Responsible business note

Compiled by
Paul V Mathew
[Cochin University of Science and Technology)
Responsible Business; Principles, Practices and Prospects

Responsible Business| Cochin University of Science and Technology (CUSAT)
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In the era of globalization the role of business and corporations is getting robustness while considering the growth of economy. Irrespective of developed and developing countries business plays a crucial role in the generation employment and the enhancement of livelihood of common people. It is apparent that the prime objective of the business is profit. At the same time all the business enterprises have a responsibility towards planet and people. In other way organizations are expected to contribute for the overall development of society and environment. In contrary to this, while booming business in one side environment as well as people remain as victims. It may be heartening to realize that millions of people sink in to poverty and hunger whereas a minority business groups deepen their pockets with the cost of the majority. In this context, the concept ‘responsibility’ emerges as a very vital component. It spreads in individual, organization, community and governments thereby creating a win win situations. Amidst competition and crisis Corporate Sector around the world is striving to strike a balance between business and society. The issues like environmental degradation, climate change, corruption etc. tempts business to think beyond profit. Along with profit business tries to meet the needs of the present generation without compromising the ability of the next generation. Businesses now want to handle planet and people with great care to minimize its negative impact on society and the natural environment. While encapsulating, business must focus its attention on achieving the 'triple bottom line'- people, planet and profit. This reflection forces the organizations and business enterprises to trying to ensure that economic growth is socially and environmentally sustainable. A business which is responsible towards society, environment and economy can sustain for a long time. In the wake of this realization, different stake holders comprises of governments, business leaders and social activists have began to call on the business community to play a significant role in moving global economy towards ‘sustainability’. The concept emerged from the Brundtland Report of UN World Commission on Environment and Development that defines sustainable development as “meeting the needs of the present without jeopardizing the ability of future generation to meet their needs. It incorporates social, environmental and economic goals of entities in the notion of development. The terminologies with similar meanings responsible business, sustainable business, social and environmental performance, social action program, corporate citizenship and Corporate Social Responsibility (CSR) provides us a parallel notion about sustainable development. Responsible Business
Responsible Business refers to the commitment of an enterprise to operating in an economically, socially and environmentally sustainable manner while balancing the interests of diverse stakeholders (Indian Institute of Corporate Affairs). A parallel or equally relevant concept Corporate Social Responsibility (CSR) is about how companies manage the business processes to produce an overall positive impact on society. Even though the concept CSR is conspicuous, the term ‘Responsible Business’ now emerges as a more meaningful substitute to avoid ambiguities of CSR – what it really signifies and provide a holistic approach for business responsibility. The concept CSR created a notion which limited business responsibility inside certain boundaries that made it as some financial contribution for society. But responsible Business envisions a holistic approach that expects responsibility in each and every minute activities of business.

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The Extended Producer Responsibility (EPR) in waste management, cradle to grave approach of product development, CSR and social cost benefit analysis are some of responsible business practices. A Responsible Business practice is that businesses should not only be responsible but they should also be seen as socially, economically and environmentally responsible. This concept comprises of various environments like socio – politic, cultural, economy, legal, technology and ecology. It is a concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment. It can be also explained as the organization concern towards economic issues, social issues, environmental issues or a combination of these three pillars is to promote better corporate governance practices and raise the standard of corporate governance towards achieving stability and growth. The 21st century will be the century of the social sector organization. If a large economy, Huge money supply, and a high volume of information becomes available globally then the size of the community becomes higher and higher. CSR evolved beyond code of conduct and reporting, it started taking initiative in NGO’s, multi- stakeholder, ethical trading etc. The Green paper defined CSR as “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis” as they are increasingly aware that responsible behavior leads to sustainable business success. Responsible Business Practice – Walmart
Align value with values Walmart is the largest business in the world. As such, it is one of the heaviest users of packaging and other materials. In 2005, after much criticism, Walmart set goals to be supplied with 100% renewable energy, to create zero waste, and to sell products that sustain resources and the environment. Paul Tepfenhart, senior director of private brands strategy at Walmart, talks about the benefits of the company’s zero packaging initiative. “Walmart is the place,” he says, “to save money, to live better…. By being smarter through the life cycle of a product, we save money in our cost structure and that’s reflected on the shelf. This builds the brand.” The epiphany that came to Tepfenhart and others at Walmart is that sustainability saves customers money. “It is good business, wise business, and the way to build a lasting relationship with our customers,” he explains. (Source: Beyond CSR, Doug Solomon)
The Caux Round Table (CRT) Principles
The Caux Round Table (CRT) is an international network of business leaders working to promote a morally and sustainable way of doing business. The Responsible Business Principles developed in the Caux Round Table are widely recognized as the most comprehensive statement of responsible business practice. This approach to responsible business consists of seven core principles. It recognizes that while laws and market forces are necessary, they are insufficient guides for responsible business conduct. The principles are rooted in three ethical foundations for responsible business and for a fair and functioning society more generally, namely: responsible stewardship; living and working for mutual advantage; and the respect and protection of human dignity. The principles also have a risk management foundation - because good ethics is good risk management. And they balance the interests of business with the aspirations of society to

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ensure sustainable and mutual prosperity for all. Following are the seven principles of Responsible Business. Principle 1 - Respect Stakeholders beyond Shareholders Principle 2 – Contribute to Economic, Social and Environmental Development Principle 3 – Build Trust by Going beyond the Letter of the Law Principle 4 –Respect Rules and Conventions Principle 5 – Support Responsible Globalization Principle 6 – Respect the Environment Principle 7 – Avoid Illicit Activities Stakeholder Management Guidelines The CRT Principles for Responsible Business are supported by more detailed Stakeholder Management Guidelines covering each key dimension of business success: customers, employees, shareholders, suppliers, competitors, and communities.
1. Customers
A responsible business treats its customers with respect and dignity. Business therefore has a responsibility to:
a. Provide customers with the highest quality products and services consistent with their requirements.
b. Treat customers fairly in all aspects of business transactions, including providing a high level of service and remedies for product or service problems or dissatisfaction.
c. Ensure that the health and safety of customers is protected.
d. Protect customers from harmful environmental impacts of products and services.
e. Respect the human rights, dignity and the culture of customers in the way products and services are offered, marketed, and advertised.
2. Employees
A responsible business treats every employee with dignity and respects their interests. Business therefore has a responsibility to:
a. Provide jobs and compensation that contribute to improved living standards.
b. Provide working conditions that protect each employee's health and safety.
c. Provide working conditions that enhance each employee’s well-being as citizens, family members, and capable and caring individuals.
d. Be open and honest with employees in sharing information, limited only by legal and competitive constraints.
e. Listen to employees and act in good faith on employee complaints and issues.

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f. Avoid discriminatory practices and provide equal treatment, opportunity and pay in areas such as gender, age, race, and religion.
g. Support the employment of differently-abled people in places of work where they can be productive.
h. Encourage and assist all employees in developing relevant skills and knowledge.
i. Be sensitive to the impacts of unemployment and work with governments, employee groups and other agencies in addressing any employee dislocations.
j. Ensure that all executive compensation and incentives further the achievement of long term wealth creation, reward prudent risk management, and discourage excessive risk taking.
k. Avoid illicit or abusive child labor practices.
3. Shareholders
A responsible business acts with care and loyalty towards its shareholders and in good faith for the best interests of the corporation. Business therefore has a responsibility to:
a. Apply professional and diligent management in order to secure fair, sustainable and competitive returns on shareholder investments.
b. Disclose relevant information to shareholders, subject only to legal requirements and competitive constraints.
c. Conserve, protect, and increase shareholder wealth.
d. Respect shareholder views, complaints, and formal resolutions.
4. Suppliers
a. A responsible business treats its suppliers and subcontractors with fairness, truthfulness and mutual respect. Business therefore has a responsibility to:
b. Pursue fairness and truthfulness in supplier and subcontractor relationships, including pricing, licensing, and payment in accordance with agreed terms of trade.
c. Ensure that business supplier and subcontractor activities are free from coercion and threats.
d. Foster long-term stability in the supplier relationships in return for value, quality, competitiveness and reliability.
e. Share information with suppliers and integrate them into business planning.
f. Seek, encourage and prefer suppliers and subcontractors whose employment practices respect human rights and dignity.
5. Competitors
A responsible business engages in fair competition which is a basic requirement for increasing the wealth of nations and ultimately for making possible the just distribution of goods and services. Business therefore has a responsibility to:
a. Foster open markets for trade and investment.
b. Promote competitive behavior that is socially and environmentally responsible and demonstrates mutual respect among competitors.

