UNIT 1

Introduction of CSR

Meaning

Corporate social responsibility, or CSR, refers to the belief that businesses have an obligation
to society beyond their commitments to their stockholders or investors. In addition to
generating profits, companies are expected to have some responsibility to stakeholders
such as employees, customers, communities, and the environment. CSR includes
corporations being economically responsible, improving labor practices, embracing fair
trade, mitigating environmental damage, giving back to the community, and increasing
employee satisfaction.

This guide provides an overview of CSR. It is not intended to be comprehensive; rather, the
goal of this guide is to provide credible starting points for research, and to assist in further
study of this topic.

Corporate Social Responsibility is a management concept whereby companies integrate

social and environmental concerns in their business operations and interactions with their
stakeholders. CSR is generally understood as being the way through which a company
achieves a balance of economic, environmental and social imperatives (“Triple-Bottom-
Line- Approach”), while at the same time addressing the expectations of shareholders and
stakeholders. In this sense it is important to draw a distinction between CSR, which can be
a strategic business management concept, and charity, sponsorships or philanthropy. Even
though the latter can also make a valuable contribution to poverty reduction, will directly
enhance the reputation of a company and strengthen its brand, the concept of CSR clearly
goes beyond that.
“Social responsibility requires managers to consider whether their action is likely to promote
the public good, to advance the basic beliefs of our society, to contribute to its stability,
strength and harmony.” — Peter F. Drucker

Types of Corporate Social Responsibility

In general, there are four main types of corporate social responsibility. A company may
choose to engage in any of these separately, and lack of involvement in one area does not
necessarily exclude a company from being socially responsible.

1. 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 it leaves natural resources better than before its operations.
Companies often 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.

2. 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, though 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.
3. 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 it.

 Whether a company only enters into transactions 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 for
related events.

4. Financial Responsibility
Financial responsibility is the pillar of corporate social responsibility that ties together the
three areas above. A company make plans to be more environmentally, ethically, and
philanthropically focused; however, the company 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.

Scope of Corporate Social Responsibility:

1. Environment:

This area involves the environmental aspects of production, covering pollution control in the
conduct of business operations, prevention or repair of damage to the environment
resulting from processing of natural resources and the conservation of natural resources.
Corporate social objectives are to be found in the abatement of the negative external social
effects of industrial production, and adopting more efficient technologies to minimize the
use of irreplaceable resources and the production of waste.

2. Energy:
This area covers conservation of energy in the conduct of business operations and increasing
the energy efficiency of the company’s products.

3. Fair Business Practices:

This area concerns the relationship of the company to special interest groups.
In particular it deals with:
i. Employment of minorities
ii. Advancement of minorities
iii. Employment of women
iv. Employment of other special interest groups
v. Support for minority businesses

4. Human Resources:
This area concerns the impact of organizational activities on the people who constitute the
human resources of the organization.
These activities include:
i. Recruiting practices
ii. Training programs
iii. Experience building -job rotation
iv. Job enrichment
v. Wage and salary levels
vi. Fringe benefit plans
vii. Congruence of employee and organizational goals
viii. Mutual trust and confidence
ix. Job security, stability of workforce, layoff and recall practices
x. Transfer and promotion policies
xi. Occupational health

5. Community Development:
This area involves community activities, health-related activities, education and the arts and
other community activity disclosures.

6. Products:
This area concerns the qualitative aspects of the products, for example their utility, life-
durability, safety and serviceability, as well as their effect on pollution. Moreover, it
includes customer satisfaction, truthfulness in advertising, completeness and clarity of
labelling and packaging. Many of these considerations are important already from a
marketing point of view. It is clear, however, that the social responsibility aspect of the
product contribution extends beyond what is advantageous from a marketing angle.
Principles of CSR

Principle 1 – Businesses should conduct and govern themselves with Ethics, Transparency
and Accountability.
Principle 2 – Businesses should provide goods and services that are safe and contribute to
sustainability throughout their life cycle.
Principle 3 – Businesses should promote the well-being of all employees.
Principle 4 – Businesses should respect the interests of, and be responsive towards all
stakeholders, especially those who are disadvantaged, vulnerable and marginalised.
Principle 5 – Businesses should respect and promote human rights.
Principle 6 – Business should respect, protect, and make efforts to restore the environment.
Principle 7 – Businesses, when engaged in influencing public and regulatory policy, should
do so in a responsible manner.
Principle 8 – Businesses should support inclusive growth and equitable development.
Principle 9 – Businesses should engage with and provide value to their customers and
consumers.

The CSR is gaining importance because of the following reasons:

i. Public Expectations from the Enterprise –
It refers to the anticipations of the people associated either directly or indirectly with an
enterprise. The enterprise can exist peacefully, if it fulfills the needs, wants, and demands
 of the society. However, if an enterprise fails to live up to the society’s expectations, its
existence would become difficult. Therefore, an enterprise should respond to the society’s
needs if it wishes to remain in the business in the long run.

ii. Better Environment for Business –

It refers to providing a feasible environment for business operations of an enterprise. If the
society is satisfied with the business activities of the enterprise, it creates a favorable
environment for the enterprise.

iii. Good Public Image –

It helps an enterprise to gain more customers and better employees. Therefore, building and
maintaining public image helps in improving the performance of the enterprise.

iv. Responsibility with Power –

It acts as an important area that should be balanced properly. An enterprise enjoys a social
power as its decisions have an impact on the environment, consumers, employees, and
many other areas of the society. Therefore, any imbalance in the decisions may lead to a
negative effect to the welfare of the society.
Social responsibility of business with respect to different stakeholders

(1) Towards consumers: Responsibilities towards consumers include:

(a) Production of safe items by maintaining quality standards.
(b) To ensure a regular supply of goods and supply.
(c) To educate consumers regarding the use and content of the product.
(d) To refrain from profiteering. Adulteration, misleading advertisements and unfair and
unscrupulous trade activities.

(2) Responsibilities towards employees:

(a) Providing fair and reasonable compensation and benefits.
(b) Providing safe and good working conditions.
(c) To provide them opportunities for personal growth and development.
(d) Not to do favourtism and discrimination while appointing, promoting the employees.
(e) To give them the opportunity to participate in management and must respect their right
to form unions.

(3) Responsibility towards the share holders/ investors:

(a) To ensure the safety of investment and to maximise the wealth of the owners,
(b) To ensure fair and regular return on investment
(c) To give complete information regarding the financial position of the business.
(d) To make optimum utilisation of firms resources in the interest and for the benefit of
investors.
(4) Responsibility towards the government and community:
(a) To abide by rules, regulations and laws.
(b) To pay tax and duties on time.
(c) To give their required contribution in solving social problems.
(d) To co-operate in implementing government policies and plans.
(e) To have a good citizen and act according to the accepted values of the society.
(f) To protect the environment and maintain natural beauty.
(g) To preserve social and cultural values.
(h) To provide employment opportunities and help in the promotion of national
integration.
(i) Not to misuse or wastage national resources and conserve natural resources.

Sustainability and Stakeholders Management

Who is a stakeholder?

“Persons, groups and entities with a specific interest in an organisation. For a company, this
typically includes shareholders, suppliers, customers and employees.”
Sustainable management

Takes the concepts from sustainability and synthesizes them with the concepts
of management. Sustainability has three branches: the environment, the needs of present
and future generations, and the economy. Using these branches, it creates the ability of a
system to thrive by maintaining economic viability and also nourishing the needs of the
present and future generations by limiting resource depletion. From this definition,
sustainable management has been created to be defined as the application of sustainable
practices in the categories of businesses, agriculture, society, environment, and personal
life by managing them in a way that will benefit current generations and future
generations.

