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Corporate Social Responsibility: A study on CSR practices in Indian

Businesses-NTPC and RIL.

Research · September 2015

DOI: 10.13140/RG.2.1.3032.1125

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Corporate Social Responsibility: A study on CSR practices in Indian Businesses-NTPC and
RIL.

Ashutosh (Research Scholar) & Dr Ashok Sharma (Asstt.Professor)

Amity University, Noida, (UP)/India.

Abstract

Independent India sought industrialization through PSU. CSR then was still in philanthropic
space. With time Govt. /Non Govt. entities included CSR in community development. Democratic
institutions pressurised businesses to shift from philanthropy to socially responsible behaviour
and practices. Businesses felt threatened by growing gap between the Have and Have-Not
customers resulting in proactive attitudinal change.

Government regulatory mechanism (CSR clause in Companies act 2013) and BR report of SEBI
together with societal pressures persuaded private enterprises CSR activities rigorously. With
globalisation of Indian economy CSR practices in India are evolving fast covering balancing of
economical, social and environmental imperatives addressing simultaneously expectation of all
stakeholders. CSR- A strategic business concept helps in reducing poverty providing livelihood
mean, promoting skills and well being in the shape of education, health and environmental safe
guard. This study discusses all these issues supported with cases of two of the largest companies-
one from PSU (NTPC) and other from private sector (RIL).Their CSR policies, procedures and
activities are discussed exhaustively in this report.

The Indian economic scenario has shifted from agriculture to manufacturing and services
sector causing migration of workforce resulting in greater exploitation of natural resources and
consequent environmental disturbances. These developments threatened the social fabric both in
rural and urban areas resulting in unrest. Businesses felt perturbed and modified their CSR.

Keywords Triple bottom line approach strategic philanthropy Corporate Citizen shareholder,
Moral Management.

______________________________________________________________________________________

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 Introduction

1.1 Definitions of CSR:

The Global context

While as concept of CSR has emanated as late as mid twentieth century with the industrialisation
of western world different industrial powers have accepted different definitions of the
terminology CSR based on the impact of businesses on the society and their expectations. The
factors that were responsible for evolving a coherent definition were the social problems like
economy conditions of society and impact on environment due to use of technology. Moreover
ethical factors, self regulatory mechanisms and norms and standards established by National,
International bodies resulted in framing of Laws, Corporate action plans. This took full care of
the impact of environment and interest of stakeholders like community in the vicinity of industry,
employees, investors, consumers and Nation at large.

CSR definition as stated by WBCSD* enumerates “The commitment of business to contribute

to

 Sustainable economic development.

 Working with employees and their families.
 Working with local community and society at large.

With the goal of improving the quality of life”.

The core theme of CSR is that the business policy, strategy and activities should result in
managing costs and benefits to both internal and external stakeholders such as workers, investor,
shareholders, community members, institutions of public governance and other entities. However
the PSUs are trying to maintain an improved view that their CSR activities should achieve
beyond compliance on voluntary basis.

Three foremost international organisations define CSR as

“EC-the responsibility of enterprises for their impact on society-states that to meet their social
responsibility enterprise: should have in place a process to integrate, social, environmental,
ethical, human right, consumer concerns into their business operations and core strategy in close
collaboration with their stakeholders”.

WBCD-defines CSR as “the continuing commitment by business to contribute to economic

development while improving the quality of life of the workforce and their families as well as
community and society at large”.

*World business council for sustainable development.

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UNIDO- “CSR is a management concept whereby companies integrate social and environmental
concerns in their operations and interactions with their stake holders .They believe in Triple
bottom line approach i.e. a company achieves a balance of economic ,environmental and social
imperatives”.

In developing countries like Indo-china perceive the risks, threats and opportunities that arise due
to economic globalisation. Also individual business decision making have to balance with the
socio-economic circumstances and the public policy intervention resulting in effective drivers for
implementation of CSR.

The Indian Context

In pre-independent India being predominantly an ago- economy businesses practiced CSR that
was restricted mostly to philanthropic activities such as socio-religious, education, health or
cultural. These would be operated by funding mostly through trusts.

Stretching the above idea an understanding developed among prominent Indian corporate bodies
and being conscious about their responsibilities towards upliftment of common masses in the
immediate vicinity of their business entitities together with protection of the environment drove
them to implement CSR plans.

As mentioned earlier at national level traditionally Philanthropy, charity and sponsorship were
the non deliberated concepts towards CSR. However now we have moved from institutional
building to community development. As a result a discernible trend has set in with passage of
time; CSR is getting more strategic in nature by companies undertaking various activities which
are reflected in official websites, annual -, sustainability and CSR reports. Companies act 2013*
has made it mandatory to promote greater transparency and disclosure which has helped in
introducing idea of CSR thereby promoting greater transparency and disclosure.

CSR has strengthened the concept of sustainable development. Brundtland Commission has
derived the concept of sustainable development that needs of the present (CSR driven) without
compromising the ability of future generation to meet their needs.

*This act has made CSR a robust program and benefited by way of Communities provide license
to operate,attacts and retains employees, Community livelihoods enhanced by becoming a link in
supply chain and lastly generated corporate reputation.

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1.2 Literature Review:

Different scholars termed CSR with different names like Corporate Citizenship, Corporate
Conscience, and Corporate Obligations, Corporate social responsibility of business, corporate
social responsiveness and Responsible Corporate Strategy.

As said above among definitions of various expert bodies the roots of CSR from earlier stages
have emerged out of such philanthropic activities like donations and charity,etc.This idea has
advanced to cover related concepts like Corporate Citizenship and Strategic philanthropy and
shared values leading corporate sustainability and business responsibility. A brief definition of
CSR states ‘The responsibility of enterprises for their impact on society’. This meets the
requirement to integrate social, environmental, ethical, human rights, consumer concern covering
interest of all stake holders. This win-win situation which covers interest of both direct
stakeholders (Owners/Investors/Employees) as well as indirect stakeholders clarifies the
terminology CSR as Corporate Owners beyond shareholder .This has been brought out by R.E
.Freeman in his book titled strategic management- A stake holders approach. Another scholar
Bowen regards’ CSR as the obligation of the businessmen to pursue such policies which lead to
the adoption of actions supporting objectives and values of the society’. Another definition
propounded by Frederick (1960) states ‘Social responsibility means businesses should oversee
the operation of an economic system that fulfils the expectation of people’.

In general while as before onset of twentieth century businesses regarded their enterprises as
private arrangement for enriching share holders evolution of CSR has changed the thinking that
businesses are a joint enterprise in which workers management consumers, locality, government
trade unions and other interested groups having stake in the business have to make a common
purpose for interest of all.

2.0 Objective

 To study the concept and scope of CSR in alignment with vision and mission of the
enterprises from public and private sector with reference to well reputed organisation like
NTPC and Reliance (RIL) respectively.
 To review existing various models of CSR.

