CORPORATE SOCIAL

RESPONSIBILITY

A report submitted in partial fulfillment of the requirement for the degree of

MASTERS OF BUSINESS ADMINISTRATION

(2018-2020)

Submitted to: Submitted by:

Dr. Sandeep S. Virdi Akshay Sharma

Assistant Professor MBA – 1st year (A)

GROUP – 1

Roll No.:18421010

SCHOOL OF MANAGEMENT STUDIES

PUNJABI UNIVERSITY PATIALA

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DECLARATION

I, Akshay Sharma student of MBA 1st year, Group–1, Roll No.18421010. , hereby

declare that the seminar report entitled, “CORPORATE SOCIAL RESPONSIBILITY”,

submitted in the partial fulfillment of requirement for the degree of Masters of Business

Administration, under the guidance of Dr. Sandeep Singh Virdi, Assistant Professor,

School of Management Studies, Punjabi University, Patiala, is my original work and has

not been submitted elsewhere for the award of any other degree, diploma, fellowship, or

any other similar title.

Date: __ / __ / 2018

Name: Akshay Sharma

Roll No. : 18421010

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ACKNOWLEDGEMENTS

The feeling of gratefulness to any one’s help directly arises from the bottom of heart. A

small but an important and timely help can prove to be a milestone in one’s life.

Even human being has such kind of experience. Being human being, I also have, the same

feeling of gratefulness of today I have achieved an important milestone in my life.

This project is dedicated to all the people, whom I met, took guidance, talked, interviewed

and learned something from them. At this occasion I sincerely thank all of them while

submitting this project report.

I would like to heartily thank Dr. Sandeep S. Virdi (project guide) who has provided

me necessary information and guidance in taking my curriculum decision and choosing,

initiating and getting on with the project and without whom this would have not been

possible. .

Last, I would like to extend thanks to my friend who helped me. I always have felt the

invisible help from the almighty, without the blessing almighty, I could not have

succeeded.

Name: Akshay Sharma

Roll No. : 18421010

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TABLE OF CONTENTS

Sr.no. Topic page no.

1. Introduction 1-4

• Theories of CSR 4-7

• Pyramid of CSR 7-8

2. Importance of CSR 9-10

3. Nature of CSR 10-11

4. Levels of CSR 11-12

5. Benefits of CSR 13-16

6. How CSR influences stakeholders? 17-19

7. Some existing CSR Policy initiatives across countries 20-22

8. CSR evolution in India 22-24

• CSR examples in India 25-26

9. Policy framework for CSR in India 27-29

• Some Principles relating to CSR 29

• Companies Bill,2012 30

• Companies Act, 2013 32

10. Current scenario of CSR in India 33-47

11. Some issues and challenges 48-51

12. Conclusions 51-52

13. Case study 52-64

14. Bibliography 65
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LIST OF TABLES AND FIGURES

Table no. / Figure no. Page no.

Table 1 6

Table 2 28

Table 3 49-47

Figure 1 8

Figure 2 22

Figure 3 24

Figure 4 31

Figure 5 35

Figure 6 38

Figure 7 38

Figure 8 40

Figure 9 41

Figure 10 42

Figure 11 43
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INTRODUCTION

Over the past few years CSR, as a concept, has been the focus of many deliberations and

research. It has grown in importance both academically as well as in the business sense. It

captures a spectrum of values and criteria for measuring a company’s contribution to

social development. As the term “CSR” is used continually, many complementary and

overlapping concepts, such as corporate citizenship, business ethics, stakeholder

management and sustainability, have emerged. These extensive ranges of synonymously

used terms indicate that multiple definitions have been devised for CSR mostly from

different perspectives and by those in facilitating roles such as the corporate sector,

government agencies, academics and the public sector.

Corporate social responsibility (CSR, also called corporate sustainability, sustainable

business, corporate conscience, corporate citizenship or responsible business) is a type of

international private business self-regulation. While once it was possible to describe CSR

as an internal organizational policy or a business strategy, that time has passed as various

international laws have been developed and various organizations have used their

authority to push it beyond individual or even industry-wide initiatives. While it has been

considered a form of corporate self-regulation for some time, over the last decade or so it

has moved considerably from voluntary decisions at the level of individual organizations,

to mandatory schemes at regional, national and even transnational levels.

The ‘social’ in Corporate Social Responsibility waters down, to a large extent, this idea of

accountability, by turning the more comprehensive principle of corporate responsibility

into merely corporate ‘social’ responsibility – shifting focus to ‘what corporates can do for

society’ from what its business does to society. It quietly pushes into the shadows,
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corporate economic responsibility, corporate environmental responsibility, corporate

human rights responsibility, etc.

The idea of CSR first came up in 1953 when it became an academic topic in HR

Bowen’s Social Responsibilities of the Business. Since then, there has been continuous

debate on the concept and its implementation. Although the idea has been around for more

Than half a century, there is still no clear consensus over its definition.

“BUSINESS WITHOUT MORAL VALUES

IS LIKE

VALUABLES WITHOUT VALUES”

CSR, as defined by LORD HOLME & RICHARD WALTS, “CSR is the continuing

commitment by business to behave ethically and contribute to economic development

while improving the quality of life of the workforce and their families as well as of local

community and society at large ”.

The voluntary compliance of social and ecological responsibility of companies is called

CSR. CSR is basically a concept whereby companies decide voluntarily to contribute to a

better society and a cleaner environment. Corporate social responsibility is represented by

the contributions undertaken by companies to society through its business activities and its

social investment. This is also to connect the Concept of sustainable development to the

company‘s level. The Term Corporate Social Responsibility is imprecise and its

application differs. CSR can not only refer to the compliance of human right standards,

labor and social security arrangements, but also to the fight against climate change,
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sustainable management of natural resources and consumer protection. CSR initiatives

generally fall into four main groups. HR strategy is intrinsically linked to all of these.

• Employees – focusing on the rights and well-being of employees and other

workers in the value chain (including suppliers).

• Environment – ethical resource and energy use, recycling, carbon footprint.

• Community – how the organization’s activities affect the community / public.

• Market place – ethical sourcing, fair trading, corporate taxes and anti-bribery.

India has a long tradition in the field of corporate social responsibility and industrial

welfare has been put to practice since late 1800s. Historically, the philanthropy of business

people in India has resembled western philanthropy in being rooted in religious belief.

Business practices in the 1900s that could be termed socially responsible took different

forms: philanthropic donations to charity, service to the community, enhancing employee

welfare and promoting religious conduct. The concept of CSR has evolved from being

regarded as detrimental to a company’s profitability, to being considered as somehow

benefiting the company as a whole, at least in the long run. This paper tries to analyze the

CSR status in India, and focuses on the finding & reviewing of the issues and challenges

faced by CSR activities in India.

In order to contribute to a clarification of the field of business and society, our aim here is

to map the territory in which most relevant CSR theories and related approaches are

situated. As the starting point for a proper classification, we assume as hypothesis that the

most relevant CSR theories and related approaches are focused on one of the following

aspects of social reality:

• economics,
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• politics,

• social integration and

• ethics

The inspiration for this hypothesis is rooted in four aspects that, according to Parsons

(1961), can be observed in any social system:

▪ adaptation to the environment (related to resources and economics),

▪ goal attainment (related to politics),

▪ Social integration and pattern maintenance or latency (related to culture and

values).

This hypothesis permits us to classify these theories in four groups:

1. A first group in which it is assumed that the corporation is an instrument for wealth

creation and that this is its sole social responsibility. Only the economic aspect of

the interactions between business and society is considered. So any supposed

social activity is accepted if, and only if, it is consistent with wealth creation. This

group of theories could be call instrumental theories because they understand CSR

as a mere means to the end of profits.

2. A second group in which the social power of corporation is emphasized,

specifically in its relationship with society and its responsibility in the political

arena associated with this power. This leads the corporation to accept social duties

and rights or participate in certain social cooperation. We will call this group

political theories.
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3. A third group includes theories which consider that business ought to integrate

social demands. They usually argue that business depends on society for its

continuity and growth and even for the existence of business itself. We can term

this group integrative theories.

