Corporate Social Responsibility (CSR)

DEFINITION OF CSR “Corporate Social Responsibility is the continuing commitment by

business to behave ethically and contribute to economic development while improving the quality of
life of the workplace and their families as well as of the local community and society at large”.

WHY SOCIAL RESPONSIBILITY OF BUSINESS?

• ‘The Business of business is Business’ was the motto of businesspersons in early times.
• To economists like Adam Smith and Milton Friedman, in a capitalist society profit maximization by
the continued increase of efficiency is the most socially responsible way of conducting business.
This implies making quick money, with utter disregard for the responsibility of business towards
society.
• The ethical and social behaviour of corporations is essential for the generation of profit, owing its
source to the reputation the corporation would acquire in view of its social behaviour.

ACCOUNTABILITY TO SOCIETY
• In a democratic society, any kind of enterprise exists for the sake of society.
• Industries are allowed to exist because they are perceived by the public to be useful in the
attainment of the personal, social, and material goals of the people.
• So, corporations exist for the sake the public, they are accountable to the public and have a
social responsibility.

CORPORATION’S DEBT TO SOCIETY

• Corporations, whether public or private, draw much from society.
• It depends on society for a developed infrastructure such as roads, water supply, electricity and an
educated workforce.
• It also depends on society for the maintenance of law and order, public health, transport facilities
and for reaching out to its customers through the mass media.
• Finally, all consumers of its finished products are drawn from society.

If a corporation draws so much from society it has to make its own contribution to society.

CSR may be classified into:

• Classical economic model
• Socioeconomic model

THE CLASSICAL ECONOMIC MODEL

Adam Smith, father of the classical economic model, believed that an ‘invisible hand’
promoted the public welfare Smith believed that the public interest was served best by
individuals pursuing their own self-interests.

THE SOCIOECONOMIC MODEL

• Business is seen as one sub-system among many in a highly interdependent society.
• Recognizes that companies have stakeholders other than their stockholders.
• A stakeholder audit allows companies to systematically identify all parties that could possibly be
impacted by the company’s performance.
• Business has an obligation to respond to the needs of all stakeholders while pursuing its profit.
Some of the driving forces behind the evolution of CSR are:
• Concerns and expectations from citizens, consumers, public authorities and investors,
• Concerns about the impact of economic activity on the environment, and
• Increased transparency of business activities because of the development in IT

IMPLEMENTATON OF CSR
The systematic implementation of CSR means:
• Adoption of strong organizational values and norms depicting behaviours that are
appropriate towards a variety of stakeholders.
• The continuous generation of intelligence about stakeholders issues, along with positive
responses to these issues.

THEORETICAL JUSTIFICATION FOR CSR

1) TRUSTEESHIP MODEL
2) SOCIAL ENTITY THEORY
3) PLURALISTIC MODEL

What are corporations expected to do?

Some economists argue that corporations depend on society for a number of facilities they
enjoy such as
• Developed infrastructure,
• Peace and tranquillity in the work place
• A trained workforce
• Maintenance of law and order
• Mass media through which they reach their customers
• Above all, consumers of products, without whom they have no reason for existence, are all
drawn from the society.

Corporations have a moral responsibility to take a long and hard look at their values,
practices and assumptions. They have to ensure that:
• The country’s name is not compromised during their deals abroad, either as exporters or
importers,
• Maintenance of quality of their products,
• Create employment opportunities for the disadvantaged persons by directly setting up
ancillaries,
• Provide financial resources,
• Make available marketing support by purchasing from disadvantaged communities,
• Donate.

Private sector needs goodwill of the society

• Historical reasons
• Need for goodwill
• Economic goals and social responsibility objectives need not contradict each other

Models for implementation of CSR

1) Ethical Model
2) Statist Model
3) Liberal Model
4) Stakeholder Model
CSR as a business strategy for sustainable development
• “CSR is about capacity building for sustainable livelihoods”
• Manifold benefits to corporations both internally and externally.
Socially Responsible Investing is gaining importance because:
• Socially responsible companies offer long term value
• Evaluating a company’s social impact on top of its financial performance provides an
additional hedge against the risk
• SRI blunts adverse sentiments against the company “CSR is an outcome for business
models, which goes just beyond financial viability.”

