Corporate Social Opportunity

Contents Corporate Social Responsibility - An Insight

Just One Point

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R K Sarangi FEATURE ARTICLES

Corporate Social Responsibility in Modern Times

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H K Sethi & R L Sood

Corporate Social Responsibility : An Indispensable tool for Corporate Growth and Survival 16 P V S Sarma & L K Jena

Corporate Social Responsibility : A Business Contribution to Sustainable Development 22 Tapan Kumar Chakravarty, Asok Kumar Das, Debapriya Sen & Ajanta Sengupta

Green Marketing : Corporate Social Responsbility and the Opportunity Ahead

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Somnath Mukherjee & Dr S Shivani

Aligning Social Responsibility with Business Strategy

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Satyajit Jena & Bishwajit Chowdhury

Corporate Social Responsibility : Management of Power

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Dr S K Bhattacharya

Social Accounting of Corporate Social Responsibility

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Dr Ashok Kumar

Corporate Social Responsibility : An Indian Perspective

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Debjit Rath & Benz Thomas

READERS' FORUM

Corporate Social Responsibility .... For a Better World

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K Patel

Integrating Corporate Responsibility towards nation building with Business Development : 77 Role of the Steel Industry in Building Rural India Shoeb Ahmed

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Corporate Social Responsibility : A New Perspective

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Kaushiki Roy

Safety - A Corporate Social Responsibility

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Shashi Kant

Corporate Social Responsibility : Some Points to Ponder

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P K Banerjee & Payal Maggo

CASE STUDY

Corporate Social Responsibility : The DSP Experience

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Gautam Sinha

Corporate Social Responsibility for a better tomorrow

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Rakesh Kulshreshthra & Preeti Bhatnagar

Towards Imroving Quality of Life of The Under Privileged : Initiatives of RDCIS at Ranchi105 Dr D Mukherjee & A K Sinha

ARTICLE DIGEST

The Relationship Between Corporate Philanthrophy and Shareholder Wealth : A Risk Management Perspective

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Paul C Godfrey

BOOK REVIEW

Corporate Social Opportunity : Seven Steps to Make Corporate Social Responsibility work for Your Business

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David Grayson & Adrian Hodges

The World is Flat : A Brief History of the Globalization World in the Twenty-First Century

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Thomas L Friedman

HINDI ARTICLE

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MkW0 gfj gj.k BIBLIOGRAPHY

Corporate Social Responsibility : A Select Bibliography P K Banerjee

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Just One Point

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ince the past decade, Corporate Social Responsibility (CSR) has blossomed as an idea; a thought that is gradually assuming a shape as a coherent practical programme, giving business a new meaning. Essentially, the idea of CSR rests on the philosophy that the business has direct or indirect effects on groups of people and organizations and that it should accept the responsibility for these effects. Ideally, if business is considered as an economic activity pursued for a symbiotic growth with the society at large, the core purpose of business would go beyond assuring a growing financial bottomline and transcend to an area that would put the “context” of business also in the forefront. The spirit of CSR would thus entail a holistic perspective of how companies conduct themselves in relation to “stakeholders” and join hands with them for growing together. CSR thus becomes an integral facet of business that has a definite role to play in shaping the destiny of organizations in a dynamically balanced environment. The context of business is important in this framework. It describes the interface between organization and its environment at three levels -individual, group and society. At the individual level, organization has the onus of respecting the basic rights of individual- the right to live a healthy life, the right to grow and the right to be assured of a safe future for him and his progeny. Organization thus has the prime responsibility of providing people with an environment where they can lead a good quality of life. Thus, organizations must reflect a spirit of wisdom, objectivity, sensitivity and reason in its responses towards its people. The extent to which people are contented with such response could be gauged by the love and belongingness that they could reciprocate for the organization. Such love would energize the organization and create a faith that is essential for growth and sustenance. The context of business also relates to the interface between organization and groups. Groups are independent entities who symbolize homogeniety, and are created for a common cause. Being influencers of the environment, organization must create conditions wherein fruitful collaboration is possible. Organizations must live up to the aspirations of such groups and create, deliver and communicate “Value” which could be used for the long-term benefit. Such synergy would reinforce organizations to ensure growth of the society along with its own, and would be the ones which are trusted and believed. In the process a faith that is reposed on them would evolve a corporate persona that is so important for the future of organizations. The social responsibility of business is the third level of interface between the organizations with its environment. In the ultimate analysis, the superordinate purpose of organization is to wipe off tears from the eyes of the underpriviledged and bring in a smile on face of underpriviledged and deprived. Organization and society thus become complementary to each other. Such bonds should be explicit in the various social responsibilities that corporates assume and instill assurance of being one with have-nots. This basic appreciation about organizations being part of the society and that its growth is possible only when the society supports them is the precursor to pursuit for excellence. What is needed today is to integrate these three vital aspects of corporate response - towards people, towards groups and towards the society as such and align them all with the corporate mission. The task is arduous. But a strong will and sincere approach could make it happen. Corporate history is replete with instances where it has happened before. And it can happen again.

(R K Sarangi) Executive Director(HRD) 3

Feature Article "Corporate Social Responsibility" in Modern Times H K Sethi* R L Sood **

Abstract Corporate Social Responsibility has always been one of the concerns of business. The nature of the responsibility might have changed with the times, but it has always been an inherent part of the social system as duties and responsibilities of the individuals/ entities. Passing through the lanes of history the article tries to trace the evolution of ‘Corporate Social Responsibility’ and relate it to the modern business in a rational manner. The authors take a holistic view of this prime responsibility of corporates and discuss responsibility towards self / self control, responsibility towards the stake holders, responsibility towards employees, responsibility towards society and responsibility towards nature. Key Words : ‘Corporate, Social, Responsibility, Evolution, Modern

“The pace of events is so fast that unless we can find some way to keep our sights on tomorrow, we cannot expect to be in touch with today”

inbuilt (written down or otherwise) in the social system as duties and responsibilities of the men at the helm of affairs, the sardars, the kings, the rulers, the leaders, the elected representatives, ….. or whatever they were called depending upon the type of governance prevalent at the time. Carrying out of this responsibility dutifully by most of them has resulted in progress of human society & civilization to the extent we see as of today.

- DEAN RUSK

Preamble

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orporate Social Responsibility although lately has become very much a talk of the day, it can be well realized that the concept is as old as the times when the early man learned the benefit of, and started, living in groups. The nature of the responsibility may have changed with the times, as per the topical needs of the society, but it has always been there ○

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Modern times are characterized by huge plants, corporate bodies, and technological enterprises, which employ a large number of members of the today’s society. As such quite a share of social responsibility has shifted from the rulers

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* GM I/c (M&U), Bhilai Steel Plant ** AGM (Technical) M&U, Bhilai Steel Plant

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GROWTH, VOLUME 34, NO. 1, APR-JUN, 2006

(government) alone to such corporate entities. How they go about their operations, has a great impact on the ‘society’ of whom they themselves are a part of.

or even if they were created equal, the varying circumstance made them different in different ways. Some were better off or smarter than others. Initially the physically stronger became the group leaders (rulers) and subsequently the mental powers decided ‘who will rule’.

Going a little into the history of evolution of times, society, and their needs appears relevant here to arrive at the subject of ‘Corporate Social Responsibility in Modern Times’.

Whatsoever the leader was necessary for survival of the human species groups and for improving their security and pleasure of living.

The Evolution As the need at that time was basically to search food and survive against the onslaught of other animals or other Kabeelas; the leader fulfilled his ‘social responsibility’ by organizing his group to ‘fight better’, to gather more food and to protect themselves better - enforcing certain code of conduct in his group for mutual benefit of all members so that they can have a secure and comfortable living to the extent it was possible at that time. It was natural that the leader took care of his group, otherwise he was likely to be dethroned by another member more competent (physically or mentally) than him.

The history of (evolution of) mankind is in fact the evolution of our abilities to resolve our difficulties, improve our comfort and quality of the life. The historians & social scientists tell us that the Adi Manav had learned (rather was queued) to live in groups (kabeelas) at a very early stage, to protect themselves, their shelters, & food, not only from the other animal habitants on earth, but from the other ‘Adi Manav’ groups also.

We all know that the dividing line between the animals and the homo-sapiens was very faint at that time. As an elephant or a lion had a stronger body or monkey had greater agility, the group The history of (evolution of animals we call ‘human beings’ of) mankind is in fact the today had a stronger (or better) brain, evolution of our abilities to - the ‘thinking power’-, with the resolve our difficulties, capacity to evolve itself. Evolution of improve our comfort and this inherent power endowed by quality of the life. nature has made him rule the earth today.

As the society and civilization developed the ‘Kabeela Sardars’ got transformed into the Rajas (Kings) & Maharajas (Emperors) and further to the ‘Heads’ in various types of Government and Corporate Entities - but the basic instinct or requirement remains ‘security and comfort’ or ‘sur vival and pleasure’. In Sigmund Freud’s philosophical terms it was called “seeking of pleasure and avoidance of pain”. Maslow has tried to put it in a different way by starting from the ‘basic needs’ to ‘security’ to ‘recognition’, … and ultimately to Self Actualization. The fact remains that human beings are driven by seeking ‘pleasure & leisure’ in life (of course after getting secure).

Over the times the human species started living in a ‘better organized’ way. Invented tools and tackles, invented ‘the wheel’ and the progress (we may call it growth of civilization) continued. We know where we are today.

The Evolution Responsibility

of

Leader

The Society, Security and Pleasure

&

When tribes (kabeelas) were the order of the day - of course they had chosen, rather ‘accepted’ their leader (kabeela sardar) also.

Today when we are talking about ‘Corporate Social Responsibility’ in a structured way in our books, lecture rooms and board rooms there are compelling reasons for it to talk about.

Perhaps all men are not created equal by design, 5

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CORPORATE SOCIAL RESPONSIBILITY IN MODERN TIMES - SETHI & SOOD

During the transit of civilization from Adi Manav to today’s Modern Man his life became more and more secure. He became more secure from the other animals, more secure from the natural calamities, more secure from various ailments & epidemics alongside getting secure in respect of food & shelter requirements. As the security increased, the pleasure seeking part of instinct started to become more and more predominant. The human society started getting divided into ‘classes’ the ‘rulers’ and the ‘ruled’, the ‘lower and the upper’, the ‘rich and the poor’, the ‘servants’, and the ‘masters’. The tendency shifted from mutual dependence, collective living or the ‘kabeela spirit’ to more towards ‘self dependence’ and self gratification pronounced by personal gains (greed) and personal enrichment.

“It is simple to be happy but it’s difficult to be simple”. The governance of the society has changed from the ‘kabeela sardars’, zamidars Rajas, Maharajas, Monarchy / Anarchy … and so on, to so called selfrule, rule by elected representative or ‘democracy’ which is mostly the order of the day. The societies or a group of societies have grown in size, depending upon natural geographical boundaries (or drawnout agreed boundaries) which we call as countries. Although in general the countries have their own rule or governance system but body like UNO has also come up, which to some extent makes & tries to set certain considered rules & regulation to be applicable to various countries on earth. The concept of Global Village is the talk of the day. Whatsoever present day scenario is characterized by large enterprises, technologically giant plants and huge set ups, management of which in itself is a complex matter. The dominance of economics and techno-economics has made one individual almost a tool for the working of the system (there is a fear that it may happen that he is ‘human’ may be forgotten at all)

This led to problems in society as this was against the designs of nature (nature created man as a social animal). The earthlings including human beings were created for the benefit of each other (co-existence). No species or an individual can survive in isolation. In the situation, the need for well laid out ‘rules for the governance’ or the ‘Corporate Social responsibility’, can be well realized for the good of the society.

The danger of the past was that men became slaves. The danger of the future is that men may become robots.

At some stage the concept of ‘God’ seems to have been much revered to bind the members of the group (now societies) to follow the code of conduct. Members (as per their capabilities) were categorized into Brahmins, Kshatriyas, Vaishyas, and Shudras - perhaps as per their role and function in the society for harmonious living with fewer problems. The duties and responsibilities of ‘each class’ were also defined (today we may call it wrong or right) including the duties & responsibilities of the ‘leader’, ‘king’ or the ‘ruler’.

“The danger of the past was that men became slaves. The danger of the future is that men may become robots.” - ERICH FROMM

Quality of Life & Social Accountability

Today's World, Governance & Society

Although the first seventy or so years of the last century have been witness to perpetual growth of technology and technological giants, with almost universal indifference to any consequence other then mere profit, next two decades saw the increase in our awareness of the perils of ecological unbalance. Lately the awareness and concern about the quality of life is very much in our talks and agendas.

With the further advancement of civilization, increase in populations, and technological developments the human society (as well as human nature) has become more and more complex.

Perhaps this concern for the quality of life (at least that of the human beings), has led us (or our Leaders) to formulate the ‘social accountability’ system in a structured way as a part of our official agenda. 6

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Responsibility Towards Self / Self Control

Presently Bhilai Steel Plant is going in for SA : 8000 : 2001 certification in a big way. These systems will certainly help us, as a society, to lead a quality life with ‘pleasure and leisure’ which actually was the real objective of all technological developments and enterprises.

As has been brought out somewhere in the above write up, some individuals (by design or otherwise) are gifted or better placed circumstantially & capable as compared to the other members of the society. In general such individuals emerge as group leaders, entrepreneurs, corporate heads, board members or even elected representative in the government or governing bodies.

Corporate Social Responsibility Today "There is one thing stronger than all the armies in the world and that is an idea whose time has come"

These members, who are the pioneers and necessary for generation of wealth and the growth of the society, first of all have the responsibility towards sustenance of self. It becomes their natural right (and it happens also) to strengthen their own position. They have to first of all work towards “their own good” (security, health & happiness).

- Victor Hugo The objective behind all development has compulsorily to be ‘real sustainable progress’ as otherwise (perhaps) we are doomed to perish. “Each year new animals are added to the list of endangered or extinct species. Man, in haughty disregard of the facts, thinks he can escape joining the list.”

But the problem starts when this lot goes beyond the limits of their needs and indulge in self gratification only (power can corrupt also). History tells us of With the above in view, the time has come we gave kings and rulers who were drowned in profligacy a serious thought to our social (ignoring their duties and responsibility responsibilities as individuals of good governance for which nature (especially the ‘learned’ or the had designed them). History also tells privileged ones) as well as members There is one thing us such characters, although had of groups/enterprises /corporate bodies some good times (of short duration), stronger than all the (especially the top layers, who have ultimately perished or ended in pain armies in the world and much more command and influence - ruining their own compatriots and that is an idea whose to channelize the human energies and societies. time has come strategies, as compared to the lower layers). “As a bad boss we do more harm to the organization than as a bad subordinate.”

As the theme selected (very timely) for this publication is “Corporate Social Responsibility” – concentrating on the same, the points considered worthy of deliberating upon are humbly discussed under the following heads :

As such the privileged individuals, at the top of the hierarchies have the (social) responsibility (towards self) of strengthening their position, health, & happiness to the extent it is necessary to enable them play their constructive role without straying towards profligacy. This type of self actualization can only lead us towards better times for self and the society. A line has to be drawn somewhere between their needs and their greed (accumulation of wealth for themselves).

Responsibility towards Self/Self Control Responsibility towards Employees Responsibility towards the Stake Holders Responsibility towards Society Responsibility towards Nature

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Responsibility Towards Employees

Times and Timing

Responsibility towards the employees is an important and intricate part of the “Social Corporate Responsibility” of any corporate body.

Compensation

The work place of an olden day craftsman (workers) or an entrepreneur was his ‘home’ itself. It shifted away from his home, as the civilization progressed, enterprises grew larger and members of one family took to different professions. From a self earning individual (or family) he became the ‘employee’ of say a corp body, and from a self governed creature the governance of his working time, working life, pleasure, hours etc. started getting governed by the needs of the corporate body or the enterprise he works for. He was no more self-dependent in the real sense. The rules and regulations of his employer to a great extent bind him for a major part of this life to determine how he spends time and how he achieves pleasure in life.

Safety, Health & Basic Amenities

Managing Talent

Times and Timings The concept of working hours, working days and holidays was introduced so that both office (work place) life, as well as home (or social) life go well alongside each other. One off day a week has been in practice for quite long and is still practiced in many enterprises. It served the purpose well when man and life both were simple. Seeing to the increase in complexities in life many enterprises have adopted two weekly offs or even more for its employees.

In present day life scenario one has to remain equipped with all the information and knowledge Passage of history has seen times of slavery when continuously updated not only pertaining to his own privileged member (at top) enslaved the lower (less profession, but to a much wider arena. privileged) ones. They were treated He has to remain informed (and active) no better than animals and were often about politics, economics, tax laws, Responsibility towards traded (sold and bought) openly in children education, medicines, the arranged markets. Time has seen the employees is an ecology, psychology, sociology, stock prevalence of bonded labour also till important and intricate market fluctuations, beauty aids, quite late which of course has been part of the “Social automobiles, car maintenance and… almost fully checked now with the Corporate what not. rising awareness, concern, and strict Responsibility” of any rules / regulations by governing bodies With such a heavy demands on him corporate body. / governments. We as a society can he certainly needs more time for certainly pat our backs for that and himself. say that ‘society has really progressed’ As such it is the duty and responsibility of the and become ‘civilized’ at least to that extent. The enterprises to seriously consider and formulate IT sector of today treats its employees with much working time and off time policies well suited to care, providing them cozy workplace environment the social and personal needs of the employee so with recreational facilities, noiseless commuting that he doesn’t feel like a bonded labour for earning vehicles, flexible timings, and so on to build up their his livelihood. reputation, efficiency, and pleasure. The work and life (pleasure & leisure) have to go together without dilution of the either.

Wherever we are today in respect of growth of civilization, the following points can be considered (as part of the ‘social corporate responsibility’ agenda) as responsibility of the corporate bodies towards their employees.

In a 24 hr X 7 day nonstop working operational requirements of certain industr y as of today,

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introduction of the concept of ‘clear off time’, especially for the senior executives appears to be the need of the modern times and must be considered to keep human beings ‘humane’ and not change to robots.

poor in the country in view) based upon the payment to the lowest levels and deciding a multiplication factor for various levels to determine their packet. Extending the formula concept further even the payment of the elected representatives / parliamentarians can be decided based upon some factor (of the lowest paid employee or a daily wage earner or even the ‘per capita income’ in the country). While formulating the wage structure, the post retirement life needs of all levels have also to be kept in view.

Compensation (Pay Package) Compensation commensurate with the role in society and job responsibility is a time tested way for keeping and motivating the right men to right places. Ancient school of thought advocates compensation and respect in the ascending order for the unskilled, the skilled, the manager, design engineer, research scientist….and the teacher. Some societies still follow the concept and some have deviated also.

Management Talent

Another responsibility of any enterprise has to be regarding taking care of the ‘talent’ in the system. It is not necessary, in modern day complex world and systems, (as compared to olden times) that Certain key functions like say design, consultancy, the talented one can automatically necessarily research and development etc play a much more capture or float to the respectable positions - being important role towards the profit and growth of the restricted by his circumstance and many social enterprise but many times production becoming factors. If the privileged ones in the company see the prime concern (after building up the enterprise) a ‘talent’ they must take care of him in whatever the importance of such departments gets diluted way they can, as these are the ones resulting in long time hidden who really contribute better to build consequences. The organization has a better society (with more pleasure to be fair to all with compensation Compensation & leisure). being commensurate with the significance of the role of the individuals.

commensurate with the role in society and job responsibility is a time tested way for keeping and motivating the right men to right places.

It is natural and logical that the compensation has to be higher at higher levels (with higher roles), but the difference certainly has to be such that it doesn’t amount to exploitation of the lower/lowest cadres. Recognition of the fact the every body has the right to a respectable living is not to be ignored.

“It seems almost trite to say that talented people are the key determinant of business success” - K. M. BIRLA

“Talented people often generate friction, not by design, but because they tend to speak out more and offer dissenting views more forcefully and more often, which ruffles feathers…….. Over time leaders must develop the right altitude to handling dissent, such that the views are taken at face value, rather than being internalized as a personal affront.”

The system (pay pattern) has to be such that nobody (especially the lowest one in the hierarchy) should appear to be at the mercy of the whims and fancies of the ‘superiors’ for his survival.

- K. M. BIRLA

To overcome the broad disparities at various levels it seems logical that a concrete formula can be devised (keeping the lowest paid employee or contract worker or the needs of the poorest of the

Every organization has its personnel policies and promotion systems. Promotion by ‘seniority’ has been in practice for quite a long with little problems. It had its benefit of generating little dissent and natural 9

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respect for the ‘next person’. Many organization, now, with the aim of making it more objective, have chalked our various promotion policies based upon performance appraisal systems etc. But many a time rather than objectivity, more of subjectivity and personal or system prejudices come into play, defeating the basic purpose.

and the social responsibility of any corporate body to build and improvise its set up and systems, utilizing the new technologies, fully safe and healthy for the creatures i.e. the human beings who work them even if it means some cost to the enterprise and may be seemingly a little lowering of the profits. Because the hidden or subsequent consequences of any casual carelessness ultimately cost us heavily, over and above mere profit, ‘zero accident’ has to be aimed at and arrived at, to really feel proud of ourselves.

A random selection system (say by draw of lots from eligible candidates) can do 50% (statistically) justice, promotion by seniority is expected to do better justice (much more than 50%) as this is a select group (well chosen at the time of recruitment). Any new system in this respect must ensure still more justice by taking care of the talent, and must be better in the respect that scope of manipulations, prejudices, victimizations and unjustified supersessions is eliminated.

Some schools of thinkers have often tried to blame the technology for all the modern day mishaps and unfortunate happenings; and talk of the good old days. But it is not so. “To condemn the technology in toto is to forget gardens made green by desalination of sea water, while to idealize technology is to forget Hiroshima”.

Justice not only needs to the done, it must appear to have been done also, for better peace in the society. Safety, Health and Basic Amenities : It is heartening to say that as compared to the earlier times, say a century ago or even compared to a few decades ago, today’s modern enterprises in general are much aware and exhibit quite a good sense of their responsibilities in this respect. Barring some isolated small cottage industry most of the large establishments lately have adopted safety and health policies for their employees and also work in that direction for further improvements.

- STUART CHASE

Valuing the human life in true spirit, it is the duty and the social responsibility of any corporate body to build and improvise its set up and systems, utilizing the new technologies, fully safe and healthy for the creatures

We cannot forget the Bhopal Gas Leak tragedy either. It is up to us how we use and channelise the developments in technology - for ‘mere profit’ or for ‘total benefit’ to the society. Being concerned about and taking care of the health of the employees is also the responsibility of the enterprises. This can be divided into two parts.

First being the maintenance of healthy conditions at the work places. This perhaps needs little elaboration as already now we are aware about the noise decibel levels, healthy air, proper lighting, cleanliness, avoidance of hazardous chemicals, substitution of Asbestos and so on. Many of these have been enforced by law (Statutory Requirements) but a good establishment has to go beyond the compliance of statutory obligations only and continuously upgrade the working place environment to the extent possible and create healthy and pleasant condition for the workman. Closing down of old unhealthy installation

Every human life is precious. Untimely loss of a life or de-capacitating of a person, due to accident, for earning a livelihood or for living a normal life, is certainly being viewed seriously now. The awareness and the developments in technologies have helped us in reducing, if not totally eliminating, the hazardous tasks where life and health of the worker was at stake. Valuing the human life in true spirit, it is the duty 10

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(where improvements are not feasible) can also be considered.

“Kitchens, eating places, toilets & bathrooms are the mirrors of any civilized home or society. These have to be refreshing energy charging spots rather than mere obligatory setups in any modern day establishment.”

Regarding corporate responsibility towards employee’s health, second part is the medical facilities and the practices of health checkups of employees. Although small enterprises may not be able to afford a comprehensive setups for the purpose but the large corporate bodies can set up & own such establishments in the larger interest of the employees and the society. The smaller ones can go in for tie-ups with established hospitals and medical centers. This is normally being practiced but it is to be understood that by doing this the corporate is not doing any obligation but only fulfilling its responsibility.

Responsibility Towards Society This part of the social corporate responsibility extends beyond the premises of the work area of the corporate body and encompasses the lives of families of employees, the people (which form the society) with whom they live, and of which they are a part of, their social needs and aspirations, and the social climate. This can extend to the society at large i.e. the country in which the corporate body operates and flourishes.

Regarding the basic amenities, provision of appropriate restrooms, canteens, toilets etc, is Sixty years ago when India got freedom, its leaders, the men at the helm of affairs, got the privilege of obligatory as per the factories act and labour laws. Fulfilling the statutory requirements is one thing choosing the direction for the country’s development but in modern times a good enterprise has to think for secure, healthier & happier lives of its inmates. and do beyond that. As we are “Freedom implies the right to make modernizing our plants, attention needs choices, but we are not free to choose to be paid towards upgrading & We cannot forget the to break the laws of the land.” modernizing our restrooms, canteens Bhopal Gas Leak tragedy and toilets also. Why any canteen, lunch - LJP either. It is up to us how room or bathroom in a good we use and channelise Our visionaries chose the concept of organization should not be comparable the developments in a ‘welfare state’ at the initial stages. with any good restaurant or any star technology for ‘mere They considered large enterprises like hotel. profit’ or for ‘total benefit’ our Steel Plants with the objective Good canteens and lunch rooms matter of building up basic infrastructure, to the society. a lot in developing good work generating employment, low cost environment, sense of belonging, and higher education facilities, schooling, pride among the working personnel. and perhaps housing also … all If in healthy condition these places, apart from towards enhancing quality of life. Land law reforms providing a refreshing respite during or after the and subsidies to farmers etc had also been day’s work, come in handy for informal discussions considered. and at times for very useful interactions - sorting Our development and adoption of new technologies out and rounding off many a sharp corners. keeping pace with times, we have come a long way Many times it is seen that although the plant working and entered the IT era in a big way, and are moving is round the clock but the canteens work only during towards becoming a ‘power’ to reckon with at the daytime. Availability of at least tea/snacks can be global level. The enterprises, public as well as in ensured round the clock in 24 Hr working systems. private sector, got the opportunities and the Hygiene and quality of food are still having scope circumstances to build and grow; and have really for improvement at many places. grown taking full benefit of the freedom and the 11


laws of the land in the country.

Feature Article by the regulators and the enterprises themselves, keeping in view the ethical values and the fact that children (with tender minds) and the old (beyond Van Prastha state of mind) are also very much a part of the society. We have no right to pollute the minds of our children and stray them away from their natural play & pleasure at early stages of life - nor do we have the right to disturb the peace & tranquility of the old or the senior citizens as we call them today.

As such it is imperative and the need of the hour that apart from government, some share of social welfare functions and responsibility of the ‘welfare state’ are taken over by the so developed large enterprises or corporate entities - whatever we call them. Enterprises can contribute towards affordable health & education facilities (for the under privileged), peripheral development, good housing colonies, model townships with water and power, ancillary developments (indirect employment generation), recreation places, sports complexes say a public swimming pool and so many things as a part of their responsibility towards society and the country at large.

It may not be necessary that everything is exhibited on the media / movie. Some things can be the controlled to the privacy of interested groups only, rather than making those available openly on public media as national way of life.

Responsibility Towards the Stake

Holders Of course a small part of their profit has to be expended for the purpose but as they can afford Today’s (large) enterprises, unlike the individual they must do it. Many, including our steel plants, or family owned establishments of yesteryears, are are already doing it but perhaps built and operated upon the pooled the ‘extent’ needs to be consciously money from various stake holders considered and reviewed by or the ‘share holders’ as we call As such it is imperative and themselves. them in modern times. Many the need of the hour that enterprises conceived or started Further adding to this responsibility apart from government, initially with the individual or a towards society one important some share of social welfare family ’s own resources have aspect, worth including here is the functions and responsibility subsequently gone in Public or cultural & ethical part of impact of the ‘welfare state’ are taken Private Ltd (private in a limited way) of the operations of a different type over by the so developed for the growth of the same in the of enterprises. competitive scenario. large enterprises or corporate Enterprises like Film industr y, entities This was necessitated also by the Advertising agencies, Fashion Show fact that the resources or funds organizers have also come up in requirement for technologically a big way in the country. What they sound large (from economics point of view) size do and what they exhibit has a great social impact. set ups were very high and beyond the capacity of It is seen lately that such enterprises have started an individual of a family. The concept of pooling of going to any extent to sell products & their shows, money resources as ‘shares’ has been well accepted with earning or the profit as the sole objective. in today’s society. Although the enquiry into the slippage of top and bursting of lower costume during a recent fashion parade, has revealed that it was by chance only and not by design - but the limits to what extent the things should be allowed, have to be determined

The concept of majority stake (and the minority stake) etc is well understood and needs no clarification. The pioneers or the majority stake holders normally and naturally control the working of the enterprise at the helm of affairs. 12

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It is the responsibility, rather the duty of the men at the helm of affairs of the corporate body regarding justified distribution of the wealth generated by the enterprise. Indulging in money plundering, profligacy and manipulations for the benefit of the limited few (self) controllers only is swaying away from its basic social responsibilities. Every share holder has contributed his hard earned money (however meager) towards the need (for funds) of the enterprise and it’s his natural right to enjoy a share of the prosperity of the same.

of available resources on earth as well as degeneration of natural physical environment around the globe. It is fine that over the last few decades we have become quite aware (thanks to the creator that humans are equipped with superlative brains) of this ensuing ecological imbalance with the inherent peril to the human race or life on the planet; and steps are being taken at the global level to contain the ecological imbalance, pollution problems, and damage to the environment caused by our greedy advancements over the times.

It is nice that we have many elaborate “Companies’ Laws”, Governing Bodies, watchdog Agencies setup by the government (peoples’ representatives) for monitoring and regulating the activities & decision making processes of the companies but a good corporate body, a company, or an establishment raised with the help & funds of public or shareholders, has to take care of their interest beyond fulfilling (or circumventing) the governing laws.

The evidence is clear that we have the ability to resolve our difficulties and establish a new relationship to our planet based on the principles of enduring cycles of natures -LJP

Our technologies are being reoriented towards being more environment-friendly. Laws have been enacted Any written down rules or laws howsoever elaborate to limit the amount of industrial can never be perfect and complete waste discharged into the rivers. The to fully take care of the humane and quality of smoke released into the social sentiment. atmosphere and the quality of As such enterprises have industrial water at the outlets from a much pronounced and It is to mention that stake holders in factories etc have come under the much subtle role to play in private setups are its limited regulations. shareholders but the main this respect towards shareholder in a public enterprise is fulfilling their social The responsibility of all enterprises the ‘government’, which means the or corporate bodies, however large responsibilities (towards ‘country’ or public at large where or however small, towards ‘mother stake holders). Nation’s wealth is involved. nature’ has to be well realized and taken as an important part of its ‘corporate social responsibility ’ agenda, and by doing this contribute towards a real and sustainable progress with the hope that soon we will fall in step with mother nature in maintaining the ecological balance.

As such enterprises have a much pronounced and much subtle role to play in this respect towards fulfilling their social responsibilities (towards stake holders).

Responsibility Towards Nature

As this part of the subject is being covered almost comprehensively in our write ups & literature on environment management issues and endeavors, further elaboration of same appears uncalled for here.

The progress, with rise in standards of living, and technological developments, has directly amounted to increased usage of energy and natural resources apart from interfering with the environment. As a result we are faced with the problems of depletion

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Conclusion

strength, the stake holders are our partners in progress, the member of the society are our leaves & flowers; and our planet / mother nature is actually the provider - our support.

We have come a long way from the Adi Manav stage, from the slavery prevalence or the bonded labour times; have earned profits, have become more secure in all respects, and are enjoying the fruit of our labour and prosperity, but the fact remains that ‘we’ as ‘corporate bodies’ are a part of the society, part of the country; and members of the global village, rather the Universe.

We as the leaders, or the privileged ones, have to take care that we do not damage our roots, our leaves, our partners; or our real support. That type of thinking, and sense of responsibility, can really take us to glory with health & happiness (with pleasure and leisure) for everybody towards a better society with sustainable development.

We have to recognize that the lowest worker at the base is a part of our roots, our employees are our

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Feature Article Corporate Social Responsibility : An Indispensable Tool for Corporate Growth and Survival P V S Sarma* L K Jena **

Abstract The world today is much concerned about the increasing recognition of the triple-bottom-line: People, Planet and Profit. It is a responsibility of business to be accountable to all of its stakeholders and achieve sustainable development - economically, socially and environmentally. This paper brings together some serious thinking in the field of corporate social responsibility through focusing on contemporary trends and practices and how companies are focusing on the delicate issues on social responsibility and further how they are carving out their role to become a responsible corporate. In this context the authors have deliberated upon Economic Responsibility, Legal Responsibilities, Ethical Responsibilities and Discretionary Responsibilities and tried to describe a business model that covers business as well as social perspectives effectively. Key Words : CSR, Success, Social, Holistic, Emerging, Model

Chevron Texaco, one of the leading companies

“Corporate social responsibility is not philanthropy. It is not charity. It is an investment in our collective future”.

in the oil and petroleum business, received the US Secretary of State’s award for corporate excellence for its outstanding corporate citizenship in Nigeria (It was the first multinational energy company ever to receive the award for Corporate Excellence). Chairman and CEO Dave O’ Reilly accepted the award on behalf of Chevron Nigeria Ltd (CNL). Handing over the award, the US Secretary of State, Collin Powell, commended Chevron, “we applaud Chevron Nigeria’s commitment to its employees and to the people of the Niger Delta. More than a good corporate citizenship, Chevron Nigeria is a good neighbor, and

- Dr. ManMohan Singh “We know our success as a company depends not only on our financial performance, but also on our ability to address the social and environmental expectations of our stakeholders. Indeed, we see corporate social responsibility and business success as mutually reinforcing.” - Dave O’ Reilly, CEO, Chevron Texaco ○

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* Principal, ICFAI National College, Rajahmundry ** Faculty Member - HR, ICFAI National College, Rajahmundry

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CORPORATE SOCIAL RESPONSIBILITY : AN INDISPENSABLE TOOL FOR CORPORATE GROWTH AND SURVIVAL - SARMA & JENA

a model of excellence and trust”1

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propositions that the business operations of companies have direct or indirect effects on groups of people and organisations, and should bear responsibility for these effects. In particular CSR views leaders as having responsibilities in three areas: economic, social and environmental performance. Present day leaders should modify their traditional emphasis on economic performance to incorporate both social and environmental performance. Decisions should be evaluated on the basis of their impact on all areas, not just in terms of economic performance.

