Corporate social responsibility 

("CSR" for short, and also called corporate

conscience, citizenship, social performance, or sustainable responsible
business[1]) is a form of corporateself-regulation integrated into a business
model. CSR policy functions as a built-in, self-regulating mechanism whereby
business monitors and ensures its active compliance with the spirit of the law,
ethical standards, and international norms. The goal of CSR is to embrace
responsibility for the company's actions and encourage a positive impact
through its activities on the environment, consumers, employees,
communities, stakeholders and all other members of the public sphere.
Furthermore, CSR-focused businesses would proactively promote the public
interest by encouraging community growth and development, and voluntarily
eliminating practices that harm the public sphere, regardless of legality. CSR is
the deliberate inclusion of public interest into corporate decision-making, that is
the core business of the company or firm, and the honouring of a triple bottom
line: people, planet, profit.
APPROACHES FOR CSR

An approach for CSR that is becoming more widely accepted is community-

based development approach. In this approach, corporations work with local
communities to better themselves. For example, the Shell Foundation's
involvement in the Flower Valley, South Africa. In Flower Valley they set up
an Early Learning Centre to help educate the community's children as well as
develop new skills for the adults. Marks and Spencer is also active in this
community through the building of a trade network with the community -
guaranteeing regularfair trade purchases. Often activities companies participate
in are establishing education facilities for adults and HIV/AIDS education
programmes. The majority of these CSR projects are established in Africa. JIDF
For You, is an attempt to promote these activities in India.
A more common approach of CSR is philanthropy. This includes monetary
donations and aid given to local organizations and impoverished communities in
developing countries. Some organizations[who?] do not like this approach as it
does not help build on the skills of the local people, whereas community-based
development generally leads to more sustainable development.[clarification
needed  Difference between local org& community-dev? Cite]

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, "Fairtrade fits very strongly into our commitment
to our communities."[5]
Another approach is garnering increasing corporate responsibility 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. A business
needs a healthy, educated workforce, sustainable resources and adept
government to compete effectively. For society to thrive, profitable and
competitive businesses must be developed and supported to create income,
wealth, tax revenues, and opportunities for philanthropy. CSV received global
attention in the Harvard Business Review article Strategy & Society: The Link
between Competitive Advantage and Corporate Social Responsibility [1] by
Michael E. Porter, a leading authority on competitive strategy and head of the
Institute for Strategy and Competitiveness at Harvard Business School; and
Mark R. Kramer, Senior Fellow at the Kennedy School at Harvard University
and co-founder of FSG Social Impact Advisors. The article provides insights
and relevant examples of companies that have developed deep linkages between
their business strategies and corporate social responsibility. Many approaches to
CSR pit businesses against society, emphasizing the costs and limitations of
compliance with externally imposed social and environmental standards. CSV
acknowledges trade-offs between short-term profitability and social or
environmental goals, but focuses more on the opportunities for competitive
advantage from building a social value proposition into corporate strategy.
Many companies use the strategy of benchmarking to compete within their
respective industries in CSR policy, implementation, and effectiveness.
Benchmarking involves reviewing competitor CSR initiatives, as well as
measuring and evaluating the impact that those policies have on society and the
environment, and how customers perceive competitor CSR strategy. After a
comprehensive study of competitor strategy and an internal policy review
performed, a comparison can be drawn and a strategy developed for competition
with CSR initiatives.

While CSR does not have a universal definition, many see it as the private

sector’s way of integrating the economic, social, and environmental imperatives
of their activities. As such, CSR closely resembles the business pursuit of
sustainable development and the triple bottom line. In addition to integration
into corporate structures and processes, CSR also frequently involves creating
innovative and proactive solutions to societal and environmental challenges, as
well as collaborating with both internal and external stakeholders to
improve CSRperformance.

Why companies go for CSR?

1. Companies all around the world are focussing on csr as it helps to make
business more competitive by supporting operational efficiency gains;
improved risk management and improved reputation and branding.

2. CSR also frequently involves creating innovative and proactive solutions

to societal and environmental challenges, as well as collaborating with
both internal and external stakeholders to improve CSR performance.
3. It helps to create favourable relations with the investment community
and improved access to capital; enhanced employee relations; stronger
relationships with communities and an enhanced licence to operate.
4. Corporations are keen to avoid interference in their business
through taxation or regulations. By taking substantive voluntary steps,
they can persuade governments and the wider public that they are taking
issues such as health and safety, diversity, or the environment seriously as
good corporate citizens with respect to labour standards and impacts on
the environment.
5. In crowded marketplaces, companies strive for a unique selling
proposition that can separate them from the competition in the minds of
consumers. CSR can play a role in building customer loyalty based on
distinctive ethical values.
WHAT HAPPENS IF CSR GOES WRONG?

