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Who Says there is No Money in CSR?

Case Study Reference No. CSR0061 This case was written by Raghava Krishna Neti under the direction of Saradhi K. Gonela, Icfai Business School Case Development Centre. It is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. This case was compiled from published sources. Copyright 2009, Icfai Business School Case Development Centre No part of this publication may be copied, reproduced or distributed, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or medium electronic, mechanical, photocopying, recording, or otherwise without the permission of Icfai Business School Case Development Centre.

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Who Says There is No Money in CSR?

Who Says there is No Money in CSR?

Corporate social responsibility is not just about managing, reducing and avoiding risk, it is about creating opportunities, generating improved performance, making money and leaving the risks far behind.1 Sunil Misser, Head of Global Sustainability Practice, PwC It is for governments not firms to decide questions of social, environmental and industrial policy- and governments should know that if they fail in that duty, the psychotic corporation, quite like hiding behind CSR, will continue to rape and pillage.2 Joel Bakan, Law School Professor

CSR is one of the most debated topics with diversified opinions. Compulsions from ethical consumer groups and growing popularism of environmental friendly products forced organisations to adopt Corporate Social Responsibility (CSR) as a part of business policy. Many companies have demonstrated that implementation of CSR would result in a win-win situation for both the society and companies and ensure long-term sustainability to the organisations. Corporate houses have understood that implementation of CSR in their core activities will improve their operational efficiencies, contributing to the growth of the bottom-line, develop new business models and create competitive advantage all of these aspects resulting in business sustainability. However, critics feel social welfare is the responsibility of the elected governments along with social organisations and there is no defined role for corporates in social welfare. They also argue that inclination of corporates towards CSR is unethical as it compromises the shareholders interests and drives the resources away from the basic principle of business, i.e., maximisation of shareholders wealth. However, withstanding these criticisms business houses across the globe are increasingly adopting CSR initiatives for varied reasons.

Circumstances that forced organisations to adopt CSR in business policy

Ethical consumerism, the enforcer of CSR, has evolved in the late 1960s and gained significance in 1970s. Two major changes have been observed in the buying behaviour of consumers during that period, adhering to positive buying and boycotting or avoiding the products that did not meet perceived social and ethical norms. Since 1970s consumers have been manifesting their adherence to ethics by purchasing only products that were fair trade certified cruelty free, organic, recycled, re-used and to some extent preferring locally produced goods. Consumers groups became active and boycotted the goods from those corporations that are not adhering to these standards during the production process. Due to these changes in consumers, many environmental or social issues that started as small regional problems have turned into major troubles for the organisations that have not responded or sensed the situation. As NGOs and voluntary organisations were very critical of these, serious implications followed. Many an instance is found from the 1970s. In 1971, ethical consumer groups in California have targeted Adidas for its use of Kangaroo skin in sports shoes3, Adidas was also accused of creating sub-standard working conditions in its factories in South Asia and African countries,
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Quotations from Business and Thought leaders on Ethics and CSR, http://www.interpraxis.com/quotes.htm The ethics of Business, http://www.economist.com/surveys/displaystory.cfm?story_id=E1_PVVVNRG, January 20th 2005 Please boycott Adidas, the Kangaroo killers, http://www.saveabunny.com/?q=node/3375, October 16th 2007

Who Says There is No Money in CSR?