Sustainable management is needed because it is an important part of the ability to

successfully maintain the quality of life on our planet. Sustainable management can be
applied to all aspects of our lives. For example, the practices of a business should be
sustainable if they wish to stay in businesses, because if the business is unsustainable, then
by the definition of sustainability they will cease to be able to be in competition.
 Communities are in a need of sustainable management, because if the community is to
prosper, then the management must be sustainable. Forest and natural resources need to
have sustainable management if they are to be able to be continually used by our
generation and future generations. Our personal lives also need to be managed
sustainably. This can be by making decisions that will help sustain our immediate
surroundings and environment, or it can be by managing our emotional and physical well-
being. Sustainable management can be applied to many things, as it can be applied as a
literal and an abstract concept. Meaning, depending on what they are applied to the
meaning of what it is can change.

Concept of Charity

The Concept of Charity:

Charity is the act of extending love and kindness to others unconditionally, which is a
conscious act but the decision is made by the heart, without expecting a reward. When
Charity is carried out selflessly, it is a one-way act where a person gives but asks for
nothing in return.

It is this act of nature that makes it precious and soulful. There are people who believe charity
should begin at home but others believe it should originate from the heart. However,
charity originates from the heart as you feel the urge of giving, begins from home,
ultimately extending to others in the society.

Charity begins with the inward recognition of a need to show compassion to others whether
consciously or unconsciously. Everyone has problems, troubles, and griefs of some sort in
life but charity starts with those who learn to downplay their own problems, in order to
extend compassion, kindness, and love to help others. Hence some people set aside their
own pains to relieve the pain of others.
Purpose of Charity:

Charity is essential and therefore meant to be done for public benefit, relief and to provide
assistance to people at times of need in any part of the world, especially those who are the
victims of war, natural disaster, catastrophe, hunger, disease, poverty, orphans by
supplying them with food, shelter, medical aid, and other fundamental needs.

Such charitable purposes can gain momentum from advancing the education of young people
for the public benefit by making grants and awards to students in full-time education.
When considering poverty in the developing world, people feel deep sorrow but seem to
put no effort whatsoever to reduce or eradicate the problem. Poverty in today’s world has
turned out to be sinister and we lay passive towards the problem, therefore such attitude
has made us powerless to stop it.
Corporate Philanthropy

According to the Council on Foundations, corporate philanthropy refers to the investments

and activities a company voluntarily undertakes to responsibly manage and account for its
impact on society. Philanthropic investments and activities include: Money. Donations of
products.

Corporate philanthropy refers to the activities that companies voluntarily initiate to manage
their impact on society. Typically, corporate philanthropic activities include monetary
investments, donations of products or services, in-kind donations, employee volunteer
programs and other business arrangements which aim to support a social cause. While
some companies spearhead and operate corporate philanthropy programs themselves,
others may focus on advancing the work of local community organizations, nonprofit
organizations or other social initiatives geared toward improving society.

Corporate philanthropy involves a corporation or organization supporting the wellbeing of

others, typically through charitable contributions or donations.

It involves investments and actions which a company voluntarily undertakes. These actions
are to manage and account for their effect on society appropriately.

However, corporate giving programs need to move beyond a basic annual donation to a
favorite charity. It is becoming a crucial way to engage workers and further integrates
values into the culture.

6 Simple Steps to Create A Corporate Philanthropy Program

1. Determine which colleagues or team members will be in charge of the program.

2. Choose a philanthropic strategy that is in line with your organization's objective.
3. Identify and reserve funding for the program.
4. Create a detailed execution strategy.
5. Make a marketing strategy to promote your philanthropy.
6. To maximize the impact of your program, keep track of the metrics and assess them
frequently.

Top 7 Tips on Corporate Philanthropy To Boost Employee Engagement

1. Back them with corporate matching gift programs.

Many of us already have the best employee rewards and recognition programs in place. But
you can make them even more effective by incorporating a corporate matching gift
program.
2. Offer paid time off to volunteer.

When volunteerism is a part of a company's philanthropy, employee engagement can surge. It

is further enhanced by offering paid time off to employees who volunteer to participate in
charity events. It is also called VTO, which is short for 'volunteer time-off." Businesses all
over the world have realized that VTO is a great employee motivation strategy.

3. Encourage group volunteer activities.

Volunteering as a group is a wonderful way to engage employees, boost cooperation, and

bring everyone together. It can also help your team connect with the community and make
a meaningful impact on people's lives.

 For animal-loving groups, an activity to gather and distribute pet food for a month might
be a fun way to give back.
 Organizing a public area cleanup in your community is a fantastic way for teams who care
about the environment.
 Or you can host a creative and unique workplace fundraiser or organize some other
charity team-building activities. It can be a charity bikeathon or supporting a local youth
sports team.
 You can also organize a blood donation camp in your organization. Incentivizing the same
is a great way to give back.

4. Offer volunteer grants.

When a person takes time to volunteer, you can give monetary grants to an eligible non-profit
organization. These corporate philanthropy grants are usually distributed in one of two
ways:

1. A fixed amount per hour of volunteer service (for example, $10 per hour with a minimum
of 10 hours.)
2. Once an employee has volunteered for a given period; they are paid at a defined rate.
Like, say, $250 after 24 hours.
5. Invite employees to participate in the planning of the committee.

Your corporate philanthropy program supports your corporate social responsibility mission
and values. But to be a hit, it must also support causes that are meaningful to your
employees. It is only then that they are more likely to participate.
7. Celebrate its results.

Some employees may be unaware of their company's charitable giving program, community
involvement, or relevant aspects. It results in a lack of participation.

To enliven the engagement of all your employees, make use of your company's
communication channels.

Corporate Social Responsibility and Corporate Citizenship

The main elements of corporate citizenship are not very different from the concept of CSR
i.e., legal requirements, societal obligations, voluntary actions, values and ethics are
integrated along with a stakeholder view of the firm although environmental responsibility
which the key theme of CSR and sustainability are missing. The issues of implementing a
consistent set of universal hyper norms seem to be glossed in the literature.

What Is Corporate Citizenship?

Corporate citizenship involves the social responsibility of businesses and the extent to which
they meet legal, ethical, and economic responsibilities, as established by shareholders.

Corporate citizenship is growing increasingly important as both individual and institutional

investors begin to seek out companies that have socially responsible orientations such as
their environmental, social, and governance (ESG) practices.
Models of CSR in India
 UNIT-2

Models of CSR

1. Trusteeship model / Ethical Model

The origin of the first ethical model of corporate responsibility lie in the pioneering efforts of
19 th century corporate philanthropists such as the Cadbury brothers in England and the
Tata family in India. The pressure on Indian industrialists to demonstrate their
commitment to social development increased during the independence movement, when
Mahatma Gandhi
developed the notion of trusteeship, whereby the owners of property would voluntarily
manage their wealth on behalf of the people.

Gandhi’s influence prompted various Indian companies to play active roles in nation building
and promoting socio-economic development during the 20th century. The history of
Indian corporate philanthropy has encompassed cash or kind donations, community
investment in trusts and provision of essential services such as schools, libraries, hospitals,
etc. Many firms, particularly family-run businesses, continue to support such
philanthropic initiatives.

Gandhi's economic ideas were part of his general crusade against poverty, exploitation
against socio-economic injustice, and deteriorating moral standards. Gandhi was an
economist of the masses. His approach was rooted in human dignity. His economic
 philosophy is a result of innumerable experiments which he conducted in the course of his
life. His pragmatic approach gave a new direction to the existing socio-economic
problems in the process of protecting human dignity.

The fluid international conditions fraught with ideological tensions in the economic domain
demanded a fresh approach to economic philosophy, with emphasis on the ideals of
human rights like democracy, economic freedom, and social justice. Gandhi’s as a socio-
economic philosophy suits not only to accomplish the higher ideals of democratic freedom
and socialism but it was also thoroughly developed to meet the challenge of national and
international forces of communism and capitalism.

2. Statist model
A second model of CSR emerged in India after independence in 1947, when India adopted
the socialist and mixed economy framework, with a large public sector and state-owned
companies. The boundaries between the state and society were clearly defined for the state
enterprises. Elements of corporate responsibility, especially those relating to community
and worker relationships, were enshrined in labor laws and management principles. This
state sponsored corporate philosophy still operates in the numerous public sector
companies that have survived the wave of privatization of the early 1990s.

