Course: Corporate Social Responsibility

Sr.No. 1)

Contents

Page No. 2 2 5 6 6 7 7 7 8 10 12

Answer of Question Number 1

1.1 Arguments on CSR 1.2 Relationship between Business and Society 1.3 Government Control and Solution 1.4 Conclusion 2)

Answer of Question Number 2

2.1 Importance of CSR 2.2 Types of Social Responsibility 2.3 TATA Group 2.4 Reliance Group 2.5 Conclusion

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1) One of the arguments against CSR is that there is too much hype and little has been done on ground level. It is also argued that shareholders are interested only in business activities that generate profits, so it does not make sense for companies to invest resources in unproductive activities like CSR. What is your stand on this? Answer: Corporate social responsibility (CSR) is not a new idea. However, CSR has never been more prominent on the corporate agenda than it is today. A generation of activists has been raised on the idea of corporate social responsibility (CSR) that large corporations can be cajoled into paying employees better, being more environmentally responsible, improving labor conditions.

Corporations approach on CSR has been changed in the last 10 years.

2001

2011

CSR was a moral issue

We want to do the right things; we want to invest in the community

CSR is a Strategic / Profit issue

Ignoring CSR potentially damages shareholders. Embracing it creates values.

The nature of discussion regarding CSR has changed from the early days: Instead of wondering whether commitments should be made, it is asked how and what to do now. As a response to heightened stakeholder interest, many managers and MNCs have introduced new CSR initiatives and allocated more funds to activities. The fact that organization appears as socially responsible helps, at least to a degree, to deflect stakeholder interest on CSR issues. The trend of this increase in organizational interest to CSR has hardly gone unnoticed by the general public, which has witnessed, for example, the increasing number of launches of corporate codes of conduct, cooperation programs with NGOs and labor unions, and corporate advertising campaigns depicting achievements of responsibility.

There are plenty of examples of firms that, in the pursuit of profit, have exhibited all sorts of socially irresponsible corporate behavior, such as deceiving customers, swindling investors,
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exploiting and even brutalizing employees, putting consumers at risk, poisoning the environment, cheating the government, and more. However, many corporations do not behave in socially irresponsible ways. In fact, some corporations go to great lengths to do just the opposite, by giving to charities, supporting community activities, treating their workers and customers decently, abiding by the law, and generally maintaining standards of honesty and integrity. Why do some corporations act in socially responsible ways while others do not? The imperative of maximizing profit and shareholder value is the root cause that may prevent corporations from acting in socially responsible ways. Firms will act in socially responsible ways will also be associated with the level of competition they face. In situations where competition is so extremely intense that profit margins are narrow enough to put shareholder value and firm survival at risk, the incentive to cut corners and save money wherever possible will cause corporations to act in socially irresponsible in situations where competition is so extremely intense that profit margins are narrow enough to put shareholder value and firm survival at risk, the incentive to cut corners and save money wherever possible will cause corporations to act in socially irresponsible ways.

