Book on csr and competitiveness by CSR & COMPETITVENESS

CSR and Competitiveness Essential of the Corporate India and its Sustainability

CSR and Competitiveness Essential of the Corporate India and its Sustainability Patron

Rusen Kumar, Founder, INDIACSR

Editor

Saurabh Mittal Editorial Board Members

Veena Tewari Nandi Poonam Kumar

Knowledge Partner

Asia-Pacific Institute of Management, New Delhi

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Preface

Foreword

Corporate Social Responsibility, or CSR, once a “do-gooding sideshow, is now seen as mainstream”, according to The Economist. Top-drawer managers in the corporate world have long since come to realize that paying attention to CSR in a truly responsible manner is necessary for the businesses for creating positive image in the society and even survival. The idea of sustainability is broad based and calls for concerted efforts on the part of industry, government and civil society to combat illiteracy, poverty, poor health, environmental degradation for promoting sustainable development. The critics of sustainability in industry relentlessly chased their dreams of profit and enhancing shareholder value till they realized that business itself becomes unstable in the conditions of un-balanced development. The civil society expectations and the Government’s rules and reports put pressure on the corporations to take the responsibility challenge in order to save the planet and improve the conditions of underdeveloped world. Sustainability demands corporate social responsibility for the balanced development of world, free from impoverishment of all kinds. Integrating CSR in the strategic management process helps in developing a directed and consistent approach towards long term goal. This integration improves the understanding of the complexities in a competitive environment and aids in development of capacities and resources and enhance key stakeholder relationships. The theme CSR and Competitiveness gives us a scope to debate and discuss several possibilities and will provoke some unexpected transformative business solutions leading to a third wave sustainable organization. This Edited Book puts together the perspectives of the Corporates and Researchers from diverse domains and highlights the opportunities and challenges to the businesses across the globe. I hope this book proves a great resource for the future work in the area of CSR and Competitiveness. RUSEN KUMAR (Founder and Director) INDIACSR (India’s largest CSR Network) CSR INDIA Corporate Social Services Pvt. Ltd. Regd. Office: 222, Krishna Vatika, Near Shalini School, Church Road, Boirdadar, Raigarh–496001 (Chhattisgarh), India

CSR and Competitiveness

Preface

vii

Acknowledgements

I am indebted to all the Authors and Contributors for reposing their confidence in us, sending their original contributions and working as per our timelines. I am thankful to our reviewers from industry and academia, who worked so hard to meet our deadlines. My special thanks goes to all the members of the Editorial Advisory Board: • Rusen Kumar (Founder and Director, INDIACSR) • C.V. Baxi, Ex-Dean, Ex-Director, MDI • Ashwani Kumar (General Manager, CSR, BHEL India) • Vijay Kapur, International CSR Consultant, Kohana CSR • Enakshi Sengupta, International CSR Consultant, Kohana CSR • Saurabh Gupta (Professor, J.K. Padampat Singhania Institute of Management and Technology, India) • Jastin Paul (Professor, University of Washington, Michael G. Foster School of Business) • Ashok B. Chakraborty (Executive Director, Carbon Management Group, ONGC India). I thank Mr. Rusen Kumar, Founder—INDIACSR, India’s largest CSR Network for providing me such an opportunity to bring together the knowledge from all the corners of the world in the form of an Edited Book on CSR and Competitiveness. I am thankful to Mr. Amarendra Kumar Shrivastava, Chairman, Asia-Pacific Institute of Management, New Delhi for inspiring me to work on this project. I thank Dr. D.K. Batra, Director, Asia-Pacific Institute of Management, New Delhi for the valuable guidance and advice. My sincere thanks to Dr. A.N. Sarkar and Dr. Saurabh Gupta for their consistent support. Besides, I would like to thank the authority of INDIACSR and Asia-Pacific Institute of Management for providing me with a good environment and facilities to complete this project. Also, I would like to take this opportunity to thank the fellow members of Editorial Board, Dr. Veena Tewari Nandi and Dr. Poonam Kumar. Without their regular motivation and efforts, this project would have not been completed. I appreciate the editors, designers, production experts and officers at Allied Publishers who worked with interest and devotion to ensure that the book is available for launch in th the Mega Conference on CSR, Mumbai on 9 May 2012.

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Finally, an honorable mention goes to my parents, my lovely wife, my baby Astik and friends for the time stolen out of their pocket, their understanding and support for me in completing this project. SAURABH MITTAL

Preface

In the 20th century we witnessed the development of the concept of CSR both as a management idea and as an academic concept. Although the development confronted uneven and rough terrain yet the status of CSR has grown over the years, compensating for negative externalities and contributing to social welfare. CSR is a dynamic concept and large part of it rests in the development in business and society relationships. The academic concept of this subject reaches out to draw from cognate fields of business ethics, governance, business strategy, sustainability and stakeholder relations. The concept of CSR is as old as 1800 emerging from a tradition of industrial paternalism or philanthropy meandering its way between ‘stewardship’ and ‘trusteeship’ and finally reaching the label of ‘social responsibility’ in the 60’s. Researchers and academicians have been busy organizing and re-organizing the various components of CSR into meaningful typologies and integrating it into business process. Today CSR is in a continual state of emergence and has been trying to affirm its place in business strategy leading to create competitive advantage of the firm. This book explores possibilities to view CSR as a part of new global governance ushering in new perspectives from a broader set of disciplines of sociology and economics. This book starts with chapters on Role of Corporates for Community Development through CSR. The chapters in this section are focusing upon the emerging issues, responsible corporate citizenship. We highlight here that business ultimately helps itself by helping to solve societal problems. Authors attempt here to explain why it is necessary for the corporates to get involved in community development. The efforts from corporates are duly supported and mentioned in the case/examples taken up in the chapters. Chapter on Role of District Administration in Community Development through CSR Initiatives is a unique explanation of the efforts and success achieved through such initiatives. Chapter on Making Poverty a Business Issue traces the relationship and involvement of the business sector with the causes and solutions of poverty. It gives examples to strengthen the argument and presents a number of views and theories on the issue. Chapter on Corporate Social Responsibility and Strategic Branding for Rural India represents the framework of strategic branding in rural India and role of Corporate Social Responsibility in the strategic decisions related to branding. This chapter is followed

CSR and Competitiveness

by Case Study of Corporate and Rural Development: A Study of TVS Group’s CSR Initiatives in Padavedu, Tamilnadu. Chapter on Importance of Worker Engagement and Empowerment for SME Sustainability highlights the role of worker engagement, to build an understanding about the worker, building of trust to finally empowerment of the workers. Chapter on CSR and Work Life Balance of Employees points out role of CSR in human resource development and good Quality of Work-Life (QWL) for competitive brand sustainable profit. It defines patterns for intrinsic job quality and skills, life-long learning and career development, health and safety at work, better organizational management, and work-life balance. Chapter on The Nature of CSR Leadership is a special contribution from CSR International Paper Series, No. 4, 2011. With the permission of the author, the chapter is included in this edited book for the benefit of the readers. This chapter highlights role of bold and effective leadership (political, institutional and individual level) to resolve our most serious social and environmental crises. Reading this chapter shall help better understand what makes these leaders effective catalysts for positive change. Chapter on Branding Corporate Image and Reputation: Focus on Organisational and Sustainability Dimensions discusses the various emerging strategic and organizational dimensions of corporate image building process and initiatives; and analyzes its state of transition from identity to reputation, as seen from business perspectives. Chapter on Dovetailing Sustainability with Risk Management: An Up-and-Coming Paradigm for Corporates explores using sustainability as a platform for risk management to supplement the current risk management techniques and offers an insight to reflection and propel a move away from ‘iron cage’ of established scope to understand organization. Chapter on Coporate Social Responsibility Initiatives by Some Companies—Doing More than Just the Business describes how an organization contributes to a social cause and what it expects to gain in the process. With the help of some leading organizations, the CSR Initiatives and their impact is presented. Chapter on ISO 26000: Theory and Practice presents the framework on the applications of ISO 26000 Social Responsibility standard, studies the gaps in theory and practice. Chapter on Strategic CSR finds out how social or environmental issues are affected by company’s ordinary course of business and explains how Strategic CSR will help the organizations to blend their long term goals with CSR initiatives.

Preface

Chapter on Relevance of Ethics and CSR in Emerging Economies explores various inter-twining issues and the effects on the vulnerable population and CSR as an emerging factor to create sustainable business. Chapter on Best Practices in CSR Initiatives: A Case Study presents the real world case study and unleashes the full cycle from conception to results. Chapter on Best Practices in CSR Initiatives and Planning: Case Study presents the real world case study and unleashes the business challenges can be properly dealt by achieving development of society commensurate with the Industrial Development. Chapter on The Ages and Stages of CSR: Towards the Future with CSR 2.0 by Wayne Visser, CSR International Paper Series, No. 3, 2011 is a special contribution from with the permission of the author, the chapter is included in this edited book for the benefit of the readers. This chapter reviews businessâ&#x20AC;&#x2122;s historical progress over the Ages and Stages of CSR, then examines the Three Curses of CSR 1.0 (incremental, peripheral and uneconomic), before exploring what CSR might look like in an emerging Age of Responsibility. I am sure this book shall provide a new vision to researchers and practitioner and help them identify how the forward thinking firms are approaching CSR as an initiative to improve the community, environment and its workforce with active participation of its key stakeholders towards bettering of the world. The wide spectrum of Corporate Social Responsibility related issues have been raised, discussed and presented in the form of various chapters. I hope you find the contemporary facts and expert views expressed in this book attention-grabbing and thought provoking. SAURABH MITTAL Editor

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CSR Development in India

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Contents

Foreword ........................................................................................................... Acknowledgements ............................................................................................... Preface ................................................................................................................

v vii ix

1. CSR and Community Development in India ............................................ Sasmita K. Maurya 2. Corporates for Community Development through CSR .......................... Harry Sethi 3. CSR and Community Development .......................................................... Noshir H. Dadrawala 4. Role of District Administration in Community Development .................. through CSR Initiatives Yudhbir Singh 5. Making Poverty a Business Issue ................................................................ Sharon Weir 6. CSR and Strategic Branding in Rural India ............................................... Sasmita K. Maurya 7. Corporates and Rural Development: A Study of TVS Groupâ&#x20AC;&#x2122;s ................. CSR Initiatives in Padavedu, Tamilnadu Krithika Ram 8. Importance of Worker Engagement and Empowerment for ..................... SME Sustainability Monica Ramesh 9. CSR and Work Life Balance of Employees ................................................ Veena Panjwani 10. The Nature of CSR Leadership: Definitions, Characteristics .................... and Paradoxes Wayne Visser 11. Branding Corporate Image and Reputation: Focus on Organisational ...... and Sustainability Dimensions A.N. Sarkar

1 15 27 39

57 73 88

105

113 126

140

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12. Dovetailing Sustainability with Risk Management: ................................... An Up-and-Coming Paradigm for Corporates Roopinder Oberoi 13. CSR Initiatives by Some Companiesâ&#x20AC;&#x201D;Doing More than ......................... just the Business K. Sirisha 14. ISO 26000: Theory and Practice ............................................................... Ravi Raj Atrey 15. Strategic CSR ............................................................................................ Ratna Trivedi 16. Relevance of Ethics and CSR in Emerging Economies ............................... Leela Mehernosh Karkaria 17. Best Practices in CSR Initiatives: A Case Study ......................................... Rajeev Goyal 18. Best Practices in CSR Initiatives and Planning: Case Study ....................... P. Ramamohana Rao 19. The Ages and Stages of CSR: Towards the Future with CSR 2.0 ............... Wayne Visser

170

194

207 230 244 256 264 278

CSR and Community Development in India

CSR and Community Development in India Sasmita K. Maurya Research Associate, Metric Consultancy Ltd., Pune; Visiting Professor, IIPM, Mohali, Punjab E-mail: sasmita.maurya@indiatimes.com; sasmitamaurya@yahoo.co.in

ABSTRACT The idea of social responsibility of business or Corporate Social Responsibility (CSR) is getting popular every financial reporting year. Its growth and prominence has seen an upswing due to globalization (Arora and Puranik, 2004). The objective of this chapter is to explain the what, why and how of Community Development through socially responsible businesses. Thus, this chapter begins with brief insight into the concept of CSR and what are the key focus areas of CSR globally. It explores the divergent socially responsible business practices for community development in India. It examines the corporates’ approach to implementation of CSR initiatives and assesses the impacts of such initiatives on community development in India. It identifies the gaps or challenges in present practices and recommends strategies for overcoming them. This chapter will summarise the case studies of 30 companies in India practising socially responsible business by including pictures, flowcharts, quantitative analysis and tables. 27 case studies will be reviewed from the white paper published by KPMG (in association with ASSOCHAM). 1 case study has been prepared by the author after primary research and 2 case studies have been compiled from various secondary data sources.

INTRODUCTION The idea of businesses working for the welfare of their societies has been in existence for many centuries. In around 1700 BC, King Hammurabi of ancient Mesopotamia introduced a code in which innkeepers, builders or farmers were executed if the local citizens were caused any inconvenience/deaths due to their negligence. Kautilya, a philosopher from India also preached ethical principles for businesses. “When making a profit conflicts with respecting the welfare of the community, corporations do not always choose profit as their only goal. They look within to their boards of directors and managers, they take time to hear community representatives, and they chose courses of action carefully geared to the needs of the community as well as their own.”—Goodpaster and Matthews (1982). This opinion represents the humane aspect

CSR and Competitiveness

of businesses where supporting the society/community causes and solving their issues are considered equally important performance areas as increasing shareholder wealth. In the late 1980s, major banks in the USA (Bank of America, Citicorp, Chase Manhattan etc.) created community development companies to provide support to rundown neighbourhoods (Smith, 1994). Similarly, the websites for the Fortune 500 companies showcase their activities under the aegis of corporate social responsibility, Social responsibility, corporate citizenship, corporate philanthropy, corporate responsibility, societal marketing etc. These represent the primary sentiment of businesses doing “good” for the community. CSR or Corporate Social Responsibility is the phrase generally used by management thinkers and academicians for discussion and research purposes. The World Business Council for Sustainable Development (2007) described CSR as— ‘the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large’. Carroll (1991) explored the nature of CSR and identified its four componentseconomic responsibilities, legal responsibilities, ethical responsibilities and philanthropy (Figure 1).

Fig. 1: Carroll’s Pyramid of CSR

The summary of Carroll’s report states that an organisation should focus on making profit, be law abiding, ethical and charitable. The basic understanding from all the

CSR and Community Development in India

research on CSR is that the synergy between business and society should not be based solely on production and consumption, but on goodwill and trust as well. Arora and Puranik (2004) have referenced Ward and Fox (2002) as—‘whatever the language used, the basic idea is to understand business as part of society-not somehow separate from it’. It is a fact that the interest around CSR by businesses has increased in the past decades. In 1977 less than half of the fortune 500 even mentioned CSR in their annual reports, by 1990s almost 90% of these firms incorporated CSR within their organisational goals (KPMG White Paper). Some earlier researches on CSR have suggested following definitions (Banerjee, 2007): ‘The firm’s considerations of, and response to, issues beyond the narrow economic, technical and legal requirements of the firm to accomplish social benefits along with the traditional economic gains which the firm seeks’ (Davis, 1973). ‘Actions that appear to further some social good beyond the interests of the firm that which is required by the law’ (McWilliams and Siegel, 2001). ‘The ways in which an organisation exceeds the minimum obligations to stakeholders specified through regulation and corporate governance’ (Johnson and Scholes, 2002). However, the well-known economist, Milton Friedman suggested that using company resources for altruistic and philanthropic purposes will lead to socialism and CSR in such cases should be discouraged (Carroll, 1991). Despite this, a report from global accounting and consulting firm Grant Thornton (2011) noted that CSR activities across the world have increased dramatically in recent years as “businesses realize their value not only commercially, but also in terms of boosting employee value, attracting staff and cutting costs” (Corporate Social Responsibility in India: No Clear Definition, but Plenty of Debate: IndiaKnowledge@Wharton(http://knowledge.wharton.upenn.edu/india/article.cfm? articleid=4636). Another Social Impact study that was done in 2011 reports that 30% companies invest in philanthropic and socially responsible activities because they want to have an impact on critical issues of the society (www.csrinternational.com). In the same study, other motivators for CSR included: • Seeing an organisation’s values in action-25% • Building customer loyalty-15% • Differentiating the company from competitors-6% • Engaging employees-4% CSR reporting has also seen an upswing and the latest proposal in the Companies Bill in India suggests that it should be mandatory for companies to disclose their CSR spendings. Globally, non-corporate organizations have developed standards that provide

CSR and Competitiveness

targets against which social performance may be measured. Following guidelines address how social performance can and should be reported: • SA8000, launched in 1997 by Social Accountability International (formerly Council on Economic Priorities Accreditation Agency) is an auditable standard specifically addressing labour and workplace conditions. • The Global Reporting Initiative Sustainability Guidelines, revised in June 2000, provide a framework and principles for reporting on environmental, social and economic corporate performance. • AA1000, a standard for the social reporting process, was developed by the Institute of Social and Ethical Accountability and publicly released in 1999. Kotler and Lee (2005) have summarised six different options of doing ‘good’ by businesses (Table 1). These reflect the overall CSR activities followed by companies globally. Community development can happen through cause promotions, corporate social marketing, community volunteering or corporate philanthropy. In emerging economies, companies are expected to assist their local communities. Interest in CSR in countries such as India, Pakistan and China has dramatically risen over the past four years. In countries like Malaysia and India the social obligations of firms towards employees or wider society have long been recognised (Frynas, 2006). Table 1: Corporate Social Initiatives Cause Promotions Description Provide funds, other resources to support a social cause.

Source: Kotler and Lee, 2005.

CauseRelated Marketing Commit to making a contribution or donating a percentage of revenue to a specific cause based on product sales.

Corporate Social Corporate Community Marketing Philanthropy Volunteering Support the development or implementation of a behaviour change campaign intended to improve public health, safety, environment or community well-being.

Make direct contribution to a charity or cause in the form of cash grants, donations and/or inkind services.

Support and encourage employees, retail partners and/or franchise members to volunteer time to support local community, charities, cooperatives and causes.

Socially Responsible Business Practices Adopt and conduct discretionary business practices and investments that support social causes to improve community well-being and protect the environment.

CSR and Community Development in India

CSR IN INDIA It has been noted that in India the line between philanthropy and CSR is mostly very blurred and in effect companies get away with charity in the name of CSR (http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4636). However, radical transformations are taking place in the Indian business sector with respect to designing several innovative CSR programmes in the areas of public health, community development (education, social issues), microfinance, environmental issues to name a few. Community development programs are generally carried out by focussing on health, women empowerment, education and agriculture development. Organisations have allocated budget for CSR activities and for instance, consider the case of IOC which has a specific allocation of its CSR budget (Table 2) which is approximately to the tune of ` 10 crore. It is interesting to note that 30% budget is allocated to community development. The issues addressed in community development vary from location to location. Table 2: CSR Budget Allocation of Indian Oil Corporation (IOC) National Calamities Donations Community Development Indian Oil Scholarships Other Activities

35% 5% 30% 20% 10%

Source: www.csrworld.net

In this section we take a look at some social initiatives by companies in India.

Forbes Marshallâ&#x20AC;&#x2122;s Department of Social Initiatives Forbes Marshall is a privately held, family owned company in India. The companyâ&#x20AC;&#x2122;s philosophy for social initiative is to assist the local population in becoming selfdependent. It is a Pune-based multi-divisional, ISO 9001 certified global business manufacturing advanced engineering products for process industries across the world. At present, its factory premises are located in the Kasarwadi industrial area in the suburbs of Pune. A quick browsing of its official website (www.forbesmarshall.com) tells that it stands out in the crowd because of its unique corporate structure and commitment to quality along with its extensive community and social service program. The first community development projects that the company took were directed towards improving the sanitation and lighting conditions in Kasarwadi area. Social responsibility is part of the organisation culture of Forbes Marshall. The employees are informed through in house newsletters that highlight the various social

CSR and Competitiveness

activities of the company. The Department of Social Initiatives of Forbes Marshall conducts workshops and lectures for employees to involve them in the social initiatives programs and spread awareness of critical social and health issues. The basic philosophy behind the company’s social initiatives programs is to not lead people into believing that they can get things for free. For example, it runs a out patient clinic where everyone has to pay a token amount as consultation fee (the fee used to be ` 2 in 2008). The Department of Social Initiatives (DSI), is dedicated to work on all social initiative programmes and it has the freedom to utilise a fixed percentage of the company’s profits every year for all its projects. The department works with stated objectives, measurable goals and business plans and is managed like any other business (Figure 2). It functions as a catalyst to enable positive changes in the society (Figure 3). The usual interventions by the DSI are in areas of health, education, women empowerment and community development. The department does not decide on its own what is good for the community, the community groups discuss their overall disablements and what ought to change. The company has conducted vocational training courses for women in collaboration with the local municipal corporation and welfare department. It has set up ‘Shakti’ (meaning strength in the local language) group, to offer/provide support and counselling to wives of alcohol abusers. Women belonging to poor families in the local suburab are trained in making handicraft items and snack food items by resource persons hired by the company. The DSI assists in promoting and selling these products which helps in generating revenue for the women. Over the years many women have set up their own businesses and become self-sufficient.

Fig. 2: Department of Social Initiatives (DSI) of Forbes Marshall—The Organisation Structure (Source: Maurya, S.K. (2010) ‘Social initiatives for sustainable development: a case study of a company in India’, Int. J . Environment and Sustainable Development, Vol. 9, Nos. 1/2/3, pp. 114–122.)

Forbes Marshall has been teaming up with various non-profit organisations towards providing counselling, psychological support, awareness programs on substance abuse, HIV/AIDS, value education, career guidance through street plays, film shows and poster exhibitions.

CSR and Community Development in India

Fig. 3: DSI’s Participative Method

Procter and Gamble’s Shiksha Project Procter and Gamble (P&G) India launched its CSR programme called ‘Shiksha’ (meaning Knowledge in local language) for underprivileged children in India. The philosophy behind this programme was that children are the future and community development can begin by educating the future. P&G India, partnered with Round Table India (RTI), Child Rights and You (CRY), Army Wives Welfare Association (AWWA), Save the Children (STC) and other local communities. In 2010–11 it has built 20 ‘Shiksha’ schools in India and managed to reach almost 2,80,000 underprivileged children, helping them access their right to education. In 2012, it has plans to open 20 more Shiksha schools.

Aditya Birla Group’s Tradition of Philanthropy and Strategic Community Development Activties Aditya Birla group has always been associated with philanthropy and as it has changed its business ways, it also embraced the CSR philosophy and started many community development projects. In 2011 the Government of India has bestowed the Padma Bhushan Award on Mrs. Rajashree Birla, Chairperson, Aditya Birla Centre for Community Initiatives and Rural Development for her exemplary contribution in the area of ‘Social Work’. The Padma Bhushan is among the highest civilian awards in India. The Aditya Birla Centre for Community Initiatives and Rural Development has worked in the areas of education, women empowerment and other local issues. KPMG India has published a compendium of 27 case studies, highlighting the CSR initiatives of companies in India. Table 3 tabulates the key success areas of these

CSR and Competitiveness

companies with the objective to identify the trends in community development intiatives in India. The findings: • 78% of the organisations have mentioned community development in their key CSR success areas. • 85% organisations have focussed on education, which indirectly contributes to community development. • 67% organisations have projects/initiatives for environment. • 63% organisations focus on health issues as well. • 59% organisations deal with livelihood issues. • 56% organisations have mentioned issues like microfinance, rural development, infrastructure development. • 26% organisations have focussed on women empowerment. Table 3: Summary of CSR Initiatives by Companies in India (KPMG India’s compendium) Company

Initiatives

Partnerships

Abhijeet group

Health, education, employment, environment, community development

Ambuja Cements

Poverty Reduction, Reducing Child Mortality, HIV/AIDS, Education and Environment

Bharat Petroleum Corporation Ltd. (BPCL)

Health, Education, Infrastructure, Income Generation, Vocational Guidance, Livelihood and Environment Conservation

Villagers • NGO partner – Research Analysis Consultants • BPCL teams (HR, CSR, other departments)

ACC Ltd.

Education, Health, Environment, Livelihood and Waste Management

Development Alternatives, an NGO to help launch a Sustainable Community Development programme for those living their Wadi Plant in Karnataka.

Apollo Tyres

Health (HIV AIDS programme) Integration of HIV AIDS programme with its supply chain

DFID

Centurion Bank of Punjab Ltd.

Education—launched the Miracle credit card where everytime the subscribers used a card, it would contribute towards education of underprivileged children

Foundation

NGOs, local cooperatives

Ambuja Cement Foundation, established in 1993

CSR and Community Development in India Company

Initiatives

Partnerships

Coca Cola India

Health, Environment, Education, Livelihood So far, the Company’s water initiatives have improved the lives of more than 140,000 Indians and made millions more aware of the crucial importance of water conservation

Identify partners primarily on the basis of the need of a specific project, understand their experience and expertise in specific fields; their ability to deal/engage with the community

DLF Limited

Rural Development, Urban Community Development, Education and Environment to improve the living conditions of our construction workers by providing them all the basic necessities at the site itself by efficient and effective space management

Development Promotion Group (DPG)

Microfinance, Education, Environment, Health, Livelihood and Tsunami Relief and Rehabilitation Services

Dr Reddy’s Laboratories

Microfinance, Education, Health, Environment, Livelihood and Social Entrepreneurship. Dr. Reddy’s is the only Indian pharmaceutical company to publish a Sustainability Report and among the few Indian companies to do so. The report is prepared according to guidelines recommended by Global Reporting Initiatives

Employees

Gateway Terminals India Pvt. Ltd.

Health, Sanitation, Education, Infrastructure Keeping in view the requirements of the villagers the organisation decided to start a Mobile Medical Van to provide basic health care, medication and health counseling for the villagers by going to each village once in a week

Tata Institute of Social Sciences (TISS) identified the community needs where Gateway Terminals could intervene.

The Godavari Sugar Mills Ltd.

Rural Development, Urban Community Development, Education and Environment

Sponsors/donors from all over the world

Infosys Technologies Ltd.

Education, Health, Environment, Livelihood They complied with the US GAAP accounting

Board of directors, employees, NGOs and cooperatives

Foundation

Dr Reddy’s Foundation, Nandi Foundation

Infosys Foundation

CSR and Competitiveness Company

Initiatives

Partnerships

Foundation

requirements and were first to incorporate a number of innovative disclosures in financial reporting including human resources valuation, brand valuation Jindal Stainless Foundation

Education, Vocational Education and Training, Health Care, Environment Protection, Community Development, Women Empowerment and Capacity Building

JSW Steel

Women Empowerment

Jubilant Organosys Ltd.

Education, Health, Environment, Community Development, Rural Infrastructure, Women Empowerment and Livelihood

Lodha group

Education and Environment

Khushii, an NGO spearheaded by Kapil Dev works towards the upliftment of the poor and destitute communities in both rural and urban India

Motorola India Pvt. Ltd.

Education, Environment, Community

Indian Universities Concern India Foundation at Hyderabad, Shristi Special Academy and Parikrma Humanity Foundation at Bangalore

Modicare Foundation

Health. It is recognised as one of the finest technical resource agencies by various national and international organisations, such as, NACO, UNICEF, Chambers of Commerce, ILO; corporates and the Government of NCT of Delhi

Multi Commodity Exchange

Information Disseminationâ&#x20AC;&#x201D;reach out to farmers located in far flung remote areas of the country with an infrastructure that is available locally to overcome constraints such as power, telecommunication, cost of price dissemination, etc.

India Post

Reliance Industries Ltd.

Microfinance, Education, Environment, Health, Livelihood, Community Development, Child

Public Private Partnerships with various agencies. Project Drishti, launched,

Motorola Foundation and Foundation for Advanced Education & Research (FAER, www.faer.ac.in)

Reliance Rural Development Trust, Dhirubhai

CSR and Community Development in India Company

Initiatives

Partnerships

Welfare and Infrastructure Development. Their maiden Corporate Sustainability Report (2004–05) report was the first Corporate Sustainability Report from the Indian Oil and Gas sector. Further, this report obtained “inaccordance” 2002guidelines status from the Global Reporting Initiative (GRI)—the official collaborating centre of the United Nations Environment Program (UNEP)

in 2003, in association with the National Association for the Blind (NAB—a non-profit institution serving the blind in India for over five decades) – is a nation-wide free corneal grafting drive to bring light in the lives of visually challenged from the underprivileged segment of the society has illuminated lives of over 5,000 Indians

Sesame Workshop India

Education

Sesame workshop South Africa

Tata Chemicals Ltd.

Microfinance, Education, Environment, Health, Livelihood

Government, NGOs

Tata Steel Ltd.

Microfinance, Education, Environment, Health, Livelihood and Relief during calamities

NGOs, Hospitals

Tata Teleservices Ltd.

Microfinance, Education, Livelihood

NGOs

Bennett Coleman and company Ltd.

Education, Environment, Livelihood, Women Empowerment, Disaster Management, Climate Change and Capacity Building

Partners are chosen on the basis of their defined mandates, credibility, financial accountability and scope of initiatives— such as Human Rights Watch, London School of Economics, World Bank, INTRAC, John Hopkins University, Corporate Foundations, Governments in India and overseas and grassroots organisations among others.

Wockhardt Hospitals Ltd.

Health, Societal Values

Foundation Ambani Foundation.

Times Foundation

It is noteworthy here that all organisations are focussing on more than one issue directly or indirectly contributing to community development. The initiatives of Reliance Industries Ltd, Infosys technologies Ltd and Dr Reddy’s Laboratories become more laudable

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because they have adopted the standard reporting structures that are understood and comprehended easily. This validates their initiatives and provides meaningful direction to all other companies. Standard reporting also builds trust and encourages good corporate governance. The companies listed in this chapter is not an exhaustive list and there are many more organisations in India that are doing commendable work in CSR and community development.

DISCUSSION AND CONCLUSION It is not easy for organisations to embrace social initiatives as it requires investment of resources, partnering with communities, NGOs and other organisations, and identifying the right cause. Any meaningful action is preceded by meticulous planning, careful implementation and constant monitoring. In the context of CSR there is a possibility for organsations to improve their competitive advantage while doing ‘good’ for the community. Porter and Kramer (2002) have suggested a framework where organisations can gain competitive advantage by pursuing philanthropy—“Philanthropy can often be the most cost-effective way for a company to improve its competitive context, enabling companies to leverage the efforts and infrastructure of nonprofits and other institutions.” This implies that organisations need not hesitate from investing time and resources in addressing social causes or issues. But, it is also true that organisations face a lot of challenges while implementing CSR initiatives. Such challenges could be: • Lack of community participation: Organisations may face unenthusiastic and skeptical community members who refuse to participate in any initiative. This may be due to past disappointments, mistrust or ignorance. • Transparency issues: In the absence of any standard reporting, the issue of transparency becomes a serious bottleneck as it may lead to several questions regarding appropriate allocation of funds, and actual achievements if any. This may eventually lead to miscommunication between community, other stakeholders and the company. • Non Government Organisations unavailable: In the absence of any registered NGO, the company may find it difficult to implement its CSR initiatives. • No clarity on CSR: Many organisations, including the NGOs, still perceive CSR as philanthropy. This creates confusion and practitioners may face resistance from top management in designing strategic CSR initiatives. • Vested interests: Many organisations may collaborate with NGOs to divert funds and save taxes. Others may take up projects only to build up their brand image. If companies have such vested interests then implementation of successful CSR initiatives becomes a challenge. All these challenges can be overcome by comprehensive education and training on CSR philosophy, reporting and practices. The CSR reporting should become mandatory and

CSR and Community Development in India

companies will be forced to follow the guidelines as specified by global non profit organisations. Organisations should partner with only the registered NGOs in order to minimise any transparency/reporting issue and prevent any fraud. Further, any independent verification and audit of all CSR initiatives would ensure actual implementation of plans and reduce traces of friction and distrust with community. Figure 4 conceptualises a framework for addressing community development needs through CSR. This framework lists six important steps for identifying communicty needs, planning CSR initiative, implementing, monitoring, measuring, auditing and reporting it. While identifying the community needs, the organisation should also identify the available resources (partnerships, funds, human resources, time, facilities, volunteers etc). Planning for CSR initiative additionally includes planning for training programmes for partners, employees, volunteers, other stakeholders, allocation of funds and other resources, and communication strategy. Meticulous planning at this stage will reduce any cynicism, mismanagement or miscommunication. Subsequent implementation and monitoring of all aspects of planning will ensure a succesful CSR project. At this point it is also important to audit the project for governance purposes. Reporting is the final step, that will record the achievements, limitations and future scope of the project.

Fig. 4: Framework for Enabling Community Development through CSR

The net worth of many multinationals is more than the total GDP of small, developing or least developed countries. Other companies, too, have resources and expertise to contribute positively for societal good. Thus, it is important that such businesses thrive by contributing towards community development as the very community they develop may become their stakeholder in future.

CSR and Competitiveness

REFERENCES Arora, B. and Puranik, R. (2004). A review of Corporate Social Responsibility in India. Development , 93–100. Banerjee, S.B. (2007). CSR: The Good, The Bad and The Ugly. Edward Elgar Publishing. Carroll, A.B. (1991). The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders. Business Horizons, July–August. Corporate Social Responsibility in India: No Clear Definition, but Plenty of Debate: India Knowledge@Wharton (http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4636) Frynas, J.G. (2006) ‘Corporate social responsibility in emerging economies’, Journal of Corporate Citizenship, Winter, Vol. 24, pp.16–19. Goodpaster, K.E. and Matthews, J.B. (2003). Can a Corporation Have a Conscience? In HBR on Corporate Responsibility (pp. 131–156). Boston: Harvard School Publishing Corporation. KPMG in India (2008). Corporate Social Responsibility—Towards a Sustainable future. A White Paper. Kotler, P. and Lee, N. (2005). CSR—doing the most good for your company and your cause. New Jersey: John Wiley and Sons, Inc. Maurya, S.K. (2010). Social Initiatives for Sustainable Development: a case study of a company in India. International Journal of Environment and Sustainable Development, Vol. 9(1/2/3), 114–122. Porter, M.E and Kramer, M.R (2002). The Competitive Advantage of Corporate Philanthropy. In HBR on Corporate Responsibility (pp. 27–64). Boston: Harvard School Publishing Corporation. Smith, C. (1994). The New Corporate Philanthropy. In HBR on Corporate Responsibility (pp. 157– 187). Boston: Harvard School Publishing Corporation.

Websites http://www.brass.cf.ac.uk/uploads/History_L3.pdf http://timesofindia.indiatimes.com/topic/Greentech-Gold-CSR-Award-2011 http://www.gidf.org/news-events-education.html http://opim.wharton.upenn.edu/gc/philadelphia/abstract/abstract_Justice.pdf www.csrnet.org www.adityabirla.com

ABOUT THE AUTHOR Ms Sasmita Maurya is a Visiting Professor at IIPM, Mohali and Research Associate at Metric Consultancy Ltd. She is a Reviewer at Journal of International Business and Management and many other International Journals. She is Faculty/Author at Professional Education Organization International. She is Business Administration Professional having worked in fast paced, challenging environment with great emphasis on developing positive interpersonal skills, independent decision making and responsibility. She is adept at imparting training and lectures in the areas of confidence building, cultural sensitivity, customer services, sales management, employability skills and other general and marketing management theories.

Corporates for Community Development through CSR

Corporates for Community Development through CSR Harry Sethi Independent Consultant, Social Development, Dehradun, India E-mail: harrysethi56@yahoo.co.in

ABSTRACT The chapter briefly defines Corporate Social Responsibility (CSR) and Community Development (CD) and attempts to explain why it is necessary for the corporates to get involved in community development. CSR is a relatively new concept. Simply stated, it refers to corporates carrying on their business in a socially responsible way. The chapter looks at different approaches to CSR and community development. It argues how community development makes business sense for the corporate. It introduces the concept of ‘Social enterprises’ by Mohmad Yunus. It looks at the ways in which CSR can contribute to the achievement of Millennium Development Goals (MGDs). Keywords: Corporate Social Responsibility, Community Development, Social Business, Philanthropy, Social Capital.

INTRODUCTION As reported widely in the media, the Supreme Court of India on 12 April 2012 upheld the constitutional validity of the Right of Children to Free and Compulsory Education Act, 2009. The majority judgment said: “We hold that the Right of Children to Free and Compulsory Education Act, 2009 is constitutionally valid and shall apply to a school established, owned or controlled by the appropriate Government or a local authority; an aided school including aided minority school(s) receiving aid or grants to meet whole or part of its expenses from the appropriate Government or the local authority; a school belonging to specified category; and an unaided non-minority school not receiving any kind of aid or grants to meet its expenses from the appropriate Government or the local authority.” Disposing of a PIL filed by the Private investors who do not receive any aid or assistance from the government, the Bench said: “To put an obligation on the unaided nonminority school to admit 25 per cent children in class I under Section 12(1) (c) cannot be termed as an unreasonable restriction. Such a law cannot be said to transgress any

CSR and Competitiveness

constitutional limitation. The object of the 2009 Act is to remove the barriers faced by a child who seeks admission to class I and not to restrict the freedom under Article 19(1) (g).” While it is clear that the primary obligation of providing free and compulsory education to children is that of the State, is it unfair to expect the private sector to share a part of this obligation to educate poor children without charging the high fees that other children pay. Do the private schools have a social responsibility? This is the question that we would discuss in the broader sense of social responsibility of private businesses. Should they focus only on maximizing profits or they need to get involved in community development for their own sustainability. Should this be done under compulsion from the government, civil society organizations, environmentalist groups, etc. or voluntarily by the corporates. Is occasional charity or philanthropy enough or undertaking community development should be a part of the corporate strategy of businesses. What are the different ways in which corporate can fulfill their responsibility. These are some of the issues that will be examined in this chapter.

CORPORATE SOCIAL RESPONSIBILITY Milton Friedman, well known Economist and Noble Laureate, strongly felt that, “there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud” (The New York Times Magazine, 13 September 1970). The business of business is business and its only purpose is to maximize profits. According to Noble Laureate, Muhammad Yunus, “Capitalism has created poverty by focusing exclusively on profit. It built a fairy-tale of prosperity for all”. ‘Globalisation’ was believed to raise living standards across the world. In recent years, there is a growing realization that large parts of the world have not benefited from the gains in economic well being across the globe. Even in the developed nations Rich-Poor gap is widening. According to the Organization for Economic Cooperation and Development (OECD) recent study: • The benefits of economic growth do not automatically ‘trickle down’ to the disadvantaged. • The average income of the richest tenth of the population is now about nine times that of the poorest tenth. • The gap has increased about 10% since the mid 1980s. • Mexico, USA, Israel and UK are among the countries with the biggest divide between the rich and the poor.

Corporates for Community Development through CSR •

Denmark, Norway, Belgium and the Czech Republic are among those with smallest gap.

The protest against inequality is fast spreading across Europe, US and other parts of the world. The common theme of Occupy Wall Street (OWS) is simply stated as “We are 99%”. The rich, greedy and guilty 1% were taken care of at the cost of the remaining 99%. According to some estimates, in the US 1% of the population controls more than 40% of the wealth and receives more than 20% of the income. Today’s protesters are asking for the right to decent work at decent pay, a fairer economy and society. Does business have a responsibility about these social problems? Over the past few years, there is shift from purely profit to profit with social responsibility. This has popularized the term ‘Corporate Social Responsibility’ (CSR), also called corporate responsibility, corporate citizenship, responsible business and corporate social opportunity. The World Business Council for Sustainable Development defines ‘Corporate Social Responsibility’ (CSR) as, ‘the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large’. In October 2011, the European Commission has put forward a simpler definition of CSR as “the responsibility of enterprises for their impacts on society”. Commission acknowledges that although there is no “one-size-fits-all” and for most small and medium-sized enterprises the CSR process remains informal, complying with legislation and collective agreements negotiated between social partners is the basic requirement for an enterprise to meet its social responsibility. The new definition is consistent with internationally recognized CSR principles and guidelines, such as the OECD Guidelines for Multinational Enterprises, the ISO 26000 Guidance Standard on Social Responsibility and the United Nations Guiding Principles on Business and Human Rights. CSR is different from philanthropy. Some corporate make contributions to the society by socially beneficially projects like free hospitals, old age homes, institutions for physically and mentally challenged children, instituting scholarships for students etc. This is philanthropy guided by religious and moral considerations. In India, the Gandhian concept of trusteeship influenced industrial houses like Tatas, Birlas and some others who always gave a part of their profits to charitable trusts. CSR is a part of the business strategy and is undertaken on a sustainable way. CSR is always characterized by voluntary and ‘beyond compliance’ measures taken by industry. CSR is becoming increasingly normalized in global business, and increasingly institutionalized through UN initiatives like the Global Compact, by the European Commission and voluntarily by businesses.

CSR and Competitiveness

CSR has internal and external components. Internal aspects relate to fair and ethical business practices concerning employees, suppliers, customers and shareholders. External aspects are corporate responsibility towards the society in general and communities around, in particular.

COMMUNITY DEVELOPMENT The key purpose of Community Development (CD) is to work with communities experiencing disadvantage, to enable them to collectively identify needs and rights, clarify objectives and take action to meet these within a democratic framework which respects the needs and rights of others. Community work recognizes the need to celebrate diversity and appreciate differences among ethnic and social groups in the community. The widely used meaning of CD is the one given by the United Nations (United Nations, 1971) in which CD is an organized effort of individuals in a community conducted in such a way to help solve community problems with a minimum help from external organizations. The implication of UN’s definition of CD is, therefore, emphasizing creativity and self-reliance in the community for short and long term goals, but not to deny the role of various types of external organizations including business firms.

Why Should Business Get Involved in Community Development Having looked at the meaning of CSR and CD, let us now examine why businesses should get involved with CD. It is generally assumed that in free market economies solving social problems is the responsibility of the government. Experience has however, shown that while government has an important role to play in social development, it alone cannot achieve the task. The governments all over the world realized the importance of partnering with civil society, Non Government Organisations (NGOs) and businesses in tackling social problems. The formation of the World Business Council for Sustainable Development, the UN World Summit for Sustainable Development in 1995, the report by the Brundtland Commission titled “Our Common Future” and a series of conventions held by ILO, UNEP, UNIDO, etc. created a scenario for world business leaders to realize their social responsibility. Over a period of time it has been argued that it is in the interest of business to actively get involved in community development. C.K. Prahalad argues “For sustaining energy, resources, and innovation, the BOP (bottom of the pyramid) must become a key element of the central mission for large private-sector firms”. The poor have a largely untapped potential for consumption, production, innovation, and

Corporates for Community Development through CSR

entrepreneurial activity. As an article in The Economic Times, 20 March, 2012 argues it is a ‘Win-win situation’. CSR can help the businesses increase revenue, enhance market access, increase productivity, accrue savings in cost, augment access to capital, reduce risk, attract and retain good quality human capital and significantly boost the brand value and reputation. Some of the benefits that businesses reap by getting involved in community development are discussed below. 1. Integrating Community Needs with Business will Boost Corporates’ Bottom Line: Socially responsible corporations can enhance their profits and enhance their image as well through CSR programmes. As Prahalad says “The real source of market promise is not the wealthy few in the developing world, or even the emerging middle-income consumers. It is the billions of aspiring poor who are joining the market economy for the first time.” To CSR initiatives that focus and get involved with poor communities will not only result in improving lot of poor but would also boost corporates’ bottom line. 2. Companies with Good CSR Find it Easy to Attract Talent: Organizations with a reputation for CSR can take advantage of their status and strengthen their appeal as an attractive employer by making their commitment part of their value proposition for potential candidates. It is also found that when employees view their organization’s commitment to socially responsible behavior more favorably, they also tend to have more positive attitudes in other areas that correlate with better performance. They believe their organizations recognize and reward great customer service, act quickly to address and resolve customer concerns, and are led by people in senior management who act in the best interest of customers. Confidence in senior management is higher in other areas, too, when employees give their company high marks for being socially responsible. 3. Closer Ties between Corporations and Community: Through CSR corporations and community stays in peace and harmony. This becomes a social capital that is essential in business development. The close link between a corporation and community is another aspect of CSR role in CD because in the long run it creates sustainable development. This could be seen e.g. Shell Foundation involvement in the Flower Valley in South Africa and Marks and Spencer in Africa. The CSR projects give aid to local organization and impoverished communities. This certainly leads to sustainable community development (Wikipedia, 2009). In the District of Moga, Nestle had set up a dairy in 1962. In India, Moga was a backward area, poverty stricken, lacking in the basic facilities like electricity, transportation, medical care etc. The livestock of the people consisted of ordinary cows and buffalos without any facilities for improving their breed and yield. Nestle brought in veterinary doctors, medicines, nutritional supplements for the animals and gave training to the local people for improving the quality and yield of their animals. Financial and technical assistance also were given to the farmers to dig bore wells.

CSR and Competitiveness

When the first factory was opened by Nestle, milk was supplied by only 180 local farmers but in 2006 Nestle had 75,000 farmers in the region supplying milk twice a day from around 650 village dairies. Both Nestle and the community have prospered due to the responsible business practices of the corporate which resulted in the economic and social development of the people in the region and at the same time bringing more profits to the business. There is a similar success story from the village Etha in the State of Uttar Pradesh where Lipton India Ltd. started a dairy farm and took steps for educating the villagers, improving the medical facilities for both human beings and livestock and providing infrastructure for the small scale farmers. (Minister of Corporate Affairs, Government of India Speech, 2012). 4. CSR Helps to Protect Environment and Compensate for other Negative Consequences of Industrialization: Resettlement and rehabilitation of project affected families and ensuring that there is no adverse impact on livelihoods due to environmental degradation are major issues to be addressed by our corporate enterprises. Some of the world’s largest companies have made a highly visible commitment to CSR. These companies take the view that financial and environmental performance can work together to drive company growth and social reputation. Many non-profit organizations have been involved in learning and advocacy of environmental protection of CSR such as those reported by the United Nations. They are for example a) “Friends of the Earth” who highlights the environmental impact of some MNCs and campaign for stronger laws on environmental responsibility; b) “Green Peace mission” is another example of CSR initiative that gives benefit to society and community in preserving the latter’s rights towards reaping healthy environment (Wikipedia, 2009). 5. CSR is for Human Right and Corporate Sustainability: The United Nations have launched the “Global Compact”. The UN Global Compact is a strategic policy initiative for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labor, environment and anti-corruption. By doing so, business, as a primary driver of globalization, can help ensure that markets, commerce, technology and finance advance in ways that benefit economies and societies everywhere.

IS CSR RELEVANT DURING FINANCIAL CRISIS Europe is going through financial crisis. The European Commission argues that even in times of crisis corporate social responsibility is important due to the following reasons: • A strategic approach to CSR is increasingly important to a company’s competitiveness. It can bring benefits in terms of risk management, cost savings, access to capital, customer relationships, human resource management, and innovation

Corporates for Community Development through CSR

•

capacity. It also encourages more social and environmental responsibility from the corporate sector at a time when the crisis has damaged consumer confidence and the levels of trust in business. Through CSR, enterprises can significantly contribute to the European Union’s treaty objectives of sustainable development and a highly competitive social market economy. CSR underpins the objectives of the Europe 2020 strategy for smart, sustainable and inclusive growth, including the 75% employment target. Responsible business conduct is especially important when private sector operators provide public services. CSR requires engagement with internal and external stakeholders so it enables enterprises to anticipate better and take advantage of fast-changing expectations in society as well as operating conditions. This means it can also act as a driver for the development of new markets and create real opportunities for growth. By addressing their social responsibility, enterprises can build long-term employee, consumer and citizen trust as a basis for sustainable business models. This in turn helps to create an environment in which enterprises can innovate and grow. The economic crisis and its social consequences have to some extent damaged levels of trust in business, and have focused public attention on the social and ethical performance of enterprises, including on issues such as bonuses and executive pay. Helping to mitigate the social effects of the crisis, including job losses, is part of the social responsibility of enterprises. In the longer term, CSR offers a set of values on which to build a more cohesive society and on which to base the transition to a sustainable economic system.

SOCIAL BUSINESS Noble Laureate, Muhammad Yunus, feels that in CSR, companies are trying to do good to the people while conducting their business. But profit-making still remains their main goal, by definition. Though they like to talk about triple bottom lines of financial, social, and environmental benefits, ultimately only one bottom line calls the shot: financial profit. Yunus advocates Social Business that is a cause-driven business. He says “In a social business, the investors/owners can gradually recoup the money invested, but cannot take any dividend beyond that point. Purpose of the investment is purely to achieve one or more social objectives through the operation of the company, no personal gain is desired by the investors. The company must cover all costs and make profit, at the same time achieve the social objective, such as, healthcare for the poor, housing for the poor, financial services for the poor, nutrition for malnourished children, providing safe drinking water, introducing renewable energy, etc. in a business way. The impact of the business on people or environment, rather the amount of profit made in a given

CSR and Competitiveness

period measures the success of social business. Sustainability of the company indicates that it is running as a business. The objective of the company is to achieve social goal/s”. Yunus’ Grameen has shown that it is doable through Grameen Danone Company which went into operation in early 2007. The yogurt ‘Shokti Doi’ (Energy Yogurt) is already in the market (25 December 2007).

CASE STUDIES Matthew T. Klick in a study examines the fete of small fishing community of Hammerfest in northern Norway as a consequence petroleum development in the area. The study looks at how progressive CSR policies were developed, implemented, and how they worked. The Conclusions of this study are reproduced below. The fact that results from CSR initiatives in Hammerfest are imperfect is not surprising. CSR attempts to curtail negative externalities, or capitalize on positive spin-offs, in a pre-emptive manner and cannot ultimately prepare a community or industry for inevitable mishaps. This report nonetheless demonstrates the potential value of CSR to communities that confront large-scale industrial development with inherent risks. Incorporating stakeholders and their values yields a more complete cost-benefit analysis that results in an efficient reduction of harmful externalities and similarly promotes positive outcomes. In this case study, the greatest winners were local business groups and suppliers who wanted to assure that money and employment benefited the community and the region. Less successful were environmentalists and the Sámi. Some of the reasons why have been discussed, but these outcomes raise different questions that have not been answered: Will this unequal treatment of stakeholders always be the case? Will business always be accommodated over the environment, and what if the business is inextricably tied to environmental health, or the ‘business’ is a subsistence activity that depends on environmental sustainability? The outcomes in Hammerfest demonstrate a degree of community development, but they do not suggest sustainability. StatoilHydro’s answer to regional stakeholders in Finnmark who seek economic revitalization is increasingly: ‘more acreage’. In other words, while suppliers have successfully stemmed the flow of money to southern Norway, and stimulated positive economic development in Hammerfest, the local economy is still dependant on a finite natural resource with notable negative externalities. CSR, in this case study, has tangible results that minimized risk to fishermen. It has also helped position local stakeholders to capitalize on a resource boom, more than they might have otherwise. But it is unclear if CSR has positioned the community to weather the ‘bust’. It is also unclear if CSR can, or even if it should perform those functions. In this report CSR was examined under the lens of externalities, to better understand how CSR addressed them. CSR, therefore, is a piece—arguably an important

Corporates for Community Development through CSR

one—of a puzzle that includes a regulatory framework, strong institutions, and a diverse economic outlook that considers more than resource extraction for salvation. In a study to understand the CSR initiatives being taken by selected public and private Indian companies for rural development, Sanjay Pradhan and Akhilesh Ranjan found that companies implement CSR programs with respect to rural development through following four types of institutions. 1. CSR activities implemented directly by the company through its own (a) CSR division (b) Human Resource Department (c) Local management of manufacturing unit 2. CSR activities implemented through a foundation; 3. CSR activities implemented through partnership with NGOs, academic institutions, international agencies; 4. CSR activities implemented through partnership with Government. The study concludes that social responsibility is regarded as an important business issue of Indian companies irrespective of size, sector, business goal, location of the company. Because Indian companies are realizing that without socio-economic development of the local communities, there can be no stability and sustainability for doing business so as to compete with the global market. The study shows that all surveyed companies present themselves as having CSR policy and practices. In another study titled ‘Corporate Social Responsibility in Rural Development Sector: Evidences from India’, Pradhan and Ranjan conclude that a wide range of CSR initiatives ranging from income generation activities for livelihood, health check-up camps, mobile health services, education, adult literacy, agricultural development, provision of drinking water, management and development of natural resources, infrastructure facilities being carried out by the companies. Though the approach to work is generally shifting from philanthropic to welfare and sustainable development but no link was observed between the company’s CSR agenda and Millennium Development Goals.

CSR AND MGDs Helen Clark, UNDP Administrator, while speaking in Japan in June 2011 on the potential for the private sector to support achieving the Millennium Development Goals (MDGs) said there are many different ways in which businesses can contribute to MDG achievement: • First of all businesses can benefit the poor by including them in their core business operations, whether that be it as producers and business partners in their supply and distribution chains; as employees in the workplace; or as consumers in the

•

CSR and Competitiveness

marketplace. A recently published UNDP report, “The MDGs: Everyone’s Business”, provides many examples of how businesses can contribute to the MDGs. A second way in which the private sector can make important contributions to advancing progress on the MDGs is through bringing low cost innovations to market. There is now low cost mobile technology to conduct life saving heart scans; as there are energy efficient LED lamps which enable poor children to do their homework at night; smokeless stoves which support better health for those who labour over them; and mobile phone and internet applications which support small farmers and fishermen get access to better prices. Innovations like these, when accessible to the poor, definitely can contribute to MDG achievement. A third, and perhaps a more traditional way, for businesses to promote MDG achievement is by giving back to the community through corporate social responsibility activities. The scope and magnitude of these kinds of activities has multiplied in recent times—and indeed they need to be brought to scale more consistently to have wide impact.

GOVERNMENT OF INDIA POSITION ON CSR As discussed earlier in this chapter, CSR is voluntary and beyond compliance of law. The Ministry of Corporate Affairs (MCA), Government of India recently released the National Voluntary Guidelines on Social, Environmental and Economic responsibilities of Business. These guidelines have been formulated keeping in view the diverse sectors within which businesses operate, as well as the wide variety of business organizations that exist in India today. In the recently introduced Companies Bill 2011, the government has proposed that companies should earmark 2% of average profits of the preceding three years for CSR activities and make a disclosure to shareholders about the policy adopted in the process. Section 135 of Companies Bill 2011 stipulates that: 1. Every Company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during any financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more Directors, out of which at least one Director shall be an independent director. 2. The Board’s report under Sub-section (3) of Section 134 shall disclose the composition of the Corporate Social Responsibility Committee. 3. The Corporate Social Responsibility Committee shall: (a) Formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activity or activities to be undertaken by the company as specified in Schedule VII.

Corporates for Community Development through CSR

(b) Recommend the amount of expenditure to be incurred on the activities referred to in clause (a); and (c) Monitor the Corporate Social Responsibility Policy of the company from time to time. 4. The Board of every company referred to in sub-section (1) shall: After taking into account the recommendations made by Corporate Social Responsibility Committee, approve the Corporate Social Responsibility Policy for the company and disclose contents of such Policy in its reports and also place it on the companyâ&#x20AC;&#x2122;s website, if any, in such manner as may be prescribed; and ensure that the activities as are included in Corporate Social Responsibility Policy of the company are undertaken by the company; 5. The Board of every company referred to in sub-section (1), shall make every endeavour to ensure that the company spends, in every financial year, at least two percent of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy; Provided that if the company fails to spend such amount, the Board shall, in its report made under clause (o) of sub-section (3) of section 134, specify the reasons for not spending the amount.â&#x20AC;? In India, the involvement of businesses, especially large companies, in CSR is likely to be enforced by law.

CONCLUSION CSR and its role in community development are still evolving. While there is strong international commitment to CSR, its practice varies in different countries and different situations within the same country. There are some shining examples of how getting involved with the communities the businesses have improved their bottom lines. The Triple Bottom Line (TBL) concept that measures business performance in financial, environmental and social terms needs to be practiced more rigorously.

REFERENCES The Social Responsibility of Business is to Increase its Profits, Milton Friedman, The New York Times Magazine, September 13, 1970. Mohamad Yunus, www.grameen.com www.oecd.org The Silent Majority Finds its Voice, 2012, www.iccr.org www.unglobalcompact.org

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The Political Economy of Corporate Social Responsibility and Community Development A Case Study of Norway’s Snøhvit Natural Gas Complex Matthew T. Klick matthew.klick@gmail.com January 2009. The Oxford Companion to Economics in India, Edited by Kaushik Basu, Oxford University Press, 2007. The Fortune at the Bottom of the Pyramid-Eradicating Poverty Through Profits, C.K. Prahalad, Wharton School Publishing, 2005. Win-Win Situation, The Economic Times, 20 March, 2012. Corporate Social Responsibility and Its Role in Community Development: An International Perspective Maimunah ISMAIL, The Journal of International Social ResearchVolume 2/9 Fall 2009. Corporate Social Responsibility in Rural Development Sector: Evidences from India, Sanjay Pradhan, Akhilesh Ranjan A. Manager (Sociology) RITES LTD. (A Government of India Enterprise). Corporate Social Responsibility Handbook, Bombay Chamber of Commerce and Industry, 2005. Corporate Responsibility in South Asia—Building Corporate Citizenship into Business Ethos, CII. Ministry of Corporate Affairs, Government of India, www.mca.gov.in

ABOUT THE AUTHOR Mr Harry Sethi did his M.A. Economics and M.Sc. in National Development and Project Planning from Bradford University, U.K. He taught economics to graduate and post graduate students briefly before joining the Government of India as a member of the Indian Economic Service (IES) in November 1971. After working with the Government for around 23 years, he took voluntary retirement in February 1995 and joined CARE, world’s largest relief and development organization. He has the experience of working with the corporate sector as well. Currently he teaches MA Economics and Management to Students. He also advices some NGOs in project design, implementation, monitoring and evaluation.

CSR and Community Development

CSR and Community Development Noshir H. Dadrawala Chief Executive Officer, Centre for Advancement of Philanthropy (CAP), Mumbai E-mail: noshir@capindia.in

“In the long run, those who do not use power in a manner that society considers responsible, will tend to lose it.” —Keith Davis “The wealth gathered by Jamsetji Tata and his sons in half a century of industrial pioneering formed but a minute fraction of the amount by which they enriched the nation. The whole of that wealth is held in trust for the people and used exclusively for their benefit. The cycle is thus complete; what came from the people has gone back to the people many times over.” —R.D. Tata The Indian tradition of Shresthdharma recommends that the better off one is in society, the higher should be one’s sense of responsibility. Little wonder the doyen of Indian industry, Late J.R.D. Tata believed, “the most significant contribution industry can make is to identify itself with the life and problems of the community it lives in”.

INDIA’S DEVELOPMENTAL CHALLENGES India is faced with a number of developmental challenges, which requires concerted effort on the part of all three sectors 1) Government 2) Business and 3) Voluntary. A harmonious and effective partnership between all these three sectors, often referred to as ‘Civil Society’, is the best response to any developmental challenge. India already has a population of over 1.21 billion people; it is slated to surpass China’s by 2025. The latest World Bank Report on India, “Undernourished children—a call for reform and action”, finds the number of underweight children in India is among the highest in the world. The report says approximately 60 million children are underweight in India. Literacy in India is key for socio-economic progress. According to a recent study in the British Medical Journal, India has an HIV/AIDS population of approximately 1.4–1.6 million people. Despite being home to the world’s second-largest population suffering from HIV/AIDS, the AIDS prevalence rate in India

CSR and Competitiveness

is lower than in many other countries. In 2007, India’s AIDS prevalence rate stood at approximately 0.30%—the 89th highest in the world. Indian literacy rate grew to 75.06% in 2011 from 12% at the end of British rule in 1947. Although this was greater than six fold improvement, the level is well below the world average literacy rate of 84%, and India currently has the largest illiterate population of any nation on earth. Despite government programs, India’s literacy rate increased only sluggishly and a 1990 study estimated that it would take until 2060 for India to achieve universal literacy at then current rate of progress. The 2011 census, however, indicated a 2001–2011 decadal literacy growth of 9.2%, which is the slower than the growth seen during the previous decade. Environmental issues in India are many. Air pollution, water pollution, garbage pollution and wildlife natural habitat pollution continue to challenge India. The situation was worse between 1947 through 1995. According to data collection and environment assessment studies of World Bank experts, between 1995 through 2010, India has made one of the best advances in the world, in addressing its environmental issues and improving its environmental quality. Still, India has a long way to go to reach environmental quality similar to those enjoyed in developed economies. Pollution remains a major challenge and opportunity for India. The major sources of pollution in India include the rampant burning of fuel wood and biomass such as dried waste from livestock as the primary source of energy, lack of organized garbage and waste removal services, lack of sewage treatment operations, lack of flood control and monsoon water drainage system, diversion of consumer waste into rivers, cremation practices near major rivers, government mandated protection of highly polluting old public transport, and continued operation by Indian government of government owned, high emission plants built between 1950 to 1980. Liberalization and Globalization have indeed ushered a new era of economic development in India. However rightly did Justice A.M. Ahmadi remark at the 31st Annual Convocation of the Indian Institute of Management (Ahmedabad, 1998): “Economic development without human development leaves development incomplete and may, therefore, truncate the growth of the human being. Development divorced from human cultural aspects has been described as growth without soul. For development to be complete, it should comprise both economic and human development. It should not be just confined to increased production of goods and services, but should also embrace human values.”

RESPONSIBLE CORPORATE CITIZENSHIP Responsible Corporate Citizenship is often considered a western concept. However, way back in the nineteenth century Jamsetji Tata (1839–1904) believed that industry was meant to serve man. To-date his worthy successors echo the same sentiments.

CSR and Community Development

‘Corporate Giving’ neither begins nor ends with ‘giving of funds’. Companies can enter into meaningful partnerships with voluntary organizations in several non-financial ways: (a) Providing skills (including loaning senior executives to work with NGOs). (b) Training and assistance (especially in areas of accounts, marketing, communications, budgeting, management, technical skills). (c) Preferential purchase of products. (d) Distribution tie-ups. (e) Employing the disabled/disadvantaged. (f) Developing/supporting ancillary units employing the disadvantaged. (g) Offering infrastructure (office space, computers, fax, telephone and other communication facilities). (h) Payroll deductions (i.e. encouraging employees to contribute a fixed sum of money every month from their salary cheques. Often companies also match the employees’ aggregate contribution with their own). For many companies the goal of ‘doing good’ for the constituencies they serve is merging, by necessity, with the companies’ need to ‘do well’. As companies analyze the return on such ‘social-partnerships’, the process increasingly seems to be turning into one of financially sound goodwill. A nationwide poll by Cone Inc. reveals that over 80 per cent of Americans (more so after September 11, 2001) prefer doing business with companies that are founded on the core elements of corporate and social responsibility. According to the Boston-based Cone Group, “Americans more than ever are demanding that companies play an active role in supporting social needs. What’s more, Americans are increasingly making purchasing, employment and investment decisions to reward companies that do so.”

SUSTAINABLE DEVELOPMENT The World Business Council for identifies ‘corporate social responsibility’ as the third pillar for sustainable development along with economic growth and ecological balance. Responsible businesses are beginning to define goals that go beyond their own corporate objectives. The core belief is that companies incur responsibilities to society beyond profit maximization. Huge corporations possess the power to control and influence the quality of life of employees, customers, shareholders and residents of local communities in which they operate. A single corporate decision can irrevocably change the lives of thousands of people. Power necessarily entails responsibility. Managers, in pursuing their primary goal of increasing shareholder value, have social responsibilities beyond meeting the minimal requirements of the law.

CSR and Competitiveness

CSR CIRCLES Corporate social responsibility navigates three circles. The inner circle includes the clear-cut basic responsibilities for the efficient execution of its basic function— products, jobs and economic growth. The intermediate circle encompasses a responsibility to exercise this function with a sensitive awareness of changing social values and priorities: for example, with respect to environmental conservation, hiring and relations with employees. The outer circle outlines newly emerging and still amorphous responsibilities that business should assume to become more broadly involved in actively improving the social environment. In the modern business world there are three motivating/compelling factors that inspire corporate social responsibility: 1. ‘Reputation Capital’ for capturing and sustaining markets. Many companies see this as a business strategy to reduce investment risks and maximize profits by taking all the key stakeholders into confidence. Business strategists often include corporate social responsibility in their advertising and social marketing initiatives. 2. ‘Eco-social’: Social and environmental stability and sustainability are important prerequisites for the sustainability of the market in the long run. Increasing poverty can lead to social and political instability. Such socio-political instability can, in turn, be detrimental to business, which operates from a variety of socio-political and cultural backgrounds. Islands of prosperity cannot exist in a sea of poverty. Analyzed from the Eco-social perspective, corporate social responsibility is both a value and a strategy to ensuring the sustainability of business. It is a value because it stresses the fact that business and markets are essentially aimed at the well being of society. It is a strategy because it helps to reduce social tensions and facilitate markets. 3. ‘Stakeholders Rights’: Consumers, employees, affected communities and shareholders have a right to know about corporations and their business. Corporations are private initiatives but increasingly they are becoming public institutions whose survival depends on the consumers who buy their products and shareholders that invest in their stocks. Accountability, transparency and social and environmental investment therefore become key aspects of corporate social responsibility. Michael Porter, the guru of corporate competitive strategies feels, “to prosper, companies will have to become more human, finding new ways to cushion the impact of competition on the firm and it’s employees”. There is realization that business ultimately helps itself by helping to solve societal problems. Corporate philanthropy therefore is often perceived as a matter of enlightened selfinterest. But most people tend to agree that for the greater good of society, may corporate Enlightened Self-interest prevail!

CSR and Community Development

DOING GOOD MAKES BUSINESS SENSE Succeeding in business today involves more than a savvy business sense. Business success involves a sense of important societal issues and a sense of how these issues impact the company and the community. Today’s companies, all over the world and in India, are realizing that many community issues have a direct impact on the company and its ability to succeed, realizing that a successful business vision requires social vision as well. One of the hallmarks of a good company is that it takes great care to enrich the lives of its neighbours rather than merely co-existing. At the very least, it is a matter of enlightened self-interest, in the sense that it creates local goodwill in the community or society it operates and from which it draws its resources, both human and material. It also helps create better staff relations and opportunities for staff to participate in development work in a meaningful way.

WHY COMPANIES? It is increasingly becoming clear that solutions to the country’s development problems are largely beyond Government and the loudest proponent of this view is the Government itself. But why companies? Are they not paying enough as tax for the Government to look into this? Isn’t it true that social and other legislation’s already lay down enough responsibilities on corporations for the care of employees, society and the environment? Will any further contribution not appear to shareholders as an indulgence? The truth is that a company’s social involvement can never add to corporate costs unless corporate benefit is also involved. There is therefore no reason why a company’s altruistic and business motives cannot be in harmony. Corporate involvement cannot be peripheral to the main interests of the company. It should be an integral part of its strategy. An effective community relations programme is important to the success of a business. A company’s thoughtful and sustained involvement in social programmes always helps the community observe the organisation in a broader and more positive perspective. Shareholders and customers see the company as more than a purveyor of goods and services and source of dividends. Employees are helped to perceive the company as more than just an employer. Large companies are often criticised as being faceless, even inhuman. By living in harmony with the people and the environment, a company can gain acceptance as a responsible, understanding and sympathetic corporate citizen. Business is more likely to thrive in a healthy society and environment and so it is sound sense to do what one can to make it healthy. A company’s involvement, therefore, must be in areas where there is a major societal concern.

CSR and Competitiveness

POTENTIAL AND OPPORTUNITY Companies operating in India are increasingly recognizing the fact that the best way for their business to grow is by aligning themselves with the nation’s development objectives. Through good corporate citizenship initiatives, companies can help ensure a prosperous future for the country and for themselves. There is realization that business ultimately helps itself by helping to solve societal problems. On one hand, India has a tremendous resource of NGOs working at grassroot levels on issues such as education, health-care, employment generation, rural development, disability, child-welfare, women’s emancipation, protection of the environment, etc. There are virtually thousands of NGOs engaged in these projects. On the other hand, companies have large resources not just in terms of money but also human resource and expertise.