3. Liberal Model
Indeed, the worldwide trend towards privatization and deregulation can be said to be
underpinned by a third model of corporate responsibility that companies are solely
responsible to their owners. This approach was encapsulated by the American economist
 Milton Fried-man, who in 1958 challenged the very notion of corporate responsibility for
anything other than the economic bottom line.
Many in the corporate world and elsewhere would agree with this concept, arguing that it is
sufficient for business to obey the law and generate wealth, which through taxation and
private charitable choices can be directed to social ends.

4. Stakeholder Model
The rise of globalization has brought with it a growing consensus that with increasing
economic rights, business also has a growing range of social obligations. Citizen
campaigns against irresponsible corporate behavior along with consumer action and
increasing shareholder pressure have given rise to the stakeholder model of corporate
responsibility. This view is often
associated with R. Edward Freeman, whose seminal analysis of the stakeholder approach
to strategic management in 1984 brought stake holding into the mainstream of
management literature (Freeman, 1984). Ac-cording to Freeman, a stakeholder in an
organization is any group or individual who can affect or is affected by the achievement of
the organizations objectives.

International Framework of CSR

1. International frameworks: guides for global business

All aspects of doing business - procurement, production and sales - are part of globally
integrated structures, often putting them outside the influence of exclusively national
legislation. But how can we make sure that in such a world the profit of one person
does not result from harming somebody else? To this end, international organisations
have developed guidelines that offer globally active companies guidance and are
designed to ensure that social and environmental responsibility are part of the
equation.

Human rights are at the heart of the debate, and so is the question of which tools can be
deployed to make sure that they are respected. In 2011, the Human Rights Council of

the United Nations adopted concrete guidelines for action, the Guiding Principles on

Business and Human Rights , intended to move beyond the debate on voluntary versus
binding instruments in the area of human rights. The guiding Principles rest on three
pillars:

1. the state duty to protect

2. the corporate responsibility to respect
3. access to remedy

The first pillar describes the obligation of states to actively contribute to preventing
human rights violations by companies, while the second pillar deals directly with the
responsibilities of companies. This responsibility comprises not only a company's own
activities, but also all relevant business relationships, e.g. the supply chain. The third
pillar sets out how access to remedy and complaint mechanisms can be ensured in
cases of human rights violations.
2. Corporate social responsibility in line with the OECD Guidelines for Multinational
Enterprises
As for the OECD Guidelines for Multinational Enterprises , they offer a comprehensive
code of conduct designed to provide multinational enterprises (MNEs) with guidance
and support in their interactions with trade unions and in the areas of environmental
protection, the fight against corruption and respect of the interests of consumers. The
Guidelines also contain recommendations on overseas investment and cooperation
with foreign suppliers. They were last updated in 2011, adding to the sections on
human rights and due diligence obligations (responsibility for the actions of suppliers
and business partners)

The Guidelines were developed by the OECD member states in cooperation with
companies, trade unions and civil society as recommendations for companies. Their
application is voluntary. However, the States Parties are obliged to promote the
Guidelines, which are the only mulilaterally agreed and comprehensive code of
conduct for corporate social responsibility. This is the job of the National Contact
Points (NCPs). The Federal Ministry for Economic Affairs and Energy, and more
precisely its division VC3, acts as Germany's NCP. Here you will find more

information about the NCPs tasks .

3. The ILO's social standards

The International Labour Organization (ILO), which was founded in 1919, aims to
introduce minimum social standards around the world. The idea behind these efforts is
to prevent companies from gaining competitive advantages by violating workers'
rights.
4. The mission and the actions of the ILO are based on four basic principles:

 Freedom of association and the right to collective bargaining

 Elimination of forced labour
 Abolition of child labour
 Elimination of discrimination in respect of employment and occupation

To date, eight conventions spell out these basic principles in more detail. Collectively,

they are known as the core labour standards . In 1998, all member states adopted

the Declaration on Fundamental Principles and Rights at Work . It stresses that "social
justice is essential to universal and lasting peace". To date, 142 ILO members states,
among them Germany, have ratified all the core labour standards.

The tripartite declaration of principles concerning multinational enterprises and social

policy constitutes the basis for the actions of the ILO's member states. It deals with
all ILO guidelines "enhancing the positive social and labour effects of the operations
of MNEs”. The principles aim to serve as guidelines for multinational enterprises
(MNEs) as well as for companies, governments, employers' and workers'
organisations. All in all, the declaration contains 59 rules for the following areas:The
tripartite declaration of principles concerning multinational enterprises and social
policy constitutes the basis for the actions of the ILO's member states. It deals with all
ILO guidelines "enhancing the positive social and labour effects of the operations of
MNEs”. The principles aim to serve as guidelines for multinational enterprises
(MNEs) as well as for companies, governments, employers' and workers'
organisations. All in all, the declaration contains 59 rules for the following areas:

 Employment
 Training
 Conditions of work and life
 Industrial relations

5. The UN Global Compact

The UN Global Compact is an international network of companies, which have

committed to aligning their operations with ten globally applicable principles on
human rights, labour, the environment and anti-corruption. For companies this
includes taking on responsibility for respecting human rights - also along supply
chains -, implementing labour standards in developing and emerging markets,
pursuing measurable environmental goals and actively fighting corruption.

The ten Global Compact principles are derived from four key international agreements:
the Universal Declaration of Human Rights, the ILO's Declaration on Fundamental
Principles and Rights at Work, the principles of the Rio Declaration on Environment
and Development and the UN Convention against Corruption.

Sustainability Development Goals (SDGS)

