• There is almost certainly some element of “public relations exercise‟ in the CSR pronouncements of companies. Given sufficient publicity, CSR can enhance the reputation of a company with its potential customers and its employees. In the long run, this can have a beneficial effect on sales which can, in turn, lead to competitive advantage
• Finding and keeping talented staff
  Being a responsible, sustainable business may make it easier to recruit new employees or retain existing ones. Employees may be motivated to stay longer, thus reducing the costs and disruption of recruitment and retraining.
• It may also be argued more generally that the CEO appears to hold the „shareholder view‟ of corporate governance – which the primary purpose of a company should be to maximise the profits of shareholders. This view may be challenged, for example, with the „enlightened stakeholder view‟ – that even if the main purpose of a company should be to increase the wealth of shareholders, concern should be shown for other stakeholder groups such as employees, customers, suppliers and society.
• Concerns for matters such as suppliers, communities and employees may help to attract investments from „ethical investors‟ – investment institutions that specialise in making investments in companies they regard as ethical in their behaviour and business activity. If so, this may have some effect in maintaining the share price.
• It keeps your company competitive. When you choose a unique position as a company, and do things differently from competitors it helps your business stand out. This applies to all facts of business, including to social responsibility. Your relationship with society is as important as your relationship with customers. Having a strong vision and connection to a cause that makes a positive impact gives you a competitive advantage.
• Reduce regulatory burden – good relationships with local authorities can often make doing business easier.
                                                                                                                                                                                  (Any 5 points)

i. Integrating the environment into capital expenditure decisions (by considering environmental opposition to projects which could affect cash flows, for example).
ii. Understanding and managing environmental costs. Environmental costs are often ‘hidden’ in overheads and environmental and energy costs are often not allocated to the relevant budgets.
iii. Introducing waste minimisation schemes
iv. Understanding and managing life cycle costs. For many products, the greatest environmental impact occurs upstream (such as mining raw materials) or downstream from production (such as energy to operate equipment). This has led to producers being made responsible for dealing with the disposal of products such as cars, and government and third party measures to influence raw material choices. Organisations therefore need to identify, control and make provision for environmental life cycle costs and work with suppliers and customers to identify environmental cost reduction opportunities.
v. Measuring environmental performance. Business is under increasing pressure to measure all aspects of environmental performance, both for statutory disclosure reasons and due to demands for more environmental data from customers.
vi. Involving management accountants in a strategic approach to environment-related management accounting and performance evaluation.

• Proactive strategy– strategy which a business follows where it is prepared to take full responsibility for its actions. A company which discovers a fault in a product and recalls the product without being forced to, before any injury or damage is caused, acts in a proactive way.
• Reactive strategy – This involves allowing a situation to continue unresolved until the public, government or consumer groups find out about it. The reactive strategy refuses all kind of CSR and then does not implement what the stakeholders expect.
• Defence strategy – This involves minimising or attempting to avoid additional obligations arising from a particular problem. The defensive strategy accepts the idea of some CSR but defines and implements only the minimum of what stakeholders expect.
• Accommodation strategy – This approach involves taking responsibility for actions, probably when one of the following happens: Encouragement from special interest groups; Perception that a failure to act will result in government intervention. The accommodating strategy integrates CSR and tries to implement what the stakeholders expect. The proactive strategy anticipates the requirements and expectations of the stakeholders, it defines objectives and implements actions going beyond what stakeholders require (this is the case of the linked and integrated CSR).

• If managers do this, they are generally speaking, spending the owners’ money for purposes other than those they have authorized; sometimes it is the money of customers or suppliers that is spent and on occasion, the money of employees. By doing this, the manager is in effect, both raising taxes and deciding how they should be spent, which are functions of government, not of business. There are two objections to this:
   Managers have not been democratically elected (or selected in any way) to exercise government power
   Managers are not experts in government policy and cannot foresee the detailed effect of such social responsibility spending.
• Businesses do not have responsibilities, only people have responsibilities. Managers in charge of corporations are responsible to the owners of the business, by whom they are employed.
• These employers may have charity as their aim, but generally their aim will be to make as much money as possible while conforming to the basic rules of the society, both of those embodied in ethical custom.
• Maximizing wealth has the effect of increasing the tax revenues available to the state to disburse on socially desirable objectives.
• If the statement that a manager has social responsibilities is to have any meaning, it must mean that he is to act in some way that is not in the interest of his employers.
• Many company shares are owned by pension funds, whose ultimate beneficiaries may not be wealthy anyway.

