Module IV Corporate Social Responsibility

By
Prof. Nikhil Bangde
(S. B. Jain Institute of Technology, Research &
Management, Nagpur)
Business Ethics
Module IV- Corporate Social Responsibility

This Unit will help You
[Course Outcome (CO)]
To Evaluate:
Choose a suitable model of
Corporate Social Responsibility
(CSR)
2 Prof. Nikhil Bangde, Asst. Professor, SBJITMR

Data: Year 2014
All Over World
Factories- 841
Workers- 1 Mn
Employees per factory- 1189
USA
Factories- 66
Workers- 8151
Employees per- 123
factory
Vietnam
Factories- 40
Workers- 1,71,276
Employees per - 4,281
factory

YING-YANG

(CSR)
Prof. Nikhil Bangde, Asst. Professor,
SBJITMR
5
 CSR is a gesture of showing the company's concern &
commitment towards society's sustainability & development
 CSR is the ethical behaviour of a company towards society
 CSR is also referred to as:
* Corporate/Business responsibility * Community relations
* Corporate/Business citizenship * Social responsibility
 According to World Business Council for Sustainable
Development
“Continuing commitment by business to behave ethically &
contribute to sustainable economic development while
improving the quality of life of the workforce & their families
as well as of the local community & society”

Basic Constituents of CSR
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6

Types of Social Responsibility for
Businesses
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i. Responsibility towards Society
ii. Responsibility towards Government
iii. Responsibility towards Shareholders
iv. Responsibility towards Employee
v. Responsibility towards Consumers

Types of Social Responsibility for Businesses
(Contd..)
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8
Towards Society
• Carrying on business with
moral& ethical standards
• Prevention of environmental
pollution
• Minimizing ecological
imbalance
• Contributing towards
development of social health,
education
• Making use of appropriate
technology
• Overall development of
Towards Government
 Obey rules & regulations
 Regular payment of taxes
 Cooperating with the govt.
to promote social values
 Not to take advantage of
loopholes in business laws
 Cooperating with the govt.
for economic growth &
development

(Contd..)
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9
Towards Shareholders
• To ensure a reasonable rate
of return over time
• To work for the survival & the
growth of the concern
• To build reputation &
goodwill of the company
• To remain transparent &
accountable
Towards Employees
 To provide a healthy working
environment
 To grant regular & fair
wages
 To provide welfare services
 To provide training &
promotion facilities
 To provide reasonable
working standard & norms
 To provide efficient
mechanism to redress
worker’s grievances
 Proper recognition of
efficiency & hard work

(Contd..)
SBJITMR
10
Towards Consumers
• Supplying socially harmless products
• Supplying the quality, standards, as promised
• Adopt fair pricing
• Provide after sales services
• Resisting black-marketing & profiteering
• Maintaining consumer’s grievances cell
• Fair competition

Advantages/ Benefits of CSR for
Business
Prof. Nikhil Bangde, Asst.
Professor, SBJITMR
11

Scope of CSR
Professor, SBJITMR
12
• Reducing hunger & poverty
• Promotion of Education
• Promoting Gender Equality & Empowering
women
• Reducing child mortality
• Ensuring environment sustainability
• Employment enhancing vocational skills & social
business projects

HOW are Indian Companies
faring in
CSR
Link for Indian
Companies Scorecard
https ://csr.gov.in/#

Models of CSR
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i. Friedman Model
ii. Ackerman Model
iii. Carroll Model
iv. Environmental Integrity & Community Model
v. Corporate Citizenship Model
vi. Stakeholder Model
vii. Stockholders & Stakeholders Model

1. Friedman Model
Professor, SBJITMR
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 Based on Milton Friedman’s classic article:
“Social responsibility of business is to increase its
profits” (1970)
 Friedman vigorously argued against the notion of
social responsibilities for corporations based on
three main arguments:
Only human beings have a moral responsibility for their
actions
Businessmen has no other social responsibility to
perform except to serve his shareholders & stockholders
Social issues and problems are the proper province of
the state rather than corporate managers

