Internal Assignment

Course: - corporate social responsibility

Q1. M/s Khana Khazaana is an Indian MNC which sells tomato ketchup, wheat flour, ice creams in
the Indian Market. The company holds a good reputation in Indian Market and its product are known
for superior quality. The company now plans to do its own CSR activity. You have joined the
company as a CSR head who will look after all the planning and implementation of CSR activities.
The company directors have asked you to prepare a detailed report of CSR activities that company
can conduct and help the people in need. The directors have asked you to list down minimum five
CSR activities and explain the details of each activity in the report.

Ans: - Corporate social responsibility (CSR) is a form of business self-regulation to incorporate

social and environmental concerns. It represents a business model that adheres to laws, ethical
standards, and international norms.
As part of the business model, businesses have to take into account the impact of their activities
on the environment, employees, communities, stakeholders, and other members of the public. In
short, CSR represents the deliberate inclusion of the publics interest in a business decision
making to ensure a triple bottom line that considers the planet, people, and profits. In general,
CSR involves some kind of standardized reporting that allows the business to collect information
on how it is making progress on various fronts. Businesses that engage in CSR typically focus on
some or all of the following:

Environment: This requires a look at the environmental impacts of products and services,
as well as what the business does outside the company to improve the environment.

Employees: Its important to ensure that all employees are cared for adequately.
Businesses usually focus on workplace conditions, benefits, living wages, and training.

Communities: Engaging the surrounding communities is an important part of not just

creating good human capital that can serve the business, but also securing a reputation
that can further establish the business.

Regulations: Respecting regulations to the fullest and often exceeding them is part of
being socially responsible.

Crisis Preparedness: Being ready to address business crises and ensure safety for employees and
surrounding communities is critical. Having plans ready and tried are important in ensuring
minimal losses during times of crises.

CSR is about how companies manage the business processes to produce an overall
positive impact on society
Take the following illustration:
Companies need to answer to two aspects of their operations.
1. The quality of their management - both in terms of people and processes (the inner circle).
2. The nature and quantity of their impact on society in the various areas.
Outside stakeholders are taking an increasing interest in the activity of the company. Most look
to the outer circle - what the company has actually done, good or bad, in terms of its products
and services, in terms of its impact on the environment and on local communities, or in how it
treats and develops its workforce. Out of the various stakeholders, it is financial analysts who are
predominantly focused - as well as past financial performance - on quality of management as an
indicator of likely future performance.
Other definitions
The World Business Council for Sustainable Development in its publication "Making Good
Business Sense" by Lord Holme and Richard Watts, used the following definition. "Corporate
Social Responsibility is the continuing commitment by business to behave ethically and
contribute to economic development while improving the quality of life of the workforce and
their families as well as of the local community and society at large" The same report gave some
evidence of the different perceptions of what this should mean from a number of different
societies across the world. Definitions as different as "CSR is about capacity building for
sustainable livelihoods. It respects cultural differences and finds the business opportunities in
building the skills of employees, the community and the government" from Ghana, through to
"CSR is about business giving back to society" from the Phillipines.
On the other hand, the European Commission hedges its bets with two definitions wrapped into
one: "A concept whereby companies decide voluntarily to contribute to a better society and a

cleaner environment. A concept whereby companies integrate social and environmental concerns
in their business operations and in their interaction with their stakeholders on a voluntary basis".

Need for Corporate Social Responsibility

1. A societal approach to business is the contemporary business philosophy, which demands
business organizations to be responsive to the social problems.
2. As a result of globalization of business, global companies and MNCs operate in a big
way in their host countries. In order to establish a good corporate image, they include
social responsibility as a corporate objective. Indigenous companies are forced to follow
suit for maintaining their corporate identity.
3. In the terms and conditions of collaborations agreements, very often, social welfare terms
are included which necessitates the collaborating company to take up social responsibility
of business.
4. On the basis of legal provisions, companies have to concentrate on social problems. For
example an industrial organization in India must obtain a certification from Pollution
Control Board.
5. Corporate donations of social welfare projects of approved NGOs are exempted from
income tax in India.
6. An organizations commitment to social responsibility creates a good corporate image,
and there by a better business environment.
7. Social responsibility of business enables the organization to improve its product
positioning and thereby improve its market share.
8. Very often situations demand due to natural calamities, accidents and so on. For example,
gas leak at the Union Carbide plant in Bhopal, wherein the company had to monetarily
compensate through medical treatment.

Q2) Assume that one of your CSR activities gets appreciated and approved by the director of M/s
Khaana Khazaana from the five activities that you reported. You can select any one activity of your
choice from the CSR activities that you suggested and prepare a detailed report on the following
topics: Developing a CSR Strategy, Implementing a CSR Strategy, Monitoring and Measurement of
CSR Strategy. The answer should have a clear reference to the selected CSR activity.

