corporate governance

1. BGS-Module2
CORPORATEGOVERNANCE

2. Introduction-What iscorporate
governance?
Corporate governance is the system of principles, policies, procedures, and
clearly defined responsibilities and accountabilities used by stakeholders to
overcome the conflicts of interest inherent in the corporate firm.
◦ Hence,the importance of understanding the different forms of business.
Corporate governance affects the operational risk and, hence, sustainability ofa
corporation.
◦ Thequality of acorporation’s corporate of governance affects the risks and value of the
corporation.
◦ Effective, strong corporate governance is essential for the efficient functioning of markets.
2

3. Corporategovernance(CG)
Corporate governance broadly refers to themechanisms, processesand
relations by which corporations are controlled anddirected.
Governance structures and principles identify the distribution of rights and
responsibilities among different participants in the corporation (such asthe
board of directors, managers, shareholders, creditors, auditors, regulators, and
other stakeholders) and includes the rules and procedures for making decisions
in corporateaffairs.
Corporate governance includes the processesthrough which corporations'
objectives are set and pursued in the context of the social, regulatory and
market environment.
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4. CoreAttributes of aneffective
corporate governancesystem
4

5. Corporate Governance:Introduction and
definition
5
What is CorporateGovernance?
Corporate Governance refers to the way acorporation is governed. It is the technique by which
companies are directed and managed. It meanscarrying the businessasper the stakeholders’
desires. It is actually conducted by the board of Directors and the concerned committees for the
company’s stakeholder’s benefit. It is all about balancing individual and societal goals, aswellas,
economic and socialgoals.
Corporate Governance is the interaction between various participants (shareholders, boardof
directors, and company’s management) in shaping corporation’s performance and the way it is
proceeding towards. Therelationship between the owners and the managersin anorganization
must be healthy and there should be no conflict between the two. Theowners must seethat
individual’s actual performance is according tothe standard performance. Thesedimensions of
corporate governance should not beoverlooked.

6. Theoretical basisfor corporate
governance-Agency Theory ofCG
6
The principal–agent problem, in political science and economics, (also known as agency dilemma or theory of
agency) occurs when one person or entity (the "agent") is able to make decisions on behalf of, or that impact,
another person or entity: the"principal".
This dilemma exists in circumstances where the agent is motivated to act in his own best interests, which are
contrary to those of the principal, and is an example of moral hazard.
Common examples of this relationship include corporate management (agent) and shareholders (principal),
or politicians (agent) and voters(principal).
Consider a legal client (the principal) wondering whether his lawyer (the agent) is recommending protracted
legal proceedings because it is truly necessary for the client's well being, or because it will generate income
for the lawyer.
In fact the problem can arise in almost any context where one party is being paid by another to do something
where the agent has a small or nonexistent share in the outcome, whether in formal employment or a
negotiated deal suchaspaying for household jobs or carrepairs.

7. Specific sourcesof conflict:
Agencyrelationships
Managers
Boardof
directors
Shareholders
Management–Shareholder conflicts
Director–Shareholder conflicts
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8. Management–ShareholderConflicts
Shareholders entrust management with funds from reinvested earningsor
newly issued stock, which management invests.
Theoverarching objective is to maximize shareholders’wealth.
Issue: Managers are human
Managers may be more interested in expanding the sizeof thebusiness, bonuses based
on earnings, taking on excessiverisks, or jobsecurity.
Managers may consume excessiveperquisites, or in effect, take advantage oftheir
position to spend excessively on things forthemselves.
Bottom line: there may be agency costs in terms of the explicit and implicit costs when
managers do not act in the best interest of shareholders.
Effective corporate governance guards against agencycosts.
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9. Director–shareholderconflicts
Theboard of directors are an intermediary between the shareholders and
management, and represent shareholders’interestsby:
◦ Monitoring managers;
◦ Approving strategies andpolicies;
◦ Approving mergers andacquisitions;
◦ Approving audit contracts;
◦ Reviewing audit contracts and financialcontracts;
◦ Establishing managementcompensation;
◦ Disciplining poorly performingmanagers.
Aconflict mayarise ifthe board members align with management.
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10. Market model and control mode Issues
in corporategovernance
10
Asystem relying on the investors of afirm to exert control over how the corporation is to be
managed.
Amarket-based corporate governance system defines the responsibilities of the different
participants in the company, including shareholders, the board of directors, management,
employees, suppliers and customers.
Corporate governance systemshavedeveloped differently throughout theworld.
Themarket-based corporate governance systemis basedon Anglo-Americanlaw.
Since the markets are the primary source of capital, investors are given the most power in
determining corporatepolicies.
Therefore, the system relies on the capital markets to exert control over the corporation's
management.

