CORPORATE SOCIAL RESPONSIBILITY

• The term corporate social responsibility is based on the idea that business
has social obligations beyond earning profits.
•A corporation is responsible not only to its shareholders but to all
stakeholders – customers, employees, suppliers, competitors, government,
and social community.
• According to Carrol:
“corporate social responsibility encompasses the economic, legal, ethical
and discretionary expectations that the society has to organizations at a
given point of time.”

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 FEATURES OF CSR

• OLD IDEA – CSR is an old idea though the perspectives on it have been changing
over time. It focuses on the idea that business has social obligations above and beyond
making a profit. It is companies responsibility to produce an overall positive impact on
society.
• WORK BEYOND EARNING PROFIT – the concept of CSR is based on the premise
that a business firm is more than economic instructions. It is an organ of society and its
activities exercise significant influence on the public. Therefore, businesses should
work beyond the narrow goal of profit-making.
• LONG RUN MOTIVE – in the long run, social responsibility is consistent with a
profit motive. A business cannot survive and grow without serving society. By fulfilling
its social obligations, the business creates an environment that is conducive to its
success. What is good for society is ultimately good for the business.

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• PERSONAL OBLIGATION- social responsibility is a personal obligation. A business
firm can discharge its social responsibility only through the persons who manage and
control it.
• FIRM SIZE- social responsibility of a business is commensurate with its social power.
For example, a small firm has less responsibility towards society than a multinational
firm.
• CONTINUOUS – Social responsibility is a continuing obligation. A business firm
remains responsible to society throughout its life.

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 CSR AND CORPORATE RESPONSIBILITY

• Corporate Responsibility (CR) is a wider concept than corporate social

responsibility.
• In addition to CSR, CR comprises broader issues such as corporate
governance, ethics, and the environment. In corporate social responsibility,
the focus is mainly on the social aspects of business or on giving back to
society.
• Therefore, experts suggest that companies should adopt a wider and long-term
perspective by moving from CSR to CR.

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• According
to the World Business Council for Sustainable Development
(WBCSD) CR consists of :
➢ Corporate Social Responsibility
➢Corporate Financial Responsibility
➢Corporate Environment Responsibility

• Thus, CSR is an integral part of CR. In other words, CSR is one of the means of
discharging CR. CSR is doing good to society whereas CR is doing good to
everybody.

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 MODELS OF CSR IN INDIA

• THE ETHICAL MODEL – The charisma of Gandhiji promoted big

business houses in India to play an active role in socio-economic development
and nation-building. Their commitment to society’s welfare is reflected in
investment in schools, colleges, hospitals, and other public sources.

• THE STATIST MODEL – This was developed in India after independence.

State ownership of basic and heavy and the legal framework of India reflects
CSR. Thus, the statist model suggests state control over the business to ensure
that it is responsible to society.
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• THE LIBERAL MODEL – According to this model, a company is mainly
responsible to its private owners (shareholders). A company discharges its CSR if
it obeys the law and generates wealth for its shareholders. This model is based on
the viewpoint of Milton Friedman who argues that the only social responsibility
of business is to maximize profits.

• THE STAKEHOLDER MODEL – This model suggests that a company is

responsible to all those groups who have a direct or indirect stake in it. These
groups are known as stakeholders. They include shareholders, customers,
employees suppliers, distributors, Government, media, and the community.
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DRIVERS OF CSR

✓Globalization
✓Pressure from Investors
✓Good employees relations
✓Increase in Market share
✓Legal requirements
✓Risk cover
✓Cost saving
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 BENEFITS OF CSR
Company Benefits: -

• Improved financial performance;

• Lower operating costs;

• Enhanced brand image and reputation;

• Increased sales and customer loyalty;

• More ability to attract and retain employees;

• Reduced regulatory oversight;

• Access to capital;

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Benefits to Community and General Public: -

▪ Charitable contribution;

▪ Employee volunteer programs;

▪ Corporate involvement in community education, employment, and homelessness programs;

▪ Product safety and quality.

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 Environmental Benefits: -

❑ Greater material recyclability;

❑ Better product durability and functionality;

❑ Greater use of renewable resources;

❑ Integration of environmental management tools into business plans, including life-cycle

assessment and costing, environmental management standards, and eco-labeling.

