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Definition of 'Corporate Social Responsibility'

Corporate initiative to assess and take responsibility for the company's effects on
the environment and impact on social welfare. The term generally applies to
company efforts that go beyond what may be required by regulators or
environmental protection groups.
Corporate social responsibility may also be referred to as "corporate citizenship"
and can involve incurring short-term costs that do not provide an immediate
financial benefit to the company, but instead promote positive social and
environmental change.
What is CSR?
Corporate Social Responsibility is a management concept whereby companies
integrate social and environmental concerns in their business operations and
interactions with their stakeholders. CSR is generally understood as being the way
through which a company achieves a balance of economic, environmental and
social imperatives (Triple-Bottom-Line- Approach), while at the same time
addressing the expectations of shareholders and stakeholders. In this sense it is
important to draw a distinction between CSR, which can be a strategic business
management concept, and charity, sponsorships or philanthropy. Even though the
latter can also make a valuable contribution to poverty reduction, will directly
enhance the reputation of a company and strengthen its brand, the concept of CSR
clearly goes beyond that.
Promoting the uptake of CSR amongst SMEs requires approaches that fit the
respective needs and capacities of these businesses, and do not adversely affect
their economic viability. UNIDO based its CSR programme on the Triple Bottom Line
(TBL) Approach, which has proven to be a successful tool for SMEs in the developing
countries to assist them in meeting social and environmental standards without
compromising their competitiveness. The TBL approach is used as a framework for
measuring and reporting corporate performance against economic, social and
environmental performance. It is an attempt to align private enterprises to the goal
of sustainable global development by providing them with a more comprehensive
set of working objectives than just profit alone. The perspective taken is that for an
organization to be sustainable, it must be financially secure, minimize (or ideally
eliminate) its negative environmental impacts and act in conformity with societal
Key CSR issues: environmental management, eco-efficiency, responsible sourcing,
stakeholder engagement, labour standards and working conditions, employee and
community relations, social equity, gender balance, human rights, good
governance, and anti-corruption measures.

A properly implemented CSR concept can bring along a variety of competitive

advantages, such as enhanced access to capital and markets, increased sales and
profits, operational cost savings, improved productivity and quality, efficient human
resource base, improved brand image and reputation, enhanced customer loyalty,
better decision making and risk management processes.

Four Types of Corporate Social Responsibility

Economic Responsibilities
A company's first responsibility is its economic responsibility -- that is to say, a
company needs to be primarily concerned with turning a profit. This is for the simple
fact that if a company does not make money, it won't last, employees will lose jobs
and the company won't even be able to think about taking care of its social
responsibilities. Before a company thinks about being a good corporate citizen, it
first needs to make sure that it can be profitable.
Legal Responsibilities
A company's legal responsibilities are the requirements that are placed on it by the
law. Next to ensuring that company is profitable, ensuring that it obeys all laws is
the most important responsibility, according to the theory of corporate social
responsibility. Legal responsibilities can range from securities regulations to labor
law, environmental law and even criminal law.

Ethical Responsibilities
Economic and legal responsibilities are the two big obligations of a company. After a
company has met these basic requirements, a company can concern itself with
ethical responsibilities. Ethical responsibilities are responsibilities that a company
puts on itself because its owners believe it's the right thing to do -- not because
they have an obligation to do so. Ethical responsibilities could include being
environmentally friendly, paying fair wages or refusing to do business with
oppressive countries, for example.
Philanthropic Responsibilities
If a company is able to meet all of its other responsibilities, it can begin meeting
philanthropic responsibilities. Philanthropic responsibilities are responsibilities that
go above and beyond what is simply required or what the company believes is right.
They involve making an effort to benefit society -- for example, by donating services
to community organizations, engaging in projects to aid the environment or
donating money to charitable causes.

Amul is an Indian dairy cooperative, based at Anand in the state of Gujarat, India.
The word amul is derived from the Sanskrit word amulya , meaning invaluable.
The co-operative was initially referred to as Anand Milk Federation Union
Limited hence the name AMUL.
Formed in 1946, it is a brand managed by a cooperative body, the Gujarat Cooperative Milk Marketing Federation Ltd. (GCMMF), which today is jointly owned by 3
million milk producers in Gujarat.[4]
Amul spurred India's White Revolution, which made the country the world's largest
producer of milk and milk products. [5] In the process Amul became the largest food
brand in India and has ventured into markets overseas.
Dr Verghese Kurien, founder-chairman of the GCMMF for more than 30 years (1973
2006), is credited with the success of Amul. [6]

Corporate Social Responsibility, The Amul Way

Corporate social responsibility (CSR) has been defined as the
commitment of business to contribute to sustainable economic
development working with employees, their families, the local community,
and society at large to improve their quality of life, in ways that are both
good for business and good for development
To meet with the CSR it is expected that a business in its entire
procurement-production-processing-marketing chain should focus on
human development involving the producer, the worker, the supplier, the
consumer, the civil society, and the environment.

