CSR, Human Values & Ethics

UNIT-1
syllabus

 Moral Values and Ethics: Values- concepts, types and formation of values, Values of
Indian Managers. Business Ethics; School of Ethics; Ethical Decision Making, Business
Ethics; Values and Ethics as drivers of Corporate Social Responsibility : A historical
perspective and emerging theories of CSR; CSR and Regulatory Issues
 Ethical Dilemma: Implications of failed corporate responsibilities: Worker rights and
health, technology and privacy in the workplace, Human Rights, Stockholders right and
Corporate Governance; Consumerism; Ethical issues in Marketing, Advertising and
Supply Chain; Intellectual Property Rights, Corruption in Business and Administration,
Building a value based corporate culture, Big Data: Ethical and Regulatory Framework
 Corporate Social Responsibility: Current CSR Practices of the firms in India and
Abroad, International Frameworks of CSR and sustainability; Global Compact, Caux
Round Table, OECD Guidelines for Multinational Enterprises, GRI, SA 8000 Standard
etc., BS/ ISO Guidelines BRR (SEBI), NVG Guidelines (Ministry of Corporate Affairs)
 Sustainable Development: Challenges of Sustainable Development, Environmental
Challenges as Business Opportunity, Kyoto Protocol and Clean Development Mechanism
(CDM), Managing Environmental Quality, Green IT initiatives, Emerging trends in CSR
 Case-1

 Krish is a junior engineer. in a big oil company. He has been working under Andy’s
supervision for the past three years. Krish knows that Andy is a good manager, but
he has noticed that he frequently has liquor on his breath at work and that
sometimes his speech is slurred. One day Krish learns that Andy is about to be
offered a better paying position. He is happy for Andy until he learns that his new
job will be the Chief Safety Inspector for all the oil rigs that the company owns in
the region. Krish worries that Andy’s drinking habit will interfere with his future
job.
Andy agrees that he will have to cut back on his drinking, but he tries to assure Krish that
he has things under control. He says that he is going to take the job, and he asks Krish not
to tell anyone about his drinking.

 (a) Should Krish take his concerns to higher management?

“The simple step of a simple courageous man is to not take part in
the lie, not to support deceit. Let the lie come into the world, even
dominate the world, but not through me.”
-- Alexander Solzhenitsyn
Values

 Abstract ideals that shape an individual’s thinking and behaviour

 Values are our guidelines for success
 Conscious or unconscious motivators and justifiers of the actions and judgment.
 Personal values are defined as “emotional beliefs in principles regarded as particularly
favourable or important for the individual”
 Values are the scaled we use to weigh our choice for our actions, whether to move
towards or away from something. (e.g. Snake & Gold)
Features/ Characteristics of values

 Values are unconsciously held on the basis of personal experience and observation of
others’ experiences.(e.g. a kid learning to walk and talk)
 Values and beliefs influence the human tend to take actions that reflect support their
value system.
 Extremely practical
 Provide standards of competence and morality
 Go beyond specific situations and persons
 Influenced by culture, tradition, internal & external factors
 Relatively permanent
 Central to the core of a person.
Ethics

 Ethics is an activity and process of enquiry. It refers to a particular set of beliefs, attitudes
and habits of individuals or family or groups concerned with morals.
 Derived from Greek word ‘ethos’ which means “the characteristic spirit or attitudes of a
community, people, or system”
 Ethics tells us how to live, to respond to issues, through the duties, rights and
responsibility and obligations.
 The focus is to study and apply the principles and practices, universally.
Work Ethics

 Work ethics is defined as a set of attitudes concerned with the values of work, which
forms the motivational orientation
 It is a characteristic attitude of a group towards what constitutes the morality of work.
 Brings discipline and order to the workplace
 Improves relationships amongst superiors, peers and subordinates.
 Enhances commitment and accountability of the top managers
 Ensures safety of interest of its various stakeholders.
 Hypothetical Situation-1

