CU_SEM_III_MCOM-CSR-Second draft-converted

MASTER OF COMMERCE SEMESTER-III CORPORATE SOCIAL RESPONSIBILITY MCM614

CHANDIGARH UNIVERSITY Institute of Distance and Online Learning Course Development Committee Prof. (Dr.) R.S.Bawa Pro Chancellor, Chandigarh University, Gharuan, Punjab Advisors Prof. (Dr.) Bharat Bhushan, Director – IGNOU Prof. (Dr.) Majulika Srivastava, Director – CIQA, IGNOU Programme Coordinators & Editing Team Master of Business Administration (MBA) Bachelor of Business Administration (BBA) Coordinator – Dr. Rupali Arora Coordinator – Dr. Simran Jewandah Master of Computer Applications (MCA) Bachelor of Computer Applications (BCA) Coordinator – Dr. Raju Kumar Coordinator – Dr. Manisha Malhotra Master of Commerce (M.Com.) Bachelor of Commerce (B.Com.) Coordinator – Dr. Aman Jindal Coordinator – Dr. Minakshi Garg Master of Arts (Psychology) Bachelor of Science (Travel &Tourism Management) Coordinator – Dr. Samerjeet Kaur Coordinator – Dr. Shikha Sharma Master of Arts (English) Bachelor of Arts (General) Coordinator – Dr. Ashita Chadha Coordinator – Ms. Neeraj Gohlan Academic and Administrative Management Prof. (Dr.) R. M. Bhagat Prof. (Dr.) S.S. Sehgal Executive Director – Sciences Registrar Prof. (Dr.) Manaswini Acharya Prof. (Dr.) Gurpreet Singh Executive Director – Liberal Arts Director – IDOL © No part of this publication should be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording and/or otherwise without the prior written permission of the authors and the publisher. SLM SPECIALLY PREPARED FOR CU IDOL STUDENTS Printed and Published by: TeamLease Edtech Limited www.teamleaseedtech.com CONTACT NO:01133002345 For: CHANDIGARH UNIVERSITY Institute of Distance and Online Learning

First Published in 2021 All rights reserved. No Part of this book may be reproduced or transmitted, in any form or by any means, without permission in writing from Chandigarh University. Any person who does any unauthorized act in relation to this book may be liable to criminal prosecution and civil claims for damages. This book is meant for educational and learning purpose. The authors of the book has/have taken all reasonable care to ensure that the contents of the book do not violate any existing copyright or other intellectual property rights of any person in any manner whatsoever. In the event the Authors has/ have been unable to track any source and if any copyright has been inadvertently infringed, please notify the publisher in writing for corrective action.

CONTENTS UNIT – 1 : INTRODUCTION TO CORPORATE SOCIAL RESPONSIBILITY ............4 UNIT - 2: COMPANIES EMPHASIS ON CSR ..................................................................27 UNIT – 3 : EVOLUTION OF CSR.......................................................................................47 UNIT - 4: ETHICS IN CSR AND CORPORATE BEHAVIOUR .....................................66 UNIT – 5 : CSR AND COMPANIES ACT 2013 .................................................................82 UNIT – 6 : SOCIAL RESPONSIBILITY IN GLOBALIZATION....................................92 UNIT – 7 : SOCIAL RESPONSIBILITY AND LEADERSHIP......................................109 UNIT – 8 : ORGANIZATION CLIMATE ........................................................................120 UNIT – 9 : THE STRATEGIC LENS ................................................................................140 UNIT – 10 : THE STRATEGIC IMPORTANCE OF CSR .............................................165 UNIT – 11 : CSR ACTIVITIES OF CORPORATE INDIA ............................................187 UNIT – 12: REPORTING FRAMEWORK.......................................................................208

UNIT – 1 : INTRODUCTION TO CORPORATE SOCIAL RESPONSIBILITY Structure 1.0 Learning Objectives 1.1 Introduction 1.2 Meaning and definition of CSR 1.3 Features of CSR 1.4 Scope of CSR 1.5 Importance of CSR 1.6 Summary 1.7 Keywords/Abbreviations 1.8 Learning Activity 1.9 Unit End Questions 1.10 References 1.0 LEARNING OBJECTIVES After studying this unit, you will be able to: • Understand organisations as living systems and assess their purpose. • Get an overview of the concept of CSR. • Define CSR as a concept. • Analyse the different dimensions of CSR

1.1 INTRODUCTION The dimensions of corporate behaviour encompass those activities of the corporate that ensure responsible and just behaviour towards society. There are four major dimensions of corporate behaviour: 1 Setting boundaries of learning, accountability and responsiveness. 2 Building activities that form the basis of learning 3 Creating measures that validate and make knowledge effective, and so form the basis of decision-making and action. 4 Institutionalization (making it integral part of the corporate strategy and system) trust in the ways that create a virtuous circle of practice and further engagements with stakeholders. Values are, therefore, essential to the organizational function and dynamics. This is the reason CSR has received such importance in management studies. The human aspect of any organization is its core asset, as they are the data generators as well as the data users. Organizations are the combined perceptions of all the associates contributing to its activities. The human operator of the organization is certainly more important than the objective result because the result is achieved by what individual does. Here, we encounter the importance of the phenomenon of CSR, which is about business taking into account their total impact on society and natural environment. Businesses have to align their profitable opportunities with their social identities and underline values of corporate responsibility. The world is increasingly undergoing rapid development. More controlling and enabling technologies are constantly being created. Life and its choices are becoming more complex. These necessitate that we radically alter our view ourselves and the world and our functioning as beings in order to ensure sustainable development. The present situation is one of bewilderment and confusion about the ways in which the corporate world has exercised its size and power, and at what cost and result. CSR provides the structure of boundary for the free market to operate sensibly. However, CSR also appears to be the most misunderstood. Corporations are still struggling to give a formal structure to their CSR programmes. Social responsibility has been variously described as a vague and ill-defined concept.

1.2 MEANING AND DEFINITION OF CSR Corporate social responsibility (CSR) is a form of corporate self-regulation integrated into a business model. With the help of CSR policy, a business organisation monitors and ensures its vigorous fulfilment with the spirit of the law, ethical standards, and international norms. In some models, a firm’s functioning of CSR goes beyond fulfilment and engages the in actions that appear to enhance some social good, beyond the interest of the firm and that which is required by law. CSR can also be understood as a procedure that aspires to embrace company’s responsibility to monitor its activities and encourage a positive force on all the members of the society including environment, consumers, employees, communities and shareholders. Lord Holme and Richard Watts define CSR \"as 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 the local community and society at large\" International Organization for Standardization's Guidance standard on Social Responsibility, ISO 26000, published in 2010-states: \"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 behavior, and • Is integrated throughout the organization and practiced in its relationships.\" Financial Times \"Corporate social responsibility (CSR) is a business approach that contributes to sustainable development by delivering economic, social and environmental benefits for all stakeholders.”

Investopedia \"CSR refers to a corporation's initiatives to assess and take responsibility for the company's effects on environmental and social wellbeing.' 1.3 FEATURES OF CSR The main features of CSR are as follows: 1 Mandatory under Companies Act 2013: According to Section 135 of Companies Act 2013, it is mandatory for certain companies to spend at 2% of its average net profits during the three immediately preceding financial years on CSR. The companies that are not covered under section 135, the CSR is optional. Section 135 of CA 2013 states - Every company having net worth of Rs500 crore or more, or turnover of Rs1000 crores or more or a net profit of 5 crore or more during any financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director. This committee of the Board must ensure that the company spends at least 2% of profits on CSR activities. 2.Multiple Stakeholders' Orientation: Companies have tasks to their shareholders. However, companies rely on various other stakeholders such as suppliers, dealers, employees, consumers and local communities, etc., in order to endure and flourish. Therefore, companies have social responsibilities to them as well. 3. Alignment of Social and Economic Responsibilities: Many experts on CSR stress that communal and economical responsibilities of a company need to be associated, and profitability is an important issue. This characteristic of CSR prompts attention to how firms can benefit economically from undertaking corporate social responsibility. 4. Practices and Values: It is obvious that CSR implies a particular set of business practices and strategies that deal with social issues. Moreover, many experts state that CSR is a philosophy or set of values that supports strongly these practices. Therefore, it is often being discussed not only what (practices) companies do in the social arena, but why (values) they do it. 5. Beyond Philanthropy: Sometimes CSR is mainly about philanthropy, which means, for example, corporate philanthropy towards the weaker sections of the society. Among

