CHAPTER-I

INTRODUCTION
 CHAPTER-I
INTRODUCTION

1.1 Meaning and Definition of Corporate Social Responsibility

Government policies, programmes and Legislations often affect business and

society. The Government has its own form, structure, style and philosophy. Depending on

the nature of the government at work, business and society have to organize their

activities. The Government of every country formulates and executes a set of policies and

programmes for the welfare of the society. These policies are executed through

legislation. Today, there are so many laws that at every turn a businessman meets law;

modern businessmen need legal advice constantly. Modern business is more in the nature

of a legal contract than a social contract.1

Social responsibility is an integral part of business and society. This social

responsibility should enhance the competitiveness of business and maximize the value of

wealth creation to society.

Corporate Social Responsibility means giving back to society whatever that is

received from society. Corporate social responsibility is about capacity building for

sustainable livelihoods. The World business council for sustainable development in its

publication ‘Making Good Business Sense’ by Lord Holmes and Richard Watts says

“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 community and society at large”.2

1
Dr V Balachandran, V. Chandrasekaran.”Corporate Social Responsibility and Legal Environment”. SEBI
& Corporate Laws- Magazine.Vol 40, Nov 2002. pp 35-39.
2
Sudheendra Putty. “Corporate Governance – Corporate Social Responsibility”, SEBI & Corporate Laws-
Magazine, Vol 56, Nov 2004, p 186-192.
 2

Social Responsibility has wide gamut to comprehend accountability towards

various stakeholders within and outside the business and touches upon the issues of

workers’ welfare, consumer’s safeguard, environmental protection, human rights,

guarantee and social/ gender justice in addition to securing the shareholders legitimate

interest.3

Corporate Social Responsibility is treating all the stakeholder of the corporate

world in a socially responsible way. The stakeholders are several – workers, consumers,

shareholders, creditors, management, suppliers, sellers and the society and environment

at large. It is more than ordinary law abidance. It represents expectations of business by

non – state stakeholders groups and strategic management of these demands by the

corporate bodies.4

The Sanskrit saying “Atithi Devo Bhav” means – ‘the one comes to you for being

served, should be taken to be as God’, is considered as the highest order of responsibility,

be it to individuals or to the society. Thus, the phrase social responsibility has its roots in

Indian context.

“Let us walk together

Let us talk together

Let our heart vibrate together” – Rig Veda.

CSR can be explained as:

• Corporate – means organized business

• Social – means everything dealing with people, the society at large.

• Responsibility – means accountability between the two.

3
M Friedman, Capitalism and Freedom, (Chicago: University of Chicago Press, 1962), p 133.
4
Mathew Hirschland, Corporate Social Responsibility and the Shaping of Global Public Policy,( New
York : Palgrave, Mac Millan 2006), p.7.
 3

From the above, CSR could be defined as the process of business operations

carried out while ensuring compliance with legal requirements, as also linked to ethical

values, to an extent.5

CSR means open and transparent business practices that are based on ethical

values and respect for employees, communities and the environment. It is designed to

deliver sustainable value to the society at large as well as to the shareholders.6

Corporate Social Responsibility is a term describing a company’s obligation to be

accountable to all of its stakeholders in all its operations and activities.7

Broadly speaking, there are two views with regard to the CSR in India. The first

view, considered to be more conservative. If a company is legally compliant and has been

equitable in terms of

i) Distribution of income and surplus

ii) Truthful and transparent in its disclosures

iii) Provision of a safe and healthy environment for its workers.

iv) Payment of timely divided to shareholders.

v) Takes care of the qualitative and service aspects of its business with regard

to their customers.

vi) Prompt in after –sale services, it is compliant with the principles and

tenets of CSR, which it owes to all its stakeholders in some way or the

other.

