Unit : 02
Module 15 : Corporate Social Responsibility
Learning objectives
By the end of this module, you will able to
Learn what is CSR
Understand the types of CSR activities and their benefits
Comprehend the various CSR programmes undertaken by companies for a
social cause
What is Corporate Social Responsibility (CSR)?
Corporate Social Responsibility is a management concept whereby companies
integrate social and environmental concerns in their business operations and interactions
with their stakeholders. Initially CSR was thought of as a means of curbing business
frauds, Corporate Bribery, Environmental Damage caused by Industries, Immoral
Practices in Organizations, etc.
CSR is not about giving donations for community projects, not providing ad-hoc
solutions to societal problems, not to be a repair center to do the patching up of gaps in
Govt responsibilities. But CSR is expected to bring in Systemic Change in organizations,
integrated in market economy and add Value to community / customers.
Corporate social responsibility (CSR) has become something of a buzz phrase in
recent years. There have been many arguments regarding whether CSR can actually
help companies to improve their reputation and improve profit margins, if it costs
businesses money and whether businesses are doing it to genuinely help the
environment and society, or if it is solely a marketing technique.
Despite the arguments, many companies have found that CSR does help them –
it improves their reputation, attracts better employees and saves them money. While all
businesses must operate within the law (e.g. health and safety standards, human rights
laws, emissions guidelines) many are now becoming proactive and going above and
beyond what the law requires. When correctly employed, CSR (Figure 1) should create
value for all stakeholders (e.g. anyone who has a direct or indirect interest in a company)
in a business, not just shareholders.
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Figure 1 CSR
Approaches to CSR
One of the most popular approaches to CSR is philanthropy. This usually involves
financial donations or other aid to local or international charitable organisations. However,
many companies do not like this approach to CSR as it does not involve building any
skills, either within their employees or with the recipients of the donations.
Community-based development is a less common method, although it is
becoming more popular. Companies using this method become more involved with
communities to help them improve their skills or better themselves. This method can
involve helping disadvantaged communities to educate children or assisting adults to
develop new skills.
Other companies are now building CSR into their corporate strategies. One
example of this could be Cadbury’s, who have only recently been able to label their
packages as Fair Trade certified.
A more intricate approach to CSR is creating shared value (CSV). This model is
based on the idea that social welfare and corporate success are inextricably linked. The
idea behind the model is that businesses need a healthy, well-educated workforce,
suitable government and sustainable resources to survive and compete, whereas society
requires profitable businesses to create income and opportunities. CSV focuses on how
companies can build competitive advantage by adding social value to their activities. A
paper by Michael E Porter, entitled Strategy & Society: The Link between Competitive
Advantage and Corporate Social Responsibility, describes in detail how companies have
linked their business strategies and CSR. Many companies now use benchmarking to
ensure they remain competitive in their CSR activities. This involves measuring and
evaluating the impact that CSR activities undertaken by competitors have on both the
environment and society, and how customers perceive this activity. Companies then
develop their CSR strategies according to the outcome of their research.
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Four Types of CSR
i. Environmental Responsibility.
ii. Ethical Responsibility.
iii. Philanthropic Responsibility.
iv. Economic Responsibility.
CSR activities are generally self-regulated. Advantage of CSR is that it helps in
improving environmental, ethical, social and economic living of community.
Benefits CSR
• It is a good marketing tool
• It adds value to customers and hence earns good will
• It helps in employee engagement and satisfaction which in turn helps in
retention
• It helps organisations in locating right candidates for their job
• It helps organizations to introspect and analyze how they manage different
functions
• While succeeding financially, it also helps in solving some pressing problems
of the world.
It is also noticed that organizations having established CSR practices incidentally
enjoyed the following:
• Increased Revenue
• Reduced Energy Costs
• Reduced Wastages
• Reduced Material Expenses
• Increased Productivity
• Reduced Turnover and
• Reduced Risks
Corporate Social Responsibility Under Section 135 of Companies Act 2013
• The Board of Directors shall make sure that the company spends in every
financial year, minimum of 2% of the average net profits made during the 3
immediately preceding financial years as per CSR policy.
