CORPORATE SOCIAL RESPONSIBILITY

FINAL DRAFT SUBMITTED IN THE FULFILMENT OF THE COURSE TITLED LEGAL

ENGLISH

SUBMITTED TO:

Dr. PRATYUSH KAUSHIK

ASSISTANT PROFESSOR OF ENGLISH

SUBMITTED BY:

NAME: KARAN SINGH RAUTELA

COURSE: B.A., LL.B (Hons.)

ROLL NO: 1736

SEMESTER: 1st

CHANAKYA NATIONAL LAW UNIVERSITY, NYAYA NAGAR,

MITHAPUR, PATNA 800001

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 ACKNOWLEDGEMENT

Writing a project is one of the most significant academic challenges, I have ever faced.
Though this project has been presented by me but there are many people who remained in
veil, who gave their all support and helped me to complete this project.

First of all I am very grateful to my subject teacher Dr. Pratyush Kaushik, without the kind
support of whom and help the completion of the project could not have been possible for me.
He donated his valuable time from his busy schedule to help me to complete this project and
suggested me from where and how to collect data.

I am very thankful to the librarian who provided me several books on this topic which proved
beneficial in completing this project.

I acknowledge my friends who gave their valuable and meticulous advice which was very
useful and could not be ignored in writing the project. I want to convey most sincere thanks to
my seniors, for helping me throughout the project.

Last but not the least, I am very much thankful to my parents and family, who always stand
aside me and helped me a lot in accessing all sorts of resources.

I thank all of them !

KARAN SINGH RAUTELA

ROLL :- 1736
SEMESTER :- I
B.A.L.L.B. ( Hons. )

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 TABLE OF CONTENT

(I) INTRODUCTION---------------------------------------------------------------------------- 4-6

(II) CSR IN INDIA-------------------------------------------------------------------------------- 9-11

(III) LEVEL AND TYPES OF SOCIAL COMMITMENT----------------------------------- 12-13

(IV) CONTEMPORARY MODEL IN CORPORATE

SOCIAL RESPONSIBILITY ------------------------------------------------------------ 14-17

(V) EMERGING ISSUES------------------------------------------------------------------------- 18-19

(VI) LAWS RELATED TO CSR----------------------------------------------------------------- 20-22

(VII) CASE STUDIES ----------------------------------------------------------------------------- 23-24

(VIII) CONCLUSION AND SUGGESTION --------------------------------------------------- 25

(IX) BIBLIOGRAPHY ----------------------------------------------------------------------------- 26

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 1. INTRODUCTION

Corporate Social Responsibility (CSR also called as corporate conscience, corporate citizenship,
or responsible business) is a form of corporate self regulation integrated into a business model1.
It is a business which monitors and ensures its active compliance with laws, ethics, national and
international norms. According to Adam Smith ,father of the classical economic model believed
that that the public interest was pursued by individuals pursuing their own self interests2. It
engages in actions to do some social goods, beyond the personal interests of the firm and that
which is required by law. The aim of the CSR is to increase long term profits through positive
public relations and high ethical standards and reduce the legal risks by taking responsibilities for
corporate actions. It aims to provide a positive impact on the environment including consumers,
customers, employees and others. CSR is based on the basic ideology that if all business
industries and enterprises work in an economically rational manner then overall benefit to the
society will be maximized.It is further expanded to business enterprises.Their design is to
maximize profits and minimizing the means of making such profits. It brings forth the idea of
functioning of any business enterprise in an economically rational manner that it overall benefits
the society. A business is false if it concerns itself with only the goods and services which the
consumers want. There was only one responsibility of business and that was to use its resources
and direct it to increase their profits. Their basic responsibility was to produce wealth for its own
survival.
But when the corporates pay heed to the social issues and the ethical principles, it is said
to be socially responsible. They ought to govern the relations between business and society.The
prime approach of CSR is to evolve and execute strategies which supports the communities in
partnership with government and civil society.
The key issues of CSR are environmental management, eco-efficiency, responsible sourcing,
stakeholder engagement, labour standards and working conditions, employee and community
relations, social equity, gender balance, human rights, good governance, and anti-corruption
measures3.
Though the CSR in India is new but its concept dates back to the mauryan dynasty where
philosophers like Kautilya focused on ethical principles and practices while carrying out business
and trades. It was practiced in ancient times in the form of donations, charity, and sharing ones
earning with the deprived section of society. Merchants gave alms to the poor and shelter to the
homeless person.

1
Donna J. Wood ,Corporate Social Management Revisited, 16 TAMR 691, 691-92 (1991)
2
Meenakshi Gupta,Principles of Management 32 (PHI Learning Private Ltd. 2009 , 2012)
3
What is CSR?, United Nation Industrial Development Organization, (Sept.30, 2017, 4:35 PM),
http://www.unido.org/csr/o72054.html