5
ICSI “Corporate Governance” 4th edn, 2006, p 299.
6
Id, p. 300.
7
Prof. Vijayalakshmi Iyengar, “CSR as a Determinant of Market Strategic Issues”: An Exploratory Study’.
p 1.
 4

However, the other view takes its operations beyond the narrow confines and

believes that this is not CSR, but this is the point where CSR begins. According to this

view, a company simply becomes a good corporate citizen by doing all this but it still has

a long way to comply with its CSR. Here CSR is loosely referred to what a company

does, apart from its obligations.8

Corporate social responsibility – CSR in short, also called corporate conscience,

citizenship, social performance or sustainable responsible business is a form of corporate

self regulation, integrated into a business model.9

CSR policy functions as a built in, self- regulating mechanism whereby business

monitors and ensures its active compliance with the spirit of law, ethical standards and

international norms. The goal is to embrace responsibility for, an encourage a positive

impact through its activities on the environment, consumers, employees, communities,

stakeholders and all other members of the public sphere.

So, CSR is the deliberate inclusion of public interest into corporate decision –

making and the honoring of a triple bottom line – people, planet, and profit.10

Globalization is a continuous and massive transformation of international

development. On the one hand it brings significant material prosperity and on the other

hand, creates powerful systems and processes focused on material prosperity at the

expense of environmental and social sustainability. Globalization by its very nature

should enable international dialogue and co – operation by various jurisdictions to

facilitate the development of regulatory frameworks capable of transcending the national

8
Vikramaditya Singh Malik and RoshanSanthalia. “Corporate Social Responsibility an Environmental
Ethics”, The Indian Context’. NALSAR, Hyderabad, p 5-6
9
Wikipedia, “Corporate Social Responsibility”. p 1
10
Id, p 2.
 5

boundaries. However the issue of accountability in a global context is complex and

manifold.11

Like globalization, business also affects all areas of life in the society. In the

global scenario, business has an enormous influence not just on the prospects of the

individual, but also on the ability of the society as a whole to realize its potential and

shape a brighter future. Accordingly, entrepreneurial activity has always borne a

pronounced responsibility for societal development. Hence, in the global context CSR is

emerging as the continuing commitment by business to behave ethically and to contribute

to economic development while improving the quality of life of the workforce and their

families as well as the local community and society at large.12

CSR as such, is not a new concept, it has transcended from its early primitive

state i.e. from religious charity to philanthropy to stewardship to trusteeship to CSR to the

present day concept of corporate citizenship. However the popularity of CSR grew

significantly after 1996 when ISO 14001 was launched.

1.2 Literature Review

Before undertaking the present study the researcher surveyed the existing

literature available on the problem and following is the conspectus of the literature

studied. During the course of this work the present researcher has extensively relied upon

these materials.

11
Parashar Anuradha- “Globalization and Corporate Social Responsibility Auditing”, Man Power
Journal. Vol. XLVNO. 2, Apr- Jun 2010, p 37.
12
Vengurlekar Pradyumna,” Corporate Social Responsibility and Corporate Governance”: A Global
perspective, Chartered Secretary, Dec- 2010, p 1797.
 6

Palmer's Company Law13is an important and basic work available in this area.

The British Companies Act 2006 spans more than 1,000 sections and this book covers all

these sections as relevant to both students and practitioners. This book adopts a very

logical approach by setting out the Act and then providing annotations under each

section. It helps the reader to quickly find the relevant commentary.

Gower & Davies’ Principles of Modern Company Law 14is a leading text

available on company law. It provides clarity and has covered all key areas. It contains

detailed and in-depth analysis of the issues in Corporate Law. Academics and researchers

can turn to Gower and Davies to secure knowledge in this field. The work is interesting,

thought provoking and understandable. It exposes both theory and practice in this area to

the present day challenges. It gives readers the comprehensive guidance they need in

order to understand this complex area of law, and provides a reliable reference. It also

discusses important case laws such as Bhullar v Bhullar on corporate opportunity, Item

Software v Fassihi on conflict of duty, Re Spectrum Plus on charges over book debts,

Clark v Cutland on unfair prejudice, and Chaston v SWP Group on financial assistance. It

also shows how the law has recently been interpreted in British courts on the subject.