4. A fourth group of theories understands that the relationship between business and

society is embedded with ethical values. This leads to a vision of CSR from an

ethical perspective and as a consequence, firms ought to accept social

responsibilities as an ethical obligation above any other consideration. We can

term this group ethical theories.

The preceding description, summed up, leads to the conclusion that the hypothesis

considered in the introduction about the four basic focus employed by CSR

theories and related approaches is adequate. Consequently, most of the current

theories related to CSR could be broadly classified as instrumental, political,

integrative and ethical theories.


Corporate Social Responsibilities theories and related approaches
TYPES OF THEORIES
Instrumental theories
(focusing on achieving
economic objectives
through social activities)
Political theories (focusing
on a responsible use of
business power in the
political arena)
Integrative theories
(focusing on the integration
of social demands
6
Table. 1
APPROACHES SHORT DISCRIPTION
Maximization of Long-term value maximization
shareholder values
Strategies for competitive Social investments in a
advantages competitive context
Strategies based on the natural
resource view of the firm and
the dynamic capabilities of the
firm
Strategies for the bottom of the
economic pyramid
Cause-related marketing Altruistic activities socially
recognized used as an
instrument of marketing
Corporate Social responsibilities of
constitutionalism businesses arise from the
amount of social power that they
have
Integrative Social Assumes that a social contract
Contract Theory between business and society
exists
Corporate or business The firm is understood as being
citizenship like a citizen with certain
involvement in the community
Issues management Corporate processes of response
to those social and political
issues which may impact
significantly up on it
Public responsibility Law and the existing public
policy process are taken as a
reference for social performance
Stakeholder management Balances the interests of the
stake holders of the firm
Corporate Social Searches for social legitimacy
performance and processes to give
appropriate responses to social
issue
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THE PYRAMID OF CORPORATE SOCIAL RESPONSIBILITY

For CSR to be accepted by a conscientious business person, it should be framed in such a

way that the entire range of business responsibilities is embraced. It is suggested here that

four kinds of social responsibilities constitute total CSR: economic, legal, ethical, and

philanthropic. Furthermore, these four categories or components of CSR might be

depicted as a pyramid. To be sure, all of these kinds of responsibilities have always existed

to some extent, but it has only been in recent years that ethical and philanthropic functions

have taken a significant place.

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PHILANTHROPIC
Responsibilities
(be a good corporate
citizen. )
contribute resources to
the community; improve
quality of life

ETHICAL Responsibilities
(be ethical)
obligation to do what is right,
just, and far. Avoid harm

LEGAL Responsibilities
(obey the laws)
law is society's codification of right and
wrong. Play by the rules of the game.

ECONOMIC Responsibilities
(be profitable)
the foundation upon which all other rest

Fig1. Pyramid of CSR

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IMPORTANCE OF CSR

Corporate social responsibility (CSR) plays a major role in developing the economy of a

country. It can be defined as the way in which a company manages various business

entities to produce an impact on the society. Companies with high CSR standards are able

to demonstrate their responsibilities to the stock holders, employees, customers, and the

general public.

Business organizations that have high corporate social responsibility standards can attract

staff thereby reducing employee turnover and cost of recruitment. What is the importance

of corporate social responsibility? Anyone can give a clear answer to this question.

Companies voluntarily contribute a large sum of money to make a better society and a

clean environment. Corporate social responsibility is a process in which all companies

come together as one and take part in the welfare of the society. Many organizations

conduct campaigns to create awareness among corporate, civic bodies, and government

bodies about the importance of corporate social responsibility.

Many national and multinational firms are booming in various developing countries. But

at the same time, these countries suffer social challenges such as poverty, corruption,

population growth, etc. Therefore, it is important for all companies to strive together and

adapt corporate social responsibility standards to make the society better than before. An

organization can exhibit a better image in the society if it cares for its employees and

involve them in social activities. The responsibilities of an organization may range from

providing small donations to executing bigger projects for the welfare of the society.

Many business houses around the world show their commitment to corporate social

responsibility.
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What is the importance of corporate social responsibility? The answer lies in two things:

1) Organizations understanding their role in developing a society and

2) Awareness among business houses, corporate bodies, and the people. Versatile,

profitable, and dynamic businesses are the driving forces that build the economy of the

country. We must remember that the growth of a country purely depends on the growth of

the society and the people in the society.

NATURE OF CSR

The nature of social responsibility can be understood as follows:

i. Focus on business firms:

Though both business and non-business organizations should be responsible

towards society, the focus is more on business firms to look after social interests.

ii. Deals with moral issues:

Companies have specific policies and programs to look after interests of the

employees and other stakeholders. These programs are devised from the need to do

what is right and just for the society as a whole.

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iii. Commensurate with the objective of profit maximization:

Social goals are discharged by economically sound organizations. A financially

unviable enterprise cannot look after interests of the society. In fact, it may pass

the costs of social responsibility to consumers by increasing prices of goods and

services.

iv. Continuing activity:

Social responsibility is not catering to the interests of society once or twice. It is

important for organizations to continuously engage in social issues if they want to

survive in the long-run. The economic and social issues, in fact, go hand in hand.

v. Pervasive activity:

Social responsibilities are not just the obligation of top level managers. Managers

at all levels are involved in social responsibilities.

LEVELS OF CSR

A hierarchy of the extent to which business houses discharge social responsibilities is

developed by R. Joseph Monsen.

Starting from the lowest level, there are four levels of hierarchy:

1) Obey the laws:

Manages feel discharging social responsibility is merely obeying the law.

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2) Cater to public expectations:

Social responsibility goes beyond merely obeying the law. In addition to abiding

by legal framework of the country, social responsibility also caters to public

expectations from the business enterprises for example, providing job

opportunities, good quality, controlling pollution etc.

3) Anticipate public expectations:

At a still higher level, companies not only fulfill what society expects but also

anticipate needs of the society and devise programs to fulfill those needs.

4) Create public expectations:

At highest level of hierarchy, managers not only cater to public demands but also

set standards of social responsibilities and want the society to be benefited by those

standards. Business enterprises are moving from lower to higher levels of this

hierarchy.
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BENEFITS OF CSR

Organizations of all sizes are rapidly discovering that CSR and sustainable business

practices can foster improved green programs and overall environmental stewardship.

Today, we are seeing increased awareness and active participation by business

professionals in the development of CSR policies. Organizations are increasingly more

involved in green initiatives by adopting sustainable processes and practices, adapting

products and services to the low-carbon economy and innovating in all areas their

business. The net positive on reducing waste, designing green buildings, implementing

green operations and maintenance plans — all have continually proven to yield a positive

Return on Investment (ROI).

CSR has come to rely on a more complex set of factors than corporate governance alone,

and likewise also depends on sustainable development, environmental impact and supply

chain management.

The development of the new carbon trading markets, verified emission reductions, also

known as carbon offsets, and renewable energy credits, it has become easier for

organizations to create and measure direct ROI from CSR. Likewise, CSR efforts have

shown to yield measurable returns in waste reduction, improved efficiency, diminished

liabilities, improved community relations, and brand recognition.

Through communicating clear and measurable sustainability objectives and the

implementation of practical and equally functional corporate governance mechanisms,

organizations are realizing that they can have a achieve Return on Investment (ROI)

through their sustainability efforts.

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Integral strategies in ensuring substantive long-term results include:

• Define path of progress in CSR and strategically manage expected organizational

outcomes.

• Ensure basic CSR values are culturally integrated across the organization.

• Adopt an effective engagement strategy with stakeholders to create buyer

awareness and loyalty.

• Properly map organizational objectives and critical success indicators with CSR

performance metrics.

Innovative organizations that understand the value of CSR work to create a corporate

culture in which each employee is committed to doing his or her part to improve the

environment. According to Forrester Research, effective CSR and sustainability practices

within large companies have been shown to contribute to a profit increase up to 35 %.

What’s You Return on Investment (ROI)?

There are proven methodologies that demonstrate ROI benefits to CSR. A partial summary

of such strategies has been outlined below and reflect best practices in the implementation

of successful CSR programs designed to drive improved operational performance and net

positive ROI. Some Business Benefits are:

➢ Improving Operational Efficiency: Perhaps the strongest and best

documented argument for engaging employees in environmental practices is the

connection between CSR involvement and increased operational efficiency. Front-

line employees are often in the best position to identify inefficiencies and propose
 15

improvements. Educating employees on CSR can improve profitability by

supporting greater efficiency through less waste, water and energy usage.

