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Corporate social responsibility (CSR, also called corporate conscience, corporate citizenship, social performance, or sustainable responsible business/ Responsible Business) is a form of corporate self-regulation integrated into a business model. CSR policy functions as a built-in, self-regulating mechanism whereby a business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms. In some models, a firm’s implementation of CSR goes beyond compliance and engages in “actions that appear to further some social good, beyond the interests of the firm and that which is required by law.
” CSR is a process with the aim to embrace responsibility for the company’s actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere who may also be considered stakeholders. The term “corporate social responsibility” became popular in the 1960s and has remained a term used indiscriminately by many to cover legal and moral responsibility more narrowly construed.
While there is no universal definition of corporate social responsibility, it generally refers to transparent business practices that are based on ethical values, compliance with legal requirements, and respect for people, communities, and the environment. Thus, beyond making profits, companies are responsible for the totality of their impact on people and the planet. “People” constitute the company’s stakeholders: its employees, customers, business partners, investors, suppliers and vendors, the government, and the community. Increasingly, stakeholders expect that companies should be more environmentally and socially responsible in conducting their business.
In the business community, CSR is alternatively referred to as “corporate citizenship,” which essentially means that a company should be a “good neighbor” within its host community.
The term is often used interchangeably for other terms such as Corporate Citizenship and is also linked to the concept of Triple Bottom Line Reporting (TBL), which is used as a framework for measuring and organisation’s performance against economic, social and environmental parameters. The rationale for CSR has been articulated in a number of ways. In essence it is about building sustainable businesses, which need healthy economies, markets and communities. The key drivers for CSR are:
1.1. Enlightened self-interest – creating a synergy of ethics, a cohesive society and a sustainable global economy where markets, labour and communities are able to function well together.
1.2. Social investment – contributing to physical infrastructure and social capital is increasingly seen as a necessary part of doing business.
1.3. Transparency and trust – business has low ratings of trust in public perception. There is increasing expectation that companies will be more open, more accountable and be prepared to report publicly on their performance in social and environmental arenas.
1.4. Increased public expectations of business – globally companies are expected to do more than merely provide jobs and contribute to the economy through taxes and employment.” 1. Definitions:
1.1. The World Business Council for Sustainable Development defines the CSR as “business’ commitment to contribute to sustainable economic development, working with employees, their families, the local community, and society at large to improve their quality of life”. Under this point of view, the CSR rests on the fundamental pillars of both the economic growth and the quality of life as an engine for “sustainable” development.
1.2. The Canadian Centre for Philanthropy: CSR is “a set of management practices that ensure the company minimises the negative impacts of its operations on society while maximising its positive impacts”. This definition therefore provides the link between the decisions tied to the social responsibility and “the business” derived from the respect of the lawyer instruments, the population, the communities, and the environment.
2. Reasons for learning about CSR and its importance:
Corporations are powerful institutions that can make a significant difference to society. That difference can be a positive contribution or it could equally be harmful. Learning about Corporate Social Responsibility (CSR) contributes to better thinking about what is morally right and wrong with the decisions and activities of these institutions. This knowledge can produce decisions and behavior that meet the demands of stakeholders for greater accountability. It can help stakeholders to recognize unethical behavior which is still too common and it can help managers assess the changes needed to manage corporate responsibility. There are seven compelling reasons for corporations and their stakeholders to be active in business ethics training.
3.1. Corporate Power
Corporations are powerful institutions that influence many facets of society. They are private enterprises formed to pursue commercial purposes but their processes have a very public impact. Companies affect many lives through their actions and behaviors. It is important that they act and behave responsibly. Learning about corporate social responsibility (CSR) explains why these responsibilities arise, what they are and how they can be delivered.
3.2. Responsible Business Can Make a Worthwhile Contribution Responsible business can make a worthwhile contribution to society. Companies make products and deliver services. They create jobs. They generate investment. Companies have the potential to fulfill not only a major economic role within society but also a major environmental and societal role. Their decisions and activities can positively impact on the use of natural resources and the quality of lives of many people – both internal to their operations like managers and employees; and external to their operations like customers, suppliers, governments and local communities. Responsible business can help build sustainable lives and livelihoods for many.
3.3. Unethical Business Can be Harmful
While responsible business can be positive in its impact, irresponsible business can be harmful in equal measure. Companies that lack awareness or regard for their responsibilities can act and behave in ways that are very damaging to the world’s natural resources, to the lives of local communities and to the well-being of staff and managers. The potential for impact is heightened in a globalised economy where the activities of corporations reach across many countries and cultures.
3.4. Stakeholders Demand Accountability:
Tolerance of corporate impacts is changing and stakeholders, whose lives and livelihoods are impacted by irresponsible business activities, are demanding greater accountability. Stakeholders are placing greater demands on companies to be accountable for corporate activities and their impacts. Stakeholders include the owners (shareholders/investors), employees, customers, suppliers, the community, competitors and government. Developments in communications technology allow stakeholders greater and quicker access to information, and to each other. Global communication via the internet and cell phones means that issues of malpractice can surface more rapidly and stakeholders can mobilize to respond more quickly.
