social responsibility of business final copy

8/12/2019 Social Responsibility of Business Final Copy

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CORPORATE SOCIAL RESPONSIBILITY

*MISS HASHIMA KAKKAR

**RAHUL MANKOTIA ***RUPINDER WALIA

ABSTRACTThe literature on strategic integration o cor!orate social res!onsi"ilit# $%SR& in "usiness'o(els is still un(er(e)elo!e( We there ore "orro+ ro' the theor# on strategic'anage'ent to organi,e this contri"ution accor(ing to the !rocess o strategic'anage'ent A ter a re)ie+ o the e+ strategic %SR a!!roaches- an e.!lorati)e casestu(# 'etho(olog# is a(o!te( to stu(# the 'anage'ent o a %SR !ro.#- )i, This stu(#

!ro)i(es insight into +hat actions a co'!an# ta/es at e)er# stage o %SR 'anage'ent-into the strategic logic o these actions- an( into the (i erent challenges the co'!an#

aces This article inclu(es +hat is %or!orate Social Res!onsi"ilit#- Wh# shoul( "usiness "e sociall# res!onsi"le- +h# has %SR "eco'e i'!ortant- !otential "ene its oi'!le'enting a %SR a!!roach- Real ir's are re!orting real "ene its ro' %SR-I'!le'enting cor!orate social res!onsi"ilit#- Organi,ing or %SR- The 'oral !ur!ose o

"usiness

INTRODUCTION

There is gro+ing recognition o the signi icant e ect the acti)ities o the !ri)ate sectorha)e0on e'!lo#ees- custo'ers- co''unities- the en)iron'ent- co'!etitors- "usiness !artners- in)estors- sharehol(ers- go)ern'ents an( others It is also "eco'ingincreasingl# clear that ir's can contri"ute to their o+n +ealth an( to o)erall societal+ealth "# consi(ering the e ect the# ha)e on the +orl( at large +hen 'a/ing (ecisions1usiness o!inion !olls an( cor!orate "eha)iour "oth sho+ increase( le)els oun(erstan(ing o the lin/ "et+een res!onsi"le "usiness an( goo( "usiness Also-in)estors an( inancial 'ar/ets are "eginning to see that %SR acti)ities that integrate

"roa(er societal concerns into "usiness strateg# an( !er or'ance are e)i(ence o goo('anage'ent In a((ition to "uil(ing trust +ith the co''unit# an( gi)ing ir's an e(gein attracting goo( custo'ers an( e'!lo#ees- acting res!onsi"l# to+ar(s +or/ers an(

others in societ# can hel! "uil( )alue or ir's an( their sharehol(ers It 'ust "erecogni,e( u! ront that %SR still creates a (egree o con usion an( contro)ers#Is the !ro'otion an( i'!le'entation o sociall# an( en)iron'entall# !re era"lecor!orate con(uct a unction o "usiness or go)ern'ent2 Is the i'!le'entation o %SR

!ractices a cost or a )alue3enhancer2 Is it 4ust !u"lic relations2 In !art- the !ro"le' ste'sro' (e initional issues- an( a !erce!tion in so'e 5uarters that %SR is 'ore a"out

!hilanthro!#- rather than 6(oing "usiness7 an( res!on(ing to sharehol(er interests Thecentral thesis o this gui(e is that %SR is an integral !art o the ne+ "usiness 'o(el

* Lecturer In %o''erce De!art'ent- A!ee 8a# %ollege O 9ine Arts- 8alan(har**- *** Stu(ents O A!ee %ollege O 9ine Arts- 8alan(har


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Pro!erl# un(erstoo(- %SR shoul( "e seen as the +a# that ir's0+or/ing +ith those'ost a ecte( "# their (ecisions $o ten calle( 6sta/ehol(ers7&0can (e)elo! inno)ati)ean( econo'icall# )ia"le !ro(ucts- !rocesses an( ser)ices +ithin core "usiness !rocesses-resulting in i'!ro)e( en)iron'ental !rotection an( social con(itions