1. End poverty in all its forms everywhere. Data is critical to analyzing the extent of
poverty, understanding the determinants of poverty, mapping high-poverty urban slums,
and ensuring that all receive essential services. By providing information about public
goods and services, government ministries can help people in poverty gain access to basic
resources and care. As these basic needs are met, Open Data about educational and job
opportunities can help people achieve greater economic security.
2. End hunger, achieve food security and improved nutrition and promote sustainable
agriculture. New companies and government services are using Open Data on weather,
soil, and crops to help farmers make better decisions. GODAN, the Global Open Data for
Agriculture and Nutrition program, has become a centralized resource for farming and
food security. In different parts of the world, Open Data is helping to combat local issues
as diverse as overuse of pesticides, erratic food prices and praedial larceny (the theft of
livestock and produce). Open Data helps consumers directly as well: Government
nutrition data helps families devise healthier menus with locally produced foods.
3. Ensure healthy lives and promote well-being for all at all ages. The benefits of Open
Data in health range from provision of basic services to studies that can have a significant
impact on healthcare quality and cost. New companies and programs in several countries
are giving consumers useful data through applications that help them find healthcare
providers and pharmaceuticals. Through programs like the Southern Africa Regional
Programme on Access to Medicines and Diagnostics (SARPAM), Open Data is showing
when medicines and services are overpriced and encouraging better competition and
efficiency. Open Data is also a critical tool for fighting infectious disease, combining
clinic reports with social, demographic, geospatial and other data to predict and prevent
disease outbreaks and track and combat disease when it does spread.
4. Ensure inclusive and equitable quality education and promote lifelong learning
opportunities for all. Government agencies and NGOs in many countries are now using
open government data to identify locations where new schools may be needed and to
assess, publicize, and ultimately improve school quality. By making school quality
measures public, these organizations help parents and students learn which schools are
best and put pressure on low-quality schools to improve. Open Data can also help ensure
that schools have the resources they need and help them operate more efficiently. Data-
driven projects have included an assessment of school sanitary facilities in Kenya, a
 platform to make buying school supplies more efficient in Romania, and a project to fight
the corruption that was interfering with school funding in the Philippines.
5. Achieve gender equality and empower all women and girls. Analysis of Open Data can
highlight shortcomings in the ways that education and health systems serve women and
girls. Census, education, and health data from national statistical organizations can be
used to develop indicators of gender disparities in these areas. In addition, Open Data on
healthcare facilities and public health information can provide women and girls with
resources on sexual and maternal health. A number of programs now use openly available
health data to help pregnant women and young mothers, and have decreased rates of infant
and maternal mortality.
6. Ensure availability and sustainable management of water and sanitation for all. A
first step is to map out communities to see where water and sanitation facilities are located
and where they are needed, using GPS and satellite data. Open Data can improve water
quality by identifying problems and prioritizing them for clean-up. In areas where water is
scarce, Open Data can help predict and manage the impact of drought and help citizens
know when water will be available.
7. Ensure access to affordable, reliable, sustainable, and modern energy for all. Open
Data from household energy surveys, satellite imagery and other sources can help
governments and entrepreneurs prioritize investments in energy generation and decide
where and how to extend the electric grid. It can be especially important in developing
renewable energy sources strategically and efficiently. In India, for example, Open Data is
being used to develop data-driven tools to forecast power output from wind and solar
sources, making it possible to predict and manage these renewable sources for maximal
output.
8. Promote sustained, inclusive and sustainable economic growth, full and productive
employment and decent work for all. Open Data can be a valuable resource (among
others) for entrepreneurship, business development, skills training, and improving the job
 market. It can be the raw material used to launch innovative new businesses in all sectors
of the economy, including health, environment, energy, finance, education, and
others. The Open Data Impact Map, developed as part of the Open Data for Development
network, and other studies have aggregated hundreds of examples of these kinds of
companies. Established businesses can also use Open Data to operate more efficiently and
profitably, which can ultimately enable them to expand and hire more workers. For
example, many companies use GPS data to improve shipping and transportation, use
weather data to plan their product inventories, or use census data to improve their
marketing.
9. Build resilient infrastructure, promote inclusive and sustainable industrialization,
and foster innovation. Open Data is a critical tool for rethinking and improving urban
infrastructure. The concept of “smart cities” involves combining government-provided
Open Data with extensive, diverse and timely data collected from sensors around the city
that measure traffic, air quality and other factors. Open Data is being used to understand
urban issues and improve urban planning, for example, through the work that the Urban
Data Party is doing throughout China. Open Data may have the most immediate effect on
transportation systems. In Moscow, for example, an analysis of Open Data enabled the
city to avoid a billion-dollar investment in a new train system by revising its bus routes to
serve consumers better.
10.Reduce inequality within and among countries. Open Data can both reveal inequalities
and help prioritize efforts to address them. Data from national statistical organizations and
other sources is also used to calculate poverty levels, eligibility for nutrition and health
programs, and a wide range of other social services. This data can then inform economic
policies to best provide for those living near or below the poverty line.
11.Make cities and human settlements inclusive, safe, resilient and sustainable. Some of
the most effective applications of Open Data — not only government data, but also data
gathered from citizens — have been in identifying at-risk areas and populations,
 mitigating disaster risk and managing relief efforts. The organization Ushahidi, for
example, has used data gathered by cellphone to track the impacts of natural disasters and
help direct relief efforts to where they are most needed. Rio de Janeiro and other cities
have developed data-driven programs and control centers to monitor and act on the threat
posed by flooding and other disaster conditions.
12.Ensure suitable consumption and production patterns. Open Data can be used to track
consumer prices both locally and on a global scale and spot early signs of food shortages,
inflationary pressures and other market problems. In many countries, this information
plays a critical role in protecting the population from erratic market shifts and the
resulting economic dislocation.
13.Take urgent action to combat climate change and its impacts. Major national and
international data programs are now addressing climate change along with other
environmental issues. In the U.S., for example, the Climate Data Initiative is a cross-
governmental effort to make data from a wide range of federal agencies available for
analysis. In addition to providing critical data for predicting the course of climate change,
Open Data programs are designed to help cities and countries become more resilient in the
face of these changes and the floods, droughts, and other extreme events that may ensue.
14.Conserve and sustainably use the oceans, seas and marine resources for sustainable
development. Data on fishing in national and supranational waters is essential to
monitoring compliance with sustainable sourcing guidelines. Government agencies around
the world monitor fishing, and by making their data open and available, they can increase
pressure for compliance. Open Data on the marine environment can also help lead to the
usage of marine energy sources such as geothermal vents.
15.Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably
manage forests, combat desertification, and halt and reverse land degradation and
halt biodiversity loss. Open Data on both the state of the world’s resources, and the
activities used to extract resources help both gage change in conditions over time, and
 assess the impact of practices such as mining and drilling. Open Data on energy industry
practices help promote transparency through programs such as the Extractive Industries
Transparency Initiative. By making this kind of data open and available, governments and
NGOs can help increase pressure on companies to operate sustainably. A similar approach
is being used to fight deforestation. The World Resources Institute runs a Global Forest
Watch website that the governments of Indonesia and Singapore are using to crack down
on illegal burning by pulp and paper companies.
16.Promote peaceful and inclusive societies for sustainable development, provide access
to justice for all and build effective, accountable and inclusive institutions at all
levels. The kind of government transparency provided by Open Data is critical to making
institutions more accountable and inclusive. Several countries have used Open Data in
spending transparency initiatives — often for both their own internal controls and their
international reputation. Brazil’s Transparency Portal, one of the best-known examples,
tracks more than $12 trillion in government funds. The Participatory Budgeting
movement, now active in more than 1,500 cities worldwide, gives citizens data about their
city budgets and involves them directly in local budget allocation. Perhaps most
important, open contracting — making government contracts available for public
review — deters favoritism and hidden deals, and simultaneously benefits government,
businesses, and investors. The Open Contracting Partnership is now developing standards
for contracting data and supports efforts to make contracting more transparent worldwide.
17.Strengthen the means of implementation and revitalize the global partnership for
sustainable development. Open Data is now central to a number of organizations and
initiatives that are focused on sustainable development. The Open Data Charter, which
was developed from a G8 agreement, is an international mechanism for supporting Open
Data efforts that can apply to all UN member states. Open aid data on developing
countries can allow for more efficient allocation of foreign aid resources and support for
sustainable development. Open Data is widely used by the World Bank, USAID, the
Millennium Challenge Corporation, and other lenders to help guide their aid activities.
 Unit -3

CSR –Legislation in India and the World

Section 135 of Companies Act.

India`s new Companies Act 2013 (Companies Act) has introduced the provision for
Corporate Social Responsibility (CSR). The concept of CSR rests on the ideology of give
and take. Companies take resources in the form of raw materials, human resources etc
from the society. By performing the task of CSR activities, the companies are giving
something back to the society. Ministry of Corporate Affairs has notified Section 135 and
Schedule VII of the Companies Act as well as the provisions of the Companies (Corporate
Social Responsibility Policy) Rules, 2014 (CRS Rules) which has come into effect from 1
April 2014 and certain amendment in May 2016.

Applicability: Section 135 of the Companies Act 2013 provides the threshold limit for
applicability of the CSR to a Company:

(a) Net worth of the company to be Rs 500 crore or more; or

(b) Turnover of the company to be Rs 1000 crore or more; or

(c) Net profit of the company to be Rs 5 crore or more.

Further as per the CSR Rules, the provisions of CSR are not only applicable to Indian
companies, but also applicable to branch and project offices of a foreign company in
India. Expenditure on CSR does not form part of business expenditure.
CSR Committee and Policy:

Every qualifying company requires spending of at least 2% of its average net profit (Profit
before taxes) for the immediately preceding 3 financial years on CSR activities in India.

Further, the qualifying company will be required to constitute a committee (CSR Committee)
of the Board of Directors (Board) consisting of 3 or more directors.

The CSR Committee shall formulate and recommend to the Board, a policy which shall
indicate the activities to be undertaken (CSR Policy); recommend the amount of
expenditure to be incurred on the activities referred and monitor the CSR Policy of the
company.

The Board shall take into account the recommendations made by the CSR Committee and
approve the CSR Policy of the company.