3.5. Corporate Decision-making:
Corporate Social Responsibility involves more complex decision-making. It moves business away from single dimensional thinking (maximizing financial profit) and toward multi-dimensional thinking (the economic, social and environmental facets of corporate impact). It shifts business thinking about whether a decision is only financially profitable or strategically strong to whether it is morally right or wrong. Knowledge of CSR is necessary for corporate managers to identify, understand, analyse and resolve the complexity of these multiple issues. It also assists other stakeholders to do the same.
3.6. Corporate Social Responsibility Management:
Learning about Corporate Social Responsibility also means learning how to manage CSR initiatives, engage with stakeholders and report on activities. CSR cannot be simply an idea that has no strategy or action to support it. So learning about CSR helps managers evaluate the advantages and disadvantages of particular strategies and their implementation. It enables managers to bring CSR alive within the company.
3.7. Unethical Business Conduct is too Common:
Another reason for learning about CSR is that ethical misconduct in business is still far too common. Knowledge of Corporate Social Responsibility helps employees and managers to recognize wrong-doing within the workplace. It helps customers and other external stakeholders to recognize misconduct when transacting with a company. Knowledge of CSR can make stakeholders more assured in taking action to address the misconduct. It would be easy to think that business ethics training is the realm of a select few but it is relevant to many people. Within a corporation, it is relevant to senior executives, to middle management and across all areas of staff. Knowledge of CSR provides greater momentum for its correct implementation. Outside the corporation, there are compelling reasons for customers, suppliers and community stakeholders to learn about CSR so as to protect and promote their interests in relation to corporate activities. In learning about Corporate Social Responsibility, everyone can benefit.
4. Types of CSR:
Four types of CSR: As large corporations begin to dominate the world economy, it raises questions about the importance of corporate social responsibility in business. A variety of types of corporate social responsibilities have emerged in public discussions, and understanding their implications is important.
4.1. Environmental Responsibility
People expect businesses to exhibit environmentally responsible behavior, as evidenced by a PricewaterhouseCoopers survey that found that the No. 1 issue for companies in the future, according to U.S. respondents, is carbon emissions reductions. Specific environmental issues that affect businesses include global warming, sustainable resources and pollution. Businesses are being urged by environmental groups and governments to reduce their carbon footprint, to obtain their materials from sustainable sources and to reduce their pollution.
4.2. Human Rights Responsibility
The 21st-century marketplace is highly global. This means that when a product is purchased in the United States, for example, it may have been produced in China, or have components from South America. The ethical issue for corporations is ensuring that human rights are respected throughout all levels of the supply chain. Major companies have received criticism for their use of sweat shops and for sourcing resources that are harvested by unfairly treated workers. This has lead to a push for the use of strict labor standards to be applied to suppliers, and a demand for fair trade products such as chocolate and coffee.
4.3. Financial Responsibility
Financial responsibility is an important issue in corporate social responsibility. In the wake of the accounting fraud perpetrated by Enron and Arthur Andersen and Ponzi schemes orchestrated by the likes of Bernie Madoff, businesses are questioned about the accuracy of their financial reporting by increasingly skeptical shareholders and government officials, as evidenced by the Sarbanes-Oxley Act. Employees are expected to act as whistle blowers in such situations, and white collar crime is seeing high-profile prosecutions like that of Martha Stewart or former Worldcom CEO Bernie Ebbers.
4.4. Political Responsibility
Trading with repressive regimes is a difficult issue in corporate social responsibility. Some businesses argue that working with these regimes will help to advance them and bring rights to the countries. People and governments have demanded that businesses stop trading with repressive regimes, which was most notably observed when several western governments launched an embargo against the Apartheid government in South Africa during the 1980s. Shell Oil received considerable consumer backlash during the 1990s for its complicit involvement with the Nigerian government that murdered anti-oil activists.
5. Arguments for CSR:
Major arguments for and against CSR:
– Address Environmental Concerns
– Better employee engagement and retention
– Business accountability for their actions
– Help those most in need in society
– Can lead to better profits
– Some argue the sole role of business is to make profit and nothing else
– Some companies may only treat it as a marketing exercise
– dilution of economic productivity
– lack of skills by business leader to solve the problem
The major arguments for the assumption of social responsibilities by business are:
1) Public expectations: Social expectations of business have increased dramatically since the 1960s. Public opinion in support of business pursuing social as well as economic goals is now well solidified.
2) Long run profits: Socially responsible businesses tend to have more and secure long run profits. This is the normal result of the better community relations and improved business image that responsible.
3) Ethical obligation: A business firm can and should have a conscience. Business should be socially responsible because responsible actions are right for their own sake.
4) Public image: Firms seek to enhance their public image to gain more customers, better employees, access to money markets, and other benefits. Since the public considers social goals to be important, business can create a favorable public image by pursuing social goals.
5) Better environment: Involvement by business can solve difficult social problems, thus creating a better quality of life and a more desirable community in which to attract and hold skilled employees.
6) Discouragement of further government regulation: Government regulation adds economic costs and restricts management’s decision flexibility by becoming socially responsible, business can expect less government regulation.
7) Balance of responsibility and power: Business has a large amount of power in society. An equally large amount of responsibility is required to balance it. When power is significantly greater than responsibility, the imbalance encourages irresponsible behavior that works against the public good.
8) Stockholder interests: Social responsibility will improve the price of a business’s stock in the long run. The stock market will view the socially responsible company as less risky and open to public attack. Therefore, it will award its stock a higher price earning ratio.
