Cgbe- Unit- 5 (Ethics & Csr)

8/11/2019 Cgbe- Unit- 5 (Ethics & Csr)

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SUBJECT CGBE - UNIT-5MR. RASHMIRANJAN PANIGRAHI, LECTURER IN FINANCE

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UNIT -5(ETHICS & CORPORATE SOCIAL RESPONSIBILITY)

ETHICS & CORPORATE SOCIAL RESPONSIBILITY HELPS IN LONG TERMGROWTH

PERSPECTIVES ON CORPORATE SOCIAL RESPONSIBILITYIn the age of globalization, corporations and business enterprises are no longer confined to thetraditional boundaries of the nation-state. One of the key characteristics of globalization is thespread of the market and the change in the mode of production. The centralized mode of

production has given way to a highly decentralized mode of production spread across the world.

In the last 20 years, multinational corporations have played a key role in defining markets andinfluencing the behavior of a large number of consumers. The rules of corporate governancehave changed too. And there has been a range of reactions to this change. On the one handglobalization and liberalization have provided a great opportunity for corporations to be globallycompetitive by expanding their production-base and market share. On the other hand, the samesituation poses a great challenge to the sustainability and viability of such mega-businesses,

particularly in the context of the emerging discontent against multinational corporations indifferent parts of the world. Laborers, marginalized consumers, environmental activists andsocial activists have protested against the unprecedented predominance of multinationalcorporations.

The ongoing revolution in communication technology and the effectiveness of knowledge-basedeconomies has created a new model of business and corporate governance. A growing awarenessabout the need for ecological sustainability and the New Economy framework, with anunprecedented stress on communication and image merchandising, have paved the way for a newgeneration of business leaders concerned about the responses of the community and the

sustainability of the environment. It is in this context that we need to understand the new trendsin corporate social responsibility.

There are three emerging perspectives that inform corporate social responsibility:

One, a business perspective that recognizes the importance of 'reputation capital' for capturingand sustaining markets. Seen thus, corporate social responsibility is basically a new businessstrategy to reduce investment risks and maximize profits by taking all the key stake-holders intoconfidence. The proponents of this perspective often include corporate social responsibility intheir advertising and social marketing initiatives.The second is an eco-social perspective . The proponents of this perspective are the newgeneration of corporations and the new-economy entrepreneurs who created a tremendousamount of wealth in a relatively short span of time. They recognize the fact that social andenvironmental stability and sustainability are two important prerequisites for the sustainability ofthe market in the long run. They also recognize the fact that increasing poverty can lead to socialand political instability. Such socio-political instability can, in turn, be detrimental to business,which operates from a variety of socio-political and cultural backgrounds.

Seen from the eco-social perspective, corporate social responsibility is both a value and astrategy to ensuring the sustainability of business. It is a value because it stresses the fact that


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business and markets are essentially aimed at the well-being of society. It is a strategy because ithelps to reduce social tensions and facilitate markets.

For the new generation of corporate leaders, optimization of profits is the key, rather thanthe maximization of profit . Hence there is a shift from accountability to shareholders toaccountability to stakeholders (including employees, consumers and affected communities).There is a growing realization that long-term business success can only be achieved bycompanies that recognize that the economy is an "open subsystem of the earth's ecosystem,which is finite, non-growing and materially closed".There is a third and growing perspective that shapes the new principles and practice of corporatesocial responsibility. This is a rights-based perspective on corporate responsibility. This

perspective stresses that consumers, employees, affected communities and shareholders have aright to know about corporations and their business. Corporations are private initiatives, true, butincreasingly they are becoming public institutions whose survival depends on the consumers who

buy their products and shareholders who invest in their stocks. This perspectivestresses accountability, transparency and social and environmental investment as the keyaspects of corporate social responsibility.

