Gitarattan International Business School

Corporate Social Responsibility and Human Values and Ethics

(CSR & HVE) MS 208
MBA- (First shift)
Batch: 2018-20
M4A, M4B
Date of releasing Question Bank: 10/04/2020
Date of Revision class : 11/04/2020
UNIT 3
Q1. What do you understand by the term “Sustainability Reporting”? How are the principles
of Business Responsibility Reporting in line with global initiatives of “Sustainability
Reporting?
Ans: Concept of Sustainability reporting
Sustainability reporting is the disclosure and communication of environmental, social, and
governance (ESG) goals—as well as a company's progress towards them. sustainability reporting is
not just report generation from collected data; instead it is a method to internalize and improve an
organization’s commitment to sustainable development in a way that can be demonstrated to both
internal and external stakeholders.
The principles of Business Responsibility Reporting are in line with global initiatives of
“Sustainability Reporting:
The National Voluntary Guidelines were published by Ministry of Corporate Affairs in 2012. The
same were followed by the mandate for top 100 listed companies to publish Business
Responsibility Report by SEBI. SEBI has further extended this mandate to top 500 companies and
has also re-iterated that these companies should voluntarily adopt integrated reporting format for
disclosure on financial and non-financial parameters. These formats serve not only as standard
template but enable benchmarking as well and assess progress over time. It was in this context and
to be in line with global reporting standards, the concept of “Sustainability Reporting” was
introduced by SEBI for the Indian corporates.
NVG and SEBI both laid down the practices and objectives to be achieved from implementation of
BRR principles in India. The Nine Principles of BRR represent the Environmental, Social and
Economic factors.
Principles of Business Responsibility Reporting:
The 9 principles of Business Responsibility Reporting are as follows:
Principle 1: Ethics, Transparency and Accountability: Businesses should conduct and govern
themselves with Ethics, Transparency and Accountability
Principle 2: Product Life-Cycle Sustainability: Businesses should provide goods and services that
are safe and contribute to sustainability throughout their life cycle
Principle 3: Employees' Well-being: Businesses should promote the wellbeing of all employees
Principle 4: Stakeholder Engagement: Businesses should respect the interests of, and be responsive
towards all stakeholders, especially those who are disadvantaged, vulnerable and marginalized
Principle 5: Human Rights: Businesses should respect and promote human rights
Principle 6: Environment: Business should respect, protect, and make efforts to restore the
environment
Principle 7: Public Advocacy: Businesses, when engaged in influencing public and regulatory
policy, should do so in a responsible manner
Principle 8: Inclusive Growth: Businesses should support inclusive growth and equitable
development
Principle 9: Customer Value: Businesses should engage with and provide value to their customers
and consumers in a responsible manner
Conclusion: In response to the above, companies are strengthening their governance structure and
focusing on sustainable growth, caring for environment and society while sourcing materials and
services.
Q2. “The process of Social Audit combines people's participation and assess the social impact
of specific government programmes and policies”.
In light of the above statement, explain the concept and benefits of social audit with reference
to any government programme.
Ans.: Social Audit of Government Programs
Social Audit is the examination and assessment of a programme/scheme conducted with the active
involvement of people and comparing official records with actual ground realities. Social Audit is
a powerful tool for social transformation, community participation and government accountability.
Benefits of Social Audit
• It informs and educates people about their rights and entitlements.
• It provides a collective platform for people to ask queries, express their needs and
grievances.
• It promotes people's participation in all stages of implementation of programmes.
• It brings about transparency and accountability in government schemes.
• It strengthens decentralised governance.
Key features of Social Audit
• Fact finding not fault finding.
• Opportunity for awareness building on entitlements and processes.>
• Creating the space and platform for dialogue among various levels of stakeholders.
• Timely grievance redressal.
 • Strengthening the democratic process and institutions.
• Building people's pressure for better implementation of programmes.
• It informs and educates people about their rights and entitlements.
• It provides a collective platform for people to ask queries, express their needs and
grievances.
• It promotes people's participation in all stages of implementation of programmes.
• It brings about transparency and accountability in government schemes.
• It strengthens decentralised governance.
Social Audit of government programme:
Section 17 of the MGNREGA has mandated Social audit of all Works executed under the
MGNREGA. The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA),
also known as Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS) is
Indian legislation enacted on August 25, 2005.
