Project On

Corporate Social Responsibility

Submitted to

Rishika singh Gaharwar

Gaharwar and associates

submitted by

Bhavana khatwani

Semester- 2nd

Hidaytullah National Law University

 Corporate Social Responsibility
Introduction

Companies beside doing their business are expected to perform their social activities. The
companies should have impact on society at large. Performing social activities have great
benefits such as satisfied employees and improving reputation etc. Corporate Social
Responsibility is a management concept whereby companies integrate social and environmental
concerns in their business operations and interactions with their stakeholders. CSR is defined
and explained in companies act 2013.

Definition

Corporate social responsibility has been defined differently by different writers based on what
they perceive about the concept. Having learnt from the devastating effects of corporate social
irresponsibility, companies are focusing on the impacts of their operations not only on profits but
the society and environment at large. Therefore, corporate social responsibility refers to

"the ethical principle that an organization should be responsible for how its behaviour might
affect society and the environment"

Explaination-

Corporate Social Responsibility is a management concept whereby companies integrate social

and environmental concerns in their business operations and interactions with their stakeholders.
CSR is generally understood as being the way through which a company achieves a balance of
economic, environmental and social imperatives Corporate Social Responsibility is a concept
which has become dominant in business reporting. Every corporation has a policy concerning
CSR and produces a report annually detailing its activity. And of course each of us claims to be
able to recognise corporate activity which is socially responsible and activity which is not
socially responsible.
There are two interesting pints about this:
firstly we do not necessarily agree with each other about what is socially responsible;
secondly although we claim to recognise what it is or is not when we are asked to define it then
we find this impossibly difficult.
Example: Xerox

The printing giant offers many programs supporting corporate social responsibility.
Their Community Involvement Program encourages it by directly involving employees. Since
1974, more than half a million Xerox employees have participated in the program. In 2013 alone,
Xerox earmarked more than $1.3 million to facilitate 13,000 employees to participate in
community-focused causes. The return for Xerox comes not only in community recognition, but
also in the commitment employees feel when causes they care for are supported by their
employers.

CSR in India has traditionally been seen as a philanthropic activity. And in keeping with the
Indian tradition, it was an activity that was performed but not deliberated. As a result, there is
limited documentation on specific activities related to this concept. However, what was clearly
evident that much of this had a national character encapsulated within it, whether it was
endowing institutions to actively participating in Indias freedom movement, and embedded in
the idea of trusteeship.

However the practice of CSR in India still remains within the philanthropic space, but has moved
from institutional building (educational, research and cultural) to community development
through various projects.

Few broad categories of corporate social responsibility-

1. Environmental efforts: One primary focus of corporate social responsibility is the

environment. Businesses regardless of size have a large carbon footprint. Any steps they can take
to reduce those footprints are considered both good for the company and society as a whole

2. Philanthropy: Businesses also practice social responsibility by donating to national and local
charities. Businesses have a lot of resources that can benefit charities and local community
programs.

3. Ethical labor practices: By treating employees fairly and ethically, companies can also
demonstrate their corporate social responsibility. This is especially true of businesses that operate
in international locations with labor laws that differ from those in the United States.

4. Volunteering: Attending volunteer events says a lot about a company's sincerity. By doing
good deeds without expecting anything in return, companies are able to express their concern for
specific issues and support for certain organizations.

Why CSR matters

As the business environment gets increasingly complex and stakeholders become vocal about
their expectations, good CSR practices can only bring in greater benefits, some of which are as
follows:

Communities provide the licence to operate: Apart from internal drivers such as values and
ethos, some of the key stakeholders that influence corporate behaviour include governments,
investors and customers. In India, a fourth and increasingly important stakeholder is the
community, and many companies have started realising that the licence to operate is no longer
given by governments alone, but communities that are impacted by a companys business
operations. Thus, a robust CSR programme that meets the aspirations of these communities not
only provides them with the licence to operate, but also to maintain the licence, thereby
precluding the trust deficit.