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 The principles of earlier times run parallel with the new system of CSR in present times.
At the start of the twentieth century, there were few corporate acts of charity. At that time two
principles evolved regarding the views on social responsibility.
The first one is the principle of charity4. It has its foundation from the biblical tradition
and suggests that those who have plenty should give to those who do not. Till 1850, the wealthy
businessmen shared their riches with the society by either setting up temples or religious
institutions5. During the times of famines, the rich people opened their granaries for people. In
1990s the industrialists like Tata, Godrej, Modis, Bajajs, etc. who promoted this idea of CSR by
setting up of charitable institutions, educational institutions, healthcare facilities, and anything
for the development of human society. For example, Andrew Carnegie put much of his wealth
for education. Henry Ford made recreational and health programmes available to Ford
employees.
The second principle that is responsible for shaping the corporate and social
responsibility is Principle of Stewardship6.It obligates the organization to see that the publics
interests are best served by their actions and the ways in which the profits are spent. As the
corporations hold vast resources and power and this power in turn provides them with wealth.
So, it becomes obligation and ethical duty for the corporates to serve the needs of the society. In
this way the managers become stewards, or trustees, for society.
Religion also played an important role in the promotion of CSR.Islam had a law called
Zakaat, which rules that a portion of ones earning must be shared with the poor in form of
donations7. Dharmada was followed by Hindus where the manufacturer or seller charged extra
amount which was ultimately donated to the charity. In the same way Sikhs followed Daashant.
CSR in India has evolved through different phases. Its history can be divided into four
phases:
PHASE 1 (1850-1914)
The first phase of charity is known for its charity and philanthropist nature. CSR was influenced
by family values, traditions, cultures and other things. The wealthy businessman spent their
wealth in development of the educational, religious, and welfare institutions. In times of famines
or drought these businessman opened their granaries for the poor and hungry people. The leading
businessmen like Tata, bajaj, Godrej, etc were in favour of the CSR. They supported it by
establishing charitable, educational, healthcare institutions. There tendency to support the people
through social activities were driven by the political motives.

4
supra note 2
5
Evolution of CSR in India, SoulAce, (Oct. 1, 2017, 6:45 PM), http://www.soulace.in/blog/evolution-of-csr-in-india/
6
supra note 2
7
supra note 5

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PHASE 2 (1910-1960)
The second phase was during the independence movement. Mahatma Gandhi urged the
industrialists their wealth and benefits with the poor and needy people.The socio-economic
growth was the result of development of concept of trusteeship given by Mahatma Gandhi which
was similar to the principle of Stewardship. This influence of Gandhiji prompted various
businessmen and industrialists to play active roles in the nation building activities, and promote
socio-economic development during 20th century.According to Gandhi, companies and industries
were the temples of modern India8. And these temples played a very important role in the
social reformation.

PHASE 3 (1950-1990)
This phase is characterized by the emergence of PSUs (Public Sector Undertakings) to ensure
better to ensure better distribution of wealth in the society. The policy on industrial licensing and
taxes, and restrictions on the private sector resulted in malpractices in corporate sectors. And as a
result, it triggered legislation on corporate governance, labour and environmental issues. In 1965,
academicians, politicians and businessmen conducted a nationwide workshop on CSR where
major emphasis was given to social accountability and transparency9.

PHASE 4 (1980 Onwards)

In the last phase CSR became characterized as a sustainable business strategy. The wave of
liberalization, privatization and globalization ushered into the new era leading to a boom in
economic growth. This further increased the momentum of economic growth, making it possible
for companies to contribute towards social responsibility. What started as a charity was now
understood as a responsibility which should be followed by each and every corporate sectors or
industries.

8
Evolution of CSR in India, Janalakshmi, (Oct.1, 2017, 10:25 PM),
http://www.janalakshmi.com/wp-content/uploads/evolution_of_csr_in_india.pdf
9
Id

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AIMS AND OBJECTIVES
To study the role of Corporate Social Responsibility in corporate activities.

RESEARCH METHODOLOGY
This research project is solely based on doctrinal type of research work.

HYPOTHESIS
The Corporate Social Responsibility is beneficial for the environment and to the people living
in the surrondings of corporate sectors.

LIMITATIONS OF RESEARCH
The researcher will confine his research to the city of Patna in Bihar. Due to time constraints the
researcher will use the doctrinal mode of research.
SOURCES OF LITERATURE
Primary Sources: Acts, Judgements, Laws, etc
Secondary Sources: Newspapers, journals, periodicals, internet etc.

REVIEW OF LITERATURE
For the purpose of research the researcher went to CNLU library and found sources of primary
secondary nature relating to his research topic.

MODE OF CITATION
The researcher has followed Bluebook Citation [20th edition].

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 LITERATURE REVIEW

Dr. Sanjay Kumar Pandas book Corporate Social responsibility in India: Past, Present and
Future published in 2008 profoundly speaks about the role and importance of CSR in a society.
The wide range of subjects the book encompasses amazes the reader. The book gives its reader
an approach from theory to practice. The corporates can use this book to plan and implement
their CSR interventions as it generates awareness and sensitizes on issues related to CSR. The
book is based on a detailed study carried out in various Indian Corporates from Public and
Private sector, NGOs, Government initiatives and collaborative actions taken by the Association
of industries. This study done by Dr. Panda gives this book a special feel and provides the reader
a broad overview of various initiatives taken.

In Corporate Social Responsibility and Globalisation, by Jacqueline Cramer, the author reports
on the findings of 20 diverse companies that participated in a 3-year Dutch program to
incorporate 'Corporate Social Responsibility' into business practices and offers strategies for
companies interested in starting down this path. Topics to consider include how to consider
cultural differences and customs when doing business in another country, and how to encourage
social responsibility along your supply chain. In addition, some of the obvious topics include
environmental responsibility, but less obvious areas which were considered include openness
within the company, and corruption policies. To begin, a company is instructed to conduct a
survey among employees throughout the company to determine where the company stands and
where it is perceived to stand on social responsibility. This then offers a starting point for what a
company is excelling in, and where more work is needed.

Corporate Social Responsibility and Public Libraries by Prof. B. Ramesh Babu stresses the
need for incorporating Public Libraries into the gamut CSR so that there is an overall socio-
economic development envisaged by the Ministry of Corporate Affairs in their Voluntary
Guidelines for CSR. While education has been given a front seat in CSR, it can also be
extended to public libraries, because public libraries are considered as social institutions
providing basic information for social, economic and cultural development of citizens; and to
create skills for livelihood for local communities. The book reiterates that Public libraries play a
vital role in disseminating existing knowledge and promote the creation of new knowledge.
There are many reasons attributed to this stagnation; the foremost being lack of adequate funds
and support from the Government. Although there are various acts, policies and institutions for
the promotion of public libraries, they are in an irreversible state. The present public library
system needs a total revival and transformation for which we need to adopt a different approach
and resources to bridge this gap.

