. 6.2 Experts Assessment DTB 81Fig. 6.3 Quality-oriented Framework of Standards DTB 81Fig. 6.4 Dow Jones Sustainability Indices 83Fig. 6.5 Universe Structure of DJSI 84Fig. 6.6 (FTSE4) Good Rating Methodology 86Fig. 7.1 Global Corporate Governance Forum 104Fig. 7.2 Global Code of Ethics 110Fig. 7.3 Andriane Cadbury 112Fig. 10.1 Reputex ESG Rating Model 147Fig. 11.1 The CSR structure of an Indian Public Sector Company NTPC 153Fig. 11.2 CSR Frameworks Continuum 154Fig. 11.3 CSR in Operations Business Case (Leaders, 2010) 160Fig. 11.4 Business Value Drivers – Supply Chain 161Fig. 11.5 Solar ATM – SBI Vortex 163

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Fig. 11.6 Texas City, Texas – BP Oil Refinery 163Fig. 11.7 Alaska North Slope – BP Pipeline 164Fig. 11.8 BP Energy Investment 164Fig. 12.1 Centralized Corporate Responsibility Model 175Fig. 12.2 Parthenon Group Graduating from Decentralized to Centralized CSR 176Fig. 12.3 Decentralized CSR Structure 177Fig. 12.4 Lufwanyama School 184

LIST OF TABLES

Table 1.1 Caroll vs. Steven and Philip 8Table 2.1 Social Monitoring and Evaluation 22Table 2.2 Types of Evaluation: Formative and Summative 23Table 2.3 IA Tools for Commercial Organization 25Table 2.4 IA Tools for Social Ventures 26Table 2.5 IA Tools for NGOs 26Table 4.1 GIIRS Assessment Structure Format 53Table 4.2 Company Specific Impact Areas 53Table 7.1 Generic CSR Framework 115Table 12.1 Firms Attributes and Motivations for CSR Participation 182Table 12.2 Company Size Influencing CSR (Source: Pauly, 2010) 183

CASE STUDIES

Case Study 1: Preventive Health Care by Aditya Birla Group 13

Case Study 2: H&M RRR 32

Case Study 3: Backward Linkage – Sustainable Livelihoods 33

Case Study 4: Gildan Corporate Governance 34

Case Study 5: Unilever Innovation 35

Case Study 6: Encord – Air Pollution 37

Case Study 7: Alpha Natural Resources – Water Pollution 37

Case Study 8: StarBucks Water Conservation 38

Case Study 9: Monsanto Soil Conservation 39

Case Study 10: Sanofi India 119

Case Study 11: CSBM in Mining Sector Company: EMIL 138

Case Study 12: CSBM in Power Industry: NTPC 139

Case Study 13: CSBM in Banking Sector: HDFC 139

Case Study 14: CSBM in Retail Sector: Grameen Danone 140

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Case Study 15: Carbon Disclosure Project: Company Allergan 143

Case Study 16: Carbon Disclosure Project: Investment Firm SWIP 144

Case Study 17: Toyota’s CSR Management Structure 151

Case Study 18: Nike CSR Role in Operations 158

Case Study 19: Ford – Supply Chain 161

Case Study 20: Decentralized CR: Hyatt Group of Hotels 177

Case Study 21: Decentralized CSR: Intel 179

Case Study 22: Decentralized CSR: Aditya Birla Group 179

Case Study 23: CSR Marketplace: Berg Law Firm 181

Case Study 24: CSR Marketplace: Mantra Group 181

Case Study 25: CSR of MNC: Ranbaxy Pharmaceuticals Pvt. Ltd. 184

NOTES

Note 1: CAS Methodology 85

Note 2: Marks and Spencers 114

EQUATIONSEquation 1: Indirect Employment Effects 48

Equation 2: Import and Export Effects 48

Equation 3: Forward and Backward Jobs 49

Equation 4: Poverty Effect 49

Equation 5: Child Mortality Effect 49

Equation 6: SA Country-wise: Dashboard Tool 54

Equation 7: EGX Calculation 67

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.SE

CT

ION

:ON

E CSR Concepts1. What is Corporate Social Responsibility (CSR)?