3.0 Research Methodology

Exploratory research of descriptive nature to ensure greater accuracy based on secondary data
from such sources as journals, magazines, corporate annual reports, articles and relevant research
papers and material from website and media.

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4.0 Evolution of CSR

The evolution of CSR India has followed a four stage thinking approach .Models for which are
explained in the paper.

Period(Era) Model Target

1930-50 Ethical Trusteeship promotion
1950-70 Statist State ownership&
compliance legal
1970-90 Liberal Private owners
(shareholders)
responsibility
1990 onwards(continuing) Stake Holder Comprehensive coverage
involving needs of all
stakeholders & legal
requirements as well as
communities & nation at
large

In addition there are models which describe the evolution and scope of social orientation of the
companies. Some of the notable models are

 Carroll’s Model defines CSR as complete range of duties business has towards the
society. It is a framework of 3D conceptual model of corporate performance having four
categories of obligation namely economic, legal, ethical & discretionary.
 Halal’s Model believes that since CSR is a difficult task only a workable solution among
group having diverse interest engage in creating value for distribution among the
members of coalition. To avoid resulting conflict coordination between economic &
ethical decision is necessary.
 Ackerman’s Model is implemented in three phases consisting of recognition of social
problem by top management and as a result appointment of staff specialist to look into
issues and find measures to tackle them. Lastly implementation of the strategy devised by
the specialist.

4.1 CSR in Indian Corporate Sector: A separate Ministry of corporate Affairs has been
established to take up the role of enable, facilitator and regulator for effective functioning and
growth of the corporate sector. A number of initiatives have resulted to frame rules and
regulations on the legislative service delivery and capacity building sides to ensure smooth
sustainable growth.CSR in last few decades has progressed from simple philanthropic activities
to integrating interest of the businesses to that of the community in which it operates. Businesses
have exhibited socially, environmentally and ethically responsible behaviour in the governance

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of its operations. Businesses have generated and long term sustainability for itself while making
positive contribution in the betterment of the society.

Despite sustained economic growth in last few decades and global financial crisis in last decade,
we have been able to adopt the path that leads us to inclusive growth and sustainable future.
Effective steps have been taken in this path to nurture it in which all stakeholders are discharging
respective responsibility. In the decade gone by we have seen sustained economic growth but
major challenges remain especially on human side like problems of poverty, illiteracy and
malnutrition. This has kept a large section of the population away from the main stream. This left
out section of the society whose needs are to be addressed through suitable efforts and
innovation. A major effort on this front is to be discharged by the Indian business through
suitable CSR efforts. A separate ministry of corporate at Federal level have prepared voluntary
guidelines which indicate some of the core elements that businesses need to focus on while
conducting the affairs. These guidelines have been prepared after receiving valuable suggestions
from trade and industry, experts, stakeholders. Also internationally prevalent and practiced
guidelines, norms and standards in the area of CSR have been included in these guidelines. It is
expected that India incorporate will implement these guidelines and suggest refinements so as to
meet challenges that arise to take forward India to frontline of Nations.

Experts within India and abroad are of the view that twenty first century for India will be
characterised by unprecedented challenges and opportunities arising from globalisation. The
most recent financial upheaval has concluded that India will be fastest growing nation leaving
behind Asian giant China. The desire of inclusive development and imperatives of climate
change have created a rethink in Indian businesses. At the same time the Indian businesses is
today viewed globally a responsible component of ascendancy of India and is poised to take on a
leadership role in the challenges thrown by twenty first century global crisis. Research and past
events world over have shown that integrating social, environmental and ethical responsibility
into governance of businesses ensures long-term sustainable success and competitiveness.
Obviously this reaffirms the view that businesses are integral part of the society and have a
critical and active role to play in the sustenance and improvement of healthy eco system, in
fostering social practices and good governance. Effective CSR adopted by socially responsible
companies achieves suitable sustainable growth in their operation in long run. Moreover there
offerings i.e. good and services are preferred by the customer.

The Indian tradition of several thousand years emerging from ancient wisdom has inspired the
business people to work for the larger objective of wellbeing of all the stakeholders of their
businesses. In current context these values will help organisations grapple with the challenges
that arise out of the fulfilment of stakeholders and community at large.CSR activity unlike earlier
times are not philanthropy only but are obligations to the society to go beyond statutory
requirements/obligations. Ministry has framed guidelines which are purely voluntary
(reproduced in annexure 2 separately). These guidelines form the base for CSR policy
implementation by India Corporate and formulate a roadmap for strategic planning which should
6
be an integral part of overall business policy and aligned with their business goals. Guidelines
being voluntary in nature, they are not intended for regulator or contractual use. While the
guidelines are meant for Indian incorporate enterprises that have a transnational presence could
benefit from using these guidelines for their overseas operations as well.

5.0 Classification of Public sector engagements

To understand Public roles in CSR we have to study their engagements which are classified as
under:

Engagement Axis

 Roles -Mandating, Facilitating, Partnering and Endorsing. These roles are briefly
tabulated in Table 1 in the annexure.
 Activities: The classification of Public sector activities under above mentioned four
roles is tabulated in Table 2 in the annexure.

An explanatory note on the four Public Sector roles tabulated above is briefly discussed below:

 Mandating: Business performance standards consistent with legal engagements such

as emission limit values, relevant decision making of Directors, adoption of best
practices, technology are the some of the guiding principles of mandating role set up
by Government.
 Facilitating: Public sector has to play a supporting role catalysing CSR agenda to
improve social and environmental aspects of business. Similarly Public Sector bodies
can stimulate activities like funding for research, campaigning for information,
collation and dissemination training and raising awareness. Voluntary product
labelling and stimulating markets by affording fiscal incentives.
 Partnering: Examples exists where strategic partnership has brought the
complementary skills and inputs of Public Sector when it partnered with Private
sector and all civil society in tackling complex social and environmental problems.
This tri-sector partnership benefits the long term interest of business sector while
meeting the social objectives of civil society and thereby creating stable social and
financial environment.
 Endorsing: Endorsement includes actions such as use of policy documents, effects of
public procurement, adoption dynamic management practices, recognition of efforts
of individual enterprises and honourable mention by celebrities.

Likewise some more light is thrown on the ten CSR themes mentioned in the table 2.

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Compliance with standards-Though setting and ensuring compliance with minimum
standards is ensured under mandatory role still corporate bodies cover this aspect under
their code of conduct and CSR related issues. Besides this partnership role under the
coverage of minimum good practice sets standards such as environmental covenants
practice by Dutch and South African countries.

Public Policy-Next CSR theme namely public sector activities involving Public Sector
engagement in policy makes an important contribution to align business practices with
sustainable development goals. In this context corporate donations and lobbying are
interest groups to further Public policy role of business. Beyond compliance activities are
resorted to by the businesses to take care of specific regional interests. Affirmative action
such as Public sector procurements and company ownership giving preferential treatment
to disadvantaged groups is the sound example in this connection.

