sybms sem 4

1. Unit 4
Corporate Social Responsibility
Jyostna jain

2. Topics to be Discussed
 Meaning of CSR,
 Evolution of CSR,
 Types of Social Responsibility
 Aspects of CSR- Responsibility, Accountability, Sustainability and Social Contract
 Need for CSR
 CSR Principles and Strategies
 Issues in CSR
 Social Accounting
 Tata Group’s CSR Rating Framework
 Sachar Committee Report on CSR
 Ethical Issues in International Business Practices
 Recent Guidelines in CSR
 Society’s Changing Expectations of Business With Respect to Globalization
 Future of CSR

3. What is CSR?
 The term generally applies to efforts that go beyond what may be required by regulators or
environmental protection groups.
 CSR may also be referred to as "corporate citizenship" and can involve incurring short-
term costs that do not provide an immediate financial benefit to the company, but instead
promote positive social and environmental change.

4. History and Evolution of CSR
 CSR in India has evolved through different phases,like community engagement,socially
responsible production and socially responsible employee relations.

5. Phase 1
 In the first phase charity and philanthropy were the main drivers of CSR. Culture, religion, family values
and tradition and industrialization had an influential effect on CSR.
 In the pre-industrialization period, which lasted till 1850, wealthy merchants shared a part of their
wealth with the wider society by way of setting up temples for a religious cause. Moreover, these
merchants helped the society in getting over phases of famine and epidemics by providing food from
their godowns and money and thus securing an integral position in the society.
 With the arrival of colonial rule in India from the 1850s onwards, the approach towards CSR changed.
 The industrial families of the 19th century such as Tata, Godrej, Bajaj, Modi, Birla, Singhania were
strongly inclined towards economic as well as social considerations. However it has been observed that
their efforts towards social as well as industrial development were not only driven by selfless and
religious motives but also influenced by caste groups and political objectives

6. Phase 2
 In the second phase, during the independence movement, there was increased stress on Indian
Industrialists to demonstrate their dedication towards the progress of the society. This was
when Mahatma Gandhi introduced the notion of "trusteeship", according to which the industry
leaders had to manage their wealth so as to benefit the common man.
 According to Gandhi, Indian companies were supposed to be the "temples of modern India".
Under his influence businesses established trusts for schools and colleges and also helped in
setting up training and scientific institutions. The operations of the trusts were largely in line with
Gandhi's reforms which sought to abolish untouchability, encourage empowerment of women
and rural development.

7. Phase 3
 The third phase of CSR (1960–80) had its relation to the element of "mixed economy", emergence
of Public Sector Undertakings (PSUs) and laws relating labour and environmental standards.
 During this period the private sector was forced to take a backseat.
 The public sector was seen as the prime mover of development. Because of the stringent legal rules
and regulations surrounding the activities of the private sector, the period was described as an "era of
command and control".
 The policy of industrial licensing, high taxes and restrictions on the private sector led to corporate
malpractices.
 This led to enactment of legislation regarding corporate governance, labour and environmental issues.
 PSUs were set up by the state to ensure suitable distribution of resources (wealth, food etc.) to the
needy.

8. Phase 4
 In the fourth phase (1980 - 2013) Indian companies started abandoning their traditional
engagement with CSR and integrated it into a sustainable business strategy.
 In the 1990s the first initiation towards globalization and economic liberalization were
undertaken.
 Controls and licensing system were partly done away with which gave a boost to the economy
the signs of which are very evident today.
 Increased growth momentum of the economy helped Indian companies grow rapidly and this
made them more willing{Gajare, R.S. (2014).

9. Types of Social Responsibilities
 Legal Responsibilities:A company's legal responsibilities are the requirements that are placed on it by the law. Next to
ensuring that company is profitable, ensuring that it obeys all laws is the most important responsibility, according to
the theory of corporate social responsibility. Legal responsibilities can range from securities regulations to labor law,
environmental law and even criminal law.
 Ethical Responsibilities. Ethical responsibilities are responsibilities that a company puts on itself because its owners
believe it's the right thing to do -- not because they have an obligation to do so. Ethical responsibilities could include
being environmentally friendly, paying fair wages or refusing to do business with oppressive countries, for example.
 Philanthropic Responsibilities.:Philanthropic responsibilities are responsibilities that go above and beyond what is
simply required or what the company believes is right. They involve making an effort to benefit society -- for
example, by donating services to community organizations, engaging in projects to aid the environment or donating
money to charitable causes.
 Economic Responsibilities:A company's first responsibility is its economic responsibility -- that is to say, a company
needs to be primarily concerned with turning a profit. This is for the simple fact that if a company does not make
money, it won't last, employees will lose jobs and the company won't even be able to think about taking care of its
social responsibilities. Before a company thinks about being a good corporate citizen, it first needs to make sure that
it can be profitable

10. Aspects of CSR
Corporate
Responsibility
Social
Accounting
Corporate
Sustainability
Social Contract

11. Corporate Responsibility
 Responsibility towards Stakeholders
 Responsibility towards employees
 Responsibility towards Customers
 Responsibility towards Society
 Responsibility towards Government
 Responsibility towards Financial Institutions
 Responsibility towards Competitors

