Corporate Social Responsibility

Aradhna Malik (PhD)

Assistant Professor
VGSOM, IIT Kharagpur
 What is CSR? (Werther & Chandler, 2010)

 Three words, corporate, social, responsibility

 “A view of the corporation and its role in

society that assumes a responsibility among
firms to pursue goals in addition to profit
maximization & a responsibility among a firm’s
stakeholders to hold the firm accountable for its
actions.”
 Corporate philanthropy
 Philanthropy (Oxford English Dictionary): “The
practice of helping people in need”

 Corporate philanthropy: The desire of profit

making organizations to help people in need or
promote welfare of people in need.
 Strategic corporate philanthropy
(Michael Porter & Mark Kramer in Werther & Chandler, 2010)

 “The acid test of good corporate philanthropy

is whether the desired social change is so
beneficial to the company that the organization
would pursue the change even if no one ever
knew about it.”

 A balance between the “… ends of economic

viability and the means of being socially
responsible.”
 The CSR Pyramid
(Carroll, 1991, in Schwartz & Carroll, 2003)

Be a good citizen Desired

Philanthropic

Be ethical Expected
Ethical

Required
Obey the law Legal

Required
Be profitable Economic
 The CSR Hierarchy
(Carroll, 1991, in Werther & Chandler, 2010)

Discretionary
Responsibilities

Ethical
Responsibilities

Legal
Responsibilities

Economic
Responsibilities
 The CSR Hierarchy (Contd.)
(Carroll, 1991, in Werther & Chandler, 2010)

 Economic responsibility: “…to produce an

acceptable return on its owners’ investments”
 Legal responsibility: “… a duty to act within the
legal framework drawn up by the government &
judiciary”
 Ethical responsibility: “… to do no harm to its
stakeholders & within its operating environment”
 Discretionary responsibility: “… proactive, strategic
behaviors that can benefit the firm & society, or
both”
 The culture & context (Werther & Chandler, 2010)

 Rich and poor societies: Who can afford what

 Individualistic and collectivistic cultures:
Different needs, different priorities, different
agendas for CSR
 A moral argument for CSR
(Werther & Chandler, 2010)

 The existence of an organization and the

expectations of the community and wider
society it functions in.
 The iron law of social responsibility
(Davis & Blomstrom, 1966, in Werther & Chandler, 2010)

“In a democratic society, power is taken away

from those who abuse it.”
 CSR and profits (Werther & Chandler, 2010)

“While CSR does not increase profits, higher

profits lead to greater CSR.”
 Why is CSR important?
(Werther & Chandler, 2010)

 Growing affluence
 Ecological sustainability
 Globalization
 The free flow of information
 The public image of an organization
Thank You
Theories of CSR
 Legitimacy Theory
(Fernando & Lawrence 2014)

 The society gives organizations their resources.

So, the organizations are expected to fulfil the
expectations of the society they function in

 “Organizations can only continue to exist if the

society in which they are based perceives the
organization to be operating to a value system that
is commensurate with the society’s own value
system.” (Gray et al., 2010, in Fernando & Lawrence, 2014)
 How do organizations legitimize
their operations? (Fernando & Lawrence, 2014)

 “To educate relevant stakeholders about their actual

performance”: Reporting
 Change the perceptions of the relevant stakeholders
about the underlying issue without changing the
organization’s behavior”: Public impression management
 “Distract or manipulate the attention away from the
issue of concern and seek to divert the attention to a
favorable issue”: CSR Activities and advertising
 “Seek to change external expectations about the
organization’s performance”
 Limitations of Legitimacy Theory
(Gray et al., 2010, in Fernando & Lawrence, 2014)

 Legitimacy gap: Dynamic nature of the

expectations of the society versus
organizational objectives
 Legitimization threats: Unexpected occurrences
affecting the organization’s reputation, such as
a financial threat, major accident, scandal, etc.
 Vagueness regarding disclosure: If and why
and how much should organizations disclose
 Stakeholder Theory (Fernando & Lawrence, 2014)

 “… the management of an organization is

expected to perform its accountability towards
its stakeholders by undertaking activities
deemed important by its stakeholders, and by
reporting information”
 Who are stakeholders?
(Florea & Florea, 2013)

“Stakeholders are the persons, institutions,

organizations, formal & non formal groups which
are interested or can be affected or which could
influence the company decisions or actions.” (Freeman,
1980, in Florea & Florea, 2013)

20
 Types of stakeholders (Florea & Florea, 2013)

Based on involvement:
 “Internal stakeholders have a range of interests in
the different parts of the company [or organization
or community] and its activities.”

 “External stakeholders are individuals, companies

or groups outside the companies which are
influenced or could influence company [or
organization or community] decisions and
activities.”
 Types of stakeholders (Contd.)
(Florea & Florea, 2013)

Based on how they are influenced by decisions/ actions

 “Primary stakeholders are the people or groups which are directly
affected, in a positive or negative way, by a strategy, decision or
action of a company, organization [or community].”
 “Secondary stakeholders are people or groups that are indirectly
affected, either positively or negatively by a company [or
organization or community] decision or action.”
 “Key stakeholders play an important role in [the] decision making
process & also in its implementation because they are involved in
company management or financing [or management & financing of
the organization or community], [e.g.] policy makers, officials,
important professionals or community personalities having a
strong position or influence.”
22
 Types of stakeholders (Contd.)
(Florea & Florea, 2013)

Based on the amount of power and influence they have:

 “Promoters have both great interest in the decision & the
power to help make it successful (or to fail it)”
 “Defenders have a vested interest & can voice their
support in the community, but have little actual power to
influence the decision in any way.”
 “Latents have not particular interest or involvement in
the decision, but have the power to influence it greatly if
they become interested.”
 “Apathetics have little interest & little power, & may not
even know the decision exists.”
 Perspectives of stakeholder theory
(Fernando & Lawrence, 2014)

 Ethical perspective:
 “Irrespective of the stakeholder power, all the
stakeholders have the same right to be treated
fairly by an organization.”
 “”Managers of an organization are expected to
manage the business for the benefit of all
stakeholders, regardless of whether management of
stakeholders leads to improved financial
performance.”
 Limitation: very difficult to manage different
and contradictory interests of stakeholders
 Perspectives of stakeholder theory
(Contd.) (Fernando & Lawrence, 2014)

 Managerial perspective: “ an organization is

expected to be accountable to its economically
powerful stakeholders.” The more powerful or
critical the stakeholder, the more accountable
the organization is to her or him.
 Challenge: Deciding the priority list
 Institutional theory (Fernando & Lawrence, 2014)

 Social acceptance
 “Institutional theory views organizations as
operating within a social framework of norms,
values, & taken-for-granted assumptions about
what constitutes appropriate or acceptable
economic behavior.”
 Dimensions of institutional theory
(Fernando & Lawrence, 2014)