2. Ackerman Model
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Model emphasizes on the internal policy goals & their
relation to the CSR (1976)
Find the Social Problem
Study Problem
Work on it
Evaluate
Four Stages involved in CSR include:
i. Managers of company getting to know the most common social
problem & then express a willingness to take a particular
project which will solve some social problems
ii. Intensive study of the problem by hiring experts & getting their
suggestions to make it operational
iii.Managers take up the project actively & work hard
iv.Evaluating the project by addressing the issues

Six Strategies in the adoption of
CSR
17
i. Rejection strategy
ii. Adversary strategy
iii. Resistance strategy
iv. Compliance strategy
v. Accommodation strategy
vi. Proactive strategy
SBJITMR

3. Carroll Model
18
Carroll’s Four-Part model of CSR
SBJITMR

3. Carroll Model (Contd..)
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19
 Economic Responsibilities
Stay in business, make profits, reasonable returns
and salaries to shareholders and employees
 Legal Responsibilities
To act as per the laws of the land since the laws are
the codifications of ethics/morals
 Ethical Responsibilities
Follow ethical expectations of society even if they
do not infringe legal requirement
 Philanthropic/ Discretionary Responsibilities
Charities, improving environments etc.

• This model was developed by Redman & Many corporate in US
adopted this model
• Corporate contribution towards environmental integrity &
human health is focused on here as there will be greater
expansion opportunities if concentration is on this
• Healthy people can work more & earn more
• CSR is beneficial for the corporate sector
4. Environmental Integrity &
Community Health Model
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20

• To be a corporate citizen, a corporate firm has to satisfy four
conditions:
i. Consistently satisfactory
ii. Sustainable economic performance
iii. Ethical actions
iv. Behaviour
• Organizations following it believe: they play a particular role in
the community & that their ability to do good- which derives from
the profits they reap- create a responsibility to do good
• A particular firm’s commitment to corporate citizenship requires
the fulfillment of certain social responsibility.
5. Corporate Citizenship Model
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6. Stakeholders Model
Prof. Nikhil Bangde, Asst. Professor, SBJITMR
22
 Edward Freeman (1984) has developed Stakeholder
theory
 A stakeholder of an organization is:
any group or individual who can affect, or is affected by,
the achievement of the organization’s objectives
(Freeman 1984)
 Here ‘affected by’ symbolises
Principle of corporate rights - the corporation has the
obligation not to violate the rights of others
Principle of corporate effect – companies are
responsible for the effects of their actions on others

Traditional Stakeholder Theory
23
Firm
Shareholders
Employees
Suppliers
Customers

Stakeholder Model
24
Firm
Shareholders
Employees
Suppliers
Customers
Civil
society
Competitors
Government

Network Stakeholder Model
25
Firm
Shareholde
rs
Supplier
stakeholder
1
Suppliers
Customers
Civil society
Competitor
s
Governmen
t
Employees
Civil society
stakeholder
2
Civil society
stakeholder
1
Employee
stakeholder
2
Employee
stakeholder
1
Customer
stakeholder
1
Customer
stakeholder
3

7. Stockholders & Stakeholders
Model
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26
1
Productivism
2
Progressivism
3
Philanthropy
4
Ethical Idealism
ORIENTATION
Stakeholder
Model
Stockholders
Model
Self
Duty
Interest
Moral
MOTIVES

7. Stockholders & Stakeholders Model
(Contd..)
27
 Productivists believe that the only mission of a firm is to
maximize the profit
 Philanthropists who entertain the stockholders according
to them CSR is dominated by moral obligations & not
self-interest
 Progressivists believes the corporate behaviour is
basically motivated by self interest & should have ability
to transform the society for good
 Ethical Idealism concern’s with sharing of corporate
profits for humanitarian activities

CSR through Triple Bottom Line
28
• A sustainability framework that examines a company’s
social, environment, and economic impact.
• Triple bottom line is also known as TBL or 3BL
• It states that the value created by any organization is
based on three areas: Environmental(Planet),
Monetary(Profit) and Social(People)
• In 1994, while dealing with ‘eco-efficiency’, John
Elkington introduced the model of Triple Bottom Line

CSR through Triple Bottom Line
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• According to TBL theory, companies should be working
simultaneously on these three bottom lines:

Need for CSR
30
 To reduce the social cost
 To enhance the performance of employees
 It a type of investment
 It improves the public image
 Can generate more profit
 To provide moral justification
 It satisfies the stakeholders
 Helps to avoid government regulations & control
 Enhance the health by non polluting measures

Arguments For & Against CSR
For Against
31
 Corporate should have
some moral & social
obligations to undertake
for the welfare of the
society
 Proper use of resources,
capability & competence
 The expenditure on CSR
is a sort of investment
 Company can avoid many
legal complications
 It create a better
impression
 Corporate should return a
part of wealth
 Fundamental principles of
business gets violated
 It very expensive for
business houses
 CSR projects will not be
successful
 There are not the special
areas of any business
 CSR is to induce them to
steal away the
shareholders money

Best Practices of CSR
32
 To identify social problems & issues properly
 To select social problems & issues which are aligned with
corporate principals
 Study the social problem deep enough including its possible
side effects
 To use social human resources & engage them through right
interaction on problem solving
 Build a long lasting relationship with the community through
the activity
 Retain the community core values
 Impact of the CSR needs to be assessed
 Reporting the impact
 Create community and media awareness

CSR Legislation of India
33
 Companies that meet a certain threshold are required to
compulsorily spend a portion of their profits on CSR activities
under the Companies Act, 2013 (“Act”)
 CSR Law (Sec 135) India is the first country in the world to
mandate CSR (Law Applicable from 1 April, 2014)
 APPLICABILITY
 Section 135 applicable to Companies with
- Net worth Rs. 500 crore or more,
- Turnover Rs. 1000 crore or more or
- Net Profit Rs. 5 crore or more
during any financial year.

CSR Legislation of India (Contd..)
34
 Indian Institute of Corporate Affairs(IICA) anticipate that
about 16000 Indian Companies will be required to undertake
CSR Projects in order to comply with the new guidelines
 CSR SPEND IN FINANCIALYEAR
i. At least 2% of the average net profits of the company made
during the three immediately preceding financial years.
ii. MCA has clarified that computation of net profits for
section 135 is as per section 198 of the Companies Act,
which primarily considers profit before taxes.
iii. Where the company fails to spend such amount, the board
shall, in its report, specify the reasons for not spending the
amount.

Prestigious Awards for
CSR
Professor, SBJITMR
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 Ministry of Corporate Affairs, GoI has instituted National CSR
Awards to recognize companies that have made a positive
impact on the society through their innovative & sustainable
CSR initiatives
 Award is the apex recognition of CSR initiatives in India
National CSR Awards seeks to:
i. Encourage companies to spend the entire amount i.e. eligible
CSR spend
ii. Recognize the impact, innovation, usage of technology, gender
& environment issues, sustainability, scalability and replicability
of CSR activities
iii. Channelize CSR activities of corporates so that the benefits of

Prestigious Awards for
CSR
Professor, SBJITMR
36
Corporate Awards for
Excellence in CSR
• Companies having
eligible CSR Spend
equal & above Rs.
100 Crores
eligible CSR Spend
equal & above Rs. 10
Crores but less than
Rs. 100 Crores
eligible CSR Spend
equal & above Rs.1
Crore but less than
Rs.10 Crores
eligible CSR Spend
below Rs. 1 Crore
CSR in Aspirational Districts
/ Difficult Terrains
• Northern India
• North-East India
• Eastern India
• Western India
• Southern India
Contribution in National
Priority Areas
• Education
• Skill Development &
Livelihoods
• Agriculture & Rural
Development
• Health, Safe Drinking Water
& Sanitation
• Environment, Sustainable
Development & Solar
Energy
• Women & Child
Development
• Technology Incubation
• Promotion of Sports
• Slum Area Development
• Heritage, Art and Culture
• Support to Differently-Abled
Categories & Sub-categories of
Awards

CSR & Indian Companies- A
Scorecard
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Source:
csr.gov.in
Link for detailed Scorecard: https
://csr.gov.in/#

CSR & Indian Companies- A
Scorecard
SBJITMR
Source:
csr.gov.in
List of Winners of CSR- 2019 Awards
(Hyperlinked)
38

This Unit will help You
[Course Outcome (CO)]
To Evaluate:
Choose a suitable model of
(CSR)

Module IV Corporate Social Responsibility

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