The MGNREGA provides a legal guarantee for one hundred days of employment in every
financial year to adult members of any rural household willing to do public work-related unskilled
manual work at the statutory minimum wage. The Ministry of Rural Development (MRD), Govt of
India is monitoring the entire implementation of this scheme in association with state governments.
MGNREGA guarantees hundred days of wage employment in a financial year, to a rural household
whose adult members volunteer to do unskilled manual work.
Q3. “Corporate Governance” which was treated as a routine regulatory requirement with
scanty regard from corporate sector just a few decades ago, has become a critical component
world over for enhancing shareholder value through increased transparency, disclosures and
accountability”.
Cite the principles of Corporate governance. Explain how does SEBI ensure corporate
governance of listed companies in India?
Ans: Corporate Governance
“Corporate governance involves a set of relationships between a company’s management, its
board, its shareholders and other stakeholders. Corporate governance also provides the structure
through which the objectives of the company are set, and the means of attaining those objectives
and monitoring performance are determined.”
Principles of Corporate governance : Corporate governance is carried out in accordance with the
Company’s Corporate Governance Code and is based on the following principles:
1. Accountability. The Code provides for accountability of the Company's Board of Directors to all
shareholders in accordance with applicable law and provides guidance to the Board of Directors in
making decisions and monitoring the activities of the executive bodies.
2. Fairness. The Company undertakes to protect shareholders' rights and ensure equal treatment of
shareholders. The Board of Directors shall give all shareholders the opportunity to obtain effective
redress for violations of their rights.
3. Transparency. The Company shall provide timely, accurate disclosure of information about all
material facts relating to its activities, including its financial situation, social and environmental
indicators, performance, ownership structure and governance of the Company, as well as free
access to such information for all stakeholders.
4. Responsibility. The Company recognizes the rights of all interested parties permitted by
applicable law, and seeks to cooperate with such persons or companies for their own development
and financial stability.
Role of SEBI in ensuring corporate governance of listed companies in India:
All listed companies in India must comply with the Clause 49 of the Listing Agreement. This
clause provides the code of corporate governance prescribed by the Securities and Exchange Board
of India.
Clause 49 requirements included:
(i) Minimum percentage of independent directors (50% or 33% depending on whether the
Chairman was an executive director),
(ii) Tightening up the definition of “independence”
(iii) Mandating the number of board meetings per year
(iv) Developing a code of conduct
(v) Imposing limits on the number of directorships a director could simultaneously hold
(vi) Enhancing the power of the audit committee by requiring financial literacy, experience and
independence of its members and by expanding the scope of activities on which the
audit committee had oversight
(vii) Certification by the Chief Executive Officer (CEO) and Chief Financial Officer (CFO)
of financial and overall responsibility for internal controls
(viii) Enhanced disclosure obligations including accounting treatment and related party
transactions
Conclusion: Thus, Today corporate governance is an essential tool and mechanism for the very
survival and success of corporate in the new economic environment. Good governance is
characterized by a firm commitment and adoption of ethical practices by an organization in all
its dealings with a wide group of stakeholders encompassing employees, customers, vendors,
regulators and share holders.
 Q4. Based on your understanding, how would you differentiate the concept of CSR with
that of sustainability and philanthropy?
Ans: INTRODUCTION
CSR: Corporate social responsibility (CSR) is a self-regulating business model that helps a
company be socially accountable—to itself, its stakeholders, and the public.
Philanthropy: philanthropy means literally "love of mankind". Thus, philanthropy is giving
money for a purpose or cause benefiting people who you don't personally know. (Animals
are usually included as well.)
Sustainability: Sustainability focuses on meeting the needs of the present without
compromising the ability of future generations to meet their needs.
Difference between CSR and Corporate Philanthropy
Corporate Philanthropy: Corporate philanthropy has a narrower, more limited scope than
corporate social responsibility. It refers primarily to donations made to charitable and non-profit
groups, whether by the corporation, its employees or both.
Corporate Social Responsibility (CSR): Corporate Social Responsibility has much wider
coverage and a greater impact. CSR looks at the company as a whole, and encourages business to
take responsibility for their impact on the environment, their employees, the local community and
beyond.
Corporate social responsibility not only deals with corporate philanthropy but also other issues
that affect the environment, consumers, human rights, supply-chain sustainability and
transparency for the greater good of the world at large.