SOCIAL CONSCIOUSNESS Over the years, business in India has developed a social conscience. There is a growing belief that to give concrete expression to its responsibility to society, industry must actively participate in and promote efforts to strengthen and improve the community in which it functions. In Maslow’s theory of the hierarchy of needs, the highest state is that of self-actualization or the need of the individual to be socially acceptable. This can be easily applied to companies, since all professionally managed organizations desire to establish a significant presence in the market. To achieve such a presence it is essential that companies recognize their duty to the society in which they are operating. As an instrument of development, corporate philanthropy has several inherent strengths. It can take a long-term view of problems and promote durable solutions. Lord Coke had, in his time, observed that the corporation has no “soul”. In the climate that prevails today, one would venture to suggest that the corporation had better develop a soul.

SHAPING NEW SOCIETIES Given the current scenario, private sector support of cause-related issues should be willingly forthcoming. Companies could align themselves with social causes in several areas and work out a strategy to bring about necessary social change. For instance, companies can help make a difference to society at large through genuine involvement in areas such as: • Health Care (AIDS, Leprosy, TB…) • Poverty/Population/Illiteracy • Traffic in illegal drugs/addiction

CSR and Community Development • •

Environment conservation Education—including adult education or education of women.

The need for better corporate support to social causes can hardly be underscored. Good corporate citizenship is becoming one of the key attributes of transnational corporations operating in a global marketplace. There are many reasons for the same. It is a fact that: • increasingly qualified professionals will want to work for a company that not only provides value-added products which improve the quality of life, but also has a commitment to social engagement; • customers show a marked preference for doing business with organisations that market quality products/services and are environment-conscious and socially driven; • communities and governments want companies that are good corporate citizens; • shareholders like to invest in companies that demonstrate their social responsibility. Therefore, integrating a social investment strategy in the business strategy makes good business sense. Additionally, it endows the organisation with a “good public image”. Also, there is really nothing wrong if the end-goal of any community involvement programme is targeted at making the company increasingly profitable. Only a profitable company can afford to be a more involved corporate citizen.

CORPORATE POLICY Companies must strive to make Good Corporate Citizenship a core corporate value in the organization. It must also evolve a community initiative strategy and have clear resource allocation for the same (e.g. one per cent of pre-tax profit). If a company has a policy and is prepared to make this publicly known, then it should produce a written statement on that policy covering the history of the company and a description of its rationale for giving. In the statement, the company should clearly state: (a) the sort of activity or type of individual or organization it would like to support; (b) the priority areas where it would concentrate its giving; (c) what the company would not support—the activities or types of projects that are excluded; (d) how to apply and how the company will assess the appeals it receives; (e) how applications will be processed and the time it will take to process; (f) whom to contact.

CSR and Competitiveness

MISSION STATEMENT The company’s thrust should be on evolving a “social responsibility” policy with a clear sense of mission that includes well-defined objectives, a time-span and results that can be qualitatively and quantitatively measured. Social responsibility does not mean simply cheque-book philanthropy. It has to be purposeful and measurable. Take, for example, the case of IBM—the internationallyrenowned computer company. The company, over the years, has donated millions worth of computer equipment to U.S. schools. Their total approach to social engagement is very innovative. It has a business dimension as well as a social dimension. The company’s focus is on computer education and clean environment via computer technology. Besides giving substantial grants to university departments to enable them to get into the information age, IBM offers paid leave to computer professionals to enable them to use their competence for training computer enthusiasts. IBM also helps to solve environmental problems through application of computer technology and simulation.

EVALUATION Evaluation of a company’s social performance can serve two purposes. The performance can be evaluated in order to determine how effective it is in reaching its stated objectives. This concept of evaluation is aimed at measuring results of a company’s performance in terms of “outcome”. Evaluation can also be used as a tool to provide information necessary to make appropriate changes and adjustment in the company’s programme as it proceeds. This concept is focussed on the way the company’s programme has been conducted (“process evaluation”). Various “tools of social science” can be used or developed to measure and evaluate “social performance”.

TRIPLE-BOTTOM-LINE—PEOPLE, PLANET AND PROFIT Corporate Social Responsibility (CSR) or Corporate Citizenship (CC) is a business principle affirming that the long-term interests of business are best served when its profitability and growth are accomplished alongside the development of communities, the protection and sustainability of the environment and the improvement of people’s quality of life.

CSR and Community Development

‘Corporate social responsibility’ is qualitatively different from the traditional concept of ‘corporate philanthropy’. It acknowledges the debt that the corporation owes to the community within which it operates, as a stakeholder in corporate activity. It also defines the corporation’s partnership with social action groups in providing financial and other resources to support development plans, especially among disadvantaged communities. In fact there is an increasing recognition of the triple-bottom-line: People, Planet and Profit. The triple-bottom-line affirms the following: 1. The stakeholders in a business are not just the company’s shareholders 2. Sustainable development and economic sustainability are inter-linked 3. Corporate profits should be analyzed in conjunction with social prosperity. In the traditional paradigm, most corporate bodies viewed CSR as the extension of a financial input for a humanitarian cause. However, the contemporary context is more complex. Traditional corporate philanthropy dates back to the 19th century and emerged out of a variety of factors, such as concern for the employees and their families, the quest for personal satisfaction with the establishment of philanthropic institutions, the desire to establish a strategic relationship with the State or society and the establishment of trusts and foundations for tax benefits, which also support socially beneficial activities.

ETHICAL BUSINESS Ethical business is the more fundamental, emerging trend on the international scene. It focuses on specifics like how the business is conceptualized, how the business is operated and the notion of fair profit. In an ethical business the essential thrust is on social values and the business is conducted in consonance with broader social values and the stakeholders’ long-term interests. The primary drive for ethical business and corporate social responsibility came from the USA and Europe in the ‘80s and ‘90s, from campaigns run by pressure groups such as Greenpeace and Friends of the Earth. Consumer boycotts, direct action, shareholder action, ethical shopping guides, ethical product labeling schemes, media campaigns and ethical competitors became increasingly effective in changing corporate perspectives. The mid-’90s were the watershed years for the new consciousness in international corporate polity. This was the time when two prominent MNCs were compelled by ‘ethical market forces’ to re-orient their business attitudes. In 1995, Shell dumped its Brent Spar oil platform in the North Sea. Public agitation in Europe was so intense

CSR and Competitiveness

that in Germany sales fell by 70 per cent within a fortnight. Similarly, Nike, the shoe and apparel giant, ran aground thanks to a campaign against child labour and worker exploitation in many of the 700 factories across 40 countries where Nike worked with subcontractors. That prompted the company to set up a full-scale team under a Vice President, Corporate Responsibility in 1997. In the early-’90s, Greenpeace commissioned a unit in eastern Germany to manufacture a CFC-free refrigerator. Within six months, mainstream manufacturers in Germany were manufacturing identical fridges. Today most companies’ fear becoming the target of a powerful single-issue campaign group. So, rather than wait for it to happen, managers are taking pre-emptive action in the form of environmental product development and labeling, or engaging in such ideas as codes of conduct and social audits. Companies a quickly learning the value of becoming well governed internally and well behaved externally.

CSR AS A WAY OF LIFE Today one of the main considerations for a company to adopt and practice CSR is the buildup of “social capital” with a view to generate long-term socio-economic benefits. An effective and strategic CSR programme must have four key elements: 1. Policy (providing the mandate and defining the direction of the company’s CSR agenda) 2. Programmes (the policy is translated into a set of interventions in the form of projects, programmes and activities to address specific needs of the company and the community in which it operates) 3. Systems (the company must decide whether it would like direct involvement with the community or work through an accredited NGO and in either case, who would be in charge, who would oversee and who would report to whom. In other words setup management systems and proper procedures to sustain the programmes) 4. Measurements and Reporting (measure the direct and indirect impact of CSR on the company’s business performance and report the same to all stakeholders).

CSR IMPACT INDICATORS Healthy communities are important to the well being of society and the overall economy. Indeed, healthy communities provide an environment for healthy business. When corporations support the right causes in the right way they set in motion a virtuous and enriching cycle.

CSR and Community Development

The following are some of the direct and indirect business impact indicators:

Direct Business Impact Indicators Financial Drivers •

•

Human and Intellectual Capital: A company committed to social responsibility and which draws the best from its employees and rewards them justly attracts, retains and further develops a highly committed, loyal and motivated staff. In the process it saves on recurrent recruitment and training costs of new employees and derives competitive advantage from its pool of productive and motivated employees. In an increasingly competitive environment, talent would be keen to be associated with a company that it sees as more respectable in the public eye. For existing employees, it sends messages of trust and to a large extent, makes a person rethink a decision to quit the place. Marketing Edge: CSR helps the company to boost its public image resulting in attracting and retaining customer/consumer loyalty. Companies that produce goods and services in a fair and ethical manner benefit from sustained patronage of their customers. Being an upright Corporate Citizen is a title a company can flaunt and gain an edge over others who are not. However companies that desire to make CSR a marketing tool must have a long-term cohesive element that will integrate it into the marketing strategy and not be just a one-off event.

Social Drivers •

• •

Corporate Reputation: CSR promotes positive public perception. However companies which have a notorious reputation cannot use CSR as a whitewashing exercise in a bid to spruce up its image. CSR should be a living corporate value. Favourable Business Environment: A company’s involvement in social development encourages business-friendly policies and incentives through legislations. Social Acceptability: CSR generally promotes a mutually supportive relationship with the local community on the basis of transparency and mutual trust.

Environmental Drivers •

•

Operational Efficiency: CSR can be used as a core business strategy to achieve higher levels of productivity at the least cost. For example, a company that adopts environmentally sound processes can reduce overhead costs. Reduced Management Risks: A company’s social activities generally help in identifying appropriate social and environmental interventions to minimize some negative impacts from its business operation.

CSR and Competitiveness

INDIRECT BUSINESS IMPACT INDICATORS Financial Driver Reduced Indirect Costs: As there is always cost to inaction, a company that behaves in an ethically acceptable and proactive way to address social and environmental concerns can avoid incurring costs that would have arisen if these concerns had worsened.

Social Driver •

•

Leadership: A company’s leadership in CSR heightens its influence in persuading other business houses to participate in initiatives that benefit the entire or a larger community. Reduced Dependence: The development programmes or projects of the company promote capacity and self-reliance and reduce dependence on the company’s resources.

Environmental Driver Shared Environmental Costs and Risks: Through CSR networks, business organizations and stakeholders are able to share time and expand the reach of their resources in solving social and environmental issues.

CONCLUSION In the environment of modern economic development, the corporate sector can no longer function in isolation. Corporations must behave and function, as responsible members of the society, just like any other individual. Having a ‘social vision’ is integral for the success of ‘business mission’. Companies desiring to build and sustain brand equity will do well to remember that discharging social commitments is essential to generating an image in the minds of the people. At the end of the day, how well an organization integrates community interests into its core values will be one of the determining factors that will spell its success or failure. A social investment strategy is a must for any progressive organization’s secure future.

ABOUT THE AUTHOR Mr. Noshir H. Dadrawala is the Chief Executive of the Centre for Advancement of Philanthropy (CAP), Mumbai, a leading registered not-for-profit organization. Currently, he serves on international boards such as Member, Asia Pacific Philanthropy Network, which is a part of Give2Asia based in San Francisco, Fellow of the Centre for Study of Philanthropy (New York) which is affiliated to the Graduate School and University Center of the City University of New York, member of the Advisory Council of the U.S. based International Centre for Not-for-profit Law.

Role of District Administration in Community Development through CSR Initiatives

Role of District Administration in Community Development through CSR Initiatives Yudhbir Singh IAS Officer, Deputy Commissioner Residence, Jind, Haryana, India E-mail: yudhbirsingh@gmail.com

ABSTRACT This chapter establishes the Need of CSR for the Community and Social Development in Rural Areas and accomplishment of Corporate Social Responsibilities through infrastructure available with District Administration thus minimizing the Internal and External Challenges for Implementation of CSR by enterprises. It is a case study emphasizing on how the stakeholders may be engaged in various activities through CSR initiatives to achieve the objective of Community and Social Development. Government of India has various projects on its priority list for community development like Total Sanitation Campaign (TSC), Swarnjayanti Gram Savrojgar Yojna (SGSY), Mahatama Gandhi National Rural Employment Guarantee Scheme (MNREGS) etc. which are being implemented as per the government policies. There are still many critical gaps which need to be filled for successful implementation of these projects. Besides, there are other societal works also which are not directly or indirectly covered by various Government Policies and can be taken up and implemented by the District Administration especially in Rural Areas in association with the PRIs, Line Departments, Local NGOs and other implementing agencies, if financial support is available through CSR initiatives. Keywords: CSR, Corporate Social Responsibility, Community Development, Social Development, District Administration, Role of Administration.

INTRODUCTION Community and Social Development is an Endeavour to bring about an integrated development of rural life. The final aim of community development program is to bring about an all round development of the nation as a whole. The people of a particular community plan according to their need and necessities out of their own

CSR and Competitiveness

initiative and co-operate with each other to implement such plans. Government of India defines Community and Social Development as “The program of aided self help to be planned and implemented by the villagers themselves”. Decentralized planning or the “Bottom-up-Planning” is recognized as an important form of planning for the local area development. It is being prepared at the sub-national level and is in different forms such as “District Planning”, “Block Planning” and “Village Planning”. It is remarked that planning at the sub-national level, formulated in an integrated manner, can be more effective in tackling those problems than national planning shaped on the basis of national averages (Patnaik 1985). The need for decentralized planning of development in India was felt in the First Five Year Plan (1951–56) itself, which recognized that there is a need to break up the planning exercise into national, state, district, and local community levels. The two new components of decentralized planning came into picture in the Second Five Year Plan namely the establishment of the District Development Council and the drawing up of Village Plans. The planning commission in 1969, communicated guidelines to the states for formulating district plans, details of the concept and the methodology of drawing up such plans within the framework of annual, medium term and perspective plans. In 1978, M.L. Dantwala laid stress on Block Level Planning to form a link between village and district level planning. In 1984, Hanumantha Rao Committee recommended for decentralization of functions, powers and finances and setting up of district planning bodies and district planning cells.

OBJECTIVE Community Development refers to the welfare of the entire population not of a particular section or group of section. It is an attempt to create a new social order. It covers almost all aspects of social life, such as health and sanitation, agricultural development, education, employment, growth of science and technology etc. No Developmental Program can be imposed on people. The people are involved in developmental activities spontaneously because they feel the need to increase their standard of living, to lead a better and comfortable life. There are certain cases where the initiative expected of the people does not come spontaneously. In such cases different methods are used to arouse the need for that thing within the people. Community Development Program aims at securing people’s participation from planning to execution. The people have to be conscious of their own need and put their resources and efforts together to fulfill that. This needs a systematic mechanism which can combine the efforts of people and the assistance of Government to accelerate the process of reaching the end.

Role of District Administration in Community Development through CSR Initiatives

In India, all States have started to incorporate the idea of welfare States. The government is supposed to perform various functions that come under the welfare of the people. Today, we can speak of community development project as a process of administration. Community Development embraces all aspects of government activities in fields like Education, Health, Agriculture, Employment and other community activities. Ministry of Rural Development, Government of India has various projects on its priority list for Community and Social Development like: • Total Sanitation Campaign (TSC) • National Rural Health Mission (NRHM) • Swarnjayanti Gram Savrojgar Yojna (SGSY) • Pradhan Mantri Gram Sadak Yojana (PMGSY) • National Social Assistance Programme (NSAP) • Mahatama Gandhi National Rural Employment Guarantee Scheme (MNREGS) etc. But there are still “CRITICAL GAPS” which need to be filled up for effective implementation of various programs and policies at grass root level. Besides, there are many other societal works also which are not directly or indirectly covered by these programs and policies. These programs can be taken up and implemented by the District Administration especially in Rural Areas in association with the PRIs, Line Departments, Local NGOs and other implementing agencies if additional financial support is available. The objective of this chapter is to understand the need of CSR initiatives in the Community and Social Development in a District and for the purpose District Sirsa in Haryana has been taken as a case study.

STUDY OF EXISTING SOCIO-ECONOMIC STATUS AND THE INFRASTRUCTURE—DISTRICT SIRSA Sirsa district is bounded by the state of Punjab in the north and north-east, by Hisar district in the east and by the state of Rajasthan in the south and west. The district has a semi arid type of climate, where there is dryness of air, extremes of temperatures and scanty rainfall. The main soils in the district are sandy soft loam (Rahi), salty clay, sandy and loamy sand. The southern part of the district is dotted with sand dunes. In its physical features, the district presents a level plain. River Ghaggar is the only river associated with this district and it has been identified with sacred river Saraswati. There is a lake at Ottu, which is filled by the over flow of the Ghagar river. Kankar and saltpeter (shora) are two minerals found in the district.

CSR and Competitiveness

Role of District Administration in Community Development through CSR Initiatives

Table 1: Profile of Sirsa Sr. No.

Facts

Figure

Date of Formation

26 August, 1975

Area

4277 sq. km.

Latitude

Between 29.14 and 30. O’ North

Longitude

Between 74.29 and 75.18 East

Population (2001)

11,16,649

Males

5,93,245

Females

5,23,404

Population Density

261

Sex Ratio

882 females for 1000 males

Literacy Rate

60.55%

Sub-Divisions

Tehsils

Sub-Tehsils

Blocks

Villages

325

Average Rainfall

32–53 mm

Source: Statistical Abstract of Haryana, 2007–08.

The district comprises of 333 villages (of which 321 are inhabited), 333 panchayats and five towns.

Education/Literacy Literacy is one of the most important indicators of development. District Sirsa has one university, five degree colleges, two B.Ed. colleges, three engineering colleges, one dental college, 237 high/higher secondary schools, 131 middle schools and 580 primary schools. The district also has five ITIs and one J.B.T. centre.

Health and Family Welfare Health is one of the important indicators of social development of any area and its population. The birth rate in the state is still high (26.8) as compared to its neighboring state of Punjab and Himachal Pradesh and so is the infant mortality rate which was 61 per thousand live births.

CSR and Competitiveness

Safe Drinking Water Access to safe drinking water is one of the fundamental basic needs of human being. Surprisingly, in Sirsa, 64.43% of the households have access to tap water as compared to the State percentage of 48.14%. On the contrary, 3.32% of household in the district drinking water from river as canal as compared to 0.15% in the State. Still several households in the district do not have access to safe drinking water.

SWOT ANALYSIS Strengths of the District Fertile Soils, Good environment for Dairy, Horticulture and other Agro based Industries and Skilled Workers.

Weaknesses Low Literacy Rate, High Cost Agricultural Labor and Backward Industrial Sector.

Opportunities There is a scope for improvement in Health, Education and Environment, scope of area expansion under horticulture, scope for lift irrigation schemes, scope for dairy development, congenial atmosphere for improved agricultural activities, scope for rural connectivity through roads, I.T. and rural electrification.

Threats Repeated drought years and consequent depletion of underground water table, seasonal migration of landless laborers, Traditional cropping patter i.e. paddy, wheat rotation which causes exploitation of natural water resources.

Major Objectives • • • • • • • •

Diversification of agriculture sector. Programmes regarding poverty alleviation in SC population. To promote small scale and cottage industries. Training programme of SHGs and unemployed youths. Social infrastructure to create direct and indirect employment. To fill up the critical gaps in physical and social infrastructure. To improve the irrigation, power, water supply, education and health infrastructure. To promote water harvesting in long way.

Role of District Administration in Community Development through CSR Initiatives

Strategies • • • • • • • •

To identify critical gaps in various sectors To introduce new agricultural practices To improve ground water level through water harvesting schemes To create sustainable assets for training and self employment of youth Upgradation of infrastructure for educational institutions, health institutions, animal husbandry institutions and rural connectivity Motivation of farmers for diversification of agriculture by providing better inputs Training to SHGs for industries and local artisans Judicious use of existing resources.

EDUCATION Construction of School Rooms The overall literacy rate of the district continues to be less than the average of the State. Between 2001 and 2008, the district achieved only 2% increase in the literacy rate, which is very low. More significantly, literacy rate of minority community is less than the district average. The education level of female is further, lower and only 45% of them attend schools above primary level. This is more skewed in case of Muslim community, as even 10% of them could not go beyond primary classes. Children from Muslim and ST households reported highest dropout i.e. around 17% and 13% respectively (2008). Unlike some other districts, the low level of literacy is not because of non-availability of schools, as almost all the villages in district have at least one primary school. The basic problem is low enrolment ratio and relatively high dropout rate. The development plan of Sirsa should focus on increasing enrolment and arresting the dropout rates particularly of minorities and females.

Problems • • • • • •

There is spatial disparity in the provision of educational institutions and the various facilities in these institutions Literacy rate in some blocks is much below the district average The female literacy is lower than the male literacy The literacy in the rural areas is much lower than that of the urban areas The teacher student ratio is high Classrooms are inadequate and more than 30 per cent need repairs.

CSR and Competitiveness

Objectives • •

To improve the literacy scenario in the district. To reduce the disparities in the education sector among the blocks and between rural and urban areas.

Strategy • • • • • • •

To saturate the demand of Additional School Rooms. To enhance literacy rate. To arrest the dropout and enhance the enrollment. To make Elementary Education accessible to everyone. Provision of adequate facilities including class rooms and kitchen sheds in the schools. To give priority to rural pockets which are lagging behind. To achieve the object in a phased manner.

Proposed Schemes • • •

Provision of classroom in existing schools. Provision of kitchen shed in Primary and Upper Primary schools. Use of Incinerator for School Toilet Waste.

Girls Education in Rural Areas In order to encourage girls education in rural areas, a pilot project was launched in District Sirsa. Two buses were provided by the district administration for transportation of girls students of 11th and 12th class from nearby villages to Sr. Secondary School of village Kaluana so that the girls from villages where Sr. Secondary schools are not available should not be deprived of education. Not only this, two more buses were provided for transportation of girls students from these villages to colleges at Sirsa so th that these girls can continue their studies after completing 12 class. This project has been very successful and the girls including their parents are very happy since the girls from rural areas are now able to continue their studies up to the graduation.

Literacy—Saksharta Mission Women in rural areas feel sad about being illiterate themselves and wish that their children and grand children must get education for better and secure future. Having understood the importance of literacy, they are happy that their children are getting

Role of District Administration in Community Development through CSR Initiatives

good education in schools. Not only this, they have also started participating in Saksharta Rallies to make villagers aware of the Literacy Campaign. In the present scenario, Women in rural areas are very much excited and thrilled about the education facility of their children especially the girls of villages.

HEALTH Health is one of the important indicators of Social Development of any area and its population. The birth rate in the State is still very high (26.8) as compared to its neighboring State of Punjab and Himachal Pradesh and so is the infant mortality rate is 61 thousand per live birth. The National Rural Health Mission (NRHM) a flagship programme of the Government of India aims at to provide accessible, affordable, accountable, effective and reliable primary health care services, especially to poor and vulnerable sections of the population. The programme sets standard for Rural Health Care and provides financial resources to meet the standards.

Anemia Awareness and Eradication Program The program was started in 30 villages of the district after finding that anemia is prevailing in more than 70% cases. The target groups were School Children with special emphasis on female students of class IXâ&#x20AC;&#x201C;XII, Antenatal and Lactating mothers and children enrolled in Anganwadi Centers. The project was implemented through the human resource of AYUSH Department and monitoring was effected through senior officers of the health department. Lectures comprising of causes, signs and symptoms, implications and complications of anemia, and importance of cleanliness and dietary habits to combat Anemia was delivered to the beneficiaries. Teachers were sensitized about the importance of continuously reminding the students about medication. Poster making competitions, essay reading competitions were conducted on the subject to create awareness about Anemia. Ayurvedic and Allopathic medicines were administered in 15 villages each to cure iron deficiency anemia amongst those diagnosed to be suffering from Anemia. Midterm evaluation was instituted in some of these villages. The beneficiaries who were subjected to Hemoglobin estimation before starting the medication were once again subjected to Hemoglobin estimation after a period of 45 days from starting the medication. It was found that the Hb level increased in 80.43% of the beneficiaries who were available for interim evaluation. The most important factor is that the students from rural areas have become aware of this problem and they now follow the cleanliness and dietary modification practices.

CSR and Competitiveness

Voluntary Blood Donation Voluntary Blood Donation Program was launched in association with “Indian Society of Blood Transfusion and Immunohaematology” (ISBTI). Orientation and Motivational Programs, Training Programs, Workshops and CMEs were conducted for Donor Motivators, Camp Organizers, Blood Bank Staff, Clinicians and their paramedical staff to make them aware of Voluntary Blood Donation and Blood Transfusion Services. th th School Education Programs for students of 11 and 12 Standards which included Voluntary Blood Donation related Quiz Contests, Poster Making Competitions, Essay Writing etc.

Everyday, atleast one camp was organized in one of the villages of District Sirsa continuously for two years. The details of all these camps, Volunteers and Blood Donors were made available on website www.bravoblooddonor.org along with photographs. All the volunteers are blood donors, most of them are now motivating others to donate blood and some of them have even started to organize blood donation camps in their villages. Women in rural areas are not only becoming aware of their social responsibilities but are far ahead of males in some fields. They are the real source of inspiration and motivation for their family members to participate in this program. They are not only encouraging their family members but are also donating blood themselves in the camps with great enthusiasm. They are also becoming source of inspiration for other women in the villages who are afraid of donating blood. This Program has been successfully implemented in District Sirsa which has achieved the status of only district in the country having more than 300% Voluntary Blood Donation as on date. ISBTI—an NGO established in 1973 and engaged in promotion of Voluntary Blood Donation and Blood Transfusion Services in the country is aiming for and is all set to implement the same strategy of encouraging and motivating local volunteers in other districts of the State of Haryana and finally throughout the Nation.

Total Sanitation Campaign Total Sanitation Campaign was launched in District Sirsa on 2nd October, 2007. The campaign named “Naya Saal Naya Savera” was to make all the villages of District Sirsa “Open Defecation Free” by 31st December, 2007. The campaign launched in association with an NGO “Jai Swachhta Samiti” not only encouraged but ensured active participation of children, women and others from the community itself. Students joined the campaign as “Swachhta Doot”, women joined as members of Swachhta Samiti, motivators followed up the efforts and the campaign was successfully

Role of District Administration in Community Development through CSR Initiatives

completed. All the 333 villages of the district were made open defecation free within 90 days. This was verified by a team of Limca Book of Records and published in the book. Various teams from Government of India visited villages for verification and 270 out of 333 villages were awarded with “Nirmal Gram Puruskar” by the President of India. The effort made at Sirsa got recognition at national level and set an example for others also. The Total sanitation campaign has brought about a welcome change in the rural area in the improvement of sanitation facilities in the villages including other institutions like school, anganwadies, health centers etc. In rural areas, with increasing sanitation coverage in all these institutions, the disposal of waste is becoming a serious problem. Both biodegradable and non biodegradable waste can prove hazardous for health, if proper and complete disposal is not done. In schools especially, disposal of sanitary cloth and sanitary napkins in girls’ toilets is big problem. It affects the proper functioning of the toilets when disposed in the toilet and serious health problems if thrown out in garbage dumps or in the open. There is, thus an imminent need to address this important sanitary waste disposal effectively especially in terms of developing cost effective and simple technology for composite waste disposal for schools. Women used to bear the burden of diseases because of Open Defecation. They were the most inconvenient group in absence of toilets at home and played a very important role in Total Sanitation Campaign as Initiators, Motivators and Leaders. They joined “Nigrani Committee” and made the villagers aware through “Swachhta Rallies” in the villages. Women of rural areas have now started thinking of not only hygienic conditions of environment but their personal hygiene also. They have started using Clean Pads instead of dirty and unhygienic cloths at the time of monthly cycle which used to be a major cause of their diseases. Not only this, they have even made it a source of income through Self Help Groups and have started to make Clean Pads under Swarnjayanti Gram Sawrojgar Yojna (SGSY) of Government of India.

Safe Drinking Water Water and particularly safe drinking water is a peculiar good, and is an essential ingredient to sustain a health life as half of the human health problem arise due to water. At the same time the utility it contributes at low level of consumption is very high, and hence it comes under the basic utility it contributes at low level of consumption is very high, and hence it comes under the basic utilities category of the humans. Though percentage of households having access to safe drinking water is higher than all India average. Moreover, the key issue with respect to safe drinking water is the quality of the drinking water that needs to be improved through water purification process.

CSR and Competitiveness

Safe drinking water is an essential ingredient to sustain a healthy life. The provision of availability of drinking water per person in defined/desired terms is of 70 Liters Per Capita Per Day (LPCD). There are gaps in drinking water availability in rural area of this district. To overcome this problem, water supply and sanitation department is also making efforts within the sanctioned budget. Some villages out of water scarcity area have been proposed for argumentation of sources from BRGF. Due to passage of time working of filter media degraded and ultimately become unfunctional and the water supplied through these filter medias is not up to the mark and need to be replaced for quality water. As per the Base Line Survey and also pointed out in the perspective plan of BRGF prepared by CRRID, Chandigarh. It was observed that the supply of water in some pocket is not up to the mark which leads to cause water born diseases. In some pockets drinking water is hard and containing fluoride and other harmful components. To get rid of water born diseases it is proposed to change the filter media along with provision of floating arms to provide safe drinking water.

IRRIGATION Upgradation of Irrigation Facilities Physically the district is a part of indogangatic alluvial plain. Most of it is a level plain except certain tracks along with Rajasthan border, where undulating and dunes are found. There is no perennial river in the district. The Ghaggar is the only river, which has abundant water during rainy season when it swells sometimes even to cause floods and creates swamps. However in winter season, there is hardly any water in it. Even then the district has been much benefited by the river; it has helped in improving the quality and quantity of underground water in the areas through which it runs. Northern Ghaggar Canal (NGC) was constructed during the year 1884. It off takes from Ottu weir. The designed capacity of NGC is 244Cs. To increase the capacity of the channel L-Section of the channel was approved but it could not be implemented at site due to non-remodeling of head regulator of the channel. The new weir of Ottu constructed during 2001. With the construction of new weir of Ottu head, the control and regulation of flood water during monsoon season has became very handy. During monsoon season lot of floodwater is received at ottu head through river ghaggar but in the absence of any storage capacity in Ottu Lake, it goes waste on downstream side of ottu weir. NGC system falls at the tail of Bhakra canal system and generally does not get sufficient water for irrigation purposes. It is mainly dependent upon supplies received through River Ghaggar. Several representations has been received from village Panchayats for raising the capacity of NGC from 244 Cs to 504 Cs as per approved L-section. Generally floodwater is available in River Ghaggar for

Role of District Administration in Community Development through CSR Initiatives

about 35 to 40 days during kharif crop in a year and this water cannot be stored in Ottu Lake. After running all the channels to their full capacity, extra water is passed/wasted on D/s side of Ottu Weir. Therefore to make increased use of this water, it is necessary to raise the capacity of NGC from 244 Cs to 504 Cs. The CCA of the channel is 36941 acres and average irrigation per crop is 21275 acres, which is about 57.5%. This can be increased by 2128 acre if sufficient floodwater is made available to the shareholders of the channel. With increase in quantity of water the cropping pattern will also change and production will be increased.

Strategies • • • •

Upgradation/Repair of irrigation facilities in certain pockets. To increase the irrigation efficiency. Optimal use of available water. To increase the cropping intensity.

To increase the irrigation efficiency the lining of watercourses as included in the project estimate for remodeling and repair of watercourses constructed during 1971 to 1980. With the passage of time these water courses have been damaged due to which irrigators of tail area of the chaks are not getting their due share of water and they are not able to grow their crops properly. Most of the area of these watercourses is undulating, due to which it is very difficult to maintain the Kutcha/damaged watercourses. Due to these damaged W/Cs the irrigation is suffering badly. If these W/Cs are repaired/remodeled, the irrigation of the area will be improved substantially. The increase in irrigation will further increase the irrigation production, which will improve financial position of the farmers. The total CCA of these W/Cs 9372 acres and irrigation per crop is 3615 acres. With the proposed remodeling/repair the irrigation is likely to increase by 1828 acres and the proposed benefits will be about ` 182.8 lacs per annum. The B.C. ration have been evaluated which comes out to be 8.01 : 1. Therefore the project estimate is beneficial and the same is hereby recommended in larger interest of the public, as 1631 Nos. Irrigators of 49 Nos. villages will be benefited. By upgrading these irrigation facilities 222225 man days additional employment will be generated.

Agriculture Tube Wells, Sprinkler Irrigation System and underground Pipelines to irrigate Panchayat land in convergence with MGNREGS to fulfill following objectives:

52 • • • • • •

CSR and Competitiveness

To create assured irrigation facilities to the Panchayat lands in the district. To bring cultivable waste and fallow lands under agriculture. To increase crop production and productivity. To supplement agricultural income of Gram Panchayat. To increase adoption of water management techniques. To fill up the ponds for animals.

WOMEN AND CHILD DEVELOPMENT Changed Scenario of Anganwadi Centers Access to modern health facilities is another critical gap in the district. Only 42% of the children are fully vaccinated and only 34% of the deliveries are institutional. The number of villages with PHCs is also very low in the district. Therefore, the households have little access to institutional delivery system. The Backward Region Grant Fund has to focus on improving the hospital and paramedical support in the villages. Integrated Child Development Services Scheme is the single largest programme to provide children the basic services for a better start in life. ICDS cares for children below six years of age and also takes care of essential needs of pregnant women and nursing mothers by providing the following package of service: • Supplementary Nutrition; • Immunization; • Health check up; • Referral services; • To promote pregnant ladies for institutional deliveries; • Treatment of minor illnesses; • Nutrition and health education; • Non-formal pre-school education; • Convergence of other supportive services, like water supply and sanitation etc. Here we have to look at the status of ICDS centers at villages. All the sample villages recorded the presence of ICDS centers, but interestingly not even a single centre reported to have any building. In all the villages, ICDS centers are running in the premises of panchayat buildings or school buildings. They provide one room to store the ration, cooking items, and records. Foods prepared in the yard and served in the corridors of the buildings or on the open ground. Thus, the ICDS centre concept here is reduced to just a food supplier to mothers and children than the larger concept of elementary education, awareness creation and integrated child development. In order to achieve the core objective of ICDS, it is essential to support the programme with necessary infra-structure facilities in the villages.

Role of District Administration in Community Development through CSR Initiatives

Therefore, the Backward Region Grant Fund under the Ministry of Panchayat Raj, Govt. of India can earmark some fund in those villages to build ICDS centers with classroom, a medical centre for pre and post natal care with drinking water and toilet facilities. The initiative for welfare of children and changed the scenario of all Anganwadi Centers in District Sirsa by providing Playing and Learning Material facilities for kids and children in order to encourage them to come to Anganwadi Centers. Playing and Learning Material include the facilities like Plastic Toys and Rides for playing, Hindi and English Alphabets, Stickers of Pet and Wild Animals for learning, molded Chairs and Table used for sitting and studying in the rooms, Fabric Foam Flooring, Children Stackable Bed, Baby Shelf, PVC Almirahs, PVC Storage bins etc. The playing and learning material including all the items worth ` 30,000 were made available in each of the 914 Anganwadi Centers and 66 Balwadi centers of District Sirsa. The result of this effort has been very encouraging for women of the villages also in the sense that the children who used to avoid coming to Anganwadi Centers or never came to the centers have now become interested and have started coming to the centers.

COMMUNITY WELFARE AND INFRASTRUCTURE DEVELOPMENT Gram Vikas Kendra Rural population in the district is facing problems to search the village level field functionaries due to non availability of offices for village level field functionaries. Grass root level functionaries i.e. MPHW/ANM/Asha/RCH worker, Lineman, ADO, Patwari, Panchayat Secretary etc. have to work in the village. It is planned to construct Vikas Kendras having the office facility for the field functionaries and also a common hall for meeting purpose at village level to facilitate the common man and inter department cooperation for better coordination at village level. 11 villages are being proposed to construct Vikas Kendras in first phase with unit cost ` 9.42 lacs. The total proposed outlay is worth ` 100.00 lacs.

Upgradation of Roads, Extension of Sewerage System Network and Provision of Street Lights within MC Limits Problems • • •

Drainage facilities are required in sum road segments. Many road segments lack proper maintenance, which affect accessibility. Inconvenience for proper move ability.

CSR and Competitiveness

Objectives •

To improve road connectivity to all the settlements and ensure flow of traffic.

Strategies • • • •

For improving the existing roads network on priority basis. Maintenance of existing internal roads. Proper drainage facility. Proper street lighting to avoid any un-incident.

Heavy increase in motor vehicles leads to damage roads particularly on internal roads of urban areas which normally remain crowded. Internal roads in the old habitation are looked after by ULBs. Due to inadequate funds the repair/maintenance of internal roads is out of reach of ULBs. The old internal roads had been constructed by PWD B&R and ULBs. The premixing of these roads was damaged due to lack of proper drainage facilities and public at large facing is problems due to damaged internal roads. In the evening hours it is very difficult to drive in remote areas of urban habitation. It is very necessary to provide street lighting in those areas. If the internal roads, drainage and street lighting are provided/constructed these will help the public at large in like reduction in transportation charges, less consumption of fuel, saving of energy and time, proper use of manpower and also increase the income and employment of the people.

Vocational Education and Training for Vulnerable and Marginalized Groups British Council offered to CII to submit a Joint Project proposal of ‘Vocational Education and Training for Vulnerable and Marginalized Group in India’ to European Commission. CII submitted the proposal for Vocational Education and Training for Vulnerable and Marginalized Group in two locations i.e. Sirsa (Haryana) and Sitapur (UP) with British Council and proposal has been sanctioned by European Commission.

Overall Objectives • • • •

Contribute towards creation of a new national structure for skills development. Create a formalized framework for employer engagement. Establishment of the Sector Skills Council (SSC) that will link with industry, government, academia and NGOs. Provide Vocational Education and Employment opportunities through a coordinated approach for stakeholders.

Role of District Administration in Community Development through CSR Initiatives

Specific Objectives 1. The program has three key components: • Creation of Sector Skills Council • Deliver demand driven benchmarked skills in manufacturing, agro processing and tourism sectors; and • Development of delivery mechanism for soft skills including English for employability. 2. The project would train a large number of Rural Youth in vocational skills across Sirsa. 3. Create a sustainable and effective skills development network of employers, training providers, government and community in this district.

SV Street Light Systems With a view to improve the life style of villagers and keeping in view the technological advantage and benefits to the villagers, a project proposal was prepared to install 20 Solar Photo Voltaic (SPV) Solar Lighting Systems in each of the 333 villages of District Sirsa. Due to the frequent power cuts in the rural areas, the main objective of the project was to provide infrastructure like solar street lighting system to give people a relief from the frequent power cuts in the rural areas and ultimately improve the standards of living of people. Solar Street Light System will facilitate movements of villagers within the village and will lead to increased working hours and thus realizing more income. This will also create awareness about renewable energy and solar appliances in rural areas.

Blind School The institution developed on the pattern of National Institute of Visually Handicapped, Dehradun. An MOU has already been signed for running of Braille Library, Talking Books (Audio) Library and Braille Appliances. Vocational Training Center for Visually Handicapped has been set up covering following courses: • Computer Education and Low Vision Unit • Book Binding • Note Books Making • Dona Plate Making • File Cover Making • Paper Plate Making. These units shall also be used for commercial production for sustainability of the institute. Concept of “Earn while you Learn” has been implemented.

CSR and Competitiveness

Strengthening of AYUSH Centre Focus was on strengthening infrastructure of AYUSH Institutes to ensure better services to masses. The main features of the project included: • Safe Drinking Water along with water storage facility. • Power Connection in 16 AYUSH centers. • Furniture and Equipments. • Sanitary Toilets in 22 AYUSH centers. • LPG Connections. • Boundary Walls. • Power Backup Inverters. • Computer with Peripherals and relevant general and medical focus.

CONCLUSION The Success Stories of all these programs carried out by the District Administration in District Sirsa got recognition at the National Level. This has been possible mainly due to: • wide participation of community from Rural Areas • association of NGOs, Line Departments, PRIs and Local Resources • and most importantly the additional financial aid to district administration. All the projects mentioned above and many others were possible in District Sirsa only because there was an additional financial aid available under ‘Backward Rural Grant Fund’ (BRGF) as Sirsa is one of the backward districts of the country. But this financial support is not available in most of the districts and therefore such projects can’t be implemented at grass root level. A system, therefore, has to be devised where corporate houses have the option to come forward and adopt some districts under their CSR initiatives to fill the critical gaps and to carry out similar or other projects in association with the District Administration which are not funded directly or indirectly by the State and/or Central Governments for community and social development.

ABOUT THE AUTHOR Dr. Yudhbir Singh (IAS) is currently posted as Deputy Commissioner at District Jind in Haryana. He has largely been associated with the work in the field of Community Mobilization and Social Services, especially in the rural areas. He has led many campaigns to success which got recognition at National and International Level (2 Entries in Limca Book of Records for “Rakt Daan Jaagran Mela” and making Sirsa the First “Open Defecation Free District” in the country). He is also heading “Indian Society of Blood Transfusion and Immunohaematology” (ISBTI) as National President. ISBTI is an NGO engaged in the field of Voluntary Blood Donation and Safe Blood Transfusion Services throughout the country since 1973. He was awarded with “Mother Teresa Memorial Award” for Voluntary Blood Donation Awareness and Motivation Program by ISBTI in 1998.

Making Poverty a Business Issue

Making Poverty a Business Issue Sharon Weir Founder of 4th Wheel, Ahmedabad E-mail: sharon@the4thwheel.com

ABSTRACT Globalization has increased the extent and scope of capitalism. The private sector has gained immense clout and importance in the prevailing form of capitalism. The role of businesses in facilitating human and social development has long been debated. We have progressed to a society, where businesses are no longer based on the sole motive of profit maximization. There has been an acceptance of the role they can play in making the effects of globalization and business operations positive, and reducing the ill effects by conscious efforts. These efforts in a broad sense are termed as Corporate Social 1 Responsibility (CSR) . Corporate Social Responsibility is an evolving concept and is no longer random charity or philanthropy but is now looked as key to business operations, sustainability and development. This essay traces the relationship and involvement of the business sector with the causes and solutions of poverty. It gives examples to strengthen the argument and presents a number of views and theories on the issue. Alvin Toffler’s idea of a ‘multipurpose corporation’ which is no longer deemed as responsible simply by making a profit or producing goods but should simultaneously contribute to the solution of extremely complex ecological, moral, political, racial, sexual and social problems is the new emerging trend in the study of sustainable and inclusive development, which will play an important role in facilitating social and human development and eradication of squalor and poverty.

INTRODUCTION I believe in the potential of Corporate Social Responsibility (CSR) in addressing economic, social and human development issues in the 21st century. By no means is this a neoliberal view advocating market based development or pushing social 1

CSR is “a commitment to improve community well being through discretionary business practices and contributions of corporate resources” (Philip Kotler and Nancy Lee, Corporate Social Responsibility, 2010), “the continuing commitment by business to contribute to economic development while improving the quality of life of the workforce and their families as well as of the community and society at large” (World Business Council for Sustainable Development).

CSR and Competitiveness

responsibilities of the State to the Private Sector. I argue that the complex problems of today’s poor cannot be solved by the State and Civil society alone. The business sector has emerged a key ‘player’ and needs to accept responsibility and work in collaboration with these entities to address social issues. It is no longer a question of ‘why’ corporates and businesses should engage in alleviating social ills but is a question of ‘how’ and to ‘what extent’ they should. Rather than engaging in random charity and philanthropy, businesses are beginning to understand the importance of innovating and investing in their business operations for social purposes in order to enjoy sustainability and growth of the firm, C.K. Prahlad (2005) has highlighted various ways companies could engage in mitigating poverty along with generating profits. Bill Gates (2008) has spoken of “creative capitalism”, a perspective on how governments, businesses, and nonprofits can work together and find ways that meet the needs of the poor while generating profits and recognition for companies. I am convinced that this type of capitalism is a dynamic concept capable of being recreated. We are witnessing an age of Corporate Capitalism, Transnational (TNC)/ Multinational Corporations (MNC) and the private sector have gained immense importance with the neoliberal policies of Globalisation, Liberalisation and Privatisation being preached, imposed and practiced. The private sector has come into the limelight for its capitalist exploitations and human deprivations, environmental degradation, creation of inequalities and corporate scandals. Businesses have an intrinsic relationship with a large segment of the population through employment provision and labour markets, service provision, commodity markets and environment and resource use. The business sector is faced with new responsibilities, new challenges and new opportunities to be explored in order to make a dent in reducing the harmful effects of capitalism and related poverty. There are a number of ways to label such endeavours by businesses towards the wellbeing of society, namely corporate citizenship/corporate governance, social and environmental auditing, stakeholder theory, business ethics, environmental sustainability and cause related marketing (strategic philanthropy). Though these terms differ, they all share the common theme namely—Corporate Social Responsibility. Although the term Corporate Social Responsibility holds various meanings, I understand CSR as the responsibility of a firm to make investments in catering to the ‘common good’ in the society that it operates in. By ‘common good’ I mean meeting the needs and considering the rights of all the stakeholders of a business in order to promote their overall wellbeing. Thus the modern day thrust of every firm should be not only to looking at the long run profitability/sustainability of their businesses but also to cater to the ultimate goal of the ‘common good’. This view is incorporated in the three aspects of CSR namely—people, profit and planet, also known as the Triple Bottom Line. The ‘triple bottom line’ is a unique concept, as it removes the sole fixation on financial results to judge corporate performance.

Making Poverty a Business Issue

For most people, CSR would mean philanthropy and is disdained as a marketing gimmick. CSR is accused of being socialist in thought, not complying with the basic ‘only profit’ motive of capitalism. Philanthropy among businesses has always existed. Corporate Social Responsibility is evolving as a concept. “CSR in an international context is not only high on the agenda of large multinational companies. As a result of economic globalisation smaller companies are also becoming more involved in a network of international suppliers and customers. Within this network, they are increasingly held accountable for certain activities in their product chains.”2 Globalisation has led to increased information sharing, knowledge systems, mass media attention, brand consciousness, importance of customer satisfaction, etc. Nike faced mass consumer boycotts after the media reported abusive labour practices at some of Nike’s Indonesian suppliers in the early 1990s. Today many businesses view being socially and environmentally sensitive and responsible as a way to reduce risk and increase profits. The Gandhian principle of trusteeship (Gandhi M.K. Harijan, 1927) expresses the inherent duties of the business enterprises to its consumers, workers, community and the mutual responsibilities of these to one another. In a developing country like India, practices of CSR are gaining momentum. “Nearly all leading corporates in India are involved in Corporate Social Responsibility (CSR) programs in areas like education, health, livelihood creation, skill development, and empowerment of weaker sections of the society. Notable efforts have come from the Tata Group, Infosys, Bharti Enterprises, ITC Welcome group, Indian Oil Corporation among others.”3 In view of the growing acceptance of CSR this paper attempts to research various aspects like the prevailing form of capitalism in the 21st century, the importance of Corporate Social Responsibility, arguing that rather than looking at CSR purely as philanthropy and as external to business operations, it is now increasingly important for businesses to incorporate ethics, innovation and social sensitivity into their businesses thereby generating profits and at the same time, working towards the reduction of poverty in society.

CAPITALISM IN THE 21ST CENTURY Capitalism became the dominant economic system worldwide in the 21st century. By the early 1980s, even before communism’s political collapse, the economic competition was essentially over. People could see that the Communist world (the old Soviet Union, most of Eastern Europe, China and Cuba) was vastly poorer than Western Europe, 2

‘Corporate social responsibility and globalization—An action plan for business’, Jacqueline Cramer, p. 14. 3 http://www.ibef.org/india/CSR.aspx

CSR and Competitiveness

the United States and Japan. They could see that it wasn’t just elites who benefitted; 4 average families enjoyed riches that, 50 years earlier, had been virtually unimaginable.” Globalization has increased the scale and scope of capitalism. It has led to an age of Corporate Capitalism. The global capitalist system and the global economy exist to 5 the extent that private rather than national interests prevail across borders. A direct result of this is the political and economic clout of Multinational Corporations (MNCs) which has grown considerably in the last few decades. An idea of the giant size of these MNCs can be had from the study conducted by the Washington based Institute for Policy Studies (IPS), that of the 100 largest economies in the world, 51 are corporations and 49 are countries. Wal-Mart the number 12 corporation is bigger than 161 countries, including Israel, Poland and Greece.6 Critics associate globalization with unfettered market conditions, rising inequalities and income disparities and the breaking of class relations. They believe that MNCs have contributed to labour, environmental, and human rights abuses as they pursue profits, around the globe. Capitalism with its various facets is accused of being exploitative, increasing inequalities and making the rich richer and the poor poorer. It is believed to produce externalities which affect large segments of populations, negatively. In this context Barbara Harris-White (2006) has listed ways in which capitalist development creates poverty: through primitive accumulation and creation of doubly free labour, petty commodity production, dominance of commercial capitalism, technological change and the creation of a reserve army of labour, production of pauperizing commodities, in addition to creation of waste and environmental destruction. However the advocates of globalization argue that that it has led to liberal democracy and free market capitalism across the globe. Capitalism is argued to be the economic system, most capable of bringing mass populations out of poverty. Schumpeter said that capitalist development over time results not only in higher levels of national income and output per head, but also in a more just and equitable distribution of real output. He wrote that, “the capitalist process, not by coincidence but virtue of its mechanism, progressively raises the standard of life for the masses.” He was confident of the trickle down effects of economic growth in a capitalist economy. However, the empirical evidence from the third world countries in recent years does not lend any credence to Schumpeter’s contention. In most parts of the world the absolute numbers of global consumers and millionaires have increased rapidly over recent decades. It is also true that in some places the absolute numbers of the destitute and near-destitute have also 4

Capitalist Bible - Gretchen Morgenson, p. 24. The transnational Capitalist Class-Leslie Sklair, p. 3. 6 Growth and Development, Misra and Puri, p. 225. 5

Making Poverty a Business Issue

increased (United Nations Development Program, 1998) and that the gap between rich and the poor have widened since 1980s (Korzeniewicaz and Moran, 1997).7 A classic, alternative, political economy explanation is that Capitalist development in itself creates poverty, and that social action and state policies are necessary in order to mitigate this. Globalization and the current form of capitalism cannot be ignored or rejected. We need to explore possibilities of mitigating the problems arising from its existence and functioning. “Is globalization good or bad for the poor? If we accept globalization is like gravity and there is no point in defying gravity; but great benefit to defying it and build a plane, then we can ask the question differently: “How do we 8 make the benefits of globalization accessible to all?” The prevailing form of capitalism has led to an explosive growth in employment opportunities in developing countries, more involvement in global commodity chains, markets being established in rural areas, spurred the growth of small businesses and increased the dependence of populations on businesses and the private enterprise. This leads me to argue that businesses now have an important role to play in facilitating development and catering to social responsibilities. The business sector is faced with new responsibilities, new challenges and new opportunities to be explored in order to make a dent in reducing the harmful effects of capitalism. Thus the history and traits of 21st century capitalism leads me to the firm conviction that CSR is the need of the hour and needs to be addressed. Those against the idea of CSR maintain that a corporation’s duty is to serve the financial interests of its shareholders, and anything else risks undermining the capitalist system that has created our prosperity. It is more efficient for business to increase the wealth in society and let governments and philanthropists handle the problem of how to redistribute it. Friedman (1963) terms the social commitment of the business class as an act of irresponsibility. For him, efficiency is the best way to improve their contribution to the economy and thus serve the society too. For critiques, the basic principle involved is more socialist than capitalist. Michael Kinsley (1987) says that critics feel that corporations should keep to their own sphere and not attempt to become all embracing social-service agencies and there should be some clear division of labour between corporations and government. Richard Posner (2008) has stated that firms have only a fiduciary obligation where they are obligated to act in the interest of stockholders and to maximise corporate profits. Corporates engage in lower labour standards or lower wages because it increases profits and reduces costs but these practices leads to exploitation and denies basic human rights. Gregory Clark and Gary Becker (2008) argue that firms in competitive industries cannot 7 8

The transnational Capitalist Class, Leslie Sklair, p. 6. The Bottom of the Pyramid, C.K. Prahlad, p. 20.

CSR and Competitiveness

indulge in CSR or philanthropy since this would drive them out of business. The new school of thought of incorporating CSR strategy with business strategy does wonders to overcome this issue of sustaining CSR activities with concrete impact, over a long period of time.

EVOLUTION OF CSR Initially CSR was an “after thought” which businesses acknowledged as taking some responsibility for the welfare of the communities in which they operate. “The appropriate extent of corporate social responsibility and the best methods for achieving it have been debated for decades. We have moved from a society that once said any use of corporate funds for philanthropic purposes was illegal, to one where corporations 9 are expected to engage in philanthropic activities” (Sharfman, 1994). Prior to the 1990s, decisions regarding the selection of social issues that should be supported tended to be made for ‘doing good to look good’. Commitments were more short term, allowing the organization to spread the wealth over a variety of organizations and issues through the years. Decisions regarding issues to support organizations to sponsor were also more heavily influenced by preferences of senior management and directors of boards than by needs to support strategic business goals and objectives. We see more corporations picking a few strategic areas of focus that fit with corporate values; selecting initiatives that support business goals; choosing issues related to core products and core markets; supporting issues that provide opportunities to meet marketing objectives, such as increased market share, market penetration, or building a desired brand identity; evaluating issues based on their potential for positive support in times of corporate crisis or national policy making; involving more than one department in the selection process, so as to lay a foundation of support for implementation of programs; and taking on issues that the community, 10 customers and employees care most about. A recent trend of the corporate sector showing serious concern for society has been observed. There also appears to be more long-term relationships being developed with nonprofit organizations, one that looks more like a partnership than a casual relationship. Corporations have expanded their options for giving beyond cash donations to include contributions of other corporate resources like excess products, use of distribution channels, and technical expertise. Alvin Toffler (1980) speaks of the ‘multipurpose corporation’ which is no longer responsible simply by making a profit 9 10

Corporate Global Citizenship, Mary Tschirhart, p. 63. Ronald Paul Hill, Debra Stephens, and Iian Smith, “Corporate Social Responsibility: An examination of Individual Firm Behaviour”, Business and Society Review, 108:3 (2003), pp. 339–364.

Making Poverty a Business Issue

or producing goods but should simultaneously contribute to the solution of extremely complex ecological, moral, political, racial, sexual and social problems.

IMPORTANCE OF CSR “Past development strategies have created both social and environmental stresses and if not changed cannot sustain development any more. Now the goal of improving human well being worldwide requires that development process ‘does better’. It must eliminate poverty, reduce income inequality and integrate environmental concerns in 11 pursuit of sustained improvement in human well-being.” The term ‘Sustainability’ originated around a growing awareness, in the 1980’s, that development should be achieved without destroying the environment or sacrificing the well being of future generations. A sustainable corporation is one that creates profit for its share holders while protecting the environment and improving the lives of those it is associated, indirectly or indirectly with. “If sustainability is more important today than ever before, it’s probably because corporations have, over the past decades, entered what we call the Age of Accountability.”12 Corporations have been under close scrutiny from civil society, Governments, International organizations and NGOs. They are now being held accountable and answerable for their actions and externalities. The central argument in the CSR debate at large is that the businesses ought to play a more prominent societal role, given their dominant (economic) position. It becomes clear that a limited number of corporations are responsible for the (economic) prosperity in the world. This prosperity only applies to one fifth of the world population receiving 82.7% of the world income (ENDAP, Human development report, 1992), while the poorest one fifth only receives 1.4%. This leads to a debate around the use of natural resources, inequality, power balances, the role of nations and governments and so 13 forth. CSR is relevant today due to changing social expectations. There has been reduced public trust in corporations because of scandals and catastrophic events. Public confidence in the ability of regulatory bodies and organizations to control corporate ill practices has decreased to a great extent and has added to the sense of expecting more responsibility from corporations. The increasing affluence of people has increased consumer choice and selectivity. Globalization has made media and internet, among other things, more accessible and information is more easily available. Porter and Kramer (2006) do see the license to operate as one of the ‘traditional reasons’ for CSR, although they argue in their recent article titled ‘Strategy and society: 11

Gowth and Development, Misra and Puri, p. 343. The Triple Bottom Line—Andrew W. Savitz with Karl Weber, p. 124. 13 In Search of Society: Redefining Corporate Social Responsibility, Organizational Theory and Business Strategies, Jan Jonker p. 426. 12

CSR and Competitiveness

The link between competitive advantage and CSR’, “that the real importance of CSR is in the ‘shared value’ that businesses have with society. “For a business to be successful in the long term it has to create value, not only for its shareholders but also for society. It is not philanthropy or an add-on but a fundamental part of its business 14 strategy”. It is argued that for the survival of the firm, to gain legitimacy in areas of operation and to avoid conflict, business need to play an important role in the development of the people it impacts. There is believed to be a connection between success and concern for long term relationships in the society with CSR. To illustrate, it may well be in the long run interest for a corporation that is a major employer in a small community to devote resources to providing amenities to that community or improving its government. That may make it easier to attract desirable employees or lessen losses from pilferage and sabotage or have other worthwhile effects. Or it may be that, given the laws of the deductibility of corporate charitable contributions, the stock holders can contribute more to charities they favour by having the corporations make the gift than by doing it themselves, since they can in that way contribute an amount that would otherwise have been paid as corporate 15 taxes.” There is certainly a long list of firms that have sacrificed profitability by failing to invest in Corporate Social Responsibility early enough-most famously, Shell, Nike and Nestle have each lost market share through damage to their reputations and have had to invest heavily to claw back. Companies can now increasingly be called upon to accept and incorporate business ethics and has become a dominant theme in Corporate Social Responsibility. They can experience a range of benefits like increased sales and marketing share, strengthened brand position, enhanced corporate image and clout, increased ability to attract, motivate, and retain employees, decreased operating costs and increased appeal to investors and financial analysts from taking a positive ethical stance. “In the last decade, there has been increased corporate giving, increased corporate reporting on social responsibility initiatives, the establishment of a corporate social norm 16 to do ‘good’, and a transition from giving as an obligation to giving as a strategy.” Companies are beginning to take a direct approach to correcting social problems. Landmark projects by such companies as Merck, Ameritech, GE, Sara Lee, Levi Strauss, Procter and Gamble, and J.P. Morgan, to name a handful of prime examples are being scrutinized by corporate managers and university researchers and heralded as the beginning of a new era of enlightened capitalism.17 Michael Porter and Mark Kramer 14

The Link between Competitive Advantage and Corporate Social Responsibility, M. Mutreja. The Social Responsibility of Business, Milton Friedman. 16 Corporate Social Responsibility, P. Kotler and N. Lee, p. 33. 17 Corporate Global Citizenship, M. Tichy, A. Mcgill. 15

Making Poverty a Business Issue

(Harvard Business Review, 2002) argue that philanthropic activities can (and should) go beyond generating goodwill. They give examples of how activities can enhance a company’s productivity like ExxonMobil making substantial donations to improve roads in developing countries where it operates, expanding markets like Apple computers donating computers to schools, increasing the usage and appeal of their systems, and ensuring a strong future workforce like American Express supporting training for students pursuing careers in travel agencies. The triple bottom line, originally proposed by sustainability guru John Elkington, suggests that business need to measure their success not only by their financial performance (most often expressed in terms of profits, Return on Investment (ROI), or shareholder value) but also by their impact on the broader economy, the environment, and on the society in which they operate. The Triple Bottom Line focuses the corporation not just on the economic value that they add but also the environmental and social value they add and destroy. Corporate Global Citizenship/Corporate Governance have gained immense leverage in development debates. It aims to enhance the quality of development practices through active, participative and organized involvement. The emerging concept of global corporate citizenship represents the main ideological and political efforts of the corporate community to persuade skeptical bureaucrats and politicians and, ultimately, the public that they can be trusted to regulate and police themselves. As we approach th the end of the 20 century, nations the world over and corporations doing business in them are struggling with a web of issues relating to population, the environment, social justice, poverty, health, and education. They will be forced to redefine their role as a potent force for solving pressing issues. Global citizenship entails an understanding and awareness of future trends that will affect both the climate for doing business and the quality of life of the world’s population. In spite of the challenges, corporations can, should and must contribute to the global community. We can imagine no other scenario in which the pressing problems of population growth, inequities in the distribution of wealth and the depletion of environmental resources can begin to be addressed. The power that businesses have achieved should be coupled with an embracement of responsibility and accountability. According to Bill gates, “Self interest is just one of two forces in human nature. The other is ‘caring for others’. The genius of capitalism is that it makes self interest serve the general interest. Philanthropy and government are supposed to address our ‘caring for others’ but there is not enough philanthropic or government money to solve the world’s problems. Creative capitalism is a system where incentives for both profits and recognitions motivate both self interest and caring for others. Under creative capitalism, governments, businesses and non profits work together.” He gives suggestions of corporations donating money or products and corporations spending money or using

CSR and Competitiveness

technology to find new markets in poor countries. An apt example would be ‘Tiered pricing’ wherein a drug company has a valuable patent and charges full monopoly price in the developed world but let’s poor world manufacturers produce for less than one dollar a dose. Another example is the Bono (RED campaign) model under which products are sold with a small percentage of the profits going to worthy causes in the poor world. “What unifies all forms of creative capitalism is that they are market-driven efforts to bring solutions we take for granted to people who can’t get them.” He suggests that corporations should allow ‘top innovators’ to spend part of their time 18 on issues facing people too poor to be customers. C.K. Prahlad (2005) has stated that “The idea that the private sector can and should be involved in creating market-based solutions for the world’s poorest consumers is gaining credibility.” He gives a case study on a company called ‘Jaipur rugs’, operating in India and elaborates on how a company can benefit the poor by connecting them with global markets. Jaipur rugs makes this connection by building and orchestrating a global supply chain on a massive scale-one focused on developing human capability and skills at the grassroots level, providing steady incomes for rural men and women in the most depressed parts of India and connecting them with market of the rich, such as the US. He gives an example of the cell phone revolution which has demonstrated beyond doubt that there is a market for world class goods and services if they can be made at accessible at affordable prices. “The cell phone, we can say, has shown that the Bottom of the pyramid is not just a market but a source of innovation in business models and applications. It has transformed the lives of the poor. ‘We can do well and do good’ simultaneously. He mentions organizations which help the handicapped walk, helps subsistence farmers check commodity prices and connect with the rest of the world. There are banks adapting to the financial needs of the poor, power companies reaching out to meet energy needs, and construction companies doing what they can to house the poor in affordable ways that allow for pride. He also mentions the chains of stores 19 tailored to understand the needs of the poor and to make products available to them.

ISSUES CSR has shifted from the margins to the mainstream. Two problems create an impediment to companies in realizing the potential benefits of CSR. One of the greatest drivers causing business leaders to adopt CSR is ‘fear’, with the emphasis on avoiding trouble rather than looking for opportunities. It is done to legitimize their ill practices and to avoid trouble, thus as an afterthought and not built into business operations to generate wealth for the ones left worse off from their operations. The second problem is that CSR is too often a ‘bolt on’ to business operations rather than ‘built in’ to 18 19

Michael Kinsley, Creative Capitalism, pp. 18–19. Bottom of the Pyramid, C.K. Prahlad, p. 29.

Making Poverty a Business Issue

business strategy, resulting in CSR becoming a distraction and hindrance to business 20 objectives, rather than a help.

CSR IN INDIA Prior to Indian independence, the British East India Company exercised economic dominance in the country that operated relatively free from control by Indian authorities. With it emerged a tradition of corporate philanthropy beginning in the late 19th century. Merchant families who also participated in the nation-building process frequently made donations to temples and other social causes. Soon after independence, Government of India had committed itself to the creation of a democratic socialist society with the motto of promoting the standard of living by bringing about industrialization along with democratic institutions. The role of businesses slowly changed between 1960s and 1980s, a post independence period dominated by a ‘mixed economy’. During this time, large, state-owned companies took part in prominent state-sponsored CSR activities, and Nehruvian socialism encouraged private industries to play an active role in the economic and social development of the country. As a result of the emergence of economic and trade liberalization, non family owned businesses started to increase, blending Gandhian trusteeship and Nehruvian social responsibility, and paving the way for contemporary CSR practices in India.21 According to Kirti Singh (2007), the evolution of CSR in the Indian context can be largely understood as beginning from philanthropy done by the large family business houses like the Tata’s and the Birla’s who engaged themselves with charity or infrastructure development for schools, hospitals, etc. to a stage post independence where economic reforms of the 90s saw companies adopting different social issues of social concern and addressing them through different models like employee 22 volunteerism, direct funding, preferential buying, etc. It is difficult to generalize to what extent the Gandhian philosophy of trusteeship influences Indian business practices. Certainly, the communitarian dimension continues to play a role, and private owned businesses have a long tradition of social contribution enabled by a tightly controlled, family ownership structure that the firm is not tied down by shareholder pressures. At the same time, the vast network of cottage industries and labour markets in the country remains unorganized and readily exploited in terms of labour practices and fair wages. In a country like India it is not uncommon to see huge sky-scrapers, in which live the affluent sections of society, at the foot of which exists a 20

Corporate social opportunity, David Gramson and Adrian Hodges, p. 8. http://www.bsr.org/reports/CultureMatters_CSRSpirituality_1.pdf, p. 9. 22 “Benchmarking Responses to Corporate Social Responsibility Practice in India: A Descriptive Case Study”, Kirti Singh, pp. 8–9. 21

CSR and Competitiveness

huge slum which houses the poor (their exact numbers is an eternal economic and political debate). However, India is also an emerging economic power with its rapidly growing industrial and service sector. In such a scenario it is important for business India to accept social responsibility. There have been many occasions in the history of independent India where the topic of business and social responsibility has been broached. The first seminar on Social Responsibility of Business in India was organized in 1966 with an agenda to relook at the concept of trusteeship. Jayprakash Narayan (Gopalakrishna, CSR, 1991), the great Sarvodaya leader, had organized a seminar in 1966 under the banner of Indian International Centre and Gandhian Institute of studies that initiated a public debate 23 regarding the social responsibility of business. The Confederation of Indian Industries is the most important business organization in the country. CII has taken up the initiative in stating areas in which the business community could be constructively involved. These areas include education, basic transportation infrastructure, clean water, proper sewage treatment, improved health care facilities, housing for employees, and child care for female workers, and local community involvement. The Indian companies are observed to be positive about taking on these challenges. Fulfilling these environmental and social requirements is a condition of investments support. Additionally, companies are said to view meetings these challenges as a branding exercise as well. It is interesting to see an increasing realization of the importance of CSR in India. The ministry of corporate affairs released a document, “Corporate Social Responsibility Voluntary Guidelines” in 2009. This document urges corporate India to voluntarily adopt CSR so that statutory regulations may not be imposed; something that the government seems reluctant to do. In essence, the document is a positive, forwardthinking move by the government as is evident from its view that CSR must not be seen as philanthropy and, in fact, needs to be merged with core business vision and goals, thereby leading to concrete and ground breaking change. Discussions are being had about Corporate social responsibility (CSR) spends made mandatory for corporate India. If approved, companies will have to spend 2% of their average net profit on CSR. Mandatory CSR will be made part of the amendment to the Companies Bill. CSR will be mandatory for companies with ` 500 crores net worth, ` 1,000 crores sales, or net profits of ` 5 crores or more. Such companies will have to formulate a CSR policy and directors will have to disclose CSR activities and progress in their annual reports.

Corporate Social Responsibility, Dhrubodh Mukherjee, p. 12.

