CU_SEM_III_MCOM-CSR-Second draft-converted

population was evenly distributed and for these fresh lands were often colonized and developed, so that there was not over-dependence on one place and development was well spread out by enriching resources like forests, mines, etc., along with agriculture. Thus, the state played a proactive part in helping trade and industry and ensuring that common citizens did not suffer from capitalistic greed and selfishness. The state regulated vices like gambling and drinking by appointing officers to supervise these institutions. Extreme precaution was taken that individual liberty did not suffer in this embracing of welfare activities. This was achieved through a balance between bureaucracy and independent institutions like trade guilds and Stamina or Brahmana assemblies, which were local in nature. In these assemblies, people had the upper voice, meaning they were not state-controlled and had the autonomy to take independent decisions. Decentralization was carried out by empowering the village panchayats (council), city councils, and trade guilds. In periods of economic instability, guilds took over decision-making and governance roles at local levels (adapted from Altekar 1977, pp. 58—63). Ancient Indians understood and appreciated the idea of collaboration and felt that the state could reconcile conflicting interests if its bureaucracy worked in close cooperation with well- established popular bodies. During the Maura (c.300 BC) and Gupta (c.500 AD) periods, this collaborative, socially responsible process worked extremely well and India experienced its golden era of political strength and socio-economic harmony and stability. This portrays the continuity of social responsibility, which can be traced from the BC (before Christ) era to the AD (after the birth of Christ) period in history as an ideology in ancient India. 3.2.2 Impact of Religion Religion played a major role in encouraging charity. Hindu scriptures highlighted the concept of using wealth for granting charity, performing sacrifices, and discharging debts. The best gift was the gift of spiritual knowledge and the lowest that which satisfied the basic physical needs of human beings. Therefore, most Hindu merchants made generous gifts to temples, monasteries, and conglomerates of religious practitioners like priests and monks. To encourage secular learning, scholarships were instituted by the merchant families and educational institutions were set up. Other forms of gifts included land, cattle, food, etc. The founder administered all endowments, whether small or big. Thought of giving evolved into

the final philosophy of Lokasangrah (l (universal brotherhood) and Sarvabhutahita (welfare of all beings) found in the book of the Hindus—the Gita. Jainism also encouraged charity and many hospitals, rest houses, libraries were constructed from their endowments. Since the Jain religion strictly prohibited any kind of violence and cruelty, Jains normally provide charity to all races and creeds as part of the practice of compassion for all living beings. Islam popularized Zakat, i.e., a certain percentage of the acquired wealth an profit should be dedicated for the purpose of charity. Building mosques attached educational institutions was a common form of charity. The tenet of giving was central to Christian teachings as well. In fact, Christians were told 'let thy right hand not know what thy left hand gives' signifying the importance of giving but not for publicity. In Christianity also wealth was considered as a trust and therefore, distribution of wealth was also about doing justice to society, not just compassion. Christianity highlighted the importance of giving time and personal service for the welfare of others, and that encouraged great humanitarian activities by the followers of the religion. The Parsi community in India drew its strength from their religion Zoroastrianism. The religion, in a way, preached a middle path by neither glorifying poverty nor wealth. It was more about self-development through self help and hard work. Prosperity was to be shared through works of beneficence and public well-being. Charity was, by and large, motivated by religion and spirituality. However, at times practice faltered in terms of strict adherence to the religious tenets because self-interest drove charity. This is visible when we find that very often charity was linked to business interest and practices. Studies by Rudner (1995) and Bayly (1983) have clearly shown that religious giving was often linked to social creditworthiness and this in itself was self-reinforcing and self-fulfilling. 3.3 MERCHANTS TO MULTINATIONALS The emergence of reform movements like Buddhism and Jainism, which later became independent religions, gave an extraordinary fillip to trade and business. These religions emphasized non-violence and therefore those who embraced it chose to follow trade as a

profession because it helped them maintain the tenet of non-violence. This was so because in the social system thon prevalent, there was a movement against Brahmanic hegemony. The Kshatriyas were the warrior class, the Vaisyas tilled the land, which injured living organisms when land was cultivated, and the Sudras performed menial labour. The merchants practised frugality, honesty, and believed in individual responsibility. These qualities were supported by religious and spiritual teachings and the merchants came to be highly respected in the community. They donated wealth for social causes like setting up educational institutions, hospitals, gardens, charity homes, orphanages, etc. They were renowned for their charity, which also helped them gain social status. History records eminent merchant families like Virji Vora of Surat, Shantidas Jawahari of Ahmedabad in Western India, Jagatseth of Murshidabad in East India, and Malaya at Pulicat in South India. Similar merchant guilds like those that flourished in ancient India can be traced in medieval India as well. A businessman was called shreshthi, which later changed to Seth or Sethi. The wealthiest businessman was also selected as the Nagarseth who took care of the city's needs as a modern-day mayor does. With the establishment of British rule in India, there was a change in the position of the merchant families. The British brought modern banking and uniform currency system, which affected the merchant bankers and money lenders. Though business flourished because of improvement in transportation, irrigation, communication, etc., traditional business families could not keep pace with the change. Families who migrated from pure trade as business to industries became the next famous group of businessmen. The Indian merchant community Consisted of various religious and regional groups. Some of the famous communities were the Marwari’s, Khatri’s, Chattier, and Persis. These communities utilized the opportunities that the British provided by either becoming intermediaries, working in the East India or becoming contractors and brokers. None of them had strong community and helped needy members of the community. Among these communities it was only the Persis who embraced western education and western (adapted from Sunder 2000).

Though the merchant community was heterogeneous. there underlying bond of unity based on commercial solidarity (Rudner 1995). Communities collaborated at different levels of common interest, like religion supplying credit, marketing, etc. They actively participated in social reforms and ensured the growth of social welfare. 3.4 GROWTH OF INDIAN BUSINESS With the establishment of the British hegemony, the urban economy threw up two distinct classes of business categories. One was the typical westernized expatriate businessmen who usually running mines, plantations. or indulging in export-import trade were controlled by small groups or managing agencies like Shaw Andrew Yule, and Dunlop. to name a few. Indian business houses drew capital from the 'bazaar economy', consisting r, the local bankers, money lenders, wholesale merchants, and others. Is group being not the extension of the earlier mentioned merchant families. belonged to the same community, but to new families who had made in opium, indigo, cotton, land, and banking. Some of them had beyond the confines of India and forged ties with businesses in other Some famous communities that ventured beyond India to do business Parsis with China, Chettiars with Burma, and Bhatias, Khojas, and with the Middle East and East Africa. Others had become brokers (the Banias Calcutta and Dubashes of Madras) to the European agency houses et al. 1995). There was an intellectual movement in India at this juncture. This intelligentsia drew its impetus from the introduction of English education which helped in the growth of liberal ideas, and scientific and technological learning was encouraged. A critical outlook on the past and new aspirations for the future marked the new awakening. The pioneer and true representative of the new spirit of the age was eminent social reformer Raja Ram Mohan Roy. whose English biographer remarks that the Raja 'presents a most instructive and inspiring study for the new India of which he is the type and the pioneer He embodies the new sprit• its freedom of enquiry, its thirst for science, its large human sympathy, its pure and sifted ethics, along with its reverent but not uncritical regard for the past and prudent . . . disinclination towards revolt' (Mujumdar et al. 1995). Seeds of Modern CSR

Figure 3.1: Evolution of CSR Indians quickly built on their potential by embracing new technology and business opportunities that were beneficial to Indian society. Charitable activities were still on traditional lines, like donating to educational and religious institutions. However, with the spread of western education, as represented by Raja Ram Mohan Roy, a perceptible change was noticed in the process of charitable investment. Now the shift was towards more inclusive philanthropy, based on the equality of all human beings. Christian missionaries, with their humanitarian approach, played a significant role in bringing about this change. The political awakening in India, on thelions of democratic and secular understanding of freedom, helped in creating an atmosphere of social justice, equality. individual freedom. and universal brotherhood. The state helped by awarding status to individuals engaged in philanthropy. There was a realization that the development of society depended on public enlightenment. Therefore, education was the most popular and favourite field for donations. Public health was also a concern that received charitable help as health facilities were very poor. Endowments to build libraries, mooting halls, parks. and gardens are also recorded. Indian culture was encouraged through theatre, dance, and music. The Parsi community was more