When there is pressure to maximize profits, misguided corporate philanthropy

and the behavior of top executives is inconsistent with the company’s CSR
policies – alone or in combination – it signals that the company is treading
down the path of a failing corporate social responsibility campaign.

Relentless Pressure to Maximize Profits

Milton Friedman wrote in his famous 1970’s article in The New York Times
Magazine, that “the one and only social responsibility of business, is to increase
profits for shareholders.” Some companies may have taken this a little too
literally. Management’s fundamental goal is to increase value for its
shareholders and not any single stakeholder such as solely the socially
responsible.

Whilst some shareholders may find it acceptable to incur short term costs for
socially responsible activities that benefit both the company and the wider
society in the long term, investors at large are unlikely to continue investing in a
socially responsible company that continuously makes losses. This causes an
undue amount of pressure on management to constantly maximize profits whilst
supposedly being socially responsible.

The most glaring case of when there is relentless pressure to maximize profits,
whilst a corporate social responsibility campaign is failing, is when companies
rake up huge costs in their attempts to be more socially responsible and pass
these costs onto their customers. This in turn causes consumers at the lower end
of the income gap to lose access to a greater number of products and inherently
increases the income gap. Naturally, this defeats the whole purpose of
attempting to be socially responsible.

Inconsistency of Management’s Behavior and Attitudes with CSR Policies

Some companies run the risk of having their corporate social responsibility
efforts labeled as window dressing for the very fact that that their CSR policies
are inconsistent with management’s behavior and attitudes. The allegations may
run deeper if they are backed by the companies’ suspicious efforts to bypass
consumer concern over covert socially irresponsible activities.

For example, a mining company may distract consumers with advertisements

about a new environmentally friendly plant, while continuing to dump industrial
waste covertly in nearby rivers. Also, a company with significantly large
business travel expenditure will be contributing immensely to business travel
carbon emissions but maybe accepting more compensation from the World
Wildlife Fund (WWF) under the Carbon Pollution Reduction Scheme (CPRS).

Misguided Corporate Philanthropy

Companies often have altruistic intentions for getting involved in corporate

philanthropy, from wanting to do good for society, to improving their images
with consumers and persuading would-be employees that they are admirable
companies. However, some companies may walk down the crooked path of
getting into corporate philanthropy in order to get tax savings or give only
where name recognition is maximized. Indeed, companies donate to charity
organizations for name recognition and social status, and empirical research
has found that an anonymous charity donation is rare for this reason.

CSR IN RECESSION

A recession is not an excuse to cut corporate social responsibility budgets but a

chance to leverage greater non-financial resources. 

In April 2009, Booz & Co., a global management consulting firm, released the
findings of a study into the impact of the recession on sustainability-related
corporate spending. The study essentially found that there is little correlation
between financial strength and optimism about socially responsible CSR
agendas and 28% of respondents at financially strong companies said CSR
agendas in their industries will be affected by the economic downturn.
Another survey of charity chief executives by the UK Charities Aid
Foundation (CAF) revealed that 72% have seen demand for their services
increase as their running costs rose during the recession and 30% saw the
charity donation for charity organizations, nonprofit fundraising for nonprofit
organizations and the likes of corporate philanthropy fall at the same time.

Indeed, budget cuts for corporate social responsibility CSR are to be expected
during a recession. A recession, however, provides ample opportunities for
companies to leverage greater non-financial resources. "False belief that
investments in people and training can wait; that corporate social responsibility
can be put on the back burner," Starbucks CEO Schultz wrote in an essay in
the Huffington Post. Companies can uphold their socially responsible
commitments by reviewing their corporate citizenship strategy in three simple
ways:

Employ a Strategic Framework for Corporate Citizenship

Companies will have to integrate specific social issues into corporate strategy in
a way that reinforces competitive advantage to create a sustainable business.
An effective strategic corporate social responsibility framework aligns
community efforts and donations with core business strategy, company
expertise and market needs. As such, this calls for more targeted corporate
social responsibility expenditure on one or two specific issues that are linked
intrinsically to one or more of a company’s business units.

