UNIT – 10: CORPORATE SOCIAL
RESPONSIBILITY
Contents
10.0 Objectives
10.1 Introduction
10.2 Definition
10.3 Concept of Social Responsibility
10.3.1 Society& Community
10.3.2 Social Audit
10.4 What is Corporate Social Responsibility?
10.4.1 Corporate
10.4.2 Company
10.4.3 Organisation
10.5 Corporate Citizen
10.6 CSR and Business Organizations
10.6.1 Business
10.6.2 CSR & business
10.7 Areas of Corporate Social Responsibility,
the benefits of CSR
10.7.1 Areas of CSR
10.7.2 Benefits of CSR
10.8 Designing CSR Project
10.8.1 CSR project
10.8.2 CSR activities
10.9 Role of Public Relations
10.9.1 PR & Social Responsibility
10.9.2 Two themes
10.9.3 Four fold Role of PR
10.10 Summary
10.11 Answers to self assessment questions
10.12 Model Examination Questions
10.13 Glossary
10.14 References
10.0 OBJECTIVES
After studying this Unit, you
will be able to:
·
Define
who is a corporate citizen
·
Explain
what is society & how a corporate citizen is responsible to the society
·
Describe
the concept of social responsibility
·
Design
a CSR project
·
Identify
the role of public relations in discharging CSR
10.1 INTRODUCTION
Corporate Social Responsibility
(CSR), variously called Corporate Conscience, Social Performance, and
Sustainable Responsible Business/Responsible Business, is a form of corporate self-regulation
integrated
into a business model. CSR policy
functions as a built-in, self-regulating mechanism whereby a business monitors
and ensures its active compliance with the spirit of the law, ethical
standards, and international norms. In some
models, a firm's implementation of CSR goes beyond compliance and engages in
"actions that appear to further some social good, beyond the interests of
the firm and that which is required by law." CSR is a process with the aim to
embrace responsibility for the company's actions and encourage a positive
impact through its activities on the environment, consumers, employees,
communities, stakeholders and all other
members of the public sphere.
Jamshedji Tata,
the pioneer of social responsibility in India said; “Wealth that comes from the
people as far as possible must go back to the people”. It is against the
background of this philosophy, the concept of corporate social responsibility
began in India at Jamshedpur, Bihar where the Tatas built a township for the
workers of the Tata Iron and Steel Company.
The
importance of Corporate Social Responsibility (CSR) has further increased
because of changing corporate world. Everything from family life to ways of
working in a corporation is changing. In consequence, every organisation has to
confront with a global economy; a technological revolution, an information
revolution and proliferation of sources of information; emergence of large
companies with international business; mergers and acquisitions, and signs of
increasing environmental damages. The changes have had an impact on ways of
doing business. For instance, competition gets intensified when cheap goods
produced by low-wage workers are imported into parts of the world where labour
charges are high. Reputations are either strengthened or damaged as the
information is flowing with lightening speed. As a result, the concept of
corporate citizenship and corporate social responsibility is growing in the
modern world.
10.2 DEFINITION
Corporate
Social Responsibility means a company’s sense of responsibility towards the community and environment (both ecological and social) in which it
operates. Companies are corporate citizens
and the CSR is expressed
(1) through their waste and pollution reduction processes, (2) by contributing educational and
social programs, and (3) by earning adequate returns on the employed resources with ethical values.
Corporate social responsibility is defined as “the process by which a corporation participates in the welfare of both internal and external community, enhancing its environment and well-being to the advantages of the organisation and the community concerned”. It also aims at building relationships with all types of public and increasing the reputation of the company. Actions, community services that do not have purely financial implications and those are demanded or expected of an organization by society at large, often concerning community welfare, ecological and social issues come under the corporate social responsibility.
Self
assessment question – I
1. What is your
understanding of Corporate Social Responsibility?
10.3 CONCEPT
OF SOCIAL RESPONSIBILITY
The social responsibility concept is based on the
premise that business has greater impact on society than can be measured by
profit or loss. As a participant in society, business should contribute to the
human and constructive social policies that guide society. The concept of
social responsibility is merely a first step towards social effectiveness of
business. It is the underlying value which gives businessmen/corporate citizens
a sound basis for social action. It is the philosophy which justifies business
involvement in its social community, but philosophy by itself is incomplete. It
must be followed by effective social action.