12. Social Accounting
 Corporate accountability can be defined as the ability of those affected by a corporation to hold
corporations to account for their operations.
 This concept demands fundamental changes to the legal framework in which companies
operate. These include placing environmental and social duties on directors to complement
existing duties on financial matters, and legal rights for local communities to seek compensation
when they have suffered as a result of directors failing to uphold those duties
 Instead of urging companies to voluntarily give an account of their activities and impacts to
improve their social and environmental performance, the corporate accountability ‘movement’
believes corporations must be ‘held to account’ – implying enforceability. This is a more radical
position than that of CSR

13. Corporate Sustainability
 Sustainability is most often defined as meeting the needs of the present without compromising
the ability of future generations to meet theirs.
 It has three main pillars: economic, environmental and social

14. Social Contract
 The social contract approach to business refers to the strategy a company chooses when it
accepts informal expectations from the public and makes social and environmental responsibility
important to its business operations.
 Social contract approach argues that since the corporation depends on society for its existence
and continued growth, there is an obligation for the corporation to meet the demands of that
society rather than just the demand of targeted group of customers

15. Need for CSR
 The term corporate social responsibility gives a chance to all the employees of an organization to
contribute towards the society, environment, country and so on.
 Corporate social responsibility goes a long way in creating a positive word of mouth for the
organization on the whole.
 Corporate social responsibility also gives employees a feeling of unparalleled happiness. Believe
me, employees take pride in educating poor people or children who cannot afford to go to
regular schools and receive formal education.

16. Issues in CSR
 Lack of Community Participation in CSR Activities: This is largely attributable to the fact that there exists little or no
knowledge about CSR within the local communities as no serious efforts have been made to spread awareness
about CSR and instill confidence in the local communities about such initiatives.
 Need to Build Local Capacities: NGO as a tool is rarely considered due to reasons like their inefficiency,
incompetency, lack of resources and support for their development. Hence, there is a need for capacity building of
the local nongovernmental organizations as there is serious dearth of trained and efficient organizations that can
effectivelycontribute to the ongoing CSR activities initiated by companies.
 Issues of Transparency: Lack of transparency is one of the key issues brought forth by the survey.There is an
expression by the companies that there exists lack of transparency on the part of the localimplementing agencies as
they do not make adequate efforts to disclose information on their programs,audit issues, impact assessment and
utilization of funds
 Narrow Perception towards CSR Initiatives: Nongovernmental organizations and Governmentagencies usually
possess a narrow outlook towards the CSR initiatives of companies, often definingCSR initiatives more donor-driven
than local in approach.
 Lack of Consensus on Implementing CSR Issues: There is a lack of consensus amongst localagencies regarding CSR
projects. This lack of consensus often results in duplication of activities bycorporate houses in areas of their
intervention. This results in a competitive spirit between localimplementing agencies rather than building
collaborative approaches on issues.

17. Social Accounting
 Social accounting is concerned with the study and analysis of accounting practice of those
activities of an organization.
 The concept of socialistic pattern of society, civil rights movements, environmental protection
and ecological conservation groups, increasing awareness of society towards corporate social
contribution, etc. Have contributed towards the growing importance of Social accounting.

18. Importance of Social Accounting
o A firm fulfills its social obligations and informs its members, the government and the general public to enables
everybody to form correct opinion.
o It counters the adverse publicity or criticism leveled by hostile media and voluntary social organizations.
o It assists management in formulating appropriate policies and program
o Through social accounting the firm proves that it is not socially unethical in view of moral cultures and
environmental degradation.
o It acts as an evidence of social commitment.
o It improves employee motivation.
o Social accounting is necessary from the view point of public interest groups, social organisations investors and
government.
o It improves the image of the firm.
o Through social accounting, the management gets feedback on its policies aimed at the welfare of the society.
o It helps in marketing through greater customer support.
o It improves the confidence of shareholders of the firm.

19. Principles of CSR
Accountability

20. Strategies of CSR
 Ethical CSR: type of CSR in which organisations pursue a clearly defined sense of social conscience in
managing their financial responsibilities to shareholders and stakeholders
 Alturistic CSR : Altruistic corporate social responsibility is a form of corporate social responsibility (CSR)
that goes beyond ethical behavior to voluntarily donate time and/or money towards certain groups of
stakeholders, even if the time or money commitment sacrifices part of the business
profitability.Altruistic CSR can be viewed as unethical from a business standpoint because it
encourages Utilitarianism, a form of philanthropy in which "ethical actions result in the greatest good
for the greatest number,as well as going against the theory of Deontology.
 Strategic CSR: Strategic CSR is a carefully planned act of CSR that has a direct and expected impact on
the business. This type of CSR is implemented primarily for the affect it will have on the business. The
types of act involved could be quite varied, depending on the outcome desired, and may be initiated
as a direct result of an external issue

