CSR & HVE

Unit-2
It takes 20 years to build a reputation and
only 5 minutes to ruin it- Warren Buffet
Failed Corporate Responsibilities/ Corporate
Irresponsibility
• Analyse the following situations with the perspectives of worker rights&
health, technology & privacy in workplace, human rights, shareholders
rights
• 1. Maggi noodles controversy
• 2. CBI chief on leaves controversy
• 3. Sahara scam case
• 4. Satyam scam case
• 5. Nike Factories in Asia
• 6. Union Carbide- Bhopal Gas Tragedy
Ethical Dilemma/ Ethical issues in Business
• With respect to employees: feedback about performance & standing;
employment security; appropriate working conditions
• Peers & superiors: truth telling, loyalty & support
• Customers: fair treatment, truth telling, questionable practices,
collusion
• Suppliers: fair/ impartial treatment, unfair pressure tactics, truth
telling
• Stakeholders: respecting legal constraints, truth telling in public
relations, shareholders’ interests
Tools for promoting ethical practices
• Establishment of mission statements
• Laying down core values
• Formulating business policies and procedures
• Formulating code of conduct for business
• Establishing grievance handling mechanism
• Ethical dilemma resolution workshops
Workers’ Rights and Health
• Equal work opportunities for all
• Security of tenure
• Work days and work hours
• Weekly rest days
• Wage and wage related benefits
• Payment of wages
• Employment of women
• Employment of children
• Safe working conditions
• Right to self organization and collective bargaining
• EC benefits and work related contingencies
• The Factories Act, 1948
(https://www.youtube.com/watch?v=aBzqh-
z3R3k&list=RDQMFjTWXhs_UF0&start_radio=1)
• Payment of Gratuity Act, 1972
• Employees’ Provident Fund and Miscellaneous Provisions Act, 1952
• Payment of Bonus Act, 1965
• Equal Remuneration Act, 1976
Statutory Provisions Concerning Health
(Factories Act 1948)
• Cleanliness
• Disposal of wastes and effluents
• Ventilation and temperature
• Dust & fumes
• Artificial humidification
• Overcrowding
• Lighting
• Drinking water
• Latrines & Urinals
• Spittoons
Safety Provisions under The Factories Act,
1948.
• Fencing of Machinery
• Work on or near machine in motion
• Employment of young person on dangerous machines
• Casing of Machinery
• Prohibition of employment of women & children near
cotton openers
• Hoists & lifts
• Revolving machinery
• Pressure Plant
• Floors, Stairs & means of access
• Excessive weights
• Protection of eyes
• Dangerous fumes
• Explosive or inflammable gas/ dust
• Fire
• Employee fitness programme
• Employee Wellness Programme
• Types of Welfare Services
1. Intramural(Done in the building or boundary)
2. Extramural- Housing, Education, Transportation,
Recreation, etc.
• Provided Under
1. The Factories Act, 1948(First aid,canteen,rest rooms,
creche, etc.)
