Historical Perspective - 28th March

(1)

Corporate

Social

Responsibility

1)

1)A A Historical Historical PerspectivePerspective

from Industrial Revolution

to Social Activism

2)

(2)

 !rom Industrial Revolution

to Social Activism

"HA# IS C$RP$RA#% S$CIA& R%SP$'SI(I&I#

*CSR+,

Corporate Social Responsibility *CSR+ refers

to t-e responsibility t-at business

organisations *mainly companies+ ta.e upon

t-emselves to do good for t-e society/ #-is

responsibility re0uires t-e companies to

invest time and money in social proects t-at

benet society and people/ #-is responsible

act by companies is of great importance in

developing and under developed countries/

Some countries -ave made CSR mandatory for

(3)

 !rom Industrial Revolution

to Social Activism

CSR means di3erent t-ings to di3erent people/ "-ile some loo. at it as pure

p-ilant-ropic or c-aritable 4or. by

companies5 ot-ers vie4 it as compliance 4it-la4s to survive in business/ A t-ird vie4 of CSR could be t-e disc-arge of contractual obligations to4ards employees5 customers5 suppliers5 etc/

I 4ould dene CSR as a set of functions disc-arged by companies5 eit-er voluntarily or in compliance 4it- t-e la45 to provide benets to t-at section of society

(4)

4-ic-Historical Perspective of CSR  !rom

Industrial Revolution to Social Activism

#H% $RI6I' $! CSR,

#-e !irst Industrial Revolution too. place bet4een 1789 to 1:;9 4-ere t-e signicant transformation 4as t-e movement from manual production to mec-anised production/ #-e factory system also came into e<istence/ Since organised production started 4it- t-e factory system5 it can be said t-at t-e earliest time 4-en businesses 4ould -ave started socially responsible 4or. 4ould be around t-at time/ #-e !irst Industrial Revolution evolved into t-e Second one bet4een 1:;9 to 1:79/ =uring t-e Second Industrial Revolution5 tec-nological and economic progress too. t-e centre>stage/

(5)

Historical Perspective of CSR  !rom

Industrial Revolution to Social Activism

Morrell Heald in -is boo.5 ?#-e Social Responsibilities of (usiness@5 stated t-at t-e practice of Corporate Social Responsibility CSR) 4as alive and gro4ing from t-e 1B

t-century itself/ (usiness giving and business involvement in community issues 4ere very muc- prevalent at t-at time/ (ig companies used to get involved in t-ese community

activities5 as t-ey 4ere given t-e

responsibility of fullling public goals and public interest obectives/

(6)

Historical Perspective of CSR  !rom

Industrial Revolution to Social Activism

PR%>"$R&= "AR II %RA,

Heald notes t-at t-e ?trustees-ip concept@ of business leaders-ip and responsibility 4as enunciated nearly 2D years before "orld "ar II around 1B1D)/ Andre4 Carnegie o3ered an even earlier statement of t-e trustee concept in Eune 1::B in -is 'ort- American Revie4 article titled ?"ealt-/@ In 1B985 ale Fniversity President5 Art-ur Hadley5 advised business leaders to remember t-at t-ey are also trustees of t-e public interest and to align t-eir sense of et-ics and obligation

(7)

Historical Perspective of CSR  !rom

Industrial Revolution to Social Activism

In t-e 1B29s5 t-e trustees-ip concept emerged boldly in t-e 4ords and practices of $4en =/ oung and 6erard S4ope5 C-airman and President5 respectively5 of t-e 6eneral %lectric Company/ In t-eir eyes5 s-are-olders 4ere only one constituency to 4-om business leaders 4ere responsible5 and as oung put it in 1B285 t-e public and employees ran.ed a-ead of s-are-olders/ oung and S4ope envisioned and soug-t to bring about cooperation bet4een business5 labour5 government and community  not open -ostilities/

#-us5 4ell before "orld "ar II5 t-e practices of giving p-ilant-ropy) and of community involvement 4ere 4ell establis-ed in community c-est drives of t-e 1B29s  alt-oug- certainly not embraced by all business leaders/

(8)

Historical Perspective of CSR  !rom

Industrial Revolution to Social Activism

#H% P$S#>"$R&= "AR II %ARS,

CSR activities gre4 in scope and intensity after t-e end of t-e Second "orld "ar in 1B;D/ %urope and America emerged from t-e "ar and modern businesses too. 4ings/ As t-e 1BD9s unfolded5 Heald describes business leaders moving beyond p-ilant-ropy to substantive cooperation and outrig-t leaders-ip on a range of community initiatives/ He developed e<tensive proles of business initiatives 4it--ig-er education5 and business support for t-e arts and community living/

Arc-ie (/ Carroll -as provided t-e most compre-ensive overvie4 of t-e evolving denition of CSR in t-e post "orld "ar II period/ Carroll -as e<amined and compared all t-e main contributions from sc-olars from 1BD9 t-roug- t-e mid>1BB9s/

(9)

