CSR Policies and their

Three-dimensional Impacts.
By Sukriti Jha & Jacqueline Pinto
Dept. of Economics
Christ University

Introduction

The World Business Council for Sustainable Development: the

continuing commitment by business to contribute to economic
development while improving the quality of life of the workforce
and their families as well as of the community and society at
large."

The concept was associated with philanthropy and was

discretionary in nature.

There is the question of whether reputation damage is a major

motivation behind the adoption of CSR policies by a
multinational.

The new Companies Bill 2011 mandated private companies to

earmark 2% of net profit in preceding three years for CSR
activities.

Literature Review
Adam Smith: By pursuing his own interest he frequently promotes that
of society more effectively than when he really intends to promote it.
Milton Friedman: there is one and only one social responsibility of
business to use its resources and engage in activities designed to
increase its profits as long as it stays within the rules of the game; which
is to say, engage in open and free competition without deception or
fraud.
Baron: Corporate Social Performance
John Elkington: Triple Botton Line
Barboza and Trejos: CSR as an Economic Model
DIHK shows that the companies that are highly motivated in actively
and purposefully assuming corporate social responsibility and follows
entrepreneurial commitment, benefits both the society and the company.
Zwart & Tulder: shows that companies that have been on thin ice
usually become leaders in the business sector concerning CSR issues.

Research
Methodology

Case-study approach using secondary data.

Four multi-nationals in the light of CSR

conflicts.

Subsequent responses and change in CSR

policies.

Source: information available on companys

website, online newspapers and nongovernmental organization (NGO) reports,
as well as academic journals and books.

Research
Objectives
1. To identify the changing roles in CSR
policies of the MNC firms in light of the
conflicts and controversies.
2. To show the three-dimensional impact of the
modified CSR policies.

The Coca Cola Company

Company Profile

Started in 1886 by Asa Candler.

By
the
1920s
internationally.

By the end of 20th century, the company was

selling its products in almost every country in
the world.

In 2005 it became the largest manufacturer,

distributor and marketer of non-alcoholic
beverages and syrups in the world.

it

began

expanding

CSR Conflicts

Presence of pesticides.

Water pollution and the over extraction of

ground water.

Monopolistic and discriminatory practices.

Labor union controversies.

FDA violations.

Three-dimensional impact
The Individual level:

Consumer campaigns & labor boycotts affect the

firms profits and sales.

Monopolistic practices affects consumer welfare.

The Social Level:

Disgruntled employees & human rights violations.

The Global Level:

Environmental impacts ground water resources

& pesticide contamination.

CSR policies and responses

post-conflicts

Adopted GRI guidelines and started reporting on

sustainability.

Initial denial of claims leading to mistrust of customers.

Later undertook damage-control measures including
publishing of Environmental Performance Report (2008).

Coca-Cola India Foundation, Anandana, to address local

water problems. Launching various community water
projects in India.

It also implemented a water stewardship programme and

set certain measurable objectives.

It has denied most of the other claims with regard to

labor charges, FDA violations and monopolistic practices.

Hindustan Unilever
Ltd

Company Profile

Incorporated in 1933 but its product have been

sold in India since 1888.

It is part of the 40 billion Euro Unilever Group

which has more than 400 brands. The group
has its presence in over 100 countries.

Indias largest FMCG company providing

services to over 700 million consumers.

The company is mentioned in the Forbes list of

Worlds Most Reputed companies in 2007.

CSR Conflicts

Indonesian deforestation controversy.

Mumbai & Assam labor conflicts.

Mercury poisoning.

Advertisements which perpetuated racism.

FDA violations.

Three-dimensional impact
The Individual level:

Consumer campaigns & labor boycotts affect

the firms profits and sales.

The Social Level:

Hurting consumer sentiments.

Ignoring health and safety standards.

The Global Level:

Environmental impacts deforestation and

mercury dumping.

CSR policies and responses

post-conflicts

The company has not undertaken any

substantial measures to address labor
conflicts. Major initiatives taken by AICUU.

Steps taken to provide medical care to the

people of Kodaikanal. But no action taken to
clean up dumping sites.

Microfinance initiative in Karnataka and

Maharashtra.

It pledged to stop its suppliers from cutting

down natural forests in Indonesia and initiated
a sustainable living plan.

Nestle

Company profile

Founded in 1866 by Henri Nestl.

Nestl was formed in 1905 by the merger of

the Anglo-Swiss Milk Company.

Nestl's products include baby food,

bottled water, breakfast cereals, coffee,
confectionery, dairy products, ice cream,
pet foods and snacks.

In 2011, Nestl was listed No. 1 in the

Fortune Global 500 as the world's most
profitable corporation.

CSR conflicts

Marketing of infant formula.

Ethiopian debt.

Melamine in Chinese milk.

Green Washing.

Zimbabwe farms.

Palm oil use & deforestation.

Health issues.

Child labor.

Three-dimensional
impact
The Individual level:

Loopholes in strategizing credit policies.

Loss of consumer trust in product safety affecting sales and

profits.

The Social Level:

Use of advertising, which contradicted conventional beliefs.

Ignoring health and safety standards.

Human rights violations (child labor accusations)

The Global Level:

Environmental impacts deforestation and green washing.

CSR policies and responses

post-conflicts

Redesigned advertising campaigns.

Change in credit policies.

Set up a new R&D facility in China.

Started the Corporate Citizenship Report in 2008.

Invited the Forest Trust to audit its supply chain.

Recalled contaminated products.

Started working with the FLA to improve working

conditions.

Summing up

All three companies began reporting

according to sustainability guidelines after
major conflicts. These guidelines are set by
different organizations, like GRI.

The companies seemed to address the

environmental issues more extensively than
the social issues.

All three companies followed certain

intended CSR policies since their inception.
But changing global scenario led to the
formation of emergent (modified) CSR
policies.

Conclusions

The responses of the multinationals to the

conflicts varied, ranging from attempting to
repair reputation damage and denying the
claims, to providing a remedy.

The case studies provide evidence that after

the multinationals experienced a conflict, the
companies made changes to their CSR policies.

Furthermore, the sustainability reports in

which the multinationals present their CSR
policies are created as long- term commitments
and not just to resolve the current conflict.

Limitations & Direction of

Research

The company's CSR contributions are not

published. Hence quantitative data
collection was limited.

Most of the conflicts faced by firms were

allegations, hence their effects could not be
measured.

The implementation of the Companies Bill

2011, will lead to more publicly available
information with regards to CSR. This is
expected to provide the required data for
further research.