For example, General Electric GE expanded its program that provides health-
care equipment and training in places like Honduras and Kenya and has
committed extra funding and corporate philanthropy towards catering for basic
needs like food, clothing and shelter for needy Americans.

Commit to Economically Deprived Social Projects

Environmental issues and issues engaging environmental sustainability often

take a back seat during recession times and gets less face time in the media.
Companies should refocus their corporate citizenship efforts in these areas in
order to maximize their impact and get maximum exposure.

For example, Intel, the world's largest chip maker, stepped up its energy
conservation efforts through the purchase of 1.3 billion kilowatt hours of
renewable-energy certificates, during a time where oil prices dipped and
renewable energy was seemingly not such a sexy phrase anymore.

Partner with the Right External Organizations

Working with external organizations provides credibility for the company’s

corporate citizenship efforts, and increase public confidence in it. Areas where
significant improvements for socially responsible companies can be expected
from Non-Government Organizations NGOs and government entities alike by
companies are mobilization of resources, communication mediums and know-
how in certain areas. Partnership with the right nonprofit organizations can also
mean effective nonprofit fundraising, ease at which a charity donation is made
for charity organizations and an ideal example of this is karmayog.

For example, McDonald’s implemented the Sustainable Fisheries program in

collaboration with the Sustainable Fisheries Partnership, which defines
sustainability standards that guide all of McDonalds’ purchases of fish to create
a sustainable business for a fishery.
BUDGETING FOR CSR ACTIVITIES

Corporate social responsibility (CSR) or corporate citizenship entails companies

behaving in a socially responsible manner, and dealing with other business
parties who do the same. With growing public awareness and demand for
socially responsible businesses, it is little wonder that companies of today take
corporate social responsibility into account when planning future socially
responsible business operations. They typically incorporate environmental and
social priorities into their business decisions, including their business plans,
CSR budgets and financial investments.

In the aftermath of business ethics scandals such as Enron and Worldcom,

investors and other stakeholders demand greater accuracy in the financial
reporting process to invoke confidence in the financial statements of companies.
A big part in bringing about this confidence is in improving the financial
reporting processes, including making financial budgeting more timely and
accurate. Business ethics that addresses CSR Budgets is associated with higher
awareness during the budgeting process.

Signs that a Company Needs to Improve its Corporate Social

Responsibility Budgeting Process

 Company’s progress is often hampered by the lack of corporate social

responsibility CSR strategy execution
 Employees may find that the corporate social responsibility budgeting
tools processes are tooburdensome and repetitive
 Employees may also find that corporate social responsibility budgeting
process is inefficient, time consuming and hierarchical
 Company finds it difficult to access relevant, flexible, reliable
information on the company’s corporate social responsibility efforts
quickly through the budgeting worksheets
 Users of the data on the budgeting worksheets may make known that the
information is actually outdated and not reflective of latest trends
 Company is unable to determine if the level of performance set for
corporate social responsibility targets and related bonus incentives is
appropriate
 Company uses existing technologies ineffectively or uses too many excel
budgeting worksheets which are manual and error-prone
 Company’s budgeting process is not aligned and designed to support
decision making and the broader corporate social responsibility CSR
strategy
Advantages in Improving Corporate Social Responsibility Budgeting
Process

 Enhanced accuracy of cash flow reporting to free up cash for corporate

social responsibility efforts
 Better management and integration of potential performance of the
company
 Provides management with greater understanding of the corporate social
responsibility budgeting assumptions
 Budgeting process will be more consistent with company’s long term
investment CSR strategy for corporate social responsibility investments
 Allows management to better understand the company’s business drivers
 Issues can be better understood and resolved more quickly to drive
desired practical business solutions
 Management information is available in a consolidated location on the
budgeting worksheets
 Improves accountability through agreement on key metrics within the
corporate social responsibility spectrum
 Reduces time and effort spent on corporate social responsibility
budgeting
 Improved visibility for employees and shareholders
 Enhanced confidence in financial management of the company
 Supplementary efficient planning and performance management
processes can be instilled

WHY LEARN ABOUT CSR??