The pressures for increased corporate attention to CSR and whether this attention is warranted and likely to be sustained. The differentiates between the business case for CSR and the normative case and concludes that often there may be a compelling business case for making a substantial commitment to CSR, but an individual firm must assess the extent to which the general business case for CSR applies to its specific circumstances. It is suggested that for some firms (e.g., in the pharmaceutical and resource extraction industries) CSR may be a major influence on corporate strategy, though it is unclear whether these examples reflect unique characteristics of these industries or an early warning of pressures likely to be experienced in other industries. Companies making a substantial commitment to CSRbecause of a business or a normative caseare likely to find that this involves major challenges with respect to the formulation and implementation of CSR strategy, not least because of the uncertainties forever associated with determining a firms societal obligations. Firms often engage in CSR precisely because it enhances shareholder value and, more specifically, that some CSR activities create goodwill among consumers in excess of their price tag. Averting social injury is the task of corporate staffers and management, but it is the responsibility of the shareholders to make the corporate decisions to avert or ignore. It goes without saying that CSR is ultimately part and parcel of shareholder culture even before it becomes a corporate strategy and actuality. Criticism of business organizations has increased and publics expect them to pay greater attention to CSR initiatives. Despite the hype around the concept today, CSR is not a novel idea. It is just that criticism towards corporations is more far-reaching, because higher expectations are put to private sector in solving social problems. Corporations are facing increasing demands of responsible corporate practices by NGOs, communities and other institutional forces. Due to the proliferation and increasing power of activist groups and greater media attention to responsibility
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matters, organizations non-market strategies are likely to become more important in the future. Thus, it seems that nowadays ethical behavior and conducting business cannot really be separated from each other. Companies have a responsibility to act in the public interest and will profit from doing so is fundamentally flawed. Large companies now routinely claim that they aren't in business just for the profits, that they're also intent on serving some larger social purpose. They trumpet their efforts to produce healthier foods or more fuel-efficient vehicles, conserve energy and other resources in their operations, or otherwise make the world a better place. In cases where private profits and public interests are aligned, the idea of corporate social responsibility is irrelevant: Companies that simply do everything they can to boost profits will end up increasing social welfare. In circumstances in which profits and social welfare are in direct opposition, an appeal to corporate social responsibility will almost always be ineffective, because executives are unlikely to act voluntarily in the public interest and against shareholder interests. To get a better fix on the irrelevance or ineffectiveness of corporate social responsibility efforts, first look at situations where profits and social welfare are in synch. Auto makers have profited from responding to consumer demand for more fuel-efficient vehicles, a plus for the environment. And many companies have boosted profits while enhancing social welfare by reducing their energy consumption and thus their costs. But social welfare isn't the driving force behind these trends. These companies are benefiting society while acting in their own interests. It is the relentless maximization of profits, not a commitment to social responsibility that has proved to be a boon to the public in these cases. Unfortunately, not all companies take advantage of such opportunities, and in those cases both social welfare and profits suffer. Still, the fact is that while companies sometimes can do well by doing good, more often they can't. Because in most cases, doing what's best for society means sacrificing profits. This is true for most of society's pervasive and persistent problems; if it weren't, those problems would have been solved long ago by companies seeking to maximize their profits. A prime example is the pollution caused by manufacturing. Reducing that pollution is costly to the manufacturers, and that eats into profits. Poverty is another obvious example. Companies could pay their workers more and charge less for their products, but their profits would suffer.

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Relationship between Business and Society. As you can see, organizations interact and affect many different groups. The larger the organization, the greater the effect. Below chart will show how the people and groups with whom an organization interacts.
Society needs Business Business needs Society

Employment & Wages

Create Demand

Investment & Innovation Profit & Taxes

Public Assets & Infrastructures Legal Protection

Interdependence of Business & Society

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Government Control and Solution: The ultimate solution is government regulation. Its greatest appeal is that it is binding. Government has the power to enforce regulation. No need to rely on anyone's best intentions. But government regulation isn't perfect, and it can even end up reducing public welfare because of its cost or inefficiency. The government also may lack the resources and competence to design and administer appropriate regulations, particularly for complex industries requiring much specialized knowledge. And industry groups might find ways to influence regulation to the point where it is ineffective or even ends up benefiting the industry at the expense of the general population. Various nonprofit organizations and movements provide a voice for a wide variety of social, political, environmental, ethnic, cultural and community interests. In India, the new company law makes mandatory for companies to disclose details of social sector initiatives, called CSR, in addition to money spent, to shareholders in their annual reports. Not just how much, but companies will also have to disclose to their shareholders where they have spent the 2 per cent of net profit earmarked for corporate social responsibility (CSR) initiatives. Every company having (net worth of Rs 500 crore or more, or turnover of Rs 1,000 crore or more) or (a net profit of Rs 5 crore or more during a year) shall be required to formulate a CSR Policy ... as may be approved and specified by the company. In case any such company does not have adequate profits or is not in a position to spend prescribed amount on CSR activities, the directors would be required to give suitable disclosure/reasons in their report to the members. Industry has been of the view that they should be allowed to monitor implementation of CSR themselves without government intervention. In India, there are many government regulations. The main problem is not regulations but the ability or desire to enforce them. Self-Control: Self-regulation can be useful. It tends to promote good practices and target specific problems within industries, impose lower compliance costs on businesses than government regulation, and offer quick, low-cost dispute-resolution procedures. Self-regulation can also be more flexible than government regulation, allowing it to respond more effectively to changing circumstances. Conclusion: In today's world where business has become global but governments have remained local, companies have to bear the social responsibility for their actions. For a business to be successful in the long term it has to create value, not only for its shareholders but also for society. Whenever need government should enforce regulation. The firms which engage in CSR activities should be rewarded by the market in economic and financial terms.

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Q2) Compare the corporate social responsibilities of TATA and Reliance. (You may also take two equally big corporate houses of your choice). Which one do you think has contributed more towards the society?