Making Poverty a Business Issue

SOME CONCLUSIONS Government can, and has, played an essential role not only in mitigating market failures but also in ensuring social justice. Markets may lead to the underproduction of some things like basic research and overproduction of others like pollution. Professor Glaeser (2008) argues that though laizzez faire capitalism has worked many miracles, it has never been particularly well targeted towards righting social inequalities. Private firms usually have the incentives to cater to the rich rather than the poor. Globally, corporations were called upon to contribute significantly to the Millennium Development Goals for sustainable development by Kofi Anan in his speech at the World Economic Forum in Switzerland in January 2002. Many do not agree with the assumption that globalization in its present form can be sustainable and equitable, even if accompanied by the implementation of standards for human rights, labour and the environment.24 This paper seeks to address this argument by stressing on the fact that the importance and weight age given to the social responsiveness and responsibility of corporations has just begun to gain leverage and in the coming years could prove to be a strong driver of development accompanied with collaborations with the State and Civil Society organizations. Development has been defined as “a vision, description or measure of the state of being of a desirable society; as an historical process of social change in which societies are transformed over long periods; as consisting of deliberate efforts aimed at improvement on the part of various agencies, including governments, all kinds of organizations and social movements.”25 This argument has been on these lines. I argue that CSR is a new vision of looking at the players on the development fora, societies are undergoing rapid changes because of globalization and are realizing the enormous potential that businesses and corporations have in this day and age to facilitate development. It is no longer possible for the business sector to take a back seat in facilitating environmental, economic, human and social development, but should make conscious efforts to work in coalition with different civil sector organizations and the State. The rising power and ‘legitimacy’ of TNCs/MNCS and businesses has been observed st since free market capitalism and has become the norm in the 21 century. There are new concerns about the role of businesses in society from engaging in supply chains to genetically modified crops. Governments, Non Government organizations, philanthropic organizations, international and transnational organizations like the United Nations have succeeded or sometimes failed miserably in catering to social and economic problems in developing countries. The private sector now has an increased responsibility towards catering to society and is argued to be one of the main drivers 24 25

Ibid., p. 4. Thomas (2000), p. 777.

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of improving conditions and leading to development in communities. Companies should accept corporate governance principles, take into consideration the social impacts of their business operations, mitigate harm from value chain activities, transform value chain activities to benefit society, leverage capabilities to improve salient areas of competitive advantage and engage in strategic CSR by incorporating strategic CSR which is aligned with business goals and objectives. CSR has evolved from being a philanthropic activity to a concept which has pro active engagement with serious pressing issues like human rights, social ills, etc. because of the world’s monetary wealth in the private sector and the belief that resources to develop real world solutions lie in the private sector. And it is well acknowledged that companies are now understood to be a part of the solution. Profits are no longer the sole motive of a company. st Making 21 century capitalism and globalization work in favour of the poor is the call of the hour and CSR is an important aspect in this issue. It might be a challenge for the business sector to take on a role to aid development but this does not negate the fact that the business sector HAS a key role to play and should be regulated and guided by the State and International Organizations for direction, incentives and suggestions. To conclude, I reiterate that it is possible and essential for the business sector to ensure tomorrow’s generation refer to ‘poverty’ in their history textbooks.

BIBLIOGRAPHY Books Cramer, J. (2006). Corporate Social Responsibility and Globalisation (Greenleaf Publishing). Crane, A. (2008). The Oxford handbook of corporate social responsibility (Oxford). Esptein, M.J. (2008). Making Sustainability Work (Berret-Koehler Publishers). Hopkins, M. (2007). Corporate social responsibility and international development: Is business the solution? (Earthscan). Jonker, J. (2003). In Search of Society: Redefining Corporate Social Responsibility, Organizational Theory and Business Strategies, in J.A. Batten and T.A. Fetherston, Social Responsibility: Corporate Governance Issues (Elsevier Science). Kinsley, M. (2008). Creative Capitalism (Simon and Schuster). Kotler, P. and Lee, N. (2005). Corporate Social Responsibility (Wiley India, Pvt. Ltd.). Misra and Puri (2004). Growth and Development (Himalya Publishing House). Mitra, M. (2007). It’s Only Business! India’s Corporate Social Responsiveness in a globalising world (Oxford). Morgenson, G. (2009). The Capitalist’s Bible (Harper Collins). Prahlad, C.K. (2010). The Fortune at the Bottom of the Pyramid (Pearson Education).

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Richter, J. (2001). Holding Corporations Accountable: Corporate Conduct, International Codes and Citizen Action (Unicef). Savitz, A. and Weber, K. (2006). The Triple Bottom Line (John Wiley & Sons). Sklair, L. (2001). The transnational Capitalist Class (Blackwell Publishing Ltd.). Stiglitz, J. (2002). Globalization and Its Discontents (Penguin Books). Tichy, N.M., McGill, A.R. and Clair, L. (1997). Corporate Global Citizenship (The New Lexington Press). Vogel, D. (2006). The market for virtue: the potential and limits of corporate social responsibility (Brookings Institution Press).

Articles Appelbaum, R.P. (2008). ‘Giant Transnational Contractors in East Asia: Emergent Trends in Global Supply Chains’, in Competition and Change, Vol. 12, No. 1, pp. 69–87. Arrighi, G., Silver, B. and Brewer, B. (2003). ‘Industrial Convergence, Globalization, and the Persistence of the North-South Divide’, in Studies in Comparative International Development, 38(1), pp. 3–31. Bair, J. (2005). ‘Global capitalism and commodity chains: looking backward, going forward’, in Competition and Change, Vol. 9 No. 2, pp. 163–180. Bartlett, A. and Preston, D. (2000). Can Ethical Behaviour Really Exist in Business? Journal of Business Ethics, Vol. 23, No. 2, pp. 199–209. Basu, K. (2006). ‘Globalization, poverty, and inequality: What is the relationship? What can be done?’ World Development Vol. 34, 8, pp. 1361–1373. Brammer, S. and Millington, A. (2005). Corporate Reputation and Philanthropy: An Empirical Analysis, Journal of Business Ethics, Vol. 61, No. 1, pp. 29–44. Brenner, R. (1977). ‘The Origins of Capitalist Development: A Critique of Neo-Smithian Marxism’ New Left Review, 104, pp. 25–92. Cammack, P. (2004). ‘What the World Bank Means by Poverty Reduction, and Why It Matters’, New Political Economy 9 (2), pp. 189–211. Friedman, M. (1970). ‘The Social Responsibility of Business’, The New York Times Magazine (The New York Times Company). Gates, Bill (2008). Address to the World Economic Forum. Graafland, J., Eijffinger, W. and Smid, H. (2004). Benchmarking of Corporate Social Responsibility: Methodological Problems and Robustness, Journal of Business Ethics, Vol. 53, No. 1, pp. 137–152. Harris-White, B. (2006). ‘Poverty and Capitalism’ Economic and Political Weekly, 41(13), pp. 1241–6. Hill, R., Stephens, D. and Smith, I., “Corporate Social Responsibility: An examination of Individual Firm Behaviour”, Business and Society Review, 108:3 (2003), pp. 339–364. Husted, B. (2005). Risk Management, Real Options, and Corporate Social Responsibility in Journal of Business Ethics, Vol. 60, No. 2, pp. 175–183. Krueger, A. (1974). ‘The Political Economy of the Rent-Seeking Society’, American Economic Review, 64, pp. 291–303. Milanovic, B. (2003). ‘The two faces of globalization: against globalization as we know it’, World Development 31(4), pp. 667–683.

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Mukherjee, D. (1999). “Corporate Social Responsibility”, Thesis, Tata Institute of Social Sciences, Mumbai. Mutreja, M. (2009). “The Link between Competitive Advantage and Corporate Social Responsibility”, Thesis, Tata Institute of Social Sciences, Mumbai. Prahlad, C.K. and Hart, Stuart (2002). The Fortune at the bottom of the pyramid, strategy and business. Singh, K. (2007). “Benchmarking Responses to Corporate Social Responsibility Practice in India: A Descriptive Case Study” Thesis, Tata Institute of Social Sciences, Mumbai. Thompson, E.P. (1967). ‘Time, Work-Discipline, and Industrial Capitalism’, Past and Present, 38, pp. 56–97. United Nations Development Program: Blue Ribbon Commission’s Human Development Report, 2004.

Internet Ressources http://www.bsr.org/BSRResources/IssueBriefsList.cfm?area=all http://www.bsr.org/reports/CultureMatters_CSRSpirituality_1.pdf, http://economictimes.indiatimes.com/articleshow/5891434.cms http://www.ibef.org/india/CSR.aspx http://www.princeton.edu/~cenmiga/works/Global%20Capitalism%20-%201%20-%20Intro.pdf www.jstor.com http://makepovertybusiness.squarespace.com/chapter-three-what-is-povert/ http://siteresources.worldbank.org/CGCSRLP/Resources/DevelopmentOutreachBusinessandPov ertyBrochure.pdf http://opinion.inquirer.net/24657/poverty-as-business-enemy http://www.wcfcg.net/GCCSR%20Report.pdf http://www.poverty.ch/documents/poverty.pdf http://www.wcfcg.net/gcsr_proceedings/Henry%20I.%20Onaga%20&%20Chris%20Ogbalu.pdf

ABOUT THE AUTHOR Ms Sharon Weir is the founder of 4th Wheel which works for research and advocacy of Corporate Social Responsibility. An economics graduate from St. Xaviers College, Mumbai, she has been involved in Social development research for the past 5 years. She is currently involved in research and trainings pertaining to ethical functioning of organizations and a one of its kind civic engagement/employee engagement program in Ahmedabad.

CSR and Strategic Branding in Rural India

CSR and Strategic Branding in Rural India Sasmita K. Maurya Research Associate, Metric Consultancy Ltd., Pune; Visiting Professor, IIPM, Mohali, Punjab E-mail: sasmita.maurya@indiatimes.com; sasmitamaurya@indiatimes.com

ABSTRACT Last couple of decades have seen many companies stepping into rural India, wooing it with a plethora of brands and lifestyle enhancing offers. CavinKare made shampooing fun for rural women by introducing Chik brand of shampoo in sachets. ITC started the e-chaupal for farmers while Hindustan Unilever initiated project Shakti to empower women. Not to be left behind, P&G, Pepsi, and Nokia were among the other large companies that focussed on establishing strong presence in the hinterland. The purpose of this paper is to identify the framework of strategic branding in rural India and role of Corporate Social Responsibility in the strategic decisions related to branding. The primary issue addressed is whether Corporate Social Responsibility can be integrated with strategic branding decisions in rural India. The chapter describes the meaning and contemporary trends in CSR in developing countries including India. A random selection of companies has been studied to identify their rural ventures along with a complete reference to the concept of branding. The chapter suggests a model to integrate Corporate Social Responsibility and branding strategies of companies for a sustainable future in rural India. This chapter will be a useful reference for research in strategic branding. In addition it will make it easier for brand managers to design uniquely trusted brands for the bottom of pyramid markets.

INTRODUCTION A paradigm shift from price-driven products to quality-driven products has been reported in the consumption trend in rural areas (A CII1 study). With almost 70% of India’s population living in rural areas, Prahlad (2005) identified a huge opportunity for marketers and thus coined the phrase—Bottom of the Pyramid (BOP) market. However, one cannot ignore an interesting perspective by Jaiswal (2007) that talks about rural consumers to be seen not only as consumers but as producers as well. Thus, the question arises, is it important for companies to be perceived as benefactors of rural India 1

CII–Confederation of Indian Industry.

CSR and Competitiveness

and not Multi-National Companies trying to shove unwanted products and services down the rural throats? Over the years, a plethora of companies have been wooing the rural consumers with a variety of products across several categories. CavinKare, Hindustan Unilever Ltd, Colgate-Palmolive, ITC Ltd, Philips, Nokia, Coca Cola and Dabur have succeeded into making their presence felt in these markets. New companies are trying their best to get a foothold in the latest business destination for all companies—rural India. The battle ofbrands is prevalent across all product categories and innovative strategies appear to be the flavor of all boardroom discussions. The idea of social responsibility of business or Corporate Social responsibility (CSR) is getting popular every financial reporting year. Its growth and prominence has seen an upswing due to globalization (Arora and Puranik, 2004). Organizations all over the world agree that there is need for added commitment in the areas of sustainable development and social progress (De Kleijn, 2006). In 1950s, the ideology of CSR was that businesses have obligations to society (Banerjee, 2007). Since 1990s, there has been a shift in this ideology from fulfilling societal obligations by philanthropy to companies taking more strategic decisions to tie up their corporate social initiatives to social objectives (Banerjee, 2007). Plenty has been achieved in this field and different definitions of CSR are used by academicians, organizations and researchers. The World Business Council for Sustainable Development (2007) described CSR as—‘the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large’. Kotler and Lee (2005) define Corporate Social Responsibility as—‘Corporate Social Responsibility is a commitment to improve community well being through discretionary business practices and contributions to corporate resources’. Visser (2008) defines CSR as—‘the formal and informal ways in which business makes a contribution to improving the governance, social, ethical, labour, environmental conditions of the developing countries in which they operate, while remaining sensitive to prevailing religions, historical and cultural contexts’. The basic understanding from all these research works is that the synergy between business and society should not be based solely on production and consumption, but on goodwill and trust as well. Banerjee (2007) has given the reference of Howard Bowen who wrote one of the earliest books on CSR—“The Social Responsibilities of the businessman” in 1953. In this book, Bowen argued—“Since social institutions shaped economic outcomes, it was to be expected that business firms should consider the social impact of business activity”. Arora and Puranik (2004) have referenced Ward and Fox (2002)

CSR and Strategic Branding in Rural India

as—‘whatever the language used, the basic idea is to understand business as part of society-not somehow separate from it’. In the Indian rural market context, this particular segment forms the bottom of the pyramid of Indian economy. It is evident, therefore, that if marketers were to invest resources and time in order to address and create the needs for this segment, they will reap business profits in future. But the question of sustainability in responsible marketing is important if the companies have to stay in rural markets for good. The challenge of sustainable development is a complex issue (Maurya, 2010) and can’t be addressed with some cut-and-dried methods. The primary issue that arises is—How can businesses plan sustainable, innovative marketing/branding strategies to integrate with CSR?

CORPORATE SOCIAL RESPONSIBILITY (CSR)— A LITERATURE REVIEW Kotler and Lee (2005) have stated that participation in corporate social initiatives can impact key performance factors. Business for Social responsibility, a leading nonprofit global organization providing businesses with information, tools, training and advisory services related to integrating CSR in their business operations and strategies conclude that such companies have experienced a range of bottom-line benefits.

Behaviour in both frontiers can migrate to the civil foundation -Either through widespread imitation of the successful innovator, -Or through collective action or government mandate.

Exhibit 1: Martin’s (2002) Virtue Matrix Frontier – quadrant 1, 2 (Intrinsic) Corporate managers engage in such conduct for its own sake, rather than to enhance shareholder value.

1. Strategic

2. Structural

(behaviour that both benefits shareholders and adds to the supply of social responsibility)

(actions that benefit society but not shareholders, creating a structural barrier to corporate action)

3. Choice

4. Compliance

(companies choose to observe norms and customs)

(companies are mandated by law or regulation to comply)

Civil Foundation- quadrant 3, 4 (instrumental) Behaviour in the civil foundation does no more than meet society’s baseline expectations.

CSR and Competitiveness

Martin (2003) opines that organizations face many obstacles on the path to becoming better corporate citizens. Undertaking costly initiatives may erode their competitive position, inviting government oversight may be hampered by costly regulations and they may drive jobs to countries with less stringent standards if they adopt wage scales and working conditions that prevail in the wealthiest democracies. Martin’s ‘virtue matrix’ is a tool to help executives analyze corporate responsibility by viewing it as a product or a service (Exhibit 1). Table 1: CSR and Business Researcher(s), Year Key Findings Kanter, 2003 Now companies are viewing community needs as opportunities to develop ideas, locate and cater to new markets, and solve long overdue business problems. Chapple and Community involvement is the largest part of established form of CSR in Moon, 2005 India. This is now being followed by socially responsible production processes and employee relations. Goodpaster and Corporations that monitor their employment practices and the effects of their Matthews, 2003 production processes and products on the environment and human health show the same kind of rationality and respect that morally responsible individuals do. Porter and Social and economic goals of companies are not inherently conflicting but Kramer, 2002 integrally connected. Corporations need to rethink both where they focus their philanthropy and how they go about their giving. Sen, Bhattacharya Stakeholders from consumption, employment and investment domains react positively to a company’s CSR initiatives. and Korschun, 2006 Maignan, Ferrel Market oriented cultures along with humanistic cultures lead to proactive corporate and Hult, 1999 citizenship, which in turn is associated with improved levels of employee commitment, customer loyalty and business performance. Peterson and Jun, A company which has incorporated CSR philosophy in its business model has 2009 better reputation and this leads to better financial performance, since both are closely related. Sirsly and CSR initiatives of a company can lead to a sustainable first-mover advantage Lamertz, 2008 provided it is central to the company’s mission, provides company specific benefits and is made visible to external audiences. Institutional intermediaries (NGOs, rating agencies, certifying agencies, think Doh, Howton, tanks, public institutions etc) appear to influence market assessments of a Howton and company’s social responsibility. Siegel, 2010 Employees’ participation in framing CSR policies cannot be ignored because Daugareilh and OECD guidelines on employment and industrial relations and ILO Tripartite Isabelle, 2008; Declarations specify the same; Sobczak, 2004 Companies should be cautious in using CSR tools, such that while protecting consumer rights, labour rights should not be compromised. Kapoor and There is significant positive impact of CSR on corporate profitability and Sandhu, 2010 insignificant positive impact on corporate growth.

CSR and Strategic Branding in Rural India

Quadrants 1 and 2 in Martin’s virtue matrixrepresent the frontiers in Corporate Social Responsibility where corporates choose to engage in CSR either strategically or structurally. Over a period of time, the strategic CSR initiatives undertaken by certain corporates become norms or customs because of widespread imitation of the successful model. The structural CSR initiatives, when successful in meeting their goals and objectives, are mandated by the government or regulatory bodies for all other companies to comply. Thus, good CSR practices gradually metamorphose into either norms/ customs or law/regulation in the civil foundation. Quadrants 3 and 4 represent such behaviour in the civil foundation which raises the bar for CSR frontiers and encourages companies to innovate further and add to the strategic or structural frontiers. For past many decades, researchers have published various findings and insights pertaining to Corporate Social Responsibility. Table 1 summarizes some of the key research findings related to CSR as published by various researchers all over the world. Exhibit 2

(Source: river-village.com)

Colgate-Palmolive’s Operation Jagruti (2001) was launched to educate villagers about oral hygiene. It communicated about the benefits of Colgate-Palmolive’s toothpaste vis-à-vis traditional products like “Neem” (Neem twigs have herbal benefits and has been popular in rural India for maintaining oral hygiene—Exhibit 3). Through product trials and distribution of free samples, Colgate-Palmolive was able to generate awareness in this new market. Table 2 shows the glaring difference in usage of oral hygiene products in rural and urban market, yet it presents opportunities for companies like Colgate Palmolive. Table 2: Penetration of Oral Care Products in Indian Market (2010) Particulars Toothpaste Toothpowder

All 48.6 34.7

India Urban 74.9 30.6

Rural 37.6 36.5

Zones North 47.8 37.1

South 61.8 35.7

East 40.0 30.0

(Source: http://www.docstoc.com/docs/69537537/Solution-for-rural-distribution-colgate-case-study#)

West 44.4 36.1

CSR and Competitiveness Exhibit 3: A Rural Person Using “Neem” Twig for Oral Hygiene; “Neem” Twigs

(Source: http://www.thestate.com/2012/02/09/2147470/the-daily-edit-02102012.html)

Colgate-Palmolive recruited local youths to distribute their products to small shops and stores in rural areas. This provided source of livelihood to the unemployed and helped the company reach the interiors of rural India (Exhibit 4). Exhibit 4

(Reuters)—Carrying two worn bags full of toothbrushes and toothpaste, Raj Verma rides his battered bicycle around villages in India’s northern state of Uttar Pradesh, leaving fresh supplies of Colgate products at the small shops he visits.

(Source: http://www.reu ters.com/article/2011/09/16/us-india-frugal-idUSTRE78F0WH20110916)

The rural marketing strategy adopted by Colgate-Palmolive appears to be successful, as a decade later, it enjoys the highest market share in oral care products (Figure 1).

Fig. 1 (Data Source: http://www.ideasmakemarket.com/2011/08/study-on-oral-care-industry-in-india.html)

CSR and Strategic Branding in Rural India

Chik—a shampoo brand of Cavin Kare was first launched in South India. The strategy used by the organization was to initially educate the people on how to use it, as previously they would wash their hair with soap. Live ‘touch and feel’ demonstrations were done and free sachets of shampoo were distributed at local fairs. This strategy was successful in rural areas of Tamil Nadu and Andhra Pradesh (Exhibit 5). Exhibit 5 When Chik moved in the shampoo market, Godrej was already marketing Velvette Shampoo aggressively. They reached the rural South India where people mostly used mixture of herbs and soaps for their hair. Cavin Kare demonstrated to them how to use shampoo by giving live demonstrations and asking people to touch, feel and smell the hair after shampoo. They also distributed free sachets of Chik after sponsored shows. This was successful in rural areas of Tamil Nadu and Andhra Pradesh. But one of the most successful schemes was where they offered to exchange five sachets of any shampoo for a free sachet of Chik Shampoo. Subsequently the scheme was altered as—one free Chik Shampoo sachet in lieu of five Chik Shampoo sachets only (This scheme reportedly increased the sale of Chik shampoo by almost 342%!). (Source: brandchannel.com)

Dabur not only customized its marketing communications but rechristened its brand. “Dabur Lal Dant Manjan” (means red tooth powder in Hindi) was renamed as “DaburSivappu Pal Podi” (red toothpowder in Tamil) for the south market (Exhibit 6). Exhibit 6

Dabur Plans Marketing Strategy for Southern States PTI May 20, 2007, 06.00 pm IST MUMBAI: FMCG major Dabur India has planned an aggressive marketing strategy to increase its sales in the four southern states. The company, which currently has 10 per cent sales of consumer care products in the south, will rename them in local languages and also come out with special products with distinct local flavour to capture a larger market share. “Dabur India is donning a local garb to drive sales in the South. From rechristening brands in local languages like Tamil to creating special products and even roping in local celebrities as brand ambassadors, the company is adopting every trick in the book to drive deeper into the south Indian markets”, a Dabur India spokesperson told PTI.

CSR and Competitiveness

“The idea is to give the brands a local flavour to make them easily understandable to the Tamil speaking people”, he said. The Company would also tailor the products especially to suit the South India audience. “Recognising the southern consumer’s belief on natural products, Dabur Herbal toothpaste has been launched only in Kerala and Tamil Nadu”, he said.

Hindustan Unilever Ltd. (HUL) launched a unique scheme called Project Shakti (means strength in Hindi) in 2001. The project targeted rural women from existing self-help groups to work as “direct-to-home” distributors (called Shakti Amma—“Shakti” means Power and Amma which literally means mother, is a respectful way of addressing women in rural India) for HUL products. This synergistic model helped the company enter an unfamiliar market while the Shakti Ammas were benefited with additional income and raised self-esteem (Exhibit 7). Exhibit 7 Project Shakti was launched in Andhra Pradesh’s Nalgonda district in 2001, and it has swept the country with such success that Anglo-Dutch multinational firm Unilever is now customizing it to rural markets in Sri Lanka, Bangladesh and Vietnam.

Show and tell: Roshni, a Shakti amma from Dhindaar village in Uttar Pradesh, says sales of Fair and Lovely improved after she conducted a seminar to show her customers the right way to apply the cream. Ramesh Pathania/Mint (Source: http://www.livemint.com/2009/03/24001107/Mother-of-all-rural-marketing.html)

CSR and Strategic Branding in Rural India

Nokia introduced its mobile services for non-urban areas through Life Tools in 2008. It offered value added services for farmers. An English daily reported thus: “Nokia (through Reuters Market Light) will relay contents to the farmers. It will include information on prices and availability of seeds, fertilisers, pesticides and market prices of produce and weather conditions. The information is customised to the farmer’s location and selection of crops and will be delivered directly to the mobile phone. It will help farmers make informed decisions that will have a beneficial impact on their productivity and yield.” (Source: Hindu Business Line, Business Daily from THE HINDU group of publications Thursday, Nov 13, 2008). Nestle’s rural initiatives have largely been based on price-led initiatives. Brands such as Maggi noodles and KitKat chocolates have been priced at ` 5, and few other candy and chocolate brands are priced at ` 2 per unit. These price points not only help Nestle in making inroads into rural markets but reach more retail formats in urban markets as well. Currently, rural markets account for below 10 per cent of the food major’s revenues. Coca-Cola has been investing heavily in tapping the rural market, and has designed its rural strategy on three factors—availability, affordability and acceptability. Its “Chhota Coke” priced at ` 5 was accompanied with catchy advertising slogans and popular brand ambassador like Amir Khan (Exhibit 8). The entire advertising campaign was built around rural theme. Exhibit 8

Source: WSJ.com

ITC Ltd’s E-chaupal Initiative involves farmers as suppliers where the company sources agricultural produce like wheat directly from the farmers. This benefits the company and the farmers where each one gets monetary gains due to elimination of middle men. This has enabled ITC to penetrate the rural market and its stores in these areas stock the ITC brands for consumption.

CSR and Competitiveness

Microcredit blossomed in South Asia in the early 1990s when development agencies began giving loans of $100 or so to poor women to help alleviate rural poverty. In India and Bangladesh, private banks found that repayment rates were high enough to make micro-lending profitable (as reported in Wall Street Journal, 2005). Table 3 summarises the specific characteristic of marketing mix of these companies.

Customised Products • Chic shampoo

(packaging), Nokia Life Tools, • Microcredit

Table 3: Rural Marketing Initiatives Unconventional Innovative Pricing Distribution • Coca Cola, • Colgate toothpowder and • Nestle’s Maggi toothpaste, and KitKat • HUL’s products, • ITC’s e-chaupal

• • • •

Comprehensive Communication Medimix herbal soaps, Colgate toothpowder and toothpaste, Chic shampoo, Dabur Red toothpowder

CSR AND STRATEGIC RURAL BRANDING A review of these limited rural brand building initiatives in India leads to the conclusion that customized and affordable products, effective distribution and innovative but focused marketing strategies are essential factors for building a credible brand. However, in addition to usual competition from other companies, presence of unorganized sectors with a glut of local copycat brands poses a formidable competition for organizations. This implies that for a leadership advantage marketers need to tailor their branding strategies in synergy with rural needs which could be: • the need for a better lifestyle, • a new source of livelihood, • healthy and prosperous family, • better education or • the needs for reduced urban-rural economic divide. At this point there is a scope for integrating CSR initiatives with branding strategies (as followed by Colgate-Palmolive, ITC Ltd, Microcredit companies, Nokia). Such initiatives will help in building credibility for the corporate brand name, leading to greater brand recall and a sustainable business model. HUL (as in section 3.5 above) seems to be in agreement with this notion and in addition to Project Shakti, which was a marketing initiative integrated with CSR, its latest rural initiative is called ‘Khushiyon ki Doli”. This multi-brand rural activation programme was launched in 2010 across three large states—Uttar Pradesh, Andhra Pradesh and Maharashtra. It incorporates the usual marketing strategies of creating awareness, consumer engagement and retail contact with communication about issues like improved hygiene for self and home. A small but powerful and useful communication like this can go a long way towards enabling the

CSR and Strategic Branding in Rural India

rural communities to manage minor health issues and have a better lifestyle. In business terms, this ensures lifelong demand for personal care and home care products. Integration of CSR with rural branding need not be restricted to corporate philanthropy, social marketing or other “do good” projects. The quest for developing useful and exclusive products for rural India, thereby creating the need can be seen in companies like Nokia and Philips. Nokia’s Life Tools (discussed in 3.6) has been designed only for rural consumers. Rural India is part of Philips’ strategy too. It has plans to launch Smokeless Chulha (stove), a rechargeable portable lantern (called Uday) and a hand cranked LED flashlight (called Kiran) for this market. Thus, product innovations like these indirectly contribute to the organization’s CSR initiatives in addition to building a powerful brand. Brand building requires a lot of persistence, clear thinking and focus. One of the most important aspects of building a brand involves communication about the brand to all the stakeholders. A comprehensive communication for rural consumers will include use of all possible, otherwise unconventional media vehicles like village fairs, mobile vans, local festival get together, community centers etc., which can penetrate the rural market. If brand communication is integrated with CSR initiative of the organization, the business model will benefit in terms of long lasting consumer engagement and an emotional connection to the brand. As Anand and Krishna (2008) have observed, if any FMCG brand has to get established in rural markets in India, they have to differentiate themselves on quality, value for money and sense of belongingness with customer. Consumers like to “feel good” about things they purchase and at times they tend to get “wary” of very successful brands. The general feeling regarding such brands is that these are over expensive. Thus it is important that marketers maintain an interactive communication with their consumers and CSR initiatives provide a meaningful platform for such interactions and emotional bonds. Company brand becomes the primary discriminator for consumers. Their choice of what they buy will depend less on an evaluation of the functional benefits of the product but rather more on the assessment of the company culture. CSR campaigns have enhanced people’s perceptions of sponsor’s image, reputation and credibility. On the basis of CSR literature review and basic understanding of branding in rural India, Figure 2 conceptualizes a model which shows the integration of CSR with branding strategies. This framework conceptualises the strategy of integrating Corporate Social Responsibility with marketing initiatives in rural areas and provides course of action in internal and external environment of the company. It suggests that:

Internal Environment 1. Rural CSR Initiatives and company CSR policy should be in sync withthe company mission. Disputes between social and corporate interests can kindle legal cases

CSR and Competitiveness

Employees and Institutional Intermediaries (NGOs, rating agencies, etc)

ExternalÂ Environment

Differentiator

Internal Environment

Company CSR Policy

(+)

Company mission Rural CSR Initiatives

Corporate reputation

(+)

Innovative rural branding

Sustainable rural demand

Rural Marketing Initiatives

Rural needs

Innovative pricing

Unconventional distribution

And/or

In sync with

Synergistic relationship

Customized products

Comprehensive communication

Fig. 2: Conceptual Framework for Integrating Corporate Social Responsibility (CSR) Initiatives with Rural Branding Strategies (Maurya, 2012)

against the companies and board of directors may end up narrowing their focus to only maximising shareholder wealth. Thus, company CSR policy needs to involve the employees and other institutional intermediaries. This ensures that the companyâ&#x20AC;&#x2122;s CSR philosophy is understood and communicated by all stakeholders, thus eliminating or reducing any miscommunication or conflict of interests. 2. Rural marketing initiatives of companies can be strategized using innovation in any one or more than one element of marketing mix. It can be customized products for rural markets, innovative pricing to suit low budgets, unconventional distribution involving the local population and comprehensive communication using road shows, entertainment programs, live demonstrations and advertising. 3. Rural CSR activities and rural marketing initiatives together can lead to strategic rural branding. At the same time, rural CSR initiatives will lead to positive (+) impact on corporate reputation/company image.

External Environment 1. In the external environment, the two initiatives combined can function as a differentiator in consumersâ&#x20AC;&#x2122; perception of the specific brand. It will also increase the company goodwill and enable consumer trust. 2. Like CSR policy, rural branding, so strategized, should be in synchronization with company mission and it should also have synergistic relationship with rural

CSR and Strategic Branding in Rural India

needs. Such a practice will justify all efforts and expenditure incurred by the company on the societal development. 3. Positive corporate reputation and rural branding strategies together can contribute towards building and developing a sustainable rural demand for the company’s products. To conclude, marketing as a profession has faced adverse challenges. Smith and Higgins (2009) have mentioned that for the past many years the field of marketing has been thought of as made up of fast buck artists, wheeler dealers and shoddy goods distributors. This poor reputation was due to a few firms that betrayed consumer trust in their relentless pursuit of profits. Kotler (1987) proposed humanistic marketing2 in continuum with the gaining credence of notions of social and societal marketing. In the present times, with virtually negligible global boundaries and intense competition, organizations cannot survive by simply following the business rules. Somewhere along the line, they have to take cognizance of their social responsibility and integrate their CSR policy and marketing strategies.

REFERENCES Arora, B. and Puranik, R. (2004). A review of Corporate Social Responsibility in India. Development, 93–100. Chapple, W. and Moon, J. (2005). Corporate Social Responsibility (CSR) in Asia—A SevenCountry Study of CSR Website Reporting. Business and Society, 415–441. Daugareilh and Isabelle. (2008). Employee Participation, ethics and corporate social responsibility. Transfer: European Review of Labour and Research, 93–111. Doh, J.P., Howton, S.D., Howton, S.W. and Siegel, D.S. (2010). Does the market respond to an endorsement of social responsibility? The role of institutions, information and legitimacy. Journal of Management, Vol. 36 No. 6, 1461–1485. Goodpaster, K.E. and Matthews, J.B. (2003). Can a Corporation Have a Conscience? In HBR on Corporate Responsibility (pp. 131–156). Boston: Harvard School Publishing Corporation. Kapoor, S. and Sandhu, H.S. (2010). Does it pay to be socially responsible? An empirical examination of Impact of Corporate Social responsibility on Financial Performance. Global Business Review, Vol. 11, 185–209. Kanter, R.M. (2003). From Spare Change to Real Change: The social sector as Beta site for Business. Innovation. In H.B. review, HBR on Corporate Responsibility (pp. 189–213). Boston: Harvard Business school publishing corporation. Kotler, P. and Lee, N. (2005). CSR—doing the most good for your company and your cause. New Jersey: John Wiley and Sons, Inc. Maignan, I., Ferrell, O. and Hult, G.M. (1999). Corporate Citizenship: Cultural Antecedents and Business Benefits. Journal of the Academy of Marketing Science, Vol. 27, 455–469.

Humanistic marketing—a marketing philosophy that takes as its central objective the earning of profits through the enhancements of the customer’s long run well being. It assumes that the consumer is active and diligent; seeks satisfaction of both immediate needs and larger interests and favours companies that develop products, services and communications that enrich the customer’s life possibilities.

CSR and Competitiveness

Martin, R.L. (2002). The Virtue Matrix: Calculating the Return on Corporate Responsibility. In H.B. Review, HBR on Corporate Responsibility (pp. 83–103). Boston: Harvard Business School Publishing Corporation. Maurya, S.K. (2010). Social Initiatives for Sustainable Development: a case study of a company in India. International Journal of Environment and Sustainable Development, Vol. 9(1/2/3), 114–122. Peterson, R.T. and Jun, M. (2009). Perception of Social responsibility: The Entrepreneurial Vision. Business and Society, 385–406. Porter, M.E. and Kramer, M.R. (2003). The Competitive Advantage of Corporate Philanthropy. In H.B. Review, HBR on Corporate Responsibility (pp. 27–64). Boston: Harvard Business School Publishing Corporation. Sen, S., Bhattacharya, C. and Korschun, D. (2006). The role of corportae social responsibility in strengthening multiple stakeholder relationships: A field experiment. Journal of the Academy of Marketing Science, Vol. 34, 158–166. Sirsly, C.-A.T. and Lamertz, K. (2008). When does a Corporate Social Responsibility Provide a First-Mover Advantage? Business and Society, Vol. 47, 343–370. Sobczak, A. (2004). Corporate Social Responsibility: from labour law to consumer law. Transfer: European Review of Labour and Research, 401–416. Smith, W. and Higgins, M. (2009). Cause-Related Marketing: Ethics and the Ecstatic. Business and Society, Vol. 39, 304–322. Visser, W. (2008). Corporate Social Responsibility in Developing Countries. In CSR in Global Context (pp. 473–498).

Websites Anand and Krishna, 2008. http://dspace.iimk.ac.in/bitstream/2259/418/1/RM02.pdf Branding in rural market. http://www.articlealley.com/article_1670519_15.html HUL launches rural market programme. http://www.hul.co.in/mediacentre/news/2010/HUL launchesmultibrandruralactivationprogramme.aspx Jaiswal, A.K. (2007). Fortune at the bottom of the pyramid—an alternate perspective available at http://www.iimahd.ernet.in/publications/data/2007-07-13Jaiswal.pdf Micro Credit in India. http://www.vinodkothari.com/Micro%20Credit%20in%20India%20%20Overview%20of%20the%20Regulatory%20Scenario.pdf http://articles.economictimes.indiatimes.com/2007-05-20/news/28422557_1_dabur-indiamarketing-strategy-dabur-shwaasamrit http://businesstoday.intoday.in/story/the-fizz-is-back/1/4180.html http://economictimes.indiatimes.com/cmpnewsdisp.cms?companyid=13330&newsid=363359 http://www.4psbusinessandmarketing.com/21042011/storyd.asp?sid=4513&pageno=1 http://www.ibef.org/download/CocaCola.pdf http://www.indiainfoline.com/Markets/News/PandG-doubles-Shiksha-impact-in2011/5229768082 (project shiksha) http://www.itcportal.com/ruraldevp_philosophy/echoupal.htm http://www.nokia.com/NOKIA_COM_1/Microsites/Entry_Event/phones/Nokia_Life_Tools_d atasheet.pdf www.brandchannel.com

CSR and Strategic Branding in Rural India

ABOUT THE AUTHOR Ms Sasmita K. Maurya is Visiting Professor at IIPM, Mohali and Research Associate at Metric Consultancy Ltd. She is a Reviewer at Journal of International Business and Management and many other international journals. She is Faculty/Author at Professional Education Organization International. She is Business Administration Professional having worked in fast paced, challenging environment with great emphasis on developing positive interpersonal skills, independent decision making and responsibility. She is adept at imparting training and lectures in the areas of confidence building, cultural sensitivity, customer services, sales management, employability skills and other general and marketing management theories.

CSR and Competitiveness

Corporates and Rural Development: A Study of TVS Group’s CSR Initiatives in Padavedu, Tamilnadu Krithika Ram Project Officer, Agastya International Foundation, Bangalore, India E-mail: n.kritika@gmail.com

ABSTRACT One of the most pressing issues in India today is that of the widening gap between the rural and urban areas. Sustainable Rural development is the only way of bridging this gap. It has to be understood that the success of rural development and its sustainability demands a lot of commitment on the part of the implementing agency. This commitment in turn is directly related to the understanding of the implementing agency about the rural area, its unique socio-economic, political and cultural set-up, its needs and challenges. Now, this answers the question—“Why are very few rural development programs successful?” Off-late sustainable rural development has become a buzz-word not just among the Government agencies but also in the CSR wings of corporates, given the fact that for a major chunk of their stakeholders are from rural India. Given the present challenges in Sustainable Rural Development, it becomes necessary to take a look at the best practices in CSR and understand how they have been able to achieve something which even Government. has largely been unsuccessful at. This paper is about the success story of Srinivasan Services Trust (SST), The CSR wing of TVS Group, in the area of Sustainable Rural Development. Keywords: CSR, Rural Development, Sustainability, Economic Development, Education, Health, Environment.

INTRODUCTION “I have believed and repeated times without number that India is to be found not in its few cities but in its 7,00,000 villages…” —Mahatma Gandhi, the Father of Nation

Corporates and Rural Development…

Around 70% of India’s population is living in rural areas. Rural Development which is concerned with economic growth and social justice, improvement in the living standard of the rural people by providing adequate and quality social services and minimum basic needs, is of utmost importance today. With a mountain of challenges in front of the State, it is impossible to set things right all by itself with the wave of a magic wand. This is when the other stakeholders i.e. the community, local institutions and non-governmental organization also play a crucial role in reaching the welfare and development programs to the rural areas. At this juncture, there is one more actor emerging in this arena viz. the corporate companies. No doubt, profit-making is the very aim of the corporate world, but beyond this, there are some companies that believe in contributing a small fraction of their energy and resources for the social development. While some corporates take up small voluntary programs like making monetary and material donations to poor, orphaned, disabled and needy; some other corporates encourage their employees to spend their time with these deprived sections of the population. There is another section of corporates who have gone a step further and have set their foot in the area of rural development. Such corporates contribute in terms of developing village infrastructure, enhancing education and rural entrepreneurship, providing medical aid to the poor or even extending moral and material support to during calamities. There are huge corporate companies in India which are contributing substantially towards rural development. Some of them have adopted rural areas and have even set up model villages to showcase to the world, what real rural development must be like. Few other corporates who had not been taking social responsibility seriously have started to re-think based on theories of “Fortune at the Bottom of Pyramid” and “The Three Ps” People, Planet and Profit. Both these theories stress on the importance of caring for people/community as the foremost important thing as are the main stakeholders in any business. Apart from this, there are also investors and consumers who also emphasize on the need for the corporates to indulge in sustainable business practices keeping in mind the planet and people. Corporate giants such as TATA, Birla, Modi, Mahindra and ITC are fine examples of how much importance they had given to CSR and the good name and trust that they have earned in return among their stakeholders thus helping them strengthen their business operations worldwide. Here is an impressive case of one similar corporates—TVS Group, which has taken corporate social responsibility very seriously and has been contributing immensely towards the social welfare in rural India.

LITERATURE REVIEW Different researches at different points of time and classical Indian literature have emphasized the CSR practice of corporate entities in India. Kautilya in his ‘Arthashastra’

CSR and Competitiveness

mentions traders’ responsibilities to the local society which was voluntary. (Pradhan, S. and Ranjan, A. 2010) Rao, G.R.S (1991) points out the fact that the conceptual framework of social responsibility of business in society like India, rooted in social problems like economic poverty and over-population, emanates from the national resolve to seek social development through the process of economic growth. Ramlal, P. and Mohinuddin, W. (2011) remark that an organization receives inputs from the society and environment in the form of labor and raw material. This realization has led to and increasing focus on CSR. Chakrabarthy, S. (2008) goes a step further and explains how business and society are bound by contracts in which they operate. While business is expected to create wealth and provide opportunity for employment, society is expected to provide an environment conducive for business. Jatana, Renu et al. (2007) is of the opinion it is the responsibility of business people to cooperate with the government in eradication of poverty, unemployment, regional backwardness etc. Khanna, P. and Gupta, G. (2011) argue how CSR in India has become an integral part of the corporate strategy, which is evident from the fact how some companies have CSR teams that devise specific policies, strategies and goals for their CSR programs and set aside budgets to support them. Muruganantham, G. (2010) Gulati, Jagdish (2005) give examples of corporates who have been contributing towards rural development based on Gandhiji’s Trusteeship theory. Chahoud, T. et al. (2011) states that Indian companies regard their community development projects as a way of contributing some of their profits to social welfare objectives, which also enhances their reputation and improves relations with the community. Wharton (2010) points out how companies have been filling the gaps left by government, by building roads in rural India that help them deliver their goods, provide education and health care for communities whose workforces they rely upon, and implement environmental programs to protect precious natural resources, that was needed to keep their supply chains running smoothly. Mohapatra, N. et al. (2009) note that irrespective of the profits they make, corporates are aiming at uplifting of the poor and enhancing the standard of life in the rural sector, mainly due to the realization that rural people can become a viable market for the corporate with a developmental approach of social marketing. This trend is largely due to the realization among some corporates sparked by the theory of “Fortune at the Bottom of the Pyramid” in which Kakkar, P. (2005) states that a huge potential lies untapped among the poor section of the population, which forms the base of the pyramid and therefore can’t be ignored. Dr. Verma, S. and Chauhan, R. (2007) argue that there is urgent need that all stakeholders in national economic development put synergistic effort to bridge the socioeconomic gap and CSR plays a very important role here. Kakkar, P. (2005) observes

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that from aid focused on large infrastructure projects and public spending on education and health, there is a growing strong belief that private-sector involvement is a crucial ingredient to poverty alleviation. Agarwal, K.S. (2008) opines that the poor don’t want charity, but opportunity and choices, while Kakkar, P. (2005) speaks about better approach to help the poor, that involves partnering with them to innovate and achieve sustainable win–win scenarios where the poor are actively engaged and, at the same time, the companies providing products and services to them are profitable. This point is strengthened by Mahapatra, S. and Visalaksh, K. (2005) by stating that the corporations themselves have moved away from the charitable grants by providing products and services in a manner that would make a real difference in the target communities. Lee, S. (2010) marks that people-centric approach in CSR makes the CSR practices of Indian business unique, while India shares with other developing countries in its CSR experiences and practices certain attributes that come with the process of development, such as a distinct set of CSR agenda challenges and the deployment of CSR as an alternative to government.

CSR IN INDIA TODAY The increasing relevance of CSR in India has stemmed from the fact that a business cannot succeed by ignoring the human and social needs of our society. The concept of CSR has become more and more common in business practices and customers today almost expect companies to be socially responsible.1 At one end, CSR can be viewed simply as a collection of good citizenship activities being engaged by various organizations and at the other end it can be a way of doing business that has significant impact on society. For this later vision to be enacted in India, it will be necessary to build CSR into a movement. That is to say, public and private organizations will need to come together to set standards, share best practices, jointly promote CSR, and pool resources where useful. Some might say that it is easy for corporate houses to support CSR when the economy is growing at 8% and profits are doing well. The real test is what happens to CSR budgets during an economic downturn. That is why it is so important over the next two to three years to embed 2 CSR into the public consciousness, as well as into the executive suite. 1

G. Muruganantham, “Case study on Corporate Social Responsibility of MNC’sin India” International Trade and Academic Research Conference (ITARC) - London 2010 Website: http://abrmr.com/pdf/ Case%20study%20on%20Corporate%20Social%20Responsibility%20of%20MNCs%20in%20Ind ia%20-%20G%20Muruganantham%20.pdf 2 Bethapudi, Prabhakar and Anbalagan, C., “Corporate Social Responsibility Practices in India” Website: clear-research.in/CLEARIJRMST/CLEARIJRMST_pdf/Chapter5.pdf

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ABOUT TVS GROUP TV SundaramIyengar and Sons, popularly known as TVS, is a household name in South India, especially in Tamil Nadu. TVS and Sons was founded in 1911 by late Sri. T.V. SundaramIyengar at Madurai, Tamil Nadu. The Group’s core competence is mostly in two wheelers, automotive spares, components, automobile-related activities such as tyres, bus body building, precision products relating to the industry, auto electrical components and related products. They also have units for textile, a sewing needle, computer peripherals and switches for computers and telephones. The group owns a couple of non-banking finance companies that provide finance chiefly to transport sector. They are also into freight service and logistics. The group owns three 3 software units. The group, with 25,000 employees, has operations spread across India, the United States, Europe, Indonesia and China.

SRINIVASAN SERVICES TRUST Late Mr. SundaramIyengar was inspired by Gandhi’s concept of Sarvodaya or service to the society and TVS was one of the industrial groups to integrate CSR into its business culture. The TVS Group was the first to introduce full-fledged canteens to provide meals for all employees in their establishments. They also offered the benefits of healthcare and education for the families of their staff. This legacy of social service was continued by the founder’s family-his son, Mr. T.S. Srinivasan and his grandson, Mr. Venu Srinivasan. In 1996, the Srinivasan Services Trust (SST) was established by Mr. Venu Srinivasan to extend the company’s CSR activities to rural areas to fulfill Gandhi’s vision of sustainable development based on selfreliant villages.4 Mr. Ashok Joshi a retired IAS Officer and the Chairman of SST remarks that on an average about ` 3 crores is spent every year towards CSR but the total value could be “five times that”. The SST provides a classic example of Indian corporate which moved from philanthropy-welfare mode to a broader agenda in congruence with current development approaches worldwide. Since its inception, SST has been actively engaging itself in community development work. The organization is presently engaged in several activities for the development of rural communities in several districts of India.5 Headquartered in Chennai, SST is directed by Mr. Ashok Joshi and his leadership team of five community

Fernando, A.C., “Corporate Governance: Principles, Policies and Practices”, S.P. Printers, 2009. Srinivasan Services Trust Annual Report 2010–11. 5 Fernando, A.C., “Corporate Governance: Principles, Policies and Practices”, S.P. Printers, 2009. 4

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directors, who manage approximately 130 field staff, including social workers, doctors, agronomists, veterinarians, and engineers.6 Over 15 years of service, SST has played a pivotal role in transforming the lives of people by creating self-sufficient rural communities that are models of integrated development in every sphere-providing financial security, education, health care and better living conditions with environmental and cultural conservation.7 SST’s Vision statement reads—“To be catalysts in creating self-reliant villages by deploying the skills and resources of local governments, development agencies and the private sector to fulfill this vision.” The Mission statement of SST reads—“To facilitate the process of sustainable development in rural India in key areas such as economic opportunities, quality education and health care, the creation and maintenance of infrastructure and environmental and cultural conservation, through active participation of national and state governments in partnership with local communities.”8 The foremost aspect that the mission statement brings forth is the importance that SST places in holistic development which has the vital element of sustainability in it, thereby ensuring that the fruit of development reaches not just the present generation but also the generations to come. True to its mission and vision, SST has been involved at various levels with the various agencies of the state and also the other profit and not for profit players in the development sector, whereby the idea is to involve as many brains, hands and resources, as possible. Their motive is not to establish a parallel welfare system to that of the State but to restore and safeguard the faith of the society towards their State by effectively liaising with the agencies of the State and seeing to it that the available programs and schemes reached to the rural areas. The project areas of SST are as follows: 1. Economic Development: (a) SHG micro-entrepreneurship programs b) Agriculture and animal husbandry. 2. Education 3. Environment and Conservation (a) Solid Waste and Liquid Waste Management b) Soil and Water Conservation 4. Health and Family Welfare 5. Infrastructure Development and Maintenance 6

Li, Xue, Shirley et al., “Srinivasan Services Trust: Combating Poverty with Entrepreneurship” Website: https://mitsloan.mit.edu/MSTIR/GlobalEntrepreneurship/Srinivasan-Services-Trust/Docu ments/11-113.SST.Kelly.pdf 7 Srinivasan Services Trust Annual Report 2010–11. 8 Srinivasan Trust Website: http://www.tvssst.org

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6. Special Projects: Watershed Development, TVS Educational Society, Restoration of Places of culture and heritage. During 2011, SST’s operations had expanded from 720 villages to 1000 villages located in four states: Tamil Nadu, Karnataka, Maharashtra and Himachal Pradesh.9 Table 1: SST Projects in India State Tamil Nadu Tamil Nadu Tamil Nadu Tamil Nadu Tamil Nadu Tamil Nadu Tamil Nadu Karnataka Himachal Pradesh Maharashtra

District Thiruvannamalai Krishnagiri Thirunalveli Thoothukudi Thiruvallur Nagapattinam Kanyakumari Mysore Solan Pune

Locations Padavedu Hosur Thirukkurungudi Navatirupati Padi Thenampattinam, Puthupattinam Keelamanakudi, Alikal, Pillaithopu Sindhuvalli, Hosakote Bhatian Shirur

SST’S RURAL DEVELOPMENT INITIATIVES IN PADAVEDU Padavedu is a Village in PolurTaluk in Tiruvannamalai District in Tamil Nadu in India. It is about 19.4 km distance from its Taluk Main Town Polur and around 50.2 km away from Thiruvannamalai. It is a calm and scenic place that consists of over 100 villages encircled by Jawadu hills, river and other water bodies, paddy, coconut and plantain fields. There are more than 10 ancient temples, located here and is regarded as one of the SakthiSthalams of ThondaiMandalam. In early 1990’s before the intervention of SST, Padavedu the economy of Padavedu was not very impressive, with large section of the rural population dependent on agriculture and poor employment opportunities in other livelihood activities, which could be attributed to lack of knowledge and low skill development. Apart from this there were no proper infrastructure facilities in the village. Education and health was in a state of neglect.

SST’S CSR INITIATIVES IN PADAVEDU It was only in late 1990s, when the TVS Group, under the aegis of Mr. Venu Srinivasan had begun to give a lot of importance to CSR and they adopted Padavedu under this initiative. 9

Srinivasan Services Trust Annual Report 2010–11.

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During the very early phases, the SST had kick-started by initiating effort to preserve the temples in Padavedu and to patronize the rich culture and heritage of the area. Looking at the poor state of the rural economy at Padavedu, the Trustees of SST decided to take up community development programs and established a special office there to cater to the needs of the rural population in and around the village. The major initiatives of SST in Padavedu could be categorized into Community Development, Tribal Development and Eastern Ghats Development Initiatives. Both the community development and the tribal development are being implemented with the holistic rural development in mind that adopts multi-sector approach to achieve its aim of improving the socio-economic status of the people. This involves the various tasks such as, strengthening the education system, providing access to better economic development, water and irrigation facility, improving health services and sanitation facilities, developing community infrastructure, and creating a clean and green environment. The Eastern Ghats development has been initiated with the aim of environmental conservation and preservation of forest eco systems.

RURAL DEVELOPMENT INITIATIVES AT PADAVEDU The Community Development programs of SST in Padavedu presently cover 25 Panchayats, consisting of 179 villages, inhabited by about 22,500 families. The rural development activities are integrated with spiritual development. Temple, trees and tanks are the hub of whole rural development programs. Another notable feature is the holistic approach aimed at making people self-reliant through active involvement of local communities.

Economic Development Self-Help-Groups (SHGs) The focus area of SST here has been the SHGs that have proved to be a successful vehicle for integrating development by providing women with opportunities for employment, education and personal growth. Each SHG is a self-managed cooperative that consists of members who come together to start income generating activities, either collectively or individually, with assistance from the government and non-government agencies like SST. SHGs have empowered women by providing them access to bank loans to run microenterprises, offered them the expertise to run their businesses successfully, operate bank accounts and gain savings to become earning members of society. SHGs also provide a platform for personal development by providing awareness about a range of issues like health, nutrition, education, womenâ&#x20AC;&#x2122;s rights etc. This has helped women to become

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decision makers in their families and also take leadership roles in community affairs. They are champions of social change and many women have entered public service as elected representatives in their village Panchayats. Presently, Padavedu has a total of 476 women SHGs that cover 7,141 families in the village. The duties of this SHG other than their regular livelihood activities and group based activities, consists of: • Fighting social evils and malpractices in the village. • Organizing cleanliness drives in the village. • Monitoring health center, schools and Balwadis. • Spreading awareness among people on health and related issues. • Making contribution to temples and small material support to schools. • Volunteering for social welfare programs such as health camps. The most striking feature about the SHGs in Padavedu is not just their success rate in terms of thrift, lending, and livelihood, but also the social angle to them which makes them unique in all aspect. Their contribution is immense in social as well as economic aspect. The women in the village say that the SHGs have taught them faith, love, trust and sisterhood. Given these attributes, no wonder there have been no defaults or no dropouts in most of the SHGs. Some SHGs are also involved in helping the other SHGs in problem solving. Apart from women SHGs there are also men SHGs that are active in Padavedu which help the members the same way as the women SHGs. Total savings of ` 2.08 crores; and Credit linkage of ` 9.16 crores has been arranged for matured SHGs till date. Some of the women SHGs have been winning District and State level “Manimegalai” Awards for Best Performing SHG. Income Generating Activities Major income generating (IG) activities are banana fiber making, backyard poultry, milch animal, agarbathi making, bamboo product making, bricks making unit, hotel and petty shops. Mostly SHGs are involved in these activities as mentioned already. Mushroom Cultivation, poultry rearing and Garment unit is one of our recent initiatives in IG activities. Totally 6102 beneficiaries earn an average additional income of ` 2500 to 5000 per month through these activities. At least 8911 families in Padavedu area earn ` 1 lakh per annum. Sustainable development is guided by the need to protect resources and conserve environment. This requires the adoption of eco-friendly technologies along with reorientation of traditional skills to create new job opportunities in market economy. SST’s income generating activities use local resources to create livelihoods, with minimum

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infrastructure. Women are the main beneficiaries of these activities that offer a supplementary source of income for their families.

Education As education is the path to self-development and the hope for a better future, SST has focused on providing every child in its project areas with access to quality education. Initially, SST faced several barriers to school enrolment, such as poverty, illiteracy among parents, lack of motivation and gender discrimination. It overcame these problems by organizing door-to-door campaigns to convince parents about the value of education. Improvements in school infrastructure, teaching standards and regular interactions with the community resulted in 100% enrollment of children in schools. SST also organized school competitions, group discussions and several extra-curricular activities in schools. These have helped to motivate children to remain in school, and not drop out. SST has provided equal educational opportunities for both boys and girls. It has motivated many high school graduates to pursue higher education at the college level. The major initiatives in Padavedu village with respect to education has been supplementing and strengthening the present educational institutions and system through various means. In the last 15 years, SST has focused on multi-pronged approach to tackle the issue of education at all levels: Anganwadis, primary, middle and high schools; vocational training for youth and adult education. The Elementary School in Keshavapuram village of Padavedu is a good example to show SST’s importance towards education. The most important infrastructural support was given by SST by the means of providing the 20% contribution towards construction of compound walls around the school, providing drinking water and toilets. SST takes care of the repair work of the school on regular basis. SST has introduced evening special classes or the resource center for students, which imparts training in basic IT skills according to the student’s age from class 1 to 12. The Saturdays of every week are converted as Balvikas day when education on human values in imparted to the students that has essential elements of intellectual, moral and spiritual development. SST has also been conducting summer camps where teachers are provided by SST itself. The most laudable feature of the SST initiative is that it ensures that teachers are trained on regular basis. The cleanliness and regularity aspects are kept under check by the SHGs in the village, who also donate books and stationary on special occasions, to the children. Balwadi Center at Keshavapuram Village is also a classic example of SST’s sincere effort. The center is maintained spic and span by the helper who also assists the teacher at the Balwadi to take care of the toddlers. SST has made sure that the children get to learn the maximum in that tender age by providing educational toys for them, painting the walls with colorful information and pictures and providing audio-visual aids to make

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learning more interesting for them. Clean drinking water and toilet have been provided by SST, along with quarters for the teacher to stay in the Balwadi premises. A kitchen garden has been maintained, which acts as a nutrition supplement for these children. The Balwadi also maintains a record of pregnant, lactating women, new born etc. for the purpose of vaccination programs. Monthly meetings are held in its premises to educate young mothers on the importance of child care and nutrition. A very unique aspect of the Balwadis is the mother volunteer programme. The mother of every toddler is free to make a surprise visit to the center and monitor how it is functioning. She can check on the quality of food provided to her child and be a part of the teaching session for a day. Apart from them, SHGs also regularly monitor the working of these Balwadis. Apart from supporting the schools and Balwadis, another significant contribution of SST has been in the area of adult education. The adult education programme at Padavedu has been one of the key factors in improving the status of rural women there. SST’s literacy programs have provided women with basic reading and writing skills up to class 2 levels. The impact of literacy programme has been all pervasive. It has encouraged rural women to step out of their homes, for the first time, to learn new skills and participate in a variety of enterprises. It has also made women more confident and articulate, enabling them to become decision makers in their homes and communities. Women in Padavedu now have increased awareness about many issues ranging from healthcare and nutrition to children’s education and women’s rights. This has improved standards of health and hygiene and reduced gender gaps in children’s education. Some of the achievements of SST at Padavedu in Education have been as follows: • Developed 21 Model Balwadis with good infrastructure, 100% enrollment and attendance, kitchen garden, safe drinking water, proper sanitation, adequate play materials, mother volunteerism, etc. th th • Slow learners of Class 4 and 5 from 10 primary schools are given special coaching classes in addition to their regular curriculum. • Adult Literacy Programme has covered 6404 beneficiaries so far. • Running six Balavikas Programme/Education in Human Values centers, covering 135 beneficiaries.

Health Care As health is essential to human development, SST has focused on a range of activities to provide quality healthcare that is accessible and affordable. These activities include expansion and improvement of the healthcare network, creating awareness about health, hygiene and nutrition and ensuring community participation in the healthcare programs.

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To achieve the health objectives of the Millennium Development Goals, SST has taken steps to reduce maternal and infant mortality. SST animators advise pregnant women on their medical and dietary needs; organize pre and post natal-care checkups for mothers and immunization for their infants. It is amazing to note that in Padavedu 99% of the deliveries are attended by skilled medical practitioners/midwives. Due to these efforts, the Infant Mortality Rate and the Maternal Mortality Rate are recorded as 0% in Padavedu. Females in the reproductive age i.e. between 15â&#x20AC;&#x201C;35 years are screened for anemia and free tablets are distributed on a regular basis. In 2011 alone year alone iron tablets were distributed to 5884 women in Padavedu. Apart from this malnutrition among children is being controlled through free and nutritious mid-day meals at Balwadis. Also, regular dental and eye camps at schools for timely treatment of needy children. The Health Sub Center at Veerakoil, Padavedu, was established by SST to cater to the need of the 35 villages in Padavedu which did not have any health center earlier. To reach the nearest hospital, the villagers had to travel the distance of at least 20 kilometers. At a nominal fee of ` 5/-, the patients and given best of the treatment and free medicines. On any normal day, there are 60 to 70 patients visiting this center. Complicated cases are however referred to good city hospitals. The health center has been crucial from the angle of womenâ&#x20AC;&#x2122;s health and the role it has been playing towards bringing down infant and maternal mortality rates. So far there have been zero cases of anemia and the way the morbidity rates have come down from 45% to 8%. This is attributed to the unique practice that has been introduced by SST, whereby SHGs are used as a medium to spread awareness on health and they help the center to regularly follow up cases in the villages. There are weekly meetings held between the Doctor at the Center, SST animators and the SHG when the Doctor shares the cases studies with the SHG to educate them on the various infections and illnesses diagnosed during the week. Through this method the Doctor educate the SHGs about the severity of cases and the need for early intervention. Also, they intimate the SHGs on the follow up cases which are maintained by the health center in a register. The SHGs make sure that the patients go to the center for follow up and for those who cannot make it there like the old and the disabled, medical camps are held at each area depending on the need to conduct basic screening and have a regular follow up on their health. Apart from this, a quarterly report is submitted to SST to keep them informed about the functioning of the health center.

Environment Farmers whose livelihoods are dependent on agriculture are directly affected by environmental degradation. Indiscriminate felling of trees, over use of bore wells and pesticides have resulted in soil erosion, poor rainfall, depleted water resources and aridity.

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These factors have contributed to loss of livelihoods, poverty and migration of labor to other regions for employment. In arid regions, SST has adopted many conservation measures to revive cultivation and restore eco-systems. This includes reforestation of denuded forests and watershed programs like rainwater harvesting, construction of check dams and weirs to raise levels of groundwater for irrigation. These measures, combined with the repair of wells and irrigation channels, have increased rainfall, conserved water and raised groundwater, enabling farmers to grow a variety of crops and vegetables. In addition, SST’s agronomists have introduced organic farming practices to replenish the fertility of soil for sustainable agriculture. As far as Padavedu is concerned, SST had successfully implemented a watershed project in collaboration with the Ford Foundation that covered the areas in three Panchayats viz. Padavedu, Anantapuram and Kalasamudram. This project began in 1994 as a result of request from some of the more informed farmers to begin a water and soil conservation project in Padavedu on the lines with Ralegaon Siddhi where they had been sent for an exposure visit by SST as a part of Farmers’ education programme. The watershed project took shape with the full involvement of the community, whereby 107 big and small works were taken up. The result was evident when the water level in the wells rose from 2 meters to almost 20 meters. Every farmer in Padavedu is also encouraged to plant trees along their fields that help them not only conserve soil and improve its quality, but also gives them and extra revenue later on. This does eventually have a significant impact on the environment of the village overall. The commitment of SST towards environmental conservation is evident from the fact that it had spent more than ` 3 lakhs on afforestation on the hill slope near a village called Samandipuram at Padavedu, where 15,000 saplings were planted with the involvement of the community. The solid waste management programme is a responsibility shouldered by the women SHGs of the village, who go door to door collecting the wet and dry waste. The biodegradable waste is then turned into vermi-compost, which is an extra earning for the SHGs. This rich compost is packed and sold to the farmers in the village itself. At Padavedu, 4 tons of compost is generated every month from the compost shed. Apart from this, “Village Mass cleaning” organized twice in a month in all villages. It is a pleasure to note that 9 village Panchayats had received Nirmal Gram Purashkar award for outstanding contribution in promotion of rural sanitation.

Infrastructure SST promotes partnership between the government and the local communities to implement a range of projects—from the building of roads, schools, medical centers and housing, to provision of water supply and sanitation systems.

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Village Development Councils (VDCs) are an integral part of the development process in villages. Members of the VDCs together with representatives of the state government, members of local community and SST, come together to take decisions and establish priorities on issues concerning community development projects. They then help implement projects with funds from government, other development agencies or SST. They also contribute funds for repair and maintenance of these buildings. At Padavedu 174 common structures have been built, which include community toilet, additional classrooms, stabilization tank, compost yard, school and PHC compound wall, concrete and bitumen roads, bridge and pipe culverts. The total public contribution received during 2006–2010 is ` 1.50 crores and additional ` 1.92 lakh has been generated under the Village Development Fund. The infrastructure development has been done majorly under the NamkkuNaame Thittam (NNT). Under the NNT, the state government provides three-fourth of the financial support, one-fourth is contributed by the community either in the form of cash or kind or labour. The SST has been tying up with NNT since 1999. Before SST came into the village, it lacked infrastructure and was unclean. However thanks to SST, the village has proper roads, drinking water, bridges and toilets. SST has also renovated 15 temples in the village. All these have been done with community participation which ensures that the common village property is maintained with care as every individual has a sense of belongingness towards the same.

LESSONS TO BE LEARNT FROM SST Padavedu is just one example of SST’s dedicated service to the mankind. There are at least 1000 other rural areas across the country where SST is involved with the same amount of passion and dedication. The valuable contribution of SST towards community development, in the area of CSR was brought before the world when it was awarded the Times of India Social Impact Award 2011, very recently. In the past too SST’s efforts have been lauded when in 2008 it had received the Mother Teresa Award for Corporate Citizen from Loyola Institute of Business Administration (LIBA); Sri Jamshedji Tata Award for Adult education in tribal areas and Golden Award on Readers Digest Pegasus Corporate Social Responsibility Award. The obvious question that rises in our mind is—“How has the organization managed to create such an impact?” This question is crucial as it would help us understand the best practices of this CSR organization in a better manner and thereby lay down the lessons that could be learnt by other corporates who would like to make a difference. When Mr. Ashok Joshi, the Chairman of SST listed the following factors, which act as a driving force behind SST’s success:

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1. A Professional and Dedicated Workforce: 98% of SST’s staff is based in the field areas and all of them are professionally qualified. Interested and dedicated individuals from the local community are appointed as animators to work at the grass-root level. In the project areas, Civil Engineers also form a part of the team. Each and every team member takes personal effort to know and understand the community better by interacting with them on regular basis which makes them trustworthy and approachable for the community. 2. People’s Participation: This is a very crucial element to not only create a sense of belongingness in the community, but also ensuring sustainability even after the organization has left the area. People’s participation is the means to make sure that the community is “taught fishing” instead of “being given a fish”. 3. Network with Government: The idea of SST is not to create a parallel system but to strengthen the existing community welfare systems in the rural area. SST maintains a strong network with the Government and its agencies to ensure that the rural development activities which are pending are taken up and new ones initiated. 4. Third Party Auditing: In order to ensure that the systems are in place and that there is continuous improvement of quality, SST makes sure that all its programs are audited every year by a third party. This way SST ensures that the funds are continued to be put to proper use and there is no scope for misappropriation or manipulation, whatsoever. 5. The Group has Complete Faith on SST: The faith that TVS Group has over its CSR wing is evident from the fact that it does not interfere with the functioning of SST in any manner. Once the funds are handed over to SST, they completely trust its team to make proper use of the money allocated for CSR and provide all the required support to it. This independence given to SST inspires it to explore new horizons and soar higher. 6. Do Not Work for Publicity: Mr. Joshi remarked that one big reason behind their success is that they never have gone chasing behind publicity. They maintain a low profile about the work that they do. For SST, he added—“It is more important that the programme reaches the beneficiaries…”

CONCLUSION By adopting a multi-pronged approach SST has succeeded in addressing various issues and problems which the rural economy faces. This accomplishment is attributed to the fact that it has made a sincere effort to understand their rural stakeholders and has actively involved them in planning and execution of the programs, rather than treating them as “poor and needy people in need of charity”. As every phase of their programs, the factor of sustainability was given prime importance, to ensure that the villages

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continue to thrive even after SST has left their area. Thus, SST has succeeded in bringing about a positive difference into the lives of not just the present, but also the future generations. Hence it is clear, that if there is a strong will, desire and commitment to uplift the poor, resources are not a constraint and an abundant cooperation of the rural folk can be taken for granted. The outstanding contribution made by the Srinivasan Services Trust of TVS Group of Companies is a model of CSR worth emulating by other Indian corporates.