proactive in providing basic needs like housing and sanitation than the other philanthropists. Agriculture and rural development still did not receive the attention they should have. According to Rudner (1995), personal interest was a major driver in the philanthropy of that age: 'Religious gifting and secular philanthropy—far from constituting irrational expenditures for other worldly ends—were investments in the conditions that made worldly commerce possible.' (This means that philanthropy was not limited to only religious charities for spiritual fulfilment but also added to actual material gains and profits in economic terms.) Philanthropy in this period suffered from the stigma of traditionalism, but it cannot be denied that it prepared the ground for future institutional reforms. First Industrial Corporations There were momentous changes in the Indian business firmament with the establishment of industrial houses and expansion of the entrepreneurial base. The freedom movement united the efforts of all members of society and there were major shifts in philanthropic activity geared towards achieving independence. Mahatma Gandhi's call for trusteeship, which promoted the idea of voluntary renouncement of part of the wealth by the business community for the good of the community, and also acting as trustee of that wealth to ensure proper and fair implementation, appealed to the business community. Gandhi clearly emphasized that trusteeship was neither charity nor philanthropy—it was to be a way of life. 'The art of amassing riches becomes a degrading and despicable art, if it is not accompanied by the nobler art of how to spend wealth usefully. Let not possession of wealth be synonymous with degradation, vice, and profligacy' (Venkat Subbiah 1997). The combined effects of political and socio-economic factors led to the development of large- scale philanthropy, and famous families like Tata, Birla, Shri Ram, Godrej, Dalpatbhai Lalbhai, Singhania, Modi, Murugappa Chettiar, Kuppuswamy Naidu, Mafatlal, Mahindra’s, and others became the backbone of India's economic strength. To this day, these families are the pride of India. Slowly, the dawn of the era of social responsibility was being acknowledge by business. The government also moved from closed economy policies. The enlightened educated business leaders realized government alone cannot be held responsible for development and there a movement towards social responsibility emerged. An important change the industry acceptance of social responsibility as part of the management the enterprise itself.

There was a visible movement towards the rural sectors and the communities living at the edge of urban industrialized sectors. However, the pace was slow, as there was scepticism about the lack of knowledge in various sectors and an amorphous understanding of social responsibility. The go news is that steps had been taken and there was going to be no looking bat Smaller groups also decided to join the established business houses in mission towards CSR. Thus, we see that CSR is not a modern discovery and certainly not a distort that can be credited to the economically developed countries of today. The question is: is economic development a prerequisite for CSR or does economic development follow CSR? The answer is not simple because CSR involve: number of stakeholders with unique demands of their own. The uniqueness the demands stems from the fact that each actor in the socio-economic scene is a product of the scenario and also shapes the scenario. Therefore, CSR to be part of the DNA of an organization for the organization to understand t] dilemma and institutionalize the concept. This requires that the organization driven not only by rules and regulations, but also by idealism. This stakeholder concept and the processes needed to institutionalize the CSR process v become more comprehensible in the chapters that follow. Two examples of modern CSR efforts of organizations are given at the of this chapter to show the tremendous growth and acceptance of the cons among the industrial and business community. 3.5 MERCHANT CHARITY Merchant gifting was a strategic ploy in gaining political influence and smoothening relations with rulers whose origin was outside the community, city, or country. In return, the donors were credited with honours by the rulers, which enhanced their prestige and added to their creditworthiness and thus improved business. During the British rule, gifts to buy favours with the rulers took the form of philanthropy, since a different moral code precluded personal gifts. Merchant charity can be studied under four broad headings—religious secular, individual, and collective. Religious grants were made, as the name suggests, to any activity of religious significance and was not limited to any geographical boundary. Merchants often donated to

religious institutions beyond their homelands. Secular charity included donations and grants to activities like development in infrastructure, education, arts and culture, and public welfare, etc. There are references to individual merchant charity and even of a number of merchants coming together in a group and offering collective grants and donations. Perhaps the earliest religious endowments can be traced to the Buddhist era, when land was donated for building stupas, or financial help was given to build them and monastic institutions like the Sangha was also given financial support by devout merchants. Similar activities were followed by Hindu merchants for their religious communities and temples. Merchants often went beyond their geographical boundaries and donated to famous religious institutions. Some notable examples are the Trivedi family, a wealthy family of Brahmin bankers, who built a big temple in Surat and many others across India. The leading banking family of Surat—the Chakawala family—built a temple of Shiva in a nearby village and also donated huge sums to Vaisnavite (followers of Lord Vishnu) deities elsewhere, the well- known family of jeweller Manekchand Jhaveri, who belonged to the Jain community, built rest houses for pilgrims and hostels for Jain students in Surat, Bombay (now called Mumbai), Kolhapur, and other places where Jains traded and worshipped. Merchant families kept a portion of their profit to use for charitable purposes. Individual grants were made in areas of public welfare, like feeding the poor, building roads, rest houses, wells, providing relief during natural calamities like floods and famine, setting up schools and colleges, and giving alms. Rich merchants often helped their less well-to-do colleagues with financial support because of strong community ties that wore ingrained in every community. Communal institutions like hostels were usually built to cater to members of the same community. Animal homes were also provided for as an extension of ahimsa (non-violence) as a religious mandate. It is also evident that merchants collectively supervised charitable activities for the benefit of the common population. The Buddhist Jatakas record incidents of collective charities organized through the collection of various rates and taxes, which were used for public benefit. Similar instances can be traced back to the nineteenth century, when businessmen like jewellers and grain dealers came together in an effort to help their city by collecting cesses

(taxes). Hindu and Muslim merchants often helped in the upkeep of each other's shrines through donations (Haynes 1987). Although the usual help was extended mainly to members of the same community or caste, it was not unnatural to find grants being given for the development of entire villages and cities, especially during times of calamities. Importance of education Education was considered one of the most important needs of society and substantial grants were made to promote it through granting land free, building the institution, providing free hostel facilities, etc. An interesting quote elaborates this point further: 'Respect for learning has forever been the redeeming feature of the East . . . The most unprincipled chief, the greedy moneylender, and even the freebooter vied with the small moneylender in making harmony with his conscience by establishing schools and rewarding the learned. Not a single temple, mosque or dharamshala was without the school attached to it where the youth gathered for religious education. Few wealthy men did not engage a maulvi, a pandit, or a guru to teach their sons, and along with them the sons of their friends and dependents. There was not a single villager who did not take pride in devoting a portion of his produce to a respected teacher' (Sunder 2000). Thus, we see that social work has always been one of the driving forces for business, whether meeting urgent needs or long-term commitment for social well- being. 3.6 CORPORATE PHILANTHROPHY AND CSR

Figure 3.2 Corporate Philanthropy and CSR The word philanthropy comes from the Greek word 'philanthropos' includes two words — philos (loving, caring) and Anthropos (human being). Thus, philanthropy implies giving or donating for the well-being of human beings. Essentially philanthropy is an act of charity, i.e., giving donations to public welfare. Philanthropy refers to “Goodwill to fellow members of the human race; especially an active effort to promote human welfare.” (Merriam Webster) Corporate Philanthropy is the act of a corporation or business promoting the welfare of others, generally via charitable donations of funds or time. Charity and philanthropy are often used interchangeably; however, this is not always the case. According to \"Philanthropy in America: A History,\" the difference between the two is \"charity relieves the pains of social problems, whereas philanthropy attempts to solve these problems at their root.\" Corporate philanthropy is often focused on treating the issues that non-profit organizations exist to seen. Corporate philanthropy can come through a variety of channels monetary donations or gifts of time and talent (in-kind donations). These may be more commonly known as matching gifts or voluntary grants, and any other type of product or service donation that is non-monetary. Types of Corporate Philanthropy There are several channels of corporate philanthropy. include matching gifts and volunteer grants. Corporate can also include product and service donations. For example, Microsoft donates, on average, about $ 2 per day in software to non- profits (organisations) around the key to Microsoft's corporate philanthropy successes is really communication. Matching Gift Programmes Matching Gift Programmes are what we like to call “free non-profits.\" These are charitable giving programmes established by the companies where they match donations to employees to eligible non-profit organizations. The types of depend on what the company's policies are, but some companies will match the donation 1:1, and others might even double donation

