final report on csr
TRANSCRIPT
CONCEPTUAL FRAMEWORK
“Wealth created from society has to be ploughed back into
Society.”
Mahatma
Gandhi
This is the concept on which the foundation of Corporate Social
Responsibility of CSR as it is popularly known as is laid. CSR is a genuine
attempt by a company to build meaningful relationship between the corporate
sector & the rest of society. CSR is achieved when a business adapts all of its
practices to ensure that is operates in ways that meet, or exceed, the ethical,
legal, commercial & public expectations that society has of business. To be
considered effective, Corporate Social Responsibility must be an integrated
part of day-to-day business, engaging all stakeholders & including strategies to
support individual managers to make socially responsible decisions, confirm to
ethical behavior & obey the law.
Corporate Social Responsibility (CSR) is a growing phenomenon
worldwide that’s trying to change the role & nature of corporations. CSR deals
with the thorny issues ground a corporation’s responsibility to society, & how
it relates to the company’s traditional commitment to maximize share holder
profits.
Organizations & industries of all sizes find it necessary & desirable to
consider Corporate Social Responsibility in Strategic decision making
processes. In some companies this has had a profound effect from the shop
floor to the executive suite. Not surprisingly the maintenance department has
potential to be a leader in implementing initiatives that align with CSR related
goals & objectives, including improved safety on the job, waste
Reduction, improved energy management, selection of vendors that can
supply “CSR approved” parts, increased employee diversity, alternative
working arrangements & balancing work and lifestyle.
Corporate Social Responsibility (CSR) has been influenced by two major
concepts stake-holder model, wherein it is recognized that good business
practice entails engaging all stake holders in company business. So good
business is not only seen as maximizing shareholder value but also stakeholder
value. The other concept is triple bottom line, where companies would no
longer be judged by the conventional single i.e. financial bottom line, but also
on there performance in social & environmental bottom-lines
CSR is a concept that an enterprise is accountable for its impact on all
relevant stake holders to behave fairly and responsibly, contribute to economic
development while improving the quality of life of the workforce and their
families as well of the local community and society at large. By expressing their
social responsibility, companies are at firming their role in societal and
territorial cohesion, quality and environment.
Corporate Social Responsibility is the commitment of business to
contribute to sustainable economic development working with employees and
their families, the local community and society at large to improve their quality
of life in ways that are good for business and good for development.
1.1 CONCEPT
The role of business in society has been debated in economic literature
for a long time. By the term Corporate Social Responsibility (CSR), what is
generally understood is that business has an obligation to society that extends
beyond its narrow obligation to its owners or shareholders, this idea has been
discussed throughout the twentieth century but is was Haw ard R. Bowen’s
book on “Social Responsibilities of Businessman” published in 1953, which was
the origin of the modem debate on the subject. Bowen reasoned that there
would be general social and economic benefits that would accrue to society, if
business recognized broader social goals in its decisions.
Corporate Social Responsibility is nothing but what an organization does
to positively influence the society in which it exists. It could take the form of
community relationship. Volunteer assistance programmes, healthcare
initiatives, special education running programmes ad scholarships,
preservation of cultural heritage and beautification of cities. The philosophy is,
basically to give back to the society, what’s (business) has taken from it, in the
course of its quest for creation of wealth.
The debate, on whether responsibility of a business enterprise is only to
its shareholders (owners) or to all stakeholders, including environment and the
society at large, is an ongoing one and continues. In present literature
“Stakeholder”, as an expression is fairly recent in origin, reportedly appearing
first in an internal memorandum of the Stanford Research Institute in the year
1963. According to a definition given by Edward Freeman “A stakeholder is any
group of individual who can effect, or is effected by the activities and
achievements of an organization”. “Friedricn N’eubauer and Ada Demb”“The
Legitimate Corporation” indentify six groups of distinguishable stakeholders
(not necessarily in this order) as follows —
Providers of funds
Employees
General public
Government
Customers and Suppliers
On the one hand experts have argued that shareholders put their risk
capital in a Joint Stock Company (or business) and therefore, companies should
be managed in the interest of the owners or the shareholders. This primacy of
treatment given to the shareholders is being justified on the grounds of
ownership and shareholding. It is felt that the maximization of profits or the
bottom line should be ultimate objective of the management. On the other
hand, a number of experts will not agree with this position For example, in
Japan employees are treated as family. It is felt that an employee who devotes
his or her life to the company has a bigger stake in it as compared to a
shareholder. Germany is another nation where stakeholder recognition is high.
Prominent among the experts who has taken a broader view is Minks who has
argued that any company with a short term in view, only maximizing profits for
the shareholder, will destroy value in the medium to long run.
It is felt that the moot point here is the time frame. And that in the long
run, the sustainability of the enterprises will be of paramount importance. In
the long run, interests of both the stakeholders and the shareholders are not
only likely to converge, but also have to be balanced.
In the tradition of Hobbes, Locke & Jean lacque Russeau (writing in year
1962), society and corporation must co-exist and contribute to the well being
of each other. There is a contract, which is at once explicit and implicit, that
governs the operation of business within a given community. Benjamin
Franklin has also expressed a similar sentiment when he says that “Doing good
is not a private act between a bountiful giver and a grateful receiver, it is a
prudent social act.”
1.2 HISTORICAL PERSPECTIVE
The view that a business can have obligations that extend beyond
economic roles is not new in many respects. Throughout recorded history the
roles of organizations producing goods and services for the market place were
frequently linked with and include political, social, and/or military roles. For
example, throughout the early evolutionary stages of company development in
England (where organizations such as the Hudson Bay Company and the East
India Company received board mandates), there was a public policy
understanding that corporations were to help achieve societal objectives such
as the exploration of colonial territory, setting up settlements, providing
transportation services, developing bank and financial services, etc. During the
nineteenth century, the corporation as a business form of organization evolved
rapidly in the US. It took on a commercial form that spelled out responsibilities
of the board of directors and management of shareholders (i.e. fiduciary duty).
In this later evolutionary form, public policy frequently addressed specific
social domains such as health and safety for workers, consumer protection,
labour practices, environmental protection, etc. Thus corporations responded
to soci1 responsibilities because they were obligated to be in compliance with
the law public policy. They also responded voluntarily to market demands that
reflected consumer morals and social tastes.
By the mid-point of the twentieth century, corporate social responsibility
was being discussed in the US by business management experts such as Peter
Druckers and being considered in business literature. In 1970, economist
Milton Friedman outlined his view that the social responsibility of corporations
is to make profits within the boundaries of society morals and laws (but
cautioned that socially responsible initiatives
By corporations could lead to unfocused management directions,
misallocations of resources and reduced market competition, opportunity and
choice). CSR emerged and continues to be a key business management,
marketing, and accounting concern in the US, Europe, Canada, and other
nations.
In the last decade, CSR and related concepts such as corporate
citizenship and corporate sustainability have expanded. This has perhaps
occurred in response to new challenges such as those emanating from
increased globalization on the agenda of business managers as well as for
related stakeholder communities. It is now more a part of both the vocabulary
and agenda of academics, professional’s, non-governmental organizations,
consumer groups, employees, suppliers, shareholders, and investors.
Values, Ethics & Social Responsibility
Business ethics is not a distinct and separate aspect of corporate life. It
permeates all aspects and departments of the firm, its operations and its links
with the community. At times, the word ethics and values are used
interchangeably. Values, are set of beliefs germane to the individual, group or
organization and is the basis for action. It is something, which is held in regard,
importance or worth. Values, is essentially a thought based concept. While
ethics is a set of actions, born out of beliefs, attitudes and values. It is a branch
of knowledge concerned with moral principles that govern influence conduct.
Ethics, is essentially an activity based concept.
Ethics is person specific, context specific and culture specific. It is also
important to distinguish between ‘managerial ethics’ and ‘business ethic’.
While the former is a micro view and is an examination of individual
Level behavior. The latter is a macro view and examines organizational
behavior. It is important to look at the micro level behavior because (a) Most
unethical decisions emanate at the individual level, rather than as collective
decision of boards or committees, and (b) Individual sensitivities will contribute
to companies taking an active ethical stand while making decisions.
Ethics and CSR are closely related concepts. Ethics deal with issues
pertaining to organizations and its stakeholders in day-to-day business
transactions. Social responsibility refers to a company’s posture relative to the
community either narrowly or broadly defined. Ethics tends to be more
internal in orientation, while social responsibility is more external, but this
orientation is not an absolute one. Many companies that are highly ethical also
exhibit heightened levels of social responsibility. In fact, the term corporate
citizenship is used now to denote many of the activities that fell under the CSR
umbrella earlier.
Social Accounting & Reporting
An increasing number of companies are reporting publicly on their
social, environmental and ethical performance, both as a communication to
stakeholders, and as a management tool. However, as this practice has only
become more widespread since the mid 1 990s, there is as yet no standard
format to address the type of information companies choose to report, or how
that information is collected, analyzed and presented.
At the same time, many stakeholders are becoming increasingly
sophisticated in the type and quality of information they are demanding from
companies. In an effort to meet these demands — as well as to strengthen the
credibility of their social and environmental reports-some companies are
Choosing to have their reports externally verified. In doing so,
companies recognize that verification by a third party can add value to the
overall social and environmental reporting process by enhancing relationships
with stakeholders, improving business performance and decision-making,
aligning practice with organizational values, and strengthening reputation risk
management.
A small, but growing, number of companies are producing verified social
and environmental reports, with the social report movement, in particular,
being led in large part by European companies. Verification refers to any
independent assessment as to the quality, accuracy, or completeness of a
company’s report and can include audits, reviews, attestations, or other forms
of assurance.
As shell has noted in its Principles and Profits Report, society has moved
from a ‘Trust Me’ position, through a ‘Tell Me’ position to a ‘Show Me’
position, implying that verbal assurances by corporate management are no
longer sufficient to gain the trust of stakeholders. Independent verification of
social and environmental reports is one way in which companies are
addressing this lack of trust.
During the 1 990s, calls for greater corporate social accountability by
activists, non-governmental organizations (NGOs), governments and the
general public increases, both in the United States and internationally.
Additionally, increasing numbers of investors taking companies’ social and
environmental performance into account in their investment decision.
The trends in environmental reporting have begun to be duplicated in
social reporting. Standards developed by non-corporate organizations provide
targets against which social performance may be measured. Guidelines also
address how social performance can and should be reported.
For example, SA8000, launched in 1997 by Social Accountability
International (formerly Council on Economic Priorities Accreditation Agency) is
an auditable standard specifically addressing labor and workplace conditions.
The Global Reporting Initiative Sustainability Guidelines, revised in June 2000,
provide a framework and principles for reporting on environmental, social and
economic corporate performance. AA1000, a standard for the social reporting
process, was developed by the Institute of Social and Ethical Accountability and
publicly released in 1999.
During the late 1980s and 1990s, non-governmental organizations have
been at the forefront of campaigns on social and environmental issues,
becoming a powerful force in both publicizing a wide range of corporate social
responsibility issues and in pressuring companies to address them.
Representing particular stakeholder issues, they have challenged corporate
reporting of social and environmental performance and demanded
independent monitoring of social issues, as well as audits of social and
environmental reporting processes.
• Global Reporting Initiative - Sustainability Reporting Guideline:
The Global Reporting Initiative (GRI) is multi-stakeholder initiative,
formed to develop globally applicable guidelines that can be used voluntarily
by reporting organizations. The Sustainability Guidelines on Economic,
Environmental and Social performance, launched in May 1999 and updated for
re-release in June 2000, were designed to help companies report on the
economic, environmental and social impact of their business operations. The
guidelines acknowledge independent verification as a measure of providing
assurance for reliability and completeness of sustainability reports. They also
recognize the potential for verification to “enhance the quality of
Information within an organization and the underlying management
systems and processes.” An annex of the guidelines outlines principles for
verification and offers advice as to what may be expected from verifiers —
such as contents for inclusion in the verification report. The guidelines suggest
the principles and standards for verification of social reports need to allow for
more diverse approaches than are used in traditional financial auditing, while
maintaining fundamental audit concepts necessary to provide assurance and
credibility.
Accountability 1000 (AA1000): AA1000, developed by the Institute of
Social and Ethical Accountability and launched in November 1999, is a ‘process
standard’ setting out principles and a method for social reporting that focus on
the process rather than the content of the social report. Within the standard
are guidelines addressing principles for the conduct of the social and ethical
auditor. They also offer a framework for the audit process, covering the terms
of engagement through to reporting the audit. These guidelines however, do
not form part of the AA1 000 standards and are not for the purpose of
certifying a social report ‘AA1000 compliant’. They are aimed to be a tool for
companies and a framework that can be referenced by auditors, in order to
describe to readers of the report, the audit process and principles that have
been followed.
• Social Accountability 8000 (SA8000): Social Accountability International
(formerly Council on Economic Priorities Accreditation Agency) launched
SA8000 in 1997, as a standard labor and workplace
• Conditions. It is also a system for independent verification of factories’
compliance to the standard. The SA8000 system is modeled
On the International Standards Organization (ISO) standard, ISO 9000, used by
companies to ensure quality control and to demonstrate the quality of
business systems and operations to customers. SA8000 builds on ISO auditing
techniques: specifying corrective and preventive actions; encouraging
continuous improvement; and focusing on management system and
documentation proving these systems’ effectiveness. SAl accredits firms —
usually known as certification bodies — to be external auditors, certifying
manufacturing facilities for conformance to SA8000. While SA8000 uses
independent auditors to certify companies as compliant with the standard, this
certification and audit relates to companies’ actual performance in regard to
labor condition, rather than the public reporting of their performance. It is
including here however, as a significant contributor to the development of
‘auditable’ social performance factors.
International Standards Organization: The International Standards
Organization (ISO) has produced a number of auditable standards and
accreditation systems for reporting on corporate performance. In particular, it
provides on environmental management systems (ISO 14000 series). ISO
14002 is a guide for environmental auditing and qualification criteria for
environmental auditors. As yet, however, there are no ISO standards that
specifically address social reporting and auditing.
International Audit Practices Committee (IAPC) International Standards
on Auditing (ISAs): the Committee is part of the International Federation of
Accountants, and organization of national professional accountancy
organizations that represent qualified public
Accountants. Recognizing the differences in national auditing standards,
the IAPC has developed International Standards on Auditing that can be
applied to the practice of financial audit internationally. However, they contain
standards and principles that can be applied and adapted to the audit of non-
financial information.
Coalition of Environmentally Responsible Economies (CERES):
The CERES Report is a standardized format for corporate environmental
reporting developed through collaboration by companies, institutional
investors and environmental organizations. The CERES Report establishes the
environmental performance data that should be disclosed, suggests methods
of measurement, and thereby helps companies to track their environmental
performance in quantifiable ways. Participating companies receive feedback on
their reports, and the reports undergo a joint prepublication review to ensure
clarity and conformity to the standard.
The idea that business has stakeholders other than shareholders is not
new, at least in the western advanced economies. Large auditing firms like
KPMG and Price water House Coopers continue to receive assignments of audit
“Triple Bottom lines” — the financial bottom-line, environmental bottom lines
and ethical/social bottom lines.
1.3 CORPORATE SOCIAL RESPONSIBILITY DEFINED
Corporate social responsibility is necessarily an evolving term that does
not have a standard definition or a fully recognized set of specific criteria, With
the understanding that businesses play a key sole on job and wealth creation in
society, CSR is generally understood to be the way a company achieves a
balance or integration of economic, environmental and
Social imperatives while at the same time addressing shareholder and
stakeholder expectations.
Different organization has framed different definitions:
The World Business Council for Sustainable Development
(WBCSA) in its publication “Making Good Business Sense” by Lord Holmes and
Richard Watts, Used the following definition.
“Corporate Social Responsibility is the continuing commitment by
business to 1? have 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”.
The same report gave some evidence of the different perceptions of
what this should mean from a number of different societies across the world.
Definitions as different as “CSR is about capacity building for sustainable
livelihoods. It respects cultural differences and finds the business opportunities
in building the skills of employees, the community and the
From Ghana, through to “CSR is about business giving back to
Government”
Society” from the Philippines.
Traditionally in the United States, CSR has been defined much more in
terms of a philanthropic model. Companies make profits, unhindered except
by fulfilling their duty to pay taxes. Then they donate a certain share of the
profits to charitable causes. It is seen as tainting the act for the company to
receive any benefit from the giving.
The European model is much more focused on operating the core
business in a socially responsible way, complemented by investment in
communities for solid business case reasons. This model is more sustainable
because:
1. Social responsibility becomes an integral part of the wealth creation process
which if managed properly should enhance the competitiveness of business
and maximize the value of wealth creation to society.
2. When times get hard, there is the incentive to practice CSR more and better
— if it is a philanthropic exercise which is peripheral to the main business, it
will always be the first thing to go when push comes to shove.
The business for social responsibility defined CSR. as follows:
“Corporate social responsibility operating a business in a manner which
meets or excel the ethical, legal commercial and public expectations that a
society has from business”.