• Understanding and managing environmental costs. Environmental costs are often hidden in overheads and environmental and energy costs are often not allocated to the relevant budgets.
• Minimise accidents and long-term environmental effects. Accidents and long-term environmental effects can result in large financial liabilities.
• Companies with poor environmental performance may face increased cost of capital because investors and lenders demand a higher risk premium.
• Environmental protection and ethical labour practices is now a key aspect of corporate social responsibility. Any steps they can take to protect the environment and its employee’s safety are considered both good for the company’s reputation and society as a whole.
•  Pressures on businesses for environmental and safety of employees are increasing.
• Short term savings through waste minimization and energy efficiency schemes can be substantial.
                                                                                                                                                                                  (Any 4 points)

                                                                             REPORT
To: The Board of Directors
From: Corporate Affairs Manager
Date:
Subject: A Case for Corporate Social Responsibility
Introduction
Following the impasse among members of the board on the nature of the company’s philosophy and strategy on corporate social responsibility, this report was commissioned to make a case for corporate social responsibility in order to help the board to formulate an appropriate CSR strategy. Below are the arguments in favour of CSR.
i. Customer expectations – There is an increasing expectation from consumers and other stakeholders that businesses will act in a more socially responsible manner. This is a global expectation. For example, from the food they eat, to the coffee they drink and the clothes they wear, consumers are becoming more aware of the origins of the everyday things they buy, and they want to buy products that are responsibly sourced.
Given that one of the key success factors for a business is the ability to offer customers what they want, then offering products and services which are deemed to be socially responsible could help boost sales. In this respect, CSR could provide opportunities to enter new markets or develop new products.
ii. Brand name – Being seen as socially responsible can help enhance a business’s reputation and therefore its brand. Customers may prefer to deal with a business they feel is socially responsible rather than with one which is not. Therefore, CSR could actually be a source of differentiation for a business.
iii. Lower environmental costs – If firms improve the efficiency of their energy usage, for example, then as well as making lower emissions they will also have lower cost bases. If firms can achieve a lower cost base through the efficient use of resources, this could help them create or improve their competitive advantage.
More generally, firms could also find it is less costly to regulate their own activities voluntarily than ignoring social responsibility in the short term and then having to comply with statutory regulations (in the form of taxes or fines, for example) which may imposed on them later.
iv. Trade opportunities – If firms are perceived as not being socially responsible, they may find it harder to attract trading partners, or support from nations and local communities where they might want to invest.
v. Access to staff – Similarly, the way firms are perceived to treat their employees may affect their ability to attract staff. For example, firms that are perceived to offer good working conditions are likely to be able to appeal to a higher caliber of staff than firms which are perceived to offer unfavourable working conditions. In turn, a firm which is able to attract (and retain) high quality staff may be able to generate competitive advantage over a firm which is less able to recruit good quality staff.
vi. Investment and funding – A firm’s reputation may also affects its ability to attract finance, particularly from ethical investors. For example, obtaining a listing on the FTSE4Good (index of companies that meet globally recognised corporate responsibility standards) is likely to help a firm attract finance from ethical investors.
vii. Sustainable business – Taken collectively, the arguments in favour of CSR suggest that a socially responsible business is likely to be able to operate for longer in society than a less responsible one. In turn, if the business can expect more years of cash flows in the future, it might be reasonable to expect the value of the company to be higher than that of one whose future is perceived to be less secure.
                                                                                                                                                                                                  Signed

i. Proactive strategy: This is a strategy which a business follows where it is prepared to take full responsibility for its actions. It does so without being forced to do so by regulators and enforcing agencies. A company adopting this strategy would, thus, take steps to recall a product from the market after it discovers a fault in that product. It does this in order to avoid injury or damage to consuming public.

ii. Reactive strategy: This strategy involves allowing a situation to continue unresolved until the public, government or consumer groups find out about it. Unlike the proactive strategy, a company employing the reactive strategy will only withdraw a faulty product if it is forced to do so by regulators, the public or strong consumer groups – by which time the consuming public may have suffered some damage already.

iii. Defence strategy: A company that adopts this strategy would take steps to minimize or attempt to avoid additional obligations arising from a particular problem which have occurred as a result of its negative actions.

iv. Accommodation strategy: An accommodation strategy involves a company taking responsibility for actions, probably when one of the following happens:

*Encouragement from special interest groups

*Perception that a failure to act will result in government intervention

Sustainability involves developing strategies so that the company only uses resources at a rate that allows them to be replenished such that the needs of the current generation can be met without compromising the needs of future generations. At the same time, emissions of waste are confined to levels that do not exceed the capacity of the environment to absorb them.
The triple bottom line (TBL) is sometimes summarized as People, Planet, and Profit. It consist of:

• Social justice: fair and beneficial business practices towards labour and the community and the region in which a corporate conducts its business. A TBL company conceives a reciprocal social structure in which the wellbeing of corporate, labour and other stakeholder interests are interdependent.
• Environment quality: a TBL company endeavours to benefit the natural order as much as possible, or at the least do no harm and curtail environmental impact. In this way, the company tries to reduce its ecological footprint by, among other things, carefully managing its consumption of energy and non-renewable resources, and by reducing manufacturing waste, as well as rendering waste less toxic before disposing of it in a safe and legal manner.
• Economic prosperity: the economic benefit enjoyed by the host society. It is the lasting economic impact the organization has on its economic environment. Importantly, however, this is not as narrow as the internal profit made by a company or organization.