2 “The set of obligations an organization has to protect and enhance the societal environment in...

Corporate Social Responsibility

Rachna Bansal Jora, Sharda University 2

“The set of obligations an organization has to protect and enhance the societal environment in which it functions.”

“Organization’s obligation to make choices and take actions that will contribute to the welfare and interests of society and organization.”


Areas of social responsibility

• Toward their stakeholders (anyone who is directly affected by the practices of an organization and has a stake in its performance)

• Toward the natural environment• Toward general social welfare


STAKE HOLDERS

The Organiz

ation

Customers

Local communit

y

Suppliers

Employees

Trade unions

Owners

Government

Creditors


To Whom is Management Responsible?


• The Classical View

–Management’s only social responsibility is to maximize profits (create a financial return) by operating the business in the best interests of the stockholders (owners of the corporation).

–Expending the firm’s resources on doing “social good” unjustifiably increases costs that lower profits to the owners and raises prices to consumers.


• The Socioeconomic View

–Management’s social responsibility goes beyond making profits to include protecting and improving society’s welfare.

– Corporations are not independent entities responsible only to stockholders.

– Firms have a moral responsibility to larger society to become involved in social, legal, and political issues.


ARGUMENTS FOR AND AGAINST SOCIAL RESPONSIBILITY

For Public expectations Long-run profits Ethical obligation Public image Better environment Discouragement of further

governmental regulation Balance of responsibility and power Stockholder interests Possession of resources Superiority of prevention over cure

Against Violation of profit

maximization Dilution of purpose Costs Too much power Lack of skills Lack of

accountability


FROM OBLIGATION TO RESPONSIVENESS TO RESPONSIBILITY

• Social Obligation– The obligation of a business to meet its economic

and legal responsibilities and nothing more.

• Social Responsiveness–When a firm engages in social actions in

response to some popular social need.

• Social Responsibility– A business’s intention, beyond its legal and

economic obligations, to do the right things and act in ways that are good for society.

Rachna Bansal Jora, Sharda University

Proactive

Take social initiatives.

Accommodation

Accept ethical responsibility.

Defense

Do only what is legally required.

Obstruction

Disregard for social responsibility.

High

Low

Degree of Social

Responsibility

ORGANIZATION’S APPROACHES TO SOCIAL RESPONSIBILITY

10


CSR under Companies Bill 2013

Section 135-Corporate Social Responsibility• Now every company having net worth of rupees

five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during any financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director.


Continued…

• The Corporate Social Responsibility Committee shall, formulate and recommend to the Board, a Corporate Social Responsibility Policy and the amount of expenditure to be incurred on the activities provided in the policy.


Continued…

• The Board of aforesaid company shall • a. after taking into account the recommendations

made by Corporate Social Responsibility Committee, approve the Corporate Social Responsibility Policy for the company and disclose contents of such Policy in its report and also place it on the company’s website, if any, in such manner as may be prescribed; and

• b. ensure that the activities as are included in Corporate Social Responsibility Policy of the company are undertaken by the company;


Continued…

• The Board have to ensure that the company spends, in every financial year, at least 2% of average net profits of the company made during 3 immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy and in case of failure to do so, necessary reasons for not spending the amount, shall be disclosed in the Director’s Report

• The company shall while spending the amount earmarked for Corporate Social Responsibility activities give preference to the local area and areas around it where it operates.


• Activities which may be included by companies in their Corporate Social Responsibility Policies. Activities relating to:—

• (i) eradicating extreme hunger and poverty;• (ii) promotion of education;• (iii) promoting gender equality and empowering women;• (iv) reducing child mortlity and improving maternal health;• (v) combating human immunodeficiency virus, acquired immune deficiency

syndrome, malaria and other diseases;• (vi) ensuring environmental sustainability;• (vii) employment enhancing vocational skills;• (viii) social business projects;• (ix) contribution to the Prime Minister's National Relief Fund or any other

fund set up 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

• (x) such other matters as may be prescribed.


CSR in INDIA

• CSR is not a new concept in India. Ever since their inception, corporates like the Tata Group, the Aditya Birla Group,and Indian Oil Corporation, to name a few, have been involved in serving the community. Through donations and charity events, many other organizations have been doing their part for the society.

• The basic objective of CSR in these days is to maximize the company's overall impact on the society and stakeholders. CSR policies, practices and programs are being comprehensively integrated by an increasing number of companies throughout their business operations and processes. A growing number of corporates feel that CSR is not just another form of indirect expense but is important for protecting the goodwill and reputation, defending attacks and increasing business competitiveness.


CSR in INDIA

• Bajaj Auto, – Focus area: Development of weaker sections of

society, –Methodology: Trust Undertakes long-term projects

in rural areas.


