ABSTRACT

In today’s era, the number of companies reporting their social and environmental
impact on society has increased tremendously. The emergence of corporate social
responsibility is just a blueprint for the future, but a new highway to follow to
conduct business in today’s uncertain world. More and more companies are heading
the call of social responsibility. Socially responsible companies consider the full
scope of their impact on communities and the environment when making decisions,
balancing the needs of stakeholders with their need to make profit. Companies
must conduct their business in an ethical way and in the interests of the wider
community responding positively to the emerging societal priorities and
expectations. Businesses should be run in the interests of the stakeholders. Socially
responsible firms have been more successful in achieving their objectives. Recent
corporate events have brought a heightened awareness of corporate governance.
Many corporate government initiatives have been passed in India as well abroad.
The objective of corporate governance reforms is to provide transparency in the
workings of the organizations. The ultimate purpose of maintaining corporate
governance is to protect the rights of the shareholders. While corporate social
responsibility and corporate governance go hand by hand, corporate governance
and economic development are intrinsically linked.

INRODUCTION

No business can exist in isolation. As your business exist in the environment you are
liable to all the stakeholders(customers ,suppliers, local community, employees
etc).The products your business make and the way by which you make them, have
an impact on the environment .in recent decade, the concept of corporate social
responsibility has become the most important strategy for companies to survive.
Corporate Social Responsibility takes all these factors into account and helps the
companies to maintain effective relationships with its stakeholders. Companies with
good business practices enjoy more benefits than other companies. It brings a
competitive edge to the companies. Therefore corporate responsibility and
corporate governance has emerged as a new theme in the global community and is
becoming a main stream activity.

CORPORATE SOCIAL REPONSIBILITY

In broad terms relates to the responsibilities corporations have towards the society
within which they operate. According to Philip Kotler and Nancy Lee (2005) CSR
means “A commitment to improve community well being through discretionary
practices and contribution of corporate resources”. Corporate social
responsibility (CSR) is also known as corporate responsibility, corporate
citizenship, responsible business, sustainable responsible business (SRB),
or corporate social performances. CSR exhibits the ethical behavior that an
organization exhibits towards its internal and external stakeholder and it denotes
the responsibility of an organization towards the environment and society in which
it operates.

DRIVERS TOWARDS CORPORATE SOCIAL RESPONSIBILTY

1. Low participation of government

Decreasing government resources, distrust of regulations, has led to the exploration

of voluntary and non-regulatory initiatives.

2. Demands for greater disclosure

There is a growing demand for corporate disclosure from stakeholders, including

customers, suppliers, employees, communities, investors, and activist
organizations.

3. Increase in customer interest

In a recent survey by Environics International, more than one in five consumers

reported having either rewarded or punished companies based on their perceived
social performance.

5. Competitive labour markets

Employees are seeking those employers whose operating practices match their own
principles. In order to hire and retain skilled employees, companies are being forced
to improve working conditions.

SUSTAINABLE GROWTH THROUGH CORPORATE SOCIAL RESPONSIBILITY

Impact on business

In today’s era, as companies have gone global by entering new markets to sell their
products and services, the cost of compliance have also risen rapidly. Failure to
abide by regulations can destroy the business reputation, but compliance alone
can’t build brands. Recently companies have started understanding this scenario
and they have started thinking to be socially and environmentally responsible. Many
huge companies regard CSR as a platform for growth and differentiation. To be
sustainable, organizations are now embracing a new objective i.e. optimizing their
operations to improve environmental and social outcomes that increases overall
performance. As a result, companies have to face new decisions. Companies that
are substantially outperforming their peers attain benefits from CSR activities
integrated to the core of their business.Successfull companies understand their
customers CSR expectations well. They collaborate with consumers and business
partners on their CSR activities. These companies engage all their employees in
achieving these objectives.

Corporate social responsibility is the way companies manage their organizations to

produce an impact on society through economic, environmental and social factors.
Evidence asserts that companies can do well by doing well. many well known and
successful companies have already proven that they can differentiate their brands
and reputations, if they take social responsibility for the well being of the societies
and environments in which they operate,. These companies practice CSR in a way
that it generates higher returns to the company’s demands long term commitment
and redefinition of corporate values. It also requires a total change in the way
companies operate.

Corporate social responsibility offers many benefits both internally and externally to
the companies. It creates a good image among the people and earns a special
respect amongst its peers. Working with keeping in view the interests of local
community bring a wide range of business benefits. For example, for many
businesses, local customers are an important source of sales. By improving the
reputation, companies can recruit employees and retain them easily. it helps in
developing a sense of loyalty and trust amongst the employees in the
organizational ethics. It improves operational efficiency of the company and is often
accompanied by increases in quality and productivity Employees feel more
motivated and they work more efficiently. Apart from this, CSR helps ensure that
the organization comply with regulatory requirements

CORPORATE GOVERNANCE

Corporate governance is the set of processes, customs, policies, laws, and

institutions affecting the way a corporation (or company) is directed, administered
or controlled. Corporate governance also includes the relationships among the
many stakeholders involved and the goals for which the corporation is governed.
The principal stakeholders are the shareholders, management, and the board of
directors. Other stakeholders include employees, customers, creditors, suppliers,
regulators, and the community at large

Corporate governance is the system by which business corporations are controlled

and directed. The corporate governance structure specifies the distribution of rights
and responsibilities among different participants in the corporation such as the
board, managers, shareholders and other stakeholders and spells out the rules and
procedures for making decisions on corporate affairs. Good corporate governance is
established with legislation, regulation and free volition. Corporate governance is
about commitment to values and ethical business conduct

CORPORATE GOVERNANCE INITIATIVES IN INDIA

There is a very impressive growth of the corporate sector in India. To examine

corporate governance issues and recommend a voluntary code of best practices,
Confederation of Indian Industry (CII) set up a committee and started the initiative
to improve corporate governance in India. The first draft of the code was prepared
by April 1997, and the final document was released in April 1998.