11. JapaneseModel
11
Thisis the business network model, which reflects the cultural
relationships seenin the Japanesekeiretsunetwork, in whichboards
tend to be large, predominantly executive and oftenritualistic.
Thereality of power in the enterprise lies in the relationships
between top management in the companies in the keiretsu network.
In the Japanese model the financial institution plays a crucial role in
governance. The shareholders and the main bank together appoint
the board of directors and thepresident.

12. JapaneseModel
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13. GermanModel
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TheGerman corporate governance model differs significantly from both the Anglo-USand the
Japanesemodel, although someof its elements resemble the Japanesemodel.
Bankshold long-term stakesin Germancorporations ,bank representatives are elected to
German boards.
However, this representation is constant, unlike the situation in Japan where bank
representatives were elected to a corporate board only in times of financial distress.
Germany’s three largest universal banks (banks that provide a multiplicity of services) play a
major role; in some parts of the country, public-sector banksare also keyshareholders.
There are three unique elements of the German model that distinguish it from the other
models outlined in this article. Two of these elements pertain to board composition and one
concerns shareholders’rights

14. GermanModel
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15. Indian Model
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TheSecurities and Exchange Board of India (SEBI) Committee on Corporate
Governance defines corporate governance asthe "acceptance by management
of the inalienable rights of shareholders asthe true owners of the corporation
and of their own role astrustees on behalf of the shareholders”.
It is about commitment to values, about ethical business conduct and about
making adistinction between personal & corporate funds in the management of
acompany

16. 16

17. Importance/Relevance of corporate
governance
Corporate governance is the way acorporation policesitself.
In short, it is amethod of governing the companylike a sovereign state, instating its own
customs, policies and laws to its employeesfrom the highest to the lowest levels.
Corporate governance is intended to increase the accountability of the company and to avoid
massivedisasters before they occur.
Failed giant Kingfisher, and its bankrupt employees and shareholders, is aprime argumentfor
the importance of solid corporategovernance.
Well-executed corporate governance should be similar to apolice department Internalaffairs
unit, weeding out and eliminating problems with extreme prejudice.
Acompany canalso hold meetings with internal members, suchasshareholders and
debtholders - aswell assuppliers, customers and community leaders, to addressthe request
and needsof the affectedparties.
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18. Importance of corporategovernance
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19. Importance of corporategovernance
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Changing Ownership Structure : In recent years, the ownership structure of companies haschanged alot. Public financial institutions,
mutual funds, etc. are the single largest shareholder in most of the large companies. So,they have effective control on the management of
the companies.Theyforce the management to usecorporate governance.That is, they put pressure on the management to become more
efficient, transparent, accountable, etc. Thealsoaskthe management to make consumer-friendly policies, to protect all social groups and to
protect the environment. So,the changing ownership structure hasresulted in corporategovernance.
Importance of Social Responsibility : T
oday,social responsibility is given alot of importance. TheBoard of Directors haveto protect the
rights of the customers, employees, shareholders, suppliers, local communities, etc. Thisis possible only if they usecorporate governance.
Growing Number of Scams : In recent years, many scams,frauds and corrupt practices have taken place. Misuse and misappropriation of
public money are happening everyday in India and worldwide. It is happening in the stock market, banks, financial institutions, companies
and government offices. In order to avoid these scamsand financial irregularities, many companies have started corporategovernance.
Indifference on the part of Shareholders : In general, shareholders are inactive in the management of their companies. They only attend the
Annual general meeting. Postal ballot is still absent in India. Proxies are not allowed to speakin the meetings. Shareholders associations are
not strong. Therefore, directors misuse their power for their own benefits. So,there is aneed for corporate governance to protect all the
stakeholders of the company.
Globalisation : Todaymost big companies are selling their goodsin the global market. So,they haveto attract foreign investor and foreign
customers.Theyalso have to follow foreign rules and regulations. All this requires corporate governance. Without Corporate governance, it is
impossible to enter, survive and succeedthe globalmarket.
Takeoversand Mergers : T
oday,there are many takeovers and mergers in the business world. Corporate governance is required toprotect
the interest of all the parties during takeovers and mergers.
SEBI(Security & Exchange Board of India) : SEBIhasmade corporate governancecompulsory for certain companies. Thisis done to protect
the interest of theinvestors and other stakeholders.

20. Obligationto society,obligationto investors,Obligationto employees,
obligation tocustomers,managerialobligations(stakeholders model)
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Stakeholder theory, on the other hand, states that a companyowes aresponsibility to awider group of
stakeholders, other than justshareholders.
A stakeholder is defined asany person/group which canaffect/be affected by the actions ofabusiness. It
includes employees, customers, suppliers, creditors and even the wider community andcompetitors.
Edward Freeman, the original proposer of the stakeholder theory, recognised it asan important element of
Corporate SocialResponsibility (CSR),aconcept which recognises the responsibilities of corporations in the
world today, whether they be economic,legal, ethical or even philanthropic.
Nowadays,some of the world’s largest corporations claim to have CSRat the centre of their corporate
strategy.
Whilst there are many genuine casesof companies with a“conscience”, many others exploit CS
Rasagood
meansof PRto improve their image and reputation but ultimately fail to put their words into action.

