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Submitted to: Dr.Rajul Singh
Submitted by: Arjun Chauhan FT-09-731
Corporate Social Responsibility (CSR)
Corporate Social Responsibility is the action taken by a firm that appear to further some social causes beyond the interest of the firm and that which is required by law and ethics. Corporate social responsibility (CSR), also known as corporate responsibility, corporate citizenship, responsible business, sustainable responsible business(SRB), or corporate social performance, is a form of corporate self-regulation integrated into a business model. Ideally, CSR policy would function as a built-in, self-regulating mechanism whereby business would monitor and ensure its support to law, ethical standards, and international norms. Consequently, business would embrace responsibility for the impact of its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. Furthermore, CSR-focused businesses would proactively promote the public interest by encouraging community growth and development, and voluntarily eliminating practices that harm the public sphere, regardless of legality. Essentially, CSR is the deliberate inclusion of public interest into corporate decision-making, and the honouring of a triple bottom line: people, planet, profit. The term "CSR" came in to common use in the early 1970s, after many multinational corporations formed, although it was seldom abbreviated. The term stakeholder, meaning those on whom an organization's activities have an impact, was used to describe corporate owners.
An approach for CSR that is becoming more widely accepted is community-based development approach. In this approach, corporations work with local communities to better themselves. For example, the Shell Foundation has involvement in the Flower Valley, South Africa. In Flower Valley they set up an Early Learning Centre to help educate the community's children as well as develop new skills for the adults. A more common approach of CSR is philanthropy. This includes monetary donations and aid given to local organizations and impoverished communities in developing countries. Some organizations do not like this approach as it does not help build on the skills of the local people, whereas community-based development generally leads to more sustainable development. Another approach to CSR is to incorporate the CSR strategy directly into the business strategy of an organization. For instance, procurement of Fair Trade tea and coffee has been adopted by various businesses. Another approach is garnering increasing corporate responsibility interest. This is called Creating Shared Value, or CSV. The shared value model is based on the idea that corporate success and social welfare are interdependent. A business needs a healthy, educated workforce, sustainable resources and adept government to compete effectively.
Potential Business Benefits
The scale and nature of the benefits of CSR for an organization can vary depending on the nature of the enterprise, and are difficult to
quantify, though there is a large body of literature exhorting business to adopt measures beyond financial ones. The business case for CSR within a company will likely rest on one or more of these arguments: Human resources: A CSR programme can be an aid to recruitment and retention, particularly within the competitive graduate student market. Potential recruits often ask about a firm's CSR policy during an interview, and having a comprehensive policy can give an advantage. CSR can also help improve the perception of a company among its staff, particularly when staff can become involved through payroll giving, fundraising activities or community volunteering. Risk management: Managing risk is a central part of many corporate strategies. Reputations that take decades to build up can be ruined in hours through incidents such as corruption scandals or environmental accidents. These can also draw unwanted attention from regulators, courts, governments and media. Building a genuine culture of 'doing the right thing' within a corporation can offset these risks. Brand differentiation: In crowded marketplaces, companies strive for a unique selling proposition that can separate them from the competition in the minds of consumers. CSR can play a role in building customer loyalty based on distinctive ethical values. License to operate: Corporations are keen to avoid interference in their business through taxation or regulations. By taking substantive voluntary steps, they can persuade governments and the wider public that they are taking issues such as health and safety, diversity,
or the environment seriously as good corporate citizens with respect to labour standards and impacts on the environment.
Pyramid of CSR
CSR Initiatives and Green Measures
• Reliance industries and two Tata groups firms, Tata Motors and Tata Steel are the country’s most admirable companies for their Corporate Social Responsibilities initiative. • IBM has joined hands with Tribal Development department of Gujarat for a development project aimed at up liftment of tribal in the Sesan area of Gir forest. • The Indian paint industries are making their product more environment friendly by opting for water based paints and making its carcinogens free.
