Corporate Social Responsibility (CSR)?

• 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.

• Engaging in CSR means that, in the ordinary course of business, a

company is operating in ways that enhance society and the
environment instead of contributing negatively to them.
• India is the first country in the world to make corporate social
responsibility (CSR) mandatory, following an amendment to the
Companies Act, 2013 in April 2014. Businesses can invest their profits
in areas such as education, poverty, gender equality, and hunger as
part of any CSR compliance.

• Amid the COVID-19 (coronavirus) outbreak, the Ministry of Corporate

Affairs has notified that companies’ expenditure to fight the pandemic
will be considered valid under CSR activities. Funds may be spent on
various activities related to COVID-19 such as promotion of healthcare
including preventive healthcare and sanitation, and disaster
management.
TYPES OF CSR
CSR is often broken into four categories:
1. environmental impacts,
2. ethical responsibility,
3. philanthropic endeavors, and
4. financial responsibilities.
Environmental Responsibility
Environmental responsibility is the pillar of corporate social responsibility rooted
in preserving mother nature. Through optimal operations and support of related
causes, a company can ensure that it leaves natural resources better than before
its operations. A company can pursue environmental stewardship through:
• Reducing pollution, waste, natural resource consumption, and emissions
through its manufacturing process.
• Recycling goods and materials throughout its processes, including promoting
re-use practices with its customers.
• Offsetting negative impacts by replenishing natural resources or supporting
causes that can help neutralize the company's impact. For example, a
manufacturer that deforests trees may commit to planting the same amount or
more.
• Distributing goods consciously by choosing methods that have the least impact
on emissions and pollution.
• Creating product lines that enhance these values. For example, a company that
offers a gas lawnmower may design an electric lawnmower.
Ethical responsibility
Ethical responsibility is the pillar of corporate social responsibility rooted in acting
in a fair, ethical manner. Companies often set their own standards, although
external forces or demands by clients may shape ethical goals. Instances of
ethical responsibility include:

• Fair treatment across all types of customers regardless of age, race, culture, or
sexual orientation.
• Positive treatment of all employees including favorable pay and benefits in
excess of mandated minimums. This includes fair employment consideration for
all individuals regardless of personal differences.
• Expansion of vendor use to utilize different suppliers of different races, genders,
veteran statuses, or economic statuses.
• Honest disclosure of operating concerns to investors in a timely and respectful
manner. Though not always mandated, a company may choose to manage its
relationship with external stakeholders beyond what is legally required.
Philanthropic Responsibility
Philanthropic responsibility is the pillar of corporate social
responsibility that challenges how a company acts and how it
contributes to society. In its simplest form, philanthropic responsibility
refers to how a company spends its resources to make the world a
better place. This includes:
• Whether a company donates profit to charities or causes it believes
in.
• Whether a company enters into transactions only with suppliers or
vendors that align with the company philanthropically.
• Whether a company supports employee philanthropic endeavors
through time off or matching contributions.
• Whether a company sponsors fundraising events or has a presence in
the community.
Financial Responsibility
Financial responsibility is the pillar of corporate social responsibility that ties
together the three areas above. A company might make plans to be more
environmentally, ethically, and philanthropically focused; however, it must
back these plans through financial investments of programs, donations, or
product research. This includes spending on:

• Research and development for new products that encourage sustainability.

• Recruiting different types of talent to ensure a diverse workforce.
• Initiatives that train employees on DEI, social awareness, or environmental
concerns.
• Processes that might be more expensive but yield greater CSR results.
• Ensuring transparent and timely financial reporting including external
audits.
Examples of Corporate Social Responsibility

Starbucks
• Starbucks (SBUX) has long been known for its keen sense of corporate
social responsibility and commitment to sustainability and community
welfare. In its 2022 Environmental and Social Impact Report, the
coffee giant highlights taking care of its workforce and the planet
among its CSR priorities. Starbucks points to its investments in its
employees through stock grants and providing additional medical,
family, and educational benefits. In terms of environmental
sustainability, the company's goals include achieving 50% reductions
in greenhouse gas emission, water consumption, and waste by 2030.
Tata Group
• The Tata Group conglomerate in India carries out various CSR projects, most
of which are community improvement and poverty alleviation programs.
Through self-help groups, it has engaged in women empowerment
activities, income generation, rural community development, and other
social welfare programs. In the field of education, the Tata Group provides
scholarships and endowments for numerous institutions.

• The group also engages in healthcare projects, such as the facilitation of

child education, immunization, and creation of awareness of AIDS. Other
areas include economic empowerment through agriculture programs,
environment protection, providing sports scholarships, and infrastructure
development, such as hospitals, research centers, educational institutions,
sports academy, and cultural centers.
Ultratech Cement
• Ultratech Cement, India’s biggest cement company is involved in
social work across 407 villages in the country aiming to create
sustainability and self-reliance. Its CSR activities focus on healthcare
and family welfare programs, education, infrastructure, environment,
social welfare, and sustainable livelihood.

• The company has organized medical camps, immunization programs,

sanitization programs, school enrollment, plantation drives, water
conservation programs, industrial training, and organic farming
programs.
Mahindra & Mahindra
• Indian automobile manufacturer Mahindra & Mahindra (M&M)
established the K. C. Mahindra Education Trust in 1954, followed by
Mahindra Foundation in 1969 with the purpose of promoting
education. The company primarily focuses on education programs to
assist economically and socially disadvantaged communities.