There is an increasing recognition of the triplebottom-line: People, Planet and Profit. The triplebottom-line stresses the following : The stakeholders in a business are not just the company’s shareholders Sustainable development and economic sustainability Corporate profits to be analyzed in conjunction with social prosperity

Today Corporate Social Responsibility (CSR) is a There exist many definitions of CSR. One of the most far more holistic phenomenon. Specifically, it is a popular of them was given by the World Business company’s obligation to be accountable to all of Council for Sustainable development: “CSR is the its stakeholders in all its activities, to try and achieve continuing commitment by business to sustainable development: economically, behave ethically and contribute to socially and environmentally. economic development while improving Corporations no Stakeholders include everyone from the quality of life of the workforce and shareholders and employees to longer exist to earn their families as well as of the local customers, suppliers, local only profits, but also community and society at large”. neighborhoods, the government and the strive to satisfy environment. In total, Corporate Social Responsibility various societal is the sense of obligations on the part Good CSR should not be seen as a needs. of companies to build certain social burden: it should benefit both businesses criteria and manage the business and the community. The key is to see it as an investment in a strategic asset or distinctive What is that life worth which cannot bring capability, rather than as an expense. At the end of comfort to others ? the day, corporate social responsibility is the character These words of Dr.S.K.Burman have inspired of a company. Its ethics are the measure by which generation of Dabur. Keeping these golden words it will be increasingly judged. in mind, Sundesh or the sustainable development This paper is bringing together some serious thinking Society was set up to carry out welfare activities in the field of corporate social responsibility through aimed at improving the quality of life of the rural focusing on contemporary trends and practices and people in its area of operation. This society is given how companies are focusing on the delicate issues complete financial and managerial support by on social responsibility and further how they are Dabur India Limited. carving out their role to become a responsible Sundesh is engaged in providing health services, corporate. nonformal educations and training in income generating activities. The society has a dedicated What CSR is all about ? team, consisting of a doctor, a community organizer, Corporations no longer exist to earn only profits, a lady social worker, and instructors for income but also strive to satisfy various societal needs. The generating activities. Sundesh organizes regular idea that firms have responsibilities beyond profits OPDs and health camps in the villages. is known as Corporate Social Responsibility. Source : Casefoli (ICFAI Publications), September Fundamentally, the idea of CSR rests on the 20016 16

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activities by taking strategic decisions. All socially responsible companies should consider various issues, from the organisation of the firm to building relationships with the community.

objectives. First and foremost, a firm makes products those society desires, which it should do in a profitable manner. If it doesn’t, it will not be a viable enterprise in the long run. According to Mr. N. L. Mirchandani former Personnel head and the present HRD advisor to Crompton Greaves - “We at Crompton call this concept as Customer delight. Since our products are highly technical in nature; we adopt the concept in the following manner. We believe that our customer should be happy; should come back to buy our products and at the same time we also keep in mind that any of our products don’t harm the society. With adequate market research we find both the positive as well as negative features of our product. The necessary changes if required are conveyed to the engineers, design team who can thus make the correct product that the society desires. That is why every Crompton product is environment friendly. Every Crompton product is easier for the consumer to use and has a good shelf life with no break downs”.

Relationship and Responsibility Breeds Success : Success of a business can be materialized if they are maintaining good relationships with all the stakeholders (are all those who participate in some way in the activities of the organisations). Based on their relationships Stakeholders are categorized as : Stakeholders

Internal Stakeholders Shareholders Employees Management

External Stakeholders Consumers Suppliers Creditors Competitors Community

Legal Responsibilities : In making a decision to pursue profits at all costs, a manager is putting an explicit emphasis on satisfying Managers must ensure that a firm conforms to the the goals of one group of stakeholders rules and regulations in the regions in a firm, its shareholders. Typically in which it operates. For example, a shareholders, who tend to have profit firm’s pursuit of profits should be done Success of a business related goals, are the stakeholder with in the frame work of a nation’s can be materialized if groups to whom managers feel the or societies legal parameters. A they are maintaining greatest responsibility. Yet, a firm has challenge in conducting international good relationships with a variety of other stakeholders – its business activities in Asia comes from all the stakeholders employees, its customers, the people the differing legal responsibilities that in the communities in which it is accompany activities in various situated to name a few- to whom it countries in the region5. also has a responsibility. Ethical Responsibilities :

Working with the idea that a firm’s leaders should pay attention to the interests of all its stakeholders opens the door to a wide range of potentially conflicting objectives and activities. To help narrow that range into one that is feasible, strategic and eventually profitable to pursue, the activities are categorized into four types of responsibilities :

After formal rules and regulations come the standards of behaviour, and norms of conduct, to which a business is expected to conform. Although there is a general expectation that a firm’s managers should conform to perceptions about ethical responsibilities, these are rarely well defined. Yet, the majority of leaders are able to comply with ethical responsibilities with in and outside their business responsibility. The L&T Vision enshrines the stakeholder approach

Economic Responsibility : This responsibility is at the forefront of a firm’s 17


towards fulfilling its responsibilities. CSR Policy statement from office of Chairman & Managing Director, Mr. A.M. Naik: “L&T is strongly committed towards fulfilling social obligations of conducting business. The company supports various community welfare programs in health care, environment and rural development. Across the company there is a total commitment for environment, safety, health and conservation of natural resources.”9

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The Enron scandal is the most significant corporate collapse in the United States since the failure of many savings and loan banks during the 1980s. This scandal demonstrates the need for significant reforms in accounting and corporate governance in the United States, as well as for a close look at the ethical quality of the culture of business generally and of business corporations in the United States. The board of directors was not attentive to the nature of the off-books entities created by Enron, nor to their own obligations to monitor those entities once they were approved. The board did not pay attention to the employees because most directors in the United States do not consider this their responsibility. They consider themselves representatives of the shareholders only, and not of the employees. However, in this sandal they did not even represent the shareholders well-and particularly not the employees who were shareholders.

Discretionary Responsibilities : A challenge for a firm’s management comes from activities for which there is no clear message from the societal or legal framework about the firm’s responsibilities. As the name suggests, fulfilling this responsibility is a choice for a firm. A firm’s leaders must decide, for example, when and where to devote its philanthropic and other voluntary activities that meet the firm’s broad social responsibility mandate. A large grey area in the four categories of responsibilities comes from the third type – ethical responsibilities. Economic and legal responsibilities are often well defined. A firms discretionary responsibilities are ones that a firm might do, but they are not activities that a firm should necessarily do. A firm’s ethical responsibilities are ones that it must meet, but these are often not well defined.

Source : http://www.scu.edu/ethics/publications/ ethicalperspectives/enronlessons.html

Emerging Perspectives : Business Perspectives : It recognizes the importance of ‘reputation capital’ for capturing and sustaining markets. Corporate social responsibility is basically a new business strategy to reduce investment risks and maximize profits by taking all the key stakeholders into confidence. The proponents of this perspective often include corporate social responsibility in their advertising and social marketing initiatives.

Reinforcing the implicit beliefs the Tata Group brings to its mission of sustainable development is an explicit set of structures, embodied most notably by the Tata Council for Community Initiatives (TCCI). A centrally administered agency that helps Tata companies through specific processes, TCCI’s charter embraces social development, environmental management, biodiversity restoration and employee volunteering. Speaking about the Tata Index, Anant G. Nadkarni, General Manager, Group Corporate Social Responsibility, says: “We have adopted a business model to drive social responsibility efforts within the group because that way you ensure a huge network. The Index helps structure our efforts and quantify their effect on the communities and people they are aimed at.”

Eco-social Perspectives : The proponents of this perspective are the new generation of corporations and the new-economy entrepreneurs who created a tremendous amount of wealth in a relatively short span of time. They recognize the fact that social and environmental stability and sustainability are two important prerequisites for the sustainability of the market in the long run. They also recognize the fact that increasing poverty can lead to social and political instability. Such socio-political instability can, in turn, be detrimental to business, which

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operates from a variety of socio-political and cultural backgrounds.

that long-term business success can only be achieved by companies that recognize that the economy is an “open subsystem of the earth’s ecosystem, which is finite, non-growing and materially closed”.

With its page length Advertisement in The Week, March 26 2006 Edition, SAIL, is painting its future with hope through adding a new color to its horizon adopting green initiatives at every step. It is making a pioneering attempt through minimizing pollution, reducing waste and lowering cost creating a virtuous cycle of ecological balance and economic growth.

Right Based Perspective : This perspective stresses that consumers, employees, affected communities and shareholders have a right to know about corporations and their business. Corporations are private initiatives, true, but increasingly they are It can be seen from this example that corporate becoming public institutions whose survival depends social responsibility is both a value and a strategy on the consumers who buy their products and to ensuring the sustainability of shareholders who invest in their business. It is a value because it stresses stocks. This perspective stresses upon the fact that business and markets accountability, transparency and social Corporate social are essentially aimed at the well-being and environmental investment as the responsibility is both a of society. It is a strategy because it key aspects of corporate social helps to reduce social tensions and value and a strategy to responsibility. The plan to dismantle facilitate markets. ensuring the the Clemenceau in India had sparked sustainability of protests by Greenpeace and For the new generation of corporate business. environmental and social justice leaders, optimization of profits is the groups in both India and France. They key, rather than the maximization of charged that the ship contains massive profit. Hence there is a shift from amounts of toxic asbestos which were injurious accountability to shareholders to accountability to to health. If the Indians workers were to dismantle stakeholders (including employees, consumers and it, they would be at grave risk. By dismantling the affected communities). There is a growing realization Basel Convention is an example of an international treaty aimed at controlling inter-country movement of hazardous wastes and their disposal. It has 3 objectives : -

To reduce trans-border movements of hazardous wastes while minimizing their generation.

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To promote the disposal of such wastes as close as possible to their places of origin.

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To prohibit the shipment of hazardous wastes to countries lacking the legal, administrative, and technical capacity to manage them in an environmentally sound manner.

Corporate social responsibility is about tradition and culture. Firms can institutionalize voluntarism among employees through appropriate incentives and recognition. Internal performance evaluation of employees could recognize community work. Community work can take many forms: teaching in government schools, supporting NGOs financially, empowering women, cleaning parks, planting trees, volunteering in orphanages, protecting the abused. Many corporations in the U.S. allow employees to write about their community service as part of their annual evaluation report. Even if companies do not reward community activities, at least, the idea that the company cares will have a positive impact.

The Basel Convention doesn’t have measures that eliminate cross border movements of waste, but it does place explicit responsibility on national governments to authorize movements of waste.

Source : Opinion leading page article by, Prabhudev Konana, Distinguished Teaching Professor, The University of Texas at Austin.

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ship in India, and thereby skirting French and European Union regulations governing the disposal of toxic wastes, the French government was expecting to save between 5 and 8 million Euros. As the tension intensifies French President Chirac has announced a dramatic recall of the Asbestos laden worship – Clemenceau turning around and going back to France.

Educating preamble :

People

must

be

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human beings, and checks and balances. It is not uncommon to find high school students volunteering in community work; in fact, students often accumulate points for school grades. Scholarships are awarded to those who show community leadership and academic performance.

Concluding Remarks : Corporate social responsibility has much broader implications for the nation as a whole. It reduces dependency on the government for social change. Most governmental programmes quickly become embroiled in political manipulation, corruption, communal overtones, and bitter infighting. There is a need for public-private partnership with welldefined controls and processes for the best use of resources for social change. Social reforms driven by the Corporate and community will bring people together, turn the attention of the masses to tasks that benefit society and reinforce peace and harmony.

the

Inculcating corporate social responsibility is also about training young minds and helping future generations organize themselves for greater good. Social responsibility needs to be deeply ingrained from childhood. In the U.S., increasingly admission to elite private and public universities is not only based on academic grades, but also participation in community activities and leadership roles. Social responsibility is about leadership, respect for fellow

Bibliography 1. “Corporate Social Responsibility: Chevron Texaco in Nigeria” www.chevrontexaco.com

7. http://www.thehindu.com/2006/03/09/stories/ 2006030905431000.htm Opinion leading page article by, Prabhudev Konana, Distinguished Teaching Professor, The University of Texas at Austin.

2. Corporate Social Responsibility: Cases by Subhasis Ray, ICFAI University Press, Hyderabad 3. Corporate Social Responsibility: Contemporary Insights by Sumati Reddy ICFAI University Press, Hyderabad

8. http://www.scu.edu/ethics/publications/ ethicalperspectives/enronlessons.html 9. h t t p : / / w w w. b o m b a y c h a m b e r. c o m / c s r profiles.htm

4. Corporate Social Responsibility: The Environmental Aspects by Sumati Reddy, ICFAI University Press, Hyderabad

10. Herman E Daily in ‘Sustainable Growth? No thank you’ in The Case of the Global Economy, (Eds.) Jerry Mander, Edward Goldsmith; Sierra Book Club, 1996)

5. Mastering Business in Asia: Strategy for Success in Asia, by Kulwant Singh and Andrew Delios, John wiley & Sons(Asia) Pte Ltd., 2005 edn.

11. The Week, 26th March, 2006 edn.

6. Business Ethics and Corporate Governance, ICMR Publications, Hyderabad

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Feature Article Corporate Social Responsibility : A Business Contribution to Sustainable Development Tapan Kumar Chakravarty* Asok Kumar Das ** Debapriya Sen*** Ajanta Sengupta****

Abstract Corporate Social Responsibility (CSR) provides a coherent, coordinated and convenient way for appraising our values, policies, strategies and helps us and our stake holders to assess how a company performs. This is an integrated approach for the management of environment, health of employee, community and ethical issues completely and transparently. This describes a company’s accountability to stakeholders for its operational activities and decision-making. Today, CSR is a business opportunity and needs to be treated as a business goal. CSR commitments and activities typically address aspects of a company’s behavior (including its policies and practices) with respect to such key elements as health and safety, environmental protection, human rights, human resource management practices, community development & consumer protection, labor protection, relation with the business clients/ stake holders. Key Words : Corporate Social Responsibility, Environment, Sustainable, Development

Introduction

company to company with its own challenges, corporate culture, unique set of stakeholders and management systems. Some of the Initiatives and guidelines/ code of conduct taken for CSR across the world in different time are mentioned below :

T he World Business Council for Sustainable

Development defines CSR as “The continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the work force and their families as well as of the local community and society at large.” There is no single code or standard that will lead to corporate responsibility. This varies from ○

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a) The Corporate Responsibility Code Book 2003 (Global Initiatives) - Adopted in 1976, the guidelines have been revised to include sustainable development issues and core labor ○

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* Executive Director, Environment Management Division, SAIL, Kolkata ** AGM, Environment Management Division, SAIL, Kolkata *** AGM, Environment Management Division, SAIL, Kolkata **** Manager, Environment Management Division, SAIL, Kolkata

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CORPORATE SOCIAL RESPONSIBILITY : A BUSINESS CONTRIBUTION TO SUSTAINABLE DEVELOPMENT - CHAKRAVARTY, DAS, SEN, SENGUPTA

standards. They provide voluntary principles and standards for responsible business conduct in a variety of areas including employment and industrial relation, human rights, environment, information disclosure, competition, taxation and Science and Technology.

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comprehensive reference to good practice to counter bribery. f) Implementation : ISO- 14001 – A family of Standards for Environment Management System.

CSR : Genesis & Contemporary issues

b) Human rights : Voluntary principles on security and Human Health – This is a set of voluntary principles developed by US & UK Governments, companies in the extractive and energy sectors and NGOs interested in human rights and CSR – This was first released in Dec 2000 by the US and UK governments –

The CSR practices has remained confined to few big companies and is still generally equated with philanthropy and is not integrated within core business strategy. CSR follows the pattern of globalization, and may be the focus on business benefits has directed companies away from seeing a market opportunity in the most impoverished parts of the world. In essence, CSR is emerging in more c) Labour Rights : mature markets of Southern countries, and so far International Labour Organisation’s “Tripartite bypasses countries where business case is less Declaration” of principles concerning evident. Even in advanced developing countries, Multinational Enterprises and Social Policy. the CSR has remained confined to some selected Social Accountability International’s First Social companies and has not penetrated into the business Accounting System- became policies of small and medium fully operational in 1998. enterprises. The current phase of globalisation has witnessed many d) Environment & As a cascading effect of the changes of Business boundaries Sustainability : globalization, the like Product orientation to performance of a company Eco Management & Audit Customers’ need (1960s), mass Scheme (EMAS): Launched in is not judged only by the consumerism attitude to quality 1995 and revised in 2001. This profits they make for their control (in 1970s),ordinary product is a Voluntar y scheme for shareholders, but also by the to Environment Friendly product organizations to improve their impact they make on the well (in 1980s) which has less impact Environmental Performance on man and environment. In 1990s being of the community at The Business Charter for the stakeholders’ demand was large “Producers to be socially Sustainable Development (By responsible for their products”. The International Chamber of Commerce), Launched in 1991 role of Corporate Social Responsibility starts from this point. Rio declaration on Environment and Development – Adopted in 1992 UN Conference As a cascading effect of the globalization, the on Environment and Development (UNCED) in performance of a company is not judged only by Rio-de-Janeiro. the profits they make for their shareholders, but also by the impact they make on the well being of the community at large. The performance of a company is not only being measured in terms of economic impact but what is known as triple bottom line impact i.e. economic, environmental and social or Triple “P” Impact i.e. People, Planet and Profit. Terms like “shareholders wealth” is being replaced

e) Combating Corruption : OECD (Organisation for Economic Cooperation and Development) convention on combating bribery of foreign officials in International Business Transactions - The principles were published in 2002. The Business principles aim to provide a practical tool to which companies can look for a 22

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by “stakeholders’ wellbeing “and maximization of profit is being gradually replaced by the concept of optimization of profit.

adhoc and CEO-driven. This is best illustrated by the fact that only 11% of the companies had a written policy. This is in spite of the fact that over 85% of the companies agree that they have a responsibility to society. Companies that work with communities do not necessarily distinguish between the privileged and the under privileged. While a few companies and business groups have taken a lead in promoting CSR in India, the role of the industry associations cannot be overstated. While the CII (Confederation of Indian Industry) has various committees for social developmental activities and has even developed a voluntary social code for its members, chambers like FICCI (Federation of Indian Chamber of Commerce & Industries), Bharat Chamber of Commerce also have set up foundations for this purpose. However, the overall approach still seems to be driven by philanthropy rather than integrating it with business as has been happening in the west.

Governance of Corporate Social Responsibility : Various Performance Indices Commitment towards Corporate Social Responsibility of any company is adjudged through evaluation of its performance in areas more than one. These are called performance indices and deal with basic ethical and well being issues of the community concerned. Some of the performance indices are: Health care & Education Sports facility Peripheral village development Mother & Childcare Protection against HIV/ AIDS

Some of the Indian companies and multinational companies involved in CSR activities are as below:

Care for the Senior citizen Promote, protect and preserve our national heritage and culture Fighting corruption in public life Caring and supporting own people Valuing Customer Concern for Environmental Management and Resource Conservation Community Development

&

Steel Authority of India Limited

A research done by an NGO shows that corporate involvement in developmental issues tends to be adhoc and CEO-driven.

Peripheral

Tata Steel Sahara India Gujrat Ambuja Cement Reliance Energy Ltd. ONGC Larson & Toubro Sony

Attending the views of the interested parties/ stake holders

Wipro Wockhardt

Adoption of Policy for CSR

Philips India

Child & Labour law

Tata Power

Womens’ empowerment Freedom of Association & collective bargaining

Voltas

Transparency & openness

Indal Bajaj Auto

Indian perspective

Colgate Palmolive

A research done by an NGO shows that corporate involvement in developmental issues tends to be

ITC etc. 23


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(a) Indicators : Internal Context Stake Holder

Objective

Indicators

Employees

Continuous Training

Training Time per individual or unit

Delegation and team work

No of individual in one team

Transparency and Internal communication

No of gathered and answered suggestion

Balance work, Family, leisure

No of extra hours by a person or by department

Diversity of the labor force

Male Female ratio at work place

Equal opportunities and responsible hiring

Average wage of the company with respect to the sector

Employment and stability at the work place

No of Permanent employees / Total No of Employees

Profits and share capital participation

No of employees holding the share of the company

Safety & Security at work place

Number of accidents /year

Process of reconstruction

No of outplacements of dismissed employees

Share capital reward

% increase of the share value in last three years

Informative transparency

Company Information in net including Business performance

Ethical investments in long term

Report on investments

Corporate Governance

Existence of conduct code

Share holders

(b) Indicators : External Context Stake Holder

Objective

Indicators

Customer,

Quality, trustworthy and reasonable

No of claims from customers

Supplier &

priced products

competitors

Selection and relations with suppliers

Terms of payment to the suppliers

Collaboration & alliances with

No of sanctions because of competition

competitors Local

Contributions to local development

No of indirect jobs (auxiliary companies)

community

Social Action/ Medical Aid and

Donation to students, Number of Medical

services/ relief

camps, Donation for Health points etc.

Participation in international projects

Affiliation to international declarations on

Society in general

Corporate Social Responsibility (Global Reporting Initiatives etc.) 24

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Other Tools to put CSR in Action : SA 8000

Business benefit of SA 8000 and SMS from Customer point of view :

SA 8000, or “Social Accountability 8000”, was developed to promote socially responsible business in all sectors around the globe. SA 8000 was developed to help socially responsible companies to measure and differentiate themselves from other companies operating with less than acceptable labor conditions. It sets out expectations regarding health and safety, child labor, forced labor, freedom of association, discrimination, disciplinary practices, working hours and compensation together with the management systems to address them. SA 8000 covers all the major labor rights issues contained in International Labor Organization (ILO) conventions, the Universal Declaration of Human Rights and the UN Convention on the Rights of the Child. It also acknowledges the importance of compliance with locally applicable laws.

If a company has its own monitoring procedures in place to ensure that products sold under the company’s brand name are in a way desired by the customers’ requirement, this definitely reduces the monitoring cost.

SA 8000 is an International Standard for Social Accountability initiated by CEPAA (Council on Economic Priority Accreditation Agency). The objective is to ensure ethical sourcing of goods and services. It is a voluntary standard and can be applied to any size of business or Organizations across all Industries. SA 8000 implies basic standards for: 1. Child Labour

Implementation of this standard leads to greater confidence that the supplied products and services are produced in a working environment that is fair and safe. The requirement for continual improvement and the need of third party auditing and the certification are the prime requisite for an enhanced corporate reputation and a better corporate image. Business benefit of SA 8000 and SMS from Suppliers’ point of view :

In a business environment where social issues are increasingly important, compliance to SA 8000 ensures competitive edge, attracting new customers and entry to new markets while giving the company and the managers a social peace of mind

In a business environment where social issues are increasingly important, compliance to SA 8000 ensures competitive edge, attracting new customers and entry to new markets while giving the company and the managers a social peace of mind

Global Reporting Initiatives (GRI) guidelines and Corporate Social Responsibility reporting

To get a clear picture about the societal and ecological impact of the activities, products and services of any business, many companies around the World have opted for Sustainable Reporting as a green business tool. Benefits of Sustainable Report are :

2. Forced Labour 3. Freedom of association & Collective bargaining 4. Working Hours 5. Compensation

Sustainability reporting is a tool for linking typically discrete and fragmented information (Economic, Environmental and Societal)in a more strategic manner

6. Health & Safety 7. Disciplinary practices 8. Discrimination

It helps the Reporting Organisation to evaluate and continuously improve it’s performance and progress.- an ideal tool for continual improvement

This requires a Social Management System (SMS) for the accountability of the above said standards. SA 8000 has the support of many companies and Organizations over a wide spectrum of interest, though it is not an official standard.

Sustainable Reports can help communicate an Organisation’s Economic, Environmental and 25


Social opportunities and challenges in a way far superior to simply responding to stakeholders information request

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7 Steel Cans recycled can save energy equivalent to energy consumption of 60W bulb for 26 hours. 6 steel cans recycled can save 40 full grown trees in home construction.

Transparency and open dialogue about performance, priorities and future sustainability plans helps to strengthen the partnership and build trust

70% of steels used in today’s cars did not exist 10 years back.

Sustainable reporting may reduce volatility and uncertainty in share price for publicly traded enterprises as well as reducing the cost of capital. Sustainable Reporting does not deal only with the Environmental Performance Indicators but it also deals with the Societal and Economical and Performance indicators of an organisation. It has the potential to provide critical information for business analysis that is absent from a financial report.

Pollution Prevention as a major tool for Social Responsibility in Iron and Steel Industry : Steel and its many derivative products have played a major role in the development of today ’s modern industrialized society, particularly the ever developing transport and social infrastructure that we now take for granted. The rapid and continuing growth of the steel Industry over past few decades is an evidence of our reliance upon its many positive aspects such as high strength, excellent formability, corrosion resistance etc.

Corporate Social Responsibility – SAIL perspective

Steel is valued as a major foundation for Sustainable world. This is achieved by a financially sound Industry taking leadership in environment, social & economic sustainability and seeking continuous improvement.

(a) Environment Friendly Steel Products : Steel Authority of India Limited has developed and introduced durable, corrosion resistant, diversified function, high-design products by adding value of steel composition, surface treatment and coating to highly sustainable “steel” which are most user friendly and in harmony with nature.

Our steel product and production process have met the need for waste reduction with the features of high corrosion resistance and long life, and the need for energy conservation with the feature of high heat shielding. Today we continue to develop and offer a variety of products to meet the need for formation of a recycling society, environmental protection, and prevention of the global warming.

IISI (International Iron & Steel Institute), the international body for World’s Iron & Steel producers, set a vision which states, “Steel is valued as a major foundation for Sustainable world. This is achieved by a financially sound Industry taking leadership in environment, social & economic sustainability and seeking continuous improvement.”

Some of our user and environment friendly steel products are as below :

Steel is relatively easily regenerated from its scrap. Its recycling rate has been higher than competing materials. It is therefore characterized as most environmentally benign product

Reduction of Environmental Load Energy savings and resource conservation User friendly products for customers 26

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Table below shows the savings in steel in case doubly reinforced beams using M15 and M20 grades of cement when using SAIL TMT or SAIL TMT- HCR, thus contributing less Impact on Environment

Resource

Utility

Grade Savings in Steel compared to IS-2062 plain bar

Load

Fe 415 40 %

Savings in steel compared to IS-1786 /Fe 415 CTD

Galvanized corrugated steel Plate for paneling, door frames, shutters, AC ducts, coolers, storage bins, auto sectors etc.

Fe 500 44%

Fe 550 47%

14 %

19%

SAIL produces SAILCOR steel which is a special variety of high strength, low alloy steel, having excellent atmospheric corrosion resistance and tenacity properties. It is principally intended for applications requiring durability, lesser weight and least maintenance. Thus contributing lesser load to environment. It is much superior to stainless steel and mild steel.

Galvanized corrugated steel sheets for roofing, Industrial sheds etc. which ensures more durability than other materials use. Thermo Mechanically Treated Steel for general concrete reinforcement in high rise buildings, bridges and other structures Steel Noise Barriers in Roads & High ways to ensure less impact of Noise pollution

(b) Prevention of Global Warming :

High Tensile strength hot -rolled / Cold rolled steel sheets

Green Belt development & afforestation to act as a sink for CO2 . Study shows that a tree with 150 m 2 projected area in 100 years produce as much Oxygen as is consumed in 20 years by a man. i.e. a human being requires 5 large canopy trees for his oxygen consumption.

SAIL TMT HCR, for construction exposed to coastal, marine or underground environment. This special grade steel exhibits higher thermal resistance even at temperatures up to 600 0 C and are ideal for use in fire prone areas.

A hectare having approx. 1000 trees of large canopy absorbs 3.7 tonnes of CO2 and releases 2.5 tonnes of O2

Magnetic Core steel (CRNO) sheet for electrical Industry which ensures less core loss than the conventional steel sheet.

SAIL is contributing to the society by developing green belt which takes care of the CO2 generation during production of Steel. Efforts towards plantation of trees since inception and till 2004- 05 are as below:

Abrasion resistant steel (e.g. SAIL HARD) Corrosion resistant steel to ensure longer life and durability (e.g. IRS M 41, SAILCOR, ASTMA –588M, IS 2062 with copper)

Unit

Stainless steel & Steel products SAILRIM, SAILHUB,SAILMUDGUARD for cycle manufacturing

Integrated Steel Plants

SAILCOR for railway wagons Special grade of steel (UTS) for railways etc Various application in auto sectors in making long and cross members of chassis. 27

Area Trees Covered Planted (Ha) (x1000 Nos) 6340

12964

Special Steels Plant

447

796

Mines

1840

4631

Total

8627

18391


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(c) Social Responsibility initiatives at Work place SAIL is committed to the following to support and taking care of the employees at workplace. Providing good medical support & taking care of the health and safety of our employees Regular audiometric tests are being performed at plants for the employees and workers who are exposed to noise prone areas. Human Resource Development of the employees by Identifying their training need and providing them on site off site training Operating with clear and fair terms of employment as per company rule

To provide Primary medical health & educational facilities

Minimum age convention & discouraging child labour

Education to the people living in & around the SAIL townships

Equal remuneration convention Encouraging employee participation in all kinds of social activities Ensuring employee access to information - recently SAIL has updated the company web site in line with the Right to information Act 2005. Ensuring Regular health check up at plants and mines

Steel Authority of India Limited, not only helps the Nation to meet the infrastructure requirements, but also doing lots of activities to make meaningful difference to the lives of a large section of the people in the society.

To support preser vation of National monuments Initiatives towards prevention and control of HIV/AIDS through “SAIL’s Aids Control Program (SACP) Erection of Shed for pilgrims and for the workers Supply of medicines for the local people Cleaning of wells in the peripheral villages

(d) Community and Peripheral Development Steel Authority of India Limited, not only helps the Nation to meet the infrastructure requirements, but also doing lots of activities to make meaningful difference to the lives of a large section of the people in the society. Some of the key programs run by the Company as a part of its Corporate Social Responsibilities on a sustained basis are as below:

Construction of culverts, class rooms and school boundaries

SAIL has approved a CSR and peripheral development policy of spending 2 % of distributable profit for developing the surrounding areas of steel plants and their inhabitants by providing health care, educational and sports facilities and taking up women empowerment programs

Maintenance of community tree plantation along the high way.

De-siltation of Nallahs Family welfare activities at surrounding areas Maintenance of peripheral village roads Medical Centers for mentally retarded children

Free Medical camps in the nearby villages Relief to Natural calamity Filling of low lying area 28

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(e) Our Responsibility for protection of Environment :

Environmental Management Systems : SAIL is progressively implementing EMS linked to ISO – 14001 in its various units in order to minimise environmental impact in its various stages of operation. This includes identification of the environmental aspect /impacts and finding out its significance documentation & control of records, training to the employees and the suppliers, views of the interested parties, identifying and responding to the legal and other issues, communication, hazard identification and disaster management plan, periodic management review. Till date following units have been certified with EMS :

For Sustainable Development & Environmental Excellence (in line with IISI principle & guidelines) SAIL is committed to Environmental protection, Environmental Management System, Environmental friendly (clean) Technology, Resource conservation & Energy Management. Environmental Protection : SAIL always believes that contributing towards a clean & sustainable environment is a prime responsibility. In line with this, SAIL has its own Environmental Policy which aims at : Sound Environmental Management Practices

Bhilai Steel Plant : Full Plant

To comply with all relevant regulations

Indian Iron & Steel Company Steel Plant (ISP) Rolling Mill Complex

Introduction of new clean technology

Rourkela Steel Plant: Silicon Steel Mill, SP- II, EED, PM & HSM

Minimise waste Generation & promote 3 Rs(Reduce , Recycle & Reuse) Increase greener y in and around plants & Mines Increase environmental awareness amongst the employees and general populace around plants & Mines As a responsible corporate citizen SAIL is also committed to the Charter on the Corporate Responsibility for Environmental Protection. Some of the salient points of CREP commitments are :

For Sustainable Development & Environmental Excellence (in line with IISI principle & guidelines) SAIL is committed to Environmental protection, Environmental Management System, Environmental friendly (clean) Technology, Resource conservation & Energy Management.

Bokaro Steel Plant : Hot Dip Galvanising Complex, Cold Rolling Mill Zone -2, Hot Strip Mill, Slabing Mill & Hot Roll Coil Finishing unit Salem Steel Plant : Full Plant Dalli Iron Ore (Mechanised)

Mines

Kiriburu-Meghahatuburu Iron Ore Mines Bolani Ores Mines Balance units are in the process of certification. Resource Management :

Fugitive emissions control from Coke Ovens

Ore beneficiation, use of quality raw materials, waste

Energy & Water conservation Solid and Hazardous waste Management Reduction of Green House Gas emissions and adoption of cleaner technologies Implementation of Life Cycle Assessment (LCA) study recommendations. ( A study undertaken in 3 major steel plants of India like Bhilai Steel Plant, Tata Steel & Vizag Steel Plant under the initiatives of MoEF) Rain water harvesting etc. 29


utilisation through sinter plant etc has enabled SAIL to optimise raw material consumption. Though there is almost 2 MT increase in production over last 5 years, specific raw material consumption has been reduced by 11.6%.

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By Product gases are being used for power generation Many energy optimising technologies like Injection of DRAs( CDI /CTI)

Energy Management

Installation of Static Reactor Compensators to improve the power factor etc are in use at different units

Through out the years SAIL has taken lots of initiatives for the Reduction of Green House gases by : Reduction of power Consumption

Energy audit is being conducted regularly by the respective Energy Management Department

Use of By-product gases for power generation Promotion of Energy Optimising Technology

Some plants have Energy Auditors certified by BEE/PCRA etc.

Energy Audit SAIL plants consumed 7.28 Gcal/tcs which was 2% lower than the previous year inspite of the increase in production of value added steel which consumes higher energy.

Conclusion : Steel and its many derivative products play a major role in the development of any society. The rapid growth of the steel industry in past few decades is a testament to the sustainable qualities of steel and our reliance towards its many positive aspects. Steel Authority of India Limited, being the highest producer of Steel in India and amongst top 10 in the worlds steel producers has a brand name for maintaining transparency in all its business activities, developing community, practicing ethical code of conduct and achieving high stakeholders values. These values symbolize Corporate Social Responsibility, Financial Stability and ethical business code. Still then we need to go miles ahead in order to maintain perfect synchronization of “Social Responsibility vis-a vis “Sustainable Production”.