Pradyumna Vengurlekar, in his business article15, Corporate Social

Responsibility and Corporate Governance: A global perspective, has verified the nexus

between disclosure principles and the corporate social responsibility. He has also

advocated for the convergence of corporate governance and corporate social

responsibility. He has further demarcated the arguments for and against the corporate

13
Palmer's Company Law, “Annotated Guide to the Companies Act 2006”, 2nd edn, (Sweet & Maxwell,
2009).
14
Gower & Davies: “Principles of Modern Company Law”, 9th edn, (Sweet & Maxwell)
15
CSR Articles, Chartered Secretary, December 2010, 1797-1800.
 7

social responsibility as social and economic arguments. He has rightly concluded that, the

Corporate Social Responsibility is becoming a management strategy and is assuming

central position in corporate governance. He suggests that Corporate Social

Responsibility should be a part of corporate portfolio management so as to make the

Directors or the managers accountable for Corporate Social Responsibility.

Aditya Gupta and Ayan Sinha, in an article, A critical and comparative

analysis of the concept of CSR and of Section 135, Companies Act 201316, have

considered the concept of corporate social responsibility as evolved and practices in

different countries and they have provided a working definition of corporate social

responsibility so as to include the economic and legal compliance by the corporations in

just and ethical manner. This article has listed out certain activities which cannot be

considered as those within the scope of corporate social responsibility. The article

stresses the need for corporate social responsibility policy at all levels. The authors have

concluded that even with stringent capitalistic mindset the concept of Corporate Social

Responsibility is not wrong in totality. They have suggested that for the sake of achieving

flexibility the concept of Corporate Social Responsibility should not be left undefined,

and countries like India must utilize Corporate Social Responsibility to achieve inclusive

growth.

Vyom Ajmera, in his article- Corporate Social Responsibility: Its increasing

relevance in a rapidly modernizing India17, has termed CSR as a holistic attempt on

the part of Companies to address the interests of various stakeholders. Further, he has

advocated that the CSR must be adopted not only as a strategy but as a value in achieving

16
Company Law Journal, 1, 2015. p 40-49.
17
Company Law Journal 2, 2015 p 140-144.
 8

the sustainability of business. The author has concluded with a suggestion that the CSR

programmes must be implemented in collaboration with NGOs and Government.

In a recent article appeared in the Indian Express (Tuesday, 4th August 2015),

Vikram Mehta has categorically summed up the present scenario of corporate attitude

towards Corporate Social Responsibility. He has stated that the responsible corporates

have long discarded from their public vocabulary, the Milton Friedman dictum that the

business of business is business. This is nothing but the observation that corporate sector

is concerned only with the business privately and not so when it comes to public outcry.

He has rightly suggested that the present corporates should resort to ‘collaborative

commons’ and there is a need to adopt ‘intra- corporate partnership approach’.

In yet another recent research paper18 Corporate Human Rights Accountability

and The Human Rights To Development: The Relevance And Role Of Corporate

Social Responsibility, Clarance J. Dia, has employed Human Rights perspective on

CSR. He has analyzed the relevance of CSR in globalised economy. The paper elaborates

three trends and developments in the area of CSR viz., the phenomenal growth of

corporate power, the paradigm shift in development and the victims of corporate social

development. The author has correspondingly suggests three initiative to respond to these

developments. They are corporate and industrial voluntary initiatives, the human right to

development and the human right to protection. The author has remarkably appreciated

the UN initiatives in this regard.

1.3 Genesis of Corporate Social Responsibility

The foundation of CSR can be seen not only in the Constitution of India but also

under various other statutes. The primary source can only be the Constitution of India
18
Available @ www. Manuptra.co.in/newsline/articles accessed on 29/05/2015.
 9

that has to be utilized by the courts to its fullest extent. This is so because the courts in

interpreting the Constitution enjoy a freedom, which is not available in interpreting a

statute.19

The Constitution is organic and living in nature. It is also well stated that the

interpretation of the Constitution of India or statutes would change from time to time.