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• CSR Policy elaborates the activities to be undertaken by the Company as
named in Schedule VII to the Act and spend. The activities should not the same
which are done by the company in its normal course of business
• In case a company fails to comply with the provisions relating to CSR spending,
transferring and utilising the unspent amount, the company will be punishable
with a minimum fine of Rs 50,000 which may increase to Rs 25 lakh.
Methods of CSR
There are many different forms of CSR, both social and environmental. These can
include reducing waste, recycling, community projects, changing working methods and
monetary donations.
Some of the main CSR activities currently undertaken are listed.
• Using fair trade goods to create products, or selling fair trade goods
• Ensuring that no animal testing takes place anywhere in your supply chain
• Removing harmful chemicals from the production process, or decreasing
emissions
• If purchasing from abroad, ensuring that all factories pay a living wage to
employees, that health and safety standards are up to the same standard we
would expect in the UK and that no human rights violations are made by other
companies in the supply chain
• Using less energy and / or fuel
• Using organic materials in production
• Recycling office waste, and ensuring recycled materials are used in production
or packaging
• Taking part in community projects or making donations to charities and
organisations
• Ensuring diversity and equality in the workforce
• Ensuring employees have a healthy work/life balance
Effects of CSR
When undertaken appropriately, CSR can have many positive impacts on a
business such as helping to enhance the reputation of a company. However, business
owners must be sure to take care with their activities. In the past some consumers have
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questioned CSR activities, arguing that businesses partake only to improve their public
image. While this has mostly been the case with large companies such as McDonald’s
and BP, small businesses must ensure that they are undertaking CSR for the right
reasons.
Another reason for including CSR activities is product differentiation. This allows
businesses a unique selling point over their competitors. An example would be the Body
Shop. The Body Shop was the first cosmetics company of its kind in the UK, using all
natural ingredients in its products. The company was from its inception heavily involved
in social and environmental awareness campaigns. Many companies now find that CSR
is essential in attracting and retaining talented employees. Many graduates now say that
they would prefer to work for companies with a CSR policy, which can also help to improve
staff perception of a business and motivate employees, e.g. through community
volunteering or fundraising activities.
There are several ways in which CSR can help companies to reduce costs or
improve profits. Firstly, businesses can aim to reduce their use of energy and fuel, saving
money by having lower bills. Those who are able to differentiate their product or service
via their CSR activities may find that consumers are more likely to choose their product
over competitors, as buyers become more ‘green’ or socially aware.
Sample CSR Community projects
• There are many community development projects fully sponsored by Industries
in India as part of CSR initiative.
• Most of the CSR funds are spent for Community Development through NGOs.
Projects under Community development work
About 10 different projects are listed here as example to understand the nature
and volume of the community development work being done through CSR initiatives.
1. The Holistic Rural Development Project (HRDP)
Name of the Company: HDFC Bank Limited
Location: Pan India
Implementing Agencies: Abhyuday Sansthan; Action for Agricultural Renewal in
Maharashtra AFARM; Aga Khan Rural Support Programme India; Ambuja Cement
Foundation; AROH Foundation; BAIF Development Research Foundation;
M.S. Swaminathan Research Foundation; Manjari Foundation; Professional
Assistance for Development Action; S.M. Sehgal Foundation, etc.