Definition of the term CSR:

The term CSR has been defined under the CSR Rules which includes but is not limited to: •
Projects or programs relating to activities specified in the Schedule; or

• Projects or programs relating to activities undertaken by the Board in pursuance of

recommendations of the CSR Committee as per the declared CSR policy subject to the
condition that such policy covers subjects enumerated in the Schedule.
Flexibility is also permitted to the companies by allowing them to choose their preferred CSR
engagements that are in conformity with the CSR policy.

The Board of a company may decide to undertake its CSR activities approved by the CSR
Committee, through a registered society or trust or section 8 company with established
track record of three years.

Activities under CSR / Scope of CSR Activities under Schedule

The activities (in areas or subject, specified in Schedule VII) that can be done by the
company to achieve its CSR obligations include:

Schedule VII of Companies Act 2013

(i) Eradicating hunger, poverty and malnutrition, promoting health care including preventive
health care and sanitation including contribution to the ‘Swachh Bharat Kosh’ set up by
the Central Government for the promotion of sanitation and making available safe
drinking water:

(ii) Promoting education, including special education and employment enhancing vocation
skills specially among children, women, elderly, and the differently abled and livelihood
enhancement projects;
(iii) promoting gender equality, empowering women, setting up homes and hostels for
women and orphans; setting up old age homes, day care centres and such other facilities
for senior citizens and measures for reducing inequalities faced by socially and
economically backward groups;

(iv) ensuring environmental sustainability, ecological balance, protection of flora and fauna,
animal welfare, agro forestry, conservation of natural resources and maintaining quality of
soil, air and water including contribution to the ‘Clean Ganga fund’ set up by the Central
Government for rejuvenation of river Ganga ;

(v) protection of national heritage, alt and culture including restoration of buildings and sites
of historical importance and works of art; setting up public libraries; promotion and
development of traditional arts and handicrafts:

vi) measures for the benefit of armed forces veterans, war widows and their dependents; (vii)
training to promote rural sports, nationally recognised sports, paralympic sports and
Olympic sports;

(viii) contribution to the Prime Minister's National Relief Fund or any other fund set up by
the Central Government for socio-economic development and relief and welfare of the
Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women;

(ix) contributions or funds provided to technology incubators located within academic

institutions which are approved by the Central Government;

(x) rural development projects;

(xi) Slum area development.

Fines and Penalties for Non-Compliance

 Failure of a company to comply with CSR spending provisions or transferring and
utilizing the unspent amount out of the CSR funds, a company will be punishable with a
fine which may increase to Rs. 25 lakh but not less than Rs. 50,000.

The Act also provides for punishment of company officers who default in compliance. It
states that every such officer of the company will be liable to for a punishment with a fine
which may increase to Rs. 5 lakh but not less than Rs. 50,000 or imprisonment for a
maximum term of three years of with both.

Companies Act 2013 Highlights

The major highlights of the 2013 Act are given below:

 The maximum number of shareholders for a private company is 200 (the previous cap was
at 50).

 The concept of a one-person company.

 Company Law Appellate Tribunal & Company Law Tribunal

 CSR made mandatory

Salient Features of the Companies Act 2013

 It has introduced the concept of ‘Dormant Companies’. Dormant companies are those that
have not engaged in business for two years consecutively.

 It introduced the National Company Law Tribunal. It is a quasi-judicial body in India

adjudicating issues concerning companies. It replaced the Company Law Board.
 It provides for self-regulation concerning disclosures and transparency rather than having
a government-approval based regime.

 Documents have to be maintained in electronic form.

 Official liquidators have adjudicatory powers for companies having net assets of up to
Rs.1 crore.

 The procedure for mergers and amalgamations have been made faster and simpler.

 Cross-border mergers are allowed by this Act (foreign company merging with an Indian
company and reverse) but with the permission of the Reserve Bank of India.

 The concept of a one-person company has been introduced. This is a new type of private
company which may have only one director and one shareholder. The 1956 Act required
at least two directors and two shareholders for a private company.

 Having independent directors has been made a statutory requirement for public
companies.

 For a prescribed class of companies, women directors are mandatory.

 All companies should have at least one director who has been a resident of India for not
less than 182 days in the last calendar year.

 The Act provides for entrenchment (apply extra-legal safeguards) of the articles of
association.

 The Act mandates at least 7 days of notice for calling board meetings.

 In this Act, the duties of a Director has been defined. It has also defined the duties of ‘Key
Managerial Personnel’ and ‘Promoter’.

 For public companies, there should be a rotation of audit firms and auditors. The Act also
prevents auditors from performing non-audit services to the company. In case of non-
compliance, there is substantial criminal and civil liability for an auditor.
 The whole process of rehabilitation and liquidation of the companies in the case of the
financial crisis has been made time-bound.

 The Act makes it mandatory for companies to form CSR committees, and formulate CSR
policies. For certain companies, mandatory disclosures have been made with regard to
CSR.

 Listed companies ought to have one director to represent small shareholders as well.

 There is provision for search and seizure of documents, during the investigation, without
an order from a magistrate.

 Norms have been made stringent for accepting deposits from the public.

 Setting up of the National Financial Reporting Authority (NFRA) has been provided for.
It engages in the establishment and enforcement of accounting and auditing standards and
oversight of the work of auditors. (Due to notification of NFRA, India is now eligible for
membership of the International Forum of Independent Audit Regulators (IFIAR).)

 The Act bans key managerial personnel and directors from purchasing call and put options
of shares of the company if such person is reasonably expected to have access to price-
sensitive information.

 The Act offers more power to shareholders in that it provides for shareholders’ approval
for many major transactions.

Appointment of Independent Director on Board

Independent Director means a director who is not connected or associated with the Company
in any manner and works only to safeguard the interest of the members who individually
cannot look after their interest.
Basically, we can say that an independent director is a nonexecutive director of a company
who helps the company in improving corporate credibility and governance standards.

He/ She do not have any kind of relationship with the company that may affect the
independence of his/ her judgment. The term “Independent Director” has been defined in
the Act, along with several new requirements relating to new requirements relating to their
appointment, duties, role, and responsibilities. The provisions relating to appointment of
Independent directors are contained in Section 149 of the Companies Act, 2013 should be
read along with Rule 4 and Rule 5 of the Companies (Appointment and Qualification of
Directors) Rules, 2014

Requirement for Independent Director

As per the Companies Act 2013, all listed public limited companies are mandatorily required
to have at least one-third of the total number of directors as an independent directors.
Unlisted public companies should appoint at least two independent directors in the
following situations:

1. If the paid up share capital is in excess of Rs.10 crores;

2. If the turnover is in excess of Rs.100 crores;
3. If the total of all the outstanding loans, debentures and deposits is in excess of Rs.50
crores.

Duties of an Independent Directors

The guidelines, role, functions and duties of an Independent Director is defined in the Code
of conduct under Schedule IV related to the Companies Act, 2013. The key role and
 functions of an Independent Director as listed under Schedule IV of the Companies Act,
2013 are described as follows:

1. Aid in bringing an independent judgment to bear on the Board’s deliberations particularly

on issues of strategy, performance, risk management, resources, key appointments and
standards of conduct;
2. Enable an objective view in the evaluation of the performance related to board and
management;
3. Examine the performance of management in meeting the decided goals and objectives and
examine the reporting of performance;
4. Satisfy themselves on the reliability of financial information and that financial controls
and the systems of risk management are considered robust and defensible;
5. Protect the interests of all stakeholders, mainly the minority shareholders;
6. Balance the conflict of interest of the stakeholders;
7. Decide suitable levels of remuneration of executive directors, key managerial personnel
and senior management and have a major role in appointing and where essential
recommend removal of executive directors, important managerial personnel and senior
management;
8. Moderate and adjudicate in the interest of the company as a whole, in the situations of
conflict between the management as well as shareholder’s interest.