Corporate Governance –Besides governance guidelines and codes of best practices

some of the issues could be as follows: Business organisation, in order to ensure
corporate accountability have also include negotiations and implementation of
international principles, partnership based co-development and engagement in capacity
building, pension legislation and other good corporate governance practices.

Socially Responsible Investment-Examples from enlightened advanced western

countries have taken measures to promote actions in this connection such as enacting
laws under pension acts by endorsing particular system of indicators and metrics. Beyond
this Public sector has linked CSR to such friendly practices as technology transfer, local
economic linkages. Public sector loan guarantee and public private partnership by
aligning with corporate investment such as in infrastructure and social security (education
and health).

Philanthropy and Community development-An endeavour by collaboration of Govt.

and businesses. An example of rich oil and gas producing company a small percentage of
its annual revenue to channel funds into infrastructure, environmental and social
development projects (source-Nigeria Delta development commission).Another
significant action in this connection is the intervention to create incentive for voluntary
corporate donations and social investment through Tax incentives.

Stake Holders Engagements facilitating a dialogue between stakeholders and businesses

through either mandatory legislation for multi-stakeholders or interest of particular stake
holders where CSR initiatives need intervention for third party discrimination.

Pro-CSR themes- In connection with production and consumption Public sector

agencies promote them through business, technical, advisory services and research for
example export promotion is achieved by producing green goods and services. Another
example that supports investment within business is achieved by adopting the policy

8
“Polluter Pays” (by imposing a levy).Environmental and social labelling schemes for
consumers to prefer the same can be regarded as Pro – CSR activity of business.

Certification, beyond compliance standards and environmental engagements are the

issues initiated by Public sector bodies giving birth to creation of guidelines leading to
development of Public sector codes of conduct and standard. Some of the examples in
this connection are quoted as: South Africa’s National responsible tourism guidelines,
Egyptian environmental policy program and Taiwan Public procurement Policy.

Multilateral Process Guidelines and Conventions-Both developing and Developed

countries have endorsed UN global compact as well as OECD guidelines for
Multinational enterprises. Also Inter-Govt. Processes to tackle sector specific issues have
been sorted through what is called Kimberley process to create sectarian frame work for
implementation.

The above detailed review of initiatives has focussed mainly on engagements in

PRO-CSR activities by national level Public sector bodies, however collaboration
between central Govt. at regional, provincial or state level also need to be studied. In this
connection an UN conference on environment and Development titled “local Agenda 21”
speaks of private sector engagement in processes to define locally relevant policy
framework for sustainable development with incidental benefits in promoting responsible
business practices.

The above comprehensive study seemingly creates a dilemma in the mind of experts
as to understand Public sector engagements for reasons given in the following study.

Since understanding on basic terms in CSR agenda are far from consistent standards the
agenda appears to be contradicting at places are rather at places at immature level, for
example several Public sector organisation are engaged in producing goods and services
that promote export of much needed foreign exchange, but Public sector don’t consider
this activity part of CSR.

Another key contradiction is that both in Industrial and developing countries advocates of
CSR mostly lack understanding of such established and evolving approaches as life cycle
assessment, eco-efficiency, cleaner production and environmental management systems.
In a way these issues within the overall CSR are not yet fully recognised.

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Lastly, no formal evaluation of which Public sector agency has more than others to build
a more enabling environment for CSR is still in its infancy preventing to point to best
practice example. Some of the hurdles in this connection are inadequate funding,
insufficient consumer demand and or mal administration.

The Propellers and Impediments for the public sector to engage in establishing best CSR
practices are tabulated in table 3 and followed by explanatory note below.

An explanatory note on the five Public Sector Engagements tabulated in table 3 in the
annexure is briefly discussed below:

International policy processes covering inter governmental framework and regional

cooperation have the potential to drive the public sector engagement thereby enabling
environment for CSR.

At regional level same can be achieved by bringing together different Governments in

settings where one or more participant’s engagement already exists. Another example of
this effort can be cited is regarding clean developmental mechanism of KYOTO protocol
on climate change that has the potential to propel Public sector in promoting of PRO-
CSR business. However, almost little engagement in developing countries Public sectors
to National level under OECD guidelines on Multinational enterprises.

Trade/Investment Promotion-PSB do realise that CSR agenda could help to assess to

export of sustainably produced goods and services and could tackle the potential
exclusion from existing markets.PSB do feel responsible for building capacity for
domestic producers to enable them to meet CSR standards and engagement in standard
setting initiatives to avoid unfair market access barriers. Adequate evidence exists that
CSR is at times viewed as non tariff barriers to trade or an unwelcome imposition of
foreign concerns. Regarding developing countries voluntary adoption of international
level CSR standards of the level of ISO (International Organisation for Standardisation)
are be addressed through a number of initiatives. Though CSR activities in consonance
with trade promotion does exist there is very little evidence to confirm that direct link
between PRO –CSR public policy exists to attract FDI.

Maintain minimum standards-To protect commercial transaction, a free and fair

competition, new demands CSR agenda of PSB arises. To ensure compliance whether
through civil society pressures or public agencies minimum mandatory standards cannot
create the level playing field thereby allowing the market place resulting in rewards for
higher standards of innovation. Voluntary labour code of conduct does help Public sector
inspectorate does help in some cases. A similar result for enforcement of minimum
standards is achieved through command and control methods.

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 Partnership & civil Society demands-Private sector actors in development of strategies
for sustainable development or poverty reduction that could be achieved by PSB is
relatively limited outside developed countries. Development strategies demand input
from Govt., development agencies, civil society, research community and businesses. But
regrettably this is almost nonexistent. Partnership initiatives by PSB at National /local
administration level being resource intensive need donor interventions. In addition to this
partnership calls for significant inputs from such sections of society NGOs, Trade Unions
and Community based organisations in addition to public sector inputs. Unfortunately
these voices are almost in effective being weak and having significant barriers.

Consumer demand for sustainable goods and services-It is only significantly small
number of consumers who are knowledgeable particularly in developing countries who
could differentiate products and services for sustainably /ethically produced goods and
services. Thus Public sector intervention in poor and middle income countries for green
/ethical consumer markets domestically is limited and needs continuous interventions to
stimulate consumer demand.

Notwithstanding drivers and constraints outlined earlier there is scope to strengthen

Public Sector in developing countries to have robust CSR. Some core themes for the
same are given below.

CSR Agenda & its implications-Awareness thereof

In order to ensure that CSR agenda results in sustainable development and poverty
reduction we need to have
 Information on: drivers of Agenda, key players and effective pressure points.

SA 8000(Social accountability standard) is one of the specific voluntary approach to

national economic development priorities. This of course is possible if PSB have access to
information on the effectiveness of voluntary schemes in enhancing business and market
assess. Such initiatives as

 country specific impact assessment of CSR related requirements imposed through

contracts for supply of Goods and services and
 Work to strengthen integration CSR related themes in enterprise development and
export investment promotion.

The above is subject to CSR agenda being sensitive to economic and social importance of
SMMES and policy priority of the concerned developing Government.

