INTRODUCTION

CORPORATE SOCIAL RESPONSIBILITY:

Corporate social responsibility (CSR, also called corporate
conscience, corporate citizenship or responsible business) is
a form of corporate self-regulation integrated into a business
model. CSR policy functions as a self-regulatory mechanism
whereby a business monitors and ensures its active compliance
with the spirit of the law, ethical standards and national or
international norms. With some models, a firm's
implementation of CSR goes beyond compliance and statutory
requirements, which engages in "actions that appear to further
some social good, beyond the interests of the firm and that
which is required by law". 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. The aim is to increase long-term profits and shareholder trust through
positive public relations and high ethical standards to reduce business and legal risk by taking
responsibility for corporate actions.

Background:
The concept of social responsibility was traced back to the ancient times. The first stage of the CSR
development happened thousand years BC where authorities introduced different rules and regulations
where the workers were severely punished for being careless and injured someone during their work. Or
"In Ancient Rome senators grumbled about the failure of businesses to contribute sufficient taxes to fund
their military campaigns."(History of Corporate Social Responsibility and Sustainability) During the
industrial revolution the concept grew to a whole new level and the significance of business in society
started to increase exponentially. By the 1920s the new stage began that social responsibility was not seen
as an ethic but became a whole new concept, however the magnitude of the concept was undervalued. As
Dean of Harvard Business School Wallace B. Donham: "Business has not learned how to handle these
changes, nor does it recognise the magnitude of its responsibilities for the future of civilisation."(History
of Corporate Social Responsibility and Sustainability)

The ideology of corporate social responsibility (CSR) has emerged as a response to pressure from the
business side of growing leftist sentiment and the trade union movement in the last third of the XIX
century. Incurred if the institutions of civil society demanded from businesses providing social guarantees
to the workers and to ensure protection of their labor and the decline of trade unions in the mid XX
century for business owners updated the task of preserving and maintaining the loyalty and
motivation of subordinates, which again forced them to turn to CSR. It was then that the concept has
become firmly established in the theory and practice of corporate governance in the U.S.

However the effect of globalization cannot be under estimated as it played a significant role in CSR,
which forced companies to look for more creative ways of positioning information in a crowded world.
Thus, CSR was the result of deep transformation of relations of private business and society in a post-
industrial economy.

Rationale:
The theme of my study is corporate social responsibility. I have chosen this theme because it is one of the
main issues of modern business, which is developing fast and is widely discussed. With the introduction
of Companies Bill 2013 it has become mandatory for companies to spend at least 2% of their profit after
tax on CSR activities. It has become necessary to understand the needs and ways of corporate social
responsibility. A company cannot sustain in present scenario without practicing CSR. Thus, as per the
need of the hour, Corporate Social Responsibility is an apt topic to select for the study.

The prime minister of India, Dr. Manmohan Singh expressed the challenges to budding mangers of India,
in his speech as “we should recognize that our high growth is not sustainable unless it is made more
inclusive, in a manner that helps to reduce social tensions and disparities. The innovation- in
management, in systems, in communication should not only be helping a firm or it’s bottom-line but it
should address pressing economic and social challenges” Singh (2011). Primarily the basics of the CSR
itself support the rationale of the corporate social disclosure. Thus, it shall not be out of the place to look
at the rationales dictating CSR by the companies. First of all, the pressures of 8 globalization have forced
the companies to decentralize production/marketing facilities. So, integration between the global
approach and local orientation is a recent phenomenon called basically glocalisation of production
facilities. This process has raised the sensitivity of the corporate world to the needs of the local
communities.

Secondly, the growing awareness of the world to environmental issues, global warming, climatic changes
(though already matured but it has bounced back with more vigor than ever before. The worsening global
climatic conditions and emergence of carbon trading markets and Kyoto agreement with ‘Cap and Trade
systems’ has also forced the companies to sit up and respond to the environmental and societal needs. The
CSR works as an image booster and these days adbusting (using the mainstream media itself to strike at
dominant marketing messages and send alternative messages), is increasingly being used as a perfect
marketing tool, making the world listen to firms’s brand message.
Survey Of Literature:
The early roots of corporate social responsibility can be traced back to 1917, when Henry Ford announced
that the aim of Ford Motor company is that “To do as much as possible for everybody concerned, to make
money and use it, give employment, and send out the car where the people can use it and incidentally to
make money” (Lee 2008, p. 54). Eighty years later, Henry Ford’s great-grandson, William Clay Ford Jr
emphasised that Ford company valued all stakeholders’ interests as well as the social welfare of
employees and shareholders, as he said that “we want to find ingenious new ways to delight consumers,
provide superior returns to shareholders and make the world a better place for us” (Meredith 1999, p.
157).