ETHICAL BUSINESS AND CORPORATE SOCIAL RESPONSIBILITY

The primary drive for ethical business and corporate social responsibility came from the USAand Europe in the '80s and '90s, from campaigns run by pressure groups such as Greenpeace andFriends of the Earth. Consumer boycotts, direct action, shareholder action, ethical shoppingguides, ethical product labeling schemes, media campaigns and ethical competitors becameincreasingly effective in changing corporate perspectives.

The mid-'90s were the watershed years for the new consciousness in international corporate polity. This was the time when two prominent MNCs were compelled by 'ethical market forces'

to re-orient their business attitudes. In 1995, Shell dumped its Brent Spar oil platform in the North Sea. Public agitation in Europe was so intense that in Germany sales fell by 70 per centwithin a fortnight. Similarly, Nike, the shoe and apparel giant, ran aground thanks to a campaignagainst child labour and worker exploitation in many of the 700 factories across 40 countrieswhere Nike worked with subcontractors. That prompted the company to set up a full-scale teamunder a Vice President, Corporate Responsibility in 1997.

In the early-'90s, Greenpeace commissioned a unit in eastern Germany to manufacture a CFC-free refrigerator. Within six months, mainstream manufacturers in Germany were manufacturingidentical fridges.

It was in the post-war period that the character and nature of business began to change in thewestern world, with proprietary firms taking on corporate structures. By 1998, there were 45registered MNCs and the income of the top 10 MNCs was higher than the GDP of over 50countries.

In the changing political paradigm, the market has begun to play a crucial role in shaping the priorities and inclinations of the State and society. There was a subtle shift from a State-centred polity to a market-centred polity. In such a polity, fluctuations in the market influence State policies, and it is markets that increasingly define a State's boundaries of financial and social


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activity, particularly through the World Trade Organisation and powerful individual cartels andstock exchanges. A State's national economy is increasingly dependent on the financial capitalmarket and the consumer market.

But we are now on the threshold of the second phase of the globalised economy. Other valueadditions have intervened in the world market. An opinion poll conducted on behalf of CSREurope concluded that:

1. Over half of those surveyed felt that businesses do not pay enough attention to their socialresponsibilities.

2. Over one-quarter said that they had engaged in activities in the previous six months thateither introduced ethics into actual consumer purchase decisions or else made such viewsknown by other means.

A recent survey showed that 86 per cent of about 4,000 people aged 15 or older in Europe,expressed a preference for purchasing a product from a company 'engaged in activities toimprove society' (Fleishman Hillard, 'Consumers Demand Companies with a Conscience',

London). In the UK, the Co-operative Bank report on ethical consumerism recently found thatconsumers expect more, as citizens, from business corporations.

In the US, the San Francisco-based Business for Social Responsibility has been working since1992 to help companies sustain their commercial success 'in ways that demonstrate respect forethical values, people, communities and the environment' and it already has 1,400 membercompanies, including American Express, AT&T, Dupont, Ford, General Motors, Johnson andJohnson and Levi Strauss. "Even Wall Street has responded to this trend, with the Dow Joneslaunching a Sustainability Group Index (in October 1999). The SGI rates companies for theirsuccess in managing economic, environmental and social factors." (Rajni Bakshi , 'CorporateAngels', The Hindu )

The earlier mantra of 'maximising the medium-term earnings per share' has come under pressurefrom a wide range of stakeholders-employees, customers and general public affected in any way

by the company's functioning. For instance, in 1999 the share price of Monsanto, the American bio-technology MNC, nose-dived due to public protests about its genetically modified products.

Since the corporate sector now controls so much of the earth's resources and because itintervenes in so many areas of social life, corporate entities must balance their right to grow withtheir responsibilities to society and to the environment. Because the financial capital market and

business corporations are created by society and must, therefore, serve it , not merely profit fromit.