Capacity Building:

Intergovernmental bodies VIZ (ISO and EU) frame CSR relevant policies and standards
where developing countries have not any role. Moreover CSR agenda is largely shaped by
11
 MNC, consumers, investors, industrial national Govt.Stakeholders in developing countries
being passive participants resulting in limited Public sector engagement in CSR related
standard setting activities which causes trade related tensions and accusation of privatised
neo-colonialism. Thus it is imperative that developing countries should become effective
players to shape their CSR agenda.

Building Environment for PRO-CSR Investment:

In order to build stable and transparent environment for PRO-CSR investment we need to
build governance characteristics for

 Attractive investment location

 Corruption free environment
 Effective administration of tax system
 Regulatory certainty
 Effective judicial system
 Provision for rights of public participation and
 Access to information and justice

Some of the CSR enabling initiatives that help strengthen environmental social
governance respect for human rights are adopted by best practice companies. One of the
benefits derived from PRO-CSR Public Sector activities is greater understanding of
connection between corporate behaviour and investor companies.

Private Sector Engagement in Public Policy Processes:

Currently private sector engagement in key policy processes is virtually absent. In order
to harness the CSR agenda of PSB at National. Regional or Local levels PSB should
engage private in framing overall strategic sustainable development and poverty
reduction policies and extend the same to areas where achievement of National public
policy goals could be strengthen through private sector engagement viz education and
health. For this private sector shall have to develop specific tool kits such as Public
spending agencies with companies undertaking community development activities and
efforts to build framework for understanding strengths and Key competencies for
funding, spending and capacity building-CSR being supportive of National policy
priorities shall have to integrate business linkage program into national poverty
eradication strategies.

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Supportive Strategies:

To assess priorities at local, regional or national levels in relation to CSR contextual

modes of intervention within an overall strategy should be framed in order to map
existing drivers and constraints. Put differently development of locally appropriate modes
of intervention rather than simply applying models from elsewhere should be encouraged.

5.1 CSR Practices in NTPC

To achieve CSR objectives of NTPC a prominent PSU, the enterprise has largely succeeded with
continuous application of advanced technologies to provide environmental protection against
burning of fossil fuels. Additionally the people affected in areas of their operation are provided
complete help in their resettlement and rehabilitation(R&R). Lastly in their endeavour to
contribute to sustainable power development this corporate body discharges its social
responsibility by adopting policies to ensure initial community development during project
inception stage. R&R for community development during project development stage and
community during operational phase.

A four stage process consisting of planning, implementation, monitoring & evaluation and
documentation & communication ensures a fool proof result oriented promotion of inclusive
growth.

Significant initiatives at NTPC focus on important stake holders benefitting programs like
community development in areas like education ,health & sanitation, capacity building &
women empowerment, development of social infrastructure, provision of drinking water,
promotion of arts culture and sports and support to disabled persons.

Of many initiatives indicated above it is worth elaborating some of the laudable actions taken by
NTPC such as…

 To promote skill development & sustainable livelihood it is have been adopted and new
ones established.
 Youth and women have been imparted training in backward districts.
 Handloom weavers with part finance assistance to work in handloom parts.
 Provision of bicycles to poor & indigent school going girls.
 Installation of solar lights in backward villages.
 Construction of roads to link highways with backward villages
 Village development for drinking water, sanitation, primary education & health
infrastructure.

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  Conservation of some national monuments.
 Empowering physically challenged persons by providing access to educational
opportunity & livelihood earning skills.

A unique initiative of NTPC in information communication technology by setting up ICT centres

for persons with visual (Braille facilities)/mobility /hearing impediments.

6.0 CSR Practices in RIL(Reliance Industries Limited)

To ensure long term sustainable growth, RIL collaborates with its stake holders by identifying
the issues, prioritising to ensure stakeholders engagement and take steps to address them. In this
connection RIL has established world class occupational & family welfare centres following
International practices in all location of its activities. These facilities offer preventive, promotive
& curative health services.

RIL also provides comprehensive health care services to villagers located in their manufacturing
divisions. In partnership with Govt AND NGOs it provides care support & free treatment to
combat HIV/TB. All their Hospitals are having NABH&NABL accreditation.

RIL has arrangement safer work environment for its employees & contractors and operating
communities. In addition safety initiatives for the community local public are taken care of by
having proper infrastructure built & safety gadget installed to prevent chaos & accidents.

Global best practices guide compliance to ensure environmental excellence .All manufacturing
sites of RIL have integrated management systems combining environment, quality, occupational
health and safety management system for new projects after conducting environmental impact
assessment to ensure minimum effects on local biodiversity & approval from all legal and
regulatory authorities are obtained

Effluent discharge at manufacturing division is continuously improved to save and effectively

manage requirement of water.

Towards environmental protection & awareness drives massive plantation are undertaken from
time to time to create awareness in the local community on importance of green cover.

Since RIL manufacture products based on application of chemical sciences it recognises

scientists worldwide through awards in recognition of innovative & seminal contribution in
chemical engineering.

For social responsibility for education & scientific research RIL has instated D.A Protsaham
Scheme which supports financial poor & meritorious students to pursue higher education.RIL
has pioneered the concept for education for all. Under this program more than 30,000
underprivileged children receive free education. One of the most admired schools is their

14
International school in Mumbai as ranked as no 1 across all categories. Attention to girls has not
lagged. Financial support & infrastructure facilities to schools for girl’s education have been
provided.

Sanitation & Healthcare -scientific disposal of wastes is regularly carried out at various project
sites of RIL.

Reliance Foundation has several hospital & one is coming up which is bench marked with the
best in the world with state of art infrastructure facility& information systems.

In promoting sports & sportsmen RIL has instituted scholar for aspiring Indian sports person for
full time training & coaching in various fields of sports.

Trust for Rural development set up fifteen years back which created facilities in around 8000
villages in the state of Gujarat covering roads, buildings, drinking water facilities, community
halls, Check Dams etc. A comprehensive water supply infrastructure was recently provided in
some villages in state of Gujarat. In addition to above RIL has done commendable work in
response to natural disaster like cyclone earth quake etc.Training has been provided to village
folk especially women to create livelihood support. Village community members are engaged in
maintenance work in various projects as skilled, semiskilled and unskilled labour.

Reliance foundation has a comprehensive approach towards sustainability development with five
pillars of rural transformation discussed above namely, education, health, urban renewal, arts,
culture & heritage. Since 2010 another program by the name RFBIJ is bridging the rural urban
divide by supporting the marginal farmers ensuring livelihood & removal of poverty. This also
aims at contributing towards conservation of nature & promoting sustainable farming practices.

Other initiatives are RF Information services, Mobile health program, RF drishti programs for
improving lives of visually impaired. Some of the other noteworthy activities under CSR of RIL
are The Dhirubai Ambani Scholarship Scheme, Sports for development (Youth Basketball
program in India).Disaster Response program, and Environmental Sustainability program-Soil &
water conservation measures, planting of sampling, biogas plants & solar lamps.

