Where Do We Go From Here? ViewingCorporate Social Responsibility through a

Sustainability LensSurya Kant Sharma

XLRI School of Business & Human ResourcesIndia

ABSTRACT

Over a period of time organizations have realized that the wealth created by them isdone by utilizing the resources of the society and in return it becomes imperative forthem to return some of the profits back to the society. For a variety of reasons,organizations have been taking many initiatives such as donating money to disastervictims, building hospitals, working for illiteracy etc. However an important questionthat crops up is whether these initiatives come under the domain of Corporate SocialResponsibility, or does it amount to mere corporate philanthropy? Philanthropyactivities do not have a long term focus and do not contribute to sustainability andthey also do not look into the social, ethical and environmental issues. Another issuethat emerges is the fact that businesses across the world are so obsessed with theimmediacy of results that they cannot sight the vast opportunity that discharging ofsocial responsibility holds for the long term sustainability for them.

In this paper the authors address important aspects of a firm's business activitieswhich can have an effect on areas such health and safety, environmental protection,human rights, stakeholder rights etc which come under the purview of CSR. Thepurpose of this paper is to emphasize the importance of CSR to the business strategyof an organization in ensuring sustainability of business. The paper also brings outthe fact that CSR needs to be implemented in the organizations not just as an imagebuilding exercise, but can be a source of competitive advantage to ensure sustainablebusiness development. The paper utilizes secondary data from various Indian andGlobal organizations to review against the back drop of the role of government in therespective sectors, in the process the authors try to identify the answer for the researchquestions ‘what constitutes CSR?’ and ‘whether philanthropic activities can be calledas CSR?’

Key words: Corporate Social Responsibility, Corporate Citizenship, CorporateResponsibility, Philanthropy, Strategic Corporate Social Responsibility.

INTRODUCTION

Corporate Social Responsibility (CSR) hasbecome one of the major areas of concern formodern business firms both in the domestic andinternational sector. Firms have graduallyrecognized the importance of CSR, mainlybecause of increasing awareness to various

factors affecting environmental degradation,human rights and social ethical issues that arelikely to be affected by firm’s actions. Some ofthe terms which are synonymously used byfirms to denote Corporate SocialResponsibility are ‘Corporate Citizenship’ and‘Corporate Responsibility’. Whatever be theterminology used the central idea remains that

Sunita MehtaVishwa Vishwani Institute of Systems

India

© The JournalContemporary Management Research2012, Vol 6, Issue No. 2, 69 - 76.

"Corporate Social Responsibility should be in the DNA of every organization. Our processes shouldbe aligned so as to benefit the society. If society prospers, so shall the organization..."

- Jamsetji N. Tata, Founder, Tata Group

70 The Journal - Contemporary Management Research September

Business organizations need to play a rolebeyond the economic role and the fact that afirm should make a positive contribution toensure that there is sustainable developmentand efforts are made to make the world a betterplace to live in. This commitment to the society,environment and other stakeholders needs togo beyond the statutory obligations laid downby legislation and become a voluntary initiativefrom the organizations. However most of theorganizations focus on their products and lookinto ways of improving profitability, neglectingthe social and environmental impact of theiractivities. Majority of the organizations that havestarted contributing to social, ethical andenvironmental issues believe that CSR is oneof the easier ways of increasing brand equity.These organizations are making CSR amarketing activity to increase visibility than as afocused responsibility to create a social impact.

Even today the subject of CSR is controversialand debatable, primarily due to the fact that thesubject still has undefined boundaries and theconcept itself remains debatable both in theacademic circles and with the practitioners. Thesupporters of CSR are of the opinion that thereare benefits attained by the organizations,society and the environment if organizationpursues CSR activities and in the long term itprovides economic benefits to the organizationsapart from providing social benefits. Critics ofCSR view it as a liability on the organizationswhich hinders them from their fundamentaleconomic role of maximizing profitability andopining that the sole responsibility of socialupliftment and environmental sustainability isgovernment’s responsibility.

