The World Business Council for Sustainable Development in its publication “Making Good Business Sense” by Lord Holme and Richard Watts, used the following definition. “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”The same report gave some evidence of the different perceptions of what this should mean from a number of different societies across the world. Definitions as different as “CSR is about capacity building for sustainable livelihoods. It respects cultural differences and finds the business opportunities in building the skills of employees, the community and the government” from Ghana, through to “CSR is about business giving back to society” from the Phillipines.

Traditionally in the United States, CSR has been defined much more in terms of a philanthropic model. Companies make profits, unhindered except by fulfilling their duty to pay taxes. Then they donate a certain share of the profits to charitable causes. It is seen as tainting the act for the company to receive any benefit from the giving.

The European model is much more focused on operating the core business in a socially responsible way, complemented by investment in communities for solid business case reasons. Personally, I believe this model is more sustainable because:

1. Social responsibility becomes an integral part of the wealth creation process – which if managed properly should enhance the competitiveness of business and maximize the value of wealth creation to society.
2. When times get hard, there is the incentive to practice CSR more and better – if it is a philanthropic exercise which is peripheral to the main business, it will always be the first thing to go when push comes to shove.

Corporate scandals at Enron, WorldCom and others made people distrust big businesses and this increased government regulations. This apart, Non-Governmental Organisations (NGOs) started criticizing and battling with MNCs. The trend of rankings and ratings also pressurized companies to report their non-financial performance along with financial results. And, of late, media is observing companies closely. Embarrassing news anywhere in the world – say, a child sewing a cloth with a company’s brand on it – can be broadcasted across the world instantly. Relatively, customers are increasingly concerned about the companies’ impact on society including that on the physical environment, impact of products on the consumers, etc., as customers have become more aware of these issues through mass media.

Click here to read the Corporate Social Responsibility at TESCO

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