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Corporate Social Responsibility

The document provides an overview of corporate social responsibility (CSR). It defines CSR and outlines its key principles and strategies. The document discusses the types and nature of social responsibilities companies have, and models of CSR like Friedman, Ackerman, and Carroll models. It also covers best practices of CSR, the need for CSR, and arguments for and against CSR. Examples of Tata Steel's good CSR practices and Volkswagen's failed CSR are provided.

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0% found this document useful (0 votes)
65 views46 pages

Corporate Social Responsibility

The document provides an overview of corporate social responsibility (CSR). It defines CSR and outlines its key principles and strategies. The document discusses the types and nature of social responsibilities companies have, and models of CSR like Friedman, Ackerman, and Carroll models. It also covers best practices of CSR, the need for CSR, and arguments for and against CSR. Examples of Tata Steel's good CSR practices and Volkswagen's failed CSR are provided.

Uploaded by

Rushi Vyas
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© © All Rights Reserved
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Corporate Social Responsibility

Lecture Outline:
 Corporate Social responsibility.
 Types and nature of social responsibilities.
 CSR principles and strategies.
 Models of CSR.
 Best practices of CSR.
 Need of CSR.
 Arguments for and against CSR.
Meaning:
 Corporate social responsibility is a gesture of showing
the company’s concern & commitment towards society’s

sustainability & development.

 CSR is the ethical behaviour of a company towards

society.
The Companies Act, 2013  has formulated Section 135, 
Companies (Corporate Social Responsibility) Rules, 2014 and Schedule VII
which prescribes mandatory provisions for Companies to fulfil their CSR. This
article aims to analyse these provisions (including all the amendments therein).

Applicability of CSR Provisions: 


♥ On every Company including its holding or subsidiary having:
Net worth of Rs. 500 Crore or more, or
Turnover of Rs. 1000 crore or more, or
Net Profit of Rs. 5 crore or more
♥ during the immediately preceding financial year
A foreign company having its branch office or project office in India, which
fulfills the criteria specified above
However, if a company ceases to meet the above criteria for 3 consecutive
financial years then it is not required to comply with CSR Provisions till such
time it meets the  specified criteria.
WBCSD (World Business Council for
Sustainable Development)

“The continuing commitment by business to behave


ethically and contribute to sustainable economic
development while improving the quality of life of the
workforce and their families as well as of the local
community and society.”
Basic Constituents of CSR

Contribute Make Improvement Towards


towards a desirable Business
of social
sustainable social
economic environment & Society
changes
development
Types of Social Responsibility
Responsibility towards
Society
 Carrying on business with moral& ethical standards.
 Prevention of environmental pollution.
 Minimizing ecological imbalance.
 Contributing towards the development of social
health, education
 Making use of appropriate technology.
 Overall development of locality.
Responsibility towards
Government
 Obey rules & regulations.
 Regular payment of taxes.
 Cooperating with the
Govt to promote social
values.
 Not to take advantage of
loopholes in business laws.
 Cooperating with the Govt for
economic growth & development.
Responsibility towards Shareholders
 To ensure a reasonable rate of
return over time.
 To work for the survival & the
growth of the concern.
 To build reputation & goodwill
of the company.
 To remain transparent &
accountable.
Responsibility towards Employee
 To provide a healthy working environment.
 To grant regular & fair wages.
 To provide welfare services.
 To provide training & promotion
facilities.
 To provide reasonable working standard &
norms.
 To provide efficient mechanism to redress
worker’s grievances.
 Proper recognition of efficiency & hard
work.
Responsibility towards consumers
 Supplying socially harmless
products.
 Supplying the quality, standards,
as promised.
 Adopt fair pricing.
 Provide after sales services.
 Resisting black-marketing &
profiteering.
 Maintaining consumer’s
grievances cell.
 Fair competition.
Nature of social responsibility
 CSR is normative in nature.
 CSR may be started as a proactive or reactive.
 All firms do not follow the same patterns of CSR.
 Legal & socially responsible.
 Legal but socially irresponsible.
 Illegal but socially responsible.
 Illegal & socially irresponsible.
Models of corporate social
responsibility
 Friedman model
 Ackerman Model
 Carroll Model
 Environmental Integrity & Community Model.
 Corporate Citizenship Model.
Friedman Model(1962-73)
 A businessmen should perform his duty well, he is
performing a social as well as a moral duty.
 A businessmen has no other social responsibility to perform
except to serve his shareholders & stockholders.
Ackerman Model (1976)
 The model has emphasized on the internal policy goals &
their relation to the CSR.
 Four stages involved in CSR.
 Managers of the company get to know the most
common social problem & then express a
willingness to take a particular project which
will solve some social problems.
 Intensive study of the problem by hiring experts
& getting their suggestions to make it
operational.
 Managers take up the project actively &
work hard.
 Evaluating of the project by addressing the
issues.
Carroll Model(1991)
Carroll Model(1991)
 Philanthropic requirements: Donation, gifts, helping the
poor. It ensure goodwill & social welfare.