2. The Plantation Labour Act, 1951(education, housing)
3. The Mines Act, 1952(shower baths)
4. The Motor Transport Workers Act, 1961()
5. The Contract Labour Act, 1970
• Labour Welfare Officer
Social Security
• Measure of Ensuring Social Justice
• Protection against economic and social distress
• Social Insurance & Social Assistance
• Social Assistance-
1. Medical Case
2. Sickness Benefit
3. Retirement Benefits
4. Employment Injury Benefit
5. Family Benefit
6. Maternity Benefit
7. Survivor’s Benefit
• Acts Guiding Social Security
1. The Workmen’s Compensation Act, 1923(Accidents)
2. The Employees’ State Insurance Act, 1948(medical
& unemployment insurance)- Medical, Sickness,
Maternity, Disablement, Dependent, Funeral)
3. The Employees’ Provident Fund and Miscellaneous
Provisions Act, 1952
4. The Maternity Benefit Act, 1961
5. The Payment of Gratuity Act, 1972
Technology and Privacy in Workplace
• real-time collection of personal information from employees
•  employees are entitled to know what information your organization
is collecting about them when they use workplace computers,
networks, and work-issued smart devices
• Organizational data concerns/ sensitivity of data
• privacy officer or legal counsel
Major Threats
• Threats:
1.Phishing(the fraudulent practice of sending emails purporting to be from reputable
companies in order to induce individuals to reveal personal information, such as
passwords and credit card numbers. "an email that is likely a phishing scam"
2. Hacking
3. Unauthorised Application Installation/ Usage
4. Default/ Weak Passwords
5. Disabled Security Controls
6. Lack of remote security
7. Clumsy social networking
8. Obsolete software
• Facebook/Cambridge Analytica scandal
Ways to limit the risk of technology &
privacy at workplace
• Educating Employees
• Using Virus/ Malware scanning for email attachments
• Using remote data backups
• Protecting sensitive information
• Report lost/ stolen devices
• Active role of management and employees
Human Rights
• Human rights are relevant to the economic, social and environmental
aspects of corporate activity
• labour rights - economic aspect
• right to non-discrimination- social aspect
• right to cleanliness and safe drinking water- environmental aspect
Reasons for growing importance
• constitutionally and statutorily entrenched rights
• political influence of corporate
• PPP models(Public-Private partnership Model)
• good corporate citizenship
• influences consumer
• investor decisions.
Ways
• labour and environmental standards
• compliance with the international standards.
• adopt sustainable business
• ensure the rights of indigenous people and environmental issues
• Read: Coca Cola Human rights
Stockholders Rights and Corporate
Governance
• Company manages its business in a manner that is accountable and
responsible to the shareholders. In a wider interpretation, corporate
governance includes company accountability to shareholders and
other stakeholders such as employees, suppliers, customers and local
community.
Need for corporate governance
• Scattered shareholders
• Institutional investors
• Social responsibility
• Restructional
• Hostile takeover(An acquiring company can achieve a hostile takeover
takeover by going directly to the target company share holder or
fighting to replace its management)
• Executive compensation
• Read: Satyam scandal
Principles of corporate governance
• Transparency
• Accountability
• Independence
• Reporting
Main issues in Corporate Governance
• Composition of Board of Directors: Role of non executive directors in
CG, non-executive directors selected through formal process, for a
specific term, reappointment should not be automatic
• Role of Board of Directors: Guide management and oversee
operations of the company to sub serve the interests of company’s
stakeholders.
• Audit Committee: independent audit committee as per SEBI code of
corporate governance. Must have a specific percentage of non-
executive directors. For better financial reporting
• Shareholders’ committee: functioning under chairmanship of a non-
executive director.
CII Code of Corporate Governance
• 1997, “Desirable Corporate Governance in India- A Code”
• Single tiered board, should meet every 2 months. Must meet 6 times
a year
• 30% independent directors in Board- if chairman is independent
• 50% independent directors in Board- if chairman is executive
• No individual should be director for more than 10 companies at any
given time
• Non Executive directors- active role, defined responsibility, conversant
with financial terms
• Non Executive directors- sitting fee+ stock options+ commission
• Directors less than 50% attendance in board meetings should not be
reappointed
• Must be reported about- default details, foreign exchange exposures,
operating and long term plans
SEBI Code
• Committee lead by Kumar Mangalam Birla , effective from 2006.
• For companies with paid up capital Rs. 3 Cr/ Networth Rs. 25 Cr.