9) Possession of resources: Business has the financial resources, technical experts, and managerial talent to provide support to public and charitable projects that need assistance.
10) Superiority of prevention over cures: Social problems must be dealt with at sometime. Business should act on them before they become serious and costly to correct and take management’s energy away from accomplishing its goal of production goods and services.
The major arguments against the assumption of social responsibilities by business are:
1) Violation of profit maximization: This is the essence of the classical viewpoint. Business is most socially responsible when it attends strictly to its economic interests and leaves other activities to other institutions.
2) Dilution of purpose: The pursuit of social goals dilutes business’s primary purpose: economic productivity. Society may suffer as both economic and social goals are poorly accomplished.
3) Costs: Many socially responsible activities do not pay their own way. Someone has to pay these costs. Business must absorb these costs or pass them on to consumers in higher prices.
4) Too much power: Business is already one of the most powerful institutions in our society. If it pursued social goals, it would have even more power. Society has given business enough power.
5) Lack of skills: The outlook and abilities of business leaders are oriented primarily toward economies. Business people are poorly qualified to cope with social issues.
6) Lack of accountability: Political representatives pursue social goals and ar6e held accountable for their actions. Such is not the case with business leaders. There are no direct lines of social accountability from the business sector to the public.
7) Lack of broad public support: There is no broad mandate from society for business to become involved in social issues. The public is divided on the issue. In fact, it is a topic that usually generates a heated debate. Actions taken under such divided support are likely to fail.
6. What role can government play?
No doubt, government actions are essential to creating an enabling environment for private sector development that diminishes risks, lowers costs and barriers of operation and raises rewards and opportunities for competitive and responsible private enterprises. The challenge for governmental agencies in promoting a CSR agenda is to identify priorities, raise awareness, create incentives and support, and mobilize resources from cross-sectoral cooperation that are meaningful in the national context, as well as building on existing initiatives and capacities. For many developing countries, especially in Asia, there is a significant opportunity for governments to harness current enthusiasm for CSR among enterprises and assist businesses in taking on a bigger role in social development, particularly under the global demands for responsible business practice.
Some key roles which a government can actively choose to engage to support a CSR agenda, include (but are not limited to) the following: regulating, facilitating, brokering, and warranting.
While CSR is normally seen as voluntarily going beyond local requirements, governments can “raise the bar” through stricter regulation. This can come in the form of laws, regulations, penalties, and associated measures to control aspects of business investment or operations. Governments at different levels can regulate the behaviour or practice of business by defining minimum standards for business performance embedded within the legal framework; establishing targets for business to achieve; setting up enforcers and inspectorates to oversee business conduct; promulgating codes or laws to confine undesirable business conduct; or imposing license of operation or mandatory environmental friendly industrial systems. Examples of this include establishing a minimum age for labour forces, emission limit values for particular categories of industrial productions, or requirements for companies to publicize corporate social responsibility reports.
Through facilitation, governments enable or incentivize companies to engage in CSR to drive social and environmental improvements. In many of the approaches reflected under this role, government plays a catalytic, secondary, or supporting role. For example, government may provide tax incentives and penalties to promote responsible business; ensure business can access information needed; facilitate understanding of minimum legal requirements for issues relating to responsible business practice; include CSR elements in related policy areas (such as industrial policy, trade policy, environmental policy, and labour policy); offer capacity building, business advisory services and technical assistance to business when needed; or, support supply chain initiatives and voluntary certification.
Governments can combine public resources with those of business and other actors to leverage complementary skills and resources to address issues within a CSR agenda. Government can act as a broker in partnering public sector agencies, businesses, civil society organizations and other stakeholder groups in tackling complex social and environmental challenges. Government can do this by initiating dialogue in multi-stakeholder processes; supporting joint government-industry collaboration in capacity building and developing sectoral CSR guidelines; engaging stakeholders in standards-setting processes; promoting public-private partnerships for community development; and mobilizing resources. In this role as broker, government can also stimulate the engagement of key actors in a CSR agenda by, for example, providing funding for research or leading campaigns, information collaboration and dissemination, training, or raising awareness.
Lastly, government can provide political support and public warrant of a CSR concept. In particular, this can be done for specific types of CSR-related initiatives in the marketplace. Warranting can take various forms, including commitment to implement international principles; education or awareness raising programmes; official policy documents; publicity of good CSR practice conducted by other leading companies; specific CSR related award schemes (such as a National Green Business Award); or, endorse specific pro-CSR indicators, guidelines, systems and standards. Government can also lead by example, through things like public procurement or public sector management practices, or direct recognition of the efforts of individual enterprises through CSR award schemes.
There are often no clear-cut boundaries separating these roles. For example, there may be cases where government acts as broker, but the incentive for partnership derives from the possibility (explicit or implied) that legislation may follow if a partnership is unsuccessful. Equally, the lines between “facilitating,” “brokering,” and “warranting” are not always clear. Governments may choose to address different CSR themes through actions which utilise a variety of roles. For example, it is quite feasible for a government to seek to increase and improve the level of corporate sustainability reporting by using any one or a combination of various mandatory (legislative), facilitating (guidelines on content), brokering (engagement with multi-stakeholder processes), and warranting (publicity) effort. The next section introduces some initiatives which combine some of the different roles that government may undertake to raise the CSR profile of a country.
