THE FUTURE OF CORPORATE SOCIAL RESPONSIBILITY

Companies today are increasingly sensitive about their social role. The companies not
only concentrate on how they will position their product or how they will sell it but also they
have a social strategy because they have started feeling that brands are built not only around
good quality of the product; but also around emotions and values that people ascribe to those
products
In addition to be more precisely defined, the CSR movement is evolving following some
trends that I intend to describe briefly:
First, there are no more a few companies, which have consecrated themselves to this new
doctrine, but the majority of large enterprises have introduced it in their agenda. Philip
Kotler and Nancy Lee in their book Corporate Social Responsibility indicate that
charitable giving has risen from $9.6 b in 1999 to $12, 19 b. In spite of some opponents
like the survey in The Economist last year which maintains that CSR is eroding the basis
of the free enterprise system, every time more this new doctrine is catching the attention
of business people.
Second, since the term triple bottom line (people, planet and profit) was carried in
1994, an accelerating progression from early concerns about safety, health and
environment to a growing range of social concerns have been seen, among them human
rights and diversity. Recently other concerns like fair trade pricing and fair wages as well
as socially increasingly have increasingly made headlines. There is an increasing
conviction that there is not a conflict but a positive correlation between CSR and
profitability and that profit can go hand-in-hand with social and environmental
responsibility.
Third, the social responsible enterprises every time more publish their activities for their
shareholders and the public in general, either in their general annual report or in CSR
specific reports. According to a survey of KPMG in 2002, 45% of co portions issued
environmental, social or sustainability reports compared with 35% in their 1999 survey.
Greater transparency is a means to improve accountability and trust.
Fourth, CSR has ceased to be a form of philanthropy so that it is no more the case to sign
a check at the end of each financial year, after a positive result - and CSR enters into the
normal activities of the corporation before declaring its profits and becoming a all year

around responsibility. It is a shift to making long-term commitments to especial social

issues providing more than cash contributions, sourcing funds from business units as well
as philanthropic budgets, forming strategic alliances, etc. CSR is becoming as much as
anything a way of thinking about and doing business. Corporate investment decisions
driven by quarterly profit earnings are short-sighted and sacrifice long-term wealth
creation.
Fifth, it is no longer the owner or the CEO the one which decides to write the check, but
it is the collective commitment of all the corporation from the CEO until the last
employee; it is precisely the employees satisfaction one of the objectives of CSR. There
is an increasing awareness of CSR among the workforce.
Sixth, before a social activity generally dissociated from the cooperation, the trend is that
the activity be totally related with the core business of the cooperation, its products or
services (for instance when an electronic corporation decides to train the students of a
school on the use of computers).
Seventh, the establishment of a social norm to do good. As William Clay Ford Ford
Motor Company CEO there is a difference between a good company and a great
company. A good company offers excellent products ands services. A great company also
offers excellent products and services but also thrives to make the world a better place.
From the philosophy of doing good to look good, to the conviction of doing well and
doing good.
Eighth, it is clear today that CSRs success requires the decisive cooperation of the
government and business in a strong symbiosis. This is particularly clear in developing
countries. As the World Summit on Sustainable Development (Johannesburg 2000)
recognized, partnership between business, government and civil society is the key to the
progress we need on sustainable development.
Ninth, every time sectoral projects on CSR are materializing like in the mining industry,
the energy industry or the apparel industry, for example, the Multi-fibre Arrangement
Forum, or like the Equator Principles where a group of large financial institution decided
to impose conditions particularly environmental conditions to their clients projects.
Ten. Up to now CSR has been something voluntary (voluntary to adopt and voluntary to
comply with). Today there is a big debate where CSR should remain voluntary or should
become compulsory. Many believe for example that the limitation off the CO2 in the
atmosphere emissions will not stop voluntary unless it becomes a legal duty.