Attracting and retaining employees: Several human resource studies have linked a companys
ability to attract, retain and motivate employees with their CSR commitments. Interventions that
encourage and enable employees to participate are shown to increase employee morale and a
sense of belonging to the company.

Communities as suppliers: There are certain innovative CSR initiatives emerging, wherein
companies have invested in enhancing community livelihood by incorporating them into their
supply chain. This has benefitted communities and increased their income levels, while
providing these companies with an additional and secure supply chain.

Enhancing corporate reputation: The traditional benefit of generating goodwill, creating a

positive image and branding benefits continue to exist for companies that operate effective CSR
programmes. This allows companies to position themselves as responsible corporate citizens.

Examples of cases where due to non-performance of corporate social responsibility loss has
occurred-

1. Bhopal Gas Tragedy

The Bhopal disaster, also referred to as the Bhopal gas tragedy, was a gas leak incident
in India, considered the world's worst industrial disaster thje main cause of Bhopal gas
tragedy was the negligence of corporate social responsibility as for
1. Management underinvested in safety, which allowed for a dangerous working
environment to develop.
2. Factors cited include the filling of the MIC tanks beyond recommended levels, poor
maintenance after the plant ceased MIC production at the end of 1984, allowing
several safety systems to be inoperable due to poor maintenance
 3. switching off safety systems to save money including the MIC tank refrigeration
system which could have mitigated the disaster severity, and non-existent catastrophe
management plans
4. Other factors identified by government inquiries included undersized safety devices
and the dependence on manual operations
5. Specific plant management deficiencies that were identified include the lack of
skilled operators, reduction of safety management, insufficient maintenance, and
inadequate emergency action plans.

2. The Volkswagen-
The Volkswagen case represents above all an absolute failure in terms of Corporate
Social Responsibility (CSR). The company deliberately set out to design a means to
circumvent emissions controla stratagem known at the highest levelswith the aim of
giving the company an unfair advantage; meanwhile it was poisoning the planet. Car of
volkswagen poisoned the planet by emitting 40 times the legal limit of nitrogen oxide.
which is the violation of corporate social responsibility.
3. The Unilever-
Unilever settled with almost 600 workers in India over mercury exposure from a now
closed thermometer plant following a 2006 lawsuit over exposure to the toxic element.
exposed sexual harassment claims from African workers that said they had to bribe
supervisors to stop them from unwanted advances. The CEO Polmans efforts to address
the sexual harassment claims were not universally accepted by NGOs. Hence Due To
Which it suffered a great loss.

Purpose of CSR

1 Corporate social responsibility (CSR) covers the responsibilities corporations have to the
societies within which they are based and operate.

2 The aim is to increase long-term profits and shareholder trust through positive public
relations and high ethical standards to reduce business and legal risk by taking
responsibility for corporate actions.
 3 CSR involves a business identifying its stakeholder groups and incorporating their needs
and values within the strategic and day-to-day decision-making process. Therefore, a
business' 'society' within which it operates, which defines the number of stakeholders to
which the organization has a 'responsibility,' may be broad or narrow depending on the
industry in which the firm operates and its perspective.

4 CSR is a corporate philosophy that drives strategic decision-making, partner selection,

hiring practices and, ultimately, brand development.

5 CSR is about businesses and other organizations going beyond the legal obligations to
manage the impact they have on the environment and society. In particular, this could
include how organizations interact with their employees, suppliers, customers and the
communities in which they operate, as well as the extent they attempt to protect the
environment.

6 CSR is a means of analyzing the inter-dependent relationships that exist between

businesses and economic systems, and the communities within which they are based.

7 CSR is a means of discussing the extent of any obligations a business has to its
immediate society and also a way of proposing policy ideas on how those obligations can
be met as well as a tool by which the benefits to a business for meeting those obligations
can be identified.