 Isomorphism: “A constraining process that

forces one unit in a population to resemble
other units that face the same set of
environmental conditions.”
 Coercive isomorphism: Pressure from people and
institutions that matter
 Mimetic isomorphism: Copying others’ practices
when one fails to do something unique on one’s
own
 Normative isomorphism: Doing good just like
everyone else…
 Dimensions of institutional theory
(Contd.) (Fernando & Lawrence, 2014)

 Decoupling: “… situation in which the formal

organizational structure or practice is separate
and distinct from actual organizational
practice.”
 Social and environmental disclosures help construct
an image of the organization that may or may not
match the real image.
 Theoretical Framework
(Fernando & Lawrence, 2014)

Convergent predictions Convergent motivations

Integrated of organizational of CSR practice
Theories behavior & motivations

1. An organization seeks 1. To legitimize the business or

Legitimacy survivability & stability of organization (legitimacy
its business motive)
Theory
2. To perform accountability to
2. An organization seeks the organization’s
legitimacy of its business stakeholders, sometimes
based on the extent of the
3. An organization tries to be
stakeholders’ power
Stakeholder accountable to its
(accountability motive)
Theory stakeholders
3. To conform to social norms &
4. An organization tries to beliefs those are largely
conform to procedures & imposed on an organization,
structures of other which ultimately leads to
organizations which are homogeneity in organizations
Institutional in the same field (isomorphic
within a particular
Theory motive)
organizational field
Thank You
Corporate Social Responsibility

Aradhna Malik (PhD)

Assistant Professor
VGSOM, IIT Kharagpur
Theories of CSR
(Contd.)
(Garriga & Mele, 2004)
 Broad categories of theories
(Garriga & Mele, 2004)

 Instrumental theories
 Political theories
 Integrative theories
 Ethical theories
 Instrumental theories (Garriga & Mele, 2004)

 “The corporation is an instrument for wealth

creation & this is its sole social responsibility
 “Any supposed social activity is accepted if, and
only if, it is consistent with wealth creation:
 “CSR is a mere means to the end of profits.”
 Groups of instrumental theories
(Garriga & Mele, 2004)

 Maximising the shareholder value:

 “Any investment in social demands that would
produce an increase of the shareholder value
should be made, acting without deception & fraud”
 “In contrast, if the social demands only impose a
cost on the company, they should be rejected.”
 “… the socio-economic objectives are completely
separate from the economic objectives”
 Groups of instrumental theories
(Contd.) (Garriga & Mele, 2004)

 Strategies for achieving competitive advantage:

 “… focussed on how to allocate resources in order
to achieve long-term social objectives & create a
competitive advantage”
 Approaches:
 “Social investments in competitive contexts
 Natural resource-based view of the firm & its dynamic
capabilities
 Strategies for the bottom of the economic pyramid”
 Approaches to strategies for achieving
competitive advantage (Contd.)
(Garriga & Mele, 2004)

 Social investments in a competitive context:

Philanthropic investments are perceived as having
better social value than any other investment (Porter &
Kramer, 2002, in Garriga & Mele, 2004)

 “When philanthropic activities are closer to a

company’s mission, they create greater wealth
than other kinds of donations.” (Burke & Lodgson, 1996, in Garriga &
Mele, 2004)

 “… philanthropic investments by members of

cluster, either individually or collectively, can have
a powerful effect on the cluster competitiveness &
the performance of all its constituents’
companies.” (Porter & Kramer, 2002, in Garriga & Mele, 2004)
 Approaches to strategies for achieving
competitive advantage (Contd.)
(Garriga & Mele, 2004)

 Natural resource based view of the firm (RBV)

& dynamic capabilities:
 RBV:
 “… the ability of a firm to perform better than its
competitors depends on the unique interplay of human,
organizational, & physical resources over time.”
 Resources for competitive advantage “… should be
valuable, rare, and inimitable, and the organization must
be organized to deploy these resources effectively”
 Natural resource-based view of the
firm & dynamic capabilities approach
(Contd.) (Garriga & Mele, 2004)

 ‘Dynamic capabilities’ approach:

 “drivers behind the creation, evolution, &
recombination of the resources into new sources of
competitive advantage”
 “organizational & strategic routines by which managers
acquire resources, modify them, integrate them, &
recombine them to generate new value-creating
strategies”
 Natural resource-based view of the
firm & dynamic capabilities approach
(Contd.) (Garriga & Mele, 2004)
 Social & ethical capabilities include,
 “process of moral decision making
 process of perception, deliberation & responsiveness or
capacity of adaptation
 development of proper relationships with the primary
stakeholders: employees, customers, suppliers, &
communities”
 Hart (1995): Strategic capabilities model:
 Interconnected capabilities: “pollution prevention, product
stewardship, sustainable development”
 Critical resources: “Continuous improvement, stakeholder
integration, & shared vision”
 Approaches to strategies for achieving
competitive advantage (Contd.)
(Garriga & Mele, 2004)

 Strategies for the bottom of the economic

pyramid:
 Strategies that can “serve the poor & simultaneously
make profits”
 Disruptive innovations: “Products & services that do not
have the same capabilities& conditions as those being
used by customers in mainstream markets; as a result
they can be introduced only for new or less demanding
applications among non-traditional customers, with a
low-cost production & adapted to the necessities of the
population.” (Christensen & Overdorf, 2000; Christensen et al., 2001, in Garriga &
Mele, 2004) e.g. a low cost basic cell phone
 Groups of instrumental
theories (Contd.) (Garriga & Mele, 2004)

 Cause related marketing :

 “… the process of formulating & implementing marketing
activities that are characterized by an offer from the firm to
contribute a specified amount to a designated cause when
customers engage in revenue-providing exchanges that
satisfy organizational & individual objectives.” (Varadarajan & Menon,
1988, in Garriga & Mele, 2004)

 Goal: “… to enhance company revenues & sales or customer

relationship by building the brand through the acquisition of,
& association with the ethical dimension or social
responsibility dimension”
 “… seeks product differentiation by creating socially
responsible attributes that affect company reputation.”
 Political theories (Garriga & Mele, 2004)

 “… the social power of the corporation is

emphasized, specifically in its relationship with
society & its responsibility in the political arena
associated with this power. This leads the
corporation to accept social duties & rights or
participate in certain social cooperation.”
 Political theories (Contd.) (Garriga & Mele, 2004)

 Principles for managing social power (Davis, 1967, in

Garriga & Mele, 2004):

 Social power equation: “… the social responsibilities

of businessmen arise from the amount of social
power that they have”
 Iron law of responsibility: “Whoever does not use
his social power responsibly shall lose it.”
 Corporate constitutionalism
(Davis, 1967, in Garriga & Mele, 2004)

 “The constituency groups of corporations

define conditions of the responsible use of
power by corporations, “… and channel
organizational power in a supportive way and
to protect other interests against unreasonable
organizational power.”
 Groups of political theories
(Garriga & Mele, 2004)

