BGS-Module 2

CORPORATE GOVERNANCE
 Introduction-What is
corporate
Corporate governance is the system of principles, policies,
governance?
procedures, and clearly defined responsibilities and accountabilities
used by stakeholders to overcome the conflicts of interest inherent
in the corporate firm.
◦ Hence, the importance of understanding the different forms of business.

Corporate governance affects the operational risk and, hence,

sustainability of a corporation.
◦ The quality of a corporation’s corporate of governance affects the risks and
value of the corporation.
◦ Effective, strong corporate governance is essential for the efficient functioning of
markets.

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Corporate governance(CG)
Corporate governance broadly refers to the mechanisms,
processes and relations by which corporations are controlled and
directed.
Governance structures and principles identify the distribution of rights
and responsibilities among different participants in the corporation (such
as the board of directors, managers, shareholders, creditors, auditors,
regulators, and other stakeholders) and includes the rules and
procedures for making decisions in corporate affairs.
Corporate governance includes the processes through which
corporations' objectives are set and pursued in the context of the
social, regulatory and market environment.
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Core Attributes of an
effective corporate
governance system

4
Corporate Governance: Introduction
and definition
What is Corporate Governance?
Corporate Governance refers to the way a corporation is governed. It is the technique by
which
companies are directed and managed. It means carrying the business as per the
stakeholders’ desires. It is actually conducted by the board of Directors and the
concerned committees for the company’s stakeholder’s benefit. It is all about balancing
individual and societal goals, as well as, economic and social goals.
Corporate Governance is the interaction between various participants (shareholders,
board of
directors, and company’s management) in shaping corporation’s performance and the
way it is proceeding towards. The relationship between the owners and the managers
in an organization must be healthy and there should be no conflict between the two.
The owners must see that
individual’s actual performance is according to the standard performance. These 5
 Theoretical basis for corporate
governance-Agency Theory of CG
The principal–agent problem, in political science and economics, (also known as agency dilemma or
theory of agency) occurs when one person or entity (the "agent") is able to make decisions on
behalf of, or that impact, another person or entity: the "principal".
This dilemma exists in circumstances where the agent is motivated to act in his own best interests,
which are contrary to those of the principal, and is an example of moral hazard.
Common examples of this relationship include corporate management (agent) and shareholders
(principal), or politicians (agent) and voters (principal).
Consider a legal client (the principal) wondering whether his lawyer (the agent) is recommending
protracted legal proceedings because it is truly necessary for the client's well being, or because it
will generate income for the lawyer.
In fact the problem can arise in almost any context where one party is being paid by another to do
something where the agent has a small or nonexistent share in the outcome, whether in formal
employment or a negotiated deal such as paying for household jobs or car repairs.

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 Specific sources of
conflict: Agency
Management–Shareholder

relationships
conflicts

Board
Manager Shareholde
s of rs
directo
rs

Director–Shareholder
conflicts

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 Management–Shareholder
Conflicts
✔Shareholders entrust management with funds from reinvested
earnings or newly issued stock, which management invests.
✔The overarching objective is to maximize shareholders’ wealth.
✔Issue: Managers are human
✔ Managers may be more interested in expanding the size of the business,
bonuses based
on earnings, taking on excessive risks, or job security.
✔ Managers may consume excessive perquisites, or in effect, take advantage
of their position to spend excessively on things for themselves.
✔ Bottom line: there may be agency costs in terms of the explicit and implicit
costs when managers do not act in the best interest of shareholders.
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 Director–shareholder
conflicts
The board of directors are an intermediary between the
shareholders and management, and represent shareholders’
interests by:
◦Monitoring managers;
◦Approving strategies and policies;
◦Approving mergers and acquisitions;
◦Approving audit contracts;
◦Reviewing audit contracts and financial contracts;
◦Establishing management compensation;
◦Disciplining poorly performing managers.
A conflict may arise if the board members align with management.
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 Market model and control mode
Issues in corporate governance
❑A system relying on the investors of a firm to exert control over how the corporation is
to be managed.
❑A market-based corporate governance system defines the responsibilities of the
different participants in the company, including shareholders, the board of
directors, management, employees, suppliers and customers.
❑Corporate governance systems have developed differently throughout the world.
❑The market-based corporate governance system is based on Anglo-American law.

