Final Answer of CSR

8/3/2019 Final Answer of CSR

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Course: Corporate Social Responsibility

Sr.No. Contents Page No.

1) Answer of Question Number 1 2

1.1 Arguments on CSR 2

1.2 Relationship between Business and Society 5

1.3 Government Control and Solution 6

1.4 Conclusion 6

2) Answer of Question Number 2 7

2.1 Importance of CSR 7

2.2 Types of Social Responsibility 7

2.3 TATA Group 8

2.4 Reliance Group 10

2.5 Conclusion 12


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1) One of the arguments against CSR is that there is too much hype and little has been

done on ground level. It is also argued that shareholders are interested only in business

activities that generate profits, so it does not make sense for companies to invest resources

in unproductive activities like CSR. What is your stand on this?

Answer:

Corporate social responsibility (CSR) is not a new idea. However, CSR has never been more

prominent on the corporate agenda than it is today.

A generation of activists has been raised on the idea of corporate social responsibility (CSR)that large corporations can be cajoled into paying employees better, being more environmentally

responsible, improving labor conditions.

Corporations approach on CSR has been changed in the last 10 years.

The nature of discussion regarding CSR has changed from the early days: Instead of wondering

whether commitments should be made, it is asked how and what to do now. As a response toheightened stakeholder interest, many managers and MNCs have introduced new CSR initiatives

and allocated more funds to activities. The fact that organization appears as socially responsiblehelps, at least to a degree, to deflect stakeholder interest on CSR issues. The trend of this

increase in organizational interest to CSR has hardly gone unnoticed by the general public,which has witnessed, for example, the increasing number of launches of corporate codes of

conduct, cooperation programs with NGOs and labor unions, and corporate advertisingcampaigns depicting achievements of responsibility.

There are plenty of examples of firms that, in the pursuit of profit, have exhibited all sorts ofsocially irresponsible corporate behavior, such as deceiving customers, swindling investors,

2001

CSR was a

moral issue

We want to do the

right things; we want to

invest in the

community

2011

CSR is a

Strategic /

Profit issue

Ignoring CSR potentially

damages shareholders.

Embracing it creates

values.


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exploiting and even brutalizing employees, putting consumers at risk, poisoning theenvironment, cheating the government, and more. However, many corporations do not behave in

socially irresponsible ways. In fact, some corporations go to great lengths to do just the opposite, by giving to charities, supporting community activities, treating their workers and customers

decently, abiding by the law, and generally maintaining standards of honesty and integrity.

Why do some corporations act in socially responsible ways while others do not?

The imperative of maximizing profit and shareholder value is the root cause that may preventcorporations from acting in socially responsible ways. Firms will act in socially responsible

ways will also be associated with the level of competition they face.In situations where competition is so extremely intense that profit margins are narrow enough to

put shareholder value and firm survival at risk, the incentive to cut corners and save moneywherever possible will cause corporations to act in socially irresponsible in situations where

competition is so extremely intense that profit margins are narrow enough to put shareholdervalue and firm survival at risk, the incentive to cut corners and save money wherever possible

will cause corporations to act in socially irresponsible ways.

The pressures for increased corporate attention to CSR and whether this attention is warranted

and likely to be sustained. The differentiates between the business case for CSR and thenormative case and concludes that often there may be a compelling business case for making a

substantial commitment to CSR, but an individual firm must assess the extent to which thegeneral business case for CSR applies to its specific circumstances. It is suggested that for some

firms (e.g., in the pharmaceutical and resource extraction industries) CSR may be a majorinfluence on corporate strategy, though it is unclear whether these examples reflect unique

characteristics of these industries or an early warning of pressures likely to be experienced inother industries. Companies making a substantial commitment to CSRbecause of a business or

a normative caseare likely to find that this involves major challenges with respect to theformulation and implementation of CSR strategy, not least because of the uncertainties forever

associated with determining a firms societal obligations.

Firms often engage in CSR precisely because it enhances shareholder value and, morespecifically, that some CSR activities create goodwill among consumers in excess of their price

tag.Averting social injury is the task of corporate staffers and management, but it is the

responsibility of the shareholders to make the corporate decisions to avert or ignore. It goeswithout saying that CSR is ultimately part and parcel of shareholder culture even before it

becomes a corporate strategy and actuality.

Criticism of business organizations has increased and publics expect them to pay greaterattention to CSR initiatives. Despite the hype around the concept today, CSR is not a novel idea.

It is just that criticism towards corporations is more far-reaching, because higher expectations areput to private sector in solving social problems. Corporations are facing increasing demands of

responsible corporate practices by NGOs, communities and other institutional forces. Due to theproliferation and increasing power of activist groups and greater media attention to responsibility


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matters, organizations non-market strategies are likely to become more important in the future.Thus, it seems that nowadays ethical behavior and conducting business cannot really be

separated from each other.