BIBLIOGRAPHY Agarwal, K.S., “Corporate Social Responsibility in India” Response Books, Sage Publications, 2008. Fernando, A.C., “Corporate Governance: Principles, Policies and Practices” S.P. Printers, 2009. Gulati, Jagdish “CSR Debate in India—From Philanthropy to Public-Private-People Partnership”, Ed-Baxi, C.V. and Prasad, Ajit “Corporate Social Responsibility: Concepts and Cases, The Indian Experience”, Excel Books, 2005. Jatana, Renu and Crowther, David, “Corporate Social Responsibility: Theory and Practice with Case Studies” Deep and Deep Publications, 2007. Kakkar, P., “Fortune at the Bottom of Pyramid”, Wharton School Publishing, 2005. Ramlal, P. and Mohinuddin, W., “Corporate Social Responsibility: A Comparative Study of Select Organizations” Rethinking Corporate Social Responsibility, Macmillan Publishers India, 2011. Rao, G.R.S., “Corporate Social Responsibilty in Indian—A Status Report” Rajaji International Institute of Public Affairs and Administration, 1991. Srinivasan Services Trust Annual Report 2010–11. Bethapudi, Prabhakar and Anbalagan, C., “Corporate Social Responsibility Practices in India” Website: clear-research.in/CLEARIJRMST/CLEARIJRMST_pdf/Chapter5.pdf Chakrabarthy, Sumit, “CSR in the Era of Globalization—Impact on Developing Countries (INDIA)” Website: http://www.indianmba.com/Faculty_Column/FC740/fc740.html, 2008 Chahoud, T., et al. “Corporate Social and Environmental Responsibility in India—Assessing the UN Global Compact's Role” Website: http://www.die-gdi.de/CMS-Homepage/openwebcms3. nsf/(ynDKcontentByKey)/ENTR-7BMDUB/$FILE/Studies%2026.pdf, 2011 Devarani, Loukham and Basu, Debabrata, “Corporate Social Responsibility—Some Basic Dimensions” Website: www.share4dev.info/kb/documents/4339.doc Muruganantham, G., “Case study on Corporate Social Responsibility of MNC’s in India” International Trade and Academic Research Conference (ITARC)—London 2010 Website: http://abrmr.com/pdf/Case%20study%20on%20Corporate%20Social%20Responsibility%2 0of%20MNCs%20in%20India%20-%20G%20Muruganantham%20.pdf Handique, M., “Companies focus more on social responsibility projects in rural areas” Website: http://www.livemint.com/2008/03/11000146/Companies-focus-more-on-social.html, March 11, 2008. Khanna, P. and Gupta, G., “Status of Corporate Social Responsibility—In Indian Context” Website: www.indianet.nl/CSRIndia_CREMfinal.pdf, 2011 Krishnan, K.S. and Balachandran, R., “Corporate Social Responsibility as a determinant of market success: An exploratory analysis with special reference to MNCs in emerging markets” Website:

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http://www.ecrc.org.eg/Uploads/documents/Articles_CSR%20as%20a%20determinant%20 of%20%20market%20success(1-19).pdf Lee, Sunyoung, “Corporate Social Responsibility in India” A Case Study for the Oxford-Achilles Working Group on Corporate Social Responsibility Website: http://www.sbs.ox.ac.uk/achilles/ downloads/research/India.pdf, 2010 Li, Xue, Shirley et al., “Srinivasan Services Trust: Combating Poverty with Entrepreneurship” Website: https://mitsloan.mit.edu/MSTIR/GlobalEntrepreneurship/Srinivasan-Services-Trust/ Documents/11-113.SST.Kelly.pdf Mahapatra, S. and Visalaksh, K. “Emerging Trends In Corporate Social Responsibility: Perspectives And Experiences From Post-Liberalized India” Website: http://www.csr-weltweit.de/uploads/ tx_jpdownloads/Sudip-Emerging_Trends_in_Corporate_Social_Responsibility1.pdf Pradhan, S. and Ranjan, A. “Corporate Social Responsibility in Rural Development Sector: Evidences from India” Website: www.iiuedu.eu/press/journals/sds/SDS_2010/SSc_Article1.pdf, 2010 Prasad, V.V.S.K., “CSR Initiatives of Indian Companies—A Study” Website: www.indianmba. com/Faculty_Column/FC955/fc955.html TVS Group Website www.tvsgroup.com Verma, S. and Chauhan, R., “Role of Corporate Social Responsibility in Developing Economies” Website: http://dspace.iimk.ac.in/bitstream/2259/378/1/139-146.pdf Wharton website http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4472 Mohapatra, N., et al., “CSR Campaign of Corporate Sectors: A Study on Rural India” Website: http://www.indianmba.com/Faculty_Column/FC986/fc986.html

ABOUT THE AUTHOR Ms Krithika Ram is Project Officer at Agastya International Foundation. She is excelling in the field of CSR and doing something substantial for the community and the organization. She has worked for M.S. Swaminathan Research Foundation, Chennai; Center for Economic and Social Studies, Hyderabad; Datamonitor, Hyderabad and taught oral and communicative English through Drama as a Helen O Grady English Trainer for six months. Previously, she was serving as Junior Manager, Execution at Ramky Foundation, Hyderabad (Corporate Social Responsibility wing of Ramky Group). She specialties in CSR, Gender Issues and Rural Development.

Importance of Worker Engagement and Empowerment for SME Sustainability

Importance of Worker Engagement and Empowerment for SME Sustainability Monica Ramesh Lead Professional, Corporate Social Accountability Division, Association for Stimulating Know-How (ASK), Gurgaon, India E-mail: monica@askindia.org

ABSTRACT Small and Medium Enterprises (SMEs) play a vital role for the growth of Indian economy by contributing 45% of industrial output, 40% of exports, employing 60 million people, create 1.3 million jobs every year and produce more than 8000 quality products for the Indian and international markets. Workers in the SME sector are an invisible entity today and are not active stakeholders in the enterprise. However, what is required is to step back and recognize the potentials and possibilities latent in the work force and adopt a far sighted worker engagement and empowerment approach, where worker is an active, positive stakeholder, fully engaged in the enterprise processes. Worker engagement, first and foremost, calls for trying to build an understanding about the worker, leading to building of trust. Once this trust is established, the engagement process should lead to empowerment of the workers. An empowered worker means a worker who can think and analyze. He/she can understand production processes and oneâ&#x20AC;&#x2122;s role in the supply chain, empathize with the needs of the enterprise and relate to them, is motivated to give the best as he/she sees his/her interest in the companyâ&#x20AC;&#x2122;s growth. This will contribute to building the financial capital for the enterprise and creation of wealth. If the employers have the broadness in their perspective and share the wealth with the workers, that further builds a sense of ownership among the workers who in turn will contribute to the further growth and sustainability of the enterprise. Some of the steps towards worker engagement are earning empathy and respect, building transparency, two way communication strategy, worker participation through workersâ&#x20AC;&#x2122; committees, motivating the workers by their skill development. Benefit sharing and recognizing the long service of workers are two other ways to achieve worker engagement and empowerment. Keywords: Worker Engagement, Worker Empowerment, SME Sustainability.

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INTRODUCTION Small and Medium Enterprises (SMEs) play a vital role for the growth of Indian economy by contributing 45% of industrial output, 40% of exports, employing 60 million people, create 1.3 million jobs every year and produce more than 8000 quality products for the Indian and international markets. SME’s Contribution towards GDP in 2011 was 17% which is expected to increase to 22% by 2012. There are approximately 30 million MSME Units in India and 12 million persons are expected to join the workforce in the next 3 years. SMEs are the fountain head of several innovations in manufacturing and service sectors, the major link in the supply chain to corporate and the PSUs.1 The SME sector is also contributing significantly to the global supply chains and manufacturing high quality products meeting global quality standards. With such a contribution to Indian economy, it is important for the SME sector to reflect upon innovative strategies for enhancing the potential of their human resource. This chapter will focus on how worker engagement process can lead to worker empowerment and which in turn can lead to SME growth and sustainability.

TOWARDS SME SUSTAINABILITY THROUGH WORKER ENGAGEMENT AND EMPOWERMENT

Worker—An Invisible Entity Workers in the SME sector are an invisible entity today. The workers are not active stakeholders in the enterprise. Employers do not perceive them as people with much sense of loyalty or long range view of the company. They are not seen as people with link to organizational goals and objectives. They are seen as people only concerned with their wages and are totally detached from the company. 1

http://www.smechamberofindia.com/About_MSMEs.aspx

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However, what is required is to step back and recognize the potentials and possibilities latent in the work force and adopt a far sighted worker engagement approach, where worker is an active, positive stakeholder, fully engaged in the enterprise processes.

Worker Engagement Worker engagement calls for first and foremost trying to build an understanding about the worker. This includes an understanding of their socio-economic and cultural background, their aspirations, expectations, potentials and capacities, fears and anxieties. This requires the employer and the SME management to engage in a process of dialogue and taking interest in their lives. Such engagement with workers will lead to building of a rapport and relationship with the worker. Sharing their joys and sorrows will further strengthen the trust. Building trust is a critical part of the worker engagement. An element of trust gives a message to the workers that they are valued as a resource and as humans with respect and dignity rather than being used. Worker or employee engagement has been recognized by researchers and defined as ‘a positive attitude held by the workers towards the organization and its values. An engaged worker is aware of business context, and works with colleagues to improve performance within the job for the benefit of the organization. The organization must work to develop and nurture engagement, which requires a two-way relationship between employer and employee (workers).’2 The engagement model illustrated in a study conducted by the Institute of Employment Studies (IES) establishes the strong link between feeling valued and involved and engagement.

Fig. 1: IES Worker Engagement Framework, IES Survey, 2003

The Drivers of Employee Engagement, Robinson D., Perryman S., Hayday S. Report 408, Institute for Employment Studies, 2004. Accessed from http://www.employment-studies.co.uk/pubs/summary. php?id=408 on 13th April 2012.

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In addition to employee communication, there are other building blocks which need to be in place for effective employee engagement. These include the following: (a) good quality line management (b) two-way communication (c) effective internal co-operation (d) a development focus (e) commitment to employee wellbeing (f) clear, accessible HR policies and practices, to which managers at all levels are committed.3

From Engagement to Worker Empowerment The idea of empowerment can be perceived as a threat. It can be associated with the workers knowing their rights, forming unions and disrupting the work. However, this would be a short term view. There is enough historical precedence including quite a few recent cases within the SME sector that it is the lack of worker engagement and participation which has led to unruly bursts of energy, including violence, disruption and destructive acts. Contrary to the fear, the worker empowerment process can lead to developing worker as an asset for the enterprise. An empowered worker means a worker who can think and analyze. He/she can understand production processes and one’s role in the supply chain, empathize with the needs of the enterprise and relate to them, is motivated to give the best as he/she sees his/her interest in the company’s growth. This makes them contribute to the success of the company and not working against it. Once the worker begins to understand the company perspective, the worker becomes a part of the solutions and problem solving and not the problem. The empowerment approach can help in dealing with most of the current problems that the SME sector faces, as elaborated in Table 1. Table 1: Overview of Problem and Opportunity for Worker Engagement Problem

Shortage of skilled workforce High labour turnover Media attention on labour and human rights abuse at work place Labour Unrest—recent example of Orient Craft incident

Opportunity

Multi skilled workforce Motivated and high performing workforce Ownership and partnership Worker retention Growth and sustainability of Enterprise

http://www.employment-studies.co.uk/pubs/summary.php?id=408, Accessed on April 13th 2012.

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Empowerment Leading to Sustainability Empowered workers, who share a broader perspective and see their own growth in the growth of the company will be more efficient, work for improving their own professional and life skills, will reduce the wastage of resources and can become the pillar for the growth of the enterprise/asset for company. In other words, workers will become the valued human resource capital. Sustained human resource capital will contribute to building the financial capital for the enterprise and creation of wealth. If the employers have the broad ness in their perspective and share the wealth with the workers, that further builds a sense of ownership among the workers who in turn will contribute to the further growth of the enterprise. Saurabh Gupta (2009) said “small and Medium Enterprises (SMEs) are worst affected due to recession. During challenging economic era when resources are scarce, competition is intense and customers are more demanding than ever, emotionally engaged employees are critical for business success especially in SMEs. Such employees work with passion. They feel connected to the company. They are critical to driving innovation and propelling the organization forward. Engaged employees feel a strong emotional bond to the organization that employs them. This is associated with people demonstrating willingness to recommend the organization to others and commit time 4 and effort to help the organization succeed.” Another recent article in the SME times said, “Embracing worker engagement is crucial for SMEs because given the tight financial situation in most of these units, it is more essential for the entrepreneurs to get the work done on time within the firm’s budgets”.5

PROCESS OF ACHIEVING WORKER ENGAGEMENT AND EMPOWERMENT From our experience of working closely and extensively with the SMEs manufacturing for the global supply chains, we would like to propose the following way forward. The practical and simple steps which SMEs need to take to integrate the worker engagement approach at their enterprise level.

1. Empathy and Respect This is fundamental principle of worker engagement, considering the worker as a key stakeholder. A sense of high self-esteem is a pre requisite of a motivated workforce. 4

http://www.smetimes.in/smetimes/news/top-stories/2009/Jun/24/employee-engagement-key-tosuccess-for-smes6604.html, Saurabh Gupta, 24th June 2009. 5 http://www.bizxchange.in/u47/S-2P-2A-2010092820100928114644185322542bcT-2N-/SMETimes.html

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2. Transparency Transparency is a value that inspires confidence among workers. Transparency can be brought about by clear and documented policies and rules. This also helps SME to function in a professional and systems driven manner rather than a person driven manner. Family owned businesses are also realizing the value of being systems driven in this globally competitive world. We have had very good results in companies where following the documentation of policies, orientation sessions have been conducted. In one instance, the workers of a factory said, “we felt extremely valued that you have invested four hours in informing us about the company policies. We will do our best to play our role to implement these policies and contribute to company’s growth.”

3. Communication Strategy It is important to reflect the effectiveness of the current methods of workers management communication. It is important that the levels of communication and engagement are progressing from one way to two way communication to consultation and joint decision making as proposed by ILO. Some of the media of communication are detailed in Table 2. Table 2: Examples of Mechanisms for Worker Management Communication at SME Level Management to Worker 1. 2. 3. 4. 5.

notice board; conducting awareness-raising sessions; through supervisors; through worker committees; through public announcement system.

Worker to Management 1. 2. 3. 4.

through supervisors; using the grievance/suggestion box; through the worker committee; and, by writing letters and calling the managing director and director to share their concerns.

4. Worker Participation Platforms such as “workers committees” can act to channel the energies of the workers in a positive manner and also act as a bridge between the workers and management. It is important to note that this will also call for capacity building for both workers and the management regarding the nature, level and depth of engagement. The process should also include clarifying the purpose of worker committee, formulating norms and its constitution, holding regular meetings and documenting them and engaging in consultations and joint decision making.

5. Motivating by Skill Development Performance enhancement and talent development at the SMEs depends upon the strategies used for motivating the workers and building skills. With focus on lean

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manufacturing and multi skilling of workers, it is important to develop performance measurement mechanism at the worker level and to motivate them to build their skill levels. In one of the cases seen in Sri Lanka, the company has very successfully increased the participation and involvement of workers by developing a “skill based performance appraisal system” for the workers and also guiding them to move from one level of skill to the other.

6. Benefit Sharing As the SME grows in its financial health, it will be imperative for it to share this wealth through various wage distribution and other methods with the workers. This will be the ultimate instrument in ensuring worker retention and building loyalty.

7. Recognition for Years of Service in the Facility The years of contribution made for the workers if recognized will help them to feeling valued and involved. This is another area, where the SME needs to be visionary and innovative to find ways of recognizing and optimally utilizing the potentials of the workers who have invested long years of service in the enterprise.

8. Reaching out to the Worker’s Family and Children Ensuring that workers understand the benefits of social security benefits, facilitating the withdrawal of deposits in case of need, facilitating the provision of good health care services, investing in a functional and fully equipped child care centre are examples of reaching to the worker’s family and children.

CONCLUDING REMARK SME is an important segment of the Indian economy. SME should build on each and every resource and ensure that they are sustainable. Workers of an SME are extremely important resource and they need to be engaged and empowered rather than allowed to remain an invisible entity. This long term strategy will strengthen the SMEs in their long term growth and sustainability path.

ACKNOWLEDGEMENTS We would like to thank all the SME and their workers with whom we have worked closely since 1998 for gaining positive experiences described in this Chapter. Last but not the least; we would like to thank Prof Saurabh Mittal who motivated us to write this chapter.

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REFERENCES Studies and Reports The Drivers of Employee Engagement, Robinson D., Perryman S., Hayday S. Report 408, Institute for Employment Studies, 2004. ISBN: 978-1-85184-336-7 Accessed from http://www. th employment-studies.co.uk/ pubs/summary.php?id=408 on 13 April 2012. The Scottish Government Publication: Employee Engagement in the Public Sector: A review of th Literature, ISBN 07559 66141, May 25 2007 (website publication date) http://www. scotland.gov.uk/Publications/2007/05/09111348/0

Web Based Articles http://www.smetimes.in/smetimes/news/top-stories/2009/Jun/24/employee-engagement-key-toth success-for-smes6604.html, Saurabh Gupta, 24 June 2009, http://www.bizxchange.in/u47/S-2P-2A-2010092820100928114644185322542bcT-2N-/SMETimes.html http://articles.timesofindia.indiatimes.com/2012-03-29/gurgaon/31253770_1_labour-dept-labourdepartment-labour-unrest

ABOUT THE AUTHOR Ms Monica Ramesh holds a post graduate degree in Social Work and her core competency is training and capacity building of the SME sector on developing management systems related to social compliance standards and decent work. She has been working extensively with the manufacturing sector engaged in global supply chains with a special focus on apparel sector since 1998. She has worked as a lead trainer for global allianceâ&#x20AC;&#x201D;a program initiated by Nike and Gap in India and has worked with ILO to initiate the Factory Improvement Program in India. She is an energetic and thinking professional committed to the cause of creating a positive work place which is a win-win situation for both workers and management.

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CSR and Work Life Balance of Employees Veena Panjwani Assistant Professor, Jagran Institute of Management, Kanpur, India E-mail: veenapanjwanijim@gmail.com

ABSTRACT The idea of corporate social responsibility would have drawn a round of blank looks just a few years ago. But things are changing. Whether sparked by headline-grabbing protests against globalization and compounded by the attacks on America on September 11, we are waking up and wanting to know more about the major influence on our world. It’s no longer just the radicals who are questioning the impact that business has on society. —Financial Times, 18 February 2002 Today, business organizations survive because of their strong network and effective Corporate Social Responsibility (CSR). CSR in business organizations concerns human resource development and creates activities such as competitive brand sustainable profit. For a more effective CSR, developing good quality of Work-Life (QWL) is crucial. These include intrinsic job quality and skills, life-long learning and career development, health and safety at work, better organizational management, and work-life balance. Keywords: CSR, QWL, Human Resource.

INTRODUCTION CSR, or corporate responsibility as I call it, is about the way business takes account of their economic, social and environmental impacts in the way they operate-maximizing the benefits and minimizing the downsides. Not surprisingly there are many different views about the proper role of business has a vital role to play in our national and global wealth and well-being. We need businesses to succeed because they create the wealth that will secure the best future for all citizens, families and communities. Most senior executives understand and accept that their corporate responsibility goes beyond the bricks and mortar that is their business, whether it is pollution management, a decent working environment or contributing to the local community. But to limit a company’s efforts to these areas is to miss out on a more fundamental “audience” that is central to any organization—its employee base. Without a contended workforce, all

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the sponsored fun runs, crèches and restaurant facilities will fail to satisfy today’s demanding employee. At times of high employment, staff is clearly in the driving seat and can choose the employer that most closely matches their individual needs, in terms of both the job description and how the role will affect their personal life. With 70 percent of all sickness absence in the UK workplace being stress related— equating to £370 million in lost business—it has never been more critical that business track the success of their personnel policies. If we then recognize that more than a third of absenteeism is due to work-life imbalance, then it becomes apparent that we need regular ongoing reviews on how to improve or evolve the approach to work-life balance. Everyone recognizes that inefficient use of time is a major source of stress for staff but it is not just the effect it has on their professional workload. Every time people are asked to undertake out-of-hours activities, it is not just their work diary that needs to be rescheduled but also their personal life, often impacting upon the plans made by family and friends. It is not working long hours in itself that is necessarily the problem. After all, most of us occasionally put in the extra time when we have to meet an urgent deadline. Imbalance, on the other hand, happens when such long hours at work become the norm or you cannot take time out to address home needs. Employers must recognize that staff has a life outside of work-including both social interest and family responsibilities and any organization that understands this can create a better environment that leads to extended benefits into the community. It can take any forms, from allowing individuals to develop their interest in a sport or charity work through to just simply spending more quality time with their dependants. Considering that one in five women who are in employment also have to care for both children and elderly parents, there is a large part of the population who, like it or not, have to balance their job with far more than the school run and trips to the supermarket. Build in the fact that childcare is with us on average for 16 years and eldercare takes around 22 years, and we have a serious amount of juggling to do! From this, it is obvious that any employer that can help reduce this burden will be contributing to the quality of life far beyond the immediate employee base. If a contended staff makes a productive team, then a realistic work-life balance strategy provides the perfect opportunity really to make a difference by embracing the needs of the work force and, indirectly, the other members of their families. With an employee base of say 250, an employer can make a direct impact-negative or positive— that can reach over 1,000 people with in days.

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For example, if without consultation a decision is made to make even minor changes to shift patterns, staff and their partners may be forced to adapt their childcare timetables and associated schedules to suit the employer. If this results in increased costs and ongoing conflict with partners, staff and partners may be forced to adapt their childcare timetables and associated schedules to suit the employer. If this results in increased costs and ongoing conflict with partners’ home life, the job quickly becomes less attractive, causing workers to feel less valued and likely to consider changing jobs. The demand for work-life balance solutions by employees and managers is expanding at an unprecedented rate. As a result, work-life balance is an increasingly hot topic in boardrooms and government halls today. Over the coming decade it will be one of the most important issues that executives and human resource professionals will be expected to manage.

WORK-LIFE BALANCE DEFINED Let us first define what work-Life balance is not. Work-Life balance does not mean an equal balance: Trying to schedule an equal number of hours for each of your various work and personal activities is usually unrewarding and unrealistic. Life is and should be more fluid than that. Your best individual work-life balance will vary over-time, often on a daily basis. The right balance for you today will probably be different for you tomorrow. The right balance for you when you are single will be different when you marry, or if you have children; when you start a new career versus when you are nearing retirement. There is no perfect, one-size fits all, balance you should be striving for. The best work-life balance is different for each of us because we all have different priorities and different lives. However, at the core of an effective work-Life balance definition are two key every day concepts that are relevant to each of us. They are daily Achievement and Enjoyment, ideas almost deceptive in their simplicity. Life will deliver the value and balance we desire… when we are achieving and enjoying something every single day… in all important areas that make live i.e. Work, Family, Friends and Self. Experts describe work-life balance as a “journey”, rather than items to tick off a list that, once achieved, mean work-life balance is to be applauded, it will only produce the more major benefits over a longer period of time and with the cooperation and commitment of the workforce.

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LITERATURE REVIEW According to it is the state of equilibrium in which the demands of both a person’s job and personal life are equal. It is the flexible working practices which allow employees to achieve a better balance between work and the rest of their lives and much evidence shows that there is a bottom lines business benefit in an improved work-life balance. Particularly, any company that offers its employees a better balance between work and home garners the rewards of increased job satisfaction among the workforce, reduced staff turnover and higher productivity (as cited in 2002). The work-life balance 2000 survey found that a quarter of men already work at home and another 38 percent would like to do so. Most of the people surveyed claimed that staying at home and 33 percent would like to do so. Most of the people surveyed claimed that staying at home would make them better employees (as cited in 2000). Later research by the department for Education and Employment has found that four out of five employees believe that everyone should be able to balance their work and home lives (as cited in 2005). The achievement of such a balance is an increasingly important issue for businesses, particularly with rising numbers of female and old workers, and the growth of so called “Generation X” that values life balance more than high salaries (2005) has found that improving work-life balance can result in (1) better employee performance and increased productivity, (2) higher morale and lower staff turnover, (3) lower absence and sickness rates, (4) reduction in burnout and stress, (5) better recruitment and retention of staff, and (6) improved company image. On the other hand, the recent study has also cited disadvantages of improving work-life balance: Improved company performance will take time to become apparent, and will take time and effort to get right. • In downsized or delivered companies, flexible working arrangements may result in some employees taking on more in order for others to do less. • If not introduced equitably, some employees may resent others. • Flexible or remote working may make it difficult to maintain an organization’s structure and culture. • Once policies are introduced, it may be difficult to change them, even if the company runs into difficulties. Flexibility in the work place will continue to become more important for both men and women. In the beginning, employees sought flexibility to manage the balance between work and family, an issue predominantly associated with those in the early and middle stages of their career. On the other hand, as workplaces develop strategies that enable and encourage flexibility for those with family responsibilities, the needs of those with other commitments, including sport, community or political involvement, other business and even recreational pursuits, will also be able to be accommodated.

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This flexibility will be beneficial to workers at all stages of their careers by enabling a more holistic work/life balance, and will have the significant advantage of retaining older employees in the workforce, an economic necessity as the mature-aged to workingaged ratio continues to rise (2002). The work-family balance has been conceptualized as an individual’s orientation across different life roles, an inter-role phenomenon (Marks and Mac Dermid, 1996), “satisfaction and good functioning at work and at home with a minimum of role conflict” (Campbell-Clark, 2000, p. 349), and a satisfying, healthy and productive life that includes work, play and love, that integrates a range of life activities with attention to self and to personal and spiritual development, and that expresses a person’s unique wishes, interests, and values” (Kofodimos, 1984). Traditionally, research on the work-family interface has been dominated by a conflict perspective focusing on negative effects such as stress (Greenhaus and parasuraman, 1999; Haas, 1999). To correct the basis of the dominating focus on the negative outcomes of the workfamily interface, a growing body of research is focusing on how work and family can benefit each other (Lauring and Selmer, 2010). Among the several proposed theoretical concepts include positive spillover (Demerouti, Geurts, and Kompier, 2004), enhancement and enrichment (Greenhaus and Powell, 2006) and facilitation (Wayne, Grzywacz, Carlson and Kacmar, 2007). The facilitation takes place when the gains obtained in one domain are transferred to and enhance the functioning in the other domain. One way a person can be facilitated in the work domain is by support in the home and work domains. The role of social support has consistently emerged in literature as an important factor that influences work-family balance in a positive manner. Social support outside of work labeled by Marcinkus, Whelan-Berry, and Gordon (2007) as personal social support may come from an employee’s spouse or partner, parents, siblings, children, extended family and friends. Numerous studies have demonstrated that personal social support is positively associated with the work-family balance. Of particular importance is support from husband who contributes in a variety of areas including earnings and personal financial management (Kate, 1998), home and family responsibilities (Baron, 1987), career management and support (Gordon and WheelanBerry, 2004; Hertz 1999), and interpersonal support (Becker and Meon, 1999). Family support also includes the exchange of support among relatives (Voydanoff, 2002). The role of workplace support, i.e. the support received from supervisors and coworkers (Voydanoff, 2002) is another critical element of work-family balance. Ezra and Deckman (1996) found that organizational and supervisor understanding of family duties are positively related to satisfaction with the balance between work and family life. Workplace support via an organizational approach involves the implementation of

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family friendly policies, which are associated with satisfaction with the work-family balance (Ezra and Deckman, 1996). Organizations offer a wide range of work-family benefits and programmes to their employees, such as job sharing, telecommuting, job protected parental leave, part-time return to work-options, flexi time, resource and referral services, unpaid family leave, dependent care assistance, shorter standard work weeks, improvement in job conditions, on-site childcare, support groups for working parents, sports-facilities, day-care facilities, laundry facilities, and canteen facilities (Lobel and Kossek, 1996; Rajadhyaksha and Smita, 2004). Research shows that flexibile work arrangements allow individuals to integrate work and family responsibilities in time and space and are instrumental in achieving a healthy work and family balance (Bond, Galinsky, Lord, Staines, Brown, 1998; Galinsky, Bond and Friedman, 1993).

WORK-LIFE BALANCE—MYTH OR REALITY A company that has achieved full work-life balance for its staff will benefit from more than just the well-publicized reduction in attrition and its related recruitment and retraining costs. It will be moving towards a less stressful and happier environment in which to work. The outcome is a workforce that not only finds time to relax at home, but also becomes an excellent ambassador for the company. As a leading expert in work-life balance, Lynne Copp, Managing Director of Marlborough—based The Work life Company, sees the two separate elements placing different demands on the individual. As she explains, “In the work environment, balance is all about productivity, prioritizing, communicating and improving assertiveness. Many of these areas are driven by each individual’s circumstances, such as their employer’s goals and expectations. By contrast, balance in your home life is more to do with finding time for yourself, developing relationships, building your own self-worth, self-belief and confidence. While most organizations have over the years continued to push productivity up and bring costs down, how many have considered the impact these business improvements have had on the personnel? With today’s fluid labour market, staff attrition will have a visible effect on the profit and loss through recruitment and retraining costs but we often ignore the truth behind the high employee turnover, preferring to accept the departing employee’s stock reason of “They offered me more money”. By looking beyond this throwaway comment, we are more likely to uncover the often— shared grievances that are never raised at the leaving party. After all, they are leaving so why would they rock the boat for their friends who will still be there come Monday morning?

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Family Friends Leisure Learning Self

A balance between one’s work and private life is a natural desire of any person, regardless of whether you manage a transnational corporation or work as an ordinary manager. Without achieving this balance, no full realization of a person as an individual is possible. Besides, the harmonious combination of the interests of one’s job and family is beneficial not only for an employee, but for its company as well. According to the results of a survey conducted by consulting company Morgan Redwood, organizations assisting their staff in achieving a good balance between their work and private life increase the efficiency of each employee by 20%. A balance between one’s work and family is not just about caring for children. First and foremost, this is about a balance between what we achieve at work and at home being “fresh” enough to generate new ideas and solutions. The role of work in the world has always changed according to economic conditions and social demands. If it was a prerequisite for survival in the beginning, today it may and must be a source of personal satisfaction. One of the tools to achieve a balance between the private and professional goals of the staff is programs of providing a balance between one’s work and family. Although such practices are still rare and the 24/7 (work 24 hours a day 7 days a week) principle is more relevant to the business environment, the process of changes has already started. “The importance of a paid job does not always make it possible for people to care for those close to them. The labor legislative regulation must add legislative guarantees of care. The time spent with one’s family must not be adapted to the work schedule, but should be viewed as an independent value, reads the “Parenthood in Modern Europe: a positive Approach” leaflet published by the council of Europe in 2007.

WOMEN IN THE WORKPLACE The attitude of female workers has also changed along with the growing number of women in the workforce. They are growing more determined as they turn out to be

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key players in the world of work, contributing to major company successes. The impact of the female boss is significantly more influential than ever before. The demand for women to accomplish forces them to work harder and for longer, particularly when wanting to prove themselves against their male counterparts.

THE FACTS SURROUNDING WORK-LIFE BALANCE ISSUE •

• • •

• •

While 65% of employees claim to offer some kind of family—friendly working arrangements, including part-time working, only 10% of workplaces provide any practical help with childcare. Only 5% of employees provide four kinds of family-friendly practices: maternity benefits, paternity leave, childcare arrangements and non-standard working time. 17% of employees offer career breaks of at least three month but only 12% offer career breaks to both men and women. Just 5% of employers provide extended maternity leave with pay beyond the legal minimum. Women are twice as likely to return to employers where extended maternity has been negotiated. 31% of male employees are entitled to some form of paternity leave-usually paid and typically four days—around the time of birth. Less than one in three employers offers parents flexibility and extended leave around the time of birth.

FLEXIBILITY—A TWO-WAY COMMITMENT A feature of work-life balance is providing staff with options on how to deal with the occasional family crisis or school meeting. One case in point is Stroud and Swindon Building Society, which found that managers and part-timers were the most likely candidates to be working extra-hours, while over a quarter of their staff were responsible for family dependents. An in depth staff revealed that the relatively high levels of inflexibility, absence and attrition were generally due to four areas of staff concern-dependant care, long hours, education and childcare. The research led Sara Phelps, HR Administration Manager for the society, to the conclusion that “we had a general challenge to educate managers and staff in adopting a flexible approach”. To achieve this, the company set up a “Work-life focus group” consisting of a single father, someone who cares for both of her elderly parents, and other similarly challenged employees. The result is a set of policies specifically focusing on staff leave for dependant care, emergencies, paternity, parental and career breaks. As Stroud and Swindon’s CEO, John Parker, sees it, “I am committed to ensuring that we provide staff with the working flexibility they need”. This enlightened attitude

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will continue to benefit employer and employee beyond the initial implementation phase as both parties learn to work together.

MAKING THE COMPANY FIT THE EMPLOYEE A second example is at Somerset—Based perfecta, a supplier of high-quality ingredients to the food industry. The nature of the business meant the workforce was typically women with family commitments, and Perfecta’s owner, Dr Peter Roberts, recognized that many workers would “Prefer to work when it fitted around their family and other commitments”. After reviewing their current practices, the company began to identify that the issues staff felt were important were mostly health-related benefits, combined with a willingness to allow staff to work around their external responsibilities. This created a ‘Pool’ of workers who could be called upon, based around their own personal needs and availability The outcome is that the company has now attracted twice the number of packers, as the local community begins to appreciate the benefit the company provides to working parents. The flexibility has also helped other departments; for example a recently divorced mother of two, who joined as a laboratory technician, was surprised to find such a company geared towards the employee’s needs.

AN INFORMAL APPROACH TO AUTHORITY With staff turnover running at up to 25 percent, Sheffield Chamber of Commerce and industry realized it had to adopt a work-life initiative if it was to reverse the trend. As with Stroud and Swindon, a staff survey was used to expose the root of the problem. In this case, it was a lack of communication between management and the workforce and, as Sue Williams, the chamber’s Personal Manager, recalls, ‘We didn’t think we had ever actually refused time off to anyone for personal or domestic reasons. The Problem was we didn’t have a culture where it was OK to ask.’ After consultation with the staff, it was agreed that a formal flextime scheme would be difficult to implement. Instead, the simple decision to give all managers the authority to use their discretion in these circumstances has resulted in a significant reduction in staff turnover. The chamber has learnt that communicating regularly overcomes issues early on, and Williams believes that “Work-Life balance has already catalysed some very significant changes for the better”.

ADVANTAGES OF INTRODUCTION OF A BALANCE BETWEEN WORK AND FAMILY The balance between work and the family has an impact on the following indicators which are important for any business leader.

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Reputation Improvement Reputation of a socially responsible employer: companies respecting their workers and providing excellent working conditions to them are more respectful in a community.

Attracting and Retaining Workers •

•

More and more workers, both young and experienced workers, prefer companies which introduce a balance between work and the family. Research shows that similar preferences have the same or even greater importance as the financial reward when choosing a job. Companies offering the possibility of a balance between work and the family can keep the necessary staff which leaves the company due to the unfavorable environment.

Performance Improvement • • • • •

Workers with a lower level of stress perform their work with higher quality and rarely make mistakes. Workers who are encouraged to care for their private life take less sick leaves and days off due to diseases and poor health. Strengthening of Ethics. Measures which take into account individual needs of workers enhance workers loyalty. Initiatives of a balance between work and the family which include interaction between workers strengthen ethics and the team spirit inside a team.

Cost Saving • •

•

Practices of a “flexible” schedule of work (for example, work at home) may reduce office waste, the need for large premises and trip expenses. Healthy workers with a lower level of stress need fewer funds for health care services. The company does not spend money due to absence of workers because of a disease. Keeping the staff reduces the cost of employment and training of new workers.

These statements lead to a conclusion that a lower level of stress among workers encourages to higher quality of their work, performance and rising ethics. A company implementing practices of a balance between work and the family gains a more positive attitude to itself as an employer which results in the improvement of relationships among workers, staff loyality, and a lower level of staff turnover.

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16 WAYS TO ENCOURAGE WORK/LIFE BALANCE IN EMPLOYEES On-the-Job Training 1. Management support for work/life balance is critical, and it must come from the top. Too often, the perception that hard work is the only way to rise in a company keeps employees at the grindstone, working themselves into illness. Top executives can set examples of good work/life balances and make it known that the same is expected from rank- and -file employees. 2. Surveys of employees work/life issues can help a company understand workers needs and design appropriate policies to meet them. Studies have shown that respect for work/life balance needs. 3. Set priorities for all work. When priorities are unclear, employees tend to overwork because they think everything must get done at once. Setting priorities allows workers to schedule tasks over a reasonable period of time. 4. Train line managers to recognize signs of overwork. Supervisors can spot increasing error rates, absenteeism and signs of stress-related burnout more easily than anyone else in the organization. Workers who show these signs of a poor work/life balance can be referred to employee-assistance programs. 5. Seminars on work-life balance can help employees understand its importance and find ways to achieve it. Such seminars teach employees how to better manage their work loads, eliminate unproductive work habits, get sufficient exercise and negotiate more flexible work conditions that meet their needs.

Make Work More Flexible 6. Flextime is one of the most useful tools in helping workers achieve a good work/life balance. Companies should identify which jobs lend themselves to flexible work scheduling and implement formal policies for coordinating flexible schedules with an employeeâ&#x20AC;&#x2122;s supervisors and co-workers. 7. Telecommunicating is a way for employees to work from home while taking care of a sick or dependent family member. It also cuts down on stress and unproductive time due to a commute. Studies have shown that telecommuters can be 30 percent more productive than their office-bound counterparts. Many companies are implementing formal telecommuting programs on an as-needed or permanent basis. Telecommuting can be a terrific recruitment too as well. 8. Job sharing can keep two valuable employees busy while reducing work-related stress. In a job sharing arrangement, two workers work part-time and share the workload of one job. Careful coordination between the two workers, their supervisor and their co-workers is necessary to make job sharing work.

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9. Encourage the use of vacation and sick leave time. Supervisors should advise employers to use their vacation and sick-leave benefits when signs of burnout or illness arise. Companies can implement use it- or -lose it. Policies to encourage employees to take time off when it is necessary. 10. A formal leave policy for employees with dependents recognizes and encourages the need to care for sick children or elderly parents. 11. Paid child birth or adoption leave gives women and men the flexibility to keep their jobs while attending to a new addition to the family. This option is almost always cheaper than the alternatives of burn-out employees or those who leave the company. 12. Limit how often employees take work home. The line between work and home lives tends to blur when employees regularly take work home. This practice should be monitored by management personnel, who should also develop plans for making sure that work gets done at the office instead of at home. 13. Some companies allow employees to take leave for community service. These firms recognize that employees obtain life satisfaction from projects or work outside of their regular jobs.

Bringing Life to Work 14. “Bring—your-kids-to-work day” is a way to get employees families involved in their work lives. The opportunity to share a day of work with children is a benefit that many employees appreciate. 15. Sponsoring employees’ family-oriented activities is another way to combine work and life. Sporting events, excursions to amusement parks, fishing trips and other family-oriented jaunts are good opportunities to help employees strike a work/life balance. 16. Companies need to promote their work/life balance policies year-round—not just in employee orientations and handbooks. Frequent, positive communication of these benefits reinforces management’s commitment to help workers achieve work/life balances and gives employees the feeling that it is OK to live a little.

CONCLUSION The above mentioned approach to work-life balancing is a behavioristic means that necessitates the employees’ adaption to their different and varying roles. Nevertheless, those strategies, whether alone or combined, have helped many people balance their work and life and enjoying life more. It should also be noted that none of the given recommendations is applicable to all thus far each requires substitution. After all, worklife balance is a journey rather than a destination.

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Small changes can have its huge impact if one focus on rebalancing one’s life, that is, making conscious choices and course corrections as he/she goes. Work-Life balance isn’t an all-or-nothing phenomenon. Spending an hour or two per week on the things that matter most to you can be the difference between feeling out of control and feeling tired yet satisfied. And in a world overflowing with meaningful opportunities and workplaces have develop strategies that enable and encourage flexibilities for those with family responsibilities, satisfaction and the work-life balance still depends on how employees view it. Significant improvement on work-life balance is likely to present individual employees much more preference about how and when they work. Research shows that the more control you have over your own work, the less stressed you’re likely to get and even more to working women. As a final point, organizations are ought to deal with the issue but an employer can do his/her part too. After all, it is just about setting ones goal and achieving them both in the workplace and in the outside.

REFERENCES Campbell-Clark, S. (2000). “Work/family border theory: a new theory of work/family balance”. Human Relations, 53(6), 747–770. nd Castells, M. (1997). The Power of identity (2 ed.). Cambridge, MA: Blackwell Publishing. De Marneffe (2004). Maternal desire: On children, love and the inner life. New York: Little, Brown and company. Ezra, M. and Deckman, M. (1996). “Balancing work and family responsibilities: flexi-time and childcare in the federal government”. Public Administration Review, 56(2), 174–179. Fletcher and Bailyn (1996). Challenging the last boundary: Reconnecting work and family. In M.B. Arthur and D.M. Rousseau (Eds), The boundaryless career, a new employment principle for a new employment principle for a new organizational era. Oxford, UK: Oxford University Press. John Hancock, “Human rights in the global marketplace”, pp. 136–141. Kofodimos, J.R. (1984). “A question of Balance”, Issues and Observations, 4(1), 1–9.

ABOUT THE AUTHOR Ms Veena Panjwani is Faculty of Economics at Jagran Institute of Management, Kanpur. She applies her educational and professional experience in teaching Managerial Economics and Research Methodology. She holds PGDM (IBM) Specialization and an M.Phil. in Economics. She brings along with her rich academic and teaching experiences to MBA students.

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The Nature of CSR Leadership: Definitions, Characteristics and Paradoxes* Wayne Visser Founder & Director, CSR International, London E-mail: waynevisser1@gmail.com

ABSTRACT In CSR circles, we see the task of creating a more equitable and sustainable world as both a serious challenge and an enormous opportunity. We are convinced that without bold and effective leadership—at a political, institutional and individual level—we will fail to resolve our most serious social and environmental crises. We will also miss out on the vast business opportunities presented by society’s transition to a sustainable economy. Over the past few years, in response to these global challenges and opportunities, we have seen more and more evidence of CSR leadership emerging, albeit not nearly enough. In order to better understand what makes these leaders effective catalysts for positive change, I have been conducting research with the University of Cambridge Programme for Sustainability Leadership (CPSL), mainly focused on individual leaders 1 in business. In this short paper, I present some of our initial findings and conclusions.

WHAT IS LEADERSHIP? Our first step in understanding CSR leadership was to go back to the basics and ask, what is leadership? There are of course numerous existing definitions (see for example Box 1). However, the definition we developed at CPSL is that a leader: Someone who can craft a vision and inspire people to act collectively to make it happen, responding to whatever changes and challenges arise along the way. *Special Contribution: Wayne Visser, CSR International Paper Series, No. 4, 2011. Copyrights for this chapter remain with the author only. 1 This paper was prepared with input and feedback from Polly Courtice, Director of the University of Cambridge Programme for Sustainability Leadership (CPSL). A significantly modified version, authored by Polly Courtice, later appeared in the CPSL 2011 publication, The State of Sustainability Leadership 2011.

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Box 1: Sample Definitions of Leadership “Leadership is about discovering the passion, persistence and imagination to get results, to be able to find the Wow factor and to be able to think the weird thoughts necessary to learn and thrive in a disruptive age”—Tom Peters, author “Leadership is about getting people to go where they wouldn’t have gone on their own”—Ian Cheshire, CEO, Kingfisher. There are also various theories on leadership and while it is not our intention to provide an exhaustive review of these, they do set a frame for CSR leadership. Hence, we can distinguish three main approaches to understanding leadership: 1. The Trait/Style school, which focuses on the characteristics or approaches of individual leaders; 2. The Situational/Context school, which focuses on how the external environment shapes leadership action; and 3. The Contingency/Interactionist school, which is about the interaction between the individual leader and his/her framing context. To these can be added the rather more practical tenets of leadership as described by Goffee and Jones (2009): 1. Leadership is Relational: It is something you do with people, not to people. Put simply, you cannot be a leader without followers. Like all relationships, it needs to be monitored and cultivated. 2. Leadership is Non-Hierarchical: Formal authority or a title doesn’t make you a leader. Leaders can be found at all levels. 3. Leadership is Contextual: You need to size up and tap into what exists around you and then bring more to the party.

WHAT IS CSR LEADERSHIP? These general perspectives on leadership establish the foundation for our more specific enquiry into the nature of CSR leadership. Based on our review of the academic literature, together with CPSL’s experience working with senior leaders over the past 20 years, we distilled the following simple definition: A CSR leader is someone who inspires and supports action towards a better world. Looking at the theories of leadership that inform this definition, our conclusion is that CSR leadership is not a separate school of leadership, but rather a particular blend of individual leadership characteristics applied within a definitive context. Put another way, the context—comprising the sustainability challenges facing the world and our aspirations for a better future—calls for particular types of leadership.

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This approach aligns most closely with the Contingency/Interactionist school, although our emphasis is as much on the actions of leaders as the context that shapes their behaviour. Hence, our model of CSR leadership has three basic elements: Context, Characteristics and Actions. The model was tested and refined through interviews with selected CSR leaders, some of whose thoughts and insights are shared in the sections below. Context ¾ ¾

Internal (within the organisation) External (beyond the organisation)

Characteristics ¾ ¾ ¾ ¾

Traits Styles Skills Knowledge

Actions ¾ ¾

Internal (within the organisation) External (beyond the organisation)

Fig. 1: A Basic Model of CSR Leadership

THE IMPORTANCE OF CONTEXT The sustainability context has become ‘mission critical’ for many businesses. According to a recent survey of 766 United Nations Global Compact (UNGC) member CEOs conducted by Accenture, 93% of CEOs globally see sustainability as important to their company’s future success, especially tackling issues like education, climate change, resource scarcity and health. 73% of CEOs see this as a way of strengthening their brand, trust and reputation. Jeffrey Immelt (2007), CEO of General Electric, agrees, saying, “The most important thing I’ve learned since becoming CEO is context. It’s how your company fits in with the world and how you respond to it.” Similarly, Sandy Ogg (2010), Chief HR Officer for Unilever, told us that CEO Paul Polman stands out as a CSR leader “because he understands the context and he understands leading with empathy in a multi stakeholder environment”.

DEFINING CHARACTERISTICS There are many characteristics (traits, styles, skills and knowledge) that are associated with CSR leaders. Our research suggests that the following seven key characteristics are among the most important in distinguishing the leadership approach taken by individuals tackling sustainability issues. Although it is unlikely that any individual will embody all seven characteristics of CSR leadership, to give a flavour for each characteristic, they are illustrated below by observations from a selection of leaders, many of whom we have worked with and who demonstrate some of these qualities themselves.

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Box 2: Key Characteristics of CSR Leadership 1. 2. 3. 4. 5. 6. 7.

Systemic understanding Emotional intelligence Values orientation Compelling vision Inclusive style Innovative approach Long term perspective.

1. Systemic, Interdisciplinary Understanding José Lopez (2010), Executive Vice President Operations and GLOBE of Nestle, insists that “one of the elements that will really get us going in this sustainability fight is the elimination of the root cause for unsustainable behaviour, unsustainable business morals, unsustainable practices and so on. The ability to see the root cause of those things will set companies apart. They have to do with the profound thinking that you have and the processes of how you invest money and how you train your people and how you develop resources.”

2. Emotional Intelligence and a Caring Attitude Jan Muehlfeit (2010), Chairman of Microsoft Europe, observes that “over the next ten years, the only way individuals, organisations and countries will succeed and compete will be through the ability to unlock human potential.” He believes that “as a leader for the future, you would need to distinguish between motivations; you can motivate people’s hands or their brains but you can’t motivate their hearts—it takes real inspiration.”

3. Values Orientation that Shapes Culture Truett Tate (2010), Group Executive Director (Wholesale) for Lloyds Banking Group, believes there is a “personal, almost spiritual commitment that needs to be epitomised in someone who is going to be successful in this sustainability space. So, a morality, a spirituality [which has] a great coupling with [having a] longer term vision.” He adds that their credibility must come from “the way that they behave and interact with the world. They epitomise interconnectedness. They understand community [in the sense of] communion with facets of the world around us.” Hence, although not everyone would characterise their actions in terms of spirituality, a values-based approach is critical.

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4. A Strong Vision for Making a Difference Ray Anderson, CEO of Interface, is well known for his vision to make Interface the first truly sustainable, zero-impact, or “restorative” company in the world, which their performance metrics suggest they are on-track to reach by 2020. He calls on “our people, our customers, our suppliers, our communities and our owners ... to learn and believe in a new and better way to be more profitable, and to reach for significance beyond success—a higher purpose for us all.” Hence, CSR leaders are able to effectively communicate a compelling narrative on how their organisations can contribute to creating a better world.

5. An Inclusive Style that Engenders Trust Ian Cheshire (2010), CEO of Kingfisher, believes “leaders actually lead through teams. The idea that you have a superstar leader”, he says, “is just nonsense”. A great definition of leadership, he goes on to say, is “about getting people to go where they wouldn’t have gone on their own. If they can get there on their own then they don’t really need a leader. Equally, you can’t always be dragging them in the opposite direction to where they want to go.” Hence, leadership is about “the leader and the followers working together to get to certain outcomes”.

6. A Willingness to Innovate and be Radical Anita Roddick (2001), founder of The Body Shop, exhorted leaders to “be daring, be first, be different, be just”. Similarly, Jeffrey Swartz (2010), CEO of The Timberland Company says, “Future capabilities will be very different, and will put a premium on lateral thinking and cross-functional, collaborative problem solving”. For Timberland, this includes not only designing cradle-to-cradle products like their Earthkeeper 2.0 boots, but also responding to challenges by Greenpeace and working with their Brazilian supplier Bertin to support the deforestation moratorium (meaning they will no longer source cattle from protected areas of the Amazon). Hence, CSR leaders recognise that complex problems require creative solutions.

7. A Long-Term Perspective on Impacts Neil Carson (2010), CEO of Johnson Matthey, believes that “companies think much longer term than governments and good companies think much longer term than bad companies”. He makes the point that in terms of sustainability, long term thinking is especially important for leaders of sunset industries. “If you’re into coal mining and turning coal into heat and power, then you’ve got to think of the long term. You’re not really a coal miner, you’re a power supplier. You can look at ways of making things more efficient. Then you can look at ways of sequestering the CO2. You can make all these

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plans ahead of time and move in the right direction. And our experience is that the employees will really react very well to those kind of long-term plans. You get more out of the employees than you might expect if you embark on such a journey.”

SUSTAINABILITY LEADERSHIP IN ACTION Our research shows that CSR leadership results from the interaction between an organisation’s social, environmental and economic context and the characteristics of individual leaders. However, CSR leadership can only truly be seen, and judged, by the actions that leaders take. In order to illustrate this point, we highlight a number of cases in this section. In each case, these show that although each company is far from reaching the goal of sustainability, leaders have taken important steps along the journey.

Box 3: CSR in Action at IBM According to CEO Samuel J. Palmisano, a smarter world—by which he means a more instrumented, connected and intelligent global society—is also a more sustainable world. “In the post-industrial age that we have now entered”, he says, “the relevant struggle is not nature vs. industry, but systemic vs. fragmented”. For example, using IBM integrated solutions, Cosco, a global shipping firm in China, reduced its distribution centres from 100 to 40, lowering its logistics costs by 23% and its CO2 emissions by 15%. Palmisano emphasises that “the most important factor in achieving this kind of progress is not technology. It’s leadership. Because just as complex, interdependent systems demand new kinds of technology, they also require new forms of management.”

GE—INVESTMENT IN INNOVATION AND LONG TERM PROSPERITY Jeffrey R. Immelt is the ninth chairman of GE, a post he has held since September 7, 2001. He has been named one of the ‘World’s Best CEOs’ three times by Barron’s, and since he began serving as chief executive officer, GE has been named ‘America’s Most Admired Company’ in a poll conducted by Fortune magazine and one of ‘The World’s Most Respected Companies’ in polls by Barron’s and the Financial Times. Despite these accolades, GE has not escaped criticism by financial analysts and sustainability activists alike. However, the way in which Immelt has responded to these criticisms is the real story of CSR leadership. Speaking at the Prince of Wales’s Business and Sustainability Programme London Lecture in 2010, Immelt set out four pillars of a competitive society: education, affordable healthcare, financial systems that promote entrepreneurship, and clean

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energy. In particular, he emphasised that a clean energy future—one that is sustainable, that emphasises energy security, that drives competitiveness and job creation and that reduces pollution—represents “the biggest opportunity that we will face in the next decades, and we have to grab it and we have to lead in this regard”. Hence, Immelt has unapologetically linked GE’’s commercial strategy with their sustainability interests. This is most evident in their Ecomagination programme, launched in 2005 and carefully aligned to GE’s overall mission of ‘imagination at work’. Immelt backed this up with bold targets—such as increasing revenues from sustainable products to $25 billion by 2010—and substantive investments to ensure innovation, including doubling R&D spend in the area to $1.5 billion by 2010. Ecomagination is clearly about making GE money and is an unapologetic investment in future profitability. Even so, Immelt believes that ‘it’s happening before it has to. It’s leading by example.’ In a related project, in July 2010, GE announced a $200 million open innovation challenge that seeks breakthrough ideas to create a smarter, cleaner, more efficient electric grid, and to accelerate the adoption of more efficient grid technologies. The money will be invested globally into promising start-ups and ideas. ‘Innovation is the engine of the global effort to transform the way we create, connect and use power’, Immelt said. ‘This challenge is about collaboration and we are inviting others to help accelerate progress in creating a cleaner, more efficient and economically viable grid. We want to jump-start new ideas and deploy them on a scale that will modernize the electrical grid around the world.’

Box 4: CSR in Action at Unilever When Unilever CEO Paul Polman recently launched their Sustainability Living Plan, it seemed to confirm something Chief HR Officer Sandy Ogg (2010) told us: “There’s so much going on now in the world that if you don’t have amplification and time compression, then it doesn’t rumble. So I call that leading big. You can’t let it drool or dribble out into an organisation like ours and expect to have any impact.” In this case, for Unilever, “leading big” means seeking to double the size of the company, while halving the environmental footprint of their products, sourcing 100% of their agricultural ingredients sustainably by 2015 and helping 1 billion people out of poverty. Another key to Immelt’s success as a CSR leader is his inclusive approach. He believes that ‘Enron and 9/11 marked the end of an era of individual freedom and the beginning of personal responsibility. You lead today by building teams and placing others first. It’s not about you.’ One of the ways GE demonstrated this collaborative approach in the

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market was to partner with Wal-Mart and help them to sell 100 million energy-saving compact fluorescent light bulbs (CFLs), thereby creating a tipping point in consumer purchasing habits. Success meant that total sales of CFLs in the U.S. would double, saving Americans $3 billion in electricity costs and avoiding the need to build additional power plants for the equivalent of 450,000 new homes. It is to Immelt’s credit that he has made these strategic investments in sustainability despite the company’s stock value having halved over the past decade, and enormous pressure from market analysts to focus on GE’s quarterly profits. This is the mark of a true CSR leader—not only viewing the world systemically and thinking long term, but also investing accordingly. It is no wonder that, under Immelt, GE is still ranked as a top 10 global brand by The Financial Times and Business Week.

GLAXOSMITHKLINE—BUILDING TRUST WITH CRITICAL STAKEHOLDERS According to the 2010 CEO survey by Accenture and the UN Global Compact, 72% of CEOs cite ‘brand, trust and reputation’ as the main factor that has driven them to take action on sustainability issues. Certainly, this seems to the case in the pharmaceuticals industry, where they have suffered a serious crisis of trust over the past 10 years. This was triggered in 2001 when 39 of the largest international pharmaceutical companies took the South African government to court over plans to introduce legislation aimed at easing access to AIDS drugs, arguing that it would infringe their patents and contravene the Trade Related Aspects of Intellectual Property Rights (TRIPS) agreement. Tens of thousands of people marched in protest all over the world, and 300,000 people from over 130 countries signed a petition against the action. Eventually, following public pressure, as well as pressure from the South African government and the European Parliament, Big Pharma dropped the case. Justin Forsyth, Oxfam Policy Director, said at the time, ‘This court case demonstrates how powerful drug companies are bullying poor countries just so they can protect their patent rights on life-saving medicines.’ Fanning the flames of public discontent, John le Carré’s 2001 book The Constant Gardener and the 2005 film adaptation depicted drug companies as corrupt profiteers. As Mail & Guardian journalist Qudsiya Karrim reported for Inside Story in 2010, ‘The past decade has been a public relations nightmare for big pharmaceutical companies—and deservedly so’. This was the turbulent milieu into which Andrew Witty (2010) stepped as CEO of GlaxoSmithKline (GSK) in 2008. Believing that ‘to be a successful and sustainable business, we must fulfil our social responsibilities and build trust with our stakeholders’, early in 2009, Witty announced a major reform in their corporate policy on drug affordability and accessibility. GSK cut its prices for all drugs in the 50 least developed

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countries to no more than 25% of the levels in the UK and US and made drugs more affordable in middle-income countries such as Brazil and India. In addition, they committed to reinvest 20% of its profits in hospitals and clinics in the least developed countries.

Box 5: CSR in Action at Skanska CEO Johan Karlström believes, “What is green today will be vanilla tomorrow. To be a leader you have to aim for deep green.” For Skanska, this means taking bold action. The company uses carbon footprinting tools to benchmark the carbon emissions of building projects and to help identify low-carbon project options. The results speak for themselves. In Stockholm, they have built apartments that are twice as energy efficient as the average, while in New York, Skanska’s work as a contractor on the 32nd floor of the Empire State Building has resulted in reductions in energy consumption of 57% and water use of 40%, while 80% construction waste was recycled. Going even further, Witty launched a radically new initiative on opening access to intellectual property through the donation of a number patents to Pool for Open Innovation against Neglected Tropical Diseases. Explaining this move, Witty said, ‘I think it’s the first time anybody’s really come out and said we’re prepared to start talking to people about pooling our patents to try to facilitate innovation in areas where, so far, there hasn’t been much progress.’ GSK may not yet have won the battle for the hearts and minds of its stakeholders, but at least some critics are being cautiously supportive. ‘He is breaking the mould in validating the concept of patent pools,’ said the head of Oxfam’s medicines campaign, Rohit Malpani. ‘It is a big step forward. It is welcome that he is inviting other companies to take this on and have a race to the top instead of a race to the bottom.’ Some of the business benefits have been rather immediate. For instance, in the Philippines, a 60% price cut in cancer vaccine Cervarix increased sales by around 600%. Time will tell whether these short-term concessions—which in some ways undermine the commercial viability of their Research and Development investments— will prove sustainable in the long term. What Witty has recognised, however, is that without the trust and support of your key stakeholders, there is no long term to contemplate.

UNMASKING THE PARADOX One of our most compelling and persistent findings is that CSR leadership is fraught with paradoxes. As the competitive landscape shifts and global challenges evolve,

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companies that were lauded in the past as CSR leaders may be discredited in the present. Similarly, today’s targeted villains may end up being tomorrow’s sustainability heroes and vice versa. There are a number of reasons for this state of flux in CSR leadership: 1. Sustainability is Aspirational—No company, or society, has achieved sustainability. The goal of sustainable development is an ideal state that we are striving for. By definition, companies will fall short of the mark and be exposed for their inadequacies. 2. The Context is Dynamic—Our global challenges are part of a complex, living system, which is constantly changing. Companies that do not innovate and adapt to match the evolving context will be left behind, while others will emerge as new leaders. 3. Perceptions can Change—The sustainability agenda is driven as much by emotions and perceptions as by factual realities. Society’s views on issues—like nuclear and GMOs—can change, and with it the perceived sustainability performance of companies. 4. Sustainability is a Learning Process—As our understanding of sustainability challenges and solutions improves, so too do our expectations of companies. Companies in their turn need to constantly renew their sustainability learning, or be left wanting.

Box 6: The Paradox of Monsanto When Monsanto began manufacturing the chemical pesticide DDT in 1944, it was seen by many as a saviour of the agricultural industry, dramatically increasing food yields. But years later—and following the scientific work of Rachel Carson (author of the highly critical Silent Spring) and others—DDT was banned as a highly toxic contaminant, and Monsanto was stereotyped as a dangerous and polluting business. Similarly, when the company pioneered genetically modified crops in the 1980s, including the creation of drought-resistant strains that could help alleviate poverty, they expected to be lauded as sustainability pioneers, yet found themselves targeted by environmental and social activists for creating farmer dependency and allegedly reducing crop resilience. Despite selling 90% of the USA’s GMO seeds, the EU placed a moratorium on all GMO crops. We can illustrate this paradox of CSR leadership by putting the spotlight on a number of companies (Monsanto, BP, Wal-Mart and Nestle). The purpose is not to name and shame, but rather to emphasise the dynamic and complex nature of CSR leadership. Besides, far from representing an underperforming minority, these examples are typical of the prevailing majority on the corporate sustainability landscape.

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BP—BRAVE LEADERSHIP OR “GREENWASH” Another classic case is John Browne’s leadership of BP from 1995 to 2007. At the time, Browne was widely credited not only with resurrecting the company’s financial fortunes, but also for turning BP from being a target for NGO criticism to being hailed as a leader on sustainability. One landmark action was in 1998 when Browne threw down the gauntlet to BP and the oil industry, promising to cut emissions from its own operations by 10% from 1990 levels by 2010, which was more than the average Kyoto Protocol country targets and certainly more than any other major oil company had committed to up until that time. In fact, they achieved the target four years later, eight years ahead of the target and at no net cost to the company. Other applauded actions were BP’s investment in renewables and the implementation of an internal greenhouse gas emissions trading scheme. And yet today, after a spate of accidents like the Texas City oil refinery explosion in 2005 and the Deepwater Horizon oil well blow out in 2010, as well as key strategic actions like investment in the Alberta tar sands, BP’s sustainability reputation is severely tarnished and Browne’s perceived legacy as a CSR leader has been brought into question.

NESTLE—EXPLOITING THE NEEDY OR “CREATING SHARED VALUE” Nestle is another case in point. In 1977, they became the target of a boycott campaign that still exists today, on the basis that they aggressively marketed baby milk formula in Africa as an alternative to mother’s breast milk. Despite Nestle stating that it its infant formula is only targeting mother’s who cannot produce their own milk, the company continues to draw criticism that it is in violation of a 1981 World Health Organization code that regulates the advertising of breast milk formulas. Today, Nestle’s sustainability approach goes under the guise of a Creating Shared Value strategy, which focuses on specific areas of the Company’s core business activities— namely water, nutrition, and rural development—where value can best be created both for society and shareholders. They are investing heavily in all of these areas and attracting praise from many sustainability advocates. Nevertheless, this did not prevent Nestle’s Kit-Kat brand from being the target of a Greenpeace campaign in March 2010, which accused the company of aiding and abetting rainforest destruction through their Indonesian supply chain. Greenpeace later called off the campaign, which Nestle Executive Vice President for Operations, Jose Lopez (2010), says was achieved “by putting on the table a very technical view of the issues we are talking about. We’ve demonstrated that we have a logic, a path and a

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process that drives continuous improvement into topics of high concern, which in this case is deforestation.” These paradoxes of CSR leadership are more the rule than the exception. This is inevitable in a global context that is so dynamic and with sustainability challenges that are so complex. Hence, as we present the findings from our research below, we want them to be considered against this backdrop of uncertainty, ambiguity and apparent contradiction. For while the characteristics of leadership, and its application to sustainability, may be fairly durable and unchanging, the examples of CSR leaders in practice are anything but constant.

Box 7: The Paradox of Wal-Mart When Harold Lee Scott Junior took over as President and CEO of Wal-Mart in 2000, Fortune Magazine described the company’s public image as being that of a ‘rapacious behemoth’. Scott commissioned a review of Wal-Mart’s legal and public relations problems, and it wasn’t a pretty picture. A discrimination lawsuit had been certified as a federal class action, new stores were blocked by activists in Los Angeles, San Francisco and Chicago, and the company had just forked out millions to regulators for air and water pollution infringements. Speaking at the 2007 London Lecture of HRH The Prince of Wales’s Business and the Environment Programme, former CEO, Lee Scott reflected on how hurricane Katrina in 2005 had “brought out the best in our company ... In the aftermath of the storm, we asked ourselves: How can we be that company—the Wal-Mart we were during Katrina—all the time? Sustainability became a big part of the answer.” Taking action, Scott announced three radical goals: 1) to be supplied 100% by renewable energy; 2) to create zero waste; and 3) to sell products that sustain people and the environment. Already, we see the Wal-Mart effect of scalability in action in three areas: more sustainable fish, cotton and lightbulbs.

CONCLUSION—COLLABORATIVE LEADERSHIP Ultimately, given the scale and urgency of the challenges, CSR leadership needs to be bold leadership. It also needs to be collaborative leadership—leaders acting together at all levels of organisation and society. Many of the CSR leaders that we spoke to emphasised the importance of collective action. James Smith, Chairman of Shell UK, told us that his view of leadership is not based on a hierarchical model but on the notion of a network—i.e. that the leadership is not invested in one person. Smith concedes that many CEOs do base their leadership on the cult of personality and cause things to happen, but their success is short lived. Sustainability leadership, by contrast, “is about cultivating good people for sustainability to be delivered.”

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Hence, while individual leaders at the apex of organisations are critical change agents for sustainability, finding CSR leaders or champions throughout our communities, government departments and companies, is also essential. Some call this approach ‘distributed leadership’, which MIT Professor Deborah Ancona (2010) says is “where junior leaders act when local needs arise and as organizational imperatives demand”. We all have the potential to be CSR leaders, whatever our area of practice, whatever our role and whatever our level of seniority. We also conclude from our research that—given the paradox of CSR leadership—the success or otherwise of the CSR leader (whether individual or organisational, hierarchical or distributed) must rest with the performance of the company. Ultimately, CSR leadership must be judged by the success of our actions—and whether we inspire and support others to follow our vision and passion for a better world.

ACKNOWLEDGEMENTS This paper was prepared with input and feedback from Polly Courtice, Director of the University of Cambridge Programme for Sustainability Leadership (CPSL). A significantly modified version later appeared in the CPSL 2011 publication, The State of Sustainability Leadership 2011.

BIBLIOGRAPHY Accenture and UN Global Compact, 2010. A new era in sustainability [CEO survey]. Ancona, D. (2010). Distributed Leadership at Work, The Washington Post, 22 April. Carson, N. (2010). Interview with Polly Courtice, Cambridge Programme for Sustainability Leadership, 15 June 2010. Cheshire, I. (2010). Interview with Polly Courtice, Cambridge Programme for Sustainability Leadership. Goffee, R. and Jones, G. (2009). Authentic Leadership. Leadership Excellence, May. Hollender, J. and Breen, B. (2010). The Responsibility Revolution: How the Next Generation of Businesses Will Win. Jossey-Bass. Immelt, J. (2007). GE’s Jeff Immelt on the 10 Keys to Great Leadership. Fast Company, 19 December. Lopez, J. (2010). Interview with Polly Courtice, 17 June 2010. Muehlfeit, J. (2010). Interview with Polly Courtice, Cambridge Programme for Sustainability Leadership. Ogg, S. (2010). Interview with Polly Courtice, Cambridge Programme for Sustainability Leadership. Roddick, A. (2001). Business as Unusual, London: Thorstens. Swartz, J. (2010). Quoted in: Accenture and UN Global Compact, A New Era in Sustainability [CEO survey].

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Tate, T. (2010). Interview with Polly Courtice, Cambridge Programme for Sustainability Leadership. Witty, A. (2010). Interview by Accenture for the UN Global Compact CEO Study, 2010.