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 2.CSR IN INDIA

CSR in India has been largely influenced by the Hindu tradition which was carried out through
ages. It find its roots in the colonial period when the leading business leaders imitated the efforts
carried out by the corporate in the west. The Indian business houses like Tata, Birla, Godrej, etc.
played a major role in the development of educational and charitable institutions in various parts
of the country.CSR has become an important issue because of the following factors:
1.) It helps in strengthening of the relationship between companies and stakeholders.
2.) It enables continuous improvement and encourages innovations.
3.) Attracts the best industry talent as a socially responsible company.
4.) Provides additional motivation to employees.
5.) Mitigates risk as a result of its effective corporate governance framework.
6.) Enhances ability to manage stakeholder expectations10.
In 1980s the advent of liberalization resulted in the opening of economy in India. Big business
families established trusts and modern institutions such as schools, colleges, hospitals, etc. It
brought the corporations in the centre stage and played an important part in the realm of policy
making and implementation.

CSR Activities In India

Education
88% 100%
Healthcare
94% 90%
Environment
94%
Livelihood
Rural Development
11

As shown in the chart, the most common areas covered by the corporate in India are the fields of
rural development, education, healthcare, environment, and livelihood. Out of these 5 areas,
100% of the companies contributed in the development of education system followed by
environment and livelihood, healthcare, and rural development.

EDUCATION
The study indicated that providing a new infrastructure to the education system in India was
given more importance than any other areas. It was the most common activities which was
carried out by the corporate and the businessmen.

10
Id
11
Id

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HEALTHCARE
In the domain of healthcare, the companies organized various health awareness campaigns and
raise health issues. It became the most common activity and it was implemented by nearly most
of the companies.

ENVIRONMENT
CSR initiatives were aimed towards the conservation and betterment of environment and
includes many initiatives like tree plantation, raise voice against deforestation, conservation of
water, responsibly disposing of the wastes such that it does not the environment. Green
initiatives are given more importance than the measures to conserve water.

LIVELIHOOD
The companies promote support skill development through vocational training and income
generation activities. There are many institutes which operates many training start-ups. Whether
your business is involves in clothing, food, hospitality, agriculture or any other an activity, the
organization can lend a helping hand for the support of people. It enable them to learn a skill
which will ultimately help them in starting their own business which can last a lifetime and for
generations to come.

RURAL DEVELOPMENT
The companies provide different infrastructural facilities like construction of road, electricity,
water facilities, sanitation, school, healthcare, etc. It contributes to the socio-economic
development of the rural people.

There is a gradual shift in the mindset of companies towards CSR. According to data compiled
by Prime Database, Indian companies spent INR 8,345 crore on various CSR activities in 2015-
16. Against the Rs 6,526 crore spend from the previous year, there was a 28% jump in the total
investment made by corporate firms12.
The Prime Ministers Relief Fund saw an increase of 418 percent to US$103 million (Rs 7.01
billion) in comparison to US$24.5 million (Rs 1.68 billion) in 2014-15. The education sector
received the maximum funding of US$300 million (Rs 20.42 billion) followed by healthcare at
US$240.88 million (Rs 16.38 billion)13. Other programs such as child mortality, maternal health,
gender equality saw negligible expenditure. The implementation of projects in the year 2015 and
2016 went up from 99 to 153 respectively with the increasing number of companies having more
control over their CSR spending.

12
Prerana Langa, Emerging Trends for CSR 2017,thecsrjournal, (Oct.2, 2017, 2:30PM),
http://thecsrjournal.in/emerging-csr-trends-for-2017/
13
Dezan Shira & Associates, Corporate Social Responsibility in India, india-briefing, (Oct.2, 2017, 2:40 PM),
http://www.india-briefing.com/news/corporate-social-responsibility-india-5511.html/

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A panel was recently held which was titled-CSR in India:2016-2017 Way Ahead14. It was
chaired the leading businessmen of India and was moderated by Sapna Bhardwaj. In that panel
Vijay Sethi stated being one of the worlds largest two wheeler company, Hero Moto Corps
CSR vision is about three things: Greener, Saver and an Equitable world15. They are more
focused on plantation of trees, education of girls, creating toilets, and road safety.

Vaishali Sinha of ReNew asserted CSR as a critical organization with its presence in 20 villages
and over 80 sites across India. It has partnered with communities, NGOs, and government to
achieve the objectives laid down in the CSR. She stated,We have broadly divided CSR into
three broad categories, human capital, social, and natural capital16.
India in 2017 is looking out for some popular trends of CSR which it will follow.Swachh Bharat
Abhiyan was launched three years ago. It brought about a concern for the cleanliness. After the
successful implementation of Swachhh Bharat Abhiyan, many companies contributed funds to
the cause of this campaign which helped in cleaning of public places, building toilets. They also
led public awareness programmes regarding health hazards of water and air pollution caused due
to the garbage burning, littered roads, etc
There are many leading companies in India which had a major contribution in CSR.For example,
Tata power empowered women through Self-help groups in Kutch region of Gujarat. Tata Power
with the support of non-profit organizations and field operatives changed the conditions of
women living in this region. It strengthened the banks and markets thus facilitating social
security.
Forbes Marshall supported the idea of contributing an giving it back to the community. So, when
Darius Forbes purchased land from the farmers for the setting up of factory, he gave first jobs to
the farmers and relatives of the farmers and provided them with basic housing, sanitation,
healthcare, etc. and other facilities.
In India the concept of CSR continues to mature. It is becoming more strategic, technological
and innovative. It is developing and increasing the socio-economic status day-by-day.