where people suffered from sexual harassment, work related illnesses, exposed to hazardous, low wages and excessive work hours4 . A campaign launched on May 8th 2006, by Hermosa workers in El Salvador accused Adidas for its delay in payment of salaries and other benefits and protested on the violation of labour laws in its factories5 . California Supreme court has given a verdict on July 30th 2007, banning the imports and use of Kangaroo rare species skin in sports shoes which has a huge impact on Adidas and its retailers6 . Adidas has unsuccessfully contested the verdict in San Francisco court. In 1980s, ethical consumer groups become more active and more critical forcing serious implications on the organisations for not adhering to safe environmental practices. In December 1984, an industrial disaster occurred in Bhopal, India, when methyl isocyanate released from a plant of Union Carbide India Limited (UCIL) killed 2,000 people and affected over 200,0007 . UCIL faced a severe criticism and resistance from the government, voluntary organisations and people which dented the organisation image. Warren Anderson, CEO and chairman of UCIL was arrested and released on bail and was charged with what is often referred as slaughter. Indian government has accused UCIL for its lapse on environmental safety measures, filed a criminal case in New York court and sued for $3 billion by inventing a legal theory called Multinational Enterprise Liability, thereby developing a new framework for monitoring the activities of the Multi National Organisations.8 Bhopal incident has been a deadly blow for UCIL operations in India, as government, local bodies and people were never convinced of UCILs safety measures and environmental policy. In 1990s, ethical consumerism gathered momentum as consumer groups succeeded in achieving stringent governmental regulations and drawing the attention of global media. The consumer groups revealed unethical and irresponsible attitude of companies, making environment sustainability and reputation of the organisation as primary aspects of purchasing decisions of consumers. In 1991, Levi-Strauss, a jeans maker was accused for illegal traffic of women from China and Thailand to work in its factories in Northern Marianas under near-bonded conditions and denied access to labour laws.9 Activists have forced Levi-Strauss to adopt a code of conduct and take-up an action plan for improving working conditions. In 1995, Shell, intending to save the sinking costs, argued that it is safer to adopt deep-sea immersion rather than on-shore dismantling of oilrigs. It wanted to submerge its obsolete oilrig in the North Sea. Green peace activists aimed at long-term interests, assessed the environmental cost, emphasised on the safety and health of the marine environment and protested Shells initiatives.10 The movement gained support of thousands of customers, and all the governments surrounding the North Sea, mounted protests and resulted in consumers across Europe boycotting products of Shell. This resulted in millions of dollars loss for the company, making it decide against sinking the rig. Subsequently, governments of North East sea nations banned on future dumping of steel-built oil installations. In 2001, Nike was targeted for its violation of labour practices in its factories, popularly known as sweat shops, in China and South Asia. This resulted in boycott of its products by ethical consumer groups in Europe and US.11 In 2004, Monsanto, Bayer and Advanta were accused of using girls under hazardous work conditions and disobedience of human laws.12 Human rights activists accused JP Morgan Chase offices role in underwriting of illegal logging in Indonesia and human rights abuses tied to Chase-funded mining operation in Peru in 2004.13 All these companies have sensed the potential threat for their survival and developed a code of conduct in-line with the demands of ethical consumers and legislations to recover their dented image. Wal-Mart has agreed an allegation in late 2003, of using hundreds of illegal immigrants for cleaning purposes in its stores, after being targeted by the social groups and NGOs in violations of federal air pollution regulations and clean water act.14 Further in 2005, Wal-Mart was accused by the Canada radio programme for paying fewer wages in its two
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Adidas, http://www.coopamerica.org/programs/responsibleshopper/company.cfm?id=180, July 8th 2008 Hermosa workers in El Salvador demand payment, http://www.unionvoice.org/studentsagainstsweat/alert-description.tcl?alert_id=1561025, May 8th 2006 Kangaroo Newsletter, Kangamail, http://www.kangaroo-protection-coalition.com/kangaroo-archives38.html, July 30th 2007 George Richard T.de, Corporate Moral Responsibility: The Bhopal Incident, http://www.unisa.edu.au/corpsocialresp/casestudies/bhopal.asp Browning Jackson B., Union Carbide: Disaster at Bhopal, http://www.bhopal.com/pdfs/browning.pdf, 2003 A Short History of the Ethical Consumer/Anti-Sweatshop Movement in the USA, http://www.organicconsumers.org/articles/article_4515.cfm, March 15th 2007 Brent Spars long saga, http://news.bbc.co.uk/1/hi/sci/tech/218527.stm, November 25th 1998 Teather David, Nike Lists Abuses at Asian Factories, The Guardian ,http://yaleglobal.yale.edu/display.article?id=5579, April 15th 2005 Biodemocracy vs Biotechnology, http://www.organicconsumers.org/newsletter/OV04autumn.htm, 2004 Baue William, Comparing Citigroup and JP Morgan chase policies: which stems illegal logging in Indonesia?, http://www.ethicalcorp.com/content.asp?ContentID=3563, March 16th 2005 Workers nabbed on immigration charges; executives facing subpoenas, http://money.cnn.com/2003/10/23/news/companies/walmart_worker_arrests/, October 23rd 2003

