Corporate Social Responsibility

 CSR is understood to be the way firms integrate social, environmental and

economic concerns into their values, culture, decision making, strategy and
operations in a transparent and accountable manner and thereby establish
better practices within the firm, create wealth and improve society.
 CSR is also called Corporate Citizenship or Corporate Responsibility.
 Corporate Social Responsibility
History of CSR :
The 1950s saw the start of the modern era of CSR when it was more commonly
known as Social Responsibility.
In 1953, Howard Bowen published his book, “Social Responsibilities of the
Businessman”, and is largely credited with coining the phrase ‘corporate social
responsibility’ and is perhaps the Father of modern CSR.
Bowen also provided a preliminary definition of CSR: “it refers to the obligations of
businessmen to pursue those policies, to make those decisions, or to follow those
lines of action which are desirable in terms of the objectives and values of our
society“.
According to Business for Social Responsibility (BSR) “Corporate social responsibility
is operating a business in a manner which meets or excels the ethical, legal,
commercial and public expectations that a society has from the business.”
 Corporate Social Responsibility
Meaning of CSR :
Corporate Social Responsibility means open and transparent business practices
that are based on ethical values and respect for employees, communities and
the environment. It is designed to deliver sustainable value to society at large
as well as to shareholders.
Corporate Social Responsibility is nothing but what an organisation does, to
positively influence the society in which it exists.
According to CSR Asia, a social enterprise, “CSR is a company’s commitment to
operate in an economically, socially and environmentally sustainable manner
whilst balancing the interests of diverse stakeholders”
 Corporate Social Responsibility
CSR is not Philanthropy:
Philanthropy means the act of donating money, goods, time or effort to support a charitable cause
in regard to a defined objective.
Philanthropy can be equated with benevolence and charity for the poor and needy.
Philanthropy can be any selfless giving towards any kind of social need that is not served,
underserved, or perceived as unserved or underserved.
Philanthropy can be by an individual or by a corporate.
It is the active effort to promote human welfare
Corporate Social Responsibility on the other hand is about how a company aligns their values to
social causes by including and collaborating with their investors, suppliers, employees, regulators
and the society as a whole.
The investment in CSR may be on people centric issues and/ or planet issues.
A CSR initiative of a corporate is not a selfless act of giving; companies derive long-term benefits
from the CSR initiatives and it is this enlightened self interest which is driving the CSR initiatives in
companies.
 Corporate Social Responsibility
Why CSR at All?
Business cannot exist in isolation; business cannot be oblivious to societal development.
The social responsibility of business can be integrated into the business purpose so as to
build a positive synergy between the two.
• CSR creates a favorable public image, which attracts customers. Reputation or brand equity of the
products of a company which understands and demonstrates its social responsibilities is very high.
• Customers trust the products of such a company and are willing to pay a premium on its products.
• Organizations that perform well with regard to CSR can build reputation, while those that perform
poorly can damage brand and company value when exposed.
• Brand eq
uity, is founded on values such as trust, credibility, reliability, quality and consistency.
• Corporate Social Responsibility (CSR) activities have its advantages. It builds up a positive image
encouraging social involvement of employees, which in turn develops a sense of loyalty towards
the organization, helping in creating a dedicated workforce proud of its company. Employees like
to contribute to the cause of creating a better society. Employees become champions of a
company for which they are proud to work.
 Corporate Social Responsibility
Why CSR at All?
• Society gains through better neighborhoods and employment opportunities, while the
organization benefits from a better community, which is the main source of its workforce and the
consumer of its products.
• Public needs have changed leading to changed expectations from consumers. The industry/
business owes its very existence society and has to respond to needs of the society.
• The internal activities of the organisation have an impact on the external environment, since the
society is an inter-dependent system.
• A business organization has a great deal of power and money, entrusted upon it by the society
and should be accompanied by an equal amount of responsibility. In other words, there should
be a balance between the authority and responsibility.
• The good public image secured by one organisation by their social responsiveness encourages
other organizations in the neighborhood or in the professional group to adapt themselves to
achieve their social responsiveness.
