Business Ethics and Corporate Social Responsibility

Unit – I

1.1.1 Meaning of Philanthropy

 Desire and active effort to help other people
 Something done or given to help needy people
 An organization giving or supported by charitable gifts
 The effort or inclination to increase the wellbeing
(The state of being healthy, happy, or prosperous; welfare.) of humankind, as by charitable ai
d or donations.
 Love of humankind in general.
 Something, such as an activity or institution, intended to promote human welfare.

1.1.2 Definition

A Greek term which directly translated means "love of mankind."

Philanthropy is defined as an idea, event, or action that is done to better humanity and usually
involves some sacrifice as opposed to being done for a profit motive.
Acts of philanthropy include donating money to a charity, volunteering at a local shelter, or raising
money to donate to cancer research.
1.1.3 Views on Philanthropy
1. Philanthropy; a humanitarian view- Philanthropy means “focusing on the love of
humanity.” In this way a person can care for, develop, or nourish his or her human potential.
In modern times it has focused on the quality of life, and balancing a scientific-social area of
our lives. It has further branched out into the business and government sectors, as
generations have evolved.
2. Philanthropist: a simple meaning- a person of wealth who gives away a portion or all of his
or her money. This may include promoting charitable giving. Several organizations in which
philanthropists have helped throughout the years are radio stations, schools, private
businesses, sanitation systems, libraries, and specialized units in public hospitals. Others feel
that philanthropy is in existence because there was a lack of humanistic, moral, or religious
activity in this person’s life.
3. Roman times to the 17th century- During the fall of Rome, when the dark ages annihilated
classical civilization, the Roman Catholic Church took on a solitary existence. Classical
Philanthropy went into deep hibernation, and the manuscripts stayed buried in the dark
recesses of austere libraries. In the Italian Renaissance, the ideas surrounding humanism
encompassed such things as history, moral philosophy, and ethics. These ideas helped
trained laymen to be effective law, business, and government leaders. During this time Pico
Della Mirandola spoke highly of “Philanthropic myth of human creation”. Europe during the
16th and 17th century, while battling religious wars, was standing ready for non religious
enterprises. Philosophers during this time period tended to lean towards “Classical”
Philanthropy, in which the Scottish population viewed favorably. Several of the Scottish felt
Philanthropy was “the key to human happiness”. Self-development, living in harmony with
nature and fitness were a few ideas were what now shaped the ideals of that era.

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 4. Classic to Modern informal- In the 19th century U.S., people felt varied on its meaning, and
many Philanthropists were either accepted as “doing good,” or being called “do-gooders”. In
the 20th century, as Philanthropy advanced, it was associated with vast amounts of private
foundations. During this era professional fundraisers shunned the word and referred only to
their “charitable organizations”. Sometime in the 21st century, it increased to include
donors, foundations, and corporations. This in turn became “charitable giving”. A good
percentage of the population was now becoming Philanthropists at earlier ages. It was
considered “very cool”, and started to attract popular celebrities from the arts genre.

1.1.4 Types of Philanthropy

Traditional & Conventional Philanthropy

Conventional philanthropy donations are dedicated to narrowly defined cause and the donation is
targeted to effectuate a recognisable change in social conditions. This often necessitates large
donations and financial support sustained over time.

For most donors, philanthropy is about deciding which non-profit to support and how much money to
give them. These donors effectively delegate to non-profit all responsibility for devising and
implementing solutions to social problems. Despite the sincere dedication and best efforts of those
who work in the non-profit sector, there is little reason to assume that they have the ability to solve
society‘s large-scale problems.

Each non-profit functions alone, pursuing the strategies that it deems best, lacking the infrastructure to
learn from one another‘s best practices, the clout to influence government, or the scale to achieve
national impact. A majority of the very largest non-profit that might have the resources to effect
national change are hospitals, universities, and cultural organizations that focus primarily on their own
institutional sustainability. Collaboration throughout the sector is almost impossible, as each non-
profit competes for funding by trying to persuade donors that its approach is better than that of any
other organization addressing the same issue. Very few systematically track their own impact.

However generous the donors or hardworking the non-profit staff, there is no assurance—nor even
any likelihood—that supporting the underfunded, non-collaborative, and unaccountable approaches of
the countless small non-profit struggling to tackle an issue will actually lead to workable solutions for
large-scale social problems. The contributions of conventional donors and the good work of effective
non-profit may temporarily improve matters at a particular place and time, but they are unlikely to
create the lasting reform that society so urgently requires.

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Strategic Philanthropy

a) Venture Philanthropy
b) Catalytic Philanthropy

The of companies by which they target their respective charitable and philanthropic activities around
a specific issues or cause that will in turn support their own business objectives. In other words,
companies look to use philanthropy as a means to simultaneously and directly benefit to their business
interests and those of beneficiary organisation.

What is needed is a new approach to philanthropy, one that catalyzes the kind of social change
exemplified by Siebel‘s Meth Project. Over the past decade, the consulting fi rm that I cofounded,
FSG Social Impact Advisors, has studied many examples of this new approach to social change. We
have distilled what makes catalytic philanthropists so effective into four distinct practices: They have
the ambition to change the world and the courage to accept responsibility for achieving the results
they seek; they engage others in a compelling campaign, empowering stakeholders and creating the
conditions for collaboration and innovation; they use all of the tools that are available to create
change, including unconventional ones from outside the non-profit sector; and they create actionable
knowledge to improve their own effectiveness and to influence the behavior of others.

Some other Philanthropy

Rural Development Philanthropy

While Rural Development Philanthropy may be a new concept to the formal philanthropic world, its
roots run deep in our ethnic and rural heritage. Rural Development Philanthropy rises from a rural
legacy in which people made decisions together, provided mutual support, and set the course for the
community‘s future.
In the early 20th century, urban philanthropy developed innovations such as community foundations
and United Way organizations, while rural philanthropy continued in the more traditional forms of
giving – from people to people or from people to the community.
At the same time, rural communities were being influenced by large industries with operations in rural
areas, which exerted influence and control over those communities, creating ―company
towns.‖ Those industries often commanded the flow of primary resources in a place – jobs, wage
levels and philanthropic giving. Large industries in small communities still exert a great deal of
control, and if those industries close, it creates a vacuum in both community leadership and in
philanthropy.
Over the last century, rural people increasingly left for opportunities in urban areas, which led to a
massive out-migration of rural youth. As this trend has continued, more and more wealth has been
leaving rural communities as it transfers from one generation to the next.
As large funders began to work in rural areas in recent decades, they often chose institutions – such as
schools, community development corporations, libraries – as their local partners. Some rural places
began building their own philanthropy but followed models developed in urban places. To get things