CORPORATE RESPONSIBILITY: THE TYPOLOGY Though the concept of corporate social responsibility has only recently been formulated, there isa long history in both the East and West of a commitment to social philanthropy, in the beliefthat the creation of wealth is primarily geared for social good. This aspect of ethical business inmodern times can be traced back to 19th-century philanthropists like Robert Owen and thevarious Quaker-owned businesses. The Quakers "ran successful businesses, made money

because they offered honest products and treated their people honestly, gave honest value formoney, put back more than they took and told no lies."


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Traditional corporate philosophy is only one of the three broad areas in which businesscompanies can, and should, discharge their social responsibility. These three areas are:

1. Traditional corporate philanthropy2. Corporate social responsibility, with a focus on sustainable development and attending to

stakeholder priorities3. Ethical business

Traditional corporate philanthropy dates back to the 19th century and emerged out of avariety of factors, such as:1. Concern for the welfare of the immediate members of the corporate body: the staff and

employees, and their families.2. Innovative contributions by visionary business leaders in quest of personal satisfaction, who

built up philanthropic institutions out of their individual shares,3. The desire to establish a strategic relationship with the State or society led some corporate

bodies to invest in the establishment of institutions that fulfil the specific requirements ofthe community,

4. The establishment of trusts and foundations for tax benefits, which also support socially beneficial activities.

Corporate social responsibility is qualitatively different from the traditional concept ofcorporate philanthropy. It acknowledges the debt that the corporation owes to the communitywithin which it operates, as a stakeholder in corporate activity. It also defines the businesscorporation's partnership with social action groups in providing financial and other resources tosupport development plans, specially among disadvantaged communities.

The emerging perspective on corporate social responsibility focuses on responsibility towardsstakeholders ( shareholders, employees, management, consumers and community) rather than onmaximisation of profit for shareholders. There is also more stress on long-term sustainability of

business and environment and the distribution of well-being.

There is an increasing recognition of the triple-bottomline: People, Planet and Profit . Thetriple-bottomline stresses the following:1. The stakeholders in a business are not just the company's shareholders2. Sustainable development and economic sustainability3. Corporate profits to be analysed in conjunction with social prosperity.

In the traditional paradigm, most corporate bodies viewed CSR as the extension of a financialinput for a humanitarian cause. However, the contemporary context is more complex: "Acompany that undertakes activities aimed at communities (be they philanthropic, socialinvestment or commercial initiatives) but does not comply with business basics cannot be termedsocially responsible." (Harish Srivastava and Shankar Venkateswaran, The Business of Social

Responsibility , Books for Change, Bangalore; 2000)Ethical business is the more fundamental, emerging trend on the international scene. It focuseson specifics:


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In an ethical business the essential thrust is on social values and business is conducted inconsonance with broader social values and the stakeholders' long-term interests.

The new issue at hand is "how to reconnect the corporation to the social and communityconcerns it was originally intended to serve" (Jonathan Rowe, Reinventing the Corporation ).Analyst Alan Reder shows, through documentation, that "marrying profits and humane,respectful management practices is no mere ideal" ( In Pursuit of Principle and Profit: BusinessSuccess Through Social Responsibility ).

In I991, the company Patagonia Garments sought replacement materials, dropped 30 per cent ofits clothing line and planned for a restricted growth of its operations, because an environmentalaudit of its products found that all its garments, including cotton clothing, cause pollution. YvonChouinard, the company's founder and president, defended the principle of restricted growth,saying, "We also committed ourselves to a lifespan of a hundred years. A company that intendsto be around that long will live within its resources, care for its people, and do everything it canto satisfy its community of customers." Body Shop, the environmentally alert cosmeticscompany, and Ben and Jerry's Homemade Ice-cream are two other world-famous examples ofethical business.

THE CORPORATE WORLD ADAPTS TO CHANGING FORCES

The major MNCs have, in part, reacted positively to the new attitudes which have redefined the paradigms of social values and have thus redefined the norms of business. They had to takecognisance of the new forces in the consumer market, where the consumer-citizen ismetamorphosing (albeit gradually in countries like India) into a citizen-consumer.