2. What are Social Causes?

3. Sustainability

Sustainable CSR (CSR Basics)

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What is Corporate Social Responsibility (CSR)?

– 3 –

Learning ObjectiveThis chapter educates students about the roots of CSR and its perception across the globe. It entails thehistory of CSR from 1959 when Professor Howard Bowen termed the word “CSR” and itsdevelopment in every decade. It also sheds light on the development of CSR in India.

Structure:1.1 Definitions of CSR across the Globe1.2 History of CSR1.3 CSR Evolution in India

1.1 DEFINITIONS OF CSR ACROSS THE GLOBECorporate Social Responsibility entails social and moral responsibility of the businesses towards

community and planet at large.

Different Versions of CSR DefinitionsThe World Business Council for Sustainable Development (WBCSD) in its publication

Making Good Business Sense by Lord Holme and Richard Watts, used the following definition.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 theirfamilies as well as of the local community and society at large.

Business for Social ResponsibilityOperating a business in a manner that meets or exceeds the ethical, legal, commercial and public

expectations that society has of business.

European Commission

A concept whereby companies decide voluntarily to contribute to a better society and a cleanerenvironment. A concept whereby companies integrate social and environmental concerns in theirbusiness operations and in their interaction with their stakeholders on a voluntary basis. (Baker, 2014)

1 What is Corporate SocialResponsibility (CSR)?

Sustainable CSR (CSR Basics)

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Canadian GovernmentCorporate Social Responsibility (CSR) is defined as the voluntary activities undertaken by a

company to operate in an economic, social and environmentally sustainable manner. (Canada, 2014)

Dr. Michael Hopkins1. Corporate Social Responsibility is concerned with treating the stakeholders of a company or

institution ethically or in a responsible manner. ‘Ethically or responsible’ means treatingkey stakeholders in a manner deemed acceptable according to international norms.

2. Social includes economic and environmental responsibility. Stakeholders exist both within afirm and outside.

3. The wider aim of social responsibility is to create higher and higher standards of living,while preserving the profitability of the corporation or the integrity of the institution, forpeople both within and outside these entities.

4. CSR is a process to achieve sustainable development in societies. (Hopkins, 2011)

InvestopediaCompanies have a lot of power in the community and in the national economy. They control a lot

of assets, and may have billions in cash at their disposal for socially conscious investments andprograms. Some companies may engage in “greenwashing”, or feigning interest in corporateresponsibility, but many large corporations are devoting real time and money to environmentalsustainability programs, alternative energy/clean tech, and various social welfare initiatives to benefitemployees, customers, and the community at large. (Investopedia, 2015)

International Organization for Standardization, ISO 26000

“Social responsibility is the responsibility of an organization for the impact of its decisions andactivities on society and the environment, through transparent and ethical behaviour that:

contributes to sustainable development, including the health and the welfare of society; takes into account the expectations of stakeholders; is in compliance with applicable law and consistent with international norms of behaviour; and is integrated throughout the organization and practised in its relationships.” (CSR, 2015)

1.2 HISTORY OF CSR

CSR in the 50s and 60s was the “Era of more talk than action”Father of CSR: “Howard Bowen” in 1953.1. The term Corporate Social Responsibility is derived by Anglo-American and US economist,

Howard Rothmann Bowen (October 27, 1908 - December 22, 1989) mentioned in his book“Social Responsibilities of the Businessmen” that entrepreneurs have the responsibility toorientate on expectations, aims and values of a society.

What is Corporate Social Responsibility (CSR)?

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2. Bowen also provided a preliminary definition of CSR: “CSR refers to the obligations ofbusinessmen to pursue those policies, to make those decisions, or to follow those lines ofaction which are desirable in terms of the objectives and values of our society”.

3. There were a few other landmark books during the 1950s, most notably Morrell Heald’s1957 publication, Management’s Responsibility to Society: The Growth of an Idea; andEell’s 1956 work, Corporate Giving in a Free Society.