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22. Federalregulator ofGovernance
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Contemporary discussionsof corporate governancetend to refer to principles raised in three documents released since 1990: The Cadbury
Report (UK,1992), the Principles of Corporate Governance (OECD,1999, 2004 and 2015), the Sarbanes-OxleyAct of 2002 (US,2002). The
Cadbury and Organisation for EconomicCo-operation and Development (OECD)reports present general principles around which businesses
are expected to operate to assureproper governance.TheSarbanes-OxleyAct, informally referred to asSarboxor Sox,is an attempt by the
federal government in the United States to legislate several of the principles recommended in the Cadbury and OECDreports.
1) Rights and equitable treatment of shareholders: Organizations should respect the rights of shareholders and help shareholders to
exercise those rights. They can help shareholders exercise their rights by openly and effectively communicating information and by
encouraging shareholders to participate in generalmeetings.
2) Interests of other stakeholders: Organizations should recognize that they have legal, contractual, social, and market driven obligationsto
non-shareholder stakeholders, including employees, investors, creditors, suppliers, local communities, customers, and policymakers.
3) Role and responsibilities of the board: Theboard needssufficient relevant skills and understanding to review and challenge
management performance. It also needsadequate sizeand appropriate levels of independence andcommitment.
4) Integrity and ethical behavior::Integrity should be afundamental requirement in choosing corporate officers and board members.
Organizations should develop acode of conduct for their directors and executives that promotes ethical and responsible decision
making.
5) Disclosure and transparency :Organizations should clarify and make publicly known the roles and responsibilities of board and
management to provide stakeholders with alevel of accountability. Theyshould also implement procedures to independently verify and
safeguard the integrity of the company's financial reporting. Disclosure of material matters concerning the organization should be timely
and balanced to ensure that all investors have access to clear, factual information.

23. Institutional investors andgovernance
23
Dothe institutional investors (IIs) have arole in the corporate governance (CG)ofacompany?
Most of the reports on CGhave emphasized the role the IIs can play in CG.
The Cadbury Committee (1992), for example, states: “because of their collective stake, we
look to the institutions in particular, with the backing of the Institutional Shareholders’
Committee, to use their influence asowners to ensure that the companies in which they have
invested comply with the code”(para 6.16).
The Kumar Mangalam Birla Committee similarly states: “Given the weight of their votes, the
institutional shareholders can effectively use their powers to influence the standards of CG.”
Contrary to this, some argue that the investment objectives and the compensation system in
the institutional investing companies often discourage their active participation in the CG.
Drucker (1976) has once commented that “...it is their job to invest the beneficiaries’ money in
the most profitable investment. Theyhave no business trying to manage. If they do not like a
company or its management, their duty is to sell the stock...”

24. Contd..
24
CG practices in place, it must get reflected in how the company deals with these stakeholders.
Thus, for example, if acompany hasgot agood CGsystem, it would ensure that the company
does not evade the payment of exciseduties or corporate income tax to the government.
The behavior of the company with respect to the above stakeholders can take any of the
following three forms:·
Positive Form:Thecompany takes extra care (more than legally necessary) of thestakeholders.
Here acompany is not required to take this extra care. But it does it nevertheless to show that
it cares.
Neutral Form:Thecompany does exactly what is legally necessary while dealing withthe
stakeholders.
NegativeForm:The company either does not perform the basic minimum things it is supposed
to do legally or tries to avoid the responsibility (though sometimes this behavior is not illegal).
The key feature of the negative form is that some of the stakeholders get hurt while dealing
with the company, either directly or indirectly.

25. Basel III
norms.
25
Basel III (or the Third Basel Accord) is a global, voluntary regulatory framework
on bank capital adequacy, stress testing, and market liquidityrisk.
It was agreed upon by the members of the Basel Committee on Banking
Supervision in 2010–11, and was scheduled to be introduced from 2013 until
2015; however, changes from 1April 2013 extended implementation until 31
March 2018 and again extended to 31 March2019.
The third installment of the Basel Accords (see Basel I, Basel II) was developed in
response to the deficiencies in financial regulation revealed by the financial
crisis of 2007–08. Basel III is intended to strengthen bank capital requirements
by increasing bank liquidity and decreasing bankleverage.