 Imagine you’re in a situation where the company has a clear policy on

harassment, and you witness someone being harassed. You can use the
company’s process to report the incident.
 But supposing the harassment is, well, borderline harassment. Not quite over
the line, but close. And the harasser is a friend of yours, and the person being
harassed is being targeted because he or she maliciously took the credit for
an important piece of work your friend had done. Do the mitigating factors
affect your judgement on whether the line has been crossed or not?
Hypothetical Situation-2

 You’re in a car. Your best friend is driving. They’re

driving too fast, and they hit a pedestrian. You’re the only
other witness, and your friend asks you to lie in court to
keep them out of trouble. Would you lie to save your
friend?
Morals Vs. Values Vs. Ethics

 Morals are the welfare principles enunciated by the wise people, based on their
experience and wisdom. They were edited, changed or modified or evolved to suit the
geography of the region, rulers (dynasty), and in accordance with development of
knowledge in science and technology and with time.
Types of Values

 As per Milton Rokeach’s Classification

 1. Terminal Values: Most desirable/ we think most important or desirable
 End states of existence, goals a person would like to achieve
during lifetime.
 Happiness, self respect, recognition, inner harmony, professional
excellence, etc.
 2. Instrumental Values: means of achieving terminal values with views on acceptable
modes of conduct
 Honesty, sincerity, ethics, ambitious.
 More focused on personality traits and character.
Terminal Values Instrumental Values

A comfortable life (a prosperous life) Ambitious (hardworking)

An exciting life (a stimulating, active life) Broadminded (open minded)

A sense of accomplishment (lasting contribution) Capable (competent, efficient)

A world of peace (free of war and conflict) Cheerful ( lighthearted, joyful)

 A world of beauty (the beauty of nature and the arts) Clean (neat, tidy)

Equality (brotherhood, equal opportunity for all) Courageous (standing up for your beliefs)

Family security (taking care of loved ones) Forgiving (willing to pardon)

Terminal Values Instrumental Values

Freedom (independence, free choice) Helpful (working for the welfare of others)

Happiness ( contentedness) Honest (sincere, truthful)

Inner harmony (freedom from inner conflict) Imaginative (daring, creative)

Mature love (sexual and spiritual intimacy) Independent (self-reliant, self-sufficient)

National security (protection from attack) Intellectual (intelligent, reflective)

Pleasure (an enjoyable, leisurely life) Logical (consistent, rational)

Salvation (saved, eternal) Loving (affectionate, tender)

Terminal Values Instrumental Values

Self-respect(self-esteem) Obedient (dutiful, respectful)

Social recognition (respect, admiration) Polite (courteous, well-mannered)

True friend (close companionship) Responsible (dependable, reliable)

Wisdom ( a mature understanding of life) Self-controlled (restrained, self-disciplined)

Importance of Values

 Foundation for understanding the level of motivation

 Influences perception
 Helps to understand what is right and wrong
 Influences attitude and behaviour
 Allow harmony and group efforts
 Work as goals set for achievement, motivation
 Guideposts of our lives, direct us who we want to be
 Not only guide but also give energy & zest for doing something meaningful
Formation of Values/ Sources of Values

 Family
 Friends and Peers
 Community & Society
 School
 Media
 Organization
 Religious Institutions
 Historical readings and artefacts
 Situational Factors
 Personal Factors
Values of Indian Managers

 Optimum Utilisation of Resources

 Choose wisely and utilize optimally
 Attitude towards work- larger vision
 Work Commitment
 Dedication
 Nishkam Karma
 Vision
Values of Indian Managers for Success

 Move from state of inertia to stage of righteous action

 Move from state of faithlessness to state of faith & self confidence
 Their actions should benefit not only themselves but society at large
 Move from unethical actions to ethical actions
 Move from untruth to truth
 No doer of good ever ends in misery
 Take the best from the western models of efficiency, dynamism and excellence and tune
them to Indian Managers
Values of Western Managers