➢ Innovation: Employee E&S education is also a source of innovation and savings

resulting from the development of new product and service lines as well as new

technologies, materials or processes that reduce water, energy usage or harmful

materials.

➢ Supply Chain Management: Educating employees on sustainability practices

throughout the supply chain can lead to greater efficiencies and help build

collaboration to meet sustainability, quality and other goals. It can also strengthen

relationships between a company and its suppliers by aligning values and

objectives.

➢ Financial Responsibility: We are seeing an unprecedented level of government

programs and initiatives designed to drive corporate decision-making within

markets that include manufacturing, construction, etc., to invest in implementing

practical and measurable green building design, construction, operations, and

maintenance solutions. In many cases, the good news is that implementation of

sustainable operations can drive increased efficiency through reductions in energy

consumption, implementation of building maintenance methodologies that are

often cost neutral, and decreasing the Cost of workspaces through use of recycled

furniture while changing too low–use lighting (which provides eco-friendly work

environments).
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Measuring the impact of CSR in achieving social and environmental goals can be

difficult, but is becoming more common if not expected within corporations, often

as a factor of CSR. Typically in business, what gets measured gets managed, and

as long as the right metrics system is created and data is tracked accurately, almost

any environmental CSR initiative can yield positive results.

There seems to be a direct correlation between the implementation of effective

green programs and design of green buildings to improved office worker

productivity and employee morale, while driving efficiencies and reduced

consumption. Innovative, forward-thinking companies have learned that they must

be fully committed to strategic initiatives that are directly tied to their business

‘core competencies (or those of clients, employees, etc.). The advantages of doing

so through an effective CSR program, such as building brand recognition, realizing

increased sales and fostering trust with employees and community, can be

achieved as a win-win in almost all situations. With committed leadership and a

strategic approach most companies can find a substantial ROI benefit in CSR.
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HOW DOES CSR INFLUENCE STAKEHOLDERS?

➢ CUSTOMERS: CSR plays an important role on the part of customers. A

company enjoys greater public confidence and provides better after sale services to

its customers and better quality of products. On the other hand it gets the most

required revenue in the form of money.

➢ SUPPLIERS: CSR on the part of the entrepreneurs also influences the suppliers.

They are considered an eminent part because they provide the most required

essential for a business i.e. the raw materials which eventually determine the

quality of products. On the other hand from supplier’s viewpoint, the firm is a

customer and therefore firm is very eminent for customer’s survival. Both the

former and the latter parties are interconnected and dependent that they ascend and

descend at the same time.

➢ LOCAL COMMUNITY: The local community consists of individual who

directly or indirectly benefits the business. They are the ones who grant the

business the right to build facilities. In return the business indirectly benefits the

local community from the taxes levied and the economic contribution of the

business. The business organization are not expected to deteriorate the

environment rather they should make the best possible way to reduce pollution by

following CSR.
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➢ COMPETITORS: Those who are eager to match a better output, goodwill and

price appeal of a firm are known as competitors. Competitor does not always run

short of cooperation. There is a much practical testimony to show that co-operation

among competitors can help both sides to resolve their conflicts.

➢ EMPLOYEES & DIRECTORS: Employees, in return for the reward offered by

the business, exchange their labor, both mental and physical. In return for their

endeavors and loyalty, they expect security, wages, benefits, fair & equal treatment

etc. thus, employees can be fair only if they follow the path of CSR i.e., being

attentive towards the clan.

➢ MASS MEDIA: Media also plays an eminent role when it comes on ground of

CSR. It is media who declares the ultimate result of the company media provides

the much required “mark-sheet” of the company to the clan. A company which

follows CSR enjoys better public confidence and improved brand image and

reputation. A better and positive image is provided to the company which

undertakes CSR. It enjoys greater & increased rate of TRP.

➢ REGULATORY AUTHORITIES: It is the government which keeps an ultimate

check on the company’s whether they are undertaking CSR as its eminent part. It

improves various rules and regulations on the company which are binding upon

them. They impose various kinds of taxes, according to the nature of business.

Government also keeps a moral check upon the entrepreneurs and adds to the

economic and social wellbeing of the country.

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➢ LENDORS: It is the creditors who act as the helping hand of the business

organization by providing grant loans to the company. A company which

undertakes CSR enjoys better brand image and gets the loans at a concessional

rate. It is the creditors which helps the business in expansion by providing the

much required life blood of the business. On the other hand, creditor’s survival

also depends upon the profits and interest changed by them from the organization.

➢ SHAREHOLDERS: Shareholders are considered as the financial stakeholders. It

is the company which is dependent upon the shareholders for its growth and

expansion. They provide the much required capital to the business in the form of

investment. Thus a company which undertakes CSR enjoys better public

confidence and thus gets more money from the shareholders in the form of

investment. On the other hand the shareholders also depend upon the company for

their livelihood. They seek maximum return as their disposable income from the

business.

Thus, in a nutshell we see that all the stakeholders get influenced by CSR, directly

or indirectly. It plays an eminent part on the part of stakeholders. A business

survival on a whole depends upon the fact whether it is looking for CSR as its

component and be accountable for it towards the clan and looks up for the

economic and social wellbeing of the economy.

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SOME EXISTING CSR POLICY INITIATIVES ACROSS

COUNTRIES

As the importance of being socially responsible is being recognized throughout the

world, governments are aware of the national competitive advantages won from a

responsible business sector. Large corporations have progressively realized the benefit

of implementing CSR initiatives where their business operations are located.

The Organization for Economic Co-operation and Development (OECD) established a

set of guidelines for multinational enterprises in 1976, and was thus a pioneer in

developing the concept of CSR. The purpose of these guidelines was to improve the

investment climate and encourage the positive contribution multinational enterprises

can make to economic and social progress. In addition to the OECD’s 30 member

countries, 11 observer countries have endorsed the guidelines.

It is observed that, transparency in reporting enhances the focus on economic, social

and environmental factors. It motivates companies to intensify their efforts in

becoming socially responsible. Several efforts have been taken by various

governments, to encourage CSR reporting, such as incentivizing companies who

voluntarily report their CSR activities or by taking measures such as mandating CSR

reporting. In 2007, the Malaysian government passed a regulation to mandate all

publicly listed companies to publish their CSR initiatives in their annual reports on a

“comply or explain” basis. Accordingly, all public listed companies (PLCs) in

Malaysia have to either publish CSR information or they need to explain why they

should be exempted. In another example, in 2009 Denmark mandated CSR reporting,

asking all state-owned companies and companies with total assets of more than €19
 21

million, revenues more than €38 million and more than 250 employees, to report their

social initiatives in their annual financial reports.

To enable transparency from businesses on the environment, social and governance

front, France passed a law called Grenelle II, which mandates integrated sustainability

and financial reporting for all companies listed on the French stock exchanges,

including subsidiaries of foreign companies located in France and unlisted companies

with sales revenue of more than €400 million and more than 2,000 employees.

Although some CSR standards are mandatory, there are others, which comprise of

both, mandatory and voluntary standards. For instance, in 2006 the British Companies

Act mandated all companies listed in the UK to include information about their CSR

activities in their annual reports; however, a full length CSR reporting was made

voluntary. A corporate responsibility index challenges and supports large

organizations to integrate responsible business practices. Emerging markets such as

Brazil, China and South Africa have become forerunners in CSR reporting in the

developing world in terms of their involvement in CSR-related activities in order to

promote the listed companies; credibility, transparency and endurance.

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•The focus was on businesses doing good deeds for society. The drivers of
change were events, people and ideas who were instrumental in characterizing
1950- the emerging social changes.
1960

•Thinkers such as Carrol ensured the change in thought which argued that firms
have responsibilities to socities including economic, legal, ethical and
1970s discretionary.

•Taking from Donaldson and Dunfee who highlighted the'tacit social contract
between the firm and society ' was characterized by an enhanced
1980s responsiveness towards stakeholders

•CSR became a strategic issue focusing on Freeman's stakeholder theory. It

correlated with current CSR definition that views it as a concept whereby
companies integrate social and environmental concerns in their business
1990s operations and interactions with their stakeholders.