core business functions one can name production, marketing, procurement, human resource management, finance, and so on. This core characteristic implies that CSR needs to be mainstreamed into normal business practice rather than focusing merely on philanthropy. In other words, corporations must integrate CSR into business practices. 6. Long Term Approach: CSR is a long-term approach. Corporations must undertake CSR activities (whether mandatory or not) by considering the long-term impact. The stakeholders trust those companies that focus on CSR activities. The trust of the stakeholders, especially, customers, employees and shareholders help the company in its long-term survival. 7. CSR and Professional Firms: Generally, CSR activities are undertaken by professional firms. The professional firms believe that a CSR is a must for corporate citizens. Since the very survival of firms depends on the support of various sections of the society, professional business firms give lot of importance to CSR activities. 8. CSR as a Process: CSR implementation involves a systematic process. The process consists of the following steps: • Institute a CSR Committee. • Identify focus - one or two programmes of CSR which the company intends to undertake. • Identify the area (preferably local area) the programmes will be implemented. • Identify the costs for implementation of CSR programmes. • Involve the employees in implementation of programmes. • Implement the focused programmes. • Inform or communicate with stakeholders such customers, business partners and the community. • Review the CSR performance. 9. Modalities for Undertaking CSR Activities: The modalities for undertaking CSR activities can be grouped under three heads: • Conducting CSR through a Third Party. • Conducting CSR through Group Entities. • Collaborating with Other Companies.

10. Brings about Social Change: CSR brings about a social through the various programmes such as: • Eradicating poverty and malnutrition. • Promoting preventive healthcare. • Promoting education, especially for weaker sections. • Promoting gender equality. • Training programmes for skill development. • Environmental sustainability. • Reducing inequalities faced by socially and economically backward classes. • Protection of national heritage. • Promotion of animal welfare, etc. 11. Concept of Trusteeship: The concept of CSR is closely related to Gandhian Concept of Trusteeship. Trusteeship is a socio-economic philosophy that was propounded by Mahatma Gandhi. It provides a means by which the wealthy people would be the trustees of trusts that looked after the welfare of the people in general. Since certain business firms make lot of profits, a part of the profits can be spent on social welfare activities. In relation to business, the principle of trusteeship states 'a business must he held high in trust, legally and morally for the benefit of people whom the business wants to serve.\" 12. Professional and Personal Growth: Corporate social responsibility (CSR) encourages Professional and personal growth of the employees. The employees can develop their leadership and management skills through a well-designed corporate social responsibility programme. This may be as simple as team building exercises. The employees may be encouraged to form relationships with people they would not normally meet like disadvantaged groups 1.4 SCOPE OF CSR The scope refers to the applicability of CSR for various areas or activities, and also for various companies. In a narrow sense, the scope of CSR is mandatory for those companies under Section 135 CA 2013.

A number of activities can be undertaken under CSR such as promoting preventive healthcare, conducting training programmes for unemployed, promoting education, etc. In a broader sense, CSR includes social responsibility towards various stakeholders such as customers, dealers, employees, suppliers, shareholders, etc. The scope of CSR can be explained as follows: Business organisation has social responsibilities towards different interest groups, such as follows: Competitors Society Employees financial Institution Social responsibility Shareholder of business Suppliers Customers Government Figure: 1: Social responsibility of business towards various stakeholders RESPONSIBILITY TOWARDS SOCIETY/LOCAL COMMUNITY: The general public expects certain social responsibilities on the part of the company. The following are the responsibilities they, expect of a good company: (a) Protection of Environment: The organization should take all possible measures to prevent air, and water pollution Business firms should not misuse or over-exploit natural resources. (b) Optimum Use of Resources: The business firms make useof scarce natural resources such as raw materials of iron, steel, fuel, and so on. The business firms

should not make indiscriminate use of the scarce resources in the interest of the society. (c) Upliftment of Backward Regions: The society expects that the companies should start industries in backward areas. This will generate employment facilities and increase in purchasing power of the rural masses. (d) Help to Weaker Sections of the Society: The business organizations should also uplift the weaker sections of the society. Certain jobs may be reserved for economically weaker sections of the society, and for physically challenged persons such as blind, lame, dumb, etc, (e) Philanthropic Activities: The society also expects donations and financial assistance to various social causes, such as eradication and financial of poverty, illiteracy, etc. The company may undertake public welfare campaigns such as anti-drug may anti-noise campaign, etc. campaign, etc. (f) Prevent Congestion in Cities: The companies should also work to avoid congestion in cities by spreading their industries in different places or locations. (g) Not supporting Anti-Social Activities: The society expects that the companies should not take part in anti-social activities. They should not support and provide financial assistance to anti-social elements. (h) Expansion: The society expects expansion and diversification of industries so as to generate employment opportunities and at the same time to enhance standard of living of the society. (i) Employment Generation: Business firms should make all possible efforts to generate employment. Such efforts will help to solve problems caused due to unemployment in the society. (j) Promote Culture: Business firms may promote culture of the society. Culture is an integral part of the society. Therefore, business firms may sponsor cultural programmes, festivals, sports, and so on. (k) Support: During Natural Disasters: Business firms need to support the society during natural disasters like earthquakes, floods, etc. They may provide contributions or donations towards relief and rehab measures. (l) Avoid Discrimination in Society: Business firms should avoid discrimination in the society. They should give fair chance for employment to citizens irrespective of race, religion, caste, etc.

RESPONSIBILITY TOWARDS EMPLOYEES: The survival and success of an organisation largely depends on the efficiency of its workforce. The employees can produce quantitative and qualitative results only when they are properly motivated. The employees are motivated only when the firm fulfils its social responsibility towards them. a) Job Security: The organization should provide job security to its employees. The workers should not be kept temporarily for a long time. They must be given enduring jobs. Keeping workers temporarily is an abuse to the workers and they may not be enthusiastic to work with assurance and devotion. b) Monetary Factors: Workers should be paid satisfactory wages and other incentives like bonus, medical allowance travelling allowance, etc. On time or quick payment often results in higher enthusiasm to the workforce. There should be increase and revision in wages. c) Working Conditions: The workers should be granted high-quality working conditions. There should be sufficient lighting and ventilations. Noise, dirt and dust pollution should be avoided. There should be appropriate working hours with rest pauses. d) Health and Safety Measures: The Company should take ample measures to protect health of the employees. They should be provided with canteen facilities, and medicinal facilities. Proper protection of machines and building must be done to prevent accidents. e) Proper Personnel Policies: There must be appropriate personnel policies in respect of transfers, promotions, recruitment, training, etc. For instance, there should be sound promotion policy: • Promotion by superiority at lower levels. • Promotion by Merit at higher levels. f) Workers Participation in Management: The workers must (f) be encouraged to take part in management. There are different ways of workers participation in management, such as quality circles, works committee, suggestion schemes, profit sharing, co-partnership, and so on. g) Grievance Procedure: A well managed grievance procedure is an essential thing to have to handle employees' complaints. An immediate solution to any complaint or grievance of the employee should be done following a suitable grievance procedure.

