ESG

UNIT 1 - Corporate Social Responsibility

❖ Conceptual Clarity: Corporate Citizenship, CSR, Sustainability and

ESG
Corporate Citizenship: Corporate Citizenship refers to a company's responsibilities toward
society. It encompasses the ethical behavior of businesses in their relationships with
stakeholders, including employees, customers, communities, and the environment.
Examples:
• Microsoft: Committed to reducing its carbon footprint and achieving zero waste in its
operations.
• Tata Group: Engages in community development projects across India, focusing on
education, healthcare, and rural development.
Corporate citizenship has been conceptualized with various definitions in the literature. For
example, corporate citizenship was addressed as the fulfilment of responsibilities for four faces
(i.e., economic, legal, ethical, and philanthropic faces), the extent to which companies satisfy
economic, legal, ethical, and discretionary responsibilities associated with stakeholders,
understanding, and managing an organization to minimize negative and maximize positive
societal impacts, and connecting corporate activities to social accountability for mutual
benefits. Although the concepts of corporate citizenship in the literature have subtle differences
across the definitions, they are generally related to concepts such as social responsiveness,
social contribution, sustainability, and relationships. However, these concepts require further
clarification for companies and amplify the abstract conceptualization of corporate citizenship.
This hampers companies to successfully implement the role of corporate citizenship for various
stakeholders. Moreover, other corporate values closely associated with corporate citizenship
such as CSR (Corporate Social Responsibility), sustainable management, ESG
(Environmental, Social, and Governance), and social values make understanding corporate
citizenship more difficult in companies.

❖ Introduction to CSR
Corporate Social Responsibility (CSR): CSR involves businesses taking responsibility for
their impact on society. This can include initiatives in environmental conservation, social
equity, and economic development.
Examples:
• Ben & Jerry's: Known for its commitment to social causes such as climate change and
fair trade.
• Infosys: Runs the Infosys Foundation, focusing on healthcare, education, and rural
development in India.
• CSR stands for Corporate Social Responsibility. It is a concept that encapsulates the
idea that businesses should not only focus on profitability but also take responsibility
for their impact on society, the environment, and all stakeholders involved. While the
term may seem like a recent development, the roots of CSR can be traced back to the
early 20th century when companies began to acknowledge their social and

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environmental responsibilities. However, CSR has gained more prominence in recent

years as businesses recognize the importance of sustainable and socially responsible
practices.

What is CSR?
• Corporate social responsibility (CSR) is a self-regulating business model that aims to
improve society and the environment. It is a looser, general framework for corporate
behavior that can vary in terms of its implementation. The nature of CSR is qualitative,
although the ISO 26000 voluntary standard does help companies define social
responsibility and provides practical guidance for achieving it.
• Good CSR helps companies maintain a positive brand image and boosts stakeholder
morale. Companies usually highlight the achievements of their CSR efforts in annual
reporting.
• In one particularly notable example of CSR, Yvon Chouinard, the founder of apparel
company Patagonia, pledged all its future profits to an organization that fights the
climate crisis in September 2022. Money not reinvested in running the business is now
distributed to the charity. That amounts to about $100 million per year, according to
Patagonia.
• Other more conventional examples include a commitment by Starbucks to eliminate
plastic straws globally -- as reported in the "Starbucks 2021 Global Environmental &
Social Impact Report" -- and The Home Depot's commitment to improving employee
benefits, as reported in its 2021 ESG report. In another example, Better World Books,
which sells used books online, donates a book to someone in need for each book
purchased. (techtarget.com)

❖ Impact of Long-term CSR support

1. Reputation and Brand Image: CSR initiatives can enhance a company’s reputation
and brand image. Consumers increasingly prefer to support socially responsible
businesses, and a positive brand image can boost customer loyalty and trust.
2. Competitive Advantage: CSR can provide a competitive edge in the market. It can
differentiate a company from its competitors and attract customers who are more
inclined to choose products and services from responsible and ethical companies.
3. Regulatory Compliance: Compliance with CSR standards and regulations is essential.
Failing to meet these standards can lead to legal troubles and damage a company’s
reputation.
4. Risk Mitigation: CSR practices can help mitigate risks. By addressing environmental
and social issues, companies can prevent potential crises and reduce the financial and
reputational damage associated with them.
5. Employee Attraction and Retention: CSR initiatives make a company more appealing
to job seekers. Employees, particularly millennials and Gen Z, often prefer to work for