Ethical responsibility: Follow moral & ethical values
 to deal with all the stakeholders.

 Economic responsibility: Maximize the shareholders


value by paying good return.

Legal responsibility: Abiding the laws of the land.


Environmental Integrity & Community
Health Model.
 This model developed by Redman.
 Many corporate in US adopted this model.
 Corporate contribution towards environmental integrity &
human health, there will be greater expansion
opportunities.
 Healthy people can work more & earn more.
 CSR is beneficial for the corporate sector.
 CSR in a particular form is welcome.
Corporate Citizenship

Model
To be a corporate citizen, a corporate firm has to satisfy four

conditions:
 Consistently satisfactory
 Sustainable economic performance
 Ethical actions
 Behaviour.
 A particular firm’s commitment to corporate citizenship
requires the fulfillment of certain social responsibilty.
Best Practices of CSR
 To set a feasible, Viable & measureable goal.
 Build a long lasting relationship with the community.
 Retain the community core values.
 The impact of the CSR needs to be assessed.
 Reporting the impact.
 Create community awareness.
Need for Corporate Social
Responsibility
 To reduce the social cost.
 To enhance the performance of employees.
 It a type of investment.
 It leads to industrial peace.
 It improves the public image.
 Can generate more profit.
 To provide moral justification.
 It satisfies the stakeholders.
 Helps to avoid government regulations & control.
 Enhance the health by non polluting measures.
Arguments for & against the CSR

 Corporate should have some moral & social obligations


to undertake for the welfare of the society.
 Proper use of resources, capability & competence.
 The expenditure on CSR is a sort of investment.
 Company can avoid many legal complications.
 It create a better impression.
 Corporate should return a part of wealth.
Arguments against the CSR

 Fundamental principles of business gets violated.


 It vey expensive for business houses.
 CSR projects will not be successful.
 There are not the special areas of any business.
 CSR is to induce them to steal away the shareholders money.
DRIVING FORCES BEHIND
CSR
1.Transparency: Companies can no longer hide things. What companies do
for either the good or the bad will be known almost instantaneous.

2.Knowledge: With all the information we can find today ,consumers will be
able to access these companies files and when purchasing between products that
are similar in nature, will be able to choose the one that has the best CSR

3.Globalization: Which is the cooperations of people, companies and


governments of different nations to come together and create a plan for our
future so we will be able to sustain life here on our planet for as long as possible.
4. Sustainability: There has been a huge topic lately around the world,
that with our population so high we have crossed the sustainable yield
threshold of many of our natural environmental systems that we heavily rely
on. This is a major problem for us and some of these companies that
heavily rely on these environmental systems for there business and are under
a great deal of pressure to cut back and show they are doing there best to
be environmentally friendly, for the good of our future.
TATA STEEL (GOOD CSR)
Tata Steel believes that the primary purpose of a business is to improve the quality of life
of people. Tata Steel will volunteer its resources, to the extent that it can reasonably
afford, to sustain and improve a healthy and prosperous environment and to improve
the quality of life of the people of the areas in which it operates."
-B. Muthuraman, Vice Chairman, Tata Steel.
 Tata Steel believes that a company should contribute to the
communities in which it operates.As such Tata Steel spends
5-7% of its profit after tax on CSR initiatives, such as
environmental sustainability and social development.

 Tata Steel’s CSR policy focuses on Education,Health,Rural


Development and sports.
VOLKSWAGEN (FAILED CSR)

The Volkswagen case represents above all an absolute failure in terms


of Corporate Social Responsibility (CSR). The company deliberately set out
to design a means to circumvent emissions control—a stratagem known at
the highest levels—with the aim of giving the company an unfair advantage
over its competitors

The Volkswagen case shows in stark contrast that we must reinvent CSR.
The people who head these departments must be made responsible for their
companies’ actions
Indian Perspective.
 The Sachar committee was appointed in 1978 to look
into corporate social responsibility issues concerning
Indian companies .
 The company must behave & function as a responsible
member of society.
 Committee suggests openness in corporate affairs &
behaviour.
 Some business houses have established social institutions
like Schools, colleges, charitable hospitals etc.
 Corporate sectors have not made significant
contributions. (Polluting Environment).
Phases of CSR in India

