[Corporate Social Responsibility and Human Rights]

By
Group - 6
[WMP6068 Amarpal Singh
WMP6069 Ambar Ashraf
WMP6070 Ankush Gupta
WMP6077 Chetan Kumar Bhatt
WMP6082 Gaurav Sehgal
WMP6094 Parul Kumar Bhatia
WMP6116 Vijender Singh]
A report submitted in fulfillment of the assignments for
[LAM]

WMP 2013

Indian Institute of Management, Lucknow

Noida Campus
2010

Date: [19-12-2010]
 Table of Contents

Corporate Social Responsibility and Human Rights

I. Introduction

Corporate Businesses in contemporary age of globalisation and consumerism

has developed new strategies to survive and prosper. One of them is
leveraging Social Issues associated with Human Rights. The earlier charity
followed by philanthropic attitude towards social causes has now given way to
concerted efforts to develop goodwill and human values in business activities.
This concept is termed as corporate social responsibility (CSR) and may be
defined “as the additional commitment by Corporate Businesses to improve
the social and economic status of various stakeholders involved while
complying with all legal and economic requirements”. Warhust (2001)1 points
out the three major elements of CSR as

i) product use which focuses on contribution of industrial

products which help in well being and quality of life of the
society,

ii) business practice which focuses on good corporate

governance and gives high impetus for the environmental
well being and

iii) equity which tries for distribution of profits equitably across

different societies especially the host community.

The increase in competition among the multinational companies to gain first

mover advantage in various developing countries by establishing good
relationships with both the state and the civil society is a clear manifestation of
this transformation. Also, in most of the emerging markets, the state still holds
the key to business success because of the existence of trade and business
regulations, restricting the freedom of multinational companies to employ their
previously successful business doctrines which have been tried and tested in
the developed nations. The state responsible for protecting the interests of the

1
Warhurst, A., 2001. Corporate citizenship and corporate social investment: drivers of tri-
sector partnerships. Journal of Corporate Citizenship, Spring, 57-73.
general public prefer the companies willing to take care of the interests of all
the stakeholders. The emerging markets are the source of immense talent
with the rising levels of education and expertise. For example, the expertise of
India in churning out software professionals and China in manufacturing is
now internationally acclaimed. In order to draw from this vast talent pool
coming up in developing countries, companies need to gain a foothold in
these markets by establishing sound business practices addressing social
and cultural concerns of the people. It has been observed that consumers
consider switching to another company's products and services, speak out
against the company to family/friends, refuse to invest in that company's
stock, refuse to work at the company and boycott the company's products and
services in case of negative corporate citizenship behaviours (Edenkamp,
2002)2.

There are many reasons why it pays for companies, both big business and
SMEs (small and medium enterprises) to be socially responsible and be
conscious about the interest of the key stakeholders.
1. Getting license to operate– from key stakeholders not just shareholders
2. Sustainable Competitiveness (Enhancing Reputations and Brands,
More Efficient Operations, Improved Financial Performance, Increased
Sales and Customer Loyalty, Increased Ability to Attract and Retain
Quality Employees)
3. Creating New Business Opportunities
4. Attracting and Retaining Quality Investors and Business partners
5. Cooperation with Local Communities
6. Avoiding Crisis Due to CSR Misconduct
7. Government Support

8. Building Political Capital etc.

The Corporate Businesses all over the world are beginning to grasp the
importance of intangible assets like brand name and employee morale. Only
firms who are able to garner the goodwill of general public and are ideal

2
Edenkamp, P (2002). Insights into how consumers are thinking, how they are acting and
why, Brandweek, Vol. 43, Issue 36, pp 16 -20.
corporate citizens can develop these intangible assets into strategic
advantages.

II. Status of CSR

In today’s world, CSR has been embraced as an integral part of corporate
policy by business houses existing internationally or nationally.
Triple bottom line
Business focus their attention on maximizing value added across the three
dimensions of sustainability:
• Economic bottom line:
Although main emphasis is on financial performance, this often refers
not only to profit but to the philosophies behind a company's strategy or
behavior, the sustainability of its businesses and its 'human capital”.
• Environmental bottom line
The impact of its products or operations on the environment, plus the
nature of its emissions and waste and how it is dealing with them.
• Social bottom line
How it approaches issues such as ethnic and gender diversity, working
hours and wages, staff security and its contribution to community services or
facilities.

With help from the consulting industry who provide triple bottom line advisory
services to businesses, more and more companies are reporting on their triple
bottom line performance.

Socially Responsible Investing (SRI):

Considering investor's financial needs and an investment’s impact on society,
the money for CSR can be put to work to build a better tomorrow while
earning competitive returns today. Social investors include individuals and
institutions such as corporations, universities, hospitals, foundations,
insurance companies, pension funds, nonprofit organizations, churches and
synagogues.

International Status:
The MNCs are taking following CSR issues :-
• Code of ethics – These are written guidelines issued by an
organisation to its workers and management to help them conduct their
actions in accordance with its primary values and ethical standards.
• Compliance with local laws
• Developing the employees
• Human rights sensitivity
• Health and safety
• HIV/AIDS
• Partnership with community or community engagement
• Stakeholder consultation
• Climate change, Energy efficiency and renewable

We will take the example of NOKIA.3

Nokia having a billion users all over the world, contribute to the global
community by taking sustainability into account in all operations, products and
services. Their corporate responsibility agenda is framed around the values of
being very human, engaging everyone, innovation and achieving together.
Through their products they provide opportunities for improving people's
livelihoods and encouraging them to embrace a more sustainable lifestyle.

Access to mobile and digital technology is an important driver of social and

economic development, both in the developed and the developing world.
Mobile phones offer far more than the ability to make calls. Billions of people
in the developing world live in remote and rural communities without access to
healthcare or education, transport and up to date news - let alone banking or
financial services. Mobile phone networks have the potential to transform the
delivery of these services and make them available to many more people.

3
http://www.nokia.com/corporate-responsibility
Their strategy focuses on two major areas: using mobile communications to
stimulate social and economic development, and working to achieve
education for all, particularly young people.

They are involved in many programmes that specifically target young people –
be it through formal education or improving their life skills more generally.
Supporting such programmes also has a wider social impact, as they directly
benefit teachers, parents, and other members of the community.

They have incorporated greater usability in design and services for customers
with disabilities.