h) Recognition of Workers' Union: To maintain industrial peace is the responsibility of management. Therefore, the management should recognize the rightful trade union, representing majority of the workers. Management should not follow divide and rule policy, and thus have multiple trade unions. Multiple trade unions weaken workers bargaining power, and also make the company week. i) Employees Welfare: Large organizations must provide proper welfare facilities to the employees such as: • Canteen facilities • Crèche facilities • Recreation facilities. • Rest rooms j) Principle of Equity: Organizations must follow the principle of equity. Equity means social justice and not equality. Deserving employees must be given fair treatment in respect of promotion, incentives, etc. k) Career Development: Organizations must facilitate career developments of their employees. Career development can take place by: • Assigning challenging tasks. • Delegation of authority. • Encouraging for higher education. • Proper placement of employees, etc. RESPONSIBILITY TOWARDS SHAREHOLDERS/ INVESTORS: The people who buy the shares of the company become the shareholders or the owners of the company. Since the shareholders are scattered widely, they appoint the management to take care of day-to-day activities of the company. Since the shareholders invest the amount in the company to earn the higher returns, they expect certain fulfilment of responsibilities by such managements a. Fair Return on Investment: The shareholders expect a fair return on their investment. The company must make adequate and timely payment of dividend

b. Expansion and Diversification: The shareholders anticipate that the management should carry out growth and diversification programmes. This will effect in more returns to the shareholders. c. Appropriate Use of Shareholders Funds: The shareholders anticipate most good use of their money. They will not accept any misuse or unproductive use of their funds by the management. d. Proper Conduct of Shareholders' Meetings: The shareholders would like fair manner of meetings. There should be just selection or appointments at company meetings. Every member should be given a possibility to present a valid point of view at the meetings. e. Proper Disclosure: The managers are supposed to make appropriate disclosures with respect to workings of the company. The accounts must be appropriately maintained and audited from time to time. The shareholders should be allowed to get copies of the audited profit and loss and balance sheets of the company. f. Periodic Information: The shareholders expect the company to notify them about significant happenings in the company, either at company meetings or through letters. The shareholders have a right to be informed of the developments in the company. g. Good public image: The shareholders anticipate that the management should build up and sustain a good public image. A company with good name and goodwill commands a lot of admiration and trust in the share market, labour market, consumer market, and so on. h. Fair practices on stock exchanges: The shareholders would appreciate if the company directors and managers indulge in fair practices on the stock exchanges. They do not expect the management to manipulate the share prices on the stock exchange. The management must not encourage insider trading on the stock markets i. First Preference: The management must give preference to the existing shareholders at the time of raising capital from the stock markets. They may issue right issue of shares to existing shareholders. j. Prompt Services: Business firms must provide prompt services to the shareholders. For instance, request for renewal of dividend cheques (due to expiry of validity), or

issue of new cheques (if cheques got misplaced) must be handled promptly. The prompt services create trust and confidence in the shareholders. RESPONSIBILITY TOWARDS CUSTOMERS: The survival and growth of a business depends upon customer satisfaction, service, and support. The company should win over the confidence of the customers. This is possible if it adopts a positive attitude towards customers, and fulfils its social responsibility towards them. a. Quality: Business firms should focus on the quality of goods. The company should always strive to improve its quality. Firms must adopt strict quality control. At no point of time quality can be 100% right and as such there is always a room for improvement. b. Fair Price: The consumers expect value for their money. They want right prices, and not exorbitant prices. Therefore, a firm must charge right price by considering certain factors such as costs, demand, competition, nature of customers, etc. Proper pricing generates loyalty. c. Honest Advertising: The consumers expect true facts the product, its uses, merits, side-effects and so on. Th will not like exaggerated and tall claims in the advertisements. The company should also refrain from vulgar and Unethical advertisements. d. Availability of Goods: The consumers should be made available the goods regularly as and when they need it The company should not create artificial shortage and hoard the goods in cooperation with unethical dealers e. After-Sale-Service: The consumers expect efficient and effective after-sale-service, especially in the case of consumer durables. Therefore, firms must give proper training to service staff. f. Redressal of complaints: The complaints of the consumers must be immediately dealt with. Valuable suggestions of the consumers must be taken into consideration. The company may reward the customers for useful suggestions.

g. Research and development: The consumers expect the company to conduct research and development for the purpose of improving the quality and reducing the cost of the product. h. Consumer safety: The consumers expect the company to produce goods which are customer-health oriented and environment friendly products. Unsafe products must not be marketed by the company. Consumers should be warned of any such unsafe goods. i. Avoid Monopolistic Competition: The sellers should avoid monopolistic competition. They should encourage healthy competition in the interest of the consumers. The sellers should not create undue problems for new firms entering the market. j. Avoid Consumers Exploitation: The sellers should avoid exploiting the consumers. They should not take undue advantage of certain situations and charge higher prices or create artificial shortage of goods. k. Information: The manufacturers or sellers should provide necessary information to the consumers either through advertisements or on packages or in any other form. The information must be provided in respect of uses of the product, side-effects, etc. l. Training: The manufacturers may also provide training to the customers either free or for a charge. The training is required especially in the case of equipments, and such other sophisticated machines. m. Consumer Welfare: The firm may assist government and consumer associations in promoting consumer welfare. n. Market Research: The firm must conduct market research to identify customers needs and wants. The market research will enable business firms to produce and distribute products that generate customer satisfaction. RESPONSIBILITY TOWARDS GOVERNMENT: The government also expects social responsibility from the business sector in the following areas:

a. Development of Backward Areas: Firms may provide assistance to the Government in the development of backward areas. Business firms may set up units in backward areas, thereby, facilitating balanced regional development. b. Payment of Taxes: The government expects the corporate sector to pay taxes and duties regularly. If the corporate sector does not pay taxes and duties on time, it would be difficult for the government to undertake development(such infrastructure - roads, irrigation) and non-development (such as administration, subsidies) expenditure. c. Observance of Government Rules and regulations: The government expects strict observance of its rules and regulations on the part of the corporate sector. For instance business firm must adopt pollution control measures. If the business sector has any valid suggestions the Government rules and regulations, it should do so in the interest of the society as a whole. d. Political Stability: The corporate sector should Work towards the political stability of the country. A stable government often brings more returns and peace in a self- governing society. Therefore, corporate sector should not hold up those elements who are indulging in political unsteadiness. e. Refrain from Corrupt Practices: Business firms should refrain from corrupt practices. The companies should not look for unfair nepotism from government officials by bribing or influencing them. The unfair favors affect the other firms in the industry. f. Earning of Foreign Exchange: Companies, particularly the large ones should penetrate in export trade to earn precious foreign exchange for the country. This foreign exchange is essential to pay for vital imports. Foreign exchange also improves Balance of Payment position. g. Recommendations to Government: Business sector should provide timely recommendations to the government in respect of framing various policies, such as export-import policy, licensing policy, industrial policy, and so on. h. Financial Assistance during Natural Calamities: The corporate sector should contribute funds during the time of emergencies or natural calamities, such as flood, earthquakes, etc.

i. Support to Government in Law and Order: Business firms should support the Government to maintain law and order in the society. They should avoid supporting anti-social element including certain political parties, which are disruptive nature. j. Support to Government in Social Development: Business firms should support the Central and State Government in social development activities. They should contribute towards education, health, and family welfare. SOCIAL RESPONSIBILITY TOWARDS DEBENTURE HOLDERS: The debenture holders are the creditors of the company. They provide medium term or long- term funds by subscribing to the debentures issued by the company. The company has certain social obligations towards the debenture holders: a. Proper Disclosure of Information: A company must provide proper financial information at the time of issue of debentures. The financial performance of the company must be provided correctly so that the prospective investors can take the right decision whether to invest in the debentures or not. b. Payment of • Interest: A company should make regular payment of interest to the debenture holders. As far as possible, delay in payment of interest to be avoided. c. Handling Grievances: A company should handle the grievances of the debenture holders effectively. Also all queries of the debenture holders must be effectively answered. d. Redemption of Debentures: A company must redeem the debentures as stated in the debenture certificate. If, due to certain reasons, the company cannot redeem the debentures on the due date, then proper explanation must be given to the debenture holders. e. Conversion of Debentures: A company may issue convertible debentures. It must convert the debentures into equity shares, and send proper notice to that effect to the debenture holders. f. Meetings: A company may call meetings of debenture holders affecting their rights and interests. Proper notice Of meetings must be sent to debenture holders.

