SVKMs Narsee Monjee Institute of Management Studies SCHOOL OF DISTANCE EDUCATION

Name: Anees Abdul Aziz Merchant Programme: PGDMM Semester: 1

G.R.No./SAP ID: ________________________

Year of Registration: July 2011

Study centre: VileParle, Mumbai

Subject: Corporate Social Responsibility

1. One of the arguments against CSR is that there is too much hype and little has been done on ground level. It is also argued that shareholders are interested only in business activities that generate profits, so it does not make sense for companies to invest resources in unproductive activities like CSR. What is your stand on this? I would like to take a step back and first highlight how the CSR started in the organizations. CSR has prevailed in the organizations whether Small Medium Enterprise or Large Corporations. This was more seen as Philanthropy in the earlier days. Philanthropy was used as a medium to gain social status in earlier days. Post the mid-19th century and the impacts of globalization CSR has been defined as a formal strategy by different large organizations. These strategies and its implementations have been of varied degree levels. If implemented accurately CSR can help in 1. Improve Shareholder Value 2. Wide access to capital (monetary as well as human) 3. Reduced business risk 4. Leverage new markets 5. Improve business efficiencies (Quality and Productivity) 6. Improve recognition in the market due to branding 7. Increased revenue Looking at the advantage it is not a hidden treasure anymore, sensible corporate entities are inheriting and building their CSR strategies as it is a very profitable proposition in the longer run. The situations where profit and CSR are in synch in fast food outlets. Global fast food giants likes of McDonalds and Burger King have come up with salads and other options to appeal to the health conscious customers. Similar analogy is in the automotive industries where manufacturers like Toyota and Honda have come up with Hybrid and Electric cars to promote protection of environment and conversing of energy. However these initiatives would not get promoted largely if there were no profits aligned to these strategies. Such strategies have allowed companies to leverage these platforms to enter new business areas with maximizing profits. However if you look at the base of these initiatives these have been somewhere driven because of increasing pressures from the corporate stakeholders to maximize profits. For example cost of land in India has been on rise, and setting up new refineries and factories for India Inc has been a big challenge. To combat the price hikes companies have been acquiring large acre of lands from farmers in the name of CSR. Reliance Industries Limited (RIL) set up worlds largest grass-root refinery in 7500 acres of land near Jamnagar in Gujarat, India in 90s. Reliance is again poised for commissioning another refinery, adjacent to existing refinery, set up by a subsidiary Reliance Petroleum Limited (RPL) in Jamnagar Special Economic Zone (SEZ) coming up in 11,000 acres. Companies are benefiting their own interests and further investing in Corporate Social Responsibility.

But apart from such CSR in which direct investments yield profits there have been many initiatives which have helped the companies improve their brand image and garner profits over a period of time. Aditya Birla Group CSR has been led by Mrs. Rajashree Birla, Chairperson, Aditya Birla Centre for Community Initiatives and Rural Development. Based on the projects identified from the communities their focus has been more on the Education, Health care, Sustainable livelihood, Infrastructure development, and espousing social causes. Additionally to self-run projects collaborative partnerships are formed with the Government, the District Authorities, the village panchayats, NGOs and other like-minded stakeholders. These projects are managed through a specific budget allocated for CSR activities. On the same ground influential individuals in the corporate world have started the foundations using their own family wealth. Michael and Susan Dell Foundation originally formed by Michael Dell (Founder and CEO of Dell Inc) in 1999 have been targeted towards welfare of children (mainly education and healthcare). Such initiatives bring reform within the not so privileged economies or part of a larger country. This brings in basic necessities for living namely food, water, shelter and basic education. Still, the fact is that while companies sometimes can do well by doing good, more often they can't. Executives are hired to maximize profits; that is their responsibility to their company's shareholders. Even if executives wanted to forgo some profit to benefit society, they could expect to lose their jobs if they triedand be replaced by managers who would restore profit as the top priority. The movement for corporate social responsibility is in direct opposition, in such cases, to the movement for better corporate governance, which demands that managers fulfill their fiduciary duty to act in the shareholders' interest or be relieved of their responsibilities. That's one reason so many companies talk a great deal about social responsibility but do nothinga tactic known as greenwashing. Such initiatives need equilibrium of thoughts and can be streamlined by government regulations. Its greatest appeal is that it is binding. Government has the power to enforce regulation. But government regulation isn't perfect, and it can even end up reducing public welfare. The government also may lack the resources and competence to design and administer appropriate regulations, particularly for complex industries requiring much specialized knowledge. And industry groups might find ways to influence regulation to the point where it is ineffective or even ends up benefiting the industry at the expense of the common man or society. Hence government alone cannot single handedly manage the situation and thereby calling for various nonprofit organizations and movements provide a voice for a wide variety of social, political, environmental, ethnic, cultural and community interests. For example Greenpeace have launched multiple campaigns and awareness stream to not only battle situations impacting environment but also human welfare. They are independent organizations in a way keeping check on corporate governance on social projects.

