Corporate Social Responsibility & Sustainable Business Practices: A ...

Proceedings of ICRBS 2015 December 4-6, 2015 Department of Management Studies, IIT Roorkee

Corporate Social Responsibility & Sustainable Business Practices: A Study of the Impact of Relationship between CSR & Sustainability Raiswa Saha1, Richa Dahiya2 1,2

Department of Management Studies, SRM University, Sonepat, Haryana, India 1 [email protected]; [email protected] 2 [email protected]

Abstract: Purpose: The purpose of this study is to show that there exists a positive correlation between Corporate Social Responsibility initiatives and adoption of sustainable business solutions. Design/Methodology/Approach: The paper surveyed top level managers and business experts of a sample of companies, representing a wide array of sectors and industries. Findings: The study finds that there is a positive correlation between CSR policies and adoption of sustainable business practices. Managerial Implications: As CSR improves the organizations performance, this study will be beneficial in terms of building professional image as well as enhance its societal roles & responsibilities. Scope for future work/research limitations: The study focuses on the roles and duties performed by the top notch companies thereby, restricting CSR practices of lower and middlelevel bodies. Future research should expand its area of study and include all the levels. Keywords: Corporate Social Responsibility, Sustainability, Corporate Sustainability, CSR practices & sustainability issues, Sustainable growth and development.

1. INTRODUCTION The economic activities have got a massive influence on our natural and human ecology. It is showing an alarming concern. According to a global research, it has revealed that the economic activities are creating huge devastating effect on the human environment on which it sustains. It has also showed that sustainable living is not only essential but is at the top priority. Ethical practices, Corporate Social Responsibility, Good Corporate Governance, Ethical codes of conduct have been in discussion from a long phase but, sustainable living is gaining popularity now in order to improve the living conditions in a more efficient and eco- friendly manner. Sustainable business practices of any enterprise have to be economically, socially and Environmentally viable so that for any short term interest it is not hampered. A company cannot run sustainable practices and CSR by simply concentrating into a closed department nor can it be done by charity. A firm

that is thriving on the resources of a region cannot recompense with charity and be called as sustainable business houses or called as sustainable business leaders. Above all country like India, where there is huge amount of poverty, unemployment, agro-based business, slow economic growth , generation of profit should be the main motive but, along with the economic gains we have to be cautious with our quality aspect also. Too much of deforestation, industrialization, emission of harmful gases, over-population we are slowly being put backward in terms of sustainability concerns. The pressure for going towards eco-friendly products, Go-Green concept has been implemented by various groups of people like NGO’s, foreign government, and host communities and lastly, the business itself demands of more sustainable solutions. CSR and Sustainability are inter-linked with each other. Industries such as mining, oil and gas who were less known for their sustainability policies have engaged themselves in different sustainable solutions. Corporate Sustainability has become a mainstream pillar of good CSR practices of a company. It is

Proceedings of International Conference on ‘Research and Business Sustainability’

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Corporate Social Responsibility & Sustainable Business Practices: A Study of the Impact of Relationship between CSR & Sustainability being reported that more than 65% of Fortune 500 companies are creating sustainability reports and including environment, social and governance impact in their reports. Sustainable, the world itself calls for far more usage of innovative and technologically efficient and practical solutions. A sustainable company is far more competitively ahead, reachable, gains popularity, attract talent, and retain long- term growth. It increases the corporate trust and reputation within the public. Compliance issues- One of the biggest challenges to cope with complexities related to environment, health and safety, consumer protection, etc. Failures may lead to mistrust. Human Resources - The most important asset of any organization. People have a tendency to work for those companies who respect their rights and interests. It is not possible for a company to attract the talent if it does not focus on the human resources. Mode of Business Operations- Making of products and services without considering sustainability issues can lead to condemnations. Many companies for example are adopting the environment sustainability process and it is being highly implemented. Some notable examples are: •

Eco initiatives by E-bay.

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Go Green approach by Starbucks

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Environmental Innovations of Google.