Commendable aspect of commitment of RIL business house is that in the last five years CSR
expenditure has grown about five fold from initial expenditure FY10-11 amounting to about 200
crores. This speaks volume about the philosophy of RIL to achieve excellence in improving all
the three aspects of business namely balance of economic, social and environment imperatives.

Additional Exciting Information

 India has been ranked as most eco-friendly consumer in the world in the survey
conducted National Geographic topping the consumer green index.

15
7.0 CSR as a Strategy

As mentioned elsewhere at several places in this paper corporate strategy was deemed to be a
tool in hand of enterprise to maximise revenue and profits but of late enlightened giant business
establishments have developed approaches to have a strategic choice resulting in both high
yielding outcomes for the organisation as well as efficient implementation of CSR. To efficiently
evolve successful CSR strategies the enterprise has to determine organisational competences and
social result and secondly examine threats and opportunities and key implementers. This means
CSR is an ongoing process requiring continuous monitoring of business environment and intra-
inter relationships. Five critical dimension of corporate strategy for successful implementation of
CSR process are Centrality, Specificity, Proactively, Voluntarism & Visibility.

8.0 Moral Management of CSR

The corporate world at the early stages started businesses with the sole responsibility to
maximise financial returns to its stakeholders. The concept gradually refined and broadened with
the social activist and thought readers advocating social legislation. Several regulatory legal
bodies who established public policies thereby officially recognising the environment, the
employees and the consumers as significant and legitimate stakeholders. Corporate had to
balance their commitment simultaneously to the owners and stakeholders who claimed both legal
and ethical rights. To reconcile obligation to shareholders with other competing groups claiming
legitimacy this involved establishing goals of business wherein ethical /moral aspects of business
where to be related to the economical and legal aspects of business.

Our goal to study CSR from ethical cum moral component we have to isolate it from economic
cum legal aspects and simultaneously relate it to the overall business framework. As early as
1960 academics and practitioners’ suggested that CSR refers to businesses “Decision and action
taken for reason at least partially beyond the firms direct economic and or technical interests”
.Some experts later on argued CSR refers to the “Problems when a corporate enterprise casts its
shadow on the social scene and ethical principles that ought to govern the relationship between
the corporation and society”. In seventies a three concentric circle approach defines CSR .The
core circle- innermost included basic economic functions of growth, products and jobs. The
immediate (intermediate circle) included the economic functions that must be exercised with the
sensitive awareness of changing social values and priorities. The outer circle outlined the
suggested responsibility that businesses must shoulder so as to become actively involved in
improving social environment. The business responsibility focussed extensively on business
obligation and motivation overlooking the business performance. A social responsiveness
movement ensued to correct this ambiguity. To reconcile the firms economic orientation with
social orientation a comprehensive definition of CSR evolved. This gave birth to a four part
concept of CSR namely corporation besides economic and legal obligation has also ethical and

16
discretion (philanthropy) responsibility as well. A pyramid covering for part prospective came
into existence.

Table 4 in the annexure depicts economic legal components of CSR.

A new term known by the name Corporate Social Performance (CSP) has emerged as an
inclusive and global concept to cover CSR, responsiveness and all socially beneficial activities of
business. In CSP firms must formulate and implement the social goals and programs as well as
integrate ethical sensitivity into all decision making, policies and actions.CSP includes quantity,
quality, effectiveness and efficiency of business. It therefore emerges that four kind of social
responsibility constitute CSR i.e. the economical, legal, ethical and philanthropy. These four
components of CSR are depicted as a pyramid and are closely considered as under:

 Economic Responsibility-Businesses as economic entities created to provide goods and

services to social members is a historical fact. Its principle role was to produce goods and
services needs of the consumer and make acceptable profits in the process. Gradually
profit motive got transformed into its maximisation and all other responsibilities got
subdued. Fig 1 above characterises the economic and legal responsibilities.
 Legal Responsibility-Apart from social sanction to the businesses to operate according
to profit motive society expects that businesses will comply with laws and regulations
enacted by various components of the Govt. In this social contract between business and
society firms are expected to pursue their economic mission within the framework of the
law. Legal responsibilities reflect a view of codified ethics embodying basic notions of
fair operation thus while as economic component forms the foundation of business next
layer in the pyramid is the legal aspect. These two coexisting responsibilities (economic
and legal) are the fundamental precepts of free enterprise system.
 Ethical Responsibility-Economic and legal responsibilities embody ethical norms about
fairness and justice. But ethical responsibilities also embrace those activities and
practices that are expected or prohibited by societal members though not codified into
law. These responsibilities cover standards, norms, fair practices regarded by consumers,
employees, shareholders and communities .Expectation that reflect a concern for what
consumers, employees, shareholders and communities regard as fair, just and protecting
share holders moral rights. It is common knowledge that ethical values existed much
before laws and regulations were enacted. Accordingly existing ethical values imparted
higher standard of performance than currently required by laws. Ethical expectation
emanating from social groups mean a better ethical performance by consideration of great
ethical principles of moral philosophy (such as principles of rights, justice and
utilitarianism).Ethical responsibility is depicted as a next layer of CSR pyramid resting on
legal responsibility thereby pushing the legal responsibility category to expand and
simultaneously placing higher expectation on businesses to operate above the law.

17
  Philanthropic Responsibility-Society expects that actions of businesses should appear to
be good corporate citizens. These actions should promote human welfare and goodwill.
Business Philanthropy should include business contribution of financial resources and or
executive time. While as philanthropy is not expected to be ethical or moral sense
beneficiaries desire firms to contribute money ,facility and human time to humanitarian
causes but they do not regard the firms unethical if they don’t provide the desired level-
that is to say philanthropy is more discretionary or voluntary. Philanthropy and ethical
responsibility differ in the sense that the society regards CSR to include philanthropy
contributions as desirable but actually less important than other three categories of CSR.
The CSR pyramid in fig 1 in the annexure which portraits four components of CSR
begins with basic building block notion that economic performance under grids all else.
Simultaneously since law is societies codification acceptable and unacceptable behaviour
next responsibility of business is to be ethical.

8.1CSR and Organisational Stakeholders:

Stakeholders may be described as those groups or persons who have a stake, a claim or
interest in the operations and decisions of the firm for example legal claim held by owner of
the business or employee of the business or customer of the business. The claim could be
nature of explicit or implicit contract. When a group asserts a right to be treated fairly or with
due process or that its opinions be taken into consideration in a business decision .This could
be deemed as a moral claim. In these cases there could be many stakeholders like
shareholders, consumers, employees, suppliers, social activists etc. Two vital criteria are
adopted to decide the claim of stakeholders. These are legitimacy of claim or the power of
the claimant. For example from the CSR point of view legitimacy may be the most important
while as power may be important from point of view of management efficiency. With above
mentioned prospective we can think that stakeholders management is a process by which
managers reconcile their own objective with the claim and expectation being made by them
on various stakeholders. In other words management has to ensure that the firms primary
stakeholders are helped to achieve their objectives while as other stakeholders are simply
satisfied. This win-win situation does not always prevail since a legitimate and desirable goal
for management is to pursue to protect its long term interest. Main functions of stakeholder
management are

18
  Describe – who are our stakeholders?
 Understand-what are their stakeholders.
 Analyse-Opportunities and challenges are presented by stakeholders.
 What-CSR responsibilities does management have to stakeholders (Ref Fig1 CSR
Pyramid).
 What strategies, actions, decision need to be taken?
 Manage-With regards to item 4 above a conceptual framework is presented as
stakeholder /responsibility matrix in Table 5 in the annexure.