The major corporations have also realised that Cause Marketing, development partnerships andenvironmental concerns make good business sense -- particularly in terms of recycling materials,

employee satisfaction and morale, building up reputational capital and as a distinctive brandmarketing tool. The emergence and ascent of the e-economy post-1995, with an information- based technology with very little impact on the environment and projecting a white-collarworkforce and neo-entrepreneurship, brought forth a new corporate leadership with a vision ofits own, originating in many instances in morally-influenced middle class backgrounds.

Under pressure from multiple social forces, the State has formulated new consumer rights andenvironment conservation legislations. In India, for instance, we have the Consumer ProtectionAct, 1986.

Another significant influence was the worldwide recognition of the Japanese business norm,which emphasizes the quality circle concept in place of the traditional assembly line concept.Employee welfare is now seen to be linked to productivity and employee identity has assumed astakeholder role. "The companies that excel today are those that restructure themselves asadaptive, resilient, creative and sustainable -- as living companies with the capacity to learn andchange." (W K Shireman, keynote address at the Asian Productivity Organizations conferencein Tokyo, April 2000)


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These companies are increasing their profits by continuous innovation. They turn waste into new products, leasing and remanufacturing billions of dollars of equipment that used to be thrownaway, driving pollution and waste towards zero, and systematically eliminating products andeven whole industries while continuing to provide the services that are actually wanted, saidShireman.

The successful corporations of the 21st century are therefore focusing on continuousimprovement. One example is Hewlett Packard, which leads the world in the provision of officeequipment while retaining the in-the-garage creative entrepreneurship of its founders.

THE WAY FORWARD

There is a need to develop a more coherent and ethically-driven discourse on corporate socialresponsibility. CSR is still sometimes seen as "green wash" to clean the sins of pollution, or"white wash" to provide a facelift to the company's public image. It is often seen as old wine in anew bottle -- just another trendy name for good old philanthropic initiatives by companies. Thereis need to move beyond such transitory illusions about corporate social responsibility.

Corporate social responsibility offers a two-way street to companies, on the one hand stimulatinginnovative business and technological initiatives which would open up new avenues for companyoperations and focus on the prospect of touching new market zones.

On the other hand, it would give a cleaner societal reputation and socially responsible identity tocompanies, involving the companies and their employees in the long-term process of positivesocial transition.

A multiple discourse on the nature of corporate social responsibility and its diverse practices and possibilities is urgently needed in the country.

We can no longer be blinkered about the earth's resources, or ignore the fact that the economy isconstructed on the foundation of natural resources.

Green-washing should go beyond tokenism to an imperative priority in industrial andtechnological futures.

The human rights perspective should be integrated in the very core of corporate socialresponsibility. The emerging role of civil society in governance cannot be wished away.Corporations are meant to derive profits out of services they provide to consumer-citizens andthey must see themselves as private institutions for public good.

All public institutions need to be accountable to the people at large, especially in the context ofhealth hazards, radiation, and genetically modified food, the chemicalisation of the food

processing industry and of agriculture.


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CORPORATE SOCIAL RESPONSIBILITY


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EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY IN INDIA

The evolution of corporate social responsibility in India refers to changes over time in Indiaof the cultural norms of corporations' engagement of corporate social responsibility (CSR), withCSR referring to way that businesses are managed to bring about an overall positive impact onthe communities, cultures, societies and environments in which they operate. The fundamentalsof CSR rest on the fact that not only public policy but even corporate should be responsibleenough to address social issues. Thus companies should deal with the challenges and issueslooked after to a certain extent by the states.

Among other countries India has one of the richest traditions of CSR, Much has been done inrecent years to make Indian Entrepreneurs aware of social responsibility as an important segmentof their business activity but CSR in India has yet to receive widespread recognition. If this goalhas to be realized then the CSR approach of corporate has to be in line with their attitudestowards mainstream businesscompanies setting clear objectives, undertaking potential

investments, measuring and reporting performance publicly.

