A company, being a legal entity but unlike a living person, exercises its acts through its

board of directors. Board of director is a body of directors who steer the mind and will of
the company. These enlistments ,present in the memorandum of association and Article of
association, are submitted to the registrar at the time of incorporation. The Memorandum
of association and Article of association, thus, bounds the board of directors in terms of its
duties and powers.

The primary duties of the Board of directors is to serve the interests of the company’s
common shareholder by maximizing the profits of the company. However, in today’s word
the interest of other stakeholders, community and environments in which the company
operates needs to be protected as well. These responsibilities are together knows as the
Social Responsibilities of the company (or enterprise).

The social responsibilities of an enterprise can be bundled under seven key core subjects
I. Organizational governance,
II. Human rights
III. Labor practices
IV. Environment
V. Fair operating practices
VI. Consumer issues
VII. Community involvement and development.

These responsibilities are exercised through the actions of an enterprise towards its
shareholders, employees, consumers, environment & community. The responsibilities are
herein elaborated in brief :-

A. Responsibility towards Shareholders :- The responsibility of an enterprise towards

its shareholders forms the cornerstone of its governance. The enterprise, through
board of directors and executive managers, works toward furthering the rights of
shareholders, protecting the shareholders’ interests and enriching shareholders
 capital (by maximizing the profit). Additionally, the enterprise should be transparent
in disclosing information to the shareholders. The legality of an enterprise actions
are set by the Companies Act,2013. These responsibilities encompass the core
subject of 1. Organizational governance.

B. Responsibility towards Employees :- Enterprise success depends largely on the

morale of it’s the company’s employees. Hence , one the major social responsibility
of the company is to ensure good and fair employment & industrial practices for the
employees. These practices include payment of fair wages, non-discrimination
amongst gender, healthy working environment & conforming to existing labor laws.
These responsibilities party cover the core subjects of 1. Organizational governance,
2. Human rights & 3. Labor practices.

C. Responsibilities towards Consumers :- In today’s world, consumers are the king who
direct companies. Enterprise responsibilities towards consumer include supply of
goods or services that are reasonably priced (especially for essential or life saving
items). The companies should abstain from forming cartel and should not misinform
consumer through misleading advertisements. Additionally the companies fulfill
their social responsibility by providing after sales services to the consumers. These
responsibilities cover the core subjects of 5. Fair operating practices, & 6. Consumer
issues.

D. Responsibilities towards Environment :- Companies in their endeavor to maximize

profits should not recklessly or negligently pollute the environment. The social
responsibility of the companies, in this regards, pertains to attempts wherein it tries
to minimize air, water, noise or any other form of pollution which is detrimental to
the environment. These attempts include abstaining from dumping toxic waste in
the water bodies, installation of filters to control air particulate matters, adjusting to
cleaner form of fuels etc. Additionally the companies should abide by the local
environmental laws. These responsibilities cover the core subjects of 4. Environment.

E. Responsibilities towards Community in particular & Society at Large :- In addition,

to the responsibilities of a company towards shareholders, employees, consumers
or environment, are the responsibilities of an enterprise towards the immediate
community in which it operates. Involving the community by offering employments,
upskilling employable population, educating the children’s, etc. are some of the
common actions. These responsibilities, though voluntary, ensure public trust in the
company. These responsibilities cover the core subjects of 7. Community
involvement and development.

In this regard, father of modern industrial India, Mr. Jamshedji Tata had adduced
that “ In a free enterprise, the community is not just another stakeholder in business
but is in fact the very purpose of its existence”.

In addition to the 7 core subject, the below seven key principles governs the socially
responsible behavior for a company. These seven behavior include 1. Accountability 2.
Transparency, 3. Ethical behavior, 4. Respect for stakeholder’s interests 5. Respect for rule
of law, 6. Respect for international norms, & 7. Respect for human rights.

The responsibilities of an enterprise towards its shareholders are governed by the

Companies Act. The enterprise (publicly listed) are required to be transparent to their
shareholder by submitting audited balance sheets, income & cash flow statements.
Additionally the shareholders are actively involved in electing the Board of Directors.
However, in the year 2014, GOI amended the Companies Act, 2013 to include the article of
Corporate Social Responsibility (CSR) wherein businesses have to invest their profit in areas
such as education, poverty, gender equality etc. The act, thereby, mandated the
responsibility of an enterprise towards environment, community etc, which were ignored in
the earlier Act.

Some of the notable examples of CSR include :-

 Tata Group :- The conglomerate carries out various CSR projects primarily aimed at
community improvement and poverty alleviation. It engages in activities like women
empowerment, income generation for local, rural community development, provides
scholarship and endowment to budding students, healthcare infrastructure
expansion etc.
 ITC Group :- Hotels, FMCG & IT major ITC group aims to provide sustainable
livelihood opportunities for sixty lacs people and through its e-coupal program
envisages to connect fifty thousand rural village via modern age internet connection.

References :
https://www.india-briefing.com/news/corporate-social-responsibility-india-5511.html/
https://www.economicsdiscussion.net/business/social-responsibility/social-
responsibility-of-business/10141
https://asq.org/quality-resources/social-responsibility#:~:text=Social%20responsibility
%20in%20business%2C%20also,%2C%20economic%2C%20and%20environmental
%20issues.
http://cbseacademic.nic.in/web_material/Curriculum21/publication/srsec/UNIT7_BA_XII.
pdf