Corporate Governance ,Ethics & Social Responsibility of Business

UNIT I TOPIC 4

Corporate Social Responsibility(CSR)

BBA-206
 Learning
Outcome
PO KL CO Description Outcome

PO1-PO8 K2 CO1 Corporate Social Students were able to understand the

Responsibility CSR, Concept concept of CSR its importance role of
of CSR, Corporate Corporate Philanthrophy,strtegic planning
Philanthropy. and corporate sustainability.

BBA-206
 Lecture
Outline

Introduction – Corporate Social Responsibility

(CSR) Concept of CSR
Corporate Philanthropy
.

BBA-206
Corporate Social Responsibility (CSR)
Meaning
CSR refers to the concept whereby companies decide voluntarily to
contribute to a better society and a cleaner environment.
Corporate Social responsibility is represented by the contribution undertaken
by companies to society through its business activities and its social
investment.
In other words CSR is a management concept whereby companies integrate
social and environmental concerns in their business operations and
interactions with their stakeholders.
CSR is a self-regulating business model that helps a company be socially
accountable – to itself, its stakeholders, and the public.
 Corporate Social Responsibility(CSR)
Definitions
 CSR is a process by which an organization thinks about and evolves its
relationships with stakeholders for the
common good and demonstrates its commitment in this regard by adoption of appropriate business processes
and strategies. Thus, CSR is no charity or mere donations.

 CSR is a way of conducting business, by which corporate entities visibly contribute to the social good.
responsible
Socially companies use CSR to integrate economic, environmental and social objectives with
company’s
the operations and growth.

 Devi’s Blomstorm “ it is the obligation of decision makers to take actions that protects and improve the welfare
of society as a whole along with their own interest , protecting and improving are two aspects of social
responsibilities.

 According to Lord Holme and Richard Watts “ Corporate social responsibility is the continuing commitment by the
business to behave ethically and contribute to economic development while improving the quality of workforce
and their families as well as of local community and society at large.”
• “Corporate Social Responsibility” (CSR) Means and include but not limited to :-

1)Projects or programs relating to activities specified in the schedule VII of the Act; or
2)Projects or Programs relating to activities undertaken by BODs of the company in
pursuance of the recommendations of the CSR committee of the Board as per declared
CSR Policy of the company enumerated in schedule VII of the
Act.

• “CSR Policy” relates to the activities to be undertaken by the company as specified in

schedule VII of the act and the expenditure
thereon, excluding activities undertaken in pursuance of
normal course of business of a company
 Basic Constituents of
CSR

Contribute Make Improvem Towards

towards a
desirabl ent of
sustainabl
esocia social
environm &
Busines
change nt
l e
e s s
Society
economic
dnet
velopme
 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
Long term economic & social
development.
Models of corporate social responsibility
• 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.
 Six Strategies in the adoption of
CSR.
 Rejection strategy
 Adversary strategy
 Resistance strategy
 Compliance strategy
 Accommodation strategy
 Proactive strategy
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.
 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.
 Stockholders & Stakeholders Model
Stockholder Stakeholde
ORIENTATION
s Model r Model

1 2
Self Interest
Productivism Progressivism
MOTIV
ES

3 4
Duty
Moral Philanthropy Ethical Idealism
 Contd………….

 Productvists believe that the only mission of a firm is to

maximize the profit.
 Philanthropists who entertain the stockholders. CSR is
dominated by moral obligations & not self-interest.
 Progressivists believes the corporate behaviour basically
motivated by self interest & should have ability to
transform the society for good.
 Ethical Idealism concern with sharing of corporate profits for
humanitarian activities.
 New Model of CSR
Ethical Rooting
Strong Poor

CSR (+) CSR(-)

Stron
g
Financial
Capabilit

CSR(-) CSR(-)
Poo
r
y
 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.

 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 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.

• Corporate should return a part of wealth.

 Arguments against the CSR

 Fundamental principles of business gets violated.

 It vey 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.
 Corporate Social Responsibility Continuum

Do more
Maximize than Integrate social
firm’s required; e.g. objectives and
profits to Fight social engage in business goals
the responsibilit philanthropic Balance profits
exclusion of y initiatives giving and social
all else objectives