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c. Not participate in anti-competitive or collusive arrangements or tolerate questionable payments or favors to secure competitive advantage.
d. Respect both tangible and intellectual property rights.
e. Refuse to acquire commercial information through dishonest or unethical means, such as industrial espionage.
6. Communities
As a global corporate citizen, a responsible business actively contributes to good public policy and to human rights in the communities in which it operates. Business therefore has a responsibility to:
a. Respect human rights and democratic institutions, and promote them wherever practicable.
b. Recognize government’s legitimate obligation to society at large and support public policies and practices that promote social capital.
c. Promote harmonious relations between business and other segments of society.
d. Collaborate with community initiatives seeking to raise standards of health, education, workplace safety and economic well-being.
e. Promote sustainable development in order to preserve and enhance the physical environment while conserving the earth's resources.
f. Support peace, security and the rule of law.
g. Respect social diversity including local cultures and minority communities.
h. Be a good corporate citizen through ongoing community investment and support for employee participation in community and civic affairs.
Caux Round Table Conference gives us a comprehensive view on Responsible Business. The seven principles and stake holder management guidelines acts as a key instrument for responsible business practitioners. (Source: Caux Round Table 2009) Responsible Business code of CSL Limited 1 A commitment to conducting CSL’s business with the utmost integrity by complying with all applicable local laws and regulations in all countries in which we operate, and by fulfilling all of our responsibilities to shareholders and the financial community; 2
Rules guiding employees and directors towards ethical decisions in situations of potential conflict of interest, political involvement, bribery and financial inducements; 3 Fundamental workplace relations principles including mutual respect, non-discrimination and freedom of association; 4
A commitment to the quality and safety of our patients, donors and employees by adherence to health and safety standards, through compliance with manufacturing and other best practice standards, and through provision of safe employee work environments; 5 Investing in Research and Development in new products and improved products that improve patients’ lives; 6
Responsible environmental practices that minimise our environmental impacts;

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7 Guidance for creating and maintaining beneficial relationships with all the communities in which we operate; 8
Collaboration throughout the organisation; 9 Contributing to the development of public policy in our areas of expertise.
Code and supplementary policies 1 Our customers and the broader community can be confident that CSL is committed to operating with the highest integrity at all times; 2
Our contractors, suppliers and distributors know what to expect from a business relationship with CSL and the expectations we have of them; 3 Our employees understand both their obligations to CSL and CSL’s obligations to them. Every employee in any of our businesses has a responsibility to ensure that the role they perform in carrying out CSL’s business is a constant reflection of these principles and the values of the organization.
(Source: Our Code of Responsible Business Practice, December 2008, CSL Ltd.) Responsible Business Guidelines – An Indian Approach Responsible business envisions a concept that goes beyond the traditional walls of a business organization and all the way across the value chain. The guidelines prepared by the Ministry of Corporate Affairs urges businesses to embrace the “triple bottom-line” approach whereby its financial performance can be harmonized with the expectations of society, the environment and the many stakeholders it interfaces with in a sustainable manner. These Guidelines aim at the enhancement competitive strengths, improving reputations, attract and retain talent and manage relations with investors and society at large. The Guidelines have been articulated in the form of nine (9) Principles with the Core Elements to actualize each of the principles. The Principle and Core Elements are applicable to large and small businesses. Principle 1: Businesses should conduct and govern themselves with Ethics, Transparency and Accountability Principle 2: Businesses should provide goods and services that are safe and contribute to sustainability throughout their life cycle Principle 3: Businesses should promote the wellbeing of all employees Principle 4: Businesses should respect the interests of, and be responsive towards all stakeholders, especially those who are disadvantaged, vulnerable and marginalised. Principle 5: Businesses should respect and promote human rights Principle 6: Business should respect, protect, and make efforts to restore the environment Principle 7: Businesses, when engaged in influencing public and regulatory policy, should do so in a responsible manner Principle 8: Businesses should support inclusive growth and equitable development Principle 9: Businesses should engage with and provide value to their customers and consumers in a responsible manner

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Cradle to Grave - A Case Study – Principle 2 The company has played a pioneering role in the growth of cellular technology in India. During product creation the company (guided by Life Cycle Assessment) focused on energy efficiency, sustainable use of materials and smart packaging. The device even has a feature which reminds the user to unplug their phone charger from the electric socket when the battery has been charged. The company's sourcing managers are in constant dialogue with suppliers to confirm full material information and compliance of every single component and module, and to ensure that the Company Supplier Requirements and related environmental and ethical standards are met. There is a dedicated Design for Environment (DfE) specialist for every product and site, to support product development and monitor that the quality, safety and environmental requirements are met through a series of milestone reviews. Packaging specialists work to minimize the materials and logistics burden: every product ships in a smaller box compared to its earlier equivalents. By providing Eco applications and services, it increases awareness of environmental choices and promote sustainable actions, like offsetting CO2 emissions. Effective end-of-life practices close the lifecycle loop, putting energy and valuable materials back into circulation. The company has recently offered take-back schemes in all its operating sites. By offering to take back old devices at all its operating sites, the company is striving to practice recycling and reusing of materials.
Solutions that touch lives – A Case Study – Principle 5 Of the some 70 million persons with disabilities in India (5-6 percent of India's population), only a handful have succeeded in obtaining employment. A Business Process Outsourcing (BPO) company recognized the need and proactively tapped different talent pools including hiring people with physical disability, having necessary skill sets to work in a BPO environment. The unique objective of this initiative was to provide gainful employment to persons with disabilities without compromising on the quality. The company encourages people with disabilities to apply for positions with them and have suitably advertised: 'Persons with disability are encouraged to apply”. They also organize special recruitment drives solely targeted a increasing the representation of persons with disability among the workforce. They have developed specific standard recruitment/induction process to ensure that persons with disability are inducted well into the company and provide the required assistance to them. This includes sensitization of team members of hearing impaired employees, and other special training, as required. They provide requisite facilities like ramps, accessible washrooms, special low floor cabs, sign language interpreter, and emergency preparedness plan etc to meet the needs of persons with disabilities. The company experienced a lowest attrition rate of 34.79% compared to the industry attrition rate of 70%
Towards Responsible Business
Sustainability and International Finance Corporation has developed a six step strategy for Responsible Business. Along with Responsible Business principles and guidelines this strategy model paves a way towards responsible Business. This six steps consist of Business Analysis, SWOT Analysis, strategy Development, Planning and implementation of strategy, monitoring and evaluation and communication.

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The diagrammatic representation of the six steps for building a strategy for Responsible Business is shown below. Six Steps for Building a Strategy for Responsible Business (RB), Steps towards Responsible Business (Source: Ministry of Corporate Affairs Adapted from Developing Value published by Sustainability and International Finance Corporation) Global reporting initiative, Global Compact, Sustainability index etc. are some of the wide known sustainability reporting initiatives. In order to practice responsible business and to ensure transparency, accountability and responsibility, these models act as effective guidelines. Responsible Business develops the consciousness that you can only ‘‘do well’’ in the long run by ‘‘doing good’’ to the environment and the society you operate in and that the source of your competitive advantage can either be enhanced or destroyed by strategic and operational decisions you take today (Daniela Ortiz Avram and Sven Ku¨hne, 2008). It is evident that many of the business have negative impact on environment and society. Advocates of Responsible Business believe that the most alarming social and environmental issues can be solved through mutual conscience and effort. To tackle different socioeconomic and environmental threats created by men and business, corporations should behave in more responsible and ethical manner.

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Business Responsibility Business is a part of the society and the existence of both is interrelated. Business provides services for society and at the same time it fetches resources from environment and people. In the wake of increased community demands and stake holder pressure which arose from the looming environmental crisis, business entities are forced to adapt myriad responsible practices not only to solace society but also to maintain sustainability. In another way sustainability is a matter of concern for almost all business. Organizations are striving to develop a variety of strategies for dealing with societal needs, environmental protection and different other sustainable development practices. “At one end of the continuum are organizations that do not acknowledge any responsibility to society and the environment. And on the other end of the continuum are those organizations that view their operations as having a significant impact as well as reliance on society at the economic, social, and ecological levels, thus resulting in a sense of responsibility beyond the traditional boundaries of the organization. Most organizations can be placed somewhere in between (Alasia et.al, 2009, Corporate Social Responsibility and Sustainable Business). Sustainable development, a concept which considers society, environment and economy with equal preference emerged as the ideal development strategy of business. This TBL (Triple Bottom Line) ideology takes account planet, people and profit shall be the agenda of business development. Social Responsibilities of Business The notion of ‘give something back to the society’ is may be the logic behind social responsibility. The term CSR is also in line with these concept. Along with profit business should concern people and society and never let people in lurch for profit. “In negative terms, social responsibility of business means its obligation to prevent economic performance overrun its social performance. In practice it could mean promoting employment opportunities, maintaining healthy competition with the result ensuring quality products and fair prices, developing human resources, promoting human values within the organization etc. The presumption here is that a business is responsible not just for doing what it thinks useful, but it is responsible to the whole community, whether local or global. This idea is expressed by Ethics in Action, a Vancouver, BC organization as follows. “Socially responsible companies consider the full scope of their impact on communities and the environment when making decisions, balancing the needs of stakeholders with their need to make a profit”. Accordingly, the success rate of a company is to be measured according to its whole impact on all who are affected by or involved in its operations, not just by virtue of its size, revenues, profits, returns to financial investors, or social responsible campaign budgets”. (Mathew Illathuparampil, Indian Ethos and Management Values).
As aforesaid there are various social responsibilities are expected from organizations. This social performance means overall activities which includes external activities as well as internal responsibilities. The social responsibility equally considers employees and nearby community as equally importance partners. Considering the internal responsibilities of business, most of it related with employees and HR practices. From the very beginning of industrial era, clash between employees and management were apparent. Earlier employees were just a cog in a machine. But time moves systems changed and employees became an integral and core part of business. While proclaiming this flamboyant ideology, unemployment and skill shortage keep employees in the back seats in certain places. In some occasions management exploits staffs and in some places employees blindly attack management with the vigor and