10.3.1 Society
and Community
A society is an
aggregate of people living together in a more or less ordered community. It is
a community of people living in a particular region and having shared customs,
laws, and organizations. Corporate citizen is a part of the society and is
dependent upon. Similarly, a community is a group of people who reside in a specific locality, share government,
and often have a common cultural and historical heritage.Though both appear to be similar; a few different
communities together are addressed as one society.
10.3.2 Social Audit
The process of evaluating a firm's various operating procedures, code of conduct, and other factors to determine its effect on a society is regarded as social
audit. The goal is to identify what, if any, actions of the firm have impacted the society in some way. A social
audit may be initiated by a firm that is seeking to improve its cohesiveness or improve its image within the society. If the results are positive, they may be released to the public. For
example, if a factory is believed to have a negative impact because of
pollution,
the company may have a social audit conducted to identify actions that
actually benefit the society.
Self assessment question – II
1.
Explain
the concept of social responsibility.
2.
What
is meant by Society and Social audit?
10.4 WHAT IS
CORPORATE SOCIAL RESPONSIBILITY?
Organizations function within the society. They survive and grow
in the societal context. They primarily exist to satisfy societal needs.
Organizations must act responsibly toward society.Social responsibility is
concerned with what organizations ought to do. It refers to pursuit of goals
that are in the interests of society. It implies safeguarding the interests of
stakeholders. They can be investors, customers, employees, government and
community. It demands commitment to the welfare of the society.Social
responsibility can be looked at from three aspects are:
1.
Social Obligation: The social obligation of organization performs its
functions efficiently. It should provide goods and services to society.
Organizations should comply with legal provisions and social functions.
2.
Social Reaction: Social responsibility
of organization is to react to social pressures. Organization creates social
problems. There are social pressures on them to solve such problems. They
should be reactive to prevailing social norms, values and expectations to
discharge social responsibility. If the civil society makes a complaint about
company’s engaging child labour, it must react and respond to the problem.
3.
Social Responsiveness: Social responsibility
is one of the goals pursued by organizations. It is in their interest to be
socially responsible. Organizations should be proactive to seek solutions to
social concerns. They should prevent social problems. Social responsibility is
in their long-term interests. It is the moral and right thing to do. Being
proactive, the company will solve many problems.
10.4.1 Corporate
A corporation is a body formed
and authorized by law to act as a single person, although constituted by one or
more persons and legally owned with various rights and duties. As such the corporation becomes a corporate
citizen. Business and community are inseparable. They depend on each other for survival. In fact, business organizations and the
community have a symbiotic relationship with one thriving on the other. It is in this context, corporate citizen has
the responsibility to serve the cause of the society.
10.4.2 Company
A Company is a voluntary association formed and organized to carry on a business. Types of
companies include sole proprietorship, partnership, limited liability, corporation, and public limited company. A company is a business organization in structure, where
people work for only profits and pay taxes. They will use that money for
improving their business and share the profits.
10.4.3 Organization
An organisation
is a social unit of people that is structured and managed to meet a need or to pursue collective goals. All organizations have management
structure that determines relationships between the different activities and
the members and subdivides and assigns roles, responsibilities and authority to
carry out different tasks. Organizations are open systems – they affect and are affected by their societal
environment. Corporate company and organisation are similar in nature in
reaction to the practice of public relations.
Self
assessment question
– III
1.
What
are the three aspects of social responsibility? Cite examples.
10.5 CORPORATE
CITIZEN
Who is a
corporate citizen? A corporation/company is a corporate citizen. It is a legal
entity registered under the law which assumes certain rights and duties like a
citizen of the country. Involvement of a corporation in matters concerning to
society as a whole is called corporate citizenship.