Be a good Corporate Citizen Ethical Responsibilities
Obey the Law Economic Responsibility Legal Responsibility Be Ethical
Criticism and Concerns
Critics of CSR as well as proponents debate a number of concerns related to it. These include CSR's relationship to the fundamental purpose and nature of business and questionable motives for engaging in CSR, including concerns about insincerity and hypocrisy. Nature of business Milton Friedman and others have argued that a corporation's purpose is to maximize returns to its shareholders, and that since only people can have social responsibilities, corporations are only responsible to their shareholders and not to society as a whole. Motives Some critics believe that CSR programs are undertaken by companies such as British American Tobacco (BAT), the petroleum giant BP (well-known for its high-profile advertising campaigns on environmental aspects of its operations), and McDonald's to distract the public from ethical questions posed by their core operations. They argue that some corporations start CSR programs for the commercial benefit they enjoy through raising their reputation with the public or with government. Ethical consumerism The rise in popularity of ethical consumerism over the last two decades can be linked to the rise of CSR. As global population increases, so does the pressure on limited natural resources required to meet rising consumer demand. Industrialization, in many developing countries, is booming as a result of both technology and globalization. Consumers are becoming more aware of the environmental and social implications of their day-to-day consumer decisions and are therefore beginning to make purchasing decisions
related to their environmental and ethical concerns. However, this practice is far from consistent or universal. Social awareness and education The role among corporate stakeholders is to work collectively to pressure corporations that are changing. Shareholders and investors themselves, through socially responsible investing are exerting pressure on corporations to behave responsibly. Ethics training The rise of ethics training inside corporations, some of it required by government regulation, is another driver credited with changing the behaviour and culture of corporations. The aim of such training is to help employees make ethical decisions when the answers are unclear. Laws and regulation Another driver of CSR is the role of independent mediators, particularly the government, in ensuring that corporations are prevented from harming the broader social good, including people and the environment. Stakeholder priorities Increasingly, corporations are motivated to become more socially responsible because their most important stakeholders expect them to understand and address the social and community issues that are relevant to them. Key external stakeholders include customers, consumers, investors (particularly institutional investors), and communities in the areas where the corporation operates its facilities, regulators, academics, and the media.
What is the need for CSR?
While the interests of shareholders and the actions of managers of any business enterprise have to be governed by the laws of economics, requiring an adequate financial return on investments made, in reality the operations of an enterprise need to be driven by a much larger set of objectives that are today being defined under the term CSR. The broad rationale for a new set of ethics for corporate decision making, which clearly constructs and upholds a organization's social responsibility, arises from the fact that a business enterprise derives several benefits from society, which must, therefore, require the enterprise to provide returns to society as well. A business cannot succeed in a society which fails. This, therefore, clearly establishes the stake of a business organization in the good health and well being of a society of which it is a part. More importantly, in this age of widespread communication and growing emphasis on transparency, customers of any product or service are unlikely to feel satisfied in buying from an organization that is seen to violate the expectations of what is deemed to be ethically and socially responsible behaviour. It is becoming increasingly evident that organizations that pay genuine attention to the principles of socially responsible behaviour are also finding favour with the public and are the preferred choice for their goods and services.
CORPORATE GOVERNANCE INITIATIVES IN INDIA
There is a very impressive growth of the corporate sector in India. To examine corporate governance issues and recommend a voluntary code of best practices, Confederation of Indian Industry (CII) set up a committee and started the initiative to improve corporate governance in India. The first draft of the code was prepared by April 1997, and the final document was released in April 1998. Considerably debate has taken place on reforming Indian corporate governance practices in recent times. Various committees have suggested Anglo-Saxon style of corporate governance reforms. However, such reforms are unlikely to improve the protection of minority shareholders. There is still a larger issue arising out of the pyramidal structures. The ordinary investors may find it difficult to differentiate a good investment from a bad one. Because the credibility of report earnings is suspect. In addition, the reported earnings may be a poor guide to future performance. To conclude, the complex organizational structures of many Indian business houses are a major impediment to good corporate governance. Mechanical measures such as increasing the number of independent directors on Board will do little to change the state of affairs unless cash flows and control rights are aligned. In the wake of issues like these, the Government has initiated measures to arrest the future deterioration in the functioning of corporate sector as well as to heal the damage caused.