(i.e., if an employee donates 500 to a non-profit organization, their employer may contribute 1000). Each employee is different, so donors should always check to see what kind matching gift programmes their employers may offer. Volunteer Grant Programmes Volunteer Grant Programmes are different, in that corporations may not give money right away to a non-profit organization because they are encouraging volunteerism of their employees in communities where they live and work. Through these programmes, companies will provide monetary grants to organizations where employees volunteer on a regular basis. There are two primary structures to these programmes: ▪ A corporation will donate a certain amount of money per hour to an organization where an employee volunteer. ▪ A corporation will set a threshold so that once an employee for a certain to that number non-profit of hours, organisation. The corporation will provide donation to that non-profit organisation. Thousands of companies worldwide offer some kind of corporate philanthropy programmes. Here are the top 10 forms of corporate philanthropy: 1. Matching gifts 2. Fundraising matches 3. Donations for doers 4. Team volunteer grants 5. Community grants 6. Volunteer support programs 7. Automatic payroll deductions 8. No strings attached annual grant / stipends 9. Internal employee fundraising campaigns. 10. Annual donation towards CSR activities. The future of corporate philanthropy—and corporate social responsibility in general - is likely to look much different than it does today, and the main difference will be a shift away

from traditional cash giving and toward addressing social challenges through business. Put another way: Companies will no longer just hand out money and products to the non-profits they align with. They will be engaged in solving social problems for profit. (Georgia - USA) that featured a host of corporate responsibility experts from the private and non-profit sectors. According to the group, the future of CSR lies in placing social purpose at the core of a company - \"integratinš it with the business's DNA\"- so that company's products, services, suppliers, employment practices and environmental policies all contribute to solving a social problem That means creating products that help solve a social problem. making financial investments in organizations, companies and communities that lead to social progress; managing a business’s environmental impact, including the selection of its suppliers, so that it leaves the smallest footprint possible, or even produces a net environmental benefit; utilizing the skills and experience of employees to provide the professional support that charities need to thrive; and just as importantly, implementing marketing strategies that capitalize on these efforts in ways that lead to more sales, loyal customers and better employees. Advantages of Corporate Philanthropy: Corporate philanthropy is an important element of social responsibility or CSR. Therefore, corporate philanthropy does have all the advantages of CSR. Competitive Advantage of Corporate Philanthropy: Corporations need to rethink both where they focus their philanthropy and how they go about providing philanthropy. Boosting social and economic circumstances in developing countries can generate more dynamic locations for a company's operations as well as new markets for its products. Indeed, we are educating that the most efficient means of addressing many of the world's serious problems is often to assemble the corporate sector in waves that advantage both society and companies. However, this does not mean that every expense of company will give benefit socially or every social benefit will improve competitiveness. 3.7 SUMMARY

• The dimensions of corporate behavior encompass those activities of the corporate that ensure responsible and just behavior towards society. • Religion played a major role in encouraging charity. Hindu merchants made generous gifts to temples, monasteries, and conglomerates of religious practitioners like priests and monks. • Jainism also encouraged charity and many hospitals, rest houses, libraries were constructed from their endowments. Islam popularized Zakat, i.e., a certain percentage of the acquired wealth an profit should be dedicated for the purpose of charity. • Christianity highlighted the importance of giving time and personal service for the welfare of others and that encouraged great humanitarian activities by the followers of the religion. • Charity was, by and large, motivated by religion and spirituality. However, at times practice faltered in terms of strict adherence to the religious tenets because self- interest drove charity. • With the establishment of British rule in India, there was a change in the position of the merchant families. The British brought modern banking and uniform currency system, which affected the merchant bankers and money lenders. • Mahatma Gandhi's call for trusteeship, which promoted the idea of voluntary renouncement of part of the wealth by the business community for the good of the community, and also acting as trustee of that wealth to ensure proper and fair implementation, appealed to the business community. • Gandhi clearly emphasized that trusteeship was neither charity nor philanthropy—it was to be a way of life. • CSR is not a modern discovery and certainly not a distort that can be credited to the economically developed countries of today. • Merchant charity can be studied under four broad headings—religious secular, individual, and collective • Corporate Philanthropy is the act of a corporation or business promoting the welfare of others, generally via charitable donations of funds or time. • Corporate philanthropy can come through a variety of channels monetary donations or gifts of time and talent (in-kind donations).

3.8 KEYWORDS • Corrective actions: improvements to an organization’s processes in order to eliminate causes of non-conformities or other undesirable situations. • Environmental: is about becoming accountable for the economic, environmental and social consequences of your business activities and effectively managing your organization’s environmental data and processes. It covers air, waste and water as well as reduction planning, carbon offsetting and emissions inventories. • Risk and compliance: focus on business continuity planning, risk and compliance management and regulatory change management. • Solicitors: Related to legal profession. • Transcendent value: Inspirational 3.9 LEARNING ACTIVITY Select the company of your choice and read their annual reports and analyse the relationship between corporate governance and corporate social responsibility. ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ 3.10 UNIT END QUESTIONS A. Descriptive Questions (Long Answer) 1. How did CSR evolve? 2. What is the difference between corporate philanthropy and corporate social responsibility? 3. How Social Responsibility or CSR policy can make a huge impact in the Indian economy? 4. What are some CSR issues confronted by multinational companies? 5. Does Government Have a Role to Play in CSR? B. Descriptive Questions (Short Answer)

1. Note on Corporate Philanthropy. 2. What are the types of Corporate Philanthropy? 3. Does religion benefit corporate social responsibility? 4. What are volunteer grant programmes? 5. Briefly explain the CSR of leading Corporations. C. Multiple Choice Questions 1. Sustainable development will not intend at: a. Social economic development which operates the economic and societal benefits available in the present, without spoiling the likely potential for similar benefits in the future. b. Sensible and justifiably distributed level of economic well-being that can be perpetuated frequently. c. Growth that meets the need of the present without compromising the capability of future generations to assemble their own needs. d. Maximising the present-day benefits through augmented resource consumption 2. Which of the following statements in relation to sustainable development is not true? a. Sustainable development is defined as the expansion that meets the needs of present without compromising the capability of our future generations to meet their own needs. b. Sustainability has the main objective of purely focusing on the natural environment. c. Sustainable development of various countries and the entire world is the only solution left with mankind to live for a longer period on Earth. d. Sustainable development not only considers the protection of the environment but also the preservation of economic feasibility as well as the social and ethical considerations. 3. The term sustainability refers to ________ a. Maintaining resource use at current or higher levels b. Keeping the natural environment and human society in a happy, healthy and functional state c. Holding or increasing the current quality of human life d. Always focusing on fulfilling short-term needs

4. Social sustainability refers to what? a. The concept of the enterprise supporting jobs and delivering income to communities in the long term b. Stewardship of resources and managing and conserving the environment c. The concept of the enterprise supporting jobs and delivering income to communities in the short term d. Sharing benefits fairly and justifiably and respecting the quality of life of communities and of human rights 4. Social, economic and ecological equity is the necessary condition for achieving a. Social development b. Economic development c. Sustainable development d. Ecological development Answers: 1 -d, 2- b, 3-a, 4-d, 5- c 3.11 REFERENCES Reference books 1. Chakraborty, S.K. (1995), Human Values for Managers, Oxford University Press, New Delhi, p.161 2. DiGeorge, Richard (1990), Business Ethics, 3/e, McMillan, New York. 3. Freeman, R. E and D. R. Gilbert (1988), Corporate Strategy and Search for Ethics, Prentice Hall, Eaglewood Cliffs, NJ 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 and Bibhu Prasanna Patra

UNIT - 4: ETHICS IN CSR AND CORPORATE BEHAVIOUR Structure 4.0 Learning Objectives 4.1 Introduction 4.2 Ethics in CSR 4.3 Gaia Hypothesis 4.4 Behavior of Corporate 4.5 Corporate Reputation 4.6 Summary 4.7 Keywords/Abbreviations 4.8 Learning Activity 4.9 Unit End Questions 4.10 References 4.0 LEARNING OBJECTIVES After studying this unit, you will be able to: • Understand an overview of business ethics and ethical management practices, with importance on the process of ethical decision-making and working through modern ethical dilemmas faced by business organizations, managers and employees. • Accustom with how ethics can be incorporated into business decisions and how do they benefit physically from engaging in CSR policies, activities and ethical practices. • Eloquent the relationship between social responsibility and ethics and elaborate the reasons to implement the said concepts in strategy decisions, business policies and practices.

4.1 INTRODUCTION The notion of moral behaviour and CSR has become popular in recent years in both developed and developing countries as a result of growing sense of corporate unlawful activity. The above said concepts can bring significant profits to a business. The notion has to be understood which says that every company has some responsibility to the society beyond making just profits for shareholders. This notion has been popular around for centuries. These concepts are very crucial for success and expansion of any organization. Business ethics primarily lead to positive employee, customer and community relations. Not only that but also, they notice that better public image/reputation; greater customer loyalty; strong and improved community relations can endure to the advantage of corporations that are socially responsible. These are the major reasons that state why CSR has a growing significance. The core belief is that the business organization has a societal and moral responsibility, as well as, the economic task of creating value for shareholders or owners of businesses (Carroll, 1989). Whereas, the economic responsibilities of a business are to create goods and services that society needs and wants at a price that can persist the continuing survival of the business, and also convince its obligations to investors; ethical responsibilities are those behaviours or activities expected of businesses by society and other stakeholders such as employees (Ferrell & Fraedrich, 1997). 4.2 ETHICS IN CSR Business ethics is a form of applied ethics to business situations. It relates to moral behaviour and actions on the part of business firms. This means, business firms got to practice ethics towards various stakeholders. They must provide quality goods at right prices to the customers. They should not indulge in unfair business practices like misleading advertisements, faulty weights and measures, creating artificial shortages, black marketing, etc. They must not exploit the employees - they should pay proper wages and salaries, provide good working conditions and welfare facilities, etc. Ethical business firms must pay proper dividend to shareholders and provide relevant information. They must also provide proper taxes to the tax authorities. The business firms must not create problems for competitors. They should pay to the suppliers on time.

