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CSR: The Stake of having a stake in the stakeholders

-Shubham Rustagi1
No success in material terms is worthwhile unless it serves the needs or interests of the country
and its people.
-JRD TATA

ABSTRACT
A very simple understanding of the word corporate social responsibility is that it is a relationship
between business organizations and the society with which they interact. Under CSR, business
organizations voluntarily embark on various developmental activities for the welfare of the
society. CSR has assumed a new meaning in todays world, given that it has extended the
boundaries of the firm into the society. But it is a highly misunderstood & misinterpreted term in
India. A responsible corporate recognizes that its activities have wider impact on the society in
which it operates.
Corporate social responsibility is one such niche area of corporate behavior & governance that
needs to get aggressively addressed & implemented tactfully in the organizations. At the same
time CSR is one effective tool that synergizes the efforts of corporate & the social sector
agencies towards sustainable growth & development of the societal objectives at
large.
This paper emphasizes that how CSR has become the linchpin for development of any corporate
organizations. This paper tries to bring out CSR initiatives taken by various organizations in
India. It will help the readers to understand the current state of Indian CSR, its impact on the
Indian society.

1
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1.INTRODUCTION
Economic growth is possible only through consumption of inputs available in the environment
and society. The harnessing of natural resources has a direct impact on the economy, the
environment and society at large. Traditional expectations of business are also changing. It is no
longer enough to simply employ people to make profits and pay taxes 2. The company must
accept its obligation to be socially responsible and to work for the larger benefit of the
community3
Corporate Social Responsibility (CSR) is a concept whereby organizations serve the interests of
society by taking responsibility for the impact of their activities on customers, employees,
shareholders, communities and the environment in all aspects of their operations. Corporate
social responsibility is not about just giving randomly but about bringing benefits to all the
stakeholders, including customers, employees and community at large.
Corporate Social Responsibility is the way companies manage their businesses to produce an
overall positive impact on society through economic, environmental and social actions.
Corporate social responsibility (CSR), also called corporate conscience, corporate citizenship,
social performance, or sustainable responsible business/ businesses. Business depends for its
survival on long term prosperity of the society.
2.

DEFINITIONS OF CSR

Social responsibility of companies was defined as responsibility to consumers, workers,

stakeholders and the community4.The aim of social responsibility is to create higher standards of
living, while preserving the profitability of the corporation5.

2 Corporate Social Responsibility- a study guide for MBA students (Aug.30, 2008) , available
atwww.discuss.itacumens.com/index.php?topic=25349

3 Sachar Committee Reports August, 1978. Chapter V.( High powered Expert
Committee on Companies and MRTP Acts)
4 Social responsibilities of business, Manaktaldas, Bombay, 1966
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CSR has been defined by different people giving it a varied dimension.

According to Michel Hopkins Corporate Social Responsibility is concerned with

treating the stakeholders of a company or institution ethically or in a responsible manner.
Ethically or in a responsible manner refers to treating key stakeholders in a manner

deemed acceptable according to international norms.

European Union has defined CSR thus A concept whereby companies integrate social
and environmental concerns in their business operations and in their interaction with

their stakeholders on a voluntary basis.

According to Business for Social Responsibility (BSR) Corporate social responsibility
is operating a business in a manner which meets or excels the ethical, legal, commercial

and public expectations that a society has from the business.

The World Business Council for Sustainable Development (WBCSD) defines CSR as
the commitment of business to contribute to sustainable economic development,
working with employees, their families & the local communities..

The Corporate Social Responsibility and Corporate Governance are inextricable in todays going
perception of the society. CORPORATE SOCIAL RESPONSIBILITY Governance and business
ethics make the concept of Corporate Social Responsibility inevitable. As Winston Churchill
once said With great power comes great responsibility, social responsibility cannot be avoided.
Corporate Social Responsibility is an important business strategy because, to some extent a
consumer wants to buy products from companies he trusts, a supplier wants to form business
partnership with companies he can rely on, an employee want to work for a company he respects,
other concerns want to establish business contacts with companies seeking feasible solutions and
innovations in areas of common concern. Corporate social responsibility is basically a new
business strategy to reduce investment risks and maximise profits by taking all the key
stakeholders into confidence. The proponents of this perspective often include corporate social
responsibility in their advertising and social marketing initiatives. It is a tool to increase the
reputation of the company in the eyes of society. It is certainly a business approach that creates a
long term consumer and employee value by not only creating a green strategy on natural
environment but also considering every dimension of how a business operates in social, cultural
and environment. The company should meet the needs of its all stakeholders (consumer,
5Michael Hopkins ,1998
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employees, shareholder, clients and other related persons) without sacrificing the ability to meet
the needs of the future stakeholders.
3.

HISTORICAL FOUNDATION OF CSR

The concept can be traced back to times immemorial, our Vedas say - man can live individually
but can survive only collectively. Hence the challenge is to form a progressive community by
balancing the interests of individuals and that of the society. To meet this, we need to develop a
value system where people accept modest sacrifices for the common good. A value system is the
protocol for behavior that enhances the trust, confidence and commitment of members of the
community. It goes beyond the domain of legality. It includes putting the community interests
ahead of our own. Thus our collective survival and progress is predicated on sound values.
Philosophers like Kautilya emphasized on ethical practices and principles while conducting
business.
In that period, Kings had an obligation towards society and merchants displayed their own
business responsibility by building places of worship, education and various forms to charity for
the needy. Although the core function of business was to create wealth for society and was based
on an economic structure, the business community with their rulers believed in the philosophy of
Sarva loka hitam which means the well-being of all stakeholders. Indian Scriptures have at
several places mentioned the importance of sharing ones earning with the deprived sections of
society. There are different ways through which a firm can exert positive social change in society
and collaborate with partners who have the explicit power to trigger such change. Vedas suggest
that peace, order, security and justice were regarded as the fundamental aims of the state. Welfare
of the public was clearly regarded as the chief aim of the state. Literature on politics describes
the promotion of dharma (moral law), karma (pleasure) and artha (wealth).The concept of
corporate social responsibility generally, agreed by the historians, emerged in the 1930s to 1940s
and became formalized in1953 with the publication of book named Social Responsibilities OF
the Businessman by Howard Bowen. However, the term CSR became only popular in the 1990s.
According to the World Business Council for Sustainable Development, 1999 Corporate Social
Responsibility is the continuing commitment by business to behave ethically and contribute to

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the economic development while improving the quality of life of the workforce and their families
as well as of the local community and the society at large.