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done, they often formed partnerships with organizations that were not part of their rural geographic
region.
Since 1990, federal rural policy has continued to focus on commodity price supports even as the
character and economies of rural communities have been changing even more dramatically due to
globalization, immigration, energy crises, and other challenges. This has resulted in a scarcity of
funds available to address current rural community issues. Communities today have been forced to
become more innovative and to refocus on internal assets.
The 1990‘s saw an increase in the development of geographically-focused funds in rural areas at
community foundations. New models of investing in rural places were being developed. Affinity
groups and intermediaries began to organize around rural, raising visibility. Examples include RUPRI,
Center for Rural Strategies, Aspen Institute Community Strategies Group, SRDI, Rural Funders‘
Working Group, and the National Rural Funders Collaborative.
In 1993, the Ford Foundation initiated and funded the Rural Development and Community
Foundations Initiative, which provided a place for community foundations to come together to share
innovative ways to meet rural community needs.
These activities began to have an impact on research. It was clear that philanthropy was being used as
a tool in ways that worked toward more democratic forms of philanthropy. This was seen by some as
a challenge to the more traditional ―donor-centric‖ model of philanthropy.
It is evident that a new type of organization is evolving – some refer to it as a ―hybrid.‖ Some of
these hybrids are rural community foundations that take on community and economic development
initiatives; some are rural community development organizations that begin to grow philanthropic
assets. Whatever form they take, these organizations are finding innovative approaches to working
with, for and in communities. This is happening in rural areas with increasing frequency, and less
often in urban settings.
Global Philanthropy
Warren Buffett and William Gates are targeting billionaires: They want the world‘s wealthy to
contribute at least 50% of their fortunes to charity by joining a global initiative called the Giving
Pledge. By the end of April, the 69 donors who had signed up so far included Larry Ellison, David
Rockefeller, Ted Turner and Mark Zuckerberg. In India, there are none. When Buffett and Gates were
visiting the country in March this year to push their cause, G.M. Rao, infrastructure tycoon and head
of the GMR Group, announced that he was donating US$340 million — his personal share in the
business — to charity. But he clarified it had nothing to do with the visiting duo. In China, which
Buffett and Gates had visited in September 2010, billionaire philanthropist Chen Guangbiao said he
would donate not half but all of his personal wealth to charity. According to a Reuters report, he had
convinced 100 other Chinese businessmen to do the same. Still, seven months later, none of their
names are on the Pledge.
1.1.5 Steps in Philanthropic Activities

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 1. Define goals, objectives, missions and visions (Planning Level)
2. Determine giving level or the budget
3. Giving structure to determined budget
4. Select the specific structure
5. Design your giving portfolio like an investment portfolio
6. Consider the strategic diversification in stages defined
7. Research and take actions
8. Evaluate or get feedback on action taken
9. Update your Plan of philanthropic activities
1.1.6 Giving Level for Philanthropic Activities
a) Money can donated directly to needy
b) Property can be donated to charity
c) Services: offering time and skills to another
d) Self: One can donate a part of themselves to another
e) Providing food and shelter
f) Strengthening educational program
g) Improving health and child care
h) Protecting environment
i) Enhancing access to technology
j) Supporting art, culture and historic treasures
1.1.7 Three Sector Model of Political Economy

Scholars within the field of philanthropic studies from more varied backgrounds define philanthropy
both more broadly and more precisely. Robert Payton‘s (1988) definition, as ―voluntary action for the
public good,‖ offers one of the primary alternatives to Salamon‘s definition within the field of
philanthropic studies. A blend of ―Paytonian‖ and ―Salamonion‖ shades of meaning may also be

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discerned in the definition of philanthropy proffered by Jon Van Til (1990) as the voluntary giving
and receiving of time and money aimed (however imperfectly) toward the needs of charity and the
interests of all in a better quality of life.

A particularly interesting aspect of Van Til‘s definition is the crucial importance he places on intent.
He considers philanthropy to encompass all acts of voluntary giving to meet charitable needs, even if
that aim is never attained, just so long as the donor aimed to achieve ―a better quality of life for all.‖
The underlying assumptions of this definition have often been questioned; by Carnegie, for example,
in his famous critique of charity‘s unintended consequences, where he writes: ―Of every thousand
dollars spent in so-called charity to-day, it is probable that nine hundred and fifty dollars is unwisely
spent–so spent, indeed as to produce the very evils which it hopes to mitigate or cure‖ (1993, p. 9).
Serious challenges have also been mounted, though, to the more robust assumptions behind Payton‘s
definition of philanthropy as voluntary service to a public good. As Paul Schervish points out, for
example, many things not philanthropic (e.g., government and the market) also serve the public good;
furthermore, philanthropic behaviour is frequently defined more in terms of its ―obligatory‖ rather
than its ―voluntary‖ nature. Given this state of affairs, Schervish (1998) chooses, instead, to define
philanthropy as a social relation governed by a moral obligation that matches a supply of private
resources to a demand of unfulfilled needs and desires that are communicated by entreaty.

Like Van Til, then, Schervish also understands philanthropy as acting to meet unfulfilled human
needs or wants. By contrast, though, he sees this process as governed by a moral obligation to meet
expressed needs rather than stemming primarily from the good will, intent, or volition of the donor.

From this brief survey of contemporary academic definitions of philanthropy, a number of

disagreements may be discerned as to its precise meaning, even among the leading scholars in the
field of philanthropic studies. In particular, there is fundamental disagreement over Whether
philanthropy is voluntary, or whether it is compelled by factors such as moral restraints, social
obligations, and the like Whether philanthropy serves a public purpose, a public good, a charitable
need, or simply a communicated want or desire Whether philanthropy is an intent to achieve a
particular aim, is the actual attainment of that aim, or is just simply a private act of giving

This survey also reveals a significant degree of divergence between the academic meaning of
philanthropy intended by most scholars and how it is generally understood by society at large.
Although donating money to charity is an aspect of philanthropy recognized in both common and
academic usage, the predominance of this particular aspect of its meaning is considered to be a more
recent development in common parlance. It also seems likely that the professionalization and
academicization of philanthropy have played a decisive role in this development.

1.2 Environmental, Social and Labour & related issue

1.2.1 Environmental Issues

Human population is increasing tremendously; therefore there is a lot of demand for food, electricity,
clothing, roads, housing, vehicles etc. These are exerting a lot of pressure on land, water, air and other
resources. This leads to pollution and degradation of the environment and biodiversity that is a part of
it.
Pollution: Pollution is any undesirable change in physical, chemical or biological composition of air,
water and land, and the agents that cause these are called pollutants.
Air pollution: It‘s the increase in amount of particles in the air, especially particles smaller than
2.5um such as CO, NO, lead, arsenic, cyanide CFCs ammonia etc., that cause respiratory diseases,

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lung cancer, Tuberculosis, lack of O2 to the brain and premature deaths.
CAUSES:
Use of vehicles is the main cause of air pollution due to release of harmful gases. Use of petrol &
coal in industries and cigarette smoking also contribute to air pollution. Improper disposal of domestic
& industrial wastes led to the release of methane.

Smog: Mixture of air pollutants (like arsenic, lead, NO, CO etc), dust & fog is called smog and is
deadly to the body as it results in deposition of dry mucus in the alveoli of lungs, tuberculosis, lung
cancer, aging, premature death etc.

Health fact: Studies show that living in cities like Delhi, Mumbai, Banglore, Kolkata and many
others is equal to smoking an average of 20 cigarettes a day and this problem is fast increasing.

Ways we can help reduce air pollution and global warming:

 Reducing the use of vehicles for travelling short distances & carpooling.
 Use of hydrogen power in cars & machines or Hybrid cars.
 By planting trees across town or growing plants in our homes.
 Use of Electrostatic precipitators, Bag houses, Particulate scrubbers.
 Use of magnetic trains.
 Upgrading industries, factories & aircraft with better engines & turbines.
 Use of renewable sources of energy such as wind, water, solar & infrared, geothermal, tidal
etc.
 Carbon credits are the most effective way of reducing carbon footprint. These credits can be
sold to companies or individuals for cash and at the same time reduce CO2 production.
 An electrostatic precipitator is a particulate removing device that removes particles such as
dust, smoke etc from air using force of an electrostatic charge. They are highly effective &
consume very less energy for their use.
 In particulate scrubbers, the polluted gas is passed through a layer of scrubbing liquid, or
forced through a pool of liquid. These are highly effective in the removal of pollutants from
the gas. But these scrubbers have a high chance of corrosion as the toxic gases removed are
highly acidic & these scrubbers require large amount of power. Also it is hard to dispose of
the waste – water.

