1. Corporate Social Responsibility
LECTURE 22:
Corporate Social Responsibility
MGT 610

2. Chapter 6 Framework For Rating Corporate Social Responsibility

3. Corporate Social Responsibility
LEARNING OBJECTIVES
Understand the importance of CSR reporting
Create awareness about the various reporting criteria followed to report CSR
Understand how conscientious organizations are committed to the concept of CSR
Learn from CSR reporting frameworks of various agencies and organization

4. Corporate Social Responsibility
Introduction
Organizations have to create their own code of decency
Create relationships with society based on trust stemming from transparency
Portray to stakeholders their intentions
Provide a measurement of its impact on stakeholders
Created an awareness that CSR should be rated
Since CSR includes the socio cultural paradigm it is difficult to create a universal rating mechanism
The rating mechanism best works as a signaling factor for stakeholders to reevaluate their financial and economic commitment to the business world and also helps the business world to rectify processes to remain in the good books of the stakeholders

5. Corporate Social Responsibility
Understanding CSR ratings
In tracing the history of rating process, two important conferences come to the forefront
The UN biosphere conference
Conference on the ecological aspect of international development
In 1972, the limits to growth was published by the club of Rome, representing initial steps in the direction of sustainability reporting
During the same year the UN conference on Human environment was held
Many sustainability related publications were launched
World Conservation Strategy 1980
UN global impact 2000
Green book of the EU commission on CSR 2001

6. Corporate Social Responsibility
Business is undertaken to cater to prevailing or created needs of society
Business has to analyze the overt and covert impact of its activities on society
This relates to the market forces that impact and are impacted by the following factors
What is the need that is being catered to
What are the alternatives available
What is the competition offering and what price
The demands of the regulation
Macro economic factors
Demographic
Economic policies
Political ideology

7. Corporate Social Responsibility
CSR rating tools helps in corporate governance process by providing information and help in monitoring socially responsible behavior
They provide the incentive to screen activities and reduce losses
This adds value to the corporation
This kind of evaluation requires organizational structure analysis
This will lead to a creation of a sustainability sensitive organization that caters to holistic growth

8. Corporate Social Responsibility
Green book of the EU commission on CSR 2001
Corporate social responsibility can make a positive contribution to the strategic goal decided by the Lisbon European Council: "to become the most competitive and dynamic knowledge-based economy in the world". A European approach to corporate social responsibility forms part of the broader context of various international initiatives, such as the United Nations Global Compact (2000), the International Labour Organisation's (ILO) Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy ( ), or the Organisation for Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises (2000).

9. Corporate Social Responsibility
While these initiatives are not legally binding, the European Commission is committed to the active promotion of the OECD guidelines. Observance of the core ILO labour standards (freedom of association, abolition of forced labour, non-discrimination and elimination of child labour) is central to corporate social responsibility.
Corporate social responsibility
Being socially responsible means not only fulfilling the applicable legal obligations, but also going beyond compliance and investing "more" into human capital, the environment and relations with stakeholders. The experience with investment in environmentally responsible technologies and business practices suggests that in going beyond legal compliance companies can increase competitiveness and it can have a direct impact on productivity.
Corporate social responsibility should nevertheless not be seen as a substitute to regulation or legislation concerning social rights or environmental standards In countries where such regulations do not exist, efforts should focus on putting the proper regulatory or legislative framework in place in order to define a level playing field on the basis of which socially responsible practices can be developed.

10. Corporate Social Responsibility
Whilst corporate social responsibility is so far mainly promoted by large or multinational companies, it is relevant in all types of companies and in all sectors of activity, from small and medium-sized enterprises (SMEs) to multinationals. Certain SMEs already assume their social responsibility, particularly through community involvement. Worker cooperatives and participation schemes, as well as other forms of cooperative, mutual and associative enterprises structurally integrate other stakeholder interests and take up spontaneous social and civil responsibilities.
Corporate social responsibility: the internal and external dimensions
Under increasing pressure from non-governmental organisations (NGOs), consumer groups and now also investors, companies and sectors are increasingly adopting codes of conduct covering working conditions, human rights and environmental aspects, in particular those of their subcontractors and suppliers. Socially responsible practices can thus help open the way to reconciling social development with improved competitiveness.

