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CORPORATE SOCIAL RESPONSIBILITY

(CSR) AND BUSINESS ETHICS AUTHOR: ALPANA

TREHAN

CHAPTER-14

© 2011, Dreamtech Press :: Chapter 14

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. --- Lord Holme and Richard Watts in a publication, Making Good Business Sense

DEFINE CORPORATE SOCIAL RESPONSIBILITY (CSR)

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Public Expectations from the Enterprise Refers to the anticipations of the people associated either

directly or indirectly with an enterpriseBetter Environment for Business

Refers to providing a feasible environment for business operations of an enterprise

Good Public Image Helps an enterprise to gain more customers and better

employees and maintaining public image helps in improving the performance of the enterprise

Responsibility with Power Acts as an important area that should be balanced properly

as the decisions of an enterprise have an impact on the environment, consumers, and employees

IMPORTANCE OF CSR

© 2011, Dreamtech Press :: Chapter 14 3

Improving relationship with stakeholders Refers to the fact that CSR activities help an enterprise to

develop the relationship with stakeholdersAttracting the investors

Refers to draw the attention of investors through CSR activities

Improving financial performance Refers to enhance the financial performance of an enterprise

Increasing public credibility Refers to improving the credibility of an enterprise through

CSR activities for helping enterprises to build trust and credibility with public

Utilizing the resources eff ectively Refers to the optimum usage of scarce resources

BENEFITS OF CSR

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• Helps in retaining employees by improving the image of the enterprise among its staff

CSR in Human Resources

• Helps in preventing the goodwill of an enterprise from depletion

CSR in Risk Management

• Builds a unique image of the enterprise in the minds of stakeholders

CSR in Brand Differentiation

SCOPE OF CSR

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Lack of Transparency

Lack of Community Participation

Lack of Non-Governmental Organizations (NGOs)

Lack of CSR Guidelines

Narrow View towards CSR Initiatives

Importance to Visibility Factor

Lack of Budget

CHALLENGES IN CSR IMPLEMENTATION

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Internal Promotion Refers to the promotion that takes place within the enterprise It is done by:

Updating employees about CSR activities Displaying and promoting CSR activities with the help of intranet

and websites

External Promotion Refers to the promotion of CSR activities outside the

premises of the enterprise It is done by:

Sending quarterly, half-yearly, and yearly newsletters to the stakeholders

Using the various modes of communication to make people aware about CSR activities

PROMOTION OF CSR PRACTICES

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Business ethics refers to moral as well as behavioral codes of conduct that every individual working with an enterprise must follow.

Business ethics plays a very crucial role in various management functions, which are given as follows: Ethics in Finance

Deals with various ethical dilemmas and violations in day–to-day financial transactions

Ethics in Human Resource Management Deals with the enforcement of the rights of employees in an enterprise

Ethics in Marketing Deals with a number of issues such as creating false impression and

misinforming the customers Ethics in Production

Deals with the responsibility of an organization to make sure that products and processes of production is not causing harm to the environment

BUSINESS ETHICS AND IMPORTANCE

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• Refer to the factors that comprise external stimuli and compel people to move in a particular direction without thinking about ethical parameters

Primary Factors

• Refer to the prominent characteristics of an individual

Personality Factors

• Refers to the attempts of an individual to find easy ways to escape from an act of violation of a law or a duty

Defensive Factors

FACTORS THAT CAUSES UNETHICAL BEHAVIOR

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Philanthropy refers to the trait of humanity and generosity at individual or corporate levels.

The types of philanthropy are: Individual philanthropy

Refers to the activities performed by an individual for the welfare of society

Corporate philanthropy Refers to the donation of funds, environment preservation, and

educational initiatives performed by an enterprise for the welfare of the society

CORPORATE PHILANTHROPY

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Analyzing the problems and requirements of members in the society and providing solutions in the form of a new product or enterprise

Performing philanthropic actions, such as conducting educational programs and taking measures to reduce environmental pollution

Acquiring funds from organizational reserves; therefore, regarded as an expense for the enterprise

Providing rebate of 10% on pre-tax income to the enterprise involved in corporate philanthropic activities

CHARACTERISTICS OF CORPORATE PHILANTHROPY

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Corporate Social Responsibility (CSR) is a voluntary approach that monitors and ensures that an enterprise adheres to ethical standards and norms.

Ethics is a moral philosophy that guides individuals to decide what is wrong or right, good or bad, and what comprises desirable behavior in a particular set of social circumstances.

Business ethics addresses moral and ethical issues that may occur in the business environment.

RECAP

© 2011, Dreamtech Press :: Chapter 14 12