Laws passed by some countries to control Air Pollution:

 Environmental Protection Act (1990)_Environment Act (1995)_British Clean Air Act

(1956)~UK
 Air Pollution Control Act (1955)_Clean Air Act (1963,1970,1990)~US
 Air Act (1981)_Environment Act (1986)~India
 Environmental Promotion Act (1994)_Environmental Compatibility Act (1994)~Austria

Water pollution:

It‘s the pollution of water bodies with substances like domestic wastes, industrial, thermal, mineral,
toxic, nitrogen & phosphorous rich wastes. The nutrient rich wastes multiply the algae concentration
in the water bodies & this leads of depletion of oxygen in these bodies & hence leads to the death of
fish and other biodiversity in the area.

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It’s harmful effects include:

 Biomagnification: It is increase in the toxicity among the food chain at successive trophic
levels. This phenomenon is well known with mercury and DDT.
 Accelerated Eutrophication: Eutrophication is the aging of a lake to convert into land,
which generally takes 1000s of years or more. But human activities have accelerated this
natural process & as a result many lakes are already extinct. It is caused due to dumping of
nutrient rich and thermal waste into lakes.
 Death of biodiversity living near the polluted water bodies, accelerated global warming &
extinction of many species.
 DDT reduces fat levels, it is an endocrine disruptor, causes cancer, causes developmental
and reproductive toxicity, causes parkinsons & asthma & thinning of eggshells.
 India has the most polluted rivers in the world. The excuse of religion & spirituality has
been the main reason for their degradation.
 BOD : Biochemical Oxygen Demand for various organisms. BOD is the amount of oxygen
required by the biodegradable material & the organic matter living in a certain water body
like lake or pond.
 Invasive plant water hyacinth: It is used to control and remove BOD, suspended solids,
nutrients (phosphorous, nitrogen), heavy metals & organochlorides from water bodies that
have been polluted with mineral, industrial & chemical wastes. Water Hyacinth Scrubbers
manage and optimize water hyacinth‘s natural capability to extract nutrient pollutants to
ensure sustainability and increased treatment performance. But if their growth is unchecked
then it spreads across water bodies quickly. In India it is also called ‗Terror of Bengal‘.

It is necessary to control water pollution as it leads to diseases like jaundice, cholera, typhoid,
dysentery, dengue, malaria etc many of which are very hard to cure.

 The waste water should be treated before dumping in rivers and lakes.
 Domestic waste water can be mildly treated and used for irrigation.
 Planting of trees to reduce acid rain & pollution of ground water.
 Rainwater harvesting to conserve water and reduce wastage of fresh water.
 Prevention/control of use of rivers for purposes related to religious ceremonies.
 Use of dry composting toilets that do not require water, also the human waste collected can be
used as a good natural fertilizer.

Some important actions taken by governments to reduce pollution of water bodies:

 The International Convention for the Prevention of Pollution from Ships, 1973, as modified
by the Protocol of 1978.
 International Convention on Oil Pollution Preparedness, Response and Cooperation, 1990.
 International Convention on Liability and Compensation for Damage in Connection with the
Carriage of Hazardous and Noxious Substances (HNS) by Sea.
 Water Act 1974-India
 Agricultural Nitrates Directive-UK
 Anything that is thrown out along with garbage such as wastes from our homes, schools,
offices, shops, hospitals etc are classified as solid wastes. These include glass, plastic, wood,
metals, organic matter, food, electrical equipment etc.

It is classified into three main types:

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  Bio Degradable waste.
 Non-Bio Degradable waste.
 Recyclable waste.
 Everyday humans produce millions of tonnes of waste all over the world. But what happens
to this waste produced?
 In many countries the waste produced is burnt to reduce it‘s volume, but burning is not an
effective way to reduce waste as it causes pollution & release of toxic wastes.
 Wastes are also dumped in landfills- a landfill is a deep trench covering a very large area in
which waste is dumped. In countries like Germany, the methane produced from the wastes is
collected & used as fuel, & the decomposed waste is used as fertilizer as it is highly rich in
nutrients. Modern landfills are designed such that the waste is fully made use of & such that
they do not pollute the ground water levels. The toxic seepage from under the landfills is
collected & treated before being used as fertilizer.

Landfills aren‘t much of a solution to solving the problem of the large amounts of wastes
generated as they get filled up overtime, faster than the waste can be removed or recycled.

Only we can reduce the amount produced by us. We could:

 Use jute bags for shopping instead of plastic or even paper.
 Glass or metal waste must be recycled & reused.
 Waste produced from hospitals must be incinerated before dumping into landfills as
these wastes contain pathogens & harmful germs, & toxic chemicals.
 Using E-Book readers for reading and writing instead of using books. Use of E-
Books can save hundreds of millions of trees around the world every year.
 Recycling of electronic items instead of dumping or burning them.
 Use of bio degradable plastic for packaging.

Agro-chemicals and their effects

 Over the years the use of agro chemicals has increased considerably. Most of the crops are
treated with Pesticides, in-organic fertilizers, insecticides etc to increase crop yield.
 But use of these chemicals results in bio-magnification & eutrophication.
 Many useful insects, rodents & micro-organisms are also killed by the use of these
chemicals.
 These chemicals seep into the ground & pollute the soil & ground water.
 These cause cancer and inhibit development of brain and the body.

The use of agro-chemicals can be overcome by smart farming strategies:

 Bee-keeping. Placing a bee hive in the centre of a crop field drastically increases crop
yield & provides honey & beeswax that can be sold for
profit. Also bees help keep elephants away as elephants are afraid of bees.
 Use of ladybugs and worms. Lady bugs help protect the crops against smaller insects &
worms help aerate the soil.
 Using cow manure or plant waste to fertilize the soil.
 Planting tree belts around the crop fields helps protect the crops from winds & rains.
 Growing more than one crop in a given farmland per year not only provides variety but
also helps replenish nutrients in the soil.

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  Placing guard dogs such as German Shepards helps protect the farmlands against animals
like rabbits & wild cattle.
Steps such as these can help reduce the use of chemicals in growing crops and help to
increase crop yield. Growing of crops in such a manner is called organic farming.