Who Says There is No Money in CSR?

factories in Bangladesh for violating international labour standards by employing children below 14 years for work.15 A report revealed Disneys labour rights violations in September 2007 at its 12 Chinese factories and accused for bad labour practices, which include 15-hour shifts, low wages than the prescribed level and exposing them to deadly toxins in its Chinese factories. Upon facing protests from local workers and activists, Disney has admitted its violations and designed an action plan to tackle the situation after its own investigation.16 These instances along with many others forced organisations to rethink their business policies and the need to incorporate ethical practices in their business models. Organisations recognised that long-term sustainability is possible only when well-being of society is taken care of. The policies are designed with the objective of optimum utilisation of resources and capabilities, keeping the benefit of the stake holders as a priority a considerable change from minding share-holder benefits alone. Studies and surveys have acknowledged that ethical consumer groups want to know more about the company and its policies beyond the brand. Ethical consumer groups have considered the violations of organisations seriously and boycotted their products, which affected the image and business prospects very badly. Companies recognised the negative impact of this on their business in the long term, and understood CSR can minimise these negative effects and contribute in a positive manner to the development of its workforce and community, along with enhancing reputation and profitability. Thereupon companies started incorporating CSR policies in their business policies.

Initiatives by organisations to adhere to the demands of ethical consumer

Industrial disaster in Bhopal, India in 1984 gave a severe blow to the UCIL, which celebrated 50 years of its existence in the same year. UCIL responded immediately by setting up a management task force and announced an aid of $2 million and arranging eminent medical team from abroad to treat the affected people. UCIL has committed aid of $470 million and announced a comprehensive package to deal the situation as directed by the Supreme Court of India for the relief measures.17 In April 1992, UCIL has sold its entire stake to MacLeod Russell (India) Limited for the establishment of a charitable trust and contributed for construction of local hospital. UCIL has contributed $2.2 million grant to Arizona state university to establish a vocational technical centre in Bhopal. Despite of relief measures and good will gestures, Bhopal Incident has proved how a critical incident can change the destiny of a company, when in the end UCIL has to close its operations in 1998.18 GE has adopted underperforming public high schools near its major facilities in US, contributed $250,000 over a 5 year period in 1989. It has also involved its employees to take an active role to assess the needs and to mentor both the students and teachers. A study conducted by an independent agency between 1989 1999 has noticed that, all the schools showed significant improvement especially graduation rate in four of the five worst performing schools has improved by over 30%.19 Shell, after facing severe criticism from the ethical consumers and incurring huge losses over the issue of oilrig dismantling in 1995, soon understood the importance of eco-friendly image for the sustainability of its business. Following that, the company started eco-friendly programme in 1997 and opted for a change in its environmental approach by imparting eco-friendly policies and spent significantly on its environmental and social responsibility policies. This eco-friendly policy has helped Shell in the transition of its image as eco-friendly organisation and a Zurich base sustainability asset management firm has ranked Shell as the top oil company and given AAA rating.20 Further, reduction of carbon dioxide emissions, which wasted excess oil from the oil wells in Nigeria has always been a target for Shell. An eco-friendly policy of reduction of flaring excess gas helped Shell to reduce the carbon dioxide emission as well as saved valuable gas, which improved the bottom-line of the company. By 2008, Shell expressed that it want to replicate
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Wal-Mart caught using child labour in Bangladesh, http://en.maquilasolidarity.org/en/currentcampaigns/Bangladesh/walmart, December 9th 2005 Disney violates Chinese Labour Laws: Report, http://www.breitbart.com/article.php?id=070912080154.wha6lkg6&show_article=1, September 12th 2007 Union Carbide: Disaster at Bhopal, op. cit., page 3 Statement of Union Carbide Corporation Regarding the Bhopal Tragedy, http://www.bhopal.com/ucs.htm Porter Michael E. and Kramer Mark R., Strategy and Society The Link between Competitive Advantage and Corporate Social Responsibility, http:// harvardbusinessonline.hbsp.harvard.edu/b01/en/common/item_detail.jhtml;jsessionid=KIX4N1QRGUTEAAKRGWDSELQBKE0YIISW?id=R0612D Guyon Janet, From Green to Gold Shells improving social responsibility record makes the oil giant attractive to investors, http://money.cnn.com/magazines/fortune/fortune_archive/ 2003/11/10/352855/index.htm, November 10th 2003