6.5. Creating an enabling environment:
There is substantial evidence that governments around the world have begun to take on a CSR agenda. Some studies emphasize the influence of public policy as a critical factor in establishing a context within which CSR practice can flourish. Public policymakers can thus initiate policies and measures enabling CSR to flourish using several means. Some key means used to introduce an enabling environment for CSR in a country include the following initiatives:
6.6. Creating awareness and raising public support
CSR cannot be imposed against the will of enterprises, but can only be promoted together with them under involvement of their stakeholders. The first step to promote CSR in a country is necessarily to fill the knowledge gaps about the significance and contribution of CSR to business success and sustainability, as well to increase awareness and acceptance among relevant actors. The government can play a crucial role in establishing CSR value and knowledge among the business and the general public through recognition for CSR achievement and spreading CSR information to attain a better understanding of CSR among the public. Initiative can come in the form of publicity, awarding success, campaigning for awareness, networking opportunities, and funding.
In the Philippines, a presidential decree promulgated in 2002 designated the first week of July as CSR week for the country. The Stock Exchange of Thailand (SET) has run annual CSR Awards for its listed public companies since 2006. SET also set up a CSR day on 19 March each year to present awards to successful companies, recognize achievement, and promote the practice and publicize examples of innovative and good models of CSR implementation. Government leaders also play a vital role in educating the public, private and non-profit sectors on how to tackle social problems from the CSR perspective. The former Malaysian Prime Minister Datuk Seri Abdullah Ahmad Badawi gave his full backing in the fact that he was a patron of the Prime Minister’s CSR Awards launched in 2007 in Malaysia aimed at recognizing companies that have made a difference to the communities in which they operate through their CSR programmes.
6.7. Establishing a specialized CSR agency
Because CSR agendas are often cross-cutting issues which broadly encompass human rights, labour, the environment, anti-corruption issues, a single agency within a Ministry working in a traditional ‘silo’ fashion would be incapable of effectively managing a CSR agenda. Governments in many countries have thus decided to set up specific agencies with a specific mission to promote CSR practice in their respective countries. In Thailand, the CSR Institute (CSRI) was established in 2007 under the SET to promote CSR practices among its listed public company members. CSRI aims to become a focal point for the public companies in promotion of the CSR undertaking. Later, the CSR Centre was launched under Thailand’s Ministry of Social Development and Human Security in 2008.
While there is no explicit CSR public policy in Viet Nam, the government of Viet Nam developed its 2004 Strategic Orientation for Sustainable Development (Viet Nam Agenda 21 or VA21) based on the Global Agenda 21 to be a national framework and legal foundation for national sustainable development in Viet Nam. VA 21 covers many CSR related components such as labour practice, gender equality, environmental protection and the development of local and regional communities. The Viet Nam 21 Agenda Office was set up as a national authority to deploy VA 21 and help the country to reach its goal of sustainable development. The VA 21 Agenda Office organizes sustainable development activities nationwide, cooperates with concerned ministries, and coordinates with national and international institutions. Support for business provided by the CSR specialist agency can focus on specific activities (information, advisory services, counselling and training, funding, as for instance) within a particular issue (for example, human rights, child care, youth work, labour, environment, or customer protection).
6.8. Reforming regulatory frameworks to meet CSR-related standards: Government plays an important role in setting standards that reflect a minimum standard of good CSR practice or performance requirements. The
government is thus in a position to determine if any legal requirement is needed to ensure compliance with these minimum social and environmental standards. It also can make necessary changes to regulatory frameworks in cases where laws, tax and administrative compliance may hinder the development of responsible business practice. Legislation that supports pro-CSR industrial investment within businesses – for example, pollution charges associated with implementation of the “polluter-pays principle” – can also contribute to pro-CSR production processes. It should be noted that the government role of defining minimum legal requirements on environmental or social issues can be accompanied by access to justice for individuals who are affected by the misconduct of business.
From 2003 to date, a number of CSR-related laws and regulations in the area of environment, labour, and CSR reporting have been passed in China, and others are currently under consideration. For example, the Corporate Act was promulgated in 2006 to set general principles on social responsibility for companies to comply with business ethics and regulation. In the Philippines, a bill requiring companies to observe CSR through community projects has been filed in the Philippines’s House of Representatives and the Corporate Social Responsibility Act of 2009 was recently released. It mandates corporations to “consider the interests of society by taking responsibility for the impact of their activities on customers, employees, shareholders, communities and the environment in all aspects of their operations”. In late 2008, the government of Bangladesh has approved the long-awaited proposal for a tax exemption facility at the rate of 10 per cent on a part of the corporate income to be spent on complying with CSR practices.
The exemption facility is aimed at encouraging private companies to be involved more in CSR conduct. Although CSR agendas are giving rise to new demands for a ‘level playing field’ of minimum environmental and social standards to protect free and fair competition, the minimum mandatory standards cannot create a level playing field that allows the market to reward higher standards without penalties for failure to comply. Lack of capacity to enforce minimum standards may lead to the collapse of these types of attempts. Government needs to pay attention to this concern. Furthermore, international collaboration may be needed to avoid distortion of competition between enterprises of different countries through different standards.