4. INTERLINK BETWEEN CSR & SOCIAL CONTRACT

THEORY

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5.THE CONCEPT OF STAKEHOLDER AND COMMUNITY

AS A STAKEHOLDER
The stakeholders can be defined as any group or individual who can affect or is affected by
theachievement of a corporations objectives. This wide or inclusive definition is meant tosignal
that managers must pay attention to external groups regardless of whether or not they happen to
like those groups, be disposed to communicate or not with them, etc. They must gain the support
of those who directly affect their achievements, but also understand how the firm will affect
others, as these may take longer term retaliatory action.
However, in order to bound the discussion for practical purposes, Freeman categorizes
stakeholders into the following groups: customers, suppliers, employees, financiers and
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communities. Basically stakeholders are -- those groups without whose support, the firm would
fail to exist.. Therefore community is a major stakeholder as it gives the consent , resources and
thereby the legitimacy to operate.
On the narrow or exclusive view, we are simply told that community is a stakeholder without
regard to what a community actually is. This leaves a potentially large hole in our narrow
definition of stakeholders, enabling any number of entities to enter the picture under that
nebulous heading. And the narrow definition then risks collapsing into the wide definition.
Thus, stakeholder theory suffers with the Problem of Community: wanting community to do
some conceptual work, and wanting corporations to be held accountable for their actions vis-vis actual communities; but not specifying exactly who or what they are, so that we could know
whether or not we are successful.
So, what exactly is a community?
In developing their definitions of community, most scholars have generally agreed that
communities can be characterized by three factors: geography, interaction and identity6
.Communities primarily characterized by geography represent people residing within the same
geographic region but with no reference to the interaction among them. Communities primarily
identified by regular interaction represent a set of social relationships that may or may not be
place based. Communities characterized primarily by identity represent a group who share a
sense of belonging, generally built upon a shared set of beliefs, values or experiences. In this
case, the individuals need not live within the same physical locality. These three factors have
served as the basis for our set of four more or less distinct alternative definitions of community
relevant to stakeholder theory.

6 Lee and Newby, 1983).

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CSR promotes a vision of business accountability to a wide range of

stakeholders, besides shareholders and investors. A corporation should be fair
and transparent to its stakeholders in all its transactions. The basic problem is in
determining who is logically a stakeholder. It is an unresolved matter in the
literature, although the broad outlines are known.

Managing stakeholders strategically is seen as a means of increasing the likelihood of achieving

the ends of the corporation, or, of greater financial performance7

7 Mellahi and Wood2, 2003

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So, to be effective one need to manage stakeholders dynamically the following four steps would
helpful:
a. Identify: The first step is to identify the stakeholders. The stake holders may be primary and
secondary. They can be internal or external. Clarkson8 (1995) divided stakeholders as Primary
and Secondary stakeholders based upon the urgency and necessity for corporate survival.
Urgency is the degree to which a stake holders claim calls for immediate attention. Necessity is
linked to the ability or power wielded by the concerned stakeholder to influence a firms
behavior, irrespective of his claim is legitimate or not.
A Primary stakeholder group is one without whose continuing participation the corporation
cannot survive as a going concern. This group is typically comprised of shareholders as well as
investors, employees, customers, and suppliers.
A Secondary stakeholder group is one that influences or affects, or is influenced or affected by
the corporation. But they are not engaged in transactions with the corporation and are not
essential for its survival. The media and a wide range of special interest groups are examples of
such secondary stakeholders.
As corporate organizations have limited resources, strategic responses to stakeholders based
upon power and urgency may provide sorting criteria for identifying and prioritizing
stakeholders.
Stakeholders were classified by (Werther9 et al. 2006) in terms of three layers as
1. Organizational Stakeholders (Employees, Managers, Stock holders, Unions)
2. Economic Stakeholders (Customers, Creditors, Suppliers, Distributors ) and
3. Societal Stakeholders (Communities, Government, NGOs,

Non-Profit

organizations )

8 Clarkson, M. (1995) A stakeholder framework for analysing and evaluating corporate social
performance, Academy of Management Review, Vol.20, No.1, pp.92-117.
9 Werther, William B and David Chandler, (2006), The Strategic Context of CSR, Strategic corporate
social responsibility: stakeholders in a global environment, Sage Publication: London, p-49
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The firms are mainly concerned with the organizational and economic stakeholders of the firm;
however these two come from the larger group of societal stakeholders. These layers are closely
interconnected with and influence each other and co-exist in a synergetic way for the sustainable
performance of a firm.
The degree of importance placed on each stakeholder type depends on the value proposition that
the organization chooses for itself.
b. Analyze: Once the stakeholders are identified the next step is to analyze as to what are
the impacts? When do they occur? And how does the impact affect the stakeholder?
c. Manage: The third step involves understanding stakeholders requirements and manage
them through the constraints (time, budget etc.) It is essential that their expectations are
set appropriately so that they are achieved. It may be remembered that these expectations
keeps changing dynamically.
D. Check: The final step is checking as to whether things are going smoothly. One needs to
know whether things have changed for the existing stakeholders. There may be new
stakeholders or there can be change in the impacts changed and sometime the priorities
might have changed. It is essential that the check is carried out quite frequently so that
the gaps/ issues if any are taken up and dealt as early as possible.

