‘ Corporate Governance involves a set of relationships amongst the company’s management, its board of directors, shareholders and other stakeholders.
These relationships which involve various rules and incentives, provide the structure through which objectives of the company are set and the means of attaining those objectives and monitoring performance are determined.’
In broad sense
‘ Corporate Governance is the extent to which companies are run in an open and honest manner.’
Social responsiveness is imperative for business. Primarily part of the society and have to serve the societal interests
Keith Davis ‘ social responsibility rises from an Enlightened Self Interest where organisations realize that it is in their own best interest to act in ways that community considers socially responsible.
David Wheeler and Maria Sillanpa in “The Stakeholder Corporation” state
that by 1998, 51 out of the 100 largest economies were not nation states, but corporations.
General Motors was bigger than Denmark;
Toyota was bigger than South Africa.
At the same time
In 1999, the United Nations reported
that the world's then three richest people - Bill Gates of Microsoft, the Sultan of Brunei and the Walton family of the Wall Mart retail chain - were worth more than the combined gross domestic product of the world's 34 poorest nations.
Corporates have experienced a range of bottom line benefits, which include improved financial performance
Enhanced brand image & reputation
Increased ability to attract and retain employees
Easier access to capital
The Social Investment Forum reports that, in the U.S. in 1999, there is more than $2 trillion in assets under management in portfolios that use screens linked to ethics, the environment, and corporate social responsibility.
Older companies & those with greater turnovers were more likely to be socially responsible.
Companies more than 40 years old & turnover greater than Rs 5 billion were found to follow a consistent CSR strategy.
17 % have a written policy on CSR.
26 % PSU’s have written policy on CSR.
Only 6 % Private companies have written policy on CSR.
CSR in India Preferred areas for CSR Companies 12 % Farm based activities 20 % Livelihood – Non farm based activities 23 % Infrastructure Development 28 % Community Support 38 % Natural Resource Management 56 % Health 66 % Education 76 % Donating money to Social causes 76 % Adhering to Labour Standards 84 % Meeting Environmental Standards
CSR: International comparison *India, Indonesia, Malaysia, the Philippines, Singapore, South Korea and Thailand Source: Chambers, Chapple, Moon and Sullivan (2003) 24% Indonesia 41% Mean of Seven countries* 72% India 98% United Kingdom CSR Penetration Rate Country