26. RBIallows banksto expand capital base
to meet BaselIIInorms
26
At atime when public sector banks(PSBs)havebeen struggling with alow capital base,the ReserveBankof
India (RBI)hasallowed bankstobeef up its capital adequacy by including certain items suchasproperty value,
foreign exchangefor calculation ofits Tier-I capital.
Thenew norms revealed by the regulator suggestthat bankscannow include the value of the property while
calculating its Tier-I or core capital base.But not the entire value of the property would be included; instead only
45 per cent of the property value would be counted.
However,this comeswith caveats. For instance, the regulator hasstated that the property value would be
counted only if the bank is able to sell the property readily at its own will and there is no legal impediment in
selling the property. Apart from this it also mandates that the valuation should be obtained from two
independent valuers, at least once in every threeyears.

27. CSR-Topicsto becovered
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Typesand nature of socialresponsibilities
CSRprinciples andstrategies
models of CS
R
Bestpractices of CSR
CSRin Indianperspective
CSRin globalcontext
assessingthe evolving global CSRsystem.

28. Corporate SocialResponsibility
Corporate social responsibility (CSR, also called corporate conscience,corporate
citizenship or responsible business) is aform of corporate self-regulation integrated into
abusiness model.
CSRpolicy functions asaself-regulatory mechanism whereby abusinessmonitors and ensures
its active compliance with the spirit of the law, ethical standards and national or
international norms.
CSRstrategies encourage the company to makeapositive impact on theenvironment
and stakeholders including consumers,employees, investors, communities, andothers.
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29. CSR-Contd..
and environment (both
CSRis "A company’s senseof responsibility towards the community
ecological and social) in which it operates.
Companiesexpressthis citizenship
(1) through their waste and pollution reductionprocesses,
(2) by contributing educational and social programsand
(3) by earning adequate returns on theemployed resources.
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30. Meaning:
Corporate social responsibility is agesture of showing the company’s concern&
commitment towards society’s sustainability &development.
CSRis the ethical behaviour of acompany towardssociety.

31. WBCSD(World BusinessCouncilfor
SustainableDevelopment)
“Thecontinuing commitment by business to behave
ethically and contribute to sustainable economic
development while improving the quality of lifeofthe
workforce and their families as well as of the local
community and society.”

32. 35

33. BasicConstituents ofC
S
R
Contribute
towards a
sustainable
economic
development
Make
desirable
social
changes
Improvement
of social
environment
Towards
Business
& Society

34. Typesof SocialResponsibility-
Responsibility towardsSociety
ealth, education
Carrying on business with moral& ethicalstandards.
Prevention of environmentalpollution.
Minimizing ecologicalimbalance.
Contributing towards the development ofsocial h
Making useof appropriatetechnology.
Overall development of locality.

35. Responsibility towardsGovernment
Obeyrules & regulations.
Regular payment of taxes.
Cooperating with the Govt to promote social
values.
Not totake advantage of loopholes in business
laws.
Cooperating with the Govt foreconomic
growth & development.

36. Responsibility towardsShareholders
T
o ensure areasonable rate of return
over time.
T
o work for the survival & thegrowth
of the concern.
T
o build reputation & goodwill ofthe
company.
T
o remain transparent&
accountable.

37. Responsibility towardsEmployees
T
o provide ahealthy working environment.
T
o grant regular & fair wages.
T
o provide welfareservices.
T
o provide training & promotionfacilities.
T
oprovide reasonable working standard & norms.
T
o provide efficient mechanism to redress worker’s
grievances.
Proper recognition of efficiency &hard work.

38. Responsibility towardsconsumers
Supplying socially harmlessproducts.
Supplying the quality, standards,as
promised.
Adopt fair pricing.
Provide after salesservices.
Resisting black-marketing & profiteering.
Maintaining consumer’s grievancescell.
Fair competition.

39. Nature of socialresponsibility
CSRis normative innature.
CSRis arelative concept.
CSRmay be started asaproactive or
reactive.
All firms do not follow the same
patterns of CSR.
◦ Legal& sociallyresponsible.
◦ Legalbut sociallyirresponsible.
◦ Illegal but sociallyresponsible.
◦ Illegal & sociallyirresponsible.
Social involvement:Legal& socially
responsible Wipro, Infosysetc.
Social obligation : legal but socially
irresponsible private, small scaleindustries.
Social reaction:Illegal but sociallyresponsible
Cocacola. Satyam computers.
Social obstruction :Illegal &socially
irresponsible : Liquorshops.

41. C
S
RPrinciples & Strategies.
Respectfor human rights.
Respectfor the differences of views.
Diversity &non-discrimination should be the guiding principle.
Make some social contribution.
Enter into edialogue
Self-realization & creativity.
Fair dealings & collaboration.
Feedbackfrom the community.
Positive value- added
Longterm economic & socialdevelopment.