Most companies understand the importance of managing relations with key stakeholders such as
shareholders, customers, employees, the local community, government, the media and the
general public. Companies have limited financial, human, physical and natural resources and
they are not efficient or effective to deal with all stakeholders equally.
The issues that matter to socially responsible investors are numerous, inconsistent, and complex.
The range of issues usually includes positive community involvement, environmental protection,
safe products, ethical marketing, high employee diversity, and non-controversial labor practices
in a firms international market.
It is not only investors who are seeing CSR as central to their assessment of a companys
likelihood of success. Employees are increasingly important as judges of CSR performance. As
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economies mature, the war for talent gets more intense. In most advanced societies it is now
employees who pick a company to work for, rather than companies selecting from a passive pool
of skills.
The modern employee has personal values and expects to see it reflected in the values of the
prospective employer. If those values are not on display, they will take their talents elsewhere.
For many companies, their present and future employees are the key consumers of the firms
CSR communications. These Values Driven Professionals look for corporate values which match
their own personal values, and CSR is often the best way to articulate this.
Growing environmental concerns, coupled with public pressure and stricter regulations changed
the way people do business across the world. Its focus on sustainable development supported
CSR movement. Stakeholder view is gaining currency and it is being considered as the source of
competitive advantage in place of a liability10 . CSR must be conceived as an ongoing long-term
undertaking; an integral part of corporate competitiveness. The real challenge is how to make
CSR a competitive asset.
Stakeholders ironically hold both the key to success while also posing the biggest threat to
embedding corporate responsibility (Frooman11, 1999; Henriques and Sharma12, 2005).
Companies cannot sustain their competitive advantage unless they care for their customers, their
products, the environment, and the communities in which they operate.

5.

CSR VOLUNTARY GUIDELINES of 2009

Principle 1: Businesses should conduct and govern themselves with Ethics, Transparency
and Accountability . The principle recognizes that ethical conduct in all functions and
processes is the cornerstone of responsible business.

10 Porter 2002 &Prahalad 2004

11 Frooman, J. (1999) Stakeholder influence strategies, Academy of Management
Review,Vol.24, pp.191-205
12 Henriques, I. and Sharma, S. (2005) Pathways of Stakeholder Influence in the
Canadian Forestry Industry, Business Strategy and the Environment, Vol.14, No.4,
pp.384-398.
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Principle 2: Businesses should provide goods and services that are safe and contribute to
sustainability throughout the business lives. The principle recognizes that all stages of the
product life cycle, right from
design to final disposal of the goods and services after use, have an impact on society and
the environment.
Principle 3: Businesses should promote the well being of all employees.The principle go
through to the all policies and practices relating to the dignity and well being of employees
engaged within a business or in its value chain.
Principle 4: Businesses should respect the interests of, and responsible towards all
stakeholders, especially those who are disadvantaged, vulnerable and marginalized. The
principle recognizes that businesses have a responsibility to think and act beyond the
interests of its shareholders to including employees, suppliers, project affecting people and
others who have an interest on the operations of the business.
Principle 5: Businesses should respect and promote human rights. The principle takes into
account the Corporate Responsibility to Respect Human Rights, as referred in the United
Nations Protect, Respect,
Remedy Framework.
Principle 6: Business should respect, protect, and make efforts to restore the environment.
The principle is to enlighten the environmental responsibility to the corporate which is a
prerequisite for sustainable
economic growth and for the well being of society.
Principle 7: Businesses, when engaged in influencing public and regulatory policy, should
do so in a responsible manner. The principle recognizes that businesses operate within the
specified legislative and
policy frameworks prescribed by the Government, which guide their growth and also provide
for certain desirable restrictions and boundaries.
Principle 8: Businesses should support inclusive growth and equitable development. The
principle recognizes the value of the energy and enterprise of businesses and encourages
them to innovate and contribute to the overall development of the country, especially to
that of the disadvantaged, vulnerable and marginalized sections of society.

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Principle 9: Businesses should engage with and provide value to their customers and
consumers in a responsible manner. This principle is based on the fact that the basic aim of
a business entity is to provide goods and services to its customers in a manner that creates
value for both.
In line with the above guidelines the Securities and Exchange Board of
India considering the largest interest of the public, disclosures by the
listed companies, and from the perspective of of Environment, Social
and Governance(ESG), decided to mandate inclusion of Business
Responsibility Report as part of the Annual report of the listed entities.
SEBI amended the Listing Agreement vide circular number CIR/CFD/
DIL/8/2012 dated on August 13, 2012 by inserting a clause 55. The
provisions of the circular were made applicable with effect from
financial year ending on or after December 31, 2012.
The clause 55 of the Listing Agreement states thatListed entities shall
submit, as part of their Annual Reports, Business Responsibility Reports,
describing the initiatives taken by them from an environmental, social
and governance perspective, in the format suggested by the board.