This a!!roach 'ani ests itsel in 'an# or's- inclu(ing high !ro ile state'ents 'a(e "#'an# cor!orate %EOs Launching :eneral Electric;s 6Eco'agination7 )ision o 6acleaner- healthier +orl(-7 %hie E.ecuti)e 8e re# I''elt un(erline( the co'!an#;sco''it'ent to in( the 6"ig ans+ers or the "ig 5uestions70cli'ate change- health-+ater0an( to (e)elo! solutions- +or/ing in !artnershi! +ith go)ern'ents an( ci)ilsociet#= < %arroll an( 1eiler ?@FF< Stur(i)ant ?@FF& As a resultthere a!!ears to "e (isagree'ent a"out +hat the ter' 'eans- +hether it shoul( "ei'!le'ente(- ho+ it shoul( "e i'!le'ente(- or +h# it shoul( "e i'!le'ente( $Wel or(C B< Stigson C C& Three s!eci ic actors 'a# ha)e "een instru'ental in (eter'iningthat a )ast a'ount o literature has e'erge( o)er the last hal a centur# +ith regar( to%SR The# inclu(e> the to!ic;s long research histor# (uring +hich 'an# an( )arie(theories- conce!ts- 'o(els- an( the'es ha)e e'erge( $%arroll ?@@@< Wel or( C B a& a generall# negati)e i'age association- an( "& con usion(ue to situation co'!le.it#- an( in !articular the 5uestion o res!onsi"ilit# o"ligation$9ree'an ?@ B< %rane an( Matten C B&< an( ga!s "et+een rhetoric an( realit# In short-(e initions o the ter' %SR 'a# (e!en( on in(i)i(ual !erce!tions ores!onsi"ilit# o"ligation that in turn a((resses the "roa(er to!ic o the role o theorganisation in societ# $Deres/# C < Stigson C C< Woo(+ar( et al C ?< Maignan etal. C C< Maignan an( 9errell C =< E!stein an( Ro# C ?< Haugh C =< %rane an(Matten C B>B=@& In "rie - the conce!t o %SR enco'!asses 'an# (i'ensions o

"usiness acti)it# ranging ro' the social $e g co''unit# !rogra''es&- to econo'ic$e g e'!lo#'ent& to the en)iron'ental $e g +aste re(uction& As !art o ul illing %SRo"ligations- ir's can "e e.!ecte( to engage +ith their sta/ehol(ers- an acti)it# that 'a#



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"e la"elle( sta/ehol(er (ialogue- to (eter'ine a!!ro!riate "usiness "eha)iour un(er eacho the three hea(ings It is to the to!ic o sta/ehol(ers an( sta/ehol(er (ialogue that the

!a!er no+ turns

Corporate Social Responsibility (CSR)

%or!orate Social Res!onsi"ilit# $%SR& aligns "usiness o!erations +ith social )alues%SR integrates the interests o sta/ehol(ers0all o those a ecte( "# a co'!an# scon(uct0into the co'!an# s "usiness !olicies an( actions %SR ocuses on the social-en)iron'entalan( inancial success o a co'!an#0the tri!le "otto' line- +ith the goal

"eing to !ositi)el# i'!act societ# +hile achie)ing "usiness success In the !ast- aco'!an# s 'erit +as solel# "ase( on its inancial !er or'ance Sta/ehol(ers are no+

"eginning to "etter un(erstan( ho+ cor!orate "eha)ior a ects social- !olitical- an(

natural en)iron'ents With this increase in un(erstan(ing co'es an increase( !ressurero' in)estors- consu'ers- an( e'!lo#ees or co'!anies to consi(er social an(en)iron'ental criteria +hen 'a/ing "usiness (ecisions This has create( 'o'entu' orusing a Jtri!le "otto' lineJ or Jsustaina"leJ a!!roach0i e - loo/ing at social-en)iron'entalan( inancial (ata +hen e)aluating "usiness o!erations Increasingl#-sta/ehol(ers are concerne( that an# co'!anies the# su!!ort ha)e "usiness !ractices that

!ositi)el# i'!act societ# +hile achie)ing inancial success %or!orate SocialRes!onsi"ilit# e'"races t+o 'ain conce!ts0accounta"ilit# an( trans!arenc# To(a#-sta/ehol(ers e.!ect co'!anies to !er or' +ell in non inancial areas that in)ol)e hu'anrights- "usiness ethics- en)iron'ental !olicies- cor!orate contri"utions- co''unit#(e)elo!'ent- cor!orate go)ernance- (i)ersit#- an( +or/!lace issues Social an(

en)iron'ental !er or'ances are consi(ere( si(e "# si(e +ith inancial !er or'ance9ro' local econo'ic (e)elo!'ent concerns to international hu'an rights !olicies-co'!anies are "eing hel( accounta"le or their actions an( their i'!act %o'!anies arealso e.!ecte( to (isclose an( co''unicate their !olicies an( !ractice those i'!acte'!lo#ees- co''unities- an( the en)iron'ent In the glo"al econo'#- co'!anies thatare res!onsi)e to the (e'an(s o all o their sta/ehol(ers are argua"l# "etter !ositione( toachie)e long3ter' inancial success Sta/ehol(ers- regulators- an( N:Os (e'an(in or'ation a"out a co'!an#;s social an( en)iron'ental i'!act- an( cor!orateco''unication a"out these issues has "eco'e critical or sustaina"le "usiness gro+thMan# co'!anies are 'a/ing signi icant e orts to (ecrease their en)iron'ental oot!rintan( "etter ser)e their )arious sta/ehol(er constituencies In)estors- consu'ers- an(