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 CSR INITIATIVES BY CORPORATES
Coca-Cola Multinational

Coca-Cola aims at both profit and social benefit maximization. It continuously makes efforts to create a
difference through its CSR efforts. It aims to contribute at least 1% of its annual income to charitable causes.
It also states clearly in its policies, the necessity to adopt ethical values and practices.
Ambuja Cements
Committed to providing quality lives to the unprivileged, Ambuja Cement emphasizes utilizing the hidden
talent of people. It also focuses on generating goodwill amongst its stakeholders through its community
initiatives.

Infosys Limited

“CSR can’t be merely a job, it’s a passion,” says Sudha Murthy, Chairperson, Infosys Foundation, the CSR
arm of IT services conglomerate Infosys. The company spent nearly Rs. 360 crores on various CSR schemes
this year. COVID-19 relief work dominated the activities, with education and health-related programs
following after. 12
Karnataka Bank Ltd.

Project Title: Green Initiatives for Environmental Sustainability, Karnataka bank Spent 0.54 Cr on green
initiatives and animal welfare. The key purpose of the Green initiative is to maintain ecological balance in
Karnataka and Delhi respectively.

Project Implementation by: Karnataka Bank Ltd. (Directly)

Amount spent: INR 0.58 Cr

Location: Delhi, Karnataka

Estimated Impact: Karnataka bank tried to achieve environmental sustainability and ecological balance with
help of Afforestation. 13
 Century Plyboards India Ltd.

Project Title: Animal welfare, under the animal welfare section, Century plyboards tried to serve helpless,
shelterless, ill as well as a handicapped cows in nearby areas. The company also wanted to bring awareness to
cow-based agriculture, health, and the environment. The company established a cow hostel in Kolkata and the
nearby area.

Project Implementation by: Calcutta Pinjrapole Society; Gow Seva Sameetee Ghatwa; Friends of Vrindavan;
Central Kolkata Prerna Foundation

Amount spent: INR 0.39Cr

Location: Kolkata and Vrindavan

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 Bharat Heavy Electricals Ltd.

Project Title: Forest-Based Sustainable Livelihood Projects

With respect to the concern of biodiversity, BHEL has carried out Afforestation activities such as mass tree
plantation and the development of green belts. Cumulatively, it has resulted in the development of a million
square meters of green coverage and the plantation of millions of trees to date.
The company also supported another CSR Initiative i.e. Manufactured biodegradable leaf cups & plates in
Sundergarh District, Odisha. The aim of this project is to protect environmental sustainability.
Project Implementation by: Society for education and environmental training
Amount spent: INR 0.13 Cr
Location: Sundergarh, Odisha
Estimated Impact: The plantation of thousands of saplings of trees and shrubs was carried out across
BHEL's establishments.
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 CORPORATE GOVERNANCE

• The term ‘Governance’ is derived from the Latin word ‘Gubernare’ which
means ‘to steer’.
• Corporate governance is the system of rules, practices, and processes by
which a firm is directed and controlled. Corporate governance essentially
involves balancing the interests of a company's many stakeholders, such as
shareholders, senior management executives, customers, suppliers, financiers,
the government, and the community.

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 Governance vs. Good Corporate Governance

• Governance by itself is a neutral concept. It can be either good or bad. When

there is any deficiency in the direction and control of a company, it is called bad
governance.
• If the company’s system of direction and control is such that the interests of all
the stakeholders are taken care of, there is good governance.
• Good corporate governance is the wider view of corporate governance. Its focus
is on the relationship between a company and its stakeholders.

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Good corporate governance is characterized by:
o Commitment to moral values
o Ethical conduct of business
o Exercising powers in a responsible manner

According to the World Bank, the main characteristics of effective corporate

governance are transparency, protection of the rights of all stakeholders,
independence in decision-making, integrity, and objective monitoring of
management’s performance.
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 FEATURES OF CORPORATE GOVERNANCE

• Corporate Governance is essential to develop an added value for the stakeholders.

• Corporate Governance ensures transparency which ensures strong and balanced economic
development. This also ensures that the interests of all shareholders (majority as well as minority
shareholders) are safeguarded. It ensures that all shareholders fully exercise their rights and that the
organization fully recognizes their rights.
• Corporate Governance clearly distinguishes between the owners and the managers. The managers
are the deciding authority. In modern corporations, the functions/ tasks of owners and managers
should be clearly defined, rather than harmonized.
• It is the technique by which companies are directed and managed. It means carrying the business
as per the stakeholders’ desires. It is actually conducted by the board of Directors and the concerned
committees for the company’s stakeholder’s benefit.
• It is all about balancing individual and societal goals, as well as, economic and social goals.
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 BENEFITS OF CORPORATE GOVERNANCE
• Good corporate governance ensures corporate success and economic growth.