CSR in Industry
General Motors. In what was deemed an uncommon case of educational institutions providing intellectual inputs to industry the students of an architecture institute provided the landscape design for the GM plant at Talegaon. It also set a target of US $ I bn worth of components to be sourced from India. It was also announced that GM would set up an auto ancillary park in the State of Gujrat partly as CSR and partly as a business opportunity. Ford India. The company has distributed grants to individuals and institutional beneficiaries for environmental conservation. In the field of education, the company has provided coaching and scholarships to children of local communities; sponsored education to help local people meet the Ford plant's employment standards; and sponsored two chairs at the Indian Institute of Technology, Chennai and Delhi for automotive research; in the field of healthcare, the company has provided aid to an institution providing mental healthcare to destitute women in Tamil Nadu and donated two Ambulances to a trauma care consortium and set up a health centre. Besides it has also supported the Automobile Research Association of India with grants for the purchase of testing equipment and donated to help cyclone and earthquake victims. Hyundai Motor India On April 10, 2006, Hyundai Motor India set up the Hyundai Motor India Foundation (HMIF) for social initiatives in the areas of health care, education & vocational training, environmental research and training including awareness programs, road safety, promotion of arts, science & technology, disaster relief and donor activity. The foundation has made its first contribution
of Rs 3.5 million (US $ 90,000) for the restoration of a local heritage building. Besides, Hyundai India had donated ambulances and Hyundai cars to the local police. Honda Siel Cars India Limited. The focus of the CSR activities of HSCI were in the areas of safety and environmental protection and its passenger cars won awards for the most eco-friendly brand. In the year 2005, the company offered customers in the flood-affected Indian state of Gujarat free check-up and repair of their cars at a 50 percent discount on spare parts and zero labor cost. Mahindra-Renault. There was no evidence of CSR activities related specifically to the Mahindra- Renault joint venture, although the Mahindra & Mahindra Group of companies had taken many social Initiatives. Maruti Suzuki. Maruti Suzuki has undertaken several CSR initiatives such as adopting Industrial Training Institutes run by the provincial government, establishing a driving and technical training institute for tribal youth, and providing education to children below the poverty line. The Company has also adopted and refurbished a children’s park in New Delhi. And undertaken measures to ensure automobile safety and environmental protection, for which it had received awards. Tata Motors. In October 2007, the company provided desks, benches, chairs, tables cupboards, electrical fittings and educational and sports material to a primary school in a village near the site where it is setting up manufacturing facilities for the Nano. The company has announced that it has plans for similar programs to upgrade school infrastructure in the project area and a computer laboratory in one of the high schools.
The birth of Mahindra & Mahindra began when K.C. Mahindra visited the United States of America as Chairman of the India Supply Mission. He met Barney Roos, inventor of the rugged 'general purpose vehicle' or Jeep and had a flash of inspiration: wouldn't a vehicle that had proved its invincibility on the battlefields of World War II be ideal for India's rugged terrain and its kutcha rural roads? Swift action followed thought. The Mahindra brothers joined hands with a distinguished gentleman called Ghulam Mohammed. And, on October 2nd, 1945, Mahindra & Mohammed was set up as a franchise for assembling jeeps from Willys, USA. Two years later, India became an independent nation and Mahindra & Mohammed changed its name to Mahindra & Mahindra. Ghulam Mohammed migrated to Pakistan postpartition and became the first Finance Minister of Pakistan. Since then, Mahindra & Mahindra has grown steadily in size and stature and evolved into a Group that occupies a premier position in almost all key sectors of the economy. The Group's history is studded with milestones. Each one taking the Group forward. In fact, today, its total turnover is about 7.1 billion dollars.
Redefining - CSR
Corporate Social Responsibility has always been an integral part of the Mahindra Group's vision and the cornerstone of our Core Value of Good Corporate citizenship. - Keshub Mahindra, Chairman The Mahindra Group defines Corporate Social Responsibility as making socially responsible products, engaging in socially responsible employee relations and making a commitment to the community around it. At the Mahindra Group, Corporate Social Responsibility is not just a duty; it's a way of life. In 2005, the Group celebrated its 60th anniversary by renewing its commitment to Corporate Social Responsibility. It pledged to dedicate 1% of its profit (after tax), on a continuous basis towards Corporate Social Responsibility. A unique kind of ESOPs Employee Social Options was launched to enable Mahindra employees to involve themselves in socially responsible activities of their choice. The Group also announced a special gift: to provide free cochlear implants to 60 profoundly hearingimpaired, under-privileged children. In addition to giving impetus to the Nanhi Kali project for the girl child and the Mahindra All India Talent Scholarship for the economically disadvantaged, the Mahindra Group is planning to set up two Mahindra Pride Schools. These schools will offer a variety of courses, with an emphasis on employability, including
training for Information Technology, Retail, Automotive Engineering etc. They will provide new skills and capabilities to the weaker sections of society, particularly the scheduled castes and scheduled tribe youth. While these projects are already underway, plans for more social initiatives are on the anvil.