Radioactive wastes
The waste produced from the nuclear fission of heavy atoms such as uranium, thorium etc
for the production of power is radioactive waste. This waste is highly toxic and causes
mutations and cancer. It has to be dealt with utmost caution. The nuclear waste should be
stored after heavy treatment and packed in special containers. It should be buried deep
under the ground for minimum of 60 – 80 years for the waste to stabilize. Even then there
is a high chance of nuclear contamination of the surrounding areas & the ground water.
Failure of nuclear power plants can have disastrous consequences. The use of nuclear
fuels should be avoided if possible.
Greenhouse effect and global warming
Global warming refers to the heating up of the Earth due to greenhouse effect.
Greenhouse effect is caused when gases such as CO2, CH4 etc increase in the atmosphere
& this leads to the heating up of the earth as these are good absorbers of heat. These gases
prevent the excess heat from leaving the Earth‘s atmosphere thus resulting in greenhouse
effect.
Presently the earth is 0.9oC hotter than normal, if earth‘s temperature continues to rise
then it could give rise to runaway global warming or the El Nino Effect. Over time this
could disrupt the delicate pattern of ocean currents & give rise to another Ice Age which
could be followed by mass extinction of several species and even endanger the Human
Race.
Global warming can have grave consequences on the health of the planet & the
biodiversity within it. Already thousands of species of flora & fauna have become extinct.
The melting of ice caps will result in flooding of low lying areas; massive tsunamis; more
powerful, fierce & unpredictable tornados; terrible storms & droughts etc.

Scientists predict that about 3 – 4 billion humans would lose their lives mostly from
developing countries by the year 2050. Finally the resulting Ice Age would have a
devastating effect on the planet.
We must control global warming to ensure that the biodiversity on Earth is
conserved. The following steps can help reduce global warming:
 Use of Hydrogen fuels & reducing the dependence on fossil fuels.
 Improving the efficiency of engines & turbines can drastically reduce pollution &
also help save millions of Dollars\Euros every year.
 Controlling & reducing the human population.
 Planting hundreds of trees across cities & in homes.
 Using Magnetic trains. Mag - Lev trains are faster than planes & cause very little
or no pollution compared to electric trains.
 Preventing Deforestation & use of Carbon Credits.

Depletion of ozone layer

The depletion of ozone layer is one of the major cause for cancer. Ozone is formed in the stratosphere
by the effect of UV rays on O2. The thickness of ozone is measured in Dobson units. The UV rays

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act on the CFCs to release freons that react with ozone to release pure oxygen. The freons merely act
as catalysts & are not used up in the reaction. Hence the released freons have a continuous harmful
effect on the ozone layer.

The CFCs released in the lower part of the atmosphere move upwards towards the south pole, hence
depleting the ozone layer over Antarctica. There are around 10 types of UV rays. Out of these the
most common ones are UVa, UVb, UVc. UV-a or black light (long wave) : It is used in tanning beds
& to find counterfeit money. UV-b (medium wave): Absorbed by ozone layer under normal
conditions. It causes snow blindness, cataract, inflammation of cornea, aging of skin, skin cancer etc
if exposed to the body. UV-c (short wave) : Used as a germicidal , in laboratories & in the treatment
of water. Realizing the harmful effects of CFCs an international treaty called the Montreal Protocol
was signed at Montreal, Canada in 1987 (effective 1989) to control CFCs emission throughout the
world.

Degradation by improper utilization & maintenance of resources Soil erosion & Desertification:

It is a result of poor maintenance of top soil. Fertile top soil takes years to form but it can easily be
removed especially due to human activities such as over – cultivation, over – grazing, deforestation,
poor irrigation practices, use of chemicals etc. It results in degradation of the top soil & the land
becomes barren. Urbanization is also a major problem of desertification.
Water logging & soil salinity: Over irrigation especially without proper drainage leads to water
logging of the soil. It also increases the salt content of the soil which heavily affects the health of
plants. It is a post – green revolution problem.

Deforestation
Deforestation refers to the cutting down of trees for wood for furniture, fire wood, paper, to make
cigarettes, to clear land for cultivation, due to the expansion of cities etc. Jhum cultivation is also a
major contributor to deforestation in India.

Deforestation has a very harmful effect on the environment. It leads to desertification, global
warming, acid rain, depletion & pollution of ground water levels, loss of biodiversity in the affected
areas etc.

There are various efforts to conserve the forests.

 Hug a tree movement.

 Organizations fighting to save trees.
 In India Amrita Devi Bishnoi Wildlife Protection Award is given to individuals or
organizations that show courage & dedication towards biodiversity.
There are various ways in which we can help to conserve trees:
 Avoiding the use paper to read books & news.
 Reforestation
 Controlling growth of Human population & the expansion of cities.
 Forming groups and communities to fight against deforestation.
 Seeking help from governmental and non – governmental organizations for the conservation
of forests.
 Creating awareness about illegal selling of forestlands to companies & rich social groups.
 Pressurizing the governments to pass laws to conserve trees & to check the deforestation
caused by private companies, to limit the deforestation they cause.

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1.2.2 Social issues
Definition
A social issue (also called a social problem or a social illness or even a social conflict) refers to an
issue that influences and is opposed by a considerable number of individuals within a society. It is
often the consequence of factors extending beyond an individual's control and local geographical
environment. In some cases, a social issue is the source of a conflicting opinion on the grounds of
what is perceived as a morally just personal life or societal order. Different societies have different
perceptions. Social issues are distinguished from economic issues; however, some issues (such
as immigration) have both social and economic aspects. There are also issues that don't fall into either
category, such as wars.
What is Social Issues?
A social problem is an issue within the society that makes it difficult for people to achieve their full
potential. Poverty, unemployment, unequal opportunity, racism, and malnutrition are examples of
social problems. So are substandard housing, employment discrimination, and child abuse and
neglect. Crime and substance abuse are also examples of social problems. Not only do social
problems affect many people directly, but they also affect all of us indirectly. The drug-abusing
driver becomes the potential traffic accident that doesn’t choose its victims by race, color, or creed
but does so randomly. The child of abusive parents all too often becomes the victim or perpetrator
of family violence as an adult.
Social problems tend to develop when we become neglectful and fail to see that serious problems
are developing. Between 1988 and 1993, for example, the United States saw a phenomenal increase
in youth violence. In my book about children who commit violent acts (Glicken, 2004b), I
documented that children younger than age 12 cause one third of all fires resulting in death and that
the average age of children who sexually abuse other children is younger than age 10. According to
Osofsky and Osofsky (2001), “The homicide rate among males 15–24 years old in the United States is
10 times higher than in Canada, 15 times higher than in Australia, and 28 times higher than in France
or Germany” (p. 287). These are troubling examples of social problems that affect all of us.
A social problem is a condition that at least some people in a community view as being undesirable.
Other social problems may be viewed as such by certain groups of people. Teenagers who play loud
music in a public park obviously do not view it as a problem, but some other people may consider it
an undesirable social condition. Some nonsmokers view smoking as an undesirable social condition
that should be banned or restricted in public buildings.

Every newspaper is filled with stories about undesirable social conditions. Examples include crime,
violence, drug abuse, and environmental problems. Such social problems can be found at the local,

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state, national and international levels. You will be focusing in the Public Policy Analyst on social
problems in your own community.

