Corporate Social Responsibility

& Sustainability
Dr. Mousumi Sengupta

Term II
Corporate Social Responsibility (CSR)
• CSR is the duty of a corporation to create wealth in ways that avoid harm to,
protect, or enhance societal assets.
• The obligations of businessmen to pursue those policies, to make those decisions
or to follow those lines of actions which are desirable in terms of the objectives
and the value our society
• Is the ethical behaviour towards society
• Is the continuing commitment by business to behave ethically and contribute to
economic development while improving the quality f life of the workforce and
their families as well as the local community and society at large.
• Is understood as the obligation of decision makers to take actions which protect
and improve the welfare of society as a whole along with their own interests.
• Private business functions by public consent and its basic purpose is to serve
constructively the needs of society to the satisfaction of he society.
• Micro perspective – it is the responsibility of one business unit or
company
• Macro perspective – CSR encompasses the whole gamut of CSR
activities where entire corporate sector is engaged (including the
government).
Basic constituents of CSR

• To supply socially necessary products, create employment

opportunities, and contribute towards sustainable economic
development
• To make the desirable social changes and respond to the changing
values and priority patterns of the society
• Actively contribute towards the improvement of social environment
and discontinue or internalize all the negative impact.
Types of CSR
• Responsibilities towards society
• Responsibilities towards the government
• Responsibilities towards employees
• Responsibilities towards shareholders
• Responsibilities towards consumers
Responsibilities towards society
• Carrying on business with moral values and ethical standards
• Preventions of environmental pollution
• Minimizing ecological imbalance
• Implementing the strategy of sustainable development
• Making the use of appropriate technology
• Contributing towards the development of social health, education,
and cultural milieu
Responsibilities towards government

• Obey rules and regulations

• Regular payment of taxes
• Cooperating with the govt. to promote social values
• Resisting bribery and corrupt practices
• Cooperating with govt. For economic growth and development
• Cooperating with govt. For promoting R & D
• Not to take advantage of loopholes in business laws
Responsibilities towards employees
• To provide a healthy working condition
• To grant regular and fare wage
• To provide regular welfare services
• To provide training and promotion facilities
• To provide reasonable working standard and norms
• To provide efficient mechanism to redress workers’ grievance
• Proper recognition of efficiency and hard work
Responsibilities towards shareholders
• To work for the survival and growth of the concern
• To build reputation and goodwill of the company
• To ensure a reasonable rate of return over time
• To remain transparent an accountable
Responsibilities towards consumers
• Supplying socially harmless products
• Supplying the quality, standard, as promised
• Providing good and services at reasonable prices
• Providing efficient and timely after-sales service
• Resisting black-marketing and profiteering
• Maintaining consumers’ grievance cell
• Trying to improve the quality of products and reduce prices over time
through competition
Situational positions for CSR

• Legal and socially responsible

• Legal but socially irresponsible
• Illegal but socially responsible
• Illegal and socially irresponsible
Continuum of CSR

Ethical responsibility

Legal responsibility

Economic responsibility

Communitarian responsibility

Humanitarian responsibility
 Models of CSR
• Friedman Model – a businessman has no duty other than developing his business.
If he performs that duty, he takes care of social and moral duty.
• Ackerman Model – There are four stages of CSR. In the first stage, the project will
be identified for social delivery. The top managers get to know the most common
social problem and express willingness to take part in a particular project. In the
second stage, experts are hired for suggestions to make the projects operational. In
the third stage, project are made public and implemented. In the fourth stage,
societal issues are considered and addressed in details.
• Carroll Model – four levels of social responsibility are identified : philanthropic
(donations, gifts etc.), economic (ROI), legal (compliance), and, ethical (moral
standards and values).
• Environmental integrity and Community Health Model – CSR will provide greater
opportunity to do business in a healthier community.
• Corporate Citizenship Model –a firm has to satisfy four conditions : sustainable
economic performance, ethical actions and behaviour, legal compliance, and
voluntary social actions.
• Stakeholder Model – Economic and social stakeholders’ interest to be protected.
 Need for CSR
• CSR can reduce social cost
• CSR can enhance employees’ performance
• CSR can lead to industrial peace.
• CSR improves public image.
• CSR provides moral justification.
• CSR can generate more profit
• CSR helps in achieving compliance.
Arguments against CSR

• Business and CSR cannot go together

• CSR initiatives are expensive
• Business executive are not trained in CSR.
• CSR steals away shareholders’ money.
 Undertaking CSR: four situations
• Ethical rooting strong + Financial capability strong : CSR undertaken (+)

• Ethical rooting strong + Financial capability poor : CSR not undertaken (-)

• Ethical rooting poor + Financial capability strong : CSR undertaken (-)

• Ethical rooting poor + Financial capability poor : CSR undertaken (-)

Global CSR
• Development of norms and principles – Universal Declaration of Human Rights, adopted
in United Nations in 1948; Tripartite Declaration of Principles concerning Multiple
Enterprises and Social Policy, adopted in UN in 1977; Norms on the Responsibilities of
Transnational Corporations, adopted by UN in 2003.
• Codes of Conduct – formal statements f aspirations, principles, guidelines, and, rule of
corporate behaviour.
• Reporting and verification standards – the practice of a company publishing information
about its economic, social, and, environmental performance.
• Labelling and certification schemes – The Kimberly Process Certification Scheme;
RugMark; Fair Trade
• Management standards – The Eco-Management and Audit Scheme (EMAS);
International Standards Organizations (ISO)
• Social Investment and Lending – Principles for responsible Investment; FTSE4 Good
Global Index; The International Finance Corporation (IFC)
• Civil Society Vigilance
• Government actions