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CORPORATE SOCIAL RESPONSIBILITY (CSR)

November 6, 2012

CORPORATE SOCIAL RESPONSIBILITY (CSR)

CSR means that a company’s business model should be socially responsible and environmentally sustainable. It is more of a social  obligation  for corporate to best serve their stakeholders and to improve the social, economic and environmental well-being of the communities in which they exist and work. According to CSR policy a business monitors and ensures its active compliance with the spirit of the law, ethical and  international standards and encourage activities which have positive impact on environment sustainability, consumers and stakeholders.

Approaches to CSR

  1. Philanthropy   – It refers to the monetary donations and aid given to local organizations and NGO’s which work for  impoverished communities in developing countries
  2. Fair-trade – It is a social movement which focuses on improving the condition of producers in developing countries , greater equity in international trade and higher social and economic standards. It advocates the export of goods like coffee, handicrafts, sugar, honey, cotton etc from producers in developing countries to consumers in developed countries by offering better trading conditions and securing the rights of producers and workers. . Some fair-trade companies are – Starbucks, KPMG.

 

 

 

   

 

FTO Mark  –  Fair Trade Organizations

 

3. Creating Shared value (CSV)  – For a company to be successful in the long term and create value for its shareholders, it must also create value for society. It works on the idea that the competitiveness of a company and the health of the communities around it are mutually dependent. Companies create shared value by

(i)Products and markets  –  companies  access new markets, develop new products related to its line of business  invest lower cost through innovation .

(ii)Value chain – Companies improve the quality, quantity, cost, and reliability of inputs and distribution and redefining productivity in value chain.

(iii)Companies invest and help in Local cluster development which in turn result in reliable local suppliers, a functioning infrastructure of roads and telecommunications, access to talent, and an effective legal system.

Example-

Nestlé has focused its Creating Shared Value efforts and investments on three areas  nutrition, water and rural development. Nestle team is working closely with farmers in Punjab, India (Moga Dist) and helping them with technology education, improved healthcare, improving local infrastructure and building a competitive milk supply chain.

 

The concept of CSR is strongly related to Corporate Accountability, Corporate Transparency, Corporate Sustainability.

CSR is often referred to as corporate conscience or corporate social performance.

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