MBA

Name: Roll No.: Course: Teacher:

Awais Farooq 28 Introduction To Business Prof. Fida Hussain Bukhari CSR

Topic:

Corporate Social Responsibility

Table of Contents
1. Introduction 2. Objectives 3. Approaches
3.1 3.2 3.3 3.4 Community-based Development Philanthropy CSR Business Strategy Creating Shared Value

4. Social Accounting 5. Business Benefits

5.1 5.2 5.3 5.4 Human resources Risk management Brand differentiation License to operate

6. Criticisms
6.1 Interferes with Business Motives 6.2 Commercial Benefits 6.3 Insincerity

7. Ethical Consumerism 8. CSR in Pakistan

Introduction
CSR or Corporate Social Responsibility is a form of corporate self regulation imposed by business upon its business strategies in order to ensure its compliance with ethical standards and the spirit of law. Corporate Social Responsibility has been defined as many things lately. Simply put, it is the commitment of a business or company to continuously upgrade its processes, systems, products and services by behaving responsibly and creating value for local communities they operate in, and by enabling its employees, existing and potential customers to improve their standards of living. The term CSR came into use in the late 1960s and the early 1970s after the formation of many multinational companies. It is often misunderstood as Business Ethics which is a different than CSR.

Self Regulation:
Self-regulation is a process whereby an organization volunteers to monitor its own adherence to legal, ethical, or safety standards, rather than having an outside independent agency such as a governmental entity monitor and enforce those standards. CSR is a corporate self regulation which means that it is adopted by a business on its own will. Outside forces do not have to tell a company to implement CSR in its business model.

Business Ethics:
Business ethics is a form of professional ethics that examines ethical principles and moral problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations. Business ethics deals with business itself and not with the society so it cannot be termed as CSR.

Objectives
The goal of the CSR is to embrace the responsibility of business and make a positive impact on the society, employees, stakeholders, and the environment. As well as Conduct business in a socially acceptable way and accommodate society to better themselves Make sure that activities of the business do not harm the environment Ensure the satisfaction and well being of employees with the company and enable them to improve their living standards Build up a good reputation of the company among the public Make a distinctive position in the market by being socially responsible Make sure that the company meets ethical standards

Approaches
The discussion about CSR is very heterogeneous. It can be imposed by a business in many ways. Some of the most popular approaches to implement CSR are given below.

1. Community-based Development
An approach for CSR that is becoming more widely accepted is community-based development approach. In this approach large organizations work with local communities to help them better themselves. For example Shell Foundations involvement in the Flower Valley Conservation Trust, South Africa. In Flower Valley they have set up an Early Learning Centre where they provide learning and training facilities to the children as well as develop new skills for the adults.

Other activities in which companies involve for the purpose of CSR are establishment of education facilities for adults and HIV/AIDS education programs.

2. Philanthropy
Another more common approach to CSR is philanthropy in which organizations make monetary donations to local communities or help for improvement of communities in developing countries. Some organizations do not like this approach that much because in their opinion it does not help build on thse skills of local people as compared to community-based development.

3. CSR in Business Strategy

Another approach to CSR is to incorporate the CSR strategy directly into the business strategy of an organization. For instance, procurement of Fair Trade tea and coffee has been adopted by various businesses including KPMG. Its CSR manager commented, "Fair-trade fits very strongly into our commitment to our communities."

4. Creating Shared Value

Another approach is garnering increasing CSR interest. This is called Creating Shared Value, or CSV. The shared value model is based on the idea that corporate success and social welfare are interdependent.

The central premise behind creating shared value is that the competitiveness of a company and the health of the communities around it are mutually dependent.

Social Accounting
For a business to take responsibility for its actions, that business must be fully accountable. Social Accounting is a concept describing the communication of social and environmental effects of a companys actions to a society at large. Social Accounting is thus an important element of CSR. Social accounting emphasizes the notion of corporate accountability. A number of reporting guidelines or standards have been developed to serve as frameworks for social accounting, auditing and reporting including:

* AccountAbility's AA1000 standard, based on John Elkington's triple bottom line (3BL) reporting * The Prince's Accounting for Sustainability Project's Connected Reporting Framework * The Fair Labor Association conducts audits based on its Workplace Code of Conduct and posts audit results on the FLA website. * Social Accountability International's SA8000 standard * The ISO 14000 environmental management standard

Business Benefits
The scale and nature of the benefits of CSR for an organization can vary depending on the nature of the enterprise, and are difficult to quantify. But the potential benefits gained by a business through CSR are given below.