“Corporate social responsibility is essentially a concept where by
companies decide voluntarily to contribute to a better society and a cleaner
environment” is how phrased in the European green paper” Promoting
European frame work for CSR”.
In the words of Millen baker “CSR is about how companies manage the
business processes to produce an overall positive impact on society”.
CSR is accepted as applying to firms where ever they operate in the
domestic and global economy. The way business engage/involve the
shareholders, employees, customers, suppliers, governments,
nongovernmental organizations (NGO’S), International organization and other
stake holder is a key feature of the concept. While business compliance with
laws and regulations on social, environmental and economic objectives set the
official level of CSR performance.
From a progressive business prospective, CSR usually involves focusing
on new opportunities as way to respond to interrelated economic, societal and
environmental demands in the market place. Many firms believe that this
focus provides a clear competitive advantage and stimulates corporate
innovation.
CSR is seen as the business contribution to sustainable development
which has been defined as “development that meets the need of the present
without compromising the ability of the future generation to meet their own
needs”.
CSR commitments and activities typically address aspects of a firms
behaviors (including its policies and practices) with respect to such key
elements as: health & safety, environmental protection, human rights, human
resource management practices, corporate governance, community
development and consumer protection, labor protection, supplier relations,
business ethics, and stakeholder rights.
Thus, CSR is viewed as a comprehensive set of policies, practices and
programs that are integrated throughout business operation and decision
making process that are supported and rewarded by top management.
1.4 THEORETICAL VIEWS:
Many experts feel that business corporation exist primarily to produce
goods and service that society wants and needs. There are three or four
theoretical views about Corporate Social Responsibility. They are discussed in
the following paragraphs.
Milton Friedman, a Nobel laureate, held the view that the only social
responsibility of business was to maximize profits for shareholders, staying
within the realm law. Achieving this is their
First objective and foremost responsibility. If they are unsuccessful in this
mission, they cannot reasonably be expected to assume other responsibility.
His very famous statement says it all
“The business of business is business”. Friedman’s defense of this theory
depends importantly on the factual claims about the efficient working of the
markets. He has also proposed the following arguments:
(a) Business executives have no special competence to directly promote th
general welfare. And since they are not democratically elected and are not
accountable to the general public, business executives should not impose their
own vision of the public good on the society.
(b) When business sacrifices profits for the sake of promoting social ends, they
are violating the rights of the shareholders, and in effect stealing their money.
Wang & Coffey also hold a similar view, when they saw that “Business has no
democratic mandate, historic role or other basis for legitimacy in this area. Any
choices made by them e.g. to back one type of cause or another, are not
sanctioned by any agreed system of legitimacy and end up reflecting the
interest, prejudice and aims of current corporate leaders.”
Hayek and Heilbroner also express similar view in their well-known essay ‘In
the Name of Profit’. Task Force set up in the USA as also the Libertarian Party
in the USA is known to have taken similar position on the subject.
Andrew Carne2ie, The legendary steel tycoon, writing in the year 1889
believed that rich had the moral obligation to give away their fortunes and that
personal wealth beyond the family’s needs should
Be regarded as trust fund for the benefit of the society. “The Trusteeship
Concept” advocated by M.K. Gandhi in India is something very similar. The
steel tycoon also believed that the money should be given during the
benefactor’s lifetime to ensure that it achieved the maximum good. Carnegie
had identified seven best uses to which a millionaire can devote the surplus of
which be must regard himself as only the trustee. These were:
• The founding of a university
• Providing free libraries
• Founding or extension of hospitals, medical colleges and laboratories
Public parks
• Providing halls suitable for meetings and concerts of elevating music.
• Public swimming baths
• One’s own church and churches in poor neighborhoods.
He advocates benevolent, paternalistic leadership and has enunciated
the Charity Principle and Stewardship principal
Keith Davis feels that social responsibility is often referred to as having risen
from an Enlightened Self Interest where organisations realize that it is in their
own best interest to act in ways that community considers socially responsible.
He talks about the
“Iron Law Responsibility”. In the long run, those who do not use power
in a way society considers responsible will tend to lose it.
In USA, there is 5% club, where a group of companies donate five
percent of their pre-tax profit to charity. In India, many large companies do the
same thing in the name of religion either build temples (mainly Hindu), run
charitable religious trusts (mainly Paris), give to the church fund (mainly
Christian) or promote the study of religious (mainly Kuranic) literature. Some
experts classify these as enlightened self-interest.
Tom Cannon, holds the view that society and the corporation or
business have to co-exist and have a mutually beneficial relationship. Business
is expected to create wealth, supply market, generate employment, innovate
and produce a sufficient surplus to sustain its activities and improve its
competitiveness while contributing to the maintenance of the community in
which it operates. Society is expected to provide an environment in which
business can develop and prosper, allowing irwestors to earn returns while
ensuring that the stakeholders can enjoy the benefits of their involvement
without fear of arbitrary and unjust action.
Business depends for its survival and long-term prosperity on society providing
the resources — people, raw materials, services, infrastructure. To convert raw
material into profitable goods/services, it needs these inputs from the society.
Business relies on society.
a) Supplying a mean of exchange — typically money — to allow it to convert
the goods it produces into assets.
b) Without a legal, judiciary and a policing system, business could not be
certain that it was safe to enjoy the rewards of its enterprise.
c) Trade agreements and defense are needed to ensure long term stable
trading conditions.
SOCIETY provides BUSINESS provides
> Means of Exchange > Products & Services
> Trained Manpower > Direct & Indirect Employment
> Legal & Banking > Income Generation in
System terms of Wages,
dividends, taxes, interest
> Social infrastructure
Like Road, Schools,
Hospitals etc.
In addition to the above, with the advent of the joint Stock Company society
grants to business two very special rights to assist business in performing its
role-The first is “Potential immortality” and the second is “Limited Liability”.
Thus, according to Cannon, in return for these special privileges being granted
to business, it does have a responsibility to fulfill to the society/community at
large.
1.5 ACTION PLAN FOR CORPORATE SOCIAL RESPONSIBILITY
There are several areas of action plan for corporate socialresponsibility.
1- Environment and Eco1oy
• Reduce consumption of energy, water and other natural resources and
emission of hazardous substances.
• Established environment management system.
• Use recycled and recyclable products.
• Increase durability of products and minimize packaging.
• Train staff in environmental issues.
2. Health and Well Being
• Establish policies to ensure the health and safety of all employees — which
are known to employees.
• Involve employees in business decisions that affect them.
• Operate open book policies.
• Consult employees on how to handle a down turn in the business if layoffs
are avoidable, offer outplacement services, retraining and severance benefits.
Provide training opportunities.
• Extend training to life management, retirement planning and dependents
care
3. Diversity and Human Rights
• Work with charities, job centers to redesign jobs to make them accessible to
disadvantaged.
• Set the tone in not tolerating sexist, racist, homophobic jokes.
• Support organizations that promote fair trade and human rights compliance.
• Make sure that staff member is aware that there are explicit policies against
discrimination in hiring, salary, promotion, training, or termination of any
employee on basis of gender, race, age, ethnicity, disability.
4. Community
• Encourage employee volunteering in the community, payroll giving and back
up with financial contributions and help in kind.
• Make some of business products or services available free or at cost to
charitable products.
• Look for opportunities to make surplus product and redundant equipment
available to local schools, charities and community organizations.
• Offer quality work experience for school children and students.
• Collaborate with local teachers to make the activity of business the subject of
school project. Use business experience to help local school of charity.
• Use marketing budget to associate business with social cause.
1.6 EMERGING AREAS OF CORPORATE SOCIAL RESPONSIBILITY
There are several emerging areas of corporate social responsibility — social
responsibility, business responsibility, environmental responsibility and
stakeholder involvement.
Areas of social responsibility include — respecting human rights, contributing
to social economic development, employee welfare — this includes right to
organize, eliminating child labour, non discrimination, living wage and social
security, training, safety, health and well being, lifelong learning,
empowerment of employees etc.
• Consumer protection includes right to information.
• Respect for national sovereignty and local communities for multinationals.
• Sharing resources with underprivileged communities.
• Investing in sustainable development programmes for the community.
Areas of environmental responsibility include — respect for environment and
environment friendly technologies.
• Use, conservation and discharge of energy, material and water in eco-
friendly manner.
• Adopting preventive and precautionary measures for environment pollution
control.
• Rectifying environmental damage at source.
• Treating waste before disposing it.
• Preservation of biodiversity.
• Promoting and implementing an environmental policy for sustainable energy
and environment.
Areas of business responsibility include — Compliance with tax laws and
other regulations.
> Investing in developing science and technology.
> Fostering ethical trade practices.
Regulating supplier’s CSR practices and distributor’s CSR practices and
transparent financial reporting.
Areas of corporate social responsibility includes — Extension of principles and
ethical values enshrined in organization to all its stakeholders such as
authorities, customer groups, business partners and external influences.
1.7 WHY CORPORATE SOCIAL RESPONSIBILITY?
David Wheeler and Maria Silanpa in “The Stakeholder Corporation” state that
by 1998. 51 out of the 100 largest economies were not nation states, but
corporations. According to Wheeler & Sillanpa, in 1998. General Motors was
bigger than Denmark. Toyota was bigger than South Africa. Yet at the
beginning of the 2l century, the gap between the world’s rich and poor is wider
than ever before.
In 1999, The United Nations reported that the world’s then three richest
people — Bill Gates of Microsoft, the Suttan of Brunei and the Watton family of
the Wall Mart retail chain were worth more than the combined gross domestic
product of the world’s 34 poorest nations. Thus, the modern day large
corporations are often large than nation states. Rich individuals on and
command resources that are so large, often larger as compared own
smaller/poorer nations. With great power (and size), comes great
responsibility.
The second important development in the late 20th “century has been the
rollong back of the State. It is increasing being realized that the State cannot
and should not perform all functions it was performing in the earlier periods. In
many countries, national and local governments have taken a “hands off’
approach to regulating business, both due to
(a) Globalization of Trade & Commerce — most experts are averse to legal
interventions. Internationally self-regulation linked to openness, transparency
& accountability seems to generate by far the maximum response, in response
to liberalization role of state is shrinking.
(b) Shrinking of resources Most of the government at the national and local
levels are experiencing shortage of funds and a shrinking resource base.
Over the past decades, a growing number of companies have recognized
the business benefits of — CSR polices and practices. Their experience has
been bolstered by a growing body of empirical studies, which demonstrate
that CSR has a positive impact on business economic performance and it is not
harmful to shareholder value.
Companies have also been encouraged to adopt and / or expand CSR
effects as a result of pressures from customers, suppliers, employees,
communities, investors, activist organization and others stake holder.
As a result, CSR has grown dramatically in recent years with companies
of all sizes and sectors developing innovative strategies.
1.8 BUSINESS CASE FOR CSR (BENEFITS)
The factors that have become the primary measures of an organization
credibility for today’s CSR success are as follows:
1. Improved financial performance: - A recent longitudinal Harvard University
study has found that “stakeholder balanced” Companies showed four times
the growth rate and eight times employment growth when compared to
companies that focused only on shareholder and profit maximization,
2. Enhanced brand image & reputation — A company consultant socially
responsible can benefit both by its enhanced reputation with the public, as
well as reputation within the business community, increasing a company’s
ability to attract capital and trading partners. For example, a 1997 study by two
Boston College management professors found that excellent employee,
customer and community relations are more important than strong
shareholder returns in earning corporations a place and Fortune magazine’s
annual “Most Admired Companies” list.
3. Increased sales and customer loyalty - A number of studies have suggested a
large and growing market for the products and service of companies perceived
to be socially responsible. While business must first satisfy customers key
buying criteria — such as price, quality,
Appearance, taste, availability, safety and convenience. Studies also show a
growing desire to buy based on other value-based criteria, such as
“sweatshop-free and “child labour-free” clothing, products with smaller
environmental impact, and absence of genetically modified materials or
ingredients.
4. Increased ability to attract and retain employees — Companies perceived to
have strong CSR commitments often find it easier to recruit employees,
particularly in tight labour markets. Retention level may be higher too,
resulting in a reduction in turnover and associated recruitment and training
costs. Tight labour markets as well the trend toward multiple jobs for shorter
periods of time are challenging companies to develop ways to generate a
return on the consideration resources invested in recruiting, hiring, and
training.
5. Reduced regulatory oversight - Companies that demonstrate that they are
engaging in practices that satisfy’ and go beyond regulatory compliance
requirements are being given less scrutiny and more free reign by both
national and local government entities. In many cases, such companies are
subject to fewer inspections and paperwork, and may be given preference or
“fast-track” treatment when applying for operating permits, zoning variances
or other forms of governmental permission.
6. Easier access to capital - The Social Investment Forum reports that, in the
U.S. in 1999, there is more than S2 trillion in assets under management in
portfolios that use screens linked to ethics, the environment, and corporate
social responsibility. It is clear that companies addressing ethics social and
environmental responsibility
Have rapidly growing access to capital that might not otherwise been available.
1.9 FACTORS AFFECTING CSR
Important factors which influence the CSR of companies include the
following Promoters and top mana2ement — The values and vision of
promoters and top management is one of the very important factors which
influence the corporate social responsibility.
2. Board of directors — As it is the Board of Directors which decides the major
polices and resource allocation of company, the attitude of the members of
the Board is an important influence of the social orientation
3. Stakeholders and internal power relationship- The attitude of various
stakeholders like shareholders, creditors, employees, etc. and the internal
power relationship also affect the social orientation of a company. As
suggested by the Halal’s model, a firm can only attempt to unite the diverse
interests of various social groups to form a workable coalition engaged
increasing value for distribution among members of the coalition. Beyond a
certain level of economic activity, the social issues at stake may become
conflicting.
4. Societal factors — The social orientation of company is also influenced by
certain characteristics of the society and general attitude and expectation of
the society regarding he social responsibility of business. For example, a
resourceful firm located in a poor community may be expected to contribute
to the development of education and health facilities, etc. of the locality where
as such
involvement may not be required of a firm in a well developed
community. The orientations or approaches may vary in accordance with the
environment. The behavior or social orientation expected of business may vary
between different societies.
5. Industry and trade associations — Industry and trade associations also
influence the behavior of the firms by establishing professional and ethical
codes and norms, education and collective decision.
6. Government and laws — Laws are society’s codification of right and wrong.
Business shall play the rules of the game. Antitrust legislations, legislations to
curb corruption, unfair practice, etc. vary between nations. What is right or not
anti-law in one county may not be so in some other county. Further, what is
legally controlled in some countries have no legal control in some other
counties. Beside legislation, there are other methods of government influence
like guidelines, persuasion, incentives (like tax exemptions) and pressurizing.
The social orientation would also depend on the government’s view of
social responsibility and the power and earnestness of government/agencies
(like SEBI, for example) in dealing with defaulting companies.
7. Political influences — Political influences include pressure exerted by special
interest groups in society and media to control business practices. These
include a variety of non-government organizations (NGOs) like consumer
interest groups, environmentalist, etc, They use a variety of methods like
lobbying to persuade government and public agencies to adopt regulatory
measures, conducting public awareness campaigns, and even direct
confrontation with the business in some cases.
8. Competitors- Social orientation of company is also influenced by competitive
forces. Two types of competitive behavior are often noted. When one or some
companies become socially involved, others may be encouraged or provoked
to do something. Sometimes, there may be competition between companies
to out-perform others. The other way by which the society benefit by
competitive behavior is the actions of suing competitors for unfair practices or
publicly exposing the misbehavior of competitors.
9. Resources — Social involvement of companies is also affected by the
financial position and other resources of the company. It may be noted that
the Tisco has been constrained to cap, albeit at fairly high level, its social
responsibility expenditure.
10 Ethical influence — another factor influencing the social orientation is the
ethical decision — making and self-regulation of business conduct. Some
companies have well laid down codes and norms of ethical behavior. Five
ethical standards that are in vague are summarized by Gene Laczniak as
follows.
1. The golden rule Act in the way you would expect others to act towards you.
2. The utilitarian principle Act in a way that result in the greatest good for the
greatest number.
3. Kant’s categorical imperative Act in such a way that the action you take
could be a universal law or rule of behavior under the circumstances.
4. The professional ethic Take actions that a disinterested panel of
professional colleague would view as proper.
5. The TV test Ask, “Would I feel comfortable explaining to a
national TV audience why I took this action.
1.10 RESPONSIBILITIES TOWARDS DIFFERENT SECTIONS OF SOCIETY
This is no unanimity as to what constitutes social responsibility of
business. The important generally accepted responsibilities of business to
society are described below. The pity is that some multinationals which
appreciate their social responsibility in respect of the developed countries do
not have the same approach in respect of the developing countries they
operate in. It is at the same time equally true that some MNCs fair much better
in social responsibility than many domestic firms.
Responsibility to Shareholders
The responsibility of a company to its shareholders, who are the owners,
is indeed a primary one. The fact that the shareholders have taken a great risk
in making investment in the business should be adequately recognized.