Corporations are powerful institutions that can make a significant difference to society. That
difference can be a positive contribution or it could equally be harmful. Learning about
Corporate Social Responsibility (CSR) contributes to better thinking about what is morally
right and wrong with the decisions and activities of these institutions. This knowledge can
produce decisions and behavior that meet the demands of stakeholders for greater
accountability. It can help stakeholders to recognize unethical behavior which is still too
common and it can help managers assess the changes needed to manage corporate
responsibility. There are seven compelling reasons for corporations and their stakeholders to
be active in business ethics training.

1. Corporate Power
Corporations are powerful institutions that influence many facets of society. They are private
enterprises formed to pursue commercial purposes but their processes have a very public
impact. Companies affect many lives through their actions and behaviors. It is important that
they act and behave responsibly. Learning about corporate social responsibility (CSR)
explains why these responsibilities arise, what they are and how they can be delivered.

2. Responsible Business Can Make a Worthwhile Contribution

Responsible business can make a worthwhile contribution to society. Companies make

products and deliver services. They create jobs. They generate investment. Companies
have the potential to fulfill not only a major economic role within society but also a major
environmental and societal role. Their decisions and activities can positively impact on the
use of natural resources and the quality of lives of many people – both internal to their
operations like managers and employees; and external to their operations like customers,
suppliers, governments and local communities. Responsible business can help build
sustainable lives and livelihoods for many.

3. Unethical Business Can be Harmful

While responsible business can be positive in its impact, irresponsible business can be
harmful in equal measure. Companies that lack awareness or regard for their responsibilities
can act and behave in ways that are very damaging to the world’s natural resources, to the
lives of local communities and to the well-being of staff and managers. The potential for
impact is heightened in a globalised economy where the activities of corporations reach
across many countries and cultures.

4. Stakeholders Demand Accountability

Tolerance of corporate impacts is changing and stakeholders, whose lives and livelihoods
are impacted by irresponsible business activities, are demanding greater accountability.
Stakeholders are placing greater demands on companies to be accountable for corporate
activities and their impacts. Stakeholders include the owners (shareholders/investors),
employees, customers, suppliers, the community, competitors and government.
Developments in communications technology allow stakeholders greater and quicker access
to information, and to each other. Global communication via the internet and cell phones
means that issues of malpractice can surface more rapidly and stakeholders can mobilize to
respond more quickly.

5. Corporate Decision-making

Corporate Social Responsibility involves more complex decision-making. It moves business

away from single dimensional thinking (maximizing financial profit) and toward multi-
dimensional thinking (the economic, social and environmental facets of corporate impact). It
shifts business thinking about whether a decision is only financially profitable or strategically
strong to whether it is morally right or wrong. Knowledge of CSR is necessary for corporate
managers to identify, understand, analyse and resolve the complexity of these multiple
issues. It also assists other stakeholders to do the same.

6. Corporate Social Responsibility Management

Learning about Corporate Social Responsibility also means learning how to manage CSR
initiatives, engage with stakeholders and report on activities. CSR cannot be simply an idea
that has no strategy or action to support it. So learning about CSR helps managers evaluate
the advantages and disadvantages of particular strategies and their implementation. It
enables managers to bring CSR alive within the company.

7. Unethical Business Conduct is too Common

Another reason for learning about CSR is that ethical misconduct in business is still far too
common. Knowledge of Corporate Social Responsibility helps employees and managers to
recognize wrong-doing within the workplace. It helps customers and other external
stakeholders to recognize misconduct when transacting with a company. Knowledge of CSR
can make stakeholders more assured in taking action to address the misconduct.

It would be easy to think that business ethics training is the realm of a select few but it is
relevant to many people. Within a corporation, it is relevant to senior executives, to middle
management and across all areas of staff. Knowledge of CSR provides greater momentum
for its correct implementation. Outside the corporation, there are compelling reasons for
customers, suppliers and community stakeholders to learn about CSR so as to protect and
promote their interests in relation to corporate activities. In learning about Corporate Social
Responsibility, everyone can benefit.
http://www.ic.gc.ca/eic/site/csr-rse.nsf/eng/Home

http://en.wikipedia.org/wiki/Corporate_social_responsibility

http://www.suite101.com/content/warning-signs-that-a-csr-campaign-is-failing-a214855

http://www.suite101.com/content/corporate-social-responsibility-in-a-recession-a211808

http://www.suite101.com/content/seven-reasons-for-learning-about-corporate-social-
responsibility-a274278

http://www.suite101.com/content/budgeting-for-corporate-social-responsibility-a220513