The manager that has to analyse the situation will develop a significant descriptive
and analytical database to be used for stakeholder management. The result of the
analysis helps to develop priorities in making both long and short term decisions
involving multiple stakeholders’ interest.

8.2 Moral Management and stakeholders

In order to study the link between the firm’s ethical responsibility and stakeholder group ethical
component in CSR pyramid is discussed separately in the context of stakeholders. To identify
and describe ethical responsibilities ethical principle such as just, right and utilitarianism are
considered. Another way is to consider stakeholders in the context of major ethical approaches
namely

 Immoral Management
 A Moral Management and
 Moral Management

A profile indicating orientation of these three ethical types with emphasis on Moral Management
is discussed below.

Three Moral Types: Ethics and morality being synonymous in the organisation context, Immoral,
Amoral and Moral Managements are descriptive categories of three types of Managers.

 Immoral Managements is constituted by those managers whose decisions, actions and

behaviour indicate an active opposition to what is deemed right or ethical. Their decisions
are discordant with ethical principles and imply an active negation of what is moral.
These Managers care only for themselves or their organisation profitability and success.
To them legal standards are barriers or impediments. They feel management must
overcome difficulties to accomplish what it wants. Their strategy is to exploit
opportunities for personal or corporate gain.
 Amoral Management: Here managers are neither immoral nor moral. However they are
not sensitive to the fact that there decisions may be deleterious effects on others. They
lack ethical perception. They may be careless and inattentive to the implications of their

19
 actions on stakeholders. Their orientation is toward the letter of law as their ethical guide.
These managers consider ethics are only for our private lives and not for business. They
believe that business activity resides outside the sphere to which moral judgements apply.
 Moral Management: Ethical norms that adhere to higher standards of right behaviour are
employed. Moral Managers apart from for conforming to accept and high levels of
professional conduct exhibit exemplary leadership for ethical issues. Moral managers
want to be profitable within the confines of sound legal and ethical precepts like fairness,
justice and due process. The orientation of their approach is towards letter and spirit of
law (regarded as minimum ethical behaviour).They try to operate well above what the
law mandates. They seek and use sound ethical principle such as justice, rights,
utilitarianism. Moral managers assume leadership positions for their companies when
ethical dilemmas arise.

Orientation towards Stakeholders

Fig 6 a, b, c, d and shows how three moral types of management discussed above, profile
their orientation toward stakeholder groups, owners and employees and customers and
local community respectively.

9.0Conclusion

Balancing of social, economic and the environmental imperatives aspect of CSR (triple bottom
line approach) should be main focus area of the CSR activities of the companies.

 RIL is regarded as most promising private sector Company in CSR .They have allocated
an expenditure 3.24% after taxes which is higher than the stipulated Company act norms.
It has annual revenue of 4 lac crores a year back spending more than 1000 crores on CSR
activities.RIL along with Tata motors & Tata steel have been adjudged as the most
admired companies for their CSR initiatives by Nelson survey. Being a private
organisation headed by one of the largest share holder’s decision making is quicker and
follow up is persuasive till results are reached.
 NTPC has constraints of revenue and profit constraints resulting in low spending on CSR
activities besides being guided by standing instructions of Govt. on PSUs to ensure
control on expenditure. There is wide difference in the corporate culture of a PSU vis-à-
vis a private enterprise. Decision making is relatively slower because of cumbersome
procedures.
 Since CSR practices are relatively young in India they have not only to catch up with
global practices but also try to keep up with their pace.

9.1Findings

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  Well established rich businesses have to go an extra mile to ensure that CSR is
implemented honestly, rigorously and on time.
 A better public image with the greater social involvement will result in creation of good
will for the company and enhance the brand equity resulting in increased revenue.
 Authorities controlling PSUs may have to modify their procedures to ensure that these
units work as efficiently as private counterparts.

9.2Limitation

 Excepting for large business houses the information and relevant regarding of private
enterprises is not readily available.
 The hierarchy of HR- delegation of powers to be exercised by decision makers is not in
tune with the requirements to efficiently implement CSR.

9.3Significance of study:

 For policy makers it throws an opportunity to invest in CSR activities in most economical
manner so as to get best results in shortest possible time.
 Investment to be made in pursuits which result in lifetime returns to the beneficiary like
education ,skill development, health care(Thereby enhancing productivity)
 Promotion of activities ensuring environmental protection.
 Bringing people belonging to BPL and other poor categories into the mainstream.
 Improved HRD development and better foreign investment environment.

10.0Recommendations

 Continuous measurement & evaluavation in CSR activities to ensure both direct and
indirect benefits like savings, beneficiary satisfaction, drop in employee turnover.
 Regular review of CSR activity with a view to find pitfalls and neglected areas.
 NGOs to be increasingly involved to act as collaborators to efficiently implement CSR
activities
 Continuous innovation to be resorted to promote efficiency and better strategy for CSR
actions.

21
References

Books

Bowen Social responsibilities of a businessman (New York Harper & Row)

Freeman Strategic Management: A stakeholders Approach (Pitman)
Fredrick Growing concern over business responsibility(C M Review)

Other Sources

A study on Corporate Social Responsibility in Indian Organisation: An Introspection by Prabhakar & Mishra –

Ryerson University Toronto.

Corporate Social Responsibility-A case study of Tata Group ISSN-2278-487X-AK Srivastava & others

CIL policy for CSR

CSR –Wikipedia, the free encyclopaedia.

CSR-Voluntary Guidelines

Handbook on corporate social responsibility by CII.

Latest Annual Statement of Chairmen to shareholders of HUL AND ITC.

Public Sectors role in strengthening Corporate Social Responsibly –A Baseline Study –Tom Fox, Halina Ward &
Bruce Howard – The World Bank.