14
Sapna Bhardwaj, Corporate Social Responsibility(CSR) current trends in India and the way ahead - Panel
Discussion, ET, Apr 19, 2016
15
Id
16
Id

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 3.LEVELS AND TYPES OF SOCIAL COMMITMENT

The ways in which the leaders of the organization operate their companies is based upon the
principles that motivate them. Zadek and Reynard (2001) describes the development of CSR in
three generations17:
The first generation of CSR showed the companies that it can be responsible in numerous ways
and can contribute to commercial success.This is the most traditional and widespread form of
CSR, often translated as social obligation. These industrialists respond to the social issues and
engage in philanthropic activities which they believe will ultimately benefit from them. Social
issues and contributions are viewed as the responsibility of the individuals and not of an
organization. Such organizations adhere to the local environment protection laws.
Environmentalism is the integral part of this business model. It ensures that its power generation
facilities operated in an efficient manner and it meets the standards of health and safety of
environment. It partners with the governmental authorities, stakeholder, NGOs, and support
socio-economic development in which it operates. First Gens corporate responsibilities extend
beyond its surrounding communities. It partners with various non-profit organizations that have a
significant impact on fields of conservation and education on environment.

Its domain is embedded within specific organizations. It concerns itself with the
functioning of organization itself. The main concerns are with the government related activities.
It is also embedded within a national context.It is concerned with upholding law and order, and
thus protecting individuals from organizational misdeeds. It ensures that the suppliers comply
with the companys code of conduct.

The second generation reflects human rights that are secured through state intervention, most
often in the form of protective legislation18. It is now being developed where companies, and
whole industries, see CSR as an integral part of long-term business strategy19. It is the place
where the companies play a leading role in the CSR. These organizations recognize that laws
often change more slowly than societys expectations. They keep pace with social norms, values,
and expectations of performance. They assume a broader responsibility than which is prescribed
by law and economic requirements. For example, they take steps to reduce pollution if they
consider the levels to be dangerous, even if these levels are acceptable by legal standards.
Further examples include rights that resulted in upliftment of social conditions during the 19th
century: improved labour conditions and product safety standards. It provides initiatives that
provides secure rights for employees, their families, local communities such as fair wages, health

17
supra note 2 at 35
18
Helle K. Aggerholm & N. Leila Trapp, Three tiers of CSR:an instructive means of understanding and guiding
contemporary company approaches to CSR?, researchgate, (Oct.2, 2017, 7:05 PM),
https://www.researchgate.net/publication/261255368_Three_Tiers_of_CSR_an_instructive_means_of_understan
ding_and_guiding_ing contemporary_company_approaches_to_CSR
19
supra note 2 at 36

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benefits, and safe working environment.The industries are work for their self-interests but in a
socially conscious manner.
The domain of CSR is also particular organizations, but it reflects the broader understanding of
relevant stakeholders put forth in Freemans stakeholder theory: any group or individual who
can affect or is affected by the achievement of the activities of an organization20.Its CSR
initiatives targets local communities and families of staff rather than just company specific
employees. It is primarily concerned with the issues directly influenced by an organization for
the benefit of its stakeholder21. For example, sponsoring local sporting, ensuring healthy
workplaces.

Third generation of CSR reflects human rights that is not limited to the concerns of individuals
but is concerned with humankind in collective sense. It addresses the need of contribution
towards poverty, exclusion of environmental degradation and socio-related problems. These
organizations are considered as socially responsible. They adopt a whole different way of
approaches taken by individuals in which they operate and they try to remould the markets
towards sustainability. This will need partnerships between organizations and civil society and
changes in public policies. This could include changes in taxation systems, social and
environmental reporting and support for consumer education. It ultimately achieves societal as
well as business development.
The domain is much wider in its scope. It surpasses national and local boundaries and is
concerned with the international community or humankind in general. It searches for a way for
new resources and ways to effectively approach complex issues. It is generally embedded with
one or more sectors. It is concerned with issues that ultimately affect humankind. For example,
abolition of child labour, and initiatives to promote greater environmental responsibility.

First and second generation are more or less motivated by profit motive. In first-generation CSR,
corporations run a profitable business without legal risks. In second generation CSR , it is
common for corporations to assert arguments regarding social incentives and fulfilling
obligations of the society. Third generation CSR on the other hand, is surpasses corporate-bound
legal and stakeholder interests22. It involves understanding of complex interconnections between
corporate activities. Thus, CSR in third generation is concerned with humankind and global
environment.

Each of the three generations of CSR should be considered as unique. It means that rather than
focusing on assumed values, the differences should solely rely in its uniqueness. The pyramid
which strongly influenced attempts to define CSR.The companies take either first, second, or
third generation approach to CSR rather than allowing obscure, and unidirectional understanding
of approaches.

20
supra note 18 at 3
21
Id at 4
22
Id

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 4.CONTEMPORARY MODEL IN CORPORATE SOCIAL
RESPONSIBILITY

4.1. EARLY CSR MODELS

4.1.1 THE CAROLL MODEL23

The carol model has four levels and a firm can be divided according to different levels by
looking at its behavior and its actions in the market place.

Level 1: Caroll describes this level as Economic. It is considered fundamental to the firm, as
every firm needs to earn profits, protect its longevity and its success. It does not prevent the firm
to work in an ethical manner.