42. Models of corporatesocial responsibility
1. Friedman model
2. Ackerman Model
3. Carroll Model
4. Environmental Integrity & CommunityModel.
5. Corporate Citizenship Model.
6. Stockholders & StakeholdersModel.
7. New Model of CSR.

43. Friedman Model(1962-73)
Abusinessmen should perform his duty well, he is performing asocial aswellas
amoral duty.
Abusinessmen hasno other social responsibility to perform except toserve his
shareholders & stockholders.

44. AckermanModel (1976)
Themodel hasemphasized on the internal policy goals &their
relation to theCSR.
Four stagesinvolved in CSR.
◦ Managers of the company get to know the most common
social problem & then express awillingness to take a
particular project which willsolve some social problems.
◦ Intensive study of the problem by hiring experts & getting
their suggestions to make itoperational.
◦ Managers take up the project actively & work hard.
◦ Evaluating of the project by addressing theissues.

45. Contd….
SixStrategies in the adoptionof
CSR.
◦ Rejection strategy
◦ Adversary strategy
◦ Resistancestrategy
◦ Compliance strategy
◦ Accommodation strategy
◦ Proactive strategy
Rejection strategy: reluctance to adopt anysocial
work or project.
Adversary strategy: Adopt CSRproject only when
pressure comesfrom external sources.
ResistanceStrategy:Adopt the CSRwhen
pressurized by the government.
Compliance Strategy: CSRis accepted & tries to
finish the project.
Accommodation Strategy: Accommodate the
request of the shareholders or government in
fulfilling the CSR.
Proactive Strategy: self interest of the firmto
adopt the CSRvoluntarily.

47. CarrollModel(1991)

48. Philanthropic requirements: Donation, gifts, helping the poor. Itensure goodwill &
social welfare.
Ethical responsibility: Follow moral & ethical values to deal with all the
stakeholders.
Economicresponsibility: Maximize the shareholders value by paying goodreturn.
Legalresponsibility: Abiding the laws of theland.
CarrollModel(1991)

49. Environmental Integrity &Community Health Model.
Thismodel developed byRedman.
Many corporate in USadopted thismodel.
Corporate contribution towards environmental integrity & human health, there will be greater
expansion opportunities.
Healthy people canwork more &earn more.
CSRis beneficial for the corporatesector.
CSRin aparticular form iswelcome.

50. Corporate CitizenshipModel
T
obe acorporate citizen, acorporate firm hasto satisfy fourconditions:
◦ Consistently satisfactory
◦ Sustainable economic performance
◦ Ethical actions
◦ Behaviour.
Aparticular firm’s commitment to corporate citizenship requires the fulfillment
of certain socialresponsibilty.

51. NewModel ofC
S
R
CSR (+) CSR(-)
CSR(-) CSR(-)
Ethical Rooting
Financial
Capability
Strong Poor
Strong
Poo
r

52. BestPracticesof C
S
R
T
o set afeasible, Viable & measureablegoal.
Build along lasting relationship with the
community.
Retain the community corevalues.
Theimpact of the CSRneeds to beassessed.
Reporting the impact.
Create community awareness.

53. Needfor Corporate SocialResponsibility
T
o reduce the socialcost.
T
o enhance the performance of employees.
It atype ofinvestment.
It leads to industrialpeace.
It improves the public
image. Cangenerate more
profit.
T
oprovide moral justification.
It satisfies thestakeholders.
Helpsto avoid government regulations &control.
Enhancethe health by non pollutingmeasures.

54. Argumentsfor & againstthe C
S
R
Corporate should have some moral & social obligations to undertake for the welfare of the
society.
Proper useof resources,capability & competence.
Theexpenditure on CSRis asort of investment.
Companycanavoid many legal complications.
It create abetter impression.
Corporate should return apart ofwealth.

55. Fundamental principles of business getsviolated.
It is very expensive for business
houses. CSRprojects will not be
successful.
There are not the special areas of anybusiness.
CSRis to induce them to steal away theshareholders money.
Arguments againsttheC
S
R

56. IndianPerspective.
TheSacharcommittee was appointed in 1978 to lookinto
corporate social responsibility issues concerning Indian
companies .
Thecompany must behave & function asaresponsible member
of society.
Committee suggests openness in corporate affairs &behaviour.
Somebusiness houses have established social institutions like
Schools, colleges, charitable hospitals etc.
Corporate sectors have not made significantcontributions.
(Polluting Environment).

