Lecture 1: Overview of CSR. Lecture delivered on 11 Feb 2011

Hi

Welcome to this blog.  Here I shall present a summary of what I taught you in the class every week.  Please use the comment section to ask me questions on the content of this blog.  We shall have a two way communication on the subject matter.

I started the class with the news item from Times of India; the news is about the changes in Companies Act which warrants a minimum of 2 % of the profit by companies to be spent on CSR.  This is an indication that the Government is serious on Corporate Social Responsibility and would like Corporates to take it seriously too.

I explained how the meaning of CSR has changed over time.  In the early part of the 20^th Century till about 1970s, Corporate Social Responsibility meant the philanthropic activities of Corporates where they spent some amount of their earnings on social welfare activities.  For example, Tatas helped to set up the Indian Institute of Science, Bangalore, in 1908.  Similarly Tatas also taken the responsibility for maintaining the township of Jamshedpur after the set up a steel plant there (now it costs them over Rs.500 Crores per year to maintain Jamshedpur). 

Over the period of time, at least in the last thirty years, the meaning of CSR has changed.  It is no more the philanthropic activities of the corporates alone, but also their responsibility to all their stakeholders, including employees, governments, customers, suppliers, investors, flora and fauna, historical monuments and the future generation etc.  Since all these stakeholders are part of the society in which the corporate operates, there is no distinction between Corporate Social Responsibility and Corporate Responsibility. 

The guidelines on Corporate Social Responsibility issued by the Ministry of Corporate Affairs, Government of India, 2009, reiterates this interpretation.  According to this Government of India guidelines document, six elements form the Corporate Social Responsibility:


1.    Care for Stakeholder
2.     Ethical functioning
3.      Respect for workers’ rights and welfare
4.      Respect for human rights
5.      Respect for environment
6.      Activities for social and inclusive development

These elements also form the core of the recently issued International Organization of Standardization document, ISO 26000 - Guidelines on Social Responsibility.  A closer analysis of the subject reveals that the Corporate Social Responsibility now contains elements of economic prosperity, environmental performance and social equity all at the same time.  These elements are essentially those which form the “Sustainability” of business organizations.   It is, therefore understood, that Corporate Social Responsibility = Sustainability.

“Sustainability“ is derived from “Sustainable Development”, a term used by Mrs. Brundtland in the UN Report “Our Common  Future”.  Sustainable Development has been defined by the Brundtland report as “the development that meets the needs of the present without compromising the ability of the future generations to meet their own needs”.  In a way, Sustainable Development is about using the renewable resources, such as water, soil etc., within the carrying capacity of the ecosystem and to find alternatives for the non-renewable resources, such as coal, oil etc., before they become exhausted. 

Sustainability is an extension of sustainable development and covers a larger canvas; sustainability is about the management of the interface between the corporate body and the stakeholder with the long term interest of the organization in focus.  All corporate bodies would like to “Survive”, “Grow”, “Make Profits” and “be accepted by the public”.  Sustainability is about achieving these Corporate Goals by addressing various interfaces with Stakeholders in a way that reduces risks to the organization, while at the same time increasing opportunities and building an image.

We started discussing about various interface elements covered under the term sustainability: energy efficiency, eco-efficiency, eco-design, green purchasing, packaging, employee occupational health and safety, unions and their rights, wages, discrimiantion at the workplace, gender bias, clean technologies, etc.  We will continue with these elements in the next lecture.