CSR Assignments

NMIMS Global Access School for Continuing Education (NGA-SCE) Course: Corporate Social Responsibility Internal Assignment Applicable for December 2016 Examination Case Study M/s Runners is a public limited company, manufacturing and distributing tyres across India. The company is now having a reputation with all the stakeholders for its quality product and timely service. The company’s profit has improved in the last few years. M/s Runners now establishes a new foundation KarmaChakra where they intend to help the members of the society. The company has hired you for conducting its CSR activities. You have suggested the management to support the “Swachh Bharat Abhiyaan” of the current government of India. The management has liked the concept and has asked you to prepare the following: 1. Prepare a detailed implementation strategy for the selected CSR activity. (10 Marks) Answer: The EC defines CSR as “the responsibility of enterprises for their impacts on society”. To completely meet their social responsibility, enterprises “should have in place a process to integrate social, environmental, ethical human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders “The WBCSD defines CSR as “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. “According to the UNIDO 3, “Corporate social responsibility is a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders. CSR is generally understood as being the way through which a company achieves a balance of economic, environmental and social imperatives (Triple-Bottom-Line Approach), while at the same time addressing the expectations of shareholders and stakeholders. In this sense it is important to draw a distinction between CSR, which can be a strategic business management concept, and charity, sponsorships or philanthropy. CSR consists of various activities that would be beneficial for the society, ultimately building the goodwill of the company. Swachh Bharat Abhiyaan is a national level sanitary campaign promulgated by the Governement. To do our part in supporting and carrying out activities that result in cleaner India is worth the deed. Let me explain the implementation strategy if we are supposed to launch it aggressively on our part. 1)Plan

is the first part and in this phase it is important to decide the organizational working process. Since CSR should be integrated into all aspects of the company a decentralized working system is to prefer. Clearly define instructions, instruments and approachis crucial in the preparation phase according to Hohnen (2008), since this is the starting point and the organization should ask themselves were they are going and not were they are right now. 2)Engage employees Hohnen (2007) explains that employees play a central role in the implementation process and in order to motivate and engage them it is crucial that they know as much as possible about the company’s way of handling the implementation. They should know about the approach to CSR, background of why adapting it, its relevance to the 28 organization, progresses and other implications. According to Hohnen (2007) there are different ways to increase employees’ commitment to the implementation process: Incorporating CSR performance elements into job descriptions and performance evaluations; Providing regular updates on progress (in meetings or the company newsletter) Developing incentives (such as monetary and other rewards for best Suggestions) Removing or reducing disincentives (e.g., competing interests such as premature deadlines that encourage employees to choose non-CSR options) Offering incentives and recognition for good ideas. 3)Appropriate metrics What gets measured in companies is what gets done. Among the first steps to strategic CSR is by making fundamental shifts in measurement systems. Quality metrics tend to be providing both financial and non-financial indicators in the process towards the CSR goals. 4)Reward systems Commitment and initiatives taken to improve the CSR implementation process, needs to be recognized and rewarded. Rewarding such initiatives will improve employees ́ willingness to engage in ways that will help the organization attaining strategic CSR objectives. 5)Support from Government: While the company could easily engage in carrying out the CSR activities to clean India, it needs fundamental support from the Government itself. Cleaning the surroundings and signing in other industries and companies to control the production of industrial waste as a proactive measure is not going to enough unless the general public is made aware about the the campaign. The most important change required as of now is the mental change in the common people against throwing waste in unallocated space. Household waste accounts for

around 40% of the total waste . This can be reduced by educating people through various seminars, public speeches and government funded advertisements. Also , the government should introduce laws to ban/fine people who contribute in polluting the environment. 2. How will you monitor, measure and report the selected CSR activity? (10 Marks) “Assuring stakeholders that your organisation is delivering on its commitments is ever more challenging in today’s increasingly complex, interconnected and fast-moving world. All the more so for larger corporation that often have, literally, hundreds of thousand if not millions of stakeholders, clustered into groups with diverse perspectives and interests.” CSR is ultimately about improving performance. As such, reporting, verification and assurance are important tools to measure whether change has actually taken place, giving interested parties an opportunity to see how well the firm is meeting its commitments and what affect that is having. Verification (also known as conformity assessment or assurance) is a form of measurement that can take place in any number of ways: internal audits, industry (peer) and stakeholder reviews, and professional third-party audits. Firms should tailor their approach to verification to suit the corporate culture, and the context for and objectives and content of their CSR strategy and commitments. Initiatives such as the Global Reporting Initiative (GRI),the Accountability AA1000 series and the UN Global Compact) are playing a major role in shaping the rapid evolution of CSR reporting and assurance. Verification and reporting are more complicated than they seem: each firm is unique, so there is no single approach to carrying out these activities. Firms that agree to adhere to third-party-assured initiatives have information to report drawn from the conformity assessments undertaken as part of such initiatives. The basic understanding of CSR initiatives is that it strikes a balance between economic benefits to organizations and social benefits to various stakeholders. An organization can monitor its CSR activities and their impact on stakeholders through following measures:

Effectiveness of a CSR program can be assessed through a two-tier monitoring mechanism involving external as well as internal agencies for thorough evaluation

There can be regular monitoring at Units, Regions & Corporate Centers with monthly & quarterly reporting about CSR activities

Full internal audit must carried out to ensure effective implementation

Transparent Assessment / Evaluation can be taken up through reputed agencies for gauging impact of our CSR initiatives

For proper and periodic monitoring of CSR activities, companies may appoint a CSR committee or a Social Audit Committee or a suitable, credible external agency Independent external agency can be consulted to evaluate CSR projects’ performance

For better monitoring evaluation following criteria can be set up:

Effectiveness of CSR activities: Is the project achieving its pre-set goals? Project relevance: Are CSR activities well-directed towards stakeholders? Coherence/Complementarity: Are CSR activities well-coordinated? Efficient use of resources: Are the resources allocated for CSR activities utilized efficiently? Development-policy effects: Are CSR project efforts contributing to pre-determined goals? Sustainability: Will CSR initiatives keep continuing for long duration?

Monitoring and Evaluation can also help in enhancing the ability to consult, coordinate and engage with various stakeholders. The well-structured monitoring and evaluation process leads to identification of relevant issues in a time-bound manner which in turn can enhance the ability to address the issues through proper performance indicators of CSR activities. There is a variety of private initiatives and consultants that offer help with the reporting process. Some of these, such as GRI and Corporate Register, enable access to others’ CSR reports.

• Corporate Register: CorporateRegister.com claims to be the world’s most comprehensive

Directory of corporate non-financial (environment/social/ sustainability/ CSR) reports. Established as a free service by Next Step Consulting (http://www.nextstep.co.uk/) in 1998, the site aims to provide access to all current reports, as well as developing an archive of all reports published since 1990. For more information, see http://www.corporateregister.com/about.html.

• OneReport: This is a web-based application designed to help make the CSR reporting process as effective as possible. It offers a single system to store, manage and distribute CSR data. Firms can use OneReport to self-publish online sustainability reports. For more information, see http://www.one-report.com. Information technology: Rapid developments in information technology have made it easier to digitally “tag,” collect and organize all kinds of business data, financial and non-financial.

3 a) Explain Carroll’s CSR Pyramid with reference to an example of any one company of your choice. (5 Marks) Answer:While Corporate Social Responsibility (CSR) has been around since the 1950s, its importance and practice took hold much later. The basis of what we consider to be the modern definition of CSR is rooted in Archie Carroll’s “Pyramid of Corporate Social

Responsibility.” In this Pyramid a corporation has four types of responsibilities. The first and most obvious is the economic responsibility to be profitable. The second is the legal responsibility to obey the laws set forth by society. The third, which is closely linked to the second, is the ethical responsibility. That is to do what is right even when business is not compelled to do so by law. The fourth is the philanthropic responsibility. Also called the discretionary responsibility, it is best described by the resources contributed by corporations toward social, educational, recreational and/or cultural purposes. Nearly 20 years later the Pyramid remains highly relevant. It is regularly cited, debated, modified and criticized by academia, corporate leaders, politicians and social commentators. But to understand the Pyramind’s true relevance one must look beyond the debate and focus more on its practical application. The Pyramid’s importance persists given its simplistic yet fundamental framework by which any company can not only comprehend the necessary principles of social responsibility, but ultimately set forth the practices to achieve each step of the pyramid with the ultimate goal of reaching the top. Although the model is not short of some demerits, yet many modern organisation practice the model with some twists here and there to prevail it in the company setting and yes, they have been successful. Companies like Tata, Apple Inc. and many other manufacturing companies have implemented the model in their business.

3 b) “It is government’s responsibility to do CSR and corporate should focus on profit” Explain your view on the same. (5 Marks) I absolutely disagree with the above view. Let me discuss my arguments with the following points: a) The Corporates exist in the society, which is facilitated with various infrastructure like electricity, transportation, resources, manpower ,etc. Although, they are paying the taxes for the use of the resources, they are not paying for the damages done to the environment. These damages done to the environment must be compensated by CSR.

b) Corporate social responsibility is a business’s concern for the welfare of society. This concern is displayed by managers who take into consideration the long-

term interests of the company and the company’s relationship with the society it which it operates. c) The simplest argument for social responsibility is that it is the right thing to do. Some of society’s problems have been created by corporations such as pollution and poverty-level wages. It is the ethical responsibility of business to correct these wrongs.

d) Another point is that businesses have many of the resources needed for solving society’s problems and they should use them to do so.

e) Another reason for companies to be socially responsible is that if businesses are not, then the government will create new regulations and establish fines against corporations. This has especially been the case for the pollution issue.

f) If businesses police themselves, they can avoid government intervention. Finally, social responsibility can be profitable. It is possible for companies to prosper and build shareholder value by working to solve social problems. It can be a great way for a company to build positive public relations and attract top talent in the industry. ********************