6.9. Fostering interaction with businesses, NGOs and other key stakeholders Government is in a unique position to convene necessary stakeholders in order to address social problems through a CSR agenda. In one way or another, governments can partner with foundations and corporations to support business responsibility initiatives. It plays a key role in facilitating meaningful stakeholder dialogue with the business community (for example, by building the capacity of civil society actors or by directly facilitating dialogue and multi-stakeholder processes). In India, two dialogue forums directly relevant to CSR policy development were initiated.102 First, the Coordination Committee to Promote Affirmative Action in the Indian Industry comprises the relevant government ministry offices (mainly the Ministry of Commerce and Industry), Associated Chambers of Commerce and Industry of India, Federation of Indian Chambers of Commerce and Industry, as well as senior representatives of industry.
The aim of the partnership is to finalize a Code of Conduct on Affirmative Action and to set up an ombudsman with regional benches to monitor the compliance of the voluntary code of conduct by its members. Another forum is the India Partnership Forum (IPF) which is also involved in this multi-stakeholder dialogue forum. IPF has a more CSR-focused brief and addresses issues other than affirmative action, its areas of interest being the adoption and operationalization of a social code for business, the formulation of CSR, providing support to public policy measures on CSR, ensuring the mainstreaming of CSR education in business schools, capacity building for community development, capacity building for sustainable reporting processes and indices, building a CSR knowledge base, and providing communication and advocacy on CSR. In some cases, governments require companies to enter into stakeholder engagement through mandatory legislation.
In many cases, governments can harness the community development potential of corporate philanthropy and social investment through dialogue to optimize their alignment with community needs. In certain cases, they can mandate corporate contributions in return for a license to operate. Such partnerships also aid in raising awareness of specific social problems and link to the engagement of business, as well as the expertise of stakeholders in other sectors. Furthermore, a business-NGO partnership can provide leverage for the availability of private resources to be directly channelled to meet social and environmental solutions.
6.10. Providing support to increase capacity and effectiveness for business in CSR initiatives Other interventions by governmental agencies in some developing countries have included capacity building activities designed to help domestic producers meet CSR standards. Outlines of a broadly complementary initiative in India serve as a good example.106 The Indian Textiles Committee, part of the Ministry of Textiles, has taken up a national campaign to sensitize the textile and clothing industry, particularly in the SME sector, to address emerging challenges resulting from the forthcoming liberalization of the Indian textile and clothing industry.
The committee is working with the Ministry of Commerce, state governments, and local industry and trade associations on the campaign. Approximately 7,500 company representatives will have taken part in 25 workshops. The aim is to disseminate information on various standards and compliance mechanisms including ISO 9000 QMS, ISO 14000 EMS, and Social Accountability (SA8000) standards, as well as offer technical assistance to encourage implementation. Regarding the international trade-related aspect of implementing a CSR agenda, governments in many countries now are recognizing the potential for a CSR agenda to open up new market access opportunities for exports of sustainably produced goods and services and to tackle potential exclusion from existing markets as CSR conditions are introduced.
Government-led export promotion of “green” goods and services can build international market access opportunities for domestic enterprises and encourage a more pro-CSR goods and services. In this case, government can provide knowledge and technical support, including capacity building for domestic producers to enable them to meet CSR standards, and engagement in CSR standard-setting initiatives to ensure they do not create unfair market access barriers.
7. POSITION OF CSR TODAY AND ITS SCOPE :
In many Asian societies, Corporate Social Responsibility (CSR) is generally understood as being no more than corporate-run community development projects to compensate for social and economic injustices. Most of such projects, like constructing schools and health care centres, have been effectively hegemonic, providing strong legitimacy and extensive license to corporations to sustain the exploitation of the human and natural resources in many countries. A further implication of CSR is that it makes people think that it is the company’s obligation to meet people’s rights to a better education system, clean water, health care, etc., instead of the State or government. At the same time, this has allowed the State to escape from its obligations towards society. CSR is a simple but effective method for corporations to obtain legitimacy as a responsible social actor. It is also a status-enhancing way for them to acquire an excellent and clean image in the public.
For many corporations, the implementation of CSR can increase the sales of their products and market share. CSR can also help the brand attain a good reputation and promote workers’ productivity. It can reduce production costs, attract more investment, and achieve more favourable credit and ratings. In this respect, there is no doubt that CSR is a vehicle for increased corporate power in society. There are many actors involved in CSR activities: NGOs, government, and international institutions, which eventually make CSR an emerging industry itself, valued at US$ 31.7 billion in 2007. CSR-driven initiatives such as Multi-Stakeholders Initiatives (MSI) claim to have an impact on core labour issues such as freedom of association and collective bargaining. However, the reality has proven that CSR has more harm than good. In the labour movement, CSR has transformed itself into a mechanism called Code of Conduct.
The Code of Conduct is a fundamental manifestation of the CSR, which corporations consider as part of their business public relations in response to accusations made by activists. Certainly, corporations by nature do not see CSR as their obligation, but as a business strategy to achieve greater profit by fulfilling its social responsibility. By promoting Codes of Conduct, employers alter labour relations in the factories towards a harmonious industrial relation to sustain their violations against labour rights without facing any resistance. Codes of Conduct are aimed at making people feel good and pacifying labour, consumer, and civil society movements. It has the mission of protecting Multinational Corporations’ interests in international sub-contracting. The way that Codes of Conduct domesticate the movements is that it serves as the basis for NGOs, and even labour unions, to be engaged in the supervision work of the manufacturing process of Multinational Corporations. In the end, many NGOs and labour unions participate in the band wagon of Code of Conduct monitoring, taskforces, stakeholders’ roundtables, etc., forsaking their core work at the grass-roots.