1. Board of Directors: atleast 1/3rd independent (non-exec chairman)
• Atleast 50% independent (exec chairman)
• Apart from fees must not be related with company/ promoters
2. Audit committee: minimum 3 directors as members
• 2/3rd independent directors
• Directors- financially literate
• Committee should be present at Annual General Meeting
• Meet 4 times a year/ maximum gap 4 months
3. Role of Audit committee: Overseeing financial reporting, appointment and
removal of external auditors, review financial statements
4. Remuneration of Directors: for non exec directors must be decided
by the board of directors
5. Board Procedures: must meet 4 times a year, max gap of 4 months,
director shall not be a member of more than 10 committees,
chairman of 5 committees
6. Management: reported about structure, risks & concerns, financial
performance, product/segment wise performance, HR employed,
etc.
7. Shareholders: Shareholders/ investors grievance committee
8. Disclosure: related party transactions, accounting treatment, Board
Disclosures- Risk Management, proceeds from public issues &
preferential issues.
9. Report on CG: separate sections in Annual Reports with detailed
compliance report (stating non-compliance too)
10. Compliance: company shall obtain a certificate from auditors,
should be sent annually to shareholders and stock exchanges
11. CEO/ CFO certifications: about financial statements to be submitted
to board of directors
Consumerism/ Consumer Protection

• Social force designed to protect consumers interests in marketplace

by organising and exerting consumer pressure on business
• Public demand for refinement in market practices to make them more
informative, responsive, sincere, truthful, efficient & concerned for
quality of life.
Significance of Consumerism
• To awaken and unite consumers
• To discourage unfair trade practices
• Protect against exploitation
• Awaken the government
• Implement consumer protection laws
• Provide complete and latest information
• Discourage anti social activities
Problems of consumers in India
• Social customs and traditions
• Ignorance and illiteracy of consumers
• Advertisement
• Lack of unity among consumers
• Fear of complicated judicial procedures
• Limited income
Consumer Rights
• Right to safety
• Right to be informed
• Right to choose
• Right to representation
• Right to seek redressal
• Right to consumer education
• Right to healthy environment
Consumer Responsibilities
• To provide adequate information to seller
• To exercise caution in purchasing
• To insist on receipt/ cash memo
• To file complaint against genuine grievances
• To be quality conscious
• To be cautious against false & misleading information/ advt.
• To exercise his legal rights
Means of Consumer Protection
• Lok Adalats (Public Courts)
• Public Interest Litigation (PIL)
• Redressal Forums (district forums, state commissions, national
commissions)
• Consumer Protection Councils ( Consumer Protection Act, 1986)
Unethical issues in Sales and Marketing
• Sale of adulterated products
• Use of weights and measures
• Sale of spurious products
• Sale of expired products
• Unauthorized use of popular brand names for sale of goods/ inferior
goods
• Charging full price but giving less quantity
• Sale of sub-standard products
• Hoarding
• Black marketing
• Tie-in-sales
• Offering gifts having no additional value or offering gifts whose life is
going to expire shortly with added price
• Changing the weight of package or units in the package within the
same price range
• False and misleading advertisements
Examples
• Nutella- Healthy Breakfast?
• Pepsico- Black lives matter advertisement
• Nestle Maggie- Healthy soup, Happy heart claim
• Horlicks/ bournvita- healthy energy drinks
• Axe advertisement- Vaibhav bedi vs. axe
• Coca-cola- Thumps Up advertisement- actor stealing the bottle from a
speeding truck
• Reckitt benckiser- Dettol against vim liquid
• Apple vs. Australian Competition and Consumer Commission
Ethical Issues in Advertising
• Unethical advt: Manipulation, Untruthful, Subliminal, Use of coercive
ways to lure buyers (esp. children)
• Ambiguous- deceiving/ misleading
• Conceal facts
• Exaggeration
• Manipulating & distorting
• Misrepresentation of reality
• Invasion of privacy
Harmful aspects of advertising
• Consumerism
• Higher prices
• Growth of monopolies
• Encouragement to wasteful consumption
• Promotion of substandard products
• Misguides the consumers
• Wastage of national resources
Basic Principles in Advertising
• Decency
• Honesty
• Social responsibility
• Truthful presentation
• Comparisons
• Imitation
• Safety and health
• Avoidance of harm
• Environmental behaviour
Unethical Issues in Supply Chain
• The supply chain consists of a series of links that enable the
movement of product from the producer to the customer.