Who Says There is No Money in CSR?

the same practice in all its facilities. Adidas has adopted a code of conduct to confirm the environmental and social standards in June 1998.21 Adidas has collaborated with Fair Labour Association (an independent non-profit organisation to review and monitor the operations of factories), in 2001 for monitoring working conditions and factory audits in its factories. It also promoted good environmental practices and corporate governance with its suppliers and employees. As per the sustainability report in 2001 nearly 10% of the supplier factories were subject to external audit. Adidas initiated eco-friendly activities, implemented green management systems in its suppliers factories and initiated usage of ships instead of airplanes for transportation of shoes to reduce pollution. Levi-Strauss after being targeted for violation of labour laws in 1991, started an ambitious project named Eureka in 1999, sanctioned grants towards the development of human rights, labour, environmental and community.22 Nike has donated $1.5 million to Fair Labour Association in 2001 to settle the 5 year long case with Kasky, and launched a public relations campaign to create awareness about its programmes regarding education and economic development, after suffering from resentment the ethical consumers in US and Europe.23 Nike started incorporating ethical practices in its business policies and also started charitable contributions for underprivileged youth and females in developing countries to revive its image. Nike in process of restoring its lost glory formulated programmes for women and girls in developing countries and created guidelines for its advertisements keeping protests from womens groups in mind and is expected to receive a Fair Labour Association Certification. In 2006, pharmaceutical companies in their meeting with Mr. Kofi Annan, secretary general, United Nations committed for societal service in Africa. Pharmaceutical companies identified the need for their participation in AIDS pandemic in Africa to ensure their long-term sustainability through serving a most important cause of the society.24 Starbucks which was under attack from ethical consumers for non fair trade certification committed to buy certified fair-trade coffee, promoting gender equality and empowerment donated 2% of its pre-tax profits to community initiatives in 2007.25 Sensing the impact of ethical consumerism, social awareness, education, government laws, regulation and consequences on their sustainability, corporate initiated a slew of initiatives aimed at the Triple Bottom Line (TBL) benefitting the people, planet and profits, as demonstrated by Wal-Mart.

Wal-Mart Initiatives
Lee Scott, president and CEO of Wal-Mart, has initiated an environmental plan in October 2005 to boost energy efficiency, cut down on waste and reduces green house gases as part of the efforts to address the issues for which it was accused for violation earlier. Wal-Mart is working with its suppliers to make the most energy intensive products in its stores. It has set a target of 25% by 2008 and targets to launch 30% more energy efficient Flat Panel TVs by 2010. Wal-Mart is pushing suppliers to make electronics that use less energy or can easily be recycled, expecting for a great deal of re-engineering.26 Wal-Mart has discussed with its US suppliers about its new environmental policy, instructed them to use energy from renewable sources and to minimise the wastage on packaging. Wal-Mart has formulated sustainability criteria for the suppliers in accordance with its environmental plan, focused on China its single largest supplier to discuss the issues of sourcing, to reduce the waste and emissions at their factories. Wal-Mart has launched Sams choice coffee in October 2005 with eco-friendly certification, rain forest alliance apart from fair trade certification with net carbon
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Wick Ingeborg Company Profile Adidas - Salomon, http://www.cleanclothes.org/companies/adidasprofile99-11.htm Levi Strauss foundation and Levi Strauss & Co Workers Rights Grant making 19992005, http://www.levistrauss.com/Downloads/Grants.pdf Price Susannah, Nike vs Kasky case settled by $1.5 million payout, http://www.ethicalcorp.com/content.asp?ContentID=1100, September 16th 2003 Annan Kofi, AIDS PANDEMIC IS STILL OUTPACING OUR EFFORTS, BROAD PARTNERSHIP NEEDED TO STEP UP RESPONSE, SAYS SECRETARY-GENERAL AFTER MEETING WITH PHARMACEUTICAL EXECUTIVES, http://www.un.org/News/Press/docs/2006/sgsm10575.doc.htm, July 24th 2006 Brearton Steve, et al., CORPORATE SOCIAL RESPONSIBILITY: 2ND ANNUAL RANKING, http://www.globeinvestor.com/servlet/ArticleNews/story/GAM/20050225/RO3PG65, February 25th 2005 Wal-Mart pushing Chinese suppliers to go green CEO, http://www.wbcsd.org/plugins/DocSearch/details.asp?type=DocDet&ObjectId=Mjg5OTI, March 14th 2008