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companies that align with their values. A strong CSR program can improve recruitment
and retention rates.
6. Investor Confidence: Investors are increasingly considering CSR when making
investment decisions. Companies that demonstrate a commitment to CSR may attract
more investment and have a higher stock market valuation.
7. Cost Savings: Some CSR initiatives can result in cost savings. For instance, energy-
efficient practices can reduce utility expenses, while sustainable sourcing can lead to
lower production costs.
8. Long-term Sustainability: Embracing CSR is an acknowledgement of a company’s
long-term sustainability. By addressing social and environmental issues, businesses are
better positioned to thrive in the future.
9. Social and Environmental Impact: One of the core reasons for practicing CSR is to
make a positive impact on society and the environment. Businesses can contribute to
solving pressing global challenges, such as climate change, poverty, and inequality.
10. Ethical Values: For some companies, practicing CSR is simply the right thing to do.
Business leaders and employees may be motivated by ethical values and a sense of
responsibility to the community and the planet.

Sustainability: Sustainability is about meeting present needs without compromising the

ability of future generations to meet their needs. It involves a balanced approach to economic
growth, environmental stewardship, and social inclusion.
Examples:
• Unilever: Implements sustainable sourcing practices and aims to halve its
environmental footprint.
• IKEA: Focuses on using renewable and recycled materials in its products.

Environmental, Social, and Governance (ESG): ESG criteria are a set of standards
for a company’s operations that socially conscious investors use to screen potential
investments. Environmental criteria consider how a company performs as a steward of nature.
Social criteria examine how it manages relationships with employees, suppliers, customers,
and the communities where it operates. Governance deals with a company’s leadership,
executive pay, audits, internal controls, and shareholder rights.
Examples:
• Tesla: High ESG rating for its innovation in electric vehicles and renewable energy
solutions.
• Patagonia: Recognized for its strong environmental policies and commitment to
sustainable practices.

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❖ Leveraging social media to amplify CSR Programmes

1. Visibility and awareness: Social-media can help you raise awareness and visibility of
your CSR and engagement initiatives, goals, and achievements. You can use social
media to share your stories, videos, photos, infographics, reports, and other content that
demonstrate your commitment and impact. You can also use hashtags, keywords, and
tags to make your content more searchable and discoverable. For example, Microsoft
uses the hashtag #MicrosoftLife to display its culture, values, and social responsibility
on various social media platforms.

2. Engagement and feedback: Social-media can help you engage and interact with your
stakeholders and get their feedback and opinions. You can use social media to ask
questions, conduct polls, surveys, quizzes, and contests, invite comments, suggestions,
and reviews, and respond to queries, complaints, and compliments. You can also use
social media to encourage user-generated content, such as testimonials, reviews,
stories, and photos, that display your CSR and engagement. For example, Starbucks
uses the hashtag #ExtraShotOfGood to invite its customers to share their stories of how
they are making a positive difference in their communities with the help of Starbucks.

3. Advocacy and influence: Social-media can help you create and mobilize a network of
advocates and influencers who can amplify your CSR and engagement message and
reach. You can use social media to identify, connect, and collaborate with your existing
and potential advocates and influencers, such as celebrities, experts, leaders, bloggers,
journalists, activists, and others, who share your vision and values and can endorse,
promote, and support your CSR and engagement efforts. You can also use social media
to join and create online communities, groups, and movements that align with your CSR
and engagement goals and causes. For example, Nike uses the hashtag #JustDoIt
to inspire and empower its customers and fans to pursue their dreams and passions and
to support social causes such as equality, diversity, and inclusion.

4. Transparency and accountability: Social-media can help you demonstrate your

transparency and accountability for your CSR and engagement performance and
impact. You can use social media to share your CSR and engagement policies,
standards, guidelines, and best practices, as well as your progress, challenges,
successes, and failures. You can also use social media to disclose and report your CSR
and engagement data, metrics, indicators, and outcomes, and to benchmark and
compare your performance and impact with your peers and competitors. You can also
use social media to acknowledge and address any issues, risks, controversies, or
criticisms that may arise from your CSR and engagement activities. For example,
Unilever uses the hashtag #UnileverPurpose to share its CSR and engagement vision,
strategy, and results on various social media platforms.

• Engaging Stakeholders through Social Media Campaigns

Engaging stakeholders through social media campaigns is a crucial aspect of corporate
social responsibility and engagement. By leveraging the power of social
media platforms, companies can effectively reach and connect with their target
audience, build brand awareness, and foster meaningful relationships with
stakeholders.