Defining CSR

Despite the ever increasing public interesttowards CSR, the concept continues to bedifficult to define. Early definitions consideredCorporate Social Responsibility to besynonymous with voluntary and philanthropicactivities by firms to provide benefits to theunprivileged people. While Drucker believedthat management’s first responsibility tosociety involved making profits, he also feltthat 'it was also important that managementconsider the impact of every business policyand action upon the society’ (Joyner & Payne,2002). As per Davis (1973) “CSR refers to thefirm’s consideration of and response to issuesbeyond the narrow economic, technical, andlegal requirements of the firm”. Davis impliedthat it was imperative for the organizations toassess the impact of their activities on thesociety before making business decisions.Further, he believed that it was essential fororganizations not only to get economic gainsbut also to provide benefits to the society.Wood (1991) proposed a holistic approachtowards corporate social performance anddefined it as a “Business organization’sconfiguration of principles of socialresponsibility, processes of socialresponsiveness and policies, programs andobservable outcomes as they relate to thefirm’s societal relationships”.

The World Business Council for SustainableDevelopment defined Corporate SocialResponsibility as the continuing commitmentby business to behave ethically and contributeto economic development while improving thequality of life of the workforce, their families as

2012 Surya Kant Sharma and Sunita Mehta 71

well as that of the local community and societyat large (Holme L. and Watts R., 2000).

CSR Practices

Some CSR practices of Global companies aregiven below (ASOCIO Policy Paper corporatesocial responsibility, 2004):

1. SAP provides services on education,awareness and research with the objectiveof preventing youth suicide. Theorganization offers life skills programs toyoung people and to those who attemptedsuicide. Through its charitable trust SAPAustralia funds ‘Here for Life’ programsamong the vulnerable youths. It alsoworked for the well being of the Tsunamivictims’ families with the Hope foundation.

2. IBM, through a Japan’s national level ‘e-elder’ program, provides support in hiringand training senior citizens as faculties forother senior citizens in an attempt to assistthe elder citizens. Japan has alreadybecome the country with largest agingpopulation.

3. Microsoft associates with some of the wellknown international organizations such asthe World Food Programme, Save theChildren, and Mercy Corps and offerstechnology based assistance through theHEART (Humanitarian Empowerment andResponse through Technology) program.

4. Reliance Industries Ltd launched a Nationwide project “Project Drishti”, to serve thevisually challenged Indians of BPL families

of the society. This initiative helped over6000 people.

5. GlaxoSmithKline Pharmaceuticalsfocuses on healthy living. They haveworked with the tribal people in theirvillages, by offering medical services suchas health check-up, treatment, medicalcamps and other health relatedawareness programs. They have alsosupported the needy tribal people withmoney for medicines and medicalequipment.

6. Wipro, through its initiative of ‘Azim premjifoundation’, has built a university with theobjective of school and developmenteducation in Karnataka.

These are some of the examples of CSR ofthe renowned companies. Existing CSRpractices shows that generally companieswork in the areas of Education, Health,Marginal section (Street children, seniorcitizens), Rural poor, Orphanages,Environment protection (Tree plantation,awareness camp) under the umbrella of CSR.Constitution of Corporate Social ResponsibilitySome practitioners are of the opinion that thesocial responsibilities are the domain of thestate. CSR is seen with a negative perspectiveof state shirking away from its responsibility oflooking after the social and environmentalneeds and they tend to ask 'If these activitiesare taken over by the corporate firms, thenwhat is the role and responsibility of the statein these areas'? Their contention is that, whenthe state is exclusively formed for the purposeof welfare of the people, society and

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environment at large then why the corporatesshould be expected to play the role of state.However, the general opinion remains that 'thecorporates should give back some thing to thesociety’. Their contention regarding paying backto the society is that, ' firms already provideemployment generation and allied economicactivities such as forward and backwardlinkages. Most of the activities that firmsparticipate in the garb of CSR are actually‘Corporate Social Service’ or ‘CorporatePhilanthropy’ and can’t be termed as ‘CorporateSocial Responsibility’. The organizations underthe umbrella of Philanthropy earmark someshare from their profits for certain socialinitiatives which has a short term focus and thusare not sustainable over a period of time. Theseactivities do not deal with the social issues fromthe grass root level and tend to provide reliefsuperficially. Companies aim to make profitsunhindered, except by fulfilling their duty to paytaxes. They utilize a certain share of the profitsto various social causes to cover up theunethical acts of earning profits by doing socialservice.