• The atmosphere of social responsiveness encourages co-operative attitude between groups of
companies. One company can advise or solve social problems that other organizations could not
solve.
 Corporate Social Responsibility
Why CSR at All?
• Companies can better address the grievances of its employees and create employment
opportunities for the unemployed.
• A company with its “ear to the ground” through regular stakeholder dialogue is in a
better position to anticipate and respond to regulatory, economic, social and
environmental changes that may occur.
• Financial institutions are increasingly incorporating social and environmental criteria
into their assessment of projects. When making decisions about where to place their
money, investors are looking for indicators of effective CSR management.
• In a number of jurisdictions, governments have expedited approval processes for firms
that have undertaken social and environmental activities beyond those required by
regulation.
 Corporate Social Responsibility
Factors Influencing CSR:
Many factors and influences, including the following, have led to increasing attention
being devoted to CSR:
1. Globalization – coupled with focus on cross-border trade, multinational enterprises and global
supply chains — is increasingly raising CSR concerns related to human resource management
practices, environmental protection, and health and safety, among other things.
2. Governments and intergovernmental bodies, such as the United Nations, the Organization for
Economic Co-operation and Development and the International Labour Organization have
developed compacts, declarations, guidelines, principles and other instruments that outline
social norms for acceptable conduct.
3. Advances in communications technology, such as the Internet, cellular phones and personal
digital assistants, are making it easier to track corporate activities and disseminate information
about them. Non-governmental organizations now regularly draw attention through their
websites to business practices they view as problematic.
4. Consumers and investors are showing increasing interest in supporting responsible business
practices and are demanding more information on how companies are addressing risks and
opportunities related to social and environmental issues.
 Corporate Social Responsibility
Factors Influencing CSR:
5. Numerous serious and high-profile breaches of corporate ethics have contributed to
elevated public mistrust of corporations and highlighted the need for improved
corporate governance, transparency, accountability and ethical standards.
6. Citizens in many countries are making it clear that corporations should meet
standards of social and environmental care, no matter where they operate.
7. There is increasing awareness of the limits of government legislative and regulatory
initiatives to effectively capture all the issues that corporate social responsibility
addresses.
8. Businesses are recognizing that adopting an effective approach to CSR can reduce
risk of business disruptions, open up new opportunities, and enhance brand and
company reputation.
Corporate Social Responsibility Under The
Companies Act, 2013

Definition of CSR
The term ‘CSR’ is defined in the Companies (Corporate Social Responsibility
Policy) Rules to mean and include but not limited to:
projects or programs relating to activities specified in the Schedule VII of the Act; or
projects or programs relating to activities undertaken by the Board in pursuance of
recommendations of the CSR Committee as per the declared CSR policy subject to the
condition that such policy covers subjects enumerated in the Schedule VII of the Act.
Corporate Social Responsibility Under The
Companies Act, 2013
Applicability :
As per section 135 of the Companies Act 2013, the CSR provision will be
applicable companies which fulfills any of the following criteria during any of
the 3 preceding financial years =
Companies having net worth of rupees 500 crore or more, or
 Companies having turnover of rupees 1000 crore or more or
 Companies having a net profit of rupees 5 crore or more.
The CSR Rules have widen the ambit for compliance obligations to include the
holding and subsidiary companies as well as foreign companies whose
branches or project offices in India which fulfills the criteria specified above.
Corporate Social Responsibility Under The
Companies Act, 2013
Applicability :
If a company ceases to be a company covered under subsection (1) of section 135
of the Act for three consecutive financial years shall not be required to –
(1) Constitute a CSR Committee; and
(2) Comply with the provisions contained in sub-section (2) to (5) of the said section till
such time it meets the criteria specified in sub-section (1) of section 135.
Thus, the CSR Rules specify that a company which does not satisfy the specified
criteria for a consecutive period of three financial years is not required to comply
with the CSR obligations, implying that a company not satisfying any of the
specified criteria in a subsequent financial year would still need to undertake
CSR activities unless it ceases to satisfy the specified criteria for a continuous
period of three years. This could increase the burden on small companies which
do not continue to make significant profits.
