A Write off On The Assignment On

Corporate Social Responsibility

Subject: Business Environment
Submitted By: Ronik P ss! " #$%& 'ig r ( ghe" ( ibh v Sh h #)*& +hir g R thod , y nk P te" #-.& Submitted To: ,s /ruti Bh tt ,BA Sem012 3ivision0B

3e4 rtment of Business nd 5ndustri " , n gement #3B5,&2 (6S782 Sur t9

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Introduction
The 21st century is characterized by unprecedented challenges and opportunities, arising from globalization, the desire for inclusive development and the imperatives of climate change. Indian business, which is today viewed globally as a responsible component of the ascendancy of India, is poised now to take on a leadership role in the challenges of our times. It is recognized the world over that integrating social, environmental and ethical responsibilities into the governance of businesses ensures their long term success, competitiveness and sustainability. This approach also reaffirms the view that businesses are an integral part of society, and have a critical and active role to play in the sustenance and improvement of healthy ecosystems, in fostering social inclusiveness and e uity, and in upholding the essentials of ethical practices and good governance. This also makes business sense as companies with effective !"#, have image of socially responsible companies, achieve sustainable growth in their operations in the long run and their products and services are preferred by the customers. Indian entrepreneurs and business enterprises have a long tradition of working within the values that have defined our nation$s character for millennia. India$s ancient wisdom, which is still relevant today, inspires people to work for the larger ob%ective of the well-being of all stakeholders. These sound and all-encompassing values are even more relevant in current times, as organizations grapple with the challenges of modern-day enterprise, the aspirations of stakeholders and of citizens eager to be active participants in economic growth and development. The idea of !"# first came up in 1&'( when it became an academic topic in )# *owen:s ;"ocial #esponsibilities of the *usiness. "ince then, there has been continuous debate on the concept and its implementation. +lthough the idea has been around for more than half a century, there is still no clear consensus over its definition. ,ne of the most contemporary definitions is from the -orld *ank .roup, stating, /!orporate social responsibility is the commitment of businesses to contribute to sustainable economic development by working with employees, their families, the local

-2community and society at large, to improve their lives in ways that are good for business and for development./

Corporate Social Responsibility Voluntary Guidelines 2009 In order to assist the businesses to adopt responsible governance practices, the 0inistry of !orporate +ffairs has prepared a set of voluntary guidelines which indicate some of the core elements that businesses need to focus on while conducting their affairs. These guidelines have been prepared after taking into account the governance challenges faced in our country as well as the e1pectations of the society. The valuable suggestions received from trade and industry chambers, e1perts and other stakeholders along with the internationally prevalent and practiced guidelines, norms and standards in the area of !orporate "ocial #esponsibility have also been taken into account while drafting these guidelines.

Fundamental Principle:
2ach business entity should formulate a !"# policy to guide its strategic planning and provide a roadmap for its !"# initiatives, which should be an integral part of overall business policy and aligned with its business goals. The policy should be framed with the participation of various level e1ecutives and should be approved by the *oard.

Core Elements:
The !"# 3olicy should normally cover following core elements4 1 Care !or all Sta"e#olders: The companies should respect the interests of, and be responsive towards all stakeholders, including shareholders, employees, customers, suppliers, pro%ect affected people, society at large etc. and create value for all of them. They should develop mechanism to actively engage with all stakeholders, inform them of inherent risks and mitigate them where they occur.

-(2 Et#ical !unctionin$: Their governance systems should be underpinned by 2thics, Transparency and +ccountability. They should not engage in business practices that are abusive, unfair, corrupt or anti-competitive. % Respect !or &or"ers' Ri$#ts and &el!are: !ompanies should provide a workplace environment that is safe, hygienic and humane and which upholds the dignity of employees. They should provide all employees with access to training and development of necessary skills for career advancement, on an e ual and non-discriminatory basis. They should uphold the freedom of association and the effective recognition of the right to collective bargaining of labour, have an effective grievance redressal system, should not employ child or forced labour and provide and maintain e uality of opportunities without any discrimination on any grounds in recruitment and during employment. ( Respect !or )uman Ri$#ts: !ompanies should respect human rights for all and avoid complicity with human rights abuses by them or by third party. * Respect !or En+ironment: !ompanies should take measures to check and prevent pollution5 recycle, manage and reduce waste, should manage natural resources in a sustainable manner and ensure optimal use of resources like land and water, should proactively respond to the challenges of climate change by adopting cleaner production methods, promoting efficient use of energy and environment friendly technologies. , -cti+ities !or Social and Inclusi+e .e+elopment: 6epending upon their core competency and business interest, companies should undertake activities for economic and social development of communities and geographical areas, particularly in the vicinity of their operations. These could include4