Supply Chain Management Activities
The functions of supply chain management are broadly classified as:
• Customer relationship management
• Materials management
• Production control and resource management
• Risk management
• Inventory management
• Supplier relationship management
 Ethical Issues in Supply Chain Management
• Transparency
• Quality of raw materials
• Standards of inventory
• faulty distribution network
• tampering with the packages
• partially filled packages
• monopoly/ cartels
Intellectual Property Rights
• Intellectual Property Rights are legal rights governing the use of
creations of the human mind.
• The recognition and protection of these rights is of recent origin.
• Patents, designs and trademarks are considered as
industrial property.
•  to promote investments in knowledge creation and business
innovation by establishing exclusive rights to use and sell newly
developed technologies, goods and services
• to promote widespread dissemination of new knowledge by
encouraging or requiring rights holders to place their inventions and
ideas on the market
Types of Intellectual Property
• Trade Secrets
• Trade Marks
• Copyrights
• Patents
Trade secrets
• Instinctual desire to keep invention a secret
• “trade secret” is any valuable information that is not publicly known and
of which the owner has taken “reasonable” steps to maintain secrecy
• Not registered with govt body
• protected by legal rules against learning by rivals through dishonest
means, if proven. Such protection lapses if the technologies are
discovered by fair means, such as independent invention or reverse
engineering
• beneficial to the extent it encourages the development and commercial
use of sub-patentable inventions. Rules protecting trade secrets thus
promote adaptive innovation and encourage learning through legal
means.
• E.g. Coke Formula
Trademarks
• protect rights to market goods and services under identified names,
symbols, sounds, colors, smells, and anything else that can bring the
product and/or its owner to the minds of a consumer can serve as your
trademark.
• The most common types of trademarks are wordmarks, logos, and slogans
• Trademarks and brand names must be sufficiently unique to avoid
confusing consumers, thereby playing the important role of reducing
consumer search costs
• induce licensees to protect the value of assets by selling goods of
guaranteed quality level
• E.g. Apple, Coca Cola, etc.
Copyrights
• Literary and artistic creations and computer software are protected by
copyrights, which provide exclusive rights for some period to copy and
sell particular expressions of ideas after they are fixed in some
medium
• inexpensive to secure, and the law allows you to demand attorney
fees from infringers
• You automatically have a copyrighted product in your creative
expressions at the time that they are fixed in a tangible medium of
expression
• E.g. Books, songs, music, movie
Patents
•  patents provide the right to prevent for 20 years the unauthorized
making, selling, importing, or using of a product or technology that is
recognized in the patent claim and that must demonstrate novelty
and industrial utility.
• Utility & Design Patent
• patent applications are made public after a prescribed time period
• Iphone design, arrangement of icons on iphone, etc.
Advantages of IPR
• Enhance the market value of your business - IP can generate income
for your business through licensing, sale or commercialisation of
protected products or services. This can, in turn, improve your market
share or raise your profits.
• Turn ideas into profit-making assets - Ideas on their own have little
value. Licensing your patents or copyright, for example, can lead to a
steady stream of royalties and additional income that can boost your
business' bottom line.
• Market your business’ products and services - IP is essential in
creating an image for your business. Think trade marks, logos or the
design of your products. IP can help you differentiate your products
and services in the market and promote them to your customers.
• Access or raise finance for your business - You can monetize your IP
assets through sale, licensing or using them as collateral for debt
financing. As well as this, you can use your IP as an advantage when
applying for public or government funding, eg grants, subsidies or
loans.
• Enhance export opportunities for your business - IP can increase
your competitiveness in export markets. You can use brands and
designs to market goods and services abroad, seek franchising
agreements with overseas companies, or export your patented
products.
