CSR Policies and their Three-dimensional Impacts.

CSR Policies and their Three-dimensional Impacts. By Sukriti Jha & Jacqueline Pinto Dept. of EconomicsChrist UniversityIntroductionThe World Business Council for Sustainable Development: the continuing commitment by business to contribute to economic development while improving the quality of life of the workforce and their families as well as of the community and society at large." The concept was associated with philanthropy and was discretionary in nature. There is the question of whether reputation damage is a major motivation behind the adoption of CSR policies by a multinational. The new Companies Bill 2011 mandated private companies to earmark 2% of net profit in preceding three years for CSR activities. Literature ReviewAdam Smith: By pursuing his own interest he frequently promotes that of society more effectively than when he really intends to promote it. Milton Friedman: there is one and only one social responsibility of business to use its resources and engage in activities designed to increase its profits as long as it stays within the rules of the game; which is to say, engage in open and free competition without deception or fraud. Baron: Corporate Social Performance John Elkington: Triple Botton Line Barboza and Trejos: CSR as an Economic ModelDIHK shows that the companies that are highly motivated in actively and purposefully assuming corporate social responsibility and follows entrepreneurial commitment, benefits both the society and the company. Zwart & Tulder: shows that companies that have been on thin ice usually become leaders in the business sector concerning CSR issues.

Research MethodologyCase-study approach using secondary data. Four multi-nationals in the light of CSR conflicts. Subsequent responses and change in CSR policies. Source: information available on companys website, online newspapers and non-governmental organization (NGO) reports, as well as academic journals and books. Research ObjectivesTo identify the changing roles in CSR policies of the MNC firms in light of the conflicts and controversies. To show the three-dimensional impact of the modified CSR policies.

The Coca Cola Company

Company ProfileStarted in 1886 by Asa Candler. By the 1920s it began expanding internationally.By the end of 20th century, the company was selling its products in almost every country in the world.In 2005 it became the largest manufacturer, distributor and marketer of non-alcoholic beverages and syrups in the world. CSR ConflictsPresence of pesticides. Water pollution and the over extraction of ground water. Monopolistic and discriminatory practices.Labor union controversies. FDA violations. Three-dimensional impactThe Individual level: Consumer campaigns & labor boycotts affect the firms profits and sales. Monopolistic practices affects consumer welfare. The Social Level: Disgruntled employees & human rights violations. The Global Level: Environmental impacts ground water resources & pesticide contamination. CSR policies and responses post-conflicts Adopted GRI guidelines and started reporting on sustainability. Initial denial of claims leading to mistrust of customers. Later undertook damage-control measures including publishing of Environmental Performance Report (2008).Coca-Cola India Foundation, Anandana, to address local water problems. Launching various community water projects in India.It also implemented a water stewardship programme and set certain measurable objectives. It has denied most of the other claims with regard to labor charges, FDA violations and monopolistic practices.

Hindustan Unilever Ltd

Company ProfileIncorporated in 1933 but its product have been sold in India since 1888. It is part of the 40 billion Euro Unilever Group which has more than 400 brands. The group has its presence in over 100 countries. Indias largest FMCG company providing services to over 700 million consumers. The company is mentioned in the Forbes list of Worlds Most Reputed companies in 2007. CSR ConflictsIndonesian deforestation controversy.Mumbai & Assam labor conflicts. Mercury poisoning. Advertisements which perpetuated racism. FDA violations. Three-dimensional impactThe Individual level: Consumer campaigns & labor boycotts affect the firms profits and sales. The Social Level: Hurting consumer sentiments. Ignoring health and safety standards. The Global Level: Environmental impacts deforestation and mercury dumping.

CSR policies and responses post-conflicts The company has not undertaken any substantial measures to address labor conflicts. Major initiatives taken by AICUU. Steps taken to provide medical care to the people of Kodaikanal. But no action taken to clean up dumping sites. Microfinance initiative in Karnataka and Maharashtra.It pledged to stop its suppliers from cutting down natural forests in Indonesia and initiated a sustainable living plan.

Nestle

Company profileFounded in 1866 by Henri Nestl. Nestl was formed in 1905 by the merger of the Anglo-Swiss Milk Company.Nestl's products include baby food, bottled water, breakfast cereals, coffee, confectionery, dairy products, ice cream, pet foods and snacks. In 2011, Nestl was listed No. 1 in the Fortune Global 500 as the world's most profitable corporation. CSR conflictsMarketing of infant formula. Ethiopian debt. Melamine in Chinese milk. Green Washing. Zimbabwe farms. Palm oil use & deforestation. Health issues. Child labor.

Three-dimensional impactThe Individual level: Loopholes in strategizing credit policies. Loss of consumer trust in product safety affecting sales and profits. The Social Level: Use of advertising, which contradicted conventional beliefs. Ignoring health and safety standards. Human rights violations (child labor accusations) The Global Level: Environmental impacts deforestation and green washing.

CSR policies and responses post-conflicts Redesigned advertising campaigns. Change in credit policies. Set up a new R&D facility in China. Started the Corporate Citizenship Report in 2008.Invited the Forest Trust to audit its supply chain. Recalled contaminated products. Started working with the FLA to improve working conditions.

Summing upAll three companies began reporting according to sustainability guidelines after major conflicts. These guidelines are set by different organizations, like GRI. The companies seemed to address the environmental issues more extensively than the social issues. All three companies followed certain intended CSR policies since their inception. But changing global scenario led to the formation of emergent (modified) CSR policies.

ConclusionsThe responses of the multinationals to the conflicts varied, ranging from attempting to repair reputation damage and denying the claims, to providing a remedy. The case studies provide evidence that after the multinationals experienced a conflict, the companies made changes to their CSR policies. Furthermore, the sustainability reports in which the multinationals present their CSR policies are created as long- term commitments and not just to resolve the current conflict.

Limitations & Direction of ResearchThe company's CSR contributions are not published. Hence quantitative data collection was limited.Most of the conflicts faced by firms were allegations, hence their effects could not be measured. The implementation of the Companies Bill 2011, will lead to more publicly available information with regards to CSR. This is expected to provide the required data for further research.