List of social issues

Social stratification
Social stratification and Systems of social stratification
The caste system in India resulted in the oppression of those referred to as Untouchables for
the past 3,000 years.[citation needed] The caste system was recently banned by the United
Kingdom,[5] and the United States is also planning to ban it.
Economic issues
Unemployment rates vary by region, gender, educational attainment, and ethnic group.
In most countries (including the developed countries), many people are poor and depend
on welfare. In 2007 in Germany, one in six children depended on welfare. That is up from
only one in seventy-five in 1965.
Social disorganization
Social disorganization theory
So-called "problem neighbourhoods" exist in many countries. These neighbourhoods tend to
have a high drop-out rate from secondary school, and children growing up in these
neighbourhoods have a low probability of going to college compared to children who grow
up in other neighbourhoods. Abuse of alcohol and drugs is common in these neighbourhoods.
Often these neighbourhoods were founded out of best intentions.
Age and the life course
Agism
Throughout the life course, there are social problems associated with different ages. One such
social problem is age discrimination. An example of age discrimination is when a particular
person is not allowed to do something or is treated differently based on age.
Inequality
Social inequality
Inequality is "the state or quality of being unequal". Inequality is the root of a number of
social problems that occur when things such as gender, race, and age may affect the way a
person is treated. A past example of inequality as a social problem is slavery in the United
States. Africans brought to America were often enslaved and mistreated, and did not share the
same rights as the white population of America (for example, they were not allowed to vote).
Education and public schools

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Education is arguably the most important factor in a person's success in society. As a result,
social problems can be raised by the unequal distribution of funding between public schools,
such as that seen in the United States.[10] The weak organizational policy in place and the
lack of communication between public schools and the federal government has begun to have
major effects on the future generation. Public schools that do not receive high standardized
test scores are not being funded sufficiently to actually reach the maximum level of education
their students should be receiving.
Work and occupations
Social problems in the workplace include occupational stress, theft, sexual harassment, wage
inequality, gender inequality, racial inequality, health care disparities, and many more.
Environmental racism
Environmental racism exists when a particular place or town is subject to problematic
environmental practices due to the racial and class components of that space. In general, the
place or town is representative of lower income and minority groups. Often, there is more
pollution, factories, dumping, etc. that produce environmental hazards and health risks which
are not seen in more affluent cities.
1.2.3 Labor and related issues
Labour in India refers to employment in the economy of India. In 2012, there were around 487
million workers, the second largest after China.[1] Of these over 94 percent work in unincorporated,
unorganised enterprises ranging from pushcart vendors to home-based diamond and gem polishing
operations. The organised sector includes workers employed by the government, state-owned
enterprises and private sector enterprises. In 2008, the organised sector employed 27.5 million
workers, of which 17.3 million worked for government or government owned entities.
Over 94 percent of India's working population is part of the unorganised sector. In local
terms, organised sector or formal sector in India refers to licensed organisations, that is, those who are
registered and pay sales tax, income tax, etc. These include the publicly traded companies,
incorporated or formally registered entities, corporations, factories, shopping malls, hotels, and large
businesses. Unorganised sector, also known as informal sector or own account enterprises, refers to all
unlicensed, self-employed or unregistered economic activity such as owner manned general stores,
handicrafts and handloom workers, rural traders, farmers, etc.
India's Ministry of Labour, in its 2008 report, classified the unorganised labour in India into four
groups. This classification categorized India's unorganised labour force by occupation, nature of
employment, specially distressed categories and service categories. The unorganised occupational
groups include small and marginal farmers, landless agricultural labourers, share croppers, fishermen,
those engaged in animal husbandry, beedi rolling, labeling and packing, building and construction

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workers, leather workers, weavers, artisans, salt workers, workers in brick kilns and stone quarries,
workers in saw mills, and workers in oil mills. A separate category based on nature of employment
includes attached agricultural labourers, bonded labourers, migrant workers, contract and casual
labourers. Another separate category dedicated to distressed unorganised sector includes toddy
tappers, scavengers, carriers of head loads, drivers of animal driven vehicles, loaders and unloaders.
The last unorganised labour category includes service workers such as midwives, domestic workers,
barbers, vegetable and fruit vendors, newspaper vendors, pavement vendors, hand cart operators, and
the unorganisedretail.
The unorganised sector has low productivity and offers lower wages. Even though it accounted for
over 94 percent of workers, India's unorganised sector created just 57 percent of India's national
domestic product in 2006, or about 9 fold less per worker than the organised sector. [10] According to
Bhalla, the productivity gap sharply worsens when rural unorganised sector is compared to urban
unorganised sector, with gross value added productivity gap spiking an additional 2 to 4 fold
depending on occupation. Some of lowest income jobs are in the rural unorganised sectors. Poverty
rates are reported to be significantly higher in families where all working age members have only
worked the unorganised sector throughout their lives.[11][12]
Agriculture, dairy, horticulture and related occupations alone employ 52 percent of labour in India.
About 30 million workers are migrant workers, most in agriculture, and local stable employment is
unavailable for them.
India's National Sample Survey Office in its 67th report found that unorganised manufacturing,
unorganised trading/retail and unorganised services employed about 10 percent each of all workers
nationwide, as of 2010. It also reported that India had about 58 million unincorporated non-
Agriculture enterprises in 2010.
In the organised private sector with more than 10 employees per company, the biggest employers in
2008 were manufacturing at 5 million; social services at 2.2 million, which includes private schools
and hospitals; finance at 1.1 million which includes bank, insurance and real estate; and agriculture at
1 million. India had more central and state government employees in 2008, than employees in all
private sector companies combined. If state-owned companies and municipal government employees
were included, India had a 1.8:1 ratio between public sector employees and private sector employees.
In terms of gender equality in employment, male to female ratio was 5:1 in government and
government owned enterprises; private sector fared better at 3:1 ratio. Combined, counting only
companies with more than 10 employees per company, the organised public and private sector
employed 5.5 million women and 22 million men.
Given its natural rate of population growth and aging characteristics, India is adding about 13 million
new workers every year to its labour pool. India's economy has been adding about 8 million new jobs
every year predominantly in low paying, unorganised sector. The remaining 5 million youth joining

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the ranks of poorly paid partial employment, casual labour pool for temporary infrastructure and real
estate construction jobs, or in many cases, being unemployed.
Unorganised labour issues
Many issues plague unorganised labour. India's Ministry of Labour has identified significant issues
with migrant, home or bondage labourers and child labour.
1. Migrant workers
Migrant skilled and unskilled labourers of India constitute about 40 to 85 percent of low wage
working population in many parts of the Middle East. They are credited to having built many of the
notable buildings in the Arab countries, including the Burj Khalifa in Dubai (above). Various claims
of poor living conditions and labour abuse have been reported.
India has two broad groups of migrant labourers - one that migrates to temporarily work overseas, and
another that migrates domestically on a seasonal and work available basis.
About 4 million Indian-origin labourers are migrant workers in the middle east alone. They are
credited to have been the majority of workers who built many of Dubai, Bahrain, Qatar and Persian
Gulf modern architecture, including the Burj Khalifa, the tallest building in world's history which
opened in January 2010. These migrant workers are attracted by better salaries (typically US$2 to 5
per hour), possibility of earning overtime pay, and opportunity to remit funds to support their families
in India. The Middle East-based migrant workers from India remitted about US$20 billion in 2009.
Once the projects are over, they are required to return at their own expenses, with no unemployment
or social security benefits. In some cases, labour abusessuch as unpaid salaries, unsafe work
conditions and poor living conditions have been claimed.
Domestic migrant workers have been estimated to be about 4.2 million. These workers range from
full-time to part-time workers, temporary or permanent workers. They are typically employed for
remuneration in cash or kind, in any household through any agency or directly, to do the household
work, but do not include any member of the family of an employer. Some of these work exclusively
for a single employer, while others work for more than one employer. Some are live-in workers, while
some are seasonal. The employment of these migrant workers is typically at the will of the employer
and the worker, and compensation varies.
Debt bondage
Debt bondage in India
Bonded labour is a forced relationship between an employer and an employee, where the compulsion
is derived from outstanding debt. Often the interest accrues at a rate that is so high that the bonded
labour lasts a very long periods of time, or indefinitely. Sometimes, the employee has no options for
employment in the organised or unorganised sectors of India, and prefers the security of any
employment including one offered in bonded labour form. While illegal, bonded labour relationships
may be reinforced by force, or they may continue from custom. Once an employee enters into a