REFERENCE Visser, W. (2011). The Nature of CSR Leadership: Definitions, Characteristics and Paradoxes, CSR International Paper Series, No. 4.

ABOUT THE AUTHOR Dr. Wayne Visser is Founder and Director of the research company Kaleidoscope Futures, the think-tank CSR International and the online trading platform, Sustainability Market. In addition, Wayne is Senior Associate at the University of Cambridge Programme for Sustainability Leadership and Visiting Professor of Corporate Responsibility at Warwick Business School in the UK. Wayne is the author of thirteen books, including The Age of Responsibility: CSR 2.0 and the New DNA of Business (2011). His work has taken him to more than 50 countries in the last 20 years. In 2011, Wayne was listed in the Top 100 Global Sustainability Leaders and the Top 100 Thought Leaders in Europe and the Middle East.

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Branding Corporate Image and Reputation: Focus on Organisational and Sustainability Dimensions A.N. Sarkar Senior Professor, Asia-Pacific Institute of Management, New Delhi E-mail: ansarkar1@gmail.com

ABSTRACT In a competitive business environment, an organizationâ&#x20AC;&#x2122;s image and reputation is gaining increased attention and criticality for determining its overall performance on a sustainable basis. There is an implicit relationship between a positive image, corporate growth, reputation and profitability. Corporate image and reputation management is also crucial for brand building of products, corporation and country; and this can be leveraged for defining corporate vision and aligning future business strategy. The paper discusses the various emerging strategic and organizational dimensions of corporate image building process and initiatives; and analyzes its state of transition from identity to reputation, as seen from business perspectives. The paper also discusses issues pertaining to ethical and sustainability aspects of branding for corporate/brand reputation and reviews corporate performance in terms of linking corporate image branding initiatives with corporate social responsibility by stakeholders, in response to the growing ecological concerns expressed by the society and community at large. Keywords: Corporate Image, Reputation Management, Corporate Branding, Organizational and Sustainability Dimension.

INTRODUCTION A corporate image basically reflects how the public views the organization. Image development initiatives taken by a company are intended to send the right signals to the audience, clients and stakeholders at large in an effort to help build a positive image about the company. The imperative goal of corporate image building as well as reputation management is to strengthen the inherent trust that stakeholders, including employees should have in an organization. Corporate image is therefore can be viewed as the foundation of corporate success. In explicit terms, corporate image could also be seen as the sum total of every thing in the entire organization; and it encompasses: mission, vision, objective, services, management styles, communication activities and

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actions around the world. There is a clear relationship between a positive image, corporate growth, reputation and profitability. Image is no longer solely the realm of marketing; but rather a strategic option of top management. Corporate image management is crucial for brand building as this promotes: general promotional value; encourage favorable behavior towards organization; build sales; attract shareholders; attract and motivate employees/build morale; reduce cost of capital; establishing relations with community/government; serves corporate objectives; creates familiarity and favorability; creates position in industry; can demand premium prices. A Brand image is, however, the sum total of all tangible and intangible traits—the ideas, beliefs, values, prejudices, interests, feature and ancestry that make it unique. A brand image visually and collectively represents all internal as well as external characteristics— the name, symbol, packaging, literature, signs, vehicles and culture. Brand image influences how a brand or a company is perceived by target constituencies—or even a single customer for that matter. Brand image may be the best, single marketable investment a company can make for long-term gains in terms of building corporate reputation. Creating or revitalizing a positive brand image is a basic component of every business—and lays a foundation on which companies can build their future. Corporate reputation is a ‘soft’ concept. It is the overall ‘formed/established image’ in which an organization is held by its internal and external stakeholders based on its past actions, achievement and probability of its futuristic behavior. Many organizations place the importance of a good reputation in the back of their minds and design corporate strategy that leads to building good reputation. A business organization can achieve its objectives more easily if it has a good reputation among its stakeholders, especially key stakeholders such as its largest customers, opinion leaders in the business community, supplier and current and potential employees. The broad objectives of the paper are to look into the following innovative dimensions of corporate image and reputation management: • To look into the emerging strategic and organizational dimensions of corporate image building process and analyzing its transition from Identity to reputation, as to be seen from business perspectives. • Analysis of ethical and sustainability aspects of branding for corporate/brand reputation management. • Understanding the nuances of linking corporate image branding initiatives with corporate social responsibility and growing ecological concerns expressed by the society.

CORPORATE IDENTITY AND CORPORATE IMAGE An organization’s identity is much like our own individual or personal identity, which is essentially unique and different at the core. Identity is formed by an organisation’s

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history, its beliefs and philosophy, the nature of its technology, its ownership, its people, personality of its leaders, its ethical and cultural values and its strategies; and it is core of an organisation’s existence in the market. Corporate identity is a planned assembly of visual cues by which the audience can recognize the company and discriminate one company from another and which may be used to represent of symbolize the company (Bernstein, 1984). Every organization is unique, and the identity must spring from the organization’s own roots, its personality, its strengths and weaknesses (Olins, 1994). Corporate Identity expresses the way a corporation sees itself and such a way contributes to affect the general image. “An organization’s mind identity is the set of values and philosophies that are believed by everybody in the corporation” (Belasen, 2008). Corporate identity is organization’s “self image” and it is a core tool which contributes to drive communication strategy and by that the external image. Many companies, such as McDonald’s and Electronic Arts, have their own identity that runs through all of their products and merchandise. The trademark “M” logo and the yellow and red appear consistently throughout the McDonald’s packaging and advertisements. Many companies pay large amounts of money for the research, design and execution involved in creating an identity that is extremely distinguishable and appealing to the company’s target audience. Corporate identity is an implied precursor to corporate image building as it raises motivation levels among the employees; inspires confidence in stakeholder groups; acknowledges important role of customers; acknowledges the vital role of financial groups. A corporate identity or brand identity is how a company is represented and seen in the market. The basic foundation for any company’s identity is its logo. There are other materials like business cards, letterhead, web sites, signage and other marketing collateral which all together help to further the image of the company consistently and efficiently. Building a corporate identity helps to increase recognition and awareness about the company, this in turn leads to expansion of the enterprise, scaling-up of business activities and increased profits. An image, on the other hand, is the set of meanings by which an object is known and through which people describe, remember and relate to it. This is the result of the interaction of a person’s beliefs, ideas, feelings and impressions about an object (Dowling, 1986). This equally applies to the corporate image on a larger canvas, encompassing customer image, community image, investor image, employee image etc. to help build corporate reputation through a state of transition from identity to reputation building, as shown in Figure 1. Corporate identity is fundamentally concerned with reality and what an organization is, that is, its strategy, philosophy, history, business scope, the range and type of products and services offered, and its communication, both formal and informal (Balmer, 1995; Schmidt, 1995; van Riel, 1995; Bernstein, 1984). Secondly, corporate identity is multidisciplinary in its manifestation. Thirdly, corporate identity is based

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on the corporate personality of the organization. Balmer and Soenen (1998) and Balmer (2001) show that practitioners tend to focus on visual aspects of identity to the neglect of other factors. Olins (1994) defines corporate identity as ‘the explicit management of all the ways in which the organization presents itself through experiences and perceptions to all its audiences’.

Fig. 1: Transition from Identity to Reputation Source: Dowling (1986).

Corporate Image from Company, Consumer and Business Perspective A strong corporate image allows a company to charge more for its goods, communications and services. This, in turn, can lead to better markup margins and greater profits for the firm with a strong corporate image. Further, firms with well-developed images have customers who are more loyal. A higher level of customer loyalty results in higher ‘Footfalls’ purchasing more products over time. There will be less substitution purchasing taking place when other companies offer discounts, sales, and other enticements to switch brands. All the same, building a strong corporate image with brand loyalty provides tangible and intangible benefits. Both customers and organizations benefit from a well-known firm with an established reputation. This is effectively a ‘Win-Win’ situation. From a consumer’s perspective, the corporate image serves several useful functions. These include: (i) Providing assurance regarding purchase decisions of familiar products in unfamiliar settings; (ii) Giving assurance about the purchase when the buyer has little or no previous experience with the good or service; (iii) Reducing search time in purchase

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decisions; (iv) Providing psychological reinforcement and social acceptance of purchases. A well-known corporate image provides consumers with positive assurance of what they can expect from the firm. A can of Coke or Pepsi purchased in Anchorage, Alaska, has a comparable taste to one purchased in Liverpool, England, or Kuala Lumpur, Malaysia. McDonald’s serves the same or similar value meals in San Francisco as the ones sold in Minneapolis or Paris. Consumers on vacation know that if they make purchase from a Wal-Mart in Texas, a defective item can be returned to a local store in Toronto, Canada. Purchasing a product from a familiar firm saves the consumer considerable time and effort. A strong corporate image creates a major competitive advantage in the business-tobusiness marketplace. Many of the same processes that affect individual consumers can also affect potential business buyers. This means that purchasing from a well-known company reduces the feelings of risk that are part of the buying process. A firm with a well-established image makes the choice easier for business customers seeking to reduce search time during the purchasing process. Psychological reinforcement and social acceptance may also be present. Therefore, once again, a strong company image or brand name can make the difference in a choice between competitors. Brand image is especially valuable to a company that is expanding internationally or transnationally. Foreign businesses firms are likely to feel more comfortable making transactions with a firm from a different country that has a strong corporate image. Therefore, a company such as IBM, Rolex, Canon, Toyota etc. can expand into a new country and more quickly gain the confidence of consumers and businesses. The traditional approach to the corporate identity—corporate image interface is best illustrated by Chajet’s (1989) analogy: “Corporate identity is to corporate image what exercise is to physical fitness”. Process models—introduced later, the most influential of

Fig. 2: The Corporation’s Images Influenced by Brand, Industry and Country Images Source: Balmer and Greyser, 2003.

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which is that of Abratt (1989) – illustrate this relationship. The brand image can also be viewed as the perception as a brand in relation to others in the same industry or product class. This seems similar to the “brand image” category, in the Hungarian classification; here the attention is called to the objective of brand positioning, i.e. the brand image is not perceived in isolation, rather in relation to competitive brands. The industry (product class) image means here the entire industry (sector). Figure 2 illustrates the image categories linking corporate image with industry image (both internal and external), brand image and country image in totality.

Company’ Ecological Responsibility in Building Corporate Image In the modern market economy, company development and social progress have become much more accessible goals than was the case in the past, especially in the period after World War II and the expansion of the state’s social role. The concept of socially responsible business became an unavoidable topic in business, managerial and academic circles, which led to extensive research of the very concept of social responsibility and its implications on the entire company as a business entity such as its business operations, products, business processes, technology, marketing, etc. (Caroll, 1999; Michael, 2003). On the other hand, the systematic public promotion of this concept contributed to the growing sensitiveness of consumers and other stakeholders to questions of ethical and responsible company operations, which resulted in a situation where a large number of companies became lastingly committed to creating a socially and ecologically responsible corporate following Green Marketing, Eco-labelling and Eco-branding concepts (Thayer Robbins, 2001). Globally speaking, performance of ten Green giants as cited in Table 1 illustrates this perception. Companies’ ecological responsibility is especially accentuated as one of the basic components of corporate social responsibility. Foremost among those compelled to fulfill the new demands for ecologically responsible business operations are the multinational companies whose core business is directly linked to high degrees of environmental pollution, such as oil companies, power Sector Company, manufacturing company such as automobile industry, engineering goods etc. Convincing proof of the significance of the ecological component of the corporate image is embodied in the continual activities and investments of “potential polluter” companies so as to maximally neutralize the negative environmental impact of their business operations including emissions reduction. The multinational British Petroleum company (ExxonMobil) represents an appropriate example of a strategic orientation towards building an ecologically responsible corporate image. This has also become a strategic issue for ExxonMobil, which is increasingly frequently promoting alternative energy sources and their positive effect on the environment. So-called green companies, such as Toyota, VoxWagan etc are committed to the use of renewable energies, and becoming attractive for investors.

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CSR and Competitiveness Table 1: Country Image Rating of India, US, and China

Sl. No.

Company

Business

Location

Year of Founding

Earnings (in $)

Number of Employees

Honda

Automobile industry

Japan

1945

84.2 billion

145,000

Continental Airline

Airline industry

Japan

1945

13.1 billion

44,000

Suncor

Refinery

Canada

1917

13.6 billion

5,500

Tesco

Energy

G. Britain

1919

71 billion

Alcan

Aluminum production

Canada

1902

23.6 billion

68,000

PG&E

Energy

San Francisco

1852

12.5 billion

20,000

S.C. Johnson

Household cleaner production

Racine, Wis.

1886

7 billion

12,000

Goldman Sachs

Banking

New Year

1869

69.4 billion

24,000

Swiss Re

Insurance

Switzerland

1863

24 billion

10,500

10.

HewlettPackard

High technology

Palo Alto

1939

91.7 billion

380,000

156,000

Source: Martin, I.M. and S. Eroglu (1993).

Impacts of Social Networking on Corporate Image Social media plays an important role in many companyâ&#x20AC;&#x2122;s marketing strategies, and is quickly becoming a popular tool for value-add customer service and community building around the brand. Getting employees involved in social media tool like Facebook can truly enhance your company or products reputation and assist in generating increased referral business, but only if special guidelines are set that everyone can follow and understand. Social media policies are more than just a commitment for how the company Facebook page is run or which social media websites employees are allowed to use from the office. In this regard, the best policies are an extension of a company brand strategy and include guidelines around how the company or product should be positioned or talked about on social networks, what information should remain private, and how employees and social media representatives should conduct themselves at all times, anywhere they can be identified or connected with the company. Social Networking is a concept that federates all of these changes and is at the center of this transformation. The founders of social networks are x-rayed by Forbes magazine on regular occasions most especially the miracle of

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“Mark Zuckerberg“ (facebook) who joined billionaires’ league of recent origin: “The same invention that makes a person rich is the same that makes some poor”. The new generation just starting their working careers, also called the ‘Millennials’, is made up of digital natives—born with a mouse in their hand, who have mastered the Internet and the PC and have a radically different approach to computing, with profound implications for the professional world Social Networking takes advantage of all the above notions to produce tools that foster collective intelligence, collaborative work and support communities: not only social networks, but also search engines, blogs, wikis, collaborative tagging and instant messaging/presence features, at least, are part of the Social Networking movement. The concept of “personal branding” plays a crucial role. Social media networking has enabled everyone to have their own personal brand by way of publicly sharing anything and everything that they “say” on the World Wide Web. If you cut through all of the semantics and take this concept of personal branding down to the most basic level, what you are left with is simply what is commonly referred to as your “reputation”. What happens in this advanced age of technology and social media marketing to a company’s brand reputation when their employees have their own personal brand? This topic was discussed and debated at great length in Fortune Magazine’s article Building your brand (and keeping your job) by Josh Hyatt. Josh spoke about Scott Monty, Ford’s first global digital and multimedia communications manager and his use of social media to promote his own personal brand and Ford’s corporate brand. In summary, Scott was a social media guru with a high degree of credibility and 3,500 Twitter followers prior to accepting a position with Ford and had already earned his personal brand reputation. Scott used his social influence to further the goals of Ford and enhance their brand synergistically with his own brand (http://www.compukol.com/ blog/when-personal-branding-and-corporate-image-collide).

Corporate Societal Marketing (CSM) in Image Building The use of Corporate Societal Marketing (CSM) appears to be on the rise in accordance with the increasing recognition of the vast potential of CSM programs (Drumwright 1996; File and Prince 1998; Varadarajan and Menon 1988). Corporate societal marketing is defined to “encompass marketing initiatives that have at least one noneconomic objective related to social welfare and use the resources of the company and/or one of its partners” (Drumwright and Murphy 2001). One factor driving this growth in CSM is the realization that consumers’ perceptions of a company as a whole and its role in society can significantly affect a brand’s strength and equity. For example, the 1999 ‘Cone/Roper Cause-Related Trends Report’ revealed that among U.S. residents (1) 80% have a more positive image of companies that support a cause that they care about, (2) nearly two-thirds report that they would be likely to switch brands to one

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associated with a good cause, and (3) almost three-quarters approve of cause programs as a business practice. Corporate societal marketing has been used to satisfy multiple objectives. Goals for companies that implement successful CSM programs include “creating a differential advantage through an enhanced corporate image with consumers” (Lichtenstein et al., 2000) and “differentiating themselves from the competition by building an emotional, even spiritual, bond with consumers” (Meyer, 2003). Other benefits exist too. For example, the Muscular Dystrophy Association’s (2001) Web site lists the following benefits of affiliation for corporate partners: “It’s good business to do business with MDA. The Association’s programs can (1) Enhance your company’s public image; (2) Boost employee morale; (3) Draw attention to a product or service; and (4) Contribute to an increase in sales.” Moreover, CSM programs may provide a reservoir of goodwill that will help deflect criticism and overcome negative publicity from an unexpected event or tragedy (Dawar and Pillutla, 2000). Although the potential benefits of CSM programs are vast, we focus on the specific benefits of CSM programs with regard to the shaping of brand equity. Corporate societal marketing programs are poised to play a more important role in brand marketing.

SIGNIFICANCE OF CORPORATE REPUTATION Effective reputation management requires the engagement of a broad range of timetested strategies and core as well as differentiated competencies over a period of time if any organization have to survive today’s dynamic and competitive business environment. When people think about a company or their products and services, it is really the unconscious consideration of the company’s reputation that is at the forefront of their mind. For instance, a survey of the top 250 UK companies in 2000 revealed that damage to reputation was the biggest business risk managers faced. In times of increasing competition, what the public perceives is most prominent and glaring. The focus has shifted from what a company does to how it does its business. By generating a positive impact factor to build reputation, a company can certainly gain competitive advantage— because from the customers’ perspective, a good reputation reduces the perceived risk of buying a company’s products and services. According to Henry Ford—“You can’t build a reputation on what you are going to do. Reputation is the result of a company’s former actions, but at the same time, it has an expectation quality.” Hill and Knowlton’s Corporate Reputation Watch, 2004 Survey’s key findings (www.hillandknowlton.com) provide the down to earth significance of corporate reputation in the business world as per the following statistics: • 93% of senior executives believe that customers consider corporate reputation important or extremely important. • 79% of senior executives believe that investors and lenders consider CR either important or very important.

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The impact of corporate governance has increased dramatically since 5 years ago: now 40% of senior executives believe that strong corporate governance is a critical factor that potential investors consider before committing, whereas 5 years only 19% thought the same. In 2001, the insurance firm Aon polled 2000 top UK’s private companies and showed that “loss of reputation” was viewed as the greatest risk, followed by failure to change” (www.aon.co.uk).

Corporate reputation is important to the career of the CEO of a company. As part of the process of evaluating the performance of the chief executive, there has been a growing trend for boards of directors to measure changes in their organization’s reputation. And international surveys show that more than half of an organization’s reputation can be attributed to the CEO. According to US research conducted in 2003, among 1,400 influential stakeholders, about 50% of a company’s reputation could be attributed to the CEO. The figure was even higher in German research conducted in 2001, wherein the CEO’s reputation accounted for two-thirds of overall corporate reputation. Thus, the CEO’s reputation can potentially add millions of dollars to the market value of the company.

Ethical Branding of Corporate Reputation According to Keller (1998), a socially responsible corporate image association involves the creation of consumer perceptions of a company as contributing to community programs, supporting artistic and social activities (i.e. mostly philanthropic) and generally attempting to improve the welfare of society as a whole. A corporate brand is the core component of corporate reputation. Being the face of the organization that owns it, a corporate brand has to communicate to a wider range of audiences than consumers and investors. According to one study of long-term stock price movements and company reputation changes, some 8–15% of a company’s stock price can be accounted for by corporate reputation (Greyser, 1996). On the other hand, a company’s corporate reputation is also affected by its past performance, both financial performance and social performance. Ethical issues are also inextricably bonded to corporate reputation and corporate branding. Ethical branding is a new area with many complicated issues in need of research. These issues can be separated into two broad categories. Firstly, ethical issues in the branding decisions: naming, renaming, positioning and targeting. Enough has been written about the purported benefits that a brand brings to the consumer and its owner (Ambler, 1997). Integrity and reputation are closely correlated. It is in the interest of individuals and organizations to keep such a high moral and professional standing since it could bring them a lot of benefits such as credibility, trustworthiness and loyalty besides the fact that integrity is a value in itself worth pursuing. In the

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wake of the numerous recent corporate and organizational scandals in the corporate world in general, politicians and lawmakers are demanding more stringent reporting and control mechanisms in an attempt to restore the reputation of the corporate world. Clearly, there is a close link between ethical branding and corporate reputation. These attributes may include: honesty, integrity, diversity, quality, respect, responsibility and accountability (cocacola.com), and define what an ethical brand stands for. An ethical brand enhances the firm’s reputation; such a reputation reinforces the brand in turn. Ethical branding can be studied at both corporate and product levels. Any unethical behaviour will severely damage or even destroy the total intangible asset as evidenced by the some recent high profile scandals such as Enron and Anderson Consulting. The organization needs to make systematic efforts to create and maintain an ethical corporate brand image that not only enhances its corporate reputation but also gives the business competitive advantages. Good Corporate Governance is closely linked to ethical standards maintained by an organization. Corporate governance is a set of mechanism through which firms operate when ownership is separated from management. The objective of good corporate governance is aimed at maximizing the contribution of firms to the overall economy, which includes all stakeholders and business partners. Good Corporate Governance usually aims to complying with strict corporate legal procedures and law, focusing on the responsibility of governing the organizations through risk and strategic management, appropriate remuneration and succession planning and internal and external Auditing. The implementation of codes of conduct, strict procurement procedures, having an overall vision in place expressing the principles and values are all important elements contributing to improving governance. If ethical values and strictly implemented rules and regulations are part of an organizational culture, chances are that activities undermining reputation may decrease over time for ethically managed corporations. According to Fombrun (1996), corporate reputation consists of four characteristics: credibility, reliability, responsibility and trustworthiness. Widerman and Buxel (2005) contend that corporate reputation helps the companies to get good employees, attract consumers, and increase consumers’ loyalty, which may be implemented as a factor of competitive performance and useful in obtaining the capital. The key role of corporate governance has to be the improvement and protection of corporate reputation. Kitchen and Laurence (2003) have proven that reputation of a CEO and reputation of a company are linked to each other. Good reputation is however impossible to maintain without internal organization support. Argenti and Druckenmiller (2004) defined corporate reputation as ‘a collective presentation of all participants image, built through the time and based on programs of company identity, its performance and perceptions of its behavior’.

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According to Barnett et al. (2006) corporate reputation includes basic components, such as the image and quality. Identity is determined as a perception of the company’s nature by its employees and managers; the image is a perception of external parameters of the company. Reputation of corporation may be observed in the sphere of awareness and it Building Corporate Reputation through Corporate Governance includes general awareness of stakeholders, without judgements. In the sphere of evaluation, there are definitions that show that stakeholders are included in the evaluation of company status. Clearly, there is a close link between ethical branding and corporate reputation. These attributes may include: honesty, integrity, diversity, quality, respect, responsibility and accountability and define what an ethical brand stands for. An ethical brand enhances the firm’s reputation; such a reputation reinforces the brand in turn. Ethical branding can be studied at both corporate and product levels. At the corporate level, a corporate brand is a vital part of the corporate reputation management. Corporate branding should provide a clear vision about how the firm’s brands are going to make the world a better place and have a justified set of core values (de Chernatony and McDonald, 2003). This ethical brand positioning could benefit the company with a differential advantage over competition; and at the same time, could help overcome the increasing consumers’ skepticism and cynicism towards branding communications. Ethical branding is a new area with many complicated issues, which need extensive research and analysis (Ambler, 1997).

Sustainable Image and Reputation Management Today, image is considered to be much more in-thing than impression or construct created by graphic design or advertising. In the modern management theories, multidimensional nature of image, intangible aspects and reputational sustainability are being emphasized. The necessity for holistic approach in reputation management has been emphasized by Gray and Balmer (1998), Davies et al., 2003; Davies (2006) etc. According to Gray and Balmer (1998), organizational reputation unfolds all the visual, virtual, verbal and behavioral elements of an organization or a person. Therefore, it should be perceived that individual, organizational or institutional reputation is concurrent to the all ones actions, results and their interpretations among various stakeholders. Image and reputation is driven by the multitude or a plethora of both internal and external factors/forces and they impinge heavily on image and reputation equally (Figure 3). Ones image and reputation can be affected not only on stakeholder’s direct meeting with the a politician, some representatives of the party, institution or public organization, but it is also being influenced by media messages, gossips, other stakeholders’ reviews and appreciations. Gray and Balmer (1998) predicated that reputation should be a dynamic expression of implementing corporate vision. Strong organizational values, organizational culture and their positive impact on reputation are

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emphasized by Little (1999). Professional and political competences can make a crucial impact on ones image and reputation in the institutional/organizational context.

Fig. 3: Factors Driving Corporate Image and Reputation

Long-term relations and reputation can lead to sustainability with built-in consistency. Corporations pursuing â&#x20AC;&#x153;Sustainabilityâ&#x20AC;? include big corporate giants like Proctor and Gamble; Dow Chemical; ABB-Asea Brown Boveri. These companies, among other things, meticulously follow Environmental Management Systems (EMS) with environmental concerns. This EMS model leads to continual improvement based upon: Planning, including identifying environmental aspects and establishing goals; Implementing, including training and operational controls; Checking, including monitoring and corrective action; and Reviewing, including progress reviews and acting to make needed changes to the EMS. EMS is also ISO compliant. ISO-14001 requires implementation of an Environmental Management System (EMS) in accordance with defined internationally recognized standards (as set forth in the ISO-14001 specification) by way of establishing an environmental policy, determining environmental aspects and impacts of products/activities/services, planning environmental objectives and measurable targets, implementation and operation of programs to meet objectives and targets, checking and corrective action, and conducting management and performance review.

Building Favorable Corporate Reputation: Corporate Cases Corporate reputations also make it possible to compare organizations (Dowling, 2001). While very useful, assessments of corporate reputation and corporate identity are

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still imperfect. Earle (2009) draws a distinction between trust in an organization and confidence in an organization. Corporate reputation is a critical factor in responding to a crisis (Schnietz and Epstein, 2005). Quality of management emerged as the most significant factor in corporate reputation, when financial performance was excluded. CEO reputation was the next most important factor in their decision to recommend a firm for investment. Hall (1993, 1999) surveyed 847 CEOs in the UK from a number of different industries and found that they estimated it would take them, on average, almost 11 years to rebuild their firm’s reputation if they had to start from the beginning. A 2004 Burson-Marsteller survey of 685 business leaders from Fortune 1000 firms found that they believed it would take more than four years to recover from a crisis that damaged an organization’s Corporate Reputations: Development, Maintenance and Repair 5 reputation and three years for a crisis to fade from the memory of most stakeholders. But 90 percent believed that a company could restore a tarnished reputation. A good corporate reputation is enhanced by the tangible things that it does—not by advertising (e.g., by delivering better products and services, being seen as a good place to work, and the building of trust with internal and external stakeholders).This leads to a distinction between well-known celebrity firms and firms having a solid corporate reputation. A corporate reputation is an investment. Although different stakeholders have different perceptions of a company’s reputation, customer and employee perceptions are the key. A favorable corporate reputation rests on competing successfully in the market place, achieving a familiar and positive image, building an ethical and high performance work culture, and communicating widely with various stakeholders (Deephouse et al., 2005; Fombrun and Van Riel, 2003). A positive organization reputation will increasingly influence purchase decisions when there is little difference in price, quality design and product. There is even more competition, lack of differentiation, and pricing concerns in the service sector. Thus building a highly regarded corporate reputation or corporate brand had become even more important. Interestingly, there are more threats to a company’s reputation today than previously. Corporate reputation has two components: sympathy—emotional identification and liking—and competence—the quality of services and products delivered. Corporate reputation has the following building blocks: emotional appeal, vision, leadership and integrity, social responsibility, and a workplace environment supporting performance. Fombrun (1996) observed that organizations doing a good job managing their corporate reputations stressed the following factors: (i) Distinctiveness—firms occupied a distinct place in the views of stakeholders; (ii) Focus—firms emphasized a core them; (iii) Consistency—firms were consistent in their communications with all stakeholders; (iv) Identity—firms were seen as genuine by stakeholders (v) Transparency—firms were seen as open and forthright in going about their business.

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Davies (2008), in a study of 859 managers form 17 organizations, investigated the association of their employer brand with four outcomes (perceived differentiation, affinity, identification and loyalty). Five dimensions of employer brand were included: agreeableness, enterprise, chic, competence, and ruthlessness. All four outcomes were predicted by aspects of employer brand. Agreeableness had the strongest predictor of outcomes. Surprisingly, competence was not related to any of the four outcomes. Organizations with a favorable leadership brand have a reputation for developing exceptional managers with a distinct set of talents that fit the expectations of customers, clients, and investors. It takes quite a long time to build a company reputation. Strong brands would include Coca-Cola, Microsoft, IBM and GE. Reputation building involves media coverage, sponsorship of events, public relations, publicity, offering high quality products and services, and most of all, “walking the talk”—behaving in the market place in accordance with stated values and principles. Organizations need to continually monitor their reputations in order to self-correct. Building and maintaining a favorable corporate reputation require considerable investment of resources.

CORPORATE BRANDING: THE FOUNDATION OF A CORPORATE BRAND Hatch and Schultz (2003) see corporate brand as constituting from three elements: strategic vision, organizational culture and corporate images (Figure 4). Vision is about what the organization and its central idea is and what the organisation wants to be, and it is usually an outcome of what are the thoughts of the manager or owner of the organisation. Culture relates to internal dimensions of the organization and communicating the meaning of the organisation to its members, and the images are the views of the stakeholder groups about the organization (Hatch and Schultz, 2003.) Thus the model includes three important factors of corporate branding, which are the management, employees and stakeholder groups.

Fig. 4: Foundation of Corporate Branding Source: Hatch and Schultz, 2003.

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All in all, these three elements, culture, vision and image, separately from each other may not constitute a successful corporate brand, but the attention should instead be paid to the relationship of the elements. These elements form the corporate brand and all together they should be in line with the desired outcome of corporate branding. The promise the brand makes and the performance of the organizations should also be in line to success in branding (Hatch and Schultz 2003, Schultz and Hatch, 2003 and Schultz et al., 2005). In corporate branding the link between the actual identity and communicated identity must be honest, and the two should be corresponding for the brand to be successful. In other words, corporate brand should be internally and externally congruent and continuous communication between these interfaces should exist (de Chernatory, 2001). According to Hatch and Schultz (2001) successful corporate branding is typically based on the alignment between (1) the strategic goals of the top management level (strategic vision ), (2) the knowledge and attitude of the employees (corporate culture) and (3) the perceptions of external stakeholders (image) (Figure 5). In other words, Hatch and Schultz claim that the strategic goals need to be supported by and fit with the corporate culture and must fit with the perceptions of key stakeholders to build and maintain a strong corporate brand.

Fig. 5: Hatch and Schultz’s VCI method

The key challenge for the firm is to turn visions into action: action on the part of the brand, in converting vision into brand value; and action on the part of the stakeholder, to invest in the brand; either through purchase, investment or alliance. Action on the part of these stakeholders means making the brand work for them. Visions do not “work” on their own. A vision can be an empty promise to the firm’s stakeholders if it is not followed up by action: i.e. walking the talk. The following flowchart diagram (Figure 6) outlines a model of the way in which vision is implemented through the corporate brand. This outlines the basics of the model, which consists of three elements: Vision, Communication and Action. These three elements are then related to corporate strategy, through key questions for management.

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Fig. 6: Translating Vision to Action

A Framework for Corporate Branding A strong corporate brand acts as a focal point for the attention, interest and activity stakeholders bring to a corporation. Like a beacon in the fog, a corporate brand attracts and orients relevant audiences, stakeholders and constituencies around the recognizable values and symbols that differentiate the organization. But corporate branding is not only about differentiation, it is also about belonging. When corporate branding works, it is because it expresses the values and/or sources of desire that attract key stakeholders to the organization and encourage them to feel a sense of belonging to it. It is this attraction and sense of belonging that affects the decisions and behaviours on which a company is built (Figure 7). A strong corporate brand taps this attractive force and offers symbols that help stakeholders experience and express their values and thereby keep them active.

Fig. 7: Successful Corporate Brands Draw Stakeholders to the Organization

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Corporate Re-branding and Inter-organizational Relationships Re-branding is the practice of building a new name representative of a differentiated position in the mind frame of stakeholders and a distinctive identity from competitors (Muzellec et al., 2003). A corporate name change may enhance market recognition and position and generate an increase in the stock market value of renamed firm. For a new name to be lunched, however, the old name has to be abandoned, an action likely to nullify years of branding effort in terms of creating awareness. Since name awareness is a key component of brand equity (Aaker, 1991), this action is likely to further damage the equity of the brand. As the name is the anchor for brand equity, the change of name might not only damage the brand equity, it might simply destroy it (Muzellec and Lambkin, 2006). The re-branding concerned brand equity, brand gestation, and communication involvement. It was proposed that re-branding exercise involving a change of name had the potential to affect old-name brand equity adversely. Thus, whether a re-branding follows from corporate strategy or constitutes the actual corporate strategy, it aims at enhancing, regaining, transferring and/or recreating the corporate brand equity (Muzellec and Lambkin, 2006). Kailkati’s study has shown an interesting number that from the first half of 2000 to 2001, re-branding around the world increased by 7 percent, equivalent to 1,993 name changes. The United States of America led the world with a total of 1,761 name changes. Meanwhile The United Kingdom was the first across the Atlantic with 65 name changes. Next were Canada with 41, Germany with 29, France with 24, and Japan with 21 (Kaikati 2003). As the activity carries forward, re-branding has become one of the most discussed topics in Asia, including Thailand. From Muzellec et al. (2003)’s study, the study shows that 166 companies, which have gone through re-branding represent over 40 different industries. Those are categorized into 12 general industry types derived from the North American Industry Classification System (NAICS) for ease of analysis. The categories with most re-branded companies are the information technology and telecommunications industries, representing 22.3 percent of the entire rebranded companies. This evident shows a market trend of technology that it is changing rapidly. Many telecommunications companies will change their strategies and reposition to be compatible and trendy with the technology advancement. Co-branding takes three forms: ingredient branding, cooperative branding and complementary branding. Ingredient branding is the placement of one brand within another brand, such as Intel microprocessors in Compaq computers. Cooperative branding is the joint venture of two or more brands into a new good or service. Study the advertisement featuring a cooperating branding venture by American Airlines, Citibank, and MasterCard in this section. Complementary branding is the marketing of two brands together to encourage co-consumption or co-purchases, such as Seagram’s 7 encouraging 7-Up as a compatible mixer or Oreo milkshakes sold in Dairy Queen stores. 27 Locating

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Subway sandwich shops in convenience stores, Little Caesar’s in Kmart outlets, and McDonald’s in Wal-Mart stores is another type of co-branding trend. From the short review of the existing research on the effects of co-branding, it is evident that the relationships a manufacturer has with its supplier and distributors are regarded as relative unambiguous and primarily based on financial benefits. However, although a co-branding strategy might improve a distributor’s profit margin, it does not necessarily imply that the relationship between the manufacturer and distributor is improved. If for instance the distributor feels obliged to keep cobranded products in the assortment because the co-branding strategy has generated preference among consumers, the relationship might actually become worsen because the distributor face the power of a dominant manufacturer. In addition, no research has empirically investigated which effect that a co-branding strategy has on interorganizational relationships. In the figure below, the relationships that a co-branding strategy potentially has impact on is identified (Figure 8).

Fig. 8: Overview of Focal Relationships where Co-branding can have an Influence on Suppliers and Customers

The increasing importance of CSR at the corporate board level coincides with a growing interest among scholars in corporate marketing as a distinctive model of marketing in its own right. Balmer and Greyser (2006) call this the “corporate model” of marketing. The components of this model are strongly aligned with current conceptualizations of CSR: they include the ‘stakeholder’ orientation (including future as well as present stakeholders), ‘organizational support’ (coordinated organizational activities which support the stakeholder orientation); an ‘end-focus’ which goes beyond the profit motive and a ‘societal application’ which takes into account the future societal needs of stakeholders and sensitivity to “the organisation’s inheritance where applicable” (Balmer, 2001). Taken as a whole, these components of corporate marketing are clearly an extension of CSR orientations.

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Corporate Branding to Project Corporate Image Corporate Brand defines the firm that will deliver and stand behind the offering that the customer will buy and use. Corporate branding allows access to organizational as well as product associations, e.g., Dell, UPS, SONY, Samsung, IBM. The Corporate Brand will be expected to project: A Rich Heritage, e.g., L.L. Bean and the Bean family heritage; GE tracing itself back to Thomas Edison; Honda engine development back in the 1940’s and ‘50’s; Assets and Capabilities: e.g., Wal-Mart has the technology; Singapore Airlines can deliver outstanding service; Prudential has financial assets behind it; People: e.g., Bill Gates at Microsoft; Michael Dell at Dell; Richard Branson at Virgin, Values and Priorities. Corporate brand can potentially find differentiation in the organizational associations: e.g., Wells Fargo is very different from Bank of America in terms of personality, style and heritage. Corporate brands can also to a large extent bring about credibility. For example, a trustworthy organization will be given the benefit of the doubt. An organization will be liked because of its citizenship activities. Corporate branding makes brand management easier and more effective. The translation of the corporate brand internally to employees must be supported by the mission, goals, values, ad culture of the organization. A corporate brand provides a message for the customer relationship that can be very different from that of the product brand. For instance, it can represent the heritage of the company and allow the brand building on that strength. Managing the Corporate Brand faces several challenges from the competitors. The principle ones are: maintaining relevance, creating value propositions, avoiding visible negatives; managing the Brand in different contexts etc. There should however be consistency across contexts. e.g., GE is in the jet engine, appliances and financial services markets. Core identity should work everywhere. Corporate brands can reduce costs. e.g., Nestlé and Unilever are reducing the number of product brands to exploit economies of scale. They give customers a sense of belonging to the community. Apple and Virgin provide customers with a distinctive positioning across products. They create common ground. McDonald’s golden arches appeal to different cultural groups. They provide a seal of approval. Sony stands for competence, quality and service over a number of products and service groups.

Corporate Brand Personality Management Brand personality has been defined as the human characteristics or traits that can be attributed to a brand. Corporate brand personality is a form of brand personality specific to a corporate brand. Unlike a product brand personality that typically relates to consumers and user imagery for a specific product brand, a corporate brand

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personality can be defined in terms of the human characteristics or traits of the employees of the corporation as a whole. A corporate brand personality will reflect the values, words, and actions of all employees of the corporation. A successful 21st century firm must carefully manage its corporate brand personality. The three core dimensions of corporate brand personality and two traits for each dimension that are crucial for marketplace success are outlined as Passionate and Compassionate (Heart), Creative and Disciplined (Mind) and Agile and Collaborative (Body). According to Keller and Richey (2006) these traits have an interactive effect such that the effects of one trait can be enhanced by the existence of another. A key component of the corporate image is the corporate brand personality. Corporate brand personality, however, is much more about perceptions of employees—both senior management and customer-facing—that make up the company as well as the organization as a whole. Corporate brand personality reflects the values, actions, and words of all employees of the corporation. In a business-to-business setting, corporate brand personality is often determined by direct contact with a wide range of employees. As a result of the different focus, corporate-level traits transcend individual products that the firm sells and the five product brand personality dimensions. Knowledge and understanding of the desired Brand image can be developed through: (i) Advertising and public relations efforts; (ii) Training and development around the development of the desired brand image (e.g. training on how to handle difficult customers); (iii) Performance management and compensation systems (e.g. Starbucks names its compensation system as “Your Special Blend”). Although the concept of brand personality is relevant to both product brands and corporate brands, there is an important distinction that can be drawn between the two types of brands that affects how the brand personality concept should be applied. A corporate brand is distinct from a product brand in that a corporate brand can encompass a much wider range of associations. For example, a corporate brand may be more likely to invoke associations based on people and relationships; programs and values; and corporate credibility; as well as on common products and their shared attributes or benefits. Procter and Gamble is an example of a corporate brand that has a more broadly defined and differently composed set of associations than those associations of the product brands it owns. Consequently, corporate brands will typically have a set of personality traits that is broader and differently composed than the set of personality traits for each product brand owned. Unlike a product brand personality that typically relates to consumers and user imagery for a specific product brand, a corporate brand personality can be defined in terms of the human characteristics or traits of the employees of a corporation as a whole. A corporate brand personality will therefore reflect the values, words and actions of employees, individually and collectively; and ideally it should be aligned to the overall corporate vision and strategy as a major Brand initiative for a company (Hatch, and Schultz, 2001 and 2008).

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Celebrity Endorsement and Brand Image A celebrity endorser is “any individual who enjoys public recognition and who uses this recognition on behalf of a consumer good by appearing with it in an advertisement” (McCracken, 1989). This definition explicitly encompasses celebrities who appear to have expertise or a long-term association with the manufacturer, but it excludes typical customer endorsements featuring non-celebrities. Because celebrities appear to be gaining increasing influence in society, marketing managers try to exploit the process of meaning transfer from an endorser to products or brands involved (McCracken, 1986, 1989). Associative learning theory details that celebrity endorsements influence brand image through a transfer of meaning from the endorser to the brand (Till et al., 1998). Communication activities establish a pattern of connectivity between the image of the celebrity and the image of the brand. Both entities represent nodes in a cognitive network, whose connectivity can be modified according to experience. An image transfer occurs when an advertisement can establish contingency between the two entities (Till et al., 1998; Till et al., 2008). Managers pursue such connectivity with the goal of obtaining a favourable brand image outcome. Brand image encompasses all perceptions of a brand, stored as brand associations in consumer memory (Keller, 1993). Its importance mainly reflects its ability to provoke unique perceptions of the brand in competitive settings (Aaker, 1996). It also constitutes a meaningful brand value driver and thus influences the formation of brand equity. Keller (1993) distinguishes among attitudes, attributes and benefits as types of brand associations, and Barich and Kotler (1991) regard brand attitude, belief and impression as ingredients of brand image. Both perspectives imply that improved attitudes toward the brand favourably influence brand image.

Communicating Corporate Social Responsibility—Brand Management The ongoing debate concerning the role of the businesses in the community is an expression of expanded corporate responsibilities referred to as CSR, corporate social responsibility, or CR, Corporate Responsibility (Löhman and Steinholz, 2003, Porter and Kramar, 2006). There is no one universally accepted definition (Whitehouse, 2006), but a number of organizations and companies have their own interpretation of CSR. The European Union states the following about the definition of CSR: “CSR is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis”. CSR is regarded as a part of the “triple bottom line”, a concept that was coined by Elkinton (1998) in which sustainability is built on financial, environmental and social grounds. Working actively with CSR by taking actions in favour of maintaining the balance between these three values is not regulated by laws; it is a voluntary initiative (Hollender and Fenichell, 2004; Löhman and Steinholz, 2003).

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Despite the increased focus on corporate responsibility, the question of the business community’s role in society is not a new phenomenon. Companies have always been a part of society, but their role and responsibilities have become somewhat unclear, leaving room for individual interpretations of private and public domains (Löhman and Steinholz, 2003). There are presently a number of multinational corporations acting all over the world in the spirit of the globalization trend (Arnold, 1993; Löhman and Steinholz, 2003; Michael, 2003). The 100 largest economies in the world today are represented by only 50 countries; the rest are multinational corporations (Foley, 2003, Veres, 2001). An increased awareness and focus of the responsibilities of a corporation gives the business communities the opportunity to be important and powerful actors in society (Nilsson, 2005; Ruggie, 2002). Companies are encouraged to actively work with CSR. But it is not only an opportunity given to the companies; it is also in many cases expectation by customers, employees, society and other stakeholders (Kotler and Lee, 2005). CSR communication is still an area to be explored (La Ferle and Choi, 2005; Maignan and Ferrell, 2004; Takala, 1996). The relevant partners in a CSR dialogue need to be identified in order to provide grounds for investment in CSR conduct and a meaningful continued dialogue. These partners, sometimes labelled senders and receivers, are referred to collectively as stakeholders (Maignan and Ferrell, 2004), sometimes with a division in primary, indispensable, and secondary, supportive stakeholders (Whitehouse, 2006). In recent years, corporations have faced increasing CSR expectations from their societal environment (Balmer and Greysner, 2003, 2006; Michael, 2003; Whitehouse, 2006). CSR refers to compliance with legal obligations as well as moral rules above and beyond “business as usual”. In a search for societal acceptance and legitimacy, businesses communicate their ethical grounds for conducting business in CSR actions. Communicating CSR requires an understanding of consumer insights in other words the profile. Customers may attribute value based on, for example, personal positive experiences or positive verdicts from trusted sources, the so-called ambassadors. But what about CSR values? They represent credence values that are difficult to see, measure and confirm. The credence values are founded in the corporate ethical stands. These values are based on trust, and they are sensitive to a negative verdict from, for example, media. Media’s role in relaying information is not neutral by any means. News that attracts attention will affect the territory for corporate communication. Media may take on the role as a critical screen to distinguish CSR strategies from CSR stunts, forcing corporations to communicate their ethical stands. Corporate Social Responsibility (CSR) and business ethics are the two concepts that are often used inter-exchangeably but different. This area is further complicated by the use of other terms such as corporate reputation, corporate image, and corporate citizenship, to name but a few (for a comprehensive review on CSR (Carroll, 1999).

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When CSR is driven only by risk management it is not only fake and unsustainable, but also doomed to failure on its own term (Kitchin, 2003). Instead of addressing real issues, CSR merely stages an elaborate pantomime to conceal or distract public attention away from the corporate illness. The idea behind CRM is that aligning companies with causes that consumers feel strongly about, will create social capital and there will be a strong association between consumers and companies (Dowling, 2001). As most marketing managers do not have adequate training or competence to decide which social cause to support and which to ignore, CRM is opportunistic and superficial at best. At worst it could bring in more trouble than benefit to the organisation as it risks alienating a large proportion of its potential consumers by taking stands on issues that are either controversial or have little to do with its core business, a good example is provided by Benetton’s so-called social issue advertising.

CONCLUSIONS The strategic intent of corporate image building and reputation management is to strengthen the trust that stakeholders and customers should have in an organization. There is an inherent and perpetual relationship between a positive image, corporate growth, reputation and profitability. Creating or revitalizing a positive brand image should be the basic drive to lay a solid foundation on which companies can build their future. Building a corporate identity helps to increase recognition and awareness about the company, and this in turn can lead to expansion of the enterprise, scalingup of business activities and increased profits. A strong corporate image allows a company to charge more for its goods, communications and services. A strong corporate image can also create a major competitive advantage in the business-to-business marketplace. This has been aptly illustrated in the paper with corporate examples. The concept of socially responsible business has become a topic of contemporary importance and relevance. Company’s ecological responsibility can be suitably defined and designed so as to translate it into rendering corporate social responsibility for the benefit of mass by initiating economically feasible and socially relevant programmes, sans detriment to the ecology or society for that matter. Social media can play a pivotal role in framing company’s marketing strategies, and this is quickly becoming a popular tool for value-added customer services and community building around the brand. The corporate societal marketing concept can be successfully integrated with corporate social responsibility for creating for projecting enhanced corporate image by building an emotional bond with consumers and the community at large. Effective reputation management requires the engagement of a broad range of timetested strategies. A corporate brand is the core component of corporate reputation. Being the face of the organization, a corporate brand has to communicate to a wider range of audiences than just consumers and investors. Ethical issues are also

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inextricably bonded to corporate reputation and corporate branding. An ethical brand enhances the firmâ&#x20AC;&#x2122;s reputation and such a reputation reinforces the brand in turn. For a successfully managed company, multi-dimensional nature of image, intangible aspects and reputation and log-term sustainability are being emphasized for long-term relationship and reputation management. A good corporate reputation would be reliant heavily on competing successfully in the market place on the strength of a familiar and positive image build built around ethical and high performance work culture and a sound widely networked communication system with various stakeholders across corporate entities. Corporate reputation is a critical factor in responding to a crisis of all conceivable kinds. Even during the recent global economic and financial crisis, many MNCs could maintain their market segments and market reputation based on Corporate and brand image. This should be a learning point for other companies to emulate. Incidentally, CEO reputation can also be viewed as the next most important factor for recommending a firm for investment even through the economic crisis. Organizations with a good leadership brand have a reputation for developing exceptional managers with a distinct set of talents that fit the expectations of customers, clients, and investors. Corporate Brand defines the firm that will deliver and stand behind the offering that the customer will buy and use. Corporate branding allows access to organizational as well as product associations. Corporate brand can potentially find differentiation in the organizational associations. Managing the Corporate Brand however faces several challenges from the competitors. The principle ones are: maintaining relevance, creating value propositions, avoiding visible negatives; managing the Brand in different contexts etc. A key component of the corporate image is the corporate brand personality. Unlike a product brand personality that typically relates to consumers and user imagery for a specific product brand, a corporate brand personality can be defined in terms of the human characteristics or traits of the employees of the corporation as a whole. A corporate brand personality will therefore reflect the values, words and actions of employees, individually and collectively; and ideally it should be aligned to the overall corporate vision and strategy as a major Brand initiative for a company. In corporate branding, the link between the actual identity, based on corporate brand value and communicated identity must therefore be honest, and the two should be corresponding for the brand to be successful. Corporate brand should be internally and externally congruent and continuous communication between these interfaces should exist. Furthermore, the strategic goals of a company aiming to build good reputation need to be supported by and fit with the corporate culture and must fit with the perceptions of key stakeholders to build and maintain a strong corporate brand. In such cases, the key challenge for the firm, however, would be to turn visions into action: action on the part of the brand, in

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converting vision into brand value; and action on the part of the stakeholder, to invest in the brand; either through purchase, investment or alliance. All said and done, corporate branding is not only about the product, brand or even corporate culture differentiation; it is also about the sense of belonging to the community as a whole. When corporate branding works, it is because it expresses the values and/or sources of desire that attract key stakeholders to the organization and encourage them to feel a sense of belonging to it. It is this attraction and sense of belonging that affects the decisions and behaviours on which a company is built and eventually sustains its longterm reputation.

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ABOUT THE AUTHOR Dr. A.N. Sarkar is Senior Professor of International Business at Asia Pacific Institute of Management, Delhi. He has worked for over 30 years in different Central Ministries of the Government of India. Subsequently, he was Chair Professor, NABARD and Professor, University of Petroleum and Energy Studies. He has been Convener and Member Secretary of several Inter-Ministerial Committees of the Government of India in the sphere of socio-economic development and renewable energy. He also served as the National Programme Coordinator for various Internationally-sponsored Projects and Programmes on Sustainable Development. Dr. Sarkar has so far authored eleven Books and over 100 Research articles in reputed National and International Journals. Areas of interest include: International Business, Global Business Negotiations, Oil, Gas, Energy and Petrochemical Industry, Global Climate Policy and Sustainable Development.

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Dovetailing Sustainability with Risk Management: An Up-and-Coming Paradigm for Corporates Roopinder Oberoi Post Doc. Fellow, Assistant Professor, University of Delhi, India E-mail: roopinderoberoi@yahoo.com; oberoidu@rediffmail.com

ABSTRACT Corporate sustainability is a topical yet embryonic corporate management paradigm. Modern management theory is somewhat constricted by a fractured epistemology, which often disconnects humanity from nature and truth from morality. Reintegration is indispensable if organizational/management science is to support eco-logically and socially sustainable development. This article posits requisites of such development and rejects the paradigms of conventional techno-centrism and antithetical eco-centrism on grounds of incongruence. A more rewarding integrative paradigm of “sustain-centrism” needs to be articulated. Sustainability proposes a new way of looking at risk that is broader and encompassing than a traditional enterprise risk management framework. By looking beyond the economic, strategic and operational factors to include social and environmental considerations, sustainability allows corporations to consider emerging risk areas and to look for opportunities presented by risks that are overlooked by other analytical, traditional and systems-driven approaches. Sustainability, coupled with traditional risk identification and analysis tools, gives risk managers the information they need to make better, more informed decisions on an array of risks, including environmental, social, economic, operational and strategic issues. This paper also attempts to present an integrative conceptual framework for sustainability risk management in corporates. The conceptual model to corporate sustainability is offered as the specific management and organizational system to both manage and integrate the corporate goals in order to create economic and financial ‘value’ and ‘awareness’ of environmental and social responsibility. This chapter explores using sustainability as a platform for risk management to supplement the current risk management techniques. The effort is to offer management theorists with an insight to

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reflection and propel a move away from ‘iron cage’ of established scope to understand organisation. It first reviews the meaning and principal requisites of sustainable development and then appraises the conventional paradigm of techno centrism which is found wanting and deficient to ‘sustain’ sustainable development. A new integrative and practical conceptualisation is projected for yielding sustainability in practice. The chapter concludes with a broad and perhaps somewhat provocative set of submissions for remodelling management lexicon and practice in support of sustainable development. Keywords: Corporate Sustainability, Management, Risk Management, Strategic Management, Sustain Centrism, Trans-Disciplinary, Sustainomics, Techno Centrism.

NAVIGATING THROUGH CONTESTED CONCEPT OF SUSTAINABILITY Victor Hugo had said ‘Nothing in this world is as powerful as an idea whose time has come’. Perhaps transforming management theory and practice so that they positively contribute to sustainable development is an idea whose time has indeed come. Twentyfirst century businesses will have to be more cognizant of planetary limits, and also be willing to create new models that take into account biodiversity and natural resources. This is a landmark year in the journey of sustainable development. Two significant milestones mark the year—the 20th anniversary of the United Nations’ Earth Summit in Rio de Janeiro and the 25th anniversary of the Brundtland Report, ‘Our Common Future’. But, Sustainable Development is easier to write about than it is to apply it. This is because, as a concept, it represents a journey with constant refashioning of development model and not mere destination/objective or one time fixing. It is hazy zone being drawn out by all concerned stakeholders. It cannot be summed up as the frequently espoused discourse of the corporate responsibility movement; a galactic battle between ‘Good Corporation’ and ‘Bad Corporation’. In reality it is a ‘mêlée of multiple’ with equally competing predicament that private corporation and their stakeholders must unite forces to resolve. The challenge ahead will be translating the vision of leading companies to the majority of business, which often lags behind. Achim Steiner, Executive Director of the United Nations Environmental Program (UNEP), acknowledges this challenge. He said, “Our global economic discourse is premised constantly on competition and therefore conflict. We are talking about zero-sum games all the time and not about what we can gain from shared objectives.” Sustainable development has been variously conceived in terms of vision expression (Lee, 1993), value change (Clark, 1989), moral development (Rolston, 1994), social reorganization (Gore, 1992) or transformational process (Viederman, 1994) toward a desired future or better world. The construct is fundamentally infused with multiple objectives and ingredients, complex interdependencies, and considerable “moral thickness” (Williams, 1985). As a consequence, some observers forecast that the notion

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of sustainable development will remain fuzzy, elusive, contestable, and/or ideologically controversial for some time to come (Beckerman, 1994; Dowie, 1995; Levin, 1993). In the early 1930s, John Maynard Keynes posited that it would take some time before the accumulation of wealth would no longer be viewed as the motive for enterprise. He went on to suggest that if we hoped to rid ourselves of the pseudo-moral principles that tend to guide business practices, a major transformation would have to occur. The recent focus on ecological (eco) sustainability looked to be a promising motivational force for the creation of such a deep change Many Pioneers call for a rethink of the economic system, although they use different language to describe similar goals. Maurice Strong calls for a “transformation of our economy from being economically driven to being ecologically driven”, whereas Klabin identifies a need to “change the priorities of the economic matrix.” Zukang references a “change of paradigm” in the “pattern of production and consumption” and Stigson acknowledges that “we are looking at a world which is resource constrained and pollution constrained” and “you have to put proper pricing on these…you have to integrate them into the economic system.”1 It echoes the language released in the January 2012 UN report of the High-Level Panel on Global Sustainability, Resilient People, Resilient Planet, which argues for a “new political economy” for sustainable development which would recognize the pricing of environmental externalities, the importance of innovation and value beyond narrow concepts of wealth. The report recommends that the “international community should measure development beyond Gross Domestic Product (GDP) and develop a new sustainable development index or set of indicators.” In a world of changing expectations, corporates need to be held accountable for the way they impact the communities and environments where they operate. Thomas L. Friedman said “In the flat world, with lengthy global supply chains, the balance of power between global companies and the individual communities in which they operate is tilting more and more in favour of the companies….As such these companies are going to command more power, not only to create value but also to transmit values, than any other institution on the planet.” (Friedman; 2005, pp. 62–70). The Sustainability Survey conducted in December 2011, in collaboration with UNEP for its forthcoming report on the business case for the Green Economy, reveals that a very large majority (88%) of the 642 experts polled see pressure for short-term

The Regeneration Project, a collaborative and multi-faceted initiative by GlobeScan and SustainAbility, aimed to provide a roadmap for achieving sustainable development within the next generation, focusing in particular on ways the private sector can improve sustainability strategy, increase credibility and deliver results at greater speed and scale.

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financial results as the primary barrier to business becoming more sustainable.2 Figure 1.

Fig. 1: Barriers to Business’s Transition to Sustainability

The recent global financial crisis has prompted deeper probing of matters related to finance and capitalism. Bendell, Doyle, Cohen, Irwin, and Black (2010 p. 10) conducted a review of capitalism that tapped insights from global leaders, many of whom called for a ‘new kind of capitalism’ which leverages the benefits of free-market coupled with a foundation of ‘‘sound ethics and a strong sense of morality’’. The notion of ‘creative capitalism’, a term coined by Bill Gates and Warren Buffett, supports this idea also. Some leaders—like John Mackey, CEO of Whole Foods—prefer the term ‘conscious capitalism’, explaining that social purpose and profit are to be balanced through voluntary cooperation. Such models assume that leaders will adopt a shared sense of responsibility and commit to a balance: a weave between shareholder and larger stakeholder strategic perspectives.3 While externally-imposed ecological regulations and self-directed incremental changes can stimulate innovation to offset the cost of compliance (Porter and van der Linde, 2

Financial Short-Termism a Major Obstacle to Sustainable Change in Business: Expert Poll http://www.globescan.com/news retrieved in March 2012. The survey, conducted in December 2011, asked experts to say whether they considered a range of factors as being barriers to increased sustainability by businesses. Although most of those polled identified multiple barriers, financial shorttermism was seen as the most significant by some distance. The next most significant barriers were inappropriate regulations and low awareness of the business imperative, both cited by 65% of respondents. Low consumer demand was identified by 57% of respondents, followed by the lack of effective management tools (45%) and the lack of international standards (50%). 3 Bendell, J., Doyle, I., Cohen, J., Irwin, E., and Black, N. (2010). Capitalism in question: The Life worth annual review of corporate responsibility in 2009. Retrieved February 13, 2012, from http://www.lifeworth.com/capitalisminquestion.pdf

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1995), they are limited because they force organizations to prevent, detect, and punish violations (simply preventive), rather than motivate sustainability through values, attitudes, and practices (weaving sustainability into very core of corporations). As stated by Van de Ven (1986, p. 591), ‘‘an innovation is a new idea’’. In a business context, innovation represents ‘‘non-routine, significant, and discontinuous organizational change or even a disjuncture from the past’’ (Mezias and Glynn, 1993, p. 78). As well as the generation of novel and distinctive thoughts that are different from extant concepts (Galbraith, 1982). Innovation for sustainability moves to replenish renewable resources, find alternatives for non-renewable resources, and recycle or assimilate production waste.4 However, despite the raised pitch about sustainable development, unsustainable trends persist and sustainable development has not found the political entry points to make real progress and has yet to become sine qua non of development model. Even though, climate change has become the de facto proxy for implementation of the sustainable development agenda; but the framework of the climate change negotiations are not always the appropriate forums for broader strategic discussions of sustainable development. Kanter (1983) recognized that the emerging global economy would require more social and organizational innovations, ideas that were developed based upon interdependencies and network alignments. She saw that deep change to foster innovation would call for enterprise zones and the development of collective problemsolving task forces. Simultaneously, Mintzberg (1983) cautioned that sustainability would only emerge when it was in the firm’s best interest.5 Recognizing that investment theory directs eco-sustainability decisions based upon risk and returns, he ultimately concluded; ‘‘The heart of the matter is all about management’’ (pp. 12–13). Mintzberg swords were a call to leaders, not insisting that they ‘‘cure society’s ills’’, but cooperate ethically to ‘‘tilt’’ the efforts of the corporation toward what is useful to society instead of what is useless or even destructive (Mintzberg, 1983, pp. 12–13).

CORPORATE SUSTAINABILITY—A TRANS-DISCIPLINARY CONCEPT The “corporate sustainability” also has gained noteworthy consideration among risk managers and has drawn attention in the academic literature (Bebbington and Gray, 1996; Gladwin et al., 1995a; Gladwin et al., 1995b; Hoffman and Ehrenfeld, 1998, Dyllick and Hockerts, 2002; Morrison, 1991a; Schaltegger et al., 2002; Winn, 1995). However, as the vision of corporate sustainability is currently not defined it remains a broad approach that includes various characteristics, in particular relating to the contextual integration of economic, environmental and social aspects. In fact, the 4 5

Galbraith, J. (1982). Designing the innovative organization. Organizational Dynamics, 10(3), 5–25. Mintzberg, H. (1983). The case for corporate social responsibility. Journal of Business Strategy, 4(2), 3–15.

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best acknowledged aspect of corporate sustainability is the heuristic, multi-criteria triple bottom line perspective (Figure 2(a)) which aims to integrate economic, social and environmental aspects of business management (as explained by Elkington, 1998).6 This differs from the macro and political levels where the orientation towards future and present needs as formulated in the Brundtland report has dominated for long. Corporate sustainability encompasses three dimensions of needs, known as the “triple bottom line”; economic prosperity and opportunity; social equity and quality of life; ecological resource preservation. It propels corporate for achieving competitive advantage through the strategic adoption and development of ecologically and socially supportive production processes, products and services and innovative human resource management practices.

Fig. 2(a): Sustainable Development Triangle Supported by a Trans-Disciplinary Framework

Figure 2(b) below, indicates how an emerging ‘sustainomics’ framework (i.e., science of sustainable development), and associated trans-disciplinary knowledge base, would support comprehensive and balanced assessment of the trade-offs and synergies that might exist between the economic, social and environmental dimensions of sustainable development (as well as other relevant disciplines and paradigms) [Munasinghe 1994, 2001; OECD 2001].7 Balance is also needed in the relative emphasis placed on traditional development (which is more appealing to the South) versus sustainability (which is emphasised by the North) (Munasinghe1992). The optimality and durability 6

Elkington J. (1999). Triple bottom line revolution: reporting for the third millennium, Australian CPA, 69: 75. 7 Munasinghe, M. 2001. Sustainable development and climate change: applying the sustainomics transdisciplinary meta-framework. Int. J. Global Environ. Issues 5 (1), 13–55.

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approaches play key roles in integrating economic, social and environmental issues (Munasinghe 2001).

Source: Adapted from Munasinghe 1992, 1994.

Fig. 2(b): Sustainomics: Trans-disciplinary Knowledge base

In trying to bring sustainability ‘down to earth’ (Reinhardt, 1999; Dyllick, 1999; Dyllick et al., 1999; Fussler and James, 1996) many businesses and academic scholars have leaned to focus on the ‘business case’ for sustainable development.8 In this perspective, they ask how firms can further their economic sustainability by paying attention to social and environmental issues, i.e. increase their ecological and social efficiency. Although such an approach is an important step towards corporate sustainability, it is unfortunately not enough. The global market theory of today suggests that firms must be creative, innovative, and discover how to do good business. But doing good does not have to be for the sake of virtue in and of itself; good business comes with realistic incentives. Eco-sustainable organizations provide customers with competitive value, leveraged sustainability can be a point of differentiation, shaping future industries. Such a stronghold will help firms establish market share, become preferred suppliers, and transform brands and organizational identity in a positive manner. Companies will contend better if they continually strive to create sustainable products that are reliable, durable, and of good quality. The notion of deep change in the global marketplace is about developing green products that represent and respect the needs of others beyond self-interest. Sustainable enterprise entails connecting environmental issues to the goals of business in complementary ways. C.K. Prahalad, in ‘The Fortune at the Bottom of the Pyramid’, presented not just the ‘hidden fortune’ with the four billion people who live on less than $2 per day globally, but how businesses could identify, tap into, and expand this fortune by developing 8

Dyllick T., Hockerts K. (2002). Beyond the business case for corporate sustainability, Business Strategy and the Environment, John Wiley and Sons, Ltd. and ERP Environment. 11(2):130–141.

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new models of doing business, often using new technology.9 What all this means is that corporations can derive sustainability value and increase business value at the same time, if they are able to identify opportunities within the array of risks and challenges. Success of microfinance in South Asia and parts of Africa, pricing and distribution of HIV-ARVs, extending stripped-down versions of FMCG products to the poor, community-based waste management, home-cleaning and waste disposal services in slums, are some of the many examples of where companies have begun to shift from risk and cost approach to opportunity and profit approach for sustainability. Corporate sustainability is an nascent corporate management paradigm. While corporate sustainability recognizes that corporate growth and profitability are crucial, it also necessitates the corporation to follow societal goals, particularly those relating to sustainable development. A scan through the literature establishes that the model of corporate sustainability borrows elements from four recognized concepts of: 1) sustainable development, 2) corporate social responsibility, 3) stakeholder theory, and 4) corporate accountability theory. The contributions of these four concepts are illustrated in Figure 3 (Wilson, 2003).10

Fig. 3: The Evolution of Corporate Sustainability

Typically, from management perspective corporate sustainability management is defined by Salzmann, Steger and Ionescu-Somers (2005) as a “profit-driven corporate response to environmental and social issues that are caused through the organization’s primary and secondary activities.” From a more decisive business perspective, corporate sustainability is “a business approach that creates long-term shareholder value by embracing opportunities and managing risks derived from economic, environmental 9 10

C.K. Prahlad, ‘The Fortune at the Bottom of the Pyramid’, Wharton School Publishing, (2004). Wilson Mel (2003). Corporate sustainability: What is it and where does it come from? Ivey Bus. J. Jul/Aug 2003. 67(6): 1–5.

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and social developments” (Dow Jones Sustainability Indexes, 2009). In another description, corporate sustainability strategies and practices aim to meet the needs of stakeholders while seeking to protect, support and enhance the human and natural resources that will be needed in the future” (Australian Government, 2009).11 Enterprise Sustainability Risk Management (ESRM) includes corporate sustainability based aims. Form this account; new Enterprise Sustainability Risk Management (ESRM) concept is based on the triple bottom line concept and it’s also includes strategic and cultural dimensions of business management: Financial-Social-Environmental-Strategic and Cultural dimensions (Values and norms, Communication, Leadership styles and Conflicts) sometimes also referred as Quadruple Bottom line (QBL). Corporate sustainability management can be understood in both functional and institutional terms. From a functional point of view it is designed to steer ecological, social and economic impacts of business activities in such a way that an enterprise develops in the direction of sustainability. The aim is not only to ensure systematic management of social and ecological aspects using economic methods, but also to integrate them in the conventional business management process. From an institutional point of view, corporate sustainability management describes the group of actors and organisational structure within the business enterprise that are concerned with social and ecological aspects and their integration in the conventional process of operational management of business activities (Schaltegger, Herzig, Kleiber, Müller, 2002).12 According to the Visser (2007), the corporate sustainability is a value laden umbrella concept, which refers to the way in which the interface between business, society and the environment is managed. Despite being a relatively young field of academic inquiry, scholars have succeeded in engaging with the mainstream management literature, as well as establishing journals that specialise in various aspects of corporate sustainability. However, research on corporate sustainability still has a bias towards an environmental association and is mainly focused at the organisational level. Scholars approach the subject in a variety of ways, performing exploratory, descriptive, normative and instrumental research, and employing both quantitative and qualitative methods (Visser, 2007).13 The most broadly accepted criterion for corporate sustainability constitutes a firm’s efficient use of natural capital. This eco-efficiency is usually calculated as the economic 11

Australian Government Department of the Environment, Water, Heritage and the Arts, (2009). Corporate Sustainability. Business and Industry Sustainability. 12 Schaltegger S., Herzig C., Kleiber O., Müller J. (2002). Sustainability Management in Business Enterprises, Concepts and Instruments for Sustainable Organisation Development, Centre for Sustainability Management (CSM) e.V., CSM, University of Lueneburg, Federal Ministry for the Environment, Nature Conservation and Nuclear Safety 2nd Edition, BMU/BDI (Eds.) 2002. 13 Visser W. (2007). Corporate Sustainability and the Individual: A Literature Review, University of Cambridge Programme for Industry Research Paper Series: No. 1, 2007.