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spirit of trade unions. The HR issues of Maruti workers, Air India pilots, Rail way loco pilots etc. are frequently occurred in news these days. Along with these the issues of nursing staffs and private school teachers were also came in to our attention. These incidents proved that business should consider the genuine issues of employees with great care. Social responsible business can do a diverse range of activities for the overall enhancement different social indices. Business can adopt social programs, cultural development initiatives, micro enterprises development, employment generation activities, awareness campaign etc. for the overall growth of immediate community. The social interest business varies, that may depend on the people demand, strategic area, management decision and certain other factors. The Time Foundation Survey (2008) reveals that the selection of issues under social responsibility by organizations depends on host of factors including organizational mandate, current relevance of issues and demand from the community. The priority areas that the respondents felt ought to be covered under social responsibility initiatives include education, environment, health, women empowerment, livelihood promotion, sanitation, microfinance, HIV/ AIDS, child care, slum improvement, disaster management and agricultural development. The study of KPMG reveals that action in social responsibility in India largely spans a diverse set of thematic areas – health, education, livelihood, poverty alleviation, environment, water, housing, energy and microfinance. However some other areas like women empowerment, child development and infrastructure also appeared in the case studies. Based on the comparative study of the 24 companies, it was found that while some companies chose to narrow their focus on a few thematic areas, others took a broader view and undertook a larger scope of areas to focus on. Out of 24 case studies that were analysed, it was found that there were as many as 16 corporates focusing on 3-5 thematic areas, whereas only 4 corporate catered to 1-2 thematic areas of work and remaining four stuck to six or more thematic areas. In terms of the area focus, environment garnered the maximum attention from corporate while women empowerment and poverty alleviation were neglected areas with minimal corporate focusing on the same. The Miracle Card – Centurion Bank of Punjab Limited (CPOB) The Miracle Card program of Centurion Bank of Punjab Limited aimed at the education of every underprivileged child in the country. The fund generated through the Miracle card - a kind credit card ensures money every time when a member spends for shopping. For every member, Bank debits a nominal amount of INR 50 on the card which is matched by a similar contribution from CBOP thus totaling to INR 100 per card. This amount is sent to the ‘Gift a Smile’ initiative run by AOL which focuses on creating ‘first time literates’. How can INR 100 make a difference? Imagine when all the proposed 500,000 people subscribe to the card. The amount changes from a mere INR 100 to a monumental 5 crores! This money is in turn put into Ved Vignan Maha Vidyapeeth, a school in Bangalore committed to providing free education to underprivileged children from rural backgrounds thus helping them break the shackles of poverty and face the world with more confidence. It costs INR 10, 000 to sponsor a kid’s education for one year (including food, travel, uniform, books). Hence with an estimated corpus of INR 5 crores, the miracle can potentially add 3500 more kids to school (INR 1.5 crores going towards funding the infrastructure).

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In order to achieve sustainability and brand image organizations are liable perform certain social functions. This is why business incorporates responsible practices in their strategic plans. Some of the social responsible practices of corporate are shown below.
Sl. No.
Social Responsible Initiatives 1 Development of local infrastructure
2
Improving basic amenities of local people 3 Giving aid for community development activities like education, women empowerment, child development, environmental protection, employment generation activities, charity works, health and hygiene etc.
4
Cooperation with government and local bodies 5 Consultation with LSG’s and NGO’s
6
Improving Management in Government 7 Ensuring equal job opportunities
8
Providing sufficient training and development activities 9 Compensation and welfare in comply with industrial standards
10
Procuring manpower and raw materials from the local community whenever possible 11 Responsive to the complainants of customers and stakeholders
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Organization runs under national and international legislations 13 Code of conduct for staffs and Management
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Policy against commercial exploitations like sexual abuse and discrimination against physically challenged persons
ASOCIO Policy paper 2004 explains 4 key drivers of social Responsibility.
 Enlightened self-interest - creating a synergy of ethics, a cohesive society and a sustainable global economy where markets, labour and communities are able to function well together.
 Social investment - contributing to physical infrastructure and social capital is increasingly seen as a necessary part of doing business.
 Transparency and trust - business has low ratings of trust in public perception. There is increasing expectation that companies will be more open, more accountable and be prepared to report publicly on their performance in social and environmental arenas
 Increased public expectations of business - globally companies are expected to do more than merely provide jobs and contribute to the economy through taxes and employment.”
In this globalized era people are more concerned and aware about socially responsible business. So companies are expected to contribute more than mere jobs and products/services. Consumers and stakeholders looks for transparency, accountability and responsibility of business. Rather than meager statements, community looks for values and ethics deliver by corporate. Reporting responsibility practices through sustainability reports, Global Reporting Initiative, Global Compact etc. are therefore increasingly

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becoming common practice and now mandatory to various organizations. Increased engagement of government, initiatives of stake holders and meaningful dialogues of business leaders make business more socially responsible. Environmental responsibility The term Business Environmental Performance gives more meaning to the concept of Environmental responsibility. Similar to other responsibility areas the idea behind environmental responsibility is ‘something in return’ to environment. Business utilizes or exploits natural resources as raw materials or products most of these are not capable of replenish. In the wake of this negative environmental impact business have the responsibility for the preservation, conservation and reproduction of environmental resources. In contrary to this contemporary business is often charged with the responsibility of creating environmental hazards. The practice of jeopardizing environment for profit caused series of natural as well as environmental calamities. The tragedies like Minamata, Bhopal Nuclear Plant, Fukushima, Chernobyl, Exon Valdez etc. are easily explained disasters created by business. While coming to our premises the scams like Coalgate and 2G Spectrum unveils that natural resources were plundered by giant business groups with meager prices. Ground water exploitation of Coco Cola in Plachimada, terminator seeds and GM crops of Monsanto and endosulfan also are evident to these issues. Even though everyone has equitable right for resources in the nature, an ecological as well as social imbalance occurs when a minority exploits natural resources in a big way. This unethical behavior drags vulnerable communities in to health hazards, poverty and drought. The practice of some developed countries to export their industrial waste, debris, radioactive materials, dirties and outdated technologies and electronic wastes to some poor and underdeveloped countries where no environmental regulations exist or through some coercion or corrupted ways make common people in peril. These incidents raise some ethical questions against the environmental integrity of business and entities. Here I remember two quotes of Mahatma Gandhi which reiterates the relevance of environment and jettisons the negation of business. “Air, water, land and resources are not an inheritance from our fore fathers but on loan on our children. So we are expected to handover to them as at least it was transferred to us.” “Resources are only to satisfy the needs not to their greed of human.” From small to big now business have the responsibility to address issues such as global warming, climate change, ozone depletion, bio diversity conservation and pollution control which is to ensure sustainable economic growth and the well being of society. A comprehensive and systematic approach is essential to understand these issues and to be accountable for direct and indirect environmental impacts of business. To make the operation environmental friendly, every business needs to imbibe certain ethical standards as well as moral principles. Ministry of Corporate Affairs, Government of India gives some guidelines in this regard.

