CORPORATE SOCIAL RESPONSIBILITY

Bhavdeep Singh

FABER CASTELL

Nearly 20 years ago FaberCastell started to think ecologically and they began to plant special pines in the Brazilian desert, thought of as uncultivable before.

10 years after the first plantings, FaberCastell started to cut these trees in order to make their pencils but every time they cut a tree they immediately replant a new one.

Nowadays their artificially created forests have an extent of 10,000 hectares of land, providing a place to live for a huge number of different animals and are fulfilling the wood demand of FaberCastell.

For their ecological engagement FaberCastell also received several prices and awards

About Corporate Social Responsibility

It is about giving back to society for having taken.

It is about doing- not because one wants to, but because one has to.

It is about responding to having exceeded the limits set by nature.

What is Corporate Social Responsibility

Corporate social responsibility is a concept whereby organizations consider the interests of society by taking responsibility for the impact of their activities on customers, suppliers, employees, shareholders, communities and other stakeholders, as well as the environment.

Two views of CSR

The Classical View: Management’s only social responsibility is to maximize profits.

The Socioeconomic View: Management’s social responsibility goes beyond making profits to include protecting and including society’s welfare.

Definition

CSR encompasses the economic, legal, ethical and discretionary (philanthropic) expectations that society has of organizations at a given point in time.

Understanding the Four Components

Responsibility

Societal Expectatio

n

Examples

Economic Required Be profitable. Maximize sales, minimize costs, etc.

Legal Required Obey laws and regulations.

Ethical Expected Do what is right, fair and just.

Discretionary(Philanthropic)

Desired/Expected

Be a good corporate citizen.

Philanthropic ResponsibilitiesPhilanthropic ResponsibilitiesBe a good corporate citizen.

Ethical ResponsibilitiesEthical ResponsibilitiesBe ethical.

Legal ResponsibilitiesLegal ResponsibilitiesObey the law.

Economic ResponsibilitiesEconomic ResponsibilitiesBe profitable.

Pyramid of CSR

Benefits of CSR

Increases sales and market share. Strengthens brand positioning. Enhances corporate image and

clout. Increases ability to attract, retain

and motivate employees. Increases appeal for investors and

financial analysts.

………and CHALLENGES

Choosing social issues. Selecting an initiative to address

the issue. Developing and implementing

program plans. Evaluation.

Social Involvement and Economic Performance

Impact of social responsibility on a firm’s profits (+ve or –ve) takes a number of years to appear.

By evaluating socially responsible mutual stock funds.

Acc. to large investment banks- When a company acts socially irresponsible, it creates significant business risks.

Greening Of Management

The recognition of the close link between an organization’s decisions and activities and its impact on the natural environment.

Approaches to Being Green:

Low

Legal Approach

Environmental Sensitivity

Market Approach

Stakeholder Approach

Activist Approach

High

Corporate Social Responsibility (CSR)

Corporate Citizenship Concepts Corporate social responsibility –

emphasizes obligation and accountability to society.

Corporate social responsiveness – emphasizes action, activity.

Corporate social performance – emphasizes outcomes, results.

The Pros and Cons of CorporateSocial Responsibility

Arguments for corporatesocial responsibility

Arguments against corporatesocial responsibility

Balances corporate power with responsibility.

Discourages governmentregulation.

Promotes long-term profitsfor business.

Responds to changingstakeholders’ demands.

Corrects social problems

Lowers economic efficiency and profit.

Dilution of purpose

Imposes hidden costs passed on to stakeholders.

Lack of skills.

Lack of accountability.

An important step taken by the government

Introduction of COMPANIES BILL 2009 on August 3, 2009.

The companies act can be defined broadly, obliging companies to take stock of their business activities and their effect on employees, communities and the environment.

It is meant to protect the rights of stakeholders and to maintain lawful responsibility to manage companies social and environmental impacts.

Microsoft Johnson and Johnson Google Coca Cola Sony Toyota Motors Procter and Gamble Amazon.com Walt Disney Honda Motors

Top-Rated Companies for Social Resposibility

McDonald`s is promoting a state wide childhood immunization campaign in Oklahoma

It`s 10yrs sponsorship commitment of a Gorilla at Sydney`s zoo is aimed at preserving this endangered species.

It`s contribution to Ronald McDonald House Charities.

Entered Moga in 1962. Established local milk purchasing

units. Provided refrigerated dairies and

nutritionists, veterinarians and quality assurance experts to assist poor farmers.

Monthly training sessions for farmers.

Nestlé has built a productive milk cluster in Moga sourcing milk from 75,000 farmers through 650 dairies.

Hence improved standard of living and achieved long term competitive advantage.

Financial governance is only one part of the broader issue of corporate governance, with diverse stakeholders, citizens and society at large.

Environmental concerns, social diversity, similar issues within a company must therefore be seen as its core, interrelated elements.