Corporate
citizenship is an idea, which has both practical and ethical dimensions. It
suggests a two-way relationship between corporations and society which are
oriented towards meeting community needs. In fact, business organisations and
the community have a symbiotic relationship with one thriving on the other. It
is in this context, corporate citizen has the responsibility to serve the cause
of the society like a citizen of a Nation. Interest in corporate citizenship
and social responsibility is growing as the role of corporate and its business
in society increases. As in the case of an individual citizen, corporate
citizen which has emerged from a corporation has similar legal and moral
responsibilities towards the needs of the society.
10.6 CSR AND
BUSINESS ORGANISATIONS
How does corporate social responsibility help
organization? CSR, helps to greenwash the company’s image, to cover up negative
impacts by saturating the media with positive images of the company’s CSR
credentials. CSR enables business to claim progress despite the lack of
evidence of verifiable change. Since much of the business case for CSR depends
on corporation being seen to be socially responsible, CSR will continue to be
little more than PR for as long as it is easier and cheaper to spin than change
(Fauset 2006). Cutlip (2000) believes that CSR can be good for PR, stating that
“much good can be credited to ethical public relations practice, and
opportunities for serving the public interest abound”.
10.6.1 Business
Human beings are continuously
engaged in some activity or other in order to satisfy their unlimited wants.
Every day we come across the word business or businessman directly or
indirectly. Business is an economic activity, which is related with continuous
and regular production and distribution of goods and services for satisfying
human wants. Lewis Henry defines business as “Human activity directed towards
producing or acquiring wealth through buying and selling of goods”. Stephenson
defines business as “The regular production or purchase and sale of goods
undertaken with an objective of earning profit and acquiring wealth through the
satisfaction of human wants”. Thus, the term business means continuous
production and distribution of goods and services with the aim of earning
profits.
10.6.2 CSR&
Business
Corporate social
responsibility is about the integration of social, environmental, and economic
considerations into the decision-making structures and processes of business.
It is about using innovation to find creative and value-added solutions to
societal and environmental challenges. It is about engaging shareholders and
other stakeholders and collaborating with them to more effectively manage
potential risks and build credibility and trust in society. It is about not
only complying with the law in a due diligent way but also about taking account
of society’s needs and finding more effective ways to satisfy existing and
anticipated demands in order to build more sustainable businesses. Like a
citizen of India, a corporation becomes a corporate citizen to perform certain
functions of corporate social responsibility.
10.7 AREAS
OF CORPORATE SOCIAL RESPONSIBILITY,
BENEFITS OF CSR
What
are the areas covered under corporate social responsibility? It includes a wide
range of activities, often far removed from the corporation’s economic
function. The benefits of CSR too are manyfold ranging from employees’ good
will to corporate image.The canvas is so large that there is need for
coordinated action from the government, local and corporate bodies, NGOs and
individuals. It encompasses several action oriented activities in the service
of society.
10.7.1 Areas of CSR
CSR
activities include, sponsorship of sport event or the arts, donations to
charity and contribution in either cash or kind such as office facilities,
equipment, professional advice, training, technology, gifts normally given
towards public or voluntary-sector activities in the community in which the
organisation operates. They also include: education, population control,
removal of poverty, illiteracy and ignorance; combating corruption, ensuring
free and fair elections; providing employment; pushing through reforms,
eradicating communicable diseases and finding answers to problems pertaining to
gender discrimination, child labour, mother and child health, HIV AIDS, energy
conservation, etc.
10.7.2 Benefits of CSR
Why should companies consider corporate
social responsibility? This is not about dropping coins in a kitty.
Corporations which are active in this area say that corporate social
responsibility makes a sense to them in the enhanced quality of relationships with
their publics. They treat this as part of their corporate strategy. Business
companies that make a public commitment to improve the welfare of the society
claim that they have substantial company benefits covering competition,
performance and recruitment as well as creation of enduring healthy
communities. Ultimately, it is about
delivering improved shareholder and debt-holder value, providing enhanced goods
and services for customers, building trust and credibility in the society in
which the business operates, and becoming more sustainable over the longer
term. While there are different ways to frame the benefits because they are
interrelated, they generally include the following:
In
other words, corporate social responsibility can bring benefits in the
following areas:
1.
Improved workforce commitment and morale
2.
Greater customer goodwill and loyalty
3.