e'!lo#ees are 'ore so!histicate( than e)er "e ore While the# un(erstan( that e)er#co'!an# can (o 'ore to "e 'ore sociall# an( en)iron'entall# accounta"le- sta/ehol(ersare re+ar(ing co'!anies +ho 'a/e stri(es to i'!ro)e their !er or'ance in these areas%SR can in)ol)e al'ost an# as!ect o a co'!an# s o!erations E)er# co'!an# has astor# to tell that sets it a!art It is i'!ortant or e)er# co'!an# to in( its stor# an( to tellit A co'!an# that is consi(ere( a goo( cor!orate citi,en is one that (e'onstrates aco''it'ent to its sta/ehol(ers through sociall# res!onsi"le "usiness !ractices an(trans!arent o!erations



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Why should business be socially es!onsibleSocial res!onsi"ilit# is a )oluntar# e ort on the !art o "usiness to ta/e )arious ste!s tosatis # the e.!ectation o the (i erent interest grou!s As #ou ha)e alrea(# learnt- theinterest grou!s 'a# "e o+ners- in)estors- e'!lo#ees- consu'ers- go)ern'ent an( societ#or co''unit# 1ut the 5uestion arises- +h# the "usiness shoul( co'e or+ar( an( "eres!onsi"le to+ar(s these interest grou!s Let us consi(er the ollo+ing !oints>

i" Public I#a$e 3 The acti)ities o "usiness to+ar(s the +el are o the societ# earngoo(+ill an( re!utation or the "usiness The earnings o "usiness also (e!en( u!on the

!u"lic i'age o its acti)ities Peo!le !re er to "u# !ro(ucts o a co'!an# that engagesitsel in )arious social +el are !rogra''es Again- goo( !u"lic i'age also attractshonest an( co'!etent e'!lo#ees to +or/ +ith such e'!lo#ers

ii" %o&e n#en' Re$ula'ion 3 To a)oi( go)ern'ent regulations "usiness'en shoul((ischarge their (uties )oluntaril# 9or e.a'!le- i an# "usiness ir' !ollutes theen)iron'ent it +ill naturall# co'e un(er strict go)ern'ent regulation- +hich 'a#ulti'atel# orce the ir' to close (o+n its "usiness Instea(- the "usiness ir' shoul(engage itsel in 'aintaining a !ollution ree en)iron'ent

iii" Su &i&al and % o('h 3E)er# "usiness is a !art o the societ# So or its sur)i)alan( gro+th- su!!ort ro' the societ# is )er# 'uch essential 1usiness utili,es thea)aila"le resources li/e !o+er- +ater- lan(- roa(s- etc o the societ# So it shoul( "e theres!onsi"ilit# o e)er# "usiness to s!en( a !art o its !ro it or the +el are o the societ#

i&" E#!loyee sa'is)ac'ion 3 1esi(es getting goo( salar# an( +or/ing in a health#at'os!here- e'!lo#ees also e.!ect other acilities li/e !ro!er acco''o(ation-trans!ortation- e(ucation an( training The e'!lo#ers shoul( tr# to ul ill all thee.!ectation o the e'!lo#ees "ecause e'!lo#ee satis action is (irectl# relate( to

!ro(ucti)it# an( it is also re5uire( or the long3ter' !ros!erit# o the organisation 9ore.a'!le- i "usiness s!en(s 'one# on training o the e'!lo#ees- it +ill ha)e 'oree icient !eo!le to +or/ an( thus- earn 'ore !ro it

&" Consu#e A(a eness 3 No+3a3(a#s consu'ers ha)e "eco'e )er# consciousa"out their rights The# !rotest against the su!!l# o in erior an( har' ul !ro(ucts "#

or'ing (i erent grou!s This has 'a(e it o"ligator# or the "usiness to !rotect the

interest o the consu'ers "# !ro)i(ing 5ualit# !ro(ucts at the 'ost co'!etiti)e !rice

Importance of CSR



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Man# actors an( in luences ha)e le( to increasing attention "eing (e)ote( to the role oco'!anies an( %SR These inclu(e>