Answer: Corporate Social Responsibility (CSR) is a concept whereby organizations consider the interests of society by taking responsibility for their activities on customers, employees, shareholders, communities and the environment in all aspects of their operations. No business firm can survive without its employees, factors of production, customers, suppliers, distributors, society, culture, and environment as a whole. A company manufactures a product or service by combining land, labor, capital and enterprise. But in the end it is the choice of the customers to buy or reject a product if it does not serve their purpose. If the product is accepted by consumers it will help the firm to break-even and generate profits or else it could lead to closure of business enterprise. So, all firms need to introspect that their existence is impossible without the involvement of the society and it is their duty to adopt ethical consumerism and to provide clean healthy environment for all the future generations to come. Business firms are realizing its importance as a tool for dominating the competitive scenario prevailing in the national as well as international market, for customer retention, and sustainable growth by projecting itself as a firm which also focuses on motivational and leadership skills, customer-driven excellence in terms of high quality products and services at the same time providing value for money, organizational and personal learning through regular training programs, treating employees and partners as valuable assets, agility, innovation in products and services, social responsibility, and to develop environmental friendly techniques of production, design, recycle industrial waste- products and conserve natural resources, forest conservation, and customer solutions for Sustainable Business Practices. The Business Organizations affect the Employees, Customers, suppliers, shareholders, the local community and the environment in various ways. Corporate social responsibility (CSR) allows business organizations to develop responsible attitude toward the society and the environment and to behave ethically and contribute to economic development of the nations. Types of Social Responsibility in Business Organizations: There are two type of social responsibility. a) Internal Social Responsibilities: Shareholders and Employees. b) External Social Responsibilities: Customers, Government, Suppliers, Community and the Environment.

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Let's take examples of business firms TATA and Reliance 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.

TATA Group: Tata Motors and Tata Steel -- have emerged as the country's most admired companies for their corporate social responsibility initiatives, says a survey. Tata Motors and Tata Steel as the most admired companies by stakeholders for their CSR initiatives. The companies have been engaged in various CSR activities such as promotion of primary and higher education among adults and economically disadvantaged sections of society, improving health care infrastructure and increasing environmental consciousness in the country. Tata Group has constantly stressed on 'leadership with trust', unity, integrity, excellence, responsibility, commitment towards national interest, providing good working environment for the employees, avoidance of conflicts of interest, and emphasis on corporate social responsibility which has become an integral part of the company's core mission and vision statement and to promote ethical conduct in all its operations, which gives it an edge of stability and sustainability in the prevailing competitive scenario. Tata Group, Corporate Social Responsibility (CSR), Community Development, Environmental Standards, Triple Bottom Line, Tata Business Excellence Model (TBEM), Models of CSR, Leadership with Trust, Corporate Philanthropy and Sustainable Human Development. In a free enterprise, the community is not just another stakeholder in business but is in fact the very purpose of its existence." - Jamsetji N. Tata, Founder, Tata Group Following are the CSR principles implemented over 100 years are part of organizational development. Year Activities 1912 8 hour workday 1916 Social Welfare scheme launched for employees 1920 Leave with pay 1934 Profit sharing bonus 1934 1951 1958 1979 1999 1995 Tata steel responded to earthquake in its Bihar province with relief suppliers Planned family norms promoted at community level 225 acre jubilee park created for the citizens of Jamshedpur Launched concerted rural development initiatives Tata Code of Conduct - mandates good governance ethical behavior by organizations as well as each and every employee. Tata Council for Community Initiatives- provides the super structure for CSR efforts across the group.
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2003

Tata Index for Sustainable Development - a CSR measure adopted across the Tata Group

The TCCI suggested below some obvious parameters backed by the experience within the Group. It also listened to the convergence and developments globally to arrive at a TCCIUNDP Partnership to develop the Tata (Corporate) Index for Sustainable Human Development Guidelines 2003-2004:

In July 2004, B. Muthuraman, Managing Director, Tata Steel Limited (TISCO) announced that in future TISCO would not deal with companies, which do not confirm to the company's Corporate Social Responsibility (CSR) standards. Speaking at the annual general meeting of the Madras Chamber of Commerce and Industry, Muthuraman stated, "We will not either buy from or sell to companies that do not measure up to Tata Steel's social responsibility standards. Tata Projects has taken a step forward by donating and installing a 1000 litres per hour defluoridation unit at Gangadevapalli village in Warangal district of Andhra Pradesh through The Federation Of Andhra Pradesh Chambers of Commerce and Industry (FAPPCI) in October 2004. Tata Steel believes that the primary purpose of a business is to improve the quality of life of people.
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Following are the immediate relief with materials and help during natural calamities. y y y Relief followed by long-term rehabilitation programs. Employees have contributed their wages towards relief and participated in relief work. Constructed schools and shelters after recent super cyclone in Orissa and earthquake in Gujrat.