RESPONSIBILITY TOWARDS SUPPLIERS: a. The Company should maintain good relations with suppliers. b. Timely payment of dues c. The company should not force the suppliers to provide unreasonable terms d. The companies should work for their growth and survival. e. The companies should not disclose any secret information about its suppliers to others. f. Large firms must not adopt pressure tactics towards suppliers by forcing them to provide unfair terms to competitors. g. Management must not demand kickbacks or underhand commission to place orders. h. The firms must provide suggestions for improvement to deserving suppliers. RESPONSIBILITY TOWARDS FINANCIAL INSTITUTION a. The payment of loan and interest instalments must be made on time. b. They should not bribe bank officials in sanctioning loans. c. Provide regular reports to the financial institutions (Fl’s) d. They should not convert bank loans into bad debts. e. There should be proper use of funds provided by FIS. f. There must be high degree of transparency in agreements. g. The borrowed funds must be utilized only for production purposes. RESPONSIBILITY TOWARDS COMPETITORS: a. The company should avoid unfair practices, such as duplicating the products of the competitors, unfair advertising to malign the name of competitors. b. Respect the competitors and treat them as challengers and not enemies.

c. They should ensure free entry, and not block entry of competitors. Unreasonable entry barriers must be avoided. d. They should join hands with competitors to provide recommendations to the Government in the interest of the industry. 1.5 RELEVANCE / IMPORTANCE OF CSR ln today's context, the concept of CSR is more relevant and important than ever before. This is due to the. Fact that business firms face lot of competition in the market, and they make an attempt to gain competitive advantage. Also, the changed expectations of the society make business firms to be proactive in CSR activities, whether mandatory or not. The relevance and importance of CSR is explained as follows: a. Triple Bottom Line: CSR enables a firm to achieve a triple bottom line. The triple bottom line consists of three main elements - people, planet, and profit: • People relates to fair and beneficial business practices towards employees, the community and the region where a firm conducts its business. In other words, business should create social value. • Planet refers to sustainable environmental practices. A company that adopts triple bottom line approach will not create destructive or critical products such as poisonous chemicals or batteries containing hazardous heavy metals. It concentrates on eco-friendly initiatives such as preservation of natural resources, and recycling of waste. It also focuses on friendly products. In other words, a business needs to create environmental value. • Profit is the amount of the money that the company makes after deducting all the costs of inputs from the sales revenue. It includes cost of the capital. It is necessary for a firm to create value to survive and prosper. b. Human Resources: A CSR program can be a support to recruitment and retention. Especially in advanced countries, potential recruits or employees often ask about a firm's CSR policy during an interview, and having a comprehensive policy can give an advantage. CSR can improve the opinion of an organization among its employees, particularly when employees get involved through payroll giving, fund raising activities

or community volunteering. c. Risk Management: Managing risk is a central part of many corporate strategies. Reputations that take decades to build up can be ruined in hours through incidents such as corruption scandals or environmental accidents. These can also illustrate superfluous attention from regulators, courts, governments and media. Building an authentic culture of 'doing the right thing inside a corporation can compensate these risks. d. Brand Differentiation: In competitive business environment, companies struggle for a USP that can distinguish them in the minds of consumers from their competitors. CSR can help the company to build customer loyalty by adopting distinguishing ethical values. Several major brands are built on ethical values. Business service organizations can benefit too from building a reputation for integrity and best practice. e. Engagement Plan: An engagement plan assists in reaching a desired audience. A corporate social responsibility team or individual is needed to effectively plan the goals and objectives of the organization. Determining a budget should be of high priority. The activities of corporate social responsibility planning include: ▪ To add discussion and analysis of a new set of risks into corporate decision- making. ▪ To represent issues within the corporation that watchdogs, NGOs and advocates represent within society. ▪ To assess a firm's long term and short term future needs to be assessed. ▪ To help prioritize consideration of socially and environmentally friendly projects that might otherwise lack a corporate advocate. ▪ To keep corporation conscious of possible major societal impacts even when it cannot have a immediate negative impact and thus reduce liability. ▪ To positively influence decision making where societal impacts are maximized, while ensuring efforts are within a given budget. f. License to Operate: Business firms are eager to evade interfering in their business through taxation or regulations. By taking substantive voluntary steps, firms can persuade Governments and the wider public that they are taking issues such as health and safety, diversity, or the environment seriously as good corporate citizens with respect to labour standards and impacts on the environment. g. Supplier Relations: CSR practices help to maintain supplier relations. Business firms are

constantly relying on suppliers to reduce overall costs, while improving the quality of their goods or services. Several companies have reduced the number of suppliers they do business with, and award contracts to a select few, in order to lower operating costs. By establishing a strong supply chain, companies are able to push for continuous quality Improvements, and price reductions. h. Corporate Image: On the whole, CSR improves corporate image the minds of various sections of the society. Customers, employees, shareholders and other stakeholders respect and trust business firms that focus on CSR activities, which are socially desirable. i. Changed Expectations of the Society: The activities of business are being regularly monitored by society, and if any discrepancy is found, the society may withdraw its support to the business. Therefore, before the society takes any action against the f. the firm should respond favorably to the changing the society. j. Balance between Economic and Social Objectives: A business organization needs to balance between economic and objectives. It must not make profits (economic objective) social at the cost of society. It must provide good wages and other facilities to the workers, provide quality goods at right prices to the customers, make payment of dividend to shareholders, etc. k. Professional and Personal Growth: Corporate social responsibility (CSR) encourages professional and personal growth of the employees. The employees can build up their leadership and management skills through a well-structured and designed CSR programme. This may 'be as simple as group building exercises. The employees may be pushed to extend relationships with those people they would not otherwise meet like underprivileged groups. l. Attracts and Retains Competent Employees: Socially responsible companies account augmented employee commitment, performance and job satisfaction. A study by Stanford University in 2003 found that MBA graduates would sacrifice an average of US $ 13700 cut in their salary per year to work for a socially responsible company. Due to social responsibility, the employees realize that their work has made a positive difference in some way. m. Attracts Investors: Investors and financiers are attracted to companies who are socially responsible. The investors understand that the social responsibility of corporates reflect good management and a positive reputation. Therefore' business firms should be committed to the principles of social responsibility.

n. Survival of the Organization: A business organization survives because of the support from various sections of the society. For instance, an organization exists due to demand from customers. Also, an organization performs its activities with the active support of its employees, and so on. Therefore, a business organization needs to fulfill its social responsibilities towards customers, employees, etc, to ensure its survival. 1.6 SUMMARY The dimensions of corporate behaviour encompass those activities of the corporate that ensure responsible and just behaviour towards society. Organizations are just the collective consciousness of all the people contributing to its activities. The human operator of the organization is certainly more important than the objective result because the result is achieved by what individual does. Hence, CSR is importance since it’s about business taking into account their total impact on society and natural environment. Corporate social responsibility (CSR) is a form of corporate self-regulation integrated into a business model. With the help of CSR policy, a business organization monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms. The main features of CSR are as follows: o It is mandatory under Companies Act 2013 o Have multiple Stakeholders' Orientation: o Alignment of social and economic responsibilities is important o CSR implies a particular set of business practices and strategies that deal with social issues o CSR needs to be mainstreamed into normal business practice rather than focusing merely on philanthropy o It is a long term approach o CSR activities are undertaken by professional firms o CSR implementation involves a systematic process etc. Business organization has social responsibilities towards different interest groups, such as competitors, society, employees, financial institutions, suppliers, government, customers etc.

1.7 KEWORDS/ABBREVIATIONS • Accountability: Responsible for one’s actions • Business: Any activity that creates utility either for masses of classes • Organization: Business Institution • Responsibility: Dutiful • Sustainability: Support growth over long period. 1.8 LEARNING ACITIVITY 1. Take any company of your choice and analyses whether their CSR practices relates to responsibility, sustainability and social contract. ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ 2. Explain the concept of trusteeship promoted by Mahatma Gandhi ________________________________________________________________ ________________________________________________________________ 1.9 UNIT END QUESTIONS A. Descriptive Questions (Long Answer) 1. What is the concept of CSR? Explain in detail the features of CSR. 2. What is the responsibility of CSR towards its society, employees and Customers? 3. Explain in detail why is CSR important in modern business? 4. What is the responsibility of CSR towards its competitors, government and financial institution? 5. How do companies ensure that business and CSR are not mutually opposed to each other? B. Descriptive Questions (Short Answer) 1. What do you mean by ‘Corporate Social Responsibility’? Justify your answer. 2. Write a note on CSR responsibility towards government.