Redefining CSR

Overexploitation of the country's naturalresources, the haphazard growth of cities, andrapid process of industrialization has causedsevere degradation of natural environmentwhich affects all the forms of life. Environmentalpollution (be it in the air, over land or in water)remains the most serious threat to our planetand thus a threat to our future existence. Someof the major damages to the environmentcaused by the corporate are as follows:

1. On August 23, 2011 the Jharkhand StatePollution Control Board (JSPCB) orderedthe closure of nearly 20 BCCL mines inJharia. The reason for the closure wasattributed to pollution and to nonadherence of the government guidelinesand licenses by the respective mines.

2. The color of Taj Mahal appears to begradually fading due to the pollution fromnearby industries. In the most popularjudgment, the Supreme Court of Indiaordered closure of more than 200 factoriesin the vicinity of the Monument.

3. A study by Blacksmith Institute (a NewYork based NGO), Vapi (Gujarat) andSukinda (Orissa) are becoming the world’stop polluted cities due to the heavy metalsIndustrial estates and Chromite mines inthe cities respectively.

4. The well known Bhopal gas tragedy ofUnion Carbide pesticide plant in 1984, oneof the worst industrial disasters of theworld that took place at Bhopal isreminiscence of the consequences ofcorporate irresponsible acts.

5. On July 14, 2010 a similar accident tookplace in the Sewri industrial area (Mumbaiport trust) due to the leak of Chlorine gaswherein, more than 76 people wereaffected.

6. The waste from the dyeing units ofThirupur, Tamil Nadu is being leftuntreated which is polluting the groundwater and the near by rivers.

2012 Surya Kant Sharma and Sunita Mehta 73

7. The Deep water Horizon oil spill also knownas the BP oil spill was an oil spill in the Gulfof Mexico in 2010, which polluted the ocean,causing extensive damage to marine lifehabitats in that zone.

Main reason for environment pollution is due toemissions from the various industries which donot adhere to regulations or are just concernedwith adherence to minimum standards stipulatedby law. Industrial sector alone contributes thelion share to the pollution and environmentaldegradation. These are the ‘Corporate SocialIrresponsible Activities’. These firms continue toignore the basic human and environment safetynorms but participate in other symbolic activitiesin the name of CSR. A firm needs to beresponsible to the society and the environmentin which it is operating and should not cause anyharm to the environment in its quest to makeprofits. CSR is thus, following ethical practiceswhile carrying out business activities.

Strategic Corporate Social Responsibility

Strategic Corporate Social Responsibilityconstitutes those CSR activities which arealigned to the mission and vision of anorganization. Further any organization whichpractices strategic CSR activity has a long-termfocus (Osborn and Hagedoorn, 1997). With theincreased attention to CSR by all stakeholders,it has now become imperative to have anintegrated CSR model that flows through thecorporate mission, vision and other activities.CSR can be used as a strategy to focus on newopportunities and respond to concerns in themarketplace with respect to economic, societaland environmental issues. A strategic approach

to CSR could be seen as helping the firmsgrow their business and also make an impacton the issues effecting stakeholders, andensure long-term viability along withstrengthening the corporate image(Aranganathan P., 2010). This long term focusof strategic CSR activities requires substantialamount of resources but it results inworthwhile benefits for the firm (Russo andFouts, 1997; Werther and Chandler, 2006).The benefits include helping a firm in followinga generic strategy; developing strategicresources for the firm; creating new business(product-market) opportunities; and helping afirm manage stakeholder-related risks better(SS Bhattacharyya, 2009). For example CSRinitiatives can help in reduced wastage ofresources and thus lowering the cost price. Italso helps in improving the goodwill andreputation thus enhances the brand value ofthe organization. It improves financialperformance by an increase in sales andcustomer loyalty. Studies have also shown agrowing desire by customers to buy on thebasis of other value-based criteria, such as“child labor-free” manufacturing, products withlesser environmental impact (green goods),and absence of genetically modified products.Companies which are perceived to havehigher CSR focus are also able to attract andretain talented employees (Heslin and Ochoa,2008).