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Business should respect, protect, and make efforts to restore the environment
1. Businesses should utilize natural and manmade resources in an optimal and responsible manner and ensure the sustainability of resources by reducing, reusing, recycling and managing waste.
2. Businesses should take measures to check and prevent pollution. They should assess the environmental damage and bear the cost of pollution abatement with due regard to public interest.
3. Businesses should ensure that benefits arising out of access and commercialization of biological and other natural resources and associated traditional knowledge are shared equitably.
4. Businesses should continuously seek to improve their environmental performance by adopting cleaner production methods, promoting use of energy efficient and environment friendly technologies and use of renewable energy
5. Businesses should develop Environment Management Systems (EMS) and contingency plans and processes that help them in preventing, mitigating and controlling environmental damages and disasters, which may be caused due to their operations or that of a member of its value chain
6. Businesses should report their environmental performance, including the assessment of potential environmental risks associated with their operations, to the stakeholders in a fair and transparent manner.
7. Businesses should proactively persuade and support its value chain to adopt this principle
Businesses should provide goods and services that are safe and contribute to sustainability throughout their life cycle The principle emphasizes that in order to function effectively and profitably, businesses should work to improve the quality of life of people. The principle recognizes that all stages of the product life cycle, right from design to final disposal of the goods and services after use, have an impact on society and the environment. Responsible businesses, therefore, should engineer value in their goods and services by keeping in mind these impacts. The principle, while appreciating that businesses are increasingly aware of the need to be internally efficient and responsible, exhorts them to extend their processes to cover the entire value chain – from sourcing of raw materials or process inputs to distribution and disposal.
1. Businesses should assure safety and optimal resource use over the life-cycle of the product – from design to disposal – and ensure that everyone connected with it- designers, producers, value chain members, customers and recyclers are aware of their responsibilities.
2. Businesses should raise the consumer's awareness of their rights through education, product labeling, appropriate and helpful marketing communication, full details of contents and composition and promotion of safe usage and disposal of their products and services.
3. In designing the product, businesses should ensure that the manufacturing processes and technologies required to produce it are resource efficient and sustainable.
4. Businesses should regularly review and improve upon the process of new technology development, deployment and commercialization, incorporating social, ethical, and environmental considerations.

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5. Businesses should recognize and respect the rights of people who may be owners of traditional knowledge, and other forms of intellectual property.
6. Businesses should recognize that over-consumption results in unsustainable exploitation of our planet's resources, and should therefore promote sustainable consumption, including recycling of resources.
Linking natural resource management with sustainable development: Creating value for society A cement manufacturing company in the country initiated the salinity mitigation programme in coastal regions of Gujarat to improve the condition of the natural resources available. Under this project, the community members were mobilized for innovative water conservation projects by the company. This jointly conceptualized and implemented project also received funding assistance from the state government and other funding NGOs. The company dealt with the problem from many angles. In areas where a seasonal river flowed, check dams were built to allow water to percolate down. The bottoms of fresh water wells were sealed so that saline water does not mix with fresh water. Modifications in agriculture, like growing of less water intensive crops, use of drip irrigation, promotion of horticulture were encouraged. For provision of drinking water, roof rain water harvesting structures were built. The highlight of the project was in using simple, relatively inexpensive technology along with direct people's participation to solve a serious socioeconomic and environmental problem. The project has benefited a total of 2181 households across 15 villages by raising the ground water levels in project villages by nearly 30 feet, interlinking water bodies/ ponds, greater ground water recharge, increased agricultural productivity as well. Initiative towards Eco friendly process: Cleaner is Cheaper A globally recognized integrated pharmaceutical (pharma) company based in Maharashtra with core competencies in the development and manufacture of APIs (active pharmaceutical ingredients) and finished dosage forms, as well as in drug discovery has been working towards making its process more energy efficient and reducing their environmental impacts. As a part of its commitment towards sustainable development and conservation of the environment, the company has undertaken remarkable initiatives for effective utilization of energy resources and minimization & control of waste. The company, through strategic process innovation in the manufacturing process of Cephalosporin, has achieved  A 40% reduction in the generation of hazardous waste; a 25% reduction in the effluent generated;  Reduced furnace oil consumption leading to reduction in sulphur emission;  Reduced electricity consumption by 95%;  Complete elimination of unrecoverable metals.  The total savings per annum have been calculated to the tune of INR 2.1 million, improving productivity by 55%. (Source: National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business, Ministry of Corporate Affairs, Govt. of India)

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In the contemporary scenario government as well as different world organizations consider the issue of environmental responsibility very seriously. Earth summits, protocols and multitude of certifications and standards are evident for this movement which will be discussed later. It is understood that environmental activism and scientific finding have played a commendable role in the mass awareness of community. Any activity hinders the healthy relation of earth and live being produce negative impacts. As a contributor of pollution, business is involved in current environmental crisis. To tackle this looming crisis, business should intentionally control their activities and adapt eco friendly practices like promotion of renewable sources, pollution control mechanisms, creation of social forests, promoting green ventures and strictly follow rules and legislations. It is important to realize the existence of business and human and there is no existence of both without the existence of earth. This realization may lead us to behave more ethically and eco friendly. Economic Responsibility “The economic value of avoiding GHG emissions by conserving forests: US$ 3.7 trillion (NPV) and the economic value of species diversity specifically the contribution of insect pollinators to agricultural output is estimated to be ~ US$ 190 billion/year”. (TEEB Report 2010) Primary objective of every business is profit. Business depicts its responsibility towards economy through creating profit, employment and infrastructure. Responsible business can contribute to the growth of economy through promoting research and development, product development, business innovation and novel business ventures. Along with these functions, business has the responsibility to pay taxes and to comply with economic objectives of the nation. @@@@@@@@@@@@@@@@@@2 The three categories of Responsible Finance considered by a study (Responsible Finance – A Catalyst for Responsible Business, International and Indian Trends and Challenges in Responsible Finance) coined three terms : Sustainable/Responsible Lending, Sustainable/Responsible Investment, and Impact Investing. Sustainable/Responsible Lending: Refers to the practices of retail lenders and corporate financiers’ (investment banks) to apply environmental, and/or social criteria in their lending decision making, the latter specifically in their project financing decisions. Sustainable/Responsible Investment: Refers to the incorporation of environmental, social and governance (ESG criteria) into investment decision making by investors. Impact investment: Refers to an investment approach by a new breed of venture capitalists and angel investors at the start up or early stage of a business’s development. In providing early stage financing impact investors aim to maximize social and environmental impacts alongside financial returns with their investments.

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International Responsible Finance Trends
 Recognition of the Business Case for Responsible Finance
 International Commitment by the Financial Institutions to Responsible Finance
 Governmental and regulatory drivers of ESG management and disclosure
 Increasing Stock Exchange Listing Requirements
 Translating a Commitment into ESG Policies
 Implementing Practices to manage operational and portfolio impacts
 Disclosing Policies, Practices and Performance
 Measuring, Rating and Rewarding Performance
 Increased interest in impact investing
 A new asset class
 Geographic Focus on emerging markets
 Thematic focus on a number of key sectors such as health and education
 Impact measurement and engaged investing
Responsible Finance Challenges and Barriers
 Lack of disclosure and data availability
 Data quality and comparability, standardization of metrics and impact
 Assurance of data
 Lack of research on business case and business case recognition by banks and investors
 Thematic blind spots of risks and opportunities
 Lack of measurement tools
 India specific challenges include:
 Lack of awareness, understanding, commitment and capacity
 Lack of engagement by the media and other stakeholders
 A focus on operational impacts by banks rather than portfolio impacts
 Non-compliance
 Shareholding patterns and lack of engagement by domestic insurance and pension funds
Responsible Business Practice of CSL (Economic and Finance) Internal controls and reporting procedures
Accurate and complete business records are essential for the effective management of our business and to maintaining investor confidence. At CSL, we are committed to ensuring the integrity and quality of our business record keeping and that all of our business records are created and managed to give a fair, true and accurate account of our business. We have internal control systems to ensure financial statements comply with the applicable local laws of the countries in which we operate. The management of our information technology ensures that our information assets are protected and held secure. Continuous disclosure
As a publicly listed company on the Australian Securities Exchange (“ASX”), CSL has obligations under Australian law and the ASX Listing Rules. Subject to limited exceptions, we must continuously disclose information about CSL that a reasonable person would expect to have a material effect on the price or value of CSL securities.CSL has a policy that sets clear guidelines and describes the actions that the directors and all employees should take when they become aware of information that may require

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disclosure. Trading in CSL shares
We encourage all of our directors and employees to be long term holders of CSL shares. However, we must take care over the timing of the sale or purchase of any such shares. Insider trading laws prohibit directors or employees from buying or selling CSL shares, where they are in possession of price sensitive information that is not generally available to the market. We have a policy that helps directors and employees to fully understand their obligations in relation to trading in CSL securities. Insider trading is a criminal offence under Australian law. Trade practices
Compliance with trade practices and competition law is fundamental to our integrity and good reputation. CSL supports the principle of free competition and forbids practices that would in any way:
o Mislead consumers;
o Result in pricing that would be in contravention of applicable trade practices or competition laws; or
o Constitute other unfair practices.
We have compliance training programs in place to ensure that relevant employees understand their own and CSL’s obligations in relation to applicable trade practices and competition laws. These programs are delivered at the local business unit level and cover the systems we have established for identifying, communicating, reporting, investigating, and resolving any non-compliance with such laws. Conflicts of interest
A conflict of interest can occur where a private interest is inconsistent with an employee’s obligation to serve the interests of CSL. In carrying out their responsible duties at CSL, all directors and employees are expected to put the interests of CSL ahead of their private interests. This includes where:
o A private interest (financial or otherwise) could conceivably influence an employee’s judgment in handling company business;
o An employee’s allegiance to immediate family or any third party, group or organization is regarded as competing with the interests and concerns of CSL;
o An employee has an interest in a transaction in which it is known that CSL has or may have an interest; or
o An employee receives fees, commissions or other compensation from a supplier, a competitor or customer of CSL.
To avoid any potential or perceived conflict of interest, an employee must seek the permission from their manager in order to commence or continue any outside employment. We have management systems and approaches in place for dealing with and resolving any conflicts or potential conflicts that may arise. We encourage employees to declare any potential conflict of interest to their manager as early as possible to help us plan ahead and avoid the conflict. Bribery & inducements
No CSL businesses or employees will directly or indirectly offer, pay, solicit or accept bribes or give or receive personal financial rewards or inducements in exchange for making business decisions. Our employees and directors must not accept gifts or entertainment where to do so might influence, or might be perceived to influence, objective business judgment.