Corporate Social Responsibility Under The
Companies Act, 2013
CSR Committee:
 Companies that trigger any of the aforesaid conditions must constitute a Corporate Social
Responsibility Committee of the Board to formulate and monitor the CSR policy of a company.
 Section 135 of the 2013 Act requires the CSR Committee to consist of at least 3 directors, including
at least 1 independent director.
 However, CSR Rules exempts unlisted public companies and private companies that are not
required to appoint an independent director from having an independent director as a part of
their CSR Committee.
 Further, the CSR Rules have relaxed the requirement regarding the presence of 2 or more directors
on the CSR Committee of the Board. In case where a private company has only 2 directors on the
Board, the CSR Committee can be constituted with these 2 directors.
 The CSR Committee of a foreign company shall comprise of at least 2 persons wherein 1 or more
persons should be resident in India and the other person nominated by the foreign company.
 The Board's report shall disclose the composition of the Corporate Social Responsibility Committee.
Corporate Social Responsibility Under The
Companies Act, 2013
List of CSR Activities: (specified in Schedule VII)
a. eradicating hunger, poverty and malnutrition, promoting health care including preventive
health care and sanitation 1 including contribution to the Swach Bharat Kosh set-up by the
Central Government for the promotion of sanitation and making available safe drinking water.
b. promoting education, including special education and employment enhancing vocation skills
especially among children, women, elderly and the differently abled and livelihood
enhancement projects.
c. promoting gender equality, empowering women, setting up homes and hostels for women and
orphans; setting up old age homes, day care centres and such other facilities for senior citizens
and measures for reducing inequalities faced by socially and economically backward groups;
d. ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal
welfare, agro forestry, conservation of natural resources and maintaining quality of soil, air and
water including contribution to the Clean Ganga Fund set-up by the Central Government for
rejuvenation of river Ganga;
Corporate Social Responsibility Under The
Companies Act, 2013
List of CSR Activities: (specified in Schedule VII)
e. protection of national heritage, art and culture including restoration of buildings and sites of
historical importance and works of art; setting up public libraries; promotion and development of
traditional arts and handicrafts;
f. measures for the benefit of armed forces veteran, war widows and their dependents;
g. training to promote rural sports nationally recognized sports and Olympic sports;
h. contribution to the Prime Minister's National Relief Fund or any other fund set up by the Central
Government for socio-economic development and relief and welfare of the Scheduled Castes, the
Scheduled Tribes, other backward classes, minorities and women;
i. contributions or funds provided to technology incubators located within academic institutions which
are approved by the Central Government;
j. rural development projects.
k. slum area development where ‘slum area’ shall mean any area declared as such by the Central
Government or any State Government or any other competent authority under any law for the time
being in force
Corporate Social Responsibility Under The
Companies Act, 2013

Case:
Tata Steel – A company that also makes steel
Tata Steel’s Vision strikes a balance between economic value as well as
ecological and societal value by aspiring to be "a Global Benchmark in Value
Creation and Corporate Citizenship".
Corporate Social Responsibility Under The
Companies Act, 2013
Case:
Tata Steel – A company that also makes steel
The Company works in partnership with the Government, national and international development organizations, local NGOs and the community
to ensure sustainable development. The Corporate Services Division delivers these responsibilities through several institutionalized bodies:
1. Tata Steel Corporate Social Responsibility and Accountability Policy
2. Corporate Social Responsibility
3. Tata Steel Rural Development Society (TSRDS)
4. Tribal Cultural Society (TCS)
5. Tata Steel Family Initiatives Foundation (TSFIF)
6. Tata Steel Skill Development Society (TSSDS)
7. Education
8. Medical Services
9. Urban Services
10. Sports Department
11. Tata Steel Adventure Foundation
12. JUSCO
13. Other societies like Ardeshir Dalal Memorial Hospital, Blood Banks, Kanti Lal Gandhi Memorial Hospital etc.)
14. Tata Relief Committee
 Corporate Sustainability
Meaning:
 Corporate sustainability indicates new philosophy, as an alternative to the traditional growth and
profitmaximization model, under which sustainable development comprising of environmental
protection, social justice and equity, and economic development are given more significant focus
while recognizing simultaneous growth of the corporate and profitability.