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• From the perspective of customers, social media campaigns provide an opportunity for
them to engage directly with the company, voice their opinions, and participate in
discussions. This level of engagement helps in building trust and loyalty among
customers, as they feel heard and valued by the company.
• From the perspective of employees, social media campaigns can serve as a platform to
showcase the company's commitment to social causes and sustainability. This not
only boosts employee morale but also attracts top talent who align with the company's
values.
• For example - P&G: ‘Love Over Bias’ Campaign, Lacoste - ‘Save our Species’
Campaign and Google Cardboard: #prideforeveryone Campaign. For detailed
campaigns refer: 3 Social Media Campaigns That Nailed CSR (zavy.co)

In-depth insights on engaging stakeholders through social media campaigns:

1. Utilize storytelling: storytelling is a powerful tool to captivate and engage

stakeholders. By sharing real-life stories and experiences related to the company's CSR
initiatives, stakeholders can connect on an emotional level and understand the impact
of their support.

2. Collaborate with influencers: Partnering with influencers who have a strong presence
on social media can amplify the reach and impact of your campaigns. Influencers can
help spread awareness, drive engagement, and encourage stakeholders to take action.

3. Encourage user-generated content: Inviting stakeholders to share their own stories,

photos, or videos related to the company's CSR efforts can create a sense of community
and involvement. This user-generated content can be shared on social media platforms,
highlighting the collective impact of stakeholders.

4. Run contests and challenges: Organizing contests or challenges related to CSR

initiatives can generate excitement and encourage stakeholders to actively participate.
This can include photo contests, fundraising challenges, or even virtual events that
promote social causes.

5. Provide educational content: Sharing informative and educational content related to

the company's CSR initiatives can help stakeholders understand the importance of the
cause and how they can contribute. This can include blog articles, infographics, or
videos that highlight the impact of the company's efforts.

Remember, these are just a few strategies to engage stakeholders through social media
campaigns. Each company's approach may vary based on its target audience, industry, and
specific CSR goals. By leveraging the power of social media, companies can create a positive
impact, foster meaningful relationships, and drive change in society.

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❖ Ethical Aspects of Advertising

Ethical aspects of advertising are a practice that adheres to moral and legal standards, ensuring
that advertisements are truthful, not deceptive, and do not exploit vulnerabilities. It respects
diversity and does not perpetuate harmful stereotypes. Ethical advertising also considers the
broader impact of advertisements on society and the environment. In the Indian context, this
means that advertising should be culturally sensitive and socially responsible.

Ethical aspects of advertising are not just a moral imperative; it is also good for business. Indian
brands that engage in ethical advertising build trust and credibility with their customers. They
create long-lasting relationships based on transparency and honesty.

In contrast, brands that employ unethical practices may achieve short-term gains but risk
damaging their reputation eventually. For instance, advertisements should not reinforce gender
biases, or caste stereotypes, or promote products that could have adverse health effects. ASCI
plays a pivotal role in regulating and upholding ethical standards in advertising. It provides
guidelines and a mechanism for consumers to report misleading or offensive advertisements.
Over the years, ASCI has played a crucial role in ensuring that Indian advertisements are more
ethical and responsible.

❖ Why ethical aspects must be considered while advertising by any

business
1. Consumer Trust: Consumer trust is the bedrock of successful business relationships.
When companies operate with transparency, honesty, and integrity in their dealings,
consumers are more likely to have confidence in their products or services. This trust
fosters loyalty, encourages repeat business, and enhances a company’s reputation.
Ultimately, businesses that prioritize consumer trust not only thrive in the short term
but also build enduring, mutually beneficial relationships with their customers.

2. Long-Term Reputation: Long-term reputation is the enduring perception of a business

within the public’s eye. It is the collective judgment formed over time, influenced by a
company’s actions and behavior. Ethical practices in advertising are crucial for
safeguarding and enhancing this reputation. Unethical advertising may yield short-term
gains, but it often tarnishes a company’s image, leading to long-lasting damage. A
positive, ethical record of accomplishment, on the other hand, can solidify a company’s
reputation and ensure its sustained success in the marketplace.

3. Legal Compliance: Legal compliance in advertising is essential to ensure a business

operates within the boundaries of the law. Advertisers must adhere to various
regulations and statutes governing advertising practices, including truth in advertising
laws, intellectual property rights, and consumer protection laws. Failure to comply can
result in legal consequences, including fines and lawsuits. Moreover, ethical advertising
often aligns with legal compliance, as both prioritize transparency and honesty to
protect consumers and maintain trust in the marketplace.