Being a living organ, it is ongoing and with passage of time, law must change. New

rights may have to be found out within the Constitutional scheme. It is established that

Fundamental Rights themselves have no fixed content; most of them are empty vessels

into which each generation must pour its contents in the light of its experience. The

attempts of the Court should be to expand the reach and ambit of the fundamental rights

by process of judicial interpretation. There cannot be any distinction between the

Fundamental Rights mentioned in Chapter III of the Constitution and the declaration of

such rights on the basis of the judgment rendered by the Supreme Court.20

Thus horizons of Constitutional law are expanding and these expanding horizons

can provide a sound base for CSR. Further we cannot allow the dead hand of the past to

stifle the growth of the living present. Law cannot stand still; it must change with the

changing social concepts and values. If the law fails to respond to the needs of changing

society, then either it will stifle the growth of the society and choke its progress or if the

society is vigorous enough, it will cast away the law, which stands in the way of its

growth. Therefore law must constantly be on the move adapting itself to the fast changing

society and not lag behind.21

19
J.P.Bansal v. State of Rajasthan, (2003) 3 SCALE 154.
20
PUCL v. UOI, (2003) 3 SCALE 263.
21
Justice P. N. Bhagwathi in National Textiles Workers Union v. P.R. Ramakrishnan, (1983) 1 SCC 228.
 10

One of the necessities of the contemporary society is the recognition and

acceptance of CSR by the companies. There are three bases which make corporate to

assume social responsibilities voluntary, as under

a) The Corporations/ companies are creatures of society and thus respond to the

demands of society

b) Long runs self – interests of business are best served when corporate assume

social responsibilities.

c) It is the moral and right thing to do.

1.4 Indian History on CSR

The Father of Nation, Gandhiji was a strong advocate of ‘Sarvodaya’ which

meant moral as well as material well-being of all sections of the community. He believed

if socialist democracy was to function, adequate employment opportunities should be

provided to all citizens irrespective of their caste, creed, and color and enables them to

earn their living with self-respect and dignity.22

Prior to 1988, the Sachar Committee on simplification of Company Law

observed: “Every company, apart from being able to justify itself on the test of economic

viability, will have to pass the test of socially responsible entity. In this context, it will be

judged by the various tests dependent upon the circumstances in each company and in

each area. Thus a chemical company, which may declare very high dividends, may yet be

responsible for polluting the water and air, would have to be named as socially

irresponsible company. No company in these days can disown its social responsibility”.

22
C.M. Bindal, “Corporate Social Responsibility: A Desirability”. Chartered Secretary. Dec – 2010.
P.1760.
 11

Sachar Committee Report made it obligatory on the Indian companies to report about

their social responsibility.23

Many of India’s leading businessmen, G D Birla, Jamnalal Bajaj, Lala Shri Ram,

Ambala Sarabhai and others came under the spell of Mahatma Gandhi and his theory of

trusteeship of wealth. They contributed liberally to his programs for the removal of

untouchability, Women’s emancipation and rural reconstruction, even as the earlier

preoccupation with creating a physical and social institutional infrastructure continued,

further honed by the vision of a free, progressive and modern India.24

Late Shri LalBahadur Shastri, the then Prime Minister in his inaugural address at

the International Seminar on social responsibilities of business held at Indian

International Center, said “the benefits of economic development must accrue more and

more to the relatively less privileged class of society and then should be progressive

reduction of the concentration of income, wealth and economic power. We must develop

but we must not allow unbridled profit motive to be the sole goal to economic activity.

Let us look not to the immediate profit but to the long term gain. Let us build on strong

foundations that will stand the test of time”.25

A seminar sponsored by India International Center, New Delhi in 1966, on Social

Responsibilities of business made a declaration to this effect in the following words,

“since the business life of India closely concerns and increasingly determines the

happiness and welfare of its people, we declare in addition to making a fair and adequate

return on the capital, business must be just and humane, as well as efficient and dynamic.

In the complex and economic business life of the country, every enterprise has a manifold

23
Id, p 1761.
24
K. Ashwathappa,” Essentials of Business Environment Social Responsibility of Business”. pp 604-605.
25
C.M. Bindal, “Corporate Social Responsibility”: A Desirability, Chartered Secretary, Dec -2010.p.1760.
 12

responsibility viz; to itself, to its customers, workers, shareholders and the community

and it is the task of management to reconcile these separate and sometimes conflicting

responsibilities”.

In 1966, Dr.V.K.R.V.Rao had suggested non coercive and non – legal ways of

enforcing CSR,26viz,

i) Exemplary conducts and behavior on the part of elites in all walks of life.

ii) Voluntary action by associations of businessmen, trade unions and

consumer associations.