Considerably debate has taken place on reforming Indian corporate governance

practices in recent times. Various committees have suggested Anglo-Saxon style of
corporate governance reforms. However, such reforms are unlikely to improve the
protection of minority shareholders.

There is still a larger issue arising out of the pyramidal structures. The ordinary
investors may find it difficult to differentiate a good investment from a bad one.
Because the credibility of report earnings is suspect. In addition, the reported
earnings may be a poor guide to future performance. To conclude, the complex
organizational structures of many Indian business houses are a major impediment
to good corporate governance. Mechanical measures such as increasing the number
of independent directors on Board will do little to change the state of affairs unless
cash flows and control rights are aligned. In the wake of issues like these, the
Government has initiated measures to arrest the future deterioration in the
functioning of corporate sector as well as to heal the damage caused.

RECOMMENDATION OF THE BIRLA COMMITTEE REPORT

Birla committee report recommending guidelines on corporate governance was

published in February 2007.Some of these recommendations however have been
categorized as mandatory and have been incorporated in the listing agreements of
the stock exchanges. The recommendations of the Birla committee could be
classified and reviewed under the following 10 sectors:
1) Role and Responsibilities of Corporate Boards and Directors: The Birla committee
recommendation in this field calls for a greater role and influence for non-executive
independent directors, a tighter delineation of independence criteria and
minimization of interest conflict potential, and stringent punishments for executive
directors of companies failing to comply with listing and other requirements.

2) Direction and Management Distinguished: managers have the responsibility to

execute the policies under the supervision of the Board, and for this purpose, they
have the necessary authority to ensure compliance and implementation.

3) Managing & Whole-Time Directors: Managing and other whole-time directors are
required to devote whole or substantially whole of their time to the affairs of their
companies. Serving as non-executive directors on several other Boards may
sometimes cause conflict of interests.

4) Non-Compete Stipulations: The Birla committee recommends that there should

be proper disclosure to the shareholders and the investing community about this
matter.

5)Interested Shareholders: one of the most important recommendations of the Birla

committee is that the interested shareholders are to abstain from voting on
specified matters that impact upon some but not all the shareholders.

6)Measures Promoting Transparency and Informed Shareholder Participation: The

Birla committee addressing this issue suggests the following measures: more
meaningful and transparent accounting and reporting, improved annual reports
concomitant with more detailed filling with regulatory authorities, and greater
facilitation for informed participation by using information and communications
technologies.

7) National listing authorities: The Birla committee recognizes this important

signaling effect of Listing, and provides for tougher Listing and compliance regimen
through a centralized National Listing Authority.

8) Public Sector Enterprises: The committee recommended that PSUs be relieved

from multiple surveillance agencies and simultaneously a commission be appointed
to draft a suitable code public behavior on the lines of the Nolan (later Neil)
Commission in the United Kingdom.

9) Corporate Social Responsibility: In line with the developing trends towards an

integrated model of governance, the Birla committee emphasizes corporate social
responsiveness and ethical business practices.

10) Centre for Corporate Excellence: The Birla committee has recommended the
constitutions with three broad functions-Research and Studies, Education Promotion
and Development, and, Accreditation with respect to matters bearing upon
corporate governance and excellence. To maintain high professional standards in
the contribution of the centre, it is imperative that its academic, financial and
functional autonomy is protected.

INFOSYS TECHNOLOGIES LIMITED

Infosys is involved in various corporate social responsibilities. Infosys promoted, in

1996, the Infosys Foundation as a not-for-profit trust to which it contributes up to
1%PAT every year. The Education and Research Department (E&R) at Infosys also
works with employee volunteers on community development projects. They have
taken initiatives in the areas of Research and Education, Community Service, Rural
Reach Programme, Employment, Welfare activities undertaken by the Infosys
Foundation, Healthcare for the poor, Education and Arts & Culture. Infosys has
contributed to community service in many ways. Computers at Classrooms initiative
was launched in January 1999, Infosys donated 2,567 computers to various
institutions across India. future. Microsoft Corporation continues to participate in
this initiative by donating relevant software. Infosys' Education & Research group
has the pride of anchoring the Infosys Extension Program (IEP), which consists of
the Infosys Fellowship Program, Rural Reach program.

KEY FINDINGS

60% of the businesses feel that CSR importance has been increased over the years,
and they are focusing on CSR activities to create new revenue streams.

Much of this is related to consumers and stakeholders. As a result companies try to

reduce carbon emissions.

The greatest success comes when companies share their information with
customers, industry groups and NGO’s

References

Friedman, Thomas “the green road less traveled” the New York Times

Catalyst Consortium (2002). "What is Corporate Social Responsibility?"

Iiathparampil, Mathew “business ethics”