Historical Perspective of CSR  !rom

Industrial Revolution to Social Activism

Carroll credits Ho4ard R/ (o4en5 aut-or of t-e boo. ?Social Responsibilities of t-e (usinessman@ 1BDG)5 as t-e ?!at-er of corporate Social Responsibility@ because -is boo. dealt directly 4it- t-e concept of social responsibility/ (o4en asserted t-at social responsibility ?refers to t-e obligations of businessmen to pursue t-ose policies5 to ma.e t-ose decisions5 or to follo4 t-ose lines of action 4-ic- are desirable in terms of t-e obectives and values of our society/@

#-e past 79 post>"orld "ar II years 1B;D to 291D) -ave been notable for t-e increasing attention given to t-e concept of CSR5 for its continuing evolution5 and for t-e lac. of consensus on 4-at it means  and even 4-et-er it is legitimate/

(10)

Historical Perspective of CSR  !rom

Industrial Revolution to Social Activism

At one e<treme5 Carroll notes Milton !riedmans often cited 1B79 'e4 or. #imes Magaine article arguing t-at CSR5 as a matter of principle5 is ?fundamentally subversive@ of t-e true responsibilities of business5 4-ic- are en-ancing protability and s-are-older value/ #-is point of vie4 arises from t-e economic t-eory5 articulated rst by Adam Smit-5 t-at a free mar.et and pursuit of self>interest later s-are-older value) 4ill result in t-e greatest benet for society overall/ $t-er sc-olars -ave debated 4-et-er basic economic and legal obligations fall 4it-in t-e concept of CSR or 4-et-er t-e domain for CSR is ?over and beyond@ economic and legal obligations/ In e3ect5 4-at is t-e scope and boundary of suc- responsibilityJ

(11)

Historical Perspective of CSR  !rom

Industrial Revolution to Social Activism

At t-e ot-er e<treme5 Carroll noted t-at

business leaders t-emselves5 under t-e

auspices of t-e Committee for %conomic

=evelopment C%=) in 1B715 articulated a

denition5 per-aps emerging in part from

t-e political5 social and urban turmoil of

t-e late 1B89s/ #-e essential ingredient of

t-e denition is t-at ?business functions

by public consent and its basic purpose is

to serve constructively t-e needs of

society  to t-e satisfaction of society/@

(12)

Historical Perspective of CSR  !rom

Industrial Revolution to Social Activism

Carrolls o4n denition of CSR embraced a full range of responsibilities, economic5 legal5 et-ical and discretionary/ In Carrolls frame4or.5 economic functions are at t-e -eart of t-e ?corporate social responsibilities@ of business/ He later c-anged discretionary to p-ilant-ropic5 but in eit-er case  discretionary or p-ilant-ropic  t-ese responsibilities 4ere seen as voluntary/ Carroll did not see t-ese responsibility categories as mutually e<clusive but rat-er as somet-ing of a continuum5 often pursued simultaneously/

(13)

Historical Perspective of CSR  !rom

Industrial Revolution to Social Activism

SFMMAR $! #H% %K$&F#I$' $! CSR 6&$(A&&,

"e -ave seen t-e origin of t-e concept of CSR from t-e mid>1Bt- century/ #-e concept -as gro4n5

bot-academically and in practice5 t-roug-out t-e 29t- century

and more so in t-e last G9 to ;9 years/

"-ile sc-olars from t-e 1B79s into t-e 1BB9s 4restled 4it- CSR concepts and developed sta.e-older t-eory5 numerous business leaders -ad independently articulated similar vie4s on t-e purpose of business/ #-roug-out t-is period sc-olars attempted to dene5 redene5 and clarify t-e concept of corporate social responsibility t-at t-ey sa4 being assumed by5 imposed upon5 and played out by business/

(14)

Historical Perspective of CSR  !rom

Industrial Revolution to Social Activism

As noted earlier5 t-ere are many e<amples of 29t- century business leaders 4-o s-aped t-eir companies business practices accordingly/

A note4ort-y e<ample is E/ Ir4in Miller5 C-airman and C%$ of Cummins %ngine Company5 4-o laid out a compre-ensive vie4 of CSR in a 1B7D intervie4 in $rganiational =ynamics/ Alt-oug- t-e intervie4 4as conducted in 1B7D5 -e began putting -is p-ilosop-y of business into practice in t-e 1BG9s/

#-e =ayton !amily5 founders in 1B98 and leaders 4ell into t-e 1BB9s of t-e company t-at today is t-e #arget Corporation5 provides anot-er e<ample of a business p-ilosop-y intimately connecting business success 4it-service to society/

(15)

Historical Perspective of CSR  !rom

Industrial Revolution to Social Activism

#H% I'=IA' SC%'ARI$

#-e concept of CSR in India -as gro4n parallel to Indias -istorical and economic development/ #-e -istory of CSR in India -as four distinct p-ases5 4-ic- may -ave overlapping features/