Level 2: This level is described as Legal, where the need is for the firm to be a law-abiding
entity. The law offers some boundations on the firms and sets some standards which has to be
followed by the firms and individuals.

Level 3: It is the ethical level; the role of the firm is to behave and act in an ethical manner and to
take precautions that no harm is being caused to the people.

Level 4: It has been described as Philanthropic level. The firm should behave as a good corporate
citizen and make contribution to the community in which it operates.

These levels is viewed as a pyramid. He explicitly refers to the Milton Friedmans famous
statement that managers responsibility is to make as much money as possible within the rules
of the society conforming to the basic rules of the society, both those embodied in law and those
embodied in ethical customs (Friedman 1970) and regards this view consistent from level 1-3
above respectively24. This leaves Friedmann to reject level 4. But according to Caroll, it is a
traditionalist view implying that there may be conflicts between different forms of social
responsibility specially between economic and other social responsibilities. However .it is upto
the management to handle these conflicts. Thus, Carolls conception of social responsibility is
inclined to the sense of performing practical stakeholder management.

23
supra note 2 at 38
24
Id at 39

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4.1.2 THE REIDENBACH AND ROBIN MODEL (1990)25

This model proposes two dimensional form that has 5 developmental stages that a company
should adhere to against concern for profit and ethical standards. These stages are:

STAGE 1 AMORAL: At the base of the companies and firms, there are some amoral or ethical
challenges. They arise only for short-terms, and should be solved at all costs. Obedience is
valued and rewarded and there is little concern for employees other than their value as an
economic unit of production. The business is not subjected to the same rules as individuals and
there is no set of values other than greed.

STAGE 2 LEGALISTIC: Legalistic firms obey the law, though ethical concerns are judged on the
basis of adherence to the spirit. No breach of law means no breach of ethics. Economic
performance dominates evaluations and rewards.

STAGE 3 RESPONSIVE: Managers understand the value of not acting solely on legal basis, even
though they believe they could win. It is coupled with a growing sense of balance between
profits and ethics. Thus a responsive companys ethics code would reflect a concern for other
stakeholders. Most stage two companies would leave ethical concerns aside until they become a
problem. Only then they would consider a remedial action.

STAGE 4 EMERGING ETHICAL: Managers have an active concern for ethical outcomes.
Values are shared across organizations. Ethical values in companies are part of the culture. They
accept their code of ethics as a starting point.

STAGE 5 ETHICAL COMPANIES: This is the stage where there is total ethical profile, with
carefully selected core values like approach to hiring, training, firing, and rewarding. An attempt
is made to maintain a suitable balance in business operations, in order to minimize reputation
risks.

4.1.3 THE STAKEHOLDER MODEL26

Carolls definition of CSR answers the question, What are business responsible for?. But it
does not answer the question: Whom are business responsible to? Clarkson (1995) suggests
that business are not responsible to society in general, but only to their stakeholders.
Stakeholders can be defined as those individuals or groups that can influence or can be affected
by corporate activities.

25
Id
26
Id

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The stakeholders may be:
i) Employees
ii) Suppliers
iii) Creditors
iv) Communities
v) Society
vi) Shareholders
vii) Consumers

According to this model, goals of the enterprise is a reflection of the goals of the stakeholders
and their relative power. Thus power of stakeholder is greater when :
a) If the organizations need more resources from the stakeholders.
b) If there is less possibility that the organizations can get resources from another sources rather
than stakeholders.
c) The more the organized the stakeholder group is, the lesser the number of internal conflicts
within the stakeholder group.
The model in principle may be used to explain that the responsible behaviour is something which
the enterprise delivers to its different stakeholders in return for its valuable resources. In terms of
stakeholder model, an enterprise can be socially responsible if it contributes to the survival of the
firm in short term or long term perspective.

4.2 CONTEMPORARY CSR MODELS

4.2.1 MODE OF SUSTAINABLE DEVELOPMENT BY ARAS AND COWTHER (2009)27

To achieve sustainable development it is necessary to achieve sustainability and this can be
achieved by four actions: maintaining economic activity as this is the most importantpurpose of
the company; conserving the environment as this is essential for the maintenance of future
generations; ensuring social justice which includes elimination of poverty and ensuring of human
rights; and developing spiritual and cultural values.

4.2.2 CSR 2.0 MODEL BY VISSER (2010)28

It is about designing and adopting an inherently sustainable and responsible business model,
supported by a reformed financial and economic system. Clearly, he was most concerned with
profit motive to ensure the viability of the model rather than environmental conservation as the
main priority.

27
Zeittey Karmilla Kaman, Corporate Social Responsibility (CSR) Models: An Approach to Environmental
Perspective, International Research Journal of Engineering and Technology, (Oct.3, 1:02 AM),
https://www.irjet.net/archives/V2/i7/IRJET-V2I702.pdf
28
Idat 6

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4.2.3 REFERENCE MODEL BY DELAI AND TAKAHASHI (2011)29
They developed a model to measure corporate sustainability (economic, social and environment)
that can be used by organizations to integrate sustainability measures into their current
performance measurement system, helping them to embed sustainability into daily activities and
to forge a sustainability culture.

4.2.4 CORPORATE SOCIAL RESPONSIBILITY UNIVERSAL MODEL BY NALBAND

AND AL KELABI (2004)30
It was contrary to the model of Caroll. Nalband and Al Kelabis model postulates that the
majority or an influential group in a company have the final say as to what the key
responsibility of the company is when conflict occurs in choosing among various responsibilities
to fulfil. In this case, the model does not specifically address how to tackle an environmental
issue despite the addition of the new elements (i.e. beliefs, values and assumptions).