Better image and reputation in the society
4.
Enhanced features of the corporate brand
5.
Stronger financial performance and
profitability through operational efficiency gains
6.
Improved relations with the investment
community and better access to capital
7.
Enhanced employee relations that yield
better results respecting recruitment, motivation, retention, learning and
innovation and productivity
8.
Stronger relationships with communities
and enhanced reputation to operate
9.
Community welfare of the society and in
turn society’s help to the company
Self
assessment question – IV
1.
What
are the areas of CSR? Explain with examples.
2. What are the mutual benefits from
CSR to business and society?
10.8 DESIGNING
CSR PROJECT
The
term "corporate social responsibility" came into common use in the
late 1960s and early 1970s after many multinational corporations formed the
term stakeholder, meaning those on whom an organization's activities have an
impact. It is used to describe corporate owners beyond shareholders.
It brings the organisation and the community closer to gain goodwill. Therefore
CSR is a part of corporate strategy as to build up relationships with all its
stakeholders.
10.8.1 CSR Project
Companies arrive at the point of
needing to design a CSR structure at various stages of their CSR strategy. Some
companies already have dedicated CSR staff, but realized that they need a
different structure to better coordinate and manage their growing CSR programs.Others
have specialized staff working in one or more areas of CSR who are overburdened
as the company’s CSR activities grow, and look for a structure that provides
greater strategy and integration. Still others decide to develop a CSR
structure as a reactive or proactive response to external pressures. Each
company must design a project of social responsibility to implement the
programme.
One of the most important points
to be madeup-front is that there is no single universally accepted method for
designing a CSR structure. This is definitely not a
“one-size-fits-all”exercise: What works for one company may not work for
another, and vice versa. What does work, though, is following a process that
allows one to design a structure that aligns the company’s mission, size,
sector, culture, business tructure, geographic locations, risk areas andlevel
of CSR commitment.
Engaging in a process to develop
the most appropriate CSR structure project for a company given its mission and
level of commitment is important. Key steps for designing a CSR structure
include:
1.
Identify
key objectives of CSR project
2.
Describe
the target audience in clear term
3.
Understand
growth drivers.
4.
Identify
key CSR issues.
5.
Identify
and evaluate stakeholders’ needs.
6.
Identify
functions that support CSR efforts.
7.
Analyze
company systems, culture and any impending changes.
8.
Evaluate
structural options.
9.
Develop
a staffing plan.
10. Create structure for
cross-functional interaction.
11. Assess process and framework for
budget and resource allocation.
12. Identify needs of local community
or society including all stakeholders
10.8.2 CSR Activities
What is good for the society is also
good for the business. The following are the general activities of corporate
social responsibility taken up by some reputed business organizations. ONGC,
Rajahmundry unit in Andhra Pradesh has spent over Rs.65 crores on various
socio-economic development activities such as construction of roads, bridges,
vocational education for women, healthcare for the poor, construction of
community halls and cycle shelters. The Hindustan Lever Ltd., has set up a
dairy plant in the backward district of Etah in UP. SBI has undertaken several
community services aimed at the welfare of general public like sponsoring
health camps, distribution of wheel chairs to the physically challenged,
adoption of sports persons etc.
Adoption
of villages
Major business houses like
Fertilizer and Cement companies have adopted villages to introduce their new
products for the benefit of farmers. The services they provide are roads, healthcare,
drinking water etc. Public Sector Undertakings like BHEL adopted villages as
part of their CSR.
Rural
Development
Since India lives in its villages,
the Tatas have taken up their social responsibility in rural India by
establishing Tata Steel Rural Development Society in 1979. It had pioneered rural development programmes
around its steel mill, Jamshedpur and also about 500 villages in Bihar, Orissa
and Madhya Pradesh. Tatas name is a
bi-word for rural development. Many
corporates/business houses in India have started following Tatas, later.
Temples
The Birlas among others, as part of
their social responsibility, built famous temples all over the country for the
benefit of devotees. While offering prayers, can devotees forget Birlas for
their outstanding contribution to the growth of temples? They forget not. The
Birlas built Venkateshwara temple in Hyderabad, which is popularly known as
Birla Mandir.