1. Human Resources
CSR program can be an aid to recruitment particularly within the competitive graduate student market. Potential recruits often ask about the CSR policy of a company in an interview and having a comprehensive CSR policy can give an advantage. It also helps to improve the companys perception among its employees.

2. Risk Management
Management of risk is a central part of any corporate strategy. Reputations which take decades to build up can be destroyed in hours by a small environmental accident and can also draw unwanted attention from regulators and govt. Having a genuine policy of Doing The Things Right can offset these risks.

3. Brand Differentiation
Companies are always striving for a unique selling point in the competition market that can separate them from others in the minds of the consumer. CSR can help build customer loyalty based on distinctive ethical values.

E.g. Apples all electronic equipment including mobiles and computers are packed in already recycled and further recyclable materials to reduce environmental burden. iPhone embodies Apples continuing environmental progress. It is designed with the following features to reduce environmental impact: * Mercury-free LED-backlit display * Arsenic-free display glass * Brominated flame retardant-free * PVC free * Majority of packaging made from postconsumer recycled fiberboard and biobased materials * Power adapter outperforms strictest global energy efficiency standards

4. License to Operate
Corporations are keen to avoid interference in their business through taxation or regulations. By taking voluntary steps, they can show governments and the public that they are taking issues such as health and safety, or the environment seriously as good corporate citizens.

Criticism
1. Interferes with Business Motives
Some critics argue that the purpose of a corporation is to maximize profits and returns to its shareholders, they say that only people can have social responsibilities and corporations are only responsible to their shareholders.

2. Commercial Benefits
Some critics believe that CSR programs are undertaken by companies such as McDonalds to distract public from questions raised upon their core operations. They argue that some corporations start CSR programs for the commercial benefit they enjoy through raising their reputation with the public or with government and corporations which exist solely to maximize profits are unable to advance the interests of society as a whole.

3. Insincerity
It is also believed and proved that some companies use fake CSR policies to gain commercial benefits and compete with other companies having good CSR policies. Critics suggest that these fake CSR policies are just show off and damage public faith in CSR. E.g. Greenwashing is a form of spin in which green marketing is deceptively used to promote the perception that a 9

company's policies or products are environmentally friendly.

Ethical Consumerism
As global population increases, so does the pressure on limited natural resources required to meet rising consumer demand. Consumers are becoming more aware of the environmental and social implications of day-to-day company decisions and are therefore beginning to make purchasing decisions related to their environmental and ethical concerns. This might not be prominent case in Pakistan but in abroad and developed countries consumers give much preference to the products which are produced in an eco-friendly environment and do not lead to environmental pollution.

CSR in Pakistan
Philanthropy and corporate philanthropy have been in practice for decades in Pakistan, but it is only recently that leading corporates have started moving towards integrating CSR into their strategic business, as well as social and community development strategies.

Many Businesses in Pakistan view CSR as mere philanthropy or charity. They lack the knowledge and expertise to implement CSR 10

into their business strategies and consider doing so as an added responsibility. There are wide ranges of opportunities in Pakistan for responsible businesses seeking to make difference in society by implantation of CSR in their corporate strategies. Unequal distribution of wealth, and unemployment are choking Pakistani cities. There are several successful and sustainable development models available throughout the developed countries but the lack of infrastructure in rural and remote areas is a major challenge to be faced. CSR is not limited to floods or natural calamities only, We see several Pakistani organizations showing their social responsibility in day to day life, E.g. Quaid-e-Azam Law College has recently adopted a family of orphans to help them meet their educational needs.

To sum up the entire topic we can say that CSR is a form of business self-regulation in which companies try to embrace their responsibility towards the society and the environment. Although it may have its drawbacks in the view of some people but it still provides social and environmental benefits. 11