Fig2. EVOLUTION OF CSR GLOBAL STORY

CSR EVOLUTION IN INDIA

India has a long tradition of paternalistic philanthropy. The process, though acclaimed

recently, has been followed since ancient times albeit informally. Philosophers such as

Kautilya from India and pre-Christian era philosophers in the West preached and

promoted ethical principles while doing business. The concept of helping the poor and

disadvantaged was cited in several ancient literatures. In the pre-industrialized period

philanthropy, religion and charity were the key drivers of CSR. The industrial families

of the 19th century had a strong inclination toward charity and other social

considerations. However, the donations, either monetary or otherwise, were sporadic

 23

activities of charity or philanthropy that were taken out of personal savings, which

neither belonged to the shareholders nor did it constitute an integral part of business.

During this period, the industrial families also established temples, schools, higher

education institutions and other infrastructure of public use.

The term CSR itself came into common use in the early 1970s. The last decade of the

twentieth century witnessed a shift in focus from charity and traditional philanthropy

toward more direct engagement of business in mainstream development and concern

for disadvantaged groups in the society. In India, there is a growing realization that

business cannot succeed in isolation and social progress is necessary for sustainable

growth. An ideal CSR practice has both ethical and philosophical dimensions,

particularly in India where there exists a wide gap between sections of people in terms

of income and standards as well socio-economic status (Bajpai, 2001).

India is the first country in the world to make corporate social responsibility (CSR)

mandatory, following an amendment to The Company Act, 2013 in April 2014.

Businesses can invest their profits in areas such as education, poverty, gender equality,

&hunger.

The amendment notified in the Schedule VII of the Companies Act advocates that

those companies with a net worth of Rs 4.96 billion or more, or an annual turnover of

Rs 9.92 billion or more, or a net profit of Rs 50 million or more during a financial

year, shall earmark 2 percent of average net profits of three years towards CSR.

In the draft Companies Bill, 2009, the CSR clause was voluntary, though it was

mandatory for companies to disclose their CSR spending to shareholders. It is also

mandatory that company boards should have at least one female member. CSR has

been defined under the CSR rules, which includes but is not limited to:

Projects related to activities specified in the Schedule; Or Projects related to activities

 24

taken by the company board as recommended by the CSR Committee, provided those

activities cover items listed in the Schedule.

In India, the evolution of CSR refers to changes over time in cultural norms of

corporations’ engagement and the way businesses managed to develop positive

impacts on communities, cultures, societies, and environment in which those

corporations operated. CSR motives changed during the independence movement in

India toward social reforms to encourage empowerment of women and rural

development.

•The concept manifested itself through charity that was carried out by
BEFORE busniessmen and philanthropists with a strong religious sentiment.
1947

•The Gandhian philosophy of trusteeship was popular. It advocated the role of

POST PSUs as important elements fulfilling the development agenda.
1947
•The era allowedthe entry of global players which enhanced competition in the
market. The global standards of CSR motivated the local players to respond to
POST the needs and enhance brand value and meet consumer satisfaction.
1991
•The global information sharing allowed the Indian government to incorporate
the best practices that made India the first country to mandate CSR. The
POST undertone has been focused on partnership and the triple bottom line of
engagement and not on monetry alliance.
2000

fig3. EVOLUTION OF CSR INDIAN STORY

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CORPORATE SOCIAL RESPONSIBILITY: EXAMPLES IN INDIA

Tata Group

The Tata Group conglomerate in India carries out various CSR projects, most of which

are community improvement and poverty alleviation programs. Through self-help

groups, it is engaged in women empowerment activities, income generation, rural

community development, and other social welfare programs. In the field of education,

the Tata Group provides scholarships and endowments for numerous institutions.

The group also engages in healthcare projects such as facilitation of child education,

immunization and creation of awareness of AIDS. Other areas include economic

empowerment through agriculture programs, environment protection, providing sport

scholarships, and infrastructure development such as hospitals, research centers,

educational institutions, sports academy, and cultural centers.

Ultra-tech Cement

Ultra-tech Cement, India’s biggest cement company is involved in social work across

407 villages in the country aiming to create sustainability and self-reliance. Its CSR

activities focus on healthcare and family welfare programs, education, infrastructure,

environment, social welfare, and sustainable livelihood.

The company has organized medical camps, immunization programs, sanitization

programs, school enrollment, plantation drives, water conservation programs,

industrial training, and organic farming programs.

 26

Mahindra & Mahindra (M&M)

Indian automobile manufacturer Mahindra & Mahindra (M&M) established the K. C.

Mahindra Education Trust in 1954, followed by Mahindra Foundation in 1969 with the

purpose of promoting education. The company primarily focuses on education

programs to assist economically and socially disadvantaged communities. CSR

programs invest in scholarships and grants, livelihood training, healthcare for remote

areas, water conservation, and disaster relief programs. M&M runs programs such as

Nanhi Kali focusing on girl education, Mahindra Pride Schools for industrial training,

and Lifeline Express for healthcare services in remote areas.

ITC Group

ITC Group, a conglomerate with business interests across hotels, FMCG, agriculture,

IT, and packaging sectors has been focusing on creating sustainable livelihood and

environment protection programs. The company has been able to generate sustainable

livelihood opportunities for six million people through its CSR activities. Their e-

Choupal program, which aims to connect rural farmers through the internet for

procuring agriculture products, covers 40,000 villages and over four million farmers.

It’s social and farm forestry program assists farmers in converting wasteland to

pulpwood plantations. Social empowerment programs through micro-enterprises or

loans have created sustainable livelihoods for over 40,000 rural women.
 27

POLICY FRAMEWORK FOR CSR IN INDIA

In the developing world, governments and businesses understand that their respective

competitive positions and access to capital increasingly depend on being able to

respect the highest global standards. At one end of the spectrum, CSR can be viewed

simply as a collection of good citizenship activities being engaged by various

organizations. At the end, it is a way of doing business resulting in a significant impact

on community and long-term sustainability.

In the last decade, CSR has rapidly evolved in India with some companies focusing on

strategic CSR initiatives to contribute toward nation building. Gradually, the

companies in India started focusing on need-based initiatives aligned with the national

priorities such as public health, education, livelihoods, water conservation and natural

resource management. Intensive national level deliberations on the potential role and

responsibility of the corporate sector in contributing toward addressing social issues

were witnessed in the last decade. In the last five years, the Government of India also

enhanced its focus on persuading companies to participate in addressing social and

developmental issues, not only as a part of their social responsibility but also their

business practices.

Setting an example for the private sector, guidelines regarding expenditure on CSR

activities for Central Public Sector Enterprises were issued by Department of Public

Enterprises. According to these “Guidelines on Corporate Social Responsibility and

Sustainability for Central Public Sector Enterprises” revised by the Department of

Public Enterprises (DPE), Ministry of Heavy Industries and Public Enterprises every

year, each CPSE shall with the approval of its Board of Directors make a budgetary

allocation for CSR and Sustainability activities/projects for the year.

 28

The budgetary allocation is determined by the Profit after Tax (PAT) of the company

in the previous year:

Table. 2

Profit After Tax (PAT) of Central Range of budgetary allocation for CSR and

Public Sector Enterprises( CPSE) sustainability activities (as % of PAT in

in the previous year previous year)

Less than INR 100 crore 3% - 5%

INR 100 crore to INR500 crore 2% - 3%

INR 500 crore and above 1% - 2%

Source: The revised guidelines by Department of Public Enterprises (DPE), with

effect from 1 April, 2013

These guidelines came into effect from 1 April 2013 and are a revised version of the

previous comprehensive “Guidelines on Corporate Social Responsibility for Central

Public Sector Enterprises” issued by The Department of Public Enterprises (DPE), in

April 2010. While the earlier guidelines focused mainly on CSR activities for external

stakeholders, the revised guidelines by the DPE also take internal stakeholders,

particularly employees, into account.8 the new CSR Guidelines also include a

dedicated section on sustainability reporting and disclosure.

