Corporate Social

Responsibility
Milton Friedman
Corporate executives are agents
of Shareholders.

The objective of the company

should be maximize Profit.
Stakeholder Theory- Freeman
Stakeholder

Corporations are oriented to serve the interests of all their

stakeholders.
• A company's purpose is to create long-term value and not to
maximize profits and enhance shareholder value at the cost of other
stakeholder groups.
• The tide has been shifting, however, and companies and business
leaders are now calling for a return to stakeholder capitalism
Social Challenges
• Rising economic inequality due to systemic bias created in favor of
shareholders in pursuit of rapid economic growth
• Unfair distribution of wealth
• Economic inequality promoting further inequality

• History has shown numerous times how inequality gives rise to social
disorder
• Is it worth risking social order by feeding human greed?
Reconceptualisng Business and Society

“Listen up, Corporate America. The American people are having a most serious
discussion about your role in their lives.” Business Week
• WEF Davos 2020- focused on stakeholder capitalism with the central
theme "Stakeholders for a Cohesive and Sustainable World.“
• 2019, Business Roundtable released a new "Statement on the
Purpose of a Corporation" which said all its member companies share
a fundamental commitment to all their stakeholders.
Capitalist’s Contract

• Companies and their managers are agents for the societies in which
they operate.
• The right to earn profit plausibly entails a reciprocal duty that firms
act as agents of society
Social Responsibility
• Besides maximizing shareholder value, businesses should
operate in a way that benefits society.

• Corporations are getting as powerful as governments…

• Greater power comes with greater responsibility!

CSR
Early Definitions of CSR
CSR- Benefits to Business
Evolution of CSR- 1970’s
Impact of environmental pollution and resource depletion
• The Silent Spring by Carson (1962)
• The Population Bomb by Ehrlich (1968)
• Club of Rome- The Limits to Growth
• Formalizing and Integrating policies that address social and public
issues.
• Creation of Bodyshop and Ben & Jerry
Carroll's Pyramid of CSR
Corporate Citizenship

• “Serving a variety of stakeholders well”- (Graves, Waddock, Kelly

2001)
• Companies have duties and responsibilities that they must fulfil to be
perceived as a good corporate citizen.
• 3 pillars of corporate citizenship (Fombrum 2007)
• Shared moral and ethical principles
• Responsibility to community
• Balance all stakeholder's claim
CSR
CSR
CSR India
CSR India- Facts
• https://www.csr.gov.in/content/csr/global/master/home/home.html
CSR Rules 2014
Areas of Spending

CSR Committee- CSR Policy

formulate, recommend to the board, fund allocation, monitoring

Board
ensure that the activities as are included CSR Policy of the company are undertaken by the company.

Companies ( CSR Amendment Rules, 2021, 2022)

Independent impact assessment
Strategic CSR
• Comparative advantage for the firm
• Value creation in economic form
• CSR integral to the firm’s strategy and day-to-day operations.
• Creating Social Value
Creating Shared Value- Porter and Kramer
• Focus on the connection between economic and social progress
• There are numerous ways in which addressing societal concerns can
yield productivity benefits to a firm.
CSR and Sustainability
• UN World Commission on Environment and Development

• “Sustainable development is the development that meets the

needs of the present without compromising the ability of future
generations to meet their own needs.”
Environmental issues
• The pace of growth has exceeded the capacity to sustain our
existence
• Replenishment of natural resources are slow
• Climate change is considered a grand challenge today
• Primarily caused by industrialization
• Delays in mitigation efforts can cause very serious consequences related to
human survival
• Corporate actions towards the environment should no longer be
limited to mere pollution control and waste management
• A sense of environmental leadership is required to combat climate change
Tragedy of the Common
• A situation in which individuals with access to a public resource (also
called a common) act in their own interest and, in doing so, ultimately
deplete the resource.
• This theory explains individuals’ tendency to make decisions based on
their personal needs, regardless of the negative impact it may have
on others.
• Emphasis the need for Sustainable Business Practices
Triple Bottom Line
Greenwashing
• Greenwashing is disinformation disseminated by an organization so as
to present an environmentally responsible public image.
• 10th edition of theConcise Oxford English Dictionary

• Making a product, policy, activity, etc. appear to be

more environmentally friendly
• Commitment to environmental policies and implementation of
environmental policies are two distinct constructs
Greenwashing- UN

• Claiming to be on track to reduce a company’s polluting emissions to net zero when no

credible plan is actually in place.
• Being purposely vague or non-specific about a company’s operations or materials used.
• Applying intentionally misleading labels such as “green” or “eco-friendly,” which do not
have standard definitions and can be easily misinterpreted.
• Implying that a minor improvement has a major impact or promoting a product that
meets the minimum regulatory requirements as if it is significantly better than the
standard.
• Emphasizing a single environmental attribute while ignoring other impacts.
• Claiming to avoid illegal or non-standard practices that are irrelevant to a product.
• Communicating the sustainability attributes of a product in isolation of brand activities
(and vice versa) – e.g. a garment made from recycled materials that is produced in a
high-emitting factory that pollutes the air and nearby waterways.
• Corporations are getting as powerful as governments…

• Greater power comes with greater responsibility!

Additional Reading
• Porter, M.E., & Kramer, M.R. (2002). The Competitive advantage of corporate philanthropy. Harvard Business
Review. Dec.
• Porter, M.E., & Kramer, M.R. (2011). Creating shared value. Harvard Business Review.
• Wheeler, D et al (2005), Creating Sustainable Local Enterprise Networks , MIT Sloan Management Review,
• Zadek S. The path to corporate responsibility. Harv Bus Rev. 2004 Dec;82(12):125-32, 150.
• Menghwar, P. S., & Daood, A. (2021). Creating shared value: A systematic review, synthesis and integrative
perspective. International Journal of Management Reviews, 23(4), 466-485.