Reference : 1. The measure of our sustainability – IISI Sustainability Report

4. Environmental activities and products of Nisshin Steel

2. SAIL product catalogues

5. http://www.worldsteel.org

3. http: www.sail.co.in

6. http://www.globalreporting.org

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Feature Article Green Marketing : Corporate Social Responsibility and The Opportunity Ahead Somnath Mukherjee* Dr S Shivani**

Abstract Although environmental issues influence all human activities, few academic disciplines have integrated green issues into their literature. This is especially true of Marketing. However one business area where environmental issues have received a great deal of discussion in the popular and professional press is marketing. Terms like Green Marketing and Environmental Marketing appear frequently in the popular press. One of the biggest problems with green marketing area is that there has been little attempt to academically examine environmental or green marketing. While some literature does exist, it comes from divergent perspectives. There is a general consensus evolving that consumers are eager for products whose production does not harm the environment and green marketing is the process by which businesses produce, label, distribute and or sell goods or services to consumers who prefer purchasing products that are generated in a more responsible manner. As society becomes more concerned with the natural environment, businesses have begun to modify their behaviour in an attempt to address society’s “new concerns”. At the same time many governments around the world have also become so concerned about green marketing activities that they have attempted to regulate them. In the above background this article explores the key issues and concerns of relevant groups regarding the concept and practice of Green Marketing or Ecological Marketing, as termed by the American marketing Association. The objective of the authors is to identify effective initiatives for better acceptance of green marketing by marketers as well as consumers of the developing world. The article specifically dwelves into the following issues : Defining the scope and goals of G reen Marketing or Ecological marketing The need for adoption of Green marketing as a business Philosophy Green Marketing : An Opportunity for marketers Problems with green marketing. Cases of successful Green marketing This paper tries to bring forward the major concepts underlying green Marketing. It also tries to understand the emerging shades of green marketing conscience throughout the world. Key Words : Green, Marketing, Social, Opportunity, Responsibility ○

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* Lecturer, Department of Management, BIT, Mesra (Ranchi) ** Reader, Department of Management, BIT, Mesra (Ranchi)

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GREEN MARKETING : CORPORATE SOCIAL RESPONSIBILITY AND THE OPPORTUNITY AHEAD - MUKHERJEE & SHIVANI

Introduction to the concept

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Although demand for economic, legal and ethical solutions to environment problems is widespread, the environmental movement in marketing includes many different groups whose values and goals often conflict. Some environmentalists and marketers believe that companies should work to protect and preserve the natural environment by :

Green Marketing refers to the specific development,

pricing, promotion and distribution of products that do not harm the environment . It is a much broader concept, one that can be applied to consumer goods, industrial goods and even services. Thus green marketing incorporates a broad range of activities including product modification, changes to the production process, packaging changes as well as modifying advertising.

a) Focussing on more efficient factors of production where there is a general agreement that efficient factors of production redefine the concept of waste, the focus therein shifts managing or handling waste to a situation where waste is not generated.

While Green Marketing came into prominence in the late1980’s, it was first discussed much earlier. The American Marketing Association (AMA) held the first workshop on” Ecological Marketing” in 1975.The AMA workshop attempted to bring together academics, practioners and public policy makers to examine Marketing’s impact on the natural environment.

b) Focussing on reducing products to types wherein they are biodegdrable i.e. on consumption the leftover is biodegradable and also it has very little side effects. Another situation or product type can be conceived where the product on consumption is taken back by the manufacturer The EC Commission issued guidelines for eco for recycling. It also requires the necessary labelling that became operational in 1992.Under technological backup where it is feasible both the EC directive; a product is physically and economically to evaluated on all significant develop and execute such kind of environmental effects throughout a loop system. The other category Green marketing ensures that its lifecycle, from manufacturing to could include such products as disposal. There is a general the interest of the consumer radioactive materials, heavy metals consensus evolving that consumers and the organisation are and toxins. These products should prefer products whose production protected, as wilful exchange always belong to the original does not harm the environment. As will not take place unless both makers who should be responsible society becomes more concerned the buyer and the seller for them and their full life cycle with the natural environment, mutually benefit. effects. businesses have begun to modify their behaviour in an attempt to c) There should be an attempt adapt to the society’s new concern. on factoring in the direct and Many Governments across the globe have also tried indirect costs of a product in the final price of to regulate Green marketing activities. the product. The direct cost would include the cost of manufacture, selling and other traditional costs .The indirect cost would include the waste disposal, non-polluting and recycling costs which need to be factored in. This might add to the general price of the product but there has to be realisation between consumers supported by different regulatory and promoting institutions that there should not be competition between products harming the environment and those trying to save it.

Green marketing ensures that the interest of the consumer and the organisation are protected, as wilful exchange will not take place unless both the buyer and the seller mutually benefit. Thus there is a shift to protect the natural environment by attempting to minimise the detrimental impact that his exchange might have on the environment. It thus focuses on minimising environmental harm if not eliminating it. 32

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It tries to eclipse and interesting fact about our current economic system being subsidised by the environment because many environmental costs are not met by either the producers or the consumers. There is a realisation that increasing product prices to protect the environment is not interfering with the free market .It is removing imperfections in the market which virtually force products to be unrealistically inexpensive. Such a heretical approach to product pricing is likely to make managers and consumers wary as generally both are used to thinking in terms of ever increasing material wealth, feel uncomfortable. However that does not make it any less important.

more responsible consumption through regulation or to push people into more responsible consumption by making them feel guilty its environmental consequences. However in the present day there has been a substantial change in the manner in which marketers have tried to understand and address Green Marketing. Modern researchers have been spearheading the use of social science approach to understanding how people can be made to want change their consumption habits to preserve the environment.

Modern researchers have contributed substantially towards understanding the requirements of the Green Consumers. Although there is general consensus Those in agreement with this concept believe that evolving there does exist the green consumers / companies that pay little attention to zero emissions, customers and that they do respond positively to pollution prevention, ecolabelling and other green marketing efforts. However while this kind environmentally related matters will sooner or later of hypothesis seemed plausible and potentially quite loose their customers because the demands made useful in market segmentation the first empirical by ‘Green Consumer’ are getting stronger by the test of it reported in the literature was day. negative.”Kassarjian” found that neither demographic nor The Green Consumer A green consumer can be psychological variables were able The root of the word consumer defined as a person whose to distinguish between people who tends to convey the idea that there values, attitudes, intentions or were less concerned and most is nothing left of a product after concerned about ecological issues. behaviour exhibit and reflect a the consumer has consumed it. relatively consistent and Contrary to popular belief a green Since “Kassarjian” study a number conscious concern for the of researchers have sought to consumer can be defined as a environmental consequences describe the green consumers for person whose values, attitudes, related to the purchase, intentions or behaviour exhibit and purposes of market segmentation. ownership use or disposal of With fair amount of success they reflect a relatively consistent and have found both demographic and conscious concern for the particular products or environmental consequences Psychographic variables to services. discriminate the Green customers related to the purchase, ownership from the general population. use or disposal of particular products or services. (Henion 1975). Thus it is a “Wells” has found that the characteristic of great logical conclusion that emanates from the definition majority of psychographics research promises to is that behaviour that is ecologically constructive produce findings that will be definitive and highly is obviously the most desirable criterion for the useful. There is a general consensus among modern identification of the green consumer. researchers that the green consumer is apparently distinguishable from other persons by the possession Identification and understanding the of certain personality traits. These include a degree Green Consumer of alienation, high dominance, high tolerance for Green Research new ideas and internal locus of control. These The traditional approach has been to try and enforce Psychological variables seem to be related to an 33


important attitude characteristically held by the Green Consumer.

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environmental costs should be factored in. some have proposed an estimate of the damage caused by a non-green product to the environment. The champions of free trade have argued that it is not the regulations but the free market that will address the ecological issue and it is in this context that Green Marketing gains in importance.

“Ken Peattie” in his article on Green Research for “The Centre for Business Relationship, Accountability, Sustainabilityand society ”recommends the following green code for environmental market research: Generalise with care. Consumer behaviour will not necessarily be consistent across different product types and particular market segments may respond to certain issues on the green agenda but not others.

Green Marketing Mix The Green P’s The Green Product – A green product may be defined as a product containing a set of environmentally related attributes which on balance either already contribute, because of the materials the product is made of or eventually will contribute significantly more to the reduction in pollution than do those of another product with which it is compared.

Remember the validity of a piece of market research is not related to the degree to which it supports your preferred option. Explore the context from which market research data comes. Be clear on the nature of the sample used, the questions asked, the way in which responses were recorded and the time and place from which the responses come.

When defining a green product a continuum of beneficence can be expected to exist and some products will be relatively more Ensure that where market beneficial than others. However such research is crossing international differences in beneficence are not borderlines, that the terminology When defining a green easily measured. In the literal sense and interpretation remains product a continuum of most consumer products tend to consistent. beneficence can be pollute the environment after a Neutrality is important both on consumer is finally finished with a expected to exist and part of the interviewer and the product either by consuming it or some products will be interviewee. not putting it to further use. When relatively more beneficial discarded this is a potential source than others. of pollution. Yet looking at the Marketing the Green problem from the viewpoint that Product : most products pollute would simply The concept of Marketing has evolved and passed replace the previously mentioned continuum of through many stages varying in their different degrees environment beneficence, which has a desirable of concern for the society and the environment. positive connotation, with a continuum of environment insult. It has generally been from Marketing

The core of the above statement is the comparison of products and the term green product mentioned here has only relative meaning.

Social Marketing

Social Cause Marketing

Green Marketing

Economists have started arguing that it has become imperative to remove the imperfections in the market, which virtually force the products to be unrealistically inexpensive. They have started arguing that the

Price - If the price of each and every product were based on its true full cost, including social as well as economic cost then the pricing 34

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forward channel is the traditional of distribution the reverse channel of distribution is a kind of remarketing in which materials are recovered from wastes and further distributed to processors and manufactures and transformation back into useful products. Materials so recycled can justifiably be called green products.

mechanism of our competitive economy would eliminate the need for green marketing. However that is not the case In fact full costing of a product would mean accounting for all environmental costs associated with it and hence full pricing is quite difficult to accomplish in practice .The problems associated with full costing are so intractable that here is ample room in policy making for strategies like green marketing. Many economists have suggested shadow prices – which they say is a kind of proxy estimate used by the economists to place a value on damages. However here are other economists like “Boulding” who argue that it is hard to put a price on environmental bads .”Stanford Rose” suggests the use of shadow prices in cost benefit studies.

The following specific channel types play or are expected to play an important role in product re usage and materials recovery : a) The traditional channel intermediary like the wholesaler or the retailer who are the local supermarket type that collects, stores and passes on say for example the beverage companies the used returnable bottles brought back by its customers.

However unlike economists the green marketers b) The manufacturer owned recycling centre (e.g. believe that they can market green products to green aluminium can recycling centres) consumers because such products are believed to c) Newly emerging resource recovery centre that have special utilities for this segment of the separates mixed municipal wastes population. The green marketers also argue that the indifference of the non-green d) The traditional secondary customers with respect to green material dealer such as local waste products can be changed through paper dealer Indifference of the noneffective and efficient green green customers with marketing. What is apparent about the respect to green products secondary materials dealer channel Green marketers ought to take can be changed through is that its structure bears little satisfaction from the fact that there effective and efficient green resemblance to the generally is a general agreement amongst sophisticated structure characteristic marketing. economists that ecological issues can of those well developed forward best be addressed by economic channels through which flows a great inducement and not regulation for portion of today’s consumer goods. under such policy the free market price mechanism Instead of the modern vertical marketing system it can be put to work. is the individual marketing type system which members of secondary materials channels are To begin with Government policies of effluent taxes operating today and the reverse channel members and widespread green marketing efforts have to are unlikely to evolve into vertical marketing system be mutually reinforcing. Green products unburdened in the near future primarily because the products by such taxes should enjoy same price advantage distributed through reverse channels are materials and should be easier to market. which are marketed quite differently from consumer products. However economists foresee reverse Green Channels channels to undergo continuous and occasional Place - Green products can be marketed through changes as they search for new and better ways forward channels and reverse channels. While to perform marketing functions. 35


The ITC initiative in greening its supply chain of ITC Hotels talks about the realisation of the concept as a very important factor.ITC hotels started GSC (greening of the supply chain) with the clear intent of attempting to work towards’ creating a sea of excellence as opposed to an island of excellence’ in the economic domain through industry initiative, by inducing their suppliers to adopt green production practices. The concept of GSC is to consistently meet specified environmental performance criterion and goals among the participants of the supply chain and to approach a more consistent corporate environmental behaviour among all players in the chain of products and services.

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constructive than using ecological appeal all by itself. Selection of media too has to be carefully done. Paid sales persons beset by serious ecological issues undoubtedly have a very important role to play in advancing the social cause of improving the environmental quality of that society Some Problems with Going Green No matter why a firm uses green marketing there are a number of potential problems that they must overcome. One of the main problems is that firms using green marketing must ensure that their activities are not misleading to consumers or industry and do not breach any of the regulations or laws dealing with environmental marketing. Green marketing claims must :

GSC also aims to help the suppliers recognise the importance of environmental issues and incorporate them into their programs for improvement. They have embarked on poster campaigns in implementing the GSC program

Clearly state environmental benefits Explain environmental characteristics

Promotion - once the business entity decides Explain how benefits are achieved on the target market from which Ensure comparative differences it is seeking ecological response are justified after segmenting and identifying The concept of GSC is to Ensure negative factors are the salient characteristics, the consistently meet specified taken into consideration Green marketer needs to environmental performance embark on a carefully crafted Use only meaningful terms and criterion and goals among the promotion strategy. For creating pictures. participants of the supply awareness, advertising is chain and to approach a more Firms Going Green probably the most economically Green marketing offers a consistent corporate effective element of the tremendous opportunity for environmental behaviour promotion mix. There is an apprehension that in advertising among all players in the chain marketers. There are many reasons for organisations those have an economic appeal will be of products and services. initiated green marketing. relatively more persuasive than Following are some of the more an ecological appeal. Obviously important ones: the former engages the immediate self-interest of the consumer by providing an opportunity Organisations perceive environmental marketing to save some money. However letting the to be an opportunity that can be used to achieve ecological appeal piggyback on the strong its objectives. economic appeal is a prudent thing to do. The Organisations believe they have a moral obligation weaker ecological appeal is undoubtedly to be more socially responsible strengthened when placed alongside the stronger Government bodies are forcing firms to become economic one. When engaged in the green more responsible marketing combining the two appeals wherever Competitors’ environmental activities pressure possible should have a greater effect in bringing firms to change their environmental activities about buying behaviour that is more ecologically 36

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Cost factors associated with waste disposal, or reductions in material usage forces firms to modify their behaviour.

Although the packaging and solid waste rules are burdensome, there are successful cases of not only meeting local standards but of being able to transfer this approach to other markets. Procter and Gamble’s It appears that all types of consumers, both individual international operations integrated global and industrial are becoming concerned and aware environmental concerns as a response to increasing about the natural environment. There are numerous demands in Germany. It introduced Lenor,a fabric cases of firms who have strived to become more softener in a super concentrated form, and sold it environmentally responsible in an attempt to better in a plastic refill pouch that reduced packaging by satisfy their consumer needs. 85 percent. This move actually increased brand sales McDonalds replaced its calm shell packaging with by 12 percent and helped set a positive tone with waxed paper because of increased consumer Government regulators and activists. The Success concern relating to polystyrene production and ozone of Lenor was transferred to the US where P &G depletion. faced similar kind of pressure. A super concentrated Downy, the US brand of fabric softner, was Xerox introduced a high quality recycled photocopier repackaged in refill pouches that reduced package paper in an attempt to satisfy the demands of firms size by 75 percent thereby costing for less environmentally harmful consumers less and actually products. It appears that all types of increasing Downy’s market share. Hewlett Packard currently provides consumers, both individual This is not to imply that all firms a convenient way to recycle used and industrial are becoming who have undertaken IT hardware products from any concerned and aware about environmental marketing activities manufacturer in an environmentally the natural environment. There usually improve their behaviour. In sound manner. HP has established are numerous cases of firms some cases firms have misled strategic partnership with leading consumers in an attempt to gain who have strived to become recycling companies around the market share. In other cases firms world. Over a decade ago, HP was more environmentally have jumped on the green a pioneer in developing a responsible in an attempt to bandwagon. This lack of true convenient and free method for better satisfy their consumer greenness of activities may result customers to recycle laser jet needs in firms making false or misleading supplies. Today this recycling green marketing claims. With a programme has expanded to proper regulatory mechanism in place and a genuine include ink jet supplies and is now available in each awareness green marketing is the emerging region throughout the world. Tens of millions of HP opportunity for both the producers and the laser jet and Inkjet print cartridges have been recycled consumers. and thousands of tons of materials have been diverted from landfills.

References 1. Henion, Karl E & Thomas c kinnear-1976Ecological Marketing

5. International Marketing-Philip R.Cateora & John L. Graham-edition 2001

2. Principles of Marketing-Philip Kotler-edition 2000

6. Green Marketing and Management-A Global Perspective: John F.Wasik

3. Green Business opportunities-A CII quarterly publication (Oct-Dec-04)

7. www.egj.lib.vidano.edu

4. Business Strategy and Environment-journal 1994

9. www.awea.org

8. www.green marketing .com

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Feature Article Aligning Social Responsibility with Business Strategy Satyajit Jena* Bishwajit Chowdhury**

Abstract By creatively responding to the market forces that are generated by the Corporate Social Responsibility movement, organizations can reap considerable benefits by using Balanced Scorecard as an improved strategic alignment of the CSR activities. This would help the organizations to integrate CSR into their strategic process and get business benefit rather than to consider it as an additional programme and a forced cost. This combination of CSR and Balanced Scorecard can help organizations create sustainable competitive advantage. Key Words : CSR, Balanced Score Card, Virtue Matrix

Introduction :

belief implies that social issues are peripheral to the challenges of corporate management. The sole legitimate purpose of business is to create shareholder value. On the other side are the proponents of corporate social responsibility, a rapidly growing, rather fuzzy movement encompassing companies that claim that they already practice the principles of CSR and skeptical advocacy groups arguing that they must go further in mitigating their social impact. Both perspectives obscure the significance of social issues to business success. They also unhelpfully caricature the contribution of business to social welfare. It is time for CEOs of big companies to recast this debate

Businesses have never been insulated from social

or political expectations. What’s different today is the intensifying pressure and the growing complexity of the forces, the speed with which they change, and the ability of activists to mobilize public opinion. Yet even as the social contract evolves, the typical corporate response appears to have become increasingly flatfooted. The great, long-running debate about business’s role in society is currently caught between two contrasting ideological positions. On one side of the current debate are those who argue that, to borrow Milton Friedman’s phrase, “the business of business is business.” This ○

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* Sr Manager(Acad) & Sr Faculty Member, Management Training Institute, SAIL, Ranchi ** Sr Manager(Acad) & Sr Faculty Member, Management Training Institute, SAIL, Ranchi

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and recapture the intellectual and moral high ground from their critics.

sector, the long-escalating debate about obesity is now resulting in calls for further controls on the marketing of unhealthy foods. In the case of big financial institutions, concerns about conflicts of interest and the mis-selling of products have recently led to changes in core business practices and industry structure. For some big retailers, public and planning resistance to new stores is constraining growth opportunities. And all this is to say nothing of the way social and political pressures have reshaped and redefined the tobacco and the oil and mining industries, among others, over the decades.

Large companies must build social issues into strategy in a way that reflects their actual business importance. Such companies need to articulate their social contribution and to define their ultimate purpose. It can help to view the relationship between big business and society as an implicit social contract. This contract has obligations, opportunities, and advantages for both sides. Companies that ignore public sentiment make themselves vulnerable to attack. Social pressures serves as early indicators of factors essential to corporate profitability: for example, the regulations and public-policy environment in which companies must operate, the appetite of consumers for certain goods above others, and the motivation of employees—and their willingness to be hired in the first place.

In all such cases, billions of dollars of shareholder value have been put at stake as a result of social issues that ultimately feed into the fundamental drivers of corporate performance.

Just as important, these outcomes have posed risks Companies that treat social issues as either irritating to companies but at the same time generated value distractions or simply unjustified creation opportunities as well: in vehicles for attacks on business are the case of the pharmaceutical turning a blind eye to impending sector, for example, the growing Large companies must forces that have the potential to alter market for generic drugs; in the case build social issues into the strategic future in fundamental of fast-food restaurants, providing strategy in a way that ways. Although the effects of social healthier meals; and in the case of reflects their actual pressures on these forces may not the energy industry, meeting fastbusiness importance. be immediate, that is not a reason growing demand (as well as Such companies need to for companies to delay preparing for regulatory pressure) for cleaner fuels or tackling them. Even from a strict such as natural gas. Social pressures articulate their social shareholder perspective, most stock often indicate the existence of unmet contribution and to define market value—typically, more than social needs or consumer their ultimate purpose. 80 percent in US and Western preferences. Businesses can gain European public markets—depends advantage by spotting and supplying on expectations of corporate cash flows beyond these before their competitors do. the next three years. Paradoxically, therefore, the language of shareholder There are many examples of the long-term business value may in this respect hinder companies from impact of social issues. That impact is growing fast. maximizing their shareholder value. Practiced as In the pharmaceutical sector, the past decade’s an unthinking mantra, it can lead managers to focus plethora of social pressures—stemming from issues excessively on improving the short-term performance such as public perceptions of excessive prices of their businesses, thus neglecting important longercharged for HIV/AIDS drugs in developing countries— term opportunities and issues, including societal are now translating into a general (and sometimes pressures, the trust of customers, and investments seemingly indiscriminate) toughening of the in innovation and other growth prospects. regulatory environment. In the food and restaurant

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ALIGNING SOCIAL RESPONSIBILITY WITH BUSINESS STRATEGY - JENA & CHOWDHURY

Shareholders Value vs Corporate Social Responsibility

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museums or parks because management believes such activities create goodwill among customers in excess of their price tag. There’s a second class of socially responsible corporate conduct that generates shareholder value by keeping a business on the right side of the law. For example, company compliance with worker safety regulations and sexual harassment statutes serves shareholders’ interests by keeping a company free from legal sanctions and by safeguarding its reputation.

The typical CEO of a publicly held corporation is accountable to thousands of shareholders. Here, the purpose is not to denigrate the share-owned corporation, which is a fundamental building block of democratic capitalism, but to acknowledge that its legal structure imposes certain priorities on its senior leaders. If they fail to maximize earnings for shareholders, managers risk removal by the equity holders to whom they report. Worse, failure to serve shareholders’ interests puts the corporation in jeopardy of being acquired by a stronger company or losing access to capital markets. In theory at least, self-interest and self-preservation ensure that no rational executive will engage in activities that clearly erode shareholder value.

Clearly, then, shareholder value and social responsibility are not necessarily incompatible. Whether their activities are dictated by choicesupporting charities and cultural institutions, for instance-or by compliance-adhering to laws and regulations-corporations can and do ser ve shareholders’ interests while also serving those of the larger community. For the purposes of this article, But corporations don’t operate in a universe such forms of corporate social composed solely of shareholders. responsibility are termed They exist within larger political instrumental -that is, they explicitly Clearly, then, shareholder value and social entities and are subject serve the purpose of enhancing and social responsibility are not to pressures from other members shareholder value. At any given of those networks, be they necessarily incompatible. moment, instrumental practices, citizens concerned about Whether their activities are backed by either laws and environmental pollution, dictated by choice-supporting regulations or social norms and employees seeking to strike a charities and cultural conventions, make up most of the balance between work and institutions, for instance-or by supply of responsible corporate family, or political authorities behavior. compliance-adhering to laws protective of their tax bases. and regulations-corporations When the interests of Another set of activities, however, can and do serve shareholders’ shareholders and the larger increases this behavior but is not interests while also serving community collide, management guaranteed to do the same for typically (and quite rationally) those of the larger community. shareholder value; in fact, these sides with shareholders. The activities may diminish it. A almost inevitable next step is for company’s leaders embark on a management to come under fire for favoring the course of action simply because they think it’s the narrow interests of shareholders over the broader right thing to do, whether or not it serves shareholder interests of the community for failing to meet the interests. demand for social responsibility. Some intrinsically motivated actions turn out to The interests of shareholders and those of the larger benefit shareholders as well as society. Henry Ford community are not always opposed. Corporations believed he ought to pay his workers enough to often willingly engage in socially responsible behavior afford to buy the cars they produced. That policy precisely because it enhances shareholder value appeared to place him at a disadvantage, since as we have seen. They choose to undertake the wages and job security at his plants were well philanthropic activities such as supporting local in excess of the norms in the auto industry at the 40

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time. But his decision ultimately benefited Ford Motor Company by making it an attractive employer and by stimulating demand for its products. At the same time, Ford’s move benefited society by raising the bar for pay and labor practices across the auto industry.

This growth has raised questions like; how to define the concept, how to measure it, and how to make it deliver on its promises. The Dow Jones Sustainability Index created a commonly accepted definition of CSR: “a business approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments.” This definition encompasses a broad range of corporate values and concerns, including reputation, transparency, social impact, ethical sourcing, profitability and civil society — the list goes on.

Some intrinsic activities benefit society at the shareholders’ expense. Others, however, unless widely adopted, are both detrimental to shareholders and ineffectual in establishing socially beneficial norms. For instance, the leaders of a chemical producer may believe that investing heavily in greenhouse-gas reduction is the right thing to do. But if the producer’s rivals refuse to follow suit, the company may undermine its own cost competitiveness without significantly lowering overall greenhouse-gas emissions. Similarly, a large exporter may balk at paying bribes to foreign officials to win sales. But if its offshore competitors persist in the practice, the company and its shareholders are put at a disadvantage while the norms that countenance bribery in the first place remain unchanged.

Demand for CSR Bob Willard’s book “The Next Sustainability Wave” outlines a set of 10 major market forces that are driving the need for organizations to address CSR in a credible manner. Willard’s 10 major forces are divided between mega issues and the stakeholders who are demanding change. These forces are motivating companies to change their behaviour and use CSR as a strategic instrument. The 10 major forces are depicted in figure 1 :

In retrospect, of course, it is fairly easy to determine whether a particular corporate action benefited shareholders, society, both, or neither. But corporate leaders don’t have the aid of hindsight when making their decisions. Internationally, major examples of CSR achievements since the beginning of the 1990s has been the following :

Figure 1 1. 2. 3. 4. 5.

Mega Issues Climate Change Pollution / health Globalization backlash The energy crunch Erosion of trust

Stakeholders "Green" consumers Activist shareholders Civil society / NGOs Governments and regulators 5. Financial sector 1. 2. 3. 4.

Nike monitors working conditions in its supplier factories in poor countries. Demand for CSR behaviour Ikea requires its rug supplier in India to prohibit the employment of children and provides families with financial assistance to help keep their children out of the labor market.

There are many examples of how companies are being affected by the above CSR drivers. Some of the important forces or drivers are described.

Starbucks guarantees coffee producers an aboveworld market price for their products.

Financial Sector/Activist shareholders Shareholders are demanding that organizations should identify, understand, mitigate and report their business risks and have a competitive advantage when raising capital. A good example is the Carbon Disclosure Project (CDP- www.cdproject.net), which

Home Depot no longer sells products harvested from old growth or endangered forests. BP (British Petroleum) has significantly reduced its greenhouse gas emissions. 41


was developed, implemented and monitored by a group of institutional investors representing in excess of US$20 trillion in capital. The CDP regularly requests the FT 500 companies, which represent the world’s largest companies for a response to a climate change questionnaire. As per CDP, companies failing to respond or providing weak responses will invite scrutiny from the investment community. The institutional investors use the questionnaire results to assess company plans and performance for addressing potential risks and opportunities of climate change.

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corporate conduct. Many people seem to think that corporate virtue declines as international economic activity expands. An analysis using the virtue matrix (figure 2) developed by Prof. Roger L. Martin suggests that the source of the skepticism has to do with the variations among the civil foundations of countries at differing stages of economic and political development. A country ’s civil foundation-thus its supply of corporate virtue-tends to grow in concert with its overall economic development. In general, corporate social responsibility in economically advanced countries is generated by deep, solid civil foundations supporting relatively smaller strategic and structural frontiers. The civil foundations of countries with developing economies, by contrast, are relatively shallow and weak, and their strategic and structural frontiers are correspondingly large.

Green Consumer The numbers of consumers who are concerned about health, environment, and social justice are increasing. In fact a new market called LOHAS (Lifestyles of Health and Sustainability) is about a US$226 billion market for goods and services focused on health, the environment, social justice, personal development and sustainable living. Approximately 30% of the adults in the U.S., or 63 million people, are currently considered LOHAS consumers. These consumers represent a substantial amount of buying power since they tend to have higher disposable income and are willing to seek out products and services that meet their CSR values and corresponding ethical concerns. Examples of products in this marketplace include organic foods, hybrid vehicles and fair trade coffee. It’s also important to note that LOHAS consumers bring their CSR values to their workplaces. The strategic shift of organizations from a niche market (focused differentiation strategy) for green consumers to a broader appeal is occurring. LOHAS Consumers reward enterprises that demonstrate the values they seek (buy products and speak positively) and punish organizations that do not (refuse to buy products and speak critically about). In essence, these consumers/employees pay close attention to how their values align with producers of goods and services, their employers and even the charities they support.

Practices in developing countries can also average down the civil foundation of an advanced country. For example, American garment manufacturers have argued that competitive pressure from manufacturers in developing countries, where wages are low and benefits non-existent, make it impossible to maintain benefits for their U.S. workforce. The varying depths of the world’s civil foundations can affect the global supply of corporate responsibility Figure 2 Virtue Matrix Frontier

Globalization backlash Civil Foundation

Globalization only heightens public anxiety over 42

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both positively and negatively. On the positive side, globalizing corporations from advanced countries can enter developing economies and bring with them the employment, ethical, and environmental practices of their home countries’ civil foundation. Those same practices are likely to be in the strategic or structural frontiers of the host country’s virtue matrix. In adopting those practices, local businesses engage in responsible behavior that eventually migrates to their country’s civil foundation. In this way, globalization can “average up” the world’s civil foundations.

is how to effectively align consumer and employee values with corporate strategy to generate longterm cognizant benefits — a better understanding of precisely with whom, what, when, where, how and why an enterprise makes a profit or surplus. CSR requires more holistic strategic thinking and a wider stakeholder perspective. Because the Balanced Scorecard is a recognized and established management tool, it is well positioned to support a knowledge-building effort to help organizations make their values and visions a reality. The Balanced Scorecard enables individuals to make decisions daily based upon values and metrics that can be designed to support these long-term cognizant benefits.

What can be averaged up, however, can also be “averaged down” When a corporation from an advanced economy does business in a developing country, it may instead establish a level of corporate virtue consistent with the host country ’s civil foundation.

A simple definition of a Balanced Scorecard is “a focused set of key financial and non-financial indicators.” These indicators include both leading and lagging measures. The term “balanced” does not mean equivalence among the measures but rather an acknowledgement of other key performance metrics that are not financial. The classic Balanced Scorecard, as outlined by Robert Kaplan and David Norton, has four quadrants or perspectives –

Notoriously, Nike, by running its Southeast Asian athletic footwear plants and paying its workers in accordance with local customs and practices, opened itself to charges of operating sweatshops. In essence, it was accused of averaging down its level of corporate responsibility. The net impact of globalization on the supply of responsible corporate behavior has yet to be calculated, of course. But it’s apparent that companies from countries with robust civil foundations will determine the outcome. If their practices average up civil foundations worldwide, globalization advocates will be vindicated in their belief that increased international economic activity can address some of the world’s most difficult development problems. On the other hand, a corporate race to the bottom would succeed only in averaging down civil foundations and confirming the most lurid fears of globalization opponents.

Integrating Scorecard

CSR

with

(i) People and knowledge, (ii) Internal, (iii)Customer and (iv)Financial. For example, increased training for employees (people and knowledge) can lead to enhanced operations or processes (internal) which leads to more satisfied customers through either improved delivery time and/or lower prices (customers), which finally leads to higher financial performance for the organization (financial). Once metrics are developed for all four quadrants, the company is able to monitor and align its activities with its business strategies.

Balanced

As a result of the interdependent nature of CSR, integration of its values remains a challenge for many business organizations. One of the fundamental opportunities for the CSR movement

By creatively responding to the market forces that are generated by the CSR movement, organizations can reap considerable benefits. One of the key 43

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Financial CSR Drivers :

Measure :

"Green Consumer"

Annual reduction in energy consumption

Energy Crunch

% use of renewable energy

Internal Processes

People and Knowledge

CSR Drivers :

Measure :

CSR Drivers :

Measure :

Pollution and Health

Standard injury, absentee rates, work related fatalities

Civil society / NGOs

Number of indigenous employees

Activist shareholders

Employees trained in environmental management practices

Climate change

Total green house emission

Customer CSR Drivers :

Measure :

Erosion of trust / transparency

Policy to exclude child labour

Energy Crunch

Supplier performance related to environmental commitments

Figure 3

benefits for an organization using Balanced Scorecard is improved strategic alignment of the CSR activities. This would help the organizations to integrate CSR into their strategic process and get business benefit rather than to consider it as an additional programme and a forced cost. The figure below shows how CSR can be integrated

into a organization’s Balanced Scorecard in figure 3.

CSR’s Competitive Advantage This combination of CSR and Balanced Scorecard can help organizations create competitive advantage. 44

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For example a company could begin to compete on cost leadership as a result of improved technology and efficient processes that can result in better risk management and lower cost of capital. Alternatively, a company could differentiate itself from its competitors’ values and performance as a result of its community building activities, which can improve corporate reputation, result in improved brand equity, creating customer satisfaction, which increases sales. The move to a broad differentiation strategy can also be achieved through extensive knowledge of green consumers and leveraging their information needs through appropriate CSR reporting to improve brand equity and reputation.

the public sector organisations. In fact, the public sector organizations were setup with major CSR responsibilities right from their inception. For the PSUs, social objectives like employment generation, peripheral development, providing school, hospitals, townships to the employees were more important than profit objective. To be a responsible corporate citizen has been part of the public sector organizations’ DNA. Companies like SAIL has for long been engaged in socially responsible activities even before the term CSR became fashionable in the western world. Even some of the private sector companies also had displayed CSR behavior. The famous Tata Steel advertisement “we also make steel” is a reminder to that behavior. Therefore the Indian PSUs should take the CSR movement as a great opportunity and use it strategically for creating competitive advantage for them.

Conclusion : When we look back at the Indian scenario, adopting the CSR practices would come quite naturally to

Bibliography : 1. Vogel D. (2005) The market for virtue: the potential and limits of corporate social responsibility washington, d.c.: Brookings institution press, 2005

5. www.cdproject.net 6. Gupta, Rajat. (2005) ‘Public-private’ Partnerships as a Development Engine’ McKinsey Quarterly, September.

2. Crawford, D and Scaleta, T. (2005) ‘The Balanced Scorecard and Corporate Social Responsibility’, CMA Management , Vol.20, October.