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bonded relationships, they are characterised by asymmetry of information, opportunity, no time to
search for alternative jobs and high exit costs.
Estimates of bonded labour in India vary widely, depending on survey methods, assumptions and
sources. Official Indian government estimates claim a few hundred thousand labourers are bonded
labourers; while a 1978 estimate placed bonded labour in India to be 2.62 million.[28] The 32nd
National Sample Survey Organisation survey in India estimated 343,000 bonded labourers in 16
major states, of which 285,379 were located and freed by 1996. The major employment sectors for
debt bonded labour include: agriculture, stone quarries, brick kilns, religious and temple workmen,
pottery, rural weaving, fishing, forestry, betel and bidi workers, carpet, illegal mining and fireworks.
Child labour has been found in family debt bonded situations. In each survey, debt bonded labourers
have been found in unorganised, unincorporated sector.
India enacted Bonded Labour System Abolition Act (1976) to prohibit any and all forms of bonded
labour practice, to protect the bonded labour, and to criminalize individuals and entities that hire, keep
or seek bonded labour.
Child labour
According to 2001 Census, India had 12.6 million children, aged 5–14, who work either part-time or
full-time. Of these over 60 percent work in unorganised agriculture sector, and the rest in other
unorganised labour markets.[30] Poverty, lack of schools, poor education infrastructure and growth of
unorganised economy are considered as the most important causes of child labour in India.
A 2009-2010 nationwide survey found child labour prevalence had reduced to 4.98 million children
(or less than 2% of children in 5-14 age group).
Article 24 of India's constitution prohibits child labour, but only in factories, mines or hazardous
employment. The Indian Penal Code, the Juvenile Justice (care and protection) of Children Act-2000,
and the Child Labour (Prohibition and Abolition) Act-1986 provide a basis in law to identify,
prosecute and stop child labour in India. Nevertheless, child labour is observed in almost all
unorganised, small scale, informal sectors of the Indian economy.
Scholars suggest inflexibility and structure of India's labour market, size of informal economy, legal
hurdles preventing industries from scaling up and lack of modern manufacturing technologies are
major macroeconomic factors encouraging demand for and acceptability of child labour.

1.3.1 Ethical and Governance issues

What is governance
Establishment of policies, and continuous monitoring of their proper implementation, by the
members of the governing body of an organisation, it includes the mechanisms required to
balance the power of the members (with the associated accountability), and their primary
duty of enhancing the prosperity and viability of the organisation.

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“Ethical Governance” is a relatively new term that is used to describe the performance issues in
management and policy making in business, government, politics, International relations, health
care, etc. The principles of Ethical Governance, however, are not new. Ethical Governance is, in
short, anti-corruption whereas authority and its institutions are accountable, effective and efficient,
participatory, transparent, responsive, consensus-oriented, and equitable. These are the major
characteristics of good governance as outlined by the United Nations.
Ethical Governance is integral to sustainable growth, stopping financial meltdowns and economic
degradation, eradication of poverty and income inequalities and also to acheive high standards of
ethical conduct, in the areas of human rights, labour, environment and anti-corruption.
For Ethical Governance to succeed in both theory and practice, there must be transperancy,
openess, information flow, degree of congruence in communication.
Reasons of Governance
1. Avoidance and resolution of conflicts of interest between the company and employees
2. Compliance with all applicable laws, rules, regulations, standards, and policies
3. Emphasis on customer relations to enhance the company‘s reputation
4. Proper use of confidential information
5. Encouragement of whistleblowers to reveal dishonesty and wrongdoings
There are several challenging shareholders issues : Nomination process. Not all shareholders
have a full access to the proxy statements and existing SEC rules allow companies to reject
any proposal pertaining to director election.
Voting System. The prevailing plurality voting system also makes it difficult for shareholders
to monitor their companies.
Proxy Statements. Shareholders of public companies with dispersed ownership have few, if
any, incentives or opportunities to monitor their company‘s business affairs and managerial
activities.
Issues in Governance
1. Accountability: Management should be accountable to board, and board should be
accountable to the shareholders.
2. Transparency: There should be timely and accurate discloser of all the important matters.
3. Fairness: Corporate governance should protect shareholders' rights and treat all of them
equally.
4. Independence: Management should be free from the influence of others. If management
follows these accurately, then there will be no need to think about any other concepts or
theories.

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5. Determination of Control Measure or standard: Specific standard should be considered as
control measure.
Moreover, According to researches, a large majority of internationally significant
organisations state that a focus on environmental issues is of extreme importance if they are
to retain a good position in the global market. Zairi (2000) also argues that the responsibility
of corporate governance is to deal with environmental strategies and create an image of
strong commitment of practicing optimal environmental policies. In order to fulfill the need,
a committee for ethical issues should be established in large organisations. The committee
will overview the role of corporate governance and avoid gap between organisation's vision
and its perception. An image of an organisation that cares forits environmental will, no doubt,
contribute to the organisation being better positioned among its clients and users compared to
organisations that do not reflect high social responsibility.

1.3.2 Corporate Social responsibility

Corporate Social Responsibility
Corporate social responsibility (CSR) is also known by a number of other names: corporate
responsibility, corporate accountability, corporate ethics, corporate citizenship, sustainability,
stewardship, triple bottom line and responsible business, to name just a few.
CSR is an evolving concept that currently does not have a universally accepted definition.
Generally, CSR is understood to be the way firms integrate social, environmental and
economic concerns into their values, culture, decision making, strategy and operations in a
transparent and accountable manner and thereby establish better practices within the firm,
create wealth and improve society.

Figure: Stakeholder
Theories and Models of CSR

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 There are various theories of corporate social responsibility that are developed to
provide a hand to the organizations which are eager to attain a positive position in the mind
of the target market. Corporate social responsibility is related to the obligation an
organization has for the society. The CSR theories state that it is the obligation of
organizations to perform their business operations by keeping the view of stakeholders. It is
expected from the organizations to be socially responsible. CSR is a strategic necessity that is
considered as a critical success factor for the organization (Corporate Social Responsibility
2009). There are mainly four theories of CSR, which are applied by the organizations to
develop image of a socially oriented firm. These are as follow:
Instrumental theory: According to this theory of CSR, firms are viewed as an instrument
for the generation of wealth only. The social activities performed by the organizations are
aimed to attain the expected economic outcomes, which are totally oriented towards wealth
creation. After a number of examinations, this theory of CSR is placed into the domain of
valid theory. It establishes a relationship between the CSR policies and the economic results.
It favors the use of social activities for the attainment of economic objectives of wealth
maximization. It applies mainly three approaches that are maximization of shareholders
value, strategies for attaining competitive advantage and marketing related to cause.
First approach states that social investment should be done for attaining the competitive
advantage. Second approach favors that focus of the corporation should be on the natural
resources and their competency. Third approach emphasizes that it is essential for the
organizations to use the social activities for improving their competitive position in the
respective market which further can contribute them to improve the wealth of their
stakeholders. Altruistic activities should be performed by the firm (Ismail 2009).
Political theory: According to this theory, corporations should use their power in the
political field. It states that firms have a powerful status in society, which is entitled to use the
power in a responsible way. It also has three main approaches that are corporate
constitutionalism, integrative social contract and corporate citizenship, which are directed to
different tools. Corporate constitutionalism argues that all the social responsibilities and
authorities are the result of social power, which is occupied by the corporations. Second
approach states that social contract is a bond between the firm and society. This contract is
based on the duties organizations have for the society for which it also attains a lot in terms of
profitability and reputation. Corporate citizenship approach argues that corporations are
similar to citizens who have some responsibilities for the society into which they reside
(Nelgadde March 2010).