❑Since the markets are the primary source of capital, investors are given the most
power in determining corporate policies.
❑ Therefore, the system relies on the capital markets to exert control over the
corporation's
management.
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Japanese Model
This is the business network model, which reflects the cultural
relationships seen in the Japanese keiretsu network, in which
boards tend to be large, predominantly executive and often
ritualistic.
The reality of power in the enterprise lies in the relationships
between top management in the companies in the keiretsu
network.
In the Japanese model the financial institution plays a crucial
role in governance. The shareholders and the main bank
together appoint the board of directors and the president. 11
Japanese
Model

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German Model
The German corporate governance model differs significantly from both the Anglo-US
and the Japanese model, although some of its elements resemble the Japanese model.
Banks hold long-term stakes in German corporations ,bank representatives are elected
to German boards.
However, representation is constant, unlike the situation in Japan
representatives
this were
whereelected
bank to a corporate board only in times of financial distress.
Germany’s three largest universal banks (banks that provide a multiplicity of services)
play a major role; in some parts of the country, public-sector banks are also key
shareholders.
There are three unique elements of the German model that distinguish it from the other
models outlined in this article. Two of these elements pertain to board composition and
one concerns shareholders’ rights

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German Model

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Indian Model
The Securities and Exchange Board of India (SEBI) Committee on
Corporate Governance defines corporate governance as the
"acceptance by management of the inalienable rights of shareholders
as the true owners of the corporation and of their own role as trustees
on behalf of the shareholders”.
It is about commitment to values, about ethical business conduct and
about making a distinction between personal & corporate funds in the
management of a company

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16
Importance/Relevance of corporate
governance
Corporate governance is the way a corporation polices itself.
In short, it is a method of governing the company like a sovereign state, instating its
own
customs, policies and laws to its employees from the highest to the lowest levels.

Corporate governance is intended to increase the accountability of the company and

to avoid massive disasters before they occur.
Failed giant Kingfisher, and its bankrupt employees and shareholders, is a prime
argument for
the importance of solid corporate governance.

Well-executed corporate governance should be similar to a police department Internal

affairs unit, weeding out and eliminating problems with extreme prejudice.
A company can also hold meetings with internal members, such as shareholders and 17
Importance of corporate
governance

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 Importance of corporate
Changing Ownership Structure : In recent years, the ownership structure of companies has changed a lot. Public financial
governance
institutions, mutual funds, etc. are the single largest shareholder in most of the large companies. So, they have effective control
on the management of the companies. They force the management to use corporate governance. That is, they put pressure on
the management to become more efficient, transparent, accountable, etc. The also ask the management to make
consumer-friendly policies, to protect all social groups and to protect the environment. So, the changing ownership structure
has resulted in corporate governance.

Importance of Social Responsibility : Today, social responsibility is given a lot of importance. The Board of Directors have to
protect the rights of the customers, employees, shareholders, suppliers, local communities, etc. This is possible only if they
use corporate governance.

Growing Number of Scams : In recent years, many scams, frauds and corrupt practices have taken place. Misuse and
misappropriation of public money are happening everyday in India and worldwide. It is happening in the stock market, banks,
financial institutions, companies and government offices. In order to avoid these scams and financial irregularities, many
companies have started corporate governance.

Indifference on the part of Shareholders : In general, shareholders are inactive in the management of their companies. They
only attend the Annual general meeting. Postal ballot is still absent in India. Proxies are not allowed to speak in the meetings.
Shareholders associations are not strong. Therefore, directors misuse their power for their own benefits. So, there is a need for
corporate governance to protect all the stakeholders of the company.

Globalisation : Today most big companies are selling their goods in the global market. So, they have to attract foreign investor
and foreign customers. They also have to follow foreign rules and regulations. All this requires corporate governance. Without
Corporate governance, it is impossible to enter, survive and succeed the global market.