THE FOUR PHASES OF CSR DEVELOPMENT IN INDIA / MODELS

The history of CSR in India has its four phases which run parallel to India's historicaldevelopment and has resulted in different approaches towards CSR. However the phases are notstatic and the features of each phase may overlap other phases.

The First Phase

In the first phase charity and philanthropy were the main drivers of CSR. Culture, religion,family values and tradition and industrialization had an influential effect on CSR. In the pre-industrialization period, which lasted till 1850, wealthy merchants shared a part of their wealth

with the wider society by way of setting up temples for a religious cause. Moreover, thesemerchants helped the society in getting over phases of famine and epidemics by providing foodfrom their godowns and money and thus securing an integral position in the society. With thearrival of colonial rule in India from the 1850s onwards, the approach towards CSR changed.The industrial families of the 19th century such as Tata, Godrej, Bajaj, Modi, Birla, Singhaniawere strongly inclined towards economic as well as social considerations. However it has beenobserved that their efforts towards social as well as industrial development were not only driven

by selfless and religious motives but also influenced by caste groups and political objectives.

The Second Phase

In the second phase, during the independence movement, there was increased stress on Indian

Industrialists to demonstrate their dedication towards the progress of the society. This waswhen Mahatma Gandhi introduced the notion of "trusteeship", according to which the industryleaders had to manage their wealth so as to benefit the common man. "I desire to end capitalismalmost, if not quite, as much as the most advanced socialist. But our methods differ. My theoryof trusteeship is no make-shift, certainly no camouflage. I am confident that it will survive allother theories." This was Gandhi's words which highlights his argument towards his concept of"trusteeship". Gandhi's influence put pressure on various Industrialists to act towards buildingthe nation and its socio-economic development. According to Gandhi, Indian companies were


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supposed to be the "temples of modern India". Under his influence businesses established trustsfor schools and colleges and also helped in setting up training and scientific institutions. Theoperations of the trusts were largely in line with Gandhi's reforms which sought to abolishuntouchability, encourage empowerment of women and rural development.

The Third Phase

The third phase of CSR (1960 80) had its relation to the element of "mixed economy",emergence of Public Sector Undertakings (PSUs) and laws relating labour and environmentalstandards. During this period the private sector was forced to take a backseat. The public sectorwas seen as the prime mover of development. Because of the stringent legal rules and regulationssurrounding the activities of the private sector, the period was described as an "era of commandand control". The policy of industrial licensing, high taxes and restrictions on the private sectorled to corporate malpractices. This led to enactment of legislation regarding corporategovernance, labour and environmental issues. PSUs were set up by the state to ensure suitabledistribution of resources (wealth, food etc.) to the needy. However the public sector waseffective only to a certain limited extent. This led to shift of expectation from the public to the

private sector and their active involvement in the socio-economic development of the country became absolutely necessary. In 1965 Indian academicians, politicians and businessmen set up anational workshop on CSR aimed at reconciliation. They emphasized upon transparency, socialaccountability and regular stakeholder dialogues. In spite of such attempts the CSR failed tocatch steam.

The Fourth Phase

In the fourth phase (1980 until the present) Indian companies started abandoning their traditionalengagement with CSR and integrated it into a sustainable business strategy. In the 1990s the firstinitiation towards globalization and economic liberalization were undertaken. Controls andlicensing system were partly done away with which gave a boost to the economy the signs ofwhich are very evident today. Increased growth momentum of the economy helped Indiancompanies grow rapidly and this made them more willing . Globalization has transformed Indiainto an important destination in terms of production and manufacturing bases of TNCs areconcerned. As Western markets are becoming more and more concerned about labour andenvironmental standards in the developing countries, Indian companies which export and

produce goods for the developed world need to pay a close attention to compliance with theinternational standards.