 Integrative social contract theory

 Corporate citizenship
 Integrative social contract theory
(Garriga & Mele, 2004)

 Donaldson & Dunfee (1994, 1999):

 Assumption of a social contract between the society and
business
 “Social responsibilities come from consent”
 Macrosocial contract: “provides rules for any social contracting.
These rules are called the ‘hyper-norms’; they ought to take
precedence over other contracts.”
 Microsocial contract:
 “… show explicit or implicit agreements that are binding within an
identified community, industry, companies or economic systems.”
 “generate ‘authentic norms’.”
 “… based on the attitudes & behaviors of the members of the norm-
generating community and, in order to be legitimate, have to accord
with the hyper-norms.”
 Groups of political theories (Contd)
(Garriga & Mele, 2004)

 Corporate citizenship: Profit making

organizations are responsible citizens of the
community they flourish in
 Integrative theories (Garriga & Mele, 2004)

 “… consider that business ought to integrate

social demands.”
 “… argue that business depends on society for
its continuity & growth & even for the existence
of business itself.”
 “… focused on the detection & scanning of, &
response to, the social demands that achieve
social legitimacy, greater social acceptance &
prestige”
 Groups of integrative theories
(Garriga & Mele, 2004)

 Issues management
 The principle of public responsibility
 Stakeholder management
 Corporate social performance
 Issues management (Garriga & Mele, 2004)

 “… the process by which the corporation can

identify, evaluate & respond to those social &
political issues which may impact significantly
upon it.”
 Social responsiveness: action, the how of CSR
 The principle of public responsibility
(Garriga & Mele, 2004)

 “… public policy includes not only the literal text of law

& regulation but also the broad pattern of social
direction reflected in public opinion, emerging issues,
formal legal requirements, & enforcement or
implementation practices.” (Preson & Post, 1981, in Garriga & Mele, 2004)
 Scope of managerial responsibility:
 Primary: “… essential task of the firm, such as locating &
establishing its facilities, procuring suppliers, engaging
employees, carrying out its production functions, &
marketing products.”
 Secondary: “… come as a consequence of the primary. e.g.
career & earning opportunities for some individuals, etc.”
 Ethical theories (Garriga & Mele, 2004)

 “… the relationship between business & society

is embedded with ethical values.”
 “… firms ought to accept social responsibilities
as an ethical obligation above any other
consideration”
Thank You
Corporate Social Responsibility

Aradhna Malik (PhD)

Assistant Professor
VGSOM, IIT Kharagpur
Why CSR?
 Approaches to CSR (Lee, 2011)

 Obstructionist strategy: Ignorance of social

demands for greater responsibility: We do not
care!
 Defensive strategy: Legal compliance only. We will
do only as much as is required.
 Accommodative strategy: Legal compliance and
stakeholder interests. We will do what is required
and try to keep stakeholders happy.
 Proactive strategy: We will actively work for the
welfare of the community whether or not we get
noticed.
 Approaches to CSR (Contd.) (Lee, 2011)

Institutional pressure
Stakeholder Weak Intense
pressure
Weak Obstructionist: Absence of Defensive: Institutional pressure
external pressures without stakeholder support

Intense Accommodative: Stakeholder Proactive: Synchrony in external

pressure without institutional pressures
legitimacy
 Antecedents of CSR (Depending
on conditions) (Campbell, 2007)

 Economic conditions
 Institutional conditions
 Economic antecedents of CSR
(Campbell, 2007)

 Corporations will be less likely to act in socially

responsible ways when
 “they are experiencing relatively weak financial
performance”
 “when they are operating in a relatively unhealthy
economic environment where the possibility for
near-term profitability is limited.”
 if there is either too much or too little competition.”
 Institutional antecedents of CSR
(Campbell, 2007)

Corporations will be more likely to act in socially

responsible ways if:
 The regulations and laws mandate it and the
punishment for non-compliance is tangibly
severe, especially if these compliance measures
have been developed collaboratively
 “There is a system of well-organized & effective
industrial self-regulation in place to ensure such
behavior”
 Institutional antecedents of CSR
(Contd.) (Campbell, 2007)

Corporations will be more likely to act in socially

responsible ways if:
 “There are private, independent organizations, including
NGOs, social movement organizations, institutional
investors, & the press, in their environment, who
monitor their behavior, & when necessary, mobilize to
change it.”
 “They operate in an environment where normative calls
for such behavior are institutionalized in important
business publications, business school curricula, & other
educational venues in which corporate managers
participate.”
 Institutional antecedents of CSR
(Contd.) (Campbell, 2007)

Corporations will be more likely to act in socially

responsible ways if:
 “They belong to trade or employer associations
[that] are organized in ways that promote
socially responsible behavior.”
 “They are engaged in institutionalized dialogue
with unions, employees, community groups,
investors, & other stakeholders.”
 Antecedents of CSR based on level of
involvement (Aguilera et al., 2007)

 Individual level
 Organizational level
 National level
 Transnational level
 Individual level Antecedents of CSR
(Aguilera et al., 2007)

Based on a sense of perceived fairness by

employees
 Instrumental motives: If the organization cares
for the environment, it will care for them. So,
they feel more in control.
 Relational motives: Belongingness: CSR fosters
positive social relationships, which in turn lead
to a feeling of belongingness
 Morality based motives: A need to do what is
right
 Individual antecedents of CSR
(Contd.) (Aguilera et al., 2007)

 “Individual employees’ needs for control, for

belongingness, and for a meaningful existence
will lead them to push firms to engage in social
change through CSR”
 Organizational Level antecedents
of CSR (Aguilera et al., 2007)

 “Internal and external organizational actors’ (Shareholders’,

managers’, consumers’) shareholder interests, stakeholder
interests, & stewardship interests will lead them to push
firms to engage in social change through CSR.”

 “A downward hierarchical ordering of motives among insider

organizational actors (i.e., Top Management Teams) will lead
to stronger pressure on firms to engage in social change
through CSR.”

 “An upward hierarchical ordering of motives among outsider

organizational actors (i.e. consumers) will lead to stronger
pressure on firms to engage in social change through CSR.”
 Antecedents of CSR at the
national level (Aguilera et al., 2007)

 Instrumental motives: Promotion of

international competitiveness
 Relational motives: Promotion of social
cohesion and social partnership between
different strata of society and marginalized
groups
 Moral motives: Collective responsibility to the
betterment of society
 Antecedents of CSR at the
national level (Contd.) (Aguilera et al., 2007)

 “Governments’ interests in establishing

competitive business environments, promoting
social cohesion, & fostering collective
responsibility for the betterment of society will
lead them to push firms to engage in social
change through CSR.”