• Strong corporate governance maintains investors’ confidence, as a result of which, the company can
raise capital efficiently and effectively.

• It lowers the capital cost.

• There is a positive impact on the share price.

• It provides a proper inducement to the owners as well as managers to achieve objectives that are in
interests of the shareholders and the organization.

• Good corporate governance also minimizes wastages, corruption, risks and, mismanagement.

• It helps in brand formation and development.

• It ensures the organization is managed in a manner that fits the best interests of all. 20
 CORPORATE GOVERNANCE SCAMS IN INDIA

• SATYAM COMPUTERS
• KINGFISHER AIRLINES

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 MANAGERIAL VALUES AND ETHOS
Ethos refers to the habitual character and values of individuals, groups, races, etc. Managerial ethos is
concerned with the character and values of managers as a professional group. Contemporary
managers hold some specific values which affect work and some of these are autonomy, equity,
security, and opportunity.
1.Autonomy: These managers tend to allow enough latitude to individual employees as long as the
use of this freedom does not violate the basic norms of the organization. In the last two decades,
some management practices have been innovated which are in keeping with this value of
autonomy.
2.Equity: Equity refers to justice in rewarding performance. Modern managers strongly feel that a
person must get a reward proportionate to his input.
3.Security(providing security both economically and emotionally): Keeping a person on his toes
by making him feel insecure is slowly but steadily getting discredited as a management philosophy.
Even the societies which have practiced the “hire and fire” policy are unmistakably shifting
towards providing security of the job.
4.Opportunity: Providing enough career advancement opportunities to employees is yet another
contemporary managerial value. 22
 MANAGERIAL ETHOS: ITS CHARACTERISTICS

• Action goal orientation: Persons with a high sense of adequacy have clear goals about their
future and are directed by these goals. They are action-oriented to reach their clear goals
• Pro-action/Pro-active: Proactive people do things on their own without having to be told by
anyone. Such initiative-taking behavior leads to a high level of activity and experimentation.
• Internal resources: Managers with a high sense of adequacy are aware of their internal
strengths and are guided by these strengths. They are aware of their weaknesses but this
awareness does not deter them from acting positively or looking for opportunities for continuous
self-improvement. They are open to feedback and ready to learn from experience.
• Problem-solving attitude: A superior ethos requires that managers view themselves as
problem solvers, rather than problem-avoiders. These managers have a positive orientation to
problem situations and do not want to run away from problems. They tend to approach problem
situations with optimism because they have an internal locus of control, i.e., a strong belief that
they can change the environment through their own efforts.
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 HOW CULTURE AND ETHOS ARE MAINTAINED

Socialization is a process of adaptation by which `new’ members come to

understand the basic values, norms, and customs for becoming `accepted’ members
of an organization. Though the most intense period of socialization is at the
“fresher” stage of entry into an organization, the process continues throughout
one’s entire career in the organization. The people who do not learn to adjust to
the culture of the organization become the targets of attack and are often
rejected by the organization.

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 The socialization process has three stages
o Pre-arrival
o Encounter
o Metamorphosis

Pre-arrival: This stage tries to ensure that prospective members arrive at an

organization with a certain set of values, attitudes, and expectations. This is usually
taken care of at the selection stage itself. Selectors try to choose the “right type” of
people, whom they feel, will be able to “fit” the requirements of an organization.
Thus an organization, even before allowing an outsider to “join”, makes an attempt
to ensure a proper match that contributes toward the creation of a uniform culture
within the organization. 25
Encounter: After gaining entry into the organization a new member faces an encounter
stage. There is always a possibility of a difference between his expectations of an
organization and the Organizational Climate. If the expected image and organizational
climate match, then the encounter stage passes off smoothly leading to confirmation of the
image. If the imbalance between the two is acute, the person has usually two choices open.
Metamorphosis: People who had discovered an anomaly between their expectations and
Organizational Climate, but decided not to drop out, enter into the metamorphosis stage.
They must sort out their problems and go through changes-hence this is called
metamorphosis. When this metamorphosis is complete, the members feel `comfortable’
with the organization and job. Successful metamorphosis results in a lowered propensity to
leave the organization.
For a very few persons, the metamorphosis stage may remain incomplete or unsuccessful.
These people, as yet, have not been able to “accept” the Organizational Climate and
thereby remain nonconformist. Sometimes they continue to `fight’ the system, at least for
some more time, with zeal and enthusiasm.
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