CSR - A WIN - WIN BUSINESS MODEL

Col. Prakash Tewari (Retd) CSR and R & R

Tata Power Company

1

Prelude

• Impacts of Business

• Integrating Business and Society

• Emergence of CSR

• Mapping Social Impacts

• Responsive CSR vs Strategic CSR

• Moral Purpose of Business

“Human Beings are animals, We are sometimes monsters, sometimes magnificent, But always animals.  We may prefer to think of ourselves as fallen angels, But in reality, we are risen apes.”

- Desmond Morris

3

Business and Society

• Economic

• Environmental

• Social

Business can impact society in three ways

Business

Impact of Business on Society

Impact on business on society can be positive as well as negative.

Business Impact on Human Development

• Business impacts poverty, literacy, education and life expectancy.

• Economic growth is only a means, though an important one, for human development.

• Human development is both an outcome and a process of enlarging people’s choices to lead lives they value.

Business and Environment

In today’s world, environment is an increasingly sensitive issue.

This means that any failure to follow environmental norms could promptly

result in a public litigation being slapped on the corporate.

Economy Vs Ecology

Economy and Ecology

Impact of Business on Communities

• Change in livelihood patterns on account of natural resources being impacted

• Change in land use / leading to socio-political-economic impact (loss of identity, culture change)

• Land owners become landless, or marginalised farmers

• Socio-psychological impact thru contrast in living standards

• Stress on local environment quality (air emissions, effluent, etc)

Impact of Business on Communities

• Stress on local ecology (flora and fauna)• Stress on local resources – water, land, rural

energy sources• Increased dependence on the industry by the

community• Influx of migrant labour• Opportunities for Business to secure goods and

services• Opportunities for community to improve their

quality of life

Scope of Collaboration

3

Adaptability Gap

EnvironmentalReducing carbon emissions and hence decreasing the chance of environmental irregularities.

EconomicProtect , enhance and diversify asset base through economic activities

SocialIf people do not have the

resources to deal with today’s stresses, then they are unlikely

to be able to deal with the additional stresses associated

with climate change

Integrating Business & Society

• CSR understand interrelationship between business & society

• Corporate need healthy society• Society needs successful corporate• Focus on intersection than friction• Mutual dependence implying principle of shared

value

• Issues that

shook corporate

• Corporate response

Emergence of CSR

• Moral Obligation

• Sustainability

• License to Operate

• Reputation

Good citizens – ‘Do the right things’

‘Meeting needs of present without compromising future generation’

Permission from Govt, communities & stakeholders

Justify CSR initiatives – Brand, image, morale & values of stock

Justification

School of Thought

• Focus on tension than interdependence• Non strategically aligned• Fail to identify/prioritize/make impact• Uncoordinated & philanthropic• Not linked to internal/external activities• Lost opportunity• Social benefits dissipated

Identifying Points of Intersection

• Interdependence takes 2 forms Company impinges through its operations External social conditions influence

corporations

LAND ACQUISITIONtechnically feasible location identification, purchase of land

LOGISTICSincoming material,

storage, data collection,

service

OPERATIONSGeneration (emission

measurement), transmission

(decentralised), distribution (smart grid)

TRADINGadvocacy, open axis regulation, short term transactions, REC, website

CUSTOMER MANAGEMENTcustomer support, complaint resolution, repair

•Displacement•Loss of livelihoods•Loss of infrastructure•Irreversible loss to natural resources

•Air pollution•Warm water discharge•Ash disposal•Impact on livelihoods•Energy & water usage•Worker safety & labour relations

•Conservation•DSM•Efficiency

•Transportation Impacts (e.g., emission, congestion, logging roads, safety)•Pollution•Dust (SPM)•Health•HIV/AIDS

•Pricing practices (e.g., price discrimination among customers, anticompetitive pricing practices, pricing policy to the poor)•Consumer protection•Global partnership for development

Mapping the Social Impact of Value Chain

•Procurement & •Supply Chain practices

•Education & Job Training•Labour Standards•*Gender equality

•Financial Reporting practices•Corporate Governance Practices•Transparency

HUMAN RESOURCE MANAGEMENT

recruiting, training, supervision system

CORPORATE INFRASTRUCTUREfinancing, planning, investor relations

PROCUREMENTcomponents, machinery,

advertising and services

TECHNOLOGY DEVELOPMENTproduct design, testing, process design, material design, market

research

Support Activities

Local Demand Conditions

The nature and complexity of

local customer needs

Input ConditionsPresence of high quality, specialized

inputs available to firms

Context for Firm StrategyThe rules and incentives that

govern competition

Related and Supporting IndustriesThe local

availability of supporting industries

•Peculiarity of local demand (e.g., cultural and society specific needs)•Demanding regulatory standards

•Fair and open local competition •Intellectual property rights•Transparency

•Availability of human resources•Availability of scientific and technological infrastructure•Sustainable natural resources

•Availability of local suppliers•Access to firms in related field

External Social Conditions

• Social issues that are not significantly affected by a company’s operations nor materially affect its long-term competitiveness

Generic Social Impacts

• Social issues that are significantly affected by a company’s activities in the normal course of business

Value Chain Social Impacts

• Social issues in the external environment that significantly affect the underlying drivers of a company’s competitiveness in the location where it operates

Social Dimensions of Competitive Context

Good Citizenship Mitigate harm from value chain activities

Transform value-chain activities to benefit society while reinforcing strategy

Strategic philanthropy that leverages capabilities to improve salient areas of competitive context

RESPONSIVE CSR

STRATEGIC CSR

Choosing Social Issues

The Moral Purpose of Business

• Contribution to economic prosperity• Corporate social integration towards building

shared value• Leading to self sustaining solutions