CSR, CSR and Ethics, Arguments for and against CSR

1. CORPORATE SOCIAL
RESPONSIBILITY
Prof. S V K

2. CSR Definition
The World Business Council for Sustainable
Development -
“Corporate Social Responsibility is the
continuing commitment by business to behave
ethically and contribute to economic
development while improving the quality of
life of the workforce and their families as well
as of the local community and society at large”
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3. European Commission - A concept whereby companies
decide voluntarily to contribute to a better society and a
cleaner environment. A concept whereby companies
integrate social and environmental concerns in their
business operations and in their interaction with their
stakeholders on a voluntary basis.
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4. Philippines-
“CSR is about capacity building for sustainable
livelihoods. It respects cultural differences and
finds the business opportunities in building the
skills of employees, the community and the
government from Ghana, through to CSR is about
business giving back to society ”
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5. ISO 26000 -“Social responsibility is the responsibility of an
organisation for the impacts of its decisions and activities on
society and the environment, through transparent and ethical
behaviour that:
•Contributes to sustainable development, including the health
and the welfare of society
•Takes into account the expectations of stakeholders
•Is in compliance with applicable law and consistent with
international norms of behaviour, and
•Is integrated throughout the organization and practised in its
relationships.”
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6. Models of corporate social
responsibility
• Classical Economic Model
• Socio economic Model
• Friedman model
• Ackerman Model
• Carroll Model
• Environmental Integrity & Community Model.
• Corporate Citizenship Model.
• Stockholders & Stakeholders Model.
• New Model of CSR.
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7. • The Classical Economic Model (Adam Smith)
– An “invisible hand” (i.e., the efforts of competing
entrepreneurs) promoted the public welfare when
individuals tried to maximize short-run profits in
pursuit of their own economic self-interests.
• Equates short-run profitability to social responsibility
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8. • The Socioeconomic Model
– Business has an obligation to meet the needs of the
many groups in society besides stockholders in its
pursuit of profit.
• Stakeholder audit: Systematically identifying all the
parties that could possibly be affected by the company’s
performance
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9. Friedman Model(1962-73)
• A businessmen should perform his duty well, he is performing
a social as well as a moral duty.
• A businessmen has no other social responsibility to perform
except to serve his shareholders & stockholders.
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10. Ackerman Model (1976)
• The model has emphasized on the internal policy goals & their
relation to the CSR.
• Four stages involved in CSR.
» Managers of the company get to know the most
common social problem & then express a
willingness to take a particular project which will
solve some social problems.
» Intensive study of the problem by hiring experts &
getting their suggestions to make it operational.
» Managers take up the project actively & work hard.
» Evaluating of the project by addressing the issues.
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11. Contd….
• Six Strategies in the adoption of CSR.
• Rejection strategy
• Adversary strategy
• Resistance strategy
• Compliance strategy
• Accommodation strategy
• Proactive strategy
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13. Carroll Model(1991)
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14. Carroll Model(1991)
• Philanthropic requirements: Donation, gifts, helping
the poor. It ensure goodwill & social welfare.
• Ethical responsibility: Follow moral & ethical values to
deal with all the stakeholders.
• Economic responsibility: Maximize the shareholders
value by paying good return.
• Legal responsibility: Abiding the laws of the land.
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15. Environmental Integrity & Community Health
Model.
• This model developed by Redman.
• Many corporate in US adopted this model.
• Corporate contribution towards environmental integrity &
human health, there will be greater expansion opportunities.
• Healthy people can work more & earn more.
• CSR is beneficial for the corporate sector.
• CSR in a particular form is welcome.
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16. Corporate Citizenship Model
• To be a corporate citizen, a corporate firm has to satisfy four
conditions:
» Consistently satisfactory
» Sustainable economic performance
» Ethical actions
» Behaviour.
• A particular firm’s commitment to corporate citizenship
requires the fulfillment of certain social responsibilty.
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17. Stockholders & Stakeholders Model
1
Productivism
2
Progressivism
3
Philanthropy
4
Ethical Idealism
Self
Duty
Interest
Stakeholder
Model
Stockholders
Model
Moral
ORIENTATION
MOTIVES
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18. Contd………….
• Productvists believe that the only mission of a firm is to
maximize the profit.
• Philanthropists who entertain the stockholders. CSR is
dominated by moral obligations & not self-interest.
• Progressivists believes the corporate behaviour basically
motivated by self interest & should have ability to transform
the society for good.
• Ethical Idealism concern with sharing of corporate profits for
humanitarian activities.
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19. A Sample Stakeholder Audit for Wal-
Mart, the World’s Largest Retailer
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Prof.SVK

20. New Model of CSR
CSR (+) CSR(-)
CSR(-) CSR(-)
Ethical Rooting
FinancialCapability
Strong Poor
StrongPoor
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21. Best Practices of CSR
• To set a feasible, Viable & measureable goal.
• Build a long lasting relationship with the community.
• Retain the community core values.
• The impact of the CSR needs to be assessed.
• Reporting the impact.
• Create community awareness.

22. Need for Corporate Social Responsibility
• To reduce the social cost.
• To enhance the performance of employees.
• It is a type of investment.
• It leads to industrial peace.
• It improves the public image.
• Can generate more profit.
• To provide moral justification.
• It satisfies the stakeholders.
• Helps to avoid government regulations & control.
• Enhance the health by non polluting measures.

23. Arguments for CSR
• Corporate should have some moral & social obligations to
undertake for the welfare of the society.
• Proper use of resources, capability & competence.
• The expenditure on CSR is a sort of investment.
• Company can avoid many legal complications.
• It create a better impression.
• Corporate should return a part of wealth.