From a business practice perspective, Ford was one of those companies, who initiated social
responsibility activities. From a research perspective, many scholars believe that Bowen’s Social
Responsibilities of the Businessman (1953) is the first work to discuss the relationship between
corporations and society (Carroll 1979; Wartick and Cochran 1985). In this book Bowen (1953) argues
that firms need to be cognisant of business ethics to achieve long-term superior performance. CSR
initiatives are very important in the context of business ethics (Maignan and Ferrell 2004). During the last
57 years, several findings have caught the attention of CSR practitioners and scholars. These include
studies which suggested that CSR activities provide an “insurance-like” protection when negative events
happen (Godfrey et al. 2009); that CSR activities not only influence sales growth, but also influence the
employment and investment domains (Sen et al. 2006); and that firms with higher CSR ratings may have
a sustainable competitive advantage rooted in human capital as they attract more and better employees
than firms with lower CSR ratings (Carmeli 2005; Hunt et al. 1989; Turban and Greening 1997).
Consequently, in order to pursue sustainable development, and, achieve a good reputation in a fiercely
competitive market, more and more companies are publishing their CSR disclosures and CSR reports.

Objective Of The Study:

The general objective of the study is to determine the increasing importance of corporate social
responsibility and understand the impact and need of the same in today’s society. Corporate Social
Responsibility is represented by the contributions undertaken by the companies towards the society
through its business activities and social investment. With the introduction of Companies Bill 2013 it has
become mandatory for companies to spend at least 2% of their profit after tax on CSR activities. It has
become necessary to understand the needs and ways of corporate social responsibility. This study will
help me understand the importance of CSR in not just nation building but also as a strategy to
successfully build up a business.
Research And Methodology:
 Area Of Study:

The area of the project that has been taken up is of the role of HDFC bank in the economic development
of India. We have tried to highlight the broad model of this private sector bank and its role in the Indian
Economic Development. The central purpose of the study is to build a database on certain crucial
parameters of private sector bank and assess the trends in their financial health.

 Type of Study:

A detailed study has been made on HDFC Bank, a private sector undertaking, and its CSR policies and
activities have been highlighted. An emphasis has been laid on its role in Indian Economic Development.

 Tool For Data Collection:

The data required for completing the project mainly consists of secondary data collected from various
sources such as publications and periodic journals of Economic Times, and company website. Flexible
reporting tools such as customizable table and graphs have been used. Few schematic diagrams have been
used as well to give a better understanding of the text. Analytical research methodology has been applied
in the project to forecast growth pattern in the industry and to measure its progress. Based on the analysis
from existing facts, suggestions and findings have been drawn in later part of the project.

Limitations Of the Study:

All the data that have been collected is from a secondary source, which includes organizational records
and data collected through qualitative methodology or qualitative research. While preparing this project,
legal aspects such as corporate governance, labor and employee welfare related laws have not been
undertaken. Rest all the important facts and data has been considered.
Chapter Planning:
This project on Corporate Social Responsibilities has been segregated in four parts:

Chapter 1: Introduction

This chapter gives information about the general background of the topic, need for the study of the
project, objective and research methodology used in preparation of data and findings.

Chapter 2: Conceptual Framework:

 CONCEPTUAL FRAMEWORK

Introduction: From Sustainable Development to Corporate Social Responsibility

Sustainable development is a vague notion which corresponds to the concept: development meets
the needs of the present without compromising the ability of future generations to meet their own
needs (Brundtland, 1987). It is based on three poles of activities, also theoretically named as a
triple bottom line: results of the firm in terms of planet (respect for the environment), people
(respect for employees, customers, suppliers, stakeholders and society) and profit (profitability
and growth of the enterprise and growth of the economy) (CIDD, 2006; Labelle, 2008; Laville,
2009; Spence, 2007). An extension of sustainable development involves the concept of
responsible entrepreneurship which means strategies voluntarily adopted by companies to
contribute to sustainable development (EC, 2004, p. 5). This definition meets the concept of
corporate social responsability (CSR) which represents, according to the CIDD (2006, p. 7), “an
improvement process in which companies incorporate voluntarily, systematically and
consistently social, environmental and economic considerations into their management in
consultation with their stakeholders”. In a similar sense, CSR requires a long term perspective
without neglecting short-term requirements (CIDD, 2006). In this perspective, it refers to
companies that incorporate their corporate social responsibility in their strategy and their
management (CIDD, 2006).