 29

The National Voluntary Guidelines on Social, Environmental and Economic

Responsibilities of Business:

Voluntary CSR guidelines create a common standard for how companies can improve

their CSR efforts, especially with regard to sustainability. The adoption of a common

set of standards creates an expectation that companies will strive to meet the

guidelines, and can create peer and public pressure for companies failing to comply. In

this regard, the National Voluntary Guidelines (NVGs) on Social, Environmental

Economic Responsibilities of Business have been laid down by the Ministry of

Corporate Affairs in order to provide companies with guidance in dealing with the

expectations of inclusive growth and imperatives of climate change, while working

closely within the framework of national aspirations and policies. These are applicable

to all businesses irrespective of size, sector or location.

The nine principlesTable. 3

of National Voluntary Guidelines are:

Principle 1: Businesses should conduct and govern themselves with ethics,

transparency and accountability.

Principle 2: Businesses should provide goods and services that are safe and contribute
to sustainability throughout their life cycle.

Principle 3: Businesses should promote the wellbeing of all employees.

Principle 4: Businesses should respect the interests of, and be responsive toward all
stakeholders, especially those who are disadvantaged, vulnerable and marginalized.

Principle 5: Businesses should respect and promote human rights.

Principle 6: Business should respect, protect, and make efforts to restore the
environment.

Principle 7: Businesses, when engaged in influencing public and regulatory policy

should do so in a responsible manner.

Principle 8: Businesses should support inclusive growth and equitable development.

Principle 9: Businesses should engage with and provide value to their customers and
consumers in a responsible manner.
 30

In the last decade, CSR has been a focus of all stakeholders including the government,

corporate sector, media, customers, suppliers, employees and communities. The

Government of India’s initiative to provide a mandate to public sector enterprises to

spend a certain percentage of profit after tax for CSR has set the wheels in motion for

increased contribution and more socially responsible behavior to lead to inclusive

growth. Moreover, the National Voluntary Guidelines on Social, Environmental and

Economic responsibilities of business by the Ministry of Corporate Affairs indicates

that governments emphasize on CSR and engaging public and private companies and

enhancing their contribution toward lessening the gap between economic and social

progress.

Companies Bill, 2012 and CSR

With a view to provide a framework for companies (private and public) to implement

need-based CSR activities, the Government of India has included CSR-related

provisions in the Companies Bill, 2012. The Clause 135 of the Companies Bill 2012

aims at motivating companies to spend 2% of the Profit after Tax(PAT) on CSR.

Though spending 2% of the PAT is not mandatory but Clause 135 of the proposed

Companies Bill casts a duty on the Board to specify reasons for not spending the

specific amount on CSR.

The Clause 135 will be applicable to all companies that have either of the following:

▪ Net worth of INR 500 crores or more

▪ Turnover of INR 1000 crores or more

 31

▪ Net profit of INR 5 crores or more

An average of last three financial years Profit after Tax(PAT) will be considered for

calculating the 2% for CSR.

The diagram below encapsulates the requirements of the CSR clause in the

Companies Bill 2012 (clause 135) [fig 4.]

Board level CSR committee:

Annual spending
1. Comprising of 3 or more on CSR by
directors with at least one Responsibilities of the
companies: company's Board:
independent director,
1. every financil 1. approve & disclose CSR
2. Composition to be disclosed year, at least 2% of
in the annual Board of Policy in the annual
the average net Directors'Report and on
Directors'report. profits made company website.
during the 3
preceding financial 2.ensure implementation
Responsibilities of the CSR years. of CSR activities as per
Committee: the Policy.
2. some activities
1. Formulate and recommend that can be 3. directors'Report to
a CSR Policy and amount of undertaken by a specify reasons in case
CSR expenditure company the specified amount is
not spent.
2. Regular monitoring of the
CSR initiatives
 32

THE COMPANIES ACT, 2013

As per as Corporate Social Responsibility is concerned, the Companies Act, 2013 is a

landmark legislation that made India the first country to mandate and quantify CSR

expenditure. The inclusion of CSR is an attempt by the government to engage the

businesses with the national development agenda. The details of on corporate social

responsibility is mentioned in the Section 135 of the Companies Act, 2013.

The Act came into force from April 1, 2014, every company, private limited or public

limited, which either has a net worth of Rs 500 crore or a turnover of Rs 1,000 crore or

net profit of Rs 5 crore, needs to spend at least 2% of its average net profit for the

immediately preceding three financial years on Corporate social responsibility

activities. The CSR activities in India should not be undertaken in the normal course of

business and must be with respect to any of the activities mentioned in Schedule VII of

the act.

The relevance of CSR within an organization

CSR is not only relevant because of a changing policy environment but also because

of its ability to meet business objectives. Undertaking CSR initiatives and being

socially responsible can have a host of benefits for companies such as the following:

• Strengthening relationships with stakeholders.

• Enabling continuous improvement and encouraging innovation,

• Attracting the best industry talent as a socially responsible company.

• Additional motivation to employees.

• Risk mitigation because of an effective corporate governance framework.

 33

• Enhanced ability to manage stakeholder expectations.

These benefits are important and most companies that are engaged in CSR are

revisiting their strategies and expanding their operations to reap enhance benefits and

contribute inclusivity in growth.

CURRENT SCENARIO OF CSR IN INDIA

CSR is not a new concept in India. Ever since their inception, corporate 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 corporate 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 .Companies have

specialized CSR teams that formulate policies, strategies and goals for their CSR

programs and set aside budgets to fund them. These programs are often determined by

social philosophy which have clear objectives and are well defined and are aligned

with the mainstream business.

The programs are put into practice by the employees who are crucial to this FY 2015-

16 witnessed a 28 percent growth in CSR spending in comparison to the previous year.

 34

Listed companies in India spent Rs 83.45 billion in various programs ranging from

educational programs, skill development, social welfare, healthcare, and environment

conservation. The Prime Minister’s Relief Fund saw an increase of 418 percent to

Rs 7.01 billion in comparison to Rs 1.68 billion in 2014-15. The education sector

received the maximum funding of Rs 20.42 billion followed by healthcare at Rs 16.38

billion, while programs such as child mortality, maternal health, gender equality, and

social projects saw negligible spend.

In terms of absolute spending, Reliance Industries spent the most followed by the

government-owned National Thermal Power Corporation (NTPC) and Oil & Natural

Gas (ONGC). Projects implemented through foundations have gone up from 99 in FY

2015 to 153 in FY 2016, with an increasing number of companies setting up their own

foundations rather than working with existing non-profits to have more control over

their CSR spending.process. CSR programs ranges from community development to

development in education, environment and healthcare etc.

For example, a more comprehensive method of development is adopted by some

corporations such as Bharat Petroleum Corporation Limited, Maruti Suzuki India

Limited, and Hindustan Unilever Limited.

Provision of improved medical and sanitation facilities, building schools and houses

and empowering the villagers and in process making them more self-reliant by

providing vocational training and a knowledge of business operations are the facilities

that these corporations focus on. On the other hand, the CSR programs of corporations

like GlaxoSmithKline Pharmaceuticals’ focus on the health aspect of the community.

 35

They set up health camps in tribal villages which offer medical check-ups and

treatment and undertake health awareness programs. Some of the non-profit

organizations which carry out health and education programs in backward areas are to

a certain extent funded by such corporations.

The CSR activities of 50 companies from the S&P (Bombay Stock Exchange Sensitive

Index) BSE Top 100 Index were analyzed in order to identify the trends of CSR

activities in India as represented by those companies that are a part of the index. The

parameters chosen to undertake the research have been categorized broadly into —

Design, Deliver and Disclose. The Design category focuses on understanding the

partnership preference and the implementation mechanism for CSR activities. The

Deliver category aims to identify the thematic areas that best describe the company’s

activities and their geographic focus. The Disclose category provides an insight on

how companies are disclosing their CSR activities and sharing their learning with the

public.

•Implementation mechanism such as through foundations or

DESIGN trusts.
•Partnerships with governments, NGOs, or other companies

•Thematic areas
•Geographical areas
DELIVER •Campaigns
•Contributions

•CSR Reporting
DISCLOSE •Signatory to UN Global Compact
•CSR budget on punlic domain

Fig. 5
 36

1) DESIGN:

This section provides an insight on the implementation platform used by

companies to implement CSR activities. It also highlights type of partnerships

in practice for implementing CSR activities.