Who Says There is No Money in CSR?

emissions to zero. Wal-Mart aimed in its environmental policy to improve its operational efficiency and launched an annual action plan spending $500 million to improve the efficiency of truck fleet by 25% by 2007 and doubling it within next 10 years. Wal-Mart intended to reduce the green house gases by 20% by 2011, reduce energy use at stores by 30% and cut solid waste from US stores and Sams clubs by 25% by 200727 . Wal-Marts initiative of reduction in packaging saved $2.4 million in 2006 in shipping costs, 3,800 trees and 1 million barrels of oil. Wal-Mart, by installing auxiliary power units to its fleet of 7,200 trucks in 2006, estimated to have saved $26 million a year in fuel costs.28 In the process of controlling green house gas emissions from its stores, WalMart has started its own electricity company in Texas called Texas Retail Energy, to supply its stores with cheap power bought at wholesale prices. This proposal is expected to save $15 million annually.29 However, these initiatives of Wal-Mart fell short in pacifying the critics. National Council of Womens Organisations and the Sierra Club, US oldest environmental organisation remarked, If Wal-Mart continues to add stores at its current growth rate, its new stores alone will use significantly more energy than any of its energy saving measures will save.30 It also added that Wal-Marts out-of-town stores had contributed heavily to the more than 40 percent increase in the amount of vehicle miles American households travel for shopping urposes since 1990. 31

HUL Initiatives
Hindustan Unilever Limited (HUL) a subsidiary of Unilever, is Indias largest fast moving consumer goods company with leadership in home and personal care products and foods & beverages with annual sales of INR13, 718 crore.32 HUL has prioritised on the initiatives, which are sustainable, having long-term benefits for the business and society. HULs rural initiative Project Shakti started in 2001 aims to cover 1 lakh villages touching the lives of 100 million rural consumers by 2005. Shakti is initiated to create opportunities for rural women to live in improved overall standard of living in their families. Project Shakti is an innovative distribution model in which entrepreneurs adopt direct sales model by taking HUL stocks on a cash and carry model basis and the required financial support will be provided by local self help groups and financial institutions. HUL collaborated with state governments to promote the products manufactured in small scale and tiny industries, guided women entrepreneurs to sell their self-made or co-operative products along with its products. The 15-month pilot project in Andhra Pradesh a southern state of India turned out to be a good learning ground for the company. First, it has helped HUL to understand the importance of local distributor as they had more information about the credit worthiness of local retailers and Shakti entrepreneurs. Second, Shakti entrepreneurs had never ventured into business, thus handholding became critical. HUL overcome this problem by creating awareness about the Shakti entrepreneur and offered incentives to villages who buy from the Shakti representative. Shakti has been extended to 80,000 villages in 15 states in 2005. By end of 2005, the project had about 25,000 women entrepreneurs in its fold where each member earns a sustainable income of about INR700 INR1, 000 per month, which is double their average household income at that period.33 Project Shakti has helped HUL to reach the areas where its conventional distribution system could not reach due to cost and accessibility constraints. HUL claimed that Project Shakti has increased its sales by around 15% in Andhra Pradesh alone, where nearly 50% of sales in come from rural areas. By the end of 2006, the company estimated Shakti to have contributed 7.5% of its total sales and 25% of rural sales. By that period, the project has also reached a break-even point on operational expenses. HUL targeted to reach 500,000 villages with 100,000 Shakti entrepreneurs
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Wal-Marts green impact, http://www.wbcsd.org/plugins/DocSearch/details.asp?type=DocDet&ObjectId=MjIzNjc, January 10th 2007 Gunther Marc, Wal-Mart sees green, http://money.cnn.com/2006/07/25/news/companies/wal-mart-short.fortune/, July 27th 2006 Souder Elizabeth, Will Wal-Mart sell electricity one day?, http://www.redorbit.com/news/science/817594/will_walmart_sell_electricity_one_day/index.html, January 28th 2007 Skapinker Michael, Virtues reward?, Financial Times, April 28th 2008 Ibid http://hul.co.in/knowus/present_stature.asp http://www.hllshakti.com/sbcms/temp15.asp