Companies have a responsibility to act in the public interest and will profit from doing so is

fundamentally flawed. Large companies now routinely claim that they aren't in business just forthe profits, that they're also intent on serving some larger social purpose. They trumpet theirefforts to produce healthier foods or more fuel-efficient vehicles, conserve energy and other

resources in their operations, or otherwise make the world a better place.

In cases where private profits and public interests are aligned, the idea of corporate socialresponsibility is irrelevant: Companies that simply do everything they can to boost profits will

end up increasing social welfare. In circumstances in which profits and social welfare are indirect opposition, an appeal to corporate social responsibility will almost always be ineffective,

because executives are unlikely to act voluntarily in the public interest and against shareholderinterests.

To get a better fix on the irrelevance or ineffectiveness of corporate social responsibility efforts,

first look at situations where profits and social welfare are in synch. Auto makers have profitedfrom responding to consumer demand for more fuel-efficient vehicles, a plus for the

environment. And many companies have boosted profits while enhancing social welfare byreducing their energy consumption and thus their costs. But social welfare isn't the driving force

behind these trends. These companies are benefiting society while acting in their own interests. Itis the relentless maximization of profits, not a commitment to social responsibility that has

proved to be a boon to the public in these cases.

Unfortunately, not all companies take advantage of such opportunities, and in those cases bothsocial welfare and profits suffer. Still, the fact is that while companies sometimes can do well by

doing good, more often they can't. Because in most cases, doing what's best for society meanssacrificing profits.

This is true for most of society's pervasive and persistent problems; if it weren't, those problems

would have been solved long ago by companies seeking to maximize their profits. A primeexample is the pollution caused by manufacturing. Reducing that pollution is costly to the

manufacturers, and that eats into profits. Poverty is another obvious example. Companies couldpay their workers more and charge less for their products, but their profits would suffer.


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Relationship between Business and Society.

As you can see, organizations interact and affect many different groups. The larger theorganization, the greater the effect.

Below chart will show how the people and groups with whom an organization interacts.

Society needs Business

Investment &

Innovation

Profit & Taxes

Employment &

Wages

Business needs Society

Public Assets &

Infrastructures

Legal Protection

Create Demand

Interdependence of Business & Society


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Government Control and Solution:

The ultimate solution is government regulation. Its greatest appeal is that it is binding.

Government has the power to enforce regulation. No need to rely on anyone's best intentions.

But government regulation isn't perfect, and it can even end up reducing public welfare because

of its cost or inefficiency. The government also may lack the resources and competence to designand administer appropriate regulations, particularly for complex industries requiring much

specialized knowledge. And industry groups might find ways to influence regulation to the pointwhere it is ineffective or even ends up benefiting the industry at the expense of the general

population. Various nonprofit organizations and movements provide a voice for a wide variety ofsocial, political, environmental, ethnic, cultural and community interests.

In India, the new company law makes mandatory for companies to disclose details of social

sector initiatives, called CSR, in addition to money spent, to shareholders in their annual reports.Not just how much, but companies will also have to disclose to their shareholders where they

have spent the 2 per cent of net profit earmarked for corporate social responsibility (CSR)initiatives.

Every company having (net worth of Rs 500 crore or more, or turnover of Rs 1,000 crore or

more) or (a net profit of Rs 5 crore or more during a year) shall be required to formulate a CSRPolicy ... as may be approved and specified by the company. In case any such company does not

have adequate profits or is not in a position to spend prescribed amount on CSR activities, thedirectors would be required to give suitable disclosure/reasons in their report to the members.

Industry has been of the view that they should be allowed to monitor implementation of CSRthemselves without government intervention.

In India, there are many government regulations. The main problem is not regulations but theability or desire to enforce them.

Self-Control:

Self-regulation can be useful. It tends to promote good practices and target specific problems

within industries, impose lower compliance costs on businesses than government regulation, andoffer quick, low-cost dispute-resolution procedures. Self-regulation can also be more flexible

than government regulation, allowing it to respond more effectively to changing circumstances.

Conclusion:

In today's world where business has become global but governments have remained local,

companies have to bear the social responsibility for their actions.For a business to be successful in the long term it has to create value, not only for its

shareholders but also for society. Whenever need government should enforce regulation.The firms which engage in CSR activities should be rewarded by the market in economic and

financial terms.


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Q2) Compare the corporate social responsibilities of TATA and Reliance. (You may also

take two equally big corporate houses of your choice). Which one do you think has

contributed more towards the society?

Answer:

Corporate Social Responsibility (CSR) is a concept whereby organizations consider the interests

of society by taking responsibility for their activities on customers, employees, shareholders,communities and the environment in all aspects of their operations.