Mobile communications has the potential to lift some of the most vulnerable
populations out of poverty and enable them to engage fully with the global
digital community. Affordable mobile communications are now a reality in
many countries. Serving lower-income consumers has not only proved to
change lives and create wide socio-economic benefits, it has also led to
profitable business. Studies indicate that an increase of 10 mobile phones per
100 people boosts economic growth by 1.2 percent. Typically, people are
willing to spend between 5 percent and 10 percent of their disposable income
on mobility. With 2.7 billion people earning less than two US dollars per day, a
monthly cost of five US dollars or less is needed to enable the majority of the
world’s lower-income consumers to join the mobile community. Nokia
research shows that emerging market average total cost of ownership (TCO)
is 10.88 US dollars, down from 13.16 US dollars in 2007. Although much
remains to be done to lower TCO still further, this is a huge advance in
increasing the potential to reach more and more consumers every day.

• Partnership with community or community engagement

Nokia’s main focus is on education for all, and the various youth projects we
are involved in also further this goal.

Generally implemented in cooperation with local non-governmental

organisations, the projects provide a means of achieving important youth
development outcomes, such as improved performance in school, increased
literacy, finding and maintaining employment, and active citizenship.
Cooperation with youth organisations like

International Youth Foundation

Nokia’s youth life skills initiative with the International Youth Foundation
continues to deliver benefits to youth and communities in numerous countries.
The IYF believes in the extraordinary potential of young people, investing in
effective programs around the world that prepare today’s youth to be healthy,
productive, engaged citizens. The partnership programs with Nokia are
tailored to harness the power of technology to improve education, promote the
spirit of youth volunteerism, and equip unemployed youth with valuable skills
and access to jobs.

YouthActionNet leadership program

Nokia is the founding sponsor of the YouthActionNet leadership program

aimed at reaching young people who are leading societal change.

PLAN

Nokia continues to partner with the international child-centered development

organization, Plan, to empower young people to communicate about issues
that are important to them and to raise awareness of their rights and
opportunities.

Employability

Nokia supports the Entra21 initiative to help youth in Latin America and the
Caribbean get employment training and job placement services, so they can
increase their employability and improve their access to jobs. The project
focuses on training, job counselling and helping young people articulate and
present their skills so that they could gain access to better quality jobs.

Nokia employees have the opportunity to volunteer as mentors and lecturers

depending on their professional experience.

Creative arts
The Dreams Workshop program, run by the Educational Volunteers
Foundation of Turkey, provides disadvantaged Turkish children with quality
non-formal education, while training older youth to serve as volunteer mentors
and teachers. The children have also learnt about the importance of
environmental protection and recycling, by making artwork out of waste
products.

Nokia also supports various efforts to enable young people to create music
and learn about technology.

The Going Further project in Senegal utilises music, radio and ICT in its aim
to promote youth rights. Artists and child rights professionals teach young
people how to produce songs and concerts professionally while raising
awareness of children's rights. It also aims to set up multimedia spaces in
science and technology schools to increase the use of ICT in education, and
provides ICT learning resources to thousands of students.

In California, the Bay Unity Music Project (BUMP) lends the help of
professional instructors to youth so they can learn to compose music and
lyrics, DJ, produce and record music, using industry-standard technology.
BUMP producers also get hands-on entrepreneurship training and experience
in producing, branding and promoting albums. Participants can use music
production software and a professional-quality rehearsal and recording space
free of charge.

Civic engagement

Even after Romania’s transition to democracy, the population remains

somewhat distrustful of the civic and political involvement of youth. Soon after
setting up a production site in Cluj-Napoca, Nokia decided to support civic
engagement of local youth through a partnership with Romanian organization
The New Horizons Foundation. The program inspires young people aged 12-
18 to develop their life, leadership and citizenship skills through service
learning.

• Developing the employees

Volunteering is an important part of global corporate responsibility approach.
Thousands of employees contribute their time and effort to worthy causes in
their communities. The employees can take one to two working days per year
as a Nokia Helping Hands day. Through this, employees can go out into the
community and contribute to a good cause.

• Stakeholder consultation

Nokia encourage their supplier companies to take a similar ethical business

approach and to demonstrate progress and achievements in these areas as
well as in educating and overseeing the practices of their own suppliers.

The principles that underline their approach are:

• Integrating sustainable practices into business - The aim is to

ensure that environmental, ethical, health and safety issues, as well as
labour practices, are not separate add-on features. They are
embedded within all sourcing processes, including supplier selection
and relationship development.
• Close co-operation – They work in close co-operation with customers
and suppliers. It allows end-to-end efficiency and speed – key success
factors for the entire supply chain. They also engage with other
stakeholders such as non-governmental organisations, governmental
organisations and industry associations to look at supply chain issues
from an industry perspective.
• Climate change, Energy efficiency and renewable

In 2009, Nokia continued to reduce the environmental impact of its mobile

devices and operations. Nokia reduced the CO2 emissions of its own facilities
by 12 percent, compared with levels in 2006. During 2009, the company also
reached its 2012 energy savings target ahead of schedule.

National Status :
We cite the example of flagship petroleum refiner IndianOil Corporation Ltd 4,
a Central Public Sector enterprise of Mahanavratna Status.

4
http://www.iocl.com/Aboutus/corporatesocialresponsibility.aspx
 At IndianOil, corporate social responsibility (CSR) has been the
cornerstone of success right from inception in the year 1964. The
Corporation’s objectives in this key performance area are enshrined in its
Mission statement: "…to help enrich the quality of life of the community and
preserve ecological balance and heritage through a strong environment
conscience."

IndianOil has set core values as – Care, Innovation, Passion and Trust – to
guide in all their activities. They take pride in being able to claim that all
countrymen are their customers. Public corporations like IndianOil are
essentially organs of society deploying significant public resources. They
strive to work as wholesome entities created for the good of the society and
for improving the quality of life of the communities we serve.

As a constructive partner in the communities in which it operates, IndianOil

has been taking concrete action to realise its social responsibility objectives,
thereby building value for its shareholders and customers. The Corporation
respects human rights, values its employees, and invests in innovative
technologies and solutions for sustainable energy flow and economic growth.
In the past five decades, IndianOil has supported innumerable social and
community initiatives in India. Touching the lives of millions of people
positively by supporting environmental and health-care projects and social,
cultural and educational programmes.