There are several platforms in use by companies to manage CSR. Out of the 50

companies reviewed, approximately 40% have established a not-for-profit

entity to manage and execute CSR initiatives. The remaining 60% companies

are managing CSR initiatives from within the organization - either by

establishing a dedicated CSR department or giving the responsibility to the

human resources function or to the Corporate Communication department.

Partnerships are important not only for effective implementation of CSR

activities but also for reach and long-term sustainability and to achieve

measurable change brought about by social initiatives. Partnerships with other

companies could help in supporting cost-intensive social initiatives and

increasing the reach of CSR projects. It can be observed that only 28% of the

companies have established partnerships with other companies for CSR

initiatives.

Partnership with local and state governments is another important factor that

will help in better utilization of resources. Establishing partnerships and

supporting the government have the potential to strengthen ongoing social

programs and ensuring long-term sustainability. The research indicates that

46% of companies have established partnerships and are found to be supporting

programs or schemes of local or state government through CSR.

 37

Mostly, the support is in terms of improving infrastructure, providing

equipment, learning aids and other supplies to government programs. This is

another area, which needs strategic thinking and efforts so that companies can

complement government’s efforts by supporting government-run programs and

welfare schemes.

Most of the companies implement CSR activities through NGOs. The research

indicates that nearly 70% have partnerships with the NGOs for implementation

of CSR activities. The remaining companies are implementing CSR activities

directly; it is possible that these companies are not likely to have disclosed their

partnerships in the public domain.

2) DELIVER:

The research focused on understanding broad thematic areas such as education,

health care, environment, livelihood, rural development and disaster relief as a

focus of CSR initiatives. Furthermore, efforts were made to understand specific

areas/issues covered in each of these broad thematic areas.

As presented in the figure most common thematic areas covered by the

companies include health, education, livelihoods, environment and rural

development. Of these thematic areas, education is the most common and

research indicates that 100% of the companies included in the research were

found to have some initiatives on education followed by livelihoods and

environment and then health care and rural development.

 38

[Source for fig 6-11 is

CSR Voluntary Guidelines (2013) Ministry of Corporate Affairs, India]

THEMATIC AREAS

100% 88%
rural development(88%)
livelihood (94%)
environment(94%)
94% healthcare (90%)
90%
education (100%)

94%

Fig. 6

EDUCATION

scholarships(62%)
30%
62% adult education (34%)

girl child education(48%)

88%
34%
quality of education(74%)

48% infrastructure
support(88%)
74%
running own schools(30%)

Fig. 7
 39

The research indicates that providing infrastructure support is the most

common activity in the education domain, undertaken by approximately 88%

(44 out of total of 50 companies focusing on education thematic area) of the

companies. For the purpose of this study we have included equipment,

furniture, books, teaching supplies, construction of libraries and renovation

work for school buildings as a part of providing infrastructure support.

Providing scholarships to disadvantaged students is another common activity

being observed with 62% of all companies offering some form of scholarships.

The research also indicates that approximately 74% of companies were also

running projects to improve quality of education by offering coaching classes

for underserved children, training primary and secondary school teachers in

new and improved teaching methodologies and providing innovative teaching

and learning aids. Around 34% of companies included in the research were

found to be running their own schools.

 40

HEALTH CARE

infrastructural & equipment

support (68%)
44%
68% water & sanitation(44%)

geriatric care(14%)

health campus(74%)
74%
44%
14% maternal & child health(44%)

Fig .8

In the health care domain, organizing health camps to offer curative services

and raising awareness on health issues is the most common activity being

implemented by nearly 74% of the companies included in the research.

Providing infrastructural and equipment support is another common activity in

the health care domain being undertaken by around 68% of the companies. The

infrastructure and equipment support includes medical equipment and

ambulances to hospitals and health centers as well as renovation of hospital

buildings and construction of new health centers. Water and sanitation and

maternal and child health are other chosen areas of intervention in the health

domain.
 41

ENVIRONMENT

64%
76% green initiatives (76%)

waste management (56%)

water conservation(64%)

56%

Fig . 9

CSR initiatives aimed toward the betterment of the environment include green

initiatives such as tree plantation drives to promote afforestation, efforts to

conserve water and manage and dispose of waste responsibly. Green initiatives

garner the highest attention with 76% of all companies undertaking specific

initiatives to improve the environment and approximately 64% taking measures

to conserve water.
 42

LIVELIHOOD

skill development(88%)

78% income generation(78%)

88%

Fig. 10

Of the 50 companies taken into consideration approximately 88% support skill

development through vocational training and career counseling to improve

skills and employability of candidates and subsequently their earning

capacities. Some activities undertaken by companies have included improving

the knowledge of people in their own field of work such as sensitizing farmers

about new and improved farming techniques. Approximately 78% of the

companies were found to be supporting income generation activities for people

and especially for women in rural areas.

 43

RURAL DEVELOPMENT

support for differently

48% abled(48%)
54%
rehabilitation initiatives(22%)

youth clubs(32%)
22%
infrastructure support(68%)

68% 32%
awareness generation(54%)

Fig. 11

In rural development, 68% of all researched companies have been working

toward betterment of rural areas by providing infrastructure support such as

building of check dams, revamping of water pumps and laying down of roads

to improve connectivity. Companies have also been working for rural

development through organizing awareness generation camps for issues such as

domestic violence, female feticide, and importance of education among others

initiatives.
 44

3) DISCLOSE:

One of the key focus areas of research was to determine whether companies

disclose their CSR initiatives in the public domain either through a

sustainability report or a specialized CSR report. The research also determined

whether the allocated budget or the total expenditure for CSR activities was

disclosed in the public domain.

Out of the 50 researched companies 40% are a signatory to United Nations

Global Compact.11 This implies that these companies are committed to

aligning their business operations and strategies to the ten universally

acceptable principles in the domain of human rights, labor, environment and

anti-corruption.

Approximately 66% of all the considered companies had compiled a report

regarding their CSR activities. Among these, 19 publish a sustainability report

and 5 publish a business responsibility report whereas 9 report their CSR

activities under other titles such as CSR Activity report, CSR Brochure, Report

of Inclusive growth, amongst others. Out of the 50 companies only 36% had

specified details about the funds allocated /spent on CSR activities.

The above analysis indicates that companies in India need to revisit their CSR

policies and strategies in order to adequately adapt their activities to the

requirements of the Companies Bill,2012. Once the guidelines related to the

CSR clause are finalized, companies will have adequate information related to

the terms of permissibility of the expenses that will be counted as CSR and

possible thematic areas and activities that could be considered for CSR.
 45

However, the Clause 135 of the Companies Bill, 2012 is very clear on the

requirement of reporting of the CSR activities and expenses. This is one area

where many companies have to focus and evolve mechanisms to regularly

document, collate and analyze data regarding CSR activities and prepare a CSR

report to share at the public domain for all stakeholders.

FY 2015-16 witnessed a 28 percent growth in CSR spending in comparison to

the previous year.

Listed companies in India spent Rs 83.45 billion in various programs ranging

from educational programs, skill development, social welfare, healthcare, and

environment conservation. The Prime Minister’s Relief Fund saw an increase

of 418 percent to Rs 7.01 billion in comparison to Rs 1.68 billion in 2014-

15. The education sector received the maximum funding of Rs 20.42 billion

followed by healthcare at Rs 16.38 billion, while programs such as child

mortality, maternal health, gender equality, and social projects saw negligible

spend.

In terms of absolute spending, Reliance Industries spent the most followed by

the government-owned National Thermal Power Corporation (NTPC) and Oil

& Natural Gas (ONGC). Projects implemented through foundations have gone

up from 99 in FY 2015 to 153 in FY 2016, with an increasing number of

companies setting up their own foundations rather than working with existing

non-profits to have more control over their CSR spending.