Dr. Rao argued that CSR could be effectively ensured by the business voluntarily

rather than through legal coercion.

The origin of the first ethical model of corporate responsibility lie in the

pioneering efforts of 19th century corporate philanthropists such as the Cadbury brothers

in England and the Tata family in India. The pressure on Indian industrialists to

demonstrate their commitment to social development increased during the independence

movement, when Mahatma Gandhi developed the notion of ‘trusteeship,’ whereby the

owners of property would voluntarily manage their wealth on behalf of the people.

Gandhiji’s influence prompted various Indian companies to play active roles in

nation building and prompting socio – economic development during 20th century. The

history of Indian corporate philanthropy has encompassed cash or kind donations,

community investment in trusts and provision of essential services such as schools,

libraries, hospitals, etc.

26
Id. p 1761.
 13

1.5 Statement of the Problem

A welcome change in recent thinking amidst the corporate world is realization of

its basic responsibility to the society. This is in contrast to the approach of profit

maximization as its sole and whole objective, and it reminiscent of collective wisdom of

society – oriented approach. From the ancient Indian idea of subordinating economic

processes and human desires to the ideals of justice and social welfare, through

mercantile community’s self – ordained norms of consumer protection and philanthropy

to Gandhiji’s concept of trusteeship of the affluent, there runs the golden thread of social

responsibility of the business.27

Social responsibility has wide extent to comprehend accountability towards

various stakeholders within and outside the business and touches upon the issues of

workers’ welfare, consumer’s safeguard, environmental protection, human rights

guarantee and social/ gender justice in addition to securing the shareholder’s legitimate

interests.28

One of the aims of CSR is to support the cause of sustainable development

through meticulous protection of environment. Sustainable development is development

that meets the needs of the present without compromising the ability of future generations

to meet their own needs.29

27
Prof. P. Ishwara Bhat.” Corporate Social Responsibility Through Law”: A Critical Note on the Role of
the Third Sector organizations’. p 2.
28
This is in contrast to what the economist Milton Friedman said – “there is one and only one social
responsibility of business – to use its resources and engage in activities designed to increase its profits so
long as it stays within the rules of the game, which is to say engages in open and free competition, without
deception or fraud. M. Friedman, “Capitalism and Freedom”, (University of Chicago Press, 1962). p. 133.
The role of well – run companies is to make profits, not to save planet, let them not make the error of
confusing the two. M. Wolf, ‘Sleep walking with the energy’, Financial Times, 16 May 2001, p. 2.
29
Brundtland Commission Report, p 43.
 14

CSR does not mean that the company has to indulge in philanthropic activities.

There is a thin line of distinction between CSR and philanthropy. The company owes a

duty to the society to make up for the damage caused by them and also to provide them

better conditions for living, as they have been an important part of growth of the

company.30

The concept of CSR has two broad approaches. The first approach is the

traditional approach and theme of this approach is –“Doing good to look good”. This

approach was followed for a long time, but the companies following the approach

undertook to perform their CSR only for the sake of it and to fetch the recognition in the

market. The commitments were short term and the new approach or the modern approach

has its underlying objective, “Doing all that we can do to the most good, and not just

some good”. It supports corporate objectives. When a particular company does well to

the society genuinely it has to be good, and it succeeds in building a name for itself.31

The Honorable Supreme Court of India while referring to CSR, when it talks of

‘duties and responsibilities towards the community’- if a company has the resources and

has come a long way in its progress, it owes a debt to the society and the community in

which it has progressed. Also, it is agreed that if a company has caused some loss to its

surrounding areas, it is its obligation to make up for that loss, whether technical or

environmental, as a part of its CSR.32

In Panchamahals Steel Ltd v. Universal Steel Traders, the Gujarat High Court has

pointed out that a company has three – fold reality. (a) Economic reality (b) Human

30
Supra note 8, p. 6.
31
Id, p 7.
32
National Textile Workers Union v. P.R. Ramakrishnan, AIR 1983 SC 759.
 15

reality (c) Public reality. It is also noted that keeping the environment clean is a sentiment

gaining momentum after the Bhopal Gas Tragedy of 1984.33

In Birla Zuari Agro Chemical Ltd., Goa case (April 1975), the Goa High Court

ordered the closure of the company’s operations because the effluents of the company

were polluting the sea causing large – scale deaths of fish and also polluting the wells of

villagers and damaging the crops.