21. Ethical Issues in International Business Practices
 Employment: Wages and the working environment in overseas locations are often inferior to those in
the United States, even when you fulfill all local legal requirements. If you hire workers there, you face
the issue of what pay levels and working conditions are acceptable. Applying U.S. standards is usually
not realistic and often simply disrupts the established market.
 Corruption: Companies making payments to secure business that they would not otherwise obtain are
guilty of illegal actions under the U.S. Foreign Corrupt Practices Act. The payments, even if they seem
to be customary, are usually illegal under local laws as well.
 Human Rights: The country into which you are expanding may not respect basic human rights. The
ethical issue facing your company is whether your presence supports the current abusive regime or
whether your presence can serve as a catalyst for human rights improvements.
 Pollution:Not all foreign countries have environmental legislation that makes it illegal to pollute.
Companies may discharge harmful materials into the environment and avoid costly anti-pollution
measures. An ethical approach to your expansion into such markets is to limit your environmental
footprint beyond what is required by local laws

22. TATA groups CSR rating framework
 The Tata index for Sustainable Human Development is a trendsetting attempt to map and
measure the social development endeavors of Tata group companies.
 The Tata index is a matrix through which Tata companies can implement,direct and measure the
social development endeavors they are involved in.
 This business model will drive social responsibility efforts in the group.
 The index will help structure their efforts and quantify their effect on the communities and people
they are aimed at

23. Features of Tata Sustainability Index Framework
 The index is an improvement of the two guidelines that preceded it,and it has been built around
the TATA BUSINESS EXCELLENCE MODEL,an open ended framework that drives Business
Excellence in companies.
 The Tata index is constructed around the core beliefs of Tata group in matter of CSR.
 The index prescribes an ‘assurance’ process to ensure that community development projects are
measured and reviewed so that they perform in a manner that matches the objectives behind
them.
 The Tata index for Sustainable Human Development analyse the impact of entity’s
vision,strategies and system and processes on all stakeholders.
 Tata group has designed Taxanomy to set business reporting and information management.it is
specially designed for the pioneers,investors,government and regulators to make informed
choices and decision that will sustain their stakeholders

24. Sachar Committee for CSR
 The Sachar committee was a high powered committee appointed in 1978 to look into many
issues concerning to the Indian companies .
 The committee made many observations and suggestions on the issue of CSR:
a) the company must behave and function as a responsible member of society
b) the company must accept its obligation to be socially responsible and work for large
benefit of community
c) the committee suggested that it is not only the profit which should give a social image of
the company but it will have to pass many tests for proving that it is socially responsible
company
d) openness in Corporate Affairs and Behaviour.

25. Recommendations of Sachar Committee for CSR
Social
accountability
Firms in rural
areas
Employment
policy
Submit social
reports
Social welfare of
employees

26. Recent Trends in CSR
Demands for
disclosure
Creation of new
resources
Global
acting locally
Investing in
employees

27. Globalization and Society’s changing expectations of business
 The term globalization is perhaps one of the most widely used and least precisely defined
concepts in contemporary business. According to Schwartz and Gibb (1999) the term
'globalization' does not refer to a single process but "serves as shorthand for several related
processes", namely:
• an increasingly shared awareness across many publics
• a new international financial web
• new open space into which dominating cultures can move
• progress from 'inter-national' to 'global' institutions
• declining importance of geography
• dangerous new linkages possible
• greater speed of events
• trend away from nation-states

28.  whereby …… "shared awareness across publics" highlights the remarkable growth of the contemporary NGO
community: non-governmental organizations (NGOs) currently represent millions of citizens around the globe, while
the new international media can mobilize those millions overnight if it chooses;
 the "new international financial web" implies that … 'transparency, probity and rule of law are nowadays more
important to more people than ever'; “
 open space for dominating cultures" indicates more and deeper debate over international values;
 the creation of "global" as opposed to "inter-national" institutions refers to the entrance of new unfamiliar players, the
'stateless corporations', in the business terrain; “
 declining importance of geography" suggests that the traditional link between production and place, between
economy and the nation state is now breaking down, while more and more people all over the world consider
themselves stakeholders in decisions made by businesses anywhere;
 "dangerous new linkages" relates to any number of emerging networks whose impacts the public (rightly) feels unsure
of; the
 "greater speed" at which the world now operates emphasizes that companies that become insulated from their
markets or communities can be blindsided by changing attitudes more quickly than ever;
 finally, the shift of power away from nation-states means that the public in general requires more accountability from
other powerful actors, such as business, and expects them to respond directly to the demands of public opinion rather
than waiting for that opinion to be mediated by government legislation or regulation

29. Future of CSR
 Identify areas of spending as CSR activities.swachh bharat,hunger,sanitation,employment,education,health care
services are considered as valid for CSR activities
 Balancing urban rural development, biodiversity and management of land and forest resources
 Regular auditing
 Avoiding duplication of projects
 Educate our people to be environmentally friendly and socially responsible through CSR
 Government CSR cell
 Focus on transparency and accountability
 CSR measurement impact
 Ability to establish efficient regulation
 Develop effective CSR strategies to help businesses adopt ways to represent themselves as more responsible
 Its necessary to have a paradigm shift in how our economy operates: how we produce and how we consume