7. Cogman, David. and Oppenheim, Jeremy M. (2002) ‘Controversy Incorporated’ McKinsey Quarterly, September, vol (4).

3. Martin, Roger. (2002) ‘ The Virtue Matrix: Calculating the Return on Corporate Responsibility’, Harvard Business review (March)

8. Davis, Ian (2005) ‘What is Business of Business’, McKinsey Quarterly, vol (3).

4. Fraser, B.W. (2005) ‘Corporate Social Responsibility’, Internal Auditor, February,pp. 43-47

9. Willard, B. (2005). The Next Sustainability Wave: Building Boardroom Buy-in. New Society Publishers.

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Feature Article Corporate Social Responsibility : Management of Power Dr S K Bhattacharya*

Abstract In this paper an attempt has been made to link power with the normative aspects of responsibility and reputation that are the keys to long-term corporate value. The ethics and values underlying decisions assume importance in this perspective. This new momentum in managerial philosophy is promoting the agendum of corporate citizenship in a globalized setting. Trustworthiness becomes the key variable in this direction. The author also mentions progress towards an‘inclusive’ view in corporate management as extending to all stakeholders, and to duties instead of merely rights. In order to translate this model into reality the author suggests processes like transparency, creating stakeholder maps, social and ethical auditing and so on. Such efforts, perhaps by external agencies, may prevent or reduce the abuse of power. Ultimately, all this may lead to the formulation of a universal benchmark of social accountability. A gradual movement in this direction is being compelled by the greater expectations of society from corporate behaviour. Hence corporate reputation is becoming the aim for which power has to be deployed. Key words : Trustworthiness, Corporate Reputation.

P ower, the ability to make things happen, is

and development, as well as being at the core of organizational performance in the long term.

probably the most important word in both management education and development, as well as operational performance of orgnizations. For many people, the power represents ‘what is really important?” However, the word responsibility, that is, “in whose interests are we making things happen?” is what should be important. Understanding relationships between power, responsibility, leadership and learning is at the core of the values driving both management education ○

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Today, the responsible exercise of corporate power is increasingly recognized as a critical element in the long-term competitive advantage of successful organizations. Not only can the pursuit of responsibility-driven attitudes and policies help reduce risks in many potentially problematic areas, it can also be an invaluable way to enhance corporate reputations. There is growing recognition that the nature and reputation of a corporate brand is ○

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* Dy General Manager (Academic) & Sr Faculty Member, MTI, SAIL, Ranchi

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There is a greater global perspective by both individuals and business. Over the past few years there has been a major increase in the recognition of the important need to manage successfully the whole spectrum of ‘diversity’. In this context, companies increasingly recognize the need to try to combine ‘thinking globally’ with ‘acting locally’. In parallel, there is a growing recognition that the world is rapidly becoming one interconnected system that links the ecological, social and economic. As Garten has argued: ‘In the twilight of the twentieth century, making globalization work humanely is quickly becoming the dominant issue of our time. This is reinforced by Hans Kung’s earlier comment, ‘what is a world order without a binding and obligatory ethic for the whole of human kind – without a world ethic? What is the use of prohibitions in one country if they can be got round to other countries.

becoming an increasingly important element in any corporate valuation. Many companies, from Exxon to Shell, have been exposed to adverse criticism from the global media which highlighted both the sensitive relationships between business and society, as well as the extent to which that is now rapidly changing in many areas, creating new, challenging agenda for many organizations. Responsible corporate citizenship covers a wide spectrum of approaches. One extreme is the minimal, essentially legalistic, approach to compliance. At the other end of the spectrum, there is a more complex link between power and responsibility– driven attitudes and actions reflecting an underlying sense of values or ethics that influence, positively, the motivation of all concerned with decision making, within the organization.

Building on the theme of the above comments, there In the responsibility-driven approach there is a is now a growing recognition that business operate genuine concern with reconciling most effectively in a society where the interests of all the stakeholders there is a high level of trust and within the decision-making process. partnership, supported by a positive Recent research (Tomorrow ’s infrastructure, that also includes In the responsibility-driven Company and Built to Last Century) an effective legal system. This has confirmed that organizations approach there is a ‘inclusive’ approach involves that are able to undertake this genuine concern with ensuring that there is an underlying reconciliation effectively are those reconciling the interests of spirit of cooperation, rather than that produce the best long-term all the stakeholders within conflict, among the stakeholders. benefits for any stakeholder group, the decision-making Such a balance is not established including the shareholders. process. quickly, or sustained easily. Trust is critically dependent on a Power and Corporate perceived sense of fairness Citizenship between the parties. If this balance But what are the core principles of this newly does not already exist, stakeholders inevitably emerging, more responsibility driven approach to become involved in power struggles that can global corporate citizenship? In essence these are: ultimately damage even destroy, the structures and organizations within which they operate. Globally A new balance in the relationship between the there are endless examples of companies where power and responsibility of the stakeholders, the relationships between employers and employees reflected by business, government and civil have broken down in such a way as to permanently society. One aspect of this change is the growing damage companies even industries. role of non-governmental organizations and charities, using those organizations as the vehicle In the national context, democracy in the twentieth for providing goods and service within society. century has provided an invaluable, but not infallible, 47

CORPORATE SOCIAL RESPONSIBILITY : MANAGEMENT OF POWER - BHATTACHARYA

vehicle for attempting to recognize and reconcile the conflicting interests of various groups within commonly agreed rules of the game. If democratic processes are to have a reasonable chance of success in the long run, they need to be reinforced by a genuine concern that the will, or power, of the majority will not be used to abuse the position, or rights, of any minority. In addition an independent legal framework is an essential part in providing underlying stability of the system. Any social system needs to be able to innovate and evolve, and this innovative process need to obtain benefits from an appropriate balance between cooperation and competition. These core issues need to be much more recognized as a basis for their more effective management.

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covers such critical areas as atmospheric and water pollution. In a major Royal Society of Arts report, one leading industrialist maintained: ‘Increasingly, business people are recognizing that their prosperity is directly linked to the prosperity of the whole community. The community is the source of their customers, employees, their suppliers and, with the wider spread of share ownership, their investors. The report itself emphasized the importance of a stakeholder approach. The central idea being of the ‘inclusive’ company which values all its stakeholders. The report concluded: There is clear evidence that companies which put shareholders first do less well for them in the long run that those that recognize the claims of all their stakeholders. In fact it can be argued that, ‘A failure to give due weight to important stakeholder relationships could thus constitute a failure by the directors to discharging their duty properly.

Power, Innovation and Change

For innovation and change in both business and The link between rights and responsibilities is society to be defined as progress, it is necessary emphasized by some writers for example: “when for the change-drivers to be based on a positive approach to values. Without this we speak of human rights, we should also speak of human responsibilities underlying emphasis, and essential – it is no use clamoring for human agreements on these values, competitive pressure will ultimately rights if we are not prepared to accept Increasingly, business our human duties. prove divisive and damaging. At the people are recognizing that other extreme, an essentially These definitions and comments on their prosperity is directly cooperative approach, if not driven power are typical of management linked to the prosperity of by a strong commitment to values literature and they reinforce the the whole community. and the responsible use of power, prevailing concept of power as will almost inevitably generate illegitimate behaviour designed to conditions where corruption and the benefit self-interest rather than abuse of power will damage the long organizational goals. Occasionally it term interests of various stakeholding is recognized that: “The responsible use of power groups in such a way as to provoke more radical is a concern to all sectors of society. Somehow we alternatives. Again, the damage that can arise over need to marry the understanding and use of power the long term when a non-inclusive approach is with an appreciation of its consequences on those taken, needs to be much more widely recognized, on the receiving and of it to find new ways to whether it is within the business, or within the broader understand and act on the power structures of which social agenda. we are all an inevitable part. This inclusiveness covers areas such as education and training, as well as the growing recognition that Power and Stakeholder Management the natural environment needs to be nurtured and In any stakeholder analysis, one factor that is now supported in order that human life can prosper. This widely recognized as conducive to agreement and growing consciousness of a dynamic interrelationship progress is the extent to which the various 48

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stakeholders reflect common underlying values and interests, as well as objectives which are then, as far as possible, combined into a strong underlying commitment to improving the performance of the organization, or the group. In many situations, the ideal option is for the stakeholder (be they shareholders, consumers, employees, suppliers or any other group) to be basically the same people wearing different hats. Experience shows that organizations are communities of people that will only work successfully over any length of time if those working in them are motivated by the fact that they share common objectives, reflecting common values.

to be reconciled with the associated responsibility while making the whole process more accountable.

Power and Social Auditing

One example of an organization that is pro-active in this area is social accountability 8000 launched in 1997 by the Accreditation Agency of the council on Economic Priorities, a New York based non-profit research organization. This organization has developed one of the first global, verifiable sets of standards for auditing corporate responsibility. Their approach is modeled on standards administered by the International Standards Organization and a number of major companies (Avon, Toys RUs, Ellen But, what tools and techniques can be used to help Fisher and Promodes) have used this methodology. Behind this approach are nine social accountability improve the effectiveness of the management of stakeholder interests? To start with, organizations requirements, which cover such areas as child labour, in general, and companies in particular, need to health and safety, discrimination policies and practice, and working hours. Ultimately, the aim is to unify be committed to more transparent accountability and more openness. This process the various fragmented codes of not only encourages comparability conduct used across the world to Experience shows that create a universal benchmark of and best practice, but it also organizations are provides the framework and social accountability. pressure for continuous communities of people that A survey of European Companies improvement. Another technique will only work successfully conducted by Harris Research, for the positive integration of power over any length of time if revealed that 70 per cent of and responsibility is the those working in them are companies view corporate development of ‘stakeholder maps’ motivated by the fact that they responsibility as a very important which help identify stakeholders issue; that 88 per cent regard share common objectives, and then promote dialogue and corporate reputation as exerting a reflecting common values. consensus. big influence on corporate value; More companies, including IBM and that a quarter see a greater expectations of social responsibility and Novo Nordisk, are taking a systematic approach to understanding and as the main reason that reputation management negotiating between various stakeholders. This is rising in importance. Accordingly, three quarters of companies have formal processes for monitoring methodology can extend to formal systems social accountability, using a variety of social audit at least one of the five areas of corporate responsibility measures. Such exercises can reveal how employees – shareholders, customers, employees, social and and other stakeholders perceive the organization, partner interests. together with how well the organization, is fulfilling The Corporate Accountability and Responsibility its aims and the extent to which it is operating within Evaluation framework developed by Price its own value statements. In essence, these audits Waterhouse Coopers (PWC) provides a series of emphasize openness and then combine this standardized procedures and checklists to help emphasis with a more public and systematic organizations manage their reputations. This process framework within which, corporate power is sought can be used to assess company’s behaviour towards 49


its stakeholders according to a series of principles organized into such areas as governance stewardship, environment, health and safety, and communication / leadership. The resulting scores can then both be compared against those achieved by ‘the best in the class’, as well as be used to benchmark progress on a regular basis within any one organization. If used effectively, these results can also provide a vehicle to generate developmental opportunities for the future continuous improvement of the organizations themselves, as well as of the people in them.

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new world of corporate social accountability, all organizations need to demonstrate their commitment to the principles of good corporate citizenship through externally verified sources. Not only is this increasingly seen to be in the corporation’s short-term interests, but it is very much in the long-term interests of the global system as a whole.

Power and New Partnership Partly because of external pressures, companies are increasingly focusing on systems and structures that encourage inter-dependence, partnership and cooperation. This trend is producing apparently unlikely alliances such as the burger chain, McDonalds and the like which have created the task force to improve the effectiveness of the treatment and disposal of the company’s solid waste.

Like other management techniques, it is essential these exercises are not taken bureaucratically. The techniques produce real benefits only if those operating the systems and procedures actually believe in them. Only then will there be a positive effect on relationships.

Without some global value-driven framework, companies face special challenges when operating within the global environment. Hence, in order to be good corporate citizen, companies need to operate within clear principles backed, ultimately, by a well defined, easy to operate and fair legal system. However, Without some global any attempt to rely simply on the law value-driven framework, as the only vehicle for regulating the companies face special system and ensuring compliance, will challenges when operating have very limited benefits. Real benefits arise only when those involved show within the global a real commitment to an underlying environment. values-driven approach.

If these assumptions are in place, there are several potential business benefits, including improved relationships with contractors and suppliers, improved customer confidence and better supply-chain management. There is little doubt that all these improvements should help to produce a more stable global business environment over the long term.

Ethical audits are also becoming much more common as vehicles for assessing the ethical climate within organizations. These approaches focus on organizational values and ask whether there is consistency between the way the organization actually operates, and the way it would like to operate. The objective of ethical audits is to explore whether an organization’s structure and processes are likely to result in behaviours that are different from their professed values. In essence, this process is an attempt to reconcile internal organizational power with responsibility and, through that reconciliation, help to minimize the abuse of power.

In order to manage change and complexity, managers not only need new skills but also a firm foundation in timeless wisdom. This wisdom reflects truths that provide the framework within which to manage the rapidly exploding areas of knowledge, information and data. Hence, education, training and the distillation of knowledge into effective learning must be at the heart of any effort to improve organization performance. These new skills need to address a wide variety of issues, but in that context, we need also to explore the apparent paradox: “why do we appear to be spending more and more time focused on learning knowledge

One point become increasingly clear is that, in the 50

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that has a short shelf-life, and less and less time on knowledge that overlaps with wisdom through having a long shelf-life? For example, the ability to communicate needs to focus on listening skills which are rarely given priority at any level of the educational system.

stereotype is often unfairly criticized, as many of those military leaders who were successful over the long term were effective managers of all the stakeholder interests. At a practical level, leadership at all levels of society, and inside organizations, needs to learn to listen and operate a positive dialogue with the various stakeholders. This approach can pre-empt potential media problems, and so, reduce the risks and help protect a company’s reputation.

A positive approach to corporate, citizenship needs to reflect this ‘inclusive approach, which should drive companies closer to all their stakeholders. This inclusive approach explores and effectively manages objectives and values, then reconciles these issues with those of power and responsibility. This process is critical, not only for the survival and success of corporations themselves, but essential for both society in general and for all of us as individuals.

As Glen Peters, (Director of Futures at the consulting arm of PWC) put it, “Management is no longer just the speciality of managers; it is now everybody’s business – governments, citizens, shareholders, customers, workers.”

In corporate citizenship: successful strategies for Responsible Companies the authors argue that, ‘Business’ as a moral and responsible activity reflects the following beliefs / goals :

Many of the traditional leadership views of power are revealed in :

“The concept of power is a preoccupation for many leaders. For some it is a drug and for others it is a Business has an obligation to strive for social source of fascination …….. the betterment. (Because it is in its concept of giving away one’s power long-term interests). is both a demand made on us. We invent most of the constraints ……. Business should act beyond At a practical level, So it is with leadership. The leader compliance with economic and leadership at all levels of who clings to power, who is afraid legal obligations (Because it is in society, and inside to give it to others, will, in fact, cease the long-term interests). organizations, needs to to be a leader. In business, this learn to listen and operate Business is the engine of society person will increasingly become (And it must accept responsibility a positive dialogue with the ineffective and in the end will be for consequences that arise from various stakeholders. ousted, while in politics it is the using the power associated with leader’s relationship to power that that engine). makes the difference between a legitimate leader and a tyrant. The directors are trusted for a range of claimants, including the shareholders (and the critical factor in their decision-making is to match effectively their power with their responsibility in the long term interests of the organization as a whole).

Some power-driven individuals and organizations can, perhaps, be defined as successful in the shortterm, but experience suggests that power-driven individuals ‘contain the seeds of their own destruction’ – and this usually includes any organizations they are associated with - based on an apparently infinite need to prove themselves (or feed their ego?). Robert Maxwell is a classic example of this approach. Both leadership and power are best seen as a form of trusteeship – unless those who have power use it responsibly (and are seen

Power and Leadership In recent years the whole subject of leadership has been re-evaluated within this wider, values driven, framework, moving away from the traditional topdown military model. However, the military 51


to use it responsibly), they will find that it is taken away from them in one way or another, sooner or later.

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approach preoccupied with power into a more positive direction where the prime emphasis is on responsibility. Within this context it is also important to recognize that ‘political correctness, and its attempts to overcome sexism and racism, are essentially about the need to minimize the abuse of power and to encourage a responsibility-driven approach. Also, the whole question of the role of ethics and ethical behaviour by individuals need to be firmly rooted in the issues raised in this paper.

In essence, the servant – leadership approach defines leadership as: “The use of gifts and talents on behalf of all of us in a way that models what we can be and empowers us to try”. It is an echo of Robert Greenleaf ’s statement: “Do those served grow as persons: do they, while being served, become healthier, wiser, freer, more autonomous, more likely themselves to become servants. The link with power is made in the remark by Kets De Vries:

Power and Responsibility

There are, however, those who argue that a market economy is essentially a power and self-driven vehicle. In this context, it is important to remember that Adam Smith, its initial exponent was a professor of moral philosophy not of economics, and he built his theories on the basis of a moral community. Before he wrote "A Theory of the Wealth of Nations" he had written his definitive work, "A Theory of Moral Sentiments", arguing that a stable society was based on ‘sympathy’ a moral duty to have regard for your fellow human beings. The market was, and is, a mechanism for sorting the efficient from the inefficient; it was not a substitute for The ultimate judgments of responsibility. leaders is often not about

“Those leaders who are able to combine action with reflection, who have sufficient self-knowledge to recognize the vicissitudes of power, and who will not be tempted away when the psychological sirens that accompany power are beckoning will in the end be the most powerful. They will also be the ones truly able to manage the ambiguities of power and lead a creative and productive life”.

However, it is valuable to recognize that: “The ultimate judgments of leaders is often not about how they acquire and use power, but how they relinquish it. Ultimately, this comment reflects how many politicians have interpreted their view of power. In how they acquire and use The key point about a market the end, leadership is concerned with power, but how they economy is not that it and profit the effective and efficient relinquish it. motive are of themselves ‘good’ or management of all the stakeholder ‘bad’ things. It can be, and is, a interests and interfaces in the long valuable resource allocation term interests of their organization technique (essentially one that is as a whole or it can be defined as decentralized so it minimizes the opportunities for the ability to act effectively and responsibly in the the abuse of power). But, in the long term, the success interests of those who are being led. Essentially this of any system that operates these techniques will latter interpretation reflects the Servant/Trusteeship be critically dependent on both how these profits approach. are made and what they are used for. If a long term view is taken, it implies the full and effective This analysis has argued that the center of the debate consideration of, and some responsibility for, the about leadership should be more about how and interests of all the stakeholders. Any short-term pursuit what we learn about responsibility, rather than the the interests of one stakeholders interests at the traditional preoccupation with power. In order to expense of the others is likely to result in instability make progress we need to generate new alliances over the longer term. and improve the effectiveness of old ones. Here learning for leadership helps shift the historic 52

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In the end, the vital link between learning, leadership and responsibility needs to be more widely recognized if we wish to be more optimistic about the shape and nature of society in the decades ahead. But what do we do about this situation now? At this stage, recognizing and emphasizing the importance of the link is a useful place to start. But it is only a beginning. As another authority perceptively put it: “The key facilitating role of Directors is to create the climate in which learning is encouraged, rewarded and allowed to flow freely around the organization.

Organization concepts: “Effective organizations hold leaders accountable for the development of all subordinates.” And: “Empowerment is defined as the process of enabling and motivating subordinates by increasing their personal efficacy – Thus it becomes the leaders’ responsibility to help each subordinate to reach his or her full potential. This general position is confirmed by Philip Sadler, author of the Centre for Tomorrow’s Company, a recent publication on leadership, who argues: “The emphasis in the past has been focused on personality traits and interpersonal skills. The emphasis in the future needs to be placed on character and values.

This view reinforces the link with Learning

References : (5) James C. Collins and Jarry I, Porras, Built to Last Century, New York: Random House, 1995.

(1) Chakraborty S.K., ‘The Management and Ethics Omnibus, New Delhi: Oxford University Press, 2001.

(6) John Van Maurik, Discovering the Leader in You, New York: McGraw Hill, 1994.

(2) Cynthia Hardy, Power and Politics in Organizations, New York: Dart Mouth, 1995.

(7) Philip Sadler, Center for Tomorrow, San Franscisco: Jossey – Bass, 1999.

(3) Hans Kung, Global Responsibility: In Search of a New Work Ethic, SCM Press, 1991.

(8) R. Garatt, Learning to Lead: Developing Your Organization and Yourself, New York: Fontana, 1990.

(4) J.A . Conger, The Charismatic Leader, San Francisco: Jossey-Bass, 1989.

The Requirements of this Job Employer :

"In this job we need someone who is responsible".

Applicant :

"I'm the one you want. On my last job, every time anything went wrong, they said I was responsible".

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Feature Article Social Accounting of Corporate Social Responsibility Dr Ashok Kumar*

Abstract With the growing importance of Corporate Social Responsibility as an inherent aspect of business, there has been a corresponding growth of social accounting of processes that constitute social responsibility of business. Today CSR is not only confined to abiding by rules and regulations but also to cater to the requirements of the common man. It has to be made integral part of the vision and strategies of the organisation. The paper deals with the different facets of social accounting of CSR and its impact on the long-term discharge of social responsibility of business. Key Words : CSR, Social Accounting, Social Audit, Stakeholders.

Introduction

3. Those who have social values and do contribute to the society in all possible ways.

E ver yone is talking about Corporate Social

Responsibility (CSR). Is it a buzzword? It is nice to know that Private Sectors to Public Sectors, Small Corporates to Big Corporates, Retailers to Manufactures all are actively engaged in CSR, but is it really making any difference to the society in general and the last man in particular? In this context, the organizations involved in CSR can be broadly divided in three categories :

Whatever intentions and motives are, the fact remains that CSR projects do something good to society, may be in limited way. In Corporate World, profit is a must. But, it is not enough to make profit, the more important aspect is what one does with that profit. Profit is earned from the society and how and how much one pays back to the society is the principle on which CSR is adopted by the organizations.

1. Those who openly declare that CSR is more of marketing and PR strategy to remain in lime light and build image.

The traditional approach of CSR was charity. Today, concept of CSR has transcended philanthrophy and charity and the focus is on the sustainability rather on just satisfying immediate needs. CSR does not confine to abiding by law and environment

2. Those who openly do not declare but hidden motive is to build image and get more and more business. ○

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* General Manager (HRD), SAIL, MTI, Ranchi.

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regulations. The responsibility to cater to the need of marginalized and deprived class of the society is of every citizen including corporate citizen. In this context, managers must develop empathy with the society in which they operate. Ultimately, CSR interventions aim at bridging the gap between the business and social factors supporting the business. CSR initiatives also enhance the credibility of the organizations as an entity that cares for the society in general and not only shareholders. However, in most of the cases the CSR has not yet become integral part of the vision and strategies of the organization.

Contribution to charity Labour relationship Practices related to hiring, promotion and pay Air, water and noise pollution Power and water consumption Plant appearance Traffic flow Support to local industries Safety and Health of employees With “Right to Information Act’, social performance in now subject to public scrutiny. While financial accounting and operational accounting have well established procedures and system, the social accounting, being a new discipline, suffers with serious problem of standard accounting. (Nike Case : Box No.1)

CSR is the alignment of business operation with social values. It is the interest of stakeholders in the Company’s business policies and actions. CSR focuses on the social, environmental and financial success of a company- the so called triple bottom line to achieve social development while achieving business success. Achievements in CSR gives social respectability to the organization.

The following are some of the serious problems social accounting :

CSR therefore is not buzzword rather it has become the password to not only overcome competition but to ensure sustainable CSR therefore is not growth by meeting the needs of all buzzword rather it has stakeholders. To-day’s organization are spending money on CSR and they become the password to are also claiming achievements. Each not only overcome organization wants to be ahead to competition but to ensure others in terms of their contribution. sustainable growth by In this backdrop, the social accounting meeting the needs of all and social audit are of great relevance.

stakeholders.

Social Accounting

1. Absence of a well conceived information system as part and parcel of social programmes under the umbrella of CSR. 2. Not all social problems are well designed or based on valid assumptions. Most often the programmes of CSR do not attack the problems at the first level of symptom – cause relationship, rather attack in an superficial problem to get more visibility and publicity.

3. Organizations implementing CSR not maintain records giving complete picture. The information related to impact of CSR on beneficiaries is seldom maintained.

Corporations have internal and external social obligations over and above economic and efficient functioning. The corporations are expected to fit into the state’s concern for improving the quality of life. To assess “social performance” of a corporation, social accounting is carried out. The social performance gets reflected interms of :

4. Absence of programme relevant social indicators. If a CSR programme includes assessment of social performance and details the quantum and indicators of such performance than social accounting become, more specific. Thus, each organizations claiming implementation of CSR must prepare a social balance sheet or a statement of social benefits and deteriments

Impact of expansion and diversification plan on the local economy Stability of local employment levels Payment of taxes 55

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SOCIAL ACCOUNTING OF CORPORATE SOCIAL RESPONSIBILITY - KUMAR

Box–1 Nike’s Social audit says Indian units below par (The Indian Express – Saturday, April 16, 2005) New Delhi, April 15 : An independent audit by Fair Labor Association (FLA), an international NGO working on adherence to international labour standards, has said that global apparel and footwear maker Nike Inc’s corporate social responsibility compliance in its Indian factories is below par.

Though, according to the company, an application has been submitted, the status right now is “ongoing” as far as safety and health compliance is concerned. Some also employ women for cutting, stitching etc. The FLA monitoring team heard of many cases of sexual harassment as also restricted access to drinking water and toilets.

The audit was commissioned by Nike Inc under its Corporate Social Responsibility Report 2004, which has been posted on its website on Wednesday.

“Many female workers during interview complained of harassment by the section in-charge of the assembly section and their complaints about him to the supervisor concerned had not resulted in any remedial action. He tends to get spiteful and often would also come and stand / sit next to a female worker and ogle at her to her sheer discomfort and disgust. The problem continues to exist,” the report says.

For the first time, Nike Inc has admitted to noncompliance issues and harassment of workers in many of its Asian contract factories, 18 of which are located in India. China has the highest number of Nike contract factories, 124, followed by Thailand, 73, South Korea, 35, and Vietnam, 34.

For long under fire from human rights and labour organizations the world over, the MNC, has for the first time made public the details of its social responsibility report.

Of the 18 contract factories in India, 13 are located in south India. In one case, the FLA team found a contract factory operating without a valid licence.

The audit acknowledges that there were cases of workers being forced to work overtime. No record was being maintained for payment, minimum wages were not being paid, and semiskilled workers were being paid wages of the unskilled grade.

Nike’s just not doing it right Nike’s Many case of sexual harassment among women Workers being forced to work overtime No record of payment are kept at the factories

These were not labeled. Also, workers had not been given any training for safe handling of chemicals, thereby exposing them to danger

Minimum wages were not being paid

The report gave out the names and location of about 700 of contract factories making Nike-branded products. “ We are disclosing our supply chain in an effort to jump-start disclosure and collaboration throughout the industry.” Says Philip H. Knight, Nike founder and chairman, in his opening letter to the report. For some years now, NGOs and labour activists have been demanding that Nike and other such companies should disclose where their factories are located, so that independent observers could go and assess the labour conditions.

History of Audits

audit is most ancient form of audit which is concerned mainly with the detection of frauds. Then came in chronological order, regularity audit,

Over a period of time, audit function has evolved starting from vigilant audit to social audit. The vigilant 56

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propriety audit, value for money audit, performance audit and lastly social audit. Audit functions, by and large, address three Es: Economy, Efficiency and Effectiveness. The social audit goes beyond these three Es and examines the impact of corporate activities on certain sections of the society as beneficiaries of such activities. As given in Box 2, China has well established system of audit administration.

Box – 2 A Case of Development of Audit in China Since the establishment of Audit Administration of the People’s Republic of China (AAPRC) in September 1983, audit institutions and vast numbers of auditors have been faithful to their duties and have taken painstaking efforts in their work, bringing about remarkable achievements, under the leadership of the State Council and people’s governments at various levels.

Audit of Social Accounting Each account needs to be audited for its accuracy, impact and further improvements. The audit of social accounting is know as ‘Social Audit’. So, how does an organization involved in CSR put all of its social accounting and reporting together? It has to be through social audit. Following definitions of social audit can be referred to have in depth understanding of this term:

The implementation of the system of auditing supervision is an objective requirement of the development of economy, the deepening of reforms and the establishment of clean governments, in China. This has been possible by planning the ascent careful by designing the steps of the audit ladder as given below :

‘Social Audit is a method for organizations to plan, manage and measure nonfinancial activities and to monitor both the internal and external consequences of the organisation’s social and commercial operations.’

International Exchange

Source : Social Audit Toolkit (1997) Freer Spreckley, Social Enterprise Partnership

‘Social Auditing is a process which enables organizations and agencies to assess and demonstrate their social, community and environmental benefits and limitations. It is a way to measure the extent to which an organisation lives up to the shared values and objectives it has committed itself to promote.’ Source : Social Economy Agency for Northern Ireland

‘Social auditing is the process whereby an organisation can account for its social performance repot on and improve that performance. It assesses the social impact and ethical behaviour of an organisation in relation to its aims and those of its stakeholders.’ Source : New Economics Foundation

Before a social audit takes place, auditee should be clear about :

In recent years, audit institutions have conducted audits of different trades and special funds and gradually introduced the system of regular audit.

What organisation is trying to do (Objectives)

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How one is going to do it (action plans)

Social auditing provides an assessment of the impact of an organisation’s CSR objectives through systematically and regularly monitoring. Social auditing requires the involvement of stakeholders. This may include employees, clients, volunteers, funders, contractors, suppliers and local residents interested in the organisation. Stakeholders are defined as those persons or organizations who have an interest in, or who have invested resources in, the organisation.

How one will measure and record the indicators mentioned in objectives (assessment) When above three things are in place it is easy to design simple procedures and formats to log what is being implemented on day to day basis (social book keeping), to tally up indicators (social accounting) and make sure that the CSR plan of organization is on target or to prepare to do something it there are deviations (social audit). The experience of Northern Ireland in social audit has been well quoted (Box 3).

Who is a Social Auditor? Social audits are generated by the organisation themselves and those directly involved. A person or panel of people external to the organisation undertakes verification of the accuracy, objectivity and impact of the social programmes. Ideally, the social auditor should be associated since very beginning and his help should be taken in framing appropriate methodology to evaluate the social performance.

Box – 3 The Northern Ireland Experience of Social Audit The Social Economy Agency (Northern Ireland) began promoting social auditing in 1996. The first social audits involved training and mentoring 10organisations. External consultants were used to design the social audit methodology, and provide training and support to auditors within each organization. This process took between 18 to 24 months of decreasing levels of support.

What does Social Auditing Involve? The social auditing process requires an intermittent but clear time commitment form a key person within the organisation who will function as social auditee and would liase with others in the organisation and would design, co-ordinate, anlayse and document the information collected during the process.

The Northern Ireland Open College Network has accredited this social auditing approach to level 3. A second round of organizations started the process in 1998. A detailed training manual has also been produced and can be obtained form the NI Social Economy Agency.

Social auditing information is collected through research methods that include social bookkeeping, surveys and case studies. The objectives of the organisation are the starting point from which social indicators of impact are determined, stakeholders identified and research tools designed in detail.

This example provides interesting lessons in how to establish a networked cluster of local auditors based within a range of organizations but who use common standards research methodology, and training / mentoring approach.

Social Auditing – A Method Determining Impact of CSR

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The collection of information is an on-going process, often done in 12-month cycles and resulting in the organisation establishing social bookkeeping and the preparation of an annual social audit document / report. Some of the internal persons can be trained and developed as social auditors. Experience has shown that it is important to provide training to the social auditors during the first few yeas. If well facilitated, social auditors from different organisatons can become self-supporting for subsequent years.

of

Social auditing is a process that enables an organisation to assess and demonstrate its social, economic, and environmental benefits and limitations. It is a way of measuring the extent to which an organisation lives up to the objectives of CSR it has committed to various stakeholders. 58

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Social audit of CSR covers three different situations :

Policies include training, career planning, remunerations and advantages, rewards linked to merit, balance between work and family life, as well as mechanisms that ensure nondiscrimination and non-harassment.

1. An analysis conducted by corporate insiders as owners of CSR programmes. 2. An analysis performed by independent internal social auditors.

Environment : monitoring and reduction of the damage caused to the environment. For instance, policies of reduction of emissions and waste.

3. An inspection and surveillance performed by independent external social auditor.

Humanity : making sure the company does not violate human rights nor appears as supporting human rights violators.

The above mentioned three situations follow each other overtime, as organisation evolves and builds a Social Policy. First corporate insiders analyse the existing programmes and their impact which is followed by audit by internal auditors. Finally, when the ‘Social Policy’ including procedures, system etc. are running smoothly, the organisation goes for independent audit by an external agency.

Scope of a Social Audit The first step in social audit is to identify the stakeholders. A Social Auditor does not study each group of stakeholders separately and he considers all stakeholders as a whole because their concerns are not limited to only immediate interest. As a result, the Social Auditor will work on a components of a company’s CSR Policy (Ethics, Labor, Environmental, Community, Human Rights, etc.), and for each subject, the Social Auditor will analyze the expectations of all stakeholders.

Community : investment in its local community. Policies include partnerships with voluntary local organizations, with financial donations, donations in kind (computers for education, food and clothes for the poor), and employees involvement. The company may initiate or participate to a major project such as the regeneration of a poor neighborhood plagued with unemployment, poverty, low education and communal The CSR initiatives need to tensions.

be managed to get desired results. The results should be assessed and audited periodically.

Society : investment of partnership beyond the community. For instance, partnership with a charity to market a product while giving a small percentage of the sales to the charity.

Compliance : Identification of all legal obligations and of the means to comply. Policies must deal with changing rules related to its work force (Labor), its products (Health, Environment, Intellectual property, specific regulations), its administration (Business, Tax), its dealings (supplier and customer liability, Criminal actions).

The scope of the audit generally includes the following aspects : Ethics : Values, the company vows to respect. Policies include the pledge not to participate in (nor engage in business with people involved in) a series of activities that are deemed offensive. This list of unacceptable activities often includes exploitation of children, damage to the environment, etc.

Management of CSR : Accountability (SA : 8000)

Social

The CSR initiatives need to be managed to get desired results. The results should be assessed and audited periodically. In this context, Social Accountability – 8000 (SA-8000) launched in October 1997 by CEPAA.-

Labour : creation of a working environment allowing all employees to develop their potential. 59

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Council on Economics Priorities Accreditation Agency, a Northern-American NGO that renamed itself to SAI – Social Accountability International, is the first global standard about Corporate Social Responsibility. It focuses on the guaranty of the rights of the workers involved in the production processes, promoting standardization in all sectors of business. At present SAI has the role of promoting & stimulating the implementation of the standard in the whole world as well as accrediting organizations qualified to certify.

permitted. (iii)

Health and Safety

Health and safety have to be guaranteed. Maintenance of a healthy working environment, focus on prevention of accidents, maintenance of machines, use of safety equipments and regular training shall be stated in a Corporate Health and Safety Management System. (iv) Freedom of Association and Collective Bargaining

Requirements

Freedom of association and collective bargaining has to be respected. Workers do not have to associate themselves necessarily, but have the right of a dialogue with the company.