Takeovers and Mergers : Today, there are many takeovers and mergers in the business world. Corporate governance is required
to protect 19
 Obligation to society, obligation to investors, Obligation to
employees, obligation to customers, managerial
❑Stakeholder
obligations(stakeholders model)
theory, on the other hand, states that a company owes a responsibility to a wider
group of stakeholders, other than just shareholders.
❑A stakeholder is defined as any person/group which can affect/be affected by the actions of a
business. It includes employees, customers, suppliers, creditors and even the wider community
and competitors.
❑Edward Freeman, the original proposer of the stakeholder theory, recognised it as an important
element of Corporate Social Responsibility (CSR), a concept which recognises the responsibilities
of corporations in the world today, whether they be economic, legal, ethical or even philanthropic.
❑Nowadays, some of the world’s largest corporations claim to have CSR at the centre of their
corporate strategy.
❑Whilst there are many genuine cases of companies with a “conscience”, many others exploit CSR
as a good
means of PR to improve their image and reputation but ultimately fail to put their words into action.
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21
 Federal regulator of
Governance
Contemporary discussions of corporate governance tend to refer to principles raised in three documents released since 1990:
The Cadbury Report (UK, 1992), the Principles of Corporate Governance (OECD, 1999, 2004 and 2015), the Sarbanes-Oxley
Act of 2002 (US, 2002). The Cadbury and Organisation for Economic Co-operation and Development (OECD) reports present
general principles around which businesses are expected to operate to assure proper governance. The Sarbanes-Oxley Act,
informally referred to as Sarbox or Sox, is an attempt by the federal government in the United States to legislate several of the
principles recommended in the Cadbury and OECD reports.

1) Rights and equitable treatment of shareholders: Organizations should respect the rights of shareholders and help
shareholders to exercise those rights. They can help shareholders exercise their rights by openly and effectively
communicating information and by encouraging shareholders to participate in general meetings.

2) Interests of other stakeholders: Organizations should recognize that they have legal, contractual, social, and market driven
obligations to
non-shareholder stakeholders, including employees, investors, creditors, suppliers, local communities, customers, and policy
makers.

3) Role and responsibilities of the board: The board needs sufficient relevant skills and understanding to review
and challenge management performance. It also needs adequate size and appropriate levels of independence
and commitment.

4) Integrity and ethical behavior::Integrity should be a fundamental requirement in choosing corporate officers and
board members. Organizations should develop a code of conduct for their directors and executives that promotes
ethical and responsible decision making. 22
 Institutional investors and
❑Do the governance
institutional investors (IIs) have a role in the corporate governance (CG) of a
company? Most of the reports on CG have emphasized the role the IIs can play in
CG.
❑The Cadbury Committee (1992), for example, states: “because of their collective
stake, we look to the institutions in particular, with the backing of the Institutional
Shareholders’
Committee, to use their influence as owners to ensure that the companies in which
they have invested comply with the code” (para 6.16).
❑The Kumar Mangalam Birla Committee similarly states: “Given the weight of their
votes, the institutional shareholders can effectively use their powers to influence the
standards of CG.”
❑Contrary to this, some argue that the investment objectives and the compensation
system in the institutional investing companies often discourage their active 23
 Contd
..
CG practices in place, it must get reflected in how the company deals with these
stakeholders.
Thus, for example, if a company has got a good CG system, it would ensure that the
company does not evade the payment of excise duties or corporate income tax to
the government.
The behavior of the company with respect to the above stakeholders can take
any of the following three forms: ·
Positive Form: The company takes extra care (more than legally necessary) of the
stakeholders. Here a company is not required to take this extra care. But it does it
nevertheless to show that it cares.
Neutral Form: The company does exactly what is legally necessary while dealing
with the stakeholders.
Negative Form: The company either does not perform the basic minimum things it is
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Basel III
norms.
Basel III (or the Third Basel Accord) is a global, voluntary regulatory
framework on bank capital adequacy, stress testing, and market liquidity
risk.
It was agreed upon by the members of the Basel Committee on Banking
Supervision in 2010–11, and was scheduled to be introduced from 2013
until 2015; however, changes from 1 April 2013 extended implementation
until 31
March 2018 and again extended to 31 March 2019.
The third installment of the Basel Accords (see Basel I, Basel II) was
developed in response to the deficiencies in financial regulation revealed
by the financial crisis of 2007–08. Basel III is intended to strengthen bank
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 RBI allows banks to expand capital
base to meet Basel III norms
❑At a time when public sector banks (PSBs) have been struggling with a low capital base, the Reserve
Bank of India (RBI) has allowed banks to beef up its capital adequacy by including certain items
such as property value, foreign exchange for calculation of its Tier-I capital.
❑The new norms revealed by the regulator suggest that banks can now include the value of the property
while calculating its Tier-I or core capital base. But not the entire value of the property would be
included; instead only 45 per cent of the property value would be counted.
❑However, this comes with caveats. For instance, the regulator has stated that the property value
would be counted only if the bank is able to sell the property readily at its own will and there is no
legal impediment in selling the property. Apart from this it also mandates that the valuation should
be obtained from two independent valuers, at least once in every three years.