In the end, social responsibility is a financial calculation for executives, just like any other aspect of their business. However if they are tied to UN driven MDGS and frequent reports and transparency to larger stakeholder community with a proper buy-in from shareholders using a proper business plan can benefit and has benefited the society at large.
Resources Corporate websites News and special articles NMIMS notes and articles

2. Compare the corporate social responsibilities of TATA and Reliance. (You may also take two equally big corporate houses of your choice). Which one do you think has contributed more towards the society? Let us look at the core value statements first for TATA and Reliance (specifically Reliance Industries Limited) TATA By Jamsetji N Tata In a free enterprise, the community is not just another stakeholder in business but it is, in fact, the very purpose of its existence Reliance By Mukesh Ambani I strongly believe that we can, and should do, much more. I also believe that this effort has to bring into play RILs strengths of strategic planning, meticulous detailing and flawless execution on a large format Quick Comparatives Details Area of focus TATA Code of honor 1. Employee Relations 2. Governance 3. Environment 4. Community Initiatives 5. Trusts Reliance 1. Children 2. Community Welfare 3. Disaster Relief 4. Education 5. Healthcare 6. Heritage Conservation 7. Physically Challenged 8. Poverty Eradication 9. Rural Development 10. Vocational Training 11. Water 12. Women Dhirubhai Ambani Foundation (DAF) , Reliance Rural Development Trust, (RRDT) and The Reliance Foundation

Trusts

Sir Dorabji Tata Trust, Sir Ratan Tata Trust, RD Tata Trust, JRD Tata Trust, MK Tata Trust, Sarvajanik Sewa Trust, Tata Education Trust, Tata Social Welfare Trust for National Indian Institute of Science Tata Institute of Social Sciences Tata Memorial Center for Cancer Research and

Endowment Institutions

Sir Hurkisondas Nurrotumdas Medical Research Society

Treatment Tata institute of Fundamental Research Tata Institute of Fundamental Research Tata Agriculture & Rural Training Center for the blind National Center for Performing Arts Sir Dorabji Tata Center for Research in Tropical Diseases JRD Tata Eco-technological Center National Institute of Advanced studies From the various articles and knowledge on the internet my findings state that Tata have been pioneers and thought leaders in the CSR space in India. The Tata Business Excellence Model integrates social responsibility into the framework of corporate management wherein social responsibility is encapsulated as Key Business Process. In fact all social service departments in Tata companies have annual programs and budgets and all this is aligned to the MDs Balanced Score Card. Reliance Industries on the other hand led by Mukesh Ambani have recently started the CSR activities in India. However in short run they have made some long strides in Healtcare and Education streams. Their notable projects in healthcare Community medical services at Jamnagar, Project Cancer-Aid, Sir Hurkisondas Nurrotumdas Hospital and Research Centre (HNHRC) have been notable and making good progress in the society. Reliance efforts are further improving however Tata has been able to set a culture of CSR within the organization for decades and sustained it and are able to drive progress within the country. Their efforts are notable not only in India but in many countries North America, Africa, UK are some of countries where there have been significant contributions in healthcare. Not to take away the efforts from Reliance, CSR teams at all manufacturing divisions interact with the neighboring community on regular basis. The Company takes pride in the fact that its CSR representatives are known by their first names in the regions that it operates. However with all these community initiatives and improvement in the overall execution of its plans, Reliance has been often called out by many authorities and independent agencies on incorrect practices in the name of CSR.

There have been allegations of land grabbing, evasion of taxes, erosion of environment and society. For example the Jamnagar refinery setup had serious back lash from the local farmer community and other independent agencies. There were multiple programs launched by Reliance to improve the relationship and also offered a lot of subsidiaries to the local farmers. However apart from all the allegations there are some true intentions and projects coming out of Reliance house. Project Drishti has been a highly spoken project in the corporate houses and many institutions have come ahead to support this project from Reliance. Additionally TATA have made some bold statements and aligned their initiatives to Indias MDGS. The eight Millennium Development Goals (MDGs) which range from halving extreme poverty to halting the spread of HIV/AIDS and providing universal primary education, all by the target date of 2015 form a blueprint agreed to by all the worlds countries and all the worlds leading development institutions. They have galvanized unprecedented efforts to meet the needs of the worlds poorest. Tatas focus has been more around the eastern part of india
Jamshedpur West Bokaro Noamundi Jamadoba

Joda Sukinda / Bamnipal Gopalpur Kalinga Nagar Belpahar Bileipada Athagarh

Jagdalpur

Other notable commitments from TATA are Signatory - UN Global Compact Founder Member - Global Business Coalition on AIDS Member -CII-Social Development Community Affairs Committee Adopted CII-UNDP Social Code Member -International Iron & Steel Institute Project Group on Sustainability indicator for Steel. Member - Corporate Roundtable on Environment & Sustainable Development The Energy Research Institute ( TERI) Member - Global Reporting Initiative Board All in all TATA has been a pioneer in the CSR activities and has been recommended and respected by many industry leaders. It is no surprise that Narayanmurthy (Current Chairman of Infosys and ex-CEO of Infosys) holds J.R.D. Tata in great esteem as an icon.