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MODULE 1
Corporate Social
Responsibility – Introduction
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EXAMPLE: Hitachi, with its global community activities and contributions, works
toward building strong relationships with its stakeholders and community
organizations. Hitachi provides both financial and volunteer support to non-profit
organizations, who work toward improving the quality of life in communities through
their programs and social contributions.
Hitachi activities in the U.S.A. demonstrate its corporate citizenship, and aim at
enriching the quality of life within society.
They have several North America CSR initiatives involving three areas of focus:
Communities, Education and Environment.
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CORPORATE SOCIAL RESPONSIBILITY AND
PHILANTHROPY
• Corporate philanthropy and corporate social responsibility are closely
related concepts in that philanthropy is a slice of the bigger corporate
social responsibility pie.
• When integrated into a company’s mission and used to guide a company’s
actions, corporate social responsibility can benefit the communities it
serves, the company itself and its employees.
• CSR & Philanthropy are part corporate communication and PR
function.
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Refer: https://www.slideshare.net/tresdsdsd/the-pyramid-of-corporate-social-responsibility
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Criterion for determining the social responsibility of business
No Single Formula: Every company has to decide for itself
There should be some incentives for social action: like tax benefit, Media reputation, Public image etc.
Financial performance of firms that are socially responsible are the same as those that are presumably
except at the margins
Social responsibilities are commensurate(equal to) with social power: More successful, more responsibility
Size and type of company matter: Size obviously a factor. E.g. GM has a huge responsibility because of its
power
The general direction of public policy should guide manager: Govt. should have guidelines
created…Companies must go beyond that. Many companies go beyond what’s required and have a social
mission
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Legal Implications:
What the Companies Act 2013 states:
The 2013 Act requires that every company with net worth of`500 crore or more, or
turnover of `1,000 crore or more or a net profit of `5 crore or more during any
financial year will constitute a CSR committee.
The CSR Rules state that every company, which ceases to be a company covered
under the above criteria for three consecutive financial years, will not be required to
(a) constitute the CSR Committee, and (b) comply with other CSR related
requirements, till the time it again meets the prescribed criteria.
Constitution of CSR committee
• The 2013 Act requires a company, which meets the CSR applicability criteria, to constitute a
CSR committee comprising three or more directors.
• The 2013 Act also states that out of these three directors, at least one director should be an
independent director.
• The CSR Rules state that a non-listed public company or a private company, which is not
required to appoint an independent director as per the 2013 Act/ Directors’ Appointment Rules,
can have its CSR Committee without an independent director.
• Also, a private company having only two directors on its board can constitute the CSR
Committee with the two directors.
• Some people argue that the CSR Rules are changing the requirements of the 2013 Act. Hence,
an issue arises whether a subordinate legislation can override the main legislation. However,
most people are likely to welcome the clarifications provided in the CSR Rules.
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CSR expenditure
In accordance with the 2013 Act, the board of each company covered
under the CSR requirement needs to ensure that the company spends, in
every financial year, at least 2% of its average net profits made during the
three immediately preceding financial years in pursuance of CSR policy.
Neither the 2013 Act nor the CSR Rules prescribe any specific penal
provision if a company fails to spend the 2% amount. However, the board,
in its report, needs to specify the reasons for not spending the specified
amount.
ASSIGNMENT 1
Explain any ten prestigious awards given for CSR
Submit within 5 days.
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- Huge and reputed companies have more
responsibility
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Self Exercise Questions:
1. What do you mean by Corporate social responsibility? Explain the scope of
CSR.
2. Define CSR. Give examples.
3. State the benefits of CSR.
4. Explain any ten prestigious awards given for CSR.
5. Discuss the divergent views on social responsibility.
6. Describe the areas of Social Responsibility.
7. Explain the legal implication on CSR.
8. What are the Criterion for determining the social responsibility of
business?
9. Elucidate the Carol's pyramid of CSR.
10. Describe the dimensions of CSR.
11. Discuss the challenges associated with CSR
12. Distinguish between ethics & CSR.
13. Write a note on role of media in CSR.
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