WHAT IS THE NEED FOR CSR?While the interests of shareholders and the actions of managers of any business enterprise haveto be governed by the laws of economics, requiring an adequate financial return on investmentsmade, in reality the operations of an enterprise need to be driven by a much larger set of

objectives that are today being defined under the term CSR. The broad rationale for a new set ofethics for corporate decision making, which clearly constructs and upholds a organization'ssocial responsibility, arises from the fact that a business enterprise derives several benefits fromsociety, which must, therefore, require the enterprise to provide returns to society as well. A

business cannot succeed in a society which fails. This, therefore, clearly establishes the stake of a business organization in the good health and well being of a society of which it is a part. Moreimportantly, in this age of widespread communication and growing emphasis on transparency,customers of any product or service are unlikely to feel satisfied in buying from an organization


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that is seen to violate the expectations of what is deemed to be ethically and socially responsible behaviour. It is becoming increasingly evident that organizations that pay genuine attention tothe principles of socially responsible behaviour are also finding favour with the public and arethe preferred choice for their goods and services.

HOW DO ORGANIZATIONS PLEDGE THEIR COMMITMENT TOWARDS CSRTypically, an organization interested in making a pledge towards CSR, will start by firstoutlining a commitment towards the concept. Given the gravity of the action and its hugeresponsibility, this commitment will be deliberated on extensively by the top management of the

business, before it is made public. This declaration is somewhat analogous to a Quality Policy ofan ISO 9000 Organization.Such a declaration is followed by the development of a CSR management and reportingframework. Here, a detailed CSR review is to be conducted to identify priority CSR risks,opportunities and impacts, followed by an exercise involving stakeholder engagement to obtainthe views of all concerned. Once the reporting and management system of the CSR is put intomotion, regular audits and Board / top management level reviews need to be conducted toensure that the system is performing as intended3. Finally, organizations may report on theirCSR practices in their annual performance report under a different section, or may even producean exclusive report focusing on CSR practices and issues relevant to the organization. This is acyclic process one of continual improvements. The learning curve is never-ending. Having saidthat, there is no cookbook recipe for an organization to pledge its commitment towards CSR. Infact, many organizations already have processes in place to manage several of the components ofCSR, but few, if any, have achieved a systematic, structured response that reflects the priorityissues from a business perspective.

CSR IN INDIA

HOW DOES CSR RELATE TO A COUNTRY LIKE INDIA

Mahatma Gandhi, the charismatic visionary leader who brought the cause of India'sindependence from British colonial rule, was a person who in several respects was ahead of histime. His view of the ownership of capital was one of trusteeship, motivated by the belief thatessentially society was providing capitalists with an opportunity to manage resources that shouldreally be seen as a form of trusteeship on behalf of society in general. Today, the world iscoming round full circle in emphasizing this concept through an articulation of the principle ofsocial responsibility of business and industry4. And this trend is no different in India either. Amuch less publicized but deeper aspect of the importance of CSR in India comes to light whenone considers CSR as a concept that covers a range of issues under the fabric of sustainabledevelopment5. This is a crucial terminology for developing nations in the world today.

Protection of the environment and a country's natural resources are a key element of this concept.Additionally, there is this equally important need to ensure that society does not suffer fromdisparities of income and provision of basic services like health care, education and literacy. Toillustrate, the United Nations' Millennium Development Goals (MDGs) and the Water, Energy,Health, Agriculture, and Biodiversity (WEHAB) agenda of the UN Secretary General aredeemed as essentials for bringing about a solution to the basic problems facing a society in adeveloping country such as India. Consequently, if corporate actions are to target the mostfundamental problems facing a poor country like India, then the components of the MDGs,


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including water and sanitation, prevention of eradicable diseases and the items included in theWEHAB agenda in some sense become guideposts for corporate social strategy and action.WHAT IS THE CURRENT STATUS OF CSR IN INDIA As of the year 2000, CSR is fast gaining momentum as an important aspect of business practice in India.An appreciative quantum of roundtables and networks pertaining to CSR are being established and doinggood work. Given below are a few of the more prominent examples.