CSR in INDIA

• Castrol India,– Focus Area: Strengthens link between business &

social investments, –Method: Rehabilitation of earthquake affected

victims in Gujarat., Castrol Drive for Safety Initiative


CSR in INDIA

• Mahindra & Mahindra – Focus area: Sharing wealth and promote primary

education –Methodology: College establishment, Nanhi Kali

(underprivileged girl child), 1% Profit after tax for CSR activities, Free education for girls Lifeline Express: medical facility Free surgeries


CSR in INDIA

• Infosys • Focus Area: Support and encourage

underprivileged sections • Methodology: Infosys Foundation provide

medical facilities to remote rural areas, organizing novel pension schemes and aiding orphans and street children and rural education program titled “A library for every school”, Human Capital Education index for its employees


CSR in INDIA

• ITC • Focus: “Citizen First” watershed development

program; Empowering Farmers; Greening Wastelands and Irrigating dry lands

• Methodology: Through “e-choupal” organizing farmers into water user groups that plan and build water-harvesting structures Primary education Livestock development Social forestry Integrated watershed development First to be certified SA 8000 standard


CSR in INDIA

• L & T• Focus: Enhancing shareholder value and

responsibility for welfare of ociety at large• Methodology: Eco Friendly approach; Create

awareness on HIV/AIDS; and waste minimization, Health One of the first corporate to launch HIV/AIDS program


CSR in INDIA

• Dabur India• Focus: Give back some part of what Dabur has

gained from community• Methodology: Establishment of Sundesh , NGO

Programs for ecological regeneration & protection of endangered plant species, Promoting health and hygiene amongst the underprivileged through Trust and Create environmental awareness amongst young minds


CSR in INDIA

• BHEL • Focus :Community and Product development• Methodology: Adopted 56 villages and

provided infrastructure for schools for physically challenged children near its units, Launched wind electric generators, solar heating systems, solar photovoltaic systems, solar lanterns and battery powered road vehicles


CSR in INDIA

• Tata Steel• Focus: “Improve the quality of life of the

communities it serves.”• Methodology: Through “Green Millennium”

campaign planted 1.5 million surviving trees Through Employment Generation, Building people, education, health and hygiene


CSR in INDIA

• Dr Reddy’s Lab• Focus: Prosperity of communities integral to success

of companies• Methodology: Through Environmental: Water Usage• Energy Usage Wastewater Discharge COD & TDS

Load Discharge HW-hazardous waste disposal GHG emissions


CSR in INDIA

• Zee Telefilms• Focus: being successful is to be socially

responsible• Methodology: Public Service Ads / Fillers

telecast to date are: Campaigns on TV


CSR in INDIA

• NIIT • Focus: Narrowing the digital divide across the

world• Methodology: Through launch of International

Women’s Month uplifting Indian women, Computer literacy. Developed I-Learn Create awareness about AIDS


CSR in INDIA

• Hero Honda• Focus: Do something for community from

whose land we generate our wealth• Methodology: Through Integrated Rural

Development Centre including : Hospital, Sports complex, Vocational Training Centre, Adult Literacy Mission , Marriages of underprivileged girl, Rural Health Care


CSR in INDIA

• Johnson & Johnson • Focus: Support good works and charities.• Methodology: Through donations of time,

money and goods; Women’s and Children’s Health Community Responsibility, Access to Care. Advancing Health Care Knowledge Global Public Health


CSR in INDIA

• Cipla Pharma • Focus: Cipla Care• Methodology: CIPLA Foundation Through Dr.

K. A. Hamied Institute & Cipla Cancer Palliative Care Centre


CSR in INDIA

• Grasim Industries • Focus: Social and economic development of the

communities in which we operate• Methodology: Through “Aditya Birla Centre for

Community Initiatives and Rural Development”. Includes education, Health & family welfare, Sustainable development & livelihood & agriculture & watershed development, Infrastructure development& Social causes


CSR in INDIA

• Godrej• Focus: Promoting education, housing, social

upliftment, conservation, population management and relief of natural calamities

• Methodology: Three Foundations/Trusts to contribute to Social, Environmental, and Educational causes


CSR in INDIA

• BPCL• Focus: Community development• Methodology: Through Health, Rain water

harvesting, Infrastructure development, education, HIV Health care and prevention.


CSR in INDIA

• Britannia Industries• Focus: Wadia Group Community conscious,

desire to share prosperity with community.• Methodology: Welfare of its workers through

trust Health care facilities


CSR in INDIA

• Colgate - Palmolive• Focus: Colgate care for the community where

they live & work• Methodology: Free oral care education

Through different community programs


CSR in INDIA

• Nestle India • Focus: Integrated communities where it runs

industrial and commercial operations• Methodology: Through Water Conservation,

Natural refrigerants replaced ozone depleting. Also include Nutrition & health projects, agricultural assistance, education and training, arts and culture, HIV/AIDS prevention and donations


CSR in INDIA

• ICICI• Focus: Empower millions economically &

socially challenged Indians.• Methodology: Through initiatives Give India;

Shop; Volunteer; and Info change.


CSR in INDIA

• Wipro • Focus: Learning Enhancement Disaster

rehabilitation• Methodology: Through trust: Provide

rehabilitation to survivors of natural calamities and Enhancing learning abilities of children from underprivileged sections.


CSR in INDIA

• Novartis • Focus: Treatment for Leprosy• Methodology: Free Multi Drug therapy. Cured

4.5 million patients


CSR in INDIA

• TCS • Focus: Flexible Global business practices• Methodology: Global delivery model: Global

deployment & delivery of high value services 35 Countries benefited


CSR in INDIA

• Citi group• Focus: Women empowerment• Methodology: Rehabilitation, Education,

Health


CSR in INDIA

• NTPC• Focus: Rehabilitation & Resettlement policy,

community work, gender equality, Policy of grant of paternity leave

• Methodology: Founded Global Compact Society for India in 2003


CSR in INDIA

• SAIL • Focus: Community development• Methodology: AIDS awareness, Education

Medical facilities and health Development of small scale/ancillary industries, Agriculture, poultry, fisheries


CSR in INDIA

• Hindalco • Focus: Poverty Alleviation Program• Methodology: Asian CSR award for Integrated

Rural Poverty Alleviation Program

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