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Corporate Social Responsibility

Ramya Nair - 0821001975


INDEX: Cont….

1. Social responsibility means


2. Relationship b/w moral, values and ethics
3. Can business be socially responsible?
4. Corporate social responsibility (CSR)
5. Benefits of CSR
6. Types of business responsibilities
7. Responsibilities towards different groups
8. Factors affecting social orientation of enterprise
9. Arguments for social responsibility of business
10. Arguments against social responsibility of business
11. Social responsibility models
12. Social responsibility strategies
13. Social audit Corporate Social Responsibility
Ramya Nair - 0821001975
INDEX:

14. Objective and benefits of social audit


15. Principles of social audit
16. Social audit cycle
17. Methods of social audit
18. Scope of social audit
19. ISO for Social responsibility

Corporate Social Responsibility


Ramya Nair - 0821001975
SOCIAL RESPONSIBILITY MEANS:

Social Responsibility is an ethical or ideological theory that an entity whether it is a


government, corporation, organization or individual has a responsibility to society at
large. This responsibility can be "negative", meaning there is exemption from blame or
liability, or it can be "positive," meaning there is a responsibility to act beneficently
(proactive stance).

According to Keith Denis:


“social responsibilities refer to the businessman’s decisions and actions taken for
reasons at least partially beyond the firm’s direct economic or technical interest”

Social responsibilities says that the corporation has not only economic and legal but
also certain responsibilities to society which external beyond these obligation.

Corporate Social Responsibility


Ramya Nair - 0821001975
RELATIONSHIP B/W MORALS, VALUES AND ETHICS:

Corporate Social Responsibility


Ramya Nair - 0821001975
CAN BUSINESS BE SOCIALLY RESPONSIBLE?
If it can be then what criteria does it need to ensure? The measurements are Economic
function, Quality of life, Social investment and Problem solving.

In economic function, the goal that is trying to be achieved should be measured to see if it
meets with the cost guidelines that the business is willing to contribute. For instance if the
business were to try to better the plant by reducing its carbon footprint, how would it go
about doing this?

In the quality of life measurement “should focus on whether the organization is improving
or degrading the general quality of life in society”.

Social Investment looks at what the business is doing for the community. Does the business
work with the community to fix outstanding issues and social problems? How much of an
investment does it make? What issues are they addressing?

Problem solving looks at to what extent the business will work to fix the problem. Will the
business simply contribute money to an organization working on the issue? Will they allow
company employees to volunteer on company time to fix the problem?

Corporate Social Responsibility


Ramya Nair - 0821001975
CORPORATE SOCIAL RESPONSIBILITY:
Corporate Social Responsibility (CSR), also known as corporate responsibility,
corporate citizenship, responsible business, sustainable responsible (SRB), or corporate
social performance, is a form of corporate self-regulation integrated into a business
model. Ideally, CSR policy would function as a built-in, self-regulating mechanism
whereby business would monitor and ensure their adherence to law, ethical standards,
and international norms. Business would embrace responsibility for the impact of their
activities on the environment, consumers, employees, communities, stockholders and all
other members of the public sphere.

Corporate Social Responsibility


Ramya Nair - 0821001975
CSR IS ALSO REFERRED TO AS:

‘CORPORATE’ OR ‘BUSINESS RESPONSIBILITY’

‘CORPORATE’ OR ‘BUSINESS CITIZENSHIP’

‘COMMUNITY RELATIONS’

‘SOCIAL RESPONSIBILITY’

Corporate Social Responsibility


Ramya Nair - 0821001975
BENEFITS OF CSR: Cont….

1. Public Image : The activities of business towards the welfare of the society
earn goodwill and reputation for the business. The earnings of business also
depend upon the public image of its activities. People prefer to buy products of a
company that engages itself in various social welfare programmers. Again, good
public image also attracts honest and competent employees to work with such
employers.

2. Government Regulation : To avoid government regulations businessmen


should discharge their duties voluntarily. For example, if any business firm
pollutes the environment it will naturally come under strict government
regulation, which may ultimately force the firm to close down its business.
Instead, the business firm should engage itself in maintaining a pollution free
environment.

Corporate Social Responsibility


Ramya Nair - 0821001975
BENEFITS OF CSR: Cont...

3. Survival and Growth : Every business is a part of the society. So for its survival
and growth, support from the society is very much essential. Business utilizes the
available resources like power, water, land, roads, etc. of the society. So it should
be the responsibility of every business to spend a part of its profit for the welfare
of the society.