All of these trends mean that businesses need to manage their environmental and social
impacts much better: corporate responsibility has to cease being a bolt-on to business operations;
and instead be built-in to business purpose and strategy. This involves a clear link to business
values and culture; strong leadership form the top; and the active engagement of stakeholders.
Potential benefits of implementing a CSR approach
Key potential benefits for firms implementing CSR include: Better anticipation and
management of an ever-expanding spectrum of risk. Effectively managing social, environmental,
legal, economic and other risks in an increasingly complex market environment, with greater
oversight and stakeholder scrutiny of corporate activities, can improve the security of supply and
overall market stability. Considering the interests of parties concerned about a firm's impact is
one way of anticipating and managing risk.
Improved reputation management. Organizations that perform well with regard to CSR
can build reputation, while those that perform poorly can damage brand and company value
when exposed. This is particularly important for organizations with high-value retail brands,
which are often the focus of media, activist and consumer pressure. Reputation, or brand equity,
is founded on values such as trust, credibility, reliability, quality and consistency. Even for
companies that do not have direct retail exposure through brands, their reputation as a supply
chain partner -- both good and bad -- for addressing CSR issues can make the difference between
a business opportunity positively realized and an uphill climb to respectability.
Enhanced ability to recruit, develop and retain staff. This can be the direct result of pride
in the company's products and practices, or of introducing improved human resources practices,
such as family-friendly policies. It can also be the indirect result of programs and activities that
improve employee morale and loyalty. Employees become champions of a company for which
they are proud to work.
Improved competitiveness and market positioning. This can result from organizational,
process and product differentiation and innovation. Good CSR practices can also lead to better

access to new markets. For example, a firm may become certified to environmental and social
standards so it can become a supplier to particular retailers.
Enhanced operational efficiencies and cost savings. These flow in particular from
improved efficiencies identified through a systematic approach to management that includes
continuous improvement. For example, assessing the environmental and energy aspects of an
operation can reveal opportunities for turning waste streams into revenue streams (wood chips
into particle board, for example) and for system-wide reductions in energy use.Corporate social
responsibility (CSR) promotes a vision of business accountability to a wide range of
stakeholders, besides shareholders and investors. Key areas of concern are environmental
protection and the wellbeing of employees, the community and civil society in general, both now
and in the future. The concept of CSR is underpinned by the idea that corporations can no longer
act as isolated economic entities operating in detachment from broader society. Traditional views
about competitiveness, survival and profitability are being swept away.

Some of the drivers pushing business towards CSR include:

1. The shrinking role of government
In the past, governments have relied on legislation and regulation to deliver social and
environmental objectives in the business sector. Shrinking government resources, coupled
with a distrust of regulations, has led to the exploration of voluntary and non-regulatory
initiatives instead.
2.

Demands for greater disclosure

There is a growing demand for corporate disclosure from stakeholders, including

customers, suppliers, employees, communities, investors, and activist organizations.

3. Increased customer interest

There is evidence that the ethical conduct of companies exerts a growing influence on the
purchasing decisions of customers. In a recent survey by Environics Internationals, more than
one in five consumers reported having either rewarded or punished companies based on their
perceived social performance.
4. Growing investor pressure
Investors are changing the way they assess companies' performance, and are making
decisions based on criteria that include ethical concerns. The Social Investment Forum reports
that in the US in 1999, there was more than $2 trillion worth of assets invested in portfolios that
used screens linked to the environment and social responsibility. A separate survey by Envirnics
Internationals revealed that more than a quarter of share-owning Americans took into account
ethical considerations when buying and selling stocks. (More on socially responsible investment
can be found in the 'Banking and investment' section of the site.)
5. Competitive labour markets
Employees are increasingly looking beyond pay checks and benefits, and seeking out
employers whose philosophies and operating practices match their own principles. In order to
hire and retain skilled employees, companies are being forced to improve working conditions.
6. Supplier relations
As stakeholders are becoming increasingly interested in business affairs, many companies
are taking steps to ensure that their partners conduct themselves in a socially responsible manner.
Some are introducing codes of conduct for their suppliers, to ensure that other companies'
policies or practices do not tarnish their reputation.
Some of the positive outcomes that can arise when businesses adopt a policy of social
responsibility include:
Company benefits:

Improved financial performance;

Lower operating costs;

Enhanced brand image and reputation;

Increased sales and customer loyalty;

Greater productivity and quality;

More ability to attract and retain employees;

Reduced regulatory oversight;

Access to capital;

Workforce diversity;

Product safety and decreased liability.

2. Benefits to the community and the general public:

Charitable contributions;

Employee volunteer programmes;

Corporate involvement in community education, employment and homelessness

programmes;

Product safety and quality.