Tata Motors and Tata Steel as the countrys most admired companies for their corporate social responsibility initiatives. Tata motors successful for Nano car. A survey conducted by the website www.indianngos.com revealed that Tatas spent Rs. 1.5 billion on community development and social services during the fiscal 2001-02 - the highest by any corporate house in India. Reliance Group: Reliance's contribution to the community are in areas of health, education, infrastructure development (drinking water, improving village infrastructure, construction of schools etc.), environment (effluent treatment, tree plantation, treatment of hazardous waste), relief and assistance in the event of a natural disaster, and miscellaneous activities such as contribution to other social development organizations etc. RIL's CSR teams across its manufacturing divisions interact with the neighboring community on regular basis. Reliance ADAG is committed to being an ideal corporate citizen and doing more than its fair share to support various deserving causes, in the field of medicine in particular: setting up and operating Kokilaben Dhirubhai Ambani Hospital. Reliance Capital Supports this and other CSR ventures. Different businesses of Reliance Capital actively promote corporate social responsibility across cities and institutions. In this, they actively partner their own employees, who are encouraged to give time, money, clothes, and even their blood. Reliance Industries Ltd has launched project Drishti in 2003, in association with the National Association for the Blind (NAB-a non-profit institution serving the blind in India for over five decades) is a nationwide corneal grafting drive to bring light in the lives of visual challenged from the under privileged segment of the society- has illuminated lives of over 5000 Indian- all free of cost For instance, in April 2010 alone, the southern team at Reliance Consumer Finance donated money to NGOs working for children in Chennai, Coimbatore, Salem, and Vijayawada. In May 2010, blood was donated simultaneously in the cities of Ahmedabad, Mumbai, Pune, and Surat. In February and in March, again the western team at Reliance Consumer Finance spent time with older people and with street children at their care centers in Ahmedabad, Indore, and Mumbai. Clothes and money was also contributed.
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The team at Reliance Mutual Fund is promoting the use of environmentally products and packaging in its offices and outside. It is also supporting the cause of global warming. The company also follows an active program of energy abatement and recycling of paper & water to lower its carbon footprint. This is not just in its corporate office, but also in other large offices in big cities. Environmental initiatives for Reliance Power townships: Reliance Power strives to preserve and uphold natural resources and reduce the environmental impact of its products and services throughout their lifecycle in order to be a responsible corporate citizen. Strategies are in place for sustainable township development in various sites of Reliance Power by designing structures with minimum disturbance to the topography and ecology. The various steps towards building an eco-friendly composition are: y In the township phase I of all sites, the construction, hostel and housing blocks modified to accommodate and preserve existing big trees. y y y y y y y
y

Rainwater harvesting has been made mandatory for all sites. Solar heating for public buildings Use of energy efficient building material Minimum day lighting arrangements for over 75% of the area Energy efficient electric fixtures within minimum 3 star BEE rating Water efficient plumbing fixtures Use of lead free paints Treatment of sewage water and reuse for landscape and irrigation purposes

In areas around its power plant sites in Sasan, Rosa, Krishnapatnam,Butibori, Chitrangi and others, Reliance Power has been actively involved in various social and environmental organizations to address the issue of sustainable development and social uplift. The Company in discharge of its responsibility as a corporate citizen actively contributes to community welfare measures and takes up several social initiatives every year. Reliance Power Ltd. has been closely working with institutions and social organizations and supporting their programs for social development, adult literacy, adoption of village, tree plantation schemes etc.

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Conclusion: In my point of view both the groups have contributed towards the society, but as long as TATA are concerned they are spending 500-600 Cr per Year for CSR but Reliance nothing are seen except some sponsorship for financial weak meritorious students. Tata group have done so much for the country in every field. like education - IISc, XLRI etc. So many social initiatives, even their brands have a social conscience like Jaago Re (Tata Tea) all apart from generating lakhs of jobs.RIL maybe a hugely profitable company but doesnt come close to the Tata group in the area of CSR. 66% stake in Tata Sons is owned by the charity organization. This means 66% of the profit made by any of the Tata Companies goes for charity. Thats the reason the brand TATA does not merely lie in the market it do lie in the hearts and emotions of the people. It has shown that these corporates have the attitude that given position for which they deserves. Both Tata & Reliance has occupied their position through long journey & hard work. I hope other companies would also get inspired by this towards their social responsibilities.

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