 “A compensatory relationship of motives in

governments will lead to stronger pressure on
firms to engage in social change through CSR.”
 Antecedents of CSR at the
transnational level (Aguilera et al., 2007)

 Instrumental motives:
 Power to facilitate NGOs and social welfare groups
 Promotion of competitiveness among businesses
 Relational motives:
 Collaborative relationships among Inter Government
Organizations (IGOs)
 Moral motives: Altruism: “…trying to make the
world a better place to live in”
 Antecedents of CSR at the
transnational level (Contd.) (Aguilera et al., 2007)

 “NGOs need for power for alignments/ collaborations, &

for altruism will lead them to push firms to engage in
social change through CSR”

 “IGOs interests in promoting competition, social

cohesion, & collective responsibility will lead them to
push firms to engage in social change through CSR.”

 “The existence of a multiplicative relationship of motives

among transnational actors will lead to stronger firm
pressure to engage in social change through CSR,
depending on the density & intensity of positive NGO,
governmental, & intergovernmental action.”
 CSR Motives at multiple levels
of analysis (Aguilera et al., 2007)

Transnational
Motives Individual Organizational National Intergovernment Corporate
al entities interest groups &
NGOs
Instrumental Need for control Shareholder interests Competitiveness Competitiveness Power (obtain
(Short Term) scarce
resources)
Relational Need for •Stakeholder interests Social cohesion Social cohesion Interest
belongingness •Legitimation/ alignment,
collective identity collaboration &
(long term) quasi-regulation
Moral Need for •Stewardship interests Collective Collective Altruism
meaningful •Higher-order values responsibility responsibility
existence
Interactions Upward •Insider downward Compensatory Compensatory Multiplicative
hierarchical hierarchical
•Outsider upward
hierarchical
 Why CSR? (Carroll & Shabana, 2010)

 “Reducing cost & risk

 Strengthening legitimacy & reputation
 Building competitive advantage
 Creating win-win situations through synergistic
value creation”
Thank You
Corporate Social Responsibility

Aradhna Malik (PhD)

Assistant Professor
VGSOM, IIT Kharagpur
Evolution of CSR
(Carroll, 1999)
 1953: Howard R. Bowen
Father of CSR
 Social Responsibilities of the Businessman:
 “… several hundred largest businesses were vital
centers of power and decision making & that the
actions of these firms touched the lives of citizens at
many points.”
 “What responsibilities to society may businessmen
reasonably be expected to assume?”
 “[Social responsibilities of businessmen refer] to the
obligations of businessmen to pursue those policies, to
make those decisions, or to follow those lines of action
which are desirable in terms of the objectives & values
of our society.”
 1960: Keith Davis
 Iron Law of Responsibility:
 “Social responsibilities of businessmen need to be
commensurate with their social power.”
 “… the avoidance of social responsibility leads to
gradual erosion of social power”
 1963: Joseph McGuire
 Business and Society
 “The idea of social responsibilities supposes that the
corporation has not only economic & legal
obligations but also certain responsibilities to
society which extend beyond these obligations.”
 1967: Clarence C. Walton
 Corporate Social Responsibilities:
 “... The new concept of corporate social
responsibility recognizes the intimacy of the
relationships between the corporation and society
and realizes that such relationships must be kept in
mind by top managers as the corporation and the
related groups pursue their respective goals.”
 1971: Harold Johnson
 “A socially responsible firm is one whose
managerial staff balances a multiplicity of
interests. Instead of striving only for larger
profits for its stakeholders, a responsible
enterprise also takes into account employees,
suppliers, dealers, local communities, & the
nation.”
 “Social responsibility states that businesses
carry out social programs to add profits to their
organization.”
 1971: Harold Johnson (Contd.)
 “Utility maximization […] the enterprise seeks
multiple goals rather than only maximum
profits.”
 “Lexicographic view of social responsibility […]
stongly profit motivated firms may engage in
socially responsible behavior. Once they attain
their profit targets, they act as if social
responsibility were an important goal – even
though it isn’t.”
 1971: Committee for Economic
Development
 Social Responsibilities of Business Corporations
 “business functions by public consent and its
basic purpose is to serve constructively the
needs of society – to the satisfaction of
society.”
 1971: Committee for Economic
Development (Contd.)
 Concentric circles definition of social responsibility:
 “Inner circle includes the clear-cut basic responsibilities
for the efficient execution of the economic function –
products, jobs & economic growth
 “Intermediate circle encompasses responsibility to
exercise this economic function with a sensitive
awareness of changing social values & priorities, e.g.
fair treatment of employees, environmental concerns,
etc.”
 “Outer circle outlines newly emerging and still
amorphous responsibilities that business should assume
to become more broadly involved in actively improving
the social environment.”
 1972: Manne & Wallich
 “To qualify as socially responsible action, a
business expenditure or activity must be one
for which the marginal returns to the
corporation are less than the returns available
from some alternative expenditure, must be
purely voluntary, and must be an actual
corporate expenditure rather than a conduit for
individual largesse.”
 Purely voluntary expenditure vs. expenditure in
response to social norms
 1972: Prof. Wallich in Manne
& Wallich
 Elements of the exercise of CSR:
 “Setting of objectives
 Decision whether to pursue given objectives
 Financing of these objectives”
 1970s
 Increasing mention of Corporate Social
Performance (CSP)
 1973: Keith Davis
 “It is the firm’s obligation to evaluate in its
decision-making process the effects of its
decisions on the external social system in a
manner that will accomplish social benefits
along with the traditional economic gains which
the firm seeks.”
 Moving beyond the law
 1973: Eilbert & Parket
 Good neighborliness:
 “… not doing things that spoil the neighborhood”
 “… the voluntary assumption of the obligation to
help solve neighborhood problems”
 1974: Eells & Walton
 “… the corporate social responsibility
movement represents a broad concern with
business’s role in supporting & improving that
social order”
 1975: S. Prakash Sethi
 “Social obligation is corporate behavior ‘in
response to market forces or legal constraints’.”
 “… social responsibility implies bringing
corporate behavior up to a level where it is
congruent with the prevailing social norms,
values, & expectations of performance”
 1975: Preston and Post
 Public responsibility: “… the scope of
managerial responsibility is not unlimited, as
the popular conception of ‘social responsibility’
might suggest, but specifically defined in terms
of primary and secondary involvement areas.”
 1976: H. Gordon Fitch
 “Corporate social responsibility is defined as the
serious attempt to solve social problems caused
wholly or in part by the corporation.”
 We take responsibility for our actions!
 1979: Abbott & Monsen
 Social Involvement Disclosure (SID) Scale: 28
issues categorized under
 Environment
 Equal opportunity