-7education, skill building for livelihood of people, health, cultural and social welfare etc., particularly targeting at disadvantaged sections of society.

Implementation Guidance:
1.

The !"# policy of the business entity should provide for an implementation strategy which should include identification of pro%ects8activities, setting measurable physical targets with timeframe, organizational mechanism and responsibilities, time schedules and monitoring. !ompanies may partner with local authorities, business associations and civil society8non-government organizations. They may influence the supply chain for !"# initiative and motivate employees for voluntary effort for social development. They may evolve a system of need assessment and impact assessment while undertaking !"# activities in a particular area. Independent evaluation may also be undertaken for selected pro%ects8activities from time to time. !ompanies should allocate specific amount in their budgets for !"# activities. This

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amount may be related to profits after ta1, cost of planned !"# activities or any other suitable parameter. To share e1periences and network with other organizations the company should

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engage with well established and recognized programmes8platforms which encourage responsible business practices and !"# activities. This would help companies to improve on their !"# strategies and effectively pro%ect the image of being socially responsible. The companies should disseminate information on !"# policy, activities and progress

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in a structured manner to all their stakeholders and the public at large through their website, annual reports, and other communication media.

Pro+ision !or CSR in Companies /ill 2012 Till date it is very difficult e1ercise to analyse the spending of !"# by various firms and private companies and such information is not maintained at government level, even

-'among the top 199 firms by revenue, there are many who don:t report their !"# spends or even declare the social causes they support, that is because they are not re uired to do so by law and no provisions for !"# e1ists in the !ompanies +ct, 1&': so currently the 0inistry does not maintain such details. *ut all that will change when the new !ompanies *ill, 2912 ;which has already been passed by the <ok "abha= becomes a law. The !ompanies *ill, 2912 incorporates a provision of !"# under !lause 1(' which states that every company having net worth #s. '99 crore or more, or a turnover of #s. 1999 crore or more or a net profit of rupees five crore or more during any financial year, shall constitute a !"# !ommittee of the *oard consisting of three or more 6irectors, including at least one Independent 6irector, to recommend activities for discharging corporate social responsibilities in such a manner that the company would spend at least 2 per cent of its average net profits of the previous three years on specified !"# activities. It is proposed to have detailed rules after passing of !ompanies *ill 2912 by #a%ya "abha to give effect to this provision. +ccording to "chedule->II of !ompanies *ill, 2912 the following activities can be included by companies in their !"# 3olicies4;i= ;ii= ;iii= ;iv= ;v= ;vi= ;vii= ;viii= ;i1= 2radicating e1treme hunger and poverty5 3romotion of education5 3romoting gender e uality and empowering women5 #educing child mortality and improving maternal health5 !ombating human immunodeficiency virus, ac uired immune deficiency syndrome, malaria and other diseases5 2nsuring environmental sustainability5 2mployment enhancing vocational skills5 "ocial business pro%ects5 !ontribution to the 3rime 0inister:s ?ational #elief @und or any other fund set by the !entral .overnment or the "tate .overnments for socio-economic development

-:and relief and funds for the welfare of the "cheduled !aste, the "cheduled Tribes, other backward classes, minorities and women5 and ;1= such other matters as may be prescribed. The !ompanies *ill, 2912, !lause 1(' also provides for constitution of a !"# !ommittee of the *oard. The !"# !ommittee is re uired to5 ;a= ;b= ;c= @ormulate and recommend to the *oard, a !"# 3olicy which shall indicate the activities to be undertaken by the company as specified in "chedule >II5 #ecommend the amount of e1penditure to be incurred on the activities referred to in clause ;a=5 and 0onitor the !orporate "ocial #esponsibility 3olicy of the company from time to time.