Corruption in Business and Administration
• Corruption is not a recent phenomenon. It has precisely been defined
as a deviant human behavior, associated with the motivation of
private gain at public expense
• Corruption promotes illegality, unethicalism, subjectivity, inequity,
injustice, waste, inefficiency and inconsistency in administrative
conduct and behavior.
• It destroys the moral fabric of society and erodes the faith of the
common man in the legitimacy of the politico-administrative set up.
examples
• delays in working until a bribe was paid to them
• illegal arrests until a protection fee was paid to the police
• wrong billing by public utility companies if the officials are not bribed
Corruption in Business
• Corruption is one of the worst enemies of business because it can
result in far-reaching consequences, including total closure of the
company.
• can be perpetuated by an individual or a group of employees within a
business organization.
• misappropriation of funds, bribery, misuse of office by company
officials and dishonesty in financial matters.
• Its magnitude notwithstanding, corruption can hurt the image of the
business and jeopardize its profitability.
The Effects of Corruption on Business
• Inefficiency
• Lost Resources
• Weakened Development
• Increases Crime
Problem
• Heavy fines, damaged reputations and jail sentences – recent
scandals prove that corruption in business doesn’t always bring profits.
Almost a fifth of executives surveyed by Ernst & Young claimed to have
lost business to a competitor who paid bribes.
• Corruption distorts markets and creates unfair competition.
• Companies often pay bribes or rig bids to win public procurement
contracts.
• Many companies hide corrupt acts behind secret subsidiaries and
partnerships. Or they seek to influence political decision- making
illicitly.
• Others exploit tax laws, construct cartels or abuse legal loopholes.
• Private companies have huge influence in many public spheres. These
are often crucial – from energy to healthcare. So it’s easy to see how
corruption in business harms taxpayers’ interests.
Solution
Private sector corruption calls for a three-pronged approach.
1. companies can take internal steps to prevent it. They need a zero-
tolerance policy towards bribery and corruption. And it must be
enforced through specific anti-corruption measures.
2. But companies also need an honest operating environment. So we
must make sure that governments enforce international anti-
bribery laws and conventions. This protects companies from
corruption across borders and down supply chains.
3. means more transparency from everyone involved with markets.
Then we can hold businesspeople to account for their actions.
Building a Value based corporate culture
• Culture: totality of beliefs, customs, traditions & values shared by the
members of the organization
• Important understandings that the members of a community share in
common.
• Corporate Culture: a number of tangible and intangible components
that together create an environment that is conducive, or not, to
good work. 
Components of Corporate Culture
• Individual Autonomy
• Structure
• Management Support
• Identity
• Performance Reward System
• Risk Tolerance
• Conflict Tolerance
• Communication Patterns
• Outcome Orientation
• People Orientation
Value Based Organization Culture
• A values-based organization (VBO) is a living, breathing culture of
shared core values among all employees.
• A values-based organization is a culture shaped by a clear set of
ground rules establishing a foundation and guiding principles for
decision-making, actions and a sense of community. 
• Strongly held value-systems rarely change yet remain flexible to
handle changes in strategy or outside influences such as competition
or the economy.
• A strongly held values-based culture or purpose will remain more
stable over time characterized by productivity and employee
commitment.
Creation of Cultural Values
• Artifacts- Visible but often undecipherable
• Beliefs and Values- greater level of awareness
• Assumptions- Invisible/ Taken for granted
Maintaining Cultural Values
• Selection of Employees
• Actions of Top Management
• Socialisation
1. Pre-arrival
2. Encounter
3. Transformation
• Productivity
• Commitment
• turnover
Big Data: Ethical and Regulatory Framework
• Big data refers to data sets that are too large or complex for
traditional data-processing application software to adequately deal
with
• Big data challenges include capturing data, data storage, data analysis,
search, sharing, transfer, visualization, querying, updating,
information privacy and data source. 