6. LEGALITY OF CSR IN THE INDIAN CONTEXT

Corporate Social Responsibility is not a new concept in India, however, the Ministry of
Corporate Affairs, Government of India has recently notified the Section 135 of the Companies
Act, 2013 along with Companies (Corporate Social Responsibility Policy) Rules, 2014
"hereinafter CSR Rules" and other notifications related thereto which makes it mandatory (with
effect from 1st April, 2014) for certain companies who fulfill the criteria as mentioned under Sub
Section 1 of Section 135 to comply with the provisions relevant to Corporate Social
Responsibility. As mentioned by United Nations Industrial Development Organization (UNIDO),
CSR is generally understood as being the way through which a company achieves a balance of
economic, environmental and social imperatives ("Triple-Bottom-Line- Approach"), while at the
same time addressing the expectations of shareholders and stakeholders.
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While proposing the Corporate Social Responsibility Rules under Section 135 of the Companies
Act, 2013, the Chairman of the CSR Committee mentioned the Guiding Principle as follows:
"CSR is the process by which an organization thinks about and
evolves its relationships with stakeholders for the common good,
and demonstrates its commitment in this regard by adoption of
appropriate business processes and strategies. Thus CSR is not
charity or mere donations. CSR is a way of conducting business, by
which corporate entities visibly contribute to the social good.
Socially responsible companies do not limit themselves to using
resources to engage in activities that increase only their profits.
They use CSR to integrate economic, environmental and social
objectives with the company's operations and growth ."

7. DIFFERENCES BETWEEN MANDATORY CSR AND

TAX?
Venu Srinivasan, Chairman of TVS Motors, has stated

13

that this measure would be similar to

imposing a tax; so have others.However, this is a flawed argument, both from a legal and
practical aspect.
From a legal viewpoint, the primary purpose of a tax is the collection of revenue. When the
Government imposes a tax, it need not identify a specific benefit accruing from the same14.
However, that is not the purpose of clause 135 of the Companies Bill, 2011 the money being
used by the companies in CSR initiatives would not be filling the coffers of the Government.
Also, the said money would be directed towards specifically earmarked activities.

From a practical viewpoint, money given as tax goes to the State, and not directly to the
community. For what purpose that money is used is left to the discretion of the Government.
13 India Inc. questions mandatory CSR, The Indian Express, Dec. 20, 2012 available at
Http://www.indianexpress.com/news/indian-inc-questions-mandatory-csr/1047785/.
14 Jindal Stainless Steel Ltd. and Anr. v. State of Haryana and Ors., AIR 2006 SC 2550.
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Also, in a country like India, where often the money does not percolate to the grassroot level due
to various reasons such as corruption, bureaucracy, population etc, mere payment of taxes cannot
be a means of ensuring that social good is being done. On the other hand, the measure under
clause 135 is much more effective than a tax companies have full freedom to give priority to
social causes they want to support, and because the money is directly pumped into CSR
initiatives, the impact is much higher. Clause 134 provides for mandatory disclosure of the
implementation of the CSR Policy, and provides for penalty in case of failure to do the same.
Hence, not only does the measure under clause 135 not amount to a tax, it is also more
effective than a taxation scheme.
Thus, it is submitted that voluntary CSR is no longer sufficient to ensure that companies realize
their obligations towards various stakeholders (both at a micro and macro level) it is only
through mandatory CSR that companies would take up CSR initiatives in a more streamlined
manner. However, as has been examined below, there are certain problems with the way in which
clause 135 has been drafted, resulting in various loopholes which would render this measure
redundant.

8.THEORETICAL PERSPECTIVE OF CSR

Models of CSR
The Indian system of CSR is based on the following models namely:
(a) Mahatma Gandhi Model: It is based on the voluntary agreement by the donor and the
society based on its commitment to the public welfare base on ethical awareness of broad social
needs.
(b) Pandit Jawaharlal Nehru Model: It is the state driven policy as it takes over the industry
and impose strict regulation on them.
(c) Milton Friedman Model: The interaction is limited to investors objectives opposed to
companys overall image and direct and indirect stakeholders interest.

Approaches to CSR

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In practical manner the concept of CSR is also based on some approaches. The term approach
means the certain grounds, principles. In regard CSR there are various approaches. Approaches
to the CSR are becoming more widely accepted and some of the corporate are duly engaged in
implementing it. They are discussed as follows:
1. Community development approach
This is the community development based approach. Here the business organization work with
local communities for their benefits.
2. Philanthropy approach
This approach concentrates on the monetary and financial donation given to the local
organizations and tries to improve the communities in developing countries.
3. Creatingshare value approach
This approach concentrates on governing the CSR interest. This is also termed as CSV. This
CSV model based on the ideas that corporate success in social welfare is interrelated. A business
organization always needs the healthy, well educated workforce, sustainable resources to
compete effectively. This model had received global attention in the Harvard
Business Review Article Strategy and Society: The link between Competitive advantage
and Corporate Social Responsibility by Micheael.E.Proter, A leading authority on
competitive strategy and head of the institute for strategy and competitiveness at
Harvard Business School, and Mr. Mark.R.Kramer, senior fellow at the Kennedy School
at Harvard University.

9. Why CSR is Relevant Today?

CSR as a strategy is becoming increasingly important for businesses today because of
three identifiable trends:
A. Changing social expectations
Consumers and society in general expect more from the companies whose products they
buy. This sense has increased in the light of recent corporate scandals, which reduced
public trust of corporations, and reduced public confidence in the ability of regulatory
bodies and organizations to control corporate excess.
B. Increasing affluence

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This is true within developed nations, but also in comparison to developing nations.
Affluent consumers can afford to pick and choose the products they buy. A society in
need of work and inward investment is less likely to enforce strict regulations
and penalize organizations that might take their business and money elsewhere.
C. Globalization
Growing influence of the media sees any mistakes by companies brought immediately to the
attention of the public. In addition, the Internet fuels communication among like-minded groups
and consumersempowering them to spread their message, while giving them the means to coordinate collective action