To protect the interests of the shareholders and employees, “#the
primary business of a business is to stay in business”. To safeguard the capital
of the shareholders and to provide a reasonable dividend, the company has to
strengthen and consolidate its position. Hence, it should develop and improve
its business and build up its financial independence.
Needless to say, to provide dividend, the company should earn sufficient
profit. Adequate reserves should be built up so that it will be able to declare a
reasonable dividend during a lean period as well.
If a company fails to cope with changes in a changing and dynamic
world, its position will be shaken, and the shareholders’ interests will be
affected. By innovation and growth the company should consolidate and
improve its position and help strengthen the share prices.
The shareholders are interested not only in the protection of their
investment and the return on it but also in the image of the company. It shall,
therefore, be the endeavour of the company to ensure that its public image is
such that the shareholders can feel proud of their company.
It may be mentioned here that the shareholders also have certain
responsibility which they have to discharge to protect their own interests. They
shall not only offer whole-hearted support and co-operation in the positive
efforts of the company but shall also guide and control properly its policies and
activities. At the same time, they shall appreciate the responsibility of the
business to other sections of society-to the workers, consumers and the
community
Responsibility to the Employees
The success of an organization depends to a very large extent on the morale of
the employees and their whole-hearted co-operation. Employee morale
depends to a large extent on the discharge of the company’s responsibilities to
them and the employer-employee relationship. The responsibility of the
organization to the workers include:
1. The payment of fair wages.
2. The provision of the best possible working conditions.
3. The establishment of fair work standards and norms.
Responsibility to Consumers
According to Peter Drucker, “there is only one valid definition of
business purpose; to create a customer.” Drucker observes. “The customer is
the foundation of a business and keeps it in existence. He alone vies
employment.
To supply the wants and needs of a consumer, society entrusts wealth-
producing resources to the business enterprises.”
It has been widely recognized that customer satisfaction shall be the key to
satisfying the organizational goals, important responsibility of the business to
the customers are:
1. To improve the efficiency of the functioning of the business so as to (a)
increases productivity and reduce prices, (b) improve quality, and (c) smoothen
the distribution system to make goods easily available.
2. To do research and development, to improve quality and introduce better
and new products.
3. To take appropriate steps to remove the imperfection in the distribution
system, including black-marketing or profiteering by middlemen or anti-social
elements.
4. To supply goods at reasonable prices even when there is a seller’s market.
5. To provide the required after-sales services.
6. To ensure that the product supplied has no advice effect on the consumer.
7. To provide sufficient information about the products, including their adverse
effects, risks, and care to be taken while using the products.
8. To avoid misleading the customers by improper advertisements or
otherwise.
9. To provide an opportunity for being heard and to redress genuine
grievances.
10. To understand customer needs and to take necessary measures to satisfy
these needs.
Despite the popularity of the Marketing Concept and the growing
awareness of consumer rights, consumers all over the world are, by and large,
dissatisfied. Consumerism, which is an organized Endeavour of the consumer
to protects their rights. [s a manifestation of this fact? In shortage economies
like India many businessmen pay scant attention to their responsibilities to
consumers. To protect consumer rights and to make business discharge its
responsibilities to them, the consumer should give up their indifferent attitude
and build up a strong consumer movement.
Responsibility to the Community
A business has a lot of responsibility to the community around its location and
to the society at large. These responsibilities include:
1. Taking appropriate steps to prevent environmental pollution and to
preserve the ecological balance.
2. Rehabilitating the population displaced by the operation of the business, if
any.
3. Assisting in the overall development of the locality.
4. Taking steps to conserve scarce resources and developing alternatives,
wherever possible.
5. Improving the efficiency of the business operation.
6. Contributing to research and development.
7. Development of backward areas.
8. Promotion of ancillarisation and small-scale industries.
9. Making possible contribution to furthering social causes like the promotion
of education and population control.
10. Contributing to the national effort to build up a better society.
1.11 CORPORATE SOCIAL RESPONSIBILITY IN INDIA
In India, corporate, as anywhere else in the world are striving to improve the
public image of business. It is not ‘dirty business’ any more. Most companies
believe in being and becoming good corporate citizen. They see the value or
giving back to the community which contributed to their success. Corporate
social responsibility is no longer mere philanthropy. Though still largely
voluntary, it is seen as imperative for sustainable business. And, there is
growing evidence that socially responsible investment by ethical companies
brings in higher returns on a long term basis.
Large public sector companies are investing up to 5 percent of profits
towards social uplift and community development. Companies in the Energy
sector especially ONGC — have committed resources by adopting a few
villages to implement President Abdul Kalam’s idea of PURA (Provision of
Urban Amentities in Rural Areas), National Thermal Power Corporation has
established a trust to work for the cause of the physically challenged people. In
the private sector the Tata Steel has been a pioneer. Their contribution to
social and community development in the tribal belt of Jharkand is so
legendary that at one time the company used to say that ‘we also make
steel’They were the first in the country to have got a social audit done.
In 1999 Kofi Annan of the United Nations invited corporate leaders for
Global Compact to promote nine principles covering three areas: human rights,
labour rights and sustainable development. Today, India can be legitimately
proud to have had the second largest number of companies from any county
sub-scribing to Global Company. Several public sector companies have joined
together to form Global Compact Society of India. In 2001, European Union-
India Network for CSR was launched to bring together European and India
Companies and Stakeholders to look at selected issues of CSR. The Indian
partner in this venture is the Business and community Fàundation (BCF), a non-
profit body set up in New Delhi for Indian and international companies, in
association with the International Business Leaders Forum. In 2004-5 UNDP
and the Confederation of Indian Industry (CII) have networked with academics
and brought out 18 case studies on CSR covering as many companies — BILT,
Excel, Hindustan Lever, IFF-CO, NTPC, Times of India and Titan among others —
in a book edited by CV Baxi of MDI and Ajit Prasad of IMI. Rajeshree Biria,
Chaiperson, Centre for Community Initiatives and Rural Development
Initiatives and Rural Development at Birla Group makes a business case for
corporate in India to shoulder CSR, “For us in corporate world to expect that
the government alone should address welfare issues is both unfair and
unrealistic India’s needs are huge and the resources of the state are limited’.
Chairman Y C Deveshwar asserted in ITC’s Sustainable Development Report,
2005, the contribution of companies should be measured by the triple bottom
line: economic, environmental and social. The message is loud and clear:
Societal well being is a prerequisite for business prosperity. Companies which
put people before profits and which care for sustainable development are the
ones who will survive the competitive pressures.
1.12 ARGUMENTS AGAINST CSR
If the arguments against a socially responsible approach were widely accepted
no body would even be talking CSR. But those of us who spend out time
hearing the case for would do well to spend a little time hearing the case
against, and considering what should be the response. The following are some
of the arguments advance against corporate social responsibility.
1. Business are owned by their shareholders any money they spend on so-
called social responsibility is effectively theft from those shareholders-who can,
after all, decide for themselves if they want to give to charity. This is the voice
of the laisser-faire in the 1 980s still being given powerful voice by advocates as
Elaine Strenberg. in US Sternberg argues that there is a human rights case
against CSR, which is that a stakeholder approach to management deprives
shareholders of their property rights. She states that the objectives sought by
conventional views of Social responsibility are absurd. Not all aspects of CSR
are guilty of this however, Sternberg statçs that ordinary decency, honesty and
fairness should be expected of any corporation.
In the first instance, this case strongly depends on the model of social
responsibility adopated by the business being a philanthropic one. The starting
point assumption is that through CSR, corporations simply get to “give away”
money which rightfully belongs to other people. If CSR is seen as a process by
which the business manages its relationships with a variety of influential
stakeholders who can have a real influence on its license to operate, the
business case becomes immediately apparent. CSR is about building
relationship with customers, about attracting and retaining talented staff,
about
managing risk, and about assuring reputation. The market capitalization of a
company often far exceeds the “property” value of the company. For instance,
in many knowledge based industries “intangibles” — account for a large
percentage of Capitalization — a major part of which rests on the reputation of
the company. No company would like to or should risk the reputation of the
company.
In any case, if shareholders are to be accorded full property right one
would expect to see the balancing feature of responsibility for the actiohs
taken by the enterprises the often fleetingly own. Since most shareholders
remain completely unaware of any such responsibility, it can only fall to the
management — the “controlling mind” of the company, to take that
responsibility on.
2. The second argument being advanced is that the leading companies who
report on their social responsibility are basket cases-the most effective
business leaders don’t waste time with this stuff. Look at the recent “Most
Respected Companies” survey by the Financial Times. Who are the most
respected companies and business leaders at the current timer? Rather
predictably, they are lack Welch and General Electric, and Bill Gates and
Microsoft. Neither has achieved their world class status through playing nice.
Welch is still remembered for the brutal downsizing that he led his business
through, and for the environmental population incidents and prosecutions.
Microsoft has had one of the highest profile cases of bullying market
dominance of recent times and Gates has been able to achieve the financial
status where he can choose to give lots of money away by being ruthless in
business.
Here again the argument is against short termism (profit maximization) and
“building to last”. Sustainability of enterprise over a long period pre-supposes,
co-option of stakeholders on the agenda.
3. The third argument against CSR, runs some what like this — Our company is
too busy surviving hard times to do this. We can’t afford to take our eye off the
ball-we have to focus on core business. It’s all very well for the very big
companies with lots of resources at their disposil. For those fighting for
survival, it’s a very different picture. You can’t go spending money on
unnecessary frills when you’re laying people off and morale is rock bottom.
And the odd bit of employee volunteering won’t make any difference to our
people when they feel cynical and negative about how the company operates.
Corporate social responsibility is often presented as an extra cost, an
added burden born by the corporation already struggling to be profitable in a
difficult economic phase. But in some situations, the opportunity to improve its
business ethics also offers the company extra ordinary marketing and branding
possibilities.
It is argued that high values are a luxury, which only wealthy and
successful companies can afford. We need to pint out that companies known
for their ethics adopted these values not when they had become big and
prosperous, but when they were small outfits. And it is precisely their values
that gave them the backing of the public in difficult times, which enabled them
to grow to their present giant size.
4. It is argued that CSR is the responsibility of the politicians. It’s not business
role to get involved. Business has traditionally been beyond morality and
public policy. We expect governments to provide the legal frame work that
says what society will put up with. There’s no point, for
instance, allowing smoking to remain legal even making large tax receipt
from it — and then acting as though tobacco companies are all immediately
beyond the pale. If you think it’s to dreadful, you should make it illegal. If not
then let us on with the job of meeting the demand out there of adults who can
choose for themselves.
Whether or not business should undertake CSR and the forms that
responsibility should take depends upon the economic perspective of the firm
that is adopted. Those who adopt No classical. View of the firm would believe
that the only social responsibility of business is provision of employment and
payment of taxes. An alternative view of the firm following the behavioral
theorists might view CSR activities from a standpoint that examines political
and non-economical influences on managerial behavior
Friday conference at the American Enterprises Institute will try to
answer the question. “Is Corporate Social Responsibility (CSR) Serious
Business?”And not a moment too soon. Though CSR was labeled by free-
market icon Milton Friedman as a “subversive doctrine much of the business
community has embraced it, arguing that it is simply “good for our business.”
Opponents of CSR have naturally argued the contrary. Emphasizing the
economic costs of following such a “misguide virtue” as CSR. But little attention
has been paid to the actual arguments made by advocates of CSR within the
business community. This is a shame, because a closer analysis of the
“business case for CSR” shows that it is, indeed, based on a set of assumptions
that undermine the legitimacy of the free- enterprise system.
But before examination the larger question, let us first consider the
extent of support that CSR enjoys among the business community. In a 2005
survey of its membership, the U.S. Chamber of Commerce found that 81
percent of respondents agreed that “corporate citizenship needs to be a
priority for companies.” Similarly. KPMG’s 2005 International Survey on CSR
found that of the top 250 companies in the Fortune 500. 52 percent now
publish separate CSR reports, alongside their annual financial reports. And
claiming it “wants to be ‘one’ with the consumer.” McDonald’s has even
started a biog devoted to CSR issues. (Issac Post — a Regulatory Policy Analyst
at the Competitive Enterprises Institute, Washingont DC)
Today, there are many references to corporate social responsibility
(CSR), sometimes referred to as corporate citizenship, in our workplaces, in the
media, in the government, in our communities. While there is no agreed- upon
definition, the World Business Council for Sustainable Development defines
CSR as the business commitment and contribution to the quality of life of
employees, their families and the local community and society overall to
support sustainable economic development. Simply put, the business case for
CSR establishing a positive company reputation and brand in the public eye
through good work that yields a competitive edge while at the same time
contributing to others-demands that organizations shift from solely focusing on
making a profit to including financial, environmental and social responsibility in
their core business strategies. Despite what the phrase corporate social
responsibility suggests, the concept is not restricted to corporations but rather
is intended for most types of organization, such as associations, labour unions,
organizations that serve the community for scientific, educational, artistic,
public health or charitable purposes, and governmental agencies.
In the late l990s, CSR began gain momentum as pressure from
consumers, the media, activists and various public organization demanded that
companies contribute to society. In large part, the increasing focus on CSR has
been fueled by a number of events in recent years, such as the highly
publicized financial scandals of Enron and WorldCom, alleged sweatshop labor
by retail clothing and sports shoe manufacturers and the alleged “under-the-
table” deals that companies such as Halliburton have received. Now,
reputation, brand, integrity and trust are increasingly considered important
measures of corporate social responsibility.
CSR in the Business Community
Worldwide, companies and their HR leadership are coming to grips with
what exactly CSR means in their organizations and how to strategically include
CSR within business goals and objectives. There is growing evidence pointing to
the validity of and the demand for CSR. For example, 82% of companies noted
that good corporate citizenship helps the bottom line and 74% said the public
has the right to expect good corporate citizenship. However, as Niall
FirzGerald, chairman of Unilever, explained in his presentation at the London
Business School, “the reality of corporate social responsibility is there are no
precedents to fall back on, and decisions must be based on judgment rather
than tried and tested formulae.”
As the concept of CSR becomes more widely accepted and integrated in
business, it is helpful in this discussion to understand that the development of
CSR in organizations is in transition. There are basically three “generations” of
CSR in varying stages of sophistication. The first generation has demonstrated
that companies can contribute to society without risking commercial success.
Today, the second generation is developing more fully as CSR gradually
becomes an integral part of companies’ long-term business strategies. Finally,
the third generation addresses significant social issues, such as poverty and
cleanup of the environment. Evidence of the transition of CSR will be discussed
throughout this article, with suggestions of how HR professionals can take on
leadership roles that can contribute to CSR initiatives in their organizations.
The article will also highlight some examples of the impact of CSR and how it
may link to the bottom line.
Making the business Case for CSR
In recent years, intangible assets-company values, human and
intellectual capital, reputation and brand equity-have become increasingly
important to organizations. Companies that exhibit good corporate citizenship
are likely to gain a competitive edge. Below are just a few examples of today’s
CSR success factors that are fast becoming the primary measures of an
organization’s credibility.
Reputation and Brand Enhancement
Company reputation and brand are greatly influenced by public
perception. For example, in the largest global survey of the public’s
expectations, the Millennium Poll on Corporate Social Responsibility
documented that over 25,000 individuals across 23 countries on six continents
revealed they form their impressions of companies by focusing on corporate
citizenship and two out of three people want companies to go beyond making
money and contribute to broader society goals. Increasingly, there are success
stories that show companies are listening to the public. A recent example is
that of Ecolab of St. Paul, Minnesota, that quickly developed new products to
address unexpected hazards with an antimicrobial disinfectant product in
response to foot and mouth disease in livestock and another new product to
combat SARS at the Toronto airport.
Today, companies are also seeking avenues of public acknowledgement
of their employer brand. For example, Business Ethics Corporate Social
Responsibility Report publishes a list of the 100 best corporate citizens.
Companies are ranked by social scores regarding environment, community and
customer relations, employee relationships, and diversity. One of the 2004
winners was Proctor & Gamble, which donated funds to help disadvantaged
youth in Vietnam, combat childhood malnutrition in India and provide
earthquake relief in Turkey.
Another critical aspect of reputation and brand, as a CSR success factor,
is the impact on a company’s sustainability-that is, the conditions or
characteristics that support an organization to continue its business, including
environmental, social and economic aspects of the company. Ultimately, the
environmental, social and economic health of a company transfers into dollars
that either directly or indirectly affect reputation and brand, and thus the
bottom line. For example, a company whose product contributes tO the safety
of the environment will likely be favorably viewed by the public. Or, a company
that supports community events may generate public approval. Both examples
may yield additional applications for employment or employee referrals, thus
potentially lowering the time and cost per hire. The final CSR report card is
directly linked to the company’s sustainability and consequently influences
critical success factors such as reputation and brand.
Accountability and Transparency
Open, reliable and regular reporting of a company’s performance-
known as accountability and transparency in CSR terminology-is quickly
becoming a public issue and one that FIR leaders will need to keep in the
forefront, As a sign of the times, large companies are beginning to publish
company information, once deemed at too sensitive to release, with
expectations for their suppliers and their internal human resources practices.