The business firms must also repay loans and interest to the banks and other lenders. The business firms must fulfil their social responsibility towards members of the society. The manager who seeks to act ethically and to ensure the ethical conduct of others to achieve “ethical management” must have ability to not only understand ethical issues and resolve them effectively, but also to appreciate the challenges of ethical decision making and ethical conduct in an organizational setting. The fact that much business activity takes place in organizations has profound consequences for the manager's role responsibilities for several reasons: • First, much decision making in business is a collaborative endeavor in which each individual may play only a small role. Many organizational decisions get made without any one person coming to a decision or being responsible for it. • Second, this collaborative decision-making process is subject to dynamic forces that may not be recognized or understood by any of the participants. As a result, decisions get made that have consequences no one intended or expected. • Third, many organizational acts are not the result of any one person's actions but are collective actions that result from a multiplicity of individual actions. Many corporate acts are thus \"deeds without doers. • Fourth, organizations themselves create an environment that may lead otherwise ethical people to engage in unethical conduct. Organizational life, according to sociologist Robert Jackal, poses a series of \"moral mazes\" that people must navigate at their own peril. Consequently, the typical case of •wrongdoing in organizations involves missteps that are due more to inadequate thought than to deliberate malice, where people get \"lost\" in a moral maze. The following two sections discuss the findings, mainly of psychologists and sociologists, about how ethical mistakes result from flaws in individual decision making and from organizational forces. Features/Characteristics of Business Ethics: The following are some of the characteristics of business ethics: 1. Ethical Values:

Business ethics is concerned with morality in business. In today's world, business community forms a large part of the society and its actions (like right or wrong, legal or illegal) are bound to have a direct impact on the wellbeing and welfare of the society. Business affects society in terms of what it does, i.e., what products it supplies. Therefore, it is necessary that business community conduct its activities with self-check, and self-control keeping always in mind the interest of community at large. 2. Relative Term: Ethics is a relative term i.e.; the concept of morality and immorality differs from one individual to other or society. What is moral in one society could also be immoral in other. For example, taking or giving bribe is taken into account as unethical in our society but could also be a routine affair or simply ignored by society in another countries. Protection of Stakeholders' Interest: Business ethics. implies that business firms should do first good to the society and then to itself. Business firm is an integral part of society, and therefore, it has social responsibility to protect the interest of those groups -- employees, customers, shareholders, and other stakeholders who contribute to its success. 3. Business-Society Relationship: Business ethics set the terms and standards to understand business-society relationship. It indicates what society expects from business and what it cares business. 4. Provides Framework: Like individuals, business firms are bound by social norms and regulations. Business firms are expected to undertake their activities within the limits of legal, socio -cultural, and economic environment. 5. Systematic Study: Business ethics is a systematic study of business policies and actions that have an impact (positive and negative) on human beings and the society. For example, a corporation that cares for better natural environment will pursue those plans and policies that protects environment. 6. Code of Conduct:

Business ethics, like code of conduct or professional ethics provides guidelines to regulate business activities on legal, moral, social and ethical principles. It prescribes what should and should not be done for the welfare of the society. 7. Guiding Principles: Business ethics are the guiding principles which helps to differentiate good or bad, right or wrong, proper or improper business decisions and actions. 8. Universal Application: Business ethics has universal application. It is applicable to all or any business units altogether countries whether large or small. However, the degree of business ethics may vary from country to country. 9. Voluntary in Nature: Business firms are not forced to adopt ethical business practices. A business firm adopts ethics at its own free will. For instance, ethical business firms adopt fair business practices without any enforcement by the Government authorities or by the pressure from social groups. Professional business firms like that of the Tata Group adopt fair business practices on their own relating to product's quality, pricing, promotion, packaging, etc. 10. Evolved Discipline: Business ethics has evolved over a period of time. Prior to 1970, business ethics were confined to genre} welfare of the stakeholders. On April 22, 1970, the first 'EaDay' was celebrated to support for environmental protection. The observation of 'Earth Day' gave rise to the concept of 'Environmental Ethics'. Therefore, professional business firms take measures to safeguard the environment by controlling pollution, and developing eco-friendly goods. 11. Reconciliation between Economic and Social Objectives. Business ethics aims at reconciliation between economic and social objectives of a firm. Business ethics is not against fair profit making. But it is against making unfair profits at the cost of customers, employees

Business Ethics is Different from Business Law: Ethics is a set of guidelines based on moral value that guide firms in their self-regulation of business activities. Business laws and regulations are framed by legal authorities for fair conduct of business practices. If ethics are not followed, there is no penalty or fine, however, if business law is violated, the legal authorises may impose fines and penalty. Also, business ethics are abstract in nature, whereas, laws are expressed and published in Wolfing. and others. Also, business firms expand their business through fair means and not at the cost of the competitors. NEED AND IMPORTANCE OF BUSINESS ETHICS The need for business ethics is more felt in recent years than ever before. The following points outline the importance of business ethics: 1. Survival of Business: Business needs to follow ethical values for its own high-quality and survival. A firm can have short-term and rapid gains by resorting to unethical means and not regarding welfare. However, such firms grow fast and are out of business faster. On the other hand, organisations doing business morally have continued to endure and flourish for a long time. 2. Protection of Consumer Rights: The application of business principles will help to bestow and execute consumer rights. This will improve the strength of individual consumer against the powerful businessmen. Business ethics are often wont to check malpractices like adulteration, unfair trade practices and to form the working of business consumer oriented. 3. Consideration of Society's Interest; Those firms, which follow business ethics in the society, would make every possible attempt to produce goods and services not only in the awareness of the consumers, but also in the interest of the society. These firms would look into not only the customers' well being, but also welfare of the society. Therefore, they would make every possible effort to produce eco-friendly products. 4. Interest of Small-scale Industry:

Business ethics is essential to defend the interest of small-scale business firms. The propensity of enormous business units is usually to govern the market and pursue away the tiny and medium scale units from the market. Small-scale units can set up their position and fight for his or her rights if the industry follows a code of ethics 5. Better Relations with Members of the Society: Business ethics is essential to expand good relations between business and society. The relationship of business with society has various dimensions such as its relations with shareholders, employees’ consumers, distributors, competitors and government. Ethics is necessary to take care of good relations among the firms on one side and between the firm and social groups on other. Business ethics will assist to endorse and defend the curiosity of various groups, associated with business activities. 6. Mutual Benefit: Business ethics benefits the business firm as well as the society. The firm that adopts business ethics get good name within the society. It may be ready to increase confidence within the minds of the buyers who successively would help to enhance the sales of the firm. The society also can gain thanks to ethical practices on a part of the business. For instance, the consumers can benefit by way of quality goods at right prices, the workers can get fair treatment, and so on. 7. Facilitates Growth and Expansion: Business ethics facilitate growth and expansion of the business. Ethical practices enable the business firm to gain trust and confidence of the customers, employees, shareholders, and society. Therefore, there would be greater support to the firm from various stakeholders, which in turn facilitate growth and expansion of the firm. 8. Benefits to Shareholders: Business ethics helps a company to expand and grow. Therefore, the performance of the firm will improve in terms of market share, profits, etc. As a result, the shareholders stand to gain in terms of higher returns in form of dividend, bonus shares, and high share price on the stock markets. 9. Decision Making:

Firms that adopt ethical practices make better decisions in the interest of the organisation and that of the stakeholders such as customers, dealers, employees, etc. Respect for ethics will enable a firm to consider economic, social and ethical aspects while taking decisions. Therefore, a business firm would be in a better position to take sound business decisions which will benefit the firm in the short term as well as in the long-term. For instance, ethical business firms will always focus decision-making with a focus on quality improvement and reduction in costs. 10. Market Share and Profits: When a business firm adopts ethical practices relating to production, marketing, etc., customers develop trust and confidence in such companies. Therefore, the sales of such business firms and market share will increase. Also, being morally responsible does not imply to work only for the well-being of the society. Every company has a duty to fulfil towards itself and shareholders i.e., to earn profits and create value for them. Morally conscious companies are bound to progress and make more value or profits in the long run; however, they may make losses in the short run. 11. Attracts and Retains Competent Employees: People aspire to join companies that adopt ethical values. Business ethics helps to attract and retain competent employees. An ethical company that is dedicated in taking care of the employees will be rewarded with employees being equally dedicated in taking care of the company. Employees provide their skills, efforts and time in return for higher salary, bonus, and career advancement opportunities. Thus, business ethics motivates employees to work with commitment and dedication. 12. Corporate Image: Ethical practices enable a firm to improve its performance. Therefore, the image of the firm improves in the minds of various stakeholders such as employees, customers, dealers, financial institutions, government agencies, suppliers, shareholders, media and other sections of the society. -For instance, in India, the firms under Tata Group enjoy a good corporate image in the minds of stakeholders due to the ethical practices followed by the firms under Tata Group

4.3 THE GAIA HYPOTHESIS Figure 4.1: The GAIA Hypothesis While theorists of organizations were developing the idea of greater responsibility to stakeholders during the 1970s, other developments were also taking place in parallel. Gaia hypothesis was thus producing in 1979. In this hypothesis a different model was anticipated for planet Earth. As per this model, all the living matter and the whole of the ecosphere, was co- dependent upon its various components and formed a complete system. According to this theory, all the components of the system and this whole system was mutually dependant and uniformly essential for preserving the world as a planet capable of sustaining life. The hypothesis was a fundamental exit from classical liberal theory that upheld that every creature was self-governing and will therefore contemplate upon looking for contentment for its own wants, without regard to other entities. This traditional broad-minded outlook of the world forms the basis of economic organization present a validation for the survival of firm as organs of economic activity and provides the underlying principle behind the model of accounting adopted by society. The Gaia hypothesis inferred that interdependence, and a resulting acknowledgment of the consequence of one’s deeds upon others, was a facet of life. This subsequently demand a different understanding of accountability in terms of individual and organizational behaviour. Given the establishment of financial activity into profit seeking firms, each acting in segregation and anxious solely with profit maximization, warranted consistent with classical liberalism, it's perhaps expected that organization theory developed as organization-centric, looking merely to supervise the activities of the firm insofar as they

affected the firm. Any actions of the firm which had consequences external to the firm were held to not be the priority of the firm. Indeed enshrined surrounded by classical liberalism, alongside the sacredness of the individual to follow his own course of action, was the idea that the process of the free market device would intercede between these individuals to authorize for an equilibrium based upon the communication of those freely acting individuals which this equilibrium was an predictable result of this interaction. As a consequence, any concern by the firm with the effect of its actions upon externalities was immaterial and not therefore a proper concern for its managers. The Gaia hypothesis stated that organisms were interdependent which it had been necessary to acknowledge that the actions of 1 organism artificial other organisms and hence unavoidably affected itself in ways which were not of necessity directly related. Thus, the performance of an organism upon its environment and upon externalities was a matter of result for each organism. This is true for humans the maximum amount as for the other living matter upon the earth. It is possible to expand this similarity to a thought of the organization of economic activity taking place in modern society and to believe the implications for the organization of that activity. As far as profit seeking organizations are concerned therefore, the logical end from this is often that the effect of the organization’s performance upon externalities may be a topic of concern to the organization, and hence a correct subject for the management of organizational activity. While it is not sensible to assert that the development of the Gaia Theory has had a major impact upon organizational behaviour, it seems possibly overly accidental to suggest that a social concern among business managers developed at a corresponding time that this theory was propounded. It is perhaps that both are symptomatic of other factors which caused a re- examination of the structures and organization of society. Nevertheless, organizational theory has, from the 1970s, become more concerned with all the stakeholders of an organization, whether or not such stakeholders have any legal stat us with respect to that organization. 4.4 BEHAVIOUR OF CORPORATE Corporate behavior is significant for company accomplishments both financially and non- financially to maintaining healthy relationship between company’s business interests and its

(stakeholders). Any focus on healthy and wholesome growth in the corporate world cannot ignore ethics and CSR. The main concern of business is to make profits and ethics has to be proactive part of business if profits are to be sustained. Any process of business to be perfect pre-supposes accountability and integrity. Both qualitative and quantitative assessments require professionals to be committed and passionate about the activity and these qualities stem from the emotions of human beings, not from skill sets. Corporate behavior consists of legal rules, ethical codes of conduct and Social responsibility. Corporate behavior toward the stakeholders is becoming a much more important concept in practice and a central part of corporate governance. Corporate behavior is a vital concept because it has to be moral, legal, and accountable behavior for organizations, stakeholders and society. This aspect of the corporate behavior has more advantage for society also and so that is why it is more related with principles and CSR as well as with governance. Figure 4.2 The Corporate Behavior To be a publicly accountable corporation, a company must be more than a legal and ethical person also. CSR is not always a legal requirement; increasingly it is a compulsion. However, a company has to be socially accountable even though it is not a legal obligation (Aras & Crowther 2008b) - which is one of the significant characteristics of CSR. These provide the stage upon which social responsibility is build.

4.5 CORPORATE REPUTATION One concept which is of growing importance for business management is that of corporate reputation. the start of the twenty-first century creates a replacement challenge for companies – realizing the potential of their corporate brands. In today’s markets organizations specialise in intangible factors so as to compete and differentiate their services/products in an environment, which is characterized by rapid changes. The reputation of the corporation is usually the foremost important think about gaining a competitive advantage also as building financial and social success. Corporations are realizing that possessing a well-known name like Johnson & Johnson, can help them secure an honest position within the marketplace. Businesses aren't only faced with complicated and knowledgeable stakeholders but also by thorough directive and growing standards also as by independent associations and agencies that act as watchdogs guarding the security of their publics. There are many benefits claimed for being perceived as having an honest corporate reputation. One among the most cares with the very fact that it improves shareholder value; a robust corporate reputation inspires confidence in investors, which successively results in a better stock price for a corporation. It brings increased customer loyalty to the products of the corporate. A positive customer perception of a corporation extends to its products. Equally a robust corporate reputation is an influential factor for forming partnerships and strategic alliances because the partner company has the likelihood to enhance its own reputation by association. Similarly, a corporation with a rock-solid standing is more significant on legislative and regulatory governmental decision-making. Employee morale and commitment are higher at corporations with an honest corporate reputation. At a time of an emergency an honest corporate reputation can shield the corporate from criticism and even blame, and may help it communicate its own point of view more easily to audiences that are willing to concentrate to its point of view. an honest example is that the Pepsi tampering case consistent with which products on sale were found to contain hypodermic syringes. Pepsi dealt efficiently with the catastrophe by neutralizing public alarm with a PR promotion that highlighted the reliability of its industrialized method and its corporate trustworthiness.

Conclusion: Moral actions and moral business have effects not only for stakeholders and shareholders but also on the complete economy. We believe that when acting morally in the business decision- making process then this will make certain more efficient and fruitful consumption of economic resources. Corporate behavior affects accountable and appropriate economic and institutional development. It will be also an influence on all society and a common benefit. 4.6 SUMMARY • Organizations affect the external environment - businesses and the wider global environment. • The concepts of ethical behavior and corporate social responsibility have come to the fore in recent years in both developed and developing countries as a result of growing sense of corporate unlawful activity. • Business ethics consists of the moral principles and values that direct behavior in the world of business; CSR is an integrative management concept, which ascertains accountable behavior within a company, its objectives, values and competencies, and the interests of stakeholders. • Ethics is not new for people in business. The corporate world has always had some rules, standards and norms for doing business. However, these are usually altering with some social and cultural basis which can be diverse country by country, even though we might be anticipating universal rules. • When the company applies these principles or norms as a fraction of their responsibility, we can call them a principled code of conduct of trade. • There are three levels of ethical standards i.e., the law, policies and procedures, and moral standards of employees. • The Gaia hypothesis shows that the whole ecosphere forms a complete system, unlike classical liberal theory which postulates the independence of each entity. • From 1970 there have urbanized theories and regulations to comprise all stakeholders inside and outside the organization. • Corporate status is an increasingly significant factors for organizations • Ethics has been reinstated as a standard for organizational activity.