Codes of Conduct create the privatization of labour law and promote self-regulation in the factories. By promoting Codes of Conduct, employers divert the focus of labour and consumer movement into setting up localised regulation, but at the same time neglect the national constitution and the labour law. Employers try to convince us that voluntary standards are better than the existing labour law, which suffers from a lack of implementation. Thus, the Code of Conduct logically has an inherent contradiction in itself: as the root-problem is the defect of labour law, Code of Conduct then has a similar limitation of its functioning. For that reason, we are very doubtful that local labour laws will be improved and properly enforced under the Code of Conduct influence. Moreover, Codes of Conduct and other types of CSR have the ‘divide and rule’ effect. At the workplace level, CSR hampers the development of genuine, free and independent unions, which are further stigmatised as trouble-makers in society. At the community level, CSR affects the loss of harmony within society, as a number of people get benefits through jobs, gifts or trade opportunities, while others get none; some people are even deprived, such as when they have to give up their land.
At the national level, the impact of CSR is obviously seen as the rupture between the proponents and opponents of CSR is ever widening. Meanwhile, in the global level, Northern and Southern workers become less and less likely to reach out each other, as they get co-opted by multi-stakeholder initiatives and become more invested in them, rather than in seeking the solidarity of other workers. In a nutshell, CSR undermines solidarity between workers. At the moment, CSR has won the battle of ideas and serves the neoliberal agenda of a reduced role for the state in favour of an expanded role for the corporate sector. To respond to the facts, we are challenged to face it in several ways. First, we have to demystify CSR. Many experiences show that CSR fails to produce concrete improvement in working conditions, but also diverts movements’ attention away from real issues.
Second, we have to strengthen solidarity between workers, to have better communication with one another, and a united front against extensive promotion of CSR. Third, we have to establish more effective international solidarity. On this occasion, we are calling everyone who shares the above-stated perspective about CSR and its impacts on society, to endorse this statement to confirm that CSR activities are detracting from labour unity and failing to contribute to sustained worker empowerment; and that labour groups must focus on increasing the collective power of workers to assert their labour rights, not relying on what is granted voluntarily by corporations.
8. CASE STUDY OF WIPRO
Wipro Limited (formerly Western India Products Limited) is a multinational IT Consulting and System Integration services company headquartered in Bangalore, Karnataka, India. As of December 2013, the company has 147,000 employees servicing over 900 large enterprise corporations with a presence in 61 countries. Wipro is the third largest IT services company in India and 7th largest worldwide On 31 March 2013, its market capitalization was 1.07 trillion ($19.8 billion), making it India’s 10th largest publicly traded company. Azim Premji is a major shareholder in Wipro with over 50% of shareholding To focus on core IT Business, it demerged its non-IT businesses into a separate company named Wipro Enterprises Limited with effect from 31 March 2013. The demerged company offers consumer care, lighting, healthcare and infrastructure engineering and contributed to approx. 10% of the revenues of Wipro Limited in previous financial year.
8.1. CONTRIBUTIONS OF AZIM PREMJI TO SOCIETY
Azim Premji Foundation and University
In 2001, he founded Azim Premji Foundation,[ a non-profit organisation, with a vision to significantly contribute to achieving quality universal education that facilitates a just, equitable, humane and sustainable society. The Foundation works in the area of elementary education to pilot and develop ‘proofs of concept’ that have a potential for systemic change in India’s 1.3 million government-run schools. A specific focus is on working in rural areas where the majority of these schools exist. This choice to work with elementary education (Class I to VIII) in rural government-run is a response to evidence of educational attainment in India. The non-profit organisation set up by Premji in 2001 currently functions across Karnataka, Uttarakhand, Rajasthan, Chhattisgarh, Pondicherry, Andhra Pradesh, Bihar and Madhya Pradesh, in close partnership with various state governments.
The foundation has worked largely in rural areas, to help contribute to the improvement of quality and equity of school education. In December 2010, he pledged to donate $2 billion for improving school education in India. This has been done by transferring 213 million equity shares of Wipro Ltd, held by a few entities controlled by him, to the Azim Premji Trust. This donation is the largest of its kind in India. The Azim Premji University was established under an act of the Karnataka Legislative Assembly to run programmes to develop education and development professionals, offer alternative models for educational change and also invest in educational research to continuously stretch the boundaries of educational thinking.
8.2. Donating shares
On 23 feb’13 Giving more to philanthropy, IT czar Azim Premji today announced transfer of 295.5 million equity Wipro shares worth Rs. 12,300 crore held by certain entities controlled by him, to an irrevocable trust. The trust will utilise the endowment to fund, various social, not-for-profit initiatives of Azim Premji Foundation, which are expected to scale significantly over the next few years, the statement said. With this transfer, the trust’s shareholding in Wipro will go up to about 19.93 per cent, according to a statement issued by the Foundation. The 295.5 million shares of Wipro Ltd represent around 12 per cent stake. Azim Premji is also chairman of Azim Premji Foundation.