2. LITERATURE REVIEW The concept of CSR or Corporate Social Responsibility dates back to histories with the phenomenal work of Bowen in 1953 with his notable book “Social Responsibilities of the Businessman”. CSR has been defined as a clear set of programs, policies, practices of a business firm that are integrated in to a decision-making process. Similarly, the word Sustainable is also in practice recently. Researches have shown that there is a close association between CSR and Sustainability. The Brundtland Commission in 1987 has defined Sustainability as “satisfying the present needs without compromising the abilities of the future”. The concept of CSR have not originated from the external factors but, very much prevalent within the organizations processes. CSR and Sustainability are synonymous terms which are closely tied to each other in terms of defining social, environmental and economic factors. According to Reynard and Forstarter, 2002 CSR and Sustainability management calls for maintaining a harmonial balance between short term and long term goals. Hence, it is been regarded as a firms pledge to its stakeholders to run their businesses in a Sustainable manner that is ethical and transparent. Stakeholders can be employees, investors,

shareholders, customers, business partners, clients, civil society groups, Government or nongovernmental organizations, local communities, environment and society at large. The World Business Council for Sustainable Development in its publication “Making Good Business Sense” by Lord Holme and Richard Watts have defined “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”. In present times, sustainable development is serving as an outline under which communities can effectively use their resources, attract and retain the human resources, develop the infrastructures, environmental protection and can create new avenues of businesses across the globe. According to Crowther (2002) the broad definition of Sustainability is concerned with the actions that are taken at present has got an impact on the future. In view of Elkington (1998), sustainability development comprises of the triplebottom line approach which is the foundation of economic, ecology and social factors. In (2001) Payne and Raiborn have stated that without sustainable development, neither the society nor the business enterprises will have a future. It is the CSR and sustainability policies that take a company ahead and lead to a better future for the society. The Sustainable Development term has also been renamed as Corporate Sustainability in 2002 by Dyllick and Hockerts. They have further added that human capital and societal wellbeing increases with sustainable development. In (2005) Hopkins has propounded a concept which measures CSR in terms of Social responsibility policies, Social Responsiveness and lastly, Social Responsibility outcomes. Zambon and DelBello (2005) have argued that the stakeholder management is the inception of sustainability.

3. OBJECTIVES OF THE STUDY •

To find out the relation between CSR initiatives and Sustainable business practices.

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To find out whether companies perform CSR for societal benefit or for economic gains.

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To identify the extent to which the CSR policies being made are sustainable.

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To find out the perception of the corporate bodies regarding adoption of CSR and Sustainability practices.

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To identify whether implementation of various environment management system has a positive influence on the performances.

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To find out whether business growth depends on the motivation towards working sustainably.


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Corporate Social Responsibility & Sustainable Business Practices: A Study of the Impact of Relationship between CSR & Sustainability

4. METHODOLOGY Collection of Data The data was collected through a structured questionnaire being distributed in hand to the respondents of various companies as well as through email link. A total of seventeen questions were being made out of which eight questions deemed relevant in order to understand and find out the relation between CSR initiatives and sustainable business solutions. Three questions inquired about the perceptions and views about CSR and Sustainability. One question also addressed about the future development of CSR. Specifically, to undertake this particular study CSR and Sustainability heads of various companies were being chosen and were asked to rate their responses by using a five-point Likert’s scale by indicating the extent to which they agreed or disagreed with each statement. The questionnaire was administered to a sample of CSR managers, NGO’s, HR professionals, top-level business experts, middle-level business managers, CEO’s, business experts, CSR heads were drawn from varied industries ranging from banking and financial services, IT, power, sales/distribution, etc. using a convenience sampling

method. The questionnaire was distributed approximately to 30 different companies out of which 20 have responded. We have used content analysis in order to study the annual reports, CSR and Sustainability reports, etc. and have used the statistical tool that is, correlation method in order to find out the relation between CSR initiatives being taken and adoption of sustainable business solutions. Responses have been summed up and the results have been used for analysis and further interpretation of data. The collected data were being analyzed by using SPSS version 20. Secondary data were also used and was generated from the company’s annual reports, CSR reports, books, journals, industrial sources, past research study, websites, etc.