International Scenario:
Many US corporations have both been attributed, and ready to claim, social responsibilities, this
has not been so common elsewhere. Comparative research in CSR between Europe and the US
has identified remarkable differences between companies on each side of the Atlantic. This
pertains, first, to the language companies use in describing their involvement in society. A
comparative study of corporate self-presentations on the internet by Maignan and Ralston (2002)
found that while 53% of US companies mention CSR explicitly on their websites only 29% of
French and 25% of Dutch companies do the same. But these differences clearly transcend
language: in a recent study on voluntary codes of conducts in the global coffee sector between
1994 and 2005, Kolk (2005a: 230) identified a total of 15 corporate codes globally, of which
only two were European (both by the same company Nestlé) while the remaining 13 codes were
issued and adopted by exclusively US-American corporations. In a similar vein, Brammer and
Pavelin (2005) found in a US-UK comparison of one of the most longstanding areas of CSR -
corporate community contributions – that the value of contributions by US companies in 2001
was more than ten times greater than those of their British counterparts (US: $4,831bn; UK:
$428m). The second commonplace observation is that corporations elsewhere in the world have
recently begun to adopt the language and practice of CSR, particularly in Europe, but also in
Africa, Australasia, South America, and South, East and South-East Asia.
Implicit and Explicit CSR:
We have argued that US-style CSR has been embedded in a system which leaves more incentive and
opportunity for corporations to take comparatively explicit responsibility. European CSR has been
implied in systems of wider organizational responsibility which have yielded comparatively narrow
incentives and opportunities for corporations to take explicit responsibility. We therefore identify two
distinct elements of CSR, the explicit and the implicit.

By explicit CSR we refer to corporate policies which assume and articulate responsibility for some
societal interests. They normally consist of voluntary programs and strategies by corporations which
combine social and business value and address issues perceived as being part of their social responsibility
by the company. A recent example was the response of Walmart, FedEx, Home Depot and other US
companies to provide disaster relief to the victims of hurricane Katrina in 2005 which - with more than
$792m raised by September 2005 (Roner, 2005) - in speed and scope exceeded the initial response by the
US government. Explicit CSR may be responsive to stakeholder pressure (e.g. consumer and activist
responses to labor conditions in Nike’s Asian supply chains), it may involve partnerships with
governmental (e.g. the US Apparel Industry Code of Conduct; the UN Global Compact) and non-
governmental organizations (e.g. the Marine Stewardship Council; the ISO 14000 and 26000 series), and
it may even involve alliances with other corporations (e.g. the Global Business Coalition for HIV Aids;
the Equator Principles). The point remains that explicit CSR rests on corporate discretion rather than
reflecting either governmental authority or broader formal or informal institutions.

Explicit CSR Implicit CSR

Describes corporate activities to assume Describes corporation’s role within the wider
responsibility for the interest of the society. formal and informal institutions for society’s
interests and concerns.
Consists of voluntary corporate policies, programs Consists of values, norms and rules which result in
and strategies. requirements for corporations.
Incentives and opportunities are motivated by the Motivated by the societal consensus on the
perceived expectations of the different stakeholders legitimate expectations of the roles and
of the corporation. contributions of all major groups in the society,
including corporations.