Sus'ainable de&elo!#en' > Unite( Nations; $UN& stu(ies an( 'an# others ha)eun(erline( the act that hu'an/in( is using natural resources at a aster rate than

the# are "eing re!lace( I this continues- uture generations +ill not ha)e theresources the# nee( or their (e)elo!'ent In this sense- 'uch o current(e)elo!'ent is unsustaina"le0it can;t "e continue( or "oth !ractical an( 'oralreasons Relate( issues inclu(e the nee( or greater attention to !o)ert# alle)iationan( res!ect or hu'an rights %SR is an entr# !oint or un(erstan(ing sustaina"le(e)elo!'ent issues an( res!on(ing to the' in a ir';s "usiness strateg#

%lobali*a'ion > With its atten(ant ocus on cross3"or(er tra(e- 'ultinationalenter!rises an( glo"al su!!l# chains0econo'ic glo"ali,ation is increasingl#raising %SR concerns relate( to hu'an resource 'anage'ent !ractices-en)iron'ental !rotection- an( health an( sa et#- a'ong other things %SR can

!la# a )ital role in (etecting ho+ "usiness i'!acts la"our con(itions- localco''unities an( econo'ies- an( +hat ste!s can "e ta/en to ensure "usiness hel!sto 'aintain an( "uil( the !u"lic goo( This can "e es!eciall# i'!ortant ore.!ort3oriente( ir's in e'erging econo'ies

%o&e nance+ :o)ern'ents an( intergo)ern'ental "o(ies- such as the UN- theOrganisation or Econo'ic %o3o!eration an( De)elo!'ent $OE%D& an( theInternational La"our Organi,ation $ILO& ha)e (e)elo!e( )arious co'!acts-(eclarations- gui(elines- !rinci!les an( other instru'ents that outline nor's or+hat the# consi(er to "e acce!ta"le "usiness con(uct %SR instru'ents o tenre lect internationall#3agree( goals an( la+s regar(ing hu'an rights- the

en)iron'ent an( anti3corru!tion

Co !o a'e sec'o i#!ac'+ The sheer si,e an( nu'"er o cor!orations- an( their !otential to i'!act !olitical- social an( en)iron'ental s#ste's relati)e togo)ern'ents an( ci)il societ#- raise 5uestions a"out in luence an( accounta"ilit#E)en s'all an( 'e(iu' si,e enter!rises $SMEs&- +hich collecti)el# re!resent thelargest single e'!lo#er- ha)e a signi icant i'!act %o'!anies are glo"ala'"assa(ors o change an( )alues Ho+ the# "eha)e is "eco'ing a 'atter oincreasing interest an( i'!ortance $see "o. "elo+&

Co##unica'ions > A()ances in co''unications technolog#- such as the Internetan( 'o"ile !hones- are 'a/ing it easier to trac/ an( (iscuss cor!orate acti)itiesInternall#- this can acilitate 'anage'ent- re!orting an( change E.ternall#-

N:Os- the 'e(ia an( others can 5uic/l# assess an( !ro ile "usiness !ractices the#)ie+ as either !ro"le'atic or e.e'!lar# In the %SR conte.t- 'o(ernco''unications technolog# o ers o!!ortunities to i'!ro)e (ialogue an(

!artnershi!s



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,inance+ %onsu'ers an( in)estors are sho+ing increasing interest in su!!ortingres!onsi"le "usiness !ractices an( are (e'an(ing 'ore in or'ation on ho+co'!anies are a((ressing ris/s an( o!!ortunities relate( to social an(en)iron'ental issues A soun( %SR a!!roach can hel! "uil( share )alue- lo+erthe cost o ca!ital- an( ensure "etter res!onsi)eness to 'ar/ets

E'hics+ A nu'"er o serious an( high3!ro ile "reaches o cor!orate ethicsresulting in (a'age to e'!lo#ees- sharehol(ers- co''unities or the en)iron'ent

0as +ell as share !rice0ha)e contri"ute( to ele)ate( !u"lic 'istrust ocor!orations A %SR a!!roach can hel! i'!ro)e cor!orate go)ernance-trans!arenc#- accounta"ilit# an( ethical stan(ar(s $see 'atri. "elo+&

Consis'ency and Co##uni'y+ %iti,ens in 'an# countries are 'a/ing it clearthat cor!orations shoul( 'eet the sa'e high stan(ar(s o social an(en)iron'ental care- no 'atter +here the# o!erate In the %SR conte.t- ir's canhel! "uil( a sense o co''unit# an( share( a!!roach to co''on !ro"le's

Leade shi!+ At the sa'e ti'e- there is increasing a+areness o the li'its ogo)ern'ent legislati)e an( regulator# initiati)es to e ecti)el# ca!ture all theissues that %SR a((ress %SR can o er the le.i"ilit# an( incenti)e or ir's toact in a()ance o regulations- or in areas +here regulations see' unli/el#