3. Explain the concept of human aspect in an organization. 4. To whom should business be accountable? Who or what should have most social power? C. Multiple Choice Questions 1. What does CSR stand for: (a) Corporation Social Responsibility (b) Corporate Social Responsibility (c) Corporate Social Resonance (d) Cooperation Social Responsibility 2 One of these is not an attribute of corporate social responsibility? (a) Product safety (b) Environmental policies (c) Consumer rights (d) Price-fixing 3. One of the following is not a characteristic of a corporate social responsibility framework? (a) Retaining the status quo (b) Understanding society (c) Harnessing diversity (d) Building capacity 4. ___________, the greater will be its social prestige. (a) The more advertisement business unit will do (b) The more luxury items a business unit will produce

(c) The more effectively a business unit caters to the needs of society (d) The more profit a business unit will earn 5. CSR is applicable to: (a) Private sector (b) Public sector (c) NGO (d) Private and public sector both Answer 1-b, 2 – d, 3 – a, 4 – c, 5 - d 1.10 REFERENCES References 1. Altekar, A.S (1977), State and Government in Ancient India, Motilal Banarsidas Publishers, Delhi, pp-48-74 2. Arlow, P and MJ Gannon (1982), Social Responsiveness, Corporate Structure and Economic Performance, Academy of Management Review, vol. 7, issues no. 2, pp-235- 241 3. Committee for Economic Development (1971), Social Responsibility of Business Corporations, CED, New York, p.15. Textbook 1. Business Ethics and Corporate Social Responsibility by Michael Vas and Aurora Vaz. 2. Corporate Social Responsibility by Madhumita Chatterjee. 3. Ethics and the conduct of business by John R Boatright, Jeffery D Smith

UNIT - 2: COMPANIES EMPHASIS ON CSR Structure 2.0 Learning Objectives 2.1 Introduction 2.2 Aspects to understand CSR 2.2.1 Responsibility 2.2.2 Accountability 2.2.3 Sustainability 2.2.4 Social Contract 2.3 CSR and Sustainable Development 2.4 CSR through Triple Bottom Line 2.5 Environmental Concerns and CSR 2.6 Summary 2.7 Keywords/Abbreviations 2.8 Learning Activity 2.9 Unit End Questions 2.10 References 2.0 LEARNING OBJECTIVES After studying this unit, you will be able to: • Understand four broad aspects of CSR • give a synthesized approach to both of Sustainable Development and Corporate Social Responsibility concepts • find the relationship between Sustainable Development and Corporate Social Responsibility based on the content analysis of the main milestones of Sustainable Development process

• Learn CSR as an important tool in economic development, social development and environment protection. • Analyze and evaluate the implementation of socially responsible activities by enterprises, in relation to the specific stakeholder that is the natural environment. 2.1 INTRODUCTION Business organizations, as an integral part of the society, have certain obligations to the society in which they operate. The executives and the employees of the corporations who carry out business activity, must act in a responsible manner, so that a reasonable balance is maintained between doing well in business and giving better service to the society. It is a myth that in the world of business, \"market force is everything,\" \"profit is everything.\" Giving priority to profit is natural to any business and is necessary for the stability of the organization. But it is not sufficient for long term sustainability. Thus, organizations are now focusing on two more features, in addition to the profit or the bottom line, such as: (I) environmental protection (i.e., thinking about nature), and (ii) liberty, justice, equality for stakeholder, and governance process like transparency, accountability, empowerment and respect (i.e., thinking about society). Thus, these three factors, that contribute to a long-term sustainability in business, is widely known as the triple bottom lint' (profit i.e., the economic value, planet i.e., the environmental value and people i.e., the ethical value). Environmental Sustainability out of the three steps mentioned above for sustainability, environmental sustainability has been given priority by the corporations, because the socially active groups and investors worldwide are now more worried about the business activity that has an adverse impact on the natural environment. At present, industrialization is considered to be the largest threat to the natural environment. Works on sustainable development have recognized that the environmental threats like climate change, pollution, deforestation, and species loss, is having a catastrophic effect on the eco-system. Environment degradation, resource scarcity, and painstaking the free goods like water and air, are becoming scarce resources. The conflict between industrialization and the protection of environment is based on the argument that industrialization harms the environment; and corporations cling to the idea that the protection of environment involves additional costs and adversely affect the economic performance of business. In order to strike a balance between the economic performance and

the environmental performance, corporations are now coming up with new ideas that strike a balance between the two. Corporations are, nowadays, focusing on issues like quality, service, and price and are more concerned about the environment. Of late, they have realized that the basic growth and the development of a business heavily depend on the society that provides them the opportunity to conduct the business. So strategically, all business decisions that aims at business success, must care for the environment and the society, for their best interest. Otherwise, they have to face the wrath of the society. Stakeholders are becoming more active and react sharply to such misconducts. 2.2 ASPECTS TO UNDERSTAND CSR It is important to understand that CSR goes beyond philanthropy, though that may be its beginning. It has to take into account integrity and accountability in the long-run process of sustainability. For a better understanding of this concept, it has been divided into four broad aspects of CSR: 2.2.1 Responsibility Clarkson (1995) has tried to differentiate between responsibility, responsiveness, and performance. He has argued that a fundamental problem in the field of business and society has been the notable absence of definitions of corporate social performance (CSP), corporate social responsibility (CSR), and corporate social responsiveness (CSR2), and the lack of consensus about the meaning of these terms from an operational or managerial viewpoint. He emphasizes that Corporate Social Performance can be investigated more efficiently by using a structure based on the management of a corporation's relationships with its stakeholders than by using CSR models and methodologies. This, he believes, is a better way of understanding because corporations are the nexus of a complex web of stakeholder relationships. Therefore, corporations manage relationships with specific stakeholder groups rather than with society at large. The crux of the problem stems from the meaning of the word 'social' and how it links to everyday business activities. In fact, Clarkson (1995) defines society as 'a level of analysis that is more inclusive, more ambiguous, and further up the ladder of abstraction than a corporation itself.' In the same vein, William Frederick (1994) has taken the concept of CSR to a higher level by discussing about corporate responsiveness. According to him, corporate social responsiveness refers to the capacity of a corporation to respond to social pressures.'

From the creativity view of history, there is a need for now forms of creativity and innovation in the era of globalization to deal with the challenges that corporations face while pursuing profits. From the liberation view of history, we learn the lessons of empowerment, and the fall of the fittest view indicates the need for continuous innovation and a better understanding of the change process (Sharma 2005). Ethically accepted corporate activity and profit-making are not mutually exclusive (not opposed to each other). Sustainable growth and success demand ethicality in the process of dealing with stakeholders. As analysis of history shows three distinct approaches to understand the relationship between the victor and the victim. These are: domination, exploitation and oppression This can also be extended to the business world, because when selfish means of earning profit is practiced by the business world, then society becomes the victim of domination, exploitation, and oppression. However, this way of earning profit is not sustainable in the long run, as it leads to both economic depletion of resources and social upheavals as a result of exploitation. The result of such degradation and exploitation would impact the business that is promoting it, so future avenues of earning profit would not be available. Therefore, mutual respect and sharing of benefits would lead to a continuous flow of profits through better productivity based on trust. We have to create a framework that meets the requirements of internal uniformity and operational stability. Often, CSR has been challenged on the grounds of relativity, which means that what may be considered right by one may be considered wrong by another. Arriving at a consensus for CSR checklists may not be easy. There will be the perennial and inevitable disagreements on 'cause and effect' in the development process, as every organization has its own perspectives and perceptions regarding service to society. This needs to be innovatively handled because there are certain universal values that are acceptable to all and are collectively known as human rights. Therefore, in a cross-cultural scenario that is riddled with diversity, issues have to be prioritized, keeping the human aspect of compassion and justice in the forefront. This concept is certainly not new. Every age in and history the social has tried man to find a symbiotic relationship between the economic man. 2.2.2 Accountability

The easiest way to understand the different levels of accountability is to adhere to the report on Social Responsibilities of Business Corporations issued by the Committee for Economic Development (CED) in 1971. The CED was initiated in 1942 to address national priorities that promote Sustained economic growth and development to benefit all Americans. CED is a non. profit, non-partisan, business-led public policy organization. It conducts in. depth research on major economic and social issues, and provides suggestions on the implementation of its recommendations by the public and private sectors. Members include about 200 senior corporate executives and university leaders who provide the body important academic and practitioners' view on research and outreach efforts to meet the changing socio-economic scenario. However, one should remember while complying with the framework that the report does not take into account the legal responsibilities and therefore precaution should be taken not to ignore the legal aspects. The report consists of the following three concentric circles. Inner Circle The inner circle includes the clear-cut basic responsibilities for the efficient execution of the economic function—products, jobs, and economic growth. For example, for a product such as an automobile, a number of people get employed to help in the production, and economic growth happens because of better means of communication, growth of ancillary (related) industries that cater to the main vehicle producing company, and various other factors like export, import, and similar economic activities. Intermediate Circle The intermediate circle encompasses responsibility to implement this economic function with sensitive awareness of changing social values and priorities; for example, with respect to environmental conservation, hiring and relations with employees, more rigorous expectations of customers for information, fair treatment, and protection from injury. Outer Circle The outer circle outlines newly emerging and still amorphous responsibilities that business should assume to become more broadly involved in actively improving the social environment. Society is beginning to turn to corporations for help with major social problems such as poverty and urban blight. This is not so much because the public considers business singularly responsible for creating these problems but because it feels large corporations possess considerable resources and skills that could make a critical difference in solving these problems.