12. POTENTIAL BUSINESS BENEFITS OF CSR

The scale and nature of the benefits of CSR for an organization can vary depending on the nature
of enterprise, and are difficult to quantify, though there is large body of literature exhorting
business to adopt measures beyond financial ones. The business case
for CSR within a company will likely rest on one or more of these arguments.
A. Human resources
A CSR programme can be an aid to recruitment and retention, particularly within the competitive
graduate student market. Potential recruits often ask about a firms CSR policy during an
interview, and having a comprehensive policy can give an advantage.
B. Risk management
Managing risk is a central part of many corporatestrategies. Reputation as take decades to build
up can be ruined in hours through incident such as corruption scandals or environmental
accident. These can also draw unwanted attention from regulators, courts, governments & media.
Building a genuine culture of doing the right thing within a corporation can offset these risks.
C. Brand differentiation
Brand differentiation in crowded market places, companys striving for a unique selling
proposition. That can separate them from the competition in the minds of consumers. CSR can
play role in building customer loyalty based on distinctive ethical values.
D. License to operate
Corporation are keen to avoid interference in there business through taxation. By taking
substantive voluntary steps, they can pursuit governments that they are taking issues such as

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health & safety, diversity, or the environment seriously as good corporate citizen with respect to
labor standards and impacts on the environment

10. INDIAN CSR INITIATIVES

In India, the big corporate houses like Tatas and Birlas have long been associated with their
employee welfare and immediate community programmes by way of engaging themselves in
creating infrastructure for schools, hospitals and temples. The tradition of Tata philanthropy goes
back to 1892 when Jamshedji first gave grants to two lady doctors to go abroad and specialise in
gynaecology.
1.

In the next hundred years the JN Tata Endowment for the higher education of Indians
was to give loans to 2000 students towards their studies abroad. The book 100 Great
Modern Lives by John Canning concludes: Probably no other family has ever
contributed as much in the way of wise guidance, economic development and advancing
philanthropy, to any country as Tatas have to India15

2. As a part of its corporate social responsibility; Tata Steel invested in waste separation
project which ultimately resulted in earning the company twenty times of the amount
invested by selling this separated waste. This kind of utilisation of resources thus helps in
improving the financial performance by means of improved revenues.
3. Mahima Mehra of Haathi Chaap wanted to work in recycling, but not as NGO and she
ended up starting a business of handmade paper. As corporate social responsibility 8 % of
Haathi Chaaps profits go towards funding an elephant ambulance in Jaipur. Ultimately,
Haathi Chaaps paper making business is an enterprise born out of passion for recycling
(Bansal, Connect The Dots, 2010).

15 (Lala, 1992).
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4.

Aavishkaar Social Venture Fund supported rural entrepreneurs in India and today it
has 23 companies which generate profits, returns to investors and addresses an important
social cause simultaneously.

5. Rangasutra run by Sumita Ghose, a for profit venture; sources craft and textile from
villages and retails through Fabindia.
6. Through Ecosphere, Ishita Khanna promotes eco-tourism and berry processing resulting
into duel benefit of economic incentives to mountain folk and preservation of their
majestic heritage. (Bansal, I have a Dream, 2011).
7. Infosys Foundation, the philanthropic arm of Infosys Technologies Ltd., came into
existence on 4th December 1996 with the objective of fulfilling the social responsibility of
the company by supporting and encouraging the underprivileged sections of society. The
Foundation has undertaken various initiatives in providing medical facilities to remote
rural areas, organizing novel pension schemes and in aiding orphans and street children.
It has undertaken a large rural education program titled "A library for every school" under
which 5500 libraries have been set up in government schools spread across many
villages.
8. The Tata Memorial Centre is not just India's bestcancer hospital. It is a global centre of
excellence where 70 per cent of patients get free primary care. About 10 to 12 million
people the world over suffer from cancer. Almost 52 per cent of them are from
developing countries. In India 800,000 are diagnosed with this dreaded disease every
year.
9. IBM - Japan's 'e-elder' initiative is a national program using training materials and other
support from IBM Japan which will hire and train seniors as instructors for other seniors
in an effort to help elder citizens more fully participate in a Web-based society.

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10.

Microsoft works closely with international organizations such as the World Food
Programme, Save the Children, and Mercy Corps to provide technology-based
development assistance through the HEART (Humanitarian Empowerment and Response
through Technology) program.

11.

Lupin India Ltd, Indias third largest manufacturer of pharmaceuticals has started a
project for providing sustainable development in 154 villages across Rajasthan. The
scheme instead of providing forpiece-meal assistance that does not lead to effective
alleviation of poverty or adequate development is designed as a holistic action plan that
includes an Agricultural Income Generation Scheme, land cultivation and fruit plantation
programs, fodder preservation schemes, sericulture and water-recycling programs,
establishment of medical and educational centers, adult literacy programs and credit
schemes.

12.

Cipla, another Indian pharma major has found a novel approach to fulfill its corporate
social responsibility obligations by offering to sell a cocktail of three anti-HIV drugs,
Stavudine, Lamivudine and Nevirapine, to the Nobel Prizewinning voluntary agency
Medicine Sans Frontiers (MSF) at a rate of $350, and at $600 per patient per year to other
NGOs over the world. This offer has to led to an significant decrease in the prices of
these drugs worldwide increasing the accessibility of these drugs especially in the
developing countries.
13. Ranbaxy, one of Indias major pharmaceutical firms operates seven mobile healthcare
vans and two urban welfare centers that reach over a lakh people in various parts of
northern and central India as part of its corporate social responsibility initiative.
14. Tata Consultancy Services (TCS) has set up a fully equipped computer training
laboratory for children from the Society for the Welfare of the Physically Handicapped
and Research Centre, in Pune for imparting basic computer knowledge.