Evaluation of CSR activity 3 basic principles:

• Sustainability
• Accountability
• Transparency

Advantages of CSR
• Improved financial performance
• Enhanced brand image and reputation
• Increased sales and customer loyalty
• Increased ability to attract and retain employees
• Reduced regulatory oversight
• Innovation and learning
• Risk management
• Easier access to capital
• Reduced operating costs

Scope of CSR Three levels of social responsibility can be identified:

• Market forces
• Mandated actions
• Voluntary actions

CSR addresses the following issues:

• Community, assistance in solving community problems
• Health and welfare
• Education
• Human rights
• Natural environment
• Culture

Corporate social responsibilities to different group of stakeholders: -

1. To consumers and community
• Quality
• Reasonable prices
• After-sales services
• Free competition
• Ethical advertising policy
• Support for educational, charitable and other programs
• Honest trade policies
• Impartiality towards political affairs
• Social accountability
• Progressive outlook
2. To employees
• Promote spirit de corps
• Pay fair wages
• Provide reasonable work conditions
• Help development of proper leadership
• Guarantee religious, social and political freedom to workers to take part in civic activities

3. To owners and inter-business establishments

• Provide fair return
• Develop healthy cooperative business relationship
• Check the advance of unfair practices
• Help in control of monopoly and promotion of healthy

BENEFITS OF CSR

 Winning new business

 Enhanced Relationship with stakeholders
 Attracting, Retaining a happy workforce
 Media interest and good reputation
 Access to funding opportunities
 Enhancing your influence in the industry
 Differentiating yourself from the competitor
 Saving money on energy and operating cost
 Increase in customer retention
CSR Projects for Business

Market Focused Initiative

Product Focused Initiative

Employee Focused Initiative

Society Focused Initiative

Environmental Focused Initiative

 Ethical issues and problems in Business and the corporate world

1. Explain the different issues and problems in business and the business enterprise from the moral
perspective.

6 Ethical Issues in Business and What to Do About Them

Ethical issues in business can be a difficult challenge to navigate for any
business owner. Though there are laws and statutes that exist to hold
workers and employers accountable, these alone do not entirely deter
employees from behaving unethically.

What Are Ethical Issues in Business? 

Ethical issues in business encompass a wide array of areas within an organization’s ethical
standards. Fundamental ethical issues in business include promoting conduct based on integrity
and trust, but more complex issues include accommodating diversity, empathetic decision-
making, and compliance and governance that is consistent with the organization’s core values. 
In order to manage the ethical issues in business that arise in your organization, you
first need to develop a thorough understanding of what those issues can look like.
Understanding how to detect and, most importantly, deter these issues before they
become a problem can ensure your focus stays on business growth and success
instead of remediation. 
 

6 Ethical Issues in Business

1. Harassment and Discrimination in the Workplace 

Harassment and discrimination are arguably the largest ethical issues that impact
business owners today. Should harassment or discrimination take place in the
workplace, the result could be catastrophic for your organization both financially and
reputational.  Every business needs to be aware of the anti-discrimination laws and
regulations that exist to protect employees from unjust treatment. 

 Age: applies to those 40 and older, and to any ageist policies or treatment

that takes place. 
 Disability: accommodations and equal treatment provided within reason
for employees with physical or mental disabilities. 
 Equal Pay: compensation for equal work regardless of sex, race, religion,
etc. 
 Pregnancy: accommodations and equal treatment provided within reason
for pregnant employees. 
 Race: employee treatment consistent regardless of race or ethnicity. 
 Religion: accommodations and equal treatment provided within reason
regardless of employee religion. 
 Sex and Gender: employee treatment consistent regardless of sex or
gender identity.

2. Health and Safety in the Workplace 

As outlined in the regulations stipulated by the Occupational Safety and Health
Administration (OSHA), employees have a right to safe working conditions. 