Ans: CSR is an important business strategy because, wherever possible, consumers want to buy
products from companies they trust; suppliers want to form business partnerships with
companies they can rely on; employees want to work for companies they respect; and NGOs,
increasingly, want to work together with companies seeking feasible solutions and innovations in
areas of common concern. Satisfying each of these stakeholder groups allows companies to
maximize their commitment to another important stakeholder grouptheir investors, who
benefit most when the needs of these other stakeholder groups are being met:
I honestly believe that the winning companies of this century will be those who prove with their
actions that they can be profitable and increase social valuecompanies that both do well and do
good.Increasingly, shareowners, customers, partners and employees are going to vote with
their feetrewarding those companies that fuel social change through business. This is simply
the new reality of businessone that we should and must embrace.
Chairman and Chief Executive Officer

M/s Khaana Khazaana

The businesses most likely to succeed in the globalizing world will be those best able to combine
the often conflicting interests of its multiple stakeholders, and incorporate a wider spectrum of
opinions and values within the decision-making process and objectives of the organization.
Lifestyle brand firms, in particular, need to live the ideals they convey to their consumers:

CSR is increasingly crucial to maintaining success in businessby providing a corporate

strategy around which the company can rally, but also by giving meaning and direction to day to
day operations.

Implementing CSR
CSR is about common sense policies that represent a means of integrating a complete social
perspective into all aspects of operations. The goal is to maximize true value and benefit for an
organization, while protecting the huge investments corporations make today in their brands.
CSR asks companies to ensure their business operations are clean and equitable, and contribute
positively to the society in which they are based. Otherwise, they leave themselves open to too
much danger from a potential consumer backlash.
CSR is good business sense, and a total approach to doing business, in a globalizing world where
companies are increasingly relying on brand strength (particularly global lifestyle brands) to add
value and product differentiation, and where NGO-driven consumer activism is increasing.
Many believe the issue of how corporations integrate CSR into everyday operations and longterm strategic planning will define the business marketplace in the near future. It will become a
key point of brand differentiation, both in terms of corporate entities and the products that carry
their brands.
Key steps on the road to integrating CSR within all aspects of operations include:
Ensure the commitment of top management, and particularly the CEO, is communicated
throughout the organization
Appoint a CSR position at the strategic decision-making level to manage the development of
policy and its implementation
Develop relationships with all stakeholder groups and interests (particular relevant NGOs)
Incorporate a Social or CSR Audit within the companys annual report
Ensure the compensation system within the organization reinforces the CSR policies that have
been created, rather than merely the bottom-line
Any anonymous feedback/whistle-blower process, ideally overseen by an external
ombudsperson, will allow the CSR Officer to operate more effectively
Corporations today are best positioned when they reflect the values of the constantly shifting and
sensitive market environment in which they operate. It is vital that they are capable of meeting
the needs of an increasingly demanding and socially-aware consumer market, especially as
brands move front and center of a firms total value. Global firms with global lifestyle brands
have the most to lose if the public perception of the brand fails to live up to the image portrayed.
Integrating a complete social perspective into all aspects of operations will maximize true value
and benefit for an organization, while protecting the huge investments companies make in
corporate brands.

Arguments of CSR
Arguments offered in favor of CSR can be broadly split into two campsmoral and economic.
1. A moral argument for CSR
While recognizing that profits are necessary for any business entity to exist, all groups in society
should strive to add value and make life better. Businesses rely on the society within which they
operate and could not exist or prosper in isolation. They need the infrastructure that society
provides, its source of employees, not to mention its consumer base. CSR is recognition of that
inter-dependence and a means of delivering on that obligation, to the mutual benefit of
businesses and the societies within which they are based:
CSR broadly represents the relationship between a company and the wider community within
which the company operates. It is recognition on the part of the business that for profit entities
do not exist in a vacuum, and that a large part of any success they enjoy is as much due to the
context in which they operate as factors internal to the company alone.
Charles Handy makes a convincing and logical argument for the purpose of a business laying
beyond the goals of maximizing profit and satisfying shareholders above all other stakeholders in
an organization:
The purpose of a business is not to make a profit, full stop. It is to make a profit so that the
business can do something more or better. That something becomes the real justification for
the business.It is a moral issue. To mistake the means for the end is to be turned in on oneself,
which Saint Augustine called one of the greatest sins.It is salutary to ask about any
organization, If it did not exist, would we invent it? Only if it could do something better or
more useful than anyone else would have to be the answer, and profit would be the means to
that larger end.