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15. NIIT has launched a highly popular hole-in-the-wall scheme where it places a computer
on a public wall in urban and rural areas so that neighborhood children can learn
computer basics using the play-way method.
16. Bharat Electronics Ltd has built cyclone proof houses for the victims of the super
cyclone in with the help of the victims themselves so that the houses are built according
to their needs.
17. Shantha Biotech recruits people who have hunger to do something for the country. The
company helped the underprivileged by crashing price of a vaccine from Rs. 750 to Rs.
50 and today the vaccine is sold for as little as Rs. 15. The employees here understand
that they all have a social obligation and they need to fulfill it.
18. Arvind Eye Hospitals paramedical staff is the key to the success of its business model.
The tenth standard pass girls are recruited from the villages and are trained for couple of
years and placed as nurses. These girls are found to be tremendously satisfied employees;
the satisfaction derived from helping people regain their sight and earn respect and
recognition in the community.
19. Ashok Leyland Operates a FunBus in Chennai and New Delhi. This bus, equipped with
a hydraulic lift, takes differently abled children and those from orphanages and
corporation primary schools on a days picnic. The company also runs AIDS awareness
and prevention programmes in its Hosur factories for about 3.5 lakh drivers.
20. Axis Bank through The Axis Bank Foundation runs Balwadis which are learning places
for children living in large urban slum clusters. It also conducts skill development
programmes (PREMA and Yuva Parivartan) in motor driving, welding, mobile repairing,
tailoring etc, for the youth in backward districts.
21. Bharat Petroleum Corporation Its rain water harvesting project Boond, in association
with the Oil Industries Development Board, selects draught-stricken villages to turn them

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from water-scarce to water-positive. Some of BPCLs other social programmes include
adoption of villages, prevention and care for HIV/AIDS and rural health care.
22. Hindalco Industries Its CSR activities are concentrated in 692 villages and 12 urban
slums, where it reaches out to about 26 lakh people. It has constructed check dams, ponds
and bore wells to provide safe drinking water. In education, it awards scholarships to
students from the rural schools it support. Its other interests include women s
empowerment and health care, in which it treats patients in hospitals, runs medical camps
and operates rural mobile medical van services.
23. Indian Oil Corporation It runs the Indian Oil Foundation (IOF), a non-profit trust,
which works for the preservation and promotion of the countrys heritage. IOCL also
offers 150 sports scholarships every year to promising youngsters. Some of its other
initiatives lie in the domains of clean drinking water, education, hospitals and health care.
24. Mahindra & Mahindra Nanhi Kali, a programme run by the KC Mahindra Education
Trust, supports education of over 75,000 underprivileged girls. The trust has awarded
grants and scholarships to 83,245 students so far. In vocational training, the Mahindra
Pride School provides livelihood training to youth from socially and economically
disadvantaged communities. M&M also works for causes related to environment, health
care, sports and culture.
25. Oil & Natural Gas Corporation It offers community-based health care services in rural
areas through 30 Mobile Medicare Units (MMUs). The ONGC-Eastern Swamp Deer
Conservation Project works to protect the rare species of Easter Swamp Deer at the
Kaziranga National Park in Assam. ONGC also supports education and women
empowerment.

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11. THE CSR PROCESS

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12.ISSUES AND CHALLENGES IN CSR

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 which is an opportunity for the
business.
Some of the drivers pushing business towards CSR include:
(a) 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.
(b) Demands for Greater Disclosure: There is a growing demand for corporate disclosure from
stakeholders, including customers, suppliers, employees, communities, investors, and activist
organizations.
(C)Increased Customer Interest
There is evidence that the ethical conduct of companies exerts a growing influence on the
purchasing decisions of customers. 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.
(D)Growing Investor Pressure
Investors are changing the way they assess companies' performance, and are making decisions
based on criteria that include ethical concerns. The Social Investment Forum reports that in the
US in 1999, there was more than $2 trillion worth of assets
invested in portfolios that used screens linked to the environment and social responsibility.
Employees are increasingly looking beyond pay checks and benefits, and seeking out employers
whose philosophies and operating practices match their own principles. In order to hire and
retain skilled employees, companies are being forced to improve working conditions.
( E)Supplier Relations
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As stakeholders are becoming increasingly interested in business affairs, many companies are
taking steps to ensure that their partners conduct themselves in a socially responsible manner.
Some are introducing codes of conduct for their suppliers, to ensure that other companies'
policies or practices do not tarnish their reputation.
The regulatory bodies often show leniency towards companies having strong social commitment
like Infosys and Tatas. One of the recent examples include the State Government of UP giving
exemptions to SA8000 certified companies. Banks, financial institutions and even venture
capitalists are now inclined to provide access to capital to companies committed socially. One of
the main reasons is that these companies are increasingly seen as lesser risky ones due to their
social obligation and environmental compliance. Reserve Bank of India recently asked banks to
look in the domain of sustainable development.

10. SCOPE OF CSR ACTIVITIES.

The Policy recognizes that corporate social responsibility is not merely compliance; it is a
commitment to support initiatives that measurably improve the lives of underprivileged by one
or more of the following focus areas as notified under Section 135 of the Companies Act
2013 and Companies (Corporate Social Responsibility Policy) Rules 2014:
i. Eradicating hunger, poverty & malnutrition, promoting preventive health care & sanitation &
making available safe drinking water;
ii. Promoting education, including special education & employment enhancing vocation skills
especially among children, women, elderly & the differently unable & livelihood enhancement
projects;
iii. Promoting gender equality, empowering women, setting up homes & hostels for women &
orphans, setting up old age homes, day care centers & such other facilities for senior citizens &
measures for reducing inequalities faced by socially & economically backward groups;
iv. Reducing child mortality and improving maternal health by providing good hospital facilities
and low cost medicines;
v. Providing with hospital and dispensary facilities with more focus on clean and good sanitation
so as to combat human immunodeficiency virus, acquired immune deficiency syndrome, malaria
and other diseases;