CORPORATE ROUNDTABLE ON DEVELOPMENT OF STRATEGIES FOR THEENVIRONMENT AND SUSTAINABLE DEVELOPMENT - BUSINESS COUNCIL FORSUSTAINABLE DEVELOPMENT (CORE-BCSD) OF INDIA

There are several bodies now emerging on the Indian scene that focus on issues of CSR. Forinstance, the Corporate Roundtable on Development of Strategies for the Environment andSustainable Development - Business Council for Sustainable Development (CoRE-BCSD) ofIndia6 is a grouping of Indian corporate trying collectively and individually to build insustainable development concepts into their operations (see BOX-A ). Initiated by The Energyand Resources Institute (TERI), CoREBCSD India includes some of the most innovative, some

of the largest and also the most forward looking organizations in the country. Subject expertsfrom these corporates identify and conceptualize projects. A team of industry members and TERIresearchers then works to develop appropriate solutions/strategies for use by the industry.Currently the Roundtable includes some of the leading

INDIAN CORPORATES, SUCH AS :

The Associated Cement Companies Limited Bharat Heavy Electricals Limited Bharat Petroleum Corporation Limited

Century Textiles & Industries Limited Gas Authority of India Limited Gujarat Ambuja Cements Limited Hindustan Lever Limited Infrastructure Leasing & Financial Services Limited ITC Limited - Paper Brands & Speciality Papers Division National Thermal Power Corporation Limited Reliance Energy Limited

Tata Chemicals Limited


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R CORPORATE SOCIAL RESPONSIBILITY HAS A COST?

Corporate social responsibility cannot be considered as a cost because of followings -:

CORPORATE SOCIAL RESPONSIBILITY HOW CORPORATIONS BENEFITAs mentioned in our earlier blog about corporate social responsibility, current times dont allowfor companies to simply be in business for the sake of making a profit anymore. Whileconsumers may rely on corporations for goods and services, the level of competition allowscustomers to make decisions based on several factors, including (maybe surprisingly) how muchgood a corporation is also doing outside of the workplace. Many individuals today are basingtheir corporate loyalties on how companies are positively impacting their community.

A BETTER PUBLIC IMAGE

A corporations public image is at the mercy of its social responsibility programs and howaware consumers are of them (remember, this is the biggest obstacle education and awareness)!According to a study by Cone Communications, 9 out of 10 consumers would refrain from doing

business with a corporation if there existed no corporate social responsibility plan.


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For example, if a company is heavily involved in the practice of donating funds or goods to localnonprofit organizations and schools, this increases the likelihood that a consumer will use their

product. Additionally, if a corporation takes great care to ensure the materials used in its products are environmentally safe and the process is sustainable, this goes a long way in the eye

of the public.If you havent seen the Scarecrow video from Chipotle, you should take a few minutes to watchit.Remember, consumers feel good shopping at institutions that help the community. Clean up your

public image (and broadcast it to the world!)

BETTER AND MORE MEDIA COVERAGE

Going along with how the public sees your corporation, the amount of positive media coverage acorporation receives is extremely important for business. It doesnt matter how much yourcompany is doing to save the environment if nobody knows about it. As they say, its okay totoot your own horn every once in a while. Make sure youre forming relationships wit h localmedia outlets so theyll be more likely to cover the stories you offer them. How much good a company can do in the local communities, or even beyond that, is corporatesocial responsibility. And the better the benefits, the better the media coverage.On the other hand, however, if a corporation participates in production or activities that bringupon negative community impacts, the media will also pick this up (and unfortunately, bad newsspreads quicker than good news). Media visibility is only so useful in that it sheds a positive light

to your organization.

FOSTERS A POSITIVE WORKPLACE ENVIRONMENT

This section is short and simple because its just common sense employees like working for acompany that has a good public image and is constantly in the media for positivereasons. Happy employees almost always equal positive output .