However, few companies give robust performance measures, with fewer yet
being independently verified. The clothing industry, fir example, has been
criticized for how workers are treated in factories in their supply chain.
Setting an example, Gap, Inc. released its first Social Responsibility
Report, emphasizing the organization’s commitment to working with key
players to create industry-wide change. It also took a proactive stance on
employee treatment by prohibiting child labor, forced labor and discrimination
and protecting freedom of association for workers.
Risk Management
Managing investor confidence is another factor supporting the business
cake for CSR, Today, the financial community is examining organizations CSR
report cards and their risk profile. The rapid rise of socially responsible
investment illustrates that corporate citizenship is becoming a key measure
that investors consider when aligning ethical concerns with publicly held
corporations. For example, the Dow Jones Sustainability Indexes track the
financial performance of the leading sustainability-driven companies
worldwide, and the Domini Social Investments screen companies for corporate
citizenship, diversity, employee relations, non-U.S. impact, environmental
responsibility and safe and useful products. In view of the increasing
importance placed on socially responsible investment, this is an opportunity
for HR leaders to consider programs, such as community events, that may
generate investor confidence linkirg CSR initiatives to the bottom line.
The Talent War
With the anticipated labor shortage in the next 10 to 25 years,
attracting, developing, motivating and retaining talent is, and will continue to
be, very important. Correspondingly, CSR influences a company’s competitive
advantage today through two key value drivers: 1) company reputation and
brand; and 2) human capital, HR leaders have begun to assume leadership
roles to address both areas. For example, a positive CSR initiative was
documented by an employee survey that illustrated the pride of employees
regarding their company’s contribution to a local AIDS organization
In addition, the talent war is evidenced by an influx of “best places to
work” awards (e.g. Fortune magazine’s “100 Best Companies to Work For.”)
There are many such programs, located in communities and business
organizations that highlight the company andJor the HR professional. By
applying for and winning these awards, HR leaders can gain invaluable
exposure for their organizations and use the award as a key feature in
recruiting campaigns. Thus, a strong argument for CSR is talent management in
both the short and the long term.
Challen2es to the Business Case for CSR
The business case for CSR is not necessarily a simple one. Among the
challenges is that social andlor environmental impact differs across industries,
complicated by the fact that the term CSR has different meaning to different
industry sectors in different parts of the globe. Also, some may question if the
message CEOs communicate about CSR is an add-on or part of company core
business activities-or is it merely an insincere effort to boost public relations?
In some organizations, CSR is still considered to mean compliance and
philanthropy, although some large companies are now placing CSR in a more
strategic framework.
Further, there is the question of how to measure CSR. For example, a
survey of 539 CEOs in 40 countries examined the strategic importance of
communication regarding corporate citizenship to investors. One of the largest
obstacles noted was the lack of a rigorous, credible business case backed up by
performance indicators and metrics that can be quantified and benchmarked.
Further, investment in CSR is not yet being taken seriously by some
organizations. Only 30% of executive said their company increased overall
business investments in corporate citizenship in the last year. The same report
indicates resources and resistance as barriers to practicing corporate
citizenship and CSR.
Not all organizations may have the resources (e.g., funds, time, staff) to
fund. Into CSR initiatives. However, CSR programs may not be expensive or
require a significant time commitment. Organizations that are interested in
CSR may choose to start with small projects that showcase their commitment
to their workforce and the community. HR leaders can help address this
challenge by considering different options and developing creative approaches
to CSR to present to their company. Below are recommendations to consider:
Network with other HR professional to learn about their organization, CSR
initiatives (ideas and information about programs; what worked and lessons
learned)
o Explore partnering with other organization (e.g., co-sponsor a community
event).
o Contact local business organization, such as the Chamber of Commerce, to
learn what events they sponsor and how the company may contribute.
o Solicit employee suggestions regarding CSR initiatives.
Thus, it is at this point that FIR leadership, as the eyes and ears of the
organization, is key to the CSR equation. As discussed in the next section, HR
has the opportunity, through well-managed programs, policies and practices,
to engage the organization and its stakeholders (e.g., owners, employees,
management, customers, creditors, the government and other public
organization) in the value of CSR by focusing on communications, employee
relations, health, safety and community relations to provide their organizations
with a competitive advantage.
HR’s Leadership Role
With company reputation, viability and sometimes survival at stake, one
of the critical roles of HR leadership today is to spearhead the development
and strategic implementation of CSR throughout the organization and promote
sound corporate citizenship. Attracting and retaining competent people is one
of the primary business reasons for CSR. While strategically including CSR in
the organization can begin from different points (e.g., product safety, the
board of directors, business development), it makes good business sense for
FIR to head the process and partner with strategic leaders in the firm because
human capital is arguably the number one intangible value driver.
Many HR leaders are already looking ahead to the future. According to
the SHRM® 2004-2005 Workplace Forecast, key HR trends are 1)
demonstrating HR’s return on investment; 2) HR’s role in promoting corporate
ethics; and 3) building people management and human capital components
into key business transactions. As this report documents, some HR leaders are
taking action now:
o 63% are increasing spending on learning and training initiatives.
o 40% are changing company policy as a response to environmental issues.
o 36% are changing company policy as a response to grassroots pressure to
change specific business practices.
o 32% are increasing involvement in social programs. The Status of CSR in the
Organization
FIR leaders can influence three primary standards of CSR-ethics,
employment practices and community involvement-that relate either directly
or indirectly: to employees, customers and the local community, as outlined
below. By considering these three CSR standards, HR leaders can then identify
the CSR stage or their organization before making decision to develop and
implement CSR initiatives.
o Ethics — Ethical standards and practices are developed and implemented in
dealings with all company stakeholders. Commitment to ethical behavior is
widely communicated in an explicit statement and is rigorously upheld.
o Employment Practices- Human resource management practices promote
personal and professional employed development, diversity at all levels and
empowerment. Employees are valued partners, with the right to fair labor
practices, competitive wages and benefits and a safe, harassment-free, family-
friendly work environment.
o Community Involvement - The Company fosters an open relationship that is
sensitive to community culture and needs and plays a proactive, cooperative
and collaborative role to make the community a better place to live and
conduct business.
Next, prior to launching and/or evaluating CSR initiatives in the organization,
consideration of principles, implementation and employer brand will assist HR
leaders in determining how and/or why to include CSR initiatives in their
company. First, question of principle provide the broad view of CSR-moving
from philanthropy and donations to contributing solutions to help solve the
large issues such as poverty. Second questions of implementation address
practical issues such as incorporating CSR into the performance appraisal
process and the softer issues of creating an organizational culture that
supports CSR initiatives. And third, question regarding employer brand provide
an opportunity for HR leaders to look closely at how their current polices and
programs can more positively affect recruitment, retention and talent
management.
HR’s CSR Checklist
Taking the long-range view, HR leaders can use a checklist to track
the FIR scorecard on CSR as initiatives are developed and implemented over
time. As appropriate, changes in direction can be made to correspond with
the organization’s overall strategy.
o Create a strong organizational culture around core company values.
o Scan the environment to identif\j potential threats (e.g., competition for
talent within the organization’s industry sector).
o Build personal and professional capability of the workforce (e.g., expand
intellectual capital within the organization and in collaboration with other
organizations).
o Include ethical concerns in staff performance measures.
o Support participated decision-making.
Ensure highest standards in work place health and safety.
o Encourage active engagement in community activities.
Moving Forward with CSR-HR as a Change Agent
Focusing on company values, HR leaders set the tone for an organizational
culture that is open to and understands CSR, 1-IR’s role as a change agent-
grounded in mutual respect, and open and honest communication-is essential
to educate management and employees about including CSR when setting
business goals and objectives. Three practical steps to promote change
regarding CSR are to 1) establish a workable stakeholder cbnsultation process;
2) use the process to understand the local culture (e.g,. internal-the workforce-
or external-the community) at all stages of implementation CSR; and 3) create
a sense of ownership between staff who set up a project and those who
implement it.
Beyond including CSR in the HR management system, HR’s role as a
change agent continues through keeping the CEO and other members of the
senior management team informed of human capital initiatives, the status of
community relations, measurements of employment activities and
development of partnerships and for CSR program, both inside and outside the
organization.
HR and Community Relations
One of the most visible CSR initiatives is community relations. Strong
community relations can have a positive impact on company reputation and
brand. Through community programs that highlight the company doing good
work, HR can link critical issues-decreasing turnover, savings on cost per hire
and attracting talented individuals-to CSR and the bottom line. There are many
other possibilities that HR leaders could explore to match both company and
community needs (e.g., cultural facilities for the community,recreational
lacilities br employees and their families, an educational project to help
prepare tomorrow’s work force). For example, employees from high-tech
companies could work with students on science projects that require technical
skills. Further, programs that affect both short-and long- term goals are also
strategically advantageous as CSR initiatives, an illustration of such a program
is the literacy initiative developed by Time Warner when the company saw that
the reading public could have an impact on their short- and long-term goals of
product sales.
CSR is the Global Arena
Internationally, CSR has a strong human rights dimension. This is
evidenced, for example, by the United Nations’ Global Compact the addresses
10 principles in the areas of human rights, labor and the environment with the
goal to have the private sector help realize United Nations’ vision of a more
sustainable and inclusive global economy. Global companies are increasingly
placing a stronger emphasis on corporate citizenship activities. The top four
citizenship priorities are 1) employee health and safety; 2) sustainability; 3)
equal opportunities/global diversity; and 4) globalization of contributions.
Further, companies worldwide are beginning to emphasize the importance of
citizenship activities beyond philanthropy. For example, a recent study
documents that about 60% of global managers polled indicated these activities
result in an enhanced reputation with customers and goodwill that opens
doors in local communities.
The global CSR agenda is associated with multilateral processes and
guidelines. In recent years, there has been a significant growth of “codes of
conduct” worldwide, sometimes referred to as global regime of “soft law”.
These voluntary business conduct principles cover a wide range of
corporate citizenship topics from corporate social and environmental
responsibility to transparency and fair business practices. Following these
international codes of conduct has been shown to yield similar outcomes as
domestic C.SR initiatives, such as enhancement of company reputation,
increased stakeholder confidence and higher standards of business
accountability. For example, companies are increasingly publicly strengthening
their global partnerships by joining organizations such as Social Accountability
Internationa1’s Corporate Involvement Program, the Ethical Trading Initiative
and the United Nations’ Global Compact’ Therefore, as organizations continue
to expand globally, HR leaders must be cognizant of, promote and
demonstrate public support of these codes.
Globally, CSR has s significant impact on HR management. For example,
HR must be aware that effective CSR means respect for cultural and
development differences and sensitivity to imposing values, ideas and beliefs
when establishing global HR policies and programs. Externally, global
organizations are publishing mission statements, such as the one below by
Shell, to publicly announce their intentions of corporate citizenship. using
terms such as “respect” and “cultural differences”, and focusing on CSR
priorities of diversity, health, safety and equal opportunity.
“We aim to treat everyone with respect. We strive to protect people from
harm. from our products and operations. We aim to respect and value
personal and cultural differences and try to help people realise their potential
“.
Internally, HR leaders are beginning to take steps regarding CSR by
developing and implementing incentives and appraisal systems that reflect
citizenship vision and purpose as well as hiring personnel that reflect
these traits. For example, research by the Conference Board reveals that 50%
of global mangers report their companies do, or plan to, include citizenship as
a performance evaluation category. Additionally, 68% of respondents cite the
link between citizenship and performance appraisal as “increasingly
important.”
What Does the Future Hold?
The impact of CSR is under close scrutiny. There are four primary areas
of concern: 1) product responsibility; 2) strategies for sustainability; 3) the
quality of CSR management; and 4) the future of CSR overall. Importantly,
indications are that organizations will increasingly be held accountable for their
actions. According to PricewaterhouseCoopers, within the next 10 years
evaluation methods used by Wall Street analyst will include new metrics- social
performance and intellectual capital-to more accurately assess the net worth
of a company, and within the next five years, 70% of North American and
European companies will assign board responsibility for reputation and social
responsibility.
Over the next five to 10 years, one of the primary test of how society will
judge companies will be based on where corporations place their facilities,
how they source goods and services and what economic impact they have on
poor and disadvantaged communities. Companies will increasingly adopt a
comprehensive view of corporate citizenship that includes the environment
and community engagement. A proactive and perhaps controversial
recommendation regarding human capital and emerging markets is that global
corporations consider putting the world’s five billion or so poorest people at
the heart of their profit-making strategies-.
Not surprisingly, evidence suggests that companies have a long way to
go to clearly demonstrate substantive CSR performance For example, a global
ranking report notes that the world’s 100 largest companies have a poor
record of accounting for their impact on society and the environment. A range
of measures that include strategy, governance and stakeholder involvement
show these companies scoring an average of 24 out of 100 points with only
five companies scoring more than 50% and only one U.S. Company, Hewlett-
Packard, placing among the 10 highest scorers. Further, the level of effort that
the worldwide community is putting into the achievement of the United
Nations Millennium Declaration goals is less than half the effort necessary to
meet any of the goals. Consequently, since the CSR initiatives of most
organizations tend to be peripheral and isolated from their core businesses
and the initial momentum gained in the past few years appears too disjointed
to make a significant impact in the world, the CSR movement must significantly
shift gears in orders to reach its full potential.
In conclusion, with the growing importance of human capital as a
success factor for today’s organizations, the role of HR leadership will become
evermore critical in leading and educating organization on the value of CSR and
how best to strategically implement CSR policies and programs domestically
and abroad. (Nancy R. Lockwood, SPHR, GPNR, HR Content expert, December
2004)
CSR and Public Relations
With the growing popularity of CSR in the last few years, especially in
Europe and more recently in the US a number of major PR firms have
responded by establishing specialist CSR practice groups within their
companies.
In a review of the role of PR firms in corporate social responsibility programs.
Lisa Roner wrote in Ethical Corporation that “many early efforts to
communicate on corporate responsibility have been high on production value
and low on substance.”
Citing examples such as Hill & Knowition’ s role in the first Gulf War and the
more recent over billing controversy that engulfed Fieishman Hillard over its
contracts with a Los Angeles government agency Roner argues, “It appears PR
firms may have to clean up their own ethics since many corporat&buyers seem
to believe that a messenger with internal issues of its own may not be best
placed to deliver a credible message.
When British American Tobacco was contemplating producing its first
corporate social responsibility report their Corporate and Regulatory Affairs
director, Michael Prideaux, sketched some of the benefits of the process as
being to build “credibility” and establish a “robust platform on which to build
at reputation communication campaign”
“The process will not only help BAT achieve a position of recognized
responsibility but also provide air cover from criticism while improvements are
being made. Essentially it provides a degree of publicity endoresed amnesty.”
he wrote.
CSR and Regulations
CSR is often used to promote voluntary corporate initiative as an
alternative to additional or existing mandatory regulation. The International
Chamber of Commerce has aggressively promoted a standards-free concept of
“corporate responsibility that enables companies to proclaim their
“responsibility” without necessitating companies to meet minimum standard.
Accordingly many non-governmental organization are suspicious of the CSR
“movement” as corporate PR or regulation-dodging “The burgeoning industry
known as CSR is now seen as a vital tool in promoting and improving the public
image of some of the world’s largest companies and corporations. Christian Aid
state in its report scrutinizing the record of several major companies. “The
image of multinational companies working hard to make the world a better
place is often just that an image. What’s needed are new laws to make
business responsible for protecting human rights, and the environment
whatever they work. Christain Aid argued.
CSR & Sales
Peoples consumptions patterns are influenced by CSR efforts, according
to 2004 survey of more than 400 opinion elites # members of the top 10
percent of society, with regard to media consumption, civic engagement, and
interests in public policy issues) in 10 countries, by APCO World wide. “Positive
CSR information has 72% of the respondents to purchases a company’s
product or services and 61% of recommend the company to others.
Consersely, negative CSR news led 60% to a boycott a company’s products and
services”. Reported PR week
Based its survey, APCO suggested that companies “Shape the opinion
environment” by touching their own CSR efforts, although 91 percent of
respondents found CSR more credible when verified by a third-party such as
non-governmental organization or local government.
The UN’s Global Compact
The meaning and practical effect of one international CSR program, The
Global Compapt of the United Nations, has been debated. “Some companies
are using it for public relations,” admitted consultant Scott Great head, but it
fosters “dialogue between companies and their civil society critics” and “lends
the stature of the Secretary General to the concept of corporate
responsibility.” Consultant John Elkigton contends, “More attention should be
paid to the extent to which corporate lobbying by Global Compact members
align — or don’t align — with their state commitment.” Also, the lack of
enforcement “raises real concerns about the longer-term risk to the UN’s
reputation.” he warns according to Business.
Business and Conservative Opposition to CSR
‘The Business Council of Australia has come out against Government
plans to create legislation forcing directors to meet certain levels of corporate
social responsibility (CSR)”.