Who Says There is No Money in CSR?

reaching 600 million people in the near future. Exhibit I provides the information of sales trends of HUL in key categories and their corresponding market shares.

Exhibit I Financial Performance of HUL and Market Share of Key Categories

Year 2000 2001 2002 2003 2004 2005 2006 2007 Market Share in Soaps & Detergents (%) 40 40 45 44 45 45 47 47 Market Share in Gross PAT in % Personal Products (%) Sales INR in Crore 17 21 22 24 26 28 29 29 11392 11781 10952 11096 10888 11976 13035 14757 11.5 13.1 15.8 16.3 11.0 11.3 11.8 12.0 PAT INR in Crore 1310 1543 1730 1809 1198 1353 1538 1771

Compiled by the author from Annual Reports of the HUL

Nestle India Limited Initiatives

Nestle S.A is the worlds largest and most diversified food company with 250,000 employees, operations in 100 countries, 500 factories worldwide and offering over 8,000 varieties of products to millions of consumers. Nestle India Limited, the Indian arm of Nestle, manufactures and distributes infant food, milk products, beverages, prepared dishes & cooking aids and chocolates & confectionary. These products are offered in a host of brands such as Nescafe, Lactogen, Munch, Kit Kat, Milk Maid, Cerelac, Bar-One, Maggi and Nestea. Nestle has started its operations in India in 1912 as The Nestle Anglo-Swiss condensed Milk Company (Export) Limited, importing and selling finished products in the Indian market. After independence of India, Nestle formed Nestle India Limited and received government permission to build a diary in the northern district of Moga, Punjab. Moga is one of the most backward districts in Punjab where people are deprives of basic amenities like electricity, transportation, telephones and medical facilities. Farmers land holdings are very small and the land is poorly irrigated with infertile soil. Milk production is very limited due to fewer cattle per head, high calves death and absence of veterinary facilities. Even that low produce was bound to go waste due to lack of refrigeration, transportation and quality checks. Nestle understood the lack of basic infrastructure resulting in hindrances of establishing local sources of milk. Nestle focussed on creating basic infrastructure in Moga by establishing refrigerated diaries as collection points for milk in each town and trucks were arranged to collect the milk from the collection points. Nestle also engaged a team of veterinarians, nutritionists, quality experts to conduct awareness and training sessions to farmers to rise above their problems. Farmers were recipient to the initiatives resulting in higher yields of milk production, improving productivity from 6.4 kg to 10.7 kg per farmer (Exhibit II) and 75% reduction in calves death.34 Also, these initiatives encouraged many new farmers toward the dairy industry. Nestles initiative resulted in stable supply of high quantities of milk and helped the company to remove the middlemen in its operations thereby gain control over margins, which enabled them to pay more to farmers than the prescribed rates. Remarkable rise in incomes transformed Moga as a district of higher standard of living and ninety percent of

Strategy and Society The Link between Competitive Advantage and Corporate Social Responsibility, op. cit., page 5

Who Says There is No Money in CSR?

Exhibit II Suppliers Productivity Comparison During the Period 19801981 to 2002

(in %)

Suppliers Category Farm labourers (below 2kg/day) Very small farmers (25 kg/day) Small farmers (510 kg/day) Average farmers (1025 kg/day) Large farmers (2550/day) Very large farmers (above 50 kg/day)

No. (19801981) 27.31 40.50 22.55 8.48 0.95 0.20

Qty. (19801981) 6.53 27.74 31.85 24.46 6.36 3.05

No. (2002) 14.78 26.88 26.47 24.36 5.82 1.59

Qty. (2002) 1.68 9.05 18.72 36.60 19.19 14.75

Source: Damodaran Harish, Nestle renders new look to dairying in Punjab, http://www.thehindubusinessline.com/2003/11/08/stories/ 2003110800831100.htm, November 8th 2003

homes have electricity, telephones, educational facilities and better medical facilities. The increased purchasing power of local farmers has also greatly expanded the market for Nestles products. Nestle want to replicate the same initiative in other developing countries which include China and Brazil.