The total expenditure of the Project (in Cr): INR 381.5
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Development Work: Projects under the HRDP range from school infrastructure to
household sanitation, sustainable agricultural practices to accessible drinking, and
irrigation water and renewable energy sources (solar, biogas, biomass) to
alternative sources of livelihood. Through the project they have touched more than
4 Lakh households across 1,282 villages in 17 states.
2. HCL Samuday
Name of the Company: HCL Technologies Limited
Location: Uttar Pradesh
Implementing Partner: HCL foundation
The total expenditure of the Project (in Cr): INR 97.08
Development Work: to develop a sustainable, scalable, and replicable model –
source code for economic and social development of rural areas. The program
covers 164 Gram Panchayats, comprising of 765 villages and 90,000 households
totaling a population of 6,00,000 people. Ensuring improved school education for
55,000+ children in the project area;
326 happy Schools with effective school environment, ICT-enabled learning,
assertive community participation, and improved teaching learning processes
through happy school intervention; and 48,000+ adults enrolled in adult literacy
batches.
3. Rural development and related activities
Name of the Company: ICICI Bank Limited
Location: Pan India
The total expenditure of the Project (in Cr): INR 53.05
Development Work: To enable better opportunities for farmers, the Bank has
started funding electronic negotiable warehousing receipts (eNWR).
Farmers can use eNWR to get loans against underlying commodities. This lending
protects the farmers from volatility and provides opportunities to avail better prices
for their produce. The Self-Help Group (SHG) Programme is an initiative that has
enhanced entrepreneurship among women in the rural areas. The Bank provides
a comprehensive suite of banking products, including zero-balance savings
account and term loans, for meeting the business requirements of the women.
4. Holistic Villages Development
Name of the Company: Cummins India Limited
Location: Maharashtra
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Implementing Partner: Cummins India Foundation; Kamdhenu Aayog Maharashtra
State Government etc.
The total expenditure of the Project (in Cr): INR 8.68
Development Work: Organic farming is one of them which was encouraged with
an intention of minimizing the use of environmentally harmful chemicals. The
farmers were trained by subject matter experts on the best practices of farming.
Organic farming complemented with the use of new equipment has resulted into
increased agricultural yield to which doubled income of many families. Cummins
teams also helped in marketing of farm produce.
5. Community Infrastructure and Rural Development
Name of the Company: Shree Cement Limited
Location: Rajasthan, Uttarakhand, Chhattisgarh, Haryana, Uttar Pradesh,
Karnataka, Jharkhand, Bihar, Odisha
Implementing Partner: Shree Foundation Trust
The total expenditure of the Project (in Cr): INR 6.57
Development Work: Undertaken infrastructure and construction projects in the
nearby communities to improve infrastructural facilities, improving accessibility of
services and proper utilization of resources for increasing living standards of
people in these communities. In order to remove bottleneck of road connectivity in
rural areas, construction/ repair of public institutions, renovation of old buildings
and community centers, construction of stages, boundary wall, stay rooms, waiting
stands, etc. were done for the communities at large.
6. Project Saakar
Name of the Company: Chambal Fertilisers and Chemicals Limited
Location: Odisha, Rajasthan
Implementing Agencies: KK Birla Memorial Society
The total expenditure of the Project (in Cr): INR 4.48
Development Work: Made significant investment over the years for the
development of rural infrastructure to provide better living opportunity to the
community members. During the Financial Year 2019-20, the Company has
undertaken construction of cement concrete roads, drainage improvement system,
development of playground, community shed, drinking water facility, etc. in nearby
villages.
The Company has also undertaken renovation and maintenance activities in 17
Government Schools during the Financial Year 2019-20.
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7. Arvind Limited
Name of the Company: Rural Transformation & Community Development
Location: Gujarat
Implementing Partners: Arvind Foundation, Narottam Lalbhai Rural Development
Fund
The total expenditure of the Project (in Cr): INR 3.6
Development Work: Arvind Rural Transformation Initiative (ARTI) is a combination
of long term integrated programs focused in defined geographies in Ahmedabad,
Gandhinagar and Narmada districts of Gujarat at present. Improving the education
environment by upgrading the infrastructure in village schools, increasing
enrolment by multiple learning and development programs for the students and
support to parents are initiatives aimed at Educational Advancement.
Improving school-built environment for enhanced learning in Government Primary
Schools and Digital classrooms, science activity centre, interactive play scape and
herbal garden were initiated.