CSR includes integrity and accountability because it demands knowledge that goes beyond the traditional framework of business understanding, i.e., profit-making and bottom line. It brings business face to face with the pertinent questions regarding sustainable and value-added development in the political and socio-economic environment. CSR is rewarding as it offers us with information and ability for doing business by understanding modern societies in a more organized way. 2.2.3 Sustainability Sustainability places an extended set of expectations on business. Such issues as layoffs, plant closures, product quality, financial frauds, or industrial pollution demand the consideration of a diverse and complex range of systemic solutions. Businesses have the resources and expertise to create systems that have at least the potential to contribute to sustainable and humane development. Therefore, CSR requires not only techniques and performance metrics for achievements but also revolution in the way that companies think and act. The reason CSR has to promote beyond philanthropy is because familiarity with unethical practices often makes society extremely tolerant and insensitive. Business, with its set of professionals, can see the dangers of lack of perception due to familiarity with unethical activities. Therefore, also business understands that often there is a reduction in the level of self-control on the part of society in keeping a watch on the harmful activities in the environment. Now the responsibility lies with business either to be extra vigilant to ward of catastrophes or take an advantage of the not-so-alert to pursue unethical activities. There is an urgent need to encourage integrity and ethics to rein in greed, corruption of a communal CSR disharmony, governance and terrorism. Legal and ethical principles of business are outcomes of the chosen behavior of individuals who could be the principle (owner) or agent (managers) acting on behalf of the organization. Therefore, the action of the principal or the in or government must stand the test of morality if they be enforced under the law. Total business relationship with stakeholders is a concept that would embrace both legal and ethical and contractual rights and duties. More often than not, there will be ethical conflicts in serving the different constituents of business, not only because of the conflicting interest of different constituents but also due to the differences in in

understanding the purpose of business. This dilemma of differences solved by following CSR in its true spirit. 2.2.4 Social Contract CSR is related to the social contract between the business and the society which it operates. At any one time in any one society, there is a set of generally accepted relationships, obligations, and duties between the major institutions and the people. Philosophers and political theorists have called this set common understandings 'the social contract' (Steiner and George 1972). If we take this understanding further, we find that at any point of time the accepted relationships, obligations, and duties differ between and within society, and therefore business practitioners prefer to either ignore or criticize the concept of CSR as only theory based, However, when business professionals were surveyed even a decade ago, nearly 81 per cent of 248 executives believed that wealth maximization and social involvement were not contradictory concepts (Edmonds and Hand 1976). This thought is further corroborated by the twin surveys conducted by McKinsey in 2007 (The McKinsey Quarterly, 2007), which reveal that 84 per cent of executives and 89 per cent of consumers believe that corporate obligations to shareholders must be balanced by contribution to the broader public good; for example, providing good jobs (jobs that ensure sustainable livelihood). making philanthropic donations. and going beyond legal requirements to minimize pollution and other negative effects of business activities. The consensus for engagement (business engaging in socially relevant activities) is widespread, ranging from 75 per cent in China to go per cent in India among executives, and from 86 per cent in India to 91 percent. Business has responded in a very fragmented manner to the demands of responsibility by enacting labor laws, employee welfare programmes, consumer satisfaction policies, environmental protection activities, etc. But there is no collective long-term impact on the community and therefore it has become imperative to consolidate the concept of CSR and fit it into an overall plan. It is interesting to note that certain themes have evolved about how business can relate to ethical behavior. According to Robin and Erie (1989), 'business activities that have a

foreseeable and potentially serious impact on individuals ought to be regulated by the values of deontological (related to rules and regulations) reasoning.' For the level of performance, Aristotle's Virtue Ethics describing the \"golden mean\" i.e., neither excessiveness nor deficiency in performance is suggested.' This relates to earning profit by ensuring that neither is CSR emphasized so excessively that profit suffers, nor is CSR totally ignored and profit is earned by exploitation. For social responsibility, 'the image of an average family using central values to solve family problems provides a benchmark for developing values within a business organization.' Though business has the bigger responsibility of going beyond philanthropy, we must also keep in mind that each stakeholder also has reciprocal duties with others and the consuming community also has the obligation to make the trade-off between cost and sustainability and integrity. Different stakeholders also cannot be driven by their selfish interests alone because each stakeholder has an important role to play and one cannot be destroyed for the benefit of the other. Just as business needs to do just trade-off between stakeholders based on priority and sustainability, stakeholders also have to understand that at times one has to give up one's interest for the benefit of all. 2.3 CSR AND SUSTAINABLE DEVELOPMENT A procedure that meets goals of human development and also maintains the ability of natural systems is sustainable development. It ensures continuous supply of natural resources and ecosystem services upon which the economy and society depends. Sustainable development focuses on three areas of development: • Economic development • Social development • Environmental protection

Economy Environment Sustainable Development Social Community Figure 2.1 Three areas of Sustainable Development Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs - World Commission on Environment and Development. Sustainable Development includes contains two important concepts: • The concept of needs, in particular the essential needs of the world's poor, to which overriding priority should be given; and • The idea of limitations imposed by the state of technology and social organization on the environment's ability to meet present and future needs. Living within our environmental limits is one of the-central principles of sustainable development. One implication of not doing so is climate change. But the focus of sustainable development is far broader than just the environment. It's also about ensuring a strong, healthy and just society. It simply means satisfying the varied wants of the people in present and future society; encouraging personal welfare, social solidity and inclusion, and creating equivalent opportunity.

Important Aspects of Sustainable Development: 1. Satisfaction of Needs of All Humans: Contentment of human wants and objective is the major aim of development. The vital needs of large population in developing countries for foodstuff, clothes, protection, jobs are not being satisfied, and ahead of their fundamental wants of these people have lawful objective for an enhanced life quality. The universe in which poverty and injustice are widespread will always be prone to environmental and other disasters. Sustainable development necessitates satisfying the basic necessities of all and broadening it to all the prospects to meet their demands for an enhanced life. 2. Consumption Standards for Longer sustainability: Living standards that go beyond the essential least amount are sustainable only if consumption standards everywhere have regard for long-term sustainability. Yet many of us live beyond the World's environmental means, for example in our patterns of energy use. Apparent needs are socially and ethnically strong-minded, and sustainable development requires the encouragement of values that encourage consumption standards that are within the boundaries of the environmental possible and to which all can reasonably aspire. 3. Enhancing Economic Growth in Poorer Areas: Meeting necessary needs depends in part on realizing full growth potential, and sustainable development clearly requires growth and development in such economies places where necessary needs are unmet. Elsewhere, it can be reliable with economic growth, provided the content of growth reflects the broad values of sustainability and non-exploitation of others. But growth by itself is not enough. 4. Population Growth and Potential of Ecosystem: A growth in numbers can increase the pressure on resources and slug the rise in living standards in areas where deficiency is widespread. Though the issue is not just one of population size but of the sharing of resources, sustainable development can only be pursued if demographic developments are in agreement with the varying creative potential for eco-system