 Personnel

 Community involvement

 Products

 Other

Measured by the number of times they were

mentioned
 1979: Archie B. Carroll
 “For managers to engage in Corporate Social
Performance, they needed to have:
 “A basic definition of CSR
 An understanding/ enumeration of the issues for
which a social responsibility existed (or in modern
terms, stakeholders to whom the firm had a
responsibility, relationship, or dependency),
 A specification of the philosophy of responsiveness
to the issues”
 1980: Thomas M. Jones
 CSR is a process not an outcome
 CSR, when engaged in as a process of decision
making, should constitute CSR behavior
 1983: Rich Strand
 Systems paradigm of organizational social
responsibility, responsiveness, and responses
 How social policies and activities within the
organization are affected by the organization and
the outer environment, and in turn affect the
activities within and outside the environment
 1983: Archie B. Carroll
 Four constituent parts of CSR:
 Economic
 Legal
 Ethical
 Voluntary or philanthropic
 1985: Wartrick & Cochran
 Corporate Social Performance Model:
 Principles: Corporate Social Responsibilities
 Processes: Corporate Social Responsiveness
 Policies: Social issues management
 1991: Archie B. Carroll
 CSR Pyramid
 “The CSR firm should strive to make a profit,
obey the law, be ethical, and be a good
corporate citizen”
Thank You
Corporate Social Responsibility

Aradhna Malik (PhD)

Assistant Professor
VGSOM, IIT Kharagpur
CSR: Global Timeline
(Katsoulakos, 2004)
 1946 – 1958: Fair Trade
(http://wfto.com/about-us/history-wfto/history-fair-trade)

 1946: Self Help Crafts began buying

needlework from Puerto Rico
 1958: First formal Fair Trade shop opened in
USA
 1960
 OECD (Organization for Economic Cooperation &
Development) created in Paris (came into force on
30/09/61) to:
 “achieve the highest sustainable economic growth &
employment & a rising standard of living in Member
countries, while maintaining financial stability, & thus to
contribute to the development of the world economy
 “contribute to sound economic expansion in Member as
well as non member countries in the process of
economic development”
 “contribute to the expansion of world trade on a
multilateral, non-discriminatory basis in accordance with
international obligations”
 1961: George Goyder
 The Responsible Company
 First mention of social auditing: “… a social audit
can act as both a useful management tool & offer
stakeholders a platform for challenging &
influencing companies”
 1961: World Wildlife Fund
 WWF created at Morges, Switzerland
 1962: Rachel Carson
 Silent Spring, by Penguin Books:
http://www.rachelcarson.org/SilentSpring.aspx
 “... bringing together research on toxicology,
ecology, & epidemiology to suggest that
agricultural pesticides are building to catastrophic
levels.”
 1966
 International Covenant on Economic, Social &
Cultural Rights (ICESCR) adopted by the UN
(http://www.ohchr.org/Documents/ProfessionalInterest/cescr.pdf):

 Part 1: Right to self determination: People are free to

“determine their political status and freely pursue their
economic, social and cultural development”, and
dispose off their natural wealth, and the State has a
responsibility to facilitate this
 Part 2: Right to be recognized without discrimination
 Part 3: Rights to fair and respectful treatment at work,
and the responsibility of organizations to facilitate the
balancing of work and personal life of their employees
 1968: Club of Rome
 “…commissioned a study […] to model and
analyze the dynamic interactions between
industrial production, population, environmental
damage, food consumption & natural resource
usage.” – published as Limits to Growth in 1972
(https://www.clubofrome.org/report/the-limits-to-growth/)
 1969: UNESCO
 “Provided a forum Conference for Rational Use
& Conservation of Biosphere for early
discussions of the concept of ecologically
sustainable development.”
 1969: US Congress
 Passed the National Environmental Policy Act
(NEPA) creating the first national agency for
environmental protection (EPA)
(https://www.epa.gov/nepa)
 1969: Commonwealth
Arbitration Commission
 “Adopted the principle of equal pay for equal
work regardless of gender”
(http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/
Browse_by_Topic/employmentlaw/Historyemploymentlaw)
 1970
 “The first Earth Day was held as a national
awareness campaign on the environment. An
estimated 20 million (2 crore) people
participated in peaceful demonstrations all
across the USA.”
 1971
 “Man and Biosphere program founded by
UNESCO (http://www.unesco.org/new/en/natural-sciences/environment/ecological-
sciences/man-and-biosphere-programme/)

 Henderson Poverty Index developed in

Australia
 In France, companies with more than 300
employees required by law to produce an
employee report: The Bilan Social.”
 1970s
 “Germany engaged in the social model of
corporate management
 Council on Economic Priorities and others in USA
began to rate companies publicly on their social &
environmental performance”
 “United Nation’s Code of Conduct for Transnational
Corporations was an early attempt to define
principles of CSR for businesses in terms of ethics,
product standards, competition, marketing, &
disclosure of information.”
 1972
 “United Nations Conference on the Human
Environment considered the need for a
common outlook and for common principles to
inspire & guide the peoples of the world in the
preservation and enhancement of the human
environment”
 United Nations Environment Program established
 1972
 Nordhaus and Tobin: Is growth obsolete?
Article in Economic Research: Retrospect and
Prospect, Volume 5 – developed the Measure of
Economic Welfare as an alternative to crude
GDP as a measure of economic progress
(http://www.nber.org/chapters/c7620.pdf)
 1974
 “Rowland & Molina release a seminal work on
Chloro Fluoro Carbons in Nature magazine
calculating that if use of CGC gases is to
continue at an unaltered rate, the ozone layer
will be depleted soon.”
 1979: Tata Steel
 Chairman asks “audit committee to report on
‘whether, and the extent to which the company
has fulfilled the objectives … regarding the social
and moral objectives”

Advertisements: “We also make steel”

https://www.youtube.com/watch?v=qYBkbYaCUuw
https://www.youtube.com/watch?v=Iw4CQIeWGHo
https://www.youtube.com/watch?v=AnXUJXApoNc
 1980: International Union for
the Conservation of Nature
 “World Conservation Strategy released by IUCN
as ‘the modification of the biosphere & the
application of human, financial, living & non-
living resources to satisfy human needs &
improve the quality of human life’.”
(https://portals.iucn.org/library/efiles/documents/
wcs-004.pdf)
 1982
 “Business in the Community is founded by UK
based business organizations focussed on CSR”
http://www.bitc.org.uk/
 1984
 Edward Freeman: Strategic Management: A
Stakeholder Approach: Classic textbook
integrating CSR with mainstream management
theory
 1986: USA
 “Toxics Release Inventory established under
the Emergency Planning and Community Right
to Know Act”
https://www.epa.gov/toxics-release-inventory-
tri-program
 1987: United Nations
 “Brundtland Commission appointed by the United
Nations to study the connection between
development & the environment publishes report:
‘Our Common Future’. The report introduces the
term ‘sustainable development’ defining it as
‘development that meets the needs of the present
without compromising the ability of future
generations to meet their own needs.”
 http://www.un-documents.net/our-common-
future.pdf
 1988
 “The Co-Operatives UK publishes its first Social
Report”
 Ben & Jerry’s in USA produces its first Social
Performance Assessments”
 1989: UK
 Profs. David Pearce, Anil Markandya & Edward
Barbier: Blueprint for a Green Economy.
Earthscan Publishers
 “Introduction of the concept of natural capital and
definition of sustainable development as non-
declining per capita human well-being over time.”
 1989: Netherlands
(http://wfto.com/about-us/history-wfto)