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Corporate Social Responsibility (CSR)
The term Corporate Social Responsibility (CSR) is an evolving concept getting wide attention and gaining
different dimensions day by day. Even though the term is new, the concept has a long history even from
pre Christian period. At the same time, sustainable business, responsible business, social and
environmental performance, social action program, corporate citizenship etc are emerged as a proxy for
CSR. Albeit the term ‘Corporate Social Responsibility’ was coined by R. Edward Freeman in his book titled
‘Strategic Management: A Stakeholder Approach’, this term not have a globally accepted definition. But
the common concise that CSR is essential to business and majority believe that business should serve as a
steward in society, and that it has a duty to investors, employees, consumers, communities and the
environment (CCC 2005c., Corporate Responsibility, a critical introduction, Michel Blowfield and Alan
Murray). This can be corroborated by the fact that while in 1977 less than half of the Fortune 500 firms
even mentioned CSR in their annual reports, by the end of 1990, approximately 90 percent Fortune 500
firms embraced CSR as an essential element in their organisational goals, and actively promoted their CSR
activities in annual reports (Boli and Hartsuiker, 2001). (Corporate Social Responsibility –Towards a
Sustainable Future, A White Paper, KPMG IN INDIA).
The meaning of CSR has two dimensions. On one hand, it is ethical behavior of an organization exhibits
towards its and on the other hand, it denotes the responsibility of an organization towards the
environment and society in which it operates. According to World Business Council for Sustainable
Development “Corporate social
Responsibility is the continuing
commitment by business to behave
ethically and contribute to economic
development while improving the
quality of life of the workforce and
their families as well as of the local
community and society at large”.
While debating on definition, there
is no dual opinion in the fact that
CSR relates with sustainable
development. The common
principles constitute to form a
concept triple bottom line (TBL)
approach gives a holistic view on
CSR. This may be encapsulated as
the organization/individual effort
towards social, environmental and
economical enhancement of the
society. This was evolved in line with the three pillar concept (People, Planet and Profit). In short CSR can
be expressed as the of the organizations responsibility towards overall positive impact of the society.
(Diagram: Source: http://www.bombaychamber.com/image002.jpg)

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Evolution of CSR The concept of CSR in India is not new, the term may be. The process though acclaimed recently, has been followed since ancient times albeit informally. Philosophers like Kautilya from India and pre-Christian era philosophers in the West preached and promoted ethical principles while doing business. The concept of helping the poor and disadvantaged was cited in much of the ancient literature. The idea was also supported by several religions where it has been intertwined with religious laws. “Zakaat”, followed by Muslims, is donation from one’s earnings which is specifically given to the poor and disadvantaged. Similarly Hindus follow the principle of “Dhramada” and Sikhs the “Daashaant” The term corporate social performance was first coined by Sethi (1975), expanded by Carroll (1979), and then refined by Wartick and Cochran (1985).In Sethi’s 1975 three-level model, the concept of corporate social performance was discussed, and distinctions made between various corporate behaviors. Sethi’s three tiers were ‘social obligation (a response to legal and market constraints); social responsibility (congruent with societal norms); and social responsiveness (adaptive, anticipatory and preventive) (Cochran, 2007). An ideal CSR has both ethical and philosophical dimensions, particularly in India where there exists a wide gap between sections of people in terms of income and standards as well as socioeconomic status (Bajpai, 2001). According to Infosys founder, Narayan Murthy, ‘social responsibility is to create maximum shareholders value working under the circumstances, where it is fair to all its stakeholders, workers, consumers, the community, government and the environment’. Commission of the European Communities 2001 stated that being socially responsible means not only fulfilling legal expectations, but also going beyond compliance and investing ‘more’ into human capital, the environment and the relation with stakeholders(Bajpai, 2001). Over the time four different models have emerged all of which can be found in India regarding corporate responsibility (Kumar et al.2001). In the global context, the recent history goes back to the seventeenth century when in 1790s, England witnessed the first large scale consumer boycott over the issue of slave harvested sugar which finally forced importer to have free-labor sourcing. In India, in the pre independence era, the businesses which pioneered industrialisation along with fighting for independence also followed the idea. They put the idea into action by setting up charitable foundations, educational and healthcare institutions, and trusts for community development. The donations either monetary or otherwise were sporadic activities of charity or philanthropy that were taken out of personal savings which neither belonged to the shareholders nor did it constitute an integral part of business. The term CSR itself came in to common use in the early 1970s although it was seldom abbreviated. By late 1990s, the concept was fully recognised; people and institutions across all sections of society started supporting it. This can be corroborated by the fact that while in 1977 less than half of the Fortune 500 firms even mentioned CSR in their annual reports, by the end of 1990, approximately 90 percent Fortune 500 firms embraced CSR as an essential element in their organisational goals, and actively promoted their CSR activities in annual reports (Boli and Hartsuiker, 2001). (Source: Corporate Social Responsibility – Towards a Sustainable Future, A White Paper - KPMG IN INDIA)

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CSR Theories Instrumental theories In this group of theories CSR is seen only as a strategic tool to achieve economic objectives and, ultimately, wealth creation. Representative of this approach is the well-known Friedman view that ‘‘the only one responsibility of business towards society is the maximization of profits to the shareholders within the legal framework and the ethical custom of the country’’ (1970). Instrumental theories have a long tradition and have enjoyed a wide acceptance in business so far. As Windsor (2001) has pointed out recently, ‘‘a leitmotiv of wealth creation progressively dominates the managerial conception of responsibility’’ (Windsor, 2001, p. 226). Concern for profits does not exclude taking into account the interests of all who have a stake in the firm (stakeholders). It has been argued that in certain conditions the satisfaction of these interests can contribute to maximizing the shareholder value (Mitchell et al., 1997; Odgen and Watson, 1999). An adequate level of investment in philanthropy and social activities is also acceptable for the sake of profits (McWilliams and Siegel, 2001). Three main groups of instrumental theories can be identified, depending on the economic objective proposed. In the first group the objective is the maximization of shareholder value, measured by the share price. Frequently, this leads to a short-term profits orientation. The second group of theories focuses on the strategic goal of achieving competitive advantages, which would produce long-term profits. In both cases, CSR is only a question of enlightened self-interest (Keim, 1978) since CSRs are a mere instrument for profits. The third is related to cause-related marketing and is very close to the second. Let us examine briefly the philosophy and some variants of these groups. Currently, this approach usually takes the shareholder value maximization as the supreme reference for corporate decision-making. The Agency Theory (Jensen and Meckling, 1976; Ross, 1973) is the most popular way to articulate this reference. However, today it is quite readily accepted that shareholder value maximization is not incompatible with satisfying certain interests of people with a stake in the firm (stakeholders). In this respect, Jensen (2000) has proposed what he calls ‘enlightened value maximization’. This concept specifies long-term value maximization or value-seeking as the firm’s objective. At the same time, this objective is employed as the criterion for making the requisite tradeoffs among its stakeholders. Strategies for achieving competitive advantages A second group of theories are focused on how to allocate resources in order to achieve long-term social objectives and create a competitive advantage (Husted and Allen, 2000). In this group three approaches can be included: (a) social investments in competitive context, (b) natural resource-based view of the firm and its dynamic capabilities and (c) strategies for the bottom of the economic pyramid.
The resource-based view of the firm (Barney, 1991; Wernerfelt, 1984) maintains that the ability of a firm to perform better than its competitors depends on the unique interplay of human, organizational, and physical resources over time. The ‘‘dynamic capabilities’’ approach is focused on the drivers behind the creation, evolution and recombination of the resources into new sources of competitive advantage (Teece