5. Problems of Ill-considered Development: People at large may compromise on their ability to meet the crucial needs of their own self by overexploiting resources. Example of this may be the new and progressive growth of technology may solve immediate issues but may have long term effects on the economy. 6. Human Interventions: Some of the strong examples of human interfering with nature for their selfish needs or growth can be established agriculture, the drawing of minerals, inherent manipulation, distraction of waterways, the discharge of heat and poisonous gases into the environment and industrial forests. These interventions which were on a smaller scale with limited impact are more extreme recently and have more intimidating effects to life-support systems both nationally and internationally. This should be stopped completely. At least, no danger should be caused to any natural resources; life on Earth, the environment, the waters or the soils by any sustainable development. 7. Renewable Resources: Economic growth and development visibly engage changes in the physical ecosystem. Every ecosystem everywhere cannot be conserved unharmed. A forest may be dwindling in one part of a watershed and extended elsewhere, which is not a bad thing if the utilization has been planned and the effects on soil erosion rates, water regimes, and genetic losses have been taken into consideration. In general, renewable resources like forests and fish stocks need not be at a low level provided the rate of use is within the limits of renaissance and natural growth. 8. Non-Renewable Resources: As for non-renewable resources, like fossil fuels and minerals, their use minimises the stock available for future generations. But this does not mean that such resources should not be used. In general, the rate of depletion should take into account the criticality of that resource, the accessibility of technologies for minimizing exhaustion, and the likelihood of substitutes being obtainable. Thus, land should not be tarnished beyond sensible recovery. With minerals and fossil fuels, the rate of depletion and the importance

on recycling and economy of use should be calibrated to make certain that the resource does not run out before suitable substitutes are obtainable. 9. Conservation of Plant and Animal Species: Development tends to make simpler eco-systems and to diminish their diversity of species and species, once extinct, are not renewable. The loss of plant and animal species can to a great extent limit the options of future generations; so sustainable development requires the conservation of plant and animal species. 10. Natural Elements: So-called free goods like air and Water are also resources. The raw materials and energy of Production processes are only partly converted to useful products. The rest comes out as wastes. Sustainable development requires that the unfavourable impacts on the quality of air, water, and other natural elements are minimized so as to sustain the ecosystem's overall integrity. 2.4 CSR THROUGH TRIPLE BOTTOM LINE Bottom line is an accounting framework with three parts: Social, environmental, (or ecological) and financial. Many organizations have implemented the Triple Bottom Line structure to appraise their act in a broader point of view to create larger business worth. The term was invented by John Elkington in 1994. The phrase ‘triple bottom line’ was made popular by John Elkington in his 1997 cannibals with Forks: The Triple Bottom Line of 21st Century The concept stresses that a company's responsibility lies with stakeholders rather than shareholders. In these cases, stakeholders\" means anyone who is prejudiced, either directly or otherwise, by the behaviour of the company. As per the stakeholder the business unit is to be used as a medium for synchronizing stakeholder interests, as against maximizing profit of shareholders

Figure 2.2: CSR through Triple Bottom Line Triple Bottom Line: CSR enables a firm to achieve a triple bottom line. The triple bottom line consists of three main elements - people, planet, and profit: People relates to fair and valuable business practices towards employees, the community and the region where a firm conducts its business. In other words, business should create social value. Planet refers to sustainable environmental practices. A triple bottom line organization does not produce destructive or disparaging products such as poisonous chemicals or batteries containing hazardous heavy metals. It focuses on eco-friendly initiatives such as preservation of natural resources, and recycling of waste. It also focuses on eco-friendly products. In other words, a business should generate environmental value. Profit is the monetary price earned by the company after paying for all the input costs including the cost of capital from the sales revenue it earns. It is important for a firm to create economic value to s and prosper.

2.5 ENVIRONMENTAL CONCERNS AND CSR Nowadays, there is growing concern towards environmental sustainability. Professional business firms follow strict environmental policies to ensure that they remain in full compliance with international environmental regulations and the specific environmental requirements of each country where they do business. Business firms actively work to protect natural resources by doing the following: 1. Conservation of Natural Resources: Professional business firms adopt environmental policy of conserving, reusing, and recycling natural resources. When it is feasible, firms conserve natural resources by using recycled materials and supplies, efficiently using energy, and participating in recycling programmes for their products after they have served their useful life. Companies encourage and support the sustainable use of renewable natural resources. 2. Reducing and Disposing of Waste: Companies reduce and wherever possible eliminate waste through source reduction and recycling at company facilities. All waste is safely and responsibly handled and disposed of. Some firms adopt 'Zero Waste - No Waste Policy'. Therefore, such firms develop attitude and consciousness towards Zero Waste Policy through training. 3. Developing Safe and Sustainable Products: Companies develop, produce, and market products that are safe for their intended use. Environmental policies and practices aim to protect, conserve, and sustain the world's natural resources and also protect the companies' customers and the communities where they live and operate. 4. Environmental Principles and Business Relationships: Companies strive to incorporate environmental principles into business relationships. Professional firms seek similar commitments to the environment from their major suppliers. They participate in industry groups to set industry standards on environmental practices. They also strive to keep the customers informed about their efforts, and they welcome customers' feedback. 5. Improvement in Performance: Companies set objectives and targets to ensure continuous improvement in their environmental performance. Companies value employee contributions towards the firm's environmental initiatives, Companies regularly review the business activity and assess the environmental programmes,

practices, and goals to evaluate progress and to identify areas in which they can make further improvement. 6. Communicating Environmental Progress to Stakeholders: Firms demonstrate their environmental responsibility to their stakeholders. They engage the stakeholders about their objectives and targets. They periodically communicate their environmental activities and progress thereof, to employees, Shareholders, customers, and members of the public. 7. Use of Renewable Energy: An energy-efficient facility is good, but a 100 percent renewable energy facility is better. Firms like Apple Inc., Microsoft, and others focus on renewable energy. For instance, Environmental Responsibility Report, 2015 of Apple Inc. states — \"As of2014, 100 percent of our U.S. operations and 87 percent of our operations worldwide are powered by renewable energy—which results in fewer carbon emissions. Therefore, Apple Inc. taps into energy from solar, wind, micro hydro, biogas fuel cells, and geothermal sources. 8. Environmental Audit: Business firms need to conduct environmental audit. Environmental audit is an independent third-party assessment of the current status of an organization's compliance with local environmental laws and regulations. Environment audit checks into the environmental performance of an existing operation or an activity. The main purpose of an environmental audit is the systematic saluting of environmental performance throughout a company's existing operations. 9. Pollution Control: Environment is deteriorating day by day due to industrial pollution, toxic chemicals, automobile emission and natural resource depletion. Pollution in its various forms - air pollution, water pollution, soil pollution, noise pollution, etc., is increasing tremendously. Therefore, professional minded business firms in India take necessary measures to reduce air, water, soil, and noise pollution. 10. Environmental Reporting: Business firms must report on the environment sustainability with respect to their operations. Environmental reporting is a public disclosure by a firm of its environmental performance information, similar to the publication of its financial performance information. However, environment sustainability reporting is not a mandatory requirement in India. Except for some high performing, visible companies, a lot of organisations in India haven't started using the GRI sustainability reporting framework effectively.

11. Environmental Education and Training: Environmental education is the best programme to deal with the environmental problems. It is most fundamental in our efforts to combat and control pollution, over-population and misuse of natural resources. Environmental education includes the following objectives: a) Creating awareness of the environmental problems. b) Providing knowledge to deal with the problems. c) Developing new attitudes towards environmental problems. d) Developing skills for solving environmental problems. 2.6 SUMMARY • Sustainable development is growth as purely economic growth, referring to the wealth of developed countries, which jeopardizes natural resources, biodiversity and natural environments. • The scope of corporate responsibility varies country by country, region by region, interest group by interest group. • It is important to understand that CSR goes beyond philanthropy, though that may be its beginning. It has to take into account integrity and accountability in the long-run process of sustainability. • For a better understanding of this concept, it has been divided into four broad aspects of CSR: Responsibility, Accountability, Sustainability and Social Contract • Corporate social responsibility, or CSR, involves examining corporate citizenship and environmental accountability to provide support to the communities in which they function, which also chains long-term business accomplishment. • Socially accountable companies conserve environmental resources significant to future generations, according to the International Institute for Sustainable Development. • The expansion of corporate social responsibility has been determined in part by augmented consumer social awareness and expectations of responsibility. • Consumers favour to do business with companies that give back to the communities they serve. To achieve full congruence with these areas of responsibility, a company must function with equality and integrity with customers and suppliers.