 Highly professional with excellent analysis, power, professional qualifications and

specialisation
 Proper code of conduct, work in formal structured atmosphere with no place of modesty
in their behaviour
 Professional efficiency, work efficiency
 Rules are sacred
 Responsible and accountable
 Dignity of labour
 Clear distinction between personal and professional relations
 Contractual obligations (honour contracts)
 Principles above privileges
 Respect public goods
 Empathy and sensitivity
 2 pillars of success- loyalty to family
 Loyalty to community
Case-2
Business Ethics

 Set of moral principles

 Characteristic attitude of a group towards what constitutes the morality of work
 Bring discipline and order
 Improves & strengthens relationships amongst superiors, peers and subordinates
 Enhances commitment and accountability of top managers
 Ensures safety of interest of its various stakeholders.
Features of business ethics

 Umbrella term that covers all business practices which are desirable from the point of
view of the society
 Co-exist with law but has much broader coverage
 Based on concept of equity
 Emphasis on making a businessman honest, just and responsible citizen
 Create self imposed discipline on the part of managers
Importance of Business ethics

 Improves society
 Helps maintain moral course in disturbed times
 Cultivates strong teamwork and productivity
 Supports employee growth
 Ensures legality of policy
 Quality management, consistency in standards, self control
 Strong public image
 Better relationships
Principles of business ethics

 Be trustful
 Keep an open mind
 Meet obligations
 Have clear documents
 Involved in community
 Maintain accounting control
 Be respectful
Schools of Ethics: Consequentialism,
Deontology, Virtue ethics

 Consequentialism
 Consists of different varieties of utilitarianism and hedonism
 Main idea: morality is not based on rules, good intentions or
goals but only on consequences that result from our behaviours.
 Basic good is pleasure or happiness
 Deontology
 Consists of different varieties of rule morality
 Main idea: morality is based on rules, good intentions and
goals. The consequences do not matter as long as the person’s
heart was in the right place.
 Greatest good is obedience to the rules, whether or not that
brings pleasure or pain
 Virtue Ethics
 A new variety of ethics
 Main idea: character is the measure of all morality and this is
intuitive in every person, including children
 Immorality of punishing the innocent and breaking promises is
intuitive for all people, for all time. Morality is based on this
Ethical Decision Making
 Decision Making
 The process of selection from a set of alternative courses of action which is thought to fulfil the
objectives of the decision problem more satisfactorily than others.
 Decision Making Process
1. Defining the Problem
2. Developing Alternative Solutions
3. Evaluation of Alternatives
4. Choice of Best Alternative
5. Implementing decision
6. Follow up
Ethical Decision Making

 Taking into consideration ethical issues at various stages of the decision making process
 Basic steps involved in ethical decision making are same as in normal decision making process, but in
every step ethical aspects are given due consideration
 Use of PLUS approach
 Policies (P): is the decision consistent with the organization’s policies, procedures and guidelines?
 Legal (L): Is the decision acceptable under the applicable laws and regulations?
 Universal (U): Does the decision conform to the universal principles and values the organization has
adopted?
 Self (S): Does the decision satisfy the manager’s personal definition of right, good and fair?
PLUS Approach (Contd.)

 PLUS Approach assumes effective communication with all

employees so, there is a common understanding of:
 Organizational policies and Procedures
 Applicable laws & regulations
 Set of universal values in this case empathy, patience, integrity and
courage.
 Sense of right, fair and good arising from personal values set.
Case-2