“Mandating CSR through legislative intervention runs the risk of stifling
the innovation and creative approaches to CSR that are being adopted by
Australian companies,” claims the lobby group, in a submission to a
Parliamentary inquiry. The submission stresses, “ The greatest social
contribution made by corporation is through employment, the goods and
services they create and the wealth these produce”. It also highlights the
existing CSR efforts of Council members. The chair of Morgan Stanley Australia
says government mandates would result in less meaningful CSR, “People would
invent a bit of jargon, for example societaly appropriate value maximization, as
a way of asserting that they were doing whatever Canberra thought is was
causing them to do.”
In March 2006 Competitive Enterprise Institute analyst Isasc Post wrote,
“Though CSR was labeled by free-market icon Milton Friedman as s ‘subversive
doctrine’ much of the business community has embraced it, arguing that it is
simply “good for our business’ Opponents of CSR have naturally argued the
contrary, emphasizing the economic costs of following such ‘misguided virtue’
as CSR, But little attention has been paid to the actual arguments made by
advocates of CSR within the business community this is a shame, because a
closer analysis of the ‘business case for CSR’ shows that it is indeed, based on a
set of assumptions that undermine the legitimacy of the free-enterprise
system.”
Competitive Enterprise Institute Editorial Director Ivan Osorio wrote,
“Clive Crook of the Atlantic Monthly, whose article in The Economist, ‘The
Good Corporation,’ sparked considerable debate on CSR, adds another
important consideration: “Profit seeking serves the social purpose’ To that I-
would add the corollary: By doing anything to reduce their bottom line,
companies make the world poorer-and there’s nothing responsible in that”.
On March 3, 2006, the American Enterprise Instittute hosted a
conference on CSR titled, “Is Corporate Social Responsibility Good Business?”
The event was part of their joint project with the Federalist Society called NGO
Watch. The conference description asked, “Is CSR really a win-win situation-as
its promoters claim-for both corporations and the public? Corporate leaders
struggle with determining to whom their social responsibilities extend: to
shareholders, employees, local communities, the environment humanity as a
whole, future generations?” The conference promised to “examine the
complex global CSR phenomenon and take an indepth look at Wal-mart. which
has been under fire for some of its corporate, social, and environmental
practices.”
Playing FTSE With Social Responsibility
“Nearly a fifth of the UK’s top public companies are still failing to deliver
comprehensive reports detailing the economic, environmental and social
impact of their business,” reports Andy Favell for the Independent Analyses
have found corporate social responsibility (CSR) reports form 18 of the British
companies on the FTSE 100 Index to be inadequate. Nine of the “poor
performers” are also listed on FTSE-4 Good, which is geared towards socially
responsible investment, Favell explains. “FTSE-4 Good initially set fhe bar
relatively low and listing requirements are lifted each year,” He concludes. “It
is common to hear both investors and (non-governmental organization)
leveling criticism at the standard of CSR reporting as a whole... With a
significant number of the FTSE 100 still failing to satisfy on CSR reporting, and
green wash accusations against many others, are we really getting the
information we deserve?” (Source watch, a Project of the centre for Media &
Democracy)
A survey conducted by Business Community Foundation for TERIEurope
during the year 200 1-02. This was a follow- up of an earlier opinion poii
conducted by the same foundation during 2000-01. The preliminary
conclusions of the earlier poii had noted that high expectations from
companies are not yet matched by judgments about corporate responsibility.
More trust is placed in the media and NGOs than in business. Multinational
Corporations are being viewed with suspicion. Gender discrimination is a real
issue in the workplace. Workers and management have sharply diverging
perceptions of working conditions.
While the first poll sought to explore the perception of workers, company
executives and the general public about social, economic and environmental
responsibilities of companies in India; the second poi was structured to
facilitate documentation of corporate responsibility practices from the
perspective of the three stakeholder groups-companies, Non- Government
Organizations (NGOs) and trade unions.
Serious and committed approach to corporate responsibility practices is
increasing its reach, but there is a vast ground yet to be covered. Corporate
sector is slowly realizing the positive aspects of corporate responsibility
practices (goof for business is good business). There is growing collaborative
work between NGOs and companies. All stakeholders are increasingly
becoming aware of the diverse facets of corporate responsibility practices. Due
various internal and external pressures, the climate is conducive for the growth
of corporate responsibility practices in India.
Although many companies, NGOs and trade were aware of corporate
responsibility practices, the study findings suggest that the concepts has yet to
become part of core business strategy in most companies in India. Almost all
companies, irrespective of size and sector had some awareness of corporate
responsibility and its potential benefits. While most companies also had polices
in place related to labor issues, community relations and environmental
practices, they were for the most part not backed up by comprehensive
implementation and monitoring system. Community programmes or social
development initiatives, in most cases, were philanthropic and/or ad hoc in
nature and not integrated into core business activities such as marketing and
brand management
Most companies have labour and environmental policy guidelines in
place. This is not surprising given that Indian State Law require that companies
meet minimum standards. Policies on working conditions include minimum
wage requirements, health and safety, equal opportunities, nonemployment of
child labour, and employee welfare in general. In the area ofenvironmental
policy, most companies, especially those industries with a direct impact on the
natural environment — extractive industries, chemical, manufacturing
industries — have policies and management system in place. However, there is
a wide discrepancy between the perceptions of workers and management
about company compliance with labour regulations.
Monitoring and reporting on social and environmental issues is found to
be limited. Whereas environmental assessments and audits are undertaken in
some cases, there is almost no evidence of social audits taking place.
The sul4ey observes that they are visible differences by company sector
ad size Bigger company, with numerous employees and a large turnover, have
more corporate responsibility practices and guidelines in place. However,
these tend to be more philanthropic in nature than strategic. There are also
some differences with respect to sectors, with the IT industry appearing to
have an edge over other (Business Community Founded for TERI Europe)
A survey was jointly conducted by Confederation of Indian Industry (CII),
United Nations Development Programme (UNDP), British Council (BC) and
Price Water. Coopers (PWC). Labeled as the most ambitious attempt to capture
the entire gamut of issue pertaining to Corporate Social Responsibility (CSR) in
India, the survey was carried out in September — October 2002.
The only limitation of the survey was that of the 1,000 companies—
small, medium and large — that were sent the questionnaire, only 102
companies responded. Those companies, that see themselves as leaders or
early movers appears to represent a high portion of the respondents, says the
survey report. The most striking features of the responses to the survey is that
the respondents are in near unanimity that CRS is very much a part of United
Nations Development Programme (IJNDP), British Council (BC) and Price wates
coopers (PWC)j.
The first International Conference on ‘Business-Social Partnership:
Beyond Philanthropy’ at the Indian Institute of Management (TIM) —
Calcutta, assumes special significance. The four day conference (December 4-
7.2002) at TIM-C has brought together the policy makers, corporate heads,
trade union leaders, social workers and academicians on a forum to analyze
the organizational practices that govern business today. The focus of the
conference was to understand the global partnership process between
businesses, government add NGOs. (Indian Institute of Management Calcutta,
December 4-7, 2002) Corporate Social Responsibility (CSR) has permeated
management practice and theory
up to a point where CSR can be referred to as the latest management fad
(Guthey, Langer, & Morsing, 2006). However, so far CSR integration into
business processes has been very uneven. Hockerts (2008), for example, finds
that most firms conceptualize CSR primarily as a tool to reduce risks and
operational cost. Only a minority of firms is actually using CSR as a means to
drive innovation. In their study of 150 German and British pharmaceutical
companies Blum-Kusterer and Hussain (2001) similarly find that regulation and
technological progress are the two main drivers for sustainability innovations.
They observed that the lure of emerging market niches was no important
motivator for the firms studied. This is unfortunate since bringing stakeholders
into the innovation process offers important opportunities to increase both the
social and financial performance of firms.
This report is part of the Nordic Centre on Corporate Responsibility
(NCCR) a collaborative research effort, bringing together CSR scholars from
Denmark, Sweden, Norway, Finland, and Iceland under the sponsorship of the
Danish Commerce and Companies Agency (DCCA) with the goal of studying
CSR-driven innovation in the Nordic region.
With this literature review Copenhagen Business School (CBS) aims to
provide the theoretical grounding of the empirical work to be undertaken by
the NCCR. The report falls into five parts: a brief review of key concepts in the
CSR debate (i.e. organizational legitimacy, moral choices, stakeholder
interaction, and sustainable development) a short discussion of the state of the
art of innovation literature (i.e. incremental vs. radical innovations; sustaining
vs. disruptive innovation; user-driven innovation, the entrepreneurial process,
the role of the entrepreneur, institutional entrepreneurship) an analysis of
extant publications on CSR and innovation (corporate social innovation, base of
the pyramid (BOP), social entrepreneurship, and eco-innovations) an analysis
of social innovation on all four levels discussed in the first part. we close by
providing a list of global examples of social innovation brands.
PART I: CSR BETWEEN LEGITIMACY, ETHICS, STAKEHOLDER DIALOGUE, AND
SUSTAINABILE DEVELOPMENT
In recent years the business strategy field has experienced the renaissance of
corporate social responsibility (CSR) as a major topic of interest. The concept
has not surfaced for the first time. CSR had already known considerable
interest in the 1960s and 70s, spawning a broad range of scholarly
contributions (Cheit, 1964; Heald, 1970; Ackermann & Bauer, 1976; Carroll,
1979), and a veritable industry of social auditors and consultants.
However, the topic all but vanished from most managers' minds in the
1980s (Dierkes & Antal, 1986; Vogel, 1986). Having blossomed in the 1970s CSR
all but vanished and only re-emerged in recent years.
CSR resurfaced forcefully over the past ten years in response to
mounting public concern about globalization. Firms find themselves held
responsible for human rights abuses by their suppliers in developing countries;
interest groups demand corporate governance to be transparent and
accountable; rioters from Seattle to Genoa protest violently against the cost of
free trade and other perceived negative consequences of globalization.
However, nearly two decades of neglect have helped to undo much of the past
achievements of corporate social responsibility. It is thus no surprise that both
practitioners and scholars are
struggling once again to answer the question what the strategic implications of
CSR are. The literature on CSR and innovation draws on a number of different
theoretical traditions, which often are in contradiction to each other. Wood
(1991) describes three levels of analysis: institutional, individual, and
organizational. We add to this analysis a fourth level which we will characterize
as global.
Institutional Level: CSR as Organizational Legitimacy
Davis (1973) describes the iron law of responsibility, as the fact that firms
exercising power will eventually be held accountable by society. At this level
CSR can be best understood as a quest for organizational legitimacy. Firms are
under the obligation not to abuse the power invested on them by society or
they risk losing society’s implicit A Literature Review on Corporate Social
Responsibility in the Innovation Process
endorsement. More recently this view point has resurfaced as a firm’s need to
retain it’s “license to operate” (Post, Preston, & Sachs, 2002: 21).
Individual Level: CSR as Moral Choices of Managers
At the individual level, CSR has been constructed by Ackermann (1975) as
managerial discretion. According to this view managerial actions are not fully
defined by corporate policies and procedures. So although managers are
constrained by their work environment they nonetheless have to weigh the
moral consequences of the choices they make.
The view of CSR is strongly anchored in the business ethics literature (Jones,
1991; Donaldson & Dunfee, 1994; Crane & Matten, 2003).
Organizational Level: CSR as Stakeholder Management
With Freeman’s (1984) seminal book the focus moved from legitimacy and
morals
towards a new theory of the firm. Social considerations are thus no longer
outside an organization but are part of its purpose of being. CSR thus becomes
a question of stakeholder identification, involvement, and communication
(Mitchell, Agle, & Wood, 1997; Morsing & Beckmann, 2006; Morsing & Schultz,
2006).
“The purpose of stakeholder management was to devise a framework to
manage
strategically the myriad groups that influenced, directly and indirectly, the
ability of a firm to achieve its objectives.” (Freeman & Velamuri, 2006) The aim
of stakeholder management is thus to analyze how a company can serve its
customers and be lucrative while also serving its other stakeholders such as
suppliers, employees, and communities. Recently the stakeholder perspective
has dominated the reinterpretation of CSR pushing the question of the
legitimacy of corporate power as well as the moral dimension of managerial
decisions more into the background.
Global Level: CSR as Sustainable Development
The latest literature tradition to have impacted our understanding of corporate
social responsibility is that of sustainable development. It was the Brundtland
Commission (1987) that for the first time systematically emphasized the link
between poverty, environmental degradation, and economic development. Its
definition of sustainable development, as meeting the needs of the present,
without compromising the ability of future generations to meet theirs, extends
the responsibility of firms both inter- and intra generationally.
Thus firms are expected to also consider traditionally unrepresented
Stakeholders such as the environment and as well as future generations.
Although many CSR authors have taken up the notion of a “triple bottom line”
(Elkington, 1997) there remain important tensions between the CSR and the
sustainable development debate (i.e.Dyllick & Hockerts, 2002).
PART II: ORGANIZATIONS AND INNOVATION
Definitions for innovation abound. From an economic perspective the
following
definition can be a useful point of departure:
"Innovation is the process through which productive resources are developed
and utilized to generate higher quality and/or lower cost products than had
been previously available.
[Innovation] requires the visualization of a range of potentialities that were
Previously hidden and that are now believed to be accessible. Thus, innovation
strategy is in its essence, interpretative and therefore subjective, rather than
'rational' and objective." (O'Sullivan, 2000: 393, 409)
It is important to note, as do Nelson and Winter (1977: 66), that market
environments are only one possible social system within which innovations can
occur. As will be discussed later innovation can also happen in non-market
environments such as the public or voluntary sector.
In this part we will focus on three schools of innovation (Incremental and
Radical
Innovation, Sustaining and Disruptive Innovation, User-driven Innovation) and
three focus areas of entrepreneurship (Exploiting Entrepreneurial
Opportunities, The Role of the Entrepreneur, Institutional Entrepreneurship).
Incremental and Radical Innovation
Radical improvements "represent technical advance so significant that no
increase in scale, efficiency, or design can make older technologies competitive
with the new technology." (Tushman & Anderson, 1986: 441) Lazonick (2001),
therefore, differentiates innovating enterprises from merely optimizing
enterprises by characterizing innovative enterprises as transforming
technological and/or market conditions, so as to differentiate themselves from
other forms in an industry to gain sustained competitive advantage. It is an
important goal of innovation research to identify, analyze, and select possible
innovations and then to implement them internally or through the foundation
of new ventures (Servatius, 1994; Van de Ven, Polley, Garud, & Venkataraman,
1999).
American aircraft manufacturer Boeing came up with a virtual team combining
people from very diverse backgrounds in order to spark radical innovation.
Creativity was enhanced by people collaborating across different disciplines,
product groups and industries. This became a huge success in the case of the
Boeing-Rocketdyne, fundamentally changing the engine structure and thereby
the market mechanisms. On the other hand, incremental innovation is non-
radical improvements and restructuring of processes occurring within the
organization. Consumer goods manufacturer Gillette use incremental
innovation to improve the way business is done by every employee at every
level and every function within the organization. This came to a restructuring
of the collection of receivables by upgrading training and incentives
programmes and removing the collection team from the sales department.
This generated about $700 million of excess cash.
Sustaining and Disruptive Innovation
Innovation can also be characterized by its ability to either strengthen a firm's
existing capabilities and market position or to disrupt them by rendering
competencies obsolete or reaching out to new customers and so-far unserved
markets (Abernathy & Clark, 1985).
Christensen (1997) points out that established firms often find it difficult to
react properly to new technologies if they happen outside their current
markets. He differentiates between sustaining and disruptive technologies
(Bower & Christensen, 1995; Christensen, 1997; Christensen & Overdorf,
2000). Sustaining innovations happen in the core market of a firm and result in
a product delivering better quality at a lower price.
Disruptive innovations occur at the margins of established markets. Providing
at first worse quality than existing products, these innovations are ignored by
the mass market and consequently by the leading producers. Usually there is
only a small group of dedicated customers who buy these products because
they like a distinctive feature of the disruptive innovation and otherwise do not
care too much about bad quality or high prices. By serving these niche markets
innovative firms can build new capabilities that will allow them to extend the
niche. Once the disruptive innovation has improved on the
Traditional quality and cost dimensions, innovative firms are then well
positioned to attack the mass market. A great industrial example of disruptive
innovation is the health care industry, where the so-called Minute Clinics have
become an alternative for some people to the hospital emergency room. These
walk-in offices provide offerings limited to relatively simple treatments and
diagnoses. The treatments are affordable and convenient to a client base
otherwise excluded from the specialist treatments. Thereby, the disruptive
innovation is established at the rim of the market, eventually positioning itself
within the niche to
attack the mass market.
Large corporations are many times accused of focusing too much on cost
efficiency and defending established market shares on behalf of innovation
strategies. Ford Motor Company has seen a decrease in performance due to a
corporate culture that prioritized efficiency over innovation. The Toyota story
on the other hand offers plenty of sustaining innovation examples that turned
the company into a market leader, among these the “lean” management
system.