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 CSR-Topics to be covered
❖ Types and nature of social
responsibilities
❖ CSR principles and strategies
❖ models of CSR
❖ Best practices of CSR
❖ CSR in Indian perspective
❖ CSR in global context
❖ assessing the evolving global CSR
system.

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Corporate Social
Responsibility
Corporate social responsibility (CSR, also called corporate conscience,
corporate citizenship or responsible business) is a form of corporate
self-regulation integrated into a business model.
CSR policy functions as a self-regulatory mechanism whereby a business monitors
and ensures its active compliance with the spirit of the law, ethical standards and
national or
international norms.
CSR strategies encourage the company to make a positive impact on the environment
and stakeholders including consumers, employees, investors, communities, and
others.

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 CSR- Contd..
CSR is "A company’s sense of responsibility towards the and environment
community ecological and social) in which it operates. (both
Companies express this citizenship
(1) through their waste and pollution reduction processes,
(2) by contributing educational and social programs and
(3) by earning adequate returns on the employed resources.

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Meaning:
Corporate social responsibility is a gesture of showing the company’s
concern & commitment towards society’s sustainability & development.

CSR is the ethical behaviour of a company towards society.

WBCSD (World Business
Council for Sustainable
Development)
“The continuing commitment by business to
behave ethically and contribute to sustainable
economic development while improving the
quality of life of the workforce and their
families as well as of the local community and
society.”
35
Basic Constituents of
CSR

Contribute Make Improvemen Towards

towards a desirabl Busines
t of social
sustainable e social
economic
environment s &
change Society
developme
s
nt
Types of Social Responsibility-
Responsibility towards
Carrying on business with moral& ethical
Society
standards. Prevention of environmental
pollution.

Minimizing ecological imbalance. ealth,

Contributing towards the development of education
social h Making use of appropriate

technology.

Overall development of locality.

Responsibility towards
Government
Obey rules &
regulations. Regular
payment of taxes.

Cooperating with the Govt to promote

social values.
Not to take advantage of loopholes in
business laws.
Cooperating with the Govt for economic
growth & development.
Responsibility towards
Shareholders
To ensure a reasonable rate of
return over time.
To work for the survival & the
growth of the concern.
To build reputation & goodwill of
the company.
To remain transparent &
accountable.
Responsibility towards
Employees
To provide a healthy working
environment. To grant regular & fair
wages.
To provide welfare services.
To provide training & promotion facilities.
To provide reasonable working standard &
norms.
To provide efficient mechanism to redress
worker’s grievances.
Proper recognition of efficiency & hard work.
Responsibility towards
consumers
Supplying socially harmless
products.
Supplying the quality,
standards, as promised.
Adopt fair pricing.
Provide after sales services.
Resisting black-marketing &
profiteering.
Maintaining consumer’s grievances
cell. Fair competition.
Nature of social responsibility
CSR is normative in Social involvement: Legal &
nature. CSR is a socially responsible Wipro,
Infosys etc.
relative concept.
Social obligation : legal but socially
CSR may be started as a irresponsible private, small scale
industries.
proactive or reactive.
Social reaction: Illegal but socially
All◦ firms do not
Legal & socially follow the same
responsible.
◦ Legal but socially responsible Coca cola. Satyam
patterns of CSR.
irresponsible. computers.
◦ Illegal but socially
responsible. Social obstruction :Illegal &
◦ Illegal & socially
irresponsible. socially irresponsible : Liquor
shops.
 CSR Principles &
Strategies.
Respect for human rights.
Respect for the differences of views.
Diversity & non-discrimination should be the guiding
principle.
Make some social
contribution. Enter into e
-dialogue
Self-realization & creativity.
Fair dealings &
collaboration. Feedback
from the community.
Positive value- added
 Models of corporate social
1.responsibility
Friedman model
2. Ackerman Model
3. Carroll Model
4. Environmental Integrity & Community
Model.
5. Corporate Citizenship Model.
6. Stockholders & Stakeholders Model.
7. New Model of CSR.
Friedman Model(1962-73)
A businessmen should perform his duty well, he is performing a social as
well as a moral duty.