The Companies Act 2013

The Companies Act, 2013 In India, the concept of CSR is governed by clause 135 of the
Companies Act, 2013, which was passed by both Houses of the Parliament, and had received the
assent of the President of India on 29 August 2013. The CSR provisions within the Act is
applicable to companies with an annual turnover of 1,000 crore INR and more, or a net worth of
500 crore INR and more, or a net profit of five crore INR and more. The new rules, which will be
applicable from the fiscal year 2014-15 onwards, also require companies to set-up a CSR
committee consisting of their board members, including at least one independent director. The
Act encourages companies to spend at least 2% of their average net profit in the previous three
years on CSR activities. The ministrys draft rules, that have been put up for public comment,
define net profit as the profit before tax as per the books of accounts, excluding profits arising
from branches outside India. The Act lists out a set of activities eligible under CSR. Companies
may implement these activities taking into account the local conditions after seeking board
approval. The indicative activities which can be undertaken by a company under CSR have been
specified under Schedule VII of the Act.

The draft rules (as of September 2013) provide a number of clarifications and while these are
awaiting public comment before notification, some the highlights are as follows:

Surplus arising out of CSR activities will have to be reinvested into CSR initiatives, and this
will be over and above the 2% figure

The company can implement its CSR activities through the following methods: - Directly on
its own - Through its own non-profit foundation set- up so as to facilitate this initiative -
Through independently registered non-profit organisations that have a record of at least three
years in similar such related activities - Collaborating or pooling their resources with other
companies

Only CSR activities undertaken in India will be taken into consideration

Activities meant exclusively for employees and their families will not qualify

A format for the board report on CSR has been provided which includes amongst others,
activity-wise , reasons for spends under 2% of the average net profits of the previous three years
and a responsibility statement that the CSR policy, implementation and monitoring process is in
compliance with the CSR objectives, in letter and in spirit. This has to be signed by either the
CEO, or the MD or a director of the company

Need of CSR

Better Public Image:

Each firm must enhance its public image to secure more customers, better employees and
higher profit. Acceptance of social responsibility goals lead to improve public image.
Conversion of Resistances Into Resources:
If the innovative ability of business is turned to social problems, many resistances can be
transformed into resources and the functional capacity of resources can be increased
many times.
Long Term Business Interest:
A better society would produce a better environment in which the business may gain long
term maximization of profit. A firm which is sensitive to community needs would in its
own self interest like to have a better community to conduct its business. To achieve this
it would implement social programmes for social welfare.
 Avoiding Government Intervention
Regulation and control are costly to business both in terms of money and energy and
restrict its flexibility of decision making. Failure of businessmen to assume social
responsibilities invites government to intervene and regulate or control their activities.
The prudent course for business is to understand the limit of its power and how to use
that power carefully and responsibly thereby avoiding government intervention.
Changing social expectations: Consumers and society in general expect more from the
companies whose products they buy.
Increasing affluence: 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.
Globalization: Growing influence of the media sees any mistakes by companies brought
immediately to the attention of the public.

Benefits of Corporate Social Responsibility

1. Productivity and Quality: Improved working conditions, reduced environmental

impacts or increased employee involvement in decision making which leads to
increased productivity and defective rate in a company.
2. Improved Financial Performance: Socially responsible business are linked to
positive financial performances. Improved financial results are attributed to stable
socio political legal environment, enhanced competitive advantage through better
corporate reputation and brand image, improved employee recruitment, retention
and motivation and a more secure environment to operate in.
3. Brand Image And Reputation:
A company considered socially responsible can benefit both from its enhanced
reputation with the public as well as its reputation within the business community,
increasing the companys ability to attract trading partners.
4. Access To Capital: The growth of socially responsible investing concept means
companies with strong CSR performance have increased access to capital that might
not otherwise have been available.
5. 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.
6. Risk management: Managing risk is a central part of many corporate strategies.
Reputation as take decades to build up can be ruined in hours through incident such
as corruption scandals or environmental accident. These can draw unwanted
attention from regulators, courts, governments & media. Building a genuine culture
of doing the right thing within a corporation can offset these risk.
7. 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.
8. 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 health & safety, diversity, or the
environment seriously as good corporate citizen for positive impact on the
environment.
9. Risk management: Managing risk is a central part of many corporate strategies.
Reputation as take decades to build up can be ruined in hours through incident such
as corruption scandals or environmental accident. These can draw unwanted
attention from regulators, courts, governments & media. Building a genuine culture
of doing the right thing within a corporation can offset these risk
10. 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.
11. 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 health & safety, diversity, or the
environment seriously as good corporate citizen for positive impact on the
environment