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vi. Ensuring environmental sustainability, ecological balance, protection of flora & fauna, animal
welfare, agro forestry, conservation of natural resources & maintaining quality of soil, air &
water;
vii. Employment enhancing vocational skills
viii. Protection of national heritage, art & culture including restoration of buildings & sites of
historical importance & works of art; setting up public libraries; promotion & development of
traditional arts & handicrafts;
ix. Measures for the benefit of armed forces veterans, war widows & their dependents;
x. Training to promote rural sports, nationally recognized sports, sports & Olympic sports;
xi. Contribution to the Prime Ministers National Relief Fund or any other fund set up by the
Central Government for socio-economic development & relief & welfare of the Scheduled
Castes, the Scheduled Tribes, other backward classes, minorities & women;
xii. Contributions or funds provided to technology incubators located within academic
institutions, which are approved by the Central Government;
xiii. Rural development projects, etc
xiv. Slum area development.
Explanation. For the purposes of this item, the term slum area shall mean any area declared
as such by the Central Government or any State Government or any other competent authority
under any law for the time being in force.
The Above list is illustrative not exhaustive. All activities under the CSR activities should be
environment friendly and socially acceptable to the local people and Society. Contribution
towards C.M relief fund shall be a part of CSR activities above 2% of Net profit other than the
activities mentioned above. Further Ministry of Corporate Affairs vide Notification dated
24.10.2014 increased the scope of contribution made towards Corporate Social Responsibility
Activities namely: Page 7 of 12
(i) In item (i), after the words "and sanitation", the words "including contribution to the Swach
Bharat Kosh set-up by the Central Government for the promotion of sanitation" shall be
inserted;
(ii) In item (iv), after the words "and water", the words "including contribution to the Clean
Ganga Fund set-up by the Central Government for rejuvenation of river Ganga" shall be
inserted.
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4. SCOPE
A Education.
i) Support Technical /Vocational Institutions for their self -development.
ii) Academic education by way of financial assistance to Primary, Middle and Higher Secondary
Schools.
iii) Adult literacy amongst those belonging to BPL.
iv) Awareness Programmes on girl education.
v) Counseling of parents
vi) Special attention on education, training and rehabilitation of mentally & physically
challenged children/persons.
vii) Spreading legal awareness amongst people and disadvantageous sections of the society about
their rights & remedies available.
viii) Promotion of Professional Education by setting up educational Institutions offering courses
in Engg, Nursing, Management,
ix) Medicine and in Technical subjects etc.
x) Provide fees for a period of one year or more to the poor and meritorious, preferably girl
students of the school in the operational area of the Company to enable them to get uninterrupted
education.
B Water Supply including Drinking Water:
i) Installation/Repair of Hand Pumps/Tube Wells.
ii) Digging/Renovation of Wells.
iii) Gainful utilization of waste water from Under -ground Mines for Cultivation or any other
purpose.
iv) Development/construction of Water Tank/Ponds.
v) Rain water-harvesting scheme.
vi) Formation of a Task Force of Volunteers to educate people regarding
vii) Proper use of drinking water.
viii) Empowerment to the villagers for maintenance of the above facilities for availability of
water.

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C. Health Care organizing, health awareness Camps on
i) AIDS TB and Leprosy
ii) Social evils like alcohol, smoking, drug abuse etc.
iii) Child and Mother care
iv) Diet and Nutrition.
v) Blood donation camps.
vi) Diabetics detection & Hypertension Camps
vii) Family Welfare.
viii) Senior Citizen Health Care Wellness Clinics.
ix) Fully equipped Mobile Medical Vans.
x) Tele medicine
xi) To supplement the different programme of Local/State Authorities.
xii) Along with De addiction centers
D. Environment
i) Organizing sensitizing programmes on Environment Management and
ii) Pollution Control.
iii) Green belt Development
iv) A forestation, Social Forestry, Check Dams, Park.
v) Restoration of mined out lands.
vi) Development of jobs related to agro product i.e., Dairy/Poultry/farming and others.
vii) Plantation of saplings producing fruit.
viii) Animal care.
E. Social Empowerment.
i) Self /Gainful Employment Opportunities Training of Rural Youth for Self Employment
(TRYSEM) on Welding, Fabrication, and other Electronic appliances.
ii) To provide assistance to villagers having small patch of land to develop mushroom farming,
medicinal plants, farming & other cash crops to make them economically dependent on their
available land resources.
iii) Training may be provided by agricultural experts for above farming.
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iv) Organizing training programmes for women on tailoring Embroidery designs,
v) Home Foods/Fast Foods, Pickles, Painting and Interior Decoration and other
vi) Vocational Courses.
vii) Care for senior citizens.
viii) Adoption/construction of Hostels (specially those for SC/ST &girls)
ix) Village Electricity/Solar Light
x) To develop infrastructural facilities for providing electricity through Solar Lights or
alternative renewal energy to the nearby villages. Recurring expenditure should be borne by the
beneficiaries.
xi) Pawan Chakki as alternative for providing electricity in villages, etc.
F Sports and Culture
i) Promotion of Sports and Cultural Activities for participation in State and National level.
ii) Promotion/Development of sports activities in nearby villages by conducting Tournaments
like Football, Kabaddi and Khokho, Cricket etc.
iii) Providing sports materials for Football, Volleyball, Hockey sticks etc. to the young and
talented villagers.
iv) Promotion of State level teams.
v) Sponsorship of State Sports events in Bihar.
vi) Sponsorship of Cultural event to restore Indian Cultural Traditions and Values.
vii) Possibility of providing facilities for physically handicapped persons may be explored.
viii) Medias for preparing of documentary films.
ix) Guide-lines to be followed to promote sports activities by way of granting financial
assistance/donation/sponsorship etc.
x) Registered Clubs/Institutions which promote Sports activities may be granted financial
assistance/donations/sponsorship based on the following norms:1) Sports talent development programme by Clubs/Institutions may be encouraged provided the
proposal is routed through the respective Government Authorities/Block Development
Office/Sub-Divisional Office/District Office/State Associations/ local people representatives i.e.
Panchayat , Pradhan/Mukhiya/MLA/MP/ Minister etc., to ascertain bonafide objective, status of
activities and contribution to the society.
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2) Helping State Government in promotion of sports by providing them proper training facilities,
grounds, construction of fields,etc.
3) While sanctioning financial assistance/donation/sponsorship for State/ National/International
events, Company could send its representatives to ensure proper utilization of fund for the
specific purpose, as well as, to ensure publicity/coverage for corporate image building.
4) As per the Government policy for payment of financial assistance/donation/ sponsorship
Registered Clubs/Institution will furnish details as required by Company. i.e. their Registration,
PAN No. etc. to establish their authenticity.
xi) Generate self-employment.
xii) Infrastructure Support construction, repair, extension etc. of:i. Auditorium,
ii. Educational Institutions
iii. Rural Dispensaries initiated by reputed NGOs.
iv. Mobile Crches.
v. Bridges, Culverts & Roads,
vi. Check Dam
vii. Shopping Complex to facilitate business/self employment for local people
viii. Community Centre,
ix. Sulabh Souchalaya,
x. Yatri Shed in Bus Stand,
xi. Burning Ghat/Crematorium
xii. Development of Park
xiii. Play ground/Sports complex
xiv. Old Age Home.