 It is a business approach that creates long-term shareholder value by embracing opportunities
and managing risks deriving from economic, environmental and social developments.
 Corporate sustainability describes business practices built around social and environmental
considerations.
 Corporate sustainability encompasses strategies and practices that aim to meet the needs of the
stakeholders today while seeking to protect, support and enhance the human and natural
resources that will be the need of the future.
 Corporate sustainability leaders achieve long-term shareholder value by gearing their strategies
and management to harness the market's potential for sustainability products and services while
at the same time successfully reducing and avoiding sustainability costs and risks.
 Corporate Sustainability

Definition:
Thomas Dyllick and Kai Hockerts in ‘Beyond the Business Case for Corporate
Sustainability’ define Corporate Sustainability as, "meeting the needs of a
firm's direct and indirect stakeholders (such as shareholders, employees,
clients, pressure groups, and communities) without compromising its ability
to meet the needs of future stakeholders as well.“
 Corporate Sustainability
Following key drivers need to be garnered to ensure sustainability:
Internal Capacity Building strength – In order to convert various risks into
competitive advantages.
Social impact assessment – In order to become sensitive to various social
factors, like changes in culture and living habits.
Repositioning capability through development and innovation: Crystallisation
of all activities to ensure consistent growth.
Corporate sustainability is a business approach creating shareholder value in
the long run.
 Corporate Sustainability
As a good corporate citizen, the companies are required to focus on the following key aspects:
Absolute Value Creation for the Society
• Organizations should set their goal towards the creation of absolute value for the society. Once
it is ensured, a corporate never looks back and its sustainability in the long run is built up.
Ethical Corporate Practices
• In the short run, enterprise can gain through non-ethical practices. However those cannot be
sustained in the long run. Society denies accepting such products or services. Example – Maggi
Worth of the Earth through Environmental Protection
• Resources which are not ubiquitous and have economic and social value should be preserved
for a long-term use and be priced properly after considering environmental and social costs.
• For example, a power plant should build up its cost model efficiently after taking into account
cost of its future raw material sourcing, R&D cost for alternate energy source, cost for proper
pollution control measures and so on.
 Corporate Sustainability
As a good corporate citizen, the companies are required to focus on the following key
aspects:
Equitable Business Practices
• Corporates should not indulge themselves in unfair means and should create candid
business practices, ensuring healthy competition and fair trade practices.
Corporate Social Responsibility
• As a Corporate citizen, every corporate is duty bound to its society wherein it operates and
serves. Although there are no hard and fast rules, CSR activities need to be clubbed and
integrated into the business model of the company.
Innovate new technology/process/system to achieve eco-efficiency
• Innovation is the key to success. Risks and crisis can be eliminated through innovation.
Learning and innovative enterprise gets a cutting edge over others. These innovative
processes bring sustainability if developments are aimed at satisfying human needs, and
ensure quality of life, while progressively reducing ecological impact and resource intensity
to a level at least in line with earth’s estimated carrying capacity. Eg – E-Vehicles / EVM
 Corporate Sustainability
As a good corporate citizen, the companies are required to focus on the following key aspects:
Creating Market for All
• Monopoly, unjustified subsidies, prices not reflecting real economic, social environmental cost,
etc. are hindrances to the sustainability of a business. Simultaneously, a corporate has to build
up its products and services in such a way so as to cater to all segments of
customers/consumers. Customer confidence is the essence of corporate success.