The pyramid of Corporate social responsibility: Towards the goal management of Organisational stakeholders-
Archie.B .Carroll

RIL annual report 13-14

www.ril.com

www.ntpc.co.in.
_____________________________________________________________________________________

22
 Annexure 1
PSU Activity List

 Fixing business standards, framing rules for public participation and ensuring
compliance.
 Framing fiscal incentives for CSR activities.
 Engagements and Initiatives-at intergovernmental and international level.
 Policy goals and overall strategy to be framed for private sector action.
 Voluntary CSR initiatives-encouraging thereof.
 Interdepartmental coordination across various agencies for promotion of CSR.
 Industry and civil society coordinated actions.
 Promoting PRO-CSR activities for consumer choice/export promotion/market
stipulation.
 Promoting interest of stakeholder groups.
 CSR agenda for local, regional, national context-boundary setting.
 Partnerships – Intergovernmental-businesses-civil society
 Business linkages-CSR activities in Public sector expenditure.
 Ensuring and encourage responsible investment and loans.
 Judgemental study of good practices-Collating and disseminating on information
thereof and encouraging replication.
 Informing CSR to stakeholders and companies.
 Informing the international CSR debate about local, regional and national CSR
context.
 Capacity building to meet the external CSR requirements.
 Supporting civil society to drive CSR.
 Awareness program for Stakeholders (businesses/consumers/employees/regulators).
 Facilitating dialogues among various stake holders.
 Giving and getting political support and official endorsement to CSR initiatives.
 Highlighting good practices of individual and worth mentioning companies.

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 Annexure 2

Reproduction of Guidelines Ministry of corporate Affair Govt. of India

Fundamental Principle

Each business entity should formulate a CSR policy to guide its strategic planning and provide a
roadmap for its CSR initiatives which should be an integral of overall business policy and
aligned with its business goals. The policy should be framed with the participation of various
level executives and should be approved by the Board.

Core Elements

The CSR policy should normally cover following core elements

1 Care for all stakeholders

The companies should respect the interest of ,and be responsive towards all stakeholders,
including shareholders ,employee, customers ,suppliers, project 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 wherever they occur.

2 Ethical Functioning

Their governance systems should be underpinned by ethics, transparency, and accountability.

They should not engage in business practices that are abusive, unfair, corrupt, and all anti-
competitive.

3 Respect for workers right and welfare

Companies should provide a workplace environment that is safe, hygienic and humane and
which upholds the dignity of employees. They should provide all the employees with access to
training and development of necessary skills for career advancement, on an equal 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

24
system, should not employ child or forced labour and provide and maintain equality of
opportunities without any discrimination on any grounds in recruitment and during employment.

4 Respect for human rights

Companies should respect human rights for all and complicity with human right abuses by them
or by third party

5 Respect for Environment

Companies should take measures to check and prevent pollution, recycle, manage and reduce
waste, should manage natural resources in a sustainable manner and ensure optimal use of
resources like land and water, should pro actively respond to the challenges of climate change by
adopting cleaner production methods, promoting efficient use of energy and environmental
friendly technologies.

6 Activities for social and inclusive development

Depending upon their core competency and business interest, Company should undertake
activities for economic and social development of communities and geographical areas
particularly in vicinity of their operations. These could include education, skill building,
livelihood of people, health, cultural and social welfare etc particularly targeting at this
advantaged sections of society

Implementation Guidance

1The CSR policy of the business entity should provide for an implementation strategy which
should include identification of projects/activities, setting measurable physical targets with
timeframe organisation mechanisms and responsibilities, time schedules and monitoring.
Companies may partner with local authorities; business association and civil society / Non govt.
organisations. They may influence the supply chain for CSR initiative and motivate employees
for voluntary effort for social development. They may evolve a system of need assessment and
impact assessment while undertaking CSR activities in a particular area. Independent evaluation
may also be undertaken for selected projects / activities from time to time.

2 Companies should allocate specific amount in their budget (2% of profits) for CSR activities.
This amount may be related to profit after tax, cost of planned CSR activities or any other
suitable parameter.

25
3 To share expenses and network with other organisations the company should engage with well
established and recognised programmes/platforms which encourage responsible business
practices and CSR activities. This would help the companies to improve on their CSR strategies
and effectively project the image of being socially responsible.

4 Companies should disseminate information on CSR policy, activities and progress in a

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

Earlier in this study we had projected a comprehensive picture of the CSR activity of one PSU
NTPC and one leading private enterprise RIL. The latest seventieth annual report of the year
ending 2015 of M/s Larsen and Tubro which claims to have attained Global bench marks for
various aspects of its businesses is worth being exhibited as for its latest CSR in action is
concerned the same is being reproduced as per Appendix 3

Appendix 3

Extracts of Corporate Social Responsibility report of M/s L&T for the year 2104-15

CSR no matter how well intentioned, runs the risk of diffusion – of trying to run too many
programs, do too many things, too soon. Larsen & Tubro has therefore narrowed its focus to a
single theme; building India social infrastructure. Based on key criteria a few villages in water
stressed district around the country and more are being identified.

Through its integrated community development L7T partnered with the community and
addressed issues of water and sanitation, education, health and skill building. Active participation
from the community is sought every step of the way, breaking down illusionary differences
between “us” and “them” between experts and dependent villagers awaiting relief.

Communities pledged their support through “Shram Dhan”(Voluntary Service).They agreed to

partner L&T in implementing projects and most importantly assumed ownership of the plan.
This would ensure that the programmes are sustained all the way to success.

CSR in Action

At L&T, we believe it is imperative that a company’s social responsibilities transit from lofty
thought, emotional prose and silk presentation to tangible action with measurable benefits. The
well being of the less privileged of our country is far too important to be lost in the translation of
plans into performance.

So we asked ourselves a few simple, specific questions.

26
  Did our programmes last year improve access to water in summer for villagers in Talasari,
Maharashtra and in Rajpura, Punjab?
 How much water and energy do our plants consume?
 And how will plans for next year improve performance further?

The answers to these questions are real yardsticks of success. For us if it is not CSR on the
ground, it is not CSR at all.

Larsen & Tubro has CSR department at Mumbai supported by units around the country .Larsen
& Tubro public charitable trust further supplements the efforts. Our corporate social
responsibility policy is endorsed by the group chairman. The company’s sustainability and CSR
organisation structure enjoys board level representation. The following write up presents CSR in
Action

Where will the next Einstein come from?

L&T does not believe genius limits itself to meet little demographic brackets. The next Einstein,
the next Homi Bhabha could well be from disadvantaged community far from metropolitan
centres. Our responsibility then is to ensure that the high road of opportunity is open to all.

L&T set us a science centre at the Ondipudar Boys higher Secondary School in Coimbatore. It
provides hands on science education for the underprivileged and acts a hub of science learning. It
will also act as a resource centre, teacher training centre and venue for project based an
integrated learning.

Balwadis L&T has set up over hundred Balwadis in partnership with NGOs across the country.
In addition to conventional responsibility of looking after health and nutrition these provide
enriching learning environment.

Campaign against AIDs .An ART centre built and operated by L&T is now owned by Municipal
Corporation of Greater Mumbai.

Water Provision A power plant at Rajpura Punjab provides water to the needy farmers.

Larsen Tubro employees render voluntary services and also respond to other social needs.

Larsen Tubro believes in the three Rs of sustainability viz reduce, reuse and recycle.

In addition Larsen Tubro has fourth R- rethink.