Kim and Mauborgne (1997; 1999; 2005) talk of disruptive innovations as “value
innovations” or “blue ocean strategies”. Value innovators do not take as given
the structures and dynamics in their market, but rather see the possibility of
creating new market space. Schumpeter has been the first to describe the
creation of competitive space through disruptive innovation. He calls this the
quintessential entrepreneurial act (Schumpeter, 1962 [1934]: 132).
User-driven Innovation
Eric von Hippel (1979; 1986; 2001) has introduced the notion of (lead) user-
driven innovation to describe the ability of user communities to initiate and
develop exceedingly complex products sometimes even without any specific
manufacturer involvement. He speculates that the power and pervasiveness of
such communities could become enormously amplified by the Internet’s
capacity to support collaboration and distribution. While incremental user
innovation has been known for many years it is the question
whether users can also drive radical innovations that is most debated
(Lettl & Gemünden, 2005; Lettl, Herstatt, & Gemuenden, 2006). Empirical
research has studied user innovation in so disparate sectors as the medical
sector (Shaw, 1985), the sports industry (Shah, 2000; Lüthje, 2002; Franke &
Shah, 2003; Hienerth, 2004, 2006), and software development (von Hippel,
2001; Franke & Hippel, 2003; von Krogh, Spaeth, & Lakhani, 2003).
Recent research has focused on what commercial firms can do to
motivate and capture such innovations and their related benefits. Learning and
innovation efforts from which a firm may benefit need not necessarily be
located within the organization, but may well reside in the consumer
environment (Franke & Shah, 2003). These learning processes can, however,
be structured, motivated, and partly organized by a commercial firm by
organizing the infrastructure for consumers' interactive learning activities
(Jeppesen & Molin, 2003; Jeppesen, 2005; Baldwin, Hienerth, & von Hippel,
2006; Hienerth, 2006).
But user-driven innovation does not only benefit firms. It also creates
public goods as well as specific benefits for the involved users (Harhoff, Henkel,
& von Hippel, 2003; Henkel & Hippel, 2004). Since 2005 the Danish
Government has made support of “userdriven innovation” a national priority,
launching a particular program to build the abilities of Danish companies to
change on user generated knowledge.
IT company Intel provides an example of user-driven innovation in the
1990’s with the launch of two in-house departments implementing concrete
product innovations and long-term strategic implications directly derived from
user-obtained knowledge.
Exploiting Entrepreneurial Opportunities
For a long time research of entrepreneurship has been part of either
economic research or business strategy research. It is only over the past two
decades that entrepreneurship has emerged as its own field of research. It is
thus not very surprising that the exact definition and focus of this field is still
debated among its members (Bruyat & Julien, 2000; Shane & Venkataraman,
2000; Low, 2001; Ucbasaran, Westhead, & Wright, 2001).
For this report entrepreneurship shall be defined as the discovery and
profitable exploitation of (so-far unrealised) opportunities to create new
competitive space by generating market disequilibria (Stevenson & Gumpert,
1985; Drucker, 1986; Shane & Venkataraman, 2000). An entrepreneurial
opportunity allows the generation of entrepreneurial profits. However, as
Schumpeter (1962 [1934]: 133) explains, this profit is only temporary. Once an
entrepreneurial venture has been successful, other market players are likely to
follow the example, thereby competing away the entrepreneurial profit.
At this point most entrepreneurial enterprises become just another
optimizing firm, unless they can identify a new entrepreneurial opportunity
and exploit it. Within this view it is the entrepreneurial opportunity (its
identification, selection, and implementation) that is at the heart of
entrepreneurship research. It is true that small businesses or start-ups are well
placed to realize entrepreneurial opportunities; however, this is no
constitutive condition. On the contrary, multinational corporations (MNC) are
as capable of identifying entrepreneurial opportunities as are small businesses.
If entrepreneurial opportunities are realized within an existing organization
one often speaks of internal corporate venturing or of intrapreneurship
(Burgelman, 1983; Kuratko, Montagno, & Hornsby, 1990; Antoncic & Hisrich,
2001).
The Role of the Entrepreneur
Another research focus is on the enterprising individual, the entrepreneur,
who is responsible for the discovery and exploitation of profitable
opportunities. Penrose describes entrepreneurs as having "a psychological
predisposition on the part of the individuals to take a chance in the hope of
gain, and, in particular, to commit effort and resources to speculative activity"
(Penrose, 1959: 33). However, the belief of conventional wisdom that it is
usually one entrepreneur who can single-handedly identify, implement and
exploit a valuable opportunity is probably as far-fetched as the assumption
that the CEO alone can make or break a corporation. There are undoubtedly
examples of strong personalities for whom this has been the case; however, in
many circumstances entrepreneurial accomplishments are much more likely to
be the result of A Literature Review on Corporate Social Responsibility in the
Innovation Process teamwork rather than the action of one individual (Kamm
& Shuman, 1990; Ucbasaran, Westhead, & Wright, 2001: 60). Although it is
safe to assume that profits are a strong motivation for most entrepreneurs,
research indicates that other motives such as independence, control of one’s
own destiny, the need for admiration (Kets de Vries, 1985, 1996, 1997), and
issues such as psychic benefits or the availability of alternative employment
opportunities (Gimeno, Folta, Cooper, & Woo, 1997) are also present. As shall
be discussed in this report, the pursuit of social goals can also be a strong
motivation.
A final aspect of entrepreneurship research concerns the question of
organizational form and the access to capital. Some scholars identify gaps in
financing as an important reason for closure, accounting for the fact that the
vast majority of start-up firms actually fail (Amit, Brander, & Zott, 2000).
Institutional Entrepreneurship
The term “institutional entrepreneurship” was introduced by DiMaggio
(1988) as means to describe how actors can shape institutions even within the
constraints they face.
Institutional entrepreneurs initially are in conflict with established
institutions but through their actions contribute towards changing them
eventually (Lawrence, 1999; Garud, Jain, & Kumaraswamy, 2002; Dorado,
2005). In their literature review Leca, Battilana and Boxenbaum (2005) identify
four key research questions about institutional entrepreneurs addressed in
prior publications: What motivates them? Do they act intentionally? What type
of change do they implement? How do they succeed in the face of institutional
constraints?
Examples of entrepreneurial start-ups are plenty. The following examples
provide a basis to separate entrepreneurs and intrapreneurs. Well-known
examples include Starbucks, where entrepreneur Howard Schulz identified an
opportunity to take over and extend three coffee shops to a global scale
operation. An intrapreneurial example is provided by 3M launching the Post-it
product after one employee past on the concept idea to another employee
who developed the actual product features. Every step of the innovation A
Literature Review on Corporate Social Responsibility in the Innovation Process
process happened within 3M, which eventually benefited from the global
success of the product.
PART III: CSR AND INNOVATION – WHAT IS IT?
Literature bringing together CSR and innovation has emerged gradually over
the past decade. One interpretation of “social innovation” can refer to
improvements in the CSR process. Examples could be improved social
reporting tools or CSR management systems. In this review we do, however,
not consider these kinds of improvements and instead focus mainly on product
related social innovation. In the following we will discuss some of the main
themes standing out from literature. Broadly speaking there are two schools of
thought: The first line of publications deals with innovations aiming at social
improvements (i.e. health, education, community development). Here the
term social innovation can refer to product innovations with a social purpose.
A subgroup of these types of innovations concerns “Base of the Pyramid”
thinking. Social innovation is also used to refer to the process of starting and
improving social enterprises. A second group of authors put environmental
innovation at the heart of their work. These literature contributions have
coalesced around the theme of eco-innovation, which more recently has
spawned the discipline of clean-technology venturing.
Corporate Social Innovation
The term “corporate social innovation” was first introduced by Rosabeth Moss
Kanter (1999: 125) who argues that firms should use social issues as a learning
laboratory for identifying unmet needs and for developing solutions that
create new markets. She describes, for example, BankBoston’s effort in setting
up a Community Bank, which has eventually evolved into a new market for the
bank. Similarly Bell Atlantic has equipped schools with HDSL computers, in the
processing learning a lot about how to use and A Literature Review on
Corporate Social Responsibility in the Innovation Process market this new
technology. The term corporate social innovation is increasingly taken up by
practitioners. Patrick Cescau CEO of Unilever for example defines corporate
social innovation as a way of "finding new products and services that meet not
only the functional needs of consumers for tasty food or clean clothes but also
their wider aspirations as citizens."(cited in Webb, 2007) However, as pointed
out by Hackers (2008), most firms remain focused on CSR as a tool to reduce
risks and operational cost.
In his study of twelve multinationals he finds that only firms with very
high social performance rankings think about CSR as a means to drive product
innovation. He proposes that corporate social innovation requires the creation
of knowledge structures that result from investments in corporate social
performance. Examples for such scripts could be CSR management and
communication tools (i.e. Kuhndt, Tunçer, & Liedtke, 2003; Seuring, 2004;
Beske, Koplin, & Seuring, 2006; Burritt & Saka, 2006; Morsing, 2006; Perrini,
2006b; Von Hauff & Kleine, 2006; Vallentin, 2007) that in turn can initiate
corporate learning processes (Müller & Siebenhüner, 2005).
Base of the Pyramid (BOP)
An important subtheme of corporate social innovation is the focus on
low-income markets. Prahalad and Hart (1999) talk in this context of the
potential of the bottom or base of the pyramid (BOP). The BOP premise is that
by focusing on the unmet needs of low-income populations firms can create
profitable markets while also helping the poor address some of their most
urgent needs (Christensen, Craig, & Hart, 2001; Prahalad &Hammond, 2002;
Prahalad & Hart, 2002). Prahalad’s most notable assumption is that BOP
markets have to pay a “poverty premium”(Prahalad & Hammond, 2002: 8).
This means that many poor have to pay more for products and services such as
food, water, medication, credit, or telecommunication, than their middle or
upper class compatriots.
By using BOP thinking MNCs are believed to better target their design as
well as improve the distribution so as to bring down the poverty premium. The
Mexican cement manufacturer Cemex launched an initative that enable low-
income rural Mexican households to by the cement to build a house. The
purchase includes low-weekly payments and consultation and inspections from
Cemex architects. The initiative allows a Literature Review on Corporate Social
Responsibility in the Innovation Process great deal of flexibility and assistance
to the poor, who would not have been able to construct a house at
traditionally fluctuating market prices.
Social Entrepreneurship
The concept of social entrepreneurship has emerged in the late 1990s in
the U.S. (Boschee, 1995; Henton, Melville, & Walesh, 1997; Bornstein, 1998;
Dees, 1998b, a; Brinckerhoff, 2000; Dees, Emerson, & Economy, 2001a, b;
Drayton, 2002), and the UK (Leadbeater, 1997; Warwick, 1997; Zadek & Thake,
1997; SSE, 2002). However, it has only recently reached the acacedmic debate
(Haugh, 2006; Light, 2006; Mair & Marti, 2006; Mair, Robinson, & Hockerts,
2006; Perrini, 2006a; Hockerts, 2007; Robinson, Blockson, & Robinson, 2007).
According to Hockerts it describes “the discovery and sustainable
exploitation of opportunities to create public goods” (Hockerts, 2007: 422).
This is usually done through the generation of disequilibria in market and non-
market environments. Social Entrepreneurship can in some cases lead to the
creation of social enterprises. These social ventures are hybrid organizations
exhibiting characteristics of both the for-profit and notfor profit sector.
Successful examples of social innovation often originate from social enterprises
and firms thus can learn a lot from the NGO or voluntary sector (Hockerts,
2003). SustainAbility is an example of a value-driven for-profit organization
specializing in sustainable business models. The company consults MNCs like
Coca Cola, Ford, Nestlé and Nike in implementing sustainable business
strategies.
Eco-Innovation
The notion that sustainable development drives disruptive innovations
has come quite naturally to the sustainability debate (Hockerts, 1999, 2003).
Sustainability innovations(also called eco-innovations, eco-design, eco-
preneurship, or cleantechnology venturing) have been proposed as a source
for "environmentally benign growth" (Dyllick, 1994: 60), as a "breakthrough
discipline for innovation" (Fussler, 1996), as a "source of creative destruction"
(Hart & Milstein, 1999: 23), as well as the beginning of the "next industrial A
Literature Review on Corporate Social Responsibility in the Innovation Process
revolution" (Braungart & McDonough, 1998: 82; Lovins, Lovins, & Hawken,
1999: 1; Senge & Carstedt, 2001: 24), or a source for "the great leap
downward" (Christensen, Craig, & Hart, 2001: 92). From this has emerged a
large number of publications advancing management tools for furthering the
creation of new markets through environmental innovation (Fussler, 1996;
McDonough & Braungart, 2002b, a; Randelovic, O'Rourke, & Orsato, 2003;
Wüstenhagen, 2003; Kolk & Pinkse, 2004; Cohen, Smith, & Mitchell, 2008).
In his seminal book on Eco-Innovation Fussler (1996) states that a
majority of today's firms is not actively pursuing eco-innovations as a strategy
to create market share.
However, he does not believe that this "innovation lethargy" (Fussler,
1996: 9) will persist in the years to come. Using a number of anecdotal case
studies he shows that innovative firms can succeed in driving ecological
innovation profitably, not by following current customer demand but by
creating future market space. This notion that firms can actively transform
market structures so that they better support ecological innovations is also
proposed by Dyllick (1994: 66; 1999) and particularly by Schneidewind (1998).
Ecological innovation will happen both in large corporations, the ecological
"Goliaths", and small start-ups, the ecological "Davids" (Wüstenhagen, 2003).
A Literature Review on Corporate Social Responsibility in the Innovation
Process
PART IV: CSR AND INNOVATION – HOW DOES IT HAPPEN?
In the following, the four levels of analysis introduced in part one will
serve as foundation for further analysis of how CSR and innovation interlink
and come together.
Institutional Level: Innovation and Legitimacy
At the institutional level, literature on innovation and CSR has mainly
focused on standards-driven institutional entrepreneurship. Examples, include
research work on the creation of the Global Compact, an institutional
innovation aiming at creating a framework for reporting the social,
environmental, and economic performance of firms (Etzion & Ferraro, 2006;
Brown, de Jong, & Lessidrenska, 2007). As such the Global Compact aims to
help firms attain and maintain legitimacy with society. Another empirical study
is Boxenbaum’s research of diversity management in Denmark in which she
chronicles the evolution of this emerging institution (Boxenbaum, 2004).
Typically such innovations can be qualified as sustaining since they aim at
strengthening a firm's existing capabilities and market position.
Individual Level: The Social Entrepreneur
At the individual level social entrepreneurship focuses on persons
driving social change and innovation. These social or civic entrepreneurs can be
individual citizens, community activists (Swamy, 1990; Henton, Melville, &
Walesh, 1997; Leadbeater, 1997; Thompson, Alvy, & Lees, 2000) or civil
servants (Leadbeater, 2000; James, 2001) who use entrepreneurial spirit in
order to reach social objectives. Bornstein defines a social entrepreneur as "a
path-breaker with a powerful new idea, who combines visionary and real-
world problem-solving creativity, who has a strong ethical fibre and who is
'totally possessed' by his or her vision for change." (Bornstein, 1998: 36) Mair
and Noboa (2006) identify empathy, moral judgement, self-efficacy, and social
support as the key aspects that distinguish social entrepreneurs. Although the
motivation to build a viable business can be part of social entrepreneurship,
many authors do not think this to be a necessary A Literature Review on
Corporate Social Responsibility in the Innovation Process condition. A real-life
example of a social entrepreneur is Florence Nightingale, who was the founder
of modern nursing. She established the first school for nurses and fought to
improve hospital conditions balancing an innovative drive and a passion for
social improvements.
Organizational level: Stakeholder-driven Innovation
While there is a growing literature stream on user-driven innovation
there exists so far very little research on how innovation can be driven by other
stakeholders besides users and consumers. Empirical examples, for
stakeholder-driven innovation include the role of Greenpeace in developing
and marketing the Greenfreeze technology (Stafford & Hartman, 2001;
Matsumoto, 2002; Stafford, Hartman, & Liang, 2003) and in launching the fuel
efficient SmILE vehicle (Plante, 1999), which Neuner calls a case of “collective
prototyping” (Neuner, 2000).
Another example of activist-driven innovation concerns the fair trade
movement which as initiated and launched by activist NGOs (Tallontire, 2000;
Hockerts, 2006). Drawing on church groups, developmental charities, and
activist networks fair trade has matured from a non-profit start-up idea into a
profitable business proposition.
The Danish start-up company MyC4, a provider of online peer-to-peer
microfinance lending in Africa is another example, for stakeholder driven
innovation. Rather than basing its innovation process on in house development
the firm is sharing the innovation process with all types of stakeholders. It thus
includes both investors and lenders in the process of developing its business
processes. More important MyC4 offers the possibilities so called providers to
suggest micro-entrepreneurs leaving the setting of interest rates and
transaction costs to the providers.