From educating a girl child in Udaipur, providing healthcare to inaccessible areas in Uttarkhand,; enabling socially disadvantaged youth become self reliant in Pune, to planting a million trees in India, your Company's Corporate Social Responsibility (CSR) initiatives continue to provide strategic interventions that help the Nation help itself. At Mahindra they call it Transform-nation. CSR continues to be an integral part of the vision of the Mahindra Group and this year too, the Company has pledged 1% of its Profit after Tax for CSR initiatives, largely to benefit the socially and economically disadvantaged sections of Society. Some of the major initiatives your Company has invested in are described below:
EDUCATION:Established by the late Mr. K. C. Mahindra in 1953, the K. C. Mahindra Education Trust aims to ‘Transform the lives of people in India through education, by providing financial assistance and recognition to them, across age groups and across income strata'.
It was registered as a Public Charitable Trust under the Bombay Public Trusts Act, 1950. The K.C. Mahindra Education Trust has undertaken a number of education initiatives to make a difference to the lives of deserving students. The Trust promotes education mainly by way of scholarships. It has provided more than Rs. 13.80 crores (approximately US $ 3.0 million) in the form of grants, scholarships and loans. Some of these scholarships were instituted as far back as the 1950’s, while others were founded recently. These are funded through an investment portfolio, the main donors of which are the Mahindra Group of companies. • Mahindra Pride Schools: Mahindra Pride Schools (MPS) unique partnership model speeds its graduates' integration into the workforce, where they earn not only a salary but also the respect of their family and peers. Since inception in March, 2007, 1,720 students from socially disadvantaged communities have completed the 3 month course at MPS. MPS provides these youth with livelihood training in sunshine industries. i.e. Hospitality, Customer Relationship Management, Hardware & Networking and Call Centre Training. All students are required to undergo mandatory courses in English, Life skills and computer applications. • NANHI KALI: Nanhi Kali, which supports the education of the disadvantaged girl child has been the flagship programme of the K. C. Mahindra Education Trust. Nanhi Kali brings about a complete transformation, by allowing the girls to attend school' and learn with dignity. Nanhi Kali sponsorship provides not only academic
support classes where concepts of Maths, Science and language are taught to the girls but also provides uniforms, school bags, shoes, etc. which free her family from hidden costs of education. The Mahindra Group independently supports 11,000 girls across India. With support from thousands of individuals and Corporate donors, Project Nanhi Kali now supports the education of over 54,000 underprivileged girl children, in poor urban, remote rural and conflict afflicted tribal communities across 8 States of India. The goal of Nanhi Kali is to provide educational support to 1,00,000 underprivileged girls by 2011.
Gifting Cochlear Implants:
By gifting the power of sound through the donation of Cochlear Implants, the Mahindra Group has changed the life and future of 60 profoundly hearing-impaired, underprivileged children till date. Operations are performed by Dr. Milind Kirtane, India's leading ENT surgeon and his Team. All beneficiaries are hearing impaired children below the age of 5, belonging to the lower socio economic strata of Society.
Bihar Rehabilitation Project:
The river Kosi wreaked havoc in Bihar in 2008 with floods causing incalculable loss of life and property besides snatching away the livelihood of lakhs of people in the State. Following the same, Mahindra Foundation and Mahindra Consulting Engineers Limited (MACE), a subsidiary of the Company have entered into a Memorandum of Understanding (MOU) with the Collector, Madhepura District, Bihar to support the rehabilitation and
reconstruction activities in Pattori Gram Panchayat, Singheswar Block, Madhepura District of Bihar for those ravaged by the Kosi floods in 2008. Under the terms of the MOU, MACE would create the complete social infrastructure in Pattori Gram Panchayat. This comprehensive programme includes the construction of permanent houses with provision of basic infrastructural facilities such as water supply and sanitation.