 46

Theme-wise percentage spend of CSR allocation for top 100 companies in India

(2017 data)

Table. 3

THEME PERCENTAGE OF SPENT

EDUCATION 27.1

HEALTH 14.86

RURAL DEVELOPMENT 13.82

WATER AND SANITATION 10.2

ENVIRONMENT AND WILDLIFE 6.98

CONSERVATION

SKILLS AND VOCATIONAL TRAINING 5.49

COMMUNITY DEVELOPMENT / SOCIAL 4.74

EMPOWEMENT

COMMON / OTHER SCR ACTIVITIES 3.89

LIVELIHOOD 3.88

DISASTERS 2.28

OVERHEADS 2.07

DISABILITY 0.24

WOMEN AND CHILDREN 0.90

SPORTS 0.66

PROMOTION OF HERITAGE / ART & 0.69

CULTURE

FINANCIAL LITERACY AND FINANCIAL 0.51

 47

INCLUSION

SCHEDULED CASTS, SCHEDULED TRIBES, 1.61

NOMADIC, SEMI-NOMANDIC AND

DENOTIFIED TRIBES

RENEWABLE ENERGY 0.05

ELDERLY 0.04

The total amount to be spent by top 100 companies was Rs 6653 crore, of which Rs

5908 crore was spent during the year. CSR expenditure percentage was the highest in

areas of education and health. Companies are spending only 0.24 per cent of CSR

grants on disability and a mere 0.04 per cent is being spent on the elderly. In funding

various government schemes, we see that 10.2 per cent of the CSR expenditure is

being spent on water and sanitation. 2017 CSR spends further rose with corporate

firms aligning their initiatives with new government programs such as Swachh Bharat

(Clean India) and Digital India, in addition to education and healthcare, to foster

inclusive growth.
 48

SOME ISSUES & CHALLENGES

Many companies think that corporate social responsibility is a peripheral issue for

their business and customer satisfaction more important for them. They imagine that

customer satisfaction is now only about price and service, but they fail to point out on

important changes that are taking place worldwide that could blow the business out of

the water. The change is named as social responsibility whichis an opportunity for the

business.

Some of the drivers pushing business towards CSR include: The Shrinking Role of

Government In the past, governments have relied on legislation and regulation to

deliver social and environmental objectives in the business sector. Shrinking

government resources, coupled with a distrust of regulations, has led to the exploration

of voluntary and non-regulatory initiatives instead.

Challenges are listed below :

1: Lack of Community participation in CSR Activities:

There is a lack of interest of the local Community in participating and contributing to

CSR activities of companies. This is largely attributable to the fact that there exists

little or no knowledge about CSR within the local communities as no serious efforts

have been made to spread awareness about CSR and instill confidence in the local

communities about such initiatives.

 49

2: Need to Build Local Capacities:

There is a need for capacity building of the local nongovernmental organizations as

there is serious dearth of trained and efficient organizations that can effectively

contribute to the ongoing CSR activities initiated by companies. This seriously comp

remises scaling up of CSR initiatives and subsequently limits the scope of such

activities.

3: Issues of Transparency:

Lack of transparency is one of the key issues brought forth by the survey. There is an

expression by the companies that there exists lack of transparency on the part of the

local implementing agencies as they do not make adequate efforts to disclose

information on their programs, audit issues, impact assessment and utilization of

funds. This reported lack of transparency negatively International Conference on

Technology and Business Management impacts the process of trust building between

companies and local communities, which is a key to the success of any CSR initiative

at the local level.

4: Non-availability of Well Organized Non-governmental Organizations:

It is also reported that there is non-availability of well-organized Non-governmental

organizations in remote and rural areas that can assess and identify real needs of the

community and work along with companies to ensure successful implementation of

CSR activities.
 50

Visibility Factor : The role of media in highlighting good cases of successful CSR

initiatives is welcomed as it spreads good stories and sensitizes the local population

about various ongoing CSR initiatives of companies. This apparent influence of

gaining visibility and branding exercise often leads many nongovernmental

organizations to involve themselves in event-based programs; in the process, they

often miss out on meaningful grassroots interventions.

5: Narrow Perception towards CSR Initiatives:

Non-governmental organizations and Government agencies usually possess a narrow

outlook towards the CSR initiatives of companies, often defining CSR initiatives more

donor-driven than local in approach. As a result, they find it hard to decide whether

they should participate in such activities at all in medium and long run.

6: Non-availability of Clear CSR Guidelines:

There are no clear cut statutory guidelines or policy directives to give a definitive

direction to CSR initiatives of companies. It is found that the scale of CSR initiatives

of companies should depend upon their business size and profile. In other words, the

bigger the company, the bigger is its CSR program.

 51

7: Lack of Consensus on Implementing CSR Issues:

There is a lack of consensus amongst local agencies regarding CSR projects. This lack

of consensus often results in duplication of activities by corporate houses in areas of

their intervention. This results in a competitive spirit between local implementing

agencies rather than building collaborative approaches on issues. This factor limits

company’s abilities to undertake impact assessment of their initiatives from time to

time.

CONCLUSIONS

Corporate Social Responsibility is an emerging activity which is at the initial stage and

will grow more in the coming times. Companies Bill which is a good initiative by the

Government of India for various companies to allocate certain budget for this activity

but it is unclear that how much amount has to be spent on this activity. On the

international front, CSR has been accepted as an important concept for image building

and for the successful conduction of the business.

Companies can take up various issues happening in the society and work on that under

CSR. Ideally, the companies should not and cannot work on CSR activities alone, if

cooperation and contribution from employees is absent. Stakeholders should be

encouraged to contribute in the promotion of CSR activities. Conferences, seminars,

workshops and training sessions should be conducted by various companies in order to

spread knowledge and awareness in this sector. It is also important to review the

existing policies which are being laid by various companies and implementation must

also be put in that way so that the desired result could be achieved.
 52

Development of new civil society organizations with a social purpose is called for.

Such organizations will be dependent primarily on corporate rather than donor money,

and be focused on particular issues, such as sanitation, clean water, child and maternal

health and so on. Law makers have a responsibility to create the enabling conditions

for such organizations to form and thrive, which draws us to our last point. The CSR

clause in the Indian Companies Bill is unique, and the first for a big economy. Critics

might see it as a 2 percent tax, but that will be the case only if we miss this golden

opportunity to set a new model for how businesses can make a real contribution to

society's critical problems

But in India, it has to be taken up on a more serious note than a mere tax benefiting

activity. The amount projected to be spent on CSR activities should be fixed by

government. Social and environmental development programs must be taken up by

various companies as a part of this activity.

 53

CASE STUDY

Methodology: The case will be compared by studying a CSR conflict that the

multinational faced and that became, to a certain extent, a turning point for the CSR

policies of this multinational. The multinationals’ response to the conflict will be

analysed, how the company resolved the conflict and whether the company

implemented specific CSR policies with measurable targets as a response to the

conflict. The research is based on desk research that makes use of publicly available

information on the company’s website, online newspapers and non-governmental

organization (NGO) reports, as well as academic journals and books.

1. Apple

1.1. Apple’s profile

Apple Inc. (hereafter Apple) was established in 1977 and is registered on the

NASDAQ Global Select Market exchange. According to its Form 10-K‘Apple

designs, manufactures and markets mobile communications, media devices, personal

computers and portable digital music players, and sells a variety of related software,

services, peripherals, networking solutions, and third-party digital content and

applications’. Its products are sold through Apple’s retail stores, online stores and third

parties. Apple is a world leader in producing innovative electronic goods and

technology. In 2011 Apple’s net sales were estimated at $108.2 million. Its net sales in

2011 increased by 60% compared to 2010.Apple worldwide employs 60,400 full-time

people and 2,900 temporary employees and contractors. The company utilizes

outsourcing through the manufacturing of its products overseas; most of the factories

are located in Asia.

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1.2. Apple’s CSR policies and reporting

As required by the SEC, Apple has made the Form 10-K annual report available on its

website. The Form 10-K contains – amongst other things – information on Apple’s

business strategy and organization, the company’s risk factors, legal proceedings and

financial data. It also includes the business conduct policy of Apple: ‘Apple conducts

business ethically, honestly and in full compliance with all laws and regulations. This

applies to every business decision in every area of the company worldwide’.