 DONATIONS FOR PROFIT

 While working as the director of junior golf at a Nashville area golf course, I was put in charge of fund-raising.
This task required me to spend numerous hours calling and visiting local businesses, seeking their donations for
our end-of-the-summer golf tournament. After weeks of campaigning for money, I was pleased to have raised
$3,000 for the tournament. The money was intended to be used for prizes, food, and trophies for the two-day
Tournament of Champions. I notified the golf course manager of my intentions to spend the money at a local
golf store to purchase prizes for the participants. Upon hearing of my decision to spend all of the contribution
money on the tournament, my manager asked me to spend only $1,500. I was confused by this request because I
had encouraged various companies to contribute by telling them that their money would all be spent on the
children registered in the tournament. My manager, however, told me that the golf course would pocket the
other $1,500 as pure profit. He said the economy had been struggling and that the course could use any extra
money to boost profits.
I was deeply angered that I had given my word to these companies and now the
golf course was going to pocket half the donations. Feeling that my manager was
in the wrong, I went to him again, this time with an ultimatum. The money was
either to be spent entirely on the tournament or I would return all of the checks
personally, citing my manager’s plan as the reason. In response, he said that I could
spend the money any way I desired, but he would appreciate it if I were frugal with
the money. I spent it all.
 1. Was my manager wrong for seeking to pocket the donation money as profit? Does it
make any difference that the golf course was experiencing perilous economic times?
(After all, if the course goes out of business, tournaments cannot beheld at all).
 2. Was I right in challenging my manager? Should I have handled this differently?
 3. Do you think the companies would have felt cheated if the golf course had pocketed
their donations?
Determinants of Business Ethics

 Social Factors
 Economic Factors
 Cultural Factors
 Political Factors
 Organizational Factors
 Contemporary Codes
SOCIAL RESPONSIBILITY

 Moral conduct related to broad issues like environmental pollution, discrimination,

poverty, unemployment, etc.
 Driven by Ethics and Values
 Business Ethics- Micro Ethics
 Social Responsibility- Macro Ethics
Corporate Social Responsibility

 Obligation to act in a manner which will serve the best interests of the society
 Obligations to pursue policies and make decisions which are desirable in terms of
objectives and values of our society.
 Different perspectives
 Not a new idea
Ethiccs & Values as drivers of CSR

 Customers: expectations for fair treatment, undesirable practices like hoarding, black marketing,
adulteration, false claims
 Employees: policies conducive to healthy industrial relations. Working conditions, fair wages,
employment benefits
 Industry: fair competition, fair trade practices, healthy competition.
 Managers: enhancing business image, cordial relation with stakeholders, support from superiors and
subordinates
 Society: socially acceptable practices, social norms, focus towards greater good
 https://www.youtube.com/watch?v=NWzTuFgXWxc
 https://www.youtube.com/watch?v=vT-MT2Yyf9k
Philosophical Perspectives to corporate
responsibility
1. Corporate Social Responsibility
 Two meanings: 1. make money & responsibly act with surrounding community
 2. responsibility to profit while playing a role in broader questions of community
welfare
 Four Obligations: Economic responsibility
 legal responsibility
 Ethical responsibility
 Philanthropic responsibility
 Obligations taken in order from top to bottom are decreasingly pressing within the
theory of CSR
 2. Triple Bottom Line Philosophy
 People, Planet and Profit:( https://meet.google.com/dtt-agjj-ynr )
 A form of CSR dictating that corporate leaders tabulate bottom line results not only in
economic terms (Cost Vs. Revenue) but also in terms of company effects in social realm
and with respect to the environment.
 Notion of sustainability & Sustainable development
 https://www.youtube.com/watch?v=0FcpHPdceRk
 (coca cola in india)
 https://www.youtube.com/watch?v=kCg1RqUGRLg (starbug)
 3. Stakeholder Theory
 Mirror image of CSR
 Listing out individuals and groups who will be affected by (or affect) the company’s
actions
 They hold a right and obligation to participate in directing it
 5 cardinal stakeholders: Shareholders, workers, customers, suppliers, community
Historical Perspectives of Social
Responsibility

 Profit Maximisation: Maximum Profit within legal framework

 Trusteeship Management: Stakeholders’ Interest
 Quality of life management: remove social ills and promote up-liftment of society
Approaches to Social Responsibility