Besides focusing primarily on the welfare of economically and socially

deprived sections of society, IndianOil also aims at developing techno-
economically viable and environment-friendly products & services for the
benefit of millions of its consumers, while at the same time ensuring the
highest standards of safety and environment protection in its operations.

Sharing Profits
Every year, IndianOil sets aside a fixed portion of its profits for spreading
smiles in millions of lives across the country through a comprehensive
community welfare and development programme. About one-fourth of the
community development funds are spent on the welfare of Scheduled Caste
and Scheduled Tribe beneficiaries.

IndianOil has a concerted social responsibility programme to partner

communities in health, family welfare, education, environment protection,
providing potable water, sanitation, and empowerment of women and other
marginalised groups. IndianOil has always been in the forefront in times of
national emergencies. IndianOil People have time and again rallied to help
victims of natural calamities, maintaining uninterrupted supply of petroleum
products and contributing to relief and rehabilitation measures in cash and
kind.

IndianOil’s community-focused initiatives include allotment of petrol/diesel

station dealerships and LPG distributorships to beneficiaries from among
Scheduled Castes, Scheduled Tribes, physically handicapped, ex-
servicemen, war widows, etc. The Corporation has also unveiled kisan seva
kendras as small-format retail outlets to reach quality products and services to
people in the rural areas. IndianOil has also set up the IndianOil Foundation
(IOF) as a non-profit trust to protect, preserve and promote national heritage
monuments. The Corporation also supports a variety of endeavours in arts,
culture, music and dance, apart from organising programmes on its own
under the banners of IndianOil Art Exhibition, IndianOil Sangeet Sabha and
IndianOil Kavi Sammelan.

As part of its environment-protection initiatives, IndianOil has invested close to

Rs. 7,000 crore in state-of-the-art technologies at its refineries for production
of green fuels meeting global standards. To further reduce dependence on
precious petroleum products and secure the nation’s energy security, the
Corporation is now in the process of commercialising various options in
alternative fuels such as ethanol-blended petrol, biodiesel, and Hydrogen and
Hydrogen-CNG mixture.

With safety, health and environment protection high on its corporate agenda,
IndianOil is committed to conducting business with a strong environment
conscience, so as to ensure sustainable development, safe work places and
enrichment of the quality of life of its employees, customers and the
community. IndianOil is also committed to the Global Compact Programme of
the United Nations and endeavours to abide by the 10 principles of the
programme, some of which are already part of the Corporation’s Vision and
Mission statements. It is the firm resolve of IndianOil People to move beyond
business, touch every heart and fuel a billion dreams.

III. Existing laws/ measures and their adequacy and effectiveness

Although there are number of initiatives addressing the need for global
conduct standards, (Global Reporting Initiative (1999), ISO 26000(2001) etc.)
an international standard is yet to emerge.
However, there are many international principles and guidelines for CSR.
Some of them are mentioned below :-
_ AI’s Human Rights Principles (AI)
_ UN Global Compact (UNGC)
_ OECD Guidelines for MNCs
_ Global Sullivan Principles (GSP)
_ Fair Labour Association (FLA)
_ Ethical Trading Initiative (ETI)
_ Worldwide Responsible Apparel Production (WRAP)
_ Global Reporting Initiative (GRI)
_ Social Accountability International (SA8000)
Amnesty International (AI)5
AI is pursuing the “social responsibility” strategy by trying to convince MNCs
to voluntarily adopt human rights principles and policies in their own codes. AI
does not call for economic sanctions against countries nor boycotts against
companies. AI takes no position on the legitimacy of economic relations
between companies and governments guilty of human rights violations.

5
International Business Leader’s Forum. Human Rights: Is It Any of Your Business? (2000).

AI & IBLF. Business & Human Rights: A Geography of Corporate Risk. (2002).
AI may in some cases oppose specific transfers of equipment, training or
other support used to commit human rights violations.
AI’s Human rights principles6
Company human rights policy based on Universal Declaration of Human
Rights (UDHR).
_ Security arrangements must not permit Human Rights Violations (HRVs).
_ Community engagement.
_ Freedom from discrimination.
_ Freedom from forced labour.
_ Health and safety.
_ Right to association and collective bargaining.
_ Fair working conditions (adequate standard of living).
_ Elimination of child labour (as lawfully required).
_ Independent monitoring and transparency.

UN Global Compact- 10 principles7

The UN Global Compact launched by UN Secretary General Kofi Annan at
the 1999 Davos World Economic Forum is a purely voluntary standard. It has
weak compliance mechanism and is not a code of conduct.
The Global Compact asks companies to embrace, support and enact, within
their sphere of influence, a set of core values:
Human Rights
Principle 1: Businesses should support and respect the protection of
internationally proclaimed human rights;
Principle 2: make sure that they are not complicit in human rights abuses.
Labour Standards
Principle 3: Businesses should uphold the freedom of association and the
effective recognition of the right to collective bargaining;
Principle 4: the elimination of all forms of forced and compulsory labour;
Principle 5: the effective abolition of child labour; and

6
www.amnesty.org.uk/business; www.iblf.org/humanrights; www.business-humanrights.org.
7
http://www.unglobalcompact.org/aboutthegc/thetenprinciples/index.html
Principle 6: the elimination of discrimination in respect of employment and
occupation.
Environment
Principle 7: Businesses should support a precautionary approach to
environmental challenges;
Principle 8: undertake initiatives to promote greater environmental
responsibility; and
Principle 9: encourage the development and diffusion of environmentally
friendly technologies.
Anti-Corruption
Principle 10: Businesses should work against corruption in all its forms,
including extortion and bribery.