Do what it
takes to make Comply; Lead the
a profit; skirt do what Articulate industry and
the law; fly is legally social other
below required value businesses
social radar objectives with best
practices
 List of CSR
•
Activities:
Eradicating extreme hunger and poverty;
• Promotion of education;
• Promoting gender equality and empowering women;
• Reducing child mortality and improving maternal health;
• Ensuring environmental sustainability;
• Employment enhancing vocational skills;
• Social business projects;
• Contribution to the Prime Minister's National Relief Fund or any other fund setup
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.
 Sub Section 8 of Section 134
If a company contravenes the provisions of this section, the
company shall be punishable with fine which shall not be less
than fifty thousand rupees but which may extend to twenty-five
lakh rupees and every officer of the company who is in default
shall be punishable with imprisonment for a term which may
extend to three years or with fine which shall not be less than
fifty thousand rupees but which may extend to five lakh rupees,
or with both.
 Nature or Feature of
Corporate Social Responsibility
1. Economic Responsibility
2. Legal Responsibility
3. Ethical Responsibility
4. Philanthropic
Responsibility
 Aspects of Corporate Social Responsibility
1. Responsibility towards Shareholders
2. Responsibility towards Employees
3. Responsibility towards Creditors
4. Responsibility towards Customers
5. Responsibility towards suppliers of Goods
6. Responsibility towards Government in return
7. Responsibility towards Society
 Responsibility Towards
Shareholders
shareholders are the owners of the company and they
cannot be treated as just investors of the company.
1. Investment into profitable scheme
2. Timely payment of dividends
3. Providing requisite information
4. Informing progress of the
business
Responsibility Towards Employees
1. Providing with a fair salary and wages
2. Providing good working conditions
3. Satisfaction of security needs
4. Providing opportunity for career development
Responsibility Towards
Creditors
1. Determination of proper terms and conditions of loans
2. Proper utilization of debt capital
3. Regular payment of internet and advances
4. To provide with requisite information
Responsibility Towards
Customers
1. Determination of fair prices
2. Making available goods and services
3. Providing the quality goods
4. Satisfaction and solution to customer complaints in time
Responsibility Towards Government in Return
1. Timely payment of taxes and duties
2. Keeping away from politics of business
3. Following legal provisions pertaining to the business
4. Cooperation with the government during times of crisis and
emergency
Responsibility Towards
Society
 CSR – Tax Angle

• Sec. 10 of Income Tax Act

• Income Tax Exemption for activities like

• Research & Development

• Education Activity
• Health Activity
• MAT credits available Sec. 80 of Income Tax Act
• Income Tax Deduction for activities like

• Contribution to Relief Funds

• Contribution to Employees funds
• Staff Training
• Society Welfare activities
• Other Benefits
 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 Schools,
like colleges, charitable hospitals etc.
• Corporate sectors have not made significant contributions.
(Polluting Environment).
 Indian Perspective.
 PM’s Ten Point Social Charter 2007
 MCA and CSR
 Voluntary Guidelines on CSR, 2009
 Released in Dec 2009, in presence of the president of India
 A statement of Intent by the national government
 Intended to be replaced by a more comprehensive guideline.
 National Voluntary Guidelines on Social, Environmental and Economic
Responsibilities of Business 2011
 Planning Commission and Task Force on Business Regulation.
 Top Indian Companies in CSR
- Ranking as per CII
• Tata Group
• BHEL
• Wipro
• Bajaj Auto Limited
• Larson & Toubro
• Otis Elevator Company
• ACC
• Asian Paints
• SAIL
• Colgate Palmolive
• ITC
• Sahara Group
• Ashoka Leyland
 CSR Initiative is India

• Tata Group – TIFR , TISS , Tata Cancer Hospital, Ratan Tata Institute , JRD Tata
Lecture Series – Awards. Nationalization of Tata enterprises
• Ambuja Cement receives International Reorganization for Di- Salianation
Project in Costal Gujarat Wipro – Donation of 1/4th of Personal Worth’s by
Owners for Social Cause
• JSW Steel in Dolvi – Pen , Maharashtra Provides free electricity to nearby
villages through surplus of captive unit
• Indian Automobile industry promotes use of CNG for Public Transport
• Solar Energy Street Lightning by various corporate
 What is corporate philanthropy?

• Corporate philanthropy refers to the activities that companies voluntarily initiate to manage their
impact on society. Typically, corporate philanthropic activities include monetary investments,
donations of products or services, in-kind donations, employee volunteer programs and other
business arrangements which aim to support a social cause.

• While some companies spearhead and operate corporate philanthropy programs themselves,
others may focus on advancing the work of local community organizations, nonprofit
organizations or other social initiatives geared toward improving society.
• Corporate philanthropy involves a corporation or organization supporting the wellbeing of
others, typically through charitable contributions or donations.
• It involves investments and actions which a company voluntarily undertakes. These actions are to
manage and account for their effect on society appropriately.
• However, corporate giving programs need to move beyond a basic annual donation to a favorite
charity. It is becoming a crucial way to engage workers and further integrates values into the
culture.

Why Do Employees Want More Corporate Philanthropy?

• Nowadays, employees want to feel like they are a part of something bigger. They want to be
proud of their company and believe that their work impacts and enriches society.
• Of course, financial benefits are important. But, people are more likely to stay with a company if
they are glad to work for it and share its objective.
• Corporate philanthropy is a great way to make this connection. It positions your company as a
place where people desire to work. It demonstrates to employees that their company cares and
shares its social values.
• What's The Difference Between Corporate Social Responsibility And Corporate
Philanthropy?
• The act of donating a portion of one's profits to society is known as corporate
philanthropy. CSR, or Corporate Social Responsibility, on the other hand, is described as
fulfilling one's social responsibility while conducting business. It is carried out ethically
and without jeopardizing society's interests.