Implementation of CSR

CSR strategy is the cornerstone of the business mandate and affects the bottom-line. It should
enhance reputation, build positive ties to communities, customers and the public at large. An
excellent CSR strategy should therefore showcase sustainable, effective and impactful social
responsibility campaigns. However, how can this be achieved?

1. Undertake research

Organizations need to align social responsibility strategy to business goals. CSR should create
business value by supporting initiatives that personify the business. It is not about giving
money away but rather about meeting specific societal needs aligned to the company mandate.
Research is important to define what an organization stands for. Leadership should involve all
key stakeholders in outlining the areas of focus - ultimately the process ensures buy-in.
2. Manage resources

Once the key areas of focus have been identified, it is easier to determine a realistic budget to
meet recommendations stemmed from research. Resource management is key when disbursing
funds, accounting reports should be submitted to Finance as the reporting cycle dictates.

4. Develop CSR guidelines and criteria

A robust policy ensures that criteria and methods for an effective program are in place. This
will allow the organization to avail resources and information needed to support the operation
and monitoring of the program.

5. Conceive and Initiate

A corporate social responsibility program is never one-size-fits-all. While crafting a program,
it is important to keep the Three Pillars of Sustainability in the forefront: People, Planet and
Profit. Create opportunities and multiple ways for employees and other stakeholders to engage
with the program. Incorporate opportunities across a wide spectrum of engagement that include
volunteer days, traditional giving, recycling events, peer to peer fundraising, and disaster
assistance. Consider taking your CSR program a step further and incorporate cause marketing
into the program. Integrate your companys products within the program, and take this as an
opportunity to initiate commitments to supply chains and production processes. Consider
where and how it makes sense for your company to make a socially responsible and
environmentally impactful investments and how to involve your companys employees and
leadership in that investment.

6. Commit and Implement

Once the concept and details of the CSR program have been determined, its up to you to prove
its value in terms of triple bottom line results for your company. This requires assessing and
measuring your programs impact. Develop a link between your social responsibility program
and your companys business results. How does your cause driven program impact your
companys sales, customer satisfaction, employee and brand loyalty, and market access? Prove
that your program positively impacts the company reputation and the overall profitability.
Track, measure, and communicate the impact that your program is making on the social,
environmental, and economic factors

7. Establish Governance structure

A CSR audit to measure, monitor and evaluate the program is a must. The subsequent report
should be published for accountability. This process legitimizes an organizations involvement
 in corporate citizenry

8. Communicate and Inspire

For any corporate program to succeed, the program needs endorsement and acceptance from the
top management. A corporate social responsibility program is no different. Communicating the
impact and successes of your program to the top levels of your organization is critical.
Communicate frequently about the programs progress and accomplishments, and also be sure
to convey the programs impact to the companys triple bottom line. Convince leadership to
inspire employees and other stakeholders to make cause a priority, and encourage employees
to participate and get each other involved. Track and share program outcomes and impact with
employees, customers, community members, and program beneficiaries to build program
recognition, loyalty, and momentum. The success of the program is all about inspiration and
participation.

Conclusion-

We can conclude that CSR is a great need for companies to grow in society. CSR involves
various social activities done by companies other than the business and profits activities. The
CSR envisages that the group evolves and executes strategies to support communities in
partnership with governments, civil society and relevant stakeholders. It can be implemented
with a due process. And performing CSR activities can greatly help you to improve your
company reputation employees satisfaction human resources etc however not adopting corporate
social responsibility can prove harmful for company.