Global Reporting Initiative (GRI)8

It is a voluntary, long-term, multi-stakeholder international guideline for
sustainability reporting. GRI addresses Economic, Environmental, and Social
dimensions of Business.
– Economic: wages and benefits, labour productivity, job creation,
expenditures on R&D, investment in training.
– Environmental: impacts of processes, products and services on air, land,
water, biodiversity, and human health.
– Social: workplace health and safety, employee retention, labour rights,
human rights, working conditions.
_GRI Features
_ Comprehensive reporting guideline applicable to almost all businesses.
_ Improves transparency with stakeholders.
_ Provides a management tool to help evaluate and continuously improve
business operations.
_ Common format allows comparisons and illuminates relationships among
core elements.
_ Supports independent verification, but does not provide it.
_ Supports consultation with key stakeholders.
_ Allows for incremental implementation.
8
www.globalreporting.org
Social Auditing -- SA8000
It is a comprehensive, technically strong, and effectively auditable, multi-
sector code for CSR. It uses accredited professional auditing bodies (SGS,
ITS, DNV, BVQI and UL). SA8000 is tested internationally with 300+ audits
and under this code. certificates are issued in 24 countries on four continents.
Its members include Avon Products, Eileen Fisher, Otto Versand, Toy R Us,
Coop-Italia, the UN Office of Project Services and others. It has International
Advisory Board representing multinational corporations, trade unions, and
NGOs.
SA8000 Elements are
_ No child labour
_ No forced labour
_ Freedom of association
_ Freedom from discrimination
_ Disciplinary practices restricted
_ Reasonable working hours
_ Compensation to meet basic needs
_ Management system
_ Appeals and complaints system
Thailand Factory Example
_ Apparel Avenue Co., headquartered in Nakorn Pathom was the first
company in Thailand to be SA8000 certified.
_ Mr. Kartchai Jamkajornkeiat, president of the company, had already
obtained ISO 9002 and ISO 14001certificates and saw SA8000 as a
management tool and as a means to maintain his export market in the long
run.
_ Major SA8000 corrective action request was to reduce overtime hours to no
more than 60 hours per week.
_ Achieved this by redesigning work stations and production sequencing to
achieve greater productivity.
At national level, Government of India has issued Guidelines on CSR for
Central Public Sector Enterprises (CPSEs), and even national and state level
corporate businesses have taken CSR in their own way.
Guidelines on Corporate Social Responsibility for Central Public Sector
Enterprises.9
1. CONCEPT
1.1. Public Corporations have legal responsibilities to maximize shareholder
profits; but a shift in corporate mindset led by social expectations and
pressure is causing business leaders to rethink their responsibilities with
respect to corporate performance measured in terms of economic impact,
social impact and environmental impact – commonly called the Triple Bottom
Line.
1.2. 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.
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.
1.3. Corporate Social Responsibility is a Company's commitment to operate in
an economically, socially and environmentally sustainable manner, while
recognizing the interests of its stakeholders. This commitment is beyond
statutory requirements. Corporate Social Responsibility is, therefore, closely
linked with the practice of Sustainable Development. Corporate Social
Responsibility extends beyond philanthropic activities and reaches out to the
integration of social and business goals. These activities need to be seen as
those which would, in the long term, help secure a sustainable competitive
advantage.
2. PLANNING
2.1. The planning for Corporate Social Responsibility should start with the
identification of the activities/projects to be undertaken. CSR projects/activities
may be undertaken in the periphery where a company carries out its
commercial activities as far as possible. Where this is not possible or
9
Dpemou.nic.in
applicable, a Company may choose to locate CSR projects anywhere in the
country. Company specific Corporate Social Responsibility strategies should
be developed that mandate the design of Corporate Social Responsibility
Action Plan (Long-term, medium-term and short-term), with a shift from the
casual approach to the project based accountability approach. The business
plan under CSR should be integrated with the social and environment
concerns related to the business of the company.
2.2. Selection of activities under CSR may be made to ensure that the
benefits reach the smallest unit i.e. village, panchayat, block or district
depending upon the operations and resource capability of the company.
The approach to CSR planning needs to be shifted from an ad-hoc charity to
a long-term sustainable approach. The Project Management and Monitoring
skills available with the companies could be shared as far as possible, with
the local administration by training and setting up required structures and
systems.
2.3. The long-term Corporate Social Responsibility Plan should match with the
long term Business Plan. This should be broken down into medium term and
short term plans. Each of these plans should clearly specify:
i) Requirements relating to baseline survey;
ii) Activities to be undertaken;
iii) Budgets allocated;
iv) Time-lines prescribed;
v) Responsibilities and authorities defined;
vi) Major results expected.
2.4 Such plans should also clearly specify the implementation guidelines and
the involvement of the implementing agency. The procedures and
methodologies prescribed for monitoring should be highlighted as well as the
modalities of the concurrent and final evaluation. Finally, there should be a
clear specification regarding mandatory documentation of the experience.
3. IMPLEMENTATION
a. CSR initiatives of Central Public Sector Enterprises (CPSEs) should
consider the following parameters for identification/selection of
schemes/projects:
(i) Thrust should be given wherever possible to areas related to the business
of the CPSEs as a natural corollary to the business.
(ii) Investment in CSR should be project-based. Mere donations to
philanthropic/ charity or other organizations would not come under the
category of CSR.
(iii) CSR activities should generate community goodwill, create social impact
and visibility.
(iv) For every project, the time-frame and periodic milestones should be
finalized at the outset.
(v) CSR activities should also involve the suppliers in order to ensure that the
supply-chain also follows the CSR principles.
(vi) CSR activities should help in building a positive image of the company in
the public perception.
(vii) CSR activities may be related to United. Nations Global Compact
Programme on Environment.
(viii) CSR projects may be closely linked with the principles of Sustainable
Development, based on the immediate and longterm social and environmental
consequences of their activities.
(ix) Every CPSE should shoulder responsibility for restoring / compensating
for any ecological damage that is taking place as a result of its operations.
(x) Care may be taken to ensure that CPSEs work towards fulfillment of the
National Plan goals and objectives, as well as the Millennium Development
Goals adopted by our country, ensure gender sensitivity, skill enhancement,
entrepreneurship development and employment generation by co-creating
value with local institutions/people.
(xi) Central Public Sector Enterprises should redefine their business continuity
plan to factor in hazards, risks and vulnerabilities. They should also create
value in innovative social investments in the community and may focus on the
areas of "Preparedness and Capacity Building" in Disaster Management
(OM).
(xii) Public-Private Partnership between the Government and the Central
Public Sector could also be encouraged to leverage the strengths of the latter
in Disaster Management. CPSEs need to network with the Ministries in
Government of India /NOMA at the National level and State Governments /
SOMAs at the State level to strengthen and formalize their role in the OM
process for ensuring preparedness of the communities towards disaster
resilience.
3.2 Project activities identified under CSR are to be implemented by
Specialized Agencies and generally NOT by staff of the CPSE concerned.
Specialized Agencies could be made to work singly or in tandem with other
agencies.
3.3 Such specialized agencies would include:-
i) Community based organizations whether formal or informal;
ii) Elected local bodies such as Panchayats;
iii) Voluntary Agencies (NGOs);
iv) Institutes Academic Organizations;
v) Trusts, Missions, etc.;
vi) Self-help Groups;