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Integrative theory: This theory states that main aim of organizations should be focused on
the satisfaction of requirements of society. It has chiefly four approaches: management issue,
public responsibility, stakeholder management and corporate social performance, which are
aimed to fulfill the social demands. First approach is related to the response of organizations
to the political and social issues. By responding to the issues encountered by political and
social environment, an organization can perform its public responsibility effectively. Second
approach states the use of public policies and legal rules to locate the society. Third approach
is related to the stakeholder management that is aimed to balance the identified interests of all
key members of the stakeholder group. Corporate social performance states that corporation
should identify some process and social legitimacy to respond to the social issues and needs.
Only after searching the social issues and demands, it is possible for the companies to fulfill
the unmet needs of society.
Ethical theory: This theory of CSR states that corporations should focus over the right paths
to create a good society. It also has four approaches that are stakeholder normative theory,
universal rights, sustainable development and common good. The first approach states that
corporations should perform some fiduciary duties towards the stakeholders. For this, a firm
should apply the moral theories. The next approach states that company should consider
rights of human, labor and environment for working in an ethical manner. Sustainable
development focuses on the development of human beings by considering their current and
potential generations.
Social Capital Theory- The term social capital, broadly speaking, refers to social
networks, the reciprocities that arise from them and the value of these in the business
environment. Social capital has become an influential concept in debating and understanding
organizational management. This emerging body of theory has been hailed as a critical link
between the fields of economics, sociology and political science, signifying a re-convergence
of consideration of the economy within a complex social and institutional environment. This
theory has gained importance in CSR studies, particularly those that investigate the concept
from the perspective of smaller businesses.
STAKEHOLDER THEORY- an overview of the evolution of CSR and the recent
developments in this area. This laid the foundation needed for ananalysis of the literature of
stakeholder theory, one of the theoretical frameworks that are often applied in the
investigation of CSR practices in businesses. Stakeholder theory basically relates to
organisational management and business ethics and addresses the morals and values involved
in the management of an organisation (Freeman 1984). Whilst this theory is popular in fields

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like strategic management, finance, accounting, marketing, law and public policy, its greatest
contribution has been in shaping and defining the concepts of CSR and business ethics.
Model of CSR
Model 1: According to first model, CSR is a set of some specific activities, which consist of
philanthropic and charitable donations, advancement of religious, racial and gender diversity
at workplace and human rights, environment and safety. All these activities should be
performed for the society and its welfare. It is an obligation of a firm to consider the key
activities which are aimed to deliver some helpful hands to the society at a whole.
Model 2: This model states that business ethics are considered as a main dimension of CSR.
It mainly focuses on the issues of stakeholders and emphasizes some traditionally linked
areas to ensure the compliance with the ethical code of conducts. It also focuses on the key
aspects related to business ethics that are bribery, antitrust issues, dubious sales, deceit and
pricing policies. It favors the ethical conducts which are aimed to perform the business
activities in an ethical manner along with the fulfillment of stakeholder's requirements (Legal
Perspectives on Corporate Social Responsibility January 2010).
Model 3: According to this model, activities and business procedure of the corporate have a
combined feature of socially responsible behavior that is favorable to the stakeholders.
Behavior of a firm is the mirror of corporate social responsibility, which should be
maintained through some ethical activities by the firms in order to develop a positive image
in front of the target market (Jennings 2004).
These are some pertinent theories and models of corporate social responsibility (CSR) which
should be considered by the organizations which are interested in developing a positive
reputation in the eye of customers. According to these theories and models of CSR,
organizations should invest their resources for ensuring the standards set by CSR. Framework
provided by CSR theories and model is in favor of constructing a better world by showing
proper response to the stakeholders needs (Fang, Huang and Huang January 2010)

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 Model 4: Kang‘s Model Mapped to Wood‘s

1.3.3 Social responsibility of a business firm

Social responsibility is obligation of the decision makers to take decision which protect and
improve the welfare of the society as a whole along with their own interests.
Social responsibility means the intelligent & objective concern for the welfare of society and
leads in the direction of human welfare.
Responsibility towards Customer
1) True and fair information through advertisement.
2) Regular supply of goods
3) Charge reasonable prices
4) Avoid black Marketing
Responsibility towards Shareholder
1) A fair return on investment
2) Provide full and accurate information regarding business
3) Safety of investment
4) Improving the public Image of company
Responsibility towards Employee
1) Fair wages and salaries
2) Good and safety working conditions
3) Opportunities for education training and promotion
4) Workers participation in decision making
Responsibility towards Government
1) To abide by the laws of the land
2) To pay taxes honestly
3) To avoiding corrupting
4) To encourage fare trade
5) To avoid monopoly

1.3.4 Social responsibility of business stakeholders (owners, employees, consumers and

community);
Concept of Stakeholder
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Sparked by the labor movement, the concept of Corporate Social Responsibility (CSR) has only been
in existence since the 1950‘s. Society began to expect companies to accept additional social
responsibilities outside of the fundamental business functions, including being profitable and obeying
the law. Starting in the 1960‘s and 1970‘s, the civil rights movement and environmental protection
agencies influenced the way consumers looked at businesses. Consumers believed that those with
great power also had great responsibility to positively influence people, the environment, and society.
Businesses were called on to help solve global problems, aimed at making the world a cleaner, safer,
and more productive place. This view was based on the concept that businesses should extend beyond
their required economic and legal responsibilities to accept ethical, moral, and discretionary
responsibilities in order to improve society. This view became the foundation for what we know in
today‘s business world as Corporate Social Responsibility. In order to completely understand the
context of Corporate Social Responsibility, you must first understand the role of stakeholders for an
organization. The next section will describe the role of stakeholders.
Definition
Stakeholders By definition, stakeholders are the individuals or groups that have an interest in the
organization and are affected by its actions. Stakeholders are customers, employees, suppliers,
board of directors, owners, shareholders, government agencies, unions, political groups, the media,
and others. Within the broad spectrum of stakeholders, stakeholders can be broken into two
different groups: primary stakeholders and secondary stakeholders.
Organization builds ethical and social elements in its operating philosophy and integrate them in its
business model, it is said to have possessed a self-regulating mechanism that guides, monitor and
ensure its adherence to law, ethics, and norms in carrying out business activities that ensures the
serving the interest of all external and internal stakeholders. In other words, the objective of being
socially responsible business is achieved when its activities meet or exceed the expectations of all its
stakeholders.

Here is a model for evaluating an organization‘s social performance. The model indicates that total
corporate social responsibility can be subdivided into four criteria-economic, legal, ethical and
discretionary responsibilities.

These responsibilities are ordered from bottom to top in the following illustration. Let‘s discuss each
one them briefly.

