Current Trends and

Opportunities in CSR

Course Code: 2T6

CORPORATE SOCIAL
RESPONSIBILITY AND
SUSTAINABILITY
 CO5
• Given the task of CSR , the future
manager will be able to plan and
implement various activities to be
taken under CSR activity and evaluate
its effectiveness
Corporate Social Responsibility
as a Strategic Tool

• The heightened consumer awareness

about environmental issues, coupled
with tightening government regulations
has ensured that companies look for
innovative ways to meet their social
responsibilities.
 Theoretical Background
• The topic of CSR has been explored from different
angles such as stakeholder analysis, transaction cost
economics, competitive advantage etc. as follows:
– Shareholder wealth maximization as the only social
responsibility of business
– CSR as combination of economic, ethical, legal and
discretionary responsibilities
– In the long run, CSR increases trust and possibly reduces
transaction costs
– Resource based view of the firm : CSR as a source of
competitive advantage
 CSR Categorization
• Philanthropy (focus on charity, sponsorships,
employee voluntarism etc.)
• Corporate Responsibility Integration
(emphasis on conducting business operations
more responsibly)
• Corporate Responsibility Innovation (focus on
solving social and environmental problems
through new business models)
Strategic Corporate Social
Responsibility
• Strategy is related to understanding and addressing
issues which affect a firm’s ability to achieve its
mission with efficient utilization of resources so as to
build and sustain a competitive advantage.
• Social and economic goals are integrally connected in
the long run.
• The concept of Strategic CSR is thus defined as; CSR
activities which support core business
activities and thus provide significant business
related benefits to a firm and contribute to its
effectiveness.
Strategic CSR Graph
Strategic CSR Model
 Dimensions of Strategic
CSR
• The contribution of CSR activities to value creation
for the firm can be assessed by the following five
strategic dimensions:
– Centrality: Closeness of fit between a CSR policy/programme and the firm's
mission and objectives.
– Specificity: Firm's ability to internalize the benefits of a CSR programme
instead of creating public goods.
– Proactivity: Manner in which a firm acts in anticipation of emerging
technological, economic, political or social trends. (Ex. Maruti)
– Voluntarism: Shows the absence of externally imposed compliance
requirements depicting the scope of discretionary decision-making by the
firm. (Ex. Mahindra)
– Visibility: Related to the firm’s ability to engage in observable business
activity and obtain recognition from internal as well as external
stakeholders. (Ex. Tata)
Benefits of Strategic CSR
• Enhancement of firm’s reputation as a socially conscious one;
better relations with different stakeholders (government,
suppliers, customers, civil society) leading to less stringent
regulatory pressures along with increased social license to
operate.
• Generates strategic tangible and intangible firm assets which
provide a competitive advantage such as greater purchase
likelihood and longer-term loyalty.
• Helps attract better qualified workforce and aids in employee
retention
• Efficiencies and cost savings in the value chain such as, ITC’s e-
Choupal initiative.
• Creates new product/ market opportunities, such as, HUL’s
campaign for washing hands (Lifebuoy)
Firm Level Model
 Firm Level
Implementation
• Recognise the critically important stakeholders for achieving the firm's mission
using the three attributes of power, legitimacy and urgency. Also identify the
CSR policies/programmes that address their needs and interests.
• Examine the potential strategic benefits of these CSR projects and their fit
with the stated vision, mission and objectives of the firm. (Centrality)
• Determine the extent to which these benefits can be internalized by the firm
rather than be freely available for all firms in the industry or the society at
large. (Specificity)
• Proactively anticipate changes to the firm's environment and needs of critical
stakeholders and address them through forward looking CSR policies.
• Create visibility and communicate impact of CSR activities. It is essential to
involve senior management to weave CSR into the fabric of corporate culture.
• Reward involvement and commitment to CSR initiatives through appropriate
incentive structures to integrate strategic CSR into organizational culture.
 Exercise Caution
• CSR can be used as source of competitive advantage through good corporate
governance, effective execution of innovative social projects and ethical
management.
• Firms should smartly communicate their CSR efforts to ensure that consumers view
them as driven by intrinsic (genuine) rather than extrinsic (profit led) motivations.
• A dichotomy between stated objectives and firm actions is likely to be viewed
negatively by consumers.
• The importance of integrating CSR into the culture, governance and strategy
development initiatives of the company along with its current management and
incentive structure is apparent.
• This requires considerable corporate commitment, with senior management leading
the implementation of strategic CSR efforts to ensure organizational “buy-in”.
• It is clear that firms who understand their social responsibilities and explore ways
in which CSR can be built into strategy are more likely to reap the rewards of
enhanced competitive positions in the future, benefitting not only their
shareholders but all stakeholders involved and the society at large.
Case Studies of Major CSR
Initiatives 1/2
Companies CSR Activities Contribution
TISCO, NTPC, ABG, Community work (health Reputation in local
L&T, RIL, Bajaj care, infrastructure, community, Political
Auto etc. education literacy ) near Acumen and social
the plant and license to operate
manufacturing facilities
HUL Project Shakti: Joint Micro Brand Reputation
finance and marketing amongst the villagers
scheme with women's
SHGs
ITC E- chaupal for Eucalyptus Generation of tangible
plantation in AP and resources; ITC also
Soybeans farming in MP sells to rural populace
like Rural Mall adding
to sales
Case Studies of Major CSR
Initiatives 2/2
Companies CSR Activities Contribution

ICICI Micro Financial Services Reputation,

with rural populace advertising, more
business
Aditya Birla Group Aditya Birla Group Reputation, can help in
Scholarship for recruitment and help
professional courses in HRM
Indian elite educational
institutions
\Nestle Fair Trade Campaign: Reputation, customer
better trading conditions loyalty
for farmers in developing
countries
 Thank You
• This is the final lecture. Do you have
any Questions?
• Feel free to contact me anytime for any
queries related to the topic at
[email protected]