 According to their 2018 study, 5,250 workers in the United States died from occupational accidents
or work-related diseases. On average, that is more than 100 a week, or more than 14 deaths every day.
The top 10 most frequently cited violations of 2018 were: 

Fall Protection, e.g. unprotected sides and edges and leading edges 
Hazard Communication, e.g. classifying harmful chemicals 
Scaffolding, e.g. required resistance and maximum weight numbers 
Respiratory Protection, e.g. emergency procedures and respiratory/filter equipment standards 
Lockout/Tagout, e.g. controlling hazardous energy such as oil and gas 
Powered Industrial Trucks, e.g. safety requirements for fire trucks 
Ladders, e.g. standards for how much weight a ladder can sustain 
Electrical, Wiring Methods, e.g. procedures for how to circuit to reduce electromagnetic interference 
Machine Guarding, e.g. clarifying that guillotine cutters, shears, power presses, and other machines
require point of operation guarding 
Electrical, General Requirements, e.g. not placing conductors or equipment in damp or wet locations 

3. Whistle blowing or Social Media Rants 

The widespread nature of social media has made employees conduct online a factor in their
employment status. The question of the ethics of firing or punishing employees for their online posts is
complicated. However, the line is usually drawn when an employee’s online behaviour is considered to
be disloyal to their employer. Business owners must be able to respect and not penalize employees who
are deemed whistleblowers to either regulatory authorities or on social media. This means that
employees should be encouraged, and cannot be penalized, for raising awareness of workplace
violations online. 

4. Ethics in Accounting Practices 

Any organization must maintain accurate bookkeeping practices. “Cooking the
books”, and otherwise conducting unethical accounting practices, is a serious
concern for organizations, especially in publicly traded companies. 
5. Nondisclosure and Corporate Espionage 
Many employers are at risk of current and former employees stealing information,

including client data used by organizations in direct competition with the

company. When intellectual property is stolen, or private client information is

illegally distributed, this constitutes corporate espionage. Companies may put in

place mandatory nondisclosure agreements, stipulating strict financial penalties

in case of violation, in order to discourage these types of ethics violations. 

6. Technology and Privacy Practices 

Under the same umbrella as nondisclosure agreements, the developments in

technological security capability pose privacy concerns for clients and employees

alike. Employers now have the ability to monitor employee activity on their

computers and other company-provided devices, and while electronic

surveillance is meant to ensure efficiency and productivity, it often comes

dangerously close to privacy violation.  

Ethical Issues in Business 

Avoiding ethical issues in business always starts with top management. Providing clearly written

policies and processes that ensure those policies are both acknowledged and adhered to, can

ensure transparency and ethical business practices are applied.  

In order to effectively detect and, most importantly, deter ethical issues in business from

surfacing in your organization, there are several everyday efforts you can take. Be sure to
 communicate and enforce a robust code of ethics when making decisions and ask the same of

your employees. Remain aware of the discrimination laws that exist in your region. Stay

informed on the rules that impact your industry, and ensure your organization is acting in

compliance with those regulations. Collaborate with accountants, maintaining transparency and

honesty in your financial reports. Be present in your company, making sure your organization

and employees alike are always doing the right and ethical thing.

2. Develop a framework for analysis and resolution of ethical dilemmas and problems
affecting business.

With values as focal point, the National Association of Social Workers has created a framework
that is used by social workers to address ethical dilemmas. The framework includes six steps:[1]

1. Determine whether there is an ethical issue or/and dilemma. Is there a conflict of values, or
rights, or professional responsibilities?
2. Identify the key values and principles involved. What meanings and limitations are typically
attached to these competing values?
3. Rank the values or ethical principles which – in your professional judgement – are most relevant
to the issue or dilemma. What reasons can you provide for prioritizing one competing value/principle
over another?
4. Develop an action plan that is consistent with the ethical priorities that have been determined
as central to the dilemma. Have you conferred with clients and colleagues, as appropriate, about the
potential risks and consequences of alternative courses of action? Can you support or justify your action
plan with the values/principles on which the plan is based?
5. Implement your plan, utilizing the most appropriate practice skills and competencies. How will
you make use of core social work skills such as sensitive communication, skilful negotiation, and cultural
competence?
6. Reflect on the outcome of this ethical decision making process. How would you evaluate the
consequences of this process for those involved: client(s), professional(s), and agency(ies)?