 International Federation of Alternative Trade

established (IFAT)
 1993: “… aim of IFAT was to ‘improve living
conditions for the poor’ through ‘promoting fair
trade internally/ externally’ with the ‘anticipated
result’ of ‘a higher level of trust and
cooperative among members thus achieving
the aim of IFAT’. ”
 1991
 “IUCN/UNEP/WWF publish “Caring for the
Earth: 2nd World Conservation Strategy’
focussing on ‘sustainable society’, ‘sustainable
living’, & ‘sustainability’ itself”
 1992: USA
 Business for Social Reponsibility founded
 https://www.bsr.org/en/
 1994
 “European Universities Charter for Sustainable
Development agreed to promoting University
education for the training of decision-makers &
teachers, oriented towards sustainable
development & fostering environmentally aware
attitudes, skills & behavior patterns, as well as a
sense of ethical responsibility.”
 Currently adopted as Copernicus Guidelines by United
Nations Economic Commission for Europe (UNECE):
http://www.unece.org/fileadmin/DAM/env/esd/informati
on/COPERNICUS%20Guidelines.pdf
 1994: INSEAD (Institut Européen d'Administration des

Affaires)/ European Institute of Business Administration) France

 Caux Round Table Principles for Business

adopted: “The CRT Principles for Business
articulate a comprehensive set of ethical norms
for businesses operating internationally or
across multiple cultures. ”
http://www.cauxroundtable.org/index.cfm?&menuid=28&parentid=2
 1995
 World Business Council for Sustainable
Development (WBCSD) established with a view
to “… provid[ing] business leadership as a
catalyst for change toward sustainable
development, & to promot[ing] the role of co-
efficiency, innovation, & CSR”
 http://www.wbcsd.org/
 1995: United Nations Framework
on Climate Change (UNFCC)
 Conference of Parties (COP) constituted in
Berlin, Germany
 Article 3.1: "The Parties should protect the climate
system for the benefit of present and future
generations of humankind, on the basis of equity
and in accordance with their common but
differentiated responsibilities and respective
capabilities. Accordingly, the developed country
Parties should take the lead in combating climate
change and the adverse effects thereof;”
(https://unfccc.int/resource/docs/cop1/07a01.pdf)
 1996: Organization for Economic
Cooperation & Development (OECD)

 “Introduced the concept of Environmentally

Sustainable Transportation (EST)”
 1996: European Commission
 57 European companies got together and
established CSR Europe “… to help companies
achieve profitability, sustainable growth &
human progress by placing CSR in the
mainstream of business practice”
 http://www.csreurope.org/
 1996: USA
 “… Social Accountability International (SAI)
Advisory Board was created to establish a set
of workplace standards in order to ‘define and
verify implementation of ethical workplaces’.”
 Source:
http://www.history.ucsb.edu/labor/sites/secure.lsit.ucsb.edu.hist.d7_labor/files/sitefiles/CSR_Re
search_Files/SAI%20and%20SAAS%20Summary.pdf
 1997: Framework Convention
on Climate Change
 Kyoto Protocol negotiated: Clear directions
regarding active measures to reduce in
greenhouse gas emissions
 1997: USA
 Social Accountability International launched the SA8000
standard to ensure accountability of social performance
in the following areas:
 “Child Labor
 Forced or Compulsory Labor
 Health and Safety
 Freedom of Association and Right to Collective Bargaining
 Discrimination
 Disciplinary Practices
 Working Hours
 Remuneration
 Management System”
 1997
 John Elkington: Cannibals with Forks- The
Triple Bottom Line of the 21st Century,
Capstone Publishing Limited, Oxford
 Coined the term, ‘Triple Bottom Line’
 Focussed on People, Planet & Profit
 Review of the book available at
http://appli6.hec.fr/amo/Public/Files/Docs/148_en.p
df
 1997
 “Global Reporting Initiative launched to develop
Sustainability Reporting Guidelines”
Focus on
 actively reducing greenhouse emissions,

 protecting natural habitats, especially of

endangered species of flora & fauna
 reporting sustainability efforts in a systematic
manner
https://www.globalreporting.org/Information/about-
gri/Pages/default.aspx
 1999: UK
 Quality of Life Counts: Indicators for a Strategy
for Sustainable Development for the UK: A
Baseline Assessment.
 Update in 2004:
http://www.nies.go.jp/db/sdidoc/qolc2004.pdf
 1999
 Paul Hawken, Amory Lovins, Hunter Lovins:
Natural Capitalism: The Next Industrial
Revolution
 1999: US
 Global Sullivan Principles of CSR launched
 “The objectives of the Global Sullivan Principles are to
support economic, social and political justice by companies
where they do business; to support human rights and to
encourage equal opportunity at all levels of employment,
including racial and gender diversity on decision making
committees and boards; to train and advance disadvantaged
workers for technical, supervisory and management
opportunities; and to assist with greater tolerance and
understanding among peoples; thereby, helping to improve
the quality of life for communities, workers and children with
dignity and equality.”
 http://hrlibrary.umn.edu/links/sullivanprinciples.html
 1999: UN
 Global Compact launched with a view to “…
bring companies together with UN agencies,
labor & civil society to support ten principles in
the areas of human rights, labor & the
environment”
 https://www.unglobalcompact.org/
 1999: UK
 “UK Corporations Disclosure Legislation passed.
The Turnbull Report on corporate governance
added reputation, probity, & other non-financial
risks to the necessary criteria for reporting risk
to shareholders.”
 1999
 Meeting held in Bonn to discuss Kyoto
Agreement and penalties associated with non-
compliance
 2000
 “UK Pension Act amended to require the
trustees of occupational pension schemes to
disclose their policy on socially responsible
investment in their Statement of Investment
Principles”
 2001: UK
 Launch of the FTSE4Good Index: Ethical
investment stock market index
 2002: UK
 “Business in the Community launches first
Corporate Responsibility Index”
http://www.bitc.org.uk/services/benchmarking/cr
-index
 2004
 “There are over 60 Government initiatives of
relevance for CSR.
 The UK Parliament has two all-party groups on
corporate citizenship:
 The All-Party Parliamentary Group on CSR
 The All-Party Parliamentary Group on Socially
Responsible Investment”
Corporate Social Responsibility

Aradhna Malik (PhD)

Assistant Professor
VGSOM, IIT Kharagpur
CSR in India
 Evolution of Indian CSR
(Deo, 2017; Sundar, 2000, in Dhanesh, 2015)

 Phase 1 (1850 to 1914)

 Phase 2 (1910 to 1960)
 Phase 3 (1950 to 1990)
 Phase 4 (1980 onwards)
 Pase 1 (1850 to1914)
(Deo 2017; Sundar, 2000, in Dhanesh, 2015)