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et al., 1997). So dynamic capabilities are organizational and strategic routines, by which managers acquire resources, modify them, integrate them, and recombine them to generate new value-creating strategies.) c) Strategies for the bottom of the economic pyramid. Traditionally most business strategies are focused on targeting products at upper and middle-class people, but most of the world’s population is poor or lower- middle class. At the bottom of the economic pyramid there may be some 4000 million people. On reflection, certain strategies can serve the poor and simultaneously make profits. Prahalad (2002), analyzing the India experience, has suggested some mind-set changes for converting the poor into active consumers. The first of these is seeing the poor as an opportunity to innovate rather than as a problem. A specific means for attending to the bottom of the economic pyramid is disruptive innovation. Disruptive innovations (Christensen and Overdorf, 2000; Christensen et al., 2001) are products or services that do not have the same capabilities and conditions as those being used by customers in the mainstream markets; as a result they can be introduced only for new or less demanding applications among non-traditional customers, with a low-cost production and adapted to the necessities of the population. For example a telecommunications company inventing a small cellular telephone system with lower costs but also with less service adapted to the base of the economic pyramid. Disruptive innovations can improve the social and economic conditions at the ‘‘base of the pyramid’’ and at the same time they create a competitive advantage for the firms in telecommunications, consumer electronics and energy production and many other industries, especially in developing countries (Hart and Christensen, 2002; Prahalad and Hammond, 2002). Cause-related marketing Cause-related marketing has been defined as ‘‘the process of formulating and implementing marketing activities that are characterized by an offer from the firm to contribute a specified amount to a designated cause when customers engage in a revenue-providing exchanges that satisfy organizational and individual objectives’’ (Varadarajan and Menon, 1988, p. 60). Its goal then is to enhance company revenues and sales or customer relationship by building the brand through the acquisition of, and association with the ethical dimension or social responsibility dimension (Murray and Montanari, 1986; Varadarajan and Menon, 1988). In a way, it seeks product differentiation by creating socially responsible attributes that affect company reputation (Smith and Higgins, 2000). Political theories A group of CSR theories and approaches focus on interactions and connections between business and society and on the power and position of business and its inherent responsibility. They include both political considerations and political analysis in the CSR debate. Although there are a variety of approaches, two major theories can be distinguished: Corporate Constitutionalism and Corporate Citizenship. Corporate constitutionalism
Davis (1960) was one of the first to explore the role of power that business has in society and the social impact of this power. In doing so, he introduces business power as a new element in the debate of CSR. He

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held that business is a social institution and it must use power responsibly. Additionally, Davis noted that the causes that generate the social power of the firm are not solely internal of the firm but also external. Their locus is unstable and constantly shifting, from the economic to the social forum and from there to the political forum and vice versa. Davis attacked the assumption of the classical economic theory of perfect competition that precludes the involvement of the firm in society besides the creation of wealth. Davis formulated two principles that express how social power has to be managed: ‘‘the social power equation’’ and ‘‘the iron law of responsibility’’. The social power equation principle states that ‘‘social responsibilities of businessmen arise from the amount of social power that they have’’ (Davis, 1967, p. 48). The iron law of responsibility refers to the negative consequences of the absence of use of power. In his own words: ‘‘whoever does not use his social power responsibly will lose it. In the long run those who do not use power in a manner which society considers responsible will tend to lose it because other groups eventually will step in to assume those responsibilities’’ (1960, p. 63). So if a firm does not use its social power, it will lose its position in society because other groups will occupy it, especially when society demands responsibility from business (Davis, 1960). According to Davis, the equation of social power responsibility has to be understood through the functional role of business and managers. In this respect, Davis rejects the idea of total responsibility of business as he rejected the radical free-market ideology of no responsibility of business. The limits of functional power come from the pressures of different constituency groups. This ‘‘restricts organizational power in the same way that a governmental constitution does.’’ The constituency groups do not destroy power. Rather they define conditions for its responsible use. They channel organizational power in a supportive way and to protect other interests against unreasonable organizational power (Davis, 1967, p. 68). As a consequence, his theory is called ‘‘Corporate Constitutionalism’’. Integrative social contract theory Donaldson (1982) considered the business and society relationship from the social contract tradition, mainly from the philosophical thought of Locke. He assumed that a sort of implicit social contract between business and society exists. This social contract implies some indirect obligations of business towards society. This approach would overcome some limitations of deontological and teleological theories applied to business. Afterwards, Donaldson and Dunfee (1994, 1999) extended this approach and proposed an ‘‘Integrative Social Contract Theory’’ (ISCT) in order to take into account the socio-cultural context and also to integrate empirical and normative aspects of management. Social responsibilities come from consent. These scholars assumed two levels of consent. Firstly a theoretical macrosocial contract appealing to all rational contractors, and secondly, a real microsocial contract by members of numerous localized communities. According to these authors, this theory offers a process in which the contracts among industries, departments and economic systems can be legitimate. In this process the participants will agree upon the ground rules defining the foundation of economics that will be acceptable to them.
The macrosocial contract provides rules for any social contracting. These rules are called the ‘‘hyper- norms’’; they ought to take precedence over other contracts. These hyper-norms are so fundamental and basic that they ‘‘are discernible in a convergence of religious, political and philosophical thought’’ (Donaldson and Dunfee, 2000, p. 441). The microsocial contracts show explicit or implicit agreements that are binding within an identified community, whatever this may be: industry, companies or economic systems. These microsocial contracts, which generate ‘authentic norms’, are based on the attitudes and

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behaviors of the members of the norm-generating community and, in order to be legitimate, have to accord with the hyper-norms. Corporate citizenship In the 80s the term ‘‘corporate citizenship’’ was introduced into the business and society relationship mainly through practitioners (Altman and Vidaver- Cohen, 2000). Since the late 1990s and early 21st century this term has become more and more popular in business and increasing academic work has been carried out (Andriof and McIntosh, 2001; Matten and Crane, in press). Although the academic reflection on the concept of ‘‘corporate citizenship’’, and on a similar one called ‘the business citizen’, is quite recent (Matten et al., 2003; Wood and Logsdon, 2002; among others), this notion has always connoted a sense of belonging to a community. Perhaps for this reason it has been so popular among managers and business people, because it is increasingly clear that business needs to take into account the community where it is operating. The term ‘‘corporate citizenship’’ cannot have the same meaning for everybody. Matten et al. (2003) have distinguished three views of ‘‘corporate citizenship’’: (1) a limited view, (2) a view equivalent to CSR and (3) an extended view of corporate citizenship, which is held by them. In the limited view ‘‘corporate citizenship’’ is used in a sense quite close to corporate philanthropy, social investment or certain responsibilities assumed towards the local community. The equivalent to CSR view is quite common. Carroll (1999) believes that ‘‘Corporate citizenship’’ seems a new conceptualization of the role of business in society and depending on which way it is defined, this notion largely overlaps with other theories on the responsibility of business in society. Finally, in the extended view of corporate citizenship (Matten et al., 2003, Matten and Crane, in press), corporations enter the arena of citizenship at the point of government failure in the protection of citizenship. This view arises from the fact that some corporations have gradually come to replace the most powerful institution in the traditional concept of citizenship, namely government. Integrative theories This group of theories looks at how business integrates social demands, arguing that business depends on society for its existence, continuity and growth. Social demands are generally considered to be the way in which society interacts with business and gives it a certain legitimacy and prestige. As a consequence, corporate management should take into account social demands, and integrate them in such a way that the business operates in accordance with social values. So, the content of business responsibility is limited to the space and time of each situation depending on the values of society at that moment, and comes through the company’s functional roles (Preston and Post, 1975). In other words, there is no specific action that management is responsible for performing throughout time and in each industry. Basically, the theories of this group are focused on the detection and scanning of, and response to, the social demands that achieve social legitimacy, greater social acceptance and prestige. Issues management
Social responsiveness, or responsiveness in the face of social issues, and processes to manage them within the organization (Sethi, 1975) was an approach which arose in the 70s. In this approach it is crucial to consider the gap between what the organization’s relevant publics expect its performance to be and the organization’s actual performance. These gaps are usually located in the zone that Ackerman (1973, p. 92) calls the ‘‘zone of discretion’’ (neither regulated nor illegal nor sanctioned) where the company receives some unclear signals from the environment. The firm should perceive the gap and choose a response in order to close it (Ackerman and Bauer, 1976). Ackerman (1973), among other scholars, analyzed the