Business Tool > 1usinesses are recogni,ing that a(o!ting an e ecti)e a!!roach to%SR can re(uce the ris/ o "usiness (isru!tions- o!en u! ne+ o!!ortunities- (ri)einno)ation- enhance "ran( an( co'!an# re!utation an( e)en i'!ro)e e icienc#

Po'en'ial bene)i's o) i#!le#en'in$ a CSR a!! oach

6We "elie)e in %SR "ecause it is a !ro!osition aligne( +ith our )alues- "ut also "ecauseit 'a/es "usiness sense Our co''ercial !artners e.!ect ro' us soun( en)iron'entalan( social !ractices We get an( un(erstan( the 'essage an( are acti)el# !ro'oting %SRa'ong associates We +ant to "e recognise( as a res!onsi"le in(ustr#- a((ing )alue toour !ro(ucts 7

-ey !o'en'ial bene)i's )o )i #s i#!le#en'in$ CSR include+

Be''e an'ici!a'ion and #ana$e#en' o) an e&e .e/!andin$ s!ec' u# o) is0"E ecti)el# 'anaging go)ernance- legal- social- en)iron'ental- econo'ic an(other ris/s in an increasingl# co'!le. 'ar/et en)iron'ent- +ith greatero)ersight an( sta/ehol(er scrutin# o cor!orate acti)ities- can i'!ro)e thesecurit# o su!!l# an( o)erall 'ar/et sta"ilit# %onsi(ering the interests o

!arties concerne( a"out a ir';s i'!act is one +a# o "etter antici!ating an('anaging ris/



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I#! o&ed e!u'a'ion #ana$e#en'" Organi,ations that !er or' +ell +ithregar( to %SR can "uil( their re!utation- +hile those that !er or' !oorl# can(a'age "ran( an( co'!an# )alue +hen e.!ose( Re!utation- or "ran( e5uit#- is

oun(e( on )alues such as trust- cre(i"ilit#- relia"ilit#- 5ualit# an( consistenc#

E)en or ir's that (o not ha)e (irect retail e.!osure through "ran(s- theirre!utation or a((ressing %SR issues as a su!!l# chain !artner0 "oth goo( an( "a(0can "e crucial co''erciall#

Enhanced abili'y 'o ec ui'1 de&elo! and e'ain s'a))" This can "e the (irectresult o !ri(e in the co'!an#;s !ro(ucts an( !ractices- or o intro(ucingi'!ro)e( hu'an resources !ractices- such as 6 a'il#3 rien(l#7 !olicies It canalso "e the in(irect result o !rogra's an( acti)ities that i'!ro)e e'!lo#ee'orale an( lo#alt# E'!lo#ees are not onl# ront3line sources o i(eas ori'!ro)e( !er or'ance- "ut are cha'!ions o a co'!an# or +hich the# are

!rou( to +or/

I#! o&ed inno&a'ion1 co#!e'i'i&eness and #a 0e' !osi'ionin$" %SR is as'uch a"out sei,ing o!!ortunit# as a)oi(ing ris/ Dra+ing ee("ac/ ro' (i)ersesta/ehol(ers can "e a rich source o i(eas or ne+ !ro(ucts- !rocesses an('ar/ets- resulting in co'!etiti)e a()antages 9or e.a'!le- a ir' 'a# "eco'ecerti ie( to en)iron'ental an( social stan(ar(s so it can "eco'e a su!!lier to

!articular retailers The histor# o goo( "usiness has al+a#s "een one o "eingalert to tren(s- inno)ation- an( res!on(ing to 'ar/ets Increasingl#- 'ainstrea'a()ertising eatures the en)iron'ental or social "ene its o !ro(ucts $e g - h#"ri(cars- unlea(e( !etrol- ?B ethicall# !ro(uce( co ees- +in( tur"ines- etc &

Enhanced o!e a'ional e))iciencies and cos' sa&in$s" These lo+ in !articularro' i'!ro)e( e iciencies i(enti ie( through a s#ste'atic a!!roach to

'anage'ent that inclu(es continuous i'!ro)e'ent 9or e.a'!le- assessing theen)iron'ental an( energ# as!ects o an o!eration can re)eal o!!ortunities orturning +aste strea's into re)enue strea's $+oo( chi!s into !article "oar(- ore.a'!le& an( or s#ste'3+i(e re(uctions in energ# use- an( costs

I#! o&ed abili'y 'o a'' ac' and build e))ec'i&e and e))icien' su!!ly chainela'ionshi!s" A ir' is )ulnera"le to the +ea/est lin/ in its su!!l# chain Li/e3