The standard is composed by 9 requirements based on the Convention of the International Labour Organisation (ILO), the Universal Declaration of Human Rights and the United Nations Convention on the Rights of the Child. The certification also requires the conformity with the local laws.

(v) Discrimination Discrimination is not permitted. There is no discrimination in hiring, compensation, access to training, promotion, termination or retirement based on race, caste, national origin, religion, age, disability, gender, marital status, sexual orientation, union membership or political affiliation.

The requirements to be incorporated by the corporation are : (i) Child Labour Child Labour is not permitted. Child Labour is considered labour done by a person younger than 15 years (or the minimum age established by local laws whichever rule is more restrictive). If the company to be certified is employing minors of less than 15 years it is not allowed dismissing them. In this case the company shall establish and present work plans to assure that the child is not exposed to situations in or outside of the workplace that are hazardous, unsafe or unhealthy. Furthermore the company has to guaranty the access to education. This ruling prohibits that dismissed children have to submit themselves to even more dangerous work, keeping in mind that they find themselves usually in a cycle of poverty which makes work the only way of survival.

(vi)

Disciplinary Practices

Disciplinar y practices are not permitted. The company shall not engage in or support the use of corporal punishment, mental or physical coercion, and verbal abuse. Charging fines for not fulfilling goals is not permitted. (vii)

Working Hours

Working hours should not exceed 48 hours a week. Overtime shall be voluntary, shall not exceed 12 hours per week, shall not be demanded on a regular basis and shall always be compensated at a premium rate. Workers shall be provided with at least one day off every seven-day period. (viii)

(ii) Forced Labour

Remuneration

Wages should always be enough to meet basic needs like housing, clothing, and alimentation and to provide some discretionary income. The company shall ensure that labour-only contracting arrangements and false apprenticeship schemes are not undertaken

Forced labour is not permitted. As forced labour is considered work that is extracted from any person under the menace of any penalty and said person is not receiving remuneration. Retention of personal documents or deposits by the company is not 60

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in an efforts to avoid fulfilling its obligations under applicable laws. (ix)

If the company possesses other types of certifications of the ISO-series (ISO 9000 or ISO 14000, for example) it is possible to use and adapt the same management system created for the earlier certifications. Auditing of the different certifications can be integrated, which results in considerable cost reduction.

Management Systems

A management systems shall exist to assure the effectiveness of the concordance to all of the requirements of the standard through documentation, implementation, maintenance, communication and monitoring of the company relating to the requirements of the standard within a on-going improvement process.

Once the certification has been obtained, bi-annual auditing visits will be necessary to verify the fulfillment of the goals set in the action plans. Certification is valid for 3 years. After that period a new certification has to be solicited.

Referring to the Quality Management Standards ISO 9000 and the Environment Management Standard ISO 14000, SA 8000 is following their structure and emphasizes the importance of an on-going improvement process.

Marketing activities and external publishing are only allowed after obtaining the certification.

Benefits of SA 8000 Along with the humane workplace, the implementation of SA8000 offers more benefits to companies and others:

Implementation

The implementation of SA 8000 within an organization is done through the definition of a management system. A Flow Diagram with PDCA Cycle for A management systems shall implementing SA 8000 is given in exist to assure the effectiveness Figure 1.

Certification for SA : 8000

of the concordance to all of the requirements of the standard through documentation, implementation, maintenance, communication and monitoring of the company relating to the requirements of the standard within a on-going improvement process.

Before commissioning audit by an external party, the activities described in the management system should be accomplished. It is recommended that a preauditing through a third party certification body1 is carried out before the certification auditing. Both the internal auditing and the external preauditing can lead to corrective actions, which can be carried out before the certification auditing.

Benefits for Workers, Trade Unions and NGOs: Enhanced opportunities to organize trade unions and bargain collective A tool to educate workers about core labor rights An opportunity to work directly with business on labor rights issues A way to generate public awareness of companies committed to assuring conditions

Benefits Business : Drives company values into action

The certification auditing consists of auditing visits to obtain objectives of the implemented process. The information is collected through interviews with employees and stakeholders. This process is followed by a report with the positive or negative recommendation for certification.

Enhances company and brand reputation Improves employee recruitment, retention and productivity Supports better supply chain management and performance 62

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of the Corporation. The primary aim of CSR is not to gain visibility through drum beating rather Clear and credible assurance for ethical decisions corporations should share the earned profit with the society for its welfare and well Identification of ethically made being. The competition among products and companies corporations to be ahead in CSR is committed to ethics It will be better if CSR not a healthy sign. It will be better programme highlight its Broad coverage of product if CSR programme highlight its categories and production objectives and social objectives and social indicators and geography have a system of social book keeping, indicators and have a social accounting and social audit. system of social book It will be better if corporations get Conclusion keeping, social accounting certified for their ‘Social and social audit. CSR should be considered as an Performance’ by a reputed certifying integral part of the business. The agency. It is time to realize that CSR programmes of CSR should have should not be implemented as direct linkages with the Social Policy disjointed activity and efforts should be made to develop management systems for designing, implementing and evaluating CSR initiatives. Benefits for Consumers and Investors :

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Feature Article Corporate Social Responsibility : An Indian Perspective Debjit Rath* Benz Thomas**

Abstract Everyone has a different viewpoint on the evolution of the concept of CSR. Some believe that it is a product of liberalization, an extension of integrated marketing communication, while others believe that it has always been in practice by big firms like IBM, Johnson & Johnson, and Microsoft etc. In India, CSR as an inherent corporate philosophy has gained momentum in the last one and a half decades and is now been considered as a reflection of the spirit of an organization. In this article, the authors have made an attempt to discuss the various facets of CSR as understood and practiced in India, in all its nuances. Key Words : Corporate Social Responsibility, Indian, Accountability, Transparency

In recent past the concept of Corporate Social

a better image for themselves making them more acceptable by the society. MNC’s and major Indian companies like P&G, HLL, ITC, Ranbaxy and the likes have been engaging more and more resources to fulfill their CSR objectives.

Responsibility has gained immense importance. With the advent of globalisation business organisations have grown bigger and better in terms of efficiency. Their influence on the lives of the common man has increased significantly. Further the introduction of satellite television; Internet and other forms of communication heralded a new era of information where the common man is able to take holistic view of different companies not only on the basis of their performance but also on the strength of their service and contribution to the society. The organisations, in turn, have also been making intensive efforts to espouse corporate social responsibility so as to project ○

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In India large corporate houses like the Tatas and Birlas have been practicing CSR for a long time. However, so far as the leading Public Sector Enterprises are concerned CSR has been central to their existence since they were launched primarily with a social motive. SAIL is a true embodiment of this philosophy and upholds social values as its prime motto right from the inception.

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* General Manager (Corporate Affairs), SAIL New Delhi ** Junior Manager (Corporate Affairs), SAIL New Delhi

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Feature Article Concept of Responsibility

Corporate


Social

What corporate social responsibility does is essentially to align the business and operations to social values of the company. It integrates the interests of all the company’s stakeholders to make them a part of the company’s business policies and actions.

This propels us to take a closer look at the concept of CSR. Ask ten different people and what you get is ten different definitions of CSR. CSR has assumed a form that transcends conventional business horizons and encompasses the macro environment of which it is a part. The most widely used and accepted definition of corporate social responsibility so far has been :

Earlier the standing of a company was measured solely by its financial performance. But now with the advent of better and instant communication tools the stakeholders are more informed and more aware of what is happening around them. With this increase in understanding comes an increased pressure from all the stakeholders, be it investors, consumers, or employees for the company concerned to consider various other matters such as social and environmental issues when making business decisions. And this is exactly what has led to the development of something called Triple Bottom Line or TBL in short. TBL is essentially looking at social, environmental, and financial data when evaluating business operations.

“A commitment to improve community well-being through voluntary business practices and contributions of corporate resources”. The key word in this definition is voluntary. This means that neither is there a compulsion to undertake this work nor is CSR activity backed by a statute. The statement conveys the desire for the company to be socially responsible towards the community. The organisation is there not to make profits only but to work towards the betterment of its stakeholders and the people in general. Other definitions of Corporate Social Responsibility are CSR is about how companies manage the business processes to produce an overall positive impact on society.

CSR is about how companies manage the business processes to produce an overall positive impact on society.

Corporate Social Responsibility embraces two main concepts— accountability and transparency.

Accountability : Stakeholders expect companies to perform well not only in financial but also in nonfinancial areas. These could be through various initiatives like working towards building a healthier community by supporting programmes on AIDS prevention, health care, safety, education, employment, environment and the development of certain communities or locations where the company has its operations.

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.

CSR is about capacity building for sustainable livelihoods. It respects cultural differences and finds the business opportunities in building the skills of employees, the community and the government.

Transparency : The second concept is that of transparency. Transparency can be achieved through regular and proper communication. Companies undertaking CSR are expected to disclose and communicate their policies and practices that directly or indirectly impact employees, communities, and the environment. Stakeholders, regulators and NGOs demand information about a company’s social and

There is, however, one common philosophy for all these definitions - CSR is about the business of giving back to society. 65

CORPORATE SOCIAL RESPONSIBILITY : AN INDIAN PERSPECTIVE - RATH & THOMAS

environmental impact, and communication regarding these issues.

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Foundation, which has been working since 2001, significantly contributing to quality universal education to facilitate a just, equitable and humane society. The Foundation focuses on programmes, experiments and solutions that seek to demonstrate improvement of quality of education, build accountability towards quality education among stakeholders and bring about systemic changes in education delivery system in India. The Azim Premji Foundation works in tandem with government since it believes that the government has the best available resources which if properly utilized can lead to immense benefit for the people it touches.

The Present Day Scenario in India Earlier donation of a certain sum of money towards social causes was taken as something that would fulfill the responsibility of the corporate. However, companies under TATA group and SAIL took to developing the townships where their employees resided. This was done more with an intention to cater to the needs of their own employees and their families. Still there were some other companies who simply did nothing towards such causes and just kept on pursuing their commercial interest.

P&G along with the National Association for the blind started ‘Project Drishti’ to restore eyesight to 250 girls by conducting corneal transplant operations. Taking it a step further the company along with Sony Television urged viewers to buy P&G products, which in turn would help sponsor Project Shiksha, which was launched to educate the underprivileged children.

Of late there has been a steady transformation of the scenario. Companies operating in India have become more and more conscious about their responsibility towards the communities. They have started focusing on Corporate Social Responsibility in a sustained manner and not as one off projects. This is mainly due to the fact that the Corporate Social Responsibility programmes of a company are now interpreted as the social conscience of the Companies operating in company and show its commitment towards the community, society and India have become more the country at large. This, in turn, and more conscious throws light on the fact that the about their responsibility company is looking at longterm towards the interest and is interested in building communities. brand equity for the company.

The general trend that is prevalent in India is to keep the company’s profit motive segregated from the company’s CSR activities. But ITC is one company that has harnessed the art of blending CSR with the company’s objectives. The apt example in this context would be that of e-choupal. ITC as a company sees no conflict between the two goals of shareholder value enhancement and CSR. What ITC has done is essentially carving out a corporate strategy that enables realisation of these twin goals in a mutually reinforcing and synergistic manner. ITC’s e-Choupal and social forestry programmes represent two stellar examples of this philosophy in action.

A fleeting glance at the corporate social responsibility being pursued by companies operating in India throws up interesting findings. Subros, a leading air condition systems manufacturer in India has taken upon itself the job of improving the environment in capital city of India through its ‘Green Delhi Campaign’. In fact it has gone ahead to extend this programme across the country covering major cities. Technology giant Infosys is working towards developing a library in every school. Under this programme 5500 libraries have been setup in government schools across the villages in India. Then there is the Azim Premji

Looking at the above examples it can be safely inferred that CSR is no longer just a fringe activity aimed at building a loftier stature for the company in the eyes of the stakeholders. It is becoming a sustained activity aimed at enhancing the total value for the company.

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Trends of Corporate Social Responsibility

to better technology while enhancing the consumption of steel, which is in the interest of the steel industry.

Over the last decade there has been a steady transformation of the Corporate Social Responsibility concept – a shift from charity to sustained CSR. An analysis of the developments in the field of CSR shows that there are a few broad trends emerging in the sphere of CSR activities in the country.

Increased support : Post liberalization the direct spending on CSR activities has increased. This is evident from the fact that 11% of the companies operating in India have a written policy on CSR and that 85% agree to the fact that the company has a responsibility towards the society.

From charity to responsibility : The Corporate Social Responsibility scene in India has Increased Reporting : Corporate Social undergone a sea change in terms of the way Responsibility is the latest buzzword and every the companies fulfill their responsibility. The other corporate has jumped onto the bandwagon. earlier trend of giving away money to charities A large number of companies today are bringing and NGO’s has long given way to sustainable out CSR reports. These reports sometimes are development. Earlier the companies were published under different names like Corporate supporting charities, NGO’s or various causes Citizenship, sustainability and Community through donation which, in turn, helped them Development although they belong to the arena get a tax rebate. But the companies had no of CSR etc. direct control or involvement as to where these Special wings catering to CSR established : funds were utilized and for what purpose. Today A large number of companies have established the companies are partnering with these NGO’s a team or cell that is dedicated and social causes and ensuring to the formulation of social that the funding or programme responsibility objectives of the reaches the needy and that it A large number of companies company, identifying the areas and addressed the concerns of the have established a team or implementing the programmes. stakeholders of the company cell that is dedicated to the whom it wants to influence. Increased communication : formulation of social Communicating the CSR From Do good to merging of responsibility objectives of the programmes of the company to objectives : More and more company, identifying the areas its various stakeholders has also corporates are blending their and implementing the increased in the last decade. What Corporate Social Responsibility programmes. began with publishing of CSR agenda with their company’s Reports has now given way to policy. Now a days corporations sustained campaigns by various companies to are selecting a few strategic areas of focus that highlight the CSR initiatives taken by the company. fit their corporate values; selecting initiatives Tata Steel and ITC have taken special initiative that support their business goals; choosing issues in CSR communication. SAIL which, so far, had that are related to their product; supporting issues been reticent on communicating its activities that help in meeting their marketing objectives in this all have now been compiling an elaborate etc. An instance is the support extended by SAIL report and is developing its own CSR and TISCO in putting up steel intensive houses communication module. in rural areas through the pioneering innovations made by INSDAG. Similarly a new project involves the distribution of steel bullock carts specially developed for the rural sector. These steps spell dual benefits of providing access to rural masses

From CSR to one’s individual responsibility: In the present day scenario there is no dearth of employees showing eagerness to render their services towards the CSR activities of the 67


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company. For a majority of them it is a way for self-development. It is a way to gain exposure and network with external social groups to achieve greater self-actualisation. Therefore the trend is towards individually contributing to the society. For example one of India’s oldest companies, the Tata group has over 11000 employees who have volunteered themselves towards social causes. In SAIL, although no specific data compilation has yet been done, there are innumerable individuals who devote all their spare time towards contributing to the development of education, living standard, cultural enrichment of the community in and around the steel townships.

Why practice CSR ? (Source : Corporate Social Responsibility By Philip People who exercise on a daily basis tend to be Kotler and Nancy Lee) healthier than those who do not do so. Similarly companies that practice Corporate Social company that in turn supports and aligns itself with Responsibility as a part of their corporate philosophy social causes. tend to be looked at with greater respect than the ones who do not For instance a major furniture do so. There is growing evidence manufacturer in USA had to suffer that practicing CSR is good for the heavy losses since word floated There is growing brand as well as the bottom-line around that the company used evidence that practicing of the company. wood from the tropical rain forests. The benefits of CSR can be summed up into these major points: Increased Market Share, sales and loyalty

CSR is good for the brand as well as the bottom-line of the company.

The manufacturer had to make amends to switch over to wood substitutes to bring back its customers. Strengthened brand positioning

It has been noticed that the sales of products actually goes up when there is a social cause attached to the product. Also today people not only want good and safe products but also prefer purchasing goods produced in a socially and environmentally responsible way. Surveys conducted abroad have provided strong evidence of this. In a survey conducted by Cone/Roper sixty six percent of the respondents said that they would switch brands to support a cause they cared for. Seventy-eight of adults said that they would be more likely to buy a product associated with a cause they cared for. This shows that people would actually support a

Today a wide variety of products are available on sale. Beyond the rational or functional benefits of a product what really differentiates it from others. Hamish Pringle and Marjorie Thompson, in their book Brand Spirit say that that today consumers are looking beyond the practical issues of functionality and rational benefit of a product. They are looking at the emotional and physiological aspects of the brand. They are looking at good brands, brands that have a broad social outlook, brands that undertake tangible social welfare programmes. 68

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Many companies in India are known for their brand equity. This brand equity has been built over a long time. The brand equity is due to the long-term commitment that the business group has showed towards Corporate Social Responsibility. SAIL had also popularised the slogan ‘There is a little bit of SAIL in every body’s life’, which has drawn heavily on its association with the community it serves.

Some companies have started offering a certain number of hours for voluntary service to employees. What this essentially does is enhance the experience of the employee and instill a sense of pride amongst them. It helps in internal branding of the company. Employees feel a sense of pride in being associated with a company that has strong social goals. Besides the option for such voluntary work provides a welcome break from the hectic schedules of working. It acts as a rejuvenation and de-stressing tool and helps employees become more concerned and conscientious human beings. These initiatives also help in leadership and character building amongst employees.

Enhanced reputation of the company It is said that good reputation is often very hard to build – and yet can be destroyed in less than a day. Trust in the company by various stakeholders is the cornerstone of a company’s reputation. A strong reputation in environmental and social responsibility can help a company build this trust. However, it needs to result from real practices and policies and integrity towards the company’s responsibilities. Stakeholders today are able to see and make out whether a company is merely projecting its image or is actually concerned about its social responsibility.

Lower operating costs

The common belief is that Corporate Social Responsibility activities are a cost. On the contrary it is actually an investment for the company. Improved environmental management systems may not always lead to increased costs. Over time, these measures improve operational efficiency by reducing waste, improving A strong reputation in production and water usage, environmental and social increasing energy efficiency and in responsibility can help a some cases, adding to revenue company build this trust. through sale of recycled materials.

A company that genuinely practices CSR has a better reputation than a company that does not do so. Non Government Organizations (NGOs) and local communities are far more willing not take action against a However, it needs to result company for an environmentallyAn example to back the above from real practices and damaging incident if it is evident that infererence is the e-choupal initiative policies and integrity towards of ITC. The company initiated an the company has genuinely worked hard to prevent it happening in the the company’s responsibilities. e-Choupal effort that places first place, and has in place solid computers with Internet access in management practices for rectifying rural farming villages. The e-Choupals the situation – quickly – and learning and improving serve as both a place for social gathering facilitating to prevent a repeat occurrence. exchange of information (choupal means gathering place in Hindi) and an e-commerce hub. What began Better ability to attract, motivate and retain as an effort to re-engineer the procurement process employees for soy, tobacco, wheat, shrimp, and other cropping systems in rural India has also created a highly A company’s dedication to CSR can help to attract profitable distribution and product design channel and retain employees. People want to work for a for the company—an e-commerce platform that company that works in accordance with their own is also a low-cost system focused on the needs of values and beliefs. Employees are not just worried rural India. The e-Choupal system has also catalyzed about promotion and salary any more. They want rural transformation that is helping to alleviate rural to work for a company that is seen as an ethical isolation, create more transparency for farmers, and and reputed company and has a good image. improve their productivity and incomes. 69


ITC uses the e-choupal to procure various raw materials directly from the farmers. By eliminating middlemen, it ensures that the farmer gets a good price, mostly higher than what he was getting earlier while for ITC it ensures availability of raw materials at a lower rate than earlier due to economies of scale.

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partnering with the various Governments wherein the foundation gets access to the large underutilized resources of government machinery. Cause Related Marketing A corporation makes a commitment to contributing or donating a certain amount of money toward a social cause or to a non-profit organisation. This amount is directly linked to the amount of sales of a certain product and is for a specific period of time. This is mutually beneficial to the community, consumers and the company. By involving customers in social causes corporates are cueing into feeling of the customers that they need to do something for the community. Market analysts feel that a social attribute added to the brand can boost up sales. Supply of steel materials by steel companies like SAIL for reconstruction in the Tsunami affected areas and other places hit by natural calamities was one such example where all concerned benefited from the activity.

Increased appeal to investors and financial analysts Companies that are committed to CSR often have access to capital that would not otherwise be available. A 2001 study showed that 12% of total investment in the USA was of a socially responsible nature. Likewise, there were 313 green, social and ethical funds operating in Europe in June 2003, showing a 12% increase in the eighteen months.

Options for Practicing CSR For a company, which is practicising CSR, there are many ways in which it may do so. Philip Kotler and Nancy Lee in their book Corporate Social Responsibility: Doing the most good for your company and your cause have broadly categorized the ways of practicing CSR into six major categories.

In association with UNICEF, P&G launched ‘OPEN MINDS’—a special program targeted to support and educate working children. The initiative is supported by P&G’s brands. Part of the sale proceeds of their specific brand is contributed towards the initiative.

Cause Promotions

Corporate Social Marketing

To increase awareness and concern about a certain social issue the corporate may provide funds or support in kind like infrastructure etc. The corporation may initiate it or partner it with somebody who has prior experience like the Azim Premji Foundation which is working towards the universalisation of elementary education in India. This is done by

A corporation may support the development or implementation of a behaviour change campaign intended towards various causes like improvement in environment, public health, safety, better running of public transport etc. This focuses on a particular behavioural that the company attempts at changing.

Various options for practicing CSR

Cause Promotions

Cause related marketing

Corporate Social Marketing

Corporate Philanthropy

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Community Volunteering

Socially Responsible Business Practices

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Many of the SAIL steel townships mobilized campaigns against use of plastic bags through human chains and rallies.

Socially Responsible Business Practices A company or corporate may take up such business practices and investments which in turn support social causes to improve the general well being of the community and protect the environment.

Corporate Philanthropy When a company makes a direct contribution to a cause or charity, in the form of cash, donation or in kind then it is known as Corporate Philanthropy. Till recent times this was the most popular form of support. These kinds of supports help the NGO’s tide over the gap between income and expenditure. These could include offering grants, scholarships, donating products etc.

Conclusion CSR is about how companies manage the business processes to produce an overall positive impact on the society. CSR is no longer a one off activity for corporates. It is no longer a fringe activity being conducted for the sake of looking good. It is now a sustained activity for most companies- an activity that is aimed at creating a better society while ensuring profitability for shareholders. The type of ‘CSR’ activities the company undertakes may not matter much. What matters is the final impact on the society. One thing that can be said conclusively is that the concept of ‘CSR’ is here to say, in one form or the other, by one name or the other. As a philosophy it is now ingrained as a part of any company's purpose of existence.

Community Volunteering A company may ask its employees, partners, distributors, and vendors etc to voluntarily support a certain initiative by pledging their time towards it. It could involve teaching at a local school or extending help to build a road or community centre in a small village. The company may in turn give a certain benefit to the contributor. There are companies, which have voluntary group of employees devoting their time to various social initiatives.

Sources : 1. Harvard Business Review

14. ITCportal.com

2. Businessworld

15. TATA.com

3. National Academy of Legal studies and research, Hyderabad

16. The economist

4. CSR Network

17. Media Coverage of CSR- James T Hamilton, The Joan Shorenstein Center

5. Mallenbarker.net

18. The geography of Giving

6. Business India

19. Harvard Business School – online journal

7. Indiainfoline.com

20. Stanford Social Innovation Review

8. Journal of communication management

21. The Internet

9. infochangeindia.com

22. Corporate Social Responsibility By Philip Kotler and Nancy Lee

10. The Hindu

23. Strategic Corporate Social Responsibility – William B. Werthwer and David Chandler.

11. Financial Express 12. India Brand Equity Foundation Publications 13. The Economic Times 71

Readers' Forum Corporate Social Responsibility .... For a Better World K Patel*

Can corporates take on roles of governance ?

responsibility. Campaigns from pressure groups such as Greenpeace and Friends of the Earth led to formulation of ethical guidelines and changing corporate perspectives. The mid ‘90s saw two prominent MNCs compelled by ethical market forces to re-orient their business attitudes: Shell’s dumping of its Brent Spar oil platform in the North Sea drew large scale agitation reducing its profits in Germany by 70% in two weeks; Nike ran aground due to campaigns against child labor and worker exploitation at its 700 factories in 40 counties that used subcontractors - this prompted the company to set up a full scale team functioning under a Vice President, Corporate Responsibility.

In the recent past, a lighter vein controversy got

sparked in the media with a corporate leader making remarks on a State’s governance. It drew flak in the media that corporate leaders should try running the country and also that politicians should try running companies. A politician also remarked that it was easy for corporate heads to run their companies as they had the “freedom to do anything” whereas governments had to face opposition, criticism and sloth every step of the way. Though the above statements were made in lighter vein, it leaves food for thought. Can politicians and corporate leaders exchange roles? Can corporates take on some of the roles expected traditionally from governments? As per reports in the internet, today we live in a world where many corporates have wealth greater than the GDP of many countries. The companies call the shots and control much of the earth’s resources. Corporates further have the advantage of faster decision making without the menace of red tape. With increasing globalization, corporates also play a key role in not only defining markets but in influencing the behavior of people. Do not wealth and influence bring with them a social responsibility ?

CSR is qualitatively different from the traditional concept of philanthropy in that it acknowledges the debt that the corporation owes to the community within which it operates as a stakeholder in corporate activity. It defines the business corporations’ partnership with social action groups in providing financial and other resources to support development plans, especially among disadvantaged communities.

Global Conference on Social Responsibility : some issues A global conference on social responsibility was held during February 16-18, 2006 at Vilamoura, Portugal. The theme was “Social Responsibility -

The ‘80s and ‘90s showed the beginning of corporate ○

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* General Manager (HRD), Bhilai Steel Plant, Bhilai

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Role of Business in Alleviating Poverty”. The theme itself was considered revolutionary but apt, as just a few years ago businesses would not have seen themselves as having a role in social processes traditionally the responsibility of the government. The conference, attended by former prime ministers, legislators, management thinkers, academicians, business leaders and non-government organizations, aimed at co-creating business models to increase corporate value and help the poor, providing winwin for both.

task was to equip the young people to become entrepreneurs. The Secretary General of ACP (African, Carribean and Pacific Group of States - considered poor by all definitions) posed a question on what was needed for the ACP States: “Trade, or Aid?” While irrefutable benefits of international trade were recounted, a supply of exportable products and trade related infrastructure was required for the trade to take place. Thus “aid for trade” was the new cliché of requirement formed, at this time of negotiations for ACP with the EU and the WTO. The former Prime Minister of Canada said that companies need to change their paradigms: paradigms which create the problems will not create the solutions. Dr Giscard DÉstaaing, Founder Chairman of INSEAD observed that once a company gets into a country, it needs to become active in the wider aspects of the community, therefore the French resistance to Lakshmi Mittal’s take over bid of Arcelor was based primarily on corporate responsibility issues and not protectionism.

Presentations highlighted that throughout history, companies that made money also moved their business goal posts to serve poor markets. Rockfeller’s slogan at Standard Oil was, “Let the poor man have his cheap light”. George Eastman’s slogan at Kodak was, “A camera for everybody”. Henry Ford was the first man to democratize luxury by not only mass producing Model T but he also paid workers enough so they could buy one. Bill Gates vision was, “Computing for everyone”. Walmart, Woolworth, Penny Stores, McDonalds - all created disruptive markets to make their goods and CSR is qualitatively different services, once the prerogative of from the traditional concept of the rich and famous, accessible to philanthropy in that it the poor.

The Golden Peacock Award for Social Responsibility for the year was given to Deutsche Bank. With its banking and securities spread over 75 countries, Deutsche Bank considers CSR a Business Case: it acknowledges the debt that the promotes collaborative integration Examples from India were quoted. corporation owes to the into all levels and stages of business, ICICI runs 200,000 rural markets community within which it and its sustainable management managed by 16 managers through system promotes cultural diversity, operates as a stakeholder in self help groups; Aravind Eye provides lasting sustainable corporate activity. Hospital has only 40% paying solutions to social problems, and patients; Hero Cycles dominates invests in society’s talents and by making cycles which help intellectual capital. It campaigns for human rights farmers take their produce to the markets. Similarly and has an annual CSR spending of 3% of its net ITC, Jaipur Foot, Amul, Seva were quoted and income. appreciated. An issue raised was, “Do the poor need handouts?” The poor are seen no more as a begging bowl of the world but as an immense business opportunity and a means for wealth creation and innovation. With our entering an era in which there would be a lot of work but little employment, the need was not handouts and subsidies but investment in infrastructure and entrepreneurial work. A primary

Some reflections on CSR closer home There is a growing realization in India, as in the rest of the world, that corporations are created by society and must therefore serve it, not merely profit from it; since corporates intervene in many areas of social life, they must be responsible towards society and the environment. In the context of the public 73

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CORPORATE SOCIAL RESPONSIBILITY ..... FOR A BETTER WORLD - PATEL

sector steel plants and the townships that they support, the organizations can play a pivotal role in alleviating some of the specific problems in society. Here are a few :

Quite often people do these because they have not been taught the right things; often, because there is no imposition of rules and regulations. Organizations with their own townships and resources can help build an orderly society, which can be a model for the nation. They can do this by undertaking a drive to educate people through the media, through posters, pamphlets and street shows; they can collaborate with the state authorities for imposition of rules. They do not have to do these through penal measures. A citizen of New Delhi reported in a newspaper that he once jumped a traffic signal and he was intercepted by a police vehicle; the police officer gave him a rose and this message, “Sir, as you are an educated member of the society, we expect you to be a role model for others - we are sure you will not jump a traffic signal again”. Reporting of the incident speaks of the impact that the message had on the person.

People falling prey to various kinds of handicap A considerable percentage of people in society fall prey to various kinds of handicap, some due to unsafe acts, and some due to lack of awareness on health-related issues and consequent negligence. Prevention of accidents and removal of potential hazards is an area of high priority for organizations, therefore they have considerable expertise developed in the area. If organizations disseminated this knowledge widely into the society, they could prevent loss of precious life and limb. Organizations can take up surveys on high incident issues. Small family norm and standard of living

It is paradoxical that the financially well off adopt Caring for the small family norms and maintain a healthy standard of living whereas the financially weak have large numbers of children and a poor standard of living. Often, these people have say There is a growing realization they have not paid serious attention in India, as in the rest of the to this aspect, nor were they world, that corporations are educated on these aspects. created by society and must Organizations can collaborate with therefore serve it, not merely or complement government profit from it. agencies in these matters, so as to better the quality of living in their vicinity.

youth The President of India said that our country has 50 crore youth who can move mountains! The energies of the youth need to be channeled so they contribute in constructive ways to the society. In the absence of gainful engagement, the youth can be the cause of social problems, as happening in many countries.

One of the major problems in society today is that there are more and more educated youth coming out of educational institutions whereas there are insufficient jobs. Organizations have their own constraints which prevent them from providing adequate employment. It was mentioned in the global conference, too, that we are entering an era where there would be plenty of work but less of “jobs”. Organizations can collaborate with government and non-government agencies for providing adequate training in entrepreneurial work and self-employment. Many of the youth are not aware of these opportunities and of the loans available for starting small projects.

Civic education It is often observed that people do not follow the simple rules that go into the making of a pleasant and decent society. Some jump queues at counters (be it in the banks, post offices or petrol stations); they enter wrong lanes at rail crossings and jam traffic; they drive in the wrong direction on roads; they overtake from the wrong side; they spit and they do all sorts of things. There is often lack of concern for the others, be they the young or old. The adults pass on these “wrong” habits to the young. 74

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As it is said, the need of the hour is to “teach the youth to fish, rather than give them a fish”. Organizations can further support initiatives like artisanship by buying their products in large numbers, for giving as company gifts.

in the coming 50 years! Oil, coal and ores are some of the fast depleting resources. Thus innovative effort is urgently required to find alternative sources, and to prolong the life of existing resources.

All responsible societies have thought and fought Health related research for the comfort and security of future generations. Freedom fighters too have valiantly given up their Specific health related afflictions are prevalent in lives only for the benefit of future generations. It is various regions. The sickle cell genetic disorder is thus binding on a responsible organization to find prevalent in certain communities in Chattisgarh and alternative means and technologies western Orissa. With lack of adequate so as to save the resources and knowledge on the affliction, people bequeath them to the future in the communities pay scant attention generations of at least a few hundred The pace at which the to measures for prevention and control years. Some countries have begun to resources of the planet of the disease, thereby going through extensively harness solar, wind and are being ravaged in the other types of energy to replace personal hardship and suffering – such as periodic blood transfusion. name of progress is a conventional energy sources.

matter of grave concern.

Organizations can do much in this area for education, prevention and care related to the specific diseases prevalent in the area. They could support or initiate scientific studies and research into these areas.

Conclusion : Organizations should embrace the remarkable concept of reaching out and forming partnership with social groups for strengthening the society. Corporate social responsibility and volunteerism have no boundaries and are not constrained by color, race, religion or region. CSR is a culture and an unwritten contract to help the society in which organizations exist. This invisible culture can help shape a brighter future for all nations.

Bequeathing of resources The pace at which the resources of the planet are being ravaged in the name of progress is a matter of grave concern. Survey reports indicate that with the present rate of consumption, some of the crucial natural resources (once abundant) will be depleted

Ever ybody, Somebody, Anybody & Nobody This is the story of four people named Everybody, Somebody, Anybody and Nobody. There was an important job to be done and Everybody was asked to do it. Anybody could have done it, but Nobody did it. Somebody got angry about that, because it was Everybody's job. Everybody thought Anybody could do it, but Nobody realized that Everybody wouldn't do it. Consequently, it wound up that Nobody told Anybody, so Everybody blamed Somebody.