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relevant factors regarding the internal structures of organizations and integration mechanisms to manage social issues within the organization. The way a social objective is spread and integrated across the organization, he termed ‘‘process of institutionalization’’. According to Jones (1980, p. 65), ‘‘corporate behavior should not in most cases be judged by the decisions actually reached but by the process by which they are reached’’. The concept of ‘‘social responsiveness’’ was soon widened with the concept ‘‘Issues Management’’. The latter includes the former but emphasizes the process for making a corporate response to social issues. Issues management has been defined by Wartick and Rude (1986, p. 124) as ‘‘the processes by which the corporation can identify, evaluate and respond to those social and political issues which may impact significantly upon it’’. They add that issues management attempts to minimize ‘‘surprises’’ which accompany social and political change by serving as an early warning system for potential environmental threats and opportunities. Further, it prompts more systematic and effective responses to particular issues by serving as a coordinating and integrating force within the corporation. Issues management research has been influenced by the strategy field, since it has been seen as a special group of strategic issues (Greening and Gray, 1994), or a part of international studies (Brewer, 1992). That led to the study of topics related with issues (identification, evaluation and categorization), formalization of stages of social issues and management issue response. Other factors, which have been considered, include the corporate responses to media exposure, interest group pressures and business crises, as well as organization size, top management commitment and other organizational factors. The principle of public responsibility Preston and Post (1975, 1981) criticized a responsiveness approach and the purely process approach (Jones, 1980) as insufficient. Instead, they proposed ‘‘the principle of public responsibility’’. They choose the term ‘‘public’’ rather than ‘‘social’’, to stress the importance of the public process, rather than personal-morality views or narrow interest groups defining the scope of responsibilities. They added that ‘‘public policy includes not only the literal text of law and regulation but also the broad pattern of social direction reflected in public opinion, emerging issues, formal legal requirements and enforcement or implementation practices’’ 58 Elisabet Garriga and Dome`nec Mele´ (Preston and Post, 1981, p. 57). This is the essence of the principle of public responsibility. Preston and Post analyzed the scope of managerial responsibility in terms of the ‘‘primary’’ and ‘‘secondary’’ involvement of the firm in its social environment. Primary involvement includes the essential economic task of the firm, such as locating and establishing its facilities, procuring suppliers, engaging employees, carrying out its production functions and marketing products. It also includes legal requirements. Secondary involvements come as consequence of the primary. They are, e.g., career and earning opportunities for some individuals, which come from the primary activity of selection and advancement of employees. Stakeholder management
Instead of focusing on generic responsiveness, specific issues or on the public responsibility principle, the approach called ‘‘stakeholder management’’ is oriented towards ‘‘stakeholders’’ or people who affect or are affected by corporate policies and practices. Although the practice of stakeholder management is long- established, its academic development started only at the end of 70s (see, e.g., Sturdivant, 1979). In a

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seminal paper, Emshoff and Freeman (1978) presented two basic principles, which underpin stakeholder management. The first is that the central goal is to achieve maximum overall cooperation between the entire system of stakeholder groups and the objectives of the corporation. The second states that the most efficient strategies for managing stakeholder relations involve efforts, which simultaneously deal with issues affecting multiple stakeholders. Stakeholder management tries to integrate groups with a stake in the firm into managerial decision making. In recent times, corporations have been pressured by non-governmental organizations (NGOs), activists, communities, governments, media and other institutional forces. These groups demand what they consider to be responsible corporate practices. Now some corporations are seeking corporate responses to social demands by establishing dialogue with a wide spectrum of stakeholders. Stakeholder dialogue helps to address the question of responsiveness to the generally unclear signals received from the environment. In addition, this dialogue ‘‘not only enhances a company’s sensitivity to its environment but also increases the environments understanding of the dilemmas facing the organization’’ (Kaptein and Van Tulder, 2003 p. 208). Corporate social performance A set of theories attempts to integrate some of the previous theories. The corporate social performance Corporate Social Responsibility (CSP) includes a search for social legitimacy, with processes for giving appropriate responses. Carroll (1979), generally considered to have introduced this model, suggested a model of ‘‘corporate performance’’ with three elements: a basic definition of social responsibility, a listing of issues in which social responsibility exists and a specification of the philosophy of response to social issues. Carroll considered that a definition of social responsibility, which fully addresses the entire range of obligations business has to society, must embody the economic, legal, ethical, and discretionary categories of business performance. He later incorporated his four-part categorization into a ‘‘Pyramid of Corporate Social Responsibilities’’ (Carroll, 1991). Recently, Schwartz and Carroll (2003) have proposed an alternative approach based on three core domains (economic, legal and ethical responsibilities) and a Venn model framework. The Venn framework yields seven CSR categories resulting from the overlap of the three core domains. Ethical theories There is a fourth group of theories or approaches focus on the ethical requirements that cement the relationship between business and society. They are based on principles that express the right thing to do or the necessity to achieve a good society. As main approaches we can distinguish the following. Normative stakeholder theory
Stakeholder management has been included within the integrative theories group because some authors consider that this form of management is a way to integrate social demands. However, stakeholder management has become an ethically based theory mainly since 1984 when Freeman wrote Strategic Management: a Stakeholder Approach. In this book, he took as starting point that ‘‘managers bear a fiduciary relationship to stakeholders’’ (Freeman, 1984, p. xx), instead of having exclusively fiduciary duties

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towards stockholders, as was held by the conventional view of the firm. He understood as stakeholders those groups who have a stake in or claim on the firm (suppliers, customers, employees, stockholders, and the local community). In a more precise way, Donaldson and Preston (1995, p. 67) held that the stakeholder theory has a normative core based on two major ideas (1) stakeholders are persons or groups with legitimate interests in procedural and/or substantive aspects of corporate activity (stakeholders are identified by their interests in the corporation, whether or not the corporation has any corresponding functional interest in them) and (2) the interests of all stakeholders are of intrinsic value (that is, each group of stakeholders merits consideration for its own sake and not merely because of its ability to further the interests of some other group, such as the shareowners). Universal rights Human rights have been taken as a basis for CSR, especially in the global market place (Cassel, 2001). In recent years, some human-rights-based approaches for corporate responsibility have been proposed. One of them is the UN Global Compact, which includes nine principles in the areas of human rights, labor and the environment. It was first presented by the United Nations Secretary- General Kofi Annan in an address to The World Economic Forum in 1999. In 2000 the Global Compact’s operational phase was launched at UN Headquarters in New York. Many companies have since adopted it. Another, previously presented and updated in 1999, is The Global Sullivan Principles, which has the objective of supporting economic, social and political justice by companies where they do business. The certification SA8000 (www.cepaa.org) for accreditation of social responsibility is also based on human and labor rights. Despite using different approaches, all are based on the Universal Declaration of Human Rights adopted by the United Nations general assembly in 1948 and on other international declarations of human rights, labor rights and environmental protection. Although for many people universal rights are a question of mere consensus, they have a theoretical grounding, and some moral philosophy theories give them support (Donnelly, 1985). It is worth mentioning the Natural Law tradition (Simon, 1992), which defends the existence of natural human rights (Maritain, 1971). Sustainable development
Another values-based concept, which has become popular, is ‘‘sustainable development’’. Although this approach was developed at macro level rather than corporate level, it demands a relevant corporate contribution. The term came into widespread use in 1987, when the World Commission on Environment and Development (United Nations) published a report known as ‘‘Brutland Report’’. This report stated that ‘‘sustainable development’’ seeks to meet the needs of the present without compromising the ability to meet the future generation to meet their own needs’’ (World Commission on Environment and Development, 1987, p. 8). Although this report originally only included the environmental factor, the concept of ‘‘sustainable development’’ has since expanded to include the consideration of the social dimension as being inseparable from development. In the words of the World Business Council for Sustainable Development (2000, p. 2), sustainable development ‘‘requires the integration of social, environmental, and economic considerations to make balanced judgments for the long term’’. Numerous definitions have been proposed for sustainable development (see a review in Gladwin and Kennelly 1995, p. 877). In spite of which, a Corporate Social Responsibility content analysis of the main definitions

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suggests that sustainable development is ‘‘a process of achieving human development in an inclusive, connected, equiparable, prudent and secure manner.’’ (Gladwin and Kennelly 1995, p. 876). The common good approach This third group of approaches, less consolidated than the stakeholder approach but with potential, holds the common good of society as the referential value for CSR (Mahon and McGowan, 1991; Velasquez, 1992). The common good is a classical concept rooted in Aristotelian tradition (Smith, 1999), in Medieval Scholastics (Kempshall, 1999), developed philosophically (Maritain, 1966) and assumed into Catholic social thought (Carey, 2001) as a key reference for business ethics (Alford and Naughton, 2002; Mele´, 2002; Pope John Paul II, 1991, #43). This approach maintains that business, as with any other social group or individual in society, has to contribute to the common good, because it is a part of society. In this respect, it has been argued that business is a mediating institution (Fort, 1996, 1999). Business should be neither harmful to nor a parasite on society, but purely a positive contributor to the wellbeing of the society. Business contributes to the common good in different ways, such as creating wealth, providing goods and services in an efficient and fair way, at the same time respecting the dignity and the inalienable and fundamental rights of the individual. Furthermore, it contributes to social well-being and a harmonic way of living together in just, peaceful and friendly conditions, both in the present and in the future (Mele´, 2002). Approaches of CSR Business has a long term liability towards society and environment; this may be in the wake of its strong link with various components of environment and society. While business explores resources and fetches profit from the people, it has the liability to ‘give something in return’. Even though this may be the core notion behind CSR, times taught business entities to think beyond CSR and to behave more responsibly. Researchers have identified the reasons why firms develop CSR strategies, such as reputation improvement, government regulations, competitive advantage, stake holder pressure, critical events and top management pressure (Hall and Vredenburg, 2004; Kassins and Vafeas, 2006; Chih Hung Chen and Winai Wonsgurawat, 2011.). The selection of issues under CSR by organisations depends on host of factors including organisational mandate, current relevance of issues and demand from the community. The priority areas are covered under CSR initiatives include education (82 percent),environment (81 per cent), health (81 per cent), women empowerment (63 per cent), livelihood promotion (62 per cent), sanitation (61 per cent), microfinance (60 per cent), HIV/ AIDS (54 per cent), child care (55 per cent), slum improvement (50 per cent), disaster management (44 per cent) and agricultural development (29 per cent). (Survey; Times Foundation and TNS, 2010). Other than CSR initiatives, business enterprises are striving to depict its commitment, transparency, accountability and governance practices to enhance its brand image and competitiveness through Global Reporting Initiative and Sustainability Reports. CSR and Inclusive Approach
In order to ensure equality and justice in the society, more attention is vital to cater the needs of neglected and underprivileged sections of the community. The recently published 12th plan period approach paper was titled ‘faster, sustainable and inclusive’ growth. Inclusive development, inclusive