'in(e( co'!anies can or' !ro ita"le long3ter' "usiness relationshi!s "#i'!ro)ing stan(ar(s- an( there"# re(ucing ris/s Larger ir's can sti'ulate s'aller ir's +ith +ho' the# (o "usiness to i'!le'ent a %SR a!!roach 9ore.a'!le- so'e large a!!arel retailers re5uire their su!!liers to co'!l# +ith+or/er co(es an( stan(ar(s

Enhanced abili'y 'o add ess chan$e" A co'!an# +ith its 6ear to the groun(7through regular sta/ehol(er (ialogue is in a "etter !osition to antici!ate an(res!on( to regulator#- econo'ic- social an( en)iron'ental changes that 'a#



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occur Increasingl#- ir's use %SR as6ra(ar7 to (etect e)ol)ing tren(s in the'ar/et

2o e obus' 3social licence4 'o o!e a'e in 'he co##uni'y" I'!ro)e( citi,enan( sta/ehol(er un(erstan(ing o the ir' an( its o"4ecti)es an( acti)ities

translate into i'!ro)e( sta/ehol(er relations This- in turn- 'a# e)ol)e into 'orero"ust an( en(uring !u"lic- !ri)ate an( ci)il societ# alliances $all o +hich relateclosel# to %SR re!utation- (iscusse( a"o)e& %SR can hel! "uil( 6social ca!ital 7

Real )i #s a e e!o 'in$ eal bene)i's ) o# CSR

There is general e)i(ence that ir's are "eginning to "ene it ro' their %SR acti)itiesThis can "e seen ro' such things as !ositi)e 'e(ia !ro ile $e g - +inning a+ar(s-recei)ing attention&- sur)e#s o e'!lo#ee- co''unit# an( custo'er satis action- an(

ro' the success o %SR3(ri)en "usiness lines Here are so'e e.a'!les

The In(ian TATA grou! is engage( in a +i(e )ariet# o acti)ities (irecte( athel!ing co''unit# (e)elo!'ent The co'!an# We" site lists e.a'!les o the !ositi)e'e(ia this has generate(

There are no+ high3!ro ile lists o the 'ost res!onsi"le co'!anies The Inno)estir' 6? Most Sustaina"le %o'!anies in the Worl(7 list- or e.a'!le- has "een release(

annuall# at the Worl( Econo'ic 9oru' since C

The C F E(el'an Trust 1aro'eter $see ootnote @- a"o)e&- suggeste( that thereha( "een an i'!ro)e'ent in !u"lic !erce!tion o "usiness This 'a# ha)e "een (ue tothe increase( attention "usinesses are gi)ing to %SR issues

Stan(ar( %hartere( 1an/;s 6Seeing is 1elie)ing7 ca'!aign to hel! cataractsu erers has resulte( in a nu'"er o a+ar(s or the co'!an#

Rela'ionshi! be'(een CSR and 'he la(There is a close relationshi! "et+een %SR an( the la+ The 'ain instru'entgo)ern'ents use to a((ress a ir';s social- en)iron'ental an( econo'ic i'!acts is thela+ Man# countries ha)e a +i(e range o la+s- +hether at the national- state or local

le)els o go)ern'ent- relating to consu'ers- +or/ers- health an( sa et#- hu'an rights an(en)iron'ental !rotection- "ri"er# an( corru!tion- cor!orate go)ernance an( ta.ation A

ir';s %SR a!!roach shoul( "egin "# ensuring ull co'!liance +ith those la+s alrea(#in !lace No 'atter ho+ goo( a %SR !olic# 'a# "e ailure to o"ser)e the la+ +illun(er'ine other goo( e orts Loo/ing ahea(- the %SR acti)ities o ir's can "e seen as a

!roacti)e 'etho( o a((ressing !otentiall# !ro"le'atic con(uct "e ore it attracts legalattention



9/15

A /e# eature o the e'erging %SR (e"ate is the (i erence "et+een a 6co'!liance7'entalit# $i e - onl# (oing those things that are re5uire(& an( a 6)alue (ri)en7 'entalit#$i e - using a %SR a!!roach to inno)ate an( see/ ne+ 'ar/ets& So'e co''entatorsargue that a co'!liance3"ase( a!!roach (oes not hel! "usiness- "ecause it ten(s not to(ri)e inno)ation an( the 6out o the "o.7 thin/ing the# see as necessar# in the ra!i(l#

changing "usiness +orl( That sai(- a nu'"er o s!eci ic legal as!ects are +orth'entioning