A businessmen has no other social responsibility to perform except to

serve his shareholders & stockholders.
Ackerman Model
(1976)
The model has emphasized on the internal policy goals &
their
relation to the CSR.
Four stages involved in CSR.
◦ Managers of the company get to know the most
common social problem & then express a
willingness to take a particular project which will
solve some social problems.
◦ Intensive study of the problem by hiring experts &
getting their suggestions to make it operational.
◦ Managers take up the project actively & work hard.
◦ Evaluating of the project by addressing the issues.
Contd….
Six Strategies in the Rejection strategy: reluctance to adopt any
adoption of CSR. social work or project.
◦Rejection strategy Adversary strategy: Adopt CSR project only
when
◦Adversary strategy pressure comes from external sources.
◦Resistance strategy Resistance Strategy: Adopt the CSR
◦Compliance strategy when pressurized by the
government.
◦Accommodation strategy Compliance Strategy: CSR is accepted &
◦Proactive strategy tries to finish the project.
Accommodation Strategy: Accommodate
the request of the shareholders or
government in fulfilling the CSR.
Proactive Strategy: self interest of the firm to
adopt the CSR voluntarily.
Carroll
Model(1991)
Carroll Model(1991)
Philanthropic requirements: Donation, gifts, helping the poor. It ensure
goodwill & social welfare.
Ethical responsibility: Follow moral & ethical values to deal with all the
stakeholders.
Economic responsibility: Maximize the shareholders value by paying good
return.
Legal responsibility: Abiding the laws of the land.
Environmental Integrity & Community Health
Model.
This model developed by Redman.

Many corporate in US adopted this model.

Corporate contribution towards environmental integrity & human health, there will be
greater expansion opportunities.
Healthy people can work more & earn

more. CSR is beneficial for the

corporate sector.

CSR in a particular form is welcome.

Corporate Citizenship Model
To be a corporate citizen, a corporate firm has to satisfy four conditions:
◦ Consistently satisfactory
◦ Sustainable economic performance
◦ Ethical actions
◦ Behaviour.
A particular firm’s commitment to corporate citizenship requires the
fulfillment of certain social responsibilty.
New Model of
CSR
Ethical
Rooting
Stron Poo
g r

CSR (+) CSR(-)

Stron
g
Capability
Financial

CSR(-) CSR(-)
Poo
r
Best Practices of
CSR
To set a feasible, Viable & measureable
goal.
Build a long lasting relationship with
the community.

Retain the community core values.

The impact of the CSR needs to be

assessed. Reporting the impact.

Create community awareness.

Need for Corporate Social
Responsibility
To reduce the social cost.
To enhance the performance of
employees. It a type of investment.
It leads to industrial
peace.
It improves the public
image. Can generate
more profit.
To provide moral
justification. It satisfies the
stakeholders.
Helps to avoid government regulations &
control.
Arguments for & against the
CSR
Corporate should have some moral & social obligations to undertake for the
welfare of the
society.
Proper use of resources, capability &

competence. The expenditure on CSR is a

sort of investment.

Company can avoid many legal

complications. It create a better

impression.
Arguments against the
CSR
Fundamental principles of business gets violated.
It is very expensive for business

houses. CSR projects will not be

successful.

There are not the special areas of any business.

CSR is to induce them to steal away the shareholders

money.
Indian
Perspective.
The Sachar committee was appointed in 1978 to
look into corporate social responsibility issues
concerning Indian companies .
The company must behave & function as a responsible
member of society.
Committee suggests openness in corporate affairs &
behaviour.
Some business houses have established social
institutions like Schools, colleges, charitable hospitals
etc.
Corporate sectors have not made significant contributions.
(Polluting Environment).
CSR
EXAMPLES
IBM UK - Reinventing Education Partnership
programme Interactions and sharing of knowledge
through a web-based technology - the “Learning
Village” software. Culture of openness and sharing of
good practice

AVON - a partnership with Breakthrough Breast Cancer,

and its Breast Cancer Crusade has raised over 10
million pounds since its launch 12 years ago

TOI’s Lead India campaign, campaign for contribution

towards educating the poor
Companies in
trouble
Dasani mineral water (part of Coca-Cola).