Q3. Read a CSR and Corporate Governance report of any Indian listed company of your choice.
Assume that you are a director of the same company and you have been invited in a management
institute to give a talk on CSR and Corporate Governance.
a) Write a detailed speech on the topic CSR initiatives and vision for the future that you will
present to the students. The talk should be in reference to the company selected.

b) Write a detailed speech on the topic Corporate Governance rules and its impact that you
will present to the students. The talk should be in reference to the company selected.

Ans: - Corporate governance has succeeded in attracting a good deal of public interest because
of its apparent importance for the economic health of corporations and society in general.
However, the concept of corporate governance is poorly defined because it potentially covers a
large number of distinct economic phenomenons. As a result different people have come up with
different definitions that basically reflect their special interest in the field. It is hard to see that
this 'disorder' will be any different in the future so the best way to define the concept is perhaps
to list a few of the different definitions rather than just mentioning one definition.
Joanna Sheiton, (OCED) described corporate governance as a set of relationships between a
companys management, its Board of directors, shareholders and other stakeholders. In a
broader sense, he defined good corporate governance as important for overall market
confidence, the efficiency of international capital allocation, the renewal of countries industrial
bases, and ultimately nations overall wealth and welfare. The framework for corporate
governance is not only an important component affecting the long-term prosperity of companies,
it is a leading species of large genus namely, National Governance, Humane Governance,
societal governance, economic governance and political governance. Government provides
necessary conditions or environment to Corporates to operate. However, value can be added by
achievements of technological achievement, enhancement of productivity and optimal use of
available resources by corporate sector. It is to be noted that new technologies are on the anvil
e.g. Information Technology thereby improving the speed of communication and dearth of
distance.
The liberalization and de-regulation world over gave greater freedom in management. This
would imply greater responsibilities.
b) The players in the field are many. Competition brings in its wake weakness in standards of
reporting and accountability.
c) Market conditions are increasingly becoming complex in the light of global developments like
WTO, removal of barriers/reduction in duties.

d) The failure of corporates due to lack of transparency and disclosures and instances of
falsification of accounts/embezzlement and the effect of such undesirable practices in other
companies.
It is the increasing role of foreign institutional investors in emerging economies that has made
the concept of corporate governance a relevant issue today. In fact, the expression was hardly in
the public domain. In the increasingly close interaction of the economies of different countries
lies the process of globalisation. This involves the rapid migration of four elements across
national borders. These are (i) Physical capital in terms of plant and machinery; (ii) Financial
capital; (iii) Technology; and (iv) Labour
The increasing concern of the foreign investors is that the enterprise in which they invest should
not only be effectively managed but should also observe the principles of corporate governance.
In other words, the enterprises will not do anything illegal or unethical. This need for reassurance is felt by the FIIs due to the fact that there have been cases of dramatic collapse of
enterprises which were apparently doing well but which were not observing the principles of
corporate governance. In India corruption is an all embracing phenomenon. In this, if the
respective players in the field were to adopt healthy principles of good corporate governance
and avoid corruption in their transactions, India could really take a step forward to becoming a
less corrupt country and improving its rank in the Corruption Perception Index listed by the
Transparency International. Studies in India and abroad show that markets and investors take
notice of well managed companies respond positively to them and reward such companies with
higher valuations.
1. Rights and Responsibilities of shareholders
The basic rights of the shareholders include right to transfer and registration of shares, obtaining
relevant information on the company on a timely and regular basis, participating and voting in
shareholder meetings, electing members of the board and sharing in the residual profits of the
corporation.The Committee therefore recommends that as shareholders have a right to participate
in, and be sufficiently informed on decisions concerning fundamental corporate changes, they
should not only be provided information as under the Companies Act, but also in respect of other
decisions relating to material changes such as takeovers, sale of assets or divisions of the
company and changes in capital structure which will lead to change in control or may result in
certain shareholders obtaining control disproportionate to the equity ownership.

The Committee recommends that information like quarterly results, presentation made by
companies to analysts may be put on companys web-site or may be sent in such a form so as to
enable the stock exchange on which the company is listed to put it on its own web-site. The
Committee recommends that the half-yearly declaration of financial performance including
summary of the significant events in last six-months, should be sent to each household of
shareholders.
A company must have appropriate systems in place which will enable the shareholders to
participate effectively and vote in the shareholders meetings. The company should also keep the
shareholders informed of the rules and voting procedures, which govern the general shareholder
meetings. The annual general meetings of the company should not be deliberately held at venues
or the timing should not be such which makes it difficult for most of the shareholders to attend.
The company must also ensure that it is not inconvenient or expensive for shareholders to cast
their vote.
Currently, although the formality of holding the general meeting is gone through, in actual
practice only a small fraction of the shareholders of that company do or can really participate
therein. This virtually makes the concept of corporate democracy illusory. It is imperative that
this situation which has lasted too long needs an early correction. In this context, for
shareholders who are unable to attend