No business firm can survive without its employees, factors of production, customers, suppliers,

distributors, society, culture, and environment as a whole. A company manufactures a product orservice by combining land, labor, capital and enterprise. But in the end it is the choice of the

customers to buy or reject a product if it does not serve their purpose. If the product is accepted by consumers it will help the firm to break-even and generate profits or else it could lead to

closure of business enterprise.

So, all firms need to introspect that their existence is impossible without the involvement of the

society and it is their duty to adopt ethical consumerism and to provide clean healthyenvironment for all the future generations to come.

Business firms are realizing its importance as a tool for dominating the competitive scenario

prevailing in the national as well as international market, for customer retention, and sustainablegrowth by projecting itself as a firm which also focuses on motivational and leadership skills,

customer-driven excellence in terms of high quality products and services at the same time providing value for money, organizational and personal learning through regular training

programs, treating employees and partners as valuable assets, agility, innovation in products andservices, social responsibility, and to develop environmental friendly techniques of production,

design, recycle industrial waste- products and conserve natural resources, forest conservation,and customer solutions for Sustainable Business Practices. The Business Organizations affect the

Employees, Customers, suppliers, shareholders, the local community and the environment invarious ways. Corporate social responsibility (CSR) allows business organizations to develop

responsible attitude toward the society and the environment and to behave ethically andcontribute to economic development of the nations.

Types of Social Responsibility in Business Organizations: There are two type of socialresponsibility.

a) Internal Social Responsibilities: Shareholders and Employees.b) External Social Responsibilities: Customers, Government, Suppliers, Community and

the Environment.


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Let's take examples of business firms TATA and Reliance using business ethics as a tool forretaining customers and increasing its market share by highlighting the initiatives it has taken for

providing a clean environment for the society.

TA

TA

G

roup:Tata Motors and Tata Steel -- have emerged as the country's most admired companies for theircorporate social responsibility initiatives, says a survey. Tata Motors and Tata Steel as the most

admired companies by stakeholders for their CSR initiatives. The companies have been engagedin various CSR activities such as promotion of primary and higher education among adults and

economically disadvantaged sections of society, improving health care infrastructure andincreasing environmental consciousness in the country.

Tata Group has constantly stressed on 'leadership with trust', unity, integrity, excellence,

responsibility, commitment towards national interest, providing good working environment forthe employees, avoidance of conflicts of interest, and emphasis on corporate social responsibility

which has become an integral part of the company's core mission and vision statement and topromote ethical conduct in all its operations, which gives it an edge of stability and sustainability

in the prevailing competitive scenario.

Tata Group, Corporate Social Responsibility (CSR), Community Development, EnvironmentalStandards, Triple Bottom Line, Tata Business Excellence Model (TBEM), Models of CSR,

Leadership with Trust, Corporate Philanthropy and Sustainable Human Development.

In a free enterprise, the community is not just another stakeholder in business but is in fact thevery purpose of its existence."

- Jamsetji N. Tata, Founder, Tata Group

Following are the CSR principles implemented over 100 years are part of organizationaldevelopment.

Year Activities

1912 8 hour workday

1916 Social Welfare scheme launched for employees

1920 Leave with pay

1934 Profit sharing bonus

1934Tata steel responded to earthquake in its Bihar province with reliefsuppliers

1951 Planned family norms promoted at community level1958 225 acre jubilee park created for the citizens of Jamshedpur

1979 Launched concerted rural development initiatives

1999

Tata Code of Conduct - mandates good governance ethical behavior

by organizations as well as each and every employee.

1995Tata Council for Community Initiatives- provides the superstructure for CSR efforts across the group.


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2003

Tata Index for Sustainable Development - a CSR measure adopted

across the Tata Group

The TCCI suggested below some obvious parameters backed by the experience within theGroup. It also listened to the convergence and developments globally to arrive at a TCCI-

UNDP Partnership to develop the Tata (Corporate) Index for Sustainable Human Development Guidelines 2003-2004:

In July 2004, B. Muthuraman, Managing Director, Tata Steel Limited (TISCO) announced that

in future TISCO would not deal with companies, which do not confirm to the company'sCorporate Social Responsibility (CSR) standards.

Speaking at the annual general meeting of the Madras Chamber of Commerce and Industry,Muthuraman stated, "We will not either buy from or sell to companies that do not measure up to

Tata Steel's social responsibility standards.

Tata Projects has taken a step forward by donating and installing a 1000 litres per hour de-fluoridation unit at Gangadevapalli village in Warangal district of Andhra Pradesh through The

Federation Of Andhra Pradesh Chambers of Commerce and Industry (FAPPCI) in October 2004.

Tata Steel believes that the primary purpose of a business is to improve the quality of life ofpeople.