Finally a view which is shared by most of theresearchers and practitioners is that the longterm success of the firm depends not only onthe organizations well being but also on thestatus of the social and natural environmentin which it operates. This has encouraged the

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proactive firms to align CSR initiatives tostrategies of the organization. In 1984, PeterDrucker reviewed his 1954 research in order tounderstand the relationship between businessand society, and asserted that CSR couldbecome a business opportunity for businessesbecause it can improve financial profitability(Drucker, 1984). Another excellent example ofthe 1980s literature that relates CSR andfinancial profitability is Philip Cochran andRobert Wood’s empirical study (Cochran andWood, 1984). They conducted research into thevarious ways in which social and financial resultswere executed in the past, and found a positiverelationship between them.

Domestic corporate majors such as the Tata andBirla group companies have led the way inmaking CSR an intrinsic part of their businessplans. In these firms, CSR flows out of their corebusiness activities. These firms have beenintensely involved with social developmentinitiatives in the communities surrounding theirfacilities. The Tata group, since inception, hasgiven equal importance to increasingshareholder’s return as well as to fulfilling itsobligation towards social and environmentalissues. After decades of corporate philanthropy,the efforts of the group in recent years havebeen directed towards having a balance of thepeople, planet and profits which is popularlycalled the Triple Bottom Line (TBL).

Through its TBL initiative, the Tata group aimedto reduce the negative impacts of its businessactivities on the society and the environment andfurther encouraged and educated Tataemployees for initiating environment friendlypractices.

Dabur is another Indian organization whichhas been involved in CSR initiatives driventhrough its Sustainable Development Societycalled ‘SUNDESH. Dabur Nepal Pvt. Ltd. ajoint venture company was established in theyear 1989. Nepal has been a major source forthe herbal plants which are widely used inmaking medicines. However, due to extensiveuse, early harvesting, lack of the post harvesttechnology and unscientific collectionmethods, these natural reserves were foundto be depleting speedily and further there wasno organized efforts to replenish these naturalresources of medicinal plants in the Himalayanregion. Dabur Nepal started a project onmedicinal plants in Nepal using moderntechnology for cultivation of the requiredmedicinal herbs of Himalayas. This initiativewas fully integrated with the company’sbusiness vision and was designed to be aneco-friendly project keeping in mind thesustainability of the environment. Besideshelping preserve natural resources, thisinitiative also helped in generatingemployment and income for local populationand in improving the socio-economicconditions of local population in the HimalayanKingdom.

CONCLUSION

In this paper, the traditional philanthropicactivities of the companies have beenreviewed. The argument is based on the factthat these traditional philanthropic activitiescannot be termed as CSR, and are, at bestcorporate social services. Moreover, even ifthey are termed as CSR, there should not beany societal expectation on the companies in

2012 Surya Kant Sharma and Sunita Mehta 75

taking part in these activities as they already addvalues in terms of employment generation andwealth creation. CSR needs to move beyond therealm of charity and philanthropy, and firmsneed to extend their support not only to humanbeings but also to the land, forests, water andto all the living beings that inhabit the planet.Further firms need to go beyond the 'compliancemode' in adherence to stipulations and shouldcreate a balance for the Triple Bottom Line whilecarrying out business activities. CSR initiativesneed to become a part of the employee andcorporate ethos and it should not be a distinctactivity. Only then would CSR have a strategicperspective and a long term focus.

REFERENCES

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