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value added by a firm in relation to its aggregated ecological impact (Schaltegger and Sturm, 1990, 1992, 1998).14 This idea has been popularized by the WBCSD as the ‘business link to sustainable development’. Eco-efficiency is achieved by the delivery of competitively-priced goods and services that satisfy human needs and bring quality of life, while progressively reducing ecological impacts and resource intensity throughout the life-cycle to a level at least in line with the earth’s carrying capacity.

ENDING THE DISJUNCTURE IN ORGANIZATIONAL STUDIES AND THE NATURAL SCIENCE MANAGEMENT The long disassociation between organizational studies and the natural environment has been captured by Shrivastava with the metaphor of “castration” (1994).15 Attention to nonhuman nature is absent from the strategic management literature (Hosmer, 1994; Pauchant and Fortier, 1990; Throop, Starik, and Rands, 1993), from stakeholder theory (Starik, 1995), and limited in the field of business ethics (Hoffman, 1991). Indeed, a growing number of observers (Buchholz, 1993; Gladwin 1993a, b; Orr, 1994; Stead and Stead, 1992) have remarked on the paucity of attention to the biophysical world in management theory and education. Most management theorizing and research continues to proceed as if organizations lack biophysical foundations. Organic and biotic limits in the natural world are excluded from the realm of organizational science. Theories employ organismic metaphors restricted to only humanly mediated transactions across organizationenvironment boundaries, ignoring the myriad ecosystem service transactions that ultimately keep organizations alive. The disassociation intellectually disconnects organizations from the ultimate sources of life. In a manner not dissimilar to neoclassical economics, this disassociation leads organizational theorists to employ injudicious assumptions, impossibility theorems, and fallacies of misplaced concreteness (Daly and Cobb, 1994). The dysfunctional, and at times pathological, dangers of being locked into “psychic prisons” (Morgan, 1986), “iron cages” (DiMaggio and Powell, 1983), and other forms of constricted sense making (Weick, 1969) or faulty mental modelling (Senge, 1990) are well known to organizational scientists.16 As Kuhn noted, new paradigms tend to emerge from entirely new fundamentals and, at first, without a full set of concrete rules or standards (1962).17 Rather than lament 14

Salzmann O., Steger U., Ionescu-Somers A. (2005). Quantifying economic effects of corporate sustainability initiatives – Activities and Drivers, IMD 2005–28, November 2005, p.3. 15 Shrivastava, P. 1994. Castrated environment: Greening organizational studies. Organization Studies, 15(5): 705–726. 16 Gladwin Thomas, Kennelly James J., Krause, Tara-Shelomith; Shifting Paradigms for Sustainable Development: Implications for Management Theory and Research, The Academy of Management Review, Vol. 20, No. 4 (Oct., 1995), pp. 874–907. 17 Kuhn, T.S. 1962. The structure of scientific revolutions. Chicago: University of Chicago Press.

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or withdraw from this embryonic state of affairs, it is hoped that management thinkers and practitioners will proactively embrace the unfolding process of paradigmatic debate, for the advance of all sciences requires conflict between competing schools of thought (Kuhn, 1970).18 The development of strategic tools that are rooted in sustainability core values assists organizations in reaching their overall sustainability goals without compromising any long-term financial viability. Strategy is subsequently characterized as the process of positioning the sustainability concepts within business goals and objectives; developing guidelines that can delineate how specific tools, techniques, and business models can identify environmental sustainability-related issues, and instituting mechanisms to gather data and formulate economically and socially acceptable solutions. There are three categories of reasons to embed sustainability into an organization’s business strategy: The potential for upside benefits; the management of downside risks; a values-based concern for environmental stewardship.

MULTIFACETED SUSTAINABLE DEVELOPMENT: ENTAILING EQUALLY COMPETING CONCEPTS Amorphous concept of sustainability slips and gathers more each time. Scholars dealing with sustainability now must accept and encompass the interpenetration of observable fact and humanly assigned value, the hazy lines between description and prescription, and the twin filters of scientific viability and policy usefulness inherent in this value-laden topic. Sustainability, in the end, may lie beyond or after the fact, in what Clifford Geertz might call the realm of “unabsolute truths” (Berreby, 1995). For now, we are forced to deal with the topic at a rather high level of abstraction. It surely will be some time before the technical characteristics, operational indicators and moral injunctions of sustainable development enjoy widespread consensus along with the urgency to make it executable. The content analysis suggests that sustainable development is a process of achieving human development (widening or enlarging the range of people’s choices; United Nations Development Programme, 1994) in an inclusive, connected, equitable, prudent, and secure manner. Inclusiveness implies human development over time and space. Connectivity entails an embrace of ecological, social, and economic interdependence. Equity suggests inter-generational and intra-generational fairness. Prudence connotes duties of care and prevention: technologically, scientifically, and politically. Security demands safety from chronic threats and protection from harmful disruption.19 18 19

Kuhn, T.S. 1970. The structure of scientific revolutions (2nd ed.). Chicago: University of Chicago Press. Gladwin Thomas., Kennelly James J., Krause, Tara-Shelomith; Shifting Paradigms for Sustainable Development: Implications for Management Theory and Research, The Academy of Management Review, Vol. 20, No. 4 (Oct., 1995), pp. 874–907.

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The deliberation over the denotation and connotations of sustainable development will continue till its contours are well defined and that abstract conception is but one of many. The formula is very simple, in that human development is subjected to five constraints. In this view, development is unsustainable when an enlargement of human choice excludes, disconnects, promotes inequity, reflects imprudence or raises insecurity. All of these terms are challenging to define, with notions such as security or prudence more easily identified by their absence than their presence. Each of the five components is further augmented below: • Inclusiveness—The definitions of sustainable development share an expansive view in terms of space, time, and component parts of the manifest world. They suggest that sustainability embraces both environmental and human systems, in the present and the future. An understanding of the human dimensions of sustainability must encompass the “driving forces” of anthropogenic global environmental change: population change, economic growth, technological change, political and economic institutions, and attitudes and beliefs (Stern, Young, and Druckman, 1992). Sustainability thus goes beyond ecological efficiency to also include social sufficiency; and extends beyond “The Natural Step” (Robert, 1994) to include social and economic steps. • Sustainability—Demands an understanding of the world’s problems as systemically interconnected and interdependent. As the World Resources Institute has concluded, “the concept of sustainable development is based on the recognition that a nation cannot reach its economic goals without realizing social and environmental goals like universal education and employment opportunity, universal health and reproductive care, equitable access to and distribution of resources, stable populations, and a sustained natural resource base” (1994: 43). Social equity and biospheric respect are required for enhanced welfare anywhere on the planet: Improved human welfare and social equity are necessary to motivate biospheric respect, and enhanced welfare and biospheric respect are needed to facilitate social equity (Glad-win, Krause, and Kennelly, 1995). Efforts aimed only toward ecological health and integrity, in the absence of efforts to alleviate poverty, stabilize population, and redistribute economic opportunity, may produce trivial results at best. Any gains may be counteracted by global ecosystem degradation and sociopolitical instability induced by the poverty-population nexus (Dasgupta, 1995).20 • Equity—Fair distribution of resources and property rights, both within and between generations, is a central dimension of nearly all conceptions of sustainable development. The moral imperatives of intergenerational and intragenerational equity cannot be found empirically; they can be found in inter 20

Gladwin Thomas., Kennelly James J., Krause, Tara-Shelomith; Shifting Paradigms for Sustainable Development: Implications for Management Theory and Research, The Academy of Management Review, Vol. 20, No. 4 (Oct., 1995), pp. 874–907.

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subjectively. The absence of objective criteria pushes the study of sustainability toward that of a normative science where rules are worked out via a competition of beliefs and moral debate. While acknowledging the vast realm of debate regarding fairness, equity and justice, the definitions of sustainability imply that sustainability, at a minimum, means that human activities should not shift costs onto, without proper compensation. Prudence—Most definitions of sustainable development call for keeping lifesupporting ecosystems and interrelated socioeconomic systems resilient, for avoiding irreversibilities, and for keeping the scale and impact of human activities within regenerative and carrying capacities. Most analysts call for prudence and humility in the pursuit of sustainable development, given the massive uncertainty and unpredictability, non-linear interaction between system components, unknown thresholds, and complex dynamics in ecological and social systems (Costanza, Wainger, Folke, and Maler, 1993). This constraint demands precaution, preemptive safeguards, reversible actions, safety margins, and preparation for perpetual surprise (Ludwig, Hilbron, and Walters, 1993). Security—Sustainable development is generically a human-centered construct, aimed at ensuring “a safe, healthy, high quality of life for current and future generations.” There are a number of overlapping boundary conditions that must be fulfilled in support of this goal. At a minimum, sustainability mandates no net loss of (a) ecosystem and social system health (i.e., capacities of natural and social systems to resiliently provide essential life-support services to humanity) (Costanza, Norton, and Haskell, 1992); (b) critical natural capital (i.e., stocks of irreplaceable natural as-sets such as biological diversity, the ozone layer, and biogeochemical cycles) (Daly, 1994); (c) self-organization (i.e., capacities of living systems to carry out self-renewal, self-maintenance and self-transformation, which provide the context for all human activity) (Norton, 1991); (d) carrying capacity (i.e., long-run capacities of biophysical and social systems to support physical scales of human enterprise) (Daily and Ehrlich, 1992); and (e) human freedom (i.e., civil society, with democracy and full realization of human rights in day-to-day living dependent on participation, account-ability, reciprocity and transparency) (Veiderman, 1994), including the fulfilment of basic human needs.21

SUSTAINABILITY FOR AND BEYOND CORPORATE RISK MANAGEMENT Sustainability is, therefore, a process by which individuals or entities seek to integrate and produce balance among competing objectives in economic, environmental and 21

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social factors. Within business organizations, sustainability also has operational and strategic dimensions that assure sound financial management, ethical corporate governance and transparency with respect to information provided to employees and other stakeholders. It involves actions by which organizations strive for financial success while accepting responsibility for their impacts on and relationships with a diverse group of stakeholders. While classic sustainability is not viewed as a risk management technique, it can be coupled with traditional risk identification and analysis tools to provide risk managers with additional information by which they can make better informed decisions on a broader array of risks including environmental and social as well as economic, operational and strategic concerns. Today, the risks associated with social and environmental issues can impact shareholder value as much as strategic and operational issues. Sustainability also provides management useful information that can serve as the basis for identification and development of new and better products and processes to address those risks and add to shareholder value. Delineating the encompassing concept of sustainability at the corporate level requires devising tools to make sustainability synergistic to corporate sustainability strategies. The marriage between two somewhat completing concepts of profitability and sustainability calls for evolving of instrumentalities to make this work. The linkage between corporate risk management and sustainability management is an emerging field of research. Companies are now beginning to focus on corporate sustainability in very different ways and incorporating it in long term planning. Sustainability offers a new way of looking at risk that is broader and holistic than a traditional Enterprise Risk Management (ERM) framework. By looking beyond economic, strategic and operational factors to embrace social and environmental considerations, sustainability allows corporations to consider emerging risk areas and to look for opportunities presented by risks that are overlooked by other analytical and systems-driven approaches. A more holistic point of view assures sound financial management, ethical corporate governance and transparency with respect to information provided to employees and other stakeholders. Sustainability requires that organizations strive for financial success while accepting responsibility for their impact on and relationships with a diverse group of stakeholders. Patrick Cescau, group chief executive of Unilever, recently said, â&#x20AC;&#x153;We have come to a point now where this agenda of sustainability and corporate responsibility is not only central to business strategy but will increasingly become a critical driver of business growth ... how well and how quickly businesses respond to this agenda will determine which companies succeed and which will fail in the next few decades.

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Sustainability, coupled with traditional risk identification and analysis tools, gives risk managers the information they need to make better, more informed decisions on an array of risks, including environmental, social, economic, operational and strategic issues. A risk management approach that incorporates sustainability provides management with useful data for identifying emerging issues and developing new and better products and processes that help protect corporate reputation and improve shareholder value. Successful sustainability programs methodically address strategic, operational, collaborative, and governance requirements (Deloitte, 2007).22 The United Nations Environment Programme (UNEP) Finance Initiative addresses the interaction between financial institutions and four broad groups of stakeholders: Suppliers, Internal (employees), Clients and shareholders, Society and the environment. Also, four primary ways in which implementing Sustainability Management and Reporting (SMR) can provide benefits to financial institutions, especially in emerging and developing economies, are identified by the UNEP Finance Initiative (2006):23 • Revenue growth • Risk management • Access to capital • Cost savings and efficiency. Enterprise Risk Management reflects the change of mindset in risk management over the past decades. Corporate Management as a framework aims to capture/anticipate and manage risks that are material from the point of view of the achievement of the strategic objectives of the enterprise. Enterprise Risk Management is a process, applied in strategy setting and across the enterprise, designed to identify potential events that may affect the entity, and manage risks to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives. Apart from the measurable risk silos, the conception of Enterprise Risk Management (ERM) encompasses risks that cannot be readily quantified or aggregated. These nonquantifiable risks include, for example, the risks of strategic failure, environmental risks, reputational risks and operational risks that materialise (Mikes, 2007).24 The connection between corporate risk management and sustainability management is a promising field of study looked at keenly by corporate honchos. The framework model discussed 22

Deloitte (2007). Creating the “Wholly Sustainable Enterprise”: A practical Guide to Driving Shareholder Value through Enterprise Sustainability. Deloitte Development LLC., p. 3. 23 UNEP Finance Initiative (2006). Sustainability management and reporting: Benefits for financial institutions in Developing and Emerging Economies, December 2006.retrived March 2012. 24 Mikes A. (2007). Enterprise Risk Management in Action, Financial Market Group, Retrieved 12/08/2009 from http://fmg.lse.ac.uk/events/pdfs/A_Mikes.pdf.

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below serves as a starting point to develop a company-specific model. Also, ERM model is based on risk management principles as following (Kwak and Stoddard, 2003): • Shared Product Vision: A shared vision for success based upon commonality of purpose, shared ownership, and collective commitment. • Open Communications: A free flow of information at and between all program levels though formal, informal, and impromptu communication and consensus-based processes. • System Perspective: That software development is viewed within the larger systemslevel definition, design, and development. • Proactive Strategies: Proactive strategies that involve planning and executing program activities based on anticipating future events. • Systematic and Adaptable Methodology: A systematic approach that is adaptable to the program’s infrastructure and culture. The vision of sustainable development embraces three dimensions—economic, ecological and social aspects—and seeks to integrate them. In the past ten years this vision has grown increasingly important, and at the same time its status has evolved from a theoretical, abstract project to an increasingly tangible and concrete task.25 The objective of sustainable development confronts business enterprises with four sustainability challenges (Schaltegger, Herzig, Kleiber, Müller, 2002): • Ecological Challenge: Increasing ecological effectiveness. • Social Challenge: Increasing social effectiveness. • Economic Challenge to Environmental and Social Management: Improving ecoefficiency and/or social efficiency. • Integration Challenge: Bringing together the first three challenges and integrating environmental and social management in conventional economically oriented management. The Enterprise Sustainability Risk Management conceptual model offers a strategic road map, which provides a contextual framework for businesses serious about taking on the challenges and opportunities of sustainable development.26 The process of the Corporate Sustainability Risk Management conceptual model is composed of five main phases and their sub-steps. The main phases are: • Phase 1: Strategic Management: Strategic Plan and Orientation. 25

Kwak Y.H., Stoddard J. (2003), “Project risk management: lessons learned from software development environment”, Elsevier Science Ltd., pp. 915–920. 26 Schaltegger S., Herzig C., Kleiber O., Müller J. (2002), Sustainability Management in Business Enterprises, Concepts and Instruments for Sustainable Organisation Development, Centre for Sustainability Management (CSM) e.V., CSM, University of Lueneburg, Federal Ministry for the Environment, Nature Conservation and Nuclear Safety 2nd Edition, BMU/BDI (Eds.) 2002.

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Phase 2: Management and Organization: Organizational and Infrastructural Orientation (includes Strategic and cultural dimensions (Values and norms, Communication, Leadership styles and Conflicts) Phase 3: Framework Set-up: Establishment and frame Framework Orientation. Phase 4: Report and Monitor: Internal Control Orientation. Phase 5: Enterprise Sustainability Performance Optimization: Corporate Orientation.

The choice to embark on sustainability is theoretically easier but implementing sustainability in a way that balances opportunity and risk is a significant challenge requiring fundamental business model innovation. Breakthrough thinking is necessary to incorporate sustainability into every aspect of the business model. Leading companies factor changing technologies, emerging consumer demands, and evolving regulatory requirements into sustainable strategies and operations. Corporate leaders are also beginning to take up the challenge to drive engines of change forward. According to the 2011 Survey on Sustainability Leadership by GlobeScan and SustainAbility, experts point to a new generation of companies leading the charge on the transition to sustainable development, including Unilever, GE, Interface, retail giant Marks and Spencer, ONGC, Wipro and Natura etc. These companies have not only integrated a comprehensive vision with strong performance but have also been able to effectively engage stakeholders in their vision. Companies are focusing on sustainability in very different ways. However, successful sustainability programs methodically address strategic, operational, collaborative, and governance requirements. Leading companies take a top-down, sequential approach when implementing sustainability into their organizations. Leadership commitment is the most important first step. Then, through non-traditional collaborations, systematic assessments of value—chain impacts, and robust governance structures, leading companies ensure that sustainability is woven into the very fabric of the company (Deloitte, 2007). Corporate sustainability involves both financial and non-financial measurement and it can be built on (Salzmann, Steger and Ionescu-Somers, 2005: 3/24): • Cost reduction achieved through improved environmental, health and safety performance (fewer accidents, fines, lost workdays, etc.). • Revenue increases achieved through gain in market share due to new environmentally sound products. • Positive effects on intangibles or, as referred to in Figure 4, value constructs, which do not increase financial performance per se but are yet to be leveraged accordingly. As sustainability develops in the business world, companies can move from shortterm risk avoidance and regulation compliance to long-term development of brand,

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competitive, and operational advantage. Proactive sustainability initiatives are an opportunity for companies to differentiate themselves as leaders in the industry, the environment, and society, ensuring long-term business success (Deloitte, 2007).

Source: Salzmann, Steger, Ionescu-Somers, 2005.

Fig. 4: Systemization of Value Drivers and Value Constructs

Organizations may develop a comprehensive sustainability strategy separate from the overall or corporate business strategy or revise the business strategy to incorporate sustainability values. However, the best approach is the latter: to make sustainability the foundation of operations, business planning, and decision making. Organizations that start with a separate sustainability strategy, for example, a set of strategic statements or goals focused only on sustainability, should eventually incorporate it directly into the overall business strategy. Over time, sustainable thinking should fully permeate the organizational culture and become simply the way that business is conducted. Sustainability can and should touch every part of an organization. Its implications and opportunities should be considered for all activities from the design of new products/services and production processes to building a new facility to ordering paper and office supplies. Sustainability strategies must rest on unique activities, defined methods, and models that are different from competitorsâ&#x20AC;&#x2122;; support customersâ&#x20AC;&#x2122; needs; provide customers accessibility; create choices; establish strong and competitive value for individual activities; and have a horizon of decades, not a single planning cycle. The five case studies presented in the table below attempt to unlock the spirit of innovation and generate ideas to tackle some of the most chronic social and

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environmental ailments India is facing. Using the criteria along four dimensional benefits—environment, social, business and innovation the Company-ApproachSolution Matrix is provided. The Table 1 shows how these companies adopted an approach and solution matrix for sustainable development and innovation.27 Table 1: Company-Approach-Solution Matrix Approach

Solution

BASIX

New business model: Sustainable livelihoods promotion

Innovation to improve quality of life for the ‘have-nots’

Cosmos Ignite Innovations

Social entrepreneurship: poor as the first customer

Disruptive innovation: Light Emitting Diode (LED) = based solar power lighting system

ITC

Scaled-up low-hanging fruits to create sustainability image

Sustainability benefits across SBUs due to integrated material and competence flows

L&T

Identifies sustainability = driven opportunities

Has technology, products and services delivery in place

TCS

Innovative solutions for sustainability challenges

Substantial success in leveraging IT Innovation capabilities.

Source: ‘Indian Companies with the Solutions that the World Needs’.

Companies need to acknowledge that sustainability is a multi-dimensional process and must be able to engage with relevant stakeholder constituencies within their innovation process. This engagement should be followed by action for their future operations. Measurable targets must be set to ensure that sustainability efforts of the company add value in economic, social and environmental terms. Company’s efforts towards sustainable innovation need to be driven by leadership and supported by the rest of the organisation force. Having conditioned the organisation, companies should look at the level of innovation capability those results in business and sustainable value. Innovation is as much necessary for internal low-hanging fruits as it is for offering new products and solutions. Therefore, analysis of sustainability risks involves an expanded view of the risk management process outlined in the ERM program discussed above. Sustainability further incorporates evolving and future anticipated risks that are not always capable of accurate assessment. However, these risks cannot be ignored if the corporation is to survive and succeed in a changing environment. 27

Joshi, Sachin, Arora Seema, Pamlin Dennis; Indian Companies with the Solutions that the World Needs’ CII and WWF, 2008, pp. 25–29.

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PRACTICAL SUSTAINABILITY MODEL AND THE SEA FRAMEWORK The Practical Sustainability Model is a strategic model that developed from sustainable business practices and strategic decision making in accord with the following management components: • Stakeholder values (S factor) • Externality (E factor) • Asset (A factor). These factors constitute a framework that provides a clear, pragmatic approach for each stage of project management, including design, implementation, monitoring, and impact assessment. Rooted in the core concepts of sustainability, this framework can also shape business policies and strategies according to the strategic, operational, regulatory, reputation-oriented, and financial challenges and opportunities. This model can assist managers in integrating sustainability concepts and rules on the level of business planning and project management simply by identifying how those projects contribute or respond to the main drivers of business sustainability. The application of this model can also provide opportunities for businesses to turn their social, economical, and environmental expertise into a tangible competitive advantage. Notably, this is an elastic model with the potential to be customized according to the culture and technical specifications of any industry. Using a qualitative or a quantitative approach, an industry can define how effective its sustainability strategy is and how it can be modified, for example, via a scoring system. Global application of the SEA framework could also include: • Assessing climate-related risks and opportunities • Setting corporate goals for improving environmental and social performance • Addressing increasing investor demand for companies to meet high environmental, social, and governance standards • Addressing demand for products and services that are “green” and “sustainable” • Participating in “fair trade” • Meeting high expectations for labor market, human rights, community, and environmental benefits • Communicating with stakeholders in regard to strategic decisions and responses • Working with policy makers to explore how their actions could impact the industry.

SUSTAINABILITY—BEYOND MERE RISK MANAGEMENT/MITIGATION The conception of sustainable development as inclusive, connected, equitable, prudent and secure human development suggests implications that are applicable to a broad

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range of management theory. Sustainability shifts boundary constraints from plenitude to limitation and from efficiency to equity. Organizations collectively confront limits, social, environmental and physical carrying capacities in any region of operation; scale is also bounded by finitude (Ehrlich, 1994).28 Because the world is no longer empty, strategies for reducing economic inequality cannot depend on unconstrained expanding of the scale/scope of human activity. Sustainable development imposes a constraint of distributive justice (i.e., fair distribution of benefits and burdens) upon the efficient allocation of resources as determined by the market. Theories of management, which, serves to redistribute wealth from the poor to the rich, or from the future to the present, would thus be inconsistent with sustainable development. Sustainability may represent an emergent “hyper-norm”, under which a range of ethical belief systems will converge to limit the moral “free space” of organizations (Donaldson and Dunfee, 1994; Taylor, 1989).29 As constraints of optimal ecological scale are approached and rules of fair distribution are enforced, societal goals are likely to shift from growth to development. Thus it can be expected that organizational incentive systems will shift in emphasis from quantity to quality. Organizations in harmony with sustainability will increase the quality of life in equitable ways that maintain or reduce energy/matter throughput. This also implies removing assumptions of reckless growth from theories of strategy and organization. It is based on theorizing about ‘qualitative’ improvement in place of quantitative expansion. The concept of sustainable development requires organizations to develop a culture that emphasizes employee participation, continuous learning and improvement. The International Chamber of Commerce explains the process of continual improvement thus: To continue to improve corporate policies, programmes and environmental performance, taking into account technical developments, scientific understanding, consumer needs and community expectations, with legal regulations as a starting point and to apply the same environmental criteria internationally. Advocates of the sustainability paradigm demand a complete notion of the external environment, an acknowledgement of the full range of material exchanges with the physiosphere, ecological exchanges with the biosphere, and non-market exchanges with the broader socio sphere. Sustainability also demands fuller acceptance of systemic interconnection. Such a view would see organizations both partially causing and being affected by climatic changes, food insecurity, population growth, persistent 28

Ehrlich, P. 1994. Ecological economics and the carrying capacity of earth. In A. Jansson, M. Hammer, C. Folke, and R. Costanza (Eds.), Investing in natural capital: The ecological economics approach to sustainability: 38–56. Washington, DC: Island Press. 29 Donaldson, T. and Dunfee, T.W. 1994. Toward a unified conception of business ethics: Inte-grative social contract theory. Academy of Management Review, 19: 252–284.

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poverty, gender bias, and explosion of mega cities. New insights about system dynamics and predictability emerging from the study of complex and inter-connected systems may become critical in making these connections (Costanza et al., 1993).30 The idea of sustainable development pushes management research toward inter-disciplinary and trans-disciplinary modes of inquiry. Significant contributions toward understanding ecologically and socially sustainable economies, societies, and organizations, however, will arise only from new fundamentals, new languages, and new lenses. (Kuhn, 1970).31 Futurist Willis Harman argued that “business has become, in the last century, the most powerful institution on the planet. The dominant institution in any society needs to take responsibility for the whole.” (Harman, cited in Hawken, 1992: 100).32 However, the sense is that large corporations are increasingly becoming merely transient members of communities, embracing only parts of the world that happen to be useful to them, and cocooning themselves in contented pockets of the planet, while the larger biosphere and full human community atrophy (Gladwin, 1993b).33 The moot questions are: Has the body of management theory inadvertently encouraged this diminishment of communion and enlargement of hyper-agency (i.e., excessive concern with autonomy and self-preservation)? Do theories emphasize organizational freedom over union, rights over responsibilities, independence over interdependence, and what works (efficiency) over what is worth pursuing? Have management theories, when implemented, pushed organizations into a pathological agency, where severance from communities (both human and ecological) sets forces in motion that eventually destroy the conditions upon which organizations ultimately depend? Admittedly, the research agenda is extensive and radical. Does sustainability require organizations to develop a sense of place, to become rooted in communities? Do forces of globalization and the mobility of financial capital systematically work against the idea of organization-in-community? Does free trade work to the benefit of all or only serve a narrow range of established interests (Bhagwati, 1993; Daly, 1993; Lang and Hines, 1993)?34 Does sustainable development require a new protectionism or a renationalization of capital? Indeed, what are an organization’s social contract with society and natural contract with the biosphere? Do charters of incorporation imply duties of sustainable corporate citizenship and accountability (Grossman and Adams, 1993)? Can stakeholder models be extended to be more spatially and temporally inclusive 30

Costanza, R., Wainger, L., Folke, C. and Maler, K.G., 1993. Modeling complex ecological-economic systems. Bioscience, 43(8): 545–555. 31 Kuhn, T.S. 1970. The structure of scientific revolutions (2nd ed.). Chicago: University of Chicago Press. 32 Hawken, P. 1993. The ecology of commerce: A declaration of sustainability. New York: Harp-erBusiness. 33 Gladwin, T.N., Krause, T. and Kennelly, J.J. 1995. Beyond eco-efficiency: Towards socially sustainable business. Sustainable Development, 3(1): 35–43. 34 Bhagwati, J. 1993. The case for free trade. Scientific American, 270(11): 42–49.

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(Chappell, 1993; Donaldson and Dunfee, 1994; Roddick, 1991; Starik, 1995)? And who represents the mute stakeholders? Who speaks for them and who hears them out? Some of these questions require moving away and beyond the current paradigm and the lexicon of debate/discourse in fact also drop the narrow concerns of risk mitigation and management. But at present, at least, this is the language they take notice of and appreciate. So involving them by ‘their concern’ is also strategic means to imbibe sustainability within the organisations mission/vision. In short, the study of sustainability must shift from objective to subjective, from exterior nuts and bolts to interior hearts and minds. Some argue that business is the only institution in the modern world powerful enough to foster the changes necessary for ecological and social sustainability (Hawken, 1993). However, in order to harness this power, sustainable behaviour must become a source of competitive advantage (Collins and Porras, 1994; Makower, 1994; Scott and Rothman, 1994) Creative institutional or cultural reforms may be needed to overcome the problems of collective action, limits of altruism, prisoners’ dilemmas and social traps that so pervasively affect human and organizational behaviour (Cross and Guyer, 1980; Fox, 1985; Hardin, 1982). Tools of greening may move organizations in the right direction, but fail to inform them about the distance from or variance with the ultimate destination of sustainability. Management must shift from the prevailing metaphor of greening (Walley and Whitehead, 1994), which merely “reduces the bads” to that of sustaining or “realizing the goods”. The greatest challenge of postmodern society may reside in their reintegration (Habermas, 1990; Taylor, 1989). Sustaining global economic development will demand a substantial shift in the role of industry by bringing innovation to drive sustainability and profit. This challenge faces management gurus. The transcendence of techno-centrism and eco-centrism into sustain-centrism represents a definitive step in a journey toward management theory if sustainability has to serious concern. Sustainability opens, rather than closes, the debate on the role/power of human organizations in our world.

BIBLIOGRAPHY Allenby, B.R. and Richards, D.J. (Eds.). The greening of industrial ecosystems, Washington, DC: National Academy Press (1994). Ayres, R.U. Cowboys, Cornucopian’s and long-run sustainability, Ecological Economics, 8: 189– 207, (1993). Blackburn, William R.; The Sustainability Handbook, Environmental Law Institute, (2007). Bohman, H. and Johansson, L.M., Management for change: On strategic change during recession, Journal of Business Research, 41(1) (1998). Buchholz, R., Principles of environmental management: The greening of business. Englewood Cliffs, NJ: Prentice Hall (1993). Collins, J.C. and Porras, J.I., Built to last: Successful habits of visionary companies, New York: Harper Business (1994).

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Donaldson, T. and Dunfee, T.W., Toward a unified conception of business ethics: Integrative social contract theory, Academy of Management Review, 19: 252–284. (1994). Dorothea Baur Hans Peter Schmitz; Corporations and NGOs: When Accountability Leads to Co-opration J Bus Ethics 106:9–21 (2012). Dunphy, D.C., Griffiths, A. and Benn, S. Organizational change for corporate sustainability: A guide for leaders and change agents of the future (2nd ed.). New York: Routledge (2007). Economist Intelligence Unit Limited; Global trends in sustainability performance management; Economist Intelligence Unit; SAP (2010). Elkington, J., Cannibals with forks: The Triple Bottom Line of 21st Century Business. London: New Society Publishers (1998). Epstein, E.M., The corporate social responsibility process: Beyond business ethics, corporate social responsibility, and corporate social responsiveness. California Management Review, 29(3), 99–114. (1987). Frank Figge, Tobias Hahn, Stefan Schaltegger Marcus Wagner; The Sustainability Balanced Scorecard-Linking sustainability Management to Business Strategy Business Strategy and the Environment, 11, 269–284. (2002). Friedman, M., The social responsibility of business is to increase profits, New York Times Magazine, 122–126. (1970, September 13). Gladwin, T.N., Building the sustainable corporation: Creating environmental sustainability and competitive advantage, Washington, DC: National Wildlife Federation (1992). Habermas, J., The philosophical discourse of modernity (F. Lawrence, Trans.). Cambridge, MA: MIT Press. (1990). Kaplan, R.S. and D.P. Norton, The Balanced Scorecard—Measures that drive performance Harvard Business Review 70 (January/February): 71–79 (1992). Kolk Ans, Sustainability Accountability and Corporate Governanace: Exploring Multinationals Reporting Practices Business Strategy and the Environment (2010). Norton, B.G., Toward unity among environmentalists, New York: Oxford University Press. (1991). Shrivastava, P., Ecocentric management for a risk society. Academy of Management Review, 20(1): 118–137. (1995). United Nations Conference on Environment and Development UNCED, Earth Summit 92 (Agenda 21). London (1992). Weiss, E.B., In fairness to future generations: International law, common patrimony, and intergenerational equity, The United Nations University and Transnational Publishers (1989). William S. Laufer; Social Accountability and Corporate Green washing Journal of Business Ethics 43: 253–261. (2003).

ABOUT THE AUTHOR Dr. Roopinder Oberoi is working as Assistant Professor at Kirori Mal College, University of Delhi since November 2005. She is Ph.D. in Political Science and has published two books. She has 22 Research Publications in National and International Journals to her credit. She has presented papers in 10 National and International Conferences.

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CSR Initiatives by Some Companies— Doing More than just the Business K. Sirisha Associate Professor, Swarna Bharati Institute of Science and Technology (SBIT), Khammam E-mail: kandirajusirisha@gmail.com

ABSTRACT One of humankind’s greatest challenges this century will be to ensure sustainable, just and balanced development. The needs of current and future generations cannot be met unless there is respect for natural systems and international standards protecting core social and environmental values. In this context, it is increasingly recognized that the role of the business sector is critical. As a part of society, it is in business’ interest to contribute to addressing common problems. Strategically speaking, business can only flourish when the communities and ecosystems in which they operate are healthy. Keywords: CSR, ITC, Infosys, Bajaj Auto, Pepsico.

INTRODUCTION India has become one of fast growing economies of the world. It is growing at the rate of 9 per cent p.a. As an emerging market all are looking at India from an international perspective. At the stage when India is set to acquire a global position, it is essential to gauge whether the economic growth is due to successful business operations. Organizations must realize that government alone will not be able to get success in its endeavor to uplift the downtrodden of society. The present societal marketing concept of companies is constantly evolving and has given rise to a new concept—Corporate Social Responsibility. Many of the leading corporations across the world had realized the importance of being associated with socially relevant causes as a means of promoting their brands. Cause-related marketing and corporate social responsibility has provided companies with a new tool to compete in the market. CSR refers to the corporation’s obligation to all the stakeholders. It stems from the desire to do good and get self satisfaction in return as well as societal obligation of business. This could be a strategic marketing activity a way for a company to do well by doing good-distinct from sales promotion, corporate philanthropy, corporate sponsorship, corporate Samaritan acts and public relations. Now, it is assumed to be responsibility of the business houses too.

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Nothing builds brand loyalty among today’s increasingly hard to please consumers, like a company’s proven commitment to a worthy cause. Other things being equal many consumers would do business with a company that stands for something beyond profits. In nutshell, CSR and cause related marketing results in increased sales, visibility, and consumer loyalty and enhanced company image along with positive media coverage. Rural India has a population of 700 million people spread across 6,38,000 villages. Thus more than 60 per cent of India’s total population is rural by nature. A report by National Council of Applied Economic Research (NCAER) shows that rural consumers comprise more than 50% of consumers and are a prime market for consumer goods and essential services. Culture is the pillar of our country and if the pillar has strength, then it can raise our country to a top level. Organizations are helping to sustain as well as revive the rich culture of the country through their programs. Today, India’s literacy rate stands around 65 per cent, up from 52 per cent in 1991. (NSSO Survey) Considering the rate of increase, it would take some 20 to 25 years to clear this problem. Hence, the CSR agenda of corporate consider rural development as one of the important dimension. On the other hand, a nonprofit organization is an organization, which exists for providing some benefit or assistance or a sort of self-help group. Like the name suggests, the organization will have all the properties of a profit-making organization, i.e. a mission statement, a vision, offices, infrastructure etc., but the objective will not include making a profit out of its operations. However, to run any organization, funds are needed, and this has to come in to the non-profit in terms of financial i.e. grants, subsidies, donations etc or services in terms of staff support or infrastructure support.. The sources for these funds could be individuals, the government or other charitable institutions and finally companies. These business houses through their CSR (Corporate Social Responsibility) initiatives contribute to the mission of social progress and growth of India. In this study I discussed about 5 companies initiatives i.e. ITC, Infosys, Hindustan Unilever Limited, Bajaj Auto Limited, Pepsico.

DEFINING CORPORATE SOCIAL RESPONSIBILITY Definitional issues regarding “corporate social responsibility” (CSR) have been debated since many years. Early CSR models was initiated in the early 1960s. It showed the “social” aspect of CSR as referring directly to those responsibilities above and beyond economic and legal obligations (Carroll, 1979; Waddock, 2004; Matten and Crane, 2005). Many considered corporate social responsibility synonymous with voluntary and philanthropic acts by business organizations which are designed to alleviate social ills or in order to benefit a disadvantaged group chosen by the corporation’s managers. The World Business Council for Sustainable Development in its publication “Making Good Business Sense” by Lord Holme and Richard Watts, used the following definition.

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“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 workforce and their families as well as of the local community and society at large”. “CSR is about capacity building for sustainable livelihoods. It respects cultural differences and finds the business opportunities in building the skills of employees, the community and the government.” CSR is about business giving back to society. Traditionally, CSR has been defined much more in terms of a philanthropic model. Companies make profits, unhindered except by fulfilling their duty to pay taxes. Then they donate a certain share of the profits to charitable causes. It is seen as tainting the act for the company to receive any benefit from the giving. According to Philip Kotler, “Corporate Social Responsibility: Doing the Most Good for your Company and Cause” does a terrific job of describing the range of corporate social initiatives and suggests best practices for choosing, implementing and evaluating them. Thus, corporate social responsibility has been a topic that has received a lot of attention in recent years (Sethi, 1995).

NEED FOR STUDY The basic aim of the study is to gain familiarity or formulating a problem or to achieve new insights into it. In this particular study, an attempt has been made to growing acceptance of the plea that business should be socially responsible in the sense that the business enterprise, which makes use of the resources of society and depends on society for its functioning, should discharge its duties and responsibilities in enhancing the welfare of the society of which it is an integral part.

OBJECTIVE OF THE STUDY The objective of the study was how an organization contributes to a social cause and what it expects to gain in the process. Is it philanthropy, is it a feeling of obligation to the society in general or is it for financial benefits in terms of tax exempted.

MAJOR RESPONSIBILITIES OF CORPORATES TOWARDS VARIOUS SECTIONS The important and major responsibilities of corporate towards various sections of the society are: Responsibility to Shareholders: It is primary and major responsibility of any business to consider their basic responsibilities towards their shareholders like safeguarding the

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capital of the shareholders and to provide a reasonable dividend and creating a sense of confidence among the shareholders that their investment is safe and secure. Responsibility to Employees: Employees to the large extent play a very important role in the successful functioning of an organization which necessitates the need for them to be included in the list of responsibilities towards them. Payments of fair wages, benefits, facilities, providing them training, education, recognition etc., are some responsibilities of the corporate toward their employees. Responsibility to Consumers: Consumers are the responsible for the existence of business enterprises to keep in the words of Peter Drucker. There are certain responsibilities of the corporate towards consumers like providing qualitative products with affordable costs, easy availability of goods, educating the consumers regarding the usage of the products, effective after sale services, listening to consumers and to redress genuine grievances etc. Responsibility to the Community: It is generally considered as the biggest responsibility of the corporate because it has the capacity to provide enormous solutions that an individual cannot provide to the community on the whole like development of backward areas by establishing plants, factories in those areas which will generate employment opportunities and basic facilities, promoting ancillary and small-scale industries, taking initiative for preserving ecological balance and taking steps to prevent environmental pollution etc.

MODELS FOR IMPLEMENTATION OF CSR Though there are several theories to justify CSR activities of corporation, not all of them lend themselves to be put into practice. A model for implementation of CSR is one that enables organizations to apply a particular concept or theory as a workable proposition. Before mangers can apply the concept, they need a simple working definition of it, so that there is the required conceptual clarity. For instance CSR can be associated with philanthropy or a business strategy. When several such alternatives are available, a company may choose a model that is suitable to its core competence. There are four models of corporate responsibility globally Table 1. Model Ethical Statist Liberal Stakeholder

Emphasis Voluntary commitment by companies to public welfare State ownership and legal requirements determine corporate responsibilities Corporate responsibilities limited to private owners (Shareholders) Companies respond to the needs of stakeholders-customer, creditors, employees, communities, etc.,

Proponent Mahatma Gandhi Jawaharlal Nehru Milton Friedman R. Edward Freeman

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Ethical Model: A model in which corporates are committed voluntarily towards public welfare. Such a model has its roots in the Gandhian Philosophy of trusteeship. This model has been adopted by many companies like Tatas, Birlas, Infosys, Dr. Reddy’s Labs and Reliance Industries–who provided cash for social welfare projects, community investment trusts and schools. Statist Model: A model in which state-owned public sector units (PSUs) are committed for the upliftment and development of the society. Such a model was propounded by Jawahar Lal Nehru and was adopted in India since 1947, in Bhilai and Bokaro. Liberal Model: Such a model was drawn from Milton Friedman’s view that states that company’s responsibility is improving the economic bottom-line and increasing the wealth of the shareholder. It is the Individual’s commitment and responsibility and not the corporations to think about responsibilities towards society. Stakeholder Model: There has been an increasing realization that business has as a social responsibility since the late 1980s and through the 1990s. It is generally understood that a stakeholder in an organization is an individual or a group of individuals who can affect or is affected by the objectives and activities of the organization. CSR now means ethical and environment-friendly practices. Companies are expected to stick to the triple bottom-line of economic, social and environmental responsibility towards workers, the shareholders and the community.

BUSINESS LEADERS ON CORPORATE SOCIAL RESPONSIBILITY Here is a take on what business leaders have to say on corporate social responsibility. According to N.R. Narayana Murthy, chairman and chief executive officer of Infosys Technologies, corporate’s foremost social responsibility is to create maximum shareholder value working under the circumstances where it is fair to all its stake holdersworkers, in harmony with the community, government and environment around us and not cheating our customers and workers, we might not gain anything in the shortrun, but in the long-term it means greater profits and shareholder value. Bertrand Collomb, Chairman and chief executive officer, Lafarge, France, observes that a company can’t be successful in the long-run without a happy community around and a motivated and happy workforce which would translate into great labour productivity, lower wastage in manufacturing process and product rejection rate resulting in greater profits. According to him, international companies can exhibit a greater social responsibility by bringing in efficient manufacturing and business practices to the developing countries and training and educating local people in new skills and knowledge. In the opinion of Aman Mehta, CEO, HSBC, Hong Kong, however, it is not so straight forward. He says that CSR as a concept is different to different people and in different countries. Fundamentally, CSR is balancing the conflicting interest put on the

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corporations from different stockholders with the objectives a commercial organization in such a way that there is minimum loss to anybody. Courtesy: The Economic Times, 5 December, 2001. Akbar Al Baker CEO of Qatar Airways realizes that it is important to go beyond the current industry best practices for fuel and environmental management in order to ensure a sustainable future for the airline, its staff and its neighborhoods. We have the responsibility to deal with the impact on global climate change, noise, local air quality, non-renewable resources and waste. With that we have a direct economical impact on global climate change and environmental costs as well as direct and indirect economic impact on society. John Mack, the CEO of Morgan Stanley quotes “We believe that we have a responsebility to manager and leverage our resources—and the work we do as one of the world’s leading financial services firms—in a way that promotes a healthy environment and community.” In an interview with Hubert Joly, President and Chief Executive Officer of Carlson he quotes “Our Responsibility is not limited to just delivering great profits to our shareholders. We have a responsibility to all our stakeholders—employees and guestsand also to the communities we operate in and the environment. Indu Jain, the chairperson of the times of India Group quotes “Corporate Social Responsibility Practices in India sets a realistic agenda of grassroots development through alliances and partnerships with sustainable development approaches. At the heart of solution lies intrinsic coming together of all stakeholders in shaping up a distinct route for an equitable and just social order”.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES IN SOME COMPANIES Corporate Social Responsibility (CSR) isn’t just about doing the right thing. It also means that the organizations must be responsible for their activities, businesses and process. It is becoming an increasingly important activity to businesses nationally and internationally. As globalization accelerates and large corporations serve as global providers, these corporations have progressively recognized the benefits of providing CSR programs in their various locations. CSR activities are now being undertaken throughout the globe. Here is the data collected from various corporations on the various CSR initiatives.

1. CSR Initiatives at ITC Limited ITC is one of India’s foremost private sector companies and a successfully diversified Indian conglomerate with leadership status in FMCG, Hotels, Paperboards and

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packaging, Agri business and a strong presence in Information technology. Some CSR Initiatives at ITC Limited are: (a) Economic Empowerment of Women: ITC’s initiatives provide sustainable economic opportunities to poor women in rural areas by assisting them to form micro-credit selfhelp groups that enable them to build up small savings and finance self-employment and micro-enterprises. A large number of women earn income as self-employed workers or as partners in micro-enterprises. ITC’s Women Empowerment Initiative is economically empowering over 18,000 women. (b) Livestock Development: ITC’s livestock development programme assist rural households to upgrade livestock quality through cross-breeding by artificial insemination to boost milk productivity by a factor of 6–9 times, leading to threshold increase in household incomes and thereby an improvement in their poverty status. Currently, these initiatives reach out to nearly 2,600 villages in 5 states. (c) Renewable Energy at ITC: ITC has adopted a conscious strategy to lower its carbon footprint, which has brought immense benefits: over 30% of the company’s total energy consumption is from renewable sources and carbon neutral fuels. In keeping with its commitment to utilize an increasing component of renewable energy, ITC has setup a 14 MW wind energy facility to provide power to the company’s packing unit in Chennai. Additional investments in wind energy, totaling over 25 MW, are also being made to supplement the power requirements of the ITC Hotels in Mumbai and Chennai. (d) Providing Supplementary Education: ITC’s supplementary Learning centers offer additional coaching that backs up school learning, stemming drop-outs and enabling more children to complete school. ITC also supports outreach projects, including mobile libraries that foster the reading habit and a ‘roaming laptop’ programme that promotes computer skills and interactive learning. ITC’s Primary Education Initiative is currently educating over 193,000 rural children.

2. CSR Initiative at Infosys Infosys limited is a global technology service company headquartered in Bengaluru, India. The company offers software products for the banking industry and business process management services and it also provides end-to-end business solutions. “Our vision is to be a responsible, leading global organization working towards the greater common good by setting global benchmarks for a sustainable tomorrow” —Mr. N.R. Narayana Murthy Chairman and Chief Mentor

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Here are some CSR Initiatives at Infosys: (a) Resource Efficiency: Infosys believes resource efficiency is an effective means to reduce their impact on the ecosystem. Following up on their commitment to be a responsible consumer of energy, water and other natural resources, the company has invested in green buildings and have launched several initiatives to conserve electricity, reuse paper, recycle water and effectively manage our waste: • 1,400,00 sq. ft. of green buildings under construction. • Collaborated with government bodies in formulating environmental policies. • 3.6 million KWh of electricity procured from renewable sources. • 23,714 trees planted in India’s office locations. • 18% reduction in Percapita electricity consumption during last two years. (b) Social Contract: Infosys strives to pursue the highest standards on corporate governance, people wellbeing and corporate stewardship. It does by engaging with their stakeholders be they customers, employees, vendor partners or society. They believe social contract is central to their efforts in building tomorrow’s enterprise. • 67,500 students benefited by the spark program. • 2,100 new houses for flood victims in Karnataka. • 60,000 children benefited by the Note Book drive. • 1.2 million Beneficiaries of the Akshaya Patra Midday meal program every day. (c) Green Innovation: Many of Infosys business units work with clients in creating sustainable solutions to optimize production and thereby help them reduce their energy consumption. Some initiatives in green innovation are: • SET Labs’ In Green—helps clients manage their energy consumption. • US $ 1 million savings implemented for a client using wireless sensor networks.

3. CSR Initiatives at Hindustan Unilever Ltd. Hindustan Unilever Limited (HUL) is India’s largest fast moving consumer goods company, with leadership in home and personal care products and foods and beverages. The company believes that the true worth of an organization comprises more than just its business achievements. The service it renders to society bestows great value on the organization itself. It is committed to creating a responsible leadership that has a positive impact on society, and helps solve its most challenging issues. Some CSR initiatives at HUL are: (a) Water: HUL is working with specialized NGO Partners in the field of water conservation, and using various models with specific performance indicators and evaluation procedures. The project aims at meeting the challenges of acute shortage of water in different terrains in India. Some of the successful water conservation pilot projects are:

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Project Khamgaon: A pilot watershed management project was started seven years ago on a five hectare plot, to prevent soil degradation and to conserve water. The efforts have resulted in the creation of a green belt, which in now a veritable forest with about 6,300 trees. Encouraged by the results, HUL extended the model to a neighboring village, Parkhed in association with The Energy and Resources Institute (TERI) and BAIF Development Research Foundation. Project Silvassa: In April 2004, Vanarai and HUL started a project in Karchond and later in Dapada, Pati, Sindoni, and Silvassa. Till March 2010, the project has made an impact on water and soil conservation. The project has ensured sustaiainable development of water and land resources, locals have attained selfsufficiency in basic needs of food, water, fodder and fuel, and local employment oppurtunities have been generated through increased economic activity. Project Puducherry: HUL’s Puducherry unit in coordination with DHAN Foundation, Madurai had identified eight village ponds for renovation to enhance the water quality. One of the unique aspects of the project was to form social capital by organizing villagers into pond association empower them to execute the physical renovation work, thus creating employment opportunities to them. The project has led to improvement in water availability in eight village ponds by harvesting monsoon run-off.

(b) Enhancing Rural Livelihood: HUL has made considerable efforts by coordinating with various foundations and NGO partners to enhance the livelihood of rural community. • 75,000 women from rural, urban, tribal in the south were provided training on banking and financial services like to how to pool their own savings, accessing bank resources etc. • Enhancing Livelihoods in Dadra Nagar Haveli by providing training to the tribal youth on water conservation project. (c) Other Commendable Community Initiatives by HUL • In the year 1976, HUL provided a 72,500 sq. ft plot for setting up Asha Daan in the heart of Mumbai. The home is presently supported by the missionaries of charity and cares for the abandoned and challenged children, victims of HIV. The company bears Capital and Revenue expenses for maintenance, upkeep, and security of the premises. • HUL started Sanjivani, a mobile medical service in the year 2003, to offer effective free medical care in surrounding area of Assam. • Fair and Lovely Foundation scholarships of up to INR 1 Lakh have been awarded to those women who have dreams but couldn’t realize it due to financial problems. Since 2003, more than 790 scholarships have been awarded to women across India. • Contribution of over INR 10 Crores toward the relief and rehabilitation of tsunami-affected families in the year 2006 by providing them relief material, land

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and construction facilities and INR 5 Crores worth of nutritional and personal hygiene products were supplied immediately to the needy soon after the disaster.

4. CSR Initiative at Bajaj Auto The Bajaj Group is amongst the top business houses in India. Its wings are spread in various sectors like lighting, automobiles, home appliances, iron and steel, finance etc. Some major initiatives of Bajaj Auto are: Education • •

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Shiksha Mandal Wardha: In 1914, Jamnalalji and his associate Shri Shrikishandas Jajoo established the shiksha Mandal for propagating education. Kamalnayan Bajaj School: It was commenced in the year 1976 with 24 fully furnished class rooms and labs. A total of 1400 students study from Lower KG to 12Tth standard. Jankidevi Bajaj Institute of Management Studies: It was established in August 1997, is a centre of Management studies and the postgraduate Department of Management Education. Jamnalal Baja Institute of Management Studies: It was established in the year 1965 in collaboration with Graduate School of Business, Stanford University, with a donation from the Jamnalal Bajaj Seva Trust.

Health: In the area of Health some Hospitals have been established: • Kamalnayan Bajaj Hospital: It was established in the year 1990 in Aurangabad with the capacity of 60 Bed hospital and Research centre. Now it has 225 beds with 60 full time doctors. • Bajaj—YCM Hospital A.R.T. Centre for HIV/AIDS: Initiating Public-Private Partnership with Government of India-Ministry of Health and Family welfareNational Aids Control Organization (NACO) Bajaj has set up an YCMH in Pimpri, Pune for HIV Patients. Women Empowerment: In the area of Women empowerment some samsthas have been established for the upliftment of women. • Jankidevi Bajaj Gram Vikas Sanstha: The samstha has been after the Padmavibhushan late Jankidevi Bajaj, wife of Shri Jamnalal Bajaj, was established in 1987. The main objective for establishing the sanstha is empowerment of women, eliminating poverty, development of human and natural resources, promotion of ecological balance etc. Self Reliance: Some trusts established for empowering self reliance are: • Jamnalal Bajaj Seva Trust: It is the first charitable trust established in the year 1942 after the demise of Jamnalalji. The trust’s Memorandum, Articles of

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Association and objectives was drafted by Mahatma Gandhi. The trust aims at promoting art gallery, exhibitions, and handicrafts at Kamalnayan Bajaj Hall. Institute of Gandhian Studies: The institute of Gandhian Studies was established in memory of Jamnalal Bajaj in October 1987. The society aims at promoting long-term and short-term study courses on Gandhian thoughts by organizing seminars, consultative meets for Panchayats workers, special courses for women members of the panchayats and trade union workers.

Rural Development Activities: Through various trusts and companies like Bajaj Auto, Hind lamps, Jankidevi Bajaj Gram vikas sanstha, Jamnalal Bajaj Foundation, Khadi and Village Industries Commission, Jamnalal Bajaj Seva Trust, The Bajaj Group carries out various Rural Development Activities like: • Distribution of Agricultural Implements • Tree Plantation/Horticulture • Distribution of Solar-lantern and solar-cookers • Veterinary services like insemination, vaccination and distribution of cattle feed. Environment and Natural Resources: In Areas like Environment and Natural Resources Jankidevi Bajaj Gram Vikas Sanstha has taken certain activities for rural community like: • Water conservation projects for improving agricultural productivity • Construction of latrines • Family size biogas plants • Dairy development • Improving agricultural implements in 11 villages.

Source: http://www.bajajauto.com/our_csr_areas.asp

5. CSR Initiative at Pepsico India PepsiCo entered India in 1989 and in a short period of 20 years has grown into the largest and one of the fastest growing food and beverage business in the country. PepsiCo India’s growth has been guided by PepsiCo’s global vision of “Performance with Purpose”. This means that while business maximizes shareholder value, they have a responsibility to all the stakeholders including the communities in which they operate, the consumers they serve and the environment whose resources they use. Some Initiatives taken by PepsiCo India in the area of Environmental Sustainability are: Replenishing Water—Conserving the World’s Most Precious Asset: Water • PepsiCo India has pioneered several initiatives to replenish water in communities. The year 2009 was a year of immense pride and joy for PepsiCo India and a time

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for celebration for it as it was able to give back more water than it consumed through various initiatives or recharging, replenishing and reusing water. In the last five years PepsiCo India was able to reduce water use by more than 45 percent and saved more than billion liters of water through conservation efforts.

Partnership with Farmers: PepsiCo India continues to strengthen its partnership with farmers across the country to boost the productivity and income of partners. It has a plan to strengthen farmer connect from 21,000 in 2009 to 50,000 by 2012. The company’s vision is to create a cost-effective, localized agri-supply chain for its business by: • Introducing Sustainable farming methods and practicing contact farming. • Educating farmers on world-class agricultural practices. • Working closely with farmers and state governments to improve agri-sustainability and crop diversification. • Introducing new high-yielding varieties of potato and other edibles. • Facilitating various services like financial and insurance to the farmers. Waste to Wealth: Pepsico Solid Waste Management Programme: Pepsi CO In partnership with an environmental NGO Exnora has taken initiative to convert waste into wealth by providing employment to rural community as well recycling the wastage, making the environment clean and sustainable. • Community members enjoy the benefits of a clean environment and are educated on how to recycle the waste. • 85% of Household bio-degradable waste is converted into organic manure through the process of vermin-culture. This project provides livelihood to more than 500 community members. • Recyclable wastage such as tetra packs, pet bottles, plastics etc. are recycled. • This initiative recycled nearly 30,000 tons of solid waste in 2010 that would have otherwise been relocated to landfills. Pepsico India HIV/AIDS Initiative: PepsiCo India in consultation with it’s technical partner ILO (International Labour Organization has taken initiative to spread awareness amongst all its stakeholders through “Each One Teach One” approach to ensure sustainability. Today it has 58 Master Trainers and 175 Peer Educators to spread awareness on HIV/AIDS. Corporate Social Responsibility (CSR) has been in existence for a while but recently it has become central to the strategic decision making of every organization. So every organization has a CSR policy and produces a report of its activities. An increasing number of companies are adopting a variety of “Voluntary initiatives” associated with codes of conduct, improvements in environmental management systems and occupational health and safety.

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CONCLUSION Corporations are now viewed as integral parts of society whose role is to help society develop which, in turn, insures to a great extent the long-term viability of the corporations. The values, visions, and strategic objectives of corporations should be compatible with those of society and the community. Hence, there must be congruence in purpose between and among these entities, not to mention the interests of stakeholders. In simple terms, this is the essence of corporate philanthropy or corporate social responsibility.

BIBLIOGRAPHY Aswathappa, K., “Essentials of Business Environment”, Mumbai, Himalaya Publication House Pvt. Ltd., 2006. Francis, Ronald D. and Mishra, Mukti, “Business Ethics—An Indian Perspective”, New Delhi, Tata McGraw Hill, 2009. Singh, S., “Corporate Governance—Global Concepts and Practices”, Excel Books, New Delhi. First Edition 2005. Velasquez, Manuel G., “Business Ethics—Concepts and Cases”, Pearson’s Education, Asia. Fifth Edition. http://www.itcportal.com/sustainability/lets-put-india-first/home.aspx http://www.itcportal.com/sustainability/sustainability-report-2010/index.aspx http://www.itcportal.com/sustainability/sustainability-report-2010/sustainability-report-2010.pdf http://www.infosys.com/sustainability/pages/index.aspx http://pepsicoindia.co.in/purpose/environmental-sustainability.html http://www.infosys.com/sustainability/social-contract/Pages/index.aspx http://www.bajajauto.com/csr.asp http://www.hul.co.in/sustainability/society/?WT.LHNAV=Society:_Creating_a_positive_impact

ABOUT THE AUTHOR Ms K. Sirisha is working as an Asst. Prof. in Swarna Bharati Engineering College, Khammam. She is having 6 years of experience. She is MBA, MHRM, M.Com., M.Phil. and pursuing Ph.D. from Sri Padmavathi Mahila Viswa Vidyalayam, Tirupathi. Till now she has presented 6 research papers in national conferences, and 3rd international conferences. She has 5 research papers published in national journals and four research papers in international journals.

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ISO 26000: Theory and Practice Ravi Raj Atrey Independent CSR Consultant, New Delhi, India E-mail: atrrey.msw@gmail.com

ABSTRACT This research paper aims to present the framework on the applications of ISO 26000— Social Responsibility standard, studies the gaps in theory and practice. It describes the emergence of so many international standards on CSR and uniqueness of ISO 26000, practical realities behind adoption of ISO 26000 with reference to corporate sustainability and impact on macro-economic trends and national business environment. The paper is structured into eight main parts, each one emphasizing a specific research objective—Role of standards in good social and economic governance; Emergence of so many global codes and standards; Evolution of IS0 26000; How ISO 26000 is different from the other standards; General presentation of ISO 26000; Mechanisms and responsibilities for Monitoring under ISO 26000; Key issues for adoption of ISO 26000 for the corporate and private sector; and Recommendations and conclusions. Keywords: ISO 26000, Corporate Social Responsibility (CSR), Social Responsibility (SR), Responsible Business, International Standards on CSR. Corporate Sustainability.

ROLE OF STANDARDS IN GOOD SOCIAL AND ECONOMIC GOVERNANCE “A key lesson from the recent recession and business scandals in the financial sector is that responsible, transparent, and ethical leadership is needed in order for companies to develop and maintain a long-term commitment to corporate responsibility for the benefit of multiple stakeholders. This is especially true of multinational corporations (MNCs) because of the power and influence these businesses and their executives represent. MNCs operate in multiple environments and contexts where laws, rules, expectations, and mores are divergent. In addition, the enforcement and monitoring mechanisms to oversee these expectations range from the barely existent to wellresourced government agencies.”

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Good Governance approach has been a popular reform model to bring about popular reform models in economic and sustainable people centric development. “We define human development as expanding the choices for all people in society. This means that men and women—particularly the poor and vulnerable—are at the centre of the development process. It also means “protection of the life opportunities of future generations...and...the natural systems on which all life depends” (UNDP, Human Development Report 1996). This makes the central purpose of development the creation of an enabling environment in which all can enjoy long, healthy and creative lives. Economic growth is a means to sustainable human development—not an end in itself. Human Development Report 1996 showed that economic growth does not automatically lead to sustainable human development and the elimination of poverty. For example, countries that do well when ranked by per capita income often slip down the ladder when ranked by the human development index. There are, moreover, marked disparities within countries—rich and poor alike—and these become striking when human development among indigenous peoples and ethnic minorities is evaluated separately.” In developed and developing countries alike, the state is being compelled to redefine its role in social and economic activity—to reduce it, reorient it, reconfigure it. The pressures for change stem from three sources: • The private sector wants a more conducive market environment and a better balance between state and market. • Citizens want increased accountability and responsiveness from government, as well as greater decentralization. • Global pressures from supranational and worldwide social and economic trends are challenging the identity and nature of the state. Sustainable human development depends in part on creating jobs that provide enough income to improve living standards. Private sector is the primary source of opportunities for productive employment. Economic globalization is fundamentally changing the ways in which industries and enterprises operate. In many developing countries, private enterprise needs to be encouraged and supported to be more transparent and competitive in the international marketplace. Equitable growth, gender balance, environmental preservation, expansion of the private sector and responsible and effective participation in international commerce cannot be achieved by the market alone, however. Private sector development can be fostered that is sustainable by: • Creating a stable macroeconomic environment • Maintaining competitive markets

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Ensuring that the poor (especially women) have easy access to credit Nurturing enterprises that generate the most jobs and opportunities Attracting investment and helping to transfer knowledge and technologies, particularly to the poor Enforcing the rule of law Providing incentives for human resource development Protecting the environment and natural resources.

Governance can no longer be considered a closed system. The state’s task is to find a balance between taking advantage of globalization and providing a secure and stable social and economic domestic environment, particularly for the most vulnerable. Globalization is also placing governments under greater scrutiny. Some of the International Standards like ISO 26000 guide the corporations in such a manner that the macro-economic impacts are affected in country at large, above are the few points for sustainable development which can be achieved if corporations adopt these standards of responsible business. Organizations around the world, and their stakeholders, are becoming increasingly aware of the need for and benefits of socially responsible behaviour. The objective of social responsibility is to contribute to sustainable development. An organization’s performance in relation to the society in which it operates and to its impact on the environment has become a critical part of measuring its overall performance and its ability to continue operating effectively. This is, in part, a reflection of the growing recognition of the need to ensure healthy ecosystems, social equity and good organizational governance. In the long run, all organizations’ activities depend on the health of the world’s ecosystems. Organizations are subject to greater scrutiny by their various stakeholders. Standards guide to be adhere to various local legislations, so a business unit if implement a single standard can be in compliance with many national legislations including Labour Laws, Environmental laws, Social Laws, Companies Act etc. Factories act and so on. The main purpose of the International Organization for Standardization (ISO) is to help the private sector develop its own voluntary international standards free from government regulation, and to help businesses develop in-house structures facilitating compliance with those standards. The most well known ISO Management System standards are the ISO 9000 (quality control) and 14000 (environmental protection) certification series. The ISO is now the focus of debate on whether CSR should be standardized.

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EMERGENCE OF SO MANY GLOBAL CODES AND STANDARDS Following is a summary of major international standards and norms on CSR:

1. Green Paper 366: Promoting a European Framework for Corporate Social Responsibility Released: July 2001. Drafting Entity: European Commission. Background Against the backdrop of calls for greater social cohesion in Europe, the Gyllenhammar Report was released in November 1998, and subsequently delegates to the March 2000 Lisbon European Council declared that the Union’s goal for the next decade was to become a knowledge-based economy capable of sustainable economic growth, with more and better jobs and greater social cohesion. These developments influenced the content of the Green Paper 366, issued by the European Commission. Salient Features Two of the Green Paper’s aims were: (1) to launch a broad-ranging debate on how the European Union could promote the best CSR practices (in other words, what type of framework would be suitable to promote best practices in each industrial sector, and for each business size); and (2) to promote the development of a European CSR framework and to foster social cohesion through CSR. A section at the end of the Green Paper asks for the opinions of a broad spectrum of social bodies, especially companies, labor unions and NGOs, by posing these questions: What can the European Union do to promote the development of corporate social responsibility? Should the EU develop an overall European framework to promote CSR practices? Core Elements of the Document Corporate Social Responsibility—The Internal Dimension 1. 2. 3. 4.

Human resources management Health and safety at work Adaptation to change (restructuring) Management of environmental impacts and natural resources.

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Corporate Social Responsibility—The External Dimension 1. 2. 3. 4.

Local communities Business partners, suppliers and consumers Human rights Global environmental concerns.

A Holistic Approach towards Corporate Social Responsibility 1. 2. 3. 4. 5.

Social responsibility integrated management Social responsibility reporting and auditing Quality in work Social and eco-labels Socially responsible investment.

2. Corporate Social Responsibility: A Business Contribution to Sustainable Development (Communication from the European Commission) Released: July 2002. Drafting Entity: European Commission. Background This recent report indicates strategies needed to promote CSR practices at the EU level, and takes into consideration various stakeholders’ opinions on the EU Green Paper 366. Salient Features The European Commission states the need to deepen understanding of CSR and good practices at the EU level, and calls for greater convergence and transparency in the following areas: codes of conduct; management standards; accounting, auditing and reporting; social labels; and socially responsible investment. The Commission also proposes to set up an EU Multi-Stakeholder Forum on CSR, to be composed of employers, employees, consumers, NGO representatives and others, as a way to encourage debate on CSR practices. The Forum is requested to present, by mid2004, a report on guiding principles on such issues as: (1) the relationship between CSR and competitiveness (business case); (2) the effectiveness and credibility of codes of conduct; (3) the development of commonly agreed guidelines for CSR measurement and reporting; and (4) definition of commonly agreed guidelines for labeling schemes. After its formation, the EU Multi-Stakeholder Forum on CSR held its 1st High Level Meeting in Brussels, on October 16, 2002. Some of the participants at the meeting represented employers’ groups (including the Union of Industrial and Employers’ Confederations of Europe (UNICE), business networks (including CSR

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Europe), trade unions (including the European Trade Unions Confederation (ETUC)), and NGOs. Core Elements of the Document 1. 2. 3. 4.

Introduction Synthesis of consultation on Green Paper on CSR A European action framework for CSR Improve the knowledge about CSR and facilitate the exchange of experience and good practice 5. Promoting convergence and transparency of CSR practices and tools 6. Launching a EU Multi-Stakeholder Forum on CSR 7. Integrating CSR in all EU policies.