Scholarships
The Hindu, national daily in
association with Hitachi Ltd., Tokyo offers scholarships for technical training
in Japan for six months in the areas of digital media, power systems,
industrial systems etc.
Community works
The Telestra Corporation Ltd.,
Australia’s largest telecommunications company had motivated its employees to
join a voluntary body along with family members to serve the cause of
community. A network of 10,000
registered employee volunteers help Telestra’s sponsorship programmes. They
help in clean up Australia, national blood bank, community open day, support
for children’s hospitals etc.
Self
assessment question – V
1.
What
is meant by a CSR project? Explain its key components.
2.
What
are the various CSR activities?
10.9 ROLE OF
PUBLIC RELATIONS
What is public relations? Public relations
is the management of a two-way communication process between an organization
and its publics to promote the corporate mission, services, products,
reputation and gain public understanding
10.9.1 PR and Social Responsibility
One of the objectives of corporate social responsibility is that having
done good to the community, the corporation intends to improve its reputation
as a responsible corporate citizen. The corporate contributions, undoubtedly,
create good relations with employees, shareholders, consumers, community
neighbours, media public, dealers, distributors, educators, the government,
etc.
As ethical standards towards
society and the commitments to corporate social responsibility grow, public
relations which is based on the principle of public interest and social purpose
gains added importance to help the corporate world. “Do the Right Thing”. It is
here the role of public relations that doing good or performing well by the organisation is reported to the
community. Therefore, public relations means ‘P’ for ‘performing’ good and ‘R’
for ‘reporting’ which will build goodwill of key publics. Many corporations
operate their corporate social responsibility programmes through their public
relations/corporate communications departments. The community services
activities of the State Bank of India are part of Public Relations Department.
10.9.2
Four – Fold Role of PR
Public Relations has a
fourfold role in the process of corporate social responsibility
1.
Identification of community needs and keep
the management informed for inclusion in CSR programmes.
2.
Reporting to the community about the
activities of the CSR so that people could make use of such programmes.
3.
Promoting of the corporation as socially
responsible to the community
4.
Understanding the attitudinal changes of
stakeholders and impact of the CSR to report to the management.
10.9.3 Two Themes
Public relations literature
in the West highlights two main themes with regard to corporate social
responsibility and public relations. The first theme points out the
relationship between the public relations function and society which clearly
says that public relations in it has the social responsibility to serve the
cause of the community and has a role to promote the public welfare and public
good. The second theme argues that public relations performs the role of
conscience keeper of the organisation and it has a moral obligation to promote
the social responsibility programmes of the corporation.
Public relations, in social
responsibility, plays dual role. It communicates to the target audience about
the programmes of social responsibility on the one hand and also identifies the
community needs such as educational facilities, drinking water, medical
facilities, etc. and brings such needs to the notice of management on the other
hand. The second role enables the management to undertake corporate social
responsibility programmes.
Thus, there is a close link
between corporate social responsibility and public relations function. The
ideal role of public relations is often described as that of “a person in the
middle”, between the corporation and the society without any scope of the
possible conflict that might result in this role. In fact, the objective of
public relations in a society is to harmonise an organisation with the social
environment by communicating honestly, consistently and continuously to gain in
return credibility, public goodwill, mutual understanding and mutual respect.
The International Public
Relations Association in a survey of eight countries (UK, USA, S. Africa,
Brazil, Japan, Singapore, Switzerland & Australia) in 1977 which looked at
the effects of globalisation on corporate communication observed “the most
important task for public relations in future will be the maintenance and
improvement of corporate social evaluation along with corporate communication
based on company strategy”.
Self
assessment question – VI
1.
What
is the role of PR in discharging corporate social responsibility?
10.10
SUMMARY
Corporate Social Responsibility
seems largely dependent on the utilitarian theory, “the greatest happiness of
the greatest number”, which benefits the donor as well as the beneficiary. Sometimes corporate social responsibility is
undertaken in crisis management like natural calamities, accidents etc.