On February 19, Mr Premji had announced he will commit more of his wealth to philanthropy, as his Foundation scales up work to improve equity and quality of the primary education system in the country. The business tycoon had donated 8.7 per cent of the total stock of Wipro from his personal stock-holding for philanthropy in 2010. This had formed the endowment for the Foundation. In a letter for the first international “Giving Pledge”, group, he said the Foundation currently has 800 people spread across the country: most of whom are working for the betterment of some of the most disadvantaged regions of the country, and others at the Azim Premji University. Currently, the Foundation’s work is spread across Karnataka, Uttarakhand, Rajasthan, Chhattisgarh, Puducherry, Andhra Pradesh, Bihar and Madhya Pradesh, it said.
8.3. Azim Premji tops philanthropy list with donation of Rs. 8000 crore With this, Premji’s holding (including entities controlled by him) in the company slides from 79.36 per cent to about 68.42 per cent. Close on the heels of releasing the second edition of Hurun India Rich List, China-based Hurun Report Inc launched the inaugural Hurun India Philanthropy List 2013, with IT tycoon Azim Hashim Premji emerging as the most generous Indian with a donation of Rs. 8,000 crore in the past year. Hurun Report included donations made by companies in which an individual had a significant share, by applying the percentage the individual has of the company on the donations. Education was the most important area for the Indian philanthropists with a total contribution of Rs.12,200 crore. It was followed by social development (Rs. 1,210 crore), healthcare (Rs. 1,065 crore), rural development (Rs.565 crore), environmental cause (Rs. 170 crore) and agriculture (Rs. 40 crore).
MORE INITIATIVES BY WIPRO IN CSR
8.4. WIPRO’S VIEWS ON GOOD CITIZENSHIP
‘’Over the years we have realized and learnt that a corporation’s survival and progress is a function of three key vectors – the corporation itself, the society in which it operates and the environment that envelopes all of these. By design, these are also the vectors that from the crux of our corporate citizenship philosophy and form the base of all our sustainability initiatives both, internal as well as external.’’ -by Anurag Behar | Chief Sustainability Officer, Wipro Limited
8.5. GOOD CITIZENSHIP
Wipro is based on a strong foundation of values that incorporate humane views
on ‘Good Citizenship’. For us, good citizenship stands for:
Business with integrity
Social and community initiatives
The initiatives we undertake as a responsible corporation cover Ecology, Education and Sustainability in environment. A humane approach has helped us connect with the public and as we move forward with these initiatives, our partnerships grow with the communities at large.
Wipro’s initiatives in sustainable education are more than a decade old and the approach is multi-stakeholder focused and long-term. The initiatives address diverse stakeholders ranging from colleges from which Wipro recruits a large pool of its human resources to the larger society.
It includes local educational institutions, engineering colleges, universities, educational and other civil society organizations, schools, teachers, students and parents. Over time these have achieved significant scale in terms of 1000s of schools and colleges and more than a million students impacted directly or indirectly. It has also built partnership networks and thus created value through capacity building. Such value though needs to be seen at different levels:
The direct value received by someone receiving school education, The indirect value in the long-term to society through the capacities that are created, and The indirect business value to Wipro in working towards a more democratic and humane society.
Towards the larger objectives as described, each of the initiatives below has followed strategies appropriate to their own context – the context determines the strategy.
Wipro Applying Thoughts in Schools focuses on long-term societal development through school education reform and so has supported civil society capability development, published quality educational support material and influenced ideas in education through public advocacy. Mission10X focuses on making the engineering education system responsive to evolving needs and so has supported faculty development in colleges to increase learning with understanding and employability of graduates.
Eco-eye is the way we see ourselves and our engagement with stakeholders – on the journey to more sustainable business practices. The initiative focuses on reducing ecological footprint of our business operations, engagement with employees and our supply chain, partners and customers to create a more sustainable society, and transparent reporting/disclosures.
For customers and our business partners, we offer a host of solutions and products to help make their own businesses more sustainable. Transparent reporting is important for our internal and external stakeholders – and we are responsibly proud of our achievements in this area – leaders in CDP, Newsweek, Greenpeace, RobecoSAM, inclusion in DJSI and NASDAQ 100, rated among the top in OeKom apart from host of others.
Wipro develops eco-sustainability
Energy and GHG efficiency
– 25% improvement in energy efficiency in the last 6 years due to adoption of green building standards based on LEED framework – 44% reduction in use of printing paper through effective automated controls and behavioral changes Water efficiency
– 32% of water requirement met through water recycling and harvesting Waste management
– Four biogas plants convert food waste to cooking fuel translating into a net reduction of 100 tons per annum
Wipro enables eco-sustainability initiatives for customers
Builds Green Data Centers that consume 10-20% less energy
Operates green certified (LEED) buildings that offer better working environment and economy Helps in greening existing buildings that save energy and operational costs Consults factories to go ‘Green’ and work efficiently under an eco-umbrella.
Our approach to social change is not driven by ‘check book philanthropy’ but by direct engagement. A clear reflection of this is the fact within our organizational structure; we have created distinct groups to focus on the chosen areas of engagement.
8.9. Wipro Cares – a not-for-profit trust and its achievements is an earnest initiative by Wiproites to use the collective wisdom of volunteers to make compelling and channelized contributions in the areas of education, community service projects and social development, continually.