By implicit CSR we refer to the corporations’ role within the wider formal and informal
institutions for society’s interests and concerns. Implicit CSR normally consists of values, norms
and rules which result in (mandatory and customary) requirements for corporations to address
stakeholder issues and which define proper obligations of corporate actors in collective rather
than individual terms. Whilst representative business associations would often be directly
involved in the definition and legitimization of these requirements, individual corporations
would not normally articulate their own versions of such responsibilities. Our differentiation
focuses, first, on the language corporations use in addressing their relation to society: companies
practicing explicit CSR use the language of ‘CSR’ in communicating their policies and practices
to their stakeholders while those practicing implicit CSR would normally not describe their
activities this way. Second, our differentiation also exposes differences in intent: corporations
practicing implicit CSR might conduct similar practices to those practicing explicit CSR.
Implicit CSR, however, is not conceived as a voluntary and deliberate corporate decision but
rather as a reaction to, or reflection of, the corporations’ institutional environment while explicit
CSR is the result of a deliberate, voluntary, often strategic (Porter & Kramer, 2006) decision of
the corporation. Many of the elements of implicit CSR occur in the form of codified norms, rules
and laws but are not conventionally described explicitly as CSR. It is the societal norms,
networks, organizations and rules which are explicit rather than their implications for the social
responsibilities of business. It is in this sense that CSR in these systems is ‘implicit’. Where
corporations comply with the law and customary ethics but do not claim distinctive authorship of
these practices, they are nonetheless acting responsibly as noted by Carroll (1979).

Framework of CSR In India:

The tool of Corporate Social Responsibility (hereafter referred to as 'CSR') has been introduced
under the Companies Act, 2013 (hereafter referred to as 'CA13'), effective from April 1, 2014, to
address the social obligations of the corporate world. The objective of CSR is a noble one and
necessary for a robust and sustainable development. The general reaction of the corporate
industry towards the reform has been positive. Various companies have undertaken extensive
projects addressing the socio-economic problems, facing the society at large.

The vehicle of CSR has been driven into CA13 in order to bridge the gap of inequality and fulfil
various social obligations that require certain amount of capital and other resources. CSR is
basically an obligation towards the nation at large, which attempts to preclude confinement of
the fruits of benefits to certain consumers or shareholders. It is a legal responsibility that casts
upon a corporate body to address the umpteen number of socio-economic-environment concerns
plaguing the country.

Although proper implementation of CSR will definitely add to the grandeur of the nation,
detractors have questioned the need of such obligations in a nation such as India where generally
all the policies of the government focus on striving socio-economic equality and development.
The reason for imposing such obligations appears to be twofold, firstly, that the protracted
problems of socio-economic equality and environmental concerns have proved to be chronic and
secondly, the past endeavours demonstrate clearly that a greater extent of participation is needed
for reaching the roots of such problems. Bringing the corporate world into the fold of socio-
economic obligations would prove to be beneficial for the masses as well as the corporate world.
Advantages of CSR:
Although most companies in the world today agree that corporate social responsibility is part of
daily business practice, this idea is not shared by everyone. This is the so-called business to
business approach. In today’s digital, fast speed world, each business, small or big, needs to have
a CSR program in place. If CSR is not yet part of your daily business practice, you must act fast.
Or else you’ll lose the trust of the people who are important to your business.

 Satisfied Employees: Employees want to feel proud of the organization they work for.
An employee with a positive attitude towards the company, is less likely to look for a job
elsewhere. It is also likely that you will receive more job applications because people
want to work for you.More choice means a better workforce. Because of the high positive
impact of CSR on employee wellbeing and motivation, the role of HR in managing CSR
projects is significant.

 Satisfied Customers: Research shows that a strong record of CSR improves

customers’ attitude towards the company. If a customer likes the company, he or
she will buy more products or services and will be less willing to change to
another brand.

 Positive PR: CSR provides the opportunity to share positive stories online and through
traditional media. Companies no longer have to waste money on expensive advertising
campaigns. Instead they generate free publicity and benefit from worth of mouth
marketing.

 Costs Reductions: A CSR program doesn’t have to cost money. On the contrary. If
conducted properly a company can reduce costs through CSR. Companies reduce cost by

 More efficient staff hire and retention

 Implementing energy savings programme
 Managing risks and liabilities more efficiently
 Less investment in traditional advertising

 More Business Opportunities: A CSR program requires an open, outside oriented

approach. The business must be in a constant dialogue with customers, suppliers and
other parties that affect the organization. Because of continuous interaction with other
parties, your business will be the first to know about new business opportunities.

 Long Term Future for Business: CSR is not something for the short term. It’s all about
achieving long term results and business continuity. Large businesses refer to: “shaping a
more sustainable society” (Vodafone 2010 report): “ Deliver a sustainable society in
which business and its stakeholders can prosper in the long term”
ANALYSIS AND FINDINGS