• Big data processing creates significant accountability challenges for
data controllers and the enforcement agencies that oversee data
protection and privacy.
Ethical issues in Big data
• Private customer data and identity should remain private
• Shared private information should be treated confidentially
• Customers should have a transparent view
• Big Data should not interfere with human will
• Big data should not institutionalize unfair biases
• India is one step closer to having its own data protection law after the
Srikrishna Committee submitted its initial assessment and
recommendations on data privacy and management as well a draft of
the legislation on data protection titled Personal Data Protection Bill,
2018
• India presently does not have any express legislation governing data
protection or privacy. However, the relevant laws in India dealing with
data protection are the Information Technology Act, 2000 and the
(Indian) Contract Act, 1872.
• The (Indian) Information Technology Act, 2000 deals with the issues
relating to payment of compensation and punishment in case of
wrongful disclosure and misuse of personal data and violation of
contractual terms in respect of personal data.
• Under section 43A of the (Indian) Information Technology Act, 2000, a
body corporate who is possessing, dealing or handling any sensitive
personal data or information, and is negligent in implementing and
maintaining reasonable security practices resulting in wrongful loss or
wrongful gain to any person, then such body corporate may be held
liable to pay damages to the person so affected.
• It is important to note that there is no upper limit specified for the
compensation that can be claimed by the affected party in such
circumstances.
• The Government has notified the Information Technology (Reasonable
Security Practices and Procedures and Sensitive Personal Data or
Information) Rules, 2011. The Rules only deals with protection of
"Sensitive personal data or information of a person", which includes
such personal information which consists of information relating to:-
• Passwords;
• Financial information such as bank account or credit card or debit card
or other payment instrument details;
• Physical, physiological and mental health condition;
• Sexual orientation;
• Medical records and history;
• Biometric information.
• Under section 72A of the (Indian) Information Technology Act, 2000,
disclosure of information, knowingly and intentionally, without the
consent of the person concerned and in breach of the lawful contract
has been also made punishable with imprisonment for a term
extending to three years and fine extending to Rs 5,00,000 
• It is to be noted that section 69 of the Act, which is an exception to
the general rule of maintenance of privacy and secrecy of the
information, provides that where the Government is satisfied that it is
necessary in the interest of:
• the sovereignty or integrity of India,
• defence of India,
• security of the State,
• friendly relations with foreign States or
• public order or
• for preventing incitement to the commission of any cognizable offence
relating to above or
• for investigation of any offence,
Amendments as introduced by the IT
Amendment Act, 2008
• Section 43A – Compensation for failure to protect data.
• Section 66 – Computer Related Offences
• Section 66B – Punishment for dishonestly receiving stolen computer
resource or communication device.
• Section 66C – Punishment for identity theft.
• Section 66D – Punishment for cheating by personation by using
computer resource.
• Section 66E – Punishment for violation for privacy.
• Section 66F – Punishment for cyber terrorism.
• Section 67 – Punishment for publishing or transmitting obscene material in
electronic form.
• Section 67A – Punishment for publishing or transmitting of material
containing sexually explicit act, etc, in electronic form.
• Section 67B – Punishment for publishing or transmitting of material
depicting children in sexually explicit act, etc, in electronic form.
• Section 67C – Preservation and Retention of information by intermediaries.
• Section 69 – Powers to issue directions for interception or monitoring or
decryption of any information through any computer resource.
• Section 69A – Power to issue directions for blocking for public access of any
information through any computer resource.
• Section 69B – Power to authorize to monitor and collect traffic data or
information through any computer resource for cyber security.
• Section 72A – Punishment for disclosure of information in breach of lawful
contract.
• Section 79 – Exemption from liability of intermediary in certain cases.
• Section 84A –Modes or methods for encryption.
• Section 84B –Punishment for abetment of offences.
• Section 84C –Punishment for attempt to commit offences.
End of Unit-II