vii) Government, Semi-Government and autonomous Organizations;
viii) Standing Conference of Public Enterprises (SCOPE);
ix) Mahila Mandals! Samitis and the like;
x) Contracted agencies for civil works;
xi) Professional Consultancy Organizations, etc.
3.4 CPSEs should generate awareness among all levels of their staff about
CSR activities and the integration of social processes with business
processes. Those involved with the undertaking of CSR activities should be
provided with adequate training and re-orientation.
3.5 Initiatives of State Governments, District Administration, Local
Administration as well as Central Government Departments! Agencies, Self-
Help Groups, etc., would be dovetailed! synergized with the initiatives taken
by the CPSEs.
3.6 Every care should be taken to ensure that there is no duplication of CSR
activities undertaken by the CPSEs with that of programmes run by Central,
State and Local Governments.
3.7 While assigning CSR projects to specialized agencies, every possible
effort must be made to verify the reliability and clean track record of such
agencies. CPSEs may make efforts to prepare suitable panels of such
agencies or they may select from panels maintained by Government, Semi-
Government, Autonomous Organization or the National CSR Hub, etc.
3.8. Activities related to Sustainable Development will form a significant
element of the total initiatives of CSR.
3.9. Such activities should come under the 3 UN Global Compact Principles
pertaining to the Environment. Businesses are asked to:
i) Support a precautionary approach to environmental challenges;
ii) Undertake initiatives to promote greater environmental responsibility; and
iii) Encourage the development and diffusion of environmentally friendly
technologies.
3.10. Companies may also keep in mind the Environmental Management
System as per ISO 14001.
4. RESEARCH, DOCUMENTATION, ADVOCACY, PROMOTION &
DEVELOPMENT
4.1. The Department Of Public Enterprises, in conjunction with SCOPE and
the CPSEs will create a National CSR Hub which will undertake/facilitate the
following activities:
i) Nation-wide compilation, documentation, and creation of database;
ii) Advocacy;
iii) Research;
iv) Preparation of Panels of Implementing organisations/ monitoring and
valuation Agencies;
v) Promotional activities, including production of short films, printing of
brochures, pamphlets etc.;
vi) Conferences, Seminars, Workshops - both national and international;
vii) Act as a Think Tank;
viii) Any other matter as entrusted to it from time to time by the Department of
Public Enterprises (OPE)
4.2 The National CSR Hub will begin operations with funding provided by
Department of Public Enterprises. It will, however, be free to receive funds
from:
i) SCOPE and both Central as well as State PSEs;
ii) UN Agencies, reputed international agencies such as World Bank, EU and
other multilateral bodies and organisations;
iii) Reputed National and State Bodies;
iv) Government Departments, Autonomous Organisations, Planning
Commission, Attached and Subordinate Offices, Corporations etc.
v) Philanthropic Missions, Trusts, etc. of national and international repute.
4.3. Decisions relating to the location and functioning of the HUB will be taken
by DPE. SCOPE will be kept informed of such decisions and will be free to
offer suggestions, inputs etc.
5. FUNDING
5.1 The CSR budget. will be mandatorily created through a Board Resolution
as a percentage of net profit in the following manner:-
Type of CPSEs Expenditure range for CSR in a Financial Year Net Profit
(Previous Year) (% of profit)
(i) Less than Rs. 100 crore 3%-5%
(ii) 100 crore to Rs. 500 crore 2%-3%
(Subject to a Minimum of 3 crores)
(iii) 500 crore and above 0.5%-2%
5.2 Loss-making companies are not mandated to earmark specific funding for
CSR activities.
5.3. They should achieve CSR objectives by integrating business processes
with social processes wherever possible and taking up such initiatives which
do not involve cash outgo, e.g., by synergising their CSR activities with those
of other profit-making companies.
5.4. The CSR Budget should be fixed for each financial year. This funding will
not lapse. It will be transferred to a CSR Fund, which will accumulate - as in
the case of non-Iapsable pool- for the North East.
5.5. In case CPSEs have different Profit Centers like Factories I Plant
locations, they may be allocated separate CSR budgets to be spent by them
under the Annual CSR Budget allocations.
6. CLARIFICATIONS
6.1. These Guidelines will supersede/override any other
Guidelines/Circulars/lnstructions etc. that may have been issued by any
Ministry/ Department on any prior date. Guidelines on CSR for CPSEs will
henceforth issue only from the Department of Public Enterprises.
6.2. These Guidelines are fully in consonance with the draft Guidelines for
Corporates issued by the Ministry of Corporate Affairs as per their website.
6.3. Such companies who are operating in sectors such as financial services,
and have no specific geographical area or limited area, would adopt and
define the areas of their choice for undertaking CSR activities.
6.4. Activities and expenditure related to staff benefits will not count as CSR.
6.5. Also grants to organizations/ institutions that are not specifically
implementing CSR projects specified by the CPSE would not count as CSR.
6.6. These Guidelines may be amended by the Department of Public
Enterprises from time to time with the approval of the competent authority.
7. BASELINE SURVEY & DOCUMENTATION
7.1. The impact made by CSR activities should be quantified to the best
possible extent with reference to base line data, which need to be created by
the CPSEs before the start of any project. Hence Base-line Surveys are
mandatory.
7.2. Meticulous documentation relating to CSR approaches, policies,
programmes, expenditures, procurement, etc., should be prepared and put in
the public domain, (particularly through the internet) and made available to
the National CSR Hub.
8. MONITORING
8.1. Monitoring of the CSR projects is very crucial and needs to be a periodic
activity of the Enterprise.
8.2. The Boards of CPSEs should discuss the implementation of CSR
activities in their Board meetings.
8.3. Each CPSE should include a separate paragraph/chapter in the Annual
Report on the implementation of CSR activities/projects including the facts
relating to physical and financial progress.
8.4. The implementation of CSR guidelines will form a part of the
Memorandum of Understanding that is signed each year between CPSEs and
Government.
8.5. The performance of each CPSE with reference to its CSR activities
should be monitored by the Ministry/Department concerned on a regular
basis.
8.6. In MoU Guidelines from 2010-11 onwards, 5 marks have been earmarked
out of the non-financial parameters for CSR activities and 5 marks for
Sustainable Development initiatives.
8.7. For proper and periodic monitoring of CSR activities, companies may
appoint a CSR committee or a Social Audit Committee or a suitable, credible
external agency.
8.8 CSR projects should also be evaluated by an independent external
agency. This evaluation should be both concurrent and final.
9. ANNEXE
POSSIBLE AREAS OF ACTIVITIES UNDER CSR (THE LIST IS
INDICATIVE AND NOT EXHAUSTIVE)
i) Drinking Water Facility
ii) Education
iii) Electricity Facility
iv) Solar Lighting System
v) Health and Family Welfare
vi) Irrigation Facilities
vii) Sanitation and Public Health
viii) Pollution Control
ix) Animal Care
x) Promotion of Sports and Games
xi) Promotion of Art and Culture
xii) Environment friendly technologies
xiii) Promotion of livelihood for economically weaker sections through forward
and backward linkages
xiv) Relief to victims of Natural Calamities like eartl}-quake,. cyclone, drought
& flood situation in any part of the country
xv) Supplementing Development Programmes of the Government.
xvi) Non-conventional Energy Sources
xvii) Construction of Community Centres/Night Shelters/Old Age Homes
xviii) Imparting Vocational Training
xviii) Setting up of skill development centres.
xix) Adoption of vi"ages
xx) Taking action on points suggested by Ministry of Forest and Environment
pertaining to Charter on Corporate Responsibility for Environment Protection
for 17 categories of Industries.
xxi) Scholarships to meritorious students belonging to SC, ST, OBC and
disabled categories.
xxii) Adoption/Construction of Hostels (especially those for SC/ST and girls),
xxiii) Skill training, entrepreneurship development and placement assistance
programmes for youth.
xxiv) Building of Roads, Pathways and Bridges.
xxv) Entrepreneurship Development Programme (EDP)
xxvi) Disaster Management Activities including those related to amelioration/
mitigation.
xxvii) Activities related to the preservation of the Environment/Ecology and to
Sustainable Development