Coke’s sale was banned as the result of tests, including

those by the Indian government, which found high
concentrations of pesticides.

Communities in India , around Coca-Cola's bottling

operations are facing severe shortages of water as a
major sucking
result of huge amounts of water from the
the cola
groundwater
common
source.
Issues at NIKE
Nike Inc producer of footwear, clothing, equipment and
accessory
products for the sports and athletic market.
Selling to approximately 19,000 retail accounts in the
US, and approximately 140 countries around the
world.
Manufactures in China, Taiwan, Korea, Indonesia , Mexico as well
as in the
US and in Italy.
People working - 58% young adults between 20 and 24 years
old, 83% - women.
❑ Few have work-related skills when they arrive at the factory.
Issue- unhealthy work environment – debates heated arguments,
verbal abuse , 7.8% of workers reported receiving unwelcome
sexual comments, and 3.3% reported being physically abused.
Vodafone promised to cut down their
carbon dioxide emissions in half by 2020
through improving the energy efficiency
of its global mobile -phone networks.
Additional points for Vodafone on CSR
because they are constantly updating us
with the results of the campaign; no
matter whether it’s going well or not.
Future promises includes pledging to
recycle 95% of network equipment
waste and plans to reduce work-related
accidents that cause lost time by 10%.
On top of that, Vodafone is a leading
business in socially responsible products
such as the text-to-speech software for
blind people and easy-to-use handsets
for the elderly.
The bank’s head of corporate
sustainability, Teresa Au, has said
that despite the economic situation,
HSBC would continue to support its
sustainability campaign. Initiatives
include providing small businesses
with sustainability insurance options
and developing an index for climate
change. The business has also
boosted its management of ethical
and socially responsible investing
funds by 60% over the last two
years. HSBC has an American unit
that is dedicated to assisting local
communities by promoting
affordable homeownership, among
other goals.
CSR examples
Toms “One for one” motto is a well
known phrase. They’ve recently upped
the ante by donating a portion of their
sunglass sales to vision care for
children in need. But it’s not just
consumers that are involved in Toms’
social good, it’s employees as well.
Toms’
employees participate in an annual Shoe
Drop
where they travel and donate a variety
of goods to children. Their careers
page specifically calls for employees
that want to change lives and be a part
of a movement.
LinkedIn. One Friday each month
LinkedIn’s employees participate
“InDay.”
InDay’s purpose is to give back to the
community through employee volunteerism
and resources. Each InDay has a different
theme allowing diverse departments to
come together for a common cause.
InDay activities range from guest speakers
discussing global justice, to initiating global
learning programs, and volunteering in
local communities.
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CSR examples
PG&E does its part to serve the
communities of California. On Earth Day
employees help clean and restore 18
state parks. They
are exemplary members of Habitat for
Humanity and volunteer by providing
solar panels on new Habitat homes.
Employee volunteerism hits inside the
home as well by participating in various
food programs
providing those struggling to make ends
meet with care packages and thousands
of pounds of groceries. The employees
clearly care about their Coast.
Zappos is a company creating a social
impact with a shoebox. Zappos is known
for a company culture that focuses on
the well being of their employees and
they are on a mission to make the world
a better place, for everyone. They also
donate huge amounts of Zappos goods
to tons of charitable organizations. Their
employees are paid for time off if they
are volunteering, because Zappos
knows 9-5 isn’t the only work that
matters.
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CSR examples
General Electric’s employees volunteer
over 1 million hours per year! Donations
from the GE foundation have supported
senior centers, children with autism,
literacy programs, and neglected urban
spaces among many other programs. On
Global Community Days, GE coordinates
company-wide to address urgent projects
around the world. GE knows that a
helping hand starts in your backyard
extends across the world.
Cisco’s initiatives cover every aspect of
daily life. Global projects provide
education, healthcare, economic
empowerment, and disaster relief to areas
in need. Cisco employee’s log more than
160,000 volunteer hours around the world
in a year. Teams of Cisco employees called
Civic Councils get involved in their local
communities by organizing events and
donation projects. Cisco asks their
employees to, “be a part of the equation.
You + Networks= Impact Multiplied.”
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CSR examples
Deloitte employees both have the
opportunity to lead and attend
conferences that provide training on
volunteerism and non-profit organization.
What is that saying about teaching a man
to fish? Deloitte has a keen awareness
that training employees on skills based
volunteer programs and running
functional non-profits has the ability to
have long term effects rather than simply
taking an employee volunteer trip.
Verizon “is proud to support the
generosity of their employees.” The
Verizon Matching Gifts program matches
employee financial donations 1:1 to
qualified organizations. The spirit of
giving doesn’t stop there. They also
encourage employees to volunteer. If
employees log more than 50 hours with
an organization they can apply for a
$750 grant awarded to the organization
from Verizon.
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CSR examples
Dell supports over 4,615 charities around
the world. Dell Youth Connect provides
technology and educational facilities in
11 countries. The Dell Social Innovation
Challenge provides funding and
mentorship to college students to further
projects that
help solve social problems. Dell’s disaster
relief
program provides holistic assistance
to communities affected by natural
disaster around the world. Dell’s
employees are a social good force to
be reckoned with.
IBM believes in Corporate Citizenship.
Their social good projects extend across
societal issues. Employees volunteer in
environmental efforts, community
economic development, education, health,
literacy, language and culture. Their year
long volunteer initiative, “Celebration of
Service,” logged over 3,00,000 hours of
service. IBM has also established, “On
Demand Community,” enabling employees
and retirees to find volunteer
opportunities, through trainings and
placement.
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Philanthropy
Philanthropy (from Greek ) means , the love of humanity, in the sense of caring,
nourishing, developing, and enhancing what it means to be human.
In this meaning, it involves both the benefactor in their identifying and exercising
their values, and the beneficiary in their receipt and benefit from the service or
goods provided.
A conventional modern definition is "private initiatives, for public good, focusing on
quality of life," which combines an original humanistic tradition with a social
scientific aspect developed in the 20th century.
The definition also serves to contrast philanthropy with business endeavours,
which are private initiatives for private good, e.g., focusing on material gain,
and
with government endeavours, which are public initiatives for public good, e.g.,
focusing on
provision of public services.
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A person who practices philanthropy is called a philanthropist.
Philanthropy -examples
1. Apple
CEO Tim Cook became Apple’s head honcho in April 2011 and almost immediately
instituted a program to match employee donations. In the time since, Apple has
matched over $25 million worth of employee donations, resulting in more than $50
million for charities around the world.
2. Google
Normal companies don’t offer diverse giving options, but Google is not a normal
company. With offices in 70 cities and more than 40 countries, Google’s philanthropy
has a deep global reach from New York, to the U.K., to Germany and more.