Switching over from the Stakeholders Dialogue to holistic Partnership
• A business enterprise can advance its activities very positively if it makes all the stakeholders
partner in its progress. It not only builds confidence of its stakeholders, but also helps the
management to steer the business under a very dynamic and flexible system. This approach
offers business, government and other stakeholders of the society to build up an alliance to
bring about common solutions to the common concerns faced by all.
Compliance of Statutes
• Compliance of statutes, rules and regulations and standards set by various bodies ensure
clinical check up of a corporate and confers societal license upon it to the corporate to run and
operate its business in the society.
 Corporate Sustainability
SUSTAINABILITY REPORTING:
The concept of sustainability reporting is of recent origin.
Sustainability reporting is a process for publicly disclosing an organization’s
economic, environmental, and social performance.
Many companies find that financial reporting alone no longer satisfies the
needs of shareholders, customers, communities and other stakeholders for
information about overall organizational performance.
Through sustainability reporting, organizations report on progress against
performance goals not only for economic achievements, but for
environmental protection and social well-being.
 Corporate Sustainability
Benefits of sustainability reporting:
Sustainability reporting can help organizations to measure, understand and
communicate their economic, environmental, social and governance performance,
and then set goals, and manage change more effectively. A sustainability report is
the key platform for communicating sustainability performance and impacts –
whether positive or negative.
Internal benefits of sustainability reporting for companies and organizations can
include: Increased understanding of risks and opportunities.
 Emphasizing the link between financial and non-financial performance.
 Influencing long term management strategy and policy, and business plans.
 Streamlining processes, reducing costs and improving efficiency.
 Benchmarking and assessing sustainability performance with respect to laws, norms, codes,
performance standards, and voluntary initiatives.
 Avoiding being implicated in publicized environmental, social and governance failures.
 Comparing performance internally, and between organizations and sectors.
 Corporate Sustainability
Benefits of sustainability reporting:
External benefits of sustainability reporting can include:
Mitigating – or reversing – negative environmental, social and governance impacts.
Improving reputation and brand loyalty.
Enabling external stakeholders to understand the organization’s true value, and
tangible and intangible assets.
Demonstrating how the organization influences, and is influenced by, expectations
about sustainable development.
 Corporate Sustainability
Some of the key drivers of sustainability reporting:
Regulations:
Governments, at most levels have stepped up the pressure on corporations to measure the impact of their
operations on the environment. Legislation is becoming more innovative and is covering an ever wider range of
activities. The most notable shift has been from voluntary to mandatory sustainability, monitoring and reporting.
Customers:
Public opinion and consumer preferences are a more abstract but powerful factor that exerts considerable
influence on companies, particularly those that are consumer oriented. Customers significantly influence a
company’s reputation through their purchasing choices and brand.
Loyalty:
This factor has led the firms to provide much more information about the products they produce, the suppliers
who produce them, and the product’s environmental impact starting from creation to disposal.
NGO’s and the media:
Public reaction comes not just from customers but from advocates and the media, who shape public opinion.
Advocacy organisations, if ignored or slighted, can damage brand value.
Employees:
Those who work for a company bring particular pressure to bear on how their employers behave; they, too, are
concerned citizens beyond their corporate roles.
 Corporate Sustainability
Some of the key drivers of sustainability reporting:
Peer pressure from other companies:
Each company is part of an industry, with the peer pressures and alliances that go along with it.
Matching industry standards for sustainability reporting can be a factor; particularly for those who
operate in the same supply chain and have environmental or social standards they expect of their
partners.
Companies themselves:
Corporations, as public citizens, feel their own pressure to create a credible sustainability policy, with
performance measures to back it up, but with an eye on the bottom line as well. Increasingly,
stakeholders are demanding explicit sustainability reporting strategies and a proof of the results. So,
too, are CEOs, who consider sound social and environmental policies a critical element of corporate
success.
Investors:
Increasingly, investors want to know that companies they have targeted have responsible, sustainable,
long-term business approaches. Institutional investors and stock exchange CEOs, for example, have
moved to request increased sustainability reporting from listed companies, and environmental, social
and corporate governance indices have been established such as the Dow Jones Sustainability Index.