57. C
S
REXAMPLES
IBM UK- Reinventing Education Partnership programme
Interactions and sharing of knowledge through aweb-based
technology - the “Learning Village” software. Culture of
openness and sharing of goodpractice
AVON- a partnership with Breakthrough Breast Cancer, and its
Breast Cancer Crusade has raised over 10 million pounds since
its launch 12 yearsago
TOI’sLeadIndia campaign, campaign for contribution towards
educating the poor

58. Companiesin trouble
Dasani mineral water (part ofCoca-Cola).
Coke’ssale was banned as the result of tests, including those
by the Indian government, which found high concentrations of
pesticides.
Communities in India ,around Coca-Cola's bottlingoperations
arefacing severeshortages of water as a result of the cola
major sucking huge amounts of water from thecommon
groundwatersource.

59. Issues at NIKE
Nike Inc producerof footwear,clothing, equipment and accessory
products for the sports and athleticmarket.
Selling toapproximately 19,000retail accounts in the US, and
approximately 140countries around theworld.
Manufactures in China,Taiwan,Korea,Indonesia,Mexico as wellas in the
US and inItaly.
People working - 58% young adults between20and 24yearsold, 83% -
women.
Fewhave work-related skills when they arrive at thefactory.
Issue- unhealthy work environment – debates heated arguments, verbal
abuse ,7.8% of workers reported receiving unwelcome sexualcomments,
and 3.3% reported being physically abused. In addition, sexual trade
practices in recruitmentand promotion werereported

60. Vodafone promised to cut down their
carbon dioxide emissionsin half by 2020
through improving the energy efficiency ofits
global mobile -phone networks.Additional
points for Vodafone on CSRbecausethey are
constantly updating uswith the results of the
campaign; no matter whether it’s going well
or not.
Future promises includes pledging to recycle
95%of network equipment waste and plans
to reduce work-related accidents that cause
lost time by 10%.Ontop of that, Vodafone is
aleading businessin socially responsible
products suchasthe text-to-speech software
for blind people and easy-to-use handsetsfor
the elderly.

61. Thebank’s head of corporate
sustainability, TeresaAu, hassaid that
despite the economic situation, HSBC
would continue to support its
sustainability campaign. Initiatives
include providing small businesseswith
sustainability insurance options and
developing an index for climate change.
Thebusinesshasalso boosted its
management of ethical and socially
responsible investing funds by 60%over
the last two years. HSBChasan
American unit that is dedicated to
assisting local communities by
promoting affordable homeownership,
among other goals.

63. C
S
Rexamples
T
oms“One for one” motto is awell known
phrase.They’ve recently upped the ante by
donating aportion of their sunglasssalesto
vision care for children in need. But it’s not
just consumersthat are involved in Toms’
social good, it’s employees aswell. Toms’
employees participate in an annual ShoeDrop
where they travel and donate avariety of
goodsto children. Their careers page
specifically calls for employees that wantto
changelives and be apart of amovement.
LinkedIn. One Friday each month
LinkedIn’s employees participate “InDay.”
InDay’s purpose is to give back to the
community through employee volunteerism
and resources. Each InDay has a different
theme allowing diverse departments to
come together for a common cause.
InDay activities range from guest speakers
discussing global justice, to initiating global
learning programs, and volunteering in
local communities.
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64. C
S
Rexamples
PG&E does its part to serve thecommunities
of California. OnEarth Dayemployees help
clean and restore 18 state parks.They
are exemplary members of Habitat for
Humanity and volunteer by providing solar
panels on new Habitat homes. Employee
volunteerism hits inside the home aswellby
participating in various foodprograms
providing those struggling to makeends meet
with care packagesand thousands of pounds
of groceries. Theemployees clearly care about
their Coast.
Zappos is acompany creating asocial impact
with ashoebox. Zapposis known for a
company culture that focuseson the well
being of their employees and they are on a
mission to makethe world abetter place,for
everyone. Theyalso donate huge amountsof
Zapposgoodsto tons of charitable
organizations.Their employees are paid for
time off if they are volunteering, because
Zapposknows 9-5 isn’t the only work that
matters.
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65. C
S
Rexamples
General Electric’s employees volunteer over 1
million hours per year! Donations from the GE
foundation havesupported senior centers,
children with autism, literacy programs, and
neglected urban spacesamong many other
programs. OnGlobal Community Days,GE
coordinates company-wide to addressurgent
projects around the world. GEknows that a
helping hand starts in your backyard extends
acrossthe world.
Cisco’s initiatives cover every aspect of
daily life. Global projects provide
education, healthcare, economic
empowerment, and disaster relief to areas
in need. Cisco employee’s log more than
160,000 volunteer hours around the world
in a year. Teams of Cisco employees called
Civic Councils get involved in their local
communities by organizing events and
donation projects. Cisco asks their
employees to, “be a part of the equation.
You + Networks= Impact Multiplied.”
65