However, the corporate citizen is projected as a moral person who can do good
in society to the benefit of both in the corporation and the public. CSR casts a heavy role on public relations as
a technique or tool of reputation management. When the focus of a corporation
is on public welfare, then public relations naturally figures prominently. All the programmes of welfare measures of a
company are communicated to both internal and external public only through
public relations.
10.11
ANSWERS TO SELF
ASSESSMENT QUESTIONS
Self
assessment question – I
1.
“Wealth that comes from the people as far
as possible must go back to the people”. This is the philosophy, philanthropy and
the concept of corporate social responsibility in India. Corporate Social Responsibility
is defined as the process by which a corporation participates in the welfare of
both internal and external community, enhancing its environment and well being
to the advantages of the organisation and the community concerned.
Self
assessment question – II
1. As a Corporate citizen and
a participant in society should contribute to the human and constructive social
policies that guide society.
2. Society is a large social group
consisting of a number of communities, measuring social purpose activities of
an organisation is social audit.
Self
assessment question – III
1.
Corporate
Social Responsibility has three aspects (1) Social obligation (2) Social
reaction and (3) Social responsiveness.
Self
assessment question – IV
1.
The
areas of social responsibility include education, removal of poverty and
illiteracy, population control, training etc....
2.
Corporate
social responsibility brings benefits to a company in three ways – enhancement
of the value of corporate brand, greater customer goodwill and loyalty and
improved commitment of workforce.
Self
assessment question – V
1.
Corporate
social responsibility project or structure identifies its objectives, social
problem, staffing and action oriented activities to serve the cause of the
society.
2.
Corporate
social responsibility programmes intended for the benefit of community include:
sponsorship of sports event, donations to charity, supply of technical
equipment, training, public education, award of scholarships, measures for
population control, eradicating communicable diseases, HIV AIDS, energy
conservation etc
Self
assessment question – VI
1.
Public
Relations has to report to the community about the community welfare undertaken
by a corporation. When public relations
is based on public interest, it has the responsibility to promote corporate
social responsibility. Public Relations also identifies the community needs and
brings to the notice of corporation for undertaking community welfare
programmes.
10.12 MODEL
EXAMINATION QUESTIONS
I.
Answer the following questions in
about 30 lines each.
1.
What
is the meaning and concept of Social Responsibility? How and why it is
discharged by a Corporate?
2.
Why
Society is important in doing business? What influences the society can
exercise on business?
II.
Answer the following questions in
about 30 lines each.
3.
What
are the benefits of CSR? List out some general initiatives taken up under
Corporate Social Responsibility by reputed firms?
4.
What
is Corporate Social Responsibility? How does Public Relations promote social
responsibility?
10.13 GLOSSARY
Business = Trading
of goods, services or both to consumers
Citizen = An inhabitant of a city or town
Charity = Disposition of heart to think in favor
of fellowmen A form of self-sacrifice
Company = An association of persons for carrying
on a
commercial or industrial
enterprise
Community = Individuals residing in a locality
Community needs = Needs of the individuals residing in a locality
Community relations = Relations
established with the individuals
Corporate = Formed or
united or combined into a body
Corporate citizen = A company’s role & responsibility towards society
Corporate
philanthropy = Company’s charity activity in the
society
CSR = Corporate Social Responsibility/Ethical
business
Enterprise = An organisation involved in trade
Organisation = A social entity that has a collective
goal
Public Relations = Practice of managing and sharing information with
stakeholders
Society = A large social group, bigger than
community
Social Audit = Measuring social and ethical
performance
Social evaluation = Measuring the social impact
Social
Responsibility = Obligation towards the welfare of the
society
Stakeholders = Person or group having interest in organisation
10.14REFERENCES
Tymson
& Lazar The new
Australian & New Zealand PR Manual, Tymson Communication, Chatswood,
Australia, 2002
CV NarasimhaReddi Dr Effective Public Relations &
Media Strategy, Prentice Hall of India, New Delhi 2009
CV NarasimhaReddi Dr. Public Relations Voice, the journal of
Indian PR, Hyderabad, April-June 2003
Norman A. HART Strategic Public Relations,
Macmillan Press Limited, London, 1995
-
Y.
Babji
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