 Ranging from lowest to highest degree of socially responsible practices

1. Social Obstruction: Oppose the concept of CSR
2. Social Obligation: Discharging Social responsibility to extent that avoids government interference
3. Social Response: Perform legal, ethical & social obligations only when asked to
4. Social Contribution: Seek opportunities to perform activities that contribute to social goals
THEORIES OF CSR

 Feminist Theory: Ethics of Care

 Traits that are valued in close relationships
 Sympathy, compassion, fidelity, friendship.
 Stakeholders Theory
 Social Contract Theory
 Ethics and Nature
 Economising Values
 Ecologising Values
 Power Aggrandising
 Pragmatism
Reasons for growing importance of CSR for
Managers

 Social forces
 Avoid government interference
 Strength of labour force
 Consumer protection
 Self enlightenment
 Professionalism
ARGUMENTS FOR AND AGAINST CSR
Arguments For CSR

 Long run survival of the business concerns/ long term business interest
 Use of society’s resources
 Moral justification and social commitment
 Improvement in public image
 Government intervention
 Conscious customers
 Strong trade unions
Arguments against CSR

 Conflicting considerations- economic activity

 Quantification of social benefits
 Cost benefit analysis
 Lack of skill and competence
 Responsibility of government
 Burden on consumers
 Lack of self interest
 Sub-optimal utilisation of resources
 Transfer of social costs: increase in prices
 Reduction in wages, reduction in profits
Procedure for implementing CSR

 Understand the relevance of CSR

 Build business case for CSR Response
 Engage with stakeholders
 Identify & prioritise key risks
 Develop CSR strategy
 Develop supporting policies and procedures
 Organizational change (alignment to CSR agenda)
 Monitoring of performance
 Communication
 CSR and Regulatory Issues

 CSR LAWS IN INDIA

The Companies Act, 2013, made CSR a compulsory act. Under Section 135 of the new act, CSR is compulsory for all
companies- government or private or otherwise, provided they meet any one or more of the following fiscal criterions:
 The net worth of the company should be Rupees 500 crores or more
 The annual turnover of the company should be Rupees 1000 crores or more
 Annual net profits of the company should be at least Rupees 5 crores.
If the company meets any one of the three fiscal conditions as stated above, they are required to create a committee
to enforce its CSR mandate, with at least 3 directors, one of whom should be an independent director
Responsibility of CSR Committee under the
companies Act, 2013
 Creation of an elaborate policy to implement its legally mandated CSR activities.
 allocate and audit the money for different CSR purposes.
 responsible for overseeing the execution of different CSR activities.
 issue an annual report on the various CSR activities undertaken.
 CSR policies should be placed on the company’s official website, in the form and format approved by the
committee.
 The board of directors is bound to accept and follow any CSR related suggestion put up by the aforementioned
committee.
 The aforementioned committee must regularly assess the net profits earned by the company and ensure that at
least 2 percent of the same is spent on CSR related activities.
 The committee must ensure that local issues and regions are looked into first as part of CSR activities.(csr in
havells : https://www.youtube.com/watch?v=13vCIk9Rz7k) tata moters :https://www.youtube.com/watch?
v=arSMxYZzGYs
FEATURES OF CSR LAWS

 Quantum of money utilized for CSR purposes are to be compulsorily included in the
annual profit-loss report released by the company
 The CSR rules came into force on 1st April 2014 and will include subsidiary companies,
holdings and other foreign corporate organizations which are involved in business
activities in India.
 CSR has been defined in a rather broad manner in Schedule VII of Companies Act, 2013.
The definition is exhaustive as it includes those specific CSR activities listed in Schedule
VII and other social programmes not listed in schedule VII, whose inclusion as a CSR
activity is left to the company’s discretion[14].
Activities permitted under Corporate Social
Responsibility (CSR)