Murihead (1999) categorized mid-50s and 60s as “Growth and Expansion of CorporateContribution”. (Caroll, 2015)

CSR Sculptors – 60sKeith Davis:

He is often referred as the runner-up for “Father of CSR”.

“Businessmen’s decisions and actions taken for reasons at least partially beyond the firm’sdirect economic or technical interest”

William C. Frederick:

“Social responsibility in the final analysis implies a public posture toward society’s economicand human resources and a willingness to see that those resources are utilized for broad social endsand not simply for the narrowly circumscribed interests of private persons and firms.”

Clarence C. Walton:

“The new concept of social responsibility recognizes the intimacy of the relationships betweenthe corporation and society and realizes that such relationships must be kept in mind by top managersas the corporation and the related groups pursue their respective goals.”

CSR Sculptors – 70sThought Leader:

Management expert Peter Drucker argues that “the proper ‘social responsibility’ of business isto [...] turn a social problem into economic opportunity and economic benefit, into productivecapacity, into human competence, into well-paid jobs, and into wealth.” It has been argued that, “itwill not be too long before we can begin to assert that the business of business is the creation ofsustainable value—economic, social and ecological—converting social problems to economicopportunity.”

In 1971, when the Committee for Economic Development (CED) published its SocialResponsibilities of Business Corporations, as a code of conduct, the CED outlined a three-tieredmodel of CSR:

The inner circle: The basic responsibilities an organization has for creating profit andgrowth;

The intermediate circle: An organization must be sensitive to the changing social contractthat exists between business and society when it pursues its economic interests; and

The outer circle: The responsibilities and activities an organization needs to pursue towardsactively improving the social environment such as poverty or urban crowding issues.

Sustainable CSR (CSR Basics)

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Other influential thought leaders: George Steiner (Business and Society – 1971), Preston andPost, Eels and Walton and S. Prakash Sethi who distinguished between social obligation(prospective approach), social responsibility (prescriptive approach) and social responsiveness.

Philanthr-opicResponsi-bilities

Be goodcorporate

citizen

EthicalResponsibilities

Legal Responsibilities

Economic Responsibilities

Obey the law. Law is society’scodification of right and wrong.

Be ethical. Obligationto do what is right and

fair. Avoid harm.

Be profitable. The foundation uponwhich all others rest

Fig. 1.1: Caroll’s CSR Pyramid

Caroll (1979)

Caroll’s contribution would be marked as the beginning of CSR research since it provided aframework for effective classification of responsibilities of a business.

It has given substantial contribution to the development of the research area.

This list gives us a general picture of what businesses thought of CSR was all about in the 1970s.Other important CSR activities were found to be:

developing understandable accounting statements, truth in advertising, product defects, consumer complaints, consumer-oriented label changes, and guarantees and warrantees.

What is Corporate Social Responsibility (CSR)?

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Important CSR Issues in the Early 1970s

CSR Activity Present of Firms EngagedMinority hiring 100Ecology (Concern for environment) 95Minority training 91Contributions to education 91Contributions to the arts 83Hardcore hiring 79Hardcore training 66Urban renewal 62Civil rights 58

Source: Eilbirt and Parket (1973: 11).

Fig. 1.2: CSR Challenges Faced in Early 70s

Few Social Movements that Led to the Development of CSR

The rhetoric of the 60s and 70s movements had several conditions of the society that it attemptedto convert into power for the movement.

American Apartheid. Despite the ending of chattel slavery in 1865, American culture –particularly in the South – had re-established a cultural system based in racial superiority.Discrimination against non-Euro Americans and even some ethnic Euro Americans was commonsocial practice established and promoted by discursive practices. Many movements sought to confrontthis system.

Disparity in Wealth. In 1960, one in five Americans lived in conditions described by the federalgovernment as “poverty.” Many movements were egalitarian movements seeking to convert thisdisparity into support for social change.

Materialism. The movements of the 60s were not simply movements uniting the lesser endowedclasses of American society. The children of the American middle and even upper classes were eagerparticipants and often the leaders of these movements. They found that the material satisfactions oftheir wealthy status did not produce satisfaction with their lives. Many movements addressed non-material issues and framed motivation for movements in alternatives to the central place ofmaterialism.