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4. Social Responsibility: Social responsibility in advertising refers to a company’s

obligation to consider the broader societal impact of its marketing practices. Ethical
advertising considers how advertising messages may affect vulnerable groups,
promotes diversity and inclusivity, and avoids perpetuating harmful stereotypes. It
strives to create content that resonates positively with society, aligning with values and
social norms. By demonstrating social responsibility, businesses contribute to a more
ethical and inclusive advertising landscape, fostering goodwill and trust among
consumers.

❖ Ethical Considerations in Advertising

1. Truth in Advertising: Truth in advertising is a fundamental ethical principle. ethical
aspects of advertising should provide accurate information about their products or
services. In India, the Maggi Noodles controversy serves as a stark reminder of the
consequences of misleading advertising. Nestlé, the company behind Maggi, faced
public outrage and legal action when it was revealed that the product contained excess
lead and MSG levels, contrary to what their advertisements claimed. The Consumer
Protection Act in India seeks to protect consumers from such deceptive practices
emphasizing the importance of honest messaging.

2. Transparency and Disclosure: Transparency and disclosure are critical aspects of

ethical advertising. ethical aspects of advertising should be transparent about their
affiliations and any potential biases. In India, celebrity endorsements are a common
advertising strategy. However, there have been instances where celebrities have
endorsed products without disclosing their financial interests. This led to a call for
stricter regulations, and the Advertising Standards Council of India (ASCI) introduced
guidelines to ensure transparency in such endorsements.

3. Fair Competition: Fair competition is a cornerstone of ethical advertising. Advertisers

should compete on a level playing field, without resorting to unfair or anti-competitive
practices. In India, the ‘Cola Wars’ between PepsiCo and Coca-Cola exemplified the
importance of fair competition. Both companies engaged in aggressive marketing
tactics, but the Competition Act in India ensures that companies do not abuse their
dominant market positions and compete fairly.

4. Respectful Advertising: Respectful advertising involves treating individuals and

groups with dignity and respect. Tata Tea’s “Jaago Re” campaign is an excellent
example of this in India. The campaign tackled pressing social issues while promoting
the brand’s values. Such campaigns demonstrate how ethical aspects of advertising can
be used as a force for positive change while respecting societal values. The Advertising
Standards Council of India (ASCI) plays a crucial role in ensuring that advertisements
adhere to respectful and responsible standards.

5. Targeting Vulnerable Audiences: Advertising aimed at children is a contentious issue

in India. Many argue that it exploits the vulnerability of young minds, leading to
unhealthy consumption habits. Brands must ethically approach advertising to children,
avoiding manipulative tactics and promoting responsible consumption. Another
concern is the targeting of low-income groups. Some advertisers have been criticised
for promoting products that are financially detrimental to this audience. Ethical

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considerations demand that brands provide value to all segments of society, without
exploiting economic vulnerabilities.

6. Avoiding Stereotypes: Ethical aspects of advertising have a history of perpetuating

gender stereotypes. Brands are now challenged to break free from these stereotypes and
promote equality. For instance, some brands have been celebrated for highlighting
women in empowering roles, and challenging societal norms. Cultural sensitivity is
crucial in a diverse country like India. Advertisers should avoid using cultural
stereotypes that can offend certain communities or reinforce biases. Brands that have
failed to do so have faced backlash and boycotts.

7. Ethical Dilemmas in Advertising: The use of celebrities in advertising is common in

India. However, ethical dilemmas arise when celebrities endorse products without
believing in them or when they are associated with controversial brands. Brands and
celebrities need to maintain integrity in these partnerships. Many Indian brands are now
recognizing their social responsibilities. Ethical dilemmas arise when brands claim to
support social causes without making genuine efforts. Consumers are increasingly
demanding authenticity and holding brands accountable for their actions.

8. Ethical Sourcing and Production: Ethical sourcing and production extend beyond
advertising to the entire supply chain. Brands must ensure fair labour practices and safe
working conditions. Failure to do so can lead to boycotts and damage to a brand’s
reputation. Sustainability is a growing concern for consumers. Brands should focus on
eco-friendly production processes and transparent sourcing of materials. Those who
neglect environmental ethics risk losing environmentally conscious consumers.

❖ Creating a watchdog culture for ethical standards in Indian

Advertising

Regulations on Advertising: How it Works?