Pe )o #ance e!o 'in$ and 'he la(" In 'an# 4uris(ictions there are la+s in !lace re5uiring ir's in !articular sectors to !u"licl# (isclose certain o their !ractices an( acti)ities The U K %o'!anies Act C - or e.a'!le- re5uires !u"licl#3liste( co'!anies to re!ort on a nu'"er o s!eci ic issues +here the# arenecessar# to un(erstan(ing the co'!an#;s "usiness These inclu(e en)iron'ental'atters $inclu(ing the i'!act o the co'!an#;s "usiness on the en)iron'ent&- theco'!an#;s e'!lo#ees- social an( co''unit# issues- an( ris/s through theco'!an# su!!l# chains Si'ilar !ro)isions also e.ist in 9rance an( across the

EU Co !o a'e $o&e nance and disclosu e" Social an( en)iron'ental issues are

increasingl# "eing seen as integral co'!onents o the cor!orate go)ernanceagen(a In 'an# countries ir's issuing securities are re5uire( to !u"licl#(isclose their cor!orate go)ernance !ractices an( co'!l# +ith local gui(elines onthe su"4ect A C re!ort "# the international la+ ir' 9resh iel(s- 1ruc/hausan( DeringerC? conclu(e( that un(er the current legal s#ste's o 'an# countries-(irectors 'ight "e in "reach o their i(uciar# (uties i the# (i( not ta/e intoaccount en)iron'ental- social an( go)ernance issues

B ibe y" %SR also stresses that ir's shoul( a(o!t res!onsi"le !ractices+here)er the# o!erate National la+s 'a/ing it illegal to "ri"e oreign o icials too"tain or retain "usiness on the su"4ect are o ten "ase( on the ?@@F OE%D%on)ention on %o'"ating 1ri"er# o 9oreign Pu"lic O icials in International1usiness Transactions- CC an( the C = UN %on)ention Against %orru!tion C=

Re5ui e#en's unde di))e en' 6u isdic'ions" It is i'!ortant to "e a+are o the)ar#ing legal re5uire'ents o (i erent countries In the U K - or e.a'!le-legislation re5uires !ension un( trustees to !u"lish a co''ent in theirin)est'ent state'ents on the e.tent to +hich their in)est'ent !olicies a((resssocial- ethical an( en)iron'ental issues As note( a"o)e- in Euro!ean countries

la+s re5uire co'!anies to re!ort on their social an( en)iron'ental !er or'anceIn the U S - a nu'"er o ir's ha)e "een sue( un(er the Alien Tort Claims Act$e g - Doe ) Unocal&- +hich raises the !ossi"ilit# that cor!orate lia"ilit# coul( "eesta"lishe( through transnational ci)il litigation The U S has also signi icantl#re)ise( its cor!orate go)ernance legislation in recent #ears- in !articular- !assingthe Sarbanes-Oxley Act in C C +hich esta"lishes stricter stan(ar(s or all U S

!u"lic co'!an# "oar(s- 'anage'ent an( !u"lic accounting ir's At the Unite( Nations- a S!ecial Re!resentati)e on 1usiness an( Hu'an Rights to the



10/15

Secretar#3 :eneral +as a!!ointe( in 8ul# C The S!ecial Re!resentati)e ise.!ecte( to i(enti # stan(ar(s o cor!orate res!onsi"ilit# an( accounta"ilit#-enhance un(erstan(ing an( recognition o these stan(ar(s- an( issuereco''en(ations on uture Unite( Nations +or/ regar(ing "usiness an( hu'anrights issues

Mention shoul( also "e 'a(e in this conte.t o the 'an# "usiness co(es o con(uct thate.ist These co(es- o ten (e)elo!e( "# a s!eci ic in(ustr# sector- are usuall# )oluntar#an( not legall#3"in(ing Nonetheless- the# can "e use( in a legall#3"in(ing 'anner in acontractual conte.t $e g - in a su!!l# chain& Here- )arious legal 5uestions 'a# arise-inclu(ing in relation to +hether national- regional or international stan(ar(s ta/e

!rece(ence

I#!le#en'a'ion o) Co !o a'e Social Res!onsibili'y

There is no 6one3si,e3 its3all7 'etho( or !ursuing a cor!orate social res!onsi"ilit#$%SR& a!!roach Each ir' has uni5ue characteristics an( circu'stances that +ill a ectho+ it )ie+s its o!erational conte.t an( its (e ining social res!onsi"ilities Each +ill )ar#in its a+areness o %SR issues an( ho+ 'uch +or/ it has alrea(# (one to+ar(si'!le'enting a %SR a!!roach That sai(- there is consi(era"le )alue in !rocee(ing +ith%SR i'!le'entation in a s#ste'atic +a#0in har'on# +ith the ir';s 'ission- an(sensiti)e to its "usiness culture- en)iron'ent an( ris/ !ro ile- an( o!erating con(itionsMan# ir's are alrea(# engage( in custo'er- e'!lo#ee- co''unit# an( en)iron'entalacti)ities that can "e e.cellent starting !oints or ir'3+i(e %SR a!!roaches %SR can "e