1st Phase 2ndPhase 3rd Phase 4th Phase


(1850 – 1914) (1914– 1960) (1960 – 1990) (1990 onwards)
Mainly During the CSR under CSR in a
the
Philanthropy and Independence aegis globalized world
Charity during struggle Of in
CSR mixed
Industrialization. used economy. a puzzled state.
Organization as a tool Organizations Organizations
for
solely responsible Social Responsibility Responsibility
to Proprietor and Development. towards towards
Manager. Organization proprietor, Proprietor,
is
for managers Managers,
and
proprietor, other Environment and
Challenges of CSR

 Lack of Awareness of General Public in CSR


Activities
 Need to Build Local Capacities
 Issues of Transparency
 Non-Availability Of Well Organized Non-
Governmental Organizations
 Visibility Factor
 Narrow Perception towards CSR
Initiatives
 Non-Availability of Clear CSR Guidelines
 Lack of Consensus
EFFECT OF SUSTAINABILITY ON STAKEHOLDERS

When a company chooses to incorporate environmental sustainability in its


processes, it can affect stakeholders in a variety of ways. Stakeholders
should be on-board with the company's dedication to environmental
sustainability, while maintaining a say in the company's future direction.
Because many companies are becoming mindful of the importance of
sustainability -- due to the convictions of the public at large and tougher
environmental regulations -- stakeholders can be affected in largely positive
ways.
SUSTAINABLE DEVELOPMENT
Businesses are increasingly adopting strategies that not only involve the essential
needs of the business's operations and enterprise, but that also comply with
environmental regulation and the recognition that sustainability is important to the
protection of natural resources and human existence. Sustainability takes into account
the future impact of economic development and incorporates it in ways that benefit the
company, the environment and the consumer's quality of life.

STAKEHOLDERS
The term "stakeholders" encompasses a variety of people. Stakeholders are customers,
shareholders, employees and communities with a vested interest in a company's
strategies and development plans. All of these individuals are affected by a company's
sustainability efforts, and those efforts affect society as a whole and the global
environment. Because enterprise is increasingly linked to the global economy and
developing countries, stakeholders also include citizens of countries with developing
economies. These individuals are ultimately affected by multinational corporations'
business strategies and sustainability efforts, as environmentally sound practices
improve water quality and natural resource reserves.
ECONOMIC EFFECTS

Sustainability has become a trend, and many multinational corporations


understand that stakeholders are concerned about the environment and
wasteful business practices. Because consumers have become more mindful
of air quality, emissions, carbon footprint and eco-friendly consumption,
many corporations have adopted advertising campaigns aimed at assuring
the consumer of the corporation's commitment to sustainable policies. This
movement by corporations has at times negatively affected employees and
entire business sectors, as the demand for eco-friendly products has made
some manufacturing processes obsolete.
CODES ON CSR
The Code is an effective way to guide the behaviour of everyone in CSR by clearly
stating CSR's firm commitment to behaving honestly and fairy. The Code applies to
all CSR people, including all employees, Board members, consultants, contractors
and suppliers (CSR People).
1. VALUES:
 Workplace Health, Safety Environment
 Working Together
 Customers
 Innovation 
 Results 

2. RESPONSIBILITIES:
 act with integrity – being honest, fair and trustworthy in all business dealings
and relationships;
 avoid conflicts between CSR's interests and personal interests;
 protect CSR's business assets;
 respect and abide by our obligations to fellow employees, shareholders,
customers, suppliers, competitors and the communities in which CSR operates;
and
 act within the laws and regulations affecting business conduct.
3. Responsibility and Accountability of the CSR Board of Directors and
Managers

4. Using Social Media Responsibly 

5. Protecting Confidential Information

6. Acting Responsibly on Workplace Health, Safety and the


Environment

7. Protecting and Sustaining the Environment

8. Acting Responsibly with Customers, Suppliers, Competitors and


Others
The words Charity and Philanthropy are often used interchangeably, but actually
there is a difference between these two concepts.

 The origin of the word Philanthropy comes from the Greek language that


translates to: “Love of mankind”. A more modern definition is “private
initiatives for the public good which combines an original humanistic
tradition with a social scientific aspect”.

 Charity comes from the old French word Chrité and means, “Providing for
those in need; generosity and giving”. The practice of charity involves giving
money, goods or time to the unfortunate, either directly of by means of
charitable trust or other worthy causes.
 Charity tends to be emotional, immediate response which mainly focused on
rescue and relief, whereas Philanthropy is more strategic and built on
rebuilding.
The main difference is that Charity aims to relieve the pain of a
particular social problem, whereas Philanthropy attempts to address the
root cause of the problem. An example is the difference between
sending painkillers to malaria patients, which is charity, versus
educating the public in affected areas or supporting medical research
teams in finding a cure for malaria, which are philanthropy.

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