CORPORATE SOCIAL RESPONSIBILITY

MEANING OF CORPORATE SOCIAL

RESPONSIBILITY
• It contains three words – corporate , social , responsibility.
• For simple understanding, it relates to the responsibility of
a corporate body towards the whole society
• Government is automatically taken to be an organization
with social welfare as its main goal, not so a corporate
body, hence a special concern for CSR.
 Some definitions:
“Social Responsibilities refer to businessmen’s decisions and
actions taken for reasons at least partially beyond the firm’s direct
economic and technical interest.” .. Keith Davis
• CSR relates to not only decisions taken by business organizations
but also their obligations.
• The obligations relate to the human element of the society and the
environment (the physical element).
 CORPORATE ENTITIES
CSR IS AN ISSUE RELATED WITH CORPORATE BODIES ONLY .
THESE BODIES GENERALLY HAVE THE FOLLOWING
CHARACTERISTICS:

• They are business organizations recognized ( registered) as

such under the law.
• These business organizations carry out one or more
business with the main goal of earning income in the form
of profit.
• The ownership of these organizations can have wide
variations – beginning with single owners to widely held
companies with innumerable share holders
• Many types of private practitioners – doctors, chartered
accountants, engineers etc. – do undertake business
activities of a different form but are not considered as
“businessmen”.
• NGOs are another type of organizations which do not come under
the purview of CSR
• There are many non-corporate bodies such as universities which
also have a “social responsibility” but are not included in the CSR
concept.
WHY SOCIAL RESPONSIBILITY
• Corporate bodies are primarily profit making organizations and
their first responsibility is for themselves – to make profits.
• Corporate live and evolve in a social system. They prosper
because of the society and profit from it.
• As a corollary, corporate will not be able to survive in a dying
society.
• So, in order to survive and prosper, they must ensure that the
society not only remains stable but also prospers along with them.
a) CSR ensures presence and improvement in goodwill of the
company in the society
b) CSR is necessary for the long term survival of the business
c) The public expects the business to fulfill its CSR
d) It is a part of some legal requirements
e) CSR can provide solutions to many problems of the society
and hence provide a better atmosphere for the company to
work in.
f) It enables the maintenance of the give and take relation ship
with the society.
The Importance Of Social Responsibility:
• Build Meaningful Relationships
• Sometimes, doing your work as part of a large
team may make you feel like a cog in the wheel.
You may not find meaning in your work. But if
you can help your organization in its CSR efforts,
you’ll build meaningful connections with your
coworkers and organization. It’s important to do
more than just the daily tasks of an employee. As
a member of the society you operate in, you have
a duty to help make it better for everyone, not
just yourself or your workplace
• Add Value To Your Work Life
Helping as part of a CSR initiative takes you away from your
desk for a more hands-on immersion into your surroundings.
This way, you’ll find meaning and value in your work life. If
you’re simply working day in, day out without really
contributing where you should, you’ll soon burn out or lose
sight of why you started. You can improve your work life by
volunteering once a week. Pick an initiative your organization
supports or if you want to start something and go all out.
• Express Your Gratitude
When you take, you have to give back. As human beings, we
are takers in the food chain. But CSR efforts and initiatives are
a way to give. This is our opportunity to express how grateful
we are for what we receive from the environment and the
society we live in. Organizations that set up operations in
remote villages create employment for residents. This kind of
relationship fosters growth and development within and
without the organization.
• Give Back To Society
• Giving back to society by volunteering your time, effort and
resources is truly a rewarding experience. As part of your
work life, you can make a conscious effort to give back and
contribute whenever you can. Donating to the charity of
your choice, volunteering a few hours over the weekend or
simply spending time with people who need it are some
ways you can do your part for your community.
• Strengthen Employee-Organization Relationships
• As an employee, you’re more likely to stick around and feel
like a part of your organization when you find your work-life
enriching. Apart from what you love doing, CSR can truly
bring you close to your roots, giving you a sense of
belonging. When you help plant a tree, you want to stick
around and see how it grows; you nurture and value it to
make sure it’s robust and thriving.
• The importance of social responsibility is well-understood by
organizations that want to remain a part of their society. Not
only does it help them with employee development but also
establishes their credibility as organizations that care.
• Establishing Trust In Communities
Organizations must build trust in their community. Starbucks,
for instance, has plans to diversify its workforce by hiring US
war veterans and youngsters to help them restart or launch
their careers. Lush, a UK-based cosmetics retailer makes
organic, preservative-free products. Their ‘Reduce, Reuse,
Recycle’ initiative encourages customers to return their empty
containers in exchange for free, full-sized products. These are
only a few ways organizations can balance their impact on the
environment. Think about what you can do as an employee or
business owner to make the most of your professional life.
• Trust is the bedrock of a relationship—whether it’s between
an employee and their organization or with the society at
large.
 ORIGINS OF SOCIAL RESPONSIBILITY
• Business organizations evolved from cottage industries. These were
an extension of agricultural activities. The barter system of exchange
ensured that the products of such cottage level units were available
for the whole society for consumption. This, in turn, helped the
society in further economic progress. Thus even in such primitive
form of business, CSR was an integral inherent part.
• With the development of the cities, the spread of trade and use of
money for transactions, industrial production got an individual
identity of its own. Most of the firms had individual owners. At the
most they became family businesses. These business benefited not
only the owners but their families also. In fact the benefits extended
to the extended family – the joint family in case of India and China.
 With the advent of the industrial revolution a change in the
organization and scale of production occurred due to
technological developments.
 This change brought about a revolution in the ownership
pattern also. The joint stock company evolved as a result.
 The joint stock company segregated the roles of owners,
managers and other employees (workers) into different
social and economic strata.
 Since all powers vested in the board of directors (owners)
in a joint stock company initially, CSR was put on a back
seat.
 By this time the sovereign state was considered to be the
protector of the rights of the society collectively.
 Under the circumstances, it became the responsibility of the
government to safeguard the interests of the society from over
exploitation by the corporate sector through legislations.
 Many acts were passed by various governments in many
countries to ensure the interests of the society are maintained in
a transparent manner.
 To begin with the registration of the companies as legal entities
empowered to undertake the stated business activities was the
first such step in this direction.
 This was accompanied by a regulation about the annual public
reporting of the activities of the company – particularly related
to financial matters.
On the human side, the legislations related to the age at which
people could be employed in business (elimination of child
labour), the daily hours of work, weekly days off and other
holidays to which the labour force was given a right, minimum
wages, determination of wages on various parameters such as
skill levels and experience, provision of necessities like
drinking water, sanitation, well ventilated work rooms,
protection from industrial pollutants (especially in chemical
factories), provident fund (or social security in a broader form)
were almost uniformly and voluntarily adopted by every
country by the beginning of the twentieth century.
• These regulations emanating from the sovereign authorities sprang
from the belief that no business organization would volunteer to ensure
the protection of the society on these dimensions. Hence they needed
the pressure of law to ensure fair practices in business.
• The impact of these regulations was varied and changed with further
evolution and development of new types of businesses. The main
reactions were:
a) The enterprise tried to just remain within the law in order to keep
the costs low.
b) Some of the business enterprises tried to cross the law as they
probably found the cost of penalty to be far less than the profit gained
by not adhering to the law
c) Some enterprises, however, went beyond the law, were proactive
and displayed great humanitarian concerns for not only their
employees but also for the society at large.
THUS CSR HAS A HISTORY DATING BACK TO ALMOST THE
NINETEENTH CENTURY.