Qualities of Independent Director

An independent director should preferably possess appropriate skills, experience and

knowledge in one or more domains of finance, law, management, sales, marketing,
administration, research, corporate governance, technical operations or other disciplines
 that are related to the company’s business. Generally one who wishes to qualify as an
Independent Director has to possess the following qualities:

 Impartiality
 Loyalty
 Decision- making (judgment)
 Professional repute

Appointment of Independent Director

While selecting an independent director, the board of directors must ensure that there is an
appropriate balance of skills, experience, and knowledge in the Board so as to enable the
Board to discharge its functions and duties effectively. The appointment of an independent
director of the company must be approved at the meeting of shareholders.

Letter of Appointment

The selection of independent directors would be formalized by a letter of appointment. The

components of a letter of appointment are as follows:

 The term of appointment.

 The anticipation of the Board from which the appointed director. The board level
committee in which the director is expected to serve his/her tasks.
 Directors and Officers insurance.
 The code of Occupational Ethics that the company expects from its directors and
employee to follow.
 Enumerated actions that a director should follow while working in a company
 The remuneration, mentioning the periodic fee, compensation of expenses for contribution
in the Boards and other meetings and profit related commission.

The terms and conditions of selection of independent directors should be open for inspection
at the registered office of the company by any member during normal business hours.
The terms & conditions of appointment of independent directors should also be posted on
the company’s website.

Re-Appointment

The independent directors are subject to their performance evaluation by other directors.
Their re-appointment would be considered based on their performance appraisal report.
 Unit 4

Identifying Key stakeholders & Trends in CSR

What Is the Public Sector?

The public sector is the segment of the economy owned, operated, and controlled by
government agencies. It provides services to the general public that contribute to
societal well-being, such as law enforcement, national defense, public transportation,
transit infrastructure, educational institutions, and health services. Unlike the private
sector, the public sector does not seek to make a profit off its services.

In addition to the entities it funds, the public sector implements public policy at all levels
of government and includes public services provided by elected officials. It also
includes outsourcing of services provided to these agencies. The three levels of
government services in the public sector are federal, regional, and local.

Features of Public Sector

1. State Ownership:

The enterprise ownership has to be vested with the State. It could be in the nature of Central,
State or local government ownership or any instrumentality of the state too can have the
ownership of public enterprise.

2. State Control:

Public Enterprise is controlled by the Government both in its management and functioning.
The Government has the direct responsibility to manage the affairs of the enterprise
through various devices and exercises control over it by means of a number of agencies
and techniques.

3. Public Accountability:
Public Enterprises owe accountability to people as they are funded through public money.
This accountability is realized through legislature and its committees, ministers, audit
institutions and other specialized agencies.

4. Autonomy:

Public Enterprises function with utmost autonomy under given situations. They are free from
day to day interference in their affairs and management.

5. Coverage:

The public enterprise traverses all areas and activities. There is hardly any field of activity,
which is not covered by the operations of public enterprises.

Role of Public Sector in Corporate Social Responsibility

1. Accepting and Supporting CSR activities.

2. Following good CSR practice in its operations.

3. Significant regulatory roles.

Impact of Public sector on Business

National Voluntary Guidelines by Government of India on Social, Environmental and
economic Responsibility

The Guidelines presented herein are a refinement over the Corporate Social Responsibility
Voluntary Guidelines 2009, released by the Ministry of Corporate Affairs in December
2009. Significant inputs, received from diverse stakeholder groups across the country
have been duly considered, and based on these inputs; appropriate changes have been
made in the original draft Guidelines produced by the Guidelines Drafting Committee.
This document therefore represents the consolidated perspective of vital stakeholders in
India, and accordingly lays down the basic requirements for businesses to function
responsibly, thereby ensuring a wholesome and inclusive process of economic growth.

Principles and Core Elements

Principle 1: Businesses should conduct and govern themselves with Ethics,

Transparency and Accountability

Brief Description

The principle recognizes that ethical conduct in all its functions and processes is the
cornerstone of responsible business.

The principle acknowledges that business decisions and actions, including those required to
operationalize the principles in these Guidelines should be amenable to disclosure and be
visible to relevant stakeholders.

The principle emphasizes that businesses should inform all relevant stakeholders of the
operating risks and address and redress the issues raised.

The principle recognizes that the behavior, decision making styles and actions of the
leadership of the business establishes a culture of integrity and ethics throughout the
 enterprise.

Core Elements

1. Businesses should develop governance structures, procedures and practices that ensure
ethical conduct at all levels; and promote the adoption of this principle across its value
chain

2. Businesses should communicate transparently and assure access to information about their
decisions that impact relevant stakeholders

3. Businesses should not engage in practices that are abusive, corrupt, or anti- competition

4. Businesses should truthfully discharge their responsibility on financial and other

mandatory disclosures.

5. Businesses should report on the status of their adoption of these Guidelines as suggested
in the reporting framework in this document.

6. Businesses should avoid complicity with the actions of any third party that violates any
of the principles contained in these Guidelines

Principle 2: Businesses should provide goods and services that are safe and

contribute to sustainability throughout their life cycle

Brief Description

The principle emphasizes that in order to function effectively and profitably, businesses
should work to improve the quality of life of people.

The principle recognizes that all stages of the product life cycle, right from design to final
disposal of the goods and services after use, have an impact on society and the
environment. Responsible businesses, therefore, should engineer value in their goods and
services by keeping in mind these impacts.
The principle, while appreciating that businesses are increasingly aware of the need to be
internally efficient and responsible, exhorts them to extend their processes to cover the
entire value chain – from sourcing of raw materials or process inputs to distribution and
disposal.

Core Elements

1. Businesses should assure safety and optimal resource use over the life-cycle of the
product – from design to disposal – and ensure that everyone connected with it-
designers, producers, value chain members, customers and recyclers- are aware of their
responsibilities.

2. Businesses should raise the consumer's awareness of their rights through education,
product labelling, appropriate and helpful marketing communication, full details of
contents and composition and promotion of safe usage and disposal of their products
and services.

3. In designing the product, businesses should ensure that the manufacturing processes and
technologies required to produce it are resource efficient and sustainable.

4. Businesses should regularly review and improve upon the process of new technology
development, deployment and commercialization, incorporating social, ethical, and
environmental considerations.

5. Businesses should recognize and respect the rights of people who may be owners of
traditional knowledge, and other forms of intellectual property.

6. Businesses should recognize that over-consumption results in unsustainable exploitation

of our planet's resources, and should therefore promote sustainable consumption,
including recycling of resources.
Principle 3: Businesses should promote the wellbeing of all employees

Brief Description

The principle encompasses all policies and practices relating to the dignity and wellbeing of
employees engaged within a business or in its value chain

The principle extends to all categories of employees engaged in activities contributing to the
business, within or outside of its boundaries and covers work performed by individuals,
including sub-contracted and home based work.

Core Elements

1. Businesses should respect the right to freedom of association, participation, collective

bargaining, and provide access to appropriate grievance redressal mechanisms.

2. Businesses should provide and maintain equal opportunities at the time of recruitment as
well as during the course of employment irrespective of caste, creed, gender, race,
religion, disability or sexual orientation.

3. Businesses should not use child labour, forced labour or any form of involuntary
labour, paid or unpaid.

4. Businesses should take cognizance of the work-life balance of its employees, especially
that of women.

5. Businesses should provide facilities for the wellbeing of its employees including those
with special needs. They should ensure timely payment of fair living wages to meet basic
needs and economic security of the employees.

6. Businesses should provide a workplace environment that is safe, hygienic humane, and
which upholds the dignity of the employees. Business should communicate this provision
to their employees and train them on a regular basis.
7. Businesses should ensure continuous skill and competence upgrading of all employees by
providing access to necessary learning opportunities, on an equal and non-
discriminatory basis. They should promote employee morale and career development
through enlightened human resource interventions.

8. Businesses should create systems and practices to ensure a harassment free workplace
where employees feel safe and secure in discharging their responsibilities.

Principle 4: Businesses should respect the interests of, and be responsive towards all
stakeholders, especially those who are disadvantaged, vulnerable and marginalized.