5. ANALYSIS AND FINDINGS Reliability testing was done and the value of Cronbach Alpha was 0.736. Reliability Statistics Cronbach’ s Alpha N of Items .736 8

Correlation Analysis


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Corporate Social Responsibility & Sustainable Business Practices: A Study of the Impact of Relationship between CSR & Sustainability

The hypotheses are: H1: Implementation of Environment Management System has a positive impact on the performances of a company in terms of sustainable development. H2: Future sustainable development is positively related to the present performances and monitoring. H3: CSR and Sustainable development is positively related to the goals of an organization. H4: Environment Impact Reduction has a positive relation with the measurement of business growth. H5: Environmental Impact Reduction has a direct relation with the motivation for developing sustainable measures. Thus, from the table we can analyze that there is a significantly high correlation between implementation of environment management system and the performances in terms of sustainable development. The value is 0.528. The degree of correlation between future sustainable development and performance, monitoring of sustainable development is quite high at 0.776. CSR and Sustainability relation is positively influencing CSR goals and the value is noted at 0.579. The correlation between environment impact reductions with motivation is quite high at 0.649. Performance and monitoring of sustainable development is positively correlated at 1% level of significance with future development and the value is 0.776 which is significantly a high value.

6. LIMITATIONS OF THE STUDY/ SCOPE OF FUTURE WORK Though, this study is exploratory and analytical it has got its own limitations. A more detailed analysis is required in order to find out what exactly the organization does. More of personal interviews can be done but, due to time constraint it is lacking. Few respondents have suggested reviewing their CSR reports in order to find out the answers. Considering these limitations, we have found an alternative of selecting those companies who publish their CSR and Sustainability reports and are active participant in various activities for social developments, community growth, enhancing the livelihood patterns, etc. For this, the responses are only restricted towards CSR and Sustainable players thereby, restricting our knowledge of CSR of non-participating companies. A more elaborative study can be done including the less known CSR players, small and medium scale enterprises can add to our results and refine the research findings. The study focuses on the roles and duties performed by the top notch companies thereby, restricting CSR practices of lower and middle-level bodies. Future research should expand its area of study and include all the levels. Next, our paper is only targeting the corporate bodies for giving the responses thereby; we could not understand the general public opinion. It is also required to understand the

expectations of the society in general. Future studies can be done on it. Given the escalating social issues in India it is essential that each and every individual join hands together and focus on improving their country in terms of better livelihood and sustenance. The gathering of information was tedious and cumbersome as companies responded only after repeated reminders. Since it was not possible to cater to all the sectors, the survey has its limitation there. Time and money were one of the major concerns.

7. CONCLUSION Today’s society demands of a more sustainable approach. A business is not only judged through its economic indicators but, also by its social factors. The traditional goal of business organizations have reshaped itself and have taken an altogether new formation. Firms are expected to play a more important role. They are expected to show ethical behavior in their corporate practices and follow the norms of doing business without hampering the growth and development of the society. Huge amount of dependency can be found between the business houses and the society in general. One cannot sustain without the other. A business enterprise can only flourish if it satisfies certain basic societal requirements. There prevails a two-way process. If we are taking so much from the environment and the society it is our endeavor to give it back. We are responsible for everything we do, either make it or break it. Sustainability or CSR is all about making accountable decisions in order to lessen the businesses adverse impact on the environment. Waste reduction or effective energy usage is not the actual intention but, it is more of concerned with the building and developing processes in which businesses can be more sustainable in the near future.

8. RECOMMENDATIONS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Infrastructure development at the project peripheries or surrounding villages. Skill development programmes for project-affected areas. Increasing attention on environmental protection. Greater emphasis on recycling and renewable energy resources. Implementing CSR activities and responsibilities on a micro-level. Linking of CSR and Sustainability issues with the organization’s mission and vision. Leveraging Community. Adopting Sustainable principles as a norm within the organization and follow it. Promoting effective means of collaboration between government bodies, publics and the business enterprises. Encouraging the firms in building their Social Responsibility Standards (SRS).


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Corporate Social Responsibility & Sustainable Business Practices: A Study of the Impact of Relationship between CSR & Sustainability 11. 12. 13. 14. 15.

Planning strategically to implement CSR and Sustainability Practices. Leveraging green technologies and standards Involving in inclusive development. Partnering with expert agencies. Lastly the most important part is monitoring in order to identify the gaps and adopting required measures.

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