27
Table 1-Roles – A Public Sector Engagement

Mandating Command control legislation, regulation & inspection,Penalities and rewards

Facilitating Enabling legislation, funding support, Incentives & awareness, capacity
building and Market simulation

Partnering Combined resources and Engage stakeholder

Endorsing Offer political support and Publicity

Table 2-Activities – A Public Sector Engagement

Theme Mandating Facilitating Partnering Endorsing
Compliance with Defining min std, setting Tax information, Build capacity through Publicity & political
standards goals, enforcing & good practices, multilateral agencies & support.
inspection. propogate civil society.
performance, and
civil society support.
Public Policy Reforms, political Public policy Forum debates To include
finance, setting policies processes consistent participation. representatives of
for voluntary action & with societal businesses.
disclose payment to priorities.
public bodies.
Corporate Governance Regulation, laws & Help to implement Widen stakeholder Best demonstrated
codes. international code. practices.
practices.
Investment FDI guidelines & Linking investment PPP (Private public Indicators & metrics &
sovereign loan opportunities to partnership). civil society initiative.
guarantees. various policies.
Philanthropy & Corporate Contributions Tax incentives, bank PPP (Private public Publicise corporate
Community scheme & league partnership). donations.
development tables.
Stakeholders Licensing for stake Civil society Facilitating dialogue & Support significant
involvement holder consultation engagement support stakeholder processes multi stakeholder
& defending processes
stakeholder’s interest.
Pro-CSR Activity A) Mandating a) Export initiatives, a) Govt-Industry A) Public procurement,
a)For production & environmental taxes & capacity building initiatives in capacity Labelling schemes
consumption c&c for innovation. ,advisory services, development & extra.
b)Certification b) Environmental. public procurement, guidelines. B) Systems approaches
c)Reporting c) Reporting. support CS actions& b) Standard setting and practices.
Tax incentives process. c)commending
b) Capacity building, c) Multi stakeholder reporters
BB partnering, public dialogue on guidelines,
procurement,
regulatory incentives
& voluntary
certification.
c) Voluntary
reporting.
Multilateral Processes Implementing guidelines Capacity building & Negotiating Guidelines.
through legislation. technical support. agreements and shared
monitoring

28
Table 3 Public Sector Engagements

Propellers Impediments
International Policy Processes  Weak capacity to engage in
 Inter Governmental framework Negotiation/Implementation.
 Regional Inter Governmental  Lack of take up of issues
Cooperation  Insufficiency of engagement with
 Multilateral guidelines application processes and guidelines

Trade/Investment Promotion  Insufficiency in awareness of

 Pro-CSR export opportunities green/ethical market opportunities.
 CSR Requirements introduction in  Insufficient capacity to equip
existing export markets. domestic industry.
 Policy to promote investment.  Capacity insufficiency in key
standard setting processes &
understanding of link between PSU
intervention on CSR & economic
competitiveness.
Maintain minimum standards  Insufficient capacity for
 Business & civil society to have a enforcement of standards and
playing field of social & wrong perception about
environmental standard for rewards voluntary/mandatory action.
 Weak enforcement through
traditional activities.  Weak civil society perception.
Partnership & civil Society demands  Both Financial and human resource
 Engagement to address complex insufficiency.
social/environmental issues.  Weak concern institutions.
 Domestic Civil society pressures to  Weak organised labour.
improve standards.
Consumer demand for sustainable goods  Lack of domestic consumer
and services demand.
Table 4-Economic legal components of CSR.

Economic Components(Responsibilities) Legal Components

 Performance to be consistent with  Firm to perform inconsistency with
maximising EPS. Govt. and law.
 Businesses to be committed to profit.  Firm to comply with regulations at
federal, state and local level.
 Maintenance of competitive position.  Business to be law abiding corporate
citizen.
 Maintenance of high level of operating  To be defined a successful firm it
efficiency. should fulfil legal obligations.
 To be a successful firm consistent  Firms good and services to meet
Profitability is required. minimum legal requirements.

29
 Table 5 Stakeholder /Responsibility matrix

Type of CSR
Stakeholder Economic Legal Ethical Philanthropic
Owner
Customer
Employee
Community
Competitors
Suppliers
Activist
Public
Others

Table 6a Orientation of 3 Moral types towards Stakeholders

Type of Management Owners/Shareholders-stakeholders

Immoral Management  Shareholders are given short shrift
Concealments from them is the operating
procedure.
 Focus is on maximising executive
benefits.

Amoral Management  Shareholders are minimally

accommodated. Their only reward is
profit. No thought is given to the ethical
consequences of decisions detrimental to
shareholders interest.
 Communication is restricted to
requirements of law.
Moral Management  Shareholder interest is primary factor.
All stakeholders’ claimants are treated in
fair and ethical manner. Board created
ethical committee protects shareholders
interests by applying code of ethics.

30
Table 6b Orientation of 3 Moral types towards Employee stakeholders

Type of Management Employee-stakeholders

Immoral Management  Employees are
exploited/manipulated for benefits
accruing to manager/Firms. Their
needs/rights/expectation is ignored.

Amoral Management  Employee’s treatment is restricted to

requirements of law. Focus is on
employee productivity rather than
satisfying their growing maturity
needs. They are seen as agents of
production but little attention is
drawn to remunerate them. They are
shown minimal respect. Rewards are
geared towards short/medium term
productivity.
Moral Management  Employees are regarded as human
resource to be treated with dignity
and respect.
Consultative/Participative
management style is adopted
generating mutual confidence and
trust. Employees rights (Due
process/privacy/freedom of speech
/safety) are considered in all
decisions

31
Table 6 c Three Moral Types –An orientation towards stake holder groups

Type of Management Customer-stakeholders

Immoral Management  Customers exploited for
personal/organisational gains with the
intention to cheat/deceive/mislead ethical
standards are ignored.
 Customer is taken advantage of in all
marketing decisions
Amoral Management  Management makes decisions with the
sole aim of profitability within the letter of
law without thinking through the ethical
consequences.
 Management is unfair from prospective of
customer focussing only on managements
rights and having no consideration of
ethical implications of interaction with
customers.
Moral Management  Customer viewed as equal partner in
transaction. Management gives fair value.
Full information, fair guarantee and
satisfaction to the customer thereby
liberally interpreting and honouring
customer rights.

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Table 6d Three Moral Types –An orientation towards local community-stake holder
groups.

Type of Management Local Community-stakeholders

Immoral Management  Exploits community by disregarding its
needs. Community resources usurped
without returns.
 Violates laws and ordinances to its own
advantage.
 Pollutes environment.
Amoral Management  Community and its resources are not taken
into account in decision making being
assumed to be irrelevant to management
decisions.
 Legal considerations are followed to
minimum extent.
 Least dealings with community and its
activities.
Moral Management  Community interest pursued behaving itself
as a leading citizen to motivate others, get it
involved and helps leading institutions
through philanthropic engagements.
 Regards community and company as
mutually interdependent.

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 Fig 1 CSR Pyramid

34

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