66. C
S
Rexamples
Deloitte employees both havetheopportunity
to lead and attend conferences that provide
training on volunteerism and non-profit
organization. What is that saying about
teaching aman to fish? Deloitte hasakeen
awarenessthat training employees on skills
basedvolunteer programs and running
functional non-profits hasthe ability to have
long term effects rather than simply taking an
employee volunteer trip.
Verizon “is proud to support the generosityof
their employees.”TheVerizon Matching Gifts
program matches employee financial
donations 1:1 to qualified organizations.The
spirit of giving doesn’t stop there. Theyalso
encourage employees to volunteer. If
employees log more than 50 hours with an
organization they canapply for a$750 grant
awarded to the organization fromVerizon.
66

67. C
S
Rexamples
Dell supports over 4,615 charities aroundthe
world. Dell Youth Connect provides
technology and educational facilities in 11
countries. TheDell SocialInnovation
Challengeprovides funding and mentorship
to college students to further projects that
help solve social problems. Dell’s disaster relief
program provides holistic assistanceto
communities affected by natural disaster
around the world. Dell’s employees are a
social good force to be reckonedwith.
IBM believes in Corporate Citizenship. Their
social good projects extend acrosssocietal
issues.Employeesvolunteer in environmental
efforts, community economic development,
education, health, literacy, languageand
culture. Their year long volunteer initiative,
“Celebration of Service,” logged over 3,00,000
hours of service. IBM hasalso established, “On
Demand Community,” enabling employees and
retirees to find volunteer opportunities,
through trainings andplacement.
67

68. Philanthropy
Philanthropy(from Greek ) means, the love of humanity, in the sense of caring, nourishing,
developing, and enhancing what itmeansto be human.
In this meaning, it involves both the benefactor in their identifying and exercising their
values, and the beneficiary in their receipt and benefit from the service or goodsprovided.
Aconventional modern definition is "private initiatives, for public good, focusing on quality
of life," which combines an original humanistic tradition with asocial scientific aspect
developed in the 20thcentury.
Thedefinition also servesto contrast philanthropy withbusiness endeavours, which are
private initiatives for private good, e.g., focusing on material gain, and
with governmentendeavours, which are public initiatives for public good, e.g., focusing on
provision of publicservices.
Aperson who practices philanthropy is called aphilanthropist.
68

69. Philanthropy -examples
69
1. Apple
CEOTim CookbecameApple’s head honcho in April 2011 and almost immediately instituted a
program to match employee donations. In the time since,Apple hasmatched over $25 million
worth of employee donations, resulting in more than $50 million for charities around the world.
2. Google
Normal companiesdon’t offer diverse giving options, but Googleis not anormal company.With
offices in 70 cities and more than 40 countries, Google’sphilanthropy hasadeep global reach
from New York,to the U.K.,toGermany and more.

70. GooglePhilanthropy Examples
70
Google’s community programs include:
BayAreaGiving: Proud to support local nonprofits that
strengthen the community, Google hasgiven over $60
million to BayArea nonprofits over the past three
years.
Code forAmerica:In an effort to provide better
technological support for governments that are slow to
embrace technology, Google provides Codefor
America with an annual gift of $3 million to develop
civic technological solutions.
Robots: Google believes that robots are afun,effective
way to teach children foundationaltechnological
concepts, sothey funded Germany’s Fraunhofer
Institute for Intelligent Analysis and Information
Systemsto help them developtechnology to program
and control robots using asmartphoneapp.
Programming Education
Gathering: Google donated more than5,000
RaspberryPicomputers in order to providea
computer scienceeducation to more than
25,000 Japanesechildren.
Raspberry Pi: A$1 million Google grant will give
RaspberryPicomputers —inexpensive
microcomputers about the sizeof acreditcard
—to 15,000 U.K.children who showexceptional
enthusiasm for computerscience.

71. Philanthropy -examples
71
3. Microsoft In1983,
200 Microsoft employeesraised $17,000 for
nonprofits through the company’s first
employee giving program. Thanksto matching
gifts, Microsoft employees havesince donated
over $1 billion to charitableorganizations.
That’s alot of computers.
4. PepsiCo:Pepsi is afood and beverage
powerhouse, which is why itsphilanthropy
prioritizes related causes,including:
Healthy lifestyles
Affordablenutrition
Accessto cleanwater
Sustainable agriculture
Jobreadiness
Empowering women

72. Philanthropy -examples
72
5. Shell
LikePepsi,Shell also supports the community
in abig way.
Through along-standing philanthropic
relationship, Shell hasdonated morethan
$24.8 million dollars to theUniversity of
Texasat Austin. In 2012, Shell and UTsigned a
five-year, $7.5 million deal to address
challenges facing the growing worldwide oil
and gasindustry. Most of the money willgo to
research, but nearly half amillion dollars will
support UTstudents and programs.
T
oempower employees, Shell offers a
matching gift program. Thecompanymatches
employee donations between $25 and$5,500
at a1:1 ratio.
Matching gifts havehelped Shell to pursue
severalphilanthropic goals.Asof the endof
2014, Shell donations havehelped to create
more than 35,000 jobs, saved6.2 million
metric tons of CO2,and raised $5 billion for
organizations in fourcontinents.