29
Id
30
Id at 7

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 5.EMERGING ISSUES

The interest in CSR is increasing and growing day-by-day. But looking beyond the largest
companies, CSTmis still generally equated with philanthropy and is not integrated within the
core of business strategy.
The few areas which is emerging regarding the CSR are:

5.1 INCREASING CONCENTRATION ON PRODUCT RESPONSIBILITY31

The key areas of a debate are moving away from side-effects such as how well a company treats
its staff or how efficient its productions are. The products that they are marketing is considered
as a good thing or not. Current issues include modified foods, AIDS drugs, animal rights,
tobacco, junk food and arms production. Some companies realize that the philanthropy and the
risk management will not distract from their core responsibilities and are beginning to engage
with these issues.

5.2 EMERGENCE OF SUSTAINABILITY APPROACHES32

There is meeting of social, environmental and economic approaches into one that looks at overall
sustainability. A number of initiatives including the global Reporting initiative and the sigma
project are leading the development of integrated approaches to CSR.

5.3 A GREAT FOCUS ON THE QUALITY OF CSR MANAGEMENT

With greater understanding of good practice and the relation between social and financial
aspect. There is increasing focus on the quality of management of CSR. Its standards and quality
management approaches converges as each take its toll on others. For example, the European
Foundation for Quality management now uses terms such as empowerment and values. It is clear
that CSR is driven by business case approach, with outcomes in concern with objectives and
societal needs.

Fear about how CSR will survive recession and global insecurity. CSR, if integrated with the
business strategies is likely to remain strong, however additional quality of humanitarian add-on
is vulnerable to cost cutting. The most important issue is the downsizing of companies.It may not
bring immediate benefits to a struggling company with the economic climate, but in the long-
term is likely to build up reputation of the company.

31
supra note 2 at 42
32
supra note 2 at 42

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The influence of corporate as an increasing high profile issue. Influence of politics has remained
hidden and disconnected from more high profile social and environmental commitments. In
many companies, they are managed by completely separate departments, which appear to pursue
unconnected agendas, with the company, With the increasing movement of CSR in businesses,
contradictions will become more apparent and transparency and clinging to policy will become
more prolonged.

5.4 CSR BECOMES AN ABOLUTE MANDATE33

One of the most compelling trends CECP (The Committee Encouraging Corporate Philanthropy)
sees globally is the move by countries and regions to mandate certain aspects of corporate
societal engagement. Companies with a current or growing multinational footprint need to
understand this evolving landscape to inform their societal investment strategy and support
compliance. Some emerging markets, including Brazil and Indonesia, have regulations that
determine a specific level or type of corporate societal investment, similar to Indias new 2
percent CSR requirement.

33
Susan McPherson, Eight CSR trends to watch out for in 2015, forbes, (Oct.3, 2017, 9:46 PM),
https://www.forbes.com/sites/susanmcpherson/2014/12/31/five-csr-trends-to-watch-out-for-in-
2015/#6df741759e04

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 6. LAWS RELATED TO CSR

In order to encourage more entities to participate in the process of development of the society
via- CSR, the Government of India has actually implemented the concept of CSR in the new
Companies Act 2013, On 27th February, 2014, the Government of India has notified the rules for
CSR spending u/s 135 of the New Companies Act 2013 along with Companies (Corporate Social
Responsibility Policy) Rules, 2014 effective from 1st April 2014.

The company should constitute a corporate social responsibility committee as follows:

1. The committee shall constitute of 3 members including 1 independent director, however in
case of Private company or the company which is not required to appoint independent director o
board, or foreign company the committee can be formulated with two directors.

2. The CSR policy shall be formulated in accordance with schedule VII and the CSR committee,
will be responsible for framing the policy, finalizing the amount to be spent on CSR, monitoring
and implementation of the scheme.

3. If company ceases to fulfill the eligibility criteria for three consecutive years, then the
company is not required to comply until the company will meet the eligibilitycriteria once
again34.

The CSR Rules provides the manner in which CSR committee shall formulate, monitor the
policy and manner of understanding for CSR activities. Under the rules, the Government has also
fixed a threshold limit of 2% of the "Average' Net Profits of the block of previous three years on
CSR activities and if Company fails to spend such amount, disclosures are to be made for the
same. But an exemption has been given to the Companies that do not satisfy the above threshold
for three consecutive years.

CSR Activities as prescribed under Schedule VII of CA, 201335

1. Objective to efface the daily life segments including poverty, malnutrition and hunger
while enhancing the standard of living and promoting the facets of better health care and
sanitation.
2. Initiative to promote the different segments of education including special education and
programs to enhance the vocation skills for all ages like children, women, elderly and
conducting other livelihood enhancement projects.
3. Aim to bring the uniformity in respect of different sections of the society to promote
gender equality and other facilities for senior citizens and developing hostels for women

34
Hemant Goyal and Sandhya Aggarwal, India: Corporate Social Responsibility As Per New Indian Companies Act
2013, mondaq, (Oct.3, 2017, 10:12 PM),
http://www.mondaq.com/india/x/302204/Corporate+Commercial+Law/Corporate+Social+Responsibility+Now+A+
Mandated+Responsibility
35
Id

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 and orphans and taking initiative for empowering women and lowering inequalities faced
by socially and economically backward groups.
4. Elevate the segment of flora and fauna to bring the ecological balance and environmental
sustainability in respect of animal welfare, conservation of natural resources and ago
forestry while maintaining the quality of air, water and soil.
5. Enhancement of Craftsmanship while protecting art and culture and measures to restore
sites of historical importance and national heritage and promoting the works of art and
setting up of public libraries.
6. Steps to bring worthy to the part of war windows, armed force veterans and their
departments.
7. Sports programs and training sessions to enhance the level of rural sports, nationally
recognized sports, Paralympic sports and Olympics sports.
8. Favoring to Prime Minister's National Relief Fund and contribution to other fund set up
by the central government to promote socio-economic development and welfare of the
schedule castes and Schedule Tribes and for supporting backward classes, minorities and
women.
9. To uplift the technology of incubator that's comes under academic institutions and which
are approved by the Central Government.
10. Introducing varied projects for Rural Development.