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growth and inclusive banking are some of the key strategies of the Government to make certain that all are benefitting. Contradict to this, 650 million people (53.7% of population) living in poverty - 340 million (28.6%) in severe poverty and 198 million people (16.4% of the population) are vulnerable to poverty (Poverty and Human Development Initiative, Oxford). India is the country with largest number of stunted (31%), wasted and underweight (42%) children in the world (HuNGama Report, 2011). One in three malnourished children worldwide is found in India (UNICEF). India recorded the highest number of deaths due to premature births (Born Too Soon: The Global Action Report on Pre-Term Birth, 2012). India accounted for 47 per cent of Measles deaths in 2010 (WHO, The Lancet, 23 April, 2012). Lack of health service and adequate nutrition emerges as serious cause of concerns. It is true that government is very keen to consider various social evils and implemented myriad schemes to surpass these issues. Whereas many of them are fruitful, rampant corruption and policy paralysis are drowning people to severe peril. As per the Transparency International Report, India ranked 83 out of 172 countries in the corruption index. At the same time, as a result of neo liberal policies of government corporate are now in the race to fetch public resources with fewer prices. In this back ground business need to be more transparent and should play a vital role in social development. In order to extend the services of the Government and to fill the existing lacuna, corporate and business enterprises can contribute a lot for inclusive development of the country. CSR and Triple Bottom Line (TBL) approach
The conspicuous concept Triple Bottom Line (TBL) model contributes a large towards sustainable development initiatives. TBL is the totality of the corporation’s financial, social, and environmental performance in conducting its business. It envisions a holistic approach that reiterates the responsibility of business towards society, economy and environment. Attaining sustainability requires stabilizing or reducing the environmental burden, keeping business people friendly by maximizing social benefit and making the business economically feasible. This was the Sustainable development conceptualized by the Brundtland Commision Report in 1987 – ‘meeting the needs of the present generation without compromising the ability of future generations to meet their own needs’ and it is now commonly paraphrased. United Utilities defines sustainability as ‘development that conserves natural resources, protects and enhances the environment, support the communities we serve, and maintains economic growth, for AMEAC, ‘a commitment to acting responsibly in all that we do, whilst talking into account the concerns of our stake holders’. The Global Compact Programme, 2000, announced by Mr Kofi Annan, is now considered as the model of social responsibility of corporate all over the world and its sustainability approach is globally acclaimed. The United Nations' Millennium Development Goals (MDGs) and the Water, Energy, Health, Agriculture, and Biodiversity (WEHAB) agenda of the UN Secretary General are also deemed as essentials for bringing about a solution to the basic problems facing our society and environment. Therefore, responsible actions of business can tackle multiple problems in the society by incorporating different dimensions of economy and environment. There are several bodies now emerging on the Indian scene that focus on issues of CSR. For instance, the Corporate Roundtable on Development of Strategies for the Environment and Sustainable Development - Business Council for Sustainable Development (CoRE-BCSD) of India is a grouping of Indian corporate trying collectively and individually to build in sustainable development concepts into their operations (EMC, 2005). The efforts of Ministry of

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Corporate Affairs, Confederation of Indian Industries (CII), Times Foundation, EU – India CSR Network etc are laudable. CSR and Participatory Approach
Participation is considered as one of the success factors of effectiveness and mission accomplishment. People democracy, works committee, community involvement, industrial democracy and employee participation are evolved from this ideology. The same has been enshrined in our constitution especially through 73rd and 74th amendments which provided constitutional guarantee to the formation of Panchayath at village and other levels (Grama Sabha). Similarly, there is no expectation in the case of CSR implementation. CSR defined by the World Business Council for Sustainable Development (1999) gives a stakeholder dimension – ‘the commitment of business to contribute to sustainable economic development, working with employees, their families, local community and society at large to improve their quality of life’. Another definition states as ‘Corporate social responsibility is the overall relationship of the corporation with all of its stakeholders. These include customers, employees, communities, owners/investors, government, suppliers and competitors. Elements of social responsibility include investment in community outreach, employee relations, creation and maintenance of employment, environmental stewardship and financial performance’ (Khoury et al., 1999). The stakeholder theory of CSR put forwarded by Freeman (1984) describes the role of primary and secondary stake holders. The business community can make tremendous contributions in the well being of our nation in partnership with local people, NGO’s, Governemnt and different philanthropists. In order to understand the ground realities and people needs, a strong participatory approach is essential. This will help to create a win - win situation by maintaining a strong and long lasting partnership with different stake holders. The diagram shown above (IBM Institute) depicts the participation of different stake holders in CSR initiatives. It is apparent that a healthy collaboration among business, Government and community is very essential in CSR projects.
During this period, expectations of people have increased enormously along with their demands focusing on unemployment, health, social infrastructure, education and poverty alleviation. Pressure groups like NGO’s and Community organizations are successfully persuading corporate to fund various CSR schemes. However, the efforts of Governments may not be adequate to provide basic services to its citizens. It is being increasingly recognized that progress and welfare of a society is not only the responsibility of the Government alone, but many more stakeholders need to be involved to attain the development goal (Save the Children Sweden, 2007). The corporate sector has a pivotal role to play in ensuring private investment flows to those rural areas that have been left out of the development process so far and also to work for sustainable development of rural areas in general. (Corporate Social Responsibility in Rural Development

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Sector: Evidences from India, Sanjay Pradhan, Akhilesh Ranjan) . At the same time, it is essential to understand the actual needs of society rather than creating a doom effect through CSR. Triple Bottom Line Approach The triple bottom line (TBL or 3BL) also known as people, planet, profit or the three pillars captures an expanded spectrum of values and criteria for measuring organizational (and societal) success: economic, ecological, and social. With the ratification of the United Nations and ICLEI TBL standard for urban and community accounting in early 2007, this became the dominant approach to public sector full cost accounting. Similar UN standards apply to natural capital and human capital measurement to assist in measurements required by TBL, e.g. the EcoBudget standard for reporting ecological footprint. In the private sector, a commitment to corporate social responsibility (CSR) implies a commitment to some form of TBL reporting. This is distinct from the more limited changes required to deal only with ecological issues. Triple bottom line (TBL) accounting expands the traditional reporting framework to take into account social and environmental performance in addition to financial performance. In 1981 Freer Spreckley first articulated the triple bottom line in a publication called 'Social Audit - A Management Tool for Co-operative Working. In this work, he argued that enterprises should measure and report on social, environmental and financial performance. The phrase was coined by John Elkington in his 1997 book Cannibals with Forks: the Triple Bottom Line of 21st Century Business. Sustainability, itself, was first defined by the Brundtland Commission of the United Nations in 1987. 1988 also marked the foundation of the Triple Bottom Line Investing group by Robert J. Rubinstein, a group advocating and publicizing these principles. The concept of TBL demands that a company's responsibility lies with stakeholders rather than shareholders. In this case, "stakeholders" refers to anyone who is influenced, either directly or indirectly, by the actions of the firm. According to the stakeholder theory, the business entity should be used as a vehicle for coordinating stakeholder interests, instead of maximizing shareholder (owner) profit. (Source: Wikipedia accessed 20/09/2012)
Environmental and Social Issues
Deforestation
It is estimated that total industrial roundwood consumption in India could exceed 70 million m3 per year by the end of the decade (350,000 large shipping containers), while domestic supply would fall short of this figure by an estimated 14 million m3.
Pollution Increasing competition for water among various sectors, including agriculture, industry, domestic, drinking, energy generation and others, is causing this precious natural resource to dry up. Increasing pollution is also leading to the destruction of the habitat of wildlife that lives in waterways.
• Loss of Biodiversity and Extinctions
• Climate Change Affects Biodiversity
• Climate Change and Global Warming

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