In comparison, Evans and MacMillan (2014) have developed a framework involving 10 steps to
make ethical decision-making efficient and practical. This framework is specific to law
enforcement officers and addresses the consideration of laws, regulations, policy, and procedures
that other frameworks assume will be followed, but in law enforcement are very important to
avoid charges and allow cases against suspects to proceed. The framework concludes with a
follow-up to determine the effectiveness of the course of action taken by the officer.
 As a simple alternative to these frameworks, students should consider the following framework:

1. Establish the facts surrounding the ethical dilemma.

Facts are important in law enforcement. To investigate all cases, officers must rely on facts to guard
against misinformation and cognitive biases. This is also true in ethical dilemmas that we face. If the
facts are not known to us, we must investigate everything that surrounds the dilemma to ensure we are
acting on the right information. Avoid acting on rumours and gossip by verifying information through
factual information and evidence.
2. Determine your legal obligations and duties.
We must be sure what our professional and legal obligations are. Professional and legal obligations will
likely allow us to easily decide on a course of action to take in an ethical dilemma. However, while
professional and legal obligations may not always require a course of action that coincides with these
obligations, our awareness of any professional and legal obligations must be known to allow us to be
fully cognizant of the consequences of our actions should we choose to ignore professional or legal
obligations.
3. Establish the interested participants involved.
It is important to know who will be impacted by the course of action that we decide upon. Often the
primary participants are easy to identify and it is the secondary participants that are often not
considered. These may include friends, families, or employees that are related somehow to the primary
participants in the ethical dilemma. Knowing the impact of the decision made to secondary participants
may be particularly important for a decision made with utilitarian underpinnings; where the rights of
those who are not part of the majority may not be considered.
4. Determine the ethical values of each participant.
Determining ethical values is important to allow us an understanding of what is truly at stake. A
participant in an ethical dilemma may value loyalty as the most important value. However, another
participant may value equality as the more important value. When considered, the value of loyalty may
not compare with equality, depending upon the ethical dilemma.
5. Consider normative ethical theories as an aide to determine a course of action.
When considering options, normative ethical theories may assist us in determining the consequences of
actions, or the duties we may be obligated to follow that fall outside of the laws, rules, and procedures.
We may also assess whether the decision we are considering is rational from another perspective we
have not considered. We may also settle on an option, and rely on an ethical theory to assist us in
articulating the reasoning behind the option we have chosen.
6. Consider options that would be ethically sound.
There may be several options to consider, and each option ought to be considered critically by
determining what harm it would cause and what values the person being harmed holds. The participant
should consider the positives and negatives of the decision and determine the risks and benefits
associated with each option, as well as the benefits of each action, with these values in mind.
7. Consideration of the possible negative and positive outcomes of each possible option.
Try to predict what may otherwise be unintended consequences of your decision. These consequences
may not be readily apparent, but they require a critical analysis of the consequences of your decision. To
help with this, try asking the following questions:
o Would the action taken be well received if it was on the front page of a newspaper?
While this should be a consideration, keep in mind that often the right decision may be the least popular
in public opinion.
o If the decision is job-related, would the agency or company you work for still hire you if
it knew you would make this decision? If the answer is yes, then this should give weight to the decision
you are about to make.
o If the decision is not job-related, would the agency you would like to work for still hire
you if it knew all the facts surrounding the dilemma and the decision you would make? If the answer is
yes, then this should give weight to the decision you are about to make.

3. Develop problem solving skills using the philosophical-qualitative approach to resolve ethical
problems in the business and corporate world.

Problem Solving and Decision Making

Problem solving and decision making are important skills for business and life. 

Problem solving often involves decision making, and decision making is especially
important for management and leadership. 

There are processes and techniques to improve decision making and the quality of
decisions. 

Decision making is more natural to certain personalities, so these people should focus
more on improving the quality of their decisions. 

People that are less natural decision makers are often able to make quality
assessments, but then need to be more decisive in acting upon the assessments
made. 

Problem solving and decision making are closely linked, and each requires creativity in
identifying and developing options, for which the brainstorming technique is
particularly useful.