69
Google Philanthropy Examples
Google’s community programs include:
Bay Area Giving: Proud to support local nonprofits
that strengthen the community, Google has given
over $60 million to Bay Area nonprofits over the Programming Education
past three years. Gathering: Google donated more than
Code for America: In an effort to provide better 5,000 Raspberry Pi computers in order
technological support for governments that are to provide a computer science education
slow to embrace technology, Google provides
Code for America with an annual gift of $3 million to more than 25,000 Japanese children.
to develop civic technological solutions.
Raspberry Pi: A $1 million Google grant will
Robots: Google believes that robots are a fun,
effective way to teach children foundational give Raspberry Pi computers —
technological inexpensive microcomputers about the size
concepts, so they funded Germany’s Fraunhofer
Institute for Intelligent Analysis and Information of a credit card
Systems to help them develop technology to — to 15,000 U.K. children who show
program and control robots using a smartphone
app. exceptional enthusiasm for computer
science.
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Philanthropy -examples
3. Microsoft In 1983,
200 Microsoft employees raised $17,000
for nonprofits through the company’s first
employee giving program. Thanks to
matching gifts, Microsoft employees have
since donated over $1 billion to charitable
organizations.
That’s a lot of computers.
4. PepsiCo:Pepsi is a food and
beverage powerhouse, which is why
its philanthropy prioritizes related
causes, including:
Healthy lifestyles
Affordable