Global level: Sustainability Innovation
At the global level much attention has been paid to the role venture
capital (VC) plays in promoting sustainability innovation. The term clean
technology venture capital has been introduced in order to delimit this new
type of innovation from earlier environmental technology or "green tech"
investments popularized in the 1970's and 80's. The latter were mainly end-of-
pipe solutions that strongly relied on particular legislation support.
Cleantech on the other hand is meant to denote new technology and
related business models offering competitive returns for investors and
customers while providing solutions to global challenges through breakthrough
product innovation. Cleantech venturing is thus driven by two main forces:
technology and competitiveness which both are superimposed on certain
environmental or social problems in order to generate new ideas. Whereas,
stakeholder-driven innovation is very outwards oriented, cleantech or
sustainability innovation uses technology and traditional innovation
mechanisms.
PART V: INTERNATIONAL SOCIAL INNOVATION BRANDS
Social innovation takes many forms especially in a global context. In
order to grasp the different levels and forms of social innovation the following
examples will serve as inspiration.
ABN AMRO
ABN AMRO is a Dutch corporation working in the financial service
industry. It was acquired in 2007 by a consortium of three European banks,
Royal Bank of Scotland Group, Fortis, and Banco Santander. Before this take
over, ABN AMRO had initiated a large scale acquisition scheme in Brazil in
1998. The take over of several major Brazilian banks resulted in the
establishment of Banco ABN AMRO Real. This new consortium took some
pioneering initiatives like the establishment of a new social-environmental
policy when making decisions on loans, the creation of the Real MicroCrédito,
which provided financing for small business and entrepreneurs, and the
implementation of the Ethical Fund, which was the first Social Responsible
Investment fund in Brazil. These initiatives were primarily led as a first mover
within the Brazilian market, and introduced in a market context with little
previous experience in social banking practices.
Electricité de France
The French electricity company focuses on electricity access in
developing parts of the world. The initiative, Energy Access Programme
through Rural Electricity and Services Companies, has helped bringing
electricity to rural areas of Mali, Morocco and South Africa, which would have
been otherwise ‘off the grid.’ EDF has brought electricity to 800,000 people
and the 2010 goal is one million people. EDF considers this ‘a drop in the
ocean’ but emphasizes the difference they make in these specific countries.
Around 8-10 per cent of electricity is provided through this initiative, affecting
a lot of people and businesses within the region. One of the projects in
Morocco is called Temasol and has A Literature Review on Corporate Social
Responsibility in the Innovation Process provided solar energy for more than
20,000 households in rural areas. Temasol has
undertaken a pilot project of delivering drinking water to the same
households, while at the same time extending operations to other parts of the
country. The initiatives are innovating both in terms of social capacity building,
while at the same time having a low environmental impact. It is an important
first step, and a basis for other people to further develop infrastructure in
these communities. The presence in these markets has allowed the company
to innovate social schemes further in areas of housing, employment and
education.
Essilor International
Social innovation in the French company is realized through value-led
innovation systems and Base of the pyramid activities. Essilor International has
developed both manufacturing and distribution systems in rural India for
optical lenses. The initiative was undertaken in the absence of adequate eye
care facilities, which resulted in very low usage of spectacles. Uncorrected
refractive error is one of the major causes of blindness, which if detected and
corrected, would give a fresh lease of life to individuals. In 2004, Essilor India
established a Rural Marketing Division. Access was even more important than
costs so innovation within both manufacturing and distribution was urgent.
After an initial study of the situation, Essilor realized that the lack of
consumption of spectacles was connected to a lack of product access. Essilor
has now developed a system of mobile low cost testing in rural areas as a
means to reach the remote, rural population of India and manufacture cheap,
affordable products through a steep learning curve and immense scale in
production.
Novo Nordisk
Stakeholder-driven innovation is at the core of social innovation in Novo
Nordisk. Several programmes have been initiated during the past decade, all
with global perspectives and growth potential. Novo Nordisk has undertaken a
shift from an internal focus to a reflective view through a corporate history and
culture that lays the foundation for its values-based and holistic approach to
doing business. By establishing the link between healths as a driver of wealth,
it has been possible to pursue Triple Bottom Line strategies in a way that
increasingly gets at the heart of core business processes – in the markets, as
well as in the corporate functions and governance mechanisms. The approach
is shaped through extensive stakeholder engagement embedded in
organizational behaviour and business operations. An example of these
stakeholder-driven initiatives is the DAWN programme, the largest-ever, global
survey to uncover diabetes attitudes, wishes and needs. The study focuses on
the person behind the disease and is aimed to uncover the psychosocial
aspects of diabetes. The DAWN programme taught all parties involved, that
the patients also need mental encouragement and positive guidance
empowering them to take charge of their own health. Such innovation in
public health promotion activities help effectively reduce the burden of
diseases such as diabetes.
Furthermore, Novo Nordisk is driving National Diabetes Programmes to
educate stakeholders as well as actively supporting the growing international
advocacy platform to put chronic disease prevention on the political agenda.
One such initiative is the Oxford Health Alliance.
Philips
1The Green Flagships project at Philips is a gathering and quantitative
measuring of the best lighting products. To be considered a Green Flagship, a
product must first undergo a divisional EcoDesign procedure. Next, the product
or product family is investigated in at least three of the six Green Focal Areas.
These Green Focal Areas consist of Energy Efficiency, Recyclability, Lifetime
Reliability, Packaging, Hazardous Substances and Weight. Based on this
analysis, the product or product family must be proven to offer at least 10%
improved environmental performance in at least one Green Focal Area
compared to a predecessor or competitive product, and the overall lifecycle
score must be equal or better. So while many products may be “green”, only
the top Eco-designed products achieve Green Flagship status. A Philips Green
Flagship product is a best environmental choice and a product that either has
the best environmental performance in the market, is the most innovative
environmental friendly product in its portfolio, or is the best environmental
solution in its application area. The development of Green Energy has
experienced a major boom within the last decade. The labelling of green
energy “cleantech” is increasingly attracting finance from both venture capital
and MNCs. The Green Flagship label is an example of this environmental
progress.
CORPORATE SOCIAL RESPONSIBILITY : :
Today we define Corporate Social Responsibility as the way a company balances its economic, social and environmental objectives while addressing stakeholder expectations and enhancing shareholder value.
But ACC has undertaken social volunteering practices almost from its
off
inception, – long before the term corporate social responsibility was coined. The company’s earliest initiatives in community development date back to the 1940's in a village on the outskirts of Mumbai while the first formal Village Welfare Scheme was launched in 1952. The community living around many of our factories comprises the weakest sections of rural and tribal India with no access to basic amenities.
Corporate Social Responsibility Policy “The Company shall continue to have among its objectives the promotion and growth of the national economy through increased productivity, effective utilization of material and manpower resources and continued application of modern scientific and managerial techniques, in keeping with the national aspiration; and the Company shall continue to be mindful of its social and moral responsibilities to consumers, employees, shareholders, society and the local community.
In pursuance of the above objective, ACC acknowledges the importance of the concept of inter-dependence of all sections of society. In particular, its focus revolves around the community residing in the immediate vicinity of its Cement Plants and Mines where it seeks to actively assist in improving the quality of life and making this community self-reliant. In line with its abiding concern for preservation of the ecological balance and safeguarding the health of the community, ACC has always actively demonstrated its firm resolve to protect the environment
Mindful of its great tradition, ACC is deeply committed to enhancing its reputation and respect built over the years in industry and society for its professional style of management based on philosophy of the best in business ethics.”
Community & Rural Welfare Our community development activities revolve around the under-privileged community that lives in the immediate vicinity of our cement plants and is thus more dependent on us. The range of our activities begins with extending educational and medical facilities and goes on to cover vocational guidance and supporting employment-oriented and income-generation projects like
agriculture, animal husbandry, cottage industries by developing local skills, using local raw materials and helping create marketing outlets.
At all our cement factories we share our amenities and facilities with members of the local community. This includes sharing education and medical facilities, sports and recreation. Wherever possible we share access to Bore Wells, drinking water and the usage of colony roads.
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Education Education is imparted not only to children of ACC employees but also more importantly to children from rural areas who do not have access to any medium of information or education. ACC schools maintain high standards and are open to other children of the vicinity. Often these schools are the most preferred centers of learning in the district and adjoining areas. Wherever possible, ACC provides funds and infrastructure to help set up local schools, colleges and centers for learning and education.
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Healthcare ACC takes pride in providing various forms of medical assistance to the
families of our employees and also to all those living in surrounding villages. Each factory has a medical center with full-fledged doctors and the latest of basic equipment. Mobile medical services are provided in the vicinity and regular medical camps are held to eradicate diseases, offer medical help, treatment and preventive care.
ACC has come out to provide support to state and national health initiatives such as the eradication of malaria, dengue fever and the dreaded HIV.
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HIV/AIDS - Workplace Policy
ACC is desirous of playing a meaningful role in the nationwide effort to eradicate HIV/AIDS and has pledged to support the Confederation of Indian Industry in their initiative. ACC recognizes that a fundamental step in this respect involves a clear statement of the company’s internal policy to deal with employees affected by HIV/AIDS. CII has framed a Code of Practice for Industry to guarantee and safeguard the rights of employees infected and affected by HIV/AIDS. We adopt this as ACC’s internal workplace policy for HIV/AIDS. The policy states that::
1. The company will provide a safe and healthy work environment for employees.
2. The company will educate its employees and the family on prevention, care and counseling of HIV/AIDS.
3. The company will educate its employees on safe blood donation and transfusion.
4. If an employee has been infected, information about the illness would be kept confidential by the company. Only the immediate superior would be kept advised to prevent any medical eventuality.
5. A HIV positive employee will be allowed to continue to work in his or her job unless medical conditions interfere with the specific job he or
she is doing. On account of health conditions the employee may be shifted to another comfortable position.
6. The employer should ensure that the co–employees cannot or should not shun their HIV positive peer or refuse to work alongside them. In fact, the company will assure his or her comfort level in the work place.
7. The company will, as a policy, not discriminate against any employee infected by HIV/AIDS with regard to promotions, training and any other privileges, applicable to all employees of the organisation.
8. While the company may ask a person who is being offered a job to undergo general medical tests before the issue of the appointment letter, the test will not cover HIV/AIDS, without an informed consent and pre test counseling of the candidate. |
9. The company will educate its employees and encourage them to participate in voluntary counseling and testing. However, HIV/AIDS tests will not be a part of any annual or regular health check ups, without the employee’s informed consent and pre test counseling.
10.The company will ensure that proper treatment is available to employees infected with HIV/AIDS. The company will assist the employee in meeting the cost of antiretroviral (ARV) drugs within the prescribed limits as fixed by the Company. The arrangements for treatment will be made at hospitals pre-identified by the company and payment will be made directly to the service provider. All other (non-ARV) HIV/AIDS related costs will be covered as per the company’s prevailing scheme for Health and Medical treatment.
It is hoped that this policy will help build positive and supportive attitudes towards those infected as well as promote health and safety amongst the employees.
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HIV/AIDS treatment - Anti Retroviral Treatment Centres
Disaster Relief
ACC and its employees make timely contribution to help in any national disaster. This is done both at the corporate level, by local units and employees. Apart from the Kargil cause, collective contributions by way of cash, food and clothing has been sent to help victims of calamities such as the Latur earthquake, Himachal Pradesh floods, Orissa cyclone, Gujarat
earthquake, Tsunami and floods in Maharashtra.
| TOP | CLOSE |
Gujarat Masons’ Training
ACC’s contribution to the rebuilding effort after the 2001 earthquake in Gujarat was unique. Anticipating a scarcity of skilled masons and trained supervisors for the reconstruction work - especially in Kutch, Rajkot and Surendranagar districts, the company evolved a scheme to provide construction related training to over 2500 unemployed persons (mostly youth) in earthquake affected villages. Our best civil engineers were deputed to impart training on basic skills needed to work as masons and construction site supervisors and to make earthquake resistant structures, using local materials. This was perhaps the country’s first formal training programme of this magnitude for masons and site supervisors, organised by ACC.
| TOP | CLOSE |
Conservation of heritage structures
The services of ACC’s Concrete experts have often been utilized in the restoration of several national heritage buildings across the country - such as sections of the Chhatrapati Shivaji Terminus (formerly Victoria Terminus) at Mumbai, the J N Petit and David Sassoon Libraries in Mumbai, churches in Goa, palaces and royal mansions in Mysore and Hyderabad and other old structures in the country.
The historic Vijayraghavgarh fort in Madhya Pradesh was recently restored under ACC’s patronage. This is not a core business of the company but an act of corporate volunteering by way of sharing knowledge and expertise.
| TOP | CLOSE |
Global Compact
ACC Limited is a signatory to the United Nations Global Compact. We are committed to the ten principles of the Compact which foster better corporate responsibility in the areas of human rights, labour, environment and anti-corruption. Established in 1936, this company has from its very inception been conscious of its obligations to the community and has always kept in view its social responsibilities. ACC’s Vision vividly declares the company’s commitment to its corporate social responsibility and sustainable development issues making these an essential part of the business goals for the company. This communication on Progress provides an insight into our recent activities in support of the Global Compact’s Objective and our efforts towards continuous improvement.
Communication on Progress 2009
Communication on Progress 2008
Communication on Progress 2007
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Support to national Sport
ACC has had an old and close association with the game of cricket. From the 1950’s to the 70’s, many cricket legends were employees of ACC during their active cricket careers. This was in the days before cricketers became like the superstars they are today. ACC was then among the few companies which went out of its way to employ young cricketers, including budding young Ranji Trophy hopefuls. ACC joined hands with the Confederation of Indian Industry to sponsor India’s National Boxing team at the Athens Olympics in 2004 and the Commonwealth Games. ACC also sponsors and supports other sports at National, regional and local levels such as inter-regional Badminton championships, youth soccer and Rural Sports Meets.
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Awards & Accolades
ACC was the first recipient of ASSOCHAM’s first ever National Award for outstanding performance in promoting rural and agricultural development activities in 1976. Decades later, PHD Chamber of Commerce and Industry selected ACC as winner of its Good Corporate Citizen Award for the year 2002. Over the years, there have been many awards and felicitations for achievements in Rural and community development, Safety, Health, Tree plantation, afforestation, Clean mining, Environment awareness and protection. In 2006, we were selected to receive the Good Corporate Citizen Award of the Bombay Chamber of Commerce and Industry.
Awards & Accolades
National Award for outstanding performance in promoting rural and agricultural development – by ASSOCHAM
Sword of Honour - by British Safety Council, United Kingdom for excellence in safety performance.
Indira Priyadarshini Vrikshamitra Award --- by The Ministry of Environment and Forests for "extraordinary work" carried out in the area of afforestation.
FICCI Award --- for innovative measures for control of pollution, waste management & conservation of mineral resources in mines and plant.
Subh Karan Sarawagi Environment Award - by The Federation of Indian Mineral Industries for environment protection measures.
Drona Trophy - By Indian Bureau Of Mines for extra ordinary efforts in protection of Environment and mineral conservation in the large mechanized mines sector.
Indo German Greentech Environment Excellence Award
Golden Peacock Environment Management Special Award - for outstanding efforts in Environment Management in the large manufacturing sector.
Indira Gandhi Memorial National Award - for excellent performance in prevention of pollution and ecological development
Excellence in Management of Health, Safety and Environment : Certificate of Merit by Indian Chemical Manufacturers Association
Vishwakarma Rashtriya Puraskar trophy for outstanding performance in safety and mine working
Good Corporate Citizen Award - by PHD Chamber of Commerce and Industry
Jamnalal Bajaj Uchit Vyavahar Puraskar - Certificate of Merit by Council for Fair Business Practices
Greentech Safety Gold and Silver Awards - for outstanding performance in Safety management systems by Greentech Foundation
FIMI National Award - for valuable contribution in Mining activities from the Federation of Indian Mineral Industry under the Ministry of Coal.
Rajya Sthariya Paryavaran Puraskar - for outstanding work in Environmental Protection and Environment Performance by the Madhya
Pradesh Pollution. Control Board.
National Award for Fly Ash Utilisation - by Ministry of Power, Ministry of Environment & Forests and Dept of Science & Technology, Govt of India - for manufacture of Portland Pozzolana Cement.
Good Corporate Citizen Award - by Bombay Chamber of Commerce and Industry for working towards an environmentally sustainable industry while pursuing the objective of creation of a better society.
National Award for Excellence in Water Management - by the Confederation of Indian Industry (CII)
Golden Peacock Eco-Innovation Award 2008 won by AFR Business for efficient disposal of industrial wastes
"Vanvasi Sant Gahira Guruji Maharaj - Chhattisgarh Paryavaran Puraskar" 2008, in the Industrial Category for best efforts in Environment Conservation in Chhattisgarh State .