IV. Compliance and Enforcement mechanism and their effectiveness

CSR as stated above in Guidelines of Ministry of Corporate Affairs, are not
enforceable through legal rules and regulations. CSR is an expected duty
from corporate businesses. Often it takes a crisis to precipitate attention to
CSR. One of the most active stands against environmental management is
the CERES Principles that resulted after the Exxon Valdez incident in Alaska
in 1989 (Grace and Cohen 2006). Other examples include the lead poisoning
paint used by toy giant Mattel, which required a recall of millions of toys
globally and caused the company to initiate new risk management and quality
control processes. In another example, Magellan Metals in the West
Australian town of Esperance was responsible for lead contamination killing
thousands of birds in the area. The company had to cease business
immediately and work with independent regulatory bodies to execute a
cleanup. Odwalla also experienced a crisis with sales dropping 90%, and the
company's stock price dropping 34% due to several cases of E. Coli spread
through Odwalla apple juice. The company ordered a recall of all apple or
carrot juice products and introduced a new process called "flash
pasteurization" as well as maintaining lines of communication constantly open
with customers.
 V. Role of Judiciary- Contribution of Supreme Court / High
Courts
CSR issues cannot be put before Judiciary as it is not mandated through any
legislation. However, it is the role of the judiciary to interpret the law in the
socio-economic and political context in which it is meant to be interpreted.
Further, the judiciary recognised the civil and political rights by broadening
locus standi, making the judiciary more accessible. The responsible role
played by the judiciary in terms of judicial activism, by recognising CSR, as
long back as in 198310. However, the legislature has still not given effect to it
in terms of any statutory standing, even though the judiciary, by recognising
CSR, has actually supplemented the burden of the government, with that of
the corporates, which could have ended up in division of responsibilities of the
government.

Also, through Public Interest Litigations (PILs) any citizen in India can raise an
issue concerning Human Rights which in his / her view is not upheld by any
business entity. Some examples are Uphaar Cinema Fire Incidence, Bhopal
Gas Leakage Case and excessive use of groundwater by Coca Cola in
Kerala. All these cases when put up for judgment, have a CSR angle as the
culprit company is considered to not uphold their responsibilities.
Till now, redressal is available only against the actions of the government. If
CSR is mandated, there would be a more effective redressal forum in the form
of the judiciary, in case of failure on the part of corporates, apart from the
current accountability forum, i.e. the media. Further, even the UN Norms seek
to impose responsibilities on businesses “within their respective spheres of
activity and influence.”

10
AIR 1983 SC 759, where it was held by the Apex Court that the traditional view that a company is the property of
the shareholders is an exploded myth. According to the new socio-economic thinking, a company is a social
institution having duties and responsibilities towards the community in which it functions. Also, it is agreed that if a
company has caused some loss to its surrounding areas, it is its obligation to make up for that loss, whether technical
or environmental, as a part of its CSR. Also, refer to para 4 in MANU/SC0025/1982, where Justice P.N. Bhagwati
refers to this as the new ‘Corporate Philosophy’, and also attracts the Directive Principles of State Policy, and their
furtherance with the help of such corporates.
 VI. Role of NGOs/Civil Society Groups and Business /
Industry Associations and other stake holders
Non Government Organisations (NGOs) are private voluntary organizations
(PVOs) that represent social movements. They function as “moral
entrepreneurs” that are “selling” ethical ideals and standards for no-profit and
no-loss. They vary greatly in size, mission, strategies and degree of
democratic legitimacy.
NGO Strategies and Tactics for Promoting CSR are
_ Research and Reporting – media exposure
_ Social Responsibility – dialogue with Trans National Corporations (TNCs)
_ Social Accountability – standards and audits
_ Shareholder Activism – shareholder resolutions
_ Economic Pressure – boycotts
_ Sanctions/Divestment – selective purchasing
_ Government Regulation – supporting legislation
_ Litigation – bringing law suits.
_ Norm Creation – development of international law
NGOs can play the role of mediator between Corporate Businesses and civil
society by:
_ Understanding need to address demands from civil society as a responsible
dialogue partners who can represent civil society interests.
_ NGOs have relevant expertise to assist TNCs in country risk assessments
and social auditing programs.
_ Provide guidance about social standards and social auditing.
_ protecting TNCs reputation and public criticism.
NGOs are also interested to co-ordinate with Transnational Corporations due
to
_ shift of power in the Post Cold-War world towards TNCs and economic
issues.
_ Perceived lack of social and environmental accountability of TNCs under
existing laws.
_ Internal critique of the human rights movement for being too “Northern” and
too focused on traditional civil and political rights.
_ Desire to find new allies in the on-going struggle for human rights and
dignity for all people.
Civil Society Groups
Ethical banks excel in community involvement, as do other financial
institutions such as credit unions. Community involvement is not limited to
ethical banks as conventional banks also partake in such actions. The
following are a few examples of community involvement done by ethical
banks, credit unions, and conventional banks:

