Corporate Social Responsibility

Does your company have what it takes to be a leader? What is Corporate Social Responsibility? High performance is generally measured against key business imperatives including competitive advantage, sales, talent management, operational efficiency, return on investment and profitability. It is no longer adequate for a corporation to revel in economic prosperity in isolation from those agents impacted by its actions. Today, a new element of leadership is making an intense difference in weighing business performance: Corporate Social Responsibility. Related Posts: What is the relationship between Corporate Social Responsibility and Business Ethics? Social Value of Corporate Companies Corporate Philosophy of Management The late 1990s and the early 2000s saw an uptake in businesses giving proceeds or providing volunteers to causes related to their brands. Some called it “corporate social responsibility”; others called it “corporate philanthropy” or “corporate citizenship.” Regardless of its title, it was a way for business to increase visibility while raising funds for good. The spotlight is on both increasing the firm’s bottom line and being a good corporate citizen. Keeping abreast of global trends and remaining committed to financial obligations to deliver both private and public benefits have compelled organizations to restructure their frameworks, rules, and business models. Although the roots of CSR lie in altruistic activities (such as donations, charity, relief work, etc.) of corporations, globally, the concept of CSR has evolved and now embraces all allied concepts such as triple bottom line, corporate citizenship, philanthropy, strategic philanthropy, shared value, corporate sustainability and business responsibility. You might be wondering what is “Triple bottom line?” (abbreviated as TBL or 3BL) – The term coined by John Elkington in 1994, incorporates the notion of sustainability into business decisions. The TBL is an accounting framework with three dimensions: social, environmental (or ecological) and financial. “A plethora of research points to a majority of stakeholders agreeing that CSR is a ‘must do’,” and 67% of consumers say they are more likely to buy products and services from a company if they know it supported good causes. As a key component in business strategy and execution, CSR is playing a crucial role in helping organizations to be seen as leaders. Smart corporations are allocating increasing internal resources to CSR investments that include clear objectives and furnish measurable social outcomes. India is a country of multitude contradictions. On the one hand, it has grown to be one of the major economies in the world, and an increasingly important player in the emerging global order, on the other

hand, it is still home to the largest number of people living in absolute poverty (even if the proportion of poor people has decreased) and the largest number of malnourished children. This is the sad state of uneven distribution of the benefits of growth which many believe, is the root cause of social unrest. Companies too have been the target of those disconcerted by this lop-sided development and as a result, their contributions to society are under severe scrutiny. Many companies have been astute to sense this development, and have responded proactively while others have done so only when advocated. Also Visit: How to crack your next Job Interview? Corporations that are considered leaders in terms of business performance take a common approach to CSR. The blueprint for how corporations can maximize their investments in CSR contain five essential ingredients- business-based social purpose, clear theory of change, quality and depth of information, concentrated effort, and partnering with experts. 1. Business-based social purpose: There have been too many examples of CSR programs that ignore business fundamentals. Leadership-level CSR programs always directly reflect what the business is and what it does. An innovative CSR initiative can emphasize the company’s business purpose and flawlessly leverage its operational competencies. The social purpose of a business is aligned with and supports social issues in a way that is consistent with the unique culture and character of the business. Srinivasan Services Trust is a social arm of Sundaram Clayton Limited and TVS Motor company established in 1996 for charitable purposes. The company focuses on improving health, education, women’s empowerment, infrastructure and environment that would bring about changes in the lives of people in a community. 2. Clear theory of change: CSR is becoming indispensable. On the one hand, that’s good news because it proves its business value. On the other hand, it’s getting harder to discriminate one company’s efforts from another’s. CSR leaders develop branded approaches to drive measurable social change. Starbucks Coffee has 8,000 stores, in 34 countries that sell to 30 million customers each week has adopted an unique CSR approach. Their mission is to provide the highest quality coffee in an environment that is consistent worldwide and support the sustainability of their farmers. Starbucks could be considered compliant and even proactive in their responsibilities to stakeholders. They purchase coffee in 20-30 countries per year, as their buying agents spend 240/365 days per year on the road searching for the best coffee farms and developing relationships with customers. It involves mutually agreed upon fair pricing, economic transparency, socially responsible buying, and environmentally friendly expectations. These standards protect the farmer’s business and ensure that Starbucks can support their ethical branding with practices that respect the environment. 3. Quality and depth of information: Merely pin-pointing social priorities for community investment is not adequate. Leadership comes from providing employees, customers and external stakeholders with a

significant depth of information about the social issue through authentic research, white papers, videos, stories, social media, and so on. Bill & Melinda Gates Foundation or the Gates Foundation is one of the largest private foundations in the world, founded by Bill and Melinda Gates. It was launched in 2000 and is said to be the largest transparently operated private foundation in the world. Guided by the belief that ‘all lives have equal value’, Bill Gates and his wife Melinda Gates the co-chairs explains about their work and their commitment in supporting the government in reaching India’s most vulnerable communities with the services they need to live healthy and productive lives. The Department of Biotechnology (DBT) under the Ministry of Science and Technology of the Government of India and the Bill & Melinda Gates Foundation in collaboration with India’s Biotechnology Industry Research Assistance Council (BIRAC) launched a call for proposals as part of Grand Challenges India to reinvent the toilet. The Department of Biotechnology and the Gates Foundation will each invest US$1 million to support Indian investigators to drive research, development, and production of the “next generation toilet.” 4. Concentrated effort: Leadership is shown by corporations that direct their efforts on one social issue and align all their internal and external resources with this issue. 5. Partnering with experts: Leadership entails showing a high degree of credibility. This is best done through relationships with social issue experts and not-for-profit organizations. Starbucks hosted a “Cup Summit” at the Massachusetts Institute of Technology to connect municipalities, raw materials suppliers, cup manufacturers, retail and beverage businesses, recyclers, non-government organizations and academic experts to share ideas for rendering paper and plastic cups more recyclable. Corporations that haven’t optimized their approach to CSR can not be considered as industry leaders for much longer. CSR is already shaping how employees, customers, and stakeholders are deciding whom they’d prefer to follow In fundraising, there’s something called the “warm glow” theory that offers a reason for why people give. While research has suggested that tax benefits, vested interest in causes and recognition all compel people to donate, it’s the warm glow—the feeling of doing good—that truly drives the act of giving. This theory has been extended to the corporate world as well. It has been confirmed that buying from a company that acts ethically or gives to a cause provides further incentive (warm glow!) to the consumer. Infosys is one of the first few Indian companies to contribute to CSR activities as per the New Companies Act. Established in 1996, Infosys Foundation works in the areas of healthcare, education, culture, destitute care and rural development. Today, businesses continue to see positive results from their CSR efforts, such as:

• Enhanced reputation: This develops an organisation or brand’s appeal to potential consumers, employees and investors. Brands with solid reputations are also more likely to experience positive media coverage. • Increased sales and customer loyalty: This drives the bottom line, as people care about how an organisation conducts business. A 2002 study by Hill and Knowlton, an advertising agency found that 79% of Americans take CSR practices into consideration when deciding on a product purchase. • Strengthened relationships and expanded market share: This too powers the bottom line, while opening the doors to new products, services and partnerships. • Competitive edge: This can help businesses trap the market. According to a recent IBM study, more than 1,100 CEOs said they plan to increase their companies’ corporate social responsibility spending by 25% on average. • Peace of mind and satisfaction: This comes with doing what is right. It also checks potential public relations firestorms that many other companies face when solid ethics are not an organisational cornerstone. Visit: http://www.managementguru.net/ for articles on Accounting, Human Resource, Business Management and Strategy.