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Readers' Forum Integrating Corporate Responsibility towards Nation Building with Business Development : Role of the Steel Industry in Building Rural India Shoeb Ahmed*

India has finally arrived economically. We are today

of which, I am sure, must have rekindled the adventurous spirit of Road travel and romanticism of long drives amongst many of us. No matter which city we visit, the change is not just evident but strikingly visible. However, we the city bred urbanized Indians must not forget that there is also a rural India and India’s recognition as a truly developed nation cannot be without seeing these strikingly visible changes in Rural India also.

one of most talked about nations, with the possible exception of China, in the Economic World. While for most of the 90s and the beginning of this millennium it was our sterling growth in the IT & ITES which brought us to limelight, other sectors are also giving them tough competition now. Two of the most important of these are Steel & Construction – A very positive sign and a very formidable combination indeed for the economy. The standard model of economic transformation says that development should be from primary to secondary and then to tertiary sector. For most of the last 15 years, it is services sector that has hogged the limelight in India. We can argue indefinitely on the Pros and Cons of economic growth model where the service sector has preceded the secondary sector. However, what is more important is to realize that the secondary sector is fast catching up on the goodwill and capital that has been created by the growth of the service sector.

In this paper, the focus of my thoughts will be largely on Rural Infrastructure and the role the Steel Industry can play, however small, in helping achieve the desired growth in the rural infrastructure. I will try to bring into focus here the “Bharat Nirman” Programme of the Government of India. The programme is a time bound programme for the development of rural infrastructure to unlock the growth potential of rural India. The Bharat Nirman Programme outlines six goals to be achieved by the year 2009. These goals concern wide ranging areas of development from providing basic housing and drinking water to roads, irrigation, electricity and communication. These Goals are

The fact that sustained economic development can not be achieved without the development of the secondary sector has also not been lost to the economic planners of the country and infrastructure development has been in the focus of the Government Planning. It all started with the ambitious National Highway Development Program (NHDP), the results ○

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1. Every Village to be provided Electricity by 2009. This will involve connecting 1,25,000 villages and nearly 2.3 crore households in this time frame.

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* Executive Director (Marketing - Long Products), Central Marketing Organisation, SAIL, Kolkata

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Electricity

2. Every habitation of more than a 1000 to be covered by all weather roads. This involves connecting nearly 66800 habitations by 2009.

Goal : Every Village to be provided electricity – 1,25,000 villages and 2.3 crores households to be covered by 2009.

3. Every habitation to have safe source of drinking water. Nearly 55000 habitations to be covered by 2009.

Infrastructure required : At least one 33/11 KV substation in each block and at least one distribution transformer in each village.

4. Every village to be connected by a telephone. Approx.66800 villages to be covered by 2007.

Opportunities for the Steel Industry : Clear opportunities can be seen in terms of potential demand for structural steel, especially the demand 6. 60 lacs houses to be constructed for the rural for high tensile grades that will be required in the poor by 2009. setting of the substations and transmission lines and in the electrical steel sheets for the distribution If we take a second look at these tasks, it would transformers. It is very pertinent to mention that in be fairly evident that the role of steel here is not both these products imports constitutes a major small as I mentioned earlier before having broached portion of the current supplies. The reason is fairly upon the targets set by “Bharat Nirman”. It must obvious – the domestic steel industry has not been also be mentioned be here that the role of steel able to meet the demand of these products both industry that I am envisaging here is not about actions in terms of the volumes and the quality of the supplies. we must take just out of Philanthropic interests or Some R&D efforts and capacity building is required Corporate Social Responsibility but those which will by the steel industry so that the make plainly evident business imports can be substituted by sense. Talk to any CEO and they, domestic supplies. The Country can We in the steel industry, in all probability, will pay you save a lot of foreign exchange and therefore, should actively anything to make strategies like the steel manufacturers can earn demand creation, market engage ourselves with the high margins in these value added expansion & market penetration government and assists & grades of steel. successful. And this is what we are enhance the governments’ talking of here, basic business Out of the 1,25,000 villages targeted role in the “Bharat strategies of demand creation, for the implementation of this Nirman” Program. market expansion and market programme, approx 70% are in the penetration. We in the steel states of Uttar Pradesh, Bihar and industry, therefore, should actively Jharkhand. This is only to give you engage ourselves with the an idea of where the market is going to be. government and assists & enhance the governments’ role in the “Bharat Nirman” Program. And this will Roads not just give us a huge opportunity to develop the Goal : Every habitation of over 1000 population (500 market but also give us the satisfaction of having in hilly and tribal areas) to be provided all-weather played a role in building rural India. roads: Remaining 66802 habitations to be covered Let us now take a detailed look at each of these by 2009. Goals of the “Bharat Nirman” and try and analyse What this means in terms of road length : As how the steel industry can help in achievement of per the estimates given in the “Bharat Nirman” policy each one of these and in the process expand the document it means 1,46,185 kms of new road domestic market and increase the consumption of construction and up gradation of 1,94,132 kms of steel in the rural hinterland. 5. 10 million hectares of additional irrigation capacity to be created by 2009.

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INTEGRATING CORPORATE RESPONSIBILITY TOWRDS NATION BUILDING WITH BUSINESS DEVELOPMENT : ROLE OF THE STEEL INDUSTRY IN BUILDING RURAL INDIA - AHMED

associated roads.

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What is the estimated cost : In the current year, the expected expenditure is approx. Rupees 4000 crores.

Just to give an idea of the magnitude of these numbers, the National Highway Development Program (NHDP) envisages development of 13200 kms of highways. We must, however, discount the fact that these roads are going to be much smaller in there scale. Nevertheless, the numbers are still huge. Investments of approx 48000 crores for this will be provided by the Central Government

Opportunities for the Steel Industry : The document does not mention how these targets are broken up in terms of villages to be covered by ponds, tube wells etc. However, at the face of it, a potential demand for tube-wells and hand-pumps comes to the mind. This means a potential demand for HR products for the Tubes & pipes and forgings for the hand pumps. Then there are the water tanks which need to be made. Some steel intensive designs have been prepared for water tanks by INSDAG which need to be promoted to intensify the steel usage for this. It can also bring down the time required for construction of these tanks.

Opportunities for the Steel Industry : Opportunities for steel here would primarily be in the form of steel requirements for the construction of culverts and small bridges. The demand creation would be primarily for reinforcement steel in the lower diameters and to a certain extent for structural steel. The challenge here will not be the production & availability but the distribution strength required Irrigation in reaching the steel to hitherto unconnected parts of the country and that too not in very high volumes Goal : 10 million hectares of additional Irrigation to individual locations. We need to carefully analyse capacity to be created by 2009 how we can iron out the seams in Where the opportunities are for our logistic of movement of steel. the Steel Industry : The targets Once we are able to do it, it is pretty Out of the 1,25,000 set have been broken up into plans certain that we can have a lot of other villages targeted for the through the major, medium and untapped latent demand that exists small irrigation projects and Ground implementation of this in the various small consumption water development. In terms of steel programme, approx 70% points, which most of us steel demand the promise is mainly for are in the states of Uttar producers, have willy-nilly chosen to the major and medium irrigation overlook. Pradesh, Bihar and projects which involves construction Jharkhand. This is only to Out of the 66,802 habitations targeted of large and small dams, bunds etc. give you an idea of where for the implementation of this Again the major demand that will the market is going to be. be generated would be for programme, approx 75% are in the states of Assam, Rajasthan, reinforcement steel. Chattisgarh, Uttar Pradesh, Bihar, Orissa and Jharkhand. This is again, only to give Housing you an idea of where the market is going to be Goal : 60 lacs houses for the rural poor by 2009

Drinking Water

Methodology : The objectives will be implemented primarily through the Indira Awaas Yojna

Goal : Every habitation to have a source of safe drinking water. 55607 uncovered habitations to be covered by 2009. In addition the planning commission estimates that 2.8 lacs habitation which have slipped back after having developed source of safe drinking are also to be covered.

Opportunities for the Steel Industry : The entire area of rural low cost housing is of a great promise in terms of creating additional steel demand in the country. However, just considering these targets and the government grant of Rs.30000 per house, 78

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the government expenditure is likely to be approx 18000 crores. Steel Intensive rural housing has been an area where INSDAG has done a lot of work. Many of its designs have already been successfully tested. The promotion of these designs to the government bodies now needs to be done aggressively. Low cost steel intensive rural housing has numerous advantages ranging from longer life span and quicker construction etc. Considering the designs which INSDAG has made there is potential demand for nearly 5 million tonnes of steel for implementing the above targets. This will require a lot of promotional work and coordination between the steel industry and the government agencies implementing the schemes.

channel for the distribution of steel has been a weakness which we need to address very quickly. Getting the strategy right is one thing, implementing it is another. When the strategy involves such large geographical spread involving so many stakeholders, implementation can sometimes be more difficult than conceiving the right strategy. Thankfully, it seems that we have a very willing partner ready to help us the rolling out the strategy, the government itself. SAIL, in the recent past has been taking the views of the various stakeholders including the state government in each region to understand and solve this last mile delivery problem and it seems that the state and local governments are more than willing to help. Solution is not easy, even the governments have failed in many of their very noble policy aims as they just didn’t have the last mile delivery channel to be able to reach the truly needy and poor. Hopefully a synergy of the steel industry and the government may bring out a cost effective and efficient way to accomplish this task.

Telephones Goal : Every Village to be connected by telephone. Remaining 68,822 villages to be connected by 2007 Approx 22% of the targeted 68,822 villages are to be connected through satellite phones as these are far flung.

The per-capita consumption of steel in rural India is believed to be a dismal 2 kgs per person. The National Steel Policy has a set a very modest target of increasing it to 4 Kgs per person by 2019-20, a CAGR of just about 4.4%. With the kind of plans the government has for development of the rural infrastructure, this target can surely be achieved much faster if the steel industry goes about trying to sort out the issues of rural distribution in the right earnest. The demand is there but due to supply side constraints it has not really translated into real consumption. If we are able to tap this latent demand and the huge potential which rural India has we will not only be able to serve our strategic business interest of expanding the market and increasing the consumption but will also help in nation building and in transforming the country into a truly developed nation.

In terms of the expenditure plans, this is the perhaps smallest of the “Bharat Nirman” goals with the estimated expenditure being approx. 450 crores for providing the village telephone booths . Opportunities for the Steel Industry : In terms of the potential for generating steel demand also, this is perhaps the one with the smallest potential. Except perhaps the demand for the Hamilton poles not much other steel related consumption is expected out of this. After discussing each of these, a recurring feature which comes out is the challenge of distribution and movement logistics required to meet the demand of steel that is expected from the rural areas. This is an area in which, the main steel producers are particularly weak. Developing the last mile delivery

"It's really more of a lateral move which is great for me". 79

Readers' Forum Corporate Social Responsibility : A New Perspective Kaushiki Roy*

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hether a business enterprise should be socially responsible has been debated for long. While Milton Friedman, nobel laureate argued that “the business of business is business”, Tom Cannon, holds the view that society and the corporation or business have to co-exist and have a mutually beneficial relationship. Business is expected to create wealth, supply market, generate employment, innovate and produce a sufficient surplus to sustain its activities and improve its competitiveness while contributing to the maintenance of the community in which it operates.

or social development initiatives are philanthropic and/or ad hoc in nature and not integrated into core business activities.There are several instances of effective CSR action undertaken in India by corporates both large and small in different sectors, primarily in the following areas : Education / Training Healthcare Environment Welfare of Underprivileged Sections Rural Development

Broadly, corporate social responsibility may be defined as “the need for organisations to consider the good of the wider communities, local and global, within which they exist in terms of the economic, legal, ethical and philanthropic impact of their way of conducting business and the activities they undertake”. According to Carroll, “the CSR firm should strive to make a profit, obey the law, be ethical, and be a good corporate citizen’”.

Other activities like support to art, culture and sports, protection of wildlife, conservation of national monuments and heritage etc. But the concept of Corporate Social Responsibility has transcended the realms of mere social support activities like the above to take on a whole new dimension. As Rosabeth Moss Kanter, Management Scholar and Ernest Arbuckle Professor at Harvard Business School writes in the Harvard Business Review, “companies that are breaking the mold are moving beyond corporate social responsibility to social innovation. These companies are the vanguard of the new paradigm. They view community needs as opportunities to develop ideas and demonstrate business technologies, to find and serve new markets, and to solve longstanding business problems.”

The origin of the CSR movement was driven by anticorporate campaigns of the late 1990s. Companies in Europe and America saw CSR as a way to ward off flak from NGOs (Non Government Organisations). Often the CSR agenda of big businesses got guided by a ‘defensive’ strategy - anticipating criticism and taking some quick action to avoid it. In India, the corporate sector is slowly realising the positive aspects of corporate responsibility practices and that what is good for business is good business. However, by and large, community programmes ○

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Creating value, improving processes for the benefit of the common man, bringing in transparency and fair practices, eradicating corruption, spreading

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* Manager, Content, Metaljunction Services Ltd, Kolkata

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awareness and effective dissemination of information are just as integral to societal well being as are the protection of the environment, welfare of underprivileged sections or patronage of art and culture. For instance, the milk cooperative movement spearheaded by Dr. Verghese Kurien, apart from laying the foundations of the powerful Amul brand, liberated milk producers from exploitation by buyers and modernised the cooperative movement as a whole. Replicated elsewhere, the Anand model showed that its success was not peculiar to the cooperative movement in Gujarat. Its success lay in the innovation of providing producers direct access to a modern system and modern technology. The success of the movement demonstrated the vital role that a healthy cooperative sector could play in a modern economy.

marketing of coal and is today selling over a million tonnes of coal every month for Coal India Limited, transforming the coal supply chain forever in the process. metaljunction’s mission is “We will transform the supply chains, of selected industries, to bring about efficiency and transparency to the way goods and services are bought and sold.” Its vision is to leverage the power of the Internet and Information technology to design and develop processes and systems that are not only the best in class in delivering operational efficiency, but, are also innovative, fair and transparent so as to generate and deliver long term sustainable value to its clients, the industry and the community at large.

Steel plants generate a significant volume of Prime Over Runs, secondary steel, scrap and various byproducts, the market for which is a disorganised Microfinance or microcredit is another area where and fragmented one. Prior to e-marketing, these business blends with social development by products were sold through a physical auction generating employment and promoting small scale process or a tender process which apart from being industries. Microcredit began in cumbersome and time the 1970s in Bangladesh when the consuming, involved dependence Creating value, improving Grameen Bank began giving small on intermediaries, lack of loans to those too poor to be transparency and cartelisation. processes for the benefit of the eligible for credit from other Small buyers and consumers, common man, bringing in banks. By combining other especially at remote locations in transparency and fair practices, innovative strategies, like offering the country did not have direct eradicating corruption, spreading access to the steel manufacturers value added services to the awareness and effective clients, including savings, training, and had to rely wholly upon dissemination of information are networking, and peer support, middlemen to source these items, just as integral to societal well microfinance programmes can for which they invariably would become powerful vehicles for being as are the protection of the have to pay a premium. The other desirable social manufacturers too could not environment, welfare of developments. reach out to the end user and underprivileged sections or were constrained to decide the patronage of art and culture. Similarly, the innovative use of price of the products based on technology to streamline and prices quoted by a select group improve distribution systems and of high volume buyers. key supply chains in the country is, in its own right, an initiative in social development. In 2001, SAIL The coal industry was plagued by similar, if not worse and TATA Steel, two of the largest steel companies problems before the advent of online selling. realized the significant contribution that Internet Consumers in the non-core sector getting coal through and ebusiness could make to reinvent the steel supply linkage at notified prices were tempted to divert chain and joined hands to set up metaljunction the coal in the premium market, while consumers services limited which went on to become the world’s having no linkage were constrained to purchase largest e-marketplace for steel and India’s largest from the premium market at higher prices. With e-commerce company within a short span of time. the introduction of e-marketing, over Rs. 1000 crores 4 years later, in 2005, metaljunction entered ein terms of revenue has been unlocked to the coal 81

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CORPORATE SOCIAL RESPONSIBILITY : A NEW PERSPECTIVE - ROY

companies, which was earlier being cornered by the mafia. This enabled the PSU behemoth CIL to make an impressive turnaround in its business performance in 2005-06.

6 months between an enquiry and formal order. The e-procurement system has hastened the process tremendously and reduced paperwork.” “Deals through EPS are free from manipulations, transparent, straight and clear.”, says another supplier. For the buying organization, EPS brings multiple benefits like better choice, lower prices, cost saving and reduction in cumbersome manual processes, besides curbing unfair dealings in the procurement process which ultimately hampers the image of the company.

Today, through metaljunction’s e-marketing platform, every steel and coal buyer, large or small, trader or end user, urban or rural, can buy steel and coal in a transparent, efficient and convenient manner from the comfort of his own home or office through e-marketing and even have the material delivered at his doorstep. “In e-marketing, everyone gets a fair chance. Earlier, our small customers had the false impression that we were partial to large volume, high net worth buyers and were reluctant to approach us.”, says Mr. Vijay Mathur of Tata Steel. “e-marketing has enabled us to dispel this notion and reach out to the small buyer. This has brought in competitive pricing and also enhanced the confidence of our buyers in us”.

Through e-marketing and e-procurement, metaljunction has also indirectly brought awareness regarding the immense advantages that technology can bring to small businessmen in semi-urban and even rural areas like Chitra, Talcher, Angul and Sundargarh, Chas and Giridih. Metaljunction conducts frequent awareness and training programmes to help prospective buyers and vendors who are not very computer literate get over “keyboard fear” and become more comfortable with the system. These initiatives also go a long way in changing mindsets towards the use of technology.

There was a time when for small vendors and suppliers, selling products to large buyer organizations was an uphill task. Invariably, quotations from these While the CSR team at metaljunction “In e-marketing, suppliers would lose themselves amidst also participates in traditional everyone gets a fair tenders from larger and more initiatives in corporate citizenship like chance. Earlier, our established vendors who had a blood donation events, tree planting, small customers had longstanding relationship with the helping the aged and underprivileged organization. So while the latter children in association with the Tata the false impression cornered a large share of the pie, the Council for Community Initiatives that we were partial to buying organization itself missed out (TCCI), its real achievement in this large volume, high net on opportunities for more cost-effective area perhaps lies in the creation of worth buyers and were sourcing and vendor discover y. a “world without barriers” for every reluctant to approach Metaljunction discovered that this was link in the supply chains it has served, us.” an area where it could, with its be it individual or corporate. The innovative processes add value both organisation’s success in the steel and to the buyer in terms of transparency coal ventures has spurred and efficiency, as well as to the small vendors in metaljunction to explore new supply chains which terms of convenience and fair processes. Thus it could be transformed through similar innovations. developed an e-procurement system (EPS) which Providing NGOs and Social Work organizations with facilitates the supply or vendor management systems an emarketing platform to sell handicrafts and other to a great extent. The vendor now has the items made by orphans and the underprivileged convenience of placing a quotation from his own for example, is an area which is being considered office. No longer would the humble supplier have by the CSR team at metaljunction. The service could to stand in long queues hoping for that elusive also be extended to rural self-help groups in the appointment with the Purchase Officer. Here’s what field of floriculture. The possibilities are endless. a vendor has to say about his experience of the system, “Earlier, there used to be a lag time of over 82

Readers' Forum Safety - A Corporate Social Responsibility Shashi Kant*

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c) Continuous organizational learning through practices such as feed back system;

ith the concept of the triple bottom line of companies becoming a reality the role of cultivating a safety culture and its sustenance has gained considerable significance and importance.

d) Monitoring and analyzing and a care and concern for hazards, which is shared across the workforce.

There are many definitions to define the safety culture of an Organisation.

Examining worker attitudes towards safety and their perception of hazards within the workplace is often used to provide a measure of the organization’s safety climate and ultimately the safety culture, which underlies it. Attitudes towards safety are a basic element of safety culture. Any safety intervention may fail if the attitudes and perceptions of safety are not taken into account.

Increasingly businesses are recognizing that they can not achieve their safety management objectives through Engineering & Work Procedures alone. The missing component is usually the organizational culture and the people factors, which are essential to support and maintain the corporate philosophy and programme.

International Atomic Energy Agency introduced the term safety culture after the Chernobyl accident.

Culture represents those characteristics in an organization that are relatively enduring over time and influence the behaviour of people in the Organization.

The safety culture of an organization is the product of individual and group values, attitudes, perceptions, competencies and patterns of behaviour that determine the commitment to, and the style and proficiency of an organization’s health and safety management.

It is expressed as “the way we do things here”. The underlying assumptions value and behaviour define an organization’s culture or glue that holds the organization together. A good safety culture may reflect and be promoted by four factors :

Organizations with a positive safety culture are characterized by communication founded on mutual trust by shared perceptions of the importance of safety and by the confidence in the efficacy of preventive measures.

a) Senior Management commitment to safety; b) Realistic and flexible customs and practices for handling both well-defined and ill-defined hazards;

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The attitudes, belief and perception shared by natural groups as defining norms and values which determine

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* Executive Director, SAIL Safety Organisation, Ranchi.

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SAFETY - A CORPORATE SOCIAL RESPONSIBILITY - SHASHI KANT

how they act and react in relation to risks and risk control systems.

internalizing that accidents have roots in the minds of people and it is in the minds of men that prevention of accidents must be created. This amounts to sowing the seeds of safety in the minds of men and thereby laying the foundation or strengthening the foundation of culture of safety in SAIL.

Safety needs to be one of company’s core values and given at least equal importance as other core values like production quality, customer service and profitability. Safety must be integral to the way business is conducted – not an after thought or bolt on extra.

In spite of the supporting factors the safety culture, which has evolved in SAIL over the past four decades, will not change by itself. There may not be a strong resistance to change as the need for change is recognized, but to bring about the desired change would require hard work by line managers and other senior executives.

Operating discipline is a reflection of the safety behaviour of everyone in the company. It’s a cliché but it really does start at the top or it doesn’t start at all – and the stronger it is better the response and performance of the rest of the organization. It is their leadership and personal behaviour that’s the all important ingredient. Safety management is not something that can be delegated. Senior management must provide and lead through their own personal involvement in the safety management process. To achieve safety excellence and drive towards “best practices”, it is necessary to have a two pronged strategy one being the development and implementation of a safety management system that’s the company’s own and the other being safety behaviour modification to put ‘legs on the system’ and develop a strong safety culture. The prime focus is on behaviour because 96% of accidents are attributable to behaviour of the people.

Cultivating a good safety culture would need : a) Nourishing reinforcing and strengthening what is good in the existing safety culture. b) Weeding out and discontinuing what is not consistent within desired safety culture and

To achieve safety excellence and drive towards “best practices”, it is necessary to have a two pronged strategy one being the development and implementation of a safety management system that’s the company’s own and the other being safety behaviour modification to put ‘legs on the system’ and develop a strong safety culture.

c) Creating/planting and establishing new system practices and behaviour consistent with the desired safety culture.

The leaders of Safety Culture

Safety cannot be externalized. Neither the statutory authorities nor the SAIL management says that safety is not their concern. Safety is a concern of all from the Chief Executive to the lowest levels of workmen. But the most important persons in the matter of safety are the ploughmen, the line personnel, who are operating in the field i.e. the employees prone to get involved in accidents. It is the accident-prone employees, the line personnel who have to rise to the occasion, take lead in creating, cultivating and establishing a culture of safety in the Company. Since these are the people who know where the shoe pinches they have to point out the unsafe conditions prevailing, which have to be eliminated.

It has been said that a work place is neither safety nor unsafe nor does it possess varying degrees of safety between these two extremes. It is people who are safe or unsafe. It is behaviour of people not a characteristic of the work place that determine the frequency and degree of personal injuries or danger to health, environment and property. Our efforts to cultivate a culture of safety in Steel Authority of India Limited can commence by 84

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Integrated systems

successful it has enormous impact on the organizations future direction. In short, it is impossible to substantially change the direction of the enterprise without changing the culture.

Only a few organizations have achieved a fully integrated management system covering quality, health, safety and the environment. By applying the principles of Total Quality to the Management of Health, Safety and the Environment within a business, manager cannot only reduce costs but explore greater opportunities to improve their performance.

The safety function is not an island isolated from the influence of the broader organization and its culture. Leadership must show a vision for establishing safety excellence :

The techniques for integration involve a comprehensive review of the business in terms of the way it manages quality health and safety and environmental aspects.

Cultures to a large extent are created by leaders. Leadership is the most powerful component of the culture. Leaders affect change, which in turn, creates and sustains an organization’s culture. A poor safety culture implicates poor leadership.

Safety Culture & Leadership : The concept of safety culture must be practically defined to be of value.

Management must deal with maintaining status quo, leadership deals mostly with change. Positive culture A useful definition of safety culture as a product is change is up to leadership but most leaders are “that observable degree of effort by which all not aware of how much the organization members direct their assumptions they take for granted attention and action towards are reflected in day to day behaviour improving safety on a daily basis”. Cultures to a large extent by the way they manage the are created by leaders. decision making process. For example, it is often assumed Leadership is the most that workers bad attitudes lead to Leaders must focus on specific powerful component of the unsafe behaviours causing injuries behaviours to strengthen safety culture. Leaders affect resulting in poor safety culture : performance. But a proper change, which in turn, When people talk about culture understanding of the model reveals creates and sustains an changes what they really want is that attitudes are an output not an organization’s culture. A behaviour change. When someone input of the safety culture process. poor safety culture talks about changing the culture, Poor leadership and management implicates poor what most people hear is changing lead to unsafe processes and are leadership. core beliefs, which is nearly one cause of poor attitudes. impossible. The key to speak about Thus safety culture is a process changing behaviour with basic rather than a programme. It is a simple way of viewing beliefs that underlie those behaviours. a rather complex reality and it lends itself the ability Leaders must pay attention to their own behaviour to improve the system. rather than that of employees. Safety culture is an integral part of the large Leaders need both “what to” and “know how” organization : to establish excellent culture : Organizational culture can help or harm safety efforts. Leaders must posses both the desire to act and a An organizational culture is more powerful than clear understanding of the specific behaviour that any individual. As the culture dictates what is lead to excellent safety culture. Top management important who’s important and what it takes to be 85

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SAFETY - A CORPORATE SOCIAL RESPONSIBILITY - SHASHI KANT

must be committed to excellence and drive the agenda by establishing a vision, value and goals and by seeing that all Line Managers have safety improvement objectives, by auditing performance and by visual personal involvement.

contribution to organizational learning and ultimately leads to safety improvements.

Role of Safety Professionals :

A behaviour based observation and feed back process provides possibility and control over upstream indicators of safety performance namely safe and at risk behaviours. Using simple but effective observation techniques employees periodically observe each other and then give appropriate one to one counselling regarding safety related behaviours.

Behaviour based observation and training :

The safety (S.H.E) profession must influence site and corporate leaders and line management to establish a safety culture. The practitioner should be knowledgeable and technically competent to provide relevant guidance but more importantly illustrate the way forward and function effectively as an organizational “leader”.

It is then discussed in work teams to develop relevant intervention strategies. As employees become more comfortable with the informal observation process, they begin to observe and give behaviour based feedback informally as safety becomes a natural part of work culture.

As said earlier, the safety culture is characterized by behaviours that focus on safe, quality production and ensure safety for everyone. The culture called the want to safety culture is the outcome of a collaborative effort between management and workers.

Conclusion :

The safety triangle is a clear study of shifting from a compliance based safety to a culture of safety commitment.

The effectiveness of safety devices can easily reflect the culture of safety in a plant. And there is more to safety than just installing safety devices. How the device is integrated into the system is just as important if not more so because the logic used in an installation has to be correct. Will the employee be safeguarded in the way he expects!

As a minor basic compliance with regulation demonstrate to employees that the company is committed to safety. The next step is to minimize the occurrence of near misses. A near miss is any event that could have resulted in injury but didn’t because of some behaviour the individual did to keep safe. Based on the conceptual frame work presented in the safety pyramid minimizing near misses will minimize first aid injuries, serious cases and fatalities. Investigation of near miss occurrences is a very useful measure of health and safety performance as well as enabling organizations to learn from such errors.

In conclusion, it is apt to quote from “Accident free steel” of IISI Measures which assist the evaluation of improving performance are reactive (after the event) and proactive (before the event). Reactive measures include the number and frequency of accidents and incidents, the results of inspection and value of enforcement action etc.

The process involves analysis of events, which may have led to accidents with a view to preventing more serious outcomes in the future. Within the industry monitoring of near miss occurrences make a positive

Proactive measures include number of employees trained, of safe behaviour observed of near miss recollected and risk assessments undertaken.

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Readers' Forum Corporate Social Responsibility (CSR) : Some Points to Ponder P K Banerjee* Payal Magoo**

CSR - An Overview

local communities or even ‘society’ as a whole, which it must fulfill as a part of its social responsibility.

T he

environmental and social effects of globalization are being experienced by governments, local communities and business across all regions. As the pressure on business is growing, the relationship between companies and the communities in which they operate is becoming more complex. Now a days, companies are judged on their efforts to get involved with the community and make a contribution over and above their role of providing goods and services, creating wealth, generating jobs and paying taxes. There is a growing realization that corporations are created by the society and must therefore serve it, not merely earn profit from it.

Whatever may be the purpose or goal of the business, in the coming years the pressure on business, to play a major role in the social issues, will continue to grow. It has been observed that only those institutions have excelled which have operated effectively beyond the conventional business arena and have helped society to grow along with themselves. Call for contribution as corporate citizen in today’s business environment has encouraged Corporates to address the societal issues for the benefit of stakeholders on a long-term basis. The realization of a connection between the everyday activities of the company and the well being of the society is driving a more comprehensive approach to corporate citizenship and the social & environmental activities of the Company.

Different philosophers have different views about the purpose of business in society. Some suggests that the principal purpose of a business is to maximize returns to its owners or its shareholders (wealth maximization). So, only those activities that increase profitability and shareholders’ value should be encouraged. Others believe that only those companies are likely to survive in a competitive marketplace, for which profit maximization is above everything else. Some other philosophers contend that business has moral responsibilities towards ‘stakeholders’ i.e. employees, customers, vendors, ○

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But, the question arises what does it actually mean for the organization to be socially responsible? Academicians and practitioners have been striving hard since last 30 years to establish an agreed-upon definition of social responsibility of business, generally known as Corporate Social Responsibility. In 1960, Keith Davis suggested that social

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* Dy General Manager (P & A), MTI, SAIL, Ranchi ** Student of MBA, VIT - Business School, Vellore

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responsibility of businesses’ refers to “decisions and actions taken for reasons at least partially beyond the firm’s direct economic or technical interests.” At about the same time, Eells and Walton (1961) argued that CSR refers to the “problems that arise when corporate enterprise casts its shadow on the social scene, and the social principles that ought to govern the relationship between the Corporation and the Society...” The World Business Council for Sustainable Development in its publication “Making Good Business Sense” by Lord Holme and Richard Watts used the definition “Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to the economic development while improving the quality of the life of the workforce and their families as well as of the local community and society at large.” (Business Horizon, 1991.While CSR seems unexceptional, it actually “assigns to businesses a new role and purpose”, notes Economist David Henderson in his 2001 book Misguided Virtues. While various definitions of CSR have been advocated, the following five key elements, as pointed out by Buchholz (1991) in one of his articles on CSR, “Corporate Social responsibility and the Good Society: From Economics to Ecology”, are almost reflected in all the definitions: 1. Corporations have responsibilities that go beyond providing goods and services.

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that steers the definition of CSR in Brazil with the endorsement of part of business community) states that : “Corporate Social Responsibility involves managing business in a manner that make companies partners and co-partners in the social development process. Socially responsible companies are also able, when planning their activities, to incorporate the interests of their different parts (shareholders, employees, service Providers, suppliers, community, government & environment), striving to serve all interest not just those shareholders and owners.” In simple terms, we can say that “Corporate Social Responsibility (CSR) is all about a company knowing, managing and improving its impact on the economy, the environment and the society.”

Business responsibilities under CSR

Corporate Social Responsibility involves managing business in a manner that make companies partners and co-partners in the social development process.

As mentioned by Carroll in 1991, four kinds of social responsibilities constitute total CSR: economic, legal, ethical and philanthropic. All these kinds of responsibilities have always existed to some extent, but it has only been in recent years that ethical and philanthropic functions have taken a significant place.

CSR Initiatives

Over the years, a number of CSR initiatives have been taken to help companies do the “right things” for achieving business as well as societal objectives. When properly implemented, CSR initiatives help the companies meet legal and societal expectations that can benefit governments, employees, citizens and businesses. Multinational firms are implementing CSR initiatives making improvements in the market access, productivity and their long-term as well as short-term strategies. Below are some examples of Indian & Global CSR Initiatives :

2. These responsibilities involve helping to solve important social problems. 3. Corporations have a broader constituency than shareholders alone 4. Corporations have impacts that go beyond simple marketplace transanctions; and 5. Corporations serve a wider range of human values that can be captured by a sole focus on economic values. The definition given by Instituto Ethos (an institution 88

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Tata Steel’s ‘Operation Muskaan’

CSR at HSBC

Hundreds of people born with cleft lips and cleft palates have been operated on, for free, through Operation Muskaan,a project initiated by Tata Steel Rural Development Society(TSRDS),Tata Steel’s NGO Community service arm. Through this kind of CSR initiative, Tata Steel became successful in bringing smiles on the faces of nearly 775 children and adults till now.

In 2001,HSBC had begun planning the logistics for the movement of 8500 staffs from around 20 different sites in Central London. One of the key challenges was the disposal of more than 3000 metric tons of office furniture. HSBC had the option of either disposing it off or recycling and reusing it. Though the disposal option would have been easier and more cost effective, the management at HSBC decided to look at the option of reuse of these furniture by smaller organizational and Charitable trusts. It partnered with Green Works – a not-forprofit social enterprise providing office furniture to schools, charities, community’s etc. HSBC proved through this action that it is in line with the principles of environmental management and social responsibility.

TT Rangnathan Clinical Foundation The 60-bed TT Ranganathan Clinical Foundation was set up in 1987 in Chennai by TTK group of industries. Also, known as TTK Hospital, it was India’s first hospital to deal with the problems of alcoholism and drug addiction. Since its inception 55,000 people have been treated at the hospital, of which 55% are now free of addiction. Treatment at the hospital covers psychological support, motivation and detoxification. The Infosys Foundation The Infosys Foundation prefers to donate in kind rather in cash. For instance, recently it gave books in Kannada to the regional libraries in Karnataka, so that it could help strengthen the local language. In the field of education, the foundation has instituted 26 scholarships for PhD Scholars in 13 prestigious institutions. The Foundation has also played an important role in setting up science centers and libraries.

Industry Sector Initiatives in Canada

Canadian industries have been responding to CSR and Sustainable Development challenges on a collective as well as on an individual company basis. Some of the examples of such initiatives areWhen properly

implemented, CSR initiatives help the companies meet legal and societal expectations that can benefit governments, employees, citizens and businesses.