Employee Social Options:
Employee Social Options (ESOPs) is the unique programme at the Mahindra Group where each employee can do social work by volunteering in various CSR initiatives. Till date, 31,317 employees have volunteered in various initiatives in their local communities. ESOPs were formally launched in 3 new locations of Mahindra Group – Mahindra Two Wheelers; Pune, Mahindra Two Wheelers; Pithampur and Mahindra Retail; Bangalore. Some of the notable ESOPs initiatives this year were: * The Lifeline Express in Wardha: This was jointly sponsored and organised by the Farm Division and Mahindra & Mahindra Financial Services Limited, a subsidiary of the Company. The Project was held at Wardha and 1,153 surgeries were performed free of cost and 281 Hearing Aids were distributed. ESOPs Volunteers spent 13,752 man hours in this activity and 30,575 man hours were spent by volunteers from the Community, thus making it an ideal public-private partnership initiative. * Mahindra Hariyali : A Survey was conducted on the survival rate of trees planted in the Financial Year 2008-09. According to the
Survey, the survival rate as on 31st May, 2009 of the trees planted during the abovementioned period is 79.49%. * ESOPs AWARDS 2009: is an internal Company award and was Institutionalised in 2008 to appreciate and promote healthy competition amongst employees and locations. Other ESOPs activities also included other initiatives in Education, Health, Environment and Social arenas bringing long-lasting impact. 54 Health initiatives such as medical camps, blood donation camps, Pulse Polio Campaigns, mobile dispensaries, etc. reached out to over 14,573 people. HIV/AIDS awareness campaigns reached out to over 1,36,560 people in Nashik. For taking care of the Environment, 1,14,862 trees were planted for Gap Filling in Financial Year 2009-10. 71 Social initiatives were conducted such as visiting Old Age Homes, interacting with children, conducting Shraamdan, etc. which reached out to over 78,003 people.
Environmental Initiatives : Air Pollution Management:
With a clear view on sustaining green business growth, the need for clean environment was given a renewed focus. By incorporation of new technological upgradations, Company is now in the process of calculating carbon foot print of Plants location wise and is taking adequate measures to mitigate the causes attributing to it. The Company also has a roadmap to reduce Green House Gas (GHG) emissions by curtailing travel of its employees to client locations for Meetings and discussions and
this is achieved by promoting the use of Video Conferencing. Your Company is constantly imbibing the major environment sensitisation drives amongst its employees through various events such as celebrations of World Environment Day, World Ozone Day alongwith active participation of employee's families.Company has also implemented ambient and work place air monitoring, increased green zones, along with effluent treatment and waste monitoring.
Water and Waste Water Management:
Company is committed towards resource conservation and has taken various initiatives to achieve waste reduction and resource conservation. Your Company has implemented various water management methods such as recycling and re-use of treated waste water in process. The Company has also introduced rainwater harvesting and recharging within Plant premises and would extend it to other locations as well.
Solid Waste Management:
Company's Plants at Kandivli, Nashik, Igatpuri and Zaheerabad believe in responsible disposal of hazardous and non-hazardous waste.The generation of waste to a greater extent has been reduced at source and if adaptable, it is recycled and reused. Your Company is aggressively working towards minimising waste disposal costs and is executing various Management programmes at each location such as vermiculture, bio-gas Plants to convert food waste to manure/cooking gas towards minimisation of the
same. Your Company is conscious towards environment and ensures environment friendly disposal of e-waste.
Company has community partners at each location for green belt development. Mahindra Hariyali was one of the initiatives which was implemented at the Plants at Mumbai and Kanhe and at dealers & distributors across India. Your Company's Plants at various locations have partnered with Non-Governmental Organisations and various academic institutions all located in and around Mumbai, Nashik, Igatpuri, Zaheerabad and Haridwar.
The Mahindra Group maintains a considerable involvement in philanthropy and in volunteering. It is considered to be an active participant in the Indian Corporate Social Responsibility field and received the Pegasus Award for CSR in 2007. When you’re serious about social change, the numbers speak for themselves. The K.C. Mahindra Education trust, established in 1953 has provided more than 13.8 crores (approximately US $3 million) to deserving and needy students. For the Mahindra Group, Corporate Social Responsibility (CSR) is not just a duty. It's the unique way we work and live. The Mahindra and Mahindra group focuses on the environment issues. Mahindra & Mahindra has taken several steps in its efforts to be an environment-friendly organisation. The Nashik plant has pledged to plant one lakh saplings in and around the city of Nashik in the current year, beginning with 5,000 saplings, which have already been planted. Earlier activities include planting saplings in the ITI campus in schools in Nashik. The Nashik plant has won laurels for its environmental-friendly activities. There are a lot of initiatives taken by the group. All this probably won't help Mahindra post record profits, but then, profit was never the sole spirit behind this US $6 billion conglomerate.
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