• Affordable housing projects

• Many banks/credit unions try to increase financial literacy in the
community
• Give local scholarships & sponsorships.
• Financially support community events

Securities & Exchange Board of India (SEBI) also emphasizes CSR of

businesses.

VII. Conclusion & Suggestions

“Globalization and continuing rapid technological advances offer
unprecedented opportunities for social and economic development. At the
same time, they continue to present serious challenges, including widespread
financial crises, insecurity, poverty, exclusion and inequality within and among
societies. Considerable obstacles to further integration and full participation in
the global economy remain for developing countries. Unless the benefits of
social and economic development are extended to all countries, a growing
number of people in all countries and even entire regions will remain
marginalized from the global economy11.”
After the colonial era, which tapped many transition economies’ natural
resources, it’s now the turn of these erstwhile colonies, somewhat better off
economically, to draw the descendants of the erstwhile colonial powers to the

11
UN “Globalization and Its Impact on the Full Enjoyment of Human Rights” (August 2000)
vast markets that await the benefits that are on offer from the developed
world. Therefore transition economies have attracted the attention of large
MNCs on account of the vast potential market growth. These markets are
relatively untapped and offer new domains for marketing operations.
However, many MNCs also take the markets for granted and exploit the laxity
in the norms of operations to their advantage. The lack of concern for the local
community, the consumers and the environment by these corporations has
created large scale public debate and action. It is important in this context to
understand that the sustainable business growth is associated with care for
the community and the markets these corporations operate in. Negative
publicity caused by the actions of MNCs has lead to suspicion about their
motives while operating, in the minds of the general public in these markets.
Irresponsible corporate behaviour by MNCs can have severe repercussions
throughout their global markets.
Despite of all the developments, the world is still suffering due to poverty and
illiteracy. The data below gives an estimation :-
- 800 million people suffer from malnutrition12
_ 900 million people are illiterate
_ 20% of the world’s population lacks access to safe drinking water.
_ 1 billion people live on less than $1 a day.
_ 250 million children work.
_ 120 million children receive no schooling.
_ 25% of humans live in poverty.
Revaluation of Values
_ The key solution to the alleviation of poverty is the provision of sustainable
livelihoods to more and more people. Economic development, as it is currently
understood, functions primarily as a means of creating economic value
(wealth), but often does so at the expense of social justice (social equity), and
environmental quality (ecological integrity). Present forms of corporate-led
globalization tend to benefit the “haves” while further marginalizing the “have-
nots.”
Tri-Valuable Solutions

12
http://www.gtz.de/de/dokumente/en-promotion-of-CSR.pdf
_ The way forward is through sustainable development programs that
increase wealth, promote social equity, and preserve ecological integrity.
Wealth (gold value) must be seen as linked with social justice (blue value) and
the preservation and renewal of the natural environment (green value).
Business enterprises and government development programs and initiatives
that promote gold, blue, and green values simultaneously are sustainable and
should be preferred to those that produce gold at the expense of green and
blue value for society.
Global Governance
_ Emerging global system is redefining roles of state, business, and civil
society in the protection of human rights and the promotion of sustainable
development.
_ Multi-stakeholder dialogue involving all three sectors is seen as key to make
globalization work for all.
_ No single actor or sector can be expected to provide for the fulfilment of all
human rights, or the solution to all social problems, but if business,
government and civil society organizations work together to address these
problems, progress is possible.
Conclusion
Corporate social responsibility is most frequently used to describe a
company's relations with its wider community. CSR is on the boundary of HR
and PR. There are dangers for companies and for the HR function if it is
allowed to slide too far towards PR. More than excessive use of relationship
management techniques they should make use of strategic relationship
management approaches. This strategic relationship management
approaches includes the relationship development, maintenance and
separation factors. After the goal attainment the HR managers should be able
to separate themselves from the community and Non Governmental
Organisations and lead them to new interventions and action programmes
where the organisations development and Social Development can be better
integrated. If HR managers are not orienting and experimenting them with
innovative areas the Human Resource Management don't have better role in
the industrial sector. HR has a role in demonstrating the benefits of workplace
practices that both reflect CSR and at the same time, contribute to
organizational efficiency and success.