3. Caux Round Table Principles for Business Released: 1994.

Drafting Entity: The Caux Round Table. Background The principles are based on the understanding that, although rules, systems and policy proposals are necessary for businesses to obtain the trust of society and play a constructive role, and necessary also for resolving trade friction problems, the most basic requirement is that companies act responsibly. Salient Features These principles were the first to be drawn up through collaboration among Japanese, American and European business leaders. The principles embody ideals brought to the table by participants from all three regionsâ&#x20AC;&#x201D;the Japanese concept of kyosei (the idea of living and working together for the common good, enabling cooperation and mutual prosperity to coexist with healthy and fair competition); an American statement called The Minnesota Principles (guidelines on fair corporate behavior); and a European proposal on human dignity (the inviolable dignity of each person to be respected by corporations while they pursue their activities). The Principles were offered in the hope they would also serve as a reference for corporate behavior in developing countries, and in countries beginning the transition to a market economy. Core Elements of the Document Section 1: Preamble

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Section 2: General Principles Principle 1: The Responsibilities of Businesses: Beyond Shareholders toward Stakeholders. Principle 2: The Economic and Social Impact of Business: toward Innovation, Justice and World Community. Principle 3: Business Behavior: Beyond the Letter of Law toward a Spirit of Trust. Principle 4: Respect for Rules. Principle 5: Support for Multilateral Trade. Principle 6: Respect for the, Environment. Principle 7: Avoidance of Illicit Operations. Section 3: Stakeholder Principles (Customers, Employees, Owners/Investors, Suppliers, Competitors, Communities).

4. The Global Compact Released: July 2000 (concept announced in January 1999). Proposed by: United Nations Secretary-General Kofi Annan. Background United Nations Secretary-General Kofi Annan proposed the Global Compact with the following in mind: 1. Globalization is promoting the advancement of development countries, but there are negative results as well, particularly more widespread poverty and more environmental degradation; and 2. These problems can only be resolved through the collective action of corporations that are active internationally. Salient Features Global Compact principles are based on the Universal Declaration of Human Rights, the ILOâ&#x20AC;&#x2122;s Fundamental Principles and Rights at Work, and the principles embodied in the Rio Declaration on Environment and Development. Companies participating in the Global Compact process agree to support and promote the Compactâ&#x20AC;&#x2122;s 10 principles on human rights, labor standards, and the environment, and are required to send the UN Global Compact office an annual report on their activities. There are well over 10 participating organizations, including international labor organizations and NGOs active on the world stage. The International Labour Organization (ILO), the Office of the UN High Commissioner for Human Rights (OHCHR), the United

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Nations Environment Programme (UNEP), and the United Nations Development Programme (UNDP) all urge compliance with the Global Compact. Core Elements of the Document Human Rights Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights within their sphere of influence. Principle 2: Businesses should be certain that they are not complicit in human rights abuses. Labour Standards Principle 3: Businesses should uphold freedom of association and the effective recognition of the right to collective bargaining. Principle 4: Businesses should uphold the elimination of all forms of forced and compulsory labour. Principle 5: Businesses should uphold the effective abolition of child labor. Principle 6: Businesses should uphold the elimination of discrimination in respect of employment and occupation. Environment Principle 7: Businesses should support a precautionary approach to environmental challenges. Principle 8: Businesses should undertake initiatives to promote greater environmental responsibility. Principle 9: Businesses should encourage the development and diffusion of environmentally friendly technologies. Anti Corruption Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.

5. OECD Guidelines for Multinational Enterprises Released: 1976 (amended in 1979, 1984, 1991 and 2000). Drafting Entity: Organisation for Economic Co-operation and Development (OECD).

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Background People are becoming increasingly concerned about the activities of multinational corporations, which are gaining strength through liberalized trade and investment and the globalized economy. The Guidelines, formulated with these concerns in mind, are a code of conduct for multinational corporations to meet. They were compiled after taking into account a wide spectrum of opinions, including those outside government circles, and have been amended several times to address the concerns of civil society. Salient Features Guidelines were originally annexed to the non-binding OECD Declaration and Decision on International Investment and Multinational Enterprises, compiled in 1976. The Guidelines are recommended by participating governments, and suggest certain behavior patterns to be followed by multinational corporations: 1. Adhering governments recommend that multinational corporations respect certain norms of behavior, since their activities exert much influence over the development of the global economy. 2. The Guidelines are not binding; corporations are expected to adopt them voluntarily. 3. Each adhering government is expected to establish a National Contact Point (NCP) in its own country, in order to promote acceptance of the Guidelines, to answer questions on the Guidelines, and to conduct discussions with relevant parties. The Japanese Ministry of Foreign Affairs serves as the NCP for Japan. Core Elements of the Document The guideline framework, as amended in 2000, basically consists of a preface, 10 chapters, and commentaries explaining the stipulations. The chapters cover: 1. Concepts and principles 2. General policies 3. Disclosure 4. Employment and industrial relations 5. Environment 6. Combating bribery 7. Consumer interests 8. Science and Technology 9. Competition 10. Taxation.

6. Guidelines of the Global Reporting Initiative Released: June 2000 (revised August 2002).

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Drafting Entity: Global Reporting Initiative (a voluntary organization established by the Coalition for Environmentally Responsible Economies, in order to develop and promote globally applicable guidelines for reports on sustainability issues). Background Discussions were launched after corporations agreeing with the CERES Principles called for the establishment of de facto standards for the content of global corporations’ environmental reports. The discussions did not define “sustainability”, but it was agreed that the issues surrounding sustainability are economic, environmental and social in nature. Performance indicators for these three factors were drawn up, and then translated into guidelines. The 2002 Guidelines were officially announced at the World Summit on Sustainable Development (Earth Summit) held in August 2002 in Johannesburg, South Africa. Salient Features The Guidelines are concerned with more than just the environment—they encompass the reporting of the “triple bottom line” of economic, environmental and social issues. Features of the 2002 version include: 1. Revamped reporting principles 2. Strengthened content for social and economic performance indicators 3. Separation of performance indicators into core and additional (voluntary) 4. Greater clarity, permitting greater flexibility and incentives when using the Guidelines, and the addition of conditions to identify a report as prepared in accordance with the 2002 Guidelines. Core Elements of the Document Preface and introduction. Part A: Using the GRI Guidelines. Part B: Reporting principles (transparency; inclusiveness; auditability; completeness; relevance; sustainability context; accuracy; neutrality; comparability; clarity and timeliness). Part C: Report content (vision and strategy; profile of reporting entity; governance structure and management systems; GRI content index; performance indicators [economic, environmental and social performance indicators]). Part D: Glossary and annexes.

7. Social Accountability 8000 Released: October 1997. Drafting Entity: Social Accountability International.

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Background As part of the globalization of corporate activities, multinational corporations tend to build factories in low-wage countries. Some of these companies pay inordinately low wages, force employees to work excessively long hours, and take children out of school for work. To counter such labor practices, concerned people in Europe and North Americaâ&#x20AC;&#x201D;academic experts, private corporations, people connected to the ISO, NGOs and othersâ&#x20AC;&#x201D;joined forces under the Council on Economic Priorities and drafted the Social Accountability 8000 standards. Salient Features Social Accountability 8000 is the first international standards on human rights and ethical behavior drawn up to eliminate unfair and inhumane labor practices (such as child labor and forced labor), primarily in developing countries. The standards are an offshoot of the ISO 9000 (quality control) and 14000 (environmental protection) certification series, and can be summed up as follows: 1. They emphasize performance, measured using fixed values; 2. They were compiled using ILO and other international standards as a basis; 3. Accreditation is done by a third party; verification procedures are not conducted by the company itself; 4. Accreditation is valid for 3 years; renewals are applied for. Core Elements of the Document 1. 2. 3. 4. 5. 6. 7. 8. 9.

Child labor Forced labor Health and safety Freedom of association and right to collective bargaining Discrimination Discipline Working hours Compensation Management systems.

The accreditation process is as follows: 1. 2. 3. 4. 5. 6.

Receipt of application package Office and witness audit Establishment of a company-level management system Decision of screening and registration body Initial audit Comprehensive audit.

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8. AccountAbility 1000 Released: 1999. Drafting Entity: Institute of Social and Ethical AccountAbility. Background The accountability standards were drawn up to address the following problems: it is often impossible to trust corporate reports on their commitment to society and the environment; the reports may be difficult to understand; and desired information is often not found in the reports. These problems exist at a time when consumers, investors and other stakeholders are becoming increasingly keen to know more about corporate governance structures and corporate attitudes towards human rights, community development, environmental protection, etc. Salient Features AccountAbility 1000 is an accountability standard. It offers guidelines for ensuring social and ethical accountability and high-quality auditing and reporting practices. The standard embodies principles for improvement processes and process elements. The process standards are underpinned by the principle of accountability to stakeholders, and do not define performance standards per se. Core Elements of the Document Planning Process 1: Establish commitment and governance procedures Process 2: Identify stakeholders Process 3: Define/review values. Accounting Process 4: Identify issues Process 5: Determine process scope Process 6: Identify indicators Process 7: Collect information Process 8: Analyze information, set targets and develop improvement plan. Auditing and Reporting Process 9: Prepare report(s) Process 10: Audit report(s) Process 11: Communicate report(s) and obtain feedback.

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Embedding Process 12: Establish and embed systems.

9. Ethics Compliance Standard 2000 Released: 1999 (amended in 2000). Drafting Entity: Business Ethics Research Project, Reitaku Center for Economic Studies, Reitaku University. Background In spite of a growing realization that corporations and other organizations must behave ethically and comply with social norms, there was no consensus on what type of systems are needed to address CSR issues. The Compliance Standard was compiled to clearly indicate the direction that systems should take to ensure compliance with ethical standards, laws and regulations. Core Elements Plan: Basic plan; Ethical compliance standards; Internal regulations; Implementation planning. Do: Establishment of competent divisions; Authority and responsibility; Training and education; Communication. Check: Monitoring; Checking awareness levels; Auditing management systems. Act: Act on audit results; Make improvements, guided by reports from competent divisions.

EVOLUTION OF ISO 26000 The need for ISO to work on an SR standard was first identified in 2001 by ISO/ COPOLCO, Committee on consumer policy. In 2003, the multi-stakeholder ISO Ad Hoc Group on SR which had been set up by ISOâ&#x20AC;&#x2122;s Technical Management Board (TMB) completed an extensive overview of SR initiatives and issues worldwide. In 2004, ISO held an international, multi-stakeholder conference on whether or not it should launch SR work. The positive recommendation of this conference led to the establishment in late 2004 of the ISO Working Group on Social Responsibility (ISO/WG SR) to develop the future ISO 26000 standard. In January 2005 a Working Group was established within ISO, to develop an International Standard providing guidelines for Social Responsibility (SR). The objective was to produce a guidance document, written in plain language that is understandable

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and usable by non-specialists, and not a specification document intended for third party certification. The work was intended to add value to, and not replace, existing inter-governmental agreements with relevance to social responsibility, such as the United Nations Universal Declaration of Human Rights, and those adopted by the International Labour Organization (ILO). ISO took action to ensure that the standard will benefit from broad input by all those with a serious interest in social responsibility. This was achieved by a balanced representation in the working group, it is shared by the stakeholder groups that are participating in the Working Group on Social Responsibility (WG SR) to develop ISO 26000: of six designated stakeholder categories—industry, government, labour, consumers, nongovernmental organizations and others, in addition to geographical and gender-based balance. 2010–05–26 2010–03–03 2010–02–17 2009–09–14 2009–06–04 2008–09–18 2007–11–20 2007–02–13 2006–12–25 2006–12–01 2006–05–24 2005–10–05 2005–03–24 2005–01–28 2004–09–29 2004–06–29 2004–06–24 2004–06–21

ISO 26000 on social responsibility approved for release as Final Draft International Standard Decision confirmed to advance ISO 26000 to Final Draft International Standard Leaders of ISO Working Group on Social Responsibility weigh up results of vote on draft ISO 26000 Future ISO 26000 standard on social responsibility published as Draft International Standard Extensive debate improves consensus on future ISO 26000 standard on social responsibility Stakeholder consensus enables ISO 26000 on social responsibility to move up in development status Record participation for 5th meeting of ISO Working Group on Social Responsibility Future ISO 26000 standard on social responsibility reaches positive turning point WG SR Media participation policy ISO and UN Global Compact reinforce cooperation on social responsibility standard Drafting progresses of future ISO 26000 standard on social responsibility ISO lays the foundations of ISO 26000 guidance standard on social responsibility Dynamic’ launching of work on ISO 26000—future guideline on social responsibility ISO prepares to launch development of standard on social responsibility Brazil-Sweden to lead development of ISO’s social responsibility standard ISO to go ahead with guidelines for social responsibility ISO weighs results of conference on social responsibility Sweden´s Crown Princess opens ISO conference on social responsibility.

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GENERAL PRESENTATION OF ISO 26000 CSR Definition by ISO 26000 The responsibility of an organization for the impacts of its decision and activities on society and the environment, through transparency and ethical behavior that: • Contribute to sustainable development, including health and welfare of society • Takes into account the expectation of stakeholders • Is in compliance with applicable law and consistent with international norms of behavior • Is integrated throughout the organization and practices in its relationship. This implies the willing inclusion by business of social and environmental concerns in the commercial (economic) activities and their relation with their stakeholders. CSR Correlates with the social and environmental dimensions of Sustainable Development as defined by brundtland and the model of the triple bottom line (Economic-Environment-Social or Profit-Planet-People). CSR may be considered as a tool, way of doing business towards sustainable development. CSR is a good way of doing business strategically and profitably. Corporate Social Responsibility (CSR) Tools/Enabler

Sustainable Development Goal

ISO 26000 was prepared by ISO/TMB Working group on Social Responsibility which released on 1st November 2010. It was one of the most comprehensive standards ever developed by ISO and received global attention and acceptance. Comprehensive Review of the Main Benefits that CSR Brings on for the Responsible Corporates Theoretical and practical evidences show that organizations that involve themselves in socially responsible practices will gain competitive advantage. In more pragmatic and economic views, the benefits for responsible corporates are at least the following: • Harmonizing business practices with the expectations of all the stakeholders • Increasing Efficiency and cost reduction

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Creating new business opportunities and winning competitive advantage Cooperating with local communities Avoiding crisis due to CSR deviations and better managing operational and commercial risks Obtaining Government support and avoiding stricter Governmental regulations Increasing possibilities of recruiting and retaining high quality employees Differentiating from competitors and achieving production or commercialization brand loyalty Attracting and retaining high quality investors and business partners Increasing the stakeholders’ value Reducing the volatility of shares Decreasing the cost of capital Obtaining good access to socially responsible investment funds Reducing risks by adopting the best practices of business partners Achieving sustainable competitiveness Improving corporate image, reputation and brand Increasing buyer’s loyalty with respect to the seller, increasing the sales’ efficiency, productivity and quality Improving corporate financial performance Obtaining the social operational license from the main stakeholders of the company, not just from the shareholders.

The ISO 26000 is based on 7 principles, 7 Core subjects or requirements, total comprising of total 36 identified significant Issues or potential area to work by organization. The organization needs to identify which issues are relevant and significant for them to address in prioritized manner, through its own consideration and through dialogue with stakeholders.

ISO 26000 Defines 7 Principles of Social Responsibility 1. Accountability: Being answerable for decisions and activities and their impacts on society, the economy and the environment. 2. Transparency: Openness about decisions and activities that impact on society and the environment. 3. Ethical behavior: In accordance with accepted principles of right or good conduct. 4. Respect for stakeholder interest: Respect, consider and respond to the interests of its stakeholders. 5. Respect for rule of law: Mandatory. 6. Respect for international norms of behavior. 7. Respect for human rights.

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ISO 26000 Defines 7 Social Responsibility Core Subjects

HOW ISO 26000 IS DIFFERENT FROM THE OTHER STANDARDS The membership of the ISO Working Group on Social Responsibility (ISO/WG SR) was the largest and the most broadly based in terms of stakeholder representation of any single group formed to develop an ISO standard. Six main stakeholder groups were represented: industry; government; labour; consumers: nongovernmental organizations; service, support, research and others, as well as a geographical and gender-based balance of participants. In July 2010, the ISO/WG SR had 450 participating experts and 210 observers from 99 ISO member countries and 42 liaison organizations. ISO 26000 integrates international expertise on social responsibilityâ&#x20AC;&#x201D;what it means, what issues an organization needs to address in order to operate in a socially responsible manner, and what is best practice in implementing SR. ISO 26000 is a powerful SR tool to assist organizations to move from good intentions to good actions. It provides harmonized, globally relevant guidance for private and public sector organizations of all types based on international consensus among expert representatives of the main stakeholdersâ&#x20AC;&#x2122; group from developed and developing countries and so encourages the implementation of best practice of Social Responsibility worldwide. ISO 26000 emphasizes what organizations need to do in order to operate in a socially responsible way. On the one hand, there have been a number of high-level declarations of principle related to SR and, on the other, there are many individual SR programmes and initiatives. The challenge is how to put the principles into practice and how to implement SR effectively and efficiently when even the understanding of what â&#x20AC;&#x153;social

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responsibility” means may vary from one programme to another. In addition, previous initiatives have tended to focus on “corporate social responsibility”, while ISO 26000 will provide SR guidance not only for business organizations, but also for public sector organizations of all types. To ensure consistency, ISO has also entered special agreements with the ILO, the Global Compact, the GRI and the OECD. As a result, ISO 26000 is probably the most inclusive sustainability standard in regards to the issues it covers. ISO 26000 distils a globally relevant understanding of what social responsibility is and what organizations need to do to operate in a socially responsible way.

MECHANISMS AND RESPONSIBILITIES FOR MONITORING UNDER ISO 26000 ISO 26000 serves as guidance. Unlike other ISO standards, it is not intended to be used for regulatory or certification purposes. It has no sanctioning mechanism. Most prominent SR principle within IS0 26000 is the respect for stakeholder interests. This principle “deals with the relationships between the organization, its stakeholders and society as a whole”. reasons for creating stakeholder engagement programmes, actions that an organization should undertake in this area and ways to involve stakeholders in the SR policy of the organization. Stakeholders are the key monitoring agents under ISO 26000. Sustainable business for organizations means not only providing products and services that satisfy the customer, and doing so without jeopardizing the environment, but also operating in a socially responsible manner. Pressure to do so comes from customers, consumers, governments, associations and the public at large. At the same time, far-sighted organizational leaders recognize that lasting success must be built on credible business practices and the prevention of such activities as fraudulent accounting and labour exploitation.

KEY ISSUES FOR ADOPTION OF ISO 26000 FOR CORPORATE AND PRIVATE SECTOR Corporate Responsibility and Sustainability issues particularly in India for which ISO 2600 helps in managing risks and seize the opportunities to create value, are as follows.

Responsible Sourcing Taking responsibility for the impact of business operations is no longer enough; these days, businesses are held accountable for what goes on in the supply chain. From

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working conditions to corruption to environmental impacts, sourcing of products is under scrutiny. Challenge is to understand the impact of buying decisions have on local communities, workers, and the environment, and then to take action to make sure this impact is positive. In essence, this is what ethical sourcing is about. Done well, it can promote sustainability, and protect and enhance the brand.

Producer Responsibility Develop producer responsibility programme so that it can reduce the environmental impacts of products and comply with national legal obligations. Producer responsibility is about ensuring that businesses take responsibility for products once they have reached the end of their life. It seeks to reduce the quantity of waste going to landfill by diverting end of life products to re-use, recycling or other forms of recovery.

Carbon Emission Strategic management of carbon emissions is complex. It starts with understanding the ways carbon management can affect the business. Whether through operational aspects such as process efficiency and alternate energy sources, regulatory aspects, or possible impacts on company reputation based on stakeholder perceptions, carbon has the potential to impact the bottom line in a variety of ways. Adding to this complexity is the array and variety of regulations, initiatives and schemes proliferating around the world to address climate change threats. These include regional market-based schemes, local and national regulations on measurement and communication and international protocols for assessing, trading and mitigating carbon emissions. A focus on assessment, engagement and communication to sense of carbon and energy priorities, balancing the operational, reputational and regulatory aspects of carbon management and to make business approach to carbon management more strategic by aligning it with the expectations of stakeholders and the vision and core commercial goals of the company is key issue today.

Biodiversity Biodiversity issues present risks and opportunities for business, yet few companies understand what they are and fewer still have begun responding properly through their strategies and practices. The biodiversity we see today is the product of around four billion years of evolution. It has sustained human life for thousands of years by providing food, fuel, shelter, fibre and medicine, and is the foundation of the planetâ&#x20AC;&#x2122;s life support systems, such as atmospheric and water regulation.

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Today, we face a biodiversity crisis driven by unsustainable demands from the growing human population. We are altering natural landscapes and utilising natural resources at an increasing and unsustainable rate. As society wakes up to the value of biodiversity and takes steps to protect it, the case for incorporating biodiversity into business planning and operations grows stronger. The risks of ignoring biodiversity issues include: • Challenges to legal licence to operate • Disruption of supply chain • Damage to brand image • Consumer boycotts and campaigns by environmental NGOs • Fines, third-party claims for environmental damages and future environmental liabilities • Lower ratings in the financial markets. Business should know on how to take proper account of biodiversity in their Corporate Responsibility or sustainability strategy and reporting, and in company’s core business strategy.

Human Rights Human rights are the universal rights and freedoms to which all humans are entitled. They are closely connected to other societal challenges such as child poverty, discrimination, labour rights, land usage, migration, health and safety, and freedom of expression to name just a few. Human rights were enshrined in the Universal Declaration of Human Rights (UDHR) by the United Nations General Assembly in 1948. Human rights violations exist in all parts of the world and under all types of political regimes. While all types of business can directly infringe human rights, or be complicit in other parties’ human rights violations, below are factors that substantially increase the likelihood of human rights violations: • Businesses (or their suppliers) operating in post-conflict areas. • Businesses (or their suppliers) operating in poor and underdeveloped countries or countries ruled by authoritarian regimes. • Business that have big direct social or environmental impacts (e.g. large low-skilled labour force, extensive use of natural resources). Businesses that operate in, or source from, such areas are therefore strongly encouraged to assess their exposure to human rights-related risks and ensure they are practising due diligence. This is achieved by: • Integrating human rights issues into corporate codes of conduct and policies. • Ensuring human rights are considered in project plans. • Putting in place monitoring, auditing and grievance mechanisms. • Thoroughly addressing areas of non-compliance.

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Bribery and Corruption ISO 26000 Fair Operating Practices have following issues: 1. Anti-corruption. 2. Responsible political involvement. 3. Promoting social responsibility in the value chain. Corruption is recognized as a major hindrance to sustainable development, with a disproportionate impact on poor communities. The impact on the private sector is also considerable, impeding economic growth, distorting fair competition and presenting serious legal and reputational risks. The development of corporate governance rules around the world is also prompting companies to focus on anti-corruption measures as part of their measures to protect reputation and the interests of shareholders. In recent years, high-profile cases of corporate corruption and bribery have given rise to diplomatic tensions between countries. ISO 26000 addresses anti-corruption in the context of “fair operating practices”, identifying it as one of several related issues. ISO 26000 states that fair operating practices concern ethical conduct in an organization’s dealings with others. These include relationships between companies and government agencies, as well as partners, suppliers, contractors, competitors and the associations in which they are members. ISO 26000 also recognized the linkages between corruption and other core subjects, stating that: “Corruption can result in the violation of human rights, the erosion of political processes, impoverishment of political processes, impoverishment of societies and damage to the environment. It can also distort competition, distribution of wealth and economic growth.”

RECOMMENDATIONS AND CONCLUSIONS The failure to have a global legal and regulatory scheme has resulted in environmental disasters, child labor, financial fraud, antitrust violations, tainted food products, and other problems. The present economic and social context affected by the globalization puts a stronger emphasis on Social Responsibility of Corporates. Corporates, aiming at long-term profitability, operating efficiency and credibility are realizing that ethical and socially responsible criteria should become an integral and strategic part of their business operations. A voluntary international standard for offering guidance in terms of Social Responsibility (Common basic definitions, working methods and methods of evaluation) is a necessary instrument for corporates aiming to apply a common framework for implementing and evaluating their CSR policies. Enhancing credibility, quality and reputation are the key motivating factors behind participation of corporate in ISO 26000.

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The perception and reality of an organization’s performance on social responsibility can influence following, among other things: • Competitive advantage. • Reputation. • Ability to attract and retain workers or members, customers, clients or users. • Maintenance of employees’ morale, commitment and productivity. • View of investors, owners, donors, sponsors and the financial community. • Relationship with companies, governments, the media, suppliers, peers, customers and the community in which it operates. The standard represents an impressive consensus, with the exception of the five votes against it, including those from India and the US, both of whom were apprehensive that it might form a barrier to trade. India fear that this standard could be easily adopted by some developed countries such as Japan and the European Union as a tool to discourage imports from developing countries. In a submission to the ISO, India had argued that for the purposes of the multilateral trading system governed by the World Trade Organization (WTO), ISO-26000 should not be interpreted as an international standard, guideline or recommendation. The US and Canada had supported India’s submission. Core issue is labour standards and its inclusion in context of trade having the potential to alter the entire trade dynamics. When India talks about comparative advantage, particularly in a situation where labour mobility is so limited, it is theoretically impossible. “Despite the new coverage of corporate wrongdoing and questionable decision making, many firms are making the commitment to corporate responsibility through selfregulation. More than 5,000 companies in 135 countries are signatories to the United Nation’s (UN) Global Compact, signaling their agreement to ten principles on human rights, anticorruption, environmental issues, and labor. The Global Reporting Initiative (GRI) provides a framework for companies developing corporate responsibility reports that discuss key standards, are comparable to peers, and capture performance over time. The new ISO 26000 standards will assist in voluntary organizational self-analysis, media review, investor due diligence, and other reviews of corporate responsibility efforts.”

ACKNOWLEDGEMENT I am thankful to Mag. Martin Neureiter, the task group leader within ISO for the writing of the ISO 26000 Standard on Social responsibility who allowed me to learn about ISO 26000 with CSR Company International. I am thankful to Mr. Bharat Wakhlu, Resident Director of the Tata Group India, who inspired me towards responsible business practices. Further, I am thankful to the Mr. Saurabh Mittal and

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India CSR Reviewer Board’s Comment on my current work and allowing me to write for this edited book.

REFERENCES Good Governance and Sustainable Human Development, Governance for Sustainable Human Development, A UNDP Policy Document, United Nations Development Programme, 2004. Governance, International Law and Corporate Social Responsibility, International Labour Organization, Research Series 116, 2008. How to regulate Global Business: Issue—Are less formal systems and agreements likely to be more successful than formal legal and regulatory systems?, Daniels Fund Ethics Initiative University of New Mexico, 2011. International Organization for Standardization (ISO), Discovering ISO 26000 Project Overview, Geneva, 2010. International Organization for Standardization (ISO), ISO 26000 Project Overview, Geneva, 2010. OECD Principles of Corporate Governance, Organization for Economic Cooperation and Development, 2004. Puterman, P., “How developing countries contributed to ISO 26000”, Summary presented in developing countries workshop, 2010. UN and ISO Corporate on Global Corporate Social Responsibility, Global Governance Watch, Jim Kelly, Dec. 2009. What are Standards for: The case of ISO 26000, The Guardian, Sustainable Business, UK, Jan. 2012.

ABOUT THE AUTHOR Mr. Ravi Raj Atrey is an expert on Responsible Business, Sustainable Development and Structural Social Reforms. He is well versed with International Standards on Sustainable and Socially Responsible Business (UNGC, ISO 26000 and others). He is contributing leadership role in social development of country in Governance Reforms and Human Rights Advocacy. He is affiliated with several international organizations. He has presented research papers in different international and national seminars on developmental issues. He is an accomplished senior-level Professional having experience in Comprehensive Corporate, Humanitarian and Development Sector. He had multidisciplinary education in International Law, Management, Social Work and Economics.

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Strategic CSR Ratna Trivedi Assistant Professor, Department of MBA, Gandhinagar Institute of Technology, Ahmedabad, Gujarat E-mail: oratna1@yahoo.com

ABSTRACT Strategic CSR (Corporate Social Responsibility) aims for CSR activity as a part of business strategy. CSR should be a part of core value and philosophy of a corporation. In this chapter we will describe why it is emphasized to conduct CSR activities with a strategic mindset. We will throw light on why CSR should be a part of core activities of your business. What the present state of CSR in India is and how Indian corporations can transform their present CSR activities into a strategic one. We will design a road map for carrying out CSR activity in such a way that it satisfies all stakeholders. For that we will see that how social or environmental issues are affected by company’s ordinary courses of business. And then we will try to explain how Strategic CSR will help the organizations to blend their long term goals with CSR initiatives. Keywords: CSR, Sustainability, Sustainable Development.

INTRODUCTION Why do all corporations worry about Corporate Social Responsibility and Sustainability? • It gives positive image to a corporation • It permits you license to do your business • It makes you feel that as you are obliged towards the environment and stakeholders, you are doing some good deeds to give back • It inspires you to undertake the kind of activities which aim for Sustainability because we live in a world of scarcity (of resources) hence for example, if you pollute the environment by liberating smoke you are bound to plant and nourish as many trees as possible to grow in nearby area of the facility. According to Hindu religion when god gives us in plenty we should try to give it back by doing some good social deeds and hence Indian business houses, started philanthropic th activities even in 19 century. Thus Indian corporations had started CSR activities in the form of charity and philanthropy.

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Now the question arises: Is CSR a charity or philanthropy? One can say that CSR activities are for a good cause hence they are indeed philanthropic activities and if we talk about charity, it can be said as part of CSR activity, henceforth we can conclude that CSR is neither charity alone nor philanthropy alone but it is much broader rather different than the above two concept. We will move ahead logically. As our mind will question us we will try to find the answer with the help of some proven statements, facts and figures, some arguments and will be reaching to a conclusion.

LITERATURE REVIEW So now we stuck at what is CSR? CSR assumes plenty of definitions because of its wideness. We will look into some very basic and fundamental definitions of CSR which are globally accepted. According to Caroll (1983) “corporate social responsibility involves the conduct of a business so that it is economically profitable, law abiding, ethical and socially supportive. To be socially responsible then means that profitability and obedience to the law are foremost conditions when discussing the firm’s ethics and the extent to which it supports the society in which it exists with contributions of money, time and talent” (p. 608). But Carrol himself admitted that the definition given by him is one of the many definitions of CSR which have been used globally since 1950. CSR is widely accepted term but many similar terms are prevailing in the market. Moon (2002) pointed that CSR is one of the several terms coined in the market to describe the relationship between business and society. As it was widely acknowledged that CSR is the most popular term used by corporations and others, there are synonymous terms to CSR used in market like Corporate Citizenship, Business ethics, Sustainability or Sustainable Development, Business and Governance, Corporate Governance, Business and Society and many more.

PRESENT STATUS OF INDIA’S CSR ACTIVITIES Karmayog has been doing the practice of giving rating of top 500 Indian companies (in terms of revenue) according to their CSR practices. The practice started in 2007. The graph shown in Figure 1 shows the comparison of ratings from 2007 to 2010 where 5 is considered as best, 0 is considered worst rating particularly given when there is no CSR practice undertaken by a company. The result is that over a period of four years the ratings improved a bit but we cannot observe continuous increase in rating. Considerable improvement is shown in zero rating from 2007–2010. In 2007, there were 225 companies with no CSR activity

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(0 rating). Looking at Table 1, in 2007 only 40 companies attained rating 3 but by 2010, the figure soared to 65.

Fig. 1: Comparison of CSR Ratings 2007–2010

Looking at Table 1, one can feel a shock when it is come to know that only twelve companies have gained rating 4 (second best) in 2010. None of the Indian Corporation has gained rating of 5. Table 1: Comparison of Ratings: 2007–2010 No. of Companies 2007

2008

2009

2010

Level 0

221

173

128

113

Level 1

118

147

148

Level 2

144

161

146

161

Level 3

Level 4

Level 5

When we observe the CSR activities done by top 500 Indian companies, we can quickly get the idea that why the ratings of all these companies are so poor. There are various reasons behind poor ratings: • One of the facts is Indian companies don’t know exactly what is “CSR”, many companies just taking CSR as philanthropic deed or charity but as a social and environmental responsibility. • Majority of the companies don’t have CSR budget decided for the year. As CSR is a part of operational activities there should clearly defined goals and budget and people dedicated for the particular activity/project.

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Many companies don’t have personnel/department specifically looking after CSR activities. Many companies don’t have any affiliation with Government, other companies or NGO. The most important fact is that the companies those are involving in various CSR activities, they lack strategic mindset towards CSR.

Hence the question in front of us is that how to consider CSR as part of operational activity, how to incorporate CSR into business strategy and how to make CSR as core value of the company. Question may arise to our mind that why “Strategic CSR”? At global level, economic competition has been rising and at the same time social and environmental expectations are also rising from various stakeholders; henceforth CSR needs to become a beneficial activity for the business houses (Porter and Kramer, 2006; Crawford and Scaletta, 2005; Meehan et al., 2006; Kotler and Lee, 2005; Windsor, 2006). According to the authors listed above, CSR is an opportunity cost unless it generates any advantage for the business. According to Porter and Kramer, they should select type of environmental and social issues those are directly affected by their business activity. This way, one can convert opportunity cost of CSR into an attractive business opportunity. We can understand this situation with the help of a case. Mr. A who was drunk and driving a car irresponsibly, breaking all traffic rules and suddenly he hit a pedestrian Mr. B walking on the footpath. Mr. B got badly injured. The drunkard (Mr. A) didn’t show any kind of sympathy or feeling of sorry towards Mr. B and quickly ran away as if nothing happened. Mr. B was a poor guy bearing responsibility of his family’s livelihood. At that instance he was fighting between life and death. Mr. A was a rich and well known personality of the town. Now the time is for discussion and conclusion!!

ETHICAL BEHAVIOR Our common sense says that when somebody is hurt because of your actions; your first duty is to get the things right by helping the person who got hurt because of you. And simultaneously insure yourself that you won’t repeat the kind of mistake and thus will bring improvements in your actions. Therefore Mr. A should first stop his car and get Mr. B in to rush to a private hospital whereby Mr. B must get timely treatment from doctors. Mr. A should remain present during the initial treatment and try to contact the family members of Mr. B. Mr. A should bear entire expenses of Mr. B’s treatment. Even Mr. A should express the feelings of sorry to Mr. B and his family. Ethically a person should act like described above. This was considered as an ethical

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behavior of a person or in other words this was the example of a citizen’s social responsibility. Imagine If Mr. A behaves what we have described above then Mr. B and his family members will forgive him and even they will have a feeling of gratitude for Mr. A though he was the reason for the accident.

ACTUAL BEHAVIOR Actual behavior of Mr. A was different. He used to give donations to various schools, colleges, orphanage home, old age home and hospitals run by trusts for poor and middle class people. To fulfill his social responsibility he should do these kinds of charity and philanthropic activities. Here the point required to note is that he didn’t bear responsibility for which he indeed was responsible. As a consequence on very next morning, the news came in newspaper quoting about Mr. A. Everybody in the city made aware about the incident and Mr. A lost the impression of a kind hearted and respected citizen!!! The morale remains same even when we talk about a corporation. That is the reason that corporation’s prime responsibility falls in the areas which are directly affected by corporation’s business activity. For example, to set up a facility for company X, in the region of forest, cutting of trees are required. Other problem is many people’s livelihood depends upon this forest. Now we can conclude that as the company X has decided to set up a factory in the area of forest because of proximity of rare and valuable raw material and cheap labor; due to company X’s business activity in forest area direct impact would be on environment and on nearby community, henceforth the company’s prime responsibility is to provide livelihood to the people, to grow and nourish trees in nearby area and when the facility starts routine operation they should take care about that the factory’s working would be under the pollution control rules. Company X knows its responsibility very well so while they had formulated strategy to start a business in this region; they decided to make CSR and Sustainability practice a part of their business strategy. And thus they started thinking strategically for the CSR activity in such a way that they can generate money from new factory, do the business within the legal boundary, behave ethically while solving business dilemma, build a reputation in front of various stakeholders and follow concept of sustainable development. To implement the concept of “Strategic CSR”, they planned to make CSR practice part of their operation activity. The benefit of this idea is that they can relate CSR activity with other business activities very easily, as in one business; different activities are always related, interlinked and interdependent; they can relate CSR activity with production, marketing, finance and Human Resources. Hence for them CSR is not considered merely as charity and philanthropy, and only an opportunity cost

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for the company or a separate area which bears no relevance with their present business. Rather for company X; CSR is a source of competitive advantage. How? Let’s see…

PLANNING FOR “STRATEGIC CSR” They have planned that raw material requirement would be fulfilled very easily coz easily available in plenty and in proximity; cheap labor would be available from local community. Problem is that they are illiterate and poor. Prior to set up a plant they planned to visit the area, they decided to interact with local people and thought to explain the people that their poverty could be removed if the company could start a plant here. At the end they will make them convince by giving assurance for employment to the local people. According to HR planning, at present they require 300 workers for the plant and the number almost matches with the local community strength. They are 500 people residing in the village, subtracting 150 as old and children; almost 350 adult menwomen are left and these all will be given some kind of employment. For that they are required to give basic education to all and then will be given training for the operations of plant. This all started with the construction of the plant begins at one side and people are convinced and started training and education on other side. It will take six months to the factory to reach to operational position. By this time the company will provide two time meal and tea and snacks to all villagers for six months as they are not in the position to earn due to cutting of trees to set up the plant. The company has also opened a small medical clinic with one doctor, five nursing staff and two ambulances with all necessary stock of medicines. Some villagers know the work of construction therefore they are allotted shift in the construction work. Few are literate and educated up to standard 10; they are sent to medical clinic to learn nursing work because they had plan that within a year they are going to build their own township to live engineers and executives with their families, hence they will set up a school and a hospital in the village. Three men have passed attained graduation so they are given assurance for offering a school teacher job in the school which is going to take shape in one year. They have selected fifty women to work and to cook food for the company’s upcoming canteen facility where employees and workers are going to have their meal when the factory becomes operational. They are going to cover entire area with dense forest just leaving the factory and township area. For this, villagers and some key employees, managers and engineers of the company will be divided into different teams and each team will be given some sq. meter area in which they will have to plant and grow the trees and thus before starting of the daily operation; the company has initiated the program of employee engagement for CSR efforts. In factory premises and even in township it is planned that at every three

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feet distance there would be one tree along with many small and big gardens already included in the planning. The entire narration was very fast and relevance couldn’t be understood with the topic!!!! Why does this person tell stories???? Friends, this is very important question; must raised one!!! As all of us know, it is the fact that a person can quickly and well understand something with the help of stories and example than pure theory. That’s why I have chosen a way of telling stories wherever it is possible. Sorry for Interruption!!! Let’s again try to understand…For this I request you to read this again. Go back to page no. 6, last paragraph. Reading entire case again, we can understand that to achieve two main CSR goals of giving employment to local community and growing and nourishing more trees around the region; they have planned to make following efforts: • To educate people • To train people in terms of imbibing operational skills and expertise • To provide food • To make team comprising local people along with company executives, engineers and other employees • Delegate responsibility of planting and nourishing trees to all teams • Initiate Employee Engagement in CSR activities • To start a school and a hospital at the plant location • Build a good reputation and philanthropic image among the stakeholders • Do business ethically and legally. Now, think otherwise!!! Company Y wanted to start its plant in the same region for the same purpose of easy availability of valuable raw material and cheap labor. The twist comes here that CSR is neither part of their business strategy nor included in the core value of the company. Company Y’s promoters are not interested and even not aware about “Strategic CSR”. Now, let’s observe their move. They want to start a plant in the region surrounded by dense forest; they visit the place and come to know about local people’s livelihood dependency on forest. They consider entire case as a big threat in starting of their factory. Hence they meet to Head of Village-Sarpanch, and talk with him regarding the problem they inform Sarpanch that they will give employment to some people because they require illiterate and poor people as workers in their factory but can’t give employment to all. So for rest of the matter Sarpanch needs to convince and control local community; and also required to give assurance that local people will not oppose even in future

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when working of factory start. For this task company officials bribe the Sarpanch. Even to give pressure on Srapanch that he would do his work with 100% loyalty after taking the bribe; they even bribed many State Government and district level officials. With this they start construction and cut down trees from surrounded area. They are not worried about environment, sustainability or philanthropy; hence they don’t try to grow a single tree in surrounding area. They build their factory and township with beautiful gardens inside but outside the key area no involvement. Some people who are special to Sarpanch; they are given first priority in getting the work in factory. For others, there is no place in factory!! People tried to start a movement against factory but it was suppressed badly with the help of threats and violence. At the end of the year, they give a heavy donation to village school because Sarpanch’s son is school principal!! They distribute used cloths, used books and used toys of their engineers’ and executives’ family as charity to poor people. Points to conclude: • The operation of plant started by company Y will become successful but at the cost polluting the environment and unemployment and poverty of local community. • Company Y can earn profit and economic growth sacrificing Sustainability. • It can’t build an image of a good corporate citizenship among the stakeholders. • It doesn’t do business within the legal boundary. When a company doesn’t do business considering sustainable development, then there is no meaning of growth. It is simple to understand when the growth is not based on sustainability; in real terms it can’t be said growth. Growth, which is not based on sustainability; is temporary. Hence it can be failed in bringing lasting development. Now we will follow Karmayog CSR rating 2010 and will try to understand and justify ratings of different companies based on their CSR efforts. For this we will follow five different companies whose ratings will be 0, 1, 2, 3 and 4. No company has gained rating of 5 therefore we will choose the companies only up to rating 4. This study will help us to understand what kind of CSR efforts are considered meaningful and strategic which really brings sustainable development. We will choose five IT and ITES companies of India. Each company has been given different rating ranging from 0 to 5. Looking at the CSR practices of above mentioned companies in Table 2, we need to evaluate CSR practices of individual companies and then we will come to know the reason behind different ratings of each company.

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CSR and Competitiveness Table 2: Karmayog CSR rating 2010 Sr. No 1. 2. 3. 4. 5.

Name of the Company Infosys Technologies Ltd MphasiS Ltd. InfoTech Enterprises Ltd Hexaware Technologies Ltd. ICSA (India) Ltd.

CSR Rating 4 3 2 1 0

Infosys Technologies Ltd. Karmayog CSR rating: 4 Strategic CSR Infosys has its own Sustainability policy adopted from July, 2010. They have decided to work on sustainability by focusing on following themes. Social Contract It is pursuance of humanism in all spheres of business. Under this theme, they engage stakeholders and even encourage employee participation across various CSR initiatives. Employees at Infosys used to take up different programs in the areas of healthcare, education, art and culture, rural rehabilitation and inclusive growth. One of the employee driven organization wide CSR practices is “Spark” which spreads knowledge about IT and advancement in IT among students and thus helping students in studies and providing good exposure in career planning. In this program, employees reach to high school, non-engineering and engineering students in ten office locations across India. In this practice they give two weeks of training to high school students during vacation period in turn the students get early exposure of corporate culture. The data says that in FY 2009–10, 67500 students and 3372 faculty members had been benefited and 2600 committed volunteers were created through this program. Under the theme of Social Contract, they have achieved following milestones: • 67500 students benefited by Spark program • 2100 new houses for flood victims in Karnataka • 60000 children benefited by Note book drive • 1.2 million beneficiaries for Akshay Patra midday meal program every day 1 • ASTD Excellence award for gender diversity practices. 1

ASTD—American Society for Training and Development. It is world’s leading non-profit association of workplace learning and performance professionals, forming a world-class community of practice.

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Resource Efficiency • • •

Infosys has committed to become a responsible consumer of energy, water and other natural resources. They have taken plenty of initiatives in the area of becoming energy efficient, reusing of paper, recycling of water and managing waste properly. They have set long term goals to become carbon neutral, water sustainable, to preserve and promote natural habitat, to minimize solid waste and to improve new methods for disposal of solid waste, to minimize the use of virgin natural resources.

Under the theme of Resource Efficiency, they have achieved following milestones: • 1,400,000 sq. ft. of green building under construction • Collaborated with government bodies for formulating environmental policies • 3.6 million kWh of energy procured from renewable sources of energy • 23,714 trees planted in India based office locations • 18% reduction in per capita electricity consumption during last two years. Green Innovation •

• •

•

It believes in working with client on the issues of sustainability whereby they together come up with sustainable solutions to optimize production and hence reduction in energy consumption can be achieved. According to Infosys, corporate can attained their sustainability goals through IT integration, communication, reengineering and innovation. It uses technology and innovative solutions for their clients in the area of Smart grid, intelligent building design, Green logistics and supply chain management by collaborating with their clients, partners and alliances. Under the theme of Green Innovation, they have achieved following milestones: – 224 patent applications filed in India and US – 20% in clients cost saved by FinacleTM (Finacle core banking solution is a comprehensive, integrated yet modular business solution. It effectively addresses the strategic and day-to-day challenges faced by banks. Finacle solutions address the core banking, mobile banking, e-banking needs of retail, corporate and universal banks worldwide) through operating system visualization – US $ 1 million savings implemented for a client using wireless sensor networks.

MphasiS Ltd. Karmayog CSR rating: 3 • They don’t publish Sustainability Report • They don’t have CSR budget

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It focuses on the following area: • Physically challenged • Poverty abolition • Vocational Training. It has emphasized to bridge between: • The company and the community we live in • Our employees and Social issues • Our skills and needs of society. Its key areas are: • Education: According to MphasiS, education is the key to social and economic development of a nation. That’s why they invest in projects related to providing education. • Employability: They believe that a person should possess a kind of skill which prepares him in getting the job in the market. So he can explore new opportunities in market and shape a bright future for him. • Entrepreneurship Development: Their goal is to train young guns who can take risks, explore new opportunities and hence run enterprises through which our nation can progress. Key features of MphasiS CSR practice: • Employee Engagement: they devote their time, money, skills and creative ideas • They encourage NGO’s awareness generation and fund raising efforts in MphasiS • They encourage employing qualified but disabled people in MphasiS • MphasiS and IIMB Partner to Set Up an Office of Disability Services (ODS) • They believe that CSR is Not just financial philanthropy • They firmly believe that employees should voluntarily participate in various CSR programs and should contribute monetarily even for a kind cause. • It has received NCPEDP—Shell Helen Keller Award 2008 for inclusiveness of people with disabilities at work place • It has also received National Award for the Empowerment of Persons with Disabilities 2008 • It has established F1 Foundation • MphasiS’ partners for various CSR activities include: (s) Each One Teach One (b) Headstreams (c) JAGRUTI Seva Sanstha (d) Office of Disability Services, Indian Institute of Management (e) Swadhar (f) Srinivasan Services Trust

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(g) NOIDA Deaf Society (h) NASSCOM Knowledge Network (i) Fourth Wave Foundation (FWF).

InfoTech Enterprises Ltd. Karmayog CSR Rating: 2 • They don’t publish Sustainability Report. • They have kept the provision for CSR budget. • It conducts various CSR activities through Infotech Enterprises Charitable Trust (IECT). • Main focus area is imparting primary education to underprivileged children in India. • IECT has initiated a project—Adopt a School for which financial support, infrastructure improvements in schools and voluntary service by employees are contributed by Infotech Enterprise. • They have adopted state government run schools which do not possess necessary infrastructure, resources and good quality teachers. Adopting these schools they will transform them into a place where children wish to come and learn. • They have donated ` 60 lakhs for flood relief to Government of Andhra Pradesh. • They have also donated ` 10.20 lakhs towards Chief Minister’s Relief Fund.

Hexaware Technologies Ltd. Karmayog CSR Rating: 1 • Main focus area: Community welfare, Physically challenged, Environment • They don’t publish Sustainability Report • They don’t have CSR budget.

ICSA (India) Ltd. Karmayog CSR Rating: 0 • No CSR activity has been initiated.

CONCLUSION •

Indian corporations are lagging behind when we talk about CSR and Sustainability practices. According to Karmayog CSR rating 2010, no one have attained highest rating 5, only 12 companies have achieved rating of 4. This shows that the companies who engage in CSR activities they don’t understand real crux behind the concept of CSR and hence they couldn’t achieve higher rating and ended up with rating 0, 1, 2 or 3.

242 •

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CSR should be part of company’s core philosophy then only it can be a part of company’s Strategy. In case of Infosys Technologies Ltd., we have seen that CSR is an inseparable part of its core strategy and hence they have incorporated CSR in their all strategic and operational aspects. CSR should be part of your day to day business activity; it is misunderstood as only charity or philanthropic activity. Many companies like Hexaware technologies Ltd.’s CSR activities are less strategic and more of a kind of charity. When a company imbibes CSR in its core strategy, it doesn’t required to think for CSR as a foreign function; as routine business activities are moved on simultaneously CSR and Sustainability flows inside all activities and thus becomes heart of your business operation. One of the milestones of Infosys is they have achieved 18% reduction in per capita electricity consumption during last two years. This is only possible when CSR is flowing in your routine business activities as life blood.

ACKNOWLEDGEMENT I am very happy to express my gratitude to all those without whom the contribution of Chapter “Strategic CSR” would not be possible. One more time I have felt grace of God and an opportunity knocked my door!!! First of all I want to express my gratefulness towards Prof. Saurabh Mittal and Team India CSR for giving me a platform to contribute for the book. I want to thank all my family members and colleagues without whom perhaps I couldn’t able to finish the assignment. Thanks to all.

REFERENCES Carroll, A.B. (1983). Corporate social responsibility: Will industry respond to cut-backs in social program funding? Vital Speeches of the Day, 49, pp. 604–608. Crawford, D. and Scaletta, T. (2005). “The balanced scorecard and corporate social responsibility: aligning values and profits”, CMA Management, Vol. 79, No. 6, pp. 20–7. Kotler, P. and Lee, N. (2005). Corporate social responsibility: Doing the most good for your company and your cause. Hoboken, NJ: Wiley. Meehan, J., Meehan, K. and Richards, A. (2006). “Corporate Social Responsibility: the 3C-SR model”, International Journal of Social Economics, Vol. 33, No. 5/6, pp. 386–398. Moon, J. (2002). Corporate Social Responsibility: An Overview. In C. Hartley (Ed.), The International Directory of Corporate Philanthropy, First ed.: 3–14. London and New York: Europa Publications. Porter, M.E. and Kramer, M.R. (2006). “Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility”, Harvard Business Review, December 2006, pp. 78–92. Windsor, D. (2006). “Corporate Social Responsibility: Three Key Approaches”, Journal of Management Studies, Vol. 43, No. 1, pp. 93–114.

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——. (2010). I., (Ed.), Infosys Sustainability Report 2009–10, pp. 16, 26, 29, 31, 38. Retrieved from http://www.infosys.com/sustainability/Documents/infosys-sustainability-report-2009-10.pdf ——. (2010, —). Karmayog CSR rating 2010. Retrieved from http://www.karmayog.org/csr2010

ABOUT THE AUTHOR Ms Ratna Trivedi holds a post graduate degree in Master of Business Administration and currently she is working as Asst. Professor in MBA Department, Gandhinagar Institute of Technology, Ahmedabad. She is interested in research in the area of Corporate Social Responsibility and Sustainability. She thinks that Indian companies don’t give proper focus on CSR and many companies don’t know how CSR can be a beneficial tool. She wants to contribute in this area in such a way that Indian companies consider CSR as important as their business.

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Relevance of Ethics and CSR in Emerging Economies Leela Mehernosh Karkaria Assistant Professor and Manager, CSR, School of Business, Chikka Hagade Cross, Chandapura, Bangalore E-mail: leela.k@alliance.edu.in

ABSTRACT Ethics and CSR play an important role in emerging economies for businesses to survive. CSR in emerging economies is still in the exploratory stage and no differentiation is evident between philanthropy and CSR. Government of India has come out with National Voluntary guidelines for public sector enterprises and now the government expects to contribute 2% of the profits towards the development of the social sector. Ethics and ethical values, do they have a say in the corrupt emerging economy? Only if the corporations are ethically sound, there can be a balance between societal expectations from business versus sustainability of business. This paper explores various intertwining issues and the effects on the vulnerable population and CSR as an emerging factor to create sustainable business.

INTRODUCTION In the twenty first century, survival will be a more complicated and precarious question than ever before, and the ethics required of us must be correspondingly sophisticated. (Oscar Arias, former President of Costa Rica and winner of the 1987 Nobel Peace Prize) In a globalised and liberalized new emerging economic world, many national and international corporations are discussing CSR and Code of Ethics in their boardrooms. This trend has also shifted to management schools to equip future manager to adapt and adopt ethical practices to enable them to involve in social development of communities. There has been a tremendous whistle blowing measure from various pressure groups of the community and the society in general worldwide on different issues concerning business collaborations and ventures outside the mother country and these groups are constantly and consequentially exerting their direct influences on

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businesses through various social media that is more than available in abundance in this internet age. Every new collaboration and venture goes through a scrutiny process in various degrees depending on the governments of the country. The pressure to exist in an emerging economy that is volatile puts considerable strain on corporations that is still groping to understand the socio-cultural milieu of the local population and to be sensitive to localisation. The aftermath is some of the businesses have not been able to survive or exist within a few months of shifting base. The business environment at a global level consists of dynamic set of relationships with partnering companies, markets, financial markets, government policies, towns, technologies, political ideologies and stakeholders at large. Why? Is adaption the key for businesses to survive? Do businesses need to adapt or adjust to the new social milieu for individuals or groups to survive? What is that corporations need to do to achieve triple bottom line growth approach? Can corporations survive without Ethics and CSR? Can Corporations act responsibly in terms of moral behaviour, principled action and behave according to the social expectations of the society? Outside the EU, India is as different from China as it is from the UK. Everything is local and culture counts, more than almost anything else. The English word ‘ethics’ has its origins in ‘ethikos’, a Greek word. Ethikos denotes a person’s moral behavior and social expectations of etiquette and principled action. Business ethics is the code of moral conduct which a business should adhere to during its daily dealings. Although economic and legal responsibilities embody ethical norms about fairness and justice, ethical responsibilities embrace those activities and practices that are expected or prohibited by societal members even though they are not codified into law. Ethical responsibilities embody those standards, norms, or expectations that reflect a concern for what consumers, employees, shareholders and the community regard as fair, just or in keeping with the respect or protection of stakeholder’s moral rights. Generally people believe business ethics involves adhering to legal, regulatory, professional and company standards, keeping promises and commitments and abiding by general principles like fairness, truth, honesty and respect. The institute of Global Ethics defines ethics as the obedience to the unenforceable. Thirty years ago, Milton Friedman, Nobel prize winner for economics and a fierce advocate for free markets argued that “there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits”. Business ethics—idea that businesses should not only behave according to certain moral standards but also demonstrate a level of social responsibility and accountability to a range of stakeholders that stretches from employees and customers to suppliers and the wider community—has risen up the management agenda.

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BHAGAVAD GITA AND ETHICS In the Bhagavad Gita, Krishna advises Arjuna about an ethical system that is applicable even now. Krishna elaborates on character-building virtues and how to avoid ethical failure. Krishna mentions 26 virtuous qualities, which are: to be peaceful, charitable, simple, clean, mild-mannered, magnanimous, saintly, equitable, truthful, obedient and merciful. One should surrender the fruits of one’s actions to God and avoid greediness. More ideal qualities include: to be determined, steady, concise, expert, eloquent, friendly, compassionate, grave, humble, respectful and sober. Ethical failure happens when one is bereft of good character. Virtuous people have no problem in living ethically. Therefore, one should develop desirable virtues to lead an ethical life. Aristotle advocated the virtues of self-restraint, courage, justice and prudence. Christian virtues include love, hope and faith. Other desirable virtues include civility, modesty, hospitality, empathy, generosity and compassion (Source: Mrs Jaya Row, Vedanta Institute of Learning). Corporate Social Responsibility (CSR) as the term defines is a corporate obligation to give back to the society from where it derives its resources be it human resources, skills and knowledge.

Archie’s Caroll’s model describes the multiple responsibilities of corporations and depending on the situations, the corporation assumes responsibilities based on the prioritised needs, be it economic, legal or social needs. Social issues appear only when there is a conflict in the priorities and responsibilities versus the needs of the surviving local communities. Whatever the needs are, ethical and social responsibility plays a major factor for determining the survival of business.

SOME MAJOR DRIVER OF CHANGE AFFECTING ETHICS AND CSR The four drivers of change is technology, globalisation, increasing value of intangible assets and intellectual capital in the corporation. In every emerging economy i.e., the

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BRIC countries, technology is needed to suit the local communities. Brazil, Russia, India and China are constantly trying to compete with newer technologies and indulge in aping the west for quick production without giving a thought to cleaner and greener and safe technology. Globalisation in these countries has displaced the small and medium enterprises for e.g., Malls coming up in every corner including in the rural areas. This has not gone well with small individuals like hawkers on the streets and these groups are now becoming more aware of the effects. For a common man, globalisation is an intruding to their basic right to survive economically as he has to feed his own family as well as extended family. Corporate intellectual property (items such as patents, trademarks, copyrights, business methodologies), goodwill and brand recognition are all common intangible assets in today's marketplace. Increasing value on intangible assets in emerging economies plays a major role in building trust among the stakeholders who belong to the underprivileged sector of the society. While intangible assets don’t have the obvious physical value of a factory or equipment, they can prove very valuable for a firm and can be critical to its long-term success or failure. For example, a company such as Coca-Cola wouldn't be nearly as successful were it not for the high value obtained through its brand-name recognition. Although brand recognition is not a physical asset you can see or touch, its positive effects on bottom-line profits can prove extremely valuable to firms such as Coca-Cola, whose brand strength drives global sales year after year.

RELATION BETWEEN ETHICS AND CSR Ethics and CSR are two sides of the coin and cannot exist without each other. Unless corporations are ethical sound they will not be able to act responsibly. To be ethical with lot of other issues emerging at a rapid pace requires a sound ethical policy and practices based on a value system that will help gain sustainability in business in the long run. It is the ability of a corporation to forge successful relationships with a diverse set of stakeholders, including employees, customers, supplier, pressure groups and opinion setters is crucial. Ethics is the face of the corporation and being socially responsible adds value to the whole business. Avoiding expensive court cases, or the bad publicity and damage to their reputation, increased shareholders scrutiny, activist’s involvement and growing evidence of the boost to brand value that can be gained if the brand is associated with ethical behaviour, employees morale also depends on the ethical behaviour of the employers. When Dow Jones Sustainability Index was launched in 1999, the economist argued that “Companies with an eye on their triple bottom line—economic, environmental and social sustainability—outperform their less fastidious peers on the stock market. That is why social responsible investment SRI are used by a number of leading fund managers.

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Business Ethics movement is also gaining ground in western Europe and has begun touching emerging economies not least because of the desire of multinationals to make sure their supply chains come up to ethical scratch. Companies can no longer hide behind the veil of ignorance and claim that they had no idea what their suppliers were up to or procurement of their raw material and HOW of it?.

MILLENNIUM DEVELOPMENT GOALS OF UN Reference UN website Ban K. Moon, Secretary General UN states in foreword in a report on Millennium Development Goals that “The Millennium Declaration in 2000 was a milestone in international cooperation, inspiring development efforts that have improved the lives of hundreds of millions of people around the world. The Goals represent human needs and basic rights that every individual around the world should be able to enjoy— freedom from extreme poverty and hunger; quality education, productive and decent employment, good health and shelter; the right of women to give birth without risking their lives; and a world where environmental sustainability is a priority, and women and men live in equality. Meeting the goals is everyone’s business. Falling short would multiply the dangers of our world—from instability to epidemic diseases to environmental degradation”. MDG Goal 1: Eradicate extreme poverty and hunger MDG Goal 2: Achieve universal primary education MDG Goal 3: Promote gender equality and empower women MDG Goal 4: Reduce child mortality MDG Goal 5: Improve maternal health MDG Goal 6: Combat HIV/AIDS, malaria and other diseases MDG Goal 7: Ensure environmental sustainability MDG Goal 8: Develop a global partnership for development.

SHA ZUKANG, Under-Secretary-General for Economic and Social Affairs, UN States in his Report of the MDG Goal of 2010 as follows: An estimated 1.4 billion people were still living in extreme poverty in 2005. Moreover, the effects of the global financial crisis are likely to persist: poverty rates will be slightly higher in 2015 and even beyond to 2020, than they would have been had the world economy grown steadily at its pre-crisis pace. Gender equality and the empowerment of women are at the heart of the MDGs and are preconditions for overcoming poverty, hunger and disease. But progress has been sluggish on all fronts—from education to access to political decision-making. The most severe impact of climate change is being felt by vulnerable populations who have

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contributed least to the problem. The risk of death or disability and economic loss due to natural disasters is increasing globally and is concentrated in poorer countries. Armed conflict remains a major threat to human security and to hard-won MDG gains. Large populations of refugees remain in camps with limited opportunities to improve their lives. In 2009, 42 million people had been displaced by conflict or persecution, four fifths of them in developing countries. Achieving the MDGs will also require increased attention to those most vulnerable. Policies and interventions will be needed to eliminate the persistent or even increasing inequalities between the rich and the poor, between those living in rural or remote areas or in slums versus better-off urban populations, and those disadvantaged by geographic location, sex, age, disability or ethnicity. In all developing regions: • Children in rural areas are more likely to be underweight than urban children. In Latin America and the Caribbean and parts of Asia, this disparity increased between 1990 and 2008. • The gap between the richest and the poorest households remains enormous. In Southern Asia, 60 per cent of children in the poorest areas are underweight compared to 25 per cent of children in the richest households. • In developing regions overall, girls in the poorest 20 per cent of households are 3.5 times more likely to be out of school than girls in the richest households and four times more likely to be out of school than boys from the richest households. • Even in countries close to achieving universal primary education, children with disabilities are the majority of those excluded. • Maternal health is one of the areas in which the gap between rich and poor is most conspicuous. While almost all births are attended by skilled health personnel in the developed countries, less than half of women receive such care when giving birth in parts of the developing world. • Disparities in access to care during pregnancy are also striking, with women in the richest households 1.7 times more likely to visit a skilled health worker at least once before birth than the poorest women. • Lack of education is another major obstacle to accessing tools that could improve people’s lives. For instance, poverty and unequal access to schooling perpetuate high adolescent birth rates, jeopardizing the health of girls and diminishing their opportunities for social and economic advancement. • Contraceptive use is four times higher among women with a secondary education than among those with no education. For women in the poorest households and among those with no education, negligible progress was seen over the last decade. The Millennium Development Goals are still attainable. The critical question today is how to transform the pace of change from what we have seen over the last decade into dramatically faster progress. The experience of these last ten years offers ample evidence of what works and has provided tools that can help us achieve the MDGs by 2015.

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ETHICAL ISSUES INVOLVING PEOPLE, PRODUCT AND SERVICES At the macro level there are a range of ethical issues that companies need to grapple with in many emerging markets. Dealing with repressive or corrupt regimes, undemocratic governments, war zones, security of company personnel, addressing land rights and people’s rights, child labor, bonded labor, issues involving NGO’s etc. Unless there is a clear stated ethical policy based on the value based philosophy, a balance between values and ethics becomes an issue by itself. Ethical dilemmas are two types: Open and concealed. Open: Open type where the problem is open to the public and can be seen —theft, bribery, sabotage or espionage. Concealed: Concealed that is secret or not seen—Capital investment or insider trading, bad HRM policies or corporate acquisitions and mergers. Ethical Issues of corporations involve their PEOPLE (Employees, Employers, Internal and External Stakeholders), PRODUCT AND PROCESS (procurement of raw material, process used to extract the raw material, equipment and machinery, occupational hazards, pollution, cleaner technologies, and final saleable product) AND SERVICES (target group, services offered by the company, its effects on the community, ethical, moral, value oriented, etc) in a larger frame of reference.

PEOPLE as a Human Resource In globalised economies manpower as a human resource need to be sensitized to the new developing economy issues and the integration to the new socio cultural becomes a crucial factor. For e.g. Employees from the European Union or USA or Scandinavian countries or from Africa or even other parts of the Asian continent need a rigorous learning to reorient them to adapting to the local milieu. Mostly, employees with families relocating to new locations need to understand their own strengths and also to understand there will be more limitations that they need to overcome. Hence, integration and inclusion to newer societies is a key for surviving business eventualities.

PRODUCTS, Consumer Oriented and Customer Driven Product is another most important area where corporations have to be ethically and morally sound to ensure fair trails and justice and not treat the people from the developing world as “GUINEA PIGS”. Most of the retail products are consumer oriented where the consumers and customer are mainly women and children, the product needs to undergo a lot of trials before it is made user friendly and the product is sold with additional information on cause and effects that is clearly spelt out. Advertisement through any social media has to first address the concerns of the

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consumer thereby consumer awareness and consumer protection becomes an added value to the company product. The product is more likely to be accepted by the community before the actual product is consumed. As more and more companies are targeting rural markets, it is the vulnerable population that is affected by the final product and hence social media becomes a tool of social marketing.

Services Services offered by the corporations are the means to the end. Here the services offered to the population without any education becomes a major factor for successful business. The soft drink and its product have reached the remote corners of India due to its acceptability in the vulnerable population. The packed colorful products lighten the eyes of the tribal children in India and even the tribal children avoid the nutritious meal served by ISKON in the villages of Maharashtra. Such is the service of soft drink company that no one can escape the outreach of PEPSI as a soft drink company. Where does the ethics play here? Will CSR activity of mid day meals help in overcoming malnutrition in children living in tribal areas? Can we tell PEPSI to stop manufacturing their products as they are junk food by all standards? For CSR professionals it is a thin divide between ethics and CSR, if we have to plan interventions in the community. To be ethical in oneâ&#x20AC;&#x2122;s life when it is accepted that all ethical tenets are relative and all ethical practices are situational, one has to learn to take ethical decisions with full awareness. Some ethically relevant issues that is relevant to CSR are: Stakeholder engagement with companies, corruption, various legal compliance procedures, cyber liabilities, relief and rehabilitation packages, Public Interest Litigations (PIL), internal and external communication, public relations and branding, social issues of local communities, involvement with non profit organisations, civil societies, government agencies, human rights issues, political and economic issues of the country, law and order, fair wages, customer care, corporate citizenship, etc. Ethical issues involving environmental issues like pollution of air, land and water, land degradation, soil erosion, water conservation, waste management, global warming, climate change, etc. Ethical issues revolve around people, planet and profit and its effects on the triple bottom line growth. In India, PILs are on the increase as vulnerable groups as stakeholders have now access to information. Social media has taken on the role of whistle blowing and has been quite apt in reporting from every corner of the country. Be it Orissa, or Karnataka or Andhra Pradesh or Madhya Pradesh or North East or Rajasthan and more recently the Singur struggle of the people. In spite of known companies like Tataâ&#x20AC;&#x2122;s involved and well known for their philanthropy, yet they could not sustain their business and had to shift out from the state. Is the common Man affected with the policies of corporations? Can he called the real stakeholder? Or corporations still believe that their stakeholders are

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SHAREHOLDERS of the company? Politics in a democratic country often deter the corporations to survive or sustain their businesses. It is a known fact that in some states of India ruled by the Communist Part of India like Kerala or west Bengal, industry does not survive.

CORRUPTION AS A MAJOR ISSUE IN DEVELOPING ECONOMIES In developing economies as per the corruption perception index, 2000, in a scale of 0 = highly corrupt to 10 = very clean, the BRIC countries are rated as follows; Brazil = 3.9, Russia = 2.1, India = 2.8, China = 3.1. However the CPI index considers the level of corruption within a country and does not attempt to take account of corrupt payments made by exporters to foreign officials. (Source: Transparency International). Corruptions take the form of favours, payments, bribes, petty bribes, entertainment and small gifts, etc. Among the BRIC countries, India has the most corrupt rating of 2.8. Corporations have a tough task handling corruption in BRIC countries. In India, we have the anti corruption movement which is gaining grounds and this has resulted in the Jan Lokpal Bill. Indeed the common man is subjected to humiliation for the services he can demand but corruption is the root of all evils and is a difficult task for western countries to account for the bribes that has been released to the agents, sub agents etc. Right from the security guard to the administrative persons and also corrupt ministry officials, nothing moves without bribes. Many of the corporations have created political fund for election campaigning and almost all the so called Bollywood films talk of corrupt officials and the war between rich and the poor. A question is where is ethics in bollywood in real life? Most of the bigwigs in the Bollywood industry evade taxes of the country. Corruption also takes the form of organised mafiaâ&#x20AC;&#x2122;s or gangs operating in the vulnerable areas in the emerging economy. There is a parallel economy in these emerging economies. Corporations need to address these issues and are open to risks of collapse of business. In an ethical business, the essential thrust is on social values and business is conducted in consonance with broader social values and the stakeholdersâ&#x20AC;&#x2122; long-term interests. Ethical values of corporation related to an ethical issue as corruption is also the most debated topic in the boardrooms. Social values in corporations need to be embedded in the philosophy to deal with a major issue of corruption. Many scandals have surfaced due to corruption and many ethically sound officers even in the Indian government and the common man have lost their lives. With RTI (Right to Information), becoming a tool to expose public corruption, at least the common man is becoming more aware of the rights in this volatile democracy. A recent report in the newspaper says that 49% of the members of the legislative assembly are facing criminal charges in the State of Uttar Pradesh. A recent news is

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the killing of an IPS officer by the mafia Gang operating in the mining sector in UP, India. (A young IPS officer, Narendra Kumar Singh, was crushed to death under the wheels of a tractor-trolley on Thursday allegedly by the mining mafia in Madhya Pradesh, when he tried to stop the vehicle carrying stones at Banmore town in the neighbouring Morena district). There is no role of ethics in a corrupt country when it comes to even mowing people down. There is a common saying that you can mint money if you get into government posts. So why Ethics or CSR? Is CSR used as a tool to cover up corrupt practices in many countries?