The data pack compiled by !"# identity.com together with @orbes India is revealing to some e1tent how much each company will have to fork out on !"# when they will bound by law and their actual spending for the financial year 2912. The data is given in +nne1ure -I. Guidelines on CSR !or Public Enterprises The 6epartment of 3ublic 2nterprises had issued .uidelines on !orporate "ocial #esponsibility ;!"#= for !3"2s in +pril, 2919 which have been issued formally to the 0inistries86epartments for compliance in the !entral 3ublic "ector 2nterprises ;!3"2s= under their administrative control. @ollowing are the salient features of guidelines on !"# A "ustainability4 ;i= !orporate "ocial #esponsibility and "ustainability is a company:s commitment to its stakeholders to conduct business in an economically, socially and environmentally sustainable manner that is transparent and ethical.

-B;ii= In the revised guidelines, !"# and "ustainability agenda is perceived to be e ually applicable to e1ternal and internal stakeholders, including the employees of a company, and a company:s corporate social responsibility is e1pected to cover even its routine business operations and activities. !3"2s are e1pected to formulate their policies with a balanced emphasis on all aspects of !"# and "ustainability e ually with regard to their internal operations, activities and processes, as well as in their response to e1ternalities. ;iii= In the revised guidelines !"# and "ustainable 6evelopment have been clubbed together in one set of guidelines for !"# and "ustainability because of close linkage between the two concepts. ;iv= 3ublic "ector enterprises are re uired to have a !"# and "ustainability policy approved by their respective *oards of 6irectors. The !"# and "ustainability activities undertaken by them under such a policy should also have the approval8ratification of their *oards. -ithin the ambit of these guidelines, it is the discretion of the *oard of 6irectors of !3"2s to decide on the !"# and "ustainability activities to be undertaken. ;v= The financial component8budgetary spend on !"# and "ustainability will be based on the profitability of the company and shall be determined by the 3rofit +fter Ta1 ;3+T= on the company in the previous year. P-0 o! CPSES in t#e Pre+ious year ;i= <ess than #s. 199 crore Ran$e o! t#e /ud$etary allocation !or CSR and Sustainability acti+ities 1as 2 o! P-0 in pre+ious year3 (C-'C 2C-(C ;iii= 1C-2C

;ii= #s. 199 crore to #s. '99 crore #s. '99 crore and above

+ll !3"2s shall strive to ma1imize their spending on !"# and "ustainability activities and move towards the higher end of their slabs of budget allocation.

-D;vi= <oss making companies are not mandated to earmark specific funding for !"# and "ustainability activities. )owever, they must pursue !"# and "ustainability policies by integrating them with their business plans, strategies and processes, which do not involve any financial e1penditure. They may also collaborate with the profit making !3"2s and assist them in ingenious ways without financial support in !"# and "ustainability activities. ;vii= 0andatory compliance with legal re uirement8rules8regulations8laws in letter and in spirit will be covered under !"# and "ustainability activity. )owever, e1penditure on such activities would not be covered by !"#s financial component and would be considered as mainstream business spend. ;viii= The unutilized budget for !"# activities planned for a year will not lapse and will, instead, be carried forward to the ne1t year. )owever, the !3"2s will have to disclose the reasons for not fully utilising the budget allocated for !"# and "ustainability activities planned for each year. The unspent amount will have to be spend within the ne1t two financial years, failing which, it would be transferred to a ;"ustainability @und to be created separately for !"# and "ustainability activities. ;i1= @rom amongst these beneficiaries of !"# and "ustainability spend ;financial component= of a company, the stakeholders directly impacted by its operations and activities can rightfully stake a claim for attention before others. "uch stakeholders are generally located in the periphery of commercial operations of a company. The corporate social responsibility of a company towards these stakeholders e1tends beyond its legal obligation to compensate for, and ameliorate the impact of its commercial activities. @or this reason, !3"2s must accord priority to these stakeholders and undertake !"# and "ustainability pro%ects in the periphery of its commercial operations on priority. ;1= !3"2s are e1pected to take initiative to promote welfare of employees and labour by addressing their concerns of safety, security, professional enrichment and