Brief Description

The principle recognizes that businesses have a responsibility to think and act
beyond the interests of its shareholders to include all their stakeholders.

The Principle, while appreciating that all stakeholders are not equally influential or aware,
encourages businesses to proactively engage with and respond to those that are
disadvantaged, vulnerable and marginalized.

Core Elements

1. Businesses should systematically identify their stakeholders, understand their concerns,

define purpose and scope of engagement, and commit to engaging with them

2. Businesses should acknowledge, assume responsibility and be transparent about the

impact of their policies, decisions, product & services and associated operations on the
stakeholders

3. Businesses should give special attention to stakeholders in areas that are underdeveloped.

4. Businesses should resolve differences with stakeholders in a just, fair and equitable
manner
 Principle 5: Businesses should respect and promote human rights

Brief Description

The principle recognizes that human rights are the codification and agreement of what it
means to treat others with dignity and respect. Over the decades, these have evolved
under the headings of civil, political, economic, cultural and social rights. This holistic
and widely agreed nature of human rights offers a practical and legitimate framework
for business leaders seeking to manage risks, seize business opportunities and compete
in a responsible fashion.

The principle imbibes its spirit from the Constitution of India, which through its provisions
of Fundamental Rights and Directive Principles of State Policy, enshrines the
achievement of human rights for all its citizens. In addition, the principle is in
consonance with the Universal Declaration of Human Rights, in the formation of which,
India played an active role.

The principle takes into account the “Corporate Responsibility to Respect Human Rights”, as
referred in the United Nations “Protect, Respect, Remedy” Framework.

Core Elements

1. Businesses should understand the human rights content of the Constitution of India,
national laws and policies and the content of International Bill of Human Rights.
Businesses should appreciate that human rights are inherent, universal, indivisible and
interdependent in nature

2. Businesses should integrate respect for human rights in management systems, in

particular through assessing and managing human rights impacts of operations, and
ensuring all individuals impacted by the business have access to grievance
mechanisms.
3. Businesses should recognize and respect the human rights of all relevant stakeholders and
groups within and beyond the workplace, including that of communities, consumers and
vulnerable and marginalized groups.

4. Businesses should, within their sphere of influence, promote the awareness and realization
of human rights across their value chain.

5. Businesses should not be complicit with human rights abuses by a third party.

Principle 6: Business should respect, protect, and make efforts to restore the
environment

Brief Description

The principle recognizes that environmental responsibility is a prerequisite for sustainable

economic growth and for the well being of society.

The principle emphasizes that environmental issues are interconnected at the local, regional
and global levels which makes it imperative for businesses to address issues such
as global warming, biodiversity conservation and climate change in a comprehensive
and systematic manner.

The principle encourages businesses to understand and be accountable for direct and
indirect environmental impacts of their operations, products and services and to strive
to make them more environment friendly.

The Principle urges businesses to follow the precautionary principle and not go ahead with
a particular action if it is unsure of its adverse impacts.

Core Elements

1. Businesses should utilize natural and manmade resources in an optimal and responsible
manner and ensure the sustainability of resources by reducing, reusing, recycling and
 managing waste.

2. Businesses should take measures to check and prevent pollution. They should assess the
environmental damage and bear the cost of pollution abatement with due regard
to public interest.

3. Businesses should ensure that benefits arising out of access and commercialization of
biological and other natural resources and associated traditional knowledge are shared
equitably.

4. Businesses should continuously seek to improve their environmental performance by

adopting cleaner production methods, promoting use of energy efficient and environment
friendly technologies and use of renewable energy

5. Businesses should develop Environment Management Systems (EMS) and contingency

plans and processes that help them in preventing, mitigating and controlling
environmental damages and disasters, which may be caused due to their operations or that
of a member of its value chain

6. Businesses should report their environmental performance, including the assessment of

potential environmental risks associated with their operations, to the stakeholders in a
fair and transparent manner.

7. Businesses should proactively persuade and support its value chain to adopt this
principle

Principle 7: Businesses, when engaged in influencing public and regulatory policy,

should do so in a responsible manner

Brief Description

The principle recognizes that businesses operate within the specified legislative and policy
 frameworks prescribed by the Government, which guide their growth and also provide
for certain desirable restrictions and boundaries.

The principle acknowledges that in a democratic set-up, such legal frameworks are developed
in a collaborative manner with participation of all the stakeholders, including businesses.

The principle, in that context, recognizes the right of businesses to engage with the
Government for redressal of a grievance or for influencing public policy and public
opinion.

The principle emphasizes that policy advocacy must expand public good rather than
diminish it or make it available to a select few.

Core Elements

1. Businesses, while pursuing policy advocacy, must ensure that their advocacy positions are
consistent with the Principles and Core Elements contained in these Guidelines.

2. To the extent possible, businesses should utilize the trade and industry chambers and
associations and other such collective platforms to undertake such policy
advocacy.

Principle 8: Businesses should support inclusive growth and equitable development

Brief Description

The principle recognizes the challenges of social and economic development faced by
India and builds upon the development agenda that has been articulated in the government
policies and priorities.

The principle recognizes the value of the energy and enterprise of businesses and encourages
them to innovate and contribute to the overall development of the country,
especially to that of the disadvantaged, vulnerable and marginalised sections of society.
The principle also emphasizes the need for collaboration amongst businesses, government
agencies and civil society in furthering this development agenda.

The principle reiterates that business prosperity and inclusive growth and equitable
development are interdependent.

Core Elements

1. Businesses should understand their impact on social and economic development, and
respond through appropriate action to minimise the negative impacts.

2. Businesses should innovate and invest in products, technologies and processes that
promote the wellbeing of society.

3. Businesses should make efforts to complement and support the development priorities at
local and national levels, and assure appropriate resettlement and rehabilitation of
communities who have been displaced owing to their business operations.

4. Businesses operating in regions that are underdeveloped should be especially sensitive to

local concerns.

Principle 9: Businesses should engage with and provide value to their customers and
consumers in a responsible manner

Brief Description

This principle is based on the fact that the basic aim of a business entity is to provide goods
and services to its customers in a manner that creates value for both.

The principle acknowledges that no business entity can exist or survive in the absence
of its customers.

The principle recognizes that customers have the freedom of choice in the selection and
usage of goods and services, and that the enterprises will strive to make available
 goods that are safe, competitively priced, easy to use and safe to dispose off, for the
benefit of their customers.

The principle also recognizes that businesses have an obligation to mitigating the long
term adverse impacts that excessive consumption may have on the overall well-being of
individuals, society and our planet.

Core Elements:

1. Businesses, while serving the needs of their customers, should take into account the
overall well-being of the customers and that of society.

2. Businesses should ensure that they do not restrict the freedom of choice and free
competition in any manner while designing, promoting and selling their products.

3. Businesses should disclose all information truthfully and factually, through labelling and
other means, including the risks to the individual, to society and to the planet from the
use of the products, so that the customers can exercise their freedom to consume in a
responsible manner. Where required, businesses should also educate their customers on
the safe and responsible usage of their products and services.

4. Businesses should promote and advertise their products in ways that do not mislead or
confuse the consumers or violate any of the principles in these Guidelines.

5. Businesses should exercise due care and caution while providing goods and services that
result in over exploitation of natural resources or lead to excessive conspicuous
consumption.

6. Businesses should provide adequate grievance handling mechanisms to address customer

concerns and feedback.
Guidance on Implementation of Principles And Core Elements

Successful implementation of the Principles and Core elements that this Guideline provides
require that all of them need to be integrated and embedded in the core business processes of
an enterprise. This requires, specifically that the following actions are taken:

Leadership – The Chairman/CEO/Owner-Manager should play a proactive role in

convincing the board/Top Management and staff within the business that adopting these
principles is crucial for success. The board and senior management need to ensure that the
principles are fully understood across the organization and comprehensively executed.

Integration – These principles and core elements must be embedded in theBusiness

policies and strategies emanating from the core business purpose of the organization. For
this to happen, these must align with each business's internal values and/or must provide
clear business benefits.