Another most disfavoring argument is that business has profit maximization as its

main objective. In fact, the business is most socially responsible when it attends to its

interests and leaves other activities to other institutions. Since business operates in a

world of poverty and hunger, the economic efficiency of business is a matter of top

priority and should be the sole mission of business. In this kind of system, managers are

the agents of the stakeholders, and all their decisions are controlled by their desire to

maximize profits for the stockholders while reasonably complying with law and social

custom.34

Apart from above, another point of view is that, the business involvement in

social goals lack support from all groups in society. If business does become socially

involved, it will create so much friction among dissident parties that business cannot

perform its social assignment. Though many persons desire business to become more

socially involved, others oppose the idea. There is lack of agreement among the general

public, among intellectuals, in the Government, and even among businessmen

themselves.35

33
Union Carbide Corporation v. Union of India, 1989 SCC (2) 540, AIR 1990 273.
34
Keith Davis and Robert L Blomstrom, “Business and Society – Environment and Responsibility”. p 24.
35
Id, p. 28.
 16

Keeping in view unprecedented challenges and opportunities arising from

globalization and the leadership role of the Indian business has, the Ministry of Corporate

Affairs has issued, Corporate Social Responsibility Voluntary Guidelines 2009. It states

CSR is not philanthropy but purely voluntary – what companies will like to do beyond

any statutory requirement or obligation. CSR aims at well- being of all stakeholders.36

In recent years, corporate social responsibility has gained growing recognition as

a new and emerging form of governance in business. It is already established in the

global context, with international reference standards set by the United Nations,

Organization for Economic Co-operation and Development (OECD) guidelines and

International Labor Organization (ILO) conventions. With brand value and reputation

increasingly being seen as one of a company’s most valuable assets, CSR is now seen as

building loyalty and trust among shareholders, employees and enterprises that operate

multinational in very different social and environmental settings.37

The Companies Act, 2013 (‘2013 Act’), enacted on 29 August 2013 on accord of

Hon’ble President’s assent, has the potential to be a historic milestone, as it aims to

improve corporate governance, simplify regulations, enhance the interests of minority

investors. The new law will replace the nearly 60-year-old Companies Act, 1956 (‘1956

Act’). The 2013 Act provides an opportunity to catch up and make our corporate

regulations more contemporary, as also potentially to make our corporate regulatory

framework a model to emulate for other economies with similar characteristics.38

36
Supra note 19, p. 1759.
37
Id, p. 1760.
38
“Implications of Companies Act, 2013”.Corporate Social Responsibility. Grant Thornton India LLP, p.3.
available at http://www.grantthornton.in/companiesact2013
 17

The 2013 Act has introduced several provisions which would change the way

Indian corporates do business and one such provision is spending on Corporate Social

Responsibility (CSR) activities. CSR, which has largely been voluntary contribution, by

corporates has now been included in law.

The term CSR has been defined under the CSR Rules which includes but is not

limited to:

• Projects or programs relating to activities specified in the Schedule; or

• Projects or programs relating to activities undertaken by the Board in

pursuance of recommendations of the CSR Committee as per the declared

CSR policy subject to the condition that such policy covers subjects

enumerated in the Schedule.

This definition of CSR assumes significance as it allows companies to engage in

projects or programs relating to activities enlisted under the Schedule. Flexibility is also

permitted to the companies by allowing them to choose their preferred CSR engagements

that are in conformity with the CSR policy.

The Act defines CSR as activities that promote poverty reduction, education,

health, environmental sustainability, gender equality, and vocational skills development.