-&healthy working conditions, whether mandated or otherwise. )owever, e1penditure on mandated activities cannot ualify for !"#:s financial components. ;1i= +lthough !3"2s may select their !"# and "ustainability pro%ects from a vast range of available options, priority should be accorded to activities pertaining to ;i= inclusive growth of society, with special attention to the development of weaker sections of society and the backward districts of the country, and ;ii= environment sustainability. !"# and "ustainability initiatives should focus on capacity building, skill development and infrastructural development for the benefit of the marginalised and under privileged sections of the local communities and also in the backward regions so that avenues are created for their employment and income generation, and they also e1perience empowerment and inclusion in the economic mainstream. -eaker sections would include "!, "T, ,*!, minorities, women and children, *3< families, old and aged, physically challenged, etc. ;1ii= It is mandatory for !3"2s to take up at least one ma%or pro%ect for development of a backward district as identified by the 3lanning !ommission for its *ackward #egion .rand @und ;*#.@= "cheme, and one ma%or pro%ect for environment sustainability. @or 0aharatna !3"2s, it is mandatory to take up one more ma%or pro%ect in either of the two categories. ;1iii= + *oard level committee headed by either the !hairman and 8 or 0anaging 6irector, on an Independent 6irector would assist the *oard of 6irectors to formulate !"# and "ustainability policies and oversee the implementation of !"# and "ustainability pro%ects8activities by the !3"2. ;1iv= There is emphasis on internalizing the philosophy and spirit of !"# and "ustainability within the organizational culture and ethos. The philosophy and spirit of corporate social responsibility and sustainability should get embedded in the core values of all the !3"2s, be imbibed by the employees at all levels and it should permeate into all the activities, processes, operations and transactions of the enterprise. !orporate enterprises professing to behave responsibly are e1pected to

-19produce goods and services that are safe and healthy for the consumers and the environment, with reduced cost to the company in the long run. ;1v= ' per cent of the annual budget for !"# and "ustainability activities has to be earmarked for 2mergency needs, which would include relief work undertaken during natural calamities8disasters, and contributions towards 3rime 0inister :s 8 !hief 0inister:s #elief @unds. ;1vi= 2thical conduct of business lies at the core of responsible business. To promote organizational integrity it is essential that premium is placed on individual probity of employees5 transparency in all activities, dealing and transactions is encouraged5 unethical, corrupt and anti-competition practices are discouraged temptation of uick returns and marginal gains in business through avoided. ;1vii= "ustainability reporting and disclosure of all !"# and "ustainability activities undertaken by a !3"2 is mandatory. *y reporting transparently and with accountability, public sector companies can gain and reinforce the thrust of the stakeholders. This, in turn, would provide a powerful stimulus to their !"# and "ustainability policies and agenda, and motivate them to pursue them with greater vigour. +s per the above guidelines on !"# issued by the 6epartment of 3ublic 2nterprises ;632= in +pril, 2919, all profit making !entral 3ublic "ector 2nterprises ;!3"2s=, including 0aharatna !3"2s are re uired to select !"# activities which are aligned with their *usiness strategy and to undertake them in a pro%ect mode. !3"2s are mandated to spend their funds on !"# pro%ects selected by them with the approval of their respective *oards. +ll profit making !3"2s are re uired to allocate budget mandatorily through a *oard #esolution as percentage of net profit ;previous year= in the following manner4 uestionable means is resisted5 and, position and situations that give rise to possible conflict of interest are

-11P-0 o! CPSES in t#e Pre+ious year ;i= <ess than #s. 199 crore E4penditure ran$e o! CSR in a Financial 5ear 12 o! pro!it3 (C-'C 2C-(C ;sub%ect to a 0inimum of #s. ( !rore = 9.'C-2C

