HOW CSR CREATES A WIN-WIN SITUATION

IIM RANCHI

Submitted by:Vishwesh Koundilya PGEXP/004/2012-14

HOW CSR CREATES A WIN-WIN SITUATION

Why we must integrate corporate social responsibility into the business strategy
Its not important I drive a car What is more important is how I drive it. Its not only the profit that defines an organisation's success, but also the process of generating these profits. It is in this context that CSR in the emerging global markets has witnessed a rapid transformation towards a more mature understanding. The definition of CSR has evolved from the concept of charity, philanthropy and giving back to the community to Sustainability. From a short term, exclusive, immediate threat management tool, CSR has evolved as an inclusive and critical business process as a tool for sustainability. Two major concepts have evolved in understanding CSR Stakeholder Model and Triple Bottom Line (3BL or TBL). The concepts are not mutually exclusive and I understand them from a Means End perspective. While the former focuses on the process of inclusion to enhance stakeholder value over merely shareholder value; the later focuses on the impact on People (Human Capital), Planet (Environment) and Profit. Strategic CSR, which evolves from blending both the interdependent concepts, focuses on integrating CSR into business practice. The focus of strategic CSR in on creating a winwin situation and takes all the stakeholders concern into business operations. It is in the ultimate interest of the business only as islands of prosperity cant sustain in a sea of poverty. Therefore, it makes sense in designing CSR in such a way that while contributing towards social development, it also contributes to business growth and sustainability.

The business value that CSR can draw is generally qualitative but very important for sustainable business operations. Some such values are mentioned below: Stakeholder Relationship Business success can only be sustained if there is a supportive environment. Companies, who understand and are understood by the communities in which they operate and whom they affect, can achieve this. Relationship building is a consolidated effort along with eagerness from within to know people. It is a process of mutual exchange of information, views and knowledge so that both insiders and outsiders would feel they are talking not to a stranger with apprehensions but a next-door person whom they know very well. This process gives rise to a relationship which is not blood bound but based on trust and liking to share thoughts of each other. Social engineers or so-called CSR professionals License to Operate Having positive relationship with the stakeholders enables to get a License to operate, which needs to do two things: balance interests and set criteria. Healthy relationship helps in understanding the local context, culture and traditions. Land tenure provides a useful illustration of this point. In many developing countries land is regarded as the most precious asset and is subject to customary laws on ownership, inheritance, and acquisition. This is particularly true of indigenous cultures, where the concept of ownership may also differ radically from the developed world's perspective. The ability of such cultures to sustainably exploit natural resources such as game, fish, medicinal plants, and so on is often far more important than the notion of ownership. Failure to acknowledge the legitimacy of customary laws in parallel with national or regional laws pertaining to natural resource exploitation will almost certainly result in conflict with the owners or occupiers of land.

Managing Expectations There is an ever-growing expectation of stakeholders as soon as the organization launches its projects. Communities and Civil Society Organizations most often make the adhoc demands and at times, such demands are benefiting only at individual level. It is difficult to respond but people often ask What is in it for me. CSR specialists will have to learn to say No so as to optimize such demands and doesnt raise the expectations of the community. It needs to be clear and firm from the very beginning in describing what the project can and cannot deliver. Sustainable Decision-Making Sustainable decision-making is the tool for attaining Corporate Sustainability by addressing the Social Concerns, Environmental Concerns and Economic Concerns. The model is described through the diagram below: Optimal balance is required for addressing all the three concerns; as none can be addressed in isolation. The common corporate practice far and wide is that the first decision that is taken is the Economic decision that is followed by decisions to address environmental concerns and social concerns. But if the company starts engaging with the community and address some of the social concerns & environmental concerns and then moves towards driving the economic objectives, the chances of sustainable business operations is much higher than the earlier case. Sustainable Community Development Programs The key to the success of any developmental intervention is appropriate and effective stakeholder consultation. It should take into consideration the socio-economic background of the society and address the core needs of the community in a sustainable manner. Forging strong and strategic partnership with Government, NGOs, CBOs and local businesses plays pivotal role in undertaking developmental programs effectively and efficiently, which brings manifold advantages for the business through creating value