 Economic Phase: Industrialization

 What did the rulers do in the name of
development?: Colonial time, extraction
 Corporate CSR: Dynastic charity
 Phase 2 (1914-1947)
(Deo, 2017; Sundar 2000, in Dhanesh, 2017)

 Economic Phase: Trade barriers

 What did the rulers do in the name of
development?: Colonial time, exploitation
 Corporate CSR: Support freedom struggle
 Phase 3 (1947-1960)
(Deo, 2017; Sundar, 2000, in Dhanesh, 2017)

 Economic Phase: Socialism, protectionism

 What did the Government do for
development?: Make five year plans
 Corporate CSR: Support new state; launch own
rural initiatives
 Phase 4 (1960-1990)
(Deo, 2017; Sundar, 2000, in Dhanesh, 2015)

 Economic Phase: Heavy regulations

 What did the Government do for
development?: Licensing, failed at development
efforts
 Corporate CSR: Corporate trusts
 Phase 5 (1991 to 2013)
(Deo, 2017; Sundar 2000, in Dhanesh, 2015)

 Economic Phase: Liberalization

 What did the Government do for development?:
Shrinking in production; expanding in social
provision
 Corporate CSR:
 Family trusts, private-public partnerships, NGO
sponsorship
 2009 (Updated in 2011): Ministry of Corporate Affairs:
National Voluntary Guidelines on Social, Environmental
& Economic Responsibilities of Business
 Phase 6 (2013 to Present)
(Deo, 2017; Sundar, 2000, in Dhanesh, 2015)

 Economic Phase: Globalization

 What did the Government do for
development?: Realized the need to manage
inequality; New reforms to liberalize further
 Corporate CSR: Addition of 2% mandatory CSR
spending to Companies Act
 Models of social responsibility
in India (Balasubramaniam et al., 2005, Arevalo & Aravind, 2011)

 Gandhian model/ Ethical model: “Voluntary commitment

to public welfare based on ethical awareness of broad
social needs
 Statist model/ Nehruvian model: “State-driven policies
including state ownership & extensive corporate
regulation & administration”
 Liberal model/ Friedman model: “Corporate
responsibility primarily focused on owner objectives”
 Stakeholder/ Freeman model: “Stakeholder
responsiveness which recognizes direct & indirect
stakeholder interests”
 Discussion points for forum
On the course forum, please list and provide
links to Indian organizations following these
models of social responsibility through their
outreach activities
 CSR drivers in Indian organizations
(Balasubramaniam et al., 2005)

 Genuine concern for the society

 “Concern for social improvement
 Ethics and values
 Need to care for society
 Belief in stewardship (Gandhian philosophy)”
 CSR drivers in Indian organizations
(Contd.) (Balasubramaniam et al., 2005)
 Profit:
 “Corporate reputation
 Employee & customer relations
 Stakeholder impact
 Responsiveness to local communities
 Legal compliance
 Strategic/ corporate planning at board level”
 Discussion points for forum
 On the course forum, please list examples of
Indian corporate organizations whose work
highlights each of these focus areas, i.e.
genuine concern and profits
Thank You
Corporate Social Responsibility

Aradhna Malik (PhD)

Assistant Professor
VGSOM, IIT Kharagpur
CSR in India
(Contd.)
 National Voluntary Guidelines (2011)
(http://www.mca.gov.in/Ministry/latestnews/National_Voluntary_Guidelines_2011_12jul2011.pdf)

 Applicable to all businesses, irrespective of

sector or size
 Principles of NVG
(http://www.mca.gov.in/Ministry/latestnews/National_Voluntary_Guidelines_2011_12jul2011.pdf)

 “Principle 1: Businesses should conduct & govern

themselves with Ethics, Transparency & Accountability
 Principle 2: Businesses should provide goods & services
that are safe & contribute to sustainability throughout
their life cycle
 Principle 3: Businesses should promote the well-being of
all employees
 Principle 4: Businesses should respect the interests of, &
be responsive towards all stakeholders, especially those
who are disadvantaged, vulnerable & marignalized.”
 Principles of NVG (Contd.)
(http://www.mca.gov.in/Ministry/latestnews/National_Voluntary_Guidelines_2011_12jul2011.pdf)

 “Principle 5: Businesses should respect & promote human

rights
 Principle 6: Businesses should respect, protect, & make
efforts to restore the environment
 Principle 7: Businesses, when engaged in influencing
public & regulatory policy, should do so in a responsible
manner
 Principle 8: Businesses should support inclusive growth &
equitable development
 Principle 9: Businesses should engage with & provide
value to their customers & consumers in a responsible
manner
 Principle 1: Businesses should conduct &
govern themselves with Ethics,
Transparency & Accountability

 Core elements:
1. “Businesses should develop governance structures, procedures, & practices
that ensure ethical conduct at all levels; & promote the adoption of this
principle across its value chain
2. Businesses should communicate transparently & assure access to information
about their decisions that impact relevant stakeholders
3. Businesses should not engage in practices that are abusive, corrupt, or anti-
competition
4. Businesses should truthfully discharge their responsibility on financial & other
mandatory disclosures
5. Businesses should report on the status of their adoption of these Guidelines as
suggested in the reporting framework of the NVG document
6. Businesses should avoid complicity with the actions of any third party that
violates any of the principles contained in these guidelines.”
 Principle 2: Businesses should provide goods &
services that are safe & contribute to
sustainability throughout their life cycle

 Core Elements:
1. “Businesses should assure safety & optimal resource use over
the life-cycle of the product – from design to disposal - & ensure
that everyone connected with it – designers, producers, value
chain members, customers & recyclers are aware of their
responsibilities
2. Businesses should raise the consumer’s awareness of their
rights through education, product labelling, appropriate &
helpful marketing communication, full details of contents &
composition & promotion of safe usage & disposal of their
products & services
3. In designing the product, businesses should ensure that the
manufacturing processes & technologies required to produce it
are resource efficient & sustainable.”
 Core elements of Principle 2
(Contd.)
4. “Businesses should regularly review & improve upon
the process of new technology development,
deployment & commercialization, incorporating social,
ethical, & environmental considerations.
5. Businesses should recognize & respect the rights of
people who may be owners of traditional knowledge, &
other forms of intellectual property
6. Businesses should recognize that over-consumption
results in unsustainable exploitation of our planet’s
resources, & should therefore promote sustainable
consumption, including recycling of resources.”
 Principle 3: Businesses should promote
the well-being of all employees
 Core Elements:
1. “Businesses should respect the right to freedom of
association, participation, collective bargaining, & provide
access to appropriate grievance redressal mechanisms
2. Businesses should provide & maintain equal opportunities
at the time of recruitment as well as during the course of
employment irrespective of caste, creed, gender, race,
religion, disability, or sexual orientation
3. Businesses should not use child labor, forced labor, or any
form of involuntary labor, paid or unpaid
4. Businesses should take cognizance of the work-life balance
of its employees, especially that of women”
 Core elements of Principle 3
(Contd.)
5. “Businesses should provide facilities for the wellbeing of its employees
including those with special needs. They should ensure timely payment of
fair living wages to meet basic needs & economic security of the
employees.
6. Businesses should provide a workplace environment that is safe, hygienic,
human, & which upholds the dignity of the employees. Business should
communicate this provision to their employees & train them on a regular
basis
7. Businesses should ensure continuous skill & competence upgrading of all
employees by providing access to necessary learning opportunities, on an
equal & non-discriminatory basis. They should promote employee morale &
career development through enlightened human resource interventions.
8. Businesses should create systems & practices to ensure a harassment free
workplace where employees feel safe & secure in discharging their
responsibilities.”
 Principle 4: Businesses should respect the
interests of, & be responsive towards all
stakeholders, especially those who are
disadvantaged, vulnerable & marginalized.”