4. Employee satisfaction : Besides getting good salary and working in a healthy


atmosphere, employees also expect other facilities like proper accommodation,
transportation, education and training. The employers should try to fulfill all the
expectation of the employees because employee satisfaction is directly related to
productivity and it is also required for the long-term prosperity of the
organization. For example, if business spends money on training of the
employees, it will have more efficient people to work and thus, earn more profit.

Corporate Social Responsibility


Ramya Nair - 0821001975
BENEFITS OF CSR:

5. Consumer Awareness : Now-a-days consumers have become very conscious


about their rights. They protest against the supply of inferior and harmful
products by forming different groups. This has made it obligatory for the
business to protect the interest of the consumers by providing quality products at
the most competitive price.

Corporate Social Responsibility


Ramya Nair - 0821001975
TYPES OF BUSINESSS RESPONSIBILITIES: Cont….

1. Economic Responsibility:
a) Efficient operation to fulfill monetary need
b) Generation of surplus
c) Keeping reserve
d) Further expansion

2. Legal Responsibility:
a) Fundamental in nature
b) Obey law and regulations
c) Insure law and order

Corporate Social Responsibility


Ramya Nair - 0821001975
TYPES OF BUSINESSS RESPONSIBILITIES: Cont….

3. Ethical Responsibility:
a) Do what is right, fair and just
b) Make a healthy and competitive environment
c) Don’t use unfair advertisement
d) Produce quality products on fair prices

4. Discretionary Responsibility:
a) Contribute in social development
b) Provide basic facilities to employee
c) Contribute in development of community
d) Take initiative in emergencies

Corporate Social Responsibility


Ramya Nair - 0821001975
RESPONSIBILITIES TOWARDS DIFFERENT GROUPS: Cont….
1. Responsibility towards Shareholders
a) Fair rate of return
b) Safety of investment
c) Steady appreciation of investment
d) Regular, accurate, and full information about the worker and progress of
organization

2. Responsibility towards Employees


a) Fair wages and salary
b) Good and safe working condition
c) Adequate service benefits such as gratuity, insurance, provident fund
d) Opportunity for promotion, trading
e) Worker participation and decision making
Corporate Social Responsibility
Ramya Nair - 0821001975
RESPONSIBILITIES TOWARDS DIFFERENT GROUPS: Cont….
3. Responsibility towards Customers
a) Regular supply of right quality goods at right time and right place
b) Charge reasonable prices
c) Supply goods that meet the needs of different classes and taste with different
purchasing power
d) Prompt adequate and continuous services
e) Prompt of solution of customer
f) True and fair information through advertisement
g) Avoid unfair and unethical like black marketing.
4. Responsibility towards Government
a) To pay the taxes honestly and timely
b) To avoid corrupting public servants
c) To encourage fair trade
d) To avoid monopoly Corporate Social Responsibility
Ramya Nair - 0821001975
RESPONSIBILITIES TOWARDS DIFFERENT GROUPS:

5. Responsibility towards Community


a) To make best possible or efficient use of societies resources
b) To provide maximum possible employee opportunity
c) To keep environment healthy and free from all types of pollution
d) To contribute to the enlistment of weaker section of society
e) To improve public health, educations and cultural life of community.

Corporate Social Responsibility


Ramya Nair - 0821001975
FACTORS EFFECTING SOCIAL ORIENTATION OF ENTERPRISE
1. Promoters, Directors and Top Management: The values and vision of promoters
and top management is a key influencing factor.

2. Stakeholders: Attitude of various stakeholders like shareholders, creditors,


employees etc. also affect the social orientation of a company.

3. Societal Factors: Social orientation could also be affected by the expectation of the
society from the Corporation. Eg: A resourceful firm located in a poor community
may be expected to contribute to the development of education facilities of the
locality etc.

4. Industry and Trade Associations: They influence the behavior of firms by


establishing professional and ethical codes and norms.

5. Government and Laws: Laws to curb corruption, unfair practices etc. and the
government’s view of social responsibility also acts as an influencing factor.

6. Political Influences
7. Competitors
8. Resources
Corporate Social Responsibility
Ramya Nair - 0821001975
ARGUMENTS FOR SOCIAL RESPONSIBILITIES OF BUSINESS :

1. Change in public expectations: The need’s of today consumes have changed


,resulting in a change in their expectations of business. since businesses owe
their profits to society ,they have to therefore respond to the needs of society.

2. Business is part of society: Society and business are benefited when there is a
symbiotic relationship between the two. Society gains through economic
development and the provision of employment opportunities and business
benefits through the workforce and consumers provided by society.

3. Avoiding intervention by government : By being socially responsible,


organizations attract less attenuation from regulatory agencies. This gives them
greater freedom and flexibility in their operations.

