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Corporate Social Responsibility

Dr Safdar A Butt

Business decision making linked with: Ethical values Compliance with the law Respect for people, communities and the environment.

Another definition
Lord Holme and Richard Watts define CSR as: CSR is the continuing commitment By a business firm (company) To behave ethically, and Contribute to countrys economic development While improving the quality of life of:
the workforce as well as the community and society at large.

The American & European Concepts

American businesses mostly think CSR is only about giving money for worthy causes. Europeans think CSR is a tool for promoting business. Treat the society well so that society can buy your products. Do more CSR when times are bad.

Trusteeship Theory

Companies really do not belong to any one. Shareholders own share of what remains but not specific assets of the company. Directors hold the assets of the company in trust on behalf of not just shareholders but the society at large. A company is a social asset.

Historical Perspective

In fact, CSR came much after Business Ethics. Business have learned that chasing only profit does not give enough profit. CSR can actually improve their profitability and sustainability of their ventures.

Scope of CSR

Philanthropy Doing Business Responsibly Being a good citizen


Financial donations to worthy causes:

Do not just throw away money be careful Do not wait for disasters to show your kindness

Setting, running or supporting socially desirable bodies:

Monitoring and evaluating them in the process

Supplementing the governmental efforts towards social welfare


Doing business responsibly

Essentially being ethical Integrity in all that you do Fairness

To every one: employees, clients, suppliers, all

Protection of all stakeholders interest Serving the common interest of all stakeholders

Being a good citizen

Compliance with law. Paying your dues

No tax evasion, directly or indirectly Capital nature rather than just recurrent

Investment in community:

Concern for environment


Concern for Environment

Deforestation Soil degradation Atmospheric changes


Waste/Discharges management Emphasis on creating re-usable resources


Depletion of resources

Environmental Risk Management

Identify and define risks being posed (or faced) by the company. Establish the extent and probability of risks. Assess cost of:
The consequences of the risk after it takes place preventing it from happening

Assign specific responsibility


ERM -2

Define means of handling it. Preventing it through:

Better technology Better materials Better maintenance

Actual loss Claims against the company


Strategies for Prevention of Industrial Pollution

Environmental processes audit

Waste management audit Material usage review Non-solid effluents audit

Financial considerations
Cost benefit analysis of being eco-balanced Use of new cleaner technology Life cycle assessments

Spreading awareness among users


Resource Management

Energy resources (fossil fuels vs. others) Re-cycling of materials

Using re-cycled material Using bio-degradable material

Conservation of life supporting systems

Forests, trees, water sources, mountains Wild life Responsible use of land


EP Law

The law is there. EPA has been set up. But law does not make any one responsible. Companies have to want to be environmentally responsible.


Some Big Environmental Disasters

Chernobyl Nuclear Disaster (1986)

Nuclear reactors went berserk

11.5 million barrels of crude spilled

Exxon Valdez (1989) in Alaska

Tokiamora Accident (1999)

Nuclear radiation leaked

Leakage of poisonous gas, killing 300 and affecting 400,000 persons Leakage of crude oil, polluting virtually the entire gulf

Bhopal Tragedy (1984)

Gulf of Mexico (2010)

Shades of CSR

Official posture and reality Spending more money on publicizing CSR than actual CSR work. Lip service: strings attached help IPPR says most CSR is lip service


CSR Who is watching what?

Institutional investors PIRC provide web based data on how companies are acting on CSR, ethics, environment, etc. Regulators / Kings Report in SA Disclosure Requirements


Formulating CSR Policy

Set a Code of Ethics outlining CSR Values to be upheld Establish current position on CSR values Discuss with relevant stakeholders
Employees Pressure groups Clients

Draw up a formal CSR Policy


CSR Policy

Formally promulgate the CSR policy Prescribe systems Establish responsibility for each party Set realistic strategies and targets Keep all concerned informed Monitor achievements Revise policy or targets as necessary

Bench Marking in CSR

You do as much as others are doing. Can any one set minimums? Who ensures compliance? How to monitor compliance?


CSR in Pakistan

Mostly companies consider philanthropy to be the only means of CSR. However change is coming. Telenors Karo Mumkin PTCs tree planting Mobilinks medical helpline


CSR Survey
People in Pakistan want companies to: Promote education Create employment Provide health care to public Reduce pollution Provide better work place


Thank you
Dr S A Butt