Corporate Social

Responsibility

CSR

The present-day CSR

also called as

corporate responsibility,

corporate citizenship,

Responsible business

corporate social opportunity

classical view of CSR

narrowly limited to philanthropy

shifted to

the emphasis on business-society relations particularly

referring to the contribution that a corporation or firm
provided for solving social problems

Early Twentieth Century,

Scope widened up further.

management to take the initiative in raising both ethical standards and

justice in society through the ethic of economizing, i.e. economize the use of
resources under the name of efficient resource mobilization and usage.

business creates wealth in society and provides better standards of living.

business organizations should consider the interest of society by taking responsibility

for the impact of their activities on

Customers

suppliers

employees

Shareholders

communities

and other stakeholders

environment.

the organizations have to comply with legislation

voluntarily initiatives to improve well-being

of their employees and their families

the local community

society at large.

In other words:

ethical

society friendly.

What's in it for corporations?

???

Common Roles of CSR in Community

Development

To share the negative consequences as a

result of industrialization.

higher UK road tax for higher emission vehicles

thus reducing the burden of small vehicle owners in a community
so, small vehicle owners share less the tax burden,

Closer ties between corporations and

community.

Corporation more than a place just to get employment and producers of

goods and services.

corporations and community would stay in peace and harmony.

This becomes a social capital that is essential in community development

e.g. Shell Foundation involvement in the Flower Valley in South Africa and
Marks and Spencer in Africa: The 540-hectare farm is home to many critically
endangered lowland fynbos species. It has been cleared of all invasive alien
plants, which is followed up regularly.

Role in transfer of technology (TOT)

TOT & MNCs that give concerns on CSR and communities in the host countries
flow of human resources;
Hence:

product development and marketing,

better price and quality,

concern for peoples wellbeing.

CSR helps to protect environment

financial and environmental performance can work together to drive company

growth and social reputation.

going green

We green the earth --- MNCs in Malaysia who own large golf areas within
the vicinity of residential areas

non-profit organizations--- ACTVISIM--- environmental protection of CSR

Friends of the Earth who highlights the environmental impact of some MNCs
and campaign for stronger laws on environmental responsibility

CSR is for human right corporate sustainability.

Global Compact United Nations initiative to convince international

companies to commit themselves to universal principles in relation to
protection of human rights

areas of human rights, labor, and environment

ensure that markets, commerce, technology and finance advance in ways that
benefit economies and societies everywhere

Aid to alleviate poverty

Malaysian reality program Bersamamu of TV3 : sponsored by Syarikat Faiza

Sendirian Berhad (SFSB), a local enterprise-cum-philanthropist who responds
to governments appeal to help impoverished community to improve their
livelihoods . SFSB gets help from the local media company TV3 for publicity
and audience support. This TV program is focused on the life reality of the
poor, helpless and misfortune people in their survival. Every purchase of
Faiza's Product, will entitle the buyer to make a donation to TV3 (a fund of
the broadcasting agency).

Through this collaboration it may trigger other corporations to help the nation
in its effort to alleviate poverty and, hence, in developing communities.

corporate sustainability goals

The EU has developed a corporate sustainability framework, which identifies a

progressive set of economic, social and environmental objectives that companies are
encouraged to achieve.

they have developed a methodology to assess the employee perspective on sustainable

business practices (SBP).

These practices represent a continuing commitment by a company to behave ethically

and contribute to economic development

While improving the quality of life of its workforce and family members, as well as the
local community and society at large. .

Specific skills for CSR managers are very hard to clarify due to the diverse
roles and range of disciplines involved

1.

six core competencies:

understanding community and community development,

2.

building capacity

3.

questioning business beyond profit making,

4.

stakeholder relations,

5.

business and community partnership,

6.

Harnessing diversity.

Hmm !

We have lived so long at the mercy of uncontrolled economic forces,

that we have become skeptical about any plan for human emancipation.
Such a rational and deliberate reorganization of our economic life would
enable us, out of the increased wealth production, to establish an
irreducible minimum standard which might progressively be raised to one
of comfort and security.
Lord Harold Macmillan
Former UK Prime Minister

According to the European Commission, CSR involves companies integrating

social and environmental concerns into business operations and in their
interaction with stakeholders on a voluntary basis.

voluntary basis

All companies are bound by the laws of the country in which they operate.

However, these laws rarely, if ever, bind companies to particular standards of

behavior in their dealings with poor people and poor communities

At the heart of CSR is the idea that companies, on their own, can be trusted
to fill this regulatory gap and address any problems their operations may
cause.