Cambil Software

a) Responsible Care Program by the Canadian Chemical Producer’s Association (CCPA) : This program aims to manage the proper use of chemicals throughout the product life cycle. Environmental protection, health and safety are key integral features of the Responsible care program.

b) Environmental Health and Safety Stewardship Program by the Canadian Association of Petroleum Producers (CAPP) – This program addresses five key components: Company commitments, public consultation, benchmarking, operating practices and verification. This program encourages its members to improve its performance in certain areas, engage stakeholders in their reporting process and to produce an annual,

Cambil software is a global IT services organization focused on delivering outsourced services to customers worldwide. It was established in 2002 with an altruistic belief to fulfill social responsibility of the company by supporting and encouraging the old and underprivileged people. They have taken the responsibility to bear the cost of 10 old people in Kerala who have been abandoned by their near & dear ones. 89


Environmental, Health and Safety Stewardship Progress Report.

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con Futuro (young people with a future) in association with La Plata National University and various professional organizations. The program provides training and work experience for young people to help facilitate their integration into the labor market.

HP’s Social, Environmental Achievements in 2005 HP is a technology solutions provider to consumers, businesses and institutions globally. The company’s offerings span IT infrastructure, global services, business and home computing, and imaging and printing .HP has three global citizenship priority areas: reducing product environmental impacts, raising social and environmental responsibility standards in the supply chain, and increasing access to information technology. HP has had a social investing option since 1998, as one of 37 options in its retirement plan. David Lear, V.P of corporate, social and environmental responsibility, said, “for HP it is a natural fit to our corporate citizenship approach.”

Through the Manpower La Plata office, training is provided to young people . Using Manpower skills assessment software, specialists identify the abilities required for each job, define job profiles and ultimately train young people in the skills necessary to successfully integrate into the workforce. Manpower Argentina recently entered into the United Nations Global Compact to help establish an understanding of the importance of creating new opportunities for disadvantaged workers. In Belgium

Milestones achieved in these areas by HP in fiscal 2005 include :

In 2000, Manpower Unlimited was developed as a recruitment and selection service for the disabled, working in partnership with the local disabled community, to help overcome perceived barriers related to the employment of people with disabilities. The program was the first private initiative in Belgium to integrate handicapped people into the workplace. Manpower Unlimited provides a mobile team of Manpower employees equipped with a specially adapted vehicle enabling candidates and companies to meet and generate employment opportunities for the disabled individuals. Candidates are provided with career guidance, legal and administrative advice and other personalized services. Employers are provided with feasibility studies of their work environment, the recruitment and selection of candidates and training and assistance with integration of the candidate into the workplace.

Recycling 140 million pounds of computer hardware and print cartridges — nearly 17 percent more than in 2004 — which represent clear progress toward the company’s goal of recycling 1 billion pounds of materials by the end of 2007. The completion of 85 audits of the company’s supplier code of conduct in China, Czech Republic, Hungary, Indonesia, Korea, Malaysia, Mexico, Philippines, Poland and Thailand, exceeding HP’s goal to audit 75 sites. Manpower Inc National CSR Initiatives Manpower Incorporation works to enrich people’s lives with quality employment opportunities and training, and to provide companies with quality HR solutions that help them increase productivity, improve efficiency and manage the bottom line. Its CSR initiatives in Argentina, Belgium, Europe, France and Paraguay are given below :

Manpower Belgium in 2005 won an important contract with a public employment organization in Wallonia to provide training to 1,500 jobseekers under the age of 30. As part of the public-private collaboration, Manpower developed two separate training programs designed to increase the employability of young people.

In Argentina To help integrate young people into the workforce and society who are disadvantaged due to social, cultural or schooling deficiencies, Manpower Argentina launched a CSR program called Jovenes

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In 2003, Manpower placed a special emphasis on eliminating barriers to employment for people with disabilities. This commitment included becoming an official sponsor of the 2003 European Year of People with Disabilities (EYPD) to raise awareness among employers of the issues facing people with disabilities in European society. The Year was designed by its sponsors, the European Disability Forum (EDF) and the European Commission, to focus maximum attention on the challenges facing people with disabilities in European society and to generate momentum that will lead to long-term improvements in the situation faced by disabled individuals. In conjunction with the EYPD, the Working with Disabilities report was produced by Manpower for use as a tool with Manpower’s 250,000-strong European customer base, thus enabling employers to better understand the issues and help eliminate barriers to the employment of people with disabilities. In France Manpower France has entered into several partnerships to facilitate its CSR initiatives, including:

Manpower an “associate member” of the foundation and allowing the Managing Director of Manpower France to attend the representative national conferences of FACE as a consultant through 2005, which was the duration of the agreement. In Paraguay In 2005, Manpower Paraguay released the Gender Equality Report in collaboration with the United Nations to emphasize the importance of gender equality and ending discrimination in the workplace.

Issues in CSR : Points to Ponder

Corporates, whether doing their business in developed or developing countries, are realizing that globalization is transforming CSR from a choice into an imperative. Besides taking care of their personal objectives, corporates must be able to be recognized as good corporate citizens and adopt measures for sustainable growth through their labor practices, environmental habits and Besides taking care of their protection of community interests.

personal objectives, corporates must be able to be recognized as good corporate citizens and adopt measures for sustainable growth through their labor practices, environmental habits and protection of community interests.

In a developing country like India, a very crucial aspect of CSR could be Entrepreneurship Development. Young unemployed are compelled to waste their talents due to lack of opportunities and encouragement in the field of business. Some have challenging ideas but no funds to implement them whereas many have funds but no proper guidance to give their ideas a proper shape. So, Corporates should take initiatives to conduct special EDPs (Entrepreneurship Development Programmes) so that potential but untapped ideas of young minds can prove fruitful to Indian economy’s development.

Since 1997, Manpower France has been involved in a partnership with FACE (Foundation for Action to Combat Exclusion), which involves corporations dedicated to enlisting companies in the struggle against exclusion from the work force and developing concrete means of action to that end. Since joining FACE, Manpower has participated in local programs aimed at developing the employability of disadvantaged persons through temporary work assignments. Candidates are given tests and interviewed in order to evaluate their skill level, at which point Manpower works to appropriately place them in temporary positions based on their capabilities.

Yet another issue which is hampering the overall economic growth of India is “lack of health facilities”. Like Tata Steel’s CSR initiative Operation Muskaan for the cure of cleft lips and palates(as mentioned in the CSR initiatives in this article),other Corporates

In 2002, 78 temporary employees performed a total of 403 temporary work assignments, representing 23,650 hours worked. Also in 2002, Manpower signed a partnership agreement with FACE making 91


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In India, environment protection is a major issue today. Businesses can take Environmental Initiatives too. They should ensure that their operations should not harm the environment. Special waste treatment facilities should be incorporated in order to reduce the toxicity of the plant wastes. Along with this, Special Plantation Programmes should be organized at regular intervals in association with various schools, colleges, and of course with their own employees.

should also come forward to organize health camps, providing medicines to poor people and organizing health awareness programmes.This would help the societal members understand the basic ways in which they protect themselves from any major kind of health complication. Regular immunization programmes can be conducted at regular intervals especially for infants. Another step can be taken in the direction of providing ‘Vocational Education’ especially to village students immediately after their Xth standard. The Vocational or skill-based education would help the teenagers to earn their living by the time they reach their voting age i.e. 18 years. Corporates can also provide cash donations to various educational institutions in order to assist students coming from poor families, in pursuing their education.

The need of the hour is to generate different ways in which businesses can lever their resources into charity. They need to have a stronger positive impact on key social issues along with achieving their organizational objectives. Irrespective of the kind of business the Corporates are involved in .CSR demands that the business should be able to manage the economic, social and environmental impacts of their operations to maximize the benefits and minimize the downsides of their organization and society as a whole.

In addition to financial contributions, some companies offer non-cash support to the society such as establishing STD/ISD connections in villages, dwelling up of wells and hand pumps in the areas of water scarcity etc.

References 1. A.B.Carroll,”The Pyramid of Corporate Social Responsibility: Towards the Moral Management of Organizational Stakeholders”. Business Horizons, Vol 34, No. 4, July-Aug 1991.

5. R.Eells and C.Walton,”Conceptual Foundations of Business”, (Homewood, Ill: Richard D. Irwin, 1961) Websites

2. Rogene A.Buchholz,” Corporate Responsibility and The Good Society: From Economics to Ecology”. Business Horizons, Vol 34, July-Aug1991

http://www.bsr.org www.ethos.org.br

3. K.Davis,”Can Business afford to ignore its Social Responsibilities?” California Management Review, 2,3 (1960) : 70-76

www.google.com www.hp.com/go/report

4. David Henderson (2001), Misguided Virtues, False Notions of CSR, Institute of Economic Affairs & Profile Books Ltd. 92

Case Study Corporate Social Responsibility : The DSP Experience Gautam Sinha*

Introduction

education, provision of basic amenities etc. have been aided and funded by DSP in the past.

Corprate Social Initiatives are the major activities

undertaken by a corporation to support social causes and to fulfill commitments towards corporate social responsibility (Kotler et al). In the late 1990s the Corporate Social Responsibility (CSR) got accelerated momentum as pressure mounted from the consumers, the media, the activists and various public bodies, who demanded that companies make conscious contribution to the betterment of the society at large. With increasing public awareness in the globalized world the long-term sustainability of an organization will depend not only on its business performace alone but also on its abilities to facilitate and demonstrate corporate social responsibility. CSR is primarily about becoming a good corporate citizen with a strong commitment to improve community well-being. The greatest challenge for CSR is that there are not always antecedents to fall back on, and most of the times decisions are taken on judgement rather than tested formulae. However, this challenge is nothing but an opportunity opening up new vistas.

In the area of co-operative movement a number of co-operative societies / bodies have been promoted to render a wide array of services to the township residents. A few leading ones are DSP Employees’ Consumer Cooperative Society** Durgapur Steel Peoples’ Cooperative Bank Mahila Karmodyog Samity Death Benefit Scheme (**Incidentally “Durgapur Steel Peoples’ Cooperative Bank” is regarded as a fore-runner and trend setter in the area of micro-crediting in India). In the area of Peripheral development a number of programmes were undertaken in areas adjoining the township, essentially rural areas, for providing drinking water supply, constructing roads, bridges and culverts, basic medical services etc. The Indian Steel Industry faced a sweeping change from the early nineties. The public sector steel companies were forced to take business orientation in its approaches and policies. It was a paradigm shift from social focus to business focus. From the mid of nineties the steel industry was subjected to one of the most severe downturns. However, even during this period DSP did not waiver its attention from becoming a socially responsible organization.

DSP’s past experience in CSR Durgapur Steel Plant (DSP) as a unit of the public sector major SAIL has all along played the pivotal role in the development of this region. Numerous efforts in different areas of social welfare such as promotion of co-operative movement, medical and health facilities for the needy, sanitation and hygiene, ○

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* Executive Director, Durgapur Steel Plant

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into various organisations of people and extending help to enhance their capabilities, which will affect their development in the long run. Empowerment of people is basic to the success of the projects. Their participation should be such that the programmes launched by DSP now should in the years to come be virtually ‘taken over’ by the villagers as self-sustaining schemes.

Though new projects could not be taken up during this time but all support were extended to the projects which were undertaken in the earlier years.

DSP’s ongoing experience in CSR With the buoyancy in the steel market and changed fortune the Corporate Social Initiatives of DSP once again took a front seat from the early twenty first century. It has some credits of the past, strong commitment for the present and a vision for the future. CSR is considered as an integral part of goals, objectives and policies of DSP.

The Process Three tribal villages namely Jabbarpally, bonsol and Hetadoba have already been identified and as a first step individual low cost sanitation units have been provided to all 372 households. Planning and implementation of other developmental activities are already underway.

Today the strategy of the corporate social initiative in DSP is to ensure long standing benefits and development of the community at large. This time the strategy has been taken to involve the community primarily through the reputed NGOs in the developmental activities. It is not only an effort to ensure community involvement in the developmental activity but also to sensitize people about the importance of self sustenance. In the efforts towards CSR activities DSP has decided to act as a facilitator by providing financial help and extending technical and managerial expertise in starting of a project and then encouraging people to take ownership of the project. Till now the strategy has worked well and has hel[ped us in undertaking diverse projects at the same time.

Initiative – 2 : Providing Medical & Health Care to nearby villages The Task Providing basic medical facilities to the poorest and most underprivileged and catering to the health needs of rural communities living in surrounding villages. This has to be done through extensive coverage of curative, preventive and promotive aspect of health. The Goal The projects shall aim at helping the communities to improve their quality of life by promoting good health and creating awareness about developing a healthy environment and nation.

Some of our major initiatives are enumerated below:Initiative – 1 : Adoption of Villages

The Process The Task -

Creating provision of Mobile Medical Units and dedicated teams which will conduct regular visits and health camps in nearby villages and surrounding areas. One NGO has been provided with a Mobile Dispensary in the current year and it has been conducting medical camps in the identified areas. Few other NGO’s are being given infrastructure and equipment support to render services to the poor and the needy.

To undertake comprehensive development activities over the years in the adopted village, so as to make it a model village in every aspect of development viz. Health & hygiene, education, income generation, empowerment etc. The Goal The projects shall aim at consolidating the villages

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Initiative – 3 :

training of mentally & physically challenged children are normally available only in big cities DSP has undertaken the initiative for facilitating creation of centers of learning for such children by supporting involved NGO’s to start such centers by providing building, infrastructure support, special training equipments and medical aids.

Assistance to Educational Institutions The Task – Assistance to educational institutions for below poverty line children in the form of infrastructure development and addition of facilities.

Already two such centers are functioning in the Steel city of Durgapur.

The Goal The projects shall aim at creating an environment conducive for rendering good education and creating awareness amongst children from the underprivileged sections of the society about developing into responsible citizens of the nation.

Initiative – 5 : Self Employment Schemes The Task Facilitating creation and promotion of Self Help Groups for alternative employment generation amongst unemployed youth and poor women.

The Process Apart from help to regular schools DSP has taken the initiative to support non-formal education activities particularly amongst the slum dwelling children by providing infrastructure and educational aid support to agencies involved in such activities. A number of schools have been given financial assistance during the current year and the same shall go on in future also.

The Goal The projects shall aim at promoting a culture of entrepreneurship amongst unemployed youth and poor women through identification of areas of selfemployment and supporting such ventures by providing infrastructure/ equipment support.

Initiative – 4 :

The Process -

Education & Training of the Mentally & Physically challenged children

Already one such initiative has been implemented, in the current year, in collaboration with an NGO, whereby 10 poor women have been benefited by starting a soap making and gunny bag production unit within the DSP township. DSP has provided the building and, necessar y equipment & infrastructure costing around Rs. 1.50 lakhs. Additionally DSP has also started procuring soap from them.

The Task Assistance to Social Organisations/ Institutions/ NGO’s engaged in the upliftment of disabled, mentally and physically handicapped and other medically challenged persons. The Goal -

We intend to provide this initiative for more groups. The projects shall aim at providing basic education, training, health care and counseling facilities to the disabled children/ adults so that in due course they are able to be assimilated in the main stream of the society.

Other Initiatives i.

Sanitation/ Construction of public toilets in important locations. Considering the impact of sanitation on public health particularly in the underdeveloped areas DSP has taken the initiative to facilitate setting

The Process As dedicated facilities for the education and 95

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CORPORATE SOCIAL RESPONSIBILITY : THE DSP EXPERIENCE - SINHA

4. Conclusion

up of sanitation units, both individual and public, depending on the socio-economic conditions and the space available.

Durgapur Steel Plant, as a proud unit of SAIL, has been continuously striving towards overall community development as a part of its Corporate Social Responsibility (CSR).

Already more than 300 households have been provided with individual Low Cost Sanitation Units in three tribal under developed villages. We are also creating three public toilet facilities in and around Durgapur for the benefit of the poor & needy and the general public at large.

Numerous efforts in different areas of social welfare such as health & hygiene, education, provision of basic amenities etc. have been aided and funded by Durgapur Steel Plant in the past.

ii. Construction of bus stands cum shelters at important locations to help common commuting public.

However, being the largest and foremost company located in this region Durgapur Steel Plant has a special continuing responsibility towards the people of this area. To emphasize the statement “There’s a little bit of SAIL in everybody’s life” and further its efforts towards overall development of the society in and around this steel city a number of new initiatives are being taken up.

12 bus stands have been constructed in and around Durgapur keeping in view the daily passenger volume and lack of shelters nearby iii. Development of public places. Assistance has been provided to public libraries and community centers in augmenting their infrastructure/ facilities for the benefit of the common people.

(I acknowledge the contribution of Mr. Anjani Kumar Sharan, Manager (Personnel) and Mr. Chinmoy Samajdar, Manager (Communications)/ DSP for the article)

References : 1

Kotler, P., Lee, N.(2005), Corporate Social Resposibility, John Wiley & Sons,Inc.

2

Muirhead, S. A., Bennett, C. J., Berenbeim, R. E., Kao, A., & Vidal, D. J. (2002). Corporate citizenship in the new century: Accountability, transparency, and global stakeholder engagement. New York: The Conference Board, Inc.

3

Unilever. (2004). A perspective on corporate social responsibility in the 21st century. [Based on a speech by Niall FitzGerald, Unilever chairman, “CSR: Rebuilding Trust in Business,” pp. 2-3. Distinguished Speaker Series. London Business School.] London: Author.

Bank Customer Service "I'm not saying that the customer service in my bank is bad, but when I went in the other day and asked the clerk to check my balance .... he leaned over and pushed me".

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Case Study Corporate Social Responsibility : Contribution of Bhilai Steel Plant Rakesh Kulshreshtha* Preeti Bhatnagar**

Understanding CSR

suppliers can live and work. Firms have a moral duty to ensure that they conduct their business in a way that does not pose a serious threat to health, safety and environment. Large multinationals who have failed to perform this moral obligation have paid a heavy price not only by way of penalties for damages suffered by employees, consumers and community but also as loss of business on account of their brand names getting associated with negative perception about social responsibility and violation of international standards. Today there is increasing realization among firms across the world that CSR is good for business and if, applied well, it can be a means to improved competitiveness that shows up on the bottom line. CSR needs to be seen as an investment that bears fruit in the short, medium and long term. The firms will do well to adopt in letter and spirit the word of great economist Ezra Solomon that profits are not the purpose of the business but a means of building the business thereby creating wealth and rewarding stake holders. As Aristotle said in ancient Greece, “Wealth is evidently not the good we are seeking, for it is merely useful for the sake of something else.”

The field of Corporate Social Responsibility (CSR) can be conceptualized in myriad ways. Moreover, several aspects may need to be studied to arrive at an appreciation of the subject since CSR is an amalgam of approaches, conceptualizations, and practices which determine the strategic thrust of an organization. Imbibing the values of CSR into the fabric of an organization can take a long timeranging from years to decades. Hence, it would be apt to proclaim that CSR is not a passing management fad or a “flavour of the month” which can be practiced today and forgotten tomorrow. It is about corporate strategy and corporate vision, with implications for each day of an organization’s life. Thus CSR is about how organizations manage the business processes to produce an overall positive impact on society. If firms wish to continue conducting business in the society in which they operate, they need to respect its rights, legally as well as morally and ethically. Firms, then, should act responsibly if they want to reach out to a qualified workforce, potential customers with the purchasing power to buy their products, and an environment with the resources that enable them to keep producing and which form part of the context in which their customers and ○

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Triple bottom line approach to CSR – concept of sustainable development Sustainable development has been defined as development which meets the needs of the present

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* General Manager (Management Services), Bhilai Steel Plant ** Manager (CMMS), Bhilai Steel Plant

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CORPORATE SOCIAL RESPONSIBILITY : CONTRIBUTION OF BHILAI STEEL PLANT - KULSHRESHTHA & BHATNAGAR

without compromising the ability of future generation to meet their own needs.

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The verification by an external agency is voluntary. However verification by a reputed verifying agency adds credibility to the report.

Stakeholders are looking now at a “triple bottom line”, increasingly aware of non-financial drivers that affect profitability over the long-term. These include social and environmental issues that can have an indirect impact on corporate profitability through an organisation’s reputation or more direct impacts through environmental liabilities or opportunities.

Sustainability and Steel Industry : International Iron & Steel Institute (IISI), Brussels has introduced a policy statement outlining visions and goals for the world steel industry on Sustainable Development in 2002. Leading steel companies such as POSCO, Arcelor etc have published sustainability reports and Tata Steel was the first steel plant in India to publish this report. Bhilai steel has been publishing this report for last three years and its latest report has been verified by a third party verifying agency namely M/s Ernst & Young.

The yardstick for measuring triple bottom line performance are economic, social and environmental : Economic performance involves evaluation the balance sheet, income statement and cash flows along with traditional financial measures and ratios.

Why publish Sustainability Report ? Effective Management in a global economy, where information (reliable or unreliable) travels at Internet speed, requires a proactive approach. Measuring and reporting both past and anticipated performance is a critical Management tool in today’s high-speed, interconnected world.

Social performance involves evaluating a company ’s employment policy, union relationships, education, health, safety measures for its employees, empowerment, career developments, community development initiatives, business practices, perception in its local communities and similar issues. These items tend to affect an organisation’s reputation, which ultimately can affect the organization’s value.

Today’s strategic and operational complexities require a continual dialogue with investors, customers, suppliers, employees and the society. Reporting is a key ingredient to building, sustaining, and continually refining stakeholder engagement.

Environmental performance involves evaluating an organisation’s company’s environmental compliance record and, perhaps more importantly, how proactively it responds to environmental issues and whether it seeks ways to mitigate the footprints it leaves behind.

Transparency and open dialogue about performance, priorities, and future sustainability plans help to strengthen partnerships with external parties, ranging from consumer’s to investors to community groups.

Global Reporting Initiative Guidelines

Sustainability reporting is a vehicle for linking diverse and insular functions-finances, operations, marketing, research and development – in a more strategic manner. Sustainability reporting opens internal conversations where they would not otherwise occur.

The GRI Guidelines present reporting principles and specific content to guide the preparation of organization-level sustainability reports. While the guidelines are neither a code of practice nor a standard, they assist organisations in presenting a balanced and reasonable picture of their economic, environmental, and social performance with a view to promote comparability of reports and to facilitate its assessment by an internal or external agency.

The process of developing a sustainability report provides a warning of trouble spots-and unanticipated opportunities – in supply chains, 98

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Since inception, Bhilai Steel Plant has made huge positive impact on the society, in and around Bhilai. As the magic wand of progress touched Bhilai’s townships, they transformed magically, from calm, unruffled landscapes into great centres of Human activity. Human concern has been the mainstay of Bhilai Steel Plant. Throughout its history, Bhilai has been proactively involved in satisfying the social concerns of the region.

in communities in reputation and image building, and others. Sustainability reporting helps to sharpen the Management’s ability to assess the organization contribution to natural, human, and social capital. Reporting helps highlight the societal and ecological contributions of the organization and the “sustainability value proposition” of its products and services. Such measurement is central to maintaining and strengthening the “licence to operate”.

The Corporate Social Responsibility of Bhilai Steel Plant is based on triple bottom line excellence, that is – Social, Economic and Environmental.

Sustainability reporting may reduce the cost of capital for a company. Fuller and more complete information disclosure can add stability to a company’s financial condition by avoiding major swings in investor behaviour caused by untimely or unexpected disclosures.

BSP considers steel as a major foundation of a sustainable world. Accordingly the leadership has accorded a ver y high priority to the issue of sustainability. BSP has taken leadership initiatives in the areas of environmental, social and economic sustainability and seeking continuous development. For BSP, sustainability means creation of value for all its stakeholders, enhancing profitability, delivering world class products, reducing the cost of production, increasing the operational efficiencies, contributing to a flourishing environment, propagating the culture of learning amongst employees and providing services to the community for social development of the region. We believe in managing our business in a way that balances our environmental, social and economic impacts.

Expected benefits (Summary) 1. Improved material efficiency 2. Improved product quality 3. Improve community relations 4. Improved media coverage 5. positive pressure group relations 6. Assured present and future compliance(the license to operate)

Bhilai Steel Plant is now looking at a “triple bottom line” increasingly aware of non-financial drivers that affect profitability over the long-term. These include social and environmental issues that have an indirect impact on its profitability by way of positive perceptions of the society in which it operates. IISI has published its first sustainability report in 2004 for Member Steel Companies. Out of 11 sustainability indicators of IISI, 5 indicators of BSP are better than the world average. (Ref. Fig. 2)

7. Reduced risk exposure 8. Lower insurance premium 9. Cheaper finance (Applicable for SAIL as whole) 10. Increased staff commitment

Bhilai Steel Plant and Corporate Social Responsibility

Triple-bottom line Excellence

Bhilai is the offspring of the dream of self reliance that Pandit Nehru had seen for India. Founded on the ideals, built with dedication and nurtured with care, Bhilai transcends the parameters of a Business venture.

Economic Performance BSP has- registered highest ever profit of Rs. 4042 crore during the financial year 2004-05. It’s Gross 99

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Margin to average Capital Employed at 182 % (in 2004-05) is a Global Benchmark and it has made profit consecutively for last eighteen years. The other indicators in the form of asset utilization, financial ratios are also one of the best in the industry.

of 16 km radius, educational support through schools, infrastructure for sports, parks, civic amenities like construction of roads, bridges, borewells, safe drinking water facilities, community halls, etc. With a key objective of woman empowerment, Bhilai Mahila Samaj, provides training and employment for tribal woman for sewing, knitting, painting, production of cottage products, Masala products, stationeries and handicrafts. BSP has maintained and supported these activities as part of the overall management system. (Refer Fig. 3)

Social Performance BSP has been proactively involved in meeting the social concerns of the region. To meet the goals of social responsibility, the Plant has provided not only in township but also in villages within periphery

Figure 2 IISI Sustainability Reporting Indicators Sl.No.

Indicator

Units

Indicators value (World Avg.)

BSP's Value

1.

Operating Margin

% of revenue

8.9

41.5

2.

Return on Capital Employed (ROCE)

% of capital employed

9.5

155

3.

Value added

% of revenue

3.2

38.7

4.

Employee Training

Training days / employees

6.3

11

5.

Lost time injury frequency rate

Frequency / million hours worked

7.8

0.057

100

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and certification of township and hospital (first among SAIL plants) is underway. To improve the quality of life and environment inside the works and in the surrounding habitat, BSP has taken effective measures in the areas of resource conservation, water conservation, pollution prevention, compliance of legislative and regulatory requirements, waste reduction, conversion of waste to wealth and rainwater harvesting. As a part of Corporate Plan 2012, BSP has benchmarked coke rate, energy rate, solid waste utilization, particulate matter load and effluent load with the international standards.

Social Accountability Policy of BSP Bhilai Steel Plant shall continuously strive to enhance its employee productivity by promoting a safe, healthy and socially accountable work culture which encourages its employees to contribute their best by : Adhering to the Social Accountability management system based on the requirements of internationally recognized SA:8000 standard and its periodic review; Complying with the national law and all other applicable laws and requirements;

Actions speak better …

Respecting the principles adopted in all relevant international instruments;

BSP adopts tribal children and takes complete care of their education, lodging etc, ensuring their seamless integration with the main stream society.

Developing pro-active team spirit for continual improvement through innovation and change management.

5 Shram Veer and 5 Vishwakarma awardees from RMP donated prize money to tribal children

Environmental Performance Bhilai Steel Plant is working systematically to improve its environmental performance while reducing any detrimental impact of its operations on the environment. The plant is certified as per ISO-14001

14 men from MRD bearing annual school fees and providing hostel amenities of tribal children.

Figure 3 101


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of dependence. The learnings and the methodology can then be replicated to other villages in the vicinity.

Installation of Social Accountability System as per SA 8000 standard Bhilai Steel Plant is one of the first PSU’s to have taken up the initiative for installing of internationally acclaimed SA 8000 standard for Social Accountability with the philosophy to ensure fair and humane labour practices and ethical sourcing of goods. Target for certification is June, 2006.

c. Devising a methodology for encouraging greater involvement of our employees with society thereby expanding the total involvement.(“Need for contribution to society and recognition by society” have been identified as an important need under Maslow’s theory of motivation.). If 35000 employees devote one day voluntarily to social work this would amount to 116 skilled and talented social workers working for one full year.

“Today I am changing the name of Bhilai. I am rechristening it as “Bhalai”, meaning welfare. The welfare of India will be reflected here” - Acharya Vinoba Bhave

d. Aiming for 100% solid waste utilization and zero discharge by 2012.

Marching ahead as a Responsible Corporate Citizen

e. Promoting non-conventional energy resources - extraction of Bio-diesel from 5 lakhs ‘Karanj’ plants already cultivated in the township.

As a part of continuous improvement the following initiatives are under consideration with the management :

f.

a. Giving a process orientation to “peripheral development” by setting up objectives goals/ targets, need assessments, review of implementation etc. The department of community development under town services is being restructured for this purpose.

Social audit by eminent citizens.

g. Becoming a signatory to Global Compact – an initative by United Nation Secretary-General Kofi Annan. The global compact lays ten principles in the areas of human rights, labour, environment etc. h. Address the convergence of various initiatives on standards and practices (e.g.Global Reporting Initiatives, Social Accountability etc.) to bring these under a coherent framework.

b. Greater proportion of population in and around Bhilai live below the poverty line. Their first need is to have access to water. Second means of sustainable livelihood, third health and lastly education. These are therefore the areas of focus. Although education is given maximum thrust as through education one can help them surmount their problems. A proposal is under consideration for adopting one village and developing it as a model village taking care of all its primary needs by involving grassroot level and at the same time not encouraging a culture

Living in harmony with society is the philosophy at Bhilai Steel Plant and human excellence its pride. It has dedicated its sustainability report to the people of Chhattisgarh and paid rich tributes to Bhilai collective and its excellent work culture that has enabled the plant to make great strides in triple bottom line excellence.

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References : 1. http://www.arcelor.com

8. ‘ Why Firms need to do good?’ by William B.Werther,Jr, divid Chandler

2. http://www.icfaipress.org

9. Service with a Smile’, C.S. Venkata Ratnam, The Economic Times, April28,2006.

3. http://www.iisi.org 4. http://www.undp.org

10. Corporate Social Responsibility- Perceptions of Indian business. Published by the Centre for Social Markets, London/ Calcutta July 2001

5. www.globalreporting.org 6. Sustainability Report 2004-05, BSP 7.

‘Leadership in Communities’ by Rajshree Birla, Smart Manager, Oct-Nov 05 Vol.4 Issue 6

Equation of Earnings The Equation Engineers and Scientists will never make as much as business executives. Now a rigorous mathematical proof has been developed that explains why this is true : Postulate 1 : Knowledge is Power. Postulate 2 : Time is Money. As every engineer knows, Work = Power * Time Since Knowledge = Power, and Time = Money, We have : Work = Knowledge * Money Solving for Money, We get : Work Money = --------------------Knowledge Thus, as Knowledge decreases, Money increases, regardless of how much work is done. Conclusion : The Less you know, the More you Make. Note : It has been speculated that the reason why Bill Gates dropped out of Harvard's math program was because he stumbled upon this proof as an undergraduate, and dedicated the rest of his career to the pursuit of ignorance.

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Case Study Towards Improving Quality of Life of The Under Privileged : Initiatives of RDCIS at Ranchi Dr D Mukerjee* A K Sinha**

Introduction

Panchayats, social organisations individual institutions and people’s representatives of the area. SAIL has been deeply involved in various social activities, like, SAIL Aids Control Programme (SACP) in association with National Aids Control Organisation (NACO), adopting tribal children and providing free education, boarding and lodging facilities, establishing academics for handball, hockey and football at Bhilai, Rourkela and Bokaro respectively, providing assistance during national calamities, such as, floods and earthquakes, preserving and maintaining national monuments etc. SAIL has always encouraged its units to take a constructive and active role in pursuing programmes that make an impact on improving the quality of life of persons belonging to the economically weaker section.

Be it individuals, organisations or industries, all

are indebted to the society, at large, in some form or the other, for their success, prosperity and accomplishments. One has a moral obligation in repaying this gratitude by undertaking responsibilities, voluntarily, aimed at improving the quality of life, especially of the deprived sections of the society. The idea is to share prosperity with the surrounding community. Corporate social responsibility has to enshrine the spirit of service, love and dedication in order to usher happiness in the lives of economically backward group of persons. Selfless service should be the expression and manifestation of love where it is not necessarily bound by duty. Steel Authority of India Ltd. (SAIL) and the various units under it have been in the forefront in discharging obligation under corporate social responsibility (CSR). Through its various CSR programmes, SAIL has shown its commitment in the realm of social responsibility not only to its employees and their dependents but also to the population residing in the peripheral regions of its units. Different units of SAIL have undertaken programmes that reach out to people living within a radius of 8-20 kms. The programmes are pursued under close coordination with the State Government, District Administration, local ○

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Corporate Social Responsibility : Some Thoughts ‘Corporate Social Responsibility’ (CSR), as is generally understood, imbibes the concept that business has an obligation to society that extends beyond its narrow obligation to its owners or shareholders. The book by Howard R. Bowen on “Social Responsibilities of Businessman” published in 1953 stated the modern debate on the subject. The author strongly reasoned that general social and economic benefits would

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* General Manager (CP), RDCIS, SAIL, Ranchi ** Manager (IR&W), RDCIS, SAIL, Ranchi

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accrue to the society, if business recognised broader social goals in its decisions. Though there is no uniformly accepted definition of CSR, the following two reflect the spirit behind it:

which are often larger than nation states. Obviously greater responsibility, like social responsibility, comes in the wake of significant power and size of business houses. In the past couple of decades, a growing number of companies have realised the benefit, from business angle, of CSR policies and practices. As a result CSR has grown in recent years with companies of all sizes and sectors developing innovative strategies.

“Corporate Social Responsibility is operating a business in a manner which meets or excels the ethical, legal, commercial and public expectations that a society has from business”. “Corporate Social Responsibility involves aligning a company’s activities with the social, economic and environmental expectations of its stakeholders”.