Difference between CSR and Sustainability:

1. Vision
Corporate Social Responsibility (CSR) looks backwards, reporting on what a business has done,
typically in the last 12 months, to make a contribution to society.
Sustainability looks forward, planning the changes a business might make to secure its future
(reducing waste, assuring supply chains, developing new markets, building its brand).
2. Targets
CSR tends to target opinion formers – politicians, pressure groups, media.
Sustainability targets the whole value chain – from suppliers to operations to partners to end-
consumers.
3. Business
CSR is becoming about compliance.
Sustainability is about business.
4. Management
 CSR gets managed by communications teams.
Sustainability gets managed by operations and marketing.
5. Reward
CSR investment is rewarded by politicians.
Sustainability investment is rewarded in long term, by both in terms of stock market and
accounting performance.
6. Drive
CSR is driven by the need to protect reputations in developed markets.
Sustainability is driven by the need to create opportunities in emerging markets.
Q5. Briefly elucidate some of the International CSR guidelines and standards.
Some of the International CSR guidelines and standards are :
1. ISO 26000 The ISO 26000 guidance on social responsibility helps enterprises take a
strategic approach to their business processes in accordance with responsible business
conduct principles.

The ISO 26000 standard provides guidance on:

• Recognizing social responsibility and engaging stakeholders

• Ways to integrate socially responsible behavior into the organization

The seven key underlying principles of social responsibility:

o Accountability
o Transparency
o Ethical behavior
o Respect for stakeholder interests
o Respect for the rule of law
o Respect for international norms of behavior
o Respect for human rights

The seven core subjects and issues pertaining to social responsibility:

o Organizational governance
o Human rights
o Labor practices
o The environment
o Fair operating practices
o Consumer issues
o Community involvement and development
2. Caux Round Table (CRT) : The Principles for Caux Round Table (CRT) articulate a
worldwide vision for ethical and responsible corporate behavior. They serve as a foundation for
ethical action for business leaders across the globe.
There are seven core CRT Principles which include the following:
1.Respect Stakeholders Beyond Shareholders
2.Contribute to Economic, Social and Environmental Development
3.Build Trust by Going Beyond the Letter of the Law
4.Respect Rules and Conventions
5.Support Responsible Globalization
6.Respect the Environment
7.Avoid Illicit Activities

3. Global Reporting Initiative

The Global Reporting Initiative (GRI) provides a globally applicable framework for drawing up
sustainability reports in accordance with internationally recognised criteria. The reporting
framework covers principles and indicators for enterprises and other organisations to measure their
economic, environmental and social performance. GRI also provides interest groups with a
transparent representation of the relevant sustainability aspects of an enterprise.

4. Sustainable Development Goals: The 2030 Agenda for Sustainable Development (UN
development goals) was developed by the international community in 2015 to contribute to global
development, promote human well-being and to protect the environment. The 17 Sustainable
Development Goals and their 169 targets form a core element of this agenda.

5. OECD Guidelines for Multinational Enterprises

The OECD Guidelines for Multinational Enterprises constitute comprehensive recommendations

for conduct provided by governments to multinational enterprises. They help enterprises exercise
their responsibility and can be applied wherever the enterprises operate. The OECD guidelines are
not legally binding. General and sector-specific guidelines (covering minerals, agriculture, textiles,
finance, etc.) support implementation of the OECD guidelines and enterprises’ due diligence in
particular.

6. UN Guiding Principles on Business and Human Rights

The UN Guiding Principles on Business and Human Rights include 31 principles and are based on
three pillars:
 1. State duty: Countries must take the necessary measures (e.g. laws, incentives and
awareness raising) to protect the population from human rights abuses, including by
private agents (enterprises included).

2. Corporate responsibility: Enterprises must respect human rights and to this end must
exercise due diligence in proportion to the circumstances.

3. Access to remedy: Countries and enterprises have a responsibility to facilitate effective

remediation for those affected by means of judicial and extrajudicial measures.

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