11. Corporate Social Responsibility
Within the company, socially responsible practices primarily involve investment in human capital, health and safety, and managing change. They also cover environmentally responsible practices relating to the management of the natural resources used in production. In addition to these internal aspects, companies also contribute externally to their local communities, by providing jobs, wages, services and tax revenues. On the other hand companies depend on the health, stability, and prosperity of the communities in which they operate. In this sense, corporate social responsibility involves a wide range of stakeholders: business partners and suppliers, customers, public authorities and NGOs representing local communities, as well as the environment.
In a world of multinational investment and global supply chains, corporate social responsibility must also extend beyond the borders of Europe. One of the external dimensions to corporate social responsibility is that of human rights, particularly in relation to global production activities. Despite the existence of international instruments such as the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy and the OECD Guidelines for Multinational Enterprises, human rights remain a very complex issue presenting political, legal and moral dilemmas.

12. Corporate Social Responsibility
In a world of multinational investment and global supply chains, corporate social responsibility must also extend beyond the borders of Europe. One of the external dimensions to corporate social responsibility is that of human rights, particularly in relation to global production activities. Despite the existence of international instruments such as the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy and the OECD Guidelines for Multinational Enterprises, human rights remain a very complex issue presenting political, legal and moral dilemmas.

13. Corporate Social Responsibility
Integrated management of social responsibility
Companies' approaches in dealing with their responsibilities and relationships with their different stakeholders vary according to sectoral and cultural differences. In general, companies tend to adopt a mission statement, code of conduct, or credo where they state their purpose, core values, and responsibilities towards their stakeholders. These values are then translated into action across the organisation, adding a social or environmental dimension to their plans and budgets in order to carry out social or environmental audits and set up continuing education programmes.
Many multinational companies are now issuing social responsibility reports. While environmental, health, and safety reports are common, reports tackling issues such as human rights or child labour are not. In order for these reports to be useful, a global consensus needs to evolve on the type of information to be disclosed, the reporting format to be used, and the reliability of the evaluation and audit procedures.
The Green Paper invites public authorities at all levels, including international organisations, enterprises from SMEs to multinationals, social partners, NGOs, other stakeholders and all interested individuals to express their views on how to build a partnership for the development of a new framework for the promotion of corporate social responsibility, taking account of the interests of both business and the various stakeholders. Enterprises need to work together with public authorities to find innovative ways of developing corporate social responsibility.

14. Corporate Social Responsibility
Integrated management of social responsibility
Many multinational companies are now issuing social responsibility reports. While environmental, health, and safety reports are common, reports tackling issues such as human rights or child labour are not. In order for these reports to be useful, a global consensus needs to evolve on the type of information to be disclosed, the reporting format to be used, and the reliability of the evaluation and audit procedures.
The Green Paper invites public authorities at all levels, including international organisations, enterprises from SMEs to multinationals, social partners, NGOs, other stakeholders and all interested individuals to express their views on how to build a partnership for the development of a new framework for the promotion of corporate social responsibility, taking account of the interests of both business and the various stakeholders. Enterprises need to work together with public authorities to find innovative ways of developing corporate social responsibility.

15. Corporate Social Responsibility
Available accepted rating frameworks
Some of the established quantitative rating frameworks that are available for organizations to report on sustainability
Global Reporting Initiative (GRI)
Birthplace is US
Envisioned by non profits CERES (Coalition for Environmentally Responsible Economies) and Telles Institute , with the support of the UN environment Program (UNEP) in 1997
In 1999 the first version of the sustainability reporting guidelines was published
The full version was released in 2000
GRI is an independent body but has close connection with UN
It is a network base organization that seeks consensus from business, civil society, labour and professional institutions
It offers principles and indicators that can be used to measure and report economic, environmental and social performance

16. Corporate Social Responsibility
It prides itself with quality, credibility and relevance
Keeps updating its guidelines – last updation in 2006
The guidelines is a free public good
As of January 2009 more than 1500 companies in 60 countries used the guidelines
Relevant to all organization regardless of location, size, sector or industry
Used as reporting guidelines
Framework is flexible and is a voluntary initiative

17. Corporate Social Responsibility
Features of reporting methodology
Principles for defining report content
Materiality
Major content of the report
Topics that reflect organization economic, social and environmental impact
Stakeholders inclusiveness
Identify
How the organization has responded to expectations and interest
Sustainability context
Organization performance in the context of sustainability
Completeness
Principles for ensuring report quality
Balance
Positive and negative aspect of the organization performance
Comparability
Information should be selected, compiled and reported consistently

18. Corporate Social Responsibility
Principles for ensuring report quality
Balance
Positive and negative aspect of the organization performance
Comparability
Information should be selected, compiled and reported consistently
Accuracy
Timeliness
Clarity
Understandable
Accessible
Reliability
Gathered, recorded, compiled, analyzed and disclosed in a way that could be subjected to examination and that establishes quality of the information