4. Balance of responsibility and power: Businesses have considerable power and


authority. The exercise of this power should be accompanied by a corresponding
amount of responsibility.

Corporate Social Responsibility


Ramya Nair - 0821001975
ARGUMENTS FOR SOCIAL RESPONSIBILITIES OF BUSINESS :

4. Protecting share holder interests: By being socially involved, a company can


improve its image and thus protect its shareholder’s interest.

5. New avenues to create profits : Social responsibility involves the conservation


of natural resources. Conservation can be beneficial for firms.

6.Favorable public image : Through social involvement, affirm can create a


favorable public image for itself and ender to society. By so doing, a firm can
attract customers, employees and investors

Corporate Social Responsibility


Ramya Nair - 0821001975
ARGUMENTS AGAINST SOCIAL RESPONSIBILITIES OF
BUSINESS : Cont….

1. Profit Maximization: Economic efficiency of business should be the top priority


and the sole mission of business. In this situation decisions are controlled by
their desire to maximize profits for the shareholders while reasonable complying
with law.

2. Society has to pay the Cost: Costs of social responsibility will be passed on to
the society and eventually it is the society which has to bear them.

3. Lack of social skills: Business managers are goods at solving matters relating to
business and not very effective at solving social problems as their outlook is
primarily economic.

4. Business has enough Power: Business already has enough social power and the
society should not take any steps which give it more power as it could mould
social values.

Corporate Social Responsibility


Ramya Nair - 0821001975
ARGUMENTS AGAINST SOCIAL RESPONSIBILITIES OF
BUSINESS :

5. Social Overhead Costs: Cost of social responsibility will not immediately


benefit the business. Why spend money on an object, benefits of which will be
realized only in future.

6. Lack of accountability: Businessmen have no direct accountability to the


people. Unless the society can develop mechanisms which establish direct lines
of social accountability from the business to the public, business must not stay
away from social activities.

7. Friedman’s Views: Friedman asserted that if managers spend corporate funds


on projects not intended to maximize profits, the efficiency of the market
mechanism will be undermined and resources will be misallocated within the
economy. Many companies involve themselves in social activities because of the
tax exemptions on the income spent on social purposes.

Corporate Social Responsibility


Ramya Nair - 0821001975
SOCIAL RESPONSIBILITY MODELS:

CARROLL’S CSR
MODEL

Corporate Social Responsibility


Ramya Nair - 0821001975
1. CARROLL’S CSR MODEL:

Carroll has proposed a three dimensional conceptual model of corporate


performance. A firm has the following four categories of obligations of corporate
performance:
a) Economic
b) Legal
c) Ethical
d) Discretionary

Firm being an economic activity, the main responsibility is economic along with
complying with the legal responsibilities.

Ethical responsibilities are norms which the society expects the business concern
to observe even though they are not mandated by law. While discretionary
responsibilities refer to the voluntary contribution of the business to the social
cause like involvement in community development etc. Carroll points out that
these four categories are not mutually exclusive and presented them as a pyramid
of CSR.

Corporate Social Responsibility


Ramya Nair - 0821001975
2. HALAL’S MODEL

Halal’s return on resources model of corporate performance points out that a firm
can only attempt to unite the diverse interests of various social groups to form a
workable coalition engaged in creating value for distribution among members of the
coalition. Beyond a certain level of economic activity the social issues at stake
become conflicting.

3. ACKERMAN’S MODEL

There are three phases:


1. The first phase is one when top management recognizes the existence of a social
problem and acknowledges the company’s policy by making it an oral or written
statement.
2. The second phase is characterized by the company appointing staff specialists to
study the problem and provide recommendations.
3. The third phase involves the implementation of the social responsibility
programs.

Corporate Social Responsibility


Ramya Nair - 0821001975
SOCIAL RESPONSIBILTY STRATEGIES:

Businesses response to social responsibility tend to fall within four categories:

1. Social Opposition: View taken by business is that they have no obligation to the
society in which they operate.

2. Social obligation: Companies believe that they have an obligation to obey the
law.

3. Social response: Position taken by companies which believe that their social
responsibilities are as dictated by law and will on selective basis go beyond the
legal requirements. These units may volunteer to participate in limited socially
responsible efforts, but not until they are convinced that the benefits outweigh
the costs.

4.Social contribution: Position taken by Companies which believe that they have a
deep obligation to serve the society.

Corporate Social Responsibility


Ramya Nair - 0821001975
SOCIAL AUDIT:

Social audit is a tool for evaluating how satisfactorily a company has discharged its
social responsibilities. Social audit enables the public as well as the company to
evaluate the social performance of the company.