• Corporate Social Responsibility (CSR) as a subject indicates concern with social and environmental effects of organizational behavior. 4.7 KEYWORDS • Business Ethics: Standards of business behavior that promote human welfare and “the good.” (Hanson, n.d.) • Collective Impact : The promise of a group of important actors from different sectors to a common plan for solving a specific social problem. Uses a central infrastructure, a devoted staff, and a prepared procedure leading to a common plan, shared measurement, continuous communication, and mutually reinforcing activities among all participants. • External Corporate Social Responsibility: Corporate Social Responsibility efforts directed toward factors outside the firm: environment, local community, customers, suppliers, etc. (Hameed, Riaz, Arain, & Farooq, 2016) • Focused Strategy: A Corporate Social Responsibility strategy in which a company links their CSR to their core business. (Rosa, 2017a) • Integrity-Based Ethics Management: Combines a concern for the law with an emphasis on managerial responsibility for ethical behavior; goes above and beyond compliance for compliance’s sake and speaks to the deeply held values of the organization; may involve the use of “integrity initiatives” rather than a “legal compliance initiative.” (Paine, 1994) 4.8 LEARNING ACTIVITY How is the Covid-19 pandemic likely to change Corporate Social Responsibility for Companies? Explain with example. ___________________________________________________________________________ ___________________________________________________________________________ 4.9 UNIT END QUESTIONS A. Descriptive Questions (Long Answer)

1. Define Business Ethics. Discuss its characteristics. 2. Explain the need and importance of business ethics to business firms? 3. What is the relationship between CSR and corporate behaviour? 4. Is CSR an ethical issue? Discuss in detail. 5. Explain in detail The Gaia Hypothesis. B. Descriptive Questions (Short Answer) 1 Write Short Notes on: Indian Ethos 2 Explain the concept of Corporate Ethics 3 Explain Deontological theory of ethics. 4 Explain Utilitarianism theory of ethics 5 How is corporate reputation affected by ethical CSR? C. Multiple Choice Questions 1. __________, __________ and ___________ are included as categories of Carroll’s model of social responsibility including the ones at the discretion of the firm. a. consumerism; discrimination; environment b. moral responsibilities; unfairness; legal responsibilities c. moral responsibilities; legal responsibilities; economic responsibilities d. work-related safety; legal responsibilities; economic responsibilities 2. Which statement is/are true? a. Ethics is unidentical to religious morality or moral theology b. Ethics is the standard that guide the human behavior c. The terms 'ethics' and 'morality' are not identical terms d. All of the above 3. Corporate social responsibility that extends beyond legal mandates can help meet societal expectations in the absence of

a. Statutory devices b. Social tool c. Cost tool and Techniques d. Science tool 4. The moral dilemma of choosing between two rights refers to a. choosing between the lesser of two evils b. deciding which of two employee rights is the most important c. deciding to offer a bribe or lose out on an important opportunity d. choosing between the two types of sexual harassment 5. According to the concept of moral intensity, a worker is most likely to behave ethically and legally when a. a manager observes his or her behaviour closely b. the worker has intense morals c. the consequences of the act are minor d. the consequences of the act are substantial Answers: 1-c, 2-d, 3-a, 4-a, 5-d 4.10 REFERENCES References 1. Chakraborty, S.K. (1995), Human Values for Managers, Oxford University Press, New Delhi, p.161 2. DeGeorge, Richard (1990), Business Ethics, 3/e, McMillan, New York. 3. Freeman, R. E and D. R. Gilbert (1988), Corporate Strategy and Search for Ethics, Prentice Hall, Eaglewood Cliffs, NJ Textbook 1. Business Ethics and Corporate Social Responsibility by Michael Vas and Aurora Vaz. 2. Corporate Social Responsibility by Madhumita Chatterjee.

UNIT – 5 : CSR AND COMPANIES ACT 2013 Structure 5.0 Learning Objectives 5.1 Introduction 5.2 CSR Provisions under Companies Act 2013 5.2.1 Schedule VII of Companies Act 5.2.2 A CSR Scorecard 5.3 Summary 5.4 Keywords/Abbreviations 5.5 Learning Activity 5.6 Unit End Questions 5.7 References 5.0 LEARNING OBJECTIVES After studying this unit, you will be able to: • Understand the provisions of Section 135 of the Companies Act, 2013 (Act) in relation to the Corporate Social Responsibility (CSR) 5.1 INTRODUCTION

Corporate Social Responsibility (CSR) can be defined as a Company’s sense of responsibility towards the society and surroundings (both ecological and social) in which it operates. Companies can accomplish this responsibility through waste and pollution reduction processes, by contributing educational and social programs, by being environmentally responsive and by undertaking activities of similar nature. CSR is not charitable trust or sheer donations. It is a technique through which the businesses are conducted by which corporate entities evidently contribute to the social good. The companies that are socially conscious do not restrict themselves to only undertaking activities which will make them profitable. They employ CSR to incorporate economic, environmental and social objectives with their operations and growth. CSR is supposed to augment reputation of a company’s brand among its customers and society. Section 135 of the Companies Act, 2013 prescribes obligatory provisions for Companies to fulfil their CSR (Section VII). This article aims to analyze these provisions (including all the amendments therein). 5.2 CSR PROVISIONS UNDER COMPANIES ACT 2013 According to the companies Act 2013, the subsequent activities can be included in CSR, eradication of starvation and scarcity, promotion of education and gender equality, empowerment of women, decrease in child mortality and improvement in maternal health, re bat of HIV and other diseases, environmental sustainability, training, contribution to the Prime Minister's National Fund or any other fund set up by the Central or state welfare of SC/ STS and 0Bcs. The list is likely to grow the exact provisions of the CA 2013 are still being debated. Section 135 of Companies Act 2013, provides legal provisions relating to Corporate Social Responsibility:

Figure 5.1: CSR provisions under Section 135 of Companies Act, 2013 1. Every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during any financial year shall comprise 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. 2. The Board's the composition reports under of sub-section the Corporate (3) of section 134 shall reveal the composition of Corporate Social Responsibility Committee. 3. The Corporate Social Responsibility Committee shall, — a. Devise and advise to the Board, a Corporate Social Responsibility Policy which shall point out the activities to be undertaken by the company as specified in Schedule VII b. Propose the amount of expenditure to be incurred on the activities referred to in clause (a); and c. Observe the Corporate Social Responsibility Policy of the company from time to time. 4. The Board of every company referred to in sub-section (1) shall, — a. After taking into description the recommendations made by the Corporate Social Responsibility Committee, commend the Corporate Social Responsibility Policy

for the company and disclose contents of such Policy in its statement and also put it on the company's website, if any, in such manner as may be prescribed; and b. Ensure that the activities as are included in Corporate Social Responsibility Policy of the company are undertaken by the company. 5. The Board of every company referred to in sub-section (I), shall make certain that the company spends, in every financial year, at least two per cent of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy: a. Provided that the company Shall give preference to the local area and areas around it where it operates, for spending the amount earmarked for Corporate Social Responsibility activities: b. Provided further that if the company fails to spend such amount, the Board shall, in its report made under clause (o) of sub-section (3) of section 134, specify the reasons for not spending the amount. 5.2.1 Schedule VIl of Companies Act 2013 Schedule VII of CA 2013 lists out about 38 activities grouped under eleven categories to be included in CSR policy of a company. Some of the activities are: a) Eradicating tremendous hunger and poverty; b) Encouragement of education; c) Promoting gender equality and empowering women; d) Dipping child mortality and improving maternal health; e) Fighting human immune deficiency virus, acquired immune deficiency syndrome, malaria and other diseases; f) Ensuring environmental sustainability; g) Employment enhancing vocational skills; h) Social business projects; i) Rural development projects j) Slum area development

k) Such other matters as may be prescribed. It is to be noted that a company cannot undertake all the activities listed under Schedule Vll of the CA 2013. Therefore, a company must focus on two or three such activities for the purpose of CSR. 5.2.2 A CSR Score Card It's now been over two years since Section 135 of the Companies Act 2013 came into effect. Reports about how companies fared in their first year under the ambit of the 2% mandatory CSR law have been released. The fiscal year ended 31 March 2015 was the first year in which companies had been asked to spend a minimum of 2% of their average profits of the past three years on CSR projects. CSR and Indian Companies Indian corporations were contributing towards CSR activities even before the provisions of Section 135 of Companies Act, 2013 came into force. A number of Indian corporations undertake various CSR activities. Some of them are briefly listed as follows: 1. Max India Foundation (MIF): It spearheads the CSR initiatives of the Max India Group entities. The Foundation has been working relentlessly in the areas of healthcare,