• Its CSR programs invest in scholarships and grants, livelihood training,

healthcare for remote areas, water conservation, and disaster relief
programs. M&M runs programs such as Nanhi Kali focusing on
education for girls, Mahindra Pride Schools for industrial training, and
Lifeline Express for healthcare services in remote areas.
CII Launches Guidelines on Integrity and Transparency in
Governance and Responsible Code of Conduct
1. Integrity, Ethics and Governance
2. Responsible Governance and Citizenship
3. Role of High performing Board
4. Balancing Interests of Stakeholders
5. Independent Directors and Women Directors
6. Safe Harbours for Independent Directors: Easier settlement norms and amnesty provisions
7. Risk Management
8. Succession Planning
9. Role of the Audit Committee
10. Improving audit quality, and enhancing accountability of third parties who play a fiduciary role
11. Disclosure and transparency related issues
12. Vigil Mechanism
13. Stakeholder, Vendor and Customer Governance
14. Investor Activism
15. Start-ups and MSMEs
UNETHICAL PRACTICES RELATED
TO
• MARKETING
• INFORMATION TECHNOLOGY
• FINANCE
• ACCOUNTING
What are the different forms of
whistleblowing?
Internal channels
• Most whistleblowers are internal whistleblowers, who report misconduct on a fellow employee or superior
within their company through anonymous reporting mechanisms often called hotlines. Within such
situations, circumstances and factors can cause a person to either act on the spot to prevent/stop illegal
and unacceptable behavior, or report it. [9] There are some reasons to believe that people are more likely to
take action with respect to unacceptable behavior, within an organization, if there are complaint systems
that offer not just options dictated by the planning and control organization, but a choice of options for
absolute confidentiality.
• Anonymous reporting mechanisms, as mentioned previously, help foster a climate whereby employees are
more likely to report or seek guidance regarding potential or actual wrongdoing without fear of retaliation.
The coming anti-bribery management systems standard, ISO 37001 includes anonymous reporting as one
of the criteria for the new standard.
External channels
• External whistleblowers report misconduct to outside people or entities. In these cases, depending on the
nature of the information, whistleblowers may report the misconduct to lawyers, the media,
law enforcement or watchdog agencies, or other local, state, or federal agencies. In some cases, external
whistleblowing is encouraged by offering monetary rewards.
Third party channels
• Sometimes organizations use external agencies to create a secure and
anonymous reporting channel for its employees, often referred to as a
whistleblowing hotline. As well as protecting the identity of the whistleblower,
these services are designed to inform the individuals at the top of the
organizational pyramid of misconduct, usually via integration with specialised
case management software.

• Implementing a third party solution is often the easiest way for an organization
to promote compliance, or to offer a whistleblowing policy where one did not
previously exist. An increasing number of companies and authorities use third
party services in which the whistleblower is anonymous also towards the third
party service provider, which is made possible via toll free phone numbers
and/or web or app-based solutions which apply asymmetrical encryption.
Audit committee in corporate governance

• The audit committee plays a vital role in corporate governance

because they hold the board and the organization accountable in
almost every area, from internal and external audits to financial and
risk management. The audit committee and management must
maintain the internal controls and governance that ensure that the
financial reporting process is accurate and effective.
Role of the Audit Committee
While the audit committee is responsible for performing the audit, they are also responsible for other essential tasks
relative to the audit and the corporation’s internal control system. Audit committee responsibilities encompass many
oversight responsibilities, including fraud prevention, ethics and compliance, oversight of the independent auditor and
involvement with external communications. Additional functions of an audit committee include:

• Risk Oversight: The audit committee ensures that the company’s risk management plan is well-defined and effective.
Management should discuss the company’s policies and guidelines that govern risk management. Both parties should
be knowledgeable about major financial risk exposures and the steps managers should take to monitor and control
risks.
• Ethics and Compliance: This is an important function of the audit committee because it requires members to address
allegations or violations of the code of ethics promptly and consistently. Audit committees must protect individuals
who come forth with reports of questionable behavior by employees. The company must have a fair process for
addressing violations of ethics or compliance, which should include regular compliance audits.
• Oversight of the Independent Auditor: An essential part of the audit committee's duties is to be responsible for
appointing, compensating and overseeing the duties of the independent auditor. This responsibility extends to
resolving any disagreements with management. Audit committee members should meet with the independent
auditor at least quarterly.
• Oversight of Internal Audit: Audit committee members’ roles require them to oversee and make suggestions for
improving the company’s internal operations and processes. Proper oversight of the internal audit requires companies
to enlist the help of independent internal auditors to ensure the integrity and transparency of the processes.
• Facilitate External Audit: During the annual audit, the audit committee meets separately with external
auditors to examine matters that need to be discussed privately. It’s important for audit committees to
work toward preventing fraud. Auditors with forensic audit expertise are adept at detecting willful
accounting errors and anomalies. Because of their unique relationship with external auditors and the
importance of their duties, audit committees must have authority over their budgets and for managing
external auditors.
• Manage Financial Reporting and Controls: The role of the audit committee requires them to be
familiar with the processes and controls for financial reporting and internal controls. This requires
working with members of management, independent auditors and internal auditors to acquire
adequate knowledge about the company’s financial reporting and internal controls. The committee
uses this information to determine whether the company’s financial reporting processes are designed
and operating effectively.
• Review of Filings and Earnings Releases: Financial analysts, ratings agencies and other financial
experts rely on audit committees to oversee earnings releases, SEC filings containing financial
information and other financial reports to ensure they’re transparent and fair. Audit committee teams
are also responsible for working with legal teams to ensure that disclosures are accurate and complete
and include reporting on financial trends
• Provide Recommendations to Management: The audit committee should allow management
adequate time to review and comment on the audit committee’s annual audit findings. An important
function of an audit committee is to provide management with an audit committee report and final
management letter that offers recommendations on how to comply with best practices for financial
reporting and internal controls.