The voluntary approach is widely endorsed by European governments.

E.g. The UK : Stephen Timms , the minister for CSR within the Department of
Trade and Industry (DTI). His view is that the role of governments is to work
with the corporate sector to facilitate this type of involvement, rather than
looking to regulatory measures or new laws.

International legally binding frameworks for multinational companies may

divert attention and energy away from encouraging corporate social
responsibility and towards legal process.

Organization for Economic Cooperation and Development (OECD) also support

self-regulation

Can safeguarding the social and environmental rights of poor people as they
come into contact with multinational corporations cannot be left solely to the
discretion of those corporations????

Historical background:

During the 1980s, the United Nations grappled with the international Code of
Conduct on Transnational (multinational) Corporations, covering areas such as

labor standards,
consumers rights,

womens rights,

the environment,

corruption and

restrictive business practices .

The code was never approved, largely because of US government and

corporate opposition to its scope and legal status

Modern CSR was born during the 1992 Earth Summit in Rio de Janeiro, as an
explicit endorsement of voluntary approaches rather than mandatory
regulation.

The UN Centre on Transnational Corporations was charged with researching

the regulation of business and coming up with regulatory proposals.

produced a set of recommendations on corporate regulation for the Summit.

Rejected after western states and businesses lobbied in favour of a manifesto

for voluntarism drafted by the World Business Council

coalition of companies united by a shared commitment to sustainable

development

Loop- holes in legal regulation of MNCs

Home country

Host country

International law

Loop- holes in legal regulation of MNCs

Multinationals are primarily governed by the national legislation of the

countries in which they operate.

Unless they have been offered exemptions from national legislation as an

incentive to invest, they have equivalent status to domestic companies.

However, national legislation in developing countries is often weak.

Many lack an acceptable legal framework to adequately protect social and

environmental rights.

Where the necessary laws do exist, many host countries do not have the
political will or technical know-how to enforce them.

regulation of multinationals in their home countries is often strong.

In the UK, companies are bound by laws protecting labour rights, the
environment and consumers.

But these only extend to the activities of companies based or operating in

the UK, and not to the overseas activities.

When operating overseas, often via subsidiaries, UK companies are mainly

accountable under UK law for their financial performance.

Legislation governing their human rights and environmental performance is

limited to highly specific measures, such as the OECD convention on
combating bribery, which makes it a crime under UK law to bribe foreign
officials.

extremely difficult to use UK law to hold a UK-based multinational

accountable for alleged violations committed outside its own national
boundaries.

US Alien Torts Claims Act (ATCA) has been used with some success to hold US
companies to account for their activities overseas

It gives district courts in the US the power to hear foreign citizens claims for
injuries in violation of the law of nations.

Cases under ATCA have proved extremely time-consuming, costly and complex

But its use against multinationals has increased considerably over the past
decade

High punitive damages

International law has almost exclusively concerned itself with the

responsibilities of governments, leaving national law to govern the activities
of companies

The annual cost of environmental

degradation in Pakistan is about $4.3 billion

brick kiln owners are flouting the law by polluting the environment in
Haripur district, which ranks amongst the most polluted areas of the
province, owing to unchecked discharge of effluents in streams and
emissions from industries in Hattar.

use of rubber and plastic items with coal

bronchitis and asthma, chemicals attack the bodys immune system, lung
cancer

vomiting, diarrhoea, eye irritation, nausea, and disorientation, liver and renal
diseases

Not a single Environment Protection Order has ever been issued to local brick
kiln owners since the agency is not serious about controlling pollution.

Shehla Zia vs Wapda (1994),

In Shehla Zia vs Wapda (1994), the Supreme Court of Pakistan declared that a
clean and healthy environment was the fundamental right of every citizen of
Pakistan by reading the right to a clean and healthy environment into the
Fundamental Right to Life protected by Article 9 of the Constitution.

Pakistan Environmental Protection Act of 1997, but the government never made
it functional

industrialists often questioned why they should comply with Environmental

Protection Agency (EPA) regulations requiring them to set up individual
wastewater treatment plants when the drains and rivers were already
polluted.

Fabric industry:

current process used about 100 litres of water to dye one kilo of fabric,
meaning a million litres for a tonne of fabric.

60 per cent more energy efficient, used 60 per cent less water, and took a
third of the time of the process currently in use.

being used in seven countries

one per cent of waste water is treated.

We cannot put the burden of polluting industrialists on the tax payer. can
we???