immunization, and environment in its endeavour to improve the quality of life. Over the years, Max India Foundation has partnered regularly with reputable NGO's such as Can Support, SOS Children's Village, Manav Seva Sannidhi and Chinmaya. Mission to undertake initiatives like pan India immunization programme, surgeries for underprivileged, artificial limb and polio calipers camp, multi-specialty camps, blood donation camps, on board rail operation theatre - Life Line Express, 'Clean Delhi Clean Yamuna' campaign, support for disaster relied victims amongst others. MIF operates across the country in association with Max India Group companies and closely involves all employees of the Group. Since its inception in 2008, MIF has been able to make a difference to the lives of nearly 5 lakh people across more than 292 locations across India. On January 20, 2014, Max India Foundation was honored with the Golden Peacock Award for Corporate Social Responsibility (CSR) for 2014, in the 'National Awards' category for third time in a row. 2. Model Villages of A.V. Birla Group: One of A.V. Birla Group's unique initiatives is to develop model villages, so each of the Group's major companies (Grasim, Hindalco, Aditya Birla Nuvu, and Ultra Tech) is working towards the total transformation of a number of villages in proximity to their plants. Making of a replica village entails ensuring self-reliance in all aspects viz., education, health care and family welfare, infrastructure, agriculture and watershed management, and functioning towards sustainable livelihood patterns. Basically, ensuring that their development reaches a stage wherein village committees take over the complete responsibility and their teams become superfluous 3. Infosys Foundation: Infosys Technologies is dedicated to contributing to the society and established the Infosys Foundation in 1996 as a not-for-profit hope to support social initiatives. The Foundation supports programs and organizations the mentally devoted challenged, to the grounds of and the destitute, economically the rural poor, disadvantaged sections of the society. The Foundation also helps preserve certain cultural forms and dying arts of India. The Infosys Science Foundation, set up in 2009, gives away the annual Infosys Prize to honour outstanding achievements in the fields of science and engineering. The company supports causes in health care, culture and rural development. In an interesting initiative

undertaken by it, 100 school teachers in Karnataka, who were suffering from arthritis, underwent free surgery as a part of a week-long programme 5.3 SUMMARY • Before Companies Act, 2013 came into existence Corporate Social Responsibility (CSR) was voluntary for companies however after enactment of Section 135 of CSR Companies Act 2013 is compulsory for certain companies. • Following below mention companies are required to constitute CSR Committee, If Company having following during Immediately Preceding financial year • The Provisions of CSR are applicable to Foreign Company having Branch office or project in India if it fulfils the above given criteria. The criteria of [1]Net Profit etc. apply only to business operations in India in case of foreign Company/ Project Office. • Every company which ceases to be a company covered above three conditions for Immediately preceding financial years shall not be required to: o Constitute a CSR Committee; and o Comply with the provisions contained in sub-sections (2) to (5) of the said section (to spent amount on CSR Activities). • Once company again fall within the limit provisions of CSR will be applicable on Company. • Company to which CSR is mandatory should constitute a CSR Committee to undertake and monitor CSR activities 5.4 KEYWORDS • \"Act”: means the Companies Act, 2013 (18 of 2013)

• Annexure: The Annexure appended to these rule • CSR Policy: A statement constituting the approach and way given by the board of a company, taking into account the recommendations of its CSR Committee, and includes guiding principles for selection, implementation and monitoring of activities as well as formulation of the annual action plan • Ongoing Project: means a multi-year project undertaken by a Company in fulfillment of its CSR obligation having timelines not exceeding three years excluding the financial year in which it was commenced, and shall include such project that was initially not approved as a multi-year project but whose duration has been extended beyond one year by the board based on reasonable justification; • International Organization: means an organization notified by the Central Government as an international organization under section 3 of the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), to which the provisions of the Schedule to the said Act apply 5.5 LEARNING ACTIVITY What are various amendments of CSR under Companies Act? ___________________________________________________________________________ ___________________________________________________________________________ 5.6 UNIT END QUESTIONS Descriptive questions (Long answers) 1. What are the provisions of CSR? 2. Discuss the provisions of Companies Act 2013 concerning corporate social responsibility? 3. Explain the CSR of Indian Companies giving few examples. 4. What is the Schedule VII of Companies Act 2013. 5. Tabulate the information for calculation of Net profit for CSR activities as per Companies Act. Descriptive Questions (Short Answers) 1. What is Section 135 of Companies Act 2013?

2. Who is eligible for CSR? 3. Is CSR required by law? 4. Who introduced CSR in India? 5. In which countries CSR is mandatory? Multiple Choice Questions 1. External audit of the accounts of a limited company is required a) Because it is demanded by the company’s bankers b) by the Companies Act 2013 c) at the judgment of the shareholders d) to identify fraud 2. Directors’ responsibilities are unlikely to include. a) a fiduciary duty b) a duty to keep proper accounting records c) a duty to suggest high dividends for shareholders d) a duty of care 3. A company may become insolvent if it a) has negative working capital b) cannot meet its budgeted level of profit c) makes a loss d) cannot pay creditors in full after realisation of its assets 4. Fraudulent trading may be a) a civil offence committed by any employee b) a criminal offence committed only by directors of a limited company c) a civil and a criminal offence committed only by directors of a limited company d) a civil and a criminal offence committed by any employee 5. Which of the following actions will not help directors to protect themselves from non- compliance with their obligations and responsibilities?

a) keeping themselves fully informed about company affairs b) ensuring that regular management accounts are prepared by the company c) seeking professional help d) including a disclaimer clause in their service contracts Answers: 1-b, 2- a, 3-d, 4-d, 5-a 5.7 REFERENCES Reference books 1. Gladwin, T.N., J.J. Kennelly, and T.S. Krause (1995), ‘Shifting Paradigms for Sustainable Development – Implications for Management Theory ad Research’, Academy of Management Review, vol. 20, issue no. 4, pp. 874-907. Textbook 1. Business Ethics and Corporate Social Responsibility by Michael Vas and Aurora Vaz. 2. Corporate Social Responsibility by Madhumita Chatterjee.

UNIT – 6 : SOCIAL RESPONSIBILITY IN GLOBALIZATION Structure 6.0 Learning Objectives 6.1 Introduction 6.2 Globalization 6.3 Impact of Globalization on Social Responsibility of Corporate 6.4 Globalization, an opportunity or threat 6.5 Globalization and Setback of Social Responsibility of Corporate 6.6 Summary 6.7 Keywords/Abbreviations 6.8 Learning Activity 6.9 Unit End Questions 6.10 References 6.0 LEARNING OBJECTIVES After studying this unit, you will be able to: • Understand the impact of the globalization of business on social responsibility and ethics. • Focus on the problem of globalization and its consequences for theorizing on corporate social responsibility (CSR) • Outline how CSR has gained heightened global interest and has become key term in global economy disclosure 6.1 INTRODUCTION If we analyze the three words in CSR, i.e., corporate, social and responsibility, it would be easier for us to evaluate whether a common CSR formula can be created. When we look at

the word corporate, we find it easy to define because there is a global consensus on which institutions can be grouped under the term ‘corporate’ or ‘company’. The term ‘social’ has been debated by various authors to include the wide concept of national social system to narrow the vision of the surrounding community around the company. Society involves a number of actors and therefore a number of relationships have to be sensitively and delicately handled. Dealing with social concerns like basic sanitation, housing, water and electricity supply are much easier than micro issues related to freedom, human rights, justice, fair distribution of facilities, and governance. These factors have a close relationship with the history and culture of a nation. The perception about these macro factors differs from one country to another, depending on the ethos of the country. Responsibility' deals with intangible emotions like accountability and integrity. Measuring responsibility is not easy and requires a longer time to assess. While assessing responsible behavior, it may become difficult to segregate the impact of policies when a number of organizations work at the same time and in the same place. Responsibility requires that a fair trade-off between various stakeholders is achieved to ensure least dissatisfaction among the stakeholders. Effective and efficient usage of limited resources can bring to the forefront the question of sustainability, i.e., ensuring that future generations have enough resources at their disposal to enjoy quality life. The 'cause and effect' relationship become Complex as major social problems have to be tackled to ensure value-added development that leads to inclusive growth of all sections in society. Thus, we see that designing a ‘one fit for all’ CSR model is not easy. In fact, the universal ethical concepts can only be served as the base for the design and the corporate should ensure compliance to basic human rights and dignity. 6.2 GLOBALIZATION Sustainability