Safety Innovation Award by the Institution of Engineers, New Delhi
Greentech Environment Excellence Award by Greentech Foundation
Good Green Governance Award by Srishti Publications, Delhi
The Federation of Indian Mineral Industries, (FIMI) New Delhi has selected ACC, one of the four companies in India, to be Members of the "Sustainable Miners Club" for outstanding contribution to the national goal of sustainable development through excellence in environmental conservation' scientific research and social development in harnessing natural resources.
Tikaria wins IMC Ramkrishna Bajaj Certificate of Merit 2008
Gagal wins IMC Ramkrishna Bajaj National Quality Performance Excellence Trophy 2008
CNBC-TV18's India Business Leaders Award in the category India Corporate Citizen of the Year 2008
Greentech Safety Gold Awards 2009 - for outstanding performance in Safety management systems by Greentech Foundation
International Safety Award 2008 by British Safety Council
ACC tops cement industry in Karmayog CSR rating
Council for Fair Business Practices, Jamnalal Bajaj UCHIT VYAVAHAR PURASKAR 2008 - in the category Manufacturing Enterprises – Large – for exemplary record of practicing and promoting fair business practices.
Srishti Good Green Governance Award 2008 by Srishti Publications
State Safety Award for 2007 by Government of Orissa – for best performance in accident prevention, safety management and communication systems among industries in Orissa
CORPORATE SOCIAL RESPONSIBILITY : :
Today we define Corporate Social Responsibility as the way a company balances its economic, social and environmental objectives while addressing stakeholder expectations and enhancing shareholder value.
But ACC has undertaken social volunteering practices almost from its inception, – long before the term corporate social responsibility was coined. The company’s earliest initiatives in community development date back to the 1940's in a village on the outskirts of Mumbai while the first formal Village Welfare Scheme was launched in 1952. The community living around many of our factories comprises the weakest sections of rural and tribal India with no access to basic amenities.
Corporate Social Responsibility Policy “The Company shall continue to have among its objectives the promotion and growth of the national economy through increased productivity, effective utilization of material and manpower resources and continued application of modern scientific and managerial techniques, in keeping with the national aspiration; and the Company shall continue to be mindful of its
off
social and moral responsibilities to consumers, employees, shareholders, society and the local community.
In pursuance of the above objective, ACC acknowledges the importance of the concept of inter-dependence of all sections of society. In particular, its focus revolves around the community residing in the immediate vicinity of its Cement Plants and Mines where it seeks to actively assist in improving the quality of life and making this community self-reliant. In line with its abiding concern for preservation of the ecological balance and safeguarding the health of the community, ACC has always actively demonstrated its firm resolve to protect the environment
Mindful of its great tradition, ACC is deeply committed to enhancing its reputation and respect built over the years in industry and society for its professional style of management based on philosophy of the best in business ethics.”
Community & Rural Welfare Our community development activities revolve around the under-privileged community that lives in the immediate vicinity of our cement plants and is thus more dependent on us. The range of our activities begins with extending educational and medical facilities and goes on to cover vocational guidance and supporting employment-oriented and income-generation projects like agriculture, animal husbandry, cottage industries by developing local skills, using local raw materials and helping create marketing outlets.
At all our cement factories we share our amenities and facilities with members of the local community. This includes sharing education and medical facilities, sports and recreation. Wherever possible we share access to Bore Wells,
drinking water and the usage of colony roads.
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Education Education is imparted not only to children of ACC employees but also more importantly to children from rural areas who do not have access to any medium of information or education. ACC schools maintain high standards and are open to other children of the vicinity. Often these schools are the most preferred centers of learning in the district and adjoining areas. Wherever possible, ACC provides funds and infrastructure to help set up local schools, colleges and centers for learning and education.
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Healthcare ACC takes pride in providing various forms of medical assistance to the families of our employees and also to all those living in surrounding villages. Each factory has a medical center with full-fledged doctors and the latest of basic equipment. Mobile medical services are provided in the vicinity and regular medical camps are held to eradicate diseases, offer medical help, treatment and preventive care.
ACC has come out to provide support to state and national health initiatives
such as the eradication of malaria, dengue fever and the dreaded HIV.
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HIV/AIDS - Workplace Policy
ACC is desirous of playing a meaningful role in the nationwide effort to eradicate HIV/AIDS and has pledged to support the Confederation of Indian Industry in their initiative. ACC recognizes that a fundamental step in this respect involves a clear statement of the company’s internal policy to deal with employees affected by HIV/AIDS. CII has framed a Code of Practice for Industry to guarantee and safeguard the rights of employees infected and affected by HIV/AIDS. We adopt this as ACC’s internal workplace policy for HIV/AIDS. The policy states that::
11.The company will provide a safe and healthy work environment for employees.
12.The company will educate its employees and the family on prevention, care and counseling of HIV/AIDS.
13.The company will educate its employees on safe blood donation and transfusion.
14.If an employee has been infected, information about the illness would be kept confidential by the company. Only the immediate superior would be kept advised to prevent any medical eventuality.
15.A HIV positive employee will be allowed to continue to work in his or her job unless medical conditions interfere with the specific job he or she is doing. On account of health conditions the employee may be shifted to another comfortable position.
16.The employer should ensure that the co–employees cannot or should not shun their HIV positive peer or refuse to work alongside them. In fact, the company will assure his or her comfort level in the work place.
17.The company will, as a policy, not discriminate against any employee infected by HIV/AIDS with regard to promotions, training and any other privileges, applicable to all employees of the organisation.
18.While the company may ask a person who is being offered a job to undergo general medical tests before the issue of the appointment letter, the test will not cover HIV/AIDS, without an informed consent and pre test counseling of the candidate. |
19.The company will educate its employees and encourage them to
participate in voluntary counseling and testing. However, HIV/AIDS tests will not be a part of any annual or regular health check ups, without the employee’s informed consent and pre test counseling.
20.The company will ensure that proper treatment is available to employees infected with HIV/AIDS. The company will assist the employee in meeting the cost of antiretroviral (ARV) drugs within the prescribed limits as fixed by the Company. The arrangements for treatment will be made at hospitals pre-identified by the company and payment will be made directly to the service provider. All other (non-ARV) HIV/AIDS related costs will be covered as per the company’s prevailing scheme for Health and Medical treatment.
It is hoped that this policy will help build positive and supportive attitudes towards those infected as well as promote health and safety amongst the employees.
| TOP | CLOSE |
HIV/AIDS treatment - Anti Retroviral Treatment Centres
Disaster Relief
ACC and its employees make timely contribution to help in any national disaster. This is done both at the corporate level, by local units and employees. Apart from the Kargil cause, collective contributions by way of cash, food and clothing has been sent to help victims of calamities such as the Latur earthquake, Himachal Pradesh floods, Orissa cyclone, Gujarat earthquake, Tsunami and floods in Maharashtra.
| TOP | CLOSE |
Gujarat Masons’ Training
ACC’s contribution to the rebuilding effort after the 2001 earthquake in Gujarat was unique. Anticipating a scarcity of skilled masons and trained supervisors for the reconstruction work - especially in Kutch, Rajkot and Surendranagar districts, the company evolved a scheme to provide construction related training to over 2500 unemployed persons (mostly youth) in earthquake affected villages. Our best civil engineers were deputed to impart training on basic skills needed to work as masons and construction site supervisors and to make earthquake resistant structures, using local materials. This was perhaps the country’s first formal training programme of this magnitude for masons and site supervisors, organised by ACC.
| TOP | CLOSE |
Conservation of heritage structures
The services of ACC’s Concrete experts have often been utilized in the restoration of several national heritage buildings across the country - such as sections of the Chhatrapati Shivaji Terminus (formerly Victoria Terminus) at Mumbai, the J N Petit and David Sassoon Libraries in Mumbai, churches in Goa, palaces and royal mansions in Mysore and Hyderabad and other old structures in the country.
The historic Vijayraghavgarh fort in Madhya Pradesh was recently restored under ACC’s patronage. This is not a core business of the company but an act of corporate volunteering by way of sharing knowledge and expertise.
| TOP | CLOSE |
Global Compact
ACC Limited is a signatory to the United Nations Global Compact. We are committed to the ten principles of the Compact which foster better corporate responsibility in the areas of human rights, labour, environment and anti-corruption. Established in 1936, this company has from its very inception been conscious of its obligations to the community and has always kept in view its social responsibilities. ACC’s Vision vividly declares the company’s commitment to its corporate social responsibility and sustainable development issues making these an essential part of the business goals for the company. This communication on Progress provides an insight into our recent activities in support of the Global Compact’s Objective and our efforts towards continuous improvement.
Communication on Progress 2009
Communication on Progress 2008
Communication on Progress 2007
| TOP | CLOSE |
Support to national Sport
ACC has had an old and close association with the game of cricket. From the 1950’s to the 70’s, many cricket legends were employees of ACC during their active cricket careers. This was in the days before cricketers became like the superstars they are today. ACC was then among the few companies which went out of its way to employ young cricketers, including budding young Ranji Trophy hopefuls. ACC joined hands with the Confederation of Indian Industry to sponsor India’s National Boxing team at the Athens Olympics in 2004 and the Commonwealth Games. ACC also sponsors and supports other sports at National, regional and local levels such as inter-regional Badminton championships, youth soccer and Rural Sports Meets.
| TOP | CLOSE |
Awards & Accolades
ACC was the first recipient of ASSOCHAM’s first ever National Award for outstanding performance in promoting rural and agricultural development activities in 1976. Decades later, PHD Chamber of Commerce and Industry selected ACC as winner of its Good Corporate Citizen Award for the year 2002. Over the years, there have been many awards and felicitations for achievements in Rural and community development, Safety, Health, Tree plantation, afforestation, Clean mining, Environment awareness and protection. In 2006, we were selected to receive the Good Corporate Citizen Award of the Bombay Chamber of Commerce and Industry.
Awards & Accolades
National Award for outstanding performance in promoting rural and agricultural development – by ASSOCHAM
Sword of Honour - by British Safety Council, United Kingdom for excellence in safety performance.
Indira Priyadarshini Vrikshamitra Award --- by The Ministry of Environment and Forests for "extraordinary work" carried out in the area of afforestation.
FICCI Award --- for innovative measures for control of pollution, waste management & conservation of mineral resources in mines and plant.
Subh Karan Sarawagi Environment Award - by The Federation of Indian Mineral Industries for environment protection measures.
Drona Trophy - By Indian Bureau Of Mines for extra ordinary efforts in protection of Environment and mineral conservation in the large mechanized mines sector.
Indo German Greentech Environment Excellence Award
Golden Peacock Environment Management Special Award - for
outstanding efforts in Environment Management in the large manufacturing sector.
Indira Gandhi Memorial National Award - for excellent performance in prevention of pollution and ecological development
Excellence in Management of Health, Safety and Environment : Certificate of Merit by Indian Chemical Manufacturers Association
Vishwakarma Rashtriya Puraskar trophy for outstanding performance in safety and mine working
Good Corporate Citizen Award - by PHD Chamber of Commerce and Industry
Jamnalal Bajaj Uchit Vyavahar Puraskar - Certificate of Merit by Council for Fair Business Practices
Greentech Safety Gold and Silver Awards - for outstanding performance in Safety management systems by Greentech Foundation
FIMI National Award - for valuable contribution in Mining activities from the Federation of Indian Mineral Industry under the Ministry of Coal.
Rajya Sthariya Paryavaran Puraskar - for outstanding work in Environmental Protection and Environment Performance by the Madhya Pradesh Pollution. Control Board.
National Award for Fly Ash Utilisation - by Ministry of Power, Ministry of Environment & Forests and Dept of Science & Technology, Govt of India - for manufacture of Portland Pozzolana Cement.
Good Corporate Citizen Award - by Bombay Chamber of Commerce and Industry for working towards an environmentally sustainable industry while pursuing the objective of creation of a better society.
National Award for Excellence in Water Management - by the Confederation of Indian Industry (CII)
Golden Peacock Eco-Innovation Award 2008 won by AFR Business for efficient disposal of industrial wastes
"Vanvasi Sant Gahira Guruji Maharaj - Chhattisgarh Paryavaran Puraskar" 2008, in the Industrial Category for best efforts in Environment
Conservation in Chhattisgarh State .
Safety Innovation Award by the Institution of Engineers, New Delhi
Greentech Environment Excellence Award by Greentech Foundation
Good Green Governance Award by Srishti Publications, Delhi
The Federation of Indian Mineral Industries, (FIMI) New Delhi has selected ACC, one of the four companies in India, to be Members of the "Sustainable Miners Club" for outstanding contribution to the national goal of sustainable development through excellence in environmental conservation' scientific research and social development in harnessing natural resources.
Tikaria wins IMC Ramkrishna Bajaj Certificate of Merit 2008
Gagal wins IMC Ramkrishna Bajaj National Quality Performance Excellence Trophy 2008
CNBC-TV18's India Business Leaders Award in the category India Corporate Citizen of the Year 2008
Greentech Safety Gold Awards 2009 - for outstanding performance in Safety management systems by Greentech Foundation
International Safety Award 2008 by British Safety Council
ACC tops cement industry in Karmayog CSR rating
Council for Fair Business Practices, Jamnalal Bajaj UCHIT VYAVAHAR PURASKAR 2008 - in the category Manufacturing Enterprises – Large – for exemplary record of practicing and promoting fair business practices.
Srishti Good Green Governance Award 2008 by Srishti Publications
State Safety Award for 2007 by Government of Orissa – for best performance in accident prevention, safety management and communication systems among industries in Orissa
Q-1 Does your company have a formalized CSR policy.
Responses Respondents%1. Yes %2. No %
INTERPRETATION-
Q- 2 Do CSR policies are of your company include policy on business ethics.
yes no
Responses Respondents%1. Yes %2. No %
INTERPRETATION-
Q-3 Does your company produce an annual sustainable CSR Report
yes no
Responses Respondents%1. Yes %2. No %
INTERPRETATION-
Q-4 Does your company have separate department / cell CSR.
Responses Respondents%1. Yes %2. No %
yes no
INTERPRETATION-
Q-5 ACC gives compensation to pollution affected people.
Responses Respondents%1. Strongly agree %2. Agree %3. Uncertain %4. Disagree %
yes no
INTERPRETATION-
Q-6 Health check up by medical facility is going routinely and in proper manner
.
Responses Respondents%1. Strongly agree %
strongly agree agree neutral disagree
2. Agree %3. Uncertain %4. Disagree %
INTERPRETATION-
Q- 7 Malaria control operation is going properly.
Responses Respondents%
strongly agree agree neutral disagree
1. Strongly agree %2. Agree %3. Neutral %4. Disagree %
INTERPRETATION-
Q-8 There is available necessary machine and equipment in ACC hospital.
Responses Respondents%1. Strongly agree %2. Agree %3. Uncertain %4. Disagree %
strongly agree agree neutral disagree
INTERPRETATION-
Q-9 There is given concession in fees to student those belong from poor class family
Responses Respondents%1. Strongly agree %2. Agree %3. Uncertain %4. Disagree %
strongly agree agree neutral disagree
INTERPRETATION-
Q-10There is proper setting arrangement and furniture in school those run by ACC
Responses Respondents%1. Strongly agree %2. Agree %3. Uncertain %4. Disagree %
INTERPRETATION-
strongly agree agree neutral disagreestrongly agree agree neutral disagree
Q-10There is proper setting arrangement and furniture in school those run by ACC.
Responses Respondents%1. Strongly agree %2. Agree %3. Uncertain %4. Disagree %
INTERPRETATION-
strongly agree agree neutral disagree
Q-12 Road are repaired after certain period.
Responses Respondents%1. Strongly agree %2. Agree %3. Uncertain %4. Disagree %
INTERPRETATION-
strongly agree agree neutral disagree
Q-13 There is problem of drinking water.
Responses Respondents%1. Strongly agree %2. Agree %3. Uncertain %4. Disagree %
INTERPRETATION-
strongly agree agree neutral disagree
Q-14 Hand pumps are repaired.
Responses Respondents%1. Strongly agree %2. Agree %3. Uncertain %4. Disagree %
INTERPRETATION-
strongly agree agree neutral disagree
Q-15 Cleanliness of sulabh toilets is done neighbouring villages.
Responses Respondents%1. Strongly agree %2. Agree %3. Uncertain %4. Disagree %
INTERPRETATION-
strongly agree agree neutral disagree
Q-16 Dirking water is supplied during the summer through water tanker.
Responses Respondents%1. Strongly agree %2. Agree %3. Uncertain %4. Disagree %
INTERPRETATION-
strongly agree agree neutral disagree
Q-17- ACC pays attention toward making neighbouring villages hygienic.
Responses Respondents%1. Strongly agree %2. Agree %3. Uncertain %4. Disagree %
INTERPRETATION-
strongly agree agree neutral disagree
Q.1-
Responses Respondents%1. Strongly agree %2. Agree %3. Uncertain %4. Disagree %
INTERPRETATION-
strongly agree agree neutral disagree
Q.1-
Responses Respondents%1. Strongly agree %2. Agree %3. Uncertain %4. Disagree %
INTERPRETATION-
strongly agree agree neutral disagree
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