• 6 Simple Steps To Create A Corporate Philanthropy Program

• Determine which colleagues or team members will be in charge of the program.
• Choose a philanthropic strategy that is in line with your organization's objective.
• Identify and reserve funding for the program.
• Create a detailed execution strategy.
• Make a marketing strategy to promote your philanthropy.
• To maximize the impact of your program, keep track of the metrics and assess them
frequently.
•
 Corporate Philanthropy To Boost Employee Engagement

• 1. Back them with corporate matching gift programs.

Many of us already have the best employee rewards and recognition programs in place. But you can make them even more effective by
incorporating a corporate matching gift program.
• In 1954, the General Electric Foundation introduced the concept of corporate matching gift program. Employees at all levels, as
well
as retirees, are eligible for matching gifts. Each year, participants are eligible for a match of up to $5,000 (maximum).
• Matching gifts is a corporate giving program set up by businesses and corporations to benefit their staff. A worker can submit a
matching gift request to their employer after donating to a non-profit. Successively, the corporation will make a second payment to
that non-profit. A well-designed corporate matching gift plan shows staff that their employers care about them and share their values.
• 2. Offer paid time off to volunteer.
When volunteerism is a part of a company's philanthropy, employee engagement can surge. It is further enhanced by offering paid time
off to employees who volunteer to participate in charity events. It is also called VTO, which is short for 'volunteer time-off." Businesses all
over the world have realized that VTO is a great employee motivation strategy.
• Enabling employees and teams to help the community increases their commitment and makes them feel selflessly supported by the
company.
• However, every employer must ensure that the time-off program is well-defined. That means, to stay on top of it, HR should create a
concrete and scalable framework for the time-off program.
• 3. Encourage group volunteer activities.

CONTD..
 CONTD…
• Volunteering as a group is a wonderful way to engage employees, boost cooperation, and bring everyone together.
It can also help your team connect with the community and make a meaningful impact on people's lives.
• Some companies offer their staff extra time off to volunteer. Likewise, once you've decided how and where your
team will volunteer, you can set aside a few work hours to volunteer as a team.
• Employees are more likely to bond through such activities, making your efforts worthwhile and successful.
• For animal-loving groups, an activity to gather and distribute pet food for a month might be a fun way to give
back.
• Organizing a public area cleanup in your community is a fantastic way for teams who care about the
environment.
• Or you can host a creative and unique workplace fundraiser or organize some other charity team-building activities.
It can be a charity bikeathon or supporting a local youth sports team.
• You can also organize a blood donation camp in your organization. Incentivizing the same is a great way to give back.
 CONTD….
• 5. Invite employees to participate in the planning of the committee.
• Invite your employees to participate in the corporate giving planning process. Ask them for suggestions on programs, funds, or charitable
events to support, and collect data on employees' giving activities and interests.
• If you show that you support their causes, you will see many employees actively participate in the program throughout the year. It will
strengthen not only your relationship with your employees but also your overall influence on society.

•
6. Maintain transparency by using the right PhilanTech platform.
• Employee loyalty improved by 30% when employers were perceived as transparent by their employees.
• Nowadays, employees demand openness and transparency in all aspects of their workplace environment, and social initiatives are no
exception.
• To maintain complete transparency into the programs, use the correct tools and technology. Here comes the use of a FinTech platform (or
PhilanTech platform in this case.) It allows you and your team to track where donations go and how they're spent. It also ensures that all
donations are directed to the intended recipient.

• 7. Celebrate its results. Some employees may be unaware of their company's charitable giving program, community involvement, or
relevant aspects. It results in a lack of participation.
• To enliven the engagement of all your employees, make use of your company's communication channels.
• Increase the visibility of your program, celebrate its accomplishments, and see an increase in participation as a result. Don't forget to
recognize and reward that employee who makes a difference in your corporate philanthropy efforts.
 CONCLUSION
• Corporate Social Responsibility (CSR) is the idea that a company should play a positive role in the
community and consider the environmental and social impact of business decisions. It is closely
linked to sustainability − creating economic, social, and environmental value – and ESG, which
stands for Environmental, Social, and Governance. All three focus on non-financial factors that
companies, large and small, should consider when making business decisions.
• In recent years, there has been a shift from CSR to social purpose. Many companies have pivoted
from having a community investment strategy and a ‘nice to have’ mindset to adopting a holistic
approach in which their mission is built into everything they do.
• CSR can involve a broad scope of approaches and initiatives—everything from sustainable practices
to community involvement. Customers increasingly expect responsible behaviour from companies
they do business with.

BBA-206
 References

 Fernando, A.C, Business Ethics, Pearson Education.

 Balachandran V, Corporate Governance, Ethics and Social Responsibility, PHI.
 Mandal, S.K., Ethics in Business and Corporate Governance, Mc Graw Hill
Education Company.
 Kumar, S., Corporate Governance, Oxford, England: Oxford University
Press.
 Sherlekar, S. A., Ethics in Management, Himalaya Publishing House.

BBA-206