73. 73

74. EmergingChallengeof C
S
R
74
Public support
Budget and Finance
Government support
Effectivecommunication
Sustainability
Politics by Parties
Time commitment
Committed Volunteers
Positive Community Impact
Skills training
Ethics
Logistical support
Building trust among volunteers,public

75. OECD-Organisation for EconomicCo-
operation and Development(OECD)
75
Our mission
Themission of the Organisation for EconomicCo-operation and Development (OECD)is to promote policies that will
improve the economic and social well-being ofpeople around the world.
TheOECDprovides aforum in which governments canwork together to share experiences and seeksolutions to
common problems. Wework with governments to understand what drives economic, social and environmental change.
Wemeasure productivity and global flows of trade and investment. Weanalyse and compare data to predict future
trends. We set international standards on awide range of things, from agriculture and tax to the safety of chemicals.
Wealso look at issuesthatdirectly affect everyone’s daily life, like how much people pay in taxes and social security, and
how much leisure time they cantake. Wecompare how different countries’ school systemsare readying their young
people for modern life, and how different countries’ pension systems will look after their citizens in old age.
Drawing on facts and real-life experience, we recommend policies designed toimprove the quality of people's lives. We
work with business, through the Businessand Industry Advisory Committee to the OECD(BIAC),and with labour,
through the TradeUnion Advisory Committee (TUAC).Wehaveactive contacts aswell with other civil society
organisations. Thecommon thread of our work is ashared commitment to market economies backedby democratic
institutions and focused on the wellbeing of all citizens.Along the way, we also set out to make life harder for the
terrorists, tax dodgers, crooked businessmen and others whose actions undermine afair and open society.

76. OECD-History
76
TheOECD'sorigins date back to 1960, when 18 European countries plus the United Statesand
Canadajoined forces to create an organisation dedicated toeconomic development.
Today,our 35 Member countries span the globe, from North and SouthAmerica to Europe and
Asia-Pacific.Theyinclude many of the world’s most advancedcountries but also emerging
countries like Mexico, Chile andTurkey.
Wealso work closely with emerging economieslike the People's Republic of China,India and
Brazil and developing economies in Africa,Asia, LatinAmerica and the Caribbean.Together,our
goal continues to be to build astronger, cleaner and fairer world.

77. CURRENTMEMBERSHIP
77
Australia
Austria
Belgium
Canada
Chile
CzechRepublic
Denmark
Estonia
Finland
France
Germany
Greece
Hungary
Iceland
Ireland
Israël
Italy
Japan
Korea
Latvia
Luxembour
g Mexico
Netherlands
New Zealand
Norway
Poland
Portugal
Slovak Republic
Slovenia
Spain
Sweden
S
witzerland
Turkey
United Kingdom
United States

78. OECDObjectives
78
OECD at 50andbeyond
Today,we are focused on helping governments around the worldto:
Restoreconfidence in markets and the institutions that makethemfunction.
 Re-establishhealthy public finances asabasisfor future sustainable economicgrowth.
Foster and support new sourcesof growth through innovation, environmentally friendly ‘green
growth’ strategies and the development ofemerging economies.
Ensure that people of all agescan develop the skills to work productively and satisfyingly in the
jobs of tomorrow.

79. QuestionBank
79
1. What is the meaning ofCorporate
Governance?
2. Explain the different models ofCG.
3. Explain the relevance of corporate
governance,
4. What are the various obligations ofCGto
Investors, Society, Employeesand
Customers
5. What is the meaning ofCSR-Corporate
SocialResponsibility?
6. What are the types and nature ofsocial
responsibilities?
7. CS
Rprinciples andstrategies
8. Explain the different models ofCSR
9. Explain the Bestpractices of CS
R
10. Explain CS
Rin Indianperspective
11. Explain CS
Rin globalcontext

80. QuestionBank
12) What is corporate Governance?Explain the benefits ofgood corporate governance.
13) Sincethe exposure of corporate scandalslike Enron, Satyam& 2010 TelecomsLicenserow,
there is much interest at present in the Corporate Governance & related issues.Identify a
range of stakeholders with an interest in the quality of Management &Corporate
Governance.
14) Explain the benefits of good corporate governanceto acorporation & society.
15) Write short notes on OECDModel.
16) State the obligations of businesstowardssociety.

81. Endof Module2