nutrition

Access to clean water

Sustainable
agriculture Job
readiness
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Philanthropy -examples
5. Shell
Like Pepsi, Shell also supports the
community
in a big way.
Through a long-standing philanthropic
relationship, Shell has donated more
than
$24.8 million dollars to the University of
Texas at Austin. In 2012, Shell and UT
signed a five-year, $7.5 million deal to
address challenges facing the growing
worldwide oil and gas industry. Most of
the money will go to research, but nearly
half a million dollars will support UT
students and programs.
To empower employees, Shell offers a
matching gift program. The company
matches employee donations between
$25 and $5,500 at a 1:1 ratio.
Matching gifts have helped Shell to
pursue several philanthropic goals. As
of the end of 2014, Shell donations
have helped to create more than
35,000 jobs, saved 6.2 million metric
tons of CO2, and raised $5 billion for
organizations in four continents.
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73
Emerging Challenge of CSR
Public support Committed Volunteers
Budget and Positive Community
Finance Impact Skills training
Government
Ethics
support
Logistical support
Effective
Building trust among volunteers,
communication public
Sustainability
Politics by

Parties Time

commitment 74
OECD- Organisation for Economic Co-
operation and Development (OECD)
Our mission
The mission of the Organisation for Economic Co-operation and Development (OECD) is to promote policies
that will
improve the economic and social well-being of people around the world.

The OECD provides a forum in which governments can work together to share experiences and seek
solutions to common problems. We work with governments to understand what drives economic, social and
environmental change. We measure productivity and global flows of trade and investment. We analyse and
compare data to predict future trends. We set international standards on a wide range of things, from
agriculture and tax to the safety of chemicals.

We also look at issues that directly affect everyone’s daily life, like how much people pay in taxes and social
security, and how much leisure time they can take. We compare how different countries’ school systems are
readying their young people for modern life, and how different countries’ pension systems will look after their
citizens in old age.
Drawing on facts and real-life experience, we recommend policies designed to improve the quality of
people's lives. We work with business, through the Business and Industry Advisory Committee to the OECD
(BIAC), and with labour, through the Trade Union Advisory Committee (TUAC). We have active contacts as
well with other civil society organisations. The common thread of our work is a shared commitment to market75
OECD- History
The OECD's origins date back to 1960, when 18 European countries plus the United
States and Canada joined forces to create an organisation dedicated to economic
development.

Today, our 35 Member countries span the globe, from North and South America to
Europe and Asia-Pacific. They include many of the world’s most advanced countries
but also emerging countries like Mexico, Chile and Turkey.

We also work closely with emerging economies like the People's Republic of China,
India and Brazil and developing economies in Africa, Asia, Latin America and the
Caribbean. Together, our goal continues to be to build a stronger, cleaner and fairer
world.

76
CURRENT
MEMBERSHIP
Australi France Kore Slovenia
a German a Spain

Austria y Latvi Sweden

a Switzerlan
Belgiu Greece
Luxembour d Turkey
m Hungar
Canada y g Mexico United
Kingdom
Chile Iceland Netherland
United States
Czech Ireland s
Israël New Zealand
Republic
Italy Norway
Denmark
Japan Poland
Estoni Portug 77
 OECD Objectives
OECD at 50 and beyond
Today, we are focused on helping governments around the world to:
❖Restore confidence in markets and the institutions that make them function.
❖ Re-establish healthy public finances as a basis for future sustainable economic
growth.
❖Foster and support new sources of growth through innovation, environmentally friendly
‘green
growth’ strategies and the development of emerging economies.

❖Ensure that people of all ages can develop the skills to work productively and
satisfyingly in the jobs of tomorrow.

78
 Question Bank
1. What is the meaning of 5. What is the meaning of
Corporate Governance? CSR-Corporate Social
Responsibility?
2. Explain the different models of CG.
3. Explain the relevance of 6. What are the types and nature of
corporate governance, social responsibilities?
7. CSR principles and strategies
4. What are the various obligations of
CG to Investors, Society, Employees 8. Explain the different models of CSR
and Customers
9. Explain the Best practices of CSR
10. Explain CSR in Indian perspective
11. Explain CSR in global context

79
 Question Bank
12) What is corporate Governance? Explain the benefits of good corporate
governance.
13) Since the exposure of corporate scandals like Enron, Satyam & 2010 Telecoms
License row, there is much interest at present in the Corporate Governance &
related issues. Identify a range of stake holders with an interest in the quality of
Management &Corporate Governance.
14) Explain the benefits of good corporate governance to a corporation & society.
15) Write short notes on OECD Model.
16) State the obligations of business towards society.
End of Module
2