24. • Fundamental principles of business gets violated.
• It vey expensive for business houses.
• CSR projects will not be successful.
• These are not the special areas of any business.
• CSR is to induce them to steal away the shareholders money.
Arguments against the CSR

25. Types of Social Responsibility
1. Responsibility towards Shareholders
• To ensure a reasonable rate of return over
time.
• To work for the survival & the growth of the
concern.
• To build reputation & goodwill of the
company.
• To remain transparent & accountable.
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26. 2.Responsibility towards
Employee
• To provide a healthy working environment.
• To grant regular & fair wages.
• To provide welfare services.
• To provide training & promotion facilities.
• To provide reasonable working standard & norms.
• To provide efficient mechanism to redress worker’s
grievances.
• Proper recognition of efficiency & hard work.
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27. 3.Responsibility towards
consumers
• Supplying socially harmless products.
• Supplying the quality, standards, as promised.
• Adopt fair pricing.
• Provide after sales services.
• Maintaining consumer’s grievances cell.
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28. CA 2013 - Applicability
• Section 135 applicable to Companies with -
Net worth Rs. 500 crore or more,
- Turnover Rs 1000 Crore or more or
- Net Profit Rs. 5 Crore or more
during any financial year
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29. Clause 135, Companies Act, 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 5 crore INR
and more..
• It 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
atleast 2% of their average net profit in
the previous three years on CSR
activities.

30. CA 2013 - CSR Committee
Composition
• At least 3 directors, one of whom should be an
independent director
• In a company where appointment of an
independent director is not mandatory
• CSR committee of a private company having
only two directors can have only two members
• CSR committee would be a committee of the
board
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31. CA 2013 – CSR expenditure
• At least 2% of average net profit of preceding
3 financial years in every financial year
• Average Net Profit shall be calculated as per
Section 198 of Companies Act 2013
• It shall not include the net profit of an overseas
branch or branches, whether operated as
separate company or otherwise
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32. 1. Eradicating Hunger, Poverty and
Malnutrition,
2. Promoting Education
3. Promoting Gender Equality
4. Ensuring Environmental
Sustainability
5. Protection of National Heritage, Art
and Culture
6. Measures For The Benefit of Armed
Forces
7. Training to Promote Rural Sports
8. Contribution To The Prime
Minister’s National Relief Fund
9. Contributions or Funds Provided
By Technology Incubators
10. Rural Development Projects
Areas Where The CSR Budget Can Be
Spent :

33. CSR ACTIVITIES IN INDIA
(Source - Study conducted by Ernst & Young
and PHD Chamber, published in Global CSR

34. CSR ACTIVITIES IN INDIA
EDUCATION
The study indicates that
providing infrastructure
support is the most common
activity in the education
domain, undertaken by
approximately 88% or 44 out
of a total of 50 companies.Source - Study conducted by Ernst & Young

35. CSR ACTIVITIES IN INDIA
HEALTHCARE
In the healthcare domain, organising health
camps to offer curative services and raising
awareness on health issues are the most
common activities implemented by nearly 74%
of the companies.

36. CSR ACTIVITIES IN INDIA
ENVIRONMENT
CSR initiatives aimed towards the betterment
of the environment include green initiatives
such as tree plantation
drives to promote afforestation, as well as
efforts to conserve
water, and to manage and dispose of waste
responsibly. Green initiatives garner the highest
attention with 76% of all companies
undertaking specific initiatives to improve the
environment and approximately 64% taking
measures to conserve water.

37. CSR ACTIVITIES IN INDIA
RURAL DEVELOPMENT
In rural development, 68% of companies have
been working towards betterment of rural areas
by providing infrastructure support.

38. Key Players of India
Source-economic times

39. Mahindra & Mahindra
• Focus on the girl child, youth and farmers through programmes in the domains of
education, public health and environment.
• Mahindra Pride Schools provide livelihood training to youth from socially and
economically disadvantaged communities and have trained over 13,000 youth in
Pune, Chennai, Patna, Chandigarh and Srinagar.
• There's Project Hariyali, which has planted 7.9 million trees till date, including four
million trees in the tribal belt of Araku Valley. M&M has constructed 4,340 toilets
in 1,171 locations across 11 states and 104 districts specifically for girls in
government schools as part of Swachh Bharat Swachh Vidyalaya.
• Expenditure on CSR in the last fiscal was Rs 83.24 crore — 2% of PAT. Set up by
Anand Mahindra in 1996, Project Nanhi Kali supports the education of over 11 lakh
underprivileged girls in ten states, providing material support (uniforms, bags,
notebooks, shoes and socks) and academic support (workbooks, study classes). The
key outcomes of the project include an increase in both enrolment of girls in
schools and curtailing dropouts to less than 10%.
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40. 3/21/2017 Prof.SVK
Tata Power
• Key CSR Areas: Education, environment, community development, health, safety,
security, resource and energy conservation, women empowerment, skill
development and livelihood generation.
Tata Steel
• Key CSR Areas: Education, healthcare, facilitation of empowerment and
sustainable livelihood opportunities, preservation of ethnicity and culture of
indigenous communities and sports. Initiatives run across ten districts in Jharkhand,
Odisha and Chhattisgarh, covering nearly 500 core villages.
L&T
• Key CSR Areas: Water and sanitation, education, healthcare and skill building.
L&T partners with local governments on health programmes focused on
reproductive health, tuberculosis & leprosy control, integrated counselling & testing
centres for HIV/ AIDS. L&T's community health centres are located at Mumbai,
Thane, Ahmednagar, Hazira, Vadodara, Coimbatore, Chennai, Lonavala and
Kansbahal.
Tata Chemicals
Key CSR Areas: Focused on sustainable community development and preserving
the ecosystem.

43. “We generate wealth for the people.
What comes from the people must, to
the extent possible, therefore get
back to the people.”
- J R D Tata