Though there are arguments against CSR, there is a strong body which favours CSR. Tom Cannon holds the view that society and the corporation or business need to co-exist and have a beneficial relationship. The debate on whether responsibility of a business Business is expected to create wealth, supply market, enterprise is only to its ‘shareholders’ (owners) or generate employment, innovate and produce to all ‘stakeholders’, including environment and sufficient surplus to sustain its activities and improve society at large, is a continuous one. As per Friedrich its competitiveness while contributing to the Neubauer and Ada Demb in “The Legitimate maintenance of the community in which it operates. Corporation”, the following six groups of Society is expected to provide an environment in distinguishable stakeholders have been identified: which business can develop and (a) providers of funds; prosper, allowing investors to earn (b) employees; (c) general public; returns while ensuring that the (d) government; (e) customers and David Wheeler and Maria stakeholders can enjoy the benefits (f) suppliers. Sillanpa in “The Stakeholder of their involvement. Thus, Some experts argue that since Corporation” mention that by according to Cannon, in return for shareholders put their risk capital 1998, 51 out of the 100 the privileges that the society grants in business, companies should be to businesses, the latter have an largest economies were not managed only in the interest of its important obligation in fulfilling the nation states, but owners or shareholders. On the needs of the society/ community corporations. According to other hand, a number of experts at large. the authors, in 1998, General believe that any company with a Motors was bigger than The idea that business has short term in view, only maximising stakeholders other than Denmark; Toyota was bigger profits for the shareholders, will shareholders is not new, in the than South Africa. destroy value in the medium to long western advanced economies. term. And as such, in the long run Large auditing firms like KPMG and the interests of both the Pricewater House Coopers continue to receive stakeholders and shareholders need to converge assignments to audit ‘Triple Bottom lines’ – financial and also have to be balanced. bottom line, environmental bottom line and ethical/ David Wheeler and Maria Sillanpa in “The Stakeholder social bottom line. Corporation” mention that by 1998, 51 out of the In India, during a recent survey, visible differences 100 largest economies were not nation states, but in commitments towards social responsibility were corporations. According to the authors, in 1998, found with respect to company sector and size. Bigger General Motors was bigger than Denmark; Toyota company, with numerous employees and a large was bigger than South Africa. Thus, the modern turnover, has more corporate social responsibility day large corporations are often bigger than nation practices and guidelines in place. However, they states. These corporations command resources 105

TOWARDS IMPROVING QUALITY OF LIFE OF THE UNDER PRIVILEGED - MUKERJEE & SINHA

tend to be more philanthropic than strategic. There were also some differences with respect to sectors, with IT industry appearing to have an edge over others. In general, big public and private sector companies in India, like SAIL, Bharat Petroleum Corporation Ltd., National Thermal Power Corporation, TATA Steel etc have sizeable presence and involvement in activities related to CSR.

Practice of Corporate Responsibility at RDCIS

Case Study

identified and detailed cost estimates are prepared. Executing vendor for each activity is then identified keeping in mind the existing purchase practices of the organisation and also the competence and credibility of the vendor to meet time schedules. The execution phase is also time consuming and can extend upto 50-60% of the overall time frame. The last phase of each activity relates to evaluation of benefits that has resulted to the beneficiary and this may account for around 5-10% of the time. The process of evaluation involves rigorous interaction with the target section of the society and understanding their perception and views of the implemented project. These interactions help to improve their awareness as to how the project will impact their quality of life. Sometimes follow up measures are identified so that the beneficiaries can extract full benefit of the programme. The flow sheet given in Fig.1 shows the vital steps related to the CSR programmes being pursued at RDCIS.

Social

It is a stark reality that within the city of Ranchi as well as in its immediate periphery, there are pockets of people who are deprived of basic amenities of life. RDCIS considers it important to extend help to such groups as part of its corporate social responsibility. We strongly believe that RDCIS should not develop in isolation, bereft of commitments towards improving the lot of poorer people. While we should strive to take RDCIS and SAIL to higher levels of prosperity, it is also imperative to share this prosperity, to the extent possible, with the community. The essence of undertaking activities related to improving the lot of poorer sections society and the of the society is to establish a rapport with society, understanding its needs corporation or and implementing programmes for business need to coupliftment. exist and have a

Efforts at RDCIS Towards Social Responsibility

RDCIS has been making meaningful contributions towards the society in many spheres. Providing support for education for weaker and backward section children, including handicapped children, has been beneficial relationship. The initiation of various ideas related rigorously pursued. Other important to peripheral development schemes areas of involvement include provision start with in-depth interaction with of drinking water, medicare, youth and persons, social organisations, schools, women empowerment, construction government departments etc and appreciating the of rooms/ toilets/ culverts, fabrication of steel cots problems at hand. The next step involves for orphans/ blind school children, organising development of specific plans depending on the computer awareness programmes, erection of street nature of problem and the areas of implementation. solar lighting system etc. Elaboration of activities The planning process is one of the crucial element under four specific heads is provided hereunder. in ensuring desired end result and can take upto 30-40% of the overall time outlay. Once the plans Solar light : Pollution free energy source are in position, prioritisation and allocation of resource There are villages galore, in the adjacent locations outlay are worked out within the realm of the overall of Ranchi, which are deprived of electrical energy financial sanction provided. The third phase lies source. One such remote village, Bandhua, located in execution and implementation of the prioritised about 20 kms from Ranchi and falling under Namkum schemes. For this, reliable executing agencies are block, was identified for provision of solar street 106

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lighting system. The village was earmarked, in association with Ramakirshna Mission, Tupudana. After discussion with the village Panchayat, who expressed a strong desire for getting access to alternate source of energy for lighting purpose, a monitoring team, comprising responsible persons of the village, was formed. A survey was conducted by the Peripheral Development Committee (PDC) team of RDCIS, SAIL to pin point suitable locations in the village for erection of solar powered street lights. Five such locations were identified.

All the borings at the chosen sites were successful in producing safe drinking water. The other beneficiaries included schools where handicapped and poor children studied. In some of the schools with electrical connections, submersible pumps with overhead storage tanks and associated pipelines were provided. This has particularly helped schools, with large student population, since mid-day meals are being cooked under Government directive, which require large quantity of clean water.

Support to Schools : Means for better

The solar street lights conformed to Ministry of Nonambience Conventional Energy Sources (MNES) 2003-04 Providing educational support in various forms to specifications. Before drawing up the scheme, under-privileged school children has been a major interactions were held with West Bengal Renewable thrust of RDCIS. The idea of extending this support Energy Development Agency (WBREDA), Salt Lake, is to allow these children to have a smother access Kolkata and Jharkhand Renewable Energy to education and gain a higher level of confidence. Development Agency (JREDA), Ashok Nagar, Ranchi; The different types of help provided to poor both being agencies of the respective State handicapped children as well as children from lower Governments. Five solar street lights, with dusk to economic and social strata are briefly explained. dawn sensors, capable of switching on and off automatically depending of ambient light intensity, Handicapped children were erected through a leading supplier and handed over to the RDCIS has been very deeply associated villagers in February, 2006. The villagers with betterment of poor handicapped are being trained in maintaining the RDCIS has been children: blind and deaf and dumb. light sources. This is probably one of making meaningful Two blind schools, namely, Braja the first such attempts under SAIL to Kishore Netraheen Balika Vidyalaya, contributions towards provide a pollution free source of Bariatu and St. Michael’s School for the society in many energy for poor village folks. the blind, have been provided

spheres.

assistance. For assisting children with partial visual impairment, in St. Michael’s School, big TV set was provided, where letters could be magnified almost 32 times with the help of supporting software that facilitated these children to read and comprehend school books and notes. The living hostel quarters for the girls of Braja Kishore blind school has been completely renovated and they have been provided with specially designed steel cots. In addition, a braille computer and printer is presently being installed to help the children with their notes and study material. The computer Braille has been procured from Webel Mediatronics Ltd., a public sector company in West Bengal keeping the specific needs of the blind children.

Drinking water : The elixir of life With the fall in the water table in Ranchi, owing to burgeoning population, several areas in and around Ranchi faces severe water shortage for safe drinking purpose. Keeping in view the necessity for providing succour to people, RDCIS identified various locations in adjacent areas, particularly schools, leper colonies, bustees, backward villages, etc to undertake deep tube well borings. For choosing the right spots for boring, the help of a local expert was taken. A proper drilling agency was identified and schedule for boring followed by construction of hand pumps was made. In total 13 borings, extending upto 250 ft, were made. 107


The children of Kshitish Deaf and Dumb School, Nivaranpur has a number of fulltime boarders. A spacious dining room-cum-kitchen was constructed for these children. The living rooms were provided with fans.

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the poorer and backward strata of the society. The schools who have been provided with various types of support include, Pramathanath Madhya Vidyalaya, Hinoo; Samajik Uccha Sah Madhya Vidyalayla, Hatia; Vishnupuri Sishu Mandir, Burdwan Compound; Islamia High School, Doranda and Vivekananada Vidyalaya, Tupudana. The help extended, other than provision of drinking water, were of the following nature :

Children from poor background A number of provisions have been extended to various schools who mainly cater to children coming from 108

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Desk Top Publishing. In total more than 85 such youths were sponsored for free training. The training programmes were conducted with the assistance of the SISI, Ranchi, where theoretical as well as practical hands-on experience were imparted. Armed with the knowledge in respective training disciplines, the unemployed youths have generated the necessary confidence to start self-employment ventures. The more enterprising lot, amongst the candidates, have started their small businesses.

Distribution of books, exercise copies and other study material Provision of bench-desk unit Construction of toilets Provision of ceiling fans Organising computer awareness programmes Provision of school uniforms and daris

Women and Youth Empowerment : Avenue for earning

Responses from Society

Empowering weaker sections of women and youth has been an area of focus. For this, PDC members had to interact extensively and undertake survey for identifying potential candidates and beneficiaries. In this endeavour, help was sought from social organisations like Ramakrishna Mission, Tupudana and Small Industries Service Institute (SISI), Government of India, Ranchi. The nature of assistance provided are mentioned hereunder.

The direct beneficiaries as well as the organisations involved with CSR activities of RDCIS, SAIL have reflected their deep appreciation of the work carried out so far. The brief responses from a cross section of persons are summarised below. “I, on behalf of the villagers of Bandhua, express our deep gratitude to R&D Centre, SAIL for providing light to our remote village. This help will be cherished with deep affection for a long time” – Shri Bagrai Munda, leader and school head master in Bandhua village.

Women Empowerment Poorer womenfolk residing in the premises of R.K. Mission, Tupudana and its adjoining villages were trained and provided with sal leaf moulding machine for manufacture of leaf plates and bowls. The machine, patented by the Institute of Technology, Kharagpur, is operated on any type of bio-mass fuel and its not dependant either on electricity or diesel. The machine has been specially designed so that women can easily use it. The machine is presently being used extensively utilising the raw materials (sal leaf), which is abundantly available at R.K. Mission, Tupudana. Moreover the produce is being marketed in RK Mission ashrams, which have a steady demand, as well as in adjoining areas. This effort of RDCIS has paved the way for the women to earn their livelihood.

“Under its peripheral development programme, RDCIS, SAIL has done a wonderful job for Bandhua village by providing solar street light. This was absolutely necessary for the villagers as they hardly ventured out after dark” – Swami Vimokshananda, Secretary, R.K. Mission, Tupudana. “The school will always remain grateful to RDCIS, SAIL for extending a helping hand for the blind girl students” – Smt. Neelu Verma, Incharge, Braja Kishore Netraheen Balika Vidyalaya, Bariatu. “Water is the biggest support to life. God will shower His grace on you for the charitable act” - A resident of Jagannathpur leper colony, Ranchi. “We are indeed happy to be a part of the efforts of RDCIS, SAIL to train unemployed youths in different vocations” - Shri J.C. Pandey, Director, Small Industries Service Institute, Govt.of India, Ranchi.

Youth Empowerment Tribal and backward youths, both male and female, with atleast high school/ college education, were short listed after intensive interaction and were provided training under entrepreneurship development programme (EDP) in three areas, namely, Chemical Products, Beauty Therapy and

“We are very excited to start our candle making venture after completing the training programme on Chemical Products. This training has opened up opportunities for us for which we are deeply indebted to RDCIS, SAIL” - Mangla Toppo, Tupudana, participant of EDP programme. 109

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Benefits Accruing to RDCIS

provided by SAIL, RDCIS has planned for stepping up its activities. This will naturally depend upon the availability of committed and selfless people in the organisation, who would voluntarily extend their time and resource. The plans ahead have been formulated which will try to concentrate on large projects and work in areas where help has already been extended, namely, in identified schools and villages. This will help to consolidate the benefits being experienced by the target groups. The main areas of involvement will include, building vocational training centre, construction of facilities for schools, medical care, drinking water facilities, educational support to poorer sections and women and youth empowerment.

The peripheral development activities have resulted in benefits to the organisation apart from those enjoyed by the society. It has provided a deep sense of satisfaction and joy for being instrumental in reaching out to the needy people and providing support and succour to them. During working on various projects, the members of PDC could develop a better understanding of the difficulties faced by the masses and also means of overcoming them in future. The benefits accruing to the organisation were as follows : Generate a deep bond of interaction and earn the confidence of people/ organisations/ local bodies/ village groups Develop a better appreciation of problems faced by groups of people and society Create a data base of various sections of the society

“Water is the biggest support to life. God will shower His grace on you for the charitable act” - A resident of Jagannathpur leper colony, Ranchi.

Acknowledgement The authors wish to record the unstinting support

extended

by

numerous

colleagues, namely, S/Shri G. Chowdhuri, B.N. Anand, P.K. Maini, Dr. A. Bhattacharya, Rejendra Ram, U. Basu, K.N. Upadhyay,

Facilitate better liaison with state government departments/ social organisations and obtain their support and help in future

and K.M. Chandran. The tacit support provided by Shri

Augment and establish the credibility of the organisation who undertakes CSR seriously

extended by SAIL Corporate office is thankfully

Anup Prasad, U. Bhaskar, Rajesh Kamal S. Chakraborty, ED & I/c, RDCIS and the senior colleagues of RDCIS is gratefully acknowledged. The financial support acknowledged. The manuscript was typed by S/Shri Nayendra Ram and Debashis Banerjee for which special

Future plans

thanks are being extended.

Based on experience generated and the support

Bibliography 1. R. Howard Bowen, “Social Responsibility of Business”, Harper Publishers, New York, 1953.

5. J. Harrison and E. Freeman, “Stakeholders Social Responsibility and Performance – Empirical Evidence and Theoretical Perspectives”, Academy of Management Journal, Vol.42, 1999.

2. KPMG, “The KPMG survey of Environmental Reporting”, London, 1997. 3. Tom Cannon, “Corporate Responsibility – A Textbook of Business Ethics, Governance, Environment : Roles and Responsibilities”, Pitman Publishers, London, 1994.

6. N.R. Narayanmurthy, “The Born Again Corporate Citizen”, Business Today, January 7, 2000. 7

4. D. Wheeler and M. Sillanpa, “The Stakeholder Corporation–A Blueprint for Maximising Stakeholder Value”, Pitman Publishers, London,1997. 110

N. Balasubramanium, “Changing Perceptions of Corporate Governance in India”, ASCI Journal of Management, 1998.

Article Digest The Relationship Between Corporate Philanthrophy and Shareholder Wealth : A Risk Management Perspective Paul C Godfrey

There has been debate over link between corporate

the employment of its tangible and intangible assets, consistent with the prescriptions of the Capital Asset Pricing Model. It focuses on two groups of actors : (1) managers, who make allocation decisions regarding philanthropic activity, and (2) stakeholders, who interact with the firm in their area of interest and as members of communities affected by philanthropic activity. The stakeholder world is pluralistic, which means that society consists of several “competing comprehensive doctrines” (philosophies, religions, etc.)

social responsibility (CSR) and corporate financial performance (CFP). The relationship between philanthropic activity and shareholder wealth represents one facet of this debate which has generated substantial theoretical argument for over seven decades and substantial empirical research contributions over the last three.

A complex theoretical explanation is presented to draw upon the business ethics, social psychology, law, microeconomics, and strategic management literature to CSR must be perceived as a citizenship CSR must be perceived present an academic version of an duty, whether an ethical or political as a citizenship duty, intuitively simple argument: good conception of citizenship is used. whether an ethical or deeds earn chits. It establishes three Proponents of one pole in the debate core assertions: (I) that corporate (strict capitalism) hold that there is political conception of philanthropy can generate positive no relationship between CSR and CFP citizenship is used. moral capital among communities and and, consequently, that there should stakeholders, (2) that moral capital be no involvement in social issues; can provide shareholders with proponents of the other pole (business protection similar to insurance for citizenship) argue for deep social many of a firm’s idiosyncratic intangible assets, and involvement based on citizenship obligations, (3) that insurance-like protection contributes to irrespective of any economic gain. shareholder wealth. These three assertions provide A term coined as strategic philanthropy appears relationships that embody one pathway that leads to be an oxymoron. However, the term adequately from philanthropic activity as a manifestation of captures a compromise view that links CSR and CSR to shareholder wealth as a measure of CFP. CFP. The scholarship of strategic philanthropy seeks Philanthropic activity is considered at one end of a compromise position between the two extremes the pathway and shareholder wealth on the other - arguing for a significant level of social involvement end. Shareholder wealth is the expected discounted by firms, but limiting that involvement to the strategic value of a firm’s anticipated cash flow stream from

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THE RELATIONSHIP BETWEEN CORPORATE PHILANTHROPHY AND SHAREHOLDER WEALTH : A RISK MANAGEMNT PERSPECTIVE - GODFREY

interests of the firm, thereby increasing shareholder wealth. It may be argued that philanthropic activity can, under certain circumstances, generate positive moral capital, which provides the firm with insurancelike protection for its relationship-based intangible assets. The strength of the strict capitalism position lies in its clear delineation of a stopping rule for managerial investment and activity: only invest in those activities that create tangible and explicit value for shareholders

Article Digest

consistency between philanthropic activity and a community’s ethical values it will yield an act-based positive moral evaluation. This evaluation becomes the necessary condition for the generation of moral capital. The logic of moral capital generation follows the simple arithmetic rule that one negative assessment ensures a negative result.

Positive Moral Capital As Insurance Organisations create positive moral capital which acts as insurance and protects relational wealth against loss by mitigating negative stakeholder assessments and related sanctions when bad acts occur. A representative but non-comprehensive list has been drawn from literature about relational wealth among different stakeholders and the list includes the following :

Philanthropic Strategy Citizenship position of the business lies in the vision of the corporation as tightly integrated into the larger social and institutional system. Sound and tight coupling between business and society generates the citizenship mandate of corporate involvement in building the “good society”, A reputation in and of itself has no cash value, but reputational capital -positive or negative -has economic value because it disposes stakeholders to hold beliefs and/or engage in actions that potentially create (or destroy) wealth for shareholders,

Employees -Affective Commitment : Employee’s emotional attachment is reflected by affective commitment. It also includes identification with, and involvement in the organization. Employees with a strong affective commitment continue employment with the organization because they want to do Citizenship position of so.

There is understanding that stakeholders will assign values -some the business lies in the of them moral -to organizational action vision of the Communities’ and Regulators and it can be traced back to some of Legitimacy : A generalized perception corporation as tightly the earliest scholarship in the field of or assumption that the actions of an integrated into the management. Philanthropic moral entity are desirable, proper, or larger social and reputational capital represents the appropriate within some socially institutional system. outcome of the process of assessment, constructed system of norms, values, evaluation, and imputation by beliefs, and definitions. stakeholders and communities of a firm’s philanthropic activities. It is therefore essentially Suppliers and Partners -Trust : The willingness a perception-based construct. of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party.

AT&T’s support of Planned Parenthood generated negative moral capital among prolife communities, and in the ensuing cancellation of support, the firm lost its positive moral capital among pro-choice groups. AT& T burned credit with everyone involved whereas it could have earned credit for it. Pluralism implies a number of “comprehensive doctrines” by which people and communities order their lives and their conception of the good. If there is

Customers-Brand : Customers develop perception about a brand which is nothing but rich, product-specific information acquired, retained, and believed by the consumer independent of any particular act of consumption. 112

Article Digest


It has been seen that some events that cause loss to the value of relationship-based intangible assets may be accidental or unintentional (e.g., an oil spill by an energy company or product contamination in a food products company). Similarly, many of the events that negatively impact firm-stakeholder relationships are conscious and deliberate decisions like closing down a plant. When the moral capital generated by philanthropic activity conflicts with other readily salient examples of the firm’s moral behavior (e.g., violations of law or regulations, disregard for ethical norms and customs), philanthropic moral capital will be unlikely to change the composite view and provide compelling evidence of good character. Sometimes stakeholders may view philanthropy as ingratiating act of hypocrisy in worst situation. The company produces an annual report to show that (1) the overall project produces clear social, in addition to economic, gains for the region and that (2) such philanthropic efforts are inconsistent with acts of repression and brutality.

The sufficient condition for generating moral capital through philanthropic activity highlights the issue of community perceptions about the intents, motivations, goals and vision of the actors that are imputed into the activities and the processes generating those activities. Following three principles should underlie a firm’s processes: Transparency : The principle of transparency states that firms should disclose details of their philanthropic portfolio publicly. Stability : A pattern of consistent philanthropic activity avoids the appearance of ingratiation, since it provides counterfactual evidence that decision makers engage in philanthropy on an opportunistic or capricious basis. Responsiveness : It reflects that decisions about philanthropic activities and allocations should change as economic or social conditions change. The existence of a conceptual optimal level of philanthropic activity, with the attendant implications for determining the actual level and targeting of philanthropic activity, is aimed at the strict capitalism position, which views strategic philanthropy as lacking a clear and definitive stopping rule for managerial engagement in philanthropic activity. It is advised for rational managers to engage in corporate philanthropy because such activity benefits shareholders. Risk management perspective works because philanthropic activity is more of moral and discretionary action than obligatory in moral sense.

Philanthropic Strategy : Optimal Philanthropic Activity After articulating the strategic value of philanthropic activity, implications of the models for the practices of philanthropy by a firm’s managers need to be studied. Proctor and Gamble represents a hybrid, since it sells its products to both a broad base of consumers but also enjoys strong customer niches among identifiable communities of interest -for example, mothers who buy Pampers. In such case, company creates two type of moral capital : Specific moral capital : Philanthropic activity generates positive moral capital in a community to the extent that the ethical values underlying the activity are consistent with the ethical values of the focal community.

Article Digest Prepared by : Dr Hari Haran, Dy General Manager (Acad) & Sr Faculty Member MTI, SAIL, Ranchi.

General moral capital : When stakeholder groups belong to varied, diverse, and perhaps divergent communities, the optimal portfolio of philanthropic activity should focus on creating general positive moral capital.

Source : The Academy of Management Review, Volume 30, Number 4, October 2005 PP 777 - 798

113

Book Review Corporate Social Opportunity : Seven Steps to Make Corporate Social Responsibility Work for Your Business David Grayson Adrian Hodges

The book titled “Corporate Social Opportunity:

largely untapped opportunities for product innovation, market development and non-traditional business models.

Seven Steps to Make Corporate Social Responsibility Work for Your Business” is a very thought provoking work by David Grayson and Adrian Hodges. The book compels readers to relook into myriad areas of social responsibility of business and guide them by providing extensive real-world examples and hypothetical scenarios that have helped business people transform corporate responsibility from risks to opportunities. Published by Greenleaf Publishing Ltd. and priced at US $75, this book makes an attempt to move the dialogue surrounding corporate social responsibility beyond the ‘why’ and into the ‘how. ’ By assuming the virtues of CSR, the focus of the book is on exploring new challenges as business leaders move forward in developing and implementing new business models. In-depth interviews with CEOs, planning tools and profiles of best practices make useful contribution to business leaders for organizational growth and sustenance.

Authors state that Corporate social responsibility (CSR) is now firmly on the business agenda for a significant number of firms. Some 2,000 international companies regularly report on their environmental and social impacts, and in some countries, such as France and Australia, reporting is mandatory. It is increasingly common for Fortune 500companies to have a designated manager or department that has oversight of CSR. Many of these same companies retain management and public relations consultants selected from a growing pool of professional services firms offering CSR advice. These observations reflect how, over the last decade, CSR has shifted from the margins to the mainstream of business practice. However, behind this apparently positive picture lie two problems that create an impediment to companies in realizing the potential benefits of CSR. The first problem arises from the fact that one of the greatest drivers causing business leaders to adopt CSR is ‘fear’, with the emphasis on avoiding trouble rather than looking for opportunities. The second problem is that CSR is too often a ‘bolt-on’ to business operations rather than ‘built in’ to business strategy, resulting in CSR becoming a distraction and hindrance to business purpose and objectives, rather than a help.

In ‘Corporate Social Opportunity’ Grayson and Hodges challenge perceived wisdom that adherence by business to corporate social responsibility (CSR) is a zero-sum game where the impact on companies is added costs and extra regulator y burden. From their unique vantage point working with leaders of global businesses and of local communities, the authors explain how powerful drivers forcing companies to adopt stringent social, ethical and environmental standards simultaneously create 114

Book Review


Authors David Grayson, former managing director of Business in the Community and Adrian Hodges, managing director of the International Business Leaders Forum acknowledge that they did not invent the term CSO. While this book represents the most in-depth treatment of the concept, the authors cite an early mention of the idea in the 2002 Procter & Gamble. “We can never lose sight of our responsibility to the outside world and our employees,” states Paul Polman, President of Procter & Gamble Western Europe, in the report. “But to be really sustainable in the long term, companies need to link business opportunity to sustainable development.”

describe the same seven-step model, which, if followed, will help managers think through desired changes to business strategies, and necessary corresponding changes to operational practices. In Part 1, the seven steps—triggers; scoping; making the business case; committing to action; resources and integrating operations; engaging stakeholders; and measuring and reporting—are described and illustrative evidence and corresponding data provided. In Part 2, the authors have created a worked example of the diagnostic processes that form the backbone of the seven steps, based on the health and well-being issue of fast food and the growing problem of obesity, particularly among children, along with notes on how a manager might work through the processes with colleagues. This strategy is perhaps one of the strongest aspects of the book, as it provides a road map through what would otherwise be unnavigated territory for many readers. For example, to illustrate the servicing of new or under-served markets in step two on scoping out opportunities, a gray box describes a joint venture between Daimler Chrysler, Shell and Norsk Hydro.

“By harnessing their creativity and innovation, companies can find new products, new services, new initiatives, develop new markets and business models that can deliver a better quality of life to all, for now and for the future,” he continues. “We need to move beyond Corporate Social Responsibility to embrace our Corporate Social Opportunity.”

Grayson and Hodges intend the book to serve less as a philosophical treatise and more as a tool for By harnessing their creativity practitioners. After discussing the and innovation, companies “A Shell-branded hydrogen station various aspects relating to CSR, has opened in Reykjavik, Iceland,” can find new products, new toward this end, they split up their the text states. “The station refuels services, new initiatives, concept into seven steps: identify Daimler Chrysler fuel cell buses. develop new markets and triggers, scope what matters, make It uses Norsk Hydro plant to business models that can the business case, commit to action, produce hydrogen from water by deliver a better quality of life to electrolysis.” integrate and gather resources, all, for now and for the future. engage stakeholders, and measure The initiative is part of larger project and report. The authors take a to shift from oil and coal different tack to illustrate these dependence (Iceland currently seven steps in practice: they invent produces the most greenhouse gas emissions per a fictitious company and describe its journey through capita in the world) to a hydrogen-energy economy. the entire seven-step process. This approach provides For its part, Shell intends to open similar hydrogen a completely different kind of roadmap, one that stations in Washington, DC, Hamburg, Berlin, and scripts an entire hypothetical scenario instead of Tokyo. piecing together a collage of isolated real-world snapshots. The strength of this section is its inclusion of process forms that can act as blueprints for practitioners seeking to transform corporate social responsibility initiatives from risk mitigation exercises into corporate social opportunities.

With examples from 200 companies to illustrate their case, the authors outline both in theory and practice a seven-step process managers can apply to assess the implications of CSR on their business strategy and identify their own corporate social opportunities. The key to exploiting these

The book is structured into two parts. Both parts 115

CORPORATE SOCIAL OPPORTUNITY : SEVEN STEPS TO MAKE CORPORATE SOCIAL RESPONSIBILITY WORK FOR YOUR BUSINESS - GRAYSON & HODGES

Book Review

postgraduate students following courses, which include a CSR component. I will certainly be referencing it on my own course on corporate governance and accountability

opportunities lies in building CSR into business strategy, not adding it on to business operations. This book adds a new acronym to the business vernacular: ‘CSO’, or Corporate Social Opportunity, a term that turns on the existing, well-known acronym CSR (corporate social responsibility). While many businesspeople focus on risk management when addressing CSR, the new term refocuses on the business opportunities of corporate responsibility. This seemingly slight semantic shift may prove profound, as it transforms an essentially negative outlook (avoiding risk) into a positive one (seizing opportunity) accompanied by financial incentive to capitalize on opportunity. The strength of this concept could generate a spark that could result in paradigm shift for corporate responsibility; whether it is powerful enough to inspire widespread adoption of a new acronym remains to be seen.

‘Corporate Social Opportunity’ moves the argument from the ‘why’ of corporate social responsibility (CSR) to the ‘how’ and beyond—to a future where CSR is perceived as an opportunity for business both in terms of reaping the benefits of retaining brand or organizational value and by developing new products and services, serving new markets and adopting new business models. This is not always a story of black and white, of what is right or what is wrong. Often it embraces apparently conflicting demands, which require the application of judgment, guided by a clear sense of overall direction and corporate purpose. This book is designed to act as a compass for aiding navigation through such dilemmas and complex decisions.

According to the authors, what enabled these three companies to collaborate on such an innovative project was Corporate Social Opportunity’ their approaching fossil fuel dependence not as a risk to be moves the argument from the minimized but rather as an ‘why’ of corporate social opportunity to be maximized.

responsibility (CSR) to the ‘how’ and beyond—to a future where CSR is perceived as an opportunity for business both in terms of reaping the benefits of retaining brand or organizational value and by developing new products and services, serving new markets and adopting new business models.

The authors are pro-business although not business-as-usual. The book is written first and foremost with the purpose of helping to improve business performance, because business is after all the principal motor for growth and development in the world today. The authors argue that companies adhering to best practice in CSR and taking advantage of possibilities inherent in ‘Corporate Social Opportunity’ are good for shareholders as well as customers and employees. The book is packed full with analysis includes examples from 200 companies and includes a wealth of references to real cases of CSR, using these to illustrate the mistakes companies can make and the essential nature of stakeholder inclusivity. As well as being an excellent book for practitioners and managers at all levels within companies, this book is an ideal reference for undergraduate and

Using examples of current good practice, detailed interviews with leading CEOs and newly created diagnostic planning tools, all framed within a sevenstep model for making CSR happen, the book aims to provide a practical guide to help business leaders and their managers understand how to assess the impact of corporate social responsibility factors on their core business strategy and operations and help them identify and prioritize between subsequent options and resulting business opportunities.

Reviewed by : Dr T Ghoshal, Asstt General Manager (Acad) & Sr Faculty Member MTI, SAIL, Ranchi. Publisher : Greenleaf Publishing Price : US $ 75

116

Book Review The World is Flat : A Brief History of the Globalization World in the Twenty-First Century Thomas L Friedman

Thomas Friedman is one of the world’s most

conflicts or political events but for a whole new age of globalization – a flattening of the world. The explosion of the advanced technologies now means that suddenly knowledge-pools have connected all over the planet, leveling the playing field as never before as Nandan Nilekani, the CEO of Infosys tells Friedman in a conversation in the opening of the book. Each of us is potentially an equal at the same time a competitor of other.

respected and influential journalists, renowned for his expertise on international affairs and economic issues. Presently, he is the foreign affair columnist for The New York Times. He has won the Pulitzer Prize three times for his work there and has traveled all over the globe. Friedman is also the author of the international best-selling books From Beirut to Jerusalem which is used as a basic text book on Middle The beginning of the twentyEast, The Lexus and the Olive Tree, first century will be his first acclaimed book on remembered, Friedman argues, globalization, and Longitudes and not for military conflicts or Attitudes, a reportage following 9/ political events but for a whole 11.

Globalization 3.0

In the World is Flat Friedman rejoins the debate over what is really driving world politics and new age of globalization – a In this captivating book, Friedman argues that “ the most important flattening of the world. found himself chatting in Bangalore force shaping global economics with a young videogame company and politics in early twenty-first CEO named Rajesh Rao. “ India is century is a triple convergence of going to be a superpower, and we new players, on a new playing field, developing new processes and habits for horizontal are going to rule”, Rao said excited about a new economic era that makes the globe into a massive collaboration.” Friedman writes that the world is marketplace. When Friedman asked whom to rule, now entering the era of Globalization 3.0 following Globalization 1.0 which run from 1492 until 1800 Rao laughed, “ It is not about ruling anybody”. He admitted , “That is the point. There is nobody to and was driven by countries with sheer military rule anymore.” Rao’s enthusiasm about the changing power. Then it was Globalization 2.0 in which “the key agents of change, the dynamic force driving rules of global business and politics where nothing is left to rule in a brave new world of globalization global integration, was multi-national companies” underscores the virtues of this new book. The driven to look abroad for markets and labour purred by industrial age breakthroughs in hardware such beginning of the twenty-first century will be remembered, Friedman argues, not for military as steamships, trains, phones and computers. That 117

THE WORLD IS FLAT : A BRIEF HISTORY OF THE GLOBALIZATION WORLD IN THE TWENTY-FIRST CENTURY - FRIEDMAN

era ended around 2000 replaced by one in which individuals are the main agents doing the globalization, pushed by “not horsepower, and not hardware, but software” and a “global fibre-optic network that has made us all next-door neighbours. “If the first two eras were driven mostly by Europeans and Americans, the third is open to every colour of human rainbow”.

Book Review

requires us all to run faster in order to stay in the same place, mean the world has got too small and too flat for us to adjust. Friedman demystifies the exciting and bewildering global scene which is unfolding before us, which we sense but hardly understand. With his inimitable ability to simplify complex political and economic issues, he explains how this flattening of the world happened. What is its implication for communities, countries and individuals and how the governments and societies can adapt? All these fundamental questions are discussed in 473 pages of this illuminated book. Friedman is a world-class writer and The World is Flat is an essential and powerful update by him on globalization.

Outsourcing Friedman has narrated at length the great economic phenomenon of the day: the outsourcing of the U.S. economy’s service and IT work to India, China and elsewhere. The world is wired so that Indian accountants are expected to do about 400000 American tax returns this year. Small U.S. hospitals have their CAT scans read in the night by Indian radiologists known as nighthawks. The Indian software engineers can share an idea, team their skills or compete head-on for work with their U.S. or European counterparts. Professionals, everywhere, from China to Australia to Costa Rica can work from home as if they were in offices next door to each other. The rules of the game have changed forever. Friedman argues that this ‘death of distance’, which

Reviewed by : Bishwajit Chowdhury, Sr Manager (Acad) & Sr Faculty Member MTI, SAIL, Ranchi. Publisher : Penguin / Allen Lane, US$16.50 ISBN O-713-99878-4

Those who don't know The world is divided into two groups. There are those who know, and those who don't know. Those who know are no problems. Those who don't know are also in two groups. One is those who don't know and know they don't know. Well, they can learn ! But then, there are those who don't know, and don't know they don't know. They are potential dangers. 118

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