CORPORATE SOCIAL RESPONSIBILITY HOW NONPROFITS BENEFITHow corporations embrace corporate social responsibility in 2014 is also going to be of great

importance to the nonprofit world. Corporate giving programs, which can include everythingfrom matching gifts to volunteer grants ; from team building volunteer efforts to fundraisingevents. These types of programs, which vastly increase the public good that corporations aredoing, are vital to nonprofit organizations because of the great monetary and volunteerimplications.
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GREATER FUNDING THROUGH EMPLOYEE MATCHING GIFT PROGRAMS

Corporations that offer matching gift programs are essentially doubling donations that itsemployees are giving to eligible nonprofits. For example, if an employee provides a $100

donation to a nonprofit of their choice, his or her employer (if the company offers a matching gift program) will write an additional $100 check, thereby increasing total funds brought in. Itsreally that simple!A recurring theme here seems to be the education factor of it. These are phenomenal sociallyresponsible programs that benefit both corporations and nonprofits, but if they are underutilized

because of a lack of awareness, then these programs do little good. As a nonprofit, encouragecorporations to promote these programs to employees in fact, offer to help them! Use socialmedia outlets as a way to spread the word. Sometimes a simple Facebook post can make all thedifference.It should also come as no surprise that matching gift programs increase employeeengagement for companies that offer these kinds of socially responsible programs, but they alsohelp foster deeper nonprofit-donor relationshi ps. If youre looking to increase fundraising fromexisting donors, matching gift programs are a great place to start.Become a Matching Gift Expert in Just Five Days

Increase the amount of money your nonprofit raises from employee matching gift programs. Findout how in this free 5 day email course.

GREATER TIME COMMITMENTS THROUGH EMPLOYEE VOLUNTEER GRANT

PROGRAMSCorporations that offer volunteer grants, or even offer paid time off to volunteer at nonprofitorganizations, are bringing in helping hands to eligible nonprofit organizations. A corporationwith this kind of program might offer (for example) a $250 check to a nonprofit once anemployee has volunteered at least 10 hours with the organization. There are also pay-per-hourgrants that many corporations offer, paying a certain dollar amount per hour volunteered.This kind of socially responsible program is a win-win for both parties involved. Employees ofcorporations are seen volunteering and donating their time to important causes in the community,and nonprofits are receiving free time and volunteer work, which is essential the success of somany nonprofits.Volunteer grant programs are another huge reason why corporate social responsibility isimportant, especially for the upcoming year!
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FORGING CORPORATE PARTNERSHIPS

Yet another positive impact corporate social responsibility has on nonprofit organizations is the possibility of corporate partnerships. These partnerships are vital to the work a corporation cando in the local community, and important to a nonprofit that may not have the resources for

major marketing campaigns. Longterm corporate-nonprofit partnerships can benefit everyone.For a corporation, a partnership with a local or national nonprofit organization improves thecompanys image in the public eye, as consumers can clearly see the positive impact acorporation is having on their community. A key benefit is that it makes it easier for consumersto trust a company.For a nonprofit organization, a partnership with a local or national corporation puts its name ontons of marketing materials that otherwise could not have been afforded on tight budgets. A key

benefit is the partnership brings additional awareness to the nonprofits cause.

CORPORATE SOCIAL RESPONSIBILITY HELPS EVERYONE INVOLVEDAs you can see, socially responsible programs are mutually beneficial in the corporate-nonprofitworld. When working on your strategic plans for 2014, make sure to take some time and look atthe programs your company offers or benefits from and how they are working toward a bettercommunity and corporate environment for everyone involved. Work from there to expand yourreach, and good luck!

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ALL THE BEST FOR YOUR FORTHCOMING EXAMINATION

MR. RASHMIRANJAN PANIGRAHI,

LECTURER IN FINANCE, ASMIT

Cgbe- Unit- 5 (Ethics & Csr)

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