Introduction to CSR

Srirang Jha
Apeejay School of Management
 Introduction to Corporate Social
Responsibility
• Evolution
• definition and objectives of corporate social
responsibility (CSR)
• Philanthropy vs. Corporate citizenship
• Provisions of CSR under the Companies Act
2013
 Evolution of CSR
• 1950s: the primary focus on businesses'
responsibilities to society and doing good
deeds for society
• 1960s: focus on social change
• 1970: business managers applied the
traditional management functions when
dealing with CSR issues
 Evolution of CSR
• 1980s: business and social interest came
closer and firms became more responsive to
their stakeholders
• 1990s: the idea of CSR became almost
universally approved
• 2000s: CSR became definitively an important
strategic issue
 Defining CSR
• Corporate Social Responsibility is the
continuing commitment by business to behave
ethically and contribute to economic
development while improving the quality of
life of the workforce and their families as well
as of the local community and society at large
--Lord Holme and Richard Watts in Making Good
Business Sense 
 Defining CSR
• A concept whereby companies decide
voluntarily to contribute to a better society
and a cleaner environment. A concept
whereby companies integrate social and
environmental concerns in their business
operations and in their interaction with their
stakeholders on a voluntary basis
--European Union
 Defining CSR
• Corporate social responsibility (CSR) is a
business approach that contributes to
sustainable development by delivering
economic, social and environmental benefits
for all stakeholders
--Financial Times
 Defining CSR
• Social responsibility is the responsibility of an organisation for
the impacts of its decisions and activities on society and the
environment, through transparent and ethical behaviour that:
Contributes to sustainable development, including the health
and the welfare of society
Takes into account the expectations of stakeholders
Is in compliance with applicable law and consistent with
international norms of behaviour, and
Is integrated throughout the organization and practised in its
relationships.
--Guidance Standard on Social Responsibility, ISO 26000
 Key features of a corporation
• A corporation is essentially defined in terms of
legal status and the ownership of assets
• Corporations are typically regarded as ‘artificial
persons’ in the eyes of the law
• Corporations are notionally ‘owned’ by
shareholders, but exist independently of them
• Managers and directors have a ‘fiduciary’
responsibility to protect the investment of
shareholders
 Can a corporation have social responsibilities?

• Milton Friedman’s classic article is “The social

responsibility of business is to increase its profits”
(1970)
• Friedman vigorously argued against the notion of
social responsibilities for corporations based on
three main arguments:
– Only human beings have a moral responsibility for
their actions
– It is managers’ responsibility to act solely in the
interests of shareholders
– Social issues and problems are the proper province of
the state rather than corporate managers
Can a corporation be morally responsible for its actions?

• Evidence to suggest that legal designation of a

corporation makes it unable to be anything but
self-interested (Bakan 2004)
• Long, complex debate but generally support from
literature for some degree of responsibility
accredited to corporations. Argument based on:
– Every organisation has a corporate internal decision
structure which directs decisions in line with
predetermined goals (French 1979)
– All organisations manifest a set of beliefs and values
that lay out what is generally regarded as right or
wrong in the corporation – organizational culture
(Moore 1999)
Why do corporations have social responsibilities?

• Business reasons (‘enlightened self-interest’)

– Extra and/or more satisfied customers
– Employees may be more attracted/committed
– Forestall legislation
– Long-term investment which benefits corporation
• Moral reasons:
– Corporations cause social problems
– Corporations should use their power responsibly
– All corporate activities have some social impacts
– Corporations rely on the contribution of a wide set of
stakeholders in society, not just shareholders
 What is the nature of corporate social responsibilities?

Corporate social responsibility includes the

economic, legal, ethical, and philanthropic
expectations placed on organizations by
society at a given point in time
(Carroll and Buchholtz 2009:44)
Carroll’s four-part model of corporate social responsibility

Desired by society
Philanthropic
Responsibilities
Expected by society
Ethical
Responsibilities

Required by society
Legal
Responsibilities
Required by society
Economic
Responsibilities
Source: Carroll (1991)
 CSR and strategy: corporate social responsiveness

• Corporate social responsiveness refers to the

capacity of a corporation to respond to social
pressures (Frederick 1994)
• 4 ‘philosophies’ or strategies of social
responsiveness (Carroll 1979)
– Reaction
– Defence
– Accommodation
– Proaction
 Philanthropy vs Corporate Citizenship
• Philanthropy:
 a Greek term --"love of mankind."
 an idea, event, or action that is done to better humanity and
usually involves some sacrifice as opposed to being done for
a profit motive.
 acts of philanthropy include donating money to a charity,
volunteering at a local shelter, or raising money to donate to
cancer research
 the desire to promote the welfare of others, expressed
especially by the generous donation of money to good
causes
 Philanthropy vs Corporate Citizenship

• Corporate Citizenship
• A limited view of CC
– this essentially equates CC with corporate
philanthropy
• An equivalent view of CC
– this essentially equates CC with CSR
• An extended view of CC
– this acknowledges the extended political role of the
corporation in society
 Three views of corporate citizenship

Limited view Equivalent view Extended view

Focus Philanthropy, focused on All areas of CSR Citizenship: social, political and
projects, limited scope civil rights

Main Local communities, Broad range of stakeholders Broad range of citizens; society
stakeholder employees in general
group

Motivation Primarily philanthropic; Mixed – economic, legal, Political

also economic where ethical, philanthropic
citizenship is ‘strategic’

Moral Reciprocity, i.e. ‘putting Duty to be responsible and Grounding is not moral, but
grounding something back’ avoid harms to society comes from changes in the
political arena