Indeed, a very tough task. Most businesses would certainly flounder in not
being able to achieve at least one or many of those expectations. But
AMUL has shown the way.
CSR-sensitive Organisational Structure
AMUL is a three tier co-operative organisation. The first tier is the cooperative society at the village,of which; milk producers are voluntary
members, managing the co-operative through a democratically elected 9member managing committee, and doing business by purchasing milk
from members and selling it to the district level co-operative. There are
more than 11,000 co-operatives in villages of Gujarat.
The second tier is the district co-operative that processes milk into milk
products, markets locally and sells surplus to the state co-operative for
national and international marketing. There are 12 district co-operatives
each being managed by a 15-member board elected by the college
comprising the nominated representatives or chairmen of the village cooperatives.
Third tier is the state level co-operative - the Gujarat Co-operative Milk
Marketing Federation (GCMMF) responsible for national and international
marketing of milk and milk products produced and sold to it. The GCMMF
is managed by the board democratically elected by and from amongst the
chairmen of the district co-operatives.
The entire three-tier structure with the GCMMF at its apex, is a unique
institution because it encompasses the entire chain from production of
raw material to reaching the consumer with the end product. Every
function involves human intervention: 23.60 lakh primary milk producers;
35,000 rural workmen in more than 11,400 village societies; 12,000
workers in 15 dairy pla-nts; 750 marketing professionals; 10,500 salesmen
in distribution network and 600,000 sal-esmen in retail network. Accumulation of human capital is sine qua non for the development and growth
of any enterprise or economy. The GCMMF is sensitive towards CSR. It
believes that technology and capital are replicable inputs but not the
human capital. Since men are the basis for achieving the CSR, the GCMMF
lays emp-hasis on their development into competent, courteous, credible,
reliable, responsive communicators and performer

CSR-sensitive Business Philosophy

The first step towards discharging the CSR is the business philosophy of
the GCMMF. It is two-fold: one, to serve the interests of milk producers
and second, to provide quality products to consumers as value for money.
Evolution of an organisational system has ensured that the corporate

social responsibility towards the primary milk producers, village and the
ecological balance is fulfilled. The milk producers are paid for their milk in
accordance with market forces and realisation of value for their produce.
Invariably the price paid to the member-producers in Gujarat is higher by
15 per cent than the national average.
CSR-orientation To Distributors & Retailers
The GCMMF has identified the distributors and retailers are its important
link in its vendor supply chain. Through surveys the GCMMF found that
90% of the distributors do not get any opportunity of exposure to latest
management practices. The GCMMF realised that it was a corporate social
responsibility to strengthen the core business processes of its distributors
so as to keep them in mainstream business and compete with those with
formal training in management. The GCMMF has developed and trained all
its distributors through Value-Mission-Strategy Workshops, competence
building, Amul Yatra, Amul Quality Circle meetings, computerisation, and
electronic commerce activities.
Competency Building Module of the GCMMF is meant to infuse
professional selling skills by making the distributors and their salesmen
aware of latest sales management tools and techniques; enhance their
knowledge of products; positioning and segmentation strategies for
various products. Under Amul Yatra the distributors and their salesmen
are taken on a visit to Anand. During this visit they are shown dairy
plants, their upkeep, international standards of hygiene and quality; the
practices adopted for clean milk production, and above all the cooperative
philosophy. Through one to one talk with the farmers, the distributors and
salesmen realise AMUL is a large business of small farmers. The visit
leaves an everlasting impression on their minds that by selling AMUL
products, they are discharging a social responsibility towards a large
number of poor farmers whose livelihood depends upon their skill and
integrity. They feel proud that they are participants in development of
rural society and thus in nation building.
Earnings Of GCMMF
Nurturing its primary members - the milk producers - is the first mission of
the GCMMF. Discharge of this responsibility is reflected in the manner in
which the GCMMF conducts its business and shares its earnings. The milk
from the village co-operatives is purchased at an interim price. So as to
maximise the earnings of the milk producers the GCMMF changes the
product profile during the fiscal and directs its sales and marketing
activities towards those products that would bring in maximum returns.
True! Every business organisation follows the same principle. But the
GCMMF follows it with the central interest of the producers. During the
fiscal, as the GCMMF finds that from its earnings it is possible to pay more

to the producers for milk, the final price is declared higher than the
interim price being paid. Before the GCMMF closes its financial accounts
the co-operatives are paid price difference, the amount between the
interim price and the final price. Thus profit of the GCMMF is very low. The
net profit (PADT) of the GCMMF during 2003-04 was Rs 7.31 crore against
a turnover of Rs 2,947 crore, a meagre 0.25%. Further out of the net profit
of Rs 7.31 crore, Rs 4 crore was given as share dividend to the cooperatives. To fulfill its corporate social responsibility towards its milk
producers and co-operatives the GCMMF works on razor thin profits and
retention of funds.
CSR-oriented To Staff
The GCMMF hires and trains people to take advantage over its
competitors. It has developed in-house modules for training and
competence buil-ding to improve and up grade of their knowledge;
communication skills to understand the customer, be responsive to
customer requirements, and communicate clearly for trouble shooting of
problems. They are expected to be courteous, frie-ndly, respectful, and
considerate to the customer. To improve the credibility and
trustworthiness of the managers it is important they perform consistently
and accurately every time and at all times. The structure of salary and
perquisites is altogether different. The first and foremost the staff must
get satisfaction from the job they. They are recognised for their
contribution (Climate Survey) CSR-AMUL WAY
The writer is an officer on special duty, Gujarat Co-operative Milk
Marketing Federation, New Delhi)