Companies can choose which area to invest in, or contribute the amount to central or state

government funds earmarked for socioeconomic development. While this definition of

CSR is broad and open to interpretation, it clearly emphasizes corporate philanthropy

rather than strategic CSR. However, the act does, specify that companies “shall give

preference to the local area and areas around where it operates”.39

39
Id.
 18

In today’s business environment Corporate Social Responsibility reporting (CSR

report) has come to the forefront and is gaining importance every day. Annual report of

publicity listed companies now report on non – financial key performance indicators.40

CSR is a concept where organizations consider the interest of society by taking

responsibility for the impact of their activities on customers, suppliers, employees,

shareholders and other stakeholders. CSR can be called as a broader component of

stakeholder views on corporate governance which goes beyond profit maximization and

extend to issues relating to obligation that companies have to their communities in all

aspects of their operation.

1.6 Statement of Research Questions

1. What is Corporate Social Responsibility? What is its Jurisprudential basis and

justification?

2. What is the historical evolution of Corporate Social Responsibility?

3. Whether CSR policy takes care of all stakeholders and creates value for all of

them?

4. Whether business practices function ethically?

5. Whether the business is accounting for workers’ rights and welfare?

6. How far the companies respect for Human Rights of all?

7. What are the mechanisms companies use to check and prevent pollution,

manage natural resources in a sustainable manner?

40
Pradyumna Vengurlekar, “Corporate Social Responsibility and Corporate Governance, A Global
Perspective”, Chartered Secretary. Dec 2010, p. 1797.
 19

8. Should companies proactively respond to the challenges of climate change by

adopting cleaner production, methods, promoting efficient use of energy and

environment friendly technologies?

9. What are the activities companies undertake for social and inclusive

development?

10. How the Indian Judiciary has responded in deciding the Corporate Social

Responsibility matters?

11. What are the other legislations beside the Industrial laws to protect the interest

of stakeholders?

12. Is there any relevant provision under Taxation Law to exempt CSR activities?

13. What kinds of behavior might constitute Corporate Social Responsibility and

what is the extent to which such activities are legally permissible under

English company law?

14. What is Corporate Social Responsibility in a broader sense and in technical

sense? Is there any difference or similarities between two?

1.7 Hypotheses

i) The Corporate and the government should try to build up a relationship between the

business and society. The concept of Corporate Social Responsibility has so far

failed to take deep root in India because the nomenclature is not properly defined.

The CSR is in a nascent stage. Much needs to be done to bring changes in attitude

towards CSR and bring awareness among the corporate about their social

responsibilities.
 20

ii) The CSR, instead of being used as a mere statement of corporate intention, must be

made mandatory to corporate operation and this will subserve the human rights

practice and protection.

iii) The present legal system helps the companies to swell their coffers and permits them

to ignore their wider social responsibilities. The legal provisions relating to CSR are

inadequate. Lack of specific mandatory legislations or enactments has made the

issue much more complicated. Hence, there is an urgent need to enact laws

governing issues of CSR concerned.

iv) In a welfare state, the wider interests of the society must be supreme and corporate

interest must be subservient to the societal interests. In this context – the following

measures may be made mandatory to ensure participation of the corporate in social

development; incorporation of a section on social actions in annual reports of

companies; Appointment of an independent social accounting committee to measure,

monitor, evaluate and report- impact of CSR in annual reports; periodic training

programmes and awareness camps to train personnel on CSR, linkage between CSR

and financial success should be established.

v) There is a need to revise the rate at which corporate entities are required to earmark

funds for social development, which should reflect in the annual balance sheets of

Companies

1.8 Objectives

The chief objectives of the study are to narrate and explain the concept Corporate

Social Responsibility and its historical evolution in different stages. The primary

objective is to examine and study Corporate Social Responsibility towards better

environment through competitive analysis. Another objective is to examine impact of

CSR activities on stakeholders of company, special concern about consumers. Various

labor laws have been passed to protect interests of workmen, research also aims to

identify and highlight the effects of industrial activities on labors. Another object is to

look into the laws which are enacted to protect the interest of various groups of the

society, i.e. society at large.

1.9 Significance of the Study

The study would revolve around the matter what responsibility implies? Here

responsibility of business is basically a moral one in the initial stage and now became

obligatory, and it is an activity which is dedicated to improve the quality of people’s life.

The concept of CSR would be discussed to the extent required to understand it in Indian

and International perspectives.

Social Responsibility encompasses the sectors like health, education,

employment, income, environment and quality of life. It should be binding on the

corporate sector to work on the above aspects which are the primary social indicators.