The Business Case for CSR

_ Enhances compliance with local and international laws.
_ Benefits from promotion of rule of law.
_ Better internal control and control over supply chain.
_ Protection of reputation and brand image.
_ Enhances risk management.
_ Increases worker productivity, morale, and loyalty.
_ Provides management tools.
_ Addresses shareholder concerns.
_ Builds community goodwill.
_ Applies corporate values.
_ Reduces operating costs.
_ Enhances financial performance.
_ Increases stock value.
_ Enhanced ability to attract quality workforce.
_ Improves business relationships.
Push Factors
_ Globalization of production.
_ Privatization of state-owned industries in some cases.
_ Communications and IT.
_ Calls for greater corporate transparency.
_ Threats of trade sanctions, boycotts and divestment campaigns.
_ Threats of negative publicity and damage to reputation.
_ Desire to address concerns of consumers and active shareholders.
_ Desire to address concerns of NGOs, Trade Unions, and Faith-Based
organizations.
_ Desire to address concerns of local communities.
_ Desire to respond to CSR initiatives by governments.
_ Desire to keep up with industry leaders in CSR.
Next Steps for Companies
_ Companies should adopt strong CSR policies.
_ Companies should commit to creating internal management systems to
monitor compliance.
_ Companies should seek to achieve external certification through auditing
systems such as SA8000.
_ Companies can cooperate with local NGOs and community groups in
identifying issues, assisting internal and external auditors, and solving
problems.
_ Companies need to be more transparent about what they are actually doing
in the field of CSR.
The Way Forward
_ More companies must get past “Why should we?” to “How can we?” Don’t
wait to be “shamed” for bad practices.
_ More NGOs need to loose their anti-business biases and begin to
distinguish among different companies.
_ Companies need to begin to think about CSR compliance as a normal part
of the cost of doing business, and as providing a competitive advantage.
_ NGOs need to begin thinking of companies as potential allies and partners
rather than as adversaries.
_ Ultimately, governments will need to create and enforce CSR standards
internationally.
In India, traditionally business is seen as legitimate, integral part of society
with inherent Vedic philosophy – “Sarva Loka Hitam” – the well being of all
stakeholders along with business excellence. Today most of our big business
houses like TATA, BIRLA, RELIANCE, etc and CPSEs, SPSEs all have taken
CSR as part of their mission. However, this has to be further inculcated up to
bottom level of their day to day working. This can be achieved through regular
training and incentives to all involved. As ex-prime minister Late Shri Rajiv
Gandhi in one of his rallies stated that if Rs 100/- is sent, only Rs 15/- reaches
up to the needy. The main stress shall be on accountability of distribution of
Public Goods whether food items through Public Distribution System or
money through various YOJNAs like NREGA, Gramin Sadak Vikas etc. Rapid
implementation of UID scheme may help in rooting out this problem. The
education and health system shall also be revamped as they are becoming
very costly day by day, making them out of reach of our majority of population.
Schools like KVS, NVS, etc shall be leveraged in standard of education and
facilities to make them at par with private schools. Government Hospitals
services are to be made at par with Private Hospitals. Also, these entities
should be discouraged for making them money churning house at the cost of
exorbitant fees.
Infrastructure like, roads, railways, irrigation, housings all need a CSR
perspective while planning and implementation. All things said and done can
only bear their desired fruits, if the population is kept under control. At 120
crores today, and further increasing at a rate higher than world rate, it has to
be given foremost weightage.
In light of the above arguments in favour of CSR, and its benefits, attempts
should be made to mandate CSR, or else, the people would be deprived of a
whole new forum of ensuring poverty reduction and social development, apart
from the government. In this way, the government and the corporates can
work hand in hand, both assuming their duties and responsibilities while
realising rights of the people. Thus CSR exhorts firms to diverge from their
sole aim of maximising profits and to lay more importance on improving the
economic and social standards of the community in their countries of
operation.

VII. Views regarding relevance of project for a business

manager and entrepreneur
This project may help a business manager / entrepreneur to understand
importance of his/ her CSR.
1) Role of Human Resource Managers
If Non Governmental Organizations can play better role in the corporate social
responsibility, then Human Resource Management Department of the industry
can play better role in linking industry with community. The HR managers
shall take lead in the effort to link between community and the industry. To
develop better rapport with the people, HR managers have to make use of
their Strategic Relationship Management Skills. They should interact with the
community by establishing better linkage with the Non Governmental
Organisations Working there in the locality. The HR managers can initially
conduct Focus Group Discussion (FGD) with the community and community
leaders with the help of Non Governmental Organisations and ‘need
evaluation’ and ‘need prioritization’ should be conducted. Here HR managers
can act as facilitators in the Corporate Social Responsibility initiatives. The
community may have unlimited social needs. It is the responsibility of the HR
managers to intervene into those needs and give a realistic perception to the
community members related to their unlimited and unrealistic needs. The
needs of the community are to be segregated into important and important
needs. Both short-term goals and long-term goals are to be segregated. The
discussion to be entertained and the need categorization and finalization
should come from the community itself. The HR managers who act as the
implied leaders should lead the community towards realistic goal perception
that integrate the goals and objectives of Corporate Social Responsibility
programme initiated by the organization. This indicates that as leaders of the
Corporate Social Responsibility programme, HR managers should integrate
the needs of the community and that of the organisation. The list of social
development needs and the environmental protection needs to be discussed
soon after the Focus Group Discussions, with the top management in order to
ascertain whether all those needs can be met with the budget allotment for
the developmental programs. A multi level discussion, with members of the
NGO's, HR managers and representative of the Top Management, is to be
initiated for the finalization of the social intervention programme. Corporate
Social Responsibility offers the HR community opportunities to demonstrate
its strategic focus. The relationship with the community and Non
Governmental Organisations indicates the level of HR manager's success role
in the Corporate Social Responsibility effort.

2) The potential for banks to create environmentally and socially

conscious business practices
Generally all banks play an intermediary role in the economy; because of this
the possibility for banks to contribute to sustainable development is potentially
profound. Banks have extensive and efficient credit approval systems, which
gives them a comparative advantage in knowledge (regarding sector-specific
information, legislation and market developments). Banks are well seasoned
and well equipped to weigh risks and attach a price to these risks; because of
this banks can fulfill an important role in reducing the information asymmetry
between market parties, for example between the business and consumers.
This is important not just to consumers but also to depositors. When
depositors allow a bank to invest for them they are able to assume that the
bank will know which investments will maximize their returns. Conventional
banks are legally bound to maximize return for their clients. If clients are
concerned with more than simple return (i.e. the costs of the return on other
areas such as society and the environment) then they may need to turn to an
ethical bank to find ways in which they can garner return while keeping to their
own moral concerns.
3) Ethical initiatives
Numerous ethical banks (as well as some conventional banks) create initiates
that allow the banker to contribute to organizations that have positive
societal/environmental impacts either in the local community or in developing
countries. For example the Cooperative Bank (UK) offers customers "a free
Home Energy Rating on all house purchases, enabling them to better
understand how energy efficient a property is and how to make
improvements. Additionally, all of the bank's mortgages include carbon-offset
features. Every year that a customer holds a mortgage the bank offsets a fifth
of the carbon dioxide emissions arising from a typical household's energy
consumption. Following customer consultation, 2003 offset monies were used
for reforestation in Uganda, a Bangladesh project which trains local people to
build energy efficient stoves and a Bulgaria project supporting micro-hydro
electricity.
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