• When you talk about advertising laws in India, we can witness a diverse and intricate
regulatory landscape. What are the rules and laws regulating advertising in India? Who
controls this dynamic framework? It is the Ministry of Information and
Broadcasting and the Advertising Standards Council of India (ASCI) who stand as
key players.
• In its capacity as a self-regulatory body, ASCI is essential in establishing advertising
standards. For businesses to succeed in India, they need to follow ASCI advertising
standards regulation and the legal directives from the Ministry of Information and
Broadcasting, in charge of the nation’s advertising laws and policies.
• These entities collaborate and control businesses through certain regulations on
advertising. To effectively market themselves and find a strong place in the
marketplace, Indian brands must have a comprehensive understanding of the regulation
of advertising and promotion.

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❖ The Principles of the Laws on Advertising/ Key Legal Frameworks

Governing Advertising in India
Advertising laws and regulations in India encompass a wide range of legal and regulatory
issues that advertisers must navigate to ensure their campaigns are legally compliant. These
principles and regulations on advertising are crucial for protecting consumers, maintaining fair
competition, and preserving the integrity of the marketplace.
Let us check out the major principles of advertising law.

1. Truthfulness and Non-Deceptiveness: The need for truthfulness is the cornerstone of

advertising law. An advertisement’s claims must all be accurate, not deceptive, and
supported by evidence. The Consumer Protection Act, 2019, reinforces laws on false
advertising, outlining strict penalties for misleading advertisements. This implies that
marketers need to provide proof to support their statements. For example, in the United
States, the Federal Trade Commission (FTC) mandates that advertisements must be
truthful and non-deceptive and that advertisers provide evidence to support their claims.
To avoid making fictitious or inflated claims that could potentially mislead customers,
this principle is essential.

2. Fair Competition: Advertising laws always aim to promote fair competition in the
marketplace. This includes laws against false or misleading comparative advertising.
Comparative advertising is legal and often advantageous for consumers, but as per the
regulations on advertising, it must not be deceptive. As per the advertising law in India,
any comparison must be factual and the products under comparison should be similar.
Regulations on advertising prevent businesses from gaining an unfair advantage
through fraudulent advertising tactics.

3. Adhering to Intellectual Property (IP): According to the regulations on advertising,

brands as advertisers must respect intellectual property rights. This includes avoiding
the unauthorized use of trademarks, copyrighted material, or other proprietary content
in advertisements. This principle of advertising is to ensure that brands do not unfairly
benefit from the work or reputation of others. Adhering to IP eliminates confusion
among consumers about the origin or validation of a product.

4. Caring for the Target Audience: Advertising regulations in India give prime
importance to the target audience of an advertisement. For instance, there are strict
regulations about ads targeting children. This includes guidelines on the type of content
and the advertising tactics employed. On the other hand, rules on advertising alcohol
and tobacco strictly adhere to the advertising restrictions, thereby avoiding the
promotion of unsafe behaviors. Regulations on advertising considering the target
audience thereby ensure that advertisements are appropriate and responsible. The
principle considers the impression ads might have on different segments of the
customers.

5. Data Privacy Regulations: Online guidelines are a result of how drastically the digital
age is changing India’s advertising environment. Digital advertising is regulated by
stricter data protection laws, such as the Information Technology (Intermediary
Guidelines and Digital Media Ethics Code) Rules, 2021. A thorough comprehension of
digital advertising regulations is crucial for success in the Indian market, as advertisers

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must understand how to ensure compliance with data privacy regulations and consent
procedures.

6. Credibility in Health Claims and Product Endorsements: In the Indian context,

health claims made in advertisements are frequently subject to close examination. In
compliance with the advertising regulations, brands must thoroughly verify any health-
related claims, which is in line with the pledge to be truthful. Additionally, transparent
disclosure of any potential biases in validations provided by public figures or
influencers is required to ensure that consumers are aware of them. This dedication to
credibility upholds the consumer protection provisions of the Indian legal framework.

7. Respecting Cultural Sensitivities: Advertisers must navigate a multitude of cultural

nuances in a nation as diverse and culturally rich as India to avoid unintentionally
offending anyone. Not only is it wise to customize advertising content to fit the cultural
background of the intended audience, but it is also required by law. Making effective
and culturally relevant ads requires an understanding of and respect for the diverse
Indian population’s cultural sensitivities.

8. Social Responsibility and Environmental Impact: Indian advertisers are becoming

environmentally aware because of greater consideration being paid to social
responsibility and the welfare of the planet. To help establish an advertising
environment that is more socially conscious, businesses are expected to abstain from
creating content that encourages harm or reinforces stereotypes. Furthermore, the need
for legitimacy in advertising is emphasized by the intense scrutiny surrounding
environmental deception, which is the false promotion of environmental benefits.

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