Now the business will have no choice but to implement Corporate Social Responsibility.

The laws need to be formulated to help in reinforcing CSR practices.

The growing global need has made corporate face challenges to accept and adopt

the concept of Social Responsibility for a better tomorrow. CSR activities are purely

voluntary. To provide Companies with guidance in dealing societal expectations, the

Voluntary Guidelines for Corporate Social Responsibility have been developed. Since

guidelines are voluntary and not prescriptive in nature, they are not intended for

regulatory or contractual use.

1.10 The Limitation of the Study

At present it is a common understanding that, the concept of CSR dominantly

includes a new heads like rural development, protection of national heritage, art and

culture, ecological balance etc. This study also throws light on the items like labour and

consumer welfare under the realm of CSR. The same is done for the purpose of analysing

the traditional notions of labour and consumer welfares as fitted in the corporate agenda.

This study makes an overview of CSR in all major national jurisdictions but for the sake

of convenience and clarity, the concept of CSR as prevailing in U K and India only is

elaborately discussed. This study is purely doctrinal as there is a little scope for empirical

work. In view of this secondary data and information only is made use of in this study.

1.11 Research Methodology

The present research work is based on doctrinal legal research. Analytical,

descriptive and critical methods would be used as tools for achieving the mentioned

objectives. This work has analysed the corporate social responsibility, its historical

evolution in different stages and major challenges for implementing CSR. It has critically

looked into the existing legal regime governing social responsibilities of companies. The

data is collected from both primary and secondary sources.

Primary sources like laws, statutes, rules and regulations of various countries have

been referred to in this research and also judgments.

Secondary sources including textbooks, reports, periodicals, articles, journals,

encyclopedia and other literary works have also been referred.

1.12 Structure of the Study

The whole research work is divided into following Seven chapters.

Chapter 1: This chapter has introduced the present research work. It has defined

terms like Corporate Social Responsibility, Corporate Governance, stakeholders,

common collaboration, etc. It has enumerated the research questions, hypothesis,

objectives, importance and scope of the study. It has also discussed the foundation of

Corporate Social Responsibility in Constitution of India and in judgments of Supreme

Court.

Chapter 2: This chapter explains the concept and nature of Corporate Social

Responsibility, its philosophical background and historical evolution in different phases

till present day. The chapter also enumerates the Gandhian concept of Trusteeship and

social responsibilities of company, Corporate Social Responsibility in Vedic literature,

Kautilyas Arthashasthra, Buddhism and CSR, emergence of concept of CSR in USA,

UK, Brazil, etc.

Chapter 3: This chapter approaches Corporate Social Responsibility as a tool to

achieve better environment al protection. Here environmental legislations intend to

control the environmental degradation to improve quality of life and health of inhabitants

at national and international level has been discussed in length. Different conventions

have been discussed in detail with the study of history of evolution of law in different

periods like in ancient India, medieval India, during British period and post-independence

period. The problems with national legislations and solutions have also been discussed.

The principles and doctrines put forward by the Indian Judiciary been discussed with the

help of decided cases.

Chapter 4: This chapter focuses on Corporate Social Responsibility and

Consumer protection. This chapter also studies the stakeholders of a company and the

legislations for protection against exploitation of consumers, unfair and unethical

practices along with judicial responses. The chapter has discussed the history and growth

of Consumer Protection, laws which protect consumers in India along with the rights

under the Consumer Protection Act in detail.

Chapter 5: It deals with social responsibility of company towards Labors and

workers. At first, the chapter discusses the Human Rights aspect of Corporate Social

Responsibility. It has examined various Labor Legislations to protect the interest of labor

and improve their working conditions along the effects of non-compliance of statutory

provisions.

Chapter 6: This chapter is devoted for the discussion of impact of Corporate

Social Responsibility on society at large. A detail discussion of Corporate Social

Responsibilities as per New Indian Companies Act, 2013 is done along with role of CSR

in community development.

Chapter 7: This chapter summarizes the whole research work chapter wise and

enumerates the findings of the research. These are followed by specific suggestions for

the purpose of better implementation of Corporate Social Responsibility.