3. Environmental benefits:

Greater material recyclability;

Better product durability and functionality;

Greater use of renewable resources;

Integration of environmental management tools into business plans, including life-cycle

assessment and costing, environmental management standards, and eco-labelling.

Nevertheless, many companies continue to overlook CSR in the supply chain - for example
by importing and retailing timber that has been illegally harvested. While governments can
impose embargos and penalties on offending companies, the organizations themselves can make
a commitment to sustainability by being more discerning in their choice of suppliers.
The concept of corporate social responsibility is now firmly rooted on the global business
agenda. But in order to move from theory to concrete action, many obstacles need to be
overcome.
A key challenge facing business is the need for more reliable indicators of progress in the
field of CSR, along with the dissemination of CSR strategies. Transparency and dialogue can
help to make a business appear more trustworthy, and push up the standards of other
organizations at the same time.
The Global Reporting Initiatives is an international, multi-stakeholder effort to create a
common framework for voluntary reporting of the economic, environmental, and social impact
of organization-level activity. Its mission is to improve the comparability and credibility of
sustainability reporting worldwide.
There is increasing recognition of the importance of public-private partnerships in CSR.
Private enterprise is beginning to reach out to other members of civil society such as nongovernmental organizations, the United Nations, and national and regional governments.
An example of such a partnership is the 'Global compact'. Launched in 1999 by the United
Nations, the Global Compact is a coalition of large businesses, trade unions and environmental
and human rights groups, brought together to share a dialogue on corporate social
responsibility.The 'Working with NGOs' section offers some insights into the way businesses and
lobby groups are working together to mutual benefit. Management training plays an important
role in implementation of CSR strategies, and there is a growing number of conferences and
courses available on the subject. Organizations that provide such training include Global
Responsibility, Business for Social Responsibility and the Corporate Social Responsibility
Forum. The idea of Indian companies going beyond business imperatives to do something for
society has undergone remarkable changes over the years. Time was when companies merely

dispensed cash by way of charity to organisations or NGOs engaged in social work. Others
promoted activities that were mutually beneficial, to villagers living around a company plant or
town as well as to their own employees. For instance, villagers were encouraged to produce
more vegetables or keep cattle for milk, with the company providing the start-up money, the
knowledge and the marketing infrastructure that ensured the extra produce got to town. The
villagers were encouraged to take the risk and try their hand at new farming activities because of
the assurance of a dependable market and a steady income. That changed over time to
community outreach: reaching out to the communities around company plants or offices, and
providing amenities that were lacking. Companies supplemented facilities in schools or
hospitals, helped women earn extra income through sponsorship of, say, sewing machines or
community centres which, apart from generating income, promoted adult literacy and family
welfare activities. With the growth of environment consciousness in the 1960s, companies felt
the need to redeem themselves for some of the damage done. They got involved in forestation,
water conservation and similar projects. The concept of corporate social responsibility (CSR)
thus evolved from philanthropy to a more elaborate concept that encompassed the
environment, employee relations, corporate governance and engaging with the community. The
current understanding of CSR also attempts to deploy a companys core competencies to help
address societys problems. Examples of this approach abound, and one standout example is
TCS, which has used its expertise in information technology to help communities in different
parts of India help themselves. TCS has developed a database for Child Line, which supports
children in distress in 54 centres in India, all using volunteers from among its employees; it has
also designed and implemented a computer-based functional literacy project, a unique idea that
enables adults to learn to read using low-end computers and a breakthrough software solution
within 30 to 40 hours, over two-three months. Similarly, NIIT has used its IT expertise for
its hole in the wall experiment, where children from slums learn to use computers with a touch
screen. Cut from the same cloth is ITCs much-celebrated e-choupals, which help farmers check
prices in Indian and global markets before going to the marketplace with their produce.
An important aspect of CSR today is the encouragement given to employees to get
involved in tackling social issues. Mother Teresa used to tell admirers eager to offer her money:
I dont want your money; I want your time. She ended up getting both. CSR is no longer a
fringe activity that companies engage in to look good. Effective CSR today is that which relates
directly to the givers core competencies and offers real value, not just philanthropy. It is no
longer considered good for business, but simply good business. Because when you give back to
the society you operate in, you become truly embedded in that society, rather than being
perceived as seeking profits alone