!hase( in "# ocusing care ull# on !riorities in accor(ance +ith resource or ti'econstraints Alternati)el#- 'ore co'!rehensi)e an( s#ste'atic a!!roaches can "e

!ursue( +hen resources an( o)erall !riorities !er'it or re5uire The "otto' line is that%SR nee(s to "e integrate( into the ir';s core (ecision 'a/ing- strateg#- 'anage'ent

!rocesses an( acti)ities- "e it incre'entall# or co'!rehensi)el#

The i'!ulse or har'oni,ation also ste's ro' the +i(er social conte.t As +ill "e(escri"e( "elo+- there are a nu'"er o go)ern'ental an( !artnershi! (e)elo!e(initiati)es that ha)e e'erge( to !ro)i(e gui(ance on go)ern'ental an( societale.!ectations o "usiness 1# using these instru'ents0such as the OE%D MNE:ui(elines or the UN :lo"al %o'!act0"usiness users can "e con i(ent that the# are

"asing their e orts on internationall#3en(orse( a!!roaches

What ollo+s "elo+ is a "roa( ra'e+or/ or i'!le'enting a %SR a!!roach that "uil(son e.isting e.!erience as +ell as /no+le(ge o other iel(s- such as 5ualit# an(en)iron'ental 'anage'ent The ra'e+or/ ollo+s the a'iliar 6!lan- (o- chec/ an(i'!ro)e7 'o(el that un(erlies such +ell3/no+n initiati)es as those o the InternationalOrgani,ation or Stan(ar(i,ation $ISO& in the areas o 5ualit# an( en)iron'ental'anage'ent s#ste's The ra'e+or/ is also inten(e( to "e le.i"le- an( ir's areencourage( to a(a!t it as a!!ro!riate or their organi,ation



11/15

CSR and s#all businesses

In 'ost regions o the +orl(0in "oth the (e)elo!e( an( (e)elo!ing +orl(0the great'a4orit# o "usinesses are classi ie( as 6s'all an( 'e(iu' si,e( enter!rises7 $SMEs&Whether 'icro one3!erson "usinesses or ir's +ith aroun( C e'!lo#ees- SMEs arealso the largest e'!lo#ers While in(i)i(uall# their contri"utions an( i'!acts onsurroun(ing co''unities an( the en)iron'ent 'a# "e s'all- collecti)el# these i'!actsare large 1ecause SMEs are 'an# an( ten( to ha)e a lo+er !u"lic !ro ile than theirlarger counter!arts- non3go)ern'ental organi,ations $N:Os& 'a# not target the' or

ailing to ta/e their societal i'!acts into account Ho+e)er- the su!!ort o the co''unit#aroun( s'all ir's is usuall# 'ore essential or their success than it is or large

"usinesses In act- larger ir's in the %SR s!otlight 'a# see/ out as "usiness !artner;ss'all local ir's +ith %SR a!!roaches in !lace The (istinct challenges acing s'all

"usiness such as "eing !resse( or ti'e- 'one# an( resources0are +ell /no+n 1ut+hile these challenges are great- s'aller "usinesses are also recogni,ing the )alue oe'"racing %SR The %SR i'!le'entation ra'e+or/ set out in this gui(e is "uilt aroun(the 6!lan- (o- chec/ an( i'!ro)e7 'o(el- +hich is a soun( a!!roach or ir's o an#si,e Ho+e)er- 'an# o the ste!s 'a# "e too ela"orate or s'all "usinesses To a((ressthe nee(s o s'all "usiness o+ners an( their e'!lo#ees- ti!s or si'!li #ing the !rocessare !ro)i(e( throughout in "o.es 'ar/e( +ith the 'agni #ing glass icon Thesuggestions 'a# also "e o interest to those in larger ir's Re lecting the i'!ortance oSMEs- there are an increasing nu'"er o s!eciall# (e)elo!e( tool/its or s'all "usiness

These inclu(e>

In' oduc'ion 'o Co !o a'e Social Res!onsibili'y )o S#all 7 2ediu#.Si*edEn'e ! ises" This is a ree- online- Euro!ean %o''ission tool/it or SMEs that inclu(esa sel 3a+areness test- case stu(ies an( other 'aterials the ser)ice or !ro(uct concerns ocusto'ers< sa et#< the hu'an rights an( en)iron'ental concerns o co''unities

social responsibility of business final copy

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