P-ase 1  In t-is p-ase5 c-arity and p-ilant-ropy 4ere t-e main drivers of CSR/ Culture5 religion and family values inLuenced t-e p-ilant-ropic activities of business groups/ In t-e pre>industrialisation period5 4-ic- lasted till 1:D95 4ealt-y merc-ants donated t-eir 4ealt- for temple>building and -andling famines and epidemics/ !rom 1:D9 on4ards5 4it- t-e arrival of (ritis- Rule in India5 t-e approac- to CSR c-anged/ Industrial families li.e t-e #atas5 (irlas5 Modis5 (aas5 etc/ -ad social and economic considerations for ta.ing CSR initiatives/

(16)

Historical Perspective of CSR  !rom

Industrial Revolution to Social Activism

#H% I'=IA' SC%'ARI$ *Continued+

P-ase 2  #-is 4as t-e period of t-e !reedom Movement about 1::D to 1B;7) and t-e Industrial -ouses 4ere e<pected to s-o4 t-eir dedication to4ards nationalism and progress of t-e society/ #-is 4as also t-e time 4-en Ma-atma 6and-i introduced t-e concept of ?#rustees-ip@/ 6and-ii e<plained t-e concept by saying t-at t-e 4ealt-y -ad to manage t-eir 4ealt- in a manner t-at benets t-e common man/ #-e industrialists responded positively to t-is idea and set>up trusts to

(17)

Historical Perspective of CSR  !rom

Industrial Revolution to Social Activism

P-ase G  #-is p-ase 1B89 to 1B:9) coincided

4it- t-e rise of t-e Public Sector

Fnderta.ings PSFs) and t-e relative decline of t-e private sector/ &a4s 4ere amended to favour t-e PSFs so t-at t-ey could ensure redistribution of 4ealt- 4it-in t-e Indian economy/ Ho4ever5 t-is policy -ad limited success and t-e 6overnment of India realised t-at t-e economy cannot gro4 4it-out promoting t-e private sector too/ CSR activities did not gro4 muc- in t-is p-ase

(18)

Historical Perspective of CSR  !rom

Industrial Revolution to Social Activism

P-ase ;  In t-is p-ase 1B:9 till date)5 CSR activities got integrated 4it- business strategy/ As t-e Indian economy 4as liberalised from 1BB1 on4ards5 t-e private sector 4as uns-ac.led/ Rapid gro4t- amongst private companies encouraged t-em to contribute generously to4ards social causes/ #oday5 corporates feel t-at CSR is important to build a good reputation and increase business competitiveness/ #-ey -ave specialised CSR teams t-at formulate policies and strategies for t-eir CSR initiatives/ #-ese initiatives range from community development programs to protection of environment and liveli-ood/

(19)

Historical Perspective of CSR  !rom

Industrial Revolution to Social Activism

C$'C&FSI$',

"e -ave seen t-at bot- in India and else4-ere in t-e 4orld5 t-e concept of modern CSR probably originated in t-e 1Bt- century 

during t-e !irst Industrial Revolution in %urope and t-e pre>Industrialisation period in India/ "-ile academics and business leaders -ave completely di3erent vie4s on t-e utility and legality of CSR5 it -as come to stay as an important concept and tool in t-e interactions bet4een business and society at large/

(20)

Moral Arguments for CSR

CSR as a concept -as its s-are of detractors because t-e concept is seen as bordering on illegality and somet-ing t-at is forced upon business -ouses/ In fact5 4e -ave seen t-e e<treme positions ta.en by academics and business leaders on t-is issue/ 'onet-eless5 t-ere are many compelling reasons for -aving an environment t-at promotes and pus-es CSR activities/ $ne suc- reason is t-at it is moral on t-e part of corporates to s-are t-eir 4ealt- 4it- t-e needy so as to promote standards of living/ "e need to .no4 t-e moral arguments in favour of CSR/

(21)

Moral Arguments for CSR

1) Responsibility #o4ards %nvironment 

Corporates must invest in clean

tec-nologies so as to avoid pollution/ #-ey cannot let t-eir business interests damage t-e already deteriorating environment/ It is t-eir moral obligation to save people from environment>lin.ed diseases and save t-e eart- itself/

2) Helping t-e &ess Privileged  Companies must step for4ard to s-are t-eir prots 4it- t-e less privileged sections of our societies 4-o struggle to -ave a basic standard of living/ Huge private

(22)

4ealt-Moral Arguments for CSR

G) It is t-e Rig-t #-ing to do  (usiness et-ics and societal values demand t-at corporates s-ould underta.e activities t-at benet t-e poor/ #-ey 4ould be seen to be unet-ical and immoral if t-ey did not s-are a part of t-eir 4ealt- 4it- t-e deprived sections of society/ #-is 4ould be a very strong argument in an economy t-at is not prosperous/

;) Corporate Commitment to Manage its Roles in Society  Companies -ave multiple roles to play in society  producer5 employer5 mar.eter5 citien5 etc/  in a balanced manner so as to positively impact lives/ #-ey need to -ave a set of voluntary principles to e<ecute t-is commitment/ #-ese principles are essentially moral and are manifested t-roug- CSR activities/