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Following are the immediate relief with materials and help during natural calamities.

y Relief followed by long-term rehabilitation programs.y Employees have contributed their wages towards relief and participated in relief work.y Constructed schools and shelters after recent super cyclone in Orissa and earthquake inGujrat.

Tata Motors and Tata Steel as the countrys most admired companies for their corporate socialresponsibility initiatives. Tata motors successful for Nano car.

A survey conducted by the website www.indianngos.com revealed that Tatas spent Rs. 1.5

billion on community development and social services during the fiscal 2001-02 - the highest byany corporate house in India.

Reliance Group:

Reliance's contribution to the community are in areas of health, education, infrastructuredevelopment (drinking water, improving village infrastructure, construction of schools etc.),

environment (effluent treatment, tree plantation, treatment of hazardous waste), relief andassistance in the event of a natural disaster, and miscellaneous activities such as contribution to

other social development organizations etc. RIL's CSR teams across its manufacturing divisionsinteract with the neighboring community on regular basis.

Reliance ADAG is committed to being an ideal corporate citizen and doing more than its fair

share to support various deserving causes, in the field of medicine in particular: setting up and

operating Kokilaben Dhirubhai Ambani Hospital. Reliance Capital Supports this and other CSRventures.

Different businesses of Reliance Capital actively promote corporate social responsibility acrosscities and institutions. In this, they actively partner their own employees, who are encouraged to

give time, money, clothes, and even their blood.

Reliance Industries Ltd has launched project Drishti in 2003, in association with the NationalAssociation for the Blind (NAB-a non-profit institution serving the blind in India for over five

decades) is a nationwide corneal grafting drive to bring light in the lives of visual challengedfrom the under privileged segment of the society- has illuminated lives of over 5000 Indian- all

free of cost

For instance, in April 2010 alone, the southern team at Reliance Consumer Finance donatedmoney to NGOs working for children in Chennai, Coimbatore, Salem, and Vijayawada. In May

2010, blood was donated simultaneously in the cities of Ahmedabad, Mumbai, Pune, and Surat.In February and in March, again the western team at Reliance Consumer Finance spent time with

older people and with street children at their care centers in Ahmedabad, Indore, and Mumbai.Clothes and money was also contributed.


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The team at Reliance Mutual Fund is promoting the use of environmentally products and

packaging in its offices and outside. It is also supporting the cause of global warming. Thecompany also follows an active program of energy abatement and recycling of paper & water to

lower its carbon footprint. This is not just in its corporate office, but also in other large offices in

big cities.

Environmental initiatives for Reliance Power townships:

Reliance Power strives to preserve and uphold natural resources and reduce the environmentalimpact of its products and services throughout their lifecycle in order to be a responsible

corporate citizen.

Strategies are in place for sustainable township development in various sites of Reliance Powerby designing structures with minimum disturbance to the topography and ecology. The various

steps towards building an eco-friendly composition are:

y In the township phase I of all sites, the construction, hostel and housing blocks modifiedto accommodate and preserve existing big trees.

y Rainwater harvesting has been made mandatory for all sites.y Solar heating for public buildingsy Use of energy efficient building materialy Minimum day lighting arrangements for over 75% of the areay Energy efficient electric fixtures within minimum 3 star BEE ratingy Water efficient plumbing fixturesy Use of lead free paintsy Treatment of sewage water and reuse for landscape and irrigation purposes

In areas around its power plant sites in Sasan, Rosa, Krishnapatnam,Butibori, Chitrangi andothers, Reliance Power has been actively involved in various social and environmental

organizations to address the issue of sustainable development and social uplift. The Company in

discharge of its responsibility as a corporate citizen actively contributes to community welfaremeasures and takes up several social initiatives every year.

Reliance Power Ltd. has been closely working with institutions and social organizations andsupporting their programs for social development, adult literacy, adoption of village, tree

plantation schemes etc.


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Conclusion:

In my point of view both the groups have contributed towards the society, but as long as TATAare concerned they are spending 500-600 Cr per Year for CSR but Reliance nothing are seen

except some sponsorship for financial weak meritorious students.

Tata group have done so much for the country in every field. like education - IISc, XLRI etc. Somany social initiatives, even their brands have a social conscience like Jaago Re (Tata Tea) all

apart from generating lakhs of jobs.RIL maybe a hugely profitable company but doesnt comeclose to the Tata group in the area of CSR.

66% stake in Tata Sons is owned by the charity organization. This means 66% of the profit made

by any of the Tata Companies goes for charity.

Thats the reason the brand TATA does not merely lie in the market it do lie in the hearts andemotions of the people.

It has shown that these corporates have the attitude that given position for which they deserves.

Both Tata & Reliance has occupied their position through long journey & hard work. I hopeother companies would also get inspired by this towards their social responsibilities.

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Final Answer of CSR