Wipro Cares has adopted Pushpavanam village in tsunami-ravaged belt of Tamil Nadu with a desire to rehabilitate survivors and rebuild the village. Our partner in this effort is BIT sunami, a trust formed by the alumni of BITS, Pilani. Pushpavanam, about an hour’s drive from Nagapattinam, has around 1200 house holds with a population of about 6000. It lost 19 people to the tsunami which washed away 200 houses; 500 families lost their livelihood and another 250 families were affected indirectly; 35 boats supporting around 200 families, an important means of livelihood were lost or damaged and almost all cultivable land (about 100 acres) was left barren, leaving both cultivators and the agricultural labourers without a means of livelihood.
What WIPRO did earlier in Orissa and Gujarat
The damage caused by these calamities was huge; thousands of lives were lost, lakhs rendered homeless, land owners suffered incalculable losses. The calamity affected people had to begin from scratch. Wipro Cares’ contribution in both these states, which were hit by two calamities of hither-to-unseen dimensions, (Cyclone in Orissa in 1999 and earthquake in Gujarat in 2001) is unique. After mobilizing funds from Wiproites which was matched by Wipro, Wipro Cares set up a team to evaluate the damage during both these calamities. Our rehabilitation work was done after detailed discussions with the survivors and analyzing their needs.
8.10. CSR activities:
Wipro Cares is an initiative by the Wiproites, their family members and friends to contribute in the areas of education, community and social development. Wipro Cares philosophy is to utilize the collective wisdom of volunteers to bring long term benefits and satisfaction to the community, as we believe that providing funds alone will not help the community.This is a unique corporate experiment to channelise the contributions of the Wiproites matched by Wipro, and the desires of Wiproites to make meaningful contributions to society, on a continuous basis. Wipro Cares contributes through two pronged strategy: providing rehabilitation to survivors of natural calamities and enhancing learning abilities of children from the under privileged sections of the society 8.11. Leaning enhancement: Wipro Cares has initiated Learning Enhancement Programmes at schools catering to the children from the under privileged section of the society.
The main objectives of this program is to improve the standards of learning, build confidence, ignite curiosity, broaden their awareness levels, improve their communication skills in English , build a healthy self-esteem and help them break through self imposed limits to achieve his/her greatest potential. In line with its focus, these programes have been successfully implemented in Olcott Memorial School in Besantnagar, Chennai and Government Secondary School in Viveknagar, Bangalore. 8.12. The Olcott Memorial School in Besantnagar, Chennai is a 110 years old Tamil medium school run by the theological Society. Wipro Cares volunteers work with the students of classes 4 and 5 (total strength -120 children), for about two hours on the 1st and 3rd Saturdays of every month. The Government Secondary School in Viveknagar, Bangalore in run in three different languages-Tamil, Telegu and Kannada.Volunteers who are comfortable in communicating in one of these languages take up the responsibility of each class where they devote 2 hours every Saturday. The volunteers work with children from class 2 onwards. As we go along, we plan to roll this programme in several more schools and in other cities.
Wipro Cares volunteers devote 2 hours every Saturday with the ultimate desire to make learning fun for these children. Once the volunteer builds a good rapport with a group of three-four children, he or she would work on the holistic development of these children – to instill confidence among them, to build communication skills, encourage their creativity and thinking ability. 8.13. Makkala Jagriti – Wipro Cares Learning Centre: A Learning Center focused on providing enriching, exciting, safe and secure environment to children from under privileged sections of the society was inaugurated by Makkala Jagriti, and Wipro Cares in Bangalore. Makkala Jagriti is an NGO, whose focus is to work with underprivileged children in the area of education. The Learning Centre will also provide opportunities for contributing to the community to Wipro employees, their friends and families. They can get involved by interacting, involving, teaching & learning in mutually enriching way to reach quality-learning environment to the economically disadvantaged children in an integrated manner through the Learning Centre. 8.14. Summer Camp for Children: The idea of interacting with the children of the school using creative and innovative ways such as arts, crafts and other fun activities appealed to the Wipro Cares volunteers.
It had two fold objectives: First, to stay in touch with the children that they were involved with during the summer break. Second, to make the summer holidays enjoyable for these children, who would otherwise have to spend time playing with mud and sand outside their homes, when their parents go to work. The activities also brought forth the hidden talents of these children (and the volunteers!) be it story telling with hand puppets, painting or clay modeling. A group of volunteers took on the additional responsibility of organizing the camp, with the support of the administration. They planned out different activities every Saturday. The summer camps also helped these children develop their skills, confidence and motivation to succeed not just in classrooms but in life.
8.15. Providing Basic Infrastructure at the School
For a child to come regularly to the school and stay interested in school activities, it is necessary that the school is equipped with proper infrastructure. Moreover, research has shown that lack of toilets facilities for girls is the main reason for the high dropout rates among students. In the Government School in Veveknagar, Bangalore-India, Wipro Cares has constructed toilet blocks to cater to e student population. Along with that, we have provided a gate, which will ensure that the kids will not run out of the school to the roads, which may be dangerous.
2. http://www.karmayog.org/csr501to1000/csr501to1000_22160.html 3. http://www.wipro.org/sustainability.html
6. http://www.csrhub.com/CSR_and_sustainability_information/Wipro-Ltd/ 7. http://www.wipro.com/about-wipro/sustainability/
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