10. THE WAY FORWARD

The World Business Council for Sustainable Development has noted that a coherent CSR strategy
based on integrity, sound values and a long term approach offers clear business benefits to
companies and contributes to the well being of society.

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The originally defined concept of CSR needs to be interpreted in the broader conceptual
framework of how the corporate embed their corporate values as a new strategic asset, to build a
basis for trust an cooperation within the wider stakeholder community.
Though there have been evidences that record a paradigm shift from charity to a long term
strategy, yet the concept still is believed to be strongly linked to philanthropy. There is a need to
bring about an attitudinal change in people about the concept. By having more coherent and
ethically driven discourses on CSR, it has to be understood that CSR is about how corporate place
their business ethics and behaviors to balance business growth and commercial
success with a positive change in the stakeholder community .
Several corporate today have specific departments to operationalize CSR. There are either
foundations or trusts or a separate departments within an organization that looks into
implementation of practices.
Being treated as a separate entity, there is always aflexibility and independence to carry out the
tasks.
But often these entities work in isolation without creating a synergy with the other department of
the corporate. There is a need to understand that CSR is not only a pure management directive but
it is something that is central to the company and has to be embedded in the core values and
principles of the corporate.
Whatever corporate do within the purview of CSR has to be related to core business. It has to
utilize things at which corporate are good: it has to be something that takes advantage of the core
skills and competencies of the companies. It has to be a mandate of the entire organization and
its scope does not simply begin and end with one department in the organization. While
conceptualization and implementation seem firmly underway, evaluation is still taking a back
seat. There is a need to incorporate an evaluation plan, which along with presenting a scope of
improvement in terms of fund utilization and methodology adopted for the project, measure the
short and long term impact of the practices.
While there have been success stories of short term interventions, their impact has been limited
and have faded over a period of time. It is essential for corporate to adopt a long term approach
rather than sticking to short term interventions, involving the companies and employees in the
long term process of positive social transition.

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A clearly defined mission and a vision statement combined with a sound implementation strategy
and a plan of action firmly rooted in ground realities and developed in close collaboration with
implementation partners, is what it takes for a successful execution of
CSR.
An area that can be looked upon is the sharing of best practices by corporate. A plausible
framework for this could be benchmarking. While benchmarking will help corporate evaluate
their initiatives and rank them, it will also provide an impetus to others to develop similar kind
practices. Credibility Alliance, a consortium of voluntary organization follows a mechanism of
accreditation for voluntary sector. Efforts have to be directed towards building a similar kind of
mechanism for CSR as well.
Sustainable development. Like building a successful business, requires taking the long term
view. The KPMG International Survey of Corporate Responsibility Reporting 2005 showed that
voluntary reporting on sustainability is on the increase across all the countries. Sustainability
Reporting is emerging as a key vehicle to implement CSR and measure its progress in
organizations.
As we move forward, increasing numbers of companies are expected to issue Sustainability
Reports, with the scope of issues broadening from purely environmental reporting to a more
comprehensive coverage of the environmental, social and economic dimensions.

CONCLUSION
The concept of corporate social responsibility has gained.Organizations must realize that
government alone will not be able to get success in its endeavor to uplift the downtrodden
of society. The present societal marketing concept of companies is constantly evolving
and has given rise to a new concept-Corporate Social Responsibility.
Many of the leading corporations across the world had realized the importance of being
associated with socially relevant causes as a means of promoting their brands. It stems
from the desire to do well and get self-satisfaction in return as well as societal
obligation of business.Most of the companies throughout the world had accepted that
business is not just for making money and this is evident through their involvement in
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various community developmental activities. Many Business firms had realized the
importance of using business ethics as a tool for retaining customers and increasing its
market share by highlighting the initiatives it has taken for providing a clean environment
for the society. Also some companies started using the CSR as a strategy, which aims at
mutual development of company and the community simultaneously. The companies act
allows for a wide range of activities to be conducted for the CSR which enables the firm
to spend on the cause it relates to. Wider scope also means more variety for the people so
its a win win situation for all. Community as a stakeholder stands to gain and has
definitely gained from the mandatory2% CSR expenditure.

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