CORPORATE SOCIAL RESPONSIBILITY CSR` can be defined as the ‘Ethical behaviour of a company (or say business) towards society. It means engaging directly with local communities, identifying their basic needs and integrating their needs with business goals and strategic intent. How business takes into account the economic, social and environmental impact. The Caux Principles relates to: 1. KYOSEI—Living and working together for the common good enabling cooperation and co existence. 2. Human Dignity: related to value of each person. With CSR as a base for extending support for overall development of the Caux Principles, corporations have also to address immediate needs that is specified in the MDG GOAL 1: Eradicating extreme poverty and hunger, MDG GOAL 4: Reduce child mortality, MDG GOAL 5: Improve Maternal Health, MDG GOAL 7: Ensure Environmental Sustainability and MDG GOAL 8: Develop a Global Partnership for Development. Here the corporations in spite of being aware of the socio cultural milieu do not really address these MDG Goals but indulge in violating all the law of the country be it environment or otherwise. For e.g. in India, many joint ventures of MNC has resulted in environment disaster resulting in mass degradation of human lives, be it Bhopal Disaster or mining sectors etc. In aligning with the MDG Goal No. 1, the UN Women's Day theme for 2012 is ‘Empower Rural Women—End Hunger and Poverty’. The theme for 2011 was ‘Equal access to education, training and science and technology: Pathway to decent work for women’. Many corporations have realised the importance of empowering women with different legislations and activities to achieve the MDG Goal. CSR activities of corporations hence start even before the plant is put up to seek overall development in the locations around the plant. CSR activities are planned keeping the MDG goals that need to be achieved as per the UN framework. To be more ethical, corporations have come out with sustainability reporting systems as per global reporting initiative systems. Ethical issues can be handled along with CSR more effectively for sustainable business and to achieve sustainable business. Following

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ethical values in corporate and business should become a normal practice and not attended due to fear of law or pressure of top management. If there is one common theme that unites disadvantaged stakeholders, it is the basics of life. This does not mean a charity focus on giving to development projects will maximise societal contributions: it won’t. But it does mean corporate financial or lobbying influence can often be easily focused where it can have most impact. Partnerships with NGOs and measurement of the results will always make a greater difference than simply donating cash and hoping for the best. HSBC/Climate Group research in 2010 found that 57% of Chinese surveyed said climate change is the biggest issue they worry about. There is often a myth that stakeholders in emerging economies do not care about the environment. This is totally untrue. They are on the frontlines of pollution, water shortages and climate change. But they often have less capacity to act or influence. Don’t confuse awareness and perceived powerlessness. They are two very different things. Stakeholders are very unpredictable and even unintended and unharmful issues can escalate very quickly. The government on your side does not mean your project or investment is safe if stakeholder engagement is failing. Vedanta in India, Asia Energy in Bangladesh and Newmont in Peru are all cases that demonstrate how quickly stakeholder reactions can shut down big business operations. When stakeholder voices and protests hit government popularity or cause major social unrest, corporate influence wanes very quickly indeed. (Source: Posted on Feb 2, 2012. Toby Webb, Emerging markets: Top tips for developing economies. Toby Webb is founder and chairman of Ethical Corporation, and chief executive of Stakeholder Intelligence, a research and training firm.)

CSR FOR MIDDLE EAST BUSINESS, AN EMERGING FACTOR IN OIL RICH NATIONS The ongoing increasing awareness and activities on CSR in the other parts of the world push Middle East business to start moving in the same track. On the other hand, global brands also introduced new CSR activities in the Middle East region and regional brands followed them. Especially the oil companies were the first introducing CSR in the region, local and global banks followed them with their CSR initiatives. The increasing CSR awareness faces with the challenges as the lack of awareness in business community, lack of trained talents in CSR field and lack of Arabic materials. However every day we hear new CSR seminars, forums, trainings and meetings at different parts of the region like Dhahran, Dubai, Kuwait, Makkah, Qatar, etc. Regional Chamber of Commerce also introduced CSR initiatives to encourage regional companies to start CSR in their companies. Professional CSR reports from couple of companies in 2010 have started being reporting. (Source: Regional Source and Network for Corporate Social Responsibility & Sustainability—Posted by Dr. Fatih Mehmet Gul on

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February 14, 2012) Ethical issues in the Middle East cover legal and corporate governance factors, social and cultural factors, and political and economic factors. With a low Human Index in the Middle East, CSR has a promising future for business to achieve long term sustainability in terms of achieving MDG goals and also maybe at a faster pace. The emerging perspective on corporate social responsibility focuses on responsibility towards stakeholders (shareholders, employees, management, consumers and community) rather than on maximisation of profit for shareholders. There is also more stress on long-term sustainability of business and environment and the distribution of well-being. Ethics, ethical issues, social values and CSR are all interrelated and needs to be integrated into the fabric of social business, social investment to create sustainable supply lines, sustainable communities and sustainable business.

REFERENCES Badi, R.V. and Badi, N.V., Business ethics. Business ethics by Andrew Crane and Dirk Matten Indian Edition Business Ethics facing up to the issues by Chris Moon and Clive Bonny. “CSR Performance in Emerging Markets: Evidence from Mexico” is published in the April 2009 Journal of Business Ethics. “Extrinsic and Intrinsic Drivers of Corporate Social Performance: Evidence from Foreign and Domestic Firms in Mexico” is published in the January 2010 Journal of Management Studies. Governance and Corruption Constraints in the Middle East: Overcoming the Business Ethics Glass Ceiling, Norman D. Bishara. Article first published online: 19 MAY 2011, © 2011 The Author. American Business Law Journal © 2011 Academy of Legal Studies in Business— American Business Law Journal. Volume 48, Issue 2, pp. 227–283, Summer 2011. International Conference on Environment, Economic, Cultural and Social Sustainability at East west Centre, Island of Oahu, Hawaii, 23–25 Feb. 2005. Simms, Michele, Emerging Trends and Ethics in Corporate Social Responsibility. www.ethics.org/resource/common-ethic-code-provisions www.un.org/millenniumgoals/pdf

ABOUT THE AUTHOR Ms Leela Karkaria is currently working as Manager and Associate Professor, CSR at Alliance University, School of Business, Bangalore. Previously, she has worked as Project Coordinator at Narotam Sekhsaria Foundation, as Assistant Manager, Corporate CSR at JSW Steel Ltd, as Programme Officer, Individual Medical Grants at Sir Dorabji Tata Trust and as Executive Employee, Welfare at Larsen and Toubro Limited. She did Diploma, Training and Development from Indian Institute for Training and Development, New Delhi. She did her Masters in Social Work, Family and Child Welfare from Tata Institute of Social Sciences.

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Best Practices in CSR Initiatives: A Case Study Rajeev Goyal Vice President & Chief Construction Manager, Abhijeet Group, Jharkhand, India E-mail: rajeev.goyal@abhijeet.in

ABSTRACT As the first company in the district of Latehar (highly naxal dominated area) setting up the power plant Abhijeet Group already played a significant role in society, and it also bears a responsibility to help bring about the society of the future. Accentuating industrial development is not an easy matter, and generating social value is something that always accompanied by difficulties in this region which could be properly dealt by achieving development of society commensurate with the Industrial Development.

As result of which, Chakla stands testimony to the fact from a nondescript village to the centre of Jharkhandâ&#x20AC;&#x2122;s emerging power hub. Chakla village in Chandwa has come a long way in the last five years, since the arrival of Abhijeet Group here in 2006. Power Plant may improve the technical, commercial and financial performance of government owned utilities, improve cash flow, facilitate mobilization of resources for capital investment, thereby releasing funds for other investments and extend access to

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electricity that may stimulate growth for small business that rely on electricity which can have a huge influence on the lives of rural and urban dwellers by creating jobs.

These are evident from the ecstatic face of the local people. Md. Izhar, Co-ordinator and spokesperson, Vishthapit Vikash Sahayog Samiti, Chakla village says “It as an Industrial Revolution brought by Abhijeet Group”. Md. Hashibullah, Chairman, Vishthapit Gramin Vikash Samiti, Dhadhu village termed the advent of Abhijeet Group as ‘Dream became Reality’.

A vital and indispensable responsibility in setting up a green field project across globe is the activities of corporate social responsibilities that get the company result it had ever thought of. At Abhijeet, CSR has taken a big leap in its notion and has provided a gate way not for itself but for other corporate willing to come to this region.

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INTRODUCTION Abhijeet Group is setting up a Coal Based Thermal Power Plant with total installed capacity of 1740 MW. Several companies signed MoU with the state government but none could start the work in the district prior to Abhijeet Group.

After a substantial development of the power plant and the society other companies started coming to the district with slow pace. Nowadays, the transmigration of the place like chandwa is legitimate with the socio-economic development that has improved multi-times than that it was in 2006.

CSR EXECUTIONS Selection of Focus Areas and Setting of Objectives It is important for companiesâ&#x20AC;&#x2122; CSR efforts to relate with Governmentâ&#x20AC;&#x2122;s social development objectives, which are outlined in government strategic documents. Several issues that Government hopes to address in improving the standard in quality of social services, exclusively in Education, Health, Environment, Livelihood, Rural Infrastructure, Social Upliftments, Sports and Fostering innovation are predominantly the frontline activities in CSR agenda of any company. A mission statement for each of the segments becomes indispensable in order to set the objectives to render services up to the utmost satisfaction of company, people and the district administration. At Abhijeet, we have outlined mission statement for each as follows rendering services to thousands of beneficiaries. Education Education is the doorway to the outer world and it should be able to open this door for the children of Latehar. Our endeavor is to impart education to the rural children in order to bring them to the mainstream of the society.

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Steps taken: To List a Few Works • Establishment of English Medium Schools • Schools for free education to poor children • Opening of Coaching Centres • Sending children across state for participation in various camps • Promotion of Technical Education in the district of Latehar • Support to new Orphanage for orphans, underprivileged and destitute children • Non Formal Education to the people of this area. Health Partnering with village communities we aim to effectively meet the immediate and long term health needs of the rural people, especially women and children. Steps taken: • Upgrading and running of Health Sub Centres • Disease prevention programme • Medical support to rural people • Organizing General Health Camps in villages • Mega Camps on Family Planning, Cataract and etc. • AIDS awareness programme • Cleft Lips Operations • Anemia camp. Environment Clean and healthy environment is part of the wealth and quality of life for our children in the future. Healthy natural systems are essential for supporting life on the planet. Steps taken: • • • • •

Plantation and Distribution of plants to the villagers Nursery of Forestry plants Plantation inside and outside plant area Development of Green House Energy conservation.

Sustainable Livelihood Development of entrepreneurship skill for small ventures. Steps taken: • •

Training to SHG members Promoting SHG members to start nursery programme

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Promoting SHG for PDS Promoting rural people for Bamboo Article making Development of Dairy Projects.

Rural Infrastructure Putting best efforts to upgrade the rural infrastructure enabling villagers to get the basic comfort level. Steps taken: • • • • • • • • • •

Transmission Line for Chandwa Repair and Maintenance of Hand pumps Installation of Hand pumps Construction and Renovation of Pond Platform Construction Well Construction Construction of Roads Transformer Installation and Repairing Lighting arrangements at required places Maintenance of Yatri Shelters.

Social Upliftments Developing communities commensurate with the industrial development. Steps taken: • • • • • • • • • • •

Cleaning of River Celebration of festivals of all religions Fire in Balumath market controlled Installation of Dustbins Display Board Installation Provision of Drinking Water Seeds Distribution Financial Help for Treatment Employment of youths as security guards Celebration of World Environment Day Celebration of World Day against Child Labor.

Partnering with Government and Relate to their Plans Identifying local development plans and priorities of local public and government is essential to take into cognizance in order to get it mapped and matched with company’s

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CSR objectives for better alignment of CSR activities with government plans and priorities. It should be well discussed with all the stakeholders first and then to be communicated to DC/DM of the district how CSR initiatives will specifically benefit Government and the people of that district. The envisaged and expected impact of CSR initiatives have on working conditions, employee morale, the surrounding community, and the environment should be highlighted at state level.

Begetting Witness to Give Strength to Brainstorming Session and Events Inviting government officials to all CSR-related events and award ceremony is indispensable to ensure that they witness the positive impact on the community. District Administration must hold periodical meetings between company managers and government officials in which CSR should be an important discussion topic. Proper alignment with all the stakeholders gives actual notion for CSR rollout in the area and all the CSR activities thus prove to be the best CSR initiatives.

Developing Faith in Team Members We at Abhijeet Group in Chandwa, Latehar have been executing CSR activities since 2006, the day when even Policemen used to be apprehensive of wearing their dress considering Chandwa to be the most naxal affected area. Though our team members have been victims in several incidences occurred but it never deterred the destination of team and on the basis of our CSR efforts we could achieve what we had desired of. Executing CSR plans in the area always accompanied with difficulties and enabled us to practice CSR initiatives up to the utmost satisfaction of public and government.

Time in Decision Making for Long Term Local people often blamed us for taking longer time to make decisions as we undertake diverse perspectives in discussion. These perspectives ensure that risks are covered and expose new insights. With the long-term mindset we could be able to see the long-term benefits of socially and environmentally responsible assignments envisaging that in the long term, social and environmental returns would start to converge with financial returns.

Involving Internal Stakeholders Involving stakeholders from within the organization to implement strategic decisions has been a powerful mechanism for ensuring that social issues are considered at the most. These are the people whose daily activities are impacted by social and environmental issues. Involving front-line staff helps ensure that different stakeholder perspectives are

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taken care of and thus involving a diversity of employees in decision making often led to more innovative solutions to the problems.

Involving External Stakeholders Engaging external stakeholders ensure decisions take account of all relevant social issues and it also identifies problems before they get converted into chaos and crises leading to turmoil and delay in project. Stakeholder’s engagement is undertaken with trusted outside people, Govt. establishments, Visthapit committees, NGOs, Representatives of MP and MLA, Mukhiya, Jila Parishad members and others for most key decisions, by involving them in an advisory capacity.

Developing Social Capital By virtue of all CSR executions we could make social capital that have the potential for being controversial and even divisive. We perceived, social capital, which resides in social relationships, has always enabled our managers to communicate with all concerned. We often disagree to the proposal of each other on unconventional approaches but it has never prevented us from reaching objectives. Social capital has allowed the soft issues to get addressed and the right decisions to be made.

Engagement of Top Level Executives Most vital characteristics of successful CSR programs is engagement of senior level executives. These executives ensure all employees embrace CSR principles and persuade employees and managers to participate in efforts to give back to the community.

SWOT ANALYSIS Strengths • • • • •

Highly motivated and Professional team. Participation of employees of other departments. Participation of management. Availability of resources. Support from stakeholders.

Weaknesses • • •

Failure of government functionaries. Non Availability of infrastructure for even basic needs. No means of livelihood.

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Opportunities • • •

Changing mindset of villagers. Transformation of rebellions into mainstream. Advent of more companies to the region.

Threats • • •

Risk from several proclaimed naxal groups. Huge pressure from villagers because of high expectations. Negative attitudes of some of the leading villagers.

FUTURE ASSIGNMENTS Looking at the needs of the people the company has envisaged of following assignments to be executed in due course of time enable rural people and local small organizations to obtain self sustainable level: • Community Based Water Distribution System. • Training on Awareness and Capacity Building. • Vocational Training Programs. • Entrepreneurship Development Programs. • Supporting Professional Organizations and NGOs. • Facilitation centre for relevant assistance to new enterpreneurs.

CONCLUSION Every organization should foresee the benefits of incorporating CSR into their Business model. CSR team can take the lead or partner with other departments and stakeholders to work cross-functionally to integrate its objectives into how business gets accelerated. The roadmap should be devised as per the requirements of people and commitment of the management. For CSR professionals, this roadmap can help them accentuate their role in sustainability and how they foster an environment that embeds CSR ethics. However, more emphasis should be given whether all the CSR activities attract attention of the media at state level.

ABOUT THE AUTHOR Mr Rajeev Goyal is diligent, young, honest and perseverant. He is Vice President cum Chief Construction Manager, Abhijeet Group, and is deputed at Chakla, Chandwa for the development of 1740 MW Thermal Power Plant. He has been instrumental in development of more than 15 Thermal Power Plants across the country. Since his advent to Chandwa in 2006 he has been an indispensable part of CSR activities that he started single handedly and brought about a radical change in the mindset of people.

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Best Practices in CSR Initiatives and Planning: Case Study P. Ramamohana Rao Senior Manager (Environment), M/s. Patel Engineering Limited, Hyderabad, India E-mail: stecram@gmail.com

ABSTRACT Corporate Social Responsibility has assumed greater relevance especially in the wake of liberalization of economic policies, thrust given to certain priority sectors/industries,viz infrastructure/:power, telecom, natural gas, coupled with some incentives offered to proponents to establish their units in backward areas, on one hand, and protest from environmental protection groups/NGOS/local project affected people, on the other hand, has prompted the central and state Governments, specially through Ministry of Environment and Forest/ Pollution Control Board (MOEF/PCB), which are the nodal agencies for awarding the consent for establishment of new units or expansion of existing units, had instructed them to include specific reports on their commitment of minimum 0.4% of their total investment of the project for overall development of nearby villages, keeping in view the United Nations Millennium Development Goals 1 (UNMDG) to be achieved and 0.2% for recurring expenditure/sustainability of the proposed programmes in and around their proposed plant site/area of operation, as the part of EIA/EMP reports, inorder to win the support of local people, by way of not only imparting training programmes for local youth in skills relevant to the project for eventual employment in the proposed plant/project itself but also to take up need based economic measures, such as appropriate income generating projects in tune with the traditional skills of the local people The anticipated changes due to implementation of the CSR programme in the study area, will pave the way with well connected by Roads, with good medical facilities and other community infrastructure coupled with individual beneficiary oriented programmes helping their economic status in the societyâ&#x20AC;&#x2122;s CSR is a concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment and it is the continuing commitment by business to behave ethically 1

UNMDG = There are 8 goals set by UN to be achieved by all member nations by 2014, atleast a sincere attempt should be made by developing nations to implement these 8 goals, if not cent percent achievement, the goals are: 1) End Poverty and Hunger, 2) Universal Education, 3) Gender Equality, 4) Child Health, 5) Maternal Health, 6) Combat HIV/AIDS, 7) Environmental Sustainability, and 8) Global Partnership in Development.

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and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and, society at large. Keywords: Liberalization of Economic Polices, United Nations Millennium Development Goals, Corporate Social Responsibilities, Economic Development.

INTRODUCTION Corporate Social Responsibility has assumed greater relevance especially in the wake of liberalization of economic policies, thrust given to certain priority sectors/industries, viz infrastructure/power, telecom, natural gas etc., coupled with some incentives (3â&#x20AC;&#x201C;5 year taxâ&#x20AC;&#x201D;holiday/low tariff power/Priority water connection, etc.) offered to proponents to establish their units in backward areas, on one hand, and protest from environmental protection groups/NGOS/local project affected people, on the other hand, has prompted the central and state Governments, specially through MOEF/PCB, which are the nodal agencies for awarding the consent for establishment of new units or expansion of existing units, had instructed them to include specific reports on their commitment of minimum 0.4% of their total investment of the project for overall development of nearby villages, keeping in view the United Nations Millennium Development Goals (UNMDG) to be achieved and 0.2% for recurring expenditure/sustainability of the proposed programmes in and around their proposed plant site/area of operation, as the part of EIA/EMP reports. This could be by way of not only imparting training programmes for local youth in skills relevant to the project for eventual employment in the proposed plant/project itself but also to take up need based economic measures, such as appropriate income generating projects in tune with the traditional skills of the local people, besides development of fodderfam, fruitbearing orchards, vocational training etc. which can help in up-liftment of poor section of society. Separate budget for community development activities and income generating programmes shall be specified.

DEFINITION OF CSR Corporate Social Responsibility (CSR) is about how companies manage the business processes to produce an overall positive impact on society, which is illustrated in the following diagram designed by Mr. Mallen Baker (2001). Companies need to answer to two aspects of their operations: 1. The quality of their managementâ&#x20AC;&#x201D;both in terms of people and processes (the inner circle). 2. The nature and quantity of their impact on society in the various areas (the outer circle).

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Source: Mr. Mallen Baker (2001).

Outside stakeholders are taking an increasing interest in the activity of the company. Most look to the outer circle—what the company has actually done, good or bad, in terms of its products and services, in terms of its impact on the environment and on local communities, or in how it treats and develops its workforce. Out of the various stakeholders, it is financial analysts who are predominantly focused—as well as past financial performance—on quality of management as an indicator of likely future performance. The World Business Council for Sustainable Development in its publication “Making Good Business Sense” by Lord Holmes and Richard Watts used the following definition. “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 workforce and their families as well as of the local community and society at large”. The same report gave some evidence of the different perceptions of what this should mean from a number of different societies across the world. Definitions as different as “CSR is about capacity building for sustainable livelihoods. It respects cultural differences and finds the business opportunities in building the skills of employees, the community and the government” from Ghana, and “CSR is about business giving back to society” from the Philippines. Traditionally in the United States, CSR has been defined much more in terms of a philanthropic model. Companies make profits, unhindered except by fulfilling their

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duty to pay taxes. Then they donate a certain share of the profits to charitable causes. It is seen as tainting the act for the company to receive any benefit from the giving. The European model is much more focused on operating the core business in a socially responsible way, complemented by investment in communities for solid business case reasons. This model is more sustainable because: 1. Social responsibility becomes an integral part of the wealth creation process— which if managed properly should enhance the competitiveness of business and maximize the value of wealth creation to society. 2. When times get hard, there is the incentive to practice CSR more and better—if it is a philanthropic exercise which is peripheral to the main business, it will always be the first thing to go when push comes to thrust. But as with any process based on the collective activities of communities of human beings (as companies are) there is no “one size fits all”. In different countries, there will be different priorities, and values that will shape how business act. And even the observations above are changing over time. The US has growing numbers of people looking towards core business issues. For instance, the CSR definition used by Business for Social Responsibility is: “Operating a business in a manner that meets or exceeds the ethical, legal, commercial and public expectations that society has of business”. On the other hand, the European Commission has coined two definitions wrapped up into one: “A concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment. A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.” Reviewing each of these, one can broadly agree that the definition now focuses on the impact of how one manages one core business. Some go further than others in prescribing how far companies go beyond managing their own impact into the terrain of acting specifically outside of that focus to make a contribution to the achievement of broader societal goals.

ABOUT THE STUDY A Case Study: CSR in M/s. Nelcast Energy Corporation Limited (NECL), Nell ore Dt. Nelcast Energy Corporation Limited (NECL), a Group Company of Nelcast2 proposes to implement a 1320 MW (2 × 660 MW) Coal Based Thermal Power Plant at 2

Nelcast Limited, started in 1984, at Chennai, Tamilnadu and Gudur, Nell ore Dt, A.P, is engaged in the manufacture and sale of iron castings. Nelcast manufactures parts to be used in various

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Pianampuram, Varakavipudi and Sivarampuram Villages, Muthukur Mandal, SPS Nell ore District, Andhra Pradesh. The project is based on imported coal and Super Critical Technology. The estimated cost of the Project is ` 6822 Crores. The project will be located near Pyanampuram, Varakavipudi and Sivarampuram Villages, Muthukur/ T.P. Gudur Mandals, SPS Nell ore District, Andhra Pradesh.

Objectives 1. To describe the socio-economic profile of the persons living in 11 out of 15 census villages in Mutthukur Mandal and 8 out of 20 census villages, in Thota Pally Gudur Mandal (as these villages are falling within 0–10 km radius from the proposed plant site) in terms of their caste, literacy rate, occupation and amenities available as per 2001 census data. 2. To conduct a socio-economic and health survey among a sample households in nearby habitations in the study area and analyse the survey data in terms of their caste, sex, age, education level, marital status, occupation, income, health, coupled with their pressing needs to be met both at household and habitation levels. 3. To list out the current Government schemes being operated in the study area. 4. To prepare a micro-plan with desired/needed programmes/schemes by people with physical and financial out-lays.

RESEARCH METHODOLOGY A multi-method research design has been adopted to conduct the study consisting of a sample house hold survey covering different occupational groups in the core zone of the study area, followed by focused group and individual discussions, review of secondary data from census, 2001, health data from PHC, 2009–10, development programmes’ data from 2004 to 2009, from, mandal level offices etc. and participatory observation of infrastructural facilities available in the study area. Tha same is presented in the following table 1.

Mr. P. Rama Mohana Rao, CSR-Consultant, discussing about the desired programmes with Women Self Help Groups (SHGs) and elected members/Male youth groups (MYGs) in the study area. applications in automobiles, such as the engine, transmission, suspension, axle, brake and steering. Nelcast also caters to the tractor industry for their requirement of various housings, as well as engine, transmission and axle components. Nelcast also caters to the railways and the pipe fittings industries. Nelcast USA Inc. is the Company’s subsidiary. Nelcast Energy Corporation Limited is the Company’s associate.

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Table 1: Research Methodology by Method, Tool and Source of Data Collection Sr. No

Research Method

Tools

Respondents/Source of Data Collection.

Primary survey

Interview schedule

proportionate Representative occupational groups in the habitation/village

Review of secondary data

Specific formats

Census data, (2001) PHC, health/diseage data/pattern (2009–2010), Development programme’s data (2005–2009) at district/mandal level.

Focused group/ Individual Discussions (FGD)

Interview guidelines

District/,/Mandalevel officials/Collector/CPO/PD-DRDA /MRO/MDO/VAO/Velugu Coordinators/ SHGs/elected representatives etc.

Participatory observation

Observation matrix

Village/habitation infrastructure viz., schools/.roads/water supply/drainage

THE STUDY AREA AND LOCATION The project site is primarily falls in the revenue village of Painampuram and Pallepalem, a hamlet of Painampuram revenue village and Gram panchayat in Muthukur Mandal in Nell ore Dist., followed by Varakavipudi, a Gram panchayat and hamlet of Ananthapuram revenue village and Sivarampuram, a Census village and a part of Varakavipudi Gram panchayat in Thotapally Guduru Mandal, Nell ore District, Andhra Pradesh. The land requirement as per CEA norm for a Power Plant is about 0.8 Acres/MW. Terms of reference was approved by MOEF for 1100 acres of land. However, now the area has been optimized and reduced to 865 acres (plus an additional area of 150 acres for coal and pipeline corridor). Plant will be located in barren land falling in the jurisdiction of Painampuram, Varakavipudi and Sivarampuram Villages, Mthukur/TPGudur Mandals, SPS Nell ore District, Andhra Pradesh. Of the 865 acres, allotted to the proposed plant, 291.21 acres is Govt, land and 573.91 acres is private land, of which 458.05 acres (79.82%) is the own land of NECL and for the reaming acres of 115.86 (20.18%) an agreement is made with land owners for acquisition. The proposed plant is located at a distance of 20.7 km away from the National Highway [NH-5] connecting Vijay Wada-Chennai. The Buckingham Canal is at a distance of 0.1 km in western direction. The area is well connected by road from Nell ore, the main city, located at a distance of 20 km from the Proposed Plant Site. The nearest Rail Station is Krishnapatnam Port (developed by Krishnapatnam Port Company). This is connected to Chennai How rah main line of Indian Railway at Venkatachalam Junction of South Central Railway. The nearest airport is Renigunta (Tirupathi) at a distance of 120 km from the Plant site. Bay of Bengal is at a distance

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of 0.5 km from the proposed plant site. Krishnapatnam Port is located at a distance of 5.8 km from the proposed plants.

FINDINGS Land Use Pattern It is interesting to note that within the core zone of the proposed M/s. Nelcast Power Plant area (0–3 km radius), the major chunk of the area the area is not available for cultivation (36.64%), followed by Culturable/Cultivable Waste (29.59%); Irrigated (22.02%) and Un-Irrigated (11.75%).

Population Profile The over all population of the study area, as per 2001 census, is 75,347 with a Sex Ratio of 972 females for 1000 male population. The average family size is 4.12. The children in the age group of 0–6 years accounts for 13.63%. The majority of the population is belong to BC + OC (65.15%) followed by SC (22.42%) and ST (12.43%). The Literacy rate in the study area is 55.46%, Majority of the working population are engaged in agricultural labor activity in the agriculture season (58.75%) followed by other activities (24.55%), (non-agriculture labor such as construction workers, transport, Storage, Communication, etc.) Cultivation (14.37%) and a very few are engaged in household industries (2.33%). Among the total Population, majority are non-workers-viz: Children below 18 years of age, housewives, old and retired people in the age group of 60 and above (52.61%), followed by main workers (40.49%), who are the real bread winners for the family, works for more than 180 days in a year marginal workers (6.90%) who works less than 180 days in year.

Health Profile/Disease Pattern There are two PHCs in the study area majority of the people are suffering from Hypertension (8.7%), followed by Helminthiasis, Food Poisoning and Amoebas cases (7.1%), Asthma (6.3%) and Acute Respiratory Infections (Flu and Pneumonia cases) (4.2%).

Infrastructural Facilities Since the plant site is located in a rural area, 20 km away from district H.Q., an attempt has been made to analyze the available gaps in existing amenities such as drinking water, educational, communication, roads, health etc., as per 2001 census vis-à-vis ground

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verification of the data in early 2010, it was observed that all the study area villages are having electricity connections for domestic, agricultural and mini-industrial operations. It is also noted that potable drinking water facility is also available in majority of the habitations. All most all villages are having primary schools, except in Sivaramapuram village of the study area. Medical facilities are not well connected to the habitations in the study area. and in general M/s NELCAST has operating two free medical Dispensaries, since Dec 2009, in the study area, one at Painapuram and the other one at Chandrasekharpuram, By these operations, Nelcast has earned a tremendous goodwill and rapport among all the villagers surrounding the proposed power plant site. Still, a lot has to be done in this sector Development of medical and infrastructure facilities are the key for overall progress of the population residing in the area. Even though, there was some progress made in providing the rural roads but much more has to be done in this sector.

NEED ASSESSMENT SURVEY An assessment survey has been conducted among the sample households to find out their felt needs for Infrastructural development such as Drinking water, Educational, Medical, Communication, Road, Transport and other related at their habitations as well as their personal/household level such as assistance for purchase of Diary Animals, Goat and Sheep, Poultry birds, taking up the small businesses, etc. These feedbacks have been cross checked with the elected representatives as well as mandal level officials. In-turn, the mandal officials also gave information on various development/ welfare programmes implemented for the last few years with the financial aid/grant from both center and state governments. The implemented welfare/ development programmes are as follows: 1. Monthly Pensions for Old, Disabled, Widows and Handloom weavers 2. House construction for weaker sections of the society 3. ‘Indira Kranthi Pathakam’ as is known as Pavala (25 paise) Vaddi (Interest) Pathakam (Project), covering Below Poverty Line (BPL) families and also all eligible caste based Self-Help Groups 4. National Rural Employment Guarantee Programme (NREGP) 5. ‘Rajiv Arogya Sri’ (Health Programme) 6. White Ration Card distribution for BPL Families, who will benefit to get 1 Kg of rice @ ` 2/7. Scholarships and Fee adjustments 8. Free electricity and new agriculture pump-set connections for farmers 9. Distribution of assigned land and residential land for house construction 10. Exemption of payment of loans for marginal farmers 11. Development of Cattle and Insurance for Goat and Sheep.

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Taking into account all these inputs/feedback, the following programmes have been covered under CSRâ&#x20AC;&#x2122;s Micro plan.

THE MICRO PLAN The Micro-Plan has been prepared for three specific levels, namely, 1) individual family oriented, 2) Individual Habitation oriented, nearby plant and 3) community development oriented programmes for all the villages existing within 10 km radius from the proposed plant site. Out of the amount of ` 33.26 crores, earmarked for implementation of CSR activates (more than the fixed minimum quota of 0.4%, Infact it works out 0.487% of the total investment) an amount of ` 17.57 crores are kept for covering both individual and habitation level (Table 2) and the remaining amount of ` 15.69 crores are budgeted for Implementation of community developmental activities for all villages (Table 3). Table 2: Micro Plan for Individual Family and Individual Habitat Ion 1st Year Unit Rate in Rs Lakhs

Nos

Rs.inLakhs

2nd Year

Nos Rs. in Lakhs

3rd Year

Nos

Rs.InLakhs

4th Year

5th Year

Nos

Rs. In Lakhs

Nos

Rs in Lakhs

Micro-Plan for Individual Family Programmes in Lunsapur,Lothpur,Kagwadar,Mithapur Self Employ-+ ment Job & Training

0.50

5.0

She buffalo

0.70

7.0

Sheep Rearing

0.50

5.0

Cultivation/ Agriculture Support

0.50

15.0

Brick Manufacturing/ Other Units

0.755

3.775

Sub Total (A)

35.775

Micro-Plan for Individual Habitation in Pailepalem, Debameeda and Vagardha H/o Pynampuram Cement Road

Community Hall

Library

Side canals

Water Supply

Best Practices in CSR Initiatives and Planning: Case Study 1st Year Unit Rate in Rs Lakhs

Nos

Rs.inLakhs

Hand Pumps

0.30

Bus Stand

5.0

Cyclone Shelter Temple

2nd Year

273

3rd Year

4th Year

5th Year

Nos Rs. in Lakhs

Nos

Rs.InLakhs

Nos

Rs. In Lakhs

Nos

Rs in Lakhs

5.0

Micro-Plan for Individual Family Programmes in Varakaipudi, H/o Ananthapuram House Construction

1.0

19.0

32.0

40.0

47.0

50.0

Self Employment Job & Training

0.50

7.5

12.50

16.0

17.50

15.5

She buffalo

0.70

9.8

10.5

13.30

12.60

16.80

Sheep Rearing

0.50

5.0

12.5

13.00

9.50

9.0

Cultivation/ Agriculture Support

0.50

14.0

12.50

22.50

20.0

19.0

Brick Manufacturing/ Other Units

0.755

2.265

1.51

3.02

0.75

3.02

Sub -Total (C)

57.565

81.51

107.82

107.35

113.32

Micro-Plan for Individual Habitation in Varakaipudi, H/o Ananthapuram Cement Road

15.0

Community Hall

2.00

Library

5.00

Side canals

6.00

Water Supply

5.00

Hand Pumps

0.30

Street Lights

0.25

2.5

Bus Stand

1.0

Cyclone Shelter 5.0

Temple/prayer Sub Total (D)

5.0

5 49.5

Micro-Plan for Individual Family Programmes in 1. Eduru II (Four Hamlets) + Sivarampuram

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CSR and Competitiveness 1st Year

2nd Year

Unit Rate in Rs Lakhs

Nos

Rs.inLakhs

Self Employment Job & Training

0.50

She buffalo

0.70

26.6

Sheep Rearing

0.50

Cultivation/ Agriculture Support

0.50

Brick Manufacturing/ Other Units

0.755

4th Year

5th Year

Nos

Rs.InLakhs

Nos

Rs. In Lakhs

Nos

Rs in Lakhs

37.1

27.3

30.1

16.5

34.5

24.5

6.04

9.815

7.55

0.755

6.04

Sub Total (E)

Nos Rs. in Lakhs

3rd Year

116.915

88.14

120.85

115.555

106.64

Micro-Plan for Individual Habitation in 1. Eduru II (Four Hamlets) + Sivarampuram Cement Road

30.0

Community Hall

Side canals

Water Supply

5.0

Hand Pumps

0.3

4.5

Bus Stand

Cyclone Shelter

Temple

5.0

Sub Total (F)

Total for five years 17.57 crores

58.5

355.48

360.2

324.68

361.73 Rs

17.57 croreres

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Table 3: Budget for Community Development Initiatives Combined for all Villages in 0–10 km Radius from the Plant Site 1

1 2

Old Age Home Adoption of Villages Adoption of Villages—Painampuram, Varakavipudi and Sivaramapuram villages Rural water supply scheme. NAANDI Foundation Education Providing Infrastructure to Schools (Drinking water facilities. Construction of toilets, repair of school buildings etc th Sponsoring of Poor students in 10 class/Intermediate for EAMCET coaching (Sponsoring 25 students from economically poor @ ` 40000/- per student per year English Learning and IT Coaching Health Disability Programme (sponsoring of 200 tricycles (3) ` 5500 /-) Medical camps Eye/Cataract camps Pulse Polio_programme Health, HIV/AIDs awareness programs Construction of Sulabh Community toilets in all the three villages and hamlets (20 villages/hamlets of Sivaramapuram, Varakavipudi and Painampuram Construction of 50 bed Rural Hospital Employment Generation a) Truck driving b) Hospitality c) White goods repair d) Security e) Construction—masonry, electrician, plumbing e) Borewell repairing Training of fisher women in breeding ornamental fish Fisheries Development Corporation/ Puducherry University ) Sustainable Development Fodder development Mangroove/Bamboo/Casurina Afforestation programme Supply of fishing nets to fishermen of Painampuram, Varakavipudi and Sivaramapuram (700 fishermen ay 20000/- per net Fish Aggregate Artificial Reefs Fish marketing and construction of one Ice plant (5 tons capacity) Sea weed cultivation Boat building (fiber boats a. ` 70000/- per boat) Total Total for five years ` 15.69 crores

year Year 30

Amount in Rs Lakhs rd ,h 2^nd 3 4 Year Year Year 3 3 3

5* Year *3>

5 5 2 2 160

5 5 4 2 5

350

5 5

5 10 5 5 701

5 5 6 5 217

Total budget for CSR activity = ` 17.57 crores + – ` 15.69 crores = ` 33.26 crores

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SUMMARY Corporate Social Responsibility (CSR) is about how companies manage the business processes to produce an overall positive impact on society. Corporate Social Responsibility has assumed greater relevance especially in the wake of liberalization of economic polices, thrust given to certain priority sectors/industries, coupled with some incentives offered to proponents to establish their units in backward areas, on one hand, and protest from environmental protection groups/NGOS/local project affected people, on the other hand, has prompted the authorities while awarding the consent for establishment of new units or expansion of existing units, had instructed them to include specific CSR reports on their commitment of minimum 0.4% of their total investment of the project for overall development of the area and people. The project site is primarily falls in the revenue village of Painampuram and Pallepalem, a hamlet of Painampuram revenue village and Gram panchayat in Muthukur Mandal in Nell ore Dist., followed by Varakavipudi, a Gram panchayat and hamlet of Ananthapuram revenue village and Sivarampuram, a Census village and a part of Varakavipudi Gram panchayat in Thotapally Guduru Mandal, Nellore District, Andhra Pradesh. The land requirement as per CEA norm for a Power Plant is about 0.8 Acres/MW. Terms of reference was approved by MOEF for 1100 acres of land. However, now the area has been optimized and reduced to 865 acres (plus an additional area of 150 acres for coal and pipeline corridor). Plant will be located in barren land falling in the jurisdiction of Painampuram, Varakavipudi and Sivarampuram Villages, Muthukur/TPGudur Mandals, SPS Nellore District, Andhra Pradesh. The over all population of the study area, as per 2001 census, is 75,347 with a Sex Ratio of 972 females for 1000 male population. The average family size is 4.12. The children in the age group of 0â&#x20AC;&#x201C;6 years accounts for 13.63%. The majority of the population is belong to BC + OC (65.15%) followed by SC (22.42%) and ST (12.43%). The Literacy rate in the study area is 55.46%, Majority of the working population are engaged in agricultural labor activity in the agriculture season (58.75%) followed by other activities (24.55%), (non-agriculture labor such as construction workers, transport, Storage, Communication, etc,) Cultivation (14.37%) and a very few are engaged in household industries (2.33%). The Micro-Plan has been prepared for three specific levels, namely, 1) individual family oriented, 2) Individual Habitation oriented, nearby plant and 3) community development oriented programmes for all the in and around villages falling within 10 km radius from the the plant. Out of the amount of ` 33.26 crores, earmarked for implementation of CSR activities (more than the fixed minimum quota of 0.4%, infact it works out 0.487% of the total investment) an amount of ` 17.57 crores are kept for covering both individual and

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habitation level and the remaining amount of ` 15.69 crores are budgeted for Implementation of community developmental activities for all villages, within 0–10 km radius from the plant site.

REFERENCES Lord Holme and Richard Watts,/2006-2.pdf, “Business Sense” by, used the following definition. “Corporate Social. Responsibility is the continuing commitment by www.bbbsc.ca/r apport/archives/English Mallen Baker.net 2001, http://www.business respect.net./newsletter. The CSR Alliance was launched in, with members of the business community and support from business organizations such. The European Commission (March 2006), www.businesseurope.eu/content/default.asp?PageID=606

ABOUT THE AUTHOR Mr. Pemmaraju Rama Mohana Rao is currently working at Patel Engineering Ltd., Hyderabad as senior Manager, CSR/R&R/LA/Liaison. He has done Master of Arts in Social Work from TATA Institute of Social Science, Mumbai. He is a Member of ADB—Consulting Management System, Society for Environmental Communications, New Delhi and ENVIS, EPTRI (Environment Protection, Training and Research Institute, Hyderabad, Andhra Pradesh, India. Previously he has worked with LEA Associates, New Delhi, as Social Development and Resettlement Specialist and with Asian Development Bank, INRM, New Delhi, Aarvee Associates, Hyderabad, A.P. and other reputed organisations in the field of Social Development and Safeguard Specialist. He has undertaken many projects with Government of India and Corporate sector in the area of Social Development and CSR during his career span of 36 years.

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The Ages and Stages of CSR: Towards the Future with CSR 2.0* Wayne Visser Founder & Director, CSR International, London E-mail: waynevisser1@gmail.com

ABSTRACT This article argues that CSR, as a business, governance and ethics system, has failed. This assumes that success or failure is measured in terms of the net impact (positive or negative) of business on society and the environment. Hence, we need a different kind of CSR is needed if we are to reverse the current direction of many of the world’s most pressing social, environmental and ethical trends. The article reviews business’s historical progress over the Ages and Stages of CSR: moving through the Ages of Greed, Philanthropy, Marketing and Management, using defensive, charitable, promotional and strategic CSR approaches respectively. It then examines the Three Curses of CSR 1.0 (incremental, peripheral and uneconomic), before exploring what CSR might look like in an emerging Age of Responsibility. This new CSR—called systemic or radical CSR, or CSR 2.0—is based on five principles (creativity, scalability, responsiveness, glocality and circularity) and forms the basis for a new DNA model of responsible business, built around the four elements of value creation, good governance, societal contribution and environmental integrity.

IF CSR IS THE ANSWER, WHAT IS THE QUESTION? First let me say what I understand by CSR. I take CSR to stand for Corporate Sustainability and Responsibility, rather than Corporate Social Responsibility, but feel free use whichever proxy label you are most comfortable with. My definition is as follows: CSR is the way in which business consistently creates shared value in society through economic development, good governance, stakeholder responsiveness and environmental improvement. Put another way, CSR is an integrated, systemic approach by business that builds, rather than erodes or destroys, economic, social, human and natural capital. *Special Contribution: Wayne Visser, CSR International Paper Series, No. 3, 2011. Copyrights for this chapter remain with the author only.

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Given this understanding, my usual starting point for any discussion on CSR is to argue that it has failed. I provide the data and arguments to back up this audacious claim in my new book, The Age of Responsibility, but the logic is simple and compelling. A doctor judges his/her success by whether the patient is getting better (healthier) or worse (sicker). Similarly, we should judge the success of CSR by whether our communities and ecosystems are getting better or worse. And while at the micro level—in terms of specific CSR projects and practices—we can show many improvements, at the macro level almost every indicator of our social, environmental and ethical health is in decline. I am not alone in my assessment. Indeed, Paul Hawken stated in The Ecology of Commerce in 1993 that ‘If every company on the planet were to adopt the best environmental practice of the ‘‘leading’’ companies, the world would still be moving toward sure degradation and collapse.’ Unfortunately, this is still true nearly 20 years later. Jeffrey Hollender, co-founder and former CEO of Seventh Generation, agrees, saying: ‘I believe that the vast majority of companies fail to be ‘‘good’’ corporate citizens, Seventh Generation included. Most sustainability and corporate responsibility programs are about being less bad rather than good. They are about selective and compartmentalized ‘‘programs’’ rather than holistic and systemic change.’

THE AGES AND STAGES OF CSR I have found it useful to view the evolution of business responsibility in terms of five overlapping periods—the Ages of Greed, Philanthropy, Marketing, Management and Responsibility—each of which typically manifests a different stage of CSR, namely: Defensive, Charitable, Promotional, Strategic and Systemic CSR. My contention is that companies tend to move through these ages and stages (although they may have activities in several ages and stages at once), and that we should be encouraging business to make the transition to Systemic CSR in the dawning Age of Responsibility. If companies remain stuck in any of the first four stages, I don’t believe we will turn the tide on the environmental, social and ethical crises that we face. Simply put, CSR will continue to fail. Economic Age Greed Philanthropy Marketing Management Responsibility

Table 1: The Ages and Stages of CSR Stage of CSR Modus Operandi Key Enabler Defensive Ad hoc Investments interventions Charitable Charitable Projects programmes Promotional Public relations Media Strategic Management Codes systems Systemic Business models Products

Stakeholder Target Shareholders, government and employees Communities General public Shareholders and NGOs/ CSOs Regulators and customers

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Let me introduce the ages and stages of CSR here briefly. The Age of Greed is characterized by Defensive CSR in which all corporate sustainability and responsibility practices—which are typically limited—are undertaken only if and when it can be shown that shareholder value will be protected as a result. Hence, employee volunteer programmes (which show evidence of improved staff motivation, commitment and productivity) are not uncommon, nor are targeted expenditures (for example, on pollution controls) which are seen to fend off regulation or avoid fines and penalties. Charitable CSR in the Age of Philanthropy is where a company supports various social and environmental causes through donations and sponsorships, typically administered through a Foundation, Trust or Chairman’s Fund and aimed at empowering community groups or civil society organizations (CSOs). Promotional CSR in the Age of Marketing is what happens when corporate sustainability and responsibility is seen mainly as a public relations opportunity to enhance the brand, image and reputation of the company. Promotional CSR may draw on the practices of Charitable and Strategic CSR and turn them into PR spin, which is often characterized as ‘greenwash’. Strategic CSR, emerging from the Age of Management, means relating CSR activities to the company’s core business (like Coca-Cola's focus on water management), often through adherence to CSR codes and implementation of social and environmental management systems, which typically involve cycles of CSR policy development, goal and target setting, programme implementation, auditing and reporting. Systemic CSR in the Age of Responsibility focuses its activities on identifying and tackling the root causes of our present unsustainability and irresponsibility, typically through innovating business models, revolutionizing their processes, products and services and lobbying for progressive national and international policies. Hence, while Strategic CSR is focused at the micro level—supporting social or environmental issues that happen to align with its strategy (but without necessarily changing that strategy)—Systemic CSR focuses on understanding the interconnections of the macro level system—society and ecosystems—and changing its strategy to optimize the outcomes for this larger human and ecological system.

THE FAILURE OF CSR 1.0 Why has CSR 1.0—those approaches from the Ages of Greed, Philanthropy, Marketing and Management—failed so spectacularly to address the very issues it claims to be most concerned about? In my view, this comes down to three factors—call it the Triple Curse of Modern CSR, if you like.

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Table 2: The Curses of Modern CSR Curses

Nature of the Failing

Peripheral CSR

CSR has remained largely restricted to the largest companies, and mostly confined to PR, or other departments, rather than being integrated across the business

Incremental CSR

CSR has adopted the quality management model, which results in incremental improvements that do not match the scale and urgency of the problems

Uneconomic CSR

CSR does not always make economic sense, as the short-term markets still reward companies that externalise their costs to society

Curse 1: Incremental CSR One of the great revolutions of the 1970s was total quality management, conceived by American statistician W. Edwards Deming and perfected by the Japanese before being exported around the world as ISO 9001. At the very core of Demingâ&#x20AC;&#x2122;s TQM model and the ISO standard is continual improvement, a principle that has now become ubiquitous in all management system approaches to performance. It is no surprise, therefore, that the most popular environmental management standard, ISO 14001, is built on the same principle. There is nothing wrong with continuous improvement per se. On the contrary, it has brought safety and reliability to the very products and services that we associate with modern quality of life. But when we use it as the primary approach to tackling our social, environmental and ethical challenges, it fails on two critical counts: speed and scale. The incremental approach to CSR, while replete with evidence of micro-scale, gradual improvements, has completely and utterly failed to make any impact on the massive sustainability crises that we face, many of which are getting worse at a pace that far outstrips any futile CSR-led attempts at amelioration.

Curse 2: Peripheral CSR Ask any CSR manager what their greatest frustration is and they will tell you: lack of top management commitment. This is â&#x20AC;&#x2DC;code-speakâ&#x20AC;&#x2122; for saying that CSR is, at best, a peripheral function in most companies. There may be a CSR manager, a CSR department even, a CSR report and a public commitment to any number of CSR codes and standards. But these do little to mask the underlying truth that shareholder-driven capitalism is rampant and its obsession with short-term financial measures of progress is contradictory in almost every way to the long-term, stakeholder approach needed for high-impact CSR. The reason Enron collapsed, and indeed why our current financial crisis was allowed to spiral out of control, was not because of a few rogue executives or creative accounting

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practices, it was because of a culture of greed embedded in the DNA of the company and the financial markets. Whether you agree or not (and despite the emerging research on ‘responsible competitiveness’), it is hard to find any substantive examples in which the financial markets consistently reward responsible behaviour.

Curse 3: Uneconomic CSR Which brings us to Curse 3. If there was ever a monotonously repetitive, stuck record in CSR debates, it is the one about the so-called ‘business case’ for CSR. That is because CSR managers and consultants, and even the occasional saintly CEO, are desperate to find compelling evidence that ‘doing good is good for business’, i.e. CSR pays. The lack of corroborative research seems to be no impediment for these desperados endlessly incanting the motto of the business case, as if it were an entirely self-evident fact. The rather more ‘inconvenient truth’ is that CSR sometimes pays, in specific circumstances, but more often does not. Of course there are low-hanging fruit—like eco-efficiencies around waste and energy—but these only go so far. Most of the hardcore CSR changes that are needed to reverse the misery of poverty and the sixth mass extinction of species currently underway require strategic change and massive investment. They may very well be lucrative in the long term, economically rational over a generation or two, but we have already established that the financial markets don’t work like that; at least, not yet.

THE RISE OF CSR 2.0 By contrast, as we enter the Age of Responsibility, Systemic CSR—which I also refer to as CSR 2.0—can be characterised by five principles, namely: Creativity, Scalability, Responsiveness, Glocality and Circularity.

Principle 1: Creativity (C) In order to succeed in the CSR revolution, we will need innovation and creativity. We know from Thomas Kuhn’s work on The Structure of Scientific Revolutions that step-change only happens when we can re-perceive our world, when we can find a genuinely new paradigm, or pattern of thinking. This process of ‘creative destruction’ is today a well accepted theory of societal change, first introduced by German sociologist Werner Sombart and elaborated and popularised by Austrian economist Joseph Schumpeter. We cannot, to a paraphrase Einstein, solve today’s problems with yesterday’s thinking. Business is naturally creative and innovative. What is different about the Age of Responsibility is that business creativity needs to be directed to solving the world’s

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social and environmental problems. Apple, for example, is highly creative, but their iPhone does little to tackle our most pressing societal needs. By contrast, Vodafone’s M-PESA innovation by Safaricom in Kenya, which allows money to be transferred by text, has empowered a nation in which 80% of the population have no bank account and where more money flows into the country through international remittances than foreign aid. Or consider Freeplay’s innovation, using battery-free wind-up technology for torches, radios and laptops in Africa, thereby giving millions of people access to products and services in areas that are off the electricity grid. All of these are part of the exciting trend towards social enterprise or social business that is sweeping the globe, supported by the likes of American Swiss entrepreneur Stephen Schmidheiny, Ashoka’s Bill Drayton, e-Bay’s Jeff Skoll, the World Economic Forum’s Klaus Schwabb, Grameen Bank’s Muhammad Yunus and Volans Venture’s John Elkington. It is not a panacea, but for some products and services, directing the creativity of business towards the most pressing needs of society is the most rapid, scalable way to usher in the Age of Responsibility.

Principle 2: Scalability (S) The CSR literature is liberally sprinkled with charming case studies of truly responsible and sustainable projects and a few pioneering companies. The problem is that so few of them ever go to scale. It is almost as if, once the sound-bites and PR-plaudits have been achieved, no further action is required. They become shining pilot projects and best practice examples, tarnished only by the fact that they are endlessly repeated on the CSR conference circuits of the world, without any vision for how they might transform the core business of their progenitors. The sustainability problems we face, be they climate change or poverty, are at such a massive scale, and are so urgent, that any CSR solutions that cannot match that scale and urgency are red herrings at best and evil diversions at worst. How long have we been tinkering away with ethical consumerism (organic, fairtrade and the like), with hardly any impact on the world’s major corporations or supply chains? And yet, when Wal-Mart’s former CEO, Lee Scott, had his post-Katrina Damascus experience and decided that all cotton will be organic and all fish MSC-certified, then we started seeing CSR 2.0-type scalability. Scalability not limited to the retail sector. In financial services, there have always been charitable loans for the world’s poor and destitute. But when Muhammad Yunus, in the aftermath of a devastating famine in Bangladesh, set up the Grameen Bank and it went from one $74 loan in 1974 to a $2.5 billion enterprise, spawning more than 3,000 similar microcredit institutions in 50 countries reaching over 133 million clients, that is a lesson in scalability. Or contrast Toyota’s laudable but premium-priced hybrid Prius for

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the rich and eco-conscious with Tata’s $2,500 Nano, a cheap and eco-friendly car for the masses. The one is an incremental solution with long term potential; the other is scalable solution with immediate impact.

Principle 3: Responsiveness (R) Business has a long track-record of responsiveness to community needs—witness generations of philanthropy and heart-warming generosity following disasters like 9/11 or the Sichuan Earthquake. But this is responsiveness on their own terms, responsiveness when giving is easy and cheque-writing does nothing to upset their commercial applecart. The severity of the global problems we face demands that companies go much further. CSR 2.0 requires uncomfortable, transformative responsiveness, which questions whether the industry or the business model itself is part of the solution or part of the problem. When it became clear that climate change posed a serious challenge to the sustainability of the fossil fuel industry, all the major oil companies formed the Global Climate Coalition, a lobby group explicitly designed to discredit and deny the science of climate change and undermine the main international policy response, the Kyoto Protocol. In typical CSR 1.0 style, these same companies were simultaneously making hollow claims about their CSR credentials. By contrast, the Prince of Wales’s Corporate Leaders Group on Climate Change has, since 2005, been lobbying for bolder UK, EU and international legislation on climate change, accepting that carbon emission reductions of between 50–85% will be needed by 2050. CSR 2.0 responsiveness also means greater transparency, not only through reporting mechanisms like the Global Reporting Initiative and Carbon Disclosure Project, but also by sharing critical intellectual resources. The Eco-Patent Commons, set up by WBCSD to make technology patents available, without royalty, to help reduce waste, pollution, global warming and energy demands, is one such step in the right direction. Another is the donor exchange platforms that have begun to proliferate, allowing individual and corporate donors to connect directly with beneficiaries via the 1 web, thereby tapping ‘the long tail of CSR’.

Principle 4: Glocality (2) The term ‘glocalization’ comes from the Japanese word dochakuka, which simply means global localization. Originally referring to a way of adapting farming techniques to local conditions, dochakuka evolved into a marketing strategy when Japanese 1

This is a reference to The Long Tail, by Chris Anderson, as it might apply to CSR. I have written about this elsewhere.

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businessmen adopted it in the 1980s. It was subsequently introduced and popularised in the West in the 1990s by Manfred Lange, Roland Robertson, Keith Hampton, Barry Wellman and Zygmunt Bauman. In a CSR context, the idea of ‘think global, act local’ recognises that most CSR issues manifest as dilemmas, rather than easy choices. In a complex, interconnected CSR 2.0 world, companies (and their critics) will have to become far more sophisticated in understanding local contexts and finding the appropriate local solutions they demand, without forsaking universal principles. For example, a few years ago, BHP Billiton was vexed by their relatively poor performance on the (then) Business in the Environment (BiE) Index, run by UK charity Business in the Community. Further analysis showed that the company had been marked down for their high energy use and relative energy inefficiency. Fair enough. Or was it? Most of BHP Billiton’s operations were, at that time, based in southern Africa, home to some of the world’s cheapest electricity. No wonder this was not a high priority. What was a priority, however, was controlling malaria in the community, where they had made a huge positive impact. But the BiE Index didn’t have any rating questions on malaria, so this was ignored. Instead, it demonstrated a typical, Western-driven, one-size-fits-all CSR 1.0 approach.2 Carroll’s CSR pyramid has already been mentioned. But in a sugar farming cooperative in Guatemala, they have their own CSR pyramid—economic responsibility is still the platform, but rather than legal, ethical and philanthropic dimensions, their pyramid includes responsibility to the family (of employees), the community and policy engagement. Clearly, both Carroll’s pyramid and the Guatemala pyramid are helpful in their own appropriate context. Hence, CSR 2.0 replaces ‘either/or’ with ‘both/and’ thinking. Both SA 8000 and the Chinese national labour standard have their role to play. Both premium branded and cheap generic drugs have a place in the solution to global health issues. CSR 2.0 is a search for the Chinese concept of a harmonious society, which implies a dynamic yet productive tension of opposites—a Tai Chi of CSR, balancing yin and yang.

Principle 5: Circularity (0) The reason CSR 1.0 has failed is not through lack of good intent, nor even through lack of effort. The old CSR has failed because our global economic system is based on a fundamentally flawed design. For all the miraculous energy unleashed by Adam Smith’s ‘invisible hand’ of the free market, our modern capitalist system is faulty at its very core. Simply put, it is conceived as an abstract system without limits. As far 2

The index has subsequently been reformed and now runs as a more integrated Corporate Responsibility Index. See www.bitc.org.uk.

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back as the 1960s, pioneering economist, Kenneth Boulding, called this a ‘cowboy economy’, where endless frontiers imply no limits on resource consumption or waste disposal. By contrast, he argued, we need to design a ‘spaceship economy’, where there is no ‘away’; everything is engineered to constantly recycle. In the 1990s, in The Ecology of Commerce, Paul Hawken translated these ideas into three basic rules for sustainability: waste equals food; nature runs off current solar income; and nature depends on diversity. He also proposed replacing our productsales economy with a service-lease model, famously using the example of Interface ‘Evergreen’ carpets that are leased and constantly replaced and recycled. William McDonough and Michael Braungart have extended this thinking in their Cradle to Cradle industrial model. Cradle to cradle is not only about closing the loop on production, but about designing for ‘good’, rather than the CSR 1.0 modus operandi of ‘less bad’. Hence, CSR 2.0 circularity would, according to cradle-to-cradle aspirations, create buildings that, like trees, produce more energy than they consume and purify their own waste water; or factories that produce drinking water as effluent; or products that decompose and become food and nutrients; or materials that can feed into industrial cycles as high quality raw materials for new products. Circularity needn’t only apply to the environment. Business should be constantly feeding and replenishing its social and human capital, not only through education and training, but also by nourishing community and employee wellbeing. CSR 2.0 raises the importance of meaning in work and life to equal status alongside ecological integrity and financial viability. These principles are the acid test for future CSR practices. If they are applied, what kind of shifts will we see? In my view, the shifts will happen at two levels. At a macro-level, there will be a change in CSR’s ontological assumptions or ways of seeing the world. At a micro-level, there will be a change in CSR’s methodological practices or ways of being in the world. Table 3: CSR 1.0 to CSR 2.0—Macro Level Shifts

CSR 1.0 Philanthropic Risk-based Image-driven Specialised Standardised Marginal Western

CSR 2.0 Collaborative Reward-based Performance-driven Integrated Diversified Scalable Global

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The macro-level changes can be described as follows: Paternalistic relationships between companies and the community based on philanthropy will give way to more equal partnerships. Defensive, minimalist responses to social and environmental issues will be replaced by proactive strategies and investment in growing responsibility markets, such as clean technology. Reputation-conscious public-relations approaches to CSR will no longer be credible and so companies will be judged on actual social, environmental and ethical performance, i.e. are things getting better on the ground in absolute, cumulative terms? Although CSR specialists still have a role to play, each dimension of CSR 2.0 performance will be embedded and integrated into the core operations of companies. Standardised approaches will remain useful as guides to consensus, but CSR will find diversified expression and implementation at very local levels. CSR solutions, including responsible products and services, will go from niche ‘nice-to-haves’ to massmarket ‘must-haves’. And the whole concept of CSR will lose its Western conceptual and operational dominance, giving way to a more culturally diverse and internationally applied concept. Table 4: CSR 1.0 to CSR 2.0—Micro-Level Shifts CSR 1.0

CSR 2.0

CSR premium

Base of the pyramid

Charity projects

Social enterprise

CSR indexes

CSR ratings

CSR departments

CSR incentives

Product liability

Choice editing

Ethical consumerism

Service agreements

CSR reporting cycles

CSR data streams

Stakeholder groups

Social networks

Process standards

Performance standards

How might these shifting principles manifest as CSR practices? Supporting these meta-level changes, the anticipated micro-level changes can be described as follows: CSR will no longer manifest as luxury products and services (as with current green and fairtrade options), but as affordable solutions for those who most need quality of life improvements. Investment in self-sustaining social enterprises will be favoured over cheque-book charity. CSR indexes, which rank the same large companies over and over (often revealing contradictions between indexes) will make way for CSR rating systems, which turn social, environmental, ethical and economic performance into

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corporate scores (A+, B–, etc., not dissimilar to credit ratings) and which analysts and others can usefully employ in their decision making. Reliance on CSR departments will disappear or disperse, as performance across responsibility and sustainability dimensions are increasingly built into corporate performance appraisal and market incentive systems. Self-selecting ethical consumers will become irrelevant, as CSR 2.0 companies begin to choice-edit, i.e. cease offering implicitly ‘less ethical’ product ranges, thus allowing guilt-free shopping. Post-use liability for products will become obsolete, as the service-lease and take-back economy goes mainstream. Annual CSR reporting will be replaced by online, real-time CSR performance data flows. Feeding into these live communications will be Web 2.0 connected social networks that allow ‘crowdsourcing’, instead of periodic meetings with rather cumbersome stakeholder panels. And typical CSR 1.0 management systems standards like ISO 14001 will be less credible than new performance standards, such as those emerging in climate change that set absolute limits and thresholds. These practical shifts are summarised below.

THE DNA MODEL OF CSR 2.0 Pulling it all together, I believe that CSR 2.0—or Systemic CSR (I also sometimes call it Radical CSR or Holistic CSR, so use whichever you prefer)—represents a new holistic model of CSR. The essence of the CSR 2.0 DNA model are the four DNA Responsibility Bases, which are like the four nitrogenous bases of biological DNA (adenine, cytosine, guanine, and thymine), sometimes abbreviated to the four-letters GCTA (which was the inspiration for the 1997 science fiction film GATTACA). In the case of CSR 2.0, the DNA Responsibility Bases are Value creation, Good governance, Societal contribution and Environmental integrity. Hence, if we look at Value Creation, it is clear we are talking about more than financial profitability. The goal is economic development, which means not only contributing to the enrichment of shareholders and executives, but improving the economic context in which a company operates, including investing in infrastructure, creating jobs, providing skills development and so on. There can be any number of KPIs, but I want to highlight two that I believe are essential: beneficial products and inclusive business. Does the company’s products and services really improve our quality of life, or do they cause harm or add to the low-quality junk of what Charles Handy calls the ‘chindogu society’. And how are the economic benefits shared? Does wealth trickle up or down; are employees, SMEs in the supply chain and poor communities genuinely empowered? Good Governance is another area that is not new, but in my view has failed to be properly recognised or integrated in CSR circles. The goal of institutional effectiveness is as important as more lofty social and environmental ideals. After all, if the institution

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fails, or is not transparent and fair, this undermines everything else that CSR is trying to accomplish. Trends in reporting, but also other forms of transparency like social media and brand- or product-linked public databases of CSR performance, will be increasingly important indicators of success, alongside embedding ethical conduct in the culture of companies. Tools like Goodguide, KPMG’s Integrity Thermometer and Covalence’s EthicalQuote ranking will become more prevalent. Societal Contribution is an area that CSR is traditionally more used to addressing, with its goal of stakeholder orientation. This gives philanthropy its rightful place in CSR—as one tile in a larger mosaic—while also providing a spotlight for the importance of fair labour practices. It is simply unacceptable that there are more people in slavery today than there were before it was officially abolished in the 1800s, just as regular exposures of high-brand companies for the use of child-labour are despicable. This area of stakeholder engagement, community participation and supply chain integrity remains one of the most vexing and critical elements of CSR. Table 5: DNA Model of CSR 2.0 DNA Code Value creation

Strategic Goals Economic development

Key Indicators • Capital investment (financial, manufacturing, social,

human and natural capital) • Beneficial products (sustainable and responsible goods

and services • Inclusive business (wealth distribution, bottom of the

Good governance

Institutional effectiveness

• • •

Societal contribution

Stakeholder orientation

• • •

Environmental integrity

Sustainable ecosystems

• • •

pyramid markets) Leadership (strategic commitment to sustainability and responsibility) Transparency (sustainability and responsibility reporting, government payments) Ethical practices (bribery and corruption prevention, values in business) Philanthropy (charitable donations, provision of public goods and services) Fair labour practices (working conditions, employee rights, health and safety) Supply chain integrity (SME empowerment, labour and environmental standards) Ecosystem protection (biodiversity conservation and ecosystem restoration) Renewable resources (tackling climate change, renewable energy and materials) Zero waste production (cradle-to-cradle processes, waste elimination)

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CSR and Competitiveness

Finally, Environmental Integrity sets the bar way higher than minimising damage and rather aims at maintaining and improving ecosystem sustainability. The KPIs give some sense of the ambition required here—100% renewable energy and zero waste. We cannot continue the same practices that have, according to WWF’s Living Planet Index, caused us to lose a third of the biodiversity on the planet since they began monitoring 1970. Nor can we continue to gamble with prospect of dangerous—and perhaps catastrophic and irreversible—climate change. A final point to make is that CSR 2.0—standing for corporate sustainability and responsibility—also proposes a new interpretation for these terms. Like two intertwined strands of DNA, sustainability and responsibility can be thought of as different, yet complementary elements of CSR. Hence, sustainability can be conceived as the destination—the challenges, vision, strategy and goals, i.e. what we are aiming for—while responsibility is more about the journey—our solutions, responses, management and actions, i.e. how we get there. The challenge now is to admit that CSR 1.0 has failed, and to make CSR 2.0—weaving the strands of sustainability and responsibility—into the new DNA of business.

REFERENCE Visser, W. (2011). The Ages and Stages of CSR: Towards the Future with CSR 2.0, CSR International Paper Series, No. 3. First published in Social Space 2011.