Some Other Torch Bearers of CSR

In 1991, Marriott, a hotel group in the US, combined with local community service organisations, who selected chronic unemployed candidates, provided paid classroom, on-job training and later recruited them into hospitality sector at the entry level. After one year, Marriott observed that retention rate is remarkable and nearly 65% are still working with their firms. Marriott felt this initiative is impressive as it provide a good platform for recruitments at lower cost and turned out to be major benefit to the communities.35 Microsoft has identified that community colleges face challenges in IT curriculum, obsolete technology in the classroom and above all unequipped faculty which finally created shortage of programmers, hitting the interests of IT industry in US. Microsoft initiated a $50 million 5 year programme in April 2007, partnered with American Association of Community Colleges (AACC) to update the IT curriculum, modernise the classroom technology and creating faculty development institutes to equip them. Microsofts initiative has solved the problem of shortage of IT manpower and created a talented pool for recruiters.36 For Microsoft this initiative resulted in savings of recruitment costs and decline in project delays. P.H.Glatfelter, a paper manufacturer started an on-site clinic for its 1,700 workers in Chillicothe, Ohio. A year after it was observed that the company has reduced the costs about $2.1 million. Data from the clinic pointed that only 4% of patients are referred to specialist and 25% to surrounding community clinics. After the commission of on-site clinic in the factory premises it is observed that the usage of prescription drugs was reduced by 5% saved $130,000 to the company.37 Toyota followed suit by starting a 20,000 sq. mt. medical centre investing $9 million near its San Antonio

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Rogovsky Nikolai, Corporate Community at Involvement programmes: Partnerships for Jobs & Development, http://www.ilo.org/public/english/bureau/inst/papers/2000/dp116/ index.htm, 2000 Ibid. Welch David, Health-Care Reform, Corporate-Style, http://www.businessweek.com/magazine/content/08_32/b4095000246100.htm?campaign_id=rss_daily, July 29th 2008

Who Says There is No Money in CSR?

factory, in 2006, for its workers. Toyota is expected to save mllions over the next decade as productivity of the employees is expected to increase and also result in reduced absenteeism. Rosenbluth, president Walgreens Health and Wellness division says every dollar invested in setting up an on-site clinic will return $3$5 and chances of personalised attention on the workers will be improved. Not only organisations, countries, governments and the people were made responsible for the environmental changes especially changing the planets climate. Uncontrolled emissions of harmful of gases to the environment have resulted in an increase of about 1.1 degrees Fahrenheit to the average temperature.38 To address this crucial issue, Kyoto protocol was adopted focusing on imposing economic measures like taxes or stricter trading systems emphasising on reduction of carbon dioxide emissions. This model proposes spending $800 billion, by various parties, over 100 years on mitigating emissions. The target, of reducing temperature by 0.4 fahrenheit by end of 21st century, if achieved will generate benefits for 90% to the investment.39 On the contrary, another model opines a narrow focus on mitigation would not solve the climate problem and added that if the same $800 billion is spent on the research & development into clean energy, the benefits will be greater than 11 times than solely spending on mitigation.40 In both the cases the conclusion is that focus on adhering to cleaner environment, following fair business practices and investments in improving the conditions of the society will yield benefits to the companies.

Assignment Questions
What is CSR? What are the different formats of delivering CSR? Is customer still the king? Analyse the role of ethical consumerism in making companies initiate CSR activities. Can CSR activities be proactive? Would CSR initiatives yield competitive advantage for companies? Discuss the impact of CSR On profitability, analyzing the evidence provided in the case study.

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Lomborg Bjorn, How to get the biggest bang for 10 Billion Bucks, The Wall Street Journal, July 29th 2008, page 15 Ibid. Ibid.