Furthermore, the business conducts deals with corporate governance, information

disclosure, non-corruption and bribery, environmental health and safety. Apple has

considered the GRI G3.1 indices relating to the economy, the environment, human

rights, society and labour for its publication on Governance, Product Environmental

Reports, Recycling and Facilities Environmental Report and Supplier

Responsibility. For Supplier Responsibility, Apple, for example, has taken into

account the indicator which reports on measures it has taken to contribute to the

elimination of child labour. With regard to Product Environmental Reports, Apple has

used the EN26 performance indicator, and sets out initiatives to lessen the

environmental impact of its products. Apple designs its products with the aim of being

as energy efficient as possible, and it is the only company that can claim all electronic

goods are Energy Star qualified. Apple’s products have become more powerful while,

at the same time, fewer materials are used and fewer carbon emissions are generated.

Almost all of Apple’s products are outsourced for manufacturing overseas. On its

Supplier Responsibility website Apple states: ‘Apple is committed to the highest

standards of social responsibility across our worldwide supply chain. We insist that all

of our suppliers provide safe working conditions, treat workers with dignity and

respect, and use environmentally responsible manufacturing processes. Our actions –

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from thorough site audits to industry-leading training programs – demonstrate this

commitment’. The Supplier Code of Conduct (Supplier Code) outlines Apple’s

expectations for the suppliers it does business with. As a condition for doing business

with Apple, suppliers have to commit to the Supplier Code. For the Supplier Code,

Apple has adopted the Electronics Industry Code of Conduct (EICC), the guidelines

and standards for the electronics sector. Through onsite audits Apple ensures that

suppliers comply with the Supplier Code. The final assembly manufactures are audited

every year and the components suppliers are audited arbitrarily. Apple obliges its

suppliers to respect the human rights of its workers, to inform the workers of their

rights, and to treat them with dignity and respect. Apple requires from its suppliers that

they prevent discrimination, involuntary and underage labour, excessive working hours

and that they pay workers with wages and benefits in accordance with the applicable

laws and regulations.

1.3. Apple’s conflicts

The limited transparency of Apple’s supplier sustainability policy has often been

criticized in the media. In February 2010 Apple also turned down two shareholders’

sustainability proposals to establish a sustainability report on Apple’s environmental

policies and the impact that climate change has on the company. The other proposal

was to establish a board of directors’ sustainability committee.

1.3.1. Labour and human rights

A well-known conflict involving Apple’s suppliers is the suicides at Foxconn. It is the

largest contracted electronics manufacturer in the world, with dealings involving Dell

and Sony. Foxconn is the manufacturer of iPhones and iPads and employs over

900,000 workers, of whom 420,000 employees work at the Foxconn Shenzhen plant.
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This plant covers 15 factories, including dormitories, a hospital, a bank, a grocery store

and restaurants. The workers live and work inside the complex. In 2006 the Chinese

local press reported on the excessively long working hours and the discrimination of

mainland Chinese workers by Taiwanese superiors. In May 2010 several media

sources reported several cases of suicide at Foxconn. From 2009 to 2010 a total of 13

workers had committed suicide. The first worker, Sun Danyong, committed suicide

after he had been interrogated on the loss of an iPhone 4 prototype that he had in his

possession. When the former CEO Steve Jobs was asked about the suicides at

Foxconn, he responded: ‘Foxconn is not a sweatshop.

During an undercover investigation it was discovered that the reason for the multiple

suicides was related to internal management. The facilities of Foxconn are fine, but the

management is poor,’ revealed Zhu Guangbing, who organised the investigation.

According to Audrey Tsui, a professor at the National University of Singapore

Business School, Foxconn maintains a military-style management approach. The

workers were not allowed to interact with each other. Workers who violated the rule

were penalized with a fine or were held to be in contempt by the manager. The weekly

working hours of workers were up to 70 hours, ten hours above the maximum hours

set by Apple’s Supplier Code. The Foxconn factory has good facilities. The workers

have access to swimming pools and tennis courts. Foxconn organises activities such as

chess clubs, mountain climbing or fishing expeditions. But with a 70-hour workweek,

employees did not have any time to enjoy these facilities.

However, interviews with several Foxconn workers by Dreamworks China revealed

that not all the employees were dissatisfied. Some believed that the working conditions

at smaller factories are worse. One of Foxconn’s workers stated that employees at
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Foxconn thought the media had exaggerated the suicides regarding their connection to

Foxconn and that possibly some suicides had a sentimental or romantic cause.

In February 2011, the media reported the child labour issues had worsened at the

suppliers for computers, iPods and iPhones. Apple’s Supplier Responsibility Report

2011 revealed 91 underage workers at the suppliers.

1.3.2. Workers’ health and safety

Concerning workers’ health and safety conditions at the suppliers, in May 2010 two

workers were killed and sixteen employees were injured during an explosion at

Foxconn. An Apple spokesperson stated: ‘We are deeply saddened by the tragedy at

Foxconn’s plant in Chengdu, and our hearts go out to the victims and their families.

We are working closely with Foxconn to understand what caused this terrible event’.

In the same month, The Guardian reported that workers from Wintek had been

poisoned by n-hexane, a toxic chemical used to clean the touch screens of iPhones.

The employees complained that the compensation Wintek offered for the health

damage was not sufficient. The workers who did receive compensation were asked to

resign from their jobs.

4.4. Apple’s CSR policy post-conflicts

Apple makes sure that suppliers comply with the Supplier Code by conducting audits.

The audits cover working and living conditions, health and safety but also

environmental practices at the facilities. According to Apple’s Supplier Responsibility

Report 2010, Apple conducted 102 audits in 2009. In 2011 Apple conducted 229

audits, an increase of 80% compared to 2010. An audit is conducted by an Apple

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auditor and supported by local third-party auditors. In the Supplier Responsibility

Report 2010, published in February 2011, Apple included a paragraph responding to

the suicides at Foxconn. In the Supplier Responsibility Report 2011, Apple reports that

during inspections Apple discovered ten facilities with underage labour violations. One

of the facilities had a large number of underage workers. Because the management did

not want to address the problem, Apple terminated businesses with this facility. Where

underage labour has been discovered, suppliers are required to pay educational

expenses, living stipends and lost wages for six months or until the worker reaches the

age of sixteen.

In November 2010, Apple set up a training programme to prevent the future hiring of

underage workers. The human resources managers are trained in Chinese labour law.

Training human resources managers, however, will not solve child labour issues.

When the costs of labour, energy and raw materials rise and there is a shortage of

labour, factory owners are forced to cut costs or to find cheaper labour. Child labour

can easily be hidden by providing fake wages and work schedule data. Also, it is

difficult to prevent child labour when underage workers want to work to provide for

their families.

The Supplier Responsibility Report of 2012 states that suppliers are obliged to return

underage workers to school and finance their education through Apple’s Child Labour

Remediation Program. Regarding abolishing underage labour, Tim Cook, the CEO of

Apple, stated: ‘We would like to totally eliminate every case of underage employment.

We have done that in all of our final assembly. As we go deeper into the supply chain,

we found that age verification system isn’t sophisticated enough. This is something we

feel very strongly about and we want to eliminate totally’.

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In the Supplier Responsibility Progress Report of 2011 Apple addressed the issue of

the use of n-hexane. Apple obliged Wintek to stop using n-hexane and required

Wintek to repair its ventilation system and to work with a consultant to improve its

environmental health and safety systems. In order to take action it is important for

companies to be transparent about their supply chain. In February 2012 Apple

announced it would be the first technology company to join the Fair Labour

Association (FLA) as a participating company.

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BIBLIOGRAPHY

a. Books:
Jan Jonker , Marco de Witte ; (2006) ; Management Models for Corporate
Social Responsibility ; Springer, Berlin (Heidelberg)

Lonneke Roza ;(2016); Employee Engagement in CSR ; Gorinchem

b. Journals / Magazines / Newspapers:

Garriga, E. , Mele, D. “CORPORATE SOCIAL RESPONSIBILITIES
THEORIES” ; Mapping the Territory ; Journal of Business Ethics 53, 51-
57, 2004

Corporate Social Responsibility in India (potential to contribute towards

inclusive social development) Global CSR Summit 2013 (an agenda for
inclusive growth)

Article: UTRECHT LAW REVIEW by Cristina A. Cedillo Torres, Mercedes

Garcia-French, Rosemarie Hordijk, Kim Nguyen, Lana Olup.

c. Web Pages:

http://www.chillibreeze.com/articles_various/CSR-in-India.asp
http://creativecommons.org/licenses/by-nc-sa/3.0/