Social audit involves:

1. Identification of the firm’s activities having potential social impact

2. Assessment and evaluation of the social costs and social benefits of such
activities

3. Measurement of the social costs and benefits

4. Reporting

Corporate Social Responsibility


Ramya Nair - 0821001975
OBJECTIVES AND BENEFITS OF SOCIAL AUDITS:

1. Evaluate the social dimension of the performance of the company.

2. Take measures to improve the social performance of the company on the basis of
feedback provided by the social audit.

3. Social audit increases the public visibility of the organization.

4. In case the social audit reveals a socially commendable performance, it helps


boost the public image of the company.

Corporate Social Responsibility


Ramya Nair - 0821001975
PRINCIPLES OF SOCIAL AUDIT:

There are six underpinning principles to social audit:

1. It should reflect the opinions of a wide variety of people affected by the Program
(multi-perspective).

2. It should cover all the activities of the community (comprehensive).

3. The program/activity should be able to compare performance over time and


between similar organizations (comparative).

4. It should happen each year and not just as a one-off exercise ( regular)

5. The findings of the social audit should be widely circulated ( disclosure).

Corporate Social Responsibility


Ramya Nair - 0821001975
SOCIAL AUDIT CYCLE: Cont…..

Corporate Social Responsibility


Ramya Nair - 0821001975
SOCIAL AUDIT CYCLE:

The four main components of a Social Audit are:

1.Statement of Purpose – engaging the community in setting priorities: long term


vision – medium term strategy – short term operational criteria
2.External View - stakeholder and service assessment: benefits received –
problems identified – solutions designed, planned and implemented
3.Internal View – organizational assessment: effectiveness of operational
methodology – efficiency of management systems – satisfaction of board
members, staff and volunteers
4.Review and Planning – the learning loop: learning lessons from the previous
years planned and actual results, making changes and planning the next years
strategy and criteria

The Social Audit cycle starts with the Statement of Purpose and Planning, this
reviews the results of last year's purpose and plans and establishes this year's
purpose and plans.

Corporate Social Responsibility


Ramya Nair - 0821001975
METHOD OF SOCIAL AUDIT:

1. Social Process Audit: To develop an internal management information system


which would allow the management to create and administer the social program
in a better way.

2. Financial Statement Format Audit: Social information is presented in the


conventional financial statement format i.e. balance sheet

3. Macro-Micro Social Indicator Audit: It attempts to evaluate the micro


indicators (i.e. the company’s performance) against a set of macro indicators
such as national policies.

4. Constituency Group Audit: Preference and attitude of various constituencies


(like employees, creditors, suppliers etc) are identified and measured and the
firm’s performance is evaluated.

5. Corporate Rating Approach: This is an external evaluation of the company’s


performance by public groups

Corporate Social Responsibility


Ramya Nair - 0821001975
SCOPE OF SOCIAL AUDIT:

The scope of social audit is very wide and not limited to a particular scheme or
activities or area. It can be taken up at village level, GP level or even block or
district level depending on nature of work and program. Similarly it can be
organized on a single activity or collectively taking more than one activities together
applicable in that specific area.

Corporate Social Responsibility


Ramya Nair - 0821001975
ISO 26000 FOR SOCIAL RESPONSIBILITY:

ISO, the International Organization for Standardization, has decided to launch the
development of an International Standard providing guidelines for social
responsibility (SR).

The guidance standard will be published in 2010 as ISO 26000 and be voluntary to
use. It will not include requirements and will thus not be a certification standard.

There is a range of many different opinions as to the right approach ranging from
strict legislation at one end to complete freedom at the other. We are looking for a
golden middle way that promotes respect and responsibility based on known
reference documents without stifling creativity and development.

Our work will aim to encourage voluntary commitment to social responsibility and
will lead to common guidance on concepts, definitions and methods of evaluation.

Corporate Social Responsibility


Ramya Nair - 0821001975
ISO 26000 FOR SOCIAL RESPONSIBILITY:

The need for organizations in both public and private sectors to behave in a socially
responsible way is becoming a generalized requirement of society. It is shared by the
stakeholder groups that are participating in the WG SR to develop ISO 26000:
industry, government, labor, consumers, nongovernmental organizations and others,
in addition to geographical and gender-based balance.

ISO has chosen (SIS) Swedish Standards Institute and (ABNT) Brazilian


Association of Technical Standards to provide the joint leadership of the ISO
Working Group on Social Responsibility (WG SR). The WG SR has been given the
task of drafting an International Standard for social responsibility that will be
published in 2010 as ISO 26000.

Corporate Social Responsibility


Ramya Nair - 0821001975
Corporate Social Responsibility
Ramya Nair - 0821001975

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