 Core Elements:
1. “Businesses should systematically identify their
stakeholders, understand their concerns, define purpose &
scope of engagement, & commit to engaging with them
2. Businesses should acknowledge, assume responsibility, &
be transparent about the impact of their policies, decisions,
product & services & associated operations on the
stakeholders
3. Businesses should give special attention to stakeholders in
areas that are underdeveloped
4. Businesses should resolve differences with stakeholders in
a just, fair, & equitable manner”
 Principle 5: Businesses should
respect & promote human rights
 Core Elements:
1. “Businesses should understand the human rights
content of the Constitution of India, national laws &
policies, & the content of International Bill of Human
Rights. Businesses should appreciate that human
rights are inherent, universal, indivisible, &
interdependent in nature.
2. Businesses should integrate respect for human rights
in management systems, in particular through
assessing & managing human rights impacts of
operations, & ensuring all individuals impacted by the
business have access to grievance mechanisms.
 Core Elements of Principle 5
(Contd.)
3. “Businesses should recognize & respect the
human rights of all relevant stakeholders &
groups within & beyond the workplace, including
that of communities, consumers & vulnerable &
marginalized groups
4. Businesses should, within their sphere of
influence, promote the awareness & realization of
human rights across their value chain
5. Businesses should not be complicit with human
rights abuses by a third party”
 Principle 6: Businesses should
respect, protect, & make efforts to
restore the environment
 Core Elements
1. “Businesses should utilize natural & manmade resources in an
optimal & responsible manner & ensure the sustainability of
resources by reducing, reusing, recycling, & managing waste.
2. Businesses should take measures to check & prevent pollution.
They should assess the environmental damage & bear the cost
of pollution abatement with due regard to public interest.
3. Businesses should ensure that benefits arising out of access &
commercialization of biological & other natural resources &
associated traditional knowledge are shared equitably.
4. Businesses should continuously seek to improve their
environmental performance by adopting cleaner production
methods, promoting use of energy efficient & environment
friendly technologies & use of renewable energy.
 Principle 6: Businesses should
respect, protect, & make efforts to
restore the environment
 Core Elements
1. “Businesses should utilize natural & manmade resources in an
optimal & responsible manner & ensure the sustainability of
resources by reducing, reusing, recycling, & managing waste.
2. Businesses should take measures to check & prevent pollution.
They should assess the environmental damage & bear the cost
of pollution abatement with due regard to public interest.
3. Businesses should ensure that benefits arising out of access &
commercialization of biological & other natural resources &
associated traditional knowledge are shared equitably.
4. Businesses should continuously seek to improve their
environmental performance by adopting cleaner production
methods, promoting use of energy efficient & environment
friendly technologies & use of renewable energy.
 Core elements of Principle 6
(Contd.)
5. “Businesses should develop Environment Management
Systems (EMS) & contingency plans & processes that
help them in preventing, mitigating & controlling
environmental damages & disasters, which may be
caused due to their operations or that of a member of
its value chain.
6. Businesses should report their environmental
performance, including the assessment of potential
environmental risks associated with their operations, to
the stakeholders in a fair & transparent manner
7. Businesses should proactively persuade & support their
value chain to adopt this principle.”
 Principle 7: Businesses when engaged in
influencing public & regulatory policy,
should do so in a responsible manner

 Core Elements
1. “Businesses, while pursuing policy advocacy,
must ensure that their advocacy positions are
consistent with the Principles & Core Elements
contained in these Guidelines.
2. To the extent possible, businesses should
utilize the trade & industry chambers &
associations & other such collective platforms
to undertake such policy advocacy.”
 Principle 8: Businesses should
support inclusive growth & equitable
development
 Core Elements
1. “Businesses should understand their impact on social &
economic development, & respond through appropriate
action to minimize the negative impacts.
2. Businesses should innovate & invest in products,
technologies, & processes that promote the wellbeing of
society.
3. Businesses should make efforts to complement & support the
development priorities at local & national levels, & assure
appropriate resettlement & rehabilitation of communities who
have been displaced owing to their business operations.
4. Businesses operating in regions that are underdeveloped
should be especially sensitive to local concerns.”
 Principle 9: Businesses should engage
with & provide value to their customers &
consumers in a responsible manner
 Core Elements
1. “Businesses, while serving the needs of their customers, should
take into account the overall well-being of the customers & that
of society.
2. Businesses should ensure that they do not restrict the freedom
of choice & free competition in any manner while designing,
promoting, & selling their products.
3. Businesses should disclose all information truthfully & factually,
through labelling & other means, including the risks to the
individual, to society, & to the planet from the use of the
products, so that the customers can exercise their freedom to
consume in a responsible manner. Where required, businesses
should also educate their customers on the safe & responsible
usage of their products & services.”
 Core Elements of Principle 9
(Contd.)
4. “Businesses should promote & advertise their
products in ways that do not mislead or confuse
the consumers or violate any of the principles in
these Guidelines.
5. Businesses should exercise due care & caution
while providing goods & services that result in
over exploitation of natural resources or lead to
excessive conspicuous consumption.
6. Businesses should provide adequate grievance
handling mechanisms to address customer
concerns & feedback.”
 Indian Companies Act (2013)
 Chapter IX, Section 135: Corporate Social Responsibility:
1. CSR Committee
2. CSR Policy
1. Formulation
2. Public disclosure
3. “The Board of every company […] shall ensure that the company
spends, in every financial year, at least 2%, of the average net
profits of the company made during the three immediately
preceding financial years, in pursuance of its CSR policy:
1. Provided that the company shall give preference to the local area &
areas around it where it operates, for spending the amount earmarked
for CSR activities
2. Provided further if the company fails to spend such amount, the Board
shall, in its report […] specify reasons for not spending the amount.”
 Homework
 Please go through the Business Responsibility
Reports of various organizations and spot
examples of these principles and discuss them
on the Forum.
Thank You