6.1 CSR POLICY36

The Act mandates companies to formulate CSR policies. The policy needs to list out
programmes it is planning to implement, execution mechanisms, monitoring and evaluation
framework and others. The policy should be made available on the companys website.

6.2 CSR COMMITTEE37

The Act mandates that eligible companies must formulate a Corporate Social Responsibility
(CSR) Committee. The CSR committee needs to formulate and recommend the CSR policy to
the board, list out and recommend CSR activities and their expenditure and periodically monitor
the CSR policy.

6.3 DISCLOSURE ON CSR IN THE DIRECTORS REPORT38

As per the Act, eligible companies must disclose CSR related details in their Directors Report
such as the composition of the CSR committee, details about the policy developed and
implemented by the company on CSR initiates taken during the year as Annual Report on CSR
containing particulars as specified by the Act, and in case of a failure to spend 2 per cent towards

36
Indias CSR reporting survey 2016, kpmg, (Oct.3, 2017, 10:34 PM),
https://assets.kpmg.com/content/dam/kpmg/in/pdf/2017/02/CSR-Survey-2016.pdf
37
Id at 7
38
Id at 8

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CSR shall specify the reasons for same. Mandatory requirement as part of Act reflects the
priority given to CSR at board level.

6.4 CSR SPENDS39

As per the Act, companies with a net worth of INR500 Cr. or more, or a turnover of INR 1,000
Cr. or more, or a net profit of INR 5 Cr. or more in a given fiscal year are required to spend 2 per
cent of its average net profit of the last three years towards CSR. Companies that are not able to
spend the prescribed 2 per cent spends are required to specify the reason for not spending the
amount. 93 companies were required to spend the prescribed 2 per cent CSR amount of the N100
companies.
There are some yearly compliances which have to complied by the industries and companies.
1. The Annual Report of the Company shall include a comprehensive Report on CSR in
the format as prescribed in the Companies (Corporate Social Responsibility Policy)
Rules, 2014, containing particulars on Overview of CSR Policy, Composition of the
Committee, Avg. Net Profit, prescribed expenditure and details of its spending, reason in
case of failure etc.
2. The disclosure on CSR in Board Report should also be available on the Company's
Website.
3. The activities included in the CSR Policy and the prescribed expenditure being
undertaken/ spent shall be ensured by the Board, in the respective manner.
This means all the Companies falling in the aforesaid criteria needs to ensure CSR compliance
but it is debatable to say that the same is for welfare of the society or the companies are doing it
just to avoid penalties. CSR stands to support the Company's Vision as well as directions to what
Organization stands for and will sustain its clients. An ISO 26000 is the accepted worldwide
standard for Corporate Social Responsibility (CSR).
CSR term has been revaluated with an aim to embrace responsibility for the Company's actions
and encourage a positive impact through its activities on the environment, consumers,
conscience, corporate citizenship, social performance, employees, communities and
all stakeholders40.

39
Id
40
supra note 34

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 7. CASE STUDIES

7.1 COCA COLA

In 2007 Coca-Cola launched its sustainability framework Live Positively embedded in the
system at all levels, from production and packaging to distribution. The companys CSR policy
Live Positively establishes seven core areas where the company sets itself measurable goals to
improve the business sustainability practices. The core areas are beverage benefits, active
healthy living, the community, energy and climate, sustainable packaging, water stewardship and
the workplace. Coca-Cola has a Code of Business Conduct which aims at providing guidelines to
its employees on amongst other things competition issues and anti-corruption. The company
has adopted international CSR guidelines such as Global Compact and Ruggies Protect, Respect
and Remedy Framework (Ruggies Framework), but these guidelines do not seem to be
integrated into the Code of Business. However, these CSR initiatives are included in other
activities or policies of the company. For instance, the UN Global Compact principles are cross-
referenced in the companys annual Sustainability Reviews and Ruggies Framework is partly
adopted in the companys Human Right Statement. After the conflict in India, in 2007 Coca-
Cola formed a partnership with the World Wildlife Fund (WWF) and became a member of the
CEO Water Mandate, as water is one of the companys main concerns. Every year Coca-Cola
publishes a directors report denominated The Coca-Cola Company Annual Report; the last one
was published in March 2011 and comprises the companys activities during 2010. In this report
there is a small section dedicated to CSR and it includes a brief description of the initiatives in
community development and water preservation that the company has developed. Since 2001,
Coca-Cola also annually publishes a separate report devoted to CSR called The Coca-Cola
Company Sustainability Review. These reviews, which are published every two years, are
verified and assured by a third party, the sustainability rating firm FIRA Sustainability Ltd. This
verification provides moderate assurance on the reliability of the information reported by Coca-
Cola. Both reports the annual company review and the sustainability reports are elaborated
based on the GRI G3 guidelines, which were adopted by the company in 2001.24 Due to its
relevance to Coca-Colas business, the company also annually reports on the progress of the
water stewardship programmes targets.