8. Global Parli Project and other initiatives
Name of the Company: HEG Limited
Location: Pan India
Implementing Partner: LNJ Bhilwara HEG Lok Nyas Trust , Global Vikas Trust,
PHD Rural Development Foundation
The total expenditure of the Project (in Cr): INR 2.05
Development Work: Rural transformation for nation building i.e. water conservation
and horticulture with a view to increase the poor farmers income. The tree planting
target for 2020 is set at 1.5 – 2.5 lakhs. HEG has contributed close to 3 crore
towards this green cover initiative. Moreover, the company provided clean drinking
water at Mandideep and nearby areas by installing water coolers with reverse
osmosis filters in public places like bus stops and temples.
9. Developing of rural areas
Name of the Company: Apollo Hospitals Enterprise Limited
Location: Andhra Pradesh
Implementing Agency: Total Health
The total expenditure of the Project (in Cr): INR 1.877
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Development Work: Apollo Hospitals contributed to the CSR by contributing
towards Rural development. It focused in providing of drinking water, Extension of
Sanitation facilities, Setting up of Nutrition Centres, Vocational Training Centres
facilitating skill development training, Mobile Medical Units – primary and
preventive healthcare including diagnostics and Promotion and Revival of rural
sports.
10. Rural Infrastructure Development and other initiatives
Name of the Company: Grasim Industries Limited
Location: Gujarat, Jharkhand, Karnataka, Madhya Pradesh, Uttar Pradesh
Implementing Partner: Nagar Nigam Udaipur; Nagar Nigam Bundi
The total expenditure of the Project (in Cr): INR 1.6253
Development Work: 1,276 rural medical and awareness camps, 82,189 people
were examined. Health check-ups were conducted for ailments such as malaria,
diarrhea, diabetes, hepatitis, arthritis, skin diseases, gynecological disorders, and
cardiac related issues. Their rural mobile medical van services complemented
these efforts. Of the 298 villages that they work in, they have zeroed in on 50
villages for a transformative process that raises them to become model villages.
Registration of NGOs for CSR funding
Registration of NGOs for CSR Funding – File Form CSR-1 with Ministry of
Corporate Affairs
Types of organizations eligible to file the CSR-1 form
• A company established under section 8 of the Act, or a registered public trust
or a registered society, registered under section 12A and 80 G of the Income
Tax Act, 1961 (43 of 1961), established by the company, either singly or along
with any other company, or
• A company established under section 8 of the Act or a registered trust or a
registered society, established by the Central Govt or State Govt; or
• Any entity established under an Act of Parliament or a State legislature; or
• A company established under section 8 of the Act, or a registered public trust
or a registered society, registered under section 12A and 80G of the Income
Tax Act, 1961, and having an established track record of at least three years in
undertaking similar activities
Visit the MCA portal for details.- http://www.mca.gov.in/
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The details are given in Figure 2 and Figure 3.
Figure 2 Top 3 sectors
Figure 3 Geographic priority
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Considering the CSR funds received – as per percentage. It is found Maharashtra
has received 7473 cr with 15.59% followed by Rajasthan 2962 cr with 6.18%, Karnataka
2852 cr with 5.95%, Gujarat 2531 cr with 5.28% and so on as shown in the Figure. Further
based on the contribution by industry, it is found the major contribution comes from Oil,
Lubricants, Refineries and Petrochemicals with 22%, Banking and Finance with 21%,
Computer software and hardware with 14%.
Corporate social responsibility (CSR) is a self-regulating business model that helps
a company be socially accountable to itself, its stakeholders, and the public. By practicing
corporate social responsibility, also called corporate citizenship, companies can be
conscious of the kind of impact they are having on all aspects of society, including
economic, social, and environmental.
Summary
In this module we have
Learnt what is CSR
Understood the types of CSR activities and their benefits
Comprehended the various CSR programmes undertaken by companies for a
social cause
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