Thought Leaders – 80s80s was known as the “Decade of greed”. UK was struck by unemployment, urban decay and

social unrest which led to further realization for the need of CSR.

1980s gave rise to “Stakeholder Theory” pioneered by R. Edward Freeman, “Business Ethics”.

Sustainable CSR (CSR Basics)

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Corporate Scandals and Mishaps in 1980s gave rise to serious mindset change of corporates. Infant-formula controversy Union Carbide Bhopal Controversy over companies doing business in South Africa Apparent support to apartheid Ivan Boesky’s insider trading scandal

Thomas M. Jones: He emphasized CSR is voluntary and business social obligation is beyondshareholders and extends to stakeholders.

Frank and Barry: They linked CSR with Maslow’s hierarchy.

In 1985, Steven Wartick and Philip Cochran presented “CSR Performance Model” whichconvoluted and integrated Caroll’s model.

Edwin M. Epstein restated the above with a change in issues management to business ethics andpresented “Corporate Social Policy Process”.

Table 1.1: Caroll vs. Steven and Philip

Caroll Steven and PhilipSocial Responsibility PrincipleSocial Responsiveness ProcessesSocial Issues Management Policies

CSR in the 90sMuirhead classified “corporate contribution” of the mid-80s and 90s as “Diversification and

Globalization”.

This era marked the rise of CSR consulting firms such as: Sustainability (1989) Business for Social Responsibility (1992) CSR Europe (1996) Multi Stakeholder Dialogue – Ethical Trading (1993) and Forest Stewardship Council (1998)

Codes were developed: ISO 14001 (1996) GRI Sustainability Guidelines (1997) SAI (1998) AA1000 (1999) UNGC (1999) – Code for CSR devised by Kofi Anan

What is Corporate Social Responsibility (CSR)?

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Changing CSR Dynamics in 2000s

EthicalResponsibilities

LegalResponsibilities

PhilanthropicResponsibilities

EconomicResponsibilities

Adopt voluntary codes ofgovernance and ethics

Ensure good relationswith government officials

Set aside funds forcorporatesocial/community projects

Provide investment,create jobs and paytaxes

Fig. 1.3: African CSR Pyramid – Wayne Visser

Till date, theoretical contributions were done in CSR, now was the time for “Empirical Research”to be conducted.

Rowley Berman (2000) retermed “Corporate Social Performance”. Schwartz and Caroll (2003) compressed Caroll’s 4-dimension CSR Pyramid to 3-dimension

venn diagram – Economy, Legal and Ethical. Wayne Visser in his book “Corporate Citizenship in Developing Countries” showcased

African CSR Pyramid shown above. (Visser, 2010)

1.3 CSR EVOLUTION IN INDIA

In India, old business houses such as Tata, Bajaj, Godrej and Birla has been doing philanthropicactivities since pre-independence time.

In the recent times, following developments have made India a path-breaker in the world for CSR.

On 1st April, 2014, the section 25 Companies Act, 2013, has been implemented. (Wikipedia,2015)

In 2014, the Lower House of India “Lok Sabha” passed the Companies Act, 2013, therebymaking section 134 and section 135 as an Act to be enacted on India Inc.

Sustainable CSR (CSR Basics)

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A detailed study of the Indian Law can be referred in the Corporate Governance section.

The New Companies Bill was introduced in the in the Lok Sabha in August 2009 but passedto the finance committee and reintroduced in 2011 but again referred to standing committee.

In December 2012, the new companies bill was passed in Lok Sabha.

In August 2013, the new companies bill was passed in Rajya Sabha.

Fig. 1.4: Indian Evolution of CSR

Questions1. Which definition entails maximum totality of CSR and Sustainability? How would you define CSR

and Sustainability?2. What led to the pursuance of CSR in US and Europe?3. Which era was most proactive in CSR and Sustainability?4. What led to the rise of CSR consultancy firms? Which were the earliest firms?

Projects1. What services and clients did the premier CSR Consultancy firms offer at initial stages?2. Prepare a brief on each codes including the following: what they stand for, who founded, their journey

of growth and present significance.