• One factor vital to both sustainable development and CSR is the environment. CSR and sustainable development goals both give emphasis to stronger environmental preservation, recycling and renewal programs. • Clarkson (1995) emphasizes that CSP can be analyzed more efficiently by using a structure based on the management of a corporation's relationships with its stakeholders than by using CSR models and methodologies. • William Frederick (1994) refers that corporate social responsiveness refers to the capability of a corporation to react to social pressures.' • CSR is worthwhile as it provides us with information and skills for doing business by sympathetic modern societies in a more methodical way. • CSR has to encourage beyond philanthropy is because knowledge with unethical practices often makes society extremely tolerant and insensible. • Sustainable development is a procedure for meeting human development goals while fulfilling the capacity of natural systems maintained to offer the natural resources and ecosystem services upon which the economy and society depends. • Some of the important aspects of sustainable development are: o Satisfaction of Needs of All Humans: o Consumption Standards for Long term sustainability o Enhancing Economic Growth in Poorer Areas o Conservation of Plant and Animal Species o Change in the Content of Growth o Mutual Reinforcement of Economic and Social Development o Conservation of Natural Resources o Unification of Economies and Ecology etc. • Many companies can implement the TBL structure to assess in broader sense their performance in order to create a higher business value. • CSR enables a firm to achieve a triple bottom line. The triple bottom line consists of three main elements - people, planet, and profit • Businesses, non-profit organizations and government are all users of TBL.

2.7 KEYWORDS • Amorphous: Unstructured or vague • Philanthropy: Charity of generosity • Social contract: Agreement between business (state) and society (population) for mutual advantage • Sustainability: support growth over long period • Urban plight: Suffering caused due to development and modernization 2.8 LEARNING ACTIVITY Give a case study on any company with CSR activities ensuring sustainability and environment development ___________________________________________________________________________ ___________________________________________________________________________ 2.9 UNIT END QUESTIONS A. Descriptive Questions (Long Answer) 1. There is a relationship between CSR and sustainability. Do you agree, justify? 2. Elaborate the difference between CSR and sustainability? 3. Does CSR help in the sustainable development of the organization? Justify your answer. 4. Is there a relationship between environmental sustainability and corporate social responsibility? Explain 5. Explain CSR through Triple Line in Business. B. Descriptive Questions (Short Answer) 1 Give 4 factors of sustainability? 2 List the key features of sustainable development?

3 Discuss the main issues of sustainable development? 4 What are the environmental aspects of CSR? 5 Why is CSR important to the environment? C. Multiple Choice Questions 1. The stakeholder view of social responsibility mentions that the companies must answer to the needs of: a. employees and customers b. shareholders and owners c. all interested parties d. all those who might sue the organization. 1. A company is thought to have just corporate social performance when: a. stockholders spend in socially accountable causes b. charitable deductions are automatically deducted from pay without the approval of employees c. the company has not been convicted of moral violations for five consecutive years d. stakeholders are pleased with its level of social responsibility 2. Corporate Social Responsibility (CSR) consists of which four kinds of responsibilities a. Economic, ethical, societal, and altruistic b. Economic, legal, ethical, and altruistic c. Fiscal, legal, societal, and philanthropic d. Economic, legal, ethical, and philanthropic 3. Which of the following does the term Corporate Social Responsibility relate to? a. moral conduct b. Human rights and employee relations c. All of the above d. None of the above

4. Which of the following does the term Corporate Social Responsibility relate to? a. Ethical conduct b. Human rights and employee relations c. All of the above d. None of the above Answers: 1-c, 2- d, 3-d, 4-c, 5- b 2.10 REFERENCES References Book 1. Sunder, Pushpa (2000), Beyond business from Merchant Charity to Corporate Citizenship, Tata Mc Graw Hill, New Delhi 2. Friedman, Milton (1970), “ The Social Responsibility of Business is to increase Its Profits” New York Times Magazine, September 13, pp. 32-33, 122-126. 3. Committee for Economic Development (1971), Social Responsibility of Business Corporations, CED, New York, p.15. Textbook 1. Business Ethics and Corporate Social Responsibility by Michael Vas and Aurora Vaz. 2. Corporate Social Responsibility by Madhumita Chatterjee. 3. Ethics and the conduct of business by John R Boatright, Jeffery D Smith

UNIT – 3 : EVOLUTION OF CSR Structure 3.0 Learning Objectives 3.1 Introduction 3.2 History of CSR in the past 3.2.1 Role of State 3.2.2 Impact of Religion 3.3 Merchants to Multinationals 3.4 Growth of Indian Business 3.5 Merchant Charity and CSR 3.6 Corporate Philanthropy and CSR 3.7 Summary 3.8 Keywords/Abbreviations 3.9 Learning Activity 3.10 Unit End Questions 3.11 References 3.0 LEARNING OBJECTIVES After studying this unit, you will be able to: • Provide a distinctive historical perspective on the evolution of CSR as a conceptual paradigm by reviewing the most relevant factors that have shaped its understanding and definition, such as academic contributions, international policies and significant social and political events • Analyse the importance of CSR in governance. • Concept of Corporate Philanthropy

3.1 INTRODUCTION The relationship of the company beyond the legal existence to socio-economic scenario is well summarized by Berle (1959). According to him, the ‘company’ is not merely a legal institution. It is rather a legal device for attainment of any social or economic end and to a large extent; this is done publicly and by being socially responsible. It is, therefore, a combined political, social, economic and legal institution. This brings us to the concept of Corporate Social responsibility (CSR) as corporations derive wealth from society. Thus, in the larger perspective, it is society that actually gives permission to business to operate in society and earn money. This obviously demands that the business world pays for this permission by a legitimate sharing of the wealth it is earning from society by sharing it with society. Since CSR is a responsibility that corporations have to fulfill, first we shall understand the dimensions of business behavior and importance of the concept of business world. The dimensions of corporate behavior encompass those activities of the corporate that ensure responsible and just behavior towards society. There are four major dimensions of corporate behavior: • Setting boundaries of learning, accountability and responsiveness. • Building activities that form the basis of learning • Creating measures that validate and make knowledge effective, and so form the basis for decision making and action. • Institutionalizing trust in ways that create virtuous circle of practice and further engagements with stakeholders. Values are, therefore, essential to the organizational functional and dynamics. This is the reason CSR has received such importance in management practice. Businesses have to align their profitable opportunities with their social identities and underline values of corporate responsibility. The world is increasingly undergoing rapid development. More powerful and enabling technologies are constantly being created. This necessitate that we radically alter our view of ourselves and the world and our functioning as beings in order to ensure sustainable development

3.2 HISTORY OF CSR The history of CSR can be traced back to the description of the aim of state found in ancient Indian literature. Observations in the Vedas suggest the peace, order, security, and justice were regarded as the fundamental aims of the state. Chandogva Upanishad (V. 11.5) records that religion was to be promoted morality was to be encouraged, and education was to be patronized. All Round welfare of the public was clearly regarded as the chief aim of the state during the Vedic and Upanishadic ages. These relate to periods as old as c.1000 and c.600 BC. Literatures on politics describe the promotion of dharma (moral law), rather (wealth), and Kama (pleasure) as the aims of the state (Altekar 1977). The state was to promote dharma by fostering a feeling of piety and religiousness, by encouraging virtue and morality, and by patronizing social institutions like hospitals, feeding houses for the poor, as well as promoting literature and sciences. Artha was procured by encouraging trade, industry, and agriculture Fresh land was brought under cultivation, and dams and canals were built to reduce dependence on rain. Rules were formulated for systematic and extensive working of mines. Kama was ensured through establishment of peace and order. Individuals could enjoy life undisturbed and pursue finer arts and aesthetic culture. Ancient policymakers were thus fully committed to the ideal perfect development of the individual, which culminated in the full development of society. 3.2.1 Role of the State The activities of the state, as envisaged by the Mahabharata and the Arthasastra, relate to all the aspects of human life: social, economic, and religious. The idea that state was a necessary evil was refuted and even the laissez-faire theory that the activity of the state should be reduced to the bare minimum of maintaining advocated popularly. The state was to administer in the activities included establishing piety, morality, and righteousness, by encouraging learning, education, and art. The state delivered public welfare by maintaining rest houses, charity halls, and hospitals to provide relief during distress situations like floods and famines. The state ensured increased productivity in agriculture by acquiring fresh land, and by building dams and canals. It is interesting to note that the state was encouraged to see that the