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Economic responsibilities:
The first criterion of social responsibility is economic responsibility. The business institution is, above
all, the basic economic unit of society. Its responsibility is to produce goods and services that a
society wants and to maximise profit for its owners and shareholders. Economic responsibilities,
carried to the extreme, is called profit-maximizing view; it was advocated by Nobel economist Milton
Friedman. This view argued that a company should be operated on a profit-oriented basis, with its
sole mission to increase its profits so long as is stays withing the rule of the game.
The purely profit-maximizing view is no longer considered an adequate criterion of performance in
the world in general. Treating economic gain in the social as the only social responsibility can lead
companies into trouble.
Legal responsibilities
All modern societies lay down ground rules, laws and regulations that businesses are expected to
follow. Legal responsibility defines what society deems as important with respect to appropriate
corporate behavior. Businesses are expected to fulfil their economic goals within the legal framework.
Legal requirements are imposed by local councils, state and federal governments and their regulating
agencies. Organizations that knowingly break the law are poor performers in this category.
Intentionally manufacturing defective goods or billing a client for work not done is illegal. Legal
sanctions may include embarrassing public apologies or corporate ‗confessions‘.
Ethical responsibilities
Ethical responsibility include behavior that is not necessarily codified into law and may not serve the
organization‘s direct economic interests. To be ethical, organization‘s decision makers should act with

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equity, fairness and impartiality, respect the rights of individuals, and provide different treatments of
individual only when differences between them are relevant to the organization‘s goals and
tasks. Unethical behavior occurs when decisions enable an individual or organization to gain expense
of society.
Discretionary responsibilities
Discretionary responsibility is purely voluntary and guided by an organization‘s desire to make social
contributions not mandated by economics, laws or ethics. Discretionary activities include generous
philanthropic contributions that offer no payback to the organization and are not expected.
Discretionary responsibility is the highest criterion of social responsibility, because it goes beyond
societal expectations to contribute to the community‘s welfare.
1.3.5 Response of Indian firms towards CSR.
The history of CSR in India has its four phases which run parallel to India's historical
development and has resulted in different approaches towards CSR. However the phases are
not static and the features of each phase may overlap other phases.
The First Phase
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 the colonial rule in India from 1850s onwards the approach
towards CSR was 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 selfless and religious motives but also
influenced by caste groups and political objectives.
The Second Phase
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. "I desire to end
capitalism almost, if not quite, as much as the most advanced socialist. But our methods
differ. My theory of trusteeship is no make-shift, certainly no camouflage. I am confident that

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it will survive all other theories." This was Gandhi's words which highlights his argument
towards his concept of "trusteeship". Gandhi's influence put pressure on various Industrialists
to act towards building the nation and its socio-economic development.[4] 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 un-touchability, encourage empowerment of
women and rural development.
The Third Phase
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. However the
public sector was effective only to a certain limited extent. This led to shift of expectation
from the public to the private sector and their active involvement in the socio-economic
development of the country became absolutely necessary. In 1965 Indian academicians,
politicians and businessmen set up a national workshop on CSR aimed at reconciliation. They
emphasized upon transparency, social accountability and regular stakeholder dialogues. In
spite of such attempts the CSR failed to catch steam.
The Fourth Phase
In the fourth phase (1980 until the present) Indian companies started abandoning their
traditional engagement with CSR and integrated it into a sustainable business strategy. In
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 and able to
contribute towards social cause. Globalization has transformed India into an important
destination in terms of production and manufacturing bases of TNCs are concerned. As
Western markets are becoming more and more concerned about and labour and

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environmental standards in the developing countries, Indian companies who export and
produce goods for the developed world need to pay a close attention to compliance with the
international standards.
Current State of CSR in India

As discussed above, CSR is not a new concept in India. Ever since their inception, corporates
like the Tata Group, the Aditya Birla Group, and Indian Oil Corporation, to name a few, have
been involved in serving the community.Through donations and charity events, many other
organizations have been doing their part for the society. The basic objective of CSR in these
days is to maximize the company's overall impact on the society and stakeholders. CSR
policies, practices and programs are being comprehensively integrated by an increasing
number of companies throughout their business operations and processes. A growing number
of corporates feel that CSR is not just another form of indirect expense but is important for
protecting the goodwill and reputation, defending attacks and increasing business
competitiveness.
Companies have specialised CSR teams that formulate policies, strategies and goals for their
CSR programs and set aside budgets to fund them. These programs are often determined by
social philosophy which have clear objectives and are well defined and are aligned with the
mainstream business. The programs are put into practice by the employees who are crucial to
this process. CSR programs ranges from community development to development in
education, environment and healthcare etc.
For example, a more comprehensive method of development is adopted by some corporations
such as Bharat Petroleum Corporation Limited, Maruti Suzuki India Limited, and Hindustan
Unilever Limited. Provision of improved medical and sanitation facilities, building schools
and houses, and empowering the villagers and in process making them more self-reliant by
providing vocational training and a knowledge of business operations are the facilities that
these corporations focus on.
On the other hand, the CSR programs of corporations like GlaxoSmithKline Pharmaceuticals‘
focus on the health aspect of the community. They set up health camps in tribal villages
which offer medical check-ups and treatment and undertake health awareness programs.
Some of the non-profit organizations which carry out health and education programs in
backward areas are to a certain extent funded by such corporations.
Also Corporates increasingly join hands with Non-governmental organizations (NGOs) and
use their expertise in devising programs which address wider social problems.

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For example, a lot of work is being undertaken to rebuild the lives of the tsunami affected
victims. This is exclusively undertaken by SAP India in partnership with Hope Foundation,
an NGO that focuses mainly on bringing about improvement in the lives of the poor and
needy . The SAP Labs Center of HOPE in Bangalore was started by this venture which looks
after the food, clothing, shelter and medical care of street children.
CSR has gone through many phases in India. The ability to make a significant difference in
the society and improve the overall quality of life has clearly been proven by the corporates.
Not one but all corporates should try and bring about a change in the current social situation
in India in order to have an effective and lasting solution to the social woes . Partnerships
between companies, NGOs and the government should be facilitated so that a combination of
their skills such as expertise, strategic thinking, manpower and money to initiate extensive
social change will put the socio-economic development of India on a fast track.
The CSR principles which are included in the CSR Frame of Reference are, for the benefit of
this report, divided into four CSR aspects: operational principles (on how companies can give
account for their actions), social, environmental and economic sustainability.

UNIT -2
2.1.1 CSR and Consumer Protection:
2.2.1Consumerism
2.3.1Unethical issues in functional aspects of management (sales, marketing and
technology etc.);
2.4.1 Competitive strategy.
UNIT -3
3.1.1 Wider concept of social responsibility
3.2.1 Cost-benefit analysis of corporate social responsibility and good corporate
citizenship (Social / moral obligations and survival).
3.3.1 Ethics
3.4.1 Human rights
3.5.1 Balanced global environment, concern of global warming
3.6.1 judicious use of natural resources.
UNIT -4

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 4.1.1 Corporate Ethics: Fundamental principles of ethics
4.1.2 Values concepts, types and formation;
4.1.3 Principles and concepts of managerial ethics
4.1.4 Relevance of ethics and values in business
4.1.5 Corruption in businesses
4.1.6 Values of Indian managers
4.1.7 Factors influencing business ethics.
UNIT -5
4.1.8 Case analysis of failure of leading corporate and top auditing firms due to
lapses in ethical and social responsibilities
4.1.9 Role of international trade and business organizations
4.1.10 Concept of Ombudsman
4.1.11 Overview of NGO and CSR

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