Globalization CSR Globalization is one among the foremost cited catchwords of our time and is employed to explain a process of social change on the macro level of societies. Many phenomenon like peace, relocation and resettlement of migrants, crime, production, allocation of resources, technological progress, employment, and social identity and solidity are affected by globalization. We define globalization because the procedure of intensification of cross-area and cross-border social relations between actors from very distant locations, and of growing transnational interdependence of economic and social activities holds that with globalization “the whole of earth surface, the regions and social contexts have been networked as an entire .“ The nation condition loses much of its political routing capability during this period. The state’s enforcement power is sure to its territory while the themes of state regulation, especially the business firms, have massively expanded their activities beyond national borders. New social and environmental challenges appear which are transnational in reach and can't be synchronized or governed unilaterally. Also, new actors and institutions like international organizations, transnational corporations, nongovernmental organizations, and civil society groups gain political influence. Their activities aren't limited to a particular territory. Their influence stems from the political power they will exert inside and out of doors the normal institutions of nation-state politics, e.g., by lobbying, PR , campaigning, knowledge and competence, offering material or symbolic support, or threatening with disinvestments or the retreat of resources. As a result we observe new forms of governance below, above and beyond the nation state. 6.3 IMPACT OF GLOBALIZATION ON CSR As is obvious from the term 'multinational', multinational companies are those that have subsidiaries or operations in several different countries. They usually operate by setting up

branch offices in multiple locations across the globe. These companies are also known as transnational companies, multinational enterprises, or are sometimes referred to as international corporations. These companies came into greater prominence with the growth of globalization. The phenomenon of globalization has been surrounded by both concurrence and controversies about its impact on the socio-economic structure of different countries. The general concern has been whether the MNCs have used their wider reach, better knowledge, and technologies to exploit vulnerable workforces and degrade the environment because of lax environment protection laws and regulations. To abate these fears and project an image of being responsible, most multinationals use CSR practices to highlight their ethical intentions. The CSR code bas been used in portraying different by different companies. For example, according to Diller (1909), the codes to establish a company's legitimacy the eyes of those are directly involved with the organization. A similar thought crouch (2006), who described the adoption of a CSR code by firms that voluntarily take account of the externalities produced their market behaviour'. Thus, multinational companies have used the of CSR to promote their business and earn profit among diverse communities and countries by projecting the image of a well-wisher and not an exploiter. However, we find that these companies have pursued CSR in varied ways as explained below. Differences in CSR Practice A study conducted by Welford (2005) of 15 countries' CSR practices showed that there is a link between the economic development of a country and the development of its CSR practices. This idea is further explored in the writings of Baughn, Bodie (2007) who conclude that a country that boasts of a high level of wealth and development can provide technology resources that are applicable to social and environmental practices. There is also some evidence that CSR codes are more common in some nationalities of NINCs than others and that the country of origin also affects the character of the codes (Bondy et al. 2004). We have already seen that there is no one definition of CSR or one 'fit for all' strategy; yet there is a common thread of welfare that overlaps in an organization's duty towards its various stakeholders. Thus, if we want to look at the multinational view, then it can be seen as an advocacy of development of products in a country or region to help improve policies and practices, only if justified by the cultural context and preferences (Chaudhry 2006).

CSR codes have also been distinguished in terms of their application, i.e., whether they are 'internal' or 'external'. The internal code deals with the management and employees of the firm itself, while the 'external' targets the outside groups, such as suppliers, or both (Bondy et al. 2004). Connected to the same idea is the distinction that relates to the nature and implementation of the codes. This means one has to understand whether the codes are mandatory or advisory in nature because that would indicate the implementation mechanism. If the codes are laid down by the management, then there are chances that they may not cover all the necessary areas and suffer from the deficiency of unilateral authoritarian decisions. Monitoring would also not be proper as there would be no say of stakeholders in the implementation process. However, if the codes are negotiated with stakeholder representatives like trade unions, environmentalists, government regulators, and others, then the chances are that they would cover issues more extensively and in greater depth. The monitoring in this case would include stakeholder representatives and therefore accountability would be higher, which would ensure that the provisions codes are put in practice. Many companies consider moral and ethical activities articulating the problems of customers and stakeholders, interests and increase the investment within the projects of CSR. However, the previous aspects aren't truth understandings of corporate social responsibility. Baker (2003) proposed that the positive outcome of the firm’s control and business activities for the entire society is corporate social consciousness for many firms. Moreover, the definition from the European Union Commission (2011) is more comprehensive in meaning, which is that companies incorporate social and environmental concerns into their business activities and therefore the interaction with their shareholders and consumers to benefit the whole society. These definitions on corporate social responsibility consider the development of welfare and society. However, the definition from the EU Commission indicates that environmental, social and ethical issues are entrenched within the processes of the business. In this study, truth meaning of corporate social responsibility is that firms integrate environmental, social and ethical issues in business processes and deciding process with the motivation of benefiting the stakeholders. The concept of globalization is described as one of the most leading thoughts considerably affecting modern business theories and practices. This concept significantly makes most

scholars and practitioners consider its influences on every aspect of human living and modern business, like economic restructure, firm’s business operation, environment sustainability, culture, technology and governance. Scherer and Palazzo (2008) projected that globalization is defined as a course of intensification and quickening of social activities and economic cooperation across areas and countries. This procedure makes multinational corporate add more free space and flexible to employ international business and trade for more profits. In early stage, globalization involves the alteration and development of technologies in host countries, information sharing in different economies or continents, human resource mobility, and foreign investment from developed economies to less developed countries. Under the power of globalization, economic liberalization, international cooperation between different countries and the previous aspects, such as the conversion of technologies and others, considerable countries have practised the benefits from globalization. Furthermore, these countries also need more efforts to be encountered with the challenges and pressure created by globalization. The Impact of Globalization on Corporate Social Responsibility For corporates that are multinational, globalization brings more than just opportunities and benefits by making these multinationals adapt to the changing environment and accept the unprecedented challenges in the global level, industrial level and other levels. Corporate social responsibility is taken into account together of the foremost significant aspects facing firms employing international business. In other words, corporates that are multinational reassess the fact that the moral, ethical, environmental and social issues should be incorporated into the structures of decision making on strategies and operations of business enterprises. Globalization to a great extent promotes this evolution of corporate social responsibility all over the world. In one hand, globalization further makes the public and organizations distinguish and appreciate the negative consequences, such as the increasing income inequality, the exploitation of labour, and environmental unsustainability (Thomson, 2002). Corporate Social Responsibilities gets more attention and momentum by public and international community since MNCs and their business gets deeper. However, on other

hand, the event of international business and therefore the activities of multinational firms are measured because the solution of worldwide problems, like the supplier of public goods and therefore the protection of citizenship rights and human rights (Matten and Crane, 2005). Corporate social responsibility is viewed as one of the major forces to solve the negative consequences of globalization and the existing global problems to some extent. Hypothetically there are two characteristics of the effect of globalization on corporate social responsibility. First, economic process not only makes the general public and national governments consider welfare augmentation and its benefits for the society, but also makes them recognize that economic development is the consequence of the mixture of social, economic and moral implications (Friedman, 2006). Ideally, economic growth will provide the even income and welfare distribution, the respect and protection of human rights and other aspects, which all people will share. However, the phenomenon on inequality intensifies further with globalization to a certain extent. This study argues that governments, firms, consumers are described as the principal undertaker. For firms, they're significant undertakers liable for the general public and social interests and moral issues. The firms incorporate social, environmental and moral issues into the method of their deciding and take the rational responsible behaviour and activities, which brings more and more profits for their shareholders and interests for his or her stakeholders within the future. However, some firms made some decision and illegal and immoral and were liable for the bad consequences. For instance, Enron scandal is taken into account because the most vital example on illegal operation and misbehaviour making shareholders liable for the large loss (Healy and Palepu, 2003). Second, during the process of globalization, the firms can make the most of the competence and the performance of firms’ business through the worldwide allotment of resources. Nevertheless, the firms come across the fierce competition beyond the range of country or area. The competition not only brings more value and interests for his or her consumers, but also makes firms rethink their concerns of social, ethical and environmental issues and deciding process. There is an unquestionable fact that more and more consumers worry the perception of firms’ environmental and social issues and socially responsible behaviours. Furthermore, the implementation of the strategies on

environment and social communities is concentrated by shareholders and stakeholders. They will spend within the responsible and sustainable companies that create the advantages and profits within the future. Based on these facts from consumers and shareholders, more and more companies consider the functioning and development of social responsibility. In summary, during the process of globalization, there are the emergence of the global problems and negative consequences, such as global warming and climate change, the increasing unequal distribution of income and welfare, the abuse and invasion of human rights etc. These elements promote the main target and implement of corporate social responsibilities when multinational corporates employ international business and trade. Moreover, the worldwide competition and consumers’ and shareholders’ perception make the firms recognize and rethink corporate social responsibility and deciding process concerning environmental, social and ethical issues. 6.4 GLOBALIZATION, AN OPPORTUNITY OR THREAT Figure 6.1: Impact of Globalization on CSR There is no certain account this question and it depends on from where we are observing. There are no two thoughts as to how globalization has varied effects on social responsibility of a corporation and behaviour of managers. A number of these effects are motivating companies towards socially responsible behaviour, while others are destroying