 Eradicating extreme hunger and poverty

 Promotion of education
 Promoting gender equality and empowering women
 Reducing child mortality
 Improving maternal health
 Combating human immunodeficiency virus, acquired, immune deficiency syndrome,
malaria and other diseases
 Ensuring environmental sustainability,
 Employment enhancing vocational skills, social business projects
 Contribution to the Prime Minister’s National Relief Fund or any other fund set up by the
Central Government or the State Governments for socio-economic development, and
 Relief and funds for the welfare of the Scheduled Castes, the Scheduled Tribes, other
backward classes, minorities and women and such other matters as may be prescribed.
Corporate social responsibility: Examples in
India
Tata Group
 The Tata Group conglomerate in India carries out various CSR projects, most of which are community
improvement and poverty alleviation programs. Through self-help groups, it is engaged in women
empowerment activities, income generation, rural community development, and other social welfare
programs. In the field of education, the Tata Group provides scholarships and endowments for
numerous institutions.
 The group also engages in healthcare projects such as facilitation of child education, immunization and
creation of awareness of AIDS. Other areas include economic empowerment through agriculture
programs, environment protection, providing sport scholarships, and infrastructure development such
as hospitals, research centers, educational institutions, sports academy, and cultural centers. 
 ITC Group
 ITC Group, a conglomerate with business interests across hotels, FMCG, agriculture, IT,
and packaging sectors has been focusing on creating sustainable livelihood and
environment protection programs. The company has been able to generate sustainable
livelihood opportunities for six million people through its CSR activities. Their e-
Choupal program, which aims to connect rural farmers through the internet for procuring
agriculture products, covers 40,000 villages and over four million farmers. Its social and
farm forestry program assists farmers in converting wasteland to pulpwood plantations.
Social empowerment programs through micro-enterprises or loans have created
sustainable livelihoods for over 40,000 rural women.
 Ultratech Cement
 Ultratech Cement, India’s biggest cement company is involved in social work across 407
villages in the country aiming to create sustainability and self-reliance. Its CSR activities
focus on healthcare and family welfare programs, education, infrastructure, environment,
social welfare, and sustainable livelihood.
 The company has organized medical camps, immunization programs, sanitization
programs, school enrollment, plantation drives, water conservation programs, industrial
training, and organic farming programs.
 Mahindra & Mahindra
 Indian automobile manufacturer Mahindra & Mahindra (M&M) established the K. C.
Mahindra Education Trust in 1954, followed by Mahindra Foundation in 1969 with the
purpose of promoting education. The company primarily focuses on education programs
to assist economically and socially disadvantaged communities. CSR programs invest in
scholarships and grants, livelihood training, healthcare for remote areas, water
conservation, and disaster relief programs. M&M runs programs such as Nanhi Kali
focusing on girl education, Mahindra Pride Schools for industrial training, and Lifeline
Express for healthcare services in remote areas.
Discussion on Previous Year Questions
 Situational Analysis of CSR & Ethics

 You are an environmental engineer for one of the many local plants.
That plant discharges effluents into a lake in a flourishing tourist area.
Although all the plants are marginally profitable, they compete for the
same customers. Your responsibilities are to monitor the water and air
discharges at your plant and the periodic reporting to Dept. of Anti-
pollution. You have just prepared a report that indicates that the level of
pollution in the Plant’s water discharges slightly exceed the legal limits.
 Your supervisor says you should regard the excess as a mere ‘technicality’,
and he asks you to ‘adjust’ the data so that the data appears to be in
compliance. He says that slight excess is not going to endanger human or
fish life any more than if the plant were actually in compliance. However he
says, solving the problem would require a very heavy investment. He
explains, “We can not afford new equipments. It might cost even a few jobs.
It will set us behind our competitors. Besides, he says that many of the
competitors are doing the same and the bad publicity we would get might
scare off some of the tourist industry, making it worse for everybody”