Engagement – Building strong relationships and engaging with stakeholders on a consistent,

continuous basis is crucial.

Reporting: Implementation process includes disclosure by companies of their

Impact on society an environment to their stakeholders.

Application of Guidelines to Micro, Small and Medium Enterprises (MSMEs)

Widely regarded as the backbone of the Indian economy, the MSME sector1 is highly
diverse and heterogeneous in its structure. The enterprises range from an entity having just a
single self-employed person to the one employing hundreds of people; and from the one
supplying goods to a next door neighbour, to the one producing high-tech goods for global
supply chains. The framework of these Guidelines and the extent to which they are
applicable to such a sector needs to be understood in the context of the realities of these
enterprises.

A major part of the Indian MSME sector is 'local' in its operations and outlook. Yet it
impacts the environment and society in its own way, despite the small numbers of its
employees, the localized buyers and the confined surroundings of its place of
business.

Due to the increasing integration of the Indian economy with the global economy, especially
during the last decade, enterprises of all sizes have been gradually exposed to global
competition. Global buyers are basing their sourcing decisions not only on traditional
commercial considerations such as price, quality and delivery commitments, but also on
compliance with social and environmental norms in the workplace, covering, for instance,
health and safety, social equity in employment and production, and ecological
compatibility of products and processes. Many Indian buyers too are beginning to
incorporate these requirements into their purchasing decisions. MSMEs not sensitive to these
expectations run a serious risk of isolation and rejection by buyers as well as consumers,
whereas those that are responsive to these expectations might find new business
opportunities opening up for them.

The need for responding to rising social and environmental concerns is being realized
increasingly by the MSME sector but the multiplicity of prevailing codes is an
impediment. The present Guidelines aim to provide coherence in expectations and obviate
the need for multiple codes on social and environmental concerns. The principles and core
elements of these Guidelines are size neutral and are equally applicable to the MSME sector.

The Guidelines Drafting Committee has been sensitive to the fact that to be effective and
have wider acceptance among MSMEs, the Responsible Business practices need to be
grounded in the context within which MSMEs operate in India. Many MSMEs,
particularly the micro enterprises, may genuinely lack resources and capacity to adopt and
integrate the Guidelines. Their business
environment may also be discouraging a responsible enterprise. Hence, promoting
Responsible Business practices among MSMEs may necessitate a multi- pronged approach
which should include:

1. Facilitating MSMEs to recognize the business case for adopting Responsible Business
practices

2. Preference by public agencies and large players in value chains to MSME suppliers that
follow BR practices

3. Handholding MSMEs during the adoption of the Guidelines

The public agencies as well as large enterprises may catalyze the process further by
supporting collective initiatives of the MSMEs in clusters. The capacity of the MSME
associations could be built for awareness creation and to carry out collective initiatives.

These Guidelines suggest that the Principles and Core elements outlined in this document are
integral to business strategy and operations. The set of essential Indicators, appended with
these Guidelines, is to facilitate enterprises of all sizes to measure progress of
implementation. But the MSMEs are encouraged to customize the processes and indicators
in their unique context. The board or 'top management', for example, in an MSME may be
just the owner- manager or the partner.

Business Responsibility Report - Suggested Framework

Part -A

Part A of the report includes basic information and data about the operations of the business
entity so that the reading of the report becomes more contextual and comparable with
other similarly placed businesses. It may be written in a free format incorporating at
least the following:
A-1

• Basic details of the business – Name; nature of ownership; details of the people in top
management; location of its operations - national and international; products and
services offered; markets served;

• Economic and Financial Data – Sales; Net Profit; Tax Paid; Total Assets; Market
Capitalization(for listed companies); number of employees;

A-2

• Management's Commitment Statement to the ESG Guidelines

• Priorities in terms of Principle and Core Elements

• Reporting Period/Cycle

• Whether the report s based on this framework or any other framework

• Any Significant Risk that the business would like its stakeholders to know

• Any Goals and Targets that were set by the top management for improving their
performance during the Reporting Period

Part -B

Part-B of the report incorporates the basic parameters on which the business may report
their performance. Efforts have been made to keep the reporting simple keeping in view
the fact that this framework is equally applicable to the small businesses as well. The
report may be prepared in a free format with the basic performance indicators being
included in the same. In case the business entity has chosen not to adopt or report on any
of the Principles, the same may be stated along with, if possible, the reasons for not
doing so.
B-1

Principle 1 – Ethics, Transparency and Accountability

• Governance structure of the business, including committees under the Board responsible
for organizational oversight. In case no committee is constituted, then the details of the
individual responsible for the oversight

• Mandate and composition (including number of independent members and/or non-

executive members) of such committee with the number of oversight review meetings
held.

• State whether the person/committee head responsible for oversight review is independent
from the executive authority or not. If yes, how.

• Mechanisms for shareholders and employees to provide recommendations or direction to

the Board/ Chief Executive.

• Processes in place for the Board/ Chief Executive to ensure conflicts of interest are
avoided.

• Internally developed statement on Ethics, Codes of Conduct and details of the process
followed to ensure that the same are followed

• Frequency with which the Board/ Chief Executive assess BR performance.

Principle 2 – Products Life Cycle Sustainability

• Statement on the use of recyclable raw materials used

• Statement on use of energy-efficient technologies, designs and manufacturing/ service-

delivery processes

• Statement on copyrights issues in case of the products that involve use of traditional
 knowledge and geographical indicators

• Statement on use of sustainable practices used in the value chain

Principle 3 – Employees' well-being

• Total number of employees with percentage of employees that are engaged through
contractors

• Statement on non-discriminatory employment policy of the business entity

• Percentage of employees who are women

• Number of persons with disabilities hired

• Amount of the least monthly wage paid to any skilled and unskilled employee

• Number of training and skill up-gradation programmes organized during the reporting
period for skilled and unskilled employees

• Number of incidents of delay in payment of wages during the reporting period

• Number of grievances submitted by the employees

Principle 4 – Stakeholder Engagement

• Statement on the process of identification of stakeholders and engaging with them

• Statement on significant issues on which formal dialogue has been undertaken with
any of the stakeholder groups

Principle 5 – Human Rights

• Statement on the policy of the business entity on observance of human rights in their
operation
• Statement on complaints of human rights violations filed during the reporting period

Principle 6 – Environment

• Percentage of materials used that are recycled input materials

• Total energy consumed by the business entity for its operations

• Statement on use of energy saving processes and the total energy saved due to use of
such processes

• Use of renewable energy as percentage of total energy consumption

• Total water consumed and the percentage of water that is recycled and reused

• Statement on quantum of emissions of greenhouse gases and efforts made to reduce the
same

• Statement on discharge of water and effluents indicating the treatment done before
discharge and the destination of disposal

• Details of efforts made for reconstruction of bio-diversity

Principle 7 – Policy Advocacy

• Statement on significant policy advocacy efforts undertaken with details of the

platforms used

Principle 8 – Inclusive Growth

• Details of community investment and development work undertaken indicating the

financial resources deployed and the impact of this work with a longer term perspective
• Details of innovative practices, products and services that particularly enhance access and
allocation of resources to the poor and the marginalized groups of the society
Principle 9 – Customer Value

• Statement on whether the labeling of their products has adequate information regarding
product-related customer health and safety, method of use and disposal, product and
process standards observed,

• Details of the customer complaints on safety, labeling and safe disposal of the products
received during the reporting period

Part -C

Part C of the report incorporates two important aspects on BR reporting. Part C-1 is a
disclosure on by the business entity on any negative consequences of its operations on
the social, environmental and economic fronts. The objective is to encourage the business
to report on this aspect in a transparent manner so that it can channelize its efforts to
mitigate the same. Part C-2 is aimed at encouraging the business to continuously
improve its performance in the area of BR.

C-1

• Brief Report on any material/significant negative consequences of the operations of the

business entity

C-2

• Brief on Goals and Targets in the area of social, environmental and economic
responsibilities that the business entity has set for itself for the next Reporting Period