INRODUCTION No business can exist in isolation.

As your business exist in the environment you are liable to all the stakeholders(customers ,suppliers, local community, employees etc).The products your business make and the way by which you make them, have an impact on the environment .in recent decade, the concept of corporate social responsibility has become the most important strategy for companies to survive. Corporate Social Responsibility takes all these factors into account and helps the companies to maintain effective relationships with its stakeholders. Companies with good business practices enjoy more benefits than other companies. It brings a competitive edge to the companies. Therefore corporate responsibility and corporate governance has emerged as a new theme in the global community and is becoming a main stream activity. CORPORATE SOCIAL REPONSIBILITY In broad terms relates to the responsibilities corporations have towards the society within which they operate. According to Philip Kotler and Nancy Lee (2005) CSR means A commitment to improve community well being through discretionarypractices and contribution of corporate resources. Corporate social responsibility (CSR) is also known as corporate responsibility, corporate citizenship, responsible business, sustainable responsible business (SRB), or corporate social performances. CSR exhibits the ethical behavior that an organization exhibits towards its internal and external stakeholder and it denotes the responsibility of an organization towards the environment and society in which it operates. DRIVERS TOWARDS CORPORATE SOCIAL RESPONSIBILTY 1. Low participation of government Decreasing government resources, distrust of regulations, has led to the exploration of voluntary and non-regulatory initiatives. 2. Demands for greater disclosure There is a growing demand for corporate disclosure from stakeholders, including customers, suppliers, employees, communities, investors, and activist organizations. 3. Increase in customer interest In a recent survey by Environics International, more than one in five consumers

reported having either rewarded or punished companies based on their perceived social performance. 5. Competitive labour markets Employees are seeking those employers whose operating practices match their own principles. In order to hire and retain skilled employees, companies are being forced to improve working conditions. SUSTAINABLE GROWTH THROUGH CORPORATE SOCIAL RESPONSIBILITY Impact on business In todays era, as companies have gone global by entering new markets to sell their products and services, the cost of compliance have also risen rapidly. Failure to abide by regulations can destroy the business reputation, but compliance alone cant build brands. Recently companies have started understanding this scenario and they have started thinking to be socially and environmentally responsible. Many huge companies regard CSR as a platform for growth and differentiation. To be sustainable, organizations are now embracing a new objective i.e. optimizing theiroperations to improve environmental and social outcomes that increases overall performance. As a result, companies have to face new decisions. Companies that are substantially outperforming their peers attain benefits from CSR activities integrated to the core of their business.Successfull companies understand their customers CSR expectations well. They collaborate with consumers and business partners on their CSR activities. These companies engage all their employees in achieving these objectives. Corporate social responsibility is the way companies manage their organizations to produce an impact on society through economic, environmental and social factors. Evidence asserts that companies can do well by doing well. many well known and successful companies have already proven that they can differentiate their brands and reputations, if they take social responsibility for the well being of the societies and environments in which they operate,. These companies practice CSR in a way that it generates higher returns to the companys demands long term commitment and redefinition of corporate values. It also requires a total change in the way companies operate. Corporate social responsibility offers many benefits both internally and externally to the companies. It creates a good image among the people and earns a special respect amongst its peers.Working with keeping in view the interests of local community bring a wide range of business benefits. For example, for many businesses, local customers are an important source of sales. By improving the reputation, companies can recruit employees and retain them easily. it helps in

developing a sense of loyalty and trust amongst the employees in the organizational ethics. It improves operational efficiency of the company and is often accompanied by increases in quality and productivity Employees feel more motivated and they work more efficiently. Apart from this, CSR helps ensure that the organization comply with regulatory requirements CORPORATE GOVERNANCE Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation (or company) is directed, administered or controlled. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed. The principal stakeholders are the shareholders, management, and the board of directors. Other stakeholders include employees, customers, creditors, suppliers, regulators, and the community at large Corporate governance is the system by which business corporations are controlled and directed. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation such as the board, managers, shareholders and other stakeholders and spells out the rules and procedures for making decisions on corporate affairs. Good corporate governance is established with legislation, regulation and free volition. Corporate governance is about commitment to values and ethical business conduct CORPORATE GOVERNANCE INITIATIVES IN INDIA There is a very impressive growth of the corporate sector in India. To examine corporate governance issues and recommend a voluntary code of best practices, Confederation of Indian Industry (CII) set up a committee and started the initiative to improve corporate governance in India. The first draft of the code was prepared by April 1997, and the final document was released in April 1998. Considerably debate has taken place on reforming Indian corporate governance practices in recent times. Various committees have suggested Anglo-Saxon style of corporate governance reforms. However, such reforms are unlikely to improve the protection of minority shareholders. There is still a larger issue arising out of the pyramidal structures. The ordinary investors may find it difficult to differentiate a good investment from a bad one. Because the credibility of report earnings is suspect. In addition, the reported earnings may be a poor guide to future performance. To conclude, the complex organizational structures of many Indian business houses are a major impediment to good corporate governance. Mechanical measures such as increasing the number of independent directors on Board will do little to change the state of affairs unless cash flows and control rights are aligned. In the wake of issues like these, the

Government has initiated measures to arrest the future deterioration in the functioning of corporate sector as well as to heal the damage caused. RECOMMENDATION OF THE BIRLA COMMITTEE REPORT Birla committee report recommending guidelines on corporate governance was published in February 2007.Some of these recommendations however have been categorized as mandatory and have been incorporated in the listing agreements of the stock exchanges. The recommendations of the Birla committee could be classified and reviewed under the following 10 sectors: 1) Role and Responsibilities of Corporate Boards and Directors: The Birla committee recommendation in this field calls for a greater role and influence for non-executive independent directors, a tighter delineation of independence criteria and minimization of interest conflict potential, and stringent punishments for executive directors of companies failing to comply with listing and other requirements. 2) Direction and Management Distinguished: managers have the responsibility toexecute the policies under the supervision of the Board, and for this purpose, theyhave the necessary authority to ensure compliance and implementation. 3) Managing & Whole-Time Directors: Managing and other whole-time directors are required to devote whole or substantially whole of their time to the affairs of their companies. Serving as non-executive directors on several other Boards may sometimes cause conflict of interests. 4) Non-Compete Stipulations: The Birla committee recommends that there shouldbe proper disclosure to the shareholders and the investing community about thismatter. 5)Interested Shareholders: one of the most important recommendations of the Birla committee is that the interested shareholders are to abstain from voting on specified matters that impact upon some but not all the shareholders. 6)Measures Promoting Transparency and Informed Shareholder Participation: The Birla committee addressing this issue suggests the following measures: more meaningful and transparent accounting and reporting, improved annual reports concomitant with more detailed filling with regulatory authorities, and greater facilitation for informed participation by using information and communications technologies. 7) National listing authorities: The Birla committee recognizes this important signaling effect of Listing, and provides for tougher Listing and compliance regimen through a centralized National Listing Authority. 8) Public Sector Enterprises: The committee recommended that PSUs be relieved from multiple surveillance agencies and simultaneously a commission be appointed to draft a suitable code public behavior on the lines of the Nolan (later Neil) Commission in the United Kingdom.

9) Corporate Social Responsibility: In line with the developing trends towards an integrated model of governance, the Birla committee emphasizes corporate social responsiveness and ethical business practices. 10) Centre for Corporate Excellence: The Birla committee has recommended the constitutions with three broad functions-Research and Studies, Education Promotion and Development, and, Accreditation with respect to matters bearing upon corporate governance and excellence. To maintain high professional standards in

he contribution of the centre, it is imperative that its academic, financial and functional autonomy is protected.