;ii= #s. 199 crore to #s. '99 crore ;iii= #s. '99 crore and above

<oss making !3"2s are not mandated to earmark specific funding for !"# activities. !"# *udget is fi1ed for each financial year and this fund does not lapse. It is transferred to a !"# funds in which it accumulates. Implementation of !"# activities of !3"2s is monitored by the administrative 0inistries86epartments of concerned !3"2s. "tates8ET83"E-wise information of !"# work undertaken by the !3"2s, including 0aharatna !3"2s and the number of persons benefited therefrom, is not maintained centrally in the 6epartment of 3ublic 2nterprises. Information furnished by 0aharatna and ?avratna !3"2s on total funds allocated for !"# and the funds utilized for the year 291911 and 2911-12 is given in the +nne1ure-II. !3"2s are free to take up !"# 3ro%ects for upliftment of weaker sections and backward districts.

Conclusion
The e1act provisions of the !ompanies *ill, 2912 are still being debated. ,nce the *ill is passed in #a%ya "abha, detailed rules would give effect to the provisions of voluntary guidelines issued in 299& to !orporate "ector ;3rivate !ompanies=, then !ompanies would be bound by legal provisions to implement !orporate "ocial #esponsibilities. In case of public sectors, revised guidelines on !"# and sustainability are being implemented from 1 +pril 291(, as a commitment of the !3"2s to their stakeholders to conduct business in an economically, socially and environmentally sustainable manner.

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6otable &or" by Some Companies

-s#o" 7eyland ,perates a @un*us in !hennai and ?ew 6elhi. This bus, e uipped with a hydraulic lift, takes differently abled children and those from orphanages and corporation primary schools on a day:s picnic. The company also runs +I6" awareness and prevention programmes in its )osur factories for about (.' lakh drivers. -4is /an" The +1is *ank @oundation runs *alwadis which are learning places for children living in large urban slum clusters. It also conducts skill development programmes ;3#20+ and Fuva 3arivartan= in motor driving, welding, mobile repairing, tailoring etc., for the youth in backward districts. /#arat Petroleum Corporation Its rain water harvesting pro%ect *oond, in association with the ,il Industries 6evelopment *oard, selects draught-stricken villages to turn them from ;water-scarce to water-positive. "ome of *3!<s other social programmes include adoption of villages, prevention and care for )I>8+I6" and rural health care.

Indian 8il Corporation It runs the Indian ,il @oundation ;I,@=, a non-profit trust, which works for the preservation and promotion of the country:s heritage. I,!< also offers 1'9 sports scholarships every year to promising youngsters. "ome of its other initiatives lie in the domains of clean drinking water, education, hospitals and health care.

-1(In!osys The Infosys "cience @oundation, set up in 299&, gives away the annual Infosys 3rize to honour outstanding achievements in the fields of science and engineering. The company supports causes in health care, culture and rural development. In an interesting initiative undertaken by it, 199 school teachers in Garnataka, who were suffering from arthritis, underwent free surgery as a part of a week-long programme. 9a#indra : 9a#indra ?anhi Gali, a programme run by the G! 0ahindra 2ducation Trust, supports education of over B',999 underprivileged girls. The trust has awarded grants and scholarships to D(,27' students so far. In vocational training, the 0ahindra 3ride "chool provides livelihood training to youth from socially and economically disadvantaged communities. 0A0 also works for causes related to environment, health care, sports and culture. 8il : 6atural Gas Corporation It offers community-based health care services in rural areas through (9 0obile 0edicare Enits ;00Es=. The ,?.!-2astern "wamp 6eer !onservation 3ro%ect works to protect the rare species of 2aster "wamp 6eer at the Gaziranga ?ational 3ark in +ssam. ,?.! also supports education and women empowerment. 0ata Steel It comes out with the )uman 6evelopment Inde1 ;)6I=, a composite inde1 of health, education and income levels, to assess the impact of its work in rural areas. )ealth care is one of its main concerns. The Tata "teel #ural 6evelopment "ociety aims to improve agricultural productivity and raise farmers standard of living.