7.2 WALMART

Several authors have pointed to Walmart as an important emerging private actor in the
transformation of lawmaking in the CSR field, referring to it as a global legislator. They
highlight how Walmart is able to use its contractual relationships to regulate behaviour among its
suppliers around the globe with respect to product quality, working conditions for the suppliers
employees, and ethical conduct. Since 2007 Walmart publishes its annual report on its website. It
was initially called the Global Sustainability Report and later changed to Global
Responsibility Report in 2011. Mike Duke, Walmarts CEO (Chief Executive Officer), says
This change reflects the new social and environmental dimensions we have added to our efforts
() We believe transparency and accountability are part of being a good and responsible
company. Walmarts annual report publishes its constant and progressive work towards social
responsibility issues. The Global Responsibility Report 2011 is divided into three main reporting
parameters: Environment, Social and Goals. Walmarts 2011 report covers every corner of CSR

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issues. It points out how its successful Sustainability 360 model has helped Walmart to be the
retail leader in the market. It also communicates the significant progress made by and the new
reduction goals of greenhouse gas emissions of its supply chain by 2015. Walmarts financial
contributions in kind, such as investments in education, health, commitments to fight hunger,
support for local farmers and access to healthier and affordable food, can also be found in
Walmarts Global Responsibility Report 2011. Walmarts current performance, policies and
financial figures at first sight portray Walmart as a role model company on CSR.

7.3 APPLE

As required by the SEC, Apple has made the Form 10-K annual report available on its website.
The Form 10-K contains amongst other things information on Apples business strategy and
organisation, the companys risk factors, legal proceedings and financial data. It also includes the
business conduct policy of Apple: Apple conducts business ethically, honestly and in full
compliance with all laws and regulations. This applies to every business decision in every area of
the company worldwide. Furthermore, the business conducts deals with corporate governance,
information disclosure, non-corruption and bribery, environmental health and safety. Apple has
considered the GRI G3.1 indices relating to the economy, the environment, human rights, society
and labour for its publication on Governance, Product Environmental Reports, Recycling and
Facilities Environmental Report and Supplier Responsibility. For Supplier Responsibility,
Apple, for example, has taken into account the indicator which reports on measures it has taken
to contribute to the elimination of child labour. With regard to Product Environmental
Reports, Apple has used the EN26 performance indicator, and sets out initiatives to lessen the
environmental impact of its products. Apple designs its products with the aim of being as energy
efficient as possible, and it is the only company that can claim all electronic goods are Energy
Star qualified. Apples products have become more powerful while, at the same time, fewer
materials are used and fewer carbon emissions are generated. Almost all of Apples products are
outsourced for manufacturing overseas. On its Supplier Responsibility website Apple states:
Apple is committed to the highest standards of social responsibility across our worldwide
supply chain. We insist that all of our suppliers provide safe working conditions, treat workers
with dignity and respect, and use environmentally responsible manufacturing processes. Our
actions from thorough site audits to industry-leading training programs demonstrate this
commitment. The Supplier Code of Conduct (Supplier Code) outlines Apples expectations for
the suppliers it does business with. As a condition for doing business with Apple, suppliers have
to commit to the Supplier Code. For the Supplier Code, Apple has adopted the Electronics
Industry Code of Conduct (EICC), the guidelines and standards for the electronics sector.
Through onsite audits Apple ensures that suppliers comply with the Supplier Code. The final
assembly manufactures are audited every year and the components suppliers are audited
arbitrarily. Apple obliges its suppliers to respect the human rights of its workers, to inform the
workers of their rights, and to treat them with dignity and respect. Apple requires from its
suppliers that they prevent discrimination, involuntary and underage labour, excessive working
hours and that they pay workers with wages and benefits in accordance with the applicable laws
and regulations.

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 8. CONCLUSION AND SUGGESTION

While successfully completing this project, I have identified that Corporate Social Responsibility
is not a fad or a passing trend, it is a business imperative that many Indian companies are either
beginning to think about or are engaging with in one way or another. It drives for boosting up
economic growth of any country. While some of these initiatives may be labeled as corporate
citizenship by some organisations, there basic message and purpose is the same. No company in
this world contributes towards the society without keeping in mind the objective of Profit
Maximization. When a company contributes a part of their profit towards the society, they also
create a brand value of their own name. it can be said that if MNCs start doing these
contributions then governments 12th five year plan, that is, Inclusive Growth, the fund raised
will be put to use to fulfill the objectives of the government. A successfully implemented CSR
strategy calls for aligning these initiatives with business objectives and corporate values thereby
integrating corporate responsibility across the business functions and enhancing business
reputation. The challenge for us is to apply fundamental business principles to make CSR
sharper, smarter, and focused on what really matters.

This can be done by:

Focusing on priorities
Allocating finance for treating CSR as an investment from which returns are expected
Optimising available resources by ensuring that efforts are not duplicated and existing
services are strengthened and supplemented
Monitoring activities and liaising closely with implementation partners such as NGOs to
ensure that initiatives really deliver the desired outcomes
Reporting performance in an open and transparent way so that all can celebrate progress
and identify areas for further action.

A long term perspective by organisations, which encom-passes their commitment to both

internal and external stakeholders will be critical to the success of CSR and the ability of
companies to deliver on the goals of their CSR strategy. Wealth has to be created before it can be
distributed. The responsibility to create wealth is of business. And responsibilities and rights
must go together. Hence, the society cannot disarm business of its rights which are essential for
creating value.

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 9. BIBLIOGRAPHY

BOOKS REFERRED
PRINCIPLES OF MANAGEMENT by MEENAKSHI GUPTA

WEBSITES REFERRED
WWW.UNIDO.ORG
WWW.SOULACE.IN
WWW.JANALAKSHMI.COM
WWW.THECSRLOURNAL.IN
WWW.INDIA-BRIEFING.COM
WWW.RESEARCHGATE.NET
WWW.IRJET.NET
WWW.FORBES.COM
WWW.MONDAQ.COM
WWW.ASSESTS.KPMG.COM

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